SAN JOSE, Calif., July 29, 2024 /PRNewswire/ -- Sanmina Corporation ("Sanmina" or the "Company") (NASDAQ:SANM), a leading integrated manufacturing solutions company, today reported financial results for the fiscal third quarter ended June 29, 2024 and outlook for its fiscal fourth quarter ending September 28, 2024.
Third Quarter Fiscal 2024 Financial Highlights
- Revenue: $1.84 billion
- GAAP operating margin: 4.5%
- GAAP diluted EPS: $0.91
- Non-GAAP(1) operating margin: 5.3%
- Non-GAAP(1) diluted EPS: $1.25
- Cash flow from operations: $90 million
- Ending cash and cash equivalents: $658 million
(1) See Schedule 1 below for information regarding the items excluded from and our use of non-GAAP financial measures. A reconciliation of the non-GAAP financial information contained in this release to their most directly comparable GAAP measures is included in the financial statements furnished with this release.
"We delivered third quarter results in line with our outlook. We are starting to see stabilization and demand improve going into our fourth quarter, and we expect to see growth in fiscal 2025," stated Jure Sola, Chairman and Chief Executive Officer. "We continue to execute our strategy, which is to deliver profitable growth and free cash flow generation while maintaining our strong balance sheet and returning value to shareholders."
Fourth Quarter Fiscal 2024 Outlook
The following outlook is for the fiscal fourth quarter ending September 28, 2024. These statements are forward-looking and actual results may differ materially.
- Revenue between $1.9 billion to $2.0 billion
- GAAP diluted earnings per share between $1.02 to $1.12
- Non-GAAP diluted earnings per share between $1.30 to $1.40
Safe Harbor Statement
The statements above including our financial outlook for the fourth quarter fiscal 2024 and expectations for growth in fiscal 2025 generally, constitute forward-looking statements within the meaning of the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934. Actual results could differ materially from those projected in these statements as a result of a number of factors, including adverse changes to the key markets we target; significant uncertainties that can cause our future sales and net income to be variable; reliance on a small number of customers for a substantial portion of our sales; risks arising from our international operations; geopolitical uncertainty, including from the war in Ukraine and conflict in the Middle East; and the other risk factors set forth in the Company's annual and quarterly reports filed with the Securities Exchange Commission.
The Company is under no obligation to (and expressly disclaims any such obligation to) update or alter any of the forward-looking statements made in this earnings release, the conference call or the Investor Relations section of our website whether as a result of new information, future events or otherwise, unless otherwise required by law.
Company Conference Call Information
Sanmina will hold a conference call to review its financial results for the third quarter and outlook for the fourth quarter of fiscal 2024 on Monday, July 29, 2024 at 5:00 p.m. ET (2:00 p.m. PT). The access numbers are: domestic 800-836-8184 and international 646-357-8785. The conference will also be webcast live over the Internet. You can log on to the live webcast at Q3'24 Earnings. Additional information in the form of a slide presentation is available on Sanmina's website at www.sanmina.com. A replay of the conference call will be available for 48-hours. The access numbers are: domestic 888-660-6345 and international 646-517-4150, access code is 27876#.
About Sanmina
Sanmina Corporation, a Fortune 500 company, is a leading integrated manufacturing solutions provider serving the fastest growing segments of the global Electronics Manufacturing Services (EMS) market. Recognized as a technology leader, Sanmina provides end-to-end manufacturing solutions, delivering superior quality and support to Original Equipment Manufacturers (OEMs) primarily in the industrial, medical, defense and aerospace, automotive, communications networks and cloud infrastructure markets. Sanmina has facilities strategically located in key regions throughout the world. More information about the Company is available at www.sanmina.com.
Sanmina Contact
Paige Melching
SVP, Investor Communications
408-964-3610
Sanmina Corporation | |||
Condensed Consolidated Balance Sheets | |||
(in thousands) | |||
(GAAP) | |||
(Unaudited) | |||
June 29, | September 30, | ||
ASSETS | |||
Current assets: | |||
Cash and cash equivalents | $ 657,709 | $ 667,570 | |
Accounts receivable, net | 1,154,834 | 1,230,771 | |
Contract assets | 414,805 | 445,757 | |
Inventories | 1,384,332 | 1,477,223 | |
Prepaid expenses and other current assets | 81,655 | 58,249 | |
Total current assets | 3,693,335 | 3,879,570 | |
Property, plant and equipment, net | 630,254 | 632,836 | |
Deferred tax assets | 162,782 | 177,597 | |
Other | 177,160 | 183,965 | |
Total assets | $ 4,663,531 | $ 4,873,968 | |
LIABILITIES AND STOCKHOLDERS' EQUITY | |||
Current liabilities: | |||
Accounts payable | $ 1,433,803 | $ 1,612,833 | |
Accrued liabilities | 243,429 | 267,148 | |
Accrued payroll and related benefits | 126,824 | 127,406 | |
Short-term debt, including current portion of long-term debt | 17,500 | 25,945 | |
Total current liabilities | 1,821,556 | 2,033,332 | |
Long-term liabilities: | |||
Long-term debt | 299,665 | 312,327 | |
Other | 200,972 | 209,684 | |
Total long-term liabilities | 500,637 | 522,011 | |
Stockholders' equity | 2,341,338 | 2,318,625 | |
Total liabilities and stockholders' equity | $ 4,663,531 | $ 4,873,968 | |
Sanmina Corporation | |||||||
Condensed Consolidated Statements of Income | |||||||
(in thousands, except per share amounts) | |||||||
(GAAP) | |||||||
(Unaudited) | |||||||
Three Months Ended | Nine Months Ended | ||||||
June 29, | July 1, | June 29, | July 1, | ||||
Net sales | $ 1,841,430 | $ 2,207,118 | $ 5,550,823 | $ 6,883,029 | |||
Cost of sales | 1,687,891 | 2,023,910 | 5,081,687 | 6,313,246 | |||
Gross profit | 153,539 | 183,208 | 469,136 | 569,783 | |||
Operating expenses: | |||||||
Selling, general and administrative | 61,720 | 68,828 | 195,704 | 192,948 | |||
Research and development | 7,659 | 6,719 | 20,271 | 18,712 | |||
Restructuring | 1,793 | 296 | 7,257 | 1,731 | |||
Total operating expenses | 71,172 | 75,843 | 223,232 | 213,391 | |||
Operating income | 82,367 | 107,365 | 245,904 | 356,392 | |||
Interest income | 2,572 | 4,213 | 9,641 | 9,685 | |||
Interest expense | (7,506) | (10,066) | (24,136) | (28,033) | |||
Other expense | (2,795) | (2,508) | (652) | (11,988) | |||
Interest and other, net | (7,729) | (8,361) | (15,147) | (30,336) | |||
Income before income taxes | 74,638 | 99,004 | 230,757 | 326,056 | |||
Provision for income taxes | 19,900 | 17,267 | 60,346 | 63,898 | |||
Net income before noncontrolling interest | 54,738 | 81,737 | 170,411 | 262,158 | |||
Less: Net income attributable to noncontrolling interest | 3,136 | 5,243 | 9,256 | 14,029 | |||
Net income attributable to common shareholders | $ 51,602 | $ 76,494 | $ 161,155 | $ 248,129 | |||
Net income attributable to common shareholders per share: | |||||||
Basic | $ 0.93 | $ 1.32 | $ 2.88 | $ 4.28 | |||
Diluted | $ 0.91 | $ 1.28 | $ 2.82 | $ 4.14 | |||
Weighted-average shares used in computing per share amounts: | |||||||
Basic | 55,466 | 57,987 | 55,862 | 57,995 | |||
Diluted | 56,711 | 59,592 | 57,216 | 59,996 | |||
Sanmina Corporation | |||||||
Reconciliation of GAAP to Non-GAAP Measures | |||||||
(in thousands, except per share amounts) | |||||||
(Unaudited) | |||||||
Three Months Ended | |||||||
June 29, | March 30, | July 1, | |||||
GAAP Operating income | $ 82,367 | $ 75,961 | $ 107,365 | ||||
GAAP Operating margin | 4.5 % | 4.1 % | 4.9 % | ||||
Adjustments: | |||||||
Stock compensation expense (1) | 14,682 | 14,651 | 13,317 | ||||
Amortization of intangible assets | — | — | 669 | ||||
Distressed customer charges (recoveries) (2) | (2,500) | 4,299 | — | ||||
Legal and other (3) | 500 | 1,350 | 4,475 | ||||
Restructuring | 1,793 | 3,274 | 296 | ||||
Non-GAAP Operating income | $ 96,842 | $ 99,535 | $ 126,122 | ||||
Non-GAAP Operating margin | 5.3 % | 5.4 % | 5.7 % | ||||
GAAP Net income attributable to common shareholders | $ 51,602 | $ 52,485 | $ 76,494 | ||||
Adjustments: | |||||||
Operating income adjustments (see above) | 14,475 | 23,574 | 18,757 | ||||
Legal and other (3) | — | (4,967) | — | ||||
Adjustments for taxes (4) | 4,751 | 2,849 | (3,093) | ||||
Non-GAAP Net income attributable to common shareholders | $ 70,828 | $ 73,941 | $ 92,158 | ||||
GAAP Net income attributable to common shareholders per share: | |||||||
Basic | $ 0.93 | $ 0.94 | $ 1.32 | ||||
Diluted | $ 0.91 | $ 0.93 | $ 1.28 | ||||
Non-GAAP Net income attributable to common shareholders per share: | |||||||
Basic | $ 1.28 | $ 1.33 | $ 1.59 | ||||
Diluted | $ 1.25 | $ 1.30 | $ 1.55 | ||||
Weighted-average shares used in computing per share amounts: | |||||||
Basic | 55,466 | 55,585 | 57,987 | ||||
Diluted | 56,711 | 56,699 | 59,592 | ||||
(1) | Stock compensation expense | ||||||
Cost of sales | $ 4,327 | $ 4,416 | $ 4,518 | ||||
Selling, general and administrative | 10,082 | 9,984 | 8,588 | ||||
Research and development | 273 | 251 | 211 | ||||
Total | $ 14,682 | $ 14,651 | $ 13,317 | ||||
(2) | Relates to accounts receivable and inventory write-downs (recoveries) associated with distressed customers. | ||||||
(3) | Represents expenses, charges and recoveries associated with certain legal and other matters. | ||||||
(4) | GAAP provision for income taxes | $ 19,900 | $ 19,122 | $ 17,267 | |||
Adjustments: | |||||||
Tax impact of operating income adjustments | 1,303 | 2,611 | 1,817 | ||||
Discrete tax items | 1,462 | 385 | 6,957 | ||||
Deferred tax adjustments | (7,516) | (5,845) | (5,681) | ||||
Subtotal - adjustments for taxes | (4,751) | (2,849) | 3,093 | ||||
Non-GAAP provision for income taxes | $ 15,149 | $ 16,273 | $ 20,360 | ||||
Q4 FY24 Earnings Per Share Outlook*: | Q4 FY24 EPS Range | ||||
Low | High | ||||
GAAP diluted earnings per share | $ 1.02 | $ 1.12 | |||
Stock compensation expense | $ 0.28 | $ 0.28 | |||
Non-GAAP diluted earnings per share | $ 1.30 | $ 1.40 | |||
* Due to uncertainty regarding the timing of recognition of restructuring charges, impairment charges and other unusual or infrequent items, if any, that could be incurred during the fourth quarter of FY24, an estimate of such items is not included in the outlook for Q4 FY24 GAAP EPS. |
Sanmina Corporation | |||||||||
Condensed Consolidated Cash Flow | |||||||||
(in thousands) | |||||||||
(GAAP) | |||||||||
(Unaudited) | |||||||||
Three Month Periods | |||||||||
Q3'24 | Q2'24 | Q1'24 | Q4'23 | Q3'23 | |||||
Net income before noncontrolling interest | $ 54,738 | $ 55,309 | $ 60,364 | $ 65,355 | $ 81,737 | ||||
Depreciation and amortization | 29,764 | 30,274 | 30,726 | 30,521 | 29,898 | ||||
Other, net | 19,708 | 18,634 | 18,185 | 21,947 | 21,174 | ||||
Net change in net working capital | (14,211) | (31,900) | 16,750 | (40,966) | (76,300) | ||||
Cash provided by operating activities | 89,999 | 72,317 | 126,025 | 76,857 | 56,509 | ||||
Purchases of long-term investments | (600) | (700) | (600) | (500) | (500) | ||||
Net purchases of property & equipment | (22,772) | (29,611) | (34,216) | (37,803) | (52,167) | ||||
Cash used in investing activities | (23,372) | (30,311) | (34,816) | (38,303) | (52,667) | ||||
Holdback paid in connection with previous business combination | — | — | — | — | (8,558) | ||||
Net share repurchases | (54,629) | (17,477) | (115,619) | (30,397) | (52,072) | ||||
Net borrowing activities | (4,375) | (4,375) | (12,820) | 4,070 | (4,375) | ||||
Cash used for financing activities | (59,004) | (21,852) | (128,439) | (26,327) | (65,005) | ||||
Effect of exchange rate changes | (772) | (886) | 1,250 | (1,245) | (452) | ||||
Net change in cash & cash equivalents | $ 6,851 | $ 19,268 | $ (35,980) | $ 10,982 | $ (61,615) | ||||
Free cash flow: | |||||||||
Cash provided by operating activities | $ 89,999 | $ 72,317 | $ 126,025 | $ 76,857 | $ 56,509 | ||||
Net purchases of property & equipment | (22,772) | (29,611) | (34,216) | (37,803) | (52,167) | ||||
$ 67,227 | $ 42,706 | $ 91,809 | $ 39,054 | $ 4,342 | |||||
Schedule 1
The statements above and financial information provided in this earnings release include non-GAAP measures of operating income, operating margin, net income and earnings per share. Management excludes from these measures stock-based compensation, restructuring, acquisition and integration expenses, impairment charges, amortization charges and other unusual or infrequent items, as adjusted for taxes, as more fully described below.
Management excludes these items principally because such charges or benefits are not directly related to the Company's ongoing core business operations. We use such non-GAAP measures in order to (1) make more meaningful period-to-period comparisons of the Company's operations, both internally and externally, (2) guide management in assessing the performance of the business, internally allocating resources and making decisions in furtherance of Company's strategic plan, (3) provide investors with a better understanding of how management plans and measures the business and (4) provide investors with a better understanding of our ongoing, core business. The material limitations to management's approach include the fact that the charges, benefits and expenses excluded are nonetheless charges, benefits and expenses required to be recognized under GAAP and, in some cases, consume cash which reduces the Company's liquidity. Management compensates for these limitations primarily by reviewing GAAP results to obtain a complete picture of the Company's performance and by including a reconciliation of non-GAAP results to GAAP results in its earnings releases.
Additional information regarding the economic substance of each exclusion, management's use of the resultant non-GAAP measures, the material limitations of management's approach and management's methods for compensating for such limitations is provided below.
Stock-based Compensation Expense, which consists of non-cash charges for the estimated fair value of equity awards granted to employees and directors, is excluded in order to permit more meaningful period-to-period comparisons of the Company's results since the Company grants different amounts and value of equity awards each quarter. In addition, given the fact that competitors grant different amounts and types of equity awards and may use different valuation assumptions, excluding stock-based compensation permits more accurate comparisons of the Company's core results with those of its competitors.
Restructuring, Acquisition and Integration Expenses, which consist of employee severance, lease termination costs, exit costs, environmental investigation, remediation and related employee costs and other charges primarily related to closing and consolidating manufacturing facilities and those associated with the acquisition and integration of acquired businesses, are excluded because such charges (1) can be driven by the timing of acquisitions and exit activities which are difficult to predict, (2) are not directly related to ongoing business results and (3) generally do not reflect expected future operating expenses. In addition, given the fact that the Company's competitors complete acquisitions and adopt restructuring plans at different times and in different amounts than the Company, excluding these charges or benefits permits more accurate comparisons of the Company's core results with those of its competitors. Items excluded by the Company may be different from those excluded by the Company's competitors and restructuring and integration expenses include both cash and non-cash expenses. Cash expenses reduce the Company's liquidity. Therefore, management also reviews GAAP results including these amounts.
Impairment Charges for Goodwill and Other Assets, which consist of non-cash charges, are excluded because such charges are non-recurring and do not reduce the Company's liquidity. In addition, given the fact that the Company's competitors may record impairment charges at different times, excluding these charges permits more accurate comparisons of the Company's core results with those of its competitors.
Amortization Charges, which consist of non-cash charges impacted by the timing and magnitude of acquisitions of businesses or assets, are also excluded because such charges do not reduce the Company's liquidity. In addition, such charges can be driven by the timing of acquisitions, which is difficult to predict. Excluding these charges permits more accurate comparisons of the Company's core results with those of its competitors because the Company's competitors complete acquisitions at different times and for different amounts than the Company.
Other Unusual or Infrequent Items, such as charges or benefits associated with distressed customers, expenses, charges and recoveries relating to certain legal matters, and gains and losses on sales of assets, are excluded because such items are typically non-recurring, difficult to predict or not directly related to the Company's ongoing or core operations and are therefore not considered by management in assessing the current operating performance of the Company and forecasting earnings trends. However, items excluded by the Company may be different from those excluded by the Company's competitors. In addition, these items include both cash and non-cash expenses. Cash expenses reduce the Company's liquidity. Management compensates for these limitations by reviewing GAAP results including these amounts.
Adjustments for Taxes, which consist of the tax effects of the various adjustments that we exclude from our non-GAAP measures, and adjustments related to deferred tax and discrete tax items. Including these adjustments permits more accurate comparisons of the Company's core results with those of its competitors. We determine the tax adjustments based upon the various applicable effective tax rates. In those jurisdictions in which we do not expect to realize a tax cost or benefit (due to a history of operating losses or other factors), a reduced tax rate is applied.
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