SAN JOSE, Calif., April 27, 2020 /PRNewswire/ -- Sanmina
Corporation ("Sanmina" or the "Company") (NASDAQ: SANM), a leading
integrated manufacturing solutions company, today reported
financial results for the second quarter fiscal 2020 ended
March 28, 2020.
"These are unprecedented times and I am grateful to our
employees for their strength and commitment to Sanmina and our
customers, many of whom are providing essential products during
this crisis. I am most impressed by how well our leadership team
responded to these new challenges as we continue to navigate the
evolving situation on the global supply chain. The health and
safety of our employees is our top priority and we continue to take
precautionary measures," stated Hartmut
Liebel, Chief Executive Officer. "While the financial
results for our second fiscal quarter were influenced significantly
by COVID-19, I am pleased to report we were still able to generate
$119 million of free cash flow and
maintain a strong balance sheet with over $1.1 billion in cash."
(In thousands,
except per share data)
|
Q2:FY20
|
Q1:FY20
|
Q2:FY19
|
Revenue
|
$1,590,550
|
$1,840,171
|
$2,126,639
|
GAAP:
|
|
|
|
Operating
income
|
$24,369
|
$57,181
|
$78,115
|
Operating
margin
|
1.5%
|
3.1%
|
3.7%
|
Net income
|
$4,882
|
$38,345
|
$40,885
|
Diluted earnings per
share
|
$0.07
|
$0.53
|
$0.57
|
Non-GAAP:(1)
|
|
|
|
Operating
income
|
$47,180
|
$73,437
|
$87,388
|
Operating
margin
|
3.0%
|
4.0%
|
4.1%
|
Net income
|
$22,779
|
$57,426
|
$65,046
|
Diluted earnings per
share
|
$0.32
|
$0.79
|
$0.91
|
|
(1)Non-GAAP financial measures
exclude charges or gains relating to: stock-based compensation
expenses; restructuring costs (including employee severance and
benefits costs and charges related to excess facilities and
assets); acquisition and integration costs (consisting of costs
associated with the acquisition and integration of acquired
businesses into our operations); impairment charges for goodwill
and other assets; amortization expense; and other unusual or
infrequent items (e.g. charges or benefits associated with
distressed customers, litigation settlements or recoveries, gains
and losses on sales of assets and redemptions of debt, deferred tax
and discrete tax items). See Schedule 1 below
for more information regarding our use of non-GAAP financial
measures, including th economic substance behind each exclusion,
the manner in which management uses non-GAAP measures to conduct
and evaluate the business, the material limitations associated with
using such measures and the manner in which management compensates
for such limitations. A reconciliation of the non-GAAP results
contained in this release to their most directly comparable GAAP
measures is included in the financial statements furnished with
this release.
|
Balance Sheet and Cash Flow
- Ending cash and cash equivalents: $1.1 billion, including $650 million of borrowings on our cash flow
revolver as of the end of the quarter
- Cash flow from operations: $136
million
- Free cash flow: $119
million
- Repurchased 2.4 million shares for approximately
$61 million
"Our strong balance sheet, continued focus on controlling our
costs, generating cash, and our unwavering support for our
customers providing innovative technologies and solutions gives me
confidence that we are ready and well positioned for the
recovery," concluded Liebel.
Third Quarter Fiscal 2020 Outlook
The following
outlook is for the third fiscal quarter ended June 27, 2020. These statements are
forward-looking and actual results may differ materially.
- Revenue between $1.50 billion
to $1.60 billion
- GAAP diluted earnings per share between $0.18 to $0.28
- Non-GAAP diluted earnings per share between $0.30 to $0.40
The outlook above constitutes 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, mostly notably the ongoing impacts of the
COVID-19 pandemic which have reduced and are expected to continue
to reduce demand from our customers, interrupt the flow of
components needed for our customers' products, restrict the types
of products we can build for our customers and create health risks
to our employees. Other factors that could cause our results to
differ from our outlook include 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; and the other factors set forth
in the Company's annual and quarterly reports filed with the
Securities Exchange Commission ("SEC").
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 second quarter on Monday, April 27,
2020 at 5:00 p.m. ET
(2:00 p.m. PT). The access
numbers are: domestic 866-891-4420 and international
201-383-2868. The conference will also be webcast live over
the Internet. You can log on to the live webcast at
www.sanmina.com. 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
855-859-2056 and international 404-537-3406, access code is
8567975.
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
communications networks, cloud solutions, industrial, defense,
medical and automotive. Sanmina has facilities strategically
located in key regions throughout the world. More information about
the Company is available at www.sanmina.com.
Sanmina
Corporation
|
Condensed
Consolidated Balance Sheets
|
(in
thousands)
|
(GAAP)
|
|
|
|
March 28,
|
|
September
28,
|
|
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
ASSETS
|
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
1,114,585
|
|
$
454,741
|
|
Accounts receivable,
net
|
918,582
|
|
1,128,379
|
|
Contract
assets
|
407,284
|
|
396,300
|
|
Inventories
|
883,727
|
|
900,557
|
|
Prepaid expenses and
other current assets
|
39,121
|
|
40,952
|
|
|
Total current
assets
|
3,363,299
|
|
2,920,929
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
591,738
|
|
630,647
|
Deferred tax
assets
|
285,244
|
|
279,803
|
Other
|
119,904
|
|
74,134
|
|
|
Total
assets
|
$
4,360,185
|
|
$
3,905,513
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable
|
$
1,126,997
|
|
$
1,336,914
|
|
Accrued
liabilities
|
225,330
|
|
180,107
|
|
Accrued payroll and
related benefits
|
105,312
|
|
127,647
|
|
Short-term debt,
including current portion of long-term debt
|
673,437
|
|
38,354
|
|
|
Total current
liabilities
|
2,131,076
|
|
1,683,022
|
|
|
|
|
|
|
Long-term
liabilities:
|
|
|
|
|
Long-term
debt
|
338,105
|
|
346,971
|
|
Other
|
273,255
|
|
232,947
|
|
|
Total long-term
liabilities
|
611,360
|
|
579,918
|
|
|
|
|
|
|
Stockholders'
equity
|
1,617,749
|
|
1,642,573
|
|
|
Total liabilities and
stockholders' equity
|
$
4,360,185
|
|
$
3,905,513
|
Sanmina
Corporation
|
Condensed
Consolidated Statements of Income
|
(in thousands,
except per share amounts)
|
(GAAP)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
March 28,
|
|
March 30,
|
|
March 28,
|
|
March 30,
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
1,590,550
|
|
$2,126,639
|
|
$
3,430,721
|
|
$
4,314,657
|
Cost of
sales
|
1,483,129
|
|
1,973,537
|
|
3,188,418
|
|
4,012,218
|
|
Gross
profit
|
107,421
|
|
153,102
|
|
242,303
|
|
302,439
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Selling, general and
administrative
|
62,257
|
|
64,186
|
|
125,408
|
|
127,214
|
|
Research and
development
|
5,767
|
|
7,599
|
|
10,967
|
|
14,036
|
|
Restructuring and
other costs
|
15,028
|
|
3,202
|
|
24,378
|
|
5,531
|
|
Total operating
expenses
|
83,052
|
|
74,987
|
|
160,753
|
|
146,781
|
|
|
|
|
|
|
|
|
|
Operating
income
|
24,369
|
|
78,115
|
|
81,550
|
|
155,658
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
418
|
|
364
|
|
728
|
|
558
|
|
Interest
expense
|
(6,040)
|
|
(8,472)
|
|
(11,917)
|
|
(16,743)
|
|
Other expense,
net
|
(7,660)
|
|
(891)
|
|
(6,342)
|
|
(6,885)
|
Interest and other,
net
|
(13,282)
|
|
(8,999)
|
|
(17,531)
|
|
(23,070)
|
|
|
|
|
|
|
|
|
Income before income
taxes
|
11,087
|
|
69,116
|
|
64,019
|
|
132,588
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
6,205
|
|
28,231
|
|
20,792
|
|
53,751
|
|
|
|
|
|
|
|
|
Net income
|
$
4,882
|
|
$
40,885
|
|
$
43,227
|
|
$
78,837
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic income per
share
|
$
0.07
|
|
$
0.59
|
|
$
0.61
|
|
$
1.15
|
|
Diluted income per
share
|
$
0.07
|
|
$
0.57
|
|
$
0.60
|
|
$
1.11
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
shares used in
|
|
|
|
|
|
|
|
|
computing per share
amounts:
|
|
|
|
|
|
|
|
|
Basic
|
70,584
|
|
68,821
|
|
70,377
|
|
68,556
|
|
Diluted
|
72,245
|
|
71,446
|
|
72,429
|
|
71,162
|
Sanmina
Corporation
|
Reconciliation of
GAAP to Non-GAAP Measures
|
(in thousands,
except per share amounts)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
March 28,
|
|
Dec. 28,
|
|
March 30,
|
|
|
2020
|
|
2019
|
|
2019
|
|
|
|
|
|
|
|
GAAP Operating
Income
|
$
24,369
|
|
$
57,181
|
|
$
78,115
|
|
GAAP operating
margin
|
1.5%
|
|
3.1%
|
|
3.7%
|
Adjustments:
|
|
|
|
|
|
|
Stock compensation
expense (1)
|
7,783
|
|
6,906
|
|
6,626
|
|
Amortization of
intangible assets
|
63
|
|
190
|
|
190
|
|
Distressed customer
charges (2)
|
-
|
|
-
|
|
(555)
|
|
Restructuring
costs
|
8,356
|
|
9,160
|
|
3,012
|
|
Goodwill and other
asset impairments
|
6,609
|
|
-
|
|
-
|
Non-GAAP Operating
Income
|
$
47,180
|
|
$
73,437
|
|
$
87,388
|
|
Non-GAAP
operating margin
|
3.0%
|
|
4.0%
|
|
4.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Net
Income
|
$
4,882
|
|
$
38,345
|
|
$
40,885
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
Operating income
adjustments (see above)
|
22,811
|
|
16,256
|
|
9,273
|
|
Litigation
settlements (3)
|
(259)
|
|
-
|
|
-
|
|
Adjustments for taxes
(4)
|
(4,655)
|
|
2,825
|
|
14,888
|
Non-GAAP Net
Income
|
$
22,779
|
|
$
57,426
|
|
$
65,046
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Net Income
Per Share:
|
|
|
|
|
|
|
Basic
|
$
0.07
|
|
$
0.55
|
|
$
0.59
|
|
Diluted
|
$
0.07
|
|
$
0.53
|
|
$
0.57
|
|
|
|
|
|
|
|
Non-GAAP Net
Income Per Share:
|
|
|
|
|
|
|
Basic
|
$
0.32
|
|
$
0.82
|
|
$
0.95
|
|
Diluted
|
$
0.32
|
|
$
0.79
|
|
$
0.91
|
|
|
|
|
|
|
|
Weighted-average
shares used in computing per share amounts:
|
|
|
|
|
|
|
Basic
|
70,584
|
|
70,178
|
|
68,821
|
|
Diluted
|
72,245
|
|
72,598
|
|
71,446
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Stock compensation
expense was as follows:
|
|
|
|
|
|
|
|
|
Cost of
sales
|
$
2,582
|
|
$
2,912
|
|
$
2,582
|
|
Selling, general and
administrative
|
5,127
|
|
3,925
|
|
3,939
|
|
Research and
development
|
74
|
|
69
|
|
105
|
|
Total
|
$
7,783
|
|
$
6,906
|
|
$
6,626
|
|
|
|
|
|
|
|
(2)
|
Relates to recovery
of previously written-off inventory and bad debt associated with
distressed customers.
|
|
|
|
|
|
|
|
(3)
|
Represents cash
received in connection with certain litigation
settlements.
|
|
|
|
|
|
|
|
(4)
|
GAAP provision for
income taxes
|
$
6,205
|
|
$
14,587
|
|
$
28,231
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
Tax impact of
operating income adjustments
|
222
|
|
391
|
|
189
|
|
Discrete tax
items
|
3,244
|
|
(2,526)
|
|
(3,741)
|
|
Deferred tax
adjustments
|
1,189
|
|
(690)
|
|
(11,336)
|
|
|
|
|
|
|
|
|
Subtotal -
adjustments for taxes
|
4,655
|
|
(2,825)
|
|
(14,888)
|
|
|
|
|
|
|
|
|
Non-GAAP provision
for income taxes
|
$
10,860
|
|
$
11,762
|
|
$
13,343
|
|
|
|
|
|
|
|
Q3 FY20 Earnings
Per Share Outlook*:
|
Q3 FY20 EPS
Range
|
|
|
|
|
Low
|
|
High
|
|
|
|
|
|
|
|
|
|
|
GAAP diluted earnings
per share
|
$
0.18
|
|
$
0.28
|
|
|
|
Stock
compensation expense
|
$
0.12
|
|
$
0.12
|
|
|
|
Non-GAAP diluted
earnings per share
|
$
0.30
|
|
$
0.40
|
|
|
|
* Due to uncertainty
regarding the timing of recognition of restructuring charges that
will be incurred during fiscal 2020 in connection with the
Company's rightsizing plan, an estimate of restructuring charges is
not included in the outlook for Q3 FY20 GAAP EPS.
|
Schedule 1
The commentary and financial information above includes non-GAAP
measures of operating income, operating margin, net income and
diluted 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 stock options and
unvested restricted stock units granted to employees, 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 stock options in 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 severance, lease termination costs, exit 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) 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, 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, litigation
settlements or recoveries, gains and losses on sales of assets and
redemptions of debt, deferred tax and discrete tax items, 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 excluded 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 may 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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SOURCE Sanmina Corporation