SAN JOSE, Calif., Feb. 2, 2021 /PRNewswire/ -- Sanmina Corporation
("Sanmina" or the "Company") (NASDAQ: SANM), a leading integrated
manufacturing solutions company, today reported financial results
for the fiscal first quarter ended January
2, 2021 and outlook for the fiscal second quarter ending
April 3, 2021.
First Quarter
Fiscal 2021 Financial Highlights
|
• Revenue:
$1.76 billion, exceeded midpoint of outlook
• GAAP
operating margin: 4.3 percent
• GAAP diluted
EPS: $0.72
•
Non-GAAP(1) operating margin: 5.0 percent
• Non-GAAP
diluted EPS: $1.02, exceeded outlook
|
|
Additional
Highlights
|
• Non-GAAP
pre-tax ROIC: 28.4 percent
• Cash flow
from operations: $62 million
• Free cash
flow: $51 million • Shares repurchased: approximately 384,000 for
$9.4 million
• Ending cash
and cash equivalents: $516 million
|
|
|
(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, expenses, charges and
recoveries relating to certain legal matters, 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 the
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 financial information
contained in this release to their most directly comparable GAAP
measures is included in the financial statements furnished with
this release.
|
"Fiscal 2021 is off to a good start. Our continued focus on
driving operational efficiencies and ability to provide increased
value to our customers are evident in our solid financial results
for the quarter," stated Jure Sola,
Chairman and Chief Executive Officer of Sanmina
Corporation.
"Our outlook for the second quarter reflects relatively stable
demand across our customer base and takes into account typical
seasonality. We remain focused on new and innovative
solutions for our customers and growth opportunities that support
our long-term financial objectives. As we look ahead, we are
committed to executing our growth strategy and delivering greater
value to our shareholders."
Second Quarter Fiscal 2021 Outlook
The following
outlook is for the first fiscal quarter ending April 3, 2021. These statements are
forward-looking and actual results may differ materially.
- Revenue between $1.65 billion to
$1.75 billion
- GAAP diluted earnings per share between $0.63 to $0.73
- Non-GAAP diluted earnings per share between $0.76 to $0.86
The statements above concerning our expectations for customer
demand during the second quarter and financial outlook 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, mostly notably
the ongoing impacts of the COVID-19 pandemic, which have reduced
demand from our customers, caused supply chain interruptions and
created health risks for our employees and which could result in
restrictions on where we can build products, the levels of staffing
at our plants and the types of products we can build for our
customers. 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 first
quarter on Tuesday, February 2, 2021
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 1461469.
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)
|
|
|
|
|
|
|
January 2,
|
|
October 3,
|
|
|
|
|
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
$
516,030
|
|
$
480,526
|
|
Accounts receivable,
net
|
|
|
1,108,472
|
|
1,043,334
|
|
Contract
assets
|
|
|
350,049
|
|
396,583
|
|
Inventories
|
|
|
|
819,474
|
|
861,281
|
|
Prepaid expenses and
other current assets
|
|
48,851
|
|
37,718
|
|
Total current
assets
|
|
|
2,842,876
|
|
2,819,442
|
|
|
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
|
541,188
|
|
559,242
|
Deferred tax
assets
|
|
|
269,803
|
|
273,470
|
Other
|
|
|
|
|
125,867
|
|
120,502
|
|
Total assets
|
|
|
$
3,779,734
|
|
$
3,772,656
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
Accounts
payable
|
|
|
$
1,143,431
|
|
$
1,210,049
|
|
Accrued
liabilities
|
|
|
190,797
|
|
171,761
|
|
Accrued payroll and
related benefits
|
|
120,469
|
|
122,029
|
|
Short-term debt,
including current portion of long-term debt
|
18,750
|
|
18,750
|
|
Total current
liabilities
|
|
|
1,473,447
|
|
1,522,589
|
|
|
|
|
|
|
|
|
|
Long-term
liabilities:
|
|
|
|
|
|
|
Long-term
debt
|
|
|
324,825
|
|
329,249
|
|
Other
|
|
|
|
303,514
|
|
290,902
|
|
Total long-term
liabilities
|
|
|
628,339
|
|
620,151
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity
|
|
|
1,677,948
|
|
1,629,916
|
|
Total liabilities and
stockholders' equity
|
|
$
3,779,734
|
|
$
3,772,656
|
Sanmina
Corporation
|
Condensed
Consolidated Statements of Income
|
(in thousands,
except per share amounts)
|
(GAAP)
|
(Unaudited)
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
|
|
|
Jan. 2,
|
|
Dec. 28,
|
|
|
2021
|
|
2019
|
|
|
|
|
|
Net sales
|
$
1,755,249
|
|
$
1,840,171
|
Cost of
sales
|
1,614,014
|
|
1,705,289
|
|
Gross
profit
|
141,235
|
|
134,882
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
Selling, general and
administrative
|
58,967
|
|
63,151
|
|
Research and
development
|
4,805
|
|
5,200
|
|
Restructuring and
other costs
|
1,904
|
|
9,350
|
|
Total operating
expenses
|
65,676
|
|
77,701
|
|
|
|
|
|
Operating
income
|
75,559
|
|
57,181
|
|
|
|
|
|
|
Interest
income
|
230
|
|
310
|
|
Interest
expense
|
(4,954)
|
|
(5,877)
|
|
Other income,
net
|
1,867
|
|
1,318
|
Interest and other,
net
|
(2,857)
|
|
(4,249)
|
|
|
|
|
|
Income before income
taxes
|
72,702
|
|
52,932
|
|
|
|
|
|
Provision for income
taxes
|
24,681
|
|
14,587
|
|
|
|
|
|
Net income
|
$
48,021
|
|
$
38,345
|
|
|
|
|
|
|
|
|
|
|
|
Basic income per
share
|
$
0.74
|
|
$
0.55
|
|
Diluted income per
share
|
$
0.72
|
|
$
0.53
|
|
|
|
|
|
|
Weighted-average
shares used in
|
|
|
|
|
computing per share
amounts:
|
|
|
|
|
Basic
|
65,243
|
|
70,178
|
|
Diluted
|
66,818
|
|
72,598
|
Sanmina
Corporation
|
Reconciliation of
GAAP to Non-GAAP Measures
|
(in thousands,
except per share amounts)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
Jan. 2,
|
|
Dec. 28,
|
|
|
|
2021
|
|
2019
|
|
|
|
|
|
|
GAAP Operating
Income
|
|
$
75,559
|
|
$
57,181
|
|
GAAP operating
margin
|
|
4.3%
|
|
3.1%
|
Adjustments:
|
|
|
|
|
|
Stock compensation
expense (1)
|
|
8,209
|
|
6,906
|
|
Amortization of
intangible assets
|
|
-
|
|
190
|
|
Distressed customer
charges (2)
|
|
(325)
|
|
-
|
|
Legal and other
(3)
|
|
1,873
|
|
-
|
|
Restructuring
costs
|
|
1,904
|
|
9,160
|
|
Gain on sales of
long-lived assets
|
|
-
|
|
-
|
Non-GAAP Operating
Income
|
|
$
87,220
|
|
$
73,437
|
|
Non-GAAP
operating margin
|
|
5.0%
|
|
4.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Net
Income
|
|
$
48,021
|
|
$
38,345
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
Operating income
adjustments (see above)
|
|
11,661
|
|
16,256
|
|
Legal and other
(3)
|
|
-
|
|
-
|
|
Adjustments for taxes
(4)
|
|
8,652
|
|
2,825
|
Non-GAAP Net
Income
|
|
$
68,334
|
|
$
57,426
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Net Income
Per Share:
|
|
|
|
|
|
Basic
|
|
$
0.74
|
|
$
0.55
|
|
Diluted
|
|
$
0.72
|
|
$
0.53
|
|
|
|
|
|
|
Non-GAAP Net
Income Per Share:
|
|
|
|
|
|
Basic
|
|
$
1.05
|
|
$
0.82
|
|
Diluted
|
|
$
1.02
|
|
$
0.79
|
|
|
|
|
|
|
Weighted-average
shares used in computing per
share amounts:
|
|
|
|
|
|
Basic
|
|
65,243
|
|
70,178
|
|
Diluted
|
|
66,818
|
|
72,598
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Stock compensation
expense was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
sales
|
|
$
3,421
|
|
$
2,912
|
|
Selling, general and
administrative
|
|
4,718
|
|
3,925
|
|
Research and
development
|
|
70
|
|
69
|
|
Total
|
|
$
8,209
|
|
$
6,906
|
|
|
|
|
|
|
(2)
|
Relates to accounts
receivable and inventory write-downs (recoveries) associated
with distressed customers.
|
|
|
|
|
|
|
(3)
|
Represents expenses,
charges and recoveries associated with certain legal
matters.
|
|
|
|
|
|
|
(4)
|
GAAP provision for
income taxes
|
|
$
24,681
|
|
$
14,587
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
Tax impact of
operating income adjustments
|
|
280
|
|
391
|
|
Discrete tax
items
|
|
(6,451)
|
|
(2,526)
|
|
Deferred tax
adjustments
|
|
(2,481)
|
|
(690)
|
|
|
|
|
|
|
|
Subtotal -
adjustments for taxes
|
|
(8,652)
|
|
(2,825)
|
|
|
|
|
|
|
|
Non-GAAP provision
for income taxes
|
|
$
16,029
|
|
$
11,762
|
|
|
|
|
|
|
|
|
|
|
|
|
Q2 FY21 Earnings
Per Share Outlook*:
|
|
Q2 FY21 EPS
Range
|
|
|
|
Low
|
|
High
|
|
|
|
|
|
|
|
GAAP diluted earnings
per share
|
|
$
0.63
|
|
$
0.73
|
|
Stock
compensation expense
|
|
$
0.13
|
|
$
0.13
|
|
Non-GAAP diluted
earnings per share
|
|
$
0.76
|
|
$
0.86
|
|
|
|
|
|
|
* 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 second
quarter of FY21, an estimate of such items is not included in the
outlook for Q2 FY21 GAAP EPS.
|
Sanmina
Corporation
|
Pre-Tax Return on
Invested Capital (ROIC)
|
(in
thousands)
|
|
|
|
Q1
FY21
|
|
|
|
Pre-tax Return on
Invested Capital (ROIC)
|
|
|
|
|
|
GAAP operating
income
|
|
$
75,559
|
|
x
|
4.0
|
Annualized GAAP
operating income
|
|
302,236
|
Average invested
capital (1)
|
÷
|
1,229,805
|
GAAP pre-tax
ROIC
|
|
24.6%
|
|
|
|
Non-GAAP operating
income
|
|
$
87,220
|
|
x
|
4.0
|
Annualized non-GAAP
operating income
|
|
348,880
|
Average invested
capital (1)
|
÷
|
1,229,805
|
Non-GAAP pre-tax
ROIC
|
|
28.4%
|
|
|
|
(1) Invested capital
is defined as total assets (not including cash and cash
equivalents
and deferred tax assets) less total liabilities (excluding
short-term and long-term debt).
|
Sanmina
Corporation
|
Condensed
Consolidated Cash Flow
|
(in
thousands)
|
(Unaudited)
|
|
|
Three Month
Periods
|
|
Q1'21
|
|
Q1'20
|
|
|
|
|
GAAP Net
Income
|
$
48,021
|
|
$
38,345
|
Depreciation and
amortization
|
27,635
|
|
28,735
|
Other, net
|
11,556
|
|
9,589
|
Net change in net
working capital
|
(25,401)
|
|
(55,498)
|
Cash provided by
operating activities
|
61,811
|
|
21,171
|
|
|
|
|
Sales of short-term
investments
|
-
|
|
-
|
Purchases of
long-term investments
|
-
|
|
-
|
Net purchases of
property & equipment
|
(11,191)
|
|
(28,046)
|
Cash used
in investing activities
|
(11,191)
|
|
(28,046)
|
|
|
|
|
Net share
repurchases
|
(11,472)
|
|
(12,698)
|
Net borrowing
activities
|
(4,688)
|
|
(4,688)
|
Cash
used in financing activities
|
(16,160)
|
|
(17,386)
|
|
|
|
|
Effect of exchange
rate changes
|
1,044
|
|
84
|
|
|
|
|
Net change in cash
& cash equivalents
|
$
35,504
|
|
$
(24,177)
|
|
|
|
|
Free cash
flow:
|
|
|
|
Cash
provided by operating activities
|
$
61,811
|
|
$
21,171
|
Net
purchases of property & equipment
|
(11,191)
|
|
(28,046)
|
|
$
50,620
|
|
$
(6,875)
|
Schedule 1
The statements above and financial information provided in this
earnings release include non-GAAP measures of operating income,
operating margin, net income, diluted earnings per share and
pre-tax return on invested capital (ROIC). 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 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, expenses, charges
and recoveries relating to certain legal matters, 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 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 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