SAN JOSE, Calif., May 3, 2021 /PRNewswire/ -- Sanmina Corporation
("Sanmina" or the "Company") (NASDAQ: SANM), a leading integrated
manufacturing solutions company, today reported financial results
for the fiscal second quarter ended April 3,
2021 and outlook for its fiscal third quarter ending
July 3, 2021.
Second Quarter
Fiscal 2021 Financial Highlights
|
•
Revenue: $1.7 billion, midpoint of outlook
• GAAP
operating margin: 3.8 percent
• GAAP
diluted EPS: $0.70
•
Non-GAAP(1) operating margin: 5.0 percent
•
Non-GAAP diluted EPS: $1.01, exceeded outlook
|
|
Additional Second
Quarter Highlights
|
•
Non-GAAP pre-tax ROIC: 27.6 percent
• Cash
flow from operations: $81 million
• Free
cash flow: $67 million
• Ending
cash and cash equivalents: $575 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, deferred tax adjustments 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.
|
"We achieved solid financial results for the second fiscal
quarter, despite the challenges associated with supply chain
constraints and the typical seasonality. This performance was
driven by broad end-market demand, favorable mix and operational
execution. I commend our employees for their commitment to deliver
on our customers' expectations," stated Jure Sola, Chairman and Chief Executive Officer
of Sanmina Corporation.
"Our third quarter outlook reflects strong demand across our
customer base while taking into account our current understanding
of the supply constraints facing the industry and the COVID-19
pandemic. Our focus on fundamentals, coupled with the quality of
our customer relationships, gives us confidence in the long-term
financial prospects of our company."
Third Quarter Fiscal 2021 Outlook
The following outlook is for the third fiscal quarter ending
July 3, 2021. These statements
are forward-looking and actual results may differ
materially.
- Revenue between $1.675 billion to
$1.775 billion
- GAAP diluted earnings per share between $0.71 to $0.81
- Non-GAAP diluted earnings per share between $0.84 to $0.94
The statements above concerning our expectations for customer
demand during the third 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 and our ability to
fully staff our plants. 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 and outlook for the third quarter on
Monday, May 3, 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 4858475.
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)
|
|
|
|
April 3,
|
|
October 3,
|
|
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
ASSETS
|
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
575,176
|
|
$
480,526
|
|
Accounts receivable,
net
|
1,122,962
|
|
1,043,334
|
|
Contract
assets
|
334,957
|
|
396,583
|
|
Inventories
|
785,406
|
|
861,281
|
|
Prepaid expenses and
other current assets
|
38,584
|
|
37,718
|
|
|
Total current
assets
|
2,857,085
|
|
2,819,442
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
529,651
|
|
559,242
|
Deferred tax
assets
|
259,943
|
|
273,470
|
Other
|
|
123,550
|
|
120,502
|
|
|
Total
assets
|
$
3,770,229
|
|
$
3,772,656
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable
|
$
1,108,994
|
|
$
1,210,049
|
|
Accrued
liabilities
|
176,148
|
|
171,761
|
|
Accrued payroll and
related benefits
|
114,704
|
|
122,029
|
|
Short-term debt,
including current portion of long-term debt
|
18,750
|
|
18,750
|
|
|
Total current
liabilities
|
1,418,596
|
|
1,522,589
|
|
|
|
|
|
|
Long-term
liabilities:
|
|
|
|
|
Long-term
debt
|
320,405
|
|
329,249
|
|
Other
|
296,121
|
|
290,902
|
|
|
Total long-term
liabilities
|
616,526
|
|
620,151
|
|
|
|
|
|
|
Stockholders'
equity
|
1,735,107
|
|
1,629,916
|
|
|
Total liabilities and
stockholders' equity
|
$
3,770,229
|
|
$
3,772,656
|
Sanmina
Corporation
|
Condensed
Consolidated Statements of Income
|
(in thousands,
except per share amounts)
|
(GAAP)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
|
|
|
|
|
|
|
|
|
April 3,
|
|
March 28,
|
|
April 3,
|
|
March 28,
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
1,699,677
|
|
$
1,590,550
|
|
$
3,454,926
|
|
$
3,430,721
|
Cost of
sales
|
1,556,579
|
|
1,483,129
|
|
3,170,593
|
|
3,188,418
|
|
Gross
profit
|
143,098
|
|
107,421
|
|
284,333
|
|
242,303
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Selling, general and
administrative
|
61,142
|
|
62,257
|
|
120,109
|
|
125,408
|
|
Research and
development
|
5,353
|
|
5,767
|
|
10,158
|
|
10,967
|
|
Restructuring and
other costs
|
11,880
|
|
15,028
|
|
13,784
|
|
24,378
|
|
Total operating
expenses
|
78,375
|
|
83,052
|
|
144,051
|
|
160,753
|
|
|
|
|
|
|
|
|
|
Operating
income
|
64,723
|
|
24,369
|
|
140,282
|
|
81,550
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
244
|
|
418
|
|
474
|
|
728
|
|
Interest
expense
|
(4,880)
|
|
(6,040)
|
|
(9,834)
|
|
(11,917)
|
|
Other income
(expense), net
|
6,143
|
|
(7,660)
|
|
8,010
|
|
(6,342)
|
Interest and other,
net
|
1,507
|
|
(13,282)
|
|
(1,350)
|
|
(17,531)
|
|
|
|
|
|
|
|
|
|
Income before income
taxes
|
66,230
|
|
11,087
|
|
138,932
|
|
64,019
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
19,193
|
|
6,205
|
|
43,874
|
|
20,792
|
|
|
|
|
|
|
|
|
|
Net income
|
$
47,037
|
|
$
4,882
|
|
$
95,058
|
|
$
43,227
|
|
|
|
|
|
|
|
|
|
|
Basic income per
share
|
$
0.72
|
|
$
0.07
|
|
$
1.46
|
|
$
0.61
|
|
Diluted income per
share
|
$
0.70
|
|
$
0.07
|
|
$
1.42
|
|
$
0.60
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
shares used in computing per share amounts:
|
|
|
|
|
|
|
|
|
Basic
|
65,249
|
|
70,584
|
|
65,244
|
|
70,377
|
|
Diluted
|
66,957
|
|
72,245
|
|
66,887
|
|
72,429
|
Sanmina
Corporation
|
Reconciliation of
GAAP to Non-GAAP Measures
|
(in thousands,
except per share amounts)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
April 3,
|
|
Jan. 2,
|
|
March 28,
|
|
|
|
2021
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
|
GAAP Operating
Income
|
|
$
64,723
|
|
$
75,559
|
|
$
24,369
|
|
GAAP operating
margin
|
|
3.8%
|
|
4.3%
|
|
1.5%
|
Adjustments:
|
|
|
|
|
|
|
|
Stock compensation
expense (1)
|
|
9,224
|
|
8,209
|
|
7,783
|
|
Amortization of
intangible assets
|
|
-
|
|
-
|
|
63
|
|
Distressed customer
charges (2)
|
|
(296)
|
|
(325)
|
|
-
|
|
Legal and other
(3)
|
|
-
|
|
1,873
|
|
-
|
|
Restructuring
costs
|
|
11,880
|
|
1,904
|
|
8,356
|
|
Goodwill and other
asset impairments
|
|
-
|
|
-
|
|
6,609
|
Non-GAAP Operating
Income
|
|
$
85,531
|
|
$
87,220
|
|
$
47,180
|
|
Non-GAAP
operating margin
|
|
5.0%
|
|
5.0%
|
|
3.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Net
Income
|
|
$
47,037
|
|
$
48,021
|
|
$
4,882
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
Operating income
adjustments (see above)
|
|
20,808
|
|
11,661
|
|
22,811
|
|
Legal and other
(3)
|
|
(4,807)
|
|
-
|
|
(259)
|
|
Adjustments for taxes
(4)
|
|
4,402
|
|
8,652
|
|
(4,655)
|
Non-GAAP Net
Income
|
|
$
67,440
|
|
$
68,334
|
|
$
22,779
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Net Income
Per Share:
|
|
|
|
|
|
|
|
Basic
|
|
$
0.72
|
|
$
0.74
|
|
$
0.07
|
|
Diluted
|
|
$
0.70
|
|
$
0.72
|
|
$
0.07
|
|
|
|
|
|
|
|
|
Non-GAAP Net
Income Per Share:
|
|
|
|
|
|
|
|
Basic
|
|
$
1.03
|
|
$
1.05
|
|
$
0.32
|
|
Diluted
|
|
$
1.01
|
|
$
1.02
|
|
$
0.32
|
|
|
|
|
|
|
|
|
Weighted-average
shares used in computing per share amounts:
|
|
|
|
|
|
|
|
Basic
|
|
65,249
|
|
65,243
|
|
70,584
|
|
Diluted
|
|
66,957
|
|
66,818
|
|
72,245
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Stock compensation
expense was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
sales
|
|
$
3,629
|
|
$
3,421
|
|
$
2,582
|
|
Selling, general and
administrative
|
|
5,479
|
|
4,718
|
|
5,127
|
|
Research and
development
|
|
116
|
|
70
|
|
74
|
|
Total
|
|
$
9,224
|
|
$
8,209
|
|
$
7,783
|
|
|
|
|
|
|
|
|
(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
|
|
$
19,193
|
|
$
24,681
|
|
$
6,205
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
Tax impact of
operating income adjustments
|
|
284
|
|
280
|
|
222
|
|
Discrete tax
items
|
|
(232)
|
|
(6,451)
|
|
3,244
|
|
Deferred tax
adjustments
|
|
(4,454)
|
|
(2,481)
|
|
1,189
|
|
|
|
|
|
|
|
|
|
Subtotal -
adjustments for taxes
|
|
(4,402)
|
|
(8,652)
|
|
4,655
|
|
|
|
|
|
|
|
|
|
Non-GAAP provision
for income taxes
|
|
$
14,791
|
|
$
16,029
|
|
$
10,860
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q3 FY21 Earnings
Per Share Outlook*:
|
|
Q3 FY21 EPS
Range
|
|
|
|
|
|
Low
|
|
High
|
|
|
|
|
|
|
|
|
|
|
|
GAAP diluted earnings
per share
|
|
$
0.71
|
|
$
0.81
|
|
|
|
Stock
compensation expense
|
|
$
0.13
|
|
$
0.13
|
|
|
|
Non-GAAP diluted
earnings per share
|
|
$
0.84
|
|
$
0.94
|
|
|
|
|
|
|
|
|
|
|
* 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 third quarter of FY21, an
estimate of such items is not included in the outlook for Q3 FY21
GAAP EPS.
|
Sanmina
Corporation
|
Pre-Tax Return on
Invested Capital (ROIC)
|
(in
thousands)
|
(Unaudited)
|
|
|
|
|
|
Q2
FY21
|
|
|
|
Pre-tax Return on
Invested Capital (ROIC)
|
|
|
|
|
|
GAAP operating
income
|
|
$
64,723
|
|
x
|
4.0
|
Annualized GAAP
operating income
|
|
258,892
|
Average invested
capital (1)
|
÷
|
1,237,417
|
GAAP pre-tax
ROIC
|
|
20.9%
|
|
|
|
Non-GAAP operating
income
|
|
$
85,531
|
|
x
|
4.0
|
Annualized non-GAAP
operating income
|
|
342,124
|
Average invested
capital (1)
|
÷
|
1,237,417
|
Non-GAAP pre-tax
ROIC
|
|
27.6%
|
|
|
|
(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 Statement
|
(in
thousands)
|
(Unaudited)
|
|
|
|
|
|
Three Month
Periods
|
|
Q2'21
|
|
Q2'20
|
|
|
|
|
GAAP Net
Income
|
$ 47,037
|
|
$
4,882
|
Depreciation and
amortization
|
27,196
|
|
28,042
|
Other, net
|
19,498
|
|
16,029
|
Net change in net
working capital
|
(12,642)
|
|
86,775
|
Cash provided by
operating activities
|
81,089
|
|
135,728
|
|
|
|
|
Net purchases of
property & equipment
|
(14,349)
|
|
(16,410)
|
Cash used
in investing activities
|
(14,349)
|
|
(16,410)
|
|
|
|
|
Net share
repurchases
|
(1,502)
|
|
(64,163)
|
Net borrowing
activities
|
(4,688)
|
|
629,702
|
Cash
used in financing activities
|
(6,190)
|
|
565,539
|
|
|
|
|
Effect of exchange
rate changes
|
(1,404)
|
|
(836)
|
|
|
|
|
Net change in cash
& cash equivalents
|
$ 59,146
|
|
$ 684,021
|
|
|
|
|
Free cash
flow:
|
|
|
|
Cash
provided by operating activities
|
$ 81,089
|
|
$ 135,728
|
Net
purchases of property & equipment
|
(14,349)
|
|
(16,410)
|
|
$ 66,740
|
|
$ 119,318
|
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, deferred tax adjustments 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