SAN JOSE, Calif., April 29, 2019 /PRNewswire/ -- Sanmina
Corporation ("Sanmina" or the "Company") (NASDAQ: SANM), a leading
integrated manufacturing solutions company, today reported
financial results for the second quarter fiscal 2019 ended
March 30, 2019.
"We exceeded our expectations for the quarter. Revenue was
stronger than anticipated driven by our teams' excellent job in
securing supply to catch up to demand. Our ability to control
our costs, drive efficiencies and leverage our operating model
drove operating margins to 4.1 percent. Non-GAAP EPS of
$0.91 was up 9 percent sequentially
and 81 percent over the second quarter of fiscal 2018. Cash
flow from operations was $105.7
million as our team made positive strides in reducing our
inventory levels. I am extremely pleased with the hard
work and execution by our team in meeting our customers'
requirements," stated Michael
Clarke, Chief Executive Officer.
(In thousands,
except per share data)
|
Q2:2019
|
|
Q1:2019
|
|
Q2:2018
|
|
|
Revenue
|
$2,126,639
|
|
$2,188,018
|
|
$1,675,629
|
|
|
GAAP:
|
|
|
|
|
|
|
|
Operating
income
|
$78,115
|
|
$77,543
|
|
$48,774
|
|
|
Operating
margin
|
3.7%
|
|
3.5%
|
|
2.9%
|
|
|
Net income
|
$40,885
|
|
$37,952
|
|
$24,632
|
|
|
Diluted earnings per
share
|
$0.57
|
|
$0.54
|
|
$0.33
|
|
|
Non-GAAP:(1)
|
|
|
|
|
|
|
|
Operating
income
|
$87,388
|
|
$85,790
|
|
$52,127
|
|
|
Operating
margin
|
4.1%
|
|
3.9%
|
|
3.1%
|
|
|
Net income
|
$65,046
|
|
$59,168
|
|
$36,986
|
|
|
Diluted earnings per
share
|
$0.91
|
|
$0.83
|
|
$0.50
|
|
|
|
|
(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
charges associated with distressed customers, litigation
settlements, gains and losses on sales of assets and redemptions of
debt, deferred tax and discrete tax items, all to the extent
material in the applicable period. 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 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: $405.5 million
- Cash flow from operations: $105.7
million
"Our strong results over the first six months of fiscal 2019 are
a testament to our teams' ability to provide value to our customers
through our technical capabilities, market expertise and
operational excellence. We remain confident in our ability to
drive profitable growth and positive cash flow from operations over
the remainder of fiscal 2019," added Mr. Clarke.
Third Quarter Fiscal 2019 Outlook
The following
outlook is for the third fiscal quarter ending June 29, 2019. These statements are
forward-looking and actual results may differ materially.
- Revenue between $1.925 billion
to $2.025 billion
- GAAP diluted earnings per share between $0.60 to $0.70
- Non-GAAP diluted earnings per share between $0.72 to $0.82
Company Conference Call Information
Sanmina will hold
a conference call to review its financial results for the second
quarter on Monday, April 29, 2019 at
5:00 p.m. ET (2:00 p.m. PT). The access numbers are:
domestic 877-273-6760 and international 706-634-6605. 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 2839978.
About Sanmina
Sanmina Corporation 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 Safe Harbor Statement
Certain statements
contained in this press release, including the Company's outlook
for the third quarter fiscal 2019 results and expectations for the
remainder of fiscal 2019, 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; 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.
Sanmina
Corporation
|
Condensed
Consolidated Balance Sheets
|
(in
thousands)
|
(GAAP)
|
|
|
|
March 30,
|
|
September
29,
|
|
|
|
2019
|
|
2018
|
|
|
|
(Unaudited)
|
ASSETS
|
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
405,494
|
|
$
419,528
|
|
Accounts receivable,
net
|
1,312,887
|
|
1,177,219
|
|
Contract
assets
|
401,705
|
|
-
|
|
Inventories
|
1,006,548
|
|
1,374,004
|
|
Prepaid expenses and
other current assets
|
48,454
|
|
43,676
|
|
|
Total current
assets
|
3,175,088
|
|
3,014,427
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
639,901
|
|
642,913
|
Deferred tax
assets
|
312,081
|
|
344,124
|
Other
|
|
79,617
|
|
83,669
|
|
|
Total
assets
|
$
4,206,687
|
|
$
4,085,133
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable
|
$
1,439,397
|
|
$
1,547,399
|
|
Accrued
liabilities
|
208,839
|
|
136,427
|
|
Accrued payroll and
related benefits
|
126,932
|
|
124,748
|
|
Short-term debt,
including current portion of long-term debt
|
643,360
|
|
593,321
|
|
|
Total current
liabilities
|
2,418,528
|
|
2,401,895
|
|
|
|
|
|
|
Long-term
liabilities:
|
|
|
|
|
Long-term
debt
|
-
|
|
14,346
|
|
Other
|
207,440
|
|
196,048
|
|
|
Total long-term
liabilities
|
207,440
|
|
210,394
|
|
|
|
|
|
|
Stockholders'
equity
|
1,580,719
|
|
1,472,844
|
|
|
Total liabilities and
stockholders' equity
|
$
4,206,687
|
|
$
4,085,133
|
Sanmina
Corporation
|
Condensed
Consolidated Statements of Income
|
(in thousands,
except per share amounts)
|
(GAAP)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
March 30,
|
|
March 31,
|
|
March 30,
|
|
March 31,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
2,126,639
|
|
$
1,675,629
|
|
$
4,314,657
|
|
$
3,420,429
|
Cost of
sales
|
1,973,537
|
|
1,560,931
|
|
4,012,218
|
|
3,196,265
|
|
Gross
profit
|
153,102
|
|
114,698
|
|
302,439
|
|
224,164
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Selling, general and
administrative
|
64,186
|
|
65,384
|
|
127,214
|
|
128,987
|
|
Research and
development
|
7,599
|
|
8,221
|
|
14,036
|
|
15,836
|
|
Restructuring and
other costs
|
3,202
|
|
(7,681)
|
|
5,531
|
|
16,779
|
|
Total operating
expenses
|
74,987
|
|
65,924
|
|
146,781
|
|
161,602
|
|
|
|
|
|
|
|
|
|
Operating
income
|
78,115
|
|
48,774
|
|
155,658
|
|
62,562
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
364
|
|
287
|
|
558
|
|
572
|
|
Interest
expense
|
(8,472)
|
|
(6,826)
|
|
(16,743)
|
|
(13,040)
|
|
Other income
(expense), net
|
(891)
|
|
(483)
|
|
(6,885)
|
|
2,747
|
Interest and other,
net
|
(8,999)
|
|
(7,022)
|
|
(23,070)
|
|
(9,721)
|
|
|
|
|
|
|
|
|
|
Income before income
taxes
|
69,116
|
|
41,752
|
|
132,588
|
|
52,841
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
28,231
|
|
17,120
|
|
53,751
|
|
183,119
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
40,885
|
|
$
24,632
|
|
$
78,837
|
|
$
(130,278)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic income (loss)
per share
|
$
0.59
|
|
$
0.35
|
|
$
1.15
|
|
$
(1.83)
|
|
Diluted income (loss)
per share
|
$
0.57
|
|
$
0.33
|
|
$
1.11
|
|
$
(1.83)
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
shares used in computing per share amounts:
|
|
|
|
|
|
|
|
|
Basic
|
68,821
|
|
70,441
|
|
68,556
|
|
71,096
|
|
Diluted
|
71,446
|
|
73,582
|
|
71,162
|
|
71,096
|
Sanmina
Corporation
|
Reconciliation of
GAAP to Non-GAAP Measures
|
(in thousands,
except per share amounts)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
March 30,
|
|
Dec. 29,
|
|
March 31,
|
|
|
2019
|
|
2018
|
|
2018
|
|
|
|
|
|
|
|
GAAP Operating
Income
|
$
78,115
|
|
$
77,543
|
|
$
48,774
|
|
GAAP operating
margin
|
3.7%
|
|
3.5%
|
|
2.9%
|
Adjustments:
|
|
|
|
|
|
|
Stock compensation
expense (1)
|
6,626
|
|
5,816
|
|
10,295
|
|
Amortization of
intangible assets
|
190
|
|
636
|
|
1,812
|
|
Distressed customer
charges (2)
|
(555)
|
|
(344)
|
|
(163)
|
|
Restructuring
costs
|
3,012
|
|
2,139
|
|
(8,591)
|
Non-GAAP Operating
Income
|
$
87,388
|
|
$
85,790
|
|
$
52,127
|
|
Non-GAAP
operating margin
|
4.1%
|
|
3.9%
|
|
3.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Net
Income
|
$
40,885
|
|
$
37,952
|
|
$
24,632
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
Operating income
adjustments (see above)
|
9,273
|
|
8,247
|
|
3,353
|
|
Adjustments for taxes
(3)
|
14,888
|
|
12,969
|
|
9,001
|
Non-GAAP Net
Income
|
$
65,046
|
|
$
59,168
|
|
$
36,986
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Net Income
Per Share:
|
|
|
|
|
|
|
Basic
|
$
0.59
|
|
$
0.56
|
|
$
0.35
|
|
Diluted
|
$
0.57
|
|
$
0.54
|
|
$
0.33
|
|
|
|
|
|
|
|
Non-GAAP Net
Income Per Share:
|
|
|
|
|
|
|
Basic
|
$
0.95
|
|
$
0.87
|
|
$
0.53
|
|
Diluted
|
$
0.91
|
|
$
0.83
|
|
$
0.50
|
|
|
|
|
|
|
|
Weighted-average
shares used in computing per share amounts:
|
|
|
|
|
|
|
Basic
|
68,821
|
|
68,303
|
|
70,441
|
|
Diluted
|
71,446
|
|
70,901
|
|
73,582
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Stock compensation
expense was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
sales
|
$
2,582
|
|
$
1,735
|
|
$
1,851
|
|
Selling, general and
administrative
|
3,939
|
|
3,990
|
|
8,388
|
|
Research and
development
|
105
|
|
91
|
|
56
|
|
Total
|
$
6,626
|
|
$
5,816
|
|
$
10,295
|
|
|
|
|
|
|
|
(2)
|
Relates to recovery
of previously written-off inventory and bad debt associated with
distressed customers.
|
|
|
|
|
|
|
|
(3)
|
GAAP provision for
income taxes
|
$
28,231
|
|
$
25,520
|
|
$
17,120
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
Tax impact of
operating income adjustments
|
189
|
|
168
|
|
125
|
|
Discrete tax
items
|
(3,741)
|
|
2,127
|
|
(2,552)
|
|
Other deferred
tax adjustments
|
(11,336)
|
|
(15,264)
|
|
(6,574)
|
|
|
|
|
|
|
|
|
Subtotal -
adjustments for taxes
|
(14,888)
|
|
(12,969)
|
|
(9,001)
|
|
|
|
|
|
|
|
|
Non-GAAP provision
for income taxes
|
$
13,343
|
|
$
12,551
|
|
$
8,119
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q3 FY19 Earnings
Per Share Outlook:
|
Q3 FY19 EPS
Range
|
|
|
|
|
Low
|
|
High
|
|
|
|
|
|
|
|
|
|
|
GAAP diluted earnings
per share
|
$
0.60
|
|
$
0.70
|
|
|
|
Stock
compensation expense
|
$
0.12
|
|
$
0.12
|
|
|
|
Non-GAAP diluted
earnings per share
|
$
0.72
|
|
$
0.82
|
|
|
Schedule I
The commentary and financial information above includes 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 infrequent items, as adjusted for taxes, to the extent
material or which we consider to be of a non-operational nature in
the applicable period, and as more fully described below.
Management excludes these items principally because such charges
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 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 the ongoing, core business. The material
limitations to management's approach include the fact that the
charges and expenses excluded are nonetheless charges 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 back to GAAP 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
award and may use different option 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, 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 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 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 Infrequent Items, which consist of other infrequent
or unusual items (including charges associated with distressed
customers, litigation settlements and gains and losses on sales of
assets and redemptions of debt), to the extent material or
non-operational in nature, are excluded because such items are
typically non-recurring, difficult to predict or not directly
related to the Company's ongoing core operations. However, items
excluded by the Company may be different from those excluded by the
Company's competitors. In addition, these expenses 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 include in 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 where 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