SAN JOSE, Calif., Jan. 29, 2018 /PRNewswire/ -- Sanmina
Corporation ("Sanmina" or the "Company") (NASDAQ: SANM), a leading
integrated manufacturing solutions company, today reported
financial results for the first fiscal quarter ended December 30, 2017.
First Quarter Fiscal 2018 Summary
- Revenue of $1.74
billion
- GAAP operating margin of 0.8 percent
- GAAP loss per share of $2.16
- Non-GAAP(1) operating margin of 2.7
percent
- Non-GAAP(1) diluted earnings per share of
$0.48
Revenue for the first quarter was $1.74
billion, compared to $1.76
billion in the prior quarter and $1.72 billion for the same period of fiscal 2017.
GAAP operating income in the first quarter was $13.8 million or 0.8 percent of revenue, compared
to $58.7 million or 3.4 percent of
revenue for the first quarter fiscal 2017. GAAP net loss in
the first quarter was $154.9 million,
compared to GAAP net income of $44.9
million for the same period a year ago. GAAP loss per
share was $2.16, compared to GAAP
diluted earnings per share of $0.58
in the first quarter of fiscal 2017. (The first quarter
of 2018 GAAP loss per share includes a non-cash tax
charge of $2.27 per share as a result
of the U.S. Tax Cuts & Jobs Act)
Non-GAAP operating income in the first quarter was $47.5 million or 2.7 percent of revenue, compared
to $71.7 million or 4.2 percent of
revenue in the first quarter fiscal 2017. Non-GAAP net income
in the first quarter was $36.5
million, compared to $57.7
million in the same period a year ago. Non-GAAP
diluted earnings per share for the quarter was $0.48, compared to $0.75 for the same period a year ago.
"As I mentioned in our preliminary announcement last week, we
are disappointed with our actual results for the first quarter and
expectations for the first half of fiscal 2018," stated
Bob Eulau, Chief Executive Officer
of Sanmina Corporation. "Based on new programs moving to
volume production, a solid pipeline of new business and the current
forecasts from our customers we are confident the second half of
fiscal 2018 will be stronger."
"I am excited about the opportunities ahead and the unique value
Sanmina brings to its customers. We have a dedicated and
experienced team that is focused on operational excellence, driving
improvements and optimizing our cost structure as we continue to
execute on our strategy," concluded Eulau.
Balance Sheet Summary
- Ending cash and cash equivalents were $404.9 million
- Cash flow from operations was $8.4
million
- Inventory turns were 6.1x
- Cash cycle days were 46.1 days
Second Quarter Fiscal 2018 Outlook
The following forecast is for the second fiscal quarter ending
March 31, 2018. These
statements are forward-looking and actual results may differ
materially.
- Revenue between $1.60 billion to
$1.70 billion
- GAAP diluted earnings per share between $0.20 to $0.30,
including stock-based compensation expense of $0.17 and amortization of intangible assets and
restructuring costs of $0.03
- Non-GAAP diluted earnings per share between $0.40 to $0.50
Company Conference Call Information
Sanmina will hold a conference call to review its financial
results for the first quarter on Monday,
January 29, 2018 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
5278659.
(1) In the commentary set forth above and/or in the
financial statements included in this earnings release, we present
the following non-GAAP financial measures: operating income,
operating margin, net income and diluted earnings per share.
In computing each of these non-GAAP financial measures, we 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
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 contained in this release.
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, storage, industrial, defense, medical, energy and
industries that include embedded computing technologies such as
point of sale devices, casino gaming 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 second quarter of fiscal 2018 and
expectations for the second half of fiscal 2018, 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; risks arising from
our international operations; competition that could cause us to
lose sales; consolidation among our customers and suppliers that
could adversely affect our business; 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)
|
|
|
|
|
December
30,
|
|
September
30,
|
|
|
|
|
2017
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
404,914
|
|
$
406,661
|
|
Accounts receivable,
net
|
|
1,121,800
|
|
1,110,334
|
|
Inventories
|
|
1,079,638
|
|
1,051,669
|
|
Prepaid expenses and
other current assets
|
|
46,345
|
|
47,586
|
|
|
Total current
assets
|
|
2,652,697
|
|
2,616,250
|
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
635,000
|
|
640,275
|
Deferred tax
assets
|
|
356,660
|
|
476,554
|
Other
|
|
|
114,223
|
|
114,284
|
|
|
Total
assets
|
|
$
3,758,580
|
|
$
3,847,363
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts
payable
|
|
$
1,260,432
|
|
$
1,280,106
|
|
Accrued
liabilities
|
|
121,001
|
|
116,582
|
|
Accrued payroll and
related benefits
|
|
111,806
|
|
130,939
|
|
Short-term
debt
|
|
169,416
|
|
88,416
|
|
|
Total current
liabilities
|
|
1,662,655
|
|
1,616,043
|
|
|
|
|
|
|
|
Long-term
liabilities:
|
|
|
|
|
|
Long-term
debt
|
|
392,195
|
|
391,447
|
|
Other
|
|
202,142
|
|
192,189
|
|
|
Total long-term
liabilities
|
|
594,337
|
|
583,636
|
|
|
|
|
|
|
|
Stockholders'
equity
|
|
1,501,588
|
|
1,647,684
|
|
|
Total liabilities and
stockholders' equity
|
|
$
3,758,580
|
|
$
3,847,363
|
Sanmina
Corporation
|
Condensed
Consolidated Statements of Income
|
(in thousands,
except per share amounts)
|
(GAAP)
|
(Unaudited)
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
|
|
|
Dec. 30,
|
|
Dec. 31,
|
|
|
2017
|
|
2016
|
|
|
|
|
|
Net sales
|
$
1,744,800
|
|
$
1,719,977
|
Cost of
sales
|
1,635,334
|
|
1,587,815
|
|
Gross
profit
|
109,466
|
|
132,162
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
Selling, general and
administrative
|
63,603
|
|
65,140
|
|
Research and
development
|
7,615
|
|
8,171
|
|
Amortization of
intangible assets
|
918
|
|
918
|
|
Restructuring
costs
|
23,542
|
|
728
|
|
Gain on sales of
long-lived assets
|
-
|
|
(1,451)
|
|
Total operating
expenses
|
95,678
|
|
73,506
|
|
|
|
|
|
Operating
income
|
13,788
|
|
58,656
|
|
|
|
|
|
|
Interest
income
|
285
|
|
201
|
|
Interest
expense
|
(6,214)
|
|
(5,267)
|
|
Other income,
net
|
3,230
|
|
1,257
|
Interest and other,
net
|
(2,699)
|
|
(3,809)
|
|
|
|
|
|
Income before income
taxes
|
11,089
|
|
54,847
|
|
|
|
|
|
Provision for income
taxes
|
165,999
|
|
9,983
|
|
|
|
|
|
Net income
(loss)
|
$
(154,910)
|
|
$
44,864
|
|
|
|
|
|
|
|
|
|
|
|
Basic income per
share
|
$
(2.16)
|
|
$
0.61
|
|
Diluted income per
share
|
$
(2.16)
|
|
$
0.58
|
|
|
|
|
|
|
Weighted-average
shares used in computing
|
|
|
|
|
per share
amounts:
|
|
|
|
|
Basic
|
71,605
|
|
73,554
|
|
Diluted
|
71,605
|
|
77,175
|
Sanmina
Corporation
|
Reconciliation of
GAAP to Non-GAAP Measures
|
(in thousands,
except per share amounts)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
Dec. 30,
|
|
Dec. 31,
|
|
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Operating
Income
|
|
$
13,788
|
|
$
58,656
|
|
GAAP operating
margin
|
|
0.8%
|
|
3.4%
|
Adjustments:
|
|
|
|
|
|
Stock compensation
expense (1)
|
|
8,642
|
|
11,977
|
|
Amortization of
intangible assets
|
|
1,820
|
|
1,820
|
|
Distressed customer
charges (2)
|
|
(333)
|
|
-
|
|
Restructuring
costs
|
|
23,542
|
|
728
|
|
Gain on sales of
long-lived assets
|
|
-
|
|
(1,451)
|
Non-GAAP Operating
Income
|
|
$
47,459
|
|
$
71,730
|
|
Non-GAAP
operating margin
|
|
2.7%
|
|
4.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Net Income
(Loss)
|
|
$
(154,910)
|
|
$
44,864
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
Operating income
adjustments (see above), net of tax
|
|
26,480
|
|
8,268
|
|
Litigation
settlements, net of tax (3)
|
|
(217)
|
|
-
|
|
Adjustments for
deferred tax and discrete tax items
|
|
165,115
|
|
4,601
|
Non-GAAP Net
Income
|
|
$
36,468
|
|
$
57,733
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Net Income
(Loss) Per Share:
|
|
|
|
|
|
Basic
|
|
$
(2.16)
|
|
$
0.61
|
|
Diluted
|
|
$
(2.16)
|
|
$
0.58
|
|
|
|
|
|
|
Non-GAAP Net
Income Per Share:
|
|
|
|
|
|
Basic
|
|
$
0.51
|
|
$
0.78
|
|
Diluted
|
|
$
0.48
|
|
$
0.75
|
|
|
|
|
|
|
Weighted-average
shares used in computing GAAP per share amounts:
|
|
|
|
|
|
Basic
|
|
71,605
|
|
73,554
|
|
Diluted
|
|
71,605
|
|
77,175
|
|
|
|
|
|
|
Weighted-average
shares used in computing non-GAAP per share amounts:
|
|
|
|
|
|
Basic
|
|
71,605
|
|
73,554
|
|
Diluted
|
|
75,485
|
|
77,175
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Stock compensation
expense was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
Dec. 30,
|
|
Dec. 31,
|
|
|
|
2017
|
|
2016
|
|
|
|
|
|
Cost of
sales
|
|
$
2,448
|
|
$
2,863
|
|
Selling, general and
administrative
|
|
6,164
|
|
8,840
|
|
Research and
development
|
|
30
|
|
274
|
|
Total
|
|
$
8,642
|
|
$
11,977
|
|
|
|
|
|
|
(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, net of
tax
|
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, 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 equity awards 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.
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SOURCE Sanmina Corporation