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Sanmina’s Third Quarter Fiscal 2022 Financial Results
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Sanmina’s Third Quarter Fiscal 2022 Financial Results

SAN JOSE, Calif., Aug. 1, 2022 /PRNewswire/ — Sanmina Corporation (“Sanmina” or the “Company”) (NASDAQ: SANM), a leading integrated manufacturing solutions company, today reported financial results for the fiscal third quarter ended July 2, 2022 and outlook for its fiscal fourth quarter ending October 1, 2022.

Third Quarter Fiscal 2022 Financial Highlights

  • Revenue: $2.02 billion
  • GAAP operating margin: 4.7%
  • GAAP diluted EPS: $1.29
  • Non-GAAP(1) operating margin: 5.5%
  • Non-GAAP diluted EPS: $1.30

Additional Third Quarter Highlights

  • Cash flow from operations: $102 million
  • Free cash flow: $65 million
  • Share repurchases: 3.1 million for approximately $124 million
  • Ending cash and cash equivalents: $493 million
  • Non-GAAP pre-tax ROIC: 31.6%

 (1) Non-GAAP financial measures exclude charges or gains relating to: stock-based compensation expenses; restructuring costs (including employee severance costs, environmental investigation, remediation and related costs and other 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.

“I am pleased with our strong results for the third fiscal quarter. Revenue was up 5.6 percent sequentially and non-GAAP earnings per share increased 14.4 percent. Revenue exceeded our outlook driven by strong demand from all our end-markets coupled with the excellent job our team did to secure supply. Solid execution, favorable mix and operating leverage contributed to our strong non-GAAP operating margin of 5.5 percent for the quarter,” stated Jure Sola, Chairman and Chief Executive Officer. “I am pleased with our continued operational and financial execution which further strengthens our value proposition to our customers and shareholders.”

“As we look to our fourth quarter we continue to see strong demand from our customers. Based on our fourth quarter outlook, we expect fiscal year 2022 revenue growth of approximately 14 percent,” concluded Sola.

Fourth Quarter Fiscal 2022 Outlook 

The following outlook is for the fiscal fourth quarter ending October 1, 2022. These statements are forward-looking and actual results may differ materially. 

  • Revenue between $1.95 billion to $2.05 billion
  • GAAP diluted earnings per share between $1.09 to $1.19
  • Non-GAAP diluted earnings per share between $1.27 to $1.37

The statements above concerning our financial outlook for the fourth quarter and expectations for fiscal year 2022 revenue growth 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, most notably ongoing supply chain constraints, including those resulting from the continuing impacts of the COVID-19 pandemic, and geopolitical uncertainty, including from the conflict in Ukraine. 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 fiscal third quarter and outlook for the fiscal fourth quarter on Monday, August 1, 2022 at 5:00 p.m. ET (2:00 p.m. PT). The access numbers are: domestic 866-652-5200 and international 412-317-6060, access code is 10169686. The conference will also be webcast live over the Internet. You can log on to the live webcast at Q3’22 Webcast Link. 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 877-344-7529 and international 412-317-0088, access code is 6828630.

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 markets. Sanmina has facilities strategically located in key regions throughout the world. More information about the Company is available at www.sanmina.com.

Sanmina Contact 

Paige Melching 

SVP, Investor Communications 

408-964-3610

Sanmina Corporation

Condensed Consolidated Balance Sheets

(in thousands)

(GAAP)







July 2,


October 2,







2022


2021
















(Unaudited)

ASSETS
















Current assets:








Cash and cash equivalents



$       493,305


$       650,026


Accounts receivable, net



1,228,435


1,192,434


Contract assets



459,306


348,741


Inventories




1,591,111


1,036,511


Prepaid expenses and other current assets


63,827


53,952



Total current assets



3,835,984


3,281,664










Property, plant and equipment, net



545,673


532,985

Deferred tax assets



212,407


235,117

Other





149,608


156,953



Total assets



$    4,743,672


$    4,206,719










LIABILITIES AND STOCKHOLDERS’ EQUITY














Current liabilities:








Accounts payable



$    1,976,533


$    1,464,693


Accrued liabilities 



303,076


161,896


Accrued payroll and related benefits


133,319


117,648


Short-term debt, including current portion of long-term debt

18,750


18,750



Total current liabilities



2,431,678


1,762,987










Long-term liabilities:







Long-term debt



298,345


311,572


Other




209,716


253,532



Total long-term liabilities



508,061


565,104










Stockholders’ equity



1,803,933


1,878,628



Total liabilities and stockholders’ equity


$    4,743,672


$    4,206,719

 

 

Sanmina Corporation

Condensed Consolidated Statements of Income

(in thousands, except per share amounts)

(GAAP)

(Unaudited)












Three Months Ended


Nine Months Ended












July 2,


July 3,


July 2,


July 3,



2022


2021


2022


2021










Net sales

$ 2,019,059


$ 1,657,741


$ 5,687,914


$ 5,112,667

Cost of sales

1,853,870


1,521,151


5,225,789


4,691,744


Gross profit

165,189


136,590


462,125


420,923










Operating expenses:









Selling, general and administrative

61,506


57,438


184,798


177,547


Research and development

5,071


5,269


15,320


15,427


Gain on sale of assets



(4,610)



Restructuring and other costs 

3,994


(382)


8,340


13,402


     Total operating expenses

70,571


62,325


203,848


206,376










Operating income

94,618


74,265


258,277


214,547











Interest income

540


217


1,198


691


Interest expense 

(5,615)


(4,823)


(15,362)


(14,657)


Other income (expense), net

(7,774)


29,258


(7,110)


37,268

Interest and other, net

(12,849)


24,652


(21,274)


23,302










Income before income taxes

81,769


98,917


237,003


237,849










Provision for (benefit from) income taxes 

2,226


(18,458)


45,606


25,416










Net income

$      79,543


$    117,375


$    191,397


$    212,433




















Basic income per share

$          1.33


$          1.79


$          3.07


$          3.25


Diluted income per share

$          1.29


$          1.74


$          2.98


$          3.17











Weighted-average shares used in 









computing per share amounts:









  Basic

59,970


65,427


62,404


65,306


  Diluted

61,702


67,352


64,292


67,055

 

 

Sanmina Corporation

Reconciliation of GAAP to Non-GAAP Measures

(in thousands, except per share amounts)

(Unaudited)












Three Months Ended




July 2,


April 2,


July 3,




2022


2022


2021









GAAP Operating Income


$       94,618


$       82,226


$        74,265


GAAP operating margin


4.7 %


4.3 %


4.5 %

Adjustments:








Stock compensation expense (1)


10,683


9,330


8,715


Amortization of intangible assets


251


263


284


Distressed customer charges (2)




(428)


Legal and other (3)


500




Restructuring costs


3,994


2,932


(382)


Transaction costs


200


500


Non-GAAP Operating Income


$     110,246


$       95,251


$        82,454


Non-GAAP operating margin


5.5 %


5.0 %


5.0 %

















GAAP Net Income


$       79,543


$       53,220


$      117,375









Adjustments:








Operating income adjustments (see above)


15,628


13,025


8,189


Gain on liquidation of foreign entity




(8,493)


Gain on sale of intellectual property




(15,000)


Legal and other (3)



(110)


(3,440)


Adjustments for taxes (4)


(14,818)


7,036


(32,056)

Non-GAAP Net Income


$       80,353


$       73,171


$        66,575

















GAAP Net Income Per Share:








Basic


$           1.33


$           0.85


$            1.79


Diluted


$           1.29


$           0.83


$            1.74









Non-GAAP Net Income Per Share:








Basic


$           1.34


$           1.16


$            1.02


Diluted


$           1.30


$           1.14


$            0.99









Weighted-average shares used in computing per share amounts:








Basic


59,970


62,845


65,427


Diluted


61,702


64,271


67,352

















(1)

Stock compensation expense was as follows: 
















Cost of sales


$         3,724


$         2,948


$          3,712


Selling, general and administrative


6,819


6,276


4,913


Research and development


140


106


90


  Total


$       10,683


$         9,330


$          8,715









(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


$         2,226


$       23,077


$      (18,458)










Adjustments:








  Tax impact of operating income adjustments


534


346


452


  Discrete tax items


18,394


(3,526)


37,583


  Deferred tax adjustments


(4,110)


(3,856)


(5,979)










Subtotal – adjustments for taxes


14,818


(7,036)


32,056










Non-GAAP provision for income taxes


$       17,044


$       16,041


$        13,598

















Q4 FY22 Earnings Per Share Outlook*:


Q4 FY22 EPS Range






Low


 High 












GAAP diluted earnings per share


$           1.09


$           1.19




  Stock compensation expense 


$           0.18


$           0.18




Non-GAAP diluted earnings per share


$           1.27


$           1.37




* 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 fourth quarter of FY22, an estimate of

such items is not included in the outlook for Q4 FY22 GAAP EPS.                            

 

 

Sanmina Corporation


Condensed Consolidated Cash Flow


(In thousands)


(Unaudited)














Three Month Periods


Q3’22


Q2’22


Q1’22


Q4’21


Q3’21













GAAP Net Income

$      79,543


$      53,220


$      58,634


$      56,565


$    117,375


Depreciation and amortization

27,065


27,567


27,465


27,452


27,373


Other, net

18,739


15,429


12,101


9,673


3,339


Net change in net working capital

(23,664)


(17,243)


(29,900)


(1,969)


(44,366)


       Cash provided by operating activities

101,683


78,973


68,300


91,721


103,721













Purchases of long-term investments

(700)


(1,000)



(1,000)


(1,705)


Net purchases of property & equipment

(37,434)


(27,263)


(17,362)


(29,490)


(17,182)


Proceeds from sale of intellectual property





5,000


Cash paid for businesses acquired





(21,408)


        Cash used in investing activities

(38,134)


(28,263)


(17,362)


(30,490)


(35,295)













Net share repurchases

(124,365)


(113,146)


(67,773)


(32,394)


(15,698)


Net borrowing activities

(4,688)


(4,688)


(4,688)


(4,688)


(4,688)


Proceeds from other notes receivable

500




2,500



         Cash used in financing activities

(128,553)


(117,834)


(72,461)


(34,582)


(20,386)













Effect of exchange rate changes

(1,584)


(700)


(786)


(467)


628













Net change in cash & cash equivalents

$    (66,588)


$    (67,824)


$    (22,309)


$      26,182


$      48,668













Free cash flow:











   Cash provided by operating activities

$    101,683


$      78,973


$      68,300


$      91,721


$    103,721


   Net purchases of property & equipment

(37,434)


(27,263)


(17,362)


(29,490)


(17,182)


   Proceeds from sale of intellectual property

500




2,500


5,000



$      64,749


$      51,710


$      50,938


$      64,731


$      91,539


 

 

Sanmina Corporation

Pre-Tax Return on Invested Capital (ROIC)

(In thousands)

(Unaudited)














Three Month Periods



 Q3 FY22 


 Q2 FY22 


 Q1 FY22 


 Q4 FY21 


 Q3 FY21 












Pre-tax Return on Invested Capital (ROIC)






















GAAP operating income


$       94,618


$       82,226


$       81,433


$       66,753


$       74,265


 x 

4.0


4.0


4.0


4.0


4.0

Annualized GAAP operating income


378,472


328,904


325,732


267,012


297,060

Average invested capital (1)

 ÷ 

1,397,241


1,365,669


1,337,989


1,316,373


1,274,041

GAAP pre-tax ROIC


27.1 %


24.1 %


24.3 %


20.3 %


23.3 %












Non-GAAP operating income


$     110,246


$       95,251


$       88,364


$       78,341


$       82,454


 x 

4.0


4.0


4.0


4.0


4.0

Annualized non-GAAP operating income


440,984


381,004


353,456


313,364


329,816

Average invested capital (1)

 ÷ 

1,397,241


1,365,669


1,337,989


1,316,373


1,274,041

Non-GAAP pre-tax ROIC


31.6 %


27.9 %


26.4 %


23.8 %


25.9 %












(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).

 

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, environmental investigation, remediation and related 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) generally 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 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

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