Earnings call transcript Q1 2023

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Operator

Hello, and welcome to the Sanmina Corporation's First Quarter 2023 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to the Senior Vice President of Investor Communications, Paige Melching. Please go ahead.

Paige Melching

MJ. you, Thank and fiscal ladies welcome Sanmina's to Good earnings gentlemen, call. quarter XXXX first afternoon, and

A our sanmina.com are available Relations copy today's on for of section. our press release website at in Investor slides the and discussion

me and Executive Chairman Officer. Jure Chief on today's Joining is Sola, call

Jure Sola

Good afternoon.

Paige Melching

And Kurt Chief President Vice Financial Adzema, Executive and Officer.

Kurt Adzema

Good afternoon.

Paige Melching

webcasted prepared website. will and be on our our remarks, everyone begin recorded me we remind today's and that Before let call is being available

website. the You can our with provided follow our prepared remarks slides on in along

turn of press Please X release safe the Slide presentation or to our harbor statement.

these may conference call, number annual Securities of financial a results projections this We statements could statements actual statements with reports During forward-looking the projections. regarding differ as of of the company's set materially a forth events we caution and future make in quarterly the Exchange Commission. the just filed or such that company's in are result and or other you company. from factors future projections The performance these

is in The or of required made obligation otherwise, any by statements forward-looking under any Investor the call whether presentation, section website, otherwise of result a the information, as new future the the or events such Relations expressly to earnings conference update disclaims earnings our alter company of unless release, this obligation and no or law.

posted XXXX non-GAAP website. provided you Included release between non-GAAP in XX, our GAAP well of the GAAP is the financial a statements with provided for our information. slides information also today, and operations quarter financial slides have press reconciliation as December and on press release basis we A the on ended and in issued certain as

profit, amortization on will non-GAAP compensation restructuring unusual call to to costs, are when measures non-cash income, make as gross our items. income conference earnings relates we directed we non-GAAP integration information. Any be otherwise expense, and costs, this stated this taxes, income general, non-GAAP in the net refer statement acquisition and unless our we excludes referring operating at infrequent margin, our Accordingly, gross or other it call, to stock-based and comments information expense margin, share, financial results. per operating In

I would turn to Sola. over like Jure to call the now

Jure Sola

ladies Thanks, being you us and thank all afternoon, Welcome, for Good today. here gentlemen. and with Paige.

I employees opportunity recognize to like First, would job. to exceptional leadership take Sanmina and doing this team an for our

and Sanmina's thank and team, So, consistent quarter for first up. it you, strong the to XXXX, results delivering let's you of fiscal for keep year

I our follow goals; open we and to about will agenda, Sanmina review comments details results CFO, results additional have up and with answers. question for and I For Kurt, of future for will you; our Kurt then

would to like turn Kurt. this now, to And call I over

Kurt Adzema

Thanks, Jure.

turn to Slide Please X.

quarter continued and strong team QX [$X.XXX] billion. to an growth billion approximately supply outstanding $X.X the This exceeded nicely chain. As the as in was of Jure from to improvements by X.X% well did $X.X high end billion mentioned, grew job due revenue demand, as the of strong our customer and revenue our for outlook primarily of prior quarter. profit delivering the (ph)

in at flat Non-GAAP was primarily was X.X% operating quarter. operating margin to prior Non-GAAP X.X%. was leverage. margin compared due gross expense to the X.X% This

exceeded $X.XX by $X.XX share diluted to $X.XX $X.XX end to the per Non-GAAP of approximately the outlook compared quarter, prior X% our to earnings in fully of and $X.XX. grew upper

$X.XX. was GAAP QX Finally, fully diluted EPS

in results. Slide the quarterly trends to financial slide This our turn Please X. shows

FY $X.XX non-GAAP in here over continued QX XX% over operating that 'XX share from can in to Furthermore, You see QX FY improve $X.XX to per earnings 'XX. have time. grew margins

increase to due supply primarily reserve in X.X% the for prior in related of Non-GAAP demand margin Please taken quarter, the X.X% the IMS $X.XX to a turn X.X% during to was increased customer. chain. decline revenue compared start-up was quarter. due the Slide a to to gross This primarily improvements quarter and IMS to prior QX customer an strong X. continued over billion,

IMS to gross QX. expect margins We to return level in a normalized more fiscal

an $XXX improved Services to increase to primarily X.X% of margin better and grew gross for million, to quarter, CPS quarter. in over Products Non-GAAP Components, prior product due mix. XX.X% the XX.X% prior revenue to compared the

Now, please turn to Slide X.

a October to have increase million in were India, revolver. equivalents a there XXXX. result the the primarily advantage. under a which previously as $XXX end our very borrowings We announced million. of $XXX on the and was At million balance X, sheet, which venture The company quarter, healthy joint closed no provides due cash cash $XXX Cash in competitive of our outstanding were

$XX was is calendar first in in Cash approximately the were fiscal operations year-end. expenditures Capital quarter, lower from flow our given million QX. typically flow Cash $XX million during QX.

flow free cash $X million was in Our approximately QX.

Slide to turn X. Now

We focus at flat days pre-tax relatively continue of capital. cycle management working QX. XX ROIC to for QX. on Cash remained days was XX.X% the in Non-GAAP

XX. turn Slide Please to

outlook there the about customer but as related bit political demand well to uncertainty a as strong, remained continues chain be the macroeconomic and supply environment. to QX. Overall, talk for the Let's

to there impact of fiscal our QX. in expect some $X.X $X.X is be in to the seasonal QX range revenue billion We billion. Typically,

portion of in expect operating range margin X.X% annual million to salary employer re-setting annual primarily to We million, and range of due gross And non-GAAP to of operating the margins payroll X.X% any the X%. range depending of on mix. in expenses $XX product the tax the in the adjustments. Non-GAAP of X.X% to $XX non-GAAP

by interest non-GAAP driven We of the primarily in other $XX increase rates. interest million, and expect

estimate our Indian the equity we addition, the of to in million $X In income net to reflect partner's JV. non-cash reduction income interest approximate an our JV net

diluted non-GAAP We million approximately share fully taxes count shares. non-GAAP XX%. The of of expect XX

all non-GAAP $X.XX guidance into diluted account, outlook earnings in share the take for this per is of to you our When of $X.XX. range

of well depreciation of million. $XX growth future to as be million, programs around to around We expect is capital support by growth. driven QX $XX expenditures new as the QX expected

business long term. recent believe our opportunity further with continue pleased model results, we improve the is there are that we over While to our to

And turn with to back it I'm to Jure. going that

Jure Sola

quarter you, me I'll the and XXXX. gentlemen, year few fiscal of add Ladies markets Thank our outlook the rest and the Kurt. end our the for review comments quarter and about for first financial let second more and highlights

As consistent from the quarter, for heard and Kurt, strong results. you delivered first Sanmina

driven also with growth highlights by demand our getting the from was were: key uncertainty, quarter. was our of focus these for excellent our saw of We is suppliers. better. improvements on and nice a can customers ongoing are execution first tell in semi continued supply macroeconomic lead The Despite reflection organization broad-based, that strong We chain the times components closely strategy. results and our end of by markets; working you performance our

Sanmina into differentiate done capabilities, for is as and and our Our all we to translate an team job Sanmina. has this expansion margin continuing growth outstanding continue of to industry-leading

Slide Please to turn XX.

look that tell the revenue the across strong our Let's first at for by you our was products all for I quarter markets. demand can end markets.

segments, growth Medical, revenue of and Defense and of X.X% a Industrial, For we year-over-year, which was Automotive delivered quarter-over-quarter XX.X%. $X.XXX billion,

Networks we quarter-over-quarter year-over-year, XX.X%. delivered & which growth was Infrastructure, Cloud For $X.XXX of billion, Communication XX% and

organic delivered quarter-over-quarter Total of $X.XXX for our XX.X%. year-over-year quarter, growth of and first X.X% billion. growth, It was growth we nice

were For revenue. of XX.X% our the XX quarter, first customers top

backlog a start Overall, for we are to future. fiscal good our for XXXX. we are demand year solid off strong and In summary, seeing

Please turn to Slide XX.

infrastructure. aerospace, key review for markets let automotive, medical, defense me and and cloud networks Now, outlook. Sanmina second are markets communication our The quarter industrial, end

not see, Sanmina heavy serve As our regulated you markets at is can markets. focus consumer on but does all, high-complexity,

billion. to For down quarter $X.X the for us, of this seasonally have billion second backlog, a is we $X.X with healthy but quarter, strong outlook

is We things see good that lot quarter expect to some better. are second But constraints a getting continue to news through supply our and beyond.

As rest of future. I look fiscal the excited year Sanmina's XXXX, at about the I'm

time, 'XX. seen our fiscal a nice key strong For outlook improvements this fiscal to 'XX, we've At expect we customers. deliver over year from

growth programs. existing be from Revenue and will driven new

continuous to We opportunities are pipeline by the IMS continue expansion components, growth by the segment in and new efficient to growth optical Margin will driven be lean diversified technology CPS defense future. drive And OpEx continue to by Strong services. markets. expansion structure. leverage and be at drive driven segment for efficiencies. of revenue improvements in we as products, in manufacturing growth well packaging other will Margin

in From managing the to navigate of company point talk macroenvironment. that up do to Now Sanmina dynamics management let management future. has job. market me Sanmina global the challenging these to any in strong and come to space we positioned embedded well through the could have market positioned resiliency is our economical you Again, environment. focused able any be view, about Sanmina's for

and working delivering not it's results. have changed. Strategy priorities Our is

quality focus of is building on today our partnerships. right base, Our customer

revenue our in market focused with quality We're earnings. delivering consistency are products. growth continuing earnings, on focused to mission-critical We on and growth of diversify of leaders

I long-term. still leverage focused cash business flow. yearly there We're model. maximizing focused short-term you on And Sanmina's also quarterly shareholders lot on value, and are we is tell of at and can

Please turn to XX. Slide

you in a we of basis quarter-over-quarter summary, X.X%. revenue diluted of points by quarter-over-quarter a margin, improved we year-over-year. strong XX and So, of $X.XX non-GAAP year-over-year. growth we heard non-GAAP X.X% XX.X% growth as with delivered to X.X% I, both XX.X% and $X.XX, of from quarter, And solid Kurt operating And billion, and delivered execution, growth EPS of

forecasting, is billion quarter down the strong demand us, of strong. outlook billion, for strong and to revenue typically are $X.X we again, backlog seasonally quarter, this is second is For but $X.X

of $X.XX. EPS, So, forecasting diluted non-GAAP we're $X.XX to

believe look we at we opportunities believe improve can our there's over we long business Kurt we in continue front the said, As term. as us, still model of to upside,

and So, all thank for open your question now like support. time ready you. Operator? the answer. for I and ladies you now and Thank to gentlemen, we're to would lines Operator,

Operator

Thank you.

Instructions] the go [Operator begin now Today's with ahead, will from question-and-answer We Citigroup. Jim. first comes Suva session. Please question Jim

Jure Sola

Hello, Jim.

Jim Suva

Thank the you for details. evening. Good Hello. much so

to of kind any be some Or buffer topic I'm curious have and digestion that so, a your that have in your and markets? of how I or And inventory about Are long? inventory follow-up. just down. peers if that talked Some probably worked which you seeing on ones of needs

Jure Sola

you there those had wait their We sometimes as a little and Yes. was we're a inventory forecast, Jim, for when the we're the period, us in needs, on went peak. and then at lot this based of but longer inventory definitely day a bringing believe shortages bit of customer our know, basically up. during gives we to end shortages,

of As at that we down couple work we expect quarters, next and more generate cash. the inventory look to

markets, the another, kind then all that's more Jim. the markets It's all we It's where at. are across it's one just just customer-driven not than -- So really of itself.

Jim Suva

Okay.

then, years seen some you with server your that hyperscaler of recent lot And us success that a several. can us give on on just, view cloud on additional colors storage. And across effort? and in have So, you update

Jure Sola

communication XX%-plus. about the grew pretty for that network us, well, and cloud if look Well, segment at last you computing did quarter,

positive. very Jim, were lot always take a at of market. we We're positioned programs that than confident one Overall, let's well quarter So, we a time. more months in ago. today were got lot we about new we we're a 'XX, again, say, there. six It's,

at these I time will expect a we So, markets. and to one grow quarter take

Jim Suva

you details, you Thank much so for and at and your Sanmina. to teams the congratulations

Jure Sola

Thank you, Jim.

Operator

Soderstrom next The comes ahead. go question Please Anja with from Sidoti.

Anja Soderstrom

taking questions. Hi, for and my thank you

about... talking you're So,

Jure Sola

Hi, Anja.

Anja Soderstrom

the and good Hi, congratulations on quarter.

Jure Sola

Thanks.

Anja Soderstrom

You're second quarter stronger seems XXXX, the talking improvement for quantify nice think normally there. weakness it. about growth of you really If next to fiscal the be don't though but the you a couple even about have for seasonal I quarters,

So, throughout increase should we revenue the sequential expect year?

Jure Sola

let Anja, great a put we start way, had year. me a this to Well, it

speaks for are solid. very for second our first believe quarter think, I the quarter guidance I So, itself.

quarter a we'll take one So, time, at Anja.

based very we're time, on still operate going the we environment, papers. As up, macro opinion. positive our Inflation it's year is customer read at about same up, forecast. and up this my we the But in

happens. with think especially what front matter Sanmina positioned weather we're that to in up. of the And no positive are is what's coming us, on new very programs I

our more expansion. new As mission-critical that Kurt a the customers. bit reason product little spending we're money in is all mentioned, high-technology And the driven we're by doing on programs

So, believe a better -- are we future. we in

Anja Soderstrom

excites the just new Okay. us Thank about you in? tell what those about about bit you. markets a programs. end and bit you're talk And just little programs that a you And you little talking can them? Can participate about you

Jure Sola

talked we in continue industrial, drive our as these programs, industrial, In mission-critical quarter, well-established there. as Well, medical. to we're in last we such

I market substantially. alternative think, to there our is energy going expanding be

EV infrastructure, and cloud On there, are well of thing. and same When and there. automotive, cloud defense. course, positioned network, asked on think medical the question communication are positioned Jim we we also -- regarding vehicle, well I

markets. So, a really are new our of the lot all programs across

Anja Soderstrom

you recently? have And to the you. all changes competitive Thank Okay. seen at any landscape

Jure Sola

always is more what do. competition. ourselves there, Competition but always worried I'm about than believe I it's we

require on we're focused in. customer. to markets spending We partnership are a that's heavy focused strong what that build regulated We're lot of really mission-critical with and energy a products, our technology,

Anja Soderstrom

me. all Okay. Thank from was That you.

Jure Sola

there's Operator? input. That's very questions, Anja, And thank everybody's us today. please a We know. appreciate more you -- let lot. if all for Thanks that's much. any

Operator

Instructions] [Operator

Jure Sola

Go ahead.

Operator

ahead. go -- away go Please,

Jure Sola

joining Yes. Thanks if please more we'd thank Again, like let to for available -- questions, we're any XX there's days. know, this us for everybody for next call.

Paige Melching

you. Thank

Kurt Adzema

you. Thank

Jure Sola

Bye-bye.

Operator

now is Thank presentation. concluded. conference you attending The for today's

now disconnect. may You

Sanmina (SANM) 30 Jan 232023 Q1 Earnings call transcript