Earnings call transcript Q3 2023

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Operator

Good day, and welcome to the Sanmina Third Quarter Fiscal 2023 Earnings. [Operator Instructions]. Please note this event is being recorded. I would now like to turn the conference over to Ms. Paige Melching, Senior Vice President of Investor Communications. ma'am. ahead, go Please

Paige Melching

are Good Quarter and A Fiscal release Relations today's our Chuck. sanmina.com website to the in copy and Sanmina's press Investor discussion for slides Third XXXX and on afternoon, you, our gentlemen, at ladies section. welcome of available Thank Earnings Call.

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

Jure Sola

Good afternoon.

Paige Melching

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

Kurt Adzema

afternoon. Good

Paige Melching

and remind will turn call available webcasted over everyone me that the let being today's I website. Before and our Jure, recorded be on is call to

website. You remarks can statement follow in the along turn with our slides prepared provided to on Please presentation. harbor safe the in the our

The made section company alter as forward-looking the conference Relations company. obligation the or any call, result website, disclaims our new safe release, just of any update otherwise, materially statements may or statements expressly from financial actual events statements obligation The We this projections or these as call that a and to the otherwise of a or required this company's set earnings harbor such result unless presentation, or earnings differ Investor in future the statement. we future such factors statements the caution regarding conference is projections. results you are future those other whether forward-looking the could the of forth information, of in in During under no events of projected by make performance law.

acquisition website. provided unusual release expense integration infrequent is posted and and amortization excludes information costs, other costs, In restructuring financial reconciliation and slides well in a the and quarter as as July with of the on stock-based statements Included basis slides ended press expense, noncash information. non-GAAP non-GAAP and our today, financial GAAP you provided on information compensation XXXX, operations in issued general, A our certain also our or press we non-GAAP between the release have X, items. for GAAP

non-GAAP Accordingly, and Any comments call, non-GAAP statement as income, to income we gross taxes, otherwise per results. financial stated will call to earnings we to we when at in are profit, conference be gross the they information. make relate margin, unless operating on this operating margin, net share, income our referring refer measures directed this our

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

Jure Sola

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

First, the this would getting opportunity leadership recognize and done. job take like to to Sanmina team employees our well I for

keep for team, you, solid to and results up. for quarter, delivering you let's Sanmina's So it thank the third

that Then answers. and I will Kurt. to about Kurt, detailed and and our to up And like agenda, results over future turn with I'd now for CFO, this Kurt have today call results For to you. open for I comments review we will goals. Kurt? follow Sanmina's additional questions

Kurt Adzema

Slide Thanks, Jure. X. to Please turn

good a general, base. financial of line did of the $X.XX solid outlook In was remained most team job billion. delivering $X.X billion, in our performance with to $X.X Our for billion across revenue customer quarter. stable revenue QX our

chain of the a improve. to did communication adjusting quarter primarily as few declines levels see the a result However, we continues prior customers relative supply some inventory as to

in Non-GAAP Non-GAAP of gross X.X%. per fully was diluted X.X% X.X% operating Non-GAAP guidance in was margin share to $X.XX. margin the $X.XX prior improved quarter. to $X.XX earnings with from line our

Revenue to FY FY in X. X.X% FY QX in 'XX was to $X.X in $X EPS in diluted fully 'XX GAAP $X.XX. Operating turn margin billion grew from approximately QX FY QX 'XX. X.X% X% QX QX Please improved Finally, to Slide 'XX. from billion

FY Finally, EPS 'XX. XX% to grew 'XX $X.XX FY QX approximately QX in from $X.XX in

GAAP slide shows financial of comparison to and a quarterly our turn Please non-GAAP results. This X. Slide

If you X. Slide could now turn to

start to 'XX. months of strong off fiscal for first a X are the We

Non-GAAP year. to XX% grew the X.X%. time prior revenue continued improve with months, year-to-date to X first of operating have the non-GAAP billion to margins operating For margins $X.X over compared

Finally, year-to-date, prior XX% year. in to grew to the $X.XX $X.XX compared non-GAAP EPS FY 'XX

now $X.X billion to QX You please 'XX in 'XX. FY IMS $X.X to turn compared Slide FY revenue billion was X. QX

company. said result in customers of the As decline first improvement gross of during the related before, in chain fiscal QX few a partial levels X.X% revenue This in quarter taken to primarily was the a to inventory this improve. release adjusting compared related quarter. continues I the reserves improved to prior primarily X.X% communication inventory was to margins QX as IMS to supply start-up a

normalized 'XX. expect We level more IMS to a QX return in gross FY to margins

QX compared million $XXX at was margin gross X.X%. overruns due in cost was one of to CPS QX revenue FY divisions. CPS to million primarily 'XX. This $XXX CPS FY our QX for 'XX non-GAAP was

We working to with in in recover FY range these and will expect our costs in gross are actively division CPS that normalized QX a customers be more margin 'XX.

now please Slide You to turn XX.

advantage. a provides from equivalents our were $XX outstanding QX. in million. the no There approximately our in Cash was have of and balance flow that were revolver million cash $XX Cash and million under $XXX QX, were competitive QX. million We expenditures operations strong $XXX company a borrowings at sheet end capital

had QX, repurchased XXX,XXX authorization for repurchases. the $XXX share million of At total During of end we $XX QX, approximately approximately a additional of for shares million. we remaining

now turn Slide please XX. You to

approximately ROIC focused efficient pretax remain Non-GAAP days cycle cash XX% in approximately Cash were was days QX. for on to XX continue management. We QX.

Slide to turn XX. please Now

talk about for outlook Let's the QX.

the range as expect $X.X few a billion improve. revenues $X.X chain inventory see we billion continues customers adjust levels in of as the supply to communication be to to to expect We

of range gross depending mix. margin non-GAAP on We X.X% expect the product X.X% to in

non-GAAP in margin of to X%. and are $XX million X.X% million range of Non-GAAP operating in expected operating $XX range the to the expenses

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

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

to million. XX% quarter approximately XX.X% non-GAAP expect and fully of XX tax count We share of non-GAAP the diluted rate approximately for

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

QX programs to and support growth expect $XX future approximately expected We driven new to be QX growth. depreciation CapEx to million. million, be $XX about is of by

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

back I'll to that, turn with And it Jure.

Jure Sola

you, Ladies Kurt. and gentlemen, Thank quarter. the let you give highlights me for key third some

heard coming from solid to chain competitive you is customers. Sanmina As solid for provide in quarter, delivered a our We we had components with our our execution advantage Supply Kurt, for outlook. as third semi line operational results can these getting execution focus a lot better. a of it's say back some normality. Despite our continued the are Lead our improving. strategy. And reflection macroeconomic I challenges, of on to are results times ongoing

and team EPS Please job a to continues Sanmina turn margin needs, great Our customer Slide on XX. focusing growth. do by to expansion

talk now you me by Let revenue end about markets. to

quarter For nicely the and third for up, mix the Automotive improving. Medical, for quarter, revenue trends market Industrial, Defense are was Also, growth X%. $X.X the fairly of billion, stable it but $X.XXX of year-over-year up billion, flat XX%. and was of was year, the

by We to new continue diversify and program driven defense medical, customers. automotive new in and wins industrial, markets,

see, of to can mix XX% you our revenue. As improved

fuel and year-over-year $XXX growing. inventory X.X%. communication as was and Networks, to quarter For for million quarter customers. some revenue growth relative be did see infrastructure of Cloud adjustments Kurt with Communication we prior stable the continues said, The to

that revenue. I And quarter, was XX% of can were you approximately third our XX top the book-to-bill tell For also customers X:X.

to XX. turn Please Slide

Let fourth me and quarter 'XX outlook. talk fiscal markets to you end year about

see Medical, automotive industrial, And we For markets quarter, for and fourth aerospace and defense. medical, automotive and seeing Industrial during the quarter. demand we're a defense, for the strength in stable

adjustments. infrastructure due Communications Systems, For outlook Cloud we inventory and lower see growing. stable is to revenue

turn $X.X billion. fourth revenue Slide billion we to $X.X the this Please for outlook expect of In quarter be macro to in range to XX. environment, a

expect be approximately for to fiscal year growth We XX%. revenue 'XX

For $X.XX to outlook, the quarter fourth of range the we to in EPS $X.XX. non-GAAP be expect

deliver should focus Our approximately growth of XX%. on non-GAAP EPS expansion margin

are year-to-date can strong you and fiscal performance expect for performance these XXXX. we to deliver As year strong see,

for me let to beyond. you Sanmina's and year Now 'XX future fiscal talk about

macroeconomic continue exceeding exciting strong markets, to balance base well-diversified despite for a the high focus on on, sheet future. opportunities the profitable is great will of build for future, in growth Sanmina regulated heavy is and to We new position in complexity -- challenging pipeline the environment. customer

term. is margin and expansion consistency, quality right our products. partnerships of customers customer of complexity diversified focus building growth term have focusing key both on on that base, and cash Our shareholders' is high the The and maximizing with flow growth focus Quality long support today value earnings, short of earnings. to on

services. manufacturing providing expanding solutions for investing beyond. investments we we're future, support projects new and the components, making expanding and profitable products in in are 'XX support, for industry-leading to and advanced fiscal capabilities our technologies year wins and more We're integrated Overall, engineering R&D by to

and We're positioned industrial to markets technologies will energy and defense, and for margin expanding can electrical fiscal focusing to around in profitable and these expansion key as talent cloud infrastructure. Sanmina through is medical, such 'XX dynamic you to well I also tell growth market. continue focus vehicle, manage drive Sanmina that automotive, beyond. this year invest in alternative

Slide summary, a was In turn quarter. good XX. Please to quarter third

Our solid. and base strategy continues remain to deliver pipeline customer opportunities results,

deliver we are 'XX, long-term year growth to as expect we investing mentioned, the growth, for solid and So non-GAAP to I opportunities. fiscal and EPS support revenue

we delivery meeting customers. the needs a and of quality, consistently are As focused on our management,

ready your to time you and I the open lines would and now Thank for Ladies now support. all Operator, answers. and gentlemen, you thank are like again. question we for to

Operator

come And Soderstrom Sidoti. with Instructions]. from question [Operator first the Anja will

Anja Soderstrom

and And the that there? quarter, down charge sorry, said quarter so or see talked to third in is venture? Indian down the million know starting I second first quarter? fourth a what coming about also I'm you why of addressed be that missed fourth the are from you sort curious, and expect don't you in I'm to if the you the And $X part. I that's

Jure Sola

right. All

to of the then you the it question. me to Let other venture India for over turn highlights Kurt I'll strategy address give and

deal is is all, really year This of a in First exciting. ago, India a JV This is we well. signed division our Reliance. very venture doing with about

a that. We're ahead options of We think We right potential actually, the there's upside we continue -- lot now. to a in years. it's looking our of grow couple of do lot of How strategy. next at

upside. Reliance are grown years. with And a that lot same the a management We last has we have the great been goals, we've has we India we on pace. XX partner, team of the same this and additions few and that think team, a I have together, believe over in to strong

the excited I rest for personally, team, So and very we're speak India for of in can Kurt? us. the what's

Kurt Adzema

Yes.

it's not $X million. about really to and share XX.X% back right? So the is net basically, the that a charge, of just was Reliance income, again, we out quarter, clarify, So last

We again, combination a quarter. to forecasted of it's really hard two It's This million. things. forecast. $X

profitability the predict and of business, obviously One the is with exchange variable has the the of things. it bit little a affects that to other harder to do that's rate how

had So would bit say, quarter. we bit but we're quarter I this last little forecasting forecast lower little a did lower better a than expected. Candidly,

would bit little some I hard foreign currency just of especially the say So given it's to issues. a predict,

Anja Soderstrom

terms inventory you the also of of visibility you to communication What there. you Okay. in that then there come network, kind gives saw adjustments you that going And back? have some said confidence it's do

Jure Sola

Well, we first short inventory in we some mentioned believe all, we based prepared saw our that some adjustment as statement, down on of term.

were are see of pick And what optimistic. the programs. we type will area of strong up have months. that confident customers a are that businesses we fast. pipeline with we doesn't still new we of involved, it up other we're on think make as next if The on plus, the believe we XX about based because very products And I even involved

Anja Soderstrom

you left in And behind revenue to the challenges? Okay. due supply quarter quantify did the chain you much

Jure Sola

been Actually, chain very supply No. has good.

yes, As Anja, I because back certain in ship the can it's And a couldn't some longer components there lead of any we my and major that there's parts. I revenue is -- kind said that statement, that prepared but left manageable. have to some out don't other coming believe time, say of still I normality. we

Operator

Group. from question Schwab Capital will come next with The Christian Craig-Hallum

Christian Schwab

follow-ups. few a just So

As inventory adventure? XX-day now can that that that chain out Does adjustments do that into in the has which multi-quarter the that to-six-quarter get adjustments on normalized? the nature. supply think could you be kind customer in far a as fact faster make that four- our comps, the outstanding Or Does should normalize level? days inventory of push we back

Jure Sola

that. outlook. will on of first customers Well, my at give most of give me a, -- let all, view you We about Christian, us XX our look months

improvements get on turns So every better, in and should to we the based definitely knowing inventory we on expect that believe see where lead quarter. outlook, times our

on. Next, normal a to goal humanly I possible. the of we're working X think you should internally quarters, as I as that -- lot work is There's think next get there

So comes will work it I'm pretty that inventory optimistic it to that when the down.

the take things X demand, the as that said, think to But don't see our -- as I we'll I at a at looked back we it's we cliff. take policy time. off falling is the quarter 'XX,

Christian Schwab

I talked at for outlook. guys will about, X a time, So you you Directionally but are that? Can at look as know you you quarter line us range a customers, XX-month your you top at looking do give give growth of next year? a

Jure Sola

had we outlook do that. months ago, XX a -- a and also Well, we had Christian, we year didn't

this fiscal grow. finish at 'XX, we probably with to a grow and X a 'XX. time, more we'll But when the our at lot we stick but in we'll expect quarter talk So to time, expect year do we about

Christian Schwab

my it line contributor Great. reap to guys And said revenue. that a -- do you of north you as venture. be that question When line? to business as could past the I far net joint the last India know positive material billion believe that, top relates $X you've expect then have India as in I said in income the to

So how we just about be should thinking wondering that?

Jure Sola

positive right -- me we're Let right, now, Kurt?

Kurt Adzema

Yes. as seeing makes that a revenue, the profit, the to Jure or I So ramp But next grow how extent mean we to lot It's two. said, think, it now. on of margins, indications good good I doing very customers I good right? business start think, quickly good that could JV that and business, customers, we'll interest is year definitely but think over from well right see you profitable. don't overnight, I we're

we where And so with we're pleased stand. very

Jure Sola

Yes.

us it's this to I business to we're -- for be add later. position sooner multibillion-dollar and Christian, business a to than to in grow Just think that, excellent that

that way. put Let's it

Operator

Instructions] [Operator

Jure Sola

and appreciate today. talking Well, your to in to ladies the and get you to days. I we If all looking didn't please for Thanks back all lot. all us questions, gentlemen, answer that's support. your XX next forward a

Kurt Adzema

you. Thank

Operator

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

You may now disconnect.

Sanmina (SANM) 31 Jul 232023 Q3 Earnings call transcript