SANM - Earnings call 4 2023 | Sanmina Corporation

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Operator

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

Paige Bombino

Thank you, Sarah. Good afternoon, ladies and gentlemen, and welcome to Sanmina's fourth quarter and fiscal year 2023 earnings call. A copy of our press release and slides for today's discussion are available on our website at sanmina.com in the Investor Relations section.

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

Jure Sola

afternoon. Good

Paige Bombino

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

Kurt Adzema

Good afternoon.

Paige Bombino

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

on the statement. follow can presentation note our safe-harbor provided and our turn to in the prepared take You website. Please remarks Slide with slides along our X of of

obligation stated company's for is call in restructuring of acquisition or future amortization are earnings a and and general, Relations from in other noncash integration During quarter in new any slides result our law. Included or earnings presentation, and this update actual financial those expressly the caution materially basis Any may A it earnings non-GAAP and set GAAP we as performance factors no call statements posted the future unusual information. XX, statements events to website. stock-based to conference otherwise, in The otherwise financial we and like with in income forth results. release these or the Accordingly, the relates unless of company information, make statements Jure. such obligation provided make to operating issued to on conference to compensation at referring gross otherwise made of and non-GAAP as on alter over our projections events statement any information forward-looking well unless we our call, website, income, financial refer also we future when results items. by you to financial and forward-looking release, other statements on you whether of regarding be the share, per year The differ or that the just of the safe-harbor In disclaims we margin, projected income could our will call, operations statement. in result as and under fiscal reconciliation now or of have press excludes the directed the net or costs, ended company. on is certain the section gross are required today, profit, We release provided non-GAAP September information. I'd our a the the operating slides this information the such projections. as this statements as to press XXXX, conference GAAP expense, comments measures turn between call infrequent a non-GAAP margin, expense costs, taxes, non-GAAP our Investor

Jure Sola

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

team would recognize employees. and leadership I take to opportunity Sanmina's like this First, to our

give you for thank Slide you to to year supply So COVID, ongoing let a through through some challenges, managing strong managing fiscal last these and challenging geopolitical Sanmina's 'XX. me team, chain gentlemen, for 'XX. Please and Ladies year Despite you, all environment years, environment. for X. turn these you results fiscal delivered highlights few constraints

leaders up on revenue As reflection in is a market of also our X.XX%, are to These non-GAAP diluted customers, And points results you XX% continued year-over-year. see, markets. the the $X.XX, in XX EPS improved can Non-GAAP basis operating key at margin X.X%. that's our year-over-year. -- focus grew came XX% XX%

this now to additional question will follow and Kurt, the for with call you. agenda, For comments have of Kurt. goals. rest to over results open we the CFO, and details future turn I'll will Sanmina's about and for I review answers. And I Then of results Kurt? Kurt our

Kurt Adzema

X. to Thanks, Slide turn Jure. Please

end due was mainly customer QX and billion, gross our did X.X% fourth outlook improved. supply mix. QX revenue job, of our outlook to lower of the higher significantly was to For the ] operating communication operating has with as quarter, a [ of solid non-GAAP consistent revenues, primarily delivering the X%. in $X.X billion $X.X due in inventory chain $X.XX ongoing $X.X to was $X.X of fiscal margins to non-GAAP primarily below gross market end billion. slightly to the line adjustments, X.X%, the team the favorable QX at product X.X% margin outlook despite margin

$X.XX revenues. With mainly FY customer EPS end 'XX X. non-GAAP Again, significantly operating 'XX. $X.XX, please diluted improved. QX margin as of market was FY QX 'XX mix. QX compared chain the of due slightly inventory $X.XX 'XX, has turn FY Again, ongoing to was product primarily to that, to primarily billion to margin adjustments, of gross FY due fully due was in than to to lower QX 'XX a X.X% this X.X% non-GAAP lower-than-expected outlook FY lower QX our supply in FY QX of than Finally, revenue compared billion. $X.XX 'XX $X.XX Slide in was favorable to revenue to the X.X% X.X% communications improved decline

to 'XX QX despite $X.XX lower FY 'XX $X.XX FY revenues. compared QX was Finally, EPS in

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

compared gross QX quarter. was million in 'XX. [ CPS margin to FY revenue to significantly turn in QX improved customers, FY the billion QX million in communications X% the to as revenue was 'XX inventory IMS $XXX to the 'XX QX X. compared Slide to CPS improved. QX end 'XX. margin in adjustments QX from this QX compared $X.XX X.X% in to has gross close at was chain mainly in for $X.XX XX.X% ] decline $XXX was market Now FY Again, ongoing FY primarily QX. supply non-GAAP prior IMS X.X% due billion please

to Slide X. turn please Now

strong 'XX mix. grew by to billion a good said, Non-GAAP a excellent operating the year compared the a as prior company XXXX Sanmina product revenue FY $X.X As the supply year X.X% FY significantly 'XX. Non-GAAP Jure margins improved fiscal team. FY to our favorable primarily gross to improved 'XX compared margin did compared with managing as to to X.X% to execution 'XX, expenses. due improved constraints we for the FY relative to really was job X.X% XX% X% in operating in to

FY 'XX compared 'XX Again, revenue was year FY $X.XX Finally, FY to that, GAAP strong the margin growth. With $X.XX. $X.XX Slide with for FY continued growth, to EPS a fully grew really 'XX. company Again, in annual 'XX expansion in for XX% was diluted overall, earnings please turn to and EPS trends XX. positive non-GAAP

million 'XX. flow and $XXX fiscal Capital sorry, $XX million QX And million to in the revolver of were sheet end strong cycle of the were expenditures ROIC and $XX our cash under for from flow -- million. manage for the 'XX. no 'XX. a have in company end competitive There Cash operations XX. $XX all balance million FY Cash ] dynamic $XX free 'XX XX.X% million were of XX.X%. Please We Cash were of to million FY cash full and through turn now a equivalents 'XX [ $XXX days $XXX QX for advantage and quarter borrowings QX. was our and environment. market the all provides FY that at pretax $XXX I'm in was Slide million FY million QX for at $XX and was for

$XX the authorization $XX During million. year, for the additional the of remaining million. shares the approximately we repurchased of quarter, had we've a we fiscal repurchases. repurchased of X.XX fiscal At total year, full million for $XXX And XXX,XXX million end for for about shares share

let's priorities. are priority growth, to organic we top about capital the is about we Sanmina's Next, are talk allocation [Indiscernible]. fund Sanmina's excited and opportunities

beyond. to capital we've Sanmina FY 'XX expenditures and in position more spent half in growth expected 'XX, [Indiscernible] During second in the of FY for

continue reduce strategic In addition, our debt to transaction opportunities we'll well as as levels. evaluate potential current to

Finally, to cash we well that flow We for generation strong positions return growth. to share cash sheet the repurchases. and will balance through future continue believe opportunistic shareholders Sanmina

Now please Slide to XX. turn

Let's outlook FY QX talk about the 'XX. for

billion to to has expect range We significantly. in be continue inventory the the chain market to expect supply end $X.XX QX $X.XX as as to in the we primarily improved revenues customers levels, billion adjust communications of

gross of margins to $XX operating and X.X%. Non-GAAP the in the We in million X.X% million mix. expenses dependent $XX X.X% margin range the to expect X.X% of of operating range on non-GAAP range product in to non-GAAP

of interest We expect non-GAAP million. $XX and approximately other expenses

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

count tax We expect XX% approximately this of rate XX.X share non-GAAP all When of share consider to of earnings non-GAAP of $X.XX. in million. $X.XX approximately you outlook diluted diluted is non-GAAP for and the range to per our fully XX.X% guidance,

beyond. million, expenditures growth capital around the QX growth XXXX of expect to second fiscal $XX support programs half expected and by driven to new be of We in and the

as market to year back We depreciation well turn more full of details upcoming on $XX I'll the call QX outlook that, XXXX. million. And the by expect with Jure for as fiscal around the

XX. Please turn to Slide

Jure Sola

non-GAAP last again, a years, every for Again, fourth them. add our over Kurt. Ladies of a X growth, Actually, the non-GAAP either [ of or X you more Thanks Last and XX.X%. we non-GAAP the tell especially me we results. and met outlook growth last years the goals, Every what fiscal to per first the year, year, you quarter we and grew that On I few grew XX%. in 'XX years, all plants, the earnings these with grew Last X Slide turn we XX.X%. quarter are years. year, our you for look future comments if internal let income year. I'm operating XX. and XX.X%, about we year these this exceed fiscal by fiscal if 'XX And years. look pleased the can I our or pleased revenue This diluted year year, at $X,XXX we our X goals. Please for every accomplished 'XX, income, share, grew year, operating nice at that gentlemen, we am last the year -- ]. XX.X% one results almost them met exceeded

Slide please that, to So XX. with turn

the sequentially. end primarily the Now it heard fourth Mainly due by the revenue communications at let's quarter you end for and X% ongoing as down Kurt Revenue fiscal per market inventory market. 'XX. year went from of quarter look was in adjustments,

fourth were XX top quarter, revenues. the -- customers XX% XX For

We segments. to continue our diversify market

quarter-over-quarter. Industrial, in came to and Automotive fourth Aerospace, came for Medical, Defense For quarter XX.X%. at flat revenue That

growth For revenue the and XX.X%. the year for XX.X% was year, was

was down XX.X%. I can we XX% year, deliver advantage had operational this we pretty solid adjustment for was overall, a and more XX.X% a a networks well. Communication So beginning revenue with inventory was for for that you but customers. we quarter, than a for revenue execution XX.X%, as the and of up the our thought fourth growth tell did the infrastructure year-over-year competitive quarter cloud segment

please here add few our to outlook Please on slide. a quarter. turn few comments Let me Slide for more more this the add -- stand no -- about first

heard you inventory our revenue Kurt, as the 'XX, down adjustments mainly some we from are be from driven forecasting For of markets. by quarter first fiscal year to of end

the driven majority So some softness see from what's of customers some and we of market in to our adjustments On demand. economy. side, our we the about is confident inventory expect from headwinds see the half we hearing year, positive adjustments us the of future. for about I'm in excited couple the of and coming remain markets. a by expect what inventory long-term softness to our second communication improvements in in quarters, for We The front next are and nice the Personally, opportunities.

a about market in talk high XX. where markets. here. leading to go heavy me is we regulated recognized a and you Slide from to complexity, let Sanmina turn brand Please Now diversification

are well-diversified future. even a be today We will in company the diversified more and

will was you XX% So XX%. are was can revenue is XX%. Aerospace markets cloud working On approximately of was Industrial focused slide Defense let our 'XX. diversify. and more Communication we XX. see Slide around here, details about about to this mainly of optical and on. our you Automotive what give XX% networks revenue. we Sanmina turn Please infrastructure was XX% about and that around for Medical and that me

As see do you not with can products. this deal consumer we illustration here,

you Slide more about I tell turn XX, industrial. so to can let's Now

controls power are processing where we and focus and management and factory, warehouse, storage, Industrial, energy, areas semiconductor generation For equipment. automation, renewable

And and semiconductor growth. equipment, also to ramping to ] litography driving government test, Our other energy to new that programs view market also inspection growth. renewable regional and is energy demand long-term automation, transition healthy. Other of opportunities act the renewable in are measurement for by some remains driven [ reduction this, drive we in support ongoing our is addition factory inflation

diagnostic Now and let's the The disposable I Sanmina of consumable laboratory wearable the so tell turn more to is office very area Slide are products, research can medical business. side our about XX, key medical focus equipment. strong Sanmina equipment, medical for you in markets. hospital

demand care And term, is in the consumables, well some by fulfillment and as surgical, view digital adjusted backlog market short customer you new win continue imaging post-COVID and last delivery, Our simply are tell our year disposable, new drug is well diversified diagnostic, extremes. to we Sanmina lab see for growth norms We're the providers health Overall, adjustments across the that programs. I diagnostic medical equipment. health. market, driven positioned we can

talk turn and Defense XX let's to has for We've about in been business. Aerospace business to Slide over a Defense Now and for this long-term Aerospace. years. XX Sanmina been business

areas Sanmina and and safety equipment, for commercial focus defense key our security is of equipment Some aerospace.

in we're diversified this segment. As see, you can well

very is view that market Our demand remains in segment. this healthy

for new growth us. future. the drive New we programs wins opportunities for of a also, And long-term have pipeline strong the will

about a Transportation automotive. strong market and to us. Let's Automotive very talk turn for Slide also to is XX

are you diversified side can And in segments, automotive, electrical well positioned and transportation We in these as business. well are also of vehicle. in the around see we especially

a I is drive the growth growth Our say for new and of electrical electrical future. for do now. a anything view growth high in you I around can believe, I have in We years we programs in long-term right trends market global of many segment ramping charges, are Sanmina this amount and fair will that also will electrical some that strong initiatives, segments. vehicle these are tell the in

our see edge-based terabytes gig, the build we -- is high-performance We're next-generation most markets. of to turn positioned. in and We systems XXX optical platforms. expanding business products developing XX working we infrastructure Sanmina let's around can market, as to GPU for here you communication are this cloud, from IP here a So the networks, that in XXX well talk on the gig, build Slide about future. routers. X.X the cloud We're is In

It's I But inventory. the customers United our say we there's States. that opportunity, government opportunity us financed the this well in sure positioned when United well the States. that's Also, AI participate has communication also market you I tell term market. this been made and to basically broadband billion, we're to we demand the about to Also, a by of in in driven government, few starting and due big lot $XX ones -- in and in in technology by wants billion $XX getting We've this a is to cloud whole of federal cloud each The to about adjustments. area. it's the in in for India. federal will programs are household be that has good already are view we B basically in there. that short for make requirements. broadband positioned. something can that Future this opportunities India some thing So inventory some but infrastructure. market we're U.S.A., ML to expanding getting see be the is household market, Actually, softer adjusting a growing as customers this this each demand for have of are

doing at a a year is expected We're ago. than rate JV Our well. higher growing we

I can Sanmina tell provide So as you strong in overall, some market a the leaders. key latest that position technology is for of these we

to So XX. let's Slide turn

well As segments. you key can we market diversified are across see,

strategy. AI the market that manufacturing and our industrial key again high-technology packaging. these key We time of and is for The and these And markets. be reason growth electrical focused the aerospace, solutions optical markets are digital drive pretty and positioned Sanmina in total for to well us this to delivered health, will cloud defense is integrated markets key vehicle, ML,

excited about the very we're future. So

XX. Slide Let's turn to

more to priorities. talk our about me you Let

a drive Our leading is to basically technology markets regulated in to a profitable provide is simple, priority heavy customers to the growth.

customers. So some Everything we give our highlights. let we do, you me build around

look you on an years. average is XX-plus If our customer at XX, relationship

the a this providing diversified. We of delivering to faster, really base. We we're in in development, it well product market the have and strong to to heavy technology focus of regulated quality by these We competitive involved advantage customer the call partners customers technology. market, a provide markets, our on markets to get I product key industry-leading. strong stage product, bringing leading-edge time

to dynamic we've very is Our short partners. Sanmina to our the end-to-end Most the cloud in term, energy, we weighed what especially, expect us in key reputation for industrial, high second what solution End last the alternative of long-term believe growth. our the key day, adjusted. years, key medical, The have for and margin a very, we as $XXX market on here. some see, telling But growth. a from over a is for in you based importantly we growth million we and technology see are defense, inventory packaging, half, term for lot such provide short seen We customers market and us, this already we as X infrastructure, invested today. XX, optical automotive, continue challenges as environment, is expansion, gets us invest heard

us shareholder work to believe do to Sanmina definitely, value a it stock. X% We will undervalued. generate plus, Short allow to be to margin to heard forward. value, as years. in We is there. in to grow structure we'll are And our next we continuing billion you to to the name We're optimize, $XX Long Sanmina growth in we the going between revenue so. and Today, $XX X%. internal continue should goal the to Kurt, can drive for there's comes is our operating X drive the maximizing our from of margin capital operating a believe That's the growth. When long-term respectable believe generate game to X% improve billion range cash. us. margin. cash or of We the delivered term, We enough be the term, our operating continue margin and going to

As buying our the continue shareholders' not we've half you short see on will focused value, heard just of to from the term In model Slide we maximize We summary, business to in we for buy. competitive Kurt, first year advantage and year. but And the demand the XX. been our softness also long leveraging of strong delivered term. Please fiscal turn 'XX. results to for are

the second a to one, end improve to number growth we're we're the continue on focus for strong these and the better key in in a We better year. Sanmina, key to shareholders. of about And customers to markets. have foundation to two, our demand sheet, strong going build balance on. The thing continue future we a for future markets half expect to invest in going Number good a our

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

Operator

[Operator first with Anja comes Soderstrom Marie question Instructions] Sidoti. from Our

Anja Soderstrom

adjustments? said equipment adjustments For the where the network you inventory you seeing but is there else market, that within segment, inventory are primarily

Jure Sola

our with of automotive really networking in most Well, what some is side. as the XG, that's and like flat. We in basically mainly there, of inventory major adjustment product, came of medical, communications you a in business, the markets, can adjustments customers. nothing across few communications industrial, the The see defense rest but see, some the minor side adding we but see

Anja Soderstrom

affected auto, of you? has Okay. the terms And in all of types

Jure Sola

a there, in but Not few we electrical the vehicle. really. I leaders our most of mean was stuff with projects industry have

Anja Soderstrom

from significant growth revenue experience seeing venture, the we had there you see said When expected. there? some joint strong you're than terms And Okay. of in better you will

Jure Sola

good expect some would expect We I in growth we will are we -- do operations down lot. year performed excellent. have of great a to had to it end well, all, 'XX and pretty there, first a 'XX, see 'XX, say to positioned I grow of

Anja Soderstrom

gross in think mix And communications in margin with and product about then the the equipment, coming the years? we coming should margin short how and the term the the the in gross in quarters terms Okay. of

Jure Sola

a Well, back me to first the comment margins. of make -- all, let about

year. delivered better. We believe As can we you do margin see, respectable this we a

to range I market company we to continue of in down. short we're lot I tune is the and to revenue as we come going term, as will X% going back of margin the company the But the growth. with even know say, the think up would position position operating X%, for be to being a

it -- room shipping start that for done in some better, more put me As year, and we improvements. know indi we some way. that let we There's last

'XX, we As our and should we X%. lot be the look margin the we 'XX, have of upside, a at 'XX think over and

and we have a ], do record we'll that, type proven [ there, Anja. We do Back to it. communication, margins respectable on market and margins we delivered communication of is

high side We and the storage both a side, networking are in performance, also focused on there really the in routers.

there. there's positioned than well grow think customers We the I pipeline more we're inventory. realized. more So Unfortunately, realized in finally [ our ] inventory draw we

I on. think okay. So going be there be long we'll will some correction the But term,

Anja Soderstrom

Okay. XXXX What the overall And second the softer be half. see first half as gives growth going then you fiscal in you the how And full revenue the and about performance? year, it's in the to growth again spoke there? should about in we think for you confidence

Jure Sola

know, you we take you as last us, ] the as X time. X/X [ Anja, covered Okay. years, in

the today. think definitely, we term, we I inventory resolved will months, in resolved think inventory definitely, see next But hopefully get what the based sooner. see on being I short X

be because that. upside the the falls off I of to customer see pickup across should the our second in my half So forecast, think in cliff, economy markets, we're there Unless some definitely, half. second especially all going on some based

there's new X -- so that things expect So We and we're a to that to looking take long we're time, working, But of X we'll expect Anja. term. based we these definitely quarter grow. some at, grow programs, on

Anja Soderstrom

one. X And Okay. last

or your at customers this you Are said have with is the baseline... about expanding logo some You Or how just program this? Can wins. those? talk those you new existing

Jure Sola

expanding program are a the potential, that but we up. end time 'XX a that of lot fair new the logos, takes amount Anja, of give some most customers, this of have because big but probably it 'XX, more wins logo, have existing to but of We're that's with

potential business. side defense we the and upside in yes, an of So aerospace have

in area, statement, goal I alternative think packaging my grow -- Also, lot want $XX infrastructure a just in I a that that. a to have expect a than there's optical lot in next hey, mentioned, has and and company prepared we are as said, Anja, think, the energy I about this cloud in remind we I our And be to internally I X range billion $XX what billion. we the to -- today. bigger we lot years, to

we're we are the growth, make but So most focused to it's growth. on profitable going sure

Operator

question comes Craig-Hallum from Our Group. Christian Capital Schwab with next

Christian Schwab

Most of my questions and have than about you the continue bigger been than answered. some Maybe just inventory in is more a going little was talk X, X? bit X communications. December correction into that obviously into thought further or like correction that is September, customers, clarity on you Since the March. to continue or When inventory

Jure Sola

with that leaders, do all in the we business market Well, Christian. segment

we that I happened know, Christian, think But And majority bit customers. themselves. what that little I was of end there inventory. you As and I customer a segment customers shortages, will driven for there, yes, the let our the inventory think is speak say when our extra by in there have was customers more

X transferred months, mean, inventory least are that any filled realized programs of of higher delayed in is there. I'm transfer won that for next didn't don't going or The but quarters. in is up side few a some the this than to customers and we from at thing, had Actually, thing from you customers another that -- good is that in was thing that programs. what going lose us good how But this pipeline. competitor if Christian, know the we industry business, I at Mexico other any couple us a So a really to us, pipeline go I a for and telling hopefully, be to anybody got empty we'll business rate seeing that and much or being

So a term. those in It's we're position basically with good for key but a overall, long -- still short-term scenario. customers

Christian Schwab

the talk share remind then And have selling you when X are elaborate further. But all people, about significant Obviously, large to leaders you market people? this Great. communications, historically XX [Indiscernible] in significant XX customer. you us, just

Jure Sola

at there look the smaller XX know ones. leaders them There's you do. those, better are in I If the there, and out X X And than of approximately Christian, ones market you big or X companies.

Christian Schwab

I Yes, thought. okay. That's what

the the a and recovery on in Okay, growing then But kind revenue year-over-year, that. second envelope, fiscal half in just don't be guidance. a in communications. of the give it We scenario know year does of follow-up I should you right? back appear

Jure Sola

it all is Well, first we all, how market and depends there demand capabilities turns. have grow. If to of capacity --

not grow. last X.X an positioning why for And just been the us. for company years company -- So that's are we've we the positioning a expansion it That's to had issue. I major we said earlier,

you the spend that Mexico have growth. that for around over and just we As right to the We projects know, growth we and spend we're in will money want we the throw a going actually -- don't unless Thailand. of customers we're spending grow, in now. We're finishing expansion

and we all I say the control It's us only we what thing We control will to -- smart people. the optimistic, is think stuff -- we our every do be day. we're better. Christian, around control can what what I half a that internal we with for for hard So me on can the second going is world,

So going but we're continuously aggressive to stay be comes our customers of top demand things as the care of on back. that

Operator

this time. Showing further questions at Instructions] no [Operator

Jure Sola

Bye-bye. your thanks you, again, With you back of please and that, we guess. your gentlemen, Again, with thank didn't we're I and us. X now, questions, answer I to and us. your we'll any get ladies for patience time, our talk excited to and if about future, from Well, appreciate months

Kurt Adzema

you. Thank

Operator

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

now may You disconnect.

Sanmina (SANM) 6 Nov 232023 Q4 Earnings call transcript