Sanmina (SANM) 29 Jul 242024 Q3 Earnings call transcript

Good afternoon, ladies and gentlemen, and welcome to the Sanmina Corporation Third Quarter Fiscal 2024 Earnings Conference Call. This call is being recorded on Monday, July 29, 2024. And I would now like to turn the conference over to Paige Melching. Please go ahead.

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

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

Good afternoon.

And Jon Chief President Vice Financial Faust, Executive and Officer.

Good afternoon.

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

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

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

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

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

our up. your it let's for So to customers, service keep delivering you Sanmina's dedication team, to and and excellent thank you

call. let's agenda Now today's go for our to

I'd over answers. up about future this you. to review We have additional question Jon? And of like will for to Jon, our will open turn Jon and follow results CFO, I goals, details and call Sanmina results comments and our and to now for Jon. I

here and Jure, you today. thank us and ladies joining for gentlemen, you, and good afternoon, Thank Great.

thank team line the to Before results for and I our and hard with we work their in go through entire dedication delivering outlook. the Sanmina want results, for financial

P&L discuss to Now to highlights. turn X Slide please the

billion, quarter X.X% Third line our $X.XX billion to was billion, sequentially. $X.X revenue with $X.X in outlook and up of

I beginning communications and inventory grew margin year, the by networks the same basis absorption expenses to Non-GAAP the infrastructure end the X.X%, as offset compared markets. Non-GAAP end same and and period basis mix, range. declines points compared operating market midpoint our customer cloud slide. Non-GAAP at period basis driven the last on margin the see are last sequentially operating points XX comment low to earlier. points at our in gross next which by was end the of the and partially lower more XX by short just of industrial automotive improve XX X.X% We X.X%, was detail and points sequentially that year, XX margin in gross I within $XX.X will sequentially, outlook of guided outlook unfavorable to were the down on million, referenced down basis driven

the approximately flow generated higher on a interest our driven basis share to with to range XX diluted million and with our approximately as we $XX income per margin earnings results line income and that line in $X.XX by communicated. Non-GAAP of have $X.X came was our interest at guidance This expense. Non-GAAP X% target cash favorable fully shares continues outlook. operating million, based incurred strong short-term less million. in to Our expense we be in other previously on X% and was outstanding

was by down sequentially to mentioned. in X since in down I please the been due the short-term which margin delays turn billion, in and margin ship IMS growth XXX up points programs, at and by gross non-GAAP quarter. due down came revenue discuss segment unfavorable primarily has basis non-GAAP cloud X X.X% the in XX.X% driven XX infrastructure delay that X driven million, $XXX points Slide revenue sequentially, the at to mostly resolved to primarily CPS programs communications will just in fourth X.X% mix. CPS market. results. basis Now to to in $X.XX networks end the came sequentially, gross X.X% was sequentially to IMS

CPS recent We return to to coming the margin quarter. non-GAAP expect levels in gross

competitive Now sheet, outstanding $X.X a on billion. We was manage balance which end equivalents had X quarter, leaving million cash and third sheet well. a liquidity our $XXX balance is sequential million. $X.X very the to quarter the us it to we Cash the borrowings to Slide were strong X.Xx, no and improvement. of ended please approximately at discuss revolver, At advantage continue a highlights. of $XXX company, turn with for we turns has the with the substantial inventory which billion slight and of Sanmina

reduce an purchased from we commitments inventory based As customers, believe opportunity but even further. our levels on to a our we reminder, there inventory is

well turns forward. remain inventory as our increasing priorities that So as going will

Our non-GAAP well weighted average above pretax cost ROIC was XX.X% for capital. the of quarter, our

balance long-term the sheets which industry to have with opportunities. capitalize allows of to navigate both and X.XXx, continue the leverage one low We environments strongest on complex us in of market

Slide Now highlights. flow I'll about talk capital please cash X, to turn and where allocation

to the year-over-year improvement million before, strong As I a $XXX the and adding $XX $XX Cash is quarter, up was pleased for of million from expenditures a flow basis. Capital year. million I'm have quarter delivered year-to-date brings cash which $XX for that Sanmina, the total have a flow is key were on mentioned performance. cash another $XXX quarter, for million focus we of area and flow to million operations the

growth end significant investments at $XXX to which quarter up markets a cash year-over-year. flow new future million we million stands $XX made across for the year-to-date now As strategic a geographies company and reminder, and million is capital on multiple for position the opportunities. Free and was year, $XXX basis, last

shares XXX,XXX for repurchased we X for million which shares quarter, a the the During to $XX million approximately adds far. year approximately so for $XXX up total of million,

As an we opportunity to of our Board basis. on shares on had we left June million approximately XX, plan, repurchase authorized and continue $XXX

part to flow what over we we Our also conclude the allocation. To of a cash as continue to delivered strong flexibility business actual performance on solid said was gives overall, cash invest as the in time a disciplined approach we results, on would. it to shareholders quarter the capital returning QX to us while a

which cover we Now please X, are and forecast is which I'll are customers, turn upwards. the our market from in what trend to on seeing based the fourth starting where our the for quarter, outlook Slide to

revenue up $X.X a sequentially is X% on midpoint outlook to between is follows: billion $X.X which as billion, basis. Our

not 'XX. Non-GAAP $XX gross with FY the of fourth times beyond and dependent seeing we out consistent guidance $XX levels. normal to expenses in of look mix. of line while stabilization million, providing are X.X% into quarter, we margin X.X%, on Now demand million to quarters we're Operating improvement and prior as with

material driven starts revenue leverage cost we as to our we structure expect don't margin have of efficiencies spending in achieve X.X% operating to increases. Non-GAAP operating As X.X%. to and expect our make to increase,

$XX to levels we recent an $X in $XX line driven strong $X.X XX% net noncash expense rate account of and reduction income India which EPS other the in XX%. range venture to outstanding. Capital expect estimate joint to approximately to management. A for cash our of interest, million million partner's income. Non-GAAP with to and outlook, on of shares based to $X.XX be opportunities capabilities. And million to and summary, quarter our the to diluted around is And our million, be by approximate continue We $X.XX tax our approximately on we million future invest expenditures to depreciation customers to return XX signals million. In fully expect $XX based now we approximately growth. our finally, as further in demand from strengthen fourth

excited I'm turn and the right of about ahead. And me set let call with the successful, and opportunities over be the capabilities We have back that, to Jure. customers to

our me year make our a Jon. gentlemen, fiscal And year more turn comments and let quarter. Ladies Slide quarter. you, the or few and few markets I'll a more end add also the Thank to And third about I'll next XX. outlook fourth for review XXXX. Please comments about

We're this financial forecasts in Jon, see demonstrate growth from resilience continue turn it, results, I infrastructure see results. markets, industrial through our closely with also our as some to we are end and tell stabilization Slide starting that quarter. For a market we as communication during with Overall, you the heard seeing had better we to our softness as are in in environment, team focus in delivered Sanmina XX. our in can we you we more customers. very please working inventory. delivering some third of slowly continues automotive To about quarter, customers nice from the to to burning talk line outlook. solid networks, by are they their markets. In good cloud And

As Revenue slightly was the within up aerospace and cloud communication was medical, you of for networks, our quarter Industrial, for of X.X% infrastructure, that XX% were our revenue. automotive revenue revenue. was But defense third down $X.XX and quarter-over-quarter. our billion, quarter-over-quarter. heard XX% from Jon, was guidance. That

and nice Here, improvement had up that a in demand, quarter-over-quarter. was we X.X%

our represented quarter, a is I of top customers tell well-diversified can revenue. XX.X% XX company. For Sanmina that And you third

X last are to X Book-to-bill the Regarding in X.X:X. driving Mainly bookings. Please over better the was months. newer last a bookings, XX. products we had strong bookings quarters turn Slide

tell higher-margin performance Let more applications investing systems years, aerospace, solid I we continue see In driven been AI build. upgrades AI cloud has a Sanmina industrial and infrastructure, faster-growing circuit aerospace, opportunities business more which me high-technology markets our meet year, core in more adding comments future. In fabrication few high-density profit our and energy, for to for the to to automotive, board see defense end by We're about are markets. last and infrastructure, networks demand. X.X cloud the capacity defense you make continuing that X is in printed in can medical, cloud to and defense end networks.

should wins programs growth. new mainly to continue drive the Here,

driven medical. is medical digital market medical health Our in by devices around

is energy with long positioned Sanmina for new to advanced electrical projects driver new assistance the We industrial pipeline. In I opportunities driven can markets, automotive, in of that base we vehicle, solid in we have systems, trends well with term a tell new customer on is in management, focused controls projects of growth us and electrical the around products. AI car positive around opportunities customers pipeline, infrastructure, drive focus power have are strong business with good segment. In around the connectivity, chargers. high-density, continue IP you this by generation high-performance optical around a terabytes packaging, And architecture focused opportunities expand and driving factory XXX and semiconductor energy, in and lithography we computing gig advanced X.X routing, storage gig to and automation, XXX we and storage. for our energy for development. base and

Non-GAAP cash In diluted quarter. Slide For executed non-GAAP with solid the summary, by the well for markets, at the see turn X.X% EPS outlook. our $X.XX, billion, future. Please operating trends for of to a $X.XX in our as revenue for of quarter, delivering XX. And we these we Jon team margin line our with said, line in third delivered outlook. positive and

getting is visibility For the fourth better. quarter,

the year revenue $X.X $X.XX $X 'XX about excited Sanmina. non-GAAP up diluted revenue, Jon, personally we to $X.XX. I transitional growth been long-term you for us. For as heard and for earlier in to am EPS, are from year guiding billion has Fiscal billion

very are better well Sanmina We a future. navigating these market position dynamics and for

fiscal year a growth for that expect 'XX We be year our will markets. end

excited Again, all Components X% structure drive to be margin X of making I the up growth on drive us. Ladies cloud around to in to the beyond. Short growth question lines now to a is 'XX term, products Solutions markets should heavy your you and to our basically by years. stable profitable made support. we're our operating opportunities X%. Long 'XX and of percent, X the investments and ready we're We I'm That's front group are in Thank for group focus you range to to advantage. our improvements we optimizing open X-plus in gentlemen, Integrated AI, capital and for margin we enterprise, focused next drive to time operating regulated where in infrastructure. In and competitive about have Technology again. thank term, Operator, now and driven to like in answers. would summary, Manufacturing

[Operator Bank first line comes the from of from Bhattacharya question America. Instructions] Your Ruplu of

quarter seeing you the I communications the give guiding? And third expectations Jure, see What are wireless can you're end on optical, more did in are us specifically market? was quarter? you What wondering, details within what and your within you the fourth for that networking?

networks, our statement, in cloud Ruplu, plus said grew infrastructure X% approximately communication prepared we quarter-over-quarter. as Well,

We and packaging of from driven down, these expect that working move optical the it's it's see we And as direction. I been the to new said, level to their network, right direction. some also, they I not to moving systems, high-performance Again, are market continue level the customers routing the inventory IP in it, of but yet this existing would like our at think we're switches, in that starting the programs. pickup by some some not see that right they're wanted router to

And there some we're last quarter, test equipment. ship some material challenges around that getting that and of the programs were to the able basically new

the in in second the and quarter. fourth our that move direction, that I see that the think in we've continue mentioned right direction move to we quarter to started to in should right

point that maybe just let's So you mentioned. on build that

the What pushed market talked caused got I out? How about can impact? think And that you X programs dollar programs tell in? that push out you in you was much were CPS. us can that those

Jon, do you want it? to talk about

Yes.

so the both like been So The QX. have issues just on, remarks, just It's expect working in our to we really had we in prepared resolved. customers. with ship touch said to

Product about aren't core. that think Components I in group this

program. CPS The

exactly. Yes, Correct.

issues then a results. been dollar we have above So QX to was that, fronts, level, little bit the the who see our the our perspective, But pushed it expect EPS. Sanmina same those resolved, would the From been expect guide in if both of we on a Ruplu, them not in out, QX. and numbers midpoint for have for the we revenue overall at and

all Jon, was And CPS clarify, just any to did impacts any X of other the in just have margins? margins, issues because programs? impacting decline sequential Or other those you that or

This right? the have programs we Like X quarters, we're bit puts above But impact, always, were over. little at were point at last that about if those we some last and you over And look couple Ruplu, a the XX%, XX.X%. of for we takes. combined, quarter,

of CPS, just have slightly So we the was those in to majority the X impact down been related would but programs. overall

you IMDA you of on last little bit it. if end trend fourth these end the quarter one, different to can markets? in X Maybe quarter? the or I each What a are There fourth for for ask there. do the markets revenues the expecting detail end more are segment. Okay. Got markets in for those expect How

and some in industrial. As softness we I had statement, my said automotive prepared in

out. For the how also of to good see automotive, more industrial, I'm There's optimistic. energy. around On shift we a the at those expect time, softness We'll we lot continue. programs this

earlier, Medical, I flat some COVID side of and with happened the would the Demand we're business that fabrication that say having impact of are also because our are the still for very system including I also is demand fair a there. I good amount like high-technology position where And and we demand into assembly. customers existing think there. said also and there. up, what we new aerospace, as it's during us is military But in board coming medical are an with had opportunities strong and I good. so been is for new circuit programs boards, the that and customers down, we've in existing On we're expanding military defense we're boards, strong. strong investing

continue So right expect the move that to in to business direction.

if maybe flat, So today, overall, I say, I guess would had slightly to up.

from line from next your the Fox And of Fox Advisors. question Steven comes

about have Jon, as start well. can off you bit with own X inventories talking little your Maybe just, sheet. on more balance a I questions

have You like sense a could us give follow-up. but I do, turns, how Can driving inventory I it of guys much like, you sounds then have would just for And you better that? can you what's think you do a sort best-in-class say, already better.

a if you inventory, So like think couple a years history, at our days. into into the mid-XXs. we of I we're in that back back XX from terms GOI of get is X.X can about we go mentioned, overall, turns back, perspective, and And

perspective, a number driving make there's more a progress. that we did think opportunity definitely we towards So right? So some X, from And like we're there. turns

pretty progress, front. was made basis If to you go flat on some look inventory more room dollars sequentially, that but much at an on absolute quarter-over-quarter, but

cash we're from conversion what a that's driving cycle So perspective.

internal Or as under efficiencies? your better of that is to your is that be improving like And clear, mix recovers, is own on how much capabilities, demand recovers, based just that like control?

the It's the Steve, end day. Yes. at of both,

through absorption, bit are beginning like of the by certainly, was and that's call, working markets. end So inventory still I different little customers a at the mentioning

improving seeing and looking I normalized right? front. room on are but We we always both some So that back levels, for drive of there's efficiencies, to we're sides. Then some there's kind to us, some think think getting on

you mentioned Jure, helpful. row, term turns it? about bookings can bit quarters talk then how the book-to-bill, driving the few quarters? much how products. new And Can a next like X.X so you on maybe the for maybe in in about more of That's what's is X And little a much you and talk into revenues longer

Yes.

bookings As I quarters bookings said, the new by we X the look the are at way driven to released mainly build were Steve, built. to that be maximum, yes, last to released programs. the in now X put typically next pretty bookings in of X.X:X, bookings is And not orders are for couple that really strong, don't quarters we the X,

clear. So that is

but in get So only that's released for might basis. out $XX is, X on is throwing example, years, and let's examples, million. we just Steve, military, million, I'm first year say, But a over $XXX there contract, a quarterly

We to count the count that projects will not released. bookings build. released what's for but booked We for do not only are

clear. pretty that's So

be also talking and that's helping released years. started built. working year, So Those about see the new our bookings. in come the is they've programs that on starting what the they're been also, to stuff last the And developing to with out, as to are X.X we customers all existing I'm really

going So overall, we've And been inventory this let I just correction. me go know back. to

of or things And optimistic the signs to tell than X the going can I by our would But year being definitely, are X, months are starting the most perfect future so. to of X ago sure right of more this And improve. can't let's starting or is next for customers say, for direction. you, I've be our their I affected rest about some next in as couple I are you quarters, moving seen they're calendar of but all work customers tell say, it, more, to inventory it. quarters everything

we've pipeline growth the our we've And in years, trends. that's of those going then lot drive working the in of our are positive to good a got that on. couple next So stuff opportunities been

amount. been mentioned So his statement, as we've in fair prepared investing Jon

had so to or that is we're gaining cases, to If So up winning been we anything, of we are lose than ] multiple didn't there. [ lot shipping we a believe lot are we we've what grow. lot today even, programs internally some of customers. do is set any in focus sources customer Good a some more thing the

So a is bit green. things, we say like positive everything little can a but before we lot wait more to of

your next Group. of line comes And the Christian Schwab Craig-Hallum question from from Capital

And little exactly inventory impacted of and should quarter, end not a we top from email opportunity Last entire for real now the and things remaining to demand 'XX. you nice headwinds, it growth year the flows growth more you kind business wins, be given crystal for a pushes Last talked of and the of What of we're may about customer still regarding maybe fiscal bottoming. we're exit being what momentum, I range and business, pushouts talked in inventory customer across to and as guys broadly far kind about bit guys as bookings and strong the quarters. inventories kind think sounds quarter, design about but by like more year guarded return thinking visibility new an impacting this line ebbs be the strong clear. next fiscal multiple

Yes.

let me take Christian, on. one that So

it nothing burned down I of at would affects second these quarter, a talking million, forecast a demand is rate. than I coming at talking maybe year. inventory faster say out would were fiscal and about stronger last personally be components about small thought in the will $XX this slower rate be When $XX I thought little that the the half our we're will beginning a inventory say you I projects bit, more major. but what the revenue all, in group, of pretty million and shipments we're our profitable business, to on stable. product a First so pushouts

a rate. from up continue be at you we're down, this been for as us burned slower demand billion. $X today saying down is billion inventories but burned heard $X.X guiding we're So What that it's quarter, to to fourth

So a at in moving that's direction. the forecast you step as we said, customer right a and Jon on it's if and side. And ability, positive definitely I both right look the his

over then on that and his turn I'll 'XX have give comfortable markets 'XX the customers a it we to and the will from markets focus have, key comments. can feel Jon, For he you follow. definitely that all the based we we we very that We key that positive growth in

and it, that some grow new programs up go ready was the are help But commitment we new we're a drove want we're basically to we into make of to to 'XX. that the won, through I I much that programs longer ready not we mainly up. this talked communication tell we the So our you in about quarter today we expect today really in But to and optimistic. how year that of that time smarter a fiscal to the us. like be new quarter do. us I coming in that's what like to this programs going quarter, we're the thing of us quarter front what so we think to just you tell for that new have of 'XX, first just what's hopefully going that 'XX, program. next at sometimes some will and

that year, today from ready you a again not will days XX tell be we 'XX growth believe that's now. about that till but I'm what I tell see So can to but is you today the we percentage today, Jon? my commitment

Jure of Yes, just add the what was Christian, saying, the level numbers. to on to some and set

about If question, before, be for We in we shy think just been billion of to I so was a billion, been X when about guided $X.X above I QX guide, the mentioned those would midpoint to Ruplu's you we like midpoint. if have X% a answering slightly So improvement. billion. $X.X that our have came of not sequential would that programs and $X.XX had

right? $X.X started inventory do And guide now fiscal improved we to QX that a be there's about more as sequential at when perspective. If $X.X think of billion we're about you from and revenue, that this to be and our think inventory-wise, expect too of that to billion about efficiencies trajectory the are ago, certainly on bit that $X side we to billion. to a we increase, work then would We're going we've midpoint on the getting back correct well. X% the I turns we little year, the customer like opportunity And mentioning down to be up. turns [indiscernible], just was driving that through get So

QX we definitely the return as into So we start progress look ahead, we're see as to that next to year. growth. that make to going fiscal

our again year thank any much. you today, we months like questions. to joining looks fiscal and with fourth XXXX. I for discuss it Operator, very look a few like would further you don't to everyone in quarter have us and we Thank forward speaking to

Thank you.

Bye-bye.

participating. today's Thank concludes for you call. This

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