8-K: Sanmina Reports Fiscal Q3 2024 Results, Sees Stabilization and Growth Ahead

Sanmina Corporation announced its fiscal third quarter 2024 financial results, reporting revenue of $1.84 billion and providing an outlook for growth in fiscal year 2025.

Summary

• Sanmina Corporation reported its financial results for the third fiscal quarter ended June 29, 2024.
• The company's revenue for the quarter was $1.84 billion.
• GAAP operating margin was 4.5%, while non-GAAP operating margin was 5.3%.
• GAAP diluted earnings per share (EPS) was $0.91, and non-GAAP diluted EPS was $1.25.
• Cash flow from operations was $90 million, and the company ended the quarter with $658 million in cash and cash equivalents.
• Sanmina expects revenue between $1.9 billion and $2.0 billion for the fourth fiscal quarter ending September 28, 2024.
• The company anticipates GAAP diluted EPS between $1.02 and $1.12 and non-GAAP diluted EPS between $1.30 and $1.40 for the next quarter.
• Sanmina is starting to see stabilization and demand improve, expecting growth in fiscal year 2025.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive. While the current quarter's results show a decrease in revenue and net income compared to the previous year, the company is seeing stabilization and expects growth in the next fiscal year. The outlook for the next quarter is also positive, indicating a potential turnaround.

Positives

• Sanmina delivered third quarter results in line with their outlook.
• The company is seeing stabilization and demand improvement heading into the fourth quarter.
• Sanmina expects to see growth in fiscal year 2025.
• The company maintains a strong balance sheet.
• Sanmina is focused on delivering profitable growth and free cash flow generation.
• The company is returning value to shareholders.

Negatives

• Net sales decreased from $2.207 billion in Q3 2023 to $1.841 billion in Q3 2024.
• GAAP net income attributable to common shareholders decreased from $76.494 million in Q3 2023 to $51.602 million in Q3 2024.

Risks

• Adverse changes in key markets could impact future sales and net income.
• The company relies on a small number of customers for a substantial portion of its sales.
• International operations pose risks.
• Geopolitical uncertainty, including the war in Ukraine and conflict in the Middle East, could affect the company.
• The company's future sales and net income can be variable.

Future Outlook

Sanmina expects revenue between $1.9 billion and $2.0 billion for the fourth fiscal quarter ending September 28, 2024, with GAAP diluted EPS between $1.02 and $1.12 and non-GAAP diluted EPS between $1.30 and $1.40. The company anticipates growth in fiscal year 2025.

Management Comments

• We delivered third quarter results in line with our outlook.
• We are starting to see stabilization and demand improve going into our fourth quarter, and we expect to see growth in fiscal 2025, stated Jure Sola, Chairman and Chief Executive Officer.
• We continue to execute our strategy, which is to deliver profitable growth and free cash flow generation while maintaining our strong balance sheet and returning value to shareholders.

Industry Context

Sanmina operates in the Electronics Manufacturing Services (EMS) market, serving various sectors including industrial, medical, defense, aerospace, automotive, communications networks, and cloud infrastructure. The company's performance is indicative of trends in these sectors, with stabilization and demand improvement suggesting a potential recovery or growth phase in the broader market.

Comparison to Industry Standards

• Sanmina's revenue of $1.84 billion is a significant figure in the EMS industry, but it is a decrease compared to the $2.207 billion reported in the same quarter last year.
• Companies like Jabil and Flex, which are also major players in the EMS sector, have reported varying results in recent quarters, with some experiencing similar challenges in demand and supply chain dynamics.
• Sanmina's operating margin of 4.5% (GAAP) and 5.3% (non-GAAP) is within the range of what is typically seen in the industry, but it is important to compare these figures to the specific performance of its direct competitors to assess its relative position.
• The company's focus on profitable growth and free cash flow generation aligns with industry best practices, as many EMS companies are prioritizing efficiency and financial stability in the current economic environment.

Stakeholder Impact

• Shareholders can expect potential growth in fiscal year 2025 and continued value return.
• Employees may see stability and potential growth opportunities as the company stabilizes and demand improves.
• Customers can expect continued service and support as Sanmina executes its strategy.
• Suppliers may see increased demand as the company anticipates growth in the next fiscal year.
• Creditors can be reassured by the company's strong balance sheet and focus on free cash flow generation.

Next Steps

• Sanmina will hold a conference call on July 29, 2024, to review the financial results and outlook.
• The company will continue to execute its strategy to deliver profitable growth and free cash flow generation.
• Sanmina will focus on maintaining a strong balance sheet and returning value to shareholders.

Key Dates

Keywords

Sanmina, Manufacturing Solutions, Electronics Manufacturing Services, EMS, Financial Results, Revenue, Operating Margin, EPS, Cash Flow, Fiscal Quarter, Outlook