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SAN JOSE, Calif., April 26, 2010 /PRNewswire via COMTEX News Network/ -- Sanmina-SCI Corporation (the "Company"/Nasdaq: SANM), a leading global Electronics Manufacturing Services (EMS) company, today reported financial results for the second fiscal quarter ended April 3, 2010.
Second Quarter Fiscal 2010 Highlights
Q/Q - compared to the prior quarter
Y/Y - compared to the same quarter a year ago
Revenue for the second quarter was $1.53 billion, up 3.3 percent compared to $1.48 billion in the prior quarter ended January 2, 2010 and up 27.8 percent compared to $1.20 billion in the same period a year ago.
GAAP Financial Results(1)
GAAP net income in the second quarter was $10 million, a diluted earnings per share of $0.12, compared to net income of $59 million, a diluted earnings per share of $0.74 in the prior quarter. GAAP net loss for the same period a year ago was $38 million, a diluted loss per share of $0.45.
Non-GAAP Financial Results(1)(2)
Non-GAAP gross profit in the second quarter was $120 million, or 7.8 percent of revenue, up 20 basis points, compared to gross profit of $112 million, or 7.6 percent of revenue in the prior quarter. Non-GAAP gross profit for the same period a year ago was $71 million, or 5.9 percent of revenue.
Non-GAAP operating income was $56 million, up 14.7 percent, compared to $49 million in the prior quarter and up 390 percent compared to $11 million in the same period a year ago. Operating margin for the second quarter was 3.7 percent, up 40 basis points, compared to 3.3 percent in the prior quarter and a 270 basis point improvement compared to 1 percent in the second quarter fiscal 2009.
Non-GAAP net income in the second quarter was $24 million, a diluted earnings per share of $0.29, compared to a net income of $18 million, a diluted earnings per share of $0.23 in the prior quarter. Non-GAAP net loss for the same period a year ago was $31 million, a diluted loss per share of $0.37.
Three Month Periods
(In millions, except per
share data) Q2:2010 Q1:2010 Q2:2009
------------------------ ------- ------- -------
Revenue $1,527 $1,478 $1,195
GAAP:
Net income (loss) $10 $59 $(38)
Diluted earnings (loss) per
share(1) $0.12 $0.74 $(0.45)
Non-GAAP(2):
Gross profit $120 $112 $71
Gross margin 7.8% 7.6% 5.9%
Operating income $56 $49 $11
Operating margin 3.7% 3.3% 1.0%
Net income (loss) $24 $18 $(31)
Diluted earnings (loss) per
share(1) $0.29 $0.23 $(0.37)
--------------------------- ----- ----- ------
Balance Sheet Results
As of April 3, 2010 cash and cash equivalents amounted to $673 million, compared to $727 million for the quarter ended January 2, 2010. Cash cycle days were 42 days and inventory turns were 7.1x for the quarter.
"This was our fourth consecutive quarter of solid financial performance and I am pleased with our progress and execution to plan. We are confident that as demand continues to improve, our operating leverage will drive margin expansion in 2010. We believe that our strategy to focus on higher value added services, diversified markets and innovative technologies will allow us to capitalize on opportunities with new and existing customers, positioning Sanmina-SCI extremely well for the future," stated Jure Sola, Sanmina-SCI's Chairman and Chief Executive Officer.
Third Quarter Fiscal 2010 Outlook
The following forecast is for the third fiscal quarter ending July 3, 2010. These statements are forward-looking and actual results may differ materially.
Sanmina-SCI Makes Strategic Move to Expand RF/Microwave and Micro/Opto-Electronic Capabilities
The Company has executed a definitive agreement to acquire BreconRidge Corporation, an innovative design, engineering and manufacturing services provider for RF/microwave and micro/opto-electronic products that service the networking/communications, medical, industrial, aerospace and defense markets. As part of the transaction, Sanmina-SCI will acquire a world-class design and engineering team with expertise in advanced broadband applications (currently up to 100+ Gb/s) and wireless/radar/satellite applications, and state of the art manufacturing operations in Canada and China.
The agreement is subject to certain customary closing conditions and is expected to close in approximately 30 days. The purchase price will be up to $53 million including equity and assumption of certain liabilities, and is subject to post closing adjustments. BreconRidge's revenue run rate is approximately $45 million per quarter. The Company expects revenue to be in the range of $250 to $300 million per year over the next twelve months with the increase in technology and service offerings. The transaction is expected to be accretive to earnings per share on a non-GAAP basis within the first year.
"This acquisition strengthens both our position and our customer base in RF/microwave and micro/opto-electronic technologies. We are excited to work with BreconRidge's great customers and look forward to continuing to provide them with enhanced design, engineering and manufacturing capabilities. Upon completion of this transaction, Sanmina-SCI will be the leading electronics manufacturing services provider for these rapidly expanding leading-edge technologies," stated Sola.
(1)Earnings Per Share Calculation
The Company completed a reverse split of its common stock at a ratio of one for six, effective August 14, 2009. Earnings per share data contained in this release for periods prior to such date have been calculated on a post split basis.
(2)Non-GAAP Financial Information
In the commentary set forth above and/or in the financial statements included in this earnings release, we present the following non-GAAP financial measures: revenue, gross profit, gross margin, operating income, operating margin, net income (loss) and earnings (loss) per share. In computing each of these non-GAAP financial measures, we exclude charges or gains relating to: stock-based compensation expenses, restructuring costs (including employee severance and benefits costs and charges related to excess facilities and assets), integration costs (consisting of costs associated with the integration of acquired businesses into our operations), impairment charges for goodwill and intangible assets, amortization expense and other infrequent or unusual items (including charges for customer bankruptcy reorganizations, litigation settlements and discrete tax events), to the extent material or which we consider to be of a non-operational nature in the applicable period. See Schedule 1 below for more information regarding our use of non-GAAP financial measures, including the economic substance behind each exclusion, the manner in which management uses non-GAAP measures to conduct and evaluate the business, the material limitations associated with using such measures and the manner in which management compensates for such limitations. A reconciliation from GAAP to non-GAAP results is included in the financial statements contained in this release and is also available on the Investor Relations section of our website at www.sanmina-sci.com. Sanmina-SCI provides third quarter outlook information only on a non-GAAP basis due to the inherent uncertainties associated with forecasting the timing and amount of restructuring, impairment and other unusual and infrequent items.
Company Conference Call Information
Sanmina-SCI will hold a conference call regarding this announcement on Monday, April 26, 2010 at 5:00 p.m. ET (2:00 p.m. PT). The access numbers are: domestic 877-273-6760 and international 706-634-6605. The conference will also be broadcast live over the Internet. You can log on to the live webcast at www.sanmina-sci.com. Additional information in the form of a slide presentation is available by logging onto Sanmina-SCI's website at www.sanmina-sci.com. A replay of today's conference call will be available for 48-hours. The access numbers are: domestic 800-642-1687 and international 706-645-9291, access code is 68715353.
About Sanmina-SCI
Sanmina-SCI Corporation is a leading electronics contract manufacturer serving the fastest-growing segments of the global Electronics Manufacturing Services (EMS) market. Recognized as a technology leader, Sanmina-SCI provides end-to-end manufacturing solutions, delivering superior quality and support to OEMs primarily in the communications, defense and aerospace, industrial and medical instrumentation, multimedia, enterprise computing and storage, renewable energy and automotive technology sectors. Sanmina-SCI has facilities strategically located in key regions throughout the world. More information regarding the company is available at http://www.sanmina-sci.com.
Sanmina-SCI Safe Harbor Statement
Certain statements contained in this press release, including the closing date and anticipated benefits of the Company's pending acquisition of BreconRidge and the Company's outlook for future revenue and earnings per share and statements concerning future customer demand and growth constitute forward-looking statements within the meaning of the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934. Actual results could differ materially from those projected in these statements as a result of a number of factors, including failure of future sales from BreconRidge to meet forecasts, any failure to obtain any required approvals for the closing of the BreconRidge acquisition, a return of adverse conditions in the market for the Company's customers' products and the global economy as a whole, which could negatively impact the Company's revenue and the Company's customers' ability to pay for the Company's products; additional customer bankruptcy filings; supply shortages, negatively impacting pricing, inventory levels and shipping schedules; the sufficiency of the Company's cash position and other sources of liquidity to operate and expand its business; impact of the restrictions contained in the Company's credit agreements and indentures upon the Company's ability to operate and expand its business; competition negatively impacting the Company's revenues and margins; any failure of the Company to effectively assimilate acquired businesses and achieve the anticipated benefits of its acquisitions; the need to adopt future restructuring plans as a result of changes in the Company's business; and the other factors set forth in the Company's annual report for fiscal 2009 filed with the Securities Exchange Commission ("SEC").
The Company is under no obligation to (and expressly disclaims any such obligation to) update or alter any of the forward-looking statements made in this earnings release, the conference call or the Investor Relations section of our website whether as a result of new information, future events or otherwise, unless otherwise required by law.
SANMF
Sanmina-SCI Corporation
Condensed Consolidated Balance Sheets
(In thousands)
(GAAP)
October
April 3, 3,
2010 2009
---- ----
(Unaudited)
ASSETS
------
Current assets:
Cash and cash equivalents $672,962 $899,151
Accounts receivable, net 819,359 668,474
Inventories 815,652 761,391
Prepaid expenses and other current
assets 80,941 78,128
Assets held for sale 70,610 68,902
------ ------
Total current assets 2,459,524 2,476,046
--------- ---------
Property, plant and equipment, net 539,322 543,497
Other non-current assets 84,882 104,354
------ -------
Total assets $3,083,728 $3,123,897
========== ==========
LIABILITIES AND STOCKHOLDERS'
EQUITY
-----------------------------
Current liabilities:
Accounts payable $884,618 $780,876
Accrued liabilities 111,554 140,926
Accrued payroll and related
benefits 107,805 98,408
Current portion of long-term debt - 175,700
--- -------
Total current liabilities 1,103,977 1,195,910
--------- ---------
Long-term liabilities:
Long-term debt 1,261,340 1,262,014
Other 113,953 146,903
Total long-term liabilities 1,375,293 1,408,917
--------- ---------
Total stockholders' equity 604,458 519,070
------- -------
Total liabilities and
stockholders' equity $3,083,728 $3,123,897
========== ==========
Sanmina-SCI Corporation
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(GAAP)
(Unaudited)
Three Months Ended Six Months Ended
------------------ ----------------
April 3, March 28, April 3, March 28,
2010 2009 2010 2009
---- ---- ---- ----
Net sales $1,527,451 $1,195,107 $3,005,753 $2,614,371
Cost of
sales 1,409,974 1,126,517 2,778,589 2,461,983
--------- --------- --------- ---------
Gross
profit 117,477 68,590 227,164 152,388
------- ------ ------- -------
Operating
expenses:
Selling,
general
and
administrative 63,557 57,055 125,972 120,042
Research
and
development 3,252 4,720 6,350 8,912
Amortization
of
intangible
assets 1,059 1,023 2,237 2,673
Restructuring
and
integration
costs 3,871 15,574 7,209 24,809
Asset
impairment 500 3,384 500 7,182
Total
operating
expenses 72,239 81,756 142,268 163,618
------ ------ ------- -------
Operating
income
(loss) 45,238 (13,166) 84,896 (11,230)
Interest
income 597 1,829 978 5,279
Interest
expense (26,580) (28,112) (53,357) (57,295)
Other
income,
net 120 4,923 39,775 5,476
--- ----- ------ -----
Interest
and other
income,
net (25,863) (21,360) (12,604) (46,540)
------- ------- ------- -------
Income
(loss)
before
income
taxes 19,375 (34,526) 72,292 (57,770)
Provision
for
income
taxes 9,284 3,412 2,819 5,841
----- ----- ----- -----
Net income
(loss) $10,091 $(37,938) $69,473 $(63,611)
======= ======== ======= ========
Basic
income
(loss)
per share $0.13 $(0.45) $0.88 $(0.74)
Diluted
income
(loss)
per share $0.12 $(0.45) $0.85 $(0.74)
Weighted-
average
shares
used in
computing
per share
amounts:
Basic 79,001 83,453 78,808 85,410
Diluted 82,782 83,453 81,773 85,410
Sanmina-SCI Corporation
Reconciliation of GAAP to Non-GAAP Measures
(in thousands, except per share amounts)
(Unaudited)
Three Months Ended
------------------
April 3, January 2, March 28,
2010 2010 2009
---- ---- ----
GAAP Revenue $1,527,451 $1,478,302 $1,195,107
Adjustments
Customer bankruptcy
reorganization (1) - - -
--- --- ---
Non-GAAP Revenue $1,527,451 $1,478,302 $1,195,107
========== ========== ==========
GAAP Gross Profit $117,477 $109,687 $68,590
GAAP gross margin 7.7% 7.4% 5.7%
Adjustments
Stock compensation
expense (2) 2,040 2,066 2,000
Amortization of
intangible assets - - -
Customer bankruptcy
reorganization (1) - - -
--- --- ---
Non-GAAP Gross
Profit $119,517 $111,753 $70,590
======== ======== =======
Non-GAAP gross
margin 7.8% 7.6% 5.9%
GAAP operating
income (loss) $45,238 $39,658 $(13,166)
GAAP operating
margin 3.0% 2.7% -1.1%
Adjustments
Stock compensation
expense (2) 5,352 4,652 4,326
Amortization of
intangible assets 1,059 1,178 1,023
Stock option
investigation - - 300
Customer bankruptcy
reorganization (1) - - -
Restructuring and
integration costs 3,871 3,338 15,574
Asset impairment 500 - 3,384
--- --- -----
Non-GAAP operating
income $56,020 $48,826 $11,441
======= ======= =======
Non-GAAP operating
margin 3.7% 3.3% 1.0%
GAAP net income
(loss) $10,091 $59,382 $(37,938)
Adjustments:
Operating income
adjustments (see
above) 10,782 9,168 24,607
Net gain on
derivative
financial
instruments and
other (3) - - -
Impairment of long-
term investment - - 1,000
Gain on sale of
business - (3,710) -
(Gain) /loss on
repurchase of debt
(4) - 828 (13,490)
Gain from
litigation
settlement (5) - (35,556) -
Nonrecurring tax
items 3,164 (11,644) (5,128)
----- ------- ------
Non-GAAP net
income (loss) $24,037 $18,468 $(30,949)
======= ======= ========
Non-GAAP Basic
Income (Loss) Per
Share: $0.30 $0.23 $(0.37)
Non-GAAP Diluted
Income (Loss) Per
Share: $0.29 $0.23 $(0.37)
Weighted-average
shares used in
computing Non-
GAAP per share
amounts:
Basic 79,001 78,615 83,453
Diluted 82,782 80,575 83,453
(1) Relates to
revenue reversal
and inventory
reserves
associated with
a customer's
bankruptcy
reorganization
announcement.
(2) Stock
compensation
expense was as
follows:
Three Months Ended
------------------
April 3, January 2, March 28,
2010 2010 2009
---- ---- ----
Cost of sales $2,040 $2,066 $2,000
Selling, general
and administrative 3,208 2,487 2,237
Research and
development 104 99 89
--- --- ---
Stock compensation
expense -total
company $5,352 $4,652 $4,326
====== ====== ======
Six Months Ended
----------------
April 3, March 28,
2010 2009
---- ----
GAAP Revenue $3,005,753 $2,614,371
Adjustments
Customer bankruptcy
reorganization (1) - 5,000
--- -----
Non-GAAP Revenue $3,005,753 $2,619,371
========== ==========
GAAP Gross Profit $227,164 $152,388
GAAP gross margin 7.6% 5.8%
Adjustments
Stock compensation expense (2) 4,106 3,865
Amortization of intangible
assets - 233
Customer bankruptcy
reorganization (1) - 10,000
--- ------
Non-GAAP Gross Profit $231,270 $166,486
======== ========
Non-GAAP gross margin 7.7% 6.4%
GAAP operating income (loss) $84,896 $(11,230)
GAAP operating margin 2.8% -0.4%
Adjustments
Stock compensation expense (2) 10,004 8,488
Amortization of intangible
assets 2,237 2,906
Stock option investigation - 450
Customer bankruptcy
reorganization (1) - 10,000
Restructuring and integration
costs 7,209 24,809
Asset impairment 500 7,182
--- -----
Non-GAAP operating income $104,846 $42,605
======== =======
Non-GAAP operating margin 3.5% 1.6%
GAAP net income (loss) $69,473 $(63,611)
Adjustments:
Operating income adjustments
(see above) 19,950 53,835
Net gain on derivative
financial instruments and
other (3) - (4,993)
Impairment of long-term
investment - 1,000
Gain on sale of business (3,710) -
(Gain) /loss on repurchase of
debt (4) 828 (13,490)
Gain from litigation
settlement (5) (35,556) -
Nonrecurring tax items (8,480) (4,458)
------ ------
Non-GAAP net income (loss) $42,505 $(31,717)
======= ========
Non-GAAP Basic Income (Loss)
Per Share: $0.54 $(0.37)
Non-GAAP Diluted Income
(Loss) Per Share: $0.52 $(0.37)
Weighted-average shares used
in computing Non-GAAP per
share amounts:
Basic 78,808 85,410
Diluted 81,773 85,410
Relates to revenue reversal
and inventory reserves
associated with a customer's
bankruptcy reorganization
(1) announcement.
Stock compensation expense
(2) was as follows:
Six Months Ended
----------------
April 3, March 28,
2010 2009
---- ----
Cost of sales $4,106 $3,865
Selling, general and
administrative 5,695 4,449
Research and development 203 174
--- ---
Stock compensation expense -
total company $10,004 $8,488
======= ======
(3) Relates primarily to a gain on interest rate swaps not accounted
for as hedging instruments during a portion of Q1 FY09 due to
termination of a swap.
(4) Represents gain or loss, including write-off of unamortized
debt issuance costs, on debt redeemed prior to maturity.
(5) Represents cash received in connection with a litigation settlement.
Schedule I
The tables contained above include non-GAAP measures of revenue, gross profit, gross margin, operating income, operating margin, net income and earnings per share. Management excludes from these measures stock-based compensation, restructuring and integration expenses, impairment charges, amortization charges and other infrequent items, including customer bankruptcy impacts, to the extent material or which we consider to be of a non-operational nature in the applicable period.
Management excludes these items principally because such charges are not directly related to the Company's ongoing core business operations. We use such non-GAAP measures in order to (1) make more meaningful period-to-period comparisons of Company's operations, both internally and externally, (2) guide management in assessing performance of the business, internally allocating resources and making decisions in furtherance of Company's strategic plan, (3) provide investors with a better understanding of how management plans and measures the business and (4) provide investors with a better understanding of the ongoing, core business. The material limitations to management's approach include the fact that the charges and expenses excluded are nonetheless charges required to be recognized under GAAP. Management compensates for these limitations primarily by using GAAP results to obtain a complete picture of the Company's performance and by including a reconciliation of non-GAAP results back to GAAP in its earnings releases.
Additional information regarding the economic substance of each exclusion, management's use of the resultant non-GAAP measures, the material limitations of management's approach and management's methods for compensating for such limitations is provided below.
Stock-based Compensation Expense, which consists of non-cash charges for the estimated fair value of stock options and unvested restricted stock units granted to employees, is excluded in order to permit more meaningful period-to-period comparisons of the Company's results since the Company grants different amounts and value of stock options in each quarter. In addition, given the fact that competitors grant different amounts and types of equity award and may use different option valuation assumptions, excluding stock-based compensation permits more accurate comparisons of the Company's core results with those of its competitors.
Restructuring and Integration Costs, which consist of severance, lease termination, exit costs and other charges primarily related to closing and consolidating manufacturing facilities and those associated with the integration of acquired businesses into our operations, are excluded because such charges (1) can be driven by the timing of acquisitions which are difficult to predict, (2) are not directly related to ongoing business results and (3) do not reflect expected future operating expenses. In addition, given the fact that the Company's competitors complete acquisitions and adopt restructuring plans at different times and in different amounts than the Company, excluding these charges permits more accurate comparisons of the Company's core results with those of its competitors. Items excluded by the Company may be different from those excluded by the Company's competitors and restructuring and integration expenses include both cash and non-cash expenses. Cash expenses reduce the Company's liquidity. Therefore, management also reviews GAAP results including these amounts.
Impairment Charges, which consist of non-cash charges resulting primarily from the Company's net book value exceeding its market capitalization due to weak macroeconomic conditions, are excluded because such charges are non-recurring and do not reduce the Company's liquidity. In addition, given the fact that the Company's competitors may record impairment charges at different times, excluding these charges permits more accurate comparisons of the Company's core results with those of its competitors.
Amortization Charges, which consist of non-cash charges impacted by the timing and magnitude of acquisitions of businesses or assets, are also excluded because such charges do not reduce the Company's liquidity or availability under its credit facilities. In addition, such charges can be driven by the timing of acquisitions, which is difficult to predict. Excluding these charges permits more accurate comparisons of the Company's core results with those of its competitors because the Company's competitors complete acquisitions at different times and for different amounts than the Company.
Other Items, which consist of other infrequent or unusual items (including charges for customer bankruptcy reorganizations, litigation settlements and discrete tax events), to the extent material or non-operational in nature, are excluded because such items are typically non-recurring, difficult to predict and generally not directly related to the Company's ongoing core operations. However, items excluded by the Company may be different from those excluded by the Company's competitors. In addition, these expenses include both cash and non-cash expenses. Cash expenses reduce the Company's liquidity. Management compensates for these limitations by reviewing GAAP results including these amounts.
SOURCE Sanmina-SCI Corporation
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