Sanmina Reports Fourth Quarter And Fiscal Year End Results
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Sanmina Reports Fourth Quarter And Fiscal Year End Results

SAN JOSE, Calif., Oct. 27, 2014 — (PRNewswire) —  Sanmina Corporation ("Sanmina" or the "Company") (NASDAQ: SANM), a leading integrated manufacturing solutions company, today reported financial results for the fourth quarter and fiscal year ended September 27, 2014.

Fourth Quarter Fiscal 2014 Summary

Fiscal Year 2014 Summary

Revenue for the fourth quarter was $1.69 billion, compared to $1.60 billion in the prior quarter and $1.51 billion for the same period of fiscal 2013.  Revenue for fiscal year ended September 27, 2014 was $6.22 billion, compared to $5.92 billion for the fiscal year ended September 28, 2013.

GAAP operating income in the fourth quarter was $61.5 million or 3.6 percent of revenue, compared to $44.7 million or 3.0 percent of revenue for the same period a year ago.  GAAP operating income for fiscal year 2014 was $199.7 million, compared to $157.6 million in fiscal year 2013.  GAAP net income in the fourth quarter was $132.5 million, compared to $38.8 million for the same period a year ago.  GAAP diluted earnings per share for the fourth quarter was $1.52, compared to $0.44 in the same period a year ago.  GAAP net income for fiscal year 2014 was $197.2 million, compared to $79.4 million in fiscal year 2013.  GAAP diluted earnings per share in fiscal year 2014 was $2.27, compared to $0.93 in fiscal year 2013.

Non-GAAP operating income in the fourth quarter was $71.3 million or 4.2 percent of revenue, compared to $55.7 million or 3.7 percent of revenue for the same period a year ago.  Non-GAAP operating income for the full fiscal year was $234.0 million, compared to $186.9 million for fiscal year 2013.  Non-GAAP net income in the fourth quarter was $53.4 million, compared to $39.9 million for the same period a year ago.  Non-GAAP diluted earnings per share for the fourth quarter was $0.61, compared to $0.46 in the same period a year ago.  Non-GAAP net income for fiscal year 2014 was $172.5 million, compared to $123.4 million in fiscal year 2013.  Non-GAAP diluted earnings per share in fiscal year 2014 was $1.99, compared to $1.44 in fiscal year 2013.

Balance Sheet Summary

"Solid execution coupled with stable demand from a majority of our market segments were the key drivers for overall improvement in our financial results.  Revenue for the fourth quarter was up 5 percent sequentially and 12 percent over the fourth quarter last year," stated Jure Sola, Chairman and Chief Executive Officer of Sanmina Corporation.  

"In fiscal 2014, we delivered solid growth, margin improvement, EPS expansion and strong cash generation. Execution of our core strategy has delivered consistent and predictable results.  We remain focused on the quality of our revenue, expanding our capabilities and providing value to our customers. With our revenue base exiting 2014, we are optimistic that 2015 will be another growth year for Sanmina," concluded Sola.  

Company Completes The Redemption Of All Outstanding 7% Senior Notes Due 2019
On October 8, 2014, the Company completed the redemption of the remaining $100 million in aggregate principal amount of its 7% Senior Notes due 2019 using existing cash and credit facilities.  

First Quarter Fiscal 2015 Outlook
The following outlook is for the first fiscal quarter ending December 27, 2014.  These statements are forward-looking and actual results may differ materially. 

Company Conference Call Information
Sanmina will hold a conference call regarding results for the fourth quarter and fiscal year end 2014 on Monday, October 27, 2014 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.com.  Additional information in the form of a slide presentation is available by logging onto Sanmina's website at www.sanmina.com.  A replay of the conference call will be available for 48-hours.  The access numbers are: domestic 855-859-2056 and international 404-537-3406, access code is 21263272.

(1)Fourth quarter and full year fiscal 2014 GAAP diluted earnings per share includes a non-recurring tax benefit of $1.01 and fourth quarter and full year fiscal 2013 GAAP diluted earnings per share includes a non-recurring tax benefit of $0.25.

(2)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: operating income, operating margin, net income and diluted earnings 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), acquisition and integration costs (consisting of costs associated with the acquisition and integration of acquired businesses into our operations), impairment charges for goodwill and other assets, amortization expense and other infrequent or unusual items (including charges associated with distressed customers, litigation settlements, gains and losses on sales of assets and redemptions of debt, discrete tax events and deferred tax changes), 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 of the non-GAAP results contained in this release to their most directly comparable GAAP measures is included in the financial statements contained in this release.  Sanmina provides its first quarter fiscal 2015 outlook only on a non-GAAP basis due to the inherent uncertainties associated with forecasting the timing and amount of acquisitions, restructuring activities, asset impairments and other unusual and infrequent items.

About Sanmina
Sanmina Corporation is a leading integrated manufacturing solutions provider serving the fastest-growing segments of the global Electronics Manufacturing Services (EMS) market. Recognized as a technology leader, Sanmina provides end-to-end manufacturing solutions, delivering superior quality and support to OEMs primarily in the communications, defense and aerospace, industrial and semiconductor systems, medical, multimedia, computing and storage, automotive and clean technology sectors. Sanmina has facilities strategically located in key regions throughout the world. More information regarding the company is available at www.sanmina.com.

Sanmina Safe Harbor Statement
Certain statements contained in this press release, including the Company's outlook for the first quarter and its expectations concerning growth in fiscal 2015, 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 adverse changes to the key markets we target; credit problems experienced by our customers; risks arising from our international operations; competition that could cause us to lose sales; consolidation among our customers and suppliers that could adversely affect our business; and the other factors set forth in the Company's annual and quarterly reports 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.

Condensed Consolidated Balance Sheets

(in thousands)

(GAAP)




September 27,


September 28,




2014


2013




(Unaudited)



ASSETS










Current assets:





Cash and cash equivalents

$     466,607


$    402,875


Accounts receivable, net

979,475


944,816


Inventories

893,178


781,560


Prepaid expenses and other current assets

111,714


75,337



Total current assets

2,450,974


2,204,588







Property, plant and equipment, net

563,016


540,151

Other


299,099


251,109



Total assets

$  3,313,089


$ 2,995,848







LIABILITIES AND STOCKHOLDERS' EQUITY










Current liabilities:





Accounts payable

$  1,139,845


$    956,488


Accrued liabilities 

110,357


109,363


Accrued payroll and related benefits

126,541


118,572


Short-term debt

157,394


22,301



Total current liabilities

1,534,137


1,206,724







Long-term liabilities:





Long-term debt

386,681


562,512


Other

145,516


135,048



Total long-term liabilities

532,197


697,560







Stockholders' equity

1,246,755


1,091,564



Total liabilities and stockholders' equity

$  3,313,089


$ 2,995,848

 

Condensed Consolidated Statements of Income

(in thousands, except per share amounts)

(GAAP)

(Unaudited)












Three Months Ended


Twelve Months Ended












Sept. 27,


Sept. 28,


Sept. 27,


Sept. 28,



2014


2013


2014


2013










Net sales

$ 1,686,169


$ 1,505,323


$ 6,215,106


$  5,917,124

Cost of sales

1,554,551


1,389,989


5,726,823


5,490,307


Gross profit

131,618


115,334


488,283


426,817










Operating expenses:









Selling, general and administrative

57,745


57,130


242,288


238,072


Research and development

7,932


7,395


32,495


25,571


Amortization of intangible assets

425


474


1,798


1,896


Restructuring and integration costs 

3,979


4,647


12,550


24,910


Asset impairments

-


1,000


-


2,100


Gain on sales of long-lived assets

-


-


(530)


(23,361)


     Total operating expenses

70,081


70,646


288,601


269,188










Operating income

61,537


44,688


199,682


157,629











Interest income

343


179


1,533


1,014


Interest expense 

(7,410)


(8,560)


(30,804)


(41,004)


Other expense, net

(4,075)


2,204


(8,672)


(14,233)

Interest and other, net

(11,142)


(6,177)


(37,943)


(54,223)










Income before income taxes

50,395


38,511


161,739


103,406










Provision for (benefit from) income taxes 

(82,108)


(290)


(35,426)


24,055










Net income

$    132,503


$      38,801


$    197,165


$       79,351




















Basic income per share

$          1.61


$          0.46


$          2.38


$           0.96


Diluted income per share

$          1.52


$          0.44


$          2.27


$           0.93











Weighted-average shares used in computing 









per share amounts:









  Basic

82,528


83,790


82,872


82,834


  Diluted

86,997


87,201


86,731


85,403

 

Reconciliation of GAAP to Non-GAAP Measures

(in thousands, except per share amounts)

(Unaudited)












Three Months Ended


Twelve Months Ended



Sept. 27,


Sept. 28,


Sept. 27,


Sept. 28,



2014


2013


2014


2013










GAAP Operating Income

$      61,537


$      44,688


$    199,682


$   157,629


GAAP operating margin

3.6%


3.0%


3.2%


2.7%

Adjustments









Stock compensation expense (1)

5,519


4,148


18,789


17,524


Amortization of intangible assets

1,072


474


3,871


1,896


Distressed customer charges (2)

1,856


768


2,239


6,180


Restructuring, acquisition and integration costs

3,979


4,647


12,550


24,910


Recovery of contingency item (3)

(2,686)


-


(2,562)


-


Gain on sales of long-lived assets

-


-


(530)


(23,361)


Asset impairments

-


1,000


-


2,100

Non-GAAP Operating Income

$      71,277


$      55,725


$    234,039


$   186,878


Non-GAAP operating margin

4.2%


3.7%


3.8%


3.2%



















GAAP Net Income

$    132,503


$      38,801


$    197,165


$     79,351










Adjustments:









Operating income adjustments (see above)

9,740


11,037


34,357


29,249


Loss on repurchases of debt (4)

3,587


-


11,779


1,401


Loss on dedesignation of interest rate swap (5)

-


-


-


14,903


Litigation settlements (6)

-


(2,421)


(1,571)


(2,421)


Nonrecurring tax items

(92,416)


(7,537)


(69,260)


902

Non-GAAP Net Income

$      53,414


$      39,880


$    172,470


$   123,385



















GAAP Net Income Per Share:









Basic

$          1.61


$          0.46


$          2.38


$         0.96


Diluted

$          1.52


$          0.44


$          2.27


$         0.93










Non-GAAP Net Income Per Share:









Basic

$          0.65


$          0.48


$          2.08


$         1.49


Diluted

$          0.61


$          0.46


$          1.99


$         1.44










Weighted-average shares used in computing per share amounts:









Basic

82,528


83,790


82,872


82,834


Diluted

86,997


87,201


86,731


85,403



















(1)

Stock compensation expense was as follows: 












Three Months Ended


Twelve Months Ended



Sept. 27,


Sept. 28,


Sept. 27,


Sept. 28,



2014


2013


2014


2013











Cost of sales

$        1,986


$        1,362


$        5,850


$       5,464


Selling, general and administrative

3,491


2,767


12,860


11,942


Research and development

42


19


79


118


  Total

$        5,519


$        4,148


$      18,789


$     17,524



















(2)

Relates to inventory and bad debt reserves / recoveries associated with distressed customers.



(3)

Represents a non-recurring contingency that the Company resolved favorably.



(4)

Represents a loss, including write-off of unamortized debt issuance costs, on debt redeemed or repurchased prior to maturity.



(5)

Represents a non-cash loss resulting from dedesignation of an interest rate swap.



(6)

Represents cash received in connection with a litigation settlement.

Schedule I

The commentary and financial information above includes non-GAAP measures of operating income, operating margin, net income and earnings per share.  Management excludes from these measures stock-based compensation, restructuring, acquisition and integration expenses, impairment charges, amortization charges and other infrequent items, to the extent material or which we consider to be of a non-operational nature in the applicable period, and as more fully described below.

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 the 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, Acquisition and Integration Expenses, which consist of severance, lease termination, exit costs and other charges primarily related to closing and consolidating manufacturing facilities and those associated with the acquisition and integration of acquired businesses, 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, 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. 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 associated with distressed customers, litigation settlements, gains and losses on sales of assets and redemptions of debt, discrete tax events and deferred tax changes), to the extent material or non-operational in nature, are excluded because such items are typically non-recurring, difficult to predict or 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.

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SOURCE Sanmina Corporation

Contact:
Sanmina Corporation
Paige Bombino, Director, Investor Relations, (408) 964-3610
Web: http://www.sanmina-sci.com