Sanmina Corporation · NASDAQ:SANM
Sanmina — Q4 2020 Earnings Presentation
33 slides from Sanmina's earnings presentation, Nov 10, 2020
Slide 1: Q4 & FY'20 Results
Q4 & FY’20 Results November 10, 2020
Slide 2: Today's Presenters
Today’s Presenters Jure Sola Kurt Adzema Chairman & CEO EVP & CFO
Slide 3: Safe Harbor Statement
Safe Harbor Statement Certain statements made during this presentation, including the Company's outlook for the first quarter fiscal 2021 financial results, constitutes forward-looking statements within the meaning of the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934.
Slide 4: Opening Comments
: ae Opening < > Comments SANMINA Jure Sola ——________
Slide 5: Financial Review
Financial Review Kurt Adzema
Slide 6: Q4'20 Non-GAAP Financial Highlights
Q4’20 Non-GAAP Financial Highlights Revenue: $1.87B, up 13.3% sequentially and exceeding outlook of $1.73B - $1.83B Gross margin: 8.3%, up 20 bps sequentially Operating margin: 5.1%, up 50 bps sequentially Diluted EPS: $1.10, exceeding outlook of $0.73 - $0.83 6
Slide 7: Financial Results (Unaudited)
Financial Results (Unaudited) (1)Non-GAAP financial measures exclude charges or gains relating to: stock-based compensation expenses; restructuring costs (including employee severance and benefits costs and charges related to excess facilities and assets); acquisition and integration costs (consisti
Slide 8: Segment Reporting - Revenue and Non-GAAP Gross Margin
Segment Reporting - Revenue and Non-GAAP Gross Margin* ($ in Millions) Integrated Manufacturing Solutions Components, Products and Services $1,601 $1,544 $1,541 $365 $1,348 $342 $336 $337 $1,300 $327 7.0% 7.2% 6.8% 6.6% 12.4% 12.0% 5.8% 10.9% 10.6% 10.2% Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 Q4'19 Q1'20 Q2'
Slide 9: Q/Q Non-GAAP P&L Performance
Q/Q Non-GAAP P&L Performance ($ in Millions, except per share data) Revenue Gross Profit / Margin $1,892 $1,840 $1,875 $156 $1,655 $144 $138 $1,591 $135 $110 8.1% 8.3% 7.6% 7.5% 6.9% Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 Operating Income / Margin Earnings Per Share $1.10 $0.84
Slide 10: Fiscal Y/Y Non-GAAP P&L Performance
Fiscal Y/Y Non-GAAP P&L Performance ($ in Millions, except per share data) Revenue Gross Profit / Margin $8,234 $600 $6,869 $7,110 $6,960 $519 $532 $538 $6,481 $470 8.0% 7.7% 7.3% 7.7% 6.6% FY'16 FY'17 FY'18 FY'19 FY'20 FY'16 FY'17 FY'18 FY'19 FY'20 Operating Income / Margin Earnings Per Share $3.40
Slide 11: Summary Balance Sheet
Summary Balance Sheet ($ in Millions) 10/3/20 6/27/20 9/28/19 Cash and cash equivalents $ 481 $ 1,117 $ 455 Accounts receivable, net 1,043 1,042 1,128 Contract assets 397 381 396 Inventories 861 884 901 Property, plant and equipment, net 559 575 631 Deferred tax assets 273 277 280 Other assets 158 1
Slide 12: Capital Structure to Support Any Market Environment
Debt to Cash ($ in Millions) Debt to Cash $608 Strong capital structure Paid off remaining $650M of $700M revolver $462 $480 Term loan $348M matures Nov. 2023 $385 $348 $692M available under credit facility as of FY’20 year end 1.4x 1.2x 1.2x Liquidity: Approximately $1.2B 0.8x 0.7x FY'16
Slide 13: Balance Sheet Metrics
Balance Sheet Metrics ($ in Millions) Cash and Cash Equivalents Inventory $ / Turns $1,115 $1,117 $901 $844 $884 $884 $861 7.7x 7.8x 7.3x 6.9x 6.9x $481 $455 $431 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 Q2’20 and Q3’20 include $650 million of borrowings on our cash flow revolver.
Slide 14: Cash Utilization
Cash Utilization ($ in Millions) Q4’20: $80M Cash flow from operations Cash Utilization Q4’20: $69M Free cash flow 14
Slide 15: Capital Expenditures
Capital Expenditures ($ in Millions) Net Capital Expenditures Disciplined approach Investments in prior years position us for growth $127 in the future $116 $114 $108 Leveraging existing manufacturing capacity Q4’20: $10.5M $64 Continue to invest where needed to support growth and technolo
Slide 16: Share Repurchase Program
Share Repurchase Program Q4’20: repurchased 3.0M shares for $78M Shares Repurchased (M) FY’20: repurchased 6.4M shares for $166M 6.8 6.4 5 Years: 22.8M shares repurchased for $619M 5.0 4.3 Approximately $135M remains available under Board authorized program 0.3 FY'16 FY'17 FY18 FY'19 FY'20 O
Slide 17: Q1'21 Outlook
Q1’21 Outlook* The following outlook for the first fiscal quarter ended January 2, 2021. These statements are forward-looking and actual Impact of COVID-19 and macroeconomic environment results may differ materially. continues to evolve 13 week quarter compared to 14 weeks in prior quarter Reven
Slide 18: CEO Remarks
w CEO — Lad > Remarks SANMINA Jure Sola ——________
Slide 19: Q4'20 Revenue By End-Market
Q4’20 Revenue By End-Market Communications MedicalNetworks $ in Millions Q4’20 Sequential 34.5% Communications Networks Cloud Cloud Solutions Industrial/Medical/Defense/Automotive $1,116 19.0% Solutions 6.0% Q4’20 Communications Networks $647 8.7% Cloud Solutions $112 (7.6%) Industrial/Automotive/ T
Slide 20: Q1'21 End-Market Outlook - Stable
Q1’21 End-Market Outlook - Stable I/M/D/A Industrial Security and safety, inverters and renewable energy systems, test and measurement , semiconductor equipment and heavy machinery Medical COVID-19 related products: Lab diagnostic, ventilator, patient monitoring and ultrasound, other medical product
Slide 21: Unlocking Total Value of Sanmina's Capabilities
Unlocking Total Value of Sanmina’s Capabilities 21
Slide 22: Current: Operating Segments
Current: Operating Segments Integrated Manufacturing Solutions Components, Products & Services Product System Build Interconnect Systems SCI Precision Mechanical Systems Viking Enterprise Global Services Viking Technology Q4 FY’2020 Q4 FY’2020 Revenue: $1.54B Revenue: $365M Gross margi
Slide 23: Plan: Unlocking Total Value of Sanmina
Plan: Unlocking Total Value of Sanmina Integrated Manufacturing Solutions Component Technology SCI – Defense Products Product System Build Interconnect Circuit Boards SCI Products Global Services - Logistics and Repair Precision Mechanical Systems Defense and Aerospace Product Build Op
Slide 24: Plan: Organizational Realignment
Plan: Organizational Realignment Chairman and CEO President President President Integrated Manufacturing Solutions Component Technology SCI – Defense Products Sales Sales Sales Product System Build Interconnect Circuit Boards SCI Products Global Services - Logistics and Repair Precision Me
Slide 25: Priorities
Priorities Sustainable Profitable Revenue Growth • Focused on customers in mission-critical, high-complexity end markets Leading Technology, Lean and Flexible Global Structure • A competitive advantage and supports attractive margins regardless of the business environment Cash Flow Generation • Prov
Slide 26: Summary
Summary Q4’20 – Revenue: $1.87B, up 13.3% sequentially – Non-GAAP operating margin: 5.1%, up 50 bps sequentially – Non-GAAP diluted EPS: $1.10, solid execution – Free cash flow: $69M FY’20 – Revenue: down Y/Y, impact of COVID-19 – Non-GAAP operating margin: 4.2%, 10 bps improvement over FY’19 –
Slide 27: Consolidated Financial Statements Reconciliation of GAAP vs. Non-GAAP
Consolidated Financial Statements Reconciliation of GAAP vs. Non-GAAP Quarter Ended October 3, 2020
Slide 28: Condensed Consolidated Balance Sheets
Sanmina Corporation Condensed Consolidated Balance Sheets (in thousands) (GAAP) October 3, September 28, 2020 2019 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 480,526 $ 454,741 Accounts receivable, net 1,043,334 1,128,379 Contract assets 396,583 396,300 Inventories 861,281 900,557
Slide 29: Condensed Consolidated Statements of Income
Sanmina Corporation Condensed Consolidated Statements of Income (in thousands, except per share amounts) (GAAP) (Unaudited) Three Months Ended Twelve Months Ended Oct. 3, Sept. 28, Oct. 3, Sept. 28, 2020 2019 2020 2019 Net sales $ 1,874,958 $ 1,892,207 $ 6,960,370 $ 8,233,859 Cost of sales 1,723,027
Slide 30: Reconciliation of GAAP to Non-GAAP Measures
Sanmina Corpoation Reconciliation of GAAP to Non-GAAP Measures (in thousands, except per share amounts) (Unaudited) Three Month Periods Twelve Month Periods ($ in thousands, except per share data) Q4'20 Q3'20 Q2'20 Q1'20 Q4'19 FY20 FY19 GAAP Gross Profit $ 151,931 $ 131,473 $ 107,421 $ 134,882 $ 141
Slide 31: Pre-tax Return on Invested Capital (ROIC)
Sanmina Corporation Pre-tax Return on Invested Capital (ROIC) ($ in thousands) Q4 FY20 GAAP operating income $ 82,034 14 weeks x 3.7 = 4*(13/14) Annualized GAAP operating income 304,698 Average invested capital (1) ÷ 1,245,006 GAAP pre-tax ROIC 24.5% Non-GAAP operating income $ 94,709 14 weeks x 3.7
Slide 32: Condensed Consolidated Cash Flow
Sanmina Corporation Condensed Consolidated Cash Flow (in thousands) Three Month Periods Twelve Month Periods Q4'20 Q3'20 Q4'19 FY20 FY19 GAAP Net Income $ 51,606 $ 44,880 $ 19,757 $ 139,713 $ 141,515 Depreciation and amortization 28,555 28,886 28,508 114,218 116,949 Other, net* 6,822 15,532 41,332 4
Slide 33: Sanmina
_ SANMINA ——________