Sanmina-SCI Announces Second Quarter Fiscal 2009 Results
* Wednesday April 22, 2009, 4:16 pm EDT
SAN JOSE, Calif., April 22 /PRNewswire-FirstCall/ -- Sanmina-SCI Corporation (the "Company")(Nasdaq: SANM - News), a leading global Electronics Manufacturing Services (EMS) company, today reported financial results for the second fiscal quarter ended March 28, 2009.
Revenue for the second quarter was $1.2 billion, compared to $1.4 billion in the prior quarter ended December 27, 2008.
GAAP Financial Results
GAAP net loss in the second quarter was $37.5 million and diluted loss per share of 7 cents, compared to a net loss of $25.3 million and diluted loss per share of 5 cents in the prior quarter.
Non-GAAP Financial Results(2)
Non-GAAP gross profit in the second quarter was $70.6 million, or 5.9 percent of revenue, compared to gross profit of $95.9 million, or 6.7 percent of revenue in the first quarter. Non-GAAP operating income was $11.4 million, or 1 percent of revenue in the quarter compared to $31.2 million, or 2.2 percent of revenue in the prior quarter.
Non-GAAP net loss in the second quarter was $30.9 million, a diluted loss per share of 6 cents, compared to a net loss of $768 thousand and break-even diluted earnings per share in the prior quarter.
(In thousands, except per share Q2:2009 Q1:2009 Q2:2008(1)
data)
GAAP:
Revenue $1,195,107 $1,419,264 $1,817,431
Net loss ($37,538) ($25,273) ($39,937)
Loss per share ($0.07) ($0.05) ($0.08)
Non-GAAP*:
Revenue $1,195,107 $1,424,264 $1,817,431
Gross profit $70,590 $95,896 $126,051
Gross margin 5.9% 6.7% 6.9%
Operating income $11,441 $31,164 $44,862
Operating margin 1.0% 2.2% 2.5%
Net income (loss) ($30,949) ($768) $14,453
Earnings (loss) per share ($0.06) ($0.00) $0.03
* Please refer to "Non-GAAP Financial Information" below for a discussion of how the above non-GAAP financial measures are calculated and why we believe this information is useful to investors. A reconciliation from GAAP to non-GAAP results is contained in the financial statements provided in this release and is available in the Investor Relations section of our website at www.sanminasci.com.
Second Quarter Balance Sheet Highlights
* Ending cash balance increased $55 million to $851.5 million
* Cash flow from operations was $97 million(3)
* Inventories improved $78 million
* Retired $34 million of outstanding debt and repurchased 23 million shares
"The difficult economic challenges we continued to face in the second quarter impacted all of our market segments. Demand was weak in January and February, but we did see signs of stabilization in March. As we await further economic recovery, we are cautiously optimistic that the third quarter will continue to stabilize," stated Jure Sola, Chairman and Chief Executive Officer.
"We continue to make progress in those areas we can control and I am pleased with our ability to manage our working capital metrics and generate cash in the second quarter. Our cash position increased $55 million sequentially while we retired $34 million of debt in the quarter. We are well positioned to weather the economic uncertainties with a strong balance sheet and a healthy debt maturity profile. We remain focused on cost reduction initiatives, inventory management, positive cash flow generation, increased liquidity and providing innovative technology to our customers."
Third Quarter Fiscal 2009 Outlook
The following internal forecast for the third fiscal quarter ending June 27, 2009 is based on current market demand. These statements are forward-looking and actual results may differ materially.
* Revenue between $1.175 billion to $1.250 billion
* Non-GAAP diluted loss per share between ($0.04) to ($0.02)
* Expect to generate positive cash flow from operations
"Short-term visibility has improved slightly as we enter the third quarter. We are taking aggressive actions to make the company more efficient at the current revenue level which will allow us to enhance our future financial performance as market demand normalizes," concluded Sola.
(1)Basis of Presentation for Continuing Operations
The Company completed the sale of the assets of its personal computing business and associated logistics services in two transactions that closed on June 2, 2008 and July 7, 2008, respectively. The Company has reported this line of business as a discontinued operation in the financial statements that accompany this press release. Therefore, results for the second quarter fiscal 2008 are based on continuing operations.
(2)Non-GAAP Financial Information
In the commentary set forth above, we present the following non-GAAP financial measures: revenue, gross profit, gross margin, operating income, operating margin, net income and 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), 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, to the extent material or which we consider to be of a non-operational nature in the applicable period.
Management excludes certain charges and expenses from the data it uses to evaluate the condition of the business because, in its view, such charges and expenses do not relate to the ongoing core operations of the business. For example, the features and costs of products and the locations of manufacture can change over time, and these changes in some instances may require reorganization or closure of certain plants and the layoffs of related employees. These actions, in turn, generate restructuring expense applicable to the particular plant reorganized or closed. Including these charges in the operating results evaluated by management would prevent the Company from discovering the underlying performance of individual plants or business units which, but for changes in customer requirements, would have continued operations. Such individual plant-level information is consolidated to present to management a view of the Company's operations as a whole. Similarly, since not all employees hold equal numbers of stock options, inclusion of stock compensation expense in operating results would decrease the perceived performance of business units whose employees hold more stock options compared to business units whose employees hold fewer stock options. As a result, management can only discover long-term trends in the Company's core business operations by evaluating key operational expenses such as ongoing purchases of inventory for assembly, payment of payroll obligations for continuing employees, interest expense relating to the Company's debt obligations and lease payments for operating facilities. Moreover, we believe the exclusion of these charges provides for a more accurate comparison of our results to those of our peers due to the varying available valuation methodologies, subjective assumptions and variety of award types.
Therefore, we believe that presenting non-GAAP financial measures in addition to GAAP results enables investors to analyze the core financial and operating performance of our Company in the manner utilized by management and to facilitate period-to-period comparisons and analysis of operating trends. 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.
The non-GAAP financial information presented in this release may vary from non-GAAP financial measures used by other companies. In addition, non-GAAP financial information should not be viewed as a substitute for financial data prepared in accordance with GAAP.
(3)GAAP cash flow from operations equals internal operating cash flow of $134 million, which includes $40 million from the factoring of A/R, less cash restructuring payments of $21 million and a payment related to the divesture of the PC business of $16 million.
Company Conference Call Information
Sanmina-SCI will be holding a conference call regarding this announcement on Wednesday, April 22, 2009 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 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 93674373.
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