• Revenue: $2.02 billion for Q4, exceeding the outlook of $1.9 billion to $2.0 billion, up 9.6% sequentially.
• Non-GAAP EPS: $1.43 per share, exceeding the high end of the outlook of $1.30 to $1.40.
• Non-GAAP Gross Margin: 8.7%, up 20 basis points sequentially.
• Non-GAAP Operating Expenses: $68.2 million, above the outlook.
• Non-GAAP Operating Margin: 5.3%, flat sequentially.
• Cash and Cash Equivalents: $626 million at the end of the quarter.
• Inventory: $1.33 billion, down approximately 4% sequentially.
• Inventory Turns: Improved to 5.4 times from 4.9 times in the prior quarter.
• Non-GAAP Pretax ROIC: 23% for the quarter.
• Cash Flow from Operations: $52 million for Q4, $340 million for the fiscal year.
• Capital Expenditures: $23 million for Q4, $109 million for the fiscal year.
• Free Cash Flow: $29 million for Q4, $231 million for the fiscal year.
• Share Repurchases: 945,000 shares for approximately $65 million in Q4, totaling 4 million shares for $227 million for the year.
• IMS Revenue: $1.63 billion, up 10.1% sequentially.
• CPS Revenue: $418 million, up 7.6% sequentially.
• IMS Non-GAAP Gross Margin: 7.3%, down 30 basis points sequentially.
• CPS Non-GAAP Gross Margin: 13.6%, up 210 basis points sequentially.

• Warning! GuruFocus has detected 4 Warning Signs with PRPL.

Release Date: November 04, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Sanmina Corp (NASDAQ:SANM) delivered solid revenue of $2.02 billion for the fourth quarter, exceeding their outlook of $1.9 billion to $2.0 billion.
• The company achieved a non-GAAP EPS of $1.43 per share, surpassing the high end of their guidance range.
• Sanmina Corp (NASDAQ:SANM) reported strong cash flow from operations at $52 million for the fourth quarter and $340 million for the fiscal year.
• The company maintained a strong balance sheet with $626 million in cash and no outstanding borrowings on their $800 million revolver.
• Sanmina Corp (NASDAQ:SANM) is optimistic about fiscal year 2025, expecting high single-digit revenue growth driven by new and existing programs.

Negative Points

• Fiscal year 2024 was described as a transition year with a year-over-year revenue decline due to inventory adjustments with customers.
• Non-GAAP operating expenses were above outlook due to targeted investments, impacting operating margins.
• The IMS segment experienced a decline in non-GAAP gross margin due to unfavorable mix.
• Non-GAAP earnings per share declined 16% compared to the prior year, despite improvements over previous years.
• The company faces challenges in improving inventory turns, which, although improved, still have room for further enhancement.

Q & A Highlights

Q: Can you clarify the revenue contribution from the cloud segment and its growth prospects for 2025? A: Jure Sola, Chairman and CEO, explained that the cloud segment was about 15% of revenue, slightly down from 16% the previous year due to inventory issues. However, he expressed optimism for growth in 2025, focusing on high-performance networks and cloud infrastructure, with new programs expected to drive growth.

Q: What are the trends in the communication and optical networking segments, and how long will the inventory correction last? A: Jure Sola noted that inventory levels are decreasing, with some customers already clearing their excess. He anticipates the correction to end soon, possibly within a quarter. Growth is expected across key customers, particularly in high-end optical networks.

Q: How should we view the progression of operating margins in fiscal 2025, and what are the areas of investment? A: Jon Faust, CFO, stated that margin expansion is expected in both IMS and CPS segments. Investments are being made in R&D, strategic opportunities, and workforce, with a focus on leveraging operating expenses as revenue grows.

Q: What are the priorities for cash allocation in fiscal 2025, and is there potential for M&A or share buybacks? A: Jon Faust emphasized that priorities remain on organic investments, strategic acquisitions, and share repurchases. The company sees itself as undervalued and will continue to evaluate opportunities for growth without taking on unnecessary debt.

Q: Can you provide an update on the Reliance Industries joint venture and potential for additional joint ventures? A: Jure Sola expressed satisfaction with the partnership, highlighting its success in the Indian market and potential for export growth. The joint venture is performing better than expected, and Sanmina is open to exploring similar opportunities.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.