sanm-20240330

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q


(Mark one)
☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 30, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission File Number 0-21272

Sanmina Corporation

(Exact name of registrant as specified in its charter)

77-0228183

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification Number)

2700 N. First St.,

San Jose,

95134

(Address of principal executive offices)

(Zip Code)

(408)

964-3500

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock	SANM	NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [x] No [ ]

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes [x] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large Accelerated Filer

[x]

Accelerated filer [ ]

Non-accelerated filer [ ]

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

As of April 24, 2024, there were 55,453,598 shares outstanding of the issuer’s common stock, $0.01 par value per share.

SANMINA CORPORATION

INDEX


		Page
	PART I. FINANCIAL INFORMATION
Item 1.	Interim Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Income	4
	Condensed Consolidated Statements of Comprehensive Income	5
	Condensed Consolidated Statements of Stockholders’ Equity	6
	Condensed Consolidated Statements of Cash Flows	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29
Item 4.	Controls and Procedures	30
	PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	32
Item 1A.	Risk Factors	33
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	45
Item 5.	Other Information	45
Item 6.	Exhibits	46
Signatures		47

PART I. FINANCIAL INFORMATION

ITEM 1. Interim Financial Statements (Unaudited)

SANMINA CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS


	As of
	March 30, 2024		September 30, 2023
	(Unaudited)
	(In thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	650,858	$	667,570
Accounts receivable, net of allowances of approximately $10 million and $8 million as of March 30, 2024 and September 30, 2023, respectively	1,138,413		1,230,771
Contract assets	449,419		445,757
Inventories	1,383,739		1,477,223
Prepaid expenses and other current assets	75,050		58,249
Total current assets	3,697,479		3,879,570
Property, plant and equipment, net	641,008		632,836
Deferred income tax assets	169,533		177,597
Other	178,243		183,965
Total assets	$	4,686,263	$	4,873,968
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,443,002	$	1,612,833
Accrued liabilities	260,086		267,148
Accrued payroll and related benefits	127,168		127,406
Short-term debt, including current portion of long-term debt	17,500		25,945
Total current liabilities	1,847,756		2,033,332
Long-term liabilities:
Long-term debt	303,884		312,327
Other	207,531		209,684
Total long-term liabilities	511,415		522,011
Commitments and Contingencies (Note 7)
Stockholders’ equity	2,327,092		2,318,625
Total liabilities and stockholders’ equity	$	4,686,263	$	4,873,968

See accompanying notes to condensed consolidated financial statements.

SANMINA CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME


	Three Months Ended				Six Months Ended
	March 30, 2024		April 1, 2023		March 30, 2024		April 1, 2023
	(Unaudited)
	(In thousands, except per share data)
Net sales	$	1,834,595	$	2,320,103	$	3,709,393	$	4,675,911
Cost of sales	1,679,838		2,128,914		3,393,796		4,289,336
Gross profit	154,757		191,189		315,597		386,575

Operating expenses:
Selling, general and administrative	69,199		63,390		133,984		124,120
Research and development	6,323		6,394		12,612		11,993
Restructuring	3,274		804		5,464		1,435
Total operating expenses	78,796		70,588		152,060		137,548

Operating income	75,961		120,601		163,537		249,027

Interest income	3,412		2,539		7,069		5,472
Interest expense	(8,218)		(9,286)		(16,630)		(17,967)
Other income (expense)	3,276		(2,768)		2,143		(9,480)
Interest and other, net	(1,530)		(9,515)		(7,418)		(21,975)

Income before income taxes	74,431		111,086		156,119		227,052
Provision for income taxes	19,122		25,779		40,446		46,631
Net income before noncontrolling interest	55,309		85,307		$	115,673	$	180,421
Less: Net income attributable to noncontrolling interest	2,824		5,686		6,120		8,786
Net income attributable to common shareholders	$	52,485	$	79,621	$	109,553	$	171,635

Net income attributable to common shareholders per share:
Basic	$	0.94	$	1.37	$	1.95	$	2.96
Diluted	$	0.93	$	1.33	$	1.91	$	2.87

Weighted-average shares used in computing per share amounts:
Basic	55,585		58,269		56,062		57,999
Diluted	56,699		59,819		57,470		59,863

See accompanying notes to condensed consolidated financial statements.

SANMINA CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


	Three Months Ended				Six Months Ended
	March 30, 2024		April 1, 2023		March 30, 2024		April 1, 2023
	(Unaudited)
	(In thousands)
Net income before noncontrolling interest	$	55,309	$	85,307	$	115,673	$	180,421
Other comprehensive income (loss), net of tax:
Change in foreign currency translation adjustments	(1,707)		1,060		1,784		7,243
Derivative financial instruments:
Change in net unrealized amount	4,328		2,938		103		7,407
Amount reclassified into net income before noncontrolling interest	(774)		(6,203)		(3,361)		(9,499)
Defined benefit plans:
Changes in unrecognized net actuarial losses and unrecognized transition costs	(190)		(157)		(84)		(908)
Amortization of actuarial losses and transition costs	337		217		212		562
Total other comprehensive income (loss), net of tax	1,994		(2,145)		(1,346)		4,805
Comprehensive income before noncontrolling interest	$	57,303	$	83,162	$	114,327	$	185,226
Less: Net income attributable to noncontrolling interest	2,824		5,686		6,120		8,786
Comprehensive income attributable to common shareholders	$	54,479	$	77,476	$	108,207	$	176,440

See accompanying notes to condensed consolidated financial statements.

SANMINA CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY


	Three Months Ended				Six Months Ended
	March 30, 2024		April 1, 2023		March 30, 2024		April 1, 2023
	(Unaudited)
	(In thousands)
Common Stock and Additional Paid-in Capital
Balance, beginning of period	$	6,526,063	$	6,471,299	$	6,513,331	$	6,381,348
Issuances under stock plans	146		122		293		295
Stock-based compensation expense	14,651		12,534		27,236		24,143

Sale of noncontrolling interest	—		—		—		78,169
Balance, end of period	6,540,860		6,483,955		6,540,860		6,483,955
Treasury Stock
Balance, beginning of period	(1,601,018)		(1,386,168)		(1,485,252)		(1,378,159)
Repurchases of treasury stock	(17,623)		(13,498)		(133,389)		(21,507)

Balance, end of period	(1,618,641)		(1,399,666)		(1,618,641)		(1,399,666)
Accumulated Other Comprehensive Income
Balance, beginning of period	67,539		63,275		70,879		56,325
Other comprehensive income (loss), net of tax	1,994		(2,145)		(1,346)		4,805
Balance, end of period	69,533		61,130		69,533		61,130
Accumulated Deficit
Balance, beginning of period	(2,872,940)		(3,147,964)		(2,930,008)		(3,239,978)
Net income attributable to common shareholders	52,485		79,621		109,553		171,635
Balance, end of period	(2,820,455)		(3,068,343)		(2,820,455)		(3,068,343)
Noncontrolling Interest
Balance, beginning of period	152,971		135,232		149,675		—
Sale of noncontrolling interest	—		—		—		132,132
Net income attributable to noncontrolling interest	2,824		5,686		6,120		8,786
Balance, end of period	155,795		140,918		155,795		140,918
Total stockholders’ equity	$	2,327,092	$	2,217,994	$	2,327,092	$	2,217,994

Common Stock Shares Outstanding
Number of shares, beginning of period	111,963		110,502		111,550		110,160
Issuances under stock plans	885		783		1,298		1,125
Number of shares, end of period	112,848		111,285		112,848		111,285
Treasury Shares
Number of shares, beginning of period	(57,049)		(52,902)		(54,718)		(52,766)
Repurchases of treasury stock	(351)		(225)		(2,682)		(361)
Number of shares, end of period	(57,400)		(53,127)		(57,400)		(53,127)

See accompanying notes to condensed consolidated financial statements.

SANMINA CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


	Six Months Ended
	March 30, 2024		April 1, 2023
	(Unaudited)
	(In thousands)
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Net income before noncontrolling interest	$	115,673	$	180,421
Adjustments to reconcile net income before noncontrolling interest to cash provided by (used in) operating activities:
Depreciation and amortization	61,000		57,818
Stock-based compensation expense	27,236		24,143
Deferred income taxes	7,959		13,558




Other, net	1,624		101
Changes in operating assets and liabilities, net of amounts acquired:
Accounts receivable	92,339		(66,479)
Contract assets	(3,662)		(10,569)
Inventories	94,341		136,447
Prepaid expenses and other assets	(3,984)		(25,381)
Accounts payable	(175,606)		(213,168)
Accrued liabilities	(18,578)		4,911
Cash provided by operating activities	198,342		101,802

CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES:
Purchases of property, plant and equipment	(63,827)		(99,988)



Other, net	(1,300)		(1,500)
Cash used in investing activities	(65,127)		(101,488)

CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES:

Repayments of borrowings	(17,195)		(8,750)

Proceeds from revolving credit facility borrowings	1,410,300		1,471,700
Repayments of revolving credit facility borrowings	(1,410,300)		(1,471,700)

Net proceeds from stock issuances	293		295
Repurchases of common stock	(133,389)		(21,507)

Proceeds from sale of noncontrolling interest	—		215,799
Cash provided by (used in) financing activities	(150,291)		185,837

Effect of exchange rate changes	364		2,195
Increase (decrease) in cash and cash equivalents	(16,712)		188,346
Cash and cash equivalents at beginning of period	667,570		529,857
Cash and cash equivalents at end of period	$	650,858	$	718,203

Cash paid during the period for:
Interest, net of capitalized interest	$	15,143	$	15,264
Income taxes, net of refunds	$	38,550	$	28,247
Unpaid purchases of property, plant and equipment at the end of period	$	30,598	$	34,973

See accompanying notes to condensed consolidated financial statements.

SANMINA CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1. Basis of Presentation

The accompanying condensed consolidated financial statements of Sanmina Corporation (the “Company”) have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and note disclosures normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been omitted pursuant to those rules or regulations. The interim condensed consolidated financial statements are unaudited, but reflect all adjustments, consisting primarily of normal recurring adjustments that are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended September 30, 2023 included in the Company’s Annual Report on Form 10-K filed with the SEC on November 16, 2023.

The condensed consolidated financial statements include all accounts of the Company, its wholly-owned subsidiaries and subsidiaries in which the Company has a controlling financial interest. All intra-company accounts and transactions have been eliminated. Noncontrolling interest represents a noncontrolling investor’s interest in the results of operations of subsidiaries that the Company controls and consolidates.

The preparation of financial statements requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Actual results could differ materially from these estimates.

Results of operations for the second quarter of 2024 are not necessarily indicative of the results that may be expected for other interim periods or for the full fiscal year.

The Company operates on a 52 or 53 week year ending on the Saturday nearest September 30. Fiscal 2024 and 2023 are each 52-week years. All references to years relate to fiscal years unless otherwise noted.

Recently Issued Accounting Pronouncements Not Yet Adopted

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which will require the Company to disclose information about its reportable segment’s significant expenses and other segment items on an interim and annual basis. The disclosure requirements are effective for the Company in fiscal 2025, and for interim periods within the Company's fiscal 2026, with early adoption permitted. The Company is currently evaluating the impact ASU 2023-07 will have on the financial statement disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which will require the Company, on an annual basis, to provide disclosure of specific categories in its effective income tax rate reconciliation, as well as disclosure of income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for the Company in fiscal 2026, with early adoption permitted. The Company is currently evaluating the impact ASU 2023-09 will have on the financial statement disclosures.

Note 2. Revenue Recognition

The Company has determined that revenue for the majority of its contracts is required to be recognized on an over time basis. This is primarily due to the fact that the Company does not have an alternative use for the end products it manufactures for its customers and has an enforceable right to payment, including a reasonable profit, for work-in-progress upon a customer's cancellation of a contract for convenience. In certain circumstances, the Company recognizes over time because its customer simultaneously receives and consumes the benefits provided by the Company’s services or the Company’s customer controls the end product as the Company performs manufacturing services (continuous transfer of control). For these contracts, revenue is recognized on an over time basis using the cost-to-cost method (ratio of costs incurred to date to total estimated costs at completion) which the Company believes best depicts the transfer of control to the customer. Revenue streams for which revenue is recognized on an over time basis include sales of vertically integrated manufacturing solutions (integrated manufacturing solutions and components); logistics and repair services; design, development and engineering services; and

defense and aerospace programs. At least 95% of the Company’s revenue is recognized on an over time basis, which is as products are manufactured or services are performed. Because of this, and the fact that there is no work-in-process or finished goods inventory associated with contracts for which revenue is recognized on an over-time basis, 99% or more of the Company’s inventory at the end of a given period is in the form of raw materials. For contracts for which revenue is required to be recognized at a point-in-time, the Company recognizes revenue when it has transferred control of the related goods, which generally occurs upon shipment or delivery of the goods to the customer.

Application of the cost-to-cost method for government contracts in the Company’s Defense and Aerospace division requires the use of significant judgments with respect to estimated materials, labor and subcontractor costs included in the total estimated costs at completion. Additionally, the Company evaluates whether contract modifications for claims have been approved and, if so, estimates the amount, if any, of variable consideration that can be included in the transaction price of the contract. This division is an operating segment whose results are combined with thirteen other operating segments and reported under Components, Products and Services (“CPS”) for segment reporting purposes.

Changes in the Company’s estimates of transaction price and/or cost result in a favorable or unfavorable impact to its revenue and operating income. The impact of changes in estimates on revenue and operating income resulting from application of the cost-to-cost method for recognizing revenue was as follows:


	Three Months Ended				Six Months Ended
	March 30, 2024		April 1, 2023		March 30, 2024		April 1, 2023
Revenue	(In thousands)
Favorable	$	4,843	$	1,551	$	10,710	$	3,835
Unfavorable	(2,357)		(5,179)		(6,727)		(9,509)
Net	$	2,486	$	(3,628)	$	3,983

SEC Form 10-Q filed by Sanmina Corporation