Sanmina(US:SANM)2021-08-04 17:38Financial Performance - Net sales for the three months ended July 3, 2021, were $1,657,741, a slight increase of 0.2% compared to $1,654,691 for the same period in 2020[120] - Gross profit for the nine months ended July 3, 2021, was $420,923, up from $373,776 for the same period in 2020, reflecting improved operational efficiencies[120] - Operating income increased to $74,265 for the three months ended July 3, 2021, compared to $64,103 for the same period in 2020[120] - Net income for the three months ended July 3, 2021, was $117,375, significantly higher than $44,880 for the same period in 2020[120] - The gross margin increased to 8.2% for the third quarter of 2021, up from 7.9% for the third quarter of 2020[122] Customer Concentration - Sales to the ten largest customers represented approximately 55% of net sales, indicating a significant customer concentration risk[114] Revenue Segmentation - The Integrated Manufacturing Solutions (IMS) segment accounted for approximately 80% of total revenue in the first nine months of 2021[108] Restructuring and Charges - Restructuring charges incurred amounted to approximately $29 million, primarily for severance costs under a company-wide restructuring plan[113] Operational Challenges - The company expects component shortages to persist at least through the end of calendar 2021, potentially impacting revenue and operating cash flow[111] Expenses - Selling, General and Administrative expenses decreased to $57.4 million, or 3.5% of net sales, in the third quarter of 2021, down from $59.3 million, or 3.6% of net sales, in the third quarter of 2020[124] - Selling, General and Administrative expenses decreased by $7.2 million from $184.7 million (3.6% of net sales) in the nine months ended June 27, 2020, to $177.5 million (3.5% of net sales) in the nine months ended July 3, 2021[125] - Research and Development expenses increased by $0.1 million from $5.2 million (0.3% of net sales) in Q3 2020 to $5.3 million (0.3% of net sales) in Q3 2021, while decreasing by $0.7 million from $16.1 million (0.3% of net sales) in the nine months ended June 27, 2020, to $15.4 million (0.3% of net sales) in the nine months ended July 3, 2021[126] Interest and Other Income - Interest expense decreased from $8 million in Q3 2020 to $5 million in Q3 2021, and from $20 million in the nine months ended June 27, 2020, to $15 million in the nine months ended July 3, 2021, primarily due to lower daily average borrowings[134] - Other income for the three months ended July 3, 2021, was $29 million compared to $3 million in the same period of 2020, and for the nine months ended July 3, 2021, was $37 million compared to an expense of $3 million in the same period of 2020[135] Tax Provision - The provision for income taxes for the three months ended July 3, 2021, was $(18) million (19% of income before taxes) compared to $15 million (25% of income before taxes) in the same period of 2020[136] Cash Flow and Liquidity - Net cash provided by operating activities was $246.6 million for the nine months ended July 3, 2021, compared to $220.7 million for the same period in 2020[138] - Net cash used in investing activities was $60.8 million for the nine months ended July 3, 2021, compared to $83.9 million for the same period in 2020[144] - Net cash used in financing activities was $(42.7) million for the nine months ended July 3, 2021, compared to $525.7 million for the same period in 2020[145] - Cash and cash equivalents increased to $624 million at July 3, 2021, from $481 million at October 3, 2020[140] - Working capital was $1.5 billion as of July 3, 2021, compared to $1.3 billion as of October 3, 2020[140] - The company sold approximately $406 million and $1.4 billion of accounts receivable under its programs for the nine months ended July 3, 2021, and June 27, 2020, respectively[149] - As of July 3, 2021, the company had cash and cash equivalents of $624 million and an available Amended Cash Flow Revolver of $692 million, net of outstanding borrowings[154] - The company generated $247 million of cash from operations in the third quarter of 2021[154] Liabilities and Contingencies - As of July 3, 2021, the company had a liability of $74 million for uncertain tax positions, which decreased materially during the quarter[153] - The company had accrued liabilities of $37 million related to legal proceedings and contingencies[152] Financial Instruments - The company had outstanding interest rate swaps with an aggregate notional amount of $350 million, converting floating rate debt to fixed rate debt[160] - As of July 3, 2021, the company had outstanding foreign currency forward contracts with an aggregate notional amount of $357 million to exchange various foreign currencies for U.S. dollars[162] - The company had forward contracts related to cash flow hedges in various foreign currencies with an aggregate notional amount of $114 million as of July 3, 2021[163] Future Outlook - The company believes existing cash resources and liquidity sources will be sufficient to meet working capital requirements for at least the next 12 months[155] - The company has not been required to repurchase any receivable sold due to commercial disputes to date[150]