Sanmina(US:SANM)2023-01-31 00:15Financial Data and Key Metrics Changes - Q1 revenue reached $2.136 billion, a growth of approximately 7.2% from the prior quarter, exceeding the outlook of $2.1 billion to $2.2 billion [6][32] - Non-GAAP fully diluted earnings per share (EPS) grew approximately 9% to $1.64 compared to $1.50 in the prior quarter, exceeding the upper end of the outlook by $0.13 [18][32] - Non-GAAP operating margin improved by 20 basis points to 5.8% [32] Business Line Data and Key Metrics Changes - Components, Products and Services (CPS) revenue grew to $464 million, an increase of 3.8% over the prior quarter, with non-GAAP gross margin improving to 13.3% [19] - Integrated Manufacturing Services (IMS) revenue increased to $1.94 billion, a 7.7% increase over the prior quarter, with non-GAAP gross margin at 6.9% [45] - Revenue from Industrial, Medical, Defense, and Automotive segments was $1.345 billion, showing a quarter-over-quarter growth of 4.5% and year-over-year growth of 27.5% [53] Market Data and Key Metrics Changes - Communication Networks & Cloud Infrastructure revenue was $1.016 billion, with quarter-over-quarter growth of 11% and year-over-year growth of 44.6% [27] - The company reported strong demand and solid backlog across all markets, indicating a healthy outlook for future growth [28][59] Company Strategy and Development Direction - The company is focused on quality customer partnerships and diversifying revenue growth in mission-critical products [31] - The strategy is delivering results, with a strong pipeline of new opportunities expected to drive future growth [30][56] - The company aims to manage working capital effectively, with cash cycle days remaining flat at 50 days [21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating macroeconomic uncertainties, highlighting a strong outlook based on customer forecasts [57] - The company anticipates Q2 revenue in the range of $2.2 billion to $2.3 billion, despite seasonal impacts [48][59] - Management noted improvements in lead times for semiconductor components and a positive outlook for fiscal year 2023 [25][56] Other Important Information - Cash and cash equivalents were reported at $735 million, with capital expenditures around $37 million in Q1 [46][47] - The company expects non-GAAP taxes of approximately 18% and a fully diluted non-GAAP share count of 60 million shares [49] Q&A Session Summary Question: Inventory digestion in markets - Management indicated that inventory levels peaked due to customer-driven needs and shortages, expecting to work down inventory in the coming quarters across all markets [79] Question: Competitive landscape changes - Management emphasized a focus on internal capabilities and strong partnerships rather than competition, highlighting their commitment to mission-critical products in heavily regulated markets [69] Question: End markets and new programs - Management discussed strong positioning in industrial, medical, automotive, and communication networks, with excitement about new programs across these sectors [68]