Sanmina(US:SANM)2024-11-05 04:13Financial Data and Key Metrics Changes - For Q4 2024, the company reported revenue of $2.02 billion, exceeding the outlook of $1.9 billion to $2.0 billion, and representing a 9.6% sequential growth [11][8] - Non-GAAP diluted earnings per share (EPS) was $1.43, surpassing the high end of the outlook of $1.30 to $1.40, and showing a 14% sequential improvement [14][17] - Non-GAAP gross profit was $175 million, or 8.7% of revenue, which was at the higher end of the outlook and up 20 basis points sequentially [12][16] Business Line Data and Key Metrics Changes - IMS revenue reached $1.63 billion, up 10.1% sequentially, while non-GAAP gross margin was 7.3%, down 30 basis points sequentially [18] - CPS revenue was $418 million, up 7.6% sequentially, with non-GAAP gross margin improving to 13.6%, up 210 basis points sequentially [19] Market Data and Key Metrics Changes - Revenue from industrial, medical, defense, aerospace, and automotive segments was $1.253 billion, accounting for 62% of total revenue, and up 6% quarter-over-quarter [34] - Communication networks and cloud infrastructure revenue was $765 million, representing 38% of total revenue, and increased by 16% quarter-over-quarter [34] Company Strategy and Development Direction - The company aims for fiscal year 2025 to be a growth year, forecasting high single-digit revenue growth driven by new and existing programs [42] - Focus on margin expansion with non-GAAP EPS expected to grow faster than revenue, leveraging operational efficiencies [43] - The strategy emphasizes a customer-centric approach, aiming for long-term growth and maximizing shareholder value [44] Management's Comments on Operating Environment and Future Outlook - Management noted that fiscal year 2024 was a transition year, but expressed optimism for fiscal year 2025 based on improving customer visibility and inventory levels [32][30] - Positive trends are expected in various segments, including industrial, medical, defense, and cloud infrastructure, with significant opportunities in AI and advanced technologies [36][40] Other Important Information - The company maintained a strong balance sheet with cash and cash equivalents of $626 million and no outstanding borrowings [21] - Free cash flow for the year was $231 million, up $186 million compared to the prior year, with nearly 100% of free cash flow returned to shareholders through share repurchases [26][27] Q&A Session Summary Question: Clarification on cloud segment revenue - Management acknowledged that fiscal year 2024 was challenging for the cloud segment due to inventory issues but expressed optimism for growth in high-performance networks and cloud infrastructure [47][48] Question: Trends in communications and inventory correction - Management indicated that inventory corrections are nearing completion and expressed confidence in growth across networking and optical segments [49][50] Question: Operating margin progression in fiscal 2025 - Management expects margin expansion driven by revenue growth and operational leverage, with targeted investments in R&D and strategic opportunities [50][51] Question: Cash allocation priorities and M&A opportunities - Management reiterated a focus on organic growth, strategic acquisitions, and disciplined share repurchases, emphasizing a balanced approach to capital allocation [52][54] Question: Update on Reliance Industries joint venture - Management expressed satisfaction with the partnership and highlighted growth opportunities in the Indian market, indicating strong performance ahead [64][65]