Sanmina(US:SANM)2023-11-07 01:17Financial Data and Key Metrics Changes - Q4 FY '23 revenue was $2.05 billion, down from $2.22 billion in Q4 FY '22, primarily due to ongoing customer inventory adjustments in the communications end market [11][12] - Q4 FY '23 non-GAAP gross margin was 8.7%, compared to 7.9% in Q4 FY '22, attributed to a favorable product mix [42] - FY '23 non-GAAP EPS grew 34% to $6.26 compared to $4.68 in FY '22, while GAAP fully diluted EPS for FY '23 was $5.18 [16] - Cash flow from operations was $77 million in Q4 and $235 million for the full fiscal year [17] Business Line Data and Key Metrics Changes - Q4 FY '23 revenue for the Communications and Cloud Infrastructure segment was 34.6%, down 18% sequentially, but for the year, revenue was up 11.7% [23] - CPS revenue in Q4 FY '23 was $440 million, an increase from $419 million in Q3 FY '23, with non-GAAP gross margin improving to 10.8% from 8.8% in Q3 [14] - Industrial, Medical, Defense and Aerospace, and Automotive segments accounted for 65.4% of revenue in Q4, remaining flat quarter-over-quarter [53] Market Data and Key Metrics Changes - The top 10 customers accounted for 49% of revenues in Q4 FY '23, indicating a continued diversification of market segments [22] - The company is well positioned in the medical market, focusing on disposable wearable products and laboratory diagnostic equipment, with a strong pipeline of new opportunities [26][27] - The automotive segment, particularly around electric vehicles, is expected to see long-term growth driven by global initiatives [72] Company Strategy and Development Direction - The company aims to fund organic growth and has increased capital expenditures to position itself for expected growth in the second half of FY '24 and beyond [18] - Sanmina is focused on diversifying its market segments, with key markets including cloud AI, defense, aerospace, digital health, and electric vehicles [28][72] - The internal goal is to grow revenue to between $10 billion and $12 billion over the next three years, emphasizing profitable growth [73][82] Management's Comments on Operating Environment and Future Outlook - Management expects continued inventory adjustments in the communications market, with a forecast for revenue to be down in Q1 FY '24, but anticipates improvements in the second half of the year [24][49] - The company remains optimistic about long-term opportunities based on customer feedback and market demand [24][80] - Management highlighted a strong balance sheet and cash flow generation as key advantages for future growth [46][74] Other Important Information - The company repurchased approximately 600,000 shares for $33 million in Q4 FY '23, with a total of 1.58 million shares repurchased for about $84 million over the fiscal year [47] - Capital expenditures for Q1 FY '24 are expected to be around $40 million, driven by new program growth [49] Q&A Session Summary Question: Where else are you seeing inventory adjustments? - Most inventory adjustments are primarily within the communications side of the business, with minor adjustments in industrial, medical, defense, and automotive segments [61] Question: When will we see significant revenue from the joint venture? - Significant growth is expected in FY '24, with operations performing excellently [62] Question: How should we think about gross margin in the coming quarters? - Short-term operating margins are expected to be in the range of 5% to 6%, with potential for improvement [63][79] Question: How many significant customers are involved in the communications market? - Approximately 10 significant companies are involved, with 5 being major players [68] Question: What gives confidence in growth for the second half of FY '24? - Confidence stems from expected resolution of inventory issues and new program developments [80]