SANMINA CORP

Previous wording

This quarterly report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements relate to our expectations for future events and time periods. All statements other than statements of historical fact are statements that could be deemed to be forward-looking statements, including any statements regarding trends in future revenue or results of operations, gross margin, operating margin, expenses, earnings or losses from operations, or cash flow; any statements of the plans, strategies and objectives of management for future operations and the anticipated benefits of such plans, strategies and objectives; any statements regarding future economic conditions or performance; any statements regarding litigation or pending investigations, claims or disputes; any statements regarding the timing of closing of, future cash outlays for, and benefits of acquisitions and other strategic transactions, including our Indian joint venture; any statements regarding expected restructuring costs and benefits; any statements concerning the adequacy of our current liquidity and the availability of additional sources of liquidity; any statements regarding the potential impact of the COVID-19 pandemic and future outbreaks on our business, results of operations and financial condition; any statements regarding the potential impact of supply chain shortages and inflation on our business; any statements regarding the future impact of tariffs and export controls on our business; any statements relating to future tax rates and our expectations concerning developments in the audit by the IRS of certain tax returns filed by us, including the potential impact of the IRS revenue agent’s report received by us in November 2023; any statements relating to the expected impact of accounting pronouncements not yet adopted; any statements regarding future repurchases of our common stock; any statements of expectation or belief; and any statements of assumptions underlying any of the foregoing. Generally, the words “anticipate,” “believe,” “plan,” “expect,” “future,” “intend,” “may,” “will,” “should,” “estimate,” “predict,” “potential,” “continue” and similar expressions identify forward-looking statements. Our forward-looking statements are based on current expectations, forecasts and assumptions and are subject to risks and uncertainties, including those contained in Part II, Item 1A of this report. As a result, actual results could vary materially from those suggested by the forward-looking statements. We undertake no obligation to publicly disclose any revisions to these forward-looking statements to reflect events or circumstances occurring subsequent to filing this report with the Securities and Exchange Commission (the “SEC”). Investors and others should note that Sanmina announces material financial information to our investors using our investor relation…

Excerpt shortened here; the source contains the full paragraph.

Current wording

This quarterly report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements relate to our expectations for future events and time periods. All statements other than statements of historical fact are statements that could be deemed to be forward-looking statements, including any statements regarding trends in future revenue or results of operations, gross margin, operating margin, expenses, earnings or losses from operations, or cash flow; any statements of the plans, strategies and objectives of management for future operations and the anticipated benefits of such plans, strategies and objectives; any statements regarding future economic conditions or performance; any statements regarding litigation or pending investigations, claims or disputes; any statements regarding the timing of closing of, future cash outlays for, and benefits of acquisitions and other strategic transactions, including our Indian joint venture; any statements regarding expected restructuring costs and benefits; any statements concerning the adequacy of our current liquidity and the availability of additional sources of liquidity; any statements regarding the potential impact of any future pandemics on our business, results of operations and financial condition; any statements regarding the potential impact of supply chain shortages and inflation on our business; any statements regarding the future impact of tariffs, export controls and evolving trade policies on our business; any statements relating to future tax rates and tax policies and our expectations concerning developments in the audit by the IRS of certain tax returns filed by us, including the potential impact of the IRS revenue agent’s report received by us in November 2023; any statements relating to the expected impact of accounting pronouncements not yet adopted; any statements regarding future repurchases of our common stock; any statements of expectation or belief; and any statements of assumptions underlying any of the foregoing. Generally, the words “anticipate,” “believe,” “plan,” “expect,” “future,” “intend,” “may,” “will,” “should,” “estimate,” “predict,” “potential,” “continue” and similar expressions identify forward-looking statements. Our forward-looking statements are based on current expectations, forecasts and assumptions and are subject to risks and uncertainties, including those contained in Part II, Item 1A of this report. As a result, actual results could vary materially from those suggested by the forward-looking statements. We undertake no obligation to publicly disclose any revisions to these forward-looking statements to reflect events or circumstances occurring subsequent to filing this report with the Securities and Exchange Commission (the “SEC”). Investors and others should note that Sanmina announces material financial information to our investors using o…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

Our only reportable segment for financial reporting purposes is IMS, which represented approximately 80% of our total revenue for the three months ended December 28, 2024. Our CPS business consists of multiple operating segments which do not individually meet the quantitative thresholds for being presented as reportable segments. Therefore, financial information for these operating segments is combined and presented in a single category entitled “CPS”.

Current wording

Our only reportable segment for financial reporting purposes is IMS, which represented approximately 80% of our total revenue for the six months ended March 29, 2025. Our CPS business consists of multiple operating segments which do not individually meet the quantitative thresholds for being presented as reportable segments. Therefore, financial information for these operating segments is combined and presented in a single category entitled “CPS”.

Previous wording

Sales to our ten largest customers represent 50% of net sales. Net sales from these customers are derived from multiple segments. No customers represented 10% or more of our net sales for the three months ended December 28, 2024 and one customer represented 10% or more of our net sales for the three months ended December 30, 2023.

Current wording

Sales to our ten largest customers represent approximately 50% of net sales. Net sales from these customers are derived from multiple segments. One customer represented 10% or more of our net sales for each of the three months ended March 29, 2025 and March 30, 2024. No customer represented 10% or more of our net sales for the six months ended March 29, 2025 and one customer represented 10% or more of our net sales for the six months ended March 30, 2024.

Previous wording

We believe our end-to-end manufacturing solutions combined with our global supply chain management expertise differentiate us from our competitors and enable us to better serve the needs of OEMs. However, our business faces many challenges. For example, we compete with a number of companies in each of our key end markets. This includes companies that are much larger than we are and smaller companies that focus on a particular niche product, service or end market. Although we believe we are well-positioned in each of our key end markets and offer many advantages compared to our competitors, competition remains intense and profitably growing our revenues has been challenging. Additionally, we are impacted by macroeconomic challenges, such as inflation, supply chain constraints, foreign currency fluctuations, high interest rates, market volatility, recession concerns, tariffs and other factors, that have been and could be in the future exacerbated by geopolitical conflicts such as the war in Ukraine and conflict in the Middle East, changes in trade policies. For example, the current U.S. presidential administration has indicated that a broad increase in tariffs on all imported components is possible. Although supply chain constraints have been easing, we expect headwinds to our revenue growth due to these factors to persist in 2025 due to customers continuing to absorb their finished goods inventory in some of our end markets.

Current wording

We believe our end-to-end manufacturing solutions combined with our global supply chain management expertise differentiate us from our competitors and enable us to better serve the needs of OEMs. However, our business faces many challenges. For example, we compete with a number of companies in each of our key end markets. This includes companies that are much larger than we are and smaller companies that focus on a particular niche product, service or end market. Although we believe we are well-positioned in each of our key end markets and offer many advantages compared to our competitors, competition remains intense and profitably growing our revenues has been challenging. Additionally, we are impacted by macroeconomic challenges, such as inflation, supply chain constraints, foreign currency fluctuations, high interest rates, market volatility, recession concerns, tariffs, and tax policies, that have been and could be in the future exacerbated by geopolitical environment such as changes in trade policies, the war in Ukraine, conflict in the Middle East and tensions between the U.S. and China.

Previous wording

Net sales increased 7.0% in the three months ended December 28, 2024 compared to the three months ended December 30, 2023, primarily due to new program wins in our telecommunications and automotive end markets.

Current wording

Net sales increased 8.1% in the three months ended March 29, 2025 compared to the three months ended March 30, 2024 and 7.6% in the six months ended March 29, 2025 compared to the six months ended March 30, 2024, primarily due to ramp up of programs in our telecommunications end market.

Previous wording

Gross margin decreased to 8.4% for the three months ended December 28, 2024 from 8.6% for the three months ended December 30, 2023. IMS gross margin increased to 7.9% for the three months ended December 28, 2024 from 7.6% for the three months ended December 30, 2023, primarily due to improved operating efficiencies as well as favorable customer mix. CPS gross margin decreased to 12.5% for the three months ended December 28, 2024 from 13.0% for the three months ended December 30, 2023, primarily due to an unfavorable mix.

Current wording

Gross margin increased to 8.9% for the three months ended March 29, 2025 from 8.4% for the three months ended March 30, 2024. IMS gross margin was 7.7% for each of the three months ended March 29, 2025 and March 30, 2024. CPS gross margin increased to 13.9% for the three months ended March 29, 2025 from 12.9% for the three months ended March 30, 2024, primarily due to favorable customer mix and improved operating efficiencies.

Previous wording

Selling, general and administrative expenses for the three months ended December 28, 2024 and December 30, 2023 were $71 million and $65 million, respectively. As a percentage of net sales, selling, general and administrative expenses were 3.5% for each of the three months ended December 28, 2024 and December 30, 2023. The increase in absolute dollars was primarily due to higher professional fees and higher stock compensation expense from new equity grants.

Current wording

Selling, general and administrative expenses for the three months ended March 29, 2025 and March 30, 2024 were $76 million and $69 million, respectively. As a percentage of net sales, selling, general and administrative expenses were 3.8% for each of the three months ended March 29, 2025 and March 30, 2024. The increase in absolute dollars was primarily due to higher professional fees and variable compensation.

Previous wording

Our provision for income taxes for the three months ended December 28, 2024 and December 30, 2023 was $15 million (18% of income before taxes) and $21 million (26% of income before taxes), respectively. The tax rate was lower for the three months ended December 28, 2024, primarily due to favorable discrete tax events, including a $3 million benefit from a change in tax law, and an approximately $2 million benefit from other discrete tax items.

Current wording

Provision for income taxes for the three months ended March 29, 2025 and March 30, 2024 was $18 million (20% of income before taxes) and $19 million (26% of income before taxes), respectively. The effective tax rate was lower for the three months ended March 29, 2025 primarily due to change in the jurisdictional mix of earnings, and favorable discrete tax events, including a $3 million benefit from stock compensation.

Previous wording

(1) Days sales outstanding (a measure of how quickly we collect our accounts receivable), or “DSO”, is calculated as the ratio of the average of accounts receivable, net, at the end of the current and prior quarter, to the average daily net sales for the quarter.

Current wording

(1) Days in accounts receivable (a measure of how quickly we collect our accounts receivable), or “DSO”, is calculated as accounts receivable, net, at the end of the current quarter divided by net sales for the quarter multiplied by 90 days.

Previous wording

(2) Contract asset days (a measure of how quickly we transfer contract assets to accounts receivable) is calculated as the ratio of the average of contract assets at the end of the current and prior quarter, to the average daily net sales for the quarter.

Current wording

(2) Contract asset days (a measure of how quickly we transfer contract assets to accounts receivable) is calculated as contract assets at the end of the current quarter divided by net sales for the quarter multiplied by 90 days.

Previous wording

(4) Days inventory on hand (a measure of how quickly we turn inventory into sales) is calculated as the ratio of the average inventory at the end of the current and prior quarter to the average daily cost of sales for the quarter.

Current wording

(3) Days in inventory (a measure of how quickly we turn inventory into sales) is calculated as inventory at the end of the current quarter divided by cost of sales for the quarter multiplied by 90 days.

Previous wording

(5) Accounts payable days (a measure of how quickly we pay our suppliers), or “DPO”, is calculated as the ratio of 365 days divided by accounts payable turns, in which accounts payable turns is calculated as the ratio of four times our cost of sales for the quarter to average accounts payable as at the end of the current and prior quarter.

Current wording

(4) Accounts payable days (a measure of how quickly we pay our suppliers), or “DPO”, is calculated as accounts payable at the end of the current quarter divided by cost of sales for the quarter multiplied by 90 days.

Previous wording

Cash and cash equivalents were $642 million at December 28, 2024 and $626 million at September 28, 2024. Our cash levels vary during any given quarter depending on the timing of collections from customers and payments to suppliers, borrowings under our credit facilities, sales of accounts receivable under numerous programs we utilize, repurchases of common stock and other factors. Our working capital was $2.0 billion and $1.9 billion as of December 28, 2024 and September 28, 2024, respectively.

Current wording

Cash and cash equivalents were $647 million as of March 29, 2025 and $626 million as of September 28, 2024. Restricted cash equivalents as of March 29, 2025 were $40 million. Our cash levels vary during any given quarter depending on the timing of collections from customers and payments to suppliers, borrowings under our credit facilities, sales of accounts receivable under numerous programs we utilize, repurchases of common stock and other factors. Our working capital was $2.0 billion and $1.9 billion as of March 29, 2025 and September 28, 2024, respectively.

Previous wording

Net cash provided by operating activities was $64 million and $126 million for the three months ended December 28, 2024 and December 30, 2023, respectively. Our working capital metrics tend to fluctuate from quarter to quarter based on factors such as the linearity of our shipments to customers and purchases from suppliers, customer and supplier mix, the extent to which we factor customer receivables and the negotiation of payment terms with customers and suppliers. These fluctuations can significantly affect our cash flows from operating activities.

Current wording

Net cash provided by operating activities was $221 million for the six months ended March 29, 2025. Our working capital metrics tend to fluctuate from quarter to quarter based on factors such as the linearity of our shipments to customers and purchases from suppliers, customer and supplier mix, the extent to which we factor customer receivables and the negotiation of payment terms with customers and suppliers. These fluctuations can significantly affect our cash flows from operating activities.

Previous wording

During the three months ended December 28, 2024, we generated $124 million of cash primarily from earnings, excluding non-cash items, and used $60 million of cash due primarily to decreases in accounts payable and accrued liabilities and other, partially offset by an increase in deferred revenue and customer advances. The decrease in accounts payable was primarily attributable to lower inventory receipts. The increase in deferred revenue and customer advances was due primarily to increased customer advances against raw materials inventory.

Current wording

During the six months ended March 29, 2025, we generated $237 million of cash from earnings, excluding non-cash items, and used $16 million of cash due primarily to increase in deferred revenue and customer advances partially offset by increase in inventories and decrease in accounts payable. The increase in inventories resulted from additional purchases to meet customer orders. The increase in deferred revenue and customer advances was primarily due to increased customer advances. The decrease in accounts payable is primarily due to timing of payments.

Previous wording

Net cash used in financing activities was $29 million and $128 million for the three months ended December 28, 2024 and December 30, 2023, respectively. During the three months ended December 28, 2024, we used $24 million of cash to repurchase common stock (including $8 million payment to tax authorities for stock-based compensation activity) and repayment of $4 million of borrowings. During the three months ended December 30, 2023, we used $116 million of cash to repurchase common stock (including $10 million paid to applicable tax authorities in connection with these repurchases) and repayment of $13 million of borrowings.

Current wording

Net cash used in financing activities was $147 million for the six months ended March 29, 2025. During the six months ended March 29, 2025, we used $100 million of cash to repurchase common stock, withheld $38 million payments to tax authorities for stock-based compensation activity and repaid $9 million of borrowings.

Previous wording

During the three months ended December 28, 2024 and December 30, 2023, we repurchased 0.2 million and 2 million shares of our common stock for $16 million and $106 million, respectively, under stock repurchase programs authorized by the Board of Directors. Subsequent to the end of the first quarter of 2025, our Board of Directors authorized the repurchase of up to $300 million of our common stock in the open market or in negotiated private transactions. These programs have no expiration dates and the timing of repurchases will depend upon capital needs to support the growth of our business, market conditions and other factors. Although stock repurchases are intended to increase stockholder value, they also reduce our liquidity. As of December 28, 2024, an aggregate of $37 million remained available under these programs.

Current wording

During the six months ended March 29, 2025 and March 30, 2024, we repurchased 1 million and 2 million shares of our common stock for $100 million and $107 million, respectively, under stock repurchase programs authorized by our Board of Directors. During the second quarter of 2025, our Board of Directors authorized the repurchase of up to $300 million of our common stock in the open market or in negotiated private transactions. These programs have no expiration dates and the timing of repurchases will depend upon capital needs to support the growth of our business, market conditions and other factors. Although stock repurchases are intended to increase stockholder value, they also reduce our liquidity. As of March 29, 2025, an aggregate of $253 million remained available under these programs.

Previous wording

We are party to a Receivables Purchase Agreement, as amended (the “RPA”), with certain third-party banking institutions for the sale of trade receivables generated from sales to certain customers. The amount available under the RPA is uncommitted and, as such, is available at the discretion of our third-party banking institutions. Under the Fifth Amended and Restated Credit Agreement (the “Credit Agreement”), the percentage of our total accounts receivable that can be sold and outstanding at any time is 50%. Therefore, as of December 28, 2024, a maximum of $490 million of sold receivables could be outstanding at any point in time under this program, as amended, as required by our Credit Agreement. Trade receivables sold pursuant to the RPA are serviced by us.

Current wording

We are party to a Receivables Purchase Agreement, as amended (the “RPA”), with certain third-party banking institutions for the sale of trade receivables generated from sales to certain customers. The amount available under the RPA is uncommitted and, as such, is available at the discretion of our third-party banking institutions. Under the Fifth Amended and Restated Credit Agreement (the “Credit Agreement”), the percentage of our total trade receivables that can be sold and outstanding at any time is 50%. Therefore, as of March 29, 2025, a maximum of $457 million of sold receivables could be outstanding at any point in time under this program, as amended, as required by our Credit Agreement. Trade receivables sold pursuant to the RPA are serviced by us.

Previous wording

Under each of the programs noted above, we sell our entire interest in a trade receivable for 100% of face value, less a discount. During the three months ended December 28, 2024 and December 30, 2023, we sold approximately $34 million and $407 million, respectively, of accounts receivable under these programs. As of December 28, 2024, no accounts receivable sold under the RPA and subject to servicing by us remained outstanding. As of September 28, 2024, $34 million of accounts receivable sold under the RPA and subject to servicing by us remained outstanding and had not yet been collected. Our sole risk with respect to receivables we service is with respect to commercial disputes regarding such receivables. Commercial disputes include billing errors, returns and similar matters. To date, we have not been required to repurchase any receivable we have sold due to a commercial dispute. Additionally, we are required to remit amounts collected as servicer on a weekly basis to the financial institutions that purchased the receivables. There were no outstanding remittances for amounts collected as of December 28, 2024 and $3 million had been collected but not yet remitted as of September 28, 2024. This amount is classified in accrued liabilities on the condensed consolidated balance sheets.

Current wording

Under each of the programs noted above, we sell our entire interest in a trade receivable for 100% of face value, less a discount. During the six months ended March 29, 2025 and March 30, 2024, we sold approximately $128 million and $797 million, respectively, of trade receivables under these programs. As of March 29, 2025, no trade receivables sold under the RPA and subject to servicing by us remained outstanding. As of September 28, 2024, $34 million of trade receivables sold under the RPA and subject to servicing by us remained outstanding and had not yet been collected. Our sole risk with respect to receivables we service is with respect to commercial disputes regarding such receivables. Commercial disputes include billing errors, returns and similar matters. To date, we have not been required to repurchase any receivable we have sold due to a commercial dispute. Additionally, we are required to remit amounts collected as servicer on a weekly basis to the financial institutions that purchased the receivables. There were no outstanding remittances for amounts collected as of March 29, 2025 and $3 million had been collected but not yet remitted as of September 28, 2024.

Previous wording

We enter into forward interest rate swap agreements with independent counterparties to partially hedge the variability in cash flows due to changes in the Secured Overnight Financing Rate benchmark interest rate associated with anticipated variable rate borrowings. See Note 3, “Financial Instruments” of the notes to the Condensed Consolidated Financial Statements contained in this report for details.

Current wording

We enter into forward interest rate swap agreements with independent counterparties to partially hedge the variability in cash flows due to changes in the Secured Overnight Financing Rate benchmark interest rate associated with anticipated variable rate borrowings. In addition, during the three months ended March 29, 2025, we entered into a total return swap contract to manage the equity market risks associated with our deferred compensation plan liabilities. See Note 3, “Financial Instruments” of the notes to the Condensed Consolidated Financial Statements contained in this report for details.

Previous wording

In the ordinary course of business, we are or may become party to legal proceedings, claims and other contingencies, including environmental, regulatory, warranty and employee matters and examinations by government agencies. As of December 28, 2024, we had accrued liabilities of $37 million related to such matters. We cannot accurately predict the outcome of these matters or the amount or timing of cash flows that may be required to defend ourselves or to settle such matters or that these reserves will be sufficient to fully satisfy our contingent liabilities.

Current wording

In the ordinary course of business, we are or may become party to legal proceedings, claims and other contingencies, including environmental, regulatory, warranty and employee matters and examinations by government agencies. As of March 29, 2025, we had accrued liabilities of $32 million related to such matters. We cannot accurately predict the outcome of these matters or the amount or timing of cash flows that may be required to defend ourselves or to settle such matters or that these reserves will be sufficient to fully satisfy our contingent liabilities.

Previous wording

Our liquidity is largely dependent on changes in our working capital, including sales of accounts receivable under our receivables sales programs and the extension of trade credit by our suppliers, investments in manufacturing inventory, facilities and equipment, repayments of obligations under outstanding indebtedness and repurchases of common stock. We generated $64 million of cash from operations for the three months ended December 28, 2024. Our primary sources of liquidity as of December 28, 2024 consisted of (1) cash and cash equivalents of $642 million (an aggregate of $230 million of our cash is held by Sanmina SCI India Private Limited (“SIPL”), our existing Indian manufacturing entity, that may not be used for general corporate purposes and must be retained in SIPL to fund its operations); (2) our Credit Agreement, under which $791 million, net of outstanding borrowings and letters of credit, was available; (3) our foreign short-term borrowing facilities of $71 million, all of which was available; (4) proceeds from the sale of accounts receivable under our receivables sales programs and (5) cash generated from operations. Subject to satisfaction of certain conditions, including obtaining additional commitments from existing and/or new lenders, we may increase the revolving commitments under the Credit Agreement up to an additional $200 million.

Current wording

Our liquidity is largely dependent on changes in our working capital, including sales of accounts receivable under our receivables sales programs and the extension of trade credit by our suppliers, investments in manufacturing inventory, facilities and equipment, repayments of obligations under outstanding indebtedness and repurchases of common stock. We generated $221 million of cash from operations for the six months ended March 29, 2025. Our primary sources of liquidity as of March 29, 2025 consisted of (1) cash and cash equivalents of $647 million (an aggregate of $235 million of our cash is held by Sanmina SCI India Private Limited (“SIPL”), our existing Indian manufacturing entity, that may not be used for general corporate purposes and must be retained in SIPL to fund its operations); (2) our Credit Agreement, under which $791 million, net of outstanding borrowings and letters of credit, was available; (3) our foreign short-term borrowing facilities of $71 million, all of which was available; (4) proceeds from the sale of accounts receivable under our receivables sales programs and (5) cash generated from operations. Subject to satisfaction of certain conditions, including obtaining additional commitments from existing and/or new lenders, we may increase the revolving commitments under the Credit Agreement up to an additional $200 million.

Previous wording

As of December 28, 2024, 32% of our cash balance was held in the United States. Should we choose or need to remit cash to the United States from our foreign locations, we may incur tax obligations, which would reduce the amount of cash ultimately available to the United States. We believe that cash held in the United States, together with liquidity available under our Credit Agreement and cash from foreign subsidiaries that could be remitted to the United States without tax consequences, will be sufficient to meet our United States liquidity needs for at least the next twelve months.

Current wording

As of March 29, 2025, 27% of our cash balance was held in the United States. Should we choose or need to remit cash to the United States from our foreign locations, we may incur tax obligations, which would reduce the amount of cash ultimately available to the United States. We believe that cash held in the United States, together with liquidity available under our Credit Agreement and cash from foreign subsidiaries that could be remitted to the United States without tax consequences, will be sufficient to meet our United States liquidity needs for at least the next twelve months.

Previous wording

As of December 28, 2024, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K promulgated by the SEC, that have or are reasonably likely to have a current or future effect on our financial condition, changes in our financial condition, revenues, or expenses, results of operations, liquidity, capital expenditures, or capital resources that is material to investors.

Current wording

As of March 29, 2025, we did not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in our financial condition, revenues, or expenses, results of operations, liquidity, capital expenditures, or capital resources that is material to investors.