SAN JOSE -- Sanmina-SCI last night reported fiscal first-quarter sales of $1.48 billion, up 9% sequentially and 4% year-over-year.

For the period ended Jan. 2, the electronics manufacturing services company said GAAP net income was $59 million, compared to a net loss of $33 million in the prior quarter and a net loss a year ago of $26 million. The recent results included a one-time benefit of approximately $36 million in connection with certain legal proceedings.

Sales outpaced previous guidance of $1.35 billion to $1.45 billion. The GAAP gross margin was 7.4%, a 40 basis point sequential improvement, and the GAAP operating margin was 2.7 percent, up 210 basis points sequentially.

The non-GAAP gross profit was $112 million, or 7.6%, up 50 basis points from the fiscal fourth quarter.  

The company did not break out its EMS sales from its bare circuit board and enclosures revenues, except to say the latter was about a $1 billion annual business.

The company guided for fiscal second-quarter revenue of $1.45 billion to $1.55 billion, with gross margins rising to 7.7% to 7.9%. 

Analysts said the company's strategy aided the results. In a research note, Sherri Scribner of Deutsche Bank Equity Research said, "We believe the company is benefiting from its recent cost reductions as well as its targeted strategy to focus on customers where Sanmina can add value. This includes alternative energy and defense/aerospace and high-end networking, segments where Sanmina has won new programs."

Among the one-time events for the quarter was a $35.6 million settlement on a litigation matter and an $11.6 million resolution on an outstanding tax matter. Restructuring costs totaled $3.3 million for the quarter, down from $18.3 million last quarter.

At quarter's end, cash and cash equivalents were $727 million, down as a result of the early redemption of $176 million in debt. Cash flow from operations was positive at $13 million and capital expenditures were also at $13 million. Inventory days improved from 56 days to 51 days during the quarter, and accounts receivable dropped from 49 days to 43 days. Accounts payable declined from 57 days to 54 days. Overall, cash cycle time improved sequentiallyfrom 48 days to 41 days.

Communications made up 34% of revenue, up 9%. Enterprise computing and storage, including enterprise servers and storage, was 21% of revenue, up 5%. Industrial, defense and medical was up 8% to 26% of revenue. Multimedia (which includes automotive) was up 16% to 19% of revenue.

On a conference call with analysts, chairman and CEO Jure Sola said the company is operating at an average 85 to 90% of available personnel capacity, and at 70% of equipment capacity.

Sola added that the company was seeing component shortages, specifically in logic, discrete capacitors, and memory, and that shortages were expected for another 90 days.

 

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