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Sanmina Corp. has announced preliminary financial results for the first quarter ended December 30, 2017 and the outlook for the second quarter ending March 31, 2018.
The company expects first quarter revenue of approximately $1.74 billion versus the prior outlook of $1.75 billion to $1.80 billion. Sanmina expects a first quarter GAAP loss per share of $1.85 to $2.27, including non-cash adjustments for deferred tax and discrete tax items of $2.03 to $2.31, restructuring costs of $0.19 to $0.33, stock-based compensation expense of $0.12, and amortization of intangible assets of $0.03. The company expects non-GAAP diluted earnings per share of $0.48, versus previously provided outlook of $0.68 to $0.74.
"Our disappointing financial results are driven by slower than expected new program ramps and an unfavorable program mix," stated Bob Eulau, CEO of Sanmina. "Our GAAP financial results were mainly impacted by the non-cash charge to our deferred tax assets that resulted from the enactment of the Tax Cuts and Jobs Act. We are right-sizing our fixed cost structure and we remain confident that our pipeline is strong and our second half of fiscal 2018 will be stronger than our first half as we continue to execute on our strategy."
Second Quarter Fiscal 2018 Outlook
The following outlook is for the second fiscal quarter ending March 31, 2018.
- Revenue between $1.60 billion to $1.70 billion
- GAAP diluted earnings per share between $0.20 to $0.30, including stock-based compensation expense of $0.17and amortization of intangible assets and restructuring costs of $0.03
- Non-GAAP diluted earnings per share between $0.40 to $0.50
Impact of Tax Reform Act
As a result of the enactment of the Tax Cuts and Jobs Act, Sanmina expects GAAP income tax expense for the first quarter to include a non-cash charge of $150 million to $170 million relating to the reduction in carrying value of its net deferred tax assets. The company does not expect to incur any additional material cash income tax expense in the first quarter as a result of the deemed repatriation tax provisions of the Act. The company is in the process of finalizing these provisional amounts and will provide further information about its GAAP income tax expense associated with the Act in its earnings conference call for the first quarter on January 29, 2018.
Company Initiates Restructuring Plan
On January 12, 2018, Sanmina adopted a consolidated restructuring plan impacting three of its manufacturing facilities. As a result of this plan, the company expects to incur restructuring charges of approximately $25 million to $35 million over the period of the consolidated restructuring plan, all of which is expected to be cash.
In connection with this plan, the company expects to record charges in its first quarter of fiscal 2018 of approximately $15 million to $25 million, consisting of severance and retention pay for affected employees to be paid over the period of the consolidated restructuring plan. The company expects to complete the actions taken under this plan through the first quarter of fiscal 2020. The company will continue to evaluate the consolidated restructuring plan, and any further actions that may be required under it, which could cause the Company to incur additional restructuring charges related to this plan in the future.