Sanmina-SCI Posts Q1 Net Income Drop of 53%
SAN JOSE – Sanmina-SCI Corp. reported fiscal first-quarter revenue of $1.66 billion, up 12.5% year-over-year and 4% sequentially.
Sanmina-SCI did not disclose what percentage of the increase was due to the company's acquisition of EMS company Breconridge.
For the period ended Oct. 2, GAAP net income was $28 million, down 53% compared to the same period in fiscal 2010. This included a one-time benefit of $36 million related to a litigation settlement. Operating income was $69 million, or 4.2% of revenue, up 41% compared to the same quarter last year.
It was the printed circuit board fabricator's sixth consecutive quarter of growth and profitability.
Year-over-year, each of the company's four primary markets saw double-digit growth, with communication networks up 23.2%; enterprise computing and storage up 18.6%; industrial, defense and medical up 21%; and multimedia up 24.3%.
Gross profit in the first quarter was $129 million, or 7.8% of revenue, up 15.2% year-over-year. Gross margin was down 10 basis points from the previous quarter on problems in the company's PCB unit.
"Gross margin was obviously a disappointment," said chairman Jure Sola in a conference call with analysts. "The components business has slipped back to slightly below the corporate average gross margin. We had a specific cost and execution challenge in the printed circuit board area this quarter."
Sola later attributed the PCB problems to "execution and management."
Inventory turns rose slightly to 7.3. "We still expect to improve," said Sola, "and our goal is to get up to at least 8 turns within a few quarters."
Overall factory utilization was 85% to 90% on a personnel level and 75% on an equipment basis.
Sanmina-SCI forecast revenue for April quarter of $1.625 billion to $1.67 billion, with gross margins of 8% to 8.2% and operating margins of 4.1% to 4.3%. The corporate book-to-bill was 1.04, with components slightly higher.
"Our customers' forecast[s] are more uncertain," Sola said. "[S]ome customers have been driving supply chain very strong for many quarters, and now they are pausing to review their future requirements. [S]ome have a lot of inventory in the pipeline. We still have some component shortages and still expect to leave some sales under table this quarter."
