Sanmina-SCI CEO Discusses F4Q2010 Results - Earnings Call Transcript
Sanmina-SCI Corp. (
)
F4Q2010 (Qtr End 10/02/2010) Earnings Call
November 1, 2010 5:00 pm ET
Executives
Paige Bombino - Director, IR
Jure Sola - Chairman and CEO
Bob Eulau - EVP and CFO
Hari Pillai - President and COO
Analysts
Craig Hettenbach - Goldman Sachs
Louis Miscioscia - Collins Stewart
Jim Suva - Citi
Joe Whitney - Longbow Research
Sean Hannan - Needham & Company
Amit Daryanani - RBC Capital Markets
Alex Blanton - Ingalls & Snyder
Presentation
Operator
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At this time, I would like to welcome everyone to the Sanmina-SCI 2010 fourth quarter fiscal yearend results conference call. (Operator Instructions)
At this time, I would like to turn the call over to our host, Ms. Paige Bombino.
Paige Bombino
Good afternoon, ladies and gentlemen, and welcome to Sanmina-SCI's 2010 fourth quarter and fiscal yearend earnings call. Today's call is being recorded and is posted along with a copy of our earnings release and a slide presentation on the quarter at www.sanmina-sci.com in the Investor Relations section. You can follow along with our prepared remarks in the slides posted on the website.
Please turn to Page 2, the Safe Harbor statement. During this conference call, we may make projections or other forward-looking statements regarding future events or future financial performance of the company. We caution you that such statements are just projections. The company's actual results of operations may differ significantly as a result of various factors, including the state of the economy, economic conditions in the electronics industry, changes in customer requirements and sales volume, competition, and technological change.
We refer you to our quarterly and annual reports filed with the Securities & Exchange Commission. These documents contain and identify important factors that could cause actual results to differ materially from our projections or forward-looking statements.
You'll note in our press release issued today that we have provided you with statement of operations for the three months and 12 months ending October 2, 2010, on a GAAP basis, as well as certain non-GAAP financial information. A reconciliation between the GAAP and non-GAAP financial information is also provided in the press release and is posted on our website.
In general, our non-GAAP information excludes restructuring costs, acquisition and integration costs, impairment charges, gains and losses on the extinguishment of debt, non-cash stock-based compensation expense, amortization expense and other infrequent or unusual items to the extent material. Any comments we make on this call as they relate to the income statement measures will be directed at our non-GAAP financial results. Accordingly, unless otherwise stated in the conference call, when we refer to gross profit, gross margin, operating income, operating margin, net income and earnings per share, we are referring to our non-GAAP information.
I would now like to turn the call over to Jure Sola, Chairman and Chief Executive Officer.
Jure Sola
Good afternoon, ladies and gentlemen, and welcome. Thank you for being here with us today. Joining me on this conference call is Bob Eulau, our CFO; and also President and Chief Operating Officer, Hari Pillai.
And today's agenda we have is Bob Eulau will review our financial results for the fourth quarter and fiscal year 2010. Then I will follow with comments relative to Sanmina-SCI's results and future goals. Then Bob, Hari and I will open it up for Q&A.
And now, I would like to turn this call over to Bob.
Bob Eulau
Thanks, Jure. It's a pleasure to be joining everyone today on this call.
Please turn to Slide 3. Overall this was our sixth consecutive quarter of growth and improved profitability. The fourth quarter was a solid finish to a year in which we dramatically improved our financial performance. Revenue of $1.69 billion was up 4% on a sequential basis and up 25% over the fourth quarter last year. This was at the high end of our guidance of $1.65 to $1.7 billion.
Gross margin was below the range we expected due to a specific issue that I'll discuss in a moment. Operating margin was 4.1%, and non-GAAP EPS came in at $0.46 per share. Non-GAAP EPS was well above the range of our guidance, primarily because of continued expense control and implementation of another phase in our long-term tax strategy.
Our tax restructuring is moving ahead of plan. We exited the full year with an effective tax rate of 20.1%. Had this been the tax rate for the fourth quarter, our non-GAAP earnings per share would have been $0.43 rather than the $0.46 that we have reported. This was based on 82.7 million shares outstanding on a fully diluted basis.
Please turn to Slide 4. I'll start by making a few comments on the GAAP numbers. For the fourth quarter, we reported a GAAP net income of approximately $31 million which resulted in earnings per share of $0.38. For FY'10, our revenue increased 22% from $5.2 billion to $6.3 billion. Our GAAP net income improved dramatically from a loss of $138 million last year to a profit of $122 million in FY'10.
Restructuring costs totaled $6.9 million in the fourth quarter. The restructuring costs were for the integration of the optical business acquired from BreconRidge in addition to the normal run rate of restructuring cost that we book as incurred for previously closed plans. As a result of the acquisition of BreconRidge, we will see increased restructuring costs in Q1 as we consolidate facilities.
We expect total restructuring costs for the first quarter to be between $11 million and $13 million. After Q1, we expect the restructuring costs to return to our normal rate of $3 million to $4 million per quarter.
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