San Jose-based contract electronics manufacturer, Sanmina, saw a significant boost in its shares following the release of its solid December quarter financial results. The company also provided better-than-expected guidance for the upcoming March quarter, along with a positive outlook for the second half of the year.
Sanmina's stock price rose by 26%, reaching $63.97 during late morning trading.
During its fiscal first quarter, which ended on December 30th, Sanmina reported revenue of $1.87 billion. This figure marked a 20% decrease compared to the same period the previous year, primarily due to oversupplied inventories at its customers. The company's management had initially projected revenue between $1.85 billion and $1.95 billion.
According to Chief Financial Officer Jonathan Faust, the year-over-year decline in revenue reflects ongoing market-driven inventory challenges that Sanmina has been managing with its customers. However, Faust noted that these challenges were in line with the company's expectations.
Adjusted profits for the quarter were $1.30 per share, which was at the upper end of the predicted range of $1.20 to $1.30 per share by management. On a generally accepted accounting principles basis, Sanmina earned 98 cents per share, falling within the projected range of 98 cents to $1.08 per share.
Looking ahead to the March quarter, Sanmina anticipates revenue to remain relatively flat compared to the first quarter, with a projected range of $1.825 billion to $1.925 billion. This forecast surpasses the consensus estimate of $1.8 billion. The company also expects adjusted profits for the quarter to be between $1.20 and $1.30 per share, exceeding analysts' expectations of $1.08 per share.
Although Sanmina has refrained from providing guidance beyond the second quarter, Faust expressed confidence that demand and revenue would improve in the latter part of the year. The company anticipates soft demand during the first half of the fiscal year ending in September 2024, due to ongoing customer inventory absorption.
CEO Jure Sola emphasized that Sanmina is poised for substantial growth in the long term, stating, "I can commit that in the longer term, this company is positioned to be a lot bigger than what we just did."
During the quarter, Sanmina also repurchased $106 million worth of common stock.