Sanmina Corporation EBITDA dropped on 31.0% and EBITDA Margin decreased slightly on 1.7 pp from 5.0% to 3.4%
10/29/2018 • About Sanmina Corporation (
$SANM) • By InTwits
Sanmina Corporation reported FY2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is relatively stable: 3.4% in FY2018 vs. 5.0% in FY2017 vs. 4.8% in FY2014
- Sanmina Corporation has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.6%. At the same time it's in pair with industry average of 3.1%
- CAPEX is quite volatile: $39m in 2018, $21m in 2017, $21m in 2016, $12m in 2015, $3m in 2014
- The company has potentially unprofitable business model: ROIC is 7.0%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue increased on 3.5%. Revenue growth showed acceleration in FY18Q4 - it increased 6.9% YoY. Revenue growth was financed by EBITDA margin decline. EBITDA Margin decreased slightly on 1.7 pp from 5.0% to 3.4% in FY2018.
Gross Margin decreased slightly on 1.0 pp from 7.6% to 6.5% in FY2018. SG&A as a % of Revenue showed almost no change in FY2018. SG&A as a % of Revenue was relatively stable in FY2014-FY2018. Stock Based Compensation (SBC) as a % of Revenue showed almost no change in FY2018. During FY2014-FY2018 SBC as a % of Revenue topped in FY2017 at 0.55%.
Net Income margin decreased on 3.4 pp from 2.0% to -1.3% in FY2018. During the last 5 years Net Income margin topped in FY2015 at 5.9% and was declining since that time.
Investments (CAPEX, working capital and M&A)
In FY2018 Sanmina Corporation had CAPEX/Revenue of 1.7%. CAPEX/Revenue showed almost no change from FY2015 to FY2018. Average CAPEX/Revenue for the last three years was 1.7%.
Accounts receivable as a % of Revenue showed almost no change in FY2018. Inventories as a % of Revenue increased on 4.0 pp from 15.3% to 19.3% in FY2018. Accounts payable as a % of Revenue increased on 3.1 pp from 20.2% to 23.3% in FY2018.
Sanmina Corporation has spent
$2m on M&A in FY2018 which accounts for 0.028% of revenue.
Return on investment
The company operates at low but positive ROIC (7.0%) and negative ROE (-6.1%). ROIC decreased on 6.9 pp from 13.9% to 7.0% in FY2018. ROE dropped on 14.6 pp from 8.5% to -6.1% in FY2018. During FY2014-FY2018 ROE topped in FY2015 at 27.3% and was declining since that time.
Leverage (Debt)
Debt level is 0.8x Net Debt / EBITDA and 2.6x Debt / EBITDA. Net Debt / EBITDA jumped on 0.6x from 0.2x to 0.8x in FY2018. Debt jumped on 26.6% while cash increased on 3.2%.
Sanmina Corporation has short term refinancing risk: cash is only 70.7% of short term debt.
Management team
The company's CEO is Michael J Clarke. Michael J Clarke is a founder and has 0 years tenure with the company. CEO total compensation was
$27,814,494 in FY2018 which included
$1,862,500 salary. The company's CFO is David Robert Anderson. David Robert Anderson has 1 year tenure at the company.
3.2% of the company is owned by insiders. Insider ownership didn't change in 2018.
At the end of financial year the company had 47,000 employees. The number of employees didn't change in 2018. Average revenue per employee in FY2018 was
$151,279 and it increased on 3.5%.
Financial and operational results
FY ended 09/29/2018
Sanmina Corporation ($SANM) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 6,215 | 6,375 | 6,481 | 6,869 | 7,110 | 3.5% |
| Gross Profit | 488 | 484 | 514 | 520 | 464 | -10.8% |
| SG&A | 242 | 239 | 245 | 252 | 251 | -0.3% |
| EBITDA | 297 | 304 | 337 | 345 | 238 | -31.0% |
| EBIT | 200 | 203 | 225 | 226 | 119 | -47.3% |
| Interest expence | 31 | 25 | | | | |
| Tax | -35 | -201 | 17 | 75 | 193 | 158.6% |
| Net Income | 197 | 377 | 188 | 139 | -96 | -168.8% |
| Stock Based Compensation | 19 | 21 | 27 | 38 | 33 | -13.4% |
Balance Sheet
|
|---|
| Cash | 467 | 412 | 398 | 407 | 420 | 3.2% |
| Accounts Receivable | 979 | 937 | 974 | 1,110 | 1,177 | 6.0% |
| Inventory | 893 | 919 | 946 | 1,052 | 1,374 | 30.6% |
| Accounts Payable | 1,140 | 1,035 | 1,121 | 1,280 | 1,547 | 20.9% |
| Short Term Debt | 157 | 113 | 28 | 88 | 593 | 571.1% |
| Long Term Debt | 387 | 424 | 434 | 391 | 14 | -96.3% |
Cash flow
|
|---|
| Capex | 70 | 119 | 120 | 112 | 119 | 6.3% |
| Acquisitions | 80 | 14 | 59 | | 2 | |
Ratios
|
|---|
| Revenue growth | 5.0% | 2.6% | 1.7% | 6.0% | 3.5% | |
| EBITDA growth | 17.2% | 2.1% | 10.9% | 2.5% | -31.0% | |
|
|---|
| Gross Margin | 7.9% | 7.6% | 7.9% | 7.6% | 6.5% | -1.0% |
| EBITDA Margin | 4.8% | 4.8% | 5.2% | 5.0% | 3.4% | -1.7% |
| EBIT Margin | 3.2% | 3.2% | 3.5% | 3.3% | 1.7% | -1.6% |
| SG&A, % of revenue | 3.9% | 3.8% | 3.8% | 3.7% | 3.5% | -0.1% |
| SBC, % of revenue | 0.3% | 0.3% | 0.4% | 0.6% | 0.5% | -0.1% |
| Net Income Margin | 3.2% | 5.9% | 2.9% | 2.0% | -1.3% | -3.4% |
| CAPEX, % of revenue | 1.1% | 1.9% | 1.9% | 1.6% | 1.7% | 0.0% |
|
|---|
| ROIC | 12.8% | 12.8% | 14.2% | 13.9% | 7.0% | -6.9% |
| ROE | 16.9% | 27.3% | 12.0% | 8.5% | -6.1% | -14.6% |
| Net Debt/EBITDA | 0.3x | 0.4x | 0.2x | 0.2x | 0.8x | 0.6x |
| Interest coverage ratio (ICR) | 6.5x | 8.1x | | | |
| Interest expence / Average debt | 5.7% | 4.6% | | | | |
People
|
|---|
| Insider ownership | 3.2% | 3.2% | 3.2% | 3.2% | 3.2% | 0.0% |
| Employees | 43,101 | 43,854 | 45,397 | 47,000 | 47,000 | 0.0% |
| Revenue/Employee, th. $ | 144 | 145 | 143 | 146 | 151 | 3.5% |
Sanmina Corporation ($SANM) key quoterly financial indicators
| mln. $ | FY18Q1 | FY18Q2 | FY18Q3 | FY18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 1,745 | 1,676 | 1,813 | 1,876 | | 1.4% | -0.4% | 6.0% | 6.9% |
| EBITDA | 43 | 79 | 77 | 40 | | -50.5% | -10.1% | -20.0% | -46.8% |
| Net Income | -155 | 25 | 34 | 1 | | -445.3% | -22.3% | -6.7% | -97.0% |
Balance Sheet
|
|---|
| Cash | 405 | 405 | 405 | 420 | | -0.1% | -6.3% | -7.1% | 3.2% |
| Short Term Debt | 169 | 244 | 611 | 593 | | 290.2% | 7,055.0% | 17,794.6% | 571.1% |
| Long Term Debt | 392 | 393 | 15 | 14 | | -0.3% | -0.1% | -96.3% | -96.3% |
Ratios
|
|---|
| Gross Margin | 6.3% | 6.8% | 6.5% | 6.5% | | -1.4% | -1.1% | -1.1% | -0.6% |
| EBITDA Margin | 2.5% | 4.7% | 4.2% | 2.1% | | -2.6% | -0.5% | -1.4% | -2.1% |
| Net Income Margin | -8.9% | 1.5% | 1.9% | 0.0% | | -11.5% | -0.4% | -0.3% | -1.4% |
Peers in Electronic Manufacturing Servi
Below we provide Sanmina Corporation benchmarking against other companies in Electronic Manufacturing Servi industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| RF Industries, Ltd. ($RFIL) | | 41.9% | -7.8% | -24.0% | 118.4% |
| Alpine 4 Technologies Ltd ($ALPP) | | | 35,893.8% | 5.8% | 71.5% |
| Kemet Corporation ($KEM) | | -1.3% | -10.7% | 3.1% | 58.4% |
| SMTC Corporation ($SMTX) | | -3.5% | -23.9% | -17.1% | 55.2% |
| Deswell Industries, Inc. ($DSWL) | | -7.0% | 17.1% | -0.1% | 36.3% |
| |
|---|
| Median (27 companies) | | 2.8% | 1.2% | 1.9% | 9.8% |
|---|
| Sanmina Corporation ($SANM) | | 2.6% | 1.7% | 6.0% | 3.5% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Neonode Inc. ($NEON) | 68.2% | 66.0% | 86.9% | 77.1% | 89.2% |
| Andrea Electronics Corp ($ANDR) | 83.8% | 99.1% | 88.5% | 96.2% | 70.4% |
| Data I/O Corporation ($DAIO) | 53.9% | 52.4% | 55.0% | 58.9% | 59.4% |
| IPG Photonics Corporation ($IPGP) | 54.1% | 54.6% | 54.9% | 56.6% | 54.8% |
| CTS Corporation ($CTS) | 32.2% | 33.2% | 35.4% | 33.2% | 35.1% |
| |
|---|
| Median (27 companies) | 14.7% | 19.4% | 22.2% | 15.8% | 15.2% |
|---|
| Sanmina Corporation ($SANM) | 7.9% | 7.6% | 7.9% | 7.6% | 6.5% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| IPG Photonics Corporation ($IPGP) | 41.5% | 42.4% | 41.8% | 44.7% | 40.9% |
| TE Connectivity Ltd. ($TEL) | 19.7% | 19.3% | 20.9% | 20.4% | 21.4% |
| CTS Corporation ($CTS) | 14.7% | 9.0% | 20.7% | 14.0% | 17.8% |
| Methode Electronics, Inc. ($MEI) | 12.6% | 15.4% | 16.5% | 16.5% | 16.1% |
| RF Industries, Ltd. ($RFIL) | 12.4% | 6.7% | -12.1% | 3.1% | 15.9% |
| |
|---|
| Median (27 companies) | 4.4% | 5.8% | 5.0% | 4.5% | 4.8% |
|---|
| Sanmina Corporation ($SANM) | 4.8% | 4.8% | 5.2% | 5.0% | 3.4% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Maxwell Technologies, Inc. ($MXWL) | 3.7% | 2.5% | 4.9% | 6.6% | 11.3% |
| IPG Photonics Corporation ($IPGP) | 11.5% | 7.8% | 12.6% | 9.0% | 11.0% |
| eMagin Corporation ($EMAN) | 5.8% | 4.7% | 6.7% | 6.2% | 8.8% |
| TE Connectivity Ltd. ($TEL) | 5.3% | 4.9% | 5.3% | 5.6% | 6.7% |
| CTS Corporation ($CTS) | 3.2% | 2.5% | 5.2% | 4.3% | 6.1% |
| |
|---|
| Median (27 companies) | 2.7% | 2.4% | 2.8% | 3.4% | 2.5% |
|---|
| Sanmina Corporation ($SANM) | 1.1% | 1.9% | 1.9% | 1.6% | 1.7% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| RF Industries, Ltd. ($RFIL) | 8.5% | 4.6% | -18.7% | 0.9% | 29.2% |
| IPG Photonics Corporation ($IPGP) | 27.0% | 27.8% | 25.1% | 29.9% | 22.9% |
| Methode Electronics, Inc. ($MEI) | 19.7% | 26.1% | 22.7% | 20.8% | 19.2% |
| TE Connectivity Ltd. ($TEL) | 17.3% | 15.1% | 15.9% | 16.2% | 18.4% |
| Kemet Corporation ($KEM) | -2.8% | 3.8% | 6.2% | 6.9% | 16.9% |
| |
|---|
| Median (29 companies) | 4.4% | 4.9% | 6.2% | 4.2% | 6.4% |
|---|
| Sanmina Corporation ($SANM) | 12.8% | 12.8% | 14.2% | 13.9% | 7.0% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Alpine 4 Technologies Ltd ($ALPP) | | | | 34.1x | 65.7x |
| SigmaTron International, Inc. ($SGMA) | 2.7x | 4.1x | 2.4x | 3.4x | 16.0x |
| SMTC Corporation ($SMTX) | 3.5x | 1.8x | 1.0x | | 11.3x |
| IEC Electronics Corp. ($IEC) | 7.1x | 14.0x | 2.0x | 5.6x | 4.9x |
| Key Tronic Corporation ($KTCC) | 0.2x | 3.4x | 2.6x | 2.5x | 3.9x |
| |
|---|
| Median (22 companies) | -0.5x | -0.9x | 0.3x | 0.1x | -0.2x |
|---|
| Sanmina Corporation ($SANM) | 0.3x | 0.4x | 0.2x | 0.2x | 0.8x |
