Good afternoon, ladies and gentlemen, and welcome to Sanmina's second quarter fiscal 2020 earnings call. Christian, your line is open. Cash cycle days were 61.7. SANMINA CORPORATION : Press releases relating to SANMINA CORPORATION Investor relations | Nasdaq: SANM | Nasdaq Contact Us Service Request. Some of them are going to be different right because we won't have, let's say the shutdown that we had after Chinese New Year in China, but at the same time, we've got a fuller impact in let's say the automotive business or some of the shelter-in-place stuff that then come into effect toward the end of Q3 or excuse me, at the end of Q2 that may be an effect for longer in Q3. So it's that optimization so we are ready when the recovery kind of sets in. Certainly we have a very robust process every quarter. So we have to manage all three so we can produce and ship to end customers. I think it's somewhat reflective of the nature of the customer relations we have. This compares to a gain of $2.0 million in the first quarter. I am in particular pleased with our exceptional management team. Peter Nilsson President & CEO. So, operator, again we have time for one more question, if there is one more question out there we're happy to take that. As I sit here today, there are a lot of variables, which are changing every day as we manage through the COVID-19 crisis. So what are some of the puts and takes that are impacting gross margin in fiscal 3Q? And with that, I'll turn it back to Hartmut for additional comments. With regards to our supplier base, we greatly enhance the day to day monitoring, including financial strength measurements. Revenue and margins were significantly influenced by COVID-19. And my last question, you guys expressed some customer optimism in optical, kind of given bandwidth issues globally. This relates to under-absorption, continued manufacturing inefficiencies, and additional costs. I think you reported gross margin of 6.9% you mentioned additional costs associated with COVID-19, how much was that in the quarter and how should we think about additional costs associated with COVID-19 in fiscal 3Q and looks like from the guidance you're guiding gross margin down somewhat, because it's the guidance if I heard correctly was 6.4% to 6.9%. This was primarily the result of under absorption due to lower revenue levels, manufacturing inefficiencies, and additional costs caused by COVID-19. Thanks Hartmut. Thank you, Jim. There were certain limitations based on government mandates in certain geographies, which prevented Sanmina from optimizing our cost base for the lower revenue levels, which we would do in the normal course. For example currently, we are exclusive manufacturer of a rapid sub 15-minute COVID test that received emergency FDA approval. On the right hand side, you'll see Components Products and Services revenues declined to $327 million, non-GAAP gross margins were down 10.6%. And also from me a warm welcome to our second quarter earnings call. We are always in close contact with our customers and probably even more to a different levels of our organization even more these days with our customers. For example in cities with stay-at-home orders, we quickly documented to local authorities the essential nature of our work, within days we could restart manufacturing for many of our customers. In addition, there remains uncertainty as it relates to the impact of shelter-in-place and other similar restrictions on our supply chain outside of China as well as on our customers. It's greatly appreciated. We experienced some delays and constraints in particular in the medical space for PPE, monitoring tests in high demand by EMS personnel, but I think overall this additional layer of transparency and monitoring is making us a better company and our customers appreciate that. We expect non-GAAP operating margin to be in the range of 2.5% to 3%. Annual reports. As I mentioned before, we generated free cash flow in the second quarter and expect to generate free cash flow in the third quarter. Box 505000 Louisville, KY 40233 - 5000 1-800-255-0461 www.computershare.com. 2700 North First Street Just like other multinationals for Sanmina, COVID-19 also started in China. Namely, optimization of our cost structure, limitation on new capital expenditures only to the most essential items, and cash generation. However, as the quarter progressed, we started to be impacted by COVID-19. Jim, your line is open. We expect non-GAAP fully diluted share count to be around 70 million shares. As you all know, due to the drop in passenger traffic, cargo capacity is greatly reduced and very unbalanced worldwide. We will continue to be opportunistic in repurchasing shares. About Sanmina Sanmina Corporation, a Fortune 500 company, is a leading integrated manufacturing solutions provider serving the fastest-growing segments of the global Electronics Manufacturing Services (EMS) market. Sanmina Corporation Finally, despite the continued impact of COVID-19, we expect to continue to generate free cash flow in the quarter. ET, Ladies and gentlemen, thank you for standing by. I now like to turn the call over to Hartmut Liebel, Chief Executive Officer. Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer. Again, as a management team, we will remain focused on what we can control. Thank you for the insightful questions and I hope that you and your family and your team members will stay healthy. Investor Relations. The company is under no obligation to and expressly disclaims any such obligation to update or alter any of its forward-looking statements made in the earnings release on this conference call and on our Investor Relations section of our website, whether as a result of new information, future events or otherwise, unless otherwise required by law. To set the stage, I think the firm like Sanmina is very much at the center of the COVID-19 crisis. Seeing how our company work through these issues under pressure and uncertainty tells me a lot about the Sanmina team and our company. Thank you. The primary responsibility is to keep our employees safe, while building products that our customers need right now. In addition to Paige here today, with me is also Kurt, our CFO. I agree and concur. And so that's very much the feedback we are hearing from them. Customer demand for the quarter is expected to be relatively stable with the exception of weakness in automotive. So are you reserving a little bit more allowance for uncollectible accounts or have your collection been pretty sufficient in the past few years, where you have enough buffer, should it need to be some challenges in those various end markets, not just oil and gas, but small businesses, private businesses, you may have trouble with fundings? So to me the last few weeks demonstrated what mission critical products really mean in real life. There is obviously long term optimism for 5G, but even our communications end market is working through the same supply chain, employee, logistic challenges here and that's exactly the reason why characterized even the communications market as stable supporting our guidance. While we are streamlining our operations so that we prepared for any market challenges, we are also focused on being prepared so that when the recovery kicks in we are ready to go and go to meet increased demand. So I was wondering if you can just drill a little bit deeper into the communications network, what did you see in that end market in fiscal 2Q in networking, optical, or wireless? Obviously, we still experience major disruption, adding additional costs and inefficiencies that we're working through. So I think you're going to see a lot of the same factors, and I think that's why roughly margins are flat to slightly down on relatively flat revenue. You'll note in our press release and slides issued today that we have provided you with a statement of operations for the quarter ended March 28, 2020 on a GAAP basis as well as certain non-GAAP financial information. P.O. The local teams and our other retail and teams rapidly rolled out waves of operational adjustments through our network. A copy of our press release and slides for today's discussion are available on our website at sanmina.com in the Investor Relations section. For many local police stations, fire departments, and EMS personnel, we build communication systems that allow frontline managers to respond with speed and confidence even if the public networks are overloaded or down during emergencies. Our products are key building blocks in the clean-power ecosystem, enabling the generation of renewable energy as well as the efficient transmission and consumption of power in applications ranging from milliwatts to megawatts. And my follow-up question is you mentioned strength in optical, is that like accelerated strength beyond than what you may be thought three months ago or so, or is it a strength in optical relative to just the macro economy slowing? Q2 operating expenses declined relative to the prior quarter to $62.8 million. The fact that many of Sanmina's products are considered essential and as such are subject to certain exemptions from shelter-in-place or similar restrictions helped mitigate the impact, but we were still impacted. And number 3, and probably most important we need employees to be in the factory recognizing that some work can be done from remote offices. We expect non-GAAP gross margins will be in the range of 6.4% to 6.9%, as we continue to be impacted by COVID-19. Good question. This is really the mission critical nature of our work and our experience showed this is much more than a marketing slogan. We expect capital expenditures to be around $17 million, while we expect depreciation amortization to be around $28 million. So in terms of increased communication demand increased bandwidth demand increased storage demand and so on. Number two, we need a functioning supply base, we may have 99 parts, but without number 100, which might be a golden screw, you cannot fulfill the order. Net capital expenditures were approximately $16.4 million in the quarter. Investor Relations. I think the way I would think about it is, you know we had guided gross margins in kind of the mid-sevens range for the outlook. We first saw this as our employees in China were delayed in returning from Chinese New Year. Sanmina Investor Relations at 408.964.3610. Thanks, Kurt. Investor Relations Global Contacts Sanmina Corp SANM Morningstar Rating Rating as of Mar 26, 2021. We have some exciting new engagements on the medical side. Sanmina Investor Relations at 408.964.3610 About Sanmina Sanmina Corporation, a Fortune 500 company, is a leading integrated manufacturing solutions provider serving the fastest-growing segments of the global Electronics Manufacturing Services (EMS) market. We did not use any of the cash last quarter. A copy of our press release and slides for today's discussion are available on our website at sanmina.com in the Investor Relations section. Inventory was up approximately $40 million and inventory turns declined to 6.9, this was due to the manufacturing inefficiencies and disruptions in the supply chain caused by COVID-19. So, if I may recap today's call, and for that please refer to Slide number 15, which is the last slide in our deck. A copy of our press release and slides for today's discussion are available on our website at sanmina.com in the Investor Relations section. Free cash flow, where we generated nearly $120 million and finished with an industry leading balance sheet strength, with a cash balance of $1.1 billion. Filters [Phonetic] very much down to all of our supply base. It's -- it's really so widespread. I mean, obviously, it starts with volume and volumes last quarter were down relative to the prior quarter and down relative to expectations. Thank you, Ian. I think we have some very exciting years ahead of us. I said the even in communications the puts and takes kind of cancel each other out. What are the puts and takes you talked about stability in the customer base except for automotive this quarter, June. Power Integrations is a leading innovator in semiconductor technologies for high-voltage power conversion. Other factors that could cause our results to differ from our outlook include adverse changes to the key markets we target, significant uncertainties that can cause our future sales and net income to be variable, reliance on a small number of customers for a substantial portion of our sales, risks arising from our international operations, any other factors set forth in the company's annual and quarterly reports filed with the Securities and Exchange Commission. --Sanmina Corporation, a leading integrated manufacturing solutions company, today reported financial results for the second quarter fiscal 2020 … Our next question is from line of Christian Schwab from Craig-Hallum Capital. Email Alerts. I think that's still intact, but to be seen locality short-term issues is impacting the timing around that. What are the puts and takes that we should be monitoring the closest or you're monitoring the closest to kind of anticipate what the second half of the calendar year could look like? I think you're guiding flat from end market demand standpoint, except for automotive for the next quarter. Although again mitigated to some extent by the fact that many of the products we manufacture are considered essential. So they're all intertwined. I would say for the quarter that we were in our collections were actually in line with what we would normally expect. And I think overall, kind of the overall secular industry trend, which is partner network consolidation, fewer partners, and more closer to end markets more regionalization, those trends are firmly intact. Adjusting for an estimated stock-based compensation of $0.12 per share, GAAP diluted earnings per share is expected to be between $0.18 and $0.28. Again, I want to express a big thank you to all of our employees around the world, to our supplier partners, and thank you to our shareholders and investors for your long-term support. Transfer Agent Computershare Trust Company, N.A. By the time the challenges arrived in Europe and the Americas, we had learned a lot and were relatively well prepared. And so far we haven't seen any impact of that, certainly it's something we're monitoring and you know probably looking closer than you normally would although again we have a very robust process normally as well. Okay, thank you for that. Okay, thank you for that. So what are some of the things that are giving you confidence enough so that you can guide the June quarter? Sanmina Investor Relations at 408.964.3610 About Sanmina Sanmina Corporation, a Fortune 500 company, is a leading integrated manufacturing solutions provider serving the fastest-growing segments of the global Electronics Manufacturing Services (EMS) market. Investor relations contacts. I hear from our customers they appreciate our transparency and our willingness to share protocols with our customers to improve their very own procedures. 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