Shares of Sanmina Corp. (NASDAQ:SANM) were down 24% as of 12:30 p.m. EST Monday after the electronics manufacturing services company announced disappointing preliminary quarterly results.
More specifically, for its fiscal fiscal quarter ended Dec. 30, 2017, Sanmina now expects revenue will be roughly $1.74 billion -- below its previous guidance for a range of $1.75 billion to $1.80 billion. On the bottom line, that will translate to a GAAP loss per share of $1.85 to $2.27, albeit primarily due to noncash adjustments of $2.03 to $2.31 per share stemming from the recently enacted Tax Cuts and Jobs Act.
But even excluding those adjustments, as well as smaller one-time items related to restructuring (more on that below) and stock-based compensation, Sanmina's adjusted (non-GAAP) earnings are expected to be $0.48 per share, below its latest outlook for a range of $0.68 to $0.74.
"Our disappointing financial results are driven by slower than expected new program ramps and an unfavorable program mix," explained Sanmina CEO Bob Eulau. "[...]We are right-sizing our fixed cost structure and we remain confident that our pipeline is strong and our second half of fiscal 2018 will be stronger than our first half as we continue to execute on our strategy."
Earlier this month Sanmina launched a restructuring program that will impact each of its three manufacturing facilities. The company anticipates incurring total restructuring charges of $25 million to $35 million between now and the beginning of fiscal 2020. However, the lion's share of those charges -- or roughly $15 million to $25 million -- will be recorded in the fiscal first quarter of 2018, primarily related to severance pay to affected employees.
That's not to say Sanmina's longer-term story is broken. Its financial position could be bolstered in the coming quarters both as new programs complete their respective ramps and as it emerges a leaner company following its restructuring effort.
But that effort certainly isn't free, and our market hates being told to hurry up and wait. Add to that the negative repercussions of recent tax reform, and it's no surprise to see Sanmina stock falling hard in response today.