Good afternoon. My name is Mike and I will be your conference operator today. At this time, I would like to welcome everyone to the Sanmina Corporation’s Fourth Quarter Fiscal Year 2014 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. (Operator Instructions) Thank you. I will now turn the call over to Paige Bombino, Director of Investor Relations. You may begin your conference.

Thank you, Mike. Good afternoon, ladies and gentlemen and welcome to Sanmina’s fourth quarter and fiscal year 2014 earnings call. A copy of today’s release is available on our website in the Investor Relations section. You can follow along with our prepared remarks in the slides posted on our website. Please turn to the Safe Harbor statement. During this conference call, we may make projections or other forward-looking statements regarding the future events or the 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 global 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 and Exchange Commission. These documents contain risk factors that could cause the actual results to differ materially from our projections or forward-looking statements. You will note in our press release and the slides issued today that we have provided you with statements of operations for the 3 months and 12 months ended September 27, 2014 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 slides posted on our website. In general, our non-GAAP information excludes restructuring costs, acquisition and integration costs, non-cash stock-based compensation expense, amortization expense and other infrequent or unusual items to the extent material. Any comments that 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 this conference call, when we refer to gross profit, gross margin, operating income, operating margin, taxes, 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.

Thanks, Paige. Good afternoon, ladies and gentlemen. Welcome. Thank you all for being here today with us. With me on today’s conference call is Bob Eulau, our CFO.

Hello, everyone.

Our agenda we have for you is that Bob will review our financial results for the fourth quarter. I will follow up with additional comments relative to Sanmina’s results and future goals. Then Bob and I will open for question and answers. And now, I’d like to turn this call over to Bob. Bob?

Thanks, Jure. Please turn to Slide 3. Overall, the fourth quarter was very good from a growth, operating margin and cash generation perspective. Non-GAAP revenue of $1.69 billion was up 5.2% on a sequential basis and up 12.1% from the fourth quarter last year. Our gross margin came in at 7.9%, which was down 10 basis points from the third quarter and up 10 basis points from the fourth quarter last year. Operating margin increased 40 basis points from last quarter of 4.2%. Non-GAAP earnings per share was $0.61, which was above the high end of our guidance for the quarter. This was based on 87 million shares outstanding on a fully diluted basis. Finally, cash generation was excellent again this quarter with cash flow from operations at $110 million and free cash flow at $89 million. I will discuss cash in more detail in a few minutes. Please turn to Slide 4. From a GAAP perspective, revenue was up 5.1% or $81 million from Q3 to $1.686 billion. We reported net income of approximately $133 million, which resulted in earnings per share of $1.52 for the fourth quarter. This was up relative to last quarter by $1.28. The GAAP results included an incremental release of our valuation allowance against deferred tax assets. The tax benefit recorded in this quarter totaled $87.6 million or $1.01 per share versus the benefit of $21.5 million or $0.25 per share, which was recognized last year. We continue to have a valuation allowance of $362 million associated with U.S. deferred tax assets. And accordingly, this amount is not reflected in our balance sheet. For the year, revenue finished at $6.215 billion, which was up by $289 million while GAAP net income increased by $118 million to $197 million primarily due to the larger tax…

Thanks Bob. Ladies and gentlemen let me add a few more comments regarding our business environment. First of all today, I will talk about the fourth quarter a little bit and fiscal year 2014 and I will spend more time talking about the first quarter and the fiscal year 2015. So to recap, fourth quarter and fiscal year 2014 overall I will say this was a good quarter with solid results. We had a stable and a strong demand from majority of our end markets as we continued to diversify our business and our customer base. Operationally, we did a solid execution and as we delivered strong improvements in our operating margins. For fiscal year 2014, we delivered solid and consistent results, good and predictable growth, expanded our customer base and improved the quality of our customers with a better growth potential. Internally, we continue to tune things up, focus on efficiencies and lean structure globally. We continued to deliver right technology and best value solution for our customers. I can tell you today that a year later Sanmina is a lot stronger company and is positioned for a lot better future. Now please turn to Slide 12. We are continuing to diversify our revenue by end markets and customers. As you can see top 10 customers represented 51.7% of our revenue. We also had no customer at 10% for this quarter or a year. Majority of our end market segments grew in the fourth quarter. Communication networks overall for the quarter was stable growth up 3.6%. Overall demand during the quarter was stable. For the year, this segment was down 2.9% slightly below our expectation what we expected a year ago. Industrial, Medical and Defense grew nicely up 7.3%. Industrial we saw strong growth again, Medical overall good growth,…

(Operator Instructions) The first question is from Brian Alexander with Raymond James.

Hello Brain.

Hi, Brain.

Hi, Jure. Hey, Bob. A very strong quarter obviously. I just had a question on the outlook, is there anything unusual or temporary in the December earnings guidance that we should consider when we build the models for fiscal 2015? I ask that because historically I think the December quarter is about 20% of the full year earnings if I go back over the last few years and if we apply that kind of math to your guidance for this December, it would suggest that your expectation that as can do close to $3 in EPS for fiscal ‘15. So, before we all get ahead of ourselves, I just thought I would ask if there is anything you wanted to clarify about the December guidance that we should take into account for the full year?

Well, first of all, Brian as I mentioned in my prepared statement overall, I think we did lot of good things in 2014. We stuck with our strategy, which was really focusing where we are good at, continue to expand customer base that we can have a long-term partnership. We can create lot of value and create a win-win. We are able to accomplish that. We grew nicely in some segments of our business. A lot of the growth in 2014 really came from our new customers, new projects. So, we are in a little bit better position today than a year ago. As I mentioned, economy is hard to predict. I still believe the forecast will continue to be choppy out there. So, we – yes, this first quarter is a little bit better than a year ago or I should say going to be a lot better than a year ago. So, that’s good. But I would like to kind of take one quarter a time. I think as long as the economy cooperates, I believe we are well-positioned to continue to tune things up. As Bob mentioned, lot of positive things that we accomplished both on a financial side and as I mentioned I think we accomplished lot of good things on building a stronger customer relationship and providing a better technology that is needed to grow our business. So, I am optimistic, but let’s be little bit cautious. Bob?

Yes, I guess I will add a few things. We do need to be cautious about extrapolating Q1 results to the full year. And as you know Brian, we don’t give annual guidance, because there are always things that develop during the course of the year. It’s our belief our seasonality is changing a lot as the mix of our business has changed. If you go back a year ago, we had more communications business and less on the industrial, medical and defense side. So, we think we are more diversified today than we have been in the past and we think that’s going to have an impact on our seasonality hopefully making it a little less dominated by communications as it’s been in the past. I guess the other comment I would make if you go back to last couple of years in this call at the beginning of the year we had signaled we expected a stronger second half than the first half and I don’t think that’s what we are saying today. We are expecting it to be a pretty solid year and we think obviously Q1 will be pretty solid and we will wait and see how March develops.

Okay, sure. If I could just ask one follow-up on the Industrial segment, anyway that you can give us a sense for maybe what the organic growth or maybe that’s not the best word, but the growth excluding some of these big customer asset deals that you have had over the last few quarters and where are we in the ramps of those large programs and should we anticipate that segment to be more volatile than maybe it’s been in the past because maybe more of the growth is being driven by some unusually large ramps?

First of all I think this segment for us should be more stable going forward at least when I say short-term let’s focus on fiscal year 2015, I will say it’s more stable, the programs that I talked about a few minutes ago, new customers, new projects already ramped more or less in a full ramp – almost full ramp. In those type of new programs there is a lot of tuning up to do, they are not as profitable that they should be in hopefully one of these days, so we expect to make little bit more money in these segments in the future. I think it’s an area that we are really focused. We create lot of value. We add lot of vertical capabilities here from technology point of view in all the components that we manufacture. So we expect this component to be very healthy for us and hopefully more than one year. So, we are pretty optimistic on this segment, lot of work left to do though Brian.

Okay, alright. Well, thanks very much.

Thanks.

Thanks Brian.

Your next question is from Mark Delaney with Goldman Sachs.

Hello, Mark.

Hi, Mark.

Hi, good afternoon. Thanks very much for taking the question and nice quarter.

Thanks Mark.

Thank you.

I was wondering if you can elaborate a little bit more on the trends you are seeing in the communications end markets, there has obviously been some well publicized weakness from some other comm equipment companies especially those with high exposure to U.S. telecom spending and maybe you can just remind us how your exposure breaks out between service provider, data center and enterprise and then maybe some of the types of programs that you are on that are allowing Sanmina to have better results from some other market participants?

Yes. Well, first of all I may focus strictly on our customer base. It’s always dangerous trying to sound like I am an expert in communication networks. We have been in this business for many years, actually it’s the bigger segment when we started the company, this is where we grew from. So I know lot of about it. At the same time it tells you how much I you know. A year ago I thought that communication networks will grow year-over-year, well I was wrong, it’s down 2.9%. But if I look at 2015, but first of all, in the short-term I would say this – we have customers that are winning their marketplace. A good thing about our segments, Mark is that most of our customers that we do business with really do business globally. And in a short-term, I would call this stable business for us. Yes, we have a few customers that are down. Fortunately for us, that we also have a few that are up, so kind of neutralize itself. For a year, it’s hard to forecast, but if I had to be a betting man, I would say that this segment for us, it’s going to be slightly up. I don’t know how much up. We will have up and down quarters in it, but overall as I see a lot my customers, I would say they are more optimistic maybe than I am, so let’s see how things shake up.

That’s helpful Jure. Thanks for that. And for a follow-up question, maybe you could just talk a little bit about for the September quarter, you came in above what you had guided to, can you just tell us what surprised you that allowed the revenues to come in above your expectations?

Bob I will leave that up to you a little bit. I will take a break.

Yes. I think we are a little cautious, because it is actually related to the question you were asking on the communications side, we were a little cautious, but as Jure said most of the customers came through pretty well and we saw a good strength again on the industrial side, which we are really pleased by. So it was just, I would say a little bit better in several places. Some of our customers really did a little bit better and that’s, as I said that’s where really and if you look at all the big markets for us, were up and so that helped us.

Thank you very much.

Thanks Mark.

Thanks Mark.

The next question is from Osten Bernardez with Cross Research.

Hello, Osten.

Hey, good afternoon. Thanks for taking my question. I guess just to taking a look at your products and services versus your components business, could you sort of add some color as to what drove the strength within your products and services during the quarter?

Well, products and services as you can say now it was okay quarter, was nothing great. We could have done little bit better in it. We had some, how do I say it, the mix itself was not the best and we had a few push-outs, but overall this is a segment that we are spending a lot of time in and working very hard. We expect this segment to be doing a lot better than what it is doing today. So, there is a lot of focus on it on components products and services because that’s very key to our success to deliver the numbers that we want to deliver in the long-term.

Because – I asked the question because you commented on the profitability on products versus your – the components business and tied into that, I wanted to know whether it’s some of the strength that you saw in computing and storage came from new IT systems products…?

It’s definitely on the product side, our storage product is moving in the right direction. We are adding a fair amount of good customers there. So, definitely it’s contributing but it’s not yet big factor, I mean it’s definitely helping out but it’s not a major factor in our numbers yet.

Okay. And so, should we expect the trends that you are seeing in computing and storage to sort of to play out going into 2015 what should – how should we think about that from a full year perspective, I know you don’t provide….?

Yes. It’s hard to say what’s going to happen in 2015 but I said I think the pipeline is pretty stable. Right now, I think we have got some good opportunities and we are working on a fair amount of new customers. So we expect the segment to do well.

Thank you.

Thanks Osten.

Thank you, Osten.

The next question is from Jim Suva with Citi.

Thank you and congratulations to you and your team there at Sanmina, great progress.

Thanks Jim.

I am more interested in some bigger picture strategy questions to Bob and Jure. I believe it was Bob in his comments he mentioned his priority is for growth, can you help us understand is that organic growth or do you see acquisitions and if so smaller acquisitions or more medium and larger size acquisitions and the reason why I ask is it appears the past year or so you have made a couple of acquisitions that had been fold within very, very well. So I wonder since you balance sheet is probably in the best shape it’s been in many years if acquisitions become more of a focus and probability?

Yes. Jim this is Bob, so I will take the first cut at answer. I think it’s going to be both and we have been saying that for a while. We need to make sure that we are growing first of all with the right customers, building the right portfolio of accounts over time and we will continue to look at small acquisitions that are strategic and that are a direct fit with the strategy the way we have articulated it. And if we execute on both fronts I think they will both contribute to growth.

And as a follow-up to that, am I correct that when you say small acquisitions these are more kind of current maybe customer assets or adjacent skill sets as opposed to consolidating the industry or even some of the smaller private EMS companies?

Yes, that’s correct. And then we really are looking for assets that make sense for our strategy. And we are not that interested in a consolidation as we are frankly not convinced it makes a lot of sense. It’s really a matter of executing our strategy and finding opportunities with that.

And finally, is that a higher priority than say stock buyback or how should we think about that?

Yes, it really depends on our assessment of the risk and potential return to our shareholders. So, I think we will probably end up doing both by the time all is said and done.

Thank you and congratulations to you and your team at Sanmina.

Thanks, Jim.

Thanks, Jim.

The next question is from Christian Schwab with Craig-Hallum Capital Group.

Hey, guys. Great start to the year.

Thanks, Christian.

When we look at the Industrial, Defense and Medical business up 34% this year roughly $550 million, if we had to categorize that organic growth new programs ramping and then lastly some of the key customer extensions of partnerships, which included purchasing and acquiring some facilities, do you have a rough idea how we should think about that number percentage wise between those three?

You mean in last year?

Yes, of the $150 million, how much of that – what percentage of that was driven by organic growth, what percentage was driven by new programs ramping and what percentage was kind of acquiring facilities of customers?

Yes, Christian I would consider that really, everything is organic growth in that case, because these are the relationship that we extended with basically existing customers, where it’s just like going out there in some cases, buying additional equipment and getting the revenue to fill the plant up. So, I would say most of this stuff is organic growth, I mean, 90% plus is organic growth. That’s the way I look at it.

I understand that. So, if – let’s can we look at it one other way quick, Jure, and then I will leave it alone. As we look at that percentage of revenue growth if you wouldn’t have purchased extra facilities, is there any way to quantify how much the extra facilities brought versus just new programs?

Yes, but we don’t – I can’t answer that for two reasons, because that’s not how we look at it. It’s really basically its opportunity that comes – we worked with these customers for many years in both of these cases for many years and you look at okay, what’s – how what is the best to create a real partnership. In some cases, we build a new factory, in some cases, we take over the customer assets and build on that and that’s kind of that’s why hard to say and we don’t – to be honest with you, I don’t want to break it apart, because lot of that is public for competitive reasons. But I think you have to look at this as a organic growth really what we accomplished and it’s really expanding our relationship. We have some great relationship and that’s really the focus of our new strategy. And when even Jim asked the question how we are going to grow, it’s really creating a value satisfying our customers’ requirements so that we can find a relationship that can last for many years in the future and hopefully end of the day make a little bit of money. I think our strategy is really pretty simple, go back to the basics, end of the day you have to make the little bit money, we have to be consistent and we have to return the right shareholders value to our investors and to our employees. We knew that – when we started the company that’s how we build Sanmina focusing on simple things and doing them right. We did lot of stupid things in between and bad economy and bad timing. I think we learned our lesson. We are back to the basics really working around the customer, because key in our type of business, Christian, success is all about building your customers successful. Once we get our customers successful and we are primary supplier, because we are giving the right technology, right solution we win and that’s really our focus right now, not what our competition does, it’s more what we do. So, that’s why we are able to win some of this stuff and I expect we will win in 2015 type of deals like this because of providing the right service, right technology and executing right.

Well, congratulations on doing that. One last question, Jure, you talked about good potential near-term in Computing and Storage and you used those words or words very similar to that a few quarters ago before the Industrial, Defense and Medical business started growing quarter-over-quarter very nicely. Should we assume that Computing and Storage should return to a growth year in 2015?

Yes, I would expect that we grew nicely in ‘14. I would as I said earlier unless this whole economy completely goes different direction, this economy as I said stays stable with a slow recovery. I think we will see overall Computing and Storage growth in 2015.

Great. No other questions. Congratulations again.

Thanks, Chris. Operator, we have time for one more question.

The last question is from Amit Daryanani. Your line is open with RBC.

Hello, Amit.

Hi, Amit.

Hi, how are you guys doing?

Good.

Two questions from me. One, I think you made a comment saying your expectations might be a little bit more subdued in comm equipment versus your customers. If you could just flesh that out, because there has been obviously some mix data points from end-market basis on that segment. So, from a linearity basis, from a inventory basis, do you guys see anything that was odd throughout this quarter?

Well, as I said for this coming quarter, we feel stable. We are forecasting stable demand. I think we are well diversified in this segment between wireless networking and wireline infrastructure. As you know, we are mainly in infrastructure side of the business. We think our pipeline for this short-term has some good opportunities and even a longer term. So, we don’t see unless something happens tomorrow with our customer base, we don’t see anything major.

Fair enough.

And Amit, I am not an expert on every little component that goes in this industry. I can only talk about what I am seeing with the projects that I am involved in.

Understood. And then I guess Bob, you talked about how OpEx came in well below what you guys thought. I thought that was pretty impressive given the fact you had some good sales upside. As you go through maybe not just December quarter, but broadly through fiscal ‘15, what is a more optimal OpEx run-rate for you guys for us to think about?

I think you can probably assume we will be in the neighborhood of where I guided for the December quarter, I think that was $65 million to $67 million.

Fair enough, perfect. Thank you.

Yes, thank you.

Thank you, Amit. Well, ladies and gentlemen, that’s all we have for today. If you have more questions and if we didn’t answer anything, please call give us a call and looking forward talking to you in 90 days from now.

Thanks, everybody.

Thanks a lot. Bye-bye.

This concludes today’s conference call. You may now disconnect.