Sanmina Corp.

The stable outlook incorporates S&P Global Ratings' view that Sanmina Corp.'s end markets will allow it to deliver consistent operating performance, and that leverage will fall to the mid-1x area in fiscal 2019 on EBITDA growth and some reduction of revolving credit balances or receivable sale program utilization. We also believe it will conduct its acquisition and shareholder return activities such that credit metrics remain consistent with the rating. We could lower the rating if Sanmina sustains leverage above 2x, which could occur as a result of the loss of a key customer, material deterioration in operating performance, or the adoption of more aggressive financial policies. Leverage is at 2x as of Dec. 29, 2018, but we expect it to

...The operating environment is highly competitive and cyclical. The electronics manufacturing services (EMS) market is highly competitive with large players such as Flex Ltd. and Jabil Inc., as well as numerous niche competitors. The industry is also cyclical since demand for Sanmina's customers' products is driven in part by business IT spending, which is sensitive to macroeconomic downturns. Customer concentration is in line with competitors, but high for the technology hardware space in general. Sanmina's top 10 customers represented 54% of revenues last quarter, which is in line with its competitors, but high for the larger technology hardware industry. Changes in demand of one or two customers can sometimes materially affect operating performance. The company's focus is on faster-growing, higher-margin end markets to drive revenue growth. Sanmina is focused on growing its business within industrial, medical, automotive, and defense customers, which we think provide faster growth and...

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