Sanmina Corp.

While we expect the large decline in revenue, Sanmina's balance sheet is positioned to weather the recessionary environment. Sanmina has maintained positive free cash flow the past few years despite operating in a highly volatile electronics manufacturing services (EMS) space as it focused on improving working capital and operating efficiencies. It has used cash to pay down debt, which allowed leverage to drop below the 1x area in fiscal 2019 from the high-1x area in fiscal 2018. While we expect EBITDA to drop as a result of the loss of revenue and cost inefficiencies related to the pandemic, we expect Sanmina's conservative balance sheet will offset some of that EBITDA decline such that the company will be able to sustain

...While we expect large revenue declines due to the macroeconomic impact from the COVID-19 pandemic, Sanmina Corp. should be able to keep EBITDA margins stable such that S&P Global Ratings-adjusted leverage will stay below the 2x area in fiscal year 2020. Sanmina experienced large revenue declines in second-quarter 2020 as a result of the macroeconomic effects of the COVID-19 pandemic. Decline in demand of communications, cloud, and auto products helped drive a second-quarter revenue decline of more than 25% year over year. Sanmina saw issues with its supply chains, logistics, and employees, which also contributed to the loss of revenue. We expect that Sanmina will face headwinds in third-quarter 2020 related to customer demand, which will keep revenue generation muted. We expect Sanmina will see revenue rebound in the fourth quarter but not enough to offset the declines in the second and third quarters. We project that Sanmina will see at least a 15% decline in fiscal 2020 revenue related...

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