Sanmina Corp
NASDAQ:SANM
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Sanmina Corp
Earnings Call Analysis
Q1-2024 Analysis
Sanmina Corp
The company reported a revenue of $1.87 billion, matching their previous guidance, demonstrating the ability to meet targets amidst challenging market conditions. The non-GAAP operating margin has reached 5.5%, and the non-GAAP diluted EPS stood at $1.30, hitting the upper end of their outlook. This performance illustrates the company's competency in cost control and operational execution even as they navigate a complex macroeconomic landscape.
Looking forward, for the second quarter, the company forecasts revenue to be between $1.825 billion and $1.925 billion. The non-GAAP diluted EPS guidance is set at $1.20 to $1.30, roughly on par with the preceding quarter's results. This guidance suggests stability in the short term while the company gears up for more robust growth in the latter half of the fiscal year.
The company expects to witness sequential improvements in the second half of the fiscal year. They remain confident in their long-term strategy and continue to invest in new opportunities that align with their ambitions to grow revenue back to a $9 billion run rate, with prospects of eventually achieving $10 billion to $12 billion. However, they emphasize prudent growth aimed at also enhancing margins and generating strong cash flow to support this trajectory.
Sanmina is placing strategic emphasis on high-growth and higher-margin markets such as cloud infrastructure, defense and aerospace, medical digital health, electric vehicles, renewable energy, and industrial sectors. They aim to leverage their technical capabilities and global footprint to offer a competitive advantage to their clients in these areas. Revenue from industrial, medical, defense, and automotive markets constituted 67% of the revenue, indicating a diversification strategy that could help buffer against market volatility. Additionally, the company aims for margin expansion with a goal of achieving over 6% operating margin in the long run.
The company has outlined capital expenditures of around $40 million aimed at supporting new programs and future opportunities, which are key to their strategy of driving long-term growth. Alongside this, they forecast a depreciation of about $30 million. Margin expansion and cash flow generation are highlighted as priorities, such as their recent share repurchasing of over $100 million, indicating a focus on shareholder value and optimizing the capital structure for future growth.
Sanmina maintains a non-GAAP gross margin guidance of 8.3% to 8.8%, reflecting consistency with previous quarters. Additionally, they expect non-GAAP operating margins of 5.2% to 5.6% and aim to hold operating margins within 5% to 6% in the short term, indicating a stable profitability outlook. The long-term internal target surpasses 6%, revealing an ambition to further enhance profitability in the future.
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Good afternoon, ladies and gentlemen, and welcome to the Sanmina's First Quarter Fiscal 2024 Earnings Conference Call. [Operator Instructions] This call is being recorded on Monday, the 29th of January 2024.
I would now like to turn the conference over to Paige Melching, Senior Vice President of Investor Communications. Please go ahead.
Thank you, John. Good afternoon, ladies and gentlemen, and welcome to Sanmina's First Quarter Fiscal 2024 Earnings Call. 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.
Joining me on today's call is Jure Sola, Chairman and Chief Executive Officer.
Good afternoon.
And Jon Faust, Executive Vice President and Chief Financial Officer.
Good afternoon.
Before I turn the call over to Jure, let me remind everyone that today's call is being webcasted and recorded and will be available on our website. You can follow along with our prepared remarks and the slides provided on our website.
Please turn to Slide 3 of our presentation and take note of our safe harbor statement. During this conference call, we may make projections or other forward-looking statements regarding future events or the future financial performance of the company. We caution you that such statements are just projections. The company's actual results could differ materially from those projected in these statements as a result of factors set forth in the safe harbor statement. The company is under no obligation to and expressly disclaims any such obligation to update or alter any of the forward-looking statements made in the earnings release, the earnings presentation, the conference call, or the Investor Relations section of our website, whether as a result of new information, future events or otherwise, unless otherwise required by law.
Included in our press release and slides issued today, we have provided you with statements of operations for the first quarter ended December 30, 2023, 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, noncash stock-based compensation expense, amortization expense and other unusual or infrequent items. Any comments we make on this call as it relates 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, EBITDA, 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.
Thanks, Paige. Good afternoon, ladies and gentlemen, and welcome, and thank you all for being here with us today. First, I would like to take this opportunity to recognize Sanmina leadership team and our employees for doing a great job. So to you, Sanmina's team, thank you, for your dedication and delivering excellent customer service, and let's keep it up.
Please turn to Slide 4, and now ladies and gentlemen, I would like to introduce to you Jon Faust, Sanmina CFO. Jon joined Sanmina on December 18, 2023. It brings over 20 years of finance, accounting controls and operational experience. Jon previously served as a global controller and Head of Finance Transformation and Corporate Services at HP Inc. He was also CFO of Aruba, a Hewlett Packard Enterprise company, and he held various leadership roles at Hewlett Packard Enterprises. Jon has proven track record driving transformational business strategies. He is a highly accomplished leader with extensive background. And I can tell you, I'm very happy to have Jon on Sanmina leadership team.
Now let's go to our agenda for today's call. You have Jon to review details of our results for you. I will follow up with additional comments about Sanmina results and our future goals, then Jon and I will open for question and answers.
And now I'd like to turn this call over to Jon. Jon?
Great. Thank you, Jure. Good afternoon, ladies and gentlemen. It's a pleasure to be here today and to be on my first earnings call for Sanmina. I've been with the company for about 6 weeks now, and I've really enjoyed meeting the team and learning about the business. Sanmina is a company that I have long respected during my many years at HP because of its customer-centric approach, focus on operational excellence and overall reputation of being a market leader in the EMS industry. While I've only been here for a short time, my experience to date has only strengthened that perspective. I'm excited to be here and to work with Jure and the rest of the leadership team to continue to deliver on Sanmina's strategy and to drive value for our shareholders.
With that, let's talk about the Q1 results. Please turn to Slide 6. First, I want to commend the entire Sanmina team for executing well and delivering financial results in line with the company's outlook while continuing to navigate a difficult period in the market.
First quarter revenue was $1.87 billion, in line with our outlook of $1.85 billion to $1.95 billion. As a reminder, the decline in revenue results from the ongoing market-driven inventory absorption that we've been managing with our customers, which is unfolding in line with our expectations. Non-GAAP gross margin was 8.8%, up 10 basis points sequentially and 30 basis points compared to the same period last year, which is at the high end of our outlook, largely driven by favorable mix.
Non-GAAP operating margin was 5.5%, down 20 basis points sequentially and 50 basis points compared to the same period last year, which is at the midpoint of our outlook as we continue to carefully manage costs and make targeted investments when needed. Non-GAAP earnings per share came in at $1.30 based on 58 million shares outstanding on a fully diluted basis and at the high end of our outlook.
Please turn to Slide 7, where I'll talk about the segment results. IMS revenue came in at $1.5 billion, down approximately 8% sequentially due to lower demand and ongoing customer inventory adjustments with non-GAAP gross margin down 40 basis points to 7.6% due to lower revenue and mix. CPS revenue came in at $394 million, down 10% sequentially due to similar dynamics as the IMS segment, but non-GAAP gross margin was solid at 13% due to favorable mix and operational improvements we've been driving across the business.
Now please turn to Slide 8, where I'll comment on the balance sheet. Sanmina has a very strong balance sheet, which is a key advantage of the company and the pillar of our value proposition to investors. Cash and cash equivalents were $632 million. We ended the first quarter with inventory of $1.4 billion, which is down 6% sequentially and down 18% from a year ago as we have continued to focus on improving our inventory position. We continue to have one of the strongest balance sheets in the industry with low leverage, which allows us to both navigate complex market environments and capitalize on the long-term opportunity in front of us.
Please turn to Slide 9, where I'll talk about cash flow and capital allocation. We did a great job managing cash this quarter. And as I've been reviewing Sanmina's capital allocation priorities, I'm confident we're putting our cash to use in the right areas. Each quarter, we evaluate our capital allocation requirements and look for opportunities to drive shareholder value, taking a disciplined ROI-based approach when making decisions. As a reminder, those priorities are to: number one, to fund organic growth; number two, execute on strategic transactions; number three, reduce our debt and carefully manage our leverage ratio; and number four, do share repurchases. The actual mix of which depends on our needs and opportunities.
To touch on a few highlights, cash flow from operations for the quarter was $126 million. Capital expenditures were $34 million as we continue to make investments in the end markets that will support Sanmina's long-term profitable growth. Free cash flow was $92 million. And during the quarter, we repurchased 2.1 million shares for approximately $106 million. And as of December 30, we have approximately $174 million left on our Board authorized plan. Going forward, we will look to do share repurchases opportunistically.
To conclude on the Q1 actual results, overall, it was a strong quarter as we delivered on what we said we would, despite the headwinds we face as customers continue to adjust inventory levels.
Please turn to Slide 10. I'll now cover our outlook for the second quarter, which is based on everything we are seeing in the market and forecasts from our customers. Our outlook is as follows: Revenue between $1.825 billion to $1.925 billion, essentially flat with the prior quarter. Now while we're not providing guidance beyond the second quarter, we are seeing signs that demand and revenue should start to improve in the second half of the year, which Jure will elaborate on shortly.
Non-GAAP gross margin of 8.3% to 8.8% consistent with prior quarters and dependent on mix. Operating expenses of $60 million to $62 million, in line with normal levels. Non-GAAP operating margin of 5.2% to 5.6%. Other income and expense, approximately $12 million, in line with normal levels. A tax rate of 17% to 18%. We also estimate an approximate $3 million to $3.5 million noncash reduction to our net income to reflect our JV partner's equity interests. Non-GAAP EPS in the range of $1.20 to $1.30 based on approximately 57 million fully diluted shares outstanding.
Capital expenditures to be around $40 million to support new programs and future opportunities as we continue to invest where needed to support our long-term strategy. And finally, depreciation of approximately $30 million.
Overall, I'm very pleased with our performance this quarter and excited about the opportunity ahead. And now that I'm on board, I look forward to meeting with many of you and hearing your perspectives.
With that, let me turn it back to Jure.
Thank you, Jon. Ladies and gentlemen, let me add a few more comments about our financial highlights for the first quarter, and I'll review our end markets and outlook for the second quarter and the rest of the fiscal year '24.
Please turn to Slide 12. For the first quarter, as you already heard, overall, we met outlook, and we demonstrated our ability to manage costs and operational execution in this macroeconomic environment. For overall markets, we are seeing ongoing customer inventory adjustment coupled with softer demand across the industry.
What is Sanmina advantage in this environment? Our business is aligned to adapt to market dynamics like this. We have strong cost management and operational execution. We are well diversified in growth markets. In the key markets that we focus on, our customer requires Sanmina technical capabilities, global regional footprint and industry-leading IT systems managed by Sanmina Smart Connected MES. The bottom line is that Sanmina provides a competitive advantage to our customers by delivering predictable and consistent performance globally.
Please turn to Slide 13. Let me talk to you now about the revenue by end markets. As we said, we are operating in a very dynamic environment. Our team did a great job delivering first quarter financial results and aligned with our outlook. As you can see in the graph, industrial, medical, defense and automotive was 67% of our revenue, came in at $1.257 billion for a quarter. Quarter-to-quarter revenue was down 6.4%. What we saw in here is some inventory adjustments and softness in the medical sector.
For communications networks and cloud infrastructure, we delivered 33% of revenue or $680 million. Quarter-on-quarter was down 12.8%, mainly due to inventory adjustment at communications market and softer demand from end markets. We also saw some softness in cloud enterprise sector. For the first quarter, top 10 customers represented 45% of our revenue. Bookings for the first quarter were slightly better than our fourth quarter of '23. Demand for the second quarter is sequentially flat, but we expect to see sequential improvements in second half of fiscal year '24.
Please turn to Slide 14. Now let's talk about the markets that's going to drive the future growth for us. Sanmina has been investing in faster-growing and higher-margin end markets. These are key markets for us. Cloud, defense and aerospace, medical, digital health, electrical vehicles, renewable energy, industrial and optical packaging. For cloud, basically built around AI and ML, we see a lot more new opportunities driven by upgrade of cloud networks to meet AI traffic needs for the future.
Defense and aerospace will continue to see solid demand. For medical digital health, we have a strong base of customers with positive trends for longer term. Electrical vehicles and electrical vehicle charges, we see a fair amount of new projects and lots of great opportunities in front of us.
Renewable energy, new projects for us will drive the growth. For industrial, we have a solid base of business and new projects in our pipeline. And optical packaging for us, it's all about 800 gigs. We see a lot of trends in this side of the business. So I can tell you that the pipeline of the new opportunity is exciting for our future.
Please turn to Slide 15. Now let me talk about Sanmina's priorities to drive long-term profitable growth. Number one, Sanmina culture is basically to build everything around customer requirements. We are a very customer-centric company. Because of that, we're able to build a strong long-term partnership with the market leaders. We have a great diversified customer base in key markets. And strategy, again, is to build around the customer needs. And I can tell you that we are -- even in this market, we are adding new strategic customers to our existing base.
Number two is to continue to provide leading technology in heavy regulated markets. Our technology is a competitive advantage. We provide total solutions from NPI to full systems. We are well respected by our customers and industry for quality of execution. We also deliver time to market flexibility for our customers so they can get their new products to the market at a faster rate.
Number three, Sanmina is positioned for a long-term growth. For fiscal year '24, we're starting with a lower revenue base. We knew that beginning of the year with all the inventory correction that is going on, but we do have a strong pipeline of the new opportunities. We do expect sequential improvements in the second half of fiscal year '24, and we'll continue to invest in our growth opportunities. We also continue to optimize capital structure to drive the growth in the next 2 to 3 years. So this way, I can tell you that the revenue goal is to get back to $9 billion run rate and then drive that growth to $10 billion to $12 billion. But we don't want to just grow.
Number four for us is margin expansion and cash flow generation. We are focused on margin expansion. And our business model will allow us to do that. Short term, our operating margin goal is 5% to 6%. And if you look at the last 2 years, we're able to deliver those numbers more than a high end. Longer term, we believe that our long-term operating margin goal internally is over 6, 6-plus percent. We have high confidence we'll get there. And we'll continue to generate cash to drive this growth.
And number five for us is how do we maximize the shareholder value short term and long term. As Jon told you earlier, we repurchased shares opportunistically. For the first quarter, we bought over $100 million. And what also positive in Sanmina business here is that we have significant leverage still in our business model.
So now please turn to Slide 16. For the first quarter, as you already heard from us, we had a solid execution and excellent performance by our team. Revenue of $1.87 billion, in line with our outlook. We delivered a non-GAAP operating margin of 5.5% and we delivered non-GAAP diluted EPS of $1.30, and this is at the high end of our outlook.
For second quarter revenue outlook going to be at $1.825 billion to $1.925 billion. And non-GAAP diluted EPS, we're guiding between $1.20 to $1.30, which is basically flat to our first quarter. For the year, as we already said, we are seeing ongoing customer inventory absorption and softness in demand for the first half of this year. But we believe for the second half of the year, we expect to see sequential improvements.
Ladies and gentlemen, now I would like to thank you for all of your time and support.
Operator, we're now ready to open the lines for question and answers. Thank you all again.
[Operator Instructions] Your first question comes from the line of Christian Schwab from Craig-Hallum Capital Group.
Jure, can you just specifically -- on the growth markets, can you tell us which one or two that you guys anticipate seeing driving the sequential growth in the back half of the year?
Well, as I mentioned earlier, if you look at our industrial, medical, defense and aerospace markets, we believe those are markets that are pretty stable for us. And yes, there's some inventory adjustments going on now, but we expect to see nice improvements in third, especially as we exit our fiscal year and then calendar first quarter or calendar year next year. So those are the markets.
Also, when it comes to -- let's talk about communication networks for us, if you look at that market, we had a major inventory correction with some of the projects there. We -- based on those, we see some improvements in the second half, then some improvements will probably take longer than a couple of quarters to get there. But on a cloud infrastructure side, we -- a lot of our networking customers are into cloud AI, and we are involved in a lot of the new projects that are coming up that basically will be upgrading their cloud infrastructure, and we believe that Sanmina will have a fair amount to participate in that segment in the second half of the year and beyond.
So on the communications equipment part, do you anticipate that exiting this quarter, for the most part, each customer's inventory levels vary. But do you think after this quarter, the worst is kind of behind you? Or is there just going to be puts and takes as some have as you suggested, a few more multiple quarters of digestion and others are possibly returning to ordering again. Just -- I guess that wasn't clear.
Yes, I would expect to see improvements in the third quarter of our fiscal year, even across those markets, but to see more better improvements probably until the fourth quarter on some of that. But I would say worst is behind us.
We'll see how we go through this quarter, but I would -- I don't know if I'm smart enough to know when is the bottom, but I would expect -- I do expect based on what I see and what I'm hearing from key customers, that definitely third quarter, we should be able to improve our shipments. So I can say that, yes, I think the worst is behind us. Because some of these communication correction has been going on for the last 2.5 quarters.
Right. Correct. Correct, yes. So then my last question, Jure, on the optical, you talked about seeing strengths, in particular, at 800 gig. Are you guys seeing any strength or well positioned as the industry possibly starts moving to 1.2 terabytes?
Yes. Yes. We are working on some of those new programs, yes, especially the pluggable side of the business.
Okay. And you would anticipate that, that market would be solid in '24. Is that fair?
That was -- for us, I think definitely, there's some positive movements around. But I would say end of the '24-'25, we expect a fair amount of upside in that segment.
Your next question comes from the line of Anja Marie Soderstrom from Sidoti.
Congratulations on the solid quarter here despite the challenging environment. I also want to dive a little bit further into the end markets as well and the medical there. We heard from other peers here that there has been some inventory corrections there. What are you hearing in terms of that? And do you have a new progress that are ramping that will sort of offset that if that's for longer than anticipated?
Yes. Anja, there's an inventory correction now across almost every customer out there, but at a different level, okay? There are some that's not a major impact. And like in communications side, we had a more impact.
On the medical side, during this quarter that we just finished, we had some softness in demand and some inventory correction, and we expect that to continue in the second quarter. and we hope that improvements in the third and fourth quarter of this year.
So our base of -- we're around 20% of our revenue comes from medical. So it's a very solid customer base for us. But with us, we also have a lot of programs that are basically changing into the end of '24 and '25 in some cases, even to '26. So in the next 2 years, we've got a lot of new programs, they have upside, but also going through some upgrades.
Okay. And was there any -- any of this end market within those groups that you are talking about, that were particularly strong...
Defense and Aerospace for us still saw solid demand. We're still chasing certain parts, especially on some of the unique technology. Renewable energy for us is demand is strong. It's now -- but a lot of these are new programs, so just ramping up the new programs. Industrial for us was solid. That was about 27% of our revenue. So that continued to be solid for us. And like as I said earlier in the prepared statement, on cloud, we're starting to see a fair amount of demand from our customers as they are switching to support AI and ML.
Okay. And in terms of inventory, it seems like you are doing a great job in managing that as well. Do you think we should continue to see improvements from here? Or where are you targeting that?
Yes. We definitely expect to see improvement. Now with my new CFO, I actually have a lot of improvement there. So -- now, we do expect improvements, and we have programs internally that we're working very hard on and with our customers. We learned a lot through the COVID days, and how to manage it and so on. So there's a lot of focus both on the customer side and, of course, on our side to make sure that we are smarter. And going forward, how do we manage inventory, especially if we have hiccups in the industry like we have with COVID.
Okay. We're talking eventually achieving $10 billion to $12 billion revenue in a couple of years here and 6-plus percent operating margin. What kind of revenue level do you think you need for that operating margin...?
I think for us, it's a mix of the business, how much it comes from our technology group and how much does it come from our products. But as we -- as you can see, once we get closer to the $9 billion plus, I think last year, we exited a year almost on a $5.9 billion -- $5.8 billion. But -- and so as we get to the run rate around $9 billion plus, we expect to be in the high 5s to low 6s. But the key for us is the mix. We're investing in a lot of these new technology products and our components.
We are investing in some of the defense industries. We are investing into lithography. We have some European partners there that we have with lithography equipment, precision machining and so on. So we got a lot at our plate. And I think as long as those things come together, the way -- because we already spend a lot of the money for growth. So we've got to grow. I mean that's the whole focus right now internally. But we got to grow smart. We don't want to grow for a growth sake. We're going to make sure that we have a respectable margins.
[Operator Instructions] Your next question comes from the line of Ruplu Bhattacharya from Bank of America.
I have a few questions. Let me start by welcoming Jon. Thanks. It's good to have you on board. Maybe can you just tell us what your maybe top 2, 3 focus areas are over the next 12 months?
Yes. Thank you, Ruplu. It's nice to connect with you and looking forward to speaking more with you.
A couple of things, right? So number one, I would just say learning the business, right? That is the top priority for me. As I mentioned in my prepared remarks, I've been here for about 6 weeks and been spending a lot of time meeting with the leadership team. In my first week here, I was able to make a trip down to the Guadalajara and that was very important just to be able to see our capabilities firsthand in one of our major facilities, and I've done some in the Bay Area, too. and then really just getting into the details of the business.
So just a couple of weeks back as we were preparing for this earnings call, kind of in the normal course of business, we went through all of our quarterly business reviews. So that was a great opportunity for me to dig in deep to all of the respective divisions, learn about what's happening in the market, what's going on with our customers and helping to decide what our priorities need to be, right, to drive some of the things Jure was just talking about with Anja as an example, where do we see opportunity to drive operational improvements, whether it be in inventory or otherwise.
Got it. Let me ask you another question and either you or Jure can chime in. So this quarter, the CPS segment saw about 220 basis points of sequential improvement on revenues that were sequentially down I mean part of this, you said is mix part of this is operational improvements. I'm trying to see if you can parse that out because if we look from 1Q to 2Q, as you've -- in years past, you've had margins decline. So -- how much of this is structurally sustainable at this 13% level? And how would you characterize this as mix related versus operational -- more structural improvement?
Yes. Ruplu, let me -- this is Jure. Let me kind of give you an overview of what was going -- what's going on last quarter. As we said, definitely, there were some inventory adjustments that affected the revenue for us. Similar to the other businesses. We believe that our component business, we're starting to see light end of the tunnel. We're seeing because when you the demand comes back, it's going to come in our component businesses first, okay? So we're starting to see some of that right now so that we -- the key to that, our goal for our component products and services, Ruplu, is to get a minimum 15%.
So yes, it is sustainable. And I think it's now for us, it's all about getting the revenue. We might have short-term plus or minus percentage are there are up and down. But I think the longer term, these programs that we are working on and what we have in front of us. And investments that we already made, Ruplu, into our factories. And if you ever have a time, you come to the Bay Area, we'll take you around and show you some on the investments that we made in the component side of the business is really to help us not just drive the revenue, but to go after the business that is more profitable.
So Jon, you want to add something to that -- what you learned in the last Q...
Just in the 6 weeks that I've been here, but CPS is a big priority for us. I think I would add to what Jure is saying. So and really just focusing on expanding and adding more value for our customers. And if you look along the different lines of businesses there from precision machining, plastics, printed circuit boards, all of them, we saw some good operational improvements. But we think that there is more that we can do there. To Jure's point, to continue to grow that business, add value for our customers and expand margins.
Okay. Thanks for the details. Since you mentioned revenue a couple of times, I think, Jure, you've that you expect sequential growth in the second half. If I look at consensus estimates, I mean, consensus is modeling double-digit growth sequentially for both 3Q, 4Q. What do you think about that? I mean when you talk about sequential improvement, I mean, is that the kind of level of improvement you're expecting like double-digit sequential growth? Any color on that? Like what -- how strong a growth are you expecting?
Yes. We're guiding, Ruplu, strictly to make sure that we are clear here. We're only guiding 1 quarter at a time in this environment. But I can -- as we get into the third quarter, especially in the fourth quarter, the fourth quarter is going to be upside. The question is how much, okay? And it can be double digits, okay? For the third quarter, I think it will be up, but it's really hard for me right now to speculate that how much. It's all depends how inventory shake out. But our customer base and the new programs that are coming up are can drive the growth. We're just going to see it. So I don't want to overcommit, but I can commit that the longer term, this company is positioned to be a lot bigger than what we just did.
Okay. Thanks for that. And maybe I'll just try and squeeze one more in. You also talked about strong free cash flow this quarter, and the inventory went down. I mean, how -- is there a target? Like how should we think about free cash flow? Typically, EMS companies, if the economy is weak, the countercyclical balance sheet, you should have strong free cash flow. Any thoughts on free cash flow sustainability and thoughts for free cash flow for the full year?
Yes. I mean, Ruplu, you know this business is just as good as I do. Yes, definitely, we should be generating. In a down market, we should be generating a fair amount of free cash flow as we did last quarter. And we're utilizing our cash properly. Our stock is at high volume. So we bought over $100 million of debt. We continue to invest. Yes, we expect to be cash flow free for a year. I mean, if you look at historically, we've been generating free cash flow around $200 million, $250 million, and we should be at that level.
For fiscal '24?
And I'd say in the general term, we'll just see how we -- how this inventory gets used up in short term. I think that's going to -- I think that short term, it's -- first of all, the good thing about inventory, Ruplu, you know in our industry, that we have contracts where we only buy what is our customers tells us to buy, and they are 100% responsible for this inventory. We charge for carrying charges and et cetera. But just getting these things off our books and turning into the cash might take a little bit more than just the 3 months.
All right. Well, first of all, I'd like to say thank you to all our participants. And if we didn't answer all your questions, as Jon said, we're available, especially for Jon right now as we want to get to know you. So please give us a call. Thanks a lot.
Thank you, everyone.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.