Executive Summary

Q1 FY25 delivered solid execution: revenue $2.01B came in toward the high end of guidance and non‑GAAP diluted EPS $1.44 exceeded guidance; GAAP diluted EPS was $1.16 and non‑GAAP operating margin was 5.6% .
Mix and operational execution were the key positives: management cited favorable mix (notably in Communications Networks & Cloud) and efficiencies; non‑GAAP gross margin reached 9.0% vs. ~8.7% in Q4 FY24 .
Outlook: Q2 FY25 revenue guided to $1.9–$2.0B and non‑GAAP EPS $1.30–$1.40; tax rate 20–22% and OI&E net expense ~$5M; OpEx $60–$64M; management reiterated FY25 as a growth year and long‑term operating margin target of 6%+ .
Capital returns remain a catalyst: Board authorized an additional $300M share repurchase; Q1 repurchases were 0.2M shares for ~~$16M; strong liquidity (~~$1.5B) and no net debt support ongoing buybacks .
Street consensus: S&P Global consensus data was unavailable at time of analysis; relative performance assessed vs. company guidance and prior periods. Management noted revenue at high end and non‑GAAP EPS above outlook, implying a company‑guidance beat on EPS and in‑range revenue .

What Went Well and What Went Wrong

What Went Well

Consistent profitability and cash generation: non‑GAAP operating margin of 5.6% (up vs. 5.3% in Q4) and free cash flow of $47M; cash from operations $64M; cash and equivalents $642M .
Communications Networks & Cloud strength: management highlighted YoY growth led by these end markets; IMS revenue $1.62B (+7.8% YoY) and IMS non‑GAAP gross margin 7.9% on favorable mix/efficiencies .
Capital allocation confidence: announced additional $300M buyback authorization; reiterated belief shares are undervalued and intent to repurchase opportunistically .

Direct quotes:

“We delivered solid first quarter financial results, with revenue towards the high end and non‑GAAP earnings per share exceeding our outlook” – Jure Sola, CEO .
“Non‑GAAP diluted earnings per share of $1.44… up 10.8% YoY” – Jonathan Faust, CFO .
“We believe that our stock is undervalued in the market… share repurchases remain an attractive capital allocation option” – CFO .

What Went Wrong

CPS margin softness vs. prior year due to mix: CPS non‑GAAP gross margin was 12.5%, down ~40 bps YoY on unfavorable mix, despite decent segment revenue growth .
One end‑market still pressured: Management noted “the majority of our end markets grew” but “there was one that’s still under pressure,” tempering breadth of growth (context: earlier quarters had softness in automotive/industrial) .
Tax headwind persists: higher tax rate (20–22%) vs. prior year due to NOL utilization and Pillar 2 effects pressures EPS comparisons; Q2 guide embeds this tax rate .

Financial Results

Consolidated performance (GAAP and non‑GAAP)

Metric	Q1 FY2024	Q4 FY2024	Q1 FY2025
Revenue ($B)	$1.8748	$2.0175	$2.0063
GAAP Diluted EPS ($)	$0.98	$1.09	$1.16
Non‑GAAP Diluted EPS ($)	$1.30	$1.43	$1.44
GAAP Operating Margin (%)	4.7%	4.4%	4.4%
Non‑GAAP Operating Margin (%)	5.5%	5.3%	5.6%
Non‑GAAP Gross Margin (%)	—	8.7%	9.0%

Notes: Q1 FY2025 non‑GAAP gross margin +20 bps YoY and +30 bps sequential vs. Q4 FY2024 (per management’s prepared remarks) .

Segment breakdown

Segment (Non‑GAAP where margin)	Q4 FY2024	Q1 FY2025
IMS Revenue ($B)	$1.63	$1.62
IMS Non‑GAAP Gross Margin (%)	7.3%	7.9%
CPS Revenue ($B)	$0.418	$0.416
CPS Non‑GAAP Gross Margin (%)	13.6%	12.5%

Management commentary: IMS YoY growth driven by Communications Networks & Cloud; CPS YoY growth of 5.4% with margin pressure on mix .

Key performance indicators

KPI	Q1 FY2024	Q4 FY2024	Q1 FY2025
Cash from Operations ($M)	$126.0	$51.9	$63.9
Free Cash Flow ($M)	$91.8	$29.3	$47.0
Cash & Equivalents ($M)	—	$626.0	$642.4
Share Repurchases	—	0.945M sh / $65M	0.206M sh / $16M
Liquidity	~$1.5B, $0 on $800M revolver	~$1.5B, $0 on $800M revolver
Non‑GAAP pre‑tax ROIC (%)	—	23.0	23.5

Guidance Changes

Q1 FY25 Guidance vs. Actual

Metric	Period	Previous Guidance (from Q4 FY24)	Actual	Change
Revenue ($B)	Q1 FY25	$1.925–$2.025	$2.006	In range (near high end)
GAAP Diluted EPS ($)	Q1 FY25	$1.03–$1.13	$1.16	Above
Non‑GAAP Diluted EPS ($)	Q1 FY25	$1.30–$1.40	$1.44	Above

New Q2 FY25 Guidance (first issuance this quarter)

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue ($B)	Q2 FY25	—	$1.9–$2.0	New
Non‑GAAP Gross Margin (%)	Q2 FY25	—	8.4–8.8 (mix‑dependent)	New
OpEx ($M)	Q2 FY25	—	$60–$64	New
Non‑GAAP Operating Margin (%)	Q2 FY25	—	5.3–5.7	New
OI&E (Net) ($M)	Q2 FY25	—	~(5)	New
Tax Rate (%)	Q2 FY25	—	20–22	New
India JV non‑cash minority ($M)	Q2 FY25	—	~$3.0–$3.5	New
Non‑GAAP Diluted EPS ($)	Q2 FY25	—	$1.30–$1.40	New
Capex ($M)	Q2 FY25	—	~30	New
Depreciation ($M)	Q2 FY25	—	~30	New

Additional: Board authorized an extra $300M buyback; $37M remained on prior authorization as of 12/28/24 .

Earnings Call Themes & Trends

Topic	Q3 FY2024 (Q‑2)	Q4 FY2024 (Q‑1)	Q1 FY2025 (Current)	Trend
AI/Cloud infrastructure	Noted stabilization; CN&Cloud +8.3% seq; building capabilities in racks, optics, storage/servers	AI architecture driving new opportunities; expanding optical advanced packaging; detailed rack/ODM capabilities via Viking	CN&Cloud led YoY growth; investing in end‑to‑end racks, liquid cooling, optics; broader ramp in FY25	Improving demand and pipeline
Supply chain & customer inventory	Customers working down inventory; book‑to‑bill 1.1 over two quarters	Inventory correction nearing end; inventory turns improving to 5.4x	Customers’ inventories “continue to come down”; book‑to‑bill 1:1; still “more work” on inventory	Easing constraints
Margins	Non‑GAAP op margin ~5.3%; CPS margin hit by program delays	Non‑GAAP GM 8.7%, OM 5.3%; targeted OpEx investments tempered OM	Non‑GAAP GM 9.0%, OM 5.6%; mix and efficiencies cited	Sequential improvement
Capital allocation	Strong FCF; buybacks ongoing	Returned ~100% of FY24 FCF; plan to continue repurchases opportunistically	Additional $300M buyback authorized; shares viewed undervalued	Increasing firepower
End‑market breadth	CN&Cloud strength; softness in auto/industrial	Sequential growth across most end markets; CN&Cloud up YoY	Majority of end markets grew; one still under pressure; broad‑based FY25 growth expected	Broadening

Management Commentary

Strategy and positioning: “Our operational discipline and ability to service our customers will further strengthen our operating model and drive shareholder value. We continue to see positive trends and are confident that fiscal 2025 will be a growth year.” – CEO .
Segment drivers: “This was primarily driven by growth in the communications networks and cloud infrastructure end markets… Non‑GAAP operating margin continues to be in line with the 5% to 6% short‑term target range.” – CFO .
Long‑term targets: “Short term… operating margin will be stable at 5% to 6%. Long term… expect to deliver operating margin of 6‑plus percent.” – CEO .
Cash and balance sheet: “We have one of the strongest balance sheets in the industry with no net debt… substantial liquidity of approximately $1.5 billion.” – CFO .

Q&A Highlights

Cloud/AI growth and capabilities: Management emphasized an end‑to‑end model in racks, liquid cooling, optics, boards, and Viking servers/storage to capture cloud infrastructure demand; entering more hyperscale opportunities while remaining diversified with no >10% customer .
Communications inventory: Inventory correction is late innings; communications networking expected to grow in FY25 as customers normalize .
Mix/margins: IMS margin benefited from high‑end program mix and efficiencies; CPS margin down YoY on mix but management sees room for expansion over time .
Capital allocation: Priority remains organic investments and strategic M&A/partnerships; buybacks used when shares undervalued and when M&A opportunities are not immediately actionable .
Long‑term OM 6%+: Requires scale and mix; cited prior 6% OM print at higher revenue; near‑term OpEx investments support growth .

Estimates Context

Wall Street consensus (S&P Global): Data unavailable at time of access; as a result, we cannot quantify beats/misses vs. consensus for revenue or EPS this quarter.
Company guidance comparison: Management stated revenue was toward the high end and non‑GAAP EPS exceeded the company’s outlook; Q2 FY25 guidance implies continued stability in margins with a higher tax rate headwind vs. prior year .
Implications: In absence of consensus figures, we anchor to guidance and trend analysis; the combination of high‑end revenue delivery and above‑guide non‑GAAP EPS suggests a positive intra‑quarter estimate trajectory heading into Q2, contingent on mix and tax rate .

Key Takeaways for Investors

Mix‑led margin resilience: Non‑GAAP OM at 5.6% on 9.0% gross margin underscores discipline; continued mix shift to higher‑value CN&Cloud and CPS components is the lever for medium‑term OM progression toward 6%+ .
Cloud/AI optionality: Expanding capabilities (racks, liquid cooling, optics, Viking systems) position SANM to benefit from AI‑driven data center builds across enterprise and hyperscale customers in FY25–26 .
Capital return supported by balance sheet: New $300M buyback authorization, ~$1.5B liquidity, and no net debt provide flexibility to repurchase shares while funding organic and selective inorganic growth .
Inventory normalization tailwind: Customer inventory digestion is nearing completion in key networking markets, supporting sequential revenue stability and potential acceleration through FY25 .
Tax headwind acknowledged in guidance: 20–22% tax rate and JV minority interest reduce reported EPS vs. prior year; investors should focus on pre‑tax profitability and cash generation trends .
Near‑term setup: Q2 guide ($1.9–$2.0B revenue; $1.30–$1.40 non‑GAAP EPS) implies stable margins; delivery above midpoint, together with buyback cadence, are likely stock catalysts .
Medium‑term thesis: High‑single‑digit FY25 revenue growth goal, operating leverage from OpEx, and mix‑enhancing programs support margin expansion and EPS growth faster than revenue over the next 12–24 months .


## Appendix: Additional Relevant Press Releases
- Q1 FY25 results press release (same content as 8‑K exhibit): Financial highlights, cash flow, and Q2 outlook **[897723_20250127SF05109:0]** **[897723_20250127SF05109:3]** **[897723_20250127SF05109:4]**.  
- Q1 FY25 earnings call invitation: Logistics and webcast info **[897723_20250116SF98558:0]**.```

SANMINA CORP (SANM)·Q1 2025 Earnings Summary