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SANMINA CORP (SANM)·Q4 2025 Earnings Summary

Executive Summary

  • Q4 2025 delivered solid top-line and strong non-GAAP profitability: revenue $2.10B and non-GAAP diluted EPS $1.67, both at or above outlook; non-GAAP operating margin expanded to 6.0% and non-GAAP gross margin reached 9.4% .
  • Results reflected strength in Communications Networks and Cloud & AI Infrastructure; management emphasized execution and disciplined cost control; GAAP results included $27.1M of acquisition and integration charges tied to ZT Systems closing .
  • Q1 FY26 guidance points to a step-change in scale: revenue $2.9–$3.2B and non-GAAP diluted EPS $1.95–$2.25; CFO added specifics including operating margin 5.6–6.1%, OI&E net expense ~$23M, tax rate 21–23%, and legacy vs. ZT contributions, implying ~52% YoY revenue growth at the midpoint .
  • Strategic catalyst: Sanmina completed the ZT Systems data center infrastructure acquisition ahead of schedule; management reiterated the ZT run-rate of $5–6B and outlined an end-to-end AI infrastructure strategy with AMD as a preferred NPI partner .

What Went Well and What Went Wrong

What Went Well

  • Non-GAAP execution exceeded outlook: “non-GAAP gross margin of 9.4% and non-GAAP diluted EPS of $1.67 both exceeded our outlook,” with revenue and operating margin at the high end .
  • End-market strength: Management highlighted “ongoing strength in the Communications Networks and Cloud and AI Infrastructure end-markets,” supporting Q4 results and FY momentum .
  • Cash generation and balance sheet: Q4 cash from operations $199M; FY’25 $621M; ending cash $926M; inventory turns improved to 6.7x; non-GAAP pre-tax ROIC 28.3% .

What Went Wrong

  • GAAP compression vs prior year: GAAP operating income fell YoY (Q4’25 $78.5M vs Q4’24 $89.6M), with GAAP operating margin 3.7% impacted by $27.1M acquisition/integration charges and higher total operating expenses .
  • Other expenses pressure: Non-GAAP other income/expense was a net expense of $5.1M, “largely due to foreign currency,” slightly above outlook .
  • Automotive softness persists: Management noted short-term softness in automotive, despite new programs expected to help in FY26 .

Financial Results

Quarterly Progression (actuals)

MetricQ2 2025Q3 2025Q4 2025
Revenue ($USD Billions)$1.984 $2.042 $2.096
GAAP Diluted EPS ($)$1.16 $1.26 $0.88
Non-GAAP Diluted EPS ($)$1.41 $1.53 $1.67
Non-GAAP Operating Margin (%)5.6% 5.7% 6.0%
Non-GAAP Gross Margin (%)9.1% 9.1% 9.4%

Q4 2025 vs Prior Year and Consensus

MetricQ4 2024Q4 2025 ActualQ4 2025 Consensus*
Revenue ($USD Billions)$2.018 $2.096 $2.051*
GAAP Diluted EPS ($)$1.09 $0.88 N/A
Non-GAAP Diluted EPS ($)$1.43 $1.67 $1.565*

Values with asterisks retrieved from S&P Global.

Segment Breakdown (non-GAAP where noted)

SegmentQ2 2025Q3 2025Q4 2025
IMS Revenue ($USD Billions)$1.60 $1.65 $1.68
IMS Non-GAAP Gross Margin (%)7.7% 7.5% 7.8%
CPS Revenue ($USD Millions)$411 $422 $448
CPS Non-GAAP Gross Margin (%)13.9% 14.7% 14.5%

KPIs

KPIQ2 2025Q3 2025Q4 2025
Cash from Operations ($USD Millions)$156.9 $200.8 $199.1
Free Cash Flow ($USD Millions)$126.2 $168.2 $136.8
Ending Cash & Equivalents ($USD Millions)$647 $798 $926
Inventory Turns (net of Customer Advances, x)5.9x 6.3x 6.7x
Non-GAAP Pre-tax ROIC (%)23.0% 24.8% 28.3%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Billions)Q1 FY26N/A$2.9–$3.2 New
Non-GAAP Diluted EPS ($)Q1 FY26N/A$1.95–$2.25 New
Non-GAAP Operating Margin (%)Q1 FY26N/A5.6%–6.1% New
Legacy SANM Revenue ($USD Billions)Q1 FY26N/A$2.05–$2.15 New
ZT Systems Revenue ($USD Billions)Q1 FY26 (2 months)N/A$0.85–$1.05 New
Other Income & Expense (net) ($USD Millions)Q1 FY26N/A~$(23) New
Effective Tax Rate (%)Q1 FY26N/A21%–23% New
India JV Minority Interest ($USD Millions)Q1 FY26N/A~$(4) non-cash New
Diluted Shares (Millions)Q1 FY26N/A~56 New
Capex ($USD Millions)Q1 FY26N/A~85 New
Depreciation ($USD Millions)Q1 FY26N/A~45 New
Q4 FY25 Outlook vs ActualQ4 FY25Rev $2.0–$2.1; Non-GAAP EPS $1.52–$1.62 Rev $2.096; Non-GAAP EPS $1.67 Achieved/Exceeded

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2/Q3 FY25)Current Period (Q4 FY25)Trend
AI/Data Center Strategy & ZT AcquisitionBuilding end-to-end capabilities; rack/cooling, storage, custom memory/optics; planned ZT close; ZT run-rate $5–$6B; accretive post-close ZT closed ahead of schedule; AMD preferred NPI partner; combined run-rate confirmed ~$5.7B annualized; targeting doubling revenue to ~$16B within ~2 years Accelerating execution and scale
Supply Chain/TariffsTariff uncertainty; regionalization; pass-through cost model; agile footprint (US, India, Mexico) Continued uncertainty; footprint flexibility; guidance incorporates tariff/geopolitical risks Ongoing headwind, managed
End-Market DemandComm/Cloud strong; medical/industrial stable; auto mixed; book-to-bill ~1:1 Comm networks & Cloud/AI strong; auto short-term softness, new programs for FY26; diversified base, top 10 ~51.7% of FY rev; bookings solid Broad-based; Cloud/AI momentum
Working Capital/FCFInventory turns improving; strong FCF (Q2/Q3) FCF $137M; CFO highlights possible ZT working capital draw as growth ramps; legacy continues to generate cash Strong legacy cash; watch ZT WC
Segment Margins (CPS/IMS)CPS margin progress toward >15%; IMS stable CPS 14.5%, IMS 7.8% non-GAAP gross margin; continued improvement focus Improving mix and efficiency

Management Commentary

  • CEO on Q4/FY performance and outlook: “Ongoing strength in the Communications Networks and Cloud and AI Infrastructure end-markets… drove performance that met or exceeded our outlook.” FY’25 revenue +7.4%, non-GAAP margin +30bps, non-GAAP EPS +14.4%, CFFO $621M .
  • CEO on strategy and ZT closing: “Our acquisition of ZT Systems is transformative… increasing our scale and expanding our capabilities… enabling us to capitalize on significant growth opportunities in the Cloud and AI end-market.” . “We get involved in early stage of product design… racks, liquid cooling… custom memory, custom optical modules… all the way to the full system.” .
  • CFO on Q4 highlights: “Non-GAAP gross margin of 9.4% and non-GAAP diluted earnings per share of $1.67 both exceeded our outlook… revenue of $2.1 billion and non-GAAP operating margin of 6.0% were at the high end.” .
  • CFO on Q1 FY26 guide detail: Revenue $2.9–$3.2B; legacy $2.05–$2.15B; ZT $0.85–$1.05B (two months); non-GAAP op margin 5.6–6.1%; OI&E net expense ~$23M; tax 21–23%; ~56M shares; EPS $1.95–$2.25 .
  • CFO on balance sheet quality: Cash $926M; revolver increased to $1.5B; continued net cash position prior to ZT financing; strong liquidity for growth .

Q&A Highlights

  • ZT revenue run-rate and margins: Management confirmed ~$5.7B annualized (midpoint from two months guide) and ZT margins “in line” with Sanmina’s combined guide (5.6–6.1% non-GAAP operating margin) .
  • Legacy business growth trajectory: Legacy SANM guided mid-single-digit growth in Q1 with expectation to accelerate to high single-digit for FY26, supported by pipeline across industrial, medical, defense, and cloud/AI .
  • Working capital and FCF: Legacy cash conversion cycle “back in the 50s” and continued FCF generation; ZT may be a use of cash depending on growth/working capital needs .
  • Accelerated compute and full-system approach: Management emphasized end-to-end system integration, expanded engineering (Viking), and AMD partnership to re-enter accelerated compute effectively .
  • Tariffs/regionalization: Costs pass-through; customers evaluating regional footprints; Sanmina’s global footprint and single ERP enable program mobility; outlook accounts for tariff/geopolitical uncertainty .

Estimates Context

  • Q4 2025 results beat Wall Street consensus: Revenue $2.096B vs $2.051B*; Non-GAAP EPS $1.67 vs $1.565*; EBITDA $138.6M* vs $151.5M* (EBITDA below consensus) . Values with asterisks retrieved from S&P Global.
MetricQ2 2025 Estimate*Q2 2025 ActualQ3 2025 Estimate*Q3 2025 ActualQ4 2025 Estimate*Q4 2025 Actual
Revenue ($USD Billions)$1.965*$1.984 $1.980*$2.042 $2.051*$2.096
Primary EPS ($)$1.375*$1.41 $1.415*$1.53 $1.565*$1.67
EBITDA ($USD Millions)$139.7*$120.8*$144.6*$133.2*$151.5*$138.6*

Values with asterisks retrieved from S&P Global.

Key Takeaways for Investors

  • Near-term trading: The combination of Q4 beats and Q1 FY26 guide implying 52% YoY revenue growth at midpoint (with ZT contribution) is a positive catalyst; watch the magnitude of OI&E ($23M) and tax rate shift to 21–23% impacting EPS conversion .
  • Medium-term thesis: ZT acquisition accelerates entry into full-system Cloud & AI infrastructure with AMD as preferred NPI partner; management targets doubling revenue to ~$16B within ~2 years and long-term non-GAAP operating margin of 6–7%+ .
  • Cash and liquidity: Strong legacy cash generation (FY’25 CFFO $621M) and $926M cash balance provide flexibility; monitor ZT working capital needs as growth ramps .
  • Mix and margin: Continued improvement in non-GAAP operating margin (6.0%) and gross margin (9.4%); CPS margin approaching 15% supports blended margin trajectory .
  • End-market breadth: Diversified customer base with solid demand in communications/cloud and stable medical/industrial/defense; automotive softness likely transitory with new programs into FY26 .
  • Execution focus: Integration of ZT, scaling engineering (Viking), and regional manufacturing footprint for tariff resilience are central to hitting FY26 growth/margin targets .
  • Risk watchlist: Tariff/geopolitical variability, integration risk, FX in OI&E, and potential inventory/working capital builds at ZT could add earnings and cash flow variability; management has embedded these into guidance bands .