SANMINA CORP Q1 FY2025 earnings call

Jure Sola recognized the leadership team and employees for their efforts. First quarter fiscal 2025 saw solid revenue of $2.01 billion and non-GAAP EPS of $1.44 per share. Revenue was up 7.0% year-over-year, driven by growth in communications networks and cloud infrastructure. IMS and CPS showed respective revenue growth. The balance sheet was strong with cash and cash equivalents at $642 million and no outstanding borrowings. Inventory was down 5% vs the same period a year ago. Capital allocation priorities include funding organic growth, strategic M&A and partnerships, and share repurchases. Board authorized an additional $300 million share repurchase. End markets: Industrial and energy accounted for 63% of revenue, growing 1% YOY; communication networks and cloud infrastructure made up 37% of revenue, growing 19% YOY. Top 10 customers contributed 50.1% of revenue, with solid bookings and a 1:1 book-to-bill ratio. Sanmina is investing in key markets like industrial, energy, medical, defense, aerospace, automotive, and cloud infrastructure

IMS revenue came in at $1.62 billion, up 7.8% compared to the same period a year ago. IMS non-GAAP gross margin was 7.9%, up about 30 basis points compared to the same period a year ago. CPS revenue came in at $416 million, up 5.4% compared to the same period a year ago. CPS non-GAAP gross margin was 12.5%, down about 40 basis points compared to the same period a year ago

Fiscal 2025 is expected to be a growth year with high-single digit revenue growth. Second quarter outlook: revenue between $1.9 billion to $2.0 billion (midpoint $1.95 billion, up 6.3% YOY). Non-GAAP gross margin 8.4% to 8.8%. Operating expenses $60 million to $64 million. Non-GAAP operating margin 5.3% to 5.7%. Other income and expense net expense approx $5 million. Tax rate 20% to 22%. Non-GAAP EPS range $1.30 to $1.40. Capital expenditures around $30 million, depreciation approx $30 million

Q: About guidance for fiscal '2025, specifically cloud infrastructure growth and capabilities.

A: Sanmina is well diversified across key markets. Cloud infrastructure is 37% of revenue and grew 19% YOY. Investing in R&D and programs like Viking Enterprise Solutions. Well diversified with no customer over 10%.

Q: On Communications segment, inventory at customers going down, is inventory correction over?

A: Inventory continued to come down, still some left, but there's more excitement in the communication networking side, especially in high-end networks.

Q: Board authorized new $300 million buyback, M&A pace?

A: Capital allocation priorities are organic growth, strategic M&A and partnerships, then share repurchases. Evaluate opportunities on an ROI basis.

Q: Mix drivers for margins.

A: IMS had a good mix of programs and operational efficiencies. CPS had some lower end programs, but still pleased with its performance.

Q: Revenue target for fiscal 2025, main drivers.

A: Growth is more broad-based with contributions from industrial energy, medical, defense, aerospace, automotive, and cloud infrastructure.

Q: Long-term operating margin target of 6% plus.

A: Aim to reach 6% plus, with a revenue run rate around $9 billion plus expected to achieve this.

Q: Competitive landscape.

A: There's more discipline in the industry, customers understand the value added, and Sanmina is building strong partnerships