SANMINA CORP Q2 FY2025 earnings call

• Thanked Sanmina leadership team and employees for their dedication. - Second quarter fiscal 2025 delivered solid revenue of $1.98 billion and non-GAAP EPS of $1.41 per share. - First half revenue up 7.6% compared to same period a year ago, non-GAAP earnings per share for first half was $2.84, up 8.8% year-over-year. - IMS and CPS businesses performed well with IMS revenue growth and CPS margin expansion. - Strong balance sheet with cash and cash equivalents of $647 million, no outstanding borrowings on revolver, substantial liquidity. - Cash flow from operations solid, capital expenditures made, and share repurchases done. - Discussed revenue by end markets including Industrial, Energy, Medical, Defense, Aerospace, Automotive (63% of revenue) and Communication Networks and Cloud Infrastructure (37% of revenue). - Talked about details in each segment like Industrial and Energy having solid customer base and opportunities, Medical having stable demand, Defense and Aerospace and Automotive having solid demand and expansion, Communication Networks and Cloud Infrastructure having positive trends. - Addressed tariffs with proactive approach and global regional footprint to support customers. - Emphasized well-diversified company with positive trends for fiscal year 2025 and beyond.

IMS revenue came in at $1.60 billion, up 9.8% compared to the same period a year ago. IMS non-GAAP gross margin was 7.7%, flat compared to the same period a year ago. CPS revenue came in at $411 million, up 3.3% compared to the same period a year ago. CPS non-GAAP gross margin was 13.9%, up 100 basis points compared to the same period a year ago, driven by favorable mix and operational efficiencies.

• Third quarter outlook: revenue between $1.925 billion to $2.025 billion, non-GAAP gross margin of 8.6% to 9.0%, operating expenses of $62 million to $66 million, non-GAAP operating margin of 5.4% to 5.8%, other income and expense to be net expense of approximately $6 million, tax rate 20% to 22%, non-GAAP EPS in range of $1.35 to $1.45. - Full year expected revenue growth between 6.0% and 8.0%.

• Uncertainty around tariffs which may impact customers' demand and business. - Geopolitical landscape posing potential challenges.

Q: Did you see any pull - forward of demand in fiscal 2Q ahead of potential tariff increases and have any customers asked you to move manufacturing around to different regions?

A: Jure Sola said personally didn't have data to say major movement during the quarter, had discussions with customers about options if tariffs come real, but overall nothing major changed in last 90 days.

Q: As for fiscal '25 revenues growing, with Jon talking about 7% year - on - year growth at midpoint and you saying 6% to 8%, are you seeing any slowdown in demand in fiscal second half of '25 or any change in customer buying behavior?

A: Jure Sola said more prudent in guidance due to current environment dynamics, demand and programs exciting, but one program pushed out for redesign, still optimistic about fourth quarter and longer term.

Q: On inventory, gross inventory dollars up 9% sequentially, what drove that and working capital trend and cash flow uses for rest of year?

A: Jon Faust said looked at net basis, net inventory improved year - over - year, Q3 sequential movement, building inventory stockpiles to support future growth, focused on year - over - year improvement and still room to improve in inventory, will put necessary inventory in place for new programs.

Q: In the communications end market, can you rank order like which was strong, which was weak in terms of optical versus routing switching versus wireless and how demand is trending?

A: Jure Sola said inventory coming down, communication end market very strong year - on - year 20% up, high end routing, routers, switches strong, optical networks strong, see upside driven by service sector and data centers.

Q: Can you expand on second half investments in capacity and technology in India, US and Mexico? And on how you're progressing in rack integration and penetrating with cloud guys?

A: Jure Sola said India has lot of growth opportunity, joint venture doing well, expanding campus for data center demand, same in Mexico and North America, also adding capacity in high - technology printed circuit boards and mechanical capacity. Jure Sola also said has ODM product around service storage systems, design group, doing well in mechanical business, expanding into data center computing and full system integration and test.

Q: You mentioned some new customer wins, in what area are those mainly and how is the competitive environment for those to win those?

A: Jure Sola said across the board, energy business, communication networks and cloud infrastructure, defense, medical programs, etc. Jon Faust added key is to be agile with breadth of capabilities, geographic distribution, capacity, and proactive customer outreach. Jure Sola also said about long - term growth plan and flexibility offering as competitive advantage.