Sanmina Corporation Q3 FY2025 earnings call

• Jure Sola thanked Sanmina's leadership team and employees for their dedication, noting solid revenue of $2.04 billion and non-GAAP EPS of $1.53 per share for the third quarter. • Jon Faust highlighted financial highlights, including revenue of $2.04 billion (+10.9% YOY), non-GAAP gross margin of 9.1%, non-GAAP operating margin of 5.7%, and non-GAAP diluted EPS of $1.53. • Segment results: IMS up 11.6% YOY with $1.65 billion revenue, CPS up 8.8% YOY with $422 million revenue. • Balance sheet highlights: Cash and cash equivalents $798 million, no outstanding borrowings, inventory net of customer advances $1.2 billion (-12% YOY), non-GAAP pretax ROIC 24.8%. • Cash flow highlights: Cash flow from operations $201 million Q3, $422 million YTD; free cash flow $168 million Q3, $341 million YTD. • Acquisition update: Planned acquisition of ZT Systems on track, expected to add $5-6 billion net revenue run rate, accretive to EPS. • End market performance: Communication networks and cloud infrastructure up 19.1% YOY, industrial, energy, medical, defense, aerospace, and automotive up 6.2% YOY.

IMS revenue was $1.65 billion, up 11.6% year-over-year. IMS non-GAAP gross margin was 7.5%, down 10 basis points versus the same period last year. CPS revenue was $422 million, up 8.8% year-over-year. CPS non-GAAP gross margin was 14.7%, an impressive 320 basis point improvement year-over-year.

• Fourth quarter outlook: Revenue $2.0-$2.1 billion, non-GAAP gross margin 8.7%-9.2%, operating expenses $64-$68 million, non-GAAP operating margin 5.5%-6.0%, other income/expense net $4 million, effective tax rate 20%-22%, non-GAAP diluted EPS $1.52-$1.62, CapEx ~$65 million. • Full year 2025: Expected revenue growth in line with achieving 6%-8% growth. • ZT Systems: Expected to add $5-6 billion net revenue run rate on a run rate basis, accretive to non-GAAP diluted EPS in the first year after closing.

• Geopolitical uncertainties and tariffs posing challenges to forecasting and customer decisions. • Inventory evaluation risks related to the ZT Systems acquisition, including potential write-downs on lagging generation GPU inventory.

Q: On Slide 12, regarding the ZT Systems acquisition, is the $5 billion to $6 billion net revenue run rate still the expectation, and what's the plan to turn around the business?

A: Jure Sola stated they're excited about the acquisition, see potential, and expect to expand the team, with Jon Faust adding the forecast for net revenue run rate remains $5 billion to $6 billion.

Q: Fiscal 4Q guidance shows a slowdown, what markets are weaker than expected and thoughts on fiscal '26?

A: Jure Sola said the business is expanding, customer forecast is positive, and while 4Q has some uncertainties, the base business can continue growth, expecting '26 to be positive with customer confidence.

Q: On the ZT deal, risk on inventory side and legacy business CPS margins?

A: Jonathan P. Faust said they have a working capital target related to inventory, evaluating it with AMD and ZT, and Jure Sola noted CPS margins improved due to business mix and investments, aiming for above 15% margin.

Q: Progress of Indian joint venture and tariffs?

A: Jonathan P. Faust mentioned guiding on net income adjustment for the JV's equity interest, and Jure Sola and Jonathan P. Faust discussed tariffs and regional manufacturing, with customers evaluating new programs and balancing supply chain regions.