Sanmina Corporation Q4 FY2025 earnings call

• Fiscal year 2025 revenue was $8.13 billion, up 7.4% year-over-year. Non-GAAP operating margin was 5.7%, expanded by 30 basis points year-over-year. Non-GAAP EPS was $6.04, up 14.4% year-over-year. Cash flow from operations was $621 million. • Fourth quarter fiscal 2025 revenue was $2.1 billion, non-GAAP EPS was $1.67 per share. • IMS revenue up 3.3% y/y, CPS revenue up 7.3% y/y. Both segments showed margin improvements. • Completed acquisition of ZT Systems, which is transformative, increasing scale and capabilities in cloud and AI end market. • End markets: Industrial, energy, medical, defense, aerospace, automotive were 59% of Q4 revenue and 62% of FY 2025 revenue, growing 2.2% y/y. Communication networks and cloud and AI infrastructure were 41% of Q4 revenue and 38% of FY 2025 revenue, growing 17% y/y. • Priorities include focusing on customers, executing on ZT Systems opportunities, and driving profitable growth.

IMS revenue came in at $1.68 billion, up 3.3% year-over-year. IMS non-GAAP gross margin was 7.8%, up 50 basis points versus the same period a year ago. CPS revenue came in at $448 million, up 7.3% year-over-year. CPS non-GAAP gross margin was 14.5%, up 90 basis points versus the same period a year ago.

• First quarter 2026 outlook: Revenue between $2.9 billion to $3.2 billion. Legacy Sanmina revenue range $2.05 billion to $2.15 billion (midpoint 4.7% growth y/y). ZT Systems revenue range $850 million to $1.05 billion (midpoint annualizes to ~$5.7 billion). Non-GAAP operating margin 5.6% to 6.1%. Non-GAAP diluted EPS range $1.95 to $2.25 (midpoint 46.3% growth y/y). • Long-term goal: Expect to expand margin to 6% to 7% plus over time. • ZT Systems acquisition expected to contribute to growth, with legacy Sanmina aiming for high single-digit growth and AI/cloud segment growing more in future years.

Q: Congrats on closing the ZT Systems acquisition. Just to confirm, did you say that it's still at a $5 billion to $6 billion annual run rate? And one of the slides says that it's at corporate average margins. You're guiding margins -- operating margin to 5.9%. Should we assume that the ZT Systems business is also in that range of high 5%, so around 5.9% operating margin.

A: Jure Sola thanked the compliment and mentioned excitement about ZT acquisition. Jonathan Faust responded that ZT's 2-month revenue midpoint annualizes to ~$5.7 billion, and both legacy and ZT sides are expected to be within the 5.6% to 6.1% margin range.

Q: For my next question, can I ask on the legacy business? If we look at the guide Jon, for the first quarter, $2.05 billion to $2.15 billion. So it's growing like mid-single digits at this point in the first quarter. But I think one of the slides later on talks about the legacy business grows high single digits. Is that -- are you expecting high single-digit growth for the legacy business ex ZT in fiscal '26? And what drives -- if so, what drives that acceleration in the second half for the legacy business?

A: Jonathan Faust said legacy Sanmina is expected to have high single-digit growth in fiscal '26, with acceleration in the second half driven by opportunities in industrial, energy, medical, defense, aerospace, and communication networks/cloud AI infrastructure segments. Jure Sola added details on specific segments like military circuit boards, new automotive programs, and AI-related capabilities driving growth.

Q: A couple of questions for me. So without putting numbers around it, I was just curious how you think about the opportunity to rebuild the accelerated compute arm of ZT. There's been, I guess, public questions about the ability to do that relative to competition. There was some hint here, but I was just wondering how we should think about how long that takes to sort of get going and how broad you can be with the opportunity?

A: Jure Sola mentioned excitement about the talent in ZT acquisition, the founder staying, and investing in the team. They are transferring engineering resources and expanding capabilities to support accelerated compute, emphasizing the strong team and investment in technology to drive the opportunity.

Q: You see a lot of AI opportunity in the pipeline for the ZT systems. What kind of opportunities do you see there?

A: Jure Sola stated that ZT brings strategic acquisition complementing Sanmina's cloud AI technology, allowing full system integration at scale. There are significant opportunities in the pipeline for '26, '27, '28 based on current capabilities, with strong leadership and investment driving growth.

Q: And then how do you expect this to affect your Indian joint venture?

A: Jure Sola said the ZT acquisition can complement the Indian joint venture, with opportunities in India's cloud AI growth, and they are investing in a new factory in India to expand AI capabilities, which will come online early next year.