Sanmina Corporation Q1 FY2026 earnings call

• Revenue for the first quarter was $3.19 billion, non-GAAP operating margin was 6%, and non-GAAP diluted earnings per share was $2.38. • Cash flow from operations was $179 million. • Balance sheet was strong with cash and cash equivalents of $1.42 billion, no outstanding borrowings on the revolver, and inventory of $2.2 billion. • Capital allocation strategy focuses on investing in the business, evaluating strategic acquisitions, managing balance sheet, and returning capital to shareholders via share repurchases. • End markets: Communication networks, cloud and AI infrastructure accounted for 62% of revenue, with Sanmina core business growing ~20% y-o-y; Industrial, energy, medical, defense, aerospace, automotive and transportation accounted for 38% of revenue, slightly down y-o-y but stable. • ZT Systems acquisition is on track, immediately accretive to EPS, and margins are in line with core Sanmina.

IMS revenue came in at $2.79 billion, up 72% compared to the same period a year ago, driven primarily by growth in communications networks and cloud and AI infrastructure end markets for the core Sanmina business and the addition of the ZT Systems business. IMS non-GAAP gross margin was 8.7%, up 80 basis points. CPS revenue came in at $434 million, up 4.3% compared to the same period a year ago. CPS non-GAAP gross margin was 12.9%, up 40 basis points, but lower than recent performance due to multiple investments and program transitions.

• Second quarter outlook: Revenue between $3.1 billion to $3.4 billion, midpoint $3.25 billion (62% growth y-o-y). • Non-GAAP operating margin 5.7% to 6.2% dependent on mix. • Other income and expense expected to be a net expense of approximately $26 million. • Non-GAAP effective tax rate 21% to 23%. • Non-GAAP diluted earnings per share range $2.25 to $2.55. • Capital expenditures expected to be around $95 million.

• Market uncertainties stemming from tariffs and the geopolitical landscape.

Q: Can you help me parse through the sequential revenue guidance for the March quarter?

A: Jure Sola and Jonathan Faust explained that the business is improving, core Sanmina and ZT Systems performed well, and they're positioned for new product platforms.

Q: Can I ask a conceptual question about the business parts?

A: Jonathan Faust and Jure Sola discussed the transition in the business, focusing on future opportunities in accelerated compute and AMD partnership.

Q: Can you tie operating margin into the discussion?

A: Jonathan Faust and Jure Sola mentioned operating margin was 6%, driven by mix, operational efficiencies, and investments in margin-accretive businesses.

Q: Help with ZTE wins and $14 billion guidance?

A: Jure Sola and Jonathan Faust stated it's due to execution, strong team, relationships, and positioning for future technologies.

Q: Within Industrial Medical, any weakness and growth outlook?

A: Jure Sola said automotive is stabilizing, medical is recovering, defense and aerospace are stable, and Industrial is growing with new projects in Houston.

Q: Cash cycle days and second quarter outlook?

A: Jure Sola mentioned inventory turns and cash conversion cycle are expected to improve, with core Sanmina driving improvement.