Sanmina Corporation Q2 FY2026 earnings call

Management Statement and Operational Highlights: Yuri and John highlighted strong second quarter results with revenue at $4.01 billion, non-GAAP operating margin of 6.4%, non-GAAP diluted EPS of $3.16, and strong cash flow from operations at $399 million. Discussed segment results, balance sheet highlights with strong liquidity and net leverage ratio, cash flow highlights including strong operating cash flow and free cash flow, capital allocation strategy focusing on business investment, strategic acquisitions, balance sheet management, and share repurchases, ZT Systems business integration phases (immediate post-transaction integration, securing customer business, driving growth and expansion), revenue by end market with growth in communication Net Force Cloud AI infrastructure and performance in other segments, and CERMINUS capabilities and manufacturing footprint.

Segment Performance: IMS revenue was $3.58 billion, up 123.5% versus the same period a year ago, with core Sanmina IMS revenue at $1.70 billion, up 6.0% year-over-year. ZT revenue was $1.88 billion for the quarter. DPS revenue was $461 million, up 12.2% versus the same period a year ago. Total IMS non-GAAP gross margin was 8.5%, up 80 basis points versus the same period a year ago. CPS non-GAAP gross margin was 11.6%, down 230 basis points versus the same period a year ago, primarily driven by investments and component shortages.

Guidance: Expected Q3 revenue between $3.2 and $3.5 billion, core Sanmina revenue in the range of $2.2 to $2.3 billion, ZT Systems revenue $1.0 to $1.2 billion; full fiscal 2026 revenue expected in the range of $13.7 to $14.3 billion, non-GAAP operating margin 6.3% to 6.6%, non-GAAP diluted EPS $10.75 to $11.35; increasingly confident in achieving revenue of $16 billion plus in 2027.

Risks: Component shortages impacted the timing of revenue and profitability for one of the product businesses, expected to be resolved in the second half of the fiscal year; ongoing macroeconomic and geopolitical uncertainties stemming from the macroeconomic and geopolitical landscape affecting the outlook.

Question and Answer: Includes questions from Ruplu Bhattacharya regarding ZT system outperformance, margin sustainability, and ZT system revenue outlook; questions from Samik Chatterjee about ZT system customer wins and timing; questions from Stephen Fox about cash flow and ZT system growth with OEMs; questions from Mehdi about ZT system growth and R&D; questions from Anya Soderstrom about supply chain disruptions; answers covering ZT system product pull-in, margin profile, customer wins, cash flow dynamics, supply chain challenges, etc.