Sanmina’s Earnings Call: Strong Growth Amid Challenges

Sanmina-sci ((SANM)) has held its Q4 earnings call. Read on for the main highlights of the call.

Sanmina’s recent earnings call painted a picture of robust financial health, characterized by impressive revenue and earnings per share (EPS) growth. The company reported strong cash flow and strategic acquisitions that are expected to bolster its market position. Despite these positive developments, challenges were acknowledged in the automotive sector, alongside higher than anticipated expenses.

Revenue Growth

Sanmina reported a notable revenue growth for fiscal year 2025, reaching $8.13 billion, which marks a 7.4% increase year-over-year. The fourth quarter alone contributed $2.1 billion, reflecting a 3.9% rise compared to the previous year.

Earnings Per Share Increase

The company achieved a significant increase in non-GAAP EPS, which rose by 14.4% to $6.04 for the fiscal year 2025. In the fourth quarter, the EPS was $1.67, marking a 16.7% increase from the same period last year.

Cash Flow Strength

Sanmina demonstrated strong cash flow from operations, amounting to $621 million for the fiscal year, with $199 million generated in the fourth quarter alone.

ZT Systems Acquisition

The acquisition of ZT Systems is a strategic move expected to enhance Sanmina’s capabilities in the cloud and AI markets. This acquisition is projected to bring an annual run rate revenue of $5.7 billion.

Operating Margin Improvement

Sanmina’s non-GAAP operating margin improved to 5.7% for fiscal year 2025, expanding by 30 basis points year-over-year, indicating efficient cost management and operational efficiency.

Automotive Market Softness

The company noted a short-term softness in the automotive and transportation markets. However, they remain optimistic about new programs that are expected to drive growth in fiscal year 2026.

Increased Operating Expenses

Operating expenses slightly exceeded expectations, totaling $70 million. This increase reflects Sanmina’s ongoing strategic investments to support future growth.

Higher Foreign Currency Expenses

Foreign currency fluctuations resulted in a net expense of $5.1 million, slightly above the company’s outlook, impacting the overall financial performance.

Forward-Looking Guidance

Looking ahead, Sanmina anticipates first-quarter 2026 revenue to range between $2.9 billion and $3.2 billion, with a non-GAAP operating margin of 5.6% to 6.1% and diluted EPS between $1.95 and $2.25. The ZT Systems acquisition is expected to significantly enhance their capabilities in the cloud and AI sectors.

In conclusion, Sanmina’s earnings call highlighted a strong financial performance with significant growth in revenue and EPS. While challenges persist in certain markets, strategic acquisitions and investments position the company well for future growth. Investors and market watchers will be keen to see how these developments unfold in the coming quarters.