SANM — Sanmina Corporation

Sanmina Q3 2026 Earnings Call Summary

1. Key Financial Results and Metrics:

• Revenue: $3.46 billion, up 69.7% year-over-year, driven by growth in both Core Sanmina and ZT Systems.
• Non-GAAP Operating Margin: 8%, an increase of 230 basis points from the previous year.
• Non-GAAP Diluted EPS: $3.31, representing a 116% increase year-over-year.
• Cash Flow from Operations: $124 million.
• Core Sanmina Revenue: $2.4 billion, up 17% year-over-year.
• ZT Systems Revenue: $1.1 billion, meeting guidance.
• Inventory: $2.2 billion, up 87.2% year-over-year, reflecting the ZT Systems acquisition.

2. Strategic Updates and Business Highlights:

• Strong performance across all end markets, particularly in cloud and AI infrastructure, which accounted for 62% of revenue.
• Continued integration of ZT Systems with a focus on enhancing capabilities in accelerated compute and AI infrastructure.
• Successful execution of a three-phase integration plan for ZT Systems, with ongoing investments in production capabilities.
• New customer wins and expansion of existing partnerships, particularly in the AI and cloud sectors.
• Investment in capabilities for high-technology printed circuit boards and metal fabrication for AI system racks.

3. Forward Guidance and Outlook:

• Q4 Revenue Guidance: Expected between $3.3 billion and $3.6 billion, with Core Sanmina revenue projected at $1.5 billion to $1.6 billion and ZT Systems at $0.8 billion to $1.0 billion.
• Full-Year 2026 Revenue Guidance: Anticipated to be between $14.0 billion and $14.3 billion, with Core Sanmina growth of approximately 12.6%.
• Non-GAAP Diluted EPS for Q4: Expected between $3.05 and $3.35.
• Long-Term Outlook: Confidence in achieving over $16 billion in revenue for fiscal 2027, driven by strong demand in AI and cloud infrastructure.

4. Bad News, Challenges, or Points of Concern:

• Q4 guidance for ZT Systems revenue is lower than previously expected due to variability in legacy programs.
• Inventory levels have increased significantly, which may pressure cash flow as working capital builds ahead of growth.
• Potential risks related to geopolitical uncertainties and component shortages affecting production schedules.
• Operating margins are expected to decline slightly in Q4 due to a less favorable product mix.

5. Notable Q&A Insights:

• Management acknowledged that operating margins exceeded expectations in Q3 but anticipate a slight decrease in Q4 due to mix changes.
• Legacy programs are impacting ZT revenue growth, with a focus on ramping new accelerated compute programs.
• There is a strong pipeline for new customer programs, particularly in AI and cloud infrastructure, which is expected to drive future growth.
• The company is investing heavily in working capital, which may pressure free cash flow in the near term but is seen as a positive investment for future growth.
• Discussions around partnerships with AMD and new opportunities with companies like Cerebras highlight the expanding addressable market in the AI sector.

Overall, Sanmina reported strong financial results and remains optimistic about future growth, particularly in AI and cloud infrastructure, while acknowledging some challenges related to legacy programs and inventory management.