Sanmina (SANM) Q4 2026 Earnings Call Transcript

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DATE

Monday, Nov. 9, 2026

CALL PARTICIPANTS

• Chairman and Chief Executive Officer – Jure Sola
• Executive Vice President and Chief Financial Officer – Jonathan Faust
• Senior Vice President, Investor Communications – Paige Melching

TAKEAWAYS

• Revenue — $3.86 billion, representing 84% year-over-year growth driven by broad-based strength across all end markets and the integration of ZT Systems.
• Non-GAAP Operating Margin — 9.0%, representing a 300 basis point increase compared to the same period in fiscal 2025 due to favorable product mix and disciplined cost management.
• Non-GAAP Diluted EPS — $4.43, a 166% increase year over year reflecting strong operational execution and a $0.42 contribution from tariff recoveries.
• Core Sanmina Revenue — $2.97 billion, growing 42% compared to the previous year and exceeding the high end of the company’s outlook.
• Cloud and AI Systems Revenue — $884 million, aligning with management’s previous guidance during the ZT Systems product transition.
• Fiscal 2026 Total Revenue — $14.53 billion, up 79% for the full year as the company expanded its position in the cloud and AI infrastructure market.
• IMS Segment Revenue — $3.08 billion, a 83.3% increase compared to the previous year driven by growth across all industrial and technology end markets.
• CPS Segment Revenue — $822 million, up 83% year over year supported by investments in metal fabrication, storage business, and printed circuit boards.
• Fiscal 2027 Revenue Guidance — $17.5 billion to $19.5 billion, reflecting a midpoint of $18.5 billion and representing projected annual growth of 27.4%.
• Fiscal 2027 Cloud and AI Systems Revenue Guidance — $7.5 billion to $9.0 billion, anticipated to accelerate throughout the year as the Helios program ramps.
• Fiscal 2027 Non-GAAP Diluted EPS Guidance — $15.50 to $17.50, representing a 24.2% increase compared to fiscal 2026 at the midpoint.
• Operating Cash Flow — $944 million for the fiscal year, driven by earnings growth and disciplined working capital management.
• Free Cash Flow — $541 million for the fiscal year, after capital expenditures of $404 million for new capabilities and capacity.
• Share Repurchases — $393 million for the full year, representing approximately 2.4 million shares at an average price of $163.75.
• Inventory — $2.6 billion, up 131% compared to the prior year due to the ZT Systems acquisition and material staging for forecasted revenue growth.
• Return on Invested Capital — 48.8%, an improvement from 28.3% in the same period a year ago reflecting higher earnings efficiency.
• Book-to-Bill Ratio — 1.22:1 for the fourth quarter, indicating strong demand and a healthy pipeline for the new fiscal year.
• Tariff Recoveries — $30 million, primarily associated with legacy ZT Systems products which provided 75 basis points of favorability to operating margin.
• Total Liquidity — $3.83 billion, comprising $1.68 billion in cash and $2.15 billion in available credit facilities.
• Fiscal 2027 Capital Expenditures Guidance — $450 million, focused on liquid cooling, test cell capacity, and automation for next-generation compute.
• India Joint Venture Adjustment — $20 million noncash reduction to net income for the full fiscal year to reflect equity interests of local partners.
• Non-GAAP Interest and Other Expense Guidance — $140 million for fiscal 2027, as the company manages its debt following a recent refinancing.
• CPS Non-GAAP Gross Margin — 12.0%, down 250 basis points year over year due to unfavorable product mix and depreciation from growth-related investments.
• Fiscal 2027 Depreciation Guidance — $200 million, reflecting the company’s increased investment in advanced manufacturing infrastructure.

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RISKS

• Sola stated, “right now, shortages out there, and there are some uncertainties around supply chain exactly,” when discussing the challenges of managing production schedules for complex AI systems.
• Faust warned that management expects “working capital to build” in the coming year as the company invests in inventory to support the ramp of large-scale programs.
• Faust indicated that the company’s fiscal 2027 outlook “takes into account ongoing market uncertainties and the geopolitical environment,” which could impact global delivery and customer demand.

SUMMARY

Sanmina Corporation (SANM +11.11%) reported fourth quarter and fiscal 2026 results that exceeded management’s previous outlook across all key financial metrics following the transformative integration of ZT Systems. Management stated that the company achieved 79% year-over-year revenue growth for the fiscal year, driven by substantial expansion in the cloud and AI infrastructure segment and double-digit growth in the core manufacturing business. The company confirmed it has secured new program wins on multiple compute platforms and is initiating shipments of the Helios accelerated compute product. Strategic investments are currently focused on enhancing vertical integration capabilities in liquid cooling, mechanical systems, and high-technology printed circuit boards to support next-generation data center demand.

• CFO Faust noted that Sanmina has “begun to ship the Helios product, albeit in small quantities,” with expectations to scale the program throughout fiscal 2027.
• Management reported winning new programs on a second compute platform separate from the AMD partnership, with discussions currently underway for a third platform opportunity.
• The company refinanced its debt after the quarter end, extending facility maturities to 2031 and linking credit spreads to the company’s credit rating rather than its leverage ratio.
• Sanmina is expanding its participation in vertical integration for the Helios program, leveraging mechanical precision machining and enclosure capabilities for AI system racks.
• Management expects growth to accelerate in the industrial and energy segments during fiscal 2027, supported by a new business unit focused on medium voltage transformers for data centers.
• The company is diversifying its defense and aerospace portfolio by expanding into the satellite market, where it sees strong demand continuing into fiscal 2028.

INDUSTRY GLOSSARY

• IMS (Integrated Manufacturing Solutions): A segment consisting of printed circuit board assembly and test, final system assembly, and test and direct order fulfillment.
• CPS (Components, Products and Services): A segment including interconnect systems, mechanical systems, and memory, optical, and microelectronics products.
• Helios: A specialized accelerated compute product program developed in partnership with AMD for hyperscale and AI customers.
• ROIC (Return on Invested Capital): A financial ratio used to measure a company’s efficiency in allocating capital to profitable investments.
• ZT Syst

  Source: www.fool.com — article syndicated from the publisher’s feed; all rights remain with the original publisher.