SANM — Sanmina Corporation

Sanmina Q2 2026 Earnings Call Summary

1. Key Financial Results and Metrics

• Revenue: $4.01 billion, up 102% year-over-year, exceeding expectations.
• Non-GAAP Operating Margin: 6.4%, up 80 basis points from the previous year.
• Non-GAAP Diluted EPS: $3.16, a 125% increase year-over-year.
• Cash Flow from Operations: $399 million, with free cash flow at $342 million.
• Core Sanmina Revenue Growth: 7.3% year-over-year.
• ZT Systems Revenue: $1.88 billion, driven by accelerated compute shipments.
• Balance Sheet: Cash and equivalents at $1.58 billion, with no outstanding debt on a $1.5 billion revolver.

2. Strategic Updates and Business Highlights

• ZT Systems Integration: The integration of ZT Systems is progressing well, with strong customer demand and new program launches expected later in the year.
• End Market Performance: Significant growth in Communication Networks and Cloud AI Infrastructure, contributing $2.77 billion, with a notable 280% year-over-year growth.
• Core Business Strength: Core Sanmina's revenue growth is stable, with solid performance across various sectors including Industrial, Medical, and Defense & Aerospace.
• Capital Allocation: The Board authorized an additional $600 million for share repurchases, reflecting confidence in the business and stock valuation.

3. Forward Guidance and Outlook

• Q3 2026 Revenue Guidance: Expected between $3.2 billion and $3.5 billion, with ZT Systems revenue projected at $1.0 billion to $1.2 billion.
• Full Fiscal Year 2026 Revenue Guidance: Anticipated between $13.7 billion and $14.3 billion, with continued growth in both Core Sanmina and ZT Systems.
• Fiscal Year 2027 Outlook: Projected revenue of $16 billion plus, driven by strong demand and customer engagement.

4. Bad News, Challenges, or Points of Concern

• Supply Chain Issues: Ongoing material shortages, particularly in memory and custom ASICs, could impact production and revenue growth.
• Dependence on Customer Schedules: Revenue recognition and growth are closely tied to customer production schedules, which can be unpredictable.
• Margin Pressure: Future margins may fluctuate based on product mix and customer agreements, particularly as ZT Systems ramps up production.

5. Notable Q&A Insights

• ZT Systems Performance: The outperformance in Q2 was attributed to accelerated shipments driven by customer demand, primarily for AMD technology, with no NVIDIA products shipped.
• Customer Base Expansion: Sanmina is actively working to diversify its customer base, targeting both hyperscalers and OEMs.
• Future R&D Investments: As the company transitions to more value-added services, increased R&D spending is anticipated to support growth and innovation.
• Material Shortages: Management acknowledged that while they are managing supply chain challenges effectively, these shortages could limit growth potential if not resolved.

Overall, Sanmina's Q2 2026 results reflect strong operational execution and positive market demand, although supply chain challenges and reliance on customer schedules present ongoing risks. The company remains optimistic about its growth trajectory and strategic initiatives moving forward.