Sanmina (NASDAQ:SANM) reported fiscal third-quarter revenue of $3.46 billion, up 69.7% from a year earlier, as growth in its core business and the contribution from ZT Systems lifted results. The company said revenue reached the high end of its outlook range, while non-GAAP operating margin and earnings per share exceeded its prior expectations.
Non-GAAP operating margin was 8.0%, up 230 basis points year over year, and non-GAAP diluted earnings per share rose 116% to $3.31. Cash flow from operations totaled $124.5 million during the quarter ended June 27.
Core Business and ZT Systems Results
Core Sanmina revenue totaled $2.4 billion, an increase of 17% from the prior-year period, with growth across all end markets and continued strength in cloud and AI infrastructure. ZT Systems contributed $1.1 billion in revenue, landing at the midpoint of the company’s outlook.
Executive Vice President and CFO Jon Faust said the company’s revenue performance reflected broad-based demand, while profitability benefited from business mix, cost management and non-recurring engineering services related to product launches.
“Our revenue of $3.46 billion came in at the high end of our outlook range,” Faust said. “This was driven by both the core Sanmina business, which exceeded its outlook range, with growth coming from all end markets, and the ZT Systems business, which came in at the midpoint of its outlook range.”
- Integrated Manufacturing Solutions revenue was $2.96 billion, up 79.4% year over year. Its non-GAAP gross margin was 10.2%, up 270 basis points.
- Components, Products and Services revenue was $546 million, up 29.2% year over year. Its non-GAAP gross margin was 12.8%, down 190 basis points from a year earlier but up 120 basis points sequentially.
The CPS revenue increase was driven by metal fabrication for AI system racks and high-technology printed circuit boards used in aerospace and defense products. The year-over-year margin decline in the segment reflected depreciation and other expenses associated with investments in new programs, according to Faust.
AI Infrastructure Investments and ZT Integration
Sanmina said it continued to integrate ZT Systems and invest in incremental power, liquid cooling, test-cell capacity and automation needed for the next generation of accelerated-compute products. The company said it secured additional customer orders during the third quarter, expanding its customer base beyond orders announced previously.
Faust said customer validation efforts were progressing in collaboration with AMD and joint customers, with Sanmina supporting nearly all pre-production activities. He said the company expects next-generation accelerated-compute revenue to begin contributing in the first quarter of fiscal 2027 and ramp over time, rather than affecting fourth-quarter revenue.
The company also said its expanded cloud and AI infrastructure focus has led to incremental programs in the core Sanmina business, including new customers and additional platforms. Faust confirmed during the question-and-answer session that Cerebras was among the additional platform businesses referenced by the company.
Sola said AI demand remains strong, while the company is also seeing favorable conditions in industrial and energy, medical, defense and aerospace markets. Communications networks, cloud and AI infrastructure represented 62% of third-quarter revenue, or $2.148 billion, up 173.2% year over year. The company’s other end markets represented 38% of revenue, or $1.316 billion, up 4.8%.
Core Sanmina recorded a book-to-bill ratio above 1.1 during the quarter, Sola said.
Balance Sheet, Capital Spending and Outlook
Sanmina ended the quarter with $1.84 billion in cash and cash equivalents and no borrowings outstanding on its $1.5 billion revolving credit facility. The company said total liquidity, including a delayed-draw term loan facility, was about $4 billion. Its net leverage ratio was 0.29 times, below its long-term target range of 1.0 to 2.0 times.
Inventory, net of customer advances, was $2.2 billion, up 87.2% from a year earlier, primarily due to the ZT Systems acquisition. Faust said working capital is expected to rise further as the company invests ahead of anticipated growth in both core Sanmina and ZT Systems.
Capital expenditures were $100.9 million in the third quarter. The company said its investments include metal fabrication capacity for AI racks, printed-circuit-board capabilities, medium-voltage transformers, and ZT Systems capacity for power, liquid cooling, testing and automation.
For the fiscal fourth quarter, Sanmina forecast:
- Revenue of $3.3 billion to $3.6 billion, including $2.5 billion to $2.6 billion from core Sanmina and $800 million to $1 billion from ZT Systems.
- Non-GAAP operating margin of 7.5% to 8.0%.
- Non-GAAP diluted EPS of $3.05 to $3.35.
- Capital expenditures of about $135 million.
The ZT Systems fourth-quarter outlook is below the company’s prior implied guidance because of timing on a few legacy programs, Faust said. He added that the change was unrelated to the next-generation accelerated-compute program, which remains on track but is not included in the fourth-quarter outlook because of revenue-recognition timing.
For fiscal 2026, Sanmina expects revenue of $14 billion to $14.3 billion, non-GAAP operating margin of 6.85% to 7.25%, and non-GAAP diluted EPS of $11.90 to $12.20. The company expects core Sanmina revenue of $9.1 billion to $9.2 billion, representing 12.6% growth at the midpoint.
Management reiterated confidence that Sanmina can generate more than $16 billion in revenue in fiscal 2027, with higher growth expected in the second half of that year as AI data-center demand and accelerated-compute programs ramp.
About Sanmina (NASDAQ:SANM)
Sanmina Corporation is a leading global electronics manufacturing services (EMS) provider specializing in the design, production and end-to-end supply chain solutions for complex electronic products. Founded in 1980, the company has built a reputation for delivering high-reliability manufacturing across a wide range of industries, including communications, computing, aerospace and defense, medical, automotive and industrial sectors.
Sanmina’s core offerings encompass product design and engineering support, precision PCB fabrication and assembly, system integration, testing, and final system deployment.
