Sanmina beat expectations in fiscal Q1 with revenue of $3.19 billion, non‑GAAP diluted EPS of $2.38 and a non‑GAAP operating margin of 6.0%, as revenue rose 59% year‑over‑year driven by communications, cloud and AI infrastructure plus the ZT Systems acquisition.
Management says the ZT Systems integration is on plan and “immediately accretive,” with the quarter implying an annualized ZT run rate of about $5.7 billion, and it reiterated an aggressive goal to “double Sanmina revenue in the next two years” while pursuing a >$16 billion AI data‑center opportunity for 2027.
Balance‑sheet and capital priorities remain conservative: Sanmina ended the quarter with $1.42 billion cash, roughly $3.6 billion in total liquidity, net leverage of 0.8x, repurchased 516,000 shares for ~$79 million, and guided Q2 revenue of $3.1–$3.4 billion with EPS of $2.25–$2.55.
Sanmina (NASDAQ:SANM) reported what management characterized as a strong start to fiscal 2026, highlighting results that met or exceeded its outlook and pointing to continued momentum in communications, cloud, and AI infrastructure markets. The electronics manufacturing services provider also discussed early progress integrating its ZT Systems acquisition, which executives said is on plan and already accretive to earnings per share.
For the first quarter ended Dec. 27, 2025, Sanmina posted revenue of $3.19 billion, non-GAAP operating margin of 6.0%, and non-GAAP diluted earnings per share of $2.38. CEO Jure Sola said the company is “executing according to our plan,” and noted cash flow from operations of $179 million.
CFO Jon Faust said revenue and operating margin came in toward the high end of the company’s outlook, while earnings per share exceeded expectations. Revenue rose 59% year over year, which Faust attributed primarily to growth in communications networks and cloud and AI infrastructure within the core Sanmina business, along with the addition of ZT Systems.
On profitability, Faust reported:
Non-GAAP gross profit: $298 million, or 9.3% of revenue, up 30 basis points year over year, driven by favorable mix and operational efficiencies.
Non-GAAP operating expenses: $106 million, or 3.3% of revenue, down 10 basis points year over year, as the company made “targeted investments” while maintaining discipline.
Non-GAAP operating profit: $192 million, or 6.0% of revenue, up 40 basis points year over year and at the 6% level for a second consecutive quarter.
Non-GAAP other income and expense was a net expense of $19.1 million, which Faust said was favorable to guidance due to strong cash generation. Diluted EPS was based on approximately 56 million shares outstanding and increased 66.1% from the year-ago period.
In the Integrated Manufacturing Solutions (IMS) segment, revenue came in at $2.79 billion, up 72% year over year, reflecting core growth in communications networks and cloud and AI infrastructure plus the addition of ZT Systems. IMS non-GAAP gross margin was 8.7%, up 80 basis points, which management said reflected favorable mix and operational efficiencies across both the legacy Sanmina and ZT Systems operations.
In the Components, Products and Services (CPS) segment, revenue was $434 million, up 4.3% year over year. CPS non-GAAP gross margin was 12.9%, up 40 basis points, but Faust said the margin was below recent performance due to multiple investments coming online to support new programs and a few program transitions. He said the investments are expected to deliver “margin accretive growth in the near future.”
Sanmina ended the quarter with $1.42 billion in cash and cash equivalents and no outstanding borrowings on its $1.5 billion revolver. Faust cited “substantial liquidity” of approximately $3.6 billion to support expected growth.
Inventory, net of customer advances, was $2.2 billion, up 74% year over year, which Faust said was driven by the ZT Systems acquisition. Inventory terms, net of customer advances, were 5.3 times for the quarter, down from 5.8 times a year ago due to the acquisition; Faust noted the calculation included two months of ZT Systems cost of goods sold. He added that core Sanmina inventory terms improved both sequentially and year over year, while also stating there was “still room for improvement.”
Non-GAAP pre-tax return on invested capital was 32.1%, up from 23.5% a year earlier. Faust said Sanmina’s net leverage ratio was 0.8 times and reiterated a long-term net leverage target of 1.0 times to 2.0 times, anticipating leverage could increase as working capital investment grows to support ZT Systems. He also said the company’s long-term goal remains to achieve investment-grade ratings over time.
Cash flow from operations totaled $179 million, capital expenditures were $87 million (slightly above outlook), and free cash flow was $92 million. Sanmina repurchased 516,000 shares for approximately $79 million to offset dilution, and Faust said the company had about $160 million remaining under its current repurchase program.
Sola said ZT Systems is executing to plan and that integration is “on track and is doing well.” He emphasized that the acquisition is “immediately accretive” to EPS and that ZT Systems margins are in line with core Sanmina. He also highlighted what he called a strong management and technical team in place.
Looking ahead, Sola reiterated an ambitious growth objective, saying the company’s goal is to “double Sanmina revenue in the next two years.” He added that the AI opportunities are on track to deliver $16+ billion in calendar year 2027, and said Sanmina is pursuing vertical integration opportunities for AI data centers, including capabilities spanning components, liquid cooling racks, and full system integration at scale.
During the Q&A, management pushed back on the idea of sequential softness implied in second-quarter revenue guidance, noting the first quarter only included two months of ZT Systems results and that the business is in a transition. Sola said both core Sanmina and ZT Systems are expected to grow quarter over quarter in the second quarter, adding that core Sanmina should grow double digits year over year.
Faust also referenced the company’s prior comments from May 19 regarding an expected ZT Systems revenue run rate of $5 billion to $6 billion after the transaction close, noting that annualizing the first-quarter contribution implied a run rate of about $5.7 billion during the transition period.
For the fiscal second quarter, Sanmina guided to revenue of $3.1 billion to $3.4 billion, non-GAAP operating margin of 5.7% to 6.2%, and non-GAAP diluted EPS of $2.25 to $2.55 on roughly 56 million diluted shares. The outlook assumes a full quarter of ZT Systems and incorporates “ongoing market uncertainties stemming from tariffs and the geopolitical landscape,” according to Faust.
Additional outlook items included:
Other income/expense: net expense of about $26 million, reflecting a full quarter of the company’s new debt structure.
Non-GAAP effective tax rate: 21% to 23%.
India joint venture equity interest: an estimated $3 million non-cash reduction to net income.
Capital expenditures: about $95 million; depreciation:
On end markets, Sola said communications networks, cloud, and AI infrastructure represented about 62% of first-quarter revenue, and he noted the core business in that segment grew about 20% year over year. Industrial, energy, medical, defense and aerospace, and automotive and transportation made up the remaining 38% of revenue, which he said was down about 3% year over year but “very consistent and stable.”
Sola pointed to strong demand for high-performance switches and enterprise storage, expansion in optical advanced packaging products, and shipments spanning 400G and 800G systems with 1.6T starting to ship. He also described industrial and energy as a “very strong segment,” citing demand for power products supporting AI data centers and discussing a Houston, Texas factory expansion tied to medium-voltage transformers, grid-scale transformers, and battery storage systems. Sola said the company plans to ship a few units in late 2026 and reach full production in calendar 2027, noting a partnership with KONČAR to co-design custom medium-voltage transformers and a long-term commitment from a strategic customer.
In other markets, Sola said medical is showing signs of recovery and that defense and aerospace demand remains strong. He described automotive as becoming more stable and said new programs are expected to drive growth.
Management reiterated its view that fiscal 2026 is expected to be a growth year, with Faust saying the company continues to expect the core Sanmina business to grow high single digits for the year. Sola also said he was comfortable with the possibility of hitting $14 billion in revenue, referencing the company’s prior discussion of consensus expectations while emphasizing that Sanmina guides one quarter at a time.
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.
