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Summary of Sanmina Conference Call Company Overview - **Company**: Sanmina (NasdaqGS: SANM) - **Industry**: Electronics Manufacturing Services (EMS) - **Key Event**: UBS Tech Conference on December 3, 2025 Core Points and Arguments 1. **Transformation and Acquisition**: Sanmina has undergone significant transformation, particularly following the acquisition of ZT Systems from AMD, which is expected to enhance its capabilities in the AI and data center markets [8][9][12] 2. **Strategic Focus**: The acquisition of ZT Systems is seen as a strategic move to deepen relationships in the cloud and data center sectors, allowing Sanmina to offer complete solutions from engineering to full systems [10][12][18] 3. **Market Positioning**: Sanmina positions itself as a leader in North American AI manufacturing, leveraging its high-end capabilities and established customer relationships to compete effectively against other EMS and ODM companies [18][20][21] 4. **Customer Relationships**: Sanmina emphasizes its long-standing relationships with key customers, which span over 20-25 years, and aims to build on these to drive future growth [26][31] 5. **Financial Performance**: The company anticipates a growth rate of 6%-10% for its core legacy business, with expectations of doubling revenue from the AI segment within two years [73][78][127] 6. **Margin Expectations**: Sanmina aims for operating margins of 6%-7% in the long term, with current margins around 5.7% for the legacy business [40][42][49] 7. **Supply Chain Strategy**: The company is focused on a global supply chain strategy that emphasizes regional manufacturing, learning from past challenges during the COVID-19 pandemic [101][102] 8. **Market Demand**: There is a strong demand for AI and data center solutions, with expectations that the market will continue to grow significantly in the coming years [76][78][121] Additional Important Insights 1. **Investment in Technology**: Sanmina highlights the complexity and investment required in building high-technology products, which differentiates it from competitors [38][56] 2. **Execution Focus**: The company stresses the importance of execution and delivering results to maintain customer trust and drive growth [31][71] 3. **Competitive Advantage**: Sanmina believes its engineering capabilities and long-term customer relationships provide a competitive edge over both global and local competitors [21][127] 4. **Future Outlook**: The management is optimistic about the future, projecting significant growth in EPS and overall revenue, particularly with the integration of ZT Systems [127][128] This summary encapsulates the key points discussed during the Sanmina conference call, highlighting the company's strategic direction, market positioning, and future growth prospects.

Core Insights - Sanmina Corporation (SANM) has achieved a 92.5% increase in stock value over the past year, outperforming Jabil, Inc. (JBL) but underperforming Celestica, Inc. (CLS) [1][2] Group 1: Company Performance - Sanmina's growth is driven by strong demand in various end markets, particularly in Communications Networks, Cloud and AI Infrastructure, Medical, and Defense and Aerospace sectors [3] - The company has a competitive edge due to its end-to-end solutions, which encompass product design, manufacturing, assembly, testing, and aftermarket support [4] - Sanmina's stock performance reflects robust demand across key markets and growth in major business segments, supported by a diversified market presence [8] Group 2: Financial Position - As of September 27, 2025, Sanmina reported $926.3 million in cash and cash equivalents, with a long-term debt of $282.3 million, resulting in a debt to capital ratio of 10.6% [6] - The company's current ratio was 1.72 at the end of the fourth quarter of fiscal 2024, indicating a strong liquidity position to meet short-term obligations [9] - Earnings estimates for 2025 have increased by 38.9% to $9.64, and for 2026, they have risen by 43.43% to $11.46, reflecting bullish sentiment [10] Group 3: Market Dynamics - Sanmina is actively addressing geopolitical volatility and tariff-related uncertainties by aligning its manufacturing footprint with global production requirements [5] - The company's vertically integrated manufacturing processes help streamline operations and reduce costs, enhancing economies of scale [5] - Sanmina's valuation metrics indicate it is trading at a price/earnings ratio of 15.49, which is lower than the industry average of 24.8 and its mean of 16.94, suggesting it is relatively undervalued [12] Group 4: Future Outlook - The upward revision of earnings estimates indicates growing investor optimism regarding Sanmina's growth potential [10][14] - The company is expected to benefit from strong momentum in communication, cloud, and AI verticals, supported by its comprehensive portfolio offerings [14]

Core Viewpoint - Sanmina reported strong fourth-quarter fiscal 2025 results, with both revenue and net income exceeding estimates, driven by growth across multiple end markets [2][3][5]. Financial Performance - Net income on a GAAP basis for Q4 was $48.1 million or $0.88 per share, down from $61.4 million or $1.09 per share in the prior year [3]. - Non-GAAP net income for Q4 was $91.5 million or $1.67 per share, compared to $80.3 million or $1.43 in the prior year, surpassing the Zacks Consensus Estimate of $1.57 [3]. - For the full year 2025, GAAP net income was $245.9 million or $4.46 per share, up from $222.5 million or $3.91 per share in 2024 [4]. Revenue Growth - Q4 revenues increased to $2.09 billion from $2.01 billion year-over-year, beating the consensus estimate by $46 million [5]. - For the full year 2025, revenues rose to $8.13 billion from $7.56 billion in 2024 [6]. - The Integrated Manufacturing Solutions segment generated $1.68 billion in Q4 revenues, up 3.3% year-over-year, contributing 80.2% to total revenues [6]. Segment Performance - The Industrial & Energy, Medical, Defense & Aerospace, and Automotive markets generated $1.247 billion in revenues, slightly down from $1.253 billion [7]. - Communications Networks and Cloud Infrastructure revenues increased to $849 million from $765 million year-over-year [7]. Profitability Metrics - Non-GAAP gross profit was $196.4 million, up from $175.5 million in the year-ago quarter, driven by improved operational efficiency [8]. - Non-GAAP operating income totaled $126.4 million compared to $107.3 million in the prior year, with a non-GAAP operating margin of 6%, up from 5.6% [8]. Cash Flow and Liquidity - In Q4, Sanmina generated $199.1 million of net cash from operating activities, compared to $51.9 million in the previous year [11]. - For the full year 2025, the company generated $620.7 million in cash, up from $340.2 million in 2024 [11]. - As of September 27, 2025, Sanmina had $926.3 million in cash and cash equivalents and $282.3 million in long-term debt [11]. Future Outlook - For Q1 of fiscal 2026, revenues are expected to be between $2.05 billion and $2.15 billion, with non-GAAP earnings per share estimated between $1.95 and $2.25 [12]. - Non-GAAP operating margin is projected to be in the range of 5.6% to 6.1% [12]. Market Sentiment - Since the earnings release, there has been an upward trend in estimates, with the consensus estimate shifting by 22.76% [13]. - Sanmina holds a Zacks Rank 1 (Strong Buy), indicating expectations for above-average returns in the coming months [15].

Core Insights - Sanmina is a global leader in the design and manufacturing solutions business, focusing on heavily regulated markets and complex products, differentiating itself from peers that operate in the consumer space [1] Business Focus - The company operates across multiple end markets, providing services in communication networks, cloud infrastructure, medical, aerospace and defense, industrial, and energy sectors, showcasing a well-diversified portfolio [1]

Sanmina Conference Call Summary Company Overview - **Company**: Sanmina (NasdaqGS: SANM) - **Business Focus**: Global leader in design and manufacturing solutions, primarily in heavily regulated markets and complex products, avoiding the consumer space. Key sectors include communication networks, cloud infrastructure, medical, aerospace and defense, industrial, and energy [4][5][6]. Financial Performance - **Fiscal Year 2025 Revenue**: Approximately $8.1 billion, with high single-digit growth [5]. - **Cash Generation**: Generated about $621 million in cash [5]. - **Revenue Breakdown**: - Communication networks and cloud infrastructure: ~40% (~$3.1 billion) [6][23]. - Industrial, energy, medical, aerospace, defense, and automotive: ~60% (~$5 billion) [10]. Business Segments 1. Communication Networks and Cloud Infrastructure - **Growth**: High double-digit growth, with approximately 20% year-over-year growth [24]. - **Key Products**: Optical modules, transceivers, and data center networking equipment [23][24]. - **Acquisition Impact**: Recent acquisition of ZT Systems expected to enhance capabilities in cloud infrastructure and AI [8][25]. 2. Industrial and Energy - **Performance**: Mixed results; energy sector performing well with projects in power storage and controls, while industrial sector showing varied performance [12][13]. - **Customer Outlook**: Improved visibility with stable forecasts from customers [11]. 3. Medical - **Market Participation**: Engaged in a wide range of medical products from large hospital equipment to wearables [14]. - **Growth Outlook**: Low single-digit growth in FY2025, with expectations for improvement in the second half of FY2026 [15]. 4. Aerospace and Defense - **Business Mix**: Focused on U.S. Department of Defense and commercial aerospace, with stable performance expected due to long-term contracts [16][17]. 5. Automotive - **Focus**: Primarily on electric vehicles (EVs), with growth driven by expanding product offerings [19][20]. - **Market Dynamics**: Anticipated improvement in the second half of FY2026 despite broader automotive market challenges [20]. Acquisition of ZT Systems - **Acquisition Details**: Closed at the end of October 2025 for approximately $2 billion, with expected revenue contribution of $5.7 billion annually [28][36]. - **Strategic Partnership**: Collaboration with AMD for design engineering and manufacturing [35]. - **Growth Potential**: Focus on accelerated compute and storage solutions for hyperscalers and OEMs [34][36]. Financial Outlook - **FY1Q26 Guidance**: Legacy Sanmina revenue expected to be flat sequentially but up 5% year-over-year, with high single-digit growth anticipated throughout FY26 [45]. - **Operating Margin Targets**: Near-term target of high 5s to low 6%, with long-term goal of 6%-7% [48][51]. - **Free Cash Flow**: Generated $621 million in cash flow from operations last year, with a strong balance sheet to support growth [56][60]. Capital Allocation and Future Strategy - **M&A Appetite**: Open to future acquisitions that align with growth strategy while maintaining leverage ratios [63]. - **Share Buybacks**: Currently on hold, with focus on growth and capital allocation strategies [65]. Conclusion - **Company's Position**: Sanmina is well-positioned for growth with a strong legacy business and the recent acquisition of ZT Systems, which is expected to transform the company and expand its market reach [68].

Investment Opportunities - Ryan Kelley, chief investment officer of Hennessy Funds, has outperformed 99% of peers over the last five years with his funds [1] - Kelley highlights Sanmina Corporation (SANM) and Dycom Industries (DY) as key holdings in the mid-cap fund, benefiting from the AI infrastructure boom [2] Company Insights - Sanmina manufactures essential components for data centers, with a market cap of approximately $8.5 billion [3] - The company recently acquired ZT Systems from AMD, enhancing its position in the industry, and trades at a forward P/E ratio of 35, slightly above the Nasdaq 100 average of 33 [4] - Dycom specializes in installing fiber optic networks, with a market cap of $10.4 billion and a forward P/E ratio of 45, reflecting a 93% stock increase over the past year [5][6] Market Trends - The demand for data centers and fiber optic networks is expected to grow significantly as hyperscalers invest heavily, with companies like Sanmina and Dycom positioned to benefit from this trend [2][6] - Kelley notes that even if AI's potential is uncertain, companies involved in the supporting infrastructure will still see growth [3][6]

Core Insights - Three stocks with strong growth characteristics and buy ranks are highlighted for investors: Dycom Industries, Micron Technology, and Sanmina Corporation [1][2][3] Company Summaries - **Dycom Industries, Inc. (DY)**: - Provides specialty contracting services to the telecommunications sector - Zacks Rank 1 - Current year earnings estimate increased by 4.7% over the last 60 days - PEG ratio of 1.78 compared to the industry average of 2.66 - Growth Score of B [1] - **Micron Technology, Inc. (MU)**: - Engages in memory and storage products - Zacks Rank 1 - Current year earnings estimate increased by 5.9% over the last 60 days - PEG ratio of 0.46 compared to the industry average of 1.24 - Growth Score of A [2] - **Sanmina Corporation (SANM)**: - Global provider of electronics contract manufacturing services - Zacks Rank 1 - Current year earnings estimate increased by 38.9% over the last 60 days - PEG ratio of 0.63 compared to the industry average of 1.86 - Growth Score of A [3]

Core Insights - The artificial intelligence sector is seeing renewed investor interest as the Nasdaq attempts to recover above its 50-day moving average heading into December [1] - Strong earnings growth and anticipated Federal Reserve interest rate cuts are supporting a bullish outlook for the stock market, encouraging investors to re-enter [2] - Investors are advised to focus on stocks that have demonstrated resilience in the current market environment rather than on beaten-down stocks [3] Stock Screening Methodology - A screening method using the Research Wizard identifies Zacks Rank 1 (Strong Buy) stocks, narrowing down to those with upward price momentum and trading within 20% of their 52-week highs [4][5] - The screening criteria include a PEG ratio of less than or equal to 1, a Price to Sales ratio of less than or equal to 3, and a percentage price change over the last 12 weeks [8] Featured Stock: Sanmina Corporation (SANM) - Sanmina Corporation is highlighted as a leading integrated manufacturing tech solutions firm, recently acquiring ZT Systems to enhance its capabilities in the Cloud and AI markets [6][7] - The company reported a 7% increase in sales and a 14% rise in adjusted earnings year-over-year for Q4 FY25, with projections indicating a 72% revenue increase in FY26 and a 60% boost in adjusted earnings [9][10] - SANM stock has appreciated 100% in 2025 and 560% over the past decade, outperforming the tech sector's 405% growth [11]

Core Insights - The article emphasizes the importance of utilizing Zacks Premium for both new and experienced investors to enhance their stock market strategies and confidence in investing [1] Zacks Style Scores - Zacks Style Scores provide a unique rating system for stocks based on value, growth, and momentum, serving as complementary indicators to the Zacks Rank [2] - Stocks are rated from A to F, with A indicating the highest potential for outperforming the market [3] Value Score - The Value Style Score focuses on identifying undervalued stocks by analyzing financial ratios such as P/E, PEG, Price/Sales, and Price/Cash Flow [3] Growth Score - The Growth Style Score assesses a company's financial health and future outlook, considering projected and historical earnings, sales, and cash flow to identify stocks with sustainable growth potential [4] Momentum Score - The Momentum Style Score helps investors capitalize on price trends by analyzing short-term price changes and earnings estimate revisions [5] VGM Score - The VGM Score combines the Value, Growth, and Momentum Scores to identify stocks with the best overall potential, making it a valuable tool alongside the Zacks Rank [6] Zacks Rank - The Zacks Rank is a proprietary model that leverages earnings estimate revisions to guide investors in building successful portfolios, with 1 (Strong Buy) stocks achieving an average annual return of +23.93% since 1988, significantly outperforming the S&P 500 [7] - There are typically over 800 stocks rated 1 or 2, making it essential for investors to utilize Style Scores to narrow down their choices [8] Stock Highlight: Sanmina Corporation - Sanmina Corporation, based in San Jose, CA, specializes in electronics contract manufacturing and offers comprehensive supply chain solutions across various sectors, including industrial, medical, and automotive [11] - Sanmina holds a 1 (Strong Buy) rating on the Zacks Rank and has a VGM Score of A, indicating strong growth potential with a forecasted year-over-year earnings growth of 59.6% for the current fiscal year [12] - The company has seen positive revisions in earnings estimates, with the Zacks Consensus Estimate increasing from $7.94 to $9.64 per share, and an average earnings surprise of +5.4% [12][13]