Sanmina (SANM) Q1 2025 earnings summary

Executive summary

• Q1 FY25 revenue reached $2.01 billion, up 7% year-over-year, with non-GAAP EPS of $1.44, both exceeding guidance and outlook targets.

• Growth was driven by strong performance in communications networks, cloud infrastructure, and new program ramps, with broad-based strength across industrial, energy, medical, defense, aerospace, and automotive markets.

• Customers continued to reduce inventory, supporting normalization and new program launches.

• Board authorized an additional $300 million for share repurchases, with $37 million remaining under the prior program.

• Operational discipline and strong cash generation highlighted as drivers of shareholder value.

Financial highlights

• Non-GAAP gross margin was 9.0%, up 20 basis points year-over-year; non-GAAP operating margin was 5.6%, up 10 basis points; GAAP gross margin was 8.4%.

• Non-GAAP net income attributable to common shareholders was $80.2 million, with non-GAAP diluted EPS at $1.44; GAAP net income was $65 million, with GAAP diluted EPS of $1.16.

• Free cash flow was $47 million; cash flow from operations totaled $64 million; cash and cash equivalents stood at $642 million.

• Non-GAAP pre-tax ROIC was 23.5%; gross leverage ratio was 0.49x, with no net debt and no borrowings under the $800 million revolver.

• Share repurchases in Q1 totaled $16 million for 0.2 million shares.

Outlook and guidance

• Q2 FY25 revenue expected between $1.9 billion and $2.0 billion; non-GAAP diluted EPS guidance of $1.30–$1.40; GAAP diluted EPS guidance of $1.03–$1.13.

• FY25 is forecasted as a growth year, with high single-digit revenue growth and EPS growth outpacing revenue.

• Long-term operating margin target set at 6%+ as revenue approaches $9 billion+.

• Management expects persistent headwinds from customer inventory absorption, macroeconomic factors, and geopolitical risks.