SANMINA CORP

Sanmina Corporation is a leading global provider of integrated manufacturing solutions, components, products and repair, logistics and after-market services, primarily serving original equipment manufacturers (OEMs) in the industrial, medical, defense and aerospace, automotive, communications networks and cloud infrastructure industries. The company operates with approximately 39,000 employees, including 4,000 temporary employees, across 20 countries on four continents, and locates its facilities near customers and their end markets in major electronics industry centers or lower-cost locations. The industry has historically comprised companies providing design and manufacturing services to users of electronic components, but has expanded to include product design and engineering, high-level assembly and test, direct order fulfillment, after-market services, and global supply chain management, driven by customer demand for outsourcing to focus on core competencies, access design capabilities, optimize supply chains, reduce fixed costs, and accelerate time-to-market.

The electronics manufacturing services (EMS) industry is highly competitive, with Sanmina competing against major global EMS providers including Benchmark Electronics, Inc., Celestica, Inc., Flex Ltd., Hon Hai Precision Industry Co., Ltd. (Foxconn), Jabil Inc., and Plexus Corp., as well as regional or niche competitors and OEMs that may choose to manufacture internally. The company believes its competitive strengths include a customer-focused organization with global account managers, end-to-end solutions covering the entire product lifecycle, product design and engineering resources, vertically integrated manufacturing solutions, advanced component technologies, global manufacturing capabilities, comprehensive IT systems and global supply chain management, expertise in serving diverse end markets, and expertise in industry standards and regulatory requirements. Sales to the ten largest customers represented 52% of net sales in fiscal 2025, with one customer representing 10.1% of net sales in both fiscal 2025 and fiscal 2024.

Sanmina generates revenue primarily through sales of integrated manufacturing solutions, components, and proprietary products to OEMs, with additional sources including logistics and repair services, design and engineering services, defense and aerospace programs, and sales of raw materials. The company manages its operations as two businesses: Integrated Manufacturing Solutions (IMS), which is a single operating segment consisting of printed circuit board assembly and test, high-level assembly and test, and direct order fulfillment; and Components, Products and Services (CPS), which includes advanced PCBs, backplanes, cable assemblies, fabricated metal parts, precision machined parts, plastic injected molded parts, optical/RF/microelectronic design and manufacturing, memory solutions, high-performance storage platforms, defense and aerospace products, and cloud-based smart manufacturing execution software. Revenue is recognized for the majority of contracts on an over-time basis because the company does not have an alternative use for the end products and has an enforceable right to payment including a reasonable profit, with at least 95% of revenue recognized over time as products are manufactured or services are performed.

The IMS segment, which is the company's only reportable segment for financial reporting purposes, generated approximately 80% of total revenue in fiscal 2025, with segment revenue of $6,512,891,000 ¹ in fiscal 2025 compared to $6,033,867,000 ² in fiscal 2024. IMS includes printed circuit board assembly and test, high-level assembly and test, and direct order fulfillment services such as build-to-order and configure-to-order capabilities, and supports a 48-to-72 hour turn-around-time for BTO and CTO requests. The CPS segment generated approximately 20% of total revenue in fiscal 2025, with segment revenue of $1,615,491,000 ³ in fiscal 2025 compared to $1,534,461,000 ⁴ in fiscal 2024, and includes advanced PCBs, backplanes, cable assemblies, fabricated metal parts, precision machined parts, plastic injected molded parts, optical/RF/microelectronic products from Advanced Microsystems Technologies, multi-chip package memory solutions from Viking Technology, high-performance storage platforms from Viking Enterprise Solutions, defense and aerospace products from SCI Technology, cloud-based manufacturing execution software from 42Q, and design, engineering, logistics and repair services. CPS gross margin increased to 13.9% ⁵ in fiscal 2025 from 12.8% ⁶ in fiscal 2024, primarily due to improved operating efficiencies partially offset by unfavorable product mix.

On October 27, 2025, subsequent to the end of fiscal 2025, Sanmina completed the acquisition of ZT Group Int'l, Inc. (ZT Systems) from AMD Design, LLC, a wholly owned subsidiary of Advanced Micro Devices, Inc., for an aggregate consideration of $1.6 billion ⁷ consisting of $1.46 billion ⁸ in cash consideration, a number of shares of common stock valued at $150 million ⁹, and up to $450 million ¹⁰ in contingent cash consideration upon achievement of certain financial metrics during the three-year period following closing. During fiscal 2025, the company repurchased 1.4 million ¹¹ shares of its common stock for $114 million ¹² (including commissions) under stock repurchase programs authorized by the Board of Directors, and as of September 27, 2025, an aggregate of $239 million ¹³ remained available under the stock repurchase program. The company also entered into a new credit agreement on July 29, 2025, providing for senior secured credit facilities in an aggregate principal amount of $3.5 billion ¹⁴, consisting of a $1.5 billion ¹⁵ revolving credit facility and a $2.0 billion ¹⁶ term loan A facility, and incurred $34,162,000 ¹⁷ in acquisition and integration charges during fiscal 2025 related to the ZT Systems acquisition.

For fiscal 2025, Sanmina reported net sales of $8,128,382,000 ¹⁸, an increase of 7.4% ¹⁹ compared to $7,568,328,000 ²⁰ in fiscal 2024, driven by new program wins and ramp-ups in communications networks and cloud infrastructure as well as medical end markets. Gross profit was $716,357,000 ²¹ in fiscal 2025 compared to $640,429,000 ²² in fiscal 2024, with gross margin improving to 8.8% ²³ from 8.5% ²⁴ in the prior year. Operating income was $354,568,000 ²⁵ in fiscal 2025 compared to $335,494,000 ²⁶ in fiscal 2024, and net income attributable to common shareholders was $245,893,000 ²⁷ compared to $222,536,000 ²⁸ in fiscal 2024. Diluted earnings per share were $4.46 ²⁹ in fiscal 2025 versus $3.91 ³⁰ in fiscal 2024, and cash provided by operating activities was $620,657,000 ³¹ compared to $340,216,000 ³² in the prior year.

A primary growth vector is the expansion into the Cloud and Artificial Intelligence ecosystem through the acquisition of ZT Systems, a provider of AI and general purpose computer infrastructure for hyperscale computing companies, which was completed on October 27, 2025 for a purchase consideration of $1.6 billion ³³ consisting of $1.46 billion ³⁴ in cash consideration, shares valued at $150 million ³⁵, and up to $450 million ³⁶ in contingent cash consideration. The company also entered into a Manufacturing Services Agreement with ZT Systems on October 27, 2025 with an initial term of five years, and to finance the acquisition, drew $1.4 billion ³⁷ under the term loan A facility and the full $800 million ³⁸ under the term loan B facility. The company believes it is well positioned to take advantage of future opportunities on a global/regional basis and intends to continue diversifying into mission critical markets and creating a portfolio of more complex, higher technology products with longer product life cycles.

Another growth vector is the continued penetration of diverse end markets that the company believes offer significant growth opportunities, including industrial, medical, defense and aerospace, and automotive, where OEMs sell mission critical products subject to strict regulatory requirements and/or rapid technological change. The company has invested in technologies and capabilities to strengthen its value proposition in these industries, and its market focused approach aims to increase customer competitiveness by leveraging vertical capabilities, industry expertise, global scale and regional presence, and global IT systems. The company also intends to continue investing in factory automation, process improvements, robotics and AI to further enhance manufacturing efficiency, and maintains extensive operations in lower-cost locations with plans to expand presence as appropriate to meet customer needs.

The company's gross margin improved to 8.8% ³⁹ in fiscal 2025 from 8.5% ⁴⁰ in fiscal 2024, with IMS gross margin increasing slightly to 7.7% ⁴¹ from 7.5% ⁴² and CPS gross margin increasing to 13.9% ⁴³ from 12.8% ⁴⁴ primarily due to improved operating efficiencies. The company seeks to optimize its facilities to provide cost-effective services, and continues to invest in factory automation, process improvements, robotics and AI to further enhance manufacturing efficiency. The company's strategy includes capitalizing on end-to-end solutions to sell additional solutions to existing customers and attract new customers, with the goal of increasing the number of manufacturing programs for which it provides multiple solutions to improve margins and profitability.

The company's global network of manufacturing facilities provides customers with flexibility through a combination of sites to maximize benefits of regional and best cost manufacturing solutions and repair services, especially in the evolving tariff and geopolitical environment. The company supports its customers' logistics and repair requirements through selected certified partners around the world, and employs an enterprise-wide ERP system at substantially all manufacturing locations that operates on a single IT platform for company-wide inventory planning and purchasing capabilities. The company intends to continue to invest in factory automation, process improvements, robotics and artificial intelligence to further enhance efficiency output, and maintains extensive operations in lower-cost locations with plans to expand presence as appropriate.

During fiscal 2025, the company repurchased 1.4 million ⁴⁵ shares of its common stock for $114 million ⁴⁶ (including commissions), and as of September 27, 2025, an aggregate of $239 million ⁴⁷ remained available under the stock repurchase program which has no expiration date. Capital expenditures were $147,357,000 ⁴⁸ in fiscal 2025 compared to $111,227,000 ⁴⁹ in fiscal 2024. The company has never declared or paid cash dividends on its common stock and currently expects to retain future earnings for use in operations, expansion of the business, share repurchases and debt repayments, and does not anticipate paying cash dividends in the foreseeable future, with its ability to pay dividends limited pursuant to covenants contained in its credit agreements.

The company faces structural headwinds from intense competition in the EMS industry, which has experienced a surplus of manufacturing capacity, and from current and potential OEM customers who may elect to manufacture their own products internally. Macroeconomic challenges include tariffs, inflation, supply chain constraints, foreign currency fluctuations, high interest rates, market volatility and recession concerns exacerbated by geopolitical tensions such as those between the U.S. and China, conflict in the Middle East and the war in Ukraine. Uncertainties around U.S. tariffs, retaliatory tariffs from other countries, and import/export restrictions may impact customer decisions to use the company's services in certain manufacturing locations and increase the complexity and cost of the supply chain, and although customers are generally liable for tariffs, gross margins could be impacted if the company is unable to fully recover these costs.

The company faces constraints from the concentration of its customer base, with sales to the ten largest customers representing 52% ⁵⁰ of net sales in fiscal 2025, and the loss of or significant reduction in sales to a major customer could substantially reduce revenue and margins. The company also faces risks from its international operations, as the substantial majority of net sales are generated through non-U.S. operations, and it is exposed to changes in trade and tax laws, compliance with foreign laws, labor unrest, political instability, currency fluctuations, and potentially increased risk of intellectual property misappropriation. Additionally, the company's strategy to pursue higher margin business depends on the success of its CPS businesses, and a decrease in orders for these components, products and services can have a disproportionately adverse impact on profitability since they generally yield higher margins than the core IMS business.

The company's operating results are subject to significant uncertainties, including its ability to replace declining sales from end-of-life programs, conditions in the global economy, fluctuations in component prices and shortages, timing of customer orders and forecasts, and the extent to which customers may choose to in-source manufacturing. Sales to the ten largest customers represented 52% ⁵¹ of net sales in fiscal 2025, and the loss of or significant reduction in sales to a major customer could substantially reduce revenue and margins. The company faces risks from current U.S. trade policy, as broad increases in tariffs on imported components and raw materials could increase costs, and although customers are generally liable for tariffs, gross margins would be reduced if the company is unable to fully recover these costs. The company is subject to a number of U.S. export control and regulatory requirements relating to its defense business, and a qui tam lawsuit filed by a former SCI employee alleges violations of the False Claims Act seeking treble damages, civil penalties, and interest approximating $100 million ⁵². The company also faces risks from its international operations, as the substantial majority of net sales are generated through non-U.S. operations, and it is exposed to changes in trade and tax laws, currency fluctuations, and political instability.

Management's message emphasizes the company's vision to be the trusted leader in providing mission critical products, services and supply chain solutions to accelerate customer success, with key strategic priorities including capitalizing on comprehensive end-to-end solutions, extending technology capabilities, attracting and retaining long-term customer partnerships, promoting new product introduction and joint design manufacturing solutions, continuing to penetrate diverse end markets, pursuing strategic transactions, and continuing to seek cost savings and efficiency improvements. The company completed the acquisition of ZT Systems on October 27, 2025 for a purchase consideration of $1.6 billion ⁵³ consisting of $1.46 billion ⁵⁴ in cash consideration, shares valued at $150 million ⁵⁵, and up to $450 million ⁵⁶ in contingent cash consideration, in line with its strategic intent to expand presence in the Cloud and Artificial Intelligence ecosystem. Management states that despite challenges including tariffs, inflation, supply chain constraints, foreign currency fluctuations, high interest rates, market volatility and recession concerns, the company remains focused on improving operations, building flexibility and efficiencies in processes, and adjusting business models to changing circumstances, while continuing to diversify into mission critical markets and creating a portfolio of more complex, higher technology products with longer product life cycles.