10-Q · April 27, 2026
Sanmina reported a material revenue jump in Q2: net sales increased to $4,013,271 (thousands) (up 102.3% YoY) driven by Communications Networks and Cloud & AI Infrastructure. Gross margin was largely stable at 8.8% for…
Earnings analysis · 10-Q
SANM earnings analysis
Filed July 27, 2026 · Our reading of the company's report
The latest report
Sanmina posted a strong fiscal Q3, with revenue of $3.464 billion rising 69.7% year over year and GAAP operating margin expanding 170 basis points to 6.4%; GAAP EPS was $2.12. Growth was overwhelmingly driven by…
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Sanmina posted a strong fiscal Q3, with revenue of $3.464 billion rising 69.7% year over year and GAAP operating margin expanding 170 basis points to 6.4%; GAAP EPS was $2.12. Growth was overwhelmingly driven by Communications Networks and Cloud & AI Infrastructure, whose revenue rose 173.2% to $2.148 billion, aided by ZT Systems. Liquidity strengthened, with $1.8 billion of cash and $701.977 million of nine-month operating cash flow, but the ZT transaction has materially increased debt, interest expense, cloud-market concentration and integration exposure.
From revenue to operating profit
Where each $100 of revenue went in this report.
Cost of sales, operating expenses, and what remained. Figures are rounded to whole dollars.
Reported figures
- Earnings per share
- $2.12
- Segment
- Industrial & Energy, Medical, Defense & Aerospace, and Automotive & Transportation: $1.316 billion
- Segment
- Communications Networks and Cloud & AI Infrastructure: $2.148 billion
What stood out
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Revenue surged year over year; EPS rose
Fiscal Q3 revenue was $3.464 billion, up 69.7% year over year from $2.042 billion, although down 13.6% sequentially from $4.010 billion in fiscal Q2. GAAP diluted EPS was $2.12, up from $1.26 a year ago and $1.70 sequentially.
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Margins expanded sharply
Gross margin expanded to 10.5% from 8.9% a year earlier and 8.8% in fiscal Q2. Operating margin reached 6.4%, versus 4.7% a year ago and 3.9% sequentially, on $221.225 million of operating income.
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Cloud and AI infrastructure drove growth
Communications Networks and Cloud & AI Infrastructure revenue increased $1.362 billion, or 173.2% year over year, to $2.148 billion. Management attributes growth primarily to the ZT acquisition, cloud-infrastructure demand, new program wins and communications-network ramps.
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Core end markets remained positive
The other end-market grouping—industrial and energy, medical, defense and aerospace, and automotive and transportation—grew 4.8% year over year to $1.316 billion, a $60.306 million increase.
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Operating cash flow remained strong
Nine-month operating cash flow increased to $701.977 million from $421.578 million, while capital expenditures were $244 million, equal to 34.8% of operating cash flow. Implied nine-month free cash flow was approximately $457.977 million.
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Liquidity and working-capital metrics improved
Cash and equivalents nearly doubled to $1.8 billion from $926 million at fiscal year-end, and working capital increased to $3.4 billion from $2.0 billion. Receivable days improved to 52 from 60 and inventory days improved to 91 from 94.
What to watch
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ZT increases cloud and hyperscaler concentration
ZT integration and AI-cycle exposure are material: ZT represented 31% of quarterly revenue, 38% of nine-month revenue and 25% of total assets excluding goodwill and intangibles. The filing newly emphasizes that hyperscale customers' capital-spending cycles and long-term AI demand are difficult to predict.
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Debt and interest expense rose after ZT deal
Acquisition financing increased leverage and interest burden: $2.2 billion was outstanding under the New Credit Facility at June 27, 2026, and quarterly interest expense rose to $32 million from $5 million a year earlier. The company has hedged $1.45 billion of notional borrowings at an approximately 4.9% effective rate.
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CPS margin weakened on inefficiencies
CPS gross margin declined to 12.8% from 14.7% a year ago, which management attributes primarily to manufacturing inefficiencies. This is notable because CPS is the company's higher-margin business mix strategy.
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ZT earn-out and integration costs remain
ZT-related costs and contingent consideration remain meaningful: quarterly acquisition, integration and other expense was $21 million, including a $13 million fair-value adjustment, while the contingent-cash-consideration liability was $183 million. The undiscounted potential payout ranges from $0 to $450 million.
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Tax rate rose materially
The effective tax rate increased to 35% from 20% a year ago, driven primarily by non-deductible acquisition charges and closure and settlement of the fiscal 2008–2010 IRS audit. Quarterly tax provision rose to $66 million from $19 million.
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Large-customer concentration persists
Customer concentration remains elevated: the top 10 customers accounted for 67% of sales, and one customer represented at least 10% of quarterly net sales. A reduction in hyperscaler or other large-customer orders could have an outsized revenue effect.
Management's outlook
The 10-Q does not provide numerical revenue or EPS guidance. Management states that existing liquidity should meet working-capital requirements for at least the next 12 months.
Earlier filings 1
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.