DEF: Sanmina Reports Strong Fiscal 2025, Acquires ZT Systems

Sanmina Corporation announced robust fiscal 2025 financial results, including 7.4% revenue growth and expanded operating margins, alongside the strategic acquisition of ZT Systems to bolster its Cloud and AI infrastructure offerings.

Summary

• Fiscal 2025 revenue reached $8.13 billion, marking a 7.4% increase compared to the prior year, driven by growth in most end-markets, particularly Communications Networks and Cloud and AI Infrastructure.
• Non-GAAP operating margin expanded by 30 basis points to 5.7%, and non-GAAP diluted earnings per share grew 14.4% to $6.04.
• The company ended the year with a strong balance sheet, holding $926 million in cash and cash equivalents, and generated $621 million in cash flow from operations.
• Sanmina reinvested $142 million into the company through equipment upgrades, facility expansions, and technology advancements, and repurchased 1.44 million shares for $113.7 million.
• On October 27, 2025, the transformative acquisition of ZT Systems, a leading provider of Cloud and AI infrastructure, was completed, positioning Sanmina directly in the growing Cloud and AI ecosystem.
• The Annual Meeting of Stockholders is scheduled for Monday, March 9, 2026, at 11:00 A.M., Pacific Daylight Time, as a virtual meeting.
• Key proposals for the Annual Meeting include the election of eight directors, ratification of PricewaterhouseCoopers LLP as the independent auditor, an advisory vote on executive compensation, and approval for the reservation of an additional 1,200,000 shares under the 2019 Equity Incentive Plan.
• The Board unanimously recommends against a stockholder proposal advocating for an independent board chairman.

Sentiment

Score: 8

Explanation: Sanmina reported strong fiscal 2025 financial results with significant growth in revenue and EPS, coupled with a transformative acquisition in the high-growth Cloud and AI infrastructure sector. The company demonstrates robust cash generation, disciplined capital allocation, and a commitment to shareholder returns through share repurchases. Corporate governance practices are evolving with new independent directors and responsiveness to shareholder feedback, though the board opposes an independent chairman proposal. The outlook for fiscal 2026 is positive, focusing on strategic growth and operational excellence.

Positives

• Strong fiscal 2025 financial performance with revenue up 7.4% to $8.13 billion.
• Non-GAAP operating margin expanded 30 basis points to 5.7%, indicating improved operational discipline.
• Non-GAAP diluted earnings per share grew 14.4% to $6.04, reflecting increased profitability.
• Maintained a strong balance sheet with $926 million in cash and cash equivalents.
• Generated robust cash flow from operations of $621 million, providing financial flexibility.
• Strategic reinvestment of $142 million into equipment upgrades, facility expansions, and technology advancements to strengthen market position and support long-term goals.
• Repurchased 1.44 million shares for $113.7 million, demonstrating commitment to returning capital to stockholders.
• Completed the transformative acquisition of ZT Systems, positioning the company for direct participation in the high-growth Cloud and AI ecosystem.
• Received approximately 82% stockholder support for executive compensation at the 2025 annual meeting.
• Board refreshment efforts include the addition of three new independent directors in the last 36 months.
• The Board reduced the threshold to call a special meeting from 50% to 25% of shares outstanding, in response to stockholder feedback, enhancing corporate governance.

Risks

• The Board oversees risks related to economic conditions, strategy, supply chain, trade risks, legal and regulatory matters, compensation programs, and cybersecurity.
• Potential risks are associated with the overall compensation program, which the Compensation Committee monitors.
• The inability to obtain necessary regulatory authority or comply with registration requirements for share issuance under the 2019 Equity Incentive Plan could relieve the company of liability for failing to issue or sell shares.

Future Outlook

The company is optimistic about opportunities in fiscal 2026, planning to build on current momentum. The long-term strategy remains focused on high complexity, heavily regulated markets, while driving operational excellence and investing in areas with the greatest opportunities. Management expresses confidence in unlocking the company's full potential and delivering greater value to stockholders. Key priorities include customer and market focus, capitalizing on ZT Systems opportunities, driving profitable growth, and maximizing shareholder value. The proposed increase in the 2019 Equity Incentive Plan's share reserve is expected to support equity-based compensation for at least the next two years.

Management Comments

• "Sanmina delivered strong fiscal 2025 financial results, demonstrating the strength and resilience of our operating model and the strategic importance of our offerings." Jure Sola, Chairman and CEO.
• "Fiscal 2025 was a strong year for Sanmina, and I'm incredibly proud of the contributions of our teams." Jure Sola, Chairman and CEO.
• "Our ability to generate cash continues to provide the flexibility to support our ongoing initiatives, driving both organic and inorganic growth through investments in key technologies and capabilities." Jure Sola, Chairman and CEO.
• "We reinvested $142 million into the company through equipment upgrades, facility expansions, and technology advancements. These investments will strengthen our market position and support our long-term financial goals, paving the way for future opportunities." Jure Sola, Chairman and CEO.
• "As we look ahead to fiscal 2026, we are excited about the opportunities in front of us." Jure Sola, Chairman and CEO.
• "We have built an agile and resilient organization and I am confident in our ability to unlock Sanmina's full potential and deliver greater value to our stockholders." Jure Sola, Chairman and CEO.

Industry Context

Sanmina operates as a leading global provider of integrated manufacturing solutions for OEMs across diverse industries, including industrial and energy, medical, defense and aerospace, automotive and transportation, communications networks, and cloud and AI infrastructure. The acquisition of ZT Systems, a key player in Cloud and AI infrastructure for hyperscalers, strategically positions Sanmina to directly capitalize on the significant growth within the Cloud and AI ecosystem. This move complements Sanmina's existing vertical integration capabilities, offering end-to-end solutions at scale and aligning with the notable strength observed in its Communications Networks and Cloud and AI Infrastructure end-markets. The company also acknowledges operating in a highly competitive environment for executive talent, particularly in Silicon Valley.

Comparison to Industry Standards

• Sanmina claims to maintain one of the strongest balance sheets in the industry, though no specific comparative metrics are provided.
• The company's three-year average net burn rate for equity awards is 1.9%, which is compared to a 1.4% median net burn rate for its core peer group (Benchmark Electronics, Inc., Celestica Inc., Flex Ltd., Jabil Inc., and Plexus Corp.).
• Sanmina states its overhang (shares subject to outstanding awards and reserved for future issuance) is reasonable compared to the average net and gross overhang of its peers.
• Long-term incentive grant practices are designed to provide substantially comparable target compensation opportunities to key executive managers, aligning with practices of other manufacturing and high-technology companies, especially in Silicon Valley.
• Change-in-control severance arrangements are stated to be below median general industry practices.

Management Changes

Corporate Governance

Related Party Transactions

• Zeljko Sola, brother of Chairman and CEO Jure Sola, is a Senior Vice President, PCB Global Sales Technology & Commercial Sector, and earned approximately $742,000 in fiscal 2025.
• Martina Sola, daughter of Chairman and CEO Jure Sola, is a Business Development Vice President, and earned approximately $391,000 in fiscal 2025.
• Nikola Sola, son of Chairman and CEO Jure Sola, is an Account Manager, and earned approximately $209,000 in fiscal 2025.

Stakeholder Impact

• **Shareholders**: Expected to benefit from strong financial performance, strategic growth initiatives (ZT Systems acquisition), disciplined capital allocation including share repurchases, and enhanced corporate governance practices.
• **Employees**: Supported by initiatives for career growth, professional development, health and wellness programs, and a focus on safety. Executive compensation programs are designed to attract and retain key talent.
• **Customers**: Will benefit from expanded offerings and end-to-end solutions, particularly in the Cloud and AI infrastructure sector, following the ZT Systems acquisition, and continued focus on mission-critical products and services.
• **Communities**: The company's commitment to corporate social responsibility, including environmental stewardship (CO2 emissions, water conservation, waste management) and employee volunteerism, positively impacts the communities where it operates.

Next Steps

• Hold the Annual Meeting of Stockholders on March 9, 2026, to vote on director elections, auditor ratification, executive compensation, and equity plan share reservation.
• Continue to focus on the long-term strategy in high complexity, heavily regulated markets.
• Drive operational excellence and invest in key technologies and capabilities.
• Execute on opportunities presented by the ZT Systems acquisition.
• Regularly engage with stockholders to obtain feedback on strategy and executive compensation programs.
• PricewaterhouseCoopers LLP is appointed as the independent registered public accounting firm for the fiscal year ending October 3, 2026.

Key Dates

Recommendation

Sanmina's strong fiscal 2025 performance, marked by significant revenue and EPS growth, demonstrates robust operational execution. The strategic acquisition of ZT Systems positions the company favorably in the rapidly expanding Cloud and AI infrastructure market, offering substantial future growth potential. The company's healthy balance sheet, strong cash flow from operations, and commitment to returning capital to shareholders through repurchases further enhance its investment appeal. While there are some governance discussions, the overall financial health and strategic direction indicate a positive outlook for long-term shareholder value.

Keywords

Sanmina, SANM, Proxy Statement, SEC Filing, Financial Results, ZT Systems, Acquisition, Cloud Infrastructure, AI Infrastructure, Electronics Manufacturing, Corporate Governance, Executive Compensation, Shareholder Value, Stock Repurchase, Board of Directors