Sanmina Corporation Reports 7% Revenue Growth in Q1 Fiscal 2025

Sanmina Corporation reported its financial results for the first quarter of fiscal 2025, ending December 28, 2024, showing a net sales increase of 7% to $2.006 billion, compared to $1.875 billion in the same period last year. The company's gross profit rose to $167.9 million, up from $160.8 million, while operating income slightly increased to $88.6 million from $87.6 million. Net income attributable to common shareholders also improved, reaching $65 million, or $1.20 per share, compared to $57 million, or $1.01 per share, in the prior year.

The company experienced notable changes in its financial performance, with revenue growth primarily driven by new program wins in the telecommunications and automotive sectors. The Integrated Manufacturing Solutions (IMS) segment, which constitutes about 80% of total revenue, reported a gross margin increase to 7.9% from 7.6%, attributed to improved operational efficiencies and a favorable customer mix. However, the Components, Products, and Services (CPS) segment saw a decline in gross margin to 12.5% from 13.0%, mainly due to an unfavorable product mix.

In terms of operational developments, Sanmina's customer base remains concentrated, with its ten largest customers accounting for 50% of net sales. The company reported a slight increase in cash and cash equivalents to $642.4 million from $625.9 million at the end of the previous quarter. Additionally, Sanmina's working capital increased to $2 billion, reflecting a strategic focus on managing its liquidity effectively amid ongoing macroeconomic challenges, including inflation and supply chain constraints.

Sanmina's strategic initiatives included a stock repurchase program, where the company repurchased 0.2 million shares for $16 million during the quarter, significantly lower than the 2 million shares repurchased for $106 million in the same period last year. The Board of Directors has authorized an additional $300 million for stock repurchases, indicating a commitment to returning value to shareholders while balancing capital needs for growth.

Looking ahead, Sanmina anticipates continued challenges from macroeconomic factors, including inflation and geopolitical tensions, which may impact revenue growth. The company remains focused on diversifying into mission-critical markets and optimizing its product mix towards higher-value opportunities. Management believes that existing cash resources and liquidity will be sufficient to meet working capital requirements for at least the next twelve months, although they acknowledge the potential need for additional liquidity should demand for services decline significantly.