Sanmina reported a solid, albeit slower-growing quarter to start the calendar year 2024, delivering revenue of $1.835 billion for the second quarter ended March 30, 2024. On a non-GAAP basis, gross margin reached 8.9% and non-GAAP operating margin was 5.4%, both slightly above/baseline expectations and reflecting favorable mix and disciplined operations, even as revenue declined ~2% sequentially. Net income of $52.5 million translated to a net margin of roughly 2.9% with non-GAAP EPS of $1.30 at the high end of guidance. Management framed QQ2 within a broader transition year, emphasizing stabilization in end markets and a path to improving demand as customer inventory absorption dissipates, with a mid-single-digit margin trajectory longer term toward a 6%+ operating margin target.
Looking ahead, management provided a cautious but constructive Q3 2024 outlook: revenue of $1.8–$1.9 billion, gross margin of 8.3–8.9%, and non-GAAP EPS of $1.22–$1.32. They also signaled better visibility and normalization of supply chains, with continued emphasis on high-growth, higher-margin end markets (cloud infrastructure, AI/ML, defense/aerospace, medical, automotive, renewables, industrial, and optical advanced packaging). The balance sheet remains one of Sanmina’s strategic strengths, with roughly $651 million in cash, minimal debt, and a net cash position, supporting ongoing capital allocation including opportunistic share repurchases and selective investments.
Key takeaway for investors: Sanmina’s near-term earnings power is resilient, aided by mix and discipline, while the longer-term earnings trajectory hinges on a recovery in communications/cloud demand, the ramp of AI/cloud-related programs, and the expansion of high-margin end-markets such as optical advanced packaging and defense/aerospace. The company’s robust balance sheet and positive free cash flow provide flexibility to weather cyclicality and fund growth initiatives.