Sanmina (SANM) Financials

Sanmina’s latest results show a sharp improvement in profitability during Q3 fiscal 2026, although revenue declined sequentially and the balance sheet now carries substantially more debt than it did before the company’s recent expansion. The data also includes restated prior-period figures, so investors should focus on broad trends rather than treating every year-over-year comparison as fully like-for-like.

Revenue and earnings: Q3 fiscal 2026 revenue was $3.46 billion, down 13.7% from $4.01 billion in Q2 but up 69.7% from the restated $2.04 billion reported in Q3 fiscal 2025. The year-over-year increase appears to reflect the company’s significantly larger operating base, including acquisition-related changes. Gross profit increased to $363.3 million, producing a 10.5% gross margin, compared with 8.8% in Q2 and 8.9% in the year-earlier quarter.

Operating income rose to $221.2 million in Q3 from $157.0 million in Q2, lifting the operating margin to approximately 6.4%. Net income attributable to common shareholders increased to $117.1 million, or $2.12 per diluted share, from $93.6 million, or $1.70 per diluted share, in Q2. This improvement followed unusually high operating charges in earlier quarters, including a $44.0 million restructuring charge in Q1 and $72.6 million of other operating expenses in Q2.

Cash flow: Sanmina generated $124.5 million of operating cash flow in Q3, down considerably from $398.8 million in Q2. The Q2 figure benefited from a $272.0 million favorable working-capital contribution, while Q3 working capital consumed $24.6 million. Capital expenditures rose to $100.9 million, resulting in estimated free cash flow of roughly $23.6 million. This is positive, but well below the approximately $163.0 million of free cash flow generated in Q3 fiscal 2025.

Cash and equivalents increased to $1.84 billion at the end of Q3 from $1.58 billion in Q2, helped by a $261.4 million quarterly increase in cash. Investing cash flow was positive at $142.0 million, primarily because of the $242.8 million acquisition-related cash inflow shown in the statement. Investors should review the underlying transaction disclosures to determine whether this represents proceeds, acquired cash, or another transaction-related adjustment.

Balance sheet: Total assets reached $9.74 billion, compared with $5.22 billion in Q3 fiscal 2025. Accounts receivable and inventory also expanded significantly over that period, reaching $1.99 billion and $3.15 billion, respectively. The larger inventory balance may support higher production levels, but it also increases the risk of working-capital pressure if demand weakens or customer programs are delayed.

Total debt was approximately $2.16 billion at the end of Q3, consisting of $215.0 million of short-term debt and $1.96 billion of long-term debt. That compares with approximately $305 million of total debt in Q3 fiscal 2025. Sanmina therefore had roughly $327 million of net debt despite its sizable cash balance. Total liabilities represented about 71.7% of assets, while the current ratio was approximately 1.8, indicating adequate near-term coverage but a more leveraged capital structure.

• Profitability improved materially: Q3 operating income increased 41% sequentially to $221.2 million, while diluted EPS rose 25% to $2.12.
• Margins expanded: Gross margin improved to approximately 10.5% from 8.8% in Q2, and operating margin reached about 6.4%.
• Revenue remains substantially above the prior-year level: Q3 revenue was 69.7% higher than the restated Q3 fiscal 2025 figure.
• Operating cash flow remained positive: Sanmina generated $124.5 million from operations, and estimated free cash flow was approximately $23.6 million after capital expenditures.
• Liquidity increased: Cash and equivalents rose to $1.84 billion, and working capital remained positive at roughly $3.43 billion.
• Acquisition activity is changing the company’s scale: Total assets nearly doubled year over year, but investors need additional disclosures to assess the acquired businesses’ contribution and returns.
• Share count has gradually declined: Diluted weighted-average shares were 55.1 million in Q3, below the 59.6 million reported in Q3 fiscal 2023, supporting per-share results.
• Sequential revenue weakened: Q3 sales fell 13.7% from Q2, showing that recent earnings strength was driven more by margin improvement than by continued sequential growth.
• Free cash flow deteriorated: Q3 free cash flow was approximately $23.6 million, down from about $163 million in the year-earlier quarter, as capital expenditures increased.
• Leverage is materially higher: Total debt rose to approximately $2.16 billion from $305 million a year earlier, leaving Sanmina with net debt and greater interest-rate and refinancing exposure.

Overall, Sanmina’s Q3 fiscal 2026 statements point to stronger earnings power and improved margins, but the investment case now depends heavily on whether the company can convert its larger revenue base into consistent free cash flow while managing higher debt, elevated inventory, and acquisition integration.