Narendra Narendra Narendra Narendra Jure Sola, Jure Sola, Jure Sola Thank you. Thank you. Thanks for watching! Jure Sola, Jure Sola, Jure Sola Jure Sola, Jure Sola, Jure Sola, Thanks for watching! Good afternoon, ladies and gentlemen, and welcome to Sandmina's fourth quarter fiscal 2026 earnings conference call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for an operator. This call is being recorded on Monday, November 9th, 2026. I would now like to turn the conference over to Paige Melching. Please go ahead.

Thank you, Marisa. Good afternoon, ladies and gentlemen, and welcome to Sandmina's fourth quarter and fiscal 2026 earnings call. A copy of our press release and slides for today's discussion are available on our website at sandmina.com in the investor relations section. Joining me on today's call is Jure Sola, Chairman and Chief Executive Officer.

Good afternoon.

And John Faust, Executive Vice President and Chief Financial Officer.

Good afternoon.

Before I turn the call over to Jure, Let me remind everyone that today's call is being webcasted and recorded and will be available on our website. You can follow along with our prepared remarks in the slides provided on the website. Please turn to slide three of our presentation and take note of our safe harbor statement. During this conference call, we may make projections or other forward-looking statements regarding future events or the future financial performance of the company. We caution you that such statements are just projections. The company's actual results could differ materially from those projected in these statements as a result of factors set forth in the safe harbor statement. The company is under no obligation to, and expressly disclaims any such obligation to, update or alter any of the forward-looking statements made in this earnings release, the earnings presentation, the conference call, or in the investor relations section of our website, whether as a result of new information, future events, or otherwise, unless otherwise required by law. Included in our press release and slides issued today, we have provided you with statements of operations for the fourth quarter and fiscal year end, October 3rd, 2026, on a GAAP basis, as well as certain non-GAAP financial information. A reconciliation between the GAAP and non-GAAP financial information is also provided in the press release and slides posted on our website. In general, our non-GAAP information excludes restructuring costs, acquisition and integration costs, non-cash stock-based compensation expense, amortization expense, and other unusual or infrequent items. Any comments we make on this call as it relates to the income statement measures will be directed at our non-GAAP financial results. Accordingly, unless otherwise stated in this conference call, when we refer to gross profit, gross margin, operating income, operating margin, taxes, net income and earnings per share, we are referring to our non-GAAP information. I would now like to turn the call over to Yuri.

Thanks, Paige. Good afternoon, ladies and gentlemen. Welcome. and thank you all for being here with us today. First, I would like to take this opportunity to recognize our employees and Samina's leadership team for doing a great job. So to you Samina's team, thank you for your dedication, hard work and delivering strong execution for our customers.

Please turn to slide four. Ladies and gentlemen, I can tell you

that I'm very pleased with our performance. We delivered a great results for the fiscal year 26. Revenue grew 79% year over year to 14.53 billion. Non-GAAP operating margin expanded from 5.7% operating margin to 7.4% operating margin year over year. Non-GAAP diluted EPS More than doubled to $13.28. Cash flow from operation was also very, very strong.

Came in at $944 million.

I can tell you that we are executing according to our plan, with strong execution in both core SunMina and SunMina AI Group ZD systems. Now let's go to our agenda for today's call. We have John, our CFO, to review details of the results for you. I will follow up with additional comments about results and future goals. And John and I will open for questions and answers. And now, I'd like to turn this call over to John. John?

Thank you, Jure. Good afternoon, ladies and gentlemen, and thank you for joining today's earnings call. Before I review our financial results for the quarter and the fiscal year, I want to acknowledge the entire Sanmina team for their focused execution and thank them for delivering a great fourth quarter and a strong finish to the fiscal year. This was a transformative year for Sanmina as we delivered strong, broad-based growth across all of our end markets while largely completing the integration of the ZT Systems business I'm very proud of the team's performance, and I'm excited about the opportunities ahead across our entire business. Now please turn to slide six, where I'll speak to the financial highlights. As you already mentioned, we are very pleased with our financial results, which as you can see, exceeded our previously communicated outlook for both the quarter and the fiscal year across all metrics. Revenue exceeded the high end of our outlook ranges. This was driven by both the core Sandmina business, which exceeded its outlook ranges with growth coming from all end markets, and the ZT Systems business, which came in line with our outlook. Additionally, our non-GAAP operating margin and our non-GAAP diluted earnings per share both exceeded our outlook driven by strong execution, mix, and disciplined cost management. We also had about $30 million of tariff recoveries, primarily associated with legacy ZT Systems products, which wasn't factored into our outlook and contributed about 75 basis points of favorability to our non-GAAP operating margin and about 42 cents to our non-GAAP diluted earnings per share. All in all, This was an outstanding quarter for Sanmina, which closed out a strong fiscal year. And with our proven track record of solid operational execution, we're now well positioned to take advantage of robust market demand in the new fiscal year ahead. Now, please turn to slide seven, where I'll speak to our non-GAAP P&L performance. As shown on the prior slide, we delivered revenue of $3.86 billion which was up 84% versus the same period a year ago. Our core Sanmina business revenue of $2.97 billion grew 42% versus the same period a year ago, exceeding our outlook with broad-based strength across all of our end markets, several of which through double digits year over year. Our ZT Systems business revenue of $884 million was in line with our outlook. Our non-GAAP gross profit was $444 million or 11.5% of revenue. This was up 210 basis points versus the same period a year ago and above the high end of our expectations. Our non-GAAP operating expenses were $96.3 million or 2.5% of revenue in line with our expectations. Our strong revenue and non-GAAP gross profit results along with ongoing cost discipline and operating leverage enabled us to achieve non-GAAP operating profit of $348 million or 9.0% of revenue, up 300 basis points versus the same period a year ago. Our non-GAAP other income and expense was a net expense of $20.9 million, lower than our expectations, largely due to strong cash flow generation. Our non-GAAP deluded earnings per share was $4.43 based on approximately 55 million shares outstanding. This strong non-GAAP deluded earnings per share performance represents a 166% increase versus the same period a year ago and showcases the high potential of our combined core Sanmina and ZT Systems businesses.

Now please turn to slide eight where I'll speak to the segment results.

IMS revenue came in at $3.08 billion of 83.3% versus the same period a year ago. This was driven by growth in all of our end markets, including the contribution from the ZT Systems business. Core Sanmina IMS revenue was $2.2 billion for the quarter of 30.8% versus the same period a year ago. ZT revenue was $884 million for the quarter. Our total IMS non-GAAP gross margin was 11.2% of 340 basis points versus the same period a year ago. This was driven primarily by favorable mix, including the impact from the addition of the ZT Systems business, plus the tariff recoveries that I mentioned previously. GPS revenue came in at $822 million of 83% versus the same period a year ago. This was driven by strong growth in our Viking Enterprise Solutions storage business, our metal fabrication business for AI system racks, and our high technology printed circuit board business for aerospace and defense related products, all of which we've been investing in since the end of last fiscal year. DPS non-GAAP gross margin was 12.0%, down 250 basis points versus the same period of year. This sequential and year-over-year decrease was primarily driven by mix, as well as the impact of the depreciation and other expenses related to investments to support future growth that I've spoken about on prior earnings calls. Now, please turn to slide nine, where I'll speak to our P&L performance for fiscal year 2026 as compared to fiscal year 2025. At the beginning of the year, When we provided our high-level expectations for fiscal 2026, we said we expected core Sandmina revenue to grow in the high single digits and GT Systems revenue to be at a run rate of $5 to $6 billion as it was being integrated into Sandmina and going through a product transition. And we delivered on both of those commitments. Core Sandmina revenue came in stronger than expected with growth of 18.3% compared to the prior year. driven by a solid performance across all end markets. And GT Systems revenue came in at $5.4 billion on an annualized basis, falling well within the $5 to $6 billion annualized run rate. As you may recall, we provided a formal full year outlook in April during our second quarter earnings call, and then we increased that outlook in July in our third quarter earnings call. I'm pleased to report that we exceeded the July outlook with revenue of $14.5 billion, which is up 79% year over year, and $225 million above the high end of that outlook. Non-GAAP gross profit was $1.47 billion, or 10.1% of revenue, up 90 basis points compared to the prior year. Non-GAAP operating income was $1.07 billion, or 7.4% of revenue, representing a 170 basis point improvement compared to the prior year and exceeded the high end of our outlook. Non-GAAP diluted earnings per share was $13.28, which represents an increase of 120% versus the prior year and exceeded the high end of our outlook provided in July by $1.08 and the outlook we provided back in April by $1.93. These improvements were the result of strong revenue growth, favorable product mix and solid operational execution. Now please turn to slide 10 where I'll speak to the balance sheet highlights. We continue to have a very strong balance sheet with prudent leverage and ample liquidity, giving us the capacity to invest in support of our growth objectives. Cash and cash equivalents were $1.68 billion. We ended the quarter with inventory of $2.6 billion net of customer advances, which is up 131% versus the same period a year ago, driven by the ZT Systems acquisition and material staging required to support current and forecasted revenue growth. Inventory terms that have customer advances were 5.2 times for the quarter down from 6.7 times in the same period a year ago. It's important to remember that inventory is bound to firm customer purchase orders and binding forecasts and that we do not make purchases on a speculative basis. In addition, We continue to utilize customer advances and prepayment agreements to de-risk against shifts and end market demand. Our strong earnings growth and disciplined working capital management resulted in non-GAAP pre-tax ROIC of 48.8% for the quarter, which is well above our weighted average cost of capital and an improvement from the 28.3% from the same period a year ago. Our net leverage ratio was 0.33 times for the quarter, below our long-term target range of 1.0 to 2.0 times, but we still expect to increase into that target range this coming year as we invest in working capital to support the growth of the business. That being said, we remain committed to maintaining a healthy balance sheet, which means carefully managing the liquidity needed to invest in the business and capitalize on the strategic opportunities that further strengthen our position in the market.

Now, please turn to slide 11, where I'll speak to our cash flow highlights.

As a result of the team's disciplined working capital management, cash flow from operations came in at $242 million for the fourth quarter and $944 million for the fiscal year. Capital expenditures were $159 million for the quarter and $404 million for the fiscal year. And free cash flow was $83 million for the quarter and $541 million for the year. For the last several quarters, we've been making strategic investments in new capabilities and incremental capacity across both the core Sanmina and GT systems businesses, and we will continue to do so to support future growth. In the core sand mina business, these investments include metal fabrication capacity for AI system racks, new capabilities for high technology printed circuit boards for both AI and aerospace and defense related products, and capacity equipment for the new medium voltage transformer business for the rapidly growing energy end market. In the ZT Systems business, the focus has been on incremental power, liquid cooling, Thank you for joining us today. for $393 million. At the end of our fourth quarter, we had approximately $446 million available under our board authorized share repurchase program.

Now please turn to slide 12, where I'll speak to our liquidity position. We ended the quarter with total available liquidity of over $3.83 billion

which consists of $1.68 billion in cash and cash equivalents, an undrawn revolver and other similar facilities of $1.55 billion, and a term loan A delayed draw of $600 million. After the end of the quarter, we refinanced our debt, further enhancing our financial flexibility and increasing our liquidity while reducing our interest costs. The refinancing which was very well received by our existing annual lenders increased our funded term loan A amount back to $1.4 million which was the original amount of that facility before we repaid approximately $70 million over the past year. So only a nominal increase. In addition, the maturity of both our revolver and the term loan A facility was extended by one year to October, 2031 and our option to borrow the delayed draw component of the term loan aid facility, which is currently undrawn, has been extended by six months to April 2027, which better aligns with our actual needs. Annual mandatory repayment amounts have also been reduced, giving us further financial flexibility. And finally, the credit spreads have been reduced by approximately 25 basis points and are now linked to our credit rating and Jure Sola. Thank you. When it comes to capital allocation, it's incredibly important to have a clear strategy and a well-defined set of priorities when making decisions. As we shared with you before, our first priority is to invest in our business to drive long-term organic growth and margin expansion. We evaluate all investments with discipline and take a structured ROI-based approach. Second, we continuously evaluate strategic acquisition and partnership opportunities which need to meet our ROI expectations to help accelerate our growth. Third, we carefully manage our balance sheet and liquidity position with a focus on our long-term net leverage target as well as our long-term goal of achieving an investment grade rate. And finally, when appropriate, we return capital to shareholders through share repurchases subject to maintaining a strong balance sheet and liquidity position. We have and will continue to execute on this strategy by utilizing these options, which enables us to take advantage of opportunities to grow our business.

Now please turn to slide 14, where I'll speak to our cloud and AI infrastructure strategy.

Earlier this year, I provided an overview of our three-phase plan for the ZT Systems business, and I explained how we had clear objectives for how to realize the full value of combining the two companies. In that plan, the first phase was focused on executing the immediate post-transaction integration actions, including making the necessary capital investments in incremental power, liquid cooling, and test cell capacity to be production ready for the next generation of accelerated compute, all of which is largely complete at this point. The second phase was focused on the successful execution of a product transition process which required that we win new accelerated compute business, which we've now done with Hyperscale, Frontier AI Lab and OEM customers. And the third and final phase is about driving growth and expansion.

And that's what I'd like to speak about today. First step is focused on our AMD partnership.

Over the past year, we've made tremendous progress in establishing our partnership with AMD by winning new business with Hyperscale, Frontier AI Lab, and OEM customers for the Helios accelerated compute program. The customer validation process is going well, and we're working in very close collaboration with AMD and our joint customers to support pre-production activities, providing the quality, delivery, and services to support customer needs. We finalized the operating models for several customers and are working to do the same for the others and will continue to do so as new customers get added. We've also received preliminary production schedules from our customers, which will continue to get refined and updated throughout the program launch process. I'm also pleased to announce that we've now begun to ship the Helios product, albeit in small quantities, and we're very excited about the opportunity ahead as we grow and scale the program.

The second step is focused on adding new platforms.

In our last earnings call, we announced that we won new programs on a second platform, which we're very excited about as it took place earlier than expected. These new programs, which will start to ramp this fiscal year, are included in our fiscal year 2027 outlook, which I will provide shortly. This past quarter, we also started discussions to win programs on a third platform. These programs are not included in our fiscal year 2027 outlook, but could lead to upside later in the year. We're very pleased with the progress we've made with these new platforms, which demonstrate our value proposition through a full suite of product and service offerings and our ability to build upon what we acquired with VT Systems to significantly scale our business in the cloud and AI infrastructure and more.

The third and final step is focused on vertical integration.

While we didn't expect to participate in vertical integration with the Helios program, due to high demand and our ability to demonstrate our key technology offerings, we've won some initial programs. Our close collaboration with customers during the pre-production validation process has given us the opportunity to showcase our unique value proposition. By combining ZT Systems' large-scale systems integration capabilities with Sanmina's extensive sub-assembly expertise, we can deliver a full suite of offerings that includes our components, products, and services. We plan to continue investing in our engineering capabilities to support all platforms, and in doing so, we expect our vertical integration opportunities and wins to grow in scale throughout the year and into the future.

Now please turn to slide 15, where I will provide our outlook for the first quarter.

Our outlook is based on current customer forecasts, the return to a 13-week quarter, and takes into account ongoing market uncertainties and the geopolitical environment. With that said, we expect revenue between $3.8 and $4.1 billion. With the ZT Systems integration largely completed, Going forward, we will report revenue for cloud and AI systems, which includes ZG Systems, as well as the additional platforms and other related products and services that I just spoke about. To be clear, cloud and AI systems is a subset of our cloud and AI infrastructure and market. We expect cloud and AI systems revenue to be between $1.3 to $1.5 billion. As we mentioned last quarter, We expect this part of our business to accelerate throughout the year, primarily driven by the timing of the Helios program ramp, as well as the additional platform opportunities and other related products and services. At the midpoint, total sanitary revenue would be $3.95 billion, which represents 23.8% growth versus the same period a year ago. Non-GAAP operating margin of 7.0 to 7.5% depending on mix, above the high end of the expectations Jure and I set for the combined business when we first announced the ZG Systems acquisition. We expect other income and expense to be at net expense of approximately $24 million.

We expect our non-GAAP effective tax rate to be between 21% to 23%.

We estimate an approximate $5 million non-cash reduction to our net income to reflect our India joint venture partners' equity interests. Non-GAAP diluted earnings per share in the range of $3.50 to $3.85, based on approximately 55 million diluted shares outstanding. At the midpoint of $3.67.5, that represents a 54.4% increase compared to the same period a year ago. We expect capital expenditures to be $150 million as we continue to invest strategically to support our future growth expectations. And finally, depreciation of approximately $48 million.

Now please turn to slide 16, where I will provide our outlook for the full fiscal year in 2027.

Much like our outlook for the first quarter, our fiscal year 2027 outlook is based on current customer forecasts and takes into account ongoing market uncertainties and the geopolitical environment. With that said, we expect revenue between 17.5 and $19.5 billion. We expect cloud and AI system revenue to be in the range of 7.5 to $9.0 billion. As I mentioned earlier, cloud and AI systems is a subset of our cloud and AI infrastructure and market and includes ZT systems, as well as additional platforms and other related products and services. When we first announced the ZG Systems acquisition in May 2025, we said we expected Sanmina revenue to double from about $8 billion to about $16 billion within three years. At the start of fiscal 2026, we accelerated that timeline to two years. Based on this fiscal 2027 guidance, we're now setting that bar even higher. with a revenue midpoint of $18.5 billion, which represents 27.4% growth versus the same period a year ago and sets us on a great trajectory for the future. We expect non-GAAP operating margin 7.0 to 7.5% depending on mix, which is above the high end of the expectations Jure and I set for the combined business when we first announced the ZT Systems acquisition. We expect other income and expense to be at net expense of approximately $140 million. We expect our non-GAAP affected tax rate to be between 21% to 23%. We estimate an approximate $20 million non-cash reduction to our net income to reflect our India joint venture partners' equity interest. Non-GAAP diluted earnings per share in the range of $15.50 Thank you for joining us today. while carefully managing our liquidity position in order to maintain a strong balance sheet.

And finally, depreciation of approximately $200 million.

In summary, I'm very pleased with our results for both the fourth quarter and fiscal year 2026 as the team did an excellent job staying focused on the core Sandvina business while we worked to integrate the ZT Systems business and worked through a transition process and did so in a very dynamic market. And on top of that, we exceeded expectations on all fronts, not only for the fourth quarter, but also on a full year basis from a revenue growth, non-GAAP operating margin expansion and non-GAAP diluted earnings per share growth perspective. There is still a lot of work to do, but we're on a great trajectory and that is clearly evident in our outlook for the full fiscal year 2027. And with that, I would like now to turn the call back over to you.

Thank you, John. Ladies and gentlemen, please turn to slide 18. As you heard from John, we deliver strong financial results. But also, you heard from him, there's a lot of things that we're doing making this company a stronger company for the future. We are executing to our business plan. As you heard from John, we exceeded all our outlook both for fourth quarter and fiscal year 26. Also, we've been adding new customers and expanding our partnerships with existing customers. This allowed us to deliver the growth across all end markets in fiscal year 26. Most important again is that Sanmina is well positioned for growth in fiscal year 27 and beyond.

Please turn to slide 19. Let me share with you some of the performance by market.

As you heard, cloud and AI infrastructure did really well. In our last quarter, 2.37 billion. That's a growth of 179% year over year. And for a year, we delivered in this segment 9.25 billion, up 198%. Industrial Energy Medical Defense Aerospace and Automotive did well in the fourth quarter and delivered $1.49 billion in revenue, up 19% year over year. And for a year delivered $5.27 billion, up 5%. Also, exciting news for us is when we look at our business is the bookings. Bookings in the fourth quarter were very strong. Book to build came in. 1.221.

Please turn to slide 20. Now let me talk to you about your market view for fiscal year 27 and beyond.

I can tell you that we see strong demand across our customer base. For cloud, AI infrastructure, communication networks, bookings continue to be strong.

We are winning new AI platform business. We added new customers.

And for this segment, we see strong demand, not just for 27, but also for 28 today and beyond. For industrial and energy, we have very strong customer base. We expect growth to accelerate in fiscal year 27, driven by expanding our energy business for AI data center and others. and a lot of other new programs that we have in a pipeline to drive the growth in fiscal year 27 and beyond. For medical, in this medical business, we are well diversified. We have a great customer base. We are leveraging our regulatory knowledge and experience to expand our customer base and programs. And for fiscal year 27, we expect to see improvements in demand, mainly driven by new programs that are coming up. For defense and aerospace, we expect the growth in traditional USA defense and aerospace business to continue to grow. We are expanding our customer base in the satellite market, which is very exciting for us. And we continue to see strong demand also in this segment, not just for 27, but also for 28 and beyond. For automotive and transportation, overall we see stable demand. We continue to bring new programs from new and existing customers. And we also have a great customer base in this segment.

Please turn to slide 21.

Let me talk to you about a few things, as John was talking about, you know, we've been investing into diverse set of industry leading capabilities. We also, as we got more and more involved in AI business, we're looking into increasing our addressable market through vertical integration and engineering. We've been beefing up our full system architecture and design. We've been investing in our traditional high technology business around military and AI. We're expanding our assembly capabilities Mechanical precision machining around rocks and enclosure. We're investing in liquid cooling, including cooling manifolds and bus bars. We've been expanding our joint development and ODM products such as compute and storage. Our custom memory has been doing well and we're expanding that. We're also expanding our custom optical modules and investing in that segment. John talked to you a lot about the AI investments around the ZT and of course all the way to global order fulfillment and services. So really excited what's in front of us from that point of view. So please turn to slide 22. Let me talk to you now what are my personal priorities. I call internally back to basics. Number one is continue to diversify our customer base. On the positive side, we are expanding our long-term customer partnerships. We are adding new customers through building strong partnership by providing industry-leading technology solutions to them. Number two, we're executing cloud and AI strategy. Just to add a few things what you heard from John. ZT system has been a great acquisitions for us. Not just from our technology and capabilities, but from the people that we acquire. But also in the last 12 months, we made a lot of investments to drive operational excellence. Companies well positioned in AI segment and expanding partnership with AI market leaders. Very exciting time for us.

Number three, we are focused on long-term growth

Margin Expansion, and Cash Generation. For fiscal year 27, we see strong demand and we expect strong demand to continue into fiscal year 28. In this market, we expect to maximize our operating leverage to expand profitability. And number four is always to maximize shareholders' value by focusing on long-term shareholders' returns. We do have lots of opportunities to drive the growth the next two years. And the goal is to build Samina bigger and stronger company. And longer term, we expect to see continue to improve margin. We still believe there's room for improvements there.

Now please turn to slide 23. In summary, we delivered a strong fourth quarter and a fiscal year 26.

Thank you very much. Thank you. Very positive trends for us. We expect to grow from all of our key end markets in fiscal year 27 based on what we see today.

Our outlook for 27 reflects a strong demand and a rentless focus on operational execution. So as you heard from John, for fiscal year 27, we've all positioned for profitable growth.

As we shared our outlook for a year, Revenue of $17.5 billion to $19.5 billion and operating margin of 7% to 7.5% and non-GAAP $15.50 to $17.50. The key for our success, as always, has been delivering competitive advantage to our customers, and I believe we are doing that. Ladies and gentlemen, Now, I would like to thank you all for your time and support. Operator, we are now ready to open the lines for questions and answers. Thank you again.

Thank you, Mr. Sola. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by one on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to remove your hand from the queue, please press star followed by two. and if you're using a speakerphone, please lift the handset before pressing any keys. Your first question comes from Rupalu Bhattacharya with Bank of America. Please go ahead.

Hi, thanks for taking my questions. For fiscal 27, you're guiding to a strong 8.25 billion of AI, cloud and AI infrastructure revenue. Can you comment on how we should think about the cadence of that, like how much is first half, how much is second half, how much is the mix, GPU versus CPU, and how much is consignment versus non-consignment? And I have a follow-up. You got a lot of questions.

First of all, let me add to that, and maybe John can add more to it. First of all, We expect a strong demand for AI hardware in the second half of fiscal 27. I mean, we see it today. It's all about now, you know, where, you know, customers will accept the deliveries. The good thing is we're starting to deliver. We are learning a lot. And, you know, it's a very exciting time for us. So not to break it in all details, you know, when we deliver the full system, includes everything that they just said from GPUs, CPUs, and so on. It's a very expensive system. That's why engineering performance quality is very, very critical for us. At the same time, we are expanding. If you look at our Samina customer, I don't want to talk about and name it today, but we have a lot of customers there are typically been in networking business for a long time but now also you know growing this business a lot of their products that we used to ship to them we'll actually be shipping it to ourselves to be integrated in the systems that we build so it's a very strong demand Ruplu and now it's all about executing you know and delivering when our customer needs it.

John? Yeah, just to add to what Yuri said, I agree with all that. In short, not a whole lot has changed. So from a timing perspective, still expected to be back-end loaded to the second half. Still early days, we wanted to give a full-year perspective, so we did that as committed, both a Q1 guide and a full-year guide, but still expected to be more back-end loaded. In terms of the mix, no real change either. A lot of that revenue, the $7.5 billion to $9 billion for the whole year is related to ZT Systems and the GPU and the Helios business. But as far as some of these other platforms, we expect those to ramp throughout the year. So we'll see what those are able to deliver. And then, yes, the assumption is still that net accounting basis with the consignment model. So as I said in my prepared remarks, we finalized that with A couple of the customers already, you know, the rest are in the works, but no change to the core assumptions.

Got it. Thanks for the details there. Can I ask your guiding for the full year 7.25% operating margin at the midpoint? Again, how much is that being contributed by the core business improving versus having AI become a bigger part of the mix? And how does that impact working capital and free cash flow for fiscal 2017?

Yeah, so, you know, the contribution is from both parts of the business or all of the business. I'll say that, you know, when Jure and I, when we first announced the ZT Systems acquisition, you know, we made an assumption that, you know, we'd have, that business would have Sanmina-like margins, and we talked about a 6% to 7% operating margin range. So now that we're guiding fiscal year 27, you know, we're a little bit above that, which is great. A big part of that is the contribution of the core business. You know, the core business is doing very well. It grew quite a bit in the second half of this past year. You know, we expect that trajectory to continue. And we've been driving margin expansion there, too, both in terms of the mix of the business, operational improvements, and just operating leverage. And then, yeah, the VT systems side, or what we're calling cloud and AI systems, you know, is doing well, too. So all in all, we're in a pretty good place. And, you know, we're very happy with where we're at from an execution standpoint, essentially being ahead of the curve. of what we initially thought in our investment thesis. And what I mean by that is, you know, winning programs on new platforms, starting to get things going with vertical integration. Now, on the working capital front, you know, this past year, we had a great year for cash flow. And we saw that with what we just reported, you know, cash flow from operations coming in at $944 million, almost a billion dollars was great. You know, as we head into this next year, you know, we do expect working capital to build. As I was saying in my prepared remarks, I do expect we'll start to fall within our target range of that leverage ratio, but that should be as expected. No different than what we said before, and we're certainly still very well capitalized.

Can I just ask a quick clarification? When you say second platform and third platform, John, are these still with AMD, or does ZT have the capacity now to move beyond AMD to other platforms as well?

So it's moving beyond AMD. So when we talked about last quarter, there was a second platform, so separate from AMD. So just early stages of that, but it is included in our guide and part of that cloud and AI systems revenue, because we do expect that to ramp throughout the year. So still a lot of work to get that off the ground, but we're making good progress. The third platform that I mentioned is not included in our guide. Now, that's still early stages. So not, you know, not definitive enough to be able to include in guidance. But that's why I said my prepared remarks, you know, we're very positive about that third separate platform. Hopefully, you know, if all goes to plan, we'll be able to talk more about that. And it could provide some upside potential. But again, it's a little bit too early. So first, we've got to get that deal done. And then we can start thinking about the timing of revenue and profit that comes from that.

Yeah, by short term, we have plenty on our plate. Plenty on our plate.

Thanks for all the details. Appreciate it.

Thanks, Rupal. Thanks, Rupal.

Your next question comes from Manmohan Preet Singh with JP Morgan. Please go ahead.

Hey, MP. How are you? Hello, MP. Hi, Jure and John. Thank you for taking my questions and congrats on the strong print and guides. For my first question, just wanted to double click on the fiscal 27 guide. I think it's a pretty wide range than usual. So can you just help us understand, like, what are the drivers which are making you give a wider range? And over time, what would help you to narrow that range down to a more discreet guidance? And I have a follow up.

Yeah, sure. So, you know, it's really just the length of the fiscal year. And if you look at our Q1 guide, our guidance ranges are very much in line with what we've been doing historically, right? So a revenue range of about $300 million, EPS range of 35 cents, so below 10% on both fronts, you know, very, very much similar to what we've done for the last several quarters. On a full year basis, you're right, right? The revenue range of $2 billion and the $2 of EPS, a little bit wider above that 10% mark. but really the rationale is is that you know we've got a lot of new programs big programs that are coming online so it's a little bit early like we said on the call you know everything that we know about from a customer forecast perspective there's a lot of demand as Yuri said you know geopolitical perspective you know all those things have been factored in but there's still a lot of risk out there when you have a big new program a complex program there's always some risk so even if you look at the Cloud and AI Systems Revenue Guide. If I point you to that on the full year, seven and a half billion to nine billion. So that's one and a half of the two billion overall range. So that's really the context. It's really just the length of time and just the dynamic nature of the market. But over time, we should expect to tighten that up.

Yeah, if I can add to that, also the supply chain. We have right now shortages out there and there's some uncertainties around supply chain.

exactly no that's helpful and a quick follow-up on the fourth quarter results so the course and MENA business growth accelerated to I think what over 40 percent in fiscal 4Q while like firstly I just want to double click on like what exactly are the drivers within there is it some new market share wins or new program wins or what's really driving that and then when we look into fiscal 27 course and MENA growth kind of moderates into 27 so Is it just conservatism given it's early into the year or are there any definite drivers or definite drivers which are making you to kind of imply a moderation and growth rate there? Thank you.

Yeah, MP, you know, on a course, I mean, you know, legacy Samina business, you know, in the last couple of years, we invested a lot of, how do I say, time without critical customers. We had a lot of new programs coming in end of 2005. into the 26th. So we see a lot of those now programs starting to mature. And, you know, we believe that's what drove the growth. Well-diversified customer base, you know, across all the key markets. And if you look at our industrial, energy, medical, defense, and aerospace, you know, that market today's well position grew nicely in that fourth quarter of 19%. and so we expect the Samina's business to grow you know low double digits and but there's a lot of a lot of strong programs in a pipeline and you know it's a good good time for us and when you combine the opportunities we have it's a ZTAI That's why we're excited about the fiscal year 27 and beyond. John, you want to add anything to that?

I think you said it well, Jure. I mean, we're not reporting core Sanmina versus ET systems anymore, right? But you're kind of back into the high-level math of low double digits growth of that core business. You know, I think that's a good proxy at the end of the day. The reality is both cloud and AI infrastructure, communication networks, For a while, we had six quarters in a row, 20% year-over-year growth. But last quarter in Q3, now this quarter, that accelerated. So we expect that to continue to the first half, but then in the second half, we'll have some tougher compares. But the rest, industrial, energy, medical, defense, and aerospace, that's really been accelerated. We expect that to continue.

But our team, if I can really give a compliment to our operational team, Our team is executing really well. Anytime you do a major position as we did a year ago, you always kind of worry. So if you look at our forecast from a year ago and what we delivered, we delivered better than 40% than what was the forecast beginning of the year. And that's all really to our operational team by executing. Our customers are being very supportive because of our execution and technology that we bring to them and That's what we are building on. In this business, MP, you never can relax. It's one day at a time, but the team has been doing well, and I think that's the reason we are winning the new programs, and hopefully that will continue.

Thank you. Thanks a lot for the call, Dave.

Thanks, MP.

Your next question comes from Stephen Fox with Fox Advisors. Please go ahead.

Hi, good afternoon and congrats on all the great numbers. Hi. I guess, first of all, just thinking about the full year margin guidance, how would we think about that on sort of an apples to apples comparison? You had the tariff benefits in Q4, but you also had some unusual margins on some pre-engineering work you called out in prior quarters. Like, what are we comparing the seven to seven and a half to you, would you say, you know, just to get a sense for that? and within that question, can you just give us, it sounds like mix is the biggest driver on top of volume, but I just want to make sure I got that right.

And I had to follow up.

Yeah, no, that's exactly right, Steve.

I mean, I think it's a fairly apples to apples comparison. You know, the NRE, the non-recurring engineering that we saw with the Helios program, the reality is that's part of our business model, not just on the ZT system side of the business, but the course and mean of business too. You know, we always do that. Just happens that Helios is a very large program with large customers. And so that, you know, that had a pretty big impact and it was just more than what we'd expected within the year. So that kind of led to some of the beef that we saw. But that'll continue. And hopefully if we win the programs after Helios, you know, we'll see some of that again. But it exists on both sides of the business. So kind of apples to apples. You know, tariffs was kind of a unique, you know, one-time thing, the $30 million. You know, at the end of the day, that was related to some legacies, ZT Systems products, because it wasn't so much, it's not part of like the core St. Mina business model, and it won't be part of ZT Systems going forward either. So you could kind of adjust for that on a full year basis, which isn't a huge amount. And that's why if you think about where we exited in 26, you know, full year compared to our full year 27 outlook, not too far off aside from mix adjustment.

And also, if you look at, Steve, where we've been investing in the last 12 to 18 months, we've been in all more advanced technology products that should help us sometimes in 47 add to the bottom line.

Great. That's very helpful. And that actually leads into my second question, which is, if I think about sort of the revenue guidance for the cloud and AI segment that you're now defining, ZT plus additional business Is basically the difference between the total and whatever would be ZT related to you guys getting more attach rate on your vertical capabilities? Is that how we should think about it? Is there anything else that's getting in there that you're having success with? And then what do we think about the attach rate maybe now versus exiting the year for some of those vertical skills?

Let me take that question, Steve, more from a business where we are being focused on. um every year is a different year and the mix of the business is very critical uh we've been strategically investing in in our in a business that will allow us well they're a lot more difficult to build uh require bigger investments but this should deliver us a better margin in the future we're not there yet we think there's a room for improvements as we go out a few quarters and you know Jon a little bit talked about the energy investment that this is a new business building large transformers that are over 12 tons you know we have a huge demand on that right now uh that you know once we start the production on that in January we expect to uh to start seeing some good profitable business middle of the next year all those things that we think differently today. And I mean, even ZT, ZT is completely a different company today from capabilities point of view than when we acquired it. We invest a lot of money into that. We strategically positioned for the, we building some very, very advanced system that can't fail. And those types of things, if you can do it right, you can squeeze out based on our efficiencies and leveraging Your capabilities, a penny here, a penny there should help us move in the right direction.

Yeah, just to add to that, Steve, I mean, when we did the ZTE systems acquisition, that was a decision Yuri and I made to expand deeper into the data center and market. You know, big focus on rack integration, but other opportunities, too. So when you think about, like, adding new platforms, for example, some of that could happen in the ZTE plants, but some will be done, of course, in MENA plants. So the lines are starting to blur, right? and even some of the vertical integration opportunities that we have. We win with like a Helios program, for example, you don't get incremental revenue for that. It helps on the profit side because it gets eliminated. But we could also sell some of those products and services to non-Helios, right? So if you think about mechanical racks, right? We can give mechanical racks for Helios for those customers, that revenue gets eliminated. But if we sell mechanical racks to other customers, now that's upside. So the point is, The lines are blurring, as we've talked about, between core SAMeNA and GT systems, which is why we shifted to this cloud and AI systems category to help to give some insight in this first year as we turn the corner and grow.

Great. That's all very helpful. Thank you.

Operator, we have time for one more question.

Wonderful. The final question comes from... Two more questions, sorry.

Two? Okay.

Absolutely. The next question comes from Mehdi Hosseini with SIG. Please go ahead.

Very good. Thank you. Thanks for taking my question.

Mehdi, I almost forgot you here for a second.

That's all right. I'm sure you've been busy. And actually, speaking of being busy, if I just take the midpoint of your fiscal year 27, A guide for cloud and AI system. Can you talk into diversification of customers? I know you talked about a second platform but I also want to get a better sense of how big the second platform is and I'm sure if I ask you're not going to give me The dollar amount, but perhaps you could talk about a diversification of the customer mix in the cloud and AI system midpoint for 2027, and I have a follow-up.

Yeah, a couple of things, Mehdi. So one, even with the AMD platform business, primarily Helios, we've got a very diversified business, right? So we've got multiple customers, talked about hyperscalers, the frontier AI labs, OEMs, NeoClouds, and that's across both the US and non-US or international. So pretty diverse base. Then you add on top of that to your point, additional platforms and other products and services. Now, one thing I'll point you to if you didn't notice it, but in slide 19 in our earnings presentation, it's the end market mix that Yuri covered. We did actually put in there the cloud and AI systems baseline for FY26. You got a comparison point. So what you can see is that GT was We've always wanted to drive diversification within the AMD business and then across the blotter category overall. Gotcha, which is all encouraging.

It leads to my next question. If I just take your commentary and midpoint of the overall revenue, you're exiting fiscal year 27 in a revenue, a quarterly revenue of 5.5 to 6 billion. And given this diversification of AI customers and a prospect of the third platform materializing, then I see a continued double digit growth into FY28 given The round rate you're exiting is 27. Would you agree with that thought process?

Everything is possible. That's the potential. We are very positive with the key customers that we have today about the future. Definitely 27, but we also see a lot of positive things in 28. I think potential is there to grow. I mean, that's what we want to do. That's what we are hoping for and working for, not just hoping. We're making things happen to position the company to have that potential.

And I think Yuri said it well earlier when he said that there's a lot of demand out there, right? If we can go out and execute, you know, we can manage the supply chain well, and that's done in coordination with our partners and with our customers. You know, if we can take advantage of that demand, you know, anything's possible. So I agree.

So, John, would your CapEx guide of, sorry, I forgot your CapEx guide of 450 million. I'm sorry, 450, right? Right.

That's correct.

Yeah. Is that CapEx for fiscal year 27 be enough to sustain a double-digit growth into FY28?

Well, the one thing I'll remind you of, Mehdi, is that, you know, that third platform that we talked about is not part of our guide, either on the P&L perspective, you know, either CapEx as well, right? So put that aside. But, you know, the guide that we have right now, 450, very much supports the P&L that we guided, the 17 and a half to 19 and a half. Now, things go very, very well. We start to see that demand develop, right, that you were just asking about for FY28 and beyond. and we start trending towards the higher end of $19.5 billion, then certainly could we invest a bit more? Sure. And we'll always look at those opportunities following our capital allocation strategy that I talked about as a part of my prepared remarks.

Got it. Okay. Thank you. Thank you, Maggie.

Your final question comes from Anya Soderstrom with Sudoti. Please go ahead.

Hi, thank you for taking my questions and congrats on the nice quarter here.

Thanks, Tanya.

Most of my questions have been answered already or addressed already, but I'm just curious, you're talking about the third platform not included in the guidance, but what does the pipeline look like beyond that third platform?

Yeah, I mean, you know, at this point, as Yuri was saying just a few minutes ago, like we've got a lot to execute, you know, with what we've got going on in the core business, you know, the AMD partnership, even the second platform. But, you know, we've got the capacity to do more. Now, you know, we're focused on this third platform right now. So we'll see if there's something beyond that that makes sense. But one point I do want to make on you is that, you know, we intend to maintain a very well-diversified portfolio, right? We exited this year. FY26 well diversified between all of our ad markets and we want to continue that going forward because as great as you know the data center business has been and how much demand is out there there's a lot of opportunities elsewhere you know and we feel it's important to say well diversified cross-end markets you know the customers that we have geographies you know all of those things we'll balance those decisions about what comes next you know with that lens.

Okay, again, just in terms of the margin, you guided to the same margin for the first quarter and the full year, but given it's going to be sort of a back-end loaded year, shouldn't that expand as you get higher revenue and might the full year margin guidance be a little bit shy maybe?

Yeah, no, I think it's fair and balanced. You know, we always forecast on a center-weighted basis. You know, like the midpoint is our best guess. There's upside risk. There's downside risk. That's why we put the ranges out there in a slightly higher range to MP's question on a full-year basis. But it's predominantly mixed, right? Yes, to your point, you know, as we grow, should we get more operating leverage? Yes. More fixed-cost leverage? Yes. But also, you know, some of the businesses that we're in have a A little bit lower margin profile. Some of the other ones that we're growing is higher. So our best guess at this point in time is that seven to seven and a half, but it will depend on this.

And we'll update that on a quarterly basis.

Okay, thank you.

Well, ladies and gentlemen, thank you very much for the great questions and a call. You know, we're excited what's in front of us. So if we didn't answer any of your questions, please give us a call and appreciate your support and talk to you 90 days from now.

Thank you.

Bye-bye.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.