Q4 2025 Sanmina Corp Earnings Call
Speaker #1: Good afternoon, ladies and gentlemen, and welcome to the Sanmina's fourth quarter fiscal 2025 earnings conference call. At this time, all lines are in a listen-only mode.
Speaker #1: Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press *0 for the operator.
Speaker #1: This call is being recorded on Monday, November 3, 2025. I would now like to turn the conference over to Paige Melching, Senior Vice President of Investor Communications; please go ahead.
Speaker #2: Thank you, John. Good afternoon, ladies and gentlemen, and welcome to Sanmina's fourth quarter in fiscal 2025 earnings call. A copy of our press release and slides for today's discussion are available on our website at sanmina.com in the Investor Relations section.
Speaker #2: Joining me on today's call is Jure Sola, Chairman and Chief Executive Officer;
Speaker #3: Good afternoon, ladies and gentlemen.
Speaker #2: And John Faust, Executive Vice President and Chief Financial Officer. Before I turn
Speaker #4: Good afternoon.
Please turn to slide number 4 first. I would like to take this opportunity to recognize sanmina leadership team and our employees for doing a great job.
So to you, send me a name. Thank you for your dedication hard work and delivery in. Excellent service to our customers.
Ladies and gentlemen, I can tell you that I'm very pleased with our performance for physical year 2025.
Revenue came in at 8.13%, representing a growth of 7.4% year-over-year.
In margin came in at 5.7%.
Were able to expand these margins by 30 basis point year-over-year.
In at 64.
That's growth of 14.4% year-over-year.
We also delivered very strong cash flow from operations of $621 million.
And for the fourth quarter of fiscal year 2025, we delivered solid revenue of $2.1 billion and non-GAAP EPS of $0.67 per share.
Now, let's go to our agenda for today's call.
We have John our CFO to review details of results for you. I will follow up with additional comments about Samina, results, and future goals.
Then, John and I will open for question and answers and now I'd like to turn this. Call over to John John great. Thank you. Yuri and good afternoon, ladies and gentlemen, we appreciate your participation in today's earnings call.
Before I discuss our financial results, I would like to thank the entire send me a team for their hard work and dedication and for executing a strong close to the fiscal year.
The team has demonstrated exceptional, focus and Agility and meeting our customers of all being needs, all year long.
Yuri and I, along with the entire M, Mina management team, commend these efforts, which have resulted in a strong fourth quarter and fiscal 2025 performance.
Now, please turn to slide 6 where I'll speak to the financial highlights.
We're very pleased to report that our fourth quarter results, either met or exceeded. Our previously communicated Outlook.
To be specific, our non-gaap gross margin of 9.4% and our non-gaap diluted earnings per share of $1.67 both exceeded our Outlook.
Furthermore, our revenue of 2.1 billion dollars and our non-gaap, operating margin of 6.0% were both at the high end of our Outlook.
These strong quarterly results, as well as our performance throughout the year. Contributed to our ability to achieve fiscal 2025 results in line, with our expectations, as Yuri mentioned at the beginning of the call.
Now, please turn to slide 7 where I'll speak to our pnl performance for the fourth quarter.
Previously, noted we generated revenue of 2.1 billion which represents an increase of 3.9% year-over-year.
growth was primarily driven by broad-based demand across, the majority of our end markets with particular strengths in the communication, networks and cloud, and Ai and markets, which Yuri will speak to in more detail in his prepared remarks
Non-gaap growth profit was 196. Million representing 9.4% of Revenue and a 70 basis point Improvement versus the same period a year ago.
And ongoing operational efficiencies.
Non-gaap operating expenses totaled, $70 million slightly above our Outlook reflecting our continued, strategic, Investments aimed at driving future growth.
Non-GAAP operating income was $126 million, or 6.0% of revenue, representing a 70 basis point improvement versus the same period a year ago.
This Improvement was driven by a combination of Revenue, growth favorable, mix and disciplined execution.
Non-gaap other income and expense resulted in a net expense of 5.1 million slightly above our Outlook largely due to foreign currency.
And finally non-gaap diluted earnings per share was $1.67 based on approximately 54.9 million shares. Outstanding representing a 16.7% increase compared to the same period of the year ago.
Now, please turn to slide 8, or I'll speak to our segment results.
IMS Revenue came in at 1.68% year-over-year.
This was driven by growth across most and markets with particular, strength in the communication networks and cloud, and Ai and markets.
IMS. Non-gaap gross margin was 7.8% up. 50 basis points versus the same period a year ago.
CPS revenue came in at $448 million, up 7.3% year-over-year.
And CPS non-gaap gross. Margin was 14.5% of 90 basis points versus the same period a year ago.
the strong performance in CPS was driven by Revenue growth, favorable, mix and ongoing operational efficiencies
While we're pleased with the performance of both the IMs and CPS businesses. This quarter, we have not yet reached our full potential
We recognize the ongoing opportunity for further Improvement in both Revenue, growth and margin expansion which will remain key. Focus areas going forward.
Now, please turn to slide 9 where I'll speak to our p&l performance for fiscal 2025 as compared to the same period a year ago.
At the beginning of the year, when we provided our outlook for fiscal 2025, we said we expected Revenue to grow High single digits. That non-gaap diluted earnings per share would grow faster than revenue and that we generate strong cash flow.
And I'm pleased to report that we delivered on all of those commitments.
In fiscal 2025, we executed to our plan, and we continue to see positive trends as we move into fiscal 2026.
Revenue for the 12 months increased by 7.4% year-over-year.
Growth was driven by solid performance across the majority of our end markets with notable strength in the communication networks and cloud, and Ai and markets.
Non-gaap growth profit was 744 million or 9.2% of Revenue up 50 basis points compared to the prior year.
Non-gaap operating income was 465, million or 5.7%, to revenue up, 30 basis points compared to the prior year.
These improvements were the result of Revenue growth, favorable product mix and strong, operational execution.
Non-gaap diluted earnings per share was $6.04 which equates to an increase of 14.4% year-over-year.
Now, please turn to slide 10 or I'll speak to the balance sheet highlights.
For many years Samina has had 1 of the strongest balance sheets in the industry, and we continued to add to that strong Foundation. This quarter
Cash and cash, equivalents were 926 million.
At quarter end, we had no outstanding borrowings on our 800 million revolver, leaving us with substantial liquidity of approximately 1.8 billion.
We ended the quarter with inventory. Net of customer advances of 1.1 billion, representing a 12.1% decrease in absolute dollar terms versus the same period a year ago.
Our non-gaap pre-tax roic for the quarter was 28.3% well, above our weighted average cost of capital and a sizable improvement from 23.0% in the same period a year ago.
The company continued to be in a net cash position at the end of the quarter and our gross leverage ratio was 0.32 times.
This robust Financial profile enables us to effectively execute on our strategic initiatives while still navigating macroeconomic uncertainties.
Now, please turn to slide 11 or I'll speak to the cash flow highlights.
Thanks to the disciplined. Working Capital Management of the saint Mina team cash flow from operations. For the fourth quarter was 199 million and came in very strong for the fiscal year at 621 million.
Full expenditures for the quarter, were 62 million and totaled 142 million for the fiscal year or 1.8% of Revenue.
This is in line with historic levels of capex spending which typically ranges between 1% to 2% of Revenue.
As we move forward into the new year, we remain committed to making strategic investments in the capabilities and Technologies necessary to strengthen our Market position and support our long-term financial goals.
To that end. We anticipate ongoing targeted investments in both capacity and Technologies across our operations in the US, India and Mexico.
Free cash flow. For the quarter was 137 million, and 478 million for the full fiscal year.
We repurchased 1.44 million shares for 113.7 million for the year. And as of September 27th 2025, we had 239 million remaining. Under our authorized share repurchase program.
Our strong cash flow. Performance has provided us with the financial flexibility to allow for continued investments in the business. While also returning Capital to the shareholders all within a disciplined and balanced Capital, allocation framework.
Now, please turn to slide 13 where I'll speak to the transaction details around the ZT systems acquisition.
This is an exciting time for sanmina as the acquisition of ZT systems is truly transformative.
It increases our scale, expands our capabilities and enables us to capitalize, on the significant growth opportunities in the cloud and Ai and Market.
On this slide, I'm comparing the original transaction details to our latest estimates, as of the closing date, some of which are still pending a 90-day working capital true up process.
First, as a result of the hard work and dedication of all the teams involved, we were able to close the transaction earlier than expected.
Pending the working capital throughout process. I mentioned earlier and assuming a full earnout of the contingent consideration we estimate the closing purchase price to be 2.05 billion which is based on 1. 0 5.
The lower networking Capital dollar amount is primarily the result of production seasonality given the earlier than anticipated closing date as well as disciplined Inventory management.
Third. As we discussed in May the purchase price, reflects a premium of dollars to the book value of the acquired, networking capital and property plant and equipment with 150 million of this, premium and cash, and 150 million in sanmina equity.
At closing.
AMD received approximately 1.15 million shares based on a share price of $130.32.
Calculated based on the volume weighted average price for the 5 to closing.
We believe that having AMD as a shareholder will only further align our interests, especially as it relates to our new strategic partnership.
Lastly, as referenced earlier, there's also a contingent consideration of up to a 450 million which is based on the financial performance of the business over the next 3 years.
Now, please turn to slide 14 where I'll speak to our strong balance sheet and the liquidity position.
The result of our industry-leading balance sheet is that we were able to secure the necessary financing for this transaction on attractive terms.
This puts us in a position to capitalize on future opportunities, both for ZT Systems and for the legacies of Sanmina's business.
We secured a term loan, of $2.0 billion, of which $600 million is a delayed draw and a Term Loan B of $800 million.
With these funds, we repaid Saint Mina's existing Term Loan, a and at closing, we have 2.2 billion dollars of funded debt.
As a reminder, we are targeting a net leverage ratio of 1.0 times to 2.0 times overtime. With the goal of achieving an investment grade rating.
at the end of the fourth quarter Standalone, sanmina at 926 million of cash and cash equivalents
As a part of the new financing structure, we also increased our revolver from 800 million to 1.5 billion.
The combination of cash, our revolver, and the delayed draw on our Term Loan. A gives us a significant amount of liquidity to support the growth of both ZT systems and the Legacy Samina business.
Also, I want to emphasize our commitment 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 accelerate our position in the market with strong, fiscal policies and controls.
Now, please turn to slide 15.
Where I'll cover our first quarter 2026 Outlook.
Our guidance is based on current customer forecasts, two months of the ZT systems acquisition, and ongoing market uncertainties stemming from terrorism and the geopolitical landscape.
Our first quarter Outlook is as follows.
We expect revenue between 2.9 billion to 3.2 billion dollars.
We expect Legacy Sanmina revenue to be in the range of $2.05 billion to $2.15 billion, which, at the midpoint, reflects a 4.7% growth versus the same period a year ago.
We expect ZT systems to be in the range of $850 million to $1.05 billion for the two months. After closing, pending final accounting policy alignment.
At the midpoint of 3.05 billion for the total company that reflects 52% growth versus the same period a year ago.
Non-GAAP operating margin of 5.6% to 6.1%.
We expect other income and expense to be a net expense of approximately $23 million.
An effective tax rate of 21% to 23%, which is up slightly from Legacy, sannino due to the us-based earnings pickup from ZT systems.
We estimate an approximate 4 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 $1.95 to $2.25 based on approximately 56 million fully diluted shares outstanding.
At the midpoint of $2.10 that represents a 46.3% increase versus the same period a year ago.
Capital expenditures are expected to be around 85 million. As we continue to invest strategically to support our future growth expectations.
And finally depreciation of approximately 45 million.
In summary, we're very pleased with our Q4 and fiscal 2025 performance, as we've made great progress towards our financial goals.
Also, now that we've completed the ZT Systems acquisition, we're very excited about our growth potential, both in that part of the business and the Legacy CC business too.
And with that, let me turn the call back over to Yuri.
Thank you, John. Uh, ladies and gentlemen, let me add more comments about the results for fiscal year 2025.
And also talk to you about what we are planning to do for fiscal year 2026 and beyond.
AI infrastructure business from AMD last week.
so, before
I talk about our results, I would like to take this opportunity to welcome ziti system team to send Mina's family.
as we said,
Together, we are now a stronger company.
And I can tell you, this is an exciting time for all of us.
Please turn to slide 7.
Hello from John. We deliver strong results for a 4. Quarter Revenue. Non-gaap operating margin at the high end of our Outlook.
And non-GAAP gross margin and non-GAAP diluted EPS exceeded our outlook.
For fiscal year, 2025 was a good year for sanmina. Most importantly, is that we positioned our company for a better and stronger future.
In summary.
Our consistent execution is driving financial performance.
Please turn to slide 18.
let me talk to you about Revenue by End Market for a 4 quarter fiscal year 25
Industrial energy, medical, defense, aerospace, and automotive segments have been very consistent for us.
For a quarter, that was 59% of our revenue. And for a year there was 62%
for a year. We saw the growth, 2.2% year-over-year.
And cloud and AI infrastructure. Overall, we had strong demand, which was 41% of our quarterly revenue.
and for the year that was 38% and we saw great growth of 17% year-over-year.
For the fiscal year, 25 top 10 customer represented 51.7% of our Revenue. As you can see we have well Diversified and no customers over 10%.
Overall, bookings were solid book to bill came around, 1 to 1.
We see very positive trends for the future. To tell you more about it, please turn to slide 19.
as we look at our,
Markets. We see, positive trends.
For industrial and energy. We have strong customer base.
And new project in the pipeline that should drive the growth in fiscal year. 26 for medical, we have well Diversified within the market itself.
And we expect to see nice growth in physical year, 26.
For defense and Aerospace, we continue to see solid demand.
This segment is continues to do well from technology components segment to a full System Assembly.
Automotive, and transportation short-term. We see some softness in the market.
But we do have a great customer base.
In fiscal year 26.
Overall, we saw a strong demand for high performance switches and Enterprise storage.
We also growing our Optical Advanced Packaging.
And we have a strong pipeline for second half of calendar year, 46, and calendar year 27.
For cloud and AI infrastructure. We feel good about the future. New programs will will drive the growth for calendar year, 26 and Beyond.
Please turn to slide 20.
Now, let me talk to you a little bit more about sanmina AI ziti system.
This strategic acquisition from a AMD compliments, sanina Advanced Cloud AI technology and gives us the ability to do full system integration at scale.
Our strategy is to provide industry-leading capabilities from design to full system and to end solutions for cloud, AI infrastructure and Market.
As you can see in this slide was some Mina brings to the table.
Viking Enterprise, that will support the ZT going forward. We provide high technology printer circuit boards
We provide high technology board assembly, and test.
We provide mechanical rocks enclosure both, custom and open compute.
We provide liquid comp, uh uh liquid cooling both with a partners and ourselves.
We provide server and storage. Uh, both from a joint development with our customers through odm.
Custom memory.
Custom Optical modules.
All the way to the full system and you can see why ziti system aligns very well with some Min strategic growth priorities.
And as John said, we will continue to invest in this key market.
Please turn to slide 21.
Let me talk to you right now about priorities uh for 26 actually. Today, number 1 is focus on our customers.
Part of our strategy is always to focus on our customers and build around customer needs.
We have a strong long-term partnership with many market leaders already.
We're expanding our customer base in this key markets.
And our technology is continued to be competitive Advantage as we've been investing and will continue to invest in a key Technologies.
Number 2 is to how we going to execute on ziti system opportunities. As we said, we believe there's a lot of great opportunities in front of us. First of all, we keep in the same.
Management team as ET, there will be led by our founder. Frank, Zhang it's been running this operation for 30 years. Plus we we learn a lot about the management and we believe uh with addition uh help from our President Chief Operating Officer Mike lie. I believe we have a number 1 team in our company to to Really lead this organization going forward.
We expect a very smooth integration of ZT Systems with Sanmina.
And as we both say, John and I, we have large opportunities for the Ziti system right in front of us to build on.
And number 3 for us is to drive the profitable growth. It's easy to get the growth but driving the right segments to allow us to improve the uh, to have a customers that going to be with us for many, many years. But also to improve the margin
we are optimizing our capital structure to drive the growth in next 2 to 3 years, 26 to 28
ZT systems. As John said current annual run rate. Revenue is about 5 to 6 billion dollars.
Last quarter, we told you that within next 3 years, we would double seminar Revenue to around 16 billion dollars. Now,
We see opportunity to do a sooner with the next 2 years.
As I mentioned, we are focused on margin expansion by delivering competitive advantage.
For our customers.
Short term, we forecasting margin to be in a range of 5.6% to 6.1%. Plus longer term, we expect to expand our margin.
and our goal to be in a range of 6 to 7% Plus,
in a simple English, our strategy is to build a bigger
and stronger company for the future.
Please turn to slide 22.
In summary, we finished the fiscal year 2025 with a strong momentum.
For growth.
We expect Legacy Salina business to continue to grow, High, single digits.
And we expect solid growth in cloud and AI markets in the second half of calendar year 2026 and continuing through calendar year 2027 and beyond.
Our capabilities and cloud and AI will bring solutions from concept to development with quality speed and flexibility at scale.
This is competitive Advantage for semina.
Also, sanmina has an manufacturers.
Overall, great opportunities to drive profitable growth.
So ladies and gentlemen, now I would like to thank you all for your time and support operator. We now now ready to open the lines for question and answers. Thank you again.
Thank you, ladies and gentlemen, we will now begin the question and answer session. Should you have a question please? Press star. Followed by the number 1 on your touchtone phone.
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Should you wish to decline from the following process? Please press star followed by the number 2?
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Your first question comes from the line of food blue, but Aaria from Bank of America. Your line is now open. Hello. Hello. Hello. Hi, Yuri. Hey, thanks for taking my questions. Congrats on the closing of the ZT Systems acquisition. Just to confirm, did you say that it's still at a $5 to $6 billion annual run rate? And one of the slides said that it's at corporate average margins, you're guiding margins, operating margin to 5.9%. Should we assume that the ZT Systems business is also in that range of high 5%, so around 5.9% operating margin? So can you just first confirm the revenue and operating margins for the ZT Systems? Well, first of all, thank you for the compliment. I'm very excited about the ZT acquisition.
We got to know the team uh at GT. We got a excellent people there and and fits to our cultures. So we're really excited in front of us. Uh, maybe I'll turn it over to John when it comes to the margins but we are very optimistic go ahead. Yeah. You know, group on on the first point about the revenues. So so we did want to give some color on ZT systems for that 2 months and we guided a range of 850 million dollars to 1.05 billion. You take that midpoint to 950 for the 2 months and annualize it puts you to like 5.7%. You know. We said that we closed in that 5 to 6 billion dollar run rate on an annual basis and we did that and then to your second question on the margin profile like as it shows on the slide you know we expect ziti we can you know guide it on a combined basis but said that you know ZT is in line with Saint Mina. So yes you know the short answer to the question is you know we expect both sides of the business to be within that 56 to 61
Range.
Okay, great. Uh, for my next question, can I ask about the Legacy business? If we look at the guide, John, for the first quarter, it's $2.05 to $2.15 billion, so it's growing like mid-single digits at this point in the first quarter. But I think one of the slides later on talks about the Legacy business growing high single digits. Is that what you are expecting: high single-digit growth for the Legacy business?
Ziti in fiscal 26 and and what drives if so what drives that acceleration in the second half for the Legacy business.
Yeah, that that's exactly right ruple. Um, and you know it's we we just closed ziti a week ago so we didn't want to touch too much on a full year basis for that but we'll we'll come back in January in our next earnings, call and give some more specifics but at least for the Legacy Samina business, you know, very similar to how we guided fiscal year. 2025, we expect 26 to be have Revenue growth and that high single digit range to your point. The midpoint would be just shy of 5%. So in the mid, single digit range, but we expect that to, to accelerate. And that's based on all the opportunities that Yuri, uh, spoke to, on the The End Market slide. Um, you know, we see a lot of opportunity ahead. Um, you know, in the first quarter here, it'll be more in that mid-range. But as we continue on throughout the year, particularly into the back half for the second half of the fiscal year, we expect that to accelerate
Yeah, if I can add route to that, definitely we see him more positive activities as we go into next year. Uh, around the industrial energy. Medical defense continued to be stable. We are expanding our components capabilities. There are are military. Circuit boards are doing well, very profitable business. Uh, Automotive, only a short term is likely down, excuse me. But we do have some new programs that will offset that
Overall we we feel very strong with Samina um Legacy business and also we've been as we said last year, our goal is how do we take this business back to the 9? 10 11 12 billion dollar run rate, that's our still plan. So the key for Sina is to be Diversified company, not just to depend on 1 SE of the market or not. So we're excited about the growth. We're excited about what we can build around the AI uh, with the ZT. And I and I said it earlier, ziti fits like a glove most important. We have great Management in there. We're going to be investing. Well, first of all, AMD investor fair amount of money in last year plus and we'll continue to do that. And we have a you know some of the best capabilities for new technology that is coming out end of this year in the future. So overall R R, I think there's a lot of upside, it's all about how well do we execute.
Okay, if if we put all of what you said together, so if the Legacy business grows High single digits, that would be about 8.9 billion in fiscal 26. And then ZT is 5.7 at the midpoint, like John said. So total for physical 26. Looks like the implied guidance is about 14.5 or 14.6 billion. Did you say then that you know, looking forward the comment that you made Yuri on the 1611 year ahead of
Good time. So are we essentially saying that that 14.5 billion in fiscal? 26 can then grow to 16 billion? So about 10% year-on-year growth between fiscal 26 and fiscal 27. Okay, is is, what was that the first of all? First of all, I'm very optimistic. What's in front of us? Okay, let's that's number 1. Number 2, we're going to give you a lot more. John said we're going to give you a lot more details in January because we just as you know, for legal reasons you we couldn't get all the details about forecasts and so on and so on. So we'll we'll share a lot more with you in January. But looking what, what's in front of us? We basically said about 6 months ago, or 3 months ago, we think we can double the size of semina, within 3 years, what we see in front of a with Legacy business, plus what we believe that we can grow in around ZT, plus AI opportunities that are in a pipeline that we can accomplish that.
Hopefully next 2 years so that's all I'm saying.
Right. And the 2 years would put it at calendar, 27 for for, for the 16th, but maybe 1 last question but let me just say what we'll get trust me. We're going to give you a lot more information in January.
Okay, understood thanks for the details. Let me just ask 1 more quick question on working capital because you're taking on working capital, uh, John. How should we think about cash conversion cycle? Uh, and and uh, free cash flow going forward. Thanks. Yeah, I mean, first of all, I'm very pleased with with how we performed in Q4 and all fiscal year 25 right year. And I both talked about that, you know, cash flow from operations, for this whole year, being at 621 million which you don't see very often when you're driving growth and we drove Revenue growth of 7%. So our cash conversion cycle, you know, exiting Q4 is back in the 50s, which is a good place to be. That's where we wanted to get to now, we still see some room for for improvement, um, and I'm talking about the Legacy business right now. We still see the opportunity to to generate cash from that perspective and for Ziti um you know it it'll really depend asiri was saying at this point we're just guiding q1 because we just closed the transaction last week now depending on growth and
Working capital needs, you know that b might become a draw on cash. Um, but we think it we're in a good position, you know, right? Right now. So bottom line being Legacy business, you know, continue to expect to to generate cash flow from from operations and ZT. More more to come on what we think for the full year and what that'll mean for a cash perspective.
Okay, thank you for all the details, really appreciate it. Sure, thanks a lot.
Your next question comes from the line of Steven Fox from Fox, advisors your line is now open. Hello. Hi. Hi. Good afternoon everyone. Um, couple questions for me so without putting numbers around it. I was just curious. Um, how you think about the opportunity to um,
Re rebuild the, uh, accelerated compute arm of ziti. There's been, I guess public questions about the ability to do that relative competition.
I'm very excited about the talent that that we got through in the ZT Acquisitions. This is a very strong team. Um you know the founder is going to stay with us to to to help us take this uh business to the next level. Um, he's excited, I'm excited, we put in a great team around it. We're going to invest in it. Uh, we are also taking our uh, uh, Viking Enterprise Group, uh, and moving it over to support, uh, ziti. Yes. You know, it is an odm, uh, operations. And uh, we also transferring fair amount. Uh, uh, we have an Engineering Services Group. We're going to transfer big portion of that into the Viking, to build the Viking team bigger. Uh, so that we have a stronger engineering team and, uh, we are hiring, uh, 2, you know, to really Drive our odm business, uh, at a high level. So,
Uh, you know, smena has a lot of Technology, uh, and the goal here for us, uh, you know, to to provide and and basically connect this thing together, you know, from a system architectural electrical mechanical design. Uh, you know, providing as, you know, especially in the AI, there's a demand for a lot of high technology circuit boards. We believe we can add value there through assembly of of the subsystem.
Uh, through mechanical design, around the liquid cooling. We're using partners and some of our own, uh, Rock enclosures about customs and, uh, and open compute, uh, you know, you know, a lot about the Viking um, uh, storage. We also have a viking technology around, uh, you know, custom memory custom Optical modules and we believe, you know, Buzz bars, we believe all of these things will help us improve the margin. Uh you know, for our uh communication and ai ai business. So a lot of work in front of us but you know good things don't happen. Easy Steve
Yes, absolutely not. I guess just to interpret what you said though. Yuri is that you're you're implying that um, you need to pull the full system solution from Soup To Nuts together first, before you can then sort of go after the accelerated compute business again, is that fair to say no, no, no, no. We're going to go after first, of all, we have a great partner to, you know, with, you know, with AMD through NPI. So we into that part right away and we are expanding our engineering team to work with, you know, AMD and other platforms uh, immediately. Yes we have to, you know, as you know, ziti had a, you know, big engineering team and we expect to to build that whatever is necessary to be able to support our customers.
Customer requirements.
That's helpful and then just on the, on the cash flows and the transaction just to be clear. John, um, the 2 billion dollar purchase price is that close to what the final number would be, or could it balloon back to 3? And then when we think about cash flows, um, I it sounded like you can grow cash flows on Legacy Samina and then depending on growth we'll see if you need to invest in working capital on the ZT business. Am I reading all that, right? If you can provide some color there, yeah, you got that correct? Steve. So on on the first point, um, I don't think the number will move too much. Um, so so it's subject to a 90 period, a 90-day, uh, true up process. And that's because, because we're closing in the middle of the quarter, you know, we worked on some estimates, so we'll have to work through that, uh, to, to reconcile it. But I wouldn't expect it to move materially. Um, so that's it should be pretty close to where we land and then as far as future cash flow generation. Yeah. And the Legacy side of the business, you know, still some opportunity to generate cash even though we'll be
Growing, you know, this year we made huge progress, uh, in inventory this past year. I mean, in fiscal 2025, and that's how we were able to generate the 621 million. You know, there's not as much opportunity as that any anymore, but we still think we can generate cash and then ziti. Yeah, still early days just closed a week ago. Um, you know, we'll, we'll see how the trajectory of the business continues particularly as we get into the back half and, and that bit could become a, a
Use of cash, but more, you know, as we guide each quarter, we'll provide more specifics on that.
Great, thank you very much.
Thanks Steve.
as a reminder, if you wish to ask a question, please press star 1 on your telephone keypad,
Your next question comes from the line of Anya solders Chrome from C. Your line is now open.
Hi. Thank you for taking my question now, congrats on on closing that um,
I just need to assist the application so early. Um,
What you mentioned you see a lot of AI opportunity in the pipeline for City systems. What what do you see, uh, potential beyond what you you currently have in the
Books.
Could you repeat that question? Uh, Anya.
Yeah, you just said you see a lot of opportunity in the pipeline for the city systems? Yes. Uh, what kind of opportunities do you see there?
Okay. Well, first of all, uh, you know, we been building our capability to support uh, data center, AI all the way from high technology boards to assembly, mechanical liquid cooling odm JDM. And so on both in a custom memory and, and custom Optical modules would be an expanding it.
Ziti brings to us. Is that complete? Uh you know what I we call Strategic acquisition.
the compliments and in advanced, Cloud AI technology that gives us the ability to fill
System integration at scale. We have that today. So when you really look at the ZT today specifically, um...
You know, there's a great opportunity in a pipeline that will allow us to really grow, and you know, 2026, 2027, 2028. Let's focus on the next 3 years. Who knows what's going to happen 5 years from now? But, at least for the next 3 years, we see a lot of opportunities that, based on our capabilities today, we can compete in this segment with anybody.
You know, and and especially, as I said earlier, I think the key for us is to make sure that we execute on this opportunities. And I have a very high confidence because we have a strong leadership in there. We basically letting them go ahead and, and take it to the next level. We, we, we took 1 of our top Managers from Saint Mina. They ran all our IMS business for the last 25 years to basically help us together with the founder to take, take this to the next level. So, opportunities are great, a lot of work in front of us, but we are excited. We we think we can build something big, something good. Uh, that's going to be good for our employees for our investors and and and we'll be able to provide some great capabilities for our customer and give them a competitive advantage.
Okay, thank you. And then how do you expect this to affect your Indian joint venture?
Actually, you can compliment in the joint venture. There's a lot of opportunities in India. When it comes to the uh Cloud AI growth. We are working with our partners in India right now, for opportunities that are happening in India. We have a new Factory that, uh, we are building right now that will have, uh, we will, how do I say expand our AI capabilities? Uh, we invest in right now and that will come on online early next year and
It's, it's going to be very positive.
Okay, thank you. And then it seemed like...
There that could help you drive growth there. Yeah. And I don't I don't believe. Uh, overall for us, our motive was pretty pretty strong beginning of the year and the slow down a little bit end of the year, but overall it's it's pretty good. Uh, you know, we have a some new programs that we want in last 1690 days for, you know, end of the 26th 2027 and Beyond. So overall, uh, you know, we are putting optimistic and we have opposition with couple, you know, very critical customers.
Okay, thank you. That was all for me.
Thank you, Anya.
We don't have any other questions at this time. Please continue, sir.
Operator, is there any other question?
We don't have any other questions at this time. First of all, I would like to thank everybody on this call. If there are any questions, please let us know. Otherwise, I look forward to talking to you in 90 days from now. Thanks a lot for your support. Bye-bye. Thank you.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.