Sanmina’s $78 million ZT charge explains most of its profit gap
A noncash charge explained about two-thirds of the gap between GAAP and adjusted operating income. The ZT deal can still require a cash payment.
Sanmina (Nasdaq: SANM) recorded a $78 million charge in its fiscal fourth quarter after raising the estimated fair value of a potential payment tied to the ZT Systems acquisition. That item accounted for about 66% of the difference between GAAP and adjusted operating income for the quarter ended October 3. Sanmina added the charge back when it calculated operating cash flow.
Sanmina's November 9 earnings release and reconciliation
What Sanmina took out of adjusted profit
| Fiscal Q4 operating income | USD millions |
|---|---|
| GAAP operating income | 229.7 |
| Adjusted operating income | 348.1 |
| Difference | 118.4 |
| ZT earnout charge within the difference | 78.0 |
Amounts are rounded. The share of the gap is $78 million divided by $118.421 million. Footnote 4 identifies the charge, and the cash-flow statement shows the addback.
The charge sits inside a broader acquisition and integration adjustment that also includes compensation and professional fees. The $78 million reflects a change in the value Sanmina assigned to a possible payment. The agreement still determines when cash changes hands.
What Sanmina could still pay
Sanmina bought ZT's server manufacturing business from AMD in October 2025. The deal lets the seller collect up to $450 million in cash if the business meets specified revenue and gross profit targets over the three years after closing. Sanmina initially valued the potential payment at $111 million. The estimate reached $183 million as of June 27, according to its previous quarterly filing.
Sanmina's valuation uses forecasts, risk-adjusted rates and expected volatility. The November release gives the size of the latest change. It leaves open which assumptions moved and how much cash, if any, will ultimately be due.
Sanmina reported a 7.4% adjusted operating margin for fiscal 2026 and forecasts 7.0% to 7.5% for fiscal 2027. That outlook is a measure of operating profitability. The acquisition's cash cost will depend separately on the targets in the deal and what Sanmina actually pays.