PLXS — Plexus Corp.

Summary of Plexus Holdings Q1 2026 Earnings Call

1. Key Financial Results and Metrics

• Revenue: $1.07 billion, meeting the midpoint of guidance and reflecting a 10% year-over-year increase.
• Non-GAAP EPS: $1.78, at the high end of guidance.
• Gross Margin: 9.9%, consistent with guidance and previous quarter.
• Non-GAAP Operating Margin: 5.8%, meeting guidance.
• Free Cash Flow: Expected to be approximately $100 million for fiscal 2026.
• Cash Cycle: 69 days, up 6 days from the previous quarter, primarily due to increased inventory days.

2. Strategic Updates and Business Highlights

• Plexus secured 22 new manufacturing programs worth $283 million in annualized revenue, with a record $220 million from the Aerospace and Defense (A&D) sector.
• The company is experiencing strong demand across Healthcare/Life Sciences and A&D sectors, with ongoing market share gains.
• Investments in talent, technology, and facilities are ongoing to support future growth.
• Recognition for operational excellence includes awards for best workplace and sustainability efforts in Malaysia.

3. Forward Guidance and Outlook

• Q2 Revenue Guidance: $1.11 billion to $1.15 billion, representing 6% sequential and 15% year-over-year growth at midpoint.
• Non-GAAP Operating Margin Guidance: 5.6% to 6.0%.
• Fiscal 2026 Revenue Growth Goal: Potential to exceed the high end of the 9% to 12% target, driven by strong demand and program ramps.
• Continued focus on operational efficiency to offset seasonal cost increases and investments.

4. Challenges and Points of Concern

• Seasonal Cost Increases: Anticipated headwinds from increased variable compensation expenses and typical seasonal costs.
• Supply Chain Issues: Rising lead times for certain components, particularly semiconductors and printed circuit boards, could impact program ramps and working capital investments.
• Cash Flow Management: Significant cash outflow of approximately $51 million in Q1 due to operational investments, though still maintaining a net cash position.

5. Notable Q&A Insights

• Market Dynamics: Management indicated that both strong program wins and improving end market demand are driving growth, particularly in semicap and Healthcare sectors.
• Aerospace and Defense: While there is optimism for growth, full demand pull-through from major customers like Boeing is not yet realized.
• Automation and AI Initiatives: Significant investments in automation and AI are expected to enhance operational efficiency and potentially improve margins, with a focus on reducing labor costs and improving productivity.
• Capacity Management: Current facilities are expected to support growth without immediate need for new capacity additions, with a focus on optimizing existing resources.

Overall, Plexus is positioned for strong growth in fiscal 2026, supported by robust demand across key sectors and strategic investments, despite facing some operational challenges and supply chain pressures.