PLXS — Plexus Corp.

Summary of Plexus Holdings Q2 2026 Earnings Call

1. Key Financial Results and Metrics

• Revenue: Q2 revenue reached $1.164 billion, exceeding guidance and reflecting a 19% year-over-year increase. This marks the fifth consecutive quarter of sequential revenue growth.
• Non-GAAP EPS: Reported at $2.05, surpassing guidance.
• Operating Margin: Non-GAAP operating margin was 6%, at the top end of guidance, supported by favorable service mix and operational efficiencies.
• Gross Margin: Recorded at 10.2%, benefiting from fixed cost leverage and productivity improvements.
• Cash Flow: Generated $28.5 million in cash from operations, with free cash flow of $16 million, exceeding expectations.
• Return on Invested Capital (ROIC): 13.8%, significantly above the weighted average cost of capital.

2. Strategic Updates and Business Highlights

• New Program Wins: Secured 30 new manufacturing programs with a record $355 million in annualized revenue potential, driven by strong contributions across all market sectors, particularly aerospace and defense.
• Market Sector Performance: Notable strength in aerospace and defense, healthcare/life sciences, and industrial sectors, with significant demand for semiconductor capital equipment.
• Sustainability Initiatives: Continued commitment to sustainability, with recognition as a finalist for the 2026 Manufacturing Leadership Awards.
• Leadership Transition: Pat Jermain announced his retirement after 12 years as CFO, with David Abuhl stepping in as the new CFO.

3. Forward Guidance and Outlook

• Q3 Revenue Guidance: Expected to be between $1.2 billion and $1.25 billion, indicating 5% sequential and 20% year-over-year growth at the midpoint.
• Fiscal 2026 Outlook: Anticipating mid-teens or greater revenue growth, with robust profitability and a non-GAAP operating margin of 6% or greater.
• Investment Plans: Projecting capital expenditures of $100 million to $120 million, with a focus on operational efficiency and working capital investments.

4. Challenges and Points of Concern

• Supply Chain Tightness: Ongoing challenges with supply chain conditions, particularly in semiconductors and passive components, which could impact future program ramps.
• Malaysia Facility Performance: The facility is slightly behind breakeven due to faster-than-expected revenue ramp-up requiring additional early investments.
• Increased Working Capital Needs: Anticipated higher investments in working capital to support accelerating revenue growth, with cash cycle days expected to rise in the near term.

5. Notable Q&A Insights

• Working Capital Management: Management indicated a good position in the low to mid-60s for cash cycle days, with a 10% to 15% increase in working capital dollars expected with revenue growth.
• Market Share Gains: Significant share gains in semiconductor capital equipment and defense sectors were highlighted, with ongoing operational excellence contributing to these gains.
• Capacity and Automation: Current capacity is deemed sufficient to handle projected revenue growth, with ongoing efficiency improvements minimizing the need for additional capital investments.
• Competitive Landscape: No significant changes in the competitive environment were noted, with an uptick in large opportunities won, suggesting strong differentiation in the market.

Overall, Plexus demonstrated strong financial performance in Q2 2026, with positive growth outlooks and strategic initiatives in place, though challenges in supply chain management and working capital investments remain areas of focus.