PLXS — Plexus Corp.

Summary of Plexus (PLXS) Q3 2026 Earnings Call

1. Key Financial Results and Metrics

• Revenue: Achieved record revenue of $1.305 billion, up 12% sequentially and 28% year-over-year.
• Non-GAAP Operating Margin: Reported at 6.3%, meeting the high end of guidance, and up 30 basis points year-over-year.
• Non-GAAP EPS: Came in at $2.32, exceeding guidance.
• Cash Cycle: Improved to 62 days, the best in over five years.
• Return on Invested Capital (ROIC): Reached 14.9%, significantly above the weighted average cost of capital.

2. Strategic Updates and Business Highlights

• Market Performance: All three market sectors (Aerospace & Defense, Healthcare/Life Sciences, Industrial) contributed positively, with Aerospace & Defense wins totaling $400 million year-to-date.
• New Programs: Secured 31 new manufacturing programs with an annualized revenue potential of $255 million.
• Sustainability Initiatives: Received multiple awards for sustainability efforts, including a Gold Award for renewable energy.
• Capacity Expansion: Plans to expand capacity at the Penang, Malaysia site to support growth, with an additional $0.5 billion in capacity expected.

3. Forward Guidance and Outlook

• Fiscal Q4 2026 Guidance: Revenue expected between $1.33 billion and $1.38 billion, with a non-GAAP operating margin of 6.1% to 6.5%.
• Fiscal 2026 Outlook: Anticipating over 20% revenue growth and operating margins exceeding 6%.
• Fiscal 2027 Projections: Expected revenue growth to exceed the 9% to 12% target, with continued strong performance in Aerospace & Defense and Industrial markets.

4. Bad News, Challenges, or Points of Concern

• Supply Chain Tightness: Acknowledged challenges in the supply chain, particularly with component lead times and pricing pressures, though management is actively managing these issues.
• Healthcare Sector Growth: While Healthcare/Life Sciences saw a 2% sequential increase, growth is expected to moderate in fiscal 2027 after a strong year, potentially impacting overall revenue growth.
• Interest Expense: Anticipated increase in non-operating expenses due to higher interest rates, which may affect profitability.

5. Notable Q&A Insights

• Capacity Management: Management expressed confidence in meeting demand through existing capacity expansions and operational efficiencies, with a focus on maintaining a strong supply chain.
• Market Dynamics: Positive sentiment regarding the semi-cap equipment market and broader industrial sectors, with visibility into fiscal 2027 improving.
• Data Center Strategy: Discussed a strategic focus on expanding capabilities in the data center market, particularly in power and thermal management, with a current funnel of approximately $0.5 billion.

Overall, Plexus reported strong financial results and provided an optimistic outlook for future growth, despite some challenges related to supply chain dynamics and sector-specific growth moderation.