PLXS — Plexus Corp.

Summary of Plexus (PLXS) Q2 2026 Earnings Call

1. Key Financial Results and Metrics

• Revenue: $1.164 billion, exceeding guidance and representing a 19% year-over-year increase.
• Non-GAAP EPS: $2.05, above guidance.
• Non-GAAP Operating Margin: 6%, at the top end of guidance.
• Gross Margin: 10.2%, benefiting from a favorable mix and productivity improvements.
• Cash Flow: Generated $28.5 million from operations, with $16 million in free cash flow.
• Return on Invested Capital (ROIC): 13.8%, significantly above the weighted average cost of capital.
• Cash Cycle: Improved to 64 days, down 5 days from the previous quarter.

2. Strategic Updates and Business Highlights

• New Program Wins: Secured 30 new manufacturing programs with a record $355 million in annualized revenue.
• Market Sector Performance: Strong growth in aerospace and defense, healthcare/life sciences, and industrial sectors, with notable contributions from semiconductor capital equipment.
• Sustainability Commitment: Continued focus on responsible innovation and sustainability, with recognition for efforts in AI and circular economy.
• Leadership Transition: Pat Jermain announced retirement after 12 years as CFO; David Abuhl appointed as new CFO.

3. Forward Guidance and Outlook

• Q3 Revenue Guidance: Expected between $1.2 billion and $1.25 billion, representing 5% sequential and 20% year-over-year growth.
• Operating Margin Guidance: Non-GAAP operating margin projected at 5.9% to 6.3%.
• Fiscal 2026 Outlook: Anticipating mid-teens or greater revenue growth, with a robust profitability forecast of 6% or greater operating margin.
• Long-term Growth: Expected sustained momentum into fiscal 2027, driven by ongoing program ramps and market share gains.

4. Bad News, Challenges, or Points of Concern

• Supply Chain Tightening: Challenges with certain commodities (semiconductors, passives) could impact program ramps.
• Investment Needs: Increased working capital investments anticipated to support growth, with potential cash flow usage in Q3.
• Malaysia Facility Performance: Slightly behind breakeven due to faster-than-expected revenue ramp and early investments.

5. Notable Q&A Insights

• Working Capital Investments: Discussion on the correlation between revenue growth and working capital requirements; expected to remain in the low to mid-60s for cash cycle days.
• Demand Drivers: Both market share gains and overall market demand are contributing to growth, particularly in aerospace and defense.
• Competitive Landscape: No significant changes noted; however, an uptick in large opportunity wins suggests a strong competitive position.
• Capacity Management: Current capacity is deemed sufficient to meet demand, with ongoing assessments for potential future expansions.

Overall, Plexus demonstrated strong financial performance and growth momentum in Q2 2026, with positive outlooks for the upcoming quarters despite some supply chain challenges and investment needs.