• Revenue: $976 million for the fiscal first quarter.
• Non-GAAP Operating Margin: 6.0%, near the high end of guidance.
• Non-GAAP EPS: $1.73, exceeded guidance.
• Free Cash Flow: $27 million, significantly better than expectations.
• Manufacturing Program Wins: 30 programs worth $212 million annually.
• Gross Margin: 10.3%, at the top end of guidance.
• Selling and Administrative Expense: $49 million, slightly above guidance.
• Non-Operating Expense: $3.4 million, favorable due to improved foreign exchange and lower interest expense.
• Cash Cycle: 68 days, five days favorable to expectations.
• Fiscal Second Quarter Revenue Guidance: $960 million to $1.00 billion.
• Fiscal Second Quarter Non-GAAP EPS Guidance: $1.46 to $1.61.
• Fiscal 2025 Free Cash Flow Forecast: Up to $100 million.

• Warning! GuruFocus has detected 7 Warning Sign with PLXS.

Release Date: January 23, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Plexus Corp (NASDAQ:PLXS) reported fiscal first-quarter revenue of $976 million, meeting their guidance.
• Non-GAAP EPS of $1.73 exceeded guidance, benefiting from strong operating margin performance and reduced interest expense.
• The company delivered $27 million of free cash flow, significantly better than expectations.
• Plexus Corp (NASDAQ:PLXS) won 30 manufacturing programs worth $212 million in annual revenue, indicating strong future growth potential.
• The company continues to focus on sustainable business practices, including reducing environmental impact and improving operational efficiencies.

Negative Points

• The Aerospace and Defense sector experienced a 13% sequential revenue decrease due to challenges in commercial aerospace production rates.
• Healthcare/Life Sciences sector revenue was down 10% sequentially, below expectations due to demand softening.
• The industrial sector is facing challenges with soft end markets, leading to a forecasted revenue decline in the fiscal second quarter.
• Plexus Corp (NASDAQ:PLXS) anticipates a reduction in gross margin for the fiscal second quarter due to seasonal compensation cost increases.
• The company is experiencing volatility in customer forecasts, particularly in the Healthcare and Industrial sectors, leading to uncertainty in demand.

Q & A Highlights

Q: Can you elaborate on the industrial segment, particularly the semi cap and broader demand trends? A: Todd Kelsey, President and CEO, explained that they expect strong growth in the semi cap sector, driven by share gains and new program wins. Oliver Mihm, EVP and COO, added that while semi cap is strong, other industrial subsectors like communication and automation are experiencing softer demand, which they anticipate will rectify in the longer term.

Q: What are the growth prospects for the Aerospace and Defense sector, considering current challenges? A: Todd Kelsey noted that while long-term prospects are strong, near-term growth is subdued due to production challenges in commercial aerospace. However, Defense and Space subsectors are showing positive growth trajectories, and there's an 11.5-year backlog in commercial aerospace, indicating future demand.

Q: How is Plexus addressing potential impacts from tariffs and trade policies? A: Todd Kelsey stated that Plexus is closely monitoring the situation and has invested in trade compliance to assist customers. The company is well-positioned to move products if needed and passes tariff costs to customers, minimizing direct impact on Plexus.

Q: Can you discuss the impact of recent program wins and the timeline for revenue realization? A: Oliver Mihm explained that while some large wins were not tied to engineering developments, the sales cycle can be lengthy. Shawn Harrison added that manufacturing wins typically take 1.5 to 3 years to reach normalized volume, with recent wins likely impacting fiscal 2026.

Q: What are the expectations for capital expenditures and free cash flow in fiscal 2025? A: Pat Jermain, CFO, confirmed that capital spending will be higher due to a new facility in Malaysia, but expects it to normalize in 2026. Despite increased spending, Plexus anticipates generating up to $100 million in free cash flow for fiscal 2025.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.