Plexus Announces Fiscal Second Quarter Financial Results

Fiscal Second Quarter 2023 Information

Todd Kelsey, Chief Executive Officer, commented, "Our team continues to execute well amidst ongoing market volatility and supply chain challenges. Plexus delivered fiscal second quarter revenue of $1.07 billion, representing 21% year over year growth, GAAP operating margin of 5.3% and GAAP EPS of $1.45. Second quarter results exceeded our guidance reflecting increased end of quarter shipments as a result of mitigating supply constraints, better than anticipated performance by our engineering and sustaining services teams and our ongoing focus on improving manufacturing efficiency.”

Patrick Jermain, Executive Vice President and Chief Financial Officer, commented, “We generated $80 million in free cash flow during the fiscal second quarter, a result that was close to double our net income and exceeded our projections. Through the first six months of fiscal 2023, we generated positive free cash flow, and we anticipate delivering additional positive free cash flow for the second half of fiscal 2023. The fiscal second quarter cash cycle of 104 days was favorable to our expectations and sequentially lower by two days as we benefited from increased end of quarter revenue and continued progress on our working capital initiatives. Improvements in our cash cycle, coupled with strong operating performance, led to return on invested capital for the fiscal second quarter of 13.8% or 480 basis points above our weighted average cost of capital.”

Mr. Kelsey further commented, "We are guiding fiscal third quarter revenue of $1.00 billion to $1.05 billion, non-GAAP operating margin of 4.5% to 5.0% and non-GAAP EPS of $1.05 to $1.23. Our guidance is impacted by our strong late second quarter shipments, supply chain challenges and further semiconductor capital equipment market weakness. The non-GAAP guidance excludes $9 million, or $0.29 per share, of estimated restructuring and other charges associated with planned actions to realign our spending to create a more efficient and scalable platform to capitalize on our robust pipeline of future growth opportunities.”

Mr. Kelsey concluded, “As we near completion of our annual strategic planning process, I remain convinced in our ability to drive robust revenue growth and strong profitability, including achieving our target of $5 billion in revenue with 5.5% GAAP operating margin by our fiscal 2025. As we look beyond this goal, I have continued confidence in sustaining our industry-leading revenue growth and profitability as our team leverages our best-in-class capabilities and solutions to help our customers create the products that build a better world.”

Business Segment and Market Sector Revenue

Non-GAAP Supplemental Information

ROIC and Economic Return

Free Cash Flow

Conference Call and Webcast Information

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The statements contained in this press release that are guidance or which are not historical facts (such as statements in the future tense and statements including believe, expect, intend, plan, anticipate, goal, target and similar terms and concepts), including all discussions of periods which are not yet completed, are forward-looking statements that involve risks and uncertainties. These risks and uncertainties include the effect of inflationary pressures on our costs of production, profitability, and on the economic outlook of our markets; the effects of shortages and delays in obtaining components as a result of economic cycles, natural disasters or otherwise; the risk of customer delays, changes, cancellations or forecast inaccuracies in both ongoing and new programs; the ability to realize anticipated savings from restructuring or similar actions, as well as the adequacy of related charges as compared to actual expenses; the lack of visibility of future orders, particularly in view of changing economic conditions; the economic performance of the industries, sectors and customers we serve; the outcome of litigation and regulatory investigations and proceedings; the effects of tariffs, trade disputes, trade agreements and other trade protection measures; the effects of the volume of revenue from certain sectors or programs on our margins in particular periods; our ability to secure new customers, maintain our current customer base and deliver product on a timely basis; the risks of concentration of work for certain customers; the particular risks relative to new or recent customers, programs or services, which risks include customer and other delays, start-up costs, potential inability to execute, the establishment of appropriate terms of agreements, and the lack of a track record of order volume and timing; the effects of start-up costs of new programs and facilities or the costs associated with the closure or consolidation of facilities; possible unexpected costs and operating disruption in transitioning programs, including transitions between Company facilities; the risk that new program wins and/or customer demand may not result in the expected revenue or profitability; the fact that customer orders may not lead to long-term relationships; our ability to manage successfully and execute a complex business model characterized by high product mix and demanding quality, regulatory, and other requirements; the risks associated with excess and obsolete inventory, including the risk that inventory purchased on behalf of our customers may not be consumed or otherwise paid for by the customer, resulting in an inventory write-off; risks related to information technology systems and data security; increasing regulatory and compliance requirements; any tax law changes and related foreign jurisdiction tax developments; current or potential future barriers to the repatriation of funds that are currently held outside of the United States as a result of actions taken by other countries or otherwise; the potential effects of jurisdictional results on our taxes, tax rates, and our ability to use deferred tax assets and net operating losses; the weakness of areas of the global economy; the effect of changes in the pricing and margins of products; raw materials and component cost fluctuations; the potential effect of fluctuations in the value of the currencies in which we transact business; the effects of changes in economic conditions, political conditions and tax matters in the United States and in the other countries in which we do business; the potential effect of other world or local events or other events outside our control (such as the conflict between Russia and Ukraine, escalating tensions between China and Taiwan or China and the United States, changes in energy prices, terrorism, global health epidemics and weather events); the impact of increased competition; an inability to successfully manage human capital; changes in financial accounting standards; and other risks detailed herein and in our other Securities and Exchange Commission filings, particularly in Risk Factors contained in our fiscal 2022 Form 10-K.