Plexus(PLXS) - 2023 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported fiscal third quarter revenue of $1.02 billion, meeting guidance amidst mixed market conditions [57] - GAAP operating margin was 2.8% with GAAP EPS of $0.56 per share, including $0.14 per share of stock-based compensation expense [36] - Non-GAAP operating margin was 5%, at the high end of guidance, benefiting from improved gross margin and lower SG&A expenses [50] - Non-GAAP EPS was $1.32, exceeding guidance due to operational excellence and lower-than-forecasted taxes [98] Business Line Data and Key Metrics Changes - Revenue in the industrial sector declined 3% in the fiscal third quarter, better than expected due to improvements in supply chain [42] - The healthcare and life sciences sector is on track for a 20% increase for the full year of fiscal 2023, despite being flat for the fiscal fourth quarter [43] - Aerospace and defense sector decreased 1% in the fiscal third quarter, beating expectations due to improved deliveries [43] Market Data and Key Metrics Changes - The Americas region saw exceptional wins of almost $200 million, with significant contributions from the Guadalajara facility [67] - The EMEA region had impressive wins of $64 million, with trailing four-quarter wins surpassing $300 million [67] - The APAC region benefited from strong wins primarily from the industrial sector, contributing to overall growth [67] Company Strategy and Development Direction - The company aims to achieve $5 billion in revenue with a 5.5% GAAP operating margin by fiscal 2025, focusing on operational excellence and lifecycle solutions [62] - The strategy includes expanding sustainability-oriented product lifecycle solutions to enhance customer engagement and reduce emissions [38] - The company is optimistic about future growth opportunities, particularly in commercial aerospace and healthcare sectors [61] Management's Comments on Operating Environment and Future Outlook - Management noted that the current demand and supply chain dynamics are holding steady, with expectations for accelerating revenue and profitability growth [40] - There is cautious optimism regarding the semiconductor capital equipment market, which is expected to find a bottom [61] - The macro environment poses risks, but management remains confident in the company's ability to deliver industry-leading growth [62] Other Important Information - The company purchased approximately 150,000 shares for $13.5 million during the quarter, with plans for further purchases [51] - The cash cycle at the end of the third quarter was 111 days, slightly above expectations, with an anticipated improvement in the fourth quarter [99] - The company released its inaugural Sustainability Report, highlighting responsible business practices and ongoing sustainability initiatives [59] Q&A Session Summary Question: What is the outlook for the December quarter and the $5 billion target for fiscal '25? - Management indicated that achieving the $5 billion target will require mid- to high single-digit growth, with expectations for flat to down performance in the first half of fiscal '24 [12] Question: What are the challenges in the semiconductor capital equipment market? - Management acknowledged ongoing softness in the semiconductor capital equipment market but expressed excitement about potential recovery and growth opportunities [80] Question: How is the company addressing supply chain challenges? - The company is actively engaging with customers to help solve supply chain issues and is implementing machine learning and predictive analytics to optimize material positioning [111]