Plexus(PLXS) - 2022 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The fiscal fourth-quarter revenue reached $1.12 billion, representing a year-over-year growth of 33% and significantly exceeding guidance [4][6] - Fiscal 2022 revenue totaled$ 3.81 billion, a 13% increase from fiscal 2021, surpassing the 9% to 12% growth target [7][8] - GAAP EPS for the fourth quarter was $1.78, which included$ 0.18 of stock-based compensation expense, exceeding guidance [4][28] - The GAAP operating margin for the fourth quarter was 5.5%, achieving the target and reflecting fixed cost leverage [6][27] Business Line Data and Key Metrics Changes - The industrial sector grew revenue by 14% in the fiscal fourth quarter, significantly above expectations [17] - The Healthcare/Life Sciences sector achieved exceptional growth of 17% in the fiscal fourth quarter, exceeding expectations [18] - The Aerospace and Defense sector grew 8% in the fiscal fourth quarter, also above expectations [19] Market Data and Key Metrics Changes - The funnel of qualified manufacturing opportunities maintained a record level of $3.4 billion at the end of the fiscal fourth quarter [24] - The company won$ 214 million in new manufacturing programs during the fourth quarter, bringing the total for fiscal 2022 to $1 billion [6][20] Company Strategy and Development Direction - The company aims for at least 9% to 12% revenue growth, a 5.5% GAAP operating margin, and a 15% return on invested capital [8] - The focus on operational excellence and investments in manufacturing capabilities are expected to drive future growth [15][30] - The company is exploring opportunities in vehicle electrification and other secular growth markets [6][52] Management's Comments on Operating Environment and Future Outlook - Management noted ongoing supply chain challenges but expressed optimism about strong customer demand and new program ramps [14][25] - The company anticipates robust year-over-year revenue growth despite macroeconomic uncertainties [15][70] - Management highlighted the importance of strategic discussions among customers regarding long-term manufacturing strategies due to supply chain disruptions [85] Other Important Information - The company has made significant progress in environmental, social, and governance (ESG) initiatives, including energy reduction and diversity programs [9][10] - Capital expenditures for the fiscal year were just over$ 100 million, with plans for continued share repurchase activity [29][30] Q&A Session Summary Question: What percentage of revenue does the semiconductor capital equipment business represent? - The semiconductor business accounts for about 20% of company revenue, with minimal near-term impact anticipated from market fluctuations [37][38] Question: How is unfilled demand breaking down by market verticals? - The company expects growth in Healthcare/Life Sciences and a conservative outlook for the industrial sector, while Aerospace and Defense faces supply chain constraints [40][41] Question: What is the outlook for the industrial segment given recent trends? - The backlog remains strong, and while some softness is noted, no dramatic decline is expected [44][45] Question: Can you elaborate on the electrification program mentioned? - The company is involved in providing solutions for industrial equipment and infrastructure supporting electric vehicles, which is a growing market [52][56] Question: What is the pricing versus volume dynamic? - Inflation is seen in the mid-single digits, with ongoing discussions with customers regarding labor cost increases [82] Question: Has there been any change in sentiment regarding the economy? - There has been no significant change in de-commit rates, and supply chain constraints remain a primary challenge [77][78]