Plexus(US:PLXS)2025-10-23 13:30Financial Data and Key Metrics Changes - Revenue for the fiscal fourth quarter was $1,058 million, approaching the high end of guidance, marking the third consecutive quarter of sequential growth [4][6] - Non-GAAP EPS was $2.14, substantially exceeding guidance due to favorable discrete tax items, with a non-GAAP operating margin of 5.8% [5][23] - Free cash flow for the fiscal fourth quarter was $97 million, resulting in a total of $154 million for fiscal twenty twenty five, significantly exceeding projections [6][24] Business Line Data and Key Metrics Changes - Aerospace and Defense sector revenue decreased 6% sequentially in the fiscal fourth quarter, with flat revenue for fiscal twenty twenty five due to delays in new program ramps [14] - Healthcare and Life Sciences sector revenue increased 1% sequentially in the fiscal fourth quarter, with a 5% increase for fiscal twenty twenty five driven by imaging and monitoring sub-sectors [15][16] - Industrial sector revenue was up 11% sequentially in the fiscal fourth quarter, with flat revenue for fiscal twenty twenty five [18] Market Data and Key Metrics Changes - The funnel of qualified manufacturing opportunities increased by 2% sequentially, reaching $3.7 billion, with a record high in aerospace and defense sector opportunities [20] - The company expects mid-single-digit revenue growth in the aerospace and defense sector for the fiscal first quarter, driven by new program ramps [14] - The industrial sector is expected to see a high single-digit decrease in revenue for the fiscal first quarter due to seasonality [18] Company Strategy and Development Direction - The company aims for revenue growth in excess of end markets, targeting a 9% to 12% growth goal while focusing on operational efficiency and shareholder value creation [4][11] - Investments will continue in talent, technology, and facilities to support sustained future revenue growth [11][32] - The company is committed to driving positive change and promoting sustainability through responsible innovation [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in future growth potential, citing substantial new program ramps and modest improvements in end markets [39] - The company is monitoring the impact of government shutdowns but has not seen any indications of slowdown in customer demand [50] - There is optimism regarding the defense sector's growth outlook, supported by increased military spending in the U.S. and Europe [112] Other Important Information - The company achieved a 40 basis point expansion in non-GAAP operating margin and 30% non-GAAP EPS growth for fiscal twenty twenty five [4][116] - The company reduced debt by over $100 million while returning cash to shareholders through an expanded share repurchase program [24][25] - The cash cycle improved to 63 days, the best result in five years, due to reduced inventory and improved working capital management [26] Q&A Session Summary Question: Growth trajectory and investments - Management indicated increased confidence in growth trajectory due to substantial new program ramps and modest market improvements [36][39] Question: AI opportunities - The company is seeing opportunities in AI, particularly in power generation and healthcare, with new programs leveraging AI technology [43][44] Question: Impact of government shutdown - No indications of slowdown from the government shutdown have been observed, and customer demand remains stable [50] Question: Semi cap and energy growth - The outlook for semi cap remains stable, with expectations of share gains, while energy sector growth is driven by infrastructure and power generation [52][54] Question: Healthcare sector strength - Strength in the Healthcare sector is attributed to both new program ramps and the resolution of inventory overhang [58] Question: Customer visibility and tariffs - Customer visibility is stable, with ongoing focus on new program ramps and managing supply chain challenges related to tariffs [67] Question: Capacity and expansion in Malaysia - The new facility in Malaysia has significant expansion capacity, and efficiency improvements are expected to drive profitability [79] Question: Commercial aerospace demand - There is potential for commercial aerospace demand to increase, but visibility on timing remains uncertain [82][85]