Plexus(US:PLXS)2025-10-23 13:32Financial Data and Key Metrics Changes - Revenue for fiscal 2025 was $1.058 billion, marking the third consecutive quarter of sequential growth and approaching the high end of guidance [8][9] - Non-GAAP EPS grew over 30% to $2.14, substantially exceeding guidance due to favorable discrete tax items [8][9] - Non-GAAP operating margin expanded by 40 basis points to 5.8% [9][25] - Free cash flow for fiscal 2025 was $154 million, significantly exceeding projections, with a total of $495 million generated over the past two fiscal years [9][26] Business Line Data and Key Metrics Changes - Aerospace and Defense sector revenue decreased 6% sequentially in Q4, with flat revenue for fiscal 2025 due to delays in new product launches [17][18] - Healthcare Life Sciences sector revenue increased 1% sequentially in Q4, with a 5% increase for fiscal 2025 driven by imaging and monitoring subsectors [19][20] - Industrial sector revenue was up 11% sequentially in Q4, but flat for fiscal 2025, with strong wins of $165 million in Q4 [21][22] Market Data and Key Metrics Changes - The funnel of qualified manufacturing opportunities increased by 2% sequentially to $3.7 billion, with a record high in aerospace and defense sector opportunities [23] - The company expects revenue growth in excess of end markets for fiscal 2026, driven by ongoing program ramps and market share gains [24][14] Company Strategy and Development Direction - The company aims for revenue growth of 9% to 12% in fiscal 2026, focusing on investments in talent, technology, and operational efficiency [8][14] - Continued emphasis on sustainability and responsible innovation, with significant achievements in waste reduction and community engagement [12][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in future growth potential, citing new program ramps and modest improvements in end markets [41][39] - The company is monitoring the impact of government shutdowns but has not seen any indications of slowdown in major market verticals [49][50] Other Important Information - The company reduced debt by over $100 million in fiscal 2025 while returning cash to shareholders through an expanded share repurchase program [26][27] - The cash cycle improved to 63 days, the best result in five years, with significant reductions in gross inventory [28] Q&A Session Summary Question: Growth trajectory and confidence in future investments - Management indicated increased confidence in growth trajectory due to substantial new program ramps and modest market improvements [39][41] Question: AI opportunities and new product developments - The company is seeing opportunities in AI, particularly in power generation and healthcare, with ongoing programs leveraging AI technology [45][46] Question: Impact of government shutdown on defense and other markets - No indications of slowdown due to the government shutdown have been observed, and management is closely monitoring the situation [49][50] Question: Strength in semicap and energy sectors - Management expects similar performance in semicap for fiscal 2026, with significant share gains anticipated [52][53] Question: Healthcare Life Sciences growth drivers - Growth in this sector is attributed to both new program ramps and the resolution of inventory overhang [56][57] Question: Customer visibility and market stability - Visibility from customers appears stable, with ongoing programs progressing well despite previous volatility [66][67] Question: Capacity and expansion plans for Penang facility - The Penang facility has significant expansion capacity, and efficiency improvements are expected to drive profitability [80][81] Question: Commercial aerospace demand signals - Management is optimistic about potential tailwinds in commercial aerospace but has not yet seen demand signal changes [83][85]