Plexus Corp.

Plexus reported fiscal third-quarter revenue of $1.305 billion, up 12% sequentially and 28% year over year. Gross margin was 10.1%, in line with guidance, and non-GAAP operating margin was 6.3%, up 30 basis points year over year. Non-GAAP EPS was $2.32, above guidance. Cash from operations was $25.9 million, capex was $26.6 million, and free cash flow usage was just under $1 million; the company ended the quarter in a net cash position. For fiscal fourth quarter, Plexus guided revenue to $1.33 billion to $1.38 billion, non-GAAP operating margin to 6.1% to 6.5%, and non-GAAP EPS to $2.47 to $2.63. For fiscal 2026, management now expects revenue growth of greater than 20%, non-GAAP operating margin above 6%, capex of $100 million to $120 million, and cash cycle days in the low to mid-60s; it also expects fiscal 2027 free cash flow to exceed $100 million.

Todd Kelsey emphasized that Plexus’ differentiated value proposition around quality and delivery is driving customer wins, record revenue, and a record funnel. He said the company is positioned for more than 20% fiscal 2026 revenue growth and sees fiscal 2027 revenue growth potentially above its 9% to 12% goal. His tone was notably confident, with repeated comments that demand, market share gains, and new program launches are supporting durable growth and operating margin expansion.

David Abuhl focused on profitability, cash conversion, and disciplined capital allocation. He highlighted 10.1% gross margin, 6.3% non-GAAP operating margin, and $2.32 non-GAAP EPS, along with favorable nonoperating expense of $4.8 million and a 14.9% ROIC that was 590 basis points above WACC. On cash, he cited $25.9 million of operating cash flow, capex of $26.6 million, a 62-day cash cycle, $20.6 million of share repurchases, and $172 million outstanding on the revolver with over $320 million available. He also said fiscal 2027 capex should remain at 2% to 3% of revenue and free cash flow should return to more than $100 million.

Analysts focused on whether Plexus can supply demand as growth accelerates, especially into fiscal 2027, and management said it is already pulling in capacity expansion plans while managing supply chain tightness. They also asked about the growth mix across aerospace/defense, industrial, semi-cap equipment, and healthcare; management said aerospace/defense and industrial will drive most of next year’s growth, while healthcare likely normalizes after a strong year. In follow-up questions, management said the new Malaysia capacity expansion is already underway, adds more than $0.5 billion of capacity, and should not meaningfully affect margins because it is within an existing profitable facility. Management also said the data-center power opportunity is part of a broader strategy and that the funnel there is conservatively around $0.5 billion.