8-K: Plexus Corp. Announces Strong Fiscal Second Quarter Results and Provides Guidance for Q3 2025

Plexus Corp. reports solid Q2 2025 financial results with revenue of $980 million and provides Q3 2025 revenue guidance of $1.00 billion to $1.04 billion.

Summary

• Plexus Corp. announced its fiscal second quarter 2025 financial results, reporting revenue of $980 million.
• GAAP operating margin was 5.0%, and GAAP diluted EPS was $1.41.
• Non-GAAP operating margin was 5.7%, and non-GAAP diluted EPS was $1.66, excluding $0.25 of stock-based compensation expense.
• The company initiated fiscal third quarter 2025 revenue guidance of $1.00 billion to $1.04 billion.
• GAAP diluted EPS for Q3 is expected to be $1.40 to $1.55, including $0.25 of stock-based compensation expense.
• Non-GAAP EPS guidance for Q3 is $1.65 to $1.80, excluding stock-based compensation expense.
• Plexus won 42 manufacturing programs during the quarter, representing $205 million in annualized revenue when fully ramped into production.
• Fiscal second quarter free cash flow was $16.5 million, contributing to fiscal year-to-date free cash flow of $43.6 million.
• The company purchased $12.2 million of its shares at an average price of $141.18 per share under the 2025 Share Repurchase Program, leaving $25.0 million available under the existing $50.0 million authorization.

Sentiment

Score: 8

Explanation: The document presents a positive outlook with strong financial results, exceeding expectations in some areas. The company is also actively managing its capital and returning value to shareholders through share repurchases. However, there are some risks and uncertainties mentioned, such as tariffs and economic conditions, which temper the overall sentiment.

Positives

• Strong financial performance in Q2 2025 with revenue in line with guidance and EPS exceeding guidance.
• Significant manufacturing wins, adding $205 million in annualized revenue.
• Improved cash cycle management, leading to a favorable return on invested capital.
• Continued share repurchase program, returning cash to shareholders.
• Gross inventory balance continues to improve, with this quarter representing the fifth consecutive quarter of improvement.

Negatives

• The company is conservatively assessing the remainder of the fiscal year and acknowledging the uncertainty associated with tariffs.
• Top 10 customers comprised 51% of revenue during both the first and second quarter of fiscal 2025, up 3 percentage points from the second quarter of fiscal 2024, indicating customer concentration.

Risks

• The company faces uncertainty associated with tariffs and trade disputes.
• Inflationary pressures could impact costs of production and profitability.
• Shortages and delays in obtaining components could affect operations.
• Customer delays, changes, cancellations, or forecast inaccuracies pose a risk.
• The company acknowledges the uncertainty associated with tariffs.

Future Outlook

Plexus is guiding fiscal third quarter revenue of $1.00 to $1.04 billion, non-GAAP operating margin of 5.7% to 6.1%, and non-GAAP EPS of $1.65 to $1.80. The company anticipates achieving meaningful EPS growth in fiscal 2025, capitalizing upon revenue growth in each of its market sectors, robust operating margin performance, and ongoing free cash flow deployment.

Management Comments

• Todd Kelsey, President and CEO, stated that Plexus generated strong fiscal second quarter financial performance, demonstrating the continued momentum of operational and working capital efficiency initiatives.
• Patrick Jermain, Executive Vice President and CFO, noted that the fiscal second quarter cash cycle of 68 days was favorable to expectations and consistent with the fiscal first quarter.
• Mr. Kelsey added that the company delivered 42 fiscal second quarter manufacturing wins, representing $205 million in annualized revenue.

Industry Context

Plexus operates in the electronics manufacturing services (EMS) industry, providing design, manufacturing, and aftermarket services to companies in various sectors. The company's performance is influenced by factors such as global economic conditions, supply chain dynamics, and demand in its key markets (Aerospace/Defense, Healthcare/Life Sciences, and Industrial).

Comparison to Industry Standards

• Plexus's ROIC of 13.7% is a strong indicator of efficient capital allocation, potentially outperforming some of its EMS peers.
• Key competitors in the EMS industry include Jabil, Sanmina, and Flex.
• Comparing Plexus's operating margin and revenue growth to these companies would provide a more comprehensive assessment of its relative performance.
• For example, Jabil reported revenue of $8.5 billion for its most recent quarter, while Sanmina reported $1.9 billion.
• Flex reported net sales of $7.5 billion for its most recent quarter.

Stakeholder Impact

• Shareholders will benefit from the strong financial performance and share repurchase program.
• Employees are part of a global team of over 20,000 members.
• Customers are supported by Plexus's comprehensive product lifecycle solutions.
• Suppliers are part of Plexus's global supply chain.
• Creditors are supported by Plexus's strong financial position.

Next Steps

• The company will hold a conference call and webcast on April 24, 2025, to discuss the results.
• Plexus will continue to execute its strategy, focusing on operational excellence and strategic investments.
• The company will monitor and navigate evolving landscapes and dynamic environments to enable customer success.

Key Dates

Keywords

financial results, earnings, revenue, EPS, operating margin, guidance, manufacturing, cash flow, share repurchase, Plexus