8-K: Plexus Exceeds Q4 EPS, Guides Strong Q1 2026

Plexus Corp. reported strong fiscal fourth quarter and full-year 2025 financial results, exceeding EPS guidance and providing optimistic outlook for Q1 2026.

Summary

• Reported fiscal fourth quarter 2025 revenue of $1.058 billion, GAAP operating margin of 5.0%, and GAAP diluted EPS of $1.87.
• Achieved fiscal fourth quarter 2025 non-GAAP operating margin of 5.8% and non-GAAP diluted EPS of $2.14, exceeding guidance.
• Reported fiscal year 2025 revenue of $4.033 billion, GAAP operating margin of 5.0%, and GAAP diluted EPS of $6.26.
• Achieved fiscal year 2025 non-GAAP operating margin of 5.9% and non-GAAP diluted EPS of $7.43.
• Initiated fiscal first quarter 2026 revenue guidance of $1.050 billion to $1.090 billion, with GAAP diluted EPS of $1.40 to $1.55 and non-GAAP EPS of $1.66 to $1.81.
• Won 28 manufacturing programs in Q4F25, representing $274 million in annualized revenue when fully ramped.
• Generated free cash flow of $97 million in Q4F25 and $154 million for FY2025, both exceeding projections.
• Purchased $21.5 million of shares in Q4F25 at an average price of $134.07 per share, with $85.0 million remaining under the current authorization.
• Produced a Return on Invested Capital (ROIC) of 14.6% for FY2025, representing an economic return of 5.7% above the weighted average cost of capital of 8.9%.
• Reduced gross inventory balance for the seventh consecutive quarter, ending FY2025 $82 million lower than FY2024.
• Achieved a cash cycle of 63 days in Q4F25, which was favorable to expectations, sequentially lower by 6 days, and the best result in the past five years.

Sentiment

Score: 8

Explanation: Plexus delivered strong fiscal Q4 and full-year 2025 results, surpassing EPS and free cash flow projections. The company demonstrated excellent operational execution, including significant inventory reduction and a five-year best cash cycle. The outlook for Q1 2026 and FY2026 free cash flow remains robust, supported by strong program wins and strategic investments, positioning the company for accelerated revenue growth. Positive ESG initiatives were also highlighted.

Positives

• Q4F25 non-GAAP diluted EPS of $2.14 exceeded guidance of $1.82 to $1.97.
• Free cash flow of $97 million in Q4F25 and $154 million for FY2025 both exceeded projections.
• Strong manufacturing wins: 28 programs in Q4F25 ($274 million annualized revenue) and 141 programs in FY2025 ($941 million annualized revenue).
• Revenue growth is exceeding that of end markets, driven by new program ramps and share gains.
• Increased engineering solutions engagements and achieved record wins for sustaining services in FY2025.
• Reduced gross inventory balance for the seventh consecutive quarter, ending FY2025 $82 million lower than FY2024.
• Cash cycle of 63 days in Q4F25 was the best result delivered in the past five years and sequentially lower by 6 days.
• FY2025 ROIC of 14.6% exceeded the weighted average cost of capital by 570 basis points.
• Ended the fiscal year in a net cash position due to strong free cash flow and reduced borrowing.
• Anticipates robust fiscal 2026 free cash flow of approximately $100 million.
• Achieved 40 basis points of non-GAAP operating margin expansion and 30% non-GAAP EPS growth in FY2025.
• Reduced waste to landfill by more than 30% globally, with eight sites now operating at zero waste to landfill.
• Reduced absolute Scope 1 and 2 emissions by more than 10% across global manufacturing sites versus the fiscal 2023 baseline.

Negatives

• Q4F25 GAAP operating margin of 5.0% was at the low end of the guidance range of 5.0% to 5.4%.
• Q1F26 GAAP diluted EPS guidance of $1.40 to $1.55 is lower than the Q4F25 actual of $1.87.
• Q1F26 non-GAAP EPS guidance of $1.66 to $1.81 is lower than the Q4F25 actual of $2.14.
• Q1F26 GAAP operating margin guidance of 4.9% to 5.3% is slightly lower than the Q4F25 actual of 5.0%.
• Q1F26 non-GAAP operating margin guidance of 5.6% to 6.0% is slightly lower than the Q4F25 actual of 5.8%.
• Top 10 customers comprised 49% of revenue during Q4F25 and FY2025, indicating continued customer concentration.

Risks

• Effects of tariffs, trade disputes, trade agreements, and other trade protection measures.
• Impact of inflationary pressures on costs of production, profitability, and the economic outlook of markets.
• Shortages and delays in obtaining components due to economic cycles, natural disasters, or other factors.
• Customer delays, changes, cancellations, or forecast inaccuracies in both ongoing and new programs.
• Ability to realize anticipated savings from restructuring or similar actions, and the adequacy of related charges.
• Lack of visibility of future orders, particularly in view of changing economic conditions.
• Economic performance of the industries, sectors, and customers served.
• Outcome of litigation and regulatory investigations and proceedings.
• Effects of the volume of revenue from certain sectors or programs on margins in particular periods.
• Ability to secure new customers, maintain the current customer base, and deliver product on a timely basis.
• Risks of concentration of work for certain customers.
• Particular risks relative to new or recent customers, programs, or services, including delays, start-up costs, potential inability to execute, and lack of a track record.
• Effects of start-up costs of new programs and facilities or costs associated with facility closure/consolidation.
• Possible unexpected costs and operating disruption in transitioning programs.
• Risk that new program wins and/or customer demand may not result in expected revenue or profitability.
• Customer orders may not lead to long-term relationships.
• Ability to successfully manage and execute a complex business model characterized by high product mix and demanding quality, regulatory, and other requirements.
• Risks associated with excess and obsolete inventory, including customer non-payment leading to write-offs.
• Risks related to information technology systems and data security.
• Increasing regulatory and compliance requirements.
• Any tax law changes and related foreign jurisdiction tax developments.
• Current or potential future barriers to the repatriation of funds held outside of the United States.
• Potential effects of jurisdictional results on taxes, tax rates, and the ability to use deferred tax assets and net operating losses.
• Weakness of areas of the global economy.
• Effect of changes in the pricing and margins of products.
• Raw materials and component cost fluctuations.
• Potential effect of fluctuations in the value of the currencies in which business is transacted.
• Effects of changes in economic conditions, political conditions, and regulatory matters in the United States and other operating countries.
• Potential effect of other world or local events or events outside control (e.g., conflicts, energy prices, terrorism, global health epidemics, weather events).
• Impact of increased competition.
• Inability to successfully manage human capital.
• Changes in financial accounting standards.

Future Outlook

Plexus guides for fiscal first quarter 2026 revenue of $1.050 billion to $1.090 billion, with GAAP diluted EPS of $1.40 to $1.55 and non-GAAP EPS of $1.66 to $1.81. The company anticipates delivering robust fiscal 2026 free cash flow of approximately $100 million and plans to deploy excess cash to create additional shareholder value. Management expects new program ramps, inclusive of share gains, to continue driving revenue growth in excess of modest end-market growth. During Q1F26, Plexus will continue to invest in talent, technology, facilities, and advanced capabilities to expand industry-leading solutions, drive greater long-term operational efficiency, and prepare for expected fiscal 2026 revenue growth towards its 9% to 12% goal.

Management Comments

• "The Plexus team continues to deliver a differentiated value proposition for our customers, and generated strong fiscal fourth quarter results. I am particularly pleased with our non-GAAP EPS of $2.14, which exceeded guidance, and our free cash flow, which again exceeded projections." Todd Kelsey, President and CEO.
• "Our go-to-market team generated 28 fiscal fourth quarter manufacturing wins, representing $274 million in annualized revenue. For fiscal 2025, the team generated 141 manufacturing wins representing $941 million in annualized revenue, which supports revenue growth exceeding that of our end markets." Todd Kelsey.
• "For the seventh consecutive quarter, our team drove a reduction in our gross inventory balance, ending the fiscal year $82 million lower than fiscal 2024. Fiscal fourth quarter cash cycle of 63 days was favorable to our expectations and sequentially lower by 6 days as we benefited from increased revenue and continued progress on our working capital initiatives. This level of cash cycle was the best result delivered in the past five years." Patrick Jermain, Executive Vice President and CFO.
• "We delivered $154 million in free cash flow for fiscal 2025, a result well above our projections. Utilizing our exceptional free cash flow, we continued to execute upon our expanded share repurchase program and reduce our borrowing, ending the year in a net cash position." Patrick Jermain.
• "Finally, while we expect increased investments in support of future revenue growth and operational efficiency initiatives, we anticipate delivering robust fiscal 2026 free cash flow of approximately $100 million and deploying excess cash to create additional shareholder value." Patrick Jermain.
• "Fiscal 2025 was an outstanding year for Plexus. Our team delivered excellent operational execution, strong financial performance, including 40 basis points of non-GAAP operating margin expansion and 30% non-GAAP EPS growth, and robust and well-balanced new program wins across our solutions. These results provide momentum and position us well in fiscal 2026 to accelerate revenue growth toward our 9% to 12% goal and sustain strong financial performance." Todd Kelsey.

Industry Context

Plexus operates in the Electronics Manufacturing Services (EMS) industry, serving specialized sectors like Aerospace/Defense, Healthcare/Life Sciences, and Industrial. The company's reported revenue growth exceeding modest end-market growth, coupled with increased engineering solutions engagements and record sustaining services wins, indicates a strong competitive position and effective execution of its market sector-focused strategy. The consistent reduction in inventory and achievement of a five-year best cash cycle demonstrate disciplined working capital management, which is crucial in an industry often impacted by supply chain volatility. Strategic investments in talent, technology, and facilities are aimed at expanding industry-leading solutions and driving long-term operational efficiency, positioning Plexus for continued outperformance.

Comparison to Industry Standards

• The fiscal year 2025 Return on Invested Capital (ROIC) of 14.6% significantly exceeded the company's weighted average cost of capital (WACC) of 8.9% by 570 basis points, indicating strong capital efficiency relative to its own cost of capital.
• Revenue growth is stated to be "exceeding that of our end markets," suggesting outperformance compared to the broader industry trends in its served Aerospace/Defense, Healthcare/Life Sciences, and Industrial sectors.
• The cash cycle of 63 days in Q4F25 was the "best result delivered in the past five years," demonstrating superior working capital management compared to its own historical performance.

Stakeholder Impact

• Shareholders: Increased shareholder value through share repurchases ($65.0 million in FY2025, $21.5 million in Q4F25) and anticipated deployment of excess cash. Strong financial performance (exceeded EPS, ROIC above WACC) indicates good returns.
• Employees: Restructuring costs in FY2025 for employee severance in EMEA and AMER regions were incurred. The global team contributed over 32,000 paid volunteer hours.
• Customers: Differentiated value proposition, strong manufacturing wins (141 programs in FY2025), increased engineering solutions engagements, and record sustaining services wins.
• Communities: The global team contributed over 32,000 paid volunteer hours, and Plexus donated $1.4 million to global non-profits through its Plexus Community Foundation.
• Environment: Reduced waste to landfill by over 30% globally, with eight Plexus sites now operating at zero waste to landfill. Reduced absolute Scope 1 and 2 emissions by more than 10% across global manufacturing sites versus the fiscal 2023 baseline.

Next Steps

• Continue investments in talent, technology, facilities, and advanced capabilities during Q1F26.
• Expand industry-leading solutions.
• Drive greater long-term operational efficiency.
• Prepare for expected fiscal 2026 revenue growth.
• Accelerate revenue growth toward the 9% to 12% goal in fiscal 2026.
• Deploy excess cash to create additional shareholder value in fiscal 2026.

Key Dates

Recommendation

Plexus delivered exceptional fiscal Q4 and full-year 2025 results, significantly exceeding non-GAAP EPS and free cash flow guidance. The company demonstrated robust operational efficiency, marked by a seven-quarter inventory reduction trend and a five-year best cash cycle. Strategic program wins, strong ROIC exceeding its cost of capital, and a positive outlook for fiscal 2026 revenue growth and free cash flow deployment underscore a compelling investment thesis. The commitment to shareholder value through continued share repurchases and strategic investments further strengthens the positive sentiment, making it a strong buy for seasoned investors.

Keywords

Plexus, PLXS, financial results, earnings, Q4 2025, FY 2025, Q1 2026 guidance, revenue, EPS, operating margin, free cash flow, ROIC, manufacturing, electronics manufacturing services, EMS, supply chain, inventory, share repurchase, corporate social responsibility, ESG