8-K: Plexus Reports Strong Fiscal Q3 Results, Exceeding EPS Guidance and Announcing New Share Repurchase Program

Plexus Corp. announced robust fiscal third quarter 2025 financial results, surpassing non-GAAP diluted EPS guidance and initiating optimistic fourth quarter guidance, alongside a new $100 million share repurchase program.

Summary

• Fiscal third quarter 2025 revenue was $1.018 billion, in-line with guidance of $1.000 billion to $1.040 billion.
• GAAP operating margin for Q3F25 was 5.3%, and GAAP diluted EPS was $1.64, exceeding guidance of $1.40 to $1.55.
• Non-GAAP operating margin for Q3F25 was 6.0%, near the high end of guidance of 5.7% to 6.1%, and non-GAAP diluted EPS was $1.90, exceeding guidance of $1.65 to $1.80.
• The company won 41 manufacturing programs during the quarter, representing $250 million in annualized revenue when fully ramped into production.
• Fiscal third quarter free cash flow generated was $13.2 million, contributing to fiscal year-to-date free cash flow of $56.8 million.
• Plexus purchased $18.4 million of its shares at an average price of $128.70 per share during the quarter.
• A new $100.0 million share repurchase program was approved by the Board of Directors on May 14, 2025, and the company has begun repurchasing shares under this program after fulfilling the previous $50.0 million program.
• The fiscal third quarter cash cycle was 69 days, consistent with expectations but one day higher than the fiscal second quarter.
• Gross inventory balance was reduced for the sixth consecutive quarter.
• Return on invested capital (ROIC) for the fiscal third quarter was 14.1%, exceeding the weighted average cost of capital by 520 basis points, resulting in an economic return of 5.2%.

Sentiment

Score: 8

Explanation: The company reported strong fiscal third quarter results, exceeding non-GAAP EPS and operating margin guidance, demonstrating operational efficiency and effective cash management. The positive outlook for Q4, including significant EPS growth, and the new share repurchase program indicate strong confidence in future performance and commitment to shareholder value.

Positives

• Non-GAAP diluted EPS of $1.90 exceeded guidance of $1.65 to $1.80.
• Non-GAAP operating margin of 6.0% was near the high end of guidance (5.7% to 6.1%).
• Revenue of $1.018 billion was in-line with guidance.
• Free cash flow of $13.2 million surpassed expectations, contributing to $56.8 million year-to-date.
• Secured 41 manufacturing program wins, representing $250 million in annualized revenue when fully ramped.
• Achieved a Return on Invested Capital (ROIC) of 14.1%, exceeding the weighted average cost of capital by 520 basis points.
• Reduced gross inventory balance for the sixth consecutive quarter.
• Approved a new $100.0 million share repurchase program, demonstrating commitment to shareholder returns.
• Fiscal fourth quarter guidance anticipates robust non-GAAP fiscal 2025 EPS growth of 26% at the midpoint.

Negatives

• Cash cycle of 69 days was one day higher than the fiscal second quarter.
• Top 10 customers comprised 48% of revenue, down three percentage points from the second quarter of fiscal 2025.

Risks

• Effects of tariffs, trade disputes, trade agreements, and other trade protection measures.
• Impact of inflationary pressures on production costs, profitability, and market economic outlook.
• Shortages and delays in obtaining components due to economic cycles, natural disasters, or other factors.
• Risk of customer delays, changes, cancellations, or forecast inaccuracies in ongoing and new programs.
• Ability to realize anticipated savings from restructuring or similar actions, and adequacy of related charges.
• Lack of visibility of future orders, especially with changing economic conditions.
• Economic performance of served industries, sectors, and customers.
• Outcome of litigation and regulatory investigations and proceedings.
• Effects of revenue volume from certain sectors or programs on margins.
• Ability to secure new customers, maintain current customer base, and deliver product timely.
• Risks of concentration of work for certain customers.
• Particular risks relative to new or recent customers, programs, or services (delays, start-up costs, execution inability, agreement terms, lack of track record).
• Effects of start-up costs of new programs and facilities or costs of 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.
• Fact that customer orders may not lead to long-term relationships.
• Ability to successfully manage and execute a complex business model with high product mix and demanding quality/regulatory requirements.
• Risks associated with excess and obsolete inventory, including non-payment by customers.
• Risks related to information technology systems and data security.
• Increasing regulatory and compliance requirements.
• Tax law changes and related foreign jurisdiction tax developments.
• Current or potential future barriers to repatriation of funds held outside the U.S.
• Potential effects of jurisdictional results on taxes, tax rates, and ability to use deferred tax assets/net operating losses.
• Weakness of areas of the global economy.
• Effect of changes in product pricing and margins.
• Raw materials and component cost fluctuations.
• Potential effect of fluctuations in currency values.
• Effects of changes in economic, political, and regulatory conditions in the U.S. and other operating countries.
• Potential effect of other world or local events or other events outside control (e.g., Russia-Ukraine conflict, Middle East conflict, China-Taiwan/US tensions, 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 anticipates delivering strong fiscal fourth quarter financial results, including further sequential revenue growth. The company is guiding revenue of $1.025 billion to $1.065 billion, non-GAAP operating margin of 5.7% to 6.1%, and non-GAAP EPS of $1.82 to $1.97. At the midpoint, this guidance would result in robust non-GAAP fiscal 2025 EPS growth of 26%. This revenue expansion is expected to be driven by share gains, new program ramps, and growth with new customers, despite overcoming muted end market demand, evolving new program ramp timelines, and uncertainties created by tariffs.

Management Comments

• "Our Plexus team continues to execute at a high level in driving numerous efficiency initiatives, which resulted in another strong quarter of financial performance." Todd Kelsey, President and CEO.
• "Fiscal third quarter revenue of $1.018 billion grew sequentially and was in-line with guidance, non-GAAP operating margin of 6.0% was near the high end of guidance and non-GAAP EPS of $1.90 exceeded guidance." Todd Kelsey, President and CEO.
• "Furthermore, free cash flow again surpassed our expectations." Todd Kelsey, President and CEO.
• "Fiscal third quarter cash cycle of 69 days was consistent with expectations and one day higher than the fiscal second quarter." Patrick Jermain, Executive Vice President and CFO.
• "For the sixth consecutive quarter, we drove a reduction in our gross inventory balance." Patrick Jermain, Executive Vice President and CFO.
• "This result, combined with other improvements to our cash cycle and our strong operating performance, produced fiscal third quarter return on invested capital of 14.1%, which exceeded our weighted average cost of capital by 520 basis points." Patrick Jermain, Executive Vice President and CFO.
• "We also delivered better than anticipated free cash flow of $13.2 million in support of our expectation to achieve approximately $100 million in free cash flow for fiscal 2025." Patrick Jermain, Executive Vice President and CFO.
• "Finally, furthering our commitment to return cash to our shareholders, we repurchased $18.4 million of our shares during the fiscal third quarter, while adding a $100 million share repurchase program to our previous, now fully-utilized, $50 million program." Patrick Jermain, Executive Vice President and CFO.
• "Our go-to-market team secured 41 fiscal third quarter manufacturing wins with well-balanced market sector diversification, representing $250 million in annualized revenue." Todd Kelsey, President and CEO.
• "Included in these wins are share gains resulting from our sustained focus on zero defects and perfect delivery as well as new customers in each of our market sectors with products aligned to exciting growth technologies." Todd Kelsey, President and CEO.
• "We expect to deliver strong fiscal fourth quarter financial results, including further sequential revenue growth." Todd Kelsey, President and CEO.
• "We anticipate generating this revenue expansion through share gains, new program ramps and growth with new customers, while overcoming muted end market demand, evolving new program ramp timelines and uncertainties created by tariffs." Todd Kelsey, President and CEO.
• "We are committed to creating long-term shareholder value through enabling customer success and focused initiatives that drive organizational and operational efficiency." Todd Kelsey, President and CEO.
• "We are bullish on the growth opportunities our solutions and market sectors provide." Todd Kelsey, President and CEO.
• "Our strategy is creating opportunities to gain share and capture new outsourcing opportunities in support of delivering sustained strong financial performance and growth exceeding that of our end markets." Todd Kelsey, President and CEO.

Industry Context

Plexus is navigating an industry landscape characterized by "muted end market demand" and "uncertainties created by tariffs." Despite these headwinds, the company's strategy of securing share gains, ramping new programs, and acquiring new customers across its diversified market sectors (Aerospace/Defense, Healthcare/Life Sciences, and Industrial) positions it to achieve sequential revenue growth and outperform the broader market trends.

Stakeholder Impact

• Shareholders: Positive impact due to strong financial performance, exceeding EPS guidance, robust ROIC, and a new $100 million share repurchase program, indicating commitment to returning capital.
• Employees: Potential positive impact from continued strong company performance and growth opportunities, though past restructuring charges indicate some workforce reductions.
• Customers: Positive impact from the company's focus on "zero defects and perfect delivery" and securing new programs, suggesting strong customer relationships and service.
• Suppliers: Implied continued business relationships due to ongoing manufacturing and new program wins.

Next Steps

• Fiscal fourth quarter ending September 27, 2025.
• Fiscal 2025 Q3 Earnings Conference Call and Webcast on July 24, 2025.
• Continued execution of efficiency initiatives and focus on zero defects and perfect delivery.
• Ramping new manufacturing programs to realize $250 million in annualized revenue.

Key Dates

Recommendation

Plexus Corp. delivered a robust fiscal third quarter, surpassing key non-GAAP financial metrics and demonstrating strong operational execution, including significant ROIC and free cash flow generation. The initiation of an optimistic fiscal fourth quarter guidance, projecting 26% non-GAAP EPS growth for fiscal 2025 at the midpoint, coupled with a new $100 million share repurchase program, signals strong management confidence and commitment to shareholder returns. Despite a challenging end-market environment, the company's ability to secure substantial new program wins and gain market share positions it favorably for continued growth. These factors collectively suggest a strong investment opportunity.

Keywords

Electronics Manufacturing Services, EMS, Contract Manufacturing, Aerospace/Defense, Healthcare/Life Sciences, Industrial, Supply Chain, Global Manufacturing, Share Repurchase, Financial Results, Plexus Corp.