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01/11 03:42
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call shows a mixed picture. While there is confidence in growth, particularly in the Healthcare and Defense sectors, there are concerns over flat revenue in key areas like Industrial and Aerospace. The Q&A reveals uncertainty in the aerospace sector and reliance on future program ramps. Despite positive guidance and strategic investments, the flat revenue and minor delays temper expectations, leading to a neutral outlook.
Revenue $1.058 billion, marking the third consecutive quarter of sequential growth. This was driven by late-quarter demand upside from semi cap and energy customers, which offset minor delays in new program transitions in the aerospace and defense market sector.
Non-GAAP EPS $2.14, which substantially exceeded guidance due to favorable discrete tax items. Non-GAAP EPS grew over 30% in fiscal 2025 compared to fiscal 2024.
Non-GAAP Operating Margin 5.8%, with a 40 basis point expansion compared to fiscal 2024. This was attributed to improved fixed cost leverage from higher revenue and continued productivity gains across manufacturing sites.
Free Cash Flow (Fiscal Fourth Quarter) $97 million, contributing to a fiscal 2025 total of $154 million. This exceeded projections and was achieved through reductions in borrowing and accelerated share repurchase activity.
Return on Invested Capital (ROIC) 14.6%, which was 570 basis points above the weighted average cost of capital. This improvement was driven by sustained working capital improvements and enhanced operating performance.
Cash Cycle 63 days, the best result in the past 5 years. This was achieved through a 10-day sequential improvement in inventory days and a year-over-year reduction in gross inventory of $82 million.
Aerospace and Defense Revenue Decreased 6% sequentially in the fiscal fourth quarter due to minor delays in new program ramps. Fiscal 2025 revenue for this sector was flat year-over-year, as new product launch delays and inventory adjustments offset double-digit growth in defense and space subsectors.
Healthcare/Life Sciences Revenue Increased 5% in fiscal 2025 year-over-year, driven by strength in the imaging and monitoring subsectors, new program ramp revenue, and customer demand increases for previously ramped products.
Industrial Sector Revenue Flat for fiscal 2025 year-over-year. Low double-digit growth in the semi-cap subsector offset reductions in industrial equipment and vehicle electrification.
New Program Wins: Secured 28 new manufacturing programs worth $274 million annually in Q4. Fiscal 2025 saw 141 manufacturing wins, representing $941 million in annualized revenue.
Aerospace and Defense: Record wins in Aerospace and Defense, including unmanned aircraft and commercial aerospace programs.
Healthcare/Life Sciences: Wins included a therapeutics product remediation and an AI-powered digital cell analysis platform.
Industrial Sector: Strong wins of $165 million in Q4, including semi-cap programs and high-voltage product assembly for the rail industry.
Market Share Gains: Expanded relationships with commercial aerospace customers, healthcare, life sciences, and industrial sectors. Notable gains in semi-cap.
Revenue Growth: Revenue of $1.058 billion in Q4, marking the third consecutive quarter of sequential growth. Fiscal 2026 aims for 9%-12% revenue growth.
Operational Efficiency: Achieved a 40 basis point expansion in non-GAAP operating margin and reduced waste to landfill by over 30% globally.
Free Cash Flow: Generated $154 million in free cash flow for fiscal 2025, exceeding projections. Reduced debt by over $100 million.
Inventory Management: Reduced gross inventory by $82 million year-over-year and $330 million compared to fiscal 2023 year-end balance.
Sustainability Initiatives: Reduced Scope 1 and 2 emissions by over 10% and achieved zero waste to landfill status at 8 sites.
Investments: Investing in talent, technology, facilities, and advanced capabilities to support long-term growth and efficiency.
Market Conditions: Minor delays in new program transitions in the aerospace and defense market sector and muted near-term demand in the industrial sector could impact revenue growth.
Competitive Pressures: Challenges in maintaining market share and achieving growth targets in competitive sectors like semi cap and healthcare/life sciences.
Regulatory Hurdles: Anticipated increase in effective tax rates due to global minimum tax implementation in certain jurisdictions.
Supply Chain Disruptions: Inventory adjustments in the commercial aerospace supply chain and potential seasonality in the energy subsector.
Economic Uncertainties: Muted demand in industrial equipment and vehicle electrification subsectors, and seasonality affecting revenue in certain sectors.
Strategic Execution Risks: Ongoing investments in talent, technology, and facilities may strain resources and impact operational efficiency in the short term.
Revenue Growth: Plexus anticipates revenue growth in fiscal 2026 to exceed end market growth, with year-over-year growth expected in all market sectors. The company is targeting a 9% to 12% revenue growth goal.
Operating Margin: The company aims to achieve a 6% non-GAAP operating margin in fiscal 2026, with expectations to maintain or exceed this level as the year progresses.
Capital Expenditures: Capital spending for fiscal 2026 is projected to be in the range of $90 million to $110 million, consistent with fiscal 2025 spending.
Free Cash Flow: Plexus expects robust free cash flow of approximately $100 million for fiscal 2026, despite higher investments in working capital to support revenue growth.
Market Sector Performance: - Aerospace and Defense: Anticipates robust growth in fiscal 2026, driven by strong defense sector growth, new program ramps in unmanned aircraft, and a return to growth in commercial aerospace.
Investments: The company plans to continue investing in talent, technology, facilities, and advanced capabilities to support long-term competitiveness and operational efficiency.
Tax Rate: An effective tax rate of 16% to 18% is expected for fiscal 2026, influenced by the global minimum tax in certain jurisdictions.
Share Repurchase Activity: We have now generated $495 million of free cash flow over the past 2 fiscal years while deploying excess cash to reduce our borrowing and accelerate our share repurchase activity.
Expanded Share Repurchase Program: For fiscal 2025, we reduced our debt by over $100 million while continuing to return cash to shareholders through our expanded share repurchase program. For the fiscal fourth quarter, we acquired approximately 161,000 shares of our stock for $21.5 million. At the end of the fiscal year, we had approximately $85 million remaining on the current repurchase authorization.
Future Shareholder Value Creation: We plan to continue to deploy any excess cash to create additional shareholder value.
The earnings call shows a mixed picture. While there is confidence in growth, particularly in the Healthcare and Defense sectors, there are concerns over flat revenue in key areas like Industrial and Aerospace. The Q&A reveals uncertainty in the aerospace sector and reliance on future program ramps. Despite positive guidance and strategic investments, the flat revenue and minor delays temper expectations, leading to a neutral outlook.
The earnings call reveals strong financial performance, with record cash flow and debt reduction. Despite some uncertainties, such as the Boeing contract and supply chain challenges, guidance remains optimistic with expected growth in key sectors. The new share repurchase program further boosts shareholder confidence. The company's market cap suggests moderate volatility, aligning with a positive stock price movement prediction of 2% to 8%.
The earnings call summary shows strong financial performance with record free cash flow, improved margins, and debt reduction. Despite challenges in certain sectors, the company projects robust growth in aerospace and defense and has authorized a new share repurchase program. The Q&A session confirmed strong growth expectations, particularly in aerospace, and highlighted strategic priorities in capital allocation. While there are risks in industrial and EMEA markets, the overall sentiment remains positive, especially with the new program wins and operational efficiencies. Given the market cap, the stock is likely to see a positive movement of 2% to 8%.
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