PLEXUS CORP (PLXS)·Q3 2025 Earnings Summary

Executive Summary

• Non-GAAP EPS of $1.90 beat guidance and Wall Street consensus, driven by strong gross margin execution, lower-than-anticipated interest expense and a favorable tax rate; GAAP diluted EPS was $1.64. Revenue was $1.018B, roughly in-line sequentially and with guidance, but modestly below S&P consensus; EBITDA was below consensus.*
• Margin execution continued: GAAP operating margin rose to 5.3% and non-GAAP operating margin reached 6.0% near the high end of guidance; ROIC expanded to 14.1%, exceeding WACC by 520 bps.
• Free cash flow was $13.2M; cash cycle increased to 69 days (+1 q/q) but inventory days improved by 4 days; sixth consecutive quarter of gross inventory reduction.
• Q4 FY25 guidance implies sequential revenue growth ($1.025–$1.065B) and non-GAAP EPS of $1.82–$1.97; tax rate is guided down to 8–10% and capital spending for FY25 lowered as Malaysia site timing shifts to FY26—catalysts for estimate revisions and sentiment.

What Went Well and What Went Wrong

• What Went Well

  • Margin execution and EPS beat: “Non-GAAP operating margin of 6.0% was near the high end of guidance and non-GAAP EPS of $1.90 exceeded guidance… free cash flow again surpassed our expectations.” — CEO Todd Kelsey.
  • ROIC strength: ROIC of 14.1% exceeded WACC by 520 bps; sustained working capital improvements, six consecutive quarters of gross inventory reduction.
  • Commercial momentum: 41 manufacturing program wins representing $250M annualized revenue; diversified across sectors; early signs of European defense sector activity.

• What Went Wrong

  • Healthcare/Life Sciences grew 2% sequentially vs a mid-single-digit increase expected, due to a customer design update causing temporary production delay.
  • Semi cap program pushouts created timing friction (not perishable demand), contributing to EBITDA below consensus despite EPS beat.*
  • Cash cycle days rose to 69 (from 68), with a net $19M of advanced payments returned to customers; free cash flow, while positive, stepped down q/q.

Financial Results

Segment breakdown by market sector ($USD Millions):

Geographic segments ($USD Millions):

KPIs and cash cycle components:

Guidance Changes

Note: No dividend guidance discussed.

Earnings Call Themes & Trends

Management Commentary

• “Revenue of $1.018 billion met our guidance… Non-GAAP operating margin of 6% was near the high end of our guidance and non-GAAP EPS of $1.90 exceeded guidance.” — CEO Todd Kelsey.
• “Non-GAAP EPS… exceeded our guidance due to… lower than anticipated interest expense and a favorable tax rate… we delivered $13,200,000 of free cash flow.” — CFO Patrick Jermain.
• “We secured 41 new manufacturing programs with $250,000,000 in revenue annually when fully ramped… well-balanced across all market sectors.” — CEO Todd Kelsey.
• “We are guiding revenue of $1.025 to $1.065 billion… At the midpoint… robust non-GAAP fiscal 2025 EPS growth of 26%.” — CEO Todd Kelsey.

Q&A Highlights

• Semi cap pushouts are timing-related, not demand destruction; Q4 buoyed by new program ramps. “Moving revenue to the right… not perishable demand.” — COO Oliver Mihm.
• Commercial aerospace remains muted; defense/space strong; European defense conversations increasing post Paris Air Show.
• Malaysia site ramp: minimal margin drag in Q4; seeded with significant new business; expected quick path to profitability.
• Capacity headroom: Utilization suggests >$5B revenue run-rate possible at full capacity; consistent across regions.
• Tariffs: Costs passed to customers; limited demand shifts; USMCA compliance north of 80% in Mexico products.
• Cash cycle target mid-to-low 60s achievable; continued focus on inventory and deposits.

Estimates Context

• Q3 FY25 actuals vs S&P Global consensus:
  • Revenue: $1.0183B vs $1.0209B estimate* (slight miss).
  • Primary EPS: $1.90 vs $1.7117 estimate* (beat).
  • EBITDA: $73.334M vs $78.725M estimate* (miss).*
• Q4 FY25 setup:
  • Company guidance: Revenue $1.025–$1.065B; non-GAAP EPS $1.82–$1.97; GAAP EPS $1.57–$1.72.
  • S&P Global consensus: Revenue $1.046B*; Primary EPS $1.863* (tax-rate guidance of 8–10% and lower interest expense may bias EPS estimates up).*

Values retrieved from S&P Global.*

Key Takeaways for Investors

• EPS beat was quality-driven: gross margin strength, lower interest expense, and favorable tax rate; operating margin at 6% non-GAAP near high end provides confidence into Q4.
• Revenue trajectory is sequentially positive across Q1–Q3 with diversified sector contributions; Healthcare/Life Sciences and Industrial both up q/q in Q3, albeit Healthcare below plan due to a customer design delay.
• Working capital discipline remains central: inventory days improved, cash cycle guided to mid-60s; sustains ROIC well above WACC, supporting buybacks ($100M authorization).
• Semi cap pushouts are timing-related; robust wins and ramps (Penang, Guadalajara) support FY26 growth across energy and semi cap.
• European defense is an emerging growth lever; commercial aerospace recovery remains a future catalyst not embedded in FY26 outlook.
• FY25 capital spending cut to ~$80–$100M with payments shifting to FY26; combined with ~$100M free cash flow and lower tax rate in Q4, estimates likely need upward EPS revision despite modest gross margin drag from Malaysia startup.
• Near-term trading catalysts: non-GAAP EPS guidance implying ~26% FY25 growth, continued repurchases, and strong ROIC; watch Healthcare program ramp timing and tariff policy updates.

Other Relevant Q3 FY25 Materials

• Fiscal 2024 Sustainability Report (June 2): Scope 1 & 2 emissions -6.4% YoY; waste-to-landfill intensity -13.7%; >20,000 paid volunteer hours; >50% of global supply chain spend assessed on sustainability criteria.