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PLEXUS CORP (PLXS)·Q4 2025 Earnings Summary

Executive Summary

  • Q4 2025 revenue was $1.058B, near the high end of guidance, with GAAP EPS $1.87 and non-GAAP EPS $2.14; non-GAAP EPS beat both company guidance and Street consensus materially, aided by favorable discrete tax items and lower non-operating expense .
  • Non-GAAP operating margin held at 5.8% (inline with guidance), while fiscal 2025 delivered 40 bps of non-GAAP op margin expansion and 30% non-GAAP EPS growth year over year .
  • Free cash flow was strong at $97M in Q4, driving $154M for FY25; inventory and cash cycle improved to best levels in five years, supporting net cash at year-end .
  • Q1 2026 guidance: revenue $1.050–$1.090B, non-GAAP EPS $1.66–$1.81, gross margin 9.8–10.1%, tax rate 16–18%; management expects margins to meet/exceed the 6% target as FY26 progresses, with capex $90–$110M and ~$100M FY26 FCF .
  • Stock reaction catalysts: sustained semicap share gains, accelerating program ramps (including unmanned aircraft and power/thermal for AI data centers), and improving Healthcare/Life Sciences demand; watch for potential upside from commercial aerospace if OEM production rates translate into demand within ~90 days .

What Went Well and What Went Wrong

What Went Well

  • Robust non-GAAP EPS beat: $2.14 vs guidance $1.82–$1.97; CFO cited lower interest expense, favorable FX vs expectations, and a favorable tax rate as contributors .
  • Operational execution: seventh consecutive quarter of inventory reduction; cash cycle improved to 63 days (best in five years), supporting ROIC of 14.6% (+570 bps above WACC) .
  • Strategic wins: 28 manufacturing programs worth $274M annualized; notable share gains in semicap, expansion in unmanned aircraft, and AI-powered healthcare platform wins .

Selected management quote:

  • “Non-GAAP EPS of $2.14 substantially exceeded our guidance due to favorable discrete tax items, with inline non-GAAP operating margin of 5.8%.” — CEO Todd Kelsey .
  • “Cash cycle…63 days…best result delivered in the past five years.” — CFO Patrick Jermain .

What Went Wrong

  • Aerospace/Defense revenue decreased 6% sequentially due to minor delays in new program ramps; sector revenue was essentially flat for FY25 as commercial aerospace inventory adjustments offset defense strength .
  • Gross margin ticked down sequentially (9.9% vs 10.1% in Q3) on mix and higher incentive compensation, partially offset by productivity gains .
  • Non-operating expense expected to rise in Q1 2026 (~$4.6M) as capitalization of interest on site additions fades and tax rate steps up to 16–18% with global minimum tax impacts .

Financial Results

Headline metrics vs prior periods and vs estimates

MetricQ4 2024Q3 2025Q4 2025
Revenue ($USD Millions)$1,050.6 $1,018.3 $1,058.4
Gross Margin (%)10.3% 10.1% 9.9%
Operating Margin (%)5.1% 5.3% 5.0%
GAAP Diluted EPS ($)$1.48 $1.64 $1.87
Non-GAAP Diluted EPS ($)$1.85 $1.90 $2.14
Free Cash Flow ($USD Millions)N/A$13.2 $97.2

Street consensus vs actuals (S&P Global; asterisk denotes S&P data*)

MetricQ4 2024Q3 2025Q4 2025
Revenue Consensus Mean ($USD Millions)*N/A1,020.91,046.0
Revenue Actual ($USD Millions)$1,050.6 $1,018.3 $1,058.4
Primary EPS Consensus Mean ($)* (non-GAAP)N/A1.71171.8633
Non-GAAP EPS Actual ($)$1.85 $1.90 $2.14
EBITDA Consensus Mean ($USD Millions)*N/A78.779.4
EBITDA Actual ($USD Millions)N/A73.3 [GetEstimates]*72.3 [GetEstimates]*
# of Estimates (EPS/Revenue)*N/A6 / 66 / 6

Values retrieved from S&P Global.*

Segment breakdown

SegmentQ4 2024 ($MM)Q3 2025 ($MM)Q4 2025 ($MM)
Americas$307 $312 $336
Asia-Pacific$618 $594 $605
Europe, Middle East & Africa$128 $117 $119
Inter-segment Elimination($2) ($5) ($2)
Total Revenue$1,051 $1,018 $1,058

Market sector mix

SectorQ4 2024 ($MM, %)Q3 2025 ($MM, %)Q4 2025 ($MM, %)
Aerospace/Defense$184, 18% $183, 18% $173, 16%
Healthcare/Life Sciences$415, 39% $420, 41% $424, 40%
Industrial$452, 43% $415, 41% $461, 44%
Total Revenue$1,051 $1,018 $1,058

KPIs

KPIQ4 2024Q3 2025Q4 2025
Cash Cycle (days)64 69 63
Days in Inventory127 128 118
ROIC (%)11.8% 14.1% 14.6%
Top 10 Customers (% of rev)52% 48% 49%
Share Repurchases ($)N/A$18.4M $21.5M

Guidance Changes

MetricPeriodPrevious GuidanceCurrent Guidance / ActualChange
Revenue ($B)Q4 2025$1.025–$1.065 $1.058 Met/near high end
GAAP Diluted EPSQ4 2025$1.57–$1.72 $1.87 Raised vs guided (beat)
Non-GAAP EPSQ4 2025$1.82–$1.97 $2.14 Raised vs guided (beat)
Revenue ($B)Q1 2026N/A$1.050–$1.090 New
Non-GAAP Op Margin (%)Q1 2026N/A5.6–6.0 New
GAAP Op Margin (%)Q1 2026N/A4.9–5.3 New
Non-GAAP EPSQ1 2026N/A$1.66–$1.81 New
Gross Margin (%)Q1 2026N/A9.8–10.1 New
SG&A ($M)Q1 2026N/A$51.5–$52.5 (incl. ~$6.6M SBC) New
Non-Operating Expense ($M)Q1 2026N/A~$4.6 New
Effective Tax Rate (%)Q1 2026 & FY26N/A16–18 New
Diluted Shares (M)Q1 2026N/A~27.3 New
Cash Cycle (days)Q1 2026N/A66–70; end FY similar to FY25 New
Capex ($M)FY26N/A$90–$110 New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2025)Previous Mentions (Q3 2025)Current Period (Q4 2025)Trend
AI/technology initiativesInvesting in internal AI, automation; largest engineering wins in 5+ years N/A in transcript; semicap wins highlighted in release Focused on power generation and thermal management for AI; healthcare products leveraging AI; new AI-powered cell analysis platform win in Romania Expanding participation via power/thermal and healthcare AI
Supply chain/tariffsPassing tariffs to customers; modeling relocations; “in-region, for-region” positioning; no demand degradation Uncertainties around tariffs acknowledged; Q4 guide contemplated Monitoring regulatory changes; diversifying supply; continued trade compliance efforts Active mitigation; not yet demand-impacting
Semicap/product performanceSemi-cap driving sector growth, wins and share gains; broader industrial muted ex-semicap Semi-cap growth low teens expected for FY25; Q4 guide built on share gains Q4 beat aided by late-quarter demand upside from semicap; expect similar semicap growth in FY26 via share gains Strengthening; share gains continue
Energy/power/data centersEarly ramps in energy management N/ASeasonality near-term; positioning for power generation around data centers; wins in high-voltage rail Building pipeline; seasonal dip Q1 then growth
Aerospace/Defense & unmannedUp HSD in Q3 guide; softness in commercial aerospace offset by defense/space A&D 18% mix; steady sequential revenue A&D down 6% seq in Q4 on ramp timing; Q1 expected up mid-single digits; unmanned aircraft subsector called out Near-term headwind turning to growth; unmanned growing
Regional trends/capacityNew Penang (Malaysia) site opening; warehouse automation rollout APAC strength; capacity across regions Penang to break even in one quarter, near corporate margins in two; Thailand margin improvement expected Rapid capacity scaling with efficiency
Regulatory/legal/taxHedging FX; working capital improvements N/AGlobal minimum tax lifts ETR to 16–18% Tax headwind in FY26
Operational efficiency5 consecutive quarters inventory reduction; cash cycle improved Cash cycle 69 days; continued improvements Best cash cycle in 5 years; automation expanding (warehouse, material robots) Sustained execution

Management Commentary

  • “Revenue of $1.058 billion approached the high end of our guidance… Non-GAAP EPS of $2.14 substantially exceeded our guidance due to favorable discrete tax items… We delivered fiscal fourth quarter free cash flow of $97 million.” — CEO Todd Kelsey .
  • “We delivered $154 million in free cash flow for fiscal 2025… ending the year in a net cash position… anticipate delivering robust fiscal 2026 free cash flow of approximately $100 million.” — CFO Patrick Jermain .
  • “We are guiding fiscal first quarter revenue of $1.050 to $1.090 billion, non-GAAP operating margin of 5.6% to 6.0% and non-GAAP EPS of $1.66 to $1.81.” — CEO Todd Kelsey .
  • “Capital spending [FY26] to be $90 million to $110 million… We expect to maintain margins at a similar level [Q2] with an opportunity to meet or exceed our 6% margin target as the year progresses.” — CFO Patrick Jermain .

Q&A Highlights

  • Investments and growth trajectory: Management’s confidence in FY26 growth is tied to substantial new program ramps (including semicap share gains); Penang to break even in one quarter and near corporate margins in two, implying minimal margin drag .
  • AI exposure: Focus on power generation and thermal management for AI infrastructure and healthcare devices leveraging AI; compute not a target due to commoditization risk .
  • Semicap outlook: Expect FY25/FY26 to be similar, with WFE low-single-digit growth but Plexus driven by share gains to deliver low-teens semicap growth .
  • Aerospace/Defense cadence: Q4 delays behind; Q1 sector up mid-single digits; unmanned aircraft subsector a growing driver; potential future tailwinds from commercial aerospace production rate increases in 2026 .
  • Margins and efficiency: Higher incentive comp is a headwind; automation and site efficiency (Thailand) can drive margin improvements; FY26 potential to meet/exceed 6% operating margin target .

Estimates Context

  • Street consensus for Q4 2025: revenue $1.046B* vs actual $1.058B (beat), non-GAAP EPS $1.86* vs actual $2.14 (beat); EBITDA $79.4M* vs actual $72.3M* (miss on EBITDA) with 6 estimates contributing to EPS and revenue [GetEstimates]* .
  • Prior quarters: Q3 2025 revenue $1.021B* vs actual $1.018B (slight miss), non-GAAP EPS $1.71* vs actual $1.90 (beat); Q2 2025 revenue $0.980B* vs actual $0.980B (inline), non-GAAP EPS $1.54* vs actual $1.66 (beat) [GetEstimates]* .

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Quality of beat: Non-GAAP EPS beat driven by favorable tax and lower non-operating expense alongside solid execution; sustainability of margin improvement depends on productivity and automation offsetting higher incentive comp .
  • Growth vectors: Semicap share gains and program ramps, unmanned aircraft, and AI-adjacent power/thermal projects underpin FY26 revenue acceleration toward the 9–12% goal .
  • Operating leverage: Expectation to meet/exceed 6% operating margin in FY26 as Penang ramps quickly and Thailand improves; watch quarterly cadence as Q1 includes seasonal and investment effects .
  • Cash discipline: Inventory reduction and cash cycle improvements support ongoing strong FCF (FY26 guide ~$100M) and capital returns via buybacks; ended FY25 in net cash .
  • Risk watch: Global minimum tax lifts ETR to 16–18%; tariffs/regulatory dynamics require continued supply chain agility; commercial aerospace visibility uncertain but could turn positive within ~90 days of OEM production rate changes .
  • Near-term trading: Positive setup from EPS beat and Q1 guidance within growth framework; monitor semicap orders and A&D ramp timing for confirmation; EBITDA underperformance vs Street is a watch item even as EPS beat supports sentiment [GetEstimates]* .
  • Medium-term thesis: Durable multi-sector wins, improving ROIC, and automation-driven efficiency enhance margin resiliency and FCF, supporting re-rating potential if 6%+ operating margin is sustained in FY26 .