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    PLXS
    Earnings call· Mar 2026(Q2 FY26)

    PLEXUS Q2 FY26 earnings call PLXS

    Apr 30, 2026 Source

    Executive summary

    Plexus Q2 FY26 — Record Wins and Accelerated Revenue Growth Outlook

    Plexus delivered strong Q2 FY26 results, driven by record program wins and broad-based market sector strength, leading to an increased full-year revenue growth forecast. The company is expanding investments in operational efficiency and technology while maintaining financial discipline, positioning for sustained momentum beyond FY26 despite some supply chain tightening and increased working capital needs in the near term. The call also marked the retirement of the long-serving CFO, Pat Jermain, and the appointment of David Abuhl as his successor.

    Highlights

    5

    • Secured a record $355 million in new manufacturing program wins in Q2 FY26.

    • Q2 FY26 revenue of $1.164 billion exceeded guidance, representing a robust 19% year-over-year increase.

    • Non-GAAP EPS of $2.05 in Q2 FY26 exceeded guidance.

    • Achieved a robust 6% non-GAAP operating margin in Q2 FY26, at the top end of guidance.

    • Funnel of qualified manufacturing opportunities expanded 11% sequentially to $4 billion in Q2 FY26.

    Concerns

    2

    • Supply chain tightening observed in specific commodities including semiconductors, passives, memory, raw PCB fabs, high-performance passives, magnetics, and microcontrollers, with lead times extending.

    • Anticipated higher investments in working capital for Q3 FY26 to support accelerating revenue growth, expecting a usage of free cash flow for the quarter.

    Guidance & targets

    12
    CategoryTargetConfidence
    Q3 FY26 Revenue
    $1.2 billion to $1.25 billion
    high materiality
    High
    Q3 FY26 Non-GAAP Operating Margin
    5.9% to 6.3%
    medium materiality
    High
    Q3 FY26 Non-GAAP EPS
    $2.02 to $2.18
    high materiality
    High
    FY26 Revenue Growth
    mid-teens or greater
    high materiality
    High
    FY26 Non-GAAP Operating Margin
    6% or greater
    high materiality
    High
    FY26 Non-GAAP Effective Tax Rate
    16% and 18%
    medium materiality
    High
    FY26 Capital Expenditures
    $100 million to $120 million
    medium materiality
    High
    FY26 Free Cash Flow
    $50 million to $75 million
    high materiality
    Medium
    FY26 Cash Cycle Days
    low 60s
    medium materiality
    High
    Aerospace and Defense FY26 Revenue Growth
    well into the double digits
    medium materiality
    High
    Healthcare/Life Sciences FY26 Revenue Growth
    exceed our 9% to 12% goal
    medium materiality
    High
    Industrial FY26 Revenue Growth
    well in excess of our 9% to 12% growth goal
    medium materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Aerospace and Defense
    Revenue increased 19% sequentially in Q2 FY26, significantly outperforming expectations. Improved end market demand across all subsectors and expanded component availability drove the result. Q3 FY26 revenue expected to be up mid-single digits. FY26 revenue growth anticipated to be well into double digits, exceeding the 9% to 12% goal, supported by strong demand in commercial aerospace, space, and exceptional growth in defense.
    Q2 FY26 Wins: $44 million
    		——19%—
    Healthcare/Life Sciences
    Revenue increased 1% sequentially in Q2 FY26, aligned with expectations. Q3 FY26 revenue expected to be flat, with an anticipated return to sequential growth in Q4 FY26. FY26 revenue growth anticipated to exceed the 9% to 12% goal, supported by ongoing and new program ramps, share gains, and strong end market demand across therapeutics and monitoring subsectors.
    Q2 FY26 Wins: $116 million
    		——1%—
    Industrial
    Revenue increased 12% sequentially in Q2 FY26, in line with forecasts. Q3 FY26 outlook is for a low double-digit increase, supported by substantial growth in the semicap subsector and strength in industrial equipment. FY26 revenue growth anticipated to be well in excess of the 9% to 12% growth goal, supported by new program ramps and robust growth in semicap, offsetting pockets of demand softness.
    Q2 FY26 Wins: $195 million (record high)
    		——12%—

    Operational metrics

    22
    Non-GAAP Operating Margin
    6%at top end of guidance
    Q2 FY26

    Achieved while continuing to heavily invest in program ramps, operational efficiency initiatives and technologies.

    Non-GAAP EPS
    $2.05exceeded guidance
    Q2 FY26

    Exceeded the top end of guidance due to favorable non-operating expense and tax rate.

    Capital Expenditures
    $12.5 million
    Q2 FY26

    Spend during the fiscal second quarter.

    Shares Repurchased
    109,000
    Q2 FY26

    Approximate number of shares acquired.

    Buyback Amount
    $20.6 million
    Q2 FY26

    Amount spent on share repurchases.

    Remaining Buyback Authorization
    $42 million
    end of Q2 FY26

    Remaining on the current repurchase authorization.

    Net Cash Position
    —similar to last quarter
    end of Q2 FY26

    Ended the fiscal second quarter in a net cash position.

    Revolving Credit Facility Outstanding
    $137 million
    Q2 FY26

    Amount outstanding under the revolving credit facility.

    Revolving Credit Facility Available
    over $350 million
    Q2 FY26

    Amount available to borrow under the revolving credit facility.

    Return on Invested Capital (ROIC)
    13.8%480 basis points above WACC
    Q2 FY26

    Despite an increase in invested capital to support robust revenue growth.

    Cash Cycle Days
    64 days5 days lower than last quarter
    end of Q2 FY26

    Favorable to expectations.

    Days in Receivables
    improved 3 dayssequentially
    Q2 FY26

    Due to exceptional collection efforts.

    Days in Inventory
    improved 4 dayssequentially
    Q2 FY26

    From continued progress on working capital initiatives and increased revenue.

    Accounts Payable Days
    increased 3 dayssequentially
    Q2 FY26

    Due to timing of supplier payments and procuring inventory in anticipation of significant revenue growth.

    Days in Advanced Payments
    6-day reduction
    Q2 FY26

    With a net $15 million being returned to customers during the quarter.

    Gross Margin
    10.2%at the top end of guidance
    Q2 FY26

    Due to a favorable mix of service offerings and fixed cost leverage, and productivity improvements offsetting compensation cost increases.

    Selling and Administrative Expense
    $57.3 millionslightly above guidance
    Q2 FY26

    Due to additional incentive compensation expense and expanded technology and automation investments.

    Non-operating expense
    $4 millionfavorable to expectations
    Q2 FY26

    Due to foreign exchange gains and lower-than-anticipated interest expense.

    Operating Leverage Drop-through
    10% to 12%
    typical

    Typical drop-through on revenue growth, balanced with investments in capabilities.

    Malaysia Facility Profitability
    a little bit behind breakeven
    Q2 FY26

    Due to revenue ramping faster and additional investments; still on track to exit the fiscal year with strong profitability.

    Funnel of Qualified Manufacturing Opportunities
    $4 billionexpanded 11% sequentially
    Q2 FY26

    Expanded due to record high funnels in aerospace and defense and industrial sectors.

    Annualized Revenue from New Wins
    $355 millionrecord
    Q2 FY26

    When fully ramped into production, with broad-based contributions across market sectors.

    Industry KPIs

    8
    MetricValueDetails
    Orders book to bill$355 millionUSD
    Segment revenue growthAerospace and Defense: 19% sequential; Healthcare/Life Sciences: 1% sequential; Industrial: 12% sequential%
    Design wins product cycle ramps30programs
    Order visibility backlog policy$4 billionUSD
    Supply demand imbalance lead timestightening
    Capacity expansion internal sourcing$100 million to $120 millionUSD
    End market revenue mix organic growth19%%
    Operating margin incremental leverage6%%

    Orderbook & backlog

    2
    Funnel of Qualified Manufacturing Opportunities$4 billionend of Q2 FY26

    expanded 11% sequentially

    Includes record high funnels in aerospace and defense and industrial sectors, which expanded in excess of 45% compared to Q2 FY25.

    Annualized Revenue from New Manufacturing Program Wins$355 millionQ2 FY26

    record

    Represents annualized revenue when fully ramped into production from 30 new manufacturing programs.

    Deals & partnerships

    7
    Existing customer (Kelso, Scotland site)Follow-on share gain award in the defense subsector.

    Customer noted the strength of partnership and operational excellence as factors in their decision.

    Existing unmanned defense customer (Boise, Idaho facility)Significant follow-on award.

    Relationship strength and operational excellence were factors in the award.

    Existing customer (Xiamen, China site)Next-generation point-of-care ultrasound system.

    Won due to the strength of new product launch capabilities and seamless engineering to production transition.

    Existing customer (Neenah, Wisconsin facility)Significant award for a robotic surgical platform.

    Seamless engineering to production transition capabilities contributed to the award.

    Existing customer (Bangkok, Thailand facility)Substantial award for a new product line for data center power solutions.

    Long-term strategic partnership and strength of value proposition contributed to the win.

    Existing robotics customer (Guadalajara, Mexico campus)Substantial follow-on award.

    Strength of execution and ability to quickly ramp to fulfill demand supported the win.

    New customer (Guadalajara, Mexico campus)Selected to support production of an energy storage system for electric commercial vehicles.

    Welcoming a new customer to Plexus for electric commercial vehicle energy storage.

    Capital programs

    1
    Capital Expendituresunderway$100 million to $120 million

    Benefit: higher throughput on existing production lines, increasing site revenue capacity

    Reconfirmed guidance for fiscal 2026. Teams have improved throughput of assets by 10%, avoiding approximately $20 million of capital investments, allowing growth on a very similar capital base.

    Risks & headwinds

    2
    Supply chain tighteningCurrent

    Lead times extending for semiconductors, passives, memory, raw PCB fabs, high-performance passives, magnetics, and microcontrollers.

    Mitigation: Proactive identification of risk, consultative engagement with customers, extending forecast visibility, expanding alternates, advanced materials planning, early PO placement, extended PO horizon, and use of AI tools to find supply.

    Increased working capital investmentsQ3 FY26

    Higher investments in working capital expected for Q3 FY26, leading to anticipated usage of free cash flow.

    Mitigation: Focus on working capital efficiency, with an expectation to end FY26 with cash cycle days in the low 60s.

    What to watch in Q3 FY26

    5

    FY26 Revenue Growth

    Next quarter (Q3 FY26 earnings call)
    Currentmid-teens or greater
    TargetConfirmation of 'mid-teens or greater' or further upward revision

    Why it matters

    This is a core thesis driver, indicating continued strong demand and execution, and any revision would significantly impact investor sentiment.

    Accordingly, for fiscal 2026, we now expect to deliver mid-teens or greater revenue growth overall, a substantially increased forecast from our initial expectations last October.

    Q&A highlights

    6

    How should investors think about longer-term working capital investment to support growth, considering the strong acceleration and CapEx efficiencies?

    Pat Jermain stated that low to mid-60s days is a good range for cash cycle going forward, with approximately 10% to 15% additional working capital dollars associated with any revenue growth. David Abuhl added that efficiency gains, such as a 10% improvement in asset throughput, have avoided about $20 million in capital investments, allowing revenue growth on a similar capital base.

    “I'd say 2 things, Melissa. I think from a days perspective, I think we're in a really good spot in this low to mid-60s going forward. I think that would carry into fiscal '27. I think the other thing to look at is with revenue growth, we're probably around 10% to 15% additional working capital dollars associated with any growth in revenue.”

    asked by Melissa Dailey Fairbanks · answered by Patrick Jermain

    2 min read6 chapters

    Detailed Narrative

    01

    Record Program Wins and Funnel Expansion

    Plexus secured 30 new manufacturing programs in Q2 FY26, representing a record $355 million in annualized revenue when fully ramped into production. All market sectors contributed to this performance, including broad-based opportunities in aerospace and defense, expanded relationships in surgical and imaging platforms, and new engagements in data center power solutions. The funnel of qualified manufacturing opportunities expanded 11% sequentially to $4 billion, driven by record high funnels in the aerospace and defense and industrial sectors, which expanded over 45% compared to Q2 FY25.

    02

    Strong Q2 Performance and Increased FY26 Outlook

    Fiscal Q2 revenue of $1.164 billion exceeded guidance, marking the fifth consecutive quarter of sequential growth and a robust 19% year-over-year increase. Non-GAAP EPS of $2.05 also surpassed expectations, with a 6% non-GAAP operating margin at the top end of guidance. Due to this momentum, Plexus now expects to deliver mid-teens or greater revenue growth for fiscal 2026, a substantial increase from initial expectations, alongside robust profitability of 6% or greater non-GAAP operating margin.

    03

    Operational Efficiency and Strategic Investments

    The company is expanding significant investments in operational efficiency initiatives and technologies to support ongoing revenue growth and drive greater long-term operational efficiency. These efforts have already yielded tangible benefits, with teams improving throughput on existing production lines by 10%, avoiding approximately $20 million in capital investments. This focus allows Plexus to grow revenue on a similar capital base and increase site revenue capacity.

    04

    Working Capital Management and Free Cash Flow

    Plexus delivered better-than-expected working capital performance in Q2 FY26, with cash cycle at 64 days, a 5-day sequential improvement. Days in receivables improved by 3 days, and days in inventory improved by 4 days. While Q3 is expected to see higher working capital investments, leading to anticipated free cash flow usage, the company remains confident in ending FY26 with cash cycle days in the low 60s and generating $50 million to $75 million in free cash flow for the year.

    05

    Market Sector Dynamics and Growth Drivers

    Aerospace and Defense revenue increased 19% sequentially, driven by improved demand and component availability, with FY26 growth expected well into double digits. Industrial revenue was up 12% sequentially, supported by substantial growth in the semicap subsector and strength in industrial equipment, with FY26 growth anticipated well in excess of goals. Healthcare/Life Sciences revenue was up 1% sequentially, expected to be flat in Q3, but with a return to sequential growth in Q4 and FY26 growth exceeding goals, supported by new program ramps and strong end market demand.

    06

    CFO Transition and Leadership Confidence

    The call highlighted the retirement of Pat Jermain after 12 years as CFO, with Todd Kelsey and Oliver Mihm expressing gratitude for his leadership. David Abuhl was introduced as the new CFO, with confidence expressed in his extensive financial expertise and strategic mindset to lead the finance organization and support Plexus's continued growth journey.

    AI-generated summary of the company’s earnings call. Not investment advice.