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    PLXS
    Earnings call· Jun 2026(Q3 FY26)

    PLEXUS Q3 FY26 earnings call PLXS

    Jul 30, 2026 Source

    Executive summary

    Plexus Q3 FY26 — Record Revenue and Strong FY27 Outlook

    Plexus delivered record Q3 FY26 revenue and strong profitability, driven by robust end-market demand and successful program launches across all sectors. The company provided an optimistic outlook for FY27, anticipating revenue growth exceeding its long-term goal and continued operating margin expansion, supported by strategic capacity additions and efficient working capital management. Supply chain tightness and inflationary pressures are being actively managed.

    Highlights

    5

    • Record revenue of $1.305 billion, exceeding guidance and representing a 28% YoY increase.

    • Non-GAAP operating margin of 6.3%, meeting the high end of guidance and increasing 30 bps YoY.

    • Non-GAAP EPS of $2.32, exceeding guidance.

    • Secured 31 new manufacturing programs with $255 million in annualized revenue when fully ramped.

    • Cash cycle of 62 days, the best quarterly result in over 5 years.

    Concerns

    2

    • Fiscal Q4 free cash flow forecast to be breakeven or a slight usage of cash due to timing of working capital investments.

    • Healthcare/Life Sciences sector expects short-term growth moderation in FY27 following a year of strong new product launches.

    Guidance & targets

    27
    CategoryTargetConfidence
    Revenue
    $1.33 billion to $1.38 billion
    high materiality
    High
    Non-GAAP operating margin
    6.1% to 6.5%
    high materiality
    High
    Non-GAAP EPS
    $2.47 to $2.63
    high materiality
    High
    Revenue growth
    greater than 20%
    high materiality
    High
    Non-GAAP operating margin
    greater than 6%
    high materiality
    High
    Revenue growth
    in excess of our 9% to 12% goal
    high materiality
    High
    Operating margin
    expansion
    high materiality
    High
    Aerospace Defense sector revenue growth
    more than 20%
    medium materiality
    High
    Aerospace Defense sector revenue growth
    well exceed our 9% to 12% goal
    medium materiality
    High
    Healthcare/Life Sciences sector revenue growth
    high teens
    medium materiality
    High
    Healthcare/Life Sciences sector revenue growth
    at least mid-single-digit
    medium materiality
    Medium
    Industrial sector revenue growth
    20-plus percent
    medium materiality
    High
    Industrial sector revenue growth
    well exceed our 9% to 12% goal
    medium materiality
    High
    Gross margin
    10% to 10.3%
    medium materiality
    High
    Selling and administrative expense
    $57.5 million to $58.5 million
    low materiality
    High
    Non-GAAP operating margin
    at or above 6%
    high materiality
    High
    Non-operating expense
    approximately $6.3 million
    low materiality
    High
    Non-operating expense quarterly run rate
    slightly higher
    low materiality
    Medium
    Non-GAAP effective tax rate
    between 12% and 14%
    low materiality
    High
    Non-GAAP effective tax rate
    between 15% and 17%
    low materiality
    High
    Non-GAAP effective tax rate
    between 16% and 18%
    low materiality
    Medium
    Cash cycle days
    low to mid-60s
    medium materiality
    High
    Cash cycle days
    sustain this performance
    medium materiality
    High
    Capital expenditures
    2% to 3% of revenue
    medium materiality
    High
    Capital expenditures
    $100 million to $120 million
    medium materiality
    High
    Free cash flow
    breakeven or a slight usage of cash
    medium materiality
    High
    Free cash flow generation
    in excess of $100 million
    high materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Aerospace and Defense
    Revenue increased 10% sequentially, exceeding mid-single-digit expectations. Strong execution from supply chain and operations teams accelerated demand capture. Expected to be approximately flat sequentially in Q4 FY26, with a return to sequential growth in Q1 FY27. FY26 revenue growth expected to be more than 20%, led by defense and unmanned subsectors. FY27 potential for robust revenue growth well exceeding 9-12% goal, driven by program ramps, market share gains, and robust end-market demand in defense, unmanned, security, and space, plus continued commercial aerospace demand improvement.
    		——10%—
    Healthcare/Life Sciences
    Revenue increased 2% sequentially, exceeding flat forecast due to successful program ramps and improved customer demand. Expected to be approximately flat sequentially in Q4 FY26 due to delays in program ramps offsetting stronger customer demand. FY26 revenue expected to increase in the high teens YoY, well ahead of mid-single-digit market growth. FY27 potential for at least mid-single-digit revenue growth, benefiting from program ramps and strong demand for surgical robotics and therapeutic/monitoring solutions, but with short-term growth moderation expected after a year of numerous new product launches.
    		——2%—
    Industrial
    Revenue increased 23% sequentially, well ahead of low double-digit forecast. Outperformance driven by operational and supply chain excellence supporting expanding demand in semi-cap and other industrial subsectors. Expected high single-digit to low double-digit sequential revenue growth in Q4 FY26 due to strengthening end-market demand and program ramps. FY26 revenue expected to increase by 20-plus percent. FY27 potential for very strong revenue growth well exceeding 9-12% goal, with robust growth from semi-cap, industrial automation, robotics, test and measurement, and energy management/storage solutions.
    		——23%—

    Operational metrics

    13
    Non-GAAP operating margin
    6.3%up 30 bps YoY
    Q3 FY26

    Met the high end of guidance, benefiting from leverage on revenue growth, operational efficiencies, and continued cost discipline.

    Non-GAAP EPS
    $2.32
    Q3 FY26

    Exceeded guidance due to higher revenue and favorable nonoperating expense, partially offset by a higher tax rate.

    Selling and administrative expense
    $70.1 million
    Q3 FY26

    In line with guidance, included typical stock-based compensation and executive retirement expenses. Gained nearly 50 bps of leverage vs. Q2 FY26 excluding these expenses.

    Nonoperating expense
    $4.8 million
    Q3 FY26

    Favorable to expectations, driven by additional interest income.

    Capital expenditures
    $26.6 million
    Q3 FY26

    Spend on capital assets in the quarter.

    Share repurchase
    $20.6 million
    Q3 FY26

    Amount of stock repurchased in the quarter.

    Share repurchase authorization remaining
    $21 million
    Q3 FY26

    Remaining amount on current repurchase authorization.

    Return on invested capital (ROIC)
    14.9%590 bps above WACC
    Q3 FY26

    Highest in several years, despite an increase in invested capital to support robust revenue growth.

    Revolving credit facility outstanding
    $172 million
    Q3 FY26

    Amount outstanding under the revolving credit facility.

    Revolving credit facility available
    $320 million
    Q3 FY26

    Amount available to borrow under the revolving credit facility.

    Cash cycle days
    62 days
    Q3 FY26

    Best quarterly result in over 5 years, driven by improvements across all areas of working capital, including inventory.

    Operating equipment effectiveness
    over 10%
    last 12 months

    Improvement in some areas, unleashing capacity and contributing to preparedness for growth.

    Renewable energy adoption
    100%
    as of FY26

    Achieved through a combination of on-site generation and purchased renewable energy.

    Industry KPIs

    8
    MetricValueDetails
    Orders book to bill$255 millionUSD
    Segment revenue growth10%%
    Design wins product cycle ramps31programs
    Order visibility backlog policy$4.5 billionUSD
    Supply demand imbalance lead timestightening
    Capacity expansion internal sourcingnorth of $0.5 billionUSD
    End market revenue mix organic growth28%%
    Operating margin incremental leverage6.3%%

    Orderbook & backlog

    7
    New manufacturing programs annualized revenue$255 millionQ3 FY26

    When fully ramped into production

    Qualified manufacturing opportunities funnel$4.5 billionQ3 FY26

    up 12% sequentially, up 23% YoY

    Record level, supporting robust long-term revenue growth

    Aerospace and Defense wins$135 millionQ3 FY26

    Part of the $255M total new programs

    Aerospace and Defense wins year-to-date$400 millionQ3 FY26

    more than 2x combined FY24 and FY25 performance

    Positions for long-term secular market outgrowth

    Healthcare/Life Sciences wins$53 millionQ3 FY26

    Part of the $255M total new programs

    Industrial wins$67 millionQ3 FY26

    Part of the $255M total new programs

    Data center funnel (power and thermal management)around $0.5 billionQ3 FY26

    Conservative estimate for active opportunities

    Deals & partnerships

    8
    ASMSupplier Performance Award for overall Supplier Excellence and Prism Sustainability Award for circularity

    Recognitions underscoring commitment to deep customer collaboration and advancing sustainable practices.

    New defense and security customerSecure wireless communication system

    Won by teams in Boise, Idaho, and Oradea, Romania. Dual region support ensures U.S. and EU regulatory compliance. Helps establish Oradea as a center of defense excellence in Continental Europe.

    Existing customerNaval submarine electronics program

    Awarded to the Boise team due to superior customer service.

    Existing healthcare customerPrototype build of instruments for surgical robotics platform

    Won by team in Neon, Wisconsin, for a platform Plexus currently supports.

    Leading healthcare customerProduction of a next-generation ultrasound platform

    Won by teams in Haining, China, and Oradea, Romania. Driven by long-standing relationship and ability to provide global support, resulting in market share gain.

    Existing customerFollow-on award for a market-leading patient monitoring device

    Awarded to the team in Penang, Malaysia, due to strong engineering relationship and superior execution record.

    New customerBuild battery energy storage systems for data centers

    Awarded to the Bangkok, Thailand team. Customer valued engagement, transparent communication, and expert technical insights. Initial production already underway.

    Existing customerFollow-on award for an innovative vehicle imaging and inspection system

    Won by the team in Guadalajara, Mexico.

    Capital programs

    1
    Penang, Malaysia capacity expansionunderway
    Start: underway

    Benefit: north of $0.5 billion of additional capacity

    Expansion of existing facilities to deliver incremental capacity efficiently. Expected to maintain FY27 capital expenditures in the range of 2% to 3% of revenue. Will not have a meaningful impact to margin as it's part of an existing profitable facility.

    Risks & headwinds

    4
    Tornado impact on local communityQ3 FY26

    No material impact to Plexus' operations or headquarters

    Mitigation: Company operations were unaffected; focus on community support.

    Supply chain tightening and inflationary pressuresQ3 FY26 and ongoing

    Offset by revenue leverage and operational productivity gains

    Mitigation: Proactive management by supply chain teams, close collaboration with customers on forecasting and preplacement of inventory (often customer-funded).

    Short-term growth moderation in Healthcare/Life SciencesFY27

    FY27 growth potential of at least mid-single-digits vs. high teens in FY26

    Mitigation: Expected as activity normalizes following a year of tremendous success in launching numerous new products; long-term growth algorithm expected to return.

    Higher interest expenseQ4 FY26 and FY27

    Nonoperating expense up sequentially in Q4 FY26, quarterly run rate slightly higher in FY27

    Mitigation: Factored into financial guidance.

    What to watch in Q4 FY26

    5

    FY27 Revenue Growth

    FY27
    Currentgreater than 20% for FY26
    Targetin excess of 9% to 12% goal

    Why it matters

    This indicates continued strong top-line momentum and market share gains, crucial for the investment thesis.

    For fiscal 2027, we currently see the potential to maintain quarterly sequential revenue expansion and generate revenue growth in excess of our 9% to 12% goal.

    Q&A highlights

    6

    How will Plexus meet future demand given the positive FY27 outlook, and what is the confidence level in the growth trajectory?

    Management expressed high confidence in the FY27 growth trajectory, noting that supply chain management is already factored into projections. They are pulling in expansion plans, specifically adding over $0.5 billion in capacity at the Penang, Malaysia site efficiently within existing facilities. They are also mindful of talent acquisition and retention.

    “I would say, first of all, our confidence level in our growth trajectory that we put out there is high. Our supply chain team, and we take into account we're mindful of the tightness of the supply chain right now. And as we provide projections, whether it be for Q4 or for fiscal 2027, that has that in mind.”

    asked by David Williams · answered by Todd Kelsey

    2 min read5 chapters

    Detailed Narrative

    01

    Record Performance and Strong Growth Outlook

    Plexus achieved record revenue of $1.305 billion in Q3 FY26, a 28% YoY increase, exceeding guidance. Non-GAAP operating margin reached 6.3%, at the high end of expectations, and non-GAAP EPS was $2.32, also above guidance. The company anticipates over 20% revenue growth for FY26 and sees potential for FY27 revenue growth to exceed its 9% to 12% goal, driven by market share gains and new program ramps.

    02

    New Program Wins and Funnel Expansion

    The company secured 31 new manufacturing programs in Q3, representing $255 million in annualized revenue when fully ramped. This included a significant new partnership in the industrial sector for battery energy storage systems for data centers and a robust contribution from aerospace and defense. The funnel of qualified manufacturing opportunities expanded to a record $4.5 billion, up 23% YoY, supporting long-term revenue growth.

    03

    Sustainability and Operational Excellence

    Plexus received ASM's Supplier Performance and Prism Sustainability Awards, highlighting its commitment to customer collaboration and sustainable practices. All Penang facilities now operate on 100% renewable energy as of FY26. The company also released its annual sustainability report, establishing formal greenhouse gas emission reduction targets. Operational productivity gains and revenue leverage contributed to solid operating performance.

    04

    Capacity Expansion and Working Capital Efficiency

    To support accelerating revenue momentum, Plexus is expanding production capacity at its Penang, Malaysia site, expecting to add over $0.5 billion in capacity efficiently within existing facilities. Despite increased working capital investments, the cash cycle improved to 62 days, the best in over five years. The company expects to sustain this efficiency into FY27 and return to meaningful free cash flow generation.

    05

    Market Sector Performance and Drivers

    Aerospace and Defense revenue grew 10% sequentially, with FY26 growth expected over 20% and FY27 growth well exceeding the 9-12% goal, driven by defense, unmanned, security, and space subsectors. Healthcare/Life Sciences grew 2% sequentially, with FY26 growth in the high teens, but expects moderation in FY27. Industrial revenue surged 23% sequentially, with FY26 growth over 20% and FY27 growth well exceeding the goal, led by semi-cap, industrial automation, robotics, and energy management.

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