Plexus (PLXS) Q3 2024 earnings summary

Executive summary

• Fiscal Q3 2024 revenue was $961M, within guidance, with non-GAAP operating margin of 5.8% and non-GAAP EPS of $1.45, both exceeding expectations.

• Free cash flow reached $114M, the second highest in company history, and net income rose 58.9% to $25.1M.

• 35 new manufacturing program wins, with record contributions from Healthcare/Life Sciences and strong customer recognition from major clients.

• Customer sentiment is positive, with momentum in aerospace & defense, SemiCap, and healthcare life sciences sectors.

• Market-driven inventory corrections and weaker demand in some sectors impacted results, but improvements are anticipated into fiscal 2025.

Financial highlights

• Q3 2024 revenue: $961M; gross margin: 9.8%, up from prior periods; GAAP operating margin: 4.1%; non-GAAP operating margin: 5.8%.

• Non-GAAP EPS: $1.45; GAAP diluted EPS: $0.91; net income: $25.1M.

• Free cash flow: $114M in Q3, $147M YTD.

• Cash and cash equivalents: $270M; total debt: $349M.

• Return on invested capital: 10.4%; cash cycle: 83 days, improved sequentially and YoY.

Outlook and guidance

• Q4 2024 revenue guidance: $990M–$1.03B; non-GAAP operating margin: 5.6%–6%; non-GAAP EPS: $1.50–$1.65.

• Fiscal 2025 outlook: 9%–12% revenue growth, >6% non-GAAP operating margin exiting the year, continued strong free cash flow.

• Capital spending for FY24 expected at $90M–$110M (<3% of revenue); annual effective tax rate for FY24: 15.0%–17.0%.

• Management anticipates a material impact on effective tax rate in FY25 due to global minimum tax.