Plexus Announces Fiscal Fourth Quarter and Fiscal Year 2023 Financial Results

NEENAH, WI, (GLOBE NEWSWIRE) — Plexus Corp. (NASDAQ: PLXS) today announced financial results for our fiscal fourth quarter and fiscal year ended September 30, 2023, and guidance for our fiscal first quarter 2024 ending December 30, 2023.

• Reports fiscal fourth quarter 2023 revenue of $1.02 billion, GAAP operating margin of 5.2% and GAAP diluted EPS of $1.44, including $0.21 of stock-based compensation expense
• Reports record fiscal 2023 revenue of $4.21 billion, GAAP operating margin of 4.7% and GAAP diluted EPS of $4.95, including $0.75 of restructuring and other charges as well as $0.76 of stock-based compensation expense
• Reports fiscal 2023 non-GAAP operating margin of 5.2% and non-GAAP EPS of $5.70, including $0.76 of stock-based compensation expense
• Initiates fiscal first quarter 2024 revenue guidance of $990 million to $1.03 billion with GAAP diluted EPS of $1.15 to $1.33, including $0.19 of stock-based compensation expense

			Three Months Ended
			Sep 30, 2023				Sep 30, 2023		Dec 30, 2023
			Q4F23 Results				Q4F23 Guidance		Q1F24 Guidance
Summary GAAP Items
Revenue (in billions)			$	1.02			$1.00 to $1.04		$0.99 to $1.03
Operating margin				5.2	%		4.7% to 5.2%		4.8% to 5.3%
Diluted EPS (1)			$	1.44			$1.18 to $1.36		$1.15 to $1.33
Summary Non-GAAP Items (2)
Return on invested capital (ROIC)				13.4	%
Economic return				4.4	%
(1	)	Includes stock-based compensation expense of $0.21 for Q4F23 results, $0.19 for Q4F23 guidance and $0.19 for Q1F24 guidance.
(2	)	Refer to Non-GAAP Supplemental Information in Tables 1 and 2 for additional information regarding non-GAAP financial measures.

Fiscal Fourth Quarter 2023 Information

• Won 30 manufacturing programs during the quarter representing $192 million in annualized revenue when fully ramped into production
• Delivered fiscal 2023 manufacturing wins of $946 million in annualized revenue when fully ramped into production
• Purchased $3.4 million of our shares at an average price of $98.91 per share under our current $50.0 million share repurchase authorization, leaving $5.7 million available

Fiscal Year 2023 Information

• Delivered $62 million of free cash flow
• Produced ROIC of 13.4%, representing an economic return of 440 basis points above our weighted average cost of capital of 9.0%
• Purchased $40.9 million of our shares at an average price of $95.96 per share under our share repurchase authorization

Todd Kelsey, Chief Executive Officer, commented, “Fiscal 2023 was an exceptional year for Plexus. Our team’s focus on delivering operational and customer service excellence resulted in outstanding financial performance. For fiscal 2023, we delivered revenue growth in excess of 10%, 5.2% non-GAAP operating margin and free cash flow of $62 million. We also delivered excellent results for our fiscal fourth quarter, with in-line revenue of $1.024 billion, GAAP operating margin of 5.2%, which met the high-end of guidance, and GAAP EPS of $1.44, which exceeded guidance.”

Mr. Kelsey continued, “Our strong fiscal 2023 performance was also demonstrated through the advancement of our sustainable and responsible business practices. I am proud of how our team members supported our vision of helping to build a better world in fiscal 2023, contributing more than 19,000 volunteer hours to our local communities, significantly expanding the reach and impact of our employee resource groups, donating over $1 million through our Plexus charitable foundation and substantially exceeding our 5% energy intensity reduction goal for the year. In addition, the Bevi smart water dispenser that is manufactured in our Appleton, WI facility was recently voted the Coolest Thing Made in Wisconsin for 2023. This product highlights how we partner with our customers to combine innovation and sustainability to build a better world.”

Patrick Jermain, Executive Vice President and Chief Financial Officer, commented, “We generated $66 million in free cash flow for the fiscal fourth quarter, a result well above our projections. Contributing to this strong performance was our fiscal fourth quarter cash cycle of 87 days, which was favorable to our expectations and sequentially lower by 3 days. For fiscal 2023, we delivered return on invested capital of 13.4%, which was 440 basis points above our weighted average cost of capital. We drove this result and created substantial shareholder value through strong operating performance, prudent capital investments and reductions in inventory.”

Mr. Kelsey commented, “We are guiding fiscal first quarter revenue of $990 million to $1.03 billion, GAAP operating margin of 4.8% to 5.3% and GAAP EPS of $1.15 to $1.33. We expect to benefit from sustained, robust commercial aerospace demand, improving semiconductor capital equipment demand and new program ramps, while also facing headwinds as a result of short-term inventory corrections with a small number of Healthcare/Life Sciences customers and ongoing supply chain challenges with certain lagging edge semiconductors.”

Mr. Kelsey concluded, “We continue to forecast accelerating revenue growth as fiscal 2024 progresses, leveraging strong demand in our Aerospace/Defense and Industrial market sectors, increasing new program ramp momentum and lessening supply chain challenges, which creates the opportunity to capture our ongoing unfulfilled backlog of customer demand. As revenue growth accelerates, we also anticipate operating margin expansion. Consequently, we remain confident in achieving our goal of $5 billion in revenue with 5.5% GAAP operating margin by our fiscal 2025.”

Quarterly & Annual Comparison	Three Months Ended												Twelve Months Ended
(in thousands, except EPS)	Sep 30, 2023				Jul 1, 2023				Oct 1, 2022				Sep 30, 2023				Oct 1, 2022
Revenue	$	1,023,947			$	1,021,610			$	1,123,848			$	4,210,305			$	3,811,368
Gross profit		96,716				93,646				107,105				394,554				347,229
Operating income		53,333				28,204				62,314				195,820				178,185
Net income		40,261				15,799				50,457				139,094				138,243
Diluted EPS	$	1.44			$	0.56			$	1.78			$	4.95			$	4.86
Gross margin		9.4	%			9.2	%			9.5	%			9.4	%			9.1	%
Operating margin		5.2	%			2.8	%			5.5	%			4.7	%			4.7	%
ROIC (1)		13.4	%			13.5	%			13.0	%			13.4	%			13.0	%
Economic return (1)		4.4	%			4.5	%			3.7	%			4.4	%			3.7	%
(1) Refer to Non-GAAP Supplemental Information in Tables 1 and 2 for non-GAAP financial measures discussed and/or disclosed in this release, such as adjusted operating margin, adjusted net income, adjusted diluted EPS, ROIC and economic return.

Business Segment and Market Sector Revenue

Plexus measures operational performance and allocates resources on a geographic segment basis. Plexus also reports revenue based on the market sector breakout set forth in the table below, which reflects Plexus’ market sector focused strategy. Top 10 customers comprised 48% of revenue during the fourth quarter of fiscal 2023. This is down three percentage points from the third quarter of fiscal 2023 and ten percentage points from the fourth quarter of fiscal 2022. For fiscal 2023, top 10 customers comprised 50% of revenue, down six percentage points from fiscal 2022.

Business Segments ($ in millions)	Three Months Ended												Twelve Months Ended
	Sep 30, 2023				Jul 1, 2023				Oct 1, 2022				Sep 30, 2023				Oct 1, 2022
Americas	$	389			$	371			$	380			$	1,558			$	1,311
Asia-Pacific		557				572				689				2,358				2,300
Europe, Middle East and Africa		108				105				85				403				316
Elimination of inter-segment sales		(30	)			(26	)			(30	)			(109	)			(116	)
Total Revenue	$	1,024			$	1,022			$	1,124			$	4,210			$	3,811

Market Sectors ($ in millions)	Three Months Ended															Twelve Months Ended
	Sep 30, 2023					Jul 1, 2023					Oct 1, 2022					Sep 30, 2023					Oct 1, 2022
Healthcare/Life Sciences	$	449	44	%		$	451	44	%		$	467	42	%		$	1,875	44	%		$	1,565	41	%
Industrial		417	41	%			428	42	%			520	46	%			1,756	42	%			1,753	46	%
Aerospace/Defense		158	15	%			143	14	%			137	12	%			579	14	%			493	13	%
Total Revenue	$	1,024				$	1,022				$	1,124				$	4,210				$	3,811

Non-GAAP Supplemental Information

Plexus provides non-GAAP supplemental information, such as ROIC, economic return and free cash flow because such measures are used for internal management goals and decision-making, and because they provide management and investors with additional insight into financial performance. In addition, management uses these and other non-GAAP measures, such as adjusted operating income, adjusted operating margin, adjusted net income and adjusted diluted EPS, to provide a better understanding of core performance for purposes of period-to-period comparisons. Plexus believes that these measures are also useful to investors because they provide further insight by eliminating the effect of non-recurring items that are not reflective of continuing operations. For additional information on non-GAAP measures, please refer to the attached Non-GAAP Supplemental Information tables.

ROIC and Economic Return

ROIC for fiscal year 2023 was 13.4%. Plexus defines ROIC as tax-effected annualized adjusted operating income divided by average invested capital over a five-quarter period for the fiscal year. Invested capital is defined as equity plus debt and operating lease obligations, less cash and cash equivalents. Plexus’ weighted average cost of capital for fiscal 2023 was 9.0%. ROIC for fiscal year 2023 less Plexus’ weighted average cost of capital resulted in an economic return of 4.4%.

Free Cash Flow

Plexus defines free cash flow as cash flows provided by operations less capital expenditures. For the three months ended September 30, 2023, cash flows provided by operations was $89.8 million, less capital expenditures of $24.2 million, resulting in free cash flow of $65.6 million. For the fiscal year ended September 30, 2023, cash flows provided by operations was $165.8 million, less capital expenditures of $104.0 million, resulting in free cash flow of $61.8 million.

Cash Cycle Days			Three Months Ended
			Sep 30, 2023			Jul 1, 2023			Oct 1, 2022
Days in Accounts Receivable			59			63			60
Days in Contract Assets			13			12			11
Days in Inventory			154			161			144
Days in Accounts Payable			(64	)		(68	)		(72	)
Days in Advanced Payments (1)			(75	)		(78	)		(70	)
Annualized Cash Cycle (2)			87			90			73
(1	)	Includes a reclassification in the presentation of advanced payments from customers reflected in prior period amounts. As of September 30, 2023, July 1, 2023 and October 1, 2022, the impact of this reclassification was an increase in the Company’s days in advanced payments and a reduction in annualized cash cycle by 16, 21, and 27 days, respectively.
(2	)	Plexus calculates cash cycle as the sum of days in accounts receivable, days in contract assets and days in inventory, less days in accounts payable and days in advanced payments.

Conference Call and Webcast Information

What:	Plexus Fiscal 2023 Q4 Earnings Conference Call and Webcast
When:	Thursday, October 26, 2023 at 8:30 a.m. Eastern Time
Where:	Participants are encouraged to join the live webcast at the investor relations section of the Plexus website, plexus.com. Participants can also join utilizing the links below: Audio conferencing link: https://register.vevent.com/register/BI5a69de202ccc46feab44d36aad3c82a2 Webcast link: https://edge.media-server.com/mmc/p/vynass2n
Replay:	The webcast will be archived on the Plexus website and will be available as on-demand for 12 months

Investor and Media Contact
Shawn Harrison
+1.920.969.6325
shawn.harrison@plexus.com