Plexus at Raymond James Conference: Strategic Growth and Market Expansion

On Monday, 02 March 2026, Plexus Corp (NASDAQ:PLXS) presented at the 47th Annual Raymond James Institutional Investor Conference, projecting a robust fiscal year 2026 with expected revenue growth surpassing the high end of its 9%-12% annual target. The company highlighted its strategic focus on efficiency, market expansion, and innovation while acknowledging near-term investment impacts on margins.

Key Takeaways

• Plexus anticipates exceeding its annual revenue growth target, driven by strong market conditions in sectors like semi-cap, healthcare, and defense.
• The company is investing in automation and AI to enhance operational efficiency and supply chain management.
• Financial targets include a non-GAAP operating margin of 6% and a $100 million free cash flow for fiscal 2026.
• Plexus is expanding its footprint with new facilities in Malaysia and Thailand, supporting significant revenue potential.
• Strategic capital allocation focuses on organic growth, with M&A and shareholder returns also considered.

Financial Results

• Revenue Growth: Plexus aims for 9%-12% annual growth, expecting to exceed the upper limit in fiscal 2026.
• Operating Margin: The long-term non-GAAP operating margin target is 6%. Fiscal 2025 ended at 5.9%, with Q2 fiscal 2026 guided at 5.8% due to investments.
• Free Cash Flow: Targeting $100 million in fiscal 2026, following approximately $500 million generated over 2024 and 2025.
• Cash Cycle: Improved from the high 80s in fiscal 2023 to a target in the mid-60s. Each day in the cash cycle is valued at $10 million.
• Capital Structure: Maintains a low debt-to-EBITDA ratio below 1, with a net cash position.

Operational Updates

• Footprint Expansion: New facilities in Penang, Malaysia, and Thailand are pivotal, with Penang capable of generating $500 million in revenue, expandable to $1 billion.
• Automation Investments: Implementing systems like AutoStore to enhance warehouse efficiency by reducing footprint and picking time.
• AI Deployment: AI is used to optimize procurement and manufacturing processes, significantly reducing timeframes and resource needs.

Future Outlook

• Market Opportunities: Growth anticipated in AI data centers, defense, unmanned systems, LEO satellites, and energy sectors.
• Margin Expansion: Continued investments in efficiency and automation to drive margins beyond 6%.
• Capital Allocation: Prioritizes organic growth, with potential M&A and shareholder returns via share repurchases.

The full transcript provides a comprehensive overview of Plexus’s strategic direction and financial outlook.

Full transcript - 47th Annual Raymond James Institutional Investor Conference:

Melissa Fairbanks, Analyst: All right, I think we’re live. Good morning, everyone. Welcome to the conference. I am Melissa Fairbanks. I cover analog semis and IT supply chain, including the EMS guys with our guest this morning, Plexus. Today from Plexus, we’ve got CEO Todd Kelsey. We’ve got David Abuhl, SVP of Finance, and of course, Shawn Harrison, that many of you already know, who’s head of IR for the company. I think, you know, because it is a generalist conference, it’s always good to do a brief overview of the company. Todd, I think we’ll leave that up to you. You always do a really good job.

Todd Kelsey, CEO, Plexus: All right. Well, thank you, Melissa, and thanks for having us here at the conference. I wanna thank everybody for attending today. A really nice crowd we have in here today. Just to give you a little bit more insight about Plexus. Plexus, what we do is we design, manufacture, and service our customers’ products. They’re typically electronic or electromechanical, and basically what our focus is highly complex products demanding regulatory environments. That leads us to three market sectors that we’re focused on. That would be healthcare life sciences, industrial, and then aerospace and defense. Examples of products that we’d have within those specific marketplaces, again, think the complexity within those markets. Within healthcare, we’re typically finished product for clinical or hospital type settings.

Quite often it’s Class II and Class III regulatory requirements on those products. Things like robotic-assisted surgery, for instance, would be an example. Within industrial commercial, about half of our business is within semiconductor capital equipment. We play from front end to back end. Memory and logic is a pretty even split on that. It’s a very rapidly growing piece of our business as we typically perform well above the WFE projections of the year. The remainder of industrial tends to focus on things like industrial equipment, energy and energy management, robotics and automation.

Within aerospace and defense, commercial aerospace is a key market for us, as is defense around the areas of guidance and unmanned systems, and then commercial space, a rapidly growing piece of that business for us. Plexus is about a $4 billion company. We have three goals that we target. One is revenue growth of 9%-12% annually, operating margin of 6% or greater non-GAAP, and then 15% return on invested capital. Those would be our three financial targets. This year we came out at our Q1 earnings release, which was in January, and we said that we expect to meet or exceed the high end of that 9%-12% range. We’re positioned to have a nice year here this year.

Melissa Fairbanks, Analyst: Maybe if we could talk about some of the dynamics that are driving. You know, that is, like, an unusually optimistic view from you guys. You tend to be a little bit more cautious. There have been a lot of mixed trends going on within your end markets.

Todd Kelsey, CEO, Plexus: Yeah.

Melissa Fairbanks, Analyst: Because you are kind of narrowly focused, you know. Maybe talk about what you’ve been seeing in each of those.

Todd Kelsey, CEO, Plexus: Sure. Sure. I’ll kick that off, Melissa.

Melissa Fairbanks, Analyst: Sure.

Todd Kelsey, CEO, Plexus: I’m sure Shawn will have something to say on the topic as well too, as he’s deeply embedded within our markets. We’re off I mean, off of two I would call it, relatively flat growth years for us, where our markets... I talked about the markets that we’re in. They were relatively depressed, kind of all in succession. We’re starting to see markets respond nicely. In addition to that, some of the larger programs that we had ramping, are starting to gain traction within the marketplace. If we went back, even a quarter earlier, I talked about our projections in January.

If we went back to October, we still felt we could hit this 9%-12% range, although perhaps more on the lower end of that, and that was a result of the program ramps. Since then, I would say we’ve seen more traction within the program ramps. We’ve also landed some newer programs that are ramping a little bit faster than traditionally for us. We’re seeing some good tailwinds within the markets, particularly semi-cap, very strong and strengthening over the last quarter. We’re seeing some positive trends in healthcare, while it’s still a little bit early. Defense as well as commercial space is very strong for us as well too. That leaves most of our portfolio in pretty good shape with, I’d call industrial a little bit mixed.

Shawn Harrison, Head of IR, Plexus: I’d say the other thing is not all of our markets are yet firing on all cylinders. Commercial aerospace, we’re still waiting for, you know, the Boeing and aerospace inflection to come. If that begins to happen, that would be additional upside. Our industrial markets were depressed for the better part of 18 to 24 months, and we’re starting to see that begin to accelerate, but it’s slowly accelerating as well. You’re seeing this tremendous growth even without our market sectors firing on all cylinders from a just underlying demand standpoint.

Melissa Fairbanks, Analyst: Great. Thanks. I know recently you did make some investments in capacity expansion-

Todd Kelsey, CEO, Plexus: Yes

Melissa Fairbanks, Analyst: ... overseas. Maybe talk a little bit about where your manufacturing footprint is, where you’re targeting some of that capacity expansion, and If there are specific end markets that are kind of driving that level of investment.

Todd Kelsey, CEO, Plexus: Yeah. First of all, our main focus around footprint and footprint expansion is creating campus locations.

Melissa Fairbanks, Analyst: Mm-hmm.

Todd Kelsey, CEO, Plexus: We target campus locations. We wanna be close to an area with strong technical talent because of the types of markets that we’re in, as well as just general labor availability. That, where we’ve invested recently is we just launched a facility, our fifth facility in Penang, Malaysia.

Melissa Fairbanks, Analyst: Mm-hmm.

Todd Kelsey, CEO, Plexus: That is, it’s pretty impressive what the team there has been able to do, is we had first revenue shipment in our fiscal Q1, so just the last quarter, and then this quarter will be ballpark break even out of that site.

Melissa Fairbanks, Analyst: Wow

Todd Kelsey, CEO, Plexus: ... next quarter they’ll be close to corporate averages. Very short investment time as that team ramps up that facility. It’ll still have a lot of available capacity at that point as well, too. We believe what’s theirs now would support about a half a billion dollars. It’d be in the $100 million range at that point to get to those levels. We can easily expand to $1 billion if we need to. We’ve also recently invested in Thailand. That’s been a little bit longer ramp because it’s a new geography for us to ramp to profitability, but it’s in really good shape right now and growing very rapidly. As we look forward, our footprint’s in pretty good shape.

I mean, we think we can support substantial growth out of the footprint we’re in, somewhere north of $5, maybe even $6 billion, depending on how where the demand is the strongest across our footprint. we’re more than likely, we’re more likely to expand in locations that we are-.

Melissa Fairbanks, Analyst: Mm-hmm

Todd Kelsey, CEO, Plexus: ... as opposed to add new areas for expansion.

Melissa Fairbanks, Analyst: Great. Maybe talk about, we’ve always talked about kind of the myth of onshoring. Nearshoring has definitely been a dynamic that’s driven some of your recent engagements. Certainly having a North American footprint, a large North American footprint, a lot of these established campus areas help with that.

Todd Kelsey, CEO, Plexus: Yeah.

Melissa Fairbanks, Analyst: Maybe, you know, talk about, how you help your customers navigate some of the uncertainty.

Todd Kelsey, CEO, Plexus: Yeah, I think it’s really been a trend for probably the last 5 to 8 years maybe even.

Melissa Fairbanks, Analyst: Mm-hmm.

Todd Kelsey, CEO, Plexus: This idea of being in region for region. We don’t necessarily see a lot of existing production move just because of the cost to reestablish the supply chain, but I think you are seeing a lot of shortening of the supply chain as we launch new programs. Again, I think we’re positioned well from a footprint standpoint. We have strong U.S. footprint. We’re in Mexico. We have Asia, and then also in Europe. I think the ability to be able to adjust as those supply chain preferences change, I think we’re very well positioned.

Melissa Fairbanks, Analyst: Okay. Great. You did mention that you do have some internal targets in terms of revenue growth, margin targets. Previously, your margin targets were set-

Todd Kelsey, CEO, Plexus: Mm

Melissa Fairbanks, Analyst: ... based on an assumption that you were going to hit $5 billion in revenue.

Todd Kelsey, CEO, Plexus: Mm.

Melissa Fairbanks, Analyst: You’ve exceeded some of those margin targets even, you know, with revenue of around $4 billion in revenue.

Todd Kelsey, CEO, Plexus: Mm.

Melissa Fairbanks, Analyst: Maybe if we could talk about how the mix of the business and maybe even some of that campus-oriented approach to managing the supply chain and efficiencies works.

Todd Kelsey, CEO, Plexus: Yeah, maybe I’ll kick this off. Then I’ll pass it over to David here to go into a bit more detail. One of the things when we hit the last couple of years of a little bit slower than anticipated growth is we put a heavy focus on efficiency, driving margins up, as well as free cash flow.

Melissa Fairbanks, Analyst: Mm-hmm.

Todd Kelsey, CEO, Plexus: That was a very big focus for the business so that we could continue to increase shareholder value in a period where we weren’t seeing the growth that was our typical. Maybe David wants to talk a bit more about how we’re thinking about margin targets moving forward...

Melissa Fairbanks, Analyst: Mm-hmm

Todd Kelsey, CEO, Plexus: ... and where we might see more efficiencies and even, how we’re driving free cash flow.

David Abuhl, SVP of Finance, Plexus: Yeah. Sure, I can hit that. Our current long-term target for non-GAAP operating margin is in that 6% area. We were pleased with fiscal 2025. We ended at 5.9%, so pretty close, and there’s been a few quarters, like you mentioned, where we have been at that 6% level. We’ve guided for fiscal Q2 that we’re gonna be in the 5.8% range for this next quarter, ’cause there’s some near-term investments and headwinds we’re gonna overcome. We’re expecting in the back half of fiscal 2026 to be in that 6% area. Very pleased with the progress our teams are making. The reason that, what gives us confidence are the investments we’re making in efficiency, in automation, like Todd mentioned.

Melissa Fairbanks, Analyst: Mm-hmm.

David Abuhl, SVP of Finance, Plexus: If I can give you an example. We’re, we’re investing in warehouse automation where our team members need to pick parts to supply to our lines. One of the investments we’re making is in an AutoStore unit where it takes one-third of the footprint or the square footage in a site and even one-third of the time for our team members to pick. We’re just getting started on some of these investments. As we ramp that type of capacity and capability across our sites, we know that we’re gonna see margin improvement over time as well as increased capacity within the four walls of that site. There’s many more examples. We’re proud of our team members as they’re driving those efficiencies.

We’re gonna look at that carefully with the investments we need to make for the next level of revenue growth as well.

Melissa Fairbanks, Analyst: Mm-hmm.

David Abuhl, SVP of Finance, Plexus: That might be technology investments that we need to make to ensure that we can hit that 9%-12% or even above revenue growth, and so we’re gonna watch that carefully. We’d love to be in a position here, you know, next year talking about that next level of margin target, but we wanna hit that 6% in the back half of this year first.

Melissa Fairbanks, Analyst: Perfect. We’ll let you do that at our conference next year. How about that?

Todd Kelsey, CEO, Plexus: Good time to launch it, right?

Melissa Fairbanks, Analyst: No problem. That actually kind of, you know, with the automation investment that you’ve done, the AutoStore story is really kind of fascinating with how you have optimized your existing footprint. That leads into we have to bring up AI in every presentation. I think at this point it’s mandatory. Even though you don’t have any direct specific AI data center build exposure, maybe you can talk about how you’re deploying AI to increase some of those internal efficiencies, kind of squeeze out a little bit more...

Todd Kelsey, CEO, Plexus: Yeah, maybe I’ll start. I’m gonna just talk about markets a bit and then Shawn or David, you can talk about how we’re deploying AI. One of the things that we are doing we’re not targeting the compute aspects of the data center.

Melissa Fairbanks, Analyst: Mm-hmm

Todd Kelsey, CEO, Plexus: We are targeting power management and thermal management, and we do have some early stage programs that we’re ramping there. They still have the potential to be pretty significant, so we’re excited about that. I think we can, participate but still stay in this higher complexity focus.

Melissa Fairbanks, Analyst: Mm-hmm

Todd Kelsey, CEO, Plexus: ... that we’re known for, and that we think we have a real competitive advantage at. I’ll pass it off to the rest of the team.

Shawn Harrison, Head of IR, Plexus: Yeah, maybe I’ll start and David fill in where. We’re looking at a lot of processes where, you know, there’s a significant amount of time inefficiency. That could be around, for example, when we procure parts, there’s a very long tail of parts that we have to go out and manually search for and, you know, it’s a couple of hours per part. Being able to create an agent, which we’ve done, and we’re piloting to be able to shorten that timeframe into, you know, minutes versus hours. There’s aspects of, you know, our legal framework and reviewing contracts where we can speed that up.

For example, we’ve done a lot around our supply chain, in helping out with reviewing work orders, increasing automation there, looking at lead times, and that was one of the early applications for us where we found out our supplier lead times weren’t accurate. We dumped five years of data into an LLM and realized that in many cases, these longest lead time components were coming in, you know, weeks ahead of time. We had mismatched inventory to our production schedules.

A lot of it around, and we do have an internal AI team with a leader that’s looking for both, you know, manufacturing processes as well as internal processes and programs with high ROI just to you think about time and inefficiency and where we can, you know, put our team to better use versus, you know, repeatable processes that, while beneficial, aren’t a great use of time.

Melissa Fairbanks, Analyst: Mm-hmm.

David Abuhl, SVP of Finance, Plexus: Maybe to stitch this back to margin, yet another example. We’re proud of an example in our Oradea, Romania site where a team took some software and almost created a bit of a digital twin on one of our circuit board lines and said, "How do we optimize this flow?" When they were done optimizing that, they realized out of our 10 lines, they could actually do the same production with 8 of those lines. Go down 2 lines or grow into those 10.

Melissa Fairbanks, Analyst: Wow.

David Abuhl, SVP of Finance, Plexus: These types of applications of software and AI are actually helping us deliver revenue growth of maybe the same level of fixed expense investment.

Melissa Fairbanks, Analyst: Mm-hmm

David Abuhl, SVP of Finance, Plexus: We get more leverage on that growth.

Melissa Fairbanks, Analyst: Very cool. They are an AI. I think that this, you know, you talked about using AI to kind of manage some of the procurement, the inventory investment and supply chain management. One of the questions that I get, and I think there is a lot of confusion around this, within just your industry broadly, but then also specifically with you, because you’re relatively high mix, lower volume than maybe what we normally think of from, you know, a traditional contract manufacturer as an example. As we get a really sharp increase in component prices, I’m thinking specifically around memory, you’re doing some very, very complex systems that probably consume a lot of memory. How do you manage those types of cost fluctuations?

Shawn Harrison, Head of IR, Plexus: Yeah. I’ll answer it in two aspects ’cause there’s probably a follow-up I see that’s coming as well. Our model is cost-plus. If component prices increase based upon our contracts, that is passed through to our customers. We try to make it margin neutral, to Plexus, and so that inflation, isn’t going to be, you know, eroding our margins significantly. The memory question we get is, you know, that we’re in a tight memory market. Our supply chain team utilized a lot of lessons learned. We put in, both, We reshaped the organization a bit, our leadership there did.

We put in new tools and technology as well, and so we engaged with our customers early and said, "Okay, we’re starting to see the memory market shift a little bit, and we’re starting to see that in other components as well.

Melissa Fairbanks, Analyst: A little bit.

Shawn Harrison, Head of IR, Plexus: Yeah. Right. We try to get them to procure ahead of time and really, you know, "Okay, if this is going to be your demand for the year, let’s get these components in place. We’ll put a cash deposit to offset that, so our balance sheet doesn’t get out of whack." Being really proactive and using the tools to show them kind of, you know, if we stand still, this is the risk, and this is the opportunity for us to help you capture demand and even upside demand.

Melissa Fairbanks, Analyst: Great. I think a really good example of how you managed through that was during the supply chain crisis.

Shawn Harrison, Head of IR, Plexus: Right.

Melissa Fairbanks, Analyst: ... and your ability to still service your customers. Go ahead and answer the follow-up question. I’m not sure what my follow-up question was.

Shawn Harrison, Head of IR, Plexus: Well, the follow-up was more going to be just around availability.

Melissa Fairbanks, Analyst: Yeah. Yeah. Availability, you know, lead times, we have heard of lead times starting to extend in some of the component spaces. Relatively lean channel inventory levels on the supplier basis outside of some very specific areas. Maybe talk about, you know, are you seeing any tight areas? How are you helping your customers manage through that?

Shawn Harrison, Head of IR, Plexus: Yeah, clearly memory. We’re seeing it in some analog semis and some circuit boards. It’s, it’s a proactiveness of our team. We do a multi-quarter rolling forecast and seeing where that is, and seeing where lead times are at, and being able to match that back to fulfilling demand. You know, as we’ve seen demand strengthen through just about the early part of our fiscal year, it’s making sure that, you know, we’re looking out far enough, and the team’s providing customers with some visibility into that. You know, that’s where, you know, it’s a little bit tight right now, but our team is doing a very good job. It also, based upon the work the team is doing, gave us confidence to raise our full year forecast even in.

Melissa Fairbanks, Analyst: Mm-hmm

Shawn Harrison, Head of IR, Plexus: ... you know, a tighter supply chain environment.

Todd Kelsey, CEO, Plexus: One of the things that we did too, when you look back a couple of years ago when inventories swelled and the supply chain was really tight, we put a lot of focus around process and putting better processes in place to manage inventory. I’d say the most significant one is we had an effort to redesign our Sales Inventory and Operations Planning process. I call it redesign, but it was really almost more of taking the best practices of things that were existing, but get it implemented globally with very clear decision rights. I think we’re positioned really well for a little bit tighter supply chain right now to not only manage inventory in a really productive way, but also to fulfill for our customers in a really productive way.

So, um-

Melissa Fairbanks, Analyst: Great

Todd Kelsey, CEO, Plexus: I’m excited about the position we’ve put ourselves in.

Melissa Fairbanks, Analyst: I do want to get to talking about cash cycle and your free cash flow. We’re gonna give David a moment to shine in a little bit. I kind of wanna focus, and I think that this is one area that is maybe a little bit not well understood, is where you are engaged in the industrial end markets and then certainly aerospace and defense. If we’re talking about, you know, some of these leading.

Todd Kelsey, CEO, Plexus: Mm

Melissa Fairbanks, Analyst: ... you know, the fifth defense investment strategies, how you’re positioned there, and I think it is a little bit unique for Plexus because you don’t have the consumer, you know, kind of what we think of a traditional manufacturing.

Shawn Harrison, Head of IR, Plexus: Yeah. I’ll start with A&D.

Melissa Fairbanks, Analyst: Mm

Shawn Harrison, Head of IR, Plexus: ... break into industrial. Where do we play in aerospace and defense? Todd mentioned initially the largest is commercial aerospace. The second-largest is defense and unmanned autonomous systems. That business has the potential for us to double in fiscal 2026 versus where it was two years ago, and it’s a testament to our team that they saw programs coming to market that were likely to be funded, and they engaged early and ensured us placement. We also saw the unmanned market come back to us as complexity has increased. We put a lot of effort, you know, three, four years ago into increasing our engineering engagements, which is a leading driver of manufacturing engagements, so we saw a record year of A&D engineering wins a couple years ago. Then LEO satellites and communication systems.

Our team loves to say we have the most electronics of any EMS provider in space currently, and so as that market continues to evolve and grow, we think we’ll, you know, play very well there just based upon our expertise and the current success. On the industrial side, the biggest chunk is semi-cap. It’s about half the business. Todd talked about our leadership there, front end to back end, and typically it’s, you know, complete systems or large subsystems, and so benefiting from the AI wave, but also just the incremental spending wave. The next two big components are industrial equipment, which includes a lot of automation and robotics within that and a variety of industrial applications.

you know, as we see the robotics market evolve, and we had a nice win last quarter associated with that, we think we’ll be a strong beneficiary. a growing piece that, you know, is likely to be the third largest very shortly is energy, and it’s around power gen, power management, as well as, energy storage and fast charging systems. we’re agnostic to whether it’s nuclear, fossil fuels or, you know, solar or wind. You know, we support our customers across those fronts, and we were lucky, two quarters ago to receive a supplier award from GE, which is a nice feather in our cap.

Adjacencies to AI, but also unique growth markets, and we have strong positioning and technology and expertise in there, and we’re benefiting from that growth, and it’s helping us out not only this fiscal year, but I think the next few.

Melissa Fairbanks, Analyst: Great. I think it is a very unique part of the Plexus story relative to-

Shawn Harrison, Head of IR, Plexus: Yes

Melissa Fairbanks, Analyst: ... you know, maybe some of, you know, the competitive landscape. I always do like to highlight at that as much as possible. Shawn, you mentioned engineering services. Usually when I introduce someone to Plexus, I start with they’re an engineering-led company. Todd, I know that this makes you happy when I try to explain that.

Todd Kelsey, CEO, Plexus: That’s right.

Melissa Fairbanks, Analyst: Maybe talk about, you know, I had the opportunity to tour your engineering facility there in Neenah, a couple of times. You can talk about how that has helped you engage with some of these areas, maybe in LEO satellite, maybe in some of the energy storage and certainly on the defense side.

Todd Kelsey, CEO, Plexus: Well, one of the things that’s really unique about Plexus is engineering is core to the company.

Melissa Fairbanks, Analyst: Right

Todd Kelsey, CEO, Plexus: ... it was founded.

Melissa Fairbanks, Analyst: Right

Todd Kelsey, CEO, Plexus: ... and the idea of product development engineering. Even Melissa made a joke about me. I joined Plexus as a product development engineer 32 years ago.

Melissa Fairbanks, Analyst: It was a compliment. It wasn’t a joke.

Todd Kelsey, CEO, Plexus: It shows you that this is core to who we are.

Melissa Fairbanks, Analyst: Right

Todd Kelsey, CEO, Plexus: Core to how we go to market. I think it’s been a great ability to engage with customers on the front end, help them develop their product, then take it into the marketplace at Plexus’s manufacturing, of course, and now also service it to end of life. We’ve always had a really strong offering within our healthcare life sciences market sector.

Melissa Fairbanks, Analyst: Mm-hmm.

Todd Kelsey, CEO, Plexus: Teams did a really nice job over the last several years is expanding that and growing the business in aerospace and defense.

Melissa Fairbanks, Analyst: Mm-hmm

Todd Kelsey, CEO, Plexus: ... in a very meaningful way. Also in semi-cap in a very meaningful way. We’re seeing a good diversification across the business, and this helps us to, again, get in on the front end on product development, basically lock in manufacturing because there’s no reason to go anywhere else at that point.

Melissa Fairbanks, Analyst: Yeah.

Todd Kelsey, CEO, Plexus: Help design in our supply chain, which helps our customers and us with lower pricing. It’s all a, it’s a win-win situation, but it’s something, again, that’s core to who we are.

Melissa Fairbanks, Analyst: Fantastic. I always love to highlight that.

Todd Kelsey, CEO, Plexus: Mm.

Melissa Fairbanks, Analyst: Before we get into cash cycle stuff, I do wanna open it up, check and see if anyone has any questions. All right. No questions. All right, David, now it’s your turn. I would say, over the past year, I think it was in your fiscal 25, you had an unbelievable increase in free cash flow generation, where even amidst an area where you were growing and investing. Talk about some of the ways that you managed that in terms of driving the efficiencies down through the organization, and then how that translates directly into free cash flow and then also shareholder returns.

David Abuhl, SVP of Finance, Plexus: I love that. I’m glad you asked questions about the gentleman, Todd, that mentioned SIOP. Thank you.

Melissa Fairbanks, Analyst: Yeah.

David Abuhl, SVP of Finance, Plexus: First thing, we have invested in the SIOP process, which really helps with the inventory management from end to end. That’s one thing. Also a real focus on free cash flow points starting in fiscal 2024. Fiscal 2023, our cash cycle was actually in the high 80s, and at one point in fiscal 2024, it hit high 90s, just following all the supply chain challenges, and we really needed to get after it as an organization. We instituted a new focus on free cash flow, where even free cash flow targets down to customer level...

Melissa Fairbanks, Analyst: Mm-hmm

David Abuhl, SVP of Finance, Plexus: ...were implemented across the organization. You know, I’m a finance guy, and I love the return on invested capital metric, but maybe not everybody in our organization really understood what they could do to drive that. With this new education on free cash flow that we launched in 2024, it really kinda opened everyone’s eyes to what they could do to manage this for the enterprise and for our customers at the same time. In fiscal 2024, we generated kinda cash flow, same in 2025. Across the two years was about half a billion free cash flow, and we were pleased with ending our cash cycle in fiscal 2025. With that, you know, cash flow that we generated, the balance sheet is in a very healthy space right now.

Going forward, our cash cycle, we’d love it to be in the 60s cause we do need to invest in new program ramps, especially with the amazing growth that Todd was talking about as we’re investing in this year. In the mid-60s is about what we’re targeting. We got for the next fiscal quarter between 65-69 as we’re investing in some program ramps, and we’re gonna keep working on that number. I would say going forward, even though we’re in a year of significant growth, we’re still targeting $100 million of free cash flow in fiscal 2026. The last time we grew at this level, Melissa, we generated probably negligible free cash flow.

Melissa Fairbanks, Analyst: Mm-hmm.

David Abuhl, SVP of Finance, Plexus: We’re really showing that our teams have changed our focus, and with SIOP and with this free cash flow focus, it’s kind of a new day for Plexus as we can manage our cash flow in periods of growth. Like I said, the balance sheet’s pretty healthy right now. Our capital structure, for example, our debt to EBITDA ratio is below 1 right now. That’s very pleased. We’re in a net cash position right now, but that’s not our strategy or target in the long term.

Melissa Fairbanks, Analyst: Sure.

David Abuhl, SVP of Finance, Plexus: It’s a very good place to be at the moment. The teams are doing very well.

Melissa Fairbanks, Analyst: For sure. Each cash cycle day reminds me.

David Abuhl, SVP of Finance, Plexus: It’s worth about $10 million. Every time we can move that day by 1, we’re taking $10 million of fresh cash flow that we can invest somewhere else, right? Right now the organic, growth opportunities ahead of us are tremendous, and so that’s our primary focus, and that might include investing in working capital. We did see, you know, free cash flow in the first fiscal quarter, a bit of a dip as we invested ahead of new program ramps-

Melissa Fairbanks, Analyst: Mm-hmm

David Abuhl, SVP of Finance, Plexus: ...and there were some seasonal payments. Again, we think that’s gonna come back in the back half of the year. We’re gonna deliver about $100 million for the year.

Melissa Fairbanks, Analyst: Great.

David Abuhl, SVP of Finance, Plexus: Thank you.

Melissa Fairbanks, Analyst: Amazing. I would like to, before we get into some closing comments, we only have a couple minutes left, but maybe talk about how your shareholder return strategy, talking about free cash flow, talking about managing that balance sheet, being in a net cash position, obviously you’ve got other areas where you need to invest internally to continue to drive that growth. You also have been delivering quite a bit of returns to shareholders through buyback activity.

David Abuhl, SVP of Finance, Plexus: Yep.

Melissa Fairbanks, Analyst: You know, talk about where some of those priorities are going forward.

David Abuhl, SVP of Finance, Plexus: Yeah. Let me start with the capital allocation priorities.

Melissa Fairbanks, Analyst: Mm-hmm.

David Abuhl, SVP of Finance, Plexus: First, it’s in those organic growth opportunities. Again, primary working capital or inventory growth might be the first place you might think. Also even up in the P&L, there might be some investments we need to make in, say, technology capabilities or the things we need to manage with our margin. First it’s on the organic growth side of the house. You know, if there’s, we do keep our eye out for M&A, but it has to be for the right capability or the right capacity that we need as an organization. Has a high bar right now because of the significant growth opportunities that are in front of us, but we do look. Lastly, if there is, you know, excess cash we have, we do wanna return that to shareholders.

We were pleased in fiscal 2025, the board authorized a $100 million share purchase program.

Melissa Fairbanks, Analyst: Mm-hmm

David Abuhl, SVP of Finance, Plexus: ...which doubled the size and doubled the pace at which we were repurchasing shares. With that excess cash, giving it back to shareholders, we have about $63 million left on our current, on our current authorization. Let’s see how it goes.

Melissa Fairbanks, Analyst: Mm-hmm

David Abuhl, SVP of Finance, Plexus: ...for the rest of fiscal 26. That’s all part of that $100 million of free cash flow target we put out there already.

Melissa Fairbanks, Analyst: Excellent. I love it. Todd, would you like to offer any closing remarks?

Todd Kelsey, CEO, Plexus: Uh-

Melissa Fairbanks, Analyst: Just kind of like a summary?

Todd Kelsey, CEO, Plexus: Sure, yeah. I want to thank everybody for attending. Great audience here today. What I would say is we’re in a period of accelerating momentum here at Plexus. We like our revenue growth trajectory that we’re on right now. We continue to see strong sequential revenue growth as we flow through our fiscal 26, and our ability to generate strong margins and strong free cash flow exist as well too. It’s positioned to be a really nice year.

Melissa Fairbanks, Analyst: Excellent. Love it. Thank you very much, guys. I think we’re gonna head downstairs. We are doing a breakout session where we can get into some more detailed Q&A. Thanks very much.

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