Plexus (NASDAQ:PLXS) opened fiscal 2026 with what management described as “significant momentum,” driven by program ramps across market sectors, ongoing market share gains, and signs of strengthening end-market demand in select areas. On its earnings call, the electronics manufacturing services provider reported first-quarter revenue of $1.07 billion, which met the midpoint of its guidance range and marked the company’s fourth consecutive quarter of sequential growth. Revenue increased 10% year over year.
Non-GAAP diluted earnings per share were $1.78, which management said was at the high end of guidance, reflecting “very strong operating performance” despite near-term investments tied to additional capacity, program ramps, and technology.
Revenue outlook improves as demand strengthens in pockets
For the fiscal second quarter, Plexus guided revenue of $1.11 billion to $1.15 billion, which would represent 6% sequential growth and 15% year-over-year growth at the midpoint. The company also guided non-GAAP operating margin of 5.6% to 6.0% and non-GAAP EPS of $1.80 to $1.95.
Management said the second-quarter outlook assumes Plexus will offset seasonal cost increases, higher variable compensation expense, and increased efficiency investments through revenue leverage and operational efficiency initiatives.
Large A&D win highlights quarter’s bookings
Plexus reported winning 22 new manufacturing programs during the first quarter, valued at $283 million in annualized revenue when fully ramped. Kelsey highlighted record quarterly performance in aerospace and defense, estimating $220 million in annualized revenue from wins in that sector alone.
COO Oliver Mihm said aerospace and defense revenue increased 3% sequentially in the first quarter, slightly below Plexus’ expectations due to customer end-of-year inventory management. For the second quarter, the company expects mid-single-digit sequential growth in the sector, supported by demand improvement in commercial aerospace and defense and new ramps across commercial aerospace, defense, and space subsectors.
Mihm noted Plexus is not yet seeing the “full pull-through” from Boeing volume increases in its outlook. He also said implied defense spending reflected in headlines has not translated into a “substantial” demand signal yet, suggesting potential upside if that materializes.
Sector-by-sector: healthcare ramps, semi-cap inflection, robust funnel
In healthcare life sciences, first-quarter revenue increased 10% sequentially, aligning with expectations. Plexus expects the sector to be flat to up low single digits sequentially in the second quarter, reflecting modest growth in therapeutics. The company reported $40 million of first-quarter healthcare wins, including an award for a next-generation imaging product in Haining, China, and an imaging-related mechanical cabinet subassembly award in Oradea, Romania for an existing customer.
In industrial, first-quarter revenue declined 8% sequentially, in line with the company’s forecast. Plexus expects a high single- to low double-digit sequential increase in the second quarter, driven by demand strength and program ramps in semi-cap and ramps plus near-term demand improvements in industrial equipment. Industrial wins were cited as $23 million, including a semi-cap award for Neenah, Wisconsin and a robotics-related assembly award in Oradea, Romania tied to a transition from a customer’s internal manufacturing.
Management repeatedly emphasized semi-cap as an area of improving demand. Kelsey said demand-driven increases can translate to revenue quickly—within one to two quarters—assuming materials pipelines are in place. For larger capital or footprint needs, he said timelines are “year-plus,” though Plexus indicated it has ample available capacity.
Mihm also disclosed the company’s funnel of qualified manufacturing opportunities remained “robust” at $3.6 billion. He said aerospace and defense momentum continued to build, with only a modest sequential decrease in A&D qualified opportunities despite the quarter’s large wins, indicating “strong backfill.” Management also said the aerospace and defense engineering solutions funnel reached a record high in the first quarter.
Margins, cash flow, and capital allocation
First-quarter gross margin was 9.9%, consistent with guidance and the prior quarter, despite a slight impact from opening a new Malaysia facility. SG&A expense was $51.7 million, flat sequentially, and non-GAAP operating margin was 5.8%.
CFO Pat Jermain said the Malaysia facility’s impact on first-quarter gross margin was “fairly minimal,” less than 10 basis points. He said the facility should be near break-even in the second quarter and approach close to the company’s corporate average margin in the back half of fiscal 2026. Jermain also pointed to tailwinds from the company’s newer Thailand facility, which he said could benefit overall margins by about 25 to 30 basis points in fiscal 2026.
For the second quarter, Plexus guided gross margin of 9.9% to 10.2% and SG&A expense of $54 million to $55 million, which includes more than $1 million of seasonal compensation headwinds and additional variable incentive compensation. Jermain said seasonal bonus pay would be a 50 to 60 basis-point headwind to operating margin in the March quarter, which Plexus expects to overcome through productivity, revenue leverage, and improving performance at new facilities.
On cash flow, Plexus said cash from operations consumed about $16 million in the first quarter to support program ramps. Capital expenditures were $35 million, largely for carryover payments tied to the new Malaysia facility, resulting in a cash outflow of about $51 million for the quarter. The company repurchased roughly 153,000 shares for $22.4 million and ended the quarter with about $63 million remaining on its repurchase authorization.
Cash cycle at quarter-end was 69 days, within guidance but six days higher sequentially, primarily due to increased inventory days supporting anticipated revenue growth. For the second quarter, Plexus guided cash cycle of 65 to 69 days and expects break-even to slight cash usage as working capital investments continue. The company reaffirmed its expectation for approximately $100 million in free cash flow for fiscal 2026.
Jermain also raised the company’s fiscal 2026 capital spending expectation to $100 million to $120 million, slightly above the prior estimate, as Plexus invests to support higher growth. The company guided an effective tax rate of 16% to 18% for both the second quarter and fiscal 2026.
Operations and supply chain: lead times and automation
In Q&A, management acknowledged early tightening in certain component lead times, including semiconductors and printed circuit boards out of the Asia-Pacific region. Mihm said Plexus is working with customers to pre-position inventory and extend purchase order coverage where needed, including in memory, to mitigate supply risk and ensure continuity. Kelsey said the company believes it is in a better position than in prior periods of tight supply due to improvements in its sales and inventory operations planning process and systems.
Plexus also discussed automation and efficiency initiatives, including expanded use of AutoStore warehouse systems and broader applications of AI and machine learning. Mihm said the company expects full site deployment of certain automated material deployment technology by spring 2026 and described the return on investment as under 12 months. Management also said AI is being used to reduce work-in-process and improve labor efficiency in higher-level assembly, as well as to accelerate the quoting process.
About Plexus (NASDAQ:PLXS)
Plexus Corp. (NASDAQ: PLXS) is a global provider of electronics manufacturing services (EMS) and precision engineered electronics solutions. Headquartered in Neenah, Wisconsin, the company partners with original equipment manufacturers across industries such as medical, industrial, aerospace and defense, computing, and communications. Plexus offers a full suite of services that span new product introduction, product lifecycle management, supply chain management, printed circuit board assembly, system integration, and aftermarket support.
Founded in 1979, Plexus has grown from a regional electronics assembler into a multinational organization with manufacturing and engineering centers across North America, Europe, and Asia.
