Plexus NASDAQ: PLXS reported fiscal second-quarter 2026 results that exceeded its guidance range, driven by continued program ramps, market share gains, and what management described as improving end-market demand. The company also raised its outlook for fiscal 2026 revenue growth, while highlighting record manufacturing program wins and an expanding pipeline of opportunities.
Quarterly results beat guidance as revenue growth continued
President and CEO Todd Kelsey said fiscal second-quarter revenue totaled $1.164 billion, exceeding the company’s guidance and marking its fifth consecutive quarter of sequential revenue growth. Revenue increased 19% year over year. Kelsey cited strength “throughout all of our market sectors,” with “specific strength in aerospace and defense” and in “semi-cap,” where he said share gains were “amplifying surging market demand.”
On profitability, Kelsey said the company delivered non-GAAP EPS of $2.05, also above guidance, and a 6% non-GAAP operating margin while continuing to invest in program ramps and operational initiatives.
Chief Financial Officer Patrick Jermain provided additional details, stating gross margin was 10.2%, at the top end of guidance, “due to a favorable mix of service offerings and fixed cost leverage.” Jermain said productivity improvements from operational efficiency initiatives helped offset seasonal compensation cost increases. Selling and administrative expense was $57.3 million, slightly above guidance, which Jermain attributed to higher incentive compensation tied to revenue growth and ROIC performance, alongside expanded technology and automation investments.
Jermain said non-operating expense of $4 million was better than expected due to foreign exchange gains and lower interest expense, while EPS benefited from “a favorable tax rate.”
Record program wins and a larger funnel
Kelsey said Plexus secured 30 new manufacturing programs during the quarter, representing a record $355 million of annualized revenue when fully ramped. He said the wins reflected contributions across sectors, including aerospace and defense, surgical and imaging platforms, a new engagement in data center power solutions, and continued share gains in semiconductor capital equipment.
COO Oliver Mihm broke out wins by sector, reporting:
- Aerospace and defense wins: $44 million, including follow-on share gains and awards tied to partnership strength and operational execution.
- Healthcare life sciences wins: $116 million, including a next-generation point-of-care ultrasound system in Xiamen, China, and a robotic surgical platform award for the Neenah, Wisconsin facility.
- Industrial wins: $195 million, described as a record, including a data center power solutions award for Bangkok, Thailand; a robotics follow-on award assembled in Guadalajara, Mexico; and a new customer engagement supporting an energy storage system for electric commercial vehicles.
Mihm also said the company’s “funnel of qualified manufacturing opportunities” expanded 11% sequentially to $4 billion. He attributed the increase in part to record-high funnels in aerospace and defense and industrial, adding that the funnel in those two sectors has grown “in excess of 45%” versus the fiscal second quarter of 2025.
Sector performance: aerospace and defense surged; industrial rose on semi-cap
Mihm said aerospace and defense revenue increased 19% sequentially, which he said significantly outperformed the company’s expectation for a mid-single-digit increase. He pointed to improved end-market demand across subsectors and work to expand component availability. For the fiscal third quarter, Mihm said Plexus expects aerospace and defense revenue to rise in the mid-single digits as programs scale in space and defense.
Healthcare life sciences revenue rose 1% sequentially, consistent with expectations. Mihm said the company expects the sector to be flat in fiscal third quarter “ahead of an anticipated return to sequential revenue growth in our fiscal fourth quarter.”
In industrial, Mihm said revenue rose 12% sequentially, in line with forecast, and the company expects a low double-digit increase in the fiscal third quarter. He said the outlook is supported by “substantial growth” in the semi-cap subsector and strength in industrial equipment from program ramps and improving demand.
On industrial demand themes, Mihm told analysts Plexus is seeing momentum in “energy infrastructure,” including areas adjacent to data centers such as “power management and storage, thermal cooling, thermal density, [and] fluidics,” and also described opportunities tied to ruggedized applications as companies “push AI out… at the edge.”
Guidance: Q3 outlook and higher fiscal 2026 growth expectations
For fiscal third quarter, Kelsey guided revenue of $1.2 billion to $1.25 billion, which would represent 5% sequential and 20% year-over-year growth at the midpoint. The company also guided non-GAAP operating margin of 5.9% to 6.3% and non-GAAP EPS of $2.02 to $2.18.
Looking to the full year, Kelsey said the company now expects to deliver mid-teens or greater fiscal 2026 revenue growth, calling it a “substantially increased forecast from our initial expectations last October.” He said Plexus anticipates double-digit revenue growth in each market sector for fiscal 2026, with particularly strong performance in aerospace and defense and industrial, led by semi-cap. Kelsey also said the company anticipates a 6% or greater non-GAAP operating margin for fiscal 2026 and continued working capital efficiencies.
David Abuhl, who is transitioning into the CFO role, said fiscal third-quarter gross margin is expected to be 9.9% to 10.2%, with the midpoint slightly below the prior quarter due to the timing of program ramps, capability investments, and higher incentive compensation. Abuhl said selling and administrative expense is expected to be $69 million to $70 million, including stock-based compensation and incremental expense tied to executive retirement.
Cash flow, working capital, and supply chain conditions
Jermain said Plexus generated $28.5 million in cash from operations and spent $12.5 million on capital expenditures, producing $16 million of free cash flow, which he said was better than the company’s forecast of roughly breakeven to slight cash usage. He also said Plexus repurchased about 109,000 shares for $20.6 million, and ended the quarter with about $42 million remaining under its repurchase authorization.
The company ended the quarter in a net cash position, with $137 million outstanding under its revolving credit facility and “over $350 million” available to borrow, Jermain said. He reported cash cycle at quarter-end was 64 days, five days lower than the prior quarter, driven by improved receivables and inventory days, partially offset by higher payable days and a reduction in days of advance payments.
Abuhl said the company expects higher working capital investment in fiscal third quarter to support accelerating growth, with cash cycle days expected to rise to 67 to 71 days, which he said would lead to free cash flow usage for the quarter. He also said Plexus continues to expect fiscal 2026 capital expenditures of $100 million to $120 million and updated its outlook for fiscal 2026 free cash flow to $50 million to $75 million.
On supply chain conditions, Kelsey said the company’s forecast incorporates supply realities and that he does not see “undue risk” from supply chain constraints embedded in guidance, while noting potential upside if conditions improve. Mihm said Plexus is seeing tightening in portions of semiconductors, passives, memory, and raw PCB fabrication, with lead times extending in areas such as “high-performance passives, magnetics… and… microcontrollers.” He said Plexus is working proactively with customers on forecasting, alternates, and early procurement, leveraging processes developed during post-COVID constraints and “AI tools” to locate supply.
The call also marked the retirement of CFO Patrick Jermain after 12 years in the role, with leadership welcoming David Abuhl as the next CFO. Kelsey said Plexus is “generating significant momentum” and that fiscal 2026 is expected to “set us up for a strong fiscal 2027.”
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.
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