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PLEXUS CORP

PLXS
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Business Summary

Plexus Corp. operates in the electronics manufacturing services industry, providing design, manufacturing, and sustaining services for highly complex products in demanding regulatory environments. The company serves three primary market sectors: Aerospace/Defense, Healthcare/Life Sciences, and Industrial. Plexus supports market-leading and disruptive global companies with a team of over 20,000 members across 26 facilities in the Americas, Asia-Pacific, and Europe, Middle East and Africa regions.

Plexus operates in a highly competitive market against numerous providers with global, local, or regional operations, as well as the in-house capabilities of current and potential customers. The company believes its ability to provide a full range of services across the entire product lifecycle with a global footprint provides a business advantage. No customer accounted for over 10% of sales in fiscal 2025 or 2024, and the 10 largest customers accounted for 49.1% of net sales in fiscal 2025 and 47.8% in fiscal 2024.

Plexus generates revenue by providing design and development, supply chain solutions, new product introduction, manufacturing, and sustaining services to customers. Most solutions are provided on a turnkey basis, where Plexus procures and warehouses all materials required for product assembly, with select solutions on a consignment basis. The company does not design or manufacture its own proprietary products other than certain test equipment, manufacturing equipment, and software used for internal operations. Approximately 84% of revenue in fiscal 2025 was recognized as products and services transferred over time.

Plexus serves three market sectors: Aerospace/Defense, Healthcare/Life Sciences, and Industrial. In fiscal 2025, the Aerospace/Defense sector generated net sales of $688.5 million , representing 17% of total net sales. The Healthcare/Life Sciences sector generated net sales of $1,629.3 million , representing 40% of total net sales. The Industrial sector generated net sales of $1,715.2 million , representing 43% of total net sales. The company evaluates financial performance and allocates resources geographically across three reportable segments: AMER, APAC, and EMEA.

The company's integrated solutions span the product lifecycle, including design and development through six design centers worldwide, supply chain solutions to minimize cost and mitigate risk, new product introduction services to decrease time to market, manufacturing with a global footprint and scalable operations, and sustaining services such as repair, refurbishment, and spare parts management. Net sales from engineering design and development services were less than 5% of consolidated net sales for each of fiscal 2025, 2024, and 2023.

During fiscal 2025, Plexus completed the 2025 share repurchase program by repurchasing 362,325 shares for $50.0 million at an average price of $138.00 per share. The company also initiated the 2026 Program, authorizing repurchases of up to $100.0 million of common stock, and repurchased 112,601 shares for $15.0 million at an average price of $132.94 per share. On June 15, 2025, the company repaid $100.0 million in principal amount of its 4.05% Senior Notes upon maturity. The company incurred restructuring and other charges of $4.7 million in fiscal 2025, primarily consisting of severance costs associated with a reduction in workforce in the EMEA and AMER regions.

For fiscal 2025, Plexus reported net sales of $4,032,966,000 , an increase of 1.8% compared to $3,960,827,000 in fiscal 2024. Gross profit was $406,514,000 with a gross margin of 10.1% , up 50 basis points from 9.6% in the prior year. Operating income increased 20.7% to $202,371,000 with an operating margin of 5.0% , up 80 basis points from 4.2% . Net income rose 54.7% to $172,885,000 from $111,815,000 , and diluted earnings per share increased to $6.26 from $4.01 .

Business Outlook

The annual effective tax rate for fiscal 2026 is expected to be approximately 17.0% to 19.0% assuming no changes to tax laws. The estimated impact of the global minimum tax has been included in the company's estimates of tax rates for fiscal 2026.

Plexus focuses its growth strategy on three targeted market sectors: Aerospace/Defense, Healthcare/Life Sciences, and Industrial. The company's go-to-market strategy employs market sector vice presidents and senior directors who oversee business development, customer relationship management, and subject matter experts. These teams execute sector strategies aligned to each market's unique commercial delivery, quality, and regulatory requirements, with emphasis on expanding value-add solutions offered to customers. The company's sales and marketing efforts focus on expanding engagements with existing customers as well as targeting new customers.

Plexus is committed to investing in new platform technologies such as advanced manufacturing execution systems, process automation, warehouse automation, artificial intelligence, real-time vision and anomaly detection systems, and collaboration tools. These investments are aimed at enhancing productivity, optimizing operational efficiency, and driving differentiation in a competitive landscape. The company also continues to expand its product lifecycle capabilities in response to heightened focus on sustainability, seeking to design more environmentally sustainable products, improve production practices, and deploy product life extension and part recovery strategies.

Plexus reported gross margin of 10.1% for fiscal 2025, an increase of 50 basis points from 9.6% in fiscal 2024, driven by a positive shift in customer mix and lower costs from operational efficiencies and prior restructuring activities. Operating margin of 5.0% increased 80 basis points from 4.2% in the prior year. The company's ROIC was 14.6% for fiscal 2025, reflecting an economic return of 5.7% based on a weighted average cost of capital of 8.9% .

Plexus currently estimates capital expenditures for fiscal 2026 will be approximately $90.0 million to $110.0 million to support new program ramps and replace older equipment. The company maintains a global footprint of 26 active facilities totaling approximately 5.0 million square feet, with approximately 2.1 million square feet in AMER, approximately 2.4 million square feet in APAC, and approximately 0.5 million square feet in EMEA. The company recently expanded operations by constructing an additional manufacturing facility in Penang, Malaysia, to support growth in the Asia-Pacific region.

Plexus's primary long-term goal is to achieve a 9-12% compounded annual revenue growth rate while earning a return on invested capital of 15% , which would exceed its weighted average cost of capital and represent positive economic return. The company's financial model includes an ROIC goal of 15% which would exceed WACC by more than 500 basis points. For fiscal 2025, the company's WACC was 8.9% . The company has a 2026 share repurchase program authorizing up to $100.0 million of common stock, with $85.0 million of authority remaining as of September 27, 2025. Plexus has not paid any cash dividends in the past but evaluates potential uses of excess cash from time to time.

Plexus faces structural headwinds from component shortages and longer lead-times due to supplier capacity constraints, which can be caused by world events such as government policies, tariffs, trade wars, armed conflict, natural disasters, and economic recession. The company also faces risks from inflationary pressures on costs of production and profitability, as well as the effects of tariffs, trade disputes, and other trade protection measures. The company's operations in the APAC region, particularly in Malaysia, expose it to adverse economic, political, or other developments in those countries.

Management has identified several constraints to the growth plan, including the risk that customer orders may not lead to long-term relationships, the lack of visibility of future orders particularly in changing economic conditions, and the potential failure of new programs to meet expectations. The company also faces challenges associated with ramping new programs, which can adversely affect gross and operating margins and working capital levels, particularly in the early stages of the product lifecycle. Additionally, the company must navigate increasingly extensive government regulations, legal requirements, and industry standards across the markets it serves.

Risk Factors

Plexus faces material risks from the concentration of its operations in the APAC region, particularly in Malaysia, where a significant portion of its workforce, assets, and profitability is located, exposing the company to adverse economic, political, or civil developments in that country. The company's 10 largest customers accounted for 49.1% of net sales in fiscal 2025, and the loss of a major customer or program could significantly harm results. Component shortages and supply chain disruptions, which have occurred and may continue, can delay manufacturing, reduce revenue, and increase working capital. The company's effective tax rate is highly dependent on the geographic mix of earnings, and a tax holiday for a foreign subsidiary in the APAC segment that expires on December 31, 2034 resulted in tax reductions of approximately $43.1 million in fiscal 2025; changes to this holiday or tax laws could materially impact results. Additionally, the company faces risks from increasing regulatory requirements, including those related to the Healthcare/Life Sciences sector, which is subject to FDA regulations and similar requirements in other countries.

Management Priorities

Management's message emphasizes the company's vision to help create products that build a better world, driven by a passion for excellence in partnering with customers to design, manufacture, and service highly complex products in demanding regulatory environments. The company's strategy is centered around four strategic pillars: Market Focus, Superior Execution, Passion Meets Purpose, and Discipline by Design. Management highlights the primary long-term goal of achieving a 9-12% compounded annual revenue growth rate while earning a return on invested capital of 15% , which would exceed the weighted average cost of capital of 8.9% for fiscal 2025 and represent positive economic return. The annual effective tax rate for fiscal 2026 is expected to be approximately 17.0% to 19.0% assuming no changes to tax laws.

View Source Annual Report on SEC.gov ↗

References

  1. [1] Item 7, MD&A — Consolidated Results
  2. [2] Item 7, MD&A — Consolidated Results
  3. [3] Item 8, Note 15 — Revenue from Contracts with Customers
  4. [4] Item 7, MD&A — Results of Operations
  5. [5] Item 1, Business — Customers and Market Sectors Served
  6. [6] Item 7, MD&A — Results of Operations
  7. [7] Item 1, Business — Customers and Market Sectors Served
  8. [8] Item 7, MD&A — Results of Operations
  9. [9] Item 1, Business — Customers and Market Sectors Served
  10. [10] Item 8, Note 1 — Description of Business and Significant Accounting Policies
  11. [11] Item 8, Note 13 — Shareholders' Equity
  12. [12] Item 8, Note 13 — Shareholders' Equity
  13. [13] Item 8, Note 13 — Shareholders' Equity
  14. [14] Item 8, Note 13 — Shareholders' Equity
  15. [15] Item 8, Note 13 — Shareholders' Equity
  16. [16] Item 8, Note 13 — Shareholders' Equity
  17. [17] Item 8, Note 13 — Shareholders' Equity
  18. [18] Item 8, Note 4 — Debt, Finance Lease and Other Financing Obligations
  19. [19] Item 8, Note 16 — Restructuring and Non-recurring Charges
  20. [20] Item 8, Consolidated Statements of Comprehensive Income
  21. [21] Item 8, Consolidated Statements of Comprehensive Income
  22. [22] Item 8, Consolidated Statements of Comprehensive Income
  23. [23] Item 7, MD&A — Consolidated Performance Summary
  24. [24] Item 7, MD&A — Consolidated Performance Summary
  25. [25] Item 8, Consolidated Statements of Comprehensive Income
  26. [26] Item 7, MD&A — Consolidated Performance Summary
  27. [27] Item 7, MD&A — Consolidated Performance Summary
  28. [28] Item 8, Consolidated Statements of Comprehensive Income
  29. [29] Item 8, Consolidated Statements of Comprehensive Income
  30. [30] Item 8, Consolidated Statements of Comprehensive Income
  31. [31] Item 8, Consolidated Statements of Comprehensive Income
  32. [32] Item 7, MD&A — Income taxes
  33. [33] Item 7, MD&A — Consolidated Performance Summary
  34. [34] Item 7, MD&A — Consolidated Performance Summary
  35. [35] Item 7, MD&A — Consolidated Performance Summary
  36. [36] Item 7, MD&A — Consolidated Performance Summary
  37. [37] Item 7, MD&A — Return on Invested Capital
  38. [38] Item 7, MD&A — Return on Invested Capital
  39. [39] Item 1, Business — Financial Model
  40. [40] Item 7, MD&A — Investing Activities
  41. [41] Item 1, Business — Financial Model
  42. [42] Item 7, MD&A — Return on Invested Capital
  43. [43] Item 1, Business — Financial Model
  44. [44] Item 8, Note 13 — Shareholders' Equity
  45. [45] Item 8, Note 13 — Shareholders' Equity
  46. [46] Item 7, MD&A — Consolidated Results
  47. [47] Item 8, Note 6 — Income Taxes
  48. [48] Item 8, Note 6 — Income Taxes
  49. [49] Item 1, Business — Financial Model
  50. [50] Item 1, Business — Financial Model
  51. [51] Item 7, MD&A — Income taxes
  52. [52] Item 8, Consolidated Statements of Comprehensive Income
  53. [53] Item 8, Consolidated Statements of Comprehensive Income
  54. [54] Item 8, Consolidated Statements of Comprehensive Income
  55. [55] Item 8, Consolidated Statements of Comprehensive Income
  56. [56] Item 8, Consolidated Statements of Comprehensive Income
  57. [57] Item 8, Consolidated Statements of Comprehensive Income
  58. [58] Item 8, Consolidated Statements of Comprehensive Income
  59. [59] Item 8, Consolidated Statements of Comprehensive Income
  60. [60] Item 7, MD&A — Consolidated Performance Summary
  61. [61] Item 7, MD&A — Consolidated Performance Summary
  62. [62] Item 7, MD&A — Free Cash Flow
  63. [63] Item 7, MD&A — Free Cash Flow
  64. [64] Item 8, Consolidated Balance Sheets
  65. [65] Item 8, Consolidated Balance Sheets
  66. [66] Item 8, Note 4 — Debt, Finance Lease and Other Financing Obligations
  67. [67] Item 8, Note 4 — Debt, Finance Lease and Other Financing Obligations
  68. [68] Item 8, Note 16 — Restructuring and Non-recurring Charges
  69. [69] Item 8, Note 16 — Restructuring and Non-recurring Charges
  70. [70] Item 8, Note 11 — Reportable Segments
  71. [71] Item 8, Note 11 — Reportable Segments
  72. [72] Item 8, Note 11 — Reportable Segments
  73. [73] Item 8, Note 11 — Reportable Segments
  74. [74] Item 8, Note 11 — Reportable Segments
  75. [75] Item 8, Note 11 — Reportable Segments

Analysis on 6/8/2026