PLXS - Earnings call transcript Q4 2019

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Operator

Good morning and welcome to the Plexus Corporation Conference Call regarding its Fiscal Fourth Quarter 2019 Earnings Announcement. My name is Brandon and I'll be your operator for today. At this time, all participants are in a listen-only mode.

After a brief discussion by management, we will open the conference call up for questions. The conference call is scheduled to last approximately one hour. conference recorded. this that note is being Please

I to Director Ms. like to of call over turn the Heather and Relations. would Investor now Communications Heather? Beresford, Plexus Senior

Heather Beresford

thank and Good us for today. morning you joining

statements the forward-looking be and to similar plan, will historical as call statements The statements. words of provided believe, during made Some forward-looking be not anticipate, identify our will terms they facts. often today information limited intend, and expect,

results statements. future actual Forward-looking or inherent not difficulties differ statements from results guarantees are materially predicting are could there implied since in in and those expressed the forward-looking

For could refer XXth, filing fiscal year differ to Safe to and of disclosure in particularly a please periodic for materially the statement the yesterday's in company's factors list XX-K filings, release. SEC factors cause actual press XXXX Harbor Form September the discussed, ended and the that from fair those risk results our

as free provide supplemental Plus because management into adjusted and margin, for they decision-making used such it goals performance. financial operating insight non-GAAP operating internal and ROIC, and provides cash measures economic are because adjusted return, additional information those flow income,

provide and and earnings addition net use adjusted measures per core income for understanding better In such period-to-period management share as non-GAAP other comparisons. of these of to performance a of adjusted purposes

SEC For supplemental of yesterday's information periodic non-GAAP and a our filings. reconciliation press full please refer release to

and supporting page. the Plexus' on call at access at the live this materials participants encourage webcast at to We that on www.plexus.com morning website of top Investors clicking the

President provide the for comments and Pat further Tod Pat Executive Vice Kelsey, prior Officer. today Steve are Chief and to Chief Jermain, and call Frisch, summary Officer; will Consistent Financial President Todd Steve calls with me Operating turning Joining Chief details. earnings and before over Officer; Executive Vice and Executive President

Let me Kelsey. call turn over the Todd to Todd? now

Todd Kelsey

quarterly market, Please evening morning we top fiscal the close begin Heather with X. the Yesterday which fourth of million. of you, guidance million for exceeded fourth XXXX. of $XXX our after our on million of fiscal to results everyone. achieved Slide $XXX and quarter range the our revenue $XXX reported record of good results Thank quarter end We

Each expectations the quarter. exceeded our entering of or met our sectors

and industrial in strong aerospace the were defense delivering quarter-over-quarter sectors and commercial X% respectively. Our and growth exceptionally XX% quarter

industrial a Our results modest were our semiconductor due expectations quarter, capital part commercial equipment to considerably in the than improvement better demand. in entering

We delivered $X.XX expense. of GAAP $X.XX EPS of including compensation stock-based

event $X.XX. to of our a EPS order non-GAAP range to our $X.XX $X.XX to benefit results due non-GAAP non-recurring of and Our tax was guidance $X.XX business. The to a expense a $X.XX communications above right-size due in excluded restructuring

at our and exceptional of continued margin our X% on fourth range X.X% quarter teams of end the adjusted of our target X.X% focus higher execution, and guidance range. to XXXX comfortably productivity operating our fiscal within achieved Through

flow quarter. I eight Finally, ability reduction quite inventory fiscal through the $XX critical the the quarter. deliver reduced fourth am within or have million days cash were with million by inventory our to efforts. of additional pleased $XX progress an These our made free to we efforts We in

we have $XXX days. past reduced the quarters, over Over or two million XX inventory

Please to X. Slide advance

within discuss XXXX. accomplishments Next, I additional will fiscal

the the employees, the that success highlight a in both The Plexus future. proud our other. the that of strong believe dedication team to success its strategy in company even to XXth our and the people August. have the celebrated of and customers I'm and to drive to past like greater very Plexus I'd commitment each anniversary of testament and First, is we and present

Slide to advance X. Please

growth and financial enduring economic return. our Next, highlight I goals will performance revenue our to of

consecutive over we X% fiscal billion, XXXX year the a achieve revenue growth. of XX% of XX% target communicated, increase second double-digit growth to representing As $X.X XXXX We of we previously revenue annually. in fiscal

capital of We return points. economic return We target the invested calculate weighted consistently cost invested In points goal capital. less basis well in our of an of capital resulting fiscal on of a capital with cost creation of achieving of economic positive economic and return X%. return XX.X% basis return our average delivered goal. into was territory XXX shy We weighted as XXX on value average just XXXX,

accomplishments Please fiscal advance revenue I start related growth. X. will slide to our XXXX with to

where engineering we year-over-year that a customers highlighting the the our products service differentiated organization our nearly value grew in build better help Our XX% world. solutions see create offering

solutions contributor a Plexus' strong engineering growth. is team Our manufacturing to profitability and

XX% revenue fiscal growth aerospace in defense delivered Our XXXX. sector and

another expects fiscal team XXXX. result in the addition, In strong

in be focus as a our on technology, our to pleased and zero leading-edge aerospace complex are of recognized the customers regulatory defense by our utilization advanced our result service defects, expertise. market and of supplier We highly as a offerings premier our markets

Our sector healthcare life XX% sciences fiscal grew XXXX. in

exceptional and expertise performance have to OEMs to of funnel sector strong our brand wins end this continue in this We market. are attracted as growth within leading

years in semiconductor overcame X% capital the equipment, downturn Commercial revenue printing to growth heavy equipment. sector sector over several the of Our growth efforts post the the diversify the rail in XD in semiconductor for portfolio the The revenue as XXXX. to such fiscal past in sector Industrial team equipment XX% fiscal capital excluding led by year to markets

services globally. service the traction now year. offering delivered growth XX% and are centers four fiscal We in aftermarket in the of our gaining from offer We advanced team excellence

XXXX, regions all During three geographic we each and service our fiscal of offerings. in across grew

in manufacturing prepared growth. Guadalajara we new order and support addition, in to future our Penang In facilities

customers. also We several of response design to engineering centers in expanded solutions our needs the

XXXX, significant in XXXX. success few I fiscal fiscal accomplishments for in Next, a Plexus will which position highlight

achieving has the when annualized $XXX ramped performance production. XXXX into maintained manufacturing million fiscal fully strong team wins wins Our of

quarter $XXX business exceeded and each consistency million highlighting our the of Our the fiscal wins within development processes. year diligence

a of demanding differentiated winds existing complex regulatory of and healthy our with mix The highly customers products across of programs new portfolio consisted in environments.

strong diligence of is qualified opportunities will manufacturing and Sector teams. $X.X focus wins the magnitude confidence Market In sustain sustained This funnel strategic us Global the gives which billion, momentum of funnel our the addition the reflection into future. winds strong team that quality and of performance, to at our we a

We've progress initiatives, delivering X.X% target within fiscal range quarter. made our in productivity significant fourth to the operating in X% of our margin

We furthered on repurchases strategy $XX authorization of total a XXXX. of Board fiscal million our capital this in level an a $XXX be in million completed to are approved $XX.XX focused XXXX. represented The of repurchasing We additional within million allocation performance XXXX. fiscal Further, X.X by share. Directors maintaining our shares fiscal cost or

our to guidance slide Advancing X. for fiscal on first quarter of XXXX the

$XXX $XXX million. fiscal in softening XXXX, to sciences Industrial We healthcare of the Aerospace strength at quarter revenue launch sequential Commercial offset sector growth we lower-cost term in our anticipate to looked due we Defense As first to of of next-generation near and our largely and life the continued are sector programs. getting million in

end stable. Our remain largely markets

to sound with of the in X.X% X.X%. operating performance We margin range operating continued expect

a in expense. guiding GAAP result, As includes we the are of $X.XX stock-based of range compensation EPS This to $X.XX $X.XX.

is Please with commitment better products the close advance decisions traction I'm world, to our with few fiscal to as it X. our slide resonate current as create a that has speaks help XXXX. regarding thoughts excited to Plexus and build paramount the gained we it to will a prospective I to customers brand and make an continues about the organization.

efficiency our consistent complex advantages in highly and in in results on environments for demanding platform and provides products regulatory operational a expertise Our in more customers. focus

aligns of and brand to and the passionate choice. an with current position our Our values commitment team provides talent as both Plexus employer we of a our as future Plexus

will fiscal be anticipate Please XXXX slide single the likely in another X. advance We to year though growth digits.

with coupled sciences moderate and We growth to a growth headwind, healthcare expect developed robust XXXX. commercial which Aerospace fiscal and in in significant industrial more Defense communications overcome life

of XX% aerospace highly products of fourth anticipate longer the and defense and fiscal our have more. lifecycles the demanding further portfolio cases These with or that life revenue many sciences, fiscal consistent XXXX. combined XX markets quarter industrial, differentiate health sectors years Our XXXX regulatory We our complex with portfolio, continues to and feature programs commercial care in sectors in to exceed in environments.

markets. the teens within these we addition, compounded growth have rates annual In achieved in

goal rates move maintain fiscal these beyond as growth Our to is we XXXX.

customers. remain our teams service exceptional Operationally, on for our focused providing

deliver confident addition, that we will results. In operating are we strong plans have

fiscal in within of enable which target We would EPS our X.X% X%, range delivering the XXXX performance fiscal growth year. are operating margin on solid to focused

In summary, our teams strategy. successful remain aligned to focused our consistent and

to our ability in results and value. to confident deliver shareholder create continue We’re strong

now operations. I’ll turn sectors Steve the additional analysis of the for call market performance to Steve? our of and

Steve Frisch

a to fiscal Thank for XXXX. performance Good review of quarter Please full morning. first as you, fourth market expectations for for for of sectors fiscal the the and year our well as sectors our fiscal XX of slide XXXX, the the quarter Todd. advance

slightly was health quarter. X% in Our expectations sciences better flat our fourth result increased revenue. of the The than fiscal revenue life

growth XXXX, wins third fueled yielded of the the Strong the XX%. which double-digit of year ramps, full achieved of For new consecutive fiscal historical growth. year performance program sector sector's several

Looking impact at lower fiscal first products revenue. the the will of top-line cost next-generation introduction quarter,

As sciences a life sector quarter. in decline our first care result, a the we single expect health digit for mid fiscal

ramp However, programs will return quarter. of sector in growth we to the second new expect the the fiscal

fiscal better Revenue customers which XX the in was of demand single-digit decline. XX than X% sector for the our quarter, the a drove growth. expectations fourth Stronger meaningfully sector's low increased commercial top our industrial from of

by equipment the a For X%. the the capital team full revenue overcame year of sub-sector grew in fiscal and sector XXXX, XX% overall headwind semiconductor

is look the offset first fiscal commercial in quarter. for see sub-sectors. equipment by fiscal low at strengthening softness single-digit modest in management first in capital sub-sector net self-service modest increase result we As semiconductor anticipate being in energy we XXXX, the a of our quarter sector The industrial the we that the

from fourth an teams, execution above single-digit impressive grew our operations of a in high aerospace our XX% sector the result The expectations and strong to fiscal Due global increase. significantly defense quarter. was our

enabled of and increases quarterly capped robust resulting and program of combination strong XX%. XXXX. ramps year, The outstanding the fiscal growth the quarter of end-market demand full fourth A XXXX performance for the in year new fiscal an

operations first As we new teams the our extremely integrating fiscal programs. are busy towards look quarter,

sector in expecting a fiscal we’re fiscal the first increase second meaningful and our in quarter As quarter. aerospace modest result, the growth a more and for defense

XX% fiscal Our XX% of quarter, in the a communications with in result expectations fourth sector reduction. declined was our a line that

fiscal declined For sector the XXXX, year of the XX%. full

especially throughout End cause market was softness in the reductions. the for the the cable year sub-sector

quarter, the first in not the we sub-sector we towards fiscal anticipate As cable changes significant market. do look

for fiscal revenue As a first in result, communication be flat our quarter. expecting our are to we sector the

of advance generate manufacturing won Please wins. the overview when for the programs manufacturing represents of to ramped quarter into slide red performance quarter. We million revenue expect we $XXX our an fourth annualized in that bars The fiscal fully XX new production. four wins to trailing XX

million. $XXX The at sector year teams line the win a with fiscal market with a qualified productive the wins growth indicates we wins XX% in exited had our Our grey the Even revenue kept very our XXXX, winds finished healthy robust they as of the strong exceeding momentum fourth momentum. quarter. fiscal XX% the as fiscal manufacturing performance XXXX

The for of the were million Please $XXX of aerospace advance wins sectors strength XX are defense into States. for to Americas exceptionally strong our the quarter. led fiscal results further and the in team sites Americas fourth slide as by The region wins wins was the the majority by insight United region. in a

in The are wins million $XX existing largely the APAC region customers. quarter fiscal from of fourth

delivered excellence is a XXXX. commitment with continued for operational customers, great Their foundation to enabling consistently and fiscal in the excellence existing success team APAC XXXX. fiscal throughout growth The is

with million $XX fiscal that existing XX% wins fiscal XXXX. of included through two relationships. in wins continue region customers. strong These wins customer The mainly over in trend region strategic enable will to EMEA XXXX, grew The

market XX sector. into further to insight slide performance for by the manufacturing advance Please wins

wins life quarter. DNA $XX of the manufacturing $XX Our in sequencing produced wins. highlight generated The new Commercial customer award the existing customer significant sub-sector. a Industrial fourth next-generation life from included specializes of totaling wins products million connectivity is healthcare The an team sciences sciences The our fiscal who technology. sector a million in and

well as share with sector extremely of $XXX had quarter strong set aerospace several The new meaningful space gain itself wins. year include sector an million The defense and fiscal another customer. productive fourth as aerospace new large wins with up in fiscal a for has market programs The XXXX.

$XX XXXX. early million, from of communications customer new our in we wins sector expect to ramping programs a that two fiscal start included Finally,

year larger another a the fiscal strong health XX. the than slide the qualified of funnel had robust the manufacturing $X.X sciences at continues team at billion in of be they fourth care fiscal with the The $X.X poised for advance XXXX, with fourth fiscal steady Please billion The the remaining quarter. start sector year. life to opportunities to is funnel funnel in of wins XXXX. At quarter in exited

focus the their $XXX by the million with Industrial in successfully two-thirds sector fiscal with the maintaining of sectors funnel XXXX new sector a Commercial approximately strategic adding associated diversified continue customers will balance XXXX. customers. on fiscal new In almost The healthy

of spite the billion $X.X the quarter. In almost at defense fiscal wins, and sector aerospace fourth funnel extremely strong in their maintained the

Our market year. Dan XXXX sector up set and team another his fiscal to great be leader Lewis have this

would I operating performance turn on XX. Next, like slide to to

As achieved highlighted, we quarterly fourth adjusted performance. fourth in a guidance. at quarter Strong $XXX margin X.X% margin the Todd million the of operating record higher record operating fiscal was fiscal execution $X.X in At revenue fiscal for quarter yielded billion of in strong XXXX. end the

margin X.X%. in quarter, first remain range focused fiscal efficiency we on X.X% operating are of and operational we the to guiding the at look we As

our improvements. initiatives performance, reduction margin operating inventory generate strong to to addition meaningful continue In

inventory fourth XX-day Our fiscal days quarter sequential reduction and third the the X-day second finished from quarter. the days in a and quarter from of XX fiscal fiscal at reduction

We fiscal in on focused will continue XXXX. inventory

final few execute Achieving there differentiated the A to in strategy ability XXth anniversary to it. celebrate. $X.X lot comments, record revenue testament and is billion a Plexus' a is our of team's to

goes the the results. cause for beyond financial celebration However,

our In aftermarket our facilities, device of our differentiated grew areas fiscal our manufacturing in design and sciences expansion our engineering XXXX, value teams like in and to growth sectors, single-use future manufacturing. service share add enabled market the offerings service life higher market expanded

people importantly the Intersil automated differentiator real who in Planning, Enterprise in Plexus. for and Invested like are tools in most our invested technology and manufacturing Resource

for fiscal want I to in And thank Plexus a I of great for delivering fiscal XXXX. each them the members want positioning Plexus team praise XXXX. continued XX,XXX to success for

call I will Pat now in-depth for an of to Pat? the review performance. our turn financial

Pat Jermain

and Thank everyone. good morning you, Steve,

end Fourth our was Our quarter and million, results guidance above are of higher million. of $XXX slide fiscal top by on $XX XX. sequentially quarter fourth summarized revenue the

of by improved, regions. Gross margin leverage efforts. points basis and three of X.X% margin to XX manufacturing across primarily our due containment continued expansion cost higher better-fixed cost was experienced sequentially We all mix

Selling and primarily expense. administrative incentive higher slightly expectations compensation variable expense above of $XX.X to million was our due

As was basis XX of a up X.X% SG&A points. sequentially percentage revenue,

anticipated. within all we our These fourth fiscal million sector. the address charges restructuring were completed previously During to communication quarter, than activities activities of in $X.X declines resulted which revenue lower

improved of guidance our points quarter's of restructuring the adjusted this charges, points. at XX was end by Included X.X% higher basis XX the margin operating margin, in consideration was of expense. Before approximately of operating and sequentially basis stock-based compensation

expenses to were in due $X.X lower million Non-operating expected of gains. exchange part foreign than

for tax of was effective GAAP Our fiscal fourth rate quarter the XX%. a benefit

During subsidiaries certain majority our do not withholding taxes. therefore permanently of we earnings the that undistributed re-asserted for foreign liability reinvested, a are for quarter, require

and As fiscal a quarter. $XX.X reversed liability related the fourth result, approximately a million of was benefited

GAAP and restructuring a activities. included share diluted item of after-tax share benefit per related EPS of to tax $X.XX special $X.XX to a non-cash of $X.XX per the charge the related

was $X.XX of the primarily our EPS guidance operational strong non-GAAP above of due to performance. items, these Excluding top end

balance flow and offshore slide bringing on strategy continued million fiscal we Since cash year, have reform the U.S. tax the of by the fourth repatriation XX. of million. to our sheet In enactment cash. quarter, $XXX last cash approximately approximately back back now brought we Turning $XX

quarter, million During our $XX.XX purchased per average $XX share. of an price stock we for approximately of and shares the XXX,XXX

million program million fiscal $XXX authorized the authorized the and the purchasing completed quarter. We commenced program in shares under $XX XXXX fourth during

We XXXX. consistent execute throughout this program expect to a basis on fiscal

we market into take will conditions However, consideration.

of million million. expenditures We our free we free were fiscal pleased on flow million from resulting For cash spent results. in $XX generated capital operations cash $XXX fourth $XX cash in quarter, flow with and the

For from free on the we in generated million operations $XX million year, and flow million. cash capital expenditures, spent resulting $XXX $XX in fiscal cash of

$XXX healthy at a was ratio of quarter. third improvement ended end was days, EBITDA million Cash times strong balance to XX year-end. from million, by and flow fourth a quarter with a at totaled in was the higher strong sheet $XX $XXX the year part Total debt gross We to debt million the sheet. due fiscal our sequentially the X.X generation. cash Cash cycle balance X-day

Sequentially around our Please turn continued to XX days, primarily our cycle. on improved days inventory efforts cash inventory to for management. details eight slide due

We sequential $XX drive inventory. commitment to to are in team's a million pleased the our see reduction

Over of have past inventory the excess in $XXX we reduced two quarters, million.

quarter. of Days in days, payable higher of one primarily day last the contrast each. the to receivables are sequentially timing shipments. weighted quarter the last and three in Fiscal due deposits month customer fourth to were towards days more Sequentially shipments quarter improved

revenue slide EPS review fiscal to X.X% XX quarter has the range and which margin of points gross I'll on margin Todd be be are to some of provided fourth fiscal details As gross Fiscal guidance, quarter, guidance additional this first in the for first lower expected midpoint the is the approximately already would X.X%. XX. At quarter. the summarized basis than

quarter, the transition reduction hours be the services margins During are fiscal lower on as experience we as we billable engineering resources anticipated in first within new programs. to a

first the range million. the to quarter, SG&A expense fiscal $XX.X For of in we $XX.X expect

basis At incentive to the revenue primarily guidance XX be first the expected to points, midpoint SG&A points anticipated is compensation quarter improvement which expense. operating of would X.X% in range Fiscal to of a margin basis our be of X.X%, expense. sequential of of X.X% compensation variable lower due stock-based includes revenue, XX

expenses sequential of of guidance, by two At the range midpoint primary million, $X.X these is reasons be the higher are first be A fiscal in million. be to $X.X few Depreciation this sequentially the $X.X for other $XX increase. than the to million will to notes quarter. slightly fourth expected expected approximately Non-operating quarter. million, for expenses amortization and the expense higher fiscal

XX% Guadalajara fiscal XXXX, in interest. fourth of which will gains, exchange an benefited for from longer we first We we fiscal any finalization quarter impacts tax the of full $XXX,XXX year. regulations. first effective anticipate tax in pending for quarter. both the and With rate quarter, which our Also operational quarter XX% facility not to the no we fiscal result the be the do fiscal from estimate first of before might of capitalizing foreign second is This

Continuing million the be the diluted activity share fiscal first of to weighted shares we repurchase million range outstanding quarter, XX.X our to average during shares. estimate XX.X in

in working Our first sheet this would fiscal At the we XX capital level consistent cash of is forecast, days. our for expect XX Based balance result X quarter. working to expectation on midpoint by days for higher cycle this the days will the days requirements. capital revenue of cycle guidance, cash be sequentially of

the our fiscal quarters in of For breakeven XXXX. subsequent cash first flow generating ramp deliver to we free we free for and quarter, APAC cash anticipate flow cash million $XXX approximately as we expect around region. move We expect programs new through flow free as fiscal

range Finally, XXXX expansions. site any to million, to contemplate is our $XX of not capital estimate the be spending million fiscal for in $XX which expected does

With will questions. open that, now for I Brandon? the call

Operator

you. Thank

We from ahead. Research will the Longbow And now Please Shawn have Instruction] go we question-and-answer [Operator Harrison. begin session.

Shawn Harrison

and fiscal the Good to year. finish morning, congrats everybody strong a on

Todd Kelsey

Shawn. Thanks, morning. Good

Shawn Harrison

pin guess, you're you low, digits fiscal a at I that down year. in a year? And triangulate the there to the little looking what out biggest range hoping at to unknowns are, Just terms pretty mid, bit of fiscal trying high? for broad looking the more. Single is Is

Todd Kelsey

Sure.

it little today. you XXXX, give as best about obviously, but we to fiscal know I predictions bold early Shawn, I'll our it's a So, make mean, view

I'd how where currently. But look about mid-singles look it, reasonable I'll it in make certainly -- XXXX call we digits. we'll as we're XXXX expecting you that thinking XXXX we we're at and at tell in of below double And the growth, levels we're fiscal up. So

stay to communications. beyond communications expansion depressed in at anticipate modeling any of meaningful within ramps not we're we is, new -- levels, program any so expansion One

growth So modest fiscal no while expansions. call I seeing, we're end would and above XXXX, market slightly Semi-cap, fiscal near it, modeled nowhere some it's XXXX.

XX% about, we new in good and again strong growth if nonetheless we're then, the end the but growth talked of sectors there. year, of ramps that the A&D, strong expecting markets rest program wouldn't at really due A&D. to look And approach Probably last we

stable headwind cost into of bit now. on these a right reasonably there. with programs we Healthcare, markets Industrial/commercial are on have a looking little going that's some lower transition going

line top term. the So that's near hurting our in

from So not growth stronger opposed XXXX. to XXXX healthcare a in as

programs XXXX XXXX, we're moving number in game fortunate, they're but of -- that ourselves Although, needle but more good if ramping, a XXXX we're for are F healthcare, very F on looking a more late they're because really have revenue. positioning really like we they're significant the really of changing

kind of things from So a standpoint. that's revenue look how

big expansion. But is for margin operating cash with around mean, XXXX focus our that said, I and

our looking can XXXX. really talked the growth achievable about very in targeting operating for cash us progress continue this level Pat initiatives. a range in so And we area of think then, So, million. make on double-digit believe to We flow in margin free $XXX capital be we as expansion, that's fiscal EPS we're working we

Shawn Harrison

great was it Pat. to was a my and follow-up That good segue for

how here As kind model you we leverage? or of fiscal through about of margin expansion profit quarter. in fiscal in more SG&A, expansion gross EBIT you're move XXXX, as to the profit margin gross as get But both a components going December going where of should -- margin think as well we -- to do gross see think the XXXX, in or how about you're dip the

Patrick Jermain

Yes.

This second as in bit we well, as depressed, right. do increases. quarter the gross be you're So, first a you will merit margins quarter recall

the the going for So level similar of margin. to we're a I half year, gross think first in be

half year leverage also some back XX gain some can basis we and SG&A, think margin, the is where X.X%. think XX with this gross fiscal where we in to that's I improvement ended I XXXX at see probably points. we'll

our operating as leverage with can least basis I expenses think, we those. XX at gain we points

Shawn Harrison

you. Thank Great.

Operator

have ahead. go Please Stifel, Sheerin. From Matt we

Matt Sheerin

Good Yes. morning. Thanks.

on the sciences have for customer? the healthcare, reason, customers you Or seeing, just space. concentrated or to Is one you Just in product life transitioning? a commentary reasons multiple typical the question are transitions any that regarding -- customer

Steven Frisch

going done customers. a as team NPIs late fiscal are and job And wins with has we're This it XXXX XXXX phenomenal through The Todd terms is through those different associated programs. they It's multiple in with and volume. of healthcare, where timing like life and the manufacturing highlighted, hit looks science several of with Steve. XXXX

Todd Kelsey

And that products. can long that's cycle is with and healthcare qualification based one the be with the involved of the growth various predicting FDA the quite challenges transitions on revenue and

So are some would the have they cycles wins sectors. than and other -- be longer just of just qualification a typical in maybe validation

Matt Sheerin

Okay. but been area to more just growth next your declines That's helpful. into seeing that have outlook I most year. And relative really pickup, you you have gives kind semi-cap, you're early you better on that peers less know expecting a business modest then any that any cautious visibility not any and looking that of modest for relative semi-cap this of big pickup confidence? have until or Do in you year, saw

Steve Frisch

are probably customers We've Yes. the is I from horizon. expectation increase think feedback the a industry And even Steve been about meaningful in customers mid-term the will that XXXX. again. talking be an in and there all publications and to This talking an there increase is the

question a some does expect but to come be out see we our fiscal XXXX, in get does little early; to to our as happen. than XXXX maybe talking XXXX bit our I calendar little a start strong fiscal picking is recapping what guess, drop-insurance, short-term push bit. said it that as to not and fiscal that these modest as XXXX or stronger if little not end and up bit that that we little monitoring so as increases those a kind of The is XXXX Todd we'll may increase a when Todd's fiscal probably of more as visibility throughout be about

Matt Sheerin

targets you've in bringing were those where my those nice progress was your progress seen of what days I'm wondering you business then back today you So, Are at years it different of inventory last four into XXXXs? really question there. ago. Okay. continued regarding when couple the ago seems be to to comfortable and see maybe And were also inventory you Do given you levels? the are the back down some a than years mix

seeing supply that improving. that to we still tight everything is where you year there pretty or every then Are shortages of get? saw easy quarter it's And relative know environment tight I much a areas ago, supply is to any some

Pat Jermain

the regard I'll the pleased improvement Matt, still with teams So, this mean, supply and really the to first are last be and driving Pat. very touch I and work is we've with improvement. quarters done. on that did inventory over to have but part the days, demand. got to start engaged maybe of the couple in Steve keep our with But teams there up continued

the get the why do be fiscal cash of to think we driving more a we're From programs will target fiscal what standpoint, of first I of our couple of can some reason a XXXX with a few cycle up manage in quarter towards. days regions we part out are that's and throughout inventory that But have days. new ramping that's and

have those by to but are teams we still two, balance So improvements. our focused on means driving all

Steve Frisch

there I'll for supply us is significant hit Steven. your the chain is say maybe This component challenges that's moment. -- a from is Yeah. And nothing I'd driving that standpoint at question.

word there terms challenges used easy in tracking of are You the always something down.

with forecast in it's customer more causes and chase us, scramble For short-term probably components. drop-ins us associated the

I think industry trends. of headaches that's supply probably than of any kind more our is there chain just

Matt Sheerin

Okay. very All right. much. you Thank

Operator

Please Paul go Coster. Paul JP your we Morgan, line ahead. have open. From is

mute. think you might be I on

hear? this take if is you the go. Soderstrom. Please you go can line your Company, you Anja, Anja are Check Anja We'll from do have Anja, question? next Sidoti ahead. open. to Okay. we ready & question have a

Anja Soderstrom

you Yes. there? I'm here. Are

ahead. Please Yes. Operator: go

Anja Soderstrom

good year. ending the Congratulations that. about sorry I’m Okay. on

Todd Kelsey

Thanks, Anja.

Anja Soderstrom

all, said I that better but comment has is or? a XXXX of already, questions be here lot lay-up been should that There of first in a a XXXX Todd here more correct the is of asked good and presence you think

Todd Kelsey

business to than a I expecting headwind from XXXX of a that we're overlooked more revenue potentially The be into that communications XXXX a be in expect $XXX Well, to growth an EPS strong XXXX million standpoint. from thing the year XXXX. is factoring really standpoint, versus shouldn't one is

So amount of to we a really certain the is a that overcome amount expect. depressing growth that certain or taking

Anja Soderstrom

it you when can be that. it for the year, expect you then do talk we do expect And Okay. think to segment, happen communications that you to how this sort about in of seems with or XXXX back flattish like come

Steve Frisch

this so Yes, Steve. is

we I watch we for patterns of calendar need is XXXX. MSOs spending as the think what the of through look that thing end the to the capital like come

with to tone and out kind for our December, the like the to for pre-coming for us customers timeframe look for January that expectations expect year. So set their full in the what is of going XXXX probably I and fiscal

Todd Kelsey

And we're as it what that industry although read point there's say modeling some back, it if I'd going an press the expectation if come you to. is of it some doesn't is at

So of a I think question just when. it's

Anja Soderstrom

It to year this or is be next year. going

And capitalize higher then rate expecting the and mentioned in also expenses there's interest not guidance the to bit the not foreign get. past little the non-operating and also you're Patrick to on a not and that into the Okay. than going run some expense

be run of year the this the is quarter? rate we sort looking for at the should So first

Pat Jermain

$XX The see street and year the all cash free down full we'll expenses. come bit a revolver. non-operating million pay it a right think down our now has flow little I above Yes, for generate as for we

I a think little that's light.

million $XX closer think the be. forecast it's to I what probably is should

$XX down be total for I in But will at won't is the number we're first come fiscal rate million that the year. at in quarter. that. it around full a It So from good think the run

Anja Soderstrom

That Thank all me. you. for was Okay.

Steve Frisch

Anja. Thanks, welcome. are You

Operator

Paul we Coster. from go And Please JPMorgan, ahead, have sir.

Paul Coster

me? hear you Can thanks. Yes,

Todd Kelsey

Yes.

Paul Coster

few A quick ones. Okay.

but launching persist? of and First condition. also a that not is to the talked segment it in on next-generation you of programs temporary as of pick we'll life cost and at went Why the that temporary sort sciences all you lower something healthcare

Todd Kelsey

is I revenue science a healthcare at has will the been programs the programs looking the the as revenue of these we think cost additional or what in launch a situation other overcome next-gen temporary of lower dip ramp result are or dip the life basically as programs.

Paul Coster

and what you are modest mid-single commentary in kind assuming growth the swing across around XXXX, Also for I continue you? to your see heard that have macro of the for global what factors assumptions growth digit the we made expectations that

Todd Kelsey

consistent at we're would I say with today. it's where

certain in market change is dynamics trade meaningful what it or no from today. dynamics markets end So

it I'd growth modest economy. So call a

Paul Coster

and And traditional business? Got it. splits margin with do do perspective segments how from those aftermarket How across services. they then compare a your your the

Todd Kelsey

ramping. Yes, it's still

space. margins it's in I margins. at all time say not be itself, we have it would our sciences business superior forward our corporate is aftermarket business across goes across in four would ultimate but yet but healthcare best play of we'd life over sectors to sectors all its anticipate but So the the the And it

Paul Coster

debt. then And it. finally Got your

have on You basis. net zero obviously near a

what So maybe why back the on strategy cetera? debt that some take not some more et get is buy leverage shares,

Pat Jermain

we see door the to the quarter start of then cash high lot a thing vendors. balance mark that the pay Paul next of the at out right at and quarter, the One of recognize always our to end is is with cash going a

to we our will continue Right So at cash at balance look that and we execute in. now the our of this look cash on we've going we'll we'll want May but strategy this $XX next got free we as the year flow level cash free need of generation. that forward on type million generate buyback flow position be to depending sheet type we the of

Paul Coster

Thank you very much.

Pat Jermain

welcome, Paul You are

Operator

Instructions] Ricchiuti. go Needham from [Operator have we & And Jim Please Company, ahead.

Unidentified Analyst

on Mike here. Couple for Jim Hi, guys. of Cikos questions This [ph] Ricchiuti. is

expect particularly contributing meaningful we that those assisted of XXXX? historic I ramping the those on healthcare first alluding The fiscal space. early in you vertical. you're When robot more programs number guys the the surgery to revenue? a have in new programs Are should won understand here,

Steve Frisch

is This those. definitely it not but to They're of exclusive part Steve. Yes.

Unidentified Analyst

cost for Okay. year the of looking back in some half offset those to on that space? next-gen that maybe these of ramping we're this then programs help coming And are lower programs the the are

Steve Frisch

Yes.

Our overcome are here, we putting programs. expectation pressure look headwinds these as to into is revenue we short-term programs, The growth line is with top couple be as kind QX on other beyond these in of the QX talked with about. a expect Todd the and cost with lower that of our

sequentially more of associated just back a to temporary with growth to we introduction programs those lower it's And the expect issue in and so return QX. cost of

Unidentified Analyst

was you Or existing us you wins sector, guys in the and budget it manufacturing help the understand can Aerospace better share flush that there And gains there? Okay. any Was customers had. customers? new or defense mortgage with

Steve Frisch

Yeah.

share are think gaining driving the market know there. operations strength products And we is ability definitely where I are our We with customers. our So with to of demand some from. larger explicitly and coming our Aerospace, execution team's the meet customers

are side, one and the newer work had in we past. wins in defense the are And the In for defense uptick not programs, that there an sector. of we've seeing

not is programs. increases lot of all growth It's associated related So, with a in with exclusively programs. current stuff the to just new

Unidentified Analyst

very much. you Thank

Steve Frisch

Okay, you, Jim. thank

Operator

CEO further closing this will for no your comments. have time. Todd Kelsey, it turn we And now questions back to I at

Todd Kelsey

All right thank Brandon. you,

better and help products vigorous like members outstanding thanking and end culture. that moment our build create team by your XXXX. a to exceptional customer the Plexus So, world. to And service fiscal globally It's this take through you delivering a leads for that an I'd a passion

growth for your and Plexus Plexus highly that In we'll It's have with future the of process, you demanding achieved XXXX strong complex success. efforts And and future results success. environments. outstanding markets continued optimistic, me that profitability produced regulatory products leave in revenue positioned fiscal the differentiate

the work. keep So up tremendous

joined Plexus, who our thank to finally, you your today. in then us And your appreciate on call and We everyone, support. interest

Operator

this and Thank joining. gentlemen, you. today's conference. you Ladies for Thank concludes

You may now disconnect.

Plexus (PLXS) 24 Oct 192019 Q4 Earnings call transcript