PLXS - Earnings call transcript Q3 2020

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Operator

Good morning and welcome to the Plexus Corporation Conference Call regarding its Fiscal Year Third Quarter 2020 Earnings Announcement. My name is Myra, and I'll be your operator for today's call. At this time, all participants are in a listen-only mode. After a brief discussion by management, we will open the conference call for questions. The conference call is scheduled to us approximately one hour. conference recorded. this that note is being Please I to Director, Ms like to Communications call over turn the Heather Investor would Relations. now and Beresford, Plexus Senior Heather, go please ahead.

Heather Beresford

you us and for morning thank today. Good joining

will historical forward-looking statements and made similar plan, will provided call as Some of statements. words be limited believe, and statements to the forward-looking be anticipate, identify The during terms information our often today facts. not intend, they 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 XX, filing fiscal year differ to by to as of filed in particularly a please periodic for fair information, are Safe and financial X, ROIC provide and internal materially yesterday's the with supplemental supplemented they SEC the company's non-GAAP economic factors measures list flow free XX-K and XXXX, filings, May free SEC factors cause and goals management into press for the actual on additional because XXXX our Form provides return cash disclosure performance. September because the discussed, ended Form and such return the insight statement that and those Plexus from XX-Q in used Harbor those risk results our economic decision-making as release.

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

that press Plexus' www.plexus.com, periodic call and with In the virtually. filings. light are the morning release COVID-XX, situation non-GAAP supporting the to webcast of we of supplemental access page. of this our on clicking We reconciliation materials call please SEC on conducting information, to full at top Investors quarter's at a yesterday's this refer current on website For encourage live participants and

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

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

Todd Kelsey

fiscal team growth XX% everyone. $XXX our manage of Thank Xrd they And represented quarter on from while the slide close result X million. evening. morning proud the growth record as through and you, Please of the reported our after good Plexus begin resulting quarterly sequential complexities market Heather. fiscal XXXX. global I'm with results of COVID-XX incredibly quarter The of the Xrd X% delivering from revenue yesterday

the of operated of While near COVID-XX challenges significant. of three faced for reasons. performance the was I the This many will sites resulting our highlight each pandemic quarter. from level for capacity full our possible locations most

site regional First, the the safeguard teammates, that ensured to teams developed and the were leadership our well-being our and of sustained. robust we implemented policies and procedures of

customers our the the sites, build a day world. products frontline their our better that help at associates to commitment create Second, dedicated display and each

strong allowing of deleverage GAAP delivered customers. our components, demand EPS fulfil us effectively to to as $X.XX, diluted supply our Finally, expedited including of they our compensation We partnerships uphold chain and continue their to commitments team $X.XX expense. upside their suppliers with stock-based

margin operating our years. performance margin in quarterly best X.X% was GAAP Our X of

operating than within due substantial performance as While our the benefited higher from our Please reduced United anticipated operating increased costs, quarter, to advance and margin the was States to exceptional slide direct from healthcare we COVID related X. costs teams. were leverage revenue,

I growth. start related will Next, to quarter I will fiscal our revenue items discuss our within third accomplishments XXXX. additional with of

into of wins of ramped production. annualized result manufacturing when Our exceptional $XXX an the million team to fully overcame challenges pandemic the deliver

our business adding teams customers, new In target divisions. development a our multiple new number resulted X addition in efforts wins in to traditionally innovative meaningful new logos strong virtual existing from of wins

for reputation continues with and customers; us of and performance strong execution our manufacturing inability billion strong to team's team to wins the global for us growth. the existing travel delivering customers. to well growth, superior further Our funnel target position Even X.X with for both dollars, positioning to opportunities future expanded qualified

Our Plexus we complex leadership and our peers environments. portfolio differentiate our continues to as highly products from strengthen regulatory demanding in

industrial, third commercial, market Within revenue was and the defense life healthcare generated of XX% our the sector. and quarter fiscal from combined aerospace sciences,

in these efficiency and in advantages profitable has to focus complex operational Our growth. markets led provides consistent

related highlight the to sheet. I Next, accomplishments balance will

days the fiscal cycle to conversion second fiscal of cash was XX guidance XX of it XX days. led range and X-day Our improvement cash strong third of our an free well to flow quarter for marked cycle The cash million. $XX quarter, over the below

thank XXX both part results quarter. and created on homes. COVID-XX policies economic quarter. the result globally to Unfortunately, basis average Plexus evolve normal our return of above throughout delivered facilities and of our commitment expectations of a our COVID-XX, leadership invested want This be members make capital can cost Our shareholder safest continue value exceeded impact entering team the to all away from of third procedures, represents In their an fiscal business. our the and our become for our points of We X.X%. mitigating to of of managing I the meaningful response weighted has when XX.X%. place their return capital the members our to team

enhanced mandatory to tracing we In equipment our distancing, procedures. decontamination protective and facility contact and social personal addition

to of how our a positive slide to meet a result, advance and life sector sciences quarter, customers making capacity the was sites in against throughout Please communities. Last I As fight near highlighted needs X. enabling work full healthcare in the remained impact COVID-XX. our quarter, the the us

our new quarter, and communities the of in highlight industrial This reach the within business light helping will the are products I customers how normal our pandemic.

equipment to consumers large Work surge Within can at customers. products home from homes, hardware in home. their safely them to the center entertainment enabled streaming to and shipping the needs. we products to automation that semiconductor flowing work has go people from the a are we additional help our to communications, This so in data warehouse devices world avoid provides capital Our produce largest retailers through bandwidth allowing driven capacity shop. out equipment keep for need

instrumentation products are fight used develop Our to devices by to next generation engineers medical globally pandemic. necessary the the

what need printing fight to of Finally, workers with for protective the need ensure the safely myriad battle they frontline against applications and the surge there equipment, are XD have personal COVID-XX. that

we programs COVID ramping our are from critical are applications. with seeing sciences associated and wins support addition, testing In care multiple upside healthcare recent for existing that life customers

quickly organization's our and strength, ability to adapt and Our focus. highlights persevere team's talents,

have guidance that a the quarter committed We the world. better team to on our to truly XXXX products of slide that fourth fiscal Advancing for a X. is creating build

$XXX revenue As to of to we our look the $XXX we quarter, forward million deliver in to range expect fiscal million. fourth

While demand approximately in aggregate in annual markets fiscal remain XXXX. our highly growth continues volatile, guidance strong. range be to suggests our of The X% revenue midpoint

operating pandemic. leverage expect achieved We performance to continue strong to COVID teams our be as the gains the through productivity our

lead impact and to $X.XX consideration including the we GAAP $X.XX operating at we this guidance, levels of X.X%. range of to $X.XX, stock-based are will GAAP margin anticipate of X.X% expense. have range operating taken chain to occur the in markets in EPS In however, of guiding to into such, compensation We revenue these of the supply facilities margin providing As beyond workforce constraints end on no guidance we large-scale could our or materially COVID-XX, or our that and our due outbreak to assumes will global occurred. challenges COVID-XX those COVID-XX, suppliers has due already the closures what that customers assume

of move products, products. we to specifically is and COVID products, certain industrial early we year advance This new in in anticipate the benefit related into ramps the infrastructure continued COVID-XX. performance of year. fiscal the despite related critical moderate, throughout impacts part to program to As in growth communications anticipate of healthcare expected later anticipated XXXX, the related certain the strength demand operating We from

operating believe offering, workforce, of the X% is advance talented this superior above range focus X.X% or differentiated year. goal. target portfolio, service margin our consistently efficiency deliver goal support and operational Our execution, our We to at on in fiscal to

remain priority. As we our members forward, our move team top

to the of turn to We our sites of team the will every sectors the their and customers in manufacturing who unwavering members, in those particularly and and continue our for communities. procedures analysis applaud support I additional I call manner I demonstrating am possible. are now over of to enhance operations. their proud our day our operate our of efforts. market safest Steve? policies Steve performance

Steven Frisch

how Good morning. I is update an pandemic. on Thank leading COVID-XX the on the Plexus you, will with slide X through Todd. team start

tested, have from proactively every we place, of of the we number of day, COVID-XX settlement everyone their reflected our and home, low. this quarantined check being continuing us received. are conducted satisfaction We the work the outside facilities COVID-XX need our required We to back Xrd distancing. commitment they're have be social symptoms where happy pledge a we contact make transmitted facilities we see are environment being home have virus put work, we we fiscal our the to at wear quarter. not before even employees we to in the is of and policy possible. our likelihood delivering Plexus. during virus is tracing test mitigate perform The this We survey by on masks safest in the within To are the employees where increasing issue while with largest face mitigations and our homes outside practice on who In to Plexus for our who are is employees risk, employees to contract at individuals symptoms employees were believe wavered to results the

COVID-XX at bringing effectively the Although we thus to employees it risk Plexus have stop we to of manage spreading cannot able work, far. from been

highlights In health risk customers. in the X successes addition our business employees, slide for to team risk mitigating the mitigating for

quarter challenge occurring some to supply COVID-XX the in the due meet materials to base are main demand in expediting increases. Although for Xrd the still disruptions supply our fiscal chain organization was impacts,

and for converting we procure the team as because team's customers. production third near our As results, manufacturing This were our finished efficiently rates in our our strong quarter. finished reflected was facilities at into fiscal full the additional product them to or able operations possible operate was to able materials,

today, produce all COVID-XX we but able our fiscal to of We of evolves, will fourth facilities. or expect the be in continue as levels production to in pandemic of at near quarter monitor manufacturing as full to the impacts potential

also Finally, existing advance is and to is resonating it zero opportunities potential slide this during pursuing. tours, to Through by commitment is virtual with market delivery pandemic performance defects and challenges our Plexus creating X teams on-time Please that of review COVID-XX for and customers. our especially sector but creating actively new meetings are a sector.

exceptional sequential treating line the the the fiscal diagnosing with for had sector result of Strong with would expectation The sciences our quarter. growth. growth of was customers the in and life Life in drove top double-digit We growth growth XX% exceed healthcare of XX%. COVID-XX Our products used demand our Science XX in Healthcare third that XX quarter. experienced during sector's

start the products As for we COVID-XX quarter, remains the fight used to fiscal robust. fourth demand

result, fourth quarter. life a a low As increase for our sciences single-digit healthcare in fiscal we sector expect the

experienced increased our an in growth equipment quarter job forecast sector semiconductor demand. commercial fiscal high teams and operations single-digit customers expectations the of our industrial fulfilling surpassed outstanding quarter. the Our result chain third the decline. additional XX% did The of Several and a within easily supply substantial capital

sub-sector fourth quarter, demand fiscal at semiconductor the As equipment remains healthy. the capital we look

We two expecting larger sub-sector. with our strength are connectivity also in of our customers modest

commercial increased One healthcare anticipate that total, a product the low customers these companies. In in for demand fiscal single-digit of industrial fourth for sector control we our increase quarter. industrial to an has provide they

result in our Our third than was high down quarter. aerospace of lower defense a and decline. sector single-digit expectations was The slightly XX% the fiscal

the products the aerospace Soft was reason for commercial demand lower revenue. customers main for across several

our result quarter. at fourth and be anticipate sub-sector The fourth we expecting the softness with sector we aerospace and security Looking aerospace the satellite the in net a that is low the fiscal partly for demand fiscal to in decline defense programs. some quarter, single-digit are offset commercial continued increased by

customers in robust at for sector home quarter; sector. third XX XX% connectivity to fiscal the products were from the stay Top Our increased a contributors the second communications that growth, increases our in of expectations of the the quarter, almost double-digit environment supports a internet result that fiscal largest demand The XX% topped eight growth. the

fiscal the continued connectivity demand towards fourth strong we some As we see internet look products. quarter, from

of an our XX the As fiscal new wins a quarter. fully for of of annualized are quarter. a $XXX high into we overview the increase We to slide production. result, generate wins customers or that fiscal for customers. expecting won XX Please teams new associated advance we ramped expect communications the in third of performance fourth when with manufacturing the were in Most to programs revenue million divisions sector

won manufacturing new opportunities companies. However, we X with

business will new in produce a XX region. of substantial regions Although, it our at a point wins following in positive in changes a wins caused The increased included momentum COVID-XX rapid the fiscal opportunities. wins results care cycle at goal to fourth for in close most results our $XXX is wins advance development into by COVID-XX has This approach, sales million, Please the by for The tester strong slide further our XX%. the above a performance quarter. insight as on wins at process we third $XXX impact the million metric trailing is had million in $XX Wisconsin. America typical to quarter result that were

control our addition, Each four ramp expect are one XXXX. wins, specializes in these of market APAC fiscal manufacturing facilities early of EMEA majority A sector States. which a program fiscal in start opportunities $XX that $XX early in had million in the ruggedized for quarter, wins XXXX. of million in China a third the significant United in Mexico, our the Guadalajara, wins defense aggressively for aerospace large products outside region include our China who of will robust are The operations. systems. facility program the end benefit to manufacturing customer from of expect new life wins the we included The X to sciences In fiscal region's healthcare in our in we a ramping

fourth the ramping XX advance to to Please fiscal further We into insight expect performance start sector. the manufacturing slide program market during by first them with the quarter. for

exceptionally quarter, are $XXX strong team an third new in result the rapid tester. few included of million the the point-of-care healthcare in Our life COVID-XX including had sciences fiscal wins a wins products,

wins the commercial with engineering sector Industrial quarter. of our including most a a developing $XX of been solutions that However, are fiscal the million manufacturing in medical customers. third device wins products, team has finished produced traditional our healthy

share that The that Aerospace slide capital with wins total sector in in In program a customers. XX. our some a to addition market system security financial sector further grids. used the fiscal Please of and The equipment added the semiconductor is power gains control large defense quarter. third to of is safeguard generated transactions. meaningful million wins $XX new new data includes The product used to advance

device sciences the diagnosis $X.X the opportunity $XX increased quarter. healthy teams than qualified by during of funnel funnel the size at billion. healthcare third performance. Our the fiscal sector billion quarter, life the the manufacturing wins third robust to opportunities significant manufacture the in was to quarter. continued with remained of strong funnel new A in $X.X added COVID-XX used Even fiscal more funnel wins supports At during the very million the

this $XXX win Commercial in the funnel quarter. our million The again at increased sector fiscal to program to Industrial within third quarter. finish We expect the fiscal fourth

and of market share opportunities driving the warehouse are automation the for funnel. and semiconductor gains further with capital equipment New sectors opportunities customers growth

sector. increased Our increase performance comments; a record driven funnel approach of in fiscal our quarter. our customers. million pandemic. some great we opportunities created at final and strong in achieved believe defense close by aerospace The sector few defense the A focused of a by at revenues sub I third may of $XXX to mainly portfolio XX% market how well-diversified and the wonder sector their has operational midst new end $XX was million the

not only turn possible, Pat? foundation new and for review I more commitment excellence to is you're thank will most you employees overcoming and who superior the unwavering. made employees execution, dedicated, Plexus's and excellence, of provides all of and today's possible execute to importantly Plexus strong now including to probable. commitment it is challenges Our for in-depth a customer is you When success of financial I successes are probable. dedication service operational focused, Pat success and call our the an who future make performance. the want

Patrick Jermain

Thank you, morning Steve, and everyone. good

Our X.X% gross quarter XX. margin summarized of by million $XX are fiscal sequentially $XXX of improved basis XXX was third on while slide points. Revenue higher results million

we Selling better our remain higher variable to and mix leverage margin. fixed increased expense expenses primarily significant lower Healthcare business spending last incentive in due For quarter, quarter. expenses $XX we third as areas fixed administrative consistent gross of XX% our to slightly contributed with the cost fiscal million fiscal revenue compensation compared travel to experienced manufacturing expense. Improvement second above was quarter. expectations also and and while were two the experienced costs where

percentage was area. However, improvement basis X.X%, Again, sequentially expenditures better a and than costs, XX this which of lower provided in revenue, SG&A as healthcare travel by and was reduced expected points.

million X%. lower-than-expected GAAP of and non-operating primarily points $X.X other included This represented nicely of a diluted point EPS to GAAP operations, operating our expenses X.X% and from of of Non-operating target operating Our expenses due and lower margin quarter interest margin of expense. basis better improvement impacted second above the in XXX lower an by expense. non-GAAP approximately to improvement than $X.XX tax XX expenses. result was were fiscal range expectations positively the basis stock-based X.X% compensation

XX. cash now Turning to flow and Slide sheet our balance on

the during a free For net first we $XX spent expenditures, from of capital third income. result share of fiscal excess million. is $XX million the Through our in the flow of on fiscal we free There generated cash $XX million, flow generating quarter, in third repurchase fiscal quarter. XXXX, million cash of months delivered and cash operations activity $XX nine no

quarter, environment. the program given current last repurchase decided I suspend to the As mentioned we

until to cash wait flow generation wanted free also improved. our We

for quarter, resume remaining fourth positive fiscal have quarter our and under $XX plan flow authorization. expectations million fiscal the this quarter. we results third We currently the repurchasing shares Given cash approximately to the

our We potential of strong $XXX of of million, while approximately facility Plexus cash sheet, day for our new with short-term our $XXX We XXX authorization $XX for million $XX offering. is by In executed several balance positioned sequentially well increased XXXX. this will we a Next higher were believe a month, a million. term banks. Directors loan credit of with debt we through million, review Board with May, fiscal secured

the outstanding our At use therefore, under repaid is With to facility. the borrowing facility, quarter, under this borrowings end facility. no allowing credit the us proceeds there we third fiscal of existing million the $XXX of revolving fully

Our gross level debt X.X an times, X.X of compared times. covenant limit to attractive at EBITDA leverage ratio is of to approximately the

a day, revenue sequentially days. asset demand, operating contract XXX support our return turn days improvement consistent performance of points our delivered in by in our the basis return slide improved led For capital cost This days less cash weighted a led basis of for by of XX and improved The inventory of combination X days quarter above capital, in to quarter, XX was a capital a shareholder continued days. slightly quarter with on value. improvement and reduction Cash in sequential point solid and revenue sequential to of cycle at return Please increase XX.X%. The increased the an basis last of payable than details XXX quarter. third of while economic sequential to days creating improvements activity X target. fiscal points working a we With XXX were invested end exceptional to inventory, X cycle. third purchasing of generated on average days third elevated sequentially management our receivables the one fiscal our

led in $XX customer sequential an days the improvement. which successful were we additional million, X to Finally, securing deposits

lower be due to expenses guidance approximately the revenue healthcare margin the provided EPS of already primarily some incentive As summarized at the costs. to details compensation XX. fourth quarter, has the review additional quarter I'll XX X.X%, reduction fiscal is basis and fiscal X.X% expense, margin for higher the than guidance of points in is midpoint which gross fourth this third This be would quarter. variable on gross travel expected slide are Todd and Fiscal to range

guidance fourth new is of consistent is For fiscal would anticipated the notes to for our expected which in are midpoint $XX SG&A the revenue to be this of the to % approximately in of X.X due margin fiscal million A fourth $X.X with of the Fiscal fiscal million range At $X.X X.X% points under expect fourth be quarter, compensation the SG&A range expected in few other expenses revenue expense of $XX a third of stock-based to quarter. basis expense expected with be At the primarily expense. X.X% quarter guidance, guidance, third we range $XX million. the operating XX includes these to of amortization quarter. quarter sequentially million. fiscal the would expense is quarter. to the this Depreciation and consistent interest Non-operating million, be of midpoint expenses loan. the to full higher, term be

XX% For an of fourth of the to tax tax effective to full non-GAAP estimate for we XX% quarter expect rate a the XX% XX% rate year. fiscal while effective we

are diluted million fourth shares outstanding In addition, of estimating for approximately fiscal quarter. XX the we shares

working for the on be XX midpoint Our cash this to sheet quarter. guidance, capital would expect is slightly of anticipated Based the cycle for consistent cycle days working days revenue to capital in in dollars days. to this revenue. growth will the increase cash we of with At expectation forecast, third fiscal result XX level sequential of our due balance the

cash million $XX put up $XX million free of free us the For to this expect fourth would cash the flow. flow quarter, for full fiscal we $XX million year to of at

open now call for estimate be continues fiscal spending the questions. to million the to capital in of that, range Myra, XXXX million. our $XX $XX With for Finally, let's

Operator

Thank sir. you,

begin go James with is We Tindle the [Operator Instructions] ahead. first Adam session. from now have Raymond question-and-answer question Please question. our online will the We from

Adam Tindle

going how ramps. difficult you early and the COVID in this advance strong moderate to new was good talked and ask morning Thanks demand about you, results Todd, wanted environment. 'XX congrats to of fiscal in on related operating in I

like is and air there that. little So maybe have sound just coming a bit an of I pocket two questions it on does

digits help of what First, kind more And be worse revenue, last would it's could like or magnitude segments you're impacted? little XX down expect saw a doing probably to if of just the want there's understand would ramps sure plan back quarter side year-over-year, because major low-single you adjustments. us we we of on to of kind bit I'm secondly, a catch in with the operational the you make to coming for don't so this. the OpEx half year it

how expect Just big side? a in Thanks. it dip comes in operating how should margin we the other out

Todd Kelsey

with than Adam. of sure, one bit is more guess obvious I question what's much the we perhaps things reality people Yes, a here. became or that bit a the here concerned too

look as of that to the we we at up guidance, going the want the we midpoint, bit a yet. to million and sequentially at demand we we're that fiscal over continue quarters. where quarter thinking were if some ramps situation, that we'd rate, would $XXX think up didn't at grow over today a at is program hadn't people with new the off about take these pause next, So fourth be caught it quite doing two to of we level the about past What increases

QX. in to So dip we in be in would what QX and I we would and expect call QX a to expect, we really what modest QX then end at and sequential expect growth again it from in QX

of look operating and And it isn't fiscal make margins. XX expect XX, throughout at we throughout, any changes strong with performance world, in the that environment operationally, today's fiscal fiscal structural we'd need we are some in be, there's of lot to expect, to economy we expect caveats based we really in there as environment So, broader strong but things we going here 'XX. expect and on growth the today's a the off broader with

Adam Tindle

thanks. helpful, that's Okay,

for you So a times, of What Thanks. as Comparing down and of quarter X we're the one had out you're now big profit time but think just differences maybe here quarters about quick blip, are revenue we down to we X a around revenues recession string as where record this last this, major follow-up. industry thoughts of margins. this this? coming takeaways around, of on operating XX%, recession, in had seeing and a the at just the

Todd Kelsey

think reduction. in recession I So, broad-based was last very the a we what saw demand

we're seeing and it's seeing right as been I markets diversify an able think impact that significant what now, not we're other the of with people. targeted a to our specific very way we've across portfolio,

So, through talked about XX% to operate our About as is business with demand aggregate, solid about I we sectors, and in go of our it, strong. of only our it XX% being being, would do has lot a in. and the impacted the think And recession. by I call the that I it we're what weaker to of playing of with markets diversification the now, portfolio

well is that's is to lot and different. think different, across targeted and that do what I it's I I and some quite going broad going think so, market be there the based And we're very last think was very that areas industries poorly the to the And a what that's what's see do areas this is time. various some time and across various of sectors

Adam Tindle

Thanks again. and congrats,

Patrick Jermain

things that. to standpoint Adam, few a can a margin's I from add maybe too,

mentioned I sequentially. up were XXX basis we So points that

to that around of sequential few just XX related you improvement numbers healthcare I'd that; give So a basis expenditures. say costs, points to about and lower travel

So that's something more that's probably temporary.

this benefits see COVID so related little $X last third to quarter, quarter, were they expect compared lower a second fiscal so later this to quarter, about million, a the those to quarter this there. We levels million were return expenses year. $X

from a around to ability quarter. expenses real productivity; higher delta with was where manufacturing and fixed second manage the leveraging the think our smaller that revenue, workforce I essentially consistent our keeping

with standpoint, continuing. forward us expecting think stay going continue So, strong that of I see and hence, will to some about a Todd's will change comment and margin from margins

Todd Kelsey

would comment have I before didn't left just good. about year-over-year to tend about too on first we the because add fingertips are I one performance, but question, comparables wanted year-over-year, numbers think to Adam, we my because the at have, performance more QX be more your sequential quarter we'd year solid quarter, up was pretty we'd a to with 'XX and expect in fiscal of par last from be be expect 'XX. QX at expect to quarter, on certainly, substantially that we'd a depressed to fiscal that

Adam Tindle

Got you. it. Thank

Operator

online go ahead. a is Harrison Shawn question. with Please

Shawn Harrison

they our the and morning, as robust to on partners. see to out being first Plexus that congratulations in coming if under of potentially everybody over get Wanted to come and inability to the more we to just dig able win the entire next through well control? programs the to accelerate an even Good light facilities. does in rate the get program team actually XX areas, once outstanding it, How results of walk to two my people as this XX COVID visit quarter Is opportunity meet and hopefully months, you in an the you're guidance. person Plexus potential there

Steven Frisch

this Steven. is Yes,

I there a potential think is opportunity.

the we to at drilling things the look that and and starting different through COVID strategies. seeing situations frankly of the is tariff evaluate companies are in recent One really chain supply past,

would street those to from and we're say, about those. more don't than a being looking So, anything I and virtually, we believe customers, although chain being getting requests people do with directly strategy supply are, and better I talk associated successful be there's forward able the getting to new on I addressing discussions potentially what should believe

into [indiscernible] is, in And the need through so, wins want 'XX to we where our able it is our it need in to increase the the and a to of few the 'XX to business in be as development reality investments metric really try we going. quarters made keep to number and as increase, be and last that EMEA business US, wins we is 'XX development be, in expectation keep to team, growth and the go fiscal because couple well to of here have we kind both our as

Shawn Harrison

That's you helpful. spot. put then, I'm to going And the Pat, on

well. along pandemic You you're X% cost did in midpoint and quarter, able EBIT above manufacturing helping way like EBIT pandemic, line margin during you wouldn't these, a is as going you've this margin cost some during why it but to out from lessons a you X.X% sounds to hold COVID COVID top got past overhead, we've have growth the efficiency 'XX the see the the learned and some lessons at still here if be fiscal X, efficiency

Patrick Jermain

I the process next month. there, think of plan opportunity operating to present preparing We're annual think Yes, our right is a for it's Board. that the early. little the just in definitely them I Shawn, We'll

opportunity I there. is think the

to ourselves efficient be through. think and the we proven can that workforce I productive, with more expect I we've to carry

probably your through the I just labour to the especially side, there, personal But So guide expenses will needs a point, that protective think bit, I little we'll will it's I to early down think have come continue fiscal carry think a that. to just opportunity is equipment 'XX. COVID

Shawn Harrison

Thanks.

Operator

have with Ricchiuti Please Jim & question. a from online Needham Company We go ahead.

James Ricchiuti

you're I morning. give for have did missed but good related Yes, a QX? you that expense anticipating level may COVID it

Patrick Jermain

for Pat. I this million Jim in around QX, be that's so QX. coming $X we is don't off we'll think I million think did, X

James Ricchiuti

we're impressive it. I in, to have look that you Pat, comments how you about at might environment. the being which to XX% COVID-XX the up the as you given a much environment that Got made you've business, the this the the And tailwind do just of business, as solids been is back business, economic portion to that I'm have of experienced? business that wanted come of sense wondering

Patrick Jermain

certainly terms a bit early what in do we we're about we Yes, the year. where and fiscal talk part seeing of that's general moderation of a in

I is it from just more million be here related, going in call XX the of the of so right COVID, of quarter it I'd it that's ballpark the head off just or a mean markets. order that's on I think just and solid top surge impact I'm non-COVID of demand related in my a that, might but So lot that's,

that we're, thing of I has. will of but healthcare are point think that not for We it's move But we least weak business we a going fair XX. going be have at long or we right at more as say into think fiscal improvement would business of look only have us related, than strongly the more now. come it's time. to I but back a we other care program sustainable the that elective There's that look anticipate to could help if COVID the you like you that our some the where So, say of have amount it ramps think still some is business, signs around I you if testers quite at to you of for

fiscal that to we have get we think So, into forward look I to as XX.

James Ricchiuti

being North nice any on just Got wins is generated. provide some there can wondering am in is that where other touched on in some growth growth real it. And think you then, America you and I if I it of color that

Steven Frisch

Steve. long-term Yes, customers supply you just strong I in see strong would message is on bit yes, focusing that continuity do partnerships. and this disciplined so Americas, APAC, give more past in recent we've the little also probably we in a wins on approach is of a wins seen the Obviously; really and

and so applied And cost, opposed the bit I the just these resonates of deliver able can I been that to for issues of people with what there's been well suppliers think show have chasing really think to we've our do, as really more diligence we a to them some we globe, message being can well happening when them. and as and little Plexus lowest it across due examples see resonates

of so, execution other they pretty and a think it. just my I an ability done from to ability the win customers It's and people a just like is, tell quite to we've to our message company, demonstrate financial frankly for what then stability easy the in both and And opinion, to standpoint.

James Ricchiuti

as has are about is, the this Malaysia, I any your moving update way question just last could I been there at full And been in pandemic’s it. wonder past things given facilities, we've are. to in to? talked to you just about to any, Got getting me, the we paying just just you faced if be from headwinds attention capacity talked potential, the mean, provide around. any there need but in general where you you

Steven Frisch

ability a to don't expand full the mean we capacity guess made to capacity facilities. that is our into the new have at I ability with standpoint, and From comment run I revenue doesn't full programs those capacity the Yes. and more drive

but we uptick, APAC sit an standpoint, today tool, so, a the we And in have capacity as capacity about from range, seen region. XX% available in more XX% roughly we're roughly where the of is

the as that of end getting tooled. more, on higher closer XX% APAC So to

The us, I additions that for think at kind we of I right we're in so, to China, is And fiscal in us the But comfortable our future. made were in look outside as 'XX, probably pretty additions. for the be really area footprint. APAC an with looking to growth of the

Patrick Jermain

that business through we everyday the too to everybody with which occurrence add a of dealing week every COVID like across on the things or that period one a went through Yes, orders. really and are and certainly continuing is where, those I'd period go is an it's

we've that We want we we're business don't to this we learned to operate. and around in, near to and be. revenue capacity, or this, our tooled the something we're where issues given point at call the it's believe which at it able So, locations that be we able at we'll foresee being at capacity, to think stay manage our any our, is

as to of we we be mentioned, new have room Steve go able add As plenty to forward. business

James Ricchiuti

congrats Okay, quarter. Thanks much got and on it. the very

Steven Frisch

Jim. Thanks,

Patrick Jermain

Thanks.

Operator

Please a Steven from ahead. have We online question. Fox Fox with go Advisors

Steven Fox

please. questions Thanks, Two me good morning. from

comment. up following just last on First that

are just new of some can a at high typical have follow-up. looking a direction give about So, we your capacity on, coming et I you type spending And versus year cetera, capital sort or us tooled year then there? when you're it then talking of would having unusually programs next be

Patrick Jermain

Steve think 'XX this as and to that add probably toggle fiscal two will at we're I don't years. see or I 'XX going Yes, later those I, have is maybe in some to it point capacity into until said Pat.

next I several we satisfy expect at the demand think So, to looking years. Steve, we are that, over the

looking 'XX we some kind expansion of be later into 'XX. at in think will I So,

Steven Fox

Okay.

Steven Frisch

add, around Steve, is that, it size, China online some just, be growth engine of rationale facilities the What to a to can -- engine. not engine I a it's but need team in second are be growth Asia, for That's be and growth we believe strong we our like as Asia. substantial as footprint it's we viewed just would we when is a going another and market those Malaysia given I proving strong we're geography in our us, bringing think growth going Malaysia, a for going to

Steven Fox

that And COVID it, makes of question. sort another sense. related just then Got

out can whether availability testing, as warehouse point explain what later the about you changed on seeing the providing this the And issues On in care you're are you for secondly, ramp has is given know with of you chain you as US can into consistent you're around the lines, for then supplying where chain your much some of also other year. government announcements What and supply similar funding of sort chain equipment how food the manufacturing, of given Thank you. consumer into essentials? mentioned retail. I supply efficiencies, other supply processing that

Steven Frisch

Yes.

to one the regards the first. in So, -- second I'll take

that In industries. the serving on focused outside markets other are terms of healthcare of other

point-of-care even types that to pharmaceutical difficult controls in or into and little seen We things, seen that end they how those point -- exactly they've of customer so we'll that a be do industrial areas, things Todd's obviously have and maybe that that. so sciences, customers ruggedized the quantify heard customer. device. life segmentations uptick. types of It's attribute in the some of much whether the seeing some strength they're going of the some an then, the things terms the building healthcare business to seen but and we've and other device it's entire upticks laboratories of that to a our that I some those And those isn't, again to like of in from shipping their the there; have some It's industrial different to mean, segment are sectors of products of in we most markets, the we're and of for part finished

just chain being a deliver COVID. beyond because And to capabilities some cases products, chain so, supply Todd's in these that a our customers customers developed basically product are and a chain, well their develop, supply can robust do that standpoint, working we supply from COVID-XX testing, believe go our for to comment earlier, used that closely although with they're

get comment So doing, discussed are about being do that trying viruses public things some are helping of for of these products of we directly their that things really into companies be used some these -- what for in being so the the some future. as the of and we in their out market. out testers basically of into engaged we're are engaged other can that and they help and testing but other in things And for from recognized efforts don't to we're are the the them that the terms to some in companies are

Steven Fox

very that's Great, Thank you. helpful.

Operator

ahead. from Stifel Please question. go We the Sheerin Matt with online have

Matthew Sheerin

and thank Yes, good you morning.

a equipment moderation you've quarters question seeing capital in you're semi probably cap that growth year? reductions do Is semi-cap and market, you in to are CapEx regarding this you signs part is seen to in a going seeing expected about things talked the QX visibility And strength three the in there. some Just that QX see row next you're industrial. terms we that or continue of because have that next semi within of year of when

Patrick Jermain

are industrial, that COVID in some being surges, I mentioned Matt, are products as non-semi-cap. related ones so those the of Yes, the

is necessarily COVID of related. we semi-cap moderation seeing little we But go fiscal bit the we're do, demand. do see demand into as a we in think 'XX a not I semi-cap

Matthew Sheerin

or base like are maybe memory? you specific customer your And seeing across from that some areas

Patrick Jermain

Yes, question. the to this, of take I'm have Steve this piece going

Steven Frisch

Yes.

or maybe then Todd's to part. first bit add just So second response I'll a your answer I and little answered

especially look One of commercial are at they levels us the do the up would is deposit reason do well. higher able those our you'll semiconductor space, you of inventory see seen to customer Part than that these industrial days, And market. as that as be. things is that customers with you've our in we're outperforming normally the

is lot in point are struggling as us here that, especially a demand. is capital to in at that's period semiconductor through or believe are customers inventory them stronger some coming, bullish capital 'XX, going having going they here demand to to be all or whether there in carry equipment but there be they're not 'XX extra so, pretty And COVID but of customer, are because the upside the there

demand And and fulfil inventory when then so, it. carry that extra able comes, we're to we

our 'XX, be look be numbers sector that modest same kind demand Industrial fiscal they there. exists want of upside of we we as see to because And there might that anticipation so, I from think the issue Commercial when into

Specifically, in relates softer, some marketplace like might as continues It Memory, the hearing us bit to to it be that a you the a of bit. higher end little strong little be products. be in components. looks for semi which may

most whether we as customers, are semiconductor see our at it the demand, in internal then, there's to board. everybody, quite since end markets of Memory across that end modest process, and the future, look we being the in a some we in fiscal point in kind actually higher versus well bullish bit see semi. but that's also as everybody, 'XX. end as external going as are And across predicting the So, what And just wins. diversified difficulty there is of demand after, higher everybody finally, little are a But the Memory's back-end in both customers for upside We softness front demand. semi, us, strong,

Matthew Sheerin

very obviously my is in follow-up as helpful. little demand And very your having actually ties any into strong that kept Okay about on really not constraints you result. talked customer you comments position environment, but a Steve, your supply inventory was inventory, meeting that a elevated, bit this from a

So, to here? little to day seeing it's battle up you're as continued be remain to are day elevated of and bit you at a look sort levels or somewhat expecting supply open forward, you

Steven Frisch

any list best the April, that is back XXXX,XXXX. quarter quarter or we given help it's spiked of flexible those need we the a come XXXX, In on have throw will components month that is thousand hundred of we I close to call roughly within and that up resources things to the month. solve down in a that can so, process a way corporate basically which critical quantify list coming right, within at it -- typically to list problems. it Typically, we to run the nine list Probably

quarter. improving where were third they definitely in fiscal are things the earlier So, from

the and team those. that's to more be chain issues looking actively done. are it capacitors, expect now to are discrete constraints level, higher come related There as under-emphasize map on specifically but everything the to a comes from us that semiconductors down do we are quarters. back related that short-term return an a But one electronic we the to to to at issues customer have and whether back to that logic continue tantalum suppliers site then, at people there's is what had. suppliers out trends. still spot we're directly a CECs, for those been issues a having. we right some look forward, coming smaller on or that, work believe short-term of as and area, we're to being more back But capacity being themselves should our as components, few issue, watching related MLCCs Going actively is lot supply I again, don't online want problem as than you little few transistors it's battling And and are and we diode watching side in COVID. right engaging has that a see, then, can talking shutdowns last those that automotive is supplier work issues about And now, the to a long-term more continue

Matthew Sheerin

Thanks helpful. was so much. That Okay.

Operator

the We question. go have Paul Coster from ahead. with online Please JPM

Paul Coster

thanks Yes, question. for my taking

quarter drag it if think of got the it stupid expense mean I we of is but $X.XX almost does some expense COVID do this a in exiting share about your next a it's year. even assume related normal or Should that question, So, sounds that the customers you new to or normal, this that million pass the X of, into away? can scenarios, is earnings sort and on you've about go new year like you the these on

Patrick Jermain

Yes, Paul, is Pat. this

expecting lower I think we're will than quarter. be what for it question, First the fourth a low fiscal

and along say to because $X Kind become situation. this as more new of of year, a forecast to Our related. again, productive well probably We norm we've how don't equipment quarter customers. our would learned anticipate passing a million that next mainly

the more cost have that absorb. offsets to I So, than we're think to going

Paul Coster

All right.

Todd Kelsey

we Yes, I add. believe productivity costs just to gains. want we the through COVID overcome mean have related clear, just Paul, I to to be

did that quarter, margins as COVID. every the going margin whether So, hit deliver the we to margins, while we're level not may believe in QX not strong go forward, or that we we we

Paul Coster

impressive PPEs, little markets? regards you as just mean or stuff, the that question, to XD Which picky I a printing those in mentioned you end XD It's Todd. printers a that for you're PP semi producing another printing please? XD want using products you of are for

Todd Kelsey

Yes, to used facilities local use that use them, that XD medical for PPEs but and we like our things we have we for within more we're into and all their have the that helping can putting our customers XD these marketplace, market both. into the enough, get out business Interestingly products it's people also so that printer actually actually out fixtures printers tooling we and have facilities. those so create

Paul Coster

Thank it. you. Got

Operator

at questions further please no have you this continue. time, And

Todd Kelsey

Thank right. All Myra. you,

in thank So like to team our closing, again, I'd Plexus globally.

We this Plexus. in other, all We You and to today. everybody And appreciate thank incredibly appreciate performed serving call a quarter while again, your customers who past communities. want each our well good our our support. interest day. your Have joined I

Operator

and ladies you, concludes participating. today's for Thank gentlemen. you This Thank conference.

You disconnect. may now

Plexus (PLXS) 23 Jul 202020 Q3 Earnings call transcript