Earnings call transcript Q1 2023

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Operator

Good morning, and welcome to the Plexus Corp. conference call regarding its fiscal first quarter 2023 earnings announcement. My name is Liz, and I will be your operator for today's call. [Operator Instructions].

I would now like to turn the call over to Mr. President and Vice Relations. Plexus’ Harrison, of Investor Communications Shawn Shawn?

Shawn Harrison

thank morning, joining Thank Good and you you, Liz. everyone, for us today.

Some provided and outlook. during and expense, forward-looking made future administrative expense, and business today selling cash other gross statements limitation, be income margin, revenue, without statements, of will including, cycle, and regarding margin, taxes, operating our the call those information capital allocation

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

list year For Safe in materials statement SEC access factors www.plexus.com, morning results please Plexus' this press October and in ended the filings, participants from factors supporting refer a the to differ clicking encourage discussed, that fiscal Investors risk Harbor the the disclosure our of and yesterday's X, at actual on webcast fair XXXX, top We release. of Form that could at those periodic page. particularly to XX-K cause call on to website, filing the company's the the live materially for and

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

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

Todd Kelsey

Please Slide advance X. to you, Thank Good morning, everyone. Shawn.

fiscal XXXX. as we capitalized fiscal the strong, built on Our XXXX during momentum started

generated ago, quarter. with performance industry-leading doubled supply demand earnings GAAP margin, guidance nearly our As we Amid conditions met delivered GAAP revenue in chain the operating I I'm reflect XX and market growth, first year-over-year months our XX% the share unexpected and our an per volatility, and fiscal year-over-year. dynamics pleased quite on of

taking are an ESG advanced customers that We endeavor be our notice. to our an efforts leader, also

Our from from $X.XX as billion, reflected control days customers was of demand effects unexpected paired fiscal volatility Semiconductor XX first memory US others. equipment our strong to the even demand customers, export the anticipated the experienced from order. with due than ago many capital quarter weakness in revenue market, we lower

experienced we changes, to move be is addition, new program In dynamic through that schedule as a XXXX. ramp resolved expected fiscal we

X.X%, and note of more Finally, ongoing X% million, by lead supply new only we with XXX GAAP lagging will we continue inclusive in expense to this excess be challenges average exiting declined quarter, and operating semiconductor with business demand than margin We associated of to would in continued the operations of facility at up ramp in our given strong delivered With customer associated days. Thailand. year. profitable unfulfilled that stock-based fiscal have our time Bangkok, compensation chain Bangkok interest, remains edge semiconductors. $XXX anticipate the our last from I cost

markets. during million, GAAP Finally, expense. which $XXX programs we growth with associated won compensation of delivered EPS quarter XX included stock-based worth several $X.XX programs new manufacturing including of secular $X.XX, the We

discussed some quarters, in process recent we decision-making chain customers the slow conditions for we partner As will supply to Plexus. anticipate with that continue

fiscal second during this wins driving the fiscal reversing However, year. quarter, of remainder we trend see for increased the our

Please significant X. Our our billion, reflecting million funnel opportunities delayed wins. record of the qualified increase nearly advance $X.X potential $XXX to Slide a the to and manufacturing sequentially expanded decision-making

value that our we industry-leading emissions Late SemiCap last semiconductor reduction be demonstrate innovate firms gas year, accelerating and greenhouse customers technology leader to our on many joined environmental, how continued and Climate in of throughout We commitment partnering Consortium through and as with Semiconductor founding focused operate. the the a a the governance, social, member, we are to of stream.

Supply has For team Chain addition, as In Award innovation called member we which result The competition highlighted our all impact. as our water Sustainability International's helping improvement. such award which and internal BEST, was a This to and ESG smart of fosters continuous initiatives environmental global implementation given Innovation. competition ASM of received PRISM are alternative of reduce metering, usage energy sources, reduction,

that were customer We recognized important by leader. are industry an and proud Slide Please X. our advance to efforts SemiCap

EPS We points $X.XX X%, to inclusive XX $X.XX, are of operating stock-based billion of $X.XX of revenue and X.X% of of to stock-based approximately compensation GAAP of expense. to guiding compensation fiscal basis of $X.XX second quarter inclusive billion, expense, margin GAAP $X.XX

including near-term our Our and guidance in of affected reflects in the in unfulfilled a first well SemiCap new demand quarter, weakness that of demand. dynamics ramps, excess certain $XXX fiscal slowdown impact continuing customer demand, near-term million of the program

reduced reflects coupled with and with payroll guidance seasonal associated cost our adjustments, leverage, and cost typical margin operating US resets. Our fixed salary merit-based administrative tax increases

to XXXX. fiscal as We expect overcome move both through we

quarter first quarter. second fiscal compared and EPS guide higher our to fiscal our Finally, by interest expense tax is impacted expense

fiscal see strong and beyond. in I for XXXX potential continue the performance to

While the growth recognizing macroeconomic opportunity revenue of markets serve. deliver significantly excess industry-leading we and uncertainties, profitability and have to the geopolitical in we rates

clear mitigate program the opportunity state, have elective our procedures, fiscal challenges. year. The ramps quarterly new looking revenue continued reach and and efforts a see We focus to half challenges. sustained Healthcare/Life supply markets is from healthy for Aerospace and developing sector is ramp steady demand In to tremendous automation, growth sector as new our growth participation we chain Industrial on and benefiting markets, backlog that conversion, program robust yet chain in to demand, have We in Sciences Healthcare/Life schedules, end ramps existing Defense our and and program our sector as in such challenges, our gains, resolving benefit normalizing market a and recovery ramps return from beginning given for warehouse numerous Sciences at participation due such in from supply to with supply XXXX, expect secular our for growth growth to associated our markets poised share additional continued markets efforts market electrification. chain new sequential factory to to and as continued sector second secular our program fiscal

weaker is XX share we outperform and or much supply to SemiCap While gains given ago, chain ramps. we'll than - market, new anticipate the program demand demand days while continue

from gating demand resolving been Aerospace aerospace. and Supply fiscal for XXXX, growth has sector challenges, provides for several continues quarters potential those the factor in in sequential the recover, commercial remainder market our but in progress resulting year. the sector robust to fiscal Defense for throughout particularly Finally, now, of the revenue growth our

anticipated X.X% goal margin GAAP sequential With our achieving fiscal of our focused growth exiting for on the half, operating fiscal year. return are revenue we second the

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

Steve Frisch

Todd. The our review you, on declined as for sector, the a Slide quarter. the Good sectors, of first X, fiscal X% fiscal fiscal performance for the Thank with second of with first morning. expectations revenue by was than our quarter a in the of our the Industrial well XXXX. as quarter expectation market sectors lower result I Starting start decline. will of mid-single-digit

US the adjusted Although quarter, Commerce. reductions forecast customers’ recent of during we we started markets the and impact order almost of due first the our the quarter end the anticipated from the to Department export control SemiCap softening from SemiCap of lowered as all demand customers fiscal

is fiscal sub-sector. in memory export the pressuring second the demand quarter, the the control and order softness For SemiCap market, in the

approximately for Industrial forecasting fiscal result, XX% we the second the a a are decline sector As in quarter.

look new the the expect we fiscal materialize. As as sector of to second in we sequential ramps within Industrial XXXX, the half growth sector, to program start

first of supported fourth of exceptional On our of in top the additional quarter Contributions The quarter. in an grew expectation sector fiscal ramps the was increase. XX% growth. growth fiscal line XXXX, a in the program the mid-single-digit result new Healthcare/Life Sciences of our from with X%

Healthcare/Life quarter, flat that to the Sciences quarter, fiscal the implement sequential start the second third with changes we we the growth impact healthy engineering returns working active expect customers short-term program revenue fiscal to be we fiscal sector to second is in ramps. quarter. are for before As on The our our

first and highlighted quarter. a the decrease. low customers for the in expectations offset sector declined shipments single-digit program X% we line Aerospace of Improved our of could in The from headwinds result revenue Defense Our life with was the last fiscal end not quarter. several

hampered is of has supply fulfillment made customers’ demand Although procurement chain team meaningful our progress. by constraints, still overall our

anticipate We believe a quarter. increase fiscal in ability XXXX. fulfill such, our low we single-digit Aerospace As the will second the for continue and demand sector throughout to fiscal Defense improve to

fiscal advance the X programs when We annualized Please we fully Slide expect that wins million into overview quarter won our first new in of performance. to production. $XXX XX the generate during revenue ramped for manufacturing an

exit we opportunities this near-term fiscal the and dynamic. decision-making result macroeconomic this expectation, our cycles. of previous calls, as earnings qualified was geopolitical believe we funnel below and quarter, extending first are uncertainties highlighted that Although in view We our our illustrates the

nearly shown to million robust in levels surpassing Slide qualified funnel $XXX $X.X our easily record by of XXXX. first billion of on the the quarter, As X, fiscal fiscal opportunities manufacturing jumped

at metrics current the rebound we upon of second wins be funnel, cancellations normal. visibility noticeable programs our we within remain in program quarter. program and As in the the high, new the rates continue the funnel, fiscal within look our win anticipate Based to funnel into a

Slide across back region and quarter the the a The spread to Going X wins sectors. manufacturing has wins, were fiscal first sector highlights. few

valued sector two new new Industrial won logos XX Our million. programs, including at $XX

And including third programs, our logo EMEA for valued and won were a Defense $XX sector in strong sector exceptionally $XX Sciences Healthcare/Life one region million Aerospace Wins quarter Our in new row. at million. new won new for the programs. nine the

in the next. provide I'll for growth. some $XX With poised million recent first significant region their in the quarter, insight is the additional wins into fiscal wins of

quarter of wins Please from highlights significant advance Industrial the with for our Slide sector. XX I'll wins. two first start fiscal to

used is and in The process first automation product factory control.

Romania We this into the fiscal this program a logo Oradea, our new ramping end year. by facility from expect to of start

manufactured win printer is Appleton, next-generation new XD The a will the by a sector system join second of family additive already This team in Industrial customer. Wisconsin. manufacturing current products our from

customer share Our performance be also our also team's who the product care. takeaway by Oradea Healthcare/Life a this our won in a an infusion team customer Sciences will pandemic. The This Healthcare/Life produced for competitor result during for Sciences market This Romania. exceptional from produces was of system cardiac direct our pumps. team used expanded manufacturing with Oradea, team ultrasound a

program This wins customer this platform in aircraft. of for Wisconsin. will Defense the products controller build be and Aerospace our commercial for we the Finally, Neenah, to added brake include

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

fiscal customer our second process challenges, supply During combined quarter. volatility the experienced of our forecast, semiconductors, edge with margin demand within challenges, These they operating first GAAP SemiCap in margin securing program on spite changes engineering pressure new performance team seasonal challenges In ramps. putting short-term and operating impacts, strong continued these quarter, lagging delivered X.X%. in fiscal of of are in

improve stabilizing quarter, constraints, XXXX. operating revenue potential, As we current growth new continued ramps, supply for exceeds more potential target. than while team With and our that unfulfilled of is million, margin exit revenue X% look as the fiscal customer beyond annual program delivering XXXX action see we we $XXX the forecasts, focused backlog an fiscal XX% to X.X% the GAAP on achieving the to

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

Pat Jermain

morning, and good you, everyone. Thank Steve,

compensation first investments new of results to summarized to including million and of quarter, guidance, Slide was and administrative and our slightly ongoing incentive fiscal our margin on was due X.X% $XX Our quarter favorable of primarily facility. midpoint costs, below lower to at expense XX. are last guidance Selling fixed expense. the Thailand Gross due

lower previously As EPS our in additional and of result XX income a the Non-operating a X.X% stock-based near-term GAAP our reasons operating favorable X%, for compensation a expectations. of reduction was as midpoint expense. SG&A $X.XX, the expenses was GAAP to percentage factored. guidance which midpoint of due points at with margin of guidance, included the diluted also basis factoring met expectations of revenue, to consistent interest of were fees receivables of and mentioned. was

operations flow totaled Turning working our first we million. Cash align capital and capital as demand. in quarter, sheet with on the for $XX to to totaled $XX investments million, our balance expenditures investments while anticipated, customers’ fiscal made cash in Slide XX,

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

borrowing authorization, balance and a million our were investments consistent have execute share We funded revolving $XX on repurchases XXXX. liquid repurchase combination and throughout under expect fiscal of a million approximately current With to through and $XX available the in sheet, credit a strong our under operations program, basis facility. cash and

under balance to sheet included borrow At $XXX we quarter Our and our the $XXX debt available million of cash end of end had $XXX the facility. million. million credit quarter, of

return first delivered Strong above in of led on points. quarter, basis first capital. average operating fiscal year fiscal XXX capital our weighted this the performance invested of points prior was XXX we ROIC an to basis For quarter, improvement compared to XX.X%, cost which of quarter, our

an fiscal cash led cycle During capital increase which days to higher sequentially the first quarter, expectations six we days. above working and experienced in by requirements,

sequentially for XX customer The strategic earlier by inventory the inventory Slide program cycle. to of four-day Sequentially, gross less support our in of increased than covered compares seven. reduced XX% gross to fluctuations. inventory the years from investments over turn XX% X%, procurement increase to days days increase days. from cash customer details more by to offsetting and our Please than resulted the days was Accounts demand new We on inventory demand inventory less a in inventory by days related now volatility This increased impact on increase three days in while ramps and four deposits. payable dollars Partially with within ago. quarter. deposit have cash

has basis and gross of fiscal EPS X.X% in by details, quarter, US gross the provided increases, I'll margin quarter Todd points negatively Seasonal would the is which X.X%. additional basis second as as reset At XX points. As be guidance second employees, payroll gross will of are for quarter. to XX XX. midpoint, the taxes margin than already cost summarized to approximately be the approximately range compensation Slide lower impact well first margin the Fiscal some expected on revenue the for review fiscal

in higher, the million, rates. in under to increased selling expenses to of to Non-operating due and sequentially about the revolving $XX.X facility, total expenses credit the the interest expect expected administrative rising higher $X compensation $XX.X sequentially headwinds, be with $XX.X borrowing $XX.X of range impact to primarily seasonal of million along primarily million, our to range due which are million We million.

of second full for Our quarter to to rate XX% tax while at rate projected the range expected XX%, be to the is tax XX$ fiscal is XX%. in the year

modestly demand the Our that the days in which will increase Based compared comments on working A the expect is year. modest has by been sheet usage growth, with second expenditures quarter. With cycle days. range anticipated revenue expectation XXX expect balance impacted XXXX a volatility, slight to of for capital investments support to cash cash our capital coupled we revenue to first quarter. investments, forecast, XXX to working we fiscal for capital on full the fiscal of breakeven fiscal near-term few the

$XXX free flow. improve We continue for to to expect capital spending plan targeting in with the $XX and through $XXX flow to million year free end the to as move close range million XXXX, of cash to cash of we million, fiscal

let's questions. With now call that, Liz, for open the

Operator

Instructions]. [Operator

comes from with question first Jim Our Ricchiuti Needham.

now Your line is open.

Jim Ricchiuti

this, may or market some missed to the just on hoping of you Hi. color And Good Thank I terms in something uncertain ramps. some potentially that. talk is company-specific, was additional program changes verticals the and reflection morning. could but I see have you to where the that alluded with get schedule this more just may you it, have environment. of you. these of macro I you as if whether wonder a you're seeing elaborated

Todd Kelsey

for million that changes range, they to Jim, progress so think program Yes, as growth you And but the about over be a common lumpy recall to because ago about in in to And with had start it, through of underway, ramps about we of I in a go Todd. way it if is of of per large range small out be when to talked quarter. that this this we it if could number sequential $XX them I’ll is general, you the you part very being can that $XX for there or this that product ramps bit the we expect we reason it's talked question, to million program this. talk started time. back about year the

So, ended the well, stopped. that program. on that the the not a would and paused, front engineering the as and on be so this, a they of to were a have end if progressing result some bit, up ramps you results, recall within just just bit we slowed it changes made overshooting They've call extremely now it’s high our I need

good and - we fiscal least aggressively we out perhaps exit when of the than anticipated through of but at nothing continue ahead, I'd had remainder portion on be we potential other happened that it we our a we'll through expect XXXX. it, great and ordinary, of a the have looking So, later than fiscal to quarter this, as at then second still moving programs ramp will bit were as the a and

Jim Ricchiuti

way of Is out in is I'm ramps, the a or number customers spread terms to curious specific. think about there different different how programs? this among of this

Todd Kelsey

number significant small a It's programs. of

for So, that's impact. the the reason

- impacts It’s that So, have commentary, than we continued it sector, quarter dynamics. now, why you right growth can our because least healthcare from they're it of Steve's essentially I'd at that at now. some least this call and it's that's and - that sequential not right rather flat see on market tear product a it's dynamics

Jim Ricchiuti

to better, headwind I'm for one and final you're it's And sure It - supply what but sounds of in you. chain. how seeing jump of in it's back the make to getting yes, what terms queue. question, still, a Okay. little pretty I'll like not significant

with the the to in of the that challenges? making half, As respect of sequential second this anticipating some are you you're that assumptions about think some you're improvement what chain supply

Todd Kelsey

same. assuming that it about the stays I Yes, say would we're

if aerospace, in ramped one curve. anticipate sectors, So, Aerospace clear other our other we'd demand is Defense, - that we'd more things, recall, our and because to the it it's within the demand challenges though, you faster, from of getting supply continue

of significant able in year XXXX a increasing. year the demand clear a to a the amount that to timeframe. a Defense we demand were was about quarters Aerospace behind in and three late of fiscal half So,

to be getting point those but the clear supply where we meaningfully. challenges, we're So, change chain expect the able don't we'll to we in some be expect of to

Jim Ricchiuti

back I'll in jump you. Thank the it. Got queue.

Operator

Our next Williams with comes question Company. from Benchmark David The

Your line open. now is

David Williams

morning. Hey, good

I think David. she said

She said out there. I she my think name. cut

revenue X% Todd, a reflect kind the question. SemiCap think overall on maybe expected I for you thanks base. you you've first, maybe, is that talked guys the the rebounds? taking about And on a think then, be do think the the have in to seeing that would exposure you and equipment drop past, business, So, now course, what I it XX% Do And side. headwind SemiCap you're significant, equipment previously you think of had in logic of less

kind provide. color of that could other curious just maybe So, dynamics any around you of the any and

Todd Kelsey

for start I'll Yes, and modeling of - Steve worst the case for David, of we're SemiCap. color. scenario then to in is talked pass with we be XX%. that down I'll about We down now. it could off single-digits range, it this, call thought Last I kind what close but additional right It’s some quarter, our SemiCap it a to

still think We captured ballpark that to pretty and XX% it about So, we've believe impact I that about would expectations. well. a revenue number X% is our right, have

quite granted, Now, still strong. they're

call it's a the say significant X% - to we're So, portion not I but of want growth is would the don't the on it negligible, I expecting.

Steve Frisch

existing new winning that add also products there's successful to just that, been We've maybe the have. programs. And we in on to

in ramps we do softness fiscal SemiCap current ’XX, offset the will which demand. of expect with have, the new so, some program And some with and we

go perspective, growth area in from expecting still this ‘XX. So, sequential as our through we we're

Todd Kelsey

say would I from that space. in to anywhere cognizant SemiCap equipment XX% teens the the high are we're down projecting experts And Yes.

is of reflected conscious our in that we're forecast. So, that, and

David Williams

Defense funnel looks maybe it fantastic. around in, then is - just sequentially periphery, strengthening to down program Aerospace what improve? a demand ramps that is it's or just kind new that see Thank and demand Okay. like and maybe on just are was you set trunk Do All you. the seems the And the be to you're maybe sequentially. this more improving signpost about, reading the of from that talked coming you've right, demand, the but revenue

Steve Frisch

Yes.

more clear has through a to several go ’XX, So, back standpoint it we've customers really I back - really demand, supply quarters. demand for even to seen on come pipeline exceptionally mean, come It's we strong get as our ’XX. from and working as associated just really be the been correctly. into with it It’s demand has

with And has our been challenge really to of customers work our the pipeline getting to flowing materials demand. so, get that meet

to ‘XX starting pipeline. of of see those pay of we're terms and getting to right starting so, in the types efforts off quantity materials of And some fiscal

through we believe we're why Aerospace we that's what making we a growth of half so, of to as in a ‘XX. on And as went saw opposed Defense, turn bit back and the the

David Williams

a one helpful. unfulfilled related the or that's more just supply in forward here or just quarters? very several expect demand, just factor It's rolled to the of that Okay, dynamics, maybe but here. is the kind And to $XXX capturing that of does forwards thinking for been of thinking continue roll more maybe last about to demand. quarters any million that one do for fulfilling few I'm guidance you

Todd Kelsey

Yes, but a time, forward, it quarter. I continues what continues at this highlight $XXX to would is that's roll would - every million I different say it

there's unfulfilled as we to new as demand, but progress But fulfill continue well. in demand through that'll creeps I that ‘XX. we other continue So, expect

David Williams

Thanks right, the on again very congrats solid execution here. good. All and

Operator

Our with next Matt comes question Sheerin Stifel. from

now is open. line Your

Matt Sheerin

terms in hearing common common Anything region that moving of introductions, hearing reasons were, other? Yes, not you're their below to think, I product delaying in new guess, morning. customers talked out And regarding the wanted a about to what new customers, which thanks. you extending or wins, from decision-making one whether from or you're I Steve programs. of from they're there unique I Good Steve, the terms or decision-making the about commentary pushing Is expectations. anything ask there? about on,

Steve Frisch

they seeing common that backlog in pent-up we the what there's across and the next they wouldn't today making sure on to say can Aerospace even have orders talked or and they sectors, have fact supplier strategy. product this Defense, from focusing potentially to been individual that that the and the in I outsourcing moving their supply but deliver we're about one versus relates chain the as sectors, it everybody's changing

with saw six Aerospace a other that was them to just it’s ago, and phenomena some catching in matter have. saw the Defense, that So, of quarters four demand I of they sectors. a that we think that And we in the up similar

up. to to I it’s that to suppliers the goes look In we changes we them, look demand in their Healthcare/Life and like sourcing several As the say them the for associated And macroeconomic semiconductor at would conversations with - We and in benefited from Asia in of that returning a about, our some move mixed starting specifically, capital their I think strategy. at manufacturing? larger exit that the Sciences, to those of then and we looking the industrial, have now strategies, they with seeing across southeast locations. see environment internally with like And from having opportunities shift kind few more doing want have China, the uncertainties, again, a associated sub-sectors. customers going geopolitical we strategy whole few are talking of market to pop it are at outsourcing companies equipment, to supply issues we're causing is their it into

macroeconomic the little say differently. wouldn't really a the uncertainties to a just is but I so, a And a common causing bit everybody mix, supply bit constraints think theme. and of I It’s there's chain think

Todd Kelsey

in holidays to well around too. with a that. bit I suspect do of the start off as pause a it we're QX. good bit And to a was There had

So, and around decision-making holidays. some we're was bit there demand pent-up delayed seeing that signs those of a

Matt Sheerin

the I working inventory where be. deposits or you year-over-year, despite significantly know below wanted in the free inventory been, up. cycle that. expecting be to for also And just you terms cash have flows, capital the and up to cash the And inventory cash which Thank I net ask Okay. and being you're days about then again, flow, up could of or days Pat, obviously

at we think that we year, we the So, half. how flows should free inventory what about rest you're the the position like through cash we you sequential in year? could of as about as given get then back growth looking look And that the get through think

Pat Jermain

Yes, okay.

start think to I'll So, inventory, level starting our we're off saying, by I Matt.

at cash $XX from a look increase $XX million year-end QX, were million in you could to deposits see increase offset. in inventory. to almost good of so QX ramps. see up program $XX full to Really $XX the If support we million up inventory to million, new

days I bring think XX And we back step to opportunity revenue ‘XX half, more to days. five goal an ended XXX of - back we sequential just see let and as XX at our and the fiscal days down me down is days, net fiscal cycle that. our growth, from to is cash finish

this So, forecasted even from though QX come of half back we is reductions. to inventory mainly be higher, year. It'll expect reductions in the

we inventory, down to be in important come fiscal where XX that some liquidating, of mind, days from that XX we’re But could inventory with ended associated ‘XX. think those deposits will there's to keep inventory cash it's I returned. deposits that

see trying on screws fiscal XX cycle I'd days. from level obviously So, can Oliver but can second secure our the think we aged cash with to those is, chain ‘XX million golden reduce of cash doing that, we'll generation half of cash XXX again, By the year and free of flow. the approaching in free net-net, our I regions days that five flow number teams demand on, it around to and a our the suppliers. signals is of from thing last customers, inventory, from which revolves initiatives, and The supply touch working say he $XX

variability this demand you we're forecasting want that what could of change mix add? can with at a and but be our Oliver, So, that's there lot anything projections, point. to

Oliver Mihm

thing a management is our program, that objective. to component that just there one talked we about aligned previously I XX% variable essentially compensation add I’ll that incentive think to note a has and Yes,

through so, that reduction either a all inventory targets fiscal aligned of And portion year. XX%, or a for significant of that been of, of the individuals, has piece to population that population, significant

Matt Sheerin

Very helpful. Okay, Thank great. you.

Operator

JPMorgan. with Our next Paul Chung question comes from

open. now is line Your

Paul Chung

taking Hi. Thanks my for question.

So, just can after in strength? seeing you investments to past seeing in on How's specific - demand kind And firm the kind pauses factory products demand from couple of any of and you're the versus Warehouse you are customers years? competitors automation, end the over strong positioned speak market? by

Steve Frisch

one. positive do Steve. of any the I'll they see specific new customers or wouldn't with automation significant changes, and new few with say we and as factory I the that products. get installs. ebbs is ramp seeing orders a we're This negative, flows Obviously, take

we perspective, we my continue from ramp, they have always would bumpy some knew a installs. that programs new for and ramping. guess orders They I so, And of anticipated several to bit as about these and get talked be we

So, there's or that I I positive highlight, any that specific area. wouldn't say could with trend negative,

Paul Chung

Okay, then thanks the in sequential for you half. ’XX, mentioned on that. back guidance growth just for And

You've range past. of growth of fiscal third the sequential in a seen wide quarter into somewhat

and You're help you have also can the pace the but now us visibility facing some difficult of year-on-year the quarter given frame growth third cost, into Thank you you. today?

Todd Kelsey

take is Sure. Paul. Thanks, Todd. I’ll that one. This

exceptionally out Aerospace I strong. best markets, that are SemiCap, it’s good. solid they're mean, strong in particular and with very now. think are the our maybe of fact I to Healthcare, exclusive start right they're

it not for we back what looks ago. when think days XX pretty the it’s It than was it So, our XX to days about half, similar much outlook different did ago.

now. the of through and be ramps the that and of SemiCap, working of percent. which the we couple little looks impact half have did those SemiCap also with expecting from a situation lot But it a because then back QX could in dropping program bit right again, ex the like that we're work we're rapidly, We through new before a a blip

say as to about at QX take, $XX thinking would $XX million So, quarter, we're give and or sequential per back the I we when in half, QX. we look is think what million growth

we we So, that we be our expect And X.X% goal level to really position to that fiscal meaningful. achieve it in when good us exit add margin year. operating the of puts revenue, as

Paul Chung

the pace year, helpful. clear? the is Oh, or that's the full then just is super X.X%, for And that for be to that

Todd Kelsey

I it point. year this exiting call would at the

us goal good a be for it'd So, for QX.

be I QX Possible aggressive. think might bit a …

Paul Chung

helpful. Very you. Great. Thank

Operator

[Operator instructions].

Anja Soderstrom comes Our Sidoti. from next question with

open. now is line Your

Anja Soderstrom

questions. my taking for you Thank

where in air the curious, just you I'm recovery? are commercial So,

Todd Kelsey

early caught Yes. aerospace would the the demand commercial demand I supply for it's but say yet. has is strong, quite to stages. in up The not the

elective it and equate of months or - ago. with healthcare to were to So we at SemiCap I’d XX XX where kind

Anja Soderstrom

it EMEA program terms you within strong of the EMEA looked in elaborate just you wins on you. and And presentation. thank Can there, new very Okay, strength in which regions in? see that

Steve Frisch

can Steve. this Yes, on this. touch I is

in So, facilities we've obviously. in Romania. is got there, couple a over One Scotland Oradea, is of one

is from Our that's the these facility wins. the Romania in one benefiting most

were of As Oradea. headed highlighted, the for that the I highlighted of I three five wins

lot team the through has doing the job. And an pandemic. that these wins been for over being quite there frankly, of execution we had exceptional a So, the rewards just are

go significant projected next is facility Oradea we for as growth the So, through quarters. few the

Anja Soderstrom

me. was you. That from all Thank Okay.

Operator

questions queue further I'm closing to I'd showing remarks. the time. no at turn in this like back call Todd for to Kelsey

Todd Kelsey

In and that you, closing, Again, thank in thank bullish like joined day. everybody your I'd Well, quite fiscal Have Thank to we like I'd nice We you. interest Plexus. right. call reiterate to in today. All a support regards XXXX. remain Liz. appreciate to who our

Operator

participating. conference for concludes you call. today's Thank This

You disconnect. may now

Plexus (PLXS) 26 Jan 232023 Q1 Earnings call transcript