Plexus Q2 2025 slides: EPS exceeds guidance as Healthcare sector shows recovery signs

Introduction & Market Context

Plexus Corp (NASDAQ:PLXS) released its fiscal second quarter 2025 results on April 23, 2025, reporting revenue of $980 million and non-GAAP earnings per share of $1.66, exceeding the company’s guidance. The stock closed at $127.17, up 2.47% on the day, though it showed a slight decline of 0.6% in premarket trading the following day.

The electronic manufacturing services provider highlighted recovery signs in its Healthcare/Life Sciences segment and early positive indicators in the Industrial sector, while maintaining stable performance in Aerospace/Defense. The company’s presentation emphasized investments in talent, technology, and facilities to support customer success.

Quarterly Performance Highlights

Plexus reported modest sequential revenue growth to $980 million in Q2 FY2025, up from $976 million in the previous quarter. The company achieved a non-GAAP operating margin of 5.8%, slightly higher than Q1’s 5.7% and meeting the high end of its guidance.

Non-GAAP earnings per share came in at $1.66, exceeding the company’s guidance of $1.46-$1.61, though lower than the $1.73 reported in Q1 FY2025. Free cash flow performance was better than anticipated at $16.5 million.

As shown in the following chart of quarterly financial results:

The company’s sales funnel remained robust at $3.48 billion, supporting continued strength in manufacturing wins. Quarterly wins totaled $215 million, slightly up from $212 million in the previous quarter, with the company highlighting its largest-ever win for Sustaining Services.

Detailed Financial Analysis

Plexus maintained a strong balance sheet with a cash balance of $311 million, slightly down from $318 million in the previous quarter. Total (EPA:TTEF) debt stood at $210 million, marginally lower than Q1’s $211 million. Return on invested capital remained healthy at 13.7%, compared to 13.8% in Q1.

The company’s working capital management showed continued efficiency, with cash cycle days holding steady at 68 days, a significant improvement from 91 days in the same quarter last year. This improvement reflects better inventory management and accounts payable practices.

The detailed income statement comparison is illustrated below:

Cash flow and balance sheet metrics demonstrate the company’s financial stability:

Working capital trends show significant year-over-year improvement in cash cycle efficiency:

Sector-Specific Performance

Plexus reported varying performance across its three main market sectors:

In Healthcare/Life Sciences, revenue reached $411 million in Q2, exceeding expectations due to stronger demand. This represents a significant recovery from $374 million in Q1. The company secured its largest-ever Sustaining Services win in this sector and highlighted a new robotic-assisted surgical platform win.

The Healthcare/Life Sciences sector performance is illustrated in the following chart:

The Aerospace/Defense sector met expectations with revenue of $172 million, up from $160 million in Q1, as increases in defense and space demand offset softness in commercial aerospace. The company reported continued strong wins in defense and positioned itself as a "partner of choice" in the space segment.

In the Industrial sector, revenue was $397 million, down from $442 million in Q1 but meeting expectations. The company noted "early green shoots" in this sector and highlighted strength in semiconductor capital equipment. Wins included expanded engagement with a leading construction and mining equipment customer.

Forward-Looking Statements

For the third quarter of fiscal 2025, Plexus provided guidance of $1.00-$1.04 billion in revenue and non-GAAP EPS of $1.65-$1.80. The company expects a non-GAAP operating margin between 5.7% and 6.1%.

The detailed Q3 FY2025 guidance is presented below:

Looking at the full fiscal year 2025, Plexus anticipates meaningful EPS growth resulting from revenue growth across all market sectors, strong operating margin performance, and effective free cash flow deployment. The company continues to forecast up to $100 million in free cash flow for FY2025.

Management expects sequential revenue growth for Q4 FY2025 and projects strong operating margin performance throughout the fiscal year. The Q3 guidance suggests continued momentum, as shown in the following projection:

Plexus remains optimistic about its Healthcare/Life Sciences sector, citing an improved growth outlook driven by new program ramps and some market recovery. In Aerospace/Defense, the company maintains its view of modest growth supported by strength in defense and space segments. For the Industrial sector, Plexus expects modest growth with semiconductor capital equipment strength sustaining and early signs of broader industrial recovery.

The company’s qualified manufacturing funnel of $3.48 billion provides a solid foundation for continued growth in manufacturing wins across all sectors:

With its strong financial position, operational efficiency, and positive sector outlook, Plexus appears well-positioned to deliver on its growth expectations for the remainder of fiscal year 2025, despite ongoing challenges in certain market segments.

Full presentation:

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