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| Statement |
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| A wonderful recognition for Bevi and our Plexus team |
| The region is poised for meaningful growth from this sector, especially as the semi-cap subsector strengthens |
| Fiscal 2023 was an exceptional year for Plexus |
| Our team's focus on delivering operational excellence and customer service excellence resulted in outstanding financial performance |
| And I'd also note that in spite of the strong margin performance of 2023, we believe we can continue to expand margins as revenue increases and we gain better leverage with maybe the only caveat being our fiscal Q2, where we have the seasonal headwinds due to compensation adjustments and such, which come into play |
| As we'll discuss in more detail, the accelerating momentum built in fiscal 2023 supports our confidence in achieving $5 billion in revenue with 5.5% GAAP operating margin by our fiscal 2025 |
| So strong demand continues, easing of components sets us up for a pretty good fiscal 2024 as it relates to commercial aerospace we believe |
| While we have consistently delivered industry-leading revenue growth and profitability, this result represents the first time in 15 years, we have delivered double-digit revenue growth with greater than 5% operating margin |
| With momentum building in many of our markets, increasing new program ramps and the opportunity to capture the ongoing unfulfilled demand as supply chain challenges lessen, we continue to forecast accelerating revenue growth as fiscal 2024 progresses |
| We expect the momentum to continue, resulting in another exceptional growth year for the region in fiscal 2024 |
| We delivered quarterly revenue of $1.02 billion, slightly exceeding the midpoint of our guidance, the continued progress by our team in its ability to clear supply, mitigated ramp delays and inventory correction activity with some healthcare life sciences customers |
| Meeting the high end of guidance, GAAP EPS exceeded guidance at $1.44 per share, including $0.21 of stock-based compensation expense |
| So we're able to flow that through into shipment products for our customers, which we expect to continue at a better rate here in 2024 than we did in 2023, given the environment |
| So within aerospace and defense and industrial market, which includes semi-cap, we're expecting very strong double-digit growth in both of those in fiscal 2024 |
| Positioning Plexus to maintain strong manufacturing wins momentum and robust revenue growth over the long-term |
| We expect to benefit from sustained robust commercial aerospace demand and improving semiconductor capital equipment demand, while also facing headwinds as a result of short-term inventory corrections with certain healthcare life sciences customers and a reduction of components procured at above market prices to more normal levels |
| Looking further ahead, we continue to forecast accelerating revenue growth as fiscal 2024 progresses, leveraging strong demand in our aerospace and defense and industrial market sectors, accelerating new program ramp momentum and lessening supply chain challenges, which creates the opportunity to capture our ongoing backlog of customer demand |
| As revenue growth accelerates, we also anticipate operating margin expansion |
| Consequently, we remain confident in achieving our goal of $5 billion in revenue with 5.5% GAAP operating margin by our fiscal 2025 |
| If we see a substantial improvement, we’d expect to well outgrow the market and again, keeping in mind that our CAGR in that space was 30% from fiscal 2015 to fiscal 2022 |
| I'm extremely proud of how our team members supported our vision of helping to build a better world in fiscal 2023 |
| Finally, the EMEA region had its 6th consecutive quarter of wins over $50 million |
| Last, we expect to deliver improved free cash flow as we move through fiscal 2024, ending the year with more than $50 million |
| Further, we delivered sustainable solutions within our operations as we expect to substantially exceed our 5% energy intensity reduction goal for fiscal 2023 |
| With a fiscal 2023 revenue growth rate of over 30%, the regional operations team did an outstanding job converting the wins to revenue |
| Exceptional operating performance relative to slightly higher working capital investments led to a 40 basis point improvement over fiscal 2022 |
| Finally, we realized a shared benefit from collaborating with companies to help design and produce more sustainable products |
| And we continue to progress the way we expect, and that's what gives us confidence we can exit the year around the 5.5% operating margin range and drive towards this $5 billion in revenue at 5.5% in our 25% |
| The healthy wins total for the year, along with a robust regional funnel is confirmation of the strong value proposition of the region |
| We were very pleased with the better than forecasted free cash flow performance as we wrapped up the fiscal year |
| Statement |
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| After delivering record performance in our fiscal third quarter, we witnessed some delay in closing new program win opportunities late in the fiscal fourth quarter |
| In addition, we again undershift demand this quarter by at least $100 million, primarily as a result of component shortages |
| But then there's a number of factors that are turning 2024 into a little bit of a challenging year from a growth standpoint |
| One is more related to supply chain challenges with the disposable, which we don’t do, that’s causing a little bit of slowness in the capital equipment that we’re trying to deliver |
| Starting with the industrial sector on Slide 9, revenue declined 2% in the fiscal fourth quarter |
| In addition, the growth trajectory of two new program ramps were reduced to align with broader supply chain constraints as well as near-term lower demand, and that result is we expect revenue in our healthcare life sciences sector to decline low double-digits in the fiscal first quarter |
| And I think you and your peers have in the past said that due to the uncertainty in terms of the supply chain challenges and whatnot, some potential customers have had been reluctant to ship some outsourcing model |
| So when you combine all those together, there's a bit of a headwind within that sector |
| And then the other part was more of a technical issue associated with what that customer is working through with their end markets |
| We saw lead times come down just over –sorry, just under 20% quarter-over-quarter, moving from about nine months to move in the out seven months |
| At the midpoint gross margin would be slightly lower than the fiscal fourth quarter |
| There's a bit of softening that's going on with certain end markets like imaging, for instance, we're seeing a bit of softening |
| The healthcare life sciences sector funnel dipped given the strong wins performance and turnover activity |
| We can proceed to healthcare life sciences sector on Slide 10, sector was down 1% for the fiscal fourth quarter, which was in line with our expectations |
| David Williams So maybe first, just thinking about the – you mentioned a couple of the delays in closing in the Healthcare segment |
| There's also factors going on with inventory corrections with certain customers who maybe got a bit ahead of what their demand was |
| So again, if you look back to 2023 – to fiscal 2023, we were down in the low-double-digits on a market that was down 20% to 25% so far outperformed the market |
| From a day’s perspective, this reclassification has lowered our reported cash cycle between 16 and 27 days over the period shown on Slide 16 |
| And that's a near-term issue that's happening right now |
| So as Pat noted, as that comes down, we expect to see inventory reduced, but we're still quite a bit of ways from what we would consider normal lead times |
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