Plexus aims for $100 million in free cash flow by FY25, alongside continuous revenue growth, against the backdrop of significant sector victories.
Plexus Corp. (PLXS) has announced its Q3 2025 financial results, showcasing strong performance and optimistic outlook for the future. The electronics manufacturing services (EMS) provider reported revenue of $1.018 billion, in line with guidance, and a GAAP operating margin of 5.3%, while non-GAAP operating margin reached the company's target of 6.0%.
Key Growth Drivers
The company's growth in Q3 2025 was driven by several factors. Plexus secured 41 new manufacturing programs during the quarter, representing about $250 million in estimated annualized revenue. This strong business development and program ramp-ups were led by sequential revenue growth across all three market sectors, with aerospace/defense showing a 6% growth, followed by industrial at 4%.
Plexus also reported a robust qualified manufacturing funnel worth approximately $3.6 billion, providing a strong pipeline for future expansion. The company's strategic positioning and footprint in target markets enable it to capture additional market share and upside potential, as emphasized by management.
Financial Performance Highlights
Diluted earnings per share (EPS) for Q3 2025 were $1.64 GAAP and $1.90 non-GAAP, exceeding prior guidance and last quarter's results. Free cash flow generated was $13.2 million, indicating healthy cash conversion. Return on invested capital was a solid 14.1%, the highest in nearly four years.
Plexus Corp. also initiated a new $100 million share repurchase program after completing a previous $50 million program. The company raised its EPS outlook for the next quarter and reaffirmed a $100 million free cash flow forecast for fiscal 2025, while signaling continued growth into fiscal 2026 across all market sectors.
Q4 2025 Guidance
For Q4 2025, Plexus projects revenue between $1.025 billion and $1.065 billion. Non-GAAP EPS is anticipated to be between $1.82 and $1.97, representing approximately 26% non-GAAP EPS growth for the full fiscal year 2025. Non-GAAP operating margin guidance for Q4 remains consistent at 5.7% to 6.1%.
Challenges and Opportunities
CEO Todd Kelsey expressed confidence in maintaining strong performance despite market uncertainties, emphasizing continued sequential revenue growth, strong operating and free cash flow, and momentum heading into fiscal 2026. However, management cited evolving program ramp timelines, tariff-related uncertainties, and modest end market demand as ongoing challenges.
Analysts raised concerns about semicap demand pushouts, tariff impacts on customer behavior, and the initial margin drag from the new Malaysian facility. Management addressed these by emphasizing operational flexibility, passing through tariff costs, and the expectation of rapid profitability for new facilities.
Plexus Corp. is seeing strong demand within its Defense and Space subsectors, and is starting to see signs of increased European defense demand. The company anticipates delivering this revenue expansion through share gains, new program ramps, and growth with new customers, overcoming modest end market demand, evolving new product ramp time lines, and uncertainties created by tariffs.
Future Outlook
Plexus Corp. expects "healthy year-over-year revenue growth from each of our market sectors without assuming end market demand improvement" for fiscal 2026. The company anticipates sustaining its strong operating margin and free cash flow performance into fiscal 2026. Strategic investments in operational efficiency, engineering, and global capacity position Plexus to sustain financial performance and gain market share, despite program timing uncertainties and tariff-related headwinds.
In conclusion, Plexus Corp. has reported a strong Q3 2025 performance and is optimistic about its future growth prospects. The company's focus on business development, strategic positioning, and operational efficiency is expected to drive continued growth and profitability in the coming years.
Investing in Plexus Corp. could potentially offer attractive returns, given its robust financial performance and promising future outlook. The company's strong position in the electronics manufacturing services (EMS) industry, coupled with its significant growth drivers, positions it well for capitalizing on technology advancements in the health and finance sectors, which are increasingly integral to business operations.
Despite some challenges such as evolving program ramp timelines, tariff-related uncertainties, and modest end market demand, management's strategic initiatives are designed to mitigate these risks and ensure continued growth. The company's plans for strategic investments in operational efficiency, engineering, and global capacity, along with its focus on share gains, new program ramps, and growth with new customers, demonstrate a proactive approach to seizing opportunities and maintaining its momentum.
Looking ahead, Plexus Corp.'s focus on operational efficiency, engineering, and global capacity, combined with its strategic positioning, is expected to drive financial performance and market share growth, even in the face of program timing uncertainties and tariff-related headwinds. This valuable and innovative technology company has proven its worth in the current business landscape and shows great promise for the future.
