Plexus Corp. 10-Q Summary: Fiscal Q2 2026
Business Context and Reporting Period
Plexus Corp. (PLXS) is a global electronics manufacturing services provider serving the Aerospace/Defense, Healthcare/Life Sciences, and Industrial sectors. This report covers the quarterly period ended April 4, 2026 (Fiscal Q2 2026) and the six-month period ended on the same date. The company operates 27 facilities with over 20,000 employees.
Key Financial Metrics
| Metric | Q2 2026 (3 Months) | Q2 2025 (3 Months) | YTD 2026 (6 Months) | YTD 2025 (6 Months) |
|---|---|---|---|---|
| Net Sales | $1,163.8 million | $980.2 million | $2,233.6 million | $1,956.3 million |
| Gross Profit | $119.2 million | $97.8 million | $225.3 million | $198.4 million |
| Gross Margin | 10.2% | 10.0% | 10.1% | 10.1% |
| Operating Income | $61.8 million | $48.8 million | $116.3 million | $95.7 million |
| Operating Margin | 5.3% | 5.0% | 5.2% | 4.9% |
| Net Income | $49.8 million | $39.1 million | $91.0 million | $76.3 million |
| Diluted EPS | $1.82 | $1.41 | $3.32 | $2.75 |
| Cash from Operations (YTD) | $13.1 million | $90.3 million | $13.1 million | $90.3 million |
| Free Cash Flow (YTD) | $(34.6) million | $43.6 million | $(34.6) million | $43.6 million |
| Total Debt & Obligations | $234.1 million | $137.8 million (Sep 2025) | $234.1 million | $137.8 million (Sep 2025) |
| Cash & Equivalents | $303.2 million | $306.8 million (Sep 2025) | $303.2 million | $306.8 million (Sep 2025) |
Material Changes vs. Prior Period
- Revenue Growth: Net sales increased 18.7% year-over-year (YoY) for Q2 and 14.2% YoY for the six-month period. Growth was driven by production ramps for new products and new customers across all segments (AMER, APAC, EMEA).
- Profitability: Operating income rose 26.6% in Q2 and 21.5% YTD, with operating margins expanding 30 basis points in both periods. This was primarily due to higher gross profit, partially offset by increased selling and administrative (S&A) expenses driven by compensation costs.
- Cash Flow Divergence: While net income increased significantly, operating cash flow dropped sharply from $90.3 million to $13.1 million YTD. This was driven by a $170.7 million increase in inventory (ramping programs) and a $56.4 million increase in accounts receivable.
- Debt Levels: Total debt obligations increased from $137.8 million (Sep 2025) to $234.1 million (Apr 2026), primarily due to increased borrowings under the Credit Facility to fund working capital needs.
- Tax Rate: The effective tax rate increased to 13.9% (Q2) and 16.5% (YTD) from 13.2% and 13.8% in the prior year, attributed to the implementation of global minimum tax.
Guidance, Outlook, and Risks
- Capital Expenditures: Management estimates fiscal 2026 capital expenditures will be between $100.0 million and $120.0 million to support new program ramps.
- Tax Outlook: The annual effective tax rate for fiscal 2026 is expected to be approximately 16.0% to 18.0%.
- Share Repurchases: Under the "2026 Program," the company has repurchased $43.0 million of stock YTD. Approximately $42.0 million of authority remains.
- Risks: Key risks include supply chain constraints, component shortages, geopolitical tensions (Russia/Ukraine, Middle East, China/Taiwan), and the impact of tariffs. Management notes that inventory purchased on behalf of customers carries the risk of write-offs if not consumed.
- Liquidity: Management believes current cash, operating cash flows, and credit facility availability are sufficient to meet requirements for the next 12 months.
Investor Verification Checklist
- Inventory Build: Verify the sustainability of the $145.4 million YTD increase in inventory and the associated risk of obsolescence or customer non-consumption.
- Working Capital Efficiency: Monitor the "Days in Inventory" metric (120 days YTD) and the widening cash cycle to ensure it does not strain liquidity further.
- Debt Utilization: Track the utilization of the Credit Facility, which saw average daily borrowings rise to $104.8 million YTD compared to $34.8 million in the prior year.
- Margin Pressure: Assess whether the 10.1% gross margin can be maintained as fixed costs rise and if the global minimum tax impact is fully priced in.
- Customer Concentration: Review segment disclosures for reliance on specific customers in the Aerospace/Defense and Healthcare sectors, which drive the majority of revenue growth.