Electronic manufacturing services company Plexus (NASDAQ: PLXS) met Wall Street’s revenue expectations in Q1 CY2025, with sales up 1.4% year on year to $980.2 million. The company expects next quarter’s revenue to be around $1.02 billion, close to analysts’ estimates. Its non-GAAP profit of $1.66 per share was 7.8% above analysts’ consensus estimates.

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StockStory’s Take

Plexus delivered sales that met Wall Street’s expectations for Q1, supported by broad-based new program wins across its healthcare, aerospace and defense, and industrial segments. Management attributed the quarter’s results to operational improvements and the company’s ability to secure its largest-ever sustaining services contract, as well as strong performance in engineering solutions. CEO Todd Kelsey emphasized that, “our operational efficiency efforts and stronger performance from our engineering solutions and sustaining services helped to offset a portion of the typical seasonal cost headwinds.”

Looking ahead, management maintained a cautious approach to guidance, citing ongoing uncertainty surrounding tariffs and customer demand patterns. The company expects sequential revenue growth in the coming quarters, driven by new program ramps and share gains across its main sectors. However, Plexus acknowledged that the external environment remains dynamic, with customers largely taking a “wait and see” stance regarding potential supply chain shifts. Kelsey noted that, despite these uncertainties, Plexus expects to achieve “meaningful EPS growth in 2025.”

Key Insights from Management’s Remarks

Plexus’s management highlighted several factors behind the company’s Q1 performance and its positioning for the rest of the year. The breadth of recent program wins and ongoing operational investments were central to results.

• Largest sustaining services win: Plexus secured its biggest-ever contract for sustaining services, reflecting a shift by a leading healthcare customer from in-house to outsourced work. This is expected to ramp over two to three quarters, supporting future revenue.
• Growth in engineering solutions: The company reported its strongest quarterly engineering solutions performance in over five years, with diversification across multiple end markets, including its largest-ever aerospace and defense sector design project.
• Operational efficiency initiatives: Management cited ongoing investments in process automation and facility upgrades, such as automating warehouses in Penang, Malaysia, yielding significant improvements in space utilization and labor efficiency.
• Market share gains: Plexus noted that recent wins included projects previously manufactured in-house by customers, signaling growing openness to outsourcing among industrial and aerospace clients.
• Limited tariff impact so far: Although tariffs remain a key area of uncertainty, management said impacts have been minimal to date, with costs largely passed through to customers and limited product relocation occurring currently.

Drivers of Future Performance

Management anticipates modest sequential revenue growth and stable margins, driven by new program ramps, continued operational discipline, and gradual improvement in end-market demand.

• Program ramp momentum: New manufacturing and engineering program wins across all major market sectors are expected to drive incremental revenue as they move into production, particularly in healthcare and semi cap (semiconductor capital equipment).
• Operational investments: Ongoing automation and facility upgrades are intended to improve asset utilization, delay the need for new sites, and support stable operating margins despite rising input costs.
• Tariff and macro uncertainties: Management acknowledged that global trade policy and customer supply chain decisions could impact demand and site selection, but currently sees limited effect and remains prepared to adapt as needed.

Top Analyst Questions

• David Williams (The Benchmark Company): Asked how tariffs are affecting customer behavior and supply chain strategies. Management replied that most customers are waiting for stability before making decisions, and Plexus is passing through tariff costs rather than absorbing them.
• Melissa Fairbanks (Raymond James): Inquired about long-term targets for cash cycle days given recent improvements. CFO Pat Jermain indicated a mid-to-low 60s day target is achievable, with each day reduction freeing up $10 million in cash flow.
• Steven Fox (Fox Advisors): Sought details on the healthcare sustaining services program and the ramp timeline. Management said the contract could ramp over two to three quarters and lead to future opportunities with the customer.
• Chris Grenga (Needham): Questioned potential margin headwinds from the new Penang facility ramp. Management responded that any margin impact would be minimal and that the region has a history of rapid profitability.
• Anja Soderstrom (Sidoti): Asked how diversification in engineering wins was achieved. Management explained that wins expanded beyond healthcare to include aerospace, industrial, and semi cap sectors, broadening future manufacturing opportunities.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will be monitoring (1) the pace at which new program wins ramp into full-scale production, especially in healthcare and semi cap; (2) the impact of automation and capacity expansions on operating margins and cash flow; and (3) how emerging trade policy developments and tariff uncertainties influence customer behavior and supply chain decisions. Progress in these areas will shape the company’s ability to sustain revenue growth and margin stability.

Plexus currently trades at a forward P/E ratio of 17.3×. Should you load up, cash out, or stay put? Find out in our free research report.

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