PLXS · Plexus Corp.

Plexus Corp. reported strong Q2 FY2026 results with net sales reaching $1.2 billion, up 18.7% from $980.2 million in the prior year quarter. This growth was driven by overall net increased customer end-market demand and production ramps of new products for existing customers, as noted in Management's Discussion. These dynamics enabled the company to capitalize on market recovery while executing on program wins, demonstrating effective customer engagement and operational execution.

Gross profit increased 21.9% to $119.2 million, expanding the gross margin to 10.2% from the prior year. The primary driver was the increase in net sales, partially offset by higher fixed costs. This reflects favorable operating leverage as higher volumes absorbed fixed overhead, underscoring Plexus's ability to scale profitably amid revenue acceleration. Operating income followed suit, rising 26.7% to $61.8 million with a 5.3% operating margin, primarily due to the gross profit and margin gains. Net income grew 27.5% to $49.8 million, delivering diluted EPS of $1.82, up 29.1% from $1.41, providing shareholders with meaningful earnings growth.

Cash generation presented a contrast, with net cash provided by operating activities at $13.1 million versus $90.3 million last year. This moderation stems from increased working capital requirements tied to inventory builds for new program ramps and longer component lead times. Capital expenditures of $47.7 million, comparable to $46.7 million prior year, supported equipment needs for these expansions, resulting in free cash flow of -$34.6 million. Management emphasizes that the balance sheet is positioned to handle such challenges, including supply chain constraints, component cost pressures, and labor dynamics, ensuring resilience for ongoing investments.