PLEXUS CORP

Cash and cash equivalents and restricted cash were $317.8 million as of December 28, 2024, as compared to $347.5 million as of September 28, 2024.

As of December 28, 2024, 77% of our cash and cash equivalents balance was held outside of the U.S. by our foreign subsidiaries. Based on current expectations, we believe that our projected cash flows provided by operations, available cash and cash equivalents, potential borrowings under the Credit Facility, and our leasing capabilities should be sufficient to meet our working capital and fixed capital requirements, as well as execution upon our share repurchase authorizations as management deems appropriate, for the next twelve months.

Our future cash flows from operating activities will be reduced by $31.4 million due to cash payments for U.S. federal taxes on the deemed repatriation of undistributed foreign earnings that are payable over an eight year period that began in fiscal 2019 with the first payment. The table below provides the expected timing of these future cash outflows, in accordance with the following installment schedule for the remaining two years (in millions):

Cash Flows. The following table provides a summary of cash flows (in millions):

Operating Activities. Cash flows provided by operating activities were $53.6 million for the three months ended December 28, 2024, as compared to cash flows used in operating activities of $3.0 million for the three months ended December 30, 2023. The increase was primarily due to cash flow improvements (reductions) of:

•$8.1 million increase in net income.

•$56.2 million in accounts payables cash flows primarily driven by the timing of materials procurement and payments to suppliers.

•$16.0 million in inventory cash flows driven by a decrease in inventory in the three months ended December 28, 2024 compared to an increase in inventory in the three months ended December 30, 2023.

•$9.5 million in other current and non-current asset cash flows primarily driven by a decrease in non-hedge derivative assets in the three months ended December 28, 2024 as compared to an increase in the three months ended December 30, 2023.

•$8.3 million in accounts receivable cash flows driven by timing of shipments and mix of customer payment terms.

•$(27.0) million in advanced payments from customers cash flows driven by a larger decrease in advanced payments in in the three months ended December 28, 2024 as compared to the three months ended December 30, 2023.

•$(18.6) million in contract assets cash flows corresponding to changes in demand from over time customers.

The following table provides a summary of cash cycle days for the periods indicated (in days):

We calculate days in accounts receivable and contract assets as each balance sheet item for the respective quarter divided by annualized sales for the respective quarter by day. We calculate days in inventory, accounts payable and advanced payments as each balance sheet line item for the respective quarter divided by annualized cost of sales for the respective quarter by day. We calculate annualized cash cycle as the sum of days in accounts receivable, days in contract assets and days in inventory, less days in accounts payable and days in advanced payments.

As of December 28, 2024, annualized cash cycle days decreased twenty-seven days compared to December 30, 2023 due to the following:

Days in accounts receivable for the three months ended December 28, 2024 decreased five days compared to the three months ended December 30, 2023. The decrease is primarily attributable to the timing of customer shipments and payments as well as the mix of customer payment terms.

Days in contract assets for the three months ended December 28, 2024 remained flat compared to the three months ended December 30, 2023.

Days in inventory for the three months ended December 28, 2024 decreased twenty-seven days compared to the three months ended December 30, 2023. The decrease is primarily due to inventory reduction efforts as well as lower working capital investments to support our customers. These efforts include improved materials management and timely disposition of aged inventory.

Days in accounts payable for the three months ended December 28, 2024 increased three days compared to the three months ended December 30, 2023. The increase is primarily attributable to timing of materials procurement and payments to suppliers.

Days in advanced payments for the three months ended December 28, 2024 decreased eight days compared to the three months ended December 30, 2023. The decrease was primarily attributable to a return of advanced payments to customers in line with lower inventory balances.

Free Cash Flow. We define free cash flow ("FCF"), a non-GAAP financial measure, as cash flow generated or used in operations less capital expenditures. FCF was $27.1 million for the three months ended December 28, 2024 compared to $(31.7) million for the three months ended December 30, 2023, an increase of $58.8 million. The improvement in FCF was primarily due to improvements in cash flow from operations previously discussed.

Non-GAAP financial measures, including FCF, are used for internal management assessments because such measures provide additional insight to investors into ongoing financial performance. In particular, we provide FCF because we believe it offers insight into the metrics that are driving management decisions. We view FCF as an important financial metric as it demonstrates our ability to generate cash and can allow us to pursue opportunities that enhance shareholder value. FCF is a non-GAAP financial measure that should be considered in addition to, not as a substitute for, measures of our financial performance prepared in accordance with GAAP.

A reconciliation of FCF to our financial statements that were prepared using GAAP as follows (in millions):

Investing Activities. Cash flows used in investing activities were $26.4 million for the three months ended December 28, 2024 compared to $28.6 million for the three months ended December 30, 2023. The decrease in cash used in investing activities was due to a $2.2 million decrease in capital expenditures.

We currently estimate capital expenditures for fiscal 2025 will be approximately $120.0 million to $150.0 million to support new program ramps and replace older equipment. This estimate also includes $60.0 million related to the footprint expansion on the mainland of Penang, Malaysia.

Financing Activities. Cash flows used in financing activities were $52.8 million for the three months ended December 28, 2024 compared to cash flows provided by financing activities of $5.8 million for the three months ended December 30, 2023. The increase was primarily attributable to net repayments on the credit facility for the three months ended December 28, 2024 of $35.0 million compared to net borrowings on the credit facility for the three months ended December 30, 2023 of $10.0 million as well as an increase of $12.8 million in cash used to repurchase our common stock.

On August 18, 2022, the Board of Directors approved a share repurchase program under which we were authorized to repurchase up to $50.0 million of its common stock (the "2023 Program"). The program was completed in fiscal 2024. During the three months ended December 30, 2023, we repurchased no shares under this program.

On January 16, 2024, we announced a share repurchase program authorized by the Board of Directors under which we were authorized to repurchase up to $50.0 million of its common stock (the "2024 Program"). The 2024 Program commenced upon completion of the 2023 Program and was completed in fiscal 2024.

On August 14, 2024, the Board of Directors approved a share repurchase program under which we are authorized to repurchase up to $50.0 million of our common stock (the "2025 Program"). The 2025 Program became effective upon completion of the 2024 Program and has no expiration. During the three months ended December 28, 2024, we purchased 84,823 shares under this program for $12.8 million at an average price of $151.19 per share. As of December 28, 2024, $37.2 million of authority remained under the 2025 Program.

All shares repurchased under the aforementioned programs were recorded as treasury stock.

We have Master Accounts Receivable Purchase Agreements with MUFG Bank, New York Branch (formerly known as The Bank of Tokyo-Mitsubishi UFJ, Ltd.) (the "MUFG RPA"), HSBC Bank (China) Company Limited, Xiamen branch (the "HSBC RPA") and other unaffiliated financial institutions, under which we may elect to sell receivables, at a discount. These facilities are uncommitted facilities. The maximum facility amount under the MUFG RPA as of December 28, 2024 is $340.0 million. The maximum facility amount under the HSBC RPA as of December 28, 2024 is $70.0 million. The MUFG RPA will be automatically extended each year unless any party gives no less than 10 days prior notice that the agreement should not be extended. The terms of the HSBC RPA are generally consistent with the terms of the MUFG RPA previously discussed.

We sold $151.2 million and $223.6 million of trade accounts receivable under these programs during the three months ended December 28, 2024 and December 30, 2023, respectively, in exchange for cash proceeds of $149.7 million and $221.0 million, respectively. As of December 28, 2024 and September 28, 2024, $160.0 million and $220.2 million, respectively, of accounts receivables sold under trade accounts receivable programs and subject to servicing by us remained outstanding.

In all cases, the sale discount was recorded within "Miscellaneous, net" in the Condensed Consolidated Statements of Comprehensive Income in the period of the sale. For further information regarding the receivable sale programs, see Note 13, "Trade Accounts Receivable Sale Programs," in Notes to Condensed Consolidated Financial Statements.

Based on current expectations, we believe that our projected cash flows provided by operations, available cash and cash equivalents, potential borrowings under the Credit Facility, and our leasing capabilities should be sufficient to meet our working capital and fixed capital requirements, as well as execution upon our share repurchase authorizations as management deems appropriate, for the next twelve months. We believe our balance sheet is positioned to support the potential future challenges presented by macroeconomic factors including increased working capital requirements associated with longer lead-times for components, increased component and labor costs, and operating inefficiencies due to supply chain constraints. As of the end of the first quarter of fiscal 2025, cash and cash equivalents and restricted cash were $318 million, while debt, finance lease and other financing obligations were $211 million. If our future financing needs increase, then we may need to arrange additional debt or equity financing. Accordingly, we evaluate and consider from time to time various financing alternatives to supplement our financial resources. However, we cannot be assured that we will be able to make any such arrangements on acceptable terms or at all.