PLEXUS CORP

RESULTS OF OPERATIONS

Consolidated Performance Summary. The following table presents selected consolidated financial data (dollars in millions, except per share data):

Net sales. For the three months ended July 4, 2026, net sales increased $286.5 million, or 28.1%, as compared to the three months ended June 28, 2025. For the nine months ended July 4, 2026, net sales increased $563.8 million, or 19.0%, as compared to the nine months ended June 28, 2025.

Net sales are analyzed by management by geographic segment, which reflects our reportable segments, and by market sector. Management measures operational performance and allocates resources on a geographic segment basis. Our global business development strategy is based on our targeted market sectors.

A discussion of net sales by reportable segment is presented below (in millions):

AMER. Net sales for the three months ended July 4, 2026 in the AMER segment increased $116.0 million, or 37.2%, as compared to the three months ended June 28, 2025. The increase in net sales was driven by an increase of $107.4 million due to production ramps of new products for existing customers, an increase of $29.4 million due to production ramps for new customers and overall net increased customer end-market demand. The increase was partially offset by a decrease of $20.4 million due to disengagements with customers and a decrease of $19.4 million for end-of-life products.

During the nine months ended July 4, 2026, net sales in the AMER segment increased $288.6 million, or 32.8%, as compared to the nine months ended June 28, 2025. The increase in net sales was driven by an increase of $293.3 million due to production ramps of new products for existing customers and an increase of $59.8 million due to production ramps for new customers. The increase was partially offset by a decrease of $41.9 million due to disengagements with customers and a decrease of $14.3 million for end-of-life products.

APAC. Net sales for the three months ended July 4, 2026 in the APAC segment increased $180.2 million, or 30.4%, as compared to the three months ended June 28, 2025. The increase in net sales was driven by overall net increased customer end-market demand and an increase of $21.8 million due to production ramps of new products for existing customers. A meaningful portion of increased end-market demand are continued ramps of semi-cap wins reflecting share gains from prior periods.

During the nine months ended July 4, 2026, net sales in the APAC segment increased $249.7 million, or 14.0%, as compared to the nine months ended June 28, 2025. The increase in net sales was driven by overall net increased customer end-market demand, an increase of $37.3 million due to production ramps of new products for existing customers and an increase of $7.8 million due to production ramps for a new customer. A meaningful portion of increased end-market demand are continued ramps of semi-cap wins reflecting share gains from prior periods. The increase was partially offset by a decrease of $5.9 million due to a disengagement with a customer.

EMEA. Net sales for the three months ended July 4, 2026 in the EMEA segment decreased $7.7 million, or 6.6%, as compared to the three months ended June 28, 2025. The decrease in net sales was driven by a decrease of $9.1 million due to a disengagement with a customer and overall net decreased customer end-market demand. The decrease is partially offset by an increase of $7.6 million due to production ramps of new products for existing customers.

During the nine months ended July 4, 2026, net sales in the EMEA segment increased $22.5 million, or 7.0%, as compared to the nine months ended June 28, 2025. The increase in net sales was driven by an increase of $41.7 million due to production ramps of new products for existing customers. The increase was partially offset by a decrease of $14.5 million due to a disengagement with a customer.

Our net sales by market sector for the indicated fiscal period were as follows (in millions):

Aerospace/Defense. Net sales for the three months ended July 4, 2026 in the Aerospace/Defense sector increased $49.7 million, or 27.1%, as compared to the three months ended June 28, 2025. The increase in net sales was driven by an increase of $21.8 million in production ramps of new products for existing customers, an increase of $14.6 million due to production ramps for a new customer and overall net increased customer end-market demand.

During the nine months ended July 4, 2026, net sales in the Aerospace/Defense sector increased $107.6 million, or 20.9%, as compared to the nine months ended June 28, 2025. The increase in net sales was driven by an increase of $67.4 million in production ramps of new products for existing customers, overall net increased customer end-market demand and an increase of $25.4 million due to production ramps for a new customer. The increase was partially offset by a decrease of $8.1 million due to a disengagement with a customer.

Healthcare/Life Sciences. Net sales for the three months ended July 4, 2026 in the Healthcare/Life Sciences sector increased $62.0 million, or 14.7%, as compared to the three months ended June 28, 2025. The increase in net sales was driven by an increase of $92.1 million in production ramps of new products for existing customers and an increase of $7.6 million due to production ramps for new customers. The increase was partially offset by a decrease of $16.1 million for end-of-life products, overall net decreased end-market demand and a decrease of $6.9 million due to a disengagement with a customer.

During the nine months ended July 4, 2026, net sales in the Healthcare/Life Sciences sector increased $216.1 million, or 17.9%, as compared to the nine months ended June 28, 2025. The increase in net sales was driven by an increase of $253.0 million in production ramps of new products for existing customers and an increase of $19.2 million due to production ramps for new customers. The increase is partially offset by overall net decreased end-market demand and a decrease of $16.5 million for end-of-life products.

Industrial. Net sales for the three months ended July 4, 2026 in the Industrial sector increased $174.8 million, or 42.2%, as compared to the three months ended June 28, 2025. The increase in net sales was driven by overall net increased customer end-market demand, an increase of $12.4 million due to production ramps of new products for existing customers and an increase of $11.7 million due to production ramps for a new customer. A meaningful portion of increased end-market demand are continued ramps of semi-cap wins reflecting share gains from prior periods. The increase was partially offset by a decrease of $22.0 million due to disengagements with customers.

During the nine months ended July 4, 2026, net sales in the Industrial sector increased $240.1 million, or 19.1%, as compared to the nine months ended June 28, 2025. The increase in net sales was driven by overall net increased customer end-market demand, an increase of $24.4 million in production ramps of new products for existing customers and an increase of $23.0 million due to production ramps for a new customer. A meaningful portion of increased end-market demand are continued ramps of semi-cap wins reflecting share gains from prior periods. The increase was partially offset by a decrease of $50.6 million due to disengagements with customers.

Cost of sales. Cost of sales for the three months ended July 4, 2026 increased $258.4 million, or 28.2%, as compared to the three months ended June 28, 2025, while cost of sales for the nine months ended July 4, 2026 increased $508.8 million, or 19.0%, as compared to the nine months ended June 28, 2025. Cost of sales is comprised primarily of material and component costs, labor costs and overhead. For both of the three and nine months ended July 4, 2026 and June 28, 2025, approximately 89% of the total cost of sales was variable in nature and fluctuated with sales volumes. Approximately 88% of these costs were related to material and component costs.

As compared to the three months ended June 28, 2025, the increase in cost of sales in the three months ended July 4, 2026 was primarily driven by an increase in net sales, an increase in fixed costs and a shift in customer mix. As compared to the nine months ended June 28, 2025, the increase in cost of sales in the nine months ended July 4, 2026 was primarily driven by an increase in net sales, an increase in fixed costs and a shift in customer mix.

Gross profit. Gross profit for the three months ended July 4, 2026 increased $28.1 million, or 27.2%, as compared to the three months ended June 28, 2025. Gross margin of 10.1% for the three months ended July 4, 2026 remained flat compared to the three months ended June 28, 2025. The primary driver of the increase in gross profit was the increase in net sales, partially offset by an increase in fixed costs and a shift in customer mix.

Gross profit for the nine months ended July 4, 2026 increased $55.0 million, or 18.2%, as compared to the nine months ended June 28, 2025. Gross margin of 10.1% for the nine months ended July 4, 2026 remained flat compared to the nine months ended June 28, 2025. The primary driver of the increase in gross profit was the increase in net sales, partially offset by an increase in fixed costs and a shift in customer mix.

Operating income. Operating income for the three months ended July 4, 2026 increased $7.7 million, or 14.4%, as compared to the three months ended June 28, 2025. Operating margin of 4.7% for the three months ended July 4, 2026 decreased 60 basis points compared to the three months ended June 28, 2025. The primary driver of the increase in operating income was the increase in gross profit. The overall increase in operating income was partially offset by an increase of $20.4 million in selling and administrative expenses ("S&A"). The increase in S&A was primarily due to an increase of $14.9 million in stock-based compensation expense primarily due to $12.9 million of accelerated stock-based compensation expense related to executive retirement agreements. This increase was the primary driver of the decrease in operating margin.

Operating income for the nine months ended July 4, 2026 increased $28.3 million, or 19.0%, as compared to the nine months ended June 28, 2025. Operating margin of 5.0% for the nine months ended July 4, 2026 remained flat compared to the nine months ended June 28, 2025. The primary drivers of the increase in operating income for the nine months ended July 4, 2026 were the increase in gross profit as well as a decrease of $4.7 million in restructuring and other charges. The restructuring and other charges for the nine months ended June 28, 2025 consisted of severance costs associated with a reduction in the Company's workforce in the EMEA and AMER regions. The overall increase in operating income was partially offset by an increase of $31.3 million in S&A. The increase in S&A was primarily due to an increase of $18.6 million in stock-based compensation expense primarily due to $12.9 million of accelerated stock-based compensation expense related to executive retirement agreements.

A discussion of operating income by reportable segment for the indicated fiscal period is presented below (in millions):

AMER. Operating income increased $7.6 million for the three months ended July 4, 2026 as compared to the three months ended June 28, 2025, primarily as a result of an increase in net sales, partially offset by a shift in customer mix and an increase in fixed costs.

During the nine months ended July 4, 2026, operating income in the AMER segment increased $24.3 million as compared to the nine months ended June 28, 2025, primarily as a result of an increase in net sales, partially offset by a shift in customer mix, an increase in fixed costs and an increase in S&A.

APAC. Operating income increased $23.4 million for the three months ended July 4, 2026 as compared to the three months ended June 28, 2025, primarily as a result of an increase in net sales, partially offset by a shift in customer mix and an increase in fixed costs.

During the nine months ended July 4, 2026, operating income in the APAC segment increased $33.9 million as compared to the nine months ended June 28, 2025, primarily as a result of an increase in net sales, partially offset by an increase in fixed costs, a shift in customer mix and an increase in S&A.

EMEA. Operating income increased $1.1 million for the three months ended July 4, 2026 as compared to the three months ended June 28, 2025, primarily as a result of a positive shift in customer mix, partially offset by a decrease in net sales.

During the nine months ended July 4, 2026, operating income in the EMEA segment increased $9.5 million as compared to the nine months ended June 28, 2025, primarily as a result of an increase in net sales and a positive shift in customer mix, partially offset by an increase in fixed costs.

Other expense. Other expense for the three months ended July 4, 2026 increased $1.0 million compared to the three months ended June 28, 2025. The increase in other expense for the three months ended July 4, 2026 was primarily driven by an increase in interest expense of $1.6 million due to higher borrowings on our credit facility, partially offset by an increase in interest income of $0.5 million.

Other expense for the nine months ended July 4, 2026 increased $1.3 million as compared to the nine months ended June 28, 2025. The increase in other expense for the nine months ended July 4, 2026 was primarily driven by an increase in interest expense of $1.2 million due to higher borrowings on our credit facility.

Income taxes. Income tax expense for the three and nine months ended July 4, 2026 was $13.5 million and $31.4 million, respectively, compared to $4.7 million and $16.9 million for the three and nine months ended June 28, 2025, respectively. The increase was primarily driven by the implementation of the global minimum tax across several jurisdictions in which we operate, as well as an increase in pre-tax book income. The increase is also attributable to a $3.3 million discrete tax benefit recorded for the three months ended June 28, 2025, related to the release of a state valuation allowance.

Our annual effective tax rate varies from the U.S. statutory rate of 21.0% primarily due to the geographic distribution of worldwide earnings as well as a tax holiday granted to a subsidiary located in the APAC segment where we derive a significant portion of our earnings. Our effective tax rate may also be impacted by disputes with taxing authorities, tax planning activities, adjustments to uncertain tax positions and changes in valuation allowances.

The annual effective tax rate for fiscal 2026 is expected to be approximately 16.0% to 18.0% assuming no changes to tax laws.

Net income. Net income for the three months ended July 4, 2026 decreased $2.1 million, or 4.7%, from the three months ended June 28, 2025 to $43.0 million. Net income decreased primarily as a result of the increase in tax expense, partially offset by the increase in operating income as previously discussed.

Net income for the nine months ended July 4, 2026 increased $12.5 million, or 10.3%, from the nine months ended June 28, 2025 to $134.0 million. Net income increased primarily as a result of the increase in operating income, partially offset by the increase in tax expense as previously discussed.

Diluted earnings per share. Diluted earnings per share decreased to $1.58 for the three months ended July 4, 2026 from $1.64 for the three months ended June 28, 2025, primarily as a result of decreased net income due to the factors discussed above.

Diluted earnings per share increased to $4.90 for the nine months ended July 4, 2026 from $4.39 for the nine months ended June 28, 2025 primarily as a result of increased net income due to the factors discussed above.

Return on Invested Capital ("ROIC") and economic return. We use a financial model that is aligned with our business strategy and includes an ROIC goal of 15%, which would exceed our weighted average cost of capital ("WACC") by more than 500 basis points and represent positive economic return. Economic return is the amount our ROIC exceeds our WACC.

Non-GAAP financial measures, including ROIC and economic return, are used for internal management goals and decision making because such measures provide management and investors additional insight into financial performance. In particular, we provide ROIC and economic return because we believe they offer insight into the metrics that are driving management decisions. We view ROIC and economic return as important measures in evaluating the efficiency and effectiveness of our long-term capital investments. We also use ROIC as a performance criteria in determining certain elements of compensation as well as economic return performance.

We define ROIC as tax-effected operating income before restructuring and other charges divided by average invested capital over a rolling four-quarter period for the third fiscal quarter. Invested capital is defined as equity plus debt and operating lease liabilities, less cash and cash equivalents. Other companies may not define or calculate ROIC in the same way. ROIC and other non-GAAP financial measures should be considered in addition to, not as a substitute for, measures of our financial performance prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP").

We review our internal calculation of WACC annually. Our WACC is 9.0% for fiscal 2026 and 8.9% for fiscal 2025. By exercising discipline to generate ROIC in excess of our WACC, our goal is to create value for our shareholders. For the nine months ended July 4, 2026, ROIC of 14.9% reflects an economic return of 5.9%, based on our WACC of 9.0%, and for the nine months ended June 28, 2025, ROIC of 14.1% reflects an economic return of 5.2%, based on our WACC of 8.9%.

For a reconciliation of ROIC, economic return and adjusted operating income (tax-effected) to our financial statements that were prepared using U.S. GAAP, see Exhibit 99.1 to this Quarterly Report on Form 10-Q, which exhibit is incorporated herein by reference.

Refer to the table below, which includes the calculation of ROIC and economic return for the indicated fiscal period (dollars in millions):