Plexus Corp.

Pardon me, this is the operator. Today's program is scheduled to begin shortly. Please continue to stand by, and thank you for your patience. Thank you. THE END Good morning, and welcome to the Plexus Corporation conference call regarding its fiscal first quarter 2022 earnings announcement. My name is Carmen, and I will be your operator for today's call. At this time, all participants are in a listen-only mode. After a brief discussion by management, we will open the conference call for questions. The conference call is scheduled to last approximately one hour. Please note that this conference is being recorded. I would now like to turn the call over to Mr. Sean Harrison, Plexus Vice President of Communications and Investor Relations. Sean?

Thank you, Carmen. Good morning, and thank you for joining us today. Some of the statements made and information provided during our call today will be forward-looking statements, including, without limitation, those regarding revenue, gross margin, selling and administrative expense, operating margin, other income and expense, taxes, cash cycle, capital allocation, and future business outlook, including the impact of COVID-19 on the company's business and the results of operations. Forward-looking statements are not guarantees since there are inherent difficulties in predicting future results and actual results could differ materially from those expressed or implied in the forward-looking statements. For a list of factors that could cause actual results to differ materially from those discussed, please refer to the company's periodic SEC filings, particularly the risk factors in our Form 10-K filing for the fiscal year ended October 2, 2021, as supplemented by our Form 10-Q filings in the Safe Harbor and Fair Disclosure Statement in yesterday's press release. We encourage participants on the call this morning to access the live webcast and supporting materials at Plexus' website at www.Plexus.com, clicking on Investors at the top of that page. Joining me today are Todd Kelsey, Chief Executive Officer, Steve Frisch, President and Chief Strategy Officer, Pat Germain, Executive Vice President and Chief Financial Officer, and Oliver Mim, Executive Vice President and Chief Operating Officer. Consistent with prior earnings calls, Todd will provide summary comments before turning the call over to Steve and Pat for further details. Let me now turn the call over to Todd Kelsey. Todd?

Thank you, Sean. Good morning, everyone. Please advance to slide three. I'm pleased to announce the promotion of Steve Frisch, previously our Chief Operating Officer, to President and Chief Strategy Officer. and Oliver Mim, previously our Executive Vice President of Global Supply Chain and Operational Solutions, to Executive Vice President and Chief Operating Officer. These promotions create leadership bandwidth and best leverage our talent, which is some of the most tenured in our industry. In addition, these appointments support Plexus's long-term succession planning and strengthen our position to sustain industry-leading revenue growth and operating performance as we build toward our goal of $5 billion in revenue with 5.5% gap operating margin by fiscal 2025. In Steve's new role, our team will continue to benefit from his leadership and extensive knowledge of Plexus, our customers, and our industry, developed throughout his 30-plus years with the company. I expect these attributes and Steve's history of delivering results will position him to succeed and driving industry-leading revenue growth, along with the organizational alignment of our market-driven strategy, while ensuring that technology and innovation are in place to sustain our success. In Oliver's new role, Plexus will continue to benefit from his focus on developing solutions to improve operational efficiency and drive customer success. His achievements during his more than 20 years at the company position him to expand our OnePlexus operational model and advance our commitment to flawless execution and customer service excellence. Following these appointments, my responsibilities and priorities remain unchanged. Steven Oliver, congratulations on your new roles. I look forward to your contributions to Plexus's continued success in the years ahead. Please advance to slide four. Our fiscal first quarter results were in line with our preliminary results provided on Tuesday, January 18, 2022. We delivered revenue of $817 million and gap EPS of 82 cents. The EPS result included 6 cents of restructuring charges, primarily associated with severance costs due to a facility transition in our APAC region, and 22 cents of stock-based compensation expense. Our revenue was below our expectations entering the quarter, primarily as a result of unanticipated supply chain challenges in the Americas region, which worsened in the final weeks of the quarter. The reduced revenue combined with an unfavorable product mix, operational inefficiencies, and the previously mentioned restructuring charges led to the EPS result. While supply constraints remain severe, demand continues to be exceptionally strong, and our ability to win new business continues to accelerate. Both position us well for future growth as we continue to resolve supply chain challenges. With $271 million of wins this quarter, our trailing four quarters of manufacturing and aftermarket services wins hit a new record level of $1.1 billion, representing a 7% year-over-year expansion. Included in this quarter's wins were programs from each of our previously highlighted secular growth markets of robotic-assisted surgery, warehouse and factory automation, and commercial space. Even with the exceptional wins performance, the team expanded the funnel of qualified opportunities to a record $3.3 billion. In addition, the value of our engineering wins totaled $38 million, a multi-year high. Strong engineering wins signal an active new program development environment for our customers and are a leading indicator of manufacturing program wins and future revenue growth. Please advance to slide five. As we look to the second quarter of fiscal 2022, customer demand is strong across all market sectors. However, supply chain challenges are again limiting our ability to meet the entirety of the robust demand. As a result, we are establishing a revenue guidance range of $820 to $860 million. At this revenue level, profitability will be pressured given the costs associated with maintaining the operating infrastructure needed to support the approximately $1 billion in quarterly revenue that is reflected in our customers' forecasts. Additionally, we will be negatively impacted by the typical seasonal increase in compensation costs. As such, we're anticipating GAAP operating margin in the range of 3.6 to 4%, including approximately 80 basis points of stock-based compensation expense. At these revenue and operating margin levels, we expect to deliver GAAP diluted earnings per share of 76 to 92 cents, including 23 cents of stock-based compensation expense. Our guidance assumes supply chain constraints and COVID-19 including the Omicron variant, do not further materially impact end markets or our operations. Next, a few thoughts regarding our longer-term outlook. Looking at our end markets, we see strong demand with limited indications of perishability over the next several quarters. Within healthcare life sciences, we have several major program ramps underway, including those supporting robotic-assisted surgery. With pipelined component supply, these programs should favorably impact the second half of the fiscal year. We could also benefit further from a more thorough recovery of elective procedures and its associated equipment. Our industrial sector demand is very strong, led by semiconductor capital equipment and communications. While supply is challenged, we continue to make progress through a multi-quarter effort focused on attacking component availability issues coupled with leveraging customer partnerships to secure supply. Finally, within aerospace and defense, we see a strengthening of the demand in commercial aerospace led by single aisle jets, business jets, and aftermarket needs. When these positive market factors are combined with robust new program wins in manufacturing, aftermarket services, and engineering, as well as a record funnel of qualified opportunities, we remain optimistic in our ability to make progress toward our $5 billion revenue target. In the long term, we remain committed to delivering upon our goals of 9% to 12% revenue growth with 5.5% gap operating margin and 15% return on invested capital. We anticipate sequential improvement in revenue and EPS through the remainder of fiscal 2022 as we progress toward these goals. I will now turn the call over to Steve for additional analysis of the performance of our market sectors and operations. Steve.