Plexus Corp.

Good morning and welcome to the Plexus Corp conference call regarding its fiscal fourth quarter 2022 earnings announcement. My name is Justin and I will be your operator for today's call. At this time, all participants are on 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, Justin. Good morning, everyone, 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. 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 would like to congratulate our nearly 25,000 team members globally. Through your unwavering commitment to operational excellence in quest to provide our customers exceptional service, our results improved sequentially throughout fiscal 2022, resulting in accelerating momentum that we expect to continue into fiscal 2023. We ended our fiscal 2022 on a very strong note by delivering record quarterly revenue and operating profit. Please advance to slide four for a review of our fiscal fourth quarter results. Our fiscal fourth quarter revenue of $1.12 billion, representing year-over-year growth of 33%, and GAAP EPS of $1.78 significantly exceeded our guidance. Our EPS result included 18 cents of stock-based compensation expense. While we have not witnessed any meaningful easing in supply chain conditions, our supply chain team, in conjunction with our partners and our investments in people, processes, and tools, continues to find avenues to clear additional supply. As a result of the progress made in mitigating constrained supply, all three of our market sectors had strong quarter-over-quarter growth and significantly outperformed our expectations entering the quarter. The revenue upside created fixed cost leverage resulting in record GAAP operating profit and GAAP operating margin equaling our 5.5% goal, a result which included 45 basis points of stock-based compensation expense. Our funnel of qualified manufacturing opportunities remained at a record $3.4 billion. We also continue to win meaningful new programs even as supply chain conditions have slowed the decision-making process for some customers that we anticipate intend to partner with Plexus. We won $214 million in new manufacturing programs for our fiscal fourth quarter, bringing our fiscal 2022 total to $1 billion. Included in the fourth quarter wins is an exciting opportunity with a new customer in vehicle, truck, and bus electrification, building upon our existing presence in this secular growth market. Please advance to slide five for a review of fiscal 2022 results. Fiscal 2022 revenue was $3.81 billion, which represented a 13% increase from fiscal 2021, exceeding our 9% to 12% revenue growth target. Our revenue growth benefited from improving end market demand, new program ramps inclusive of share gains, growing success in mitigating challenge component supply, in our exposure to secular growth markets. Our gap operating margin finished the year at 4.7%, inclusive of 61 basis points of stock-based compensation expense, and return on invested capital ended at 13%. While both results were slightly below our long-term targets, we delivered meaningful shareholder value, and the measures increased substantially as the fiscal year progressed, positioning us well for a strong fiscal 2023. Please advance to slide six. As a result of our strong performance in fiscal 2022, our five-year compounded annual revenue growth rate now stands at an industry-leading 9%, consistent with our 9% to 12% goal. Our return on invested capital over that same period is 14.3%, just under our long-term target of 15%. As we look forward, we remain focused on delivering at least 9% to 12% revenue growth 5.5% gap operating margin, and 15% return on invested capital. We believe these are achievable goals and represent industry leading performance. Please advance to slide seven. As proud as I am of our efforts to deliver operational excellence during fiscal 2022, I'm equally as proud of our environmental, social, and governance accomplishments. Last year at this time, we implemented a paid volunteer time off program for our team members globally, which has been heavily utilized and is a strong success. We've also grown momentum with our employee resource groups focused on diversity and inclusion, adding new chapters of these team member driven groups across all three of our operating regions. In addition, we made great progress in our global energy reduction initiatives, reducing relative electricity consumption within our manufacturing sites over 10%. Furthermore, we spent considerable time innovating across our suite of solutions in order to deliver services to accelerate our customers' progress toward their ESG goals. Innovation is a core pillar of our environmental, social, and governance program and central to reducing the environmental impact and increasing the sustainability of our customers' products. We provide innovation through our full suite of engineering solutions supply chain design and management, new product introduction, manufacturing, and what was formerly known as our aftermarket services. Please advance to slide eight. At Plexus, we are committed to building a better world by the way we innovate and operate. Our rebranded Plexus Sustaining Services exemplifies this vision. Our customers want more than a partner that fixes a broken product. Our customers want help in growing revenue, being more profitable, extending the lifecycle of their products, and reducing waste. Importantly, Plexus Sustaining Services creates value for our customers through extending the service life of capital equipment that can be in use for 5, 10, or even 20 years. Through our sustaining services, Plexus supports our customers and their customers by ensuring product is ready for use at the critical time and point of need. We ensure products that go back into the market are properly decontaminated and performing at or above the standards of newly manufactured products to ensure the best customer experience. We support asset recovery to get raw materials back into the supply chain or into refurbished products. Our sustaining services are a key part of the circular economy, a rapidly growing piece of our business, and a global service offering supporting all of our market sectors. Please advance to slide nine. Looking ahead to our fiscal first quarter of 2023, we are getting revenue of $1.08 billion to $1.13 billion, GAAP operating margin of 5.0 to 5.5%, inclusive of 50 basis points of stock-based compensation expense, and GAAP EPS of $1.40 to $1.58 including 20 cents of stock-based compensation expense. While considering the ongoing supply chain challenges and macroeconomic and geopolitical uncertainty, our revenue guidance reflects the benefit from continuing new program ramps, significant unfulfilled backlog, robust customer demand, and our participation in numerous secular growth markets, including warehouse and factory automation, vehicle electrification, commercial space, and robotic assisted surgery. We also anticipate an impact to GAAP EPS in the fiscal first quarter due to the absence of foreign exchange gains and greater interest in income tax expense relative to the prior quarter. Finally, in regards to our fiscal 2023, each year I provide an annual update with other Plexus leaders to our team members globally, typically visiting each site. This year represents the first time since prior to COVID that we have the opportunity to visit the vast majority of our team members in person and see the successes achieved and the opportunities for future growth. A key component of my message this fiscal year is to consider what is beyond our current goal of $5 billion in revenue at 5.5% gap operating margin and how we need to evolve to achieve that next big goal. The momentum built during the second half of our fiscal 2022 combined with the previously mentioned demand tailwinds creates the opportunity for robust year-over-year revenue growth, even when considering the uncertain macro environment. When coupled with our focus on operational excellence to drive manufacturing efficiencies and the significant investments made in our operations, we anticipate generating healthy operating leverage and strong EPS growth in fiscal 2023. I will now turn the call over to Steve for additional analysis of the performance of our market sectors and operations. Steve.