Plexus Corp: Form 10-Q for the period ended Jun 28, 2025

"SAFE HARBOR" CAUTIONARY STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995:

The statements contained in this Form 10-Q that are guidance or which are not historical facts (such as statements in the future tense and statements including believe, expect, intend, plan, anticipate, goal, target and similar terms and concepts), including all discussions of periods which are not yet completed, are forward-looking statements that involve risks and uncertainties. These risks and uncertainties include the effects of tariffs, trade disputes, trade agreements and other trade protection measures; the effect of inflationary pressures on our costs of production, profitability, and on the economic outlook of our markets; the effects of shortages and delays in obtaining components as a result of economic cycles, natural disasters or otherwise; the risk of customer delays, changes, cancellations or forecast inaccuracies in both ongoing and new programs; the ability to realize anticipated savings from restructuring or similar actions, as well as the adequacy of related charges as compared to actual expenses; the lack of visibility of future orders, particularly in view of changing economic conditions; the economic performance of the industries, sectors and customers we serve; the outcome of litigation and regulatory investigations and proceedings, including the results of any challenges with regard to such outcomes; the effects of the volume of revenue from certain sectors or programs on our margins in particular periods; our ability to secure new customers, maintain our current customer base and deliver product on a timely basis; the risks of concentration of work for certain customers; the particular risks relative to new or recent customers, programs or services, which risks include customer and other delays, start-up costs, potential inability to execute, the establishment of appropriate terms of agreements, and the lack of a track record of order volume and timing; the effects of start-up costs of new programs and facilities or the costs associated with the closure or consolidation of facilities; possible unexpected costs and operating disruption in transitioning programs, including transitions between Company facilities; the risk that new program wins and/or customer demand may not result in the expected revenue or profitability; the fact that customer orders may not lead to long-term relationships; our ability to manage successfully and execute a complex business model characterized by high product mix and demanding quality, regulatory, and other requirements; the risks associated with excess and obsolete inventory, including the risk that inventory purchased on behalf of our customers may not be consumed or otherwise paid for by the customer, resulting in an inventory write-off; risks related to information technology systems and data security; increasing regulatory and compliance requirements; any tax law changes and related foreign jurisdiction tax developments; current or potential future barriers to the repatriation of funds that are currently held outside of the United States as a result of actions taken by other countries or otherwise; the potential effects of jurisdictional results on our taxes, tax rates, and our ability to use deferred tax assets and net operating losses; the weakness of areas of the global economy; the effect of changes in the pricing and margins of products; raw materials and component cost fluctuations; the potential effect of fluctuations in the value of the currencies in which we transact business; the effects of changes in economic conditions, political conditions and regulatory matters in the United States and in the other countries in which we do business; the potential effect of other world or local events or other events outside our control (such as the conflict between Russia and Ukraine, conflict in the Middle East, escalating tensions between China and Taiwan or China and the United States, changes in energy prices, terrorism, global health epidemics and weather events); the impact of increased competition; an inability to successfully manage human capital; changes in financial accounting standards; and other risks detailed herein and in our other Securities and Exchange Commission filings, particularly in Risk Factors contained in our fiscal 2024 Form 10-K.

OVERVIEW

Since 1979, Plexus has helped create the products that build a better world. Driven by a passion for excellence, we partner with our customers to design, manufacture and service highly complex products in demanding regulatory environments. From life-saving medical devices and mission-critical aerospace and defense products to industrial automation systems and semiconductor capital equipment, our innovative solutions across the lifecycle of a product converge where advanced technology and human impact intersect. We provide these solutions to market-leading as well as disruptive global companies in the Aerospace/Defense, Healthcare/Life Sciences, and Industrial sectors, supported by a global team of over 20,000 members across our 26 facilities in the Americas ("AMER"), Asia-Pacific ("APAC") and Europe, Middle East and Africa ("EMEA") regions.

The following Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is intended to provide an analysis of both short-term results and future prospects from management’s perspective, including an assessment of the financial condition and results of operations, events and uncertainties that are not indicative of future operations and any other financial or statistical data that we believe will enhance the understanding of our company’s financial condition, cash flows and other changes in financial condition and results of operations.

The following information should be read in conjunction with our condensed consolidated financial statements included herein and "Risk Factors" included in Part II, Item 1A included herein as well as Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended September 28, 2024, and our "Safe Harbor" Cautionary Statement included above.

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 June 28, 2025, net sales increased $57.5 million, or 6.0%, as compared to the three months ended June 29, 2024. For the nine months ended June 28, 2025, net sales increased $64.3 million, or 2.2%, as compared to the nine months ended June 29, 2024.

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.

In the first quarter of fiscal 2025, we changed internal management reporting to focus on value-add sales in each region and adjusted the allocation of certain corporate costs among reportable segments. These changes have been implemented and are consistent with what was provided to the Chief Operating Decision Maker ("CODM"). Our composition of operating segments and reportable segments did not change. Net sales and operating income for our three reportable segments for the current period and comparative periods presented have been recast to conform to those changes. These changes had no effect on our consolidated net sales, operating income or net income for the current or comparative periods.

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

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AMER. Net sales for the three months ended June 28, 2025 in the AMER segment increased $5.2 million, or 1.7%, as compared to the three months ended June 29, 2024. The increase in net sales was driven by an increase of $14.4 million due to production ramps of new products for existing customers and overall net increased customer end-market demand. The increase was partially offset by a decrease of $9.0 million due to the discontinuation of a program with an existing customer and a decrease of $8.2 million due to disengagements with customers.

During the nine months ended June 28, 2025, net sales in the AMER segment decreased $31.7 million, or 3.5%, as compared to the nine months ended June 29, 2024. The decrease in net sales was driven by overall net decreased customer end-market demand, a decrease of $24.8 million due to disengagements with customers and a decrease of $13.8 million due to the discontinuation of a program with an existing customer. The decrease was partially offset by an increase of $40.1 million due to production ramps of new products for existing customers.

APAC. Net sales for the three months ended June 28, 2025 in the APAC segment increased $72.5 million, or 13.9%, as compared to the three months ended June 29, 2024. The increase in net sales was driven by overall net increased customer end-market demand and an increase of $26.1 million due to production ramps of new products for existing customers.

During the nine months ended June 28, 2025, net sales in the APAC segment increased $192.2 million, or 12.0%, as compared to the nine months ended June 29, 2024. The increase in net sales was driven by overall net increased customer end-market demand and an increase of $57.0 million due to production ramps of new products for existing customers. The increase was partially offset by a decrease of $7.1 million due to disengagements with customers.

EMEA. Net sales for the three months ended June 28, 2025 in the EMEA segment decreased $19.6 million, or 14.3%, as compared to the three months ended June 29, 2024. The decrease in net sales was driven by overall net decreased customer end-market demand.

During the nine months ended June 28, 2025, net sales in the EMEA segment decreased $89.2 million, or 21.7%, as compared to the nine months ended June 29, 2024. The decrease in net sales was driven by overall net decreased customer end-market demand and a decrease of $7.9 million due to disengagements with customers.

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 June 28, 2025 in the Aerospace/Defense sector increased $5.6 million, or 3.2%, as compared to the three months ended June 29, 2024. The increase was driven by overall net increased customer end-market demand and an increase of $5.9 million due to production ramps of new products for existing customers. The increase was partially offset by a decrease of $9.0 million due to the discontinuation of a program with an existing customer.

During the nine months ended June 28, 2025, net sales in the Aerospace/Defense sector increased $0.4 million, or 0.1%, as compared to the nine months ended June 29, 2024. The increase in net sales was driven by an increase of $18.4 million due to production ramps of new products for existing customers and overall net increased customer end-market demand. The increase is partially offset by a decrease of $13.8 million due to the discontinuation of a program with an existing customer and a decrease of $12.6 million due to disengagements with customers.

Healthcare/Life Sciences. Net sales for the three months ended June 28, 2025 in the Healthcare/Life Sciences sector increased $40.3 million, or 10.6%, as compared to the three months ended June 29, 2024. The increase in net sales was driven by an increase of $34.6 million in production ramps of new products for existing customers and overall net increased customer end-market demand.

During the nine months ended June 28, 2025, net sales in the Healthcare/Life Sciences sector increased $65.8 million, or 5.8%, as compared to the nine months ended June 29, 2024. The increase in net sales was driven by an increase of $71.3 million in production ramps of new products for existing customers and overall net increased customer end-market demand. The increase was partially offset by a decrease of $10.9 million due to disengagements with customers.

Industrial. Net sales for the three months ended June 28, 2025 in the Industrial sector increased $11.6 million, or 2.9%, as compared to the three months ended June 29, 2024. The increase in net sales was driven by overall net increased customer end-market demand.

During the nine months ended June 28, 2025, net sales in the Industrial sector decreased $1.9 million, or 0.2%, as compared to the nine months ended June 29, 2024. The decrease in net sales was driven by a decrease of $16.2 million due to disengagements with customers. The decrease was partially offset by overall net increased customer end-market demand.

Cost of sales. Cost of sales for the three months ended June 28, 2025 increased $48.7 million, or 5.6%, as compared to the three months ended June 29, 2024, while cost of sales for the nine months ended June 28, 2025 increased $33.3 million, or 1.3%, as compared to the nine months ended June 29, 2024. Cost of sales is comprised primarily of material and component costs, labor costs and overhead. For both the three and nine months ended June 28, 2025 and June 29, 2024, approximately 88% of the total cost of sales was variable in nature and fluctuated with sales volumes. Approximately 87% of these costs were related to material and component costs.

As compared to the three months ended June 29, 2024, the increase in cost of sales in the three months ended June 28, 2025 was primarily driven by an increase in net sales and an increase in fixed costs. As compared to the nine months ended June 29, 2024, the increase in cost of sales for the nine months ended June 28, 2025 was primarily driven by an increase in net sales, partially offset by a positive shift in customer mix and a decrease in fixed costs resulting from progress on operational efficiency initiatives.

Gross profit. Gross profit for the three months ended June 28, 2025 increased $8.9 million, or 9.4%, as compared to the three months ended June 29, 2024. Gross margin of 10.1% for the three months ended June 28, 2025 increased 30 basis points compared to the three months ended June 29, 2024. The primary drivers of the increase in gross profit and gross margin as compared to the three months ended June 29, 2024 were lower costs resulting from operational efficiencies and prior restructuring activities.

Gross profit for the nine months ended June 28, 2025 increased $31.1 million, or 11.5%, as compared to the nine months ended June 29, 2024. Gross margin of 10.1% for the nine months ended June 28, 2025 increased 80 basis points compared to the nine months ended June 29, 2024. The primary drivers of the increase in gross profit and gross margin as compared to the nine months ended June 29, 2024 were lower costs resulting from operational efficiencies and prior restructuring activities.

Operating income. Operating income for the three months ended June 28, 2025 increased $14.4 million, or 36.7%, as compared to the three months ended June 29, 2024. Operating margin of 5.3% for the three months ended June 28, 2025 increased 120 basis points compared to the three months ended June 29, 2024. The primary drivers of the increase in operating income and operating margin for the three months ended June 28, 2025 were the result of a decrease of $9.2 million in restructuring and other charges as well as the increase in gross profit and gross margin. The restructuring and other charges for the three months ended June 29, 2024 consisted of severance from the reduction in the Company's workforce as well as closure costs associated with a site in the Company's AMER region. The increase in operating income was partially offset by an increase of $3.7 million in selling and administrative expenses ("S&A"). The increase in S&A was primarily due to an increase in compensation costs.

Operating income for the nine months ended June 28, 2025 increased $35.4 million, or 31.1%, as compared to the nine months ended June 29, 2024. Operating margin of 5.0% for the nine months ended June 28, 2025 increased 110 basis points compared to the nine months ended June 29, 2024. The primary drivers of the increase in operating income and operating margin for the nine months ended June 28, 2025 were the increase in gross profit and gross margin as well as a decrease of $15.6 million in restructuring and other charges. The restructuring and other charges for the nine months ended June 28, 2025 primarily consisted of severance costs associated with a reduction in the Company's workforce in the EMEA and AMER regions. The restructuring and other charges for the nine months ended June 29, 2024 consisted of employee severance costs associated with a reduction in the Company's workforce as well as closure costs associated with sites in the Company's AMER and EMEA regions, partially offset by insurance proceeds received in an arbitration decision regarding a contractual matter that took place in the Company's EMEA region in fiscal 2023. The increase in operating income was partially offset by an increase of $11.3 million in S&A. The increase in S&A was primarily due to an increase in compensation costs.

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

AMER. Operating income increased $4.8 million for the three months ended June 28, 2025 as compared to the three months ended June 29, 2024, primarily as a result of an increase in net sales, a decrease in fixed costs resulting from progress on operational efficiency initiatives and a positive shift in customer mix.

During the nine months ended June 28, 2025, operating income in the AMER segment increased $12.6 million as compared to the nine months ended June 29, 2024, primarily as a result of a decrease in fixed costs resulting from progress on operational efficiency initiatives and a positive shift in customer mix, partially offset by a decrease in net sales.

APAC. Operating income increased $8.5 million for the three months ended June 28, 2025 as compared to the three months ended June 29, 2024, primarily as a result of an increase in net sales, partially offset by a negative shift in customer mix, an increase in fixed costs and an increase in S&A.

During the nine months ended June 28, 2025, operating income in the APAC segment increased $28.5 million as compared to the nine months ended June 29, 2024, primarily as a result of an increase in net sales, partially offset by an increase in S&A and an increase in fixed costs.

EMEA. Operating income decreased $3.4 million for the three months ended June 28, 2025 as compared to the three months ended June 29, 2024, primarily as a result of a decrease in net sales, partially offset by a decrease in fixed costs.

During the nine months ended June 28, 2025, operating income in the EMEA segment decreased $8.0 million as compared to the nine months ended June 29, 2024, primarily as a result of a decrease in net sales and an increase in S&A, partially offset by a decrease in fixed costs and a positive shift in customer mix.

Other expense. Other expense for the three months ended June 28, 2025 decreased $5.1 million as compared to the three months ended June 29, 2024. The decrease in other expense for the three months ended June 28, 2025 was primarily driven by a decrease in interest expense of $4.9 million due to lower borrowings on our credit facility and a decrease of $0.8 million in factoring fees, partially offset by an increase in foreign exchange losses of $0.6 million.

Other expense for the nine months ended June 28, 2025 decreased $18.9 million as compared to the nine months ended June 29, 2024. The decrease in other expense for the nine months ended June 28, 2025 was primarily driven by a decrease in interest expense of $14.1 million due to lower borrowings on our credit facility, a decrease of $2.9 million in factoring fees and a decrease in foreign exchange losses of $1.4 million.

Income taxes. Income tax expense for the three and nine months ended June 28, 2025 was $4.7 million and $16.9 million, respectively, compared to $5.2 million and $13.5 million for the three and nine months ended June 29, 2024. The decrease for the three months ended June 28, 2025 compared to the three months ended June 29, 2024 is primarily due to an increase in discrete tax benefits of $2.9 million. The increase for the nine months ended June 28, 2025 compared to the nine months ended June 29, 2024 is primarily due to an increase in pre-tax book income, partially offset by an increase in discrete tax benefits of $4.4 million.

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 2025 is expected to be approximately 10.0% to 12.0% assuming no changes to tax laws.

On July 4, 2025, the “One Big Beautiful Bill Act” (the “Act”) was enacted into law. The Act includes changes to U.S. tax law that has multiple effective dates through fiscal 2027. We are in the process of evaluating the impact of the Act to our Consolidated Financial Statements.

Net income. Net income for the three months ended June 28, 2025 increased $20.0 million, or 79.7%, from the three months ended June 29, 2024 to $45.1 million. Net income increased primarily as a result of the increase in operating income and the decrease in other expense and tax expense as previously discussed.

Net income for the nine months ended June 28, 2025 increased $50.9 million, or 72.1%, from the nine months ended June 29, 2024 to $121.5 million. Net income increased primarily as a result of the increase in operating income and the decrease in other expense, partially offset by the increase in tax expense as previously discussed.

Diluted earnings per share. Diluted earnings per share increased to $1.64 for the three months ended June 28, 2025 from $0.91 for the three months ended June 29, 2024, primarily as a result of increased net income due to the factors discussed above.

Diluted earnings per share increased to $4.39 for the nine months ended June 28, 2025 from $2.53 for the nine months ended June 29, 2024, 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 8.9% for fiscal 2025 and 8.2% for fiscal 2024. 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 June 28, 2025, ROIC of 14.1% reflects an economic return of 5.2%, based on our WACC of 8.9%, and for the nine months ended June 29, 2024, ROIC of 10.4% reflects an economic return of 2.2%, based on our WACC of 8.2%.

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):

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LIQUIDITY AND CAPITAL RESOURCES

Cash and cash equivalents and restricted cash were $237.6 million as of June 28, 2025, as compared to $347.5 million as of September 28, 2024.

As of June 28, 2025, 92% 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 execute our share repurchase authorization as management deems appropriate, for the next twelve months.

Our future cash flows from operating activities will be reduced by $17.2 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 and will end in fiscal 2026.

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

Operating Activities. Cash flows provided by operating activities were $117.2 million for the nine months ended June 28, 2025, as compared to cash flows provided by operating activities of $216.4 million for the nine months ended June 29, 2024. The decrease was primarily due to cash flow improvements (reductions) of:

• $50.9 million increase in net income.
• $(94.0) million in inventory cash flows driven by a smaller decrease in inventory in the nine months ended June 28, 2025 compared to the nine months ended June 29, 2024.
• $(93.0) million in advanced payments from customers cash flows driven by a larger decrease in advanced payments in the nine months ended June 28, 2025 as compared to the nine months ended June 29, 2024.
• $(56.3) million in accounts receivable cash flows driven by timing of shipments and mix of customer payment terms.
• $(50.1) million in contract assets cash flows corresponding to changes in demand from over time customers.
• $(9.2) million in deferred income taxes driven by an increase in deferred income tax benefit in the nine months ended June 28, 2025 compared to an increase in deferred income tax expense in the nine months ended June 29, 2024.
• $(8.8) million in other, net cash flows driven by higher payments for operating leases in the nine months ended June 28, 2025 compared to the nine months ended June 29, 2024.
• $128.1 million in accounts payables cash flows primarily driven by the timing of materials procurement and payments to suppliers.
• $29.7 million in other current and non-current asset cash flows primarily driven by a decrease in prepayments to suppliers in the nine months ended June 28, 2025 as compared to an increase in prepayments to suppliers in the nine months ended June 29, 2024.

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 June 28, 2025, annualized cash cycle days decreased fourteen days compared to June 29, 2024 due to the following:

Days in accounts receivable for the three months ended June 28, 2025 decreased two days compared to the three months ended June 29, 2024. 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 June 28, 2025 increased two days compared to the three months ended June 29, 2024. The increase is primarily attributed to a decrease in advanced payments for customers with arrangements requiring revenue to be recognized over time as products are produced.

Days in inventory for the three months ended June 28, 2025 decreased twenty-three days compared to the three months ended June 29, 2024. 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 June 28, 2025 increased ten days compared to the three months ended June 29, 2024. The increase is primarily attributable to timing of materials procurement and payments to suppliers.

Days in advanced payments for the three months ended June 28, 2025 decreased nineteen days compared to the three months ended June 29, 2024. 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 $56.8 million for the nine months ended June 28, 2025 compared to $147.5 million for the nine months ended June 29, 2024, a decrease of $90.7 million.

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):

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Investing Activities. Cash flows used in investing activities were $60.8 million for the nine months ended June 28, 2025 compared to $68.8 million for the nine months ended June 29, 2024. The decrease in cash used in investing activities was due to an $8.4 million decrease in capital expenditures.

We currently estimate capital expenditures for fiscal 2025 will be approximately $80.0 million to $100.0 million to support new program ramps and replace older equipment.

Financing Activities. Cash flows used in financing activities were $168.3 million for the nine months ended June 28, 2025 compared to $134.3 million for the nine months ended June 29, 2024. The increase was primarily attributable to the overall increase in net repayments which included the repayment, on maturity, of $100.0 million in principal amount of our 4.05% Senior Notes and net repayments on the credit facility for the nine months ended June 28, 2025 of $5.0 million compared to net repayments on the credit facility for the nine months ended June 29, 2024 of $83.0 million as well as an increase of $7.7 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 our common stock (the "2023 Program"). The 2023 program was completed in February 2024. During the nine months ended June 29, 2024, we repurchased 59,277 shares under this program for $5.7 million at an average price of $95.59 per share.

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 our common stock (the "2024 Program"). The 2024 Program commenced upon completion of the 2023 Program and was completed in fiscal 2024. During the three months ended June 29, 2024, we repurchased 184,581 shares under this program for $18.6 million at an average price of $100.64 per share. During the nine months ended June 29, 2024, we repurchased 311,431 shares under this program for $30.5 million at an average price of $97.87 per share.

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 June 28, 2025, we purchased 143,282 shares under this program for $18.4 million at an average price of $128.70 per share. During the nine months ended June 28, 2025, we repurchased 314,344 shares under this program for $43.4 million at an average price of $138.19 per share. The nine months ended June 28, 2025 purchased amounts exclude excise tax on share repurchases of $0.4 million. As of June 28, 2025, $6.6 million of authority remained under the 2025 Program.

On May 14, 2025, the Board of Directors approved a share repurchase program under which we are authorized to repurchase up to $100.0 million of our common stock (the “2026 Program”). The 2026 Program became effective upon completion of the 2025 Program and has no expiration.

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

On June 15, 2025, we repaid, on maturity $100.0 million in principal amount of our 4.05% Senior Notes.

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 June 28, 2025 is $340.0 million. The maximum facility amount under the HSBC RPA as of June 28, 2025 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 $179.6 million and $201.4 million of trade accounts receivable under these programs during the three months ended June 28, 2025 and June 29, 2024, respectively, in exchange for cash proceeds of $177.8 million and $199.0 million, respectively. We sold $502.6 million and $638.8 million of trade accounts receivable under these programs during the nine months ended June 28, 2025 and June 29, 2024, respectively, in exchange for cash proceeds of $497.6 million and $631.1 million, respectively. As of June 28, 2025 and September 28, 2024, $191.8 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 third quarter of fiscal 2025, cash and cash equivalents and restricted cash were $238 million, while debt, finance lease and other financing obligations were $143 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.

DISCLOSURE ABOUT CRITICAL ACCOUNTING ESTIMATES

Our critical accounting policies are disclosed in our 2024 Annual Report on Form 10-K. During the third quarter of fiscal 2025, there were no material changes.

NEW ACCOUNTING PRONOUNCEMENTS

See Note 1, "Recently Issued Accounting Pronouncements Not Yet Adopted," in Notes to Condensed Consolidated Financial Statements regarding recent accounting pronouncements.

During the third quarter of fiscal 2025, there were no material changes in our exposure to market risk from changes in foreign exchange and interest rates from those disclosed in our 2024 Annual Report on Form 10-K.

Foreign Currency Risk

Our international operations create potential foreign exchange risk. Our policy is to selectively hedge our foreign currency denominated transactions in a manner that partially offsets the effects of changes in foreign currency exchange rates. We typically use foreign currency contracts to hedge only those currency exposures associated with certain assets and liabilities denominated in non-functional currencies. Corresponding gains and losses on the underlying transaction generally offset the gains and losses on these foreign currency hedges. We cannot predict changes in currency rates, nor the degree to which we will be able to manage the impacts of currency exchange rate changes. Such changes could have a material effect on our business, results of operations and financial condition.

Our percentages of transactions denominated in currencies other than the U.S. dollar for the indicated periods were as follows:

We have evaluated the potential foreign currency exchange rate risk on transactions denominated in currencies other than the U.S. dollar for the periods presented above. Based on our overall currency exposure, as of June 28, 2025, a 10.0% change in the value of the U.S. dollar relative to our other transactional currencies would not have a material effect on our financial position, results of operations, or cash flows.

Interest Rate Risk

We have financial instruments, including cash equivalents and debt, which are sensitive to changes in interest rates. The primary objective of our investment activities is to preserve principal while maximizing yields without significantly increasing market risk. To achieve this, we limit the amount of principal exposure to any one issuer.

As of June 28, 2025, our only material interest rate risk was associated with our Credit Facility. Borrowings under the Credit Facility bear interest, at the Company's option, at (a)(1) for borrowings denominated in U.S. dollars, the Term Secured Overnight Financing Rate ("SOFR"), (2) for borrowings denominated in pounds sterling, the Daily Simple Risk-Free Rate, plus, in each case of (a)(1) and (2), 10 basis points, (b) for borrowings denominated in euros, the EURIBOR Rate plus a statutory reserve rate, or (c) an Alternate Base Rate equal to the highest of (i) 100 basis points per annum, (ii) the prime rate last quoted by The Wall Street Journal (or, if not quoted, as otherwise provided in the Credit Facility), (iii) the greater of the federal funds effective rate and the overnight bank funding rate in effect on such day plus, in each case, 50 basis points per annum (or, if neither are available, as otherwise provided in the Credit Facility), and (iv) Term SOFR for a one month interest period on such day plus 110 basis points, plus, in each case of (a), (b), and (c), an applicable interest rate margin based on the Company's then current consolidated total indebtedness (minus certain unrestricted cash and cash equivalents in an amount not to exceed $100 million) to consolidated EBITDA. As of June 28, 2025, the borrowing rate under the Credit Facility was SOFR plus 1.00%. Borrowings under the 2018 NPA are based on a fixed interest rate, thus mitigating much of our interest rate risk. Based on our overall interest rate exposure, as of June 28, 2025, a 10.0% change in interest rates would not have a material effect on our financial position, results of operations, or cash flows.

Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures designed to ensure that the information the Company must disclose in its filings with the Securities and Exchange Commission ("SEC") is recorded, processed, summarized and reported on a timely basis. The Company’s President and Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO") have reviewed and evaluated, with the participation of the Company’s management, the Company’s disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act") as of the end of the period covered by this report. Based on such evaluation, the CEO and CFO have concluded that, as of June 28, 2025, the Company’s disclosure controls and procedures were effective, at the reasonable assurance level, (a) in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports the Company files or submits under the Exchange Act, and (b) in assuring that information is accumulated and communicated to the Company’s management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

During the third quarter of fiscal 2025, there were no changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

In addition to the risks and uncertainties discussed herein, particularly those discussed in the “Safe Harbor” Cautionary Statement and "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in Part I, Item 2, see the risk factors set forth in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended September 28, 2024 that have had no material changes.