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What changed in PLEXUS CORP's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of PLEXUS CORP's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+306 added−321 removedSource: 10-K (2024-11-15) vs 10-K (2023-11-17)

Top changes in PLEXUS CORP's 2024 10-K

306 paragraphs added · 321 removed · 252 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

76 edited+36 added−34 removed14 unchanged
Biggest changeThe key electronic components we purchase include: advanced semiconductors, diodes, power management modules, microcontrollers, memory modules, interconnects, inductors, resistors, capacitors, power supplies and cable and wire. Component shortages, extended lead-times and subsequent allocations by our suppliers are an inherent risk within the electronics industry and have particularly remained an issue for semiconductors during fiscal 2023.
Biggest changeVolatile demand (in quantity or mix), material shortages, extended lead-times and subsequent allocations by our suppliers are an inherent risk within the electronics industry and have remained an issue, particularly for semiconductors during fiscal 2024. We discuss the causes, implications, and potential implications of volatile demand and material shortages more fully in "Risk Factors" in Part I, Item 1A herein.
Our Code of Conduct includes topics such as anti-corruption, discrimination, harassment, privacy, appropriate use of company assets, protecting confidential information and reporting Code of Conduct violations. It is used to reinforce our passion for operating in a fair, honest, responsible and ethical manner and articulates our responsibilities as a trusted leader in the business community.
Our Code of Conduct includes topics such as corruption, discrimination, harassment, privacy, appropriate use of company assets, protecting confidential information and reporting Code of Conduct violations. It is used to reinforce our passion for operating in a fair, honest, responsible and ethical manner and articulates our responsibilities as a trusted leader in the business community.
The Code of Conduct also emphasizes the importance of having an inclusive, welcoming environment in which all team members feel empowered to do what is right and are encouraged to voice concerns should violations of the Code of Conduct be observed. All team members are required to complete training on the Code of Conduct biennially.
The Code of Conduct also emphasizes the importance of having an inclusive, welcoming environment in which all team members feel empowered to do what is right and are expected to voice concerns should violations of the Code of Conduct be observed. All team members are required to complete training on the Code of Conduct biennially.
These reports include: Proxy Statements, Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Specialized Disclosure Reports on Form SD and amendments to those reports. These reports are also accessible at the SEC's website at www.sec.gov. Our Code of Conduct and Business Ethics is also posted on our website.
These reports include: Proxy Statements, Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Specialized Disclosure Reports on Form SD and amendments to those reports. These reports are also accessible at the SEC's website at www.sec.gov. Our Code of Conduct is also posted on our website.
Information Technology Our core solutions for manufacturing facilities include a single-instance enterprise resource planning (“ERP”) system in addition to product data management and advanced planning and scheduling systems, along with consistent solutions for warehouse management and shop floor execution that support our global operations.
Information Technology Our core solutions for manufacturing facilities include a single-instance enterprise resource planning (“ERP”) system in addition to product data management and advanced planning and scheduling systems, along with consistent solutions for warehouse management and manufacturing execution that support our global operations.
We are guided by our values and leadership behaviors. We do the right thing to support our team members, communities and customers. • Discipline by Design – We hold ourselves accountable to delivering shareholder value through consistent application of a disciplined financial model.
We are guided by our values. We do the right thing to support our team members, communities and customers. • Discipline by Design – We hold ourselves accountable to delivering shareholder value through consistent application of a disciplined financial model.
Our primary long-term focus is to achieve a 9-12% compounded annual revenue growth rate while earning a return on invested capital ("ROIC") of 15%, which would exceed our weighted average cost of capital ("WACC") and represent positive economic return.
Our primary long-term goal is to achieve a 9-12% compounded annual revenue growth rate while earning a return on invested capital ("ROIC") of 15%, which would significantly exceed our weighted average cost of capital ("WACC") and represent positive economic return.
They aim to provide educational, networking and development opportunities for all Plexus team members. 6 Table of Contents ◦ Plexus Veterans Network – The goal of the Plexus Veterans Network is to enhance Plexus’s ability to hire, develop and support U.S. veterans across the organization to improve business outcomes.
They aim to provide educational, networking and development opportunities for all Plexus team members. ◦ Plexus Veterans Network – The goal of the Plexus Veterans Network is to enhance Plexus’s ability to hire, develop and support U.S. veterans across the organization to improve business outcomes.
During these reviews, we also assess retention rates and the diversity composition of our leaders. Competency-based training, leadership development programs and online learning provide the foundation for a learning culture and ongoing development for team members at all levels.
During these reviews, we also assess retention rates and the diversity composition of our leaders and leadership pipeline. Competency-based training, leadership development programs and online learning promote a learning culture and provide ongoing development for team members at all levels.
You may access these SEC reports and the Code of Conduct and Business Ethics by following the links under "Investors" at our website. 10 Table of Contents
You may access these SEC reports and the Code of Conduct by following the links under "Investors" at our website. 10 Table of Contents
Short and long-term incentive pay is designed to be competitive, improve employee retention, reward team members for performance supporting our strategic objectives and align team members with the interests of shareholders to deliver both short-term and long-term results. Approximately 19% and 3% of our team members participate in our short and long-term incentive programs, respectively.
Short and long-term incentive pay is designed to be competitive, improve employee retention, reward team members for performance supporting our strategic objectives and align team members with the interests of shareholders to deliver both short-term and long-term results. Approximately 20.4% and 3.0% of our team members participate in our short and long-term incentive programs, respectively.
Talent Development & Acquisition Our commitment to holistic talent management means that we expect and reward high performance and address underperformance with urgency, candor and empathy. We engage in regular talent reviews to calibrate on the performance and potential of our teammates, their development needs, career pathing and the strength of our succession plans.
Our commitment to holistic talent management means that we expect and reward high performance and address underperformance with urgency, candor and empathy. We engage in regular talent reviews to calibrate on the performance and potential of our teammates, development opportunities, career pathing and the strength of our succession plans.
For additional information on non-GAAP financial measures, see Exhibit 99.1 to this annual report on Form 10-K, which exhibit is incorporated herein by reference.
For additional information on our use of non-GAAP financial measures, see Exhibit 99.1 to this annual report on Form 10-K, which exhibit is incorporated herein by reference.
Commitment to Values and Ethical Business Practices Along with our Values and Leadership Behaviors, we act in accordance with our Code of Conduct and Business Ethics ("Code of Conduct"), which creates expectations and provides guidance for all team members and representatives of Plexus to make the right decisions.
Commitment to Our Values and Ethical Business Practices Along with our values, we act in accordance with our Code of Conduct, which creates expectations and provides guidance for all team members, representatives and partners of Plexus to make the right decisions.
Relative to our competition, overriding factors such as lower manufacturing volumes, production flexibility, unique fulfillment requirements and complex regulatory and quality requirements typically result in 4 Table of Contents higher investments in inventory and selling and administrative costs for us.
Relative to our competition, overriding factors such as lower manufacturing volumes, production flexibility, unique fulfillment requirements and complex regulatory and quality requirements typically result in higher investments in inventory and selling and administrative costs for us.
Solutions With integrated solutions throughout the product lifecycle, our team strives to create innovative and efficient paths to deliver products to market, keep products in the market longer and help manage the product lifecycle sustainably and responsibly. • Design and Development – Using the same tools and processes throughout our seven design centers worldwide, we leverage the latest technology and state-of-the-art design automation methodologies to provide comprehensive new product development and product commercialization solutions.
Solutions With integrated solutions throughout the product lifecycle, our team strives to create innovative and optimized paths to deliver products to the market, keep products in the market longer and help manage the product lifecycle sustainably and responsibly. • Design and Development – Using standard tools and processes throughout our six design centers worldwide, we leverage the latest technology and state-of-the-art design automation methodologies to provide comprehensive new product development and product commercialization solutions.
Plexus current ERGs include: ◦ Plexus Pride – Plexus Pride is focused on supporting the needs of the LGTBQ+ community by creating greater awareness of the challenges and uniqueness of this demographic.
Plexus' current ERGs include: ◦ Plexus Pride – Plexus Pride is focused on supporting the needs of the LGTBQIA+ community by creating greater awareness of the challenges and uniqueness of this demographic.
Economic return is the amount by which our ROIC exceeds our WACC, and we believe it is a fundamental driver of shareholder value. We review our internal calculation of WACC annually; for fiscal 2023, our WACC was 9.0%.
Economic return is the amount by which our ROIC exceeds our WACC, and we believe it is a fundamental driver of shareholder value. We review our internal calculation of WACC annually; for fiscal 2024, our WACC was 8.2%.
Regulatory Requirements All Plexus manufacturing and engineering facilities are certified to a baseline Quality Management System standard per ISO9001:2015. We have capabilities to assemble finished medical devices meeting the U.S.
Regulatory Requirements All Plexus manufacturing and engineering facilities are certified to a baseline Quality Management System standard per ISO9001:2015. We have capabilities to assemble finished medical devices meeting the U.S. Food and Drug Administration’s (“FDA”) Quality Systems Regulation requirements and similar regulatory requirements in other countries.
This group desires to enhance talent development and retention, create an environment that fosters networking and sponsorship for career growth and provide community engagement opportunities. The group’s membership spans across all three operating regions, totaling 15 chapters across Plexus. ◦ UnusPlexus – UnusPlexus’ purpose is to celebrate the different cultures and diversity within Plexus.
This group desires to enhance talent development and retention, create an environment that fosters networking and sponsorship for career growth and provide community engagement opportunities. ◦ UnusPlexus – UnusPlexus’ purpose is to celebrate the different cultures and diversity within Plexus.
Plexus maintains a website at www.plexus.com. As soon as is reasonably practical, after we electronically file or furnish all reports to the Securities and Exchange Commission ("SEC"), we provide online copies of such reports, free of charge.
Additional Information Our global headquarters is located at One Plexus Way, Neenah, Wisconsin, 54957. Plexus maintains a website at www.plexus.com. As soon as is reasonably practical, after we electronically file or furnish all reports to the Securities and Exchange Commission ("SEC"), we provide online copies of such reports, free of charge.
We believe that in most cases our sales to any one such division, subsidiary, facility or location are independent of sales to others. 3 Table of Contents The distribution of our net sales by market sectors for the indicated fiscal years is shown in the following table: Industry 2023 2022 2021 Healthcare/Life Sciences 44% 41% 39% Industrial 42% 46% 46% Aerospace/Defense 14% 13% 15% Total net sales 100% 100% 100% Although our current business development focus is based on our targeted market sectors of Healthcare/Life Sciences, Industrial and Aerospace/Defense, we evaluate our financial performance and allocate our resources geographically (see Note 11 "Reportable Segments, Geographic Information and Major Customers" in Notes to Consolidated Financial Statements regarding our reportable segments).
The distribution of our net sales by market sectors for the indicated fiscal years is shown in the following table: Industry 2024 2023 2022 Aerospace/Defense 18% 14% 13% Healthcare/Life Sciences 39% 44% 41% Industrial 43% 42% 46% Total net sales 100% 100% 100% Although our current business development focus is based on our targeted market sectors of Aerospace/Defense, Healthcare/Life Sciences, and Industrial, we evaluate our financial performance and allocate our resources geographically (see Note 11 "Reportable Segments, Geographic Information and Major Customers" in Notes to Consolidated Financial Statements regarding our reportable segments).
These union agreements are typically renewed at the beginning of each year, although in a few cases these agreements may last two or more years. Our team members in China, Germany, Malaysia, Mexico, Romania, Thailand and the United States are not covered by union agreements.
These union agreements are typically renewed at the beginning of each year, although in a few cases these agreements may last two or more years. Our global team members outside the United Kingdom are not covered by union agreements.
During fiscal 2023, we served approximately 150 customers. GE Healthcare Technologies, Inc. ("GEHC") accounted for 10.3% of our net sales during fiscal 2023, while General Electric ("GE") accounted for 12.9% and 11.2% of our net sales during fiscal 2022 and 2021, respectively. During fiscal 2023, GE completed the separation of its healthcare business, GEHC, as a stand-alone company.
("GEHC") accounted for 10.3% of our net sales during fiscal 2023, while General Electric ("GE") accounted for 12.9% of our net sales during fiscal 2022. During fiscal 2023, GE completed the separation of its healthcare business, GEHC, as a stand-alone company.
In addition, our Compensation and Leadership Development Committee of our Board of Directors reviews our D&I initiatives and results to cultivate a diverse workforce and inclusive culture. • Employee Resource Groups – Our ERGs are voluntary, employee-driven groups organized around common interests and legitimate business purposes.
In addition, the Compensation and Leadership Development Committee of our Board of Directors reviews our human capital management strategy, including D&I initiatives and progress to cultivate an optimized workforce and inclusive culture. • Employee Resource Groups – Our ERGs are voluntary, employee-driven, executive-sponsored groups organized around common interests and legitimate business purposes.
Management also updates the Board of Directors regularly on employee-related policies and efforts intended to protect our team members and to preserve our corporate culture. Employee Data Of our nearly 25,000 team members, 50.3% are female, 49.0% are male and 0.7% choose not to identify.
Management also updates the Board of Directors regularly on employee-related policies, trends and efforts intended to protect our team members and to preserve our corporate culture, such as those related to EHS and Ethics Hotline reporting. Employee Data Of our over 20,000 team members, 50.4% are female, 49.5% are male and 0.1% choose not to identify.
The majority of our workforce, 54.1%, is located in our APAC region, while 31.7% and 14.2% of our team members are located in our AMER and EMEA regions, respectively. Approximately 165 of our team members in the United Kingdom are covered by union agreements.
The majority of our workforce, 56.8%, is located in our APAC region, while 29.6% and 13.6% of our team members are located in our AMER and EMEA regions, respectively. Approximately 240 of our team members in the United Kingdom are covered by union agreements.
At Plexus, we take pride in managing the full supply chain to minimize cost, mitigate risk and provide a flexible, scalable solution for our customers. • New Product Introduction – When introducing a new product, customers need to move quickly.
We help manage the full supply chain to minimize cost, mitigate risk and provide a flexible, scalable and resilient solution for our customers. 2 Table of Contents • New Product Introduction – When introducing a new product, we understand our customers need to move quickly.
Food and Drug Administration’s (“FDA”) Quality Systems Regulation requirements and similar regulatory requirements in other countries. 9 Table of Contents We have additional certifications and/or registrations held by certain facilities in the following regions: AMER APAC EMEA Medical Standard ISO 13485:2016 X X X 21 CFR Part 820 (FDA) (Finished Medical) X X X JMGP accreditation X X X GMP-Korea certification X ANVISA accreditation X X X NPMA (National Medical Products Administration) registration X ISO 14001(environmental management) X X X ISO 45001 (occupational health and safety) X X ANSI/ESD (Electrostatic Discharge Control Program) S20.20 X X ITAR (International Traffic and Arms Regulation) self-declaration X Aerospace Standard AS9100 X X X NADCAP certification X X X FAR 145 certification (FAA repair station) X EASA repair approval X ATEX/IECEx certification X IRIS certification (Railway) X ISO 50001:2011 (energy management) X Bureau of Indian Standards (BIS) X TL9000 (telecommunications) X Additional Information Our global headquarters is located at One Plexus Way, Neenah, Wisconsin, 54957.
We have additional certifications and/or registrations held by certain facilities in the following regions: AMER APAC EMEA Medical Standard ISO 13485:2016 X X X 21 CFR Part 820 (FDA) (Finished Medical) X X X JMGP accreditation X X X GMP-Korea certification X ANVISA accreditation X X X NPMA (National Medical Products Administration) registration X ISO 14001(environmental management) X X X ISO 45001 (occupational health and safety) X X ANSI/ESD (Electrostatic Discharge Control Program) S20.20 X X ITAR (International Traffic and Arms Regulation) self-declaration X Aerospace Standard AS9100 X X X NADCAP certification X X X FAR 145 certification (FAA repair station) X EASA repair approval X ATEX/IECEx certification X IRIS certification (Railway) X ISO 50001:2011 (energy management) X Bureau of Indian Standards (BIS) X TL9000 (telecommunications) X Refer to the discussion in "Risk Factors" in Part I, Item 1A herein for further details on legal and regulatory obligations that could adversely affect our business, results of operation and financial conditions.
Efforts in this space are customized by geography based on the current workforce dynamic. This includes partnerships with organizations such as the Society of Women Engineering ("SWE"), universities with diverse student populations and groups supporting underrepresented minorities with leadership aspirations across many disciplines.
Efforts are customized by geography based on current workforce dynamics. This includes partnerships with organizations such as the Society of Women Engineering ("SWE"), Women in Electronics, and recruiting from new universities and industry groups across many disciplines.
Our Human Rights Policy was created by a cross-functional team appointed to conduct regular policy and impact mapping, as outlined by the UN Global Compact, to facilitate continuous improvement and commitment to our standards. Diversity and Inclusion At Plexus, diversity and inclusion ("D&I") does not simply mean representation.
Our Human Rights Policy was created by a cross-functional team appointed to conduct regular policy and impact mapping, as outlined by the UNGC, to facilitate continuous improvement and commitment to our standards.
We are focused on our own operational impact, as well, with a commitment to reducing our use of natural resources, transitioning to renewable and reusable resources and optimizing our operations through adoption of new technologies and automation.
We are focused on our own operational impact, as well, seeking to reduce our emissions, waste, water and use of natural resources, transition to renewable energy and reusable resources, and optimize our operations through adoption of new technologies and automation.
Plexus maintains awareness and knowledge of our competitors' capabilities in order to remain highly competitive within our target markets. We believe our ability to provide a full range of services that complement the entire product lifecycle across a global footprint provides a business advantage.
We believe our ability to provide a full range of services that complement the entire product lifecycle across a global footprint provides a business advantage.
We survey employee engagement annually through our employee net promotor score and we identify strengths and act on areas of opportunity to enhance our work environment and increase employee satisfaction.
Employee Engagement At every facility, in every region and at all levels, we strive to continuously improve the engagement of our team members. We survey employee engagement annually through our employee net promoter score and we identify strengths and act on areas of opportunity to enhance our work environment and increase employee satisfaction.
With integrated design and development, supply chain solutions, new product introduction, manufacturing and sustaining services, we proactively tackle tough challenges throughout the product lifecycle. We provide most of our optimized solutions on a turnkey basis, and we typically procure all materials required for product assembly.
Through these integrated solutions, we proactively tackle tough challenges throughout the product lifecycle. We provide most of our solutions on a turnkey basis, under which we procure and warehouse all materials required for product assembly.
Further, as part of our efforts to expand diversity within our recruitment practices, we established a requirement that all interview panels for management job levels contain at least one diverse team member. • Employee Benefits & Programs – Plexus has a number of policies and benefits in place to support the unique needs and overall well-being of our team members and their families, including flexible workplace, paid parental leave and a Plexus Wellness Program to ensure our team members have access to the resources they need to lead healthy, balanced lives.
Employee Benefits & Programs Plexus has a number of policies and benefits in place to support the unique needs and overall well-being of our team members and their families, including competitive health and welfare plans, a flexible workplace, paid parental leave and a Plexus wellness program to ensure our team members have access to the resources they need to lead healthy, balanced lives.
Our solutions are supported across our 28 facilities in the Americas ("AMER"), Asia-Pacific ("APAC") and Europe, Middle East and Africa ("EMEA") regions. Our Vision, Mission and Strategy Our vision is to help create the products that build a better world. Our mission is to be the leader in highly complex products and demanding regulatory environments.
Our Vision, Mission and Strategy Our vision is to help create the products that build a better world. Our mission is to be the leader in highly complex products and demanding regulatory environments.
To deliver on our strategy, we align our team members, operations, systems of oversight and financial metrics to create a high performance, accountable organization with an engaged workforce deeply passionate about driving growth through customer service excellence. Financial Model Our financial model aligns with our business strategy.
Built on a foundation of innovation, we are relentless in our pursuit of excellence, aligning our team members, operations, systems of oversight and financial metrics to create a high performance, accountable organization with an engaged workforce deeply passionate about helping to create the products that build a better world. Financial Model Our financial model aligns with our business strategy.
The cost variance from our competitors is especially evident relative to those that provide EMS services for high-volume, less complex products, with less stringent requirements (e.g., consumer electronics). Sustainability Our ability to build a better world goes beyond the products we help create. We also strive to build a better world through how we innovate and operate.
The cost variance from our competitors is especially evident relative to those that provide electronics manufacturing services for high-volume, less complex products, with less stringent requirements (e.g., consumer electronics).
We aspire that all of our teammates reach their full potential and we encourage them to simply, BE YOU!" Our strategy to enhance diversity at Plexus and to foster an inclusive culture includes the following: • D&I Committee and Board Oversight – To oversee strategic objectives and to ensure appropriate accountabilities exist to support our efforts, D&I is incorporated into our executive Sustainability Committee, made up of key members of executive management, including our Chief Executive Officer.
We aspire that all of our people reach their full potential." Our organizational approach to D&I at Plexus includes the following: • D&I Integration Plan – We have established defined actions aligned to value-driven outcomes as we further integrate diversity and inclusion into our strategy, business operations and culture. • D&I Committee and Board Oversight – To oversee strategic objectives and to ensure appropriate accountabilities exist to support our efforts, D&I is incorporated into our executive Sustainable & Responsible Business Practices Committee, made up of key members of executive management, including our Chief Executive Officer.
We discuss the causes, implications, and potential implications of these shortages more fully in "Risk Factors" in Part I, Item 1A herein. We also purchase non-electronic, typically custom engineered components such as molded/formed plastics, sheet metal fabrications, aluminum extrusions, robotics, motors, vision sensors, motion/actuation, fluidics, displays, die castings and various other hardware and fastener components.
We also purchase non-electronic, typically custom engineered components such as molded/formed plastics, sheet metal fabrications, aluminum extrusions, robotics, motors, vision sensors, motion/actuation, fluidics, displays, die castings and various other hardware and fastener components. These materials are sourced from Plexus' preferred suppliers and customer directed suppliers.
Plexus offers an array of services for customers in each market sector and, aside from the specific go-to-market teams, generally we do not dedicate operational equipment, personnel, facilities or other resources to particular market sectors, nor do we internally track our costs and resources per market sector.
Plexus offers an array of solutions for customers in each market sector and, aside from the specific go-to-market teams, generally we do not dedicate operational equipment, personnel, facilities or other resources to particular market sectors, nor do we internally track our costs and resources per market sector. 3 Table of Contents Go-to-Market Strategy Each market sector has a market sector vice president, as well as market sector senior director roles, who together oversee and provide leadership to business development and customer management teams, supply chain, engineering and manufacturing subject matter experts and market sector specialists.
Through our engineering development engagements and through the quoting of new business, Plexus can influence the selection of new product components, and therefore the selection of suppliers who outperform their peers. Amidst a highly dynamic set of supply markets, Plexus' global supply chain management organization works to mitigate potential risks and ensure a steady flow of components at competitive prices.
Amidst a highly dynamic set of supply markets, Plexus' global supply chain management organization works to mitigate potential risks and ensure a steady flow of materials at competitive prices.
Ingrained in our culture of inclusion is the philosophy that each individual offers diverse perspectives, backgrounds and experiences that create great outcomes when we are united as a team. We respect our people and embrace our differences. We welcome everyone and value the ideas generated by our collective uniqueness.
We have adopted the following D&I statement at Plexus, which is directly incorporated into our Code of Conduct: "Our people create our best Plexus. Ingrained in our culture of inclusion is the philosophy that each individual offers diverse perspectives, backgrounds and experiences that create great outcomes when we are united as a team.
More detailed information about Plexus’ sustainability efforts and progress can be found in that report located at https://www.plexus.com/en-us/corporate-social-responsibility. The information in the sustainability report and on Plexus’ website is not a part of this Annual Report on Form 10-K and is not incorporated by reference.
The information in the sustainability report and on Plexus’ website is not a part of this Annual Report on Form 10-K and is not incorporated by reference.
ITEM 1. BUSINESS Overview Plexus partners with companies to help create the products that build a better world. Our global team of nearly 25,000 individuals provides innovative solutions across the product lifecycle, specializing in the design, manufacture and service of highly complex products in demanding regulatory environments.
ITEM 1. BUSINESS Overview At Plexus, we help 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.
Our sales and marketing efforts focus on expanding our engagements with existing customers as well as targeting new customers. Customers and Market Sectors Served Plexus serves a diverse customer landscape that includes industry-leading, branded product companies, along with other technology pioneering start-ups and emerging companies that may or may not maintain manufacturing capabilities.
Plexus serves a diverse customer landscape that includes industry-leading, branded product companies, along with other technology pioneering start-ups and emerging companies that may or may not maintain manufacturing capabilities. During fiscal 2024, we served approximately 190 customers. No customer accounted for over 10% of our sales in fiscal 2024. GE Healthcare Technologies, Inc.
We believe our capabilities and our culture position us to support the complex technology and regulatory needs of the industries we serve and to provide customers with innovative and dependable manufacturing services. • Sustaining Services – Plexus Sustaining Services is committed to protecting our customers' brand reputation, supporting the success of each product in the marketplace and extending a product's end-of-life, while helping to minimize the impact of their products on the environment.
Our capabilities and our commitment to superior execution position us to support the complex technology and regulatory needs of the industries we serve, providing customers with dependable and flexible manufacturing solutions. • Sustaining Services – We are committed to protecting our customers' brand reputation, supporting the success of each product in the market and extending a product's useful life through repair, refurbishment, remanufacturing (at the direction of our customers) and service parts planning.
Plexus’ facilities are strategically located to support the global supply chain, engineering, manufacturing and sustaining service needs of customers in our targeted market sectors Go-to-Market Strategy We specialize in serving customers in the Healthcare/Life Sciences, Industrial and Aerospace/Defense market sectors.
Operations Plexus is a Wisconsin-headquartered corporation operating from 26 active facilities, totaling approximately 5.0 million square feet. Our facilities are strategically located to support the design, manufacturing and service needs of customers' global supply chains in our targeted market sectors. Customers and Market Sectors Served We specialize in serving customers in the Aerospace/Defense, Healthcare/Life Sciences, and Industrial market sectors.
Plexus offers a dedicated team focused on decreasing time to market with a full suite of integrated new product introduction services. Through early integration and collaboration, customers can take advantage of Plexus’ capabilities, such as design for excellence, specialized design of test solutions and rapid prototyping.
We have a dedicated team focused on decreasing time to market and transitioning products to full volume manufacturing, through a full suite of integrated new product introduction services, such as design for excellence, product lifecycle assessment, specialized design of test solutions and rapid prototyping. • Manufacturing – Our approach to manufacturing focuses on innovation, continuous improvement and superior quality and delivery.
This includes helping our customers design more environmentally sustainable products, assessing and deploying product life extension and part recovery strategies, and helping to enable a more responsible, sustainable supply chain.
We continue to expand our product lifecycle capabilities in response to this heightened focus, as we seek to design more environmentally sustainable products, improve our production practices, assess and deploy product life extension and part recovery strategies, and enable a more sustainable, responsible supply chain for our customers.
The group plays a key role in embodying the D&I mission at Plexus, and through its tenets of communication, cultural celebration and community outreach, creates impactful experiences across Plexus. ◦ Women in Network – Women in Network has a mission to champion the advancement of women in their professional and personal development through various career and life changes.
The network facilitates veteran outreach, camaraderie and mentorship opportunities around the veterans’ community. ◦ Plexus Women in Network – Plexus Women in Network has a mission to champion the advancement of women in their professional and personal development through various career and life changes.
Compliance with Laws and Regulations As a global public company that supports manufacturing, designing and servicing highly complex products in demanding regulatory environments, our operations are subject to a variety of laws, regulations and compliance obligations.
Refer to the discussion in "Cybersecurity" in Part I, Item 1C herein for details on our cybersecurity risk management strategy and governance. 9 Table of Contents Compliance with Laws and Regulations As a global public company that designs, manufactures and services highly complex products in demanding regulatory environments, our operations are subject to a variety of laws, regulations and compliance obligations.
These regulations are related to topics such as: monitoring, tracking and reporting of air and water emissions; tracking and disposing of wastes generated from our manufacturing process; and evaluating and mitigating employee health and safety hazards in our facilities. See "Risk Factors" in Part I, Item 1A, herein, for more detail around risks pertaining to compliance with laws and regulations.
These requirements are related to topics such as: monitoring, tracking and reporting of air and water emissions; tracking and disposing of wastes generated from our manufacturing process; and evaluating and mitigating employee health and safety risks in our facilities. 8 Table of Contents Sixteen of our 17 manufacturing facilities are certified to ISO 14001 Environmental Management and three of 17 are certified to ISO 45001 Occupational Health and Safety Management standards.
While our goal is to develop our own talent, we recruit new graduate and experienced talent by valuing potential and personality traits that align with our Values and Leadership Behaviors, as well as experience. Employee Engagement At every facility, in every organization and at all levels, we strive to continuously improve the engagement of our teammates.
We also have established a formal mentoring program that aids in the development and retention of 6 Table of Contents talent. While our goal is to develop our own talent, we recruit new graduate and experienced talent by valuing potential and personality traits that align with our values, as well as direct and transferable experiences.
Within each community where we have a physical location, we provide donations to local charities that enhance innovation, promote technology-related educational programs (STEM) and preserve the quality of life. Plexus also offers paid, volunteer time off for team members who want to give back at qualified organizations or community events.
Community involvement, volunteering and charitable giving are important to ensure we are investing and promoting positive impacts in the communities in which we operate and where our team members live. Within each community where we have a physical location, we provide donations to local charities that enhance innovation, promote technology-related educational programs (e.g., STEM) and preserve the quality of life.
These components are sourced from Plexus preferred suppliers and customer directed suppliers. Altogether, purchased components range from “off the shelf” to highly customized and vary widely in terms of market availability and price.
Altogether, purchased materials range from “off the shelf” to highly customized and vary widely in terms of market availability and price. Through our engineering product development engagements and through the quoting of new business, Plexus can influence the selection of new product materials, and therefore the selection of suppliers who outperform their peers.
We also realize in order to attract and retain talented individuals we must provide our team members the ability to do meaningful work, create memorable experiences beyond their role and continually grow through diverse and innovative engagements.
We also realize in order to attract and retain talented individuals we must provide our team members the ability to do meaningful work, personally and professionally develop, and create diverse and memorable experiences. 5 Table of Contents Purpose and Culture We recognize a great culture is foundational to the success of our vision to help create the products that build a better world.
Under certain circumstances, we will purchase components from independent distributors, customers or competitors. Many of these raw materials are unique to the designed assembly. By customer agreement, we purchase materials according to customer forecast and supplier lead-times.
Many of these raw materials are unique to the designed assembly. By customer agreement, we purchase materials according to customer forecast and supplier lead-times. The key electronic components we purchase include: advanced semiconductors, diodes, power management modules, microcontrollers, memory modules, interconnects, inductors, resistors, capacitors, power supplies and cable and wire.
We take a unique approach. Our supply chain experts engage in all of Plexus’ integrated solutions, working closely with our engineers to identify opportunities for supply chain optimization early in the design stage and 2 Table of Contents throughout the product lifecycle.
Our supply chain experts engage in all of Plexus’ integrated solutions to identify opportunities for supply chain optimization.
Our commitment to sustainable and responsible business practices is core to our strategy, integrated into our culture and foundational to the long-term success of our business. Our sustainability strategy and related goals reflect our commitment to addressing important social and environmental issues.
We are committed to elevating the standards of business conduct through the integration of sustainable and responsible business practices into our enduring strategy. This integrated approach and related goals enable us to address important environmental and social issues material to the long-term success of our business. This commitment is made public through our membership with organizations such as the U.N.
In addition, the Company has invested in D&I leadership training on the value of diversity and how best to foster an inclusive culture. • Gender & Underrepresented Minorities Recruitment Strategy – Our talent acquisition teams have a strategic initiative to widen the funnel of talent seeking to join Plexus.
Plexus supports further expansion and enhancement efforts of existing ERGs as well as employee-driven creation of new ERGs. 7 Table of Contents • Training – Plexus has invested in D&I leadership training on the value of diversity and how best to foster an inclusive culture, including trainings related to foundations of D&I, unconscious bias and hiring. • Broadening our Talent Pool – Our talent acquisition teams continuously seek to widen the funnel of talent seeking to join Plexus.
The program is advanced by a dedicated Plexus team that supports a transition to volume manufacturing. • Manufacturing – Our approach to manufacturing focuses on innovation, continuous improvement and superior quality and delivery. With a global footprint and scalable operations, we aim to tailor our manufacturing environment to meet each customer’s needs worldwide.
With a global footprint and scalable operations, we aim to tailor our manufacturing environment to meet each customer’s needs worldwide. As we strive for perfect delivery and zero defects, exceptional quality begins with each individual member of our team, which we advance through our Quality Begins with Me program.
We are committed to providing a workplace that respects the health and safety of all those who work, visit or are contracted to provide a service in our facilities.
We maintain a method of evaluating environmental, health and safety ("EHS") performance for continual improvement and we are committed to providing a workplace that promotes the health and safety of all who walk through our doors.
In addition to local impacts realized through our Employee Resource Groups (“ERGs”) and team member volunteer efforts, the Plexus Charitable Foundation donated over $1.0 million in fiscal 2023, bringing its total giving to $9.9 million since 2004. We also are committed to driving greater transparency around our sustainability efforts and we published our inaugural Sustainability Report in fiscal 2023.
Plexus also offers eight hours of paid, volunteer time off for team members who want to give back through community engagement events. In addition to local impacts realized through our team member volunteer efforts, the Plexus Community Foundation donated nearly $1.1 million in fiscal 2024, bringing its total giving to $11.0 million since 2004.
From influencing a product design, which creates early access for lifecycle extension services and repair, to spare parts management and distribution, depot repair and refurbishment services, our Sustaining Services offers a full range of capabilities in all regions in which we operate.
From influencing a product's design for serviceability, which creates early access for lifecycle extension services and repair, to aftermarket and end-of-life treatment, such as spare parts management, depot repair and part recovery services, we take a proactive and circular approach to service to help keep products in the market.
Other than certain test equipment, manufacturing equipment and software used for internal operations, we do not design or manufacture our own proprietary products. Operations Plexus is a Wisconsin-headquartered corporation operating from 28 active facilities, totaling approximately 5.1 million square feet.
We provide select solutions on a consignment basis, meaning our customers supply the necessary materials, while Plexus provides the labor and other services required for product assembly. Other than certain test equipment, manufacturing equipment and software used for internal operations, we do not design or manufacture our own proprietary products.
Purpose and Culture We recognize a great culture is foundational to the success of our vision to create the products that build a better world. We are proud of our culture and the recognition we have received over the years as a great place to work.
We are proud of our culture and the recognition we have received over the years as a great place to work. In 2024, HR Asia awarded Plexus the Best Company to Work for in Asia (Malaysia Chapter), as well as the HR Asia Diversity, Equity, & Inclusion Award.
Economic, business or regulatory conditions that affect the sector, larger relative net sales associated with a certain sector or our failure to choose to do business in appropriate subsectors, can particularly impact us. Materials and Suppliers We typically purchase raw materials, including printed circuit boards and electronic components, from a wide variety of manufacturers and their authorized distributors.
Our sales and marketing efforts focus on expanding our engagements with existing customers as well as targeting new customers. Materials and Suppliers We typically purchase raw materials, including printed circuit boards and electronic components, from a wide variety of manufacturers and their authorized distributors. Under certain circumstances, we will purchase materials from independent distributors, customers or competitors.
Human Capital Management We are driven to differentiate Plexus with our talent and by our culture. How we manage our human capital is critical to how we deliver on our strategy and create sustained growth and value for our shareholders.
Human Capital Management People are the heart of what we do and who we are. How we engage and empower our team members is critical to how we deliver value and create sustained growth for our shareholders. We realize our success depends on the well-being and inclusive engagement of each individual on our team.
The network facilitates veteran outreach, camaraderie and mentorship opportunities around the veterans’ community. ◦ Plexus Young Professionals – Plexus Young Professionals focuses on creating an environment that fosters collaboration and development for the young professionals at Plexus.
This ERG aims to contribute to more women in elevated roles and increased diversity in leadership positions across Plexus. ◦ Plexus Young Professionals – Plexus Young Professionals focuses on creating an environment that fosters collaboration and development for the young professionals at Plexus.
We are committed to strengthening our capabilities as it relates to sustainable product design, including the ability to assess the global warming potential of a product based on its design and bill of materials and embedding eco-design principles into standard work. • Supply Chain Solutions – Delivering an optimal supply chain solution is more than simply getting a product where it needs to be on time.
The breadth of our capabilities across the product lifecycle enables us to integrate supply chain, manufacturing and service expertise into our designs, resulting in products developed with the full product lifecycle in mind. • Supply Chain Solutions – Delivering an optimal supply chain strategy is more than simply getting a product where it needs to be on time.
This ERG aims to contribute to more women in elevated roles and increased diversity in leadership positions across Plexus. These groups are directly supported by executive-level leadership and management engages regularly in support of ERG programming.
The group plays a key role in embodying the D&I mission at Plexus, and through its tenets of communication, cultural celebration and community outreach, creates impactful experiences across Plexus. These groups are directly supported by executive-level leadership and management engages regularly in support of ERG programming.
Paired with our optimized and integrated global supply chain, we help our customers solve complex product challenges through a broad array of differentiated services—from product development and new product introduction through volume manufacturing, service and end-of-life. We provide these solutions to market-leading as well as disruptive global companies in the Healthcare/Life Sciences, Industrial and Aerospace/Defense sectors.
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.
For our team members, this includes access to our Employee Assistance Program ("EAP"), or similar program depending on country. • Community Involvement & Volunteerism – Community involvement, volunteering and charitable giving are important to ensure we are investing and promoting positive impacts in the communities in which we operate and where our team members live.
For our team members, this includes access to our Employee Assistance Program ("EAP") - or similar program depending on the country of employment - that provides confidential support for stress management and mental health, including counseling and resources for team members and their households.
Plexus takes an adaptive and proactive approach to ensure we conduct all of our operations across the globe safely and responsibly and we maintain a method of evaluating environmental, health and safety performance for continual improvement. This includes setting and reviewing environmental, health and safety goals.
Worker Health and Safety Protecting our team and those within our communities is paramount as we strive to be the safest place for our team members outside of their home. We are committed to complying with applicable laws and take an adaptive and proactive approach to ensure we conduct all of our operations across the globe safely and responsibly.
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As we strive for zero defects, we empower all team members with the knowledge that exceptional quality begins with each individual member of our team.
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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.
Removed
We provide select services on a consignment basis, meaning the customer supplies the necessary materials and Plexus provides the labor and other services required for product assembly. In addition to manufacturing, turnkey service requires material procurement and warehousing and involves greater resource investments than consignment services.
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We believe that in most cases our sales to any one such division, subsidiary, facility or location are independent of sales to others.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeFurther, the services we provide to our customers continue to expand to encompass full product development, commercialization, production, and sustaining services, including support of sustainability-related efforts and regulatory compliance programs. As we assume more responsibility across the product lifecycle, our customers’ expectations may extend beyond what has historically been expected of electronics manufacturing service providers.
Biggest changeAs we assume more responsibility across the product lifecycle, our customers’ expectations have and may continue to extend beyond what has historically been expected of electronics manufacturing service providers, such as expectations related to environmental sustainability and heightened regulatory compliance support, including as it relates to product composition such as the Restrictions on Hazardous Substances ("RoHS") 2011/65/EU directive, the Registration, Evaluation, Authorization and restriction of Chemicals ("REACh") EC 1907/2006 EU directive, and emerging regulations pertaining to per- and polyfluoroalkyl substances ("PFAS").
In addition, the implementation of U.S. Tax Reform has required the use of estimates, which may be refined in future periods. All incentives, including a tax holiday granted to our Malaysian subsidiary, are subject to certain terms and conditions, which could be unfavorably altered by the local taxing authorities, changes to U.S. tax policy.
In addition, the implementation of U.S. Tax Reform has required the use of estimates, which may be refined in future periods. All incentives, including a tax holiday granted to our Malaysian subsidiary, are subject to certain terms and conditions, which could be unfavorably altered by the local taxing authorities or changes to U.S. tax policy.
These factors can negatively affect our operating results and financial position, including reducing our revenues and profitability as a result of having to minimize engagements in China or requiring us to shift such production or the sourcing of components to potentially other higher-cost locations.
These factors can negatively affect our operating results and financial position, including reducing our revenues and profitability as a result of having to minimize engagements in China, requiring us to shift such production to other potentially higher-cost locations, or increasing the cost of sourcing components.
This could in turn put pressure on our manufacturing costs and result in reduced profit margin associated with certain of our customer programs, or loss of customer programs that we may not be able to replace.
This could in turn put pressure on our costs and result in reduced profit margin associated with certain of our customer programs, or loss of customer programs that we may not be able to replace.
Natural disasters including weather events caused by global climate change, breaches of security and other events outside our control, and the ineffective management of such events, may harm our business. Some of our facilities are located in areas that may be impacted by natural disasters including tornadoes, hurricanes, earthquakes, water shortages, tsunamis or floods.
Physical risks, including natural disasters and weather events caused by global climate change, breaches of physical security and other events outside our control, and the ineffective management of such events, may harm our business. Some of our facilities are located in areas that may be impacted by natural disasters including tornadoes, hurricanes, earthquakes, water shortages, tsunamis or floods.
Furthermore, any additional financing may have terms and conditions that adversely affect our business, such as restrictive financial or operating covenants, and our ability to meet any current or future financing covenants will largely depend on our financial performance, which in turn will be subject to general economic conditions and financial, business and other factors.
Furthermore, any additional financing may have terms and conditions that adversely affect our business, such as restrictive financial or operating covenants, and our ability to meet any current or future financing covenants will largely depend on our financial performance, which in turn will be subject to general economic conditions and financial, business and other factors. ITEM 1B.
Customers also cancel, change or delay design, production or sustaining services demand and schedules, or fail to meet their forecasts for a number of reasons beyond our control. Customer expectations can change rapidly, requiring us to take on additional commitments or risks. In addition, customers may fail to meet their commitments to us or our expectations.
Customers also cancel, change or delay design, manufacturing or sustaining services demand and schedules, or fail to meet their forecasts for a number of reasons beyond our control. Customer expectations can change rapidly, requiring us to take on additional commitments or risks. In addition, customers may fail to meet their commitments to us or our expectations.
In addition, we make significant decisions based on our estimates of customers’ demand, including determining the levels of business that we will seek and accept, production schedules, component procurement commitments, working capital management, facility and capacity requirements, personnel needs and other resource requirements.
In addition, we make significant decisions based on our estimates of customers’ demand, including determining the levels of business that we will seek and accept, production schedules, component procurement commitments, working capital management, facility and capacity requirements, facility footprint planning, personnel needs and other resource requirements.
Misuse of or failure to secure personal information could also result in violation of data privacy laws and regulations, proceedings against us by governmental entities or others, fines and penalties, damage to our reputation and credibility and could have a negative impact on our business and results of operations.
Misuse of or failure to protect personal information could also result in violation of data privacy laws and regulations, proceedings against us by governmental entities or others, fines and penalties, damage to our reputation and credibility and could have a negative impact on our business and results of operations.
Government-imposed restrictions on where we or our customers can produce certain types of products or source components or with whom we can conduct business, such as named companies or industries identified in the 2021 National Defense Authorization Act, outbound investment restrictions, and recent export regulations limiting advanced semiconductors and chip-manufacturing equipment, could limit our ability to sell or manufacture products or services in China, or source components from certain companies or geographies.
Government-imposed restrictions on where we or our customers can produce certain types of products or source components or with whom we can conduct business, such as named companies or industries identified in the 2021 National Defense Authorization Act, outbound investment restrictions, and trade regulations limiting advanced semiconductors and chip-manufacturing equipment, could limit our ability to sell or manufacture products or services in China, or source components from certain companies or geographies.
These potential claims may be initiated through various means, such as our contractual commitments, strict liability or other claims raised by third parties, and may include damages for the recall of a product, injury to person(s) or property, or other penalties.
These potential claims may be initiated through various means, such as our contractual commitments, strict liability or other claims raised by third parties, and may include damages for the recall of a product, injury to person(s) or property, or other theories of liability.
These international aspects of our operations, which are likely to increase over time, including with any introduction of facilities in new locations, subject us to risks that could materially impact our operations and operating results, such as the following: • economic, political or civil instability • civil or international conflicts and war, including the risk of escalation in the Russia-Ukraine war, conflict in the Middle East, escalating tensions between China and Taiwan as well as China and the U.S. • transportation delays or interruptions • exchange rate fluctuations • potential disruptions or restrictions on our ability to access cash amounts held outside of the U.S. • changes in labor markets, such as government-mandated wage increases (which we are experiencing in Malaysia and Romania), increases to minimum wage requirements, changes in union-related laws, regulations or practices, limitations on immigration or the free movement of labor or restrictions on the use of migrant workers, and difficulties in appropriately staffing and managing personnel in diverse cultures • customers shifting parts of their manufacturing and supply chains to different countries, including re-shoring, which may impact footprint needs and create operational disruption due to transition efforts • compliance with laws, such as the U.S.
These international aspects of our operations, which are likely to increase over time, including with any introduction of facilities in new locations, subject us to risks that could materially impact our operations and operating results, such as the following: • economic, political or civil instability • civil or international conflicts and war, including the risk of escalation in the Russia-Ukraine war, conflict in the Middle East, escalating tensions between China and Taiwan as well as China and the U.S. • transportation delays or interruptions • exchange rate fluctuations • potential disruptions or restrictions on our ability to access cash amounts held outside of the U.S. • changes in labor markets, such as government-mandated wage increases, increases to minimum wage requirements, changes in union-related laws, regulations or practices, limitations on immigration or the free movement of labor or restrictions on the use of migrant workers, and difficulties in appropriately staffing and managing personnel in diverse cultures and increased public scrutiny on labor practices • customers shifting parts of their manufacturing and supply chains to different countries, including re-shoring, which may impact footprint needs and create operational disruption due to transition efforts • compliance with laws, such as the U.S.
These actions could also affect the cost and/or availability of upstream source materials or components that we procure from suppliers in China, as well as create disruptions, delays, shortages or increased costs within our global supply chain.
These actions could also affect the cost and/or availability of materials or components that we procure from suppliers in China, as well as create disruptions, delays, shortages or increased costs within our global supply chain.
Bribery Act and the European Union’s General Data Protection Regulation (the “GDPR”), applicable to companies with global operations • changing U.S. government export regulations, particularly relating to advanced semiconductors and chip-manufacturing equipment, may limit the ability to ship certain components or product to customers in China, and source the components necessary to manufacture customer product in China • changes in the taxation of earnings in the U.S. and in other countries • reputational risks related to, among other factors, varying standards and practices among countries • changes in duty rates • significant natural disasters and other events or factors impacting local infrastructure • the effects of other international political developments, such as tariffs, embargoes, sanctions, boycotts, trade wars, energy disruptions, trade agreements and changes in trade policies, including those which may be affected by the U.S. and other countries’ political reactions to those actions, and • other regulatory and legal requirements and industry standards, and changes thereto.
Bribery Act and the European Union’s (EU's) General Data Protection Regulation (the “GDPR”), applicable to companies with global operations • changing global trade regulations, particularly relating to advanced semiconductors and chip-manufacturing equipment, which may limit the ability to ship certain components or product to customers in China, support certain programs in our China operations, and source the components necessary to manufacture customer product in China • changes in the taxation of earnings in the U.S. and in other countries • reputational risks related to, among other factors, varying standards and practices among countries • changes in duty rates • significant natural disasters and other events or factors impacting local infrastructure • the effects of other international political developments, such as tariffs, embargoes, sanctions, boycotts, trade wars, energy disruptions, trade agreements and changes in trade policies, including those which may be affected by the U.S. and other countries’ political reactions to those actions, and • other regulatory and legal requirements and industry standards, and changes thereto.
Additionally, continued uncertainty regarding commercial dealings, tariffs, export regulations and other trade protection measures between the U.S. and China, heightened by escalating geopolitical tensions, may affect our ability to do business in China, may impact the cost of our products originating in China and may impact the demand for our products manufactured in 14 Table of Contents China in the event our customers reduce or eliminate their operations in China.
Additionally, continued uncertainty regarding commercial dealings, tariffs, export regulations and other trade protection measures between the U.S. and China, heightened by escalating geopolitical tensions, may affect our ability to do business in China, may impact the cost of our products originating in China and may impact the demand for our products manufactured in China in the event our customers reduce or eliminate their operations in China.
While many of our customers permit quarterly or other periodic adjustments to pricing based on changes in component prices and other factors, we may bear the risk of price increases that occur between any such repricing or, if such repricing is not permitted, during the balance of the term of the particular customer contract.
While many of our customers permit quarterly or other periodic adjustments to pricing based on changes in component prices and other factors, we have in the past and may continue to bear the risk of price increases that occur between any such repricing or, if such repricing is not permitted, during the balance of the term of the particular customer contract.
A failure to adequately understand unique customer requirements may also impact our ability to estimate and ultimately recover associated costs, adversely affecting our financial results. Many of our customers' markets are characterized by rapidly changing technology and evolving process developments. Our internal processes are also subject to these factors.
A failure to adequately understand unique customer requirements may also impact our ability to estimate and ultimately recover associated costs, adversely affecting our financial results. 17 Table of Contents Many of our customers' markets are characterized by rapidly changing technology and evolving process developments. Our internal processes are also subject to these factors.
Component supply shortages and delays in deliveries, along with other factors such as tariffs, trade disputes or embargos, inflation, and rising energy and transportation costs, can also result in increased pricing.
Component supply shortages and delays in deliveries, along with other factors such as tariffs, trade disputes or embargoes, inflation, and rising energy and transportation costs, can also result in increased pricing.
This risk continues to be heightened by potential volatility in end-market demand for our customers' products or our services as a result of external factors such as the current inflationary environment, supply chain constraints, global conflicts, regulatory change and general economic uncertainty.
This risk continues to be heightened by potential volatility in end-market demand for our customers' products or our services as a result of external factors such as the current inflationary environment, global conflicts, regulatory change and general economic uncertainty.
These factors include: • customers’ ability or inability to adapt to rapidly changing technologies and evolving industry standards that can result in short product life-cycles or product obsolescence • customers’ ability or inability to develop and market their products, some of which are new and untested • the potential failure of our customers’ products to gain widespread commercial acceptance, and • the availability of the components required to manufacture and service our customers' products.
These factors include: • customers’ ability or inability to adapt to rapidly changing technologies, such as artificial intelligence, and evolving industry standards that can result in short product life-cycles or product obsolescence • customers’ ability or inability to develop and market their products, some of which are new and untested • the potential failure of our customers’ products to gain widespread commercial acceptance, and • the availability of the components required to manufacture and service our customers' products.
These transition risks could negatively impact our financial condition and results of operations including by means of carbon pricing mechanisms, investments in lower greenhouse gas emissions technology, increased cost of raw materials and mandates on and regulation of existing products and services.
These transition risks could negatively impact our financial condition and results of operations including 20 Table of Contents by means of carbon pricing mechanisms, investments in lower greenhouse gas emissions technology, increased cost of raw materials and mandates on and regulation of existing products and services.
In addition, these repricing or pricing recoveries have been and may continue to be dilutive to our operating margin. Conversely, as a result of our pricing strategies and practices, component price reductions have contributed positively to our operating results in the past.
In addition, these repricing or pricing recoveries have been 15 Table of Contents and may continue to be dilutive to our operating margin. Conversely, as a result of our pricing strategies and practices, component price reductions have contributed positively to our operating results in the past.
Due to the intellectual property we maintain on our systems related to high technology components, sub-components, manufacturing processes and our customers’ products, we are a likely target from various external cyber threats, such as lone attackers, nation 17 Table of Contents states seeking to gain access to such intellectual property, as well as both unintentional and malicious internal threats.
Due to the intellectual property we maintain on our systems related to high technology components, sub-components, manufacturing processes and our customers’ products, we are a likely target from various external cyber threats, such as lone attackers, nation states seeking to gain access to such intellectual property, as well as both unintentional and malicious internal threats.
In addition, developments affecting particular countries can adversely affect our ability to access cash or other assets held in such countries. A significant portion of our operations is currently located in the APAC region, particularly in Malaysia.
In addition, developments affecting particular countries can adversely affect our ability to access cash or other assets held in such countries. 14 Table of Contents A significant portion of our operations is currently located in the APAC region, particularly in Malaysia.
A failure to foster a strong, healthy culture, or a failure to adopt or maintain policies and practices that enhance our workplace culture or competitiveness, such as those related to diversity and inclusion, workplace 19 Table of Contents flexibility or other employee benefits, could adversely impact our ability to attract, develop and retain personnel and could substantially affect our operations and financial results.
A failure to foster a strong, healthy culture, or a failure to adopt or maintain policies and practices that enhance our workplace culture or competitiveness, such as those related to diversity and inclusion, workplace flexibility or other employee benefits, could adversely impact our ability to attract, develop and retain personnel and could substantially affect our operations and financial results.
From time to time, there are changes and developments, such as retirements, promotions, transitions, disability, death and other terminations of service, that affect our executive officers and other key employees, including those that are unexpected.
From time to time, there are changes and developments, such as retirements, promotions, transitions, disability, death and other terminations of service, that affect our executive officers and other key employees, including those that are unexpected or occur simultaneously.
We occasionally incur costs defending claims, we may be unsuccessful in defending against claims and incur financial liabilities, and any such disputes could adversely affect our business relationships. 18 Table of Contents A failure to comply with customer-driven policies and standards, and third-party certification requirements or standards could adversely affect our business and reputation.
We occasionally incur costs defending claims, we may be unsuccessful in defending against claims and incur financial liabilities, and any such disputes could adversely affect our business relationships. A failure to comply with customer-driven policies and standards, and third-party certification requirements or standards could adversely affect our business and reputation.
In addition, we may expand our operations in new geographical areas where currently we do not operate. If we are unable to effectively manage this or other expansions or consolidations, or related anticipated net sales are not realized, our operating results could be adversely affected.
In addition, we may expand our operations in new geographical areas where currently we do not operate. If we are unable to effectively manage this or other expansions or consolidations, or 21 Table of Contents related anticipated net sales are not realized, our operating results could be adversely affected.
Whether or not we are responsible, problems in the products we manufacture, whether real or alleged, whether caused by faulty customer specifications, product design, manufacturing processes, servicing, a component defect or otherwise, may result in delayed shipments to customers or reduced or canceled customer orders.
Whether or not we are responsible, problems in the products we create, whether real or alleged, whether caused by faulty customer specifications, product design, manufacturing processes, servicing, a component defect or otherwise, may result in delayed shipments to customers or reduced or canceled customer orders or liability claims.
Securities and Exchange Commission ("SEC") regulations relating to climate change disclosure. A failure to adequately meet stakeholder expectations and reporting requirements may result in noncompliance with any imposed regulations, the loss of business, reputational impacts, an inability to attract and retain customers, and an inability to attract and retain talent.
Securities and Exchange Commission ("SEC") climate rules. A failure to adequately meet stakeholder expectations and reporting requirements may result in noncompliance with any imposed regulations, the loss of business, reputational impacts, an inability to attract and retain customers, and an inability to attract and retain talent.
Such suppliers may encounter quality problems, labor disputes or shortages, financial difficulties or business continuity issues that could preclude them from delivering components timely or at all. Supply shortages and delays in deliveries of components may result in delayed production of assemblies, which reduces our revenue and operating profit for the periods affected.
Such suppliers may encounter quality problems, labor disputes or shortages, financial difficulties or business continuity issues that could preclude them from delivering components timely or at all. Supply shortages and delays in deliveries of components may result in delayed manufacturing or servicing of products, which reduces our revenue and operating profit for the periods affected.
Our business model requires working capital, management and technical personnel, and the development and maintenance of systems and procedures to manage diverse manufacturing, regulatory and service requirements for multiple programs of varying sizes simultaneously, including in multiple locations and geographies.
Our business model requires working capital, management and technical personnel, and the development and maintenance of systems and procedures to manage diverse design, manufacturing, regulatory and sustaining services requirements for multiple programs of varying sizes simultaneously, including in multiple locations and geographies.
Supply chain constraints and delays can be caused by world events, such as government policies, tariffs, trade wars, trade disputes and trade protection measures, terrorism, armed conflict, natural disasters, economic recession, increased demand due to economic growth, preferential allocations, transportation challenges, and other localized events.
Supply chain constraints and delays can be caused by world events, such as government policies, tariffs, trade wars, trade disputes and trade protection measures, terrorism, armed conflict, natural disasters, natural resource availability, economic recession, increased demand due to economic growth or technological advancements, preferential allocations, transportation challenges, and other localized events.
Evolving expectations on environmental, social and governance ("ESG") matters, including global climate change, by various stakeholders could negatively affect our business. Customer, investor and employee expectations relating to ESG have been rapidly evolving and increasing. In addition, government organizations are enhancing or advancing legal and regulatory requirements specific to ESG matters.
Evolving expectations on environmental, social and governance ("ESG") matters, including global climate change, by various stakeholders could negatively affect our business. Customer, investor and employee expectations relating to ESG have been rapidly evolving and increasing. In addition, governmental and non-governmental organizations are enhancing or advancing requirements specific to ESG matters.
Monitoring employee engagement and maintaining a healthy workplace culture based on our values and leadership behaviors is important to developing these good relationships and retaining a committed workforce.
Monitoring employee engagement and maintaining a healthy workplace culture based on our core values is important to developing these good relationships and retaining a committed workforce.
Our competitors may: • respond more quickly than us to new or emerging technologies • be faster to develop new business models or otherwise adapt to evolving customer requirements and needs • have greater name recognition, critical mass and geographic and market presence • be better able to identify and take advantage of acquisition opportunities • have lower internal cost structures • have greater direct buying power with component suppliers and distributors • devote greater resources to the development, promotion and sale of their services and execution of their strategy • be better positioned to compete on price for their services • have technological expertise, capabilities and/or resources that are greater than ours • have excess capacity, and be better able to utilize such excess capacity • be better positioned to add additional resources, and • be willing or able to make sales or provide services at lower margins than we do.
Our competitors may: • respond more quickly than us to advancements in technology, such as artificial intelligence • be faster to develop new business models or otherwise adapt to evolving customer requirements and expectations • have greater name recognition, critical mass and geographic and market presence generally or within specific technologies or subsectors • be better able to identify and take advantage of acquisition opportunities • have lower internal cost structures • have greater direct buying power with component suppliers and distributors • devote greater resources to the development, promotion and sale of their services and execution of their strategy • be better positioned to compete on price for their services • have technological expertise, capabilities and/or resources that are greater than ours • have excess capacity, and be better able to utilize such excess capacity • be better positioned to add additional resources, and • be willing or able to make sales or provide services at lower margins than we do.
We anticipate this will materially and unfavorably impact our existing tax holidays and effective tax rate although to what extent is difficult to estimate without final rules and regulations. As of September 30, 2023, we currently expect those impacts to begin in our fiscal 2025, increase in fiscal 2026, and carry forward.
We anticipate this will materially and unfavorably impact our existing tax holidays and effective tax rate although to what extent is difficult to estimate without final rules and regulations. As of September 28, 2024, we expect those impacts to begin in fiscal 2026 and carry forward.
While we expect to comply with these conditions, we would experience adverse tax consequences if we are found to not be in compliance. A global minimum tax has been, or is anticipated to be, implemented in many of the countries in which Plexus operates.
We would experience adverse tax consequences if we are found to not be in compliance. A global minimum tax has been, or is anticipated to be, implemented in many of the countries in which Plexus operates.
This risk is enhanced as a result of an increase in our remote workforce due to evolving flexible workplace practices, for example by reason of utilizing home networks that may lack encryption or secure password protection, virtual meeting/conference security concerns and an increase of phishing/cyberattacks around our remote workforce's digital resources.
This risk is enhanced as a result of the increasing sophistication of threat actors, including through the use of artificial intelligence, and an increase in our remote workforce due to evolving flexible workplace practices, for example by reason of utilizing home networks that may lack encryption or secure password protection, virtual meeting/conference security concerns and an increase of phishing/cyberattacks around our remote workforce's digital resources.
In addition, transition to low-carbon alternatives could result in reduced demand or product obsolescence for certain of our customers’ products and/or price modifications for our customers’ products and the resources needed to produce them.
In addition, the economic and market uncertainty created by transitioning to low-carbon alternatives could result in reduced demand or product obsolescence for certain of our customers’ products and/or price modifications for our customers’ products and the resources needed to produce them.
These dynamics increase the risks inherent in those engagements. Despite our quality control and quality assurance efforts, problems may occur, or may be alleged, in the design, manufacturing or servicing of products.
These dynamics increase the risks inherent in those engagements. Despite our quality control and quality assurance efforts, problems may occur, or may be alleged, in the execution of these services.
This includes regulations and standards relating to labor and employment practices, workplace health and safety, manufacturing practices and quality systems, the environment, sourcing and import/export practices, data privacy and protection, ethics, financial reporting, the market sectors we support and many other facets of our operations.
This includes regulations and standards relating to labor and employment practices, workplace health and safety, operating practices and quality systems, the environment, sourcing and global trade practices, usage of emerging technologies, data privacy and protection, ethics, financial reporting, the market sectors we support and many other facets of our operations.
The regulatory climate in the U.S. and other countries has become increasingly complex and fragmented, and regulatory enforcement activity has increased in recent periods. Regulatory changes and restrictions can be announced with little or no advance notice.
The regulatory climate in the U.S. and other countries has become increasingly complex and fragmented, and regulatory enforcement activity has increased in recent periods. Rulings of the U.S. Supreme Court and other courts may affect the regulatory environment. Regulatory changes and restrictions can be announced with little or no advance notice.
When we make decisions to reduce capacity or to close facilities, we frequently incur restructuring costs. 21 Table of Contents In addition, to meet our customers' needs, particularly when the production requirements of certain products are site-specific, to achieve increased efficiencies or to address factors affecting specific locations, such as tariffs and trade disputes, we sometimes require additional capacity in one location while reducing capacity in another.
In addition, to meet our customers' needs, particularly when the production requirements of certain products are site-specific, to achieve increased efficiencies or to address factors affecting specific locations, such as tariffs and trade disputes, we sometimes require additional capacity in one location while reducing capacity in another.
Persistent inflation, especially in Europe and the U.S., has led central banks to rapidly raise interest rates throughout fiscal year 22 Table of Contents 2023 to dampen inflation. These increases in interest rates will directly impact the amount of interest we pay on our variable rate obligations and continued or sustained increases in interest rates could negatively impact our business.
Persistent inflation, especially in Europe and the U.S., has led central banks to hold higher interest rates throughout fiscal 2024 to dampen inflation. These interest rates directly impact the amount of interest we pay on our variable rate obligations and continued or sustained increases in interest rates could negatively impact our business.
In recent years, ramping new programs has been a key contributor to our revenue growth. The management of resources in connection with the establishment of new or recent programs and customer relationships and the need to estimate required resources in advance of production can adversely affect our gross and operating margins and level of working capital.
The management of resources in connection with the establishment of new or recent programs and customer relationships and the need to estimate required resources in advance of production can adversely affect our gross and operating margins and level of working capital.
In addition, we must comply with increasingly complex and rigorous regulatory standards enacted to protect business and personal data in the U.S. and elsewhere. For example, GDPR and similar legislation in jurisdictions in which we operate impose additional obligations on companies regarding the handling of personal data and provide certain individual privacy rights to persons whose data is stored.
In addition, we must comply with increasingly complex and rigorous regulatory standards enacted to protect business and personal data, globally. GDPR and similar legislation in jurisdictions in which we operate continue to evolve imposing additional obligations on companies regarding the handling and protection of personal data and provide certain individual privacy rights to persons whose data is processed and stored.
The sustained success of our business will depend upon our continued ability to: • attract and retain qualified engineering and technical personnel, especially in times of tight labor markets • choose, maintain and enhance appropriate technological and service capabilities • successfully manage the implementation and execution of information systems • develop and market services that meet changing customer needs • effectively and efficiently execute our services and perform to our customers’ expectations, and • successfully anticipate, or respond to, technological changes on a cost-effective and timely basis. 16 Table of Contents Although we believe that our operations utilize the technologies, equipment and processes that are currently required by our customers, we cannot be certain that we will maintain or develop the capabilities required by our customers in the future.
The sustained success of our business will depend upon our continued ability to: • attract and retain qualified engineering and technical personnel, especially in times of tight labor markets • choose, maintain and enhance appropriate technological and service capabilities • successfully manage the implementation and execution of information systems • develop and market services that meet changing customer needs • effectively and efficiently execute our services and perform to our customers’ expectations, and • successfully anticipate, or respond to, technological changes on a cost-effective and timely basis.
If unauthorized persons gain physical access to our facilities, or our physical assets or information are stolen, damaged or used in an unauthorized manner (whether through outside theft or industrial espionage), we could be subject to, among other consequences, interruption in our operations, negative publicity, governmental inquiry and oversight, loss of government contracts, litigation by affected parties or other future financial obligations related to the loss, misuse or theft of our or our customers’ data, inventory or physical assets, any of which could have a material adverse effect on our reputation and results of operations.
If unauthorized persons gain physical access to our facilities, or our physical assets or information are stolen, damaged or used in an unauthorized manner (whether through outside theft or industrial espionage), we could be subject to, among other consequences, interruption in our operations, negative publicity, governmental inquiry and oversight, loss of government contracts, litigation by affected parties or other future financial obligations related to the loss, misuse or theft of our or our customers’ data, inventory or physical assets, any of which could have a material adverse effect on our reputation and results of operations. 18 Table of Contents There may be problems with the products we design, manufacture or service that could result in liability claims against us, reduced demand for our services and damage to our reputation.
Our 10 largest customers accounted for 49.6% and 56.2% of our net sales in fiscal 2023 and 2022, respectively. During each of these periods there was one customer that represented 10.0% or more of our net sales.
Our 10 largest customers accounted for 47.8% and 49.6% of our net sales in fiscal 2024 and 2023, respectively. During fiscal 2023, there was one customer that represented 10.0% or more of our net sales.
Moreover, we are subject to increasing expectations an d data security requirements from our customers, generally, as well as specific data handling requirements due to the nature of their end products, including those related to the Export Administration Regulations/International Traffic in Arms, Federal Acquisition Regulation, Defense Federal Acquisition Regulation Supplement and Cybersecurity Maturity Model Certification .
Moreover, we are subject to increasing data privacy, handling, and protection requirements and customer expectations due to the nature of their end products, including those related to the Export Administration Regulations, International Traffic in Arms Regulation, Federal Acquisition Regulation, Defense Federal Acquisition Regulation Supplement and Cybersecurity Maturity Model Certification .
Rapid decreases in customer demand may result in operational inefficiencies and excess inventory, which could harm our gross profit margins and results of operations. The need for us to correctly anticipate component needs is amplified in times of shortages.
Rapid decreases in customer demand may result in operational inefficiencies and excess inventory, which could harm our gross profit margins and results of operations. The need for us to correctly anticipate component needs is amplified in times of shortages. A tight component supply and other factors discussed above, can increase the difficulties and cost of anticipating changing demand.
If we make the decision to proceed, we need to ensure that our terms of engagement, including our pricing and other contractual provisions, appropriately reflect the strategic nature of the customer, anticipated costs, risks and rewards.
If we make the decision to proceed, we need to ensure that our terms of engagement, including our pricing and other contractual provisions, appropriately reflect the strategic nature of the customer, anticipated costs, risks and rewards. The failure to make prudent engagement decisions or to establish appropriate terms of engagement could adversely affect our profitability and margins.
Given the scope of our international operations and the fluid and uncertain nature of how the BEPS project might ultimately lead to future legislation, it is difficult to assess how any changes in tax laws would impact our income tax expense.
The BEPS project is challenging longstanding international tax norms regarding the taxation of profits from cross-border business. 22 Table of Contents Given the scope of our international operations and the fluid and uncertain nature of how the BEPS project might ultimately lead to future legislation, it is difficult to assess how any changes in tax laws would impact our income tax expense.
They also include strategic risks such as the diversion of management time and attention from other business activities and opportunities and financial risks such as the use of cash or incurrence of additional debt and interest expense as consideration for the acquisition and to fund the activities required to pursue acquisitions, the potential volatility or weakness in our stock price as a result of the announcement of such transactions, the incurrence of large write-offs or write-downs as a result of the acquisition and other potential financial impacts. 13 Table of Contents Risks impacting our Superior Execution Plexus is a multinational corporation and operating in multiple countries exposes us to increased risks, including adverse local developments and currency risks.
They also include strategic risks such as the diversion of management time and attention from other business activities and opportunities and financial risks such as the use of cash or incurrence of additional debt and interest expense as consideration for the acquisition and to fund the activities required to pursue acquisitions, the potential volatility or weakness in our stock price as a result of the announcement of such transactions, the incurrence of large write-offs or write-downs as a result of the acquisition and other potential financial impacts.
Expansion and consolidation, including the transfer of operations to new or other facilities or due to acquisitions, can inherently include additional costs and start-up inefficiencies. For example, we expanded our geographic locations by constructing a new manufacturing facility in Bangkok, Thailand, to supplement our footprint in the Asia-Pacific region.
Expansion and consolidation, including the transfer of operations to new or other facilities or due to acquisitions, can inherently include additional costs and start-up inefficiencies. For example, we are expanding our operations by constructing an additional manufacturing facility in Penang, Malaysia, to support our growth in the Asia-Pacific region.
A customer’s cancellation, delay or reduction of forecasts or orders can also result in excess inventory or additional expense to us. Engineering changes by a customer or a product’s end-of-life may result in obsolete materials or components.
In addition, suppliers at times require us to purchase materials and components in minimum order quantities that may exceed customer requirements. A customer’s cancellation, delay or reduction of forecasts or orders can also result in excess inventory or additional expense to us. Engineering changes by a customer or a product’s end-of-life may result in obsolete materials or components.
The emergence of new technologies, industry standards or customer requirements may render our technical personnel, equipment, inventory or processes obsolete or noncompetitive.
The emergence or advancement in technologies, such as artificial intelligence, industry standards or customer requirements may render our technical personnel, equipment, inventory or processes obsolete or noncompetitive.
We have experienced from time to time and are currently experiencing significant component shortages and longer lead-times due to supplier capacity constraints.
We have experienced from time to time, and may in the future experience, significant component shortages and longer lead-times due to supplier capacity constraints.
Specifically, certain stakeholders are beginning to request or require that we provide information on our plans relating to certain climate-related matters such as greenhouse gas emissions, and we expect this trend to continue and be amplified by existing and potential legislation, such as the Corporate Sustainability Reporting Directive in the European Union and the proposed U.S.
Specifically, certain stakeholders are beginning to request or require disclosures on ESG topics such as greenhouse gas emissions, human capital matters and specific ESG-risk management practices, and we expect this trend to continue and be amplified by existing and potential legislation, such as the Corporate Sustainability Reporting Directive in the European Union and the U.S.
Additionally, if third parties on whom we rely for products or services, such as component suppliers, are responsible for an infringement (including through the supply of counterfeit parts), we may or may not be able to hold them responsible and we may incur costs in defending claims or providing remedies.
Infringement by our customers could cause them to discontinue production of some of their products, potentially with little or no notice, which may reduce our net sales to them and disrupt our production. 19 Table of Contents Additionally, if third parties on whom we rely for products or services, such as component suppliers, are responsible for an infringement (including through the supply of counterfeit parts), we may or may not be able to hold them responsible and we may incur costs in defending claims or providing remedies.
Additionally, a delay in obtaining a particular component may result in other components for the related program being held for longer periods of time, increasing working capital, risking inventory obsolescence and negatively impacting our cash flow. We are currently experiencing higher inventory levels as a result of component shortages.
Additionally, a delay in obtaining a particular component may result in other components for the related program being held for longer periods of time, increasing working capital, risking inventory obsolescence and negatively impacting our cash flow. In addition, components that are delivered to us may not meet our specifications or other quality criteria.
Risks associated with transfer pricing adjustments are further highlighted by the global initiative from the Organisation for Economic Cooperation and Development called the Base Erosion and Profit Shifting ("BEPS") project. The BEPS project is challenging longstanding international tax norms regarding the taxation of profits from cross-border business.
Risks associated with transfer pricing adjustments are further highlighted by the global initiative from the Organization for Economic Cooperation and Development called the Base Erosion and Profit Shifting ("BEPS") project.
We have operations in many countries. Operations outside of the U.S. in the aggregate represent a majority of our net sales and operating income, with a particular concentration in Malaysia. In addition, although we have repatriated a substantial amount of cash since the enactment of the U.S. Tax Cuts and Jobs Act (“U.S.
In addition, although we have repatriated a substantial amount of cash since the enactment of the U.S. Tax Cuts and Jobs Act (“U.S. Tax Reform”) in 2017, a significant amount of our cash balances remain held outside of the U.S., with a particular concentration in Malaysia and China.
In addition, lone and organized crime elements have been known to extort money by encrypting their victims’ data (ransomware) and/or utilizing their victims’ resources for unauthorized mining of cryptocurrency. The increasing sophistication of cyberattacks requires us to continually evaluate the threat landscape and new technologies and processes intended to detect and prevent these attacks.
In addition, lone and organized crime elements have been known to extort money by encrypting their victims’ data (ransomware) and/or utilizing their victims’ resources for unauthorized mining of cryptocurrency.
In addition, our adoption of certain standards, related reporting requirements, or mandated compliance to certain requirements could necessitate additional investments that could impact our profitability. There continues to be a lack of consistent climate legislation, which creates economic and regulatory uncertainty.
In addition, our adoption of certain standards, related reporting requirements, or mandated compliance to certain requirements could necessitate additional investments that could impact our profitability.
Most of our services are provided on a turnkey basis, under which we purchase some, or all, of the required materials and components based on customer forecasts or orders.
Most of our services are provided on a turnkey basis, under which we purchase some, or all, of the required materials and components based on customer forecasts or orders. Although, in general, our commercial contracts with our customers obligate our customers to ultimately purchase inventory ordered to support their forecasts or orders, we generally finance these purchases initially.
Further, changing export regulations, including U.S. government regulations relating to the export of advanced semiconductors and chip-manufacturing equipment that may limit our ability to ship certain components or products to customers in China or potential reductions in U.S. government agency spending, including those due to budget cuts or other political developments or issues, could affect opportunities in all of our market sectors.
Further, potential reductions in U.S. government agency spending, including those due to budget cuts or other political developments or issues, could affect opportunities in all of our market sectors.
Further, the success of new programs may depend heavily on factors such as product reliability, market acceptance, regulatory approvals or economic conditions. The failure of a new program to meet expectations on these factors, or our inability to effectively execute on a new program’s or service’s requirements, could result in lost financial opportunities and adversely affect our results of operations.
The failure of a new program to meet expectations on these factors, or our inability to effectively execute on a new program’s or service’s requirements, could result in lost financial opportunities and adversely affect our results of operations. In recent years, ramping new programs has been a key contributor to our revenue growth.
Failure of our customers to identify or flow down any such requirements to us could result in production of non-compliant product, which could restrict their ability to sell such products, thus affecting our sales to them.
Failure of our customers to identify or flow down any such requirements to us could result in production of non-compliant product, which could restrict their ability to sell such products, thus affecting our sales to them. 13 Table of Contents We may fail to identify acquisition targets, successfully complete future acquisitions, successfully integrate acquired operations or recognize the anticipated benefits of an acquisition, which could adversely affect our operating results.
Some new programs or services require us to devote significant capital and personnel resources to new technologies and competencies. We may not meet customer expectations, which could damage our relationships with the affected customers and impact our ability to deliver conforming product or services on a timely basis.
We may not meet customer expectations, which could damage our relationships with the affected customers and impact our ability to deliver conforming product or services on a timely basis. Further, the success of new programs may depend heavily on factors such as product reliability, market acceptance, regulatory approvals or economic conditions.
We may fail to identify acquisition targets, successfully complete future acquisitions, successfully integrate acquired operations or recognize the anticipated benefits of an acquisition, which could adversely affect our operating results. If we pursue new capabilities or geographies to enable growth through acquisitions, such activities would involve significant risks that could have a material adverse effect on us.
If we pursue new capabilities or geographies to enable growth through acquisitions, such activities would involve significant risks that could have a material adverse effect on us.
The failure to make prudent engagement decisions or to establish appropriate terms of engagement could adversely affect our profitability and margins. 20 Table of Contents Also, there are inherent risks associated with the timing and ultimate realization of anticipated revenue and profitability from a new program or service; these factors can sometimes extend for a significant period.
Also, there are inherent risks associated with the timing and ultimate realization of anticipated revenue and profitability from a new program or service; these factors can sometimes extend for a significant period. Some new programs or services require us to devote significant capital and personnel resources to new technologies and competencies.
In addition, components that are delivered to us may not meet our specifications or other quality criteria. Certain components provided to us may be counterfeit or violate the intellectual property rights of others. The need to obtain replacement materials and parts may negatively affect our manufacturing operations and operating results.
Certain components provided to us may be counterfeit or violate the intellectual property rights of others. The need to obtain replacement components may negatively affect our operations and operating results. The inadvertent use of any such components may also give rise to liability claims.
There may be problems with the products we design, manufacture or service that could result in liability claims against us, reduced demand for our services and damage to our reputation. We design, manufacture and service products to our customers’ specifications, many of which are highly complex, for market sectors that generally have higher risk profiles.
We design, manufacture and service products to our customers’ specifications, many of which are highly complex and subject to demanding regulatory environments for market sectors that generally have higher risk profiles for liability claims. Further, the services we provide to our customers continue to expand to encompass full product development, product commercialization, manufacturing, and sustaining services.
Tax Reform”) in 2017, a significant amount of our cash balances remain held outside of the U.S., with a particular concentration in Malaysia and China. We support customers operating in various countries and purchase a significant number of components manufactured in various countries.
We support customers operating in various countries and purchase a significant number of components manufactured in various countries.
In addition, the Healthcare/Life Sciences sector is affected by health crises, such as COVID-19. The semiconductor industry has historically been subject to significant cyclicality and volatility.
In addition, the Healthcare/Life Sciences sector is affected by health crises and trends. The semiconductor industry has historically been subject to significant cyclicality and volatility. Changing export regulations, increasing sanctions or other trade barriers may limit our ability to use or produce certain technologies or products in China or sell certain components or products that are ultimately destined to China.
Removed
The current environment of tight component supply and other factors discussed above, can increase the difficulties and cost of anticipating changing demand.
Added
Risks impacting our Superior Execution Plexus is a multinational corporation and operating in multiple countries exposes us to increased risks, including adverse local developments and currency risks. We have operations in many countries. Operations outside of the U.S. in the aggregate represent a majority of our net sales and operating income, with a particular concentration in Malaysia.
Removed
The inadvertent use of any such parts or products may also give rise to liability claims.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeOur active facilities as of September 30, 2023 are described in the following table: Location Type Size (sq. ft.) Owned/Leased AMER Neenah, Wisconsin Manufacturing 418,000 Owned Guadalajara, Mexico (1) Manufacturing/Engineering 741,000 Leased Nampa, Idaho Manufacturing 216,000 Owned Appleton, Wisconsin Manufacturing 205,000 Owned Buffalo Grove, Illinois (1) Manufacturing 189,000 Leased Neenah, Wisconsin Global Headquarters 104,000 Owned Portland, Oregon Manufacturing 91,000 Leased Neenah, Wisconsin Engineering 90,000 Leased Raleigh, North Carolina Engineering 41,000 Leased APAC Penang, Malaysia (1) Manufacturing/Engineering 1,530,000 Owned Bangkok, Thailand Manufacturing 389,000 Owned Haining, China (1) Manufacturing 264,000 Leased Xiamen, China Manufacturing 133,000 Owned Xiamen, China (1) Manufacturing 120,000 Leased EMEA Oradea, Romania Manufacturing/Engineering 296,000 Owned Oradea, Romania Manufacturing 108,000 Leased Livingston, Scotland Manufacturing/Engineering 62,000 Leased Kelso, Scotland Manufacturing 57,000 Owned Darmstadt, Germany Engineering 21,000 Leased (1) The facilities in Guadalajara, Mexico; Buffalo Grove, Illinois; Penang, Malaysia; Haining, China; and Xiamen, China include more than one building.
Biggest changeOur active facilities as of September 28, 2024 are described in the following table: Location Type Size (sq. ft.) Owned/Leased AMER Neenah, Wisconsin Manufacturing 418,000 Owned Guadalajara, Mexico (1) Manufacturing/Engineering 741,000 Leased Nampa, Idaho Manufacturing 216,000 Owned Appleton, Wisconsin Manufacturing 205,000 Owned Buffalo Grove, Illinois (1) Manufacturing 189,000 Leased Neenah, Wisconsin Global Headquarters 104,000 Owned Neenah, Wisconsin Engineering 90,000 Leased Raleigh, North Carolina Engineering 41,000 Leased APAC Penang, Malaysia (1) Manufacturing/Engineering 1,530,000 Owned Bangkok, Thailand Manufacturing 389,000 Owned Haining, China (1) Manufacturing 264,000 Leased Xiamen, China (1) Manufacturing 253,000 Leased EMEA Oradea, Romania Manufacturing/Engineering 296,000 Owned Oradea, Romania Manufacturing 108,000 Leased Livingston, Scotland Manufacturing/Engineering 62,000 Leased Kelso, Scotland Manufacturing 57,000 Owned (1) The facilities in Guadalajara, Mexico; Buffalo Grove, Illinois; Penang, Malaysia; Haining, China; and Xiamen, China include more than one building.
ITEM 2. PROPERTIES Our facilities are comprised of an integrated network of manufacturing and engineering centers with our corporate headquarters located in Neenah, Wisconsin. We own or lease facilities with approximately 5.1 million square feet of active capacity.
ITEM 2. PROPERTIES Our facilities are comprised of an integrated network of manufacturing and engineering centers with our corporate headquarters located in Neenah, Wisconsin. We own or lease facilities with approximately 5.0 million square feet of active capacity.
ITEM 3. LEGAL PROCEEDINGS Refer to Note 10, "Litigation," for information regarding legal proceedings in which we are involved. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 24 Table of Contents PART II
ITEM 3. LEGAL PROCEEDINGS Refer to Note 10, "Litigation," for information regarding legal proceedings in which we are involved. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 25 Table of Contents PART II
This includes approximately 2.1 million square feet in AMER, approximately 2.4 million square feet in APAC and approximately 0.6 million square feet in EMEA.
This includes approximately 2.0 million square feet in AMER, approximately 2.5 million square feet in APAC and approximately 0.5 million square feet in EMEA.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeITEM 4. MINE SAFETY DISCLOSURES 24 PART II 25 ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 25 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 27 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 38 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 39
Biggest changeITEM 4. MINE SAFETY DISCLOSURES 25 PART II 26 ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 26 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 28 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 39 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 40

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+0 added−0 removed4 unchanged
Biggest changeSee also Part II, Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources," for additional discussion of our intentions regarding dividends as well as a description of loan covenants that could restrict our ability to make future dividend payments. 25 Table of Contents Issuer Purchases of Equity Securities The following table provides the specified information about the repurchases of shares by us during the three months ended September 30, 2023: Period Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced plans or programs Maximum approximate dollar value of shares that may yet be purchased under the plans or programs (1) July 2, 2023 to July 29, 2023 18,827 $ 99.95 18,827 $ 7,207,069 July 30, 2023 to August 26, 2023 15,774 97.66 15,774 5,666,612 August 27, 2023 to September 30, 2023 — — — $ 5,666,612 34,601 $ 98.91 34,601 (1) Amounts exclude excise tax on share repurchases of $92,175 incurred during the quarter.
Biggest changeSee also Part II, Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources," for additional discussion of our intentions regarding dividends as well as a description of loan covenants that could restrict our ability to make future dividend payments. 26 Table of Contents Issuer Purchases of Equity Securities The following table provides the specified information about the repurchases of shares by us during the three months ended September 28, 2024: Period Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced plans or programs Maximum approximate dollar value of shares that may yet be purchased under the plans or programs (1) June 30, 2024 to July 27, 2024 60,094 $ 107.54 60,094 $ 13,058,922 July 28, 2024 to August 24, 2024 28,844 121.16 28,844 59,564,264 August 25, 2024 to September 28, 2024 76,795 124.80 76,795 49,980,101 165,733 $ 117.91 165,733 (1) On January 16, 2024, the Company announced that its Board of Directors had approved a $50.0 million share repurchase authorization (the "2024 Program") that authorizes the Company to repurchase its common stock.
The values on the graph show the relative performance of an investment of $100 made on September 28, 2018 in Plexus common stock and in each of the indices as of the last business day of the respective fiscal year.
The values on the graph show the relative performance of an investment of $100 made on September 28, 2019 in Plexus common stock and in each of the indices as of the last business day of the respective fiscal year.
The table above reflects the maximum dollar amount remaining available for purchase under the 2023 Program as of September 30, 2023. 26 Table of Contents
The table above reflects the maximum dollar amount remaining available for purchase under the 2025 Program as of September 28, 2024. 27 Table of Contents
Comparison of Cumulative Total Return 2018 2019 2020 2021 2022 2023 Plexus $100 $107 $121 $156 $150 $159 Nasdaq-Electronic Components 100 103 110 149 125 152 S&P 400 100 95 94 133 109 124 Shareholders of Record As of November 13, 2023, we had 358 shareholders of record. Dividends We have not paid any cash dividends in the past.
Comparison of Cumulative Total Return 2019 2020 2021 2022 2023 2024 Plexus $100 $113 $146 $140 $149 $218 Nasdaq-Electronic Components 100 107 145 121 148 200 S&P 400 100 99 140 115 130 162 Shareholders of Record As of November 11, 2024, we had 325 shareholders of record. Dividends We have not paid any cash dividends in the past.
On August 18, 2022, the Board of Directors approved a new share repurchase program under which we are authorized to repurchase up to $50.0 million of our common stock (the "2023 Program"). The 2023 Program became effective immediately and has no expiration.
On August 14, 2024 the Board of Directors approved a share repurchase program (the "2025 Program") that authorizes the Company to repurchase up to $50.0 million of its common stock beginning upon completion of the Company’s 2024 Program. The 2025 Program commenced upon completion of the 2024 Program, and has no expiration.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

84 edited+12 added−22 removed27 unchanged
Biggest changeAdvanced payments increases in fiscal 2022 were primarily to cover certain inventory balances. • $(346.7) million in accounts payables cash flows primarily driven by the timing of materials procurement and payments to suppliers. 32 Table of Contents The following table provides a summary of cash cycle days for the periods indicated (in days): Three Months Ended September 30, 2023 October 1, 2022 Days in accounts receivable 59 60 Days in contract assets 13 11 Days in inventory 154 144 Days in accounts payable (64) (72) Days in advanced payments (1) (75) (70) Annualized cash cycle 87 73 (1) Includes a reclassification in the presentation of advanced payments from customers reflected in prior period amounts.
Biggest changeThe increase was primarily due to cash flow improvements (reductions) of: • $(27.3) million decrease in net income. • $213.7 million in inventory cash flows driven by a larger decrease in inventory in fiscal 2024 as compared to fiscal 2023 due to inventory reduction efforts. • $139.9 million in accounts payables cash flows primarily driven by the timing of materials procurement and payments to suppliers. • $24.8 million in contract assets cash flows driven by lower demand from over time customers. • $(34.1) million in advanced payments from customers cash flows driven by a larger decrease in advanced payments in fiscal 2024 as compared to fiscal 2023. • $(36.5) million in accounts receivable cash flows driven by timing of shipments and mix of customer payment terms. • $(23.6) million in other current and non-current asset cash flows primarily driven by an increase in tax prepayments related to timing of payments and an increase in prepayments to suppliers in fiscal 2024 as compared to a decrease in fiscal 2023. 33 Table of Contents The following table provides a summary of cash cycle days for the periods indicated (in days): Three Months Ended September 28, 2024 September 30, 2023 Days in accounts receivable 54 59 Days in contract assets 10 13 Days in inventory 127 154 Days in accounts payable (59) (64) Days in advanced payments (68) (75) Annualized cash cycle 64 87 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.
Excluded from the amounts disclosed are certain bonus and incentive compensation amounts, which would be paid on a prorated basis in the year of termination. 36 Table of Contents DISCLOSURE ABOUT CRITICAL ACCOUNTING ESTIMATES Our accounting policies are disclosed in Note 1 "Description of Business and Significant Accounting Policies" of Notes to Consolidated Financial Statements.
Excluded from the amounts disclosed are certain bonus and incentive compensation amounts, which would be paid on a prorated basis in the year of termination. 37 Table of Contents DISCLOSURE ABOUT CRITICAL ACCOUNTING ESTIMATES Our accounting policies are disclosed in Note 1 "Description of Business and Significant Accounting Policies" of Notes to Consolidated Financial Statements.
However, we cannot be assured that we will be able to make any such arrangements on acceptable terms or at all. 35 Table of Contents CONTRACTUAL OBLIGATIONS, COMMITMENTS AND OFF-BALANCE SHEET OBLIGATIONS Our disclosures regarding contractual obligations and commercial commitments are located in various parts of our regulatory filings.
However, we cannot be assured that we will be able to make any such arrangements on acceptable terms or at all. 36 Table of Contents CONTRACTUAL OBLIGATIONS, COMMITMENTS AND OFF-BALANCE SHEET OBLIGATIONS Our disclosures regarding contractual obligations and commercial commitments are located in various parts of our regulatory filings.
The information should be read in conjunction with our consolidated financial statements included herein and "Risk Factors" included in Part I, Item 1A herein. A discussion regarding our financial condition and results of operations for fiscal 2023 compared to fiscal 2022 is presented below.
The information should be read in conjunction with our consolidated financial statements included herein and "Risk Factors" included in Part I, Item 1A herein. A discussion regarding our financial condition and results of operations for fiscal 2024 compared to fiscal 2023 is presented below.
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.
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.
Refer to Note 4, "Debt, Finance Lease and Other Financing Obligations," in Notes to Consolidated Financial Statements and "Management’s Discussion and Analysis of Liquidity and Capital Resources" in Part II, Item 7 for further information. RESULTS OF OPERATIONS Consolidated Performance Summary.
Refer to Note 4, "Debt, Finance Lease and Other Financing Obligations," in Notes to Consolidated Financial Statements and "Management’s Discussion and Analysis of Liquidity and Capital Resources" in Part II, Item 7 for further information. 28 Table of Contents RESULTS OF OPERATIONS Consolidated Performance Summary.
NEW ACCOUNTING PRONOUNCEMENTS See Note 1, "Description of Business and Significant Accounting Policies," in Notes to Consolidated Financial Statements regarding recent accounting pronouncements. 37 Table of Contents
NEW ACCOUNTING PRONOUNCEMENTS See Note 1, "Description of Business and Significant Accounting Policies," in Notes to Consolidated Financial Statements regarding recent accounting pronouncements. 38 Table of Contents
Our future cash flows from operating activities will be reduced by $42.0 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.
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.
As a percentage of consolidated net sales, net sales attributable to customers representing 10% or more of consolidated net sales as well as the percentage of net sales attributable to our ten largest customers for the indicated fiscal years were as follows: 2023 2022 GE Healthcare Technologies, Inc.
As a percentage of consolidated net sales, net sales attributable to customers representing 10.0% or more of consolidated net sales as well as the percentage of net sales attributable to our ten largest customers for the indicated fiscal years were as follows: 2024 2023 GE Healthcare Technologies, Inc.
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 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.
The 2018 Notes may be prepaid in whole or in part at any time, subject to payment of a make-whole amount; interest on the 2018 Notes is payable semiannually. As of September 30, 2023, we were in compliance with the covenants under the 2018 NPA.
The 2018 Notes may be prepaid in whole or in part at any time, subject to payment of a make-whole amount; interest on the 2018 Notes is payable semiannually. As of September 28, 2024, we were in compliance with the covenants under the 2018 NPA.
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 was 9.0% for fiscal 2023 and 9.3% for fiscal 2022.
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 was 8.2% for fiscal 2024 and 9.0% for fiscal 2023.
A discussion regarding our financial condition and results of operations for fiscal 2022 compared to fiscal 2021 is incorporated herein by reference from Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," in our Annual Report on the Form 10-K for the fiscal year ended October 1, 2022, which was filed with the SEC on November 18, 2022, and is available on the SEC’s website at www.sec.gov as well as our Investor Relations website at www.plexus.com.
A discussion regarding our financial condition and results of operations for fiscal 2023 compared to fiscal 2022 is incorporated herein by reference from Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," in our Annual Report on the Form 10-K for the fiscal year ended September 30, 2023, which was filed with the SEC on November 17, 2023, and is available on the SEC’s website at www.sec.gov as well as our Investor Relations website at www.plexus.com.
Net sales. Fiscal 2023 net sales increased $398.9 million, or 10.5%, as compared to fiscal 2022. 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.
Net sales. Fiscal 2024 net sales decreased $249.5 million, or 5.9%, as compared to fiscal 2023. 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.
As of the end of fiscal 2023, cash and cash equivalents and restricted cash were $257 million, while debt, finance lease and other financing obligations were $431 million. If our future financing needs increase, then we may need to arrange additional debt or equity financing.
As of the end of fiscal 2024, cash and cash equivalents and restricted cash were $347 million, while debt, finance lease and other financing obligations were $247 million. If our future financing needs increase, then we may need to arrange additional debt or equity financing.
During fiscal 2023 there were no material changes to these policies.
During fiscal 2024 there were no material changes to these policies.
Net income increased primarily as a result of the increase in operating income, substantially offset by the increase in other expense and tax expense as previously discussed. Diluted earnings per share.
Net income decreased primarily as a result of the decrease in operating income and the increase in other expense, partially offset by the decrease in tax expense as previously discussed. Diluted earnings per share.
We borrowed $748.5 million and repaid $778.5 million of revolving borrowings ("revolving commitment") under the Credit Facility during fiscal 2023. As of September 30, 2023, we were in compliance with all financial covenants relating to the Credit Facility, which are generally consistent with those in the 2018 NPA discussed above.
We borrowed $550.5 million and repaid $733.5 million of revolving borrowings ("revolving commitment") under the Credit Facility during fiscal 2024. As of September 28, 2024, we were in compliance with all financial covenants relating to the Credit Facility, which are generally consistent with those in the 2018 NPA discussed above.
The maximum commitment under the Credit Facility may be further increased to $750.0 million, generally by mutual agreement of the lenders and us, subject to certain customary conditions. During fiscal 2023, the highest daily borrowing was $412.0 million; the average daily balance was $338.1 million.
The maximum commitment under the Credit Facility may be further increased to $750.0 million, generally by mutual agreement of the lenders and us, subject to certain customary conditions. During fiscal 2024, the highest daily borrowing was $376.0 million; the average daily balance was $257.8 million.
As of September 30, 2023 and October 1, 2022, $220.5 million and $222.5 million, respectively, of accounts receivables sold under trade accounts receivable programs and subject to servicing by us remained outstanding and had not yet been collected.
As of September 28, 2024 and September 30, 2023, $220.2 million and $220.5 million, respectively, of accounts receivables sold under trade accounts receivable programs and subject to servicing by us remained outstanding and had not yet been collected.
Refer to the table below, which includes the calculation of ROIC and economic return for the indicated fiscal years (dollars in millions): 2023 2022 Adjusted operating income (tax-effected) $ 190.5 $ 156.8 Average invested capital 1,425.6 1,207.4 After-tax ROIC 13.4 % 13.0 % WACC 9.0 % 9.3 % Economic return 4.4 % 3.7 % 31 Table of Contents LIQUIDITY AND CAPITAL RESOURCES Cash and cash equivalents and restricted cash were $256.7 million as of September 30, 2023, as compared to $275.5 million as of October 1, 2022.
Refer to the table below, which includes the calculation of ROIC and economic return for the indicated fiscal years (dollars in millions): 2024 2023 Adjusted operating income (tax-effected) $ 168.0 $ 190.5 Average invested capital 1,418.7 1,425.6 After-tax ROIC 11.8 % 13.4 % WACC 8.2 % 9.0 % Economic return 3.6 % 4.4 % 32 Table of Contents LIQUIDITY AND CAPITAL RESOURCES Cash and cash equivalents and restricted cash were $347.5 million as of September 28, 2024, as compared to $256.7 million as of September 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 September 30, 2023 increased two days compared to the three months ended October 1, 2022.
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 September 28, 2024 decreased three days compared to the three months ended September 30, 2023.
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. 33 Table of Contents A reconciliation of FCF to our financial statements that were prepared using GAAP as follows (in millions): 2023 2022 Cash flows provided by (used in) by operating activities $ 165.8 $ (26.3) Payments for property, plant and equipment (104.0) (101.6) Free cash flow $ 61.8 $ (127.9) Investing Activities.
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. 34 Table of Contents A reconciliation of FCF to our financial statements that were prepared using GAAP as follows (in millions): 2024 2023 Cash flows provided by operating activities $ 436.5 $ 165.8 Payments for property, plant and equipment (95.2) (104.0) Free cash flow $ 341.3 $ 61.8 Investing Activities.
The following table provides a summary of cash flows for fiscal 2023 and 2022 (in millions): 2023 2022 Cash flows provided by (used in) operating activities $ 165.8 $ (26.2) Cash flows used in investing activities (93.3) (101.6) Cash flows (used in) provided by financing activities (92.7) 139.3 Effect of exchange rate changes on cash and cash equivalents 1.4 (6.5) Net (decrease) increase in cash and cash equivalents and restricted cash $ (18.8) $ 5.0 Operating Activities.
The following table provides a summary of cash flows for fiscal 2024 and 2023 (in millions): 2024 2023 Cash flows provided by operating activities $ 436.5 $ 165.8 Cash flows used in investing activities (94.9) (93.3) Cash flows used in financing activities (255.6) (92.7) Effect of exchange rate changes on cash and cash equivalents 4.8 1.4 Net increase (decrease) in cash and cash equivalents and restricted cash $ 90.8 $ (18.8) Operating Activities.
Borrowings under our credit facility as of September 30, 2023 were $233 million, leaving $267 million of our revolving commitment of $500 million available for use as of September 30, 2023 as well as the ability to expand our revolving commitment to $750 million upon mutual agreement with our banks.
Borrowings under our credit facility as of September 28, 2024 were $50 million, leaving $450 million of our revolving commitment of $500 million available for use as of September 28, 2024 as well as the ability to expand our revolving commitment to $750 million upon mutual agreement with our banks.
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. We have been granted a tax holiday for a foreign subsidiary operating in the APAC segment.
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. We have been granted a tax holiday for a foreign subsidiary operating in the APAC segment. This tax holiday will expire on December 31, 2034, and is subject to certain conditions.
The following table presents selected consolidated financial data for the indicated fiscal years (dollars in millions, except per share data): 2023 2022 Net sales $ 4,210.3 $ 3,811.4 Cost of sales 3,815.8 3,464.1 Gross profit 394.6 347.2 Gross margin 9.4 % 9.1 % Operating income 195.8 178.2 Operating margin 4.7 % 4.7 % Other expense 34.8 19.9 Income tax expense 21.9 20.1 Net income 139.1 138.2 Diluted earnings per share $ 4.95 $ 4.86 Return on invested capital* 13.4 % 13.0 % Economic return* 4.4 % 3.7 % *Non-GAAP metric; refer to "Return on Invested Capital ("ROIC") and economic return" below and Exhibit 99.1 for more information.
The following table presents selected consolidated financial data for the indicated fiscal years (dollars in millions, except per share data): 2024 2023 Net sales $ 3,960.8 $ 4,210.3 Cost of sales 3,582.3 3,815.8 Gross profit 378.5 394.6 Gross margin 9.6 % 9.4 % Operating income 167.7 195.8 Operating margin 4.2 % 4.7 % Other expense 38.2 34.8 Income tax expense 17.7 21.9 Net income 111.8 139.1 Diluted earnings per share $ 4.01 $ 4.95 Return on invested capital* 11.8 % 13.4 % Economic return* 3.6 % 4.4 % *Non-GAAP metric; refer to "Return on Invested Capital ("ROIC") and economic return" below and Exhibit 99.1 for more information.
Fiscal 2023 ROIC of 13.4% reflects an economic return of 4.4%, based on our weighted average cost of capital of 9.0%, and fiscal 2022 ROIC of 13.0% reflects an economic return of 3.7%, based on our weighted average cost of capital of 9.3%.
Fiscal 2024 ROIC of 11.8% reflects an economic return of 3.6%, based on our weighted average cost of capital of 8.2%, and fiscal 2023 ROIC of 13.4% reflects an economic return of 4.4%, based on our weighted average cost of capital of 9.0%.
Cash flows used in investing activities were $93.3 million for fiscal 2023 compared to $101.6 million for fiscal 2022. The decrease in cash used in investing activities was due to $10.8 million from insurance proceeds, partially offset by a $2.4 million increase in capital expenditures.
Cash flows used in investing activities were $94.9 million for fiscal 2024 compared to $93.3 million for fiscal 2023. The increase in cash used in investing activities was due to $10.8 million from insurance proceeds in fiscal 2023, partially offset by an $8.9 million decrease in capital expenditures.
We utilized available cash and financing cash flows as the sources for funding our operating requirements during fiscal 2023. We currently estimate capital expenditures for fiscal 2024 will be approximately $100.0 million to $120.0 million to support new program ramps and replace older equipment. This estimate does not include any site expansions. Financing Activities.
We utilized available cash and financing cash flows as the sources for funding our operating requirements during fiscal 2024. 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.
On August 18, 2022, the Board of Directors approved a share repurchase program under which we are authorized to repurchase up to $50.0 million of its common stock (the "2023 Program"). The 2023 Program became effective immediately and has no expiration.
On August 18, 2022, 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 "2023 Program").
As of September 30, 2023, 87% of our cash and cash equivalents balance was held outside of the U.S. by our foreign subsidiaries.
As of September 28, 2024, 88% of our cash and cash equivalents balance was held outside of the U.S. by our foreign subsidiaries.
A discussion of operating income by reportable segment for the indicated fiscal years is presented below (in millions): 2023 2022 Operating income: AMER $ 79.7 $ 44.7 APAC 289.6 267.3 EMEA 1.6 8.0 Corporate and other costs (175.1) (141.8) Total operating income $ 195.8 $ 178.2 AMER.
A discussion of operating income by reportable segment for the indicated fiscal years is presented below (in millions): 2024 2023 Operating income: AMER $ 39.6 $ 79.7 APAC 289.3 289.6 EMEA 13.4 1.6 Corporate and other costs (174.6) (175.1) Total operating income $ 167.7 $ 195.8 AMER.
The decrease is primarily attributable to timing of materials procurement and payments to suppliers. Days in advanced payments for the three months ended September 30, 2023 increased five days compared to the three months ended October 1, 2022.
Days in accounts payable for the three months ended September 28, 2024 decreased five days compared to the three months ended September 30, 2023. The decrease is primarily attributable to timing of materials procurement and payments to suppliers.
We have excluded from the above table the impact of approximately $14.0 million, as of September 30, 2023, related to unrecognized income tax benefits.
We have excluded from the above table the impact of approximately $19.6 million, as of September 28, 2024, related to unrecognized income tax benefits.
Diluted earnings per share increased to $4.95 in fiscal 2023 from $4.86 in fiscal 2022, primarily as a result of increased net income due to the factors discussed above and a reduction in diluted shares outstanding due to repurchase activity under our share repurchase plans. Return on Invested Capital ("ROIC") and economic return.
Diluted earnings per share decreased to $4.01 in fiscal 2024 from $4.95 in fiscal 2023, primarily as a result of decreased net income due to the factors discussed above, partially offset by a reduction in diluted shares outstanding. Return on Invested Capital ("ROIC") and economic return.
Information in the following table provides a summary of our contractual obligations and commercial commitments as of September 30, 2023 (dollars in millions): Payments Due by Fiscal Year Contractual Obligations Total 2024 2025-2026 2027-2028 2029 and thereafter Debt Obligations (1) $ 435.7 $ 273.2 $ 108.3 $ 54.2 $ — Finance Lease Obligations 114.7 9.1 14.4 21.2 70.0 Operating Lease Obligations 54.5 10.1 17.3 11.9 15.2 Purchase Obligations (2) 1,428.7 1,266.0 158.1 2.1 2.5 Repatriation Tax on Undistributed Foreign Earnings (3) 42.0 10.6 31.4 — — Other Liabilities on the Balance Sheet (4) 19.0 2.5 1.8 1.7 13.0 Other Liabilities not on the Balance Sheet (5) 10.8 5.3 0.6 1.3 3.6 Total Contractual Cash Obligations $ 2,105.4 $ 1,576.8 $ 331.9 $ 92.4 $ 104.3 1) Debt obligations includes $150.0 million in principal amount of 2018 Notes and $233.0 million of borrowings on the revolving commitment of the Credit Facility, as well as interest. 2) Purchase obligations consist primarily of purchases of inventory and equipment in the ordinary course of business. 3) Repatriation tax on undistributed foreign earnings consists of U.S. federal income taxes on the deemed repatriation of undistributed foreign earnings due to U.S.
Information in the following table provides a summary of our contractual obligations and commercial commitments as of September 28, 2024 (dollars in millions): Payments Due by Fiscal Year Contractual Obligations Total 2025 2026-2027 2028-2029 2030 and thereafter Debt Obligations (1) $ 212.5 $ 156.2 $ 4.2 $ 52.1 $ — Finance Lease Obligations 110.1 9.9 24.5 10.4 65.3 Operating Lease Obligations 53.2 16.1 15.3 8.2 13.6 Purchase Obligations (2) 1,144.1 1,080.7 61.0 1.3 1.1 Repatriation Tax on Undistributed Foreign Earnings (3) 31.3 14.1 17.2 — — Other Liabilities on the Balance Sheet (4) 22.6 3.9 3.6 2.0 13.1 Other Liabilities not on the Balance Sheet (5) 10.2 5.1 1.4 0.1 3.6 Total Contractual Cash Obligations $ 1,584.0 $ 1,286.0 $ 127.2 $ 74.1 $ 96.7 1) Debt obligations includes $150.0 million in principal amount of 2018 Notes and $50.0 million of borrowings on the revolving commitment of the Credit Facility, as well as interest. 2) Purchase obligations consist primarily of purchases of inventory and equipment in the ordinary course of business. 3) Repatriation tax on undistributed foreign earnings consists of U.S. federal income taxes on the deemed repatriation of undistributed foreign earnings due to U.S.
The table below provides the expected timing of these future cash outflows, in accordance with the following installment schedule for the remaining three years (in millions): 2024 $ 10.6 2025 14.1 2026 17.3 Total $ 42.0 Cash Flows.
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): 2025 $ 14.2 2026 17.2 Total $ 31.4 Cash Flows.
Cost of sales for fiscal 2023 increased $351.7 million, or 10.2%, as compared to fiscal 2022. Cost of sales is comprised primarily of material and component costs, labor costs and overhead. In both fiscal 2023 and 2022, approximately 90% of the total cost of sales was variable in nature and fluctuated with sales volumes.
Cost of sales for fiscal 2024 decreased $233.5 million, or 6.1%, as compared to fiscal 2023. Cost of sales is comprised primarily of material and component costs, labor costs and overhead. In both fiscal 2024 and 2023, approximately 89% of the total cost of sales was variable in nature and fluctuated with sales volumes.
("GEHC") 10.3% * General Electric Company ("GE") * 12.9% Top 10 customers 49.6% 56.2% * Net sales attributable to the customer were less than 10.0% of consolidated net sales for the period.
("GEHC") * 10.3% Top 10 customers 47.8% 49.6% * Net sales attributable to the customer were less than 10.0% of consolidated net sales for the period.
As of September 30, 2023, annualized cash cycle days increased fourteen days compared to October 1, 2022 due to the following: Days in accounts receivable for the three months ended September 30, 2023 decreased one day compared to the three months ended October 1, 2022.
As of September 28, 2024, annualized cash cycle days decreased twenty-three days compared to September 30, 2023 due to the following: Days in accounts receivable for the three months ended September 28, 2024 decreased five days compared to the three months ended September 30, 2023.
FCF was $61.8 million for fiscal 2023 compared to $(127.9) million for fiscal 2022, an increase of $189.7 million. The improvement in FCF was primarily due to lower working capital investments in inventory to support our customers. Non-GAAP financial measures, including FCF, are used for internal management assessments because such measures provide additional insight to investors into ongoing financial performance.
The improvement in FCF was primarily due to inventory reduction efforts as well as lower working capital investments in inventory to support our customers. Non-GAAP financial measures, including FCF, are used for internal management assessments because such measures provide additional insight to investors into ongoing financial performance.
The decrease was primarily attributable to net repayments on the credit facility in fiscal 2023 of $30.0 million compared to net borrowings on the credit facility in 2022 of $208.0 million as well as a decrease of $9.4 million in cash used to repurchase our common stock.
The increase was primarily attributable to net repayments on the credit facility in fiscal 2024 of $183.0 million compared to net repayments on the credit facility in 2023 of $30.0 million as well as an increase of $14.7 million in cash used to repurchase our common stock.
Operating income decreased $6.4 million in fiscal 2023 as compared to fiscal 2022 primarily as a result of a negative shift in customer mix, increased fixed costs, increased labor costs and reduced operational efficiencies, partially offset by an increase in net sales. Other expense. Other expense for fiscal 2023 increased $14.9 million as compared to fiscal 2022.
Operating income increased $11.8 million in fiscal 2024 as compared to fiscal 2023 primarily as a result of an increase in net sales and a positive shift in customer mix, partially offset by increased fixed costs and an increase in S&A. Other expense. Other expense for fiscal 2024 increased $3.4 million as compared to fiscal 2023.
The primary drivers of the increase in gross profit and gross margin as compared to fiscal 2022 were the increase in net sales and positive shift in customer mix, partially offset by an increase in fixed costs, reductions in operational efficiencies and increased labor costs. Operating income.
The primary drivers of the decrease in gross profit as compared to fiscal 2023 were a decrease in net sales and an increase in fixed costs to support new customer program ramps, partially offset by a positive shift in customer mix, which drove the increase in gross margin. Operating income.
As compared to fiscal 2022, the increase in cost of sales in fiscal 2023 was primarily driven by the increase in net sales, an increase in fixed costs, reductions in operational efficiencies and increased labor costs, partially offset by a positive shift in customer mix. Gross profit.
Approximately 87% of these costs in both fiscal 2024 and 2023 were related to material and component costs. As compared to fiscal 2023, the decrease in cost of sales in fiscal 2024 was primarily driven by the decrease in net sales and a positive shift in customer mix, partially offset by an increase in fixed costs. Gross profit.
Cash flows provided by operating activities were $165.8 million for fiscal 2023, as compared to cash flows used in operating activities of $26.2 million for fiscal 2022.
Cash flows provided by operating activities were $436.5 million for fiscal 2024, as compared to $165.8 million for fiscal 2023.
The Credit Facility and the 2018 NPA allow for the future payment of cash dividends or the repurchase of shares provided that no event of default (including any failure to comply with a financial covenant) exists at the time of, or would be caused by, the dividend payment or the share repurchases.
We are required to pay a commitment fee on the daily unused credit facility based on our leverage ratio; the fee was 0.100% as of September 28, 2024. 35 Table of Contents The Credit Facility and the 2018 NPA allow for the future payment of cash dividends or the repurchase of shares provided that no event of default (including any failure to comply with a financial covenant) exists at the time of, or would be caused by, the dividend payment or the share repurchases.
On August 11, 2021, 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 "2022 Program"). The 2022 Program commenced upon completion of the 2021 Program.
On January 16, 2024, the Company 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.
Our net sales by market sector for the indicated fiscal years were as follows (in millions): 2023 2022 Net sales: Healthcare/Life Sciences $ 1,874.8 $ 1,565.8 Industrial 1,756.5 1,752.7 Aerospace/Defense 579.0 492.9 Total net sales $ 4,210.3 $ 3,811.4 Healthcare/Life Sciences .
Our net sales by market sector for the indicated fiscal years were as follows (in millions): 2024 2023 Net sales: Aerospace/Defense $ 698.5 $ 579.0 Healthcare/Life Sciences 1,554.8 1,874.8 Industrial 1,707.5 1,756.5 Total net sales $ 3,960.8 $ 4,210.3 Aerospace/Defense . Net sales for fiscal 2024 in the Aerospace/Defense sector increased $119.5 million, or 20.6%, as compared to fiscal 2023.
The increase was also driven by a $6.9 million increase due to production ramps of new products for existing customers and a $6.7 million increase in production ramps for a new customer. The increase was partially offset by a $17.9 million decrease due to the discontinuation of a program with an existing customer. 29 Table of Contents Cost of sales.
The decrease was further driven by a decrease of $45.9 million due to the discontinuation of programs with existing customers and $24.1 million due to disengagements with customers. The decrease was partially offset by an increase of $83.3 million in production ramps for a new customer. Cost of sales.
Operating income increased $35.0 million in fiscal 2023 as compared to fiscal 2022, primarily as a result of an increase in net sales and improvements in operational efficiencies, partially offset by increased labor costs, a negative shift in customer mix, increased fixed costs, inflated component costs and an increase in S&A. APAC.
Operating income decreased $40.1 million in fiscal 2024 as compared to fiscal 2023, primarily as a result of a decrease in net sales and an increase in S&A, partially offset by a positive shift in customer mix and a decrease in fixed costs. APAC.
We define ROIC as tax-effected operating income before restructuring and other special items divided by average invested capital over a rolling five-quarter period. 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.
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.
Gross profit for fiscal 2023 increased $47.4 million, or 13.7%, as compared to fiscal 2022. Gross margin of 9.4% increased 30 basis points compared to fiscal 2022.
Gross profit for fiscal 2024 decreased $16.1 million, or 4.1%, as compared to fiscal 2023. Gross margin of 9.6% increased 20 basis points compared to fiscal 2023.
The increase was also driven by higher pricing associated with inflated component prices and a $10.8 million increase in production ramps for new customers. The increase was partially offset by a $5.2 million decrease due to the discontinuation of a program with an existing customer. Industrial.
The increase was partially offset by a decrease of $10.4 million due to the discontinuation of a program with an existing customer and reductions in inflated component pricing.
However, we evaluate from time to time potential uses of excess cash, which in the future may include share repurchases above those already authorized, a special dividend or recurring dividends. 34 Table of Contents 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.
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 increase is primarily attributable to increased demand, partially offset by an increase in advanced payments from customers with arrangements requiring revenue to be recognized over time as products are produced. Days in inventory for the three months ended September 30, 2023 increased ten days compared to the three months ended October 1, 2022.
The decrease is primarily attributable to a decrease in demand from customers with arrangements requiring revenue to be recognized over time as products are produced. Days in inventory for the three months ended September 28, 2024 decreased twenty-seven days compared to the three months ended September 30, 2023. The decrease is primarily due to inventory reduction efforts.
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.
Economic return is the amount our ROIC exceeds our WACC. 31 Table of Contents 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.
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.
The maximum facility amount under the MUFG RPA as of September 28, 2024 is $340.0 million. The maximum facility amount under the HSBC RPA as of September 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.
We sold $834.5 million and $787.5 million of trade accounts receivable under these programs during fiscal 2023 and 2022, respectively, in exchange for cash proceeds of $824.6 million and $783.1 million, respectively.
The terms of the HSBC RPA are generally consistent with the terms of the MUFG RPA previously discussed. We sold $854.7 million and $834.5 million of trade accounts receivable under these programs during fiscal 2024 and 2023, respectively, in exchange for cash proceeds of $844.6 million and $824.6 million, respectively.
During fiscal 2023, GE completed the separation of its healthcare business, GEHC, as a stand-alone company. 28 Table of Contents A discussion of net sales by reportable segment is presented below for the indicated fiscal years (in millions): 2023 2022 Net sales: AMER $ 1,558.2 $ 1,310.7 APAC 2,358.4 2,300.6 EMEA 403.0 316.3 Elimination of inter-segment sales (109.3) (116.2) Total net sales $ 4,210.3 $ 3,811.4 AMER.
A discussion of net sales by reportable segment is presented below for the indicated fiscal years (in millions): 2024 2023 Net sales: AMER $ 1,323.4 $ 1,558.2 APAC 2,213.1 2,358.4 EMEA 541.6 403.0 Elimination of inter-segment sales (117.3) (109.3) Total net sales $ 3,960.8 $ 4,210.3 AMER.
We deliver customer service excellence to leading global companies in the Healthcare/Life Sciences, Industrial and Aerospace/Defense market sectors by providing innovative, comprehensive solutions throughout the product's lifecycle. We provide these innovative solutions to customers in the Americas ("AMER"), Asia-Pacific ("APAC") and Europe, Middle East and Africa ("EMEA") regions.
We provide these solutions to market-leading as well as disruptive global companies in the Aerospace/Defense, Healthcare/Life Sciences, and Industrial market 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.
Net sales for fiscal 2023 in the Healthcare/Life Sciences sector increased $309.0 million, or 19.7%, as compared to fiscal 2022. The increase in net sales was driven by a $187.4 million increase due to production ramps of new products for existing customers and overall net increased customer end-market demand, inclusive of a partial easing of supply chain constraints.
The increase was driven by overall net increased customer end-market demand, an increase of $32.9 million in production ramps for new customers and $19.7 million in production ramps of new products for existing customers. The increase was partially offset by a decrease of $20.7 million due to disengagements with customers. Healthcare/Life Sciences .
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW Plexus Corp. and its subsidiaries (together "Plexus," the "Company", "our", or "we") participate in the Electronic Manufacturing Services ("EMS") industry. Since 1979, we have been partnering with companies to create the products that build a better world.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW Plexus Corp. and its subsidiaries (together "Plexus," the "Company," or "we") help 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.
Operating income increased $22.3 million in fiscal 2023 as compared to fiscal 2022, primarily as a result of an increase in net sales, a positive shift in customer mix and a reduction in inflated component costs. This was partially offset by reduced operational efficiencies, increased fixed costs and increased labor costs. EMEA.
Operating income decreased $0.3 million in fiscal 2024 as compared to fiscal 2023, primarily as a result of a decrease in net sales, partially offset by a positive shift in customer mix. EMEA.
The primary driver of the increase in operating income as compared to fiscal 2022 was the result of the increase in gross profit, partially offset by a $21.1 million increase in restructuring and other charges primarily due to an arbitration decision in Norway regarding a contractual matter as well as an increase in severance charges.
The primary drivers of the decrease in operating income and operating margin as compared to fiscal 2023 was the result of the decrease in gross profit and an increase of $14.9 million in S&A, partially offset by a decrease of $2.8 million in restructuring and other charges.
During fiscal 2023 and 2022, we purchased 425,746 and 38,397 shares under this program for $40.9 million and $3.5 million at an average price of $95.96 and $90.63 per share. As of September 30, 2023, $5.7 million of authority remained under the 2023 Program. All shares repurchased under the aforementioned programs were recorded as treasury stock.
During fiscal 2024 and 2023, we completed the 2023 Program by repurchasing 59,277 and 425,746 shares under this program for $5.7 million and $40.9 million at an average price of $95.59 and $95.96 per share, respectively.
Net sales for fiscal 2023 in the Industrial sector increased $3.8 million, or 0.2%, as compared to fiscal 2022. The increase in net sales was driven by a $63.4 million increase due to production ramps of new products for existing customers, a $42.4 million increase in production ramps for new customers and a partial easing of supply chain constraints.
The decrease was partially offset by an increase of $68.8 million due to production ramps of new products for existing customers and $41.4 million due to production ramps for new customers. 29 Table of Contents APAC. Net sales for fiscal 2024 in the APAC segment decreased $145.3 million, or 6.2%, as compared to fiscal 2023.
The increase was also driven by higher pricing associated with inflated component prices and a $24.1 million increase in production ramps for new customers. The increase was partially offset by an $17.9 million decrease due to the discontinuation of a program with an existing customer and an $11.1 million decrease for end-of-life products. APAC.
The decrease was further driven by a decrease of $31.9 million for end-of-life products. The decrease was partially offset by an increase of $87.4 million in production ramps of new products for existing customers and $14.3 million in production ramps for new customers. Industrial.
Net sales for fiscal 2023 in the Aerospace/Defense sector increased $86.1 million, or 17.5%, as compared to fiscal 2022. The increase was driven by overall net increased customer end-market demand and higher pricing associated with inflated component prices.
Net sales for fiscal 2024 in the Industrial sector decreased $49.0 million, or 2.8%, as compared to fiscal 2023. The decrease in net sales was driven by overall net decreased customer end-market demand as well as a reductions in inflated component pricing.
Net sales for fiscal 2023 in the AMER segment increased $247.5 million, or 18.9%, as compared to fiscal 2022. The increase in net sales was driven by a $219.1 million increase in production ramps of new products for existing customers and overall net increased customer end-market demand, inclusive of a partial easing of supply chain constraints.
The increase in net sales was driven by an increase of $89.3 million due to production ramps for new customers, $22.6 million due to production ramps of new products for existing customers and overall net increased customer end-market demand.
Net sales for fiscal 2023 in the APAC segment increased $57.8 million, or 2.5%, as compared to fiscal 2022. The increase in net sales was driven by a partial easing of supply chain constraints, a $40.0 million increase in production ramps of new products for existing customers and a $19.8 million increase in production ramps for new customers.
The decrease was partially offset by an increase of $20.0 million due to production ramps of new products for existing customers. EMEA. Net sales for fiscal 2024 in the EMEA segment increased $138.6 million, or 34.4%, as compared to fiscal 2023.
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.
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.
The increase was partially offset by overall net decreased customer end-market demand, primarily as a result of the Department of Commerce's export control restrictions on the People's Republic of China, as well as reductions in inflated component pricing and a $7.8 million decrease for end-of-life products. Aerospace/Defense .
The decrease in net sales was driven by overall net decreased customer end-market demand, inclusive of market-driven inventory corrections at our customers, as well as reductions in inflated component pricing. The decrease was further driven by a decrease of $32.5 million for end-of-life products and $8.5 million due to a disengagement with a customer.
The increase was also due to an increase in factoring fees of $5.4 million and foreign exchange losses of $1.1 million, partially offset by increases in other miscellaneous income of $5.4 million and interest income of $1.8 million. Income taxes. Income tax expense for fiscal 2023 was $21.9 million compared to $20.1 million for fiscal 2022.
The increase in other expense for fiscal 2024 was primarily driven by a decrease in other miscellaneous income of $4.9 million as prior year insurance recoveries did not recur and an increase in foreign exchange losses of $1.6 million, partially offset by a decrease in interest expense of $2.7 million due to lower borrowings on our credit facility. Income taxes.
Net sales for fiscal 2023 in the EMEA segment increased $86.7 million, or 27.4%, as compared to fiscal 2022. The increase in net sales was driven by overall net increased customer end-market demand, inclusive of a partial easing of supply chain constraints as well as a $15.5 million increase in production ramps for new customers.
Net sales for fiscal 2024 in the AMER segment decreased $234.8 million, or 15.1%, as compared to fiscal 2023. The decrease in net sales was driven by overall net decreased customer end-market demand, inclusive of market-driven inventory corrections at our customers, as well as reductions in inflated component pricing.
Operating income for fiscal 2023 increased $17.6 million, or 9.9%, as compared to fiscal 2022. Operating margin of 4.7% remained flat compared to fiscal 2022.
Operating income for fiscal 2024 decreased $28.1 million, or 14.4%, as compared to fiscal 2023. Operating margin of 4.2% decreased 50 basis points compared to fiscal 2023.
The increase was primarily attributable to lower sales in the fiscal fourth quarter of 2023 compared to the prior year, partially offset by a decrease in advanced payments received from customers to cover certain inventory balances. Free Cash Flow. We define free cash flow ("FCF"), a non-GAAP financial measure, as cash flow provided by (used in) operations less capital expenditures.
We define free cash flow ("FCF"), a non-GAAP financial measure, as cash flow provided by operations less capital expenditures. FCF was $341.3 million for fiscal 2024 compared to $61.8 million for fiscal 2023, an increase of $279.5 million.
Cash flows used in financing activities were $92.7 million for fiscal 2023 compared to cash flows provided by financing activities of $139.3 million for fiscal 2022.
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 $255.6 million for fiscal 2024 compared to $92.7 million for fiscal 2023.
The annual effective tax rate for fiscal 2024 is expected to be approximately 14.0% to 16.0% assuming no changes to tax laws. Net Income. Net income for fiscal 2023 increased $0.9 million, or 0.7%, from fiscal 2022 to $139.1 million.
See also Note 6, "Income Taxes," in Notes to Consolidated Financial Statements for additional information regarding our tax rate. The annual effective tax rate for fiscal 2025 is expected to be approximately 14.0% to 16.0%. Net income. Net income for fiscal 2024 decreased $27.3 million, or 19.6%, from fiscal 2023 to $111.8 million.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeOur percentages of transactions denominated in currencies other than the U.S. dollar for the indicated fiscal years were as follows: 2023 2022 Net Sales 8% 9% Total Costs 16% 16% 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.
Biggest changeOur percentages of transactions denominated in currencies other than the U.S. dollar for the indicated fiscal years were as follows: 2024 2023 Net Sales 11% 8% Total Costs 17% 16% 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 September 30, 2023, 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.
Based on our overall currency exposure, as of September 28, 2024, 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.
Based on our overall interest rate exposure, as of September 30, 2023, a 10.0% change in interest rates would not have a material effect on our financial position, results of operations, or cash flows. 38 Table of Contents
Based on our overall interest rate exposure, as of September 28, 2024, a 10.0% change in interest rates would not have a material effect on our financial position, results of operations, or cash flows. 39 Table of Contents
As of September 30, 2023, the borrowing rate under the Credit Facility was SOFR plus 1.10%. Borrowings under the 2018 NPA are based on a fixed interest rate, thus mitigating much of our interest rate risk.
As of September 28, 2024, 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.
As of September 30, 2023, our only material interest rate risk was associated with our Credit Facility.
As of September 28, 2024, our only material interest rate risk was associated with our Credit Facility.

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