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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________________________________________________________________________________________________________________
FORM 10-Q
____________________________________________________________________________________________________________________________________
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 30, 2024
OR
TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______
Commission File Number 001-14423
____________________________________________________________________________________________________________________________________
plxslogo10Q.gif
PLEXUS CORP.
(Exact name of registrant as specified in charter)
____________________________________________________________________________________________________________________________________
Wisconsin39-1344447
(State or other jurisdiction of incorporation) (I.R.S. Employer Identification No.)
One Plexus Way
Neenah, Wisconsin 54957
(Address of principal executive offices) (Zip Code)
Telephone Number (920969-6000
(Registrant’s telephone number, including Area Code) 
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, $0.01 par valuePLXSThe Nasdaq Global Select Market
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  o 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  x    No  o 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
x
Accelerated filer
Non-accelerated filer  
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  
As of April 30, 2024, there were 27,387,783 shares of common stock outstanding.
1

PLEXUS CORP.
TABLE OF CONTENTS
March 30, 2024
 
2

PART I.    FINANCIAL INFORMATION
ITEM 1.    FINANCIAL STATEMENTS

PLEXUS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands, except per share data)
(Unaudited)
Three Months EndedSix Months Ended
March 30,
2024
April 1,
2023
March 30,
2024
April 1,
2023
Net sales$966,900 $1,070,823 $1,949,507 $2,164,748 
Cost of sales878,837 967,830 1,773,304 1,960,556 
Gross profit88,063 102,993 176,203 204,192 
Selling and administrative expenses47,555 46,051 90,537 89,909 
Restructuring and other charges, net11,038  11,038  
Operating income29,470 56,942 74,628 114,283 
Other income (expense):
Interest expense(8,293)(8,287)(15,910)(15,181)
Interest income817 759 1,625 1,693 
Miscellaneous, net(3,027)(1,612)(6,529)(3,556)
Income before income taxes18,967 47,802 53,814 97,239 
Income tax expense2,728 6,958 8,360 14,205 
Net income$16,239 $40,844 $45,454 $83,034 
Earnings per share:
Basic$0.59 $1.48 $1.65 $3.00 
Diluted$0.58 $1.45 $1.62 $2.94 
Weighted average shares outstanding:
Basic27,542 27,661 27,513 27,650 
Diluted27,929 28,184 27,982 28,273 
Comprehensive income:
Net income$16,239 $40,844 $45,454 $83,034 
Other comprehensive (loss) income:
Derivative instrument and other fair value adjustments(1,609)2,924 6,788 11,363 
     Foreign currency translation adjustments(3,645)3,152 8,844 16,929 
          Other comprehensive (loss) income(5,254)6,076 15,632 28,292 
Total comprehensive income$10,985 $46,920 $61,086 $111,326 
The accompanying notes are an integral part of these condensed consolidated financial statements.
3

PLEXUS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(Unaudited)
March 30,
2024
September 30,
2023
ASSETS
Current assets:
Cash and cash equivalents$265,053 $256,233 
Restricted cash41 421 
Accounts receivable, net of allowances of $2,078 and $1,914, respectively
645,523 661,542 
Contract assets131,174 142,297 
Inventories1,518,729 1,562,037 
Prepaid expenses and other70,531 49,693 
Total current assets2,631,051 2,672,223 
Property, plant and equipment, net493,803 492,036 
Operating lease right-of-use assets63,106 69,363 
Deferred income taxes62,665 62,590 
Other assets26,032 24,960 
Total non-current assets645,606 648,949 
Total assets$3,276,657 $3,321,172 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt and finance lease obligations$245,964 $240,205 
Accounts payable627,427 646,610 
Advanced payments from customers716,172 760,351 
Accrued salaries and wages72,880 94,099 
Other accrued liabilities74,392 71,402 
Total current liabilities1,736,835 1,812,667 
Long-term debt and finance lease obligations, net of current portion192,025 190,853 
Accrued income taxes payable17,198 31,382 
Long-term operating lease liabilities33,915 38,552 
Deferred income taxes 4,429 4,350 
Other liabilities32,493 28,986 
Total non-current liabilities280,060 294,123 
Total liabilities2,016,895 2,106,790 
Commitments and contingencies
Shareholders’ equity:
Preferred stock, $0.01 par value, 5,000 shares authorized, none issued or outstanding
  
Common stock, $0.01 par value, 200,000 shares authorized, 54,487 and 54,297 shares issued, respectively, and 27,470 and 27,466 shares outstanding, respectively
545 543 
Additional paid-in capital663,130 661,270 
Common stock held in treasury, at cost, 27,017 and 26,831 shares, respectively
(1,151,997)(1,134,429)
Retained earnings1,756,782 1,711,328 
Accumulated other comprehensive loss(8,698)(24,330)
Total shareholders’ equity1,259,762 1,214,382 
Total liabilities and shareholders’ equity$3,276,657 $3,321,172 
The accompanying notes are an integral part of these condensed consolidated financial statements.
4

PLEXUS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(in thousands)
(Unaudited)
Three Months EndedSix Months Ended
March 30, 2024April 1,
2023
March 30, 2024April 1,
2023
Common stock - shares outstanding
Beginning of period27,504 27,612 27,466 27,679 
Exercise of stock options and vesting of other share-based awards152 160 190 209 
Treasury shares purchased(186)(125)(186)(241)
End of period27,470 27,647 27,470 27,647 
Total stockholders' equity, beginning of period$1,266,755 $1,150,259 $1,214,382 $1,095,731 
Common stock - par value
Beginning of period543 541 543 541 
Exercise of stock options and vesting of other share-based awards2 2 2 2 
End of period545 543 545 543 
Additional paid-in capital
Beginning of period663,542 654,059 661,270 652,467 
Share-based compensation expense7,506 5,799 12,685 11,482 
Exercise of stock options and vesting of other share-based awards, including tax withholding(7,918)(8,191)(10,825)(12,282)
End of period663,130 651,667 663,130 651,667 
Treasury stock
Beginning of period(1,134,429)(1,104,953)(1,134,429)(1,093,483)
Treasury shares purchased(17,568)(12,407)(17,568)(23,877)
End of period(1,151,997)(1,117,360)(1,151,997)(1,117,360)
Retained earnings
Beginning of period1,740,543 1,614,424 1,711,328 1,572,234 
Net income16,239 40,844 45,454 83,034 
End of period1,756,782 1,655,268 1,756,782 1,655,268 
Accumulated other comprehensive loss
Beginning of period(3,444)(13,812)(24,330)(36,028)
Other comprehensive (loss) income(5,254)6,076 15,632 28,292 
End of period(8,698)(7,736)(8,698)(7,736)
Total stockholders' equity, end of period$1,259,762 $1,182,382 $1,259,762 $1,182,382 

The accompanying notes are an integral part of these condensed consolidated financial statements.
5

PLEXUS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
Six Months Ended
March 30, 2024April 1,
2023
Cash flows from operating activities
Net income$45,454 $83,034 
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization38,514 33,434 
Share-based compensation expense and related charges12,685 11,482 
Other, net1,289 460 
Changes in operating assets and liabilities, excluding impacts of currency:
Accounts receivable18,055 84,392 
Contract assets11,045 5,988 
Inventories47,850 (33,910)
Other current and non-current assets(19,505)(3,007)
Accrued income taxes payable(10,249)(8,064)
Accounts payable(4,635)(86,054)
Advanced payments from customers(45,567)(23,067)
Other current and non-current liabilities(10,169)(7,532)
Cash flows provided by operating activities84,767 57,156 
Cash flows from investing activities
Payments for property, plant and equipment(51,516)(49,491)
Other, net336 1,876 
Cash flows used in investing activities(51,180)(47,615)
Cash flows from financing activities
Borrowings under debt agreements329,000 354,000 
Payments on debt and finance lease obligations(326,240)(336,267)
Repurchases of common stock(17,568)(23,877)
Proceeds from exercise of stock options203  
Payments related to tax withholding for share-based compensation(11,025)(12,280)
Cash flows used in financing activities(25,630)(18,424)
Effect of exchange rate changes on cash and cash equivalents483 3,777 
Net increase (decrease) in cash and cash equivalents and restricted cash8,440 (5,106)
Cash and cash equivalents and restricted cash:
Beginning of period256,654 275,470 
End of period$265,094 $270,364 
The accompanying notes are an integral part of these condensed consolidated financial statements.
6

PLEXUS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 30, 2024 AND APRIL 1, 2023
Unaudited

1.    Basis of Presentation
Basis of Presentation:
The accompanying Condensed Consolidated Financial Statements included herein have been prepared by Plexus Corp. and its subsidiaries (together “Plexus” or the “Company”) without audit and pursuant to the rules and regulations of the United States (“U.S.”) Securities and Exchange Commission (“SEC”). The accompanying Condensed Consolidated Financial Statements reflect all adjustments, which include normal recurring adjustments necessary for the fair statement of the condensed consolidated financial position of the Company as of March 30, 2024 and September 30, 2023, the results of operations and shareholders' equity for the three and six months ended March 30, 2024 and April 1, 2023, and the cash flows for the same six month periods.

The Company’s fiscal year ends on the Saturday closest to September 30. The Company uses a “4-4-5” weekly accounting system for the interim periods in each quarter. Each quarter, therefore, ends on a Saturday at the end of the 4-4-5 period. Periodically, an additional week must be added to the fiscal year to re-align with the Saturday closest to September 30. All fiscal quarters presented herein included 13 weeks.
Certain information and footnote disclosures, normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP"), have been condensed or omitted pursuant to the SEC’s rules and regulations dealing with interim financial statements. However, the Company believes that the disclosures made in the Condensed Consolidated Financial Statements included herein are adequate to make the information presented not misleading. It is suggested that these Condensed Consolidated Financial Statements be read in conjunction with the Consolidated Financial Statements and notes thereto included in the Company’s 2023 Annual Report on Form 10-K.
The preparation of financial statements requires management to make estimates and assumptions that affect the amounts reported in the Condensed Consolidated Financial Statements and notes thereto. The Company has considered information available as of the date of issuance of these financial statements and, other than the information disclosed in Note 16, "Subsequent Event", is not aware of any specific events or circumstances that would require an update to its estimates or judgments or a revision of the carrying value of its assets or liabilities. These estimates may change as new events occur and additional information becomes available. Actual results could differ materially from these estimates.
Reclassification:
Certain prior year amounts in the consolidated financial statements and notes thereto have been reclassified related to advanced payments from customers to conform to the current year's presentation.
Recently Adopted Accounting Pronouncements:
In September 2022, the FASB issued ASU 2022-04 Supplier Finance Programs (Subtopic 405-50), which requires enhanced disclosures about supplier finance programs. The Company adopted this guidance during the first quarter of fiscal 2024 with no material impact to the Company's Consolidated Financial Statements; however, the impact of the new standard on future periods will depend on the facts and circumstances of future transactions.
Recently Issued Accounting Pronouncements Not Yet Adopted:
In March 2024, the SEC adopted final rules to require registrants to disclose certain climate-related information in registration statements and annual reports. The SEC stayed its climate disclosure rules to facilitate the orderly judicial resolution of pending legal challenges. We are currently evaluating the impacts that the SEC's rule will have on our financial statement disclosures.
In November 2023, the FASB issued ASU 2023-07 Segment Reporting (Topic 280), which requires enhanced disclosures for segment reporting. The guidance is effective for the Company beginning in the first quarter of fiscal 2025. We are currently evaluating the impact that the updated standard will have on our financial statement disclosures.
In December 2023, the FASB issued ASU 2023-09 Income Taxes (Topic 740), which requires enhanced disclosures for income taxes. The guidance is effective for the Company beginning in the first quarter of fiscal 2026. Early adoption is permitted. We are currently evaluating the impact that the updated standard will have on our financial statement disclosures.
7

The Company does not believe that any other recently issued accounting standards will have a material impact on its Consolidated Financial Statements or apply to its operations.

2.    Inventories
Inventories as of March 30, 2024 and September 30, 2023 consisted of the following (in thousands):
March 30,
2024
September 30,
2023
Raw materials$1,378,789 $1,409,638 
Work-in-process50,745 66,340 
Finished goods89,195 86,059 
Total inventories$1,518,729 $1,562,037 
In certain circumstances, per contractual terms, customer deposits are received by the Company to offset inventory risks. The total amount of customer deposits related to inventory and included within advanced payments from customers on the accompanying Condensed Consolidated Balance Sheets as of March 30, 2024 and September 30, 2023 was $536.9 million and $590.2 million, respectively.

3.    Debt, Finance Lease and Other Financing Obligations
Debt and finance lease obligations as of March 30, 2024 and September 30, 2023 consisted of the following (in thousands):
March 30,
2024
September 30,
2023
4.05% Senior Notes, due June 15, 2025
$100,000 $100,000 
4.22% Senior Notes, due June 15, 2028
50,000 50,000 
Borrowings under the Credit Facility239,000 233,000 
Finance lease and other financing obligations49,988 49,233 
Unamortized deferred financing fees(999)(1,175)
Total obligations437,989 431,058 
Less: current portion(245,964)(240,205)
Long-term debt, finance lease and other financing obligations, net of current portion$192,025 $190,853 
As of March 30, 2024, the Company was in compliance with covenants for all debt agreements.
During the six months ended March 30, 2024, the highest daily borrowing under the Company's 5-year senior unsecured revolving credit facility (referred to as the "Credit Facility") was $376.0 million; the average daily borrowings were $300.3 million. During the six months ended April 1, 2023, the highest daily borrowing was $412.0 million; the average daily balance was $344.5 million.
The fair value of the Company’s debt, excluding finance lease and other financing obligations, was $383.6 million and $374.3 million as of March 30, 2024 and September 30, 2023, respectively. The carrying value of the Company's debt, excluding finance lease and other financing obligations, was $389.0 million and $383.0 million as of March 30, 2024 and September 30, 2023, respectively. If measured at fair value in the financial statements, the Company's debt would be classified as Level 2 in the fair value hierarchy. Refer to Note 4, "Derivatives and Fair Value Measurements," for further information regarding the Company's fair value calculations and classifications.


8

4.    Derivatives and Fair Value Measurements
All derivatives are recognized in the accompanying Condensed Consolidated Balance Sheets at their estimated fair value. The Company uses derivatives to manage the variability of foreign currency obligations. The Company has cash flow hedges related to forecasted foreign currency obligations, in addition to non-designated hedges to manage foreign currency exposures associated with certain foreign currency denominated assets and liabilities. The Company does not enter into derivatives for speculative purposes.
The Company designates some foreign currency exchange contracts as cash flow hedges of forecasted foreign currency expenses. Changes in the fair value of the derivatives that qualify as cash flow hedges are recorded in "Accumulated other comprehensive loss" in the accompanying Condensed Consolidated Balance Sheets until earnings are affected by the variability of the cash flows. In the next twelve months, the Company estimates that $1.8 million of unrealized gains, net of tax, related to cash flow hedges will be reclassified from other comprehensive income into earnings. Changes in the fair value of the non-designated derivatives related to recognized foreign currency denominated assets and liabilities are recorded in "Miscellaneous, net" in the accompanying Condensed Consolidated Statements of Comprehensive Income.
The Company enters into forward currency exchange contracts for its operations in certain jurisdictions in the AMER and APAC segments on a rolling basis. The Company had cash flow hedges outstanding with a notional value of $275.0 million as of March 30, 2024, and a notional value of $215.4 million as of September 30, 2023. These forward currency contracts fix the exchange rates for the settlement of future foreign currency obligations that have yet to be realized. The total fair value of the forward currency exchange contracts was a $1.8 million asset as of March 30, 2024 and a $5.0 million liability as of September 30, 2023.
The Company had additional forward currency exchange contracts outstanding as of March 30, 2024, with a notional value of $220.7 million; there were $145.5 million of such contracts outstanding as of September 30, 2023. The Company did not designate these derivative instruments as hedging instruments. The net settlement amount (fair value) related to these contracts is recorded on the Condensed Consolidated Balance Sheets as either a current or long-term asset or liability, depending on the term, and as an element of "Miscellaneous, net" in the Condensed Consolidated Statements of Comprehensive Income. The total fair value of these derivatives was a $0.3 million liability as of March 30, 2024 and a $1.3 million liability as of September 30, 2023.
The tables below presents information regarding the fair values of derivative instruments and the effects of derivative instruments on the Company’s Condensed Consolidated Financial Statements:
Fair Values of Derivative Instruments (in thousands)
  Derivative AssetsDerivative Liabilities
    March 30,
2024
September 30,
2023
  March 30,
2024
September 30,
2023
Derivatives designated as hedging instrumentsBalance sheet
classification
Fair ValueFair ValueBalance sheet
classification
Fair ValueFair Value
Foreign currency forward contractsPrepaid expenses and other$4,857 $2,610 Other accrued liabilities$3,049 $7,590 
Fair Values of Derivative Instruments (in thousands)
  Derivative AssetsDerivative Liabilities
    March 30,
2024
September 30,
2023
  March 30,
2024
September 30,
2023
Derivatives not designated as hedging instrumentsBalance sheet
classification
Fair ValueFair ValueBalance sheet
classification
Fair ValueFair Value
Foreign currency forward contractsPrepaid expenses and other$780 $1,337 Other accrued liabilities$1,036 $2,669 
The Effect of Cash Flow Hedge Accounting on Accumulated Other Comprehensive Loss ("OCL") (in thousands)
for the Three Months Ended
Derivatives in cash flow hedging relationshipsAmount of Gain (Loss) Recognized in OCL on Derivatives
March 30, 2024April 1, 2023
Foreign currency forward contracts$(2,654)$3,574 
9

Derivative Impact on Gain (Loss) Recognized in Condensed Consolidated Statements of Comprehensive Income (in thousands)
for the Three Months Ended
Derivatives in cash flow hedging relationshipsClassification of Gain (Loss) Reclassified from Accumulated OCL into IncomeAmount of Gain (Loss) Reclassified from Accumulated OCL into Income 
March 30, 2024April 1, 2023
Foreign currency forward contractsCost of sales$(991)$516 
Foreign currency forward contractsSelling and administrative expenses(54)134 
Derivatives not designated as hedging instrumentsLocation of Loss Recognized on Derivatives in IncomeAmount of Loss on Derivatives Recognized in Income
March 30, 2024April 1, 2023
Foreign currency forward contractsMiscellaneous, net$(698)$(684)

The Effect of Cash Flow Hedge Accounting on Accumulated Other Comprehensive Loss ("OCL") (in thousands)
for the Six Months Ended
Derivatives in cash flow hedging relationshipsAmount of Gain Recognized in OCL on Derivatives
March 30, 2024April 1, 2023
Foreign currency forward contracts$2,785 $9,724 
Derivative Impact on (Loss) Gain Recognized in Condensed Consolidated Statements of Comprehensive Income (in thousands)
for the Six Months Ended
Derivatives in cash flow hedging relationshipsClassification of Loss Reclassified from Accumulated OCL into IncomeAmount of Loss Reclassified from Accumulated OCL into Income 
March 30, 2024April 1, 2023
Foreign currency forward contractsCost of sales$(217)$(1,616)
Foreign currency forward contractsSelling and administrative expenses(3,786)(23)
Derivatives not designated as hedging instrumentsLocation of Gain Recognized on Derivatives in IncomeAmount of Gain on Derivatives Recognized in Income
March 30, 2024April 1, 2023
Foreign currency forward contractsMiscellaneous, net$1,671 $63 
Fair Value Measurements:
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (or exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The Company uses quoted market prices when available or discounted cash flows to calculate fair value. The accounting guidance establishes a fair value hierarchy based on three levels of inputs that may be used to measure fair value. The input levels are:
Level 1: Quoted (observable) market prices in active markets for identical assets or liabilities.
Level 2: Inputs other than Level 1 that are observable, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability.
Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the asset or liability.
The following table lists the fair values of the Company’s derivatives as of March 30, 2024 and September 30, 2023 by input level:
10

Fair Value Measurements Using Input Levels Asset / (Liability) (in thousands)
Fiscal period ended March 30, 2024
Level 1Level 2Level 3Total
Derivatives    
Foreign currency forward contracts$ $1,552 $ $1,552 
Fiscal period ended September 30, 2023
Derivatives
Foreign currency forward contracts$ $(6,312)$ $(6,312)
The fair value of foreign currency forward contracts is determined using a market approach, which includes obtaining directly or indirectly observable values from third parties active in the relevant markets. Inputs in the fair value of the foreign currency forward contracts include prevailing forward and spot prices for currency.

5.    Income Taxes
Income tax expense for the three and six months ended March 30, 2024 was $2.7 million and $8.4 million compared to $7.0 million and $14.2 million for the three and six months ended April 1, 2023.
The effective tax rates for the three and six months ended March 30, 2024 were 14.4% and 15.5%, respectively, compared to the effective tax rate of 14.6% for the three and six months ended April 1, 2023. The increase for the six months ended March 30, 2024 compared to the six months ended April 1, 2023 is primarily due to a change in the geographic distribution of pre-tax book income.
The amount of unrecognized tax benefits recorded for uncertain tax positions increased by $1.0 million for the three months ended March 30, 2024. The Company recognizes accrued interest and penalties on uncertain tax positions as a component of income tax expense. The amount of interest and penalties recorded for the three and six months ended March 30, 2024 was not material.
One or more uncertain tax positions may be settled within the next 12 months. Settlement of these matters is not expected to have a material effect on the Company's consolidated results of operations, financial position and cash flows. The Company is not currently under examination by taxing authorities in the U.S. or any foreign jurisdiction.
The Company maintains valuation allowances when it is more likely than not that all or a portion of a net deferred tax asset will not be realized. During the three months ended March 30, 2024, the Company continued to record a full valuation allowance against its net deferred tax assets in certain jurisdictions within the EMEA and APAC segments and a partial valuation against its net deferred tax assets in certain jurisdictions within the AMER segment, as it was more likely than not that these assets would not be fully realized based primarily on historical performance. The Company will continue to provide a valuation allowance against its net deferred tax assets in each of the applicable jurisdictions going forward until it determines it is more likely than not that the deferred tax assets will be realized.

11


6.    Earnings Per Share
The following is a reconciliation of the amounts utilized in the computation of basic and diluted earnings per share for the three and six months ended March 30, 2024 and April 1, 2023 (in thousands, except per share amounts):
Three Months EndedSix Months Ended
 March 30, 2024April 1, 2023March 30, 2024April 1, 2023
Net income$16,239 $40,844 $45,454 $83,034 
Basic weighted average common shares outstanding27,542 27,661 27,513 27,650 
Dilutive effect of share-based awards and options outstanding387 523 469 623 
Diluted weighted average shares outstanding27,929 28,184 27,982 28,273 
Earnings per share:
Basic$0.59 $1.48 $1.65 $3.00 
Diluted$0.58 $1.45 $1.62 $2.94 
For the three and six months ended March 30, 2024 and April 1, 2023, share-based awards for less than 0.1 million shares were not included in the computation of diluted earnings per share as they were antidilutive awards.
See also Note 12, "Shareholders' Equity," for information regarding the Company's share repurchase plans.

7.    Leases
The components of lease expense for the three and six months ended March 30, 2024 and April 1, 2023 indicated were as follows (in thousands):
Three Months EndedSix Months Ended
March 30,
2024
April 1,
2023
March 30,
2024
April 1,
2023
Finance lease expense:
   Amortization of right-of-use assets$1,506 $1,952 $3,024 $3,566 
   Interest on lease liabilities1,375 1,260 2,697 2,532 
Operating lease expense2,652 2,736 5,270 5,342 
Other lease expense1,165 1,830 3,227 3,596 
Total$6,698 $7,778 $14,218 $15,036 
Based on the nature of the right-of-use ("ROU") asset, amortization of finance lease ROU assets, operating lease expense and other lease expense are recorded within either cost of goods sold or selling and administrative expenses and interest on finance lease liabilities is recorded within interest expense on the Condensed Consolidated Statements of Comprehensive Income. Other lease expense includes lease expense for leases with an estimated total term of twelve months or less and variable lease expense related to variations in lease payments as a result of a change in factors or circumstances occurring after the lease possession date.
12

The following tables sets forth the amount of lease assets and lease liabilities included in the Company’s Condensed Consolidated Balance Sheets (in thousands):
Financial Statement Line ItemMarch 30,
2024
September 30,
2023
ASSETS
   Finance lease assetsProperty, plant and equipment, net$38,308 $37,391 
   Operating lease assetsOperating lease right-of-use assets63,106 69,363 
      Total lease assets$101,414 $106,754 
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
  Finance lease liabilitiesCurrent portion of long-term debt and finance lease obligations$4,574 $4,034 
Operating lease liabilitiesOther accrued liabilities8,281 8,363 
Non-current
  Finance lease liabilitiesLong-term debt and finance lease obligations, net of current portion40,751 39,271 
  Operating lease liabilitiesLong-term operating lease liabilities33,915 38,552 
        Total lease liabilities$87,521 $90,220 
As of March 30, 2024, we have a lease signed but not yet commenced totaling payments of $14.6 million. This lease will commence in the next twelve months, with a lease term of 60 years.

8.    Share-Based Compensation
At the 2024 Annual Meeting of Shareholders on February 14, 2024, the Company's shareholders approved the Plexus Corp. 2024 Omnibus Incentive Plan (the "2024 Plan"). The 2024 Plan is a stock and cash-based incentive plan, and includes provisions by which the Company may grant executive officers, employees and directors stock options, stock appreciation rights ("SARs"), restricted stock (including restricted stock units ("RSUs")), performance stock awards (including performance stock units ("PSUs")), other stock awards and cash incentive awards. Similar awards were offered under its predecessor, the Plexus Corp. 2016 Omnibus Incentive Plan (the "2016 Plan"), which is no longer being used for grants; however, outstanding awards granted under the 2016 Plan and its predecessor continue until vesting, exercise, forfeiture or expiration.
The Company recognized $7.1 million and $12.4 million of compensation expense associated with share-based awards for the three and six months ended March 30, 2024, respectively, and $5.9 million and $11.7 million for the three and six months ended April 1, 2023, respectively.

9.    Litigation
The Company is party to lawsuits in the ordinary course of business. We record provisions in the consolidated financial statements for pending legal matters when we determine that an unfavorable outcome is probable, and the amount of the loss can be reasonably estimated.
Management does not believe that any such proceedings, individually or in the aggregate, will have a material positive or adverse effect on the Company’s consolidated financial position, results of operations or cash flows. However, legal proceedings and regulatory and governmental matters are subject to inherent uncertainties, and unfavorable rulings or other events could occur. Unfavorable resolutions could involve substantial fines, civil or criminal penalties, and other expenditures.



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10.    Reportable Segments
Reportable segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in assessing performance and allocating resources. The Company uses an internal management reporting system, which provides important financial data to evaluate performance and allocate the Company’s resources on a regional basis. Net sales for the segments are attributed to the region in which the product is manufactured or the service is performed. The services provided, manufacturing processes used, class of customers serviced and order fulfillment processes used are similar and generally interchangeable across the segments. A segment’s performance is evaluated based upon its operating income. A segment’s operating income includes its net sales less cost of sales and selling and administrative expenses, but excludes corporate and other expenses. Corporate and other expenses primarily represent corporate selling and administrative expenses, and restructuring and other charges, if any. These costs are not allocated to the segments, as management excludes such costs when assessing the performance of the segments. Inter-segment transactions are generally recorded at amounts that approximate arm’s length transactions. The accounting policies for the segments are the same as for the Company taken as a whole.
Information about the Company’s three reportable segments for the three and six months ended March 30, 2024 and April 1, 2023 is as follows (in thousands):
Three Months EndedSix Months Ended
 March 30,
2024
April 1,
2023
March 30,
2024
April 1,
2023
Net sales:
AMER$321,782 $407,806 $655,479 $797,468 
APAC520,992 587,270 1,073,476 1,229,174 
EMEA154,762 101,794 276,700 191,167 
Elimination of inter-segment sales(30,636)(26,047)(56,148)(53,061)
$966,900 $1,070,823 $1,949,507 $2,164,748 
  
Operating income (loss):
AMER$4,978 $25,767 $13,727 $43,182 
APAC67,213 69,728 138,632 148,134 
EMEA5,745 1,879 5,508 1,240 
Corporate and other costs(48,466)(40,432)(83,239)(78,273)
29,470 56,942 74,628 114,283 
Other income (expense):
Interest expense(8,293)(8,287)(15,910)(15,181)
Interest income817 759 1,625 1,693 
Miscellaneous, net(3,027)(1,612)(6,529)(3,556)
Income before income taxes$18,967 $47,802 $53,814 $97,239 
  
 March 30,
2024
September 30,
2023
Total assets:
AMER$1,047,671 $1,124,555 
APAC1,618,174 1,696,795 
EMEA511,575 462,199 
Corporate and eliminations99,237 37,623 
$3,276,657 $3,321,172 
  


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11.    Guarantees
The Company offers certain indemnifications under its customer manufacturing agreements. In the normal course of business, the Company may from time to time be obligated to indemnify its customers or its customers’ customers against damages or liabilities arising out of the Company’s negligence, misconduct, breach of contract, or infringement of third-party intellectual property rights. Certain agreements have extended broader indemnification, and while most agreements have contractual limits, some do not. However, the Company generally does not provide for such indemnities and seeks indemnification from its customers for damages or liabilities arising out of the Company’s adherence to customers’ specifications or designs or use of materials furnished, or directed to be used, by its customers. The Company does not believe its obligations under such indemnities are material.
In the normal course of business, the Company also provides its customers a limited warranty covering workmanship, and in some cases materials, on products manufactured by the Company. Such warranty generally provides that products will be free from defects in the Company’s workmanship and meet mutually agreed-upon specifications for periods generally ranging from 12 months to 24 months. The Company’s obligation is generally limited to correcting, at its expense, any defect by repairing or replacing such defective product. The Company’s warranty generally excludes defects resulting from faulty customer-supplied components, design defects or damage caused by any party or cause other than the Company.
The Company provides an estimate of costs that may be incurred under its limited warranty at the time product revenue is recognized and establishes additional reserves for specifically identified product issues. These costs primarily include labor and materials, as necessary, associated with repair or replacement and are included in the Company's accompanying Condensed Consolidated Balance Sheets in "other accrued liabilities." The primary factors that affect the Company’s warranty liability include the value and the number of shipped units and historical and anticipated rates of warranty claims. As these factors are impacted by actual experience and future expectations, the Company assesses the adequacy of its recorded warranty liabilities and adjusts the amounts as necessary.
Below is a table summarizing the activity related to the Company’s limited warranty liability for the six months ended March 30, 2024 and April 1, 2023 (in thousands):
Six Months Ended
March 30, 2024April 1,
2023
Reserve balance, beginning of period$5,821 $6,925 
Accruals for warranties issued during the period1,726 1,254 
   Settlements (in cash or in kind) during the period(476)(2,243)
Reserve balance, end of period$7,071 $5,936 

12.    Shareholders' Equity
On August 18, 2022, the Board of Directors approved a share repurchase program under which the Company is authorized to repurchase up to $50.0 million of its common stock (the "2023 Program"). The 2023 Program completed in February 2024. During the three and six months ended March 30, 2024, the Company repurchased 59,277 shares under this program for $5.7 million at an average price of $95.59 per share. During the three months ended April 1, 2023, the Company repurchased 125,639 shares under this program for $12.4 million at an average price of $98.75 per share. During the six months ended April 1, 2023, the Company repurchased 241,362 shares under this program for $23.9 million at an average price of $98.93 per share.
On January 16, 2024, the Company announced a share repurchase program authorized by the Board of Directors under which the Company is authorized to repurchase up to $50.0 million of its common stock (the "2024 Program"). The 2024 Program became effective upon completion of the 2023 Program, which occurred in February 2024, and has no expiration. During the three and six months ended March 30, 2024, the Company repurchased 126,850 shares under this program for $11.9 million at an average price of $93.83 per share. As of March 30, 2024, $38.1 million of authority remained under the 2024 Program.
All shares repurchased under the aforementioned programs were recorded as treasury stock.

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13.    Trade Accounts Receivable Sale Programs
The Company has 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 the Company may elect to sell receivables at a discount. All facilities are uncommitted facilities. The maximum facility amount under the MUFG RPA is $340.0 million. The maximum facility amount under the HSBC RPA is $70.0 million. The MUFG RPA will be automatically extended each year unless any party gives no less than 10 days prior notice that the agreement should not be extended. The terms of the HSBC RPA are generally consistent with the terms of the MUFG RPA.
Transfers of receivables under the programs are accounted for as sales and, accordingly, receivables sold under the programs are excluded from accounts receivable on the Condensed Consolidated Balance Sheets and are reflected as cash provided by operating activities on the Condensed Consolidated Statements of Cash Flows. Proceeds from the transfer reflect the face value of the receivables less a discount. The sale discount is recorded within "Miscellaneous, net" in the Condensed Consolidated Statements of Comprehensive Income in the period of the sale. The Company continues servicing receivables sold and performing all accounts receivable administrative functions, in exchange receives a servicing fee, under both the MUFG RPA and HSBC RPA. Servicing fees related to trade accounts receivable programs recognized during the three and six months ended March 30, 2024 and April 1, 2023 were not material.

The Company sold $213.8 million and $225.7 million of trade accounts receivable under these programs, or their predecessors, during the three months ended March 30, 2024 and April 1, 2023, respectively, in exchange for cash proceeds of $211.1 million and $222.9 million, respectively.
The Company sold $437.4 million and $411.3 million of trade accounts receivable under these programs, or their predecessors, during the six months ended March 30, 2024 and April 1, 2023, respectively, in exchange for cash proceeds of $432.1 million and $406.5 million, respectively.
As of March 30, 2024 and September 30, 2023, $217.8 million and $220.5 million, respectively, of accounts receivables sold under trade accounts receivable programs and subject to servicing by the Company remained outstanding and had not yet been collected by MUFG Bank or HSBC Bank.

14.    Revenue from Contracts with Customers
Revenue is recognized over time for arrangements with customers for which: (i) the Company's performance does not create an asset with an alternative use to the Company, and (ii) the Company has an enforceable right to payment, including reasonable profit margin, for performance completed to date. Revenue recognized over time is estimated based on costs incurred to date plus a reasonable profit margin. If either of the two conditions noted above are not met to recognize revenue over time, revenue is recognized following the transfer of control of such products to the customer, which typically occurs upon shipment or delivery depending on the terms of the underlying arrangement.
The Company recognizes revenue when a contract exists and when, or as, it satisfies a performance obligation by transferring control of a product or service to a customer. Contracts are accounted for when they have approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer.
The Company generally enters into a master services arrangement that establishes the framework under which business will be conducted. These arrangements represent the master terms and conditions of the Company's services that apply to individual orders, but they do not commit the customer to work with, or to continue to work with, the Company nor do they obligate the customer to any specific volume or pricing of purchases. Moreover, these terms can be amended in appropriate situations.
Customer purchase orders are received for specific quantities with predominantly fixed pricing and delivery requirements. Thus, for the majority of our contracts, there is no guarantee of any revenue to the Company until a customer submits a purchase order. As a result, the Company generally considers its arrangement with a customer to be the combination of the master services arrangement and the purchase order. Most of the Company's arrangements with customers create a single performance obligation as the promise to transfer the individual manufactured product or service is capable of being distinct.
The Company’s performance obligations are satisfied over time as work progresses or at a point in time. A performance obligation is satisfied over time if the Company has an enforceable right to payment, including a reasonable profit margin.
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Determining if an enforceable right to payment includes a reasonable profit margin requires judgment and is assessed on a contract-by-contract basis.
Generally, there are no subjective customer acceptance requirements or further obligations related to goods or services provided; if such requirements or obligations exist, then a sale is recognized at the time when such requirements are completed and such obligations are fulfilled.
The Company does not allow for a general right of return. Net sales include amounts billed to customers for shipping and handling and out-of-pocket expenses. The corresponding shipping and handling costs and out-of-pocket expenses are included in cost of sales. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from net sales.
Contract Costs
For contracts requiring over time revenue recognition, the selection of the method to measure progress toward completion requires judgment and is based on the nature of the products or services to be provided. The Company uses a cost-based input measurement of progress because it best depicts the transfer of assets to the customer, which occurs as costs are incurred during the manufacturing process or as services are rendered. Under the cost-based measure of progress, the extent of progress toward completion is measured based on the costs incurred to date.
There were no other costs to obtain or fulfill customer contracts.
Disaggregated Revenue
The table below includes the Company’s revenue for the fiscal years indicated disaggregated by geographic reportable segment and market sector (in thousands):
Three Months Ended
March 30, 2024
Reportable Segment:
AMERAPACEMEATotal
Market Sector:
Healthcare/Life Sciences$162,816 $157,015 $58,580 $378,411 
Industrial71,007 275,494 71,683 418,184 
Aerospace/Defense84,677 62,356 23,272 170,305 
     External revenue318,500 494,865 153,535 966,900 
Inter-segment sales3,282 26,127 1,227 30,636 
    Segment revenue$321,782 $520,992 $154,762 $997,536 
Three Months Ended
April 1, 2023
Reportable Segment:
AMERAPACEMEATotal
Market Sector:
Healthcare/Life Sciences$228,245 $206,442 $52,683 $487,370 
Industrial98,686 312,840 27,755 439,281 
Aerospace/Defense76,731 47,445 19,996 144,172 
     External revenue403,662 566,727 100,434 1,070,823 
Inter-segment sales4,144 20,543 1,360 26,047 
    Segment revenue$407,806 $587,270 $101,794 $1,096,870 
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Six Months Ended
March 30, 2024
Reportable Segment:
AMERAPACEMEATotal
Market Sector:
Healthcare/Life Sciences$328,423 $321,737 $109,184 $759,344 
Industrial154,908 580,252 117,683 852,843 
Aerospace/Defense167,398 123,048 46,874 337,320 
     External revenue650,729 1,025,037 273,741 1,949,507 
Inter-segment sales4,750 48,439 2,959 56,148 
    Segment revenue$655,479 $1,073,476 $276,700 $2,005,655 
Six Months Ended
April 1, 2023
Reportable Segment:
AMERAPACEMEATotal
Market Sector:
Healthcare/Life Sciences$443,626 $429,732 $101,879 $975,237 
Industrial201,713 663,424 46,226 911,363 
Aerospace/Defense144,753 93,099 40,296 278,148 
     External revenue790,092 1,186,255 188,401 2,164,748 
Inter-segment sales7,376 42,919 2,766 53,061 
    Segment revenue$797,468 $1,229,174 $191,167 $2,217,809 
For both the three and six months ended March 30, 2024, approximately 83% of the Company's revenue was recognized as products and services transferred over time. For the three and six months ended April 1, 2023, approximately 80% and 81%, respectively, of the Company's revenue was recognized as products and services transferred over time.
Contract Balances
The timing of revenue recognition, billings and cash collections results in billed accounts receivable, contract assets and deferred revenue on the Company’s accompanying Condensed Consolidated Balance Sheets.
Contract Assets: For performance obligations satisfied at a point in time, billing occurs subsequent to revenue recognition, at which point the customer has been billed and the resulting asset is recorded within accounts receivable. For performance obligations satisfied over time as work progresses, the Company has an unconditional right to payment, which results in the recognition of contract assets. The following table summarizes the activity in the Company's contract assets during the six months ended March 30, 2024 and April 1, 2023 (in thousands):
Six Months Ended
March 30, 2024April 1, 2023
Contract assets, beginning of period$142,297 $138,540 
Revenue recognized during the period1,625,857 1,743,054 
Amounts collected or invoiced during the period(1,636,980)(1,748,565)
Contract assets, end of period$131,174 $133,029 
Deferred Revenue: Deferred revenue is recorded when consideration is received from a customer prior to transferring goods or services to the customer under the terms of the contract, which is included in advanced payments from customers on Condensed Consolidated Balance Sheets. As of March 30, 2024 and September 30, 2023, the balance of advance payments from customers attributable to deferred revenue was $165.3 million and $158.7 million, respectively. The advance payment is not considered a significant financing component because it is used to meet working capital demands that can be higher in the early stages of a contract and to protect the company from the other party failing to adequately complete some or all of its obligations under the
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contract. Deferred revenue is recognized into revenue when all revenue recognition criteria are met. For performance obligations satisfied over time, recognition will occur as work progresses; otherwise deferred revenue will be recognized based upon shipping terms.

15.    Restructuring and Non-recurring Charges
Restructuring and non-recurring charges are recorded within restructuring and other charges on the Condensed Consolidated Statements of Comprehensive Income. Restructuring liabilities are primarily recorded within other accrued liabilities on the Condensed Consolidated Balance Sheets.

For the three and six months ended March 30, 2024, the Company incurred restructuring and other charges of $11.0 million, which consisted of severance from the reduction of the Company's workforce as well as closure costs associated with a site in the Company's EMEA region, offset by insurance proceeds received associated with an arbitration decision regarding a contractual matter that occurred in the Company's EMEA region in fiscal 2023.

For the three and six months ended April 1, 2023, the Company did not incur any restructuring and other charges.

The Company recognized a tax benefit of $1.2 million related to restructuring and other charges for the three and six months ended March 30, 2024.

The Company's restructuring accrual activity for the three and six months ended March 30, 2024 is included in the tables below (in thousands):
Termination and Severance CostsFixed Asset and Operating ROU Asset ImpairmentArbitration RecoveryTotal
Accrual balance, as of December 30, 2023$ $ $ $ 
Restructuring and other charges9,865 3,423 (2,250)11,038 
Amounts utilized(3,858)(1,767)2,250 (3,375)
Accrual balance, as of March 30, 2024
$6,007 $1,656 $ $7,663 

16.     Subsequent Event
During April 2024, the Company committed to a restructuring plan and anticipates incurring approximately $6.5 million of restructuring and other charges during the third quarter of fiscal 2024. These charges relate to site closure costs in the AMER region including asset impairment and severance cash charges to best support long-term customer needs.

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ITEM 2.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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

The statements contained in this Form 10-Q that are guidance or which are not historical facts (such as statements in the future tense and statements including believe, expect, intend, plan, anticipate, goal, target and similar terms and concepts), including all discussions of periods which are not yet completed, are forward-looking statements that involve risks and uncertainties. These risks and uncertainties include the ability to realize anticipated savings from restructuring or similar actions, as well as the adequacy of related charges as compared to actual expenses; the effect of inflationary pressures on our costs of production, profitability, and on the economic outlook of our markets; the effects of shortages and delays in obtaining components as a result of economic cycles, natural disasters or otherwise; the risk of customer delays, changes, cancellations or forecast inaccuracies in both ongoing and new programs; the lack of visibility of future orders, particularly in view of changing economic conditions; the economic performance of the industries, sectors and customers we serve; the outcome of litigation and regulatory investigations and proceedings, including the results of any challenges with regard to such outcomes; the effects of tariffs, trade disputes, trade agreements and other trade protection measures; the effects of the volume of revenue from certain sectors or programs on our margins in particular periods; our ability to secure new customers, maintain our current customer base and deliver product on a timely basis; the risks of concentration of work for certain customers; the particular risks relative to new or recent customers, programs or services, which risks include customer and other delays, start-up costs, potential inability to execute, the establishment of appropriate terms of agreements, and the lack of a track record of order volume and timing; the effects of start-up costs of new programs and facilities or the costs associated with the closure or consolidation of facilities; possible unexpected costs and operating disruption in transitioning programs, including transitions between Company facilities; the risk that new program wins and/or customer demand may not result in the expected revenue or profitability; the fact that customer orders may not lead to long-term relationships; our ability to manage successfully and execute a complex business model characterized by high product mix and demanding quality, regulatory, and other requirements; the risks associated with excess and obsolete inventory, including the risk that inventory purchased on behalf of our customers may not be consumed or otherwise paid for by the customer, resulting in an inventory write-off; risks related to information technology systems and data security; increasing regulatory and compliance requirements; any tax law changes and related foreign jurisdiction tax developments; current or potential future barriers to the repatriation of funds that are currently held outside of the United States as a result of actions taken by other countries or otherwise; the potential effects of jurisdictional results on our taxes, tax rates, and our ability to use deferred tax assets and net operating losses; the weakness of areas of the global economy; the effect of changes in the pricing and margins of products; raw materials and component cost fluctuations; the potential effect of fluctuations in the value of the currencies in which we transact business; the effects of changes in economic conditions, political conditions and tax matters in the United States and in the other countries in which we do business; the potential effect of other world or local events or other events outside our control (such as the conflict between Russia and Ukraine, conflict in the Middle East, escalating tensions between China and Taiwan or China and the United States, changes in energy prices, terrorism, global health epidemics and weather events); the impact of increased competition; an inability to successfully manage human capital; changes in financial accounting standards; and other risks detailed herein and in our other Securities and Exchange Commission filings, particularly in Risk Factors contained in our fiscal 2023 Form 10-K.




*    *    *

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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. We are a global leader with a team of over 20,000 individuals who are dedicated to providing Design and Development, Supply Chain Solutions, New Product Introduction, Manufacturing and Sustaining Services. We specialize in serving customers in industries with highly complex products and demanding regulatory environments. 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.
The following Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is intended to provide an analysis of both short-term results and future prospects from management’s perspective, including an assessment of the financial condition and results of operations, events and uncertainties that are not indicative of future operations and any other financial or statistical data that we believe will enhance the understanding of our company’s financial condition, cash flows and other changes in financial condition and results of operations
The following information should be read in conjunction with our condensed consolidated financial statements included herein and "Risk Factors" included in Part II, Item 1A included herein as well as Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended September 30, 2023, and our "Safe Harbor" Cautionary Statement included above.
Market Pressures Update
During the first six months of fiscal 2024, we experienced market-driven inventory corrections at our customers and incrementally weaker demand from the Healthcare/Lifesciences and Industrial market sectors creating inefficiencies within our operations. We expect the market-driven inventory corrections at the customers and weaker demand in certain sectors to be a near-term challenge that will lessen later in fiscal 2024. However, if market softness continues for extended periods, this would impact our operating results in future periods.

A global minimum tax has been, or is anticipated to be, implemented in many of the countries in which we operate. We anticipate this will materially and unfavorably impact our existing tax holidays and effective tax rate beginning in our fiscal 2025. We will continue to monitor these developments as each jurisdiction incorporates such changes into tax laws.

We believe our balance sheet is positioned to support the potential future challenges presented by the macro-economic pressures we are facing. As of the second quarter of fiscal 2024, cash and cash equivalents and restricted cash were $265 million, while debt, finance lease obligations and other financing were $438 million. Borrowings under our Credit Facility as of March 30, 2024, were $239 million, leaving $261 million of our revolving commitment of $500 million available for use as well as the ability to expand our revolving commitment to $750 million upon mutual agreement with the bank. Interest expense could increase above current levels due to increased borrowing under our Credit Facility associated with working capital investments along with the impact of rising interest rates. Refer to Note 3, "Debt, Finance Lease and Other Financing Obligations," in Notes to Condensed Consolidated Financial Statements and "Management’s Discussion and Analysis Liquidity and Capital Resources" in Part I, Item 2 for further information.

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RESULTS OF OPERATIONS
Consolidated Performance Summary. The following table presents selected consolidated financial data (dollars in millions, except per share data):
Three Months EndedSix Months Ended
March 30, 2024April 1,
2023
March 30, 2024April 1,
2023
Net sales$966.9 $1,070.8 $1,949.5 $2,164.7 
Cost of sales878.8 967.8 1,773.3 1,960.6 
Gross profit88.1 103.0 176.2 204.2 
Gross margin9.1 %9.6 %9.0 %9.4 %
Operating income29.5 56.9 74.6 114.3 
Operating margin3.0 %5.3 %3.8 %5.3 %
Other expense10.5 9.1 20.8 17.0 
Income tax expense2.7 7.0 8.4 14.2 
Net income 16.2 40.8 45.5 83.0 
Diluted earnings per share$0.58 $1.45 $1.62 $2.94 
Return on invested capital*9.9 %13.8 %
Economic return*1.7 %4.8 %
*Non-GAAP metric; refer to "Return on Invested Capital ("ROIC") and economic return" below and Exhibit 99.1 for more information.
Net sales. For the three months ended March 30, 2024, net sales decreased $103.9 million, or 9.7%, as compared to the three months ended April 1, 2023. For the six months ended March 30, 2024, net sales decreased $215.2 million, or 9.9%, as compared to the six months ended April 1, 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.
A discussion of net sales by reportable segment is presented below (in millions):
Three Months EndedSix Months Ended
March 30, 2024April 1,
2023
March 30, 2024April 1,
2023
Net sales:
AMER$321.8 $407.8 $655.5 $797.5 
APAC521.0 587.3 1,073.5 1,229.2 
EMEA154.8 101.8 276.7 191.2 
Elimination of inter-segment sales(30.7)(26.1)(56.2)(53.2)
Total net sales$966.9 $1,070.8 $1,949.5 $2,164.7 
AMER. Net sales for the three months ended March 30, 2024 in the AMER segment decreased $86.0 million, or 21.1%, as compared to the three months ended April 1, 2023. The decrease in net sales was driven by overall net decreased customer end-market demand inclusive of market-driven inventory corrections at the customers, as well as reductions in inflated component pricing. The decrease was further driven by a decrease of $14.5 million due to disengagements with customers and $9.3 million due to the discontinuation of a program with an existing customer. The decrease was partially offset by an increase of $12.3 million due to production ramps for new customers and $9.7 million due to production ramps of new products for existing customers.
During the six months ended March 30, 2024, net sales in the AMER segment decreased $142.0 million, or 17.8%, as compared to the six months ended April 1, 2023. The decrease in net sales was driven by overall net decreased customer end-market demand inclusive of market-driven inventory corrections at the customers, as well as reductions in inflated component pricing. The decrease was further driven by a decrease of $15.0 million due to disengagements with customers and $8.5 million due to
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the discontinuation of a program with an existing customer. The decrease was partially offset by an increase of $22.1 million due to production ramps for new customers.
APAC. Net sales for the three months ended March 30, 2024 in the APAC segment decreased $66.3 million, or 11.3%, as compared to the three months ended April 1, 2023. The decrease in net sales was driven by overall net decreased customer end-market demand inclusive of market-driven inventory corrections at the customers, as well as reductions in inflated component pricing. The decrease was partially offset by a $7.9 million increase due to production ramps of new products for existing customers.
During the six months ended March 30, 2024, net sales in the APAC segment decreased $155.7 million, or 12.7%, as compared to the six months ended April 1, 2023. The decrease in net sales was driven by overall net decreased customer end-market demand inclusive of market-driven inventory corrections at the customers, as well as reductions in inflated component pricing. The decrease was further driven by a decrease of $29.5 million for end-of-life products. The decrease was partially offset by a $26.7 million increase due to production ramps of new products for existing customers.
EMEA. Net sales for the three months ended March 30, 2024 in the EMEA segment increased $53.0 million, or 52.1%, as compared to the three months ended April 1, 2023. The increase in net sales was driven by a $39.6 million increase due to production ramps for new customers and overall net increased customer end-market demand. The increase was partially offset by a $5.9 million decrease due to the discontinuation of a program with an existing customer and reductions in inflated component pricing.
During the six months ended March 30, 2024, net sales in the EMEA segment increased $85.5 million, or 44.7%, as compared to the six months ended April 1, 2023. The increase in net sales was driven by a $59.1 million increase due to production ramps for new customers and overall net increased customer end-market demand. The increase was further driven by a $10.0 million increase in production ramps of new products for existing customers, partially offset by a $9.5 million decrease due to the discontinuation of a program with an existing customer and reductions in inflated component pricing.
Our net sales by market sector were as follows (in millions):
Three Months EndedSix Months Ended
March 30, 2024April 1,
2023
March 30, 2024April 1,
2023
Net sales:
Healthcare/Life Sciences$378.4 $487.3 $759.3 $975.2 
Industrial418.2 439.3 852.8 911.4 
Aerospace/Defense170.3 144.2 337.4 278.1 
Total net sales$966.9 $1,070.8 $1,949.5 $2,164.7 
Healthcare/Life Sciences. Net sales for the three months ended March 30, 2024 in the Healthcare/Life Sciences sector decreased $108.9 million, or 22.3%, as compared to the three months ended April 1, 2023. The decrease in net sales was driven by overall net decreased customer end-market demand inclusive of market-driven inventory corrections at the customers, as well as a reduction in inflated component pricing. The decrease was partially offset by an increase of $17.0 million due to production ramps of new products for existing customers.
During the six months ended March 30, 2024, net sales in the Healthcare/Life Sciences sector decreased $215.9 million, or 22.1%, as compared to the six months ended April 1, 2023. The decrease in net sales was driven by overall net decreased customer end-market demand inclusive of market-driven inventory corrections at the customers, as well as a reduction in inflated component pricing. The decrease was further driven by a decrease of $26.4 million for end-of-life products. The decrease was partially offset by an increase of $16.4 million due to production ramps of new products for existing customers and $6.0 million due to production ramps for a new customer.
Industrial. Net sales for the three months ended March 30, 2024 in the Industrial sector decreased $21.1 million, or 4.8%, as compared to the three months ended April 1, 2023. The decrease in net sales was driven by overall net decreased customer end-market demand inclusive of market-driven inventory corrections at the customers as well as reductions in inflated component pricing. The decrease was further driven by a decrease of $16.4 million due to the discontinuation of programs with existing customers. The decrease was partially offset by an increase of $36.9 million due to production ramps for a new customer.
During the six months ended March 30, 2024, net sales in the Industrial sector decreased $58.6 million, or 6.4%, as compared to the six months ended April 1, 2023. The decrease in net sales was driven by overall net decreased customer end-market demand inclusive of market-driven inventory corrections at the customers as well as reductions in inflated component pricing.
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The decrease was further driven by a decrease of $17.9 million due to the discontinuation of programs with existing customers and $7.7 million due to a disengagement with a customer. The decrease was partially offset by an increase of $62.0 million due to production ramps for new customers.
Aerospace/Defense. Net sales for the three months ended March 30, 2024 in the Aerospace/Defense sector increased $26.1 million, or 18.1%, as compared to the three months ended April 1, 2023. The increase was driven by overall net increased customer end-market demand and an $11.2 million increase due to production ramps for new customers. The increase was partially offset by a reduction in inflated component pricing and a decrease of $10.9 million due to disengagements with customers.
During the six months ended March 30, 2024, net sales in the Aerospace/Defense sector increased $59.3 million, or 21.3%, as compared to the six months ended April 1, 2023. The increase was driven by overall net increased customer end-market demand, a $24.1 million increase due to production ramps of new products for existing customers and a $14.6 million increase due to production ramps for new customers. The increase was partially offset by a reduction in inflated component pricing and a decrease of $12.1 million due to disengagement with a customer.
Cost of sales. Cost of sales for the three months ended March 30, 2024 decreased $89.0 million, or 9.2%, as compared to the three months ended April 1, 2023, while cost of sales for the six months ended March 30, 2024 decreased $187.3 million, or 9.6% as compared to the six months ended April 1, 2023. Cost of sales is comprised primarily of material and component costs, labor costs and overhead. For both the three and six months ended March 30, 2024 and April 1, 2023, approximately 89% of the total cost of sales was variable in nature and fluctuated with sales volumes. Approximately 88% of these costs were related to material and component costs.
As compared to the three months ended April 1, 2023, the decrease in cost of sales for the three months ended March 30, 2024 was primarily driven by the decrease in net sales and a positive shift in customer mix. As compared to the six months ended April 1, 2023, the decrease in cost of sales for the six months ended March 30, 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. Gross profit for the three months ended March 30, 2024 decreased $14.9 million, or 14.5%, as compared to the three months ended April 1, 2023. Gross margin of 9.1% for the three months ended March 30, 2024 decreased 50 basis points compared to the three months ended April 1, 2023. The primary drivers of the decrease in gross profit and gross margin as compared to the three months ended April 1, 2023 were the decrease in net sales, partially offset by a positive shift in customer mix.
Gross profit for the six months ended March 30, 2024 decreased $28.0 million, or 13.7%, as compared to the six months ended April 1, 2023. Gross margin of 9.0% for the six months ended March 30, 2024 decreased 40 basis points compared to the six months ended April 1, 2023. The primary drivers of the decrease in gross profit and gross margin as compared to the six months ended April 1, 2023 were the 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.
Operating income. Operating income for the three months ended March 30, 2024 decreased $27.4 million, or 48.2%, as compared to the three months ended April 1, 2023. Operating margin of 3.0% for the three months ended March 30, 2024 decreased 230 basis points compared to the three months ended April 1, 2023. The primary driver of the decrease in operating income and operating margin for the three months ended March 30, 2024 was the result of the decrease in gross margin as well as restructuring and other charges of $11.0 million. The restructuring and other charges consisted of severance from the reduction of the Company's workforce as well as closure costs associated with a site in the Company's EMEA region, offset by insurance proceeds received associated with an arbitration decision regarding a contractual matter that occurred in the Company's EMEA region in fiscal 2023.
Operating income for the six months ended March 30, 2024 decreased $39.7 million, or 34.7%, as compared to the six months ended April 1, 2023. Operating margin of 3.8% for the six months ended March 30, 2024 decreased 150 basis points compared to the six months ended April 1, 2023. The primary driver of the decrease in operating income and operating margin for the six months ended March 30, 2024 was the result of the decrease in gross margin as well as restructuring and other charges of $11.0 million, which consisted of employee severance costs associated with a reduction in the Company's workforce as well as closure costs associated with a site in the Company's EMEA region, offset by insurance proceeds received in an arbitration decision regarding a contractual matter that took place in the Company's EMEA region in fiscal 2023.


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A discussion of operating income by reportable segment for the indicated fiscal period (in millions):
Three Months EndedSix Months Ended
March 30,
2024
April 1,
2023
March 30,
2024
April 1,
2023
Operating income:
AMER$5.0 $25.8 $13.7 $43.2 
APAC67.2 69.7 138.6 148.1 
EMEA5.7 1.8 5.5 1.2 
Corporate and other costs(48.4)(40.4)(83.2)(78.2)
Total operating income$29.5 $56.9 $74.6 $114.3 
AMER. Operating income decreased $20.8 million for the three months ended March 30, 2024 as compared to the three months ended April 1, 2023 primarily as a result of a decrease in net sales and a negative shift in customer mix, partially offset by a decrease in fixed costs.
During the six months ended March 30, 2024, operating income in the AMER segment decreased $29.5 million as compared to the six months ended April 1, 2023 primarily as a result of a decrease in net sales, partially offset by a positive shift in customer mix and a decrease in fixed costs.
APAC. Operating income decreased $2.5 million for the three months ended March 30, 2024 as compared to the three months ended April 1, 2023 primarily as a result of a decrease in net sales, partially offset by a positive shift in customer mix.
During the six months ended March 30, 2024, operating income in the APAC segment decreased $9.5 million as compared to the six months ended April 1, 2023 primarily as a result of a decrease in net sales, partially offset by a positive shift in customer mix and a decrease in S&A.
EMEA. Operating income increased $3.9 million for the three months ended March 30, 2024 as compared to the three months ended April 1, 2023 primarily as a result of an increase in net sales, partially offset by increased fixed costs.
During the six months ended March 30, 2024, operating income in the EMEA segment increased $4.3 million as compared to the six months ended April 1, 2023 primarily as a result of an increase in net sales, partially offset by increased fixed costs.
Other expense. Other expense for the three months ended March 30, 2024 increased $1.4 million as compared to the three months ended April 1, 2023. The increase in other expense for the three months ended March 30, 2024 was primarily driven by a decrease in other miscellaneous income of $1.5 million.
Other expense for the six months ended March 30, 2024 increased $3.8 million as compared to the six months ended April 1, 2023. The increase in other expense for the six months ended March 30, 2024 was primarily driven by a decrease in other miscellaneous income of $2.5 million, an increase in interest expense of $0.7 million due to a higher average interest rate and an increase in factoring fees of $0.5 million.
Income taxes. Income tax expense for the three and six months ended March 30, 2024 was $2.7 million and $8.4 million, respectively, compared to $7.0 million and $14.2 million for the three and six months ended April 1, 2023. The decrease is primarily due to a decrease in pre-tax book income.
Our annual effective tax rate varies from the U.S. statutory rate of 21.0% primarily due to the geographic distribution of worldwide earnings as well as a tax holiday granted to a subsidiary located in the APAC segment where we derive a significant portion of our earnings. Our effective tax rate may also be impacted by disputes with taxing authorities, tax planning activities, adjustments to uncertain tax positions and changes in valuation allowances.
The annual effective tax rate for fiscal 2024 is expected to be approximately 15.0% to 17.0% assuming no changes to tax laws.
Net Income. Net income for the three months ended March 30, 2024 decreased $24.6 million, or 60.3%, from the three months ended April 1, 2023 to $16.2 million. 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.
Net income for the six months ended March 30, 2024 decreased $37.5 million, or 45.2%, from the six months ended April 1, 2023 to $45.5 million. 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.
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Diluted earnings per share. Diluted earnings per share decreased to $0.58 for the three months ended March 30, 2024 from $1.45 for the three months ended April 1, 2023 primarily as a result of decreased net income due to the factors discussed above, partially offset by a reduction in diluted shares outstanding.
Diluted earnings per share decreased to $1.62 for the six months ended March 30, 2024 from $2.94 for the six months ended April 1, 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. We use a financial model that is aligned with our business strategy and includes an ROIC goal of 15% which would exceed our weighted average cost of capital ("WACC") by more than 500 basis points and represent positive economic return. Economic return is the amount our ROIC exceeds our WACC.
Non-GAAP financial measures, including ROIC and economic return, are used for internal management goals and decision making because such measures provide management and investors additional insight into financial performance. In particular, we provide ROIC and economic return because we believe they offer insight into the metrics that are driving management decisions. We view ROIC and economic return as important measures in evaluating the efficiency and effectiveness of our long-term capital investments. We also use ROIC as a performance criteria in determining certain elements of compensation as well as economic return performance.
We define ROIC as tax-effected operating income before restructuring and other charges divided by average invested capital over a rolling three-quarter period for the second 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. ROIC and other non-GAAP financial measures should be considered in addition to, not as a substitute for, measures of our financial performance prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP").
We review our internal calculation of WACC annually. Our WACC is 8.2% for fiscal 2024 and 9.0% for fiscal 2023. By exercising discipline to generate ROIC in excess of our WACC, our goal is to create value for our shareholders. For the six months ended March 30, 2024, ROIC of 9.9% reflects an economic return of 1.7%, based on our WACC of 8.2%, and for the six months ended April 1, 2023, ROIC of 13.8% reflects an economic return of 4.8%, based on our weighted average cost of capital of 9.0%.
For a reconciliation of ROIC, economic return and adjusted operating income (tax-effected) to our financial statements that were prepared using U.S. GAAP, see Exhibit 99.1 to this quarterly report on Form 10-Q, which exhibit is incorporated herein by reference.
Refer to the table below, which includes the calculation of ROIC and economic return for the indicated fiscal period (dollars in millions):
Six Months Ended
 March 30,
2024
April 1,
2023
Adjusted operating income (tax-effected)$145.6 $194.3 
Average invested capital1,478.1 1,406.4 
After-tax ROIC9.9 %13.8 %
WACC8.2 %9.0 %
Economic return1.7 %4.8 %

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LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents and restricted cash were $265.1 million as of March 30, 2024 as compared to $256.7 million as of September 30, 2023.
As of March 30, 2024, 93% of our cash and cash equivalents balance was held outside of the U.S. by our foreign subsidiaries. Currently, we believe that our cash balance, together with cash available under our Credit Facility, will be sufficient to meet our liquidity needs and potential share repurchases for the next twelve months and the foreseeable future.
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. 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 
202617.2 
Total$31.4 
Cash Flows. The following table provides a summary of cash flows (in millions):
Six Months Ended
March 30,
2024
April 1,
2023
Cash flows provided by operating activities$84.8 $57.2 
Cash flows used in investing activities(51.3)(47.6)
Cash flows used in financing activities(25.6)(18.4)
Effect of exchange rate changes on cash and cash equivalents0.5 3.8 
     Net increase (decrease) in cash and cash equivalents and restricted cash$8.4 $(5.1)
Operating Activities. Cash flows provided by operating activities were $84.8 million for the six months ended March 30, 2024, as compared to cash flows provided by operating activities of $57.2 million for the six months ended April 1, 2023. The increase was primarily due to cash flow improvements (reductions) of:

$(37.5) million decrease in net income.
$81.8 million in inventory cash flows driven by a decrease in inventory in the six months ended March 30, 2024 compared to an increase in inventory in the six months ended April 1, 2023 due to inventory reduction efforts and fewer program ramps requiring upfront inventory procurement.
$81.4 million in accounts payables cash flows primarily driven by the timing of materials procurement and payments to suppliers.
$(66.3) million in accounts receivable cash flows driven by timing of shipments, mix of customer payment terms, partially offset by increased factoring of receivables.
$(22.5) million in advanced payments from customers cash flows driven by a decrease in advanced payments in the six months ended March 30, 2024 compared to an increase in advanced payments in the six months ended April 1, 2023.
$(16.5) million in other current and non-current asset cash flows driven by an increase in tax prepayments related to timing of payments and a larger increase in prepayments to suppliers in the six months ended March 30, 2024 compared to the six months ended April 1, 2023.


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The following table provides a summary of cash cycle days for the periods indicated (in days):
Three Months Ended
March 30,
2024
April 1,
2023
Days in accounts receivable6156
Days in contract assets1211
Days in inventory158156
Days in accounts payable(65)(69)
Days in advanced payments (1)(75)(72)
Annualized cash cycle9182
(1) Includes a reclassification in the presentation of advanced payments from customers reflected in prior period amounts. As of April 1, 2023, the impact of this reclassification was an increase in the Company's days in advanced payments and a reduction in annualized cash cycle by 22 days.
We calculate days in accounts receivable and contract assets as each balance sheet item for the respective quarter divided by annualized sales for the respective quarter by day. We calculate days in inventory, accounts payable and advanced payments as each balance sheet line item for the respective quarter divided by annualized cost of sales for the respective quarter by day. We calculate annualized cash cycle as the sum of days in accounts receivable, days in contract assets and days in inventory, less days in accounts payable and days in advanced payments.
As of March 30, 2024, annualized cash cycle days increased nine days compared to April 1, 2023 due to the following:
Days in accounts receivable for the three months ended March 30, 2024 increased five days compared to the three months ended April 1, 2023. The increase is attributable to the timing of customer shipments and payments, the mix of customer payment terms, as well as decreased factoring of receivables.
Days in contract assets for the three months ended March 30, 2024 increased one day compared to the three months ended April 1, 2023. The increase is primarily attributable to a decrease 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 March 30, 2024 increased two days compared to the three months ended April 1, 2023. The increase is primarily due to lower sales in the three months ended March 30, 2024 compared to the prior year, partially offset by lower inventory.
Days in accounts payable for the three months ended March 30, 2024 decreased four days compared to the three months ended April 1, 2023. The decrease is primarily attributable to timing of materials procurement and payments to suppliers.
Days in advanced payments for the three months ended March 30, 2024 increased three days compared to the three months ended April 1, 2023. The increase was primarily attributable to lower sales in the three months ended March 30, 2024 compared to the prior year, partially offset by a decrease in advanced payments received from customers in line with lower inventory balances.
Free Cash Flow. We define free cash flow ("FCF"), a non-GAAP financial measure, as cash flow generated or used in operations less capital expenditures. FCF was $33.3 million for the six months ended March 30, 2024 compared to $7.7 million for the six months ended April 1, 2023, an improvement of $25.6 million. The improvement in FCF was primarily due to lower working capital investments in inventory to support our customers and favorable accounts payable activity due to timing of payments.
Non-GAAP financial measures, including FCF, are used for internal management assessments because such measures provide additional insight to investors into ongoing financial performance. In particular, we provide FCF because we believe it offers insight into the metrics that are driving management decisions. We view FCF as an important financial metric as it demonstrates our ability to generate cash and can allow us to pursue opportunities that enhance shareholder value. FCF is a non-GAAP financial measure that should be considered in addition to, not as a substitute for, measures of our financial performance prepared in accordance with GAAP.

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A reconciliation of FCF to our financial statements that were prepared using GAAP as follows (in millions):
Six Months Ended
March 30,
2024
April 1,
2023
Cash flows provided by operating activities$84.8 $57.2 
Payments for property, plant and equipment(51.5)(49.5)
Free cash flow$33.3 $7.7 
Investing Activities. Cash flows used in investing activities were $51.3 million for the six months ended March 30, 2024 compared to $47.6 million for the six months ended April 1, 2023. The increase in cash used in investing activities was due to a $2.0 million increase in capital expenditures.
We 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.
Financing Activities. Cash flows used in financing activities were $25.6 million for the six months ended March 30, 2024 compared to cash flows used in financing activities of $18.4 million for the six months ended April 1, 2023. The increase was primarily attributable to net borrowings on the credit facility for the six months ended March 30, 2024 of $6.0 million compared to net borrowings on the credit facility for the six months ended April 1, 2023 of $21.0 million, partially offset by a $6.3 million reduction in repurchases of our common stock.
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 was completed in February 2024. During the three and six months ended March 30, 2024 we repurchased 59,277 shares under this program for $5.7 million at an average price of $95.59 per share. During the three months ended April 1, 2023, we repurchased 125,639 shares under this program for $12.4 million at an average price of $98.75 per share. During the six months ended April 1, 2023, we repurchased 241,362 shares under this program for $23.9 million at an average price of $98.93 per share.
On January 16, 2024, we announced an additional $50.0 million in share repurchase authority (the "2024 Program") that authorizes us to repurchase our common stock. The 2024 Program became effective upon completion of the 2023 Program, which occurred in February 2024, and has no expiration. During the three and six months ended March 30, 2024, we repurchased 126,850 shares under this program for $11.9 million at an average price of $93.83 per share. As of March 30, 2024, $38.1 million of the 2024 Program remained available to repurchase shares.
All shares repurchased under the aforementioned programs were recorded as treasury stock.
We have Master Accounts Receivable Purchase Agreements with MUFG Bank, New York Branch (formerly known as The Bank of Tokyo-Mitsubishi UFJ, Ltd.) (the "MUFG RPA"), HSBC Bank (China) Company Limited, Xiamen branch (the "HSBC RPA") and other unaffiliated financial institutions, under which we may elect to sell receivables, at a discount. These facilities are uncommitted facilities. The maximum facility amount under the MUFG RPA as of March 30, 2024 is $340.0 million. The maximum facility amount under the HSBC RPA as of March 30, 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. The terms of the HSBC RPA are generally consistent with the terms of the MUFG RPA previously discussed.
We sold $213.8 million and $225.7 million of trade accounts receivable under these programs during the three months ended March 30, 2024 and April 1, 2023, respectively, in exchange for cash proceeds of $211.1 million and $222.9 million, respectively. We sold $437.4 million and $411.3 million of trade accounts receivable under these programs during the six months ended March 30, 2024 and April 1, 2023, respectively, in exchange for cash proceeds of $432.1 million and $406.5 million, respectively. As of March 30, 2024 and September 30, 2023, $217.8 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 by MUFG Bank or HSBC Bank.
In all cases, the sale discount was recorded within "Miscellaneous, net" in the Condensed Consolidated Statements of Comprehensive Income in the period of the sale. For further information regarding the receivable sale programs, see Note 13, "Trade Accounts Receivable Sale Programs," in Notes to Condensed Consolidated Financial Statements.
Based on current expectations, we believe that our projected cash flows provided by operations, available cash and cash equivalents, potential borrowings under the Credit Facility and our leasing capabilities should be sufficient to meet our working capital and fixed capital requirements, as well as execution upon our share repurchase authorizations as management deems
29

appropriate, for the next twelve months. We believe our balance sheet is positioned to support the potential future challenges presented by macroeconomic factors including increased working capital requirements associated with longer lead-times for components, increased component and labor costs, and operating inefficiencies due to supply chain constraints. As of the end of the second quarter of fiscal 2024, cash and cash equivalents and restricted cash were $265 million, while debt, finance lease and other financing obligations were $438 million. If our future financing needs increase, then we may need to arrange additional debt or equity financing. Accordingly, we evaluate and consider from time to time various financing alternatives to supplement our financial resources. However, we cannot be assured that we will be able