PLXS
#<UNK>, this is <UNK>.
What I would say, is that our quarters and our forecast has been relatively consistent over the course of the last three quarters.
Obviously, we saw the big drop or reset in our forecast back around the June through September time frame.
Multiple resets and it has stayed reasonably consistent.
The projection is that we are expecting sequential growth, just not at the 6% quarter-over-quarter rate that we are expecting to see Q3 to Q2.
In general, the markets are lackluster, I would say, with maybe the exception of aerospace.
Markets, as a whole, are pretty much going sideways.
Probably the networking communications, as a whole, is the most volatile, although we are seeing strength with certain customers within that market.
Sure.
Guadalajara, first of all, in general, with respect to the productivity and cost-reduction initiatives we really didn't include Guadalajara in there in any meaningful way.
Now, with that said, the team at the site did an excellent job.
They grew revenue to better than the $50 million quarterly run rate that we had talked about.
They also drove margins to a higher level than we had anticipated coming into the quarter.
So they had a really meaningful impact to our operating margin within the quarter and we would say that right now there at essentially corporate expectations, although there is certainly room to do more at the site as we grow the site, but we won't be talking about it in terms of it being a drag anymore on our corporate operating margins.
And if we look at the site as a whole, the site is performing spectacularly.
We run a customer net promoter survey process and the Guadalajara site had a perfect score, every customer recommended them.
They also have a funnel that is really on par; it is an exceptional funnel that is on par with any of our sites within the Company.
We expect to continue to grow the site at a relatively aggressive basis.
This is <UNK>.
From a funnel breakup standpoint, it is definitely seeing significant strength in the healthcare life sciences sector.
That team is doing a really good job driving opportunities in there.
From a size standpoint, I'm going to say that there is a significant change in the magnitude of the opportunities that are in there.
There is a mix of decent size ones, medium-sized ones and smaller-sized ones.
As we go forward, the trailing four-quarters numbers, as you look back in time here, we had a soft quarter four quarters ago.
And that one will be coming out next quarter.
I do expect this quarter to be on par to maybe even a little bit stronger.
So I would expect our trailing four quarters percentage to pop up a little bit.
From that standpoint, we continue to see a good win momentum going into the back half of the year here.
And I would expect the wins to come out of there at on par with the rates that we have had in the past, maybe slightly a little better here in the near-term.
The trailing four-quarters metric, the intention here is, as revenue grows, we do need to capture more out of it to keep the wins momentum going.
So, to answer your question, yes, we do need to continue to pull more out of there to support the growth; and that is the plan.
I don't think, <UNK>, necessarily from an OpEx standpoint.
I think we can maintain this percentage around 4.4% to 4.5%.
We are getting really good leverage with productivity improvements, continuous improvement efforts that we're making both at the sites and within the corporate office.
I think where we could see some growth is in CapEx, maybe towards the back end of 2017.
If Guadalajara continues to be as successful as they have been, we may need to look for an additional site in Mexico in Guadalajara.
You could see CapEx going up to support new program ramps and potentially a new site either later 2017 into 2018.
Let's take the tax rate first, <UNK>.
<UNK>, it could be.
It is kind of a unique situation.
It really depends on where we are earning our profits around the globe.
And obviously, there's different tax rates and some lower than others.
What is unique, is that we are seeing more profitability in the US, as we go forward, which one would think that would be maybe a negative thing because of the higher tax rate.
But actually, for the next few years, that is a positive for us because we have got previous losses that we're offsetting future profitability with.
So we are not incurring any tax expense in the near term in the US.
Now if we go out 5, 10 years from now, that could change and we could be at the corporate rate in the US.
To answer your question, I think it is probably sustainable at a lower rate for the next few years.
But then eventually, at some point, we will see that ticking up as that profitability continues in the US.
This is <UNK>, in regard to the aerospace element, it is no secret that we had a couple of challenges this past summer in our center of excellence and those are past us.
I think <UNK> mentioned in his script, the fact that a lot of the performance that we've achieved here in the last quarter is based on that team really delivering for our customers; so we expect basically to return to growth from those customers to kind of set on pause for a little bit.
So, the momentum there is really driven just by our ability to execute and deliver for those customers.
It is more commercial.
Defense is, for us, it is something that there's a lot of conversations about it rebounding a bit more, but our aerospace growth is definitely more on the commercial side.
This is <UNK>, <UNK>.
From an industrial commercial standpoint, the big change in Q3 is new-program ramps.
We have some significant new program ramps with multiple customers that are driving the revenue growth in Q3.
From a market standpoint, our end-market standpoint, I would say the industrial commercial markets, while it is very broad, they are kind of going sideways or are lackluster.
We talked about the potential that semi-cap might be improving last quarter; that is not the case.
It is really kind of back to lackluster or sideways, from our perspective; oil and gas continues to be weak.
And really, our growth in being driven by new program ramps.
Go ahead, <UNK>.
The growth is really in what we'd classify in the industrial side of equation, more in the instrumentation side, and it is related to, as <UNK> talked about, a customer that we talked about probably a year ago.
It is a customer that we've won and we have experienced good growth with them; they're bringing out new products and we are winning those.
I think one of the reasons also for the little bit of a jump, <UNK> talked about the fact that industrial commercial was softer this quarter; that customer asked us to shift some components from one product line to another which impacted our revenue but allowed them to get the part that they needed out the door.
So, we'll also experience that revenue in the quarter as well.
It's deep in growth with basic customer and it's ramping some new products.
The other thing I would add to that too, <UNK>, from a new customer-win standpoint is we're seeing some pretty significant wins within the semi-cap space.
So while we're not necessarily capitalizing on it to the level that we would hope to in the future, it positions us pretty well for when that market rebounds.
Thank you.
This is <UNK>.
The issue was that the customer came in and asked us, within lead time, to build additional product.
And we were not able to secure the materials within lead time.
So there really wasn't a component constraint in terms of anything in the industry; it was just the ability to get enough parked in-house.
And so, as a result, they asked us to shift some of that inventory to build a different product.
So there is really no component constraints in the industry.
It was just a matter of them dropping in extra demand and asking us to shift the mix.
We do not see any issue of that going forward, because now we have got the visibility and basically the lead times are not an issue at this point.
I think we are in pretty good shape, really, from a productivity standpoint in the new business ramps.
There is always some inefficiencies until you get the full leverage on the revenue coming out.
That is part of the financial model is to overcome that, with new productivity, product improvements on existing programs.
We're loathe to use that as an excuse not to hit our margin targets and, of course, we are forecasting that we are going to hit our margin targets in the coming quarters.
I think we're in good shape with the ramps that we are seeing.
In terms about the ordering patterns of those programs not coming to fruition, we would expect---+ the visibility that we have at this point is that I'm not overly concerned that they are not going to unfold the way we predict or the way we are forecasting.
I think the demand is clearly there based on what is happening in the particular industries where the ramps are occurring.
I feel quite confident in terms of how the full year here is going to unfold and, frankly, how the momentum is going to start to carry into the new fiscal year.
This is <UNK>.
The wins in the APAC region, actually across all three regions, are probably evenly split across the sectors.
So as you look at the sector splits, and you apply those to the regions, the mix is probably pretty equal across them.
These will be new program wins from either existing customers or new targeted customers, but these would not be considered transfers within Plexus.
They would be incremental revenue as they ramp.
I would also just say that, in any given quarter, the bulk of the revenue from the new business wins is with existing customers by design.
We're trying to increase our share with those customers.
The commentary probably falls back to some of the earlier discussions about our ability to effectively ramp these new programs and gain leverage as well.
Because when you have a higher number of higher concentration wins with existing customers, you tend to get the leverage and manufacturing quicker; the transitions tend to go smoother.
