PLXS
#Yes, that's a good question, <UNK>, because of course once we're up into our margin range, the story shifts to top-line growth.
I think just philosophically, the way we would look at this is, our drive toward shareholder value is about ever-increasing economic profit.
And of course, having our margin performance up in the range that it is, and improved working capital metrics is going to drive our ROIC higher here in the coming quarters because of our balance sheet metric portion of that, the denominator is on a five-quarter average, so we will see that improve.
And then it's about driving top-line growth, which requires us to increase the capital base.
And then achieving a consistent return on that ever-increasing capital base that is there to support higher revenues.
I think one of the boundaries that we look at in terms of accepting business, is, can we achieve our operating margin over a long time, our target range over a long time, with that new piece of business.
And fundamental to that is whether or not we think we can sustain some level of competitive advantage with that program versus our competition.
And so it's not extraordinarily complicated.
We also understand that not all pieces of business, from a margin standpoint, are priced the same; not all pieces of business require the same level of relative invested capital.
So we give our sector teams some latitude to manage their portfolio, but at the same time, we expect them to deliver our targeted metrics on an overall basis, within that portfolio.
So being up in the range that we are now gives us a little room to maneuver, where previously it was difficult for us to really maneuver with customers and be more competitive when we needed to, to get additional engagement with new customers.
So I would expect us to start seeing acceleration of top-line growth, now that we're in the spot that we are in.
I think, <UNK>, we can probably still stay within the low double-digit range for the next few years.
You know, I am guiding 10% to 12% for the full year in FY16.
I would expect something similar in 2017.
Maybe it ticks up a little bit as we go past FY17, but nothing dramatic.
We are not alone then.
(laughter)
This is <UNK>.
It's very similar to the industrial/commercial story, where a significant amount of the growth is coming from new program ramps that we've announced over the last several quarters.
Keep in mind, the ramp schedule for healthcare/life sciences is a big longer, so the stuff that we're seeing ramping now are actually from wins that go back into the beginning of the year, and even at the end of FY15.
So that is where the strength is coming from.
The end markets, as I think <UNK> mentioned, are flat and a little bit ---+ I don't think he used the word volatile, but they don't move around a lot.
But we haven't seen significant growth from the end-markets themselves.
This is <UNK> again.
Yes, the program wins that we have been experiencing in industrial/commercial and the two that we have talked about a little bit, the size of those programs are decent-sized programs, bigger than what I would say is a traditional industrial/commercial opportunity.
And it's really led by a couple of things.
One is, in one case, the customer decided to outsource the significant portion of their work.
And so that came in a nice- sized chunk.
The other one, the product line is quite substantial, and we're sole-sourced on being able to build that, so we won the entire project.
So again, two really nice, healthy-sized programs there.
I think the other part that is key here is that we are also making inroads into other divisions of those entities.
So we see there's a nice continued relationship with both of those customers.
I think from a pricing standpoint, as you ramp new programs, they are always a bit more challenged on the markets, because there's a lot of expenses that go into ramping a program.
As we've talked about before, we model the sectors and strive towards a 4.7% to 5% goal.
So they are actually little bit more challenged in the beginning, and as we ramp up, our expectation is that their performance is going to fall in to help us achieve our operating margin goals.
And the thing I would add though too is, when we set our operating margin goals as 4.7% to 5%, that includes ramping the new business that we need to fuel our growth.
So our expectations is that we can grow and maintain those margins.
Yes.
You are trying to get at how much of the revenue growth is already in the bag.
(laughter)
This is <UNK>.
I will take a shot at this.
And what I am going to say is very high-level and generic, because every program can be significantly different.
But you hit on it, is that, networking/communication, the ramp on those programs is ---+ if you had to give an average, you are looking at six months.
So anything that we win, we typically expect to be ramped in a six-month timeframe, six to eight months.
Healthcare/life sciences can be substantially longer.
It can be anywhere from probably 18 months to 24 months before we see a volume ramp.
Defense/security/aerospace is a similar story in terms of our length of ramp.
And industrial/commercial can be somewhere in between.
We can see things ramp relatively quickly ---+ six months.
It can be longer; 12 months 18 months, especially if you look like a semiconductor customer.
And the caveat I'll put on this is also where it comes from.
Our healthcare/life sciences wins, a lot of those are products that we are designing.
So the ramp schedule can be a bit longer.
In the case of the industrial/commercial, that customer that I talked about where we ---+ basically, they decided to outsource.
It's a pretty significant fast ramp.
And so that's also the challenges, is that, whether or not this is a new program that they are trying to penetrate the market, or whether it's existing business that we're transitioning in, the ramps can be all over the place.
Hopefully that gives you a little bit of color.
But it is really hard to say that there is a specific one for each one.
So <UNK>, I think I will add just a little bit more color around FY17 too, just to give you and the others a bit better idea of our view.
If we go back to June when we had Investor Day, we painted a optimistic picture for FY17 and beyond, from a growth perspective.
And what I would say is, we still feel that way.
We talked about the potential for solid growth in FY17, with a goal to get to the low double-digits.
We still view that as a reasonable goal.
Now, it's certainly too early to guide.
It's too early to call the year, because a lot of things can change in a big way.
But if end-markets hold up, if we don't see end-markets crash, if new program ramps go as we anticipate, we expect to really grow meaningfully on a year-over-year basis in each of our quarters.
We do believe that all our sectors are going to show growth within the year.
And that's how things are lining up at the moment.
Thank you.
All right, well, again, I want to thank, of course, the sell-side analysts, who just do a fantastic job covering Plexus and our story.
And I want to thank the investors who are on the call, for supporting Plexus.
This is my last earnings call.
And so I want to thank all of you for the great support.
And of course, I appreciate you all on an individual basis as well.
I know many of you personally.
So thanks for the support over the years.
And with that, we will close down the call.
Thank you.
