Good morning, ladies and gentleman and welcome to the Plexus Corp. Conference Call regarding its Fiscal Second Quarter 2014 Earnings Announcement. My name is Donna and I will be the operator for today's call. At this time, all participants are in a listen-only mode. After a brief discussion by management, we will open the conference call for questions.

Please note that this conference is being recorded. I will now turn the call over to Angelo Ninivaggi, Plexus Senior Vice President, Chief Administrative Officer, General Counsel and Secretary. Angelo, you may begin..

Thank you, Donna. Good morning and thank you everyone for joining us today.

Before we begin, I will remind everyone that statements made during our call today that are not historical in nature, such as statements in the future tense and statements that include believe, expect, intend, plan, anticipate and similar terms and concepts are forward-looking statements.

Forward-looking statements are not guarantees since there are inherent difficulties in predicting future results and actual results could differ materially from those expressed or implied in the forward-looking statements.

For a list of major factors that could cause actual results to differ materially from those projected, please refer to the Company's periodic SEC filings, particularly the Risk Factors in our Form 10-K filing for the fiscal year ended September 28, 2013 and the Safe Harbor and Fair Disclosure Statement in yesterday's press release.

Plexus provides non-GAAP supplemental information such as earnings or margins excluding special items return on invested capital and free cash flow. We present information excluding special items because it provides a better indication of core performance for purposes of period-to-period comparison.

ROIC and free cash flow are used for internal management assessment because they provide additional insight into ongoing financial performance. In addition, we provide non-GAAP measures because we believe they offer insights into metrics that are driving management decisions as well as management's performance under the test that it sets for itself.

For a full reconciliation of non-GAAP supplemental information, please refer to yesterday's press release and our periodic SEC filings.

We encourage participants on the call this morning to access the live webcast and supporting materials on the Plexus’ website at www.plexus.com by clicking Investor Relations at the top of the page and then Event Calendar.

Joining me today are Dean Foate, Chairman, President and Chief Executive Officer and Ginger Jones, Senior Vice President and Chief Financial Officer. Todd Kelsey, Plexus' Chief Operating Officer is not in the office today. His father passed away few days ago. We extend to Todd and his family our deepest sympathy.

With Todd's absence, Dean asked Steve Frisch, Executive Vice President and Chief Customer Officer, all to be available for today's call to assist with questions relating to our customers and our market sectors. Let me now turn the call over to Dean Foate.

Dean?.

Thank you, Angelo and good morning everyone. For those following along in the slide, we are going to be on Slide 3. Earlier today we reported results for our fiscal second quarter of 2014, revenues were $558 million above the midpoint of our guidance range and up 4% over the prior quarter.

Non-GAAP diluted EPS was $0.60 was at the midpoint of our guidance and excludes a $0.07 net detriment during the quarter. Ginger will cover the puts and takes to tie out GAAP and non-GAAP EPS during her comments.

We turn our invested capital at 14.1% down from the prior quarter due to the anticipated lower margin performance but still 310 basis points above our weighted average cost to capital.

Please advance to Slide 4, overall revenue performance was consistent with guidance but sector performance was mixed as our network communication sector improved to flat while our Industrial\Commercial and Defense\ Security\ Aerospace sectors both under performed last year's expectations.

Our Healthcare\ Life Sciences sector was in line with expectations. Our go-to market team delivered a $159 million of new manufacturing wins above our target. Our Engineering Solutions group experienced an exceptionally strong quarter and new program wins with a result at $26 million. Again the strength was largely in healthcare\life sciences.

We completed our Fox Cities facilities consolidation project and now are focused on improving performance and productivity in our site. The construction of our new lease facility in Guadalajara, Mexico remains on track for completion this summer.

During the quarter, we now will be closing our facility in Juarez, Mexico and relocating the programs to our new facility Guadalajara, Mexico. When comparing our results to our second fiscal quarter of last year, our revenue performance was essentially flat.

Confirming that we had replaced approximately $92 million of revenue for Juniper networks that we recognized for that comparable period. Our operating margin improved 30 basis points versus the prior year quarter. A full year revenue outlook improved modestly during the quarter.

Please advance to Slide 5 for some insights into our performance of our market sectors during our fiscal second quarter of 2014 as well as our current expectations for Q3. Our Networking and Communication sector was flat sequentially in the fiscal Q2 and improvement over our expectations for high single digit declined in revenues.

Our demand was soft for the majority of our network communication customers coming into the quarter. Eight of our Top 10 customers improved the forecast as the quarter unfolded. With two notable improvements related to specific product strength.

Looking ahead the fiscal Q3, we currently anticipate strong performance for our networking and communication sector as newer program ramps should deliver sequential revenue growth of better than 20% for this sector. Our Healthcare \ Life Sciences sector was up 1% sequentially in Q2 in line with our expectations.

Looking ahead the fiscal Q3, we anticipate mixed performance among our healthcare \ life sciences customer base. We currently expect strength in our larger customer to deliver overall sector growth in the low to mid single digit. Our Industrial\ Commercial sector was up sequentially above 7% in our fiscal Q2.

This result was weaker than our expectations for low teen percentage growth as eight of our Top 10 customers missed earlier forecast. We currently anticipate that our industrial\ commercial sector will be up in the high single digit percentage range in our fiscal Q3.

We continue to experience modest strengthening of customer forecast in conjunction with new program ramps. Our Defense\Security\Aerospace was up 20% in Q2, a good result but we had expected even stronger performance as several customers' underperformed earlier forecasts.

We currently expect Q3 to be up in the mid single digit percentage range as we experienced mixed performance and among our defense\security\aerospace customers. Turning now to new business wins on Slide 6.

During the quarter we won 41 new programs in our manufacturing solutions group that we anticipate would general approximately $159 million in annualized revenue when fully ramped in production.

This quarter we had relatively strong performance and new business wins into our EMEA and APAC regions with the dollar value of wins represented a significant percentage of regional quarterly revenues. Both of these regions are presently operating below corporate average capacity utilization.

Slide 7, our manufacturing win performance trend remained strong with a trailing fourth quarter performance as shown by the blue bars at $731 million. Our wins performance in fiscal Q2 has shown by the overlay green bar was down sequentially from Q1, but was still above our quarterly target of approximately $150 million.

As a reminder, we believe that trailing fourth quarter wins performance at 25% of trailing fourth quarter revenues is sufficient to deliver growth consistent with our longer term target. Our funnel of new business opportunities pull back to $2.1 billion versus the $2.3 billion last quarter but remain healthy and sufficient for growth.

Turning now to our guidance on Slide 8. We are establishing fiscal third quarter 2014 revenue guidance of $600 million to $630 million. The midpoint of this guidance range suggest that our fiscal third quarter revenue will be up approximately 10% sequentially with revenue growth anticipated in all four of our market sectors.

We are guiding diluted EPS in the range of $0.69 to $0.74, our EPS guidance include approximately $0.10 of stock based compensation expense would exclude any special charges. With that, I'll turn the call over to Ginger for more detailed review of our financial performance.

Ginger?.

Thank you, Dean and good morning everyone. Our fiscal second quarter results are summarized on Slide 9. Second quarter revenue was $558 million slightly above the midpoint of the guidance range for the quarter.

Gross margin was 9.5% for the fiscal second quarter, this was in line with our expectations and slightly below the fiscal first quarter results. Selling and administrative expenses were $27.8 million in line with our expectations for the quarter.

SG&A as a percentage of revenue was 5% in the fiscal second quarter slightly above the fiscal first quarter.

Both gross margins and Selling and administrative expenses were impacted by anticipated additional structural cost during the fiscal second quarter including merit increases for employees implemented at the beginning of the Calendar year and the reset payroll taxes for U.S. employees.

Operating margin before special charges was in line with our guidance range at 4.5%. Diluted EPS at $0.53 includes two special items during the quarter. First, we saw a $0.18 per share detriment as a result of restructuring and impairment charges in the amount of $6 million.

$5.5 million of the charges related to the closure of our manufacturing facility in Juarez, Mexico that was announced on February 5, 2014.

The remaining $0.5 million in charges was the completion of the consolidation of manufacturing facilities in Fox Cities, Wisconsin, offsetting these charges was a discrete tax benefit of $3.7 million or $0.11 per share benefit.

To the discrete tax items were generated by the release of reserves from the closure of federal and state tax audit as well as the expiration of the statute of limitation in several jurisdictions. Excluding the $0.7 in net detriment of the special items non-GAAP EPS of $0.60 was at the midpoint of our guidance.

Turning now to Slide 10, I would like to spend a bit more time highlighting the progress of our operational initiatives. Our manufacturing solutions supply chain and go-to market organizations have made significant stride on productivity initiatives.

As a result we were able to expand non-GAAP operating margins from 4.0% in Q1, F13 to 4.8% through Q1, F14. When comparing Q1, F14 operating performance to Q1 of fiscal 2013, we generated 80 basis points of improvement in operating profit margin on essentially the same revenue.

While we experience the expected and seasonal headwind in our progress in Q2, F14 our recent results from our operational initiatives provide confident that we will have the improved operating performance necessary to achieve our financial goals.

These operating performance initiatives are designed to bring us more in line with our targeted operating margin goal of 5% as we exit F14. Turning now to the balance sheet on Slide 11.

Return on invested capital was 14.1% for the fiscal second quarter of 2014, up 40 basis point reduction from the prior quarter and 310 basis points above our weighted average cost of capital for F14 of 11%. During the quarter, we purchased 185,000 of our shares for approximately $7.6 million at weighted average price of $41.18 per share.

The shares were purchased under the $30 million stock repurchase program authorized by the Board of Directors on August 19, 2013. We expect to complete the authorized repurchases on a relatively consistent basis over the remainder of fiscal 2014.

During the quarter we generate $60 million in cash from operation and spent $8.8 million in capital expenditures with approximately half of that capital for footprint expansion in Guadalajara, Mexico. Resulting free cash flow during the quarter was $7.2 million. Please turn to Slide 12.

Our cash cycle for the fiscal second quarter was 62 days in line with our expectations and consistent with our result in the fiscal first quarter. In total, working capital increased by approximately $40 million during the quarter.

Inventory increased by approximately $22 million to support the ramp of new customer program, offset by $11 million increase in accounts payable. As Dean has already provided revenue and EPS guidance, I will now turn to some additional comments on the fiscal third quarter of 2014 which are summarized on Slide 13.

We expect restructuring cost to approximately $400,000 to $500,000 in a fiscal third quarter related to the Juarez to Guadalajara transition. These costs are excluded from the guidance discussed today. Gross margin is expected to be in the range of 9.4% to 9.6%.

We expect SG&A cost to be higher than in the fiscal second quarter in a range of $29 million to $30 million. At the midpoint of our guidance range for revenue, this will result in approximately 4.8% SG&A as a percent of revenue.

This increase from the prior quarter is a result of investment in staff and system to support expected revenue growth and higher growth of incentive compensation on improved revenue outlook for fiscal 2014. This resulted in expected operating margin of approximately 4.6% to 4.8%, up from our result in the fiscal second quarter. A few other notes.

Depreciation and amortization expense is expected to be approximately $12.5 million in the fiscal third quarter, up from the $12 million in the fiscal second quarter. We are estimating a tax rate for fiscal 2014 of 8% to 10%, above our fiscal 2013 rate of 3.2%.

Our expectation for the balance sheet after working capital dollar to be up from the fiscal quarter, based on the forecast of levels of revenue we expect these changes will result in cash cycle days of 62 to 64 days for the fiscal third quarter of 2014.

This increase in working capital reflects increase investment to support expected higher levels of revenue in the remainder of the fiscal year. Our capital expanding forecast for fiscal 2014 remained approximately $75 million.

The majority of this capital is equipment to support new program ramp and the leasehold of improvement through our new lease facility in Guadalajara, Mexico. I'll now turn the call back to Dean for some wrap up comments..

All right, thank you, Ginger. All right, before we turn the call over to questions, I just like to share with you few of the near-terms that we are focused on.

So now we are on Slide 14, we have done a good job keeping up the pace and new business wins and importantly delivered meaningful new revenue into regions where we have ample capacity for growth namely EMEA and APAC regions. And we need to keep up the pace.

As part of the EMEA new business wins, we are beginning to build momentum into our Oradea, Romania facility; we can't back off of that effort. Our new facility in Guadalajara, Mexico will be near in completion by the end of our fiscal third quarter.

We've made substantial progress building a leadership team for the site, the first priority is to flawlessly transition business from our site in Juarez to Guadalajara. The second priority is to close on some of the new business opportunities developing in our funnel that are targeted for Guadalajara.

Four, we remain intently focused on improving our operating margins quarter-over-quarter to fiscal 2014 in our quest to achieve our 5% target.

And finally we need to continue to enhance our brand for customer service excellence by making meaningful progress on our global operational excellence initiatives while continue to expand our value stream solution. With that operator, we'll turn it over for questions..

(Operator Instructions) Our first question comes from Shawn Harrison from Longbow Research. Please go ahead..

Good morning, everyone. Dean, really just I guess first on the networking comp business. Do you think the underline programs that you have kind of settled down now moving into third quarter? And is all these growth going into the third quarter new program ramps or is any of just base business strengthening..

It is a combination of both of those.

We think like -- we kind of had a bit of reset I think coming into Q2 which I feel is kind of surprising to us how broad base it was but nonetheless that's what the customer forecast showed and as I said in my comments we saw a fairly broad strengthening of those forecasts as we can't see the quarter so clearly the customers were may be lost confidence coming another quarter and hoping is ended up.

But we also are experience some really strong growth amongst specific product lines for customers and these customers have some strong ideas, strong products in the market place in those specific products they are driving some real strength here as we move through the year..

If we would have looked at 20% growth over the third quarter, how much of that is base business versus ramp? Is there a way to split it out?.

Yes, and Steve is certainly -- you may have an opinion on kind where we are at from mid standpoint..

Yes, Shawn, it is Steve. I think we have several customers that have ramped newer products in the last few quarters. And I would say that as a significant modest going through is coming from stronger market acceptance of the new products and what they anticipate it.

So it is a little bit of balance between would you call it a new product or existing business. I think it is just stronger end market with acceptance of these new products..

Okay, very helpful.

And then just may be I am digging in this, into this too much but 41 wins and $159 million of revenues, the contribution for wins is a little lower than you seen historically, is that something may be that we should expect may be more number of wins going forward with the lower dollar contribution, was this quarter just an anomaly?.

No, I think that's a really good observation.

I think it is -- there will be some volatility to that obviously because sometimes individual program they kind skewed that number but generally with the market that were focused on, the path to growth in those markets means you have to win a lot of programs and this will use average when you come into a package with a customer, many times there will be six, eight individual product lines that are in there that did package and you can win some or all of those program.

So they really are individual programs we are going to package, so you end up with this larger program count. But I think that you are going to see this I think fairly indicative of what the sectors that we are focused on were and how you grow in those sectors..

Thank you. Our next question comes from Matt Sheerin from Stifel Nicolaus. Please go ahead..

Hi, yes, thanks. Just a follow up on that question regarding the strengths that you are seeing in networking. As those volumes improve, does that mix at all change the margin profile -- drag it on gross margin for instance and you are getting to that 5% goal.

Does mix impact that at all?.

Matt, this is Steve. We are not anticipating any margin erosion with the ramp of these new wins.

Yes, I think as we look at always price these programs and whether our competitor leave, they are not -- there is a mix of kind of technologies in the space, some which are more commoditized and others which are not and fortunately for us I think the growth that we are seeing or the strength that we are seeing is among some of the more difficult technologies to manufacture was special processes..

Okay, and can you quantify that relative strength of the telecom infrastructure versus traditional networking?.

Well, some of the strength is actually in support of cable market place and communication there. So I don't have a split for me but that's where a meaningful amount of strength is..

Okay and just lastly as you do get to that 5% EBIT margin threshold, is that more of function of gross margin because you talked Ginger about certain cost going up but as you later in those cost, will you have leverage on top of that so that just SG&A as a percentage will come down and that's going to drive it?.

Well, I think it comes from both, Matt. So with -- we are getting think both investment -- we are seeing investment in SG&A that is for this revenue but with the top line coming up we are seeing leverage.

So it is up to us to completely manage those SG&A investment prudently and we are on a path to improve gross margin as well through the operation initiative that we laid out. So I think it will be a combination of both..

Thank you. Our next question comes from Sherri Scribner from Deutsche Bank. Please go ahead.

Hi, thanks. I wanted to dig a little bit into the weakness or the relative weakness in industrial and the different segment.

I am just curious do you think that is specific to the programs you guys have or you are still seeing general macro weakness, I will be curious to hear your thoughts on customer sentiment right now?.

Sherri, this is Steve. We saw across several customers a little bit of decline. There was one more significant and that was really due more to a new follow program ramp that didn't materialize the way we anticipated.

They are forecasting that ramp to continue, it just kind of slid up to the right so I would say I\C is more focused around one customer, specifically on D\S\A the -- always the biggest analogy I was to hear that there was a significant amount of engineering changes that came in through the quarter so that kind of hampered the top line revenue.

We are working through those engineering changes and I don't think receiving broad base that's driving our number down into the future..

I think it is interesting -- I certainly wouldn't want call the market robust here but I think we are clearly sign to seen kind of a longer term improvement in customer forecast generally in D\S\A as we look further out. So it is clear that we are starting to see some of the effect of stronger economic activity in that sector..

Thanks, Dean, that's helpful. And then Ginger just wanted to dig - oh I am sorry did you have more comments? And Ginger, I wanted to dig into the income statement a little bit and then gross margin. I know your long term target is 10% gross margin and we are sort of in the middle of the nine at this point.

Do you think that the gross margin can improve to 10% as we move forward? And do you have a sense of when that will happen with the cost actions you are taking? Thanks..

Yes, I actually think we are focused as the overall 5% operating margin, and I believe over time we are going to get there with more leverage on SG&A and probably a gross margin slightly below 10% so a high nine so my long-term model is gross margin in a high nine and SG&A in the high four and allowing us to deliver the 5% operating margin..

Thank you. Our next question comes from Steven Fox – Cross Research. Please go ahead..

Thanks, good morning. My first question was regarding some of the new wins. Dean, you mentioned some more momentum in the engineering services and also you guys conveniently also seen some better wins in EMEA and Asia.

And I know you guys were talking about that back in September sort of something that could happen, I was curious if the near-term trend reflects any strategic initiative on your part, anything specific to timing or is it just sort of part of that longer-term trend?.

Yes, let me start out on this and then I kick it over to Steve. I just say that clearly we have been trying to do-- we have been investing in EMEA, so let me just talk about that region for a second; I'll talk about the manufacturing piece initially.

And that we have initially entered with a lower cost solution in Oradea, of course we saw some early success there and we built significant facility now that enables us to handle some long-term growth. But we have been very conscious of the importance of building a strong brand for execution in that market place.

So we have been bringing programs into that facility very deliberately, making sure that we execute really well, built up the experience of the team and really set the stage then to get after the market in a more aggressive way, so some of what you are seeing now is a concerted effort now to start to accelerate program relative to that facility and of course that region is kind of -- is obviously not in its entirety operating at our -- and were renewed to be from an operating performance that we need the revenue into that site and then into our site up in (inaudible) and deliver.

So I will turn it over to Steve because you also asked about engineering as well..

Yes, the engineering strength was broad based across globe, significantly driven by the healthcare\ life sciences sector, strength there and to comment what Dean said significant strength in the EMEA region, the production out facility in Germany, brought in a couple of new customers that we were denied access to in the past.

As those engineering programs were through the design cycle, we expect those to ramp into Oradea facility which is giving us more confidence about the value proposition, so from a overall strategy standpoint we think EMEA is working well and then from an engineering standpoint we just see broad based strength across the globe in terms of customer ramping new projects..

Steve, did you ask about Asia as well? APAC.

I did..

Yes, I think APAC, of course we created a pretty big hole from a revenue perspective and APAC would be exit our large networking customer last year and of course we did what we could to redeploy assets and people, but we certainly had significant force base for growth so of course it was really important for us to get after and get some new business ramp up there as well.

So in certainly I think may be it is always kind of hard to see it completely but as our go-to market team is out in the market driving growth in those sectors, we are doing a better job I think trying to balance and prioritize what we are after so that we can get the growth moving into the region the way we needed..

Thanks, that's very helpful. And then just a quick follow up on the demand picture. In some of the markets you talked about so the customer missing forecast but then increase confidence for the coming quarter.

I guess I will try to understand how much sort of that swing quarter-to-quarter would just do the push out versus whether there has been a material change and how customers are looking at some of the products you are producing for us?.

Yes, Steve already talked about one of those in investor commercial that clearly slid and so we are just seeing a ramps starting up a little bit later than they originally thought.

I don't know that I can read too much into other than I believe we are starting to see customers have a little bit more confidence in longer range forecast for growth, we are seeing some choppiness obviously as you come in the quarter. In the near term but kind of the outlook seems to be a little bit more confident might be..

Thank you. Our next question comes from Jim Suva – Citi. Please go ahead..

Thanks, and Dean and Ginger, congratulations to you and your team there at Plexus. A question for Dean and then one for Ginger.

Dean, can you comment at all with Obama care now kind of being rolled out and stuff, are you seeing any changes? You guys are very strong in medical, are you seeing any changes by your medical customers like are they seeing more pressure to move medical stuff out at the hospital into the home? Or changes from OEMs as far as pressures to lower cost or push back on the supply chain, there has been some taxes and change, the just kind of whole medical sector overall has been going through a lot of evolution say to a couple of years ago.

If you could just update us on that. And then, Ginger, on the tax rate, Plexus has always had a long history of low tax rate and you gave some guidance.

I think if I heard correctly was that more near-term guidance? And if so how should we think about tax rate long-term going forward as you have some factories changing, some factories ramping and things like that? Thank you..

Well, thanks for the note of congratulation, Jim. We certainly worked hard to try to get the ship course corrected after the hit on the networking that we took.

Relative to healthcare, I am tempted to just yes, all the things that you went through are in fact what we are seeing in the market place and of course and this is a healthcare cost issue from a P&L standpoint for us is directly impacting us in terms of the cost of employee headcount in U.S.

as we are starting to see significant increases in cost there.

But from customer and market perspective, there is market I am just going to say talk about the marketplace generally, I am going to talk to Steve because he is itching to talk about this little bit but when you read about the growth rate now overall in that market place it is tempered right now because of the uncertainty now this expectation is that over the long term as more and more U.S.

citizens get insured through the Affordable Care Act that you will see an increase in a number of participants in the healthcare market place and that is then going to drive growth for the medical equipment companies but it is -- we are not seen that yet.

So longer term it should be a good thing, in the near term though the market place in the equipment companies need to make adjustments to how they go to market with their markets, where they are going to see growth at least in near term in emerging market.

I think right for the moment I think life sciences and the innovation that's taking place in there on the near term may be offer some interesting opportunities. And with that I'll turn in to Steve..

Yes, Jim, you asked a couple of questions and from our perception, the Medical Device Tax caused several companies to take a look at their cost structure internally and make adjustments. So we saw fair amount of that early on, I think that's come down now it is probably though I would say from our perspective.

In terms of driving things to a more of home use our engineering solutions team is having more discussions with customers about how to get product further into down the stream so to speak in the consumer's hand.

And then in terms of growth and more cost I think the again going back to the adjustments that we made earlier I think people have come up with a strategy now it is a bit more stable in terms of looking after global footprint where they need to design and deliver products.

So probably from our perspective things have come down in terms of what is happened to that industry.

May be we see -- what we are hearing is more of stable, steady growth as of course may be some of these volatility that we see in the past, so I think people have worked through the system in terms of what it means to them and I think going forward we are able to more steady state..

Okay and then I will address the tax question, Jim. Yes, that guidance of 8 to 10 percentage for this fiscal year and just as a reminder for people on the call, we have had historically low tax rate because we have significant amount of our taxable income in a jurisdiction in Malaysia where we have zero tax rate. We have a tax holiday through 2024.

So that's driven the very favorable tax rate we have.

looking forward, I would expect the tax rate to come up modestly, we have made a lot of investments in the Americas, both in Wisconsin and in Mexico and over time we expect those regions to become more profitable and so that would drive proportionally higher tax but my guess is for the mid term I would guess tax rate of -- in the low to mid teen.

And I think that would be several years out, my guess it will be around 10% range in F15 as well as in F14..

Thank you. Our next question comes from Brian Alexander from Raymond James. Please go ahead..

Okay, thanks, good morning. As more of the growth billing forward potentially comes outside of the U.S. based on where your program wins are occurring, are there any margin implications that we should consider in terms of margin profile in the U.S.

versus outside the U.S.? Just curious if there are any structural differences there or if you effectively hold the regions accountable for the same financial goals?.

Yes, I don't think there is really any -- in terms of the way we price business I mean clearly when I think when we think about the EMEA region and it's under utilization to the extent that it is revenue going in there clearly start to allow to get some leverage out of the investment that we have there.

So I think it is important from the investors' standpoint to track our progress giving the EMEA region some regional capacity utilization. Otherwise relative to the other regions as more to what you said which is they are all held accountable for certain goals that we have for profitability.

I don't think that you should think about it and on materially shifting Plexus' kind of margin profile as if APAC brings it outside side growth or something that extent.

I would continue to thinking go around the Americas is that we are going to have this site in Guadalajara come on and we have been think the cost of that would be to us, we got that sort of baked into our longer term view, but it is going to be -- there is going to be significant chunk of capacity there.

We are going to have a nice warm start with some customers that were transitioning and that we got a part of other Juarez we have some new programs that are slated for that site.

But we need to demonstrate a meaningful trajectory of growth into that facility where we had struggled historically to see any meaningful kind of long-term growth in Juarez..

So I guess given the lower utilization in EMEA along with the stronger revenue outlook overall for the Company, should we expect greater improvement in margin performance over the next few quarters than what you have described? Or are you basically reiterating the 5% goal as you absorb some of these ramp costs in Guadalajara? And you are effectively saying what you have been saying, which is we are trying to get to 5% and hold it there?.

That's exactly correct. We are trying to get the 5% and hold it there and part of getting to 5% was our expectations of driving some new revenues into EMEA region to lift it up as well as the number of other initiative that we had in the plan..

Got it.

And then just finally, any additional observations, Dean, in terms of customers perhaps accelerating their willingness to outsource production in any of the markets that you serve? Or would you say the rate of outsourcing is pretty consistent with where it has been? Just curious what kind of the tone from customers is?.

Yes, I don't -- I am not saying the acceleration, I think that it is consistent and steady the number of customers that we have been talking to over a long period of time that is -- that are finally starting to make some progress, it is unwinding facilities, we believe we will benefit from some of that.

And so I think it is just kind of steady as you go another seems to be facility shutdown or two that happens a few times a year or so. I think that's the way it is going to stay..

Thank you. Our next question comes from the line Mark Delaney from Goldman Sachs. Please go ahead..

Thanks very much for taking the question. I was hoping first you could elaborate a little bit more on the commentary for operating margins getting to 5% exiting fiscal 2014.

Should we think about that as a run rate for maybe the last month of the September quarter that you are going to be hitting that 5%? Or should we think about a 5% operating margin for the fourth quarter overall?.

Yes, Mark, we are certainly focused on that 5% margin goal. And as you have seen we have demonstrated really good ability to improve our margins and we expect that to continue. With that said, this is a really difficult business and we work really hard to deliver these results. So we continue -- as Dean said we reiterated the 5%.

I think there may be challenges and any particular quarter that might cause us to come up little bit shy of that but we continue to focus on that as our long term goal..

Okay, that is helpful.

For my follow up question, can you give us an update on the industry dynamics in terms of competitive pricing? Are you seeing any increased -- pricing competition from any of your competitors or is it just getting better, or is it -- do you getting better or is it about the same?.

This is Steve, Mark. It is about the same. We are not really seeing any significant difference in any other sectors..

Thanks you. Our next question comes from Sean Hannan from Needham & Company..

Yes, thanks. A number of my questions have been answered, but just I guess a few trailing ones here. So first, if we can think about our customer base now today as you look at say where you are growing your share of wallet at some of your top or emerging customers.

Are there any at this point now where you have some visibility where some of these guys could be putting themselves closer to a consistent 10% versus say the types of dynamics that we have seen in the past?.

It is possible. It just depends on the longer -term program growth rate around some of these customers. But generally we were mindful of trying to grow the base of business across the customers and keep ourselves from getting into the situation where we have any kind of really significant confrontation with an individual customer..

That is great. And I think that is pretty consistent with what you folks have been talking about.

But, Dean, could you elaborate though, what segment would you be seeing that type of potential?.

Well, there is always the question of -- and we have certain customers that are multiple segments, so when you like GE for example, GE in its overall book of business to us could come up and approach 10%.

Where it could happen quickly would be in network communication is just because of the nature of those programs and how quickly they can grow versus and growth rate and some of the other sectors. But at this point it would be hard to necessarily suggest that we are going to see that..

Okay, that is great. And then lastly here, in terms of the longer-term outlook, I realize you are not feeling we are necessarily robust, but we are getting some indication of stronger economic activity.

As you take a look at the longer-term build plans from customers that -- those at least that provide longer-term forecasts for you, can you elaborate a little bit on what segments have been particularly firming or what aspects of say your customer portfolio are giving you perhaps better relative strength in being able to provide confidence in that longer-term outlook? Thanks..

Yes, I would only suggest that at least industrial\ commercial is really broad based I would say again in healthcare\ life sciences is just a few common that they are pretty steady kind of longer -term growth portfolio, nothing that's accelerating although we had expected to at some point as the whole market price works through the Affordable Care Act and we did more insured, but specifically what we see modest strength we have talked about this in the past is in particularly commercial, aerospace that you see that as a good strong, longer-term trend were forecast in a to hold up really well, we are seeing it with some our network communication customers, some of it is -- on the network side some of it is in the cable market where we are seeing good -- it would be strong and longer term -- the other is well it is kind of -- I want to say spotty that's may be not the right word but we are not seeing a consistent among all customers in semiconductor capital equipment, we are seeing some of that strength beginning and we expect that to I think the more consistent among the multiple customers that we are engaged with as we come into next fiscal year as we start to see that investment cycle pick up ahead of steam.

Other than that, do you have any add to that Steve that you can -?.

No. I think you covered them all..

Okay, great, thanks so much for the color..

Thank you. Our next question comes from Wamsi Mohan from Bank of America, Merrill Lynch. Please go ahead..

Yes, good morning, it is actually Ruplu filling in for Wamsi. Dean, I wanted to start by asking you I think last quarter you had said that of the $282 million of revenues from Juniper in fiscal 2013, at that time you had replaced about 50%.

Where does that percent stand now in terms of how much you have replaced of that Juniper revenue?.

Yes, as I commented we replaced it all. So they are in good shape and then some because we are obviously expecting some top line growth this year..

Okay, great. And then I think on the call you also said that Europe and Asia Pac are slightly below the corporate average capacity utilization.

Can you just give a little bit more color on that, what is the corporate average utilization and where are Europe and Asia Pac compared to that?.

Yes, I think we are -- overall we are in the low 70s kind of 73% - 74%, I'll just say that the other those two regions APAC and EMEA, EMEA being a lower I would say overall at this point because they are in a early investment cycle but I am reluctant to give out a specific number because it probably implies higher level decision than is really there.

I will say highest utilization rate now is in the Americas then APAC and then EMEA in that order in terms of the utilization. But obviously you got all the contemplate where the concentration of footprint is largest in APAC and smallest in EMEA, so you can move the needle more quickly when you win business into EMEA..

Okay. Yes, that makes sense. And then one for Ginger.

What are your free cash flow expectations for the year for fiscal 2014? I think you talked about working capital picking up slightly next quarter or did I hear that correctly and do you think you can positive in terms of free cash flow for the year?.

It's a little early to color, Ruplu, for the full year partly because we have this significant revenue increases and we will be investing working capital.

My goal is to generate a modest amount of free cash flow for the full year and that would be a trend that would be consistent and a year where we are growing revenue a lot, and we are going to have lower free cash flow than in other years. So my goal is always to be modestly positive free cash flow..

Thank you. We have no further questions at this time. Thank you, ladies and gentlemen. This concludes the Plexus Corp. conference call regarding its fiscal second quarter 2014 earning announcement. Thank you for participating. You may now disconnect..