With today's earnings call, Todd will provide summary comments before turning the call over to Oliver and Pat for further details. We generated solid new program wins, including opportunities supporting new customers with products aligned to exciting growth technologies. We delivered non GAAP operating margin of 6%, matching our stated goal. Through our commitment to enabling customer success, we are seeing ongoing strength in new program wins and opportunities to gain share in support of delivering growth outpacing our end markets.
In addition, our ongoing strategic investments that drive organizational and operational efficiency are generating strong profitability and free cash flow in support of creating long term shareholder value. Non GAAP operating margin of 6% was near the high end of our guidance, increasing 30 basis points sequentially and meeting our stated goal of 6% or greater operating margin. We have now achieved this goal and delivered operating margin at or above 6% for three of the last four quarters. Non GAAP EPS of $1.9 exceeded our guidance, benefiting from strong operating performance, lower than anticipated interest expense and a favorable tax rate.
Finally, we delivered $13,200,000 of free cash flow, significantly better than our expectations entering the quarter as we continue to drive strong working capital management. For the fiscal third quarter, we secured 41 new manufacturing programs with $250,000,000 in revenue annually when fully ramped into production. We also added in each of our market sectors new customers with products aligned to exciting growth technologies. Furthermore, similar to last quarter, the revenue contribution and diversification of the wins performance of our engineering solutions was strong.
| Metric | Period | Current guidance |
|---|---|---|
| Revenue | Fiscal Q4 2025 | $1.05 billion - $1.09 billion (sequential growth anticipated) |
| Non-GAAP operating margin | Fiscal Q4 2025 | 5.7% - 6.1% |
| Non-GAAP EPS | Fiscal Q4 2025 | $1.66 - $1.81 |
| Gross margin | Fiscal Q4 2025 | 9.8% - 10.1% (slightly lower at midpoint) |
| Selling and administrative expense | Fiscal Q4 2025 | $50 million - $51 million (fairly consistent) |
| Effective tax rate | Fiscal Q4 2025 | 8% - 10% (lower due to release of tax reserves) |
| Cash cycle days | Fiscal Q4 2025 | 64 - 68 days (improvement) |
| Capital spending | Fiscal 2025 | $80 million - $100 million (lowered from previous guidance as some Malaysia payments shift into fiscal 2026) |
| Free cash flow | Fiscal 2025 | approximately $100 million |
| Metric | YoY | Note |
|---|---|---|
| Aerospace and Defense revenue | — | Up 6% sequentially, meeting expectation of mid-single-digit increase, driven by new program ramps. |
| Healthcare Life Sciences revenue | — | Up 2% sequentially, below mid-single-digit expectation, due to a customer design update causing temporary production delay. |
| Industrial revenue | — | Up 4% sequentially, in line with low-single-digit expectation, as broadband communications and energy demand offset semi-cap push-outs. |
| Gross margin | — | 10.1%, slightly above midpoint due to favorable mix of service offerings and better fixed cost leverage. |
| Return on invested capital | — | 14.1%, highest in nearly four years, driven by lower invested capital from working capital improvement and better operating performance. |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Semi-cap demand | mid-teens growth expected for fiscal 2025 | low double-digit growth for fiscal 2025, with within-quarter push-outs deferring revenue (not perishable) | Softening near-term, deferred |
| Commercial aerospace (Boeing/Airbus) | awaiting production rate recovery | still no pull-in; fiscal 2026 outlook assumes steady state with no Boeing/Airbus recovery | Flat, potential upside |
| European defense | — | early signs of increasing activity and interest, new space customer added in Kelso, Scotland | Improving |
| Malaysia facility startup | — | new site beginning, minimal Q4 drag, expected to reach profitability within roughly four quarters | Ramping |
| Tariffs | customers in wait-and-see mode | little change; costs passed to customers, minimal demand movement, USMCA compliance north of 80% in Mexico | Stable |