Good morning, ladies and gentleman, and welcome to the Plexus Corp. conference call regarding its fiscal first quarter 2015 earnings announcement. My name is Vivian and I'll be your operator for today's call. At this time, all participants are in a listen-only mode. Please note, that this conference is being recorded. After a brief discussion by management, we will open the conference call for questions. The conference call is scheduled to last approximately one hour. I would now like to turn the call over to Mr. Angelo Ninivaggi, Plexus' Senior Vice President, Chief Administrative Officer and General Counsel. Angelo?

Thank you, Vivian. Good morning and thank all of you for joining us today. Before we begin, I should remind everyone that statements made during our call today and information including in this supporting material that is not historical in nature, such as statements in the future tense and statements that include believe, expect, intend, plan, anticipate and similar terms 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 factors that could cause actual results to differ materially from those discussed, please refer to the company's periodic SEC filings, particularly the Risk Factors in our Form 10-K for the fiscal year ended September 27, 2014, and the Safe Harbor and Fair Disclosure Statement in yesterday's press release. Plexus provides non-GAAP supplemental information such as earnings or margin, excluding special items, as well as return on invested capital, economic return 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 comparisons. Economic return, return on invested capital and free cash flow are used for internal management assessments, because they provide additional insight into financial performance. In addition, we provide non-GAAP measures because we believe they offer insight into the 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 at 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; Todd Kelsey, Executive Vice President and Chief Operating Officer; and Pat Jermain, Vice President and Chief Financial Officer. Let me now turn the call over to Dean Foate. Dean?

Thank you, Angelo, and good morning, everyone. If we could, please advance to Slide 3. Yesterday, after the close of the market, we reported results for our fiscal first quarter of 2015. Revenues were $665 million, relatively flat with the prior quarter and up about 25% from the comparable quarter last year. First quarter non-GAAP diluted EPS of $0.72 was above the midpoint of our guidance range. Please advance to Slide 4 for a few comments regarding the fiscal first quarter. Our fiscal first quarter revenue was above our guidance range due to better than anticipated end-market demand in our Networking/Communications sector. Much of the upside was in emerging markets. Our go-to-market teams delivered $190 million of manufacturing solutions wins, above our target of $160 million. The results were nicely balanced across our sectors. Our Engineering Solutions group experienced another solid quarter of project wins with result at $26 million. As Pat will discuss in a few minutes, our margin performance was in line with expectations this quarter, but we had disappointing working capital results. Operating margin was 4.6%, consistent with our guidance, as we invested in program transitions and the accelerated ramp at our new facility in Guadalajara, Mexico. Our cash cycle degraded to 72 days. While inventory was consistent with guidance, we had disappointing forecasting and management of receivables and payables, resulting in significant cash used during the quarter. Return on invested capital was 14.4%, resulting in an economic return of 340 basis points that was below our expectations. Concluding with a few positive notes. We completed the exit of our facility in Juarez, Mexico, successfully transitioning customer programs to our new facility in Guadalajara, Mexico. Our strategy to position our new facility in Neenah, Wisconsin, as an Aerospace Center of Excellence is successfully unfolding. We continue to…

Thank you, Dean. Good morning. Please advance to Slide 6 for insight into the performance of our market sectors during our fiscal Q1 of 2015 as well as our current expectations for the second quarter of fiscal 2015. Our Networking/Communications sector was flat sequentially in fiscal Q1, which considerably exceeded our expectations of a decline in the high-single digit percentage point range. One of our top customers significantly exceeded expectations, while several other customers also strengthened in order to fulfill calendar yearend demand. We expect our Networking/Communications sector to contract in the mid-teens percentage point range in fiscal Q2, as nine of our top 10 customers are anticipated to be down quarter-over-quarter. This softening is consistent with our earlier expectations for this sector and represents a more normalized revenue level. Despite the near-term contraction, we expect year-over-year growth within our Networking/Communications sector in fiscal 2015. Our Healthcare/Life Sciences sector was up 4% sequentially in Q1, in line with our expectations. We benefited from the traditional seasonal strength of one of our top customers and the ramp of new programs with another major customer. Looking ahead to fiscal Q2, we currently anticipate revenue in our Healthcare/Life Sciences sector to be down in the mid-single digits, as we experienced the typical seasonal softness of our second fiscal quarter. Interestingly 11 of our top 15 customers in this sector improved their forecast for Q2 from previous expectations, continuing a near-term upward trend that we have observed for the past several quarters. We expect to return to growth in this sector, as we move through fiscal 2015. Our Industrial/Commercial sector was down 1% sequentially in our fiscal Q1, in line with our expectations. One of our top customers softened considerably in the quarter, which was offset by the strengthening from two key customers. We…

Thank you, Todd, and good morning, everyone. Our fiscal first quarter results are summarized on Slide 11. First quarter revenue was $665 million, which was above the top-end of our guidance range for the quarter and about 25% above the prior year first quarter. Gross margin was 9.2% for the first quarter. This was in line with our expectations and below the fiscal fourth quarter result of 9.4%. As anticipated and mentioned last quarter, gross margin for the first quarter was impacted approximately 15 basis points by the continued ramp up of our Guadalajara, Mexico facility. Selling and administrative expenses were $30.9 million, slightly above the high-end of our expectations for the quarter. This was primarily the result of higher calendar yearend healthcare claims and higher variable incentives compensation expense due to the improved revenue for the quarter. While SG&A dollars increased compared to the prior quarter, SG&A as a percentage of revenue was approximately 4.6% for the first quarter, consistent with the fiscal fourth quarter. Operating margin of 4.6%, before special charges, was in line with our guidance range. Diluted earnings per share of $0.67 includes $0.05 per share detriment due to restructuring charges. Consistent with our guidance, we incurred $1.7 million in restructuring charges related to the Juarez closure and transition to Guadalajara. This now concludes our restructuring activities for these sites. Excluding the $0.05 of restructuring charges, non-GAAP earnings per share of $0.72 was slightly above the midpoint of our guidance. Not contemplated in our original guidance was $0.01 per share of additional tax expense related to the geographic distribution of earnings. Turning now to the balance sheet on Slide 12. Return on invested capital was 14.4% for the fiscal first quarter. We created an economic return of 3.4%, based on our fiscal 2015 weighted average cost…

Thank you, Pat. And let's just please advance to Slide 16 for some comments regarding near-term focus items. First, let me begin with a review of our goals for fiscal '15. On the growth front, our business wins performance has been strong over the past several quarters, setting the stage for double-digit growth this fiscal year. We continue to believe our business model is healthy with operating margins in the range of 4.7% to 5%. With operating margin performance in our target range, the conservative level of capital expenditures and proper management of working capital, we should generate meaningful free cash flow. Our key measure for shareholder value creation is our economic spread. We expect to deliver in the range of 400 basis points to 500 basis points. Reviewing a few key supporting initiatives. Our team has executed extremely well on the startup of our new facility in Guadalajara, Mexico. All customer program transitions from our former site in Juarez, Mexico to Guadalajara have been completed. As part of the Guadalajara first year operating plan, we will also transition certain customer programs from one of our sites in the U.S., where we are capacity bound. This transition has been delayed one quarter due to customer constraints. We need to execute this transition to the revised plan over next couple of quarters to ensure we swing our Guadalajara site profitability. Our EMEA region has been in a significant investment phase over the past few years. We are getting good traction in the region with our expanded capabilities and footprint. Part of our operating plan improvement depends on swinging the region's profitability in the second half of this year. We are on track to deliver this result with a significant ramp in revenues at our facility in Oradea, Romania. Pat spent a fair amount of time reviewing our working capital missteps in Q1. We will get it fixed. Todd's teams are driving meaningful improvement with their operational excellence initiatives. We need to continue our progress not only to improve our operating metrics, but to delight our customers. Finally, we need to remain vigilant on our understanding of our end-market dynamics, as our customers continue to provide poor visibility to out-quarter forecast. With that, operator, we will take some questions.

[Operator Instructions] And our first question comes from Brian Alexander from Raymond James.

Just on the communications segment, are you actually seeing the order rates decline to the magnitude of your guidance of down mid-teens sequentially or is that caution just based on the strong momentum that you've seen over the last couple quarters? And then I just have a follow-up.

So, Brian, this is Pat, I'll take this question here. With the Networking/Communications sector we are seeing a decline that's consistent with our forecast here. And maybe just to add a little bit more color around the Networking/Communications sector and we of course had a large spike in Q4 as a result of a new program ramp. That program did reset to more normalized levels in Q1 and it maintains that way, as we move forward through fiscal '15. But what we were able to accomplish in Q1 is another one of our significant customers saw a strong upside in emerging markets as a result of a new program ramp. So they were able to capitalize on that. We also saw some end-of-year pull in from a number of our other customers and that subsides as we enter Q2 and beyond. So we really believe the level we are forecasting now is I'd call it the new normal or the baseline from which we'll work on.

That's what I was getting at. And I wanted to make sure that this $200 million a quarter is kind of the new base after a couple quarters of $230 million-plus. And Pat, just on the margins, I guess as we look at all the puts and takes to margins, is there any change in the trajectory of the operating margin improvement that you're expecting now versus 90 days ago? I know you talked about maybe a one-quarter delay with the ramp in Guadalajara, but as you look to that 5% goal exiting the year, has the timing changed at all or the magnitude of that improvement?

No, it hasn't, Brian. And that's actually when Todd put up the slide showing that waterfall, that was the same slide that we put out last quarter. It's still very consistent.

And our next question comes from Shawn Harrison from Longbow Research.

I wanted I guess to get a little bit more detail on the large industrial win that Todd mentioned in his prepared remarks. Maybe if you could size it, any other details and I think you said it would ramp later in the second quarter as the year progressed, but just additional details would be helpful?

So it impacts our Americas region. It will be on the order of about $100 million, when fully ramped up, and it could approach that at least. And what we would expect is pretty minimal impact in Q2, as it starts to ramp, as we start to build some pilot production, but a more meaningful impact in Q3. It will really be '16 before it's fully ramped. But it's relatively aggressive from a ramp standpoint, as compared to the typical program.

And this is in brand new customer to Plexus?

Returning customer.

A returning customer would be the best way to put it. We've done business with them in the past.

And then just second, just broadly on the organic environment. Previous times you had talked about I guess the limited visibility within customer forecasts, push-ins and pull-outs has that quieted down or are you seeing any more volatility, I guess increased volatility in customer forecast?

I think it's an interesting dynamic that we've seen over the past, I guess, four or five quarters, where customers are really, I would say, under-forecasting out-quarters. And we see that the out-quarter forecast kind of come up reasonably consistently, as we move to the current quarter that we're in. So this is I think a bit of a change in a mindset from customers. Again, this isn't across the board, but generally speaking, we use to see customers tend to over-forecast demand in an effort to overdrive your availability of inventory and capacity to ensure that you can meet their needs, and we're seeing customers manage that dynamic around inventory around the channel much tighter. They're really more focused on the current quarter and maybe the next quarter, but really the current quarter. And as I said, the dynamic has been more to bring the forecasts up as we kind of move through the quarter. So I guess part of this is just that, in general, I think the whole supply chain has become more responsive to customer end-market demand dynamics. Certainly, our platform has gotten much more agile and flexible to meet those needs of customers, and they don't see any need to sort of overdrive and I think they're more concerned about being conservative on their side just from an inventory channel management.

And our next question comes from Sherri Scribner from Deutsche Bank.

I just wanted to get a little more detail on what you're seeing in the Healthcare/Life Sciences segment. I think that you mentioned that a number of customers continue to improve their forecast there? I was hoping to get a little more detail.

Yes, I would say, again, I think the Healthcare/Life Sciences is really indicative of what I was just talking about, where we see Healthcare/Life Sciences out-quarter forecast is quite soft. And we've seen this pattern, where they bring that forecast up maybe 4% or 5% kind of as you move through the current forecast that keeps happening quarter-over-quarter. So generally, we expect to have a good outcome in Healthcare/Life Sciences, but it's hard to get a read, where we're going to actually end up for the full year, because we have to kind of second-guess their out-quarter forecast, as the pattern has been to under-forecast.

And is there any specific area that's stronger or anything that you would call out?

I don't have anything in particular. Well, Pat, do you have any comments relative to?

Well, I guess, the one thing I would talk about would be the markets. And I think in general, the Healthcare/Life Sciences markets are soft and developed markets had been soft for several years now, the U.S. and Europe in particular and that continues. Now, what's really changed is that emerging markets have also softened a bit from where they had been, and we had been seeing about 10%-plus growth in emerging markets. And right now the data that we have suggest about 4% to 8% growth in emerging markets. So in general, it's a soft end-markets, but we're benefiting from new program ramps more than anything.

And then just a question for Pat. Is there any FX impact that you guys are seeing from the changes in the currency?

Not significant, Sherri. We ship over 90% and invoice in U.S. dollars. So it's pretty minimal. And for Europe, that's less than 5% of our shipments are in either euro or pound sterling. So from a topline perspective, it's less than $1 million dollars. And then when you look at the natural hedges, we've got with paying expenses in local currency. The bottomline impact is de minimis.

And our next question comes from Steven Fox from Cross Research.

Just a couple of questions on footprint. Given the new win you just highlighted and looking at the mix of the wins in the last few quarters, it seems like the North America manufacturing base is somewhat oversubscribed and you're still having to fill up some white space overseas. I guess, I'm wondering how sort of those dynamics maybe play out over the next couple of quarters? And just as a follow on to that, with the new program you just highlighted, the $100 million piece of business, can you just give us a little color on your comfort level of the ramp? Is it something new in terms of complexity or end-market? And is it something new to the customer, new product or are you taking some business from someone else?

With respect to the footprint and capacity in North America, I think we're really in good shape. I would just remind the listeners that we did a consolidation here in Neenah. We consolidated a couple of older plants and a smaller plant in Appleton nearby into our new facility, which we keep referring to as our Aerospace Center of Excellence, because it houses that capability. That building in terms of raw square footage is bigger than the three buildings that we combined into it. So we picked up some of the square footage here in Wisconsin to support customers. Secondly, we of course closed Juarez and opened the facility in Guadalajara, and we have a significant amount of capacity now available to us in Guadalajara, having rotated a relatively small amount of revenue I would say from Juarez into Guadalajara. And of course, we're in process, as I stated of freeing up some capacity at one of our facilities in the Americas with some additional program rotation out of that facility into Guad, which will give us some additional white space or kind of flexibility here in the Americas. So I mean, overall, we're in a real good shape square footage wise in the Americas and for that matter in the other two meaningful regions for Plexus as well. So we've got a lot of available kind of raw square footage that we can grow into and shouldn't anticipate having to do anything from a brick-and-mortar standpoint for quite some time. With the respect to the new program, I'll let Todd take that one.

I'd say Steve that comfort levels that are reasonable level, what we're doing is, we're transitioning business from our customer site, so it's existing business that they have at their site and have an interest in moving out, and of course we have an interest in pulling it in. Now, there is also a risk, there could be a quarter or so delay and there is always a risk that it will amount to what we speculated well at this point. But right now, we feel good about the transition.

And then, Dean, just a clarification, I guess what I was getting at is the amount of business that you're winning that's going overseas, is that up to what you would have been thinking in terms of capitalizing on some of the leverage in Europe? I know you're getting Europe towards breakeven, but is it tracking to how you would have anticipated, say, a year ago, so that you continue to improve profitability in those parts of world?

Well, certainly Europe is and it looked slower going than we thought. I think we're a couple of quarters behind, I would say, where we thought we'd be at this point in time. But generally, we're getting very good traction and I would say an improvement in momentum into new business wins there. And of course, we want to manage that carefully, because we have a new site in Oradea, Romania, I mean relatively new I would say, and an experienced management team, but the scale of that business now is starting to rise pretty rapidly. So we're really trying to make sure we protect our customers and manage the flawless performance for them to make sure that we build a strong brand in that marketplace. But generally, I'm really pleased with now how that is unfolding, having admitted that we're probably a couple of quarters behind, we're ideally would have like to have been. With respect to APAC, again, we had a little bit of, I would say, a drought in terms of revenue momentum into the APAC region. We did a reasonable job of recovering from the loss of Juniper there, but we hadn't been winning quite at the rate that we'd like now. This has been a good quarter for us here, which will get us back on growth track into the APAC region.

And our next question comes from Jim Suva from Citi.

Dean, as we look ahead, I'm just kind of thinking about what consensus is modeling for sales. Given your win rate, which has been very impressive as well as there's additional industrial win coming on. I kind of scratch my head to see that consensus is looking at kind of a single digit year-over-year growth rates for your kind of outward quarters kind of the June, September quarter and kind of bringing the full year closer to like 11% or 12%. But it seems like your win rate would support closer to 15% or more or can you help me bridge the gap about, why maybe those expectations are somewhat realistic or is there some type of hesitation or something that we should be mindful of, so we just don't get too ahead of ourselves on your kind of longer-term outlook, given the win rate?

Jim, your arithmetic is absolutely right on, and we should be able to put out numbers that are meaningfully in that mid-teens growth rate. But I would caution against doing that, because again right now as we say, we've got fairly tepid forecast in out-quarters from customers. My personal feeling is some of those tepid forecasts are not quite supported by the macro, but that would suggest I am able to outguess the customers in terms of what they're going to do in their end-markets. Now, as I said earlier, their behavior has been to improve those out-quarter forecasts every quarter, as we move through the current quarter that we're in. But right now, I think there is just a fair amount of conservatism and concern about what's going on around the world and how that dynamic could impact customers ability to continue to achieve reasonable growth rates in those out-quarters. So I am comfortable really right now with where the Street is for the full year. I mean that certainly is a reasonable spot to be in. Theoretically, we should be able to outperform that, but I would caution about trying to get ahead of it at this point until we get a little bit further into the fiscal year.

Then a quick follow-up, is the best way to think about the wins rate is kind of optimally this is where they should go. But like you said, the visibility isn't quite there to give you 100% certainty to then mathematically build that into, say, the forward looking four quarters. Is that the way to think about it?

Well, I think with the wins rate, relative to the wins rate, I mean there is a lot of variability to the ramp up rates of these programs that we announced. And I think overtime the math holds up, right. But in the short run it's pretty hard to really extrapolate precisely from a current quarter wins to over the next four quarters it is going to be at full run rate. Like I said, there is a lot of variability in that. But right now, I think the math historically is held up, that if we achieve this sort of 25% trailing four quarter revenues, it should drive our growth rate or it should facilitate our growth rate that's in the kind of low-teens or targeted 12%.

And our next question comes from Amit Daryanani from RBC Capital Markets.

Just two questions, one maybe is a question on cash flow side. Dean, you mentioned you could do $80 million to $100 million of cash flow this year. I want to make sure I heard that right. And if that's correct, then that would imply a pretty impressive I think $200 million cash generation in the next three quarters. Just maybe walk me through how do you get there, because my math says cash cycle probably I should get, cash only to get into mid-50s in the back half for you to get to those numbers.

Yes, I can help you out with that. Yes, to confirm, its $80 million to $100 million. So on that we see a pretty significant improvement in the fiscal second quarter, we're looking at cash cycle days improving, if you take the midpoint of the range I provided, that's a 10-day improvement. So just alone in the second quarter, if you look at each day representing about $5 million of cash, that's a $50 million improvement. And then you layer on top of that our cash earnings less our capital expenditures, we're at a range in the fiscal second quarter of about $70 million to $100 million in that quarter alone. So we should recover a lot of what we went down in the fiscal first quarter, and then see that improvement and positive cash flow in the back half of this year to get us to that range of $80 million to $100 million.

And then, I'm curious on the Industrial/Commercial sector, it performed a bit lower than I think what you guys are expecting in the December quarter. What were the levers that led to that headwind? Maybe I missed it. And then, could you just touch on, if you have any oil and natural gas exposure there that could create some headaches, as you go through the year?

First of all, with respect to the December quarter, it finished just about on top of where we had expected. I think if we looked at our numbers, it's about 1% below expectations. So we would consider that finishing on expectations. But what we had is one key customer that softened and that was really offset by two other customers strengthening, which ended up relatively flat. Now, with respect to the rest of the year and with oil and gas, in particular; so oil and gas, the first thing that's important to note is that it's less than 2% of our revenue. So we really don't have very big exposure to oil and gas from overall Plexus standpoint. Then if you look at oil and gas, there is two different areas of product, there is exploratory product and then there is in-service well products. Now, exploratory is the area that's really suffering in the marketplace right now, as the oil companies aren't doing much exploration, given the current price of oil. In-service is relatively stable, slightly soft. The bulk of our business is in this in-service area. So we're seeing a bit of softening in oil and gas in our exposure to it, not significant though, because it's primarily in-service wells. The other significant positive for us is that we're performing very well with our customers in this space, so we're growing our market shares. So we don't expect to have a very negative impact from the oil situation to Plexus and Plexus revenue. And then getting back to the Industrial/Commercial sector, I think it's important to note that we're launching a number of new programs that are major new programs and seeing a bit of strengthening in the marketplace in the rest of Industrial/Commercial. So we're expecting very strong growth throughout fiscal '15 and should see strong quarter-over-quarter growth each quarter.

And our next question comes from Mark Delaney from Goldman Sachs.

I was hoping first to talk on the SG&A outlook. I know the SG&A is actually coming down sequentially this quarter and normally there is some seasonal pressures. And so beyond the March quarter, should we expect the SG&A to step up or are you going to be able to capture some of the savings and flow those through for the rest of the fiscal year?

I think we will be able to keep it pretty steady with our forecast for the fiscal second quarter. I don't see that going up significantly. So we should be in that similar range that we are forecasting for the second quarter.

And then, the second question I wanted to discuss a little bit more on the networking business. I think by my math from the 10-K with the aeros moving up to I think 12.5% of total sales, I think that implies it was almost a little under 40% of the networking business revenue in fiscal 2014. So somewhat meaningful customer concentration there within the networking business, and I know they had some wins, some program ramps that droves that. Maybe you can just help me think through your degree of confidence that that's going to reset at a normalized rate at this $200 million level for the networking business overall or if there is any risk from just having that large customer concentration that it steps down further? And then also related to that, if you can just help us think through your ability to diversify and broaden the networking customer base, as you move through the year?

First of all, the risk to the $200 million reset level, we think it's relatively small, although the markets in Networking/Communications are certainly softening, as we saw and as some of our competitors have seen recently. Excuse me, but the aeros revenue in particular we believe is that a level that is supportable in their end-market. So that in particular looks reasonably good to us. As we look at the rest of the Networking/Communications business, the teams doing a nice job of bringing on new customers and new programs as well. And much of what we're seeing in the back half of the year as a result of new programs coupled with soft end-markets is the way I would explain our Networking/Communications sector. So we believe we're in position, once that sector begins to stabilize again to show growth in the sector.

And our next question comes from Sean Hannan from Needham & Company.

Just a quick question on that delayed transition you had with Guadalajara, was there any revenue disruption that came as a result of that or was that purely a margin impact?

No, there was no revenue disruption. Again, this is business that we execute at another U.S. site, and part of the strategy was to rotate some of that product into Guadalajara and to, as I said, free up some space there at our facility and give the customer a more competitive cost point. So it's just a question of a customer resource challenge and them not wanting to execute on the transition in the quarter as planned. So we believe it should be fairly deterministic from this point forward relative to our plan of transition.

And then, Dean and Todd as well, as you think about your medical customers, the forecast that you're getting from them, it sounds like out-quarters aren't incredibly encouraging. However, you've also made some comments during the course of the call that we've seen a pattern in a very general sense across your business that out-quarters have been understated. And we've gone through a period of, as we move closer to those quarters, consistently seeing those revisions upward. Would you also apply that to having seen that or been experiencing that within medical or has that been less of an impact? Any color around that would be great?

No, I would say the Healthcare/Life Sciences sector for us has been a poster child for that behavior. Very, very, I would say, conservative in out-quarter forecast.

So perhaps nothing to read too much into in terms of those out-quarters?

No, I don't think so. And in fact, relative to Healthcare/Life Sciences even with the pessimistic out-quarter forecast, we expect to have very healthy growth this year. Not quite to the enormous kind of performance that we had last year, but still healthy growth. And in my opinion, I think given the pattern of forecast, revisions we're going to see it come off from what we currently have in our current operating plan. And as Todd said, it's important also to understand, in spite of the weaker out-quarter forecasts, we continue to win new business in healthcare and ramp those programs up. So we're driving, I'd say, much of the forecasted growth with new program ramps and the end-market growth is just not apparent in those out-quarters.

And our next question comes from Todd Schwartzman from Sidoti & Company.

With regard to the delays in customer payments, can you speak to how isolated that was? Maybe how many total customers were involved and if there's any concentration in either by sector or geography?

Let me first say that a lot of these issues were cleared up the second and third weeks of January. So it really was a timing issue, one where we just had some delays with our customers paying us during those holiday weeks. I'd say it was spread evenly between the America region and the APAC region. It was concentrated among probably three or four of our larger accounts customers. But we did see a general increase in past-due balances from one to 10 days past due and increase this quarter compared to last quarter. And that's where I see improvement going forward, where we can be more diligent on staying after our customers and paying us under the contractual terms, and we'll see that improvement going forward.

Historically at that holiday time, you'd normally expect to see a one-off or two-off kind of similar delay?

We would, but not to the magnitude we saw this quarter.

And also I wonder if you could speak to the Aerospace Center of Excellence initiative? What your objectives are there? How should we look at that?

So with respect to the Aerospace Center of Excellence, and we actually have two sites that we're designating as Aerospace Center of Excellence, one in Penang, Malaysia, and one in Neenah, Wisconsin. And our goal is to put in place process and tools, and technology and supply chain solutions that are specialized or tailored to the aerospace industry. So we're in the process of doing that. And the plan would be to use that to provide better service to our customers, which would ultimately grow our business within that space. And I think we're seeing good results on it so far. I mean if you look at the quarter-over-quarter growth that we're projecting within Defense/Security/Aerospace, it's quite strong and we've run a pretty good track record over the last few years of growing that sector in a meaningful way.

And I am not showing any further questions at this time. End of Q&A

Well, I want to thank everyone for the good questions and your support of Plexus Corporation. Thank you.