Good morning and welcome to the Plexus Corporation Conference Call regarding its Fiscal Third Quarter 2017 Earnings Announcement. My name is Paulette and I will be your 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. The conference call is scheduled to last approximately one hour. Please note that this conference is being recorded. I now would now like to turn the call over to Ms. Susan Hanson, Plexus’ Director of Communications and Brand Management. Susan?

Thank you, Paulette. Good morning and thank you for joining us today. Some of the statements made and information provided during our call today will be forward-looking statements as they will not be limited to historical facts. The words believe, expects, intend, plan, anticipate and similar terms often identify 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 filing for the fiscal year ended October 1, 2016, and the Safe Harbor and Fair Disclosure Statement in yesterday's press release. Plexus provides non-GAAP supplemental information such as ROIC, economic return and free cash flow, because those measures are used for internal management goals and decision-making and because they provide additional insight into financial performance. In addition, management uses these and other non-GAAP measures such as adjusted net income and adjusted operating margin to provide a better understanding of core performance for purposes of period-to-period comparison. 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, www.plexus.com, clicking on Investor Relations at the top of that page and then Event Calendar. Joining me today are Todd Kelsey, President and Chief Executive Officer; Steve Frisch, Executive Vice President and Chief Operating Officer; and Pat Jermain, Senior Vice President and Chief Financial Officer. Consistent with prior earnings calls, Todd will provide a summary comment before turning the call over to Steve and Pat for further details. Let me now turn the call over Todd Kelsey. Todd?

Thank you, Susan, and good morning everyone. Please begin with our fiscal third quarter results on Slide 3. After the close of market yesterday, we reported results for our fiscal third quarter of 2017. Revenue was $619 million with GAAP diluted EPS of $0.74. The EPS results included $0.13 of stock-based compensation expense. I am pleased we delivered fiscal third quarter revenue and GAAP diluted EPS above the midpoint of our guidance range. Our Industrial/Commercial Communications and Defense/Security and Aerospace sectors, all exceeded our expectations for the fiscal third quarter. In addition our Healthcare/Life Sciences, Industrial/Commercial and Defense/Security and Aerospace sectors all realized sequential growth. Our continued strong operating performance enabled us to achieve fiscal third quarter operating margin of 4.8%, our fifth consecutive quarter of meeting or exceeding our target operating margin range of 4.7% to 5%. Advancing to our fiscal fourth quarter guidance on Slide 4. We expect fiscal fourth quarter revenue to increase significantly as a result of previously reported program wins ramping. Consequently, we are guiding fiscal fourth quarter revenue in the range of $660 million to $700 million. The midpoint of this guidance suggests a record revenue quarter for the company. At this revenue range, in conjunction with continued strong operating performance, we anticipate GAAP EPS of $0.77 to $0.87. This includes $0.13 of stock-based compensation expense. Within the fiscal fourth quarter, we expect sequential growth in our Healthcare/Life Sciences, Communications, and Defense/Security and Aerospace market sectors. Please advance to Slide 5. Plexus has established an exceptional brand for designing products with demanding regulatory requirements and we remain committed to maintaining our differentiation with our engineering service offering. During the fiscal third quarter, we announced a significant expansion of our engineering solutions organization. First we relocated our flagship design center Neenah Wisconsin to a new…

Thank you, Todd, good morning. Please advance to Slide 7 for insight into the performance of our market sectors during the third quarter of fiscal 2017, as well as our expectations for the sectors in the fiscal fourth quarter. Our Healthcare/Life Sciences sector was up 2% in the fiscal third quarter, which was slightly below our expectations of mid single-digits growth. Increased end-market demand with two customers was offset by new program ramp delays of two customers as well as end-market softness with another customer. Looking ahead to the fiscal fourth quarter, we currently anticipate a mid single-digit increase in our Healthcare/Life Sciences sector. New program ramps are the main contributors for the growth. Achieving the strong financial resulted in a high single-digit growth rate for the sector in fiscal 2017. The team’s new business development successes in fiscal 2017 are driving a number of new program ramps. As such, we are optimistic about the growth of the Healthcare/Life Sciences sector as we look forward to fiscal 2018. Our Industrial/Commercial sector was up 5% sequentially in the fiscal third quarter, above our expectations of flat revenue. End-market strength with three semiconductor capital equipment customers drove the better than expected results. As we look towards the fiscal fourth quarter, end-market strength of one larger customer is being offset by a significant product refresh cycle with one customer and multi-semiconductor – multiple semiconductor capital equipment customers returning to a more normalized level of production. The net impact that we anticipate a mid single-digit decline in our Industrial/Commercial sector in the fiscal fourth quarter. With this forecast, the sector would finish the year with a low single-digit growth rate for fiscal 2017. Our Communications sector was down 9% sequentially in the fiscal third quarter, which was better than our expected low double-digit decline.…

Thank you, Steve, and good morning everyone. Our fiscal third quarter results are summarized on Slide 13. Third quarter revenue of $619 million was near the top end of our guidance while gross margin at 9.9% was slightly below our guidance. Gross margin was impacted by higher labor cost associated with program transitions and new product introductions. In addition, we experienced increased revenue from lower margin programs and some labor inefficiencies caused by program delays with our Healthcare/Life Sciences sector. Comparing to the prior year’s third quarter, revenue is lower by approximately 7% while gross margin improved 50 basis points. Improving margin on lower revenue is a testament to our ability to drive productivity improvements and appropriately adjust our cost structure to align with revenue levels. Selling and administrative expense of $31.7 million was in line with our quarterly guidance and consistent with the fiscal second quarter. As a percentage of revenue, SG&A was 5.1%, similar to expectations. Operating margin of 4.8% was at the low end of our guidance as a result of the lower gross margin. Included in this quarter’s operating margin are approximately 70 basis points of stock-based compensation expense in line with our quarterly guidance. Diluted EPS of $0.74 was above the midpoint of our guidance. Fiscal third quarter tax expense was favorable to our expectations by approximately $1 million or $0.03 per share. The lower tax expense was primarily related to the deductibility of certain expenses which were approved by one of our foreign sites taxing authority. This resulted in a combination of lower current taxes due and the refund of prior taxes paid. We expect to see a benefit continue in future periods. Turning now to the balance sheet on Slide 14. Return on invested capital was 16.1% for the third quarter significantly above…

Thank you. [Operator Instructions] And our first question comes from Sherri Scribner from Deutsche Bank. Please go ahead.

Hi, guys. Good morning.

Good morning.

Good morning, Sherri.

Congratulations on the results. I wanted to ask you about the fiscal 2018 numbers. I know it’s still bit early and you are doing your plans. But you guys have talked about meaningful growth in fiscal 2018. Can you maybe quantify that, is that double-digit? Is it more than mid-teens? And then maybe provide some detail on the mix of that business? I think most of that is coming in Communications from the program ramps that maybe a little detail on where that growth is coming from would be helpful?

Sure. Sherri, this Todd. I will get started and Steve may have something to add after I am finished here. But first of all, with 2018, I’d like to start by saying, it’s certainly too early to guide or make any significant commitment to fiscal 2018. But what I would say is, we have a goal and a target of double-digit growth in fiscal 2018 and things at least in the current picture today shape up for that to occur. Now, what you are seeing first of all is significant sequential growth in Q4 F 2017, I mean, at the midpoint we are looking at about 10% sequential growth. Now we expect sequential growth as we move through fiscal 2018 as well, but not to anywhere near the magnitude on a quarterly basis is what we are seeing in Q4. So, we’ve taken a look obviously at the street numbers that are out there right now and when we look at the slope of the growth that the street has projected, I mean, that seems reasonable or a good place to start as we look at growth in fiscal 2018. But, again we expect it to be a good growth year. Things are lining up really well given the wins in the funnel that we’ve been able to generate over the course of the last fiscal year plus. And if you look at things from a sector basis, I guess what I’d say is, it goes well beyond Communication. So we are expecting strong growth in Healthcare/Life Sciences, Communications and Defense/Security and Aerospace. Industrial/Commercial we have – as Steve mentioned earlier, we are starting to see a little bit more of a normalization of semiconductor capital equipment and we will see if that becomes a reality. And so that may make Industrial/Commercial’s comparison a little bit more difficult.

Okay.

Okay? How does that?

That’s excellent. That’s a lot of good detail. Thank you. I just wanted to ask a quick follow-up on the margin trajectory. Clearly, with the new programs ramping this quarter and next quarter the margins are down versus the first half of the year, how should we think about the margin progression as we move through fiscal 2018? I assume, new program ramps will have some impact on the first and second quarter, but can we get above that 5% operating margin level in the second half of 2018? Thank you.

Yes, Sherri, that’s a positive. First let me look at gross margin, I think operating within the range of 9.5% to 10% is reasonable and especially with – like you said, ramping a lot of business and not having a lot of end-market growth. I think we will get some leverage and SG&A, so that’s an opportunity. But we are driving towards that target range of 4.7% to 5% in each one of our quarters next year. So that’s really our goal.

Yes, a little bit that I’d add on that as well, Sherri, is I mean, if we looked at our commentary over the course of last year and of course we are expecting to see the meaningful growth a little bit earlier in the cycle than we are seeing it. But, our expectations were to drive the 4.7% to 5% with accelerated growth and I think that’s really what we are beginning to see right now as we need to – because of the growth we need to invest in the transition, certainly inefficiencies that occurred during the transitions, but we are committed to maintaining that 4.7% to 5% every quarter. So that’s what the team is focused on is delivering that target range while accelerating the growth and occasionally we may pop above the 5%, but again our target is 4.7% to 5%.

Thank you.

Our next question comes from Shawn Harrison from Longbow Research. Please go ahead.

Good morning everybody.

Good morning, Shawn.

Just on the ramp in the Communications business being at 50% sequentially and a little better than expected this quarter. Would you expect to be kind of back to status quo as you enter early FY 2018? Or is there kind of more of a ramp to come in the early part of the fiscal year associated with the business?

Well, I think if you – this is Steve, if you look where the Communications sector is at, we basically returned to the revenue levels that we had when we started the fiscal year. And so, I’d say it’s back to more of a normal level. So, we do see it maintaining at that level and we do expect this sector to grow. So, from a year-over-year growth standpoint, you would expect to see sequential growth in 2018 because we do not anticipate the dip that we saw in 2017.

Okay. I guess, within that though, is there some potential customers came out of the funnel, so, it is a low-single-digit kind of normalized growth environment? How to think about that business given where the funnel opportunity is understanding that this is a kind of dynamic in 2017 that really helps you out?

Yes, I think that’d be a good way to summarize it.

Okay. And then going back to the margin question. I think the comment was some investments in aftermarket services, understanding that that could be a little bit of a drag. I initially thought you would have been at 5% in the back half of the year, so maybe, I want to dell into what is the exact cost of the aftermarket services and maybe what is the benefit going forward? And then, what kind of caught you off guard in terms of these ramps? Because I am pretty sure you had higher expectations with the gross margins at least in the June and September quarters?

Yes, Shawn, I’ll start off and then maybe Steve will want to add something. First of all, what caught us off guard, as I look across all of our sites, it was really limited to one U.S. site that had some challenges with revenue being below their forecast and they had some really challenging ramps in the Healthcare/Life Sciences sector that were very complex and our first priority as you know is customer service excellence and we are going to put the resources in place that we need to satisfy customer delivery schedules and that’s what we did. So, it was limited, primarily to that one site. With aftermarket services, Steve had mentioned a new program win and the thing unique about aftermarket services is it’s very labor-intense and when you win a program, you’ve got to add the headcount in advance of seeing that revenue and that’s what we are seeing in the fiscal fourth quarter and now that’s probably about a ten basis point drag. So at the midpoint of our operating margin guidance, which is 4.9% for the fiscal fourth quarter. The fact that we won that program is about it’s a 10 basis point drag for us in this quarter.

What I’d Shawn is that that aftermarket services win is I am quite a bit or substantially larger than what would be a typical aftermarket services win. So that’s why there is an impact that we wouldn’t normally see from other aftermarket services wins.

It’s very helpful. Congrats on the return to revenue growth in September quarter.

Thanks.

Thanks.

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

Yes, thanks. Good morning. Just a couple of questions. You noted a few times of some wins in Europe and I know that you’ve had excess capacity there and been trying to fill that capacity. It looks like there is momentum there. Can you just talk about some of the wins there? And then also, what is that due to your in terms of your capacity leverage and profitability profile in Europe?

Sure, this is Steve. In terms of the wins, we talked last quarter about the potential of winning a significant opportunity customer and that’s a Defense/Security and Aerospace customer that decided to outsource this facility. So, that win is pretty significant. It’s being split across both our Kelso, Scotland facility as well as our Oradea, Romania facility. The Kelso facility is reaching capacity. It’s quite full. So, we are talking with the teams as we get to the ramps about driving improved efficiencies out of that factory when it’s at that level. And then, for our Oradea, Romania facility, the addition of this customer as well as I talked about a Healthcare/Life Sciences customer that’s ramping Healthcare/Life Sciences will take a little bit longer to ramp. But we do expect continued decent growth in the Oradea, Romania facility through fiscal 2018. Oliver Mihm is our leader over there and he and the team are doing a really nice job at attracting and developing customers over there. So, our expectation is that, we will continue to ramp that well and we expect to see it leverage as it ramps.

To give you better ideas of the magnitude of the ramp, in fiscal 2017, we are looking at roughly mid-teens growth in the EMEA region. Fiscal 2018 is looking to be significantly better than that. So, we should continue to see leverage and better profitability within the region as we capitalize on those investments that we previously made.

Okay, that’s helpful. And on the – that your – the inventory situation, you talked about the justification for the big inventory build given the strong growth rate that you are seeing next quarter, but you also talked about component lead times stretching and the need to build in some buffer inventory. Could you elaborate on that? If the component, the tightness worsen it was last quarter was it spreading to areas other than memory and is there a situation where there are some parts on allocation and that might be an issue in terms of meeting demand?

I’ll start with that, Matt. So, yes, we are seeing a tightening of the components especially in electronic components, mainly resistors, capacitors. As you mentioned, also memory, DRAM and NAND flash, but we are still able to procure the components and we are not, it’s no threat to customer deliveries at this point. So, I am not aware of any allocations that we are on Steve.

Yes, maybe one thing to add, I think the issue is that the markets have tightened a bit. We haven’t really seen this for several years, probably eight or ten years in terms of some of this has been tightened. And I think some of the customers have gotten used to being able to drop in demand and then, we expedite and fulfill it. And so, from my standpoint, I think the biggest risk might be associated with being customers drop in demand, but that’s not built into our forecast. That’s more of the concern I have on servicing the customers.

Just as a follow-up to that then, would you expect these inventory levels to remain fairly bloated and what is that due to your cash flows?

Yes, we expect to see inventories coming down in the fourth quarter as we flush out inventory with the additional revenue.

And one final comment, I think it’s important to note that we don’t take on inventory risk ourselves without permission from the customer to go procure the inventory and do this not something that we are building, pluck this kind of responsibility, it’s more what we are trying to do to work with our customers to help them be successful meeting their demand.

Understood. Okay, thanks a lot.

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

Hi, good morning. Could you, first of all provide a little bit more color on the exact type of aftermarket services that you were alluding to earlier in the call that are ramping and then whether there is another wave of hiring that you would expect to come in or how it’s leading to other aftermarket services businesses? And then I have a follow-up.

Yes, so the Healthcare/Life Sciences sector is the team that won this significant aftermarket services business. And so, what we are doing is repair and refurb of complex medical devices. And so the customer will – when they are out in the field then they need service repair. They will ship them back to us and we will do the service and repair. We may do kind of replacement offerings in terms of emergency fills. Those types of things. So it’s really associated with working with healthcare providers to make sure that their facilities are up and running. And so we take on that responsibility for our customer. As Pat highlighted on these bigger programs, especially in this case, because in this case, the customer is outsourcing it from an internal factory. We need to add staff and resources to basically panel that transition and basically get up the learning curve on how to do this as they go through the transition. So that’s a little color on that one.

And just as a follow-up to that, when you hire for something like that, can you sort of explain how you manage to what I guess, can be an unpredictable rate of demand for that service?

It can be unpredictable, but like in this case, the customer has a pretty good visibility in terms of what their quantity or repairs are on returns are going to be on a quarterly basis. They have some historical trend data that they have themselves. And so, staffing level-wise, you can get a pretty good estimate for what you are going to need. It’s really just getting the people on in developing the level of internal expertise to be able to service the product.

Great. That’s helpful. And then secondly, just on the Communications ramp, if we think about separating out the ramp from demand, it sounds like basically the sequential increase is all due to new programs. If you could just confirm that? And then, if I went and looked into fiscal 2018, also this type of runrate, can you again just sort of talk about new program potential versus maybe overall demand trends? And lastly, within that, whether it’s dominated by one or two customers this quarter in terms of the sequential ramp? Thanks.

So, if we look at Communications ramp in general, there is a number of new programs that are ramping across multiple customers. And certainly we have a large customer within that sector. So that’s certainly a piece of it and then we need to be to have a ramp of that magnitude. And if we looked at new program versus end-markets, we are seeing a modest strengthening of end-markets, but nothing substantial. It’s mostly new programs that’s driving the growth.

Great. That’s very helpful. Thank you.

Our next question comes from Paul Coster from JP Morgan. Please go ahead.

Yes, thanks very much for taking my question. So, you just opened a couple of new facilities. You know is it mainly to invest in Scotland to absorb new business. As you roll into 2018 with growth ahead, is this the kind of common theme that you are out of capacity and could it weigh on margins as you add in new facilities?

Yes, so, this is Todd, Paul. I will take this. First of all, with respect to the new facilities we talked about, they were engineering facilities. So they are not of the scale of investment of a manufacturing facility and just to provide a little bit more color around that, the new Neenah facility that we are in it’s a leased facility. So we essentially changed the addresses from a own building to leased building. So, pretty insignificant when we look at it from an investment standpoint. Guadalajara is in our existing – we are putting our Guadalajara Design Center in our existing manufacturing facility. So while we had a little bit up fit for labs and office space, again pretty minimal investment. And then to further clarify on the EMEA wins, we won’t need additional capacity, additional facilities in Kelso or Oradea for the significant wins in EMEA. We have ample capacity in both those facilities. Now as we look forward, I mean, if we continue the growth trajectory that we believe we are starting, we are going to need to be thinking about capacity in additional facilities as we get perhaps 12 to 18 months so in the future. We’ve talked about Mexico, the potential in other facility there for instance, but we would expect to be able to absorb that into our margin performance as our other facilities will be more highly leveraged as we have plenty of capacity across the globe right now.

Well, got you. And then my quick follow-up is, of the $2.8 billion of funnel opportunities, to what extent is it existing customers and to what extent is it existing kind of industry verticals? Is there anything that takes you into new sectors completely with potentially different operating margin profiles?

This is Steve. From the four sectors that we currently service, we are very happy with where we are at and we think we can grow within those four sectors. We are always looking within the sub-sectors, out of different sub-sectors that we are interested in pursuing. And the answer to that question is really nothing meaningful and significant that’s changing from our strategy standpoint in terms of where we are going. As you look at the funnel itself, it’s roughly, on an ongoing basis, you can say it’s roughly a 70% customers, 30% new customers, is kind of how we’ve historically trended and that’s the way we kind of look at it being a very healthy portfolio. We definitely would prefer to grow with customers. It’s much easier to ramp than it is adding new customers. But we also recognize that any new level of the portfolio is important.

Got it. Thank you very much.

Our next question comes from Mitch Steves from RBC Capital Markets. Please go ahead.

Yes, thanks for taking my question. I just want to start on the Communications side, so where does the product trends that’s happening from a sequential basis, if I think about the entire full year next year, is there any way to provide me any kind of granularity around the seasonality for FY 2018?

As I highlighted in the comment, I think one of the things that we are talking about here is that, with these new program ramps, for us looking into fiscal 2018, through the end-market acceptance of those is really kind of driving – will drive what our FY 2018 looks like. So it’s a little bit early to call in terms of what the market acceptance will be. As Todd highlighted, we do see some modest growth in the Communications sector as a general statement. But from a seasonality standpoint, there is nothing that we are seeing at the moment that we could predict as to what 2018 looks like.

Typically, we don’t see a lot of seasonality in our Communications business. Perhaps a little bit of strength in the fourth calendar quarter of the year would be typical, but that’s about it. Other than that, there is nothing really noticeable.

Got it. And then from a margin perspective, for September quarter, I mean, typically the Networking segment is kind of close to the corporate, slightly below your operating line. So, was all that expansion is essentially due to revenue leverage since you are going to be closer to kind of $100 million of revenue?

Yes, it is especially, Mitch. On the SG&A or operating expenses, you will see a lot of leverage we are getting there. And the fact that even though Communications is close to the corporate average, if we are pushing a lot of revenue from certain customers, we can get leverage of those fixed expenses as well within those sites. So, it’s a combination of gross margin improvement and operating margin.

Got it. Thank you.

Our next question comes from Sean Hannan from Needham & Company. Please go ahead.

Yes, thanks for taking my question and sorry, I am going to actually ask something on Communications as well. Have these ramps that start to come into the September quarter, should we expect that you are recognizing effectively a full revenue ramp rate through the course of the quarter? Or is there only an aspect of that and that should continue to ramp up into the December quarter? Just trying to get an understanding of how that impacts from a timing standpoint?

We would expect the majority of the ramp to happen within the quarter.

Okay. But then there would be incremental within December as well?

There may be some slight incremental, but not nearly anything to the magnitude that we are experiencing this quarter.

Okay, okay. And then, in terms of looking at the funnel, so, just trying to better understand that movement quarter-to-quarter, so, obviously, some programs were pulled out of the funnel in terms of the wins. But I just want to see if I can perhaps better understand what’s behind the dip. How much were either not won opportunities or walked away from versus then what was cultivated into, if you can provide a little bit more insight in terms of that quarter-on-quarter movement? Thanks.

Sure, maybe sector-by-sector. In Healthcare/ Life Sciences, the funnel slightly increased. We backfilled what we won and really probably nothing significant in there, very similar story for Industrial/Commercial. And in the case of Defense/Security and Aerospace, the funnel dipped really due to the quantity of the wins coming out. Some really good wins that I talked about a bit. We’ve got some decent opportunities similar to the event that happened in EMEA that we are hoping to be able to add to the funnel in the next quarter or two and bring that funnel back up. So, from that standpoint, I think the Defense/Security and Aerospace funnel is fine where is that. Communications sector is the one that dipped. We did take out a couple of programs won. On a competitive basis, we decided not to pursue the cost model. And then the other one, we determined that from a mix standpoint and it really didn’t fit the business model for us. So we pulled those out of the funnel. We are pretty committed to being really just diligent about making sure the business that we win is going to meet the financial portfolio and the mix that we want. So we are not afraid to walk away from it. So with that said, that leaves the Communications sector lower than where we like it. The team knows that and we are aggressively working to grow it.

Okay, and then if I could just ask one more follow-up. Could you perhaps characterize how you are thinking about the current outsourcing environment today? What do you sense? Is there any accelerated uptake in terms of some of the markets, the acceptance of the outsourcing model in utilizing supply chain partners as yourself or – in the grand scheme of things, is this simply a good set of quarters reflective of good work that you folks are putting in not necessarily bigger secular trends at OEMs?

I’d say, Sean, it’s a little bit of both. I think our team is doing a really nice job of growing the funnel and generating new opportunities and getting in front of customers that we haven’t spoken within the past. But I’d also say, we are seeing a more large opportunity, perhaps than in the past more acceptance to at least explore outsourcing as a solution from some of the more non-traditional sectors.

Wonderful. Thanks.

Thank you, Sean.

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

Thank you very much. This is probably maybe the last question on the Communications side maybe.

Thanks.

The ramp that you saw this quarter of course was strong, but if my memory is correct, I think you had some design wins in past quarters that maybe get that third, just part of the timing of it this quarter. Was that the material reason for the upside or large increase in Communications, so this quarter was the deferral of past timing of what was difficult to hit? And then my follow-up question is, I think you mentioned in your prepared remarks, something about you would seek a lot of design wins, I think you said that, Aerospace/Defense, if I am correct. If so, can you talk to us a little bit about as those ramp next year, is that helpful to margins or neutral to margins or how should we think about that as the timing of that segment ramps? Thank you.

Maybe I’ll address your second question first. Defense/Security and Aerospace team has done a really nice job this year growing our engineering solutions relationships with our existing customers. And so, from a – I would call it, we call it, kind of a stickiness factor where we expanded the service offering beyond manufacturing to include engineering with some of our largest customers and that’s a very healthy thing to do. Although those programs are – engineering programs get better margins, from an overall scale of the sector standpoint, they are probably not meaningful in terms of changing the dynamics of the sector. But, from a – the relationship with the customer is significantly important. In terms of the Communications question in terms of where engineering and ramps, these programs that we are talking about here, we’ve had in both engineering involvement in some of them, but the magnitude of the ramp is not really related to the engineering engagements that we’ve had.

One of the things, Jim, just to add on here to clarify is that, we don’t have any significant deferred revenue out there. So basically, we are reporting revenue as we earn it. So, the current quarter had no impact as a result of deferred revenue, nor do we really have anything – of anything significant that’s out there. And Steve talked a bit too about the Aerospace wins in EMEA, the manufacturing wins and one of the things that maybe they were large, one of the things that’s unique about is, it’s a little faster ramp in typical Aerospace business. So it is something that could have an impact in F 2018, not to the full magnitude, but certainly a partial magnitude.

And we are showing no further questions. I will now turn the call over to Todd Kelsey for closing comments.

All right. Thank you, Paulette. Just a few final closing thoughts. I’d like to start by saying, I am pleased we are starting to finally see the anticipated revenue growth materialize. So, I think our commitment to our strategy has helped to really get us to this point. Again to reiterate, what’s that all about is exceptional execution to grow share with our existing customers. We like to call it operational excellence and customer service excellence. A differentiated portfolio aligned with non-commoditized markets. Expertise in our customers’ markets and then just being focus consistent and deliver it. So, with that, I would expect the end result would be accelerated growth and operating margins within our target range, while we deliver a strong economic return. So that’s what our target is for fiscal 2018. In closing, again I’d like to thank all the Plexus employees that are listening. We appreciate all your hard work. I’d like to thank our investors for their support to Plexus and also the analysts for the great questions and the support of Plexus in your notes. Thank you very much.

Thank you. Ladies and gentlemen, this concludes today’s conference. Thank you for participating and you may now disconnect.