- Fiscal first quarter 2016 revenue of $617 million
- GAAP diluted EPS of $0.42, non-GAAP diluted EPS of $0.47, excluding $0.05 per share of restructuring charges
- Initiates fiscal second quarter 2016 revenue guidance of $600 - $630 million with diluted EPS of $0.47 to $0.55, excluding any restructuring or other charges
NEENAH, Wis., Jan. 20, 2016 (GLOBE NEWSWIRE) -- Plexus PLXS today announced financial results for its fiscal first quarter ended January 2, 2016, and guidance for its fiscal second quarter ending April 2, 2016.
Three Months Ended | |||||||||
Jan. 2, 2016 | Jan. 2, 2016 | April 2, 2016 | |||||||
Q1F16 Results | Q1F16 Guidance | Q2F16 Guidance | |||||||
Summary GAAP Items | |||||||||
Revenue (in millions) | $ | 617 | $600 to $625 | $600 to $630 | |||||
Operating margin | 3.5 | % | |||||||
Diluted EPS | $ | 0.42 | |||||||
Summary Non-GAAP Items | |||||||||
Non-GAAP operating margin, before restructuring charges (1) | 3.7 | % | 3.3% to 3.6% | 3.6% to 4.0% | |||||
Non-GAAP diluted EPS, before restructuring charges (1)(2) | $ | 0.47 | $0.41 to $0.48 | $0.47 to $0.55 | |||||
Return on invested capital (ROIC) | 10.8 | % | |||||||
Economic Return | -0.2 | % | |||||||
(1) Restructuring charges of $1.5 million for the three months ended January 2, 2016.
(2) Includes stock-based compensation expense of $0.10 for Q1F16 results and $0.11 for Q2F16 guidance.
Additional Fiscal First Quarter 2016 Information
- Won 34 programs during the quarter representing approximately $179 million in annualized revenue when fully ramped into production
- Trailing four quarter program wins total approximately $702 million in annualized revenue
- Purchased $8.5 million of our shares at an average price of $37.23 per share
Dean Foate, Chairman, President and CEO, commented, "Fiscal first quarter revenue and EPS results were largely in-line with our guidance. Consistent with the expectations we set last quarter, we are guiding our fiscal second quarter revenue sequentially flat at the midpoint of our guidance range, as new program ramps offset revenue lost from the two previously announced program disengagements. Fiscal second quarter 2016 revenue guidance is $600 to $630 million with diluted EPS in the range of $0.47 to $0.55 before restructuring charges."
Patrick Jermain, Senior Vice President and CFO, commented, "Our working capital initiatives resulted in the fiscal first quarter cash cycle exceeding our expectations at 71 days and contributed to approximately $10 million in free cash flow during the quarter. The two lower-margin program disengagements that we outlined during our fiscal 2015 year-end earnings call continue to progress largely as planned. The subsequent announcements to close our Fremont, California site and end volume manufacturing at our Livingston, Scotland facility are both advancing as communicated. Assuming stability of our fiscal second half 2016 revenue forecasts, these actions, in combination with other productivity initiatives, further our belief that we will exit fiscal 2016 in our target operating margin range of 4.7 to 5.0 percent."
Quarterly Comparison | Three Months Ended | ||||||||||||||||||
Jan. 2, 2016 | Oct. 3, 2015 | Jan. 3, 2015 | |||||||||||||||||
(in thousands, except EPS) | Q1F16 | Q4F15 | Q1F15 | ||||||||||||||||
Revenue | $ | 616,664 | $ | 668,730 | $ | 664,690 | |||||||||||||
Gross profit | $ | 50,059 | $ | 59,272 | $ | 61,414 | |||||||||||||
Operating profit | $ | 21,524 | $ | 28,571 | $ | 28,783 | |||||||||||||
Net income | $ | 14,448 | $ | 23,865 | $ | 23,079 | |||||||||||||
Diluted EPS | $ | 0.42 | $ | 0.70 | $ | 0.67 | |||||||||||||
Adjusted net income* | $ | 15,955 | $ | 23,514 | $ | 24,770 | |||||||||||||
Adjusted diluted EPS* | $ | 0.47 | $ | 0.69 | $ | 0.72 | |||||||||||||
Gross margin | 8.1 | % | 8.9 | % | 9.2 | % | |||||||||||||
Operating margin | 3.5 | % | 4.3 | % | 4.3 | % | |||||||||||||
Adjusted operating margin* | 3.7 | % | 4.3 | % | 4.6 | % | |||||||||||||
ROIC* | 10.8 | % | 14.0 | % | 14.4 | % | |||||||||||||
Economic Return* | -0.2 | % | 3.0 | % | 3.4 | % | |||||||||||||
*Refer to Non-GAAP Supplemental Information Tables 1 and 2 for reconciliation to GAAP measures
Plexus provides non-GAAP supplemental information, such as ROIC, Economic Return, and free cash flow, because such 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 comparisons. For a full reconciliation of non-GAAP measures to comparable GAAP measures, please refer to the attached non-GAAP supplemental data.
Market Sector Breakout
Plexus reports revenue based on the market sector breakout set forth in the table below, which reflects the Company's global market sector focused business development strategy. The Company measures operational performance and allocates resources on a geographic segment basis. Please refer to the attached supplemental information for a breakout of revenue by reportable geographic segments. Top 10 customers comprised 60% of revenue during the quarter, up five percentage points from the prior quarter.
Market Sector ($ in millions) | Three Months Ended | ||||||||||||||||||||||||||
Jan. 2, 2016 Q1F16 | Oct. 3, 2015 Q4F15 | Jan. 3, 2015 Q1F15 | |||||||||||||||||||||||||
Networking/Communications | $ | 157 | 25 | % | $ | 179 | 27 | % | $ | 234 | 35 | % | |||||||||||||||
Healthcare/Life Sciences | 191 | 31 | % | 183 | 27 | % | 196 | 30 | % | ||||||||||||||||||
Industrial/Commercial | 173 | 28 | % | 201 | 30 | % | 148 | 22 | % | ||||||||||||||||||
Defense/Security/Aerospace | 96 | 16 | % | 106 | 16 | % | 87 | 13 | % | ||||||||||||||||||
Total Revenue | $ | 617 | $ | 669 | $ | 665 | |||||||||||||||||||||
Fiscal First Quarter 2016 Supplemental Information
ROIC for the fiscal first quarter of 2016 was 10.8%. The Company defines ROIC as tax-effected annualized operating profit, before special items, divided by average invested capital over a two-quarter period for the first quarter. Invested capital is defined as equity plus debt, less cash and cash equivalents. The Company's weighted average cost of capital for the first fiscal quarter of 2016 was 11.0%. ROIC for the quarter less the Company's weighted average cost of capital results in an economic return of -0.2%.
Fiscal first quarter cash cycle was 71 days. The Company delivered $21.3 million in cash from operations and used $11.8 million for capital investments during the quarter, resulting in positive free cash flow of $9.5 million.
Cash Conversion Cycle | Three Months Ended | |||||||||||||||
Jan. 2, 2016 Q1F16 | Oct. 3, 2015 Q4F15 | Jan. 3, 2015 Q1F15 | ||||||||||||||
Days in Accounts Receivable | 53 | 53 | 52 | |||||||||||||
Days in Inventory | 88 | 85 | 82 | |||||||||||||
Days in Accounts Payable | (59 | ) | (60 | ) | (53 | ) | ||||||||||
Days in Cash Deposits | (11 | ) | (12 | ) | (9 | ) | ||||||||||
Annualized Cash Cycle* | 71 | 66 | 72 | |||||||||||||
*We calculate cash cycle as the sum of days in accounts receivable and days in inventory, less days in accounts payable and days in cash deposits.
Conference Call and Webcast Information:
What: | Plexus Fiscal First Quarter 2016 Earnings Conference Call and Webcast | ||||||
When: | Thursday, January 21, 2016 at 8:30 a.m. Eastern Time | ||||||
Where: | Participants are encouraged to join the live webcast at the investor relations section of Plexus' website, www.plexus.com, or directly at: http://edge.media-server.com/m/p/nnoa2mdj/lan/en Conference call at +1.800.708.4539 with passcode: 41445105 | ||||||
Replay: | The webcast will be archived on the Plexus website and available via telephone replay at +1.888.843.7419 or +1.630.652.3042 with passcode: 41445105 | ||||||
About Plexus – The Product Realization Company
Plexus (www.plexus.com) delivers optimized Product Realization solutions through a unique Product Realization Value Stream service model. This customer-focused services model seamlessly integrates innovative product conceptualization, design, commercialization, manufacturing, fulfillment and sustaining services to deliver comprehensive end-to-end solutions for customers in the America, European and Asia-Pacific regions.
Plexus is the industry leader in servicing mid-to-low volume, higher complexity customer programs characterized by unique flexibility, technology, quality and regulatory requirements. Award-winning customer service is provided to over 140 branded product companies in the Networking/Communications, Healthcare/Life Sciences, Industrial/Commercial and Defense/Security/Aerospace market sectors.
Safe Harbor and Fair Disclosure Statement
The statements contained in this press release that are guidance or which are not historical facts (such as statements in the future tense and statements including believe, expect, intend, plan, anticipate, goal, target and similar terms and concepts), including all discussions of periods which are not yet completed, are forward-looking statements that involve risks and uncertainties. These risks and uncertainties include, but are not limited to: the risk of customer delays, changes, cancellations or forecast inaccuracies in both ongoing and new programs; the lack of visibility of future orders, particularly in view of changing economic conditions; the economic performance of the industries, sectors and customers we serve; the effects of the volume of revenue from certain sectors or programs on our margins in particular periods; our ability to secure new customers, maintain our current customer base and deliver product on a timely basis; the particular risks relative to new or recent customers, programs or services, which risks include customer and other delays, start-up costs, potential inability to execute, the establishment of appropriate terms of agreements, and the lack of a track record of order volume and timing; the risks of concentration of work for certain customers; the effect of start-up costs of new programs and facilities; possible unexpected costs and operating disruption in transitioning programs, including as a result of a facility closure; the risk that new program wins and/or customer demand may not result in the expected revenue or profitability; the fact that customer orders may not lead to long-term relationships; our ability to manage successfully and execute a complex business model characterized by high product mix, low volumes and demanding quality, regulatory, and other requirements; the ability to realize anticipated savings from restructuring or similar actions, as well as the adequacy of related charges as compared to actual expenses; increasing regulatory and compliance requirements; the potential effects of regional results on our taxes and ability to use deferred tax assets and net operating losses; risks related to information technology systems and data security; the effects of shortages and delays in obtaining components as a result of economic cycles or natural disasters; the risks associated with excess and obsolete inventory, including the risk that inventory purchased on behalf of our customers may not be consumed or otherwise paid for by the customer, resulting in an inventory write-off; the weakness of areas of the global economy; the effect of changes in the pricing and margins of products; raw materials and component cost fluctuations; the potential effect of fluctuations in the value of the currencies in which we transact business; the potential effect of world or local events or other events outside our control (such as changes in energy prices, terrorism and weather events); the impact of increased competition; and other risks detailed in our other Securities and Exchange Commission filings (particularly in "Risk Factors" in our fiscal 2015 Form 10-K).
PLEXUS | |||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||
(in thousands, except per share data) | |||||||||||||||||
(unaudited) | |||||||||||||||||
Three Months Ended | |||||||||||||||||
Jan. 2, | Jan. 3, | ||||||||||||||||
2016 | 2015 | ||||||||||||||||
Net sales | $ | 616,664 | $ | 664,690 | |||||||||||||
Cost of sales | 566,605 | 603,276 | |||||||||||||||
Gross profit | 50,059 | 61,414 | |||||||||||||||
Selling and administrative expenses | 27,028 | 30,940 | |||||||||||||||
Restructuring and impairment charges | 1,507 | 1,691 | |||||||||||||||
Operating income | 21,524 | 28,783 | |||||||||||||||
Other income (expense): | |||||||||||||||||
Interest expense | (3,534 | ) | (3,777 | ) | |||||||||||||
Interest income | 932 | 897 | |||||||||||||||
Miscellaneous | (1,620 | ) | 138 | ||||||||||||||
Income before income taxes | 17,302 | 26,041 | |||||||||||||||
Income tax expense | 2,854 | 2,962 | |||||||||||||||
Net income | $ | 14,448 | $ | 23,079 | |||||||||||||
Earnings per share: | |||||||||||||||||
Basic | $ | 0.43 | $ | 0.69 | |||||||||||||
Diluted | $ | 0.42 | $ | 0.67 | |||||||||||||
Weighted average shares outstanding: | |||||||||||||||||
Basic | 33,396 | 33,602 | |||||||||||||||
Diluted | 34,062 | 34,439 |
PLEXUS | |||||||||||
NON-GAAP SUPPLEMENTAL INFORMATION TABLE 1 | |||||||||||
(in thousands, except per share data) | |||||||||||
(unaudited) | |||||||||||
Three Months Ended | |||||||||||
Jan. 2, | Oct. 3, | Jan. 3, | |||||||||
2016 | 2015 | 2015 | |||||||||
Operating profit, as reported | $ | 21,524 | $ | 28,571 | $ | 28,783 | |||||
Operating margin, as reported | 3.5 | % | 4.3 | % | 4.3 | % | |||||
Non-GAAP adjustments: | |||||||||||
Restructuring costs* | 1,507 | — | 1,691 | ||||||||
Operating profit, as adjusted | $ | 23,031 | $ | 28,571 | $ | 30,474 | |||||
Operating margin, as adjusted | 3.7 | % | 4.3 | % | 4.6 | % | |||||
Net income, as reported | $ | 14,448 | $ | 23,865 | $ | 23,079 | |||||
Non-GAAP adjustments: | |||||||||||
Discrete tax benefit, net | — | (351 | ) | — | |||||||
Restructuring costs* | 1,507 | — | 1,691 | ||||||||
Net income, as adjusted | $ | 15,955 | $ | 23,514 | $ | 24,770 | |||||
Diluted earnings per share, as reported | $ | 0.42 | $ | 0.70 | $ | 0.67 | |||||
Non-GAAP adjustments: | |||||||||||
Discrete tax benefit, net | — | (0.01 | ) | — | |||||||
Restructuring costs | 0.05 | — | 0.05 | ||||||||
Diluted earnings per share, as adjusted | $ | 0.47 | $ | 0.69 | $ | 0.72 | |||||
*Summary of restructuring costs | |||||||||||
Employee termination and severance costs | $ | 1,394 | $ | — | $ | 144 | |||||
Other exit costs | 113 | — | 1,547 | ||||||||
Total restructuring costs | $ | 1,507 | $ | — | $ | 1,691 | |||||
PLEXUS | |||||||||||||||||||||
NON-GAAP SUPPLEMENTAL INFORMATION Table 2 | |||||||||||||||||||||
(in thousands) | |||||||||||||||||||||
(unaudited) | |||||||||||||||||||||
ROIC and Economic Return Calculations | Three Months Ended | Twelve Months Ended | Three Months Ended | ||||||||||||||||||
Jan. 2, | Oct. 3, | Jan. 3, | |||||||||||||||||||
2016 | 2015 | 2015 | |||||||||||||||||||
Operating profit | $ | 21,524 | $ | 115,436 | $ | 28,783 | |||||||||||||||
Restructuring and impairment charges | $ | 1,507 | $ | 1,691 | $ | 1,691 | |||||||||||||||
Adjusted operating profit | $ | 23,031 | $ | 117,127 | $ | 30,474 | |||||||||||||||
x | 4 | x | 1 | x | 4 | ||||||||||||||||
Annualized operating profit | 92,124 | 117,127 | 121,896 | ||||||||||||||||||
Tax rate | x | 12 | % | x | 11 | % | x | 10 | % | ||||||||||||
Tax impact | 11,055 | 12,884 | 12,190 | ||||||||||||||||||
Operating profit (tax effected) | 81,069 | 104,243 | 109,706 | ||||||||||||||||||
Average invested capital | ÷ | $ | 753,078 | ÷ | $ | 745,611 | ÷ | $ | 759,676 | ||||||||||||
ROIC | 10.8 | % | 14.0 | % | 14.4 | % | |||||||||||||||
Weighted average cost of capital | 11.0 | % | 11.0 | % | 11.0 | % | |||||||||||||||
Economic return | -0.2 | % | 3.0 | % | 3.4 | % |
Three Months Ended | |||||||||||||||||||||||||||||||||||
Average Invested Capital | Jan. 2, | Oct. 3, | July 4, | April 4, | Jan. 3, | Sept. 27, | |||||||||||||||||||||||||||||
Calculations | 2016 | 2015 | 2015 | 2015 | 2015 | 2014 | |||||||||||||||||||||||||||||
Equity | $ | 850,794 | $ | 842,272 | $ | 835,063 | $ | 808,468 | $ | 792,298 | $ | 781,133 | |||||||||||||||||||||||
Plus: | |||||||||||||||||||||||||||||||||||
Debt - current | 2,864 | 3,513 | 4,281 | 4,774 | 4,793 | 4,368 | |||||||||||||||||||||||||||||
Debt – non-current | 259,289 | 259,257 | 259,284 | 260,025 | 260,990 | 262,046 | |||||||||||||||||||||||||||||
Less: | |||||||||||||||||||||||||||||||||||
Cash and cash equivalents | (354,728 | ) | (357,106 | ) | (354,830 | ) | (356,296 | ) | (239,685 | ) | (346,591 | ) | |||||||||||||||||||||||
$ | 758,219 | $ | 747,936 | $ | 743,798 | $ | 716,971 | $ | 818,396 | $ | 700,956 | ||||||||||||||||||||||||
Free Cash Flow Calculation
The Company defines free cash flow as cash flows provided by (or used in) operations less capital expenditures. For the three months ended January 2, 2016 cash flow provided by operations was $21.3 million, less capital expenditures of $11.8 million, resulting in free cash flow of $9.5 million.
PLEXUS | |||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||
(in thousands, except per share data) | |||||||||
(unaudited) | |||||||||
Jan. 2, | Oct. 3, | ||||||||
2016 | 2015 | ||||||||
ASSETS | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | 354,728 | $ | 357,106 | |||||
Accounts receivable | 360,220 | 384,680 | |||||||
Inventories | 549,501 | 569,371 | |||||||
Deferred income taxes | 10,662 | 10,686 | |||||||
Prepaid expenses and other | 23,130 | 22,882 | |||||||
Total current assets | 1,298,241 | 1,344,725 | |||||||
Property, plant and equipment, net | 313,656 | 317,351 | |||||||
Deferred income taxes | 3,584 | 3,635 | |||||||
Other | 36,559 | 36,677 | |||||||
Total non-current assets | 353,799 | 357,663 | |||||||
Total assets | $ | 1,652,040 | $ | 1,702,388 | |||||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||
Current liabilities: | |||||||||
Current portion of long-term debt and capital lease obligations | $ | 2,864 | $ | 3,513 | |||||
Accounts payable | 368,030 | 400,710 | |||||||
Customer deposits | 71,863 | 81,359 | |||||||
Accrued salaries and wages | 35,715 | 49,270 | |||||||
Other accrued liabilities | 40,030 | 44,446 | |||||||
Total current liabilities | 518,502 | 579,298 | |||||||
Long-term debt and capital lease obligations, net of current portion | 259,289 | 259,257 | |||||||
Deferred income taxes | 9,664 | 9,664 | |||||||
Other liabilities | 13,791 | 11,897 | |||||||
Total non-current liabilities | 282,744 | 280,818 | |||||||
Total liabilities | 801,246 | 860,116 | |||||||
Shareholders' equity: | |||||||||
Common stock, $.01 par value, 200,000 shares authorized, | |||||||||
50,558 and 50,554 shares issued, respectively, | |||||||||
and 33,276 and 33,500 shares outstanding, respectively | 506 | 506 | |||||||
Additional paid-in-capital | 500,888 | 497,488 | |||||||
Common stock held in treasury, at cost, 17,282 and 17,054, respectively | (518,431 | ) | (509,968 | ) | |||||
Retained earnings | 875,165 | 860,717 | |||||||
Accumulated other comprehensive (loss) income | (7,334 | ) | (6,471 | ) | |||||
Total shareholders' equity | 850,794 | 842,272 | |||||||
Total liabilities and shareholders' equity | $ | 1,652,040 | $ | 1,702,388 |
PLEXUS | ||||||||||||||||||
REVENUE BY REPORTABLE GEOGRAPHIC SEGMENTS | ||||||||||||||||||
(in thousands) | ||||||||||||||||||
(unaudited) | ||||||||||||||||||
Three Months Ended | ||||||||||||||||||
Jan. 2, | Oct. 3, | Jan. 3, | ||||||||||||||||
2016 | 2015 | 2015 | ||||||||||||||||
Americas | $ | 305,097 | $ | 359,142 | $ | 335,262 | ||||||||||||
Asia-Pacific | 299,346 | 319,472 | 333,377 | |||||||||||||||
Europe, Middle East, and Africa | 42,087 | 42,556 | 28,079 | |||||||||||||||
Elimination of inter-segment sales | (29,866 | ) | (52,440 | ) | (32,028 | ) | ||||||||||||
Total Revenue | $ | 616,664 | $ | 668,730 | $ | 664,690 | ||||||||||||
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