Plexus Announces Fiscal Second Quarter 2016 Financial Results

• Fiscal second quarter 2016 revenue of $619 million
• GAAP diluted EPS of $0.50; non-GAAP diluted EPS of $0.55, excluding $0.05 per share of restructuring charges
• Initiates fiscal third quarter 2016 revenue guidance of $640 to $670 million with non-GAAP diluted EPS of $0.73 to $0.81, excluding any restructuring or other charges

NEENAH, Wis., April 20, 2016 (GLOBE NEWSWIRE) -- Plexus PLXS today announced financial results for its fiscal second quarter ended April 2, 2016, and guidance for its fiscal third quarter ending July 2, 2016.

Additional Fiscal Second Quarter 2016 Information

• Won 38 programs during the quarter representing approximately $174 million in annualized revenue when fully ramped into production
• Trailing four quarter wins total approximately $667 million in annualized revenue
• Purchased $7.3 million of our shares at an average price of $34.88 per share

Dean Foate, Chairman, President and CEO, commented, "Our fiscal second quarter revenue result was largely in-line with our guidance.  Non-GAAP diluted EPS was at the top end of our guidance range as a consequence of achieving many of our cost reduction and productivity improvements ahead of plan.  The greatly improved operational performance in our fiscal second quarter sets up our expectation that we will return to our target operating margin range of 4.7% to 5.0% in our fiscal third quarter; one quarter ahead of earlier expectations.  With fiscal third quarter revenue anticipated to be in the range of $640 to $670 million, we expect non-GAAP diluted EPS in the range of $0.73 to $0.81, before any restructuring charges."

Patrick Jermain, Senior Vice President and CFO, commented, "We continue to see improvement in our working capital.  During the fiscal second quarter, our cash cycle improved 5 days sequentially and exceeded our expectations at 66 days.  Our improved cash cycle and management of our capital spending drove free cash flow of $65 million during the quarter, which exceeded our guidance.  As a result of projected revenue growth and continued progress on our productivity improvements, we expect to sustain our target operating margin range as we exit fiscal 2016.  Lastly, we believe that our stronger margin performance in combination with disciplined invested capital management sets a trajectory for improved ROIC performance."

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 58% of revenue during the quarter, down two percentage points from the prior quarter.

Fiscal Second Quarter 2016 Supplemental Information
ROIC for the fiscal second quarter of 2016 was 11.6%.  The Company defines ROIC as tax-effected annualized operating profit, before special items, divided by average invested capital over a three-quarter period for the second quarter.  Invested capital is defined as equity plus debt, less cash and cash equivalents.  The Company's weighted average cost of capital is 11.0% for fiscal 2016.  ROIC for the second quarter less the Company's weighted average cost of capital results in an economic return of 0.6%.

Fiscal second quarter cash cycle was 66 days.  The Company delivered $70.0 million in cash from operations and used $5.0 million for capital investments during the quarter, resulting in positive free cash flow of $65.0 million.

Conference Call and Webcast Information

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 Securities and Exchange Commission filings (particularly in "Risk Factors" in our fiscal 2015 Form 10-K).

Free Cash Flow Calculation
The Company defines free cash flow as cash flow provided by operations less capital expenditures.  For the three months ended April 2, 2016 cash flow provided by operations was $70.0 million, less capital expenditures of $5.0 million, resulting in free cash flow of $65.0 million.  For the six months ended April 2, 2016 cash flow provided by operations was $91.3 million, less capital expenditures of $16.8 million, resulting in free cash flow of $74.5 million.