Plexus Announces Fiscal Third Quarter 2019 Financial Results

• Record quarterly revenue of $800 million during the fiscal third quarter of 2019
• GAAP diluted EPS of $0.81
• Initiates fiscal fourth quarter 2019 revenue guidance of $760 to $800 million with GAAP diluted EPS of $0.81 to $0.91, excluding any non-recurring charges 

NEENAH, Wis., July 17, 2019 (GLOBE NEWSWIRE) -- Plexus PLXS today announced financial results for its fiscal third quarter ended June 29, 2019, and guidance for its fiscal fourth quarter ending September 28, 2019.

Fiscal Third Quarter 2019 Information

• Won 23 manufacturing programs during the quarter representing $227 million in annualized revenue when fully ramped into production
• Trailing four quarter manufacturing wins total $938 million in annualized revenue when fully ramped into production
• Purchased $44.4 million of our shares at an average price of $56.61 per share under our existing share repurchase program

Todd Kelsey, President and CEO, commented, "We achieved record revenue of $800 million in the fiscal third quarter, a 10% increase from the comparable quarter last year.  We delivered revenue at the high end of our guidance range through successful program ramps and healthy demand in our differentiated end markets.  GAAP EPS of $0.81 was in line with our expectations and met the midpoint of our guidance range."

Patrick Jermain, Executive Vice President and CFO, commented, "During the fiscal third quarter, we continued to execute our capital allocation strategy by repatriating approximately $37 million of offshore cash.  Since the enactment of U.S. tax reform in our last fiscal year, we have brought back over $500 million.  We repurchased approximately $44 million of our shares during the fiscal third quarter, which was primarily funded with repatriated cash."

Mr. Jermain continued, "On May 15, 2019, we refinanced our credit facility to take advantage of favorable pricing and improve our financial covenants.  In addition, the maximum commitment under the credit facility was expanded to $350 million, with the potential to increase it by an additional $250 million.  The maturity of the credit facility was extended to May 2024.  The amended facility provides us with additional borrowing capacity and flexibility in anticipation of future growth." 

Mr. Kelsey continued, "Looking ahead to the fiscal fourth quarter, I am encouraged by the anticipated performance of our sectors that feature highly complex products and demanding regulatory environments.  We expect new program ramps and stable end markets within these sectors to soften the impact of a meaningful demand reduction in the Communications sector.  Therefore, we are guiding fiscal fourth quarter revenue in the range of $760 to $800 million, which is consistent with the range we provided for our fiscal third quarter guidance.  We expect continued improvement in operating performance and, as a result, we are guiding GAAP EPS in the range of $0.81 to $0.91.  This excludes any non-recurring charges as a result of addressing revenue declines in our Communications sector." 

Mr. Kelsey concluded, "Looking forward to fiscal 2020, we expect another year of revenue growth as we continue to deliver meaningful wins performance and ramp new programs in our differentiated markets of Healthcare/Life Sciences, Aerospace/Defense and Industrial/Commercial.  In addition, I am pleased with the readiness of our state of the art facilities in which we invested during fiscal 2019, as well as the progress of our productivity initiatives. We anticipate a combination of these efforts will result in operating margin expansion and EPS leverage during fiscal 2020."    

Business Segment and Market Sector Revenue
The Company measures operational performance and allocates resources on a geographic segment basis.  Plexus also 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.  Top 10 customers comprised 54% of revenue during the fiscal third quarter, down two percentage points from the fiscal second quarter of 2019.

Non-GAAP Supplemental Information
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 management and investors additional insight into financial performance. In addition, management uses these and other non-GAAP measures, such as adjusted net income and adjusted diluted EPS, to provide a better understanding of core performance for purposes of period-to-period comparisons. Plexus believes that these measures are also useful to investors because they provide further insight by eliminating the effect of items, such as the continuing transitional effects of the U.S. Tax Cuts & Jobs Act ("U.S. Tax Reform") and the one-time, non-executive employee bonus paid in the second quarter of fiscal 2018, which are not reflective of continuing operations. For a full reconciliation of non-GAAP measures to comparable GAAP measures, please refer to the attached Non-GAAP Supplemental Information Tables.

ROIC and Economic Return
ROIC for the fiscal third quarter was 12.9%. The Company defines ROIC for the fiscal third quarter as tax-effected annualized adjusted operating income divided by average invested capital over a four-quarter period. Invested capital is defined as equity plus debt, less cash and cash equivalents. The Company's weighted average cost of capital for fiscal 2019 is 9.0%. ROIC for the fiscal third quarter less the Company's weighted average cost of capital resulted in an economic return of 3.9%.

Free Cash Flow Calculation
The Company defines free cash flow as cash flows provided by operations less capital expenditures.  For the three months ended June 29, 2019, cash flows provided by operations were $41.5 million, less capital expenditures of $20.0 million, resulting in positive free cash flow of $21.5 million. For the nine months ended June 29, 2019, cash flows provided by operations was $7.0 million, less capital expenditures of $74.6 million, resulting in negative free cash flow of $67.6 million.

Conference Call and Webcast Information

Investor and Media Contact
Heather Beresford
+1.920.751.3612
heather.beresford@plexus.com

About Plexus – The Product Realization Company
Since 1979, Plexus has been partnering with companies to create the products that build a better world.  We are a team of over 19,000 individuals who are dedicated to providing global Design and Development, Supply Chain Solutions, New Product Introduction, Manufacturing, and Aftermarket Services.  Plexus is a global leader that specializes in serving customers in industries with highly complex products and demanding regulatory environments.  Plexus delivers customer service excellence to leading global companies by providing innovative, comprehensive solutions throughout the product's lifecycle.  For more information about Plexus, visit our website at www.plexus.com.

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 shortages and delays in obtaining components as a result of economic cycles, natural disasters or otherwise; the effects of tariffs and other trade protection measures; 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 effects of start-up costs of new programs and facilities; possible unexpected costs and operating disruption in transitioning programs, including transitions between Company facilities; 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; risks related to information technology systems and data security; the effects of U.S. Tax Reform and of related foreign jurisdiction tax developments; current or potential future barriers to the repatriation of funds that are currently held outside of the United States as a result of actions taken by other countries or otherwise; the potential effects of jurisdictional results on our taxes, tax rates, and our ability to use deferred tax assets and net operating losses; 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 effects of changes in economic conditions, political conditions, and tax matters in the United States and in the other countries in which we do business (including as a result of the United Kingdom's pending exit from the European Union); the potential effect of other 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; changes in financial accounting standards; and other risks detailed herein and in our other Securities and Exchange Commission filings (particularly in "Risk Factors" in our fiscal 2018 Form 10-K).