Plexus Announces Fiscal Fourth Quarter and Fiscal Year 2019 Financial Results

• Record fiscal fourth quarter revenue of $810 million and record fiscal 2019 revenue of $3.2 billion
• Fiscal fourth quarter GAAP diluted EPS of $1.23, including $0.19 of stock-based compensation expense
• Non-GAAP adjusted diluted EPS of $0.93, excluding a non-cash benefit of $0.35 per share related to special tax items and a charge of $0.05 per share related to restructuring activities
• Initiates fiscal first quarter 2020 revenue guidance of $780 to $820 million with GAAP diluted EPS of $0.87 to $0.97

NEENAH, Wis., Oct. 23, 2019 (GLOBE NEWSWIRE) -- Plexus PLXS today announced financial results for its fiscal fourth quarter ended September 28, 2019, and guidance for its fiscal first quarter ending January 4, 2020.

Fiscal Fourth Quarter 2019 Information

• Won 35 manufacturing programs during the quarter representing $202 million in annualized revenue when fully ramped into production
• Trailing four quarter wins total $907 million in annualized revenue when fully ramped into production
• Purchased $31.4 million of our shares at an average price of $58.38 per share under our existing share repurchase programs

Fiscal Year 2019 Information

• Revenue of $3.2 billion, up 10% from fiscal 2018
• GAAP diluted EPS of $3.50
• Non-GAAP adjusted diluted EPS of $3.43, excluding a net benefit of $0.12 per share related to special tax items and a charge of $0.05 per share related to restructuring activities
• ROIC of 13.1%, delivering an economic return of 410 basis points above our weighted average cost of capital
• Purchased $182 million of our shares at an average price of $57.19 per share under our existing share repurchase programs

Todd Kelsey, President and CEO, commented, "I am pleased with our strong performance in the fiscal fourth quarter.  We delivered record revenue of $810 million, which exceeded the top end of our guidance range.  Our Aerospace/Defense and Industrial/Commercial sectors were exceptionally strong in the quarter, delivering 15% and 6% quarter-over-quarter revenue growth, respectively.  In addition, we achieved fiscal 2019 revenue of $3.2 billion, representing a 10% increase over fiscal 2018 and marking the second consecutive year of double-digit growth.  This growth was led by our Aerospace/Defense and Healthcare/Life Sciences sectors, whose revenue increased 32% and 17%, respectively, from the previous fiscal year.  The combination of these two sectors now represents approximately 60% of our overall revenue."

Patrick Jermain, Executive Vice President and CFO, commented, "Fiscal fourth quarter GAAP diluted EPS of $1.23 included $0.35 per share related to special tax benefits.  Our fiscal fourth quarter GAAP results also included after-tax restructuring charges of $1.5 million, or $0.05 per share, primarily related to actions taken to address revenue declines within our Communications sector.  These actions were completed in the fiscal fourth quarter."

Mr. Kelsey continued, "Through our continued focus on productivity and exceptional execution, our teams achieved fiscal fourth quarter adjusted operating margin of 4.8%, comfortably within our target range of 4.7% to 5.0% and at the higher end of our guidance range.  Our robust growth and operating performance led to non-GAAP diluted EPS of $0.93, a result that was above our guidance range." 

Mr. Jermain continued, "During the fiscal fourth quarter, we generated $92 million in free cash flow, a result above our projections.  Fiscal fourth quarter cash cycle of 80 days was favorable to our expectations and sequentially lower by 9 days, as we benefited from continued progress on our working capital initiatives.  Over the past two quarters, we have reduced our inventory balance by over $100 million, largely due to our success with these initiatives." 

Mr. Kelsey concluded, "As we look to the fiscal first quarter of 2020, we expect continued sound operating performance and are guiding revenue of $780 to $820 million with operating margin in the range of 4.5% to 4.9%.  At this revenue level, we anticipate GAAP diluted EPS in the range of $0.87 to $0.97, including $0.18 of stock-based compensation expense.  Further, we are focused on delivering fiscal 2020 operating margin performance within our target range of 4.7% to 5.0%, which would enable solid EPS growth in the fiscal year."

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 market sector focused strategy.  Top 10 customers comprised 51% of revenue during the fiscal fourth quarter, down three percentage points from the fiscal third quarter of 2019, and 55% of revenue during fiscal year 2019, down two percentage points from the prior fiscal year.

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 operating income, adjusted operating margin, 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 restructuring costs, the one-time non-executive employee bonus paid in the second quarter of fiscal 2018, special tax items and the transitional effects of the U.S. Tax Cuts & Jobs Act ("U.S. Tax Reform") that 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 both fiscal 2019 and the fiscal fourth quarter was 13.1%.  The Company defines ROIC as tax-effected annualized adjusted operating income divided by average invested capital over a five-quarter period for the fiscal year and fiscal fourth quarter.  Invested capital is defined as equity plus debt, less cash and cash equivalents.  The Company's weighted average cost of capital for fiscal 2019 was 9%.  ROIC for both fiscal 2019 and the fiscal fourth quarter less the Company's weighted average cost of capital resulted in an economic return of 4.1%.

Free Cash Flow
The Company defines free cash flow as cash flows provided by operations less capital expenditures.  For the three months ended September 28, 2019, cash flows provided by operations was $108.3 million, less capital expenditures of $16.0 million, resulting in free cash flow of $92.3 million.  For the fiscal year ended September 28, 2019, cash flows provided by operations was $115.3 million, less capital expenditures of $90.6 million, resulting in free cash flow of $24.7 million.

Conference Call and Webcast Information

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

About Plexus
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, trade disputes, trade agreements 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 risks of concentration of work for certain customers;  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 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 and demanding quality, regulatory, and other requirements; 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; risks related to information technology systems and data security; 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 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 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; an inability to successfully manage human capital; 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.