• 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, WI – July 17, 2019 - Plexus (NASDAQ: 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.
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Three Months Ended |
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Jun 29, 2019 |
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Jun 29, 2019 |
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Sept 28, 2019 |
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Q3F19 Results |
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Q3F19 Guidance |
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Q4F19 Guidance |
Summary GAAP Items |
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Revenue (in millions) |
$800 |
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$760 to $800 |
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$760 to $800 |
Operating margin |
4.3% |
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4.3% to 4.7% |
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4.5% to 4.9% |
Diluted EPS (1) |
$0.81 |
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$0.76 to $0.86 |
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$0.81 to $0.91 |
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Summary Non-GAAP Items (2) |
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Return on invested capital (ROIC) |
12.9% |
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Economic return |
3.9% |
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(1) |
Includes stock-based compensation expense of $0.18 for Q3F19 results, $0.17 for Q3F19 guidance and $0.18 for Q4F19 guidance. Q4F19 guidance excludes any non-recurring charges. |
(2) |
Refer to Non-GAAP Supplemental Information in Tables 1 and 2 for non-GAAP financial measures and a reconciliation to GAAP. |
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.”
Quarterly Comparison |
Three Months Ended |
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Jun 29, 2019 |
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Mar 30, 2019 |
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Jun 30, 2018 |
(in thousands, except EPS) |
Q3F19 |
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Q2F19 |
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Q3F18 |
Revenue |
$ |
799,644 |
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$ |
789,051 |
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$ |
726,385 |
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Gross profit |
71,030 |
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70,636 |
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67,821 |
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Operating income |
34,403 |
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33,174 |
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32,446 |
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Net income |
24,801 |
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24,758 |
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26,501 |
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Diluted earnings per share |
$ |
0.81 |
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$ |
0.79 |
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$ |
0.79 |
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Gross margin |
8.9% |
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9.0% |
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9.3% |
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Operating margin |
4.3% |
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4.2% |
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4.5% |
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ROIC (1) |
12.9% |
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13.3% |
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15.9% |
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Economic return (1) |
3.9% |
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4.3% |
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6.4% |
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(1) Refer to Non-GAAP Supplemental Information in Tables 1 and 2 for non-GAAP financial measures discussed and/or disclosed in this release, such as adjusted net income, adjusted diluted EPS, ROIC and Economic Return, and a reconciliation of these measures to GAAP. |
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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.
Business Segments ($ in millions) |
Three Months Ended |
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Jun 29, 2019 Q3F19 |
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Mar 30, 2019 Q2F19 |
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Jun 30, 2018 Q3F18 |
Americas |
$ |
367 |
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$ |
364 |
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$ |
298 |
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Asia-Pacific |
385 |
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378 |
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384 |
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Europe, Middle East, and Africa |
81 |
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76 |
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74 |
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Elimination of inter-segment sales |
(33) |
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(29) |
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(30) |
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Total Revenue |
$ |
800 |
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$ |
789 |
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$ |
726 |
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Market Sectors ($ in millions) |
Three Months Ended |
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Jun 29, 2019 Q3F19 |
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Mar 30, 2019 Q2F19 |
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Jun 30, 2018 Q3F18 |
Healthcare/Life Sciences |
$ |
309 |
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39% |
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$ |
300 |
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38% |
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$ |
266 |
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37% |
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Industrial/Commercial |
248 |
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31% |
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250 |
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32% |
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225 |
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31% |
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Aerospace/Defense |
151 |
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19% |
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140 |
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18% |
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115 |
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16% |
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Communications |
92 |
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11% |
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99 |
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12% |
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120 |
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16% |
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Total Revenue |
$ |
800 |
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$ |
789 |
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$ |
726 |
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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.
Cash Cycle Days |
Three Months Ended |
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Jun 29, 2019 Q3F19 |
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Mar 30, 2019 Q2F19 |
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Jun 30, 2018 Q3F18 |
Days in Accounts Receivable |
52 |
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51 |
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48 |
Days in Contract Assets (1) |
12 |
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10 |
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- |
Days in Inventory (1) |
95 |
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102 |
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105 |
Days in Accounts Payable |
(54) |
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(61) |
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(66) |
Days in Cash Deposits |
(16) |
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(16) |
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(14) |
Annualized Cash Cycle (1) |
89 |
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86 |
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73 |
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(1) The Company calculates cash cycle as the sum of days in accounts receivable, contract assets and days in inventory, less days in accounts payable and days in cash deposits. On September 30, 2018, the Company adopted Accounting Standards Update No. 2014-09 (“ASU 2014-09”), Revenue Recognition (Topic 606). For the three months ended June 29, 2019 and March 30, 2019, cash cycle days include contract assets and an associated reduction in inventory. As the guidance was adopted using a modified retrospective approach, no impact to prior periods was required to be recognized. |
Conference Call and Webcast Information
What: |
Plexus Fiscal 2019 Q3 Earnings Conference Call and Webcast |
When: |
Thursday, July 18, 2019 at 8:30 a.m. Eastern Time |
Where: |
Participants are encouraged to join the live webcast at the investor relations section of the Plexus website, https://plexus.gcs-web.com/events-and-presentations/upcoming-events, where a slide presentation reviewing fiscal third quarter 2019 results will also be made available ahead of the conference call.
Conference call at +1.800.708.4540 with passcode: 48751712 |
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: 48751712 |