Plexus Announces Fiscal First Quarter Financial Results

Fiscal first quarter 2021 revenue of $830 million GAAP diluted EPS of $1.23 Initiates fiscal second quarter 2021 revenue guidance of $860 to $900 million with GAAP diluted EPS of $1.17 to $1.32 NEENAH, Wis., Jan. 20, 2021 (GLOBE NEWSWIRE) — Plexus (NASDAQ: PLXS) today announced financial results for our […]

  • Fiscal first quarter 2021 revenue of $830 million
  • GAAP diluted EPS of $1.23
  • Initiates fiscal second quarter 2021 revenue guidance of $860 to $900 million with GAAP diluted EPS of $1.17 to $1.32

NEENAH, Wis., Jan. 20, 2021 (GLOBE NEWSWIRE) — Plexus (NASDAQ: PLXS) today announced financial results for our fiscal first quarter ended January 2, 2021, and guidance for our fiscal second quarter ending April 3, 2021.















    Three Months Ended
    Jan 2, 2021   Jan 2, 2021   Apr 3, 2021
    Q1F21 Results   Q1F21 Guidance   Q2F21 Guidance
Summary GAAP Items          
Revenue (in millions) $830    $810 to $850   $860 to $900
Operating margin 5.6%   4.9% to 5.3%   5.0% to 5.5%
Diluted EPS (1) $1.23    $1.02 to $1.17   $1.17 to $1.32
             
Summary Non-GAAP Items (2)          
Return on invested capital (ROIC) 16.3%        
Economic return 8.2%        
             
(1

Includes stock-based compensation expen
se of $0.18 for
Q1F21 results,
$0.19 f
or Q1F21 guidance an
d $0.22
for Q2F21 guidance.
(2

Refer to Non-GAAP Supplemental Information in Tables 1 and 2 for non-GAAP financial measures and a reconciliation to GAAP.

Fiscal First Quarter 2021 Information

  • Won 35 manufacturing programs during the quarter representing $223 million in annualized revenue when fully ramped into production
  • Trailing four quarter wins total a record $1 billion in annualized revenue when fully ramped into production
  • Purchased $22.8 million of our shares at an average price of $74.16 per share under our existing share repurchase programs. There remains $82.6 million outstanding of the $100 million that was authorized under the fiscal 2021 program.

Todd Kelsey, President and CEO, commented, “Our operations achieved strong results in the fiscal first quarter. We expanded GAAP operating margin to 5.6% through our focus on productivity improvements and expense management along with solid performance from our Engineering Solutions team.    This operating margin represents the third consecutive quarter in excess of 5.0%. Revenue of $830 million was in line with our expectations and at the midpoint of our guidance. Through this combination, we delivered GAAP diluted earnings per share of $1.23, which was well above the top end of our guidance range.”

Mr. Kelsey continued, “Our go-to-market team’s sustained focus on leveraging our exceptional execution to drive new business development opportunities produced strong results again this past quarter. Within the fiscal first quarter, Plexus won 35 new programs including a meaningful number of new customer engagements. These wins represent $223 million in annualized revenue when fully ramped into production and contribute to our trailing four quarter wins total of a record $1.0 billion. In addition, we expanded Plexus’ funnel of qualified manufacturing opportunities by nearly $600 million from the prior quarter to a record $3.3 billion. This healthy rate of new program wins and the considerable expansion in the funnel of qualified opportunities should position us well to achieve our 9% to 12% revenue CAGR goal over the longer term.”    

Patrick Jermain, Executive Vice President and CFO, commented, “With our exceptional operating performance, we delivered return on invested capital of 16.3%, sequentially improved by 230 basis points and the highest return delivered in more than three years. This result generated economic return of 820 basis points above our weighted average cost of capital, creating substantial shareholder value. Further, we continue to maintain a solid balance sheet. We ended the quarter with cash in excess of $350 million and no outstanding borrowing under our revolving credit facility while investing in working capital, capital expenditures and our share repurchase program. We reconfirm our fiscal 2021 expectation for free cash flow of approximately $100 million.”   

Mr. Kelsey concluded, “We anticipate a robust fiscal second quarter due to expected increases in medical equipment demand, recent strengthening in our Industrial Sector and sustained operational excellence. We are guiding revenue of $860 to $900 million, GAAP operating margin in the range of 5.0% to 5.5% and GAAP diluted earnings per share of $1.17 to $1.32. Our guidance assumes that COVID-19 will not materially impact end markets or our operations beyond what has already occurred. Long-term visibility into end markets remains limited, yet our history of strong execution provides the opportunity to continue to capture potential upside demand that may arise. Looking to the second half of fiscal 2021, while we currently anticipate revenue relatively consistent with the fiscal second quarter guidance and operating margin to moderate from the fiscal first quarter result, we believe Plexus is positioned to drive strong EPS growth for fiscal 2021.”


















Quarterly Comparison Three Months Ended
(in thousands, except EPS) Jan 2, 2021   Oct 3, 2020   Jan 4, 2020
Revenue $ 830,355     $ 913,227     $ 852,409  
Gross profit 79,277     89,190     79,190  
Operating income 46,866     50,376     39,934  
Net income 36,199     37,705     31,006  
Diluted EPS 1.23     1.26     1.03  
Adjusted net income (1) 36,199     37,705     30,192  
Adjusted diluted EPS (1) 1.23     1.26     1.00  
           
Gross margin 9.5 %   9.8 %   9.3 %
Operating margin 5.6 %   5.5 %   4.7 %
           
ROIC (1) 16.3 %   14.0 %   14.7 %
Economic return (1) 8.2 %   5.2 %   5.9 %
           
(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.

Business Segment and Market Sector Revenue
Plexus 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 Plexus’ market sector focused strategy. Top 10 customers comprised 55% of revenue during the fiscal first quarter of 2021, down one percentage point from the fiscal fourth quarter of 2020.  








Business Segments ($ in millions) Three Months Ended
  Jan 2, 2021   Oct 3, 2020   Jan 4, 2020
Americas $ 327     $ 334     $ 353  
Asia-Pacific 451     503     451  
Europe, Middle East, and Africa 79     99     85  
Elimination of inter-segment sales (27 )   (23 )   (37 )
Total Revenue $ 830     $ 913     $ 852  









Market Sectors ($ in millions) Three Months Ended
  Jan 2, 2021   Oct 3, 2020   Jan 4, 2020
Industrial (1) $ 378   46 %   $ 427   46 %   $ 368   43 %
Healthcare/Life Sciences 319   38 %   345   38 %   312   37 %
Aerospace/Defense 133   16 %   141   16 %   172   20 %
Total Revenue $ 830       $ 913       $ 852    
                 
(1) During the three months ended January 2, 2021, Plexus consolidated the previously reported Industrial/Commercial and Communications market sectors to form the Industrial market sector. Prior period amounts have been reclassified to conform to the current period presentation.

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 with 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 non-recurring items 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 the fiscal first quarter was 16.3%. Plexus defines ROIC as tax-effected annualized adjusted operating income divided by average invested capital over a two-quarter period for the fiscal first quarter. Invested capital is defined as equity plus debt and operating lease obligations, less cash and cash equivalents. Plexus’ weighted average cost of capital for fiscal 2021 is 8.1%. ROIC for the fiscal first quarter less Plexus’ weighted average cost of capital resulted in an economic return of 8.2%.

Free Cash Flow
Plexus defines free cash flow as cash flows provided by operations less capital expenditures. For the three months ended January 2, 2021, cash flows provided by operations was $6.7 million, less capital expenditures of $15.9 million, resulting in negative free cash flow of $9.2 million.










Cash Cycle Days Three Months Ended  
  Jan 2, 2021   Oct 3, 2020   Jan 4, 2020  
Days in Accounts Receivable 53   48   49  
Days in Contract Assets 12   11   12  
Days in Inventory 93   85   87  
Days in Accounts Payable (59)   (57)   (61)  
Days in Cash Deposits (19)   (18)   (16)  
Annualized Cash Cycle * 80   69   71  
* We calculate cash cycle as the sum of days in accounts receivable, days in contract assets and days in inventory, less days in accounts payable and days in cash deposits.  

Conference Call and Webcast Information





What:    Plexus Fiscal 2021 Q1 Earnings Conference Call and Webcast
When:    Thursday, January 21, 2021 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 first quarter 2021 results will also be made available ahead of the conference call.

Conference Call: +1.866.922.5180 with passcode: 8662208

Replay:    The webcast will be archived on the Plexus website and available via telephone replay at +1.855.859.2056 or +1.404.537.3406 with passcode: 8662208

Investor and Media Contact
Shawn Harrison
+1.920.751.3612
[email protected]  

About Plexus
Since 1979, Plexus has been partnering with companies to create the products that build a better world.  We are a team of approximately 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 the evolving effect, which may intensify, of COVID-19 on our employees, customers, suppliers, and logistics providers, including the impact of governmental actions being taken to curtail the spread of the virus. Other 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 or the costs associated with the closure or consolidation of 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, any tax law changes as a result of change in the U.S. presidential administration, 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 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, global health epidemics 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 contained in our fiscal 2020 Form 10-K and any subsequently filed Form 10-Q.



























PLEXUS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
   
  Three Months Ended
  Jan 2,   Jan 4,
  2021   2020
Net sales $ 830,355     $ 852,409  
Cost of sales 751,078     773,219  
Gross profit 79,277     79,190  
Selling and administrative expenses 32,411     39,256  
Operating income 46,866     39,934  
Other income (expense):      
Interest expense (4,086 )   (4,132 )
Interest income 374     645  
Miscellaneous, net (1,518 )   (2,173 )
Income before income taxes 41,636     34,274  
Income tax expense 5,437     3,268  
Net income $ 36,199     $ 31,006  
Earnings per share:      
Basic $ 1.25     $ 1.06  
Diluted $ 1.23     $ 1.03  
Weighted average shares outstanding:      
Basic 28,861     29,147  
Diluted 29,539     30,065  


















































PLEXUS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(unaudited)
       
  Jan 2,   Oct 3,
  2021   2020
ASSETS      
Current assets:      
Cash and cash equivalents $ 356,724     $ 385,807  
Restricted cash 209     2,087  
Accounts receivable 484,672     482,086  
Contract assets 113,225     113,946  
Inventories 764,322     763,461  
Prepaid expenses and other 39,194     31,772  
Total current assets 1,758,346     1,779,159  
Property, plant and equipment, net 381,612     383,661  
Operating lease right-of-use assets 71,296     69,879  
Deferred income taxes 21,446     21,422  
Other 39,358     35,727  
Total non-current assets 513,712     510,689  
Total assets $ 2,272,058     $ 2,289,848  
       
LIABILITIES AND SHAREHOLDERS’ EQUITY      
Current liabilities:      
Current portion of long-term debt and finance lease obligations $ 148,408     $ 146,829  
Accounts payable 488,969     516,297  
Customer deposits 155,911     159,972  
Accrued salaries and wages 60,332     76,927  
Other accrued liabilities 101,836     103,492  
Total current liabilities 955,456     1,003,517  
Long-term debt and finance lease obligations, net of current portion 188,148     187,975  
Accrued income taxes payable 53,618     53,899  
Long-term operating lease liabilities 37,052     36,779  
Deferred income taxes 6,596     6,433  
Other liabilities 24,229     23,765  
Total non-current liabilities 309,643     308,851  
Total liabilities 1,265,099     1,312,368  
Shareholders’ equity:      
Common stock, $.01 par value, 200,000 shares authorized,      
53,596 and 53,525 shares issued, respectively,      
and 28,766 and 29,002 shares outstanding, respectively 536     535  
Additional paid-in-capital 624,859     621,564  
Common stock held in treasury, at cost, 24,830 and 24,523, respectively (957,410 )   (934,639 )
Retained earnings 1,331,278     1,295,079  
Accumulated other comprehensive loss 7,696     (5,059 )
Total shareholders’ equity 1,006,959     977,480  
Total liabilities and shareholders’ equity $ 2,272,058     $ 2,289,848  
       

























PLEXUS CORP. AND SUBSIDIARIES
NON-GAAP SUPPLEMENTAL INFORMATION Table 1
(in thousands, except per share data)
(unaudited)
             
    Three Months Ended
    Jan 2,   Oct 3,   Jan 4,
    2021   2020   2020
Operating income, as reported $ 46,866     $ 50,376     $ 39,934  
Operating margin, as reported 5.6 %   5.5 %   4.7 %
             
Net income, as reported $ 36,199     $ 37,705     $ 31,006  
             
Non-GAAP adjustments:          
Special tax impacts (1)         (814 )
Adjusted net income $ 36,199     $ 37,705     $ 30,192  
             
Diluted earnings per share, as reported $ 1.23     $ 1.26     $ 1.03  
             
Non-GAAP per share adjustments:          
Special tax impacts (1)         (0.03 )
Adjusted diluted earnings per share $ 1.23     $ 1.26     $ 1.00  
             
(1

During the three months ended January 4, 2020, there were $1.9M in tax benefits related to US foreign tax credit regulations issued during the quarter, partially offset by $1.1M of tax expense as a result of special tax items.

























PLEXUS CORP. AND SUBSIDIARIES
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 4,
  2021   2020   2020
Operating income, as reported   $ 46,866       $ 153,372       $ 39,934  
Restructuring and impairment charges +     + 6,003     +  
Adjusted operating income   $ 46,866       $ 159,375       $ 39,934  
  x 4           x 4  
                 
Adjusted annualized operating income   $ 187,464       $ 159,375       $ 159,736  
Adjusted effective tax rate x 13 %   x 14 %   x 13 %
Tax impact   24,370       22,313       20,766  
Adjusted operating income (tax effected)   $ 163,094       $ 137,062       $ 138,970  
                 
Average invested capital ÷ $ 1,002,087     ÷ $ 978,939     ÷ $ 942,793  
                 
ROIC   16.3 %     14.0 %     14.7 %
Weighted average cost of capital 8.1 %   8.8 %   8.8 %
Economic return   8.2 %     5.2 %     5.9 %













  Three Months Ended
Average Invested Capital Jan 2,   Oct 3,   Jul 4,   Apr 4,   Jan 4,   Sept 28,
Calculations 2021   2020   2020   2020   2020   2019
Equity $ 1,006,959       $ 977,480       $ 944,821       $ 892,558       $ 908,372       $ 865,576    
Plus:                      
Debt and finance lease obligations – current 148,408       146,829       145,993       107,880       67,847       100,702    
Operating lease obligations – current (1) (2) 9,351       7,724       8,061       8,546       9,185          
Debt and finance lease obligations – long-term 188,148       187,975       188,626       186,327       186,827       187,278    
Operating lease obligations – long-term (2) 37,052       36,779       38,077       39,617       36,473          
Less:                      
Cash and cash equivalents (356,724 )     (385,807 )     (296,545 )     (225,830 )     (252,914 )     (223,761 )  
  $ 1,033,194       $ 970,980       $ 1,029,033       $ 1,009,098       $ 955,790       $ 929,795    



(1 ) Included in Other accrued liabilities on the Condensed Consolidated Balance Sheets.
(2 ) In the fiscal first quarter of 2020, Plexus adopted and applied Topic 842 to all leases using the modified retrospective method of adoption. The prior year comparative information has not been restated and continues to be reported under the accounting standards in effect for fiscal 2019.

 

Della C. Mae

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