Plexus : Plexus Corp. Reports First Quarter Results January 16, 2013 oFiscal first quarter revenue of $531 Million, EPS of $0.47 oInitiates Q2 fiscal 2013 revenue guidance of $550 - $580 Million NEENAH, WI - January 16, 2013 - Plexus Corp. (NASDAQ: PLXS), today announced financial results for its fiscal first quarter ended December 29, 2012. Three Months Ended December 29, September 29, December 31, 2012 2012 2011 (US$ in thousands, except EPS) Q1 F13 Q4 F12 Q1 F12 Revenue $530,532 $594,789 $529,654 Gross profit $51,162 $56,244 $51,652 Operating profit $21,484 $27,349 $23,762 Net income $16,616 $728 $17,870 Earnings per share $0.47 $0.02 $0.51 Net income, before special charges $16,616 $23,513 $17,870 Earnings per share, before special charges $0.47 $0.66 $0.51 Gross margin 9.6% 9.5% 9.8% Operating margin 4.1% 4.6% 4.5% Return on invested capital 12.6% 15.5% 14.2% Q1 Fiscal 2013 Results (quarter ended December 29, 2012) oRevenue: $531 million, consistent with our updated guidance oDiluted EPS: $0.47, including $0.08 per share of stock-based compensation expense oReturn on invested capital (ROIC): 12.6% Q2 Fiscal 2013 Guidance oRevenue: $550 to $580 million oDiluted EPS: $0.50 to $0.55, excluding any unanticipated restructuring charges and including approximately $0.08 per share of stock-based compensation expense Dean Foate, President and CEO, commented, "Our revenue of $531 million and diluted EPS of $0.47 was consistent with our updated guidance issued on January 7, 2013. Relative to our original expectations, manufacturing demand softened across all of our sectors during the quarter, particularly for our Networking/Communications sector in the final few weeks. Despite the challenges in the end-market demand environment, our new business development results were strong again in the first quarter. Our teams won 23 new programs in our Manufacturing Solutions group; we anticipate these wins will generate approximately $193 million in annualized revenue, when fully ramped into production. As always, all future revenues are subject to the timing and ultimate realization of customer forecasts and orders that can be influenced by economic and other factors. Our funnel of qualified business opportunities increased during the quarter to $2.2 billion, up slightly from the prior quarter." Ginger Jones, Senior Vice President and CFO, commented, "Gross margin was 9.6% for the fiscal first quarter, above our expected range due to positive customer mix and sales of certain inventory that had previously been written down. Selling and administrative expenses were in line with our expectations at $29.7 million. Operating margin was 4.1%, consistent with our expectations." Ms. Jones concluded, "Fiscal first quarter cash cycle days, including customer deposits, were 74 days and significantly above our expected range. Days in receivables were one day higher than the prior quarter. Inventory days increased fourteen days, primarily as a result of lower demand during the quarter than expected. This increase was offset by a three-day increase in accounts payable days and a one-day increase in cash deposits." Mr. Foate continued, "We are establishing fiscal second quarter 2013 revenue guidance of $550 to $580 million. At that level of revenue we anticipate diluted EPS of $0.50 to $0.55, excluding any unanticipated restructuring charges and including approximately $0.08 per share of stock-based compensation expense. The midpoint of this guidance range suggests that our fiscal second quarter revenue would be up 6% compared to our fiscal first quarter; it reflects higher forecasted revenue from Juniper as we supportthe plan to substantially complete the disengagement by June 30, 2013." Mr. Foate concluded, "Recognizing the challenges the business will face after June 30 from the disengagement of our largest customer, we remain keenly focused on managing our cost structure to achieve acceptable financial results as we work to ramp up new business to replace the Juniper revenues. Our optimism is directly tied to the $956 million in new program wins in fiscal 2012 and the strong wins in the fiscal first quarter. Taking into account the Juniper exit and the current view of ramps of this new business, our goal is to work our way back to flat revenue for fiscal 2013 compared to fiscal 2012 and strive for modest revenue growth in fiscal 2014." Plexus provides non-GAAP supplemental information such as return on invested capital ("ROIC"), free cash flow and net income before special charges. ROIC is used for internal management assessments because it provides additional insight into ongoing financial performance. Net income before special charges helps assess trends and performance over time by eliminating the effects of unusual events. In addition, we provide non-GAAP measures because we believe they offer insight into the metrics that are driving management decisions as well as management's performance under the tests that it sets for itself. Please refer to the attached reconciliations of non-GAAP supplemental data. Market Sector Breakout Plexus reports revenue based on the market sector breakout set forth in the table below, which reflects the Company's focus on its global business and market development sector strategy. Beginning in fiscal 2013, as previously announced, we renamed our Medical sector to the Healthcare/Life Sciences sector. This change stems from our evolving strategy and enhanced capabilities within this market and reflects the industry's continuing approach towards holistic patient care. Healthcare/Life Sciences more accurately defines this growing industry, aligns with our existing and targeted customer base, and more accurately reflects our growth opportunities. Market Sector ($ in millions) Q1 F13 Q4 F12 Q1 F12 Networking/Communications $199 37% $228 39% $230 43% Healthcare/Life Sciences $133 25% $138 21% $114 22% Industrial/Commercial $131 25% $159 31% $135 25% Defense/Security/Aerospace $68 13% $70 9% $51 10% Total Revenue $531 $595 $530 Fiscal Q1 Supplemental Information oROIC for the fiscal first quarter was 12.6%. The Company defines ROIC as tax-effected annualized operating income divided by average invested capital over a rolling two-quarter period for the first quarter and a rolling five-quarter period for the fourth quarter. Invested capital is defined as equity plus debt, less cash and cash equivalents. oCash flow provided by operations was approximately $9 million for the quarter. Capital expenditures for the quarter were $26 million. Free cash flow was negative for the quarter, at approximately $(17) million. The Company defines free cash flow as cash flow provided by (or used in) operations less capital expenditures. oTop 10 customers comprised 56% of revenue during the quarter, up 1 percentage point from the previous quarter. oCash Conversion Cycle: Cash Conversion Cycle Q1 F13 Q4 F12 Q1 F12 Days in Accounts Receivable 50 49 46 Days in Inventory 92 78 87 Days in Accounts Payable (61) (58) (57) Days in Cash Deposits (7) (6) (6) Annualized Cash Cycle 74 63 70 Conference Call/Webcast and Replay Information: What: Plexus Corp.'s Fiscal Q1 Earnings Conference Call When: Thursday, January 17^th at 8:30 a.m. Eastern Time Where: (800) 927-0469 with confirmation number 3398 7298 http://www.media-server.com/m/p/27f372dr Replay: The call will be archived until February 15, 2013 at midnight Eastern Time http://www.media-server.com/m/p/27f372dr or via telephone replay at (888) 843-7419 or (630) 652-3042 with confirmation number 3398 7298 For further information, please contact: Ginger Jones, Senior VP and Chief Financial Officer 920-751-5487 or email@example.com About Plexus Corp. - 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 release which 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 poor visibility of future orders, particularly in view of current economic conditions; the effects on Plexus of Juniper Network, Inc.'s (Juniper's) intended disengagement, including limited visibility as to Juniper's demand during the transition and the timing of disengagement; 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 or programs, 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; our ability to manage successfully a complex business model characterized by high customer and product mix, low volumes and demanding quality, regulatory, and other requirements; 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; 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 and the continuing instability of the global financial markets and banking system, including the potential inability of our customers or suppliers to access credit facilities; the effect of changes in the pricing and margins of products; the effect of start-up costs of new programs and facilities, such as our announced plans to replace facilities in Romania and the United States, and other recent, planned and potential future expansions; increasing regulatory and compliance requirements; possible unexpected costs and operating disruption in transitioning programs; raw materials and component cost fluctuations; the potential effect of fluctuations in the value of the currencies in which we transact business; the potential effects of regional results on our taxes and ability to use deferred tax assets; the potential effect of world or local events or other events outside our control (such as drug cartel-related violence in Mexico, changes in oil prices, terrorism and weather events); the impact of increased competition; and other risks detailed in the Company's Securities and Exchange Commission filings (particularly in Part I, Item 1A of our annual report on Form 10-K for the fiscal year endedSeptember 29, 2012). PLEXUS CORP. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) (unaudited) Three Months Ended December 29, December 31, 2012 2011 Net sales $530,532 $529,654 Cost of sales 479,370 478,002 Gross profit 51,162 51,652 Operating expenses: Selling and administrative expenses 29,678 27,890 Operating income 21,484 23,762 Other income (expense): Interest expense (3,720) (4,060) Interest income 397 483 Miscellaneous (475) (545) Income before income taxes 17,686 19,640 Income tax expense 1,070 1,770 Net income $16,616 $17,870 Earnings per share: Basic $0.48 $0.52 Diluted $0.47 $0.51 Weighted average shares outstanding: Basic 34,836 34,600 Diluted 35,283 35,181 PLEXUS CORP. NON-GAAP SUPPLEMENTAL INFORMATION (in thousands, except per share data) (unaudited) ROIC Calculation Three Months Twelve Months Three Months Ended Ended Ended December 29, 2012 September 29, December 31, 2012 2011 Operating income $21,484 $0 $23,762 x 4 x 0 x 4 Annualized operating income 85,936 104,159 95,048 Tax rate x 6% x 7% x 9% Tax impact 5,156 7,291 8,554 Operating income (tax effected) $80,780 $96,868 $86,494 Average invested capital $640,992 $623,021 $610,666 ROIC 12.6% 15.5% 14.2% December 29, September 29, 2012 2012 Equity $664,515 $649,022 Plus: Debt - current 10,310 10,211 Debt - non-current 259,516 260,211 Less: Cash and cash equivalents (274,183) (297,619) $660,158 $621,825 Fiscal 2013 first quarter average invested capital (December 29, 2012 and September 29, 2012) was $640,992. September June 30, March 31, December October 29, 2012 2012 2012 31, 2011 1, 2011 Equity $649,022 $638,573 $615,296 $581,811 $558,882 Plus: Debt - 10,211 13,838 17,518 17,446 17,350 current Debt - 260,211 260,843 261,542 265,941 270,292 non-current Less: Cash and cash equivalents (297,619) (277,909) (257,754) (248,284) (242,107) $621,825 $635,345 $636,602 $616,914 $604,417 Fiscal 2012 fourth quarter average invested capital (September 29, 2012, June 30, 2012, March 31, 2012, December 31, 2011, and October 1, 2011) was $623,021. Fiscal 2012 first quarter average invested capital (December 31, 2011 and October 1, 2011) was $610,666. Free Cash Flow Calculation The Company defines free cash flow as cash flow provided by (or used in) operations less capital expenditures. For the three months ended December 29, 2012 cash flow provided by operations was approximately $9 million less capital expenditures of approximately $26 million, resulting in negative free cash flow of approximately $(17) million. PLEXUS CORP. NON-GAAP SUPPLEMENTAL INFORMATION (in thousands, except per share data) (unaudited) Three Months Ended December 29, September December 31, 29, 2012 2012 2011 Net income, as reported $16,616 $728 $17,870 Non-GAAP adjustments: Valuation allowance - 22,785 - Net income, as adjusted $16,616 $23,513 $17,870 Diluted earnings per share, as reported $0.47 $0.02 $0.51 Non-GAAP adjustments: Valuation allowance - 0.64 - Diluted earnings per share, as adjusted $0.47 $0.66 $0.51 PLEXUS CORP. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except per share data) (unaudited) December 29, September 29, 2012 2012 ASSETS Current assets: Cash and cash equivalents $274,183 $297,619 Accounts receivable 290,458 323,210 Inventories 480,992 457,691 Deferred income taxes 2,245 2,232 Prepaid expenses and other 19,010 15,785 Total current assets 1,066,888 1,096,537 Property, plant and equipment, net 281,240 265,191 Deferred income taxes 3,980 4,335 Other 41,541 42,136 Total assets $1,393,649 $1,408,199 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term debt and capital lease obligations $10,310 $10,211 Accounts payable 320,808 341,276 Customer deposits 36,388 36,384 Accrued liabilities: Salaries and wages 37,772 45,450 Other 45,367 46,550 Total current liabilities 450,645 479,871 Long-term debt and capital lease obligations, net of current portion 259,516 260,211 Other liabilities 18,973 19,095 Total non-current liabilities 278,489 279,306 Shareholders' equity: Common stock, $.01 par value, 200,000 shares authorized, 48,856 and 48,851 shares issued, respectively, and 34,840 and 35,097 shares outstanding, respectively 489 489 Additional paid-in-capital 438,379 435,546 Common stock held in treasury, at cost, 14,016 and 13,754, respectively (406,180) (400,110) Retained earnings 613,529 596,913 Accumulated other comprehensive income 18,298 16,184 Total shareholders' equity 664,515 649,022 Total liabilities and shareholders' equity $1,393,649 $1,408,199 ### ------------------------------------------------------------------------------ This announcement is distributed by Thomson Reuters on behalf of Thomson Reuters clients. The owner of this announcement warrants that: (i) the releases contained herein are protected by copyright and other applicable laws; and (ii) they are solely responsible for the content, accuracy and originality of the information contained therein. Source: Plexus via Thomson Reuters ONE HUG#1670958
Plexus : Plexus Corp. Reports First Quarter Results
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