2013-01-16 22:03:13 -
January 16, 2013
* Fiscal first quarter revenue of $531 Million, EPS of $0.47
* Initiates Q2 fiscal 2013 revenue guidance of $550 - $580 Million
NEENAH, WI - January 16, 2013 - Plexus Corp. (NASDAQ: PLXS), today announced
financial results for its fiscal first quarter ended December 29, 2012.
Three Months Ended
-----------------------------------------------------------
December 29, 2012 September December
29, 2012 31, 2011
(US$ in thousands, Q1 F13 Q4 F12 Q1 F12
except EPS)
------------------- ------------------- -----------------
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)
* Revenue: $531 million, consistent with our updated guidance
* Diluted EPS: $0.47, including $0.08 per share of stock-based compensation
expense
* Return on invested capital (ROIC): 12.6%
Q2 Fiscal 2013 Guidance
* Revenue: $550 to $580 million
* Diluted 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 support the 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
* ROIC 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.
* Cash 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.
* Top 10 customers comprised 56% of revenue during the quarter, up 1
percentage point from the previous quarter.
* Cash 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
www.media-server.com/m/p/27f372dr
Replay: The call will be archived until February 15, 2013 at midnight
Eastern Time
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
ginger.jones@plexus.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 ended September 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 September December
29, 2012 29, 2012 31, 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 $640,992 $623,021 $610,666
capital
ROIC 12.6% 15.5% 14.2%
---------------- ----------------- ---------------
December 29, 2012 September 29, 2012
------------------- ----------------------
Equity $664,515 $649,022
Plus:
Debt - current 10,310 10,211
Debt - non- 259,516 260,211
current
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 March December October
29, 2012 30, 2012 31, 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
-------------- ---------------
###
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Source: Plexus via Thomson Reuters ONE
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