Initiates Q4 Revenue Guidance of $470 – $490 Million
NEENAH, Wis., July 24 /PRNewswire-FirstCall/ — Plexus Corp. (NASDAQ:PLXS) today announced:
— Q3 Fiscal 2008 Results: Revenue for the fiscal 3rd quarter ended June 28, 2008 was $456 million with diluted GAAP EPS of $0.41, including $0.03 per share of stock-based compensation expense.
— Q4 Fiscal 2008 Guidance: The Company established fiscal 4th quarter revenue guidance of $470 to $490 million with EPS, excluding any restructuring charges, in the range of $0.42 to $0.46, including approximately $0.05 per share of stock-based compensation expense.
Dean Foate, President and CEO, commented, “We are very pleased with our 3rd quarter results, with return on invested capital (ROIC) for the quarter of 21%, revenue of $456 million, exceeding our guidance, and EPS of $0.41 at the top end of our guidance range. Sequentially strong performance in our Wireline/Networking and Medical sectors offset a modest decline in our Industrial/Commercial sector and an anticipated $26 million reduction in revenue from our large un-named defense program. Excluding this defense program, revenue grew by a healthy 7.3% sequentially in Q3. We are establishing Q4 revenue guidance of $470 to $490 million. This implies a very strong finish to fiscal 2008, with full-year revenue growth above 19% at the mid-point of the guidance range.”
“We are mindful of concerns about the economy and potential impacts on our customers and their end-market demand” Foate continued, “which could impact our ability to achieve our fourth quarter and full year targets and could affect our outlook for fiscal 2009. Despite those concerns, we are pleased by the strong overall performance projected for fiscal 2008.”
Ginger Jones, Chief Financial Officer, added “Our gross and operating margins were 10.7% and 4.9%, respectively, for the third quarter, a strong result and consistent with our 20-10-5 financial model (20% ROIC target, 10% gross margin target and 5% operating margin target).”
“We are also pleased to announce that our $200 million share repurchase plan was completed at an average price of $26.87.” Jones continued, “The $100 million accelerated share repurchase program was completed in April 2008, resulting in the repurchase of 3.8 million shares at an average price of $26.51. The remaining $100 million open market share repurchase was completed earlier this month and resulted in the repurchase of 3.7 million shares at an average price of $27.25. These repurchases successfully complete the financial recapitalization that was announced on February 25, 2008; we believe that the combination of a moderate amount of debt and returning excess cash to shareholders through the share repurchase program positions us to create significant shareholder value.”
Foate concluded, “Our continued strategic focus is to be the best EMS company in the world at serving customers with products in the mid- to low- volume, higher-mix segment of the market. We expect to continue to make prudent investments to service our customers, such as: the modest expansions previously announced in North America, ongoing strategies to add additional footprint in China and our desire to establish our first regional presence in Central/Eastern Europe. While we expand, we are carefully evaluating the value proposition and long-term viability of each of our United States manufacturing locations to ensure we optimize capacity to deliver intelligent, profitable growth that generates ROIC in excess of our weighted average cost of capital.”
Plexus provides non-GAAP supplemental information. Non-GAAP income statements exclude transactions that are not expected to have an effect on future operations. Such transactions include restructuring costs, as well as the establishment or reduction of the valuation allowance for deferred tax assets. We also provide comparisons excluding our large un-named defense program to facilitate understanding of trends in the balance of our business, due to the episodic nature of orders for that program. These non-GAAP financial data are provided to facilitate meaningful period-to-period comparisons of underlying operational performance by eliminating infrequent or unusual charges. Similar non-GAAP financial measures, including ROIC, are used for internal management assessments because such measures provide additional insight into ongoing financial performance. In particular, we provide ROIC because we believe it offers insight into the metrics that are driving management decisions as well as management’s performance under the tests which 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 sales and marketing focus.
Market Sector Q2 – F08 Q3 – F08
Wireline/Networking $193 M 43% $215 M 47%
Wireless Infrastructure $42 M 9% $41 M 9%
Medical $92 M 20% $99 M 22%
Industrial/Commercial $74 M 17% $72 M 16%
Defense/Security/
Aerospace * $50 M 11% $29 M 6%
Total Revenue $451 M $456 M
* The Defense / Security / Aerospace Sector includes revenue from a large,
un-named defense program of $27 million in Q2 F08 and $1 million in
Q3 F08.
FISCAL Q3 HIGHLIGHTS
— ROIC for the third fiscal quarter was 21%. The Company defines
quarterly ROIC as tax-effected operating income, divided by average
capital employed over a rolling four quarter period. Capital employed
is defined as equity plus debt, less cash and cash equivalents and
short-term investments. In periods including restructuring charges we
also compute adjusted ROIC excluding restructuring costs to better
compare ongoing operations.
— Cash flow provided by operations was approximately $4.6 million for
the quarter.
— Top 10 customers comprised 62% of revenue during the quarter, up 2
percentage points from the previous quarter.
— Juniper Networks Inc., with 23% of revenue, was the only customer
representing 10% or more of revenue for the quarter.
— Capital expenditures for the quarter were $14.0 million.
— Cash Conversion Cycle:
Cash Conversion Cycle Q2 – F08 Q3 – F08
Days in Accounts Receivable 46 Days 48 Days
Days in Inventory 72 Days 77 Days
Days in Accounts Payable (58) Days (57) Days
Annualized Cash Cycle 60 Days 68 Days
Conference Call/Webcast and Replay Information:
What: Plexus Corp.’s Fiscal Q3 Earnings Conference Call
When: Friday, July 25th at 8:30 a.m. Eastern Time
Where: 888-693-3477 or 973-582-2710 with conference ID: 53533515
http://www.videonewswire.com/PLXS/072508/
(requires Windows Media Player)
Replay: The call will be archived until August 1, 2008 at noon Eastern
Time http://www.videonewswire.com/PLXS/072508/or via telephone
replay at 800-642-1687 or 706-645-9291
PIN: 53533515
For further information, please contact:
Ginger Jones, VP and Chief Financial Officer
920-751-5487 or ginger.jones@plexus.com
About Plexus Corp. — The Product Realization Company
Plexus (http://www.plexus.com/) is an award-winning participant in the Electronics Manufacturing Services (EMS) industry, providing product design, supply chain and materials management, manufacturing, test, fulfillment and aftermarket solutions to branded product companies in the Wireline/Networking, Wireless Infrastructure, Medical, Industrial/Commercial and Defense/Security/Aerospace market sectors.
The Company’s unique Focused Factory manufacturing model and global supply chain solutions are strategically enhanced by value-added product design and engineering services. Plexus specializes in mid- to low-volume, higher-mix customer programs that require flexibility, scalability, technology and quality.
Plexus provides award-winning customer service to more than 100 branded product companies in North America, Europe and Asia.
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, including, but not limited to: the economic performance of the electronics, technology and defense industries; the risk of customer delays, changes or cancellations in both ongoing and new programs; the poor visibility of future orders in the defense market sector and the uncertainty of defense appropriations and spending; the effects of the volume of revenue from certain sectors or programs on our margins in particular periods; our ability to secure new customers and maintain its current customer base; the risks of concentration of work for certain customers; material cost fluctuations and the adequate availability of components and related parts for production; the effect of changes in average selling prices; the effect of start-up costs of new programs and facilities, including our recent and planned expansions; the adequacy of restructuring and similar charges as compared to actual expenses; the degree of success and the costs of efforts to improve the financial performance of our Mexican operations and the outcome of our review of our other North American footprint; possible unexpected costs and operating disruption in transitioning programs; the costs and inherent uncertainties of pending litigation; market reaction to the recently completed share repurchase program; the effect of general economic conditions and world events (such as increases in oil prices, terrorism and war in the Middle East); the impact of increased competition; and other risks detailed in the Company’s Securities and Exchange Commission filings (particularly in Part II, Item 1A of our quarterly report on Form 10-Q for the quarter ended March 29, 2008).
PLEXUS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months Ended Nine Months Ended
June 28, June 30, June 28, June 30,
2008 2007 2008 2007
Net sales $456,352 $379,574 $1,365,651 $1,120,584
Cost of sales 407,520 341,052 1,209,714 1,010,765
Gross profit 48,832 38,522 155,937 109,819
Operating expenses:
Selling and
administrative
expenses 26,350 20,169 73,965 61,087
Restructuring costs – – – 932
26,350 20,169 73,965 62,019
Operating income 22,482 18,353 81,972 47,800
Other income (expense):
Interest expense (2,262) (741) (3,720) (2,427)
Interest income 1,827 2,264 6,365 6,728
Miscellaneous
income (expense) (258) (451) (1,086) (1,082)
Income before
income taxes 21,789 19,425 83,531 51,019
Income tax expense 4,357 3,885 16,706 10,204
Net income $17,432 $15,540 $66,825 $40,815
Earnings per share:
Basic $ 0.42 $ 0.34 $1.50 $0.88
Diluted $ 0.41 $ 0.33 $1.48 $0.87
Weighted average
shares outstanding:
Basic 41,962 46,336 44,674 46,291
Diluted 42,481 46,722 45,191 46,704
PLEXUS CORP.
NON-GAAP SUPPLEMENTAL INFORMATION
(in thousands, except per share data)
(unaudited)
Statements of Operations
Three Months Ended Nine Months Ended
June 28, June 30, June 28, June 30,
2008 2007 2008 2007
Net income – GAAP $17,432 $15,540 $66,825 $40,815
Add: Income tax
expense 4,357 3,885 16,706 10,204
Income before
income taxes – GAAP 21,789 19,425 83,531 51,019
Add: Restructuring
costs* – – – 932
Income before
income taxes and
excluding
restructuring
costs – Non-GAAP 21,789 19,425 83,531 51,951
Income tax
expense – Non-GAAP 4,357 3,885 16,706 10,390
Net income –
Non-GAAP $17,432 $15,540 $66,825 $41,561
Earnings per share –
Non-GAAP:
Basic $0.42 $0.34 $1.50 $0.90
Diluted $0.41 $0.33 $1.48 $0.89
Weighted average
shares outstanding:
Basic 41,962 46,336 44,674 46,291
Diluted 42,481 46,722 45,191 46,704
* Summary of restructuring costs
Restructuring costs:
Severance costs $- $- $- $932
ROIC Calculation
Nine Months Ended
June 28, 2008
Operating income $81,972
Annualized operating income 109,296
Tax rate (excluding unusual charges) x 20%
Tax impact – 21,859
Operating income (tax effected) 87,437
Average capital employed $416,088
ROIC 21.0%
Average Capital
Sept 29, 2007 Dec 29, 2007 Mar 29, 2008 Jun 29, 2008 Employed
Equity $573,265 $604,792 $531,164 $472,846
Plus:
Debt –
current 1,720 1,815 1,581 1,638
Debt –
non-current 25,082 24,681 24,456 174,132
Less:
Cash and
cash
equiva-
lents (154,109) (158,547) (144,165) (206,499)
Short-term
invest-
ments (55,000) (54,500) – –
$390,958 $418,241 $413,036 $442,117 $416,088
PLEXUS CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(unaudited)
June 28, September 29,
2008 2007
ASSETS
Current assets:
Cash and cash equivalents $206,499 $154,109
Short-term investments – 55,000
Accounts receivable 241,099 230,826
Inventories 342,309 275,854
Deferred income taxes 14,888 12,932
Prepaid expenses and other 7,421 5,434
Total current assets 812,216 734,155
Property, plant and equipment, net 171,366 159,517
Goodwill, net 7,884 8,062
Deferred income taxes 2,399 2,310
Other 15,954 12,472
Total assets $1,009,819 $916,516
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt and
capital lease obligations $1,638 $1,720
Accounts payable 252,182 237,034
Customer deposits 22,267 10,381
Accrued liabilities:
Salaries and wages 40,816 23,149
Other 29,886 34,755
Total current liabilities 346,789 307,039
Long-term debt and capital
lease obligations, net of current portion 174,132 25,082
Other liabilities 14,874 9,372
Deferred income taxes 1,178 1,758
Shareholders’ equity:
Common stock, $.01 par value,
200,000 shares authorized,
46,677 and 46,402 shares issued,
respectively, and 39,910
and 46,402 shares outstanding, respectively 467 464
Additional paid-in-capital 348,675 336,603
Common stock held in treasury,
at cost, 6,767 shares and
0 shares, respectively (181,025) –
Retained earnings 292,389 224,586
Accumulated other comprehensive income 12,340 11,612
Total shareholders’ equity 472,846 573,265
Total liabilities and shareholders’
equity $1,009,819 $916,516
First Call Analyst:
FCMN Contact:
Source: Plexus Corp.
CONTACT: Ginger Jones, VP and Chief Financial Officer of Plexus Corp.,
+1-920-751-5487, ginger.jones@plexus.com
Web site: http://www.plexus.com/
