Plexus Announces Q3 Revenue of $380 Million and EPS of $0.33

Initiates Q4 Revenue Guidance of $425 – $440 Million

NEENAH, Wis., July 25 /PRNewswire-FirstCall/ — Plexus Corp. (NASDAQ:PLXS) today announced:

  —  Q3 ’07 Results:  Revenue for the fiscal 3rd quarter ended June 30,
2007 was $380 million with diluted GAAP EPS of $0.33, including
$0.02 per share of stock option expense.

— Q4 ’07 Guidance: The Company established fiscal 4th quarter revenue
guidance of $425 to $440 million with EPS, excluding any restructuring
charges, in the range of $0.45 to $0.50, including approximately $0.03
per share of stock option expense.

Dean Foate, President and CEO, commented, “Q3 results exceeded our guidance, driven primarily by better than expected demand from our Medical market sector. Looking forward we are expecting a significant revenue increase in Q4 driven by growth in all of our market sectors with the exception of Medical. Notably, the Defense / Security / Aerospace market sector is expected to be up over 160%, as we anticipate delivering the bulk of the orders for a large defense program that began production in Q3.”

“Additionally,” Foate continued, “Q3 was another strong quarter of new business development activity, adding more than $130 million (annualized and when fully ramped) of new program revenue that included a follow-on order worth approximately $25 million for continued production of the large defense program for deliveries in Q1 of fiscal 2008. As we always note, our quarter-to-quarter results can and do vary significantly as a result of the timing of orders, our mix of business and other factors.”

Gordon Bitter, Chief Financial Officer, added, “The 10.1% gross margin achieved in the fiscal third quarter was driven by solid operational execution, despite wider losses in Mexico primarily to provide for a customer disengagement. Our Mexican site is strategically important, and we are committed to improving its financial performance. We are also executing our plan to upgrade the facility’s supply chain and manufacturing capabilities, as well as leadership, to better align our service offering with customer requirements. Moderating the impact of the Mexico loss in Q3, we received cash and recognized revenue in the U.S. on shipments of a financially distressed customer’s written-down inventory.”

Foate concluded, “Plexus’ global footprint and operating model are aligned to provide a competitive advantage for customers with mid- to low-volume, higher-mix requirements in the market sectors we target. We believe our commitment to flawless execution delivers superior performance at a competitive price for our customers, which creates value for our shareholders as we focus on the goal of consistently delivering Return on Invested Capital (ROIC) in excess of our Weighted Average Cost of Capital (WACC).”

Plexus provides non-GAAP supplemental information. These 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. 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 are used for internal management assessments because such measures provide additional insight into ongoing financial performance. Please refer to the attached accompanying reconciliations of the GAAP net income and EPS to the non-GAAP supplemental data.


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                   Q3 – Fiscal 2007        Q2 – Fiscal 2007
Wireline/Networking 46% 45%
Wireless Infrastructure 9% 8%
Medical 24% 25%
Industrial/Commercial 14% 16%
Defense/Security/Aerospace 7% 6%


— Annualized ROIC was 14.7%. The Company defines ROIC as tax-effected
operating income, excluding restructuring costs, divided by average
capital employed, which is equity plus debt, less cash and cash
equivalents and short-term investments.
— Cash flow provided by operations was approximately $14.8 million for
the quarter.
— Top 10 customers comprised 64% of sales during the quarter, up
5 percentage points from the previous quarter.
— Juniper Networks Inc., with 24% of sales, was the only customer
representing 10% or more of revenues for the quarter.
— Capital expenditures for the quarter were $7.8 million.
— Cash Conversion Cycle:

Cash Conversion Cycle Q3 – Fiscal 2007 Q2 – Fiscal 2007
Days in Accounts Receivable 48 Days 49 Days
Days in Inventory 68 Days 68 Days
Days in Accounts Payable (53) Days (54) Days
Annualized Cash Cycle 63 Days 63 Days

Conference Call/Webcast and Replay Information

What: Plexus Corp.’s Fiscal Q3 Earnings Conference Call

When: Thursday, July 26th at 8:30 a.m. Eastern Time

Where: 800-514-0843 or 973-935-8412 with conference ID: 8952440
(requires Windows Media Player)

Replay: The call will be archived until August 3, 2007 at noon Eastern
or via telephone replay at 877-519-4471 or 973-341-3080
PIN: 8952440

About Plexus Corp. — The Product Realization Company

Plexus ( 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,” “anticipate,” “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 industry; the Company’s 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 planned expansions in Asia; 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 its Mexican operations; possible unexpected costs and operating disruption in transitioning programs; the costs and inherent uncertainties of pending litigation; the effect of general economic conditions and world events (such as 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.

                               PLEXUS CORP.
(in thousands, except per share data)

Three Months Ended Nine Months Ended
June 30, July 1, June 30, July 1,
2007 2006 2007 2006

Net sales $379,574 $397,398 $1,120,584 $1,063,615
Cost of sales 341,052 351,894 1,010,765 949,796

Gross profit 38,522 45,504 109,819 113,819

Operating expenses:
Selling and administrative
expenses 20,169 21,554 61,087 58,084
Restructuring costs – – 932 –
20,169 21,554 62,019 58,084

Operating income 18,353 23,950 47,800 55,735

Other income (expense):
Interest expense (741) (821) (2,427) (2,652)
Interest income 2,264 1,654 6,728 4,226
Miscellaneous income
(expense) (451) 637 (1,082) 656

Income before income
taxes 19,425 25,420 51,019 57,965

Income tax expense 3,885 328 10,204 579

Net income $15,540 $25,092 $40,815 $57,386

Earnings per share:
Basic $0.34 $0.55 $0.88 $1.28
Diluted $0.33 $0.53 $0.87 $1.24

Weighted average shares
Basic 46,336 45,848 46,291 44,793
Diluted 46,722 47,274 46,704 46,391

(in thousands, except per share data)

Three Months Ended Nine Months Ended
June 30, July 1, June 30, July 1,
2007 2006 2007 2006

Net income – GAAP $15,540 $25,092 $40,815 $57,386

Add income tax expense 3,885 328 10,204 579

Income before income
taxes – GAAP 19,425 25,420 51,019 57,965

Add: Restructuring costs* – – 932 –

Income before income taxes
and excluding restructuring
costs – Non-GAAP 19,425 25,420 51,951 57,965

Income tax expense –
Non-GAAP 3,885 328 10,390 579

Net income – Non-GAAP $15,540 $25,092 $41,561 $57,386

Earnings per share –
Basic $0.34 $0.55 $0.90 $1.28
Diluted $0.33 $0.53 $0.89 $1.24

Weighted average shares
Basic 46,336 45,848 46,291 44,793
Diluted 46,722 47,274 46,704 46,391

* Summary of restructuring costs

Restructuring costs:
Lease exit costs and other $- $- $- $-
Asset impairments – – – –
Severance costs – – 932 –
Total restructuring costs $- $- $932 $-

(in thousands, except per share data)

June 30, September 30,
2007 2006
Current assets:
Cash and cash equivalents $145,206 $164,912
Short-term investments 45,000 30,000
Accounts receivable 199,131 209,737
Inventories 253,763 224,342
Deferred income taxes 11,482 10,232
Prepaid expenses and other 6,173 6,226

Total current assets 660,755 645,449

Property, plant and equipment, net 152,997 134,437
Goodwill, net 7,941 7,400
Deferred income taxes 3,665 4,542
Other 11,844 9,634

Total assets $837,202 $801,462

Current liabilities:
Current portion of capital lease obligations $1,701 $997
Accounts payable 196,617 215,332
Customer deposits 7,943 7,091
Accrued liabilities:
Salaries and wages 26,390 33,153
Other 28,990 29,808

Total current liabilities 261,641 286,381

Capital lease obligations 25,460 25,653
Other liabilities 9,664 7,861

Shareholders’ equity:
Common stock, $.01 par value, 200,000 shares
authorized, 46,356 and 46,217 shares issued
and outstanding, respectively 464 462
Additional paid-in-capital 329,160 312,785
Retained earnings 199,683 158,868
Accumulated other comprehensive income 11,130 9,452

Total shareholders’ equity 540,437 481,567

Total liabilities and shareholders’
equity $837,202 $801,462

First Call Analyst:
FCMN Contact:

Source: Plexus Corp.