Plexus Announces Fiscal First Quarter Financial Results
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Insights
The reported financial results of Plexus Corp. reflect a slight decline in revenue from the previous quarter and the same period last year, with a revenue of $983 million compared to $1,023,947 in the preceding quarter and $1,093,925 in the previous year. This contraction may signal a cautious outlook for investors, as the company also anticipates a further decrease in revenue for the next quarter. The gross margin and operating margin have also seen a downward trend, which could impact the company's profitability and operational efficiency. The reduction in earnings per share (EPS) from $1.49 in the same quarter last year to $1.04 in the current quarter is another critical factor for shareholders, as it may affect the stock's valuation.
Additionally, the guidance for the upcoming quarter includes restructuring charges that are expected to impact the GAAP diluted EPS. However, the management's focus on cost savings and long-term efficiency improvements, as well as a $50 million share repurchase program, might be viewed positively by the market, as these actions could enhance shareholder value over time. The company's Return on Invested Capital (ROIC) and economic return indicate that while Plexus is generating returns above its capital cost, there has been a decrease from the previous quarters, which requires monitoring for future trends.
Plexus Corp.'s performance in various market sectors shows a significant reliance on the Healthcare/Life Sciences and Industrial sectors, which together account for 83% of their revenue. The reported softening demand in these sectors could be a cause for concern, especially given the company's acknowledgment of inefficiencies within its engineering and manufacturing teams. The business segment data indicates a geographical shift with a notable revenue decrease in the Americas and Asia-Pacific regions, which might suggest regional market challenges or competitive pressures.
The company's strategy of expanding its funnel of qualified manufacturing opportunities to $4.0 billion and winning new manufacturing programs worth $261 million in annualized revenue is an aggressive growth approach. However, the effectiveness of this strategy will depend on the company's ability to convert these opportunities into sustainable revenue streams, particularly in light of the current demand softening.
The operational efficiency of Plexus Corp. is under scrutiny given the planned restructuring actions aimed at reducing fixed costs and operating expenses. The anticipated $20 million in annualized cost savings could improve the company's competitive edge and operational leverage. However, the short-term costs associated with these restructuring efforts, approximately $10 million or $0.32 per share, will need to be weighed against the long-term benefits.
Another aspect to consider is the company's cash cycle days, which have increased from the previous quarter and year. This could indicate slower cash conversion and potential working capital management challenges. The management's attention to working capital optimization and expected improvements in the second half of the fiscal year will be critical to watch, as it impacts liquidity and the company's ability to fund operations and growth initiatives effectively.
NEENAH, WI, Jan. 24, 2024 (GLOBE NEWSWIRE) -- Plexus Corp. (NASDAQ: PLXS) today announced financial results for our fiscal first quarter ended December 30, 2023, and guidance for our fiscal second quarter ending March 30, 2024.
- Reports fiscal first quarter 2024 revenue of
$983 million , GAAP operating margin of4.6% and GAAP diluted EPS of$1.04 , including$0.19 of stock-based compensation expense - Initiates fiscal second quarter 2024 revenue guidance of
$930 million to$970 million with GAAP diluted EPS of$0.48 t o$0.63 , including$0.25 stock-based compensation expense and approximately$0.32 of restructuring charges
| Three Months Ended | ||||||||
| Dec 30, 2023 | Q1F24 Preliminary | Mar 30, 2024 | ||||||
| Q1F24 Results | Results (1) | Q2F24 Guidance | ||||||
| Summary GAAP Items | ||||||||
| Revenue (in millions) | ||||||||
| Operating margin | 4.6 | % | ||||||
| Diluted EPS (2) | ||||||||
| Summary Non-GAAP Items (3) | ||||||||
| Adjusted operating margin (4) | ||||||||
| Adjusted EPS (5) | ||||||||
| Return on invested capital (ROIC) | 10.3 | % | ||||||
| Economic return | 2.1 | % | ||||||
| (1) | Preliminary results issued on January 16, 2024; guidance provided October 25, 2023 was revenue of | ||||||||
| (2) | Includes stock-based compensation expense of | ||||||||
| (3) | Refer to Non-GAAP Supplemental Information in Tables 1 and 2 for additional information regarding non-GAAP financial measures. | ||||||||
| (4) | Excludes restructuring charges of approximately 100 basis points. | ||||||||
| (5) | Excludes restructuring charges of approximately | ||||||||
Fiscal First Quarter 2024 Information
- Won 30 manufacturing programs during the quarter representing
$261 million in annualized revenue when fully ramped into production - Trailing four-quarter manufacturing wins of
$1.05 billion in annualized revenue when fully ramped into production - The Board of Directors approved a new
$50.0 million share repurchase program that will commence upon completion of the current share repurchase authorization, which has$5.7 million remaining
Todd Kelsey, Chief Executive Officer, commented, “Consistent with revised expectations communicated on January 16, 2024, Plexus delivered fiscal first quarter revenue of
Mr. Kelsey continued, “Our go-to-market organization is leveraging the current environment to create significant opportunity for future growth, delivering sequential increases in new manufacturing program wins and in our funnel of qualified manufacturing opportunities. For the fiscal first quarter, our team won 30 new manufacturing programs worth
Mr. Kelsey further commented, “We are guiding fiscal second quarter revenue of
Patrick Jermain, Chief Financial Officer, commented, “We are guiding slightly higher cash cycle days for our fiscal second quarter related to additional working capital investments in support of new program ramps. With significant management focus and attention on working capital optimization, we expect improvement to our cash cycle as we progress through the second half of fiscal 2024. We anticipate this improvement will help deliver positive free cash flow to support future anticipated growth and our recently announced
Mr. Kelsey concluded, “We currently anticipate the fiscal second quarter to represent a revenue trough, with sequential expansion in revenue and operating margin during the second half of fiscal 2024. We expect to deliver improved profitability resulting from the restructuring actions, increased manufacturing revenue and improved utilization of our engineering team, and remain committed to delivering
| Quarterly Comparison | Three Months Ended | ||||||||||
| (in thousands, except EPS) | Dec 30, 2023 | Sep 30, 2023 | Dec 31, 2022 | ||||||||
| Revenue | $ | 982,607 | $ | 1,023,947 | $ | 1,093,925 | |||||
| Gross profit | 88,140 | 96,716 | 101,199 | ||||||||
| Operating income | 45,158 | 53,333 | 57,341 | ||||||||
| Net income | 29,215 | 40,261 | 42,190 | ||||||||
| Diluted EPS | $ | 1.04 | $ | 1.44 | $ | 1.49 | |||||
| Gross margin | 9.0 | % | 9.4 | % | 9.3 | % | |||||
| Operating margin | 4.6 | % | 5.2 | % | 5.2 | % | |||||
| ROIC (1) | 10.3 | % | 13.4 | % | 13.8 | % | |||||
| Economic return (1) | 2.1 | % | 4.4 | % | 4.8 | % | |||||
| (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 operating margin, adjusted net income, adjusted diluted EPS, ROIC and economic return. | |||||||||||
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
| Business Segments ($ in millions) | Three Months Ended | ||||||||||
| Dec 30, 2023 | Sep 30, 2023 | Dec 31, 2022 | |||||||||
| Americas | $ | 334 | $ | 389 | $ | 390 | |||||
| Asia-Pacific | 552 | 557 | 642 | ||||||||
| Europe, Middle East and Africa | 122 | 108 | 89 | ||||||||
| Elimination of inter-segment sales | (25 | ) | (30 | ) | (27 | ) | |||||
| Total Revenue | $ | 983 | $ | 1,024 | $ | 1,094 | |||||
| Market Sectors ($ in millions) | Three Months Ended | |||||||||||||
| Dec 30, 2023 | Sep 30, 2023 | Dec 31, 2022 | ||||||||||||
| Healthcare/Life Sciences | $ | 381 | 39 | % | $ | 449 | 44 | % | $ | 488 | 45 | % | ||
| Industrial | 435 | 44 | % | 417 | 41 | % | 472 | 43 | % | |||||
| Aerospace/Defense | 167 | 17 | % | 158 | 15 | % | 134 | 12 | % | |||||
| Total Revenue | $ | 983 | $ | 1,024 | $ | 1,094 | ||||||||
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 additional information on non-GAAP measures, please refer to the attached Non-GAAP Supplemental Information tables.
ROIC and Economic Return
ROIC for the first quarter of fiscal 2024 was
Free Cash Flow
Plexus defines free cash flow as cash flows provided by operations less capital expenditures. For the three months ended December 30, 2023, cash flows used in operations were
| Cash Cycle Days | Three Months Ended | ||||||
| Dec 30, 2023 | Sep 30, 2023 | Dec 31, 2022 | |||||
| Days in Accounts Receivable | 61 | 59 | 61 | ||||
| Days in Contract Assets | 12 | 13 | 10 | ||||
| Days in Inventory | 161 | 154 | 151 | ||||
| Days in Accounts Payable | (66) | (64) | (69) | ||||
| Days in Advanced Payments (1) | (73) | (75) | (70) | ||||
| Annualized Cash Cycle (2) | 95 | 87 | 83 | ||||
| (1) | Includes a reclassification in the presentation of advanced payments from customers reflected in prior period amounts. As of December 31, 2022, the impact of this reclassification was an increase in the Company's days in advanced payments and a reduction in annualized cash cycle by 23 days. | |||||
| (2) | Plexus calculates 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 advanced payments. | |||||
Conference Call and Webcast Information
| What: | Plexus Fiscal 2024 Q1 Earnings Conference Call and Webcast |
| When: | Thursday, January 25, 2024 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, plexus.com. Participants can also join utilizing the links below: |
| Audio conferencing link: https://register.vevent.com/register/BI5b4476caa76d41bfaaaf4fb0a35326ad | |
| Webcast link: https://edge.media-server.com/mmc/p/dznpgcq9 | |
| Replay: | The webcast will be archived on the Plexus website and will be available as on-demand for 12 months |
Investor and Media Contact
Shawn Harrison
+1.920.969.6325
shawn.harrison@plexus.com
About Plexus
Since 1979, Plexus has been partnering with companies to create the products that build a better world. We are a team of over 20,000 individuals who are dedicated to providing Design and Development, Supply Chain Solutions, New Product Introduction, Manufacturing and Sustaining 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 companies by providing innovative, comprehensive solutions throughout a 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 effect of inflationary pressures on our costs of production, profitability, and on the economic outlook of our markets; the effects of shortages and delays in obtaining components as a result of economic cycles, natural disasters or otherwise; the risk of customer delays, changes, cancellations or forecast inaccuracies in both ongoing and new programs; the effects of our Xiamen, China subsidiary being placed on the Bureau of Industry and Security's Unverified List; the ability to realize anticipated savings from restructuring or similar actions, as well as the adequacy of related charges as compared to actual expenses; 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 outcome of litigation and regulatory investigations and proceedings, including the results of any challenges with regard to such outcomes; 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; increasing regulatory and compliance requirements; any tax law changes and 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; the potential effect of other world or local events or other events outside our control (such as the conflict between Russia and Ukraine, conflict in the Middle East, escalating tensions between China and Taiwan or China and the United States, 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 2023 Form 10-K.
| PLEXUS CORP. AND SUBSIDIARIES | |||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||
| (in thousands, except per share data) | |||||||
| (unaudited) | |||||||
| Three Months Ended | |||||||
| Dec 30, | Dec 31, | ||||||
| 2023 | 2022 | ||||||
| Net sales | $ | 982,607 | $ | 1,093,925 | |||
| Cost of sales | 894,467 | 992,726 | |||||
| Gross profit | 88,140 | 101,199 | |||||
| Operating expenses: | |||||||
| Selling and administrative expenses | 42,982 | 43,858 | |||||
| Operating income | 45,158 | 57,341 | |||||
| Other income (expense): | |||||||
| Interest expense | (7,617 | ) | (6,894 | ) | |||
| Interest income | 808 | 934 | |||||
| Miscellaneous, net | (3,502 | ) | (1,944 | ) | |||
| Income before income taxes | 34,847 | 49,437 | |||||
| Income tax expense | 5,632 | 7,247 | |||||
| Net income | $ | 29,215 | $ | 42,190 | |||
| Earnings per share: | |||||||
| Basic | $ | 1.06 | $ | 1.53 | |||
| Diluted | $ | 1.04 | $ | 1.49 | |||
| Weighted average shares outstanding: | |||||||
| Basic | 27,485 | 27,639 | |||||
| Diluted | 28,013 | 28,305 | |||||
| PLEXUS CORP. AND SUBSIDIARIES | |||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
| (in thousands, except per share data) | |||||||
| (unaudited) | |||||||
| Dec 30, | Sep 30, | ||||||
| 2023 | 2023 | ||||||
| ASSETS | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 231,982 | $ | 256,233 | |||
| Restricted cash | 430 | 421 | |||||
| Accounts receivable | 656,207 | 661,542 | |||||
| Contract assets | 131,640 | 142,297 | |||||
| Inventories | 1,575,094 | 1,562,037 | |||||
| Prepaid expenses and other | 54,879 | 49,693 | |||||
| Total current assets | 2,650,232 | 2,672,223 | |||||
| Property, plant and equipment, net | 498,979 | 492,036 | |||||
| Operating lease right-of-use assets | 67,420 | 69,363 | |||||
| Deferred income taxes | 62,721 | 62,590 | |||||
| Other assets | 25,261 | 24,960 | |||||
| Total non-current assets | 654,381 | 648,949 | |||||
| Total assets | $ | 3,304,613 | $ | 3,321,172 | |||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
| Current liabilities: | |||||||
| Current portion of long-term debt and finance lease obligations | $ | 251,119 | $ | 240,205 | |||
| Accounts payable | 647,386 | 646,610 | |||||
| Advanced payments from customers | 709,709 | 760,351 | |||||
| Accrued salaries and wages | 74,828 | 94,099 | |||||
| Other accrued liabilities | 60,520 | 71,402 | |||||
| Total current liabilities | 1,743,562 | 1,812,667 | |||||
| Long-term debt and finance lease obligations, net of current portion | 192,118 | 190,853 | |||||
| Accrued income taxes payable | 31,382 | 31,382 | |||||
| Long-term operating lease liabilities | 35,989 | 38,552 | |||||
| Deferred income taxes | 4,410 | 4,350 | |||||
| Other liabilities | 30,397 | 28,986 | |||||
| Total non-current liabilities | 294,296 | 294,123 | |||||
| Total liabilities | 2,037,858 | 2,106,790 | |||||
| Shareholders’ equity: | |||||||
| Common stock | 543 | 543 | |||||
| Additional paid-in-capital | 663,542 | 661,270 | |||||
| Common stock held in treasury | (1,134,429 | ) | (1,134,429 | ) | |||
| Retained earnings | 1,740,543 | 1,711,328 | |||||
| Accumulated other comprehensive loss | (3,444 | ) | (24,330 | ) | |||
| Total shareholders’ equity | 1,266,755 | 1,214,382 | |||||
| Total liabilities and shareholders’ equity | $ | 3,304,613 | $ | 3,321,172 | |||
| PLEXUS CORP. AND SUBSIDIARIES | ||||||||||||
| NON-GAAP SUPPLEMENTAL INFORMATION Table 1 (1) | ||||||||||||
| (in thousands, except per share data) | ||||||||||||
| (unaudited) | ||||||||||||
| Three Months Ended | ||||||||||||
| Dec 30, | Sep 30, | Dec 31, | ||||||||||
| 2023 | 2023 | 2022 | ||||||||||
| Operating income, as reported | $ | 45,158 | $ | 53,333 | $ | 57,341 | ||||||
| Operating margin, as reported | 4.6 | % | 5.2 | % | 5.2 | % | ||||||
| Net income, as reported | $ | 29,215 | $ | 40,261 | $ | 42,190 | ||||||
| Diluted earnings per share, as reported | $ | 1.04 | $ | 1.44 | $ | 1.49 | ||||||
| (1) There were no non-GAAP adjustments for all periods presented. | ||||||||||||
| 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 | |||||||||||
| Dec 30, | Sep 30, | Dec 31, | ||||||||||||
| 2023 | 2023 | 2022 | ||||||||||||
| Operating income, as reported | $ | 45,158 | $ | 195,820 | $ | 57,341 | ||||||||
| Restructuring and other charges | + | — | + | 23,094 | + | — | ||||||||
| Adjusted operating income | $ | 45,158 | $ | 218,914 | $ | 57,341 | ||||||||
| x | 4 | x | 4 | |||||||||||
| Adjusted annualized operating income | $ | 180,632 | $ | 218.914 | $ | 229,364 | ||||||||
| Adjusted effective tax rate | x | 16 | % | x | 13 | % | x | 16 | % | |||||
| Tax impact | 28,901 | 28,459 | 36,698 | |||||||||||
| Adjusted operating income (tax-effected) | $ | 151,731 | $ | 190,455 | $ | 192,666 | ||||||||
| Average invested capital | ÷ | $ | 1,479,647 | ÷ | $ | 1,425,626 | ÷ | $ | 1,392,002 | |||||
| ROIC | 10.3 | % | 13.4 | % | 13.8 | % | ||||||||
| Weighted average cost of capital | - | 8.2 | % | - | 9.0 | % | - | 9.0 | % | |||||
| Economic return | 2.1 | % | 4.4 | % | 4.8 | % | ||||||||
| Average Invested Capital Calculations | Dec 30, | Sep 30, | Jul 1, | Apr 1, | Dec 31, | Oct 1, | |||||||||||||||||
| 2023 | 2023 | 2023 | 2023 | 2022 | 2022 | ||||||||||||||||||
| Equity | $ | 1,266,755 | $ | 1,214,382 | $ | 1,184,362 | $ | 1,182,382 | $ | 1,150,259 | $ | 1,095,731 | |||||||||||
| Plus: | |||||||||||||||||||||||
| Debt and finance lease obligations - current | 251,119 | 240,205 | 304,781 | 294,011 | 329,076 | 273,971 | |||||||||||||||||
| Operating lease obligations - current (1) | 9,172 | 8,363 | 8,772 | 8,358 | 8,878 | 7,948 | |||||||||||||||||
| Debt and finance lease obligations - long-term | 192,118 | 190,853 | 187,468 | 188,730 | 187,272 | 187,776 | |||||||||||||||||
| Operating lease obligations - long-term | 35,989 | 38,552 | 40,515 | 31,257 | 32,149 | 33,628 | |||||||||||||||||
| Less: | |||||||||||||||||||||||
| Cash and cash equivalents | (231,982 | ) | (256,233 | ) | (252,965 | ) | (269,664 | ) | (247,880 | ) | (274,805 | ) | |||||||||||
| $ | 1,523,171 | $ | 1,436,122 | $ | 1,472,933 | $ | 1,435,074 | $ | 1,459,754 | $ | 1,324,249 | ||||||||||||
| (1) Included in other accrued liabilities on the Condensed Consolidated Balance Sheets. | |||||||||||||||||||||||
FAQ
What was the fiscal first quarter 2024 revenue reported by Plexus Corp. (PLXS)?
What was the GAAP operating margin for Plexus Corp. (PLXS) in the fiscal first quarter 2024?
What was the GAAP diluted EPS for Plexus Corp. (PLXS) in the fiscal first quarter 2024?
What is the fiscal second quarter 2024 revenue guidance for Plexus Corp. (PLXS)?
How many manufacturing programs did Plexus Corp. (PLXS) win during the quarter?
What is the value of the new share repurchase program approved by Plexus Corp. (PLXS)?
Who commented on Plexus Corp.'s (PLXS) fiscal performance?
What is the CEO's outlook on Plexus Corp.'s (PLXS) future performance?
