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8-K - FORM 8-K - PLEXUS CORP | c54306e8vk.htm |
Exhibit 99.1
Plexus Reports Fiscal Fourth Quarter Revenue of $393 Million and EPS of $0.38
Initiates Q1 Revenue Guidance of $405 $430 Million
NEENAH, WI, October 28, 2009 Plexus Corp. (Nasdaq: PLXS) today announced:
Q4 Fiscal 2009 Results (quarter ended October 3, 2009):
| Revenue: $393 million, relative to guidance of $380 to $405 million. | ||
| Diluted EPS: $0.38, including $0.04 per share of stock-based compensation expense, relative to guidance of $0.27 to $0.32. |
Q1 Fiscal 2010 Guidance:
| Revenue: $405 to $430 million. | ||
| Diluted EPS: $0.31 to $0.36, excluding any restructuring charges and including approximately $0.05 per share of stock-based compensation expense. |
Dean Foate, President and CEO, commented, Fiscal fourth quarter revenues grew 4% sequentially, the
first sequential increase in revenue since the fourth fiscal quarter of 2008. While overall
revenues were within our guidance range, we experienced significant demand volatility during the
quarter. When compared to our expectations at the time we set guidance for the quarter, our
Wireless and Industrial/Commercial sectors performed substantially better, while our
Wireline/Networking and Medical sectors did not perform as well. Revenues in the
Defense/Security/Aerospace sector grew during the quarter, although slightly below earlier
expectations. Our pace of new business wins continues at a healthy
level. During Q4 we won 13 new
manufacturing programs that we currently anticipate will generate approximately $122 million in
annualized revenue when fully ramped into production over the coming quarters, subject to risks
around the timing and ultimate realization of the forecasted revenues.
Mr. Foate continued, We currently anticipate modest revenue growth in our fiscal first quarter of
2010 as we benefit from the ramp of new business wins and signs of improving customer demand. We
are establishing fiscal first quarter revenue guidance of $405 to $430 million with diluted EPS of
$0.31 to $0.36, excluding any restructuring charges and including
approximately $0.05 per share of
stock-based compensation expense.
Ginger Jones, Vice President and CFO, commented Gross and operating margins were 9.6% and 3.8%,
respectively, for the fourth quarter, consistent with our expectations. Our diluted EPS for Q4 was
particularly impacted by one significant item a lower tax rate for the full year than was used
when we established our guidance for this quarter. This reduction in tax rate is the result of
lower than anticipated earnings in higher-tax jurisdictions, primarily the United States.
Consequently, diluted EPS for the quarter reflects a $0.08 benefit associated with this final tax
rate. Excluding the benefit from the lower tax rate, EPS would have been at the mid-point of our
original guidance and consistent with our revenue level. Finally, fiscal 2009 has been an
excellent year for cash generation, with free cash flow of approximately $46 million in the fourth
quarter and $113 million for the full fiscal year.
Mr. Foate concluded, Fiscal 2009 was a difficult year as we experienced our first full-year
decline in revenue since fiscal 2003. Before we put fiscal 2009 in the rear-view mirror, it
is important to acknowledge that fiscal 2009 was a relative victory as our revenue declined just
12 percent while many of our competitors experienced declines exceeding 20 percent. I believe our
team managed well in a
difficult environment, moving quickly to re-align costs. While our financial metrics were below
our goals, we continued to be an industry leader in profitability and generated strong cash flows.
Importantly, we gained significant share with several of our customers while we experienced record
new business wins during the fiscal year. We executed prudently on capacity investments to
support anticipated growth. This relative victory in fiscal 2009 demonstrates the increasing
strength of the Plexus brand. I believe our unique value proposition helps create competitive
advantage for customers with product realization service requirements in the mid- to low-volume,
higher-mix segment of the electronic manufacturing marketplace. Looking ahead to fiscal 2010, we
currently anticipate returning to growth. But, given the current macroeconomic environment and the
uncertainty in customers forecasts, we are refraining from providing full year fiscal 2010 revenue
targets.
Plexus provides non-GAAP supplemental information. Non-GAAP income statements exclude transactions
such as restructuring costs, goodwill impairment and discrete tax adjustments, that are not
expected to have an effect on future operations. Non-GAAP financial data is provided to facilitate
meaningful period-to-period comparisons of underlying operational performance by eliminating
infrequent or unusual charges. Similar non-GAAP financial measures, including return on invested
capital (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
managements 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 Companys sales and marketing focus.
Market Sector | Q4 F09 | Q3 F09 | F08 | F09 | ||||||||||||||||||||
Wireline/Networking* |
$ | 166 M | 42 | % | $ | 180 M | 47 | % | $ | 803 M | $ | 719 M | ||||||||||||
Wireless Infrastructure* |
$ | 53 M | 13 | % | $ | 37 M | 10 | % | $ | 175 M | $ | 174 M | ||||||||||||
Medical |
$ | 70 M | 18 | % | $ | 80 M | 21 | % | $ | 383 M | $ | 352 M | ||||||||||||
Industrial/Commercial |
$ | 62 M | 16 | % | $ | 46 M | 12 | % | $ | 288 M | $ | 213 M | ||||||||||||
Defense/Security/Aerospace |
$ | 42 M | 11 | % | $ | 36 M | 10 | % | $ | 193 M | $ | 159 M | ||||||||||||
Total Revenue |
$ | 393 M | $ | 379 M | $ | 1,842 M | $ | 1,617 M |
* | Q3 F09 revenues in this table have been revised from the amounts disclosed in the third fiscal quarter to reflect the movement of $4 million for one customer from the Wireline/Networking sector to the Wireless Infrastructure sector. |
FISCAL Q4 SUPPLEMENTAL INFORMATION
| ROIC for the fiscal fourth quarter was 13.2%. The Company defines ROIC as tax-effected annualized operating income divided by average invested capital over a rolling five-quarter period. Invested capital is defined as equity plus debt, less cash and cash equivalents and short-term investments. In periods where restructuring or non-cash goodwill impairment charges were incurred, such as the fiscal first and second quarters of 2009, we compute adjusted ROIC excluding these costs to better compare ongoing operations. | |
| Cash flow provided by operations was approximately $61.0 million for the quarter. Capital expenditures for the quarter were $15.2 million. Free cash flow was approximately $45.8 million for the quarter. 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, down 1 percentage point from the previous quarter. |
| Juniper Networks, Inc., with 17% of revenue, was the only customer representing 10% or more of revenue for the quarter. | |
| Cash Conversion Cycle: |
Cash Conversion Cycle | Q4 F09 | Q3 F09 | ||||||
Days in Accounts Receivable |
45 Days | 49 Days | ||||||
Days in Inventory |
83 Days | 83 Days | ||||||
Days in Accounts Payable |
(60) Days | (55) Days | ||||||
Annualized Cash Cycle |
68 Days | 77 Days |
Conference Call/Webcast and Replay Information:
What:
|
Plexus Corp.s Fiscal Q4 Earnings Conference Call | |
When:
|
Thursday, October 29th at 8:30 a.m. Eastern Time | |
Where:
|
888-693-3477 or 973-582-2710 with conference ID: 33214069 | |
http://www.videonewswire.com/PLXS/102909 | ||
(requires Windows Media Player) | ||
Replay:
|
The call will be archived until November 5, 2009 at midnight Eastern Time | |
http://www.videonewswire.com/PLXS/102909 | ||
or via telephone replay at 800-642-1687 or 706-645-9291 | ||
PIN: 33214069 |
For further information, please contact:
Ginger Jones, VP and Chief Financial Officer
920-751-5487 or ginger.jones@plexus.com
Ginger Jones, VP and Chief Financial Officer
920-751-5487 or ginger.jones@plexus.com
About Plexus Corp. The Product Realization Company
Plexus (www.plexus.com) is an award-winning participant in the Electronic 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 Companys 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 the Asia Pacific region.
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 economic
performance of the industries, sectors and customers we serve; the risk of customer delays, changes
or cancellations in both ongoing and new programs; the poor visibility of future orders,
particularly in view of current economic conditions; 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
relative to new customers, including our recently announced arrangements with The Coca-Cola
Company, which risks include customer delays, start-up costs, potential inability to execute, the
establishment of appropriate terms of agreement, 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; 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 weakness of the global economy and the continuing instability of the
global financial markets and banking system, including the potential inability on our part or that
of our customers or suppliers to access cash investments and credit facilities; material cost
fluctuations and the adequate availability of components and related parts for production,
particularly due to sudden increases in customer demand; the effect of changes in the pricing and
margins of products; the effect of start-up costs of new programs and facilities, including our
recent and planned expansions, such as our new facilities in Hangzhou, China and Oradea, Romania;
the adequacy
of restructuring and similar charges as compared to actual expenses; the risk of unanticipated
costs, unpaid duties and penalties related to an ongoing audit of our import compliance by U.S.
Customs and Border Protection; possible unexpected costs and operating disruption in transitioning
programs; the potential effect of world events (such as drug cartel-related violence in Mexico,
changes in oil prices, epidemics, terrorism and war in the Middle East); the impact of increased
competition; and other risks detailed in the Companys Securities and Exchange Commission filings
(particularly in Part II, Item 1A of our quarterly report on Form 10-Q for the quarter ended July
4, 2009).
(financial tables follow)
PLEXUS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months Ended | Twelve Months Ended | |||||||||||||||
October 3, | September 27, | October 3, | September 27, | |||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
Net sales |
$ | 392,975 | $ | 475,970 | $ | 1,616,622 | $ | 1,841,622 | ||||||||
Cost of sales |
355,152 | 426,147 | 1,461,846 | 1,635,861 | ||||||||||||
Gross profit |
37,823 | 49,823 | 154,776 | 205,761 | ||||||||||||
Operating expenses: |
||||||||||||||||
Selling and administrative expenses |
23,034 | 26,850 | 93,138 | 100,815 | ||||||||||||
Goodwill impairment costs |
| | 5,748 | | ||||||||||||
Restructuring costs |
| 2,119 | 2,823 | 2,119 | ||||||||||||
23,034 | 28,969 | 101,709 | 102,934 | |||||||||||||
Operating income |
14,789 | 20,854 | 53,067 | 102,827 | ||||||||||||
Other income (expense): |
||||||||||||||||
Interest expense |
(2,532 | ) | (2,823 | ) | (10,875 | ) | (6,543 | ) | ||||||||
Interest income |
472 | 1,296 | 2,323 | 7,661 | ||||||||||||
Miscellaneous income (expense) |
192 | (245 | ) | 904 | (1,330 | ) | ||||||||||
Income before income taxes |
12,921 | 19,082 | 45,419 | 102,615 | ||||||||||||
Income tax expense (benefit) |
(2,130 | ) | 1,764 | (908 | ) | 18,471 | ||||||||||
Net income |
$ | 15,051 | $ | 17,318 | $ | 46,327 | $ | 84,144 | ||||||||
Earnings per share: |
||||||||||||||||
Basic |
$ | 0.38 | $ | 0.44 | $ | 1.18 | $ | 1.94 | ||||||||
Diluted |
$ | 0.38 | $ | 0.43 | $ | 1.17 | $ | 1.92 | ||||||||
Weighted average shares outstanding: |
||||||||||||||||
Basic |
39,503 | 39,358 | 39,411 | 43,340 | ||||||||||||
Diluted |
40,049 | 39,851 | 39,654 | 43,850 | ||||||||||||
PLEXUS CORP.
NON-GAAP SUPPLEMENTAL INFORMATION
(in thousands, except per share data)
(unaudited)
NON-GAAP SUPPLEMENTAL INFORMATION
(in thousands, except per share data)
(unaudited)
Statements of Operations
Three Months Ended | Twelve Months Ended | |||||||||||||||
October 3, | September 27, | October 3, | September 27, | |||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
Net income GAAP |
$ | 15,051 | $ | 17,318 | $ | 46,327 | $ | 84,144 | ||||||||
Add: Income tax expense (benefit) |
(2,130 | ) | 1,764 | (908 | ) | 18,471 | ||||||||||
Income before income taxes GAAP |
12,921 | 19,082 | 45,419 | 102,615 | ||||||||||||
Add: Goodwill impairment costs |
| | 5,748 | | ||||||||||||
Restructuring costs* |
| 2,119 | 2,823 | 2,119 | ||||||||||||
Income before income taxes, excluding
impairment and restructuring costs
Non-GAAP |
12,921 | 21,201 | 53,990 | 104,734 | ||||||||||||
Income tax expense (benefit) Non-GAAP** |
(2,130 | ) | 1,960 | 1,537 | 18,852 | |||||||||||
Net income Non-GAAP |
$ | 15,051 | $ | 19,241 | $ | 52,453 | $ | 85,882 | ||||||||
Earnings per share Non-GAAP: |
||||||||||||||||
Basic |
$ | 0.38 | $ | 0.49 | $ | 1.33 | $ | 1.98 | ||||||||
Diluted |
$ | 0.38 | $ | 0.48 | $ | 1.32 | $ | 1.96 | ||||||||
Weighted average shares outstanding: |
||||||||||||||||
Basic |
39,503 | 39,358 | 39,411 | 43,340 | ||||||||||||
Diluted |
40,049 | 39,851 | 39,654 | 43,850 | ||||||||||||
* Summary of restructuring costs |
||||||||||||||||
Severance costs |
$ | | $ | 2,119 | $ | 1,948 | $ | 2,119 | ||||||||
Other exit costs |
| | 875 | | ||||||||||||
Total restructuring costs |
$ | | $ | 2,119 | $ | 2,823 | $ | 2,119 | ||||||||
** Impact to provision related to finalization of audit and change in laws | ||||||||||||||||
Impact to provision related to the finalization
of
federal and state income tax audits and changes
in state income tax laws |
$ | | $ | | $ | 1,377 | $ | | ||||||||
PLEXUS CORP.
NON-GAAP SUPPLEMENTAL INFORMATION
(in thousands, except per share data)
(unaudited)
NON-GAAP SUPPLEMENTAL INFORMATION
(in thousands, except per share data)
(unaudited)
Operating Margin Calculation
Three Months | Twelve Months | |||||||||||||||
Ended | Operating | Ended | Operating | |||||||||||||
October 3, 2009 | Margin % | October 3, 2009 | Margin % | |||||||||||||
Operating income |
$ | 14,789 | 3.8 | % | $ | 53,067 | 3.3 | % | ||||||||
Goodwill impairment |
| 5,748 | ||||||||||||||
Restructuring costs |
| 2,823 | ||||||||||||||
Operating income
excluding
restructuring costs |
$ | 14,789 | 3.8 | % | $ | 61,638 | 3.8 | % | ||||||||
ROIC Calculation
Twelve Months | ||||
Ended | ||||
October 3, 2009 | ||||
Operating income |
$ | 53,067 | ||
Add: Unusual (restructuring and impairment)
Charges |
8,571 | |||
Operating income (excluding unusual charges) |
61,638 | |||
Tax rate (excluding unusual charges) |
x 2.85 | % | ||
Tax impact |
-1,757 | |||
Operating income (tax-effected) |
$ | 59,881 | ||
Average invested capital |
$ | 453,611 | ||
ROIC |
13.2 | % | ||
Average | ||||||||||||||||||||||||
Capital | ||||||||||||||||||||||||
Oct 3, 2009 | Jul 4, 2009 | Apr 4, 2009 | Jan 3, 2009 | Sept 27, 2008 | Employed | |||||||||||||||||||
Equity |
$ | 527,446 | $ | 508,268 | $ | 494,046 | $ | 485,716 | $ | 473,945 | ||||||||||||||
Plus: |
||||||||||||||||||||||||
Debt current |
16,907 | 17,000 | 16,921 | 17,014 | 16,694 | |||||||||||||||||||
Debt non-current |
133,936 | 138,301 | 141,376 | 145,517 | 154,532 | |||||||||||||||||||
Less: |
||||||||||||||||||||||||
Cash and cash
equivalents |
(258,382 | ) | (215,493 | ) | (201,330 | ) | (178,391 | ) | (165,970 | ) | ||||||||||||||
$ | 419,907 | $ | 448,076 | $ | 451,013 | $ | 469,856 | $ | 479,201 | $ | 453,611 | |||||||||||||
PLEXUS CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(unaudited)
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(unaudited)
October 3, | September 27, | |||||||
2009 | 2008 | |||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 258,382 | $ | 165,970 | ||||
Accounts receivable |
193,222 | 253,496 | ||||||
Inventories |
322,352 | 340,244 | ||||||
Deferred income taxes |
15,057 | 15,517 | ||||||
Prepaid expenses and other |
9,421 | 11,742 | ||||||
Total current assets |
798,434 | 786,969 | ||||||
Property, plant and equipment, net |
197,469 | 179,123 | ||||||
Goodwill, net |
| 7,275 | ||||||
Deferred income taxes |
10,305 | 2,620 | ||||||
Other |
16,464 | 16,243 | ||||||
Total assets |
$ | 1,022,672 | $ | 992,230 | ||||
LIABILITIES AND SHAREHOLDERS EQUITY |
||||||||
Current liabilities: |
||||||||
Current portion of long-term debt and capital lease obligations |
$ | 16,907 | $ | 16,694 | ||||
Accounts payable |
233,061 | 231,638 | ||||||
Customer deposits |
28,180 | 26,863 | ||||||
Accrued liabilities: |
||||||||
Salaries and wages |
28,169 | 41,086 | ||||||
Other |
33,004 | 31,611 | ||||||
Total current liabilities |
339,321 | 347,892 | ||||||
Long-term debt and capital lease obligations, net of current portion |
133,936 | 154,532 | ||||||
Other liabilities |
21,969 | 15,861 | ||||||
Shareholders equity: |
||||||||
Common stock, $.01 par value, 200,000 shares authorized, 46,994 and 46,772 shares issued, respectively, and 39,548 and
39,326 shares outstanding, respectively |
470 | 468 | ||||||
Additional paid-in-capital |
366,371 | 353,105 | ||||||
Common stock held in treasury, at cost, 7,446 shares for both periods |
(200,110 | ) | (200,110 | ) | ||||
Retained earnings |
356,035 | 309,708 | ||||||
Accumulated other comprehensive income |
4,680 | 10,774 | ||||||
Total shareholders equity |
527,446 | 473,945 | ||||||
Total liabilities and shareholders equity |
$ | 1,022,672 | $ | 992,230 | ||||
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