Attached files
| file | filename |
|---|---|
| 8-K - 8-K - PLEXUS CORP | a8kcoverpageq4f16.htm |
| EX-99.1 - EXHIBIT 99.1 - PLEXUS CORP | plxsf16q4earningsrelease-e.htm |
FISCAL FOURTH QUARTER 2016
FINANCIAL RESULTS
October 27, 2016
SAFE HARBOR & FAIR DISCLOSURE STATEMENT
2
Any statements made during our call today and information included in the supporting material
that is not historical in nature, such as statements in the future tense and statements that
include "believe," "expect," "intend," "plan," "anticipate," and similar terms and concepts, are
forward-looking statements. Forward-looking statements are not guarantees since there are
inherent difficulties in predicting future results, and actual results could differ materially from
those expressed or implied in the forward-looking statements. For a list of factors that could
cause actual results to differ materially from those discussed, please refer to the Company’s
periodic SEC filings, particularly the risk factors in our Form 10-K filing for the fiscal year ended
October 3, 2015, and the Safe Harbor and Fair Disclosure statement in yesterday’s press release.
Plexus provides non-GAAP supplemental information, such as ROIC, Economic Return, and free
cash flow, because those measures are used for internal management goals and decision
making, and because they provide additional insight into financial performance. In addition,
management uses these and other non-GAAP measures, such as adjusted net income and
adjusted operating margin, to provide a better understanding of core performance for purposes
of period-to-period comparisons. For a full reconciliation of non-GAAP supplemental
information please refer to yesterday’s press release and our periodic SEC filings.
FISCAL FOURTH QUARTER RESULTS
3
Q4F16 Guidance
Jul 20, 2016
Q4F16
Oct 1, 2016
Q3F16
Jul 2, 2016
Q4F16 vs. Q3F16
Revenue ($ millions)
$655 to $685 $653 $668 - 2%
Diluted EPS
$0.56 $0.76 - 26%
Non-GAAP Diluted EPS
excluding special items
$0.76 to $0.84 $0.82 $0.82 Flat
ROIC 13.8%
13.0% + 80 bps
• Strong operating performance delivered solid non-GAAP EPS
• Late quarter softness in Networking/Communications sector
• Mitigated impact of Typhoon Meranti at one of our Xiamen, China facilities
• ROIC improves to 13.8%; 280 bps of Economic Return
TYPHOON MERANTI
September 15, 2016 – Typhoon Meranti made landfall near Xiamen, China
• Effective crisis management protocol mitigated typhoon impact
• Proactive communication and responsive recovery plans enhanced customer
satisfaction
• Operations restored within 3 days
4
Factory Floor – Day 4 Factory Floor – Day 2
$1,062
$884 $808
$1,041
$1,229
$1,461
$1,546
$1,842
$1,617
$2,013
$2,231 $2,307 $2,228
$2,378
$2,654
$2,556
-10%
-5%
0%
5%
10%
15%
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
F01 F02 F03 F04 F05 F06 F07 F08 F09 F10 F11 F12 F13 F14 F15 F16
F16 Result Enduring Goal
Revenue Growth (4%) 12%
Economic Return 280 bps 500 bps
FISCAL 2016 RESULTS
Revenue ($M)
Economic
Return
Economic Return solid despite weak revenue year
5
3.0%
3.5%
4.0%
4.5%
5.0%
5.5%
450
500
550
600
650
700
Q4F15 Q1F16 Q2F16 Q3F16 Q4F16
R
e
ve
n
u
e
$
M
Revenue Adjusted Operating Margin
FISCAL 2016 PERFORMANCE
6
• Rapid forecast decline in early Q1F16 led to unacceptable adjusted operating margins
• Immediately implemented cost reduction and productivity improvement plan
• Achieved target operating margin range in Q3F16, one quarter ahead of plan
• Exceeded target operating margin range in Q4F16
FISCAL 2016 SECTOR REVENUE
Sector F16
Revenue
$M
F16 Revenue
YoY Delta
$M
F16 Revenue
YoY Delta
%
5 YEAR CAGR
Healthcare/Life Sciences $780 $30 4% 11%
Industrial/Commercial $774 $89 13% 8%
Networking/
Communications
$597 ($247) (29%) N/C (10%)
Networking (28%)
Communications 3%
Defense/Security/Aerospace $405 $30 8% 15%
Plexus $2,556 ($98) (4%) 3%
Shift from Networking; Rebranded N/C sector as Communications
CAGR excluding Networking
• 5-Year: 8%
• 6-Year: 10%
Differentiated portfolio supports high-single to low-double digit CAGR
7
FISCAL 2017 FOCUS AREAS
Optimism for Fiscal 2017
• Healthy new business wins
• Record $2.8B funnel of qualified manufacturing opportunities
Passion for Growth and Value Creation
• Goal - Achieve $3B annual run rate as we exit fiscal 2017
• Deliver target operating margin range of 4.7% to 5.0% resulting in strong ROIC
• Meaningful growth and profitability in Europe
• Expand Aftermarket Services portfolio
Competitive Differentiation Drives Exceptional Net Promoter Scores
• Customer Service Excellence
• Operational Excellence - Exceptional quality, on-time, at a fair price
• Leverage “One Plexus” to drive efficiency globally
• Commitment to social responsibility as a full-member of EICC
8
FISCAL FIRST QUARTER
9
Q1F17 Guidance
Revenue
$620 to $650 million
GAAP Diluted EPS
$0.74 to $0.82
• Includes $0.11 stock-based compensation expense
Mid-point of revenue guidance suggests approximately 3% contraction
• Order delays with an Industrial/Commercial customer
• End-market weakness in Communications
Mid-point of EPS guidance suggests strong operating margin
• Resiliency of model due to cost reduction and productivity improvement initiatives
Previously disclosed restructuring activities complete; Guiding GAAP EPS
CUSTOMER SERVICE EXCELLENCE
THANK YOU to the more than 14,000 Plexus team members globally.
Your commitment to Customer Service Excellence led to strong operational
performance with solid Net Promoter Scores!
10
PERFORMANCE BY SECTOR
11
Q4F16
Oct 1, 2016
Q3F16
Jul 2, 2016
Q4F16 vs. Q3F16 Q1F17 Expectations
(percentage points)
Healthcare/ Life
Sciences
$192 29% $207 31% - 7% Up high single
Industrial/
Commercial
$231 35% $202 30% + 14% Down high single
Networking/
Communications
$128 20% $156 23% - 18% Down high single
Defense/ Security/
Aerospace
$102 16% $103 16% - 1% Down mid single
Total Revenue $653 100% $668 100% - 2%
Revenue in millions
MANUFACTURING WINS BY REGION
12
• $200M in annualized manufacturing revenue
when fully ramped (37 programs)
• Second consecutive quarter with wins greater
than $190M
• Strength in AMER region
• EMEA return to healthy level
$122M
$51M
$27M
Q4F16
AMER
APAC
EMEA
Wins Momentum = TFQ Wins / TFQ Revenue
MANUFACTURING WINS BY SECTOR
• Wins balanced across market sectors
• Sector wins supports healthy portfolio
$44M
$51M $69M
$36M
Q4F16
HC/LS
I/C
N/C
D/S/A
13
MANUFACTURING WINS MOMENTUM
Trailing Four Quarters (TFQ) for Manufacturing Wins
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
%
o
f
TFQ
S
al
es
N
ew
W
in
s
($
M
)
TFQ Wins TFQ Wins % of TFQ Sales New Wins
Goal
25%
TFQ
$747M
Quarterly Target: ~ $160M
14
MANUFACTURING FUNNEL
Record manufacturing funnel at $2.8B
HC/LS and I/C funnels particularly strong
Supports the delivery of our differentiated portfolio
15
KEY OPERATIONS METRICS
Operating Margin Target Range: 4.7% to 5.0%
* Represents midpoint of guidance
16
3.0%
3.5%
4.0%
4.5%
5.0%
5.5%
450
500
550
600
650
700
Q1F13 Q2F13 Q3F13 Q4F13 Q1F14 Q2F14 Q3F14 Q4F14 Q1F15 Q2F15 Q3F15 Q4F15 Q1F16 Q2F16 Q3F16 Q4F16 Q1F17*
R
e
ve
n
u
e
$
M
Revenue Adjusted Operating Margin
INCOME STATEMENT
17
Q4F16 Comments
Revenue $653 million Marginally below guidance range from weaker
revenue primarily in Networking/Communications
Gross margin 9.4% Includes a 50 basis point detriment due to losses
incurred from Typhoon Meranti
Adjusted gross margin
excluding special items
9.9% Above guidance range; sequential improvement of
50 basis points from productivity improvement
initiatives
Selling & administrative
expenses
$36.1 million Includes $5.2 million from the acceleration of
stock-based compensation expense related to our
former CEO
Operating margin 3.6% Includes $9.9 million of special charges
Adjusted operating margin
excluding special items
5.1% At high end of guidance range and above target
range of 4.7 to 5.0%
Diluted EPS $0.56 Includes $9.2 million or $0.26 per share of special
charges
Non-GAAP Diluted EPS $0.82 At upper end of guidance range of $0.76 to $0.84,
includes $0.02 of foreign exchange gains
BALANCE SHEET AND CASH FLOWS
18
Q4F16 Comments
Return on invested capital 13.8% 280 basis points above fiscal 2016 WACC of 11%
Share repurchases $7.1 million ~ 155,000 at an average price of $45.81 per share
Free cash flow
($2.2 million) Cash from operations: $5.1 million
Capital expenditures: $7.3 million
Cash cycle days
71 days
Above guidance range of 64 to 68 days as a result
of higher Accounts Receivable days
WORKING CAPITAL TRENDS
19
Q1F14 Q2F14 Q3F14 Q4F14 Q1F15 Q2F15 Q3F15 Q4F15 Q1F16 Q2F16 Q3F16 Q4F16
Inventory Days 83 84 84 80 82 86 88 85 88 91 87 87
A/R Days 51 49 48 44 52 48 48 53 53 48 51 58
A/P Days 64 63 67 60 53 63 62 60 59 62 62 61
Customer Deposit Days 8 8 8 8 9 12 12 12 11 11 13 13
Net Cash Cycle Days 62 62 57 56 72 59 62 66 71 66 63 71
FISCAL FIRST QUARTER 2017 GUIDANCE
20
Guidance
Revenue $620 to $650 million
Diluted EPS $0.74 to $0.82
Gross margin 9.6% to 9.8%
SG&A $29 to $30 million
Operating margin 4.9% to 5.2%
Depreciation ~ $12 million
Q1 tax rate
F17 tax rate
9% to 11%
9% to 11%
Cash cycle days 67 to 71 days
F17 capital expenditures $50 to $60 million
Q&A
ANALYSTS PLEASE CONFORM TO:
ONE QUESTION
ONE FOLLOW-UP
THANKS