Attached files
| file | filename |
|---|---|
| EX-99.1 - EXHIBIT 99.1 - PLEXUS CORP | plxsf17q3earningsrelease-e.htm |
| 8-K - 8-K - PLEXUS CORP | a8kcoverpageq3f17.htm |
FISCAL THIRD QUARTER 2017
FINANCIAL RESULTS
July 20, 2017
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 1, 2016, 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 THIRD QUARTER RESULTS
3
Q3F17
Jul 1, 2017
Q3F17 Guidance
Apr 19, 2017
Q2F17
Apr 1,2017
Revenue ($ millions)
$619 $595 to $625 $604
Diluted EPS
$0.74 $0.68 to $0.76
$0.84
ROIC 16.1% 16.8%
• I/C, COMM and D/S/A all exceeded expectations
• HC/LS, I/C and D/S/A revenue increased sequentially
• Fifth consecutive quarter at or above target operating margin range (4.7% to 5.0%)
• ROIC of 16.1%; 560 bps of Economic Return
FISCAL FOURTH QUARTER
4
Q4F17 Guidance
Revenue
$660 to $700 million
GAAP Diluted EPS
$0.77 to $0.87
Includes $0.13 stock-based compensation expense
Midpoint of revenue guidance suggests significant sequential growth
• Ramping new programs across multiple sectors
• Potential record revenue quarter
• Expect sequential growth in HC/LS, COMM and D/S/A sectors
Midpoint of EPS guidance implies continued strong operating margin
ENGINEERING SOLUTIONS EXPANSION
5
Relocated Plexus’ flagship Neenah Design Center
• New state-of-the-art facility near Plexus’ Global Headquarters
• Capacity for additional 100+ engineers
Opened Guadalajara Design Center
• Located within Guadalajara manufacturing facility
• Plexus’ first design center in Mexico
• Will offer full suite of product development and
commercialization capabilities
Plexus’ 8th
Global Design Center
ADDITIONAL HIGHLIGHTS
• Record Net Promoter Survey score
– Overall NPS of 84%
– Result highlights our focus on delivering
Operational Excellence and Customer Service
Excellence
• Delivered Operating Margin of 4.8%
– Fifth consecutive quarter at or above target
operating margin range of 4.7% to 5.0%
– Expect record operating profit in fiscal 2017
• Return on Invested Capital of 16.1%
– Economic Return 560 basis points above WACC
– Represents 360 basis point improvement from
Q3F16
• Accelerating manufacturing wins
momentum
– $220M wins within quarter
– Trailing four quarter wins ratio of 33%
– Significant Aftermarket Services win
– Major business expansion in Europe
• Robust $2.8B funnel of qualified
manufacturing opportunities
• Retained Earnings exceeds $1B
– Strategy delivers long-term shareholder value
• Fiscal 2018 Annual Operating Plan
– Continued strong operating performance
– Anticipate meaningful revenue growth
6
PERFORMANCE BY SECTOR
7
Q3F17
Jul 1, 2017
Q2F17
Apr 1, 2017
Q3F17 vs. Q2F17 Q4F17 Expectations
(percentage points)
Healthcare/ Life
Sciences
$210 34% $205 34% + 2% Up mid single
Industrial/
Commercial
$201 32% $192 32% + 5% Down mid single
Communications
$99 16% $108 18% - 9% Up ~50%
Defense/ Security/
Aerospace
$109 18% $99 16% + 10% Up mid single
Total Revenue $619 100% $604 100% + 2%
Revenue in millions
MANUFACTURING WINS BY REGION
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• $220M in annualized manufacturing revenue
when fully ramped (32 programs)
• Fourth consecutive quarter with wins greater
than $200M
• Highest quarterly wins total in three years
• Substantial wins in the EMEA region
$87M
$66M
$67M
Q3F17
AMER
APAC
EMEA
Wins Momentum = TFQ Wins / TFQ Revenue
MANUFACTURING WINS BY SECTOR
• Significant wins in D/S/A with continued
strength in HC/LS and I/C
• Sector wins support healthy portfolio
$57M
$60M
$26M
$77M
Q3F17
HC/LS
I/C
COMM
D/S/A
9
10
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
Q3F15 Q4F15 Q1F16 Q2F16 Q3F16 Q4F16 Q1F17 Q2F17 Q3F17
%
o
f
TFQ
S
al
es
N
ew
W
in
s
$
M
TFQ Wins TFQ Wins % of TFQ Sales New Wins
Goal
25%
MANUFACTURING WINS MOMENTUM
Quarterly Target: ~ $160M
Trailing Four Quarters (TFQ) for Manufacturing Wins
TFQ
$839M
MANUFACTURING FUNNEL
• Manufacturing funnel remains robust at $2.8B
• HC/LS and I/C funnels consistently strong
• Supports the delivery of our differentiated portfolio
11
OPERATING PERFORMANCE
Focused on exceptional operating results while growing revenue
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Operating Margin
Target Range: 4.7% to 5.0%
* Represents midpoint of guidance
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
Q3F15 Q4F15 Q1F16 Q2F16 Q3F16 Q4F16 Q1F17 Q2F17 Q3F17 Q4F17*
INCOME STATEMENT
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Q3F17 Comments
Revenue $619 million Near upper end of guidance range of $595 to $625
million driven by strength in three of four market
sectors
Gross margin 9.9% Slightly below guidance range of 10.0% to 10.3%
Selling & administrative
expenses
$31.7 million In-line with guidance range of $31 to $32 million
Operating margin 4.8% Within guidance range of 4.8% to 5.2%
Diluted EPS $0.74 Above mid-point of guidance range of $0.68 to
$0.76
BALANCE SHEET AND CASH FLOWS
14
Q3F17 Comments
Return on invested capital 16.1% 560 basis points above fiscal 2017 WACC of 10.5%
Share repurchases $10 million ~190,000 at an average price of $52.40 per share
Free cash flow
$6.5 million Cash from operations: $16.3 million
Capital expenditures: $9.8 million
Cash cycle days
76 days
Within guidance range of 73 to 77 days
WORKING CAPITAL TRENDS
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Q3F15 Q4F15 Q1F16 Q2F16 Q3F16 Q4F16 Q1F17 Q2F17 Q3F17
Inventory Days 88 85 88 91 87 87 90 103 107
A/R Days 48 53 53 48 51 58 49 48 47
A/P Days 62 60 59 62 62 61 60 64 65
Customer Deposit Days 12 12 11 11 13 13 13 14 13
Net Cash Cycle Days 62 66 71 66 63 71 66 73 76
FISCAL FOURTH QUARTER 2017 GUIDANCE
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Guidance
Revenue $660 to $700 million
GAAP diluted EPS $0.77 to $0.87
Gross margin 9.4% to 9.8%
SG&A $31.5 to $32.5 million
Operating margin 4.7% to 5.1%
Depreciation ~$11 million
Q4 tax rate
F17 tax rate
8% to 9%
8% to 9%
Cash cycle days 69 to 73 days
F17 capital expenditures $45 to $50 million
Q&A
ANALYSTS PLEASE CONFORM TO:
ONE QUESTION
ONE FOLLOW-UP
THANKS