[ ] | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
[ ] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
[ ] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Date: July 16, 2014 | PLEXUS CORP. | ||
(Registrant) | |||
By: | /s/ Patrick J. Jermain | ||
Patrick J. Jermain | |||
Chief Financial Officer |
• | Fiscal third quarter revenue of $621 million, diluted EPS of $0.71 |
• | Non-GAAP diluted EPS of $0.74, excluding $0.03 per share of restructuring charges |
• | Initiates Q4 fiscal 2014 revenue guidance of $645 - $675 million |
Three Months Ended | |||||||||||
June 28, | March 29, | June 29, | |||||||||
2014 | 2014 | 2013 | |||||||||
(US$ in thousands, except EPS) | Q3 F14 | Q2 F14 | Q3 F13 | ||||||||
Revenue | $620,505 | $557,616 | $571,945 | ||||||||
Gross profit | $58,593 | $52,835 | $55,473 | ||||||||
Operating income | $28,198 | $19,000 | $25,184 | ||||||||
Net income | $24,584 | $18,516 | $23,204 | ||||||||
Earnings per share (diluted) | $0.71 | $0.53 | $0.68 | ||||||||
Non-GAAP net income, before special items* | $25,799 | $20,831 | $21,168 | ||||||||
Non-GAAP earnings per share (diluted), before special items* | $0.74 | $0.60 | $0.62 | ||||||||
Gross margin | 9.4 | % | 9.5 | % | 9.7 | % | |||||
Operating margin | 4.5 | % | 3.4 | % | 4.4 | % | |||||
Return on invested capital (“ROIC”)** | 14.6 | % | 14.1 | % | 13.2 | % | |||||
*Special items for the fiscal third quarter of 2014 consisted of restructuring charges of $1.2 million | |||||||||||
($0.03 per share). Special items for the fiscal second quarter of 2014 consisted of restructuring | |||||||||||
charges of $6.0 million and a discrete tax benefit of $3.7 million ($0.18 per share and $0.11 per share, | |||||||||||
respectively). Special items for the fiscal third quarter of 2013 consisted of a discrete tax benefit of $2.0 million | |||||||||||
($0.06 per share). | |||||||||||
**ROIC, a non-GAAP measure, excludes the special items identified above. |
• | Revenue: $621 million, relative to our guidance of $600 to $630 million |
• | Diluted EPS: $0.71, including $0.10 per share of stock-based compensation expense |
• | Non-GAAP diluted EPS: $0.74 (including $0.10 per share of stock-based compensation expense but excluding $0.03 per share of restructuring charges), relative to our guidance of $0.69 to $0.74 |
• | ROIC**: 14.6% |
• | Revenue: $645 to $675 million |
• | Diluted EPS: $0.74 to $0.80, excluding any restructuring charges but including approximately $0.10 per share of stock-based compensation expense |
Market Sector ($ in millions) | Q3 F14 | Q2 F14 | Q3 F13 | ||||||||||||||
Networking/Communications | $203 | 33 | % | $162 | 29 | % | $218 | 38 | % | ||||||||
Healthcare/Life Sciences | $177 | 28 | % | $167 | 30 | % | $142 | 25 | % | ||||||||
Industrial/Commercial | $154 | 25 | % | $145 | 26 | % | $138 | 24 | % | ||||||||
Defense/Security/Aerospace | $87 | 14 | % | $84 | 15 | % | $74 | 13 | % | ||||||||
Total Revenue | $621 | $558 | $572 |
• | ROIC for the fiscal third quarter was 14.6%. The Company defines ROIC as tax-effected annualized operating income before special items divided by average invested capital over a rolling four-quarter period for the third quarter and a rolling three-quarter period for the second quarter. Invested capital is defined as equity plus debt, less cash and cash equivalents. The Company estimates its weighted average cost of capital for fiscal 2014 to be 11%. |
• | Cash flow provided by operations was approximately $38.0 million for the quarter. Capital expenditures for the quarter were $27.7 million. Free cash flow for the quarter was approximately $10.3 million. 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, up two percentage points from the previous quarter. |
• | Cash Conversion Cycle: |
Cash Conversion Cycle | Q3 F14 | Q2 F14 | Q3 F13 |
Days in Accounts Receivable | 48 | 49 | 54 |
Days in Inventory | 84 | 84 | 78 |
Days in Accounts Payable | (67) | (63) | (54) |
Days in Cash Deposits | (8) | (8) | (19) |
Annualized Cash Cycle | 57 | 62 | 59 |
What: | Plexus Corp.’s Fiscal Q3 Earnings Conference Call and Webcast |
When: | Thursday, July 17 at 8:30 a.m. Eastern Time |
Where: | We encourage participants to access the reference materials and live webcast at the investor relations section of Plexus’ website, www.plexus.com or you can access the live webcast at: http://edge.media-server.com/m/p/jka7xtfq/lan/en Those without internet access can listen to the call at 1-800-708-4540 with confirmation: 37488378. |
Replay: | The webcast will be archived at the Company’s website or via telephone replay at 1-888-843-7419 or 630-652-3042 with Passcode: 37488378# |
Contact: | Kristie Johnson, 920-725-7224, kristie.johnson@plexus.com |
PLEXUS CORP. | |||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||
(in thousands, except per share data) | |||||||||||||||
(unaudited) | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
June 28, | June 29, | June 28, | June 29, | ||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Net sales | $620,505 | $571,945 | $1,712,026 | $1,660,301 | |||||||||||
Cost of sales | 561,912 | 516,472 | 1,549,096 | 1,501,645 | |||||||||||
Gross profit | 58,593 | 55,473 | 162,930 | 158,656 | |||||||||||
Operating expenses: | |||||||||||||||
Selling and administrative expenses | 29,180 | 30,289 | 83,106 | 88,800 | |||||||||||
Restructuring and impairment charges | 1,215 | - | 10,865 | - | |||||||||||
Operating income | 28,198 | 25,184 | 68,959 | 69,856 | |||||||||||
Other income (expense): | |||||||||||||||
Interest expense | (3,055) | (2,650) | (8,952) | (10,010) | |||||||||||
Interest income | 770 | 402 | 2,092 | 1,182 | |||||||||||
Miscellaneous | 1,271 | 8 | 2,182 | (467) | |||||||||||
Income before income taxes | 27,184 | 22,944 | 64,281 | 60,561 | |||||||||||
Income tax expense (benefit) | 2,600 | (260) | 3,518 | 2,766 | |||||||||||
Net income | $24,584 | $23,204 | $60,763 | $57,795 | |||||||||||
Earnings per share: | |||||||||||||||
Basic | $0.73 | $0.69 | $1.80 | $1.71 | |||||||||||
Diluted | $0.71 | $0.68 | $1.75 | $1.69 | |||||||||||
Weighted average shares outstanding: | |||||||||||||||
Basic | 33,837 | 33,797 | 33,810 | 33,744 | |||||||||||
Diluted | 34,670 | 34,363 | 34,686 | 34,226 |
PLEXUS CORP. | |||||||||||
NON-GAAP SUPPLEMENTAL INFORMATION | |||||||||||
(in thousands, except per share data) | |||||||||||
(unaudited) | |||||||||||
Three Months Ended | |||||||||||
June 28, | March 29, | June 29, | |||||||||
2014 | 2014 | 2013 | |||||||||
Operating income, as reported | $28,198 | $19,000 | $25,184 | ||||||||
Operating margin, as reported | 4.5 | % | 3.4 | % | 4.4 | % | |||||
Non-GAAP adjustments: | |||||||||||
Restructuring and impairment charges* | 1,215 | 6,045 | - | ||||||||
Operating income, as adjusted | $29,413 | $25,045 | $25,184 | ||||||||
Operating margin, as adjusted | 4.7 | % | 4.5 | % | 4.4 | % | |||||
Net income, as reported | $24,584 | $18,516 | $23,204 | ||||||||
Non-GAAP adjustments: | |||||||||||
Restructuring and impairment charges* | 1,215 | 6,045 | - | ||||||||
Discrete tax benefit, net | - | (3,730) | (2,036) | ||||||||
Net income, as adjusted | $25,799 | $20,831 | $21,168 | ||||||||
Diluted earnings per share, as reported | $0.71 | $0.53 | $0.68 | ||||||||
Non-GAAP adjustments: | |||||||||||
Restructuring and impairment charges | 0.03 | 0.18 | - | ||||||||
Discrete tax benefit, net | - | (0.110) | (0.060) | ||||||||
Diluted earnings per share, as adjusted | $0.74 | $0.60 | $0.62 | ||||||||
*Summary of restructuring and impairment charges | |||||||||||
Severance costs | $669 | $2,245 | $- | ||||||||
Fixed asset impairment | 25 | 3,160 | - | ||||||||
Other exit costs | 521 | 640 | - | ||||||||
Total restructuring and impairment charges | $1,215 | $6,045 | $- |
PLEXUS CORP. | ||||||||||||||||||||||||||||
NON-GAAP SUPPLEMENTAL INFORMATION | ||||||||||||||||||||||||||||
(in thousands, except per share data) | ||||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||
ROIC Calculation | Nine Months Ended | Six Months Ended | Nine Months Ended | |||||||||||||||||||||||||
June 28, | March 29, | June 29, | ||||||||||||||||||||||||||
2014 | 2014 | 2013 | ||||||||||||||||||||||||||
Operating income | $ | 68,959 | $ | 40,761 | $ | 69,856 | ||||||||||||||||||||||
Restructuring and impairment charges | $ | 10,865 | $ | 9,650 | - | |||||||||||||||||||||||
Adjusted operating income | $ | 79,824 | $ | 50,411 | $ | 69,856 | ||||||||||||||||||||||
÷ | 3 | ÷ | 2 | ÷ | 3 | |||||||||||||||||||||||
26,608 | 25,206 | 23,285 | ||||||||||||||||||||||||||
x | 4 | x | 4 | x | 4 | |||||||||||||||||||||||
Annualized operating income | 106,432 | 100,822 | 93,140 | |||||||||||||||||||||||||
Tax rate | x | 9 | % | x | 9 | % | x | 8 | % | |||||||||||||||||||
Tax impact | 9,579 | 9,074 | 7,451 | |||||||||||||||||||||||||
Operating income (tax effected) | $ | 96,853 | $ | 91,748 | $ | 85,689 | ||||||||||||||||||||||
Average invested capital | $ | 661,835 | $ | 650,061 | $ | 647,971 | ||||||||||||||||||||||
ROIC | 14.6 | % | 14.1 | % | 13.2 | % | ||||||||||||||||||||||
June 28, | March 29, | December 28, | September 29, | |||||||||||||||||||||||||
2014 | 2014 | 2013 | 2013 | |||||||||||||||||||||||||
Equity | $ | 760,184 | $ | 736,493 | $ | 722,021 | $699,301 | |||||||||||||||||||||
Plus: | ||||||||||||||||||||||||||||
Debt - current | 4,232 | 3,901 | 3,796 | 3,574 | ||||||||||||||||||||||||
Debt – non-current | 263,056 | 256,090 | 256,949 | 257,773 | ||||||||||||||||||||||||
Less: | ||||||||||||||||||||||||||||
Cash and cash equivalents | (330,314) | (323,695) | (324,156) | (341,865) | ||||||||||||||||||||||||
$ | 697,158 | $ | 672,789 | $ | 658,610 | $618,783 | ||||||||||||||||||||||
Fiscal 2014 third quarter average invested capital (June 28, 2014, March 29, 2014, December 28, 2013 and | ||||||||||||||||||||||||||||
September 29, 2013) was $661,835. | ||||||||||||||||||||||||||||
Fiscal 2014 second quarter average invested capital (March 29, 2014, December 28, 2013 and September 28, | ||||||||||||||||||||||||||||
2013) was $650,061. |
PLEXUS CORP. | |||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
(in thousands, except per share data) | |||||||
(unaudited) | |||||||
June 28, | September 28, | ||||||
2014 | 2013 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $330,314 | $341,865 | |||||
Accounts receivable | 328,170 | 305,350 | |||||
Inventories | 516,956 | 404,020 | |||||
Deferred income taxes | 3,889 | 3,917 | |||||
Prepaid expenses and other | 28,706 | 23,870 | |||||
Total current assets | 1,208,035 | 1,079,022 | |||||
Property, plant and equipment, net | 338,379 | 325,061 | |||||
Deferred income taxes | 2,477 | 2,510 | |||||
Other | 39,424 | 41,091 | |||||
Total assets | $1,588,315 | $1,447,684 | |||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Current portion of long-term debt and capital lease obligations | $4,232 | $3,574 | |||||
Accounts payable | 413,401 | 313,404 | |||||
Customer deposits | 49,903 | 69,295 | |||||
Accrued liabilities: | |||||||
Salaries and wages | 42,542 | 42,553 | |||||
Other | 39,395 | 42,550 | |||||
Total current liabilities | 549,473 | 471,376 | |||||
Long-term debt and capital lease obligations, net of current portion | 263,056 | 257,773 | |||||
Deferred income taxes | 2,125 | 2,128 | |||||
Other liabilities | 13,477 | 17,106 | |||||
Total non-current liabilities | 278,658 | 277,007 | |||||
Shareholders’ equity: | |||||||
Common stock, $.01 par value, 200,000 shares authorized, | |||||||
49,918 and 49,176 shares issued, respectively, | |||||||
and 33,789 and 33,600 shares outstanding, respectively | 499 | 492 | |||||
Additional paid-in-capital | 471,147 | 449,368 | |||||
Common stock held in treasury, at cost, 16,129 and 15,576, respectively | (472,251) | (449,968) | |||||
Retained earnings | 739,935 | 679,172 | |||||
Accumulated other comprehensive income | 20,854 | 20,237 | |||||
Total shareholders’ equity | 760,184 | 699,301 | |||||
Total liabilities and shareholders’ equity | $1,588,315 | $1,447,684 |
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