(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||
Exhibit Number | Description | |||||||
99.1 | ||||||||
99.2 | ||||||||
104 | Cover Page Interactive Data File (the cover page tags are embedded within the Inline XBRL document) |
Date: July 22, 2020 | PLEXUS CORP. | |||||||
(Registrant) | ||||||||
By: /s/ Patrick J. Jermain | ||||||||
Patrick J. Jermain | ||||||||
Executive Vice President and Chief Financial Officer |
Three Months Ended | ||||||||||||||||||||
Jul 4, 2020 | Jul 4, 2020 | Oct 3, 2020 | ||||||||||||||||||
Q3F20 Results | Q3F20 Guidance | Q4F20 Guidance | ||||||||||||||||||
Summary GAAP Items | ||||||||||||||||||||
Revenue (in millions) | $857 | $790 to $830 | $850 to $890 | |||||||||||||||||
Operating margin | 5.3 | % | 3.8% to 4.2% | 4.8% to 5.2% | ||||||||||||||||
Diluted EPS (1) | $1.20 | $0.72 to $0.82 | $1.05 to $1.20 | |||||||||||||||||
Summary Non-GAAP Items (2) | ||||||||||||||||||||
Return on invested capital (ROIC) | 12.9 | % | ||||||||||||||||||
Economic return | 4.1 | % | ||||||||||||||||||
(1) | Includes stock-based compensation expense of $0.22 for Q3F20 results, $0.21 for Q3F20 guidance, and $0.21 for Q4F20 guidance. | |||||||||||||||||||
(2) | Refer to Non-GAAP Supplemental Information in Tables 1 and 2 for non-GAAP financial measures and a reconciliation to GAAP. |
Quarterly Comparison | Three Months Ended | ||||||||||||||||
Jul 4, 2020 | Apr 4, 2020 | Jun 29, 2019 | |||||||||||||||
(in thousands, except EPS) | Q3F20 | Q2F20 | Q3F19 | ||||||||||||||
Revenue | $ | 857,394 | $ | 767,364 | $ | 799,644 | |||||||||||
Gross profit | 82,881 | 61,445 | 71,030 | ||||||||||||||
Operating income | 45,853 | 17,209 | 34,403 | ||||||||||||||
Net income | 35,842 | 12,926 | 24,801 | ||||||||||||||
Diluted EPS | 1.20 | 0.43 | 0.81 | ||||||||||||||
Adjusted net income (1) | 35,842 | 18,299 | 24,801 | ||||||||||||||
Adjusted diluted EPS (1) | 1.20 | 0.61 | 0.81 | ||||||||||||||
Gross margin | 9.7 | % | 8.0 | % | 8.9 | % | |||||||||||
Operating margin | 5.3 | % | 2.2 | % | 4.3 | % | |||||||||||
Adjusted operating margin (1) | 5.3 | % | 3.0 | % | 4.3 | % | |||||||||||
ROIC (1) | 12.9 | % | 11.4 | % | 12.9 | % | |||||||||||
Economic return (1) | 4.1 | % | 2.6 | % | 3.9 | % | |||||||||||
(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, and a reconciliation of these measures to GAAP. |
Business Segments ($ in millions) | Three Months Ended | ||||||||||||||||
Jul 4, 2020 | Apr 4, 2020 | Jun 29, 2019 | |||||||||||||||
Q3F20 | Q2F20 | Q3F19 | |||||||||||||||
Americas | $ | 306 | $ | 334 | $ | 367 | |||||||||||
Asia-Pacific | 482 | 388 | 385 | ||||||||||||||
Europe, Middle East, and Africa | 92 | 74 | 81 | ||||||||||||||
Elimination of inter-segment sales | (23) | (29) | (33) | ||||||||||||||
Total Revenue | $ | 857 | $ | 767 | $ | 800 |
Market Sectors ($ in millions) | Three Months Ended | |||||||||||||||||||||||||
Jul 4, 2020 | Apr 4, 2020 | Jun 29, 2019 | ||||||||||||||||||||||||
Q3F20 | Q2F20 | Q3F19 | ||||||||||||||||||||||||
Healthcare/Life Sciences | $ | 330 | 39 | % | $ | 271 | 35 | % | $ | 309 | 39 | % | ||||||||||||||
Industrial/Commercial | 317 | 37 | % | 287 | 37 | % | 248 | 31 | % | |||||||||||||||||
Aerospace/Defense | 141 | 16 | % | 157 | 21 | % | 151 | 19 | % | |||||||||||||||||
Communications | 69 | 8 | % | 52 | 7 | % | 92 | 11 | % | |||||||||||||||||
Total Revenue | $ | 857 | $ | 767 | $ | 800 | ||||||||||||||||||||
Cash Cycle Days | Three Months Ended | ||||||||||||||||
Jul 4, 2020 Q3F20 | Apr 4, 2020 Q2F20 | Jun 29, 2019 Q3F19 | |||||||||||||||
Days in Accounts Receivable | 55 | 55 | 52 | ||||||||||||||
Days in Contract Assets | 12 | 13 | 12 | ||||||||||||||
Days in Inventory | 97 | 99 | 95 | ||||||||||||||
Days in Accounts Payable | (65) | (62) | (54) | ||||||||||||||
Days in Cash Deposits | (20) | (18) | (16) | ||||||||||||||
Annualized Cash Cycle * | 79 | 87 | 89 | ||||||||||||||
* We calculate 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 cash deposits. |
What: | Plexus Fiscal 2020 Q3 Earnings Conference Call and Webcast | ||||
When: | Thursday, July 23, 2020 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, https://plexus.gcs-web.com/events-and-presentations/upcoming-events, where a slide presentation reviewing fiscal second quarter 2020 results will also be made available ahead of the conference call. Conference call at +1.866.922.5180 with passcode: 9483228 | ||||
Replay: | The webcast will be archived on the Plexus website and available via telephone replay at +1.855.859.2056 or +1.404.537.3406 with passcode: 9483228 |
PLEXUS CORP. AND SUBSIDIARIES | |||||||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||||||||
(in thousands, except per share data) | |||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
Jul 4, | Jun 29 | Jul 4, | Jun 29 | ||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
Net sales | $ | 857,394 | $ | 799,644 | $ | 2,477,167 | $ | 2,354,239 | |||||||||||||||
Cost of sales | 774,513 | 728,614 | 2,253,651 | 2,140,190 | |||||||||||||||||||
Gross profit | 82,881 | 71,030 | 223,516 | 214,049 | |||||||||||||||||||
Operating expenses | |||||||||||||||||||||||
Selling and administrative expenses | 37,028 | 36,627 | 114,517 | 109,521 | |||||||||||||||||||
Restructuring and impairment charges | — | — | 6,003 | — | |||||||||||||||||||
Operating income | 45,853 | 34,403 | 102,996 | 104,528 | |||||||||||||||||||
Other income (expense): | |||||||||||||||||||||||
Interest expense | (3,988) | (3,711) | (11,934) | (9,105) | |||||||||||||||||||
Interest income | 368 | 445 | 1,546 | 1,410 | |||||||||||||||||||
Miscellaneous, net | (600) | (1,419) | (2,619) | (4,304) | |||||||||||||||||||
Income before income taxes | 41,633 | 29,718 | 89,989 | 92,529 | |||||||||||||||||||
Income tax expense | 5,791 | 4,917 | 10,215 | 20,744 | |||||||||||||||||||
Net income | $ | 35,842 | $ | 24,801 | $ | 79,774 | $ | 71,785 | |||||||||||||||
Earnings per share: | |||||||||||||||||||||||
Basic | $ | 1.23 | $ | 0.83 | $ | 2.73 | $ | 2.34 | |||||||||||||||
Diluted | $ | 1.20 | $ | 0.81 | $ | 2.66 | $ | 2.28 | |||||||||||||||
Weighted average shares outstanding: | |||||||||||||||||||||||
Basic | 29,199 | 29,912 | 29,210 | 30,637 | |||||||||||||||||||
Diluted | 29,793 | 30,635 | 29,936 | 31,420 |
PLEXUS CORP. AND SUBSIDIARIES | |||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||||
(in thousands, except per share data) | |||||||||||
(unaudited) | |||||||||||
Jul 4, | Sept 28, | ||||||||||
2020 | 2019 | ||||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 296,545 | $ | 223,761 | |||||||
Restricted cash | 3,098 | 2,493 | |||||||||
Accounts receivable | 519,323 | 488,284 | |||||||||
Contract assets | 116,442 | 90,841 | |||||||||
Inventories | 819,543 | 700,938 | |||||||||
Prepaid expenses and other | 32,836 | 31,974 | |||||||||
Total current assets | 1,787,787 | 1,538,291 | |||||||||
Property, plant and equipment, net | 380,056 | 384,224 | |||||||||
Operating lease right-of-use assets | 71,885 | — | |||||||||
Deferred income taxes | 14,089 | 13,654 | |||||||||
Other | 34,707 | 64,714 | |||||||||
Total non-current assets | 500,737 | 462,592 | |||||||||
Total assets | $ | 2,288,524 | $ | 2,000,883 | |||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||
Current liabilities: | |||||||||||
Current portion of long-term debt and finance lease obligations | $ | 145,993 | $ | 100,702 | |||||||
Accounts payable | 553,254 | 444,944 | |||||||||
Customer deposits | 173,027 | 139,841 | |||||||||
Accrued salaries and wages | 60,056 | 73,555 | |||||||||
Other accrued liabilities | 105,290 | 106,461 | |||||||||
Total current liabilities | 1,037,620 | 865,503 | |||||||||
Long-term debt and finance lease obligations, net of current portion | 188,626 | 187,278 | |||||||||
Accrued income taxes payable | 53,899 | 59,572 | |||||||||
Long-term operating lease liabilities | 38,077 | — | |||||||||
Deferred income taxes | 6,394 | 5,305 | |||||||||
Other liabilities | 19,087 | 17,649 | |||||||||
Total non-current liabilities | 306,083 | 269,804 | |||||||||
Total liabilities | 1,343,703 | 1,135,307 | |||||||||
Shareholders’ equity: | |||||||||||
Common stock, $.01 par value, 200,000 shares authorized, | |||||||||||
53,442 and 52,917 shares issued, respectively, | |||||||||||
and 29,214 and 29,004 shares outstanding, respectively | 534 | 529 | |||||||||
Additional paid-in-capital | 615,103 | 597,401 | |||||||||
Common stock held in treasury, at cost, 24,228 and 23,913, respectively | (912,731) | (893,247) | |||||||||
Retained earnings | 1,257,374 | 1,178,677 | |||||||||
Accumulated other comprehensive loss | (15,459) | (17,784) | |||||||||
Total shareholders’ equity | 944,821 | 865,576 | |||||||||
Total liabilities and shareholders’ equity | $ | 2,288,524 | $ | 2,000,883 | |||||||
PLEXUS CORP. AND SUBSIDIARIES | ||||||||||||||||||||||||||||||||
NON-GAAP SUPPLEMENTAL INFORMATION Table 1 | ||||||||||||||||||||||||||||||||
(in thousands, except per share data) | ||||||||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||
Jul 4, | Apr 4, | Jun 29, | Jul 4, | Jun 29, | ||||||||||||||||||||||||||||
2020 | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||||||||
Operating income, as reported | $ | 45,853 | $ | 17,209 | $ | 34,403 | $ | 102,996 | $ | 104,528 | ||||||||||||||||||||||
Operating margin, as reported | 5.3 | % | 2.2 | % | 4.3 | % | 4.2 | % | 4.4 | % | ||||||||||||||||||||||
Non-GAAP adjustments: | ||||||||||||||||||||||||||||||||
Restructuring and impairment charges (1) | — | 6,003 | — | 6,003 | — | |||||||||||||||||||||||||||
Adjusted operating income | $ | 45,853 | $ | 23,212 | $ | 34,403 | $ | 108,999 | $ | 104,528 | ||||||||||||||||||||||
Adjusted operating margin | 5.3 | % | 3.0 | % | 4.3 | % | 4.4 | % | 4.4 | % | ||||||||||||||||||||||
Net income, as reported | $ | 35,842 | $ | 12,926 | $ | 24,801 | $ | 79,774 | $ | 71,785 | ||||||||||||||||||||||
Non-GAAP adjustments: | ||||||||||||||||||||||||||||||||
Special tax impacts (2) | — | — | — | (814) | 7,035 | |||||||||||||||||||||||||||
Restructuring and impairment charges, net of tax (1) | — | 5,373 | — | 5,373 | — | |||||||||||||||||||||||||||
Adjusted net income | $ | 35,842 | $ | 18,299 | $ | 24,801 | $ | 84,333 | $ | 78,820 | ||||||||||||||||||||||
Diluted earnings per share, as reported | $ | 1.20 | $ | 0.43 | $ | 0.81 | $ | 2.66 | $ | 2.28 | ||||||||||||||||||||||
Non-GAAP per share adjustments: | ||||||||||||||||||||||||||||||||
Special tax impacts (2) | — | — | — | (0.02) | 0.23 | |||||||||||||||||||||||||||
Restructuring costs, net of tax (1) | — | 0.18 | — | 0.18 | — | |||||||||||||||||||||||||||
Adjusted diluted earnings per share | $ | 1.20 | $ | 0.61 | $ | 0.81 | $ | 2.82 | $ | 2.51 | ||||||||||||||||||||||
(1) | During the three months ended April 4, 2020, restructuring and impairment charges of $6.0 million, or $5.4 million net of taxes, were incurred due to the previously announced closure of our Boulder Design Center. | |||||||||||||||||||||||||||||||
(2) | During the nine months ended July 4, 2020, there was $1.9 million in tax benefits related to US foreign tax credit regulations issued during the quarter, partially offset by $1.1 million of tax expense as a result of special tax items. During the nine months ended June 29, 2019, special tax expense of $7.0 million was recorded in accordance with new regulations issued in November 2018 under U.S. Tax Reform. These regulations impacted the treatment of foreign taxes paid. |
PLEXUS CORP. AND SUBSIDIARIES | ||||||||||||||||||||||||||
NON-GAAP SUPPLEMENTAL INFORMATION Table 2 | ||||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||
ROIC and Economic Return Calculations | Nine Months Ended | Six Months Ended | Nine Months Ended | |||||||||||||||||||||||
Jul 4, | Apr 4, | Jun 29, | ||||||||||||||||||||||||
2020 | 2020 | 2019 | ||||||||||||||||||||||||
Operating income, as reported | $ | 102,996 | $ | 57,143 | $ | 104,528 | ||||||||||||||||||||
Restructuring and impairment charges | + | 6,003 | + | 6,003 | + | — | ||||||||||||||||||||
Adjusted operating income | $ | 108,999 | $ | 63,146 | $ | 104,528 | ||||||||||||||||||||
÷ | 3 | ÷ | 3 | |||||||||||||||||||||||
$ | 36,333 | $ | 34,843 | |||||||||||||||||||||||
x | 4 | x | 2 | x | 4 | |||||||||||||||||||||
Adjusted annualized operating income | $ | 145,332 | $ | 126,292 | $ | 139,372 | ||||||||||||||||||||
Adjusted effective tax rate | x | 13 | % | x | 13 | % | x | 15 | % | |||||||||||||||||
Tax impact | 18,893 | 16,418 | 20,906 | |||||||||||||||||||||||
Adjusted operating income (tax effected) | $ | 126,439 | $ | 109,874 | $ | 118,466 | ||||||||||||||||||||
Average invested capital | ÷ | $ | 980,929 | ÷ | $ | 964,894 | ÷ | $ | 921,435 | |||||||||||||||||
ROIC | 12.9 | % | 11.4 | % | 12.9 | % | ||||||||||||||||||||
Weighted average cost of capital | - | 8.8 | % | - | 8.8 | % | - | 9.0 | % | |||||||||||||||||
Economic return | 4.1 | % | 2.6 | % | 3.9 | % |
Three Months Ended | ||||||||||||||||||||||||||
Average Invested Capital | Jul 4, | Apr 4, | Jan 4, | Sept 28, | ||||||||||||||||||||||
Calculations | 2020 | 2020 | 2020 | 2019 | ||||||||||||||||||||||
Equity | $ | 944,821 | $ | 892,558 | $ | 908,372 | $ | 865,576 | ||||||||||||||||||
Plus: | ||||||||||||||||||||||||||
Debt and finance lease obligations - current | 145,993 | 107,880 | 67,847 | 100,702 | ||||||||||||||||||||||
Operating lease obligations - current (1) (2) | 8,061 | 8,546 | 9,185 | — | ||||||||||||||||||||||
Debt and finance lease obligations - long-term | 188,626 | 186,327 | 186,827 | 187,278 | ||||||||||||||||||||||
Operating lease obligations - long-term (2) | 38,077 | 39,617 | 36,473 | — | ||||||||||||||||||||||
Less: | ||||||||||||||||||||||||||
Cash and cash equivalents | (296,545) | (225,830) | (252,914) | (223,761) | ||||||||||||||||||||||
$ | 1,029,033 | $ | 1,009,098 | $ | 955,790 | $ | 929,795 |
Three Months Ended | ||||||||||||||||||||||||||
Average Invested Capital | Jun 29, | Mar 30, | Dec 29, | Sept 29, | ||||||||||||||||||||||
Calculations | 2019 | 2019 | 2018 | 2018 | ||||||||||||||||||||||
Equity | $ | 860,791 | $ | 875,444 | $ | 905,163 | $ | 921,143 | ||||||||||||||||||
Plus: | ||||||||||||||||||||||||||
Debt and finance lease obligations - current | 138,976 | 93,197 | 8,633 | 5,532 | ||||||||||||||||||||||
Operating lease obligations - current (1) (2) | — | — | — | — | ||||||||||||||||||||||
Debt and finance lease obligations - long-term | 187,581 | 187,120 | 187,567 | 183,085 | ||||||||||||||||||||||
Operating lease obligations - long-term (2) | — | — | — | — | ||||||||||||||||||||||
Less: | ||||||||||||||||||||||||||
Cash and cash equivalents | (198,395) | (184,028) | (188,799) | (297,269) | ||||||||||||||||||||||
$ | 988,953 | $ | 971,733 | $ | 912,564 | $ | 812,491 |
(1) | Included in Other accrued liabilities on the Condensed Consolidated Balance Sheets. | |||||||||||||||||||
(2) | In the fiscal first quarter of 2020, Plexus adopted and applied Topic 842 to all leases using the modified retrospective method of adoption. The prior year comparative information has not been restated and continued to be reported under the accounting standards in effect for fiscal 2019 and 2018. |
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