EX-99.1 2 plxsf24q2earningsreleasexe.htm EX-99.1 Document

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Plexus Announces Fiscal Second Quarter Financial Results
NEENAH, WI – April 24, 2024 - Plexus Corp. (NASDAQ: PLXS) today announced financial results for our fiscal second quarter ended March 30, 2024, and guidance for our fiscal third quarter ending June 29, 2024.
•Reports fiscal second quarter 2024 revenue of $967 million, GAAP operating margin of 3.0% and GAAP diluted EPS of $0.58, including $0.25 of stock-based compensation expense and $0.36 of restructuring and other charges, net
•Reports fiscal second quarter 2024 non-GAAP operating margin of 4.2% and non-GAAP diluted EPS of $0.94, including $0.25 of stock-based compensation expense
•Initiates fiscal third quarter 2024 revenue guidance of $960 million to $1.00 billion with GAAP diluted EPS of $0.80 to $0.95, including $0.21 of stock-based compensation expense and $0.21 of restructuring charges. Fiscal third quarter 2024 non-GAAP EPS guidance of $1.22 to $1.37 excludes both stock-based compensation expense and restructuring charges.
Three Months Ended
Mar 30, 2024Mar 30, 2024Jun 29, 2024
Q2F24 Results
Q2F24 Guidance
Q3F24 Guidance (1)
Summary GAAP Items
Revenue (in millions)$967$930 to $970$960 to $1,000
Operating margin (2)3.0 %3.0% to 3.4%3.9% to 4.3%
Diluted EPS (3)$0.58$0.48 to $0.63$0.80 to $0.95
Summary Non-GAAP Items (4)
Adjusted operating margin (5)4.2 %4.0% to 4.4%
Adjusted EPS (6)$0.94$0.80 to $0.95
Adjusted operating margin, prospectively (7)5.2% to 5.6%
Adjusted EPS, prospectively (8)$1.22 to $1.37
Return on invested capital (ROIC)9.9 %
Economic return 1.7 %
(1)Historically, Plexus has included stock-based compensation expense in adjusted operating margin and adjusted EPS. Beginning in the fiscal third quarter, Plexus will issue guidance and present adjusted operating margin and adjusted EPS excluding stock-based compensation expense. Refer to the Non-GAAP Supplemental Information Table 3 for a reconciliation between the historic presentation and prospective presentation.
(2)Includes restructuring and other charges, net, of 120 bps for Q2F24 results, 100 bps for Q2F24 guidance and 70 bps for Q3F24 guidance. Includes stock-based compensation expense of 73 bps for Q2F24 results, 72 bps for Q2F24 guidance, and 60 bps for Q3F24 guidance.
(3)
Includes stock-based compensation expense of $0.25 for Q2F24 results, $0.25 for Q2F24 guidance and $0.21 for Q3F24 guidance. Includes, net of tax, restructuring and other charges, net, of $0.36 for Q2F24 results, $0.32 for Q2F24 guidance, and $0.21 for Q3F24 guidance.
(4)Refer to Non-GAAP Supplemental Information in Tables 1 and 2 for additional information regarding non-GAAP financial measures.
(5)Excludes restructuring and other charges, net, of 120 bps for Q2F24 results and 100 bps for Q2F24 guidance. Excludes stock-based compensation expense of 73 bps for Q2F24 results and 72 bps for Q2F24 guidance.
(6)
Q2F24 results excludes, net of tax, $0.36 per share related to restructuring and other charges, net, but includes stock-based compensation expense of $0.25. Q2F24 guidance excludes $0.32 per share related to restructuring and other charges, net, but includes stock-based compensation expense of $0.25.
(7)Excludes 70 bps for restructuring charges and 60 bps related to stock-based compensation expense.
(8)Excludes $0.21 per share related to restructuring charges and $0.21 per share related to stock-based compensation expense.




Fiscal Second Quarter 2024 Information
•Won 32 manufacturing programs during the quarter representing $255 million in annualized revenue when fully ramped into production.
•Purchased $17.6 million of our shares at an average price of $94.39 per share under our repurchase programs, leaving $38.1 million available under our current $50.0 million authorization.

Todd Kelsey, Chief Executive Officer, commented, “Plexus delivered fiscal second quarter revenue of $967 million and non-GAAP EPS of $0.94, each of which met the top end of our guidance. Non-GAAP operating margin of 4.2% met our expectation entering the quarter. In addition, we generated free cash flow of $65 million, a particularly strong result.”

Mr. Kelsey continued, “For the fiscal second quarter, our team won 32 new manufacturing programs worth $255 million in annualized revenue. Capitalizing on the value created by our differentiated service offering and superior execution, our go-to-market organization is winning significant new outsourcing opportunities and capturing market share in support of sustaining our industry-leading revenue growth.”

Mr. Kelsey commented, “We are guiding fiscal third quarter revenue of $960 million to $1.00 billion, non-GAAP operating margin of 5.2% to 5.6% and non-GAAP EPS of $1.22 to $1.37. We believe our revenue growth is in the early stages of inflecting higher, benefiting from robust demand within our Aerospace and Defense market sector, gradually recovering semiconductor capital equipment demand and new program ramps that are mitigating inventory correction headwinds in our Healthcare/Lifesciences and Industrial market sectors. For the fiscal third quarter, our non-GAAP operating margin excludes approximately $6.5 million of restructuring charges associated with realigning manufacturing capabilities to best support long-term customer needs and also excludes approximately $6.2 million of stock-based compensation expense.”

Patrick Jermain, Executive Vice President and Chief Financial Officer, commented, “The $65 million of free cash flow generated during the fiscal second quarter significantly exceeded our net income and our expectations. Continued progress on our working capital initiatives contributed to this strong performance, resulting in fiscal second quarter cash cycle of 91 days, 10 days favorable to our expectations and sequentially lower by four days. Aided by the improvements in our cash cycle, return on invested capital for the fiscal second quarter was 9.9%, or 170 basis points above our weighted average cost of capital. We have generated $33 million of free cash flow through the first six months of fiscal 2024 and, with further progress expected on our working capital initiatives, we now anticipate delivering approximately $100 million of free cash flow in fiscal 2024. Finally, we repurchased $17.6 million of our shares during the fiscal second quarter. We expect to execute the remaining $38.1 million of our current authorization during the second half of fiscal 2024, creating additional shareholder value.”

Mr. Kelsey concluded, “We continue to anticipate a strong finish to fiscal 2024 with expansion in revenue and non-GAAP operating margin each quarter as well as robust free cash flow generation, positioning us for further momentum into fiscal 2025. Supporting this outlook is the previously highlighted strength in certain market sectors and subsectors, new program ramps, improving utilization of our engineering team and the benefits from recent restructuring actions.”
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Quarterly ComparisonThree Months Ended
(in thousands, except EPS)Mar 30, 2024Dec 30, 2023Apr 1, 2023
Revenue$966,900 $982,607 $1,070,823 
Gross profit88,063 88,140 102,993 
Operating income29,470 45,158 56,942 
Net income16,239 29,215 40,844 
Diluted EPS$0.58 $1.04 $1.45 
Gross margin9.1 %9.0 %9.6 %
Operating margin3.0 %4.6 %5.3 %
ROIC (1)9.9 %10.3 %13.8 %
Economic return (1)1.7 %2.1 %4.8 %
(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.
Business Segment and Market Sector Revenue
Plexus measures operational performance and allocates resources on a geographic segment basis. Plexus also reports revenue based on the market sector breakout set forth in the table below, which reflects Plexus’ market sector focused strategy. Top 10 customers comprised 48% of revenue during both the first and second quarter of fiscal 2024. This is down three percentage points from the second quarter of fiscal 2023.

Business Segments ($ in millions)Three Months Ended
Mar 30, 2024Dec 30, 2023Apr 1, 2023
Americas$322 $334 $408 
Asia-Pacific521 552 587 
Europe, Middle East and Africa155 122 102 
Elimination of inter-segment sales(31)(25)(26)
Total Revenue$967 $983 $1,071 

Market Sectors ($ in millions)Three Months Ended
Mar 30, 2024Dec 30, 2023Apr 1, 2023
Healthcare/Life Sciences$379 39 %$381 39 %$488 46 %
Industrial418 43 %435 44 %439 41 %
Aerospace/Defense170 18 %167 17 %144 13 %
Total Revenue$967 $983 $1,071 

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Non-GAAP Supplemental Information
Plexus provides non-GAAP supplemental information, such as ROIC, economic return and free cash flow because such measures are used for internal management goals and decision-making, and because they provide management and investors with additional insight into financial performance. In addition, management uses these and other non-GAAP measures, such as adjusted operating income, adjusted operating margin, adjusted net income and adjusted diluted EPS, to provide a better understanding of core performance for purposes of period-to-period comparisons. Plexus believes that these measures are also useful to investors because they provide further insight by eliminating the effect of non-recurring items that are not reflective of continuing operations. For additional information on non-GAAP measures, please refer to the attached Non-GAAP Supplemental Information tables.

ROIC and Economic Return
ROIC for the second quarter of fiscal 2024 was 9.9%. Plexus defines ROIC as tax-effected annualized adjusted operating income divided by average invested capital over a three-quarter period for the second fiscal quarter. Invested capital is defined as equity plus debt and operating lease obligations, less cash and cash equivalents. Our weighted average cost of capital for fiscal 2024 is 8.2%. ROIC for the second quarter of fiscal 2024 less our weighted average cost of capital resulted in an economic return of 1.7%.

Free Cash Flow
Plexus defines free cash flow as cash flows provided by operations less capital expenditures. For the three months ended March 30, 2024, cash flows provided by operations were $87.8 million and capital expenditures were $22.9 million, which resulted in free cash flow of $64.9 million.

Cash Cycle DaysThree Months Ended
Mar 30, 2024Dec 30, 2023Apr 1, 2023
Days in Accounts Receivable616156
Days in Contract Assets121211
Days in Inventory158161156
Days in Accounts Payable(65)(66)(69)
Days in Advanced Payments (1)(75)(73)(72)
Annualized Cash Cycle (2)919582
(1)Includes a reclassification in the presentation of advanced payments from customers reflected in prior period amounts. As of April 1, 2023, the impact of this reclassification was an increase in the Company's days in advanced payments and a reduction in annualized cash cycle by 22 days.
(2)Plexus calculates 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 advanced payments.


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Conference Call and Webcast Information
What:
Plexus Fiscal 2024 Q2 Earnings Conference Call and Webcast
When:
Thursday, April 25, 2024 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, plexus.com. Participants can also join utilizing the links below:

Audio conferencing link:
https://register.vevent.com/register/BI408fb95be3e440b981d3e0808adddf91
Webcast link:
https://edge.media-server.com/mmc/p/wrgz2xex
Replay:
The webcast will be archived on the Plexus website and will be available as on-demand for 12 months
Investor and Media Contact
Shawn Harrison
+1.920.969.6325
shawn.harrison@plexus.com
About Plexus
Since 1979, Plexus has been partnering with companies to create the products that build a better world. We are a team of over 20,000 individuals who are dedicated to providing Design and Development, Supply Chain Solutions, New Product Introduction, Manufacturing and Sustaining Services. Plexus is a global leader that specializes in serving customers in industries with highly complex products and demanding regulatory environments. Plexus delivers customer service excellence to leading companies by providing innovative, comprehensive solutions throughout a product’s lifecycle. For more information about Plexus, visit our website at www.plexus.com.
Safe Harbor and Fair Disclosure Statement
The statements contained in this press release that 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 the ability to realize anticipated savings from restructuring or similar actions, as well as the adequacy of related charges as compared to actual expenses; the effect of inflationary pressures on our costs of production, profitability, and on the economic outlook of our markets; the effects of shortages and delays in obtaining components as a result of economic cycles, natural disasters or otherwise; the risk of customer delays, changes, cancellations or forecast inaccuracies in both ongoing and new programs; the lack of visibility of future orders, particularly in view of changing economic conditions; the economic performance of the industries, sectors and customers we serve; the outcome of litigation and regulatory investigations and proceedings, including the results of any challenges with regard to such outcomes; the effects of tariffs, trade disputes, trade agreements and other trade protection measures; 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 of concentration of work for certain customers; the particular risks relative to new or recent customers, programs or services, which risks include customer and other delays, start-up costs, potential inability to execute, the establishment of appropriate terms of agreements, and the lack of a track record of order volume and timing; the effects of start-up costs of new programs and facilities or the costs associated with the closure or consolidation of facilities; possible unexpected costs and operating disruption in transitioning programs, including transitions between Company facilities; 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; our ability to manage successfully and execute a complex business model characterized by high product mix and demanding quality, regulatory, and other requirements; the risks associated with excess and obsolete inventory, including the risk that inventory purchased on behalf of our customers may not be consumed or otherwise paid for by the customer, resulting in an inventory write-off; risks related to information technology systems and data security; increasing regulatory and compliance requirements; any tax law changes and related foreign jurisdiction tax developments; current or potential future barriers to the repatriation of funds that are currently held outside of the United States as a result of actions taken by other countries or otherwise; the potential effects of jurisdictional results on our taxes, tax rates, and our ability to use deferred tax assets and net operating losses; the weakness of areas of the global economy; the effect of changes in the pricing and margins of products; raw materials and component cost fluctuations; the potential effect of fluctuations in the value of the currencies in which we transact business; the effects of changes in economic conditions, political conditions and tax matters in the United States and in the other countries in which we do business; the potential effect of other world or local events or other events outside our control (such as the conflict between Russia and Ukraine, conflict in the Middle East, escalating tensions between China and Taiwan or China and the United States, changes in energy prices, terrorism, global health epidemics and weather events); the impact of increased competition; an inability to successfully manage human capital; changes in financial accounting standards; and other risks detailed herein and in our other Securities and Exchange Commission filings, particularly in Risk Factors contained in our fiscal 2023 Form 10-K.
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PLEXUS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months EndedSix Months Ended
Mar 30,Apr 1,Mar 30,Apr 1,
2024202320242023
Net sales$966,900 $1,070,823 $1,949,507 $2,164,748 
Cost of sales878,837 967,830 1,773,304 1,960,556 
Gross profit88,063 102,993 176,203 204,192 
Operating expenses:
Selling and administrative expenses47,555 46,051 90,537 89,909 
Restructuring and other charges, net11,038 — 11,038 — 
Operating income29,470 56,942 74,628 114,283 
Other income (expense):
Interest expense(8,293)(8,287)(15,910)(15,181)
Interest income817 759 1,625 1,693 
Miscellaneous, net(3,027)(1,612)(6,529)(3,556)
Income before income taxes18,967 47,802 53,814 97,239 
Income tax expense2,728 6,958 8,360 14,205 
Net income
$16,239 $40,844 $45,454 $83,034 
Earnings per share:
Basic$0.59 $1.48 $1.65 $3.00 
Diluted$0.58 $1.45 $1.62 $2.94 
Weighted average shares outstanding:
Basic27,542 27,661 27,513 27,650 
Diluted27,929 28,184 27,982 28,273 


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PLEXUS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(unaudited)
Mar 30,Sep 30,
20242023
ASSETS
Current assets:
Cash and cash equivalents$265,053 $256,233 
Restricted cash41 421 
Accounts receivable645,523 661,542 
Contract assets131,174 142,297 
Inventories1,518,729 1,562,037 
Prepaid expenses and other70,531 49,693 
Total current assets2,631,051 2,672,223 
Property, plant and equipment, net493,803 492,036 
Operating lease right-of-use assets63,106 69,363 
Deferred income taxes62,665 62,590 
Other assets26,032 24,960 
Total non-current assets645,606 648,949 
Total assets$3,276,657 $3,321,172 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt and finance lease obligations$245,964 $240,205 
Accounts payable627,427 646,610 
Advanced payments from customers716,172 760,351 
Accrued salaries and wages72,880 94,099 
Other accrued liabilities74,392 71,402 
Total current liabilities1,736,835 1,812,667 
Long-term debt and finance lease obligations, net of current portion 192,025 190,853 
Accrued income taxes payable17,198 31,382 
Long-term operating lease liabilities33,915 38,552 
Deferred income taxes4,429 4,350 
Other liabilities32,493 28,986 
Total non-current liabilities280,060 294,123 
Total liabilities2,016,895 2,106,790 
Shareholders’ equity:
Common stock545 543 
Additional paid-in-capital663,130 661,270 
Common stock held in treasury(1,151,997)(1,134,429)
Retained earnings1,756,782 1,711,328 
Accumulated other comprehensive loss(8,698)(24,330)
Total shareholders’ equity1,259,762 1,214,382 
Total liabilities and shareholders’ equity$3,276,657 $3,321,172 

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PLEXUS CORP. AND SUBSIDIARIES
NON-GAAP SUPPLEMENTAL INFORMATION Table 1
(in thousands, except per share data)
(unaudited)
Three Months EndedSix Months Ended
Mar 30,Dec 30,Apr 1,Mar 30,Apr 1,
20242023202320242023
Operating income, as reported$29,470 $45,158 $56,942 $74,628 $114,283
Operating margin, as reported3.0 %4.6 %5.3 %3.8 %5.3 %
Non-GAAP adjustments:
Restructuring costs (1)13,288 — — 13,288 — 
Other non-recurring income (2)(2,250)— — (2,250)— 
Non-GAAP operating income$40,508 $45,158 $56,942 $85,666 $114,283
Non-GAAP operating margin4.2 %4.6 %5.3 %4.4 %5.3 %
Net income, as reported$16,239 $29,215 $40,844 $45,454 $83,034 
Non-GAAP adjustments:
Restructuring costs, net of tax (1)11,893 — — 11,893 — 
Other non-recurring income, net of tax (2)(2,014)— — (2,014)— 
Adjusted net income$26,118 $29,215 $40,844 $55,333 $83,034 
Diluted earnings per share, as reported$0.58 $1.04 $1.45 $1.62 $2.94 
Non-GAAP per share adjustments:
Restructuring costs, net of tax (1)0.43 — — 0.43 — 
Other non-recurring income, net of tax (2)(0.07)— — (0.07)— 
Adjusted diluted earnings per share$0.94 $1.04 $1.45 $1.98 $2.94 
(1)During the three and six months ended March 30, 2024, restructuring and impairment charges of $13.3 million, or $11.9 million net of taxes, were incurred for employee severance costs associated with a reduction in the Company's workforce as well as closure costs associated with a site in the Company's EMEA region.
(2)During the three and six months ended March 30, 2024, insurance proceeds of $2.3 million, or $2.0 million net of taxes, were received related to an arbitration decision associated with a contractual matter that occurred in the Company's EMEA region in fiscal 2023.
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PLEXUS CORP. AND SUBSIDIARIES
NON-GAAP SUPPLEMENTAL INFORMATION Table 2
 (in thousands)
(unaudited)
ROIC and Economic Return Calculations Six Months EndedThree Months EndedSix Months Ended
Mar 30,Dec 30,Apr 1,
202420232023
Operating income, as reported$74,628 $45,158 $114,283 
Restructuring and other charges, net+11,038 +— +— 
Adjusted operating income$85,666 $45,158 $114,283 
x2x4x2
Adjusted annualized operating income$171,332 $180,632 $228,566 
Adjusted effective tax ratex15 %x16 %x15 %
Tax impact25,700 28,901 34,285 
Adjusted operating income (tax-effected)$145,632 $151,731 $194,281 
Average invested capital÷$1,478,062 ÷$1,479,647 ÷$1,406,359 
ROIC9.9 %10.3 %13.8 %
Weighted average cost of capital-8.2 %-8.2 %-9.0 %
Economic return1.7 %2.1 %4.8 %
Average Invested Capital CalculationsMar 30,Dec 30,Sep 30,Jul 1,Apr 1,Dec 31,Oct 1,
2024202320232023202320222022
Equity$1,259,762 $1,266,755 $1,214,382 $1,184,362 $1,182,382 $1,150,259 $1,095,731 
Plus:
Debt and finance lease obligations - current245,964 251,119 240,205 304,781 294,011 329,076 273,971 
Operating lease obligations - current (1)8,281 9,172 8,363 8,772 8,358 8,878 7,948 
Debt and finance lease obligations - long-term
192,025 192,118 190,853 187,468 188,730 187,272 187,776 
Operating lease obligations - long-term33,915 35,989 38,552 40,515 31,257 32,149 33,628 
Less:
Cash and cash equivalents(265,053)(231,982)(256,233)(252,965)(269,664)(247,880)(274,805)
$1,474,894 $1,523,171 $1,436,122 $1,472,933 $1,435,074 $1,459,754 $1,324,249 

(1)Included in other accrued liabilities on the Condensed Consolidated Balance Sheets.








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PLEXUS CORP. AND SUBSIDIARIES
NON-GAAP SUPPLEMENTAL INFORMATION Table 3
(in thousands, except per share data)
(unaudited)
Three Months Ended
Dec 31,Apr 1,Jul 1,Sep 30,Dec 30,Mar 30,
202220232023202320232024
Net sales$1,093,925$1,070,823$1,021,610$1,023,947$982,607$966,900
  Operating income, as reported57,34156,94228,20453,33345,15829,470
Operating margin, as reported5.2 %5.3 %2.8 %5.2 %4.6 %3.0 %
Non-GAAP adjustments:
Restructuring costs— — 8,865 — — 13,288 
Other non-recurring charges, net of tax— — 14,229 — — (2,250)
Non-GAAP operating income, previously reported 57,341 56,942 51,298 53,333 45,158 40,508 
Non-GAAP operating margin, previously reported 5.2 %5.3 %5.0 %5.2 %4.6 %4.2 %
Stock-based compensation5,819 5,907 3,829 5,824 5,335 7,096 
Non-GAAP operating income$63,160$62,849$55,127$59,157$50,493$47,604
Non-GAAP operating margin5.8 %5.9 %5.4 %5.8 %5.1 %4.9 %
Net income, as reported$42,190 $40,844 $15,799 $40,261 $29,215 $16,239 
Non-GAAP adjustments:
Restructuring costs, net of tax— — 7,920 — — 11,893 
Other non-recurring charges, net of tax— — 13,346 — — (2,014)
Adjusted net income, previously reported 42,190 40,844 37,065 40,261 29,215 26,118 
Stock-based compensation5,819 5,907 3,829 5,824 5,335 7,096 
Adjusted net income$48,009$46,751$40,894$46,085$34,550$33,214
Diluted weighted average shares outstanding 28,305 28,184 27,992 27,972 28,013 27,929 
Diluted earnings per share, as previously reported $1.49 $1.45 $0.56 $1.44 $1.04 $0.58 
Non-GAAP per share adjustments:
Restructuring costs, net of tax— — 0.28 — — 0.43 
Other non-recurring charges, net of tax— — 0.48 — — (0.07)
Adjusted diluted earnings per share, previously reported1.49 1.45 1.32 1.44 1.04 0.94 
Stock-based compensation0.21 0.21 0.14 0.21 0.19 0.25 
Adjusted diluted earnings per share$1.70 $1.66 $1.46 $1.65 $1.23 $1.19 
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