Fiscal first quarter 2021 revenue of $830 millionGAAP diluted EPS of $1.23Initiates fiscal second quarter 2021 revenue guidance of $860 to $900 million with GAAP diluted EPS of $1.17 to $1.32 NEENAH, Wis., Jan. 20, 2021 (GLOBE NEWSWIRE) -- Plexus (NASDAQ: PLXS) today announced financial results for our fiscal first quarter ended January 2, 2021, and guidance for our fiscal second quarter ending April 3, 2021. Three Months Ended Jan 2, 2021 Jan 2, 2021 Apr 3, 2021 Q1F21 Results Q1F21 Guidance Q2F21 GuidanceSummary GAAP Items Revenue (in millions)$830 $810 to $850 $860 to $900Operating margin5.6% 4.9% to 5.3% 5.0% to 5.5%Diluted EPS (1)$1.23 $1.02 to $1.17 $1.17 to $1.32 Summary Non-GAAP Items (2) Return on invested capital (ROIC)16.3% Economic return8.2% (1) Includes stock-based compensation expense of $0.18 for Q1F21 results, $0.19 for Q1F21 guidance and $0.22 for Q2F21 guidance. (2) Refer to Non-GAAP Supplemental Information in Tables 1 and 2 for non-GAAP financial measures and a reconciliation to GAAP. Fiscal First Quarter 2021 Information Won 35 manufacturing programs during the quarter representing $223 million in annualized revenue when fully ramped into productionTrailing four quarter wins total a record $1 billion in annualized revenue when fully ramped into productionPurchased $22.8 million of our shares at an average price of $74.16 per share under our existing share repurchase programs. There remains $82.6 million outstanding of the $100 million that was authorized under the fiscal 2021 program. Todd Kelsey, President and CEO, commented, “Our operations achieved strong results in the fiscal first quarter. We expanded GAAP operating margin to 5.6% through our focus on productivity improvements and expense management along with solid performance from our Engineering Solutions team. This operating margin represents the third consecutive quarter in excess of 5.0%. Revenue of $830 million was in line with our expectations and at the midpoint of our guidance. Through this combination, we delivered GAAP diluted earnings per share of $1.23, which was well above the top end of our guidance range.” Mr. Kelsey continued, “Our go-to-market team’s sustained focus on leveraging our exceptional execution to drive new business development opportunities produced strong results again this past quarter. Within the fiscal first quarter, Plexus won 35 new programs including a meaningful number of new customer engagements. These wins represent $223 million in annualized revenue when fully ramped into production and contribute to our trailing four quarter wins total of a record $1.0 billion. In addition, we expanded Plexus’ funnel of qualified manufacturing opportunities by nearly $600 million from the prior quarter to a record $3.3 billion. This healthy rate of new program wins and the considerable expansion in the funnel of qualified opportunities should position us well to achieve our 9% to 12% revenue CAGR goal over the longer term.” Patrick Jermain, Executive Vice President and CFO, commented, “With our exceptional operating performance, we delivered return on invested capital of 16.3%, sequentially improved by 230 basis points and the highest return delivered in more than three years. This result generated economic return of 820 basis points above our weighted average cost of capital, creating substantial shareholder value. Further, we continue to maintain a solid balance sheet. We ended the quarter with cash in excess of $350 million and no outstanding borrowing under our revolving credit facility while investing in working capital, capital expenditures and our share repurchase program. We reconfirm our fiscal 2021 expectation for free cash flow of approximately $100 million.” Mr. Kelsey concluded, “We anticipate a robust fiscal second quarter due to expected increases in medical equipment demand, recent strengthening in our Industrial Sector and sustained operational excellence. We are guiding revenue of $860 to $900 million, GAAP operating margin in the range of 5.0% to 5.5% and GAAP diluted earnings per share of $1.17 to $1.32. Our guidance assumes that COVID-19 will not materially impact end markets or our operations beyond what has already occurred. Long-term visibility into end markets remains limited, yet our history of strong execution provides the opportunity to continue to capture potential upside demand that may arise. Looking to the second half of fiscal 2021, while we currently anticipate revenue relatively consistent with the fiscal second quarter guidance and operating margin to moderate from the fiscal first quarter result, we believe Plexus is positioned to drive strong EPS growth for fiscal 2021.” Quarterly ComparisonThree Months Ended(in thousands, except EPS)Jan 2, 2021 Oct 3, 2020 Jan 4, 2020Revenue$830,355 $913,227 $852,409 Gross profit79,277 89,190 79,190 Operating income46,866 50,376 39,934 Net income36,199 37,705 31,006 Diluted EPS1.23 1.26 1.03 Adjusted net income (1)36,199 37,705 30,192 Adjusted diluted EPS (1)1.23 1.26 1.00 Gross margin9.5% 9.8% 9.3%Operating margin5.6% 5.5% 4.7% ROIC (1)16.3% 14.0% 14.7%Economic return (1)8.2% 5.2% 5.9% (1) Refer to Non-GAAP Supplemental Information in Tables 1 and 2 for non-GAAP financial measures discussed and/or disclosed in this release, such as adjusted net income, adjusted diluted EPS, ROIC and economic return, and a reconciliation of these measures to GAAP. Business Segment and Market Sector Revenue Plexus measures operational performance and allocates resources on a geographic segment basis. Plexus also reports revenue based on the market sector breakout set forth in the table below, which reflects Plexus’ market sector focused strategy. Top 10 customers comprised 55% of revenue during the fiscal first quarter of 2021, down one percentage point from the fiscal fourth quarter of 2020. Business Segments ($ in millions)Three Months Ended Jan 2, 2021 Oct 3, 2020 Jan 4, 2020Americas$327 $334 $353 Asia-Pacific451 503 451 Europe, Middle East, and Africa79 99 85 Elimination of inter-segment sales(27) (23) (37)Total Revenue$830 $913 $852 Market Sectors ($ in millions)Three Months Ended Jan 2, 2021 Oct 3, 2020 Jan 4, 2020Industrial (1)$378 46% $427 46% $368 43%Healthcare/Life Sciences319 38% 345 38% 312 37%Aerospace/Defense133 16% 141 16% 172 20%Total Revenue$830 $913 $852 (1) During the three months ended January 2, 2021, Plexus consolidated the previously reported Industrial/Commercial and Communications market sectors to form the Industrial market sector. Prior period amounts have been reclassified to conform to the current period presentation. Non-GAAP Supplemental InformationPlexus 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 a full reconciliation of non-GAAP measures to comparable GAAP measures, please refer to the attached Non-GAAP Supplemental Information Tables. ROIC and Economic ReturnROIC for the fiscal first quarter was 16.3%. Plexus defines ROIC as tax-effected annualized adjusted operating income divided by average invested capital over a two-quarter period for the fiscal first quarter. Invested capital is defined as equity plus debt and operating lease obligations, less cash and cash equivalents. Plexus' weighted average cost of capital for fiscal 2021 is 8.1%. ROIC for the fiscal first quarter less Plexus’ weighted average cost of capital resulted in an economic return of 8.2%. Free Cash FlowPlexus defines free cash flow as cash flows provided by operations less capital expenditures. For the three months ended January 2, 2021, cash flows provided by operations was $6.7 million, less capital expenditures of $15.9 million, resulting in negative free cash flow of $9.2 million. Cash Cycle DaysThree Months Ended Jan 2, 2021 Oct 3, 2020 Jan 4, 2020 Days in Accounts Receivable53 48 49 Days in Contract Assets12 11 12 Days in Inventory93 85 87 Days in Accounts Payable(59) (57) (61) Days in Cash Deposits(19) (18) (16) Annualized Cash Cycle *80 69 71 * 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. Conference Call and Webcast Information What: Plexus Fiscal 2021 Q1 Earnings Conference Call and WebcastWhen: Thursday, January 21, 2021 at 8:30 a.m. Eastern TimeWhere: 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 first quarter 2021 results will also be made available ahead of the conference call.Conference Call: +1.866.922.5180 with passcode: 8662208Replay: 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: 8662208 Investor and Media ContactShawn Harrisonfirstname.lastname@example.org About PlexusSince 1979, Plexus has been partnering with companies to create the products that build a better world. We are a team of approximately 19,000 individuals who are dedicated to providing global Design and Development, Supply Chain Solutions, New Product Introduction, Manufacturing, and Aftermarket 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 global companies by providing innovative, comprehensive solutions throughout the 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 evolving effect, which may intensify, of COVID-19 on our employees, customers, suppliers, and logistics providers, including the impact of governmental actions being taken to curtail the spread of the virus. Other risks and uncertainties include, but are not limited to: 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 effects of shortages and delays in obtaining components as a result of economic cycles, natural disasters or otherwise; 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; the ability to realize anticipated savings from restructuring or similar actions, as well as the adequacy of related charges as compared to actual expenses; increasing regulatory and compliance requirements; the effects of U.S. Tax Reform, any tax law changes as a result of change in the U.S. presidential administration, and of 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 (including as a result of the United Kingdom’s exit from the European Union); the potential effect of other world or local events or other events outside our control (such as 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 2020 Form 10-K and any subsequently filed Form 10-Q. PLEXUS CORP. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(in thousands, except per share data)(unaudited) Three Months Ended Jan 2, Jan 4, 2021 2020Net sales$830,355 $852,409 Cost of sales751,078 773,219 Gross profit79,277 79,190 Selling and administrative expenses32,411 39,256 Operating income46,866 39,934 Other income (expense): Interest expense(4,086) (4,132)Interest income374 645 Miscellaneous, net(1,518) (2,173)Income before income taxes41,636 34,274 Income tax expense5,437 3,268 Net income$36,199 $31,006 Earnings per share: Basic$1.25 $1.06 Diluted$1.23 $1.03 Weighted average shares outstanding: Basic28,861 29,147 Diluted29,539 30,065 PLEXUS CORP. AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS(in thousands, except per share data)(unaudited) Jan 2, Oct 3, 2021 2020ASSETS Current assets: Cash and cash equivalents$356,724 $385,807 Restricted cash209 2,087 Accounts receivable484,672 482,086 Contract assets113,225 113,946 Inventories764,322 763,461 Prepaid expenses and other39,194 31,772 Total current assets1,758,346 1,779,159 Property, plant and equipment, net381,612 383,661 Operating lease right-of-use assets71,296 69,879 Deferred income taxes21,446 21,422 Other39,358 35,727 Total non-current assets513,712 510,689 Total assets$2,272,058 $2,289,848 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Current portion of long-term debt and finance lease obligations$148,408 $146,829 Accounts payable488,969 516,297 Customer deposits155,911 159,972 Accrued salaries and wages60,332 76,927 Other accrued liabilities101,836 103,492 Total current liabilities955,456 1,003,517 Long-term debt and finance lease obligations, net of current portion188,148 187,975 Accrued income taxes payable53,618 53,899 Long-term operating lease liabilities37,052 36,779 Deferred income taxes6,596 6,433 Other liabilities24,229 23,765 Total non-current liabilities309,643 308,851 Total liabilities1,265,099 1,312,368 Shareholders’ equity: Common stock, $.01 par value, 200,000 shares authorized, 53,596 and 53,525 shares issued, respectively, and 28,766 and 29,002 shares outstanding, respectively536 535 Additional paid-in-capital624,859 621,564 Common stock held in treasury, at cost, 24,830 and 24,523, respectively(957,410) (934,639)Retained earnings1,331,278 1,295,079 Accumulated other comprehensive loss7,696 (5,059)Total shareholders’ equity1,006,959 977,480 Total liabilities and shareholders’ equity$2,272,058 $2,289,848 PLEXUS CORP. AND SUBSIDIARIESNON-GAAP SUPPLEMENTAL INFORMATION Table 1(in thousands, except per share data)(unaudited) Three Months Ended Jan 2, Oct 3, Jan 4, 2021 2020 2020Operating income, as reported$46,866 $50,376 $39,934 Operating margin, as reported5.6% 5.5% 4.7% Net income, as reported$36,199 $37,705 $31,006 Non-GAAP adjustments: Special tax impacts (1)— — (814)Adjusted net income$36,199 $37,705 $30,192 Diluted earnings per share, as reported$1.23 $1.26 $1.03 Non-GAAP per share adjustments: Special tax impacts (1)— — (0.03)Adjusted diluted earnings per share$1.23 $1.26 $1.00 (1) During the three months ended January 4, 2020, there were $1.9M in tax benefits related to US foreign tax credit regulations issued during the quarter, partially offset by $1.1M of tax expense as a result of special tax items. PLEXUS CORP. AND SUBSIDIARIESNON-GAAP SUPPLEMENTAL INFORMATION Table 2(in thousands)(unaudited) ROIC and Economic Return Calculations Three Months Ended Twelve Months Ended Three Months Ended Jan 2, Oct 3, Jan 4, 2021 2020 2020Operating income, as reported $46,866 $153,372 $39,934 Restructuring and impairment charges+— +6,003 +— Adjusted operating income $46,866 $159,375 $39,934 x4 x4 Adjusted annualized operating income $187,464 $159,375 $159,736 Adjusted effective tax ratex13% x14% x13%Tax impact 24,370 22,313 20,766 Adjusted operating income (tax effected) $163,094 $137,062 $138,970 Average invested capital÷$1,002,087 ÷$978,939 ÷$942,793 ROIC 16.3% 14.0% 14.7%Weighted average cost of capital-8.1% -8.8% -8.8%Economic return 8.2% 5.2% 5.9% Three Months EndedAverage Invested CapitalJan 2, Oct 3, Jul 4, Apr 4, Jan 4, Sept 28,Calculations2021 2020 2020 2020 2020 2019Equity$1,006,959 $977,480 $944,821 $892,558 $908,372 $865,576 Plus: Debt and finance lease obligations - current148,408 146,829 145,993 107,880 67,847 100,702 Operating lease obligations - current (1) (2)9,351 7,724 8,061 8,546 9,185 — Debt and finance lease obligations - long-term188,148 187,975 188,626 186,327 186,827 187,278 Operating lease obligations - long-term (2)37,052 36,779 38,077 39,617 36,473 — Less: Cash and cash equivalents(356,724) (385,807) (296,545) (225,830) (252,914) (223,761) $1,033,194 $970,980 $1,029,033 $1,009,098 $955,790 $929,795 (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 continues to be reported under the accounting standards in effect for fiscal 2019.