Plexus Tops Q1 Earnings & Revenue Estimates on Solid Sales - Analyst Blog

Plexus Corp. (PLXS) reported first-quarter fiscal 2015 non-GAAP earnings per share (EPS) of 72 cents that surpassed the Zacks Consensus Estimate of 71 cents. The company’s earnings also increased from the year-ago figure of 61 cents.

 

Plexus Corporation - Quarterly EPS | FindTheBest

Revenues

Revenues increased 24.5% year over year to $664.7 million and beat the Zacks Consensus Estimate of $649 million. The year-over-year rise was primarily attributable to robust performance by all segments. Revenues came above management’s guided range of $630.0 to $660.0 million.

Revenues from the Networking/Communications sector (35% of total revenue) increased 43.5% year over year to $234 million.

Healthcare/Life Sciences (30%) revenues increased 18.8% from the year-ago quarter to $196 million.

Industrial/Commercial (22%) increased 8.8% year over year to $148 million.

The Defense/Security/Aerospace segment (13%) rebounded in the quarter with revenues increasing 24.2% on a year-over-year basis to $87 million.

During the quarter, the company won 32 programs in its Manufacturing Solutions group. Plexus anticipates these wins to generate approximately $190 million in annualized revenues once production commences.

Geography-wise, the Americas and the Asia-Pacific accounted for 48% of the total revenue each while Europe, Middle East, and Africa contributed the remaining 4%.

Margins

Plexus reported adjusted operating profit of $30.5 million, up 20.1% year over year. However, adjusted operating margin contracted 20 basis points to 4.6%. Adjusted net income rose 16.5% year over year to $24.8 million.

Balance Sheet & Cash Flow

Plexus exited the quarter with cash & cash equivalents worth $239.7 million compared with $346.6 million in the prior quarter. The company had long-term debt and capital lease obligations of $261 million, lower than $262 million in the last quarter. The company used $90.3 million in cash flow from operations and $9.6 million for capital investment during the first quarter, resulting in negative free cash flow of $99.9 million.

Share Repurchase Program

During the quarter, the company repurchased $7.3 million shares under its $30 million share repurchase program.

Outlook

For the second quarter of fiscal 2015, revenues are projected in the range of $630 to $660 million. Earnings are projected within 64 to 72 cents per share, including 10 cents per share of stock-based compensation expense but excluding any unanticipated special items. The Zacks Consensus Estimate is pegged at 72 cents.

Our Take

We believe new program wins in the networking/communications, industrial/commercial and healthcare/life sciences sectors and global expansion will drive growth over the long term. Moreover, the disengagement from Juniper (JNPR) is expected to improve the product mix. Additionally, the consolidation of the company’s production facilities in low-cost areas is expected to boost margins, going forward.

However, a mature electronic manufacturing services market and intense competition from the likes of Jabil Circuit (JBL) and Flextronics (FLEX) remain the headwinds.

Currently, Plexus has a Zacks Rank #3 (Hold).

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