Plexus Reports Second Fiscal Quarter Revenue of $491 Million and EPS of $0.51

NEENAH, Wis., April 20, 2010 (GLOBE NEWSWIRE) -- Plexus Corp. (Nasdaq:PLXS) today announced:

Q2 Fiscal 2010 Results (quarter ended April 3, 2010):

• Revenue: $491 million, relative to guidance of $470 to $495 million.
• Diluted EPS: $0.51, including $0.07 per share of stock-based compensation expense, relative to guidance of $0.44 to $0.52.

Q3 Fiscal 2010 Guidance:

• Revenue: $520 to $545 million.
• Diluted EPS: $0.54 to $0.60, excluding any restructuring charges and including approximately $0.06 per share of stock-based compensation expense.

Dean Foate, President and CEO, commented, "Our second quarter results were exceptional, as expected, with revenue growing 14% over the prior quarter to $491 million, a new record level for the Company. We experienced sequential revenue growth in each of our market sectors. Earnings leverage was strong with EPS of $0.51, up 16% over the prior quarter while including an additional $0.03 of stock-based compensation expense. With better working capital management, return on invested capital (ROIC) improved to 18.7%, moving this metric closer to our 20% target."

Mr. Foate continued, "Our pace of new business wins continued at a strong level. During the second fiscal quarter we won 18 new manufacturing programs that we currently anticipate will generate approximately $137 million in annualized revenue when fully ramped into production over the coming quarters. Our engineering services business continued to build a healthy backlog, winning approximately $16 million of new programs during the second fiscal quarter. All new business is subject to risks around the timing and ultimate realization of the anticipated revenues."

Ginger Jones, Vice President and CFO, commented, "Gross and operating margins were 10.3% and 4.8%, respectively, for the second fiscal quarter, in-line with our expectations when we set guidance for the quarter. Management of working capital again improved, with second fiscal quarter cash cycle days of 66, down three days from the first fiscal quarter. This is a good result on the cash cycle considering the strong revenue growth this quarter, anticipated growth in the second half of the fiscal year and the challenges of a constrained supply-chain environment."

Mr. Foate added, "Our current expectation is that our third fiscal quarter will be another strong quarter. We believe that continued, healthy end-market conditions, in combination with new business wins that ramp during the quarter should result in strong revenue growth and earnings leverage. Therefore, we are establishing third fiscal quarter revenue guidance of $520 to $545 million with diluted EPS of $0.54 to $0.60, excluding any restructuring charges and including approximately $0.06 per share of stock-based compensation expense. We currently anticipate sequential revenue growth to continue in our fourth fiscal quarter, suggesting full fiscal year organic revenue growth could exceed 20%."

Mr. Foate concluded, "I believe that our robust recovery in fiscal 2010, both in organic revenue growth and financial results, helps demonstrate that our industry leadership in delivering product realization services to customers with mid-to-low volume, higher complexity requirements, comprises a unique value proposition that helps create competitive advantage for our customers. We believe that our strategy affords Plexus continuing longer-term organic growth opportunities. In anticipation of that growth, we expect to make further investments in our global manufacturing footprint, with additional capacity available later in fiscal 2011. Our first preference for capacity expansion is to leverage our strong regional operations teams, and make investments in close proximity to our current locations. Longer-term, to appropriately manage business concentration risk and to provide customers with services in additional global markets, we will consider investments in other countries of interest. Finally, we remain committed to our product realization services strategy in continental Europe. We continue to explore alternatives to extend our engineering services capabilities to this important marketplace."

Plexus provides non-GAAP supplemental information. Non-GAAP income statements exclude transactions such as restructuring costs that are not expected to have an effect on future operations. Non-GAAP financial data is provided to facilitate meaningful period-to-period comparisons of underlying operational performance by eliminating infrequent or unusual charges. Similar non-GAAP financial measures, including return on invested capital ("ROIC"), are used for internal management assessments because such measures provide additional insight into ongoing financial performance. In particular, we provide ROIC because we believe it offers insight into the metrics that are driving management decisions as well as management's performance under the tests that it sets for itself. Please refer to the attached reconciliations of non-GAAP supplemental data.

MARKET SECTOR BREAKOUT

Plexus reports revenue based on the market sector breakout set forth in the table below, which reflects the Company's focus on their global business and market development sector strategy.

FISCAL Q2 SUPPLEMENTAL INFORMATION

• ROIC for the fiscal second quarter was 18.7%. The Company defines second quarter ROIC as tax-effected annualized operating income divided by average invested capital over a rolling three-quarter period. Invested capital is defined as equity plus debt, less cash and cash equivalents and short-term investments. In periods where restructuring or non-cash goodwill impairment charges were incurred, such as the second fiscal quarter of 2009, we compute adjusted ROIC excluding these costs to better compare ongoing operations.
• Cash flow provided by operations was approximately $15 million for the quarter. Capital expenditures for the quarter were $19 million. Free cash flow was negative during the quarter, at approximately $4 million. The Company defines free cash flow as cash flow provided by (or used in) operations less capital expenditures. 
• Top 10 customers comprised 57% of revenue during the quarter, down 5 percentage points from the previous quarter.
• Juniper Networks, Inc., with 15% of revenue, was the only customer representing 10% or more of revenue for the quarter.
• Cash Conversion Cycle: 

Conference Call/Webcast and Replay Information:

About Plexus Corp. – The Product Realization Company

Plexus (www.plexus.com) is an award-winning participant in the Electronic Manufacturing Services (EMS) industry, providing product design, supply chain and materials management, manufacturing, test, fulfillment and aftermarket solutions to branded product companies in the Wireline/Networking, Wireless Infrastructure, Medical, Industrial/Commercial and Defense/Security/Aerospace market sectors.

The Company's unique Focused Factory manufacturing model and global supply chain solutions are strategically enhanced by value-added product design and engineering services. Plexus specializes in mid- to low-volume, higher-mix customer programs that require flexibility, scalability, technology and quality.

Plexus provides award-winning customer service to more than 100 branded product companies in North America, Europe and the Asia Pacific region.

The Plexus Corp. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=7065

Safe Harbor and Fair Disclosure Statement

The statements contained in this release which 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, but are not limited to: the economic performance of the industries, sectors and customers we serve; the risk of customer delays, changes, cancellations or forecast inaccuracies in both ongoing and new programs; the poor visibility of future orders, particularly in view of current economic conditions; 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 risk that our revenue and/or profits associated with customers who have been recently acquired by third parties will be negatively affected; the risks relative to new customers, including our arrangements with The Coca-Cola Company, which risks include customer delays, start-up costs, potential inability to execute, the establishment of appropriate terms of agreement, and the lack of a track record of order volume and timing; the risks of concentration of work for certain customers; our ability to manage successfully a complex business model; 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; the risks associated with excess and obsolete inventory, particularly if the current constrained supply environment causes customers to increase forecasts and orders to secure raw material supply or results in our inability to secure all raw materials required to complete product assemblies; the weakness of the global economy and the continuing instability of the global financial markets and banking system, including the potential inability on our part or that of our customers or suppliers to access cash investments and credit facilities; raw material cost fluctuations and the adequate availability of components and related parts for production, particularly due to sudden increases in customer demand; the effect of changes in the pricing and margins of products; the risk that inventory purchased on behalf of our customers may not be consumed or otherwise paid for by customers, resulting in an inventory write-off;  the effect of start-up costs of new programs and facilities, including our recent and planned expansions, such as our new facilities in Hangzhou, China and Oradea, Romania; the adequacy of restructuring and similar charges as compared to actual expenses; the risk of unanticipated costs, unpaid duties and penalties related to an ongoing audit of our import compliance by U.S. Customs and Border Protection; possible unexpected costs and operating disruption in transitioning programs; the potential effect of world or local events or other events outside our control (such as drug cartel-related violence in Mexico, changes in oil prices, terrorism and war in the Middle East); the impact of increased competition; and other risks detailed in the Company's Securities and Exchange Commission filings (particularly in Part I, Item 1A of our annual report on Form 10-K for the fiscal year ended October 3, 2009).