Plexus Announces Fiscal Third Quarter Financial Results

NEENAH, WI, July 24, 2024 (GLOBE NEWSWIRE) -- Plexus Corp. (NASDAQ: PLXS) today announced financial results for our fiscal third quarter ended June 29, 2024, and guidance for our fiscal fourth quarter ending September 28, 2024.

• Reports fiscal third quarter 2024 revenue of $961 million, GAAP operating margin of 4.1% and GAAP diluted EPS of $0.91.
• Reports fiscal third quarter 2024 non-GAAP operating margin of 5.8% and non-GAAP diluted EPS of $1.45, excluding $0.24 of stock-based compensation expense and $0.30 of restructuring and other charges, net of tax.
• Initiates fiscal fourth quarter 2024 revenue guidance of $990 million to $1.03 billion with GAAP diluted EPS of $1.14 to $1.29, including $0.36 of stock-based compensation expense. Fiscal fourth quarter 2024 non-GAAP EPS guidance of $1.50 to $1.65 excludes stock-based compensation expense.
  

Fiscal Third Quarter 2024 Information

• Won 35 manufacturing programs during the quarter representing $279 million in annualized revenue when fully ramped into production.
• Generated fiscal third quarter free cash flow of $114 million, contributing to fiscal year-to-date free cash flow of $147 million.
• Purchased $18.6 million of our shares at an average price of $100.64 per share under our repurchase program, leaving $19.5 million available under our existing $50.0 million authorization.
  

Todd Kelsey, President and Chief Executive Officer, commented, “Our team delivered superior operational performance for the fiscal third quarter, which enabled outstanding financial results. Revenue of $961 million was within our guidance range, while non-GAAP operating margin and non-GAAP EPS of 5.8% and $1.45, respectively, exceeded our guidance ranges. We generated free cash flow of $114 million, representing the second best quarterly performance in our history.”

Mr. Kelsey continued, “We delivered fiscal third quarter new manufacturing program wins worth $279 million in annualized revenue, including a record contribution within Healthcare/Life Sciences. In addition, we are seeing increasing market sector diversification in the demand for our engineering solutions, resulting in the team achieving the highest level of new business wins in the past four quarters.”

Patrick Jermain, Executive Vice President and Chief Financial Officer, commented, “The $114 million of free cash flow generated during the fiscal third quarter significantly exceeded our expectations. Continued progress on our working capital initiatives contributed to this strong performance, resulting in fiscal third quarter cash cycle of 83 days, three days favorable to our expectations and sequentially lower by eight days. Given this performance, we now anticipate delivering in excess of $150 million of free cash flow in fiscal 2024. The ongoing benefits from our working capital initiatives combined with increasing profitability is anticipated to result in continued strong free cash flow generation in fiscal 2025. Finally, we reduced our borrowing by $89 million and repurchased $18.6 million of our shares during the fiscal third quarter. We expect to continue to execute upon the remaining $19.5 million of our current repurchase authorization during the fourth quarter of fiscal 2024, creating additional shareholder value.”

Mr. Kelsey added, “We are witnessing signs of strengthening demand across each of our market sectors, with share gains and new program ramps further bolstering our ongoing and continued expectations for revenue growth. As a result, we are guiding fiscal fourth quarter revenue of $990 million to $1.03 billion, non-GAAP operating margin of 5.6% to 6.0% and non-GAAP EPS of $1.50 to $1.65.”

Mr. Kelsey concluded, “Consistent with prior expectations, we anticipate delivering a strong finish to our fiscal 2024, with sequential expansion in revenue, robust operating margin performance, sequential growth in EPS and continued free cash flow generation. We expect sustained revenue growth momentum into fiscal 2025, capitalizing upon Aerospace/Defense market sector strength, increasing Healthcare/Life Sciences customer forecasts aided by new program ramps, and improved semiconductor capital equipment and broadband communications demand. We anticipate revenue growth momentum, the benefits from optimizing our business for greater efficiency during fiscal 2024 and ongoing free cash flow deployment toward debt reduction and share repurchases will create meaningful EPS growth in fiscal 2025.”

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 second and third quarter of fiscal 2024. This is down three percentage points from the third quarter of fiscal 2023.

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 third quarter of fiscal 2024 was 10.4%. Plexus defines ROIC as tax-effected annualized adjusted operating income divided by average invested capital over a four-quarter period for the third 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 third quarter of fiscal 2024 less our weighted average cost of capital resulted in an economic return of 2.2%.

Free Cash Flow

Plexus defines free cash flow as cash flows provided by operations less capital expenditures. For the three months ended June 29, 2024, cash flows provided by operations were $131.6 million and capital expenditures were $17.4 million, which resulted in free cash flow of $114.2 million.

Conference Call and Webcast Information

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.