PLXS - Plexus Announces Fiscal Fourth Quarter and Fiscal Year 2020 Financial Results

• Record fiscal fourth quarter revenue of $913 million and record fiscal 2020 revenue of $3.4 billion
• Fiscal fourth quarter GAAP diluted EPS of $1.26, including $0.23 of stock-based compensation expense
• Initiates fiscal first quarter 2021 revenue guidance of $810 to $850 million with GAAP diluted EPS of $1.02 to $1.17

NEENAH, Wisc., Oct. 28, 2020 (GLOBE NEWSWIRE) -- Plexus (NASDAQ: PLXS) today announced financial results for our fiscal fourth quarter ended October 3, 2020, and guidance for our fiscal first quarter ending January 2, 2021.

Fiscal Fourth Quarter 2020 Information

• Won 44 manufacturing programs during the quarter representing $286 million in annualized revenue when fully ramped into production
• Trailing four quarter wins total $952 million in annualized revenue when fully ramped into production
• Purchased $21.9 million of our shares at an average price of $74.34 per share under our existing share repurchase program

Fiscal Year 2020 Information

• Revenue of $3.4 billion, up 7% from fiscal 2019
• GAAP diluted EPS of $3.93
• Non-GAAP diluted EPS of $4.08, excluding a benefit of $0.03 per share related to special tax items and a charge of $0.18 per share related to restructuring activities
• ROIC of 14.0%, delivering an economic return of 520 basis points above our weighted average cost of capital of 8.8%
• Purchased $41.4 million of our shares at an average price of $67.86 per share under our existing share repurchase program

Todd Kelsey, President and CEO, commented, “Our team delivered outstanding results in the fiscal fourth quarter, achieving record revenue of $913 million and GAAP diluted earnings per share of $1.26, both exceeding the top end of our guidance ranges.  Strong demand in our Healthcare/Life Sciences and Industrial/Commercial sectors fueled this growth.  Our teams continued to drive improvements in our already exceptional operating performance as we navigated through the COVID-19 pandemic.  As a result, we achieved 5.5% GAAP operating margin in the fiscal fourth quarter.  This result represented the second consecutive quarter of operating margin above 5% and contributed to GAAP operating margin of 5.4% for the second half of fiscal 2020."

Patrick Jermain, Executive Vice President and CFO, commented, “We generated $109 million in free cash flow during the fiscal fourth quarter, a result well above our projections.  The fiscal fourth quarter cash cycle of 69 days was favorable to our expectations and sequentially lower by 10 days as we benefited from increased revenue and continued progress on our working capital initiatives.  This level of cash cycle was the best result we have delivered in the past 10 quarters.  We exited the fiscal year with record free cash flow of $160 million, an outcome significantly above our fiscal 2020 net income.”

Mr. Jermain continued, “We ended the year with a solid balance sheet.  Cash of approximately $388 million was sequentially higher by $88 million due in part to our strong cash flows from operations.  At the end of the fiscal fourth quarter, we had no outstanding borrowings under our revolving credit facility and we maintained a net positive cash position.”

Mr. Kelsey continued, “I am proud of our dedicated team members globally who continued to rise to the challenges presented during fiscal 2020.  Through our commitment to operational excellence and customer service excellence, our team delivered record revenue of $3.4 billion for the fiscal year, representing 7% year-over-year growth.  This strong growth, coupled with robust operating margin, led to record non-GAAP diluted earnings per share of $4.08 for fiscal year 2020, an increase of 19% from the previous fiscal year.”

Mr. Kelsey concluded, “In alignment with our prior comments, we expect demand to moderate in the fiscal first quarter of 2021 and are guiding revenue in the range of $810 to $850 million.  We project continued operating strength and are guiding GAAP operating margin for the quarter in the range of 4.9% to 5.3%.  With this strong operating performance, we anticipate delivering GAAP diluted earnings per share of $1.02 to $1.17 for the fiscal first quarter.  Our guidance assumes that COVID-19 will not materially impact end markets or our operations beyond what has already occurred.  We expect a return to quarterly sequential revenue growth by the second half of fiscal 2021.  We also anticipate robust operating performance for the fiscal year.  We believe that the combination of these two factors should lead to solid EPS expansion for fiscal 2021.”

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 56% of revenue during both the fiscal fourth quarter and fiscal third quarter of 2020.  This is up five percentage points from the fiscal fourth quarter of 2019.  For both fiscal years 2020 and 2019, top 10 customers comprised 55% of revenue.

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 a full reconciliation of non-GAAP measures to comparable GAAP measures, please refer to the attached Non-GAAP Supplemental Information Tables.

ROIC and Economic Return
ROIC for fiscal year 2020 was 14.0%.  Plexus defines ROIC as tax-effected annualized adjusted operating income divided by average invested capital over a five-quarter period for the fiscal year.  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 2020 was 8.8%.  ROIC for fiscal year 2020 less Plexus’ weighted average cost of capital resulted in an economic return of 5.2%.

Free Cash Flow
Plexus defines free cash flow as cash flows provided by operations less capital expenditures.  For the three months ended October 3, 2020, cash flows provided by operations was $117.8 million, less capital expenditures of $8.9 million, resulting in free cash flow of $108.9 million.  For the fiscal year ended October 3, 2020, cash flows provided by operations was $210.4 million, less capital expenditures of $50.1 million, resulting in free cash flow of $160.3 million.

Conference Call and Webcast Information

Investor and Media Contact
Heather Beresford
+1.920.751.3612
heather.beresford@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 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 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 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 2019 Form 10-K and subsequently filed quarterly reports on Form 10-Q.