PLXS - Plexus Announces Fiscal Fourth Quarter and Fiscal Year 2023 Financial Results

NEENAH, WI, Oct. 25, 2023 (GLOBE NEWSWIRE) -- Plexus Corp. (NASDAQ: PLXS) today announced financial results for our fiscal fourth quarter and fiscal year ended September 30, 2023, and guidance for our fiscal first quarter 2024 ending December 30, 2023.

• Reports fiscal fourth quarter 2023 revenue of $1.02 billion, GAAP operating margin of 5.2% and GAAP diluted EPS of $1.44, including $0.21 of stock-based compensation expense
• Reports record fiscal 2023 revenue of $4.21 billion, GAAP operating margin of 4.7% and GAAP diluted EPS of $4.95, including $0.75 of restructuring and other charges as well as $0.76 of stock-based compensation expense
• Reports fiscal 2023 non-GAAP operating margin of 5.2% and non-GAAP EPS of $5.70, including $0.76 of stock-based compensation expense
• Initiates fiscal first quarter 2024 revenue guidance of $990 million to $1.03 billion with GAAP diluted EPS of $1.15 to $1.33, including $0.19 of stock-based compensation expense

Fiscal Fourth Quarter 2023 Information

• Won 30 manufacturing programs during the quarter representing $192 million in annualized revenue when fully ramped into production
• Delivered fiscal 2023 manufacturing wins of $946 million in annualized revenue when fully ramped into production
• Purchased $3.4 million of our shares at an average price of $98.91 per share under our current $50.0 million share repurchase authorization, leaving $5.7 million available
  

Fiscal Year 2023 Information

• Delivered $62 million of free cash flow
• Produced ROIC of 13.4%, representing an economic return of 440 basis points above our weighted average cost of capital of 9.0%
• Purchased $40.9 million of our shares at an average price of $95.96 per share under our share repurchase authorization
  

Todd Kelsey, Chief Executive Officer, commented, “Fiscal 2023 was an exceptional year for Plexus. Our team’s focus on delivering operational and customer service excellence resulted in outstanding financial performance. For fiscal 2023, we delivered revenue growth in excess of 10%, 5.2% non-GAAP operating margin and free cash flow of $62 million. We also delivered excellent results for our fiscal fourth quarter, with in-line revenue of $1.024 billion, GAAP operating margin of 5.2%, which met the high-end of guidance, and GAAP EPS of $1.44, which exceeded guidance.”

Mr. Kelsey continued, “Our strong fiscal 2023 performance was also demonstrated through the advancement of our sustainable and responsible business practices. I am proud of how our team members supported our vision of helping to build a better world in fiscal 2023, contributing more than 19,000 volunteer hours to our local communities, significantly expanding the reach and impact of our employee resource groups, donating over $1 million through our Plexus charitable foundation and substantially exceeding our 5% energy intensity reduction goal for the year. In addition, the Bevi smart water dispenser that is manufactured in our Appleton, WI facility was recently voted the Coolest Thing Made in Wisconsin for 2023. This product highlights how we partner with our customers to combine innovation and sustainability to build a better world.”

Patrick Jermain, Executive Vice President and Chief Financial Officer, commented, “We generated $66 million in free cash flow for the fiscal fourth quarter, a result well above our projections. Contributing to this strong performance was our fiscal fourth quarter cash cycle of 87 days, which was favorable to our expectations and sequentially lower by 3 days. For fiscal 2023, we delivered return on invested capital of 13.4%, which was 440 basis points above our weighted average cost of capital. We drove this result and created substantial shareholder value through strong operating performance, prudent capital investments and reductions in inventory.”

Mr. Kelsey commented, “We are guiding fiscal first quarter revenue of $990 million to $1.03 billion, GAAP operating margin of 4.8% to 5.3% and GAAP EPS of $1.15 to $1.33. We expect to benefit from sustained, robust commercial aerospace demand, improving semiconductor capital equipment demand and new program ramps, while also facing headwinds as a result of short-term inventory corrections with a small number of Healthcare/Life Sciences customers and ongoing supply chain challenges with certain lagging edge semiconductors.”

Mr. Kelsey concluded, “We continue to forecast accelerating revenue growth as fiscal 2024 progresses, leveraging strong demand in our Aerospace/Defense and Industrial market sectors, increasing new program ramp momentum and lessening supply chain challenges, which creates the opportunity to capture our ongoing unfulfilled backlog of customer demand. As revenue growth accelerates, we also anticipate operating margin expansion. Consequently, we remain confident in achieving our goal of $5 billion in revenue with 5.5% GAAP operating margin by our 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 the fourth quarter of fiscal 2023. This is down three percentage points from the third quarter of fiscal 2023 and ten percentage points from the fourth quarter of fiscal 2022. For fiscal 2023, top 10 customers comprised 50% of revenue, down six percentage points from fiscal 2022.

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 fiscal year 2023 was 13.4%. 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 2023 was 9.0%. ROIC for fiscal year 2023 less Plexus’ weighted average cost of capital resulted in an economic return of 4.4%.

Free Cash Flow

Plexus defines free cash flow as cash flows provided by operations less capital expenditures. For the three months ended September 30, 2023, cash flows provided by operations was $89.8 million, less capital expenditures of $24.2 million, resulting in free cash flow of $65.6 million. For the fiscal year ended September 30, 2023, cash flows provided by operations was $165.8 million, less capital expenditures of $104.0 million, resulting in free cash flow of $61.8 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 nearly 25,000 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 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 ability to realize anticipated savings from restructuring or similar actions, as well as the adequacy of related charges as compared to actual expenses; 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 2022 Form 10-K.