Attached files
| file | filename |
|---|---|
| EX-99.1 - EXHIBIT 99.1 - PLEXUS CORP | plxsf16q3earningsrelease-e.htm |
| 8-K - 8-K - PLEXUS CORP | a8kcoverpageq3f16.htm |
FISCAL THIRD QUARTER 2016
FINANCIAL RESULTS
July 21, 2016
SAFE HARBOR & FAIR DISCLOSURE STATEMENT
2
Any statements made during our call today and information included in the supporting material
that is not historical in nature, such as statements in the future tense and statements that
include "believe," "expect," "intend," "plan," "anticipate," and similar terms and concepts, are
forward‐looking statements. Forward‐looking statements are not guarantees since there are
inherent difficulties in predicting future results, and actual results could differ materially from
those expressed or implied in the forward‐looking statements. For a list of factors that could
cause actual results to differ materially from those discussed, please refer to the Company’s
periodic SEC filings, particularly the risk factors in our Form 10‐K filing for the fiscal year ended
October 3, 2015, and the Safe Harbor and Fair Disclosure statement in yesterday’s press release.
Plexus provides non‐GAAP supplemental information, such as ROIC, Economic Return, and free
cash flow, because those measures are used for internal management goals and decision
making, and because they provide additional insight into financial performance. In addition,
management uses these and other non‐GAAP measures, such as adjusted net income and
adjusted operating margin, to provide a better understanding of core performance for purposes
of period‐to‐period comparisons. For a full reconciliation of non‐GAAP supplemental
information please refer to yesterday’s press release and our periodic SEC filings.
FISCAL THIRD QUARTER RESULTS
3
Q3F16 Guidance
Apr 20, 2016
Q3F16
Jul 2, 2016
Q2F16
Apr 2, 2016
Q3F16 vs. Q2F16
Revenue ($ millions) $640 to $670 $668 $619 + 8%
Diluted EPS $0.76 $0.50 + 52%
Non‐GAAP Diluted EPS
excluding restructuring
$0.73 to $0.81 $0.82 $0.55 + 49%
ROIC 13.0% 11.6% + 140 bps
• Sequential revenue growth of 8%; high‐end of guidance range
• New program ramps in Industrial/Commercial and Healthcare/Life Sciences sectors
• Strong operating performance delivered non‐GAAP EPS a penny above guidance
• ROIC improves to 13%; 200 bps of Economic Return
• Strong free cash flow
• Healthy new business wins
FISCAL FOURTH QUARTER
4
Q4F16 Guidance
Revenue $655 to $685 million
Non‐GAAP Diluted EPS $0.76 to $0.84
• Includes $0.11 stock‐based compensation expense
• Excludes restructuring charges and other special items
Mid‐point of revenue guidance suggests flat to a modest sequential increase
• New program ramps in I/C and D/S/A offset by N/C end‐market weakness
Mid‐point of EPS guidance suggests strong operating margin
• Cost reduction and productivity improvement initiatives fully implemented
• Target operating margin range achievable in future quarters
KEY OPERATIONS METRICS
Operating Margin Target Range: 4.7% to 5.0%
* Represents midpoint of guidance
5
3.0%
3.5%
4.0%
4.5%
5.0%
5.5%
450
500
550
600
650
700
Q1F13 Q2F13 Q3F13 Q4F13 Q1F14 Q2F14 Q3F14 Q4F14 Q1F15 Q2F15 Q3F15 Q4F15 Q1F16 Q2F16 Q3F16 Q4F16*
R
e
v
e
n
u
e
$
M
Revenue Adjusted Operating Margin
4.70% ‐ 5.00%
Goal = 5.00%
3.5%
20 bps
20 bps
10 bps
90 bps
4.9%
20 bps
10 bps
20 ‐ 50 bps
Q1F16 Operating
Margin Guidance
Midpoint
Guadalajara
Ramp
Operating
Expenses
Livingston
Restructuring
Benefits
Productivity
Improvements
Q3 Results Fremont
Restructuring
Benefits
EMEA
Growth
Growth
Investments
Operating Margin
Target
ADJUSTED OPERATING MARGIN
Q1F16 – Q3F16 Future
Cost Reduction &
Productivity Improvements
6
PERFORMANCE BY SECTOR
7
Q3F16
Jul 2, 2016
Q2F16
Apr 2, 2016
Q3F16 vs. Q2F16 Q4F16 Expectations
(percentage points)
Networking/
Communications
$156 23% $157 25% ‐ 1% Down low double
Healthcare/ Life
Sciences
$207 31% $190 31% + 9% Down low single
Industrial/
Commercial
$202 30% $169 27% + 20% Up high single
Defense/ Security/
Aerospace
$103 16% $103 17% Flat Up mid single
Total Revenue $668 100% $619 100% + 8%
Revenue in millions
MANUFACTURING WINS BY REGION
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• $194M in annualized manufacturing revenue
when fully ramped (46 programs)
• Best quarterly wins result since Q2F15
• Strength in AMER and APAC regions
$113M
$75M
$6M
Q3F16
AMER
APAC
EMEA
Wins Momentum = TFQ Wins / TFQ Revenue
MANUFACTURING WINS BY SECTOR
• Sustained robust wins in Industrial/Commercial
• Sector wins momentum supports healthy portfolio
$32M
$45M
$95M
$22M
Q3F16
N/C
HC/LS
I/C
D/S/A
9
MANUFACTURING WINS MOMENTUM
Trailing Four Quarters (TFQ) for Manufacturing Wins TFQ
$714M
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
%
o
f
T
F
Q
S
a
l
e
s
N
e
w
W
i
n
s
(
$
m
i
l
l
i
o
n
s
)
TFQ Wins TFQ Wins % of TFQ Sales New Wins
Goal
25%
Quarterly Target: ~ $160M
10
MANUFACTURING FUNNEL
• Manufacturing funnel healthy at $2.3B
• HC/LS and I/C funnels particularly strong
• Supports the delivery of our differentiated portfolio
11
INCOME STATEMENT
12
Q3F16 Comments
Revenue $668 million High end of guidance range from stronger revenue
across most sectors
Gross margin 9.4% Within guidance range; sequential improvement
of 75 basis points from better leverage and
productivity improvement initiatives
Selling & administrative
expenses
$29.8 million Within guidance range; 4.5% of revenue
Operating margin 4.6% Includes $1.8 million of restructuring charges
Adjusted operating margin
excluding restructuring charges
4.9% Within guidance and target margin range
Diluted EPS $0.76 Includes $1.8 million or $0.06 per share of
restructuring charges
Non‐GAAP Diluted EPS $0.82 Above guidance range of $0.73 to $0.81
BALANCE SHEET AND CASH FLOWS
13
Q3F16 Comments
Return on invested capital 13.0% 200 basis points above fiscal 2016 WACC of 11%
Share repurchases $7.2 million ~ 170,000 at an average price of $42.13 per share
Free cash flow $24.3 million Cash from operations: $31.3 million
Capital expenditures: $7.0 million
Cash cycle days 63 days Low end of our guidance range (63 to 67 days)
WORKING CAPITAL TRENDS
14
Q1F14 Q2F14 Q3F14 Q4F14 Q1F15 Q2F15 Q3F15 Q4F15 Q1F16 Q2F16 Q3F16
Inventory Days 83 84 84 80 82 86 88 85 88 91 87
A/R Days 51 49 48 44 52 48 48 53 53 48 51
A/P Days 64 63 67 60 53 63 62 60 59 62 62
Customer Deposit Days 8 8 8 8 9 12 12 12 11 11 13
Net Cash Cycle Days 62 62 57 56 72 59 62 66 71 66 63
FISCAL FOURTH QUARTER 2016 GUIDANCE
15
Guidance
Revenue $655 to $685 million
Non‐GAAP diluted EPS $0.76 to $0.84
Gross margin 9.4% to 9.7%
SG&A $30 to $31 million
Adjusted operating margin * 4.8% to 5.1%
Depreciation ~ $12 million
Q4 tax rate *
F16 tax rate *
9% to 11%
10% to 12%
Cash cycle days 64 to 68 days
F16 capital expenditures ~ $40 million
* Before restructuring charges and special items.
Q&A
ANALYSTS PLEASE CONFORM TO:
ONE QUESTION
ONE FOLLOW‐UP
THANKS