Attached files
| file | filename |
|---|---|
| EX-99.1 - EXHIBIT 99.1 - PLEXUS CORP | plxsf17q1earningsrelease-e.htm |
| 8-K - 8-K - PLEXUS CORP | a8kcoverpageq1f17.htm |
FISCAL FIRST QUARTER 2017
FINANCIAL RESULTS
January 19, 2017
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 1, 2016, 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 FIRST QUARTER RESULTS
3
Q1F17 Guidance
Oct 26, 2016
Q1F17
Dec 31, 2016
Q4F16
Oct 1, 2016
Q1F17 vs. Q4F16
Revenue ($ millions)
$620 to $650 $635 $653 - 3%
Diluted EPS
$0.82 $0.56 + 46%
Non-GAAP Diluted EPS
excluding special items
$0.74 to $0.82 $0.82 $0.82 Flat
ROIC 17.3%
13.8% + 350 bps
• Strong operating performance delivered solid GAAP EPS
• Late quarter pull-ins within Communications sector
• Softness in Defense/Security/Aerospace
• ROIC improved to 17.3%; 680 bps of Economic Return
Q1F17 HIGHLIGHTS
• Record operating profit of $33.9M
– Operating margin of 5.3%
• Cash cycle of 66 days
– One day below the low end of our guidance range
• Free cash flow of $73M
• Return on invested capital of 17.3%
– Economic Return (ER) 680 basis points above WACC
– ER performance best since fiscal 2006
• Full recovery from Typhoon Meranti
– Strengthened customer relationships
• Accelerating manufacturing wins
momentum
– $217M wins within quarter
– Trailing four quarter wins ratio of 30%
– Business expansion with two top customers
• Record funnel of qualified
manufacturing opportunities – $2.8B
• Strong engineering wins providing
robust backlog
• Customer Net Promoter Score of 82%
– Well above an industry benchmark
Solid performance provides optimism for fiscal 2017
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FISCAL SECOND QUARTER
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Q2F17 Guidance
Revenue
$620 to $650 million
GAAP Diluted EPS
$0.71 to $0.79
Includes $0.11 stock-based compensation expense
Midpoint of guidance suggests flat revenue
• Order delays with an Industrial/Commercial customer
• End-market weakness in Communications
• Underlying growth within remainder of business
Midpoint of EPS guidance suggests strong operating margin
• Absorbed 40 basis point impact of U.S. payroll tax reset and merit adjustments
Guiding GAAP EPS
F17 FOCUS: SUSTAINED REVENUE GROWTH
Efficiently transition and ramp new programs
Leverage strong Net Promoter Scores
Accelerate wins momentum
Increase funnel of qualified Manufacturing Solutions opportunities
Continue the Quest for Excellence
• Deliver Operational Excellence; exceptional quality products and services, on-
time, at a fair price
• Leverage One Plexus mindset to drive consistency across the globe
• Provide Customer Service Excellence
Goal: Exit F17 at $3 Billion annual run rate while
achieving target operating margin range every quarter
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PERFORMANCE BY SECTOR
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Q1F17
Dec 31, 2016
Q4F16
Oct 1, 2016
Q1F17 vs. Q4F16 Q2F17 Expectations
(percentage points)
Healthcare/ Life
Sciences
$211 33% $192 29% + 9% Flat
Industrial/
Commercial
$206 32% $231 35% - 11% Down mid single
Communications
$131 21% $128 20% + 3% Down mid single
Defense/ Security/
Aerospace
$87 14% $102 16% - 15% Up mid teens
Total Revenue $635 100% $653 100% - 3%
Revenue in millions
MANUFACTURING WINS BY REGION
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• $217M in annualized manufacturing revenue
when fully ramped (51 programs)
• Third consecutive quarter with wins greater
than $190M
• Balanced wins across the regions
$106M
$67M
$44M
Q1F17
AMER
APAC
EMEA
Wins Momentum = TFQ Wins / TFQ Revenue
MANUFACTURING WINS BY SECTOR
• Wins balanced across market sectors
• Sector wins support healthy portfolio
$55M
$64M
$54M
$44M
Q1F17
HC/LS
I/C
COMM
D/S/A
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MANUFACTURING WINS MOMENTUM
Trailing Four Quarters (TFQ) for Manufacturing Wins
TFQ
$785M
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
FQ
S
al
es
N
ew
W
in
s
$M
TFQ Wins TFQ Wins % of TFQ Sales New Wins
Goal
25%
Quarterly Target: ~ $160M
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MANUFACTURING FUNNEL
• Record manufacturing funnel at $2.8B
• HC/LS and I/C funnels strong, with D/S/A funnel on upward trajectory
• Supports the delivery of our differentiated portfolio
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3.0%
3.5%
4.0%
4.5%
5.0%
5.5%
450
500
550
600
650
700
Q1F16 Q2F16 Q3F16 Q4F16 Q1F17 Q2F17*
R
ev
en
ue
$
M
Revenue Adjusted Operating Margin
REVENUE AND OPERATING MARGIN
Operating Margin Target Range: 4.7% to 5.0%
* Represents midpoint of guidance
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INCOME STATEMENT
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Q1F17 Comments
Revenue $635 million At midpoint of guidance range of $620 to $650
million
Gross margin 10.1% Above guidance range of 9.6% to 9.8%; sequential
improvement of 20 basis points from operational
performance and supply chain productivity
Selling & administrative
expenses
$30.5 million Slightly higher than guidance range of $29 to $30
million due to higher variable incentive
compensation expense
Operating margin 5.3% Above guidance range of 4.9% to 5.2%
GAAP diluted EPS $0.82 At top end of guidance range of $0.74 to $0.82
BALANCE SHEET AND CASH FLOWS
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Q1F17 Comments
Return on invested capital 17.3% 680 basis points above fiscal 2017 WACC of 10.5%
Share repurchases $7.1 million ~145,000 at an average price of $48.79 per share
Free cash flow
$73 million Cash from operations: $80 million
Capital expenditures: $7 million
Cash cycle days
66 days
One day better than guidance range of 67 to 71
days driven by lower Accounts Receivable days
WORKING CAPITAL TRENDS
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Q1F14 Q2F14 Q3F14 Q4F14 Q1F15 Q2F15 Q3F15 Q4F15 Q1F16 Q2F16 Q3F16 Q4F16 Q1F17
Inventory Days 83 84 84 80 82 86 88 85 88 91 87 87 90
A/R Days 51 49 48 44 52 48 48 53 53 48 51 58 49
A/P Days 64 63 67 60 53 63 62 60 59 62 62 61 60
Customer Deposit Days 8 8 8 8 9 12 12 12 11 11 13 13 13
Net Cash Cycle Days 62 62 57 56 72 59 62 66 71 66 63 71 66
FISCAL SECOND QUARTER 2017 GUIDANCE
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Guidance
Revenue $620 to $650 million
GAAP diluted EPS $0.71 to $0.79
Gross margin 9.8% to 10.1%
SG&A $30.5 to $31.5 million
Operating margin 4.9% to 5.2%
Depreciation ~$12 million
Q2 tax rate
F17 tax rate
9% to 11%
8% to 10%
Cash cycle days 65 to 69 days
F17 capital expenditures $50 to $60 million
Q&A
ANALYSTS PLEASE CONFORM TO:
ONE QUESTION
ONE FOLLOW-UP
THANKS