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Plexus (PLXS - Free Report) reported third-quarter fiscal 2018 adjusted earnings of 79 cents per share that missed the Zacks Consensus Estimate by 3 cents. However, the figure increased 6.8% from the year-ago quarter.
Revenues of $726 million surpassed the consensus mark of $720 million and increased 17.4% on a year-over-year basis. However, the company failed to address an additional demand of $10 million in the reported quarter due to shortages in component supply.
Segment Details
Healthcare/Life Sciences revenues (36.7% of revenues) were up nearly 27% from the year-ago quarter to $266 million.
Industrial/Commercial revenues (30.9%) were up 11.9% year over year to $225 million.
Defense/Security/Aerospace segment revenues (15.8%) grew 5.5% on a year-over-year basis to $115 million.
Revenues from the Communications sector (16.5%) grew 21% year over year to $120 million.
Region-wise, revenues from the Americas (AMER) increased 12.5% from the year-ago quarter to $298 million. Revenues from the Asia Pacific region (APAC) rose 17.8% to $384 million. Revenues from Europe, the Middle East and Africa (EMEA) totaled $74 million, up 39.6% year over year.
Contract Wins
Plexus won 45 new manufacturing contracts worth $202 million in the fiscal third quarter. Manufacturing wins contributed $828 million in revenues in the trailing four quarters.
Region wise, APAC’s share in manufacturing contract wins was highest at $117 million, while segment wise, Industrial/Commercial generated $96 million.
Plexus exited the quarter with a funnel of $2.7 billion in qualified manufacturing opportunities. The demand in the Healthcare/Life Sciences sector was robust with a funnel of qualified manufacturing opportunities at $1.4 billion. Additionally, Plexus won engineering contracts worth $38 million in the quarter.
Notably, the top 10 customers of the company together accounted for 57% of net revenues, down 1% sequentially.
Plexus reported adjusted operating income of $32.4 million, up 10% year over year.
Adjusted gross margin contracted 60 basis points (bps) on a year-over-year basis to 9.3% and adjusted operating margin contracted 30 bps on a year-over-year basis to 4.5%. The decline can be attributed to lower-than-expected volumes for high-margin products and operational efficiencies experienced due to supply chain constraints.
Reported selling and administrative expenses (4.9% of revenues) increased 11.5% from the year-ago quarter to approximately $35 million.
Balance Sheet & Cash Flow
Plexus exited the quarter with cash & cash equivalents worth $333 million compared with $402.5 million as of Mar 31, 2018.
In the fiscal third quarter, the company generated cash of $39 million from operations and used $23 million for capital expenditures, resulting in free cash flow of $16 million. Share repurchases for the quarter amounted to $56.7 million.
Outlook
For the fourth quarter of fiscal 2018, revenues are projected in the range of $735-$775 million. Operating margin is expected to be in the band of 4.7% to 5%.
The company expects to achieve 12% revenue growth in fiscal 2018 on the back of program wins and improving end markets from Healthcare/Life Sciences, Industrial/Commercial and Aerospace and Defense segments.
Long-term earnings growth rate for Micron, Intel and NetApp is projected to be 8%, 8% and 13.8%, respectively.
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Plexus (PLXS) Misses Q3 Earnings Estimates, Beats Revenues
Plexus (PLXS - Free Report) reported third-quarter fiscal 2018 adjusted earnings of 79 cents per share that missed the Zacks Consensus Estimate by 3 cents. However, the figure increased 6.8% from the year-ago quarter.
Revenues of $726 million surpassed the consensus mark of $720 million and increased 17.4% on a year-over-year basis. However, the company failed to address an additional demand of $10 million in the reported quarter due to shortages in component supply.
Segment Details
Healthcare/Life Sciences revenues (36.7% of revenues) were up nearly 27% from the year-ago quarter to $266 million.
Industrial/Commercial revenues (30.9%) were up 11.9% year over year to $225 million.
Defense/Security/Aerospace segment revenues (15.8%) grew 5.5% on a year-over-year basis to $115 million.
Revenues from the Communications sector (16.5%) grew 21% year over year to $120 million.
Region-wise, revenues from the Americas (AMER) increased 12.5% from the year-ago quarter to $298 million. Revenues from the Asia Pacific region (APAC) rose 17.8% to $384 million. Revenues from Europe, the Middle East and Africa (EMEA) totaled $74 million, up 39.6% year over year.
Contract Wins
Plexus won 45 new manufacturing contracts worth $202 million in the fiscal third quarter. Manufacturing wins contributed $828 million in revenues in the trailing four quarters.
Region wise, APAC’s share in manufacturing contract wins was highest at $117 million, while segment wise, Industrial/Commercial generated $96 million.
Plexus exited the quarter with a funnel of $2.7 billion in qualified manufacturing opportunities. The demand in the Healthcare/Life Sciences sector was robust with a funnel of qualified manufacturing opportunities at $1.4 billion. Additionally, Plexus won engineering contracts worth $38 million in the quarter.
Notably, the top 10 customers of the company together accounted for 57% of net revenues, down 1% sequentially.
Plexus Corp. Price and Consensus
Plexus Corp. Price and Consensus | Plexus Corp. Quote
Operating Details
Plexus reported adjusted operating income of $32.4 million, up 10% year over year.
Adjusted gross margin contracted 60 basis points (bps) on a year-over-year basis to 9.3% and adjusted operating margin contracted 30 bps on a year-over-year basis to 4.5%. The decline can be attributed to lower-than-expected volumes for high-margin products and operational efficiencies experienced due to supply chain constraints.
Reported selling and administrative expenses (4.9% of revenues) increased 11.5% from the year-ago quarter to approximately $35 million.
Balance Sheet & Cash Flow
Plexus exited the quarter with cash & cash equivalents worth $333 million compared with $402.5 million as of Mar 31, 2018.
In the fiscal third quarter, the company generated cash of $39 million from operations and used $23 million for capital expenditures, resulting in free cash flow of $16 million. Share repurchases for the quarter amounted to $56.7 million.
Outlook
For the fourth quarter of fiscal 2018, revenues are projected in the range of $735-$775 million.
Operating margin is expected to be in the band of 4.7% to 5%.
The company expects to achieve 12% revenue growth in fiscal 2018 on the back of program wins and improving end markets from Healthcare/Life Sciences, Industrial/Commercial and Aerospace and Defense segments.
Zacks Rank & Stocks to Consider
Plexus currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector include Micron (MU - Free Report) , Intel (INTC - Free Report) and NetApp (NTAP - Free Report) . All the three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.
Long-term earnings growth rate for Micron, Intel and NetApp is projected to be 8%, 8% and 13.8%, respectively.
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Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
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