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Plexus (PLXS) Surpasses Q4 Earnings and Revenue Estimates
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Plexus (PLXS - Free Report) reported fourth-quarter fiscal 2018 adjusted earnings of 96 cents per share, beating the Zacks Consensus Estimate by 9 cents. The figure rose 14.3% year over year.
Revenues of $771.2 million beat the consensus mark of $763 million and increased 15.1% on a year-over-year basis. Strong performance of Industrial/Commercial segment across all the end-markets drove top-line growth.
Segment Details
Healthcare/Life Sciences revenues (37.5% of revenues) were up nearly 24% from the year-ago quarter to $289 million.
Industrial/Commercial revenues (31.6% of revenues) were up 29.1% year over year to $244 million.
Defense/Security/Aerospace segment revenues (15.6%) grew 11.1% on a year-over-year basis to $120 million.
Revenues from the Communications sector (15.3%) declined 15.7% year over year to $118 million.
Region-wise, revenues from the Americas (AMER) increased 1.9% from the year-ago quarter to $320 million. Revenues from the Asia Pacific region (APAC) rose 25.2% to $418 million. Revenues from Europe, the Middle East and Africa (EMEA) totaled $69 million, up 25.5% year over year.
Contract Wins
Plexus won 44 manufacturing contracts during the quarter worth $233 million. Manufacturing wins contributed $889 million in revenues in the trailing four quarters.
Region wise, APAC’s share in manufacturing contract wins was highest at $418 million while segment wise, Healthcare/Life Sciences generated $289 million.
Notably, the top 10 customers of the company together accounted for 59% of net revenues, up 2% points sequentially.
Adjusted gross margin contracted 40 basis points (bps) on a year-over-year basis to 9.5% in fourth-quarter. The decline in gross margin can be attributed to operational inefficiencies experienced due to supply chain constraints.
Reported selling and administrative expenses (4.7% of revenues) increased 11.6% from the year-ago quarter to approximately $36.3 million.
Plexus reported adjusted operating income of $36.9 million, up 8.8% year over year. However, adjusted operating margin increased 30 bps on a year-over-year basis to 4.8%.
Return on Invested Capital (ROIC) for both fiscal 2018 and the fourth quarter was 16.1%.
Balance Sheet & Cash Flow
Plexus exited the fourth quarter with cash & cash equivalents worth $297 million compared with $333 million in the third quarter.
In the fiscal fourth quarter, the company generated cash of $25.4 million from operations and used $10.7 million for capital expenditures, resulting in free cash flow of $14.7 million. Share repurchases for the quarter amounted to $39.2 million.
At the end of the fourth quarter, it had long-term debt of $183 million, significantly up from $26 million in the third quarter.
Outlook
For the first quarter of fiscal 2019, revenues are projected in the range of $750 million and $790 million. Operating margin is expected to be in the band of 4.6% and 5%.
Improving end markets are expected to drive Healthcare/Life Sciences, Industrial/Commercial and Aerospace and Defense segments growth.
The company expects earnings in the range of 85 cents to 95 cents for first quarter of fiscal 2019 on the back of program wins and share repurchases.
Long-term earnings growth rate for Microsoft, Nikon and Twilio is projected to be 12.4%, 22.2% and 9%, respectively.
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Plexus (PLXS) Surpasses Q4 Earnings and Revenue Estimates
Plexus (PLXS - Free Report) reported fourth-quarter fiscal 2018 adjusted earnings of 96 cents per share, beating the Zacks Consensus Estimate by 9 cents. The figure rose 14.3% year over year.
Revenues of $771.2 million beat the consensus mark of $763 million and increased 15.1% on a year-over-year basis. Strong performance of Industrial/Commercial segment across all the end-markets drove top-line growth.
Segment Details
Healthcare/Life Sciences revenues (37.5% of revenues) were up nearly 24% from the year-ago quarter to $289 million.
Industrial/Commercial revenues (31.6% of revenues) were up 29.1% year over year to $244 million.
Defense/Security/Aerospace segment revenues (15.6%) grew 11.1% on a year-over-year basis to $120 million.
Revenues from the Communications sector (15.3%) declined 15.7% year over year to $118 million.
Region-wise, revenues from the Americas (AMER) increased 1.9% from the year-ago quarter to $320 million. Revenues from the Asia Pacific region (APAC) rose 25.2% to $418 million. Revenues from Europe, the Middle East and Africa (EMEA) totaled $69 million, up 25.5% year over year.
Contract Wins
Plexus won 44 manufacturing contracts during the quarter worth $233 million. Manufacturing wins contributed $889 million in revenues in the trailing four quarters.
Region wise, APAC’s share in manufacturing contract wins was highest at $418 million while segment wise, Healthcare/Life Sciences generated $289 million.
Notably, the top 10 customers of the company together accounted for 59% of net revenues, up 2% points sequentially.
Plexus Corp. Price, Consensus and EPS Surprise
Plexus Corp. Price, Consensus and EPS Surprise | Plexus Corp. Quote
Operating Details
Adjusted gross margin contracted 40 basis points (bps) on a year-over-year basis to 9.5% in fourth-quarter. The decline in gross margin can be attributed to operational inefficiencies experienced due to supply chain constraints.
Reported selling and administrative expenses (4.7% of revenues) increased 11.6% from the year-ago quarter to approximately $36.3 million.
Plexus reported adjusted operating income of $36.9 million, up 8.8% year over year. However, adjusted operating margin increased 30 bps on a year-over-year basis to 4.8%.
Return on Invested Capital (ROIC) for both fiscal 2018 and the fourth quarter was 16.1%.
Balance Sheet & Cash Flow
Plexus exited the fourth quarter with cash & cash equivalents worth $297 million compared with $333 million in the third quarter.
In the fiscal fourth quarter, the company generated cash of $25.4 million from operations and used $10.7 million for capital expenditures, resulting in free cash flow of $14.7 million. Share repurchases for the quarter amounted to $39.2 million.
At the end of the fourth quarter, it had long-term debt of $183 million, significantly up from $26 million in the third quarter.
Outlook
For the first quarter of fiscal 2019, revenues are projected in the range of $750 million and $790 million. Operating margin is expected to be in the band of 4.6% and 5%.
Improving end markets are expected to drive Healthcare/Life Sciences, Industrial/Commercial and Aerospace and Defense segments growth.
The company expects earnings in the range of 85 cents to 95 cents for first quarter of fiscal 2019 on the back of program wins and share repurchases.
Zacks Rank & Stocks to Consider
Plexus currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector include Microsoft (MSFT - Free Report) , Nikon Corp. (NINOY - Free Report) and Twilio Inc. (TWLO - 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 Microsoft, Nikon and Twilio is projected to be 12.4%, 22.2% and 9%, respectively.
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Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
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