Plexus Corp (PLXS - Free Report) reported lower-than-expected fourth quarter fiscal 2016 results. Quarterly adjusted earnings of 67 cents per share and revenues of $653.1 million missed the respective Zacks Consensus Estimate of 80 cents and $670.1 million. Revenues were down 2.3% on a year over year given continued weakness in Networking/Communications sector.
Revenues from the Networking/Communications sector (20% of total revenue) plummeted 28.5% year over year to $128 million.
Healthcare/Life Sciences (29%) revenues were up 4.9% from the year-ago quarter to $192 million.
Industrial/Commercial (35%) revenues increased 14.9% year over year to $231 million.
Defense/Security/Aerospace segment (16%) revenues fell 3.8% on a year-over-year basis to $102 million.
During the quarter, the company won 37 programs for which it anticipates approximately $200 million in annualized revenues once production commences.
Region-wise, the company’s revenues from Americas and Asia Pacific declined 7% and 6.3%, respectively, on a year-over-year basis. Nonetheless, Plexus’ revenues from Europe, Middle East, and Africa regions were almost flat year over year at $44 million.
Margins
Plexus reported adjusted operating profit of $33.5 million in the quarter, up 17.4% year over year. Adjusted operating margin increased 80 basis points year over year to 5.1%.
Balance Sheet & Cash Flow
Plexus exited the fiscal with cash & cash equivalents worth $433 million compared with $357.1 million as on fiscal 2015-end. The company had long-term debt and capital lease obligations of about $184 million compared with $258.3 million as of Oct 31, 2015.
For the fiscal, the company generated $127.7 million in cash flow from operations in the quarter and used $31.1 million for capital expenditures. Free cash flow came in at about $96.6 million. Share repurchases for the fiscal amounted to $30 million.
Outlook
For the first quarter of fiscal 2017, revenues are projected in the range of $620 million - $650 million. GAAP earnings are projected within 74 to 82 cents per share.
Our Take
We believe new program wins (added over $747 million in revenues in the trailing four quarters) along with global expansion will drive growth over the long term. Plexus remains confident of achieving $3 billion revenue run rate in the fiscal 2017. In fiscal 2016, the company reported full year revenues of $2.6 billion. Additionally, the consolidation of the company’s production facilities in low-cost areas is expected to boost margins, going forward.
However, a mature electronic manufacturing services market and intense competition from the likes of Jabil Circuit (JBL - Free Report) , Celestica Inc. (CLS - Free Report) and Flextronics (FLEX - Free Report) remain headwinds. Additionally, the company expects weakness in the Networking/Communications market to impact the business in the near term.
Currently, Plexus has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Plexus Corp (PLXS - Free Report) reported lower-than-expected fourth quarter fiscal 2016 results. Quarterly adjusted earnings of 67 cents per share and revenues of $653.1 million missed the respective Zacks Consensus Estimate of 80 cents and $670.1 million. Revenues were down 2.3% on a year over year given continued weakness in Networking/Communications sector.
Revenues from the Networking/Communications sector (20% of total revenue) plummeted 28.5% year over year to $128 million.
Healthcare/Life Sciences (29%) revenues were up 4.9% from the year-ago quarter to $192 million.
Industrial/Commercial (35%) revenues increased 14.9% year over year to $231 million.
Defense/Security/Aerospace segment (16%) revenues fell 3.8% on a year-over-year basis to $102 million.
During the quarter, the company won 37 programs for which it anticipates approximately $200 million in annualized revenues once production commences.
Region-wise, the company’s revenues from Americas and Asia Pacific declined 7% and 6.3%, respectively, on a year-over-year basis. Nonetheless, Plexus’ revenues from Europe, Middle East, and Africa regions were almost flat year over year at $44 million.
Margins
Plexus reported adjusted operating profit of $33.5 million in the quarter, up 17.4% year over year. Adjusted operating margin increased 80 basis points year over year to 5.1%.
Balance Sheet & Cash Flow
Plexus exited the fiscal with cash & cash equivalents worth $433 million compared with $357.1 million as on fiscal 2015-end. The company had long-term debt and capital lease obligations of about $184 million compared with $258.3 million as of Oct 31, 2015.
For the fiscal, the company generated $127.7 million in cash flow from operations in the quarter and used $31.1 million for capital expenditures. Free cash flow came in at about $96.6 million. Share repurchases for the fiscal amounted to $30 million.
Outlook
For the first quarter of fiscal 2017, revenues are projected in the range of $620 million - $650 million. GAAP earnings are projected within 74 to 82 cents per share.
Our Take
We believe new program wins (added over $747 million in revenues in the trailing four quarters) along with global expansion will drive growth over the long term. Plexus remains confident of achieving $3 billion revenue run rate in the fiscal 2017. In fiscal 2016, the company reported full year revenues of $2.6 billion. Additionally, the consolidation of the company’s production facilities in low-cost areas is expected to boost margins, going forward.
However, a mature electronic manufacturing services market and intense competition from the likes of Jabil Circuit (JBL - Free Report) , Celestica Inc. (CLS - Free Report) and Flextronics (FLEX - Free Report) remain headwinds. Additionally, the company expects weakness in the Networking/Communications market to impact the business in the near term.
Currently, Plexus has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand.Click to see them now>>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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