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Plexus (PLXS) Q3 Earnings Beat Estimates, Revenues Up Y/Y
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Plexus (PLXS - Free Report) reported third-quarter fiscal 2020 adjusted earnings of $1.20 per share that beat the Zacks Consensus Estimate by 60%. Moreover, the figure jumped 48.1% year over year.
Revenues of $857.4 million beat the consensus mark by 7%. The figure also increased 7.2% year over year due to robust performance in Healthcare/Life Sciences and Industrial/Commercial sectors and higher Asia-Pacific (APAC) and Europe, the Middle East and Africa (EMEA) revenues.
APAC revenues increased 25.2% year over year to $482 million. Moreover, EMEA revenues were $92 million, up 13.6%. However, Americas revenues declined 16.6% to $306 million.
Plexus won 35 manufacturing contracts during the quarter, worth $252 million in annualized revenues. Trailing four-quarter manufacturing wins totaled $868 million in annualized revenues.
Industrial/Commercial revenues grew 27.8% year over year to $317 million and accounted for 37% of total revenues.
Healthcare/Life Sciences revenues climbed 6.8% from the year-ago quarter to $330 million. The sector accounted for 38.5% of total revenues.
However, Aerospace/Defense revenues decreased 6.6% year over year to $141 million and accounted for 16.4% of total revenues.
Communications accounted for 8% of total revenues. Revenues from the sector decreased 25% year over year to $69 million.
Notably, top 10 customers of the company accounted for 56% of net revenues.
Operating Details
Gross profit on a GAAP basis increased 16.7% year over year to $82.9 million. Gross margin expanded80 basis points (bps) year over year to 9.7%.
Selling and administrative expenses (4.3% of revenues) increased 1.1% from the year-ago quarter to $37 million.
Plexus reported adjusted operating income of $45.9 million, up 33.3% year over year. Adjusted operating margin expanded 100 bps on a year-over-year basis to 5.3%, driven by strong operating performance and lower U.S. healthcare costs.
Balance Sheet & Cash Flow
As of Jul 4, 2020, Plexus had cash & cash equivalents worth $296.5 million compared with $225.8 million as of Apr 4, 2020.
Moreover, as of Jul 4, 2020, the company had a long-term debt of $188.6 million compared with $186.3 million as of Apr 4, 2020.
In third-quarter fiscal 2020, cash flow used by operations was $47 million. The company reported free cash flow of $37 million.
ROIC (tax-effected annualized adjusted operating income divided by average invested capital over two quarters) was 12.9% for third-quarter fiscal 2020. Plexus’ weighted average cost of capital was 400 bps above fiscal 2020 WACC of 8.8%.
Guidance
For fourth-quarter fiscal 2020, revenues are projected between $850 million and $890 million. Volatile end-markets remain a headwind for Plexus’ top-line growth. However, strength in Healthcare/Life Sciences, semi-cap and defense end-markets are positive.
Gross margin is expected in the range of 9.1%-9.5%. GAAP operating margin is expected between 4.8% and 5.2%.
GAAP earnings are expected between $1.05 and $1.20 per share.
The Zacks Consensus Estimate for fourth-quarter earnings is pegged at 94 cents, implying 1.1% growth from the figure reported in the year-ago quarter. The consensus mark for revenues stands at $825.4 million, suggesting 1.9% growth from the year-ago quarter’s reported figure.
Zacks Rank & Stocks to Consider
Currently, Plexus has a Zacks Rank #3 (Hold). Advanced Micro Devices (AMD - Free Report) , A10 Networks (ATEN - Free Report) and Impinj (PI - Free Report) are stocks worth considering from the broader computer and technology sector. While A10 Networks and Impinj flaunt a Zacks Rank #1 (Strong Buy), AMD carries a Zacks Rank #2 (Buy). You can seethe complete list of today’s Zacks #1 Rank stocks here.
While both AMD and A10 Networks are set to report quarterly results on Jul 28, Impinj is scheduled to report the same on Jul 29.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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Plexus (PLXS) Q3 Earnings Beat Estimates, Revenues Up Y/Y
Plexus (PLXS - Free Report) reported third-quarter fiscal 2020 adjusted earnings of $1.20 per share that beat the Zacks Consensus Estimate by 60%. Moreover, the figure jumped 48.1% year over year.
Revenues of $857.4 million beat the consensus mark by 7%. The figure also increased 7.2% year over year due to robust performance in Healthcare/Life Sciences and Industrial/Commercial sectors and higher Asia-Pacific (APAC) and Europe, the Middle East and Africa (EMEA) revenues.
APAC revenues increased 25.2% year over year to $482 million. Moreover, EMEA revenues were $92 million, up 13.6%. However, Americas revenues declined 16.6% to $306 million.
Plexus won 35 manufacturing contracts during the quarter, worth $252 million in annualized revenues. Trailing four-quarter manufacturing wins totaled $868 million in annualized revenues.
Plexus Corp. Price, Consensus and EPS Surprise
Plexus Corp. price-consensus-eps-surprise-chart | Plexus Corp. Quote
Market Sector Details
Industrial/Commercial revenues grew 27.8% year over year to $317 million and accounted for 37% of total revenues.
Healthcare/Life Sciences revenues climbed 6.8% from the year-ago quarter to $330 million. The sector accounted for 38.5% of total revenues.
However, Aerospace/Defense revenues decreased 6.6% year over year to $141 million and accounted for 16.4% of total revenues.
Communications accounted for 8% of total revenues. Revenues from the sector decreased 25% year over year to $69 million.
Notably, top 10 customers of the company accounted for 56% of net revenues.
Operating Details
Gross profit on a GAAP basis increased 16.7% year over year to $82.9 million. Gross margin expanded80 basis points (bps) year over year to 9.7%.
Selling and administrative expenses (4.3% of revenues) increased 1.1% from the year-ago quarter to $37 million.
Plexus reported adjusted operating income of $45.9 million, up 33.3% year over year. Adjusted operating margin expanded 100 bps on a year-over-year basis to 5.3%, driven by strong operating performance and lower U.S. healthcare costs.
Balance Sheet & Cash Flow
As of Jul 4, 2020, Plexus had cash & cash equivalents worth $296.5 million compared with $225.8 million as of Apr 4, 2020.
Moreover, as of Jul 4, 2020, the company had a long-term debt of $188.6 million compared with $186.3 million as of Apr 4, 2020.
In third-quarter fiscal 2020, cash flow used by operations was $47 million. The company reported free cash flow of $37 million.
ROIC (tax-effected annualized adjusted operating income divided by average invested capital over two quarters) was 12.9% for third-quarter fiscal 2020. Plexus’ weighted average cost of capital was 400 bps above fiscal 2020 WACC of 8.8%.
Guidance
For fourth-quarter fiscal 2020, revenues are projected between $850 million and $890 million. Volatile end-markets remain a headwind for Plexus’ top-line growth. However, strength in Healthcare/Life Sciences, semi-cap and defense end-markets are positive.
Gross margin is expected in the range of 9.1%-9.5%. GAAP operating margin is expected between 4.8% and 5.2%.
GAAP earnings are expected between $1.05 and $1.20 per share.
The Zacks Consensus Estimate for fourth-quarter earnings is pegged at 94 cents, implying 1.1% growth from the figure reported in the year-ago quarter. The consensus mark for revenues stands at $825.4 million, suggesting 1.9% growth from the year-ago quarter’s reported figure.
Zacks Rank & Stocks to Consider
Currently, Plexus has a Zacks Rank #3 (Hold). Advanced Micro Devices (AMD - Free Report) , A10 Networks (ATEN - Free Report) and Impinj (PI - Free Report) are stocks worth considering from the broader computer and technology sector. While A10 Networks and Impinj flaunt a Zacks Rank #1 (Strong Buy), AMD carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
While both AMD and A10 Networks are set to report quarterly results on Jul 28, Impinj is scheduled to report the same on Jul 29.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>