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Plexus (PLXS) Q1 Earnings Miss Estimates, Guidance Lowered

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Plexus Corp. (PLXS - Free Report) reported first-quarter fiscal 2022 adjusted earnings of 88 cents per share, which missed the Zacks Consensus Estimate by 4.4% and decreased 28.5% year over year.

Revenues of $817.5 million matched the consensus mark but declined 1.6% year over year.

Asia-Pacific revenues rose 8.9% while that from Europe and the Middle East and Africa and the Americas declined 7.6% and 15.3%, respectively, in the reported quarter due to supplier delivery gaps.

Plexus won 41 manufacturing contracts during the quarter, worth $271 million in annualized revenues. Trailing four-quarter manufacturing wins totaled a record $1.1 billion in annualized revenues.

Plexus Corp. Price, Consensus and EPS Surprise

Plexus Corp. Price, Consensus and EPS Surprise

Market Sector Details

Industrial revenues fell 3.7% year over year to $364 million and accounted for 44.6% of total revenues.

Healthcare/Life Sciences revenues increased 7.8% from the year-ago quarter to $344 million. The sector accounted for 42.1% of total revenues.

Aerospace/Defense revenues decreased 18% year over year to $109 million and accounted for 13.3% of total revenues.

Notably, the top 10 customers of the company accounted for 56% of net revenues.

Operating Details

Gross profit on a GAAP basis decreased 11.7% year over year to $70 million. Gross margin contracted 90 basis points (bps) to 8.6%.

Selling and administrative expenses (4.6% of revenues) increased 15.7% from the year-ago quarter to $37.5 million.

Plexus reported adjusted operating income of $32.5 million, down 30.7% year over year. Adjusted operating margin contracted 160 bps to 4%.

Balance Sheet & Cash Flow

As of Jan 1, 2022, Plexus had cash & cash equivalents worth $218.4 million compared with $270.5 million as of Oct 2, 2021.

As of Jan 1, 2022, the company had long-term debt of $187.1 million compared with $187 million as of Oct 2, 2021.

In first-quarter fiscal 2022, cash flow used in operations was $89 million. The company reported a negative free cash flow of $122.2 million.

Guidance Lowered

For second-quarter fiscal 2022, revenues are projected between $820 million and $860 million compared with the prior outlook of $825 million to $865 million. The company lowered the guidance due to the ongoing supply chain disruptions from the pandemic.

GAAP operating margin for second-quarter fiscal 2022 is expected between 3.6% and 4% compared with the previous estimation of 4.6-5%. GAAP earnings are expected in the range of 76-92 cents per share compared with $1.01 to $1.17 projected earlier.

Zacks Rank & Stocks to Consider

Plexus currently has a Zacks Rank #5 (Strong Sell).

Better-ranked stocks in the broader industry include Allied Motion Technologies Inc. (AMOT - Free Report) , salesforce.com, inc. (CRM - Free Report) and Progress Software Corporation (PRGS - Free Report) , each sporting a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Allied Motion Technologies’ next-year earnings has been revised 10.1% upward over the past 60 days.

Allied Motion Technologies delivered a trailing four-quarter earnings surprise of 46.2%, on average. It has returned 20.5% in the past year. AMOT has a long-term earnings growth expectation of 10%.

The Zacks Consensus Estimate for salesforce.com’s current-year earnings has been revised 6.4% upward over the past 60 days.

salesforce.com delivered a trailing four-quarter earnings surprise of 44.2%, on average. Although it has lost 5.4% in the past year, CRM has a long-term earnings growth expectation of 16.8%.

The Zacks Consensus Estimate for Progress Software’s current-year earnings has been revised 3.9% upward over the past 60 days.

Progress Software delivered a trailing four-quarter earnings surprise of 26.8%, on average. The stock has returned 8.1% in the past year. PRGS has a long-term earnings growth expectation of 2%.