(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Title of each class | Trading Symbol | Name of each exchange on which registered |
Exhibit Number | Description | |
99.1 | ||
99.2 | ||
104 | Cover Page Interactive Data File (the cover page tags are embedded within the Inline XBRL document) |
Date: April 22, 2020 | PLEXUS CORP. | |
(Registrant) | ||
By: /s/ Patrick J. Jermain | ||
Patrick J. Jermain | ||
Executive Vice President and Chief Financial Officer |
• | Revenue of $767 million for the fiscal second quarter of 2020 |
• | GAAP diluted EPS of $0.43 |
• | Non-GAAP adjusted diluted EPS of $0.61, excluding $0.18 per share related to restructuring activities, net of tax, as a result of the previously announced closure of our Boulder Design Center |
• | Initiates fiscal third quarter 2020 revenue guidance of $790 to $830 million with GAAP diluted EPS of $0.72 to $0.82, excluding unforeseen material impacts relating to COVID-19 |
Three Months Ended | ||||||
Apr 4, 2020 | Jul 4, 2020 | |||||
Q2F20 Results (3) | Q3F20 Guidance | |||||
Summary GAAP Items | ||||||
Revenue (in millions) | $767 | $790 to $830 | ||||
Operating margin | 2.2 | % | 3.8% to 4.2% | |||
Diluted EPS (1) | $0.43 | $0.72 to $0.82 | ||||
Summary Non-GAAP Items (2) | ||||||
Adjusted operating margin | 3.0 | % | ||||
Adjusted diluted EPS (1) | $0.61 | |||||
Return on invested capital (ROIC) | 11.4 | % | ||||
Economic return | 2.6 | % | ||||
(1) | Includes stock-based compensation expense of $0.19 for Q2F20 results and $0.21 for Q3F20 guidance. | |||||
(2) | Excludes $0.18 per share related to restructuring activities, net of tax, as a result of the previously announced closure of our Boulder Design Center. Refer to Non-GAAP Supplemental Information in Tables 1 and 2 for non-GAAP financial measures and a reconciliation to GAAP. | |||||
(3) | On March 2 and March 23, 2020, Plexus announced updates to its fiscal second quarter revenue outlook. The Company stated that it expected its fiscal second quarter revenue to fall below its previously issued guidance range as a result of COVID-19 impacts. |
• | Won 36 manufacturing programs during the quarter representing $248 million in annualized revenue when fully ramped into production |
• | Trailing four quarter wins total $844 million in annualized revenue when fully ramped into production |
• | Purchased $13.2 million of our shares at an average price of $58.57 per share under our existing share repurchase program, which program we suspended indefinitely in March due to the COVID-19 pandemic |
Quarterly Comparison | Three Months Ended | ||||||||||
Apr 4, 2020 | Jan 4, 2020 | Mar 30, 2019 | |||||||||
(in thousands, except EPS) | Q2F20 | Q1F20 | Q2F19 | ||||||||
Revenue | $ | 767,364 | $ | 852,409 | $ | 789,051 | |||||
Gross profit | 61,445 | 79,190 | 70,636 | ||||||||
Operating income | 17,209 | 39,934 | 33,174 | ||||||||
Net income | 12,926 | 31,006 | 24,758 | ||||||||
Diluted EPS | 0.43 | 1.03 | 0.79 | ||||||||
Adjusted net income (1) | 18,299 | 30,192 | 24,758 | ||||||||
Adjusted diluted EPS (1) | 0.61 | 1.00 | 0.79 | ||||||||
Gross margin | 8.0 | % | 9.3 | % | 9.0 | % | |||||
Operating margin | 2.2 | % | 4.7 | % | 4.2 | % | |||||
Adjusted operating margin (1) | 3.0 | % | 4.7 | % | 4.2 | % | |||||
ROIC (1) | 11.4 | % | 14.7 | % | 13.3 | % | |||||
Economic return (1) | 2.6 | % | 5.9 | % | 4.3 | % | |||||
(1) Refer to Non-GAAP Supplemental Information in Tables 1 and 2 for non-GAAP financial measures discussed and/or disclosed in this release, such as adjusted operating margin, adjusted net income, adjusted diluted EPS, ROIC and economic return, and a reconciliation of these measures to GAAP. |
Business Segments ($ in millions) | Three Months Ended | ||||||||||
Apr 4, 2020 | Jan 4, 2020 | Mar 30, 2019 | |||||||||
Q2F20 | Q1F20 | Q2F19 | |||||||||
Americas | $ | 334 | $ | 353 | $ | 364 | |||||
Asia-Pacific | 388 | 451 | 378 | ||||||||
Europe, Middle East, and Africa | 74 | 85 | 76 | ||||||||
Elimination of inter-segment sales | (29) | (37) | (29) | ||||||||
Total Revenue | $ | 767 | $ | 852 | $ | 789 |
Market Sectors ($ in millions) | Three Months Ended | ||||||||||||||||
Apr 4, 2020 | Jan 4, 2020 | Mar 30, 2019 | |||||||||||||||
Q2F20 | Q1F20 | Q2F19 | |||||||||||||||
Healthcare/Life Sciences | $ | 271 | 35 | % | $ | 312 | 37 | % | $ | 300 | 38 | % | |||||
Industrial/Commercial | 287 | 37 | % | 310 | 36 | % | 250 | 32 | % | ||||||||
Aerospace/Defense | 157 | 21 | % | 172 | 20 | % | 140 | 18 | % | ||||||||
Communications | 52 | 7 | % | 58 | 7 | % | 99 | 12 | % | ||||||||
Total Revenue | $ | 767 | $ | 852 | $ | 789 | |||||||||||
Cash Cycle Days | Three Months Ended | ||||
Apr 4, 2020 Q2F20 | Jan 4, 2020 Q1F20 | Mar 30, 2019 Q2F19 | |||
Days in Accounts Receivable | 55 | 49 | 51 | ||
Days in Contract Assets | 13 | 12 | 10 | ||
Days in Inventory | 99 | 87 | 102 | ||
Days in Accounts Payable | (62) | (61) | (61) | ||
Days in Cash Deposits | (18) | (16) | (16) | ||
Annualized Cash Cycle * | 87 | 71 | 86 | ||
* We calculate cash cycle as the sum of days in accounts receivable, days in contract assets and days in inventory, less days in accounts payable and days in cash deposits. |
What: | Plexus Fiscal 2020 Q2 Earnings Conference Call and Webcast |
When: | Thursday, April 23, 2020 at 8:30 a.m. Eastern Time |
Where: | Participants are encouraged to join the live webcast at the investor relations section of the Plexus website, https://plexus.gcs-web.com/events-and-presentations/upcoming-events, where a slide presentation reviewing fiscal second quarter 2020 results will also be made available ahead of the conference call. Conference call at +1.866.922.5180 with passcode: 2296280 |
Replay: | The webcast will be archived on the Plexus website and available via telephone replay at +1.855.859.2056 or +1.404.537.3406 with passcode: 2296280 |
PLEXUS CORP. AND SUBSIDIARIES | |||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||
(in thousands, except per share data) | |||||||||||||||
(unaudited) | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
Apr 4, | Mar 30 | Apr 4, | Mar 30 | ||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Net sales | $ | 767,364 | $ | 789,051 | $ | 1,619,773 | $ | 1,554,595 | |||||||
Cost of sales | 705,919 | 718,415 | 1,479,138 | 1,411,576 | |||||||||||
Gross profit | 61,445 | 70,636 | 140,635 | 143,019 | |||||||||||
Operating expenses | |||||||||||||||
Selling and administrative expenses | 38,233 | 37,462 | 77,489 | 72,894 | |||||||||||
Restructuring and impairment charges | 6,003 | — | 6,003 | — | |||||||||||
Operating income | 17,209 | 33,174 | 57,143 | 70,125 | |||||||||||
Other income (expense): | |||||||||||||||
Interest expense | (3,814 | ) | (3,145 | ) | (7,946 | ) | (5,394 | ) | |||||||
Interest income | 533 | 440 | 1,178 | 965 | |||||||||||
Miscellaneous | 154 | (1,773 | ) | (2,019 | ) | (2,885 | ) | ||||||||
Income before income taxes | 14,082 | 28,696 | 48,356 | 62,811 | |||||||||||
Income tax expense | 1,156 | 3,938 | 4,424 | 15,827 | |||||||||||
Net income | $ | 12,926 | $ | 24,758 | $ | 43,932 | $ | 46,984 | |||||||
Earnings per share: | |||||||||||||||
Basic | $ | 0.44 | $ | 0.81 | $ | 1.50 | $ | 1.52 | |||||||
Diluted | $ | 0.43 | $ | 0.79 | $ | 1.46 | $ | 1.48 | |||||||
Weighted average shares outstanding: | |||||||||||||||
Basic | 29,291 | 30,603 | 29,216 | 31,003 | |||||||||||
Diluted | 29,925 | 31,385 | 29,999 | 31,836 |
PLEXUS CORP. AND SUBSIDIARIES | |||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
(in thousands, except per share data) | |||||||
(unaudited) | |||||||
Apr 4, | Sept 28, | ||||||
2020 | 2019 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 225,830 | $ | 223,761 | |||
Restricted cash | 1,458 | 2,493 | |||||
Accounts receivable | 462,812 | 488,284 | |||||
Contract assets | 111,277 | 90,841 | |||||
Inventories | 765,818 | 700,938 | |||||
Prepaid expenses and other | 27,537 | 31,974 | |||||
Total current assets | 1,594,732 | 1,538,291 | |||||
Property, plant and equipment, net | 381,668 | 384,224 | |||||
Operating lease right-of-use asset | 74,371 | — | |||||
Deferred income taxes | 14,071 | 13,654 | |||||
Other | 30,356 | 64,714 | |||||
Total non-current assets | 500,466 | 462,592 | |||||
Total assets | $ | 2,095,198 | $ | 2,000,883 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Current portion of long-term debt and finance lease obligations | $ | 107,880 | $ | 100,702 | |||
Accounts payable | 483,441 | 444,944 | |||||
Customer deposits | 136,545 | 139,841 | |||||
Accrued salaries and wages | 53,199 | 73,555 | |||||
Other accrued liabilities | 119,792 | 106,461 | |||||
Total current liabilities | 900,857 | 865,503 | |||||
Long-term debt and finance lease obligations, net of current portion | 186,327 | 187,278 | |||||
Accrued income taxes payable | 53,899 | 59,572 | |||||
Long-term operating lease liabilities | 39,617 | — | |||||
Deferred income taxes | 6,363 | 5,305 | |||||
Other liabilities | 15,577 | 17,649 | |||||
Total non-current liabilities | 301,783 | 269,804 | |||||
Total liabilities | 1,202,640 | 1,135,307 | |||||
Shareholders’ equity: | |||||||
Common stock, $.01 par value, 200,000 shares authorized, | |||||||
53,414 and 52,917 shares issued, respectively, | |||||||
and 29,186 and 29,004 shares outstanding, respectively | 534 | 529 | |||||
Additional paid-in-capital | 607,446 | 597,401 | |||||
Common stock held in treasury, at cost, 24,228 and 23,913, respectively | (912,731 | ) | (893,247 | ) | |||
Retained earnings | 1,221,532 | 1,178,677 | |||||
Accumulated other comprehensive loss | (24,223 | ) | (17,784 | ) | |||
Total shareholders’ equity | 892,558 | 865,576 | |||||
Total liabilities and shareholders’ equity | $ | 2,095,198 | $ | 2,000,883 | |||
PLEXUS CORP. AND SUBSIDIARIES | ||||||||||||||||||||
NON-GAAP SUPPLEMENTAL INFORMATION Table 1 | ||||||||||||||||||||
(in thousands, except per share data) | ||||||||||||||||||||
(unaudited) | ||||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||||
Apr 4, | Jan 4, | Mar 30, | Apr 4, | Mar 30, | ||||||||||||||||
2020 | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||
Operating income, as reported | 17,209 | $ | 39,934 | $ | 33,174 | 57,143 | $ | 70,125 | ||||||||||||
Operating margin, as reported | 2.2 | % | 4.7 | % | 4.2 | % | 3.5 | % | 4.5 | % | ||||||||||
Non-GAAP adjustments: | ||||||||||||||||||||
Restructuring and impairment charges (1) | 6,003 | — | — | 6,003 | — | |||||||||||||||
Adjusted operating income | $ | 23,212 | $ | 39,934 | $ | 33,174 | $ | 63,146 | $ | 70,125 | ||||||||||
Adjusted operating margin | 3.0 | % | 4.7 | % | 4.2 | % | 3.9 | % | 4.5 | % | ||||||||||
Net income, as reported | $ | 12,926 | $ | 31,006 | $ | 24,758 | $ | 43,932 | $ | 46,984 | ||||||||||
Non-GAAP adjustments: | ||||||||||||||||||||
Special tax impacts (2) | — | (814 | ) | — | (814 | ) | 7,035 | |||||||||||||
Restructuring and impairment charges, net of tax (1) | 5,373 | — | — | 5,373 | — | |||||||||||||||
Adjusted net income | $ | 18,299 | $ | 30,192 | $ | 24,758 | $ | 48,491 | $ | 54,019 | ||||||||||
Diluted earnings per share, as reported | $ | 0.43 | $ | 1.03 | $ | 0.79 | $ | 1.46 | $ | 1.48 | ||||||||||
Non-GAAP per share adjustments: | ||||||||||||||||||||
Special tax impacts (2) | — | (0.03 | ) | — | (0.02 | ) | 0.22 | |||||||||||||
Restructuring costs, net of tax (1) | 0.18 | — | — | 0.18 | — | |||||||||||||||
Adjusted diluted earnings per share | $ | 0.61 | $ | 1.00 | $ | 0.79 | $ | 1.62 | $ | 1.70 | ||||||||||
(1) | During the three months ended April 4, 2020, restructuring costs of $6.0 million, or $5.4 million net of taxes, were incurred due to the previously announced closure of our Boulder Design Center. | |||||||||||||||||||
(2) | During the three months ended January 4, 2020, there was $1.9 million in tax benefits related to US foreign tax credit regulations issued during the quarter, partially offset by $1.1 million of tax expense as a result of special tax items. During the six months ended March 30, 2019, special tax expense of $7.0 million was recorded in accordance with new regulations issued in November 2018 under U.S. Tax Reform. These regulations impacted the treatment of foreign taxes paid. |
PLEXUS CORP. AND SUBSIDIARIES | ||||||||||||||
NON-GAAP SUPPLEMENTAL INFORMATION Table 2 | ||||||||||||||
(in thousands) | ||||||||||||||
(unaudited) | ||||||||||||||
ROIC and Economic Return Calculations | Six Months Ended | Three Months Ended | Six Months Ended | |||||||||||
Apr 4, | Jan 4, | Mar 30, | ||||||||||||
2020 | 2020 | 2019 | ||||||||||||
Operating income, as reported | 57,143 | $ | 39,934 | $ | 70,125 | |||||||||
Restructuring costs | + | 6,003 | + | — | + | — | ||||||||
Adjusted operating income | $ | 63,146 | $ | 39,934 | $ | 70,125 | ||||||||
x | 2 | x | 4 | x | 2 | |||||||||
Adjusted annualized operating income | $ | 126,292 | $ | 159,736 | $ | 140,250 | ||||||||
Adjusted effective tax rate | x | 13 | % | x | 13 | % | x | 15 | % | |||||
Tax impact | 16,418 | 20,766 | 21,038 | |||||||||||
Adjusted operating income (tax effected) | $ | 109,874 | $ | 138,970 | $ | 119,212 | ||||||||
Average invested capital | ÷ | $ | 964,894 | ÷ | $ | 942,793 | ÷ | $ | 898,929 | |||||
ROIC | 11.4 | % | 14.7 | % | 13.3 | % | ||||||||
Weighted average cost of capital | - | 8.8 | % | - | 8.8 | % | - | 9.0 | % | |||||
Economic return | 2.6 | % | 5.9 | % | 4.3 | % |
Three Months Ended | |||||||||||||||||||||||
Average Invested Capital | Apr 4, | Jan 4, | Sept 28, | Mar 30, | Dec 29, | Sept 29, | |||||||||||||||||
Calculations | 2020 | 2020 | 2019 | 2019 | 2018 | 2018 | |||||||||||||||||
Equity | $ | 892,558 | $ | 908,372 | $ | 865,576 | $ | 875,444 | $ | 905,163 | $ | 921,143 | |||||||||||
Plus: | |||||||||||||||||||||||
Debt and finance leases - current | 107,880 | 67,847 | 100,702 | 93,197 | 8,633 | 5,532 | |||||||||||||||||
Operating leases - current (1) (2) | 8,546 | 9,185 | — | — | — | — | |||||||||||||||||
Debt and finance leases - long-term | 186,327 | 186,827 | 187,278 | 187,120 | 187,567 | 183,085 | |||||||||||||||||
Operating leases - long-term (2) | 39,617 | 36,473 | — | — | — | — | |||||||||||||||||
Less: | |||||||||||||||||||||||
Cash and cash equivalents | (225,830 | ) | (252,914) | (223,761) | (184,028) | (188,799) | (297,269) | ||||||||||||||||
$ | 1,009,098 | $ | 955,790 | $ | 929,795 | $ | 971,733 | $ | 912,564 | $ | 812,491 |
(1) | Included in Other accrued liabilities on the Condensed Consolidated Balance Sheets. | |||||
(2) | In the fiscal first quarter of 2020, the Company adopted and applied Topic 842 to all leases using the modified retrospective method of adoption. The prior year comparative information has not been restated and continued to be reported under the accounting standards in effect for fiscal 2019 and 2018. |
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