• Record quarterly revenue of $857 million for the fiscal third quarter of 2020
• GAAP diluted EPS of $1.20
• Initiates fiscal fourth quarter 2020 revenue guidance of $850 to $890 million with GAAP diluted EPS guidance of $1.05 to $1.20, excluding unforeseen impacts relating to COVID-19

NEENAH, Wis., July 22, 2020 (GLOBE NEWSWIRE) -- Plexus (NASDAQ: PLXS) today announced financial results for its fiscal third quarter ended July 4, 2020, and guidance for its fiscal fourth quarter ending October 3, 2020.

Fiscal Third Quarter 2020 Information

• Won 35 manufacturing programs during the quarter representing an expected $252 million in annualized revenue when fully ramped into production
• Trailing four quarter wins total an expected $868 million in annualized revenue when fully ramped into production

Todd Kelsey, President and CEO, commented, “I am incredibly proud of our global Plexus team as they managed through the complexities arising from COVID-19 while delivering record quarterly revenue of $857 million and GAAP diluted earnings per share of $1.20. This strong performance led to GAAP operating margin of 5.3%, our best quarterly margin result in three years. Further, our team overcame the challenges of the pandemic to deliver exceptional manufacturing wins of $252 million annualized when fully ramped into production. In addition to traditionally strong wins from our existing customers, our team’s innovative virtual business development efforts resulted in a meaningful number of new target customer wins. Our global team’s demonstrated ability in providing superior execution continues to position us for future growth."

Patrick Jermain, Executive Vice President and CFO, commented, “During the fiscal third quarter, we delivered a return on invested capital of 12.9%.  This equates to an economic return of 410 basis points above our weighted average cost of capital, creating solid shareholder value.  A combination of exceptional operating performance and improved working capital generated this return, an improvement of 150 basis points over the previous quarter.  The increase in fiscal third quarter revenue and improvements in our inventory management contributed to an eight day sequential improvement in our fiscal third quarter cash cycle days.  We generated $37 million of free cash flow during the quarter, exceeding our net income.”

Mr. Jermain continued, “We are well-positioned with a strong balance sheet.  Cash of approximately $300 million was sequentially higher by $73 million while our short-term debt increased $38 million.  In May, we executed a 364-day term loan with several of our credit facility banks.  We secured $138 million through this offering.  With the proceeds, we repaid existing borrowing under our revolving credit facility.  At the end of the fiscal third quarter, there was no outstanding borrowing under this facility, therefore allowing us the full use of the $350 million facility.”   

Mr. Kelsey continued, “While we expect continued end market volatility, our aggregate demand is anticipated to remain strong in our fiscal fourth quarter.  As a result, we are guiding revenue in the range of $850 to $890 million.  At this anticipated revenue level, coupled with expected sustained solid operating performance, we are guiding GAAP diluted EPS in the range of $1.05 to $1.20.  In providing this guidance, we have taken into consideration known constraints with the global supply chain and workforce challenges that could occur due to COVID-19.  However, our guidance assumes no large scale closures of our facilities, or those of our suppliers or customers, due to COVID-19, nor does it assume that the COVID-19 outbreak will materially impact end markets beyond what has already occurred.”

Mr. Kelsey concluded, “As we move into the early part of fiscal 2021, we anticipate certain COVID-related demand to moderate in advance of the anticipated benefit of growth from new program ramps later in the year.  Despite the known impacts related to COVID-19, we see a path to continued strength in operating performance throughout fiscal 2021.”

Business Segment and Market Sector Revenue
Plexus measures operational performance and allocates resources on a geographic segment basis.  Plexus also reports revenue based on the market sector breakout set forth in the table below, which reflects Plexus’ market sector focused strategy.  Top 10 customers comprised 56% of revenue during both the fiscal third quarter and fiscal second quarter of 2020.

Non-GAAP Supplemental Information
Plexus provides non-GAAP supplemental information, such as ROIC, economic return, and free cash flow, because such measures are used for internal management goals and decision making, and because they provide management and investors with additional insight into financial performance. In addition, management uses these and other non-GAAP measures, such as adjusted operating income, adjusted operating margin, adjusted net income and adjusted diluted EPS, to provide a better understanding of core performance for purposes of period-to-period comparisons.  Plexus believes that these measures are also useful to investors because they provide further insight by eliminating the effect of non-recurring items that are not reflective of continuing operations.  For a full reconciliation of non-GAAP measures to comparable GAAP measures, please refer to the attached Non-GAAP Supplemental Information Tables.

ROIC and Economic Return
ROIC for the fiscal third quarter was 12.9%.  Plexus defines ROIC as tax-effected annualized adjusted operating income divided by average invested capital over a four-quarter period for the fiscal third quarter.  Invested capital is defined as equity plus debt and operating lease liabilities, less cash and cash equivalents.  Plexus’ weighted average cost of capital for fiscal 2020 is 8.8%.  ROIC for the fiscal third quarter less Plexus’ weighted average cost of capital resulted in an economic return of 4.1%.

Free Cash Flow
Plexus defines free cash flow as cash flows provided by operations less capital expenditures.  For the three months ended July 4, 2020, cash flows provided by operations of $47.1 million, less capital expenditures of $10.5 million, resulted in free cash flow of $36.6 million. For the nine months ended July 4, 2020, cash flows provided by operations of $92.5 million, less capital expenditures of $41.2 million, resulted in free cash flow of $51.3 million.

Conference Call and Webcast Information

Investor and Media Contact
Heather Beresford
+1.920.751.3612
heather.beresford@plexus.com 

About Plexus
Since 1979, Plexus has been partnering with companies to create the products that build a better world.  We are a team of over 19,000 individuals who are dedicated to providing global Design and Development, Supply Chain Solutions, New Product Introduction, Manufacturing, and Aftermarket Services.  Plexus is a global leader that specializes in serving customers in industries with highly complex products and demanding regulatory environments.  Plexus delivers customer service excellence to leading global companies by providing innovative, comprehensive solutions throughout the product’s lifecycle.  For more information about Plexus, visit our website at www.plexus.com.

Safe Harbor and Fair Disclosure Statement
The statements contained in this press release that are guidance or which are not historical facts (such as statements in the future tense and statements including believe, expect, intend, plan, anticipate, goal, target and similar terms and concepts), including all discussions of periods which are not yet completed, are forward-looking statements that involve risks and uncertainties.  These risks and uncertainties include the evolving effect, which may intensify, of COVID-19 on our employees, customers, suppliers, and logistics providers, including the impact of governmental actions being taken to curtail the spread of the virus.  Other risks and uncertainties include, but are not limited to: the risk of customer delays, changes, cancellations or forecast inaccuracies in both ongoing and new programs; the lack of visibility of future orders, particularly in view of changing economic conditions; the economic performance of the industries, sectors and customers we serve; the effects of shortages and delays in obtaining components as a result of economic cycles, natural disasters or otherwise; the effects of tariffs, trade disputes, trade agreements and other trade protection measures; the effects of the volume of revenue from certain sectors or programs on our margins in particular periods; our ability to secure new customers, maintain our current customer base and deliver product on a timely basis; the risks of concentration of work for certain customers;  the particular risks relative to new or recent customers, programs or services, which risks include customer and other delays, start-up costs, potential inability to execute, the establishment of appropriate terms of agreements, and the lack of a track record of order volume and timing; the effects of start-up costs of new programs and facilities or the costs associated with the closure or consolidation of facilities; possible unexpected costs and operating disruption in transitioning programs, including transitions between Company facilities; the risk that new program wins and/or customer demand may not result in the expected revenue or profitability; the fact that customer orders may not lead to long-term relationships; our ability to manage successfully and execute a complex business model characterized by high product mix and demanding quality, regulatory, and other requirements; the risks associated with excess and obsolete inventory, including the risk that inventory purchased on behalf of our customers may not be consumed or otherwise paid for by the customer, resulting in an inventory write-off; risks related to information technology systems and data security; the ability to realize anticipated savings from restructuring or similar actions, as well as the adequacy of related charges as compared to actual expenses; increasing regulatory and compliance requirements; the effects of U.S. Tax Reform and of related foreign jurisdiction tax developments; current or potential future barriers to the repatriation of funds that are currently held outside of the United States as a result of actions taken by other countries or otherwise; the potential effects of jurisdictional results on our taxes, tax rates, and our ability to use deferred tax assets and net operating losses; the weakness of areas of the global economy; the effect of changes in the pricing and margins of products; raw materials and component cost fluctuations; the potential effect of fluctuations in the value of the currencies in which we transact business; the effects of changes in economic conditions, political conditions and tax matters in the United States and in the other countries in which we do business (including as a result of the United Kingdom’s pending exit from the European Union); the potential effect of other world or local events or other events outside our control (such as changes in energy prices, terrorism and weather events); the impact of increased competition; an inability to successfully manage human capital; changes in financial accounting standards; and other risks detailed herein and in our other Securities and Exchange Commission filings, particularly in Risk Factors in our fiscal 2019 Form 10-K.