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Plexus Announces Q4 Revenue of $426 Million and EPS of $0.53
October 31, 2007 | PR NewswireEstimated reading time: 5 minutes
Plexus Corp. today announced:<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />
-- Q4 Fiscal 2007 Results: Revenue for the fiscal 4th quarter ended September 29, 2007 was $426 million with diluted GAAP EPS of $0.53, including $0.03 per share of stock option expense and $0.02 per share of restructuring costs.
-- Fiscal 2008 Revenue Growth Target: Consistent with the Company's strategic objectives, Plexus is targeting revenue growth in the range of 15% to 18% in fiscal 2008.
-- Q1 Fiscal 2008 Guidance: The Company established fiscal 1st quarter revenue guidance of $440 to $460 million with EPS, excluding any restructuring charges, in the range of $0.58 to $0.63, including approximately $0.03 per share of stock option expense.
Dean Foate, President and CEO, commented, "Our return on invested capital (ROIC) for fiscal 2007 of 17.6% was above our weighted average cost of capital (WACC) and consistent with our long-term financial model. Despite being at the low end of our revenue guidance for Q4, we exceeded our earnings expectations, driven primarily by a favorable mix of customer programs, better than expected labor efficiencies and strong performance by our engineering services organization (Technology Group). Relative to our guidance for Q4, our Medical Sector was exceptionally strong while our Defense Sector revenues were lower than expected, as we experienced an approximately $15 million push-out in the production schedule for a significant defense customer to the first quarter of fiscal 2008. Q4 included approximately $44 million of revenue for this customer."
Ginger Jones, Chief Financial Officer, added "Our operating income for Q4 was favorably impacted by approximately $0.01 as a result of several items: we recognized approximately $2.9 million of pre-tax benefit for shipments of inventory that we had previously written down for a financially distressed customer, which was offset by a $0.9 million pre-tax restructuring charge as we scaled our Mexican operations to match current revenue levels, as well as a $1.3 million pre-tax warranty-related charge. Offsetting the favorable net impact to operating income, we continued to experience losses in our Mexican facility, and our tax rate for fiscal 2007 was higher than expected at approximately 22%, primarily due to the regional mix of production in Q4. This resulted in an effective tax rate of 25% for the fourth quarter, which reduced diluted earnings per share for the quarter by approximately $0.04."
Foate said, "Looking forward, we are expecting a strong start to fiscal 2008, with Q1 revenue in the range of $440 million to $460 million with single digit growth in all of our Market Sectors, with the exception of our Defense Sector where we expect sequential revenue growth to exceed 25%. Including the production push-out from Q4 and a small follow-on order from our large defense customer, we are currently expecting approximately $54 million in revenue from this program in Q1 followed by approximately $26 million in Q2."
Jones commented, "Due to customer mix, we are also expecting Q1 to be an exceptionally strong earnings quarter, with EPS, excluding any restructuring charges, in the range of $0.58 to $0.63, including approximately $0.03 per share of stock option expense. Looking to future quarters in fiscal 2008, we believe that successfully executing on our strategy to gain market share and grow revenues 15% to 18% will deliver a more consistently sustainable ' 20-10-5' financial model (20% ROIC target, 10% gross margin target and 5% operating earnings target)."
Foate concluded, "We believe Plexus offers a unique value proposition that creates competitive advantage for OEMs with mid- to low-volume, higher-mix requirements in the market sectors we serve, and that this is the foundation of our goal to double the size of Plexus over a 4- to 5-year horizon. Consistent with this goal we are setting a 15% to 18% revenue growth objective for fiscal 2008. Our strong start to the year suggests that the near-term objective is achievable, yet we are mindful of growing economic uncertainly that could derail end-market demand."
Plexus provides non-GAAP supplemental information. These non-GAAP income statements exclude transactions that are not expected to have an effect on future operations. Such transactions include restructuring costs, as well as the establishment or reduction of the valuation allowance for deferred tax assets. These non-GAAP financial data are provided to facilitate meaningful period-to-period comparisons of underlying operational performance by eliminating infrequent or unusual charges. Similar non-GAAP financial measures, including ROIC, are used for internal management assessments because such measures provide additional insight into ongoing financial performance. Please refer to the attached accompanying reconciliations of the GAAP net income and EPS to the non-GAAP supplemental data.
MARKET SECTOR BREAKOUT
Plexus reports revenue based on the market sector breakout set forth in the table below, which reflects the Company's sales and marketing focus.
Market Sector Q4 - Fiscal 2007 Q3 - Fiscal 2007
Wireline/Networking 42% 46%
Wireless Infrastructure 8% 9%
Medical 21% 24%
Industrial/Commercial 15% 14%
Defense/Security/Aerospace 14% 7%
FISCAL Q4 HIGHLIGHTS
-- Annual ROIC was 17.6%. The Company defines ROIC as tax-effected operating income, excluding restructuring costs, divided by average capital employed over a rolling five quarter period. Capital employed is defined as equity plus short-term investments.
-- Cash flow provided by operations was approximately $23.0 million for the quarter.
-- Top 10 customers comprised 65% of sales during the quarter, up 1 percentage point from the previous quarter.
-- Juniper Networks Inc., with 22% of sales, and an un-named defense sector customer, with 10% of sales, were the only customers representing 10% or more of revenues for the quarter.
-- Capital expenditures for the quarter were $10.0 million.
-- Cash Conversion Cycle:
Cash Conversion Cycle Q4 - Fiscal 2007 Q3 - Fiscal 2007
Days in Accounts Receivable 49 Days 48 Days
Days in Inventory 68 Days 68 Days
Days in Accounts Payable (58) Days (53) Days
Annualized Cash Cycle 59 Days 63 Days
Conference Call/Webcast and Replay Information
What: Plexus Corp.'s Fiscal Q4 Earnings Conference Call
When: Thursday, November 1st at 8:30 a.m. Eastern Time
Where: 888-693-3477 or 973-582-2710 with conference ID: 9261576
http://www.videonewswire.com/PLXS/110107
(requires Windows Media Player)
Replay: The call will be archived until November 8, 2007 at noon
Eastern Time
http://www.videonewswire.com/PLXS/110107
or via telephone replay at 877-519-4471 or 973-341-3080
PIN: 9261576
For further information, please contact: Kristian Talvitie, Vice President - Marketing, Branding and Communications
920-969-6160 or kristian.talvitie@plexus.com
About Plexus Corp. - The Product Realization Company
Plexus (http://www.plexus.com/ ) is an award-winning participant in the Electronics Manufacturing Services (EMS) industry, providing product design, supply chain and materials management, manufacturing, test, fulfillment and aftermarket solutions to branded product companies in the Wireline/Networking, Wireless Infrastructure, Medical, Industrial/Commercial and Defense/Security/Aerospace market sectors.
The Company's unique Focused Factory manufacturing model and global supply chain solutions are strategically enhanced by value-added product design and engineering services. Plexus specializes in mid- to low-volume, higher-mix customer programs that require flexibility, scalability, technology and quality.
Plexus provides award-winning customer service to more than 100 branded product companies in North America, Europe and <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />Asia.