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Plexus Posts Fiscal Q3 Revenue of $559 Million
July 21, 2011 | Globe NewswireEstimated reading time: 4 minutes
Plexus Corporation today announced:
Q3 Fiscal 2011 Results (quarter ended July 2, 2011):
- Revenue: $559 million, relative to guidance of $550 to $580 million.
- Diluted EPS: $0.58, including $0.07 per share of stock-based compensation expense, relative to guidance of $0.52 to $0.57.
Q4 Fiscal 2011 Guidance:
- Revenue: $530 to $560 million.
- Diluted EPS: $0.50 to $0.55, excluding any restructuring charges and including approximately $0.07 per share of stock-based compensation expense.
Dean Foate, President and CEO, commented, "Fiscal third quarter revenues were $559 million with EPS of $0.58. We experienced an exceptional level of forecast volatility during the quarter as customers broadly lowered their demand for the second half of our fiscal year. As a consequence, our overall revenue performance in the fiscal third quarter was below the mid-point of our guidance range. Our diluted EPS exceeded the high-end of our guidance range primarily due to favorable customer mix and foreign currency exchange benefits. Return on invested capital was 16.2%, below our target, but still well above our weighted average cost of capital of 13.5%. "New business development activity was adequate to support our nearer-term growth goals with 25 new programs won in our Manufacturing Solutions group that we anticipate will generate approximately $124 million in annualized revenue when fully ramped into production. We continue to experience strong business development by our medical sector, which represented $55 million of this total. In another positive trend, our funnel of qualified business opportunities increased meaningfully during the quarter to $2.0 billion. Of course, all future revenues are subject to the timing and ultimate realization of customer forecasts and orders."
Ginger Jones, Senior Vice President and CFO, commented, "Gross margin was 9.7% for the fiscal third quarter, exceeding our expectations when we set guidance for the quarter, as a result of the mix of revenue during the quarter and improved leverage from our operations. Relative to our expectations for the quarter, selling and administrative expenses were higher than expected as a result of higher headcount related costs and the delay in the recognition of an expected tax incentive. While selling and administrative expenses were higher than anticipated, the stronger gross margin performance allowed us to deliver operating margin slightly above our expectations. This stronger operating performance contributed approximately $0.01 cents of diluted EPS above our original expectations. Our estimated tax rate for fiscal 2011 remains unchanged at 3%."
Jones continued, "Fiscal third quarter cash cycle days including customer deposits were 75 days, one day above our expectations. Days in receivables increased based on the timing of payments from customers. We improved inventory performance, delivering a one-day reduction in inventory days during the fiscal third quarter while continuing to meet our customers' needs for flexibility and agility."
Jones concluded, "During the fiscal third quarter and the first week of the fiscal fourth quarter we repurchased 2.7 million shares under our previously announced share repurchase program, totaling $92 million at a weighted average price of $34.03 per share. This completed our planned $175 million share repurchase program at a weighted average price of $32.29 per share. We have no immediate plans to use the remaining $25 million share repurchase authorization, which will be retained for future use based on market conditions. During the fiscal third quarter we also completed the previously announced planned funding of $175 million of new debt, with the final tranche of $75 million funding on June 15, 2011. The $175 million of senior notes, which were sold in a private placement, have a seven-year term and an effective fixed interest rate of 4.97%. We believe this level of debt appropriately leverages our balance sheet to improve weighted average cost of capital and create shareholder value."
Foate continued, "Volatility in our customer forecasts and uncertainty about the end markets are reflected in our fiscal fourth quarter revenue guidance range of $530 to $560 million. At that level of revenue we anticipate EPS of $0.50 to $0.55, excluding any restructuring charges and including approximately $0.07 per share of stock-based compensation expense. This guidance range suggests that our fiscal fourth quarter revenue will be modestly down sequentially when compared to our fiscal third quarter."
Foate concluded, "Looking ahead to fiscal 2012, our current stance is perhaps best characterized as pragmatic. We are confident that we have a winning strategy that delivers long-term growth and shareholder value, yet the continuing economic malaise is unquestionably affecting the performance of our customers' end markets, resulting in poor forecast visibility into fiscal 2012. While we currently anticipate that our fiscal 2012 first quarter revenues will grow sequentially, we are adopting a conservative view on full-year fiscal 2012. To protect operating profit performance, we are calibrating our cost structure and setting internal performance targets with the objective to deliver our 5% operating margin target with revenue growth in the high-single to low-double digit percentage range. "Longer term, we remain committed to our enduring 15% organic revenue growth goal, but nearer term we think a conservative approach is appropriate until we see evidence of an improving economic recovery. Optimistically, the strength of the Plexus brand, the pace of new business wins and the increasing funnel of opportunities provides us the confidence to continue with capacity investments required to support long-term growth. Our fourth manufacturing facility in Penang, Malaysia should be ready for operations in the fiscal first quarter of 2012. Our second manufacturing facility in Xiamen, China, which began construction in April 2011, is well underway and is expected to be complete in the second half of fiscal 2012. We also expect to announce, during the first half of fiscal 2012, the construction of a larger facility in Oradea, Romania to replace leased buildings that served as our start-up solution in lower-cost Europe."