Plexus Reports Fiscal Q3 2016 Revenue of $668 Million

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Plexus has announced financial results for its fiscal third quarter ended July 2, 2016, and guidance for its fiscal fourth quarter ending October 1, 2016.

• Fiscal third quarter 2016 revenue of $668 million
• GAAP diluted EPS of $0.76, non-GAAP diluted EPS of $0.82, excluding $0.06 per share of restructuring charges
• Initiates fiscal fourth quarter 2016 revenue guidance of $655 - $685 million with non-GAAP diluted EPS of $0.76 to $0.84, excluding any restructuring or other special items

Additional Fiscal Third Quarter 2016 Information

• Won 46 programs during the quarter representing approximately $194 million in annualized revenue when fully ramped into production
• Trailing four quarter wins total approximately $714 million in annualized revenue
• Purchased $7.2 million of our shares at an average price of $42.13 per share

Dean Foate, Chairman, President and CEO, commented, “We delivered a solid fiscal third quarter with revenue up 8% sequentially and operating margin nicely in our target range.  Relative to our guidance, revenue was at the high-end while our strong margin performance pushed our non-GAAP diluted EPS result a penny above the range.  Improved operating performance and efficient management of working capital enabled us to deliver ROIC performance of 13%, or 200 basis points above our weighted average cost of capital.”

Patrick Jermain, Senior Vice President and CFO, commented, “We improved our cash cycle sequentially by 3 days during the fiscal third quarter and generated strong cash flows from operations.  The improved cash cycle, in addition to a modest level of capital spending, drove free cash flow above our guidance to $24 million during the quarter.”  Mr. Jermain continued, “In anticipation of future growth, and in part to support our previously announced $150 million share repurchase program, on July 5, 2016, we amended our credit agreement.  We increased the maximum commitment under the unsecured credit facility to $300 million and extended the maturity to July 2021.  These modifications extend our favorable pricing structure and support our overall strategic capital allocation plans.”

Todd Kelsey, Executive Vice President and COO, commented, “Looking forward to our fiscal fourth quarter of 2016, we are guiding revenue of $655 to $685 million as we anticipate new program ramps in our Industrial/Commercial and Defense/Security/Aerospace market sectors will offset end-market weakness in our Networking/Communications sector.  At this revenue level, with continuing strong operating performance, we expect diluted EPS in the range of $0.76 to $0.84 for the fiscal fourth quarter, before any restructuring or special items.”

ROIC and Economic Return

ROIC for the fiscal third quarter of 2016 was 13.0%.  The Company defines ROIC as tax-effected annualized adjusted operating profit, divided by average invested capital over a four-quarter period for the third quarter.  Invested capital is defined as equity plus debt, less cash and cash equivalents.  The Company’s fiscal 2016 weighted average cost of capital was 11.0%.  ROIC for the third quarter less the Company’s weighted average cost of capital resulted in an economic return of 2.0%.

Free Cash Flow Calculation

The Company defines free cash flow as cash flows provided by operations less capital expenditures.  For the three months ended July 2, 2016, cash flows provided by operations was $31.3 million, less capital expenditures of $7.0 million, resulting in free cash flow of $24.3 million.  For the nine months ended July 2, 2016, cash flows provided by operations was $122.6 million, less capital expenditures of $23.8 million, resulting in free cash flow of $98.8 million.

About Plexus – The Product Realization Company

Plexus delivers optimized Product Realization solutions through a unique Product Realization Value Stream service model.  This customer-focused services model seamlessly integrates innovative product conceptualization, design, commercialization, manufacturing, fulfillment and sustaining services to deliver comprehensive end-to-end solutions for customers in the America, European and Asia-Pacific regions.