NEENAH, Wis., April 27 /PRNewswire-FirstCall/ -- Plexus Corp. announced that revenues in its second fiscal quarter ended April 1, 2006 increased 11% to a record $337.9 million from $305.5 million in the comparable prior-year period, which ended April 2, 2005. Net income in the second fiscal quarter of 2006 was a record $18.5 million, or the equivalent of $0.40 per diluted share. The prior-year period's net loss was $4.5 million, or $0.10 per diluted share, which included restructuring costs and asset impairments of $10.6 million ($9.8 million after tax), or $0.22 per diluted share. Although there were no restructuring costs in the current quarter, a reconciliation of the GAAP net income and EPS to the non-GAAP statements for the prior-year period is attached.
Dean Foate, President and CEO commented, "Financial results for the second quarter benefited from the continued improvement in operational efficiencies. Gross margins increased to 11% of revenues, and we achieved operating margins of 5.3%. As a result, our annualized after-tax Return on Capital Employed continued to improve, rising to 26.9% from 21.4% in the first quarter of fiscal 2006." Looking ahead, Mr. Foate added, "We currently expect revenues for the third quarter to be in the range of $390 million to $405 million, and we anticipate diluted earnings per share, before any restructuring costs and special items, to be in the range of $0.50 to $0.55, including $0.02 for stock-based compensation expense. A significant new program in the Defense sector and expansion of business with existing customers in the Wireline sector are driving the anticipated sequential improvement in the third quarter. We are now expecting revenue growth of approximately 20% for all of fiscal 2006, better than our earlier targeted growth rate of 15-18%."
Gordon Bitter, Chief Financial Officer, commented, "Cash flow from operations was $26.2 million in the second fiscal quarter despite a $24.1 million increase in inventories during the quarter to support anticipated higher revenues in the third fiscal quarter. Cash and cash equivalents and short-term investments increased $30 million during the quarter to $149.7 million."
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 and asset impairment costs, as well as the establishment of valuation allowances 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 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.
SECTOR BREAKOUT
Plexus reports revenues based on the industry sector breakout set forth in the table below, which reflects the Company's sales and marketing focus.
Industry Q2 - Fiscal 2006 Q1 - Fiscal 2006 Wireline/Networking 40% 42% Wireless Infrastructure 8% 8% Medical 26% 28% Industrial/Commercial 20% 17% Defense/Security/Aerospace 6% 5% Fiscal Q2 Highlights -- Top 10 customers comprised 58% of sales during the quarter, down 3% from the previous quarter. -- Juniper Networks Inc., with 20% of sales, and General Electric Corp., with 11% of sales, were the only customers representing 10% or more of revenues for the second quarter. -- Cash flow provided by operations was approximately $26.2 million for the quarter. -- Capital expenditures for the quarter were $11.9 million. -- Cash Conversion Cycle: Cash Conversion Cycle Q2 - Fiscal 2006 Q1 - Fiscal 2006 Days in Accounts Receivable 48 Days 48 Days Days in Inventory 63 Days 56 Days Days in Accounts Payable (58) Days (52) Days Annualized Cash Cycle 53 Days 52 Days Conference Call/Webcast and Replay Information What: Plexus Corp.'s Fiscal Q2 Earnings Conference Call When: Friday, April 28, 2006 at 8:30 a.m. Eastern Time Where: 877-234-1973 or 973-935-8412 with conference ID: Plexus http://www.videonewswire.com/PLXS/042806/ (requires Windows Media Player) Replay: The call will be archived until May 5, 2006 at noon Eastern Time http://www.videonewswire.com/PLXS/042806/ or via telephone replay at 877-519-4471 or 973-341-3080 PIN: 7204662 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, test, manufacturing and fulfillment and aftermarket solutions to branded product companies in the Wireline/Networking, Wireless Infrastructure, Medical, Industrial/Commercial and Defense/Security/Aerospace industries.
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 customer programs that require flexibility, scalability, technology and quality.
Plexus provides award-winning customer service to more than 150 branded product companies in North America, Europe and Asia.
Safe Harbor and Fair Disclosure Statement
The statements contained in this release which are guidance or which are not historical facts (such as statements in the future tense and statements including "believe," "expect," "intend," "anticipate," "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, including, but not limited to: the economic performance of the electronics, technology and defense industries; the risk of customer delays, changes or cancellations in both ongoing and new programs; the Company's ability to secure new customers and maintain its current customer base; material cost fluctuations and the adequate availability of components and related parts for production; the effect of changes in average selling prices; the effect of start-up costs of new programs and facilities; the adequacy of restructuring and similar charges as compared to actual expenses; possible unexpected costs and operating disruption in transitioning programs; the effect of general economic conditions and world events (such as terrorism and war in the Middle East); the impact of increased competition; and other risks detailed in the Company's Securities and Exchange Commission filings.
(Financial tables follow) PLEXUS CORP. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) (unaudited) Three Months Ended Six Months Ended April 1, April 2, April 1, April 2, 2006 2005 2006 2005 Net sales $337,911 $305,486 $666,217 $592,966 Cost of sales 300,870 279,941 597,901 545,126 Gross profit 37,041 25,545 68,316 47,840 Operating expenses: Selling and administrative expenses 19,301 19,243 36,530 37,317 Restructuring and asset impairment costs - 10,634 - 11,518 19,301 29,877 36,530 48,835 Operating income (loss) 17,740 (4,332) 31,786 (995) Other income (expense): Interest expense (1,001) (891) (1,831) (1,762) Interest income 1,453 521 2,573 1,004 Miscellaneous income (expense) 345 (145) 19 191 Income (loss) before income taxes 18,537 (4,847) 32,547 (1,562) Income tax expense (benefit) - (388) 253 (125) Net income (loss) $18,537 $(4,459) $32,294 $(1,437) Earnings per share: Basic $0.42 $(0.10) $0.73 $(0.03) Diluted $0.40 $(0.10) $0.71 $(0.03) Weighted average shares outstanding: Basic 44,633 43,315 44,265 43,252 Diluted 46,347 43,315 45,760 43,252 PLEXUS CORP. NON-GAAP SUPPLEMENTAL INFORMATION (in thousands, except per share data) Three Months Ended Six Months Ended April 1, April 2, April 1, April 2, 2006 2005 2006 2005 (unaudited) Net income (loss) - GAAP $18,537 $(4,459) $32,294 $(1,437) Add income tax expense (benefit) - (388) 253 (125) Income (loss) before income taxes - GAAP 18,537 (4,847) 32,547 (1,562) Add: Restructuring and impairment costs* - 10,634 - 11,518 Income before income taxes and excluding restructuring and impairment costs - Non-GAAP 18,537 5,787 32,547 9,956 Income tax expense - Non-GAAP - 463 253 796 Net income - Non-GAAP $18,537 $5,324 $32,294 $9,160 Earnings per share - Non-GAAP: Basic $0.42 $0.12 $0.73 $0.21 Diluted $0.40 $0.12 $0.71 $0.21 Weighted average shares outstanding: Basic 44,633 43,315 44,265 43,252 Diluted 46,347 43,718 45,760 43,741 * Summary of restructuring and impairment costs Restructuring and impairment costs: Lease exit costs and other $- $5,969 $- $5,689 Asset impairments - 3,860 - 4,292 Severance costs - 805 - 1,537 Total restructuring and impairment costs $- $10,634 $- $11,518 PLEXUS CORP. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except per share data) April 1, October 1, 2006 2005 (unaudited) ASSETS Current assets: Cash and cash equivalents $124,673 $98,727 Short-term investments 25,000 10,000 Accounts receivable 176,259 167,345 Inventories 207,905 180,098 Deferred income taxes 64 127 Prepaid expenses and other 6,788 5,693 Total current assets 540,689 461,990 Property, plant and equipment, net 130,617 123,140 Goodwill, net 6,859 6,995 Other 8,958 8,343 Total assets $687,123 $600,468 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term debt and capital lease obligations $1,553 $770 Accounts payable 191,903 159,068 Customer deposits 10,129 7,707 Accrued liabilities: Salaries and wages 24,677 24,052 Other 29,284 31,001 Total current liabilities 257,546 222,598 Long-term debt and capital lease obligations 21,623 22,310 Other liabilities 13,325 13,499 Deferred income taxes 1,518 2,046 Shareholders' equity: Common stock, $.01 par value, 200,000 shares authorized, 45,170 and 43,752 shares issued and outstanding, respectively 452 438 Additional paid-in-capital 293,464 273,419 Retained earnings 91,137 58,843 Accumulated other comprehensive income 8,058 7,315 Total shareholders' equity 393,111 340,015 Total liabilities and shareholders' equity $687,123 $600,468
Plexus Corp.CONTACT: Gordon Bitter, CFO of Plexus Corp., +1-920-722-3451,gordon.bitter@plexus.com
Web site: http://www.plexus.com/
