NEENAH, Wis., July 26 /PRNewswire-FirstCall/ -- Plexus Corp. today announced that revenues in its third fiscal quarter ended July 1, 2006 increased 27% to a record $397.4 million from $313.7 million in the comparable prior-year period, which ended July 2, 2005. Net income in the third fiscal quarter of 2006 was a record $25.1 million, or the equivalent of $0.53 per diluted share, which included $0.01 per share for stock-based compensation expense. The prior-year period’s net loss was $21.5 million, or $0.50 per diluted share, which included the impairment of goodwill and restructuring costs of $27.6 million ($27.5 million after tax), or the equivalent of $0.66 per diluted share. Although there were no net 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, “As we anticipated, sequential revenue growth in the third quarter was exceptionally strong, driven by production for an important new program in the Defense sector and renewed strength in the Wireline/Networking sector. Gross margins expanded 50 basis points from the previous quarter to 11.5% of revenues, and operating margins expanded an even greater 75 basis points to 6.0% of revenues. Third quarter’s annualized after-tax return on capital employed advanced to 34.0% from the prior quarter’s 26.9%.”
Mr. Foate added, “We currently expect revenues in the fourth fiscal quarter to be in the range of $390 million to $405 million, which would give us top-line growth for the full year of 18.3 to 19.5 percent. We anticipate diluted earnings per share, before any restructuring or special items, to be in the range of $0.46 to $0.50, including about $0.03 for stock-based compensation and $0.02 for the initial impact of FASB Interpretation No.47 “FIN 47" concerning conditional asset retirement obligations. Our slightly lower earnings outlook for the fourth quarter, compared to the third quarter, reflects an anticipated shift toward a less favorable revenue mix, only partially offset by lower SG&A expense, as well as the higher stock-based compensation expense and the charge for FIN 47, noted above.”
Gordon Bitter, Chief Financial Officer, commented on the third quarter’s restructuring action, “The Maldon, England facility will be closed to reduce manufacturing capacity in the U.K. Programs currently manufactured in Maldon will be transitioned to the company’s facility in Kelso, Scotland by the end of calendar 2006 or early in 2007. The total cost of this action is estimated at $1.0 million of which approximately $0.9 million will be cash payments for severance and retention bonuses, and the remaining $0.1 million will be a non- cash charge for asset impairments. Approximately 77 employees are involved. The initial $0.4 million of this restructuring charge for severance was recognized in the third fiscal quarter, but the charge was offset by favorable adjustments of estimates for earlier restructuring actions.”
Turning to the balance sheet, Bitter added, “The cash conversion cycle improved by three days, despite a two-day extension in average days in receivables due to the back-ending of sales within the quarter. Cash and investments increased $20.1 million over the prior quarter-end to $169.8 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 Q3 - Fiscal 2006 Q2 - Fiscal 2006 Wireline/Networking 38% 37% Wireless Infrastructure 6% 11% Medical 25% 26% Industrial/Commercial 17% 20% Defense/Security/Aerospace 14% 6% Fiscal Q3 Highlights -- Top 10 customers comprised 63% of sales during the quarter, up 5 percentage points from the previous quarter. -- Juniper Networks Inc., with 19% of sales, General Electric Corp., with 11% of sales, and an unnamed defense customer with 10% of sales were the only customers representing 10% or more of revenues for the third quarter. -- Cash flow provided by operations was approximately $7.0 million for the quarter. -- Capital expenditures for the quarter were $4.8 million. -- Cash Conversion Cycle: Cash Conversion Cycle Q3 - Fiscal 2006 Q2 - Fiscal 2006 Days in Accounts Receivable 50 Days 48 Days Days in Inventory 60 Days 63 Days Days in Accounts Payable (60) Days (58) Days Annualized Cash Cycle 50 Days 53 Days Conference Call/Webcast and Replay Information What: Plexus Corp.'s Fiscal Q3 Earnings Conference Call When: Thursday, July 27, 2006 at 8:30 a.m. Eastern Time Where: 866-406-5369 or 973-582-2822 with conference ID: Plexus http://www.videonewswire.com/PLXS/072706/ (requires Windows Media Player) Replay: The call will be archived until August 3, 2006 at noon Eastern Time http://www.videonewswire.com/PLXS/072706/ or via telephone replay at 877-519-4471 or 973-341-3080 PIN: 7564992 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 Nine Months Ended July 1, July 2, July 1, July 2, 2006 2005 2006 2005 Net sales $397,398 $313,709 $1,063,615 $906,675 Cost of sales 351,894 286,572 949,796 831,698 Gross profit 45,504 27,137 113,819 74,977 Operating expenses: Selling and administrative expenses 21,554 19,298 58,084 56,615 Goodwill impairment - 26,915 - 26,915 Restructuring and asset impairment costs - 729 - 12,247 21,554 46,942 58,084 95,777 Operating income (loss) 23,950 (19,805) 55,735 (20,800) Other income (expense): Interest expense (821) (878) (2,652) (2,640) Interest income 1,654 698 4,226 1,702 Miscellaneous income (expense) 637 (491) 656 (299) Income (loss) before income taxes 25,420 (20,476) 57,965 (22,037) Income tax expense 328 1,022 579 897 Net income (loss) $25,092 $(21,498) $57,386 $(22,934) Earnings per share: Basic $0.55 $(0.50) $1.28 $(0.53) Diluted $0.53 $(0.50) $1.24 $(0.53) Weighted average shares outstanding: Basic 45,848 43,369 44,793 43,291 Diluted 47,274 43,369 46,391 43,291 PLEXUS CORP. NON-GAAP SUPPLEMENTAL INFORMATION (in thousands, except per share data) Three Months Ended Nine Months Ended July 1, July 2, July 1, July 2, 2006 2005 2006 2005 (unaudited) Net income (loss) - GAAP $25,092 $(21,498) $57,386 $(22,934) Add income tax expense 328 1,022 579 897 Income (loss) before income taxes - GAAP 25,420 (20,476) 57,965 (22,037) Add: Restructuring and impairment costs* - 27,644 - 39,162 Income (loss) before income taxes and excluding restructuring and impairment costs - Non-GAAP 25,420 7,168 57,965 17,125 Income tax expense - Non-GAAP 328 146 579 942 Net income - Non-GAAP $25,092 $7,022 $57,386 $16,183 Earnings per share - Non-GAAP: Basic $0.55 $0.16 $1.28 $0.37 Diluted $0.53 $0.16 $1.24 $0.37 Weighted average shares outstanding: Basic 45,848 43,369 44,793 43,291 Diluted 47,274 43,881 46,391 43,788 * Summary of restructuring and impairment costs Restructuring and impairment costs: Goodwill impairment $- $26,915 $- $26,915 Lease exit costs and other - 65 - 5,754 Asset impairments - 11 - 4,303 Severance costs - 653 - 2,190 Total restructuring and impairment costs $- $27,644 $- $39,162 PLEXUS CORP. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except per share data) July 1, October 1, 2006 2005 (unaudited) ASSETS Current assets: Cash and cash equivalents $139,750 $98,727 Short-term investments 30,000 10,000 Accounts receivable 218,128 167,345 Inventories 232,824 180,098 Deferred income taxes 58 127 Prepaid expenses and other 6,260 5,693 Total current assets 627,020 461,990 Property, plant and equipment, net 129,755 123,140 Goodwill, net 7,312 6,995 Other 9,226 8,343 Total assets $773,313 $600,468 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Current portion of long-term debt and capital lease obligations $1,245 $770 Accounts payable 230,303 159,068 Customer deposits 8,787 7,707 Accrued liabilities: Salaries and wages 32,965 24,052 Other 31,594 31,001 Total current liabilities 304,894 222,598 Long-term debt and capital lease obligations 21,666 22,310 Other liabilities 6,770 13,499 Deferred income taxes 2,945 2,046 Shareholders’ equity: Common stock, $.01 par value, 200,000 shares authorized, 46,195 and 43,752 shares issued and outstanding, respectively 462 438 Additional paid-in-capital 311,236 273,419 Retained earnings 116,229 58,843 Accumulated other comprehensive income 9,111 7,315 Total shareholders’ equity 437,038 340,015 Total liabilities and shareholders’ equity $773,313 $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/
