Plexus (PLXS) Q1 Earnings Beat Estimates, Revenues Rise Y/Y

Plexus (NASDAQ:PLXS) reported first-quarter fiscal 2020 adjusted earnings of $1 per share that beat the Zacks Consensus Estimate by 7.5% and increased 9.9% year over year.

Revenues of $852 million beat the consensus mark of $801 million and increased 11.2% year over year. Strong revenues from Aerospace/Defense, Industrial/Commercial and Healthcare/Life Sciences sectors drove the top line.

Asia-Pacific (APAC) revenues increased 19.3% year over year to $451 million. Europe, the Middle East and Africa (EMEA) revenues totaled $85 million, up 16.4% year over year. However, Americas (AMER) revenues declined 0.3% to $353 million.

Plexus won 30 manufacturing contracts during the quarter, worth $167 million in annualized revenues. Trailing four-quarter manufacturing wins totaled $843 million in annualized revenues.

Plexus Corp. Price, Consensus and EPS Surprise

Market Sector Details

Healthcare/Life Sciences revenues rose 3.7% from the year-ago quarter to $312 million. The sector accounted for 36.6% of total revenues.

Industrial/Commercial revenues grew 41.6% year over year to $310 million and accounted for 36.4% of total revenues.

Aerospace/Defense revenues jumped 39.8% year over year to $172 million and accounted for 20.2% of total revenues.

Communications accounted for 6.8% of total revenues. Revenues from the sector decreased 52.8% year over year to $58 million.

Notably, the top 10 customers of the company accounted for 54% of net revenues.

Operating Details

Gross profit increased 9.4% year over year to $79.2 million. However, gross margin contracted 20 basis points (bps) year over year to 9.3%.

Selling and administrative expenses (4.6% of revenues) increased 10.8% from the year-ago quarter to approximately $39.3 million.

Plexus reported adjusted operating income of $39.9 million, up 8.1% year over year. However, adjusted operating margin contracted 10 bps year-over-year basis to 4.7%.

Balance Sheet & Cash Flow

As of Jan 4, 2020, Plexus had cash & cash equivalents worth $252.9 million compared with $223.8 million as of Sep 28, 2019.

Moreover, as of Jan 4, 2020, the company had a long-term debt of $186.8 million compared with $187.3 million as of Sep 28, 2019.

In first-quarter fiscal 2020, Plexus generated free cash flow of $61 million.

Further, the company repurchased shares worth $6.3 million at an average price of $69.82 per share.

ROIC (tax-effected annualized adjusted operating income divided by average invested capital over two quarters) was 14.7% for first-quarter fiscal 2020. Plexus’ weighted average cost of capital for fiscal 2020 was 8.8%.

Guidance

For second-quarter fiscal 2020, revenues are projected between $790 million and $830 million. The Zacks Consensus Estimate is currently pegged at $821.6 million, indicating 4.1% growth from the figure reported in the year-ago quarter.

Additionally, Plexus expects GAAP earnings between 80 cents and 90 cents per share.

The consensus mark for earnings is currently pegged at 96 cents, suggesting 21.5% growth from the figure reported in the year-ago quarter.

Zacks Rank & Stocks to Consider

Plexus currently carries a Zacks Rank #3 (Hold).

Perion Network Ltd. (NASDAQ:PERI) , CEVA Inc. (NASDAQ:CEVA) and Splunk Inc. (NASDAQ:SPLK) are some better-ranked stocks in the broader computer and technology sector. All three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Perion, CEVA and Splunk are set to report quarterly results on Feb 12, 18 and 27, respectively.

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