Plexus (PLXS) Q2 Earnings Miss Estimates, Revenues Beat

Plexus Corp (NASDAQ:PLXS) reported fiscal second-quarter 2018 adjusted earnings of 74 cents per share, which missed the Zacks Consensus Estimate by a penny and declined 11.9% year over year.

Revenues of $698.7 million however surpassed the consensus mark of $690.8 million and increased 15.6% on a year-over-year basis.

Healthcare/Life Sciences revenues (35%) were up nearly 21% from the year-ago quarter to $248 million.

Industrial/Commercial revenues (35%) were up 26% year over year to $242 million.

Defense/Security/Aerospace segment revenues (16%) grew 11% on a year-over-year basis to $110 million.

Revenues from the Communications sector (14% of total revenue) however fell 8.3% year over year to $99 million.

Region-wise, revenues from the Americas increased 11% from the year-ago quarter to $302 million. Revenues from the Asia Pacific region rose 12.9% to $350 million on a year-over-year basis. Revenues from Europe, the Middle East and Africa, which totaled $74 million, grew 68.2% year over year.

Plexus won 41 new manufacturing programs worth approximately $255 million (highest quarterly win) in the quarter. It added over $847 million in revenues in the trailing four quarters from new wins.

The 10 customers of the company together accounted for about 58% of net revenues in the quarter.

Margins

Plexus reported adjusted operating income of $30.8 million for the quarter, down 5.5% year over year.

Adjusted operating margin contracted 100 basis points on a year-over-year basis to 4.4%.

Balance Sheet & Cash Flow

Plexus exited the quarter with cash & cash equivalents worth $402.5 million compared with $506.7 million as of Dec 30, 2017. The company had long-term debt and capital lease obligations of about $27.2 million compared with $26.2 million as of Dec 30, 2017.

For the quarter, the company used $66.3 million of cash flow in operations and $12.4 million for capital expenditures, resulting in free cash outflow of $78.7 million. Share repurchases for the quarter amounted to $31.6 million.

Outlook

For the third quarter of fiscal 2018, revenues are projected in the range of $700-$740 million. GAAP earnings are projected within 76 and 86 cents per share.

Operating margin is expected to be in the band of 4.6% to 5%.

The company expects to achieve 12% revenue growth in fiscal 2018 on the back of new programs wins and improving end markets.

Zacks Rank & Other Stocks to Consider

Plexus carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the broader technology sector include Lam Research Corporation (NASDAQ:LRCX) , Micron Technology (NASDAQ:MU) and Western Digital (NASDAQ:WDC) , all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.

Long-term earnings growth rate for Lam Research, Micron and Western Digital is projected to be 17.7%, 10% and 19%, respectively.

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