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Plexus (PLXS) Q4 Earnings Beat Estimates, Revenues Up Y/Y

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Plexus (PLXS - Free Report) reported fourth-quarter fiscal 2020 adjusted earnings of $1.26 per share that beat the Zacks Consensus Estimate by 43.2%. Moreover, the figure grew 2.4% year over year.

Revenues of $913.2 million beat the consensus mark by 4.6%. The figure also increased 12.7% year over year due to a robust performance in Healthcare/Life Sciences and Industrial/Commercial sectors and higher Asia-Pacific (APAC) and Europe, the Middle East and Africa (EMEA) revenues.

APAC revenues increased 20.9% year over year to $503 million. Moreover, EMEA revenues were $99 million, up 22.2%. However, revenues in the Americas declined 2.9% to $334 million.

Plexus won 44 manufacturing contracts during the quarter, worth $286 million in annualized revenues. Trailing four-quarter manufacturing wins totaled $952 million in annualized revenues.

Market Sector Details

Industrial/Commercial revenues grew 29.2% year over year to $341 million and accounted for 37.3% of total revenues.
 

Plexus Corp. Price, Consensus and EPS Surprise

Plexus Corp. Price, Consensus and EPS Surprise

Plexus Corp. price-consensus-eps-surprise-chart | Plexus Corp. Quote

 

Healthcare/Life Sciences revenues climbed 10.9% from the year-ago quarter to $345 million. The sector accounted for 37.8% of total revenues.

However, Aerospace/Defense revenues decreased 19% year over year to $141 million and accounted for 15.4% of total revenues.

Communications accounted for 9.4% of total revenues. Revenues from the sector jumped 41% year over year to $86 million.

Notably, the top 10 customers of the company accounted for 56% of net revenues.

Operating Details

Gross profit on a GAAP basis increased 14.7% year over year to $89.2 million. Gross margin expanded 20 basis points (bps) year over year to 9.8%.

Selling and administrative expenses (4.3% of revenues) increased 0.6% from the year-ago quarter to $38.8 million.

Plexus reported adjusted operating income of $50.4 million, up 34.2% year over year. Adjusted operating margin expanded 90 bps on a year-over-year basis to 5.5%

Balance Sheet & Cash Flow

As of Oct 3, 2020, Plexus had cash & cash equivalents worth $385.8 million compared with $296.5 million as of Jul 4, 2020.

Moreover, as of Oct 3, 2020, the company had long-term debt of $188 million compared with $188.6 million as of Jul 4, 2020.

In fourth-quarter fiscal 2020, cash flow provided by operations was $117.8 million. The company reported free cash flow of $108.9 million.

ROIC (tax-effected annualized adjusted operating income divided by average invested capital over two quarters) was 14% for fourth-quarter fiscal 2020. Plexus’ weighted average cost of capital was 520 bps above WACC of 8.8%.

ROIC (tax-effected annualized adjusted operating income divided by average invested capital over a five-quarter period for the fiscal year) was 14% for fiscal 2020. Plexus’ weighted average cost of capital for fiscal 2020 was 8.8%.

Guidance

For first-quarter fiscal 2021, revenues are projected between $810 million and $850 million. COVID-19 is not expected to have any material impact on the operating strength of the company, beyond what had already occurred.

GAAP operating margin is expected between 4.9% and 5.3%.

GAAP earnings are expected between $1.02 and $1.17 per share.

The Zacks Consensus Estimate for first-quarter earnings is pegged at $1.02 per share, implying 2% growth from the figure reported in the year-ago quarter. The consensus mark for revenues stands at $845.7 million, suggesting a decline of 0.8% from the year-ago quarter’s reported figure.

Zacks Rank & Stocks to Consider

Plexus currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader technology sector are CDW Corporation (CDW - Free Report) , Qorvo (QRVO - Free Report) and Skyworks Solutions (SWKS - Free Report) . CDW and Qorvo both sport a Zacks Rank #1 (Strong Buy), while Skyworks carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Both CDW and Skyworks are scheduled to report their quarterly earnings on Nov 2. Qorvo is set to report on Nov 4.

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