Plexus (PLXS) Q4 2008 earnings summary

Executive summary

• FY08 net sales rose 19.1% to $1.842B, with growth across all five end markets; gross margin improved to 11.2% from 10.6%.

• Net income reached $84.1M and diluted EPS $1.92; FY08 benefited from an 18% effective tax rate and lower diluted share count after repurchases.

• Defense-sector sales to a major customer fell from $82.6M in H1 to $3.1M in H2, highlighting episodic demand and limited order visibility.

Financial highlights

• Revenue was $1,841.6M versus $1,546.3M in FY07; gross profit increased 25.9% to $205.8M.

• Operating income was $102.8M versus $79.4M; net income was $84.1M versus $65.7M, and diluted EPS was $1.92 versus $1.41.

• S&A expense increased 22.5% to $100.8M, including $5.5M higher variable incentive compensation and $1.9M higher stock-based compensation.

• Operating cash flow was $64.2M; cash and cash equivalents ended FY08 at $166.0M.

Outlook and guidance

• FY09 priorities: organic sales growth, improved operating income and ROIC above estimated WACC; full-year revenue targets were withheld pending more stable customer forecasts and visibility.

• Q1 FY09 net sales forecast was $455M–$480M; diluted EPS forecast was $0.38–$0.43 before restructuring and impairment costs, conditional on sales within that range.

• FY09 effective tax rate was expected at ~15%; FY09 capital expenditure guidance was $70M–$75M.