Plexus (PLXS) Q4 2011 earnings summary

Executive summary

• FY11 net sales rose 10.8% to $2.231B; net income was $89.3M, while gross margin fell to 9.6% from 10.3% on customer mix and higher fixed costs.

• Demand growth from new and existing industrial/commercial and medical programs, plus Juniper, offset wireless infrastructure declines and two customer disengagements following acquisitions.

• Q4 FY11 net sales were $538.1M, gross profit $50.3M, net income $18.3M and diluted EPS $0.52, versus $559.2M, $54.1M, $22.0M and $0.58 in Q3.

Financial highlights

• FY11 net sales $2,231.2M, up $217.8M (10.8%) YoY; gross profit $214.7M, up 3.8%, with gross margin 9.6% versus 10.3%.

• Operating income was $101.2M versus $99.7M; net income $89.3M versus $89.5M; diluted EPS $2.30 versus $2.19, lifted by lower average shares after repurchases.

• Operating cash flow reached $161.7M versus $2.0M; capex was $74.1M. Inventory fell $36.6M, turns rose to 4.3x from 4.1x, and DSO improved to 48 days from 51.

• FY11 S&A was $113.6M, up 5.9%, but declined to 5.1% of sales from 5.3%; other expense was $9.1M versus $9.2M.

Outlook and guidance

• FY12 effective tax rate expected at 8%–10%, mainly reflecting higher projected U.S. income and lower projected income in low-tax Malaysia and China.

• FY12 capex estimated at $90M–$95M, with a significant share for completing Penang, Malaysia and Xiamen, China facilities.

• Penang facility expected to be operational in Q1 FY12 and Xiamen in H2 FY12; a larger Oradea, Romania facility was expected to be announced in H1 FY12.

• Orders for a new large U.S. industrial/commercial customer were projected to rise significantly in FY12, supporting expected U.S. operating income.