Plexus (PLXS) Q4 2012 earnings summary

Executive summary

• FY12 net sales rose 3.4% to $2.307B; operating income increased to $104.2M, while reported net income fell to $62.1M, primarily due to a deferred-tax valuation allowance.

• Adjusted for the $20.6M net deferred-tax-asset reduction, FY12 net income was $84.9M and diluted EPS was $2.39; Juniper subsequently notified of its planned disengagement by FY13-end.

Financial highlights

• FY12 net sales were $2,306.7M, up 3.4% YoY; gross profit was $219.9M and gross margin was 9.5%, versus 9.6% in FY11.

• Operating income was $104.2M, up from $101.2M; operating margin remained 4.5%.

• Reported net income was $62.1M and diluted EPS $1.75; excluding the valuation allowance, net income was $84.9M and diluted EPS $2.39.

• Cash from operations was $157.5M; free cash flow was $93.8M, up from $87.6M in FY11, supported by improved working capital management.

Outlook and guidance

• FY13 effective tax rate expected at 6%–8%, consistent with FY12 before the valuation-allowance impact.

• FY13 capital expenditures estimated at $100M, largely for Neenah and Oradea facility construction; expected funding primarily from operations, with possible short-term borrowing.

• Long-term financial model targets 10% gross margin, 5% operating margin, and ROIC 500 bps above WACC; targeted organic revenue growth is 15%. FY13 WACC estimate reduced to 12.0% from 12.5%.