Plexus (PLXS) Q4 2014 earnings summary

Executive summary

• FY14 net sales rose 6.7% to $2.378B, led by Healthcare/Life Sciences and new program ramps; gross margin eased to 9.5% and operating margin to 4.2%.

• Growth and earnings improved despite Juniper disengagement and $11.3M of restructuring and impairment charges tied mainly to facility consolidation and relocation.

Financial highlights

• Net sales were $2,378.2M vs. $2,228.0M in FY13; gross profit was $225.6M vs. $213.2M, while operating income was $100.6M vs. $96.6M.

• Net income increased 6.0% to $87.2M; diluted EPS rose 6.8% to $2.52, including restructuring and impairment costs.

• Adjusted net income, excluding valuation allowances and out-of-period tax adjustments, was $95.1M vs. $86.1M in FY13.

• Operating cash flow was $88.4M vs. $207.6M; free cash flow was $23.1M vs. $99.5M, reflecting higher working-capital needs and lower operating cash generation.

Outlook and guidance

• FY15 estimated annual effective tax rate: 8.0%-10.0%; FY15 capital expenditures estimated at $50.0M.

• Management’s financial model targets 5.0% operating margin, ROIC 500 bps above WACC, and 12.0% organic revenue growth; FY15 estimated WACC is 11.0%.

• Juarez facility closure in Q1 FY15 is expected to add $1.5M-$1.8M of restructuring charges.