Plexus (PLXS) Q4 2016 earnings summary

Executive summary

• FY16 net sales fell 3.7% YoY to $2,556.0M; net income declined 19.0% to $76.4M and diluted EPS was $2.24.

• Fourth-quarter sales were $653.1M, net income $19.1M and diluted EPS $0.56.

• Lower Networking / Communications sales, restructuring charges and foreign-exchange losses weighed on results; growth in other sectors partly offset the decline.

Financial highlights

• FY16 gross profit was $227.4M and gross margin 8.9%, down 10 bps YoY; operating income was $99.4M and operating margin 3.9%.

• FY16 net income was $76.4M versus $94.3M in FY15; diluted EPS was $2.24 versus $2.74.

• FY16 operating cash flow was $127.7M; free cash flow was $96.6M, up from $41.5M in FY15.

• Adjusted for $15.1M in special items, FY16 ROIC was 13.8%; reported economic return was 2.8%.

Outlook and guidance

• FY17 annual effective tax rate expected at 9.0%–11.0%.

• FY17 capital expenditures estimated at $50M–$60M.

• Financial model targets 4.7%–5.0% operating margin, 5.0% economic return and 12.0% organic revenue growth.

• Projected operating cash flows, cash, potential credit-facility borrowings and leasing capacity expected to meet working-capital and fixed-capital needs for the next 12 months.