Electronic Manufacturing Services provider
Plexus Corp. (
reported mixed first quarter 2012 results. Earnings per share (
) came in at 51 cents, surpassing the Zacks Consensus Estimate of
48 cents and management's guided range of 48 cents to 50 cents.
However, weak top-line growth during the quarter weighed down
the EPS, which decreased 16.4% year over year.
Total revenue in the quarter decreased 6.4% on a year-over-year
basis to $529.7 million, but was in line with the higher end of
management's guided range of $525.0 million to $530.0 million.
However, reported revenue missed the Zacks Consensus Estimate of
The year-over-year decline in revenue was primarily attributed
to continued volatility in the Networking/Communications segment.
The segment reported revenue of $230.0 million, down 21.0% year
over year in the quarter. Networking/Communications contributed
43.0% to the total revenue in the reported quarter compared with
51.0% in the year-ago quarter.
Industrial/Commercial (25.0% of the total revenue) increased
14.4% year over year to $135.0 million. Medical (22.0% of revenues)
decreased 1.7% year over year to $114.0 million. Defense/
Security/Aerospace (10% of the total revenue) improved 24.4% year
over year to $51.0 million.
During the quarter, Plexus won 28 new programs in the
manufacturing solutions group, which are expected to generate
approximately $203.0 million in annualized revenue when production
Top 10 customers of the company accounted for 63.0% of the total
Juniper Networks Inc. (
was the only customer representing 10.0% or more of revenues during
Gross profit decreased 6.0% from the year-ago quarter to $51.7
million, while gross margin for the quarter stood at 9.8%, up from
the year-ago level of 9.7%. The year-over-year decline was
primarily attributed to weak top-line growth in the quarter.
Operating profit decreased 14.7% from the prior-year quarter to
$23.8 million, with the operating margin for the quarter standing
at 4.5%, down from 4.9% in the year-ago quarter. Operating profit
was impacted by higher-than-expected selling and administrative
expenses during the quarter.
Balance Sheet and Cash Flow
Plexus exited the quarter with $248.3 million in cash and
investments versus $242.1 million in the previous quarter.
Long-term debt and capital lease obligations (including the current
portion) amounted to $283.4 million versus $287.7 million in the
Cash flow provided by operations was approximately $30.0 million
in the quarter. Capital expenditures were $22.0 million and free
cash flow $8.0 million.
Second Quarter Guidance
For the forthcoming quarter, Plexus expects EPS to be between 51
cents and 58 cents, excluding any restructuring charges and
including approximately 9 cents per share in stock-based
compensation expense. The guidance was below the Zacks Consensus
Estimate of 51 cents per share.
Total revenue for the second quarter of 2012 is projected in the
range of $550.0 million to $580.0 million. The Zacks Consensus
revenue estimate is $551.0 million.
Plexus's second quarter guidance is disappointing and the
company is expected to suffer due to the lack of visibility in
customer growth and macroeconomic concerns going forward. Plexus is
expanding its manufacturing facilities in Malaysia and Romania,
which we believe will also hurt profitability in the near term.
Moreover, intense competition, continued component challenges and
supply chain constraints remain major concerns over the long
We have an Underperform recommendation on Plexus over the long
term (6-12 months). Currently, Plexus has a Zacks #3 Rank, which
translates into a Hold rating for the short term.
JUNIPER NETWRKS (
): Free Stock Analysis Report
PLEXUS CORP (
): Free Stock Analysis Report
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