Plexus Corp. (
reported earnings of 47 cents in the first quarter of 2013, which
missed the Zacks Consensus Estimate by a couple of cents (4.1%).
Plexus' result continued to suffer from lower end-market
Total revenue remained flat on a year-over-year basis but
plunged 10.8% sequentially to $530.5 million. Revenue also missed
the Zacks Consensus Estimate of $552.0 million. The weak
performance was primarily due to soft demand in the
Revenue from Networking/Communications (37.5% of total
revenue) decreased 13.5% year over year and 12.7% sequentially to
$199.0 million. Healthcare/Life Sciences (25.1% of total revenue)
surged 16.7% from the year-ago quarter but declined 3.6%
sequentially to $133.0 million.
Industrial/Commercial sector (24.7% of total revenue) declined
3.0% on a year-over-year basis but plunged 17.6% from the
previous quarter to $131.0 million. Revenue from
Defense/Security/Aerospace sector (12.8% of total revenue) soared
33.3% year over year but declined a modest 2.9% on a sequential
basis to $70.0 million.
During the quarter, Plexus won 23 new programs in the
manufacturing solutions group, which is expected to generate
approximately $193.0 million in annualized revenue once
Gross profit decreased 0.9% from the year-ago quarter and 9.0%
from the previous quarter to $51.2 million. Gross margin edged up
10 basis points ("bps") sequentially but contracted 20 bps from
the year-ago quarter to 9.6%.
Selling and administrative (S&A) expense increased 6.4%
year over year and 2.7% quarter over quarter to $29.7
Operating income decreased 9.6% year over year and 21.4%
sequentially to $21.5 million, primarily due to lower gross
margin base and higher expense. Operating margin contracted 50
bps from the year-ago quarter and 60 bps from the previous
quarter to 4.0%.
Net income decreased 7.0% year over year and 29.3%
sequentially to $16.6 million. Earnings per share (EPS) decreased
7.3% from the year-ago quarter and 28.6% from the previous
quarter to 47 cents.
Plexus exited the first quarter of 2013 with $274.2 million in
cash and investments versus $297.6 million in the fourth quarter
of 2012. Long-term debt and capital lease obligations (including
the current portion) amounted to $580.3 million versus $270.4
million in the previous quarter.
Cash flow from operations was $9 million in the quarter
compared with $41.0 million in the previous quarter. Free cash
flow was ($17.0) million compared with $22.0 million in the
fourth quarter of 2012.
Return on invested capital (ROIC) was 12.6% at the end of
first quarter compared with 14.2% in the year-ago quarter and
15.5% in the fourth quarter of 2012.
For the forthcoming second quarter of 2013, total revenue is
projected in the range of $550.0 million to $580.0 million
(mid-point up 6.0% year over year). Earnings per share are
projected to be between 50 cents and 55 cents per share,
excluding any restructuring charges and including approximately 8
cents per share in stock-based compensation expenses.
Plexus expects fiscal 2013 revenue to remain flat on a
year-over-year basis primarily due to negative effect from
disengagement, offset by approximately $956.0 million of new
program wins in 2012. Plexus expects to achieve modest revenue
growth in fiscal 2014.
We believe that sluggish demand environment will continue to
hurt Plexus in the near term. Moreover, a matured electronic
manufacturing services ("EMS") market and intense competition
remains the other major headwinds for Plexus over the long
However, we believe that new business opportunities,
particularly in the industrial/commercial and medical sector and
global expansion will drive growth over the long term. Moreover,
the disengagement with Juniper is expected to improve the product
mix going forward.
Thus, we have a Neutral recommendation on Plexus over the long
term (6-12 months). Currently, Plexus has a Zacks Rank #3
JUNIPER NETWRKS (JNPR): Free Stock Analysis
PLEXUS CORP (PLXS): Free Stock Analysis
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