Electronic Manufacturing Services provider
) reported fourth quarter 2012 adjusted earnings of 66 cents per
share, which surpassed the Zacks Consensus Estimate by three
cents and was in line with the high end of management's guided
range of 60 cents to 66 cents per share. Earnings surged 26.9%
year over year, primarily due to higher sales and modest margin
Total revenue increased 10.5% on a year-over-year basis to
$594.8 million, which was at the lower end of management's guided
range of $590 million to $620 million, but missed the Zacks
Consensus Estimate of $604.0 million. The year-over-year increase
in revenue was primarily driven by strong performance from all
its business segments.
Revenue from Networking/Communications (38% of total revenue)
increased 6.5% year over year to $228 million. Medical sector,
which will be renamed as Healthcare/Life Sciences starting FY13
(23% of total revenue) increased 23.2% from the previous-year
quarter to $138 million.
Industrial/Commercial sector (27% of total revenue) increased
a modest 1.3% on a year-over-year basis to $159 million. Revenue
from Defense/Security/Aerospace sector (12% of total revenue) was
up 27.3% from the previous-year quarter to $70 million.
During the quarter, Plexus won 28 new programs in the
manufacturing solutions group and the company expects to generate
approximately $234 million in annualized revenue once production
commences. Top 10 customers of the company accounted for 55% of
the total revenue.
Juniper Networks Inc.
) contributed 13% of the revenues and was the only customer
accounting for 10% or more of revenues during the quarter.
Gross profit increased 11.8% from the year-ago quarter to
$56.2 million. Gross margin for the quarter stood at 9.5%
compared with the year-ago level of 9.3%. Gross margin edged up
primarily due to higher revenue base.
Operating income for the quarter increased 24.1% from the
previous-year quarter to $27.3 million. Operating margin for the
quarter was 4.6%, which increased 50 basis points from the
previous-year quarter as operating expenses as a percentage of
revenue contracted 40 basis points on a year-over-year basis.
Adjusted net income increased 28.3% year over year to $23.5
Plexus exited the quarter with $297.6 million in cash and
investments versus $277.9 million in the previous quarter.
Long-term debt and capital lease obligations (including the
current portion) amounted to $270.4 million versus $274.7 million
in the previous quarter. Cash flow from operations was $41
million in the quarter. The company also announced a share
buyback program of approximately $50 million.
For the forthcoming first quarter 2013, total revenue is
projected in the range of $550.0 million to $580.0 million.
Plexus expects earnings 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. The Zacks Consensus Estimate is pegged at 53 cents for
the first quarter.
We believe that stabilizing end markets, new business
opportunities, particularly in the industrial/commercial and
medical sector and global expansion will drive growth over the
long term. We also believe that the gradual improvement in the
U.S. market will boost Plexus' top line going forward.
However, intense competition, continued component challenges
and supply chain constraints remain major concerns for Plexus
over the long term. Moreover, the company's tepid outlook for the
forthcoming quarter also would weigh on the stock.
Thus, we have a Neutral recommendation on Plexus over the long
term (6-12 months). Currently, Plexus has a Zacks #4 Rank, which
translates into a Sell rating over the short term.
JUNIPER NETWRKS (JNPR): Free Stock Analysis
PLEXUS CORP (PLXS): Free Stock Analysis
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