Plexus Corp PLXS reported first-quarter fiscal 2017 adjusted earnings of 82 cents per share, which beat the Zacks Consensus Estimate of 76 cents and grew 74.5% year over year. However, revenues of $635 million, despite 3% growth year over year, fell short of the Zacks Consensus Estimate of $649.2 million.
Continued weakness in the Communications sector was a major factor. Shares were down 3% in the aftermarket session.
Revenues from the Communications sector (20.6% of total revenue) plummeted 16.6% year over year to $131 million.
Healthcare/Life Sciences (33.2%) revenues were up 10.5% from the year-ago quarter to $211 million.
Industrial/Commercial (32.4%) revenues increased 19.1% year over year to $206 million.
Defense/Security/Aerospace segment (13.7%) revenues fell 9.4% on a year-over-year basis to $87 million.
Plexus Corp. Price, Consensus and EPS Surprise
Plexus Corp. Price, Consensus and EPS Surprise | Plexus Corp. Quote
During the quarter, the company won 51 manufacturing solutions programs for which it anticipates approximately $217 million in annualized revenues once production commences.
Region-wise, the company's revenues from both Americas and Asia Pacific increased 3.3% on a year-over-year basis. Nonetheless, Plexus' revenues from Europe, Middle East, and Africa regions were almost down 7.1% year over year to $39 million.
Margins
Plexus reported adjusted operating profit of $33.9 million in the quarter, up 47.2% year over year. Adjusted operating margin increased 160 basis points year over year to 5.3%.
Balance Sheet & Cash Flow
Plexus exited the fiscal with cash & cash equivalents worth $496.5 million compared with $432.9 million as of Oct 31, 2016. The company had long-term debt and capital lease obligations of about $184.1 million compared with $184 million as of Oct 31, 2016.
For the quarter, the company generated $79.5 million in cash flow from operations in the quarter and used $7 million for capital expenditures. Free cash flow came in at about $72.5 million. Share repurchases for the quarter amounted to $7 million.
Outlook
For the second quarter of fiscal 2017, revenues are projected in a range of $620 million - $650 million. GAAP earnings are projected within 71 to 79 cents per share.
Our Take
We believe new program wins along with global expansion will drive growth over the long term. Plexus had earlier mentioned that it remains confident of achieving $3 billion revenue run rate in fiscal 2017. Additionally, the consolidation of the company's production facilities in low-cost areas is expected to boost margins, going forward.
However, a mature electronic manufacturing services market and intense competition from the likes of Jabil Circuit JBL , Celestica Inc. CLS and Flextronics FLEX remain headwinds. Additionally, the company expects weakness in the Communications market to impact the business in the near term.
Over the past one year, shares have increased 81.17% compared with the Zacks categorized Electronic Manufacturing Services (EMC) industry's gain of 52.48%.
Currently, Plexus has a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .
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Plexus Corp. (PLXS): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
