U.S. Markets open in 5 hrs 20 mins

Plexus (PLXS) Q1 Earnings Beat Estimates, Revenues Rise Y/Y

Zacks Equity Research

Plexus PLXS reported first-quarter fiscal 2020 adjusted earnings of $1 per share that beat the Zacks Consensus Estimate by 7.5% and increased 9.9% year over year.

Revenues of $852 million beat the consensus mark of $801 million and increased 11.2% year over year. Strong revenues from Aerospace/Defense, Industrial/Commercial and Healthcare/Life Sciences sectors drove the top line.

Asia-Pacific (APAC) revenues increased 19.3% year over year to $451 million. Europe, the Middle East and Africa (EMEA) revenues totaled $85 million, up 16.4% year over year. However, Americas (AMER) revenues declined 0.3% to $353 million.

Plexus won 30 manufacturing contracts during the quarter, worth $167 million in annualized revenues. Trailing four-quarter manufacturing wins totaled $843 million in annualized revenues.
 

Plexus Corp. Price, Consensus and EPS Surprise

Plexus Corp. Price, Consensus and EPS Surprise

Plexus Corp. price-consensus-eps-surprise-chart | Plexus Corp. Quote

Market Sector Details

Healthcare/Life Sciences revenues rose 3.7% from the year-ago quarter to $312 million. The sector accounted for 36.6% of total revenues.

Industrial/Commercial revenues grew 41.6% year over year to $310 million and accounted for 36.4% of total revenues.

Aerospace/Defense revenues jumped 39.8% year over year to $172 million and accounted for 20.2% of total revenues.

Communications accounted for 6.8% of total revenues. Revenues from the sector decreased 52.8% year over year to $58 million.

Notably, the top 10 customers of the company accounted for 54% of net revenues.

Operating Details

Gross profit increased 9.4% year over year to $79.2 million. However, gross margin contracted 20 basis points (bps) year over year to 9.3%.

Selling and administrative expenses (4.6% of revenues) increased 10.8% from the year-ago quarter to approximately $39.3 million.

Plexus reported adjusted operating income of $39.9 million, up 8.1% year over year. However, adjusted operating margin contracted 10 bps year-over-year basis to 4.7%.

Balance Sheet & Cash Flow

As of Jan 4, 2020, Plexus had cash & cash equivalents worth $252.9 million compared with $223.8 million as of Sep 28, 2019.

Moreover, as of Jan 4, 2020, the company had a long-term debt of $186.8 million compared with $187.3 million as of Sep 28, 2019.

In first-quarter fiscal 2020, Plexus generated free cash flow of $61 million.

Further, the company repurchased shares worth $6.3 million at an average price of $69.82 per share.

ROIC (tax-effected annualized adjusted operating income divided by average invested capital over two quarters) was 14.7% for first-quarter fiscal 2020. Plexus’ weighted average cost of capital for fiscal 2020 was 8.8%.

Guidance

For second-quarter fiscal 2020, revenues are projected between $790 million and $830 million. The Zacks Consensus Estimate is currently pegged at $821.6 million, indicating 4.1% growth from the figure reported in the year-ago quarter.

Additionally, Plexus expects GAAP earnings between 80 cents and 90 cents per share.

The consensus mark for earnings is currently pegged at 96 cents, suggesting 21.5% growth from the figure reported in the year-ago quarter.

Zacks Rank & Stocks to Consider

Plexus currently carries a Zacks Rank #3 (Hold).

Perion Network Ltd. PERI, CEVA Inc. CEVA and Splunk Inc. SPLK are some better-ranked stocks in the broader computer and technology sector. All three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank  stocks here.

Perion, CEVA and Splunk are set to report quarterly results on Feb 12, 18 and 27, respectively.

The Hottest Tech Mega-Trend of All

Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.

See Zacks' 3 Best Stocks to Play This Trend >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Perion Network Ltd (PERI) : Free Stock Analysis Report
 
Splunk Inc. (SPLK) : Free Stock Analysis Report
 
CEVA, Inc. (CEVA) : Free Stock Analysis Report
 
Plexus Corp. (PLXS) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research