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Plexus (PLXS) Q2 Earnings Beat Estimates, Revenues Up Y/Y

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Plexus PLXS reported second-quarter fiscal 2021 adjusted earnings of $1.49 per share that beat the Zacks Consensus Estimate by 19.2%. Moreover, the figure surged 144.3% year over year.

Revenues of $881 million meet the consensus mark. Moreover, the figure increased 14.9% year over year due to higher Americas and Europe, and the Middle East and Africa (“EMEA”) and Asia-Pacific (“APAC”) revenues.

APAC revenues increased 18.3% year over year to $459 million. Moreover, EMEA revenues were $83 million, up 12.2%. Revenues in the Americas increased 9.3% to $365 million.

Plexus won 42 manufacturing contracts during the quarter, worth $284 million in annualized revenues. Trailing four-quarter manufacturing wins totaled more than $1 billion in annualized revenues.

Plexus Corp. Price, Consensus and EPS Surprise

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

Industrial revenues grew 20.1% year over year to $407 million and accounted for 46.2% of total revenues. Beginning first-quarter fiscal 2021, Plexus consolidated the previously reported Industrial/Commercial and Communications market sectors to form the Industrial market sector.

Healthcare/Life Sciences revenues increased 29.2% from the year-ago quarter to $350 million. The sector accounted for 39.7% of total revenues.

However, Aerospace/Defense revenues decreased 21% year over year to $124 million and accounted for 14.1% of total revenues.

Notably, the top 10 customers of the company accounted for 55% of net revenues.

Operating Details

Gross profit on a GAAP basis increased 49.2% year over year to $91.1 million. Gross margin expanded 240 basis points (bps) year over year to10.3%.

Selling and administrative expenses (4.3% of revenues) increased 0.1% from the year-ago quarter to $38.3 million.

Plexus reported adjusted operating income of $50.7 million, up 194.5% year over year. Adjusted operating margin expanded 350 bps on a year-over-year basis to 5.8%

Balance Sheet & Cash Flow

As of Apr 3, 2021, Plexus had cash & cash equivalents worth $294.5 million compared with $356.9 million as of Jan 2, 2021.

Moreover, as of Apr 3, 2021, the company had long-term debt of $239 million compared with $188.1 million as of Jan 2, 2021.

In second-quarter fiscal 2021, cash flow provided by operations was $82.1 million. The company reported free cash flow of $74.8 million.

ROIC (tax-effected annualized adjusted operating income divided by average invested capital over two quarters) was 17.3% for second-quarter fiscal 2021, much higher than Plexus’ weighted average cost of capital of 8.1%.

Guidance

For third-quarter fiscal 2021, revenues are projected between $875 million and $915 million. GAAP operating margin is expected between 5.1% and 5.6%.

GAAP earnings are expected between $1.23 and $1.38 per share.

The Zacks Consensus Estimate for third-quarter earnings is pegged at $1.18 per share, implying 1.7% decline from the figure reported in the year-ago quarter. The consensus mark for revenues stands at $881.6 million, suggesting growth of 2.8% from the year-ago quarter’s reported figure.

Zacks Rank & Stocks to Consider

Plexus currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader technology sector are Advanced Micro Devices AMD, Avnet AVT and CGI GIB. All the three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Advanced Micro Devices is set to report its quarter earnings on Apr 27, while both Avnet and CGI are scheduled to report the same on Apr 28.

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