GlobeNewswire Inc | Jul 21, 2021 04:15PM EDT

July 21, 2021

-- Fiscal third quarter 2021 revenue of $814 million -- GAAP diluted EPS of $0.95, including $0.04 of restructuring charges and $0.21 of stock-based compensation expense -- Initiates fiscal fourth quarter 2021 revenue guidance of $875 to $915 million with GAAP diluted EPS guidance of $1.13 to $1.29

NEENAH, WI, July 21, 2021 (GLOBE NEWSWIRE) -- Plexus (NASDAQ: PLXS) today announced financial results for our fiscal third quarter ended July 3, 2021, and guidance for our fiscal fourth quarter ending October 2, 2021.

Three Months Ended July 3, 2021 Oct 2, 2021 Q3F21 Results (3) Q4F21 GuidanceSummary GAAP Items Revenue (in millions) $ 814 $875 to $915Operating margin 4.5 % 4.8% to 5.2%Diluted EPS (1) $ 0.95 $1.13 to $1.29 Summary Non-GAAP Items (2) Return on invested capital 15.9 % (ROIC)Economic return 7.8 % (1)Includes $0.04 of restructuring charges and $0.21 of stock-basedcompensation expense for Q3F21 results and $0.22 of stock-based compensationexpense for Q4F21 guidance.(2)Refer to Non-GAAP Supplemental Information in Tables 1 and 2 for non-GAAPfinancial measures and a reconciliation to GAAP.(3)On May 24, 2021, Plexus announced an update to its fiscal third quarterrevenue and GAAP diluted EPS outlook. Plexus detailed the update on June 8,2021. The Company stated that it no longer expected to meet fiscal thirdquarter guidance ranges previously issued due to the COVID-19-relatedMalaysian government workforce curtailment. As a result, Plexus is notproviding a comparison to the guidance ranges issued on April 21, 2021.

Fiscal Third Quarter 2021 Information

-- Won 31 manufacturing programs during the quarter representing approximately $275 million in annualized revenue when fully ramped into production -- Trailing four quarter wins total a record $1.1 billion in annualized revenue when fully ramped into production -- Purchased $27.3 million of our shares at an average price of $93.53 per share under our existing share repurchase program. A balance of $26.1 million remains outstanding under the $100 million fiscal 2021 programs.

Todd Kelsey, President and CEO, commented, We delivered fiscal third quarter revenue of $814 million, GAAP operating margin of 4.5% and GAAP EPS of $0.95. Revenue met the high end of our revised expectation provided at the June 8, 2021, Stifel Virtual Cross Sector Insight Conference. This result was primarily due to the resilience and outstanding efforts of our team members in Penang, Malaysia amidst the challenging conditions created by government mandated workforce curtailments in response to the COVID-19 pandemic. GAAP operating margin and EPS significantly exceeded our updated outlook on the better than anticipated revenue performance of our Penang operations, an outstanding contribution from our Engineering Solutions team and lower than anticipated healthcare costs.

Mr. Kelsey continued, Our strong business development performance continued during our fiscal third quarter. We won 31 new manufacturing programs that represent approximately $275 million in annualized revenue when fully ramped into production. In addition, our trailing four-quarter wins expanded from the prior quarter to $1.1 billion. The wins reflect ongoing momentum in new customer engagements and multiple opportunities for our Aftermarket Services team, including an expansion of the notable new relationship highlighted last quarter.

Patrick Jermain, Executive Vice President and CFO, commented, During the fiscal third quarter, we delivered return on invested capital of 15.9%. This equates to an economic return of 780 basis points above our weighted average cost of capital, creating solid shareholder value. Fiscal third quarter cash cycle of 80 days was consistent with our expectations and contributed to $31 million in free cash flow for the quarter. The majority of this quarters free cash flow was allocated to repurchasing approximately $27 million of stock under our share repurchase program, continuing our commitment to shareholder returns.

Mr. Kelsey further commented, I am pleased that as one of three manufacturers in Penang, Malaysia approved to establish an on-site COVID-19 vaccination clinic, we began vaccinations last week for our team members, customers, suppliers and other local manufacturers. We expect that vaccination efforts, coupled with the productivity improvements implemented by our regional leadership team, will allow our Penang operations to function closer to typical levels of manufacturing output during the fiscal fourth quarter despite ongoing workforce curtailment guidelines. As a result, we are guiding fiscal fourth quarter revenue of $875 to $915 million, GAAP operating margin of 4.8 to 5.2% and GAAP EPS of $1.13 to $1.29. Our guidance assumes that supply chain constraints and COVID-19 do not materially impact end markets or our operations beyond what is already anticipated.

Mr. Kelsey concluded, Looking forward, I see the potential to deliver double-digit revenue growth for fiscal 2022 while driving sustained industry leading operational performance. Enabling our growth expectations are the ongoing recovery in equipment used in elective medical procedures, an improving commercial aerospace market, sustained program win strength inclusive of new customer engagements, and our support of secular growth markets, including warehouse and factory automation, robotic assisted surgery and commercial space.

Quarterly Comparison Three Months Ended(in thousands, except EPS) Jul 3, 2021 Apr 3, 2021 Jul 4, 2020Revenue $ 814,387 $ 880,885 $ 857,394 Gross profit 74,050 91,002 82,881 Operating income 36,373 50,687 45,853 Net income 27,609 41,763 35,842 Diluted EPS $ 0.95 $ 1.42 $ 1.20 Gross margin 9.1 % 10.3 % 9.7 %Operating margin 4.5 % 5.8 % 5.3 % ROIC (1) 15.9 % 17.3 % 12.9 %Economic return (1) 7.8 % 9.2 % 4.1 % (1) Refer to Non-GAAP Supplemental Information in Tables 1 and 2 for non-GAAPfinancial measures discussed and/or disclosed in this release, such asadjusted operating income, adjusted net income, adjusted diluted EPS, ROICand economic return, and a reconciliation of these measures to GAAP.

Business Segment and Market Sector Revenue

Plexus measures operational performance and allocates resources on a geographic segment basis. Plexus also reports revenue based on the market sector breakout set forth in the table below, which reflects Plexus market sector focused strategy. Top 10 customers comprised 55% of revenue for both the second and third quarters of fiscal 2021.

Business Segments ($ in millions) Three Months Ended Jul 3, 2021 Apr 3, 2021 Jul 4, 2020Americas $ 319 $ 365 $ 306 Asia-Pacific 447 459 482 Europe, Middle East and Africa 76 83 92 Elimination of inter-segment sales (28 ) (26 ) (23 )Total Revenue $ 814 $ 881 $ 857

Market Sectors ($ in millions) Three Months Ended Jul 3, 2021 Apr 3, 2021 Jul 4, 2020Industrial (1) $ 372 46 % $ 407 46 % $ 386 45 %Healthcare/Life Sciences 324 40 % 350 40 % 330 39 %Aerospace/Defense 118 14 % 124 14 % 141 16 %Total Revenue $ 814 $ 881 $ 857 (1) At the beginning of fiscal 2021, Plexus consolidated the previouslyreported Industrial/Commercial and Communications market sectors to form theIndustrial market sector. Prior period amounts have been reclassified toconform to the current period presentation.

Non-GAAP Supplemental InformationPlexus provides non-GAAP supplemental information, such as ROIC, economic return and free cash flow, because such measures are used for internal management goals and decision making, and because they provide management and investors with additional insight into financial performance. In addition, management uses these and other non-GAAP measures, such as adjusted operating income, adjusted operating margin, adjusted net income and adjusted diluted EPS, to provide a better understanding of core performance for purposes of period-to-period comparisons. Plexus believes that these measures are also useful to investors because they provide further insight by eliminating the effect of non-recurring items that are not reflective of continuing operations. For a full reconciliation of non-GAAP measures to comparable GAAP measures, please refer to the attached Non-GAAP Supplemental Information Tables.

ROIC and Economic ReturnROIC for the fiscal third quarter was 15.9%. Plexus defines ROIC as tax-effected annualized adjusted operating income divided by average invested capital over a four-quarter period for the fiscal third quarter. Invested capital is defined as equity plus debt and operating lease obligations, less cash and cash equivalents. Plexus' weighted average cost of capital for fiscal 2021 is 8.1%. ROIC for the fiscal third quarter less Plexus weighted average cost of capital resulted in an economic return of 7.8%.

Free Cash FlowPlexus defines free cash flow as cash flows provided by operations less capital expenditures. For the three months ended July 3, 2021, cash flows provided by operations were $42.7 million and capital expenditures were $11.2 million, resulting in free cash flow of $31.5 million.

Cash Cycle Days Three Months Ended Jul 3, 2021 Apr 3, 2021 Jul 4, 2020Days in Accounts Receivable 52 52 55 Days in Contract Assets 13 12 12 Days in Inventory 108 89 97 Days in Accounts Payable (71 ) (61 ) (65 )Days in Cash Deposits (22 ) (20 ) (20 )Annualized Cash Cycle * 80 72 79 * We calculate cash cycle as the sum of days in accounts receivable, days incontract assets and days in inventory, less days in accounts payable and daysin cash deposits.

Conference Call and Webcast Information

What: Plexus Fiscal 2021 Q3 Earnings Conference Call and WebcastWhen: Thursday, July 22, 2021 at 8:30 a.m. Eastern Time Participants are encouraged to join the live webcast at the investor relations section of the Plexus website, https:// plexus.gcs-web.com/events-and-presentations/Where: upcoming-events,where a slide presentation reviewing fiscal third quarter 2021 results will also be made available ahead of the conference call.

Conference Call: +1.866.922.5180 with passcode: 1448676 The webcast will be archived on the Plexus website and availableReplay: via telephone replay at +1.855.859.2056 or +1.404.537.3406 with passcode: 1448676

Investor and Media ContactShawn Harrison+1.920.751.3612shawn.harrison@plexus.com

About PlexusSince 1979, Plexus has been partnering with companies to create the products that build a better world. We are a team of over 19,000 individuals who are dedicated to providing Design and Development, Supply Chain Solutions, New Product Introduction, Manufacturing and Aftermarket Services. Plexus is a global leader that specializes in serving customers in industries with highly complex products and demanding regulatory environments. Plexus delivers customer service excellence to leading companies by providing innovative, comprehensive solutions throughout a products lifecycle. For more information about Plexus, visit our website at www.plexus.com.

Safe Harbor and Fair Disclosure Statement The statements contained in this press release that are guidance or which are not historical facts (such as statements in the future tense and statements including believe, expect, intend, plan, anticipate, goal, target and similar terms and concepts), including all discussions of periods which are not yet completed, are forward-looking statements that involve risks and uncertainties. These risks and uncertainties include the evolving effect, which may intensify, of COVID-19 on our employees, customers, suppliers, and logistics providers, including the impact of governmental actions being taken to curtail the spread of the virus, particularly in the key geography of Malaysia. Other risks and uncertainties include, but are not limited to: the effects of shortages and delays in obtaining components as a result of economic cycles, natural disasters or otherwise; the risk of customer delays, changes, cancellations or forecast inaccuracies in both ongoing and new programs; the lack of visibility of future orders, particularly in view of changing economic conditions; the economic performance of the industries, sectors and customers we serve; the effects of tariffs, trade disputes, trade agreements and other trade protection measures; the effects of the volume of revenue from certain sectors or programs on our margins in particular periods; our ability to secure new customers, maintain our current customer base and deliver product on a timely basis; the risks of concentration of work for certain customers; the particular risks relative to new or recent customers, programs or services, which risks include customer and other delays, start-up costs, potential inability to execute, the establishment of appropriate terms of agreements, and the lack of a track record of order volume and timing; the effects of start-up costs of new programs and facilities or the costs associated with the closure or consolidation of facilities; possible unexpected costs and operating disruption in transitioning programs, including transitions between Company facilities; the risk that new program wins and/or customer demand may not result in the expected revenue or profitability; the fact that customer orders may not lead to long-term relationships; our ability to manage successfully and execute a complex business model characterized by high product mix and demanding quality, regulatory, and other requirements; the risks associated with excess and obsolete inventory, including the risk that inventory purchased on behalf of our customers may not be consumed or otherwise paid for by the customer, resulting in an inventory write-off; risks related to information technology systems and data security; the ability to realize anticipated savings from restructuring or similar actions, as well as the adequacy of related charges as compared to actual expenses; increasing regulatory and compliance requirements; the effects of U.S. Tax Reform, any tax law changes as a result of change in U.S. presidential administration, and of related foreign jurisdiction tax developments; current or potential future barriers to the repatriation of funds that are currently held outside of the United States as a result of actions taken by other countries or otherwise; the potential effects of jurisdictional results on our taxes, tax rates, and our ability to use deferred tax assets and net operating losses; the weakness of areas of the global economy; the effect of changes in the pricing and margins of products; raw materials and component cost fluctuations; the potential effect of fluctuations in the value of the currencies in which we transact business; the effects of changes in economic conditions, political conditions and tax matters in the United States and in the other countries in which we do business (including as a result of the United Kingdoms exit from the European Union); the potential effect of other world or local events or other events outside our control (such as changes in energy prices, terrorism, global health epidemics and weather events); the impact of increased competition; an inability to successfully manage human capital; changes in financial accounting standards; and other risks detailed herein and in our other Securities and Exchange Commission filings, particularly in Risk Factors in our fiscal 2020 Form 10-K and any subsequently filed Form 10-Q.

PLEXUS CORP. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(in thousands, except per share data)(unaudited) Three Months Ended Nine Months Ended Jul 3, Jul 4, Jul 3, Jul 4, 2021 2020 2021 2020Net sales $ 814,387 $ 857,394 $ 2,525,627 $ 2,477,167 Cost of sales 740,337 774,513 2,281,298 2,253,651 Gross profit 74,050 82,881 244,329 223,516 Operating expenses Selling andadministrative 36,439 37,028 107,136 114,517 expensesRestructuring and 1,238 ? 3,267 6,003 impairment chargesOperating income 36,373 45,853 133,926 102,996 Other income (expense):Interest expense (3,190 ) (3,988 ) (11,094 ) (11,934 )Interest income 308 368 1,072 1,546 Miscellaneous, net (579 ) (600 ) (2,922 ) (2,619 )Income before income 32,912 41,633 120,982 89,989 taxesIncome tax expense 5,303 5,791 15,411 10,215 Net income $ 27,609 $ 35,842 $ 105,571 $ 79,774 Earnings per share: Basic $ 0.97 $ 1.23 $ 3.68 $ 2.73 Diluted $ 0.95 $ 1.20 $ 3.60 $ 2.66 Weighted average shares outstanding:Basic 28,529 29,199 28,708 29,210 Diluted 29,068 29,793 29,298 29,936

PLEXUS CORP. AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS(in thousands, except per share data)(unaudited) Jul 3, Oct 3, 2021 2020ASSETS Current assets: Cash and cash equivalents $ 303,255 $ 385,807 Restricted cash 4,242 2,087 Accounts receivable 469,352 482,086 Contract assets 114,022 113,946 Inventories 874,718 763,461 Prepaid expenses and other 46,151 31,772 Total current assets 1,811,740 1,779,159 Property, plant and equipment, net 380,545 383,661 Operating lease right-of-use assets 66,838 69,879 Deferred income taxes 25,015 21,422 Other 37,299 35,727 Total non-current assets 509,697 510,689 Total assets $ 2,321,437 $ 2,289,848 LIABILITIES AND SHAREHOLDERS? EQUITY Current liabilities: Current portion of long-term debt and finance lease $ 60,468 $ 146,829 obligationsAccounts payable 579,571 516,297 Customer deposits 179,831 159,972 Accrued salaries and wages 67,943 76,927 Other accrued liabilities 113,746 103,492 Total current liabilities 1,001,559 1,003,517 Long-term debt and finance lease obligations, net 187,690 187,975 of current portionAccrued income taxes payable 47,974 53,899 Long-term operating lease liabilities 33,193 36,779 Deferred income taxes 6,475 6,433 Other liabilities 24,096 23,765 Total non-current liabilities 299,428 308,851 Total liabilities 1,300,987 1,312,368 Shareholders? equity: Common stock, $.01 par value, 200,000 shares authorized,53,848 and 53,525 shares issued, respectively, and 28,377 and 29,002 shares outstanding, 538 535 respectivelyAdditional paid-in-capital 633,151 621,564 Common stock held in treasury, at cost, 25,471 and (1,013,841 ) (934,639 )24,523, respectivelyRetained earnings 1,400,650 1,295,079 Accumulated other comprehensive loss (48 ) (5,059 )Total shareholders? equity 1,020,450 977,480 Total liabilities and shareholders? equity $ 2,321,437 $ 2,289,848

PLEXUS CORP. AND SUBSIDIARIESNON-GAAP SUPPLEMENTAL INFORMATION Table 1(in thousands, except per share data)(unaudited) Three Months Ended Nine Months Ended Jul 3, Apr 3, Jul 4, Jul 3, Jul 4, 2021 2021 2020 2021 2020Operatingincome, as $ 36,373 $ 50,687 $ 45,853 $ 133,926 $ 102,996 reportedOperatingmargin, as 4.5 % 5.8 % 5.3 % 5.3 % 4.2 %reported Non-GAAP adjustments:Restructuringand 1,238 2,029 ? 3,267 6,003 impairmentcharges (1)Adjustedoperating $ 37,611 $ 52,716 $ 45,853 $ 137,193 $ 108,999 incomeAdjustedoperating 4.6 % 6.0 % 5.3 % 5.4 % 4.4 %margin Net income, $ 27,609 $ 41,763 $ 35,842 $ 105,571 $ 79,774 as reported Non-GAAP adjustments:Special tax ? ? ? ? (814 )impacts (2)Restructuringandimpairment 1,108 1,816 ? 2,924 5,373 charges, netof tax (1)Adjusted net $ 28,717 $ 43,579 $ 35,842 $ 108,495 $ 84,333 income Dilutedearnings per $ 0.95 $ 1.42 $ 1.20 $ 3.60 $ 2.66 share, asreported Non-GAAP pershare adjustments:Special tax ? ? ? ? (0.02 )impacts (2)Restructuringandimpairment 0.04 0.07 ? 0.10 0.18 charges, netof tax (1)Adjusteddiluted $ 0.99 $ 1.49 $ 1.20 $ 3.70 $ 2.82 earnings pershare (1)During the three months ended July 3, 2021, restructuring charges of $1.2million, or $1.1 million net of taxes, were incurred. During the three months ended April 3, 2021, restructuring charges of $2.0million, or $1.8 million net of taxes, were incurred. During the nine months ended July 4, 2020, restructuring and impairmentcharges of $6.0 million, or $5.4 million net of taxes, were incurred due to thepreviously announced closure of our Boulder Design Center.(2)During the nine months ended July 4, 2020, there were $1.9 million in taxbenefits related to US foreign tax credit regulations issued during thequarter, partially offset by $1.1 million of tax expense as a result of specialtax items.

PLEXUS CORP. AND SUBSIDIARIESNON-GAAP SUPPLEMENTAL INFORMATION Table 2(in thousands)(unaudited) ROIC andEconomic Return Nine Months Ended Six Months Ended Nine Months EndedCalculations Jul 3, 2021 Apr 3, 2021 Jul 4, 2020 Operatingincome, as $ 133,926 $ 97,553 $ 102,996 reportedRestructuringand impairment + 3,267 + 2,029 + 6,003 chargesAdjustedoperating $ 137,193 $ 99,582 $ 108,999 income 3 x 2 3 45,731 36,333 x 4 x 4Adjustedannualized $ 182,924 $ 199,164 $ 145,332 operatingincomeAdjustedeffective tax x 13 % x 13 % x 13 %rateTax impact 23,780 25,891 18,893 Adjustedoperating $ 159,144 $ 173,273 $ 126,439 income (taxeffected) Averageinvested $ 1,003,614 $ 1,002,260 $ 982,231 capital ROIC 15.9 % 17.3 % 12.9 %Weightedaverage cost of - 8.1 % - 8.1 % - 8.8 %capitalEconomic return 7.8 % 9.2 % 4.1 %

Three Months EndedAverageInvested Jul 3, 2021 Apr 3, 2021 Jan 2, 2021 Oct 3, 2020CapitalCalculations Equity $ 1,020,450 $ 1,013,952 $ 1,006,959 $ 977,480 Plus: Debt andfinancelease 60,468 50,229 148,408 146,829 obligations- currentOperatingleaseobligations 9,130 9,314 9,351 7,724 - current(1) (2)Debt andfinancelease 187,690 188,730 188,148 187,975 obligations- long-termOperatingleaseobligations 33,193 34,751 37,052 36,779 - long-term(2)Less: Cash andcash (303,255 ) (294,370 ) (356,724 ) (385,807 )equivalents $ 1,007,676 $ 1,002,606 $ 1,033,194 $ 970,980

Three Months EndedAverage Invested Jul 4, 2020 Apr 4, 2020 Jan 4, 2020 Sept 28,Capital Calculations 2019 Equity $ 944,821 $ 892,558 $ 908,372 $ 865,576 Plus: Debt and financelease obligations - 145,993 107,880 67,847 100,702 currentOperating leaseobligations - current 8,061 8,546 9,102 ? (1) (2)Debt and financelease obligations - 188,626 186,327 186,827 187,278 long-termOperating leaseobligations - 38,077 39,617 41,764 ? long-term (2)Less: Cash and cash (296,545 ) (225,830 ) (252,914 ) (223,761 )equivalents $ 1,029,033 $ 1,009,098 $ 960,998 $ 929,795

(1 ) Included in Other accrued liabilities on the Condensed Consolidated Balance Sheets. In the first quarter of fiscal 2020, Plexus adopted and applied Topic 842(2 ) to all leases using the modified retrospective method of adoption. The prior year comparative information has not been restated and continues to be reported under the accounting standards in effect for fiscal 2019.