GlobeNewswire Inc | Jan 26, 2022 04:15PM EST

January 26, 2022

NEENAH, WI, Jan. 26, 2022 (GLOBE NEWSWIRE) -- Plexus Corp. (NASDAQ: PLXS) today announced financial results for our fiscal first quarter ended January 1, 2022, and guidance for our fiscal second quarter ending April 2, 2022.

-- Reports fiscal first quarter revenue of $817 million, GAAP operating margin of 3.7% and GAAP diluted EPS of $0.82, including $0.22 of stock-based compensation expense and $0.06 of restructuring charges -- Initiates fiscal second quarter revenue guidance of $820 to $860 million with GAAP diluted EPS of $0.76 to $0.92, including $0.23 of stock-based compensation expense

Three Months Ended Jan 1, 2022 Jan 1, 2022 Apr 2, 2022 Q1F22 Results Q1F22 Preliminary Results (3) Q2F22 GuidanceSummary GAAP ItemsRevenue (in $ 817 $815 to $820 $820 to $860millions)Operating 3.7 % 3.6% to 4.0%marginDiluted EPS $ 0.82 $0.80 to $0.84 $0.76 to $0.92(1) SummaryNon-GAAP Items (2)Return oninvested 10.0 % capital (ROIC)Economic 0.7 % return (1)Includes stock-based compensation expense of $0.22 for Q1F22 results,$0.22 for Q1F22 preliminary results and $0.23 for Q2F22 guidance.(2)Refer to Non-GAAP Supplemental Information in Tables 1 and 2 for non-GAAPfinancial measures and a reconciliation to GAAP.(3)Preliminary results issued on January 18, 2022; guidance provided onOctober 27, 2021, was revenue of $825 to $865 million and GAAP diluted EPS of$1.01 to $1.17, including $0.21 of stock based compensation expense.

Fiscal First Quarter 2022 Information

-- Won 41 manufacturing programs during the quarter representing $271 million in annualized revenue when fully ramped into production -- Trailing four quarter manufacturing wins total $1.1 billion in annualized revenue when fully ramped into production -- Purchased $10.2 million of our shares at an average price of $91.74 per share under our share repurchase program. $36.7 million of our current $50 million authorization remains available to repurchase shares.

Todd Kelsey, CEO, commented, "Fiscal first quarter revenue of $817 million and GAAP diluted EPS of $0.82 were consistent with our preliminary results issued on January 18, 2022, which reflected the impact from unanticipated supply chain constraints in the Americas region that worsened in the final weeks of the quarter."

Mr. Kelsey continued, "Strong manufacturing program win performance, a multi-year high in the value of engineering wins and expansion of an already robust funnel of qualified manufacturing opportunities represented notable successes in the fiscal first quarter. Our trailing four-quarter new manufacturing program wins expanded 7% year over year to a record of $1.1 billion. Additionally, our funnel of qualified manufacturing opportunities reached an all-time high of $3.3 billion. The significant quantity of new engineering engagements, expansion in our funnel of manufacturing opportunities and acceleration in our win rate positions us to sustain our program wins momentum and supports our long-term revenue growth goal.

Mr. Kelsey further commented, "We are guiding fiscal second quarter revenue of $820 to $860 million, which reflects the supply chain constraints that are again limiting our ability to meet robust customer demand. In addition, profitability will remain pressured given the operating infrastructure in place to support the strong customer forecasts and a seasonal increase in compensation costs. As such, we are guiding GAAP operating margin of 3.6% to 4.0% and GAAP EPS $0.76 to $0.92.

Mr. Kelsey concluded, "We are committed to delivering upon our goals of 9% to 12% annual revenue growth with 5.5% GAAP operating margin and 15% ROIC over the long-term. We anticipate sequential improvement in revenue and GAAP EPS through the remainder of fiscal 2022, supported by new program ramps, as we progress toward these goals.

Quarterly Comparison Three Months Ended(in thousands, except EPS) Jan 1, 2022 Oct 2, 2021 Jan 2, 2021Revenue $ 817,456 $ 843,238 $ 830,355 Gross profit 69,996 78,967 79,277 Operating income 30,473 42,342 46,866 Net income 23,423 33,341 36,199 Diluted EPS $ 0.82 $ 1.16 $ 1.23 Gross margin 8.6 % 9.4 % 9.5 %Operating margin 3.7 % 5.0 % 5.6 % ROIC (1) 10.0 % 15.4 % 16.3 %Economic return (1) 0.7 % 7.3 % 8.2 % (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 margin, adjusted net income, adjusted diluted EPS, ROIC andeconomic return, and a reconciliation of these measures to their comparableGAAP measures.

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 56% of revenue during both the first quarter of fiscal 2022 and the fourth quarter of fiscal 2021, up one percentage point from the first quarter of fiscal 2021 where the top 10 customers comprised 55% of revenue.

Business Segments ($ in millions) Three Months Ended Jan 1, 2022 Oct 2, 2021 Jan 2, 2021Americas $ 277 $ 307 $ 327 Asia-Pacific 491 494 451 Europe, Middle East and Africa 73 74 79 Elimination of inter-segment sales (24 ) (32 ) (27 )Total Revenue $ 817 $ 843 $ 830

Market Sectors ($ in millions) Three Months Ended Jan 1, 2022 Oct 2, 2021 Jan 2, 2021Industrial $ 364 45 % $ 392 46 % $ 378 46 %Healthcare/Life Sciences 344 42 % 333 40 % 319 38 %Aerospace/Defense 109 13 % 118 14 % 133 16 %Total Revenue $ 817 $ 843 $ 830

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 first quarter of fiscal 2022 was 10.0%. Plexus defines ROIC as tax-effected annualized adjusted operating income divided by average invested capital over a two-quarter period for the first fiscal 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 2022 is 9.3%. ROIC for the first quarter of fiscal 2022 less Plexus weighted average cost of capital resulted in an economic return of 0.7%.

Free Cash FlowPlexus defines free cash flow as cash flows provided by operations less capital expenditures. For the three months ended January 1, 2022, cash flows used in operations was $89.0 million, less capital expenditures of $33.2 million, resulting in negative free cash flow of $122.2 million.

Cash Cycle Days Three Months Ended Jan 1, 2022 Oct 2, 2021 Jan 2, 2021Days in Accounts Receivable 66 56 53 Days in Contract Assets 12 13 12 Days in Inventory 145 116 93 Days in Accounts Payable (87 ) (76 ) (59 )Days in Cash Deposits (33 ) (24 ) (19 )Annualized Cash Cycle * 103 85 80 * 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 2022 Q1 Earnings Conference Call and WebcastWhen: Thursday, January 27, 2022 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/upcoming-eventsWhere: ,where a slide presentation reviewing fiscal first quarter 2022 results will also be made available ahead of the conference call.

Conference Call: +1.866.922.5180 with passcode: 3582506 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: 3582506

Investor and Media ContactShawn Harrison+1.920.969.6325shawn.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. Other risks and uncertainties include, but are not limited to: the effect of inflationary pressures on our costs of production, profitability, and on the economic outlook of our markets; 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 contained in our fiscal 2021 Form 10-K and subsequently filed quarterly reports on Form 10-Q.

PLEXUS CORP. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(in thousands, except per share data)(unaudited) Three Months Ended Jan 1, Jan 2, 2022 2021 Net sales $ 817,456 $ 830,355 Cost of sales 747,460 751,078 Gross profit 69,996 79,277 Operating expenses: Selling and administrative expenses 37,502 32,411 Restructuring and impairment charges 2,021 ? Operating income 30,473 46,866 Other income (expense): Interest expense (3,046 ) (4,086 )Interest income 271 374 Miscellaneous, net (923 ) (1,518 )Income before income taxes 26,775 41,636 Income tax expense 3,352 5,437 Net income $ 23,423 $ 36,199 Earnings per share: Basic $ 0.84 $ 1.25 Diluted $ 0.82 $ 1.23 Weighted average shares outstanding: Basic 28,018 28,861 Diluted 28,709 29,539

PLEXUS CORP. AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS(in thousands, except per share data)(unaudited) Jan 1, Oct 2, 2022 2021 ASSETS Current assets: Cash and cash equivalents $ 217,067 $ 270,172 Restricted cash 1,324 341 Accounts receivable 589,253 519,684 Contract assets 105,450 115,283 Inventories 1,185,915 972,312 Prepaid expenses and other 62,470 53,094 Total current assets 2,161,479 1,930,886 Property, plant and equipment, net 414,981 395,094 Operating lease right-of-use assets 69,519 72,087 Deferred income taxes 27,346 27,385 Other assets 36,321 36,441 Total non-current assets 548,167 531,007 Total assets $ 2,709,646 $ 2,461,893 LIABILITIES AND SHAREHOLDERS? EQUITY Current liabilities: Current portion of long-term debt and finance $ 151,417 $ 66,313 lease obligationsAccounts payable 711,248 634,969 Customer deposits 265,759 204,985 Accrued salaries and wages 57,221 75,394 Other accrued liabilities 180,840 147,042 Total current liabilities 1,366,485 1,128,703 Long-term debt and finance lease obligations, 187,075 187,033 net of current portionAccrued income taxes payable 47,974 47,974 Long-term operating lease liabilities 36,343 37,970 Deferred income taxes 5,307 5,677 Other liabilities 22,367 26,304 Total non-current liabilities 299,066 304,958 Total liabilities 1,665,551 1,433,661 Shareholders? equity: Common stock, $.01 par value, 200,000 shares authorized,53,909 and 53,849 shares issued, respectively, and 27,997 and 28,047 shares outstanding, 539 538 respectivelyAdditional paid-in-capital 642,654 639,778 Common stock held in treasury, at cost, 25,912 (1,053,222 ) (1,043,091 )and 25,802, respectivelyRetained earnings 1,457,414 1,433,991 Accumulated other comprehensive loss (3,290 ) (2,984 )Total shareholders? equity 1,044,095 1,028,232 Total liabilities and shareholders? equity $ 2,709,646 $ 2,461,893

PLEXUS CORP. AND SUBSIDIARIESNON-GAAP SUPPLEMENTAL INFORMATION Table 1(in thousands, except per share data)(unaudited) Three Months Ended Jan 1, Oct 2, Jan 2, 2022 2021 2021Operating income, as reported $ 30,473 $ 42,342 $ 46,866 Operating margin, as reported 3.7 % 5.0 % 5.6 % Non-GAAP adjustments: Restructuring and impairment 2,021 ? ? charges (1)Adjusted operating income $ 32,494 $ 42,342 $ 46,866 Adjusted operating margin 4.0 % 5.0 % 5.6 % Net income, as reported $ 23,423 $ 33,341 $ 36,199 Non-GAAP adjustments: Restructuring and impairment 1,809 ? ? charges, net of tax (1)Adjusted net income $ 25,232 $ 33,341 $ 36,199 Diluted earnings per share, as $ 0.82 $ 1.16 $ 1.23 reported Non-GAAP per share adjustments: Restructuring and impairment 0.06 ? ? charges, net of tax (1)Adjusted diluted earnings per $ 0.88 $ 1.16 $ 1.23 share (1)During the three months ended January 1, 2022, restructuring andimpairment charges of $2.0 million, or $1.8 million net of taxes, wereprimarily incurred for employee severance costs associated with a facilitytransition in our Asia-Pacific region.

PLEXUS CORP. AND SUBSIDIARIESNON-GAAP SUPPLEMENTAL INFORMATION Table 2(in thousands)(unaudited) ROIC and Economic Return Three Months Twelve Months Three MonthsCalculations Ended Ended Ended Jan 1, Oct 2, Jan 2, 2022 2021 2021Operating income, as reported $ 30,473 $ 176,268 $ 46,866 Restructuring and impairment + 2,021 + 3,267 + ? chargesAdjusted operating income $ 32,494 $ 179,535 $ 46,866 x 4 x 4 Adjusted annualized operating $ 129,976 $ 179,535 $ 187,464 incomeAdjusted effective tax rate x 13 % x 13 % x 13 %Tax impact 16,897 23,340 24,370 Adjusted operating income 113,079 $ 156,195 $ 163,094 (tax effected) Average invested capital 1,135,312 $ 1,014,742 $ 1,002,087 ROIC 10.0 % 15.4 % 16.3 %Weighted average cost of - 9.3 % - 8.1 % - 8.1 %capitalEconomic return 0.7 % 7.3 % 8.2 %

AverageInvested Jan 1, Oct 2, Jul 3, Apr 3, Jan 2, Oct 3,CapitalCalculations 2022 2021 2021 2021 2021 2020 Equity $ 1,044,095 $ 1,028,232 $ 1,020,450 $ 1,013,952 $ 1,006,959 $ 977,480 Plus: Debt andfinancelease 151,417 66,313 60,468 50,229 148,408 146,829 obligations- currentOperatingleaseobligations 9,507 9,877 9,130 9,314 9,351 7,724 - current(1)Debt andfinancelease 187,075 187,033 187,690 188,730 188,148 187,975 obligations- long-termOperatinglease 36,343 37,970 33,193 34,751 37,052 36,779 obligations- long-termLess: Cash andcash (217,067 ) (270,172 ) (303,255 ) (294,370 ) (356,724 ) (385,807 )equivalents $ 1,211,370 $ 1,059,253 $ 1,007,676 $ 1,002,606 $ 1,033,194 $ 970,980

(1)Included in other accrued liabilities on the Condensed ConsolidatedBalance Sheets