Plexus PLXS reported third-quarter fiscal 2021 adjusted earnings of 99 cents per share that beat the Zacks Consensus Estimate by 28.6%. The figure decreased 17.5% year over year.

Revenues of $814.4 million beat the consensus mark by 1.8%. However, the figure decreased 5% year over year due to lower Europe, and the Middle East and Africa (“EMEA”), and Asia-Pacific (“APAC”) revenues.

APAC revenues decreased 7.3% year over year to $447 million. EMEA revenues were $76 million, down 17.4%. However, revenues in the Americas increased 4.2% to $319 million.

Plexus won 31 manufacturing contracts during the quarter, worth $275 million in annualized revenues. Trailing four-quarter manufacturing wins totaled more than $1.1 billion in annualized revenues.

Plexus Corp. Price, Consensus and EPS Surprise

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

Market Sector Details

Industrial revenues fell 3.6% year over year to $372 million and accounted for 45.7% 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 decreased 1.8% from the year-ago quarter to $324 million. The sector accounted for 39.8% of total revenues.

Aerospace/Defense revenues decreased 16.3% year over year to $118 million and accounted for 14.5% 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 decreased 10.7% year over year to $74.1 million. Gross margin contracted 60 basis points (bps) year over year to 9.1%.

Selling and administrative expenses (4.5% of revenues) decreased 1.6% from the year-ago quarter to $38.3 million.

Plexus reported adjusted operating income of $37.6 million, down 18% year over year. Adjusted operating margin contracted 70 bps on a year-over-year basis to 4.6%

Balance Sheet & Cash Flow

As of Jul 3, 2021, Plexus had cash & cash equivalents worth $303.3 million compared with $294.5 million as of Apr 3, 2021.

As of Jul 3, 2021, the company had long-term debt of $187.7 million compared with $239 million as of Apr 3, 2021.

In third-quarter fiscal 2021, cash flow provided by operations was $42.7 million. The company reported free cash flow of $31.5 million.

ROIC (tax-effected annualized adjusted operating income divided by average invested capital over two quarters) was 15.9% for third-quarter fiscal 2021, much higher than Plexus’ weighted average cost of capital of 8.1%.

Guidance

For fourth-quarter fiscal 2021, revenues are projected between $875 million and $915 million. GAAP operating margin is expected between 4.8% and 5.2%.

GAAP earnings are expected between $1.13 and $1.29 per share.

The Zacks Consensus Estimate for fourth-quarter earnings is pegged at $1.09 per share, implying 26.9% decline from the figure reported in the year-ago quarter. The consensus mark for revenues stands at $872.4 million, suggesting decline of 4.5% from the year-ago quarter’s reported figure.

Industrial revenues are expected to increase low double digit. Both Healthcare/Life Sciences and Aerospace/Defense revenues are anticipated to increase high single digit.

Zacks Rank & Stocks to Consider

Plexus currently has a Zacks Rank #5 (Strong Sell).

Some better-ranked stocks in the broader technology sector are Apple AAPL, Advanced Micro Devices AMD and MSCI MSCI. All three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

All three aforementioned companies are set to report their quarterly earnings on Jul 27.

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