Plexus profit up in Q1

Dean Foate, President and CEO, commented, “Fiscal first quarter revenues grew 2% sequentially, in line with our expectations and setting a new quarterly revenue record for Plexus. Return on invested capital was 17.3%, well above our weighted average cost of capital of 13.5%. During the fiscal first quarter we won 24 new manufacturing programs in our Manufacturing Solutions group that we anticipate will generate approximately $130 million in annualized revenue when fully ramped into production, an improvement over the prior quarter. Our Engineering Solutions group also enjoyed a solid quarter of new program wins, totaling approximately $17 million. Overall a good result this quarter and continued confirmation of the Plexus brand and the power of our comprehensive Product Realization Value Stream Solutions. Of course, all future revenues are subject to the timing and ultimate realization of customer forecasts and orders.” Ginger Jones, Vice President and CFO, commented, “Gross and operating margins were 9.7% and 4.9%, respectively, for the fiscal first quarter, consistent with our expectations when we set guidance for the quarter. Our estimated tax rate for fiscal 2011 is currently 3%. This is lower than the 5% tax rate used when we established our guidance for this quarter due to the estimated mix of regional earnings for the fiscal year. Consequently, diluted EPS for the quarter was $0.01 higher than we would have anticipated. Fiscal first quarter cash cycle days including customer deposits were 78 days, up eight days from the fiscal fourth quarter cash cycle days.” Mr. Foate added, “While the fiscal first quarter met our expectations for modest sequential growth, the mid-point of the guidance suggests a modest decline in revenues in the fiscal second quarter of 2011. We are establishing fiscal second quarter 2011 revenue guidance of $540 to $570 million with EPS of $0.53 to $0.58, excluding any restructuring charges and including approximately $0.08 per share of stock-based compensation expense. As previously disclosed, the fiscal second quarter will be unfavorably impacted by ramping down production for two significant customers that were acquired during the past year and that will transition out of Plexus. Additionally, the fiscal second quarter will be unfavorably impacted by an increase in structural seasonal operating costs, including salary adjustments, which need to be absorbed in the financial model going forward.” Mr. Foate continued, “Looking ahead to the second half of the fiscal year, we currently anticipate meaningful challenges in the fiscal third quarter due to a confluence of issues. These issues include the winding down of the two manufacturing programs previously discussed, a fairly broad-based reduction in customer forecasts and a significant production delay in the two programs for The Coca-Cola Company. As a consequence, we expect the fiscal third quarter will be down sequentially in revenue from the fiscal second quarter with difficult operating performance. Recognizing the challenges associated with longer-term forecasts, we anticipate that our fiscal fourth quarter will return to sequential revenue growth with operating performance trending back to our financial model. For our full fiscal year, we currently anticipate revenue growth in the range of 10-13% over the prior fiscal year. While this would be strong organic revenue growth, it is below both our enduring goal of 15% revenue growth and our expectations just a quarter ago.”