Slide 1: Fiscal Second Quarter 2016 Financial Results
FISCAL SECOND QUARTER 2016 FINANCIAL RESULTS April 21, 2016
Slide 2: Safe Harbor & Fair Disclosure Statement
SAFE HARBOR & FAIR DISCLOSURE STATEMENT 2 Any statements made during our call today and information included in the supporting material that is not historical in nature, such as statements in the future tense and statements that include "believe," "expect," "intend," "plan," "anticipate," and simila
Slide 3: Fiscal Second Quarter Results
FISCAL SECOND QUARTER RESULTS 3 Q2F16 Guidance Jan 20, 2016 Q2F16 Apr 2, 2016 Q1F16 Jan 2, 2016 Q2F16 vs. Q1F16 Revenue ($ millions) $600 to $630 $619 $617 Flat Non-GAAP Diluted EPS excluding restructuring $0.47 to $0.55 $0.55 $0.47 + 17% GAAP Diluted EPS $0.50 $0.42 + 19% ROIC 11.6% 10.8% + 80 bps
Slide 4: Fiscal Third Quarter Guidance
FISCAL THIRD QUARTER 4 Q3F16 Guidance Revenue $640 to $670 million Non-GAAP Diluted EPS $0.73 to $0.81 • Includes $0.11 stock-based compensation expense • Excludes restructuring costs Mid-point of revenue guidance suggests 6% sequential increase • New programs ramps more than offset program disengag
Slide 5: Cause for Optimism
CAUSE FOR OPTIMISM Fiscal second quarter—significant improvement • Cost reductions and productivity improvements ahead of plan • Strong free cash flow of $65 million • Underlying revenue growth masked by proactive program disengagements • New program wins above goal Fiscal third quarter • Operating
Slide 6: Congratulations Todd!
CONGRATULATIONS TODD! 6 Todd will assume role of President and CEO • Effective October 2, 2016 • Seasoned leader that knows Plexus and our industry well • Strong relationships with our customers Dean retiring at fiscal year-end 2016 • Served in the role for 14 years • Plexus is in a good position wi
Slide 7: Performance by Sector
PERFORMANCE BY SECTOR 7 Q2F16 Apr 2, 2016 Q1F16 Jan 2, 2016 Q2F16 vs. Q1F16 Q3F16 Expectations (percentage points) Networking/ Communications $157 25% $157 25% Flat Down low single Healthcare/ Life Sciences $190 31% $191 31% - 1% Up mid single Industrial/ Commercial $169 27% $173 28% - 2% Up high te
Slide 8: Manufacturing Wins by Region
MANUFACTURING WINS BY REGION 8 • $174M in annualized manufacturing revenue when fully ramped (38 programs) • Strength in APAC region, consistent quarterly results in EMEA $60M $88M $26M Q2F16 AMER APAC EMEA Wins Momentum = TFQ Wins / TFQ Revenue
Slide 9: Manufacturing Wins by Sector
MANUFACTURING WINS BY SECTOR • Continued robust wins in Industrial/Commercial • Sector wins momentum supports healthy portfolio $22M $30M $107M $15M Q2F16 N/C HC/LS I/C D/S/A 9
Slide 10: Manufacturing Wins Momentum
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000 % o f T FQ S al es N ew W in s ($ m ill io ns ) TFQ Wins TFQ Wins % of TFQ Sales New Wins MANUFACTURING WINS MOMENTUM Trailing Four Quarters (TFQ) for Manufacturing Wins Goal 25% TFQ $667M Quarterly Targ
Slide 11: Manufacturing Funnel
MANUFACTURING FUNNEL • Manufacturing funnel at a record high of $2.5B • HC/LS and I/C funnels particularly strong • Supports the delivery of a healthier portfolio 11
Slide 12: Key Operations Metrics
KEY OPERATIONS METRICS Operating Margin Target Range: 4.7 to 5.0% *represents mid-point of guidance 3.0% 3.5% 4.0% 4.5% 5.0% 5.5% 450 500 550 600 650 700 Q1F13 Q2F13 Q3F13 Q4F13 Q1F14 Q2F14 Q3F14 Q4F14 Q1F15 Q2F15 Q3F15 Q4F15 Q1F16 Q2F16 Q3F16* R ev en ue $ M Revenue Operating Margin 12
Slide 13: Operating Margin
4.7% - 5.0% (Goal = 5.0%) 4.7% - 5.0% (Goal = 5.0%) 0.5% 0.2% 4.1% 0.6% - 0.9% 0.2% 0.1% 3.7% 0.1% (0.4%) (0.3%) Q1F16 Operating Margin Results Livingston Restructuring Benefits Cost Reductions & Productivity Improvements GDL Ramp Completion Seasonal Costs Q2F16 Operating Margin Results Cost Reducti
Slide 14: Fiscal Second Quarter Income Statement
FISCAL SECOND QUARTER INCOME STATEMENT 14 Q2F16 Comments Revenue $619 million Above mid-point of guidance range from stronger revenue in the Networking/Communications sector Gross margin 8.6% Above guidance range by 20 bps from planned cost reductions and improved productivity Selling & administrati
Slide 15: Fiscal Second Quarter Balance Sheet and Cash Flows
FISCAL SECOND QUARTER BALANCE SHEET AND CASH FLOWS 15 Q2F16 Comments Return on invested capital 11.6% 60 bps above fiscal 2016 WACC of 11% Share repurchases $7.3 million ~ 209,000 at an average price of $34.88 per share Free cash flow $65.0 million Cash from operations: $70.0 million Capital expendi
Slide 16: Working Capital Trends
WORKING CAPITAL TRENDS 16 Q1F14 Q2F14 Q3F14 Q4F14 Q1F15 Q2F15 Q3F15 Q4F15 Q1F16 Q2F16 Inventory Days 83 84 84 80 82 86 88 85 88 91 A/R Days 51 49 48 44 52 48 48 53 53 48 A/P Days 64 63 67 60 53 63 62 60 59 62 Customer Deposit Days 8 8 8 8 9 12 12 12 11 11 Net Cash Cycle Days 62 62 57 56 72 59 62 66
Slide 17: Fiscal Third Quarter 2016 Guidance
FISCAL THIRD QUARTER 2016 GUIDANCE 17 Guidance Revenue $640 to $670 million Non-GAAP diluted EPS $0.73 to $0.81 Gross margin 9.2% to 9.5% SG&A $29 to $30 million Operating margin * 4.7% to 5.0% Depreciation ~ $12 million Q3 tax rate * F16 tax rate * 8% to 10% 10% to 12% Cash cycle days 63 to 67 days
Slide 18: Q&A
Q&A ANALYSTS PLEASE CONFORM TO: ONE QUESTION ONE FOLLOW-UP THANKS