Slide 1: Fiscal Fourth Quarter 2016 Financial Results
FISCAL FOURTH QUARTER 2016 FINANCIAL RESULTS October 27, 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 Fourth Quarter Results
FISCAL FOURTH QUARTER RESULTS 3 Q4F16 Guidance Jul 20, 2016 Q4F16 Oct 1, 2016 Q3F16 Jul 2, 2016 Q4F16 vs. Q3F16 Revenue ($ millions) $655 to $685 $653 $668 - 2% Diluted EPS $0.56 $0.76 - 26% Non-GAAP Diluted EPS excluding special items $0.76 to $0.84 $0.82 $0.82 Flat ROIC 13.8% 13.0% + 80 bps • Stro
Slide 4: Typhoon Meranti
TYPHOON MERANTI September 15, 2016 – Typhoon Meranti made landfall near Xiamen, China • Effective crisis management protocol mitigated typhoon impact • Proactive communication and responsive recovery plans enhanced customer satisfaction • Operations restored within 3 days 4 Factory Floor – Day 4 Fac
Slide 5: Fiscal 2016 Results
$1,062 $884 $808 $1,041 $1,229 $1,461 $1,546 $1,842 $1,617 $2,013 $2,231 $2,307 $2,228 $2,378 $2,654 $2,556 -10% -5% 0% 5% 10% 15% $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 F01 F02 F03 F04 F05 F06 F07 F08 F09 F10 F11 F12 F13 F14 F15 F16 F16 Result Enduring Goal Revenue Growth (4%) 12% Economic Retu
Slide 6: Fiscal 2016 Performance
3.0% 3.5% 4.0% 4.5% 5.0% 5.5% 450 500 550 600 650 700 Q4F15 Q1F16 Q2F16 Q3F16 Q4F16 R e ve n u e $ M Revenue Adjusted Operating Margin FISCAL 2016 PERFORMANCE 6 • Rapid forecast decline in early Q1F16 led to unacceptable adjusted operating margins • Immediately implemented cost reduction and product
Slide 7: Fiscal 2016 Sector Revenue
FISCAL 2016 SECTOR REVENUE Sector F16 Revenue $M F16 Revenue YoY Delta $M F16 Revenue YoY Delta % 5 YEAR CAGR Healthcare/Life Sciences $780 $30 4% 11% Industrial/Commercial $774 $89 13% 8% Networking/ Communications $597 ($247) (29%) N/C (10%) Networking (28%) Communications 3% Defense/Security/Aero
Slide 8: Fiscal 2017 Focus Areas
FISCAL 2017 FOCUS AREAS Optimism for Fiscal 2017 • Healthy new business wins • Record $2.8B funnel of qualified manufacturing opportunities Passion for Growth and Value Creation • Goal - Achieve $3B annual run rate as we exit fiscal 2017 • Deliver target operating margin range of 4.7% to 5.0% result
Slide 9: Fiscal First Quarter Guidance
FISCAL FIRST QUARTER 9 Q1F17 Guidance Revenue $620 to $650 million GAAP Diluted EPS $0.74 to $0.82 • Includes $0.11 stock-based compensation expense Mid-point of revenue guidance suggests approximately 3% contraction • Order delays with an Industrial/Commercial customer • End-market weakness in Comm
Slide 10: Customer Service Excellence
CUSTOMER SERVICE EXCELLENCE THANK YOU to the more than 14,000 Plexus team members globally. Your commitment to Customer Service Excellence led to strong operational performance with solid Net Promoter Scores! 10
Slide 11: Performance by Sector
PERFORMANCE BY SECTOR 11 Q4F16 Oct 1, 2016 Q3F16 Jul 2, 2016 Q4F16 vs. Q3F16 Q1F17 Expectations (percentage points) Healthcare/ Life Sciences $192 29% $207 31% - 7% Up high single Industrial/ Commercial $231 35% $202 30% + 14% Down high single Networking/ Communications $128 20% $156 23% - 18% Down
Slide 12: Manufacturing Wins by Region
MANUFACTURING WINS BY REGION 12 • $200M in annualized manufacturing revenue when fully ramped (37 programs) • Second consecutive quarter with wins greater than $190M • Strength in AMER region • EMEA return to healthy level $122M $51M $27M Q4F16 AMER APAC EMEA Wins Momentum = TFQ Wins / TFQ Revenue
Slide 13: Manufacturing Wins by Sector
MANUFACTURING WINS BY SECTOR • Wins balanced across market sectors • Sector wins supports healthy portfolio $44M $51M $69M $36M Q4F16 HC/LS I/C N/C D/S/A 13
Slide 14: Manufacturing Wins Momentum
MANUFACTURING WINS MOMENTUM Trailing Four Quarters (TFQ) for Manufacturing Wins 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000 % o f TFQ S al es N ew W in s ($ M ) TFQ Wins TFQ Wins % of TFQ Sales New Wins Goal 25% TFQ $747M Quarterly Target: ~ $160M
Slide 15: Manufacturing Funnel
MANUFACTURING FUNNEL Record manufacturing funnel at $2.8B HC/LS and I/C funnels particularly strong Supports the delivery of our differentiated portfolio 15
Slide 16: Key Operations Metrics
KEY OPERATIONS METRICS Operating Margin Target Range: 4.7% to 5.0% * Represents midpoint of guidance 16 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 Q4F16 Q1F17* R e ve n u e $ M Revenue Adjusted Opera
Slide 17: Income Statement
INCOME STATEMENT 17 Q4F16 Comments Revenue $653 million Marginally below guidance range from weaker revenue primarily in Networking/Communications Gross margin 9.4% Includes a 50 basis point detriment due to losses incurred from Typhoon Meranti Adjusted gross margin excluding special items 9.9% Abov
Slide 18: Balance Sheet and Cash Flows
BALANCE SHEET AND CASH FLOWS 18 Q4F16 Comments Return on invested capital 13.8% 280 basis points above fiscal 2016 WACC of 11% Share repurchases $7.1 million ~ 155,000 at an average price of $45.81 per share Free cash flow ($2.2 million) Cash from operations: $5.1 million Capital expenditures: $7.3
Slide 19: Working Capital Trends
WORKING CAPITAL TRENDS 19 Q1F14 Q2F14 Q3F14 Q4F14 Q1F15 Q2F15 Q3F15 Q4F15 Q1F16 Q2F16 Q3F16 Q4F16 Inventory Days 83 84 84 80 82 86 88 85 88 91 87 87 A/R Days 51 49 48 44 52 48 48 53 53 48 51 58 A/P Days 64 63 67 60 53 63 62 60 59 62 62 61 Customer Deposit Days 8 8 8 8 9 12 12 12 11 11 13 13 Net Cash
Slide 20: Fiscal First Quarter 2017 Guidance
FISCAL FIRST QUARTER 2017 GUIDANCE 20 Guidance Revenue $620 to $650 million Diluted EPS $0.74 to $0.82 Gross margin 9.6% to 9.8% SG&A $29 to $30 million Operating margin 4.9% to 5.2% Depreciation ~ $12 million Q1 tax rate F17 tax rate 9% to 11% 9% to 11% Cash cycle days 67 to 71 days F17 capital exp
Slide 21: Q&A
Q&A ANALYSTS PLEASE CONFORM TO: ONE QUESTION ONE FOLLOW-UP THANKS