Plexus Corp 10-Q for FY2022 Q1

Plexus Corp (PLXS)

10-Q 2022-02-04 For: 2022-01-01

Added on April 12, 2026

About this 10-Q

Plexus Corp filed this 10-Q on February 4, 2022, covering the quarter ended January 1, 2022 (FY2022 Q1).

Headline figures

Quarter ended January 1, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $841.88M; down 1.8% from $857.59M a year earlier
Net income: $23.42M; down 35.3% from net income of $36.2M a year earlier
Diluted EPS: $0.82; down 33.3% from $1.23 a year earlier

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Wisconsin						39-1344447
(State or other jurisdiction of incorporation)						(I.R.S. Employer Identification No.)


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $0.01 par value	PLXS	The Nasdaq Global Select Market



PART I. FINANCIAL INFORMATION			3
ITEM 1. FINANCIAL STATEMENTS			3
Condensed Consolidated Statements of Comprehensive Income			3
Condensed Consolidated Balance Sheets			4
Condensed Consolidated Statements of Shareholders' Equity			5
Condensed Consolidate d S tatements of Cash Flows			6
Notes to Condensed Consolidated Financial Statements			7
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			18
"Safe Harbor" Cautionary Statement Under the Private Securities Litigation Reform Act of 1995			18
Overview			18
Results of Operations			21
Liquidity of Capital Resources			24
Disclosure About Critical Accounting Policies			29
New Accounting Pronouncements			29
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			29
ITEM 4. CONTROLS AND PROCEDURES			30
PART II. OTHER INFORMATION			30
ITEM 1A. Risk Factors			30
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds			30
ITEM 6. Exhibits			31
SIGNATURES			32


	Three Months Ended
	January 1, 2022		January 2, 2021
Net sales	$	817,456	$	830,355
Cost of sales	747,460		751,078
Gross profit	69,996		79,277
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
Comprehensive income:
Net income	$	23,423	$	36,199
Other comprehensive (loss) income:
Derivative instrument and other fair value adjustments	1,272		4,055
Foreign currency translation adjustments	(1,578)		8,700
Other comprehensive (loss) income	(306)		12,755
Total comprehensive income	$	23,117	$	48,954


	January 1, 2022		October 2, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	217,067	$	270,172
Restricted cash	1,324		341
Accounts receivable, net of allowances of $1,753 and $1,188, respectively	589,253		519,684
Contract assets	105,450		115,283
Inventories, net	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 lease obligations	$	151,417	$	66,313
Accounts 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, net of current portion	187,075		187,033
Long-term accrued income taxes payable	47,974		47,974
Long-term operating lease liabilities	36,343		37,970
Deferred income taxes payable	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
Commitments and contingencies
Shareholders’ equity:
Preferred stock, $0.01 par value, 5,000 shares authorized, none issued or outstanding	—		—
Common stock, $0.01 par value, 200,000 shares authorized, 53,909 and 53,849 shares issued, respectively, and 27,997 and 28,047 shares outstanding, respectively	539		538
Additional paid-in capital	642,654		639,778
Common stock held in treasury, at cost, 25,912 and 25,802 shares, respectively	(1,053,222)		(1,043,091)
Retained 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


☒						QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐						TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	January 1, 2022		October 2, 2021
Raw materials	$	1,051,889	$	860,538
Work-in-process	57,381		48,356
Finished goods	76,645		63,418
Total inventories, net	$	1,185,915	$	972,312


	January 1, 2022		October 2, 2021
4.05% Senior Notes, due June 15, 2025	$	100,000	$	100,000
4.22% Senior Notes, due June 15, 2028	50,000		50,000
Borrowings under the revolving commitment	140,000		55,000
Finance lease and other financing obligations	49,353		49,279
Unamortized deferred financing fees	(861)		(933)
Total obligations	338,492		253,346
Less: current portion	(151,417)		(66,313)
Long-term debt and finance lease obligations, net of current portion	$	187,075	$	187,033


Derivative Impact on Gain (Loss) Recognized in Condensed Consolidated Statements of Comprehensive Income (in thousands)
for the Three Months Ended
Derivatives in cash flow hedging relationships	Classification of (Loss) Gain Reclassified from Accumulated OCL into Income	Amount of (Loss) Gain Reclassified from Accumulated OCL into Income
		January 1, 2022		January 2, 2021
Foreign currency forward contracts	Cost of sales	$	(743)	$	98
Foreign currency forward contracts	Selling and administrative expenses	$	(59)	$	6


Fair Value Measurements Using Input Levels Asset/(Liability) (in thousands)
Fiscal year ended January 1, 2022	Level 1		Level 2		Level 3		Total
Derivatives
Foreign currency forward contracts	$	—	$	293	$	—	$	293

Fiscal year ended October 2, 2021
Derivatives
Foreign currency forward contracts	$	—	$	(1,266)	$	—	$	(1,266)


	Financial Statement Line Item	January 1, 2022		October 2, 2021
ASSETS
Finance lease assets	Property, plant and equipment, net	$	38,842	$	38,657
Operating lease assets	Operating lease right-of-use assets	69,519		72,087
Total lease assets		$	108,361	$	110,744

LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Finance lease liabilities	Current portion of long-term debt and finance lease obligations	$	4,586	$	4,616
Operating lease liabilities	Other accrued liabilities	9,507		9,877
Non-current
Finance lease liabilities	Long-term debt and finance lease obligations, net of current portion	37,379		36,919
Operating lease liabilities	Long-term operating lease liabilities	36,343		37,970
Total lease liabilities		$	87,815	$	89,382


	January 1, 2022		October 2, 2021
Total assets:
AMER	$	869,801	$	789,385
APAC	1,457,341		1,283,124
EMEA	276,273		275,122
Corporate and eliminations	106,231		114,262
	$	2,709,646	$	2,461,893


	Three Months Ended
	January 1, 2022
	Reportable Segment:
	AMER		APAC		EMEA		Total
Market Sector:
Industrial	$	83,245	$	265,275	$	15,307	$	363,827
Healthcare/Life Sciences	135,962		169,237		39,266		344,465
Aerospace/Defense	55,750		35,743		17,671		109,164
External revenue	274,957		470,255		72,244		817,456
Inter-segment sales	2,389		21,417		619		24,425
Segment revenue	$	277,346	$	491,672	$	72,863	$	841,881


	Fixed Asset and Operating ROU Asset Impairment		Employee Termination and Severance Costs		Total
Accrual balance, as of October 2, 2021	$	—	$	71	$	71
Restructuring and impairment costs	255		1,766		2,021
Amounts utilized	(255)		(75)		(330)
Accrual balance, as of January 1, 2022	$	—	$	1,762	$	1,762


	Three Months Ended
	January 1, 2022		January 2, 2021
Cash flows from operating activities
Net income	$	23,423	$	36,199
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization	15,489		14,836
Deferred income taxes	35		366
Share-based compensation expense and related charges	6,357		5,349
Provision for allowance for doubtful accounts	—		(2,346)
Other, net	567		754
Changes in operating assets and liabilities, excluding impacts of acquisition:
Accounts receivable	(70,159)		3,585
Contract assets	9,904		866
Inventories	(214,416)		3,710
Other current and non-current assets	(9,436)		(7,561)
Accrued income taxes payable	1,121		3,277
Accounts payable	76,222		(23,514)
Customer deposits	60,743		(5,016)
Other current and non-current liabilities	11,171		(23,789)
Cash flows (used in) provided by operating activities	(88,979)		6,716
Cash flows from investing activities
Payments for property, plant and equipment	(33,246)		(15,880)
Other, net	(124)		113
Cash flows used in investing activities	(33,370)		(15,767)
Cash flows from financing activities
Borrowings under debt agreements	181,134		4,177
Payments on debt and finance lease obligations	(97,565)		(4,175)
Repurchases of common stock	(10,131)		(22,771)
Proceeds from exercise of stock options	307		722
Payments related to tax withholding for share-based compensation	(3,702)		(2,775)
Cash flows provided by (used in) financing activities	70,043		(24,822)
Effect of exchange rate changes on cash and cash equivalents	184		2,912
Net decrease in cash and cash equivalents and restricted cash	(52,122)		(30,961)
Cash and cash equivalents and restricted cash:
Beginning of period	270,513		387,894
End of period	$	218,391	$	356,933


	Three Months Ended
	January 1, 2022			January 2, 2021
Net sales	$	817.5		$	830.4
Cost of sales	747.5			751.1
Gross profit	70.0			79.3
Gross margin	8.6		%	9.5		%
Operating income	30.5			46.9
Operating margin	3.7		%	5.6		%
Other expense	3.7			5.2
Income tax expense	3.4			5.4
Net income	23.4			36.2
Diluted earnings per share	$	0.82		$	1.23
Return on invested capital*	10.0		%	16.3		%
Economic return*	0.7		%	8.2		%
*Non-GAAP metric; refer to "Return on Invested Capital ("ROIC") and economic return" below for more information and Exhibit 99.1 for a reconciliation.


	Three Months Ended
	January 1, 2022			January 2, 2021
Adjusted operating income (tax effected)	$	113.1		$	163.1
Average invested capital	1,135.3			1,002.1
After-tax ROIC	10.0		%	16.3		%
WACC	9.3		%	8.1		%
Economic return	0.7		%	8.2		%


Remaining 2022	$	5.6
2023	5.6
2024	10.6
2025	14.2
2026	17.6
Total	$	53.6


Period	Total number of shares purchased	Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs	Maximum approximate dollar value of shares that may yet be purchased under the plans or programs (1)
October 3, 2021 - October 30, 2021	31,216	$	93.41	31,216	$	43,960,950
October 31, 2021 - November 27, 2021	37,160	91.40		37,160	40,564,577
November 28, 2021 - January 1, 2022	42,064	90.79		42,064	$	36,745,401
	110,440	$	91.74	110,440



Exhibit No.						Exhibit
10.1						Suspension of Rights under Credit Agreement relating to LIBOR.
10.2						Summary of Directors' Compensation effective January 1, 2022 .*
31.1						Certification of Chief Executive Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002.
31.2						Certification of Chief Financial Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002.
32.1						Certification of the CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2						Certification of the CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.1						Reconciliation of ROIC to GAAP and Economic Return Financial Statements.
101						The following materials from Plexus Corp.’s Quarterly Report on Form 10-Q for the fiscal quarter ended January 1, 2022, formatted in Inline Extensible Business Reporting Language ("XBRL"): (i) the Condensed Consolidated Statements of Comprehensive Income, (ii) the Condensed Consolidated Balance Sheets, (iii) the Condensed Consolidated Statements of Shareholders’ Equity, (iv) the Condensed Consolidated Statements of Cash Flows, and (v) Notes to Condensed Consolidated Financial Statements.
101.INS						Inline XBRL Instance Document (the instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document).
101.SCH						Inline XBRL Taxonomy Extension Schema Document.
101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document.
104						The cover page from the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended January 1, 2022, formatted in Inline XBRL and contained in Exhibit 101.


Chairman Retainer	$	250,000.00	USD
Board Member Retainer (all directors)	$	90,000.00	USD
Lead Director Retainer	$	120,000.00	USD


Compensation Committee Chairman Retainer	$	10,000.00	USD
Nominating Committee Chairman Retainer	$	10,000.00	USD
Audit Committee Chairman Retainer	$	10,000.00	USD


			/s/ Patrick J. Jermain
			Patrick J. Jermain
			Executive Vice President and Chief Financial Officer


/s/ Todd P. Kelsey
Todd P. Kelsey
Chief Executive Officer
February 4, 2022


										Exhibit 99.1
Return on Invested Capital ("ROIC") and Economic Return Calculations GAAP to non-GAAP reconciliation (dollars in thousands):

	Three Months Ended				Twelve Months Ended				Three Months Ended
		Jan 2,				Oct 2,				Jan 2,
		2022				2021				2021
Operating income, as reported		$	30,473			$	176,268			$	46,866
Restructuring and other charges	+	2,021			+	3,267			+	—
Adjusted operating income		32,494				179,535				46,866
	x	4							x	4

Adjusted annualized operating income		$	129,976			$	179,535			$	187,464
Adjusted effective tax rate	x	13		%	x	13		%	x	13		%
Tax impact		$	16,897			$	23,340			$	24,370
Adjusted operating income (tax effected)		$	113,079			$	156,195			$	163,094

Average invested capital		$	1,135,312			$	1,014,742			$	1,002,087

ROIC		10.0		%		15.4		%		16.3		%
WACC		9.3		%		8.1		%		8.1		%
Economic Return		0.7		%		7.3		%		8.2		%


	January 2,		October 2,		July 3,		April 3,		January 2,		October 3,
	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 and finance lease obligations - current	151,417		66,313		60,468		50,229		148,408		146,829
Operating lease obligations - current (1)	9,507		9,877		9,130		9,314		9,351		7,724
Debt and finance lease obligations - long-term	187,075		187,033		187,690		188,730		188,148		187,975
Operating lease obligations - long-term	36,343		37,970		33,193		34,751		37,052		36,779
Less:
Cash and cash equivalents	(217,067)		(270,172)		(303,255)		(294,370)		(356,724)		(385,807)
	$	1,211,370	$	1,059,253	$	1,007,676	$	1,002,606	$	1,033,194	$	970,980