Plexus Corp 10-Q for FY2021 Q1

Plexus Corp (PLXS)

10-Q 2021-02-05 For: 2021-01-02

Added on April 12, 2026

About this 10-Q

Plexus Corp filed this 10-Q on February 5, 2021, covering the quarter ended January 2, 2021 (FY2021 Q1).

Headline figures

Quarter ended January 2, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $857.59M; down 3.5% from $889.1M a year earlier
Net income: $36.2M; up 16.7% from net income of $31.01M a year earlier
Diluted EPS: $1.23; up 19.4% from $1.03 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 Consolidated Statements 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			19
"Safe Harbor" Cautionary Statement Under the Private Securities Litigation Reform Act of 1995			19
Overview			19
Results of Operations			20
Liquidity of Capital Resources			25
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 2, 2021		January 4, 2020
Net sales	$	830,355	$	852,409
Cost of sales	751,078		773,219
Gross profit	79,277		79,190
Selling and administrative expenses	32,411		39,256
Operating income	46,866		39,934
Other income (expense):
Interest expense	(4,086)		(4,132)
Interest income	374		645
Miscellaneous, net	(1,518)		(2,173)
Income before income taxes	41,636		34,274
Income tax expense	5,437		3,268
Net income	$	36,199	$	31,006
Earnings per share:
Basic	$	1.25	$	1.06
Diluted	$	1.23	$	1.03
Weighted average shares outstanding:
Basic	28,861		29,147
Diluted	29,539		30,065
Comprehensive income:
Net income	$	36,199	$	31,006
Other comprehensive income:
Derivative instrument fair value adjustment	4,055		2,223
Foreign currency translation adjustments	8,700		5,204
Other comprehensive income	12,755		7,427
Total comprehensive income	$	48,954	$	38,433


	January 2, 2021		October 3, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	356,724	$	385,807
Restricted cash	209		2,087
Accounts receivable, net of allowances of $1,807 and $3,597, respectively	484,672		482,086
Contract assets	113,225		113,946
Inventories, net	764,322		763,461
Prepaid expenses and other	39,194		31,772
Total current assets	1,758,346		1,779,159
Property, plant and equipment, net	381,612		383,661
Operating lease right-of-use assets	71,296		69,879
Deferred income taxes	21,446		21,422
Other	39,358		35,727
Total non-current assets	513,712		510,689
Total assets	$	2,272,058	$	2,289,848

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt and finance lease obligations	$	148,408	$	146,829
Accounts payable	488,969		516,297
Customer deposits	155,911		159,972
Accrued salaries and wages	60,332		76,927
Other accrued liabilities	101,836		103,492
Total current liabilities	955,456		1,003,517
Long-term debt and finance lease obligations, net of current portion	188,148		187,975
Long-term accrued income taxes payable	53,618		53,899
Long-term operating lease liabilities	37,052		36,779
Deferred income taxes payable	6,596		6,433
Other liabilities	24,229		23,765
Total non-current liabilities	309,643		308,851
Total liabilities	1,265,099		1,312,368
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, 53,596 and 53,525 shares issued, respectively, and 28,766 and 29,002 shares outstanding, respectively	536		535
Additional paid-in capital	624,859		621,564
Common stock held in treasury, at cost, 24,830 and 24,523 shares, respectively	(957,410)		(934,639)
Retained earnings	1,331,278		1,295,079
Accumulated other comprehensive income (loss)	7,696		(5,059)
Total shareholders’ equity	1,006,959		977,480
Total liabilities and shareholders’ equity	$	2,272,058	$	2,289,848


☒						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 2, 2021		October 3, 2020
Raw materials	$	637,978	$	630,833
Work-in-process	52,767		53,602
Finished goods	73,577		79,026
Total inventories, net	$	764,322	$	763,461


	January 2, 2021		October 3, 2020
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	—		—
Term Loans, due April 28, 2021	138,000		138,000
Finance lease and other financing obligations	49,939		48,435
Unamortized deferred financing fees	(1,383)		(1,631)
Total obligations	336,556		334,804
Less: current portion	(148,408)		(146,829)
Long-term debt, finance lease and other financing obligations, net of current portion	$	188,148	$	187,975


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 Gain (Loss) Reclassified from Accumulated OCI(L) into Income	Amount of Gain (Loss) Reclassified from Accumulated OCI(L) into Income
		January 2, 2021		January 4, 2020
Foreign currency forward contracts	Cost of sales	$	98	$	(27)
Foreign currency forward contracts	Selling and administrative expenses	$	6	$	(11)


Fair Value Measurements Using Input Levels Asset (in thousands)
January 2, 2021	Level 1		Level 2		Level 3		Total
Derivatives
Foreign currency forward contracts	$	—	$	5,569	$	—	$	5,569

October 3, 2020
Derivatives
Foreign currency forward contracts	$	—	$	1,201	$	—	$	1,201


	Three Months Ended
	January 2, 2021		January 4, 2020
Net income	$	36,199	$	31,006
Basic weighted average common shares outstanding	28,861		29,147
Dilutive effect of share-based awards and options outstanding	678		918
Diluted weighted average shares outstanding	29,539		30,065
Earnings per share:
Basic	$	1.25	$	1.06
Diluted	$	1.23	$	1.03


	Financial Statement Line Item	January 2, 2021		October 3, 2020
ASSETS
Finance lease assets	Property, plant and equipment, net	$	36,812	$	36,408
Operating lease assets	Operating lease right-of-use assets	71,296		69,879
Total lease assets		$	108,108	$	106,287

LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Finance lease liabilities	Current portion of long-term debt and finance lease obligations	$	3,039	$	2,700
Operating lease liabilities	Other accrued liabilities	9,351		7,724
Non-current
Finance lease liabilities	Long-term debt and finance lease obligations, net of current portion	37,323		37,033
Operating lease liabilities	Long-term operating lease liabilities	37,052		36,779
Total lease liabilities		$	86,765	$	84,236


	January 2, 2021		January 4, 2020
Net sales:
AMER	$	327,567	$	353,476
APAC	451,302		451,142
EMEA	78,723		84,477
Elimination of inter-segment sales	(27,237)		(36,686)
	$	830,355	$	852,409

Operating income (loss):
AMER	$	16,482	$	12,297
APAC	61,542		62,378
EMEA	(988)		(314)
Corporate and other costs	(30,170)		(34,427)
	$	46,866	$	39,934
Other income (expense):
Interest expense	$	(4,086)	$	(4,132)
Interest income	374		645
Miscellaneous, net	(1,518)		(2,173)
Income before income taxes	$	41,636	$	34,274


	January 2, 2021		October 3, 2020
Total assets:
AMER	$	748,699	$	759,030
APAC	1,089,148		1,073,951
EMEA	273,628		279,757
Corporate and eliminations	160,583		177,110
	$	2,272,058	$	2,289,848


	Three Months Ended
	January 2, 2021		January 4, 2020
Cash flows from operating activities
Net income	$	36,199	$	31,006
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization	14,836		13,965
Deferred income taxes	366		1,666
Share-based compensation expense	5,349		5,046
Provision for allowance for doubtful accounts	(2,346)		—
Other, net	754		57
Changes in operating assets and liabilities:
Accounts receivable	3,585		28,746
Contract assets	866		(15,864)
Inventories	3,710		(31,626)
Other current and non-current assets	(7,561)		(2,829)
Accrued income taxes payable	3,277		(2,898)
Accounts payable	(23,514)		64,965
Customer deposits	(5,016)		(3,382)
Other current and non-current liabilities	(23,789)		(14,140)
Cash flows provided by operating activities	6,716		74,712
Cash flows from investing activities
Payments for property, plant and equipment	(15,880)		(13,675)
Proceeds from sales of property, plant and equipment	113		283
Cash flows used in investing activities	(15,767)		(13,392)
Cash flows from financing activities
Borrowings under debt agreements	4,177		157,020
Payments on debt and finance lease obligations	(4,175)		(190,470)
Repurchases of common stock	(22,771)		(6,330)
Proceeds from exercise of stock options	722		9,850
Payments related to tax withholding for share-based compensation	(2,775)		(3,126)
Cash flows used in financing activities	(24,822)		(33,056)
Effect of exchange rate changes on cash and cash equivalents	2,912		604
Net (decrease) increase in cash and cash equivalents and restricted cash	(30,961)		28,868
Cash and cash equivalents and restricted cash:
Beginning of period	387,894		226,254
End of period	$	356,933	$	255,122


	Three Months Ended
	January 2, 2021		January 4, 2020
Reserve balance, beginning of period	$	6,386	$	6,276
Accruals for warranties issued during the period	465		364
Settlements (in cash or in kind) during the period	(1,066)		(776)
Reserve balance, end of period	$	5,785	$	5,864


	Three Months Ended January 2, 2021
	Reportable Segment:
	AMER		APAC		EMEA		Total
Market Sector:
Industrial	$	122,026	$	238,248	$	17,768	$	378,042
Healthcare/Life Sciences	126,439		154,046		38,828		319,313
Aerospace/Defense	76,980		34,259		21,761		133,000
External revenue	325,445		426,553		78,357		830,355
Inter-segment sales	2,122		24,749		366		27,237
Segment revenue	$	327,567	$	451,302	$	78,723	$	857,592


	Three Months Ended January 4, 2020
	Reportable Segment:
	AMER		APAC		EMEA		Total
Market Sector (1):
Industrial	$	119,887	$	228,037	$	20,076	$	368,000
Healthcare/Life Sciences	124,196		149,725		38,366		312,287
Aerospace/Defense	105,489		43,249		23,384		172,122
External revenue	349,572		421,011		81,826		852,409
Inter-segment sales	3,904		30,131		2,651		36,686
Segment revenue	$	353,476	$	451,142	$	84,477	$	889,095
(1) During the three months ended January 2, 2021, the Company consolidated the previously reported Industrial/Commercial and Communications market sectors to form the Industrial market sector. Prior period amounts have been reclassified to conform to the current period presentation.


Remaining 2021	$	5.6
2022	5.6
2023	5.6
2024	10.6
2025	14.2
2026	17.7
Total	$	59.3


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 4, 2020 - October 31, 2020	134,407	$	72.13	134,407	$	45,634,079
November 1, 2020 - November 28, 2020	75,052	73.19		75,052	$	90,141,345
November 29, 2020 - January 2, 2021	97,612	77.69		97,612	$	82,557,505
Total	307,071	$	74.16	307,071


Exhibit No.						Exhibit
10.1						Form of Performance Stock Unit Agreement
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 quarter ended January 2, 2021, 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 quarter ended January 2, 2021, formatted in Inline XBRL and contained in Exhibit 101.



Relative TSR	Payout
Percentile Rank*	Performance Factor
Below 25		0%
25		50%
30		60%
40		80%
50		100%
60		120%
70		140%
75 and above		150%



			/s/ Todd P. Kelsey
			Todd P. Kelsey
			President and Chief Executive Officer


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


										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 3,				Jan 4,
		2021				2020				2020
Operating income, as reported		$	46,866			$	153,372			$	39,934
Restructuring and other charges	+	—			+	6,003			+	—
Adjusted operating income		46,866				159,375				39,934
	x	4							x	4

Adjusted annualized operating income		$	187,464			$	159,375			$	159,736
Adjusted effective tax rate	x	13		%	x	14		%	x	13		%
Tax impact		$	24,370			$	22,313			$	20,766
Adjusted operating income (tax effected)		$	163,094			$	137,062			$	138,970

Average invested capital		$	1,002,087			$	978,939			$	945,397

ROIC		16.3		%		14.0		%		14.7		%
WACC		8.1		%		8.8		%		8.8		%
Economic Return		8.2		%		5.2		%		5.9		%


(1)			Included in other accrued liabilities on the Condensed Consolidated Balance Sheets.
(2)			In fiscal 2020, Plexus adopted and applied Topic 842 to all leases using the modified retrospective method of adoption. The prior year comparative information has not been restated and continues to be reported under the accounting standards in effect for fiscal 2019.