Plexus Corp. (PLXS) Bundle
Understanding Plexus Corp. (PLXS) Revenue Streams
Understanding Plexus Corp. (PLXS) Revenue Streams
Plexus Corp. reported a fiscal fourth quarter 2024 revenue of $1,050.6 million, which represented an increase from the $1,024.0 million reported in the same period of the previous year. For the fiscal year 2024, total revenue was $3,960.8 million compared to $4,210.3 million in fiscal 2023.
Revenue Breakdown by Business Segment
| Segment | Q4 2024 Revenue (in millions) | Q4 2023 Revenue (in millions) | FY 2024 Revenue (in millions) | FY 2023 Revenue (in millions) |
|---|---|---|---|---|
| Americas | $335 | $389 | $1,323 | $1,558 |
| Asia-Pacific | $618 | $557 | $2,213 | $2,358 |
| Europe, Middle East and Africa | $128 | $108 | $542 | $403 |
| Elimination of inter-segment sales | ($30) | ($30) | ($117) | ($109) |
| Total Revenue | $1,051 | $1,024 | $3,961 | $4,210 |
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate for Q4 2024 was approximately 2.6% compared to Q4 2023. For the full fiscal year, the revenue decreased by approximately 5.9% from fiscal 2023 to fiscal 2024.
Contribution of Different Business Segments to Overall Revenue
- Aerospace/Defense contributed $184 million in Q4 2024, up from $158 million in Q4 2023.
- Healthcare/Life Sciences generated $415 million in Q4 2024, down from $449 million in Q4 2023.
- Industrial segment revenue was $452 million in Q4 2024, compared to $417 million in Q4 2023.
Significant Changes in Revenue Streams
Notable changes in revenue streams include:
- The Aerospace/Defense sector saw a growth of 16.5% year-over-year from Q4 2023 to Q4 2024.
- Healthcare/Life Sciences experienced a decline of 7.6% in revenue from Q4 2023 to Q4 2024.
- The Industrial segment increased by 8.4% year-over-year, reflecting growth in demand.
In fiscal year 2024, top 10 customers comprised 52% of total revenue, an increase from 48% in fiscal 2023.
A Deep Dive into Plexus Corp. (PLXS) Profitability
Profitability Metrics
Gross profit, operating profit, and net profit margins for the fiscal year ending September 28, 2024, are as follows:
| Metric | Q4 FY 2024 | Q4 FY 2023 | FY 2024 | FY 2023 |
|---|---|---|---|---|
| Revenue | $1,050,569 | $1,023,947 | $3,960,827 | $4,210,305 |
| Gross Profit | $107,912 | $96,716 | $378,530 | $394,554 |
| Operating Income | $53,858 | $53,333 | $167,732 | $195,820 |
| Net Income | $41,221 | $40,261 | $111,815 | $139,094 |
| Diluted EPS | $1.48 | $1.44 | $4.01 | $4.95 |
| Gross Margin | 10.3% | 9.4% | 9.6% | 9.4% |
| Operating Margin | 5.1% | 5.2% | 4.2% | 4.7% |
| Net Margin | 3.9% | 3.9% | 2.8% | 3.3% |
Trends in profitability over time show a mixed performance. For example, the gross profit margin increased from 9.4% in Q4 FY 2023 to 10.3% in Q4 FY 2024. However, the operating margin showed slight fluctuations, ending at 5.1% in Q4 FY 2024 compared to 5.2% in Q4 FY 2023.
When comparing profitability ratios with industry averages, the average operating margin in the manufacturing sector typically hovers around 6-7%. Therefore, the company's operating margin of 5.1% demonstrates competitive performance while still indicating room for improvement.
In terms of operational efficiency, the company achieved a return on invested capital (ROIC) of 11.8% for FY 2024, which is significantly above its weighted average cost of capital (WACC) of 8.2%. This results in an economic return of 3.6%, reflecting effective cost management and operational strategies.
| Metric | Q4 FY 2024 | Q4 FY 2023 | FY 2024 | FY 2023 |
|---|---|---|---|---|
| ROIC | 11.8% | 13.4% | 11.8% | 13.4% |
| WACC | 8.2% | 9.0% | 8.2% | 9.0% |
| Economic Return | 3.6% | 4.4% | 3.6% | 4.4% |
Overall, the company's focus on increasing operational efficiency has resulted in improved profitability metrics, although ongoing challenges such as market fluctuations and cost management will be critical to maintaining these gains moving forward.
Debt vs. Equity: How Plexus Corp. (PLXS) Finances Its Growth
Debt vs. Equity: How Plexus Corp. Finances Its Growth
Overview of the company's debt levels:
As of September 28, 2024, Plexus Corp. reported a current portion of long-term debt and finance lease obligations amounting to $157.3 million. The long-term debt and finance lease obligations were reported at $90.0 million, resulting in total debt obligations of $248.3 million.
Debt-to-Equity Ratio
The debt-to-equity ratio for Plexus Corp. is calculated as follows:
- Total Debt: $248.3 million
- Total Shareholders' Equity: $1,324.8 million
- Debt-to-Equity Ratio: 0.19
This ratio is significantly lower than the industry average debt-to-equity ratio of approximately 0.75, indicating a conservative approach to leverage.
Recent Debt Issuances and Credit Ratings
Plexus has not issued new debt in the last fiscal year but has actively managed its existing debt. The company has maintained a strong credit profile, indicated by a credit rating of Baa2 from Moody's, reflecting a stable outlook.
Refinancing Activity
In fiscal year 2024, Plexus Corp. successfully reduced its borrowing under its revolving credit facility by $100 million, ending the year in a net cash position with approximately $347 million in cash and cash equivalents.
Balancing Debt Financing and Equity Funding
Plexus Corp. has effectively balanced its capital structure through a combination of debt financing and equity funding. The company generated record free cash flow of $341 million in fiscal year 2024, which was used to repurchase shares, amounting to $55.7 million at an average price of $103.81 per share.
| Financial Metric | Amount (in millions) |
|---|---|
| Current Portion of Long-term Debt | $157.3 |
| Long-term Debt | $90.0 |
| Total Debt | $248.3 |
| Total Shareholders' Equity | $1,324.8 |
| Debt-to-Equity Ratio | 0.19 |
| Free Cash Flow (FY 2024) | $341.0 |
| Share Repurchase Amount | $55.7 |
| Cash and Cash Equivalents | $347.0 |
Assessing Plexus Corp. (PLXS) Liquidity
Assessing Plexus Corp.'s Liquidity
Current and Quick Ratios
The current ratio for Plexus Corp. as of September 28, 2024, is calculated as follows:
Current Assets: $2,477,150,000
Current Liabilities: $1,643,294,000
Current Ratio = Current Assets / Current Liabilities = 1.51
The quick ratio is determined by excluding inventories from current assets:
Quick Assets: $2,477,150,000 - $1,311,434,000 = $1,165,716,000
Quick Ratio = Quick Assets / Current Liabilities = 0.71
Analysis of Working Capital Trends
Working capital as of September 28, 2024, is calculated as:
Working Capital = Current Assets - Current Liabilities = $2,477,150,000 - $1,643,294,000 = $833,856,000
This indicates a positive working capital position, suggesting that the company can meet its short-term obligations efficiently.
Cash Flow Statements Overview
The cash flow from operations for the fiscal year ended September 28, 2024, is as follows:
Cash Flows from Operations: $436,500,000
Capital Expenditures: $95,200,000
Free Cash Flow = Cash Flows from Operations - Capital Expenditures = $436,500,000 - $95,200,000 = $341,300,000
Operating cash flow for the fourth quarter is:
Operating Cash Flow: $220,100,000
Capital Expenditures (Q4): $26,300,000
Free Cash Flow (Q4) = $220,100,000 - $26,300,000 = $193,800,000
Cash Cycle Overview
| Cash Cycle Component | Days |
|---|---|
| Days in Accounts Receivable | 54 |
| Days in Contract Assets | 10 |
| Days in Inventory | 127 |
| Days in Accounts Payable | (59) |
| Days in Advanced Payments | (68) |
| Total Cash Cycle Days | 64 |
Potential Liquidity Concerns or Strengths
Plexus Corp. ended the fiscal year with a net cash position of approximately $347,000,000, which is an increase of $78,000,000 sequentially. Borrowing under the revolving credit facility decreased by $100,000,000, reflecting a strong liquidity position.
The liquidity ratios indicate that while the current ratio is above 1, the quick ratio suggests potential concerns if inventory needs to be liquidated quickly. However, the overall positive working capital and solid free cash flow generation mitigate these concerns significantly.
Is Plexus Corp. (PLXS) Overvalued or Undervalued?
Valuation Analysis
Price-to-Earnings (P/E) Ratio: The P/E ratio for Plexus Corp. (PLXS) is approximately 29.25, calculated using the recent diluted earnings per share (EPS) of $1.48 for Q4 2024 and the current stock price of approximately $43.30.
Price-to-Book (P/B) Ratio: The P/B ratio stands at 3.25, derived from a book value per share of $13.33 and the current stock price of $43.30.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio: The EV/EBITDA ratio is calculated at 12.5, considering an enterprise value of approximately $1.34 billion and EBITDA of about $107 million for the fiscal year 2024.
Stock Price Trends
Over the last 12 months, Plexus Corp.'s stock has experienced the following trends:
- 12-Month High: $117.91
- 12-Month Low: $89.20
- Current Stock Price: $43.30
- Price Change Over 12 Months: Decrease of 62.6%
Dividend Yield and Payout Ratios
Plexus Corp. currently does not pay a dividend, resulting in a dividend yield of 0%.
Analyst Consensus on Stock Valuation
As of October 2024, analyst consensus ratings for Plexus Corp. are as follows:
- Buy: 4 analysts
- Hold: 2 analysts
- Sell: 1 analyst
| Valuation Metric | Value |
|---|---|
| P/E Ratio | 29.25 |
| P/B Ratio | 3.25 |
| EV/EBITDA Ratio | 12.5 |
| 12-Month High | $117.91 |
| 12-Month Low | $89.20 |
| Current Stock Price | $43.30 |
| Dividend Yield | 0% |
| Buy Ratings | 4 |
| Hold Ratings | 2 |
| Sell Ratings | 1 |
Key Risks Facing Plexus Corp. (PLXS)
Key Risks Facing Plexus Corp.
Understanding the risk factors that impact Plexus Corp.'s financial health is crucial for investors. The company faces a variety of internal and external challenges that could affect its performance.
Industry Competition
The competitive landscape in the manufacturing sector is intense. Top 10 customers comprised 52% of revenue during the fourth quarter of fiscal 2024, up from 48% in fiscal 2023, suggesting a growing reliance on a limited customer base. This concentration can lead to vulnerabilities if any major customer decides to shift their business elsewhere.
Regulatory Changes
Increasing regulatory and compliance requirements present significant risks. The company must navigate complex regulations in various jurisdictions, which could lead to increased operational costs or fines. Changes in tax laws and foreign jurisdiction tax developments also pose financial risks.
Market Conditions
Fluctuations in the global economy can impact demand for Plexus' services. Economic downturns could lead to reduced spending from customers, affecting revenue streams. Additionally, geopolitical tensions, such as those involving China and Taiwan, could disrupt supply chains and production schedules.
Operational Risks
Operational challenges include managing a complex business model characterized by high product mix and demanding quality standards. The company reported $22.5 million in restructuring costs for the fiscal year ending September 28, 2024, indicating ongoing adjustments to its operational strategy.
Financial Risks
Financially, Plexus faces risks related to interest rates and debt management. As of September 28, 2024, the company had long-term debt and finance lease obligations amounting to $89.99 million, with total liabilities reaching $1.83 billion. The rising cost of capital could affect profitability and investment capabilities.
Mitigation Strategies
Plexus has initiated a share repurchase program, allocating $50 million for fiscal 2025, which aims to enhance shareholder value. Additionally, the company is focusing on expanding operational performance and customer service excellence as part of its strategic initiatives.
| Risk Factor | Details | Financial Impact |
|---|---|---|
| Industry Competition | Top 10 customers comprise 52% of revenue | Potential loss of a major customer could significantly impact revenue |
| Regulatory Changes | Increasing compliance costs and tax law changes | Higher operational costs and potential fines |
| Market Conditions | Economic downturns and geopolitical tensions | Reduced customer spending affecting revenue |
| Operational Risks | Restructuring costs of $22.5 million in FY 2024 | Impact on profitability due to operational adjustments |
| Financial Risks | Long-term debt of $89.99 million | Increased cost of capital affecting profitability |
Future Growth Prospects for Plexus Corp. (PLXS)
Future Growth Prospects for Plexus Corp.
Analysis of Key Growth Drivers
The company has identified several key growth drivers that are expected to propel its expansion in the coming years. These include:
- Product Innovations: The company won 26 manufacturing programs representing $230 million in annualized revenue when fully ramped into production.
- Market Expansions: The Aerospace/Defense sector revenue increased to $184 million in Q4 2024, up from $158 million in Q4 2023.
- Acquisitions: Strategic acquisitions are being pursued to enhance capabilities and market reach, although specifics on recent acquisitions are not disclosed in the latest reports.
Future Revenue Growth Projections and Earnings Estimates
For fiscal 2025, the company anticipates revenue guidance of $960 million to $1.00 billion for Q1, with a projected non-GAAP EPS of $1.52 to $1.67. Analysts expect modest revenue growth in the Healthcare/Life Sciences and Industrial sectors due to new program ramps and market share gains.
Strategic Initiatives or Partnerships That May Drive Future Growth
The company has focused on enhancing its operational performance and customer service excellence, which are expected to drive future growth. Additionally, the approval of a $50 million share repurchase program in 2025 reflects confidence in future cash flows and shareholder value creation.
Competitive Advantages That Position the Company for Growth
The company's return on invested capital (ROIC) for fiscal year 2024 was 11.8%, which exceeds its weighted average cost of capital of 8.2%, indicating effective capital utilization and competitive advantage. Furthermore, the company generated record free cash flow of $341 million in fiscal 2024, providing a strong financial foundation for future investments.
| Financial Metrics | Q4 2024 | Q4 2023 | Fiscal Year 2024 | Fiscal Year 2023 |
|---|---|---|---|---|
| Revenue | $1,050.57 million | $1,023.95 million | $3,960.83 million | $4,210.30 million |
| Net Income | $41.22 million | $40.26 million | $111.82 million | $139.09 million |
| Diluted EPS | $1.48 | $1.44 | $4.01 | $4.95 |
| Free Cash Flow | $194 million | N/A | $341 million | N/A |
| ROIC | 11.8% | 13.4% | 11.8% | 13.4% |
Overall, the company's strong financial performance, strategic initiatives, and market expansion efforts provide a solid foundation for future growth, positioning it well to capitalize on emerging opportunities in its key sectors.
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Article updated on 8 Nov 2024
Resources:
- Plexus Corp. (PLXS) Financial Statements – Access the full quarterly financial statements for Q4 2024 to get an in-depth view of Plexus Corp. (PLXS)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Plexus Corp. (PLXS)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.