Electronic manufacturing services provider Plexus Corp. (PLXS) Wednesday reported lower first-quarter earnings as sales declined at its Networking/Communications segment. Nonetheless, both earnings per share and revenues for the quarter topped Street estimates.
Plexus also provided a strong outlook for the second quarter, due in part to signing a revenue-boosting asset purchase deal with Germany-based Kontron AG (KOTRF.PK). Following the news, Plexus shares initially gained over 8 percent in extended session on the Nasdaq, before falling back to Wednesday's closing price of $33.25.
Plexus reported first-quarter net income of $17.9 million or $0.51 per share, compared to $25 million or $0.61 per share last year. Results for the quarter include stock-based compensation expense of $0.07 per share.
On average, 12 analysts polled by Thomson Reuters expected earnings of $0.48 per share for the quarter. Analysts' estimates typically exclude special items.
The Neenah, Wisconsin-based company reported sales of $530 million for the quarter, down from $566 million last year. Street analysts expected revenues of $527.78 million for the quarter.
Revenues from Networking/Communications declined to $230 million from $291 million last year, partly offset by growth in Industrial/Commercial, and Defense/Security/Aerospace revenues.
Plexus' gross margin for the quarter improved to 9.8 percent from 9.7 percent last year, while operating margin slid to 4.5 percent from 4.9 percent.
Plexus has agreed to acquire the inventory and equipment of Kontron AG's subsidiary Kontron Design Manufacturing Services (M) Sdn. Bhd. located in Penang, Malaysia for $35.2 million. As part of the deal, Kontron will commit to about $100 million of incremental revenue annually for two years that Plexus will execute out of its facilities in Penang. In fiscal 2012, this arrangement is expected to add $50 million to $75 million of revenue for Plexus and be modestly accretive to earnings per share. The transaction is to close later today.
For the second quarter, inclusive of estimated revenue from the Kontron deal, Plexus expects earnings of $0.51 to $0.58 per share. The guidance excludes restructuring charges and includes about $0.09 per share of stock-based expense. Revenues for the period is forecast in the range of $550 million to $580 million.
Analysts based on consensus, currently expect earnings of $0.51 per share and revenues of $547.62 million for the second quarter.
For the full year 2012, Plexus said most of the end markets appear to have stabilized, while concerns remain at the Networking/Communications segment.
PLXS closed at $33.25, up $0.59 or 1.81%, on the Nasdaq. In after hours, the stock gained $2.75 or 8.27%.
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