EMS 5 year forecast: Plexus at $3 billion?

Electronics manufacturing services (EMS) company Plexus recently held its investor day meetings in New York. During the meeting, Plexus management laid out an aggressive set of 5-year financial goals. Plexus management said the Company will exceed $3 billion in sales by fiscal year 2013, growing at a 20% CAGR over the next 5 years. Impressive? Time will tell.

Plexus has won approximately $690 million worth of business in the last 12 months. Management has said its near-term view is to grow the company over 20% in fiscal year 2010, reaching greater than $2 billion in revenues. At this rate, 2010 is suggested to be a new sales peak for Plexus.

Plexus maintained its long-term financial goals of 15% to 18% revenue growth and its "20 - 10 - 5" model which represents 20% ROIC, 10% gross profit margin and 5% operating margin.

Plexus management reiterated current fiscal year Q3 guidance of $355 million to $385 million in revenues (down 4.9% quarter-on-quarter) and an earnings per share of $0.18 to $0.25.

During Plexus' investment day, Company management provided some demand updates across portions of the end-markets Plexus serves.

The best EMS provider?
Some say that Plexus is simply the best EMS provider in the world serving the mid- to low-volume, higher mix segment of the EMS market where opportunities for complex mechatronics, design, assembly and fulfillment reside.

Given Plexus' recent financial performance despite the current economic downturn, the Company's strategy has resulted in industry-best growth, margins, and returns. Plexus management feels its business is essentially currently at the bottom, with revenue pressures in the last 9 months emphasized as a function of customers' markets and not representative of lost market share.

Plexus seems to be positioning itself with a view of the longer term as Company management expects to see notable growth from the industrial electronics, commercial and defense / aerospace and security customers and end-market segments in the coming years.

Plexus management explained its services in the mechatronics field as a natural evolution of its services (and not a target offering), with assembly complexity beyond systems integration. It appears that part of Plexus' long-term financial objectives rests on timing the return to growth of low-volume / high-mix electronics outsourcing.

The Company's recent win in the mechatronics field with the addition of Coca-Cola as a new custome could bring $11 million to Plexus in fiscal year 2009 and could , says the Company, be a top 5 customer in fiscal year 2010, suggesting about $80 million per year sales says one investment bank which also predicts the revenue from Coca-Cola alone could offer Plexus 4.4% revenue growth in fiscal year 2010.

VentureOutsource.com, June 2009

    

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