Plexus Earnings Call Insights: Operating Margins and Cost Cuts

Plexus Corp. (NASDAQ:PLXS) recently reported its first quarter earnings and discussed the following topics in its earnings conference call.

Operating Margins

Shawn Harrison – Longbow Research: Just to that last point there, Ginger, the 4.5% operating margin in the fiscal third quarter, could you maybe I guess discuss a little more the factors behind that. I think that’s a little better than what you talked about at the conference in December. Is that a pull-forward or restructuring plus the Juniper business getting out earlier? Are there any additional savings that’s pushing that a little bit higher? Then also with Juniper, what is the anticipated fiscal ’13 revenue contribution from them?

Ginger Jones – SVP and CFO: I’ll take the first part of that question and then let Todd talk about the Juniper revenue. We have been very focused on improving margin and I talked about some of these actions we’ve taken from headcount reductions to operational efficiencies and we’re seeing the benefits of that in the second half of the year. I’ll say we have also moderated our thoughts about some of the others costs related to the Juniper disengagement, so we believe the equipment write-off will be more modest and we may have less severance than we initially thought. So all of that, our internal work on improving productivity and better visibility to the Juniper disengagement leads us to the view of improved margins. Todd, maybe you want to comment on Juniper.

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Todd Kelsey – EVP, Global Customer Services: Sure. So Shawn, with regard to the fiscal ’13 Ginger had communicated previously in the order of $230 million. We view it as about $230 million to $26 million right now within fiscal ’13. And one of the things just to clarify as well too, we didn’t disclose Juniper as a 10% customer this quarter. What we had decided to do was not disclose customers on a quarterly basis as we’re not required to do so, but they were in fact at 12% customer, just so everyone is aware of that situation.