SAN JOSE, Calif., July 21, 2016 /PRNewswire/ -- Flex (NASDAQ:
FLEX), a leading Sketch-to-Scale™ solutions company that designs
and builds intelligent products for a connected world, today
announced results for its first quarter ended July 01, 2016:
(US$ in millions,
except EPS)
|
|
Three Month
Periods Ended
|
|
|
|
July 01,
2016
|
|
June 26,
2015
|
|
Net sales
|
$
|
5,877
|
$
|
5,566
|
|
GAAP income before
income taxes
|
$
|
117
|
$
|
119
|
|
Adjusted operating
income
|
$
|
190
|
$
|
159
|
|
GAAP net
income
|
$
|
106
|
$
|
111
|
|
Adjusted net
income
|
$
|
149
|
$
|
134
|
|
GAAP EPS
|
$
|
0.19
|
$
|
0.19
|
|
Adjusted
EPS
|
$
|
0.27
|
$
|
0.23
|
|
|
|
|
|
|
|
An explanation and reconciliation of non-GAAP financial measures
to GAAP financial measures is presented in Schedule II attached to
this press release.
First Quarter Fiscal 2017 Results of Operations
Net sales for the first quarter ended July 01, 2016 were approximately $5.9 billion, which was at the high end of the
guidance range of $5.5 to $5.9
billion.
GAAP income before income taxes was $117
million for the quarter and adjusted operating income was
$190 million, at the mid-point of the
guidance range of $175 million to $205
million.
GAAP gross margin increased approximately 60 basis points and
adjusted gross margin increased over 50 basis points on a
year-over-year basis.
Net income on a GAAP basis was $106
million and adjusted net income for the quarter was
$149 million. GAAP EPS was
$0.19 for the quarter which is flat
compared to the prior year. Non-GAAP EPS was $0.27 for the quarter, increasing $0.04 from same quarter last year.
"We continue to successfully execute our Sketch-to-Scale
strategy," said Mike McNamara,
chief executive officer of Flex. "Our first quarter results reflect
our continued portfolio evolution with a 20% growth in adjusted
operating profit, an increase of 17% in adjusted earnings, strong
cash flow from operations and over seven million shares
repurchased."
Guidance
For the second quarter ending September 30,
2016, revenue is expected to be in the range of $5.8 to $6.2 billion, GAAP EPS is expected to be
in the range of $0.18 to $0.22 and
includes estimated intangible amortization and stock-based
compensation expense. Adjusted EPS is expected to be in the
range of $0.26 to $0.30 per diluted
share.
Conference Calls and Web Casts
A conference call hosted by the Flex management team will be held
today at 2:00 PM (PT) / 5:00 PM (ET) to discuss the Company's financial
results for the first quarter ended July 01,
2016. The conference call will be broadcast via the Internet
and may be accessed by logging on to the Company's website at
www.flextronics.com. Additional information in the form of a slide
presentation may also be found on the Company's site. A
replay of the broadcast will remain available on the Company's
website afterwards.
About Flex
Flextronics International Ltd. (Reg. No. 199002645H) is a leading
Sketch-to-Scale™ solutions company that designs and builds
intelligent products for a connected world. With approximately
200,000 professionals across 30 countries and a promise to help the
world Live Smarter™, the Company provides innovative design,
engineering, manufacturing, real-time supply chain insight and
logistics services to companies of all sizes in various industries
and end-markets. For more information, visit www.flextronics.com or
follow us on Twitter @Flextronics.
This press release contains forward-looking statements within
the meaning of U.S. securities law including statements related to
future expected revenues and earnings per share. These
forward-looking statements involve risks and uncertainties that
could cause the actual results to differ materially from those
anticipated by these forward-looking statements. Readers are
cautioned not to place undue reliance on these forward-looking
statements. These risks include: that future revenues and earnings
may not be achieved as expected; the challenges of effectively
managing our operations, including our ability to control costs and
manage changes in our operations; compliance with legal and
regulatory requirements; that we may encounter difficulties with
acquisitions and divestitures; that the expected revenue and
margins from recently launched programs may not be realized; that
recently proposed changes in tax laws in certain jurisdictions
where we operate may materially impact our tax expense, and the
effects that the current macroeconomic environment could have on
our business and demand for our products as well as the effects
that current credit and market conditions could have on the
liquidity and financial condition of our customers and suppliers,
including any impact on their ability to meet their contractual
obligations. Additional information concerning these and other
risks is described under "Risk Factors" and "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" in our reports on Forms 10-K and 10-Q that we file with
the U.S. Securities and Exchange Commission. The forward-looking
statements in this press release are based on current expectations
and Flex assumes no obligation to update these forward-looking
statements. Our share repurchase program does not obligate the
Company to repurchase a specific number of shares and may be
suspended or terminated at any time without prior notice.
SCHEDULE
I
|
|
FLEX
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
(In thousands,
except per share amounts)
|
|
|
|
|
|
|
|
|
|
Three Month
Periods Ended
|
|
|
|
July 01,
2016
|
|
June 26,
2015
|
GAAP:
|
|
|
|
|
|
Net sales
|
$
|
5,876,813
|
$
|
5,566,248
|
|
Cost of
sales
|
|
5,470,818
|
|
5,213,907
|
|
Gross
profit
|
|
405,995
|
|
352,341
|
|
Selling, general and
administrative expenses
|
|
239,546
|
|
209,385
|
|
Intangible
amortization
|
|
21,598
|
|
7,671
|
|
Interest and other,
net
|
|
24,399
|
|
16,505
|
|
Other charges,
net
|
|
3,529
|
|
164
|
|
Income before income
taxes
|
|
116,923
|
|
118,616
|
|
Provision for income
taxes
|
|
11,194
|
|
7,766
|
|
Net income
|
$
|
105,729
|
$
|
110,850
|
|
|
|
|
|
|
EPS:
|
|
|
|
|
|
|
GAAP
|
$
|
0.19
|
$
|
0.19
|
|
Non-GAAP
|
$
|
0.27
|
$
|
0.23
|
|
|
|
|
|
|
|
Diluted shares used
in computing per share amounts
|
|
551,029
|
|
577,997
|
|
|
|
|
|
|
|
See Schedule II for
the reconciliation of GAAP to non-GAAP financial measures. See the
accompanying notes on Schedule V attached to this press
release.
|
SCHEDULE
II
|
|
FLEX
|
RECONCILIATION OF
GAAP TO NON-GAAP FINANCIAL MEASURES (1)
|
(In thousands,
except per share amounts)
|
|
|
|
|
|
|
|
Three Month
Periods Ended
|
|
|
July 01,
2016
|
|
June 26,
2015
|
GAAP gross
profit
|
$
|
405,995
|
$
|
352,341
|
Stock-based compensation
expense
|
|
2,433
|
|
2,018
|
Non-GAAP gross
profit
|
$
|
408,428
|
$
|
354,359
|
|
|
|
|
|
GAAP SG&A
Expenses
|
$
|
239,546
|
$
|
209,385
|
Stock-based compensation
expense
|
|
(21,364)
|
|
(14,108)
|
Non-GAAP SG&A
Expenses
|
$
|
218,182
|
$
|
195,277
|
|
|
|
|
|
GAAP income before
income taxes
|
$
|
116,923
|
$
|
118,616
|
Stock-based compensation
expense
|
|
23,797
|
|
16,126
|
Intangible
amortization
|
|
21,598
|
|
7,671
|
Interest and other,
net
|
|
24,399
|
|
16,505
|
Other charges,
net
|
|
3,529
|
|
164
|
Non-GAAP operating
income
|
$
|
190,246
|
$
|
159,082
|
|
|
|
|
|
GAAP provision for
income taxes
|
$
|
11,194
|
$
|
7,766
|
Intangible amortization
benefit
|
|
1,850
|
|
258
|
Tax benefit on intangible
assets
|
|
638
|
|
-
|
Non-GAAP provision
for income taxes
|
$
|
13,682
|
$
|
8,024
|
|
|
|
|
|
GAAP net
income
|
$
|
105,729
|
$
|
110,850
|
Stock-based compensation
expense
|
|
23,797
|
|
16,126
|
Intangible
amortization
|
|
21,598
|
|
7,671
|
Adjustments for
taxes
|
|
(2,488)
|
|
(258)
|
Non-GAAP net
income
|
$
|
148,636
|
$
|
134,389
|
EPS:
|
|
|
|
|
GAAP
|
$
|
0.19
|
$
|
0.19
|
Non-GAAP
|
$
|
0.27
|
$
|
0.23
|
SCHEDULE
III
|
|
FLEX
|
|
UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
As of July 01,
2016
|
|
As of March 31,
2016
|
ASSETS
|
|
|
|
|
|
Current
Assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
1,679,335
|
|
$
|
1,607,570
|
|
Accounts receivable,
net of allowance for doubtful accounts
|
|
2,057,943
|
|
|
2,044,757
|
|
Inventories
|
|
3,594,837
|
|
|
3,491,656
|
|
Other current
assets
|
|
|
1,088,844
|
|
|
1,171,143
|
Total current
assets
|
|
|
8,420,959
|
|
|
8,315,126
|
|
|
|
|
|
|
Property and
equipment, net
|
|
2,296,445
|
|
|
2,257,633
|
Goodwill and other
intangible assets, net
|
|
1,324,614
|
|
|
1,345,820
|
Other
assets
|
|
|
466,506
|
|
|
466,402
|
Total
assets
|
|
$
|
12,508,524
|
|
$
|
12,384,981
|
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
|
|
Bank borrowings and
current portion of long-term debt
|
$
|
66,020
|
|
$
|
65,166
|
|
Accounts
payable
|
|
4,317,571
|
|
|
4,248,292
|
|
Accrued
payroll
|
|
|
377,527
|
|
|
353,547
|
|
Other current
liabilities
|
|
1,866,585
|
|
|
1,905,200
|
Total current
liabilities
|
|
|
6,627,703
|
|
|
6,572,205
|
|
|
|
|
|
|
|
Long-term debt, net
of current portion:
|
|
2,692,596
|
|
|
2,709,389
|
Other
liabilities
|
|
521,631
|
|
|
497,857
|
|
|
|
|
|
|
|
|
Total shareholders'
equity
|
|
|
2,666,594
|
|
|
2,605,530
|
|
|
|
|
|
|
|
|
Total liabilities and
shareholders' equity
|
|
$
|
12,508,524
|
|
$
|
12,384,981
|
SCHEDULE
IV
|
|
FLEX
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
Three-Month
Periods Ended
|
|
|
July 01,
2016
|
|
June 26,
2015
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
|
|
Net income
|
$
|
105,729
|
|
$
|
110,850
|
|
Depreciation,
amortization and other impairment charges
|
|
129,500
|
|
|
110,119
|
|
Changes in working
capital and other
|
|
28,703
|
|
|
141,307
|
|
Net cash provided by operating activities
|
|
263,932
|
|
|
362,276
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
Purchases of property
and equipment
|
|
(159,103)
|
|
|
(138,348)
|
|
Proceeds from the
disposition of property and equipment
|
|
15,722
|
|
|
1,512
|
|
Acquisition of
businesses, net of cash acquired
|
|
(9,492)
|
|
|
(18,580)
|
|
Proceeds from
divestiture of business, net of cash held in divested
business
|
|
14,828
|
|
|
1,000
|
|
Other investing
activities, net
|
|
26,261
|
|
|
(7,580)
|
|
Net cash used in investing activities
|
|
(111,784)
|
|
|
(161,996)
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
Proceeds from bank
borrowings and long-term debt
|
|
75,018
|
|
|
595,548
|
|
Repayments of bank
borrowings and long-term debt
|
|
(92,222)
|
|
|
(8,457)
|
|
Payments for
repurchases of ordinary shares
|
|
(94,715)
|
|
|
(99,995)
|
|
Net proceeds from
issuance of ordinary shares
|
|
3,966
|
|
|
44,602
|
|
Other financing
activities, net
|
|
12,901
|
|
|
(25,252)
|
|
Net cash (used in) provided by financing activities
|
|
(95,052)
|
|
|
506,446
|
Effect of exchange
rates on cash and cash equivalents
|
|
14,669
|
|
|
(3,723)
|
|
Net increase in cash
and cash equivalents
|
|
71,765
|
|
|
703,003
|
|
Cash and cash
equivalents, beginning of period
|
|
1,607,570
|
|
|
1,628,408
|
|
Cash and cash
equivalents, end of period
|
$
|
1,679,335
|
|
$
|
2,331,411
|
SCHEDULE
V
|
|
FLEX AND
SUBSIDIARIES
|
NOTES TO SCHEDULES
I, II, III, & IV
|
|
|
(1)
|
To supplement Flex's
unaudited selected financial data presented on a basis consistent
with Generally Accepted Accounting Principles ("GAAP"), the Company
discloses certain non-GAAP financial measures that exclude certain
charges, including non-GAAP gross profit, non-GAAP selling, general
and administrative expenses, non-GAAP operating income, non-GAAP
net income and non-GAAP net income per diluted share. These
supplemental measures exclude stock-based compensation expense,
restructuring charges, intangible amortization, other discrete
events as applicable and the related tax effects. These non-GAAP
measures are not in accordance with or an alternative for GAAP, and
may be different from non-GAAP measures used by other
companies. We believe that these non-GAAP measures have
limitations in that they do not reflect all of the amounts
associated with Flex's results of operations as determined in
accordance with GAAP and that these measures should only be used to
evaluate Flex's results of operations in conjunction with the
corresponding GAAP measures. The presentation of this
additional information is not meant to be considered in isolation
or as a substitute for the most directly comparable GAAP
measures. We compensate for the limitations of non-GAAP
financial measures by relying upon GAAP results to gain a complete
picture of the Company's performance.
|
|
|
|
|
In calculating
non-GAAP financial measures, we exclude certain items to facilitate
a review of the comparability of the Company's operating
performance on a period-to-period basis because such items are not,
in our view, related to the Company's ongoing operational
performance. We use non-GAAP measures to evaluate the
operating performance of our business, for comparison with
forecasts and strategic plans, for calculating return on
investment, and for benchmarking performance externally against
competitors. In addition, management's incentive compensation
is determined using certain non-GAAP measures. Also, when
evaluating potential acquisitions, we exclude certain of the items
described below from consideration of the target's performance and
valuation. Since we find these measures to be useful, we
believe that investors benefit from seeing results "through the
eyes" of management in addition to seeing GAAP results. We
believe that these non-GAAP measures, when read in conjunction with
the Company's GAAP financials, provide useful information to
investors by offering:
|
|
|
|
|
•
|
the ability to make
more meaningful period-to-period comparisons of the Company's
on-going operating results;
|
|
•
|
the ability to better
identify trends in the Company's underlying business and perform
related trend analyses;
|
|
•
|
a better
understanding of how management plans and measures the Company's
underlying business; and
|
|
•
|
an easier way to
compare the Company's operating results against analyst financial
models and operating results of competitors that supplement their
GAAP results with non-GAAP financial measures.
|
|
|
|
|
The following are
explanations of each of the adjustments that we incorporate into
non-GAAP measures, as well as the reasons for excluding each of
these individual items in the reconciliations of these non-GAAP
financial measures:
|
|
|
|
|
|
Stock-based
compensation expense consists of non-cash charges for the
estimated fair value of stock options and unvested restricted share
unit awards granted to employees and assumed in business
acquisitions. The Company believes that the exclusion of
these charges provides for more accurate comparisons of its
operating results to peer companies due to the varying available
valuation methodologies, subjective assumptions and the variety of
award types. In addition, the Company believes it is useful
to investors to understand the specific impact stock-based
compensation expense has on its operating results.
|
|
|
|
|
|
Intangible
amortization consists primarily of non-cash charges that can be
impacted by, among other things, the timing and magnitude of
acquisitions. The Company considers its operating results
without these charges when evaluating its ongoing performance and
forecasting its earnings trends, and therefore excludes such
charges when presenting non-GAAP financial measures. The
Company believes that the assessment of its operations excluding
these costs is relevant to its assessment of internal operations
and comparisons to the performance of its competitors.
|
|
|
|
|
|
Adjustment for
taxes relates to the tax effects of the various adjustments
that we incorporate into non-GAAP measures in order to provide a
more meaningful measure on non-GAAP net income and certain
adjustments related to non-recurring settlements of tax
contingencies when applicable.
|
|
|
|
|
For the three-month
period ended July 1, 2016, Free Cash Flow was $121 million
consisting of GAAP net cash flows from operating activities of $264
million less purchases of property and equipment net of proceeds
from dispositions of $143 million. We believe Free Cash Flow is an
important liquidity metric because it measures, during a given
period, the amount of cash generated that is available to repay
debt obligations, make investments, fund acquisitions and for
certain other activities. Since Free Cash Flow includes investments
in operating assets, we believe this non-GAAP liquidity measure is
useful in addition to the most directly comparable GAAP measure –
"net cash flows provided by operating activities."
|
Renee
Brotherton
|
Kevin
Kessel
|
Corporate
Communications
|
Investor
Relations
|
(408)
576-7189
|
(408)
576-7985
|
renee.brotherton@flextronics.com
|
kevin.kessel@flextronics.com
|
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SOURCE Flex