SAN JOSE, Calif., July 29, 2021 /PRNewswire/ -- Flex (NASDAQ: FLEX)
today announced results for its first quarter ended July 2,
2021.
First Quarter Fiscal Year 2022 Highlights:
- Net Sales: $6.3 billion
- GAAP Income Before Income Taxes: $233
million
- Adjusted Operating Income: $290
million
- GAAP Net Income: $206
million
- Adjusted Net Income: $230
million
- GAAP Earnings Per Share: $0.41
- Adjusted Earnings Per Share: $0.46
An explanation and reconciliation of non-GAAP financial measures
to GAAP financial measures is presented in Schedules II and V
attached to this press release.
"Flex's strong first quarter performance exceeded our prior
expectations due to broad-based demand across our portfolio and
solid execution, delivering record Q1 adjusted operating margin and
EPS " said Revathi Advaithi, Flex Chief Executive Officer. "We
remain focused on driving profitable growth through disciplined
execution and our differentiated capabilities."
Second Quarter Fiscal 2022 Guidance
- Revenue: $6.1 billion to
$6.5 billion
- GAAP Income Before Income Taxes: $175
million to $210 million
- Adjusted Operating Income: $250
million to $290 million
- GAAP EPS: $0.29 to $0.35 which includes $0.05 for stock-based compensation expense and
$0.03 for net intangible
amortization
- Adjusted EPS: $0.37 to
$0.43
Fiscal Year 2022 Guidance updated
- Revenue: $25.5 billion to
$26.5 billion
- GAAP EPS: $1.42 to $1.57 which includes $0.19 for stock-based compensation expense and
$0.09 for net intangible
amortization
- Adjusted EPS: $1.70 to
$1.85
Webcast and Conference Call
The Flex management team will host a conference call today at
8:00 AM (PT) / 11:00 AM (ET), to review first quarter fiscal
2022 results. A live webcast of the event and slides will be
available on the Flex Investor Relations website at
http://investors.flex.com. An audio replay and transcript will also
be available after the event on the Flex Investor Relations
website.
About Flex
Flex (Reg. No. 199002645H) is the manufacturing partner of
choice that helps a diverse customer base design and build products
that improve the world. Through the collective strength of a global
workforce across 30 countries and responsible, sustainable
operations, Flex delivers technology innovation, supply chain, and
manufacturing solutions to diverse industries and end markets.
Contacts
Investors & Analysts
David Rubin
Vice President, Investor Relations
(408) 577-4632
David.Rubin@flex.com
Media & Press
Silvia Gianelli
Senior Director, Corporate Communications
(408) 797-7130
Silvia.Gianelli@flex.com
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of U.S. securities laws, 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: the effects of the COVID-19
pandemic on our business, results of operations and financial
condition; that future revenues and earnings may not be achieved as
expected; the effects that the current macroeconomic environment
could have on our business and demand for our products;
uncertainties and risks relating to our ability to successfully
complete a transaction for our Nextracker business, including the
potential initial public offering of our Nextracker business,
including the possibility that we may not be able to consummate the
transaction on the expected timeline or at all, or that we will
achieve the anticipated benefits of the transaction; 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 to us; the challenges of effectively managing our
operations, including our ability to control costs and manage
changes in our operations; litigation and regulatory investigations
and proceedings; compliance with legal and regulatory requirements;
the possibility that benefits of the Company's restructuring
actions may not materialize as expected; that the expected revenue
and margins from recently launched programs may not be realized;
our dependence on industries that continually produce
technologically advanced products with short product life cycles;
the short-term nature of our customers' commitments and rapid
changes in demand may cause supply chain and other issues which
adversely affect our operating results; our dependence on a small
number of customers; the impact of component shortages and
logistical constraints, including their impact on our revenues; our
industry is extremely competitive; we may be exposed to financially
troubled customers or suppliers; geopolitical risk, including the
termination and renegotiation of international trade agreements and
trade policies, including the impact of tariffs and related
regulatory actions; the success of certain of our activities
depends on our ability to protect our intellectual property rights
and we may be exposed to claims of infringement or breach of
license agreements; a breach of our IT or physical security
systems, or violation of data privacy laws, may cause us to incur
significant legal and financial exposure; we may be exposed to
product liability and product warranty liability; and that recently
proposed changes or future changes in tax laws in certain
jurisdictions where we operate could materially impact our tax
expense. In addition, the COVID-19 pandemic increases the
likelihood and potential severity of many of the foregoing
risks.
This press release does not constitute an offer to sell or the
solicitation of an offer to buy any securities. Any securities to
be offered in any offering may not be sold nor may offers to buy be
accepted prior to the time a registration statement becomes
effective.
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
annual report on Form 10-K for the fiscal year ended March 31, 2021. 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 millions,
except per share amounts)
|
|
|
|
|
|
|
|
Three-Month
Periods Ended
|
|
|
July 2,
2021
|
|
June 26,
2020
|
GAAP:
|
|
|
|
|
Net sales
|
$
|
6,342
|
|
|
$
|
5,153
|
|
|
Cost of
sales
|
5,871
|
|
|
4,849
|
|
|
Gross
profit
|
471
|
|
|
304
|
|
|
Selling, general and
administrative expenses
|
201
|
|
|
191
|
|
|
Intangible
amortization
|
15
|
|
|
15
|
|
|
Interest and other,
net
|
22
|
|
|
31
|
|
|
Income before income
taxes
|
233
|
|
|
67
|
|
|
Provision for income
taxes
|
27
|
|
|
15
|
|
|
Net income
|
$
|
206
|
|
|
$
|
52
|
|
|
|
|
|
|
Earnings per
share:
|
|
|
|
|
GAAP
|
$
|
0.41
|
|
|
$
|
0.10
|
|
|
Non-GAAP
|
$
|
0.46
|
|
|
$
|
0.23
|
|
|
|
|
|
|
|
Diluted shares used
in computing per share amounts
|
499
|
|
|
502
|
|
|
|
|
|
|
|
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 millions,
except per share amounts) *
|
|
|
|
|
|
|
|
Three-Month
Periods Ended
|
|
|
July 2,
2021
|
|
June 26,
2020
|
|
|
|
|
|
GAAP income before
income taxes
|
$
|
233
|
|
|
$
|
67
|
|
|
Intangible
amortization
|
15
|
|
|
15
|
|
|
Stock-based
compensation expense
|
20
|
|
|
13
|
|
|
Restructuring
charges
|
—
|
|
|
10
|
|
|
Legal and
other
|
—
|
|
|
27
|
|
|
Interest and other,
net
|
22
|
|
|
31
|
|
Non-GAAP operating
income
|
$
|
290
|
|
|
$
|
163
|
|
|
|
|
|
|
GAAP provision for
income taxes
|
$
|
27
|
|
|
$
|
15
|
|
|
Intangible
amortization benefit
|
2
|
|
|
2
|
|
|
Other tax related
adjustments
|
6
|
|
|
(1)
|
|
|
Tax benefit on
restructuring and other
|
—
|
|
|
2
|
|
Non-GAAP provision
for income taxes
|
$
|
35
|
|
|
$
|
18
|
|
|
|
|
|
|
GAAP net
income
|
$
|
206
|
|
|
$
|
52
|
|
|
Intangible
amortization
|
15
|
|
|
15
|
|
|
Stock-based
compensation expense
|
20
|
|
|
13
|
|
|
Restructuring
charges
|
—
|
|
|
10
|
|
|
Legal and
other
|
—
|
|
|
27
|
|
|
Interest and other,
net
|
(3)
|
|
|
1
|
|
|
Adjustments for
taxes
|
(8)
|
|
|
(3)
|
|
Non-GAAP net
income
|
$
|
230
|
|
|
$
|
116
|
|
Diluted earnings
per share:
|
|
GAAP
|
$
|
0.41
|
|
|
$
|
0.10
|
|
|
Non-GAAP
|
$
|
0.46
|
|
|
$
|
0.23
|
|
|
|
|
|
|
|
See the accompanying
notes on Schedule V attached to this press release.
|
|
*Amounts may not sum
due to rounding
|
|
|
|
|
|
|
|
|
SCHEDULE III
FLEX
|
UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEETS
|
(In
millions)
|
|
|
|
|
|
|
|
As of July 2,
2021
|
|
As of March 31,
2021
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
|
2,693
|
|
|
$
|
2,637
|
|
|
Accounts receivable,
net of allowance for doubtful accounts
|
3,833
|
|
|
4,106
|
|
|
Contract
assets
|
168
|
|
|
135
|
|
|
Inventories
|
4,444
|
|
|
3,895
|
|
|
Other current
assets
|
591
|
|
|
590
|
|
Total current
assets
|
11,729
|
|
|
11,363
|
|
|
|
|
|
Property and
equipment, net
|
2,087
|
|
|
2,097
|
|
Operating lease
right-of-use assets, net
|
630
|
|
|
642
|
|
Goodwill
|
1,094
|
|
|
1,090
|
|
Other intangible
assets, net
|
199
|
|
|
213
|
|
Other
assets
|
453
|
|
|
431
|
|
Total
assets
|
$
|
16,192
|
|
|
$
|
15,836
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
Current
liabilities:
|
|
|
|
|
Bank borrowings and
current portion of long-term debt
|
$
|
274
|
|
|
$
|
268
|
|
|
Accounts
payable
|
5,448
|
|
|
5,247
|
|
|
Accrued
payroll
|
432
|
|
|
473
|
|
|
Other current
liabilities
|
1,984
|
|
|
1,846
|
|
Total current
liabilities
|
8,138
|
|
|
7,834
|
|
|
|
|
|
|
Long-term debt, net
of current portion
|
3,505
|
|
|
3,515
|
|
Operating lease
liabilities, non-current
|
550
|
|
|
562
|
|
Other
liabilities
|
491
|
|
|
489
|
|
|
|
|
|
|
Total shareholders'
equity
|
3,508
|
|
|
3,436
|
|
|
|
|
|
|
Total liabilities and
shareholders' equity
|
$
|
16,192
|
|
|
$
|
15,836
|
|
SCHEDULE IV
FLEX
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(In
millions)
|
|
|
|
|
|
|
|
Three-Month
Periods Ended
|
|
|
July 2,
2021
|
|
June 26,
2020
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
Net income
|
$
|
206
|
|
|
$
|
52
|
|
|
Depreciation,
amortization and other impairment charges
|
118
|
|
|
125
|
|
|
Changes in working
capital and other, net
|
10
|
|
|
(806)
|
|
|
Net cash provided by
(used in) operating activities
|
334
|
|
|
(629)
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
Purchases of property
and equipment
|
(118)
|
|
|
(110)
|
|
|
Proceeds from the
disposition of property and equipment
|
3
|
|
|
8
|
|
|
Other investing
activities, net
|
2
|
|
|
2
|
|
|
Net cash used in
investing activities
|
(113)
|
|
|
(100)
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
Proceeds from bank
borrowings and long-term debt
|
—
|
|
|
1,248
|
|
|
Repayments of bank
borrowings and long-term debt
|
(1)
|
|
|
(511)
|
|
|
Payments for
repurchases of ordinary shares
|
(162)
|
|
|
—
|
|
|
Other financing
activities, net
|
(3)
|
|
|
4
|
|
|
Net cash provided by
(used in) financing activities
|
(166)
|
|
|
741
|
|
|
|
|
|
|
Effect of exchange
rates on cash and cash equivalents
|
1
|
|
|
—
|
|
|
Net increase in cash
and cash equivalents
|
56
|
|
|
12
|
|
|
Cash and cash
equivalents, beginning of period
|
2,637
|
|
|
1,923
|
|
|
Cash and cash
equivalents, end of period
|
$
|
2,693
|
|
|
$
|
1,935
|
|
|
|
|
|
|
SCHEDULE V
FLEX AND SUBSIDIARIES
NOTES TO SCHEDULES I and II
(1) To supplement Flex's unaudited selected financial data
presented consistent with Generally Accepted Accounting Principles
("GAAP"), the Company discloses certain non-GAAP financial measures
that exclude certain charges and gains, including non-GAAP
operating income, non-GAAP net income and non-GAAP net income per
diluted share. These supplemental measures exclude
restructuring charges, customer-related asset impairments
(recoveries), stock-based compensation expense, 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.
Restructuring charges include severance for
rationalization at existing sites and corporate SG&A functions
as well as asset impairment, and other charges related to the
closures and consolidations of certain operating sites and targeted
activities to restructure the business. These costs may vary in
size based on the Company's initiatives and are not directly
related to ongoing or core business results, and do not reflect
expected future operating expenses. These costs are excluded by the
Company's management in assessing current operating performance and
forecasting its earnings trends and are therefore excluded by the
Company from its non-GAAP measures.
In order to support the Company's strategy and build a
sustainable organization, and after considering that the economic
recovery from the pandemic would be slower than anticipated, the
Company identified certain structural changes to restructuring the
business in fiscal year 2021. These restructuring actions
eliminated non-core activities primarily within the Company's
corporate function, aligned the Company's cost structure with its
reorganizing and optimizing of its operations model along its two
reporting segments, and further sharpened its focus to winning
business in end markets where it had competitive advantages and
deep domain expertise. During the three-month period ended
June 26, 2020, the Company recognized
approximately $10 million of
restructuring charges, most of which related to employee
severance.
Legal and other consist primarily of costs not directly
related to core business results and may include matters relating
to commercial disputes, government regulatory and compliance,
intellectual property, antitrust, tax, employment or shareholder
issues, product liability claims and other issues on a global basis
as well as customer related asset recoveries. During the first
quarter of fiscal year 2021, the Company accrued for certain loss
contingencies where losses are considered probable and estimable.
These costs are excluded by the Company's management in assessing
current operating performance and forecasting its earnings trends
and are therefore excluded by the Company from its non-GAAP
measures.
Interest and other, net consists of various other
types of items that are not directly related to ongoing or core
business results, such as the gain or losses related to certain
divestitures, debt extinguishment costs and impairment charges or
gains associated with certain non-core investments. The Company
excludes these items because they are not related to the Company's
ongoing operating performance or do not affect core operations.
Excluding these amounts provides investors with a basis to compare
Company performance against the performance of other companies
without this variability.
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 or other non-recurring tax charges, when
applicable.
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SOURCE Flex