AUSTIN,
Texas, July 24, 2024 /PRNewswire/ -- Flex
(NASDAQ: FLEX) today announced results for its first quarter ended
June 28, 2024.
First Quarter Fiscal Year 2025 Highlights:
- Net Sales: $6.3 billion
- GAAP Operating Income: $233
million
- Adjusted Operating Income: $306
million
- GAAP Net Income attributable to Flex Ltd: $139 million
- Adjusted Net Income attributable to Flex Ltd: $211 million
- GAAP Earnings Per Share: $0.34
- Adjusted Earnings Per Share: $0.51
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.
"We delivered another solid quarter, including year-over-year
margin expansion and EPS growth," said Revathi Advaithi, CEO of
Flex. "Our results show we continue to navigate through the dynamic
cycle and drive value to our stakeholders."
Second Quarter Fiscal 2025 Guidance
- Revenue: $6.2 billion to
$6.8 billion
- GAAP Operating Income: $257
million to $297 million
- Adjusted Operating Income: $310
million to $350 million
- GAAP EPS: $0.40 to $0.48.
- Adjusted EPS: $0.52 to
$0.60 which excludes $0.08 for stock-based compensation expense,
$0.03 for net intangible
amortization, and $0.01 for net
restructuring charges
Fiscal Year 2025 Guidance
- Revenue: $25.4 billion to
$26.4 billion
- GAAP EPS: $1.60 to $1.80
- Adjusted EPS: $2.30 to
$2.50 which excludes $0.32 for stock-based compensation expense,
$0.25 for net restructuring charges,
and $0.13 for net intangible
amortization
Flex, today also announced that Paul
Lundstrom will step down as Chief Financial Officer
effective July 31, 2024 to pursue an
opportunity outside of Flex.
At that time, Jaime Martinez will
assume the role of Interim Chief Financial Officer. Mr. Martinez
has over 20 years of experience with Flex, and has held various
finance leadership roles, including financial planning and
analysis, commercial, and operations.
"Paul has been a trusted partner and exceptional leader at Flex
over the past four years," said Revathi Advaithi, CEO, Flex. "He
has played a key role in delivering on our strategy, driving
discipline across the organization, and creating value for our
shareholders. On behalf of the Board of Directors and our entire
team, I thank him for his many contributions and wish him well in
his future endeavors."
Flex has initiated an executive search process to identify a
permanent CFO. Mr. Lundstrom has agreed to assist in the orderly
transition of his CFO responsibilities to Mr. Martinez along with
the seasoned Finance leadership team.
"I would like to thank Revathi Advaithi, the Board of Directors,
and the Flex employees for the opportunity to be a part of the team
over the last four years," said Paul
Lundstrom, outgoing CFO, Flex. "The long-term opportunities
for Flex remain significant, and I am leaving Flex in the capable
hands of the Finance leadership team. I wish the company much
success in the future."
Webcast and Conference Call
The Flex management team will host a conference call today at
5:30 AM (PT) / 8:30 AM (ET), to review first quarter fiscal 2025
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
Yvette Lorenz
Director, Corporate PR and Executive Communications
(415) 225-7315
Yvette.Lorenz@flex.com
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of U.S. securities laws, including statements related
to our future financial results and our guidance for future
financial performance (including expected revenues, operating
income, margins and earnings per share). These forward-looking
statements are based on current expectations, forecasts and
assumptions involving risks and uncertainties that could cause the
actual outcomes and 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 we may not achieve our
expected future operating results; the effects that the current and
future macroeconomic environment, including inflation, slower
growth or recession, and currency exchange rate fluctuations, could
have on our business and demand for our products; supply chain
disruptions, manufacturing interruptions or delays, or the failure
to accurately forecast customer demand; the impact of fluctuations
in the pricing or availability of raw materials and components,
labor and energy, and logistical constraints; risks related to the
recently completed spin-off of Nextracker, and the transactions
related thereto, including the qualification of these transactions
for their intended tax treatment; risks associated with
acquisitions and divestitures, including the possibility that we
may not fully realize their projected benefits; geopolitical risks,
including impacts from the termination and renegotiation of
international trade agreements and trade policies, the ongoing
conflicts between Russia and
Ukraine and between Israel and Hamas, disruptions caused by the
attacks on shipping vessels in the Red Sea, or an escalation of
sanctions, tariffs or other trade tensions between the U.S. and
China or other countries, any of
which could lead to disruption, instability, and volatility in
global markets and negatively impact our operations and financial
performance; the effects that current and future 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 and our ability to pass
through costs to our customers; the challenges of effectively
managing our operations, including our ability to control costs and
manage changes in our operations; hiring and retaining key
personnel; litigation and regulatory investigations and
proceedings; our compliance with legal and regulatory requirements;
changes in laws, regulations, or policies that may impact our
business, including those related to climate change; 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 issues, excess and obsolete inventory, and
other issues which adversely affect our operating results; our
dependence on a small number of customers; our industry is
extremely competitive; we may be exposed to financially troubled
customers or suppliers; 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 and disrupt our
operations; physical and operational risks from natural disasters,
severe weather events, or climate change; our ability to meet
environmental, social and governance expectations or standards or
achieve sustainability goals; we may be exposed to product
liability and product warranty liability; that recent changes or
future changes in tax laws in certain jurisdictions where we
operate could materially impact our tax expense; and the impact and
effects on our business, results of operations and financial
condition of a public health issue, including a pandemic, or
catastrophic event.
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
most recent Annual Report on Form 10-K and in our subsequent
filings with the U.S. Securities and Exchange Commission. Flex
assumes no obligation to update any forward-looking statements,
which speak only as of the date they are made.
SCHEDULE
I
|
|
FLEX
|
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(In millions, except
per share amounts)
|
|
|
|
|
|
|
|
Three-Month Periods
Ended
|
|
|
June 28,
2024
|
|
June 30,
2023
|
GAAP:
|
|
|
|
|
Net sales
|
$
6,314
|
|
$
6,892
|
|
Cost of
sales
|
5,827
|
|
6,399
|
|
Restructuring
charges
|
16
|
|
17
|
|
Gross
profit
|
471
|
|
476
|
|
Selling, general and
administrative expenses
|
213
|
|
235
|
|
Restructuring
charges
|
9
|
|
6
|
|
Intangible
amortization
|
16
|
|
20
|
|
Operating
income
|
233
|
|
215
|
|
Interest
expense
|
56
|
|
56
|
|
Interest
income
|
16
|
|
16
|
|
Other charges,
net
|
1
|
|
11
|
|
Income from continuing
operations before income taxes
|
192
|
|
164
|
|
Provision for income
taxes
|
53
|
|
17
|
|
Net income from
continuing operations
|
139
|
|
147
|
|
Net income from
discontinued operations, net of tax
|
—
|
|
64
|
|
Net income
|
$
139
|
|
$
211
|
|
Noncontrolling interest
|
—
|
|
25
|
|
Net income
attributable to Flex Ltd.
|
139
|
|
186
|
|
|
|
|
|
GAAP
EPS
|
|
Diluted earnings per
share from continuing operations
|
$
0.34
|
|
$
0.32
|
|
Diluted earnings per
share from discontinued operations
|
$
—
|
|
$
0.09
|
|
Diluted earnings per
share attributable to the shareholders of
Flex Ltd.
|
$
0.34
|
|
$
0.41
|
|
|
|
|
|
|
Diluted shares used in
computing per share amounts
|
411
|
|
455
|
|
|
|
|
|
|
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
|
|
|
June 28,
2024
|
|
June 30,
2023
|
|
|
|
|
|
GAAP operating
income
|
$
233
|
|
$
215
|
|
Intangible
amortization
|
16
|
|
20
|
|
Stock-based
compensation expense
|
32
|
|
32
|
|
Restructuring
charges
|
25
|
|
23
|
|
Legal and
other
|
—
|
|
3
|
Non-GAAP operating
income
|
$
306
|
|
$
293
|
|
|
|
|
|
GAAP provision for
income taxes
|
$
53
|
|
$
17
|
|
Intangible amortization
benefit
|
3
|
|
3
|
|
Other tax related
adjustments
|
(2)
|
|
9
|
Non-GAAP provision
for income taxes
|
$
54
|
|
$
29
|
|
|
|
|
|
GAAP net income from
continuing operations
|
$
139
|
|
$
147
|
|
Intangible
amortization
|
16
|
|
20
|
|
Stock-based
compensation expense
|
32
|
|
32
|
|
Restructuring
charges
|
25
|
|
23
|
|
Legal and
other
|
—
|
|
3
|
|
Interest and other,
net
|
—
|
|
1
|
|
Adjustments for
taxes
|
(1)
|
|
(12)
|
Non-GAAP net income
from continuing operations
|
$
211
|
|
$
214
|
Diluted earnings per
share from continuing operations:
|
|
GAAP
|
$
0.34
|
|
$
0.32
|
|
Non-GAAP
|
$
0.51
|
|
$
0.47
|
|
|
|
|
|
|
See the accompanying
notes on Schedule V attached to this press release.
|
SCHEDULE
III
|
|
FLEX
|
UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(In
millions)
|
|
|
|
|
|
|
|
As of June 28,
2024
|
|
As of March 31,
2024
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
2,243
|
|
$
2,474
|
|
Accounts receivable,
net of allowance for doubtful accounts
|
2,952
|
|
3,033
|
|
Contract
assets
|
457
|
|
249
|
|
Inventories
|
5,839
|
|
6,205
|
|
Other current
assets
|
1,057
|
|
1,031
|
Total current
assets
|
12,548
|
|
12,992
|
|
|
|
|
Property and equipment,
net
|
2,228
|
|
2,269
|
Operating lease
right-of-use assets, net
|
573
|
|
601
|
Goodwill
|
1,139
|
|
1,135
|
Other intangible
assets, net
|
230
|
|
245
|
Other non-current
assets
|
1,019
|
|
1,015
|
Total assets
|
$
17,737
|
|
$
18,257
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
Current
liabilities:
|
|
|
|
|
Bank borrowings and
current portion of long-term debt
|
$
543
|
|
$
—
|
|
Accounts
payable
|
4,726
|
|
4,468
|
|
Accrued payroll and
benefits
|
428
|
|
488
|
|
Deferred revenue and
customer working capital advances
|
2,265
|
|
2,615
|
|
Other current
liabilities
|
1,007
|
|
968
|
Total current
liabilities
|
8,969
|
|
8,539
|
|
|
|
|
|
Long-term debt, net of
current portion
|
2,672
|
|
3,261
|
Operating lease
liabilities, non-current
|
463
|
|
490
|
Other non-current
liabilities
|
637
|
|
642
|
Total
liabilities
|
12,741
|
|
12,932
|
Total shareholders'
equity
|
4,996
|
|
5,325
|
Total liabilities and
shareholders' equity
|
$
17,737
|
|
$
18,257
|
SCHEDULE
IV
|
|
FLEX
|
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(In
millions)
|
|
|
|
|
|
|
|
Three-Month Periods
Ended
|
|
|
June 28,
2024
|
|
June 30,
2023
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
Net income
|
$
139
|
|
$
211
|
|
Depreciation,
amortization and other impairment charges
|
126
|
|
133
|
|
Changes in working
capital and other, net
|
75
|
|
(338)
|
|
Net cash provided by
operating activities
|
340
|
|
6
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
Purchases of property
and equipment
|
(111)
|
|
(167)
|
|
Proceeds from the
disposition of property and equipment
|
3
|
|
11
|
|
Acquisition of
businesses, net of cash acquired
|
2
|
|
—
|
|
Other investing
activities, net
|
24
|
|
1
|
|
Net cash used in
investing activities
|
(82)
|
|
(155)
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
Proceeds from bank
borrowings and long-term debt
|
—
|
|
2
|
|
Repayments of bank
borrowings and long-term debt
|
(41)
|
|
(243)
|
|
Payments for
repurchases of ordinary shares
|
(457)
|
|
(197)
|
|
Other financing
activities, net
|
30
|
|
(48)
|
|
Net cash used in
financing activities
|
(468)
|
|
(486)
|
|
|
|
|
|
Effect of exchange
rates on cash and cash equivalents
|
(21)
|
|
1
|
|
Net decrease in cash
and cash equivalents
|
(231)
|
|
(634)
|
|
Cash and cash
equivalents, beginning of period
|
2,474
|
|
3,294
|
|
Cash and cash
equivalents, end of period
|
$
2,243
|
|
$
2,660
|
SCHEDULE
V
|
|
FLEX AND
SUBSIDIARIES
|
NOTES TO SCHEDULES
I, and II
|
|
|
|
(1)
|
To supplement Flex's
unaudited selected financial data presented consistent with U.S.
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 certain legal and other charges,
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 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
ongoing operating results;
|
|
•
|
the ability to better
identify trends in the Company's underlying business and perform
related trend analysis;
|
|
•
|
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 unvested restricted share unit and stock
option 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 charges 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, 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.
|
|
|
|
During the three-month
periods ended June 28, 2024 and June 30, 2023, the Company
recognized approximately $25 million, and $23 million of
restructuring charges, respectively, 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 acquisition
related costs. During the first quarter of fiscal year 2024, the
Company accrued for certain loss contingencies where losses were
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. No such costs were incurred in
the first quarter of fiscal year 2025.
|
|
|
|
Interest and other,
net consist 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, currency
translation reserve write-offs upon liquidation of certain legal
entities, 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. No such costs were incurred in the first quarter of
fiscal year 2025.
|
|
|
|
Adjustments for
taxes relate 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. During the three-month
periods ended June 28, 2024 and June 30, 2023, the Company
recognized a $1 million and $12 million net tax benefit,
respectively, related to the tax effects of various adjustments
that are incorporated into non-GAAP measures on restructuring and
other.
|
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SOURCE Flex