01—Abstract
Summary
Summary of the 10-K filed May 20, 2014. Cited figures are marked; the original filing is the authoritative source.
Flextronics International Ltd. (FLEX) reported solid performance for the fiscal year ended March 31, 2014, with net sales reaching $26.1 billiona, a 10.8% increase year-over-year.
This growth was primarily driven by the acquisition of certain manufacturing operations from Google's Motorola Mobility LLC and expansion in the High Reliability Solutions (HRS) and High Velocity Solutions (HVS) business groups. The company demonstrated improved profitability, with income from continuing operations increasing to $365.6 millionb, up from $302.5 million in the prior year, bolstered by lower restructuring charges. Flextronics continues to focus on its strategy of providing end-to-end supply chain solutions, emphasizing innovation, customer focus, and global operational capabilities.
The company's diversified business across various end markets and geographies positions it to navigate economic fluctuations. Despite a competitive landscape, Flextronics leveraged its scale, end-to-end service offerings, and extensive design and engineering capabilities to maintain strong customer relationships. The company also actively managed its capital structure, including share repurchases, and maintained a healthy liquidity position with $1.6 billionc in cash and cash equivalents at year-end.
02—Key points
Key Highlights
- Net sales increased by 10.8% to $26.1 billion for FY2014, driven by acquisitions and growth in key business segments.
- Income from continuing operations rose to $365.6 million, an improvement from $302.5 million in FY2013, supported by reduced restructuring charges.
- The acquisition of Google's Motorola Mobility operations significantly contributed to the revenue growth, particularly in the High Velocity Solutions (HVS) segment.
- Gross margin improved to 5.5% in FY2014 from 4.9% in FY2013, benefiting from lower restructuring charges.
- The company reported strong operating cash flow of $1.2 billion and free cash flow of $701.5 million for FY2014.
- Flextronics maintains a diversified customer base, with its ten largest customers accounting for 52% of net sales in FY2014, and a significant portion of cash and cash equivalents held by foreign subsidiaries.
- The company continued its share repurchase program, buying back approximately 59.5 million shares during FY2014.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2014, Flex Ltd. kept $0.01.
- Revenue$26.11B100.0%
- Cost of revenue−$24.67B94.5%
- Gross profit$1.44B5.5%
- Operating costs−$1.07B4.1%
- Operating income$365.6M1.4%
- Interest, other & tax−$380,0000.0%
- Net income$365.2M1.4%
Where FY2014 revenue went
$26.11B- Cost of revenue: $24.61B, 94% of revenue
- Net income: $365.2M, 1.4% of revenue
- R&D: $30.0M, 0.1% of revenue
- SG&A: $874.8M, 3.4% of revenue
- Other operating costs: $228.5M, 0.9% of revenue
Kept 1.4% as net incomeNet income $365.2M · 1.4%R&D $30.0M · 0.1%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2014filed May 20, 2014Financial Statements
FY2014 against FY2013
| Line item | FY2014FY2013 | Change |
|---|---|---|
| Revenue | $26.11B$23.57B | +10.8% |
| Cost of Revenue | $24.61B$22.19B | +10.9% |
| Gross Profit | $1.44B$1.17B | +23.5% |
| R&D Expenses | $30.00M— | — |
| SG&A Expenses | $874.80M$805.24M | +8.6% |
| Operating Income | $365.59M$302.50M | +20.9% |
| Interest Expense | $79.90M$68.90M | +16.0% |
| Net Income | $365.21M$277.05M | +31.8% |
| EPS (Basic) | $0.60$0.42 | +42.9% |
| EPS (Diluted) | $0.59$0.41 | +43.9% |
| Shares Outstanding (Basic) | 610.50M662.87M | −7.9% |
| Shares Outstanding (Diluted) | 623.48M675.03M | −7.6% |
05—Questions
Frequently Asked Questions
What was Flextronics' primary growth driver in FY2014?
The primary growth driver for Flextronics in fiscal year 2014 was the acquisition of certain manufacturing operations from Google's Motorola Mobility LLC, which significantly boosted revenue, particularly within the High Velocity Solutions (HVS) segment. Additionally, the company saw growth in its High Reliability Solutions (HRS) business due to expanded relationships with existing and new customers.
How did Flextronics manage its profitability in FY2014?
Flextronics improved its profitability in FY2014, with income from continuing operations increasing to $365.6 million. This improvement was largely attributed to a reduction in restructuring charges compared to the prior year, along with better gross margins achieved through operational efficiencies and strategic business group performance.
What is Flextronics' strategy for competitive advantage?
Flextronics' strategy focuses on being a world-class end-to-end supply chain solutions provider. Key elements include enabling and scaling innovation for customers, maintaining leadership in core manufacturing capabilities, building extended offerings in high-growth sectors, attracting and retaining top talent, maintaining a strong customer-centric approach, and leveraging its global operational capabilities and extensive design and engineering services.
What are the company's major risks and challenges as highlighted in the filing?
Key risks identified include dependence on industries with short product life cycles and potential customer product failure, customer order volatility and cancellations, intense competition, concentration of sales with a few major customers, potential component shortages, foreign currency exchange rate fluctuations, and risks associated with international operations. The company also notes risks related to intellectual property protection, security breaches, and compliance with environmental and conflict minerals regulations.
06—Continue