01—Abstract
Summary
Summary of the 10-K filed May 28, 2020. Cited figures are marked; the original filing is the authoritative source.
Flex Ltd. reported $24.2 billiona in net sales for the fiscal year ended March 31, 2020, with a net income of $88 million.
The company operates across four key segments: High Reliability Solutions (HRS), Industrial and Emerging Industries (IEI), Communications & Enterprise Compute (CEC), and Consumer Technologies Group (CTG). The company's performance in fiscal year 2020 was impacted by several factors, including a 8%b year-over-year decrease in net sales, largely driven by a significant decline in the Consumer Technologies Group (CTG) and Communications & Enterprise Compute (CEC) segments. This was attributed to strategic portfolio optimization, reduced demand in certain sectors, and the early effects of the COVID-19 pandemic.
The High Reliability Solutions (HRS) segment saw a slight decline, while the Industrial and Emerging Industries (IEI) segment experienced growth. Flex is actively managing its business transformation, focusing on higher-margin, less volatile segments.
The company also navigated the initial impacts of the COVID-19 pandemic by implementing health and safety measures, maintaining operations, and cutting costs. Despite the challenges, Flex maintained a strong liquidity position and continued to invest in key areas.
02—Key points
Key Highlights
- Net sales for fiscal year 2020 were $24.2 billion, a decrease of 8% from the prior year, primarily due to declines in CTG and CEC segments.
- Net income for fiscal year 2020 was $88 million, a slight decrease from $93 million in fiscal year 2019.
- The company experienced significant declines in its Communications & Enterprise Compute (CEC) segment (-16%) and Consumer Technologies Group (CTG) segment (-24%), attributed to strategic portfolio adjustments and market conditions.
- The Industrial and Emerging Industries (IEI) segment showed strong growth, increasing net sales by 18%, driven by the solar energy and home & lifestyle businesses.
- The High Reliability Solutions (HRS) segment saw a modest decline of 2%, impacted by COVID-19 related shutdowns in the automotive sector.
- Flex maintained a strong liquidity position, with $1.9 billion in cash and cash equivalents as of March 31, 2020.
- The company highlighted the impact of the COVID-19 pandemic as a significant factor affecting its operations, supply chain, and customer demand, leading to increased costs and disruptions.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2020, Flex Ltd. kept $0.00.
- Revenue$24.21B100.0%
- Cost of revenue−$22.87B94.5%
- Gross profit$1.34B5.5%
- Operating costs−$924.0M3.8%
- Operating income$415.0M1.7%
- Interest, other & tax−$327.0M1.4%
- Net income$88.0M0.4%
Where FY2020 revenue went
$24.21B- Cost of revenue: $22.68B, 94% of revenue
- Net income: $88.0M, 0.4% of revenue
- SG&A: $834.0M, 3.4% of revenue
- Other operating costs: $280.0M, 1.2% of revenue
- Interest, other & tax: $327.0M, 1.4% of revenue
Kept 0.4% as net incomeNet income $88.0M · 0.4%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2020filed May 28, 2020Financial Statements
FY2020 against FY2019
| Line item | FY2020FY2019 | Change |
|---|---|---|
| Revenue | $24.21B$26.21B | −7.6% |
| Cost of Revenue | $22.68B$24.59B | −7.8% |
| Gross Profit | $1.34B$1.52B | −11.8% |
| SG&A Expenses | $834.00M$953.00M | −12.5% |
| Operating Income | $415.00M— | — |
| Interest Expense | $146.00M$146.00M | 0.0% |
| Net Income | $88.00M$93.00M | −5.4% |
| EPS (Basic) | $0.17$0.18 | −5.6% |
| EPS (Diluted) | $0.17$0.18 | −5.6% |
| Shares Outstanding (Basic) | 509.00M527.00M | −3.4% |
| Shares Outstanding (Diluted) | 512.00M530.00M | −3.4% |
05—Questions
Frequently Asked Questions
What were the main drivers of Flex's net sales performance in fiscal year 2020?
Net sales decreased by 8% to $24.2 billion in fiscal year 2020. This decline was primarily driven by reduced demand and strategic portfolio adjustments in the Consumer Technologies Group (CTG) and Communications & Enterprise Compute (CEC) segments. The Industrial and Emerging Industries (IEI) segment was a strong performer, with growth driven by solar energy and home & lifestyle businesses, while the High Reliability Solutions (HRS) segment experienced a slight decrease due to automotive sector impacts from COVID-19.
How did the COVID-19 pandemic affect Flex's operations during fiscal year 2020?
The COVID-19 pandemic materially impacted Flex's business. The company experienced disruptions to its workforce and operations, temporary facility closures or reduced capacity, supply chain constraints leading to component shortages, and increased operational expenses for health and safety measures. These impacts were felt across all business segments, leading to production disruptions and affecting customer demand.
What is Flex's strategy for future growth and profitability?
Flex is focused on transforming its business by prioritizing higher-margin, less volatile segments, such as IEI and HRS. The company aims to enable and scale innovation for its customers, maintain leadership in its capabilities, and build extended offerings in high-growth industries. This includes investing in design and engineering services and leveraging its global operational capabilities and cost-efficient manufacturing strategies.
What is Flex's financial health and liquidity situation as of March 31, 2020?
As of March 31, 2020, Flex reported $1.9 billion in cash and cash equivalents and had access to a $1.75 billion revolving credit facility with no outstanding borrowings. The company also managed its debt effectively, issuing new notes and repaying existing debt. Flex stated that its existing cash, anticipated cash flows from operations, and available credit facilities were sufficient to fund its operations for at least the next twelve months.
06—Continue