10-KPeriod: FY2020

FLEX LTD. Annual Report, Year Ended Mar 31, 2020

Filed May 28, 2020For Securities:FLEX

Summary

Flex Ltd. reported $24.2 billion 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% 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.

Financial Highlights

52 data points
Beta

Revenue

$24.21B

5.5% Gross Margin

Net Income

$88.00M

0.4% Net Margin

EPS (Diluted)

$0.17

Total Assets

$13.69B

Cash & Equivalents

$1.92B

Free Cash Flow

-$2.00B

Financial Statements
Beta
Revenue$24.21B
Cost of Revenue$22.68B
Gross Profit$1.34B
SG&A Expenses$834.00M
Operating Income$415.00M
Interest Expense$146.00M
Net Income$88.00M
EPS (Basic)$0.17
EPS (Diluted)$0.17
Shares Outstanding (Basic)509.00M
Shares Outstanding (Diluted)512.00M

Key Highlights

  • 1Net 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.
  • 2Net income for fiscal year 2020 was $88 million, a slight decrease from $93 million in fiscal year 2019.
  • 3The 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.
  • 4The Industrial and Emerging Industries (IEI) segment showed strong growth, increasing net sales by 18%, driven by the solar energy and home & lifestyle businesses.
  • 5The High Reliability Solutions (HRS) segment saw a modest decline of 2%, impacted by COVID-19 related shutdowns in the automotive sector.
  • 6Flex maintained a strong liquidity position, with $1.9 billion in cash and cash equivalents as of March 31, 2020.
  • 7The 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.

Frequently Asked Questions

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.

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.

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.

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.