01—Abstract
Summary
Summary of the 10-K filed May 19, 2021. Cited figures are marked; the original filing is the authoritative source.
Flex Ltd.'s 2021 10-K filing highlights a year of resilience and strategic repositioning, with net sales of $24.1 billiona, showing a slight decrease from the prior year primarily due to strategic exits from high-volatility businesses and COVID-19 impacts on consumer devices.
The company successfully navigated supply chain challenges and managed operational costs, leading to a significant increase in net income year-over-year. The company's operational structure was revised into two segments: Flex Agility Solutions (FAS) and Flex Reliability Solutions (FRS), aiming for enhanced focus and efficiency. Flex continues to emphasize its global scale, broad service offerings from design to manufacturing and after-sales support, and long-standing customer relationships as key competitive advantages.
The company is also actively exploring strategic alternatives for its Nextracker business. While facing ongoing risks related to the global economic environment, component shortages, and the pandemic's lingering effects, Flex demonstrates a commitment to operational improvements and managing its capital structure effectively.
02—Key points
Key Highlights
- Net sales for fiscal year 2021 were $24.1 billion, a slight decrease from $24.2 billion in fiscal year 2020, impacted by strategic business adjustments and COVID-19.
- Net income saw a substantial increase to $613 million in fiscal year 2021, up from $88 million in fiscal year 2020, driven by lower restructuring costs and improved operational efficiencies.
- The company reorganized into two primary reportable segments: Flex Agility Solutions (FAS) and Flex Reliability Solutions (FRS) to enhance focus and drive growth.
- Flex experienced significant improvements in gross profit and gross margin year-over-year, reaching 7.0% in fiscal year 2021, up from 5.5% in fiscal year 2020.
- The company is actively exploring strategic alternatives for its Nextracker business, including a potential initial public offering.
- Despite supply chain challenges, particularly component shortages, Flex reported strong performance in its Health Solutions business within the FRS segment.
- Flex maintained a strong liquidity position, with $2.6 billion in cash and cash equivalents as of March 31, 2021, and managed its debt effectively.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2021, Flex Ltd. kept $0.03.
- Revenue$24.12B100.0%
- Cost of revenue−$22.44B93.0%
- Gross profit$1.69B7.0%
- Operating costs−$892.0M3.7%
- Operating income$795.0M3.3%
- Interest, other & tax−$182.0M0.8%
- Net income$613.0M2.5%
Where FY2021 revenue went
$24.12B- Cost of revenue: $22.35B, 93% of revenue
- Net income: $613.0M, 2.5% of revenue
- SG&A: $817.0M, 3.4% of revenue
- Other operating costs: $163.0M, 0.7% of revenue
- Interest, other & tax: $182.0M, 0.8% of revenue
Kept 2.5% as net incomeNet income $613.0M · 2.5%Other operating costs $163.0M · 0.7%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2021filed May 19, 2021Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $24.12B$24.21B | −0.4% |
| Cost of Revenue | $22.35B$22.68B | −1.5% |
| Gross Profit | $1.69B$1.34B | +26.0% |
| SG&A Expenses | $817.00M$834.00M | −2.0% |
| Operating Income | $795.00M$415.00M | +91.6% |
| Interest Expense | $150.00M$146.00M | +2.7% |
| Net Income | $613.00M$88.00M | +596.6% |
| EPS (Basic) | $1.23$0.17 | +623.5% |
| EPS (Diluted) | $1.21$0.17 | +611.8% |
| Shares Outstanding (Basic) | 499.00M509.00M | −2.0% |
| Shares Outstanding (Diluted) | 506.00M512.00M | −1.2% |
05—Questions
Frequently Asked Questions
How did Flex's financial performance change in fiscal year 2021 compared to fiscal year 2020?
In fiscal year 2021, Flex reported net sales of $24.1 billion, a slight decrease from $24.2 billion in fiscal year 2020. However, net income significantly improved, reaching $613 million compared to $88 million in the prior year. This improvement was largely due to a reduction in restructuring costs and favorable operational changes. The company also saw an increase in gross profit and gross margin.
What are the key business segments for Flex, and how did they perform?
Flex reorganized its operations into two main segments: Flex Agility Solutions (FAS) and Flex Reliability Solutions (FRS). FAS experienced a revenue decline primarily due to lower demand in Consumer Devices and strategic exits, while FRS showed revenue growth, particularly driven by the Health Solutions business. The FRS segment's overall margin slightly decreased due to initial COVID-19 related shutdowns but benefited from strong performance in health and industrial markets.
What strategic initiatives or major developments are highlighted in the report?
Flex is actively pursuing strategic alternatives for its Nextracker business, including a potential spin-off or IPO. The company also implemented organizational changes to create two focused segments (FAS and FRS) for better efficiency and market responsiveness. Flex also highlighted its ongoing efforts in sustainability and human capital management.
What are the main risks and challenges facing Flex, as indicated in the filing?
Key risks include the ongoing impact of the COVID-19 pandemic, global economic uncertainty, component shortages affecting supply chains, intense competition, and reliance on key customers. The company also faces risks related to intellectual property, cybersecurity, and potential disruptions from geopolitical events.
06—Continue