01—Abstract
Summary
Summary of the 10-K filed May 20, 2022. Cited figures are marked; the original filing is the authoritative source.
Flex Ltd. reported a solid fiscal year 2022, demonstrating resilience and growth despite ongoing supply chain challenges and broader economic uncertainties.
The company's net sales increased by 8% to $26.0 billiona, driven by growth across all three operating segments: Flex Agility Solutions (FAS), Flex Reliability Solutions (FRS), and Nextracker. FAS saw a 4% increase, boosted by the Lifestyle and CEC businesses, while FRS experienced a significant 12% rise, largely attributed to the Industrial and Automotive sectors, further strengthened by the acquisition of Anord Mardix. The Nextracker segment also grew by 22%.
Financially, Flex improved its gross profit by 15%b and net income by 53% year-over-year, reflecting strong cost discipline, improved business mix, and benefits from prior restructuring activities. The company also strengthened its balance sheet, with cash provided by operations increasing substantially. However, net working capital as a percentage of sales rose due to elevated inventory levels driven by component shortages and logistical constraints, a persistent headwind expected to continue.
Looking ahead, Flex remains focused on strategic investments in key growth areas and operational efficiencies. The company is also strategically evaluating alternatives for its Nextracker business, including a potential separation, which could unlock further value. Investors should monitor supply chain dynamics, the success of new customer ramps, and the company's strategic initiatives regarding Nextracker.
02—Key points
Key Highlights
- Net sales increased by 8% to $26.0 billion in fiscal year 2022, with growth across all three reportable segments (FAS, FRS, Nextracker).
- Gross profit increased by 15% to $1.9 billion, and net income rose by 53% to $936 million, indicating improved profitability and cost management.
- The acquisition of Anord Mardix in December 2021 strengthened the Flex Reliability Solutions (FRS) segment, particularly in the data center market.
- Cash provided by operating activities significantly improved, reaching $1.0 billion for fiscal year 2022, compared to $144 million in fiscal year 2021.
- Net working capital increased as a percentage of sales to 15.4% due to elevated inventory levels, a direct result of ongoing component shortages and logistical constraints.
- The company continues to explore strategic alternatives for its Nextracker business, including a potential separation, which was advanced by a $500 million investment from TPG Rise.
- No single customer accounted for more than 10% of net sales, highlighting a diversified customer base, with the top ten customers representing 34% of net sales.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2022, Flex Ltd. kept $0.04.
- Revenue$24.63B100.0%
- Cost of revenue−$22.85B92.8%
- Gross profit$1.78B7.2%
- Operating costs−$890.0M3.6%
- Operating income$890.0M3.6%
- Interest, other & tax$50.0M0.2%
- Net income$940.0M3.8%
Where FY2022 revenue went
$24.63B- Cost of revenue: $22.84B, 93% of revenue
- Operating income: $890.0M, 3.6% of revenue
- SG&A: $830.0M, 3.4% of revenue
Kept 3.6% as operating incomeOperating income $890.0M · 3.6%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2022filed May 20, 2022Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $24.63B$24.12B | +2.1% |
| Cost of Revenue | $22.84B$22.35B | +2.2% |
| Gross Profit | $1.78B$1.69B | +5.5% |
| SG&A Expenses | $830.00M$817.00M | +1.6% |
| Operating Income | $890.00M$795.00M | +11.9% |
| Interest Expense | $160.00M$150.00M | +6.7% |
| Net Income | $940.00M$613.00M | +53.3% |
| EPS (Basic) | $1.97$1.23 | +60.2% |
| EPS (Diluted) | $1.94$1.21 | +60.3% |
| Shares Outstanding (Basic) | 476.00M499.00M | −4.6% |
| Shares Outstanding (Diluted) | 483.00M506.00M | −4.5% |
05—Questions
Frequently Asked Questions
What was Flex's overall financial performance in fiscal year 2022?
Flex reported strong financial performance in fiscal year 2022, with net sales increasing by 8% to $26.0 billion. Gross profit rose by 15% to $1.9 billion, and net income saw a significant increase of 53% to $936 million, demonstrating improved profitability and operational efficiency.
What are the key factors impacting Flex's supply chain and inventory levels?
Flex continues to be affected by global supply chain disruptions, including component shortages and logistical constraints, particularly exacerbated by the COVID-19 pandemic. These issues have led to higher inventory levels, with net working capital increasing as a percentage of sales. Management expects these headwinds to persist in the near future.
What is the status of Flex's Nextracker business?
Flex is actively evaluating strategic alternatives for its Nextracker business, including a potential full or partial separation. This process was further supported by a strategic investment of $500 million from TPG Rise in February 2022, which valued Nextracker at $3.0 billion.
How did the acquisition of Anord Mardix impact Flex?
The acquisition of Anord Mardix in December 2021 bolstered Flex's capabilities in critical power solutions and expanded its presence in the data center market. This acquisition contributed to the growth of the Flex Reliability Solutions (FRS) segment, which saw a 12% increase in net sales for fiscal year 2022.
06—Continue