01—Abstract
Summary
Summary of the 10-K filed May 19, 2023. Cited figures are marked; the original filing is the authoritative source.
Flex Ltd. (FLEX) reported strong revenue growth in fiscal year 2023, with net sales increasing 17% to $30.3 billiona.
This growth was driven by robust performance across all three segments: Flex Agility Solutions (FAS), Flex Reliability Solutions (FRS), and Nextracker. The company highlighted improved operational efficiencies and new program wins as key contributors, despite ongoing supply chain challenges and inflationary pressures. The successful initial public offering (IPO) of its subsidiary Nextracker in February 2023 provided a significant capital infusion and allows for separate evaluation of this high-growth renewable energy business.
Flex remains focused on its strategy of providing comprehensive supply chain solutions and enhancing its capabilities in advanced technologies. The company's diversified industry exposure, balanced global footprint, and strong customer relationships are key competitive advantages.
While facing macroeconomic uncertainties and supply chain complexities, Flex demonstrated resilience and delivered improved gross profit margins year-over-year. The company also continues to invest in its people, sustainability, and technology to drive long-term value.
02—Key points
Key Highlights
- Net sales for fiscal year 2023 increased by 17% to $30.3 billion, driven by strong performance across all three operating segments.
- The successful IPO of its subsidiary Nextracker in February 2023 generated approximately $694 million in net proceeds.
- Gross profit increased by 17% to $2.3 billion, with gross margin improving slightly to 7.5% from 7.4% in the prior year.
- The FAS segment saw a 12% increase in net sales, led by the Communications, Enterprise, and Cloud (CEC) business.
- The FRS segment experienced a 20% increase in net sales, primarily driven by the Industrial and Automotive businesses.
- Nextracker's segment sales grew by 31%, driven by increased gigawatts delivered and a higher average selling price.
- Flex continues to repurchase shares, with approximately $893 million available under its current authorization as of March 31, 2023.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2023, Flex Ltd. kept $0.03.
- Revenue$28.50B100.0%
- Cost of revenue−$26.53B93.1%
- Gross profit$1.98B6.9%
- Operating costs−$959.0M3.4%
- Operating income$1.02B3.6%
- Interest, other & tax−$224.0M0.8%
- Net income$793.0M2.8%
Where FY2023 revenue went
$28.50B- Cost of revenue: $26.50B, 93% of revenue
- Net income: $793.0M, 2.8% of revenue
- SG&A: $874.0M, 3.1% of revenue
- Interest, other & tax: $224.0M, 0.8% of revenue
Kept 2.8% as net incomeNet income $793.0M · 2.8%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2023filed May 19, 2023Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $28.50B$24.63B | +15.7% |
| Cost of Revenue | $26.50B$22.84B | +16.0% |
| Gross Profit | $1.98B$1.78B | +11.0% |
| SG&A Expenses | $874.00M$830.00M | +5.3% |
| Operating Income | $1.02B$890.00M | +14.3% |
| Interest Expense | $191.00M$160.00M | +19.4% |
| Net Income | $793.00M$940.00M | −15.6% |
| EPS (Basic) | $1.75$1.97 | −11.2% |
| EPS (Diluted) | $1.72$1.94 | −11.3% |
| Shares Outstanding (Basic) | 454.00M476.00M | −4.6% |
| Shares Outstanding (Diluted) | 462.00M483.00M | −4.3% |
05—Questions
Frequently Asked Questions
What were the main drivers of Flex's revenue growth in fiscal year 2023?
Flex's revenue growth in fiscal year 2023 was driven by strong customer demand and new program ramps across its key end markets. Specifically, the Communications, Enterprise, and Cloud (CEC) business within Flex Agility Solutions (FAS), and the Industrial and Automotive businesses within Flex Reliability Solutions (FRS) showed significant increases. The Nextracker segment also contributed positively with higher gigawatts delivered and increased average selling prices.
What is the significance of the Nextracker IPO for Flex?
The IPO of its subsidiary Nextracker in February 2023 was a significant event for Flex. It generated substantial net proceeds of approximately $694 million, strengthening the company's financial position. Furthermore, it allows investors to separately evaluate Nextracker's distinct business and growth prospects in the renewable energy sector, potentially unlocking greater value for both entities.
How did Flex manage supply chain challenges and inflation during the fiscal year?
Flex reported that component shortages and logistical constraints improved over the year, although some constraints in large-node semiconductors persisted. The company stated that it continues to monitor potential supply chain disruptions. While facing margin pressures from these factors and inflationary cost recoveries, Flex managed to slightly improve its gross profit margin to 7.5% by leveraging improved fixed cost absorption from stronger overall customer demand.
06—Continue