FLEX LTD. Quarterly Report for Q2 Ended Jul 1, 2011

Summary

Flextronics International Ltd. (FLEX) reported solid revenue growth for the first quarter of fiscal year 2012, with net sales reaching $7.5 billion, a 15% increase compared to the prior year period. This growth was driven by a broad-based demand across all its key market segments, including High Velocity Solutions and Integrated Network Solutions. The company demonstrated improved profitability with net income rising to $131.975 million from $118.178 million in the comparable period last year, translating to diluted EPS of $0.17. While the company's gross margin saw a slight decrease due to a higher mix of lower-margin products, this was partially offset by improved operating expense management, with SG&A expenses as a percentage of sales decreasing. Cash flow from operations remained robust, though the company utilized cash for share repurchases and capital expenditures. Flextronics continues to manage its global operations efficiently, with a significant portion of its cash held by foreign subsidiaries. The company also announced a new $200 million share repurchase authorization, indicating confidence in its financial position and commitment to shareholder returns.

Key Highlights

• 1Net sales increased by 15% year-over-year to $7.5 billion for the quarter ended July 1, 2011.
• 2Net income rose to $131.975 million, resulting in diluted earnings per share of $0.17.
• 3Gross profit increased in absolute terms to $400.2 million, although gross margin slightly decreased to 5.3%.
• 4Selling, general, and administrative (SG&A) expenses decreased as a percentage of sales to 2.8%, showcasing improved operational leverage.
• 5Cash provided by operating activities was $136.4 million, demonstrating strong cash generation capabilities.
• 6The company held $1.56 billion in cash and cash equivalents at the end of the quarter.
• 7A new share repurchase program of up to $200 million was authorized.

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