Summary
Flextronics International Ltd. (FLEX) reported its financial results for the second quarter ended September 30, 2011. The company demonstrated revenue growth, with net sales reaching $8.04 billion for the quarter, an 8% increase year-over-year, and $15.6 billion for the six-month period, an 11% increase. This growth was driven by strong performance in the High Velocity Solutions and Integrated Network Solutions segments, benefiting from increased demand from key customers in mobile/smart phone and data networking/telecommunications infrastructure markets, respectively. The company is actively managing its business portfolio, including the planned exit of its ODM personal computing business by the end of the third fiscal quarter, which is expected to improve future operating results. Financially, the company maintained a strong cash position with $1.6 billion in cash and cash equivalents. However, gross profit margins saw a slight decrease to 4.7% from 5.4% year-over-year for the quarter, attributed to a higher mix of lower-margin products and costs associated with product transitions. Selling, general, and administrative expenses increased slightly in absolute terms but remained stable as a percentage of sales. The company also refinanced its credit facilities, securing a new $2.0 billion credit facility to enhance its financial flexibility.
Key Highlights
- 1Revenue increased by 8% to $8.04 billion for the three months ended September 30, 2011, and by 11% to $15.6 billion for the six months ended September 30, 2011.
- 2The company is strategically exiting its ODM personal computing business, expecting completion by the end of Q3 FY2012, which is anticipated to improve future operating results.
- 3Gross profit margin declined to 4.7% from 5.4% year-over-year for the quarter, primarily due to a higher mix of low-margin products.
- 4Net income for the quarter was $130 million, down from $144 million in the prior year's comparable quarter.
- 5The company maintained a healthy cash and cash equivalents balance of $1.6 billion as of September 30, 2011.
- 6Flextronics entered into a new $2.0 billion credit facility on October 19, 2011, replacing its existing credit facility to enhance financial flexibility.
- 7Significant customer concentration exists, with Research In Motion and Hewlett-Packard each accounting for over 10% of net sales in certain periods.