10-QPeriod: Q3 FY2015

FLEX LTD. Quarterly Report for Q3 Ended Dec 31, 2014

Filed January 29, 2015For Securities:FLEX

Summary

Flextronics International Ltd. (FLEX) reported net sales of $7.03 billion for the third quarter ended December 31, 2014, a slight decrease of 2.2% compared to the prior year's quarter, primarily driven by softness in its Consumer Technology Group (CTG) and Integrated Network Solutions (INS) segments. Despite the revenue dip, gross profit increased to $408.7 million, and gross margin improved to 5.8% from 5.5% year-over-year, attributed to a better cost structure and favorable product mix. The company also saw a reduction in selling, general, and administrative (SG&A) expenses as a percentage of net sales, falling to 3.1% from 3.4% in the prior year period. For the nine-month period ended December 31, 2014, net sales grew 4.2% to $20.2 billion, supported by growth in the Industrial & Emerging Industries (IEI) and High Reliability Solutions (HRS) segments, along with contributions from acquisitions. Net income for the third quarter rose to $152.9 million ($0.26 per diluted share) from $145.2 million ($0.23 per diluted share) in the prior year, indicating improved profitability. The company maintained a strong liquidity position with $1.7 billion in cash and cash equivalents and generated $669.4 million in cash from operating activities for the nine-month period.

Financial Highlights

51 data points
Beta

Revenue

$7.03B

5.8% Gross Margin

Net Income

$152.90M

2.2% Net Margin

EPS (Diluted)

$0.26

Total Assets

$12.09B

Cash & Equivalents

$1.71B

Free Cash Flow

$275.41M

Financial Statements
Beta
Revenue$7.03B
Cost of Revenue$6.62B
Gross Profit$408.66M
SG&A Expenses$215.99M
Interest Expense$19.90M
Net Income$152.90M
EPS (Basic)$0.26
EPS (Diluted)$0.26
Shares Outstanding (Basic)577.16M
Shares Outstanding (Diluted)587.20M

Key Highlights

  • 1Net sales for the third quarter of fiscal year 2015 were $7.03 billion, a 2.2% decrease year-over-year.
  • 2For the nine-month period ended December 31, 2014, net sales increased by 4.2% to $20.2 billion.
  • 3Gross profit for the third quarter increased by $10.0 million to $408.7 million, with gross margin improving to 5.8% from 5.5% year-over-year.
  • 4SG&A expenses decreased by $8.6 million to $216.0 million for the quarter, representing 3.1% of net sales, down from 3.4% in the prior year period.
  • 5Net income for the third quarter increased to $152.9 million ($0.26 per diluted share) compared to $145.2 million ($0.23 per diluted share) in the prior year.
  • 6The company ended the quarter with $1.71 billion in cash and cash equivalents.
  • 7Cash from operating activities for the nine-month period was $669.4 million, reflecting strong operational cash generation.

Frequently Asked Questions

Flextronics reported net sales of $7.03 billion for the third quarter ended December 31, 2014. This represents a slight decrease of 2.2% compared to the $7.18 billion in net sales for the same period in the previous year. The decrease was primarily attributed to softness in the Consumer Technology Group (CTG) and Integrated Network Solutions (INS) segments.

Profitability improved in the third quarter. Net income rose to $152.9 million from $145.2 million in the prior year's third quarter. Diluted earnings per share increased to $0.26 from $0.23. This improvement was driven by an increase in gross profit, a decrease in SG&A expenses as a percentage of net sales, and an overall favorable product mix.

As of December 31, 2014, Flextronics had $1.71 billion in cash and cash equivalents. For the nine-month period ended December 31, 2014, the company generated $669.4 million in cash from operating activities. Investing activities used $234.0 million, while financing activities used $324.4 million during the same nine-month period.

During the nine-month period ended December 31, 2014, the company completed four acquisitions that expanded its capabilities in the medical devices market. These acquisitions were not individually or in aggregate significant to the company's financial results. The company also recognized an $11.0 million loss in connection with the disposition of a manufacturing facility in Western Europe.