Summary
Flextronics International Ltd. (now Flex) reported its financial results for the second quarter and first half of fiscal year 2016, ending September 25, 2015. For the quarter, net sales were $6.3 billion, a slight decrease of 3.2% year-over-year, impacted by lower demand in the Consumer Technology Group (CTG) and Integrated Network Solutions (INS) segments. However, gross profit increased to $396.9 million, and the gross margin improved to 6.3% due to a favorable shift in business mix towards higher-margin segments like High Reliability Solutions (HRS) and Industrial & Emerging Industries (IEI). For the six-month period, net sales were $11.9 billion, down 9.8% from the prior year, with similar drivers of decline in CTG and INS, partially offset by growth in HRS and IEI. Net income for the six-month period was $233.8 million, a decrease from $312.8 million in the same period last year. The company continued to execute its strategy of diversifying into higher-margin, longer-lifecycle businesses. Significant investments were made in acquisitions, notably Mirror Controls International (MCi), to expand capabilities in the automotive sector. The company also demonstrated solid free cash flow generation and continued its share repurchase program.
Financial Highlights
51 data points| Revenue | $6.32B |
| Cost of Revenue | $5.92B |
| Gross Profit | $396.92M |
| SG&A Expenses | $216.80M |
| Interest Expense | $25.10M |
| Net Income | $122.98M |
| EPS (Basic) | $0.22 |
| EPS (Diluted) | $0.22 |
| Shares Outstanding (Basic) | 563.33M |
| Shares Outstanding (Diluted) | 569.65M |
Key Highlights
- 1Net sales for the quarter decreased by 3.2% to $6.3 billion, primarily due to lower demand in CTG and INS segments.
- 2Gross profit increased by 5.3% to $396.9 million, with gross margin improving to 6.3% from 5.8% year-over-year, driven by a strategic shift towards higher-margin businesses.
- 3The High Reliability Solutions (HRS) segment showed strong performance, with segment income increasing 45.9% year-over-year, indicating successful diversification.
- 4Acquisitions played a significant role, with the purchase of Mirror Controls International (MCi) for approximately $555.2 million to bolster the automotive segment.
- 5Free cash flow for the six-month period was $368.0 million, a substantial increase from $167.9 million in the prior year's comparable period.
- 6The company repurchased approximately 12.8 million shares for $138.0 million during the quarter as part of its ongoing share repurchase program.
- 7Goodwill and intangible assets saw a significant increase, primarily due to the MCi acquisition, rising to $981.8 million from $415.2 million at the prior fiscal year-end.