Summary
Flex Ltd. reported net sales of $6.1 billion for the three months ended December 31, 2016, a decrease of 9.6% compared to the same period in the prior year. This decline was primarily driven by reduced sales in the Communications & Enterprise Compute (CEC) and Consumer Technologies Group (CTG) segments. Despite the revenue decrease, the company's gross profit margin remained relatively stable, improving slightly in the three-month period. The company continues to strategically rebalance its portfolio towards higher-margin businesses and has seen some positive impacts from its 'Sketch-to-Scale' strategy, particularly in the High Reliability Solutions (HRS) segment. Management highlights investments in innovation and design, aiming for long-term growth in outsourcing of advanced manufacturing and design services.
Financial Highlights
49 data points| Revenue | $6.11B |
| Cost of Revenue | $5.70B |
| Gross Profit | $416.45M |
| SG&A Expenses | $231.55M |
| Interest Expense | $26.60M |
| Net Income | $129.47M |
| EPS (Basic) | $0.24 |
| EPS (Diluted) | $0.24 |
| Shares Outstanding (Basic) | 539.64M |
| Shares Outstanding (Diluted) | 545.02M |
Key Highlights
- 1Net sales for the third quarter of fiscal year 2017 (ending December 31, 2016) were $6.1 billion, a decrease of 9.6% year-over-year.
- 2The decline in net sales was primarily attributed to lower sales in the CEC and CTG segments, with specific mentions of reduced demand from a major smartphone customer and the exit of a China operation.
- 3Gross profit margin remained stable, showing slight improvement in the three-month period (6.8%) compared to the prior year (6.7%), despite lower sales.
- 4The company's 'Sketch-to-Scale' strategy is showing positive impacts, particularly in the HRS segment, which saw margin improvement.
- 5Operating expenses, specifically SG&A, increased year-over-year due to stock-based compensation, acquisition-related costs (NEXTracker), and investments in design and engineering.
- 6Cash provided by operating activities remained strong at $1.0 billion for the nine months ended December 31, 2016, and free cash flow increased to $627.6 million.
- 7Flex repurchased $255.9 million of its ordinary shares during the nine-month period, indicating a continued focus on returning capital to shareholders.