01—Abstract
Summary
Summary of the 10-Q filed August 1, 2017. Cited figures are marked; the original filing is the authoritative source.
Flex Ltd. reported a modest increase in net sales for the three-month period ended June 30, 2017, reaching $6.0 billiona, a 2% rise year-over-year.
This growth was primarily driven by solid performance in the Consumer Technologies Group (CTG) and Industrial & Emerging Industries (IEI) segments, although partially offset by a decline in the Communications & Enterprise Compute (CEC) segment. While gross profit remained stable, the gross margin saw a slight decrease due to increased ramp-up costs for strategic relationships and production transitions. The company's strategic focus continues to be on shifting its portfolio towards higher-margin businesses with longer product life cycles, such as IEI and High Reliability Solutions (HRS).
02—Key points
Key Highlights
- Net sales increased by 2% to $6.0 billion for the quarter ended June 30, 2017, compared to the prior year period.
- Gross profit increased slightly to $407 million, but gross margin decreased by 10 basis points to 6.8% due to ramp-up costs.
- The CTG and IEI segments showed significant sales growth, contributing positively to the overall revenue increase.
- SG&A expenses increased by $11 million to $251 million, primarily due to investments in design/engineering resources and acquisitions.
- The company repurchased $74 million of its ordinary shares during the quarter under its ongoing share repurchase program.
- Cash used in investing activities was $352 million, largely driven by the acquisition of AGM Automotive for $214 million.
- Free cash flow decreased significantly to $19 million from $121 million in the prior year's comparable period, impacted by higher investing activities.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2018filed August 1, 2017Financial Statements
| Revenue | $6.01B |
| Cost of Revenue | $5.60B |
| Gross Profit | $406.93M |
| SG&A Expenses | $250.81M |
| Interest Expense | $29.00M |
| Net Income | $124.71M |
| EPS (Basic) | $0.24 |
| EPS (Diluted) | $0.23 |
| Shares Outstanding (Basic) | 530.27M |
| Shares Outstanding (Diluted) | 538.63M |
05—Questions
Frequently Asked Questions
How did Flex Ltd.'s revenue perform in the latest quarter?
Flex Ltd. reported net sales of $6.0 billion for the three-month period ended June 30, 2017, an increase of approximately 2% from $5.9 billion in the same period last year. This growth was primarily driven by the Consumer Technologies Group (CTG) and Industrial & Emerging Industries (IEI) segments.
What is the company's profitability trend, and what factors are impacting it?
Gross profit remained stable at $407 million, but the gross margin slightly declined to 6.8% from 6.9% year-over-year. This was due to increased investment and costs associated with ramping up strategic relationships, particularly in the CTG segment, and elevated production ramp costs.
How is Flex Ltd. managing its cash flow and investments?
Cash provided by operating activities was $139 million. However, cash used in investing activities was substantial at $352 million, primarily due to the $214 million acquisition of AGM Automotive. Consequently, free cash flow significantly decreased to $19 million from $121 million in the prior year's comparable quarter.
What is the company's capital structure and debt management strategy?
As of June 30, 2017, Flex Ltd. had cash and cash equivalents of $1.6 billion and total borrowings of approximately $3.0 billion. The company recently entered into a new five-year credit facility in June 2017, replacing a previous one, and is compliant with its debt covenants. The company continues to assess its capital structure and evaluate options like debt reduction or share repurchases.
06—Continue