Summary
Flex Ltd. reported strong revenue growth for the quarter and six months ended September 29, 2017, with net sales increasing by 4% and 3% respectively, year-over-year. This growth was primarily driven by the Industrial & Emerging Industries (IEI) and High Reliability Solutions (HRS) segments, offsetting a decline in the Communications & Enterprise Compute (CEC) segment. The company's gross profit saw a significant increase, largely due to the absence of charges related to solar panel inventory and business exits that impacted the prior year's results. Net income also showed a substantial improvement, shifting from a net loss in the prior year's comparable period to a solid profit. Operationally, Flex achieved a significant gain from the deconsolidation of its investment in Elementum, which boosted net income. The company also continued its share repurchase program, demonstrating a commitment to returning value to shareholders. Despite some segment-specific headwinds, Flex's diversified business model and strategic focus on higher-margin segments position it for continued performance. Investors should monitor the performance of the CEC segment and the successful integration of recent acquisitions.
Financial Highlights
49 data points| Revenue | $6.27B |
| Cost of Revenue | $5.88B |
| Gross Profit | $393.32M |
| SG&A Expenses | $274.15M |
| Interest Expense | $29.60M |
| Net Income | $205.09M |
| EPS (Basic) | $0.39 |
| EPS (Diluted) | $0.38 |
| Shares Outstanding (Basic) | 531.31M |
| Shares Outstanding (Diluted) | 536.02M |
Key Highlights
- 1Net sales increased by 4% to $6.3 billion for the three-month period and by 3% to $12.3 billion for the six-month period ended September 29, 2017, compared to the prior year.
- 2Gross profit increased by $80 million to $393 million for the three-month period and by $81 million to $800 million for the six-month period, with gross margin improving to 6.3% and 6.5% respectively.
- 3Net income dramatically improved to $205 million for the three-month period and $330 million for the six-month period, a significant turnaround from a net loss in the prior year's comparable periods.
- 4The company recognized a substantial non-cash gain of $151.6 million from the deconsolidation of its investment in Elementum, contributing significantly to the 'Other charges (income), net' line item.
- 5Operating cash flow was $281 million for the six-month period, though this was lower than the prior year's $544 million, impacted by changes in working capital and a gain from deconsolidation.
- 6Flex continued its share repurchase program, buying back approximately 4.4 million shares for $71.1 million in the three-month period and 8.9 million shares for $145.0 million in the six-month period.
- 7Acquisition of AGM was completed in April 2017 for $213.7 million, expanding capabilities in the automotive market and adding $75.3 million in goodwill.