Summary
Flex Ltd. reported net sales of $6.176 billion for the first quarter of fiscal year 2020, a decrease of 3% compared to the same period last year, primarily due to softness across most segments, particularly the Consumer Technologies Group (CTG) and Communications & Enterprise Compute (CEC) segments. Despite the revenue decline, the company's Industrial and Emerging Industries (IEI) segment showed strong growth. Profitability saw a notable shift, with net income decreasing to $44.9 million ($0.09 diluted EPS) from $116.0 million ($0.22 diluted EPS) in the prior year's quarter. This was influenced by lower sales, an increase in interest and other expenses, and significant restructuring charges ($56.2 million recorded in the current quarter, with expectations for further charges). The company is actively managing its portfolio, including accelerating a strategic decision to reduce exposure to certain high-volatility products. Liquidity remains adequate, with $1.9 billion in cash and cash equivalents. The company issued new debt and used proceeds to refinance existing debt, maintaining compliance with covenants. Management expects current liquidity to be sufficient for at least the next twelve months.
Financial Highlights
50 data points| Revenue | $6.18B |
| Cost of Revenue | $5.78B |
| Gross Profit | $352.76M |
| SG&A Expenses | $209.62M |
| Interest Expense | $40.43M |
| Net Income | $44.87M |
| EPS (Basic) | $0.09 |
| EPS (Diluted) | $0.09 |
| Shares Outstanding (Basic) | 514.24M |
| Shares Outstanding (Diluted) | 517.55M |
Key Highlights
- 1Net sales decreased by 3% year-over-year to $6.176 billion, driven by declines in CTG and CEC segments.
- 2Net income significantly decreased by 61.5% to $44.9 million ($0.09 diluted EPS) from $116.0 million ($0.22 diluted EPS) in the prior year period.
- 3Gross profit margin slightly decreased to 5.7% from 5.9% year-over-year.
- 4The company recorded $56.2 million in restructuring charges in the current quarter and anticipates further charges in fiscal year 2020.
- 5Cash flow from operations was negative at ($656.9 million), though investing activities provided positive cash flow of $775.1 million, largely due to ABS program collections.
- 6Total assets increased to $14.4 billion, with a notable addition of $656 million in operating lease right-of-use assets due to the adoption of ASC 842.
- 7The company maintains a strong liquidity position with $1.9 billion in cash and cash equivalents and $1.75 billion revolving credit facility.