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Flex Ltd. (FLEX)
Q2 2024 Earnings Call |
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Corrected Transcript
25-Oct-2023 |
Please note, unless otherwise stated, all results provided will be
non-GAAP measures and all growth metrics will be on a year-over-year basis. Full non-GAAP to GAAP reconciliations can be found in the appendix slides of todays
presentation as well as the Investor Relations website.
Earlier today, we were pleased to announce our plan to
spin-off all of Flexs remaining interest in Nextracker to Flex shareholders. As previously disclosed, Flex retained the option to affect the spin-off pursuant to a
merger agreement entered into by Flex and Nextracker in connection with Nextrackers initial public offering. We believe that the spin-off is the most advantageous form of separation for Flex, Nextracker,
and our respective shareholders. Specifically, it provides the opportunity to distribute Flexs interest in Nextracker to Flex shareholders in a tax-free manner for US federal income tax purposes and
allows Flex to focus on our core strategies and long-term value creation for our shareholders.
As earlier today, Nextracker filed a registration
statement on Form S-4 that includes a preliminary proxy statement of Flex, which includes additional information regarding the spin-off.
Spin-off is currently expected to be completed in Flexs fourth quarter ending March 31, 2024, but does remain subject to a number of conditions and no assurance can be given that the spin-off will, in fact, occur. We understand that you may have questions on this process. At this point, there are no additional details to share other than what has been publicly made available, but we will provide
any updates as appropriate.
Now, Id like to turn the call over to our CEO. Revathi?
Revathi Advaithi
Chief Executive Officer &
Director, Flex Ltd.
Thank you, David. Good afternoon, and thank you for joining us today. Before we start, I want to say how deeply saddened we are by
the horrific attacks on Israel. Our hearts go out to our colleagues, our customers, and our friends in that area.
Turning to our quarterly results on
slide 5, overall fiscal Q2 was another strong quarter with great execution. Revenue came in at $7.5 billion, which was down about 4%. Adjusted operating margin came in at 5.9%, and we delivered $0.68 of adjusted EPS. Since we have now announced
the separation of Nextracker, we are able to provide core Flexs results, which excludes Nextracker.
For core Flex, we executed really well, even
with the market uncertainty. Revenue came in at $6.9 billion, down 5% against a great quarter last year which grew 24%. Core Flex adjusted operating margin came in at 4.7%, up both sequentially and year-over-year, and we delivered $0.56 of
adjusted EPS. Im really pleased with how these results shows our ability to execute and build a resilient company with strong performance through the cycles.
Now turning to slide 6, well take a look at market fundamentals and how we continue to navigate a highly dynamic environment. However, I want to point
out a few important items that really puts into perspective the strength of our model and how we have truly evolved as a company. As youre well aware, we participate in six end markets, but within that, weve been focused on shifting our
portfolio more towards next-gen mobility, cloud, and digital health.
As highlighted in our March 2022 Investor
Day, we believe these markets drive the right growth and margin expansion for us. So Id like to give some specifics on how were doing in these areas. Next-gen mobility, as we have defined it,
comprises our EV, ADAS, autonomous and our EV charging businesses. At the time of Investor Day, we expected a 50-plus-percent CAGR for this space. We continue to see growth in this category on par with these
strong expectations.
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