Results for Q3 Fiscal 2017
Earnings Announcement: January 26, 2017
(Quarter Ending December 31, 2016)
1
Risks and Non-GAAP Disclosures
This presentation contains forward-looking statements, which are based on current expectations and assumptions that are subject to
risks and uncertainties and actual results could materially differ. Such information is subject to change and we undertake no obligation to
update these forward-looking statements. For a discussion of the risks and uncertainties, see our most recent filings with the Securities
and Exchange Commission, including our current, annual and quarterly reports.
Please refer to the appendix section of this presentation for the reconciliation of the Non-GAAP financial measures to the most directly
comparable GAAP measures for the current period results.
If this presentation references historical non-GAAP financial measures, these measures are located on the “Investor Relations” section
of our website, www.flex.com along with the required reconciliation to the most comparable GAAP financial measures.
The following business group acronyms will be used throughout this presentation:
Communications &
Enterprise ComputeTelecom, Networking, Server & Storage,
Storage & Security Appliance, Converged
Infrastructure, Software Defined Product
Solutions.
Consumer Technologies
GroupWearables, Fashion, Connected Living,
Gaming, Mobile, PCs/Printers.
Industrial & Emerging
IndustriesSemiconductor & Capital Equipment, Office
Solutions, Household Industrial & Lifestyle,
Industrial Automation & Kiosks, Energy &
Metering, Lighting.
HRS High Reliability SolutionsMedical: Consumer Health, Digital Health,
Disposables, Drug Delivery, Diagnostics, Life
Sciences & Imaging Equipment.
Automotive: Vehicle Electronics, Connectivity,
Clean Technologies.
IEI CEC CTG
2
Q3 FY2017 Income Statement Highlights
Prior Yr Current Qtr
($M, except per share amounts) December 31, 2015 December 31, 2016
Net sales $6,763 $6,115
Adjusted operating income 236 223
Adjusted net income 196 183
Adjusted EPS $0.35 $0.34
GAAP income before income taxes 127 140
GAAP net income 149 129
GAAP EPS $0.27 $0.24
Q3 FY2017 Results vs. Guidance
Net sales of $6.1B in the range of guidance $6.0 - $6.4B
Adjusted operating income of $223M above the mid-point of guidance $205 - $235M
Adjusted EPS of $0.34 towards the high-end of guidance $0.31 - $0.35
Please refer to the appendix section of this presentation for current period reconciliation of the Non-GAAP financial measures to the most directly comparable GAAP measures.
For all historical periods referenced in this presentation, refer to the Investor Relations section of our website.
Revenue & Adjusted Gross Margin($M)
3
Quarterly Financial Highlights
22% 22% 22%20% 20%
Dec-15 Mar-16 Jun-16 Sep-16 Dec-16
Return on Invested Capital(ROIC %)
$0.35
$0.29 $0.27 $0.28
$0.34
Dec-15 Mar-16 Jun-16 Sep-16 Dec-16
Adjusted Earnings Per Share (EPS)
6,763
5,773 5,877 6,009 6,115
6.7%7.1% 6.9% 6.9% 7.1%
Dec-15 Mar-16 Jun-16 Sep-16 Dec-16
Adj. Gross Margin
Adjusted Operating Income ($M)
236 200 190 197
223
3.5% 3.5%3.2% 3.3%
3.6%
Dec-15 Mar-16 Jun-16 Sep-16 Dec-16
Adj. Operating Margin
Please refer to the appendix section of this presentation for current period reconciliation of the Non-GAAP financial measures to the most directly comparable GAAP measures.
For all historical periods referenced in this presentation, refer to the Investor Relations section of our website.
Q3 FY17(December 31, 2016)
Target Adjusted
Operating Margin Range
($M)
Rev$ OP$(adj.)
OP%(adj.)
$2,102 $62 3.0%Challenging demand environment but continuing to operate
within the targeted range.
$1,849 $59 3.2%Driving a more diversified customer base by leveraging
new technologies and the expansion into new markets.
$1,141 $40 3.5%Sequential improvement and progressing towards targeted
range, despite energy project delays.
$1,023 $83 8.1%Strong execution and margins remain meaningfully inside
the targeted range.
Corporate
Services &
Other1-- ($21) --
Total $6,115 $223 3.6%
6
4
2
2.5
9
6
4
3.5
Operating Performance by Business Group
1. Corporate services and other: corporate service costs that are not included in the assessment of the performance of each of the identified business groups.
3.2%
3.0%
3.5%
8.1%
4Please refer to the appendix section of this presentation for current period reconciliation of the Non-GAAP financial measures to the most directly comparable GAAP measures.
For all historical periods referenced in this presentation, refer to the Investor Relations section of our website.
CEC
CTG
IEI
HRS
5
Other Income Statement Comments
• Q3 FY17 was $26M
• Q4 FY17 outlook $25M-$30M
Interest & other
expense, net
• Q3 FY17 was 7.2%
• FY17 outlook 8-10% tax rate
Adjusted
income tax rate
Reconciliation
between GAAP and
Adjusted EPS
Aggregate impact on EPS $0.10:
• Stock based compensation $21M or $0.04 in EPS
• Net intangible amortization $17M or $0.03 in EPS
• Severance charges $16M or $0.03 in EPS
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Please refer to the appendix section of this presentation for current period reconciliation of the Non-GAAP financial measures to the most directly comparable GAAP measures.
For all historical periods referenced in this presentation, refer to the Investor Relations section of our website.
6
Cash Flows & Net Working Capital
Three
Months
Ended
Nine
Months
Ended
($M)(Dec 31, 2016) (Dec 31, 2016)
GAAP net income $129 $233
Depreciation and amortization 128 388
Change in net working capital 214 174
Other operating cash flows, net (2) 218
Net cash provided by operating activities 469 1,013
Purchases of property & equipment, net (106) (385)
Free Cash Flow 363 628
Other investing and financing, net (94) (208)
Debt proceeds, net 126 90
Payments for share repurchases (75) (260)
Net change in cash and cash equivalents $320 $250
1,808 1,789 1,796 1,851
1,626
6.7%
7.7% 7.6%7.7%
6.6%
Dec-15 Mar-16 Jun-16 Sep-16 Dec-16
% Annualized Revenue
Net Working Capital($M)
Net Working Capital is calculated as accounts receivable, net adding back the reduction in accounts receivable resulting from the non-cash receivable sales plus inventories less accounts payable.
Free Cash Flow is calculated as cash from operations less net purchases of property & equipment.
For all historical periods referenced in this presentation, refer to the Investor Relations section of our website.
Committed to return over 50% of annual
free cash flow to shareholders
$1,857
$1,500
$525 $500 $700 $500 $600
Liquidity 2017 2018 2019 2020 2021 2022 2023 2024 2025
Significant Debt Maturities ($M) (Calendar Year)
Cash
Revolver
Total
Liquidity
$3,357
Term Loan LIBOR + 137.5bps
4.625% Notes
5% Notes 4.75% Notes$52 EURIBOR +100bps
7
Balanced Capital Structure
Key Characteristics
• Solid liquidity
• No significant near-term maturities
Please refer to the appendix section of this presentation for current period reconciliation of the Non-GAAP financial measures to the most directly comparable GAAP measures.
For all historical periods referenced in this presentation, refer to the Investor Relations section of our website.
• Low cost of debt ~3.5%
• Strong credit metrics (Debt / Adj. EBITDA (LTM): 2.3x)
Investment Grade Rating: Moody’s, S&P, Fitch
Term Loan LIBOR + 137.5bps
26%
16%34%
24%
8
Q3 FY2017 Highlights and Key Trends
158
114 121 144
363
9.3% 9.7%8.3% 7.3%
9.6%
Dec-15 Mar-16 Jun-16 Sep-16 Dec-16
FCF Yield
Free Cash Flow($M)
90 89 95 90
75
551 545 546 541 537
Dec-15 Mar-16 Jun-16 Sep-16 Dec-16
Shares Outstanding (M)
Share Repurchases($M)
HRSIEI
CTG CEC
Strong
Cash FlowContinued
Portfolio Evolution
Capital Return
Commitment
Adj.
Op. Profit
Mix
FCF yield is calculated based on (LTM free cash flow/outstanding shares at
quarter-end) / share price at quarter-end.
Please refer to the appendix section of this presentation for current period reconciliation of the Non-GAAP financial measures to the most directly
comparable GAAP measures. For all historical periods referenced in this presentation, refer to the Investor Relations section of our website.
50%
34%
19%17%
30% Revenue
Mix
36%
CTGCEC
IEIHRS
37%
18%15%
30%
9
Revenue by Business Group
Communications &
Enterprise ComputeTelecom, Networking, Server & Storage,
Storage & Security Appliance, Converged
Infrastructure, Software Defined Product
Solutions.
Consumer Technologies
GroupWearables, Fashion, Connected Living,
Gaming, Mobile, PCs/Printers.
Industrial & Emerging
IndustriesSemiconductor & Capital Equipment, Office
Solutions, Household Industrial & Lifestyle,
Industrial Automation & Kiosks, Energy &
Metering, Lighting.
High Reliability SolutionsMedical: Consumer Health, Digital Health,
Disposables, Drug Delivery, Diagnostics, Life
Sciences & Imaging Equipment.
Automotive: Vehicle Electronics, Connectivity,
Clean Technologies.
Dec
2015
33%
HRS IEI
CTG CEC
Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17E($M) $ $ $ $ $ Q/Q % Y/Y % Outlook Q/Q %
CEC 2,469 2,201 2,196 2,102 2,102 0% (15%) Down 5 - 10%
CTG 2,058 1,364 1,314 1,665 1,849 11% (10%) Down 20 - 30%
IEI 1,214 1,190 1,289 1,243 1,141 (8%) (6%) Up 10% - 15%
HRS 1,022 1,018 1,078 999 1,023 2% 0% Flat to Up 5%
Total Revenue $6,763 $5,773 $5,877 $6,009 $6,115 2% (10%)
34%
19%17%
30% Dec
2016
36%
HRS IEI
CTG CEC
10
Q4 FY2017 Guidance – March 2017
GAAP Income Before Income Taxes $100 - $130 million
GAAP Earnings Per Share $0.17 - $0.21
Other Information:
Interest & Other Expense $25 to $30 million
Adjusted Income Tax Rate 8.0% to 10.0%
WASO ~543 million shares
($M, except per share amounts)
$5,500 - $5,900Revenue
$185 - $215Adjusted Operating Income
$0.27 - $0.31Adjusted Earnings Per Share
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For more information, go to investors.flex.com
12
Appendix: Reconciliation of GAAP to Non-GAAP Measures
Quarter-endedDecember 31, 2016
($Thousands, except debt to EBITDA ratio) GAAP Adjustments Non-GAAP
Pretax income $140,242 $56,936 $197,178
Depreciation 109,415 -- 109,415
Amortization 18,734 (18,734) --
Interest, net 23,516 6,613 30,129
EBITDA 291,907 44,815 336,722
EBITDA – rolling 4 qtrs. 957,712 301,198 1,258,910
Total Debt $2,866,840 -- $2,866,840
Debt to EBITDA 3.0x (0.7x) 2.3x
Quarter-endedDecember 31, 2016
ROIC %
GAAP 13.1%
Non-GAAP Adjustments 6.9%
Non-GAAP 20.0%
Return on Invested Capital (ROIC) is calculated by dividing the Company's last twelve months after-tax
Non-GAAP operating income by the net invested capital asset base as of each date. After-tax non-
GAAP operating income is reconciled to the nearest GAAP measure above. The net invested capital
asset base is defined as the sum of shareholders' equity plus debt less cash and cash equivalents
averaged over the last five quarters.
Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA) and Debt/EBITDA are non-GAAP financial
measures. EBITDA is derived by adjusting for net interest and adding back depreciation to non-GAAP pretax income.
Quarterly Debt to EBITDA is calculated by dividing the Company's total debt as of the date presented by LTM EBITDA.
Non-GAAP pretax income excludes certain amounts that are included in the most directly comparable measures under
GAAP including stock-based compensation expense, intangible amortization and certain other charges. Additionally,
non-GAAP interest includes the loss on the sale of accounts receivable under our global AR securitization and factoring
programs.
Quarter-endedDecember 31, 2016
($Thousands, except per share amounts)
GAAP gross profit $416,455
Stock-based compensation expense 2,437
Restructuring 14,968
Non-GAAP gross profit $433,860
GAAP SG&A expenses $231,551
Stock-based compensation expense (18,344)
Restructuring (2,453)
Non-GAAP SG&A expenses $210,754
GAAP income before income taxes $140,242
Stock-based compensation expense 20,781
Restructuring 17,421
Intangible amortization 18,734
Interests and other, net 22,838
Other charges, net 3,090
Non-GAAP operating income $223,106
GAAP provision for income taxes $10,773
Intangible amortization benefits 1,776
Tax benefit on restructuring 1,684
Non-GAAP provision for income taxes $14,233
GAAP net income $129,469
Stock-based compensation expense 20,781
Restructuring 17,421
Intangible amortization 18,734
Adjustments for taxes (3,460)
Non-GAAP net income $182,945
Diluted EPS
GAAP EPS $0.24
Non-GAAP EPS $0.34
For more details on the GAAP to Non-GAAP adjustments for current and historical periods, please
refer to the Investor Relations section of our website which includes press releases and summary
financials of the respective periods.
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