Flex Reports Second Quarter Fiscal 2024 Results

Estimated reading time: 3 minutes

Flex announced results for its second quarter ended September 29, 2023.

Second Quarter Fiscal Year 2024 Highlights:

• Net Sales: $7.5 billion
• GAAP Operating Income: $376 million
• Adjusted Operating Income: $439 million
• GAAP Net Income attributable to Flex Ltd: $228 million
• Adjusted Net Income attributable to Flex Ltd: $303 million
• GAAP Earnings Per Share: $0.51
• Adjusted Earnings Per Share: $0.68

An explanation and reconciliation of non-GAAP financial measures to GAAP financial measures is presented in Schedules II and V attached to this press release.

"Our focus on the right portfolio and margin expansion has enabled the team to deliver another strong quarter and make solid progress on our financial framework," said Revathi Advaithi, CEO of Flex. "With the announcement of our plan to spin-off our remaining interest in Nextracker, we come to the final stage of unlocking its full value. Our strategic focus remains on driving growth in targeted markets, expanding margins, and executing our capital allocation strategy."

Third Quarter Fiscal 2024 Guidance

• Revenue: $6.5 billion to $6.9 billion
• GAAP Operating Income: $210 million to $260 million
• Adjusted Operating Income: $375 million to $425 million
• GAAP EPS: $0.25 to $0.34
• Adjusted EPS: $0.57 to $0.65 which excludes $0.20 for net restructuring charges, $0.09 for stock-based compensation expense, $0.03 for net intangible amortization, and ($0.01) for noncontrolling interest share of subsidiary's non-GAAP adjustments.

Fiscal Year 2024 Guidance Updated - Total Flex

• Revenue: $28.1 billion to $28.8 billion
• GAAP EPS: $1.71 to $1.89
• Adjusted EPS: $2.49 to $2.66 which excludes $0.39 for stock-based compensation expense, $0.27 for net restructuring charges, $0.13 for net intangible amortization, and ($0.01) net of tax impact for noncontrolling interest share of subsidiary's non-GAAP adjustment.

In addition, we are providing fiscal year 2024 guidance for Core Flex to provide further transparency in our core business trends. Core Flex represents Flex, excluding Flex's 51.47% economic interest in Nextracker, which is currently consolidated within Flex, and which is expected to be distributed to Flex shareholders in a tax-free spin-off in Flex's fourth quarter ending March 31, 2024. Core Flex is a non-GAAP measure that does not reflect discontinued operations presentation under GAAP.

Fiscal Year 2024 Guidance – Core Flex

• Revenue: $25.9 billion to $26.5 billion
• GAAP EPS: $1.38 to $1.51
• Adjusted EPS: $2.05 to $2.18 which excludes $0.27 for stock-based compensation expense, $0.27 for net restructuring charges and $0.13 for net intangible amortization.

Plan to Spin-off Remaining Interest in Nextracker to Flex Shareholders

Flex today also announced its plan to effect a spin-off of all of its remaining interest in Nextracker Inc. ("Nextracker") to Flex shareholders on a pro rata basis.

Flex expects that completion of the spin-off will unlock meaningful value, giving Flex shareholders direct ownership of Nextracker in a tax-free manner for U.S. federal income tax purposes and provides Flex with increased strategic flexibility.

The spin-off will be effected pursuant to that certain Agreement and Plan of Merger (the "Merger Agreement"), entered into by Flex and Nextracker on February 7, 2023, and disclosed in connection with Nextracker's previously completed initial public offering.  Earlier today, pursuant to the terms of the Merger Agreement, Flex delivered to Nextracker a written notice exercising Flex's right to effect the transactions contemplated by the Merger Agreement (the "Transactions").

Later today, Nextracker will be filing a registration statement on Form S-4, that includes a preliminary proxy statement of Flex, which will include additional information regarding the Transactions.

Flex currently beneficially owns approximately 51.47% of the economic interests in the business of Nextracker. As a result of the Transactions, Flex shareholders' indirect economic interest in the business of Nextracker will become an equivalent pro rata direct ownership interest in Nextracker Class A common stock listed on the Nasdaq Global Select Market. The number of shares of Nextracker Class A common stock to be received by each Flex shareholder will be determined in accordance with the Merger Agreement. Based on applicable share counts as of Flex's second quarter ended September 29, 2023, upon completion of the Transactions, a Flex shareholder as of the applicable record date would be expected to receive approximately 0.17 shares of Nextracker Class A common stock per Flex ordinary share held (with cash payments in lieu of any fractional shares of Nextracker Class A common stock). Following completion of the Transactions, Flex will no longer directly or indirectly hold any of the issued and outstanding shares of Nextracker or any common units of Nextracker LLC.

The Transactions are subject to a number of conditions as set forth in the Merger Agreement, including the approval of Flex shareholders in accordance with Singapore law, and there is no assurance that any such conditions will be satisfied or waived. Accordingly, no assurance can be given that the Transactions will in fact be completed. The Transactions are currently expected to be completed in Flex's fourth quarter ending March 31, 2024.