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Flex (FLEX) Q1 Earnings & Revenues Top Estimates, Up Y/Y

·4 min read

Flex Ltd. FLEX reported first-quarter fiscal 2023 adjusted earnings of 54 cents per share, beating the Zacks Consensus Estimate by 10.2%. The bottom line also grew 17.4% year over year.

Revenues increased 16% year over year to $7.3 billion and surpassed the consensus mark by 8.1%. The company benefited from strength across the Agility Solutions and Reliability Solutions segments, along with a solid end-market focus on the back of emerging opportunities.

Flex Ltd. Price, Consensus and EPS Surprise

Flex Ltd. Price, Consensus and EPS Surprise
Flex Ltd. Price, Consensus and EPS Surprise

Flex Ltd. price-consensus-eps-surprise-chart | Flex Ltd. Quote

Segment Details

The Flex Agility Solutions Group comprises the Communications & Enterprise Compute or CEC, Lifestyle, and Consumer Devices businesses. The group’s revenues were up 16% year over year to $4 billion.

Agility continued to grow at a profitable rate. The increases in CEC and Lifestyle were partially offset by supply-chain constraints.

The Flex Reliability Solutions Group comprises the Health Solutions, Automotive and Industrial businesses. The group’s revenues went up 15% year over year to $3 billion. Demand remained healthy across the business segment, which was partly offset by supply-chain constraints.

Operating Details

The non-GAAP gross margin contracted 10 basis points (bps) on a year-over-year basis to 7.4% in the reported quarter.

The non-GAAP selling, general & administrative (SG&A) expenses, as a percentage of revenues were 2.9% which remained unchanged from the prior-year period.

The non-GAAP operating margin also fell 10 bps year over year to 4.5% on a year-over-year basis.

The Flex Agility Solutions Group’s adjusted operating margin was 4.3%, up 30 bps year over year. The Flex Reliability Solutions Group’s adjusted operating margin was 5%, down 63 bps.

Balance Sheet & Cash Flow

As of Jul 1, 2022, cash & cash equivalents stood at $2.65 billion compared with $2.96 billion as of Mar 31, 2021.

As of Jul 1, total debt (net of current portion) stood at $3.13 billion compared with $3.24 billion as of Mar 31, 2021.

In first-quarter fiscal 2023, the company generated cash flow from operating activities of $38 million and a negative adjusted free cash flow of $53 million.

Guidance

For second-quarter fiscal 2023, Flex expects revenues between $7 billion and $7.4 billion.

It expects adjusted earnings of 48-54 cents per share. The adjusted operating income is projected between $315 million and $345 million.

For fiscal 2023, Flex expects revenues between $28.4 billion and $29.4 billion.
It expects adjusted earnings of $2.09-$2.24 per share. The adjusted operating income margin is projected to be 4.6-4.8%.

Zacks Rank & Stocks to Consider

Flex currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the broader technology space are Aspen Technology AZPN, Synopsys SNPS and InterDigital Inc. IDCC. Aspen Technology, Synopsys and InterDigital each carry a Zacks Rank #2 (Buy).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Aspen Technology’s 2022 earnings is pegged at $5.49 per share, increasing 0.4% in the past 60 days. The long-term earnings growth rate is anticipated to be 16.3%.

Aspen Technology’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 4.1%. Shares of AZPN have soared 34.9% in the past year.

The Zacks Consensus Estimate for Synopsys 2022 earnings is pegged at $8.67 per share, unchanged in the past 60 days. The long-term earnings growth rate is anticipated to be 19.6%.

Synopsys earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 2.7%. Shares of SNPS have jumped 24.6% in the past year.

The Zacks Consensus Estimate for InterDigital’s 2022 earnings is pegged at $2.76 per share, declining 15.9% in the past 60 days. The long-term earnings growth rate is anticipated to be 15%.

InterDigital’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 141.1%. Shares of IDCC have declined 8.7% in the past year.


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