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FLEX Q1 Earnings and Revenues Surpass Estimates, Up Y/Y

·3 min read

Flex Ltd. FLEX reported first-quarter fiscal 2022 adjusted earnings of 46 cents per share that beat the Zacks Consensus Estimate by 24.3% and surged 100% year over year.

Revenues increased 23.1% year over year to $6.34 billion and beat the consensus mark by 3.9%. The top line benefited from continued strength in the Agility Solutions and Reliability Solutions segments.

Segment Details

Flex Agility Solutions Group comprises of Communications & Enterprise Compute or CEC, Lifestyle and Consumer Devices businesses. Revenues increased 18% year over year to $3.43 billion.

Lifestyle benefited from continued robust demand for high-end durable goods and new business ramps. CEC’s top line benefited from higher cloud and critical infrastructure spend, as well as accelerated 5G deployment.

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

Flex Reliability Solutions Group comprises of Health Solutions, Automotive and Industrial businesses. Revenues increased 29.9% year over year to $2.91 billion.

In automotive, growth was witnessed due to strong demand and continued deal wins in ADAS and EV. Flex’s Health Solutions business continued to benefit from strong critical and chronic care, along with improving demand in areas such as elective procedures.

The Industrial unit benefited from expanding footprint in EV charging.

Operating Details

Non-GAAP gross margin expanded 130 basis points (bps) on a year-over-year basis to 7.5% in the reported quarter.

Non-GAAP selling, general & administrative (SG&A) expenses, as a percentage of revenues, declined 10 bps year over year to 2.9%.

Non-GAAP operating margin expanded 230 bps on a year-over-year basis to 4.6%, benefiting from cost-containment efforts.

Flex Agility Solutions Group’s adjusted operating margin was 4%, up 150 bps year over year. Flex Reliability Solutions Group’s adjusted operating margin was 5.8%, up 70 bps.

Balance Sheet & Cash Flow

As of Jun 30, 2021, cash & cash equivalents were $2.69 billion, up from $2.64 billion as of Mar 31, 2021.

Total debt (including current portion) was $3.78 billion as of Jun 30, up from $3.78 billion as of Mar 31.

Net cash provided by operating activities was $334 million during the reported quarter compared with $144 million of net cash generated in the previous quarter.

Adjusted free cash flow was $219 million in the reported quarter compared with free cash flow of $677 million in the previous quarter.

Guidance

For second-quarter fiscal 2022, Flex expects revenues between $6.1 billion and $6.5 billion.

Adjusted operating income is expected between $250 million and $290 million. Adjusted earnings are expected in the range of 37-43 cents per share.

For fiscal 2022, Flex expects revenues between $25.5 billion and $26.5 billion, up from the previous guidance range of $25-$26 billion.

Adjusted operating income margin is expected between 4.5% and 4.7%, up from the previous range of 4.4%-4.6%.

Adjusted earnings are expected in the range of $1.70-$1.85 per share, up from the previous range of $1.60-$1.75 per share.

Zacks Rank & Stocks to Consider

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

Better-ranked stocks in the broader technology sector include Avnet AVT, CyberArk Software CYBR and Bruker BRKR. While Avnet sports a Zacks Rank #1 (Strong Buy), both CyberArk and Bruker carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Bruker, Avnet and CyberArk are set to report their earnings results on Aug 2, 11 and 12, respectively.


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