Flextronics Reports First Quarter Results

July 25, 2012

- Adjusted EPS from Continuing Operations Increased 10% to $0.23
- GAAP EPS from Continuing Operations Increased 11% to $0.20

SINGAPORE, July 25, 2012 /PRNewswire/ -- Flextronics (NASDAQ: FLEX) today announced results for its first quarter ended June 29, 2012 as follows:

(US$ in millions, except EPS)

     

Three Month Periods Ended

   
 

June 29,

 

July 1,

 

Y/Y

 

2012

 

2011

 

Growth

Net sales

$        5,990

 

$   7,506

 

-20%

Adjusted operating income (1)

$           177

 

$      200

 

-12%

GAAP operating income

$           167

 

$      188

 

-11%

Adjusted net income - continuing operations(1)

$           156

 

$      160

 

-3%

GAAP net income - continuing operations

$           137

 

$      135

 

1%

Adjusted EPS - continuing operations (1)

$          0.23

 

$     0.21

 

10%

GAAP EPS - continuing operations

$          0.20

 

$     0.18

 

11%

           

(1) An explanation and reconciliation of non-GAAP financial measures to GAAP financial measures  

     is presented in Schedule II attached to this press release.  

First Quarter Results
Net sales for the first quarter ended June 29, 2012 amounted to $6.0 billion, adjusted operating income was $177 million and adjusted operating margins increased 30 basis points to 3.0% during the current quarter compared to the same quarter last year. Adjusted net income from continuing operations for the first quarter ended June 29, 2012 was $156 million and adjusted EPS from continuing operations increased 10% year-over-year to $0.23 and GAAP EPS from continuing operations was up 11% year-over-year.

"Despite the challenging economic environment, we achieved our targeted operating margin and our adjusted EPS improved 10% compared to the same quarter last year. We have accomplished a transformation of our business to our desired portfolio model, which will lead to further margin expansion over the course of fiscal year 2013," said Mike McNamara, CEO of Flextronics.

"As a result of our business transformation, our portfolio will improve our earnings predictability, generate higher margins and increase free cash flow going forward," said Paul Read, CFO of Flextronics. "We repurchased another 20.4 million shares during the quarter which has resulted in the reduction of our diluted weighted average shares outstanding by 9% or 72 million shares from a year ago, underscoring our confidence in our cash flow generation and future business performance," Read added.

Guidance
For the second quarter ending September 28, 2012, revenue is expected to be in the range of $5.9­­­ billion to $6.3 billion. Adjusted EPS is expected to be in the range of $0.21 to $0.25 per share.

GAAP earnings per share are expected to be lower than the guidance provided herein by approximately $0.03 per diluted share for quarterly intangible amortization and stock-based compensation expense.

Conference Calls and Web Casts

A conference call hosted by Flextronics's management will be held today at 2:00 PM (PT) / 5:00 PM ET) to discuss the Company's financial results for the first quarter ended June 29, 2012.

The conference call will be broadcast via the Internet and may be accessed by logging on to the Company's website at http://www.flextronics.com/. Additional information in the form of a slide presentation may also be found on the Company's site. A replay of the broadcast will remain available on the Company's website afterwards.

About Flextronics
Headquartered in Singapore (Singapore Reg. No. 199002645H), Flextronics is a leading Electronics Manufacturing Services (EMS) provider focused on delivering complete design, engineering and manufacturing services to aerospace and defense, automotive, computing, consumer, industrial, infrastructure, medical, clean tech and mobile OEMs. Flextronics helps customers design, build, ship and service electronics products through a network of facilities in 30 countries on four continents. This global presence provides design and engineering solutions that are combined with core electronics manufacturing and logistics services, and are vertically integrated with components technologies, to optimize customer operations by lowering costs and reducing time to market. For more information, please visit www.flextronics.com.  

This press release contains forward-looking statements within the meaning of U.S. securities laws, including statements related to future expected revenues and earnings per share. These forward-looking statements involve risks and uncertainties that could cause the actual results to differ materially from those anticipated by these forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements. These risks include: that future revenues and earnings may not be achieved as expected; our dependence on industries that continually produce technologically advanced products with short life cycles; our ability to respond to changes in economic trends, to fluctuations in demand for customers' products and to the short-term nature of customers' commitments; competition in our industry, particularly from ODM suppliers in Asia; our dependence on a small number of customers for the majority of our sales; the challenges of effectively managing our operations, including our ability to manage manufacturing processes, utilize available manufacturing capacity, control costs and manage changes in our operations; production difficulties, especially with new products; the impact on our margins and profitability resulting from our increased components offerings; supply shortages of required electronic components; compliance with legal and regulatory requirements; the challenges of international operations, including fluctuations in exchange rates beyond hedge boundaries leading to unexpected charges; changes in government regulations and tax laws; and the effects that the current macroeconomic environment could have on our business and demand for our products as well as the effects that current credit and market conditions could have on the liquidity and financial condition of our customers and suppliers, including any impact on their ability to meet their contractual obligations. Additional information concerning these and other risks is described under "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our reports on Form 10-K and 10-Q that we file with the U.S. Securities and Exchange Commission. The forward-looking statements in this press release are based on current expectations and Flextronics assumes no obligation to update these forward-looking statements.

SCHEDULE I

           

FLEXTRONICS INTERNATIONAL LTD. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

           
     

Three Month Periods Ended

     

June 29, 2012

 

July 1, 2011

GAAP:

       
 

Net sales

 

$ 5,989,544

 

$    7,506,204

 

Cost of sales

 

5,631,212

 

7,105,426

           
 

      Gross profit 

 

358,332

 

400,778

           
 

Selling, general and administrative expenses

 

191,077

 

212,758

           
 

      Operating income 

 

167,255

 

188,020

           
 

Intangible amortization

 

8,840

 

13,302

 

Interest and other expense, net

 

9,297

 

22,215

           
 

      Income before income taxes

 

149,118

 

152,503

           
 

Provision for  income taxes

 

11,665

 

17,096

 

     Net income from continuing operations

 

$    137,453

 

$       135,407

           
 

     Loss from discontinued operations

 

(8,981)

 

(3,432)

           
 

     Net income 

 

$    128,472

 

$       131,975

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