Flextronics Reports First Quarter Fiscal 2015 Results

July 24, 2014

· Net sales exceeded guidance, increasing over $850 million or 15% year-over-year
· Adjusted operating profit of $183 million exceeded guidance, up 34% year-over-year
· Adjusted EPS at $0.25 was above guidance and rose 39% year-over-year

SAN JOSE, Calif., July 24, 2014 /PRNewswire/ -- Flextronics (NASDAQ: FLEX), a leading end-to-end supply chain solutions company, today announced results for its first quarter, fiscal 2015 ended June 27, 2014:

(US$ in millions, exceptWASOand EPS)


Three Month Periods Ended



June 27


March 31


June 28



2014


2014


2013

Net sales

$

6,643

$

6,724

$

5,791

Adjusted operating income

$

183

$

182

$

137

GAAP operating income

$

172

$

137

$

87

Adjusted netincome

$

148

$

146

$

112

GAAP net income

$

174

$

43

$

59

Adjusted EPS

$

0.25

$

0.24

$

0.18

GAAP EPS

$

0.29

$

0.07

$

0.09

WASO(millions)


601


612


640








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 Fiscal 2015 Results of Operations

Net sales for the first quarter were $6.6 billion, higher than the Company's previously provided revenue guidance of $6.0 billion to $6.5 billion. The Company's adjusted earnings per diluted share of $0.25 in the first quarter was also higher than the Company's previously provided guidance of $0.20to $0.24.

First quarter adjusted operating income was $183 million, increasing 34% year-over-year and exceeding the high end of the guidance range of $150 to$180 million.

Adjusted net income excludes recognition of $55 million of other income due to the reversal of the contractual obligation charge recorded last quarter, as expected.

"We are the most advanced worldwide supply chain solutions provider and continue to make steady improvements across most of our core financial metrics," said Mike McNamara, chief executive officer at Flextronics. "During the June quarter, all four of our business groups exceeded our expectations and both our IEI and our HRS businesses reached record levels for quarterly sales."

"We continue to return value to shareholders through our stock buyback program by repurchasing another 10.5 million shares during the quarter for$106 million," said Chris Collier, chief financial officer at Flextronics.

Guidance

For the second quarter ending September 26, 2014, revenue is expected to be in the range of $6.2 to $6.6 billion and adjusted EPS is expected to be in the range of $0.22 to $0.26 per diluted share. 

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

Conference Calls and Web Casts

A conference call hosted by Flextronics's management team 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 27, 2014. The conference call will be broadcast via the Internet and may be accessed by logging on to the Company's website at www.flextronics.com. Additional information in the form of a slide presentation may also be found on the Company's website. A replay of the broadcast will remain available on the Company's website afterwards.

About Flextronics

Flextronics International Ltd. (Reg. No. 199002645H) is a leading end-to-end supply chain solutions company that delivers design, engineering, manufacturing and logistics services to a range of industries and end-markets, including data networking, telecom, enterprise computing and storage, industrial, capital equipment, appliances, automation, medical, automotive, aerospace and defense, energy, mobile, computing and other electronic product categories. Flextronics is an industry leader with $26 billion in sales, generated from helping customers design, build, ship, and service their products through an unparalleled network of facilities in approximately 30 countries and across four continents. Flextronics service offerings and vertically integrated component technologies optimize customer supply chains by lowering costs, increasing flexibility, and reducing time-to-market. For more information, visit www.flextronics.com or follow us on Twitter @flextronics.

This press release contains forward-looking statements within the meaning of U.S. securities law, including statements related to the 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; the challenges of effectively managing our operations, including our ability to control costs and manage changes in our operations; compliance with legal and regulatory requirements; the possibility that benefits of the Company's restructuring actions may not materialize as expected; that the expected revenue and margins from recently launched programs may not be realized; that recently proposed changes in tax laws in certain jurisdictions where we operate may materially impact our tax expense, 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 theU.S. Securities and Exchange Commission. The forward-looking statements in this press release are based on current expectations and Flextronicsassumes no obligation to update these forward-looking statements. Our share repurchase program does not obligate the Company to repurchase a specific number of shares and may be suspended or terminated at any time without prior notice.

Renee Brotherton

Kevin Kessel

Corporate Communications

Investor Relations

(408) 576-7189

(408) 576-7985

renee.brotherton@flextronics.com

kevin.kessel@flextronics.com

SCHEDULE I

FLEXTRONICS INTERNATIONAL LTD.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)












Three Month Periods Ended




June 27, 2014


March 31, 2014


June 28, 2013

GAAP:








Net sales

$

6,642,745

$

6,723,934

$

5,791,125


Cost of sales


6,261,960


6,361,790


5,480,090


Gross profit


380,785


362,144


311,035


Selling, general and administrative expenses


209,277


224,764


223,619


Operating income


171,508


137,380


87,416


Intangible amortization


6,951


7,397


8,202


Interest and other, net


18,637


16,388


12,573


Other charges (income), net


(44,009)


55,000


7,111


Income before income taxes


189,929


58,595


59,530


Provision for income taxes


16,042


15,620


273


Net income

$

173,887

$

42,975

$

59,257









EPS:









Net income:








GAAP

$

0.29

$

0.07

$

0.09


Non-GAAP

$

0.25

$

0.24

$

0.18










Diluted shares used in computing per share amounts


601,300


611,719


639,899










See Schedule II for the reconciliation of GAAP to non-GAAP financial measures. See the accompanying notes on Schedule IV attached to this press release.










SCHEDULE II

FLEXTRONICS INTERNATIONAL LTD.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES(1)

(In thousands, except per share amounts)



Three Month Periods Ended



June 27,
2014


March 31,
2013


June 28,
2013

GAAP gross profit

$

380,785

$

362,144

$

311,035

Stock-based compensation expense


1,611


1,522


1,352

Restructuring charges


-


23,522


35,126

Non-GAAP gross profit

$

382,396

$

387,188

$

347,513

GAAP SG&A Expenses

$

209,277

$

224,764

$

223,619

Stock-based compensation expense


10,071


8,500


7,237

Restructuring charges


-


11,029


5,634

Non-GAAP SG&A Expenses

$

199,206

$

205,235

$

210,748

GAAP operating income

$

171,508

$

137,380

$

87,416

Stock-based compensation expense


11,682


10,022


8,589

Restructuring charges


-


34,551


40,760

Non-GAAP operating income

$

183,190

$

181,953

$

136,765

GAAP provision for income taxes

$

16,042

$

15,620

$

273

Intangible amortization benefit


167


291


329

Restructuring charges


-


3,881


4,048

Non-GAAP provision for income taxes

$

16,209

$

19,792

$

4,650

GAAP net income

$

173,887

$

42,975

$

59,257

Stock-based compensation expense


11,682


10,022


8,589

Intangible amortization


6,951


7,397


8,202

Restructuring charges


-


34,551


40,760

Other charges (income), net(2)(3)


(44,009)


55,000


-

Adjustments for taxes


(167)


(4,172)


(4,377)

Non-GAAP net income

$

148,344

$

145,773

$

112,431

EPS:


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