Flextronics Reports Second Quarter Results

October 29, 2014

- Net Sales increased over $118 million Year-over-Year
- Adjusted Operating Profit rose 16% Year-over-Year
- Adjusted EPS at $0.26, GAAP EPS at $0.23
- Free cash flow generation of $322 million

SAN JOSE, Calif., Oct. 29, 2014 /PRNewswire/ -- Flextronics (NASDAQ: FLEX), a leading end-to-end supply chain solutions company, today announced results for its second quarter ended September 26, 2014:

(US$ in millions, exceptWASOand EPS)


Three Month Periods Ended



September 26


June 27


September 27



2014


2014


2013

Net sales

$

6,529

$

6,643

$

6,410

Adjusted operating income

$

183

$

183

$

159

GAAP operating income

$

172

$

172

$

150

Adjusted income

$

157

$

148

$

134

GAAP income

$

139

$

174

$

118

Adjusted EPS

$

0.26

$

0.25

$

0.22

GAAP EPS

$

0.23

$

0.29

$

0.19

WASO(millions)


596


601


624

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

Second Quarter Results of Operations

Net sales for the second quarter ended September 26, 2014 were $6.5 billion, within the Company's previously provided revenue guidance of $6.2 billion to $6.6 billion. The Company's adjusted earnings per diluted share of $0.26 in the second quarter ended September 26, 2014 was at the high end of the Company's previously provided guidance of $0.22 to $0.26.

Second quarter adjusted operating income increased 16% year-over-year to $183 million and was at the high end of the Company's previously provided guidance range of $165 million to $190 million.

"Our consistent execution continues to pay off with measured improvements across many areas of our business, including our operating margins, which improved for the sixth consecutive quarter," said Mike McNamara, chief executive officer at Flextronics.

"We are also pleased to have exceeded our revenue expectations in HRS and CTG in addition to posting $6.53 billion in sales," he added.

"We continued to deliver strong cash flow generation with cash flow from operations of $387 million and free cash flow of $322 million during the quarter," said Chris Collier, chief financial officer at Flextronics. "Additionally, we further demonstrated our commitment to return value to shareholders by repurchasing another 9.3 million shares during the quarter for $101 million," he added.

Guidance

For the third quarter ending December 31, 2014, revenue is expected to be in the range of $6.4 to $6.8 billion and adjusted EPS is expected to be in the range of $0.24 to $0.28 per diluted share.

GAAP earnings per share is expected to be lower than the guidance provided herein by approximately $0.04 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 second quarter ended September 26, 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 site. 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




September 26, 2014


June 27, 2014


September 27, 2013

GAAP:








Net sales

$

6,528,517

$

6,642,745

$

6,410,106


Cost of sales


6,151,436


6,261,960


6,041,683


Gross profit


377,081


380,785


368,423


Selling, general and administrative expenses


204,590


209,277


218,500


Operating income


172,491


171,508


149,923


Intangible amortization


8,232


6,951


7,718


Interest and other, net


12,506


18,637


14,601


Other charges (income), net


(2,584)


(44,009)


(1,000)


Income before income taxes


154,337


189,929


128,604


Provision for income taxes


15,434


16,042


10,399


Net income

$

138,903

$

173,887

$

118,205









EPS:








Net income:








GAAP

$

0.23

$

0.29

$

0.19


Non-GAAP

$

0.26

$

0.25

$

0.22










Diluted shares used in computing per share amounts


595,871


601,300


623,620

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



September 26,2014


June 27,2014


September 27, 2013

GAAP gross profit

$

377,081

$

380,785

$

368,423

Stock-based compensation expense


1,868


1,611


1,866

Non-GAAP gross profit

$

378,949

$

382,396

$

370,289

GAAP SG&A Expenses

$

204,590

$

209,277

$

218,500

Stock-based compensation expense


9,051


10,071


6,851

Non-GAAP SG&A Expenses

$

195,539

$

199,206

$

211,649

GAAP operating income

$

172,491

$

171,508

$

149,923

Stock-based compensation expense


10,919


11,682


8,717

Non-GAAP operating income

$

183,410

$

183,190

$

158,640

GAAP provision for income taxes

$

15,434

$

16,042

$

10,399

Intangible amortization benefit


1,177


167


329

Non-GAAP provision for income taxes

$

16,611

$

16,209

$

10,728

GAAP net income

$

138,903

$

173,887

$

118,205

Stock-based compensation expense


10,919


11,682


8,717

Intangible amortization


8,232


6,951


7,718

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


-


(44,009)


-

Adjustments for taxes


(1,177)


(167)


(329)

Non-GAAP net income

$

156,877

$

148,344

$

134,311

EPS:







Net income:







GAAP

$

0.23

$

0.29

$

0.19

Non-GAAP

$

0.26

$

0.25

$

0.22


SCHEDULE III

FLEXTRONICS INTERNATIONAL LTD.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)













September 26, 2014



March 31, 2014

ASSETS






Current Assets:







Cash and cash equivalents

$

1,514,352


$

1,593,728


Accounts receivable, net

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