Flextronics Reports Fourth Quarter And Fiscal 2015 Results

April 29, 2015

- Fourth Quarter Adjusted EPS at $0.27, up 13% Year-over-Year
- Quarterly Adjusted Operating Margin Increased 30 basis points Year-over-Year
- Fiscal Year Adjusted EPS of $1.08, up 21%

SAN JOSE, Calif., April 29, 2015 /PRNewswire/ -- Flextronics (NASDAQ: FLEX), a leading end-to-end supply chain solutions company, today announced results for its fourth quarter and fiscal year ended March 31, 2015:

(US$ in millions, except EPS)


Three Month Periods Ended




Twelve Month Periods Ended



March 31


March 31




March 31


March 31

Continuing Operations:


2015


2014




2015


2014

Net sales

$

5,952

$

6,724



$

26,148

$

26,109

Adjusted operating income

$

178

$

182



$

751

$

665

GAAP operating income

$

164

$

137



$

701

$

549

Adjusted net income

$

157

$

146



$

637

$


556

GAAP net income

$

135

$

43



$

601

$

366

Adjusted EPS

$

0.27

$

0.24



$

1.08

$

0.89

GAAP EPS

$

0.23

$

0.07



$

1.02

$

0.59















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

Fourth Quarter Results of Operations

Flextronics net sales for the fourth quarter ended March 31, 2015 were just under $6.0 billion, slightly below its previously provided revenue guidance of$6.0 billion to $6.4 billion. Despite the lighter revenues, adjusted operating income only decreased $4.0 million compared to the same quarter last year with operating margin improvement of 30 basis points to 3.0% from 2.7%. Flextronics adjusted income grew 8% to $157 million for the fourth quarter. Adjusted earnings per diluted share of $0.27 in the fourth quarter ended March 31, 2015 was up 13% from $0.24 in the year ago quarter.

Fiscal Year 2015 Results of Operations

Flextronics net sales for the fiscal year ended March 31, 2015 were $26.1 billion, flat versus the prior year. Fiscal year 2015 adjusted operating income increased 13% to $751 million from $665 million in the prior fiscal year. Adjusted earnings per diluted share also increased 21% to $1.08 year-over-year. 

"Fiscal 2015 underscored our company's ability to deliver on our commitments through steady execution which resulted in an increased adjusted operating income of 13% year-over-year and an all-time record adjusted EPS of $1.08, up 21% versus the prior year," said Mike McNamara, chief executive officer at Flextronics.

"We continue to use our strong cash flow generation to consistently return value to our shareholders through repurchasing our shares," said  Chris Collier, chief financial officer at Flextronics. "For fiscal 2015 we spent $416 million buying back almost 7% of our shares, representing an allocation of 75% of our fiscal 2015 free cash flow."

Guidance
The acquisition of Mirror Controls International ("MCi") announced today in a separate press release is expected to close in the quarter endingSeptember 25, 2015 and as a result does not impact the guidance below for the quarter ending June 26, 2015.

For the first quarter ending June 26, 2015, revenue is expected to be in the range of $5,600 to $6,200 million and adjusted EPS is expected to be in the range of $0.20 to $0.26 per diluted share.

GAAP earnings per share is expected to be lower than the adjusted EPS 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 fourth quarter ended March 31, 2015. 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 innovative 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 and innovations centers 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 Forms 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





March 31, 2015


March 31, 2014



GAAP:








Net sales

$

5,951,600

$

6,723,934




Cost of sales


5,572,783


6,338,268




Restructuring charges


-


23,522




Gross profit


378,817


362,144




Selling, general and administrative expenses


214,613


213,735




Restructuring charges


-


11,029




Operating income


164,204


137,380




Intangible amortization


8,807


7,397




Other (income) charges, net(2)


(11,707)


55,000




Interest and other, net


11,232


16,388




Income before income taxes


155,872


58,595




Provision for income taxes


20,760


15,620




Net income

$

135,112

$

42,975











EPS:









Net income:








GAAP

$

0.23

$

0.07




Non-GAAP

$

0.27

$

0.24












Shares used in computing diluted per share amounts


581,852


611,719











FLEXTRONICS INTERNATIONAL LTD.


UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


(In thousands, except per share amounts)












Twelve Month Periods Ended





March 31, 2015


March 31, 2014



GAAP:








Net sales

$

26,147,916

$

26,108,607




Cost of sales


24,602,576


24,609,738




Restructuring charges


-


58,648




Gross profit


1,545,340


1,440,221




Selling, general and administrative expenses


844,473


874,796




Restructuring charges


-


16,663




Operating income


700,867


548,762




Intangible amortization


32,035


28,892




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


(53,233)


57,512




Interest and other, net


51,410


61,904




Income before income taxes


670,655


400,454




Provision for income taxes


69,854


34,860




Net income

$

600,801

$

365,594











EPS:









Net income:








GAAP

$

1.02

$

0.59




Non-GAAP

$

1.08

$

0.89












Shares used in computing diluted per share amounts


591,556


623,479



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



March 31,

2015


March 31,

2014

GAAP gross profit

$

378,817

$

362,144

Stock-based compensation expense


1,941


1,522

Restructuring charges


-


23,522

Non-GAAP gross profit

$

380,758

$

387,188

GAAP SG&A Expenses

$

214,613

$

213,735

Stock-based compensation expense


11,509


8,500

Non-GAAP SG&A Expenses

$

203,104

$

205,235

GAAP operating income

$

164,204

$

137,380

Stock-based compensation expense


13,450


10,022

Restructuring charges


-


34,551

Non-GAAP operating income

$

177,654

$

181,953

GAAP provision for income taxes

$

20,760

$

15,620

Intangible amortization benefit


215


291

Restructuring charges


-


3,881

Non-GAAP provision for income taxes

$

20,975

$

19,792

GAAP net income

$

135,112

$

42,975

Stock-based compensation expense


13,450


10,022

Intangible amortization


8,807


7,397

Restructuring charges


-


34,551

Other charges(2)


-


55,000

Adjustments for taxes


(215)


(4,172)

Non-GAAP net income

$

157,154

$

145,773

EPS:





Net income:





GAAP

$

0.23

$

0.07

Non-GAAP

$

0.27

$

0.24






FLEXTRONICS INTERNATIONAL LTD.


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


(In thousands, except per share amounts)




Twelve Month Periods Ended




March 31,2015


March 31,2014


GAAP gross profit

$

1,545,340

$

1,440,221


Stock-based compensation expense


7,503


6,540


Restructuring charges


-


58,648


Non-GAAP gross profit

$

1,552,843

$

1,505,409


GAAP SG&A Expenses

$

844,473

$

874,796


Stock-based compensation expense


42,767


33,899


Non-GAAP SG&A Expenses

$

801,706

$

840,897


GAAP operating income

$

700,867

$

548,762


Stock-based compensation expense


50,270


40,439


Restructuring charges


-


75,311


Non-GAAP operating income

$

751,137

$

664,512


GAAP provision for income taxes

$

69,854

$

34,860


Intangible amortization benefit


1,783


949


Restructuring charges


-


7,929


Non-GAAP provision for income taxes

$

71,637

$

43,738


GAAP net income

$

600,801

$

365,594


Stock-based compensation expense


50,270


40,439


Intangible amortization


32,035


28,892


Restructuring charges


-


75,311


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


(44,009)


55,000


Adjustments for taxes


(1,783)


(8,878)


Non-GAAP net income

$

637,314

$

556,358


EPS:






Net income:






GAAP

$

1.02

$

0.59


Non-GAAP

$

1.08

$

0.89























SCHEDULE III


FLEXTRONICS INTERNATIONAL LTD.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)













March 31, 2015



March 31, 2014

ASSETS






Current Assets:







Cash and cash equivalents

$

1,628,408


$

1,593,728


Accounts receivable, net


2,337,515



2,697,985


Inventories


3,488,752



3,599,008


Other current assets



1,235,836



1,509,605

Total current assets



8,690,511



9,400,326







Property and equipment, net


2,092,167



2,288,656

Goodwill and other intangible assets, net


415,175



377,218

Other assets



496,006



433,950

Total assets


$

11,693,859


$

12,500,150









LIABILITIES AND SHAREHOLDERS' EQUITY






Current Liabilities:







Bank borrowings and current portion of long-term debt

$

46,162


$

32,575


Accounts payable


4,561,194



4,747,779


Other current liabilities


2,148,867



2,876,333

Total current liabilities



6,756,223



7,656,687








Long-term debt, net of current portion:







Revolving credit facility



-



-


4.625% Notes (due 2020)



500,000



500,000


5.000% Notes (due 2023)



500,000



500,000


Term Loans



1,027,500



1,067,500


Other long-term debt


10,071



2,520

Other liabilities


503,815



571,764









Total shareholders' equity


2,396,250



2,201,679

Total liabilities and shareholders' equity


$

11,693,859


$

12,500,150









SCHEDULE IV

FLEXTRONICS INTERNATIONAL LTD.AND SUBSIDIARIES

NOTES TO SCHEDULES I, II, & III


(1)

To supplementFlextronics'sunaudited selected financial data presented on a basis consistent with Generally Accepted Accounting Principles ("GAAP"), the Company discloses certain non-GAAP financial measures that exclude certain charges, including non-GAAP gross profit, non-GAAP selling, general and administrative expenses, non-GAAP operating income, non-GAAP net income and non-GAAP net income per diluted share. These supplemental measures exclude stock-based compensation expense, restructuring charges, intangible amortization, other discrete events as applicable and the related tax effects. These non-GAAP measures are not in accordance with or an alternative for GAAP, and may be different from non-GAAP measures used by other companies. We believe that these non-GAAP measures have limitations in that they do not reflect all of the amounts associated withFlextronics'sresults of operations as determined in accordance with GAAP and that these measures should only be used to evaluateFlextronics'sresults of operations in conjunction with the corresponding GAAP measures. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the most directly comparable GAAP measures. We compensate for the limitations of non-GAAP financial measures by relying upon GAAP results to gain a complete picture of the Company's performance.




In calculating non-GAAP financial measures, we exclude certain items to facilitate a review of the comparability of the Company's operating performance on a period-to-period basis because such items are not, in our view, related to the Company's ongoing operational performance. We use non-GAAP measures to evaluate the operating performance of our business, for comparison with forecasts and strategic plans, for calculating return on investment, and for benchmarking performance externally against competitors. In addition, management's incentive compensation is determined using certain non-GAAP measures. Also, when evaluating potential acquisitions, we exclude certain of the items described below from consideration of the target's performance and valuation. Since we find these measures to be useful, we believe that investors benefit from seeing results "through the eyes" of management in addition to seeing GAAP results. We believe that these non-GAAP measures, when read in conjunction with the Company's GAAP financials, provide useful information to investors by offering:




the ability to make more meaningful period-to-period comparisons of the Company's on-going operating results;


the ability to better identify trends in the Company's underlying business and perform related trend analyses;


a better understanding of how management plans and measures the Company's underlying business; and


an easier way to compare the Company's operating results against analyst financial models and operating results of competitors that supplement their GAAP results with non-GAAP financial measures.




The following are explanations of each of the adjustments that we incorporate into non-GAAP measures, as well as the reasons for excluding each of these individual items in the reconciliations of these non-GAAP financial measures:





Stock-based compensation expenseconsists of non-cash charges for the estimated fair value of stock options and unvested restricted share unit awards granted to employees and assumed in business acquisitions. The Company believes that the exclusion of these charges provides for more accurate comparisons of its operating results to peer companies due to the varying available valuation methodologies, subjective assumptions and the variety of award types. In addition, the Company believes it is useful to investors to understand the specific impact stock-based compensation expense has on its operating results.






Intangible amortizationconsists primarily of non-cash charges that can be impacted by, among other things, the timing and magnitude of acquisitions. The Company considers its operating results without these charges when evaluating its ongoing performance and forecasting its earnings trends, and therefore excludes such charges when presenting non-GAAP financial measures. The Company believes that the assessment of its operations excluding these costs is relevant to its assessment of internal operations and comparisons to the performance of its competitors.






Restructuring chargesinclude severance, asset impairment, lease termination, contract and product exit costs and other charges primarily related to the closures and consolidations of various manufacturing facilities. These costs may vary in size based on the Company's restructuring activities, and are not directly related to ongoing or core business results, and do not reflect expected future operating expenses. These costs are excluded by the Company's management in assessing current operating performance and forecasting its earnings trends, and are therefore excluded by the Company from its non-GAAP measures.






Adjustment for taxesrelates to the tax effects of the various adjustments that we incorporate into non-GAAP measures in order to provide a more meaningful measure on non-GAAP net income and certain adjustments related to non-recurring settlements of tax contingencies.





For the twelve-month period endedMarch 31, 2015, Free Cash Flow was$554 millionconsisting of GAAP net cash flows from operating activities of$794 millionless purchases of property and equipment net of proceeds from dispositions of$240 million. We believe Free Cash Flow is an important liquidity metric because it measures, during a given period, the amount of cash generated that is available to repay debt obligations, make investments, fund acquisitions and for certain other activities. Since Free Cash Flow includes investments in operating assets, we believe this non-GAAP liquidity measure is useful in addition to the most directly comparable GAAP measure - "net cash flows provided by operating activities."



(2)

In accordance with a manufacturing agreement, the Company recognized a$55.0 millioncharge for a contractual obligation during the quarter endedMarch 31, 2014. During the first quarter of fiscal 2015, an amendment was executed which included the removal of the$55.0 millionobligation. Accordingly, the Company reversed this charge with a corresponding credit to other income, included in other (income) charges, net with no impact to cash.



(3)

During the first quarter of fiscal 2015, the Company recognized a loss of$11.0 millionin connection with the disposition of a certain European manufacturing facility, which is included in other (income) charges, net.

To view the original version on PR Newswire, visit: http://www.prnewswire.com/news-releases/flextronics-reports-fourth-quarter-and-fiscal-2015-results-300074601.html

SOURCE Flextronics

News Provided by Acquire Media

Email Alerts

Email Address *
Mailing Lists *





press-release-details