earnings announcement: october 19,...
TRANSCRIPT
Earnings Announcement: October 19, 2015
(Ending September 25, 2015)
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This presentation contains forward-looking statements, which are based on current expectations and
assumptions that are subject to risks and uncertainties and actual results could materially differ. Such information
is subject to change and we undertake no obligation to update these forward-looking statements. For a
discussion of the risks and uncertainties, see our most recent filings with the Securities and Exchange
Commission, including our current, annual and quarterly reports.
If this presentation references non-GAAP financial measures, these measures are located on the “Investor
Relations” section of our website, www.flextronics.com along with the required reconciliation to the most
comparable GAAP financial measures.
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($ in millions, except per share amounts) September 26, 2014 June 26, 2015 September 25, 2015
Net sales $6,529 $5,566 $6,317
Adjusted operating income 183 159 196
Adjusted net income 157 134 153
Adjusted EPS $0.26 $0.23 $0.27
GAAP operating income 172 143 180
GAAP net income 139 111 123
GAAP EPS $0.23 $0.19 $0.22
Net sales of $6.3B above the mid-point guidance of $5.9 - $6.5B
Adjusted operating income of $196M above the mid-point of our guidance range of $165 - $205M
Adjusted EPS of $0.27 towards the high-end of guidance of $0.22 - $0.28
Please refer to the Investor Relations section of our website which contain the reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures
4 Please refer to the Investor Relations section of our website which contain the reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures
23.3%
24.1%23.7%
22.9% 22.7%
Sep-14 Dec-14 Mar-15 Jun-15 Sep-15
(ROIC %)
$0.26
$0.30
$0.27
$0.23
$0.27
Sep-14 Dec-14 Mar-15 Jun-15 Sep-15
(EPS)
6,529 7,025
5,952 5,566
6,317
5.8% 5.8%
6.4% 6.4% 6.3%
Sep-14 Dec-14 Mar-15 Jun-15 Sep-15
Adj. Gross Margin($ in millions)
183
207
178159
196
2.8%2.9%
3.0%2.9%
3.1%
$100
$120
$140
$160
$180
$200
$220
$240
Sep-14 Dec-14 Mar-15 Jun-15 Sep-15
% Revenue($ in millions)
5 Please refer to the Investor Relations section of our website which contain the reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures
$66 3.0%
$41 2.0%
$32 2.8%
$71 7.5%
Corporate
Services & Other1 ($14)
Total $196 3.1%
INS
CTG
HRS
($ in millions)
IEI
1. Corporate services and other related to unallocated cost
3%
5% 7%
3% 4%
4% 6%
• Strong sequential top-line growth and improved
utilization levels
• Remained within target range while managing
mobile phone demand erosion in China
• Exceeded target range due to solid execution and
strong contribution from MCi acquisition
• Revenue fell short of expectations due to ramp
challenges and increased macro weakness
2%
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• Q2 FY16 was $24M, better than guidance of ~$25M
• Outlook: quarterly estimate of ~$25M
• Q2 FY16 was 11.4%
• Outlook: 8-10% tax rate
• Intangible amortization $16M
• Stock based compensation $16M
• Aggregate impact on EPS $0.05
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Three Months
Ended
Six Months
Ended
($ in millions) Sep-15 Sep-15
GAAP net income $123 $234
Depreciation and amortization 120 230
Change in net working capital (27) 104
Other operating cash flows, net 84 94
Net cash provided by operating activities 300 662
Purchases of property & equipment, net (157) (294)
Free Cash Flow 143 368
Payments for share repurchases (142) (242)
Payments/Proceeds from borrowings, net (13) 575
Other investing and financing, net (651) (661)
Net change in cash and cash equivalents ($663) $40
1,886 1,834 1,866 1,730
1,858
7.2%6.5%
7.8% 7.8%7.4%
Sep-14 Dec-14 Mar-15 Jun-15 Sep-15
% Annualized Revenue($ in millions)
400
510
322
475 416
242
757 684 639
591 563 557
FY11 FY12 FY13 FY14 FY15 FY16 YTD
Shares Outstanding
($ in millions)
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$1,668
$1,500
$589 $469 $500 $500 $600
Liquidity 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
($M) (Calendar Year)
Cash
Revolver
Total
Liquidity
$3,168
••••
Term Loans LIBOR + 125 to 137.5bps
4.625% Notes 5% Notes 4.75% Notes
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• Strong SG&A control, with costs running below guidance
• Capex expected in-line or below depreciation for rest of the fiscal year
• Sketch-to-scale engagement model well received by customers
• Nike partnership exemplifies sketch-to-scale value proposition and
fresh approach to innovation, design and manufacturing
• Invested $142M to repurchase ~13M shares or ~2% of float
• NEXTracker acquisition complements our $1B+ Energy business and
drives accretive growth, margin, EPS and cash flow
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35%
18%15%
32%
HRSIEI
CTG INS
Sep
2015
33%
($ in millions) Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15E
Business Group $ $ $ $ $ Q/Q % Y/Y % Outlook (Q/Q)
INS 2,341 2,358 2,052 1,966 2,205 12% -6% Up mid to high single digits
CTG 2,210 2,647 1,861 1,565 2,011 28% -9% Down low single digits
IEI 1,097 1,106 1,132 1,130 1,146 1% 4% Up mid to high single digits
HRS 881 914 907 905 955 6% 8% Up low single digits
Total Revenue $6,529 $7,025 $5,952 $5,566 $6,317 13% -3%
Integrated Network
Solutions(Telecom, Networking, Server & Storage,
Converged Infrastructure)
Consumer Technology
Group(Wearables, Digital Health, Gaming,
Connected Home, Mobile, PC/Printers)
Industrial & Emerging
Industries(Semiconductor & Capital Equipment, Office
Solutions & Industrial Automation, Appliance
& Lifestyle, Energy, Lighting)
High Reliability
Solutions(Automotive, Medical, Aerospace &
Defense)
36%
17%13%
34% Sep
2014
30%
HRSIEI
CTG INS
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Adjusted SG&A Expense ~$210 - $215 million
Interest & Other Expense ~$25 million
Adjusted Income Tax Rate 8-10% range
GAAP EPS $0.22 - $0.28
WASO 563 million shares
($ in millions, except per share amounts)
Adjusted operating income excludes approximately $20 million for stock based compensation, of which approximately $17 million is excluded from adjusted SG&A.
GAAP EPS reflects approximately $0.06 for intangible amortization and stock-based compensation expense.
$6,200 - $6,800
$195 - $235
$0.28 - $0.34
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