flextronics q1fy14 earnings release slides
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Flextronics Q1FY14 Earnings Release Slides Reported on 7/25/2013TRANSCRIPT
Results for Q1 FY2014 (Quarter Ended June 28, 2013)
Earnings Announcement: July 25, 2013
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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.
Risks and Non-GAAP Disclosures
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Q1 FY2014 Income Statement Highlights
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.
Prior Yr Prior Qtr Current Qtr
June 29, March 31, June 28,
($ in millions, except per share amounts) 2012 2013 2013
Net sales $5,976 $5,295 $5,791
Adjusted operating income 177 106 137
Restructuring charges - (125) (41)
GAAP operating income (loss) 167 (27) 87
Adjusted net income 154 86 112
GAAP net income (loss) 137 (49) 59
Adjusted EPS $0.22 $0.13 $0.18
EPS impact - restructuring charges - ($0.18) ($0.06)
GAAP EPS $0.20 ($0.08) $0.09
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177 183
146
106
137
3.0% 3.0% 2.4%
2.0% 2.4%
Jun-12 Sep-12 Dec-12 Mar-13 Jun-13
% Revenue
$0.22
$0.26
$0.22
$0.13
$0.18
Jun-12 Sep-12 Dec-12 Mar-13 Jun-13
5,976
6,175 6,123
5,295
5,791
Jun-12 Sep-12 Dec-12 Mar-13 Jun-13
359 368
346
314
348
6.0% 6.0%
5.7%
5.9% 6.0%
Jun-12 Sep-12 Dec-12 Mar-13 Jun-13
% Revenue
Trended Quarterly Income Statement Highlights
Please refer to the Investor Relations section of our website which contain the reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures.
Adjusted Gross Profit ($ in millions)
Revenue ($ in millions)
Adjusted Earnings Per Share (EPS)
Adjusted Operating Income ($ in millions)
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~$10M
~$25M
~$40M
Mar-13 Jun-13 Sep-13E Dec-13E
Restructuring Charges Update
($ in millions)
FY’13 Jun-13
Cash Charges $123 $39
Non-Cash Charges 104 2
Total Charges $227 $41
Program Benefits:
• Estimated savings of $160 million on track
• Cost reductions focused on headcount,
depreciation and operating expense
• 95% of savings associated with cost of
goods sold (COGS)
Savings Trajectory to ~$160M Estimated Quarterly Savings
Program Update:
• Accounting charges completed in Q1’14
• Total one-time charge of $268 million with
60% resulting in cash charges
~$30-$35M
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Other Income Statement Highlights
Net interest & other expense was $20 million, which included an expected
net $7 million loss from the sale of our non-core investment in Workday
Adjusted income tax rate 4.0%
Reconciliation between GAAP & adjusted EPS:
• Restructuring and other charges $41 million
• Stock based compensation $9 million
• Intangible amortization $8 million
• Tax benefit $4 million
• Aggregate impact on EPS is $0.09
Weighted average shares outstanding (WASO):
640 million shares vs. 664 million shares last quarter
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Working Capital Management
Net Working Capital = Total A/R and Inventory less A/P
Cash Conversion Cycle and Net Working Capital – excludes non-cash reductions to AR from our AR sales programs for all periods
Please refer to the Investor Relations section of our website which contains the reconciliation of the adjusted financial measures to the most directly comparable GAAP measures
Inventory ($ in millions)
Cash Conversion Cycle (days)
Net Working Capital ($ in millions)
3,150 3,122
2,911 2,723
3,152
7.0x 7.4x
7.7x 7.1x
7.4x
Jun-12 Sep-12 Dec-12 Mar-13 Jun-13
Inventory Turns
2,033
1,772 1,606 1,542
1,729
8.5%
7.2% 6.6%
7.3% 7.5%
Jun-12 Sep-12 Dec-12 Mar-13 Jun-13
% Annualized Revenue
30
27
24
26 25
Jun-12 Sep-12 Dec-12 Mar-13 Jun-13
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Current Qtr
June 28,
($ in millions) 2013
GAAP net income $59
Depreciation and amortization 113
Non-cash restructuring and impairment charges 7
Change in working capital and other 19
Net cash provided by operating activities 198
Purchases of property & equipment, net of dispositions (141)
Free Cash Flow 57
Payments for repurchase of ordinary shares (215)
Payments for acquired businesses, net of cash acquired (188)
Repayments of bank borrowings, net (9)
Other net change in cash 48
Net change in cash and cash equivalents ($307)
Summary Statement of Cash Flows
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.
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$1,280
$1,500
$2,780
$174 $370
$511 $500 $500
Liquidity 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Strong Capital Structure
Please refer to the Investor Relations section of our website which contain the reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures.
Significant Debt Maturities (Calendar Year) ($ millions)
4.625% Sr. Notes Term Loans 5% Sr. Notes
($ in millions) Mar-13 Jun-13
Cash $1,587 $1,280
Total Debt 2,068 2,060
Debt / EBITDA (LTM) 1.9x 2.0x
Cash
Revolver
Total
Liquidity
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Jun-13 Sep-13E
Business Group $ Q/Q % Y/Y % Outlook (Q/Q)
Integrated Network Solutions $2,532 3% -9% Up Low Single Digits
Industrial & Emerging Industries 906 2% -7% Up Low Single Digits
High Reliability Solutions 807 4% 20% Stable
High Velocity Solutions 1,546 31% 0% Up ~ 25 - 30%
Total Revenue $5,791 9% -3%
Revenue by Business Group
Certain prior year amounts have been recast to conform to current year presentation.
($ in millions) Jun-12 Sep-12 Dec-12 Mar-13 Jun-13
Business Group $ % Total $ % Total $ % Total $ % Total $ % Total
Integrated Network Solutions $2,780 47% $2,709 44% $2,694 44% $2,454 46% $2,532 44%
Industrial & Emerging Industries 977 16% 976 15% 913 15% 886 17% 906 16%
High Reliability Solutions 670 11% 657 11% 714 12% 776 15% 807 14%
High Velocity Solutions 1,549 26% 1,833 30% 1,802 29% 1,179 22% 1,546 26%
Total Revenue $5,976 $6,175 $6,123 $5,295 $5,791
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Q2 FY2014 Guidance
Other Information:
GAAP EPS $0.16 - $0.19
Adjusted SG&A Expense $215 million
Interest & Other Expense $20 - $25 million
Adjusted Income Tax Rate 8% - 10%
WASO 625 million shares
Revenue ($ mil) $6,100 - $6,400
$150 - $175 Adjusted Operating Income ($ mil)
$0.19 - $0.22 Adjusted EPS
THANK YOU
For more information:
investors.flextronics.com