Flex Ltd (FLEX - Free Report) reported second-quarter fiscal 2024 adjusted earnings per share (EPS) of 68 cents, beating the Zacks Consensus Estimate by 17.2%. The bottom line grew 7.9% year over year.
Revenues decreased 3.8% year over year to $7.47 billion. Also, it missed the consensus mark by 0.6%. The downtick was caused by weakness across the Agility Solutions segment.
Revenues for Core Flex (which represents Flex’s total revenues excluding Flex’s 51.47% economic interest in Nextracker) was $6.9 billion, declining 5.1% year over year.
Segment Details
The Flex Reliability Solutions Group comprises Health Solutions, Automotive and Industrial businesses. Revenues were flat year over year to $3.3 billion. Demand remained healthy across the Auto and health business.
The Flex Agility Solutions Group comprises Communications & Enterprise Compute and Lifestyle and Consumer Devices businesses. Revenues were down 10% year over year to $3.6 billion. The downtick was caused due to the softness in comms, enterprise IT and consumer market.
The Nextracker Group’s revenues rose 21% year over year to $0.6 billion. The company has announced its plan to spin-off approximately 51.47% interest in Nextracker to Flex shareholders on a pro-rata basis. It is expected to be completed by the fourth quarter, which is ending on Mar 31, 2024.
Operating Details
Non-GAAP gross margin increased 130 basis points (bps) on a year-over-year basis to 9% in the reported quarter.
Non-GAAP selling, general & administrative expenses, as a percentage of revenues, were 3.2%, which increased 30 bps from the year-ago period.
Non-GAAP operating margin expanded 110 bps year over year to 5.9%.
Adjusted operating margins of the Flex Reliability Solutions Group was 5.2%, down 10 bps year over year. The Nextracker Group’s adjusted operating margin was 19.5%, up 1,040 bps year over year. The Flex Agility Solutions Group’s adjusted operating margin was 4.6%, up 30 bps.
Balance Sheet & Cash Flow
As of Sep 29, 2023, cash & cash equivalents totaled $2.9 billion compared with $2.66 billion as of Jun 30, 2023.
As of Sep 29, 2023, total debt (net of current portion) was $3.41 billion compared with $3.44 billion as of Jun 30, 2023.
In second-quarter fiscal 2024, the company generated cash flow from operating activities of $357 million and an adjusted free cash flow of $213 million.
In the quarter under review, FLEX repurchased shares worth $309 million.
Guidance
For third-quarter fiscal 2024, Total Flex (including Nextracker) revenues are expected to be between $6.5 billion and $6.9 billion. Management expects adjusted EPS in the range of 57-65 cents. Adjusted operating income is projected to be between $375 million and $425 million.
For third-quarter fiscal 2024, Core Flex (excluding Nextracker) revenues are expected to be between $5.9 billion and $6.3 billion. Management expects adjusted EPS in the range of 47-52 cents. Adjusted operating income is projected to be between $280 million and $310 million.
For fiscal 2024, Flex now expects total revenues between $28.1 billion and $28.8 billion compared with the earlier guidance of $30.5-$31.5 billion. It anticipates adjusted EPS in the range of $2.49-$2.66 compared with the earlier guidance of $2.35-$2.55. Adjusted operating margin is projected to be in the range of 5.8-6% compared with the earlier guidance of 5-5.2%.
Zacks Rank & Stocks to Consider
Flex currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology space are Asure Software (ASUR - Free Report) , Synopsys (SNPS - Free Report) and Wix.com (WIX - Free Report) . Each stock presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Asure Software’s 2023 EPS has increased 5.9% in the past 60 days to 54 cents.
Asure Software’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 676.4%. Shares of ASUR have surged 55.9% in the past year.
The Zacks Consensus Estimate for Synopsys’ 2023 EPS has gained 2.5% in the past 60 days to $11.09. SNPS’ long-term earnings growth rate is 16.4%. Shares of SNPS have surged 62.7% in the past year.
The Zacks Consensus Estimate for Wix’s 2023 EPS has remained unchanged in the past 60 days to $3.35.
Wix’s earnings beat estimates in all the trailing four quarters, delivering an average surprise of 319.3%. Shares of WIX have rallied 5.3% in the past year.
Infrastructure Stock Boom to Sweep America
A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made.
The only question is “Will you get into the right stocks early when their growth potential is greatest?”
Zacks has released a Special Report to help you do just that, and today it’s free. Discover 5 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.
Download FREE: How To Profit From Trillions On Spending For Infrastructure >>
Flex Ltd (FLEX - Free Report) reported second-quarter fiscal 2024 adjusted earnings per share (EPS) of 68 cents, beating the Zacks Consensus Estimate by 17.2%. The bottom line grew 7.9% year over year.
Revenues decreased 3.8% year over year to $7.47 billion. Also, it missed the consensus mark by 0.6%. The downtick was caused by weakness across the Agility Solutions segment.
Revenues for Core Flex (which represents Flex’s total revenues excluding Flex’s 51.47% economic interest in Nextracker) was $6.9 billion, declining 5.1% year over year.
Segment Details
The Flex Reliability Solutions Group comprises Health Solutions, Automotive and Industrial businesses. Revenues were flat year over year to $3.3 billion. Demand remained healthy across the Auto and health business.
The Flex Agility Solutions Group comprises Communications & Enterprise Compute and Lifestyle and Consumer Devices businesses. Revenues were down 10% year over year to $3.6 billion. The downtick was caused due to the softness in comms, enterprise IT and consumer market.
The Nextracker Group’s revenues rose 21% year over year to $0.6 billion. The company has announced its plan to spin-off approximately 51.47% interest in Nextracker to Flex shareholders on a pro-rata basis. It is expected to be completed by the fourth quarter, which is ending on Mar 31, 2024.
Operating Details
Non-GAAP gross margin increased 130 basis points (bps) on a year-over-year basis to 9% in the reported quarter.
Non-GAAP selling, general & administrative expenses, as a percentage of revenues, were 3.2%, which increased 30 bps from the year-ago period.
Non-GAAP operating margin expanded 110 bps year over year to 5.9%.
Adjusted operating margins of the Flex Reliability Solutions Group was 5.2%, down 10 bps year over year. The Nextracker Group’s adjusted operating margin was 19.5%, up 1,040 bps year over year. The Flex Agility Solutions Group’s adjusted operating margin was 4.6%, up 30 bps.
Balance Sheet & Cash Flow
As of Sep 29, 2023, cash & cash equivalents totaled $2.9 billion compared with $2.66 billion as of Jun 30, 2023.
As of Sep 29, 2023, total debt (net of current portion) was $3.41 billion compared with $3.44 billion as of Jun 30, 2023.
In second-quarter fiscal 2024, the company generated cash flow from operating activities of $357 million and an adjusted free cash flow of $213 million.
In the quarter under review, FLEX repurchased shares worth $309 million.
Guidance
For third-quarter fiscal 2024, Total Flex (including Nextracker) revenues are expected to be between $6.5 billion and $6.9 billion. Management expects adjusted EPS in the range of 57-65 cents. Adjusted operating income is projected to be between $375 million and $425 million.
For third-quarter fiscal 2024, Core Flex (excluding Nextracker) revenues are expected to be between $5.9 billion and $6.3 billion. Management expects adjusted EPS in the range of 47-52 cents. Adjusted operating income is projected to be between $280 million and $310 million.
For fiscal 2024, Flex now expects total revenues between $28.1 billion and $28.8 billion compared with the earlier guidance of $30.5-$31.5 billion. It anticipates adjusted EPS in the range of $2.49-$2.66 compared with the earlier guidance of $2.35-$2.55. Adjusted operating margin is projected to be in the range of 5.8-6% compared with the earlier guidance of 5-5.2%.
Zacks Rank & Stocks to Consider
Flex currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology space are Asure Software (ASUR - Free Report) , Synopsys (SNPS - Free Report) and Wix.com (WIX - Free Report) . Each stock presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Asure Software’s 2023 EPS has increased 5.9% in the past 60 days to 54 cents.
Asure Software’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 676.4%. Shares of ASUR have surged 55.9% in the past year.
The Zacks Consensus Estimate for Synopsys’ 2023 EPS has gained 2.5% in the past 60 days to $11.09. SNPS’ long-term earnings growth rate is 16.4%. Shares of SNPS have surged 62.7% in the past year.
The Zacks Consensus Estimate for Wix’s 2023 EPS has remained unchanged in the past 60 days to $3.35.
Wix’s earnings beat estimates in all the trailing four quarters, delivering an average surprise of 319.3%. Shares of WIX have rallied 5.3% in the past year.
Infrastructure Stock Boom to Sweep America
A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made.
The only question is “Will you get into the right stocks early when their growth potential is greatest?”
Zacks has released a Special Report to help you do just that, and today it’s free. Discover 5 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.
Download FREE: How To Profit From Trillions On Spending For Infrastructure >>
Get the latest research report on FLEX - FREE
Get the latest research report on SNPS - FREE
Get the latest research report on ASUR - FREE
Get the latest research report on WIX - FREE