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Flex Q4 Earnings & Revenues Surpass Estimates, Rise Y/Y

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Flex Ltd. (FLEX - Free Report) reported fourth-quarter fiscal 2022 adjusted earnings of 52 cents per share, beating the Zacks Consensus Estimate by 18.2%. The bottom line also grew 6.13% year over year.

Revenues increased 9.3% year over year to $6.85 billion and surpassed the consensus mark by 6.47%. The company benefited from strength across the Agility Solutions and Reliability Solutions segments, along with a solid end-market focus on the back of emerging opportunities.

Segment Details

The Flex Agility Solutions Group comprises the Communications & Enterprise Compute or CEC, Lifestyle, and Consumer Devices businesses. The group’s revenues were up 4.3% year over year to $3.6 billion.

Agility continued to grow at a profitable rate. The increases in CEC and Lifestyle were partially offset by a planned decline in consumer devices.

The Flex Reliability Solutions Group comprises the Health Solutions, Automotive and Industrial businesses. The group’s revenues went up 12.3% year over year to $2.8 billion. Demand remained healthy across automotive and industrial verticals, and impressive execution against demand in Industrial helped boost revenues.

Flex Ltd. Price, Consensus and EPS Surprise

 

Flex Ltd. Price, Consensus and EPS Surprise

Flex Ltd. price-consensus-eps-surprise-chart | Flex Ltd. Quote

Operating Details

The non-GAAP gross margin contracted 80 basis points (bps) on a year-over-year basis to 7.3% in the reported quarter.

The non-GAAP selling, general & administrative (SG&A) expenses, as a percentage of revenues was 3% remained unchanged from the prior-year period.

The non-GAAP operating margin also fell 60 bps year over year to 4.3%.

The Flex Agility Solutions Group’s adjusted operating margin was 4.2%, up 27 bps year over year. The Flex Reliability Solutions Group’s adjusted operating margin was 4.9%, down 74 bps.

Balance Sheet & Cash Flow

As of Mar 31, 2022, cash & cash equivalents stood at $2.96 billion compared with $2.57 billion as of Dec 31, 2021.

As of Mar 31, total debt (including the current portion) stood at $4.2 billion compared with $4.45 billion as of Dec 31, 2021.

In fourth-quarter fiscal 2022, the company generated cash flow from operating activities of $360 million and an adjusted free cash flow of $252 million.

Guidance

For first-quarter fiscal 2023, Flex expects revenues between $6.6 billion and $7 billion.

It expects adjusted earnings of 44-50 cents per share. The adjusted operating income is projected between $285 million and $315 million.

For fiscal 2023, Flex expects revenues between $27.7 billion and $28.7 billion.
It expects adjusted earnings of $2.09-$2.24 per share. The adjusted operating income margin is projected to be 4.7-4.9%.

Zacks Rank & Other Stocks to Consider

Flex currently sports a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the broader industry are Avnet (AVT - Free Report) , Hoya (HOCPY - Free Report) and Perficient (PRFT - Free Report) . Avnet currently sports a Zacks Rank #1 (Strong Buy), while Hoya and Perficient carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Avnet’s fiscal 2022 earnings is pegged at $6.83 per share, rising 20.5% in the past 60 days. The long-term earnings growth rate is anticipated to be 37.2%.

Avnet’s earnings beat the Zacks Consensus Estimate in all of the last four quarters, the average being 21.22%. Shares of Avnet have grown 7.6% in the past year.

The Zacks Consensus Estimate for Hoya’s fiscal 2022 earnings is pegged at $3.80 per share, declining 0.8% in the past 60 days. The long-term earnings growth rate is anticipated to be 20.9%. Shares of Hoya have decreased 16.4% in the past year.

The Zacks Consensus Estimate for Perficient’s 2022 earnings is pegged at $4.30 per share, up 0.5% in the past 60 days. The long-term earnings growth rate is anticipated to be 18%. 

Perficient’s earnings beat the Zacks Consensus Estimate in all of the last four quarters, the average being 4.8%. Shares of Perficient have grown 54.6% in the past year.


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