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Flex Ltd (FLEX - Free Report) reported fourth-quarter fiscal 2024 adjusted earnings of 57 cents per share, beating the Zacks Consensus Estimate by 3.6%. The bottom line grew 29.5% year over year.
Revenues (excluding Nextracker) decreased 11.7% year over year to $6.2 billion. However, it beat the consensus mark by 1.1%. Weakness across the Agility and Reliability Solutions segments led to the top-line contraction.
Net sales in fiscal 2024 totaled $26.4 billion (excluding Nextracker), down 7% year over year. Post the spin-off of Nextracker in the fourth-quarter fiscal 2024, its historical financials are now reported under discontinued operations.
Following the announcement, shares were down 8.1% and closed session at $26.34 on May 1. In the past year, the stock has gained 30.9% compared with the sub-industry’s rise of 37.7%.
The Flex Reliability Solutions Group includes Health Solutions, Automotive and Industrial businesses. Revenues were down 9.5% year over year to $2.93 billion. The downtick was caused by a slowdown in the Industrial unit, offset by growth in the automotive and health solutions.
The Flex Agility Solutions Group comprises Communications & Enterprise Compute or CEC and Lifestyle and Consumer Devices businesses. Revenues were down year over year to $3.24 billion from prior-year figure of $3.75 billion. Weak demand trends across CEC, along with Lifestyle and Consumer Devices businesses, negatively impacted sales.
Operating Details
Non-GAAP operating income increased 13.7% year over year to $333 million. Non-GAAP operating income for fiscal 2024 was $1.27 billion, up 2.8%.
Adjusted gross margin increased to 8.6% from 7% in the year-ago quarter.
Non-GAAP selling, general & administrative expenses totaled $199 million, on par with the prior-year level.
GAAP operating income decreased to $159 million from $223 million in the prior-year period.
Adjusted operating margins of the Flex Agility Solutions Group and the Flex Reliability Solutions Group were 5.6% and 5.8%, respectively, up from year-ago levels of 4.6% and 4.4%.
Balance Sheet & Cash Flow
As of Mar 31, 2024, cash & cash equivalents totaled $2.47 billion compared with $2.4 billion as of Dec 31, 2023.
As of Mar 31, 2024, total debt (net of current portion) was $3.26 billion compared with $3.29 billion as of Dec 31, 2023.
In fourth-quarter fiscal 2024, the company generated cash flow from operating activities of $679 million and an adjusted free cash flow of $602 million.
Guidance
For first-quarter fiscal 2025, Flex expects revenues to be between $5.6 billion and $6.2 billion.
Management expects adjusted earnings in the range of 37-45 cents per share, excluding 16 cents for restructuring charges, 7 cents for stock-based compensation expense and 3 cents for net intangible amortization. Adjusted operating income is projected to be between $240 million and $280 million.
For fiscal 2025, Flex expects revenues to be between $25.4 billion and $26.4 billion. It anticipates adjusted earnings in the range of $2.30-$2.50 per share, excluding 31 cents for stock-based compensation expense, 25 cents for restructuring charges and 13 cents for net intangible amortization.
Flex expects macro headwinds to persist throughout 2024, adversely impacting various end markets. An increase in global tax rates is also concerning. However, the company expects growth in certain key markets, such as cloud, power, auto and medical devices, to cushion the top-line performance.
Arista Networks, Inc. (ANET - Free Report) is slated to announce first-quarter 2024 results on May 7, after the market close. The stock, sporting a Zacks Rank #1 at present, is likely to benefit from strong momentum and diversification across its top verticals and product lines. The company has a software-driven, data-centric approach to help customers build their cloud architecture and enhance their cloud experience. Arista has a long-term earnings growth expectation of 17.5% and delivered an earnings surprise of 13.3%, on average, in the trailing four quarters.
Airgain, Inc. (AIRG - Free Report) is slated to report first-quarter 2024 results on May 8, after the closing bell. It currently carries a Zacks Rank #2 (Buy). It has a long-term earnings growth expectation of 35%.
Headquartered in San Diego, CA, Airgain offers integrated wireless solutions in the form of antenna products. These products are equipped to solve critical connectivity needs in both the design process and the operating environment across the enterprise, automotive and consumer markets. Ideal for original equipment and design manufacturers, vertical markets, chipset vendors, service providers, value-added resellers and software developers worldwide, the customizable antennas from Airgain serve both indoor and outdoor connectivity issues.
Turtle Beach Corporation (HEAR - Free Report) is slated to report first-quarter 2024 results on May 7, after the closing bell. It develops and markets gaming headset solutions for various platforms, including video game and entertainment consoles, handheld consoles, personal computers, tablets and mobile devices under the Turtle Beach brand. It has a Zacks Rank #2.
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FLEX's Q4 Earnings Surpass Estimates, Revenues Decline Y/Y
Flex Ltd (FLEX - Free Report) reported fourth-quarter fiscal 2024 adjusted earnings of 57 cents per share, beating the Zacks Consensus Estimate by 3.6%. The bottom line grew 29.5% year over year.
Revenues (excluding Nextracker) decreased 11.7% year over year to $6.2 billion. However, it beat the consensus mark by 1.1%. Weakness across the Agility and Reliability Solutions segments led to the top-line contraction.
Net sales in fiscal 2024 totaled $26.4 billion (excluding Nextracker), down 7% year over year. Post the spin-off of Nextracker in the fourth-quarter fiscal 2024, its historical financials are now reported under discontinued operations.
Following the announcement, shares were down 8.1% and closed session at $26.34 on May 1. In the past year, the stock has gained 30.9% compared with the sub-industry’s rise of 37.7%.
Flex Ltd. Price, Consensus and EPS Surprise
Flex Ltd. price-consensus-eps-surprise-chart | Flex Ltd. Quote
Segment Details
The Flex Reliability Solutions Group includes Health Solutions, Automotive and Industrial businesses. Revenues were down 9.5% year over year to $2.93 billion. The downtick was caused by a slowdown in the Industrial unit, offset by growth in the automotive and health solutions.
The Flex Agility Solutions Group comprises Communications & Enterprise Compute or CEC and Lifestyle and Consumer Devices businesses. Revenues were down year over year to $3.24 billion from prior-year figure of $3.75 billion. Weak demand trends across CEC, along with Lifestyle and Consumer Devices businesses, negatively impacted sales.
Operating Details
Non-GAAP operating income increased 13.7% year over year to $333 million. Non-GAAP operating income for fiscal 2024 was $1.27 billion, up 2.8%.
Adjusted gross margin increased to 8.6% from 7% in the year-ago quarter.
Non-GAAP selling, general & administrative expenses totaled $199 million, on par with the prior-year level.
GAAP operating income decreased to $159 million from $223 million in the prior-year period.
Adjusted operating margins of the Flex Agility Solutions Group and the Flex Reliability Solutions Group were 5.6% and 5.8%, respectively, up from year-ago levels of 4.6% and 4.4%.
Balance Sheet & Cash Flow
As of Mar 31, 2024, cash & cash equivalents totaled $2.47 billion compared with $2.4 billion as of Dec 31, 2023.
As of Mar 31, 2024, total debt (net of current portion) was $3.26 billion compared with $3.29 billion as of Dec 31, 2023.
In fourth-quarter fiscal 2024, the company generated cash flow from operating activities of $679 million and an adjusted free cash flow of $602 million.
Guidance
For first-quarter fiscal 2025, Flex expects revenues to be between $5.6 billion and $6.2 billion.
Management expects adjusted earnings in the range of 37-45 cents per share, excluding 16 cents for restructuring charges, 7 cents for stock-based compensation expense and 3 cents for net intangible amortization. Adjusted operating income is projected to be between $240 million and $280 million.
For fiscal 2025, Flex expects revenues to be between $25.4 billion and $26.4 billion. It anticipates adjusted earnings in the range of $2.30-$2.50 per share, excluding 31 cents for stock-based compensation expense, 25 cents for restructuring charges and 13 cents for net intangible amortization.
Flex expects macro headwinds to persist throughout 2024, adversely impacting various end markets. An increase in global tax rates is also concerning. However, the company expects growth in certain key markets, such as cloud, power, auto and medical devices, to cushion the top-line performance.
Zacks Rank
Flex currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Upcoming Releases
Arista Networks, Inc. (ANET - Free Report) is slated to announce first-quarter 2024 results on May 7, after the market close. The stock, sporting a Zacks Rank #1 at present, is likely to benefit from strong momentum and diversification across its top verticals and product lines. The company has a software-driven, data-centric approach to help customers build their cloud architecture and enhance their cloud experience. Arista has a long-term earnings growth expectation of 17.5% and delivered an earnings surprise of 13.3%, on average, in the trailing four quarters.
Airgain, Inc. (AIRG - Free Report) is slated to report first-quarter 2024 results on May 8, after the closing bell. It currently carries a Zacks Rank #2 (Buy). It has a long-term earnings growth expectation of 35%.
Headquartered in San Diego, CA, Airgain offers integrated wireless solutions in the form of antenna products. These products are equipped to solve critical connectivity needs in both the design process and the operating environment across the enterprise, automotive and consumer markets. Ideal for original equipment and design manufacturers, vertical markets, chipset vendors, service providers, value-added resellers and software developers worldwide, the customizable antennas from Airgain serve both indoor and outdoor connectivity issues.
Turtle Beach Corporation (HEAR - Free Report) is slated to report first-quarter 2024 results on May 7, after the closing bell. It develops and markets
gaming headset solutions for various platforms, including video game and entertainment consoles, handheld consoles, personal computers, tablets and mobile devices under the Turtle Beach brand. It has a Zacks Rank #2.