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FLEX Q1 Earnings Beat on CPI Strength, FY27 View Raised
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Key Takeaways
Flex posted fiscal first-quarter adjusted EPS of $1.00 as revenues climbed 20.6% to $7.93 billion.
Cloud and Power Infrastructure revenue rose 35%, while adjusted operating income advanced 38%.
Flex raised fiscal 2027 revenue and EPS guidance and kept the CPI spin-off on track for early 2027.
Flex Ltd. (FLEX - Free Report) reported first-quarter fiscal 2027 adjusted earnings of $1.00 per share, up 38.9% year over year. The figure beat the Zacks Consensus Estimate of 93 cents by 7.5%.
Revenues advanced 20.6% to $7.93 billion and topped the consensus mark of $7.58 billion by 4.6%. Broad-based segment growth, led by a 35% expansion in Cloud and Power Infrastructure, supported the results.
However, shares of the company declined around 5% in the pre-market trading session today. In the past year, the stock has surged 121.8% compared with the Zacks Electronics - Miscellaneous Products industry’s growth of 58.4%.
Image Source: Zacks Investment Research
FLEX Gains From All Three Segments
Regulated Manufacturing Solutions revenues rose 12% year over year to $2.67 billion. Industrial demand benefited from energy infrastructure and warehouse automation, while connected medical devices supported Healthcare.
Integrated Technology Solutions revenues increased 20% to $3.06 billion, aided by stronger advanced networking demand. Cloud and Power Infrastructure generated $2.20 billion, supported by robust demand across Power and Cloud & Cooling.
Cloud and Power Infrastructure adjusted operating income rose 38% to $214 million, with margin increasing 20 basis points to 9.7%. Regulated Manufacturing Solutions income climbed 40% to $176 million, while Integrated Technology Solutions income advanced 21% to $158 million.
Flex Expands Margins on Favorable Mix
Adjusted gross profit increased 28% to $761 million. Adjusted gross margin expanded 50 basis points to 9.6%, reflecting the benefit of the company’s mix and operating execution.
Adjusted operating income climbed 35% to $534 million, while adjusted operating margin improved 70 basis points to 6.7%. GAAP selling, general and administrative expenses rose to $334 million from $233 million. Legal and other charges totaled $67 million, including $53 million primarily tied to the planned spin-off and $14 million of acquisition costs.
Cash provided by operating activities was $276 million, down from $399 million a year earlier. Changes in working capital and other items used $149 million against a $65 million contribution in the prior-year quarter.
Net capital expenditures were $235 million, leaving free cash flow of $41 million. Free cash flow included a $24 million negative impact from separation costs related to the Cloud and Power Infrastructure spin-off.
Flex’s Balance Sheet Changes With Deal Activity
Cash and cash equivalents increased to $2.84 billion as of June 26, 2026, from $2.39 billion at fiscal 2026-end. Long-term debt rose to $5.22 billion from $3.75 billion over the same period.
The quarter included $1.13 billion of cash used for business acquisitions and $90 million of proceeds from divestitures. Flex raised $2.83 billion through bank borrowings and long-term debt and repaid $1.39 billion of borrowings and other financing liabilities.
FLEX Issues Solid Q2 Guidance
For the second quarter of fiscal 2027, FLEX expects revenues of $7.95-$8.25 billion. Adjusted operating income is projected between $535 million and $565 million, with adjusted earnings of $1.00-$1.07 per share.
Management expects Regulated Manufacturing Solutions revenues to rise in the mid-single to high-single digits. Integrated Technology Solutions is projected to grow in the high-single to low-double digits, while Cloud and Power Infrastructure is expected to increase 45-55%.
Flex Raises Fiscal 2027 Outlook
Flex raised its fiscal 2027 revenue guidance to $33.7-$35.2 billion from $32.3-$33.8 billion. The adjusted operating margin outlook was tweaked to 7.0-7.2% from 7.0-7.1%.
Adjusted earnings guidance was raised to $4.42-$4.74 per share from $4.21-$4.51. The company now expects Cloud and Power Infrastructure revenues to grow 65-75%, while free cash flow conversion is projected at roughly 40%, down from about 60% due to one-time separation costs.
SAP SE (SAP - Free Report) reported second-quarter 2026 non-IFRS earnings per share of €1.59 ($1.85), which increased 6% from the year-ago quarter. The Zacks Consensus Estimate was pegged at $2.
Despite macroeconomic uncertainty, SAP reported total revenues on a non-IFRS basis of €9.9 billion ($11.5 billion), which increased 9% year over year (up 11% at constant currency or cc). The Zacks Consensus Estimate was pegged at $11.4 billion.
America Movil, S.A.B. de C.V. (AMX - Free Report) reported net income per ADR of 47 cents for the second quarter of 2026, up from 38 cents in the prior-year quarter. The earnings figure missed the Zacks Consensus Estimate of 52 cents. Total quarterly revenues rose 3.1% to Mex$241,071 million, driven by rapid momentum across the Service and Equipment segments.
BlackBerry Limited (BB - Free Report) reported first-quarter fiscal 2027 non-GAAP earnings per share of 4 cents. The figure beat the company’s estimate of 2-3 cents. In the year-ago quarter, it reported a non-GAAP EPS of 2 cents. The Zacks Consensus Estimate was pegged at 3 cents per share. BlackBerry generated $152.9 million in fiscal first-quarter revenue, representing 26% year-over-year growth.
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FLEX Q1 Earnings Beat on CPI Strength, FY27 View Raised
Key Takeaways
Flex Ltd. (FLEX - Free Report) reported first-quarter fiscal 2027 adjusted earnings of $1.00 per share, up 38.9% year over year. The figure beat the Zacks Consensus Estimate of 93 cents by 7.5%.
Revenues advanced 20.6% to $7.93 billion and topped the consensus mark of $7.58 billion by 4.6%. Broad-based segment growth, led by a 35% expansion in Cloud and Power Infrastructure, supported the results.
However, shares of the company declined around 5% in the pre-market trading session today. In the past year, the stock has surged 121.8% compared with the Zacks Electronics - Miscellaneous Products industry’s growth of 58.4%.
Image Source: Zacks Investment Research
FLEX Gains From All Three Segments
Regulated Manufacturing Solutions revenues rose 12% year over year to $2.67 billion. Industrial demand benefited from energy infrastructure and warehouse automation, while connected medical devices supported Healthcare.
Integrated Technology Solutions revenues increased 20% to $3.06 billion, aided by stronger advanced networking demand. Cloud and Power Infrastructure generated $2.20 billion, supported by robust demand across Power and Cloud & Cooling.
Cloud and Power Infrastructure adjusted operating income rose 38% to $214 million, with margin increasing 20 basis points to 9.7%. Regulated Manufacturing Solutions income climbed 40% to $176 million, while Integrated Technology Solutions income advanced 21% to $158 million.
Flex Expands Margins on Favorable Mix
Adjusted gross profit increased 28% to $761 million. Adjusted gross margin expanded 50 basis points to 9.6%, reflecting the benefit of the company’s mix and operating execution.
Adjusted operating income climbed 35% to $534 million, while adjusted operating margin improved 70 basis points to 6.7%. GAAP selling, general and administrative expenses rose to $334 million from $233 million. Legal and other charges totaled $67 million, including $53 million primarily tied to the planned spin-off and $14 million of acquisition costs.
Flex Ltd. Price, Consensus and EPS Surprise
Flex Ltd. price-consensus-eps-surprise-chart | Flex Ltd. Quote
FLEX Cash Flow Reflects Heavy Investment
Cash provided by operating activities was $276 million, down from $399 million a year earlier. Changes in working capital and other items used $149 million against a $65 million contribution in the prior-year quarter.
Net capital expenditures were $235 million, leaving free cash flow of $41 million. Free cash flow included a $24 million negative impact from separation costs related to the Cloud and Power Infrastructure spin-off.
Flex’s Balance Sheet Changes With Deal Activity
Cash and cash equivalents increased to $2.84 billion as of June 26, 2026, from $2.39 billion at fiscal 2026-end. Long-term debt rose to $5.22 billion from $3.75 billion over the same period.
The quarter included $1.13 billion of cash used for business acquisitions and $90 million of proceeds from divestitures. Flex raised $2.83 billion through bank borrowings and long-term debt and repaid $1.39 billion of borrowings and other financing liabilities.
FLEX Issues Solid Q2 Guidance
For the second quarter of fiscal 2027, FLEX expects revenues of $7.95-$8.25 billion. Adjusted operating income is projected between $535 million and $565 million, with adjusted earnings of $1.00-$1.07 per share.
Management expects Regulated Manufacturing Solutions revenues to rise in the mid-single to high-single digits. Integrated Technology Solutions is projected to grow in the high-single to low-double digits, while Cloud and Power Infrastructure is expected to increase 45-55%.
Flex Raises Fiscal 2027 Outlook
Flex raised its fiscal 2027 revenue guidance to $33.7-$35.2 billion from $32.3-$33.8 billion. The adjusted operating margin outlook was tweaked to 7.0-7.2% from 7.0-7.1%.
Adjusted earnings guidance was raised to $4.42-$4.74 per share from $4.21-$4.51. The company now expects Cloud and Power Infrastructure revenues to grow 65-75%, while free cash flow conversion is projected at roughly 40%, down from about 60% due to one-time separation costs.
FLEX’s Zacks Rank
Flex currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Recent Performances
SAP SE (SAP - Free Report) reported second-quarter 2026 non-IFRS earnings per share of €1.59 ($1.85), which increased 6% from the year-ago quarter. The Zacks Consensus Estimate was pegged at $2.
Despite macroeconomic uncertainty, SAP reported total revenues on a non-IFRS basis of €9.9 billion ($11.5 billion), which increased 9% year over year (up 11% at constant currency or cc). The Zacks Consensus Estimate was pegged at $11.4 billion.
America Movil, S.A.B. de C.V. (AMX - Free Report) reported net income per ADR of 47 cents for the second quarter of 2026, up from 38 cents in the prior-year quarter. The earnings figure missed the Zacks Consensus Estimate of 52 cents. Total quarterly revenues rose 3.1% to Mex$241,071 million, driven by rapid momentum across the Service and Equipment segments.
BlackBerry Limited (BB - Free Report) reported first-quarter fiscal 2027 non-GAAP earnings per share of 4 cents. The figure beat the company’s estimate of 2-3 cents. In the year-ago quarter, it reported a non-GAAP EPS of 2 cents. The Zacks Consensus Estimate was pegged at 3 cents per share. BlackBerry generated $152.9 million in fiscal first-quarter revenue, representing 26% year-over-year growth.