AUSTIN,
Texas, Oct. 25, 2023 /PRNewswire/ -- Flex
(NASDAQ: FLEX) today announced results for its second quarter ended
September 29, 2023.
Second Quarter Fiscal Year 2024 Highlights:
- Net Sales: $7.5 billion
- GAAP Operating Income: $376
million
- Adjusted Operating Income: $439
million
- GAAP Net Income attributable to Flex Ltd: $228 million
- Adjusted Net Income attributable to Flex Ltd: $303 million
- GAAP Earnings Per Share: $0.51
- Adjusted Earnings Per Share: $0.68
An explanation and reconciliation of non-GAAP financial measures
to GAAP financial measures is presented in Schedules II and V
attached to this press release.
"Our focus on the right portfolio and margin expansion has
enabled the team to deliver another strong quarter and make solid
progress on our financial framework," said Revathi Advaithi, CEO of
Flex. "With the announcement of our plan to spin-off our remaining
interest in Nextracker, we come to the final stage of unlocking its
full value. Our strategic focus remains on driving growth in
targeted markets, expanding margins, and executing our capital
allocation strategy."
Third Quarter Fiscal 2024 Guidance
- Revenue: $6.5 billion to
$6.9 billion
- GAAP Operating Income: $210
million to $260 million
- Adjusted Operating Income: $375
million to $425 million
- GAAP EPS: $0.25 to $0.34
- Adjusted EPS: $0.57 to
$0.65 which excludes $0.20 for net restructuring charges, $0.09 for stock-based compensation expense,
$0.03 for net intangible
amortization, and ($0.01) for
noncontrolling interest share of subsidiary's non-GAAP
adjustments.
Fiscal Year 2024 Guidance Updated - Total Flex
- Revenue: $28.1 billion to
$28.8 billion
- GAAP EPS: $1.71 to $1.89
- Adjusted EPS: $2.49 to
$2.66 which excludes $0.39 for stock-based compensation expense,
$0.27 for net restructuring charges,
$0.13 for net intangible
amortization, and ($0.01) net of tax
impact for noncontrolling interest share of subsidiary's non-GAAP
adjustment.
In addition, we are providing fiscal year 2024 guidance for Core
Flex to provide further transparency in our core business trends.
Core Flex represents Flex, excluding Flex's 51.47% economic
interest in Nextracker, which is currently consolidated within
Flex, and which is expected to be distributed to Flex shareholders
in a tax-free spin-off in Flex's fourth quarter ending March 31, 2024. Core Flex is a non-GAAP measure
that does not reflect discontinued operations presentation under
GAAP.
Fiscal Year 2024 Guidance – Core Flex
- Revenue: $25.9 billion to
$26.5 billion
- GAAP EPS: $1.38 to $1.51
- Adjusted EPS: $2.05 to
$2.18 which excludes $0.27 for stock-based compensation expense,
$0.27 for net restructuring charges
and $0.13 for net intangible
amortization.
Plan to Spin-off Remaining Interest in Nextracker to Flex
Shareholders
Flex today also announced its plan to effect a spin-off of all
of its remaining interest in Nextracker Inc. ("Nextracker") to Flex
shareholders on a pro rata basis.
Flex expects that completion of the spin-off will unlock
meaningful value, giving Flex shareholders direct ownership of
Nextracker in a tax-free manner for U.S. federal income tax
purposes and provides Flex with increased strategic
flexibility.
The spin-off will be effected pursuant to that certain Agreement
and Plan of Merger (the "Merger Agreement"), entered into by Flex
and Nextracker on February 7, 2023,
and disclosed in connection with Nextracker's previously completed
initial public offering. Earlier today, pursuant to the terms
of the Merger Agreement, Flex delivered to Nextracker a written
notice exercising Flex's right to effect the transactions
contemplated by the Merger Agreement (the "Transactions").
Later today, Nextracker will be filing a registration statement
on Form S-4, that includes a preliminary proxy statement of Flex,
which will include additional information regarding the
Transactions.
Flex currently beneficially owns approximately 51.47% of the
economic interests in the business of Nextracker. As a result of
the Transactions, Flex shareholders' indirect economic interest in
the business of Nextracker will become an equivalent pro rata
direct ownership interest in Nextracker Class A common stock listed
on the Nasdaq Global Select Market. The number of shares of
Nextracker Class A common stock to be received by each Flex
shareholder will be determined in accordance with the Merger
Agreement. Based on applicable share counts as of Flex's second
quarter ended September 29, 2023,
upon completion of the Transactions, a Flex shareholder as of the
applicable record date would be expected to receive approximately
0.17 shares of Nextracker Class A common stock per Flex ordinary
share held (with cash payments in lieu of any fractional shares of
Nextracker Class A common stock). Following completion of the
Transactions, Flex will no longer directly or indirectly hold any
of the issued and outstanding shares of Nextracker or any common
units of Nextracker LLC.
The Transactions are subject to a number of conditions as set
forth in the Merger Agreement, including the approval of Flex
shareholders in accordance with Singapore law, and there is no assurance that
any such conditions will be satisfied or waived. Accordingly, no
assurance can be given that the Transactions will in fact be
completed. The Transactions are currently expected to be completed
in Flex's fourth quarter ending March 31,
2024.
Advisors
J.P. Morgan Securities LLC is serving as Flex's financial
advisor and Sidley Austin LLP is serving as Flex's legal advisor in
connection with the Transactions.
Webcast and Conference Call
The Flex management team will host a conference call today at
1:30 PM (PT) / 4:30 PM (ET), to review second quarter fiscal
2024 results. A live webcast of the event and slides will be
available on the Flex Investor Relations website at
http://investors.flex.com. An audio replay and transcript will also
be available after the event on the Flex Investor Relations
website.
About Flex
Flex (Reg. No. 199002645H) is the manufacturing partner of
choice that helps a diverse customer base design and build products
that improve the world. Through the collective strength of a global
workforce across 30 countries and responsible, sustainable
operations, Flex delivers technology innovation, supply chain, and
manufacturing solutions to diverse industries and end markets.
Contacts
Investors & Analysts
David Rubin
Vice President, Investor Relations
(408) 577-4632
David.Rubin@flex.com
Media & Press
Mark Plungy
Director, Corporate Integrated Communications
(408) 442-1691
Mark.Plungy@flex.com
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of U.S. securities laws, including statements related
to our future financial results and our guidance for future
financial performance (including expected revenues, operating
income, margins and earnings per share). These forward-looking
statements are based on current expectations, forecasts and
assumptions involving risks and uncertainties that could cause the
actual outcomes and results to differ materially from those
anticipated by these forward-looking statements. Readers are
cautioned not to place undue reliance on these forward-looking
statements. These risks include: that we may not achieve our
expected future operating results, including revenue and margins;
the effects that the current and future macroeconomic environment,
including inflation, slower growth or recession, higher interest
rates, a potential U.S. federal government shutdown, and currency
exchange rate fluctuations, could have on our business and demand
for our products; the impact of component shortages, fluctuations
in the pricing or availability of raw materials, labor and energy,
and logistical constraints, including their impact on our revenues
and margins; the uncertainty of our ability to complete the
Transactions referred to above, which are subject to numerous
conditions that may not be satisfied or waived, and the failure of
any such Transactions to qualify as tax-free under the relevant
Internal Revenue Code of 1986, as amended; uncertainties and risks
relating to our ability to achieve some or all of the intended or
anticipated benefits of Nextracker being a separate,
publicly-traded company, which could negatively impact our
business, financial condition and results of operations; risks
associated with acquisitions and divestitures, including the
possibility that we may not fully realize their projected benefits;
geopolitical risk, including the termination and renegotiation of
international trade agreements and trade policies, including the
impact of tariffs and related regulatory actions; the war in
Ukraine and escalating
geopolitical tensions as a result of Russia's invasion of Ukraine, including the imposition of economic
sanctions on Russia which could
lead to disruption, instability, and volatility in global markets
and negatively impact our operations and financial performance;
uncertainties relating to the Israel-Hamas war including escalating
geopolitical tensions as a result thereof which could negatively
impact our operations and financial performance; the effects that
current and future credit and market conditions could have on the
liquidity and financial condition of our customers and suppliers,
including any impact on their ability to meet their contractual
obligations to us and our ability to pass through costs to our
customers; the challenges of effectively managing our operations,
including our ability to control costs and manage changes in our
operations; hiring and retaining key personnel; litigation and
regulatory investigations and proceedings; our compliance with
legal and regulatory requirements; changes in laws, regulations, or
policies that may impact our business, including those related to
climate change; the possibility that benefits of the Company's
restructuring actions may not materialize as expected; that the
expected revenue and margins from recently launched programs may
not be realized; our dependence on industries that continually
produce technologically advanced products with short product life
cycles; the short-term nature of our customers' commitments and
rapid changes in demand may cause supply chain issues, excess and
obsolete inventory, and other issues which adversely affect our
operating results; our dependence on a small number of customers;
our industry is extremely competitive; we may be exposed to
financially troubled customers or suppliers; the success of certain
of our activities depends on our ability to protect our
intellectual property rights and we may be exposed to claims of
infringement or breach of license agreements; a breach of our IT or
physical security systems, or violation of data privacy laws, may
cause us to incur significant legal and financial exposure and
disrupt our operations; physical and operational risks from natural
disasters, severe weather events, or climate change; our ability to
meet environmental, social and governance expectations or standards
or achieve sustainability goals; we may be exposed to product
liability and product warranty liability; that recently proposed
changes or future changes in tax laws in certain jurisdictions
where we operate could materially impact our tax expense; and the
impact and effects on our business, results of operations and
financial condition of a public health issue, including a pandemic,
or catastrophic event.
Additional information concerning these, and other risks is
described under "Risk Factors" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in our
annual report on Form 10-K for the fiscal year ended March 31, 2023 and in subsequent quarterly
reports on Form 10-Q, as well as the registration statement,
including the proxy statement/prospectus, and other documents filed
by Flex or Nextracker, as applicable, with the U.S. Securities and
Exchange Commission (the "SEC") in connection with the Transactions
referred to above. The forward-looking statements in this press
release are based on current expectations and Flex assumes no
obligation to update these forward-looking statements. Our share
repurchase program does not obligate the Company to repurchase a
specific number of shares and may be suspended or terminated at any
time without prior notice.
No Offer or Solicitation
This communication is neither an offer to purchase, nor a
solicitation of an offer to sell, subscribe for or buy any
securities or the solicitation of any vote in any jurisdiction, nor
shall there be any sale, issuance or transfer of securities in any
jurisdiction in contravention of applicable law. No offer of
securities shall be made except by means of a prospectus meeting
the requirements of Section 10 of the Securities Act of 1933, as
amended, or an exemption therefrom, and otherwise in accordance
with applicable law.
Important Additional Information
Flex and Nextracker have prepared, and Nextracker intends to
file, a registration statement on Form S-4, that includes a
preliminary proxy statement of Flex and also constitutes a
preliminary prospectus of Nextracker. Flex and Nextracker will also
file other documents with the SEC regarding the Transactions,
including the definitive proxy statement/prospectus. The
information in the preliminary proxy statement/prospectus is not
complete and may be changed. When available, Flex will mail the
definitive proxy statement/prospectus and other relevant documents
to its shareholders as of a record date to be established for
voting on the Transactions. This communication is not a substitute
for the definitive proxy statement/prospectus or any other document
that Flex will send to its shareholders in connection with the
Transactions. INVESTORS AND SECURITY HOLDERS OF FLEX ARE URGED TO
READ THE REGISTRATION STATEMENT, THE PRELIMINARY PROXY
STATEMENT/PROSPECTUS, THE DEFINITIVE PROXY STATEMENT/PROSPECTUS
WHEN IT BECOMES AVAILABLE, AND ALL OTHER RELEVANT DOCUMENTS THAT
ARE FILED OR WILL BE FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS
OR SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY
BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT
THE TRANSACTIONS AND RELATED MATTERS.
Copies of the registration statement, the preliminary proxy
statement/prospectus, the definitive proxy statement/prospectus and
other documents filed by Flex or Nextracker with the SEC may be
obtained, once available, free of charge at the SEC's website at
www.sec.gov.
Participants in the Solicitation
Flex, Nextracker and their respective directors, executive
officers, other members of management, and employees, under SEC
rules, may be deemed to be participants in the solicitation of
proxies of Flex's shareholders in connection with the Transactions.
Information regarding the persons who may, under SEC rules, be
deemed participants in the solicitation of Flex's shareholders in
connection with the Transactions will be in the registration
statement, including the proxy statement/prospectus, when it is
filed with the SEC. Investors and security holders may obtain more
detailed information regarding the names and interests in the
Transactions of Flex's and Nextracker's directors and officers in
Flex's and Nextracker's filings with the SEC and such information
will also be in the registration statement, including the proxy
statement/prospectus, when it is filed with the SEC. These
documents can be obtained free of charge at the SEC's website at
www.sec.gov.
SCHEDULE
I
|
FLEX
|
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (2)
|
(In millions, except
per share amounts)
|
|
|
|
|
|
|
|
Three-Month Periods
Ended
|
|
|
September 29,
2023
|
|
September 30,
2022
|
GAAP:
|
|
|
|
|
Net sales
|
$
7,471
|
|
$
7,766
|
|
Cost of
sales
|
6,803
|
|
7,175
|
|
Restructuring
charges
|
3
|
|
—
|
|
Gross
profit
|
665
|
|
591
|
|
Selling, general and
administrative expenses
|
272
|
|
245
|
|
Intangible
amortization
|
17
|
|
21
|
|
Operating
income
|
376
|
|
325
|
|
Interest,
net
|
35
|
|
47
|
|
Other charges,
net
|
16
|
|
6
|
|
Income before income
taxes
|
325
|
|
272
|
|
Provision for (benefit
from) income taxes
|
(81)
|
|
34
|
|
Net income
|
406
|
|
238
|
|
Net income attributable
to noncontrolling interest and redeemable noncontrolling
interest
|
178
|
|
6
|
|
Net income
attributable to Flex Ltd.
|
$
228
|
|
$
232
|
|
|
|
|
|
Diluted earnings per
share attributable to the shareholders of Flex Ltd:
|
|
GAAP
|
$
0.51
|
|
$
0.50
|
|
Non-GAAP
|
$
0.68
|
|
$
0.63
|
|
|
|
|
|
|
Diluted shares used in
computing per share amounts
|
448
|
|
460
|
|
|
|
|
|
|
See Schedule II for the
reconciliation of GAAP to non-GAAP financial measures. See the
accompanying notes on Schedule V attached to this press
release.
|
|
|
|
|
|
FLEX
|
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (2)
|
(In millions, except
per share amounts)
|
|
|
|
|
|
|
|
Six-Month Periods
Ended
|
|
|
September 29,
2023
|
|
September 30,
2022
|
GAAP:
|
|
|
|
|
Net sales
|
$
14,807
|
|
$
15,113
|
|
Cost of
sales
|
13,535
|
|
13,987
|
|
Restructuring
charges
|
20
|
|
—
|
|
Gross
profit
|
1,252
|
|
1,126
|
|
Selling, general and
administrative expenses
|
542
|
|
486
|
|
Restructuring
charges
|
6
|
|
—
|
|
Intangible
amortization
|
37
|
|
43
|
|
Operating
income
|
667
|
|
597
|
|
Interest,
net
|
76
|
|
96
|
|
Other charges (income),
net
|
27
|
|
(3)
|
|
Income before income
taxes
|
564
|
|
504
|
|
Provision for (benefit
from) income taxes
|
(53)
|
|
71
|
|
Net income
|
617
|
|
433
|
|
Net income attributable
to noncontrolling interest and redeemable noncontrolling
interest
|
203
|
|
12
|
|
Net income
attributable to Flex Ltd.
|
$
414
|
|
$
421
|
|
|
|
|
|
Diluted earnings per
share attributable to the shareholders of Flex Ltd:
|
|
GAAP
|
$
0.92
|
|
$
0.91
|
|
Non-GAAP
|
$
1.24
|
|
$
1.17
|
|
|
|
|
|
|
Diluted shares used in
computing per share amounts
|
452
|
|
464
|
|
|
|
|
|
|
See Schedule II for the
reconciliation of GAAP to non-GAAP financial measures. See the
accompanying notes on Schedule V attached to this press
release.
|
|
|
|
|
|
SCHEDULE
II
|
FLEX
|
RECONCILIATION OF
GAAP TO NON-GAAP FINANCIAL MEASURES
(1)(2)
|
(In millions, except
per share amounts)
|
|
|
|
|
|
|
|
Three-Month Periods
Ended
|
|
|
September 29,
2023
|
|
September 30,
2022
|
|
|
|
|
|
GAAP operating
income
|
$
376
|
|
$
325
|
|
Intangible
amortization
|
17
|
|
21
|
|
Stock-based
compensation expense
|
45
|
|
27
|
|
Restructuring
charges
|
1
|
|
—
|
|
Legal and
other
|
—
|
|
2
|
Non-GAAP operating
income
|
$
439
|
|
$
375
|
|
|
|
|
|
GAAP provision for
income taxes
|
$
(81)
|
|
$
34
|
|
Intangible amortization
benefit
|
3
|
|
3
|
|
Other tax related
adjustments
|
136
|
|
(1)
|
Non-GAAP provision
for income taxes
|
$
58
|
|
$
36
|
|
|
|
|
|
GAAP net income
attributable to Flex Ltd.
|
$
228
|
|
$
232
|
|
Intangible
amortization
|
17
|
|
21
|
|
Stock-based
compensation expense
|
45
|
|
27
|
|
Restructuring
charges
|
1
|
|
—
|
|
Legal and
other
|
—
|
|
2
|
|
Interest and other,
net
|
8
|
|
3
|
|
Paid-in-kind and
pre-IPO dividends paid to redeemable noncontrolling
interest
|
—
|
|
6
|
|
Noncontrolling interest
share of subsidiary's non-GAAP adjustments
|
143
|
|
—
|
|
Adjustments for
taxes
|
(139)
|
|
(2)
|
Non-GAAP net
income
|
$
303
|
|
$
289
|
Diluted earnings per
share attributable to the shareholders of Flex Ltd:
|
|
GAAP
|
$
0.51
|
|
$
0.50
|
|
Non-GAAP
|
$
0.68
|
|
$
0.63
|
|
|
|
|
|
|
See the accompanying
notes on Schedule V attached to this press release.
|
|
|
|
|
|
|
|
|
|
|
FLEX
|
RECONCILIATION OF
GAAP TO NON-GAAP FINANCIAL MEASURES
(1)(2)
|
(In millions, except
per share amounts) *
|
|
|
|
|
|
|
|
Six-Month Periods
Ended
|
|
|
September 29,
2023
|
|
September 30,
2022
|
|
|
|
|
|
GAAP operating
income
|
$
667
|
|
$
597
|
|
Intangible
amortization
|
37
|
|
43
|
|
Stock-based
compensation expense
|
86
|
|
53
|
|
Restructuring
charges
|
24
|
|
—
|
|
Legal and
other
|
2
|
|
12
|
Non-GAAP operating
income
|
$
816
|
|
$
706
|
|
|
|
|
|
GAAP provision for
income taxes
|
$
(53)
|
|
$
71
|
|
Intangible amortization
benefit
|
6
|
|
6
|
|
Other tax related
adjustments
|
146
|
|
(5)
|
Non-GAAP provision
for income taxes
|
$
99
|
|
$
73
|
|
|
|
|
|
GAAP net income
attributable to Flex Ltd.
|
$
414
|
|
$
421
|
|
Intangible
amortization
|
37
|
|
43
|
|
Stock-based
compensation expense
|
86
|
|
53
|
|
Restructuring
charges
|
24
|
|
—
|
|
Legal and
other
|
2
|
|
12
|
|
Interest and other,
net
|
9
|
|
4
|
|
Paid-in-kind and
pre-IPO dividends paid to redeemable noncontrolling
interest
|
—
|
|
12
|
|
Noncontrolling interest
share of subsidiary's non-GAAP adjustments
|
141
|
|
—
|
|
Adjustments for
taxes
|
(152)
|
|
(1)
|
Non-GAAP net
income
|
$
561
|
|
$
544
|
Diluted earnings per
share attributable to the shareholders of Flex Ltd:
|
|
GAAP
|
$
0.92
|
|
$
0.91
|
|
Non-GAAP
|
$
1.24
|
|
$
1.17
|
|
|
|
|
|
|
See the accompanying
notes on Schedule V attached to this press release.
|
|
*Amounts may not sum
due to rounding
|
|
|
|
|
|
|
|
|
SCHEDULE
III
|
FLEX
|
UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEETS (2)
|
(In
millions)
|
|
|
|
|
As of September 29,
2023
|
|
As of March 31,
2023
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
2,900
|
|
$
3,294
|
|
Accounts receivable,
net of allowance for doubtful accounts
|
3,801
|
|
3,739
|
|
Contract
assets
|
577
|
|
541
|
|
Inventories
|
7,166
|
|
7,530
|
|
Other current
assets
|
1,019
|
|
917
|
Total current
assets
|
15,463
|
|
16,021
|
|
|
|
|
Property and equipment,
net
|
2,328
|
|
2,349
|
Operating lease
right-of-use assets, net
|
609
|
|
608
|
Goodwill
|
1,337
|
|
1,343
|
Other intangible
assets, net
|
275
|
|
316
|
Other assets
|
956
|
|
758
|
Total assets
|
$
20,968
|
|
$
21,395
|
|
|
|
|
|
LIABILITIES,
NONCONTROLLING INTEREST AND SHAREHOLDERS' EQUITY
|
Current
liabilities:
|
|
|
|
|
Bank borrowings and
current portion of long-term debt
|
$
—
|
|
$
150
|
|
Accounts
payable
|
5,728
|
|
5,930
|
|
Accrued payroll and
benefits
|
500
|
|
522
|
|
Deferred revenue and
customer working capital advances
|
2,795
|
|
3,143
|
|
Other current
liabilities
|
1,083
|
|
1,110
|
Total current
liabilities
|
10,106
|
|
10,855
|
|
|
|
|
|
Long-term debt, net of
current portion
|
3,412
|
|
3,691
|
Operating lease
liabilities, non-current
|
497
|
|
506
|
Other
liabilities
|
597
|
|
637
|
Total
liabilities
|
14,612
|
|
15,689
|
Total Flex Ltd.
shareholders' equity
|
5,906
|
|
5,351
|
Noncontrolling
interest
|
450
|
|
355
|
Total shareholders'
equity
|
6,356
|
|
5,706
|
Total liabilities,
noncontrolling interest, and shareholders' equity
|
$
20,968
|
|
$
21,395
|
|
|
|
|
|
See the accompanying
notes on Schedule V attached to this press release.
|
|
|
SCHEDULE
IV
|
FLEX
|
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(In
millions)
|
|
|
|
|
|
|
|
Six-Month Periods
Ended
|
|
|
September 29,
2023
|
|
September 30,
2022
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
Net income
|
$
617
|
|
$
433
|
|
Depreciation,
amortization and other impairment charges
|
260
|
|
247
|
|
Changes in working
capital and other, net
|
(514)
|
|
(539)
|
|
Net cash provided by
operating activities
|
363
|
|
141
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
Purchases of property
and equipment
|
(319)
|
|
(296)
|
|
Proceeds from the
disposition of property and equipment
|
19
|
|
18
|
|
Acquisition of
businesses, net of cash acquired
|
—
|
|
4
|
|
Other investing
activities, net
|
3
|
|
3
|
|
Net cash used in
investing activities
|
(297)
|
|
(271)
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
Proceeds from bank
borrowings and long-term debt
|
2
|
|
—
|
|
Repayments of bank
borrowings and long-term debt
|
(398)
|
|
(39)
|
|
Payments for
repurchases of ordinary shares
|
(506)
|
|
(253)
|
|
Proceeds from
issuances of Nextracker shares
|
552
|
|
—
|
|
Payment for purchase
of Nextracker LLC units from TPG
|
(57)
|
|
—
|
|
Other financing
activities, net
|
(53)
|
|
(4)
|
|
Net cash used in
financing activities
|
(460)
|
|
(296)
|
|
|
|
|
|
Effect of exchange
rates on cash and cash equivalents
|
—
|
|
(85)
|
|
Net decrease in cash
and cash equivalents
|
(394)
|
|
(511)
|
|
Cash and cash
equivalents, beginning of period
|
3,294
|
|
2,964
|
|
Cash and cash
equivalents, end of period
|
$
2,900
|
|
$
2,453
|
|
|
|
|
|
SCHEDULE V
FLEX AND SUBSIDIARIES
NOTES TO
SCHEDULES I, II, and III
(1) To supplement Flex's unaudited selected financial data
presented consistent with U.S. Generally Accepted Accounting
Principles ("GAAP"), the Company discloses certain non-GAAP
financial measures that exclude certain charges and gains,
including non-GAAP operating income, non-GAAP net income and
non-GAAP net income per diluted share. These supplemental measures
exclude certain legal and other charges, restructuring charges,
customer-related asset impairments (recoveries), stock-based
compensation expense, intangible amortization, other discrete
events as applicable and the related tax effects. These non-GAAP
measures are not in accordance with or an alternative for GAAP and
may be different from non-GAAP measures used by other companies. We
believe that these non-GAAP measures have limitations in that they
do not reflect all of the amounts associated with Flex's results of
operations as determined in accordance with GAAP and that these
measures should only be used to evaluate Flex's results of
operations in conjunction with the corresponding GAAP measures. The
presentation of this additional information is not meant to be
considered in isolation or as a substitute for the most directly
comparable GAAP measures. We compensate for the limitations of
non-GAAP financial measures by relying upon GAAP results to gain a
complete picture of the Company's performance.
In calculating non-GAAP financial measures, we exclude certain
items to facilitate a review of the comparability of the Company's
operating performance on a period-to-period basis because such
items are not, in our view, related to the Company's ongoing
operational performance. We use non-GAAP measures to evaluate the
operating performance of our business, for comparison with
forecasts and strategic plans, for calculating return on
investment, and for benchmarking performance externally against
competitors. In addition, management's incentive compensation is
determined using certain non-GAAP measures. Also, when evaluating
potential acquisitions, we exclude certain of the items described
below from consideration of the target's performance and valuation.
Since we find these measures to be useful, we believe that
investors benefit from seeing results "through the eyes" of
management in addition to seeing GAAP results. We believe that
these non-GAAP measures, when read in conjunction with the
Company's GAAP financials, provide useful information to investors
by offering:
- the ability to make more meaningful period-to-period
comparisons of the Company's ongoing operating results;
- the ability to better identify trends in the Company's
underlying business and perform related trend analysis;
- a better understanding of how management plans and measures the
Company's underlying business; and
- an easier way to compare the Company's operating results
against analyst financial models and operating results of
competitors that supplement their GAAP results with non-GAAP
financial measures.
The following are explanations of each of the adjustments that
we incorporate into non-GAAP measures, as well as the reasons for
excluding each of these individual items in the reconciliations of
these non-GAAP financial measures:
Stock-based compensation expense consists
of non-cash charges for the estimated fair value of unvested
restricted share unit and stock option awards granted to employees
and assumed in business acquisitions. The Company believes that the
exclusion of these charges provides for more accurate comparisons
of its operating results to peer companies due to the varying
available valuation methodologies, subjective assumptions and the
variety of award types. In addition, the Company believes it is
useful to investors to understand the specific impact stock-based
compensation expense has on its operating results.
Intangible amortization consists
primarily of non-cash charges that can be impacted by, among other
things, the timing and magnitude of acquisitions. The Company
considers its operating results without these charges when
evaluating its ongoing performance and forecasting its earnings
trends, and therefore excludes such charges when presenting
non-GAAP financial measures. The Company believes that the
assessment of its operations excluding these costs is relevant to
its assessment of internal operations and comparisons to the
performance of its competitors.
Restructuring charges include
severance charges at existing sites and corporate SG&A
functions as well as asset impairment, and other charges related to
the closures and consolidations of certain operating sites and
targeted activities to restructure the business. These costs may
vary in size based on the Company's initiatives, are not directly
related to ongoing or core business results, and do not reflect
expected future operating expenses. These costs are excluded by the
Company's management in assessing current operating performance and
forecasting its earnings trends and are therefore excluded by the
Company from its non-GAAP measures.
During the three and six-month periods ended
September 29, 2023, the Company
recognized approximately $1 million
and $24 million of restructuring
charges respectively, most of which related to employee severance.
No such charges were recognized for the three and six-month periods
ended September 30, 2022.
Legal and other consist primarily of
costs not directly related to core business results and may include
matters relating to commercial disputes, government regulatory and
compliance, intellectual property, antitrust, tax, employment or
shareholder issues, product liability claims and other issues on a
global basis as well as acquisition related costs and customer
related asset impairments (recoveries). During the first half of
fiscal year 2024 and 2023, the Company accrued for certain loss
contingencies where losses were considered probable and estimable.
These costs are excluded by the Company's management in assessing
current operating performance and forecasting its earnings trends
and are therefore excluded by the Company from its non-GAAP
measures.
Interest and other, net consist of
various other types of items that are not directly related to
ongoing or core business results, such as the gain or losses
related to certain divestitures, currency translation reserve
write-offs upon liquidation of certain legal entities, debt
extinguishment costs and impairment charges or gains associated
with certain non-core investments. The Company excludes these items
because they are not related to the Company's ongoing operating
performance or do not affect core operations. Excluding these
amounts provides investors with a basis to compare Company
performance against the performance of other companies without this
variability.
Paid-in-kind and pre-IPO dividends paid to
redeemable noncontrolling interest relates to dividends
paid to TPG Rise Flash, L.P. ("TPG Rise"). Prior to the Nextracker
IPO, pro-rated 5% annual preferred dividends were paid-in-kind to
TPG Rise totaling $12 million for the
first half of fiscal year 2023. No such charges were recorded in
fiscal year 2024.
Noncontrolling interest share of subsidiary's
non-GAAP adjustments represents the share of non-GAAP
adjustments attributable to noncontrolling interest. During the
three and six-month periods ended September
29, 2023, $143 million and
$141 million were recorded as
noncontrolling interest; of which ($2)
million was related to after-tax Nextracker stock base
compensation expense during first quarter of fiscal year 2024, and
$143 million net in the second
quarter, primarily relating to tax benefits on the Nextracker
follow-on offering.
Adjustment for taxes relates to the
tax effects of the various adjustments that we incorporate into
non-GAAP measures in order to provide a more meaningful measure on
non-GAAP net income and certain adjustments related to
non-recurring settlements of tax contingencies or other
non-recurring tax charges, when applicable. During the three and
six-month periods ended September 29,
2023, the Company recognized a ($139)
million and ($152) million net
tax benefit respectively, of which ($6)
million and ($19) million are
related to tax effects of various adjustments that are incorporated
into Non-GAAP measures on restructuring and other for three and
six-month periods ended September 29,
2023, respectively, ($128)
million related to tax adjustments on Nextracker follow-on
offering, and ($5) million related to
other discrete tax items.
(2) Noncontrolling interests have been included on
the consolidated balance sheets as components of redeemable
noncontrolling interest and total shareholders' equity. As a result
of the Nextracker's February 13, 2023
IPO, the redeemable noncontrolling interest are not applicable for
the period ending September 29, 2023.
The amount of consolidated net income attributable to Flex Ltd. and
to the noncontrolling interest and redeemable noncontrolling
interest are presented in the consolidated statements of
operations. In the fourth quarter of fiscal year 2023, Nextracker
Inc. completed the Nextracker IPO through a series of
reorganization transactions that resulted in Nextracker Inc. having
an umbrella partnership C corporation ("Up-C") structure and the
conversion of redeemable noncontrolling interest to noncontrolling
interest.
Upon the IPO, Flex recorded a noncontrolling interest within
shareholders equity, reflecting the portion of Nextracker that is
not owned by Flex. On a subsequent measurement basis, the carrying
value of this noncontrolling interest is adjusted for earnings
attributable to the noncontrolling interest.
As of September 29, 2023 and
March 31, 2023, the carrying value of
noncontrolling interest were $450
million and $355 million,
respectively. Net Income attributable to noncontrolling interest
and redeemable noncontrolling interest was $203 million and $12
million for the first half of fiscal year 2024 and 2023,
respectively.
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SOURCE Flex