FLEX LTD. 
SAN JOSE, Calif., Jan. 28, 2015 /PRNewswire/ -- Flextronics (NASDAQ: FLEX), a leading end-to-end supply chain solutions company, today announced results for its third quarter ended December 31, 2014:
(US$ in millions, except EPS) Three Month Periods Ended
December 31, September 26, December 31,
2014 2014 2013
---- ---- ----
Net sales $7,025 $6,529 $7,183
Adjusted operating income 207 183 187
GAAP operating income 193 172 174
Adjusted net income 175 157 164
GAAP net income 153 139 145
Adjusted EPS 0.30 0.26 0.26
GAAP EPS 0.26 0.23 0.23
An explanation and reconciliation of non-GAAP financial measures to GAAP financial measures is presented in Schedule II attached to this press release.
Third Quarter Results of Operations
Net sales for the third quarter ended December 31, 2014 were $7.0 billion, exceeding the Company's previously provided revenue guidance of $6.4 billion to $6.8 billion. The Company's adjusted earnings per diluted share of $0.30 for the third quarter ended December 31, 2014 also exceeded the Company's previously provided guidance of $0.24 to $0.28.
The Company's third quarter adjusted operating income increased 11% year-over-year to $207 million which exceeded its guidance range of $175 million to $205 million.
"The Flextronics team continues to deliver on our core innovation strategies and initiatives, allowing us to achieve our financial targets," said Mike McNamara, chief executive officer at Flextronics. "We reported solid results across our business groups which is evidenced by our 15% year-over-year growth in earnings per share." He added, "We will continue to provide the most innovative end-to-end supply chain solutions going from sketch to scale, increasing our customer's competitive advantage in the marketplace."
"Our commitment to return shareholder value was further demonstrated by repurchasing approximately 8 million shares during the quarter for $84 million," said Chris Collier, chief financial officer at Flextronics. "We continue to operate with discipline and delivered another strong quarter of free cash flow generation of $337 million."
Guidance
For the fourth quarter ending March 31, 2015, revenue is expected to be in the range of $6.0 to $6.4 billion and adjusted EPS is expected to be in the range of $0.23 to $0.27 per diluted share.
GAAP earnings per share is expected to be lower than the guidance provided herein by approximately $0.04 per diluted share for intangible amortization and stock-based compensation expense.
Conference Calls and Web Casts
A conference call hosted by Flextronics's management team will be held today at 2:00 PM (PT) / 5:00 PM (ET) to discuss the Company's financial results for the third quarter ended December 31, 2014. The conference call will be broadcast via the Internet and may be accessed by logging on to the Company's website at www.flextronics.com. Additional information in the form of a slide presentation may also be found on the Company's site. A replay of the broadcast will remain available on the Company's website afterwards.
About Flextronics
Flextronics International Ltd. (Reg. No. 199002645H) is a leading end-to-end supply chain solutions company that delivers innovative design, engineering, manufacturing and logistics services to a range of industries and end-markets, including data networking, telecom, enterprise computing and storage, industrial, capital equipment, appliances, automation, medical, automotive, aerospace and defense, energy, mobile, computing and other electronic product categories. Flextronics is an industry leader with $26 billion in sales, generated from helping customers design, build, ship, and service their products through an unparalleled network of facilities and innovations centers in approximately 30 countries and across four continents. Flextronics service offerings and vertically integrated component technologies optimize customer supply chains by lowering costs, increasing flexibility, and reducing time-to-market. For more information, visit www.flextronics.com or follow us on Twitter @flextronics.
This press release contains forward-looking statements within the meaning of U.S. securities law including statements related to the future expected revenues and earnings per share. These forward-looking statements involve risks and uncertainties that could cause the actual 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 future revenues and earnings may not be achieved as expected; the challenges of effectively managing our operations, including our ability to control costs and manage changes in our operations; compliance with legal and regulatory requirements; 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; that recently proposed changes in tax laws in certain jurisdictions where we operate may materially impact our tax expense, and the effects that the current macroeconomic environment could have on our business and demand for our products as well as the effects that current 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. 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 reports on Form 10-K and 10-Q that we file with the U.S. Securities and Exchange Commission. The forward-looking statements in this press release are based on current expectations and Flextronics 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.
Renee Brotherton Kevin Kessel
Corporate Communications Investor Relations
(408) 576-7189 (408) 576-7985
renee.brotherton@flextronics.com kevin.kessel@flextronics.com
SCHEDULE I
FLEXTRONICS INTERNATIONAL LTD.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
Three Month Periods Ended
-------------------------
December 31, 2014 September 26, 2014 December 31, 2013
----------------- ------------------ -----------------
GAAP:
Net sales $7,025,054 $6,528,517 $7,183,442
Cost of sales 6,616,397 6,151,436 6,784,823
Gross profit 408,657 377,081 398,619
Selling, general and administrative expenses 215,993 204,590 224,576
Operating income 192,664 172,491 174,043
Intangible amortization 8,045 8,232 5,575
Interest and other, net 9,035 12,506 18,342
Other charges (income), net 5,067 (2,584) (3,599)
Income before income taxes 170,517 154,337 153,725
Provision for income taxes 17,618 15,434 8,568
Net income $152,899 $138,903 $145,157
EPS:
Net income:
GAAP $0.26 $0.23 $0.23
Non-GAAP $0.30 $0.26 $0.26
Diluted shares used in computing per share amounts 587,201 595,871 618,677
See Schedule II for the reconciliation of GAAP to non-GAAP financial measures. See the accompanying notes on Schedule IV attached to this press release.
SCHEDULE II
FLEXTRONICS INTERNATIONAL LTD.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (1)
(In thousands, except per share amounts)
Three Month Periods Ended
-------------------------
December 31, 2014 September 26, 2014 December 31, 2013
----------------- ------------------ -----------------
GAAP gross profit $408,657 $377,081 $398,619
Stock-based compensation expense 2,083 1,868 1,800
Non-GAAP gross profit $410,740 $378,949 $400,419
GAAP SG&A Expenses $215,993 $204,590 $224,576
Stock-based compensation expense 12,136 9,051 11,311
Non-GAAP SG&A Expenses $203,857 $195,539 $213,265
GAAP operating income $192,664 $172,491 $174,043
Stock-based compensation expense 14,219 10,919 13,111
Non-GAAP operating income $206,883 $183,410 $187,154
GAAP provision for income taxes $17,618 $15,434 $8,568
Intangible amortization benefit 224 1,177 -
Non-GAAP provision for income taxes $17,842 $16,611 $8,568
GAAP net income $152,899 $138,903 $145,157
Stock-based compensation expense 14,219 10,919 13,111
Intangible amortization 8,045 8,232 5,575
Adjustments for taxes (224) (1,177) -
Non-GAAP net income $174,939 $156,877 $163,843
EPS:
Net income:
GAAP $0.26 $0.23 $0.23
Non-GAAP $0.30 $0.26 $0.26
SCHEDULE III
FLEXTRONICS INTERNATIONAL LTD.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
December 31, 2014 March 31, 2014
----------------- --------------
ASSETS
Current Assets:
Cash and cash equivalents $1,707,221 $1,593,728
Accounts receivable, net 2,449,773 2,697,985
Inventories 3,559,640 3,599,008
Other current assets 1,416,586 1,509,605
Total current assets 9,133,220 9,400,326
Property and equipment, net 2,114,681 2,288,656
Goodwill and other intangible assets, net 417,532 377,218
Other assets 425,040 433,950
Total assets $12,090,473 $12,500,150
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Bank borrowings and current portion
of long-term debt $45,174 $32,575
Accounts payable 4,850,515 4,747,779
Other current liabilities 2,313,033 2,876,333
Total current liabilities 7,208,722 7,656,687
Long-term debt, net of current portion:
Revolving credit facility - -
4.625% Notes (due 2020) 500,000 500,000
5.000% Notes (due 2023) 500,000 500,000
Term Loans 1,037,500 1,067,500
Other long-term debt 8,069 2,520
Other liabilities 447,337 571,764
Total shareholders' equity 2,388,845 2,201,679
Total liabilities and shareholders' equity $12,090,473 $12,500,150
=========== ===========
SCHEDULE IV
FLEXTRONICS INTERNATIONAL LTD. AND
SUBSIDIARIES
NOTES TO SCHEDULES I, II, & III
(1) To supplement
Flextronics's
unaudited
selected
financial data
presented on a
basis consistent
with Generally
Accepted
Accounting
Principles
("GAAP"), the
Company discloses
certain non-GAAP
financial
measures that
exclude certain
charges,
including non-
GAAP gross
profit, non-GAAP
selling, general
and
administrative
expenses, non-
GAAP operating
income, non-GAAP
net income and
non-GAAP net
income per
diluted share.
These
supplemental
measures exclude
stock-based
compensation
expense,
restructuring
charges,
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
Flextronics's
results of
operations as
determined in
accordance with
GAAP and that
these measures
should only be
used to evaluate
Flextronics'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 on-
going operating results;
-- the ability to better identify
trends in the Company's underlying
business and perform related trend
analyses;
-- 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 stock
options and unvested restricted
share unit 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.
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.
For the three-month period ended
December 31, 2014, Free Cash Flow
was $337 million consisting of GAAP
net cash flows from operating
activities of $363 million less
purchases of property and equipment
net of dispositions of $26 million.
We believe Free Cash Flow is an
important liquidity metric because
it measures, during a given period,
the amount of cash generated that
is available to repay debt
obligations, make investments, fund
acquisitions and for certain other
activities. Since Free Cash Flow
includes investments in operating
assets, we believe this non-GAAP
liquidity measure is useful in
addition to the most directly
comparable GAAP measure - "net cash
flows provided by operating
activities."
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/flextronics-reports-third-quarter-fiscal-2015-results-300027298.html
SOURCE Flextronics
