Results for Q4 Fiscal 2017

Transcription

1 Results for Q4 Fiscal 2017 Earnings Announcement: April 27, 2017 (Quarter Ending March 31, 2017)

2 Risks and Non-GAAP Disclosures This presentation contains forward-looking statements, which are based on current expectations and assumptions that are subject to risks and uncertainties and actual results could materially differ. Such information is subject to change and we undertake no obligation to update these forward-looking statements. For a discussion of the risks and uncertainties, see our most recent filings with the Securities and Exchange Commission, including our current, annual and quarterly reports. Please refer to the appendix section of this presentation for current period reconciliation of the Non-GAAP financial measures to the most directly comparable GAAP measures. If this presentation references historical non-gaap financial measures, these measures are located on the Investor Relations section of our website, along with the required reconciliation to the most comparable GAAP financial measures. The following business group acronyms will be used throughout this presentation: HRS High Reliability Solutions Medical: Consumer Health, Digital Health, Disposables, Drug Delivery, Diagnostics, Life Sciences & Imaging Equipment. Automotive: Vehicle Electronics, Connectivity, Clean Technologies. Industrial & Emerging Communications & Enterprise Compute Telecom, Networking, Server & Storage, Storage & Security Appliance, Converged Infrastructure, Software Defined Product Solutions. IEI CEC CTG Industries Semiconductor & Capital Equipment, Office Solutions, Household Industrial & Lifestyle, Industrial Automation & Kiosks, Energy & Metering, Lighting. Consumer Technologies Group Wearables, Fashion, Connected Living, Gaming, Mobile, PCs/Printers. 1

3 Q4 FY2017 Income Statement Highlights Prior Yr Current Qtr ($M, except per share amounts) March 31, 2016 March 31, 2017 Net sales $5,773 $5,863 Adjusted operating income Adjusted net income Adjusted EPS $0.29 $0.29 GAAP income before income taxes GAAP net income GAAP EPS $0.11 $0.16 Q4 FY2017 Results vs. Guidance Net sales of $5.9B at the high end of guidance $5.5 - $5.9B Adjusted operating income of $205M above the mid-point of guidance $185 - $215M Adjusted EPS of $0.29 at the mid-point of guidance $ $0.31 2

4 Quarterly Financial Highlights Revenue & Adjusted Gross Margin ($M) Adj. Gross Margin 7.1% 6.9% 6.9% 7.1% 7.1% Adjusted Operating Income ($M) Adj. Operating Margin 3.5% 3.6% 3.2% 3.3% 3.5% 5,773 5,877 6,009 6,115 5, Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Adjusted Earnings Per Share (EPS) Return on Invested Capital 1 (ROIC %) $0.34 $0.29 $0.27 $0.28 $ % 22% 20% 20% 20% Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 3

5 Operating Performance by Business Group Q4 FY17 Target Adjusted Operating Margin Range ($M) CEC Rev$ OP$ (adj.) OP% (adj.) $1,983 $53 2.7% 2.7% Continued investments in cloud and data center while challenging demand environment persists CTG $1,535 $41 2.7% 2 2.7% 4 Operating solidly in target range while investing in new technologies and markets IEI $1,296 $53 4.1% 4.1% 4 6 Returned to target range on broad strength led by energy and capital equipment HRS $1,049 $84 8.0% 6 8.0% 9 Strong sustainable margins led by solid execution and continued Auto expansion Corporate Services & -- ($26) -- Other 2 Total $5,863 $ % 4

6 Other Income Statement Comments Interest & other expense, net» Q4 FY17 was $34M FY17 was $113M FY18 quarterly outlook $30M - $35M Adjusted income tax rate» Q4 FY17 was 8.7% FY17 was 8.8% Long-term effective tax rate range 10% - 15% Reconciliation between GAAP and Adjusted EPS» Q4 aggregate impact on EPS $0.13 Stock based compensation $15M or $0.03 in EPS Net intangible amortization $17M or $0.03 in EPS Restructuring and other charges $37M or $0.07 in EPS 5

7 Strong Cash Flow Generation ($M) Three Months Ended Twelve Months Ended (Mar 31, 2017) (Mar 31, 2017) GAAP net income $87 $320 Depreciation and amortization Change in net working capital Net Working Capital 3 ($M) % Annualized Revenue 7.7% 7.6% 7.7% 6.6% 6.9% Other operating cash flows, net (86) 132 Net cash provided by operating activities 137 1,150 1,789 1,796 1,851 Purchases of property & equipment, net (104) (490) Free Cash Flow ,626 1,611 Other investing and financing, net (50) (258) Debt proceeds, net Payments for share repurchases (90) (350) Net change in cash and cash equivalents ($26) $223 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 6

8 Balanced Capital Structure Significant Debt Maturities ($M) (Calendar Year) Total Liquidity $3,331 Investment Grade Rating: Moody s, S&P, Fitch 4.625% Notes $107 EURIBOR +69bps Revolver $1,500 Cash $1,831 Term Loan LIBOR bps $53 EURIBOR +100bps Term Loan LIBOR bps 5% Notes 4.75% Notes $503 $500 $700 $500 $600 Liquidity Key Characteristics Solid liquidity No significant near-term maturities Low cost of debt ~3.5% Strong credit metrics (Debt / Adj. EBITDA (LTM): 2.4x) 7

9 Fiscal Year 2017 Business Highlights Improving Profitability Adj. Operating Margin (%) Portfolio Evolution Driving Richer Mix HRS + IEI Revenue ($M) HRS + IEI as % Total Revenue Consistent Shareholder Returns Free Cash Flow 4 ($M) 2.6% 2.5% 2.9% 3.2% 3.4% FY17 9,117 38% FY13 FY14 FY15 FY16 FY17 FY16 8,580 35% 554 FY13 FY14 FY15 FY16 FY17 Adj. Earnings Per Share (EPS) FY15 FY14 7,063 8,017 27% 31% Share Repurchases ($M) shares outstanding $0.84 $0.89 $1.08 $1.14 $1.17 FY13 6,597 28% FY13 FY14 FY15 FY16 FY17 FY13 FY14 FY15 FY16 FY17

10 Revenue by Business Group Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17E ($M) $ $ $ $ $ Q/Q % Y/Y % Outlook Y/Y % CEC 2,201 2,196 2,102 2,102 1,983 (6%) (10%) Down 5% - 15% CTG 1,364 1,314 1,665 1,849 1,535 (17%) 13% Up 5% - 15% IEI 1,190 1,289 1,243 1,141 1,296 14% 9% Flat to up 5% HRS 1,018 1, ,023 1,049 2% 3% Up 5% - 10% Total $5,773 $5,877 $6,009 $6,115 $5,863 (4%) 2% Communications & Enterprise Compute Telecom, Networking, Server & Storage, Storage & Security Appliance, Converged Infrastructure, Software Defined Product Solutions. Consumer Technologies Group Wearables, Fashion, Connected Living, Gaming, Mobile, PCs/Printers. Industrial & Emerging Industries Semiconductor & Capital Equipment, Office Solutions, Household Industrial & Lifestyle, Industrial Automation & Kiosks, Energy & Metering, Lighting. High Reliability Solutions Medical: Consumer Health, Digital Health, Disposables, Drug Delivery, Diagnostics, Life Sciences & Imaging Equipment. Automotive: Vehicle Electronics, Connectivity, Clean Technologies. CTG 26% HRS 18% Q4 FY17 40% CEC IEI 22% 34% 9

11 Q1 FY2018 Guidance June 2017 ($M, except per share amounts) Revenue Adjusted Operating Income Adjusted Earnings Per Share»»» $5,700 - $6,100 $170 - $200 $ $0.28 GAAP Income Before Income Taxes $100 - $130 million GAAP Earnings Per Share $ $0.20 Other Information: Interest & Other Expense Adjusted Income Tax Rate WASO $30 - $35 million Low-end of 10% to 15% range 538 million shares 10

12 11 For more information, go to investors.flex.com

13 Appendix: Reconciliation of GAAP to Non-GAAP Measures 12 Quarter-ended March 31, 2017 ($Thousands, except per share amounts) GAAP gross profit $384,804 Stock-based compensation expense 2,517 Restructuring and other 31,735 Non-GAAP gross profit $419,056 GAAP income before income taxes $98,941 Stock-based compensation expense 14,956 Restructuring and other 38,138 Intangible amortization 19,078 Interests and other, net 27,663 Other charges, net 6,186 Non-GAAP operating income $204,962 GAAP provision for income taxes $12,067 Intangible amortization benefits 1,725 Tax benefit on restructuring and other 1,132 Non-GAAP provision for income taxes $14,924 GAAP net income $86,874 Stock-based compensation expense 14,956 Restructuring and other 38,138 Intangible amortization 19,078 Adjustments for taxes (2,857) Non-GAAP net income $156,189 Diluted EPS GAAP EPS $0.16 Non-GAAP EPS $0.29 For more details on the GAAP to Non-GAAP adjustments for current and historical periods, please refer to the Investor Relations section of our website which includes press releases and summary financials of the respective periods. Quarter-ended March 31, 2017 ($Thousands, except debt to EBITDA ratio) GAAP Adjustments Non-GAAP Pretax income $98,941 $72,171 $171,112 Depreciation 106, ,990 Amortization 19,078 (19,078) -- Interest, net 24,471 6,827 31,298 EBITDA 249,480 59, ,400 EBITDA rolling 4 qtrs. 980, ,452 1,253,829 Total Debt $2,952, $2,952,143 Debt to EBITDA 3.0x (0.7x) 2.4x Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA) and Debt/EBITDA are non-gaap financial measures. EBITDA is derived by adjusting for net interest and adding back depreciation to non-gaap pretax income. Quarterly Debt to EBITDA is calculated by dividing the Company's total debt as of the date presented by LTM EBITDA. Non-GAAP pretax income excludes certain amounts that are included in the most directly comparable measures under GAAP including stock-based compensation expense, restructuring charges, intangible amortization and certain other charges. Additionally, non-gaap interest includes the loss on the sale of accounts receivable under our global AR securitization and factoring programs. Quarter-ended March 31, 2017 ROIC % GAAP 13.9% Non-GAAP Adjustments 6.2% Non-GAAP 20.1% Return on Invested Capital (ROIC) is calculated by dividing the Company's last twelve months after-tax Non-GAAP operating income by the net invested capital asset base as of each date. Please refer to the Investor Relations section of our website for full reconciliation of last twelve months after tax Non-GAAP operating income to the most directly comparable GAAP financial measure. The net invested capital asset base is defined as the sum of shareholders' equity plus debt less cash and cash equivalents averaged over the last five quarters.

14 Appendix: Definitions 1. Return on Invested Capital (ROIC) is calculated by dividing the Company's last twelve months after-tax Non-GAAP operating income by the net invested capital asset base as of each date. After-tax non-gaap operating income excludes charges for stock-based compensation expense, restructuring expense and certain other charges or income. The net invested capital asset base is defined as the sum of shareholders' equity plus total debt less cash and cash equivalents averaged over the last five quarters. We believe ROIC is a useful measure in providing investors with information regarding our performance. ROIC is a widely accepted measure of earnings efficiency in relation to total capital employed. We believe that increasing the return on total capital employed, as measured by ROIC, is an effective method to sustain and increase shareholder value. ROIC is not a measure of financial performance under generally accepted accounting principles in the U.S., and may not be defined and calculated by other companies in the same manner. ROIC should not be considered in isolation or as an alternative to net income or loss as an indicator of performance. Please refer to the Investor Relations section of our website for full reconciliation of last twelve months after tax Non-GAAP operating income to the most directly comparable GAAP financial measure. 2. Corporate services and other: corporate service costs that are not included in the assessment of the performance of each of the identified business groups. 3. Net Working Capital is calculated as accounts receivable (AR), net adding back the reduction in AR resulting from the non-cash AR sales plus inventories less accounts payable. 4. Free cash flow is calculated as cash from operations less net purchases of property and equipment. 13