FLEX - Earnings call transcript Q3 2020

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Operator

Good afternoon, and welcome to the Flex Third Quarter Fiscal Year 2020 Earnings Conference Call. Today's call is being recorded. [Operator Instructions].

At this time, for opening remarks, I would like to turn the call over to Mr. David Rubin, Flex' Vice President of Investor Relations. begin. may you Sir,

David Rubin

you Call. Flex' are Slides Relations flex.com the Thank Fiscal available Quarter XXXX Investor website. our of Conference for section for afternoon. Third joining of on Good today's discussion

with call Officer, Collier. Executive and today's on Advaithi; me some remarks our Revathi Officer, will Financial Chief introductory our Chief be Chris Joining

actual differ. is call based recorded to current information and expectations and and on we to are risks forward-looking change, subject materially forward-looking contains to undertake Today's and webcast results uncertainties, subject is no and statements. assumptions Such update being are statements, could that and which these obligation

of discussion our a recent annual filings uncertainties, the the For see current our most risks and reports. and including SEC, quarterly with

current our the along found period that This references our section call can appendix located on Otherwise, the in they Investor are Relations required reconciliations. website of non-GAAP financial with for slides. be measures

the to like over our I'd call Revathi? to CEO. Now turn

Revathi Advaithi

execute to dynamic commitments want our very I deliver customers the discipline across stakeholders. period who Good Flex progress our and David, increase with But Flex call excited you, Thank context the us to quarter who to on results the all through our start, our Flex. and provide on and for to to really today. this third call. welcome before and you transformational and for I update the I'm employees for all some making your value first thank to you strong joining our we're to earnings hard afternoon, thank to globe on everybody, to worked continue

express partnership. also our for my customers to for thanks sincere I employees and continued to to their their efforts So our want

X. go let's So Slide to

to couple of our initial I've managing and over business. approach our direction of the the our company strategy So discussed last quarters,

focus on goals upcoming on City. at March So sharing I'll we're details financial guidance. quarter performance, But New XX the very in York as Analyst pleased our on our our forward on looking and and say today, which Investor I'm delivered our more promised, strategy to third Day to

which So result our a on growth well of and achieved is We We of businesses guidance focus execution we'll QX segments, and management. portfolio our to focus level a And as reflects which realized record margin this energy and of adjusted a strategy. operating is continued discipline adjusted and $X.XX, we a to $XXX This on continuing improved generated and million, in was as executing our testament operational our start flow cash our range, with $X.X disciplined our our the adjusted EPS automotive billion. of X%, free execution. industrial continued delivered financials. our an above revenue of mix and an progress on

about to a outbreak. I talk the start -- want actually with to coronavirus

the is situation employees, expected, the as deployed As is to our of done our safety we'll have adapt families. help employees take primary concern our necessary teams out. steps our to and we proactive to plays as their of continue and What response

to limit wherever also hard disruptions. outbreak, officials official be the are across the the to We efforts business help fully government contain with We'll this are work looking can Foundation. situation, we and supporting developing monitoring to We're this cooperating we'll Flex cause through China. actively all and we

impact situation manage a a potential and to have we the early rest assured want evolving. it's will that, too be beyond for detailed to and I as is the course, disciplined you way. in situation very actively us comprehensive Of quantify any very plan that

cash all mix business. approach and disciplined pursued we improving managing So this let's execution, have our capital By to we opportunities managing allocation. Slide how our turn profitability, and and design-led is we've reflects and our to our really driven flow have along QX X. the with What continued

our Now believe business and future strongly pillar our as design We've very our to trends as growth, ago. that technology executing such strategy done all game our is also investment to electrification tremendous well XG. expertise. focus I is on has significant and a the commitments discussed this but continued around important lead position to job of quarters course, only strategy. costs, our profitable of we mix and meet which strengthened And markets, not growth X in will enable a plan you as with macro exactly and managing this our

to Flex. our current partner for and prospective and I'm to and by opportunities continue to I speak As for customers growing value create customers, really energized

most Our focus the participate. our market we be share a to on want solving in and we spaces customers' is critical challenges, manufacturing leader

to like some across wins some I'd capabilities demonstrate really that of will always, recent As share businesses. our examples our

business our that can You of results and strong wins. building see is segment pipeline in industrial exceptionally -- and energy be solid continues QX on our the strength the to some on

equipment So form that we capital complex large project one won. a is factor example recently

the solution designing Our of the interconnect the mechanical as and system large customer engineering frame of assisting HMI the design and well the or the as and included human-machine interface.

combined the of to made capital winning we our leverage a interest companies to energy see proposition. differentiators capability only our was key and equipment. are regional our who in needed particularly manufacturing to expertise of And us power, both design needs manufacturing America expertise, support capability space Asia. But customers' areas because and design one the course, looking our North with in this this the with in not but we continue partner from this to Of also

about of calls made economic facing a lot automotive We've global autonomous with made an in major industry. Chinese our is talked this China The headwinds other of the OEM. business, next had. we into inroads indigenous this added win and space, the I've has time, example lot out But despite which in the this another positive progress a before of we've

can for expertise not a also German OEM. our leverage solution compute our in we management our won our position We automotive show continue wins technical expand in these in also battery and an What the recently engineering to business and only groups. but both is that power electrification integrated

our benefit solutions seeing early collaboration including of our the management, are and Here, power broad bring connectivity to and leveraging we customers. value to capabilities,

will So I'd commitment this I of these reinforce areas. are talked to And lot consistently the disciplined flow. the type our combining the execution, of our driving growth right these I've strategy. our about driving more mix, that business managing like before. course, core with free of X a cash and, to strongly be believe winning design-led

profitable fiscal to strategy. drive This a focus as this for and our performance commitments. XXXX Our demonstrates performance quarter platform growth will invest we're long-term consistent serve us on to on our and delivering that for

really us there's course, lot profitable harness. well to consistent do to the path to Of last of on positions But a our the still work potential and over growth. X quarters, performance more

will goals, overall, on that momentum I'm pleased our this I'm our So really with positive our and making We're confident performance progress continue. quarter.

turn quarterly I'll for Chris this with to financial over closing then remarks. and results, Chris? our back I'll some come

Christopher Collier

Please Slide summary. quarter our Revathi. income third to you, for statement X Thank turn

Our $X.X third guidance totaled and range. revenue quarter billion was our above

guidance $XXX revenues. and Our roughly million, QX adjusted $XXX year-over-year income decline remained a same operating the in which range was above million despite was our

year-over-year earnings per adjusted was guidance our resulting in XX% range. and of share was was income up net Our million, above adjusted This $X.XX. $XXX

amortization million compensation, net GAAP primarily income net our $XX $XX million charges. quarter $XXX million net other stock-based restructuring intangible in income due Third was of to million and and of net lower adjusted in $XX than

Now to please X for quarterly our turn highlights. Slide financial

margin year-over-year adjusted points adjusted improved gross X.X%. of richer to quarter a basis a consecutive reflecting up expansion, third execution $XXX represents mix margin Our million, gross operational profit healthy year-over-year quarter third and business. XX year-over-year X% improved to gross was while of our a This

SG&A expense revenue to continue a percentage resulting leverage. to be to year-over-year X% cost operating with provides million Our adjusted this us X.X% as SG&A of quarter, manage increased strong $XXX sustainable which as in we

operating our We and operational our continued mix, cost managing portfolio improving improve sustaining performance to margin by profitability control. and

quarter, our operating This was income $XXX million. adjusted

year-over-year reflects of Our sixth to operating consecutive margin margin our nearly points year-over-year XX adjusted quarter which by X%, expansion. expanded basis

modestly legacy XX% across either well exceeded automotive growth a which performance. revenue decline certain health or continued was our scale Slide from our home XX% energy grew billion, weaker as with Revenue its X%, new multiple programs. quarter guidance. lifestyle demand portfolio, and from IEI its our up met in offset programs to programs. turn as by broad lower as billion, solutions. up solutions as growing new X% $X.X strength revenue was grew our our experienced growth we X% offset group exceeded by guide notable for business to of to XX%. $X customers IEI business Health HRS for our growth year-over-year across driven in prior to Now portfolio. business of business was Automotive X Each which year-over-year, groups third

reflective CEC our of as which revenue Huawei was from was to certain completed XX% the settlement, year-over-year well our better and as reduced with billion, demand and which telecom than declined impact quarter. $X.X last networking customers guidance

and Lastly, activities. our performed high-volatility, reducing from exposure effects short-cycle revenue to to $X.X XX% as CTG as CTG targeted prior year repositioning the of the declined portfolio our expected billion due low-margin, to businesses

million mix sequential pushed a from adjusted fiscal and actions margin to adjusted benefit a X.X% operating to Turning expand operating commercial operating management million to a to cost margin richer a adjusted content. adjusted It generated guidance record of structure margin of distinct our $XXX profitability. We were revenue profit of quarterly deliver X%. profit as above with engineering of million greater operating of our improved the it discipline pleased to $XX HRS continues its adjusted adjusted adjusted design ongoing it adjusted and $XX and to operating and benefited operating solutions towards business health as and was also production and delivered mix from our in reflects of of its XXXX. IEI business took margin. set operating ramp good X.X%. CEC margin a operating contribution. function program the CEC's profit X.X% profit full-scale moves to and and HRS largest-ever

and Finally, operating margin structure. of as portfolio CTG adjusted remained repositioning posted our a during transition ongoing pressured it X.X% its operating

Slide to X. Turning

review flow Let us cash our highlights. generation

displayed execution. Our third quarter flow strong performance cash

good expenditures. We in net working Net our for inventory capital from management. timing our continue and to continued improvement a capital over favorable our discipline working and customer this capital benefited operate quarter with payments

management actions This improvements days' inventory We with inventory, XX on X% or billion further focused quarter, company. $X.X drive of or days X across as ended year-over-year. multiple down the we remain worth we

expenditures for significantly net lower totaled than million $XX the quarter, depreciation. capital Our

CapEx million continue over operating $XX operating are We system. spend, and optimize control we our also benefited quarter, we and our from in as reposition proceeds this with to

a new from global prior out and infrastructure years' operating supporting We that products investments well built are technologies, are programs. are and now benefiting

We system. We also is we different global it a businesses, is needed invested long-term remain to redeploy support strength are that where continue profitable to capacity in confident which installed assets to sufficiently businesses. and our leverage our of notable among existing growth sites our higher-margin

our depreciation we last align fiscal closely to continue enter our quarter benefiting flow. thereby the As level, adjusted expect of free CapEx we that cash with will annual XXXX,

million This $XXX quarter, free we in cash generated flow. adjusted

generated X over flow and our We over remain shares and the X% months. for repurchased XX flow on We line operate with our delivering adjusted outstanding have of cash the focused historical over quarter during free $XX in commitment shares of for shareholder our generate we as million to adjusted as conversion we return million levels. X last cash positive quarters consecutive discipline free with strive

of maturities Lastly, with debt. cost staggered with structure capital debt low operate to continue a average and balanced a relatively we

of to duration During reduce extending the on expense. effect position XX-year interest issued debt with senior with which $XXX $XXX on by impact and million maturity million, debt of our and notes the quarter, our hand cash minimal proceeds we used had a

up is anticipate expected revenue as business. demand to our ramp we Slide a be HRS more is flat quarter for our in modest reflects modest growth to impacts $X.X in $X.X than auto to billion we range continued years. and fourth growth X% the coupled guidance. turn in Please to to as XX expected billion seasonality prior with new of programs Revenue solutions be health

reductions as to continues business sustained ramps. IEI with is XX% demand its ongoing down it new due to expected We to customer telecom management CTG, CEC expect actions portfolio reflecting year-over-year, XX% across highly XX% And XX%, expect this to to distinct broad XX% networking. our to earlier X% to targeted ongoing efforts. products growth down portfolio strength in part revenue persistent impact experience coupled of revenue in to addition reductions undertaken the demand be the reflecting muted for with demand in we of be in of volatile year as and specific

million, $XXX $XX be to in is million continued expansion. displaying Interest is $XXX expected to estimated of be other income $XX the to million operating million. adjusted range between and adjusted Our to margin operating expense

We XX% the of to shares to $X.XX guidance mid-range $X.XX remain of based in EPS XX%. quarter the expect to tax weighted range Adjusted average in in XXX share our million. on rate the outstanding is of per

amortization adjusted restructuring EPS net the of intangible excludes impacts and other and guidance charges. remaining Our the compensation expense, from impact our stock-based

we in $X.XX a GAAP $X.XX. As result, earnings to a share expect the of range per

Lastly, the the impact rapidly I from any guidance excludes break potential would like to given our note evolving Coronavirus situation. that

With me over before comments that, back for closing Q&A. open let the it Revathi to turn we call some for

Revathi Advaithi

to range considering nicely fourth just in be EPS to with Chris now commitment that provided, $X.XX $X.XX, the $X.XX. After really aligns $X.XX expect guidance April which Chris. our quarter you, Thank the our we of annual from of to

$X.XX and compensation other to is EPS of and to annual intangible GAAP expense, be restructuring amortization $X.XX range and in stock-based the includes charges. Our expected

been Flex have has to a and last the working record in. can Since track establish sustainable really that hard you year, confidence team consistent

the in meeting areas our the in delivering results growth direction, focused X we commitments. the months of right we're then on of are right and for Our that executing, fiscal consistently are and evidence and moving first profitable QX year our

line With for have that, going the the I'm to open operator questions.

Operator

[Operator Instructions].

first of from the JPMorgan. Coster Your Paul question comes with line

Paul Coster

couple. A

of CEC CTG culling the some and when, Do segments have sense done CTG might both you least, stabilize? think and portfolio off, the First will when you businesses. be in at

Revathi Advaithi

of the portfolio have most our changing in you and see portfolio is changing of networking had should of portfolio done it. we mix work say thank actions and in our the a But tail being our manage rest say a portfolio. year. the we're our actions and of majority portfolio From that said, size of the done. out how from at we've terms have the and at year. there's if that looking continuing to say question. of planned be and telecom taken for of that Paul, our the in CEC, say out the been and combination action, for I'd always and market customers. figure trying we of And better way telecom plays And I'd lot the perspective the though from to a a I'd CTG, market networking in space impact this CEC, seeing to actions our look I'd a

I a that keeping that looking we'll to the change we right looking on the an my on So we of basis. relationship out at as be our expectation done already, I across ongoing is of portfolio amount our at this a end of parts doesn't how we be but performance way would we'll on confidence be it perspective, because, end be win-win significant from that step run back, business our our what's I a that manage that we Paul, the portfolio. it is figuring doing day, one want customers, thinking say at that work the thing have businesses and that low will But be and for have at should to the of our always

Paul Coster

My and as strategic are generically. the EMS of allocating to own from of maybe follow-up segment. chain traditional in in you hearing your that, you such space as its capabilities from to its scope are to auto has manufacturing actually change you of what electric as auto suppliers the concur? shift? Do they result with And new vehicles We're a or transitions that a a to the question industry moving idea supply the is ICE it the transforming away interested do seeing

Revathi Advaithi

that well through a market and positioned strong well-known electrification that strategy. we going chain fact clear But have question. Yes, the are have strong portfolio is as Paul, shifts in is terms of very Yes, across the you automotive evolves really domain its also, shifts that strategy I'd around space platforms autonomous, manufacturing say through are going I important. the technology. we expertise because and clear think really and thank these capability next-generation critical design the it's which for of supply Flex

the in help also would and will automotive investments we as like in So getting in manufacturers us, in say is chain supply well this autonomous And space. and significant Flex overall see this the I positioned early a really our space, chain, changed particularly, value electrification way. broadly

space That very hardware all being said, in these we're technologies. just a building model with collaborative partners, the also across of not software business the our but space in both

well to advantage we're supply the but I Paul, changes, space think and think chain in we going So Flex. positioned is through an that's automotive

Operator

Delaney next from Mark with Sachs. line Your of Goldman comes question the

Mark Delaney

have I China this results. located certainly impact the good and point. realized very question that region. certain of manufacturing China, health the is unfortunate Flex' the is in about capacity you in a think But I on Congratulations X/X situation on coronavirus at

you at Flex with So own percentage its operationally, what at point factories in this factories point? And impacted be what may maybe your of any may extended just this can shutdowns? of talk terms about be seeing

Revathi Advaithi

Mark. Thanks,

being type detailed a of have plan And at looking for our we're on the said, very handle executing factories. now the situation our very impact that results. quite focused as we're customers right help to we I'd as like thanks making First, on provide, can that are is in sure possible colleagues, important first, in my thing best say for China have in comments we We're said with our that important coronavirus, know suppliers disciplined the and employees prepared our we and our remarks, the well. that most extremely how teams to factories our very the That our thing. performance. really on I and pleased our our most this

of the look have issue if past have there that And bulk people we the where our significantly taking the you down China, But in also, you efforts we have we in overall that of and of number China year. long-term, are at the our the is assets we deployed very is. approach. that have taken think disciplined Hubei all any province, about in is don't a presence come the factories If because diversification approach the

detailed across what to going for working factories be exceptions we're with the looking We wherever and agencies have shutdowns actual our the already, see executed to very plans are that are possible. government and

day dealing So situation a new we and we're have comfortable the accordingly. being and is plan. every that very information That Mark, evolving, terms I'm acting game of it with said, understanding in

Mark Delaney

A along remind same has maybe the I the And about. a some had plants, to. of Flex helpful. its move do factories had very make that through a lines. or the through between because usually But could and maybe complex very in different needs and of it's that Flex relatively customers. us respond to study to -- of when go you have be follow-up about just But chain how year the case examples requalifications something can That's it long some is to just when to how And to take. planning customers you reasonable think for that know something able that us question supply tariff-related manufacturing last shifts many is so talk products go thousands with quickly over may needs quickly?

Revathi Advaithi

Mark. Thanks,

are been supporting supply you as chain -- chain say move in globally, the their that And right? our than we some I'd others. will we definitely I in support our our they customers, suppliers. strategies strategy. the them look at And just follow driven faster remind them and by most have can So supply of diversification

CEC medical are cycle faster consumer anything and maybe our move So I or automotive say, segment. in them industrial factories the to or would up for our pick our our our much than example, segment, segment,

think our I general, should about that, So in how you portfolio. that's, think

to positioned to you pretty our dual-source and driving is and But do significant. chain, from on wherever go. that really supply want having And know, look because, is we're customers what our their factories as is sourcing geographic real customers multiple focus really they we're well seeing following diversity at our strategy from de-risk

Operator

next of question Ruplu Bhattacharya line with of Your from the America. comes Bank

Ruplu Bhattacharya

strong margins. congrats And on the very quarter, again,

on the maybe IEI And segment. start with question, I'll first so is my that, specifically

You range. operating margin, reported, X.X% which a strong long-term again, above very the is

any -- So thoughts I margins into mean, you at the level? your and you think over And should to is how much any have penetration markets? industrial next of segment of we penetration how there you penetration couple margins do sense the think sustainability do of go these how -- markets? about more energy on the quarters? end in Do see this And end

Revathi Advaithi

your base focus really is we're which for really The And margins our that industrial we'll will driving And this look And of Well, comment segment. space customers, it's of IEI our the segment comes from businesses, with even the performance. good good segment. our like be at volume pleased integration that said, Ruplu, every saw mix very within you always My IEI significant. in terms I energy we the comments available our be will also still across across the and beauty within and our market conversion, performance. thank is on you growth across vertical quite board right say vertically integrated. if increases today,

to So a to is be from move it big us across take for value products our us. chain opportunity and customers available for able

because the and has affinity we're kind it's to spaces we And find expectation as improve of from along. is hope energy participate so continue It available seeing sector is cycle we'll in mix our in want margins that a will big to our IEI, the in. the IEI right right And segment manage growth also long the this we pipeline and and grow in continue cycles standpoint. is market within that customer that go to to

that proves to the the can we're So performance far segment ramp a it's continue too. future, and in that about, excited so our we really space very

Ruplu Bhattacharya

makes question elaborate came on mean, is Or we, we for more HRS. are? But talked what of just couple should expected, much would X.X% go? investments but there a lower margins than is And ramping long little what I of business how And time, on kind -- It about that segment Maybe some pretty next some how you those margins. again, sense. Can Okay. have this still bit you're about another and high over investment to margins think doing. how the investments you quarters? but,

Revathi Advaithi

Yes. our about bullish I'd Ruplu. HRS say Thanks, we're segment. very

about have in of have areas that our are think from and expertise leadership. we to despite have you automotive automotive health, growth amazing If market we market aspects HRS perform perspective and a both continued well improvement perspective. continued margin and the segment, X And our segment, headwinds, they really share

we where booked. is seen more some health the we business, have bookings are of say, that have I'd challenges that have we space. our been in a our but how in related as or result growth ramping our businesses It's not to

complex amount you're a our tremendous we excited those of programs we of pipeline about to be well, booked is potential those our And We're up have up programs projects in this have lot means and team work very As we're able that -- learning have space. we future business. bookings through in to ramping this and that. ramp aware, a the a this in for see it But of of we space. for the confidence lot operations

as with, those and the that continue doing and HRS a for focus well. away whole. on we about ramps learning So feeling bullish these we very it's And one very feel comfortable potential we walk program accelerating it to from and

Operator

next Suva with Citi. the comes Your line from of question Jim

Tim Yang

on seasonality. is This Tim first Jim Yang My question is behalf calling on of Suva.

seasonal of the are March you is about And was going we think, you forward? seasonality Do quarters. as time X quarter your think finished first seasonality I guiding, past above well. the portfolio your quarter performance as most And have normal think you optimization? should December how think slightly I in above

Revathi Advaithi

to take Chris, do it? you want

Christopher Collier

Tim. you Yes, reflect when the about that Yes, more sure. set historically. than we highlighting think sure seasonality does that much forth, Thank just guidance for that, you for a muted

had. there's If around average and had of we dialogue March is terms that. portfolio around short throughout mix than cycle the significant that's and, And high-volatile question back, midpoint is seen our the and attributed -- guide both life that businesses, earlier reposition a -- lot the focus CEC is efforts CTG to the we've XX% quarter in this a roughly that We've especially, of much taken thoughtful lower and you've year you to be X-year ourselves the what an look product business reduction repositioning. of

As as year. a see revenue much balanced a you a throughout result, more depiction of you will move the company's fiscal

Tim Yang

very A quick That's helpful. follow-up on question automotive. Got it.

mentioned the And in program relatively with high Revathi, auto a ramps the think new think, in I automotive. past, are couple you driving the of strength concentration have I you OEMs.

it programs those customer ramping, diversified from a For new your from customers largest or more base? you're is

Revathi Advaithi

from focus then on has us -- for as our automotive, us in past. in And we're and talked would in strategy ramps in the say, share had I'd program we're wins these well have we're growth that expanding automotive that and both definitely about I is content and autonomous focus also progressing health this really been customer I of in electrification is we because the our overall and but real because say the significantly base, you've platform automotive, heard our across a and helping market space. diversification for both geographically also platforms.

of today. it customer those So automotive changing terms helping we have our mix of all as in are the of base

feel we'll we really where So that about continue we good and are, on effort.

Operator

Your Tindle comes the next Adam question from James. with Raymond of line

Adam Tindle

forward profit the a this revenue holding decline and wanted may Chris, possibly be just on flat quarter based declines on to guidance a comment growth. to revenue your revenue like looks admirably year-over-year. despite about I path in It that you attenuating made dollars start sizable with

So understand 'XX. just on the this, of fiscal side for how to wanting other you're leverage thinking about

were embedding quarter, growth. think on this I profit prior low single-digit we revenue dollar all double-digit example, For to growth

incremental into you how understand ahead to don't Day? trying that just So we and about get of Analyst the think this quarter ourselves contribution following reasonable margin a so

Christopher Collier

we improving Thank performance for you, have. identifying the of Adam, and some thanks

underlying margin. couple guidance think is expand a things trajectory from through us is on as ability from how strategies, a what that can is due our out we what deeper an reflected is for perfect you frame we with have care around the and as the the announcement operate time to to see our continue Investor of And cost well of our to structure. year-to-date weeks just ago performance company that get further businesses' of be QX to One a for an each But and going and discipline its put for around we Day March XX.

And business Our how us as as some SG&A been to positioned. enables move remarks, mix. forward. prepared the we in terms it my substantial in well is, we continue highlighted has That managed, well, well shift leverage to I

a of us now see us see the together continue handle trajectory in as you in gross you're to not be We'll margin. trajectory You're execution, this continue We or weeks. going discipline, have to profit able do get matter put to our improve in a gross think of profile in. a operate stage. to that a out operational to to with just want And put can you unpack front a -- deeper continue us X X I that you confidence growth for or seeing margin at terms of

Adam Tindle

moving Maybe there quarter, I put a understandable. just point parts. finer a was another Okay, to lot on know of HRS question on Last it.

You had customer move-outs.

large You're programs. ramping those very

quarters return revenue did pretty X segment sizable to the the but This think, erosion. was there. for it like time quarter, so get I first and, looks margin growth The or did

be to I'm I'm of some detail you unpack correct on the correctly. bit more the it wrong of a little margin has quarter for But and if next think a me on guidance if timing investments there. your just margins, X attenuate could still weighing on embedding helpful. would I Please buckets maybe those handle the if

Christopher Collier

those get profitability you business. we For are be for of really in these foundational ramps meaningful tried health once is a going of of to function for HRS, sure. up much into growth things it highlighted underway one than the And mix Margin, at is And programs, end of the the types volume. us. and have its for front revenue is in lower margin of some we've And obviously, future solutions. to as your to extend I is our

continues operating picture to meaningful HRS sure. very having very point be if of to of we the and company's year-over-year. for not that you the So And I'd on again, QX some shifts terms for guidance have total profit at holding for gross expansion margin portfolio midpoint going in nicely, Margin improving. a

Revathi Advaithi

is in money really we'll Adam, I general programs the we're in important, diversity and We think that bookings portfolio the right? complex in that. of way ramping revenue our things would invest have to opportunity to move ramps put in our businesses and on and about these focus our the our to is portfolio, HRS to really add, program continue that into

do. to to it, it thing afford us long right the can the do out well and term. We it's for plays in So

Adam Tindle

just Well, Okay. on just and was it one than Chris, interest quick housekeeping, guidance. better significantly other,

the changed something that. rate if So to what understand just or there structurally wanting right for is run

Christopher Collier

Adam. For sure,

was quarter, past about you terms actually item. job managing So if better think the did during the in period. -- in broad-based much debt we and of that line cash this it performance improvement a levels We

environment, in to same from quarter. underneath a this we we million are a backdrop bit minority in very of and quarter had that if improvement a you -- reducing sits several forecasted did to how period, better item. several terms to fundamentally of got last will. similar and outside the of of of dollars the million during moved some that $XX rate gains kind recorded investments million that of we an a guidance nothing of net that so had a in level. of of the improving I currency some next We shifting $XX weren't guided you line There's million interest interest of that dollars And losses

Operator

Stifel. Your last with the Matt from line Sheerin comes question of

Matthew Sheerin

in you Networking, telecom. of and the there. softness exposure got you've be your CEC a continued stall broad about A seems to know about some out. pretty issues What's and yet business, played of networking So in there cycle? talked I the not commented had XG that lot inventory thinking peers regarding your there. terms have

So any helpful. commentary would or visibility be

Revathi Advaithi

Yes.

the positioning our it in cloud center space. telecom about good with whether or in XG and very in data CEC, feel space is even the in overall we networking or Matt, So

said And that a about year. last little delay XG talked I have a is We in there bit that programs.

being general. rollouts these little North down bit a in a is infrastructure expected kind regionally, ramping XG think and you large little quite Asia see overall, a slower, America slowed definitely If we in But bit. was it faster. which Europe about of

have I think what that's we seen.

in to networking. calling probably slowness seasonality they're for. I'd a just that continue we say networking moment in in see is with can see a and issue time that And you what our customers

call think that CEC. in really say. I to We changes, where positioned But well early QX. it's we us all would too continue we're And of spaces in expect that to for

and our in we service in XG been consolidated this in the in then all has We really in of space. really and very position and positioned. space. storage, well this -- have capabilities wireless cloud, be networking always that And well And to our battery management, the leaders continue market and unique in

So but we'd some overall issues say market performing well.

Matthew Sheerin

regarding little had a expected. just higher your And OpEx, we lastly, it Okay. Chris, bit was than

should thinking had able start Of be on -- instance? Should get lot you mix of in leverage and margins? sales, about better upside the the to you a course, revenue what be and we as down of quarter. a working you But gross get percentage as the that OpEx, for

Christopher Collier

around Matt. at able us modestly was seeing sure, It What you're good million. being X%. really meaningful is operate say, does year-over-year, leverage. $XXX line QX with up The to discipline was create this item. It Yes,

while investment growth X.X% of so, a terms terms very leads the profitability. higher of in A future confident That before, range of We are support board across bit the in operate we've period a of our this step-up to incentive and enabling necessary. stated in doing of revenue as to the and bit to in did ability to the this ourselves compensation. some that our clearly actually of we better levels X%

should So X% where X.X% you to all to provide this have see range around is operate leverage. and meaningful being us, confidence of we high and able

us, our forward With our in to thank been consistent sharing in QX, performance all our March the performance forward that, into strategy for we and and we're for through our and pleased Day, with I'd really looking you say to joining in Flex. we've the we're and have more future you all look in Okay. insight fiscal seeing Investor XXXX. We

everyone. So you, thank

Operator

conference concludes and today's call. participating. for Thank you this gentlemen, Ladies

You may now disconnect.

Flex (FLEX) 30 Jan 202020 Q3 Earnings call transcript