FLEX - Earnings call transcript Q4 2020

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good afternoon, and welcome to the Flex Fourth Quarter Fiscal Year 2020 Earnings Conference Call. Today’s call is being record and all lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session.

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

David Rubin

And Flex’s Robert. XXXX quarter conference call. welcome you, fourth to fiscal Thank

our Officer, our is Chief our today’s investor today's me Joining Executive on available Officer, recorded slides the Collier. presentation and are Chief section Revathi Chris Today’s website. webcast call of being relations and for flex.com Financial and Advaithi

pandemic to we note, and subject impact and assumptions expectations today's on based current the materially could call Please results obligation statements. to including are actual contains update risks subject differ. are of is uncertainties, forward-looking forward-looking these COVID-XX undertake statements, which information to and that Such no change,

the with For of risks all filings uncertainties, most the please discussion see recent our SEC. and

period, in can appendix our Lastly in the presentation, found today's website. GAAP reconciliations Relations non-GAAP this the call references section slide be well financial as Investor measures of current for

I’d With turn our over call that, Revathi? like CEO. to to the

Revathi Advaithi

afternoon unprecedented you, for and an been thank Good joining us. It has for you XX Thank David. us days of all today.

my we're with thousands worked I best tens the Before I around to wishes to proud the to of send and sincere Flex achieve results, to world, want who thanks tirelessly the you. employees have very share of start, express

on incredible long-term Today been and focusing the going financial challenges, making term company. work I’ll decisions health the to of the describe on some the still while we've been of that's in Flex overcome near

rooted and the of thoughtfully do by our the all caring incredible addressing challenges company. and inside tenacity, are deep great can We an culture, enabled

the current formal guidance today We of will unpredictability because giving not in the environment. be

the we're what much color making. we're to provide seeing, I as However, as can I on assumptions and want

on situation. start you an the I'd like with giving First COVID-XX to update

stream and in deployed well a conversation to about work distancing Our safety leadership This mandated early and developed the We really temperature and protect shared each helped our January. ahead stream well our gloves in of presentation employees. coronavirus the government checks And with social masks, the before approach measures, priority being Investor work the to curve. had them. of a health for organizations Day in five we we be ,sanitation the approach playbook as factories our us of March, our in teams first and

We to from have of thousands enabled work without office home productivity. workers compromising

best-in-class Our also helped employees in factories China, our only customers support products. protocols Malaysia run to These protect with governments, safely Brazil. have by to colleagues, our including as recognized enabled operations of our protect operate been and several have and mandated but protocols essential effectively us Mexico, not us

As for make We like COVID-XX oxygen something which were health efforts is and primarily ICU beds. of crisis, breathe critical ramped our items of a partnership the monitors, with and customers health other could help to care capacity, do is immediately supply. in there expand such production more as concentrators, short along care prompts with efficiently, infusion products we patient need patients care was Overnight clear raise help we our in system global our customers. health a many to this products

tests. point-of-care systems. well as are COVID-XX our new increasing identifying ramping laboratory for highly We're as We production also and significantly the virus presence the both equipment accurate testing of now for both tests antibody and

as of In it. highly addition, manufacture help we were governments The publicized and well ventilators. approached been customers you to ventilators by as know has all many non shortage traditional medical as global

of engaged a partners testing market not discovered ventilators proven a are speed scale with many seen are people constrained along the simple unable demand, producers, meet make. and Current supply to as Not number equipment global only also to with be you make but never on and designs you before. the required device, bring need to the well have devices severely do the to have as chain to

Our about Philips has the talked ventilator scenes. engagement other working OEMs behind And with also we're publicly. with been

while never making XX medical before. around to XX a significant we ago takes experience had made we typically complex Device ventilator of medical ramps, Most months, seven devices weeks as

we're end to six of was ventilators crisis, continue per globe. the that year. global to sites units we're before month, XX,XXX health Now at a give so And be ventilators this you by of producing grow. of around thousands To around sense proud this say entire producing we'll scale production the

uniquely So on we as these. challenges positioned are such to take

they're we’re important and including often simplifying efficient, at you know and for managing experience products and devices, increasingly we the regionally, systems them at ramping is serve. the production and organizing to We highly medical complex make making have markets complex our redesign also building products experts exceptional decades which chain, of more helping grade customers supply as

There are product to talk me stories share, producing let Roche. many about but for a they're

other nowhere One near that of this system record formidable Flex the a and now are global We Task testing the our that response makes a expertise of leveraging is but site is system, quantities manufacturing products make In to ramp this high now. that challenge, state time. art the components for to right needed up sites Force, space created from Roche in the special demand. Swiss

As a a has strategic this in partnership result Roche, of been make the with difference given opportunity strong our Flex pandemic. to

was point global. response to truly want out this I that

shift were to Flex teams staff mention, these medical needed saving IT crisis non and contributed, medical and our addition across the they repurpose supported our operations to helped support protected efforts. operations global workers produce to provided our Health teams people teams, Not safe capacity so can Solutions with countless crucial procurement organizations regions, keeping In products. HR and life our segments others and

factories make that that and which people's products of to work cases family complex of overstate value, effort our At in to cannot great lives. tens deliver truly ways our every came and running of day, to am were Flex extraordinary to times quickly I is solve the flex our customers ultimately, thousands problems. who new many is up proud together, this the improve workers how I XX/X found heart and And difficult in the for live the purpose create despite

operations. Now let's go into our

on outlined that our suppliers component we reached only shortages February great we a and shortages then, peak that During are progress we're a see our Today, of handful shortages. managing them Since investor situations component March components have made in XX. fewer seeing call, closely.

and acute Now are with geographies, our also of that national are to American have governments pleased with local safely In our to that our facilities we down a process return are running. fully regions, and few remain due regard the waivers in in now facility line our down North in the In operations, European receiving we with customer these automotive to factories have and China we're up and sites our capacity. sites to We’ve shut received contact outbreaks. closures. shut full other

that the of expect that We shutdowns started automotive in some May. will March through continue

aggressively preserving prepared demand To and situation, we have for cut are costs the uncertain cash. ensure we're

goal as business. employees Our absolutely many jobs. to and we accomplish time. as cuts deploy is a need combination as be I maintain other furloughs this, it, want thank again dedication pay salary protect willingness our we you to for are sacrifice enable and graduated but into our of as know and and Flex during can unprecedented their action to future Taking necessity to all challenging this can to jobs we invest such To to where programs. furloughs cuts

QX part and decided our our preserve to through We Chris our you buyback to position also through strong will suspend as of during efforts liquidity fiscal financial remarks. our share conditions walk cash, and his

for the quarter, us. escalated in to Considering quickly the how turn we in slide X. great situation with COVID-XX please Now strong resulted discipline, quarter which a executed

several highlight of metrics for fourth quarter. our me key Let financial the

in billion, volatility makes reduce achieved and Revenue was changes and short down to high operating of COVID-XX the impact costs. $XX due of despite XX% with to plan COVID-XX, absorbing cycle $X.X businesses. previously our in adjusted exposure margin year-over-year an portfolio X.X%, to along We million

$X.XX. was adjusted Our EPS

We quarter flow These adjusted pandemic. reaction the disciplined on and for a reflects strong of results had fast a execution to focus strong $XXX driving million. free our very cash

to talk results. fiscal Turning X, our I'll slide about XXXX

operating of X.X% a which Revenue billion, the We year since achieved X.X%, is highest adjusted margin was down XXXX. $XX.X full year-over-year.

year generated this adjusted the was for million. was flow $XXX of original $X.XX. $X.XX, Our of And EPS we cash fiscal guidance our free within to through year, adjusted year which $X.XX

we position our portfolio, years, to Turning to company, and we of say give had one with you as strategy. number challenges COVID-XX that are we well of changes our including the we the to took to year, us this the confidence plan strongest The I of saw our have continue new fundamentals slide and fact financial X, taking, the the in actions our implementing our impacts, crisis. trade global that

come then our some Chris? through Chris, Now back will results to to in end more the over the you I'd I like closing to detail. will who turn quarterly financial at remarks, share call walk

Chris Collier

X slide Thanks, fourth Revathi. to summary. for statement quarter Please income turn

year-over-year, actions short business. down revenue Fourth impacting total production high demand, quarter XX% our this And earlier reflecting volatility was the $X.X and the during million billion result we quarter. to the distinct to COVID-XX cycle negatively exposure year reduce of undertook which

of $XXX adjusted the reflected impact QX with incremental associated expenses million COVID-XX. Our operating income of

up Despite a year-over-year. $XXX million $X our year-over-year, operating revenues million income QX quarter was decline in

compensation, to $XXX income adjusted was primarily was million in $XX which over than of and was year. our net net of amortization and share $X.XX charges. quarter stock resulting million GAAP restructuring adjusted X% million of $XX $XX other in earnings income Our $XX based up net million, adjusted net in Fourth due year income intangible lower per million net

financial to XX Now slide please turn for highlights. quarterly

significant incurred costs. adjust as of health certain costs. and global And associated factory incentives, measures, cost absorb costs forced implemented These Let of $XX to regulations. chain the roughly ability me by in absorption shutdowns. which comply health additional and our for labor COVID-XX, countries, with begin quarter incremental labor included this during earnings to These amounted sites costs, under and government there we guidelines are million and were highlighting limitations safety cost impact in supply with appropriate structure overhead our we enhanced

X% gross quarter year-over-year. profit down fourth adjusted Our was

points improved Our to year-over-year adjusted gross X.X%. XX margin basis

our our started not of fourth shocks teams operation business quarter So year-over-year led consecutive execution that despite better coupled these to of were the when mix from margin foreseen improved our expansion. with we gross quarter,

our organization while the this result dollar measures to cost terms spend, our is years. we This the focus, quickly Our to our taking reduce year-over-year of enacting us an discipline strong further we seven million conditions, absolute by our embedded current which which over expenses was in quarterly forward. maintaining targeted as $XXX actions enabled will on lowest discretionary in go expense at respond operated cost cost have market SG&A further quarter, X% level decreased to operating

year-over-year of seventh our expansion. adjusted marks margin X.X%, which quarter our to basis consecutive points margin operating Lastly, expanded XX year-over-year

$X.X was revenue in slide for down driven Now XX and decline billion, automotive solutions. business quarter decline to segment HRS in fourth X% X% a turn an X% our year-over-year, performance. by health

of response automotive hampered in multiple late customers OEM business quarter due COVID-XX the was Our to outbreak. from to our shutdowns several the large in factory

Health II to solutions, $X.X impacted quarter. that disruptions for our than year-over-year minor for grew growth solutions was renewable customers This revenue COVID-XX as more energy also as saw chain industrial, energy weaker modestly the from offset particular which throughout as lifestyle growth a customers. various II strong related business in disruptions, product home XX% and revenue ramps strong exhibited well within underlying supply certain billion. benefited significant

due year XX% networking reductions to in was telecom billion, reflective revenue $X.X center, edge compute, to the of Board declined disruptions. production CEC data across and which over year

declined due reductions impacted this year. our our earlier XX% impacts ship supply to portfolio the constraints as in high as revenue product, that chain CTG well of to targeted prior Lastly businesses volatility the significant ability billion, from $X to reflecting year

pleased our point reduced expand the absorption associated operating adjusted adjusted were $XX HRS like automotive We Turning margin of impacts profitability to to temporary a of of I’d operating to were profit, a profitability. year-over-year margin. performance X.X% and margin several sites. to million with primarily and reflective X.X%. of operating under our generated the adjusted with closure

Solutions foundational of element profit, of continuous margin. million monitoring success adjusted program, of ramp our which a Health IEI is This operating automotive a generated $XXX offering. of X.X% our the a device large masks and weakness adjusted ongoing operating glucose

growth. we've profit, been operating This performance that X.X% adjusted reflects the strong renewable margin. business over adjusted energy the of benefit CEC $XX strong from as delivered past several contribution a richer from million years, continued a as and operating winning increased well mix of

with align As adjust line. structure we top to continue CEC’s to cost this lower

it Finally, CTG X.X% repositioning simultaneously a as margin, posted of cost manufacturing pressured structure. from was efficiencies, adjusted undergoing its and operating while

Turning to slide XX.

our review flow us highlights. Let cash generation

we Adjusted we $XXX to over free continue cash free million, cash quarter flow both capital. adjusted execution. that This fourth the flow. as and cash consecutive displayed marked quarter Our have generated flow performance sixth CapEx was operate positive solid with discipline working

We from the encountered supply inventory levels, constraints, the flow generated We've $XXX we had back elevated to and initial higher in due shortages, of experiencing a constrained most million which operations, February. component in cash despite mitigated during that remained quarter. supplier environment

an operate limitations respect We in virus continue result. related with unusual environment and to production demand and fluctuating to dynamic

expect our align drive to with down it we few levels quarters adequately result, a As demand to take will the inventory current environment. a

that we buffer wide remote initiative rebalance working an are have established planning. To stock to actively we enterprise regard, cross and requirements. our partners And resetting with functional safety our

inventory able actions to confident already will we management our We be the are given achieve numerous underway. reductions, targeted

with past discipline, A have which generation this of year. a CapEx been managed we a flow our investments key element cash has

significantly $XX continue our ability now This growth products be areas and are depreciation. technologies, CapEx to supporting investing quarter, levels, while totaled new our manage capital our company. prior have the for confidence than adequately or investments net into we programs, below core depreciation million, that the Thanks to lower to of in expenditures year’s to at

flow production through term. well as clearing cash we goods restarts finished will supply as some payables, and near managed alleviating As the shifting fluctuate constraints, in and our

a strategy. CapEx cash important However, sustain counter will reiterate cash our is free expected ability fashion Flex’s flow capital in down cycle, feature Deploying flow continue it from generation to is with largely to coupled be allocation a of we prudent working a in cyclical believe our free capital key reductions, resulting discipline to investment. that

we During we remain million. return as the on $XX shares shareholder million X quarter, focused for delivering repurchased over

in and share prioritize future capital resume monitor We to appropriate ongoing an date. However, mid crisis. position repurchases as will repurchases market in and March, conditions allocation liquidity order cash during actively changed, our share we health suspended we the at our

XX Please and turn to slide for cash update. liquidity

maturities, capital We near continue that cash structure to debt maturities no staggered term operate with maturities has a balanced free and no flexible flow. meaningful

enacting liquidity our During of suspending reducing discretionary to our position, reductions. mid such a opportunities, number only investments fund the aggressively spend, we quarter, critical highest took enhance and further to pay margin tightening as repurchases in CapEx steps March, corporate and targeted share in

a billion banks As liquidity, year, close three we had supported revolver, we our ample this to syndicate. and undrawn out access quarters including by fiscal one strong

capital ability to needs maintaining we to a have In summary, maintain our diligently investment gives and future That worked us very current meet rating. our confidence flexible and sound our in and structure. to business remain grade committed

XX where slide in fiscal we continue Please operate to to turn and very business From highly first production our quarter dynamic update. XXXX today, a environment. fluid stand of for we

or quickly factories run in outbreaks safely conditions both local government actions, as further to ability which our Our subject is can change of disruptions to occur.

end in governance. uncertainty view driving financial so disciplined our and and to markets June guidance operational the we we qualitative environment, insight likely quarter, we're Given execution into this the for sound will we current to suspend some provide want how quarterly how

its non-essential with start and our consumer me impacted demand lifestyle, Flex Solution Agility groups. spending, reduced business products. our particularly by Let negatively In is a segment

certain working we in bright home within goods support remote spots, However, and schooling, like cleaning durable beverage. areas are and that seeing and

CEC and business online cloud increased demand gaming other usage. to experiencing increase telework, due is infrastructure streaming,

and networking, VPN remote solutions. are support seeing We increased also computing in our work edge to demand

flat However, enterprise broader that down restrained. we're overall seeing by CapEx to broader IT to looks commentary be spending indicating driven

maybe supply Telecom demand infrastructure and aspects inadequate about impact maybe these XG field comment It for labor, chain disruptions of all challenged the rollouts. postpone the some level is also a which further products. spend is from on

PC by been consumer telework this demand, the consumer products. and to our customers notebook mobility devices, our for a moderate But offset to practices. have than seen uptick to has due more shift regards in we With demand weaker

and increasing let segment, visibility of vehicle all well automotive well around Turning area to our as trends as where many features ADAS electrification content, business group. continue, longer-term with our Flex will very This Solution our opportunities. and indications start that an Reliability are projects as remains me low,

OEMs fully However, American and impediment of not closures in impact term. plant the European known the near North the and is by full series

some of May, a clear is While degree resume mid have still to that production to do we view demand. in expected not

So rich long-term in solutions our our differentiated remain very the while within with business in piece term. near offering of financial be the we will automotive, confident very this fundamentals performance our in pressured extremely

And critical monitors, produce. oxygenator, Health equipment to pipeline. healthy as as COVID-XX ventilators, new balanced increases care demand earlier, products, in all very a solutions significant business have over of driving which In Revathi we patient demand portfolio. our had ICU testing and related This we is necessities, such nicely highlighted continue is

demand which shut have impacted has by related essentially non-emergency been down medical to However, the elected procedures shelter-in-place services. orders

the at We return expect and health and in they routine this which that pace to elected return care services procedures unclear timing is point.

solutions modest given that a In business. to interim in quarter, recreates the June ramping overall the our demand. significant again, we growth headwind our expect But Health

business largely industrial reductions energy term likely market. challenged, been of We've while this signs remain in to is near our has Lastly, renewable seen stable.

We near term industrial challenges also ahead major CapEx segments. across related anticipate to all reductions

disruptions, business, of the decline operate we quarterly the continue our double shared, to expect I an low our to outlook to acute automotive volume sequentially range high within in digit as enterprise percentage as of revenue single pressure sum well through just would regional the as production Given

sequential to some sustained to jurisdictional costs comes When protecting our as we constraints, sustaining of distinct adjusted constraints pressures more as cost anticipate with under on levels levels This creates employees. elevated associated greater absorption as actions as shutdowns due our ability our margins, the cost first which take in operational cost of incurred increase primarily capacity well well or considering or from operating COVID-XX quarter doubling also we from a our impacts of quarter. fourth

thoughtful The structure and mention last in well drive efforts want some we've of taken is mitigate result expense thing those in incremental modestly cost disciplined actions and effects numerous continue These is levels, we quarter. lower level, our with today's sequentially in align we SGA costs, that COVID-XX to to sales the as lower as way. will our related first to a that

over me let it turn back that With Revathi to

Revathi Advaithi

Chris. you, Thank

QX with is with Looking executed and and agile year team the unexpected, when results, our Flex chain the stayed it the were in new with Even challenges is discipline. that clear XXXX cadence fiscal at supply QX back in our quite we executing production and rhythm.

Now almost differently what and working from believe and I tell accordingly. capital you operational unique radar which call base incredibly to we our customers balance early and let that this adjust investments me our downturns. we're an enables Using We an with insight our opportunity every country I of time us into diverse a supply doing out horizon. demand this we directly in needs prior and indirectly operate anticipate have to our time in immediate world. have beyond or broad look the this radar, very products.

CEOs, the in supply So we of connectivity local a combine two operate shape contracts that with our efficient managers of can officials. grassroots and as with and the chain. leaders, and thousands we our supplier are have with banks to terms we behaviors of government so at demand, early level intelligence and help see broad more we purchasing that all using We're customer, holistically data array a

us demand using for We're different respond increases very scenario quickly. actively to scenarios, plan also decreases to to enabling or that

this leadership goal the this efficient but this. the and here, done to be We crisis, out agile. industry drive to should around to lots come there's thinking be for want Now more of

day right. March even outlined our committed we we Through stress our more XX. all this, back bought on that I to strategic our Turning are want is you of XX.We that approach to slide to convinced at to investor strategy long-term remain

And our We and our We'll this specifically expanding that will are agility portfolio. targeted as as see more technology our shift to which is differentiation, focus diversified you to well can operating continue reliability on models a working. applications, growth segments. design tailored

regionalized of us Turning allowed to see faster the change production. and react strategy chains adaptive supply and regional demands positioned you'll has our slide has new XX, us and that to for to

Our focus, customer manufacturing to and is us differentiation enabling solve and technologies difficult domain through customer’s expertise most deepening our challenges supplier our relationships.

I the will of and global even crisis future. side this we positioned out of more better other the come confident for am stronger

should once to the Flex a enabling the return lives throughout generosity proud to that products part Finally, making our I'd in play like we're period. many around very creativity I by tireless essential working. their keep be and to the all save the to that the thank employees to economies for more this We globe. continue work world's be employees and inspired of

your our sure contribute Seeing making our months, teams their while many homes want ones, shown we we ways, remain is. commitments resourceful and masks in and working ramping in resilient not our hundreds so shareholders. their in thank consistent in also come of thousands how value for Flex together and our delivering ventilators to for the to from and to caring family donating creatively I support for long-term loved meet to has sustainable weeks make communities, you committed

Operator

First Instructions] the with Please comes Mark line of question Sachs. Goldman ahead. Delaney from go [Operator

is open. line Your

Mark Delaney

for Yes. Thanks very question. afternoon. taking the Good much

has March maybe understand continued more So want bookings saw company signs that better better April that and to any stabilization bookings seeing? the that now trends recently, the understand of the on there's April, help if pressured, including month be of quarter the us is in and also to Flex in

Revathi Advaithi

saw segments in very you prior expect, like industrial. some our Health you health expected trending is I segments you back a quarters. customers will with strong feel for critical strong. health, then solutions the we recovery key with say came like bookings that definitely like this POs. And and automotive quarter that market But would releasing very I Yeah, but But pause more which comes was on last it and be would pretty our here strong our executing automotive we other Solutions I year time we the as and in segments sit question. to bookings as say is in it Mark, and the says would our recall, industrial compared thank for lower were confident agility as our back. also on slowness new and pipeline the quite and focus into in that in

Mark Delaney

And helpful. question my on margins. That's follow-up is

sterling very on margin recent quarter well year-over-year the most the and expansion company's potentials and we metric margin a over and the think done to Flex for long-term the targets As the in about a as several this last basis in any fellow you Do on the quarters that factoring as the companies has in levels different including should long-term, what the discussed. distancing change margin prevention? potential in investors expect for think think about be physical Thanks. business segments and the costs can COVID we

Revathi Advaithi

operational are room improving have the result made which as right I in mix and on Investor with we next commitment business. the as the I we supply see say said we margins, Flex, focus a operational think operational in more disruptions obviously, terms comes we across that the in bookings and ranges but Day But growth margins, are we'll because the have drive only confident of be to driving quarter be not Mark right we long we're COVID but back and terms the term result No, related that, sort challenged will our our increasing the would like very of efficiency a of for costs shutdown of that with fit right we of also seeing. that in operating we areas expected to where having come constraints the also that efficiency -- think we to

that should horizon indication want other actually we'll our we so QX, great to that of executed, in, pause in revenue. despite that in returning the have that, operating we see is well QX, our to a So execute than back challenges think and levels have, the results we we QX the that be in margin in

Mark Delaney

Thank you.

Operator

question of with next comes the ahead. go Matt line Please Your Stifel. Sheerin from

Your open. line is

Matt Sheerin

longer just talk wanted want could And disruptions. it some some keep regarding because about to understand the commentary the customers to normal supply Yes. inventory than inventory, understand I take chain you. Thank I cash Chris, be I expectations. may, continued there's flow to you also situation.

But get that free are supporting you past flow of kind expect you to depositing a we're expecting? this terms cash to in or of relative customers them you we quarter And that normal deposits, the with or which working see revenue two decline once in cash regard.

Chris Collier

Hey, was remarks tried to yeah it thanks Matt, The very sure. the we for question picture paint clear. so and in for that the prepared

you back, six You we've been operating quarters know of generation, gotten around well, that greater we've discipline if of cash million our great now flow networking just discipline look straight $XXX investments. great CapEx free capital, around than very

work great through stock safety now. hand-in-hand. finished stock, kind are we also, with things done our is that prepared the proper the this as remarks high Re-assessing requirements of highlighted inventory inventory has that the One our after partners we the shock great, partners system, this discussions, engagement very it's we with goods in at of elevated of levels a in right level, that so, working

operate expect we we put in measured But you of counter And cyclical And and it would that quarters. it all we to taken a way. abate. couple very a together,

cash generation flow this anticipate to free solid seeing company coming year. You continue generate should the

these that management to taken well. will we've beneficial in We've able of us, these the historically, through I'd terms as as And couple of in discipline. move the cycles been through rigor actions All demonstrate and we prove some quarters. the our to say, inventory in

Matt Sheerin

that. the needs thanks a relative weakness and to seeing surgery. you're strength some COVID related in It's elective Okay, for question in medical, regarding

of seeing might expectations offset? in you are instead the first of the wind to the expecting part down that that part, we're surgery, On now? see of business opportunities The the terms in elective the

Revathi Advaithi

reductions net going areas non-COVID patients that aren't care quickly. growth those to for be going strong our a think expect absolutely back Health we because And going Solutions to quarter Matt areas. in know, are is hospital that to then, rebound today, in is elective the muted You in even that, surgeries, little we next of, those pretty

Because you for procedures. and kinds can't wait have that mission, of stay at those elective home

in back reductions expect solutions. quarter, in then growth next think we're come be to any will see that'll strong non-critical And So procedures, quickly. health that of pretty which we we going net

Chris Collier

a group. Matt, robustness of back as back very new pleased we very we a be the our for outlook healthy product with And broad nice in at highlighted with very, back bookings, that performance bookings that have business. we you will categories, so the to row pipeline two in very, we'd believe a continued of of know, well a array diversified partners the just Day Investor years across healthy

Matt Sheerin

a Great. Thanks lot.

Operator

Advisors. Please of Your line Steven next go from the question Fox with ahead. Fox comes

Your line is open.

Steven Fox

your a these Thanks. Good us you sort afternoon. ahead? India, those days Mexico, how going give Malaysia on account detail in more experience maybe and challenges for of some little with regions much have Could the you of and producing

Chris this And then might have in for and Is fully the -- like cost you an pressures where with with plants auto pressures you're highlighted you well secondly, COVID there that sort as of seeing inability any you OEM to quarter. overlap the down shut some with would the regard Thanks. to? to sense

Revathi Advaithi

to see say last have had continue -- know, the we relation in Malaysia -- to that this the Yeah, Thanks Steven. question. month. seen I'd impact quarter Malaysia that, we have you we for with in and

have running based percent is approved and government we quickly have we Malaysian slowly XXX-plus to factories XXX% approvals to the coming know Malaysia. all returning at you have as a -- percent, lot on back. in be and know, you essential back of the So, India – based on XX-plus

a COVID watching And all as production Mexico, doing operate Mexican then automotive to in facilities of our to full and we to in facilities employees you cities are capacity we know our what start to of is just ramp our being have shut to where are the essential keep Mexican because they approval to expected We’re down safe. trying classify even most in back outside products, outbreaks next quarter. there though week. proactive

So allowing proactive we're it our we're governments even making to very if are keep us safe. keeping employees running being Steven, sure in that

about it Chris in to to is else So down starting automotive next of automotive over for to think more. than a shut capability watch I'll now then talk hand to anything outbreaks is related through quarter terms more definitely fully. operate place we that May, in Mexico to but our And

Chris Collier

the costs doubled reflection coming North sure the their that of for result that seeing us are than large OEM as you And know on terms highlighted American and we're the has that occurring Yeah, partners shutdowns facility also of in for period. of COVID closures. European ours that extended having more this impacts a a we

global You know, operate scale. significant a we pretty

in We have does next impact of has in terms over XX and heavier and automotive so up several costs undertaking period. production are then back certified on back be they'll returned. throughout facilities in May, turned on our, that put shut Production the those of ramped a our down

Steven Fox

you that. Thank helpful. much Great. for very It's very

Operator

Shannon Your next Cross comes from the ahead. of question Cross with line go Research. Please

line is Your open.

Shannon Cross

have I point. you're talk bit XG What Thank partners you my ramp. the question. thinking you. I we some hearing how from then how about a given on this any taking look And COVID wondering for was could if as you at have follow-up. very of much -- forward your the you're a thoughts from Thank changed about and pressures it

Revathi Advaithi

Shannon. you, Thank

here Here let me for second. about a talk just XG

You've our last XG call and heard some the of ramps over weeks. their also few our customers earnings talk about also

and have look definitely up Asia investments from we we're in relative that. what Not economy government, are is the XG, if somewhat of now North ramping that's significantly China that strong in said infrastructure Right wins North now. benefit strong the just the as is Europe know, Europe. China a result we're making on about and seeing investments the and our and we before help to right XG big America in what And you in XG America. pause that are in -- You seeing is Shannon at

going resources but comes you What back up, people from is as constraints we'd from our when this. all it and can this eventually if that of thing start of customers back, a back to we're is tell that's for. and to question -- the coming not that hearing it an is it's looking on comes deploy This be main

to and Europe North China's back a we'd of coming see America just say I'd timing. start So to but for strong, have question it's

Shannon Cross

standpoint wondering of underutilized of Okay, some know to How some curious, of in areas for various terms much you of the other some to it leverage I talked as side you I'm from great. growth. shift things. about reallocate follow-up about just I auto, a of can And but I business assets. bit the was then opportunities manufacturing Thank in your and segments. the of cost you're the of want just pressures seeing capacity the you. areas within

Revathi Advaithi

let and our Today Shannon, are shifting and to Romania. our medical we're forward. which medical in our absolutely medical we're the factories employees what quite resources in factory wherever effectively it ramps in underutilized, ramps, moving and are particularly the talk across employees we kind In efficiently. that of with board even to shifting from me we're about doing doing non-factory they're US, of areas both that's happening and and from are and employees terms Juarez now operational we what model doing changing help many

Shannon, be of and as our the is meant move customers whole we sit And would as do compliments we receiving from operational But a our that that piece reliability building to agility we're forward. efficiently really doing for lot we on model medical that even that. more right is

cost make well. sure see fit even be variable products than into our quite we that enough way up you cycle fixed down, from the right now, to right and a able better QX we're we'll structure, As factories results, doing of facility what can and our that because doing flex the we're

in we're already see you take And actions to course, and like then costs and can the we've lot executed term variable all a of of that, doing those. that of can near on terms implemented pressure of offset top in of that already we

fractions, intelligence shifting even the building our that, well us model of lot to cycle. of doing taking we're us through for resources a robust we're and more makes cross that that long-term shows but operate QX with extremely So operation

Shannon Cross

Thank you.

Operator

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

is line Your open.

Tim Yang

calling Hi. behalf Thanks the Tim for a This suva. clarification of taking question. Jim on question, is Yang

quarter, be quarter XXX roughly said that associated double, You will March with next had you so $XX costs million. million and COVID cost then

plus June quarter, margin headwinds lower right So for quarter. to you performance costs, will the have the from volume, way about $XX million for is the think next incremental

Chris Collier

to we're that those is in some the of in where or the touched rules, QX. some of And bit a to on was that closures our run not a there as the under of in clarification earlier. that, absorbed absorption overlap a doubling just as cost is of of it impacts There's for those of we of in well run having result and regards pressures of so as those these shelter-in-place factories part that with extended bit equation So,

Tim Yang

very helpful. Got you. That's

demand your you. June you footprint. the decline manufacturing talk sales the how closure Given and how global factory about is Can much is much from of witness? Thank quarter that by driven of

Revathi Advaithi

Yeah.

factory let a to So right, understand seen of every that, recovery clear, operate with what me the some factory because the back, I'd obviously like answer, to But is a is comes segment as not what demand I this reduction. think a becomes very are right, what sectors result trying it's that as is in we automotive, start closures. simple talk

north that result decline overall coming Yes, I think the to have seen XX% if in is a back So, of be about you going all segment-by-segment. will IHS probably of of but year. projections automotive terms as automotive is in it shutdown,

is same other The you're what the see I going mix segments, in a would of in of So right? little bit a terms to quarter say

growth of you in be our about shutdowns. investments. spending, enterprise onion, demand cloud if infrastructure peel say, If that be and would CEC, any related I in yes, we we'd that think I CEC to would would would expect terms spend think you that enterprise if the in down of see not strong related demand But

CapEx strong have in segments be in will in we across segments QX. constrained. but still industrial If solid you We're industrial, expecting think industrial industrial, about pretty for QX that we spending growth all somewhat a do expect

would that I intelligence demand, pretty and working it. away dealing we and is customers, how we're what that operational very proactively capacity from with understand capability are with take our then meet and adjusting using with this So quickly to to is

it's So of ? really fits it in both Is different. QX it size a demand would it's operational? is to seeing all and that say I hard is each segment a you're say, answer, And what combination is one

Tim Yang

Thank the Great. color. you. Appreciate

Operator

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

Your line is open.

Ruplu Bhattacharya

Hi. and about more been talk the think the and stand does and you've portfolio Thanks demand in that the my is And CEC. June in the impacts pruning for June margins quarter, doing currently CTG in you would how where segment given weak revenues questions. are that you taking that quarter? Can pruning your you doing still

Revathi Advaithi

Yeah.

comp because started any scale but will say portfolio done, as QX said, some But us in that's think portfolio And $XXX-plus that. improving I of business some that. in last actions mix aspect any corrections be remember, a that most there'll So if actions teams to There a I QX being our continue of related at corrections, in will would do our quarter has going in to significant terms range of of I'd QX for see think most for year. would of in been constantly say Ruplu, I we've of will that to be is, of year-over-year, million our addressed now you portfolio overhang you business. our gave most of the look be that. every that We year. We I to good task impact an ongoing last a for because would our of

Ruplu Bhattacharya

and for Yeah, Revathi. thanks the details that for sense that makes

second you cash, if of soon. need maintain you realize, The can like don't liquidity, debt a coming up have it my for good maybe liquidity, you of uses looks but follow-up have to address, you I lot

You're suspended buybacks.

or consolidate So M&A the sense of the this time some growth maybe EMS some think smaller space. players given make in organic competitors try of to it and in maybe that, in would I and mean,

So in inorganic Thanks. environment? the on just growth your thoughts this

Revathi Advaithi

automotive, places about for So areas think where Investor when I'd target Ruplu, of areas you looking it in conversation be health, particularly technology clearly Day the this said like we'd that that to a M&A say growth, advantages parts I in want industrial where technology have what I is we in space, know, advantage. the gives us is for for we

the up is are say. well-positioned we'll for the right But I to now that there a the we'll watch liquidity for that. the and very We feel but M&A assets -- we're on available but right, strong shows we position. and look that comfortable have it, would And it. Now as time if you at not we're are see build take for a time maybe continuing

if but we'll strong think stronger, is is about our keep sure is eyes Our the right assets not time, open. right and up extremely and this quarter time we'll liquidity the but this I'm the show right at getting position it,

Ruplu Bhattacharya

Okay. the for you detail. Thank

Operator

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

Your is open. line

Adam Tindle

the and you Good are dollars taking profit want growing Adam morning. questions. acknowledge first This for is I revenue double-digit on declines. my that thanks Madison to fact on for

I not accustomed So growth like it's know we're is very cautious. and commentary models a sounds that. forward solid like to was -- pretty by but EMS seeing little impressive it driven performance IEI, more

out that sustainability can benefited on the and with that the margin and quarter was would there from revenue IEI you in just standpoint So time IEI both anything call touch you one performance?

Revathi Advaithi

say focused is growth, fact the we mix to taking are the but ability be on Adam margins demand the some a not our helping of portfolio because which only across continue say related unknown. a what actions so expect declining you that situation question, Yes, know, know, the would just In you is that we in lot that. case I would right improve also saying our to I to that reason continue. there is to industrialists you is that, revenues slowness industrial result and just I will will that efficiency of as we're know, of are

quarters room of that industrials we're said that integrate. We well-positioned in market vertically that industrial. prior lots and There's significant. available in very think the to We

--how There's content. it. And actually customers for to -- meaningful time we the move positioned us. is this design have for business sizable in good a our We business are and from opportunity with now more industrial like engineering to over hearing fairly industrial

the slightly base to fact than pause, from the bit industrial returns have we a grow, future as we to of you that will know concerns demand that overall customer other will you right but know, the continue So QX foreseeable world is take little perspective, now no normalcy. unknown think to

Adam Tindle

be Thank margin think margin that is going going Okay. color. slides a to well. you. that as down year-over-year operating you follow-up, do basis you a Thanks. mentioned quick operating That's know, on down also just sequentially. is from And the you to But good be

Chris Collier

defined the and Yeah. takes qualitative lot on of insight We a sequential of a that. inside there puts There's basis.

to we If are We're did into you going year over we performance. quarter X.X% business ago, operating look get back to continue operating a but margin. a have same roughly the not guiding, just a strong to to margin

austerity operating. passion. crisis We're thoughtful this measures very structures the a strong cost several think installed to we're very we're in and We've with I regards managing through

fact, In we've to not actions taken we've cut in bone the to the date.

to very as going we're partner be a good structure forward, thoughtful So and very the solid disciplined cost we being move evaluating continuously

Revathi Advaithi

honest be And Adam with you. I'll

automotive predicting and going it's or that. on soon back the right Our because things how really is biggest like back and it to ramps up depend how challenge opens quickly mix

all are you we'll in So and more well you role fact we're of cautious that's what the this, quarter every quarter this a things those world, we're unusual an QX think bit continue being that because is that whole and do. why are the across even I'm to company like shows to I calling well the going plays to that'll but for sure that, be hopefully it times looks. is impact and that's for world But executing a used how this really out mix the little exactly, in what

Adam Tindle

Okay. Thanks again for questions. taking the

Operator

JPMorgan, question last Coster of comes from with go ahead. please Paul the Your line

open. line is Your

Paul Chung

It's Thanks squeezing for for me on Coster. Hey in. Paul Chung guys.

quick power margins more a they how existing of thoughts see look some then think COVID the pricing on guys. industry, your some players, just wallet your consolidation do So evolves. expect as to on also, kind expect just And there. see to offload share to of maybe EMS as quick some post do from thoughts about you we smaller just maybe maybe some EMS curious your kind you Thanks one, fixed costs. of And in increase think you some maybe customers

Revathi Advaithi

Yeah.

we like world the say post-COVID from we with me I areas kind start wallet goes the for want customers. let I of and where us definitely So in would where of terms think think our share in demonstrated prompts, program just medical, do market. customers we complex not being have to our how it terms designs in also able to bring only rethink help of in unique we capability but terms of

to we in So health. to I'd places continue expect say wallet share grow like

that supply we capability around supply in have we or of are automotive do managing consolidation unique with weaker think We chain can they where their like operationally in a approaching same terms job and where and better their us, of see we of base, the sectors factories. think either industrial customers that

terms the wallet I share really on So that in those are expect of focus we'll that improvement. areas

unique I'd in we pockets think we say on very vertical our integration and are value capability. add has business very CEC terms where that that Lifestyle we of our with focused our business overall

a world, help have for can out. and post-COVID can defined the we role in and So us asking talking we we already customers coming to are unique to we customers where think where play

well conversation think for also out that one think of us that. a and whole through customers the we're We helping really regionalization is lot is working that

that's the So important and I've what we of on. times you on know growth kind said so right Paul focusing drive will many as

all that drive short we in efficiency. fixed that cycles products cost of continue also We've said really various see so operate In can margin, so we with on in and that. focus already as can well We're we our improvement we'll our margin of terms that helps tremendous that variable us to the overall to model our right term. has know the continuing our to that of businesses, and long think investor on the drive mid mix depends say mix. it and structure, cycle all room the I'd we you I'm you focused see for continue operational day within practice and on

comment the help, on that. say they need really then now partners, hate drive like EMS And to I in are So, focusing anything overall our terms looking where other overall would we forward post really on world, and customers in in can COVID where value. jump of I'd

plan we all think want have of really we that's and very available grow and now. think the focused in on we to I of and market segments focus a there's for mix us there grow we're clear and right enough to on

Paul Chung

Okay. Great. Thank you much. so

Revathi Advaithi

us really I'm these even for joining everyone And confident Flex. unprecedented Okay. future Hey, for about today. times, the with thanks

our you talking performance in forward fiscal wish I results. in remain could look see will to to from XXXX year You we Thank all that safe and in our great and and joining that health next of again you us. good QX you for quarter.

Operator

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

You may now disconnect.

Flex (FLEX) 8 May 202020 Q4 Earnings call transcript