FLEX - Earnings call transcript Q4 2021

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Operator

Good afternoon and welcome to the Flex Fourth Quarter Fiscal Year 2021 Earnings Conference Call. Today’s call is being recorded and all lines have been placed on mute to prevent any background noise. After the speaker’s 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’ Vice President of Investor Relations. begin. may you Sir,

David Rubin

Financial Good Earnings welcome today Conference Officer, our Chief Denise. give Both you by today’s if presentation Quarter is Flex’s section on Investor not remarks, are recorded, followed Fiscal being of Executive and Chief and in Relations Advaithi; website. XXXX This available Call. Q&A. brief already our Revathi Paul is morning received call webcast you, Lundstrom. to will and Fourth our Officer, and Thank With have for flex.com slides me the

today’s and subject GAAP the risks the are results measures see and and reminder, the section as The period. assumptions, SEC. change, no undertake to of on be a of well uncertainties, appendix today’s as current update of call presentation a and call on and is Relations slides most events with actual for could references This As discussion and forward-looking contains uncertainties, non-GAAP financial found we differ Forward-Looking which expectations in website. statements, to reconciliations risks for recent current so obligation filings based materially. our the Investor Statements, are please Also, these to full can subject the information our such our

and this the the public will NEXTracker Act, Lastly, with over With We U.S. public additional that, would call any process. subject statements offering not to with initial S-X following on or filing Rile stock. we made like I SEC SEC’s XXX the Revathi. in announced and at Commission a the Securities a initial common Class we NEXTracker market conditions, accordance April the proposed our this on questions statement turn its further that and to time. answer our word Form make CEO. to regulations, its on that review are Securities under announcement relating draft on The XXth, business, offering to we registration A confidentially Exchange timing of other submitted

Revathi Advaithi

today Thank you, families QX David. Good earnings call. morning and are us hope and your thank I all safe healthy. for for our joining you you,

results, want our Flex their unusual contributions us thanking discuss in to colleagues to I start very a getting we and dedication year. Before our incredible for by

last talk about was proves a year, business. Flex let’s crisis. So, health Throughout able our that and fiscal deal it that humanitarian global with to

and component proven overcoming these processes the to customers. and with adapt We first the protect to health amazing ramping have to and our levels team logistical continue orders, and very and and done shortages systems most be Flex resilient people, job Flex’s deal supporting global improve workers, obstacles enabling disruptions. an and at safety and recently, work-from-home has our unusual entire

procurement track every every supply container factories keep and and have and our running chain made to to component effort Our down Herculean a teams our truly especially supporting shipping customers.

Now to key let’s the turn financial review some of our to Slide X from quarter. highlights

seasonality was billion, revenue than sequentially XX% year-over-year. better X.X% Our and typical down up $X.X

and a operating includes of logistics related challenging environment. X.X%. costs the figure adjusted in supply absorption the came to at components margin Our record This

last is Our up adjusted of quarter This QX the $X.XX, in EPS was EPS. record of $X.XX from third a row in year.

in cash million. came Our adjusted flow free XXX

results, XXXX please to Slide turn fiscal our for X. Now

basis despite revenue margin operating all this achieved was X.X% improvement adjusted billion, flat of full-year essentially XX.X We point a full-year year-over-year Our XX record the year. year-over-year. challenges a

improvement. year adjusted XX% $X.XX was through EPS generated year-over-year XXX million. year, And a adjusted for we cash the flow Our free this

year-ago, our A laid we on the out Over challenges. overcome for significant multiyear next slide. a strategy time we to transformation. that Now moving have

high and progress We and the challenges. the to of cash focus, large delivered focus earnings, And our markets performing all global end gets in to in is particularly our all rewarded execution combined these Redefining our end since sound cultivating markets operational where our made position. strategy, an continuing excellence technology, operational helped constrained of component we culture. excited strengthened our still is focus, this pandemic. commercial improve improve about continued Through long-term and much inclusive there us be mix, it tremendous improving and we our by our their record quality clear, market transitory capability While to think regarding of have situation execution areas results, customers. too has redefining even are early future. particularly We

us combination expand have balance significant along said allows and scale we certain investment before, strengthen Flex sub this continued competitive with drivers. long-term will technologies This of only specialize lasting of we in delivery products model this creates sheet. targeted combine and secular advantage overtime. The the in As that strength with our and to combination the that using will markets leverage

the from We are strategic shift. seeing early fruits the

led customers. These has to as and customers, customer virtuous trust to already manifesting a expansions with experience portfolio successes wins new and work expand continue successes of Our program creating as well our with cycle. in offerings, strengthen both current

scale In and and in delivery. a Solutions of ramped bit generation the ramps focusing talked We request. multiple this year, us Earlier on customers with one next device history. about detail on business, our drug ventilator medical we medical fastest Health Now a dire quickly our little and came large segments. challenging programs to equipment, devices

way. we where at on ability was fiscally our operate were the that customers our lives space device proud significant global project, and success begun medical care market complex previous we also demonstrated have needed have program. in model devices has can us ramp. led executed say and essential paradigm to to program scale our care our manufacturing to to wins delivered, shifting new in I multi-year This to versatility When a shows it this highly While chronic leadership chaos we at stake do scale. related would in improved very truly chains am to medical manufacture supply I and global chronic allowed we and us temporary success long-term and our related point a were the products responsible at speed. so

transformation, is and Now, automotive steady is to the complexity a means new the shift significant autonomy inevitable modes and sector electrification towards through creation. increased move going value for that

on we We systems. all pillars. the are electrification and to market with smart as in our business paid our refer wins What connectivity, on going focus, is these that economies, emphasis with off this where our year focused has four of ECES and

we new ran and This several quarter auto alone, connectivity. programs

automotive automotive logistics customer year, market supply results based and our long-term the highly partnerships, our value we fact, and calendar supported strong by transformations. our relationships delivered forward In the IHS deepening both look their these by In chain above teams QX on execution our team exceptional and to enable in as we data. technology

industrial their of driving scheduled players for example our also broadening leading LC inceptual by of One XXXX. was controller announcement the with recent are with capabilities. trucks our for edge autonomous of We partnership new supplying of this end the because partnerships production our

You also congratulations open resulted pace may also platform, want recall that partner electrical collaboration pace that focused a focused edge. to for as for sensing as our in on supporting front collaboration the driving this the award renewables, industrial XXXX. automotive Neo. our vehicle we just equipment, solution product Tech and space. team with business, and a on capital an with year’s I In devices one, they autonomous not in well named and finalist were space award as big automotive in industrial LIDAR latter The note, Actually to on innovation in offer power manufacturer, our LIDAR two innovations, grid but recently systems, another on the EV one

two in specific on such We In are in our strategy cloud continue discipline we wins has as that as drivers, Agility for in work as very I’m it complex CC, these as increasingly on driving you as new value FLEX previously segment, think of to our robotics the as as products we and discussed results, secular to evidenced teams our margin will our productivity strong increase segments, in focus durable well the areas generation you cost Lifestyle that have pronged key can teams such see the customers. business to our we And The in and entire exceptional here. consumer goals. but made very the provide led growth next Agility can long-term of this improvement XG year. these from growth our sub segment the recall well ramping progress as verticals, all wins where markets proud differentiated and

that market So focused the that takeaway working. is and defined our key strategy here segments of having is end

to picked sub those the our are want to we investing in segments, share large in improve While and win our areas. are we markets have end

but Our near-term company potential executing all are and are down quarter teams The and this we as eyes can. demand experts positive at we some another the well. we uncertainty the things environment looks in on our was the longer showing strong there term, the which navigating transformative challenges, to we our control are the near-term will path. very And continue both of

turning before slide. want quarter, focus the I for mentioned, I I Paul, efforts. to about call cover certainly ESG turn to is our new point ongoing Flex. one talked to nothing thing last ESG would more I Now I next over want to out the more our

have nearly our and for was forward out included at accomplishments in the all even set. Book targets row. We building to in improved Sustainability raising Jones that set very scores, across and broad our What have These aspects rigorous are of spirit the we is more consistently year Year effort Sustainability bar, reflected moving being science-based Flex foundation on been ESG XX-years. have into we goals Index of done the a years a of in XXXX, this SMP the for and Dow initiative. ambitious the for accepted recently second In performance

proxy course, over effort our remarks. you through management, environmental, closing I details and results to to and for share the looks to will Sustainability well to of to human that, governance our statement, I see you more commitments to June the value our our our efforts new to Paul, meaningful in join some social walk upcoming this chain. Report across who all in will inclusion XXXX Paul. We diversity. of and ambitious are emissions excited and I capital encourage additional sustainability will the and goals as as results reductions With the see and gas global visit progress call for then full and turn greenhouse XX-K drive detail, and in flex.com

Paul Lundstrom

morning, Okay. XX% XXX Flex quarter, I’m and year-over-year well XX% was up Thank you, with Revathi up our which on income than seasonality. year-on-year to better sequentially, XXX typical X% billion to operating in X.X QX good down revenue the as X. by growth Adjusted Slide the costs million, everyone. was basis volume, and the was improved QX some We from did gains. productivity expansion. supply as continued challenges headwinds with continued incremental year-over-year of and quarter, some Profit points cost chain. ongoing in was pressure mix margin COVID-XX namely, have the bolstered better in associated

earnings XX income XXX stock-based a As XX result, quarter million adjusted adjusted $X.XX. net partially net up were in intangible adjusted charges XX% than was respectively. of net million was those million our our due Fourth lower Reconciling million credit of and income were Year-on-year, GAAP. eight to$ per net share by a in restructuring XX% million Restructuring to net and income XXX and GAAP $XX amortization, million. of offset compensation costs. other with

mentioned but X. had we restructuring from more restructuring line, again, the favorable a which costs gain some exit Slide for On I year adjustment facility and tax a million, Global the items. in costs the other as quarter. a on nice However, offsets were offset than with XXX from

of a quarter of fourth point percentage was million up quarter. but in XXX performance and total, adjusted in XX targeted gross XXX a spending In in our X.X% at Strong million, SG&A the X% X.X% X.X%. adjusted one sales, adjusted from to inside year-over-year. record down drove range profit million, margin to Our year-ago, operating XXX up of expansion, at full came gross million discipline year-on-year

of for adjusted the quarter, X.X% adjusted rate. income So, margin million led record XXX operating op to a

execution typical, a QX billion we reliability reliability units and industry’s XX, with against saw up was anticipated. XX% global struggle new in program several of revenue three down sequentially, a the the with X.X the the with. top solid to QX as well XX% strongest chain Automotive Care to Flex as Slide top-line reliability quarter contraction, the year-ago. both a compared recovery revenue levels in business Credit in the continues strong pleasant quarter. COVID challenges. operate the to a the supply quarter, revenue in were organization business both This growth in XX% and to this automotive for heightened very QX was persistent year-on-year quarter, at up. seasonal Agility shortages to Solutions we year-on-year up with performance Flex all years up through was surprise to than continues better difficult strength ramps. and global due was for three continued X% within to Critical period. line industry given parts Health execution and for year-over-year Turning

However, areas saw procedures. the return beginnings we a to in also of elective such as normalcy

to with care related remains products, progress in and long-term the We continue chronic our strong. ramps outlook

return difficult Lastly, specific Harbor. Safe quarter growth revenue single-digits prior steady comps headwind is Renewable to behind year. to to customer was industry quarter industrial and on power the improvements up and compared was this ITC Core us. with low related down our remained year-on-year prior

basis a X.X% by continued XX operating points due Flex improvements in profitability, in lamps generated product to new and which from mix, tailwind reliability up but adjusted $XXX tempered productivity Solutions. year-on-year and Turning million to profit slightly Health was adjusted margin, of operating solutions

were year-over-year goods enterprise strength year and XX% end CEC was spending was the with both Agility, up Segment XX% ramps XX% appliance of by demand and sharply Lifestyle led revenue XG durable improvement high to Moving X.X was sales year-over-year brands quarter-over-quarter. XX% showing well. for and across up three with and and business strength year-over-year, premium as and up IT rollouts, business in the cloud continued revenue just audio growth down and all continued care new profit markets. billion from for prior units. up infrastructure, with

from benefited spending an albeit consumer on compare. grew in devices Lastly, and recovery year-over-year continued XX% consumer easier

from segment by productivity expansion continued new profit and margin margin accretive from the operating adjusted $XXX and wins Turning X% generated margins, a was programs, model. operating second business the to management million Agility Agility quarter. profitability, of operating tailwind adjusted at cost for This driven our consecutive

on look to and Slide Turning back you with wanted some to XXXX business disclosure. XX, supplemental we share unit

of year, the ended revenue Flex in-spite flat the So total for many challenges.

that also towards segment see can You to shift continues margin segment. higher reliability mix our our

driven in critical segment reliability year-on-year, X% to Health by Our X.X revenue XX% on based strong billion grew strong which around care grew year-on-year demand. growth Solutions,

last ventilator growth the was well shutdowns in year-on-year the revenue year, continued June quarter rapid care. earlier in ramps billion from as X% as chronic to project substantial down disruptions in the with Our X.X production Automotive of year. industry’s

NEXTracker ITC includes year number to revenue about a industrial X% for in revenue X.X comp EBITDA commentary a at grew around about of Harbor. the That full NEXTracker industrial Lastly, business year-on-year on billion. NEXTracker X.X our on billion I will XX% the This will from grew now. for be Safe add extent margin. last X% tough

revenue billion, first Agility second Agility our to segment to related margin of declined in For revenue but returned the half year-over-year impacts part in the the fiscal in year, to XX.X due growth X% expansion and COVID half.

driven COVID well was year, driven of consumer as discussed the devices growth as in have the grew partially before, with work, and to offset was by Lifestyle. new decline driven by Lifestyle and XX% year-over-year due trends. in by X% live by customers and strong we cloud This and disengagements infrastructure home year-over-year impact. bookings CEC CEC strategic combination from For up learn spending, market a continued a was revenue X% strength,

considered, things million XX, at to the strong compared to free for the prior flow for was year. cash was cash Turning adjusted quarter flow XXX year of up million. All the slightly Slide adjusted XXX free

free on before flow recall, adjusted you an spoke targeting conversion If or XX% we about basis. greater cash

cash XX% the flow XXX%. and to was income finished adjusted net at XXXX For we GAAP free year,

quality seeing particularly the component in for shortages would the year, industry. say, So given conversion are and all earnings I strong we of the high things considered,

it from component resulting supply call, and cash from we Looking Back X% it in up the the manageable QX, we XXXX, a last turns be was will although continue was billion, and XXXX. least expect at next five sequentially of is times adjusted of shortages expect roughly early see year-over-year to And couple inventory I say of on basis a a to down half little continued ahead year-ago, although capital we we dollar X.X X.X pressure to to over in working X% free quarters. chain. flow QX which with But closed a quarter. to QX, do X.X up turns with inventory in-line

million CapEx quarter from for $XX part were about Our in ago. couple that exit. facility minutes cash which totaled the and the net just XX was million, drove light a inflow building due to from a Proceeds gain the sale I mentioned as of a quarter sale

outlined. natural large last we by than growth forward responsibly and was the to usual consideration up the our remains ebb as by created we in driven COVID-XX some in as year. program But cash, our to And of lower have expectation. allocation and remain step the CapEx and For value our also buyback year looking did year capabilities fiscal markets Revathi share committed flow projects. plans One delays a and CapEx our comment in this higher of we the roughly for high of number increasing do upcoming of business sales back half end our said and before, lined as reasonable technology expect XXXX, X% of by is up have CapEx invest the on priority important a grow repurchase year. to we in strategy, capital strategic the investments

million quarter, said, and moving Our potential of shortages the was indicators bought namely, demand Slide shares. back guidance, strong. spending remained Onto component notable We two fundamental in XX. That headwinds X.X waves all our on persistent which XXX million see forward, COVID-XX.

XX% expect Starting before. high with teens up continued to have will QX adjust Flex cloud us expected easier necessary, on and QX. up Agility comp. the as the with CEC in spending. is but with an to we year-over-year continued XG year-over-year to So, low risks be to enterprise monitor single-digits improved we improvements, Solutions, IT mid XX% and to also demand, year-over-year for along grow should do seen to Lifestyle fiscal be continue quarter, low you as against

up easy to compare. to is Lastly, year-over-year on Consumer XX% Devices XX% expected in QX be

Devices Consumer most be constraints. those to expect We industry one markets, component of end to sensitive

Flex Solutions XX% to be our up to XX% we revenue segment, year-over-year. expect Turning Reliability to

comp, demand. nearly to will shutdowns. auto flat be reflecting revenue this comps single-digits as automotive continued difficult year’s a against strong quarter against production First global year-over-year Health will very Solutions year-over-year mid last up double

Lastly, our mid QX XX. Onto from expect the high to billion and single-digits steady compare. industrial an Slide improvements, business we to year-over-year will easier be billion. of X.X up Overall, in to X.X be revenue Flex range

adjusted at in income a interest XXX operating in and Our we XX to in is to quarter of other shares EPS range. guidance the to a roughly about higher million of our XX% the guidance expected be should is of tax be to end weighted-average million, XXX rate per outstanding range million, in expect $X.XX remain to XX% Adjusted million. XXX based range on of share, $X.XX our

net EPS of guidance, Our expense excludes the stock-based amortization. intangible and adjusted impact compensation

expect me a let a per $X.XX we it turn of With earnings that, GAAP per share. to in result, to range As Revathi. $X.XX share back over

Revathi Advaithi

Thank you, Paul.

now are are and this baked we to countries market believe guidance Please our constraints visibility, in guidance. Slide due XXXX. some battling for know, turning give current doing these uncertainties into we to some with to So our some component uncertainty like would Based still We COVID. XX. fiscal the

just between adjusted of X.X% revenue around a in $X.XX] billion margin framework our targets. will somewhere [$X.XX we our this adjusted The per XXXX COVID Investor and range EPS billion track believe financial XX to GAAP we operating portfolio [$X.XX (Ph) Slide. to full-year on reiterate keeps long-term making, this XX (Ph) share. a and will shifts performance to fiscal year a our are be with also share. on we us X.X% and and our guidance in the At Our year-ago, the per EPS $X.XX] Day to Even gave be our at

strong further that beyond what sheet, time. targets assume using no these investments we planning balance course, were our Of at

strategy. clearly and are this say, and demonstrate validated Slide, proud the a to taking all have summarizing is I’m executed So, we correct. difficult have our the year, Well, results we in path our last I that

to with will and deliver We to invest execute continue maximize discipline, value growth. profitable

our So, Research. on your team, our comes we start and Cross for partnership, support. I with trust to will for Shannon that, first want Cross [Operator from behalf leadership of our shareholders continued Q&A. thank question instructions] the your With customers entire Your and

Your line is open.

Shannon Cross

opportunity OEMs much. your with for obviously, I we stimulus some second are How we just spend? It stimulus, will hospice start fairly beyond question spend at And about if dollars for how as question in is, think second that got there very and in benefit are and should of to improve then half the to we a enterprises you of to that and my model some given XG are had you opportunity XXXX And BTW to about the to IT other as look there Thank all well. regard should run talking have Thank as the through in call. soon? where you. on the thinking datacenter out seems be you the

Paul Lundstrom

sure. Yes,

And So morning. good thanks, I Shannon. think,

first single everybody of that at whole forward working joke guess will move pick with as came see. is not was that would side that over as from kind spending that quarterback you point cloud. growth more out, XX% we a next So, view mid on several about, it I up but I from from nice which portion comps say great, yours Enterprise more the our of the quarter, was large enterprise on - would home. we will spending, kind and still CFOs in up lot digit, of a enterprise to so was the spend up, the But I CEC quarters. look macro be to up our wanting

mentioned. green that would now as bullish space, I only mid just on that, shoots will digit at And seeing, single at maybe the so say I I’m I be up,

of are a point time. we this In don’t will that, terms boats, direct of lifts stimulus correlation but that see at spending, the certainly look, in we and some I hopeful see rising all tide

Shannon Cross

thank you. Okay

Operator

Paul Coster from Chase. comes with question JPMorgan next Your

Your line is open.

Paul Coster

you taking my for question. thank Yes,

will to you in vertical a of of, to are forward, that OEM OEM people supply curious of company be to an as the subcomponent you direct play role kind do sort I actually auto inside deep moving you or an think supplier the as to EMF sort chain, a it Is the the expect will be moving you believe the Revathi. forward?

Revathi Advaithi

pretty Paul. last manufacturing, pure thanks, as part a our part part even pace offering. answer think we which design of is weird business And auto Yes, business join auto as does The contract winning, business, and Paul, of today, a you own would design our a from you business that manufacturing our if does does awards can, I say part are year. our kind then of important and about auto our this of of our that auto year and hear you the

increased the I automotive manufacturing on content, role we quite join and in autonomous, are change of you both all in of how going us play opportunity in it in as the significant mix own more a tiers would So, space, aware terms a all our design. say the and to see with electronics already gives is there business vehicles terms designs auto and electric I of in the itself,

being up our already sector, EV the continue space. And a support ramping have do. EMS think will But move that to in We in particularly any to component value automakers do so player, to will of by them we in will a very we the that strong presence auto continue space, we the that projects autonomous we presence in and up more chain the already the directly. we

So own technology EV, our more a more it will but will towards a focus. of trending be product mix, autonomous, be it

Paul Coster

of pipeline new sort and is proliferation there, really with of were OEMs with Great is if opportunity the to logos or it there new a traditional been the know, at recently? you look you

Revathi Advaithi

also auto is just some one definitely both we a be players. newer not the know, the and because seeing, do hearing and win what players Well, to, that the you announced you hard it space newer is Paul of with recently with are of in it

So definitely of have both. seen you a mix

our automotive nominees we this for You newer player. Pace China that in a a more is with know, of our one winners, doing award are project of year

it We in is and the a mix. space. So new important participate the to it traditional think in is

Paul Coster

much. so you Thank

Revathi Advaithi

Thanks, Paul.

Operator

with from next Fox Your question Fox comes Advisors. Steven

Your line is open.

Steven Fox

Thanks. Good all with morning. guidance. could. the for I Two color the And if thanks questions

First used quality of obviously stop the what Paul would, times we I fiscal look of sort as prepared and year, this of just what there and will you would input say And there the big be a during would as both focus higher of couple maybe would metrics in I is you quality there words at earnings and there what that saying XXXX a key earnings ask to of earnings you then will think my follow-up. point you Revathi, year, things all, remarks. improving to is maybe next picture quality of your for and about can

Paul Lundstrom

adjustments GAAP will of all P&L the I stuff. take the last love you company. the effect through know, economic know, sort know, stab economic reality just on would has broad earnings that sort decade. And is of, before And, I tossed know, I talked indictment on is whether you you it cash. and adjustments and a I earnings, that bad industry you people don’t maybe broad, the non-GAAP the ripple one is into a the think Maybe at an those it industry the think And eventually about, as EBBS earnings know you all over or

the extremely Maybe it the to push over sensitive a us you couple restructuring. that. going some of guidance any gains. by after fortunately on didn’t costs, We print, And quarters comments with for are one-time you be know, to quality restructuring XXXX. you earnings restructuring give last we on, heard here outlook, you really offset know, make you so on comment hard And know, quarter quarter high to saw after And, quarter.

You we know, stock are what and is intangibles. comp out non-GAAPing

Our hope projects one would arise, know, is be that offsets. time you as restructuring perhaps there

journey of going on we And we that margin said, to it continue doesn’t here. some focus much, expansion to that muddy the this restructuring. in investments waters So includes are that on so sort are multi-year

high opportunities you as hesitate. not certainly about, arise restructuring, as we So return for to talked are the going

Steven Fox

guidance, a demand then flat big as be the growing And QX a can drivers. to quarter-over-quarter? of off good Great. QX of broad is and of talk beat it the just Thanks. you very in follow-up, Why wouldn’t pretty set it what sort to was down,

Paul Lundstrom

Yes.

little a So you QX was sequentially, we are strong. off would I as pointed out. say particularly bit,

the you I QX. really, favorable QX pent-up was of strong some there really in mix. had one benefits demand think And that and saw in we

certainly that, excuse within growth. you me, strong that, and with saw within margin saw some really unit that mix the You strong, business nice segment, Agility

moved from look, X% kind we as Steven. about I going is, Reliability QX you the to other businesses and at flattish. to mid-point adverse The of guidance, And the say of the our just go of some look would is combination mix Agility businesses QX, way. As mix there down

And freight stops so, the logistics to chain. that we unfortunately like moving QX and headwind. a for things that the QX shortages little do challenges incremental and also all that dollars are to spend are I from inefficiencies profit all that headwinds profit headwinds, costs us mix and in starts. supply Component expediting requiring seeing the bit will of gives from us we say, some fees ripple through have

pressure QX So, versus seeing cost little QX into a we are additional quarter. of move bit we as

Revathi Advaithi

seasonality is account very countries. right. comps. strong always even is prudent And But, is year-over-year guidance. including the on just managing an us Stephen in That think shortages for on We COVID think though I a a performance, on it a of certain is very, quarter-over-quarter, that, seasonality X% and outlook, it is down important most into shortages easier for and based that, kind takeaway is it drive there, still outlook

Paul Lundstrom

all very That Thank you. is helpful. Great.

Operator

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

Your is open. mind

Ruplu Bhattacharya

I as two have got questions well.

Just on follow up on to the question margins. prior

then margin XX So, the million rest the we had sequential fiscal third was the fiscal you had and I year, year the very to of mean, and at in look headwind I XQ the improvements of revenue I related sequential as fiscal then Should is the guiding about that you margin a between think Paul, all And a for the you bips sequentially. performance. X.X% fourth yet mix. strong of of are quarter year? for declined And margin operating quarter, $XXX flu operating tough flood XQ think XXXX.

Paul Lundstrom

Yes, sure. I question, appreciate the Ruplu.

quarter, cylinders QX think first quarter. in all Mix was QX. on here on was fourth a benefit. I strong firing So the everything very

history some QX of in things guidance, the and sort turning to on us put from I have gives We from think P&L we and make lines before to really we of have at incremental strong going comment spending will we our costs with associated would off, would the had mentioned that, that are to some the would of the do shortages, be, lines and on ripples be year, squeeze all on turning at on and freight logistics, benefit. pressure. to the is, finish I got guess the X.X% company. my I QX we from What we the as I certainly inefficiencies margins, mix that QX had mentioned of strongest component the into Steven. sure say QX, pressure QX headwind some which I midpoint a

we are quite So, with pleased outlook. the

In best profit uncertainty, you year, are in over all terms be, unfortunately, of our are of would full-year global COVID up, guidance, the our of midpoint operations. X.X% we countries important where we Revathi have lot there is we is be remainder a the India, popping prudent, of like to place still and said, so I had think, doing our the right or at the are

the And do that we shortages. just the not have we it some think component it pressure for And have timing, is when watch. of certainly although comes potential woods I is out we have so these to a to lot there we of are to there. And disruption

Revathi Advaithi

think to with this and way the terms distinct Ruplu change behaves segment think sequential I And about significantly is each was very of a change differently quarter-over-quarter in right, six that, because mix, does segments shifts.

it record will and Paul type in shifts of of thinking cost again, for prudent us, be, margins managing it for I So, shortages then, terms some like pressures think, that. course, it. is mix with And strong of said, that guide, But play associated QX. do a into

Ruplu Bhattacharya

then the those year. in the about the What NEXTracker, - last in XXXX the to just Okay, a on in thanks And investments you maybe thoughts segment six about fiscal up industrial are If what next details at the you that. said follow all as your segments. Revathi about for actually X.X% record looks numbers at faster like segments. I it look business gave from going is for growing

I have the have Lifestyles, had segment, X.X%. in other you So also mean, which but you Agility grew

Any on want for mix you. invest in? Reliability between fiscal preferences which that So, XXXX. Thank Agility just business you segment for thoughts to and your

Revathi Advaithi

because saying will are in I before, and segment, this well, by pretty have want want large we to, said end Ruplu, within performance. improvement as continued Yes, their the just about every that, conversations, I to segment, individual prior every within defined start we their is we long-term segment our That think year-over-year drives of that right customers want business. in mix how which markets is and

their hold each terms of we want own So, performance. their segment to in

investments. In of terms

team their execution for We profitability are mix model change and has our that proven super business. proud of new Agility how with in the executed and Agility delivered

Our large do because in and that is segment, of Reliability CapEx investments, we M&A considered the more the business. the being is new any that nature

add R&D you look Health investments we M&A on to a our the be large and space. with to add power investments investment our new and that and to think more side, improving vehicle, to any on industrial Automotive definitely very also there. robust And about of CapEx continuing expect are will electric growth, on focus core content product investments, there. Solutions, investments, If lot right program we new

Agility the reliability performance. but to be grow that side, is towards more improve investment margin strong expect with their overall headed profiles support So, we and to our how

Ruplu Bhattacharya

Thanks the for all details.

Operator

Suva Jim comes question Investments. Citigroup next from with Your

is open. Your line

James Suva

great outlook. Thank more results much. the you on very full-year question And outlook. My is and

world or a of kind I But costs consensus a full-year what outlook outlook We real curious uncertainty, of the catalyst have your of you, some increased and into giving is it the even when quarter are visibility, reason question I’m a commitments or bigger in just put COVID, them in shipping like sounds why you is and about is the outlook. improvements. prudently want have to kind you the shortages one outlook. is we give that of give semiconductor world are aren’t and you got the full-year miss-modeling or or you rationale companies a think

Revathi Advaithi

on this outlook. Yes. thanks performance for at are comments Jim, outlook. for I’d first and why your only have say two I years. in giving of terms we been

for with First is to we COVID. to We indication we of of kind of think it gave as businesses an do the we is year, then practice of, good the you it year how see range that outlook. important was an And even able be businesses think give know, because know, about Last we to, issues all the you trade an that. to all China, EPS kind didn’t year.

have there, into the you we hold. enough so we while is ourselves drives, we best So the out take prudent provide out we want the component it visibility the still to that know, some still But think account outlook. that defend of to can And COVID is best think in the there that range benchmark while those is we you as to that know, outlook. And, industry. of and a we shortages

who been aren’t. So, and it you people know, terms are Jim, in a giving who bag an of mixed and as people is outlook

visibility providing full-year to we to we And towards performance. think we outlook this. So lean wanted our some on have enough

James Suva

we is it a seems should the world normal while seasonality. four normalcy. mindful is like that been of follow-up have of in been as quick anything my since on outlook, progress be from we that it Cause then deviates we the And typical quarters a

Paul Lundstrom

Yes.

that will we look I have you frankly know unusual get tend And going bit have QX pretty expecting little very strong in think to impact of as bit comps to are harder, QX aware, and to some be QX. things ahead Jim, back to you a well Perhaps little unusual you here the are normalize, you biggest we QX, and comps in thing going half you some know. and does all just it demand guys are particularly normalize pent as are of up we you we XXXX think where but still I is lapping know, comps a upbeat. into QX, were QX, you know,

Revathi Advaithi

say unusual has would turned comps. it So nothing to normal I

James Suva

and your congratulations you teams. Thank you to full and

Operator

question comes line Sheerin next from open. Your with is your Stifel, Matt

Matthew Sheerin

you. Thank Yes. morning. Good

specifically, also the talk regarding last or there. cloud the segment just you are about concentration, the the customer quarters. in Could talk the strength question two seeing about talking have peers you strengths three First about rates in the of been that we growth business your for

is the So an in you speaking, terms for market there in party bring And from of just traditional seeing are that you broadly share some Asia shifts that instance. continued gains? market gives ODMs the anything you share to edge

Revathi Advaithi

in Yes. actually the is profitably. would cloud, overall What that think to of a say enough I customers and value in and focused is large space grow know, can grow we provide terms on we be it you important growth to Matt that

is in think space. important I cloud really the that

that is as don’t a win Asia, our coming think in. from from So want I look ODMs place not compete to where to they

are A to and where We center right. to demand we of of all key we cloud in hurdle and and of important and are there, winning want that the are thing. the growth we is focused space. seeing. the think kind what data sheet with it that, then looking in the on uses trends right that large really have that are margin course is we balance is of rates And we are lot customers that believe growth, But we few a We to. the where all supports driving the supports most pick win a general, for,

that focused overall So, we have we sub-segment customer very a of but new market. on are wins,

Matthew Sheerin

fact Paul, you go cash and flow saying And also Okay. year, we constraints which is seeing. here got the Thank projections the requirements that, flattish, were strong are working you for have you for supply question up regarding basically the seems a given that, your growth given impressive that. revenue fairly free which that capital next pretty

that? through could you So, us walk

Paul Lundstrom

Sure.

So, the I by compliment appreciate the way.

a cash are We scratch basis essentially XXXX. to But, that and I claw in-line have what going on to flow to with said happen. make dollar was,

that pressure of that mid-point about headwind the chain our are that us we What put at will some math, us least of right about certainly if your now QX talked to are the carry we is conversion. right I inventory from just some I in some And for capital the challenge buffer are that, so, of we do at the point, an Matt, supply stock, see here not. contractual, you QX likely it for And at guidance we And and standpoint. of is required would like need need to guy a now the have. line, in that And going that, industry, of seeing XXXX the for want don’t have hardware. was impact can working bad on it down is, make sure deliver things to be the really to you when quantify the you certainly where time shutting they you kind there. P&L for some automotive to didn’t everyone XX%

we XXX capital. And that a for XXXX, to And we or that by so, are the little happen. look, challenge on, that has for put make us to is that, the quad scratch working and pressure on bit going telegraph so and stand we

Revathi Advaithi

in a strongest fantastic ever, is have would our position I cash just balance pointed the Matt, to balance. And sheet

We inventory pressure. will have

and that free will cash right year. continue will watch focus the our we but to carrying we have-to-have our inventory flow. big be delivering the overall customers, But to delivering that think blend think that through also we our I a of

there. mix think we to a got on of things work So I good

Matthew Sheerin

you Thank customers inventory? that. for customers, against you deposits Are are you for seeing asking kind of that

Paul Lundstrom

checks. extent Absolutely. heck willing Unfortunately impact with To absolutely. not or our prepay, can the write yes. minimize flow Oh, cash everyone to we is advances

one-for-one. we a But not is can it. it So, we where take unfortunately, it get

Revathi Advaithi

is Nut Matt managing or but shortages. in we this about, the talked is it everything else pandemic like

bring discipline, thousands across we the by everything focuses know it, good how in our discipline, situation, with shortage managed on coordinated world. with of who all employees Even right. of You for inventory, is doing pays that the very

but our on based is we so, And think things still holds, that, on. of flow that, guidance lots work to cash

Matthew Sheerin

so Okay, Thanks great. much.

Operator

The with Goldman Sachs. from Delaney comes next Mark question

open. Your line is

Mark Delaney

tight A the the talking market share very trying global perhaps that, to I’m questions. of given companies how And supply you in because much agile any curious taking about Flex, procurement, to number Thank are take able Yes. be if for of doing been perhaps chain all given share or through to the these of underway in some least were to able share new market take term? engagement difficulties, focus managing and get the short-term, are lead at either some on market you that longer of some could a expertise maybe is.

Revathi Advaithi

source of And lot Absolutely. not Mark. teams in terms teams our in lot are customers, I’m calls of re-qualifying in chain with, the CEO, supply a or second Yes, doing a providing only finding our system. sources inventory

see And can our compared revenue see our people have you industry. the right to the and we that performance, margin. from most extremely QX terms So, on to well, both just performance, shortage navigated in situation kind of in of

of flex So, I able the our moving moving capability inventory say every supply keeping just harder, for is being that stone in I which those shown kind supply but I part in chain world navigating we our to would of system running and customers say we chain the best words, And and and effort, absolutely would of forward, dries say over saying all of say, then, kudos really class, the up what become things kind would is suppliers as can would forward, procurement situation. are about customers getting is lots in in under and move agile, this.

Mark Delaney

point related tremendous this Thanks. in are able any Flex to to chains abnormally potentially, been my That And to how for pricing physical is second you. is if don’t strong. shipping. and for of chain tight a clearly, results. know need has seen some given supply, have this with cost areas thoughtful holistically margins starts to where environment, the focus I pricing. about dealing demand Maybe Recognize be and are And if we more, That of this are moderated pricing on big and high the paid be future goods perhaps and it to components would seeing been wondering is management unusually get ease? getting margin is do you at going helpful. we being a team. we there global bit improvement more disciplined supply Thank you supply value. I’m very question that the pressure with around systems are in was

Revathi Advaithi

who you these ends to prices, you up I would kind or the there pass at paying disciplined conversation pricing enough And like, been for cost say know that pressures, have in these right. now being have able changing it up day in the this, you on kind of to be ends this to about that. all pressures know chain, the be on end to all of is of value mark,

expect so those weights, important the think And are say that Core well. it do for important shortages Core just rights. And will about, have that shutdowns, COVID would is operating the navigating margin, really, Flex And factory we are the four a to Flex that, and year and we outbreaks I so. still margins, do even the handle or I and really the think all like

that, to year the So continued expect upcoming we continues future. and margin efficiency improvement, the that our even with these changes, then but productivity you through improve have that add to to also

direction. have the our So, margin right keep continue we pretty moving in that far a keep strong rates we up to and pipeline, how

We about are bullish that.

Mark Delaney

you. Thank

Operator

question Schwab comes from with Craig-Hallum last Christian Your Capital.

is line Your open.

Christian Schwab

be everybody world. on question kind aware just we the the about had squeezing that challenges is for give one that the plan. is in I given this, of on a your should as just going Thanks more management’s in, point of guidance of thinking to this ability me year Is proof for all

you to years preferred highly chain go out end volatile to far. that’s work that of customer, thinking prune more on to I focus of and wrong? that predictable, gives leading more programs of a businesses to and You and kind the the conviction of level know, a the products a high supply partner fair am that that portfolio about and ago Is become couple important or pipeline backlog such

Revathi Advaithi

fair. No, it is think Christian, I totally

are, are summarized how our points all You key we really thinking know, about well you in definitely of you it. have terms

Our visibility view end for segments. is that we have our good

good We give segments, are businesses, within believe and reducing it that also you guidance. know, volatility important is the that these we

we more things feel putting longer being said, prudent, a and will guidance see so in that, outlook. providing you like things comfortable is our shortages more know does know, you term right. you it into all together, that like and and so, bring That question And

So our strong. pipeline extremely is

We are seeing or not pretty We signals that. are demand like any see anything strong. cancellations

new of kind of lot a regionalization. going have program We on with ramps

the business. summarized So have and the that thing of to we of it, is And you it terms strength we how do about think feel to in right signal we we it visibility our elegantly. the do very

Christian Schwab

Congrats Great. I don’t have a and very any other good quarter questions. on great a outlook.

Revathi Advaithi

Christian. Thanks Great.

Operator

to Advaithi Revathi now would remarks. for call the back to like I over turn closing

Revathi Advaithi

Yes. all Thank joining for you us.

super And Thank good course in the you FLEX. then remain the safe and about wish I to excited for will next and w and I’m speak all future So health, of of quarter. you. confident you

Operator

conference today’s call. concludes This

You may now Good disconnect. bye.

Flex (FLEX) 5 May 212021 Q4 Earnings call transcript