FLEX - Earnings call transcript Q2 2025

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Operator

Thank you for standing by. Welcome to Flex's Second Quarter Fiscal 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I will now turn the call over to Mr. David Rubin. Mr. begin. please Rubin,

David Rubin

Officer, morning, XXXX Good our to Second Chief Flex's Executive Thank Conference and Call. Fiscal Financial Interim and Earnings Revathi is Martinez. With Quarter Officer, you. Advaithi; welcome Jaime me Chief today

Q&A. We followed will remarks give brief by

today's Relations as a our call recorded This is section press at the copy available are and well of available website. being on summary flex.com. corporate and financials as for will on for of earnings Slides release the replay be Investor call

a today's call contains statements As on that to statements, our and These results could risks forward-looking assumptions. differ based reminder, which materially. cause actual current are expectations involve uncertainties and

risks most information is For the the or undertake see uncertainties, this in please statements recent SEC. to Factors Note change, press statements. to a no these these the in section filings obligation release full update Risk discussion with our and we and in of subject cautionary our presentation, forward-looking

otherwise financials to provided be on unless all found Investor in presentation will basis. The as of note, results year-over-year slides website. reconciliations the summary metrics well in non-GAAP can appendix full will non-GAAP and the in be growth a posted stated, today's Please on GAAP measures, all the Relations as be

Lastly, agreement call this excludes on entered to had The October definitive we XX, the provide on any acquisition. we into acquire pending Systems. a announced we from guidance Crown Technical impact

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

Revathi Advaithi

of power End with expectations joining trends results today. devices. Slide a were strength on our quarter solid with you, had medical morning, Thank line you $X.X in market with in off Starting X. David. Good billion. our cloud, with prior the thank revenue and us in largely and We for QX

also strong Our adjusted EPS, at And $X.XX Flex. we on in delivered came record and of the a adjusted quarterly operating a record cost based effective mix management. for X.X% margin

and ramps cloud, our this continue the auto. this well, progressing quarter dynamic to execution large in margin continues our Flex which quarter, in operate These As team our half across of macro. to contributed expect multiple power are back mentioned we we have proud to strong of including I'm the program a last ramps and as year. fiscal improvement,

our Investor to strong Slide plus a May, our life back X. services in ongoing turning manufacturing Now focus portfolio product higher-value strategy. At capabilities, longer-term this and our call innovative compute laid and of Day to plus secular out power we cycle markets advanced EMS trends. unique expand products with with services, towards an strategy We

the strategy We continue make to progress portfolio. on across diverse our

our mix services. units, to of each Each business through Within value are driving for on their of opportunities unit X looking productivity to our improving focused add core the manufacturing and teams also business businesses. our is additional operational customers

business was initially solutions. Our the and where integration lifestyle value can circular economy proved we we vertical create through

plus business. In The we similar cloud, and to markets, transformation in product margins the in From even in own to relationships. applies a lot and been our the specifically our we built have data results, course, auto, some of our value of result more out portfolio. in goods. This the as durable strategy end how creates There's is including EMS the strategy strong through plus center. our interest cloud deeper relations the services extended downcycle products in experience, CEC improved even this growth with such customer

center fully me integrated provider that let and data delivers solutions. Flex the customized, explain. briefly is power solutions racked infrastructure only So

components Our boards. power that way power data power the center server facility spans portfolio all from to the the down

to grid power is portfolio truly our So chip.

impact strategy results. already of this You're our the seeing in

our center our comp QX, of power more XX% expected combination CAGR, data quarter. a long-term a portfolio, this up were against year-over-year and difficult cloud versus also is in which we and XX% data center example, business For grew

products about services. Solutions our develop with constantly progress. improve capabilities, our of expand to and We solution want Of Flex our or talk capacitive some to Energy to It's partnership course, our quarter CESS. enhance Musashi been working design announced energy we're innovative our so a I storage busy

cloud AI to technology Our few open add data this our the capabilities, partnership solution the had heat a as expand summit, reference Flex for most now power, allowed We able high-performance that AI challenges. specs. the centers We leading liquid year's critical massive JetCool highlighting to scale power AI how and design they with compute our is server spikes mitigate are our cooling we advanced disrupting service which compute At enables address providers new announcements next-generation applications. announced handle direct-to-chip to and compute to clusters.

our at Lastly, manufacture higher liquid and vertically-integrated cool solution of scale. our we with supply all Flex for the demands power racked cloud showed we that workloads. designed customers speed for power our integrated can busbars, This demonstrates truly shelf, solution and a emerging

there's we with Because and the the Because solve technology working evolving Now both road some help center. of Flex to that, our deeper has in these drive product in and this critical case, compute, are expertise power takeaway earlier innovation and customers a announcements. in issues most map. power data of leading our edge capability the from their opportunity of in

higher EMS And to role plus strategy. about is opportunities in play our at value has product end team plus every mentioned, finding a services this diverse strategy in Flex I markets. As

Crown we a lines, of announced Technical is here. acquisition those synergistic Systems. Along strong There effect the recently

switchgear driven power portfolio, will support trends. modernization market expertise which our First, Crown being in center Their it medium our in center business. particularly in power the data the also position U.S. we and modular has a power power voltage enhances significant grid believe and data in market. growth pod American North by distribution is

expansion, value growth another great strategy tied long-term of margin EPS competencies, This cash grow create to higher-value through markets generation. core to is our ultimately in acquisition example our and and shareholder

to With take that, Jaime update. Jaime? I'll over through financial our to pass you the Martinez call

Jaime Martinez

Thank our with quarter Starting solid X. Slide second It performance another on was you, quarter. Revathi.

at totaled Second $XXX XX line $XXX And both basis billion, was level. increased the as income points. record up Revathi X.X%, quarter XX Gross levels for level with $X.X a substantial record million record points. basis Operating up per expectations. Flex. a XX% increased mentioned, margin quarterly profit operating and our year-over-year X.X%, a earnings share to quarterly million, gross were to margins improvement, revenue And of $X.XX for quarter, also was in with year-over-year

income and billion the operating mix segment strength devices. to continued on X.X% both segment range sequentially expected margin $XXX on Turning the slide. and in results in quarterly was improved, Reliability million, solid the execution. for was and with medical $X.X Operating revenue to next and year-over-year, power

$X.X based improvement at cloud and IT. and of strong three management. on non-cloud-related In Operating billion mix Agility, strong record with the enterprise cost offsetting X.X% income came continued units, in operating revenue a networking effective with flat softer in million, margin execution at was business $XXX with each along

capital cash year-over-year. Net QX, this finally the XXs. X. million, reached maintain down has our QX high flow totaled X% and normalized and year. $XXX XX% revenue Inventory down Slide quarter, X% the was on Moving net target full working similar again advances we for a of inventory to CapEx net to of of sequentially more level days, expect to in

much So about where we are. better we feel

$XXX the quarter puts worth million. over year-to-date, of We million. we of XX at reach with we Fiscal of QX the full strong cash have million flow on repurchased second million repurchased shares. track $XXX cash $XXX plus. balances us year billion. $XXX was our year-to-date, $XXX quarter, million in approximately again stock, target million That Free totaling exit to $X.X at In

Some acquisition to expected of by that Crown December. the will fund close

the third Slide quarter. segment outlook for for to turn fiscal and Please our XX

Reliability QX, Solutions, flat we to digits. mid-single will down be For expect revenue

is related mentioned As have auto the we the muting seen in half. macro second some conference, Sachs growth recently in we slowing at that Goldman

still outperform expect on industry auto unit to expectations XXXX new we content based in and fiscal gains. wins Although

little Core expected. previously softer is a industrial than demand

power single the continued to other in digits devices and low remaining in medical growth with Solutions down expected strong to Agility end to is However, expected. expected be high revenue is as strength markets continue. cloud,

guidance. for XX On to our Slide quarterly

with of other billion, is $XXX For around million. and expense $XX the to $XXX billion total between Interest Flex, million million. range be and we to expect $X.X QX estimated $X income operating in

translates We that EPS expect based on average the tax shares $X.XX rate $X.XX, and quarter. to to be All adjusted XX% outstanding. for around million XXX the weighted between approximately

slide. Looking at guidance our on the full year following

billion $XX.X macro we now billion. year expect and between full some $XX.X Given revenue pressures,

EPS $X.XX. midpoint margin is expected about at which and between adjusted XX year-on-year, points to the be will is be operating between to X.X%, now expected X.X% and and basis However, up adjusted $X.XX be

the over improvement double-digit changed value the in the and to several long-term our cycles. is business and results operations in can represents best EMS plus improving and resulting growth. much see history how of our And years, in margin Flex. guidance, continued has Flex opportunities through plus strategy believe this services the products We shifting higher last EPS You

about future. excited our very we're So

the will I call to now that, back With Q&A. begin turn the operator to over our

Operator

question from [Operator Our coming first Instructions] today Bhattacharya Bank is of America. Ruplu from

Ruplu Bhattacharya

about to going who quarter is that, And you growth there to strong you grow you of to how I And wanted possible business? customer? M&A? Is I Revathi, be you this power year-on-year. and wanted value. is that think business, it on create long-term do sustainable? shareholder more through said the this Or ask organic XX% to growth the just target plan Is

of be So a a Flex? power to Nextracker? this investors be thought like time stand-alone a candidate should over integral is this that Or business business for could think spin-off that can as

Revathi Advaithi

for the call. thanks Ruplu,

I which -- XX% our end-to-end that want is power. IT power data both includes I infrastructure to kind which our and -- the just power First business growth is of center business, Solutions, power clarify our that EMS is overall and integration business, for sure CEC make includes embedded I

XX% that up growth. So the makes

you that's would to how terms of, investments to decade. is from say, I of data the first to over to listen step that everybody significant growth Ruplu, have be talking announced the about in the growth capital sustainable? and back and say question And next center the all just going thing,

pretty we that about macro. good So feel

we're say about of is going goes the from to I'd to power because go important power around really to that, it's it's the how center company power I second that infrastructure power overall. truly the really, about can the embedded growth that as not critical impacts is And chip center only the that growth, data is directly just that grid. data be thing think, that part

that's important. So

needs So capability. more are that's this important And be more looking that as for capability and the complex, a more customers get overall power unique will for.

a very both being I So only that puts solutions Ruplu, say, IT growth. position company if -- in the get unique integration, you and back, makes would step infrastructure delivers to us that long-term good power

XX% advantage, position that hands We us beating advantage we long-term We, quarter. have are growth CAGR. our Because not said only but position. gives we technology a of share us unique obviously, unique that after quarter down a also have we puts in think that that think do

about center growth kind quite the of So good feel long-term the segment. of I data characteristics

is terms Technical just the M&A, of which Because, of us both is organic new adds use a remember, medium M&A in the Crown putting or to equipment we important. of continue quickly This data deal segment of really portfolio. an power pods overall in for ease help In really center, smart and announced overall like then integration. North we'll them capability M&A voltage America, really, pods, power before center we done our sticking power gigantic you do can start these have to them data a to full so important of so next up and creating them

of and this but So I'll say will good we've last about that then had combination our term very XX% of the feel a quarter both, long we XX% it be XX%. quarter,

Ruplu Bhattacharya

integral -- on and stand-alone part this off? could business this and can think unit of or that issue the whether just we of an potentially a that is is as a Flex And spun of be

Revathi Advaithi

have, we portfolio different step right? the our think way. a of rate solutions same is $XX in right? have Flex of segments billion, growing back with would and about is Ruplu rates, I is So as different different -- think Data same center in we billion products, growing many way. the that at different characteristics. are a Automotive $XX revenue I'll Health

that almost ourselves what services, center. create a makes these unique do for we capability moats We data that have in are is of unique in in to created And portfolio. planning every segment products, us EMS position

end so it's an board. within happens Flex I as in lot. be synergistic then a But to and significant what overall, portfolio. to doing the across to just news that pretty market very think So of would at is makes overall that it synergistic rate Flex growth in This the the This would is Flex. every we're in a segment I it say,

Ruplu Bhattacharya

if question Got ask I just it. And a my can follow-up, for on margins.

though revenues on the to -- you be range the full X.X%. are near operating kept margin, So seem even year term, to is in pretty challenged X.X% at is which confident

So ramps how what volumes I giving happening you for if is what that you are what have confidence example, lower, giving are -- can you ask I but you -- you margins? of under-absorption about the said Jaime, is -- or mean, on in automotive, concerned and cost is basically confidence,

Jaime Martinez

even ramps erosion may that for to half, question. would progress say Ruplu, the continue supports you margin there to the of are that despite fact given I our it's automotive Yes, thank that's And margins center. data ramps that The the you some portfolio, And And that projects. right? be mentioned, of for well. the that revenue second the right, of as raise our well, some the beauty portfolio helps going in in

The center up cloud, or better mix to solutions, power. continues for health And better be continues medical and portfolio is be of in us. devices strong, it's to mixing whether data also our

we So our cost double-digit makes with execution continue very right key in that and and supports that's growth we're out you margin feel and well putting And strength that expansions a manage operational performance. our there. EPS through to comfortable efficiencies, very that our

Operator

JPMorgan. from Your next Samik question from coming Chatterjee is

Unknown Analyst

This is Samik Chatterjee. MP on for

you're is order around and in seeing trends center compute question to related data your that the business. like firstly exposure my power So

any Or you're trends you order terms acceleration are the seeing to XX seeing order in So ago? of trends? same relative days

Revathi Advaithi

was -- don't But of Yes. about right? I shared are would with of kind growth, revenue comfortable Last forward-looking that have say terms much orders. as we would in XX%. what quarter we very talk say we I

higher This sees. difficult obviously, right? what than XX%, market quarter very much is the in overall And comps, kind of

about So of have that very we and no about and good I are have feel what projects to, of pipeline our kind concerns executing we that.

with very business. I is a think longer-term well that very thesis robust it fits this our

trends, rate we you specifically a strong I that give XX% think good we but So don't orders give execute very to. our should pretty backlog have growth to order and indication

Unknown Analyst

another have on your I Okay. follow-up margin performance.

year by the decline were the in for in revenue terms margins. able we of offset outlook full So to better

were industrial, EPS just still increasing for deteriorate how further if to hit was to I to So maintain the do we a full in leverage Or wondering start terms if have or the in the outlook of the start terms EPS automotive much outlook when we deteriorate in on of will guidance? more? to operating year revenues [indiscernible] see margins

Revathi Advaithi

reasons. we transformation happens is real we're One really fast that are in you tell where a the EPS we you X growing through And that through here can perform happening segments at see mix, to thing very and will really with the of comfortable is evolution our rate. I it our due high-value cycles, is outlook. our playing that our

and fantastic, you our see that's flow-through P&L. So that

the of And productivity. ups efficiency great at managing we volumes are and cost terms second and downs is in

So of have so are. markets you terms and are put And so in we no expect pegged from our we X right, are comfortable would conservative have where together, we guiding we we revenue what those would very far, forward-looking I are are our very guidance. of where erosion say say like no and I feel always it we the And with end EPS in we issue we I terms feel EPS guidance. like with

Operator

coming Our Wang from Barclays. next George from question is [Operator Instructions]

Dong Wang

versus XX% you level, strong And double-digit high cloud Revathi, just growth. obviously, don't this full ramp, long-term XX% just obviously very kind on of run quarter-to-quarter guys impressive guide the double-click rate.

couple Just top maybe integration for or some within the And kind new about the colocation. still next opportunity, potential rack it's of quarters, logos you of the that's growth and to could whether think a cadence hyperscale guys working of think double-digit how hyperscales? kind the bigger-sized within logos on share kind or especially of about the be opportunity for of X you can as whether existing new wallet you a address

Revathi Advaithi

saying IT participate back for data that step So products, Yes. EMS have across spectrum question. that of the space, we all I'll right? we of by and George, in -- solution the remind IT storage there. integration Thanks, hyperscalers. we portfolio in I'll centers, server, And everyone the start the networking products, for do racks, of

really what's in building services that. remember having is the we the and ourselves associated portfolio, are integrated racks, important very And that I just all of think well making to vertically terms not with them in

it's So it us, and hand to hand the that well it hyperscale vertically over IT solution portfolio just to a has integrated very them. we to back

chip we the on infrastructure And that around products the from everything what's chip touch itself, on the power drives then side, power the the actually it. to

So we that. build of all

unique that in unique the So again, in a really industry puts has, very very a nobody position. portfolio us

right? What is would takes is this is the that across power is board, to I have And that participate growing is So we we grow portfolio and right? this the growth, hyperscalers. across fact unique, helping us cliff? us at colos the and IT that so The products. say, solutions

centers all most of logos it I is pretty terms about new universe of wouldn't a now. colos universe George, in by them we of because them and think and of holistic So the and data know

products, not new better all new wallet it's better So technologies schedule, through share, services. just about expansion and of

really way this across business. share wallet the increasing just So the is grow board to

a announced of I adding through growth this products. really here are think adding about acquisition rate acquisitions. new the then, that's And power feel our there. how would overall kind And We're delivering. the that just we we growth course, to rate good I space, George, also organic So of about in

Dong Wang

Yes. Great.

build quick IT with can. if as margin. your especially side. design a want partnership power obviously, to about. the center I that maybe Just And kind owned talked of cooling margin, you At kind well with be guys higher could the from aside product reference of guys liquid kind kind design on liquid follow-up, just the double-digit I the cooling the JetCool, putting some of this much of OCP, double-click you data in of side,

own center embedding can you of the of maybe on corporate bit the center terms profile think a kind rack and integration versus -- So of data data in how your little to terms traditional average? talk just into high-level more of the some outlook in margin design the about accretion

Revathi Advaithi

Yes.

So I'd I the of design a natural power Because reference start think with the about the and kind this we about. right? with See works the of the make the JetCool talked partnership itself. progression, that actually chip with us, kind for we itself is how

So now products that the it's the all about and power go together it. cooling in chip

with the end. can terms end that appropriate the right, make rack solving we very really to needs that and it solution, unique product, JetCool own really of both we integrated makes cold it what do we're really cooling, our plate the power to gives IP are that think the around of we partnership. which in problems all us we trying and well and cold has which fits really reference design design about JetCool CDUs that very a that So associated feel with the partnership really and leads for with that the And the drove toughest plates itself in them. chip to to our solve us using

appropriate the considering needs. really partnership, ones it who So that's really and have only Flex we drove the that very are it power what for makes

reference end-to-end, integration So now cooling we then rack fully have make design. we and the the

accretive that cycles. The And us Flex would In terms delivering, all a what in growth are data mixes these see right? through you mix, margin, to I in growth overall. our we are margin way. big of in Obviously, say, XX% center really up these

doing higher you is mixing up have that growth which margins, to your transformation in you're So right and because portfolio really we are want that's good what to strong which data what is centers. where about in to they're margin be accretive Flex, the is you

Dong Wang

on growth side. strong Great. the in Congrats the again AI

Operator

coming Markets. Our Barger final is KeyBanc today question Capital Steve from from

Christian Zyla

Christian is for This Zyla on Steve Barger.

you peers capabilities specifically yourself well. Thanks on in the you about that think the are of question, earlier But M&A. but outside for others differentiated adding data you your EMS other guys would the with about portfolio. next-gen interested from haven't as thinking as subsegments be data center there maybe mobility First comments portfolio center,

Revathi Advaithi

clear Yes, acquisition in be we're completing that Christian, in terms and I our that of from portfolio perspective, interested a targets terms will will would say a help that in. things we've always help very really of technology that been

our general, needed area portfolio. we lot So looking other space. fit right, a automotive automotive have is the about that to it what But has to we that not be in acquisitions in achieve we talked any have with so are far, in

fairly We platform, comprehensive have portfolio provides hybrid EV customers. to platform EV that a complete a our automotive

very to feel we So comfortable that.

for you we're have a deal, And more around particular of the acquisitions a seen we us, services as financially whenever But continue financially, deal capital announced been good services. look that important is will for an because vertically-integrated overall that part allocation we has capability strategy. also have and it help about acquisitions ours portfolio thoughtful of then very to any deliver us,

I how think that's about M&A. So

Christian Zyla

the guess, on side. Great. margin going I And then,

So for upward guys. trend operating margin you expansion on has been its pretty steady

hinted in And of industry the goals have some X% peers plus. at

about If target and could think And your that you to that reasonable? get begin reliability you do that is takes recover, puts you the think there? subsegments are what

Revathi Advaithi

Christian, long-term comment mean and we've X-plus target to already quickly Yes, our at I'll percent. Jaime. it I give given

we said we can well Jaime, you'd portfolio it? range, all where expansion, as add Investor of that. mix, are Day. improved comes from see given So that to But that services you today, we and we're to obviously our improved in had in And last anything that

Jaime Martinez

Mix our important example, Revathi, think that it, we're medical right, a I basis. in coming most we saw this -- year-over-year but points helping you I XX in certainly grew mentioned on of much reduction it's us better. an a seeing as of is devices, I power No, revenue quarter, think said -- us. earlier, for performance Reliability still basis And and XX%, we we

we are services. opportunities we're much And our there and that higher gives driving the that better managing through there. us confidence Agility continues to perform portfolio value, the with through value-add of So cycle well additional that

all, achieving long-term very in X% range with all comfortable feel of that a we So plus.

Operator

you. end closing our floor We like Thank reach the of I'd the over back the turn for to question-and-answer to CEO remarks. session.

Revathi Advaithi

you. Thank

So to again we speaking look forward next quarter. you to

I Before for our dedication want just and support, hard Flex I thank your the customers world to all all team all. across close, their then work, and their the also shareholders for all our you to course, contribution their and Thank of

Operator

does That joining. Thank you. you for today's call. conclude Thank conference

You may now disconnect.

Flex (FLEX) 30 Oct 242025 Q2 Earnings call transcript