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Flex, the Sketch-to-Scale solutions provider that designs and builds Intelligent Products for a Connected World, has announced results for its fourth quarter ended March 31, 2018.
“Fiscal 2018 marked a return to revenue growth for Flex and highlighted how our strategy of pursuing portfolio evolution and investing in our Sketch-to-Scale capabilities is driving revenue momentum as we enter fiscal 2019,” said Mike McNamara, CEO at Flex.
Fourth Quarter Fiscal 2018 Results of Operations
Net sales for the fourth quarter ended March 31, 2018 were $6.4 billion, growing 9% year-over-year at the higher end of the guidance range of $6.1 to $6.5 billion. GAAP income before income taxes was $16 million for the quarter and adjusted operating income was $200 million, at the low end of the guidance range of $200 million to $230 million. GAAP net loss was $20 million and adjusted net income for the quarter was $150 million. GAAP net loss per share was $0.04 for the quarter and adjusted EPS was $0.28 for the quarter.
Fiscal Year 2018 Results Operation
Net sales for the fiscal year ended March 31, 2018 were $25.4 billion. Fiscal year 2018 GAAP income before income tax was $521 million and fiscal year 2018 adjusted operating income was $786 million. GAAP EPS was $0.80 and non-GAAP EPS was $1.09 for fiscal year 2018.
Flex’s fiscal year 2018 performance illustrates its portfolio evolution to higher margin businesses. The Company’s two higher margin business groups, High Reliability Solutions (HRS) and Industrial & Emerging Industries (IEI), combined were $10.7 billion or 43% of net sales in the fiscal year ended March 31, 2018, a $1.6 billion increase from a year ago.
Cash Flow and Balance Sheet
Flex generated cash from operations of $323 million and $754 million for the three and twelve-month periods ended March 31, 2018, respectively. Free cash flow was $195 million and $236 million for the three and twelve-month periods ended March 31, 2018. The Company repurchased ordinary shares for approximately $180 million during the twelve-month period ended March 31, 2018, reflecting its commitment to return over 50% of annual free cash flow to its shareholders.
Flex ended the quarter with approximately $1.5 billion of cash on hand and total debt of approximately $2.9 billion. The balance sheet remains well-positioned to support the business over the long-term.
First Quarter Fiscal Year 2019 Guidance
For the first quarter ending June 29, 2018, revenue is expected to be in the range of $6.3 to $6.7 billion. Adjusted EPS is expected to be in the range of $0.22 to $0.26 per diluted share. GAAP EPS is expected to be in the range of $0.15 to $0.19 and includes stock-based compensation expense and intangible amortization. The Company’s guidance excludes the impact from adoption of ASU 2014-09 “Revenue from Contracts with Customers (Topic 606)”.
In keeping with the Company’s high standard of corporate governance, the Audit Committee of the Company's Board of Directors, with the assistance of independent outside counsel, is undertaking an independent investigation of allegations made by an employee including that the Company improperly accounted for obligations in a customer contract and certain related reserves. The independent outside counsel also notified the San Francisco office of the Securities and Exchange Commission of the allegations and that it will report the findings of the independent investigation upon its conclusion.
At this time, the Company is not aware of any issues under investigation that will materially affect the fourth quarter or fiscal year results, but the investigation is ongoing. The Company has also not yet determined whether the issues will impact previously reported periods and, if so, whether that impact will be material. The historic, fourth quarter, and fiscal year results disclosed in this release do not reflect the impact, if any, from the issues under investigation.
Flex Ltd is the Sketch-to-Scale™ solutions provider that designs and builds Intelligent Products for a Connected World. With approximately 200,000 professionals across 30 countries, Flex provides innovative design, engineering, manufacturing, real-time supply chain insight and logistics services to companies of all sizes in various industries and end-markets.