Flex raises fiscal 2027 profit forecast after Q2 beat

Flex Ltd. (FLEX) said on Oct. 28 that its fiscal second-quarter adjusted earnings were $1.18 per share, topping the $1.07 consensus estimate compiled by Finnhub. The company said in a press release filed with the SEC that it raised its full-year forecast.

Revenue of $8.49 billion for the quarter ended Sept. 25 was up 25% from a year earlier. It beat the $8.3 billion estimate, according to Finnhub.

Here's how the company did:

• Net sales: $8.49 billion vs. $6.80 billion a year earlier, beating the $8.3 billion expected, according to Finnhub
• Adjusted EPS: $1.18 vs. $0.79 a year earlier, topping the $1.07 expected, according to Finnhub
• GAAP EPS: $0.70 vs. $0.52 a year earlier
• GAAP net income: $263 million vs. $199 million a year earlier

Adjusted operating income was $607 million, a 7.1% margin. GAAP operating income was $414 million, or 4.9%.

Operating cash flow was $501 million, and free cash flow was $261 million, down from $305 million a year earlier. The company said separation costs for the spin-off reduced free cash flow by $61 million.

Fiscal 2027 guidance

For fiscal 2027, the company now expects net sales of $34.9 billion to $35.9 billion, up from the $33.7 billion to $35.2 billion range it gave on July 29.

Adjusted EPS is now forecast at $4.84 to $5.16, from the $4.42 to $4.74 range it gave on July 29. The adjusted operating margin is 7.6% to 7.8%, from 7.0% to 7.2%.

The full-year figures exclude the planned spin-off of the Cloud and Power Infrastructure segment. They include acquisitions closed after Sept. 25.

For the third quarter, Flex expects net sales of $8.87 billion to $9.17 billion and adjusted EPS of $1.19 to $1.25.

CEO Revathi Advaithi said, "We continue to execute from a position of strength while advancing our planned spin-off of our Cloud and Power Infrastructure segment." Advaithi also said the EPC Power acquisition "will be immediately accretive in fiscal 2027."

Charges and cash flow

Excluded from adjusted results were $110 million in legal and other charges. About $91 million of that related to the planned spin-off.

Restructuring and impairment charges were $13 million, most of which related to employee severance.

Revenue has risen in each of the last three quarters, from $6.80 billion to $7.93 billion, according to its SEC filings. Net income has risen in each of the last three quarters, from $199.0 million to $285.0 million, according to its SEC filings.

Flex, which has a global footprint spanning 30 countries, provides advanced manufacturing and supply chain solutions. Management will host a conference call on Oct. 28 at 8:30 a.m. ET.