AUSTIN,
Texas, Jan. 31, 2024 /PRNewswire/ -- Flex
(NASDAQ: FLEX) today announced results for its third quarter ended
December 31, 2023.
Third Quarter Fiscal Year 2024 Highlights:
- Net Sales: $7.1 billion
- GAAP Operating Income: $348
million
- Adjusted Operating Income: $477
million
- GAAP Net Income attributable to Flex Ltd: $197 million
- Adjusted Net Income attributable to Flex Ltd: $309 million
- GAAP Earnings Per Share: $0.45
- Adjusted Earnings Per Share: $0.71
An explanation and reconciliation of non-GAAP financial measures
to GAAP financial measures is presented in Schedules II and V
attached to this press release.
"Overall, fiscal Q3 was another quarter of strong execution,"
said Revathi Advaithi, CEO of Flex. "We continue to deliver on our
commitments, and we are very well positioned in markets with
strong, long-term secular drivers."
Fourth Quarter Fiscal 2024 Guidance
Fourth quarter FY24 guidance excludes Flex's 51.47% economic
interest in Nextracker, which reflects the January 2, 2024 spin-off of all of Flex's
remaining interest in Nextracker.
- Revenue: $5.8 billion to
$6.4 billion
- GAAP Operating Income: $252
million to $302 million
- Adjusted Operating Income: $305
million to $355 million
- GAAP EPS: $0.38 to $0.48.
- Adjusted EPS: $0.50 to
$0.60 which excludes $0.07 for stock-based compensation expense,
$0.03 for net intangible
amortization, and $0.02 for net
restructuring charges.
Fiscal Year 2024 Guidance Updated - Total Flex
Fiscal year 2024 guidance includes Flex's economic interest
in Nextracker for Q1 through Q3 FY24, and excludes it from Q4
FY24, which reflects the January 2,
2024 spin-off of all of Flex's remaining interest in
Nextracker.
- Revenue: $27.7 billion to
$28.3 billion
- GAAP EPS: $1.77 to $1.87
- Adjusted EPS: $2.47 to
$2.57 which excludes $0.35 for stock-based compensation expense,
$0.24 for net restructuring charges
and $0.13 for net intangible
amortization, offset by ($0.02) for
tax, noncontrolling interest share of subsidiary's non-GAAP
adjustments and other, compared to GAAP earnings per share.
In addition, we are providing fiscal year 2024 guidance for Core
Flex to provide further transparency in our core business trends.
Core Flex represents Flex, excluding Flex's economic interest
in Nextracker for the entire FY2024. Core Flex is a non-GAAP
measure that does not reflect discontinued operations presentation
under GAAP.
Fiscal Year 2024 Guidance – Core Flex
- Revenue: $26.0 billion to
$26.6 billion
- GAAP EPS: $1.42 to $1.52
- Adjusted EPS: $2.07 to
$2.17 which excludes $0.26 for stock-based compensation expense,
$0.24 for net restructuring charges,
$0.13 for net intangible amortization
and $0.02 for other compared to GAAP
earnings per share.
Completed Spin-off of remaining interest in Nextracker to
Flex Shareholders
As previously announced, on January 2,
2024, Flex completed the spin-off of all of its remaining
interest in Nextracker Inc. ("Nextracker") to Flex shareholders on
a pro rata basis based on the number ordinary shares of Flex held
by each shareholder of Flex (the "Distribution") as of December 29, 2023, which was the record date of
the Distribution. Under the previously disclosed terms of the
transaction, Flex shareholders received approximately 0.17 shares
of Nextracker Class A common stock for every Flex ordinary share
held as of the record date of the Distribution. Flex shareholders
received cash in lieu of any fractional shares.
As a result of the completion of the spin-off, Nextracker became
a fully independent public company, Flex no longer directly or
indirectly holds any shares of Nextracker common stock or any
securities convertible into or exchangeable for shares of
Nextracker common stock and Flex will no longer consolidate
Nextracker into its financial results. Following the spin-off, Flex
ordinary shares continue to trade on Nasdaq under the ticker symbol
"FLEX" and shares of Nextracker Class A common stock continue to
trade on Nasdaq under the ticker symbol "NXT".
The historical results of Nextracker and certain assets and
liabilities included in the spin-off will be reported in Flex's
consolidated financial statements as discontinued operations
beginning in Flex's fourth quarter ending March 31, 2024.
Webcast and Conference Call
The Flex management team will host a conference call today at
1:30 PM (PT) / 4:30 PM (ET), to review third quarter fiscal 2024
results. A live webcast of the event and slides will be available
on the Flex Investor Relations website at
http://investors.flex.com. An audio replay and transcript will also
be available after the event on the Flex Investor Relations
website.
About Flex
Flex (Reg. No. 199002645H) is the manufacturing partner of
choice that helps a diverse customer base design and build products
that improve the world. Through the collective strength of a global
workforce across 30 countries and responsible, sustainable
operations, Flex delivers technology innovation, supply chain, and
manufacturing solutions to diverse industries and end markets.
Contacts
Investors & Analysts
David Rubin
Vice President, Investor Relations
(408) 577-4632
David.Rubin@flex.com
Media & Press
Yvette Lorenz
Director, Corporate PR and Executive Communications
(415) 225-7315
Yvette.Lorenz@flex.com
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of U.S. securities laws, including statements related
to our future financial results and our guidance for future
financial performance (including expected revenues, operating
income, margins and earnings per share). These forward-looking
statements are based on current expectations, forecasts and
assumptions involving risks and uncertainties that could cause the
actual outcomes and results to differ materially from those
anticipated by these forward-looking statements. Readers are
cautioned not to place undue reliance on these forward-looking
statements. These risks include: that we may not achieve our
expected future operating results; the effects that the current and
future macroeconomic environment, including inflation, slower
growth or recession, a potential U.S. federal government shutdown,
and currency exchange rate fluctuations, could have on our business
and demand for our products; the impact of fluctuations in the
pricing or availability of raw materials and components, labor and
energy, and logistical constraints; risks related to the recently
completed spin-off of Nextracker, and the transactions related
thereto, including the qualification of these transactions for
their intended tax treatment; risks associated with acquisitions
and divestitures, including the possibility that we may not fully
realize their projected benefits; geopolitical risks, including
impacts from the termination and renegotiation of international
trade agreements and trade policies, the ongoing conflicts between
Russia and Ukraine and between Israel and Hamas, disruptions caused by the
attacks on shipping vessels in the Red Sea, or an escalation of
sanctions, tariffs or other trade tensions between the U.S. and
China or other countries, any of
which could lead to disruption, instability, and volatility in
global markets and negatively impact our operations and financial
performance; the effects that current and future credit and market
conditions could have on the liquidity and financial condition of
our customers and suppliers, including any impact on their ability
to meet their contractual obligations to us and our ability to pass
through costs to our customers; the challenges of effectively
managing our operations, including our ability to control costs and
manage changes in our operations; hiring and retaining key
personnel; litigation and regulatory investigations and
proceedings; our compliance with legal and regulatory requirements;
changes in laws, regulations, or policies that may impact our
business, including those related to climate change; the
possibility that benefits of the Company's restructuring actions
may not materialize as expected; that the expected revenue and
margins from recently launched programs may not be realized; our
dependence on industries that continually produce technologically
advanced products with short product life cycles; the short-term
nature of our customers' commitments and rapid changes in demand
may cause supply chain issues, excess and obsolete inventory, and
other issues which adversely affect our operating results; our
dependence on a small number of customers; our industry is
extremely competitive; we may be exposed to financially troubled
customers or suppliers; the success of certain of our activities
depends on our ability to protect our intellectual property rights
and we may be exposed to claims of infringement or breach of
license agreements; a breach of our IT or physical security
systems, or violation of data privacy laws, may cause us to incur
significant legal and financial exposure and disrupt our
operations; physical and operational risks from natural disasters,
severe weather events, or climate change; our ability to meet
environmental, social and governance expectations or standards or
achieve sustainability goals; we may be exposed to product
liability and product warranty liability; that recently proposed
changes or future changes in tax laws in certain jurisdictions
where we operate could materially impact our tax expense; and the
impact and effects on our business, results of operations and
financial condition of a public health issue, including a pandemic,
or catastrophic event.
Additional information concerning these, and other risks is
described under "Risk Factors" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in our
annual report on Form 10-K for the fiscal year ended March 31, 2023 and in subsequent quarterly
reports on Form 10-Q, as well as the registration statement,
including the proxy statement/prospectus, and other documents filed
by Flex or Nextracker, as applicable, with the U.S. Securities and
Exchange Commission in connection with the spin-off of Nextracker
referred to above. The forward-looking statements in this
presentation are based on current expectations and Flex assumes no
obligation to update these forward-looking statements. Our share
repurchase program does not obligate the Company to repurchase a
specific number of shares and may be suspended or terminated at any
time without prior notice.
SCHEDULE
I
|
|
FLEX
|
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (2)
|
(In millions, except
per share amounts)
|
|
|
|
|
|
|
|
Three-Month Periods
Ended
|
|
|
December 31,
2023
|
|
December 31,
2022
|
GAAP:
|
|
|
|
|
Net sales
|
$
7,103
|
|
$
7,756
|
|
Cost of
sales
|
6,400
|
|
7,168
|
|
Restructuring
charges
|
61
|
|
5
|
|
Gross
profit
|
642
|
|
583
|
|
Selling, general and
administrative expenses
|
264
|
|
243
|
|
Restructuring
charges
|
13
|
|
—
|
|
Intangible
amortization
|
17
|
|
19
|
|
Operating
income
|
348
|
|
321
|
|
Interest,
net
|
36
|
|
54
|
|
Other charges,
net
|
5
|
|
5
|
|
Income before income
taxes
|
307
|
|
262
|
|
Provision for income
taxes
|
74
|
|
25
|
|
Net income
|
233
|
|
237
|
|
Net income attributable
to noncontrolling interest and redeemable noncontrolling
interest
|
36
|
|
7
|
|
Net income
attributable to Flex Ltd.
|
$
197
|
|
$
230
|
|
|
|
|
|
Diluted earnings per
share attributable to the shareholders of Flex Ltd:
|
|
GAAP
|
$
0.45
|
|
$
0.50
|
|
Non-GAAP
|
$
0.71
|
|
$
0.62
|
|
|
|
|
|
|
Diluted shares used in
computing per share amounts
|
436
|
|
459
|
|
|
|
|
|
|
See Schedule II for the
reconciliation of GAAP to non-GAAP financial measures. See the
accompanying notes on Schedule V attached to this press
release.
|
|
|
|
|
|
FLEX
|
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (2)
|
(In millions, except
per share amounts)
|
|
|
|
|
|
|
|
Nine-Month Periods
Ended
|
|
|
December 31,
2023
|
|
December 31,
2022
|
GAAP:
|
|
|
|
|
Net sales
|
$
21,910
|
|
$
22,869
|
|
Cost of
sales
|
19,935
|
|
21,155
|
|
Restructuring
charges
|
81
|
|
5
|
|
Gross
profit
|
1,894
|
|
1,709
|
|
Selling, general and
administrative expenses
|
806
|
|
729
|
|
Restructuring
charges
|
19
|
|
—
|
|
Intangible
amortization
|
54
|
|
62
|
|
Operating
income
|
1,015
|
|
918
|
|
Interest,
net
|
112
|
|
150
|
|
Other charges,
net
|
32
|
|
2
|
|
Income before income
taxes
|
871
|
|
766
|
|
Provision for income
taxes
|
21
|
|
96
|
|
Net income
|
850
|
|
670
|
|
Net income attributable
to noncontrolling interest and redeemable noncontrolling
interest
|
239
|
|
19
|
|
Net income
attributable to Flex Ltd.
|
$
611
|
|
$
651
|
|
|
|
|
|
Diluted earnings per
share attributable to the shareholders of Flex Ltd:
|
|
GAAP
|
$
1.37
|
|
$
1.41
|
|
Non-GAAP
|
$
1.95
|
|
$
1.79
|
|
|
|
|
|
|
Diluted shares used in
computing per share amounts
|
446
|
|
462
|
|
|
|
|
|
|
See Schedule II for the
reconciliation of GAAP to non-GAAP financial measures. See the
accompanying notes on Schedule V attached to this press
release.
|
|
|
|
|
|
SCHEDULE
II
|
|
FLEX
|
RECONCILIATION OF
GAAP TO NON-GAAP FINANCIAL MEASURES
(1)(2)
|
(In millions, except
per share amounts) *
|
|
|
|
|
|
|
|
Three-Month Periods
Ended
|
|
|
December 31,
2023
|
|
December 31,
2022
|
|
|
|
|
|
GAAP operating
income
|
$
348
|
|
$
321
|
|
Intangible
amortization
|
17
|
|
19
|
|
Stock-based
compensation expense
|
39
|
|
27
|
|
Restructuring
charges
|
73
|
|
5
|
Non-GAAP operating
income
|
$
477
|
|
$
372
|
|
|
|
|
|
GAAP provision for
income taxes
|
$
74
|
|
$
25
|
|
Intangible amortization
benefit
|
3
|
|
3
|
|
Other tax related
adjustments
|
9
|
|
—
|
Non-GAAP provision
for income taxes
|
$
86
|
|
$
28
|
|
|
|
|
|
GAAP net income
attributable to Flex Ltd.
|
$
197
|
|
$
230
|
|
Intangible
amortization
|
17
|
|
19
|
|
Stock-based
compensation expense
|
39
|
|
27
|
|
Restructuring
charges
|
73
|
|
5
|
|
Interest and other,
net
|
3
|
|
—
|
|
Paid-in-kind and
pre-IPO dividends paid to redeemable noncontrolling
interest
|
—
|
|
7
|
|
Noncontrolling interest
share of subsidiary's non-GAAP adjustments
|
(8)
|
|
—
|
|
Adjustments for
taxes
|
(12)
|
|
(3)
|
Non-GAAP net
income
|
$
309
|
|
$
285
|
Diluted earnings per
share attributable to the shareholders of Flex Ltd:
|
|
GAAP
|
$
0.45
|
|
$
0.50
|
|
Non-GAAP
|
$
0.71
|
|
$
0.62
|
|
|
|
|
|
|
See the accompanying
notes on Schedule V attached to this press release.
|
|
*Amounts may not sum
due to rounding
|
|
|
|
|
|
|
|
|
FLEX
|
RECONCILIATION OF
GAAP TO NON-GAAP FINANCIAL MEASURES
(1)(2)
|
(In millions, except
per share amounts) *
|
|
|
|
|
|
|
|
Nine-Month Periods
Ended
|
|
|
December 31,
2023
|
|
December 31,
2022
|
|
|
|
|
|
GAAP operating
income
|
$
1,015
|
|
$
918
|
|
Intangible
amortization
|
54
|
|
62
|
|
Stock-based
compensation expense
|
125
|
|
80
|
|
Restructuring
charges
|
97
|
|
5
|
|
Legal and
other
|
2
|
|
13
|
Non-GAAP operating
income
|
$
1,293
|
|
$
1,078
|
|
|
|
|
|
GAAP provision for
income taxes
|
$
21
|
|
$
96
|
|
Intangible amortization
benefit
|
9
|
|
9
|
|
Other tax related
adjustments
|
155
|
|
(4)
|
Non-GAAP provision
for income taxes
|
$
185
|
|
$
101
|
|
|
|
|
|
GAAP net income
attributable to Flex Ltd.
|
$
611
|
|
$
651
|
|
Intangible
amortization
|
54
|
|
62
|
|
Stock-based
compensation expense
|
125
|
|
80
|
|
Restructuring
charges
|
97
|
|
5
|
|
Legal and
other
|
2
|
|
13
|
|
Interest and other,
net
|
12
|
|
4
|
|
Paid-in-kind and
pre-IPO dividends paid to redeemable noncontrolling
interest
|
—
|
|
19
|
|
Noncontrolling interest
share of subsidiary's non-GAAP adjustments
|
133
|
|
—
|
|
Adjustments for
taxes
|
(164)
|
|
(5)
|
Non-GAAP net
income
|
$
870
|
|
$
829
|
Diluted earnings per
share attributable to the shareholders of Flex Ltd:
|
|
GAAP
|
$
1.37
|
|
$
1.41
|
|
Non-GAAP
|
$
1.95
|
|
$
1.79
|
|
|
|
|
|
|
See the accompanying
notes on Schedule V attached to this press release.
|
|
*Amounts may not sum
due to rounding
|
|
|
|
|
|
|
|
|
SCHEDULE
III
|
|
FLEX
|
UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEETS (2)
|
(In
millions)
|
|
|
|
|
|
|
|
As of December 31,
2023
|
|
As of March 31,
2023
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
2,764
|
|
$
3,294
|
|
Accounts receivable,
net of allowance for doubtful accounts
|
3,605
|
|
3,739
|
|
Contract
assets
|
604
|
|
541
|
|
Inventories
|
6,815
|
|
7,530
|
|
Other current
assets
|
1,089
|
|
917
|
Total current
assets
|
14,877
|
|
16,021
|
|
|
|
|
Property and equipment,
net
|
2,328
|
|
2,349
|
Operating lease
right-of-use assets, net
|
612
|
|
608
|
Goodwill
|
1,348
|
|
1,343
|
Other intangible
assets, net
|
266
|
|
316
|
Other assets
|
935
|
|
758
|
Total assets
|
$
20,366
|
|
$
21,395
|
|
|
|
|
|
LIABILITIES,
NONCONTROLLING INTEREST AND SHAREHOLDERS' EQUITY
|
Current
liabilities:
|
|
|
|
|
Bank borrowings and
current portion of long-term debt
|
$
3
|
|
$
150
|
|
Accounts
payable
|
5,292
|
|
5,930
|
|
Accrued payroll and
benefits
|
513
|
|
522
|
|
Deferred revenue and
customer working capital advances
|
2,567
|
|
3,143
|
|
Other current
liabilities
|
1,011
|
|
1,110
|
Total current
liabilities
|
9,386
|
|
10,855
|
|
|
|
|
|
Long-term debt, net of
current portion
|
3,431
|
|
3,691
|
Operating lease
liabilities, non-current
|
502
|
|
506
|
Other
liabilities
|
602
|
|
637
|
Total
liabilities
|
13,921
|
|
15,689
|
Total Flex Ltd.
shareholders' equity
|
5,965
|
|
5,351
|
Noncontrolling
interest
|
480
|
|
355
|
Total shareholders'
equity
|
6,445
|
|
5,706
|
Total liabilities,
noncontrolling interest, and shareholders' equity
|
$
20,366
|
|
$
21,395
|
|
|
|
|
|
See the accompanying
notes on Schedule V attached to this press release.
|
|
|
SCHEDULE
IV
|
|
FLEX
|
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(In
millions)
|
|
|
|
|
|
|
|
Nine-Month Periods
Ended
|
|
|
December 31,
2023
|
|
December 31,
2022
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
Net income
|
$
850
|
|
$
670
|
|
Depreciation,
amortization and other impairment charges
|
390
|
|
371
|
|
Changes in working
capital and other, net
|
(593)
|
|
(541)
|
|
Net cash provided by
operating activities
|
647
|
|
500
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
Purchases of property
and equipment
|
(449)
|
|
(455)
|
|
Proceeds from the
disposition of property and equipment
|
21
|
|
20
|
|
Other investing
activities, net
|
14
|
|
10
|
|
Net cash used in
investing activities
|
(414)
|
|
(425)
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
Proceeds from bank
borrowings and long-term debt
|
2
|
|
819
|
|
Repayments of bank
borrowings and long-term debt
|
(398)
|
|
(926)
|
|
Payments for
repurchases of ordinary shares
|
(781)
|
|
(293)
|
|
Proceeds from
issuances of Nextracker shares
|
552
|
|
—
|
|
Payment for purchase
of Nextracker LLC units from TPG
|
(57)
|
|
—
|
|
Other financing
activities, net
|
(86)
|
|
(53)
|
|
Net cash used in
financing activities
|
(768)
|
|
(453)
|
|
|
|
|
|
Effect of exchange
rates on cash and cash equivalents
|
5
|
|
(21)
|
|
Net decrease in cash
and cash equivalents
|
(530)
|
|
(399)
|
|
Cash and cash
equivalents, beginning of period
|
3,294
|
|
2,964
|
|
Cash and cash
equivalents, end of period
|
$
2,764
|
|
$
2,565
|
|
|
|
|
|
SCHEDULE V
FLEX AND SUBSIDIARIES
NOTES TO
SCHEDULES I, II, and III
(1) To supplement Flex's unaudited selected financial data
presented consistent with U.S. Generally Accepted Accounting
Principles ("GAAP"), the Company discloses certain non-GAAP
financial measures that exclude certain charges and gains,
including non-GAAP operating income, non-GAAP net income and
non-GAAP net income per diluted share. These supplemental measures
exclude certain legal and other charges, restructuring charges,
customer-related asset impairments (recoveries), stock-based
compensation expense, intangible amortization, other discrete
events as applicable and the related tax effects. These non-GAAP
measures are not in accordance with or an alternative for GAAP and
may be different from non-GAAP measures used by other companies. We
believe that these non-GAAP measures have limitations in that they
do not reflect all of the amounts associated with Flex's results of
operations as determined in accordance with GAAP and that these
measures should only be used to evaluate Flex's results of
operations in conjunction with the corresponding GAAP measures. The
presentation of this additional information is not meant to be
considered in isolation or as a substitute for the most directly
comparable GAAP measures. We compensate for the limitations of
non-GAAP financial measures by relying upon GAAP results to gain a
complete picture of the Company's performance.
In calculating non-GAAP financial measures, we exclude certain
items to facilitate a review of the comparability of the Company's
operating performance on a period-to-period basis because such
items are not, in our view, related to the Company's ongoing
operational performance. We use non-GAAP measures to evaluate the
operating performance of our business, for comparison with
forecasts and strategic plans, for calculating return on
investment, and for benchmarking performance externally against
competitors. In addition, management's incentive compensation is
determined using certain non-GAAP measures. Also, when evaluating
potential acquisitions, we exclude certain items described below
from consideration of the target's performance and valuation. Since
we find these measures to be useful, we believe that investors
benefit from seeing results "through the eyes" of management in
addition to seeing GAAP results. We believe that these non-GAAP
measures, when read in conjunction with the Company's GAAP
financials, provide useful information to investors by
offering:
- the ability to make more meaningful period-to-period
comparisons of the Company's ongoing operating results;
- the ability to better identify trends in the Company's
underlying business and perform related trend analysis;
- a better understanding of how management plans and measures the
Company's underlying business; and
- an easier way to compare the Company's operating results
against analyst financial models and operating results of
competitors that supplement their GAAP results with non-GAAP
financial measures.
The following are explanations of each of the adjustments that
we incorporate into non-GAAP measures, as well as the reasons for
excluding each of these individual items in the reconciliations of
these non-GAAP financial measures:
Stock-based compensation expense consists
of non-cash charges for the estimated fair value of unvested
restricted share unit and stock option awards granted to employees
and assumed in business acquisitions. The Company believes that the
exclusion of these charges provides for more accurate comparisons
of its operating results to peer companies due to the varying
available valuation methodologies, subjective assumptions and the
variety of award types. In addition, the Company believes it is
useful to investors to understand the specific impact stock-based
compensation expense has on its operating results.
Intangible amortization consists
primarily of non-cash charges that can be impacted by, among other
things, the timing and magnitude of acquisitions. The Company
considers its operating results without these charges when
evaluating its ongoing performance and forecasting its earnings
trends, and therefore excludes such charges when presenting
non-GAAP financial measures. The Company believes that the
assessment of its operations excluding these costs is relevant to
its assessment of internal operations and comparisons to the
performance of its competitors.
Restructuring charges include
severance charges at existing sites and corporate SG&A
functions as well as asset impairment, and other charges related to
the closures and consolidations of certain operating sites and
targeted activities to restructure the business. These costs may
vary in size based on the Company's initiatives, are not directly
related to ongoing or core business results, and do not reflect
expected future operating expenses. These costs are excluded by the
Company's management in assessing current operating performance and
forecasting its earnings trends and are therefore excluded by the
Company from its non-GAAP measures.
During the three and nine-month periods ended
December 31, 2023, the Company
recognized approximately $73 million
and $97 million of restructuring charges respectively, most of
which related to employee severance. During the three and
nine-month periods ended December 31,
2022, the Company recognized $5
million of restructuring charges, most of which related to
employee severance.
Legal and other consist primarily of
costs not directly related to core business results and may include
matters relating to commercial disputes, government regulatory and
compliance, intellectual property, antitrust, tax, employment or
shareholder issues, product liability claims and other issues on a
global basis as well as acquisition related costs and customer
related asset impairments (recoveries). During the first three
quarters of fiscal year 2024 and 2023, the Company accrued for
certain loss contingencies where losses were considered probable
and estimable. These costs are excluded by the Company's management
in assessing current operating performance and forecasting its
earnings trends and are therefore excluded by the Company from its
non-GAAP measures.
Interest and other, net consist of
various other types of items that are not directly related to
ongoing or core business results, such as the gain or losses
related to certain divestitures, currency translation reserve
write-offs upon liquidation of certain legal entities, debt
extinguishment costs and impairment charges or gains associated
with certain non-core investments. The Company excludes these items
because they are not related to the Company's ongoing operating
performance or do not affect core operations. Excluding these
amounts provides investors with a basis to compare Company
performance against the performance of other companies without this
variability.
Paid-in-kind and pre-IPO dividends paid to
redeemable noncontrolling interest relates to dividends
paid to TPG Rise Flash, L.P. ("TPG Rise"). Prior to the Nextracker
IPO, pro-rated 5% annual preferred dividends were paid-in-kind to
TPG Rise totaling $19 million for the
first three quarters of fiscal year 2023. No such charges were
recorded in fiscal year 2024.
Noncontrolling interest share of subsidiary's
non-GAAP adjustments represents the share of non-GAAP
adjustments attributable to noncontrolling interest. During the
three and nine month periods ended December
31, 2023, $(8) million and
$133 million were recorded as
noncontrolling interest; of which amounts are primarily related to
after-tax Nextracker stock based compensation expense and,
$143 million net in the nine month
period related to tax benefits as a result of the Nextracker
follow-on offering.
Adjustments for taxes relates to the
tax effects of the various adjustments that we incorporate into
non-GAAP measures in order to provide a more meaningful measure on
non-GAAP net income and certain adjustments related to
non-recurring settlements of tax contingencies or other
non-recurring tax charges, when applicable. During the three and
nine month periods ended December 31,
2023, the Company recognized a ($12)
million and ($164) million net
tax benefit respectively, of which ($10)
million and ($29) million,
respectively, relate to the tax effects of various adjustments that
are incorporated into Non-GAAP measures on restructuring and other,
($128) million in the nine month
period relates to tax adjustments on Nextracker follow-on offering,
and ($2)million and ($7) million in the three and nine month period
relates to other discrete tax items, respectively.
(2) Noncontrolling interests have been included on
the consolidated balance sheets as components of redeemable
noncontrolling interest and total shareholders' equity. As a result
of the Nextracker February 13, 2023
IPO, the redeemable noncontrolling interest are not applicable for
the period ended December 31, 2023.
The amount of consolidated net income attributable to Flex Ltd. and
to the noncontrolling interest and redeemable noncontrolling
interest are presented in the consolidated statements of
operations. In the fourth quarter of fiscal year 2023, Nextracker
Inc. completed the Nextracker IPO through a series of
reorganization transactions that resulted in Nextracker Inc. having
an umbrella partnership C corporation ("Up-C") structure and the
conversion of redeemable noncontrolling interest to noncontrolling
interest.
Upon the IPO, Flex recorded a noncontrolling interest within
shareholders' equity, reflecting the portion of Nextracker that was
not owned by Flex. On a subsequent measurement basis, the carrying
value of this noncontrolling interest is adjusted for earnings
attributable to the noncontrolling interest.
As of December 31, 2023 and
March 31, 2023, the carrying value of
noncontrolling interest were $480
million and $355 million,
respectively. Net Income attributable to noncontrolling interest
and redeemable noncontrolling interest was $239 million and $19
million for the first three quarters of fiscal year 2024 and
2023, respectively.
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SOURCE Flex