AUSTIN,
Texas, May 1, 2024 /PRNewswire/ -- Flex
(NASDAQ: FLEX) today announced results for its fourth quarter and
fiscal year ended March 31, 2024.
Fourth Quarter Fiscal Year 2024 Highlights:
- Net Sales: $6.2 billion
- GAAP Operating Income: $159
million
- Adjusted Operating Income: $333
million
- GAAP Net Income from continuing operations: $395 million
- Adjusted Net Income from continuing operations: $244 million
- GAAP Earnings Per Share from continuing operations:
$0.93
- Adjusted Earnings Per Share from continuing operations:
$0.57
Fiscal Year 2024 Results of Continuing Operations (excluding
contribution from Nextracker):
- Net Sales: $26.4 billion
- GAAP Operating Income: $853
million
- Adjusted Operating Income: $1,267
million
- GAAP Net Income from continuing operations: $872 million
- Adjusted Net Income from continuing operations: $947 million
- GAAP Earnings Per Share from continuing operations:
$1.98
- Adjusted Earnings Per Share from continuing operations:
$2.15
As a result of the spin-off of Nextracker in the fourth quarter
of fiscal year 2024, Nextracker's historical results of operations
and balance sheets for periods prior to the spin-off are presented
as discontinued operations.
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.
"We delivered another quarter and fiscal year of solid
performance, including strong margin expansion and EPS growth,"
said Revathi Advaithi, CEO of Flex. "Our results show that we can
effectively navigate through the cycle and increase value to our
stakeholders."
First Quarter Fiscal 2025 Guidance
- Revenue: $5.6 billion to
$6.2 billion
- GAAP Operating Income: $130
million to $170 million
- Adjusted Operating Income: $240
million to $280 million
- GAAP EPS: $0.11 to $0.19
- Adjusted EPS: $0.37 to
$0.45 which excludes $0.16 for restructuring charges, $0.07 for stock-based compensation expense, and
$0.03 for net intangible
amortization
Fiscal Year 2025 Guidance
- Revenue: $25.4 billion to
$26.4 billion
- GAAP EPS: $1.61 to $1.81
- Adjusted EPS: $2.30 to
$2.50 which excludes $0.31 for stock-based compensation expense,
$0.25 for restructuring charges, and
$0.13 for net intangible
amortization
Webcast and Conference Call
The Flex management team will host a conference call today at
7:30 AM (CT) / 8:30 AM (ET) to review fourth quarter and fiscal
2024 results. Additionally, as previously announced, Flex's CEO,
Revathi Advaithi, will be joined by
other members of the leadership team to discuss how the company is
delivering on its commitments, outline strategic initiatives to
drive profitable growth, and provide an update on the long-term
financial framework. 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; supply chain disruptions,
manufacturing interruptions or delays, or the failure to accurately
forecast customer demand; 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
most recent Annual Report on Form 10-K and in our subsequent
filings with the U.S. Securities and Exchange Commission. Flex
assumes no obligation to update any forward-looking statements,
which speak only as of the date they are made.
|
SCHEDULE
I
|
|
|
FLEX
|
|
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
(In millions, except
per share amounts)
|
|
|
|
|
|
|
|
Three-Month Periods
Ended
|
|
|
March 31,
2024
|
|
March 31,
2023
|
|
GAAP:
|
|
|
|
|
Net sales
|
$
6,169
|
|
$
6,984
|
|
Cost of
sales
|
5,658
|
|
6,501
|
|
Restructuring
charges
|
74
|
|
18
|
|
Gross
profit
|
437
|
|
465
|
|
Selling, general and
administrative expenses
|
261
|
|
218
|
|
Restructuring
charges
|
1
|
|
4
|
|
Intangible
amortization
|
16
|
|
20
|
|
Operating
income
|
159
|
|
223
|
|
Interest
expense
|
52
|
|
63
|
|
Interest
income
|
12
|
|
13
|
|
Other charges (income),
net
|
8
|
|
7
|
|
Equity in earnings
(losses) of unconsolidated affiliates
|
6
|
|
(1)
|
|
Income from continuing
operations before income taxes
|
117
|
|
165
|
|
Provision for (benefit
from) income taxes
|
(278)
|
|
26
|
|
Net income from
continuing operations
|
395
|
|
139
|
|
Net income
from discontinued operations, net of tax
|
—
|
|
224
|
|
Net income
|
395
|
|
363
|
|
Net income
attributable to noncontrolling interest and redeemable
noncontrolling interest
|
—
|
|
221
|
|
Net income
attributable to Flex Ltd.
|
$
395
|
|
$
142
|
|
|
|
|
|
|
GAAP
EPS:
|
|
Diluted earnings per
share from continuing operations
|
$
0.93
|
|
$
0.30
|
|
Diluted earnings per
share from discontinued operations
|
—
|
|
0.01
|
|
Diluted earnings per
share attributable to the shareholders of Flex Ltd.
|
$
0.93
|
|
$
0.31
|
|
|
|
|
|
|
Diluted shares used in
computing per share amounts
|
425
|
|
459
|
|
FLEX
|
|
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
(In millions, except
per share amounts)
|
|
|
|
|
|
|
|
|
|
Twelve-Month Periods
Ended
|
|
|
March 31,
2024
|
|
March 31,
2023
|
|
March 31,
2022
|
|
GAAP:
|
|
|
|
|
|
|
Net sales
|
$
26,415
|
|
$
28,502
|
|
$
24,633
|
|
Cost of
sales
|
24,395
|
|
26,503
|
|
22,838
|
|
Restructuring
charges
|
155
|
|
23
|
|
15
|
|
Gross
profit
|
1,865
|
|
1,976
|
|
1,780
|
|
Selling, general and
administrative expenses
|
922
|
|
874
|
|
830
|
|
Restructuring
charges
|
20
|
|
4
|
|
—
|
|
Intangible
amortization
|
70
|
|
81
|
|
60
|
|
Operating
income
|
853
|
|
1,017
|
|
890
|
|
Interest
expense
|
207
|
|
230
|
|
166
|
|
Interest
income
|
56
|
|
30
|
|
14
|
|
Other charges (income),
net
|
44
|
|
6
|
|
(165)
|
|
Equity in earnings
(losses) of unconsolidated affiliates
|
8
|
|
(4)
|
|
61
|
|
Income from continuing
operations before income taxes
|
666
|
|
807
|
|
964
|
|
Provision for (benefit
from) income taxes
|
(206)
|
|
124
|
|
92
|
|
Net income from
continuing operations
|
872
|
|
683
|
|
872
|
|
Net income
from discontinued operations, net of tax
|
373
|
|
350
|
|
68
|
|
Net income
|
1,245
|
|
1,033
|
|
940
|
|
Net income
attributable to noncontrolling interest and redeemable
noncontrolling interest
|
239
|
|
240
|
|
4
|
|
Net income
attributable to Flex Ltd.
|
$
1,006
|
|
$
793
|
|
$
936
|
|
|
|
|
|
|
|
|
GAAP
EPS:
|
|
|
|
Diluted earnings per
share from continuing operations
|
$
1.98
|
|
$
1.48
|
|
$
1.81
|
|
Diluted earnings per
share from discontinued operations
|
0.30
|
|
0.24
|
|
0.13
|
|
Diluted earnings per
share attributable to the shareholders of Flex Ltd.
|
$
2.28
|
|
$
1.72
|
|
$
1.94
|
|
|
|
|
|
|
|
|
Diluted shares used in
computing per share amounts
|
441
|
|
462
|
|
483
|
|
SCHEDULE
II
|
|
|
FLEX
|
|
RECONCILIATION OF
GAAP TO NON-GAAP FINANCIAL MEASURES (1)
|
|
(In millions, except
per share amounts)
|
|
|
Three-Month Periods
Ended
|
|
|
March 31,
2024
|
|
March 31,
2023
|
|
|
|
|
|
|
GAAP operating
income
|
$
159
|
|
$
223
|
|
Intangible
amortization
|
16
|
|
20
|
|
Stock-based
compensation expense
|
27
|
|
25
|
|
Restructuring
charges
|
75
|
|
22
|
|
Customer related asset
impairment
|
14
|
|
—
|
|
Legal and
other
|
42
|
|
3
|
|
Non-GAAP operating
income
|
333
|
|
293
|
|
|
|
|
|
|
GAAP provision for
(benefit from) income taxes
|
(278)
|
|
26
|
|
Intangible amortization
benefit
|
2
|
|
3
|
|
Tax benefit on release
of U.S. valuation allowance
|
461
|
|
—
|
|
Tax expense on foreign
subsidiaries indefinite reinvestment assertion change
|
(135)
|
|
—
|
|
Other tax related
adjustments
|
(9)
|
|
4
|
|
Non-GAAP provision
for income taxes
|
41
|
|
33
|
|
|
|
|
|
|
GAAP net income from
continuing operations
|
395
|
|
139
|
|
Intangible
amortization
|
16
|
|
20
|
|
Stock-based
compensation expense
|
27
|
|
25
|
|
Restructuring
charges
|
75
|
|
22
|
|
Customer related asset
impairment
|
14
|
|
—
|
|
Legal and
other
|
42
|
|
3
|
|
Equity in earnings
(losses) of unconsolidated affiliates
|
(6)
|
|
(1)
|
|
Adjustments for
taxes
|
(319)
|
|
(7)
|
|
Non-GAAP net income
from continuing operations
|
244
|
|
201
|
|
|
|
|
|
|
Diluted earnings per
share from continuing operations:
|
|
GAAP
|
$
0.93
|
|
$
0.30
|
|
Non-GAAP
|
$
0.57
|
|
$
0.44
|
|
|
See the accompanying
notes on Schedule V attached to this press release.
|
|
FLEX
|
|
RECONCILIATION OF
GAAP TO NON-GAAP FINANCIAL MEASURES (1)
|
|
(In millions, except
per share amounts)
|
|
|
Twelve-Month Periods
Ended
|
|
|
March 31,
2024
|
|
March 31,
2023
|
|
March 31,
2022
|
|
|
|
|
|
|
|
|
GAAP operating
income
|
853
|
|
1,017
|
|
890
|
|
Intangible
amortization
|
70
|
|
81
|
|
60
|
|
Stock-based
compensation expense
|
113
|
|
101
|
|
88
|
|
Restructuring
charges
|
172
|
|
27
|
|
15
|
|
Customer related asset
impairment
|
14
|
|
—
|
|
—
|
|
Legal and
other
|
45
|
|
6
|
|
17
|
|
Non-GAAP operating
income
|
$
1,267
|
|
$
1,232
|
|
$
1,070
|
|
|
|
|
|
|
|
|
GAAP provision for
(benefit from) income taxes
|
(206)
|
|
124
|
|
92
|
|
Intangible amortization
benefit
|
11
|
|
12
|
|
10
|
|
Tax benefit on release
of U.S. valuation allowance
|
461
|
|
—
|
|
—
|
|
Tax expense on foreign
subsidiaries indefinite reinvestment assertion change
|
(135)
|
|
—
|
|
—
|
|
Other tax related
adjustments
|
7
|
|
(1)
|
|
28
|
|
Non-GAAP provision
for income taxes
|
$
138
|
|
$
135
|
|
$
130
|
|
|
|
|
|
|
|
|
GAAP net income from
continuing operations
|
872
|
|
683
|
|
872
|
|
Intangible
amortization
|
70
|
|
81
|
|
60
|
|
Stock-based
compensation expense
|
113
|
|
101
|
|
88
|
|
Restructuring
charges
|
172
|
|
27
|
|
15
|
|
Customer related asset
impairment
|
14
|
|
—
|
|
—
|
|
Legal and
other
|
45
|
|
6
|
|
17
|
|
Interest and other,
net
|
11
|
|
4
|
|
(135)
|
|
Equity in earnings
(losses) of unconsolidated affiliates
|
(6)
|
|
(1)
|
|
(32)
|
|
Adjustments for
taxes
|
(344)
|
|
(11)
|
|
(38)
|
|
Non-GAAP net income
from continuing operations
|
$
947
|
|
$
890
|
|
$
847
|
|
|
|
|
|
|
|
|
Diluted earnings per
share from continuing operations:
|
|
GAAP
|
$
1.98
|
|
$
1.48
|
|
$
1.81
|
|
Non-GAAP
|
$
2.15
|
|
$
1.93
|
|
$
1.75
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See the accompanying
notes on Schedule V attached to this press release.
|
|
|
|
SCHEDULE
III
|
|
|
FLEX
|
|
UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
(In
millions)
|
|
|
As of March 31,
2024
|
|
As of March 31,
2023
|
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
2,474
|
|
$
3,164
|
|
Accounts receivable,
net of allowance for doubtful accounts
|
3,033
|
|
3,480
|
|
Contract
assets
|
249
|
|
243
|
|
Inventories
|
6,205
|
|
7,388
|
|
Other current
assets
|
1,031
|
|
875
|
|
Current assets of
discontinued operations
|
—
|
|
883
|
|
Total current
assets
|
12,992
|
|
16,033
|
|
|
|
|
|
Property and equipment,
net
|
2,269
|
|
2,342
|
|
Operating lease
right-of-use assets, net
|
601
|
|
605
|
|
Goodwill
|
1,135
|
|
1,139
|
|
Other intangible
assets, net
|
245
|
|
315
|
|
Other non-current
assets
|
1,015
|
|
490
|
|
Non-current assets of
discontinued operations
|
—
|
|
483
|
|
Total assets
|
$
18,257
|
|
$
21,407
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
Current
liabilities:
|
|
|
|
|
Bank borrowings and
current portion of long-term debt
|
$
—
|
|
$
150
|
|
Accounts
payable
|
4,468
|
|
5,724
|
|
Accrued payroll and
benefits
|
488
|
|
506
|
|
Deferred revenue and
customer working capital advances
|
2,615
|
|
2,955
|
|
Other current
liabilities
|
968
|
|
1,019
|
|
Current liabilities of
discontinued operations
|
—
|
|
513
|
|
Total current
liabilities
|
8,539
|
|
10,867
|
|
|
|
|
|
|
Long-term debt, net of
current portion
|
3,261
|
|
3,544
|
|
Operating lease
liabilities, non-current
|
490
|
|
504
|
|
Other non-current
liabilities
|
642
|
|
554
|
|
Non-current liabilities
of discontinued operations
|
—
|
|
232
|
|
Total
liabilities
|
12,932
|
|
15,701
|
|
Total Flex Ltd.
shareholders' equity
|
5,325
|
|
5,351
|
|
Noncontrolling interest
of discontinued operations
|
—
|
|
355
|
|
Total shareholders'
equity
|
5,325
|
|
5,706
|
|
Total liabilities and
shareholders' equity
|
$
18,257
|
|
$
21,407
|
|
|
|
SCHEDULE
IV
|
|
|
FLEX
|
|
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
(In
millions)
|
|
|
|
|
|
|
|
|
|
Twelve-Month Periods
Ended
|
|
|
March 31,
2024
|
|
March 31,
2023
|
|
March 31,
2022
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
|
|
Net income
|
$
1,245
|
|
$
1,033
|
|
$
936
|
|
Depreciation,
amortization and other impairment charges
|
537
|
|
501
|
|
484
|
|
Changes in working
capital and other, net
|
(456)
|
|
(584)
|
|
(396)
|
|
Net cash provided by
operating activities
|
1,326
|
|
950
|
|
1,024
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
Purchases of property
and equipment
|
(530)
|
|
(635)
|
|
(443)
|
|
Proceeds from the
disposition of property and
equipment
|
25
|
|
20
|
|
11
|
|
Acquisitions of
businesses, net of cash acquired
|
—
|
|
2
|
|
(539)
|
|
Other investing
activities, net
|
13
|
|
9
|
|
20
|
|
Net cash used in
investing activities
|
(492)
|
|
(604)
|
|
(951)
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
Proceeds from bank
borrowings and long-term debt
|
2
|
|
718
|
|
759
|
|
Repayments of bank
borrowings and long-term debt
|
(409)
|
|
(1,024)
|
|
(284)
|
|
Payments for
repurchases of ordinary shares
|
(1,298)
|
|
(337)
|
|
(686)
|
|
Proceeds from issuances
of Nextracker shares
|
552
|
|
694
|
|
—
|
|
Payment for pre-IPO
dividend to redeemable noncontrolling interest
|
—
|
|
(22)
|
|
—
|
|
Payment for purchase of
Nextracker LLC units from TPG
|
(57)
|
|
—
|
|
—
|
|
Capital reduction from
Nextracker spin off
|
(368)
|
|
—
|
|
—
|
|
Proceeds from sale of
subsidiary's redeemable preferred units
|
—
|
|
—
|
|
488
|
|
Other financing
activities, net
|
(78)
|
|
(27)
|
|
3
|
|
Net cash provided by
(used in) financing activities
|
(1,656)
|
|
2
|
|
280
|
|
|
|
|
|
|
|
|
Effect of exchange
rates on cash and cash equivalents
|
2
|
|
(18)
|
|
(26)
|
|
Net increase in cash
and cash equivalents
|
(820)
|
|
330
|
|
327
|
|
Cash and cash
equivalents, beginning of year
|
3,294
|
|
2,964
|
|
2,637
|
|
Cash and cash
equivalents, end of year
|
$
2,474
|
|
$
3,294
|
|
$
2,964
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SCHEDULE
V
|
|
|
FLEX AND
SUBSIDIARIES
|
|
NOTES TO SCHEDULE
II
|
|
|
(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 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
twelve-month periods ended March 31, 2024, the Company recognized
approximately $75 million and $172 million of restructuring
charges, respectively, most of which related to employee severance.
During the three and twelve-month periods ended March 31, 2023, the
Company recognized approximately $22 million and $27 million of
restructuring charges, respectively, most of which related to
employee severance. During the twelve-month period ended March 31,
2022, the Company recognized approximately $15 million of
restructuring charges, most of which related to employee
severance.
|
|
|
|
|
|
Customer related
asset impairments may consist of non-cash impairments of
property and equipment to estimated fair value for customers from
whom we have disengaged or are in the process of disengaging as
well as additional provisions for doubtful accounts receivable for
customers that are experiencing financial difficulties and
inventory that is considered non-recoverable that is written down
to net realizable value. In subsequent periods, the Company may
recover a portion of the costs previously incurred related to
assets impaired or reduced to net realizable value. During the
three and twelve-month periods ended March 31, 2024, the Company
recognized approximately $14 million of customer related asset
impairments. 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.
|
|
|
|
|
|
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. During the fourth quarter and
for the fiscal years ended March 31, 2024, 2023, and 2022, the
Company accrued for certain loss contingencies where losses were
considered probable and estimable. During the fourth quarter of
fiscal year 2024, the Company accrued $50 million related to a
commercial dispute related to a construction matter with related
production objectives. In the fiscal year ended March 31, 2022, the
Company recognized a net $17 million loss accrual related to
settled litigation claims partially offset by the successful
settlement of certain supplier claims. 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, and debt extinguishment costs. 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.
|
|
|
|
|
|
In fiscal year 2022,
the Company received approval from the relevant tax authorities in
Brazil of the Credit Habilitation request related to certain
federal operational tax credits and the Company recorded a total
gain of 809.6 million Brazilian reals (approximately USD $149.3
million based on the exchange rate as of October 1, 2021) under
other charges (income), net in the condensed statements of
operations. The total gain recorded included credits from February
2003 to September 2021, net of additional taxes, as the Credit
Habilitation received covering the period from February 2003 to
December 2019 resolved any uncertainty regarding the Company's
ability to claim such credits. This gain is non-cash and has been
used to offset tax obligations.
|
|
|
|
|
|
Equity in earnings
(losses) of unconsolidated affiliates consists of various
other types of items that are not directly related to ongoing or
core business results, such as gains (losses) 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. In fiscal years 2022 and 2024, the Company recognized
approximately $32 million and $6 million, respectively, equity in
earnings from the value increases in certain non-core investment
funds. No such significant events occurred in fiscal year
2023.
|
|
|
|
|
|
Adjustment 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 twelve-month periods ended March 31, 2024, the
Company recorded $319 million and $344 million net benefits,
respectively, of which the majority relates to a $461 million
benefit from a release of a valuation allowance previously applied
to the Company's U.S. deferred tax assets, partially offset by an
expense of $135 million reflecting a change in the Company's
assertion to indefinitely reinvest its earnings in China. During
fiscal year 2022, the Company recorded a $19 million benefit for
the release of valuation allowances on certain of its deferred tax
assets due to its acquisition of the Anord Mardix business. No such
significant events occurred in fiscal year 2023.
|
|
|
|
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SOURCE Flex