Dec q3 fy16 earnings presentation final pdf

Download Dec q3 fy16 earnings presentation final pdf

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  • Earnings Announcement: January 28, 2016

    (Quarter Ending December 31, 2015)

  • 2

    This presentation contains forward-looking statements, which are based on current expectations and

    assumptions that are subject to risks and uncertainties and actual results could materially differ. Such information

    is subject to change and we undertake no obligation to update these forward-looking statements. For a

    discussion of the risks and uncertainties, see our most recent filings with the Securities and Exchange

    Commission, including our current, annual and quarterly reports.

    If this presentation references non-GAAP financial measures, these measures are located on the Investor

    Relations section of our website, www.flextronics.com along with the required reconciliation to the most

    comparable GAAP financial measures.

    http://www.flextronics.com/

  • 3

    ($ in millions, except per share amounts) December 31, 2014 September 25, 2015 December 31, 2015

    Net sales $7,025 $6,317 $6,763

    Adjusted operating income 207 196 236

    Adjusted net income 175 153 196

    Adjusted EPS $0.30 $0.27 $0.35

    GAAP operating income 193 180 212

    GAAP net income 153 123 149

    GAAP EPS $0.26 $0.22 $0.27

    Net sales of $6.8B at the high-end of guidance range of $6.2 - $6.8B

    Adjusted operating income of $236M above guidance range of $195 - $235M

    Adjusted EPS of $0.35 above guidance range of $0.28 - $0.34

    Please refer to the Investor Relations section of our website which contains the reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures

  • 4 Please refer to the Investor Relations section of our website which contains the reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures

    24.1% 23.7% 22.9% 22.7% 22.4%

    Dec-14 Mar-15 Jun-15 Sep-15 Dec-15

    (ROIC %)

    $0.30 $0.27

    $0.23

    $0.27

    $0.35

    Dec-14 Mar-15 Jun-15 Sep-15 Dec-15

    (EPS)

    7,025

    5,952 5,566

    6,317 6,763

    5.8%6.4% 6.4% 6.3% 6.7%

    Dec-14 Mar-15 Jun-15 Sep-15 Dec-15

    Adj. Gross Margin($ in millions)($ in millions)

    207 178

    159

    196

    236

    2.9%3.0% 2.9%

    3.1%3.5%

    Dec-14 Mar-15 Jun-15 Sep-15 Dec-15

    Adj. Operating Margin

  • 5 Please refer to the Investor Relations section of our website which contains the reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures

    $76 3.1%

    $49 2.4%

    $49 4.1%

    $83 8.1%

    Corporate

    Services & Other1($21)

    Total $236 3.5%

    INS

    CTG

    HRS

    ($ in millions)

    IEI

    1. Corporate and other preliminary includes corporate services costs that are not included in the assessment of the performance of each of the identified business group.

    3%

    5% 7%

    3% 4%

    4% 6%

    2%

    Improved utilization and successful new ramps

    Driving a richer sketch-to-scale engagement model

    Improved yields, productivity, and NEXTracker ramp

    Strong execution across both Auto and Medical

  • 6

    Q3 FY16 was $22M, better than guidance of ~$25M

    Outlook: quarterly estimate of ~$25M

    Q3 FY16 was 8.4%

    Outlook: 8-10% tax rate

    Aggregate impact on EPS $0.08

    Intangible amortization $19M or $0.03 in EPS

    Stock based compensation $24M or $0.04 in EPS

    Impacts primarily from divestiture and investment impairment

    offset with one time tax benefit totaled a loss of $4M or $0.01 in

    EPS

  • 7

    Three Months

    Ended

    Nine Months

    Ended

    ($ in millions) Dec-15 Dec-15

    GAAP net income $149 $383

    Depreciation and amortization 129 359

    Change in net working capital 93 197

    Other operating cash flows, net (93) 1

    Net cash provided by operating activities 278 940

    Purchases of property & equipment, net (120) (414)

    Free Cash Flow 158 526

    Payments for share repurchases (90) (332)

    Proceeds from borrowings, net 141 715

    Payments for acquired businesses (264) (904)

    Other investing and financing, net 21 1

    Net change in cash and cash equivalents (34) 6

    1,834 1,866 1,730 1,858 1,808

    6.5%

    7.8% 7.8%7.4%

    6.7%

    Dec-14 Mar-15 Jun-15 Sep-15 Dec-15

    % Annualized Revenue($ in millions)

    400

    510

    322

    475 416

    332

    757 684 639

    591 563 551

    FY11 FY12 FY13 FY14 FY15 FY16 YTD

    Shares Outstanding

    ($ in millions)

  • 8

    $1,634

    $1,500

    $585 $555 $500 $500 $600

    Liquidity 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

    ($M) (Calendar Year)

    Cash

    Revolver

    Total

    Liquidity

    $3,134

    Term Loans LIBOR + 125 & 137.5bps 4.625% Notes

    5% Notes 4.75% Notes$54 EURIBOR +100bps

  • 9

    All 4 business groups met or exceeded revenue guidance

    HRS and IEI both reached highest level of quarterly revenue

    All 4 business groups were within or above target margin ranges

    HRS and IEI rose to 33% of sales, from 29% a year ago, up 11% Y/Y

    FCF of $526M YTD, on track for 5 year FCF target of $3-$4B

    Invested $332M YTD to repurchase shares, or 63% of FCF returned

  • 10

    37%

    18%

    15%

    30%

    HRSIEI

    CTG INS

    Dec

    2015

    33%

    ($ in millions) Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16E

    Business Group $ $ $ $ $ Q/Q % Y/Y % Outlook (Q/Q)

    INS 2,358 2,052 1,966 2,205 2,469 12% 5% Down Mid to High Single Digits

    CTG 2,647 1,861 1,565 2,011 2,058 2% -22% Down ~30% - 35%

    IEI 1,106 1,132 1,130 1,146 1,214 6% 10% Down Mid Single Digits

    HRS 914 907 905 955 1,022 7% 12% Stable

    Total Revenue $7,025 $5,952 $5,566 $6,317 $6,763 7% -4%

    Integrated Network

    Solutions(Telecom, Networking, Server & Storage,

    Converged Infrastructure)

    Consumer Technology

    Group(Wearables, Digital Health, Gaming,

    Connected Home, Mobile, PC/Printers)

    Industrial & Emerging

    Industries(Semiconductor & Capital Equipment, Office

    Solutions & Industrial Automation, Appliance

    & Lifestyle, Energy, Lighting)

    High Reliability

    Solutions(Automotive, Medical, Aerospace &

    Defense)

    33%

    16%13%

    38% Dec

    2014

    29%

    HRS IEI

    CTG INS

    Certain year amounts have been recast to conform to current year presentation

  • 11

    Adjusted SG&A Expense ~$215 million

    Interest & Other Expense ~$25 million

    Adjusted Income Tax Rate 8.0% to 10.0%

    GAAP EPS $0.18 - $0.24

    WASO ~558 million shares

    ($ in millions, except per share amounts)

    Adjusted operating income excludes approximately $21 million for stock based compensation, of which approximately $18 million is excluded from adjusted SG&A.

    GAAP EPS reflects approximately $0.07 for intangible amortization and stock-based compensation expense.

    $5,500 - $6,100

    $175 - $215

    $0.25 - $0.31

  • 12