dec q3 fy16 earnings presentation final pdf
TRANSCRIPT
Earnings Announcement: January 28, 2016
(Quarter Ending December 31, 2015)
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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.
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($ 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
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• 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 $0.01 in
EPS
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Three Months
Ended
Nine Months
Ended
($ 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)
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••
••
$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
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• 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 $332M YTD to repurchase shares, or 63% of FCF returned
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37%
18%
15%
30%
HRSIEI
CTG INS
Dec
2015
33%
($ 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
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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
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