flextronics q2fy15 earnings release slides

Results for Q2 FY2015 (Quarter Ended September 26, 2014)

Earnings Announcement: October 29, 2014

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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.

Risks and Non-GAAP Disclosures

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Q2 FY2015 Income Statement Highlights

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

Prior Yr Prior Qtr Current Qtr

September 27, June 27, September 26,

($ in millions, except per share amounts) 2013 2014 2014

Net sales $6,410 $6,643 $6,529

Adjusted operating income 159 183 183

Adjusted net income 134 148 157

Adjusted EPS $0.22 $0.25 $0.26

GAAP operating income 150 172 172

Other charges and credits - 44 -

GAAP net income 118 174 139

GAAP EPS $0.19 $0.29 $0.23

Q2 FY2015 Results vs. Guidance:

Net sales of $6.5B above mid-point of $6.2 - $6.6B

Adjusted operating income of $183M above mid-point of $165 - $190M

Adjusted EPS of $0.26 at high-end of $0.22 - $0.26

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6,410 7,183

6,724 6,643 6,529

5.8% 5.6% 5.8% 5.8% 5.8%

Sep-13 Dec-13 Mar-14 Jun-14 Sep-14

Adj. Gross Margin

Trended Quarterly Financial Highlights

Return on Invested Capital(ROIC %)

Adjusted Operating Income ($ in millions)

17.5%19.5%

22.1% 22.8% 23.3%



159

187 182 183 183

2.5%2.6%

2.7% 2.8% 2.8%


% Revenue

Adjusted SG&A($ in millions)

212213

205

199196


Revenue & Adjusted Gross Margin($ in millions)

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Other Income Statement Highlights

• Q2 FY15 $10 million, better than our guidance of ~$20

million

• Outlook: quarterly estimate of ~$20 million

• Q2 FY15 9.6%

• Outlook: high-end of our 8-10% range

Adjusted interest &

other expense, net

Adjusted income tax

rate

• Intangible amortization $8 million

• Stock based compensation $11 million

• Aggregate impact on EPS $0.03

Reconciliation between

GAAP and Adj EPS

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Three Months

Ended

Six Months

Ended

($ in millions) Sep-14 Sep-14

GAAP net income $139 $313

Depreciation and amortization 138 258

Change in net working capital 237 108

Other operating cash flows, net (127) (373)

Net cash provided by operating activities 387 306

Purchases of property & equipment, net (65) (138)

Free Cash Flow 322 168

Payments for share repurchases (101) (207)

Payments for borrowings and other (54) (40)

Net change in cash and cash equivalents $167 ($79)

Cash Flows, Net Working Capital & Share Repurchases


Consistently Returning Over 50% of Annual Free Cash Flow to Shareholders

1,718

2,083 2,020 2,126 1,886

6.7%7.3% 7.5% 8.0%

7.2%


% Annualized Revenue

Net Working Capital($ in millions)

400

510

322

475

207

757 684 639

591 580

FY11 FY12 FY13 FY14 1HFY15

Shares Outstanding

Share Repurchases($ in millions)

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$1,514

$1,500

$600 $494 $500 $500

Liquidity 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Solid Capital Structure


Significant Debt Maturities (Calendar Year)($ millions)

Term Loans LIBOR + 150 to 162.5bps

($ in millions)Jun-14 Sep-14

Cash $1,348 $1,514

Total Debt 2,129 2,109

Debt / EBITDA (LTM) 1.9x 1.7x

Cash

Revolver

Total

Liquidity

$3,014

4.625% Notes 5% Notes

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Q2 FY2015 Highlights and Key Trends

Enabling Innovation & Differentiation

• Sales near the high-end of the guidance range with 3 of 4

business groups performing better than expectations

• HRS + IEI exceeded 30% of sales

• Won the 2014 Supply Chain Innovation Award

• 6 consecutive quarters of operating margin improvement

• $183M operating profit exceeded the midpoint of the

guidance range

Steady Execution

Continued Profit

Improvements

• Repurchased ~9.3M shares for $101M

• Bought back ~1.5% of shares outstanding

Consistent Return of

Value to Shareholders

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Sep-14 Dec-14E

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

Integrated Network Solutions $2,409 -4% -7% Stable

Consumer Technology Group 2,142 -1% 2% Up low single digits

Industrial & Emerging Industries 1,103 -3% 17% Stable

High Reliability Solutions 875 3% 11% Stable

Total Revenue $6,529 -2% 2%

Revenue by Business Group

($ in millions) Sep-13 Dec-13 Mar-14 Jun-14 Sep-14

Business Group $ % Total $ % Total $ % Total $ % Total $ % Total

Integrated Network Solutions $2,588 40% $2,598 36% $2,418 36% $2,503 38% $2,409 37%

Consumer Technology Group 2,097 33% 2,829 39% 2,436 36% 2,160 32% 2,142 33%

Industrial & Emerging Industries 940 15% 933 13% 1,027 15% 1,134 17% 1,103 17%

High Reliability Solutions 785 12% 823 12% 843 13% 846 13% 875 13%

Total Revenue $6,410 $7,183 $6,724 $6,643 $6,529

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Q3 FY2015 Guidance

Other Information:

Adjusted SG&A Expense ~$200 million

Interest & Other Expense ~$20 million

Adjusted Income Tax Rate high-end of our 8-10% range

GAAP EPS $0.20 - $0.24

WASO ~590 million shares

($ in millions, except per share amounts)

Adjusted operating income excludes approximately $14 million for stock based compensation, of which approximately $12 million is excluded from adjusted SG&A.

GAAP EPS reflects approximately $0.04 for intangible amortization and stock-based compensation expense.

$6,400 - $6,800Revenue

$175 - $205Adjusted Operating Income

$0.24 - $0.28Adjusted Earnings Per Share

THANK YOU

For more information:

investors.flextronics.com