flextronics q3fy14 earnings release slides
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Results for Q3 FY2014 (Quarter Ended December 31, 2013)
Earnings Announcement: January 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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Q3 FY2014 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 December 31, September 27, December 31, ($ in millions, except per share amounts) 2012 2013 2013 Net sales $6,123 $6,410 $7,183
Adjusted operating income 146 159 187
GAAP operating income 35 150 174
Adjusted net income 148 134 164
GAAP net income 55 118 145
Adjusted EPS $0.22 $0.22 $0.26
GAAP EPS $0.08 $0.19 $0.23
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146
106 137
159 187
2.4%
2.0%
2.4% 2.5% 2.6%
Dec-12 Mar-13 Jun-13 Sep-13 Dec-13
% Revenue
$0.22
$0.13 $0.18
$0.22 $0.26
Dec-12 Mar-13 Jun-13 Sep-13 Dec-13
6,123 5,295
5,791 6,410
7,183
Dec-12 Mar-13 Jun-13 Sep-13 Dec-13
346 314
348 370 400
5.7% 5.9% 6.0% 5.8% 5.6%
Dec-12 Mar-13 Jun-13 Sep-13 Dec-13
% Revenue
Trended Quarterly Income Statement Highlights
Please refer to the Investor Relations section of our website which contain the reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures.
Adjusted Gross Profit ($ in millions)
Revenue ($ in millions)
Adjusted Earnings Per Share (EPS)
Adjusted Operating Income ($ in millions)
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Other Income Statement Highlights
Adjusted interest & other expense $14.7 million
Adjusted income tax rate 5.0%
Reconciliation between GAAP & adjusted EPS: • Stock based compensation $13.1 million • Intangible amortization $5.6 million • Aggregate impact on EPS is $0.03
Weighted average shares outstanding (WASO): • 619 million shares vs. 624 million shares last quarter • Repurchased 5.9 million shares at an average price per share of $7.56
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Working Capital Management
Inventory ($ in millions)
Cash Conversion Cycle (days)
Net Working Capital ($ in millions)
3,272 2,911
2,723 3,152
3,876
7.7x 7.1x 7.4x
6.9x 6.9x
Dec-12 Mar-13 Jun-13 Sep-13 Dec-13
Inventory Turns
1,606 1,542 1,729 1,718
6.6%
7.3% 7.5%
6.7% 7.3%
Dec-12 Mar-13 Jun-13 Sep-13 Dec-13
% Annualized Revenue
24
26 25
24 23
Dec-12 Mar-13 Jun-13 Sep-13 Dec-13
2,083 3,972
*Reflects approximately $700M of customer advances received in the current quarter.
Net Working Capital = Total A/R and Inventory less A/P
Cash Conversion Cycle and Net Working Capital – excludes non-cash reductions to AR from our AR sales programs for all periods Please refer to the Investor Relations section of our website which contains the reconciliation of the adjusted financial measures to the most directly comparable GAAP measures
Approx. $700M*
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Three Months Nine Months Ended Ended
($ in millions) Dec-13 Dec-13 GAAP net income $145 $323
Depreciation and amortization 115 336
Change in working capital and other 504 459
Net cash provided by operating activities 764 1,118
Purchases of property & equipment, net of dispositions (150) (461)
Free Cash Flow 614 657
Payments for repurchase of ordinary shares (38) (363)
Payments for acquired businesses, net of cash acquired (50) (238)
Repayments of bank borrowings, net (44) (60)
Other net change in cash 8 34
Net change in cash and cash equivalents $490 $30
Summary Statement of Cash Flows
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.
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$1,617
$1,500
$437 $600 $500 $500
Liquidity 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Solid Capital Structure
Significant Debt Maturities as presented in the chart above exclude $19M of other debt with varied maturities
Please refer to the Investor Relations section of our website which contain the reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures.
Significant Debt Maturities (Calendar Year) ($ millions)
Term Loans
($ in millions) Sep-13 Dec-13
Cash $1,127 $1,617 Total Debt 2,057 2,056 Debt / EBITDA (LTM) 2.0x 2.0x
Cash
Revolver
Total Liquidity
$3,117
5% Notes 4.625% Notes
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Dec-13 Mar-13E Business Group $ Q/Q % Y/Y % Outlook (Q/Q)
Integrated Network Solutions $2,598 0% -4% Decline ~10%
Industrial & Emerging Industries 933 -1% 2% Up Low Single Digits
High Reliability Solutions 823 5% 15% Decline Low Single Digits
High Velocity Solutions 2,829 35% 57% Decline ~25 to 30%
Total Revenue $7,183 12% 17%
Revenue by Business Group
Certain prior quarter amounts have been recast to conform to current year presentation.
($ in millions) Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Business Group $ % Total $ % Total $ % Total $ % Total $ % Total
Integrated Network Solutions $2,694 44% $2,454 46% $2,532 44% $2,588 40% $2,598 36%
Industrial & Emerging Industries 913 15% 886 17% 906 16% 940 15% 933 13%
High Reliability Solutions 714 12% 776 15% 806 14% 785 12% 823 12%
High Velocity Solutions 1,802 29% 1,179 22% 1,547 26% 2,097 33% 2,829 39%
Total Revenue $6,123 $5,295 $5,791 $6,410 $7,183
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Q4 FY2014 Guidance
Other Information: Adjusted SG&A Expense ~$210 million
Interest & Other Expense ~$20 million
Adjusted Income Tax Rate 8% - 10%
GAAP EPS $0.09 - $0.14
Impact of Restructuring Charges $0.05 - $0.06
WASO 615 million shares
Revenue ($ mil) $5,900 - $6,300
$140 - $170 Adjusted Operating Income ($ mil)
$0.18 - $0.22 Adjusted EPS
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THANK YOU
For more information: investors.flextronics.com