Flex (FLEX) J.P. Morgan 54th Annual Global Technology, Media and Communications Conference summary

Strategic rationale and business transformation

• Portfolio optimization has driven exits from consumer markets, successful spin-offs, and targeted reinvestment in high-growth areas like compute and power, especially for data centers and utilities.

• The latest spin-off creates two focused businesses, each with distinct growth profiles and capital allocation strategies, aiming to maximize returns and operational focus.

• SpinCo will pursue a diversified industrial strategy, expanding into electrical and cooling infrastructure for data centers and utilities, with a focus on portfolio diversification rather than further spin-offs.

• RemainCo will continue as a $22B+ global manufacturing and services platform, maintaining a diversified end-market approach and emphasizing financial rigor, margin improvement, and high-return capital deployment.

• Both entities are positioned to leverage secular trends, with RemainCo targeting healthcare, industrial automation, communications, and energy infrastructure.

Growth outlook and capital allocation

• SpinCo projects 65%-75% growth for FY 2027 and 80%+ for FY 2028, with 90% of FY 2027 and 70% of FY 2028 revenue already booked or awarded.

• Power segment growth is expected to outpace overall segment growth, driven by strong demand from hyperscalers and ongoing industry shifts toward higher voltage architectures.

• Capital investment will peak at $1.4B-$1.6B in FY 2027, primarily to expand power and cooling capacity for awarded programs, with CapEx intensity expected to moderate after foundational infrastructure is built.

• Flex will retain up to a 20% stake in SpinCo post-spin, enabling a debt-for-equity exchange and resulting in low leverage for both companies, providing flexibility for future investments or M&A.

Competitive positioning and differentiation

• SpinCo differentiates through integrated thermal architecture solutions, combining embedded power, compute, and cooling, and leveraging scale and speed to market.

• Unlike traditional electrical peers, SpinCo has no legacy product constraints and is positioned to capitalize on the largest technology shift in electrical infrastructure.

• The business is maturing programs in 400V and 800V architectures and developing solid-state transformer solutions, with a focus on safety, regulatory compliance, and infrastructure readiness.

• Compared to Vertiv, SpinCo offers a broader embedded power portfolio and a unique approach to rack-integrated cooling, aiming to reach peer-level margins as scale increases.