Flex (FLEX) Q1 2025 earnings summary

Executive summary

• Q1 FY2025 revenue was $6.3 billion, with adjusted operating income of $306 million and adjusted net income of $211 million, reflecting strong execution and margin expansion despite an 8% year-over-year decline.

• Adjusted EPS was $0.51, up from $0.47 year-over-year, and GAAP EPS was $0.34.

• Multiple large program ramps in cloud, power, and automotive began as planned, expected to drive continued growth through the year.

• CFO Paul Lundstrom will depart July 31, 2024, with Jaime Martinez named interim CFO; a search for a permanent CFO is underway.

• FreeFlow acquisition completed to enhance circular economy solutions.

Financial highlights

• Q1 revenue was $6.3 billion, down 8% year-over-year, with FAS at $3.4 billion (down 7%) and FRS at $2.9 billion (down 10%).

• Adjusted operating margin was 4.8%, up 50 bps year-over-year; gross margin improved to 7.8% from 7.3% year-over-year.

• Adjusted EPS was $0.51, GAAP EPS was $0.34; net income from continuing operations was $139 million.

• Free cash flow was $232 million, with $2.2 billion in cash at quarter end.

• 15.3 million shares repurchased for $457 million in Q1; $556 million remains authorized.

Outlook and guidance

• Q2 FY2025 revenue guidance: $6.2–$6.8 billion; adjusted operating income: $310–$350 million; adjusted EPS: $0.52–$0.60.

• FY2025 guidance: revenue $25.4–$26.4 billion, adjusted operating margin 5.2–5.4%, adjusted EPS $2.30–$2.50, and $800M+ adjusted free cash flow.

• Reliability Solutions Q2 revenue expected down high single-digits to mid-teens; Agility Solutions flat to slightly down.

• Management maintains a conservative approach due to macro risks but expects growth in cloud, power, auto, and medical devices.

• Current liquidity and financial condition are expected to be sufficient for future commitments.