Business Overview and History

Flex Ltd. (FLEX), formerly known as Flextronics International Ltd., has evolved from a low-value electronics assembly company to a global manufacturing powerhouse that enables some of the world's most innovative brands. With a diverse workforce across 30 countries and a focus on providing end-to-end solutions, Flex has become an indispensable partner for leading companies in cloud, communications, enterprise, automotive, industrial, consumer devices, lifestyle, and healthcare sectors.

Flex was founded in 1969 as Flextronics International, starting out as a low-cost electronics assembly provider based in Singapore. Over the years, the company has undergone a remarkable transformation, expanding its capabilities and geographical reach to become a global leader in advanced manufacturing solutions.

In the late 1990s and early 2000s, Flex significantly expanded its global footprint by establishing manufacturing facilities across Asia, the Americas, and Europe. This strategic move allowed the company to serve the growing outsourcing needs of multinational customers and become one of the largest providers of global supply chain solutions. By fiscal year 2024, Flex's revenues had reached over $26 billion, demonstrating the success of its expansion strategy.

Throughout its history, Flex has faced and overcome various challenges, including navigating through trade tariffs, the COVID-19 pandemic, and supply chain disruptions. The company's resilience was evident in its ability to help customers adapt their manufacturing and supply chain strategies during these disruptive events, further solidifying its position as a trusted partner in the industry.

In recent years, Flex has continued to evolve and strengthen its market position through strategic acquisitions and divestitures. For example, the company acquired Crown Technical Systems in 2024, expanding its capabilities in critical power solutions for data centers. This move aligned with Flex's focus on high-growth sectors and emerging technologies.

Another significant milestone in Flex's history was the spin-off of its Nextracker business in 2024. This strategic decision allowed the company to sharpen its focus on its core EMS (Electronics Manufacturing Services) and product solutions offerings across various industries, including cloud, communications, enterprise, automotive, industrial, consumer devices, lifestyle, and healthcare.

Flex's journey from a simple EMS company to a diversified manufacturing powerhouse has been marked by its ability to provide a full suite of specialized capabilities. These include design and engineering, supply chain management, manufacturing, and post-production and post-sale services. This comprehensive approach has enabled Flex to become a trusted partner for many leading multinational brands over the past five decades.

Financial Performance and Ratios

Flex's financial performance has been impressive, with the company consistently delivering strong results even in the face of industry challenges and global economic uncertainties.

Over the past three fiscal years, Flex has reported the following financial metrics:

Fiscal Year 2022 (ended March 31, 2022):

• Revenue: $24.63 billion
• Net Income: $936 million
• Operating Cash Flow: $1.02 billion
• Free Cash Flow: $581 million

Fiscal Year 2023 (ended March 31, 2023):

• Revenue: $28.50 billion
• Net Income: $793 million
• Operating Cash Flow: $950 million
• Free Cash Flow: $315 million

Fiscal Year 2024 (ended March 31, 2024):

• Revenue: $26.41 billion
• Net Income: $1.01 billion
• Operating Cash Flow: $1.33 billion
• Free Cash Flow: $796 million

Flex's financial ratios also demonstrate its strong financial position and operational efficiency:

• Current Ratio: 1.52 (as of March 31, 2024)

• Quick Ratio: 0.88 (as of March 31, 2024)
• Debt-to-Equity Ratio: 0.79 (as of March 31, 2024)
• Gross Margin: 7.0% (Fiscal Year 2024)
• Operating Margin: 3.3% (Fiscal Year 2024)
• Net Profit Margin: 3.8% (Fiscal Year 2024)
• Return on Equity: 19.0% (Fiscal Year 2024)

These financial metrics and ratios demonstrate Flex's strong financial footing, with a well-managed capital structure, efficient operations, and consistent profitability.

Financials

Flex's financial performance over the past three fiscal years showcases the company's ability to generate consistent revenue and maintain profitability. The company's revenue has fluctuated between $24.63 billion and $28.50 billion, with the most recent fiscal year (2024) showing a slight decrease to $26.41 billion. Despite this variation, Flex has managed to increase its net income from $936 million in FY2022 to $1.01 billion in FY2024, demonstrating improved operational efficiency and cost management.

The company's cash flow generation has also been robust, with operating cash flow increasing from $1.02 billion in FY2022 to $1.33 billion in FY2024. This improvement in cash flow generation has contributed to a stronger free cash flow position, rising from $581 million in FY2022 to $796 million in FY2024.

For the most recent quarter (Q3 2025), Flex reported revenue of $6.56 billion, a 2% increase year-over-year, and net income of $263 million. This growth was primarily driven by strength in the data center, health solutions, and consumer-related end markets.

Liquidity

Flex maintains a solid liquidity position, as evidenced by its current ratio of 1.52 and quick ratio of 0.88 as of March 31, 2024. These ratios indicate that the company has sufficient short-term assets to cover its short-term liabilities, providing a buffer against potential financial challenges.

The company's debt-to-equity ratio of 0.79 suggests a balanced capital structure, with a moderate level of leverage that allows Flex to finance its operations and growth initiatives while maintaining financial flexibility.

As of the most recent quarter (Q3 2025), Flex's liquidity position remained strong, with a current ratio of 1.41 and a quick ratio of 0.83. The company had $2.3 billion in cash and cash equivalents and an undrawn $2.5 billion revolving credit facility, providing ample financial resources to support its operations and strategic initiatives.

Flex's strong liquidity position and balanced capital structure provide the company with the financial resources necessary to navigate industry challenges, invest in growth opportunities, and maintain its competitive edge in the global manufacturing landscape.

Segmental Performance

Flex operates through two main business segments: Flex Agility Solutions (FAS) and Flex Reliability Solutions (FRS).

Flex Agility Solutions (FAS): The FAS segment serves customers in the communications, enterprise and cloud (CEC), lifestyle, and consumer devices end markets. This segment has been a key driver of Flex's growth, leveraging its design, engineering, and supply chain capabilities to cater to the rapidly evolving needs of its customers.

In the most recent fiscal year (2024), the FAS segment reported:

• Revenue: $10.57 billion, a 1% decrease year-over-year
• Operating Margin: 5.9%, a 130 basis point improvement from the prior year

For the third quarter of fiscal year 2025, the FAS segment showed mixed performance across its end markets:

• Communications, Enterprise and Cloud (CEC): Mid single-digit percentage increase in revenue, driven by higher demand in cloud
• Lifestyle: Low single-digit decrease in revenue due to softer demand
• Consumer Devices: High teen percentage increase in revenue

The FAS segment's operating margin improved by 120 basis points to 6.3% in the third quarter of fiscal year 2025, primarily driven by favorable product mix and strong cost execution.

Flex Reliability Solutions (FRS): The FRS segment serves customers in the automotive, health solutions, and industrial end markets. This segment has displayed resilience, with Flex's expertise in power solutions, critical infrastructure, and highly regulated industries driving its performance.

In the most recent fiscal year (2024), the FRS segment reported:

• Revenue: $15.84 billion, a 9% decrease year-over-year
• Operating Margin: 5.2%, a 50 basis point improvement from the prior year

For the third quarter of fiscal year 2025, the FRS segment showed varying performance across its end markets:

• Automotive: Mid single-digit percentage decrease in revenue due to lower customer demand
• Health Solutions: Low single-digit percentage increase in revenue
• Industrial: Low double-digit percentage decrease in revenue

The FRS segment's operating margin increased by 130 basis points to 6.7% in the third quarter of fiscal year 2025, primarily driven by favorable mix and strong cost execution.

The diverse nature of Flex's end markets has been a key strength, allowing the company to navigate industry cycles and capitalize on emerging trends across various sectors.

Geographic Performance

Flex's global presence is reflected in its revenue distribution across different regions. In the third quarter of fiscal year 2025:

• Americas: Accounted for 49% of revenue, up from 46% in the prior year period
• Asia: Contributed 30% of revenue, down from 33% in the prior year
• Europe: Remained stable at 21% of revenue in both periods

This geographic diversification helps Flex mitigate regional economic risks and capitalize on growth opportunities across different markets.

Operational Highlights and Innovations

Flex has been at the forefront of driving innovation and technological advancements in the manufacturing industry. Some of the company's key operational highlights and innovations include:

1. Data Center and Power Solutions: Flex has established itself as a leading provider of critical power infrastructure solutions for the rapidly growing data center and cloud computing markets. The company's comprehensive offerings, from power pods and distribution units to low-voltage switchgear, have enabled its customers to meet the increasing power demands driven by the proliferation of AI and other data-intensive applications. Flex sees long-term growth opportunities in its data center business, guiding for a multi-year CAGR of around 20% in this segment.

2. Medical Device and Healthcare Expertise: Flex's robust design, engineering, and manufacturing capabilities in the medical device and healthcare sectors have made it a trusted partner for some of the world's leading medical technology companies. The company's FDA-regulated facilities and expertise in areas like drug delivery and diagnostic equipment have positioned it as a preferred choice for complex, high-precision medical products.

3. Automotive Electrification and Autonomous Driving: Flex has been at the forefront of the automotive industry's transition towards electrification and autonomous driving technologies. The company's advanced capabilities in areas like power electronics, sensors, and software integration have enabled it to support its customers' efforts to develop next-generation mobility solutions.

4. Sustainability and Environmental Stewardship: Flex has made a strong commitment to sustainability and environmental responsibility, with initiatives aimed at reducing its carbon footprint, promoting circular economy practices, and enabling its customers to achieve their sustainability goals. The company's focus on renewable energy, energy-efficient manufacturing, and responsible supply chain management has earned it recognition as a leader in sustainable manufacturing.

Challenges and Risks

While Flex has demonstrated remarkable resilience and adaptability, the company is not immune to the challenges and risks inherent in the global manufacturing landscape. Some of the key risks and challenges faced by Flex include:

1. Geopolitical Tensions and Trade Uncertainties: Flex's global footprint exposes it to the risks associated with shifting trade policies, tariffs, and geopolitical tensions. The company has navigated through previous trade disruptions, such as the U.S.-China trade war, but continued uncertainty in this area could impact its operations and financial performance.

2. Supply Chain Disruptions: As a global manufacturer, Flex is susceptible to supply chain disruptions, including component shortages, logistics challenges, and the impact of events like the COVID-19 pandemic. The company's ability to effectively manage its supply chain and mitigate these disruptions is crucial to its continued success.

3. Technological Advancements and Evolving Customer Demands: The manufacturing industry is undergoing rapid technological changes, driven by the adoption of automation, robotics, and Industry 4.0 technologies. Flex must continually invest in research and development, as well as upskilling its workforce, to stay ahead of the curve and meet the evolving demands of its customers.

4. Regulatory Compliance and Quality Control: As a provider of critical products and services in highly regulated industries, such as healthcare and automotive, Flex must maintain strict quality control and comply with numerous industry standards and regulations. Failure to do so could result in costly penalties, reputational damage, and loss of customer trust.

Outlook and Growth Strategies

Looking ahead, Flex remains well-positioned to capitalize on the growing demand for advanced manufacturing solutions across its diversified end markets. The company's strategic priorities and growth strategies include:

1. Continued Expansion in High-Growth Verticals: Flex plans to further strengthen its presence in high-growth sectors, such as data centers, cloud computing, renewable energy, and medical technology, leveraging its technological expertise and end-to-end capabilities.

2. Operational Efficiency and Cost Optimization: Flex is committed to driving operational efficiency, automating its manufacturing processes, and optimizing its global footprint to maintain a competitive cost structure and enhance profitability.

3. Mergers and Acquisitions: The company is actively exploring strategic acquisitions that can bolster its technological capabilities, product portfolio, and market presence, further strengthening its position as a leading global manufacturing partner.

4. Sustainable Solutions and Environmental Stewardship: Flex will continue to prioritize sustainability and environmental responsibility, aligning its operations and service offerings with the evolving needs of its environmentally conscious customers.

5. Talent Development and Workforce Upskilling: Investing in the development and training of its global workforce will be a key focus for Flex, ensuring that it maintains a skilled and adaptable talent pool to support its long-term growth.

Financial Guidance

Flex has provided the following guidance for the fourth quarter of fiscal year 2025 and the full fiscal year 2025:

Q4 FY2025 Guidance:

• Revenue: $6.0 billion to $6.4 billion
• Adjusted Operating Income: $360 million to $400 million
• Adjusted EPS: $0.65 to $0.73 per share

Full Fiscal Year 2025 Guidance:

• Revenue: $25.4 billion to $25.8 billion
• Adjusted Operating Margin: 5.6% to 5.7%
• Adjusted EPS: $2.57 to $2.65 per share

It's worth noting that Flex exceeded its Q3 FY2025 revenue guidance, reporting $6.6 billion in revenue. The company also achieved a new quarterly record operating margin of 6.1% in Q3 FY2025, exceeding their previous guidance. Additionally, Flex reported adjusted EPS of $0.77 in Q3 FY2025, a 43% year-over-year increase and a new Flex record.

Conclusion

Flex Ltd. (FLEX) has undergone a remarkable transformation, evolving from a low-value electronics assembly company to a global manufacturing powerhouse that enables some of the world's most innovative brands. With its diversified end markets, technological expertise, and commitment to operational excellence, Flex is well-positioned to capitalize on the growing demand for advanced manufacturing solutions across various industries.

Despite the challenges and risks inherent in the global manufacturing landscape, Flex has consistently demonstrated its resilience and adaptability, delivering strong financial performance and positioning itself for continued growth. The company's solid performance in the data center, health solutions, and consumer-related end markets, coupled with its focus on operational efficiency and cost management, has contributed to its strong financial results and improved margins.

Flex's strategic focus on high-growth sectors, such as data centers and cloud computing, along with its commitment to sustainability and innovation, positions the company well for future growth. The company's strong liquidity position, balanced capital structure, and global presence provide a solid foundation for navigating industry challenges and capitalizing on emerging opportunities.

As Flex continues to execute on its strategic priorities, including expanding in high-growth verticals, driving operational efficiency, and investing in talent development, it is poised to solidify its position as a trusted partner for leading brands and drive further value creation for its shareholders. The company's positive outlook, as reflected in its financial guidance, underscores its confidence in its business model and growth strategies.