FLEX REPORTS SECOND QUARTER FISCAL 2025 RESULTS

SCHEDULE I

FLEX

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per share amounts)

Three-Month Periods Ended

September 27, 2024

September 29, 2023

GAAP:

Net sales

$                           6,545

$                           6,933

Cost of sales

5,998

6,411

Restructuring charges

16

3

Gross profit

531

519

Selling, general and administrative expenses

216

221

Restructuring charges

2

—

Intangible amortization

16

17

Operating income

297

281

Interest expense

53

49

Interest income

16

15

Other charges (income), net

(4)

14

Income from continuing operations before income taxes

264

233

Provision for (benefit from) income taxes

50

32

Net income from continuing operations

214

201

Net income from discontinued operations, net of tax

—

205

Net income

214

406

Net income attributable to noncontrolling interest

—

178

Net income attributable to Flex Ltd.

$                              214

$                              228

GAAP EPS

Diluted earnings per share from continuing operations

$                             0.54

$                             0.45

Diluted earnings per share from discontinued operations

—

0.06

Diluted earnings per share attributable to the shareholders of Flex Ltd.

$                             0.54

$                             0.51

Diluted shares used in computing per share amounts

400

448

See Schedule II for the reconciliation of GAAP to non-GAAP financial measures. See the accompanying notes on Schedule V attached to this press release.

FLEX

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per share amounts)

Six-Month Periods Ended

September 27, 2024

September 29, 2023

GAAP:

Net sales

$                         12,859

$                        13,825

Cost of sales

11,825

12,810

Restructuring charges

32

20

Gross profit

1,002

995

Selling, general and administrative expenses

429

456

Restructuring charges

11

6

Intangible amortization

32

37

Operating income

530

496

Interest expense

109

105

Interest income

32

31

Other charges (income), net

(3)

25

Income from continuing operations before income taxes

456

397

Provision for (benefit from) income taxes

103

49

Net income from continuing operations

353

348

Net income from discontinued operations, net of tax

—

269

Net income

353

617

Net income attributable to noncontrolling interest

—

203

Net income attributable to Flex Ltd.

$                              353

$                              414

GAAP EPS

Diluted earnings per share from continuing operations

$                             0.87

$                             0.77

Diluted earnings per share from discontinued operations

—

0.15

Diluted earnings per share attributable to the shareholders of Flex Ltd.

$                             0.87

$                             0.92

Diluted shares used in computing per share amounts

405

452

See Schedule II for the reconciliation of GAAP to non-GAAP financial measures. See the accompanying notes on Schedule V attached to this press release.

SCHEDULE II

FLEX

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES ⁽¹⁾

(In millions, except per share amounts)

Three-Month Periods Ended

September 27, 2024

September 29, 2023

GAAP operating income

$                              297

$                              281

Intangible amortization

16

17

Stock-based compensation expense

28

28

Restructuring charges

17

1

Non-GAAP operating income

$                              358

$                              327

GAAP provision for income taxes

$                                 50

$                                 32

Intangible amortization benefit

4

3

Other tax related adjustments

15

(3)

Non-GAAP provision for income taxes

$                                 69

$                                 32

GAAP net income from continuing operations

$                              214

$                              201

Intangible amortization

16

17

Stock-based compensation expense

28

28

Restructuring charges

17

1

Legal and other

—

—

Interest and other, net

(1)

8

Adjustments for taxes

(19)

—

Non-GAAP net income from continuing operations

$                              255

$                              255

Diluted earnings per share from continuing operations:

GAAP 

$                             0.54

$                             0.45

Non-GAAP

$                             0.64

$                             0.57

See the accompanying notes on Schedule V attached to this press release.

FLEX

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES ⁽¹⁾

(In millions, except per share amounts)

Six-Month Periods Ended

September 27, 2024

September 29, 2023

GAAP operating income

$                              530

$                              496

Intangible amortization

32

37

Stock-based compensation expense

60

60

Restructuring charges

42

24

Legal and other

—

3

Non-GAAP operating income

$                              664

$                              620

GAAP provision for income taxes

$                              103

$                                 49

Intangible amortization benefit

7

6

Other tax related adjustments

13

6

Non-GAAP provision for income taxes

$                              123

$                                 61

GAAP net income from continuing operations

$                              353

$                              348

Intangible amortization

32

37

Stock-based compensation expense

60

60

Restructuring charges

42

24

Legal and other

—

3

Interest and other, net

(1)

9

Adjustments for taxes

(20)

(12)

Non-GAAP net income from continuing operations

$                              466

$                              469

Diluted earnings per share from continuing operations:

GAAP 

$                             0.87

$                             0.77

Non-GAAP

$                             1.15

$                             1.04

See the accompanying notes on Schedule V attached to this press release.

SCHEDULE III

FLEX

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions)

As of September 27, 2024

As of March 31, 2024

ASSETS

Current assets:

Cash and cash equivalents

$                                   2,601

$                            2,474

Accounts receivable, net of allowance for doubtful accounts

3,502

3,033

Contract assets

595

249

Inventories

5,466

6,205

Other current assets

1,187

1,031

Total current assets

13,351

12,992

Property and equipment, net

2,254

2,269

Operating lease right-of-use assets, net

581

601

Goodwill

1,146

1,135

Other intangible assets, net

223

245

Other non-current assets

1,031

1,015

Total assets

$                                 18,586

$                         18,257

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Bank borrowings and current portion of long-term debt

$                                       531

$                                 —

Accounts payable

5,144

4,468

Accrued payroll and benefits

473

488

Deferred revenue and customer working capital advances

2,134

2,615

Other current liabilities

1,024

968

Total current liabilities

9,306

8,539

Long-term debt, net of current portion

3,178

3,261

Operating lease liabilities, non-current

476

490

Other non-current liabilities

623

642

Total liabilities

13,583

12,932

Total Flex Ltd. shareholders' equity

5,003

5,325

Total liabilities and shareholders' equity

$                                 18,586

$                         18,257

SCHEDULE IV

FLEX

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

Six-Month Periods Ended

September 27, 2024

September 29, 2023

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income

$                            353

$                            617

Depreciation, amortization and other impairment charges

257

260

Changes in working capital and other, net

49

(514)

Net cash provided by operating activities

659

363

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property and equipment

(214)

(319)

Proceeds from the disposition of property and equipment

6

19

Other investing activities, net

2

3

Net cash used in investing activities

(206)

(297)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from bank borrowings and long-term debt

499

2

Payments of bank borrowings, long-term debt and other financing liabilities

(57)

(398)

Payments for repurchases of ordinary shares

(757)

(506)

Proceeds from issuances of Nextracker shares

—

552

Payment for purchase of Nextracker LLC units from TPG

—

(57)

Other, net

(6)

(53)

Net cash used in financing activities

(321)

(460)

Effect of exchange rates on cash and cash equivalents

(5)

—

Net change in cash and cash equivalents

127

(394)

Cash and cash equivalents, beginning of period

2,474

3,294

Cash and cash equivalents, end of period

$                         2,601

$                        2,900

To supplement Flex's unaudited selected financial data presented consistent with U.S. Generally Accepted Accounting Principles ("GAAP"), the Company discloses certain non-GAAP financial measures that exclude certain charges and gains, including non-GAAP operating income, non-GAAP net income and non-GAAP net income per diluted share. These supplemental measures exclude certain legal and other charges, restructuring charges, customer-related asset impairments (recoveries), stock-based compensation expense, intangible amortization, other discrete events as applicable and the related tax effects. These non-GAAP measures are not in accordance with or an alternative for GAAP and may be different from non-GAAP measures used by other companies. We believe that these non-GAAP measures have limitations in that they do not reflect all of the amounts associated with Flex's results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate Flex's results of operations in conjunction with the corresponding GAAP measures. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the most directly comparable GAAP measures. We compensate for the limitations of non-GAAP financial measures by relying upon GAAP results to gain a complete picture of the Company's performance.

In calculating non-GAAP financial measures, we exclude certain items to facilitate a review of the comparability of the Company's operating performance on a period-to-period basis because such items are not, in our view, related to the Company's ongoing operational performance. We use non-GAAP measures to evaluate the operating performance of our business, for comparison with forecasts and strategic plans, for calculating return on investment, and for benchmarking performance externally against competitors. In addition, management's incentive compensation is determined using certain non-GAAP measures. Also, when evaluating potential acquisitions, we exclude certain items described below from consideration of the target's performance and valuation. Since we find these measures to be useful, we believe that investors benefit from seeing results "through the eyes" of management in addition to seeing GAAP results. We believe that these non-GAAP measures, when read in conjunction with the Company's GAAP financials, provide useful information to investors by offering:

• the ability to make more meaningful period-to-period comparisons of the Company's ongoing operating results;
• the ability to better identify trends in the Company's underlying business and perform related trend analysis;
• a better understanding of how management plans and measures the Company's underlying business; and
• an easier way to compare the Company's operating results against analyst financial models and operating results of competitors that supplement their GAAP results with non-GAAP financial measures.

The following are explanations of each of the adjustments that we incorporate into non-GAAP measures, as well as the reasons for excluding each of these individual items in the reconciliations of these non-GAAP financial measures:

Stock-based compensationexpense consists of non-cash charges for the estimated fair value of unvested restricted share units granted to employees and assumed in business acquisitions. The Company believes that the exclusion of these charges provides for more accurate comparisons of its operating results to peer companies due to the varying available valuation methodologies, subjective assumptions and the variety of award types. In addition, the Company believes it is useful to investors to understand the specific impact stock-based compensation expense has on its operating results.

Intangible amortization consists primarily of non-cash charges that can be impacted by, among other things, the timing and magnitude of acquisitions. The Company considers its operating results without these charges when evaluating its ongoing performance and forecasting its earnings trends, and therefore excludes such charges when presenting non-GAAP financial measures. The Company believes that the assessment of its operations excluding these costs is relevant to its assessment of internal operations and comparisons to the performance of its competitors.

Restructuring charges include severance charges at existing sites and corporate SG&A functions as well as asset impairment, and other charges related to the closures and consolidations of certain operating sites and targeted activities to restructure the business. These costs may vary in size based on the Company's initiatives, are not directly related to ongoing or core business results, and do not reflect expected future operating expenses. These costs are excluded by the Company's management in assessing current operating performance and forecasting its earnings trends and are therefore excluded by the Company from its non-GAAP measures.

During the three and six-month periods ended September 27, 2024, the Company recognized approximately $17 million and $42 million of restructuring charges respectively, and during the three and six-month periods ended September 29, 2023, the Company recognized $1 million and $24 million of restructuring charges respectively. Most of these charges are related to employee severance.

Legal and other consist primarily of costs not directly related to core business results and may include matters relating to commercial disputes, government regulatory and compliance, intellectual property, antitrust, tax, employment or shareholder issues, product liability claims and other issues on a global basis as well as acquisition related costs. During the first half of fiscal year 2024, the Company accrued for certain loss contingencies where losses were considered probable and estimable. These costs are excluded by the Company's management in assessing current operating performance and forecasting its earnings trends and are  therefore excluded by the Company from its non-GAAP measures. No such costs were incurred in the first half of fiscal year 2025.

Interest and other, net consist of various other types of items that are not directly related to ongoing or core business results, such as the gain or losses related to certain divestitures, currency translation reserve write-offs upon liquidation of certain legal entities, debt extinguishment costs and impairment charges or gains associated with certain non-core investments. The Company excludes these items because they are not related to the Company's ongoing operating performance or do not affect core operations. Excluding these amounts provides investors with a basis to compare Company performance against the performance of other companies without this variability.

Adjustments for taxes relate to the tax effects of the various adjustments that we incorporate into non-GAAP measures in order to provide a more meaningful measure on non-GAAP net income and certain adjustments related to non-recurring settlements of tax contingencies or other non-recurring tax charges, when applicable.  During the three and six-month periods ended September 27, 2024, the Company recognized a $19 million and $20 million net tax benefit respectively, and during the six-month period ended September 29, 2023, the Company recognized a $12 million net tax benefit, related to the tax effects of various adjustments that are incorporated into non-GAAP measures.