Flex Ltd. Q4 FY2026 earnings call

Announced intent to spin off cloud and power infrastructure business into new publicly traded company, expected to complete in first quarter of 2027. Introduced new business segments: regulated manufacturing solutions, integrated technology solutions, and cloud and power infrastructure. Closed acquisition of electrical power products (EP squared). Postponed investor day until fall. CEO and CFO changes with Revathy Advisey to lead SpinCo and Michael Hartung to lead Flex. New segmentation provides clear visibility into business units as portfolio evolves.

Fourth quarter revenue was $7.5 billion, up 17% year over year. Adjusted gross profit totaled $737 million, and adjusted gross margin improved to a record 9.9%. Full year revenue was $27.9 billion, up 8%. Adjusted gross profit was $2.7 billion, and adjusted gross margin was 9.5%. RMS revenue for the year was $10.2 billion, up 5%, with adjusted operating margin 6%. ITS revenue was $11.1 billion, down 2%, with adjusted operating margin 5.4%. CPI revenue was $6.6 billion, up 38%, with adjusted operating margin 9.2%. For fiscal 27, CPI is expected to have 65%-75% revenue growth, RMS low to mid-single digits growth, ITS flat to low single digits growth. First quarter RMS expected high single digits to low double digits growth, ITS high single digits to low double digits growth, CPI 20%-30% growth.

Fiscal 2027 revenue expected between $32.3 billion and $33.8 billion, up 18% at midpoint. Adjusted operating margin between 7% and 7.1%. Adjusted EPS between $4.21 and $4.51. CapEx range $1.4 billion to $1.6 billion. First quarter total revenue expected $7.35 billion to $7.65 billion, up 14% at midpoint. Adjusted operating income $469 million to $499 million. Adjusted EPS $0.86 to $0.92 per share.

Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially. Specific risks to be found in cautionary statements in presentation, press release, or risk factor section of recent SEC filings.

Q: How did you balance the decision to spin off against scale, diversification, and customer concentration?

A: The business has diversified customer base, product portfolio, and strong forward-looking growth rates, making it a no-brainer.

Q: How much of CPI's growth acceleration is attributable to Google multi-year agreement?

A: Acceleration related to Google and multiple other hyperscalers, neoclouds, and colos, diversified customer growth.

Q: Color on power franchise subcomponents and growth rates?

A: Embedded power and distributed power all seeing growth, further info on financials as quarters progress.

Q: Texture on Google multi-year contract and new opportunities?

A: Contract across multiple hyperscalers, neoclouds, colos, and utilities, across multiple product lines.

Q: CPI cloud margin profile and RemainCo margin progression?

A: Cloud margins lower than power, FlexPost Spinko focuses on margin improvement, productivity, and portfolio optimization.