sketch-to-scale solutions...financial performance underscores successful evolution 611 665 751 792...
TRANSCRIPT
Sketch-to-Scale Solutions™
Investor PresentationMarch 2018
Risks and Non-GAAP DisclosuresThis presentation contains forward-looking statements, which are based on current expectations and assumptions that are subject to risks and uncertainties and actual results could materially differ. Such information is subject to change and we undertake no obligation to update these forward-looking statements. For a discussion of the risks and uncertainties, see our most recent filings with the Securities and Exchange Commission, including our current, annual and quarterly reports.
If this presentation references historical non-GAAP financial measures, these measures are located on the “Investor Relations” section of our website, www.flex.com along with the required reconciliation to the most comparable GAAP financial measures.
The following business group acronyms will be used throughout this presentation:
Communications & Enterprise Compute
Cloud Data Center, Communications, Networking, Server & Storage.
Consumer Technologies Group
Connected Living, Wearables, Gaming, AR/VR, Mobile Devices, Footwear and Clothing, Supply Chain Solutions for PCs, Tablets, and Printers.
Industrial & Emerging Industries
Semiconductor & Capital Equipment, Office Solutions, Household Industrial & Lifestyle, Industrial Automation & Kiosks, Energy & Metering, Lighting.
High Reliability Solutions
Medical: Consumer Health, Digital Health, Disposables, Drug Delivery, Diagnostics, Life Sciences & Imaging Equipment.
Automotive: Vehicle Electronics, Connectivity, Clean Technologies.
HRS IEI CEC CTG
1
Table of Contents
Richer Business MixSketch-to-ScaleTMWhy Flex?Flex is Ready /
Strategically Positionedto Win
Financial Update
Why Invest in Flex?
Strong Free Cash Flow
Shareholder Return
ROIC
Portfolio Evolution
2020 Revenue & Profit Growth
Profit Growth & Earnings Power
Earnings Leverage
Targeted M&A
Customer Diversification
Balanced Capital Structure
3-4
5
6
7
8
9
10-11
12
13
14
15
The World Has Changed
The Flex Advantage
Flex Platform
Megatrends
12 Industries
100+ Locations Globally
Centers of Excellence
Investing in Capabilities
Elementum
Flex Pulse
Reinventing Construction
Nike Partnership
17
18
19
20
22
23
24
25
26
27
28
29
Innovation From Sketch-To-ScaleTM
% of Sketch-To-ScaleTM
Revenue
31
32
Consumer Technologies Group (CTG)
Communications & Enterprise Compute (CEC)
Industrial & Emerging Industries (IEI)
High Reliability Solutions (HRS)
34-36
37-41
42-44
45-52
Latest Financial Update
IR Contact Info
54-58
59
2
Why Invest in Flex?
Evolving our portfolio to provide more predictable earnings, higher margins and meaningful earnings power through structural mix change and increased Sketch-to-ScaleTM business
Strong sustainable free cash flow
Unwavering shareholder return commitment supported by significant buybacks over time
1
2
3
3
Financial Performance Underscores Successful Evolution
611
665
751792
815
FY13 FY14 FY15 FY16 FY17
Sustainable
0.84 0.89
1.14 1.17
FY13 FY14 FY15 FY16 FY17
1.08
Profitable
Adjusted EPS($)
Resilient
Free Cash Flow Generated($M)
Consistent
Shares Repurchased($M)
680701
554
639660
FY13 FY14 FY15 FY16 FY17
322
475
416 420
350
FY13 FY14 FY15 FY16 FY17
8% CAGR 9% CAGR $3.2B FCF generated $2.0B repurchased
Adjusted Operating Profit($M)
(FY13 – 17) (FY13 – 17)(FY13 – 17)(FY13 –17)
4
Strong Sustainable Free Cash Flow
680 701
554
639 660
FY13 FY14 FY15 FY16 FY17
Free Cash Flow($M)
$3.2Bfor FY13 to FY17
Key Cash Flow Drivers» Earnings expansion» Working capital sustained at 6-8% of sales» Disciplined capex investment modestly above
depreciation levels
~90%Free Cash Flow
Conversion
$3.5B+Operating Cash Flow
$2B+Free
Cash Flow
Cash Flow Generation Targets FY18–FY20
5
684 639
591 563 545 531
322
475 416 420
350
FY13 FY14 FY15 FY16 FY17
shares outstanding (millions)
Unwavering Shareholder Return Commitment
Share Repurchase($M)
Committed to returning over 50% of annual free cash flow to shareholders
Since FY11, we have repurchased…
~35%of shares
outstanding
~$3.0Bin stock
~364Mshares
Since FY13, we have returned...
62% of free cash flow to shareholders
6
Guided by our Return on Invested Capital
Return on Invested Capital1(ROIC %)
» Improving earnings efficiency
» Disciplined capital deployment
» ROIC well above WACC
1. Return on Invested Capital (ROIC) is calculated by dividing the Company's last twelve months after-tax Non-GAAP operating income by the net invested capital asset base as of each date. After-tax non-GAAP operating income excludes charges for stock-based compensation expense and restructuring charges. The net invested capital asset base is defined as the sum of shareholders' equity and net debt averaged over the last five quarters.
1922
2422
20
FY13 FY14 FY15 FY16 FY17
22%Avg.
7
Portfolio Evolution to Higher Margin Business
$4.5BHRS + IEI
revenue
$9.1BHRS + IEI
revenue
Driving predicable earnings and margin expansion
FY10HRS6%
IEI13%
CTG42%
CEC39%
19% FY17
HRS17%
IEI21%
CTG27%
CEC35%
38% FY20EHRS
~22%
IEI~23%
CTG~28%
CEC~27%
~45%
~$13.0BHRS + IEI
revenue
~2years
~4 years
~6 years
Est Avg Product Life Cycle
8
Structured to Deliver Profitable Growth
Annual RevenueGrowth Target Comments
10%+ » Technical offering and leadership expertise enables growth» Leveraging innovation and sketch-to-scale capabilities
10%+ » Momentum from record bookings across its broad portfolio» Positioned to penetrate massive TAM
3% to 5% » Structurally enhancing margin and earnings growth» Transformational new partnerships and new markets
-5% to 0% » Well positioned for next generation technologies» Disciplined management of legacy business
HRS
IEI
CTG
CEC
Targeted 2020 revenue growth model
9
FY17 Adjusted Operating
Target Adjusted Operating Margin
Profit($M)
Margin Range
$334 8.1% 6–9%
$180 3.6% 4–6%
$180 2.8% 2–4%
$229 2.7% 2.5–3.5%Corporateservices and other2
($108)
$815 3.4%
Positioned for Operating Profit and Margin Expansion
HRSIEI
CTGCEC
Targeted Adjusted Operating Profit Mix
Targeted 2020 delivers profit growth
FY20E
HRS
IEI
CTG
CEC
~60%
10
Positioned to Deliver Meaningful Earnings Power
% Sketch-to-Scale FY20E
Portfolio Evolution
Sketch-to-Scale
~3%
10%+
12%+
Revenue Adj.Operating
Profit
Adj. EPS
2016–2020 CAGRSubstantial Earnings Leverage
3x4x
Revenue mix
CEC
HRSIEI
CTG
FY20E
~45%
CEC CTG IEI HRS
~40%Total Flex
11
$1.17
~$0.26
~$0.22
~$0.19
~$0.02 ~$0.02 ~$0.12 ~$0.20
$1.80
FY16 FY17 HRS CTG IEI CEC CorporateInvestments
ShareRepurchase
Interest andTaxes
FY20E
$1.14
The Path to Delivering Substantial Earnings Leverage
» Sketch-to-Scale penetration» Leveraging investments» Operational execution
12%CAGR
$2.15+
Record EPS
12
1 Reflects M&A transactions completed from FY13 to FY17 (excludes certain OEM asset acquisitions)
Targeted M&A Accelerates Our Portfolio Evolution
11<$25M
Target capabilities
Strategic customers
Longer product lifecycles
EPS accretive
Barriers to entry
Higher margins
Key Selection Criteria
# of Acquisitions (FY13–FY17) Based on purchase price*
4>$100M
% of M&A Spend By Business Group*
61%
HRS 24%
IEI
15%
CTG~$1.5B
M&A
Expanding longer product lifecycle businesses and Sketch-to-ScaleTM capabilities
2$25-$100M
*Reflects M&A transactions completed from FY13 to FY17 (excludes certain OEM asset acquisitions).13
Improving Customer Diversification
10%+ Customers
FY07 FY12 FY17
Top 10 Customers as % of Total Revenue
64%
55%
43%
No 10%+ customer
Q3 FY18 was 8th straight quarter with no 10%+ customer
14
500
692
500
600
CY18 CY19 CY20 CY21 CY22 CY23 CY24 CY25 CY26
58119
490
119
Balanced Capital Structure
Investment Grade RatedMoody’s | S&P | Fitch
Debt Maturities ($M) Balances as of December 31, 2017
Term Loan
Notes
» No near-term maturities» Low average cost of debt: ~3.7%» Ample liquidity of $3.0B
» $1.75B revolver + $1.3B cash
15
The World Has Changed… Flex is Ready
Electronic Manufacturing
Services
Worldwide Scale and Labor Arbitrage
Time
Contract Manufacturing
Asset Light and Lower Cost
Our Industry Has Changed -- We Have Evolved Our Model
Cost Based Discussion
Director of Procurement
3-6 months lead-time
»
Sketch-to-ScaleTM
Solutions and co-innovation
Revenue/Strategy Discussion
C-level Executive
18-24 months lead-time
17
Flex is Ready… The Flex Advantage
$24Brevenue
50Msq. ft. of
manufacturing & services
space
200,000employees
100sites in over 30 countries
3,000design
engineers
18
Capabilities Built for the Future
The Flex Platform
Our company innovates across three dimensions
19
Yielding a Massive Expansion of TAM
Artificial Intelligence (AI) **
Digital Health
Smart Cities *
Autonomous/ Connected Cars
Cloud Data Center
Augmented Reality/ Virtual Reality (AR/VR) **
5G/Telco Cloud
Intelligent AssetTracking
Industrial Automation
Connected Living
2015-2020 data points ($B), CAGR
Source: Gartner, IDC,IFR, Markets & Markets, GMI Insights, Goldman Sachs, Autodesk, Flex Internal Estimates (1) Represents 2016 estimated figured(2) Overlaps with other categories including connected living an autonomous vehicles
246392
10%
4
3554%
8
4756%
32 61
14%
10
2520%
65
17622%
50
11919%
3
3884%
1
1282%
3676
16%
Source: Gartner, IDC,IFR, Markets & Markets, GMI Insights, Goldman Sachs, Autodesk, Flex Internal Estimates *Overlaps with other categories including connected living an autonomous vehicles.**Represents 2016 estimated figure.
20
Strategically Positioned to Win
Operating at Scale Across 12 Industries
Medical
$2B
Automotive
$3B
Industrial
$1B
Home Appliances
$1B
CapitalEquipment
$1B
Energy
$2B
Telecom
$3B
EnterpriseCompute
$2B
Wearables
$1B
ConnectedLiving
$1B
Mobile
$2B
Networking
$3B
Revenue
22
Purposefully Positioned in 100+ Sites and 30 Countries
Jaguariuna, Brazil ●Sorocaba, Brazil ●●
Manaus, Brazil ●●
Milpitas, CA ●●●●San Jose, CA
San Francisco, CA ●
Austin, TX ●●●●Plano, TX ●Irving, TX ●
Tempe, AZ ●
Tijuana, MX ●●Juarez, MX ●●●Reynosa, MX ●San Luis, MX ●
Overland Park, KS ●Coopersville, MI ●●
Farmington Hills, MI ●Buffalo Grove, IL ●
Northfield, MN ●
Morrisville, NC ●●Columbia, SC ●Atlanta, GA ●Memphis, TN ●Louisville, KY ●
Boston, MA ●Manchester, CT ●
Cork, Ireland ●Limerick, Ireland ●●
Manorhamilton, Ireland ●
Venray, Netherlands ●Woerden, Netherlands ●
Hoogeveen, Netherlands ●
Budapest, Hungary ●Sarvar, Hungary ●●Tab, Hungary ●Zalaegerszeg, Hungary ●Lodz, Poland ●Tczew, Poland ●●
Migdal Ha-Emek, Israel ●●Ofakim, Israel ●Yavne, Israel ●Haifa, Israel ●
Chengdu, China ●●
Gurgaon, India ●Mumbai, India ●
Pune, India ●Bangalore, India ●Chennai, India ●●
Penang, Malaysia ●●Port of Tanjong Pelepas, Johor , Malaysia ●●
Senai, Johor, Malaysia ●●Skudai, Johor, Malaysia ●●
Ibaraki, Japan ●●
Nanjing, China ●Shanghai, China ●●Suzhou, China ●Wuzhong, China ●●
Shenzhen, China ●●●Huangtian, China ●Shiyan, China ●Gushu, China ●●Fuyong, China ●Hong Kong, China ●Dongguan, China ●Zhuhai, China ●●
Singapore ●●●Batam, Indonesia ●
Tianjin, China ●
Pamplona, Spain ●
Milan, Italy ●●Treviso, Italy ●Trieste, Italy ●
Mukachevo, Ukraine ●
Timisoara, Romania ●●
Aguascalientes, MX ●●Guadalajara, MX ●●●
Global Services
Design
Manufacturing
Mechanicals
Burlington, Canada ●Toronto, Canada ●Ottawa, Canada ●
New York Innovation Center
Ronneby, Sweden ●Linkoping, Sweden ●
Corlu, Turkey ●Gebze, Turkey ●
Warrington, UK ●
Sonderborg, Denmark ●Stuttgart, Germany ●
Hägglingen, Switzerland ●Pardubice, Czech Republic ●
Brno, Czech Republic ●Althofen, Austria ●●
Vienna, Austria
Anyang, South Korea ●
23
Developing Solutions to Accelerate InnovationComponents and platform solutions with differentiated performance
Sewing & Textile
Automation & Robotics
Centers of Competence
Roll to Roll
Micro-electronics
=+
Centers of Excellence
Connectivity
Flexible Technology & Miniaturization
Smart software
Sensors & Actuators
Security & Computing
Human Machine Interface
Battery & Power
Wearable sensor patch
Notification module
Component Solutions
24
Innovation and R&D Investments($M)
121
93
49
39
39
FY17
FY16
FY15
FY14
FY13
2014
ElementumSilicon Valley
Innovation CenterCenters of Excellence
Innovation Centers Expansion Digital Health
2017• • • • •
Sketch-to-Scale
•Innovation labs
•
Investing in Capabilities Built for the Future
25
Real-time Solutions to Improve Decision Making
» Incubated in 2012 by Flex
» Strategic engagement partner for Flex
Powered by Elementum: mobile software for end-to-end supply chain management
26
Digital Visibility Through Flex Pulse
50+Elementum and enterprise-wide
applications
8worldwide
Pulse Centers
500+customer
campus visits
5,000+Flex business
users
27
Reinventing the Construction Industry
(McKinsey, 2016) Real gross value added per hour worked by persons engaged, Indexed 1995 = 100
Global productivity growth
1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
Construction
Total economy
Manufacturing200
190
180
170
160
150
140
130
120
110
100
0
We will modernize the supply chain for the Construction Industry
13% of the world’s GDP
Cloud-based 5D Enterprise Platform
28
Transformational Nike Partnership
Meaningful RevenueInvestment losses
Top 10 CustomerCTG + margins
$2 Billion+ HRS+ margins
Massive TAM expansion | Decade-long partnership | Modernizing the footwear industry
Invest and Create Rapid Ramp Industry Expansion
FY18 FY19 FY20 and Beyond
Scaling Solutions
$1 Billion+ HRS-like margins
29
Sketch-to-ScaleTM
Sketch-to-ScaleTM Solutions Bring Your Product to Life
Intellectual Property ProtectionSafeguard your developments with the highest levels of security to ensure that your project remains confidential and is protected at every stage.
Concept DesignConceptualize, design, and test ideas through co-innovation.
Additive ManufacturingSix Sigma operations in 100+ cutting-edge facilities utilizing state-of-the-art automation, advanced robotics, virtual and augmented reality and software controls.
Advanced EngineeringAccess core technologiesand product / system design engineers. Utilize testing services and accredited labs for ISO compliance.
Global ExpansionGlobal presence and regional trade regulations, taxes and duties expertise to help efficiently expand and compete.
Active Supply Chain, Distribution & LogisticsA global supply chain demands real-time information about development, fulfillment and forward and reverse logistics.
New Product IntroductionManufacturing, supply chain and technology expertise and visibility to help identify opportunities and foresee challenges.
Prototype CreationRapidly prototype to shorten the distance to a viable, quality product.
31
3%
9%
5%
18%
CEC CTG IEI HRS
7%
12%
27% 26%
33%
CEC CTG IEI HRS
Sketch-to-ScaleTM Revenue is Rapidly Accelerating
FY 2013
CEC CTG IEI HRS
FY 2020E
40%
FY 2017
23%
25–35%
35–45%
32
Richer Business Mix
Consumer Technologies Group (CTG)
Revenue ($M)
1,314
1,665 1,849
1,535 1,512 1,755
2,057
Q1 FY17 Q2 FY17 Q3 FY17 Q4 FY17 Q1 FY18 Q2 FY18 Q3 FY18
FY17 Updates» $1B in new bookings
» 50 new accounts
» 195 new programs awarded
» $1.4B increase YoY revenue for Connected Home and Audio
» 27% of revenue is Sketch-to-ScaleTM
» BOSE partnership announced
» 2 new Audio factories
34
Increasing Development of Growth Vectors
AR/VR» Gaming» Entertainment» Education» Customer Service
Fashion» Footwear» Connected Jewelry» Smart Apparel» Smart Accessories
Connected Home» Voice-Controlled Assistants» Home Gateways» Media Devices» Connected Audio
Wearables» Headsets and Headphones» Smart Watches» Hearables» Bio-authentication
Consumer Health» Biometric Monitors» Telehealth» Home Health Monitoring
Consumer AI» Smart Robots» Smart Toys» Automotive After-Market» Drones
35
Higher Margins and Operating Profit
Operating Profit
Customers Added
Revenue Growth
6%+ 404%
<3% 4-14%
4%* 69%STRATEGIC
CORE
ICE
FY17 Achieved
*Not including Nike investment36
Communications and Enterprise Compute (CEC)
FY17 Updates» Revenue $8.4B
− Cloud Data Center: Up 14% YoY − Communications: Up 1% YoY via Optical − Networking: Down -2%− Traditional Server, Storage: Down -35%
» Strong capital efficiency
» Sketch-to-ScaleTM growth 21% YoY > $1B
» $2B in bookings and 18 new customers
9,191 8,842
8,383
5,853
FY15 FY16 FY17 FY18*
Revenue ($M)
*FY18 YTD figures
37
Connected Things / Connected Intelligence
Smart Cities
M2M and Robotics
IEI
Digital Health
Autonomous Driving
HRS
Born in the Cloud Providers Telco Cloud Transformation Enterprise Hybrid Cloud
Mobile Device
Connected Living
Augmented Reality
CTG
Cloud and Edge Computing
5G
CEC
38
Creating a Smart and Connected World
Cellular Microwave & RF3G/4G Radio ModulesPTP Backhaul Units
IoT and Edge ComputingIoT Edge Computing PlatformsAutomotive Network Switch Modules
Edge Data Center & Central OfficeCRAN Optical SystemsEdge Router ModulesOpen Standard Mechanical RacksOpen19 Compute & Networking ModulesToR Switch Units
Cloud Data CenterCustom Compute Motherboards
Open Standard Mechanical RacksOCP Storage Systems
Storage Appliances
Enterprise Data Center2U JBOD Storage Systems
All Flash Array NVMe Storage Systems2U & 4U Converged Appliances
Host Bus Adapters & RAID ControllersCustom Switch Blades
SOHO
39
Sketch-to-ScaleTM Accelerates Sketch-to-ScaleTM 12% of Revenue FY17 to ~30% FY20
FY15 FY17 FY20
ProductPlatforms
Core R&DEngineers
SoftwareEngineers
12 27 60
293 458 800
60 98 200
40
12%
88%
FY17
~30%
~70%
FY20E
Flex Portfolio Evolution via Sketch-to-ScaleTM
Portfolio Evolution
Operating Profit Range
Revenue Projections
Sketch-to-ScaleTM: Communications, Converged Enterprise and Cloud
Traditional OEM
FY17 FY18E FY19E FY20E
Growth Inflection Point
$8.4B
3.5%2.5%
41
Industrial and Emerging Industries (IEI)
FY17 Updates» $2B+ record bookings
» 26% Sketch-to-ScaleTM
revenue
» 6.1% OP growth from FY14 to FY17
» 72+ new logos
3.8
4.5 4.75.0
4.3
FY14 FY15 FY16 FY17 FY18*
Revenue($B)
9.5%CAGR
6.1%Growth
127 132
158
180168
FY14 FY15 FY16 FY17 FY18*
OP($M)
12.3%CAGR
3.6%OP%
*FY18 YTD figures
42
IEI Key Markets
LightingSolutions
EnergySolutions
Lifestyle and Appliances
Capital Equipment
$540BTAM
$55BTAM
$500BTAM
$505BTAM
Source: TAM market size for 2020 based on internal research
25+active accounts
$150Mbookings
20+new logos
85 active accounts
$250Mbookings
12new logos
62active accounts
~$750Mbookings
30new logos
46active accounts
~$1.1Bbookings
21new logos
43
Residential PowerPlaySolar Panel
Water Meter
PowerplayHome Automation Hub PowerPlay
Inverter
PowerPlayHome Energy Storage
Electric Vehicle Charging Station
NX Fusion Plus™Solar + Energy Storage
NX Horizon™Solar Tracker
Solar Panel
Load ControlSwitches
Switching Gear
Volt – VARControl
Energy Storage Platform
Utility & Distributed Generation
Smart Grid
Commercial & Industrial
Electric Meter
• TrueCapture™ Power Plant Optimization
• Digital O&M™• Global Asset
Monitoring
PowerPlayEnergy Management Hub
Flex Energy Solutions
44
High Reliability Solutions (HRS)
FY17 Updates
» Thoughtfully positioned across the important megatrends
» Powered by deep industry expertise
» Unique competitive position created
» Long term structural growth is intact
3,557
3,899
4,149
3,517
FY15 FY16 FY17 FY18*
228
295 334
284
FY15 FY16 FY17 FY18*
6.4
7.68.1 8.1
FY15 FY16 FY17 FY18*
Revenue($M)
OP($M)
OP(%)
*FY18 YTD figures
45
Increasing The Auto Sketch-to-Scale Portfolio
Autonomous Connectivity Clean Tech Vehicle ElectrificationWing cameras Server compute
podsInnovative HMI Wearables Smart sensors AGS actuators Battery cables Wireless
chargingAmbient lighting
Smart textiles / Floor mats
ADAS modules Video radar decision units
Cloud services V2X modules Active surfaces DC-DC converters
Energy recuperation
Mirror actuators Lift gates Projection lighting
Sensor fusion boxes
Smart gatewaymodules
Infotainment and displays
Interior cameras
Solenoids Wire harnesses Overhead consoles
Dome lights
46
Levers of Automotive Growth
98
180
450 500
FY11 FY14 FY17 FY18E
# of vehicle models $ content per vehicle
43
88
118 134
148
185
FY11 FY14 FY17 FY18E FY19E FY20E
47
Continuously Driving Content in Vehicles
Rear CompartmentRear Tail Lamp PCBAs
LED Tail Lamp Controllers
DoorsMotion Control
Modules
SeatsPower Seat Modules
Engine & PowertrainRecuperation Modules
DC/DC ConvertersHigh Precision Solenoids (Engine & Transmission)
Wiring Harnesses (Al & Cu)Battery Cables
Specialized Harnesses (incl. FPC & AL)
Front EndFront Lamp PCBAsLight Control ModulesActive Grill Shutter Actuators
Instrument PanelDigital LCD GaugesLED/RGB Ambient Lighting
Overhead SystemsOverhead ConsolesDome LampsSunroof Controllers
Connectivity/InfotainmentConnectivity & Media ModulesMedia Device Interface ModulesRear Seat Entertainment ModulesVehicle System Interface ModulesHead Units
Mirror ActuatorsGlass
Power-folding
48
$83M
$1.0B
FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18E FY19E FY20E
Sustaining Double Digit Automotive Growth
+35%11 yearCAGR
>10%3-yearCAGR
$2.3B
Revenue
49
Medical Solutions and Technology Portfolio
2011
Blood Glucose Meter
Disposables Diagnostics
2013
Drug Delivery devices
Implantables Patient mobility Infusion sets Surgical Instruments
2016
Software solutions
CGM Ophthalmology Imaging Orthopedics Digital health Combination drug delivery
2017
50
Expanding Medical OfferingsNeuro-stimulationTumor Treating FieldsPain Management
OrthopedicsAircasts
ProstheticsJoint Replacement
Surgical Implants
Laboratory DiagnosticsPoint of Care
Immunoassay Machines
MobilityHospital Beds
Mobility Systems
OpticalDry Eye Treatment
Surgical ToolsPowered instrumentsSurgical Stapling & Cutting ToolsEndoscopic EquipmentCatheters
Wound HealingNegative Pressure Wound Healing Systems
ImagingCTUltrasoundRadiography
MonitoringHome Monitoring
Vital Sign Monitoring
Diabetes CareBlood Glucose MonitorsInsulin Delivery Devices
Digital HealthConnected Medical Grade Platform
Dosage Compliance
Drug DeliveryWearable Patches & PumpsDrug Infusion SystemsSmart Auto Injectors & Injection Pens
51
Medical Back on Double Digit Trajectory
$242M
$1.0B
FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18E FY19E FY20E
Revenue+20%11 yearCAGR
10%3-yearCAGR
$1.8B
52
Latest Financial Update
223 205178 188
220
3.6% 3.5%3.0% 3.0% 3.3%
Dec-16 Mar-17 Jun-17 Sep-17 Dec-17
Adj. Operating Margin
Revenue & Adjusted Gross Margin($M)
Adjusted Operating Income ($M)
6,1155,863 6,008
6,270
6,752
7.1% 7.1% 6.8% 6.7% 6.7%
Dec-16 Mar-17 Jun-17 Sep-17 Dec-17
Adj. Gross Margin
Quarterly Financial Highlights
20% 20% 19% 18% 17%
Dec-16 Mar-17 Jun-17 Sep-17 Dec-17
Return on Invested Capital(ROIC %)
$0.34 $0.29
$0.24 $0.27
$0.31
Dec-16 Mar-17 Jun-17 Sep-17 Dec-17
Adjusted Earnings Per Share (EPS)
54
Q3 FY18 Target AdjustedOperating Margin Range
($M)Rev$ OP$
(adj.)OP%
(adj.)
$1,979 $50 2.5%Disciplined investments to expand and reinforce our cloud data center progress while managing legacy businesses
$2,057 $39 1.9% Improving financial performance with Nike and continuing portfolio evolution
$1,491 $61 4.1%Record quarterly revenue and profits reflecting continued strong demand across diversified markets and successful new large program ramps
$1,225 $101 8.2% Record quarterly revenue and profits from strong growth and consistent operational execution
Corporate Services &
Other-- ($31) --
Total $6,752 $220 3.3%
6
4
2
2.5
9
6
4
3.5
Operating Performance by Business Group
1.9%
2.5%
4.1%
CEC
CTG
IEI
HRS8.2%
55
29%
22%18%
31%Q3 FY18 Revenue
40%
CTG CEC
IEIHRS
Q3 FY2018 Business HighlightsContinued Structural
Portfolio Evolution
» HRS and IEI growth accelerating as anticipated
» Successfully booking new customers and expanding Sketch-to-ScaleTM relationships
Accelerating Revenue Growth
» 4th straight quarter of Y/Y revenue growth» HRS and IEI growing 20% and 31% Y/Y
respectively, both achieving record quarterly revenue and profit
» Fiscal 2018 revenue growth on track
5,7735,877
6,0096,115
5,8636,008
6,270
6,752
Q1 Q2 Q3 Q4
Quarterly Revenue Year-Over-Year($M)
Dec-16 Dec-17Sep-16 Sep-17Jun-16 Jun-17Mar-16 Mar-17
20%
25%
40%
15%
Q3 FY18 Adj. OP$
65%
CTG CEC
IEI
HRS
56
Revenue by Business GroupDec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18E
($M) $ $ $ $ $ Q/Q % Y/Y % Outlook Y/Y %
2,102 1,983 1,973 1,901 1,979 4% (6%) Down 5% to 10%
1,849 1,535 1,512 1,755 2,057 17% 11% Up 5% to 10%
1,141 1,296 1,391 1,454 1,491 3% 31% Up 15% to 25%
1,023 1,049 1,132 1,160 1,225 6% 20% Up 10% to 20%
Total $6,115 $5,863 $6,008 $6,270 $6,752 8% 10%
CEC
CTG
IEI
HRS
*Reflects mid-point of Mar-18E guidance
29%
25%19%
27%
Mar-18E*
44%
CTGCEC
IEIHRS
Quarterly Revenue Mix(Y/Y) 34%
22%18%
26%Mar-17
40%
CTGCEC
IEIHRS
57
Fourth Quarter Guidance – March 2018
GAAP Income Before Income Taxes $70 - $100 million
GAAP Earnings Per Share $0.10 - $0.15
Other Information:Interest & Other Expense $35 - $40 million
Adjusted Income Tax Rate Mid-range of 10% to 15%
WASO ~534 million shares
($M, except per share amounts)
$6,100 - $6,500 Revenue
$200 - $230 Adjusted Operating
Income
$0.28 - $0.32 Adjusted Earnings
Per Share
58
Creating a smarter, more connected world
For more information contact:Kevin KesselVP, Investor Relations & Corporate [email protected](408) 576 - 7985
Or visit us at investors.flex.com
Katherine ChenAnalyst, Investor [email protected](408) 577 - 4037