FLEX REPORTS FOURTH QUARTER AND FISCAL 2025 RESULTS

SCHEDULE I

FLEX

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per share amounts)

Three-Month Periods Ended

March 31, 2025

March 31, 2024

GAAP:

Net sales

$                  6,398

$                  6,169

Cost of sales

5,807

5,658

Restructuring charges

28

74

Gross profit

563

437

Selling, general and administrative expenses

234

261

Restructuring charges

3

1

Intangible amortization

21

16

Operating income

305

159

Interest expense

52

52

Interest income

13

12

Other charges (income), net

(13)

8

Equity in earnings (losses) of unconsolidated affiliates

—

6

Income from continuing operations before income taxes

279

117

Provision for (benefit from) income taxes

57

(278)

Net income attributable to Flex Ltd.

$                     222

$                     395

GAAP EPS:

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

$                    0.57

$                    0.93

Diluted shares used in computing per share amounts

389

425

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)

Twelve-Month Periods Ended

March 31, 2025

March 31, 2024

GAAP:

Net sales

$              25,813

$              26,415

Cost of sales

23,584

24,395

Restructuring charges

70

155

Gross profit

2,159

1,865

Selling, general and administrative expenses

904

922

Restructuring charges

16

20

Intangible amortization

70

70

Operating income

1,169

853

Interest expense

218

207

Interest income

61

56

Other charges (income), net

(14)

44

Equity in earnings (losses) of unconsolidated affiliates

(3)

8

Income from continuing operations before income taxes

1,023

666

Provision for (benefit from) income taxes

185

(206)

Net income from continuing operations

838

872

   Net income from discontinued operations, net of tax

—

373

Net income

838

1,245

Net income attributable to noncontrolling interest and redeemable

noncontrolling interest

—

239

Net income attributable to Flex Ltd.

$                    838

$                 1,006

GAAP EPS:

Diluted earnings per share from continuing operations

$                   2.11

$                   1.98

Diluted earnings per share from discontinued operations

—

0.30

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

$                   2.11

$                   2.28

Diluted shares used in computing per share amounts

398

441

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

March 31, 2025

March 31, 2024

GAAP operating income

$                    305

$                    159

Intangible amortization

21

16

Stock-based compensation expense

32

27

Restructuring charges

30

75

Customer related asset impairment

4

14

Legal and other

4

42

Non-GAAP operating income

$                    396

$                    333

GAAP provision for (benefit from) income taxes

$                      57

$                  (278)

Intangible amortization benefit

5

2

Tax benefit on release of U.S. valuation allowance

—

461

Tax expense on foreign subsidiaries indefinite reinvestment assertion

change

—

(135)

Other tax related adjustments

3

(9)

Non-GAAP provision for income taxes

$                      65

$                      41

GAAP net income from continuing operations

$                    222

$                    395

Intangible amortization

21

16

Stock-based compensation expense

32

27

Restructuring charges

30

75

Customer related asset impairment

4

14

Legal and other

4

42

Interest and other, net

(20)

—

Equity in earnings of unconsolidated affiliates

—

(6)

Adjustments for taxes

(8)

(319)

Non-GAAP net income from continuing operations

$                    285

$                    244

Diluted earnings per share from continuing operations:

GAAP 

$                   0.57

$                   0.93

Non-GAAP

$                   0.73

$                   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)

Twelve-Month Periods Ended

March 31, 2025

March 31, 2024

GAAP operating income

$                 1,169

$                    853

Intangible amortization

70

70

Stock-based compensation expense

125

113

Restructuring charges

84

172

Customer related asset impairment

2

14

Legal and other

9

45

Non-GAAP operating income

$                 1,459

$                 1,267

GAAP provision for (benefit from) income taxes

$                    185

$                  (206)

Intangible amortization benefit

15

11

Tax benefit on release of U.S. valuation allowance

—

461

Tax expense on foreign subsidiaries indefinite reinvestment assertion

change

—

(135)

Other tax related adjustments

43

7

Non-GAAP provision for income taxes

$                    243

$                    138

GAAP net income from continuing operations

$                    838

$                    872

Intangible amortization

70

70

Stock-based compensation expense

125

113

Restructuring charges

84

172

Customer related asset impairment

2

14

Legal and other

9

45

Interest and other, net

(15)

11

Equity in earnings of unconsolidated affiliates

—

(6)

Adjustments for taxes

(58)

(344)

Non-GAAP net income from continuing operations

$                 1,055

$                    947

Diluted earnings per share from continuing operations:

GAAP 

$                   2.11

$                   1.98

Non-GAAP

$                   2.65

$                   2.15

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

SCHEDULE III

FLEX

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions)

As of March 31, 2025

As of March 31, 2024

ASSETS

Current assets:

Cash and cash equivalents

$                           2,289

$                           2,474

Accounts receivable, net of allowance for doubtful

accounts

3,671

3,033

Contract assets

616

249

Inventories

5,071

6,205

Other current assets

1,194

1,031

Total current assets

12,841

12,992

Property and equipment, net

2,330

2,269

Operating lease right-of-use assets, net

562

601

Goodwill

1,341

1,135

Other intangible assets, net

343

245

Other non-current assets

964

1,015

Total assets

$                         18,381

$                         18,257

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Bank borrowings and current portion of long-term debt

$                           1,209

$                                 —

Accounts payable

5,147

4,468

Accrued payroll and benefits

560

488

Deferred revenue and customer working capital advances

1,957

2,615

Other current liabilities

977

968

Total current liabilities

9,850

8,539

Long-term debt, net of current portion

2,483

3,261

Operating lease liabilities, non-current

456

490

Other non-current liabilities

590

642

Total liabilities

13,379

12,932

Total shareholders' equity

5,002

5,325

Total liabilities and shareholders' equity

$                         18,381

$                         18,257

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

SCHEDULE IV

FLEX

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

Twelve-Month Periods Ended

March 31, 2025

March 31, 2024

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income

$                    838

$                 1,245

Depreciation, amortization and other impairment charges

539

537

Changes in working capital and other, net

128

(456)

Net cash provided by operating activities

1,505

1,326

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property and equipment

(438)

(530)

Proceeds from the disposition of property and equipment

15

25

Acquisitions of businesses, net of cash acquired

(405)

—

Proceeds from divestiture of businesses, net of cash held in divested

businesses

(21)

12

Other investing activities, net

11

1

Net cash used in investing activities

(838)

(492)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from bank borrowings and long-term debt

499

2

Repayments of bank borrowings and long-term debt

(58)

(409)

Payments for repurchases of ordinary shares

(1,257)

(1,298)

Proceeds from issuances of Nextracker shares

—

552

Payment for purchase of Nextracker LLC units from TPG

—

(57)

Capital reduction from Nextracker spin off

—

(368)

Other financing activities, net

(5)

(78)

Net cash used in financing activities

(821)

(1,656)

Effect of exchange rates on cash and cash equivalents

(31)

2

Net decrease in cash and cash equivalents

(185)

(820)

Cash and cash equivalents, beginning of year

2,474

3,294

Cash and cash equivalents, end of year

$                 2,289

$                 2,474

(1)

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:

Stock-based compensation expense 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 in its non-GAAP measures.

During the three and twelve-month periods ended March 31, 2025, the Company recognized approximately $30 million and $84 million of restructuring charges, respectively, most of which related to employee severance. During the three and twelve-month periods ended March 31, 2024, the Company recognized approximately $75 million and $172 million of restructuring charges, respectively, most of which related to employee severance.

Customer related asset impairments may consist of non-cash impairments of property and equipment to estimated fair value for customers from whom we have disengaged or are in the process of disengaging as well as additional provisions for doubtful accounts receivable for customers that are experiencing financial difficulties and inventory that is considered non-recoverable that is written down to net realizable value. In subsequent periods, the Company may recover a portion of the costs previously incurred related to assets impaired or reduced to net realizable value. During the three and twelve-month periods ended March 31, 2025, the Company recognized approximately $4 million and $2 million of customer related asset impairments, respectively. During the three and twelve-month periods ended March 31, 2024, the Company recognized approximately $14 million of customer related asset impairments. 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.

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 and asset impairment. During the fourth quarter and for the fiscal year ended March 31, 2024, the Company recognized a $50 million loss contingency for a commercial dispute related to a construction matter with related production objectives. During fiscal year 2025, the Company accrued $5 million related to asset impairment and $4 million related to acquisitions costs. 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.

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. During the fourth quarter of fiscal year 2025, the Company realized a $19 million bargain purchase gain from an acquisition where the fair value of identifiable assets was in excess of the purchase consideration.

Equity in earnings (losses) of unconsolidated affiliates consists of various other types of items that are not directly related to ongoing or core business results, such as gains (losses) 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. In fiscal year 2024, the Company recognized approximately $6 million equity in earnings from the value increases in certain non-core investment funds. No such event occurred in fiscal year 2025.

Adjustment for taxes relates 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 twelve-month periods ended March 31, 2025, the Company recorded $8 million and $58 million net benefits, respectively. During the three and twelve-month periods ended March 31, 2024, the Company recorded $319 million and $344 million net benefits, respectively, of which the majority relates to a $461 million benefit from a release of a valuation allowance previously applied to the Company's U.S. deferred tax assets, partially offset by an expense of $135 million reflecting a change in the Company's assertion to indefinitely reinvest its earnings in China.