Slide 1: Our Financial Framework
Our Financial Framework Chris Collier Chief Financial Officer 54
Slide 2: Topics to cover
Topics to cover 1 Our near-term performance 2 Our financial progress 3 Capital allocation strategy 4 Operating segments 5 Long-term financial framework 55 55
Slide 3: Results have improved in the last twelve months
Results have improved in the last twelve months Revenue Adj. Operating Adj. Earnings Adj. Free ($M) Income 3.6% Per Share Cash Flow ($M) Adj. Operating ($M) Margin 3.3% 26,211 $1.23 25,441 3.1% 895 668 24,952 $1.14 872 $1.09 236 786 3 FY18 FY19 LTM FY18 FY19 LTM FY18 FY19 LTM FY18 FY19 LTM Solid fou
Slide 4: Key progress made towards stabilizing financial performance
Key progress Disengaged from over $1.2B of low margin, made towards high volatility business stabilizing Achieved growth in key end markets such as financial industrial and health solutions performance Improved adjusted gross and operating margin performance Maintained strong cost discipline Managed
Slide 5: Actions taken to diversify our portfolio and deliver sustainable business
Actions taken to diversify our portfolio and deliver sustainable business Sales by Home and Lifestyle Country USA Hungary China Other 12% No single country 14% | 17% 24% | 18% 5% | 5% 15% represents more Server & Mexico India than 25% of our Storage 18% | 25% 6% | 9% sales or PP&E 3% Automotive Mala
Slide 6: Disciplined sustainable execution – Adj. Gross Margin
Disciplined sustainable execution – Adj. Gross Margin Adj. Gross Profit ($M) Adj. Gross Margin • Displayed adjusted gross margin expansion last 3 quarters – Q3’20 adjusted gross margin reached 7.1% 6.7% 6.7% • Expansion driven from improving business mix and 6.5% enhancing value-add services 1,708 1
Slide 7: Disciplined sustainable execution – Adj. SG&A
Disciplined sustainable execution – Adj. SG&A Adj. SG&A ($M) % of revenue • Cost focus driven across all functions at every level of 3.6% the enterprise 3.2% 3.2% – Strategic spend management initiative 922 • Industry leading SG&A expense management 836 789 • Sharpened design & engineering focus ena
Slide 8: Disciplined capital investment
Disciplined capital investment Net Capital Expenditures* ($M) Depreciation • $1.1+ billion of capital investment in last 2 fiscal years 631 – Over 50% supported auto, health solutions and industrial businesses 517 • Focused investments in our future 434 455 433 – ~70% of new capex is in Flex Reliabi
Slide 9: Sustainable adjusted cash flow generation
Sustainable adjusted cash flow generation Adj. Free Cash Flow ($M) • Net working capital management sustainability Adj. FCF Conversion % 106% – Maintain target range of 6-8% of revenues 668 • Historical Adjusted Free Cash Flow (FCF) Conversion – 3-year (FY17-FY19) average: 49% – 5-year (FY15-FY19) a
Slide 10: Balanced capital structure
4,000 Balanced capital structure 1000 900 3,500 1,750 revolver 800 • Flexible and balanced maturity profile 3,000 700 650 • No annual maturities greater 2,500 133 600 600 2,000 500 112 than anticipated annual 500 adjusted free cash flow 1,789 400 440 cash 1,500 300 • Ample liquidity to support 306 1
Slide 11: Prudent capital allocation strategy
Prudent capital allocation strategy Invest in Business Returning capital through share repurchase Repurchased over $3.4B of shares in last 10 years • Focus on disciplined organic investment to drive long-term profitable growth Shares Repurchased ($M) • Targeted M&A to expand long cycle • Long-standi
Slide 12: Our business segment transformation
Our business segment transformation CTG CEC IEI HRS Flex Agility Solutions Segment Flex Reliability Solutions Segment Consumer Health Operational Lifestyle Benefits CEC Automotive Industrial Devices Solutions Commercial Benefits Benefits for Flex Enterprise Operational Benefits Results Commercial Be
Slide 13: Flex Reliability Solutions
Flex Reliability Solutions LTM Financial Snapshot ($M) Sales by Business Group Business Characteristics Revenue $9,848 • Higher margin, higher mix products Operating Profit $623 20% • Product life cycles of 4-10 Operating Margin 6.3% 50% years • Increased capital intensity • Greater design and Long-
Slide 14: Flex Agility Solutions
Flex Agility Solutions LTM Financial Snapshot ($M) Sales by Business Group Business Characteristics Revenue $15,103 • Volume-variable, lower 25% mix products Operating Profit $387 • Product life cycles of 1-3 25% Operating Margin 2.6% years • Focused on cost structure • Lower capital intensity Long-
Slide 15: Our long-term financial framework
Our long-term financial framework Revenue Organic growth at or above GDP Growth Portfolio mix focused on longer cycle business Earnings Mid single digits adjusted operating margin Expansion 10%+ annual adjusted EPS growth Cash Disciplined investment levels Generation 80%+ adjusted FCF conversion Cap
Slide 16: Moving forward
Moving • We have made deep and sustainable changes to our business forward • Our mid-to-long term plan is to shift mix to a more diversified, higher value portfolio • We are growing in specific, targeted markets where our differentiated capabilities in complex engineering-led programs create a win-w
Slide 17: flex.
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Slide 18: Appendix: Reconciliation of GAAP to Non-GAAP Measures
Appendix: Reconciliation of GAAP to Non-GAAP Measures FY18 FY19 LTM ($Thousands) % of revenue % of revenue % of revenue GAAP gross profit $1,595,882 6.3% $1,517,775 5.8% $1,352,624 5.4% Stock-based compensation expense 19,102 19,554 16,041 Customer related asset impairments - 46,684 97,754 Restructu
Slide 19: Appendix: Reconciliation of GAAP to Non-GAAP Measures
Appendix: Reconciliation of GAAP to Non-GAAP Measures FY18 FY19 LTM ($Thousands, except per share amounts) GAAP income (loss) $428,534 $93,399 ($25,032) Intangible amortization 78,640 74,396 66,240 Stock-based compensation expense 85,244 76,032 68,303 Restructuring Charges 90,691 113,313 212,003 Cus
Slide 20: Appendix: Reconciliation of GAAP to Non-GAAP Measures
Appendix: Reconciliation of GAAP to Non-GAAP Measures LTM LTM December 31, 2019 December 31, 2019 ($Thousands) ($Thousands) Segment income: Reconciliation of segment income to income before Flex Agility Solutions $386,894 income taxes Total segment income $895,187 Flex Reliability Solutions 622,816