Flex — Second Quarter Fiscal 2027 Earnings Summary

Financial Performance:

• Reported Q2 net sales of $8.5 billion, representing a 25% increase versus the prior year.
• GAAP operating margin was 4.9%, while adjusted operating margin was 7.1%.
• Reported GAAP EPS of $0.70 and record adjusted EPS of $1.18.
• GAAP operating income was $414 million; adjusted operating income was $607 million.
• GAAP net income was $263 million; adjusted net income was $443 million.
• Cash provided by operating activities was $501 million.
• Free cash flow was $261 million.
• As of September 25, 2026, total assets were $27.377 billion, up from $22.060 billion as of March 31, 2026.
• Long-term debt, net of current portion, stood at $5.213 billion as of September 25, 2026, compared to $3.751 billion as of March 31, 2026.
• Deferred revenue and customer working capital advances increased to $2.534 billion as of September 25, 2026, from $2.156 billion as of March 31, 2026.
• For the six-month period ended September 25, 2026, net sales were $16.419 billion, GAAP operating income was $806 million, and GAAP net income was $548 million.

Guidance and Future Outlook:

• Third Quarter Fiscal 2027 net sales guidance is $8.87 billion to $9.17 billion, with a midpoint growth of 28%.
• Third Quarter Fiscal 2027 adjusted operating income guidance is $685 million to $715 million.
• Third Quarter Fiscal 2027 adjusted EPS guidance is $1.19 to $1.25, representing a midpoint growth of 40%.
• Updated Fiscal Year 2027 net sales guidance is $34.9 billion to $35.9 billion, with a midpoint growth of 27%.
• Updated Fiscal Year 2027 adjusted operating margin guidance is 7.6% to 7.8%.
• Updated Fiscal Year 2027 adjusted EPS guidance is $4.84 to $5.16, representing a midpoint growth of 52%.
• Full-year adjusted income tax rate guidance is 21%.
• Weighted average shares outstanding for the third quarter are expected to be approximately 375 million.
• Guidance reflects expected results for the full fiscal year and includes contributions from recent acquisitions closed subsequent to September 25, 2026, but does not give effect to the planned spin-off of the Cloud and Power Infrastructure segment.

Business Segments and Product Lines:

• The company is advancing the planned spin-off of its Cloud and Power Infrastructure segment into an independent, publicly traded company.
• The acquisition of EPC Power has completed the company's end-to-end Power portfolio and is expected to be immediately accretive in fiscal 2027.
• The company unveiled the "Axiom" name and anticipated leadership for the new entity as part of the separation strategy.
• Flex is helping customers accelerate data center deployment by solving power, heat, and scale challenges through cutting-edge power and cooling technology and scalable IT infrastructure solutions.

Market and Competitive Landscape:

• The company operates in an extremely competitive industry.
• Flex serves a global footprint spanning 30 countries.
• The company notes dependence on a small number of customers and industries that produce technologically advanced products with short product life cycles.

Risks and Challenges:

• Risks include the potential failure to complete the planned spin-off on the anticipated timeline or at all, and the possibility that the transaction may not achieve intended benefits or may adversely impact existing business relationships.
• Macroeconomic risks include inflationary pressures, currency volatility, stagflation, slower economic growth, recession, and high or rising interest rates.
• Geopolitical uncertainties include trade conflicts, sanctions, tariffs, and ongoing conflicts in Russia/Ukraine and the Middle East.
• Supply chain disruptions, including logistical constraints, manufacturing interruptions, and reliance on sole or primary source suppliers, pose risks.
• Risks associated with acquisitions include the possibility of not fully realizing projected benefits from acquisitions such as Electrical Power Products, Inc. and EPC Power Corp.
• The company faces risks related to IT or physical security breaches, data privacy violations, and product liability.
• The company is exposed to fluctuations in raw material and component pricing, including semiconductors, labor, and energy.

Management Commentary and Tone:

• CEO Revathi Advaithi stated the company continues to execute from a position of strength while advancing the planned spin-off.
• Management views the acquisition of EPC Power as completing the end-to-end Power portfolio.
• The company aims to create two focused companies positioned for long-term success through the separation.

Other Key Points:

• The company recognized $110 million in "Legal and other" charges during the three-month period ended September 25, 2026, primarily related to the planned spin-off of the Cloud and Power Infrastructure segment and acquisition costs.
• Free cash flow for the second quarter was negatively impacted by $61 million of separation costs incurred in connection with the spin-off.
• The company recognized $13 million in restructuring and impairment charges during the second quarter, most of which related to employee severance.
• The company recognized $2 million in gains on the divestiture of a subsidiary during the second quarter.
• No share repurchases were made during the six-month period ended September 25, 2026.
• The company acquired businesses, net of cash acquired, for $1.134 billion during the six-month period ended September 25, 2026.
• Proceeds from the divestiture of businesses, net of cash held, were $90 million during the six-month period ended September 25, 2026.
• The company incurred $19 million in restructuring charges during the second quarter and $15 million in the first quarter of fiscal 2027.
• A conference call and live webcast were hosted on October 28, 2026, to review results.