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2013 Investor & Analyst Day
Chris Collier, Chief Financial Officer
2
A Financial Strategy That Supports Our Platform
Committed to increasing shareholder value
The
Flextronics
Platform
Revenue Growth
Operating Profit
Expansion
EPS Accretion
Cash Flow
Generation
Capital
Structure
Strength
FINANCIAL
PRINCIPLES
FY13 Year in Review
4
FY13 Performance - Revenue
Our execution was challenged by weak macro and customer demand softness
• Significant weakness in Multek
• Power business program delays
INS
IEI
Components
HRS
HVS
$23.6B
INS
HVS
IEI HRS
May
2012
Target
Components
FY13
Actual
$26-27B • Significant weakness in telecom
and server/storage
• Accelerated exit of RIM
• Demand softness in consumer
• Weak demand in semi-cap
• Strong growth in appliances
• Strong growth in Medical/Auto
• Strategic acquisitions
5
FY13 Performance – Adjusted Operating Margin
Factory under-absorption due to
revenue reduction
Multek factory under-absorption
due to revenue reduction
Strong operational execution
despite sharp revenue reduction
Stable margin while revenue under
pressure
Components
IEI
HVS
Performed to plan HRS
INS
Missing our target is not acceptable
2.6%
Components
HRS
INS
HVS IEI
3.3% May
2012
Target
FY13
Actual
6
$182 $185 $200
$209
~ $215
Q1'13 Q2'13 Q3'13 Q4'13 FY14E
SG&A* Expense Trend ($ Millions)
Investing in the Platform for Growth
Focused and disciplined investment to optimize our Platform
• Incremental spend associated with
acquisitions
• Boosting innovation and our supply
chain solutions technologies
• Enhancing selling and business
development capabilities
• Incremental corporate infrastructure
Stabilized at ~$215M quarterly run rate
Quarterly
run rate
*Adjusted SG&A includes Design and R&D expense but excludes stock compensation expense and restructuring charges
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Charges ($ Millions)
FY’13 Q1’14E
Update
Cash Charges $123 ~$30 - $35
Non-Cash Charges 104 ~5
Total Charges $227 ~$35 - $40
Restructuring Program Update
Program Benefits:
• Estimated savings increased to ~$160M
• Cost reductions in headcount, depreciation
and operating expense
• 95% of savings associated with cost of sales
Positioned for improved operational efficiency and profitability
~$10M ~$20M
~$35M ~$40M
Q4'13 Q1'14 Q2'14 Q3'14
Savings Trajectory to ~$160M Estimated quarterly savings
Program Update:
• Slight expansion to ~$35 - $40M
• One additional factory closing and other
rationalization efforts
• Accounting charges completed in Q1’14
8
FY13 Year in Review
Achieved record quarterly revenue of ~$350M at its target margin
Securing new business broadly distributed across our portfolio
Repurchased 52M shares; brings our total net buyback to 27% of
shares outstanding since FY09
$1B bond deal that extended our average debt maturity by ~3 years
Generated over $1B in Operating Cash Flow, and
over $680M in Free Cash Flow
Exceptional bookings
Strong Cash Flow
Improved Capital Structure
Executed Share Repurchases
Re-Positioned Power Business
Despite some challenges this past year, we accomplished . . .
Further strengthening our competitiveness
Portfolio Management
10
Diversification
Margins
Reduced Volatility
Working Capital
EPS Accretion
Flex
Balanced Portfolio Drives Optimal Shareholder Return
HVS
100%
Low-Volume
High Mix
100% 60/40 70/30
Revenue OP EPS Revenue OP EPSRevenue OP EPS
Less
Optimal Optimal
FY14 Roadmap to
Improved Performance
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Execution is paramount to achieve our desired results
Our Platform Creates Significant Earnings Expansion
1 Adjusted EPS is tax effected at 9% and assumes 650M shares outstanding
2 Adjusted operating profit reflects an estimated incremental $30M restructuring benefit achieved upon full savings run rate
Revenue
Operating
Profit
Operating
Margin
EPS1
~$750M
~$15M
~2.0%
2¢
~$350M
~$16M
~4.5%
2¢
-----
~$30M2
-----
4¢
-----
~$10M
-----
1¢
Google/MOT
Muted
Seasonality Restructuring Other
$5.3B
~$106M
2.0%
13¢
March
2013
~$500M
~$23M
~4.5%
3¢
New
Bookings
Ramp
$6.9B
~$200M
~2.9%
25¢
Revenue Growth
Path to 30%+
Growth
Cash Flow Generation &
Capital Structure
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$175
$370
$518 $500 $500
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
($ Millions) Mar 31
2012
Mar 31
2013
Cash $1,518 $1,587
Debt 2,189 2,068
Net Debt 671 481
Debt/EBITDA¹ (LTM)
1.9x 1.9x
Total
Liquidity² 2,878 3,087
Strong Capital Structure Significant Debt Maturities ($ Millions)
5% Sr. Notes 4.625% Sr. Notes
Our capital structure is in excellent shape and positioned to support our growth
¹ Debt/EBITDA: total funded debt divided by LTM EBITDA
² Total liquidity: cash at quarter-end plus unused revolver capacity
Term Loans
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Target
$3 - $4 Billion
$3 Billion
715
855
622
463 416
680
FY'08 FY'09 FY'10 FY'11 FY'12 FY'13 FY'14E FY'15E FY'16E FY'17E
Free Cash Flow Generation
Fundamentally Structured for Cash Flow Generation
• Growing operating profit
• Sustaining optimal working
capital management
• Maintaining disciplined
capex investments
Generating strong sustainable cash flow to support our growth
($ Millions)
16
Capital Allocation Strategy
~25% Strategic
Acquisitions
• Strategic value
• Revenue and operating growth
• EPS accretive
~40% Capex
• Invest for top-line growth
• Innovative solutions
• Sustaining our platform
~35% Returning
Value
• Committed to share repurchase
• Potential for dividends
Creating shareholder value with a long-term vision
Guidance &
Key Takeaways
18
Reiterate Guidance for Q1FY14 (June Qtr)
FLEX Business Groups JUN-13E Q/Q Outlook
Integrated Network Solutions Flat
Industrial & Emerging Solutions Low Single-Digit Growth
High Reliability Solutions Flat
High Velocity Solutions Low Double-Digit Growth
JUN-13E
Quarterly
Revenue
($ Millions)
$5,600
$5,300
JUN-13E
Quarterly
Adjusted EPS
$0.16
$0.12
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Key Takeaways
Our Platform provides complete supply chain solutions Competitively Advantaged
Our financial principles are the foundation for growth Accountability
Positioned and committed to increasing shareholder value
Strategically investing and optimizing our Platform Smart Investments
20
Appendix: Notes
The non-GAAP financial measures included in this presentation: adjusted SG&A, adjusted operating profit &
margin, adjusted EPS, debt to EBITDA and free cash flow may exclude certain amounts that are included in the
most directly comparable measures under GAAP or may be a supplemental measure of operating performance.
Adjusted financial measures exclude charges primarily for restructuring, stock-based compensation expense and
intangible amortization. Please refer to the Investors section of our website which contain the reconciliation of
non-GAAP financial measures to the most directly comparable GAAP measures.
Adjusted operating margin by business group excludes intangible amortization, stock compensation expense and
restructuring charges and represent approximations as the company does not include formal allocations of
common facilities and overhead costs, or centralized corporate services such as marketing, IT and other
administrative support. Although discrete financial information exists to a limited degree, the company
opportunistically allocates its resources according to specific customer opportunity irrespective of the business
group in which the business activity will be reported.
Q1FY14E Guidance Notes:
Quarterly GAAP earnings per diluted share are expected to be lower than the guidance provided herein by
approximately $0.03 reflecting quarterly intangible amortization and stock-based compensation expense, and by
approximately $0.06 for the remaining restructuring charges.