Earnings

Flex Lifts Fiscal 2027 Outlook After Record Adjusted Profit Of $1.18 A Share

The contract manufacturer raised its full-year sales and earnings guidance as the unit slated for spin-off keeps growing.

Flex, the contract manufacturer that builds products for other companies and sells power and cooling gear, raised its fiscal 2027 sales and earnings guidance Wednesday after posting record adjusted earnings of $1.18 a share for the second quarter. Net sales rose 25% from a year earlier to $8.5 billion, the company said.

Sales up 25%, profit gap wide

Adjusted operating income was $607 million, a 7.1% margin. On standard accounting, operating income was $414 million, a 4.9% margin, and earnings were $0.70 a share. A year earlier those figures were $0.79 adjusted and $0.52 standard.

The gap comes mostly from $110 million of legal and other costs the company excluded from the adjusted figures. About $91 million of that related to the planned spin-off of its Cloud and Power Infrastructure segment, and $19 million to acquisition costs.

Free cash flow was $261 million, against $305 million a year earlier. Spin-off separation costs reduced it by $61 million.

Higher guidance, led by data-center power

For the full year, Flex now expects net sales of $34.9 billion to $35.9 billion, up from $33.7 billion to $35.2 billion. Adjusted earnings per share are guided to $4.84 to $5.16, from $4.42 to $4.74, and adjusted operating margin to 7.6% to 7.8%, from 7.0% to 7.2%.

Cloud and Power Infrastructure is expected to grow sales 75% to 85% this fiscal year. The other two segments, Regulated Manufacturing Solutions and Integrated Technology Solutions, combined are guided to 8% to 11%.

For the third quarter, Flex guides to sales of $8.87 billion to $9.17 billion and adjusted earnings of $1.19 to $1.25 a share. Adjusted operating income is guided to $685 million to $715 million. The full-year outlook includes acquisitions closed after September 25 and does not reflect the spin-off.

The Axiom spin-off and EPC Power

Flex plans to separate Cloud and Power Infrastructure into an independent, publicly traded company. CEO Revathi Advaithi said the unveiling of the Axiom name and anticipated leadership is "another important step toward creating two focused companies positioned for long-term success."

She said the acquisition of EPC Power completes the company's power portfolio and will be immediately accretive, meaning it adds to earnings, in fiscal 2027. Flex spent $1,134 million on acquisitions in the first six months of the fiscal year, and long-term debt stood at $5,213 million at September 25, against $3,751 million at March 31.

Flex management reviews the results on a call at 8:30 a.m. ET Wednesday.