Flex Raises Full-Year Revenue Outlook By About $950 Million, Half From EPC Power
The CFO split the guidance increase evenly between the new acquisition and the base business, and the CEO called cooling "nascent."
Flex, the contract manufacturer that also sells power and cooling products, lifted its fiscal 2027 revenue outlook by about $950 million, and CFO Kevin Krumm said on the company's earnings call Wednesday that roughly half of it comes from the newly closed EPC Power purchase. The new range is $34.9 billion to $35.9 billion, up 27% at the midpoint.
Half acquired, half organic
Asked by a Stifel analyst to separate organic growth from acquisitions, Krumm said about $950 million was added to the guide. Approximately half is underlying improvement at Flex, he said, and the other half is EPC, which Flex closed on October 14.
Within the cloud and power infrastructure segment, now called Axiom, Krumm said about 10 percentage points of the 75% to 85% revenue growth guide comes from deals completed this year, EP Squared and EPC. The segment began the year guiding 65% to 75%, and its momentum has run "north of our original expectations," he said.
The segment grew 54% to $2.5 billion in the second quarter. Total second-quarter revenue was $8.5 billion, up 25%, and adjusted earnings reached $1.18 a share, up 49%. For the full year Flex now expects adjusted earnings of $4.84 to $5.16 a share.
Cooling is the soft spot
Asked how broader technology plans fit with power, CEO Revathi Advaithi said compute, cooling and power all matter to how Axiom builds its systems capability. Flex leads in compute and power, she said, but "cooling, our presence is still nascent."
New cooling products are planned over the next six months, she said. She later told another analyst testing would take a few months before the products are deployed.
The debt behind EPC
EPC carried $4.4 billion of debt incurred for the acquisition. An agreement announced October 5 to sell $2 billion of Axiom convertible preferred stock would repay about $2 billion of it, Krumm said. Until then Flex expects elevated interest expense, though he expects the deal to add to earnings in fiscal 2027.
Flex plans to spin off Axiom, which Krumm said should happen in early 2027. Capital spending is guided at $1.5 billion to $1.6 billion this year.
Krumm said Flex will update its fiscal 2028 view at Investor Day, and Advaithi put that event at November 10.
Sources
- flex-20261028 — sec.gov
- Flex Fiscal Q2 Adjusted Earnings, Sales Rise; Fiscal Q3 Outlook Set; Fiscal 2026 Guidance Increased — Yahoo Finance
- Flex to Report Q2 Earnings: What's in the Cards for the Stock? — Yahoo Finance
- FLEX REPORTS SECOND QUARTER FISCAL 2027 RESULTS — prnewswire.com
