Flextronics Announces Record First Quarter Results Thursday July 26, 4:02 pm ETRecord First Quarter Net Sales Up 27% to $5.2 Billion;Record First Quarter Adjusted Net Income up 29% to $134 Million;Record First Quarter Adjusted EPS of $0.22SINGAPORE, July 26 /PRNewswire-FirstCall/ -- Flextronics (Nasdaq: FLEX - News) today announced results for its first quarter ended June 29, 2007 as follows: (US$ in millions, except EPS) Three Month Periods Ended June 29, 2007 June 30, 2006 Net sales $5,157 $4,059 GAAP operating income $133 $117 Adjusted operating income (1) $153 $124 GAAP net income $107 $85 Adjusted net income (1) $134 $104 Diluted GAAP EPS $0.17 $0.14 Adjusted EPS (1) $0.22 $0.18 (1) A reconciliation of non-GAAP financial measures to GAAP financial measures is presented in Schedule II attached to this press release.Record First Quarter ResultsNet sales for the first quarter ended June 29, 2007 were $5.2 billion, which represents an increase of $1.1 billion, or 27%, over the year ago quarter. For the first quarter ended June 29, 2007 adjusted net income increased 29% over the year ago quarter to $134 million, or $0.22 per diluted share, compared to $104 million, or $0.18 per diluted share, in the year ago quarter.GAAP net income increased 26% to $107 million, or $0.17 per diluted share, for the first quarter ended June 29, 2007 compared to $85 million, or $0.14 per diluted share, in the year ago quarter.Mike McNamara, Chief Executive Officer of Flextronics, said, "We continue to maintain a strong financial position with $770 million in cash, no short term debt maturities, and a record low debt to capital leverage ratio of 19%. We decreased our inventory balance by $47 million sequentially and increased our sequential inventory turns from 6.9 to 7.7 times. We remain intensely focused on generating a higher return on capital while growing our business, as evidenced by our 40 basis point increase in return on invested capital from the year ago quarter." McNamara added, "We continue to lead the industry with a cash conversion cycle of 13 days, which resulted in our operations generating positive cash flow of $145 million for the quarter. Even though revenues grew 27%, we still generated $73 million of free cash flow."McNamara concluded, "I am very proud of the dedication and hard work of our employees and management across the globe in making this a very successful quarter for Flextronics. I remain confident that our organization will continue to execute on our normal day-to-day operations and customer service requirements as we work through the integration planning associated with our previously announced acquisition of Solectron." GuidanceFor the second quarter ending September 28, 2007, revenue is expected to grow approximately 10-20% on a year-over-year basis to a range of approximately $5.3 billion to $5.6 billion and adjusted (non-GAAP) EPS is expected to grow 10-20% on a year-over-year basis to a range of $0.22-$0.24 per share.The Company reiterated its 2008 fiscal year expectations, with revenue expected to grow 10-15% on a year-over-year basis to a range of $20.7 billion to $21.7 billion and adjusted (non-GAAP) EPS is expected to grow 15-20% on a year-over-year basis to a range of $0.92-$0.96 per share. The fiscal year 2008 guidance excludes any impact from the Solectron acquisition.Quarterly GAAP earnings are expected to be lower than the guidance provided herein by approximately $0.04 per diluted share per quarter reflecting quarterly intangible amortization and stock-based compensation expense.Update on Solectron AcquisitionThomas J. Smach, Chief Financial Officer of Flextronics, stated, "While we have received U.S. antitrust clearance, we have not yet received all outstanding regulatory approvals. Assuming no complications in the remaining approvals required we now feel as though we could close the transaction in October." Smach added, "Our integration planning has been further developed since the announcement and we are now reducing the estimated time to achieve at least $200 million of annualized after-tax synergies from 18-24 months to 12-18 months." http://biz.yahoo.com/prnews/070726/aqth142.html?.v=8To read the full press release just click the above link or go to the Flextronics website to view a pdf version. While these are not blowout results, I do think they show the underlying strength of the business. Guidance for fiscal 2008 is basically unchanged from the last earnings release, but the timetable for the Solectron acquisition is now better defined. I continue to feel the shares offer good value... JT :-)
(US$ in millions, except EPS) Three Month Periods Ended June 29, 2007 June 30, 2006 Net sales $5,157 $4,059 GAAP operating income $133 $117 Adjusted operating income (1) $153 $124 GAAP net income $107 $85 Adjusted net income (1) $134 $104 Diluted GAAP EPS $0.17 $0.14 Adjusted EPS (1) $0.22 $0.18
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