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Flex

Flex is the second largest electronics manufacturing services (EMS) company in terms of revenue after Hon Hai Precision (Foxconn). Flex designs, builds, ships, and services consumer electronics and industrial products. The EMS sector tends to have low margins, high customer concentration, and restructuring costs. However, margins and cash flow tend to be fairly stable. Flex and other EMS companies have expanded into non-electronics sectors such as medical, automotive, and energy. Those tend to have higher margins and longer product cycles. Flex reports four segments: Communications & Enterprise Compute (CEC), Consumer Technology Group (CTG), Industrial & Emerging Industries (IEI), and High Reliability Solutions (HRS). In F4Q17, 34% of sales were from CEC, 26% from CTG, 22% from IEI, and 18% from HRS. Flex estimates that 80% of its manufacturing capacity was located in low-cost regions as of March 31, 2017. In F4Q17, Flex's sales were ~27% from China, ~18% Mexico, ~10% Malaysia, ~10% Brazil, ~9% US, and ~25% other. (26 May 2017)

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Focused

Flex: Exiting Nike, CEO Retiring, Stock Down 35%

Earnings Note: 28 Oct 2018, 10:22 PM ET - Flex's F2Q19 earnings included a high profile exit from Nike, its CEO stepping down, and FY19 guidance being reduced, resulting in a 35% drop in its stock price. 

Technology: Tariffs Recap

Sector Analysis: 06 Aug 2018, 11:26 PM ET - The tech sector has been largely unaffected by tariffs enacted to date, although could be caught in the crossfire as the US contemplates additional tariffs on imports from China. We include company commentaries from calendar 2Q18 calls. 
Focused

Flex F1Q19: Expecting Margins to Improve

Earnings Note: 29 Jul 2018, 10:37 PM ET - Flex had continued top line growth primarily driven by its CTG segment although its operating margins continue to be below its target ranges in all segments except HRS. 

US, China & ZTE: Implications for TMT

Sector Analysis: 16 May 2018, 11:51 PM ET - Given recent tensions between the US and China, we discuss potential implications to sectors and companies within our TMT coverage universe. 
Focused

Flex: Nike Losses 2-3 Quarters More Than Expected

Earnings Note: 07 May 2018, 10:41 PM ET - The start-up costs at Nike continue to weigh on Flex's results, and the company pushed out its target to achieve profitability at Nike by 2-3 more quarters. 

Semiconductors: M&A and the Regulatory Landscape

Sector Analysis: 20 Mar 2018, 10:32 PM ET - We take a look at the state of the semiconductor industry in terms of market concentration and potential impediments to further M&A from a regulatory perspective.

Tech: EU Plans Tax on Digital Company Revenues

Sector Analysis: 14 Mar 2018, 10:35 PM ET - The EU states are currently negotiating a 2-6% tax on the “aggregated gross revenues” of large digital companies.
Focused

Flex: F2Q18 Results

Worth Watching: 30 Oct 2017, 10:20 AM ET - Flex (Baa3/BBB-) revenue of $6,270 million in F2Q18 was near the high end of its $5.9-6.3 bn guidance. Revenue growth continued to accelerate to up 4.4% YoY during the quarter. However, gross margin of 6.7% and operating margin of 3.0% were bot ..
Focused

Flex: Nike Investments Weighing on Profitability

Worth Watching: 28 Jul 2017, 5:07 PM ET - Flex (Baa3/BBB-) revenue of $6,008 million in F1Q18 was above the mid-point of its $5.7-6.1 bn guidance. Revenue was up 2.2% YoY which is a slight acceleration from the previous quarter. However, gross margin of 6.8% was down 12 bps YoY and ope ..
Focused

Flex: F3Q17 Earnings

Worth Watching: 10 Feb 2017, 5:55 AM ET - Flex (Baa3/BBB-) F3Q17 revenue of $6.1 bn (1.6% consensus miss) was down 9.6% YoY but up 1.8% QoQ, and near the low end of its $6.0-6.4 bn guidance range. The ~$650 mn YoY revenue decline was driven by certain legacy customers and programs, as ..

Vodafone: Indian Merger a Good Idea?

IG Note: 30 Jan 2017, 6:17 AM ET - In principle, we see a combination of Vodafone India and Idea as an excellent option for VOD, but we see the implications for VOD creditors as more mixed, with more negatives than positives.

November 2016 US Company Recommendation Changes

US Company Recommendation Changes: 01 Dec 2016, 6:00 AM ET - Our monthly report provides executive summaries for the forty-two company recommendation changes made on US companies during the month of November.

CreditSights 12th Annual European Conference

Announcement: 29 Nov 2016, 8:54 PM ET - Download our Conference Mobile App for our upcoming event on Friday 9th December 2016.

US-China Trade: A Beautiful Mine

Strategy Analysis: 21 Nov 2016, 9:56 PM ET - The game theory of US-China trade negotiations will need two sides to at least be playing the same game. Manufacturing and tech is big in US-China deficit politics, and costs would be high in the event it ends badly. 
Focused

Flex and VeriSign: Updating Recs Post Earnings

Earnings Note: 31 Oct 2016, 6:30 PM ET - We update our recommendations on Flex and VeriSign following their calendar 3Q16 earnings, and provide our thoughts on relative value and operating trends. 

Jabil: Where is the iPhone 7 Growth?

Earnings Note: 22 Sep 2016, 5:59 AM ET - Jabil’s guidance and commentary were a lot less optimistic than investors (and we) were expecting, especially considering recent indications of strong initial demand for the iPhone 7. 

MSI and SYMC: Low-BBB Tech Earnings

Earnings Note: 05 Aug 2016, 5:18 AM ET - We discuss earnings from both Motorola Solutions and Symantec, and  relative value of these low-BBB tech credits. 
Focused

Flex: Diversifying Away from Motorola/Lenovo

Earnings Note: 22 Jul 2016, 12:31 AM ET - We discuss Flex's F1Q17 results and our recommendation for its bonds. 

Jabil: The Apple Tree is Less Fruitful; M/P

Earnings Note: 15 Jun 2016, 11:05 PM ET - We discuss Jabil’s F3Q16 earnings and operating trends, which are being negatively impacted by weaker than expected demand for Apple’s existing iPhones.  
Focused

EMS Sector: Moody’s Upgrades Flex and Sanmina

Worth Watching: 12 Jun 2016, 8:37 PM ET - EMS Sector: Moody's upgraded Flex's senior unsecured notes from Ba1 to Baa3 on June 9th, and changed the outlook from positive to stable. Flex is now rated low-BBB with a stable outlook by all 3 major ratings agencies. Moody's pointed to Flex's ..

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