Flex Ltd. Q3 Fiscal Year 2026 Earnings Call Summary

Flex Ltd. (NASDAQ: FLEX), a global manufacturing and supply chain solutions provider, released its third quarter fiscal 2026 results and held a conference call on February 4, 2026 at 8:30 AM ET to discuss its financial performance, strategic progress, and future outlook. The company’s leadership, including CEO Revathi Advaithi and CFO Kevin Krumm, highlighted strong operational performance, improved margins, growth in key segments, and updated guidance for the fiscal year.

Key Financial Highlights

Flex delivered solid results for the third quarter:

• Revenue: $7.1 billion, an 8% increase compared with the prior year, driven by strong data center demand and momentum in industrial and health solutions.
• Adjusted Operating Margin: 6.5%, up 40 basis points and above 6% for another quarter, marking a record margin for the company.
• Adjusted Earnings Per Share (EPS): $0.87, a 13% increase year-over-year and a record result for Flex.
• Adjusted Gross Profit: $690 million with a 9.8% gross margin.
• Cash Flow: $275 million generated in the quarter with efficient working capital management.

Segment Performance and Business Drivers

The company’s two primary business segments — Reliability Solutions and Agility Solutions — delivered balanced growth:

Reliability Solutions

This segment saw revenue of $3.2 billion, up 10% year-over-year. Growth was broad-based, with strong power solutions and core industrial and health systems contributing to results. The segment’s operating margin also expanded due to favorable mix and disciplined execution.

Agility Solutions

Agility Solutions reported $3.8 billion in sales, representing a 6% year-over-year gain. Data center demand continued to be a key driver, particularly in areas related to AI infrastructure. However, softer consumer end-market demand partially offset overall growth in this segment. Operating margins remained stable from the prior year.

Strategic Positioning: Data Center and AI Growth

Management highlighted that the demand for data center solutions — especially those that support AI workloads — remains robust. Flex’s portfolio of integrated technologies for compute, power, and cooling positions the company as a strategic partner for customers facing complex deployment requirements. The company is collaborating with partners like NVIDIA and LG to innovate in thermal management and modular data center systems, reinforcing its leadership in this expanding market.

Operational Efficiency and Capital Allocation

Flex emphasized its disciplined approach to capital allocation and efficiency:

• Inventory Management: Inventory levels were up 5% sequentially and year-over-year, maintaining about 56 days net of advances.
• CapEx and Investment: Net capital expenditures were $145 million, representing roughly 2% of revenue.
• Share Repurchases: Flex repurchased $200 million of shares (approximately 3.3 million shares) during the quarter.

Updated Guidance

Reflecting its strong performance and market trends, Flex raised its full-year fiscal 2026 guidance:

• Revenue Guidance: $27.2 billion to $27.5 billion, representing a $350 million increase at the midpoint versus prior forecasts.
• Adjusted EPS Guidance: $3.21 to $3.27 for the full year, with the midpoint rising by $0.11.
• Free Cash Flow Conversion: The company reaffirmed its target of converting at least 80% of earnings into free cash flow for the year.

Management Commentary

CEO Revathi Advaithi described the third quarter as “another exceptional quarter,” noting that the company is executing well against strategic priorities and navigating market challenges with resilience. The conference call also included a question-and-answer session with analysts from leading financial firms, focusing on growth drivers and overall market outlook.

Overall, Flex’s Q3 performance reflects the company’s ability to capitalize on secular growth trends in data centers and industrial solutions while maintaining operational discipline and returning value to shareholders. Investors and analysts will watch closely how these trends continue into the fourth quarter and beyond.

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