Investor Presentation
December 2014
Risks and Non-GAAP Disclosures
This presentation contains forward-looking statements, which are based on current
expectations and assumptions that are subject to risks and uncertainties and actual
results could materially differ. Such information is subject to change and we
undertake no obligation to update these forward-looking statements. For a
discussion of the risks and uncertainties, see our most recent filings with the
Securities and Exchange Commission, including our current, annual and quarterly
reports.
If this presentation references non-GAAP financial measures, these measures are
located on the “Investor Relations” section of our website, www.flextronics.com along
with the required reconciliation to the most comparable GAAP financial measures.
2
Table of Contents
Business
Groups
Intro
Flextronics Platform
Manufacturing
Technologies
Headcount
Balanced Global
Manufacturing Footprint
4-7
10
12
World Is Changing
26
Free Cash Flow
Generation
41
Q2 FY15 Highlights &
Key Trends
Long-Term Model
13
Driving Future
Revenue Growth
27
Solid Capital Structure
42
INS Summary
INS Differentiation
14
15
Trended Quarterly IS
Highlights
47
Strategic Relationships
28
Strategic M&A
Investments
43
IEI Summary
IEI New Business Wins
IEI Differentiation
16
17
18
HRS Automotive
29
Revenue by Business
Group
48
Share Repurchase
44
Medical Technology
30
Motorola Update
49
HRS Summary
HRS Differentiation
19
20
Wearable Technology
31
FY14 Income Statement
Highlights
50
Connected Home
32
FY14 Summary:
Financial Principles
51
High Level Summary
52
CTG Summary
CTG Differentiation
CTG Pyramid
CTG Growth Potential &
Margin Profile
21
22
23
Open Innovation
Platform Strategy
33
24
INS Customers: IPOs
34
Automation
35
Customer Innovation
Center (CIC)
36
Elementum
Made in the USA
3
Latest
Financial
Update
FY14 Revenue Mix
8
9
Cash Flow &
Capital
Structure
Differentiated
Strategy
37-38
39
46
Flextronics Platform
A Supply Chain Solutions Provider
Our system for creating value for our customers to increase their competitiveness
Lower costs, reduce risk and increase velocity
4
Flextronics Platform
A Supply Chain Solutions Provider
Improve
decision making
•
•
•
5
Monitor the health
of your supply chain
real-time
Simultaneously
launch new
products across
multiple continents
Time-to-market
advantages from
regionalized
solutions
Flextronics Platform
A Supply Chain Solutions Provider
Increase
competitiveness
•
•
•
6
Innovation that
brings products to
market faster
~2,500 design
engineers enabling
technology
innovation
Global network of
forward, reverse
and spare parts
logistics
Flextronics Platform
A Supply Chain Solutions Provider
Leverage global
assets
•
•
•
•
7
~$26 billion in sales in
FY14
Over 100 sites spanning
30 countries with a
workforce of ~200,000
~52M square feet of
manufacturing and
services globally
3 Product Innovation
Centers and expanding
Manufacturing Technologies
8
Power
Flexible & Rigid
Circuits
Machining
Automotive
Components
Precision
Plastics
Enclosures
~200,000 Employees Strong Worldwide
Employee base centered in key low-cost manufacturing locations across various emerging markets.
Strong presence in the U.S. and Europe to support high-mix, low-volume requirements.
Other
Brazil
8%
U.S.
India
1%
4%
6%
41%
Mexico
China
15%
South East Asia
11%
14%
9
Europe
Balanced Global Manufacturing Footprint
>70 Locations
|
~25M Square Feet
Sonderborg, Denmark ●
|
~200K Employees
Ronneby, Sweden ●
Tczew, Poland ●●
Northfield, MN ●
Austin, TX ●●
Dallas, TX ●
Fort Worth, TX ●
Houston, TX ●
Buffalo Grove, IL ●
Coopersville, MI ●
Toronto, Canada ●
Cork, Ireland ●
Limerick, Ireland ●
Manchester, CT ●
Tempe, AZ ●
Milpitas, CA ●●
Morgan Hill, CA ●
San Carlos, CA ●
Zurich, Switzerland ●
Ashville, NC ●
Charlotte, NC ●
Columbia, SC ●
Valencia, CA ●
Tijuana, MX ●●
Dalingshan (Dongguan), China ●
Qiaotou (Dongguan), China ●
Sarvar, Hungary ●●
Tab, Hungary ●
Zalaegerszeg, Hungary ●
Treviso, Italy ●
Huang Tian (Shenzhen), China ●●
Gushu (Shenzhen), China ●
Nanjing, China ●
Shanghai, China ●
Tianjin, China ● Shenzhen, China ●
Suzhou, China ●
Wuzhong (Suzhou), China ●●●
Zhuhai, China ●●
Mukachevo, Ukraine ●
Timisoara, Romania ●●
Ibaraki, Japan ●
Chengdu, China ●●
Taipei, Taiwan ●
Althofen, Austria ●
Cebu, Philippines ●●
Guadalajara, MX ●●
Penang, Malaysia ●●
Port of Tanjong Pelepas (Johor), Malaysia ●
Senai (Johor), Malaysia ●●
Skudai (Johor), Malaysia ●
Juarez, MX ●●
Aguascalientes, MX ●●
Manaus, Brazil ●●
Sorocaba, Brazil ●●
PCBA, Box Build, SI
Mechanicals
Power
10
Batam, Indonesia ●
Jaguariuna, Brazil ●
Chennai, India ●●●
Migdal Haemek, Israel ●
Ofakim, Israel ●
Yavne, Israel ●
Joo Koon Singapore ●●
Kallang, Singapore ●
Business Groups
Four Primary Business Groups: FY14 Revenue Mix
12
39%
Integrated Network Solutions
34%
Consumer Technology Group
15%
Industrial & Emerging Industries
12%
High Reliability Solutions
Telecommunications, Networking, Server & Storage
Mobile, Consumer, Computing
Energy Management, Appliance & Lifestyle, Equipment & Automation
Aerospace & Defense, Automotive, Medical
Long-Term Model
Long-Term Portfolio
Long-Term Model
Revenue
Growth
Operating
Margin
HRS
Double digit
5-7%
IEI
Double digit
4-6%
INS
Trend with market
Balanced portfolio leads to a sustainable
and predictable business model
CTG
3-4%
ICE* focused
IEI
20%
2-3%
* Innovative, Connected and Emerging Technologies - ICE (within Consumer Technology Group - CTG)
35%
HRS
20%
CTG
INS
25%
40%
Maintaining strong cost discipline focused on driving
productivity & operating expense leverage
Vision is to provide 5-10% annual EPS accretion
13
Integrated Networking Solutions (INS)
FY14 Revenue Mix
~ 39% of Total Revenue
Networking &
Access
Products
Server /
Storage
$9,939
$10,782
$11,452
25%
$10,637
$10,136
38%
($ mil)
37%
Telecom
FY10
FY11
FY12
Networking / Access
Products
• Optical
• VOIP
• Routers
• Video Conference
• Switching
• Datacards
• PBX
• MiFi Devices
• Enterprise
14
FY13
FY14
Telecom
Server & Storage
 3G
 Enterprise
 4G
 Flash
 LTE
 SSD
 Wireless
 Mid-Range
 Microwave
 High-End
 FEMTO
INS Differentiation
Fast Facts:
INS
•
•
•
700+ engineers, 100 customers
Partnerships with EVERY major player in this space
Flextronics was either the sole-source or a strategic supply chain partner to the majority of
recent IPOs in INS
Networking / Access Products
•
•
•
Industry rank #1 in IP Core/Edge & Optical Routings & Switching
Leading position in disruptive SDN market
Key customers: Cisco, Juniper, Alcatel-Lucent, Palo Alto Networks, Ciena
Telecom
•
•
•
•
Industry rank #1 in Wireless/Radio Access Networks
Dominate position in LTE with all major OEMs
Leading position in disruptive small cell market (pico, micro)
Key customers: Alcatel-Lucent, Ericsson, Huawei, Nokia Networks
Server & Storage
•
•
•
•
15
Top 3 Position
Dominate position in disruptive flash based technologies
Market leader in cyber security & application control
Key customers: EMC, Teradata, F5, Citrix, Nimble, FireEye, Infoblox
Industrial & Emerging Industries (IEI)
FY14 Revenue Mix
~ 15% of Total Revenue
$3,853
$3,980
FY11
FY12
$3,752
$3,806
FY13
FY14
$3,084
($ mil)
FY10
20+ Diversified Markets
Appliances
and Lifestyle
16
Industrial
Automation
Energy
Building
Automation
Safety &
Security
Capital
Equipment
Self-Service
/ Smart
Retail
IEI New Business Wins
Appliances
and Lifestyle
17
Industrial
Automation
Energy
Building
Automation
Safety &
Security
Capital
Equipment
Self-Service
/ Smart
Retail
IEI Differentiation
Fast Facts:
•
•
•
•
•
•
•
•
18
Industry ranking: Industrial #1
Flextronics participates in 20+ diversified markets with over 250 customers
Geographic footprint: 60 sites, 5 design R&D centers, largest footprint in North
America and Europe
Developed leading edge solutions for industrial automation, appliances, self-service
kiosks, capital equipment, lifestyle buildings automation, smart meters, building
automation, oil and gas and water transport & treatment markets
17 plastics sites (2000+ injection molding machines), 10 metal forming sites, 100+
PCBA and system assembly locations
2013 Platform/supply chain solutions new win with floor care company $350M
Innovation driven customer engagements leading to manufacturing
• In FY14, 10 major design wins leading to ~$350M in manufacturing revenue
Key customers: Xerox, Teradyne, Applied Materials, Dyson
High Reliability Solutions (HRS)
FY14 Revenue Mix
~ 12% of Total Revenue
Disposable
Medical
Devices
Auto
Electronics
~25%
~26%
$3,257
$2,818
$2,358
$1,899
($ mil)
~25%
$1,437
FY10
Medical
Equipment
FY11
FY12
FY13
~3%
Car
Connectivity
Aero/Defense
FY14
Automotive
Medical
Defense & Aerospace
• Vehicle Electronics
• Consumer Health
• Defense
• Connectivity
• Drug Delivery
• Civil Aviation
• Energy Management
• Disposable Devices
• Homeland Security
• Medical Equipment
19
~21%
HRS Differentiation
Fast Facts:
HRS
•
•
•
•
•
Reached $800M+ quarterly revenue, surpassed $3B in FY14
Grew revenue double-digits y/y for 13 consecutive quarters
600 design engineers, 145+ customers
Acquisitions: FY12 Stellar (medical/A&D), FY13 Saturn (auto), FY14 RIWISA (medical)
Proactive marketing across HRS industry tradeshows
Automotive
•
•
•
•
•
•
•
$1.7B+ revenue business
#1 industry ranking. Product portfolio includes connectivity, LED lighting, power electronics
Customers are OEMs and Tier 1 suppliers
Key customers: Ford, Nexteer, Automotive Lighting, Chrysler
18 automotive facilities, 12 countries, 8K+ employees
6 lead design centers with over 250+ engineers
FY14 achievements: $350M+ new business awards, 6 new customers, 23 patents filed
Medical
•
•
•
•
•
•
Reaching $1.5B in annual revenue. Diversified portfolio: drug delivery, disposables, equipment, diagnostics
#1 manufacturing solutions provider in the medical industry
Engagement with 17 of the top 25 medical device companies
Flextronics produces #2 best-selling glucose meter in China
Flextronics helped design 65+ medical products in the market today
16 medical locations, 15K employees worldwide, 350+ dedicated engineers
Aerospace & Defense
20
•
•
•
Industry ranking #6, ~$100M revenue business
AS9100C and ISO9001 registered, DMEA trusted supplier, ITAR certified, FAA regulatory
Portfolio: defense, civil aviation, homeland security
Consumer Technology Group (CTG)
FY14 Revenue Mix
~ 34% of Total Revenue
Computing
$11,909
Mobile
23%
$11,554
$9,502
46%
$8,910
$6,363
($ mil)
Consumer
FY10
21
FY11
FY12
FY13
31%
FY14
Mobile
Consumer
Computing
• Smart Phones
• Game Consoles & Accessories
• EMS Desktop / Notebook PCs
• Wireless Modules
• Wearable Technology
• Tablets
• Headsets
• Smart Home Devices
• Printers
• Portable Audio
• Home Entertainment Equipment
CTG Differentiation
Fast Facts:
•
•
•
•
•
•
•
•
•
•
•
22
New go-to-market sales strategy focused on 3 key areas:
• Innovative, Connected & Emerging technologies (ICE)
• Strategic engagements
• Core partnerships
60+ customers
120+ CTG specific design engineers
65 factories utilized around the world
Innovative manufacturing & technology investments for co-invention, including PIC,
mass customization capabilities and cutting edge mechanical capacity
Flextronics has #1 position and most capabilities and expertise in Brazil
Lab IX initiative helps engage disruptive customers
Google Chromecast TIME’s #1 product in 2013
Leader in Wearables Technology, significant growth with 30+ customers
Over 75% of market share in fitness wearable bands in 2013
Leader in Smart Home Devices, fastest growing category within ICE
CTG Pyramid
Innovative,
Connected &
Emerging
Technologies
Strategic
Engagements
Core
Partnerships
23
CTG: Growth Potential & Better Margin Profile
5+%
Aggressive
Innovative, Connected & Emerging Tech.
3-4%
Moderate
Strategic Engagements
2+%
Stable
Core Partnerships
24
High
growth
Differentiated Strategy
The World is Changing…
Regulations
Disasters
Competition
Shortages
Logistics
Wage inflation
Product lifecycle
Regionalization
Supply chains are more complicated
26
Positioned to Drive Future Revenue Growth
Partnering with
tomorrow’s disruptors
Powerful differentiation to
create future demand
Innovation
Distinctly positioned as a
product innovation enabler
Strategic relationships
Partnered across leading
customers in varied industries
Non-traditional business
Significant opportunities to grow
our market leading position
27
Strategic Relationships
29
years
19
years
18
years
16
years
16
years
15
years
15
years
14
years
13
years
10
28
years
Intense
customer focus
builds trust and
long-standing
relationships
HRS Automotive: Flextronics Vehicle Electronics Solutions
Infotainment & Connectivity
•
•
•
•
•
Overhead Systems
• Dome lamp
• Overhead console
• Sunroof controller
Seats
• Power seat module
Instrument Panel
• Digital LCD gauge
• LED/RGB ambient lighting
Rear seat entertainment module
Media interface module
Sound & connect module
Head unit
Rear Compartment
Audio system
• Center high mounted
stop light (CHMSL)
• Rear tail lamp PCBA
• LED Tail
lamp/controller
• Power deck lift gate
• Rear camera
• Fuel pump controller
Remote systems
• Remote start antenna
• Key fob & keyless entry
Engine & Powertrain
•
•
•
•
•
•
•
•
29
Recuperation module
DC/DC converter
Electric Power steering controller
High precision solenoid
Wiring harness
Battery cable
Quasi diode/electronic relay
Cooling fan controller
Doors
Front Lighting
• Front lamp PCBA
• Light control module
• Door control module – windows,
mirrors, locks
• Power sliding door module
• “Smart” mirror electronics
Medical Technology
Brain
Neuro-stimulation
Transdermal patch for migraines
Hearing
Dental
High speed headpiece
Cochlear implants
Cardiac
Dermatology
Wound management systems
Aesthetic care devices
Diagnostic catheters
Implantable heart monitoring systems
Cardiac rhythm monitoring
Respiratory
Diagnostics
Blood analyzers
Imaging
Mobility
Hospital beds
Mobility systems
Orthopedics
Inhalers & Nebulizers
C-Pap
Hospital Supplies
IV pumps and tubing sets
Syringes
Blood collection devices
Diabetes
Blood glucose meters
Insulin delivery systems and tubing sets
Dialysis disposables and equipment
Blades and cutters
General Surgery
Podiatric
Foot ulcer system
Gel cushions
30
Insufflation sets
Gastic bands
Surgical packs
Notification Sensors
Wearable Technology
A New Market for Flextronics
Flextronics Capabilities:
• Micro-electronics encapsulation
(flex circuits)
• Sensor Integration
• Optics (image capture)
• Smart Watch Packaging (computing/mechanics)
• Bendable / Stretchable Electronics
• Waterproofing
• Customization / Personalization Tech.
Sectors We Support:
•
•
•
•
•
•
•
31
Sport & Fitness
Wellness
Image Capture
Lifestyle Computing
Entertainment
Apparel & Fashion
Personal Data Management
Smart Glasses
Smart Fabrics
Super Fitness Watches
Smart Fitness Wristbands
Smart Watches
Smart Socks
Fitness Shoe Sensors
Connected Home
Cloud
Analytics
Smart
Home
Controllers
Energy Management /
Thermostats
Wearables /
Fitness Trackers
32
Streaming
Video
and
IPTV
Smart Sensors
and
Lighting Controls
Streaming
Audio
Open Innovation Platform Strategy
Leverage validated technology building blocks and partner ecosystem
Markets & Products
Aerospace &
Defense
Automotive
Industrial
Automation
Fitness &
Medical
Communications &
Networking
Server &
Storage
Energy
Consumer
Electronics
Value
Engineering
Mechanicals
& Plastics
Innovation Services
Centers of Excellence
Sensors &
Actuators
Human Machine
Interface
Wireless &
Connectivity
Semiconductors
Smart
Software
Flexible
Technologies
Battery &
Power
Computing
Open Innovation Platform
Technology Partners
OEMs
33
University
Internal
Government &
Public
Lab IX/
Startups
Research
Institutes
INS Customers: IPOs
IPO Date: Nov 2009
Product: Security Appliances
2010
IPO Date: July 2012
Product: Security Appliances
Flextronics Exclusive
2012
IPO Date: April 2012
Product: Network
Control
34
IPO Date: Sept 2013
Product: Security Appliances
Flextronics Exclusive
IPO Date: Dec 2013
Product: Converged Storage
Flextronics Exclusive
2013
IPO Date: Nov 2012
Product: Wireless
Networking
2014
IPO Date: May 2013
Product: Optical
Products & SDN
Flextronics Exclusive
IPO Date: Sept 2013
Product: SSD
Enterprise Storage
IPO Date: June 2014
Product: SDN Solutions
(Gigabit Ethernet
Switches)
Automation
165+ projects in process
24 inventions disclosure in process
3 patent applications in process
1 granted patent application
150+ customers served
600+ projects in 4 years
35
Innovation Services that Enable Disruption
Silicon Valley’s Customer Innovation Center
Product Concept > Design & Engineering > Rapid Prototyping > Product Stabilization > Volume Production > Repair & Refurbish
New Product
Introduction
Confidential
Center
Innovation Labs &
Design Center
• Prototype to
Product Launch
• 3D Printing
(plastic)
• Private &
Secure
Manufacturing
Room
• Technology Innovation &
Engineering
• Design for ‘X’ Services
• 3D Printing (metal)
Lab IX
Global Services
• Startup
Accelerator
• Business
Scaling
Resources
• Forward &
Reverse
Logistics
• Vendor Managed
Inventory
WELCOME
CENTER
Manufacturing
• Scalable
Manufacturing
• Procurement &
Sourcing
36
System
Integration
Interconnect
Technology Center
Failure Analysis
Labs & Mechanicals
• Configure to
Order
• Build to Order
• Multek (PCBs,
Flexible & Rigid)
• Advanced Printed
Circuits
• Integrated Design
Capabilities
• Materials
Characterization
• Sheet Metal
Manufacturing
Advanced
Engineering &
Robotics Labs
• Value Engineering
Services
• Manufacturing
Technology
Innovation
Elementum: Real-time Solutions Improve Decision Making
Mobile software for end-to-end supply chain management
The Problem
•
Poor visibility into the state of operations
•
Unclear which suppliers are at risk and when
•
Don’t know which shipments are late until they don’t arrive
•
It takes way too long to get commitment on new or changed orders from partners
The Solution
•
Perspective: Real-time visibility
•
Exposure: Risk management
•
Transport: Shipment tracking & carrier management
•
Fulfillment: Order collaboration
37
Elementum: Key Facts
•
Flextronics began incubating Elementum in 2012
•
Elementum is a majority-owned subsidiary of Flextronics
•
Flextronics owns a majority of the outstanding equity and controls the board of directors
•
Consolidated financials with Flextronics
•
Elementum has over $60M in total funding
•
Outside investors:
•
Lightspeed Venture Partners
•
Dave Duffield (co-founder & co-CEO, Workday), Aaron Levie (co-founder & CEO, Box), Jerry Yang (cofounder, Yahoo & founding partner, AME Cloud Ventures), Mike Frandsen (VP of products, Workday), Jim
Davidson (co-founder, Silver Lake Partners)
•
Board of Directors:
•
Mike McNamara (CEO, Flextronics), Nader Mikhail (founder & CEO, Elementum), Chris Schaepe (founder
& partner, Lightspeed Venture Partners), Jim Davidson (co-founder, Silver Lake Partners), Ray Bingham
(Chairman of the Board, Flextronics and former CEO, Cadence)
•
Advisory Board:
•
Dave Duffield (co-founder & co-CEO, Workday), David Dibble (former EVP, Service Engineering &
Operations, Yahoo), David Henke (former SVP, Engineering & Operations, LinkedIn), Aneel Bhusri (cofounder, chairman and co-CEO, Workday)
38
Made in the USA by Flextronics
Flextronics provides customers with competitive US production capabilities based on our
unique ability to scale with speed and flexibility
Networking &
Optical
Mobile/Consumer
Communications
Scale, Scope & Speed
•
Medical
•
•
•
Industrial
Energy
•
•
•
Automotive
39
Aerospace &
Defense
•
Number 1 electronic manufacturer in North
America
~7M sq. ft. spread throughout 19 locations
~11K employees with over 140 self identified
veterans
Manufacture around $3B worth of complex
electronics extending over 7K SKUs
Over 10 major market segments serving over
190 unique clients
Product Innovation Centers located in
Milpitas, CA and Austin, TX
Proven expertise in ramping from NPI to full
production in 4 months
Complete supply chain sourcing and
materials management
Cash Flow Generation &
Capital Structure
Fundamentally Structured for Free Cash Flow Generation
$3 Billion
Target
$3 - $4 Billion
$855M
$715M
$622M
$463M
FY08
FY09
FY10
FY11
$680M
$701M
FY13
FY14
$416M
FY12
FY15E
FY16E
FY17E
Generating strong sustainable free cash flow to support our growth
41
Solid Capital Structure
Total
Liquidity
$3,014
Debt Maturities ($M) (Calendar Year)
$1,500
Revolver
4.625% Notes
Term Loans
$1,514
Cash
Liquidity
5% Notes
2014
2015
2016
2017
$600
$494
$500
2018
2019
2020
$500
2021
2022
2023
Key characteristics:
Near record levels
of liquidity
42
No near-term
maturities
Low financing cost
of ~3% at current
LIBOR rates
Improving credit
metrics
Strategic M&A Investments
Key Criteria:
Target
capabilities
Strategic
customers
Apr
2012
Longer
product
lifecycles
EPS
accretive
Dec
2012
Barriers to
entry
Nov
2013
2014
2012
Leading
microelectronics
supplier
43
Higher
margins
Leading
automotive
supplier
Leading high
precision plastics
supplier
Share Repurchase from FY11 to Q2 FY15
Last 4.5 years, we have repurchased …
~ 278 Million shares
~ $1.9 Billion in stock
… And reduced shares outstanding by
~34%
757
Shares Outstanding
684
639
$510M
591
580
$475M
$400M
$322M
$207M
65M
shares
repurchased
82M
shares
repurchased
52M
shares
repurchased
60M
shares
repurchased
20M
shares
repurchased
FY11
FY12
FY13
FY14
1HFY15
Committed to returning over 50% of free cash flow to shareholders
44
Latest Financial Update
Results for Q2 FY2015
Earnings Announcement: October 29, 2014
Q2 FY2015 Highlights and Key Trends
46
Steady Execution
• Sales near the high-end of the guidance range with 3 of 4
business groups performing better than expectations
• HRS + IEI exceeded 30% of sales
• Won the 2014 Supply Chain Innovation Award
Continued Profit
Improvements
• 6 consecutive quarters of operating margin improvement
• $183M operating profit exceeded the midpoint of the
guidance range
Consistent Return of
Value to Shareholders
• Repurchased ~9.3M shares for $101M or ~2% of shares
outstanding
Trended Quarterly Income Statement Highlights
Revenue & Adjusted Gross Margin
Adjusted Operating Income
($ in millions)
($ in millions)
% Revenue
Adj. Gross Margin
5.8%
5.6%
5.8%
5.8%
5.8%
2.5%
6,410
Sep-13
7,183
Dec-13
6,724
6,643
6,529
Mar-14
Jun-14
Sep-14
2.7%
2.8%
187
182
183
183
Dec-13
Mar-14
Jun-14
Sep-14
2.6%
159
Sep-13
Adjusted SG&A
Return on Invested Capital
($ in millions)
(ROIC %)
212
2.8%
213
17.5%
19.5%
22.1%
22.8%
23.3%
Mar-14
Jun-14
Sep-14
205
199
196
Sep-13
Dec-13
Mar-14
Jun-14
Sep-14
Sep-13
Dec-13
Please refer to the Investor Relations section of our website which contain the reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures
47
Revenue by Business Group
($ in millions)
Business Group
Sep-13
Dec-13
Mar-14
Jun-14
Sep-14
$
% Total
$
% Total
$
% Total
$
% Total
$
% Total
Integrated Network Solutions
$2,588
40%
$2,598
36%
$2,418
36%
$2,503
38%
$2,409
37%
Consumer Technology Group
2,097
33%
2,829
39%
2,436
36%
2,160
32%
2,142
33%
Industrial & Emerging Industries
940
15%
933
13%
1,027
15%
1,134
17%
1,103
17%
High Reliability Solutions
785
12%
823
12%
843
13%
846
13%
875
13%
Total Revenue
$6,410
$7,183
$6,724
$
Sep-14
Q/Q %
Y/Y %
Dec-14E
Outlook (Q/Q)
Integrated Network Solutions
$2,409
-4%
-7%
Stable
Consumer Technology Group
2,142
-1%
2%
Up low single digits
Industrial & Emerging Industries
1,103
-3%
17%
Stable
875
3%
11%
Stable
$6,529
-2%
2%
Business Group
High Reliability Solutions
Total Revenue
48
$6,643
$6,529
Motorola Update
Original Value Proposition
• Google hardware ecosystem
• Regionalization and customization
• Strategic customer relationship
• Low cost investment ~$75M
Strategic Value Created
Future Direction
• Expanded capabilities
• Increased regionalization
• Vertical integration
• Google programs & innovation
• Expanding business opportunities
• Strong Lenovo relationship
• No negative financial impact from Dallas
shutdown
• Possible financial impact remains
UNCHANGED:
• Cash flow generation of ~$100M - $150M
• Redeploy assets of ~$50M+
• Negative EPS impact of ~$0.02 - $0.03
• Limited restructuring impact
We expect limited financial impact
49
FY 2014 Income Statement Highlights
Revenue
Adjusted Gross Profit
($ in millions)
($ in millions)
+11%
26,109
23,569
FY 2013
1,505
+9%
1,387
FY 2014
FY 2013
FY 2014
Adjusted Operating Income
Adjusted Earnings Per Share
($ in millions)
(EPS)
+9%
665
$0.89
$0.84 *
611
FY 2013
+6%
FY 2014
FY 2013
FY 2014
* Reflects a $0.11 EPS benefit due to the $74M gain from Workday warrants
Please refer to the Investor Relations section of our website which contain the reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures
50
FY 2014 Summary: Financial Principles Remain Intact
Operating
Profit
Expansion
Revenue
Growth
11% Year-overyear growth
($ M)
Operating profit
increased by
$54M
($ M)
EPS
Accretion
Cash Flow
Generation
Adjusted EPS
jumped up 22%*
Generated
$1.2B of
operating cash
flow & $701M of
free cash flow
EPS
* Excluding the $0.11 EPS benefit in FY13 due to $74M gain from Workday warrants
51
($ M)
Capital
Structure
Strength
Refinanced debt
resulting in no
near-term
maturities
High-Level Summary Overview: FY13 – FY15
FY13: Platform
• Real-time information
• End-to-end services
• Physical infrastructure
FY14: Investment
FY15: Stability
• Heavy investment in
capability, new programs and
revenue growth
• Focus on operating efficiency
• Start-up costs significant all
year, but rapidly evaporating
• Strong FCF and earnings
progress
52
• Continuous operating profit
and margin expansion
• Continued strong FCF and
shareholder return
Thank You
For more information:
investors.flextronics.com