Flextronics announces Q1 results

Revenues increased 25% year-over-year; GAAP net income increased $364 Million year-over-year

Flextronics (Nasdaq: FLEX) yesterday announced results for its first quarter ended June 30, 2004.

First Quarter Results

Net sales for the first quarter were $3.88 billion, which represents an increase of $773.7 million, or 25% over the June 2003 quarter. Excluding restructuring and other charges, net income for the first quarter increased 283% to $78.3 million, or $0.14 per diluted share, compared with $20.4 million, or $0.04 per diluted share in the year ago quarter. GAAP net income for the first quarter increased by $364.0 million to $74.3 million, or $0.13 per diluted share, as compared to a loss of $289.7 million, or a loss of $0.56 per diluted share in the year ago quarter.

The quarterly results reflect continued industry-leading working capital management, with a cash conversion cycle of 19 days and inventory turns in excess of 11 times. In addition, Flextronics generated approximately $166 million in cash flow from operations in the first quarter.

"As I mentioned last quarter, our focus is on continually driving improvements in our financial results, and I am pleased we have again delivered meaningful operating results. We realized the earnings leverage inherent in our business by delivering net income growth that was more than eleven times the 25% increase in our year-over-year quarterly revenues. In addition, compared to the year-ago quarter, we increased both gross and operating margins by 110 basis points, and continued to firmly manage our SG&A, driving it down 10 basis points to 3.6% of sales," said Michael E. Marks, Chief Executive Officer of Flextronics. "The improvement in margins was driven by effective management of our operations, which included aggressive restructuring in prior periods as well as continuous cost reductions. Additionally, a healthier demand environment not only improves our factory utilization and increases overhead absorption, but also provides an opportunity for us to improve our pricing," added Marks.

Guidance

The Company provided guidance for quarterly earnings per diluted share of $0.15-$0.18 in the September 2004 quarter and $0.21-$0.24 in the December 2004 quarter, excluding amortization, restructuring and other charges. Quarterly GAAP earnings per diluted share are expected to be lower than the guidance provided by approximately $0.01-$0.02 per diluted share reflecting quarterly amortization, restructuring and other charges.

Conference Call and Web Cast

A conference call hosted by Flextronics' management will be held today at 1:30 p.m. PDT to discuss the Company's financial results and its outlook. This call will be broadcast via the Internet and may be accessed by logging on to the Company's website at www.flextronics.com. Additional information in the form of a slide presentation and CEO's Letter to Shareholders that summarizes and discusses the quarterly results may also be found on the site. A replay of the broadcast will remain available on the Company's website after the call.

Minimum requirements to listen to the broadcast are Microsoft Windows Media Player software (free download at http://www.microsoft.com/windows/windowsmedia/download/default.asp) and at least a 28.8 Kbps bandwidth connection to the Internet.