Flex Ltd.

Good afternoon and welcome to the FLEX third quarter fiscal year 2020 earnings conference call. Today's call is being recorded and all lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. At this time, for opening remarks, I would like to turn the call over to Mr. David Rubin, FLEX's Vice President of Investor Relations. Sir, you may begin.

Good afternoon. Thank you for joining Flex's third quarter of fiscal 2020 conference call. Slides for today's discussion are available on the investor relations section of our flex.com website. Joining me on today's call with some introductory remarks will be our chief executive officer, Revathi Advaithi, and our chief financial officer, Chris Collier. Today's call is being webcast and recorded and contains forward-looking statements, which are best on current expectations and assumptions that are subject to risks and uncertainties, and the actual results could materially differ. Such information is subject to change, and we undertake no obligation to update these forward-looking statements. For discussion of the risks and uncertainties, see our most recent filings with the SEC, including our current annual and quarterly reports. This call references non-GAAP financial measures for the current period. They can be found in our appendix slides. Otherwise, they are located on the investor relations section of our website, along with required reconciliations. Now, I'd like to turn the call over to our CEO, Revathi.

Thank you, David, and welcome to your first FLEX earnings call. Good afternoon, everybody, and thank you for joining us on the call today. I'm excited to provide some context to our strong results for the third quarter and update you on the progress we're making through this very dynamic and transformational period for FLEX. But before I start, I want to thank all our FLEX employees who across the globe continue to deliver on our commitments to our customers and who work really hard to execute with discipline to increase value to all our stakeholders. So I want to express my sincere thanks to our employees for their efforts and also to our customers for their continued partnership. So let's go to slide three. So over the last couple of quarters, I've discussed the initial direction of our company strategy and our approach to managing our business. So as promised, we're looking forward to sharing more details on our strategy at our upcoming Investor and Analyst Day on March 11th in New York City. But today I'll focus on the third quarter financial performance, which I'm very pleased to say delivered on our goals and our guidance. So we'll start with the financials. We achieved a revenue of $6.5 billion. This is a result of our continued growth in our industrial segments, our energy and our automotive businesses, and as well as continuing to progress on executing our mixed strategy. We realized an adjusted operating margin of 4%, and this reflects our focus on disciplined execution and portfolio management. And we delivered a record level adjusted EPS of 38 cents, which was a Bauer Q3 guidance range. And generated an adjusted free cash flow of 238 million, which is a testament to our continued focus on operational discipline and improved execution. I want to actually start with the, to talk about the coronavirus outbreak. As expected, our primary concern is with the safety of our employees and their families. What we have done is deployed our response teams to take proactive steps to help our employees and we'll continue to adapt as necessary as the situation plays out. We're actively monitoring this developing situation and we'll work hard to limit business disruptions. We're supporting all official efforts to contain the outbreak and we're fully cooperating with the government officials across China. We'll also be looking to help this cause wherever we can through the FLEX Foundation. Of course, beyond that, it's too early for us to quantify any potential impact as this situation is evolving. I want you to be rest assured that we have a very detailed and comprehensive plan and we'll actively manage the situation in a very disciplined way. So let's turn to slide four. What Q3 really reflects is how we've continued our approach to managing the business. By improving our mix and our profitability, we have driven disciplined execution and we have pursued design-led opportunities and all this along with managing our cash flow and capital allocation. Now this is exactly the game plan we discussed with you three quarters ago. We've done a tremendous job executing on our business mix strategy and as well as managing our costs not only to meet our commitments, but also to enable continued investment in technology and design expertise. I strongly believe that our focus has strengthened our position around significant macro trends and future growth markets such as electrification and 5G. And of course, all this will lead to profitable growth, which is a very important pillar of our strategy. As I continue to speak to current and prospective customers, I'm really energized by growing opportunities to partner and create value for our customers and for Flex. Our focus is on solving our customers' most critical manufacturing challenges, and we want to be a market share leader in the spaces we participate. As always, I'd like to share some examples of some recent wins that'll really demonstrate our capabilities across our businesses. You can see in our Q3 results that our industrial and energy segment continues to be exceptionally strong and is building on the strength of some solid business wins. So one example is a complex large form factor capital equipment project that we recently won. Our solution included engineering and designing of the large mechanical frame and the interconnect system. as well as assisting the customer in the design of the HMI or the human machine interface. Of course, one of the key differentiators was our regional manufacturing capability because we needed to support the customer's needs in both North America and Asia. But this combined with our design capability made this a winning proposition. And we continue to see interest from companies in this space who are looking to partner with us Not only to leverage our manufacturing expertise, but also our design expertise, particularly in the areas of power, energy, and capital equipment. The next example is out of our automotive business, which has made a lot of positive progress despite the global economic headwinds facing this industry. We've made a lot of inroads into the autonomous space, and I've talked about this before in the other calls we've had. But this time we added another major win in China with an indigenous Chinese OEM. We also continue to expand our position in electrification and recently won an integrated battery management solution for a German OEM. What both these wins show that we can leverage the technical expertise, not only in our automotive business, but also in our power and our compute engineering groups. Here we're seeing the benefit of early collaboration and leveraging our broad capabilities, including connectivity and power management, to bring valued solutions to our customers. So I'd like to reinforce our commitment to the four areas. I've talked a lot about this before, and these are managing our mix, driving disciplined execution, winning more design-led business, and of course, consistently driving free cash flow. I strongly believe that combining these with the right type of growth will be the core of our strategy. Our performance this quarter and for fiscal 2020 demonstrates that we're delivering on our commitments. This consistent performance will serve as a platform for us to focus on profitable growth and invest to drive our long-term strategy. Of course, there's still a lot of work to do and more potential to harness. But our consistent performance over the last three quarters really positions us well on the path to profitable growth. So overall, I'm really pleased with our performance this quarter. We're making progress on our goals, and I'm confident that our positive momentum will continue. I'll turn this over to Chris for our quarterly financial results, and then I'll come back with some closing remarks. Chris?