Flex Ltd.

Good afternoon and welcome to FLEX fourth 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'd now like to turn the call over to Mr. David Rubin, FLEX Vice President of Investor Relations. Sir, you may begin.

Thank you, Robert, and welcome to Flex's fourth quarter fiscal 2020 conference call. Joining me today will be our chief executive officer, Revathi Advaithi, and our chief financial officer, Chris Collier. This call is being webcast and recorded, and slides for today's presentation are available on the investor relations section of our Flex.com website. Please note, today's call contains forward-looking statements, which are based on current expectations and assumptions that are subject to risks and uncertainties, including the impact of the COVID-19 pandemic. and actual results could differ materially. As such, information is subject to change. We undertake no obligation to update these forward-looking statements. For a full discussion of the risks and uncertainties, please see our most recent filings at the SEC. Lastly, this call references non-GAAP financial measures for the current period. GAAP reconciliations can be found in the appendix slides of today's presentation as well as on the Investor Relations section of our website. With that, I'd like to turn the call over to our CEO, Revathi.

Thank you, David. Good afternoon and thank you for joining us today. It has been an unprecedented 90 days for all of us. But before I start, I want to express my sincere thanks and send best wishes to the tens of thousands of Flex employees around the world who have worked tirelessly to achieve the results we're very proud to share with you. Today, I'll describe some of the incredible work that's been going on in Flex and the decisions we've been making to overcome near-term challenges while still focusing on the long-term financial health of the company. We're addressing all of our challenges thoughtfully and with great tenacity, enabled by an incredible can-do and caring culture deeply rooted inside the company. We will not be giving formal guidance today because of the unpredictability in the current environment. However, I want to provide as much color as I can on what we're seeing and the assumptions we're making. First, I'd like to start with giving you an update on the COVID-19 situation. Our leadership teams had our first conversation about the coronavirus in early January. And as we shared during our investor day presentation in March, we developed a five work stream approach and a playbook for each of the work streams with the priority to protect the safety and well-being of our employees. This approach really helped us to be ahead of the curve. We deployed masks, gloves, sanitation measures, temperature checks, and social distancing in our factories well before government and health organizations mandated them. We have enabled thousands of office workers to work from home without compromising productivity. Our protocols to protect employees and safely run operations have been recognized as best in class by several governments, including China, Mexico, Malaysia, and Brazil. These protocols have not only helped us protect our colleagues, but also enabled us to effectively operate our factories in support of our customers with mandated essential products. As COVID-19 is primarily a global health crisis, there was a clear need to help raise the healthcare system capacity, and this is something we could do in partnership with our customers. Overnight, many of our critical care products we make for healthcare customers were in short supply. We immediately ramped our efforts to expand production of products such as oxygen concentrators, which help patients breathe more efficiently, along with other items like patient monitors, infusion pumps, and ICU beds. We're also significantly increasing our testing equipment production for both point of care and laboratory systems. We're now ramping tests for both identifying the presence of the COVID-19 virus as well as new and highly accurate antibody tests. In addition, we were approached by many medical and non-traditional customers as well as governments to help manufacture ventilators. The global shortage of ventilators has been highly publicized as you all know it. Current producers along with the supply chain are severely constrained and unable to meet the global demand. As many people have discovered, ventilators are not simple devices to make. Not only do you have to make the device, but you also need the required testing equipment as well. We engaged with a number of partners to bring proven designs to market on a scale and speed never seen before. Our engagement with Philips has been talked about publicly, and we're also working with other ventilator OEMs behind the scenes. Most medical device ramps typically take around 12 to 18 months. While we have significant experience making complex medical devices, as of seven weeks ago, we had never made a ventilator before. Now we're proud to say that we're producing ventilators at six sites around the globe, and by the end of this month, we'll be producing thousands that will continue to grow. To give you a sense of scale, before this health crisis, the entire global production of ventilators was around 25,000 units per year. So we are uniquely positioned to take on challenges such as these. We have decades of experience in making medical-grade devices. We're experts at ramping and building highly complex products and systems, often helping our customers redesign products to make their production more efficient. We're also exceptional at simplifying and managing complex supply chains. including organizing them regionally which as you know is increasingly important for the markets we serve. So you know there are many stories to share but let me talk about a product they're producing for Roche. One of the products that Roche makes is a state-of-the-art testing system that is now in high demand. We make components for this system but nowhere near the quantities that are needed right now. In response to this formidable challenge, Flex created a special global task force leveraging the expertise from our Swiss-based manufacturing site to ramp up other sites in record time. As a result of our strong strategic partnership with Roche, Flex has been given the opportunity to make a difference in this pandemic. I want to point out that this response was truly global. In addition to our health solutions and operations teams, countless others across the organizations contributed. Our non-medical segments supported with repurposed capacity in needed regions, our global procurement and IT teams provided crucial support, and HR staff helped shift flex workers to the medical efforts. Not to mention our crisis operations teams who are keeping people safe and protected so they can produce these lifesaving products. At the heart of this extraordinary effort is the tens of thousands of flex workers in our factories who deliver every day. and I cannot overstate how proud I am that despite the difficult times, the Flex family came together, quickly found new ways to work, and in many cases, we're running 24-7 to solve complex problems and ultimately, truly live up to our purpose, which is to make great products for our customers that create value and improve people's lives. Now let's turn to our operations. During our March investor call, we outlined that component shortages reached a peak on February 22nd. Since then, our suppliers have made great progress and we are seeing fewer component shortages. Today, we see component shortages in only a handful of situations and are managing them closely. Now, with regard to our operations, we're pleased that our China sites are now fully up and running. In our other regions, we have a few sites that are shut down due to acute outbreaks. In these geographies, we remain in contact with the local and national governments and have received or are in the process of receiving waivers to return factories Thank you for joining us today. to enable our future business. To accomplish this, we deploy a combination of graduated salary cuts, furloughs, and other programs. Taking actions such as pay cuts and furloughs can be challenging, as you all know it, but are absolutely necessary during this unprecedented time. I want to thank our employees again for their dedication to flex and willingness to sacrifice to protect jobs. We also decided to suspend our share buyback through fiscal Q1 as part of our efforts to preserve cash. And Chris will walk you through our strong liquidity position and our financial conditions during his remarks. Now, please turn to slide five. Considering how quickly the COVID-19 situation escalated in the quarter, we executed with great discipline, which resulted in a strong quarter for us. Let me highlight several of the key financial metrics for our fourth quarter. Revenue was $5.5 billion, down 12% year-over-year due to COVID-19, along with previously planned changes in our portfolio mix to reduce exposure to high volatility and short cycle businesses. We achieved an adjusted operating margin of 3.8%, despite absorbing an impact of $52 million in the COVID-19 cost. Our adjusted EPS was $0.28. We had a very strong quarter for adjusted free cash flow of $134 million. These strong results reflects our focus on driving disciplined execution and a fast reaction to the pandemic. So turning to slide six, I'll talk about our fiscal 2020 results. Revenue was 24.2 billion, down 7.6% year over year. We achieved a full year adjusted operating margin of 3.7% which is the highest since 2001. Our adjusted EPS for the year was $1.23, which was within our original fiscal year guidance of $1.20 to $1.30. And through this year, we generated adjusted free cash flow of 672 million. Turning to slide seven, I have to say that with the number of challenges we saw this year, including the global trade impacts, our plan changes to our portfolio. and the COVID-19 crisis. The fact that we had one of our strongest financial years should give you confidence in the fundamentals of our company. The actions we took and are taking position as well as we continue implementing our new strategy. Now I'd like to turn the call over to Chris, who will walk you through our quarterly financial results in more detail. I will then come back at the end to share some closing remarks.