Flex Ltd.

Good afternoon and welcome to the FLEX second quarter fiscal year 2022 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 now like to turn the call over to Mr. David Rubin, FLEX's Vice President of Investor Relations. Sir, you may begin.

Thank you, Jenny. Good afternoon and welcome to Flex's second quarter fiscal 2022 earnings conference call. With me today is our Chief Executive Officer, Revithi Advaiti, and our Chief Financial Officer, Paul Lundstrom. Both will give brief remarks followed by Q&A. This call is being webcast and recorded, and if you've not already received them, slides for today's presentation are available in the investor relations section of our flex.com website. As a reminder, today's call contains forward-looking statements which are based on our current expectations and assumptions and are subject to risks and uncertainties, so actual events and results could differ materially. Also, such information is subject to change. We undertake no obligation to these forward-looking statements. For a full discussion of the risks and uncertainties, please see our most recent filings with the SEC. This call references non-GAAP financial measures for the current period. The GAAP reconciliations can be found in the appendix slides of today's presentation as well as the investor relations section of our website. Also note on October 18th, we announced we'd entered into a definitive agreement to acquire on and or MARDIX, excuse me. Guidance we provide on this call excludes any impact from the pending acquisition. Lastly, with regards to Flex Next Tracker Business, as we previously discussed, on April 28th, we announced that we confidentially submitted a draft registration statement on Form S-1 with the U.S. Securities and Exchange Commission relating to the proposed initial offering of its Class A common stock. The initial public offering and its timing are subject to market and other conditions, and the SEC is a review process. We made this announcement in accordance with Rule 135 of the Securities Act. We'll continue to look to the market, and we'll evaluate the right time to do the transaction, but remain committed to doing one. Following SEC regulations, we will not make any further statements or answer any additional questions on the next draft court filing at this time. With that, I'd like to turn the call over to our CEO, Revati.

Thanks, David. Good afternoon and thank you for joining us today for our fiscal Q2 earnings call. Firstly, I want to thank our employees for their contributions this past quarter, and I really appreciate how hard our teams are working to support our customers and truly make a difference. I am very proud of what we have accomplished together. Please turn to slide three. We achieved a revenue of $6.2 billion, that is up 4% year over year. Revenue came in slightly below the midpoint of our previous guidance of $6.3 billion due to some interruptions to production late in the quarter. And I'll provide more context to that in a minute. Total flex-adjusted operating margin came in at 4.6%, consistent with last quarter, but better than what we initially expected. As you can see, we continue to execute exceptionally well. Our adjusted EPS was $0.48, up from $0.36 in Q2 of last year, and up from the pre-COVID level of $0.31 in Q2 of FY 2020. Adjusted free cash flow came in at $90 million. That brings us to over $300 million in free cash flow generation for the year. Now, going to the next slide, let me start with a little bit of update on the supply chain situation. We said last quarter that fiscal Q2 would be a more challenging quarter due to a number of factors. We based our assumptions on a broad view of the supply situation and our demand analysis at the end market level. If you look at our results, you will see that what was in our control we executed very well, again delivering year-over-year growth and very strong margins despite some headwinds we saw late in the quarter, like some last-minute supplier decommits, some further logistics surprises, and short-notice automotive OEM production shutdowns, which you all have heard a lot about. That is why we did not quite reach our revenue goal, and we think it's prudent to revise our revenue targets for the remaining two quarters, despite our demand being very strong. Now, looking at the demand situation and past the supply situation, I would say that we're in a great position. Firstly, our bookings are very strong, driven by the commercial initiatives we started driving last year, as well as growth themes like technology transitions and regionalization. As you are aware, our available markets are large, and we are driving growth in end markets that help continue to shift our mix, which has been our stated strategy. Secondly, channel replenishment needs across most of our end markets is driving strong near-term demand. So demand remains strong, and we're continuing to navigate the global supply chain and logistics issues very well. In fact, the current situation speaks to the increasing value we can provide our customers, given the value of our supply chain resiliency, production regionalization, and product redesign capabilities. This value will only increase in the future with new waves of more advanced product outsourcing and sustainability, and all of this is aligned with our longer-term growth strategy. Now, speaking of our growth strategy, I have said in the past we will invest in growth, whether it's organic or inorganic, when we find the right higher margin opportunities, particularly in key growing verticals. As you all have seen by now, we recently entered into a definitive agreement to acquire Anord Martix. They are a leader in the critical power solutions market, especially going into large-scale and modular data centers such as hyperscale and co-location. Anort Martix brings strong products, services, and incredible talent, including decades of engineering expertise. We're all aware of the secular trends driving global demands for data center expansion, and how does this acquisition fit with Flex? As you look at slide five, you can see that Flex already has an important footprint in the data center core through our embedded power business, as well as numerous data center and communications infrastructure offerings from subcomponents to systems to fully integrated racks and services. From this position, we already have a broad cloud customer base across the globe that is complementary to critical power. We can also leverage our expertise and efficiencies in advanced manufacturing and global supply chain. So I believe this is a natural extension for us to combine critical power with our core cloud offering to expand our footprint and increase the value we can provide our customers. And of course, the deal makes sense financially. We think the combination will grow faster than the market, and we expect the transaction will be creative to adjust to DPS and will deliver mid-teens EBITDA margin in our next fiscal year. We have been clear throughout our strategic transformation. We have said we would improve our mix and our operational efficiency, and you have seen it already show up in our margins. We said we would return capital when it was the right move and that would invest for growth, and that's what we're doing now. We will certainly continue to do all of these as we execute on our longer-term strategy. With that, I'll turn it over to Paul to return to our financials.