Flex Ltd.

financials.

Paul? Okay, thank you, Revathy, and good afternoon, everyone. I'll begin with our fourth quarter performance on slide eight. Fourth quarter revenue was $7.5 billion, up 9%. Gross profit totaled $594 million, and gross margin improved 60 basis points to 7.9%. Operating profit was $364 million, with operating margins at 4.9%, improving 60 basis points to year over year. Earnings per share came in at $0.57 for the quarter, an increase of 10%. Turning to our fourth quarter segment results on the next slide, reliability revenue increased 14% to $3.2 billion. Operating income was $142 million, up 1%, and operating margin for this segment was 4.4%. revenue growth was strong. However, the program investments and labor inflation we mentioned last quarter continued to pressure margins in the segment. We expect reliability margins to progressively improve over the next several quarters. In agility, revenue was $3.7 billion, up 5%. Operating income was $171 million, up 13%, and strong execution and cost management drove an impressive 4.6% operating margin. Finally, Nextracker revenue came in at $519 million, up 18% year over year. Operating income at Nextracker was $70 million, three times the level it was last year with operating margins now at 13.5%. Looking at our full year results on slide 10, revenue was $30.3 billion, up 17%. Gross profit totaled $2.3 billion and gross margin improved to 7.7%. Operating income for the fiscal year 2023 totaled $1.4 billion, up 23%, with a record 4.8% operating margin. For the full year, Flex achieved EPS of 236, up 20%. It's worth pointing out, The greater than typical differential between our GAAP and NOMGAP earnings was primarily due to the Nextracker IPO-related charges. On slide 11, we have a performance by business unit for the full year. Reliability revenue was $12.7 billion, with operating margin finishing at 4.8%. Within reliability, automotive revenue was up 22%, primarily driven by new project ramps for our next-gen mobility portfolio. Health solutions was up 9%, and industrial was up 24%, aided by very strong growth in renewable energy, hardware, EV charging, and data center power. Overall, the solid double-digit growth in this segment is representative of the strength of our comprehensive portfolio. The Agility segment revenue came in at $15.8 billion, delivering a 4.4% operating margin. This strong operating margin is reflective of our strategy to focus our efforts on more profitable business, as well as strong cost management on slowing in consumer markets. Within Agility, CEC was up 30%, resulting from new cloud wins, along with portfolio exposure to critical infrastructure like security, and networking. Consumer devices revenue was down, as expected, reflective of the consumer and market weakness. And finally, lifestyle revenue increased 2% as share gains drove better than market performance, more than offsetting softer consumer spending. Nextracker completed the year with revenue of $1.9 billion, a year-over-year improvement of 31%, and ended the year with a 10.7% operating margin, over four points higher than the prior year. Overall, we were pleased with our performance and our ability to deliver strong sales and profit growth in a challenging year. Moving on to cash flow on slide 12, we saw inventory improvements in Q4 with networking capital advances down with inventory net of working capital advances down 8% sequentially. Total gross inventory also dropped this quarter by about 300 million. We continue to see improving signs here. However, we're still managing through shortages and extended lead times for some materials. So we expect inventory will be slow to unwind in the near term. Q4 net capex totaled 180 million and for the full year came in at 615 million on target at 2% of revenue. We expect similar investment levels in our fiscal 2024. Free cash flow was $270 million for the quarter and $335 million for the full year. We expect stronger cash generation in FY24 as the severity of the component shortages improves. Free cash flow in 2024 should be $600 million or more. In terms of financing and capital structure, we made some minor debt repayments in Q4, retiring the $79 million Indian CapEx loan, and a 250 million euro term loan. That's north of 300 million in debt retirement, but you won't see that in consolidation as we put 150 million of debt onto Nextracker as part of their IPO. Maybe a couple comments on our cash balance before we turn to capital allocation. Cash on hand at 3.3 billion is solid and more than we would typically carry. The elevated level is a product of two things. One, buffer cash, given the level of cash cycle volatility created by global component shortages, a situation which, as we have mentioned, is beginning to improve. And two, proceeds from the Nextracker IPO were significant, about $700 million. I'll add, we do not plan to carry this elevated level of cash indefinitely. Turning to slide 13. We remain focused on our capital allocation priorities, including investing in future growth and return of capital. We bought back $44 million worth of stock in the quarter and $337 million for the full fiscal year. Please turn to slide 14 for our segment outlook for the fiscal first quarter. For reliability solutions, we expect mid-single to low double-digit revenue growth for the segment driven by growth across all three business units based on continuing longer-term secular trends. Revenue and agility will be down mid-single to low double digits with consumer and market weakness affecting both lifestyle and consumer devices, offsetting modest growth expected in CEC. Onto slide 15 for our quarterly guidance, we expect revenue in the range of seven to 7.5 billion with adjusted operating income between 320 and 350 million. Interest and other expenses estimated to be around 52 million in the quarter, and we expect the tax rate to be around 13%. So for the quarter, we're expecting growth from OP at the midpoint, with some pressure from interest in taxes. All that translates to adjusted EPS between 47 and 53 cents a share based on approximately 459 million weighted average shares outstanding. This guidance includes the impact of approximately three to four cents of non-controlling interest resulting from the Nextracker IPO. Looking at our full year guidance on the following slide, It's a very dynamic macro right now, however, based on our current demand indicators for reliability, we expect the positive trends we described in Q1 to continue through the year. For agility, we also expect the challenging environment to continue beyond Q1 with some potential improvements late in the year. We expect Nextracker to continue to grow based on their strong positioning in the utility solar space. We currently expect full-year revenue between 30.5 and 31.5 billion, adjusted operating margin between 4.9 and 5.1 percent, and adjusted EPS between 235 and 255 a share. This includes, as Q1 does, approximately 17 to 19 cents of non-controlling interest, again resulting from the next record separation. To close, I'd just like to reiterate our confidence in the strategy to deliver against our longer-term goals. Over the last three years, we've demonstrated how we can manage through many challenges, improve our portfolio, and still deliver double-digit annual EPS growth. So we'll manage through this current backdrop and remain focused on creating long-term value for our stakeholders. I'll now turn the call back over to Chris to begin Q&A.

Thank you. We'll now begin the question and answer portion of today's call. If you would like to ask a question, please press star 1 on your phone. As a reminder, we ask that you please limit yourself to one question and one follow-up. One moment, please, for your first question. Our first question comes from Steven Fox, Fox Advisors. Steven, please go ahead. Hi. Good afternoon.