Flex Ltd. (NASDAQ:FLEX) Q2 2024 Earnings Call Transcript

Mark Delaney: Good afternoon. Thanks for taking my question. You mentioned mix as a key tailwind to core Flex margins going from fiscal 2Q to 3Q and as total revenue declines. But is there anything additional in terms of incremental pricing or large restructuring programs that may also be playing a key role in the sequential margin strength? And if so, could you dimensionalize how large those other drivers may be?

Paul Lundstrom: Sure. So just I’m clear on your question, are you talking Q2 to Q3, Mark?

Mark Delaney: Yes, from the four seven [ph] you just did, I think the midpoint of guidance is for a — you mentioned mix is one of the key drivers as to how margins are actually even maybe expanding a little bit as revenue drops. But is there anything with restructuring programs you just did or incremental pricing that may also be playing a role to just try to think through some of the buckets and pieces that are helping margins in the upcoming quarter based on guidance?

Paul Lundstrom: Yes, got it. Okay. So I would say probably the biggest singular tailwind is our continued push on productivity programs. In our prepared remarks, you did flag that we pointed out some restructuring. We’re going to have benefit from that both in Q3 and also in Q4. But mix is definitely a factor. You look at some of the end markets that are contracting right now, they tend to earn a little less than other parts of the core portfolio. And so we’ve sort of been a beneficiary of that mix. You asked about pricing, nothing significant to comment on there. I would say it’s a combination of productivity programs and mix.

Revathi Advaithi: And we’re really, Mark, driving a lot of factory optimization. And that’s, like Paul said, that is a big driver.

Mark Delaney: Okay, that’s very helpful. Thanks for all the details on that. And then I know guidance on Nextracker, but just a level set on where you stand currently. Do you still need government approvals or tax rulings in order to do the spin, or do you have all those in place now with the announcement that you’re making today?

David Rubin: Mark, this is David. Yes, it’s all outlined in the S-4. I know you haven’t had time to peruse it all 400 pages, but that will have the outlines of what approvals we’ve gotten. We still have the shareholder vote. That’s on November 20. But otherwise, we’re moving in process.

Mark Delaney: Okay. Thanks so much for taking the questions.

David Rubin: Early Q4 is what we’re thinking, guys.

Revathi Advaithi: And I think that was our last question.

Paul Lundstrom: Great. Thank you all.

Revathi Advaithi: Okay. Thank you all for joining. I just want to thank the Flex team on behalf of the leadership team and of course to all our customers and our shareholders for your support. So thank you all. Thanks for joining.

Operator: This concludes today’s conference call.