Key Highlights
- Q4 adjusted earnings per share of $0.93 exceeded analyst projections by 8.1%, marking an increase from $0.73 in the prior-year period
- Quarterly revenue climbed 17% on a year-over-year basis to reach $7.5 billion, surpassing estimates by 8.1%
- Company announces separation of its Cloud and Power Infrastructure division into an independent publicly-traded entity in Q1 2027
- Current CEO Revathi Advaithi will transition to lead the separated company; Michael Hartung promoted to Flex CEO role
- Fiscal 2027 projections anticipate revenue between $32.3–$33.8 billion with adjusted EPS ranging from $4.21–$4.51, representing 32% growth at the midpoint
Shares of Flex (FLEX) experienced a dramatic surge of more than 35% during Wednesday trading after the manufacturing solutions provider delivered impressive fourth-quarter results and revealed a strategic plan to separate its rapidly expanding Cloud and Power Infrastructure division.
The company’s adjusted earnings per share for the fourth quarter reached $0.93, surpassing the Zacks Consensus Estimate by 8.1% and representing a significant improvement from the $0.73 reported in the comparable quarter of the previous year. Quarterly revenue totaled $7.5 billion, reflecting 17% year-over-year expansion and exceeding Wall Street expectations by an identical margin.
The star performer proved to be the Cloud and Power Infrastructure (CPI) division, which generated $1.8 billion in revenue — representing 31% year-over-year growth — while achieving an adjusted operating margin of 9.9%.
For the complete fiscal year 2026, Flex delivered total revenue of $27.9 billion, reflecting 8% growth, alongside adjusted earnings per share of $3.30, marking a 25% year-over-year increase. The company’s adjusted gross margin for the full year expanded by 70 basis points to reach 9.5%.
Strategic Separation Dominates Investor Attention
The most significant announcement during the earnings presentation centered on the company’s intention to separate the CPI business into an independent publicly-traded entity. CEO Revathi Advaithi characterized the strategic move as the “next milestone” in an ongoing, multi-year transformation of the company’s business portfolio.
Advaithi will transition to the role of CEO for the newly formed SpinCo. Meanwhile, Chief Commercial Officer Michael Hartung has been tapped to assume the CEO position for the remaining Flex operations following the completion of the transaction, which is anticipated to close during the first quarter of calendar year 2027.
Management describes the new SpinCo as a “global critical digital infrastructure company” with a strategic focus on power and thermal management solutions designed for AI-powered data centers. Advaithi connected the strategic timing to accelerating AI-driven computing requirements and characterized the market opportunity as a “generational transformation” in electrical infrastructure capabilities.
During the quarter, Flex also finalized its acquisition of Electrical Power Products (EP²), which brings utility-grade solutions for grid modernization initiatives into the company’s expanding portfolio.
Forward-Looking Financial Projections
For the first quarter of fiscal 2027, management provided guidance calling for revenue between $7.35–$7.65 billion and adjusted earnings per share in the range of $0.86–$0.92, translating to approximately 24% EPS expansion at the midpoint.
Full fiscal year 2027 projections anticipate revenue spanning $32.3–$33.8 billion, representing approximately 18% growth at the midpoint. Adjusted earnings per share are forecasted in the range of $4.21–$4.51, signifying 32% growth at the midpoint.
Capital expenditure for FY2027 is projected at $1.4–$1.6 billion, substantially higher than the $625 million invested during FY2026. CFO Kevin Krumm explained that the elevated spending relates to “foundational” power and cooling infrastructure investments supporting data center clients, with expectations for normalization during FY2028.
Management reaffirmed CPI segment growth targets of 65–75% for FY2027 and exceeding 80% for FY2028. Executives highlighted a substantial multi-year agreement with Google and emphasized that the business unit is “booked out in terms of capacity and backlog for the next two years.”
The company’s Regulated Manufacturing Solutions and Integrated Technology Solutions segments each recorded 13% growth during the fourth quarter, reaching $2.7 billion and $2.9 billion respectively.
Flex executed $200 million in share repurchases during Q4, bringing total buybacks for the full fiscal year to $944 million.
