Key Highlights
- Flex delivered Q4 adjusted earnings per share of $0.93, exceeding analyst projections by 8.1% and improving from $0.73 in the prior-year period
- Fourth-quarter revenue climbed 17% annually to reach $7.5 billion, surpassing consensus forecasts by 8.1%
- The company unveiled intentions to separate its Cloud and Power Infrastructure division into an independent publicly-traded entity during the first quarter of 2027
- Current CEO Revathi Advaithi will transition to lead the newly formed company; Michael Hartung will assume the Flex CEO position
- Fiscal 2027 projections anticipate revenue between $32.3 billion and $33.8 billion with adjusted earnings per share of $4.21 to $4.51, representing a 32% increase at the middle range
Shares of Flex (FLEX) stock jumped more than 35% during Wednesday’s trading session following the company’s impressive fourth-quarter financial performance and the disclosure of strategic plans to separate its rapidly expanding Cloud and Power Infrastructure operations.
The company’s fourth-quarter adjusted earnings per share reached $0.93, topping the Zacks Consensus Estimate by 8.1% and marking a significant improvement from $0.73 recorded during the comparable quarter one year earlier. Total revenue achieved $7.5 billion, representing a 17% year-over-year expansion and exceeding analyst expectations by an identical percentage.
The Cloud and Power Infrastructure (CPI) division emerged as the performance leader, generating revenue of $1.8 billion — a 31% year-over-year increase — while delivering an adjusted operating margin of 9.9%.
Looking at the complete fiscal year 2026, Flex announced revenue of $27.9 billion, representing an 8% gain, alongside adjusted earnings per share of $3.30, marking a 25% year-over-year improvement. The company’s adjusted gross margin expanded by 70 basis points to reach 9.5% for the full year.
Strategic Separation Captures Market Attention
The headline announcement from the earnings release focused on the planned separation of the CPI operations into an independent publicly-traded entity. Chief Executive Revathi Advaithi characterized the strategic move as a “next milestone” within a comprehensive multi-year portfolio restructuring initiative.
Advaithi will transition to the new SpinCo as its chief executive officer. Michael Hartung, currently serving as Chief Commercial Officer, will step into the CEO role for the core Flex operations following the transaction’s completion, anticipated during the first calendar quarter of 2027.
Management described the emerging SpinCo as a “global critical digital infrastructure company” concentrated on power and thermal management solutions serving AI data center requirements. Advaithi connected the strategic timing to accelerating AI-driven computational demand and what she characterized as a “generational transformation” in electrical infrastructure requirements.
The company also finalized its acquisition of Electrical Power Products (EP²) within the quarter, incorporating utility-grade solutions for grid modernization into its service portfolio.
Forward-Looking Projections for Fiscal 2027
For the opening quarter of fiscal 2027, Flex provided guidance projecting revenue between $7.35 billion and $7.65 billion with adjusted earnings per share ranging from $0.86 to $0.92, indicating approximately 24% earnings growth at the midpoint.
Full-year fiscal 2027 guidance anticipates revenue spanning $32.3 billion to $33.8 billion, representing roughly 18% growth at the middle range. Adjusted earnings per share projections fall between $4.21 and $4.51, marking a 32% increase at the midpoint.
Capital expenditure for fiscal 2027 is projected at $1.4 billion to $1.6 billion, substantially exceeding the $625 million invested during fiscal 2026. Chief Financial Officer Kevin Krumm attributed the elevated spending to “foundational” power and cooling infrastructure investments supporting data center clients, noting expectations for normalization during fiscal 2028.
Management reaffirmed CPI growth objectives of 65% to 75% in fiscal 2027 and exceeding 80% in fiscal 2028. Executives referenced a long-term contract with Google and emphasized the division is “booked out in terms of capacity and backlog for the next two years.”
The 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 the fourth quarter and $944 million throughout the complete fiscal year.
