Key Takeaways
- Fourth-quarter adjusted earnings per share of $0.93 exceeded consensus by 8.1%, compared to $0.73 in the prior-year period
- Quarterly revenue climbed 17% to $7.5 billion, surpassing analyst projections by 8.1%
- Company announces separation of Cloud and Power Infrastructure division into standalone public entity in first quarter 2027
- Current CEO Revathi Advaithi to head new SpinCo; Michael Hartung promoted to Flex CEO role
- Fiscal 2027 outlook projects revenue between $32.3 billion and $33.8 billion with adjusted EPS of $4.21–$4.51, representing 32% growth at midpoint
Shares of Flex (FLEX) skyrocketed more than 35% during Wednesday’s trading session following the release of impressive fourth-quarter financial results and the revelation of a strategic plan to separate its rapidly expanding Cloud and Power Infrastructure operations.
Adjusted earnings per share for the fourth quarter reached $0.93, topping the Zacks Consensus Estimate by 8.1% and representing a significant increase from the $0.73 reported during the comparable period last year. Quarterly revenue reached $7.5 billion, marking a 17% year-over-year expansion and exceeding Wall Street expectations by an identical margin.
The Cloud and Power Infrastructure (CPI) division emerged as the star performer, generating $1.8 billion in revenue — a 31% year-over-year jump — while delivering an adjusted operating margin of 9.9%.
For the complete fiscal year 2026, Flex delivered revenue totaling $27.9 billion, representing an 8% increase, alongside adjusted earnings per share of $3.30, reflecting 25% growth. The company’s adjusted gross margin for the year expanded by 70 basis points to reach 9.5%.
Strategic Separation Takes Spotlight
The most significant announcement from the earnings call centered on the planned separation of the CPI operations into an independent publicly traded entity. Chief Executive Revathi Advaithi characterized the strategic move as the “next milestone” in an ongoing multi-year portfolio restructuring initiative.
Advaithi will transition to serve as chief executive of the new SpinCo. Chief Commercial Officer Michael Hartung has been tapped to assume the CEO position for the core Flex business following the completion of the transaction, anticipated during the first quarter of calendar year 2027.
Management described the forthcoming SpinCo as a “global critical digital infrastructure company” specializing in power and thermal management solutions for artificial intelligence-focused data centers. Advaithi connected the timing to accelerating AI-driven computational demand and characterized it as a “generational transformation” in electrical infrastructure requirements.
During the quarter, Flex also finalized its acquisition of Electrical Power Products (EP²), incorporating utility-grade capabilities for grid modernization into its operational portfolio.
Forward Guidance for Fiscal 2027
For the first quarter of fiscal 2027, Flex provided guidance calling for revenue between $7.35 billion and $7.65 billion, with adjusted earnings per share ranging from $0.86 to $0.92, indicating approximately 24% EPS expansion at the midpoint.
Full-year fiscal 2027 projections anticipate revenue in the range of $32.3 billion to $33.8 billion, representing roughly 18% growth at the midpoint. Adjusted earnings per share are forecast between $4.21 and $4.51, reflecting 32% growth at the midpoint.
Capital expenditures for fiscal 2027 are projected between $1.4 billion and $1.6 billion, substantially higher than 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 that expenditure levels should normalize in fiscal 2028.
Management reaffirmed CPI expansion targets of 65–75% growth in fiscal 2027 and exceeding 80% in fiscal 2028. Executives highlighted a multi-year agreement with Google and indicated the division is “booked out in terms of capacity and backlog for the next two years.”
Both the Regulated Manufacturing Solutions and Integrated Technology Solutions segments registered 13% growth during the fourth quarter, each generating $2.7 billion and $2.9 billion respectively.
Flex executed $200 million in share repurchases during the fourth quarter and $944 million for the complete fiscal year.
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