Key Highlights
- Flex delivered Q4 adjusted earnings per share of $0.93, exceeding analyst projections by 8.1% and showing improvement from $0.73 in the prior year period
- Fourth quarter revenue climbed 17% compared to last year, reaching $7.5 billion and surpassing consensus estimates by 8.1%
- The company announced plans 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 leading the newly formed company, while Michael Hartung assumes the CEO role at Flex
- Fiscal year 2027 projections estimate revenue between $32.3 billion and $33.8 billion, with adjusted EPS ranging from $4.21 to $4.51, representing a 32% increase at the midpoint
Shares of Flex (FLEX) experienced a dramatic rally exceeding 35% during Wednesday trading following the company’s impressive fourth-quarter financial results and the revelation of plans to establish its Cloud and Power Infrastructure division as a separate public entity.
The company reported adjusted earnings per share of $0.93 for the fourth quarter, surpassing the Zacks Consensus Estimate by 8.1% while demonstrating growth from the $0.73 figure recorded in the comparable quarter twelve months earlier. Revenue reached $7.5 billion, marking a 17% year-over-year expansion and exceeding analyst expectations by an identical margin.
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 achieving an adjusted operating margin of 9.9%.
Looking at the complete fiscal year 2026 performance, Flex recorded revenue of $27.9 billion, representing an 8% increase, accompanied by adjusted EPS of $3.30, which marked a 25% rise. The company’s adjusted gross margin for the year showed improvement of 70 basis points, reaching 9.5%.
Strategic Separation Dominates Investor Attention
The primary focus during the earnings discussion centered on the planned establishment of the CPI business as an independent public company. CEO Revathi Advaithi characterized this strategic move as a significant step forward in the company’s ongoing portfolio restructuring efforts spanning multiple years.
Advaithi announced her intention to transition into the CEO position at the newly formed entity, referred to as SpinCo. Michael Hartung, currently serving as Chief Commercial Officer, will assume leadership of the core Flex operations following the transaction’s completion, anticipated during the first quarter of calendar year 2027.
The separated entity will function as a worldwide critical digital infrastructure provider specializing in power and thermal management solutions for artificial intelligence data centers. Advaithi connected the strategic timing to escalating AI-driven computational requirements and what she characterized as a transformational shift in electrical infrastructure spanning a generation.
During the quarter, Flex completed its purchase of Electrical Power Products (EP²), incorporating utility-grade solutions for grid modernization into its existing capabilities.
Forward-Looking Financial Projections
For the first quarter of fiscal 2027, Flex provided revenue guidance ranging from $7.35 billion to $7.65 billion, paired with adjusted EPS expectations between $0.86 and $0.92, signifying approximately 24% EPS growth at the midpoint.
The complete fiscal year 2027 outlook projects revenue spanning $32.3 billion to $33.8 billion, indicating roughly 18% growth at the midpoint. Adjusted earnings per share projections fall between $4.21 and $4.51, demonstrating 32% growth at the midpoint.
Capital expenditure plans for FY2027 range from $1.4 billion to $1.6 billion, marking a substantial increase from the $625 million invested during FY2026. CFO Kevin Krumm explained this spending relates to essential power and cooling infrastructure investments supporting data center clients, with expectations for normalized levels returning in FY2028.
Management reaffirmed CPI growth projections of 65–75% during FY2027 and exceeding 80% in FY2028. Leadership highlighted a multi-year agreement with Google, noting the division operates with full capacity bookings and backlog extending across the upcoming two years.
Both the Regulated Manufacturing Solutions and Integrated Technology Solutions divisions achieved 13% growth during Q4, reaching $2.7 billion and $2.9 billion respectively.
The company executed $200 million in stock repurchases during the fourth quarter, totaling $944 million for the complete fiscal year.
