Key Highlights
- Flex reported Q4 adjusted earnings per share of $0.93, exceeding analyst expectations by 8.1% and rising from $0.73 year-over-year
- Fourth quarter sales climbed 17% annually to $7.5 billion, surpassing consensus estimates by 8.1%
- Company unveils strategy to separate Cloud and Power Infrastructure division into independent publicly traded entity in first quarter 2027
- Current CEO Revathi Advaithi will helm the spinoff company; Michael Hartung promoted to lead remaining Flex operations
- Fiscal 2027 outlook projects revenue between $32.3 billion and $33.8 billion with adjusted EPS ranging from $4.21 to $4.51, marking 32% midpoint growth
Shares of Flex (FLEX) skyrocketed more than 35% during Wednesday trading following the company’s impressive fourth quarter results and the revelation of its intention to separate its rapidly expanding Cloud and Power Infrastructure division.
Adjusted earnings per share for the fourth quarter reached $0.93, topping the Zacks Consensus Estimate by 8.1% and representing substantial improvement from the $0.73 recorded in the prior-year period. Sales totaled $7.5 billion, marking a 17% year-over-year increase and exceeding analyst projections by an identical margin.
The Cloud and Power Infrastructure (CPI) division emerged as the performance leader, generating $1.8 billion in revenue — a 31% annual gain — while achieving an adjusted operating margin of 9.9%.
For the complete fiscal 2026 period, Flex delivered revenue of $27.9 billion, representing 8% growth, while adjusted earnings per share reached $3.30, climbing 25%. The company’s adjusted gross margin expanded 70 basis points to 9.5% for the year.
Strategic Separation Dominates Investor Focus
The primary catalyst driving investor enthusiasm stemmed from the announced plan to carve out the CPI operation as an independent public company. CEO Revathi Advaithi characterized this strategic move as the “next milestone” within a comprehensive multi-year portfolio reshaping initiative.
Advaithi will transition to the spinoff entity, assuming the chief executive position at SpinCo. Michael Hartung, currently serving as Chief Commercial Officer, will ascend to the CEO role for the core Flex business upon transaction completion, anticipated during the first calendar quarter of 2027.
Management positioned the new SpinCo as a “global critical digital infrastructure company” specializing in power and thermal management solutions tailored for AI-powered data centers. Advaithi connected the strategic timing to accelerating AI-driven computational requirements and what she termed a “generational transformation” within electrical infrastructure systems.
The company also finalized its acquisition of Electrical Power Products (EP²) within the quarter, incorporating utility-grade capabilities for grid modernization into its product portfolio.
Forward-Looking Financial Projections
For the first quarter of fiscal 2027, Flex issued guidance projecting revenue between $7.35 billion and $7.65 billion, with adjusted earnings per share expected to land between $0.86 and $0.92, indicating approximately 24% profit growth at the midpoint.
Full fiscal year 2027 revenue guidance spans $32.3 billion to $33.8 billion, translating to roughly 18% growth at the midpoint. Adjusted earnings per share is forecast between $4.21 and $4.51, representing 32% expansion at the midpoint.
Capital expenditure for fiscal 2027 is projected at $1.4 billion to $1.6 billion, substantially elevated from the $625 million invested during fiscal 2026. CFO Kevin Krumm attributed the increased spending to “foundational” power and cooling infrastructure investments supporting data center clients, noting that capital intensity should return to normal levels in fiscal 2028.
Management reaffirmed CPI division growth objectives of 65–75% for fiscal 2027 and exceeding 80% in fiscal 2028. Leadership referenced a substantial multi-year agreement with Google and indicated the division is “booked out in terms of capacity and backlog for the next two years.”
The Regulated Manufacturing Solutions and Integrated Technology Solutions divisions each posted 13% quarterly growth, reaching $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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