FLEX LTD.

Flex Ltd. is an advanced, end-to-end manufacturing partner that delivers technology innovation, supply chain, and manufacturing solutions to diverse industries and end markets, including data center, healthcare, industrial, automotive, communications, and lifestyle. The Company operates through a global workforce across approximately 30 countries with responsible, sustainable operations. The Company's full suite of specialized capabilities includes design and engineering, supply chain, manufacturing, and integrated services, plus a portfolio of power and cooling products. The contract manufacturing services market is competitive, and Flex competes against numerous domestic and foreign manufacturing service providers, as well as current and prospective customers. The principal competitive factors in the market are quality and range of services; design and technological capabilities; cost; location of sites; supply chain resiliency; sustainability; and responsiveness and flexibility.

Flex believes its global scale and regional capabilities are a significant competitive advantage. The Company's physical infrastructure includes more than 100 facilities across approximately 30 countries, staffed by approximately 150,000 employees ¹. In fiscal year 2026, the ten largest customers accounted for 45% ² of net sales, and no customer accounted for greater than 10% of the Company's net sales. The Company has a very balanced global manufacturing footprint with 44% ³ of net sales in North America, 16% ⁴ in China, 20% ⁵ in Europe, and 20% ⁶ in other areas in the fiscal year ended March 31, 2026. Flex competes with major global EMS providers, other smaller EMS companies with a regional or product-specific focus, and Original Design Manufacturers, as well as current and prospective customers.

Flex generates revenue by providing a comprehensive suite of services that range from advanced product design to manufacturing and logistics to after-sales services. The Company's end-to-end services include design and engineering, supply chain, manufacturing, value-added fulfillment and forward logistics, and aftermarket services through a network of more than 100 locations across approximately 30 countries on four continents. The Company's manufacturing operations and systems assembly generate the majority of its revenues and include PCBA and assembly of systems and subsystems that incorporate printed circuit boards and complex electromechanical components. The Company's service offerings also include power, thermal, and compute infrastructure capabilities used for AI data centers and mission-critical applications. The Company's business model is designed to allow it to be flexible and redeploy and reposition assets and resources as necessary to meet specific customers' supply chain solution needs across all the markets it serves and earn a return on invested capital above the weighted average cost of that capital.

As of March 31, 2026, Flex's three operating and reportable segments are Integrated Technology Solutions (ITS), Regulated Manufacturing Solutions (RMS), and Cloud and Power Infrastructure (CPI). The ITS segment is comprised of the Communications end market (high speed networking, enterprise, and satellite communications systems) and the Lifestyle end market (premium products across commercial, home and personal product categories). The RMS segment is comprised of the Industrial end market (mission-critical automation, energy, and industrial infrastructure), the Automotive end market (compute and power electronics platforms, and integrated systems), and the Healthcare end market (regulated manufacturing for medical devices, drug delivery and equipment). The CPI segment is comprised of the Cloud and Cooling end market (integrated compute systems supporting power-dense digital infrastructure deployments, and advanced liquid cooling solutions supporting higher-density, power-intensive rack architectures) and the Power end market (utility and facility-level electrical infrastructure enabling reliable, scalable power delivery and high-density rack- and board-level power systems supporting power-intensive compute workloads). Net sales for the ITS segment were $11.109 billion ⁷ in fiscal year 2026, representing 40% ⁸ of total net sales. Net sales for the RMS segment were $10.191 billion ⁹, representing 36% ¹⁰ of total net sales. Net sales for the CPI segment were $6.614 billion ¹¹, representing 24% ¹² of total net sales.

The ITS segment serves customers building technology-driven, intelligent products that require fast innovation cycles, while the RMS segment focuses on regulated, safety-critical markets requiring a high level of precision, compliance, and reliability. Together, ITS and RMS represent Flex's core design and engineering, advanced manufacturing and supply chain solutions business. The CPI segment is focused on delivering integrated compute systems, power, and cooling technologies that support large-scale cloud, data center, and AI-enabled infrastructure deployments. CPI programs are characterized by systems-level integration, high power density requirements, proprietary engineering and complex global manufacturing and supply chain execution, including capabilities that extend across rack-level systems through facility and utility-level electrical infrastructure. Segment income for ITS was $596 million ¹³ with a margin of 5.4% ¹⁴. Segment income for RMS was $611 million ¹⁵ with a margin of 6.0% ¹⁶. Segment income for CPI was $610 million ¹⁷ with a margin of 9.2% ¹⁸.

On May 5, 2026, Flex announced its intention to separate the Company into two independent, publicly traded companies: one comprising the CPI segment and the other comprising the advanced manufacturing and supply chain solutions business consisting of the ITS and RMS segments. The spin-off is targeted for completion in the first quarter of calendar 2027. During fiscal year 2026, the Company recognized $51 million ¹⁹ in asset impairments, inventory write-downs and other charges as a result of a missile strike on its Mukachevo, Ukraine facility on August 21, 2025. The Company also completed several strategic acquisitions, including the acquisition of a power facility in Poland in fiscal year 2026. On August 6, 2025, the Board of Directors authorized repurchases of outstanding ordinary shares for up to $1.7 billion ²⁰. During fiscal year 2026, the Company paid $0.9 billion ²¹ to repurchase shares under the current and prior repurchase plans at an average price of $49.08 ²² per share. As of March 31, 2026, shares in the aggregate amount of $1.1 billion ²³ were available to be repurchased under the current plan. On August 15, 2025, the Company issued a warrant to Amazon.com NV Investment Holdings LLC to purchase up to an aggregate of 3,859,851 ²⁴ ordinary shares at an exercise price of $51.29 ²⁵ per share.

Net sales from continuing operations for fiscal year 2026 totaled $27.914 billion ²⁶, representing an increase of 8% ²⁷ from $25.813 billion ²⁸ in fiscal year 2025. Net income from continuing operations was $880 million ²⁹ in fiscal year 2026, compared to $838 million ³⁰ in fiscal year 2025. Diluted earnings per share from continuing operations was $2.33 ³¹ in fiscal year 2026, compared to $2.11 ³² in fiscal year 2025. Gross profit totaled $2.567 billion ³³, or 9.2% ³⁴ of net sales, compared to $2.159 billion ³⁵, or 8.4% ³⁶ of net sales, in the prior year. Cash provided by operating activities was $1.685 billion ³⁷ in fiscal year 2026, compared to $1.505 billion ³⁸ in fiscal year 2025. Free cash flow was $1.060 billion ³⁹ for fiscal year 2026, compared to $1.082 billion ⁴⁰ for fiscal year 2025.

A primary growth vector is the planned spin-off of the Cloud and Power Infrastructure (CPI) segment into an independent, publicly traded company focused on data center power, digital infrastructure and power, thermal and compute integration. The spin-off is expected to be completed in the first quarter of calendar 2027, subject to certain customary conditions, including final approval by the Board of Directors, shareholders, and the High Court of the Republic of Singapore and compliance with applicable SEC requirements. The Company believes the separation will create two independent, publicly traded companies, each with more concentrated areas of focus. Another growth vector is the continued investment in the CPI segment, which saw net sales increase by $1.8 billion ⁴¹, or 38% ⁴², from fiscal year 2025, driven by increased demand in the data center market and contributions from acquisitions in the United States and Poland. The Company is also investing in power, cooling, and systems-level capabilities to support critical digital infrastructure customers.

The Company continues to invest in and strengthen its advanced manufacturing and supply chain platform, built around the complementary capabilities of the ITS and RMS segments, to support customers requiring speed, flexibility, and compliance at global scale. Flex is advancing its expertise in factory automation, robotics, artificial intelligence, vertical integration, simulation, digital twins, and power technologies, reflecting the increasing demands of both advanced manufacturing and digital infrastructure customers. The Company's strategy is to provide customers with a full range of cost competitive, vertically-integrated global supply chain solutions through which it can design, build, ship and service a complete packaged product. The Company believes it is well positioned to address increasing supply chain and manufacturing complexity as customers seek resiliency, speed, and compliance.

The Company's gross margin for fiscal year 2026 was 9.2% ⁴³, an increase from 8.4% ⁴⁴ in fiscal year 2025, driven by improved product mix with most of the revenue growth in higher margin businesses combined with operational efficiencies. Segment margins varied, with ITS at 5.4% ⁴⁵, RMS at 6.0% ⁴⁶, and CPI at 9.2% ⁴⁷. The CPI segment margin decreased 100 basis points ⁴⁸ to 9.2% ⁴⁹ for fiscal year 2026, primarily driven by costs to ramp the business and unfavorable mix in the Cloud and Cooling business, partially offset by faster growth in the higher margin Power business. The Company has taken restructuring actions to improve operational efficiency, recognizing $87 million ⁵⁰ of restructuring charges in fiscal year 2026, primarily related to employee severance. The Company may be required to take additional charges in the future to align operations and cost structures with global economic conditions, market demands, and cost competitiveness.

The Company's operations are working capital intensive, and it continues to manage its supply chain posture. As of March 31, 2026, total active manufacturing capacity was approximately 27 million ⁵¹ square feet. The Company has a network of more than 100 facilities across approximately 30 countries. The Company continues to invest in maintaining a leadership position in its world-class manufacturing services and capabilities, leveraging its broad set of capabilities globally to minimize logistics costs, manufacturing costs, and cycle times while increasing flexibility, responsiveness, and supply chain resiliency. The Company is focused on hiring and retaining the world's best talent and is committed to reskilling and upskilling employees to co-work with advanced technologies. As of March 31, 2026, the global workforce totaled approximately 150,000 ⁵² employees including the contractor workforce.

Capital expenditures for property and equipment were $633 million ⁵³ in fiscal year 2026, compared to $438 million ⁵⁴ in fiscal year 2025, to continue expanding capabilities and capacity in support of business growth. The Company's Board of Directors authorized repurchases of outstanding ordinary shares for up to $1.7 billion ⁵⁵ on August 6, 2025. As of March 31, 2026, shares in the aggregate amount of $1.1 billion ⁵⁶ were available to be repurchased under the current plan. The Company has not declared or paid any cash dividends on its ordinary shares since inception and currently does not have plans to pay any cash dividends in fiscal year 2027. Stock-based compensation expense was $142 million ⁵⁷ in fiscal year 2026.

The Company faces structural headwinds from tariffs, trade restrictions, and changes in trade policy. Throughout 2025 and into 2026, the U.S. administration imposed varying levels of tariffs on goods imported from China and other countries. During fiscal year 2026, tariff costs paid and recoveries from customers impacted revenues and costs of goods by approximately one percent and had a negligible impact on profitability. The Company expects to recover the cost of tariffs by passing tariff costs to customers, which would increase net sales, decrease operating income margins, and negatively affect operating cash flow timing. If the Company is no longer able to fully pass through these tariffs, results from operations and cash flows would be negatively impacted. Geopolitical uncertainty, including the conflicts in Ukraine and the Middle East, also presents constraints. The missile strike on the Mukachevo, Ukraine facility in August 2025 resulted in $51 million ⁵⁸ in asset impairments, inventory write-downs and other charges.

The Company's Cloud and Power Infrastructure businesses face risks related to demand variability from hyperscale cloud providers and data center operators. Demand for cloud and power infrastructure solutions is significantly influenced by continued investment in AI, machine learning, and high-performance computing infrastructure. Capital expenditure cycles among hyperscale cloud providers can be volatile and are influenced by factors outside the Company's control. The Company also faces risks related to power and water availability for data center development, as limitations on power generation, transmission, and distribution capacity, utility interconnection lead times, and water scarcity can delay customer projects. Evolving regulations relating to data center development, energy consumption, and utility infrastructure could adversely affect demand for the Company's products and services.

The planned spin-off of the Cloud and Power Infrastructure businesses may not be completed on the terms or timeline currently contemplated, if at all, and involves significant costs and risks, including the diversion of management attention, potential tax liabilities if the transaction does not qualify for tax-free treatment, and the risk that the dis-synergies of the transaction will exceed anticipated amounts. Tariffs, trade restrictions, and changes in trade policy have in the past adversely affected, and could in the future adversely affect, the business, results of operations, and financial condition. During fiscal year 2026, tariff costs paid and recoveries from customers impacted revenues and costs of goods by approximately one percent. Customer order cancellations, production changes, and demand variability could adversely affect the business, as the Company generally does not obtain firm, long-term purchase commitments from customers. The ten largest customers accounted for 45% ⁵⁹ of net sales in fiscal year 2026, and a decline in sales to any of the largest customers could materially harm the business. Investments in the Cloud and Power Infrastructure businesses may adversely affect margins, and demand for these offerings is subject to factors outside the Company's control, including capital expenditure cycles among hyperscale cloud providers and the availability of power and water for data center development.

Management's message emphasizes the Company's strategic evolution through its EMS + Products + Services approach, which is focused on strengthening core manufacturing and supply chain capabilities while expanding the portfolio of proprietary products and value-added services. The key strategic priorities for the period ahead are the planned spin-off of the Cloud and Power Infrastructure segment, which is intended to create two independent, publicly traded companies, and the continued investment in the advanced manufacturing and supply chain platform built around the ITS and RMS segments. Management also highlights the completion of several strategic acquisitions in fiscal year 2025 that enhanced the differentiated portfolio to address critical data center customer challenges around power, heat and scale, including the acquisitions of JetCool to expand direct-to-chip liquid cooling capabilities and Crown to increase critical power capabilities while adding opportunities in grid modernization. The Company announced that Revathi Advaithi, the CEO, will become the chief executive officer of the separated company and serve as Chairman of the Board of Flex for a transitional period following the completion of the spin-off, and that Michael Hartung, the President and Chief Commercial Officer, will be named as the Company's CEO.