Flex Ltd at Bank of America Global Technology Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Ruplu Bhattacharya - BofA Securities Inc. - Analyst : I think a key topic today will be the CEC business, and we're honored to have Rob Campbell, who leads that segment here. CEC, for those of you who don't know, is the Communications, Enterprise, and Cloud. Even I have to look at the acronyms. So thanks so much for coming. I think we're going to have a lot of discussion on that. And then we also have Michelle Simmons, who has just joined the company as Head of IR. So Michelle, thanks for coming today. So Revathi, we have a lot of -- a lot of things to talk about, but I want to ask you about your vision for the data center business. How are you positioning Flex to compete in this market? What is your strategy in data center? And where do you think -- what are some of the competitive advantages that Flex has?

Question: Ruplu Bhattacharya - BofA Securities Inc. - Analyst : Yes. No, that's a great overview, so let's build on that. So you talked about some staggering growth rates. I think you -- for the data center business last year, you grew 50% year on year. Like you said, you've guided 35% year on year. Help investors get comfortable with the long-term high growth rate in these segments. What are the secular drivers in compute and power -- in cloud and power that are actually going to sustain these levels of growth?

Question: Ruplu Bhattacharya - BofA Securities Inc. - Analyst : So let's talk about the relative growth rates between power and compute. I think this year, you guided compute to be a little bit -- or cloud to be a little bit lower than 35% and power to be higher. When you think on these two end markets long term, do you think power outgrows cloud or vice versa? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 04, 2025 / 8:20PM, FLEX.OQ - Flex Ltd at Bank of America Global Technology Conference

Question: Ruplu Bhattacharya - BofA Securities Inc. - Analyst : Okay, so we're going to go as deep as we can into the power business and definitely into the cloud business. But I want to talk on one higher-level item, which is everybody is talking about tariffs now. Can you give us your thoughts on what you're seeing in terms of pull-ins or end market demand impact from tariffs? And how much of your manufacturing is in the US versus in Mexico versus in China? And how is Flex being impacted because of tariffs?

Question: Ruplu Bhattacharya - BofA Securities Inc. - Analyst : Maybe just a quick follow up on that. I mean, do you think everyone is focused on manufacturing in the US? How realistic is that? I mean, are you seeing customers trying to move into the US? And what needs to happen to really enable that shift in manufacturing?

Question: Ruplu Bhattacharya - BofA Securities Inc. - Analyst : Okay. Well, that's a great segment, so let's talk about the CEC business. Rob, for those of us in the audience who don't know this business, talk about like what exactly does this segment do? What do you manufacture? Who do you manufacture for? And if you can talk about different segments within this, the cloud business versus networking versus enterprise?

Question: Ruplu Bhattacharya - BofA Securities Inc. - Analyst : Okay. So let's focus on the cloud business a little, and I think there's some confusion maybe with investors. I know most investors know that you have one large hyperscaler. But how broad is your business in this hyperscale community? And can you talk about exactly what are you guys building in that cloud business? Are you building individual servers? Are you building boards? Are you building full racks? Give us a sense for the type of business you're doing.

Question: Ruplu Bhattacharya - BofA Securities Inc. - Analyst : So a couple of months back, there were some media articles that hyperscalers are reassessing their data center plans or maybe holding off on new leases. So how should we think about Flex's CEC segment revenues? Are you directly related to CapEx spend? I mean, how correlated is your revenue to that? And then the second part of the question is GPUs versus custom ASICs. So a lot of hyperscalers are now focused on their own ASIC, their own silicon. How is your business trending? I mean, do you see opportunities to do both standard GPU servers as well as custom ASIC services? How do you see that evolving?

Question: Ruplu Bhattacharya - BofA Securities Inc. - Analyst : Okay. Let's transition to talking on margins. And one of the things that I was surprised and pleasantly surprised was that you guys are guiding to 6% operating margin a year ahead of time. It's strange, Revathi, I always thought of reliability as the end markets that have higher margins, but agility has been producing higher margins than reliability. So how should we think about the long-term margin potential for these two segments? And then Rob, if you can talk about within agility, how should we think about the relative margins for this cloud business versus networking and versus enterprise?

Question: Ruplu Bhattacharya - BofA Securities Inc. - Analyst : So that's a good transition. Let's talk about the power business. When you say you have a product portfolio, typically, EMS companies have shied away from having their own products because they don't want to compete against OEMs, but this is different. I mean, so what exactly -- can you talk to us about what are the products that you're providing in terms of this power business? What is the target customer set? And how do you plan to grow this power business?

Question: Ruplu Bhattacharya - BofA Securities Inc. - Analyst : So we have about two minutes left, and I want to cover two topics. One is, Rob, talk to us about this consignment business and how does that impact revenues? And then I want to end by, Revathi, you talking to us about what is your vision for Flex? And why should investors invest in Flex REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 04, 2025 / 8:20PM, FLEX.OQ - Flex Ltd at Bank of America Global Technology Conference now? Is there anything that the market is missing? And how do you plan to create value, whether it's in terms of share buybacks or M&A? What is your view on shareholder returns, capital allocation, how you plan to do that?

Question: Ruplu Bhattacharya - BofA Securities Inc. - Analyst : And in terms of capital allocation, M&A versus --

Question: Ruplu Bhattacharya - BofA Securities Inc. - Analyst : All right. Great. Well, I mean, look forward to great things from Flex. So Revathi, thank you so much for joining us today. Rob, thanks for all the details. Michelle, thanks for joining. Thank you for being here.