Flex Ltd (FLEX) 2024 Q2 法說會逐字稿

Good afternoon, and thank you for standing by. Welcome to Flex's Second Quarter Fiscal 2024 Earnings Conference Call. (Operator Instructions). As a reminder, this call is being recorded. I will now turn the call over to Mr. David Rubin, you may begin.

下午好，感謝您的耐心等待。歡迎參加偉創力 2024 財年第二季財報電話會議。 （操作員說明）。提醒一下，此通話正在錄音。現在我將把電話轉給大衛·魯賓先生，請您開始。

Thank you, John. Good afternoon, and welcome to Flex's Second Quarter Fiscal 2024 Earnings Conference Call. With me today is our Chief Executive Officer, Revathi Advaithi; and our Chief Financial Officer, Paul Lundstrom. Both will give brief remarks followed by Q&A. Slides for today's call as well as a copy of the earnings press release and summary financials are available on the Investor Relations section at flex.com. This call is being recorded and will be available for replay on our corporate website. As a reminder, today's call contains forward-looking statements, which are based on our current expectations and assumptions. These statements involve risks and uncertainties that could cause actual results to differ materially.

謝謝你，約翰。下午好，歡迎參加偉創力 2024 財年第二季財報電話會議。今天與我在一起的是我們的執行長 Revathi Advaithi；以及我們的財務長 Paul Lundstrom。兩人都將發表簡短講話，然後進行問答。今天電話會議的幻燈片以及收益新聞稿和財務摘要的副本可在 flex.com 的投資者關係部分取得。這通電話正在錄音中，並將在我們的公司網站上重播。提醒一下，今天的電話會議包含前瞻性陳述，這些陳述是基於我們目前的預期和假設。這些陳述涉及風險和不確定性，可能導致實際結果有重大差異。

For a full discussion of these risks and uncertainties, please see the cautionary statements in our presentation, press release, or the Risk Factors section in our recent filings with the SEC. Note this information is subject to change, and we undertake no obligation to update these forward-looking statements. Please note, unless otherwise stated, all results provided will be non-GAAP measures, and all growth metrics will be on a year-over-year basis. The full non-GAAP to GAAP reconciliations can be found in the appendix slides of today's presentation as well as the Investor Relations website.

有關這些風險和不確定性的完整討論，請參閱我們的簡報、新聞稿或我們最近向 SEC 提交的文件中的風險因素部分中的警告聲明。請注意，此資訊可能會發生變化，我們不承擔更新這些前瞻性聲明的義務。請注意，除非另有說明，否則提供的所有結果都將是非公認會計原則衡量標準，並且所有成長指標都將按年計算。完整的非公認會計準則與公認會計準則的調節可以在今天簡報的附錄投影片以及投資者關係網站中找到。

Earlier today, we were pleased to announce our plan to spin off all of Flex's remaining interest in NEXTracker to Flex shareholders. As previously disclosed, Flex retained the option to effect the spin-off pursuant to a merger agreement entered into by Flex and NEXTracker in connection with NEXTracker's initial public offering. We believe that the spin-off is the most advantageous form of separation for Flex, NEXTracker, and our respective shareholders. Specifically, it provides the opportunity to distribute Flex's interest in NEXTracker to Flex shareholders in a tax-free manner for U.S. federal income tax purposes and allows Flex to focus on our core strategies and long-term value creation for our shareholders.

今天早些時候，我們很高興地宣布計劃將 Flex 在 NEXTracker 中的所有剩餘權益剝離給 Flex 股東。如同先前所揭露的，根據 Flex 和 NEXTracker 就 NEXTracker 首次公開募股簽訂的合併協議，Flex 保留了進行分拆的選擇權。我們認為，分拆對於 Flex、NEXTracker 以及我們各自的股東來說是最有利的分離形式。具體來說，它提供了將 Flex 在 NEXTracker 中的權益以免稅方式分配給 Flex 股東的機會，以實現美國聯邦所得稅目的，並使 Flex 能夠專注於我們的核心策略和為股東創造長期價值。

As earlier today, NEXTracker filed a registration statement on Form S-4 that includes a preliminary proxy statement of Flex, which includes additional information regarding the spin-off. Spin-off is currently expected to be completed in Flex's fourth quarter ending March 31, 2024, but does remain subject to a number of conditions and no assurance can be given that the spin-off will, in fact, occur. We understand that you may have questions on this process. At this point, there are no additional details to share other than what's been publicly made available, but we will provide any updates as appropriate. Now I'd like to turn the call over to our CEO, Revathi.

今天早些時候，NEXTracker 在 S-4 表格上提交了一份註冊聲明，其中包括 Flex 的初步委託書，其中包括有關分拆的其他資訊。目前預計分拆將在偉創力截至 2024 年 3 月 31 日的第四季完成，但仍需遵守許多條件，並且不能保證分拆確實會發生。我們了解您可能對此流程有疑問。目前，除了已公開的資訊外，沒有其他詳細資訊可供分享，但我們將酌情提供任何更新。現在我想將電話轉給我們的執行長 Revathi。

Thank you, David. Good afternoon, and thank you for joining us today. Before we start, I want to say how deeply saddened we are by the horrific attacks on Israel. Our hearts go out to our colleagues, our customers, and our friends in that area. Turning to our quarterly results on Slide 5. Overall, fiscal Q2 was another strong quarter with great execution. Revenue came in at $7.5 billion, which was down about 4%, adjusted operating margin came in at 5.9%, and we delivered $0.68 of adjusted EPS. Since we have now announced the separation of NEXTracker, we are able to provide Core Flex's results, which excludes NEXTracker.

謝謝你，大衛。下午好，感謝您今天加入我們。在開始之前，我想說我們對以色列遭受的可怕襲擊深感悲痛。我們的心與該地區的同事、客戶和朋友同在。轉向幻燈片 5 上的季度業績。總體而言，第二財季是另一個強勁的季度，執行力出色。營收為 75 億美元，下降約 4%，調整後營業利潤率為 5.9%，調整後每股收益為 0.68 美元。由於我們現在已經宣布分離 NEXTracker，因此我們能夠提供 Core Flex 的結果，其中不包括 NEXTracker。

For Core Flex, we executed really well even with the market uncertainty. Revenue came in at $6.9 billion, down 5% against a great quarter last year, which grew 24%. Core Flex adjusted operating margin came in at 4.7%, up both sequentially and year-over-year, and we delivered $0.56 of adjusted EPS. I'm really pleased with how these results shows our ability to execute and build a resilient company with strong performance through the cycles.

對於 Core Flex，即使市場存在不確定性，我們也執行得非常好。營收為 69 億美元，比去年同期成長 24% 下降 5%。 Core Flex 調整後營業利潤率為 4.7%，環比和年比均有所上升，調整後每股收益為 0.56 美元。我對這些結果顯示出我們執行和建立一家在整個週期中表現強勁的有彈性的公司的能力感到非常高興。

Now turning to Slide 6. We'll take a look at market fundamentals and how we continue to navigate a highly dynamic environment. However, I want to point out a few important items that really puts into perspective the strength of our model and how we have truly evolved as a company. As you are well aware, we participate in 6 end markets, but within that, we've been focused on shifting our portfolio more towards next-gen mobility, cloud, and digital health. As highlighted in our March 2022 Investor Day, we believe these markets drive the right growth and margin expansion for us. So I'd like to give some specifics on how we're doing in these areas.

現在轉向投影片 6。我們將了解市場基本面以及我們如何繼續駕馭高度動態的環境。然而，我想指出一些重要的事項，這些事項真正體現了我們模式的優勢以及我們作為一家公司如何真正發展。如您所知，我們參與了 6 個終端市場，但在其中，我們一直專注於將我們的產品組合更多地轉向下一代行動、雲端和數位健康。正如我們在 2022 年 3 月投資者日所強調的那樣，我們相信這些市場將為我們帶來正確的成長和利潤率擴張。因此，我想詳細介紹一下我們在這些領域的工作情況。

Next-gen mobility, as we have defined it comprises our EV ADAS, autonomous, and our EV charging businesses. At the time of Investor Day, we expected a 50-plus percent CAGR for this space. We continue to see growth in this category on par with these strong expectations. Looking at our overall automotive business. Once again this quarter, our revenue growth outpaced industry units. This strength comes from past program wins coupled with continued steady vehicle content expansion. We expect our cloud business to grow just under 20% per year based on unique ability to manufacture vertically integrated data center racks and critical power systems for the data center.

正如我們所定義的，下一代行動行程包括我們的 EV ADAS、自動駕駛和我們的 EV 充電業務。在投資者日當天，我們預計該領域的複合年增長率將超過 50%。我們繼續看到這一類別的成長符合這些強烈的預期。看看我們的整體汽車業務。本季我們的營收成長再次超過行業單位。這種優勢來自於過去的專案勝利以及持續穩定的車輛內容擴展。基於製造垂直整合資料中心機架和資料中心關鍵電源系統的獨特能力，我們預期雲端業務每年將成長略低於 20%。

Even with the increasing trend towards consignment, we're on track to beat these growth expectations this year and also next year. This is based on what we have already won with multiple top-tier hyperscalers with much of that growth currently driven by generative AI capability expansions. Lastly, we said our digital healthcare business would have just over a 10% CAGR. We expect that multiyear trend to continue. Right now, we are seeing exceptional growth in our next generation of smarter and smaller devices, including continuous glucose monitors and diabetes drug delivery programs. I'd say the only changes in our Life Sciences business, but that is just short-term inventory digestion after an extended period of strong growth.

即使寄售趨勢不斷增長，我們今年和明年仍有望超過這些成長預期。這是基於我們已經在多個頂級超大規模企業中贏得的成果，其中大部分成長目前是由生成式人工智慧能力擴展所推動的。最後，我們表示我們的數位醫療保健業務的複合年增長率將略高於 10%。我們預計這種多年趨勢將持續下去。目前，我們看到下一代更聰明、更小型的設備取得了顯著成長，包括連續血糖監測儀和糖尿病藥物傳輸計畫。我想說的是我們生命科學業務的唯一變化，但這只是長期強勁增長後的短期庫存消化。

One area we touched on during our Investor Day was Clean Energy Transition opportunity. Last quarter, we announced that our renewables business doubled in our last fiscal year. Despite some lingering weakness in residential solar, we still expect renewables to grow again in fiscal '24. And it is still early days as we look at the potential opportunity from the IRA and other government initiatives to help drive the clean energy transition and upgrade grid infrastructure. Our stated intention at our Investor Day was to focus on these strategic end markets, which has made Flex a more resilient company.

我們在投資者日期間談到的一個領域是清潔能源轉型機會。上個季度，我們宣布我們的再生能源業務在上一財年翻了一番。儘管住宅太陽能市場持續疲軟，但我們仍預期再生能源在 24 財年將再次成長。現在還處於早期階段，我們正在考慮 IRA 和其他政府措施的潛在機會，以幫助推動清潔能源轉型和升級電網基礎設施。我們在投資者日表示的意圖是專注於這些策略性終端市場，這使得偉創力成為一家更具彈性的公司。

Now let's just with combining the right end markets with how we are operating as a company. Flex is a more agile and operationally efficient company, and you see that in our results with steady margin expansion and EPS growth. Our continued optimization of our mix and our factory footprint, combined with driving productivity through automation investments has enabled operating margin expansion, both sequentially and year-over-year for Core Flex. We also expect this trend to continue, and we'll discuss this further when we get to guidance. We have been shaping the company in this direction over the last 5 years, and we see the impact of our efforts in our improving results and shareholder value creation.

現在，讓我們將正確的終端市場與我們公司的營運方式結合起來。偉創力是一家更敏捷、營運效率更高的公司，您可以在我們的業績中看到這一點，利潤率穩定成長，每股收益成長。我們對產品組合和工廠佔地面積的持續優化，再加上透過自動化投資提高生產力，使得 Core Flex 的營業利潤率連續和逐年擴大。我們也預計這種趨勢將持續下去，當我們獲得指導時，我們將進一步討論這一點。過去五年來，我們一直朝著這個方向塑造公司，我們看到了我們的努力對改善業績和創造股東價值所產生的影響。

Now speaking of creating shareholder value, we're executing on our path to unlock the value of NEXTracker. Through this journey, we have created value with multiple transactions, growing cash to help fund our capital allocation strategy. We used cash from the pre-IPO TPG investment to fund the Anorak acquisition, which is focused on cloud facilities and critical power. This addition clearly checks all the right boxes for value creation. It delivers double-digit growth is margin accretive and synergistic to our overall position in the cloud market. We believe Flex is a great investment. So we're also putting cash from the transactions to work buying back our own stock.

現在談到創造股東價值，我們正在努力釋放 NEXTracker 的價值。透過這一歷程，我們透過多次交易創造了價值，增加了現金，為我們的資本配置策略提供資金。我們使用 IPO 前 TPG 投資的現金為 Anorak 收購提供資金，該收購重點關注雲端設施和關鍵電力。這項補充明確地檢視了價值創造的所有正確框架。它實現了兩位數的成長，增加了利潤，並與我們在雲端市場的整體地位產生了協同效應。我們相信 Flex 是一項巨大的投資。因此，我們也將交易中的現金用於回購我們自己的股票。

Year-to-date, we bought back $500 million worth of stock. And you'll recall our Board authorized a $2 billion share repurchase program back in August. Now we're in the final steps to fully unlock the NEXTracker value in a shareholder-friendly transaction. As David outlined, we expect to distribute a remaining 51% ownership to Flex investors via a tax-free spin in fiscal Q4. With that, I'll pass the call over to Paul to take you through our financial update. Paul?

今年迄今為止，我們回購了價值 5 億美元的股票。您還記得我們的董事會在 8 月就授權了一項 20 億美元的股票回購計畫。現在，我們正處於最後步驟，以透過股東友善的交易充分釋放 NEXTracker 的價值。正如 David 所概述的那樣，我們預計將在第四財季透過免稅剝離方式將剩餘 51% 的所有權分配給 Flex 投資者。接下來，我會將電話轉接給保羅，讓他向您介紹我們的財務最新情況。保羅？

Okay. Thank you, Revathi. I'll begin with our second quarter performance on Slide 8. It was another solid quarter. Second quarter revenue was $7.5 billion, in line with our expectations. Gross profit totaled $676 million, and gross margin increased to 9%, up 130 basis points. Operating income was $439 million with operating margins at 5.9%, a substantial year-on-year improvement, up 110 basis points, and earnings per share came in at $0.68 for the quarter, increasing 8%, which includes $0.08 of NEXTracker noncontrolling interest. Looking at core Flex results, which excludes NEXTracker, in the quarter, Core Flex revenue was $6.9 billion, down 5%.

好的。謝謝你，瑞瓦蒂。我將從幻燈片 8 上的第二季業績開始。這是另一個穩健的季度。第二季營收為 75 億美元，符合我們的預期。毛利總計 6.76 億美元，毛利率增加至 9%，上升 130 個基點。營業收入為 4.39 億美元，營業利潤率為 5.9%，年比大幅改善，成長了 110 個基點，本季每股收益為 0.68 美元，成長 8%，其中包括 0.08 美元的 NEXTracker 非控股權益。從核心 Flex 業績來看，不包括 NEXTracker，本季 Core Flex 營收為 69 億美元，下降 5%。

And as Revathi mentioned, this was against a great quarter last year, up 24%, which was our strongest quarter in fiscal year '23. Core Flex adjusted operating margins came in at 4.7%, up 20 basis points and with another quarter of sequential margin expansion, up 40 basis points from Q1. The Flex Core business delivered $0.56 of EPS, up 6%. Turning to our quarterly segment results on the next slide. Reliability revenue was flat at $3.3 billion. Auto and Health Solutions remained strong with some headwinds from residential solar and industrial. Operating income was $171 million, and operating margin for this segment improved sequentially to 5.2% on solid execution. In Agility, revenue was down as expected to $3.6 billion as strong cloud growth was offset by the anticipated pressure in comms, enterprise IT, and consumer.

正如 Revathi 所提到的，這與去年的一個季度相比表現出色，成長了 24%，這是我們在 23 財年最強勁的季度。 Core Flex 調整後營業利益率為 4.7%，上升 20 個基點，利潤率又連續一個季度擴張，較第一季上升 40 個基點。 Flex Core 業務實現每股收益 0.56 美元，成長 6%。轉向下一張投影片上的季度業績。可靠性收入持平，為 33 億美元。汽車和健康解決方案仍然強勁，但住宅太陽能和工業帶來了一些阻力。營業收入為 1.71 億美元，由於執行力強，該部門的營業利潤率較上季提高至 5.2%。在敏捷方面，由於雲端運算的強勁成長被通訊、企業 IT 和消費者的預期壓力所抵消，收入如預期下降至 36 億美元。

Operating income came in at $168 million, with a solid 4.6% operating margin, up both sequentially and year-on-year, and was reflective of strong operational management and improved mix. Finally, NEXTracker delivered revenue of $573 million, up 21%. Operating income at NEXTracker was $112 million, more than double what it was last year, delivering a strong 20% operating margin. Moving to cash flow on Slide 10. We made further progress against our inventory improvement goals, reducing net inventory by 5% sequentially and by 7% year-over-year. As we said last quarter, this is an indicator of the overall situation improving, and we expect to see further progress over the coming quarters. We continue to invest in future growth opportunities.

營業收入為 1.68 億美元，營業利潤率為 4.6%，環比和同比均有所增長，這反映了強大的營運管理和改進的組合。最後，NEXTracker 實現營收 5.73 億美元，成長 21%。 NEXTracker 的營業收入為 1.12 億美元，是去年的兩倍多，營業利潤率高達 20%。轉到幻燈片 10 上的現金流。我們在庫存改善目標方面取得了進一步進展，淨庫存環比減少了 5%，同比減少了 7%。正如我們上季度所說，這是整體情況改善的一個指標，我們預計未來幾季將取得進一步進展。我們繼續投資未來的成長機會。

Q2 CapEx came in at $144 million on target at 2% of revenue. We expect to maintain a similar total investment level for the full fiscal 2024. All that led to free cash flow of $213 million, which was up both sequentially and year-over-year. As we've committed to, we continue to prioritize opportunistic share repurchases. We bought back $309 million worth of stock in the quarter and fiscal year-to-date, we have purchased $506 million. As discussed earlier, in August, the Board authorized a new $2 billion share repurchase program. Please continue to Slide 11 for our segment outlook for the fiscal third quarter. For Reliability Solutions, we expect revenue will be down high single digits to low teens. Auto demand has been steady. However, with the UAW strike unresolved, we're taking a more conservative approach in the quarter. We also expect some continued weakness in parts of Industrial.

第二季資本支出為 1.44 億美元，目標為佔營收的 2%。我們預計 2024 財年將維持類似的總投資水準。所有這些導致自由現金流達到 2.13 億美元，環比和同比均有所增長。正如我們所承諾的那樣，我們繼續優先考慮機會性股票回購。我們在本季回購了價值 3.09 億美元的股票，截至目前，我們已經購買了 5.06 億美元的股票。如前所述，董事會於 8 月批准了一項新的 20 億美元股票回購計畫。請繼續查看投影片 11，以了解我們對第三財季的細分市場展望。對於可靠性解決方案，我們預期收入將下降高個位數至低兩位數。汽車需求一直穩定。然而，由於 UAW 罷工尚未解決，我們在本季採取了更保守的做法。我們也預計部分工業部門將持續疲軟。

Revenue in Agility is expected to be down mid-teens to low 20% with strong growth in cloud, offset by near-term weakness in comms, enterprise IT, and consumer. On to Slide 12. For our quarterly guidance. For total Flex, we expect revenue in the range of $6.5 billion to $6.9 billion, with operating income between $375 million and $425 million. Interest and other expense is estimated to be around $50 million. We expect the tax rate to be around 11% for the quarter. All that translates to adjusted EPS between $0.57 and $0.65 based on approximately 448 million weighted average shares outstanding. This guidance includes approximately $0.08 to $0.10 of noncontrolling interest from NEXTracker.

隨著雲端業務的強勁成長，敏捷業務的收入預計將下降 15% 至 20%，但被通訊、企業 IT 和消費者業務的近期疲軟所抵消。轉到投影片 12。了解我們的季度指引。對於 Flex 總收入，我們預計收入在 65 億美元至 69 億美元之間，營業收入在 3.75 億美元至 4.25 億美元之間。利息和其他費用估計約為 5000 萬美元。我們預計本季稅率約為 11%。根據約 4.48 億股加權平均流通股計算，所有這些調整後每股收益在 0.57 美元至 0.65 美元之間。本指南包括 NEXTracker 約 0.08 至 0.10 美元的非控制權益。

Again, to provide some additional visibility, we included our expectations for Core Flex, excluding NEXTracker. For Q3, we now expect core revenue to be between $5.9 billion and $6.3 billion, core adjusted operating income between $280 million and $310 million, which equates to adjusted operating margins between 4.7% and 4.9%. At the midpoint, this would be up both sequentially and year-over-year. Core Flex adjusted earnings per share is expected to be between $0.47 and $0.52. And looking at our GAAP guidance, we've included approximately $100 million in restructuring, which we expect to implement in Q3. Looking at our full-year guidance on the following slide, until the separation will provide guidance for total Flex, including NEXTracker, which remains comparable to our prior guidance.

同樣，為了提供一些額外的可見性，我們包括了對 Core Flex 的期望，不包括 NEXTracker。對於第三季度，我們目前預計核心收入將在59 億美元至63 億美元之間，核心調整後營業收入將在2.8 億美元至3.1 億美元之間，相當於調整後營業利潤率將在4.7%至4.9% 之間。在中點，這一數字將連續上升和同比上升。 Core Flex 調整後每股收益預計在 0.47 美元至 0.52 美元之間。從我們的 GAAP 指引來看，我們已將約 1 億美元用於重組，預計將在第三季實施。看看我們在下一張投影片上的全年指導，直到分離將為整個 Flex 提供指導，包括 NEXTracker，它仍然與我們之前的指導相當。

We now expect full-year revenue between $28.1 billion and $28.8 billion, adjusted operating margin now between 5.8% and 6%, and adjusted EPS between $2.49 and $2.66 per share. This includes approximately $0.30 to $0.35 in noncontrolling interest expense from NEXTracker. Looking at our full-year expectations for core Flex, -- to be clear, this excludes NEXTracker for the entire year. Again, this is something new to help you with modeling and is not comparable to previous total Flex guidance. We expect full-year revenue for Core Flex between $25.9 billion and $26.5 billion. Adjusted operating margins between 4.8% and 4.9%, which at the midpoint would be up about 0.5 point year-on-year. And last, adjusted EPS between 205 and 218.

我們目前預計全年營收在 281 億美元至 288 億美元之間，調整後營業利潤率目前在 5.8% 至 6% 之間，調整後每股收益在 2.49 美元至 2.66 美元之間。這包括 NEXTracker 約 0.30 至 0.35 美元的非控股利息費用。看看我們對核心 Flex 的全年預期，需要明確的是，這不包括 NEXTracker 全年的預期。同樣，這是幫助您進行建模的新內容，與先前的 Flex 整體指導無法相比。我們預計 Core Flex 的全年營收將在 259 億美元至 265 億美元之間。調整後的營業利益率在4.8%至4.9%之間，中間值將較去年同期上升約0.5個百分點。最後，調整後每股盈餘在 205 至 218 之間。

On the next slide, I want to highlight just how much Flex has changed as we have shifted to higher-value business and improved operationally to manage through the cycles. As you can see, our revenue outlook for FY '24 has changed, resulting from some short-term market challenges. However, despite some pressure on the top line, our expectation is that both operating profit dollars and Core Flex EPS will hold strong and that operating margin rates will continue to expand. This comes from executing on a portfolio strategy towards higher-value businesses, our constant drive to improve operating efficiency and continuously optimizing our cost structure as we have told you that we would. This is another proof point on how we've evolved and improved and are now operating at a level better than at any time in the company's history.

在下一張投影片中，我想強調隨著我們轉向更高價值的業務並改善營運以管理整個週期，偉創力發生了多大的變化。正如您所看到的，由於一些短期市場挑戰，我們 24 財年的收入前景發生了變化。然而，儘管營收面臨一些壓力，但我們預期營業利潤和核心彈性每股收益將保持強勁，營業利潤率將持續擴大。這來自於執行面向更高價值業務的投資組合策略、我們不斷提高營運效率以及不斷優化我們的成本結構，正如我們告訴您的那樣。這是我們如何發展和改進的另一個證據，現在的營運水準比公司歷史上的任何時候都好。

Thank you, Paul. Overall, I'm really pleased with how we are executing our strategy on portfolio management, focused on the right kind of growth and driving margin expansion. This, combined with executing the capital allocation strategy with a strong focus on buybacks is how we provide value to our shareholders. We expect an extraordinarily strong year for Flex with continued margin performance and EPS growth even with the near-term challenges. This is also a good time for me to reiterate our Investor Day targets for fiscal '25 getting to Core Flex adjusted EPS of $2.65. So we remain confident in the long-term opportunity for Flex. With that, I'll turn the call back to the operator, John, to begin Q&A.

謝謝你，保羅。總的來說，我對我們執行投資組合管理策略的方式感到非常滿意，該策略專注於正確的成長並推動利潤率擴張。這與執行資本配置策略並專注於回購相結合，是我們為股東提供價值的方式。我們預計，儘管近期面臨挑戰，偉創力今年仍將取得異常強勁的獲利表現和每股盈餘成長。這也是我重申我們的投資者日目標的好時機，即 25 財年 Core Flex 調整後每股收益達到 2.65 美元。因此，我們對偉創力的長期機會仍然充滿信心。之後，我會將電話轉回給接線生約翰，開始問答。

Thank you. We will now begin the question-and-answer portion of today's call. If you would one. (Operator Instructions) . As a reminder, we ask that you please limit yourself to one question and one follow-up. One moment, please, for your first question. Your first question comes from the line of Matt Sheerin from Stifel.

謝謝。我們現在開始今天電話會議的問答部分。如果你願意的話。 （操作員說明）。提醒一下，我們要求您將自己限制在一個問題和一個後續行動上。請稍等一下，回答你的第一個問題。你的第一個問題來自 Stifel 的 Matt Sheerin。

Just a question relative to your guidance versus 90 days ago. It looks like you're taking down both expectations for both reliability and agility pretty significantly. We talked a little bit about some auto headwinds in some of the datacom markets still being weak. But could you tell us exactly what you've seen from customers in terms of their order patterns? And are we hitting the bottom in some of these markets? Or do you expect a continued deterioration as we get into calendar '24?

只是一個與您 90 天前的指導相關的問題。看起來您大大降低了對可靠性和敏捷性的期望。我們討論了一些仍然疲軟的數據通訊市場中的一些汽車阻力。但您能具體告訴我們您從客戶那裡看到的訂單模式嗎？其中一些市場是否已經觸底？或者您預計隨著我們進入日曆“24”，情況會持續惡化嗎？

Matt. So first of all, I appreciate the question. I think it's spot on. Let me just give you some specifics. And Revathi, you might have some comments as well. But what we had previously called out was weakness in more of our consumer-facing markets. And in particular, I'll just give you one example. Our consumer device business, which is within the Agility segment, we figured it would be down for the year around mid-teens. But based on what we're hearing from customers today, we're thinking it will be down more like 25%. So mid-teens to 25%, a fairly significant change on those consumer-facing markets. We had called out a softening in comps infrastructure before. Our thought had been that should be probably flat for the year, but with the ongoing inventory digestion and what we're seeing in some of those end markets right now, what you guys are all seeing too, we're expecting comps to be down more like 10% for the year for us.

馬特。首先，我很欣賞這個問題。我認為這是正確的。讓我給你一些具體細節。 Revathi，您可能也會有一些評論。但我們之前指出的是我們更多面向消費者的市場的疲軟。特別是，我只舉一個例子。我們的消費設備業務屬於敏捷性細分市場，我們預計今年的銷售量將下降到十幾歲左右。但根據我們今天從客戶那裡聽到的消息，我們認為下降幅度可能會在 25% 左右。因此，從十幾歲到 25%，對於那些面向消費者的市場來說，這是一個相當重大的變化。我們之前曾呼籲補償基礎設施的軟化。我們的想法是，今年可能會持平，但隨著庫存的持續消化，以及我們現在在一些終端市場所看到的情況，你們也都看到了，我們預計比較將會下降對我們來說，這一年的成長大概是10%。

Auto has been strong, but now we're sitting in week 6 of this UAW strike, and we're seeing some impact here in Q3. So we're taking a little bit more conservative approach. That said, we're still expecting growth overall for the automotive business. And then, I guess, lastly, just a little on renewables. We were expecting robust double-digit growth for the year. But given what you're seeing right now in some of the residential solar space, that it will still be up, but it will probably be up more like low single digits. So those are some of the bigger end markets we've seen some contraction. But I guess I would sort of book in that comment by saying, although things are choppy in some areas, things like next-gen mobility looks great. Cloud, great digital health, continues some really nice to see some things there. So they just unfortunately just can't quite offset some of what we're seeing there in some of those other end markets.

汽車行業一直表現強勁，但現在已經進入 UAW 罷工的第六週，我們在第三季度看到了一些影響。所以我們採取了更保守的方法。也就是說，我們仍然預期汽車業務的整體成長。然後，我想，最後一點是關於再生能源的。我們預計今年將實現兩位數的強勁成長。但考慮到你現在在一些住宅太陽能領域看到的情況，它仍然會上漲，但它可能會更像低個位數的上漲。這些是我們看到的一些較大的終端市場的收縮。但我想我會在評論中說，儘管某些領域的情況不穩定，但像下一代移動出行這樣的事情看起來很棒。雲，偉大的數位健康，繼續在那裡看到一些非常高興的東西。因此，不幸的是，它們無法完全抵消我們在其他一些終端市場中看到的一些情況。

Matt, just the only thing I'll add to what Paul said is that one of the things we've talked about consistently for Flex in the last few years is to have the right portfolio, but you also have to have the right operational strategy to be agile and more operationally efficient. And you can see that playing out right now in our results with our margin expansion and EPS growth. So it's really well managed through the cycle, which is what you're seeing present out today. So market choppiness will be there. I think how we execute as a company is important, and we're pleased with that.

馬特，我對保羅所說的唯一要補充的是，過去幾年我們一直在為偉創力談論的事情之一就是擁有正確的產品組合，但你還必須擁有正確的運營策略變得敏捷並提高運營效率。您可以看到，我們的利潤率擴張和每股盈餘成長現在正在反映在我們的業績中。因此，它在整個週期中得到了很好的管理，這就是您今天所看到的。所以市場將會出現波動。我認為我們作為一家公司的執行方式很重要，我們對此感到滿意。

Okay. Very helpful. And as my follow-up, just regarding you reiterating that 265 EPS target for fiscal '25, obviously, it looks like significant growth off of what you're guiding the core business for '24. So how much of that is going to come from the core business growing margins expanding versus the buyback making up for that deficit?

好的。很有幫助。作為我的後續行動，就您重申 25 財年 265 每股收益的目標而言，顯然，看起來比您指導的 24 財年核心業務有顯著增長。那麼，其中有多少將來自於核心業務不斷增長的利潤率以及彌補赤字的回購呢？

It's going to be a combination of the 3, Matt. I don't want to get too far ahead of ourselves and guide too many of the specifics on that. We need to get through the next 6 months here. But I think it will be a combination of some top-line growth and margin expansion. One does I think kind of makes sense given our momentum here and probably some buyback as well.

這將是三者的結合，馬特。我不想太過超前並指導太多具體細節。我們需要在這裡度過接下來的六個月。但我認為這將是一些收入成長和利潤率擴張的結合。考慮到我們在這裡的勢頭以及可能還有一些回購，我認為這是有道理的。

Your next question comes from the line of Steven Fox from Fox Advisors.

您的下一個問題來自福克斯顧問公司的史蒂文福克斯。

Two questions, if I could. First of all, given the further progress in margins, even though you're seeing weakness in some end markets, it seems to strike a chord that like some of the markets that are softening are even lower margin, below average than I would have thought. So I was curious, like how many of these markets were maybe you're still not getting average margins? Would you consider either exiting, repricing, reconsidering the strategy in some ways? I'm just curious how pliable you're going to be towards some of these other markets going forward.

如果可以的話，有兩個問題。首先，考慮到利潤率的進一步進步，儘管你看到一些終端市場的疲軟，但似乎引起了共鳴，就像一些正在疲軟的市場的利潤率甚至更低，低於我想像的平均水平。所以我很好奇，有多少市場可能你還是沒有獲得平均利潤？您會考慮退出、重新定價、以某種方式重新考慮該策略嗎？我只是很好奇你對未來的其他一些市場會有多大的靈活性。

Sure. So I wouldn't say there's any major end markets we're planning on exiting. But I would sort of caveat that statement, Steven, by saying portfolio management is a constant process, and we're always evaluating and maybe not divesting per se, but deemphasizing. I think your comment on mix is spot on. It's kind of nice that some of those end markets that I pointed out to happened to be sort of lower margin if you look at the Flex aggregate. And so as I think about how we're moving with some market choppiness and the kind of the guide down on the top line, mix definitely helps -- mix definitely helps. I don't know, is that a helpful commentary?

當然。所以我不會說我們計劃退出任何主要的終端市場。但我想對這一說法提出警告，史蒂文，我說投資組合管理是一個持續的過程，我們總是在評估，也許不是剝離本身，而是淡化強調。我認為你對混合的評論是正確的。如果你看偉創力的整體情況，我指出的一些終端市場的利潤率恰好較低，這是一件好事。因此，當我思考我們如何應對市場波動以及頂線的指導時，混合肯定有幫助——混合肯定有幫助。不知道這樣的評論有用嗎？

Yes, even the one thing I'll add is just to say is managing mix and portfolio kind of has been our key theme in the last 5 years. If you look at what we have done overall in the Agility business and consumer devices, all of that within each of the end markets, we've really managed our mix pretty significantly in terms of moving up the value chain. That's why you see Agility's margins being such a strong performance even with the end markets it's in. So our belief is that within these end markets that are pockets that are extremely strong, that really helps us. And then there are others that will keep shrinking in size. Nothing significant to talk about, but I think it's part of managing the portfolio even within all the 6 end markets. Doesn't matter whether you're on reliability or agility, I see that normal course of action.

是的，即使我要補充的一件事只是說，管理組合和投資組合一直是我們過去 5 年的關鍵主題。如果你看看我們在敏捷業務和消費設備方面所做的整體工作，以及每個終端市場中的所有工作，我們確實在向價值鏈上游移動方面對我們的組合進行了相當大的管理。這就是為什麼即使在終端市場中，Agility 的利潤率也表現如此強勁。所以我們相信，在這些終端市場中，有一些非常強大的領域，這確實對我們有幫助。還有其他一些的規模會不斷縮小。沒有什麼值得談論的，但我認為這是管理投資組合的一部分，即使在所有 6 個終端市場中也是如此。無論您注重可靠性還是敏捷性，我都認為這是正常的行動過程。

Okay. No, that's definitely helpful. And then just -- I was wondering if you could dial in a little bit more on the auto market. You mentioned the UAW strike. But away from that, can you talk about just maturity of programs and whether they're contributing to margins, how sort of the program ramps look into next year? Because you seem pretty bullish on new programs continuing to ramp even though there's been a lot of sort of negative headlines in the last couple of months on EVs and things like that.

好的。不，這絕對有幫助。然後我想知道你是否可以在汽車市場上多做一點工作。您提到了 UAW 罷工。但除此之外，您能否談談專案的成熟度以及它們是否對利潤有所貢獻，明年的專案成長如何？因為你似乎非常看好新項目的繼續發展，儘管過去幾個月有很多關於電動車和類似事情的負面頭條新聞。

Yes. I'd say I'll start with saying that a few years ago, we kind of stated our intention in automotive to really drive our focus on what we call next-gen mobility and our EV platform that I've talked about before, which is a combination of our own designs and designs that we work on with our customers has been very successful in different geographies and also in North America in terms of winning platforms. We talked about large bookings expansion in automotive, which will take kind of 2 to 5 years to ramp up and get to maximum volume production. But that is our strategy on automotive, and we can see that in terms of our bookings and our core volume growth, both at automotive. I'd say that the noise that you see today in terms of EV is kind of part of, I would say, the growing pains that you're going to see in any end markets that is going through such a hyper-growth cycle. And we see that, that's a good thing.

是的。我想說，我首先要說的是，幾年前，我們在汽車領域表達了我們的意圖，真正推動我們對下一代移動性和我之前談到的電動車平台的關注，這是我們自己的設計和我們與客戶合作的設計的結合，在不同地區以及北美在獲勝平台方面都非常成功。我們談到了汽車行業的大規模預訂擴張，這將需要 2 到 5 年的時間才能加速並達到最大批量生產。但這就是我們在汽車領域的策略，我們可以從汽車領域的預訂量和核心銷售成長方面看到這一點。我想說，你今天在電動車方面看到的噪音是你在任何正在經歷如此高速成長週期的終端市場中都會看到的成長煩惱的一部分。我們看到，這是一件好事。

We believe that there is good growth to be had. We also think there is disruption in the overall supply chain in automotive, which provides a great opportunity for EMS companies like Flex. So you put all that together, I would say, my overall view on EVs and in automotive is that it is a good place for Flex to be. And we continue to have really strong growth as a result of that, and we want to be diversified in our automotive EVN markets.

我們相信會有良好的成長。我們也認為汽車產業的整體供應鏈出現了中斷，這為偉創力等 EMS 公司提供了絕佳的機會。所以你把所有這些放在一起，我想說，我對電動車和汽車行業的總體看法是，這是 Flex 的一個好地方。因此，我們繼續保持強勁的成長，並且我們希望在汽車 EVN 市場中實現多元化。

Your next question comes from the line of Ruplu Bhattacharya from Bank of America.

您的下一個問題來自美國銀行的 Ruplu Bhattacharya。

Looks like on the core business, your expectation for revenues has gone down about $2.6 billion, but the expectation for operating margins is 40 bps better. I was wondering if you can delve a little bit deeper into both the revenue side and on the margins, specifically on renewables, like how much of your business is tied to residential versus utility scale? And how do you see that progressing over the year? And then on automotive, are you tied more to the North American OEMs or the Europeans? And how do you see that mix changing as the mix gets more towards EVs? And then just on the margins, that 40 bps of improvement, does that come more from reliability or agility? And Paul, in the past, you've talked about things like components, the lagging edge semiconductors being an issue. Is that now done? And what is driving that 40 bps, if you can just delve into that margin improvement on lower revenues?

看起來在核心業務上，您對收入的預期下降了約 26 億美元，但對營業利潤率的預期提高了 40 個基點。我想知道您是否可以更深入地研究收入方面和利潤率，特別是可再生能源，例如您的業務有多少與住宅規模和公用事業規模相關？您如何看待這一年的進展？然後在汽車方面，您與北美原始設備製造商的關係更緊密還是歐洲製造商的關係更緊密？隨著混合動力越來越傾向於電動車，您如何看待這種混合變化？然後，就邊際而言，40 個基點的改進，更多來自可靠性還是敏捷性？保羅，過去您談過組件等問題，落後的半導體是一個問題。現在已經完成了嗎？如果您能深入研究收入較低的情況下利潤率的提高，那麼是什麼推動了這 40 個基點？

Well, the good news, Ruplu, is that there will be no more sell sides that asked questions because I think you had 8 of them in there, but I'm just teasing. So let me start with revenue. I think -- I called out a few of the end markets that we're seeing declines. By the way, my math at the midpoint, about $2.5 billion down. Consumer Devices was a piece. We talked a little bit about renewables. We talked about being a little bit more conservative with auto. We talked about comms infrastructure. So I think those are going to be some of the bigger drivers, partially offset by continued growth in the areas that Ravi and I've been talking about for a couple of years now, next general ability in auto, cloud, digital health, all look pretty good.

好吧，Ruplu，好消息是，不會再有賣方提出問題，因為我認為你有 8 個這樣的人，但我只是在開玩笑。讓我從收入開始。我認為——我指出了一些我們看到下滑的終端市場。順便說一句，我的算術結果是中間值，大約下降了 25 億美元。消費性設備是其中的一部分。我們討論了一些可再生能源。我們討論了對汽車採取更保守的態度。我們討論了通訊基礎設施。因此，我認為這些將成為一些更大的驅動因素，部分被拉維和我多年來一直在談論的領域的持續增長所抵消，即汽車、雲端、數位健康等領域的下一個通用能力。看起來不錯。

So that's what drove the derate on revenue. You asked about utility versus resi for renewables. First, I'll just say -- and I think we've disclosed this before, the renewables business is now well over $1 billion for Flex. It's a big piece of the business. There's some confidentiality around customers. We have made some disclosures that would -- in partnership with our customers. So I think you know that there's a couple of names out there that tend to be more in the residential space. And that's where we've been pinched here a little bit in terms of some forecast changes and a little bit of choppiness. But our long-term view remains very bullish on that whole renewables space, and we do expect it to continue to grow.

這就是導致收入下降的原因。您詢問了可再生能源的公用事業與剩餘能源。首先，我只想說——我想我們之前已經披露過這一點，Flex 的可再生能源業務現在遠超過 10 億美元。這是業務的重要組成部分。客戶有一定的保密性。我們已經與我們的客戶合作進行了一些披露。所以我想你知道有幾個名字往往更多地出現在住宅領域。這就是我們在一些預測變化和一些波動方面遇到的一些困難。但我們的長期觀點仍然非常看好整個可再生能源領域，我們確實預期它會繼續成長。

You asked about automotive. I would say we're fairly well geographically dispersed. We're not overly concentrated in North America. So although the UAW, we are expecting and seeing some impact here in Q3. It doesn't affect Europe, it doesn't affect China so much. In terms of margins, so $2.5 billion sales cut with no change to OP -- there's a couple of things that are in our favor on that. One, and this is what I think Steven well pointed out, the margin mix helps. We're seeing volume reductions in areas where our margin rates tend to be a little bit lower. And so that definitely helps. I would say that's one. Two, I did mention in the prepared remarks, there is going to be some restructuring here in the third quarter, and there's going to be a tailwind both in Q3 and Q4 for that. And then three, Q2 came in a little bit better. And so that's dropping through. And so I think those 3 pieces kind of help us to hold the line on operating profit.

你問的是汽車。我想說我們在地理上相當分散。我們並沒有過度集中在北美。因此，儘管 UAW，我們預計並將在第三季看到一些影響。它不會影響歐洲，也不會影響中國那麼大。就利潤率而言，銷售額減少了 25 億美元，但 OP 沒有變化——有幾件事對我們有利。第一，我認為史蒂文很好地指出了這一點，利潤率組合有幫助。我們發現，在我們的利潤率往往較低的領域，銷量減少。這絕對有幫助。我想說那就是一個。第二，我在準備好的發言中確實提到，第三季將會進行一些重組，第三季和第四季都會有一個順風車。然後第三季度，第二季度的表現稍微好一點。所以這一切都被忽略了。所以我認為這三件事有助於我們控制營業利潤。

And then the last thing that you asked about was recoveries. So if I think about the full-year revenue year-on-year for core Flex. Recoveries are down meaningfully versus what we thought over the last couple of quarters, I would say that's a very good news for a couple of reasons. One, it's going to have a beneficial impact on inventory, this chip shortage thing. It's -- although there is still tightness in some areas, it's gotten much, much better. And that helps with cost-to-cost pass-through included. And so when I think about full year, and I think at the midpoint of our guide, high single-digit down for the full year. I would guess at this point, maybe half of that comes from changes in pass-through. So it's not all the revenue headwinds that you're seeing are core markets. So some of that is just inflation pass-through as you knew that we would see when things got a little bit more normal.

你問的最後一件事是恢復情況。因此，如果我考慮一下核心 Flex 的全年收入同比情況。與我們過去幾季的預期相比，復甦明顯下降，我認為這是一個非常好的消息，原因有幾個。第一，這將對庫存產生有利的影響，即晶片短缺的問題。儘管某些領域仍然存在緊張，但情況已經好得多了。這有助於成本轉嫁。因此，當我考慮全年時，我認為在我們指南的中點，全年會出現高個位數的下降。我猜測，在這一點上，也許一半來自傳遞的變化。因此，您所看到的收入逆風並非全部都是核心市場。因此，其中一些只是通貨膨脹的傳遞，正如你所知道的，當事情變得更加正常一點時我們會看到。

I really appreciate you going into all of that. Just real quick on a quick follow-up. Now that you've announced the remaining NEXTracker transaction, does that change your philosophy around the capital return and pace of buybacks? How should we think about that?

我真的很感謝你參與這一切。只是快速跟進。既然您已經宣布了剩餘的 NEXTracker 交易，這是否會改變您關於資本回報和回購步伐的理念？我們該如何思考這個問題？

No problem. And so we've talked about our capital allocation priorities before. And I would say, number one, we're never going to starve the core business. We're quite bullish in a number of our end markets. And so we're never going to starve ourselves for things like CapEx or other internal investments. The #2 priority, and this is a high, high priority is share buyback. We continue to believe that there's a significant disconnect. Hopefully, with the NEXTracker separation, people sort of realize the arbitrage there and things sort of rationalize a little bit. I would say that probably the distant third at the moment would be M&A. As always, we reserve the right to change our minds, but stock buyback is clearly the expected use of free cash.

沒問題。因此，我們之前已經討論過我們的資本配置優先事項。我想說，第一，我們永遠不會讓核心業務挨餓。我們對許多終端市場非常看好。因此，我們永遠不會因為資本支出或其他內部投資而挨餓。第二個優先事項是股票回購，這是一個非常非常重要的優先事項。我們仍然認為存在顯著的脫節。希望隨著 NEXTracker 的分離，人們能夠意識到那裡的套利，事情也能變得合理一些。我想說，目前排在第三名的可能是併購。一如既往，我們保留改變主意的權利，但股票回購顯然是自由現金的預期用途。

And the only thing I'd add is, I'll remind you that our Board recently authorized a $2 billion stock authorization, right? And so we expect to continue to just return cash back to our shareholders.

我唯一要補充的是，我要提醒您，我們的董事會最近授權了 20 億美元的股票授權，對吧？因此，我們預計將繼續將現金回饋給股東。

Your next question comes from the line of Samik Chatterjee from JPMorgan.

您的下一個問題來自摩根大通的 Samik Chatterjee。

Just parsing through all the numbers that you've disclosed, just when I look at 3Q guide versus 4Q implied in there, there's a modest uptick in revenue and a modest uptick in profit that I get to, and I hope I'm doing the math right here, but just wondering how much of that is the cloud customer-related projects you've talked about? And -- or is there something else embedded in there in terms of recovery going from 3Q to 4Q? And any sense you can give us on the timing of those cloud projects? Are they starting in 3Q and then ramping to 4Q? Or is it more of a 4Q event in the numbers? And then I have a quick follow-up.

只需解析您披露的所有數字，當我查看其中隱含的第三季度指南與第四季度指南時，我發現收入和利潤都有適度增長，我希望我正在做這裡是數學，但只是想知道其中有多少是您所談論的與雲端客戶相關的項目？或者從第三季到第四季的復甦是否還包含其他因素？您能告訴我們這些雲端項目的時間安排嗎？他們是從第三季開始然後加速到第四季嗎？還是從數字上看這更像是第四季的事件？然後我會進行快速跟進。

So yes, there is some ramp tailwind. And as we move through Q4 as we continue to ramp cloud as a piece of it. There's a couple of others that we expect to benefit from as well. There's a number of these new platforms that we've been talking about that should give us some continued growth. It's the 3 areas that we've been talking about. It's next-gen mobility, it's cloud, as you pointed out, and health solutions should continue to do well in those -- the smaller tech device things. You mentioned margins, I do expect a little bit of a margin uptick as well as we move from Q3 to Q4. That's really just a full quarter of restructuring tailwind.

所以，是的，有一些坡道順風。當我們進入第四季度時，我們將繼續將雲端作為其中的一部分。我們預計還有其他一些也能從中受益。我們一直在談論許多這樣的新平台，它們應該會為我們帶來持續的成長。這是我們一直在談論的三個領域。正如您所指出的，它是下一代移動性，它是雲，而健康解決方案應該繼續在這些較小的技術設備方面表現出色。您提到了利潤率，我確實預計利潤率會有所上升，並且我們從第三季度轉向第四季度。這實際上只是整個季度的重組順風。

And on that point, the second question was, you did mention on the core, you're seeing about a 50 basis point margin expansion in fiscal '24 when you sort of adjust all the NEXTracker numbers out. Just wondering if you can share your thoughts about sustainability of that pace of improvement going into next year, how much of the reliability improvement through the year is on account of price increases that you start to lap in fiscal '21? And how should we think about sustainability of that pace?

在這一點上，第二個問題是，您確實提到了核心，當您調整所有 NEXTracker 數據時，您會看到 24 財年的利潤率擴大了 50 個基點。只是想知道您是否可以分享一下您對明年的改進速度的可持續性的看法，全年的可靠性改進有多少是由於您在 21 財年開始的價格上漲所致？我們該如何考慮這種速度的可持續性？

Yes. Samik, I would say first is steady margin expansion has been a core part of our story the last 4 to 5 years, right? And through the different cycles we've seen, we've been very consistent in our ability to drive margin expansion. So I view the 50 basis points margin expansion that's sustainable, and continue to track in the way of margin expansion. And it comes from the things we talked about. One is definitely continued change in our mix, right? Our focus is more on growing areas like cloud, next-gen mobility, digital health care, all of those that are better margins. So mix plays a role in it, for sure. We have done a lot around optimization of our factories and driving productivity through automation, through CapEx investments. So that is very sustainable. So if I look at how we're getting margin expansion, I would say that it's a very sustainable story. And I think that it's good that we have been able to do that consistently and reiterating FY '25 EPS also points in that direction.

是的。 Samik，我首先要說的是，在過去 4 到 5 年裡，穩定的利潤率擴張一直是我們故事的核心部分，對吧？在我們經歷的不同周期中，我們推動利潤率擴張的能力一直非常穩定。因此，我認為50個基點的利潤率擴張是可持續的，並繼續追蹤利潤率擴張的方式。它來自我們談論的事情。其中之一肯定是我們的組合不斷變化，對吧？我們的重點更放在雲端、下一代行動、數位醫療保健等不斷增長的領域，所有這些領域的利潤率都更高。所以混合肯定在其中發揮作用。我們在優化工廠以及透過自動化和資本支出投資提高生產力方面做了很多工作。所以這是非常永續的。因此，如果我看看我們如何實現利潤率擴張，我會說這是一個非常可持續的故事。我認為我們能夠始終如一地做到這一點是件好事，並且重申 25 財年每股收益也指向了這個方向。

Your next question comes from the line of George Wang from Barclays.

你的下一個問題來自巴克萊銀行的喬治王。

I have 2 questions if I can. Firstly, I just want to double-click on the buyback. Just you mentioned that authorized $2 billion of buyback. Just curious about cadence, especially kind of blackout around the kind of theme of timing, which is kind of March quarter 2024. And also, I was looking at the share count kind of from it seems to be flat based on guidance for 3Q versus 2Q, obviously, you may do some buybacks to offset dilution. Just curious, any sort of color you can provide in terms of the cadence and kind of linearity of the buybacks? And should we assume a similar sort of $300 million run rate for the next few quarters? Or could be some technicality around the spin-off timing.

如果可以的話我有兩個問題。首先，我只想雙擊回購。剛才你提到授權回購 20 億美元。只是對節奏感到好奇，尤其是圍繞時間主題的停電，即 2024 年 3 月季度。而且，根據第三季度與第二季度的指導，我正在查看股票數量，似乎持平。顯然，你可以進行一些回購來抵銷稀釋。只是好奇，您可以在回購的節奏和線性方面提供任何顏色嗎？我們是否應該假設接下來幾季的運作率為 3 億美元？或者可能是關於分拆時間的一些技術問題。

Well, the good news is now quiet periods are essentially over because that's out in the public domain that we do and intend to spend. And so that has sort of created some stops and starts over the last -- I mean, really over the last 2 years. But -- so that helps a little bit. We give our last quarter share count as sort of as part of our guide. I think you've known us to continue to buy stock as we move through the quarters. And so that's probably a slightly conservative view. If you want to read into that a little bit. In terms of specific cadence, I'm not going to say exactly what we intend to buy here in our third quarter or our fourth other than to say stock buyback is clearly a capital allocation priority for us.

好消息是，現在平靜期基本上已經結束，因為我們所做的和打算花的錢都在公共領域。因此，這在過去的時間裡造成了一些停頓和開始——我的意思是，確實是在過去的兩年裡。但是——所以這有點幫助。我們將上一季的股票數量作為我們指南的一部分。我想您已經知道我們在每個季度都會繼續購買股票。所以這可能是個稍微保守的觀點。如果你想稍微了解一下。就具體節奏而言，我不會確切地說我們打算在第三季或第四季購買什麼，只是說股票回購顯然是我們的資本配置優先事項。

Just a quick follow-up. Just in terms of the free cash flow kind of potentially could be a bigger driver for the share price appreciation, it's nice to see 2Q deliver much strong FCF versus kind of 1Q being a cash use. Just curious if you guys are reiterating $600 million or above in terms of full-year FCF and is there any potential upside just based on the better margin profile in the back half?

只是快速跟進。就自由現金流可能成為股價升值的更大推動力而言，很高興看到第二季提供了強勁的自由現金流，而第一季則為現金使用。只是好奇你們是否重申全年自由現金流為 6 億美元或以上，並且僅基於下半年更好的利潤狀況是否有任何潛在的上漲空間？

Yes, it's a great question. And so I'll just say predicting cash flow is a little trickier than predicting the P&L, it can kind of bounce around a little bit. But what we're going to do is we're going to update everyone about the free cash flow expectation targets once the separation is complete. And here's the logic on that. There's lots of puts and takes from NEXTracker specifically. And because the timing is not perfectly certain other than we expected sometime in Q4, it's just a little hard to predict. But what I want to make sure is clear, we're definitely headed in the right direction. We're particularly pleased with how we did in Q2. We generated -- like you said, we generated north of $200 million in free cash flow. That was up significantly both year-on-year and also sequentially.

是的，這是一個很好的問題。所以我想說預測現金流比預測損益表有點棘手，它可能會稍微波動。但我們要做的是，一旦分開完成，我們將向所有人通報自由現金流預期目標的最新情況。這是其邏輯。有很多來自 NEXTracker 的具體內容。而且由於除了我們預期的第四季度某個時間之外，時間並不完全確定，因此有點難以預測。但我想確定的是，我們肯定正朝著正確的方向前進。我們對第二季的表現特別滿意。正如您所說，我們創造了超過 2 億美元的自由現金流。這一數字同比和環比均大幅上升。

I'm quite pleased with our inventory performance as it came down again in the quarter. We inflected a couple of quarters back, and I'd like to see the continued progress there. And that free cash generation was after $145 million in CapEx. So we're clearly not underinvesting in the business. So I would say nothing has fundamentally changed, and we still expect to grow free cash flow.

我對我們的庫存表現非常滿意，因為它在本季再次下降。我們在幾個季度前發生了變化，我希望看到那裡的持續進展。而自由現金的產生是在 1.45 億美元的資本支出之後。因此，我們對這項業務的投資顯然並沒有不足。所以我想說沒有什麼根本性的改變，我們仍然期望自由現金流的成長。

Your last question comes from the line of Mark Delaney from Goldman Sachs.

你的最後一個問題來自高盛的馬克·德萊尼。

You mentioned mix as a key tailwind to core Flex margins going from fiscal 2Q to 3Q, even as total revenue declines. But is there anything additional in terms of incremental pricing or large restructuring programs that may also be playing on roll and the sequential margin strength? And if so, could you dimensionalize how large those other drivers may be?

您提到，儘管總收入下降，但從第二財季到第三財季，混合業務仍是偉創力核心利潤率的關鍵推動因素。但是，在增量定價或大型重組計劃以及可能持續進行的大型重組計劃和連續利潤率優勢方面是否還有其他內容？如果是這樣，您能否計算出其他驅動因素的規模有多大？

Sure. So just I'm clear on your question. Are you talking Q2 to Q3, Mark?

當然。所以我很清楚你的問題。馬克，你說的是 Q2 到 Q3 嗎？

Yes. From the 4.7, you just did, I think the midpoint of guidance is 4.8%. You mentioned mix is one of the key drivers as to how markets are you actually maybe expanding a little bit as revenue drops. But is there anything with restructuring programs you just did or incremental pricing, the may asset we plan to roll to just try to think through some of the buckets and pieces that are in margins in the upcoming quarter based on guidance.

是的。從你剛剛做的4.7開始，我認為指導的中點是4.8%。您提到混合是市場的關鍵驅動因素之一，隨著收入下降，您實際上可能會擴大一點。但是，您剛剛執行的重組計劃或增量定價是否有任何問題，我們計劃滾動的可能資產只是嘗試根據指導來考慮下個季度利潤率中的一些部分和部分。

Yes. Got it. Got it. Okay. So I would say probably the biggest singular tailwind is our continued push on productivity programs. In our prepared remarks, you did flag that we pointed out some restructuring. We're going to have benefit from that both in Q3 and also in Q4. But mix is definitely a factor. You look at some of the end markets that are contracting right now. They tend to earn a little less than other parts of the core portfolio. And so that -- we've sort of been a beneficiary of that mix -- you asked about pricing, nothing significant to comment on there. I would say it's a combination of productivity programs and mix.

是的。知道了。知道了。好的。因此，我想說，最大的單一推動因素可能是我們對生產力計劃的持續推動。在我們準備好的發言中，您確實指出我們指出了一些重組。我們將在第三季和第四季受益。但混合絕對是一個因素。你看看一些目前正在收縮的終端市場。他們的收入往往略低於核心投資組合的其他部分。因此，我們在某種程度上是這種組合的受益者，您詢問了定價，但沒有什麼值得評論的。我想說這是生產力計劃和組合的結合。

And then we really are driving a lot of factory optimization, and that's like Paul said, that is a big driver.

然後我們確實正在推動大量工廠優化，就像保羅所說，這是一個很大的推動力。

Okay. No, that's very helpful. And then I know no guidance on NEXTracker, but just to level set on where you stand currently. Do you still need government approvals or tax rulings in order to do the spin? Or do you have all those in place now with the announcement that you're making today?

好的。不，這非常有幫助。然後我不知道關於 NEXTracker 的任何指導，但只是根據您當前的情況進行設定。您是否還需要政府批准或稅務裁決才能進行旋轉？或者說，今天發布的公告中的所有內容都已準備就緒嗎？

Mark, this is David. Yes, it's all outlined in the S-4. I know you haven't had time to prove it all 400 pages, but that will have the outlines of what approvals we've gotten. We still have the shareholder vote, that's on November 20, but otherwise, we're moving in process.

馬克，這是大衛。是的，這一切都在 S-4 中概述。我知道您沒有時間用 400 頁來證明這一點，但這將概述我們已獲得哪些批准。我們仍然需要在 11 月 20 日進行股東投票，但除此之外，我們正在繼續進行。

Okay. Thank you so much for taking my questions.

好的。非常感謝您回答我的問題。

Early Q4 is what we're thinking guys.

夥計們，我們正在考慮第四季度初期。

Okay. Thank you all for joining. I just want to thank the Flex team for -- on behalf of the leadership team and of course, to all our customers and our shareholders for your support. So thank you all. Thanks for joining.

好的。感謝大家的加入。我只想代表偉創力團隊感謝我們的領導團隊，當然還有我們所有的客戶和股東的支持。謝謝大家。感謝您的加入。

This concludes our conference call. Thank you for joining. You may now disconnect.

我們的電話會議到此結束。感謝您的加入。您現在可以斷開連線。