Flex Posts Record Adjusted EPS of $1.18 and Raises 2027 Sales Outlook
Key Facts
Flex reported results on October 28 for the second quarter of its fiscal 2027, ended September 25, 2026, with sales of $8.491 billion, up 25% from the year-earlier period. Adjusted earnings per share reached a record $1.18, while diluted earnings per share under accounting standards were $0.70, compared with $0.52 a year earlier. Sales growth also reflected improved operating profitability, with operating income reaching $414 million, compared with $296 million. Net income rose to $263 million from $199 million in the year-earlier period. The results showed year-over-year growth in sales and earnings, as the company raised its full-year outlook.
Adjusted operating margin improved to 7.1% from 6.0% a year earlier, while operating margin under accounting standards was 4.9% for the quarter. Adjusted operating income was $607 million, compared with $409 million in the year-earlier period, according to the results table reported by Flex. For earnings per share, the company reported $0.70 under accounting standards and record adjusted EPS of $1.18. In the first half of the fiscal year, sales were $16.419 billion, compared with $13.379 billion in the year-earlier period. The company reported first-quarter sales of $7.9 billion, up 21% year over year, and adjusted EPS of $1.00. Comparing the two quarters, quarterly sales rose from the first-quarter level, while adjusted EPS was higher in the second quarter.
Cash generated from operating activities was $501 million in the quarter, while free cash flow reached $261 million. Flex raised its fiscal 2027 sales outlook to $34.9–$35.9 billion, from a previous range of $33.7–$35.2 billion. It also raised its adjusted operating margin outlook to 7.6%–7.8%, from 7.0%–7.2%. The adjusted EPS outlook increased to $4.84–$5.16, from $4.42–$4.74. For its fiscal third-quarter outlook, the company set sales at $8.87 billion to $9.17 billion, with growth of 28% at the midpoint. It forecast adjusted EPS of $1.19 to $1.25 for the quarter, equivalent to growth of 40% at the midpoint.
The fiscal-year outlook includes contributions from recent acquisitions that closed after September 25, 2026, but excludes the planned spin-off of the cloud and power infrastructure business. The company raised its sales growth outlook for that business to 75%–85% in fiscal 2027, while it expects combined sales growth of 8% to 11% for its RMS and ITS segments. Chief Executive Revathi Advaithi said the company was proceeding with its plan to spin off the business and that the EPC Power acquisition “strengthens the completion of our integrated power portfolio and will be immediately accretive to earnings in fiscal 2027.” Flex completed its acquisition of EPC Power on October 14. The acquired company provides power conversion and grid-forming technologies, with installed capacity exceeding 15 gigawatts. The deal forms part of Flex's expansion in power solutions for data centers and electricity grids, according to the acquisition completion announcement.
As part of its business reorganization, Flex announced on October 5 a $2.0 billion investment in convertible preferred equity in Axiom, at an initial enterprise value of $37.5 billion. The company said it intends to spin off Axiom as an independent public company in the first quarter of 2027, a target date subject to customary conditions. The move comes alongside the plan to spin off the cloud and power infrastructure business, whose separation is excluded from the current annual outlook. In premarket trading on October 28, Flex shares rose about 8.73% after the results announcement, according to Investing.com. The company scheduled Flex Innovation Day for November 10, 2026, the next event listed on its investor relations website. The event offers a further opportunity to track the company's plans after its quarterly results and updated outlook.