Flex Posts Fastest Revenue Growth in a Year, Raises Guidance Again
Flex reported net sales of $7.9 billion, up 21% year over year, marking its fastest growth pace in four quarters even as free cash flow fell to $41 million.
Flex (FLEX) posted net sales of $7.9 billion in the first quarter of fiscal 2027, up 21% from a year earlier. The growth marked a third straight quarter of acceleration, following 17% growth in the fourth quarter of fiscal 2026 and 8% in the third.
The quarter arrived as Flex works through the first full period of costs tied to its planned spin-off of the Cloud and Power Infrastructure segment, announced alongside fourth-quarter results in May 2026. Flex set an Investor Day for November 10, 2026, to detail the separation. The company also closed its acquisition of Electrical Power Products (EP²) during the quarter, adding $14 million of acquisition costs to its non-GAAP add-backs.
Adjusted earnings per share reached $1.00, a record, up 39% from $0.72 a year earlier and above the $0.93 posted in the fourth quarter, continuing a string of sequential adjusted-EPS records that included $0.93 in the fourth quarter and $0.87 in the third. GAAP EPS climbed to $0.76, up 52% from $0.50 a year ago, after rising to $0.67 in the fourth quarter and $0.64 in the third, showing GAAP profitability accelerating alongside revenue.
Margins told a more mixed story. GAAP operating margin was 4.9%, up slightly from 4.7% a year ago but down from 5.0% in the fourth quarter and well below the 5.5% record set in the third quarter. Adjusted operating margin held at 6.7%, matching the prior quarter and marking a seventh straight quarter at or above 6%.
Cash generation diverged sharply from the revenue and earnings trend. Free cash flow fell to $41 million from $268 million a year earlier and from $212 million in the fourth quarter, as capital expenditures rose to $236 million from $133 million and the company absorbed $24 million of spin-off separation costs. Operating cash flow dropped to $276 million from $399 million a year ago, reflecting a $149 million working-capital drag versus a $65 million benefit in the year-earlier quarter. Legal and other non-GAAP add-backs jumped to $67 million from $6 million, driven by $53 million of spin-off-related costs on top of the EP² acquisition costs.
The balance sheet expanded to accommodate the EP² deal. Total assets rose to $25.2 billion from $22.1 billion at March 31, 2026, long-term debt jumped to $5.2 billion from $3.8 billion, and accounts payable rose to $9.2 billion from $8.1 billion, consistent with $1.13 billion of cash acquisition spending and $2.83 billion of new borrowings during the quarter.
Flex raised its full-year guidance for a second consecutive quarter. The company now expects fiscal 2027 net sales of $33.7 billion to $35.2 billion, up from the $32.3 billion to $33.8 billion range given alongside fourth-quarter results, with adjusted operating margin guided to 7.0% to 7.2% and adjusted EPS to $4.42 to $4.74.
Flex made no share repurchases in the quarter, compared with $247 million a year earlier, as capital deployment shifted toward the EP² acquisition and the new borrowings that funded it.