Flex Raises Fiscal 2027 Outlook as Q2 Sales Jump 25% and Adjusted EPS Hits a Record

Flex raised its fiscal 2027 outlook after second-quarter sales jumped 25% and adjusted earnings hit a record, as the contract manufacturer pushes ahead with plans to spin off its Cloud and Power Infrastructure business.

The Austin, Texas, company reported net sales of $8.491 billion for the quarter ended Sept. 25, up from $6.804 billion a year earlier, according to the earnings release it filed with an 8-K on Wednesday. Net income rose to $263 million, or 70 cents a diluted share, from $199 million, or 52 cents.

Record adjusted profit

Adjusted net income climbed to $443 million, or a record $1.18 a share, from $300 million, or 79 cents, a year ago. Adjusted operating income rose to $607 million, lifting the adjusted operating margin to 7.1% from 6.0%.

GAAP operating margin was 4.9%, up from 4.4%. The gap between the two measures widened in part because of $110 million of legal and other charges excluded from adjusted results, up from $9 million a year earlier. Flex says that category can include acquisition and portfolio optimization costs and other items not tied to core results.

"We continue to execute from a position of strength while advancing our planned spin-off of our Cloud and Power Infrastructure segment," CEO Revathi Advaithi said.

Guidance moves higher

Flex now expects fiscal 2027 net sales of $34.9 billion to $35.9 billion, up from its prior range of $33.7 billion to $35.2 billion, according to the filing. It raised its adjusted EPS outlook to $4.84 to $5.16, from $4.42 to $4.74, and its adjusted operating margin forecast to 7.6% to 7.8%, from 7.0% to 7.2%.

The updated outlook includes contributions from acquisitions that closed after Sept. 25 and does not reflect the planned spin-off.

For the fiscal third quarter, Flex expects:

• Net sales of $8.87 billion to $9.17 billion, growth of 28% at the midpoint
• Adjusted operating income of $685 million to $715 million
• Adjusted EPS of $1.19 to $1.25, growth of 40% at the midpoint
• About 375 million weighted average shares outstanding

Two companies in the making

Within the full-year outlook, Flex projects sales growth of 75% to 85% for the Cloud and Power Infrastructure business, with an adjusted operating margin of 11.5% to 11.7%. Its remaining segments are expected to grow 8% to 11% with a margin of 5.9% to 6.1%.

Advaithi said the acquisition of EPC Power "further completes our end-to-end Power portfolio and will be immediately accretive in fiscal 2027," and that the unveiling of the Axiom name and anticipated leadership marked another step toward creating two focused companies.

Cash and balance sheet

Operating cash flow was $501 million in the quarter, while free cash flow fell to $261 million from $305 million as capital spending rose to $241 million from $150 million.

Flex ended the quarter with $3.083 billion in cash and cash equivalents. Long-term debt rose to $5.213 billion from $3.751 billion at the end of March, after the company spent $1.134 billion on acquisitions in the first half of the fiscal year. It did not repurchase any shares during the six months.

Sources

1. Flex Form 8-K with second-quarter fiscal 2027 earnings release (Exhibit 99.1), filed Oct. 28, 2026 (accession 0000866374-26-000039)

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