Good afternoon, and thank you for standing by. Welcome to Flex's Fiscal Third Quarter 2023 Earnings Conference Call. Presently, all participants are in a listen-only mode. After the speakers' remarks, there will be a question-and-answer session. As a reminder, this call is being recorded. I will now begin and turn the call over to Mr. David Rubin. You may begin. Thank you, JP. Good afternoon, and welcome to Flex's third quarter fiscal 2023 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 in 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. For a full discussion of these risks and uncertainties, please see the cautionary statements in our presentation, press release or in our most recent filings with the SEC. Note, this information is subject to change and we undertake no obligation to update these forward-looking statements. Unless otherwise specified, we'll refer to non-GAAP metrics on the call. The full non-GAAP to GAAP reconciliations can be found in the appendix slides of today's presentation as well as in the summary financials posted in the Investor Relations website. On January 13 of this year, we publicly filed a registration statement on Form S-1 with the U.S. Securities and Exchange Commission relating to Nextracker's proposed initial public offering. In connection with the proposed offering, Nextracker intends to list under the ticker symbol NXT. The timing, number of shares to be offered, and the price range for the proposed offering have not yet been determined. This offering is subject to market and other conditions. For more information, please refer to the S-1 filing. Following SEC regulation, we remain in a quiet period and will not make any further statements or answer additional questions on the Nextracker filing at this time. With that out of the way, I'd like to turn the call over to our CEO. Revathi?

Thank you, David. Good afternoon, and thank you for joining us today. By now, you've all probably seen the S-1 public filing for the Nextracker IPO. As I said, from the very beginning of this process, the first step in creating value for our shareholders and to unlock the full long-term potential of Nextracker is for it to operate as a standalone company. This process was, of course, delayed by the supply chain crisis brought on by the pandemic. Despite all of the challenges during this time, we have maintained discipline and achieved multiple quarters of improving growth and margins. Along the way, we partnered with TPG Rise Climate, a team making a real difference in the renewable energy transition. Now we're moving forward. That said, renewable energy is one of the most important global technology transitions ever. It also represents a robust long-term growth opportunity for a number of technologies, including solar trackers, and Flex will continue to be involved to help drive this critical sector. Moving to our results, please turn to Slide 4. Overall, fiscal Q3 was another fantastic quarter for Flex, and another validation of the resiliency of our diverse portfolio. Revenue grew 17% year-over-year, with adjusted operating margin at 4.8%. The strong performance overall drove solid results of adjusted EPS at $0.62, up 24% year-over-year. Turning to Slide 5. Many of the positive dynamics in fiscal Q2 continued through the quarter, but with a few ongoing challenges that I'll touch on in a minute. We see strong growth driven by secular trends with technology transitions in EV and ADAS, in renewables, in factory automation, along with cloud expansion and strong automotive backlog. We're also seeing demand in communications, network security, and many industrial applications we touch. Consumer end markets remained weak, which shouldn't be a surprise, and we expect that weakness to continue in the current environment. Similar to last quarter, the overall supply chain and logistics situation continues to improve on a global level. However, shortages in the large node semiconductors continue to be a challenge, particularly within higher responsibility applications such as automotive, industrial, and some healthcare products. We've talked before about how this causes inefficiencies and their absorption of costs, and the golden screw effect is also the primary driver of higher working capital requirements. We remain very bullish on the long-term growth opportunities in Reliability, so we have made additional near-term operational investments to support this growth, including increases in higher skilled labor. The net result this quarter was additional pressure on Reliability operating margins. However, these investments will benefit our longer-term market positioning and are worth the focus, as Reliability has and will be the bigger driver of our long-term growth story. The Agility team had great execution, meeting strong demand in CEC and delivered another quarter of growth in lifestyle, but also demonstrated very effective cost management given the broader consumer turndown. We continue to recognize the benefits of both the operational improvements and portfolio changes we've made over the last several years. It is important to highlight the power of a well-diversified and balanced portfolio. We remain in a challenging macro environment, and yet delivered growth in five of six core business units, and accelerated growth at Nextracker. Now looking to Slide 6, Paul will discuss our guidance shortly, but assuming Q4 revenue comes in as expected, we remain on track to deliver 16% year-over-year growth in fiscal 2023. As you can see in the chart on the left, this means we will have beaten our previous revenue high watermark before we pruned a substantial amount of lower-quality business. Adding in our operational initiatives, you can see a steady and consistent path of margin expansion, all reflecting the improvements we've made as a company. With the evolving macroeconomic uncertainty, it's still a highly dynamic environment out there. However, I want to share an early view into what we're seeing as we look to our fiscal 2024. At this point, demand indicators are holding up for many of the multiyear trends we've been discussing, including renewables, next-gen mobility, cloud, and healthcare. We believe these are strong enough to offset headwinds like consumer-related weaknesses and slowing enterprise IT spending. So, at this point, we want to state that we expect to grow next year, in fiscal 2024. We will discuss our full fiscal 2024 guidance on next quarter's call. Lastly, taking a step back, as I look at the fiscal 2025 financial framework we presented at our Investor Day last year, we said high single-digit revenue CAGR, which will lead to 5%-plus adjusting operating margin in core Flex, which is without Nextracker, with mid-teens adjusted EPS growth getting us to $2.65 for core Flex, and 80% adjusted free cash flow conversion. It is a combination of strong multiyear drivers, our focus on the right growth areas, and our execution that will get us to these targets. With that, I'll turn it over to Paul to take you through our financials. Paul?

Okay, great. Thanks, Revathi, and good afternoon, everyone. I'll begin on Slide 9 with a review of our third quarter results. Please note, all results provided will be non-GAAP, and all growth metrics will be on a year-over-year basis unless stated otherwise. The GAAP reconciliations can be found in the appendix of the earnings presentation. Revenue growth was strong, up 17% at $7.8 billion. Gross profit totaled $595 million and gross margin improved to 7.7%. Operating profit was $372 million, with operating margins at 4.8%, improving 30 basis points year-over-year. Lastly, earnings per share came in at $0.62 for the quarter, an increase of 24%. GAAP EPS came in at $0.50, up 4% year-over-year. If you recall, in Q3 of last year, we had a number of small non-operating gains that we non-GAAP-ed out, creating the difficult comparison. Overall, we're pleased with our performance this quarter. The strong growth is a result of the resiliency of our diverse portfolio and the compelling value proposition that Flex brings to the markets we serve. Turning to our third quarter segment results on the next slide. Reliability revenue increased 19% to $3.2 billion. Operating income was $143 million, up 6%, and operating margin for the segment was 4.4%, impacted by persisting semiconductor shortages and some increased operational investments made to support future growth. In Agility, revenue was $4 billion, up 13%. Operating income was $181 million, up 11%, with an operating margin of 4.5%. Finally, Nextracker revenue came in at $516 million, up a very impressive 53% year-over-year. Operating income at Nextracker was $60 million, up 225%, with operating margins now at 11.7%. That's over 2.5 points of sequential improvement and three sequential quarters of significant margin expansion. In Reliability, despite macro concerns, auto inventory is still low and customer backlog is stable. However, semiconductor shortages impacted efficiency and contributed to increased expedite costs, tempering profitability. Industrial demand was solid with notable strength in renewables, automation, and other specialty programs. Demand in the healthcare space remains steady and we continue to invest for future growth. Looking at Agility, our lifestyle business was up slightly in the quarter despite the ongoing consumer-related weakness. We've now seen multiple quarters of this outperformance driven by significant share gains. As expected, consumer devices were down similar to what we saw last quarter with continued soft end markets. CEC again showed excellent overall performance, driven by strong execution and a continuation of trends in cloud and network infrastructure. Moving to cash flow on Slide 11, Q3 net CapEx totaled $157 million, on target at approximately 2% of revenue. Free cash flow was $202 million in the quarter. With the golden screw situation continuing to the degree it has, and given our visibility today, we expect free cash flow in the fourth quarter to be on par with what we delivered in Q3, which would put us below our previous target of $550 million for the full year. We are, however, beginning to see trends inflect. Inventory net of working capital advances decreased 3% sequentially, and we flattened the curve on gross inventory, up only 1% sequentially. So, it's nice to see that we are starting to see some progress on inventory. Lastly, we returned $40 million to shareholders this quarter through share repurchases. Please turn to Slide 12 for our segment outlook for the fiscal fourth quarter and for our year-over-year growth expectations. For Reliability Solutions, we often talk about the longer-term secular tailwinds, but they are also playing out in the near term. Industrial continues to benefit from regionalization opportunities and trends in factory automation. And while the industry awaits further clarity on the IRA, the overall renewable energy transition is a positive driver. Health solutions remain strong, with outsourcing trends providing more opportunities to grow, and we continue making progress on program ramps. And in auto, the EV and ADAS transition remains a dominant theme. Collectively, these trends should contribute to overall growth with Reliability revenue up high single digits to mid-teens. For Agility Solutions, revenue will be relatively flat. CEC is expected to grow based on healthy underlying fundamentals, particularly within cloud and communications. But we expect both consumer devices and lifestyle to be down, driven by the weakness in consumer product end markets. On to Slide 13 for our quarterly guidance. We expect revenue in the range of $7 billion to $7.4 billion, with adjusted operating income between $315 million and $345 million. Interest and other is estimated to be around $60 million. We expect the tax rate to be around 14% this quarter and adjusted EPS between $0.48 and $0.54 based on approximately 460 million weighted shares outstanding. Now let's go over our full year guidance on the following slide. We increased our fiscal '23 revenue expectations to $29.9 billion to $30.3 billion, which would result in mid-teens growth year-over-year. We expect adjusted operating margins to be around 4.7%, consistent with what we've told you before. Adjusted EPS is up from last quarter's guidance and is now between $2.27 and $2.33 a share. Before we begin Q&A, I want to echo Revathi's thoughts that I remain excited about the opportunities ahead of us. As our results demonstrate, we are able to continue to deliver growth despite facing macro pressures and industry-wide challenges. The resiliency of our portfolio has been strengthened by our diversification, strategic investments in key growth areas, and operational excellence. There are a number of external factors still at play, but our team is executing against our strategy, and we remain focused on meeting our long-term targets and delivering value for all Flex stakeholders. With that, I'd like to turn the call over to the operator to begin Q&A.

We will now begin the question-and-answer portion of today's call. The first question comes from the line of Steven Fox from Fox Advisors. You may ask your question.

Hi. Good afternoon. Can you hear me okay?

Yes, we can hear you.

Okay. Thank you. First of all, I was wondering if you could provide a little more color on the margin pressures on Reliability Solutions. Can you quantify the hit from investing for the future and also the semiconductor area, and talk about what kind of path you see going forward for the margins for that segment? And then, I had a follow-up.

Yes, Steven, I'll start and then Paul can weigh in if he feels like. I'd say first is, Reliability is seeing tremendous growth, as you're aware. We're very pleased with our growth around 19%, and with growth comes all kinds of challenges. The supply chain issues and under-absorption continue in pretty much all three segments of the Reliability business. To support the growth we have this year and what we continue to see moving forward, driven by macro trends, we decided to continue to make some operational investments that support multiyear program growth. Like I said in my opening remarks, the diversity of our portfolio and how the company is performing gives us room to make those decisions. There are nuances, also, for Reliability that you know well, Steven, the skilled labor market is tight. We have to continuously find ways to keep that labor available and hire the right kind of labor in different regions of the world. We feel very good about the trajectory of Reliability margins coming out of this. These are decisions we chose to make because of how bullish we are about long-term sector growth. The strategy is intact. We're committing to the investments, keeping the long-term growth in mind.

Great. That's helpful. And then, just as a follow-up, I was wondering if there's anything you would highlight, say, over the last 90 days or so related to that regionalization theme. There have been a lot of headlines, good and bad, in China and India related to electrification, etc. Is anything you can call out that's either playing more or less on that theme than you would have thought versus a quarter ago? Thank you very much.

Yes. Steven, I would say, if anything, this only continues to accelerate. It doesn't matter the ups and downs of the conversation on China, whether it is regionalization or whether that country is opening up now, or what you're hearing going on in India. We are supporting a significant amount of programs driven by the regionalization trend, which is driven by increasing resiliency in the supply chain, particularly in Mexico and the U.S., which are our biggest growth areas. We haven't seen the trajectory change. If anything, it's accelerated, and we're trying to figure out how much more we can do moving forward. So, the pressure from customers to deliver more quickly is what we're seeing.

Your next question comes from the line of Shannon Cross from Credit Suisse. You may ask the question.

Thank you very much. Can you talk a bit about cash flow? I'm wondering about your 80% cash conversion target over a longer period of time. What are you doing internally to improve visibility, manage inventory better, considering that some of what's going on has been the golden screw?

Yes. First, I feel good about the trajectory change we're starting to see overall with working capital and how we're managing our customers. Inventory is flattening out. While we still have this incomplete kit issue, I feel good about the general underlying trends. We're seeing that the start of this quarter in terms of our overall cash flow, and we think that continues to improve. This is why we feel comfortable maintaining our cash flow conversion target, because we believe that this business will generate cash. We've made significant strides in planning and helping our customers become more disciplined with inventory management, and this will have long-term implications.

Okay, thank you. Can you talk a bit about cash utilization? Assuming you move back, assuming you have excess cash, can you discuss potential acquisitions? Your approach to returning cash to shareholders?

No problem, Shannon. First, if you look at our performance over the last few years, we've been disciplined and judicious with capital allocation. Specific to M&A, we have a robust process and pipeline. But our number one priority is supporting strong organic growth, whether that's working capital or internal investments. Stock buyback has been a priority for us over the last couple of years, but at the moment, M&A is our lowest allocation priority.

Your next question comes from the line of Mark Delaney from Goldman Sachs. You may ask your question.

Yes, good afternoon. In the CEC segment, can you elaborate a bit more on what Flex has seen in the comms infrastructure markets? Is there share gain or something else that is a tailwind for Flex?

Yes. First, there are two things happening across the three segments in CEC: cloud, communications, and enterprise. We're still seeing growth in all three segments while there’s noise about enterprise performance. For us, in cloud, while people are discussing the rate of growth changing, it is still pretty significant growth. Market share gains are contributing to our continued growth, and we see that playing forward. In communications, we have seen share gain with specific customers that have supported our growth and have backlog clearance that supports underlying growth. Overall, CEC tells a big story of share gain, particularly in communications and cloud. If the growth rate alters a bit, overall, it's a positive growth story for us.

Thanks, Revathi. Can you also elaborate on what Flex has been seeing operationally in China, especially given the recent COVID dynamics? Are customers expecting demand to pick up this coming year?

No problem, Mark. A couple months ago, we thought there would be a big COVID spike in November-December. COVID cases were very high in late December, which had an effect on us with high absenteeism. So far, returning to work has been very high, higher than we anticipated. By the end of this week, we expect to reach 100%. So, that's good news.

Your next question comes from the line of Matt Sheerin from Stifel. You may ask your question.

Thank you. Regarding the Reliability segment, could you talk about incremental weakness in some broader industrial markets, particularly semi-cap? Can you discuss demand versus program ramps and any concerns?

Yes. Across Reliability, we have strong demand, driven by the fundamentals of the end markets, plus continued market share gains. We have very little exposure to semi-caps which is a plus. We're seeing strong growth in renewables and opportunities in automation. In industrial, the fundamentals are strong, and in the auto sector, EV especially is very strong with many new program ramps ongoing. Overall, we have a lot of growth in Reliability and just need to execute.

Thank you. Regarding the margins in that business, which have been under pressure, what's the timing for margin improvement? When do we see issues like logistics and supply subside?

It's a good question, Matt. We entered this year expecting a smooth margin acceleration, but inflation has been larger and stickier than anticipated, as have semiconductor shortages. Both have pressured margins, particularly in Reliability. We expect these issues to subside, and as they do, margins should accelerate, drawing clarity on the potential growth.

I feel bullish about our long-term target. If we achieve our core Flex target while facing pressure in Reliability margins, we can see the upside. The improvement areas include manufacturing productivity and efficiency in program growth.

Your next question comes from the line of Ruplu Bhattacharya from Bank of America. You may ask your question.

Hi, thanks for taking my questions. Revathi, about risk management, what worries you most in the coming year? How can you maintain your target of high single-digit growth if there are recession worries?

Ruplu, our portfolio has changed significantly over time, focusing on resilient cycles of the economy. Looking forward, we need to ensure Reliability growth continues as that will drive our long-term trajectory. The Agility portfolio will have some ups and downs, but our efforts have minimized those. We’ve maintained growth despite past crises, and our portfolio's diversity is a key reason we're confident in our commitments.

Thanks, Revathi. On margins, you're at mid-4% margins. If we take out inflation pass-through, those margins are likely 10-20 basis points higher already. Why is your long-term target of 5% conservative? Can you elaborate on the levers for margin improvement?

You're right about mid-4% margins. We can commit to the long-term target, and there's much opportunity for improvements in manufacturing productivity and overall program growth efficiency.

We aim to maximize asset utilization and drive productivity. There will be pressures to invest for growth due to our regional advances and revenue expansion hopes. But we will remain focused on factory productivity, balancing investments with governance.

Your next question comes from the line of Paul Chung from J.P. Morgan. You may ask your question.

Hi, thanks for taking my question. Can you talk about how Anord Mardix has performed in terms of revenues and margins? What benefits have arisen from this acquisition?

The acquisition has gone very well. Anord Mardix has growth potential focused on data centers. They've had strong revenue growth and a solid backlog, and our strategy of enhancing our power portfolio has succeeded. The acquisition has helped us in hyperscale and colo-winning opportunities, differentiating us due to a comprehensive portfolio, which supports our growth.

Thanks. Can you discuss where you are facing the golden screw issues, and what timing looks like for cash conversion? Can we see more meaningful conversion in '24, and approach the 80% mark?

The older technology impacts have been significant in automotive and industrial sectors. We've seen some inventory improvements. We're starting to see some positive trends, and customer support for inventory is improving. It's too early to guide for '24, but generally, inventory should start to ease. However, organic growth will influence working capital significantly.

Your last question comes from Jim Suva from Citigroup. You may ask your question.

Thank you very much. As you load more onshoring facilities and build on the cost-plus model, do you think this will also enhance your long-term operating margin goals?

Jim, the areas you've identified are correct, particularly growth in Mexico and the U.S. As we execute complex programs, they do present challenges, but as those programs mature and we achieve efficiency, that will positively impact margins. We are confident in achieving our long-term target.

Thank you, Jim.

Thank you, everyone. On behalf of the Flex leadership team, thank you to our customers and shareholders for their support, and to the Flex team worldwide. Your hard work makes this possible. We wouldn't be here today without you all. Thank you, and see you soon. Bye.

This concludes today's conference call. Thank you for joining. You may now disconnect.