Flex Ltd. (FLEX) Cash Flow Statement

The persistent gap between operating cash flow and net income, with OCF/NI ranging from 1.49x to 2.45x, suggests that non-cash charges like depreciation and stock-based compensation are significant, but also that working capital management is not eroding cash generation. This conversion strength is particularly notable given the company's thin net margins, implying that reported earnings are backed by actual cash inflows.

FCF has grown from $229M in 2025Q1 to $283M in 2027Q1, with FCF margins hovering between 2.8% and 5.0% over the period. The recent quarter's FCF margin of 3.6% is below the 5.0% seen in 2025Q4, but the overall trajectory suggests that the company is converting revenue growth into cash flow without a proportional increase in capex, which is a positive sign for shareholders.

The capex-to-revenue ratio has been steadily climbing from 1.6% in 2025Q2 to 3.0% in 2027Q1, suggesting that Flex is investing more in its manufacturing footprint, possibly to support growth in data center and automotive segments. However, the absolute level remains modest, and the company's ability to generate FCF with such low capital intensity underscores its asset-light model, though investors should monitor whether this investment pace is sustainable.

The large negative working capital change in 2025Q4 (likely due to inventory build or receivable timing) was followed by a positive swing in 2026Q4, suggesting that Flex's cash flow is subject to lumpy working capital dynamics. This volatility is typical for an EMS provider with large customer orders, but it means that quarterly OCF can be misleading; investors should focus on trailing twelve-month figures to gauge the underlying cash generation.

The company has consistently repurchased shares each quarter, with buybacks ranging from $200M to $944M, and has also engaged in M&A, with net acquisition outflows of $1.1B in 2027Q1. This suggests that management is using cash to both enhance EPS and expand capabilities, but the large acquisition spend in the latest quarter may signal a strategic pivot that could impact future cash flows.

The cumulative gap of nearly $2B between OCF and net income is largely attributable to non-cash charges like D&A and SBC, which are added back to net income to arrive at OCF. This divergence suggests that Flex's earnings are of high quality, but it also implies that the company's cash flow is not fully reflected in its income statement, which may be a positive signal for valuation.