Good morning, and welcome to our Fourth Quarter Fiscal 2024 Earnings Call, along with our Virtual Investor Day. I'm David Rubin, Vice President of Investor Relations. Running through this morning's agenda, first, I'll take you through our Q4 and fiscal 2024 results. Then our CEO, Revathi Advaithi, will provide an update on our strategy, our progress and our plans for the next several years. She'll be joined by Michael Hartung, President of our Agility segment; and Becky Sidelinger, President of our Reliability segment, who will take you through some interesting examples showcasing our differentiation in our cloud and automotive businesses. Next, our CFO, Paul Lundstrom, will present on our financial framework and our outlook. Lastly, we'll have some time for Q&A. Please note, all questions need to be submitted through the Q&A chat function at the bottom of the event platform on your screen. You can submit questions any time during the event, and we will answer as many as we can as time allows. Before we start, I need to briefly run through a few housekeeping items. Slides for today's call as well as a copy of the earnings press release and summary financials are available on the Investor Relations section at flex.com. This call is being recorded and will be available for replay on the corporate website. 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 the Risk Factors section 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. And please note,…

Good morning, and thank you for joining us today for a virtual event. I want to say a few words about our Q4 and fiscal year 2024 results. I'm very pleased with our performance, given the dynamic environment we experienced this past year. Although year-over-year revenue was down, we still delivered strong margin expansion and EPS growth in both Q4 and in the full-year. Our results show that we can navigate effectively through the cycle and deliver increased value to our stakeholders. I am very proud of how our team delivered throughout the year, but I also want to thank our customers for their continued trust and partnership. In addition to our Q4 and fiscal year 2024 earnings today, we announced that as part of a planned succession, Michael Capellas, our Board Chairman, has chosen not to stand for reelection at our next Annual Shareholder Meeting in August. Michael has served on Flex's Board for 10 years and has been Chairman since 2017. He played a key role in building Flex's reputation and driving our success. I want to personally thank Michael for his unwavering commitment and service, and we wish him all the very best. Bill Watkins will succeed Michael as Chairman. Bill is a very experienced Board member and will provide continuity in Board leadership. I would like to welcome Bill to his new role. Now looking ahead, let's get into the details of what's next. So if you're new to Flex, we are one of the world's largest contract manufacturing and supply chain partners. Through a global footprint of manufacturing, design and service locations, we serve a broad base of leading brands across diversified markets. From manufacturing electronics to a fully integrated product, we offer solutions to meet our customers' unique needs and help them better manage…

Thank you, Revathi. At our last Investor Day, we introduced you to our cloud capabilities. We talked about manufacturing services for data center racks, which fall under the CEC business unit as well as embedded power products and critical power products, which fall under the Industrial business unit. We also said we grow our Cloud business by about 20% per year for the next few years. I'm pleased to report today that our Cloud business grew by twice the expected rate to about $3 billion in fiscal 2024. Looking back, we clearly executed on the strategy, gained market share with new and existing customers and continued to innovate across our cloud-focused product and service offering. As you can imagine, we are really excited about the leadership role we're playing, the innovations we've developed, the compelling value proposition we've created and the new opportunities we've unlocked. By now, we're all familiar with the massive growth of the cloud market, driven largely by advancements in Generative AI, the continued adoption of cloud-based services and the growing demands for data center power. For a company focused on the data center like Flex, the implications are profound for our Cloud business. This isn't a mere shift in technological trends. It's a pivotal moment opening a wealth of new opportunities. Flex has a comprehensive offering for the data center infrastructure market that includes both manufacturing services and power products. Our manufacturing services are focused on the mass deployment of vertically integrated data center racks at global scale from our cloud-focused factories. This suite of services includes design, production, vertical integration, value-added fulfillment and circular economy solutions. They help our cloud customers manage the complete product life cycle of a fully integrated data center rack. Although we're known for our manufacturing business, we also have two…

Thank you, Michael, and welcome. Automotive is another great example where our cross-industry expertise in advanced compute and power systems is driving new business wins and growth. In 2022, we spoke about the next-gen mobility aspect of our business. But to fully understand our opportunity in automotive, we need to look at both the drivers of the industry and the composition of our business. The automotive industry is seeing significant disruption, and it goes beyond just electric vehicles. Clearly, the adoption of electric vehicle and hybrid powertrains requires more complex power systems. With our expertise in power electronics, we support both EV and hybrid platforms, including with products of our own design. And we expect both of these platforms to remain long-term drivers of our business growth. Regardless of the powertrain choice between electric vehicle, hybrid or internal combustion engines, technology transitions in driver assist, safety and autonomy are increasing the electronics content per vehicle. And here is where it all gets interesting. All of these technologies are radically increasing the demand for real-time compute power in the vehicle. This is driving consolidation of vehicle electronic control units, or ECUs, to streamline complexity, integrate vehicle systems, decouple hardware from software and greatly enhance computational capabilities. We've all heard the term software-defined vehicle. The truth is, it takes a lot of hardware to run that software. You may have heard that cars are becoming more and more like edge data centers on wheel. This is not hyperbole. Our latest generation auto compute platform is liquid cooled with GPU-powered servers in multiblade rack configurations, leveraging globally reusable building blocks. So you see this is very similar to what Michael spoke about in cloud, where we offer an end-to-end solution to help cloud service providers meet the growing needs of the AI-driven data…

Thank you, Becky. Good morning, everyone. We've talked about the trends driving the industry, our focus areas for higher value growth and how we are capitalizing on these opportunities through our differentiation. I will talk about the positive implications to our longer-term financial framework. But first, I want to take a step back. The strategy we set five years ago was to go after and win the right kind of growth, expand our services and build on our operational excellence. Ultimately, this strategy is about solving complexity to drive new wins and build deeper relationships with our customers. We expected this approach to create shareholder value through profitable growth, margin expansion and lead to greater financial resiliency through the cycles. This has been tested multiple times over the last several years, and we have clearly demonstrated that it is working. As David mentioned, we've moved NEXTracker to discontinued operations, which gives you clean multiyear visibility into our core business. Looking at how Flex has advanced over the last several years, we've executed on our transformative strategy to take advantage of long-term trends, focus on key end markets and drive further efficiencies and operational excellence. The underlying longer-term trends haven't changed. But this last year, revenue growth was impacted by a significant shift in the macro cycle. But I want to pause here for just a moment because there is a very important takeaway here. In fact, it may be one of the most significant indicators of change this industry has seen in quite some time. In a year when revenue was down 7%, margins still increased 50 basis points, and EPS grew 11%. That is resiliency. And it's also the fourth year in a row, we've seen double-digit earnings growth, a trend we expect to continue. You've heard us talk…

Thank you, Paul. As a reminder, Q&A today will be through the event platform. You may submit your questions in the Q&A chat box on the lower right side of your screen. With that, let's get started. Our first question comes from Steven Fox with Fox Advisors. Can you talk about how successful to date you have been in attracting vertical solutions and aftermarket services to data center rack programs in the past and whether you can drive that attach rate higher? And if so, how?

Kyra, I'll start, and then Michael, I'll turn it over to you. First, Steven, thanks for the question. I'll start by saying that we're really excited to share the story we did with you in terms of compute and power in the data centers, which like Michael said in his presentation, is we are one of the few companies that can actually look at power products and the integration that it provides with compute, and we know that the future of the data center is all about the proliferation of the requirement of power and we have a unique value proposition. On top of that, what Michael talked about is the addition of all the services that we have end-to-end in terms of – and adding to our manufacturing services portfolio. So really a great story there. Michael, I'm sure there's a lot more to add on that?

Absolutely. I'll build on your comments there because as you know, we talk a lot about the role value-added services plays in enabling the growth across Flex, but in the data center, in particular. So maybe I'll start by just first reiterating our strategy from a manufacturing standpoint for the cloud. And that's simply to combine as many services as possible in each opportunity. And the reason I think that's important is that we have a consistent concerted effort to look at how we can continue to increase our penetration into things like vertical integration and aftermarket. When you look back, say, three or four years, the good news is that both of those elements of our business have grown at a double-digit growth rate. And since that time, we've had a lot of penetration in both of our cloud business, our customers and in that market in particular. And there's no better example to give them the one that's been asked about the data center. So if you think back what we talked about was not only the scale in manufacturing and integrating the rack itself, but our unique ability to vertically integrate components of that rack. And it starts with our ability to fabricate sheet metal racks and enclosures. We also include our private label components and we even integrate our embedded power products as well. So vertical integration is a key enabler in the data center itself. But it doesn't stop there. We also venture into the post-production market with our aftermarket services, in particular, in our Global Services business, which is already operating at scale as well. We operate in 25 factories in 18 countries, and that really does enable us to do two things. It enables us to attach value-added fulfillment capabilities, which really enables customers to lower their lead time, improve their flexibility. But maybe more importantly, it enables us to attach our circular economy solutions, which really help our customers achieve their sustainability objectives by bringing those same products back from the market for repair, refurbishment or recycling. So we really like the progress we've made so far and how we're positioned for the future.

Thank you, Michael. Our next question comes from Samik Chatterjee with JPMorgan. Between auto and cloud, you're talking about $8 billion of revenue growth over the next five years. How should we think about the margin profile, the $8 billion revenue translates at? And how do we think about the opportunities to increase margin run rate in these businesses?

Yes, Samik, thanks for the question. I will say that we're excited to share the information with you today in terms of the scale that our Cloud and our Automotive business are going to be in our overall portfolio. I think the significance of that is important for two reasons. One is, the margin rate, as you asked in your question, right? So the margin rate is much better than the Flex average margin rates in both of these data center and automotive. But I think it's even more important to talk about what drives that. What drives that, the margin rate, is the fact that the most intense problem we are solving today is the availability of power and the requirement of power in – whether it's a data center or how a car operates, right? And being in the middle of that, having products that actually solve for that is really, really important. So that gives us an important IP, an important technology vertical that we have that gives us much better margin rates. In terms of the scale that Michael talked about, very few people can integrate that scale end-to-end like he said in the previous answer, and that gives us a margin rate in terms of delivering that complexity that is much better than the Flex average rate. But I think the important thing to walk away here for all of you is that, power is the future, and we're in the middle of solving the compute power equation for both cloud and automotive. And very few companies can do that. So we'll definitely demand value for it and get value for it, and which I think puts Flex in a very unique position.

Thank you, Revathi. Our next question comes from Mark Delaney with Goldman Sachs. Cloud is roughly a $3 billion business. Can you speak to how margins compare in that business to the corporate average? And how margins can trend longer term in cloud?

I answered that a little bit, Mark, just now from Samik's question, but I also want Michael, for you to add in more to this. One is, I'd say, overall margins are very favorable to the Flex average. So I just talked about that, but it's driven by technology and vertical integration that we provide. We believe that these margin rates are sustainable and only get better as we integrate more and more complexity into it. More importantly, as we solve for these challenging power problems, the margin rates get better. But overall, I would say it's the complexity of the portfolio that drives the margin. But Michael, what would you add to it?

Yes. So Mark, you got it right. The Cloud business inside of Flex is operating at just over $3 billion. It's probably helpful to understand which markets are included in that $3 billion to better understand the margin profile going forward. So that $3 billion is roughly split between about $2 billion in our Cloud business within CEC and about $1 billion in our power business within industrial. And as Revathi mentioned, that business operates at a margin structure that's above the corporate average. But the reasons for that, I think, are pretty important. So when you think about the Cloud business, in particular, we talked about in our previous discussion, the role of value-added services. Well, our penetration rate in our cloud business tends to be much higher in our value-added services, which props up our margin profile in the Cloud business within CEC. And when you think about the Industrial business, we're talking about two different product businesses that operate at product margins, the embedded power products and the critical power products. So given the split of business between products and services, we're pretty confident we can continue to deliver that sort of margin performance for the next few years.

Yes, maybe I'll just add, Mark. First of all, appreciate the question. As you think about the building blocks for our margin expansion plan over the next few years, a 20% topline growth rate at least from the Cloud business, as Michael said, with better than average corporate margins is going to help us mix up as we move closer to that 6% op margin rate out 2027.

Thank you all. Our next question comes from Ruplu Bhattacharya with Bank of America. Revathi, can you talk about how you are thinking about risk management in this environment? What are the areas that give you the most concern? And how are you mitigating risk, whether that be in focusing on specific areas of investment or pricing or cost control? Are there areas of the platform which you are deemphasizing?

Yes, Ruplu, I'll start and Paul jump in. First, I'd say is from an overall portfolio standpoint, we're comfortable where the portfolio is today. That being said, I think I've said this a few times before, is that we are constantly improving our mix within our business units, that is our day-to-day job. And so there's always emphasis and deemphasis of the portfolio that continues to happen as a regular rhythm of the business. So I would say nothing more to add on top of that. In terms of risk management, Ruplu, what we have shown over the last four to five years is the fact that we have a very thoughtful, proactive approach as we see the ups and downs that happen in the market. So whether it is going through COVID or after that as supply chain crisis or now a slower growth environment, right? All of that requires us to constantly think ahead and make sure we have the right attributes in place that starts with our culture and that also ends with our planning processes of how we think of our plans. So in general, Ruplu, we're always conservative in terms of how we look forward. I would say our plans today for FY2025 have built the same way, but that's all attributed to risk management, right? Because it is kind of murky in terms of the environment out there. And if you look at the revenue profile and things like that, you're hearing that from all our customers. So we have built a conservative plan, and we feel like the risk mitigation around contracts and inventory planning and thinking about our customers' outlook are all built into this forecast that we have given you. It's how we work every single day. And you've seen that in the results, right? And we've got the same kind of cadence built into our forward-looking forecast.

I think the key point there is, you've seen it in the demonstrated results over the last several years. There have been lots of risks, the supply chain shocks, COVID, the ups and downs of markets, and I think that we've demonstrated our ability to be resilient through the cycle.

Thank you. So we have a follow-on from Ruplu. Paul, with respect to inorganic growth, how do you see opportunities for M&A? And are there any focus areas?

Can I start with that, Paul?

Sure. Absolutely.

I would say that the first is the areas that we're clearly interested in fall into the areas that you had, both Michael and Becky talk about today. So power, we definitely think that there are areas of power that we're interested in, in terms of technology that we'd like to add more to our portfolio. We really like where we are in terms of embedded power and critical power, but we always feel that the things that we could add to it as the future of power becomes more critical. I would say, in terms of value-added services, we're very interested in looking at more for our portfolio and value-added services, similar around automotive, right? As you heard from Becky, we're competing across geographies, across OEMs in terms of winning more Automotive business, and we really feel good about our product position within automotive, but there's always things we could add on. So very, very targeted in terms of our view of where we could add M&A. But what Paul is going to tell you is that we're very focused on capital allocation.

Our posture on M&A really hasn't changed. Revathi pointed out a few of the focus areas. I think in my prepared remarks a couple of minutes ago, I talked about the same. But if we go out and have some sort of – do some sort of M&A, you should be confident that it's a good fit. The team has high confidence in the financial model, and investors will be happy. I would say our top priority right now probably is in M&A. It's more stock buyback given our current valuation. But as I told you over the last few years, the aperture is open. We have an active pipeline, but we're going to be very, very selective and make sure that the financial model would close. A good example of that would be Anord Mardix, which I think was an absolute home run, thrilled with that. And if we can sprinkle in a couple of other things over the next couple of years in a value-creating way, then of course, we'll do that.

Thank you, Paul. Our next question comes from George Wang with Barclays. Can you talk more about cloud customers, including diversification and concentration? And how should we look at cloud revenue literally through the fiscal year 2025?

Yes. So I'll start off, and Michael, hand it over to you. I'd say, Michael, definitely should talk about what we don't include in cloud because as usual, we are very prudent and conservative in how we think about things. And so that's one thing. I would say in terms of diversification and concentration, I would say, we have one of the best portfolio in terms of products and customers in terms of cloud. In linearity, I'd say, we showed you the 20% growth that we have set through the next three to five years. We really feel good about kind of the next few years. We have seen the growth that – and we can see that in terms of our bookings and our ramps. But if anything, we'd say that it will be fairly linear. And – so I don't think that it's going to be front-end loaded or back-end loaded. I would say, at the growth rates that we have shared with you, we feel pretty good about kind of the five-year run rate of it. But Michael, over to you.

Yes. I'll build on those comments and maybe start where I left off with the last answer. So first, reiterating what's in the business. And so first to Revathi's point, we've included our Cloud business in CEC and our power business in Industrial. Now we probably could have made a case that there's large amounts of our portfolio that also have exposure to AI. But we decided not to include our 5G business, our communications business or our enterprise business. Now what's also important to think about is that we're bringing both products and services to the marketplace, which really gets us into a wide variety of customer conversations. And it helps point out a distinction in our offering, which is, we actually have a lot of diversity in our customer base. We already have multiple engagements with multiple hyperscalers, and we also have engagements with multiple silicon providers. So we think this diversity, we think this combination of products and services really does bode well for our future. And in terms of the second part of the question, how we're set up. So last time we spoke, we said we'd grow the business by, I'll call it, 20% per year for the next few years. We shared with you earlier today that we've actually grown by almost twice that expected rate. We think we're in a great position to continue that for the next few years. And so for those reasons, we're really optimistic about where we think this cloud market can go. Maybe some things about how strong the Cloud business is today. First, the demand is holding up much better than some of our other markets, which is encouraging. But it hasn't really stopped there. We've had significant share gains with our existing customers. We've had a lot of new wins with new logos. And so that also bodes well to this in continuing appreciation of the work that we've done over the prior months. So really excited about where we're heading this business.

And the only thing I'd add to that, Michael, I would say, in terms of diversification, so we are with multiple hyperscalers, right? That's important. We are with multiple colo customers because that is also important because if you think about our power portfolio, that touches the value chain end to end also. So in terms of diversification, it's very diversified. And then importantly, they're with multiple silicon providers, right? And if you think about also the future of kind of power and compute that we talked about, the integration of cooling products, power products into vertical integration of the racks really drives that diversification. So it's not just in hyperscalers, but it's also in colos, it's with silicon providers. So highly diversified. And I'd say we've given you a prediction in terms of where it goes. I feel very good about kind of the linearity of it. But as usual, we're always thoughtful in terms of prudent guidance.

Thank you all. Our next question comes from Mark Delaney with Goldman Sachs. Margins have been resilient despite macro headwinds. Has there been anything that is more temporary in nature, helping keep margins stronger? And if macro headwinds persist, do you think the improved margins can be sustained? Similarly, can you talk on price cost and how that is trending in FY2025 versus FY2024?

I will just start on that one. And if you need to clean it up a little bit, you can do that. So a fair amount to unpack there, Mark. So maybe just talk about the first part of your question, which was – has there been anything sort of unusual keeping margins up? I would say over the last couple of years, it's probably been the opposite. If you think about all of the inflation pass-through, which has really boosted the topline without any drop through, that has sort of pushed margins down. And I think as we move forward, and we saw a little bit of this last year, those inflation pass-throughs start to come down. That means the bottom line doesn't change, but the topline does come down a little bit. That actually helps the margin rate. If I think about the fourth quarter, fantastic margins in the fourth quarter, 5.4%. I'll just remind you that couple of years ago, we talked about Flex and broadly the industry at some point getting to 5% operating margins. Very pleased to see the 5.4%. I would say we blew right through that 5% goal here in the fourth quarter. What drove that? There were a couple of things in there that were quite good. One, was mix. Two, we had a number of cost actions. There was some restructuring benefit that we had in the fourth quarter that helped with margin rates. We also had one – this is a little nuanced, but if you look at our CapEx spending over the last several quarters, it stepped down fairly significantly in the fourth quarter just based on the ebb and flow of ramps. And as I think about CapEx spending, we capitalize what we can in full compliance with…

I think you've said it well. I wouldn't add anything other than, four, five years ago, we were talking about, hey, can you get past 3%, right? Today, we're talking about can you get past 6%?And like Paul said, we're well north of 5%, 5.4% in Q4. But how we get there is important, right? So mix will play an important role. We talked about 40% of our revenue coming from data center and automotive, which mixes up significantly for us. So that's one thing. And then second is, there's so much to be done on productivity and efficiency. The world is changing with robotics and AI in the factory floor, we are super excited about the benefits we're getting from that. So we feel very comfortable about the margin profile, the six-plus percent, and we feel we're well on our way to that.

Thank you. Our next question comes from Steve Barger with KeyBanc. For auto, do you have relationships with the primary OEMs? And will growth come from seeing higher content per vehicle and higher unit volume? Or are there market share wins to come as well?

It's all yours, Becky.

Thank you for the question, Steve. So for automotive, the answer is, yes. We do have relationships with the primary OEMs. And OEMs are coming to us based on our deep design expertise in power and compute. And I spoke earlier about the flexible design model. So we can design for our OEMs, we can jointly design with them or we can manufacture their designs. And all of this has resulted in a strong pipeline in automotive. I will also add that we do partner with Tier 1s as well. Where there is a benefit for Flex in the partnership with the Tier 1 is where we can be faster and more efficient in production. And that allows the Tier 1 to make investments in the other areas of the business. The second piece of the question that I'll address is the content per vehicle. So keep in mind that our auto portfolio is very well diversified across powertrain types, electric vehicle, hybrid, internal combustion engine, well diversified across all three of those and we're well diversified across autonomy levels. You couple that with the broad breadth of our portfolio. So our portfolio includes compute. It includes power, lighting, actuators, wiring. All of that content across all of those platforms is what allows us to grow. And yes, we will see content gain as a result of that. So that translates to about an average content per vehicle of roughly $1,000 per unit. If you take everything in the portfolio that you can apply to a vehicle, that would take our content well north of $4,000 per vehicle.

And so I'd say, Steve, like Becky said, comes from content per vehicle, comes from market share gain, because we're one of the few EMS providers that has a product portfolio that can design and jointly design with our OEMs. So that's a fantastic place to be. So we're again in a very unique position in automotive, and we can see that in the results from our bookings and our growth coming from automotive that this will just continue as we keep building on our platform.

Thank you both. Our next question comes from George Wang with Barclays. Can you talk more about the potential impact from the consignment model in cloud, which might be margin accretive? Can you also provide color on margin profiles for power and DC racks?

Sure. I'll take that one. First, we have a variety of different business models inside of Flex with a number of different customers. Consignment happens to be one of those business models. And yes, it is in place with our cloud customers. Now we've taken that consignment model into consideration in how we've run and how we forecast the business. So when we report you last time, we knew consignment was part of the model, we made a prediction on how we would grow that business in the neighborhood of 20% per year, and we more than doubled that result. So we feel like we've got a handle on the impact of consignment in the business, and it's been taken into consideration in our future projections. Just as a quick reminder, consignment has a headwind effect on topline revenue but doesn't have an impact in bottom line profit dollars. So yes, margin does climb as a result of consignment. But again, all of that has been factored into both our results and our projections. On the second half of your question in terms of the margin profiles, I'd consider the power products to have a different margin profile than the DC racks per se. Let me explain why. So from a rack standpoint, that's really part of our EMS umbrella. So we generate above-average margins compared to the corporation but it's still at an EMS level. It tends to be elevated because we do have a high penetration of value-added services. Again, we fabricate our own sheet metal, we incorporate our private label components and we also include some of our other products into that integration. From a power standpoint though, we're operating a product business that comes with product level margins. So they're a little bit different profiles, but both operating at well above the corporate average.

Yes. And the only thing I'd add to that would be to say in the vertical integration of racks, as complexity increases around things like cooling designs and all of that, those are all – they'll all tend to be margin accretive because it's complexity that you're integrating in on behalf of your customers, right? So having your own reference design and being able to integrate that in requires a different margin profile. On power, in embedded power, there are not many like direct competitors in terms of who we work with, and we work directly with the silicon providers and the data center folks, I would say, in terms of critical power and embedded power put together. There are other companies that you can compare margin profile with, I'd say, the likes of Vertiv. So we operate more in that level. We don't publicly tell you what we do, but to give you a feel for where the margin profile of that business would be.

Maybe just a couple of quick comments on revenue, too, George, and also to tie back to Mark Delaney's question a couple of minutes ago about margin to margin rates. As I think about the full year guide for FY2025, which is the midpoint, down about 3%, you should think about two factors. One, what Michael just said. We do have some topline headwind from more consignment, I would peg that at maybe two points. We also have a headwind from the topline from the inflation pass-through, which I would peg at probably three points. So between those two, that's about five points of sort of artificial top line headwind. And so as I think about sort of the organic performance of the business, the midpoint, we're up a couple of percent.

Thank you. Our next question comes from an investor. How much share repurchase is embedded in the FY guide of $2.30 to $2.50 per share. And what is the expected tax rate for the full year?

Sure. So maybe just quickly on buybacks. So I'll just give you a straight answer. And the straight answer on our share count for the full-year, it's 400 million, is what we're assuming. As I think about the – what happened as we went through Q4, stock buyback was north of 500 million. We expect to continue that cadence here through the first quarter. And so that should provide some meaningful tailwind as we move into the balance of the year. So about 400 million. And then as for the tax rate question, I don't love the question because I don't love the tax rate. But right now, 18.5% or thereabouts is kind of what we're thinking for the full year, which is a meaningful headwind year-on-year. And so one would be right your congressman. Two, would be – this is just how it is. I think all big multinational companies over the last few years have been talking about in the tax landscape, they call it BEPS 2.0, but it's – what it really is, is global minimum tax rates. And so if I think about specific examples, a 15% floor in a company – excuse me – in a country like Hungary, where we've historically seen 9%, as you mix up in those lower tax jurisdictions that used to help, now it doesn't really matter because those tax floors are more like 15%. So it is a little bit of pressure on the rate. But what I'll just say is we manage it as best we can, like we have over the last many, many years, and I sort of view it as a non-operational item.

And we're delivering double-digit EPS CAGR with that tax rate.

It's a great point.

So I think that's an important takeaway.

Yes. It's a great point.

Thank you. Our next question comes from an investor. How much inventory do you have left to unwind? And how much cash are you going to keep on the balance sheet?

See my answer to this always is to Becky and Michael, we have too much inventory. But you heard me say that time and time again, but we've done a really fabulous job of starting to unwind inventory. So I will admit that. But Paul, do you want to answer this?

Yes. I mean, I think everybody knows the history on inventory. The whole industry saw inventory growth. We peaked out back middle of our FY2023. But what we've seen since then is meaningful improvement. I think you look year-on-year on March 2023 to our March 2024, we dropped by $1 billion, $1.2 billion. And so I'm very happy with that. I'm also happy with the performance just sequentially this past quarter. The December quarter to the March quarter, we dropped another $400 million. And so I like the momentum there. But like Revathi, we believe that inventory is still too high and that there is ample opportunity to continue to improve that. To sort of give you some perspective on that one. In December, I think our inventory days net of working capital advances was something in the order of 74. That improved this past quarter to 70, but that's still a 10 to 12-day opportunity. So meaningful inventory can come off the balance sheet. We just need to make that happen. In terms of cash to run the business, which was the second part of that, I think, we don't need $1 billion to $1.5 billion, which is about where we're sitting today, maybe a little under that. We need $2 billion or less. And we have and will continue to put that capital to work as you've seen us do the last couple of quarters. Priority one is stock buyback. Of course, we'll continue to fund the business internally. And if there's any sort of M&A, as I mentioned, we'll, of course, have a open aperture to that. But right now, the priority is stock buyback.

Thank you. Our next question comes from Samik Chatterjee with JPMorgan. For autos, given the focus on power, how does the moderating EV protection ramps in the out year influence your view on content per vehicle long-term? And can you also talk about the customer base diversity between Western OEMs and Asian OEMs?

So I'm going to hand that over to Becky. But one thing I'd say is, I think Becky said this a couple of times in her pitch and in the Q&A, there's one takeaway on auto that would be great for everyone have is that really our product portfolio is agnostic of EV or hybrid or ICE, right? So – and that puts us in a really unique position in terms of how auto is set up for growth. So, Becky?

Yes. I'll build on those comments, Revathi. So first, I'll say that our customer base in automotive is very well diversified across customers, across OEMs, across the regions. And I mentioned that we're very well diversified across the platform type, electric vehicle, hybrid, ICE. So if we think about how the EV market is impacting this business, I would say, first, it is growing, but maybe just at a slower pace than some people might have anticipated. But what I want you to remember is that many OEMs now are swapping investments or shifting investments into hybrid platforms to bridge the full EV transition. And our Power Solutions are completely independent of whether it's a hybrid or whether it's an electric vehicle. So that benefits our Power Solutions regardless. The other important point that I'll make here is that the vast majority of our portfolio, so compute, wiring, actuators, all of the stuff I mentioned earlier, that's completely agnostic to all platforms. So whether it's an EV, whether it's a hybrid or whether it's an ICE engine, all of that content will apply, and we will continue to expand in the market.

Thank you. Our last question comes from Mark Delaney with Goldman Sachs. Flex's guide implies a back half-weighted FY2025. What is driving the improvement from the fiscal first quarter to reach the full-year outlook? And how much visibility does Flex have into the demand needed to achieve this?

Okay. How about we start, Michael, with you talking about your business and then Becky yours, and then we'll get to Paul and me.

Sure. Sounds good. So I'd say, first, to start off with. Expectations are fairly much in line with what we've seen for the past few quarters. So we're starting off Q1 with some normal seasonality, so a little lower starting point as usual. But we are seeing a lot of things progress in the market that give us a lot of optimism. So when you think about the business, think about first half, second half question. The good news is we're really not banking on a big market recovery in the second half. If you think about what's happening in our businesses across Agility, first, starting with the data center and what we've done there. We're seeing significant share gains with existing customers. We're seeing a lot of new business wins, frankly, with new logos. And it's not just contained to the data center. We're actually seeing similar progress in our Lifestyle business with share gains and new business wins with new logos. So the second half of the business, again, isn't banking on a lot of end market recovery, but we should start to see the full benefit of those new business wins with new and existing customers.

Becky, reliability?

On the reliability side, I'll walk you through the three pieces of the business, industrial, auto and health. And I'll start with Industrial. So renewables in some pieces of our core business, I think you know, are soft. We do see weakness in those areas, and that's predominantly driven by interest rates. But we are still ramping production in renewables in the U.S. to take advantage of the tax benefits. And remember that we also work in EV chargers, smart metering and grid connect. So renewables, energy efficiency, grid transformation, all in our wheelhouse, and we will continue to see this as a growth market. The second point that I want to make on Industrial, remember that the embedded power and critical power solutions, Michael discussed earlier, those actually sit in Industrial. And we're seeing very strong demand for power driven by AI, and we're seeing it from the board level to the data center power level. We are very differentiated in our power technology. Michael spoke a lot about that earlier today, plus having the ability to provide solutions from the device all the way to the data center power really differentiates us, and that's why we're going to continue to win in the industrial space. I'll pivot to Automotive. And first, I'll start with we will see growth in FY2025. We've built a really strong pipeline in Automotive. We're coming into FY2025 with a couple of strong years in bookings. And so we're going to see those programs ramp through FY2025 plus additional content gains. And I just reminded you, the vast majority of our auto portfolio is agnostic to the powertrain. So regardless of how that plays out in the market, we're going to continue to grow there. The last point that I'll make in Automotive is…

Paul, what would you say?

Well, I think you covered the end markets well, and I'll sort of jokingly say, I'm confident because Becky and Michael are confident. I think they have well under control. I'll also say, look, the comps get quite a bit easier as we move into the back half. Nothing like Michael said a couple of minutes ago. Nothing has materially changed from what we talked about back in October when we saw a little bit of pressure. But that pressure we saw was specifically in Q3 and Q4 of last year. And so comps definitely get easier. Mark, your question was more about demand, but I'd be remiss to not just talk about the rest of the P&L, really quickly here since we're talking about 2025. We have a really strong track record of productivity improvements. And I would say at this juncture, we have pretty good line of sight to our margin targets, certainly for 2025, but also beyond. And so I'm comfortable with where we are there. And then I'll also just say purely from a capital allocation standpoint, we will have continued share count tailwind as we move through 2025. And so overall, I feel pretty good about our guide.

Yes. So maybe I'll just wrap it up, Mark, with your question and then wrapping up the entire session today is, let me kind of talk about FY2025 a little bit and then overall. First is on FY2025, I think you heard a very clear answer from Michael and Becky in terms of how we're thinking about end markets. We spend a lot of time in terms of predicting our customers' forecast, looking at exactly what happens in the channel and all the way through the value chain. So I feel fairly good in terms of how we're thinking about the year. And in general, we tend to be somewhat thoughtful and prudent in terms of our guide. So we definitely have all that baked in. We feel very good about kind of margin and EPS targets, guidance that we're giving you. I feel like we're very confident with what we are driving in overall efficiency and mix change that we really will get to that. So I feel really good about our FY2025 overall guide, even in the midst of kind of some conversation about our end markets and how our customers are doing and all of that. So I feel really good about FY2025. But let's step back and talk about kind of the three-year outlook, the five-year conversation we just put in front of you. What we're talking about is that Flex stands in this unique position of being differentiated as a very good, strong global EMS company. And at the same time, being in the middle of technology trends that are happening, particularly around power and compute in amazing verticals like data center and Automotive, right? So we're in this unique position of being an EMS company in certain areas and a product differentiated company in certain areas, particularly around power. And the secular trends are in our favor in those end markets. We talked about 40% of our revenue in five years coming from these two critical areas, with amazing differentiation also in the ramp of the value-added services, which is everything from fulfillment to aftermarket care that we are providing. So I would walk away from kind of this three-year conversation that we're having, thinking that Flex is making this unique transition of being the world's best EMS company, but at the same time, bringing critical important technology trends that puts us in a differentiated position with certain product companies. And we feel really good about the implications of that to our long-term guide, which is, we've talked about 6-plus percent margin, which we should get to, I would say. And definitely, the low EPS CAGR – double-digit EPS CAGR, that we talked about. So feel really good about kind of the three-year guide. Most importantly, we feel very good about our team and what we have delivered so far. So thank you for your time and look forward to our conversation.

Yes. So a replay of today's webcast and presentation materials will be available on our Investor Relations website shortly. Thank you all for joining us to learn more about Flex and the opportunities ahead. We look forward to seeing you over the next few months at upcoming conferences, including JPMorgan and BofA, and we will also be at Barclays in London. Thank you all so much, and this concludes our event.