10-May-2017 Flex Ltd. · 10-May-2017 1-877-FACTSET www ... we've done in the past and like I'm sure...

Corrected Transcript

1-877-FACTSET www.callstreet.com

Total Pages: 52 Copyright © 2001-2017 FactSet CallStreet, LLC

10-May-2017

Flex Ltd. (FLEX)

Investor & Analyst Day

Flex Ltd. (FLEX) Investor & Analyst Day

Corrected Transcript 10-May-2017


2 Copyright © 2001-2017 FactSet CallStreet, LLC

CORPORATE PARTICIPANTS

Kevin Kessel Vice President-Investor Relations, Flex Ltd.

Michael M. McNamara Chief Executive Officer & Director, Flex Ltd.

Jeannine Perchard Sargent President-Innovations & New Ventures, Flex Ltd.

Thomas K. Linton Chief Procurement & Supply Chain Officer, Flex Ltd.

Mike Dennison President-Consumer Technologies Group, Flex Ltd.

Paul J. Humphries President-High Reliability Solutions, Flex Ltd.

Douglas Britt President-Industrial & Emerging Industries, Flex Ltd.

Caroline Dowling President-Communications & Enterprise Compute, Flex Ltd.

Christopher E. Collier Chief Financial Officer, Flex Ltd.

................................................................................................................................................................................................................................

OTHER PARTICIPANTS

Steven Milunovich Analyst, UBS Securities LLC

Amit Daryanani Analyst, RBC Capital Markets LLC

Steven Fox Analyst, Cross Research LLC

Mark Delaney Analyst, Goldman Sachs & Co.

Sherri A. Scribner Analyst, Deutsche Bank Securities, Inc.





MANAGEMENT DISCUSSION SECTION


Good afternoon and welcome to the 2017 Flex Investor and Analyst Day. We're so excited to be able to host you

this year in our New York City Innovation Hub. We didn't want to host Investor Day in New York in a hotel like

we've done in the past and like I'm sure you've all been to more than enough Investor Days in different hotels and

ballrooms. We wanted to be able to host within an intimate environment, an environment that would be immersive

where we could really bring some of these slides that you're going to see later on in today's presentations to life.

I've personally been with Flex and I've had the privilege to run and lead the IR program for the last eight years

and I've been around this industry for almost 20, and I've never been more excited about our strategy or our

position than I am right now. And I speak to many of you in the room and I get the same sense. In fact, you may

have noticed, it's a pretty full house. This is the first time we've ever, in my history with Flex, had to have a wait list

to get into Investor Day. So, it tells me that interest in Flex is on the rise.

We're really excited to also talk to you about a lot of the trends that we see that are defining the industry.

Specifically, I think that we're all collectively getting the sense that there's a new revolution in front of us and that's

the revolution where we're seeing all products across different industries becoming digitized, becoming smart and

connected, and you're going to see plenty of that throughout the day.

Speaking of the demos, behind me, let this be a quick guide to the layout and the topology of the room. You will

see those demos on both the right and left side, as well as behind me. And in fact, when we think about New York

at Flex, we think specifically about it being the center of our connected living strategy. Behind me, we have a

connected living demo that I encourage all of you to check out during the breaks and we will have guided tours at

the end as well, that is one of the best you will ever see.

Also in the back of the room, many of you already noticed, and I could see by the flock of people back there, our

fashion and apparel demo. We're going to have Mike Dennison obviously on stage later today talking about Nike.

But he'll also be back there. And what New York does for Flex in terms of having actual presence here is it puts

us much closer to that industry, the fashion and apparel industry, and it allows us to have better access to it.

Couple of quick housekeeping notes. You'll notice there's color sticker on your badge. That will coincide with the

group that you're with later today at 4:30 when we break. It's very important when we end at 4:30 that everybody

collectively go in the directions of where the groups are and you take your belongings with you. And the reason I

say that is we're going to be breaking down the entire middle of this room. And it will happen in about 15, 10 or 15

minutes. But we're going to need everybody to help us in that endeavor and transform the middle of the room into

a more comfortable area where we can bring out the cocktails as well.

At the same time, you'll notice iPads scattered throughout the building. And I know what you're thinking, 2017, it

was a really good year, record adjusted EPS. And you're thinking Flex is going over the top and they're giving out

iPads. Bubble time, right? No. No. These iPads will be collected at the end of the day, all right? But what they will

help you with is in the event that you have an obstructed view, you'll be able to see everything on those iPads.

You can also, by the way, use your own device to follow along.





And now, my favorite slide. This is the one that when we say – tell my general counsel, I spend the most time

practicing. This meeting and these presentations contain forward-looking statements, which are based on current

expectations and assumptions that are subject to risks and uncertainties, and actual results could materially differ.

Such information is subject to change and we undertake no obligation to update these forward-looking

statements. For a discussion of the risks and uncertainties, see our most recent filings with the SEC, including our

current annual and quarterly reports.

If this presentation references non-GAAP financial measures, these measures are located on the Investor

Relations section of our website along with the required reconciliations.

Briefly before I get into the agenda, I just wanted to state that we are reaffirming our Q1 guidance. What you see

up on the screen is the same guidance that we presented you with two weeks ago.

And now on to the main event. We've broken the day into three sessions. The first will be – and all three sessions

by the way are all revolving around this theme of igniting. The first session is called Igniting Intelligence, and in

this session, what you will see is how we are using our platform to access new industries and unlock new TAM.

And at the same time, we're improving our engagement model with both our customers and our suppliers to be

much more strategic and less transactional.

We'll then rotate into the middle of the day where you'll hear from all four of our business presidents. They'll take

you behind the scenes to let you know what growth vectors specifically they're most excited about. And as you

can imagine, it will tie to the demos that you see all around you.

And we'll end the day with a session on Igniting Earnings Power, where we'll take you back to the long-term

model that we laid out for you a year ago. We'll explain to you the progress that we're making and how we – and

what the different levers are that should enable us to earn that long-term earnings growth that we've spoken about

in the past. We then obviously conclude with the demos and the cocktails.

So, with that, let the revolution begin.

[Video Presentation] (06:04-08:14) ................................................................................................................................................................................................................................


So, good afternoon, and [indiscernible] (08:18) that was a good afternoon. I've got to admit I'm just [indiscernible]

(08:20) – I guess you guys are just here to take notes. So, listen, we're thrilled to have you here, as Kevin

mentioned. This is the first time we've actually been sold out. We got a little standing room only going on, mostly

our people I can see. But we're really happy to have you here.

We feel – I've been here for 25 years and I've been in this industry for 25 years and I've never been more excited

about the opportunities that are in front of us and the positioning that we've been able to build over the last few

years. Because really what we really describe here is like, as the video described, is we're moving into the age of

intelligence. And it's an area where products are just different. They're smart. They're connected. They can

capture and analyze data. They can move to be more into predictive systems. We can move more into artificial

intelligence and be cognitive.

All these things are coming at us. And as a result of that, we've never had so many different opportunities and so

many different ways to really add value in the world today and really dominate and lead in the world today in our





industry. So, we're really, really excited about the opportunities. We believe we're extremely well -prepared and

we're happy you've been able to spend the time with us today and we're looking forward to having a good

conversation.

And over the last five years, we've more than doubled our stock. We're pretty thrilled about that.

And as we look forward over the next five years, we will definitely expect to more than double our stock again. So,

and what we're going to do today is show you our strategies and how we're going to be able to accomplish them.

So, let's talk about – to take it up a level. We're actually moving into a new era. We're actually not even moving

into a new era. We're actually in a new era. And what's happened if you think about the development of the world,

it used to be land was really important. People wanted freedom. They wanted religious freedom. They wanted

safety. They wanted security. It was available and unclaimed and people had – there was a rush to go acquire

this land.

Then, we went to another area around really developing the resources and the land was an enabler to get to more

and more resources. It actually created an opportunity for more economic development and it created an

opportunity for more people to take advantage of what society had to offer as the world began to develop and

people used the land to go create oil and iron ore and gold and silver and harvest the land in a way that it actually

benefited society and this lasted for many, many years.

Think about what Henry Ford did at the beginning of 1900s. It moved to more about controlling production. And

what he did is he took a lot of different disparate systems and organized the resources of production, the

resources and the materials associated with production to produce a more efficient system. And we built

management system and management process about how operations happen. And if you remember, his

objectives was to actually create an opportunity for everybody to buy that car.

So, what he did is applied some of the new technologies of his time to reinvent how production occurred, and

once again for the benefit of society. And this occurred for many, many years all the way through the decade or

through the millennium of the 1900s.

We are in a structurally different era today. It's not about the land or the resources or the controlling of the

production. It's really built around applying intelligence. Our world has moved into a place where data, the

analysis of data, the intelligence that we can get off data, the harvesting of these data to be able to actually help

manage our lives and create economic benefit has now changed. This is the world we're in. This is the age of

intelligence.

In 2006, Motorola had the fastest-selling phone called the Razr, and if you may remember it, the reason it was the

best-selling phone is because it was the coolest phone, but for a lot of other reasons, I'm sure nobody remembers

the software. It was simply the coolest phone.

So, what happened in 2007 is Steve Jobs came along and he re-imagined the experience of what could happen

with a different kind of device. So, he didn't build a cell phone. He built a phone, an Internet connection device, an

iPod player, it connected into your computer as it integrated across your iTunes library, maybe even more

importantly included an ongoing relationship with the customer, which never happened before.

In that ongoing relationship, you continue to go into it. You end up [ph] buy (13:33) iTunes, to buy more apps.

Each fundamentally changed how a person experiences life by re-imagining what that product looked like. And we





simply went from a product to a system. And I think this is actually driving a lot or most of the produc t

development in the world today. If you are not competing with the system, it becomes very, very difficult, [ph] but

what (13:57) Steve Jobs has reinvented how we think about how we add value to the consumers.

Additionally, another good example is the car. In a world with the car for many, many, many years, we have one

right here, goes a little bit faster, is a little bit better fuel efficiency. You don't have to tune it up for 25,000 miles;

you have to tune it up at 50,000 miles. We just worked to build a little bit better product every year. But if you can

think about what the car is today, it's different, it's about being connected, it's about entertaining, it's about

transporting. When you go provide a car you want to know how it is that your device is going to integrate into that

car.

You want to know how many autonomous features it has, it's completely changed and maybe we even redefine

the problem we're trying to solve. Maybe the problem we're trying to solve is really mobility, and not just building a

better car. Tesla calls itself a technology company. Ford now calls itself a mobility company. Products have

moved to systems, and in moving the systems they've been able to and on the back of technology been able to

describe and talk about how do we create solutions to help people live.

So the world has fundamentally changed. We have a tremendous visibility into the world. We have all these

different industries where we have over $1 billion of revenue. We have an extraordinary diversification and we

could see this diversification across industries and across geographies, and it provides us a tremendous view and

a tremendous opportunity for our customers. As you go around some of these booths today, you'll see consumer

products that we've applied into automotive and medical products that we've supplied into consumer. And now,

we've been able to take automotive solutions and move them into industrial products.

All these things have gains and it creates a huge opportunity to have this amount of diversific ation as visibility.

And one of the nice examples I'd give you is one of the car companies, major car company's asked us to do a key

fob so that if you walk up to the car, it automatically opens. We literally took all the technologies out of our

consumer products division and we actually produced products in two weeks.

I mean, imagine being the CEO of the car company and trying to figure out how am I going to do all this

interconnected technology and be able to do that starting from scratch. What's more interesting is the amount of

diversification and the visibility that we see from a customer standpoint. What's interesting about a customer's

standpoint is we can now triangulate within industries. We see product technologies and evolutions within the

industries that also give us visibility. But as we think about this system, where we can triangulate across

geographies, across industries and within industries across customers, we get a tremendous visibility of the

future. And this is the basis for how we think about investing, where we think about putting our resources, where

we think about putting our capital into play. We have the visibility to move forward.

And what we built is what we call the platform. This is our system at Flex, for all the tools, the c apabilities, the

resources, the investment priorities that we have to build our systems to compete into the future. Our visibility in

order to decide on what to invest in is actually pretty extraordinary. We rolled this out to you guys in 2013 at the

Analyst Day. And when we rolled it out, we said we were going to continue to build this system and this was the

system that we were going to use to build going forward. This is the cornerstone of our investments that we've

made in order to compete into the new world. And we're really excited about what we've been able to produce.

It's a very, very broad-based platform. When we innovate across three different levels, the most important level is

at a management system level. Our objective is to stay relevant and agile in a very disruptive world. Our objective

is to drive all of our systems and processes to digitize them, to drive them into being mobile solutions to have





collaborative systems around them. To be able to analyze the data that comes off them, to actually drive to real

insights. It's not about data, it's about the insights that data gives you. And we distributed down to our

management team through mobility. Our objective is to have real-time information across all of our systems. This

is what we've developed and this is the picture that you see on the wall. For those of you who went up to San

Jose last year, you would have seen this in action. Much different now, much more robust. I talked about the age

of intelligence; this is the age of intelligence in action. We already have the age of intelligence in terms of how we

run our system.

We have a second layer of how we innovate across the platform. And our objective is to drive faster cycles and be

able to enable our customers to achieve faster and faster cycle times when they develop their products. So, we

innovate at the product and process level. We have processes that actually source and cultivated fine innovation.

So, we know what the new innovations are. We build building blocks that actually have cross-industry

functionality. And we have systems in our company where we find ways to distribute that information across

industries, that we can add a tremendous amount of value. And then we commercialize it the same as we've

always done.

And the third innovation layer is really at the operations level. And what do we do at the operation level? We have

200,000 people around the world. We operate in 30 countries. We will use Industry 4.0 technologies to be able to

drive and be sure our industries, our operations are the most efficient and effective operations we can have.

What's also interesting and pretty cool about this is many of these technologies; we're actually innovating on the

product level before it's even in the marketplace. So, like the robotics, the 3D printers, AR/VR. I mean all these

things are actually in our labs that we're working with customers out on a product [ph] basis (20:56). And a lot of

times that we just kind of like are early adopters and we know what's coming and then we can use it in our

operations. It's actually a really cool spot to think about how we devise developer operations. But this system is

exceptionally well built for the future.

For the last five years, we've been building it. We've been investing it. We've been tweaking it. We've been honing

it. We've been operationalizing it. And it's really good, it's really developed, it's really mature. And this is the core

of what we built with the visibility that we have. And it's comprehensive. It goes all the way from how do we

sustain an agile company all the way through to how we run operations.

So, our industry has changed. We are actually in the third evolution of our industry. I mentioned at the very early

stage that I've been in this industry for 25 years, and I think I've seen just about everything over that 25-year

period. The one thing I'd tell you is each time there's a recession, there's almost a redefinition of what is

happening in our industry because it fundamentally changes how the economy is structured and how it works and

who the winners and losers are.

And what we've done is we've gone from a period, where I think about the first evolution being contract

manufacturing to electronic manufacturing services, but most importantly, the evolution we're in now is Sket ch-to-

Scale. And in Sketch-to-Scale, the skills, the capabilities, the investment profile of what we need to create a

competitive advantage is simply different.

Back in contract manufacturing, it was actually quite simple. It's like, if you can do this for a lower cost, I'll give you

the work. And if I'll close down my factory, if you can actually build it for 10% less than what I can build it for. The

conversations we were having was very different and we existed, our role in the marketplace was just lower cost.

So, you can imagine about trying to run a high-margin business that has continually higher margins where every

conversation with the customers is about how do you get lower cost.





Then we moved into electronic manufacturing services after the 2001 recession. And it was a little bit different.

We became much more worldwide. This is when China really took off.

So, the operations became more sophisticated. We had a more sophisticated ERP system, more sophisticated

quality system. We were able to do simultaneous product launches into different regions at the same time, and we

added more services. We did more and more design services. We did more and more logistics service and

distribution services. And we kind of renamed ourselves – when we renamed ourselves electronic manufacturing

services instead of contract manufacturers.

But the conversation was still very much a cost-based conversation. Let me use the PC marketplace as a real

good example about how this evolved. So, you guys can build this cheaper than I can because you have low-cost

labor, great, you build it.

But you also have some capability to build up design, why don't you go and do some design for manufacturability.

That was pretty good. You did good on that. Why don't you do a whole design of a whole PC? That worked out

well. A lot of labor arbitrage, more and more competence developed. Why don't you do the services for me? Why

don't you do the repair, why don't you do the logistics? But every single conversation was based on you can do

my design services, but only if it's lower cost than what I can do with my design services for.

As we move and discuss the scale, it's structurally different. In the intelligence age, companies move from

products to systems and products to solutions. The conversation is different. We're actually a solution to the co-

innovation partner in a Sketch-to-Scale environment.

Companies need to compete with systems. And when they think about launching their products, they don't think

about launching that Razr which was just a product. They think about how do I compete in a new and disruptive

world? How do I compete on data? How do I compete on the intelligence that that data delivers? How do I use

that intelligence to solve the customer's problem in a different way? Because if I don't do that, someone else will.

So, the system now requires hardware and software and data and information and analytics and artificial

intelligence and move to be predictive and cognitive. And very often our customer is spending more of his effort

and money around where that disruption and where that value creation is occurring and how to apply that

intelligence and very often we spend more time working with the customer on the hardware because very often

the hardware is the vehicle to get to where their business model has now evolve too which is in the information,

which is in the intelligence.

So, we have a different role in this new world. So, our conversation with our customer really changes? I've spent a

lot of years in this industry never talking to the CEO. So, in contract manufacturing, even in electronic

manufacturing services where you just have more things that you can be more cost competitive on, it was a

conversation about how you drive the cost down. I would look across the direc tor of operations, I'd know his

bonus was completely based on what cost downs he was going to get.

This is not an easy industry to work in but it was very difficult to have competitive advantage but this was the role

that we played, this was the industry we're in. These were the conversations that we had back then and the

conversations where I spend my time following on these companies.

As we move forward in the Sketch-to-Scale world, the conversation moves to difference. They have to compete in

the age of intelligence; they have to create a system. They have to work towards a solution. They have to make





sure they are not disrupted. The marketplace runs faster. So, we're more of a partner. We actually engaged

earlier with those customers than we've ever had in the past. We have more conversations with these customers

about how do you drive revenue and how do you drive margin expansion for them. We [ph] had (27:53) more

conversations there in Sketch-to-Scale than the conversation of how do you just save me $0.25 on this product?

Our conversations have structurally moved. One of the things we talked about last time where many of you were

in San Jose, we have 4,000 to 5,000 people coming through our design centers, our center in San Jose, every

single year. And the amount of conversations and people are looking to understand how do they compete in this

new world, how do they pick partners in a world that moves much faster and is much more disruptive.

I've had more conversations and many different conversations over the last year where I've had entire executive

management teams including the CEO of Fortune, even 100 companies and board of direc tors that have come to

learn about how we think about the future in the age of intelligence in the system. And I've had more of those

conversations in the last year than I've had in the previous 24 years combined. It is structurally different.

And we're excited about it because that as it moves the conversation, moves from the director of operations

where his bonus is based on cost downs, to the conversations with the CEO and the CTO, and the product

executive, where the conversation is how do I drive revenue and margin expansion of my business in this new,

more complex world. This change in the conversation is creating a huge opportunity for us because this group of

people, this group of executive is willing to pay for value. And it creates an exciting time for us to contribute in a

different way.

Our role has changed. If you look at the results of our movement towards Sketch-to-Scale, it's built around – we

had roughly 7% in 2013. We moved it up to 23% this last year that we just finished. The line of sight for the

projects that we actually see in front of us is 40%. And if you look across the chart, this is every segment.

It's in every product. This is not just a single segment or a single product opportunity, this is across the board.

This is the age of intelligence. This is how companies need to act and operate in today's world. And we're seeing

a tremendous opportunity.

And as we continue to grow at this business, it creates a huge amount of confidence coming into the Flex system.

This is enabling us to compete in a fundamentally and structurally different way and we're [ph] continuing to be

(30:53) excited about it.

So let me switch a little bit and talk about what are the benefits? When we think about investing in the platform,

we think about all the technologies we've been honing over the last years. And we think about the movement into

Sketch-to-Scale where we actually can enable our customers for more revenue and more operating profit in their

business models as a part of being a solutions and co-innovation partner.

Let me give you a couple examples. The first one I want to talk about is the shoe industry. There's a lot of

conversation about the idea of reinventing the shoe industry. What's interesting about this is it's a whole new set

of TAM that we will not have happen – have had before.

So what's interesting about the conversation, the conversation is not about how do we get $0.50 out of the cost of

the shoe because we're going to do automation. The conversation is, one, how do I get an 18-month product

lifecycle from design to store shelf down to 9 months? And in order to get the conversation from 18 months down

to 9 months, you have to have regional manufacturing. You need a big system.





In order to get from regional manufacturing cost effectively, you have to have automation. And if you're going to

have automation cost effectively, you have to have design for automation because to automate processes that

were developed for labor makes no sense.

So, as a result, we work with our customer now all the way into the design labs and we have to work 18 to 24

months earlier in the cycle in order to be able to really create value. And the value creation we're looking is if you

can go from 18 months to 9 months, you're going to have more revenue, less scrap, less waste, less price

discounting, less inventory write-downs. You can actually have real value in terms of how the business actually

runs. This is a very different conversation than how do you get $0.50 out of the cost of a shoe.

And what's really interesting for us is we're using the technologies and the capabilities that we've built in the Flex

system and it's going to create massive amounts of new TAM as it's measured in billions of dollars that will be

available to us that we've never seen before. And as we create real value, we would expect our margins to

double.

Let me give you another example, construction industry. The construction industry we talked about announcing a

new JV called YTWO Formative. This is 13% of the GDP and there's almost no productivity growth in this industry

relative to other industries.

The idea of taking it from Sketch-to-Scale to actually take – integrating all the way from the design through supply

chain execution to product completion process is a huge opportunity . The ability for us – our objective is to digitize

this entire system. This would take all the modern tools that we built for all the other industries for all these other

years, take the best of all those and be able to apply them. And by doing so, we would expect a massive amount

of TAM to unfold to us measured again in the billions of dollars.

What's most interesting about these two examples, as diverse as they are in places that we've never invested in

before, these tools that we use [indiscernible] (34:45) be commonly applied. The ability to have sophisticated

systems that manage your materials to have worldwide operation systems, to be able to use automation, to create

and invent new solutions that people didn't think about before, these are all solutions where we're able to bring.

And what's interesting is it's not just the shoe industry, it's not just the construction industry; this is a repeatable

process across many different industries.

And our objective is to continuously identifying new industries where we can reinvent and digitize and modernize

the supply chain to create uncommon value within those industries and be the beneficiary of billions of dollars of

revenue where we expect to make twice the margin.

So, remember, I showed this slide earlier. I just left the data points off. We operate at scale in all these different

areas. This is the foundation that enables us to continue to move into these new possibilities.

Our foundation is incredibly strong. In fact, out of these 12 different industries, 9 of them we believe we're the

revenue leader in our industry. So, 9 out of 12. It's an incredible position to come by.

But these industries themselves are going to have limited growth. And where it really matters is the future

industries. It's about smart cities and autonomous cars and connected living and digital health.

These are all the new industries that actually really matter. And as we think about how do we penetrate these

industries, it's across industry. You a need a cross-industry set of technologies in order to be able to develop both.





I talked a little bit about the key fob before, about taking the consumer products and applying them across into

automotive, into a solution that we're able to get there quicker to give you a more detai led conversation. You know

what I mean? A simple conversation would be, oh, there's a wireless module and you'll see there's espresso

machine back here and a washing machine, and all these have wireless modules and everything's going to

connect and be smart.

Well, let's take a more complicated example. Let's take an autonomous vehicle. What does the autonomous

vehicle need in the future? It need servers, storage, optical system, it has complex mechanical technologies, it

has to interface into the telecom system and you have to build it all using flawless launches and automotive-

grade manufacturing operations. We have every one of those technologies at scale.

So, when it comes to creating a solution and integrating those, we are unbelievably well positioned and invested

due to the diversification of our platform and the investments that we've made over the years. And our vision to

recognize where the new industry – the future industries are going to lie so that we can move to a better growth

rates.

There is unquestionably a tremendous opportunity in this. And if you remember what we have talked about over

the last five years, I want to bring you back a few years. What we said is we're going to have continuous portfolio

shift so that we can build a better portfolio that has more predictability, more longer product lifecycles and higher

margins. And we've done that.

We have over 50% of our business now in the target areas that were unbalanced, which is what we call IEI and

HRS. We're going to talk more about those today. And as we shift to that, we've just come off 14 straight quarters

of operating margin expansion. This has worked well.

We've never much talked in this meeting about driving revenue because we didn't want revenue yet. We actually

wanted to have a balanced portfolio that can deliver our investors very predictable earnings. So, this isn't going to

change going forward.

I want to show you some charts in terms of our commitment to continue to drive the portfolio and the investments

and the bookings that we have to continue to do that, but we've now built the foundation. We've also built the

foundation of the technologies in the platform.

Now, it is our objective to move more towards a revenue expansion model. And the way we're going to do that is

in the back of these new industries that we're heavily focused at in investing to be able to have this – take

advantage of the very significant growth rates that are occurring in every one of these different industries. And we

expect to be a market leader, not 12, but maybe 7 out of 10 as we go and move forward.

This is the objective we're trying to do. And if we can take this growth opportunity and lay it alongside the

opportunity to continuously develop new industries by using the same technologies that we have throughout the

Flex system, we believe we can continue to drive the massive expansion. So, we are shifting our model – now

that we've built the layer of stability that we need in our system, we are now shifting to be able to take advantage

of the growth rates that are going to be available to us, because years ago, we built the right system.

Ten years ago, what Apple did is that they reimagined how the customer would use a phone. They were ahead of

their time. They were five years ahead of their time, maybe more. Tesla did the same thing years ago and they

turned it from a hardware solution in mobility to a software solution. Once again, way ahead of its time. Amazon's

done the same thing with AWS. The ability to provide that service to companies where they can actually take out





huge [ph] swats (41:10) of their capital investment and their engineers was extraordinary. It was a back -up

offering services that no one else had.

All these companies visualized the future. They all anticipated what needed to happen. What we've done is we've

built this platform and as we move into the Age of Intelligence and we've thought about what are the technologies

we need, we are now in an unbelievable position to be able to leverage those technologies, to be able to leverage

those investments, our scale, all of the opportunities that we have in hand. We're able to take those things and it

positions us to be a pivotal point of the future economy. And a pivotal point, as the world moves into the Age of

Intelligence and as everything becomes smart and connected, we're in a position where we now are the right

solution.

And we believe that we've actually moved – as how we think about what requirements are for going forward,

we've actually moved ourselves into a marketplace of one. And I in my 25 years have never seen a position

where we've had pure competitive advantage as we move into the next generation of opportunity. Needless to

say, we're super excited about it.

And hopefully you will be too because five years ago, over the last five years, we've been able to more than

double the stock and it is our objective as we think about executing on the strategies and the systems that we

built, and customers look for a platform partner, that we'll be able to more than double the stock again for the next

five years. And we're going to show you that the rest of the day.

So with that, once again, I want to thank everybody for being here. We appreciate everybody's time and attention

and I would like to now welcome Jeannine Sargent, who's President of Innovation and New Ventures. Thank you. ................................................................................................................................................................................................................................

Jeannine Perchard Sargent President-Innovations & New Ventures, Flex Ltd.

Good afternoon. Starting the conversation today, I'd like to share with you our approach to collaboration and co-

innovation at Flex. Let's take a look.

[Video Presentation] (43:31-45:09)

I stepped on the stage a few years ago when we started the conservation about build-to-print to Sketch-to-Scale.

And as Mike described, there's been a lot going on at Flex over the last few years, and in particular, the launching

of Sketch-to-Scale which allows us to change the relationship and the conversation, but also the value that we

create for customers and the value in terms of their abilities to provide unique and differentiated s olutions to these

marketplaces in ways that they hadn't done before.

So, we've been focused on this and what it results in is a richer engagement with the customers and a richer

revenue stream for us to think about. Mike mentioned the layer of innovation and technology that we have

developed to be able to support Sketch-to-Scale, and I'd like to remind you of the system that we've developed,

we call the innovation system.

We spoke a lot last year about the fact that we're cultivating and sourcing technology from universities and

consortia and other types, from start-ups to large corporations, as we think about the capabilities that are

necessary in order to be able to address these new markets. We continue to develop these programs. Our Lab IX

portfolio is over 25 companies strong. A number of them have grown and matured and graduated into greater

businesses that are supporting our customers. These are investments now that are pivoting into those new

markets and industries that Mike mentioned like smart city or a smart home or autonomous driving.





So, these are areas where we look for underlying technologies, and we help these companies and we augment

the internal development work that we have going on in our centers of excellence. So, layers in the connectivity

from sensors and actuators to human machine interface, to the ability to have the kind of connectivity and the

support that's necessary to address these new markets is – requires a new type of technology, and to be able to

develop that and then commercialize that at scale is what we've innovated and been able to do.

A big part of the development in our system this past year has been focused on the Sketch aspect; the ability for

us to expand the full product development capabilities and to do it again in new market scenarios where we hadn't

done before. The new intersections of these markets such as digital health, connected car, connected home,

these are all things that you'll have an opportunity to see an example of where we are providing unique and

differentiated building blocks in technology that has now been commercialized and brought to scale with a number

of our customers to help them achieve their end goals.

And these all links together with the ability for us to leverage our manufacturing systems and our global footprint

to be able to ensure that you could have the products that you need wherever you need them at the quality and

the price performance points. So, together, this makes up our innovation system.

In order to address the needs and address these markets, we continue to make investments and our footprint is

growing. Since the last time we spoke, we'd grown the team of design engineers from over 2,500 to over 3,000.

These teams are located in innovation centers and product introduction centers and design locations throughout

the world co-located now, not only where we have manufacturing scale but as importantly, where the product in

business technologies are being developed for our customers. So, we are adjusting the footprint in order to be

able to meet the needs of where our customers need us today.

We've moved from the build-to-print to Sketch-to-Scale and we've augmented the capabilities, and you can see

now moving from design services through joint development, we are now more often than not co-innovating and

collaborating with our customers in doing full system and product development and addressing particularly

markets which we've not done before. So, what's unique and different now is we are now doing full product

development in each of these markets, in each of the four business segments that you'll hear about later today.

So, it's a comprehensive and broad set of capabilities that, again, is leading up to a tighter and richer engagement

with our customers, longer cycle times, where was the customer a year or two before they've decided to go into

that business [indiscernible] (49:34) at a point at which the industry is launching at inflection points, and we take

them all the way through manufacturing scale. We are also work ing to provide unique capabilities and

technologies that are needed by them in ways that they not have been able to do in the past.

So, together, this co-innovation and collaboration allows us to create also a richer revenue stream in terms of

margin opportunity. The focus and the requirements for us to be at the forefront of what is next happening in the

inflection point is important. And as we move across the smart and connected aspects and the solution platforms

that Mike was mentioning, we see – as we've seen in the past that there are many inflection points in terms of

market and technologies.

As we look at what happened for example in the 1990s in terms of the smarter artificial intelligence, we've moved

from expert system in neural network to recommendation technology such that you're used to dealing with on

Amazon or a Google search engine, or natural language processing so that when you're calling your cable or

phone company or you're on an airline reservation system.





So, we're yet again at another inflection point for technology, and voice interaction and machine learning and an

artificial intelligent environment are going to change the way we engage. So, Amazon Echo is changing our

engagement structure and creating an entirely newly new ecosystem from consumer to automotive. Machine

learning is going to surpass human capabilities which is going to be necessary for us to be able to execute

autonomous vehicles or even augment human capabilities in terms of a factory floor print and what we're doing in

manufacturing, and I'll share an example with you.

When we look at the connected space, we've moved from what was cable broadband or dial -up capabilities

through high-speed Internet. And now, we're on the verge of 4.5G and 5G. The importance of us to be able to

have a platform and a highway system to communicate that can handle the explosion of data that's necessary for

on-demand video or real-time data analytics is what is driving us to 5G.

We're also in a world of over 50 billion IoT devices are going at some point be connect in the near future. Many of

those are low-cost and will have limited access to power. So, technologies in terms of low-power wide area

network are essential across all of these applications. Mike mentioned the solutions in the platform. So, we're

moving now from a smartphone with apps that essentially displaced our laptops and desktops to a world of

augmented and virtual reality platforms with smart end points.

So, the inflection points that we have in front of us for the Age of Intelligence in the next chapter that we'll go

through requires significant investment and technology capabilities in each of these areas of smart and connected

and be able to deliver that in terms of a solution platform.

I'd like to share with you a couple specific examples that highlights the work that Flex is doing that you will now

see in a number of the demonstrations that you'll see later today. In artificial intelligence, this machine learning

and voice interaction will allow us to have significant performance but also cost savings across the network.

As we look at low-cost cellular, as 5G approaches, as we've discussed, it's essential for on-demand video, for

cloud applications, for autonomous driving. We need the capacity that we're going to get with 4.5G and 5G to be

able to do that and we're focused on those core technologies and the new platform.

When we all transform and we're no longer carrying the smartphones to be the central device and we're utilizing

these new platforms, not only for consumer but one of the observations we see is that in the next few years, over

65% of enterprises will have used some form of augmented reality in their operations. This is going to create over

$3 trillion of economic value just in an IoT factory environment, and these are the core technology inflection points

that we're focused on.

And I'd like to share a few examples with you of how Flex is actually utilizing these innovations in our own work.

One of the first examples is in AR/VR manufacturing, and particularly with virtual reality. So, when you're looking

at a third party manufactured product, most of them are configured to order or built to order. So, that means that

there's variations in feature functionality, there's a complex mix of things that you need to actually configure in

order to be able to deliver the product.

At Flex alone, we have over 250,000 different product SKUs that can be configured to order. So, the process is

simply quoting these projects in terms of accuracy and timeliness is a challenge. So, we've developed and are

implementing a virtual reality platform that allows us to virtually build these complex configurations and you'll see

an example with the data center rack. And this allows us to be able to more accurately and more quickly confirm

the actual capabilities that are needed to build the product, to quote the product more accurately, which is more

responsive to our customer and more likely to have a better accuracy relative to cost.





In utilizing this process and moving from a manual mode of trial and error to an automated virtual mode, we've

been able to reduce the time to quote and improve the accuracy and go from five weeks to under five days. We're

also able to adjust and have changes on the fly that we can virtually confirm for the customer. We are changing

the way that we're engaging, and there's a direct applicability to this, to not only the data center configuration but

also in a number of our other businesses.

Second example is in artificial intelligence and particularly around manufacturing. So, one of the efforts that we

have in terms of product assembly is we're going to continue to see a significant amount of human involvement in

human operation. And the challenges around quality and productivity and also some of the ergonomic

considerations are significant when we start to think about scaling up and continuing to have more complex

projects.

So, we actually are implementing an in-trial process in Silicon Valley a type of artificial intelligence around

machine learning that is using, for the first time in the market, digital video analytics to actually video what is

happening in terms of an assembler in a product assembly situation. And being able to do that over several

operators, we then have algorithms that are able to take that in and learn the process and make

recommendations and improvements in terms of productivity, quality and, as importantly, ergonomics for the

human operator.

So this is us being able to actually take advantage of some these inflection points in the new technology and

improve upon what we're able to do in a manufacturing environment and for our employees.

5G infrastructure; as you know, Flex has been a leader in the transformation of the infrastructure for some periods

in time and the need for 5G is being driven by the IoT device demand and the response that we're going to need

to support applications such as the cloud and autonomous vehicles. Flex has deep expertise and capabilities,

primarily that we've been investing in our Sketch-to-Scale program and programs like our cellular radios, our

fronthaul-backhaul, the aggregation that – projects that are happening with centralized radio area networks. This

gives us a unique and deep capability and expertise to be able to support the transformation to 4.5G and 5G.

The telcos now are in the process of several pilot deployments, spending billions of dollars over the next several

years, pilot the R&D efforts for 5G. Flex is a key partner and enabler for them to be able to do this. We're taking

advantage of that expertise including the expertise we have in radio frequency, testing, and certification in order to

be able help them improve the capabilities and the speed with which we can transfer to 5G to address these

market needs.

The benefits are obvious in terms of the data speed, the reduction in latency, and the ability for us to be able to

have more devices supported for IoT. So, these are three areas: artificial intelligence, 5G, and AR/VR that are just

a few of the key technology areas that we're focused on. The success of the work that we're having is leading to

significant improvements in terms of the Sketch-to-Scale revenue, as Mike mentioned, but as important, the

design-enabled business that we see.

Our design wins are continuing to grow, and this past year, we had 450 design wins in our group. The majority of

our business now has transformed from build-to-print to Sketch-to-Scale. So over 75% of the engagements we

have are these richer, deeper, long-lived engagements with customers where we are co-innovating with them on

full-system product developments. We're doing this across all of our business segments.





This is also an opportunity for us to demonstrate unique and differentiated technologies and building blocks that

we've created. This year, we had over 230 patents issued; that's up from 140 last year. We currently have a

portfolio of over 1,200 patents, and we have 1,100 patents pending. So, now, as we co-innovate with our

customers in a world of Sketch-to-Scale, we are developing our own intellectual property. We are adding more

value for our customers, and working with them with their intellectual property and value to co-innovate, to create

new solutions and importantly accelerate the time-to-market.

I think it's important to note on the journey, as Mike mentioned, to 40% of manufacturing revenue, there's a time

lag from the time that we see the design products and the design programs to the time you'll see it in

manufacturing. As Mike mentioned, we're getting engaged with the customer 18 to 24 months before they bring

their product to market. The design cycles are typically 9 to 18 months; in some cases, in some businesses, we

have over two years of a design cycle time period.

These products are complex and in many cases, it's the first time they've ever been brought to market. So, the

criticality of our connection to the Flex platform and new product introduction and global operation is again one of

the unique differentiating elements of Flex. So, we support our customers in taking these complex of new

products through our new product introduction cycle which frequently can take three to six or even nine months to

get to ramp. So, it will be a two- to three-year delay from the time you see some of our design engagement until

you realize that in manufacturing. And that's why the importance of the volume of what we're seeing in design-

enabled Sketch-to-Scale today will be reflected in our manufacturing revenue two to three years from now. And

again, that manufacturing revenue is richer in terms of its margin profile.

So, when we look and step back and see as we continue on this journey of innovation, it's really about the

development of our comprehensive innovation system and the continued investments and effort we're making.

We're being rewarded with our customers in terms of the amount of design work that is Sketch-to-Scale with

them, the closer partnership and engagements that we have with them. They appreciate the fact that we are in

fact leading the development of a number of the core building blocks in digital transformation elements that will

become part of the next generation of these new products.

The digital disruption we anticipate in this area's well over $6 trillion of economic impact over the next several

years and the unique position that Flex has in Sketch-to-Scale and our ability to bring that across industries and

across geographies is unlike any other company and is probably richer now than it's ever been in the history of

Flex.

Thank you. And with that, I'd like to introduce my colleague Tom Linton. ................................................................................................................................................................................................................................

Thomas K. Linton Chief Procurement & Supply Chain Officer, Flex Ltd.

Thank you, Jeannine, and thank you, all, for being here today. We really do appreciate you spending a few hours

with us today. So, before I begin, let's kind of recap where we're at. Mike talked about how the massive TAM

opportunity in front of us creates tremendous opportunities for us as we scale across different industries.

Jeannine then went deeper into that and talked about how co-innovation and co-solutioning with our customers

creates a range of opportunities. What I'd like to do is unpack the supply side of that business model and give you

an idea how we might monetize it.

Three years ago, many of you might remember, we were talking about the platform for the first time, and we

talked about how speed and visibility were important to real-time information. From there, last year – or two years

ago, we introduced you to Elementum and what we were doing with them, and how we were taking real-time





information and announced a new thing called the Pulse Center. And last year, some of you actually were in

California, and we hosted you at the Pulse Center, and you actually saw how real-time information and visibility

improves asset velocity.

In this quarter, many of you saw that we achieved $3.4 billion which is a record in the last four years. So, the

business process innovation that we deployed in the area of supply chain management across our infrastructure

in the company is delivering real results. So, now let's take a little walk on the supply side. So, the supply side is

really all about relationships with suppliers, and how we actually can incorporate our business partners in our

vision of what we see the future looks like.

If you listened to what Mike was talking about, about the EMS industry evolving into Sketch-to-Scale, it's also

important to understand how that changed how suppliers view us. You see, in the EMS world, it's similar to raising

a 16-year-old child to adulthood. You have limited abilities to actually [ph] affect in change. (01:04:21) But if you

take a newborn, if you take a newborn, you have a lot of opportunities. And what happens in Sketch is we're

actually introducing ourselves to our customers at a different point in time.

So, the power and the opportunity for us is shifting as we go towards Sketch, because suppliers see us as

demand creators. And so, really, we're turning our suppliers into our customers as well because they're leading

our way because they want access to the 25-plus design centers that Jeannine talked about. I joke with my team,

you go to a factory, you don't see a lot of suppliers trying to get in. But you go to a design center and they're lined

up. And the reason for that is because they want to talk to us so that as we design the build and material and the

components that are in it, whether it'd be electrical, mechanical or whatever it may be, they're actually sitting there

with us and wanting to give us a good deal, right? So, we're in the process with them, we're writing agreements

with them, okay, if we design you in, what's that opportunity for us? We've already have over 500 of these

agreements in place.

So, that as they sign on with us, we can monetize that over the life cycle of the product. And our customers and

our suppliers work together with us to help create this process. So, it's turning suppliers into customers.

And it's changed over time. If you look at the different industry models, original equipment manufacturer, a 100%

product company; ODM, original design manufacturer; and electronic manufacturing services. It's a march

towards commoditization. Think of the PC industry or phone industry, choose an industry that's become

commoditized. Their actual components don't change that much. They evolve. But it's really all about features and

industrial design. But the products are commoditized. Labor arbitrage kicks in, and you want to move that to the

lowest cost place on the planet to assemble it.

So, this march is some limited margin opportunities for everyone. But as you swing the other way, there's a whole

range of new monetization opportunities. Now, monetization in my mind is what we do to drive revenue, what we

drive income statement, and how we actually improved the balance sheet. And these three dynamics all play out

in supplier negotiations, because what happened is the power has shifted to the buyer instead of from the

supplier. So, in these discussions, in these conversations, we're talking about design 4X. Design 4X is design for

supply, design for quality, design for manufacturing, but it's also design for margin, design for balance sheet, how

do you actually incorporate into this process.

So, we've actually redesigned my function, right. We have an advanced sourcing team that's actually part and

sitting in the design centers working with our sourcing teams to actually integrate and monetize the opportunity we

see at scale, really the case for scale and bring that to Flex.





If you sit back even further and you look at it from a higher point of view – a good example is the car again where

the tires on that car were probably selected through a process early in the design process of that car to a certain

specification, warranty requirements, mileage, whatever for a tire. But the monetization process isn't just about the

cost of the tire. Every time you sell a car, you can monetize that tire back into the supply chain of the company.

So, in this way, the conversations with our suppliers are changing because we're actually entering into

agreements where we can actually incorporate them into our success and the customers' success as we shift

these things in volume. So, what shifts is we go from a tactical relationship to a strategic relationship.

And let's not forget that we're real good at the scale relationship. I mean, if you look at what we do across the

world today, across all our factories, we are world-best at lean manufacturing, world's best in operational

excellence and are investing in that component as well because as you go to scale, that's where you capture the

revenue.

And what an opportunity, right? I mean, look at the massive TAM that we have in front of us in these technologies

that Jeannine and Mike both touched on. But in my view, the opportunity is ring-fencing these guys with suppliers.

And the ring-fencing of these markets with suppliers allows us to actually create common-denominator suppliers.

One is that we can leverage across multiple areas and multiple markets. And companies are very interested to

talk to us how we can leverage steel and resins or other things across different things that we do. And so, what

we do is we create this platform of capabilities that actually drives supplier revenue, as well as Flex value

creation.

Many of you saw this last year. This is Flex Pulse. Mike had a photo of it in his presentation and I just want to

provide you an update on it because it has really become a world leader. In fact, I have found nothing better out

there, and many of our customers and our visitors feel the same way. We've had over 500 different groups come

through Flex Pulse from all areas and all markets just fascinated with how we've been able to take our data, our

information, bring it up in real-time and actually, it's a human machine interface, right? So you can actually

interface with the data and the analytics of change.

MIT is actually working with us now and they've asked us, too, if we'd be willing to put a Flex Pulse Center in

Cambridge so we can actually co-work together on what's possible, incorporating things like AR, VR, MR into the

future of what data will look like. We have eight of these centers around the world, not just the one in California

anymore, and we've changed it into a way of working in our companies. So, we had meetings there where we

actually dropped information, we talked about certain customer situations or supplier situations or manufacturing

situations, and 5,000 different people in Flex are active users of this Pulse platform. And remember, Pulse is not

just a place, it's also a system. So, we had it mobile, in the hands of everybody who needs to have that

information, and allows us to operate globally.

And now we go upstream with Pulse. So, we've operated right with our scale and operated very effectively in

building Pulse out. But now we're turning the guns of this technology upstream so we can actually deploy some of

the ideas of value creation that I just talked about into Flex Pulse and things like how do we price it right, how do

we design it right, how do we do things that actually create supply or benefit in this process.

And this tool, and these two dashboards or outputs of those tools can actually tell us how we're monetizing it. I

call these my ka-ching slides. These are the ones where you actually have how the money falls into the

visualization so you actually can track and trace every single product through its life cycle and actually can – and

draw that money and those benefits down.





And wow! One of the things that is perhaps even more profound about what's happening is we're starting to

monetize two sides of the same market. One of the definitions of platforms in the industry today is the ability to do

that. Monetize from two different ways. Amazon does it, Uber does it, Airbnb does it. They're called exchanges.

And writing exchange is something that actually monetizes two sides of the same market. Airbnb, for example,

has a house to rent and somebody wants to rent that house, they monetize two sides.

There are also transaction systems out there today like Visa, MasterCard where the store has to pay and to use

Visa and so does the customer. Software design platforms, IOS and Android, ad-supported platforms, Google and

Facebook. Who's not to say that what Flex is really building today is the ability to monetize two sides of that

market. So, it's really suppliers providing those benefits in a supply side over time, which we will grow as we grow

our TAM and our efforts into this space. And also our customers, as they come to us, they have us design their

product across that middle layer which is all those industries.

And finally, if you look at the supply side economics as a whole, it's all about building increasingly intelligent

devices. These intelligent things, which are – you'll see them as you go around here and look at this room today.

All of these intelligent things are increasing the content of their components, the content of their design. So, the

number of suppliers we're dealing with in managing that complexity and putting that through a process of value

creation is going to allow us to build smarter products for a smarter and more connected world.

Thank you very much.

We do have a break coming up. If you're interested, there is refreshments in the back, and then you'll all be called

back into the room when we're done.

[Break] (01:13:34-01:34:26) ................................................................................................................................................................................................................................


Welcome back. We're about to begin session 2, Igniting New Growth Vectors, and it's my pleasure to welcome to

the stage Mike Dennison, our President of Consumer Technologies Group. Mike? ................................................................................................................................................................................................................................

Mike Dennison President-Consumer Technologies Group, Flex Ltd.

Good afternoon, guys. Looks like we still have people walking back in, but I wanted to welcome you to our New

York home. In fact, if you look behind the stage, it actually truly is our New York Connected Home. But we opened

this office about a year ago, really with the notion that we needed a headquarters for our Link business. But we

also needed a gateway to an entire new set of customers, customers like fashion and connected living and

wearables, and it made it very interesting for us to build and open this location and invite those types of folks in.

In fact, we've had a lot of iconic figures going through this facility. Some you'll hear about today, people like Tory

Burch and David Loren, and people who are really trying to look at their business and look at their business

models, think about new ways of doing things. So, for us, it's been a great location in the last year to help develop

that new set of capabilities and opportunities.

One of the things I'd like to do starting out is talk about where we have been here in 2017 with CTG. It's been a

very busy year for us. Starting at the top, we did $1 billion of new bookings across 195 programs. That's a lot of

movement, that's a lot of new programs coming in, a lot to digest, a lot to go and get after.





In addition, we increased our revenue by $1.4 billion in Connected Home and in Audio, a significant increase from

the prior year and one that really changed the dynamics of the way that we looked at our business.

On top of that, you knew about the Bose relationship that we created and the engagement with two factories that

we integrated into Flex. That went extremely well. It's a great success story for us, and really has become a very,

very strong partnership. In addition to that, of course, they came along with some design folks and two new

factories, so we integrated those businesses into Flex as well.

While we're doing all that, we became a high-volume shoe manufacturer. So, one of the things that you've heard

about this year is what we've done in that space, and we'll spend some time today talking about that.

One of the things that was important to us, this goes back not just in 2017, but literally years ago where we

started to think about a better book of business. And you've heard me say this for three or four years. You've

heard Mike McNamara say this for three or four years. This is about us just creating a book of business that's a

better balanced portfolio, a better predictable and sustainable revenue and profit stream. And as you can see

from 2017 to 2020, it's a massive shift from what was traditionally a PC, smartphone, printer k ind of business to

one that has a very balanced – perspective balanced portfolio.

It's not about making anyone piece smaller. It's about making all of them larger, in effect. And that's had a great

impact on our business going forward and helped us do a lot of great things. One of the most important things

though that it's done that you guys are very interested in is the impact on seasonality. Historically, the consumer

business has had extreme seasonality based on the types of business that we are in. And in FY 2018, you're

going to see the exit of extreme of seasonality. So, we will not have the seasonality we've shown before in our FY

2018 business.

Clearly, that makes it easier for us to go create a predictable business and helps us – it makes it easier for us to

go load our factories and to go run our business on a more consistent basis. So, that's a great thing for us. In

addition, when you look at the new areas we're going into, you see how they align to what the prior speakers,

Jeannine and Mike and others, have talked about relative to these new areas of TAM.

When you think about where CTG goes, sometimes it takes a lead because we can get there quicker, shorter

cycle times. We can get into these industries and we find ways so we can connect and create technologies and

create products that enable us into big, broad, open spaces to go build business. This has been a very effective

way for us to go launch into these new product categories.

One of the things that we talked about in the last couple of years is the notion of a pyramid and the change of our

business. So, three years ago, we became CTG and as we did that, we've reorganized the group, we restructured

the team, and we're really focused on different parts of the business and moved more away from that traditional

business. We created a pyramid that had ICE at the top, and then it had strategic business in the middle, then our

core or typical more EMS business at the bottom.

I want to give you an update on that. I try to do that each year, and I think you'll like this update. Our business has

changed. It started to balance out, and what you see is several really good indicators and this is working, this

model is working. So, ICE is growing nicely both in revenue as well as in number of customers , to [ph] really

(01:40:02) grow by 40 customers is pretty significant. And to maintain 6%-plus margin is actually higher than the

range that we had suggested. So we're doing really well at driving consistent incremental profitability in that base

and that base is growing.





In addition, in strategic, we had significant growth based on the likes of things like Bose and others, and I'll talk

more about those, and we had several customers out of it as well. They noticed in quarter that we had a decline in

revenue tied to some of our smartphone business and tied to some other changes. That's okay. We understand

that the quarter will grow at a different rate than the rest of the business. It's okay to be balanced in this area. It is

still a fundamental part of our business. I don't want to create the suggestion that we don't like our core business,

it's extremely important to us.

In fact, we still drive this business very hard. And even the Flex team hasn't heard this, late last night, we got a

notice from China that Lenovo has now named us Perfect Supplier of the Year again for this year. That is an

award that you can only get if you've had perfect quality for the year and beat all their internal factories and all

their external partners. So we continue to play a critical role with that strategic customer and we are really

appreciative about our relationship. So [ph] for us (01:41:29) still super strong, still important but you can see it's a

better balanced book of business which makes you go from a pyramid to a diamond.

When we talk about the growth in our business, we talk about Sketch-to-Scale quite a lot because Sketch-to-

Scale in CTG allows us to go create that richer type of business. And in this room today you're going to see a lot

of examples of things that we're doing that really fit in that Sketch-to-Scale notion, whether it's in the shoes or

whether it's in audio or in the fashion product. You're actually going to see some things in – Glowforge is here

today. As a matter of fact, the coasters in your tables are made from Glowforge. Dan Shapiro, the Founder and

CEO is in the back, great partner of ours, really helping him create a company and build a capability to go make

these devices. It's a phenomenal product to be able to look at it. Spend some time checking it out what it will do. I

don't think it will be long before it's in every school and a whole a bunch of homes in the country. And speaking of

the country, that product is actually made in the U.S. which we're really proud of. It's made in San Jose.

So a lot of really good things here in this slide with Sketch-to-Scale. I want you to take the time to go see them

while you're here today and really understand what it is we're doing that creates that added value that makes our

relationships stickier and more productive financially.

As we tie up from Sketch-to-Scale back into the different vectors of growth, we talk about the areas where we

think we're going to go expand, whether it's AR/VR and the notion that that's the next computing platform, a very

important place for us to play because not only is AR/VR important to CTG as a consumer event, it's quickly

expanding from consumer to industrial, automotive, medical, and many other places, we'll talk a little bit more

about that. But AR/VR is actually the place where we can get in early and invest and create that capability and

then expand it across the broader Flex, not just CTG.

And talking about wearables and fashion, in the notion of wearables, you can include fashion because it's all on

the body and that's in general when you look at it from a bigger standpoint, you want to think about fashion,

clothing, shoes as part of where we'll do it, it's wearable, support, auto or something. But that's an important place

for us to go to continue to develop and figure out where we can converge technology into fashion as well as how

do we think about manufacturing textiles differently.

One thing I want to show you today was here with the consumer AI. That light gold puck is called lidar. And lidar

technology for us is very interesting. In fact, I want to give you a short demo of what that does today. But basically

what that does is it creates the navigational system for autonomous drones, autonomous cars and many other

devices. And I actually have one right here on the right-hand side. I'm not sure all of you guys can see it because

it's your left-hand side – probably not. My right-hand side.





But [ph] Elena (01:44:30), let's go ahead and run that for a second, just let people see what that is. So this is a

screen map of all of us. It's a little bit weird with the lights on. You can – all these things are data points, and it's

actually mapping every object and every person in this room. And if we really want to be cool – like somebody's

walking right there, that's Michael. If we did the wave in here, it'd be really cool. I won't you make do the wave but

this technology is very interesting to us on a lot of different fronts. As we get better and better in this space or

working with our partners, we can enable this across our automotive business or autonomous car business,

across our medical and our drone business, lots of different areas. We can go play with the notion of lidar

technology, how things are seen.

In fact, there are areas of connected home that eventually will use this as part of a security feature in their product

set. Won't go too much further on that one, but this is going to become very interesting technology. You guys are

already seeing it today. So the notion of having these growth vectors is very important because it's allowing us to

work in spaces that we can then apply across the broader Flex doing things that we can get to quicker within

CTG, enabling their business, an important part of our business.

I want to get really clear on the financial attributes of CTG. So way back in FY 2014, we talked about the

[indiscernible] (01:46:09) about the notion of getting to a 2% profit level within this business and getting some

more predictability to it. We hadn't yet figured out exactly what our complete strategy was, but we're just starting

to think about it. In that year, we had set a goal of 2%. We missed it, we came at about 1.3%. The next year we

converted to CTG, we reorganized the group almost entirely, changed the structure and the strategy, went at a

whole bunch of different things in a new way, added things like wearable and connected home, and we set the

margin at 2% to 3%. We achieved it that year. We achieved it again the next year at 2% to 3%.

In 2017, we actually raised it to 2% to 4% and achieved it again based on what we did, as I said earlier in the slide

deck. That was great. Now this year is an investment year. We're sticking to our margin range of 2% to 4%,

though. So even though we're investing and you're hearing us invest and talk about investment in our footwear

business and other parts of our business, we are committed to that 2% to 4% range. That's not the interesting

part. The interesting part is what does that set us up for.

Based on the investments we make this year and the ability to launch in volume our footwear business, we [ph]

have a (01:47:24) step function changed of our business to 3.5% to 5%. That is a significant change in the way

this business sits in the broader portfolio of Flex, and really makes us one of those valuable focus groups that we

can actually go get after, a very good part of the overall portfolio on bundle. So our commitment investment this

year, sticking to our margin range, growing out of this year and getting the 3.5% to 5% as the indicator of our

success into these new areas.

Now I kind of figured that some of you folks would want to talk about footwear a little bit today and maybe our

relationship with Nike. So I've got a couple of slides on this that I want to go through with you. Let me st art at the

top. This relationship remains – and not only remains, but grows stronger all the time. The depth of the strategy

and the engagement between both companies, the level of investment to make this successful on both sides is so

significant and so aligned that it's like having the two biggest powerhouses in the world saying, we're going to go

change the way the industry has done and we're going to do it together. So it's a pretty amazing relationship and

a very powerful one.

It's really based on three major tenets. The first is that we need automation and technology change the way that

we make shoes. As we make shoes in region, we can't do it the way we would have done it in Asia. Innovation

and modernization throughout the entire shoe process is critical to our success. That's working. But along with

that, you have to change your supply chain, if the regional enters a supply chain since you have the flexibility and





responsiveness to do things in region. And that's one of things we're doing right one. That's one of things that

we're scaling. As fast as we're scaling in manufacturing, we have to scale our supply chain.

The third thing that you have to do is really drive the digital design, the ability to unlock with a new set of tools for

designers a way to make shoes differently. How to cut out material, how to take out material, how to take out

waste in the process, how to make manufacturing simpler, how to make it more flexible so we can adjust shoes or

styles or SKUs, all those kinds of things. If you don't do one of the three, you won't have a successful solution and

you have to do all three on pace at speed.

So we're working through those things right now. It costs us to invest. And by investing, we can unlock new

opportunities. As you figure out one thing, you actually find in those what you can go get better at. As we find

those things that we can go better at, we continue to invest. This relationship remains super strong. And we've

talked about numbers in the past, we'll talk about those a bit more going forward. But this is and remains a very

constructive positive relationship for us.

Here's a new picture for you. So this is not a shoe lab, this is basically 1 million square feet of manufacturing that

we are building today as we speak – this is actually a recent picture – to do shoe manufacturing in the region.

This is a factory that is coming online faster than any factory ever in this region. So we are absolutely creating

miracles as we put this thing together.

It's a phenomenal solution that's combing a lot of different things. And when you think about what it takes to go be

successful, what it takes to go scale this business this year and hit the commitments that we've made to you and

to the rest of our shareholders, it's pretty impressive. What do you have to do? Well, you have to build a 1 million

square foot building. You have to integrate different technology platforms together to be successful. You have to

take knitting and assembly and bottoms and be able to do them in the same place, not done before. And as we do

that, we can create a really good, really responsive supply chain, and we're working on that.

In addition, you have to hire from 2,000 people up to 10,000 people to hit the volume. Now you might say 10,000

people, seems like a lot of people. I thought you guys are doing automation. We are, but you still need people.

And in the end, when this is actually at mature volume, at mature scale, it will align with a significantly smaller

workforce than what you'd find in Asia. It's very important part of what we do.

In addition, you still have to work on innovation. You have to work on how is adhesive done. What kind of

adhesives do you use? How do you apply adhesives in a different way? You have to work on the new designs for

shoes. Shoes that are in our factories today were not designed for our type of factory. The shoes that we're

working with our partner on are designed for our type of factory. So those are significant things that we have to go

to do.

And on top of that, we've got real commits. We have to drive significant volume, which we're doing today. This

has been a great solution for us, a great story for us. It continues to be a great story for us. We're going to

continue to focus on this. We are committed to our numbers this year so we're going to make meaningful revenue

in FY 2018, and we will be at breakeven or better by the end of the year as we've said before. This is a long-term

multi-billion dollar relationship for us, and it is not measured in the scope of years but decades.

I want to move on from footwear for a second and go on to a couple other things. I talked about AR/VR and our

relationship with DAQRI. A couple of these slides coming up are really just examples of relationships that we've

created this last year that we think are very interesting. DAQRI came to us as a consumer product company. This

technology comes out of gaming and things like that. However, where DAQRI is headed is far different than that.





They're working on AR/VR solutions for automotive and for medical and for industrial in ways that will change the

way, not only the world manufactures but the way that Flex manufactures. So we think these kinds of

technologies have significant upside opportunity for us and will continue to be the platforms by which we build

future growth and profitability.

So we'll go with Bose. I mentioned it earlier, we did that transition this last year. It's been a great success story. I

won't spend too much time on that now. I can do more in the Q&A or in the open conversat ions. But again, a great

example of Sketch-to-Scale, helping them with design, helping them with the logistics supply chain all the way

through manufacturing and they're doing fantastically well. So this has just been – a matter of fact, the better than

we thought last year and as good a year as we expected this coming year.

The new one in that space is Skullcandy. Skullcandy is like Bose, working on in-ear wireless Bluetooth headsets,

hearable devices, a whole wide platform of products where we can add significant value now that we are a major

player in the audio space. They just announced this relationship not too long ago. We think it's very interesting for

us. It's going to help us take our business in a whole another direction and kind of expand our audio presence. So

it was a great win.

A lot of you folks have heard about or talked about FOSSIL. FOSSIL is in this quite a bit right now. They're going

through a pretty massive transformational change. Their business has a set of challenges as they go from fashion

– even said this in a quote, from fashion to convergence of fashion and technology. That's not an easy step for

companies to take. We're there helping them, guiding them, working with them along that journey, helping them

make that transition and cross that bridge from one type of business to another. It's critically important they get it

right and we're there to help them get it right via the services and solutions that we can provide. We like these

guys. We think they have the right vision, the right strategy. They just need our help to go continue to drive that

strategy and that transition forward.

Another new one, will.i.am. will.i.am is one of our new partners. We actually have a lot of things going on with

these guys, across a very broad portfolio of products. will was one of the first founders of Beats and he's taking

that success and that experience on to many other products and technologies. Not only a technology innovator,

he's actually a Grammy award-winning artist, too, which makes it fun and interesting.

But we've had just a great time thinking about how we can develop i.am+, which is his business, into products that

go way beyond just headphones into connected home devices, into other parts of products that we think are very

interesting. So there's a lot more coming on this relationship. You guys will be hearing more in the next weeks and

months, so stay tuned. So I think you'll be very excited about where we take this going forward and how we

leverage his media power with our innovation into a cool set of products and capabilities.

One of those things I'll just announce it now is the Fashion Tech Forum. So coming in October, we will have a

Fashion Tech Forum between will, myself, and others where we will bring the fashion leaders of the world and the

technology leaders of the world together into one venue to sit down and figure out how do we get fashion and

technology to work together, how do we truly converge technology into wearables, into textiles, into those types of

things.

For us, we think this is a great opportunity to expand our TAM, to find new ways to go play at new markets. This is

not a short road, though. It will take us a while. It will take fashion a while to figure out where we go, but this will

be a great event. I think it's actually almost sold out but it will be interesting. You'll hear a lot about that as we get

closer to it.





Let me summarize just a few key things for you real quick and that is – we set a new foundation. With Bose and

with Nike in our footwear business, we've created a whole different foundation for CTG that makes it a powerful

long-term sustainable business that we can build upon. That's extremely important to start to reduce the volatility.

We're able to reduce – not reduce our traditional business, but manage and balance your traditional business to

help eliminate some of that seasonality. That's going to be important to us as we think about how this business

looks going forward and how we actually sustain and create more predictable forecasts of margins and revenues.

So that improvement in a balanced book of business is really important.

All of our new growth vectors helped create huge TAM opportunities. As we see these opportunities, we can

actually go figure out ways to expand and diversify the consumer business way beyond where we were two or

three years ago. By expanding it, we can actually drive better value, better depth of margin, better top line

revenue. So for us, those new industries these places are extremely important.

And what that really creates for us is CTG as a third business that is truly valuable and monetizable in our

portfolio in a way that we couldn't do it before. As we scale to the 3.5% to 5% margins, that's going to enable us to

really be accretive to the overall portfolio and be truly additive to what our long-term objectives as a company are.

With that, thank you very much. And I'd like to introduce Paul Humphries. Thank you. ................................................................................................................................................................................................................................

Paul J. Humphries President-High Reliability Solutions, Flex Ltd.

Good afternoon. Welcome to the New York Innovation Center. So I'm really excited to have the opportunity to talk

to you today because we're really pumped about the progress that we've made in HRS over the last 12 months,

and we're here to talk about how we're committed to sustaining the double-digit growth that we've been able to

maintain over the last 29 quarters. So really, really excited.

But before I talk about the future, I actually have to take us back a few years and to 2011 where Mike asked me to

take on the role of HRS, which essentially was a medical and automotive business. And that gave us a chance to,

an inflection point, to actually look at the strategy of the business at that time. And remembering the strategy

that's sort of been developed around 2006 when we started the auto and medical business. And frankly, we didn't

really think it was relevant to where the world was going, and certainly didn't think it would create the margin and

the revenue potential we were looking for.

So we started taking a step back and saying where are the – where is the growth going to come from? Where can

we get higher operating margins. And we started thinking about the global megatrends, the irreversible and

transformative shift across societies that were going to impact all industries , not just the automotive and medical.

And we thought that was actually going to create a lot of disruption, a lot of innovation, and essentially a new

supply chain ecosystem. And we were clear, with the power of Flex behind us, that we wanted to be part of that

ecosystem and we thought we could really make a contribution there.

So within automotive and medical, we looked at really four trends that would impact us. And we could already see

that there were new entrants coming in. New business models, new players, new supply sources that were really

starting to disrupt the existing supply chain. And we thought there was an opportunity for us to actually go in and

not only work with the disruptive and the innovative, but actually help those who were being disrupted and create

a potential for long-term growth for the HRS business. So that 's where we decided to play.





And I think that decision was the right decision, focusing on the mega trends and how those sectors has allowed

us to deliver 29 quarters of year-over-year revenue. And actually allows us to sustain significant improvements in

our operating profit margins over the same period. So we're really excited that we followed that path. And working

with the innovative and the disruptive, leveraging the expertise that exists within Jeannine's group where we can

take advantage of the innovation platform, working with the other segments with Caroline's group in consumer

enterprise and communications, with Mike in consumer and leveraging the technologies out of t hat.

And then at the same time, building the capabilities within our own organization, going out and acquiring

competencies. And just as important, we're leveraging the deep expertise that we've had by building a strong

leadership team in both our medical and automotive business has allowed us for transition from being the mass

supplier to being the intelligent systems and solutions provider And we're actually now recognized by many of our

customers as an innovator and disruptor ourselves, and we think that puts us in a really, really good position

going forward.

So if I take a look first at automotive and I start thinking about the megatrends sort of driving change in automotive

and I go back to increasing population, aging society, increased urbanization, and obviously the shift towards IoT

and connected devices, that has great potential for us. So you're seeing the likes of Uber and Tesla and [ph] DB

(02:04:04), and even companies like Mobileye coming in and sort of disrupting that existing business.

That in turn is driving the traditional automakers and the Tier 1s to actually start to shift their model, and they're

actually to think about innovating themselves and how they do things differently. And as you know, many of them

have actually shifted a lot of their advanced engineering centers to Silicon Valley and are building up high-tech

capability themselves, doing acquisitions and are doing the best they can to actually accelerate that shift to the

new future of automotive. Mike talked about [ph] Mark still (02:04:42) refers to it as a future of mobility.

And so as they risk to bring out the first level 5 fully autonomous vehicle by 2021, that's the steady date that many

of them are looking at. That's also driving additional compute power in the car, the need for additional storage and

for server capability working towards capability in the cloud, faster connectivity, data analytics, artificial

intelligence and machine learning as they actually start to look at ways to monetize the data and not just have the

traditional model and making money for the car but being able to monetize way after the car has been sold.

And as we took a step back, we realized that's a great position for us to be in. Not only can we leverage the

significant capabilities we have in automotive, but as I said we can take expertise out of car [indiscernible]

(02:05:40) where we already have extensive experience in server and storage. And as we start to partner to

provide cloud services capability – and again, the sort of shift from being a product provider to actually being a

solutions provider.

And we believe that's actually a unique position for us. We know of no one else in the world that has that

capability on a global scale, and we think that's a capability that's disrupting the traditional Tier 1s, and we know

the automakers are looking to disaggregate that supply chain. And we've become a genuine, credible alternative

to that group with a much more flexible, innovative and responsive business model. And as a result, we're seeing

the growth that we're seeing.

So our approach, I talked about it, it was deliberate. Our success isn't an accident. We took the Flex platform, we

built our capability around the speed, scale and scope that Flex has. We leveraged the expertise out of our other

groups. We built our capabilities and we built the management team with 150 years of experience in automotive.

We took Chris Obey and brought him on as President. He'd had 15 to 20 years in automotive and then he's





assembled a team around him who have extensive experience across the automotive industry geographically, but

also in terms of multiple product categories. And between them they've launched hundreds of new products.

If you take that highly experienced, diverse auto team and then you combine that with the expertise that exists in

Flex and in businesses where innovation is a given, where speed to market is essential, if you take our consumer

business and then you combine that with the experience that we have in automotives, you actually create a

solution that's unique. And again, as I said earlier, we become essentially a market of one where we don't see

anybody today as able to defend our position.

So we know that the game continues to change. The last thing we can become is complacent or lose foresight of

where the industry is going because it is changing constantly, and there are new innovators and disruptors

coming in all the time. So we're going to continue to go outside and build our capabilities. We just recently

acquired AGM, and I know you that have been through a booth and probably Chris has talked about that earlier,

and Chris will share a lot of what I'm talking about in more detail as you go through the display. But we acquired

AGM because that gives us expertise in interiors. And we believe as you move towards autonomous vehicles, the

interiors are going to become more and more important. It's not going to be the same experience as if you're

driving the car yourself.

So we're also developing partnerships and alliances in software and services. So as we know that our customers

are already asking, not just for the hardware solutions, but they're also looking for a software solution. In many

cases, they're actually looking to combine hardware and software into this intelligent system solutions. But the

great thing about our model is we don't force that on them. We allow them – if they want the hardware, they can

have the hardware. If they want the software, they can have the software. But obviously, we believe that we can

provide a better solution by combining them both. But the flexibility on our model is one of the things that the

automakers really like.

And we're continuing to build our hardware capability and we certainly haven't diverted away from being an

innovator in hardware. The customers are now looking at us to innovate, so we have to continually bring new

ideas and new solutions to market. And in the last 12 months, we've been focusing more on autonomous and

we've developed sensor fusion boxes, compute boxes, smart gateway modules. And also, again, looking at the

interior of the vehicle and providing new experiences whether it's to the acquisitions we do with AGM in terms of

ambient lighting, in terms of smart textiles, but also looking at how we actually position ourselves to be really keen

in that capability. And actually, again, position ourselves as a strong credible alternative and allow us to maintain

that double-digit growth.

So, if you look at the results, the results we think on display for everyone to see. We had record bookings in

automotive. In FY 2017, we got close to $560 million and we set a target to get the $500 million. We achieved that

last year. We're continuing to grow those bookings and these are bookings with most Sketch-to-Scale. Around

50% of these bookings are design-related bookings that provide great stickiness and also have solutions that

combine not only hardware and software but providing the potential for us to deliver solutions.

If you look at two of the key measures of success in auto, if you look at the number of vehicle models hereon, [ph]

either Chris or Bee (02:11:24) would say the number of nameplates. And we've gone from 2011 being on 98

nameplates or 98 models to today being on around 450 and with the acquisition of AGM, we saw that going to

500 models. So, that's almost a 5x improvement over the last five years which we think is a tremendous

performance and actually, again, validity is the effectiveness of our model.





So, we also look at content per vehicle and we've have gone from $43 in FY 2011, $118 in FY 2017, but as we

look over the next three years over our three-year plan, we see that content per vehicle increasing to $185, and a

lot of this is bookings that we've already secured. So again, really, really excited about the direc tion and the

progress that we're making.

And if you look at our performance over time, we've gone from $83 million in 2006 when we first started this

business, then we did $1 billion in FY 2012, and today, we're doing $2.3 billion and seeing even further growth to

$2.7 billion with the acquisition of AGM. We think we'll be in that region in FY 2018 and we can see that we can

continue to grow double-digits over the course of the three-year plan and frankly, beyond that. [indiscernible]

(02:12:58) as I said, we think we're really, really well-positioned. We're not just focusing on hardware and we're

now partnering in things like over-the-air updates and we see the potential for data monetization and V2X. And

so, we're building capability that takes us to where the industry is going and that's essentially aligning with the

move towards level 5 autonomous vehicles. So, we are really, really excited about what we're seeing. And again,

as I said, Chris can share more with you as you talk to him in the display.

So now, I'd actually like you to take a look at the future of healthcare.

[Video Presentation] (02:13:34-02:15:46)

So, similar to automotive, I see a lot of disruption happening in the medical area, too. And [indiscernible]

(02:15:54) of which is the constant and intense cost pressures that are under the oil industries genre. And if you

look at over the last five years, it's been caused by a lot of change. There's been a lot of consolidations among

payers, providers and device manufacturers, over 100 hospital consolidations, 153 medical device companies

have got together and acquired each other, and they're actually continuing to see that. BD just announced the

acquisition of C.R. Bard for $30 billion.

Medtronic are outsourcing a part of their business to Cardinal Health for $6.1 billion. J&J and [indiscernible]

(02:16:32) are actually even getting out of the device business. So, they're facing real challenges and a lot of

these stems from the aftermath of the 2009 recession, government spending less, the shift towards value-based

care, hospitals are spending less, you've got reduced reimbursements, you've got tightening legislation, restrictive

legislation is taking longer to bring products to market.

So, all of these challenges have taken that toll on the industry and you've seen slower growth in medical in what

has been a very stable business for many years. We've seen slower growth in the last few years than you've

seen, and frankly, we've been somewhat impacted by that. But if you look at the future and you look at where the

health solutions and medical business is going, the potential is enormous. And some of you who've been through

and talked to Carol and to [ph] John (02:17:20) and seen some of those.

But again, you go back to the megatrends, you talk about aging population, you talk about increasing population,

the need for lower cost healthcare is absolutely critical. You're going to have more people coming into the middle

class, 100 million people a year coming into the middle class who wants access to healthcare. You have aging

population, you have concerns with COPD, obstructive disorders you have, challenges with diabetes, you have

issues with cardiovascular challenges. As lifestyles change and people have more obesity, there's issues related

there. People who get older want to have a more active lifestyle. They want to have replacement of hips and

joints, et cetera.

So, start to think about where the future of the industry is going. It's really significant. And then, you think, well,

how do we actually solve that? Well, we solve that by outsourcing more by lowering the cost structure and





digitizing the industry. So then, you go from not just having the device but you actually have a device that's

connected to the cloud that uses data analytics to provide insights to doctors and patients and allows them to

improve the affordability of care and actually expand the care to a much larger population.

So, as we again think about the medical business, we think about how do we actually approach that. We s tart to

take a look back and said, what do we did in automotive and we actually saw the copy of the automotive

playbook. We announced and we built capabilities in manufacturing and design. We acquired precision, plastics

and automation companies. We acquired Farm, which has a strong expertise in human factors engineering.

We start to build those capabilities. We leveraged again the technology that exists within the other parts of Flex.

We focused very heavily on connected devices, particularly for patient monitoring and for drug delivery. But just

as importantly and probably really, really important, we retooled the management team. We brought in John

Carlson who you'll meet. John was actually running the Innovation platform at J&J but at 15 years at J&J, running

three of the R&D centers for their franchises, and then before that, had 10 years working in Silicon Valley, working

with medical startups, biomedical engineering background, really deep industry content expertise in medical.

We hired Kal Patel. Kal came out of Novartis and Amgen where he was Head of Corporate Strategy, actually run

and started their digital health initiatives, worked in Silicon Valley in a telemedicine startup for a while. And Kal is

unique in the sense he's not only has a business background but he also is a qualified doctor. Again, really, really

understands the business, great connections in the industry.

So, what we've done is we've actually positioned ourselves as a technology leader. And frankly, we think both in

medical and automotive, we've created a unique competitive position. And we're sort of leaving those traditional

guys behind and we're challenging the existing incumbents. And now, because of the level of confidence that we

have and the access that guys like Kal and John bring and we're actually hiring a CTO at the end of this month,

again, with 25 years of medical experience. We're getting access to technology leaders and [indiscernible]

(2:20:35) executives at the customers because they really believe that we can bring new solutions to an industry

that faced a lot of challenges.

And then, as you start thinking about connectivity being the bridge to digital health and we have a lot of

experience in connectivity devices, and we're going to see more advanced healthcare models going forward. But

connected device is not just going to be transmitting information, it's going to be helping to control those

management compliance and supervise interventions. And eventually, that's going to lead to a medical grade

intelligent and scalable platform where it can actually deliver better than sites to caregivers and to doctors, and

then, make the transition to a much more affordable healthcare solution much more effective, and then, provide

that potential to a much larger population.

And so, we're getting prepared for those changes, and we're actually already starting to see the impact of some of

that in our recent bookings. So again, we set a target for $500 million. You can see that we didn't hit that in the

first few years, but now, we're back on track. We've actually exceeded that over the last couple of years when you

combine it. One of those is a project that we've talked about where we wanted it to be pushed out a little bit but

that's the product we're confident is going to come in. The customers are really excited about it. It's doing

extremely well in Europe and we know that's going to help us to drive growth going forward.

And so again, if you look at the trajectory, we've been able, even with these headwinds, to sustain an annual

growth rate of 20% in medical. We dipped a little bit in the last few years but as we started looking at the bookings

we've got and we start looking at the offering that we have and the position we have in the industry, we're again

really confident we can get back on this double-digit growth trajectory.





So in summary, we like to think of HRS, we have a pedal to the metal and our finger on the pulse. I was hoping I

get a couple of laughs over that but maybe not. But anyway, we're seeing even in the last few years, our revenue

was gone from $3.5 billion to $4.1 billion. This is HRS combined. Our operating profit from $228 million to $334

million and our margin from 6.4%, and that should show 8.1%. I don't know why it's not there.

So, we are thoughtfully positioned across the important megatrends. We are focused on the high growth factors

that are bringing higher margins. We are powered by deep industry expertise. We've built the team and enables

us to do that whilst leveraging the power of Flex. We're convinced we've created a unique competitive position

and not as you never be able to catch up but we'll continue to move ourselves forward and build additional

capability. And also, we're convinced that as a result of that, our long-term structural growth is intact. So, thank

you very much.

So, if I can introduce Doug Britt. Doug runs our IEI business. He's got a great story to talk about his business, too.

So, thanks very much. Doug? ................................................................................................................................................................................................................................

Douglas Britt President-Industrial & Emerging Industries, Flex Ltd.

Good afternoon, everyone. It's great to be back here in New York. The industrial marketplace has a massive

TAM. And if you look historically at this industry and these customers, they grew through acquisition and they

really committed to vertical integration in our manufacturing supply chain. But this industry is changing a lot and

there's a lot of different things are coming in play. First of all, acquisitions aren't as plentiful and driving revenue

growth through acquisitions is more challenging for these companies. So, they're looking at new ways to drive

growth and they need to regionalize. That means they need to regionalize their supply chain and be in different

marketplaces. They also need to modernize their product portfolios to get to those regions and come out with new

business models and new monetization vehicles.

What we've done over the last four and a half years is we've invested in design and engineering and innovation

solutions with domain experts at the targeted segments that we want to go after. And we've moved the discussion

from a cost base discussion to how can we help the customer drive more revenue at greater margin. When we

have those discussions and we have value that we're offering, we're able to yield higher margins in our business .

So, we're seeing more opportunities within industrial than ever before and it's reflective in our bookings.

I'd like to take you through the results that we've had over the last four years. We've been able to grow the

business by 38% over the last four years, just shy of our 10% target, a little bit over that had we not had the

bankruptcy of SunEdison which impacted us by over $550 million over the last two years. This last year, it was

$350 million so it would have been over 10%.

It also impacted our margins. We had to clean up. We had to sell some panels. The market started to drop but

we're really pleased that in our exit of Q4, we achieved 4.1% operating profit. We expanded operating profit

dollars over the last four years by 12.3% and we're committed moving forward to continue this trajectory and

accelerating it.

We're extremely excited about a record booking year. We booked over $2 billion of new business. Out of this $2

billion of new business, over 50% of these bookings were Sketch-to-Scale and they're going to be ramping over

the next coming periods. We expanded our revenue of Sketch-to-Scale over last year where we had 21% of our

revenue with Sketch-to-Scale to 26% and we'll accelerate that this year. And then, we added 72 new logos from





customers that are targeted customers for us and we're doing business. And in our business, when you win a new

customer, you land it and we can start expanding it as we get more sophisticated with the customer.

So, what's happening within industrial? Actually, consumer has really driven the cloud, mobility and sensing to

scaling cost and the industrial industries are really leveraging that investment and capitalizing on that to come up

with new product innovations to generate new revenues, and we're in the middle of that.

Today, I'm going to talk about four industries that are adding significant revenue growth to our business. They're

also going through transformations similar between the four. First, they are digitizing. They're modernizing their

product portfolios and they're digitizing. They're moving to new regions, so they have to set up new supply chains

to get to new regions. And do they invest their working capital on those supply chains or do they come with us

where we have these capabilities and we operate in these countries? And then, they're developing new service

models and new monetization vehicles.

What we've done to capitalize on these shifts is we've invested over the last four-and-a-half years in technology

and solutions for these customers. We've invested in mechanicals, power electronics, connectivity, controls,

human machine interface. As it relates to energy and digital energy, we've invested in analytic capability and

machine learning, and I'll walk you through that.

Our capital equipment business is a significant part of our revenue. Last year, we generated $250 million of

bookings in this business. We actually see a lot of opportunities accelerate our bookings in capital equipment and

we're going to put more investment, more engineers, more presales engineers into this business because there's

a tremendous transformation going on here. We added 12 new logos. We service over 14 different market

verticals within capital equipment, leveraging our platform and we believe our solutions could even expand those

industries that we do business with.

So, what's happening? There's a major macro shift. In the past, machines didn't communicate with one another.

The actions and activities in a productions facility or production line were siloed. They were not interoperable. And

what's happening in the future, Industry 4.0 is evolving machines to communicate, leverage the cloud or maybe a

local network to fog. And these machines are going to be interoperable. They're going to be integrated. And it's

moving to automation and autonomous capabilities. So, every manufacturing company in the world will be

leveraging this technology and modernizing their equipment, so there's a significant macro trend for us to

capitalize.

In 2016, 10% of machines were connected and 8% of factories were automated. By 2025, 25% of factory tasks

will be automated and 50% of the machine fleet will be replaced. Tremendous shift macro, we want to go out and

seize it.

I'm going to share two examples of how we're engaging. The first is the test and measurement customer. This is a

multibillion-dollar company. Mike talked about how our conversations have changed. We both actually got invited

to the board of directors meeting of this customer. And why did they invite us to their board meeting? They have

hundreds of thousands of test and measurement equipment deployed out in the market on engineering

workstations. Many of these machines are not connected and they're not intelligent to feed data back.

We have a lens in multiple industries. How do we get those machines connected? What's sensing technology?

What communication protocols do we use to get it connected? And now, what monetization vehicles have you

seen out in the industry that we can leverage to help build a new business model? We're working with this





customer now on next-generation design and we're also helping them retro their existing fleet to get to more data

model and evolve to new – to services.

Last year, we also won a major program with a food packaging supply company. This company is really in the

business of building packaging supplies but they also have to have the equipment that does the process

manufacturing to do the wrap. And what happened is they want to put more of their R&D on the supplies

themselves, the plastic and the technology going into that. They have moved the manufacturing of the machines

to us. We're doing that now at Poland and we're doing it out of Aguascalientes, Mexico, so we have global

solution form to serve their market.

But we're also engaged in developing technology with them to put communication and sensing technology for

predictive analytics and being able to help them get connected to their cloud and modernize their equipment to

keep up time higher so they can throughput more packaging materials . So, we're modernizing their large

machines to help them optimize their sales.

Two years ago, we launched the lighting business and we see a great opportunity in lighting. We see this

business could be a billion dollar business for us. We booked over $150 million last year. We hired domain

experts. We have invested in technology. We added 20 logos and we had 25 base customers that we brought into

the year. There's a huge change that's occurring with the LED and the invention of the LED and the cost of the

LED driving down.

Interesting facts. Lighting accounts for 19% of the global electricity use. The LED will replace incandescent and

fluorescent technology. It's too advantageous. It's going to replace it. And transitioning to a smart lighting solution

is going to reduce lighting energy costs by 53%. So, on the backdrop of that industry trend, that macro, we're

concentrating in the industrial lighting, the commercial lighting and the outdoor lighting marketplace. We have

invested in power electronics to efficiently light the power drivers, the lighting. We've also invested in the light

source. This is LED on board to do color mixing red, blue, green, to give a spectrum of colors so we give options

to our customers.

We designed the luminaires, so the high bay troffers, the streetlights, and there's optical technologies that goes in

that to make sure the light shines where it's supposed to shine. And then, smart controls, autonomous lighting

controls. So, when you walk into a building, the light goes on or it goes off or you can access the lights from your

mobile app. This industry or this business for us is accelerating in growth because of the marketplace and the

cannibalization of LED taking over incandescent and florescent.

Our energy business, we've talked a lot about. We had another record booking year, $750 million of new bookings

for our energy business, over 30 new logos and 62 active customers. The world today, 1.2% of electricity is

generated through solar power today. That's going to massively change as we move forward. Many of the reports

are showing 2030, 13% of the world will be powered by electricity. We're seeing that buildup and we've invested

strategically in what elements do we want to play in in the build out of solar energy.

Last year, we announced an energy storage platform. This is our own design. It supports multiple battery

technologies and it's essentially have a lot of different applications. One application is they could plug into the grid

and it could store energy when there's more production than there is demand or to release energy when there's

more demand than there's production. We are shipping this unit. We've got a strong pipeline. We just shipped a

unit to the National Renewable Laboratories in Boulder, Colorado, and we'll continue to grow this business.





And our solar tracking business, NEXTracker, last year reached the number one market share of trackers

anywhere in the world, 30% market share. We now operate in India, United States, we're in Australia, we are in

Mexico and we're in Brazil. We have the largest installation on the Western Hemisphere being installed today in

Northern Mexico. This is a 750-megawatt installation. It's the equivalent of 3,375 football fields. It's 8 square miles

or it's the size of Lower Manhattan. This business is accelerating and, of course, we have a technology leadership

because all of our rows on the tracking systems are independently operated and self-powered, and we orient the

panels to increase energy harvest out of a solar field.

Just last year, we announced a new product through NEXTracker, which is our NX Fusion Plus. This

encompasses inverter technology, battery storage technology onto a tracking system. We're launching this in the

agricultural market and we're launching it in small commercial applications. And by expanding the horizon of

energy production as a strong economic value proposition that we're bringing to those customers. We see this

technology evolving in new utility but we're launching in small industrial and agriculture to start with.

And then, we're extremely excited about, in fiscal year 2018, launching our artificial intelligence for energy

services. And with this news is, last year, we acquired a machine learning company and we have over 10

gigawatts of installed solar capacity through our tracking solutions. And we've taken many of the fields and we've

mapped the topographies, we've linked it to weather modeling, we have machine learning and all of our rows are

independently tracked and connected with sensing technology and we're managing the shading between each

row, and because our rows operate independently, we can remotely and automatically move the row to optimize

for the sunlight to get better energy harvest. And what that means is financially, we've seen between 2% and 4%

improvement out of the solar field based on this technology. So, we're rolling it out this year and we're extremely

excited to have our first recurring revenue model in this business.

Our lifestyle and appliance business recorded a record booking year, $1.1 billion of bookings, 21 new logos and

46 base customers. Again, an industry under transformation. The connected appliance will help transform the way

that we live. I don't know about you but I value my time and health is important, and we're really on the forefront of

automated and autonomous products connected to the supply chain. How many of you today order your groceries

and have them delivered? Not too many? A couple? Highly efficient. I see one. Okay. Highly efficient. We went

there last year and it's a super way of keeping the house rolling.

It's going to be not too far in the future where you'll be at your desk, you pull up your mobility app, you'll pull up

and you'll look at, I want to have a three-course meal. I can look at it online and I can see the vitamins, the

minerals, the calories, the fats and the proteins. I can order that meal and it could be delivered at my house within

hours, and it's fresh ingredients at your doorstep. That meal is also connected to your oven. And your oven is

designed differently. It has multiple compartments in it. So when you cook, you can cook all the courses at one

time. The oven has sensing technology so it can optimize for taste – so you don't burn it like I do – and you can

pull it out and eat it at the same time. We're working with companies to evolve this. This is how this industry is

starting to reshape and reform.

So we're working with large appliance companies. As I mentioned, the range and the oven, we're putting sensing

technology. We're helping with how to go to the Web and go to the cloud and bring the data back into their

applications. We've also won business with small appliance companies to get them smart and connected. And

what's happening in this industry, they want to reach the end customers. They want loyalty programs. Before, they

couldn't reach the end customer. We won a major deal with a high-end blender company that actually has apps

that are going to be able to provide different food replenishment that is specifically designed for their blender.





So in summary, the industrial market is digitizing. We see IoT disruption as a major factor that's helping us

accelerate our growth strategy within industrial. There's massive opportunities we've invested. We've invested in

technology and we invested in solutions to capitalize on that, and we're well-positioned.

The $2 billion record booking for us will help deliver continued 10% growth. We're extremely excited to have a

record booking year on top of four years of 9.5% growth. And based on our bookings and 50% of them being

Sketch-to-Scale, we're confident in maintaining the position of between 4% and 6% operating profit for our

industrial business.

So, with that said, we're very excited, and I would like to introduce Caroline Dowling, who runs our CEC business.

Thank you. ................................................................................................................................................................................................................................

Caroline Dowling President-Communications & Enterprise Compute, Flex Ltd.

Thank you, Doug. Good afternoon. I hope you're all doing well, and we heard a lot of great stories today. The

constant team here for digitalization, cloud computing, connectivity, all of the things that are driving my industry.

So I'm delighted to be here to talk to you about this today, and I'm particularly excited toward some of the

investments that we've made and was hoping us turn around this business group to growth.

Before we talk about the future, let's have a reflection on fiscal 2017. In fiscal 2017, we came in within guidance in

both our operating profits and our revenue at $8.4 billion, down 5% year-over-year. I'm particularly pleased with

how we expanded from Ci3 into a broad-based cloud solution. Accelerating investments in OCP, OpenStack and

the general open standards itself, and you'll see that in our cloud lab later today.

Our Communications Business Group in a particularly challenged industry actually grew 1%, primarily driven by

optical, which was up 11% year-over-year. Our networking business reaching in the external world is down

between 4% and 6%, [indiscernible] (02:44:09) was down 2% year-over-year. We made some strategic

investments during these past 12 months to enhance our product portfolio around networking, and I will be

looking forward to sharing that with you shortly.

Our traditional legacy business and server storage declines 35% year-over-year. However, I'm pleased to inform

you at this point in time that that is now less than 10% of our revenue going forward.

We operate with discipline. We continue to generate extraordinarily strong cash flow on behalf of Flex. I'm excited

about our Sketch-to-Scale where were grew 21% year-over-year. I'm equally excited about the $2 billion in

bookings that we added and 18 new logos. Some of those logos I can share with you, some of them I can't. What

you see here is some great names such as LinkedIn, Pure Storage, Nutanix, expanding our relationship with [ph]

DDM (02:45:12) and Lenovo.

We're working with these companies and co-developing and co-innovating for our future together, where we're

taking the building blocks and reference platforms that we've designed and invested in over the last number of

years to work collaboratively in solutions going forward.

Our value proposition is, as Mike said earlier today, about creating a smarter, more connected world. When I think

about this and I think about all of the presentations you've seen so far, from Mike's opening around expanded

TAM, digital health, autonomous driving; to Jeannine's building blocks in 5G and connectivity; to Paul in medical

and automotive; and to Mike in the connected home, connected smart areas; and back into Doug's industry 4.0





and the entire connected intelligence. What does that mean? So, for CEC, we provide the core building blocks

that enable this today.

All of the technologies that come together are built from connection, storage, the servers and actually helping us

to design products for the future in cloud compute. And what you've seen is that we have worked with our

automotives team, and you'll see this here today where we are working together in collaboration, bringing our

decades of experience to try and figure out how do you get a data center into a car elegantly connected securely

with zero latency.

You imagine the power of these two groups with decades of experience coming together with investments over

the last number of years and the latest technologies and you bring that to the automotive customer or you bring

that to the carrier provider or you bring that to the software provider that are trying to solve for autonomous

vehicles and transportation of the future, it's extraordinarily powerful.

Not alone is it powerful but think about an autonomous vehicle is going to drive 40 terabytes of data per day per

car. That's 40 terabytes of data per day per car. And think about also its average users, we use 650 megabytes of

data today on average and probably our teenage kids maybe 850 megs. However, 1 terabyte of data to drive a

drone every day, 40 terabytes to drive autonomous driving in vehicles and [audio gap] (02:47:43-02:47:45)

We think about digital healthcare. And my team today, we designed an edge computing device. That edge

computing is based on Intel's IoT platform, the Atom. We're working in collaboration with [ph] CAL (02:48:00) and

the healthcare group and the medical group ,and we're bringing the decades of experience together for medical

and all that insight and knowledge and FDA requirements and we're bringing all the experience in CEC together.

We're marrying this up and we're solving for digital healthcare where we're taking an edge compute device,

enable to connect to all of the medical devices and sensors all leading all of the information to the cloud, creating

analytics, and feeding the results back into the medical professionals and for the home user. Again, all of this is

driving the need and the demand for increased capacity, for secure environments, for reduction in latency and

increased connectivity. So if there's any doubt, we see that the cloud service providers will double over the next

three years.

We're going to see 4.5G to 4.9G into 5G increase the spend in connectivity. So the need for more capacity, the

need for reduced latency and higher level of connectivity is going to explode in our IoT world. It does not exist

without CEC and what we do every day. We spent the last two or three years investing in core reference

architectures, and I'm continuing to accelerate those investments. We will advance this into telco, cloud and into

connectivity for radio modules as Jeannine referenced earlier.

I get a lot of questions about our strategy as it pertains to off-the-shelf white box or x86. So for the fourth year, I'm

sharing with you we do not do x86 off-the-shelf white boxes. The reason for this is I have a belief that the market

will move towards customer and semi-custom requirements in the future. And we have spent the past three years

building our engineering capability in both software and hardware so that we can partner up with a CSPs or the

[ph] Super 7 (02:49:49) or the cloud providers and actually collaboratively design with them, co-innovate with

them, and bring all of these building blocks together.

What do we see most recently? We've seen Amazon acquire a silicon company. These CSPs are trying to figure

out how to handle more complex workloads as a result of artificial intelligence, autonomous driving, the IoT world

itself. The workloads are getting more complex. We need to optimize for them. That will demand a level of semi -

customization and customization work. What we have done over the past three years is put our building blocks in





place, put our engineering skill sets in place, and we're now going to hit into a pivot point where we'll turn this

business back to growth over the coming years, and I will share how with you.

Last year, I talked a little bit about some of the areas we'd invested in around computer storage. This year we

extended that to networking and extended it to converged infrastructure. We also have very powerful relationships

with the consortium. So we're members with OpenStack, with Open Compute, with LinkedIn, with the network

virtualizations. We broadened that this year to include CORD, which is your Central Office Re-architected as a

data center. So it's very relevant for some of the examples I'm going to share later, and equally into [ph] RF

(02:51:25) optical backhaul and 5G capabilities.

We've expanded our cloud lab where we have now 70 software engineers on staff. But I also have also very

strong relationships built up with companies such as Red Hat and Cumulus. And what we do in our lab is we take

Flex designs product, we couple it with our customers' product, we stack it in rack scale environment, and we test

it for workload optimization. And then we co-design, co-develop with those customers to change the workload

optimization and actually verify that the product is valid. We move that into a rack scale environment.

We're very excited about this. I'm going to continue with those investments and accelerate them to where we will

double our product platforms over the coming years to fiscal 2020. I will double both my software and hardware

engineering staff in collaboration with Jeannine.

And I'm going to show you some example of some of the products that we are working on, and these are based

on the latest technologies. So this is the next generation of compute, storage and flash based on fabric. It's a

NVMe all flash storage array. It's based on the next generation of Intel processor and will be available in mass

production later this summer towards the back end of the year.

We have this in four different customers right now. We're testing it with their software load. What you'll notice here

is all of the hardware design was provided by Flex but also the system architect, device engineering, all of that

capability came together from Flex, and we're now sitting side by side with our customer base where they're

validating outperforming with their software.

This is about the desegregation of software and hardware. This is addressing the software-defined networking of

the future, and you could anticipate that this is the way the industry will continue to move. Some of you will be

familiar with the term called Open 19. Open 19 was launched about nine months ago. Yuval and the LinkedIn

team founded this, and Flex became a very early member where we have co-designed and co-developed the

Open 19 solution.

And the sketch you see here is the actual sketch of us working with the engineering team over in LinkedIn,

designing this product for the future. What's unique about this is what we call is Open 19 architecture, so it's 19-

inch versus the 21-inch in Open Compute. So we do both. I also have OCP, which I'll come and talk to shortly, but

this is an Open 19 track.

The unique part of it is that it will retrofit into a brownfield site today as well, of course, as being able to bring up a

new greenfield site. It's particularly attractive for the more complex environments like telco cloud. And when you

go in and visit our lab after today's presentation, I'd like to show and spend some time with you to share what's

unique on this. It's got our top-of-rack switch designed by us based on Broadcom silicon. It's got our storage. It's

got our power management. We then partnered up to get an x86 server, and it is our rack environment and

actually some of our northbound and southbound API software, and then it's verified together with LinkedIn.





You're going to hear more about this in the press as we formally launch this in the Valley on May 23. And we did

our first rollout in Europe at CeBIT last month where Flex and LinkedIn together showcased this at CeBIT. I'm

particularly excited about it. You're going to hear about it at the back end of the summer.

I mentioned OCP, an Open Compute Platform. Some of you wrote about the products portfolio that you saw. Flex

demonstrated our key note address at the Open Compute Platform in the Silicon Valley a couple of weeks back.

So we have an open compute rack scale architecture that's based on again our top-of-rack switch, our storage,

our compute and our sled. It's our liquid cooling solution, it's our power tray, and it's ac tually rack and enabled out

into a broad environment.

And again, we're using our software engineers in collaboration with our customers' engineers, and we're taking

these reference building blocks and semi-customizing them or customizing them for future workload optimizations

that are driving more and more demand into the system.

We'll talk a little bit about communications. There's no doubt as we shift and now are already in the design stage

of 4.5G and we're taking that to 4.9G and eventually to 5G, that the need for higher level of frequency and the

radios, that the need in expansion of SKUs will quadruple as we try and solve IoT, as we try and solve

autonomous driving, which would be the most complex, driving the need for lower latency down to less than 1

millisecond.

And my belief is that we should continue to invest in this and we accelerated our RF engineering capability today.

We're building out our own product platform here. It will most likely move to merchant silicon, and we can help

solve that for our existing customers and equally for a whole new array of customers as we expand this TAM.

So, all very good. However what does it mean in terms of the portfolio and evolution for CEC?. So, let's get to the

good stuff. Focus in Sketch-to-Scale advancement is primarily driven as we expand it not just in convert storage

but expanded our service offering into compute, into rack-scale environment both in the open standards of Open

19 and also in OCP. We expect to triple that by fiscal 2020.

So moving to around an average of 30% of our portfolio driven for our building blocks and our product platforms,

working in collaboration with our customers, the solution products and deliver them to the market in the future. We

also see this investment helping our existing customer base make that transition into our merchant silicon and

semi-custom world and a hybrid world.

What does that mean for CEC in the future? So my guidance for fiscal 2018 remains unchanged at flat to minus

5%. However, I'm particularly excited to guide you for fiscal 2019 and into 2020 where we will take this business

unit back to growth. Back to growth driven off the investments we're doing today, driven off the technologies we're

doing in an open standard environment.

I continue to maintain guidance for our operating profit of 2.5% to 3.5%. So in summary, what does that mean?

The investment strategy in our product platforms is yielding results. I can't tell you how excited I am to be here

and able to share with you that we see shifting this business as it's gone through a major transformation in

technology and being able to navigate our way through that back into growth into 2019 and fiscal 2020.

Our Sketch-to-Scale enables that portfolio transition for new TAM expansions that Mike talked to but equally to

help transition existing customers as they make that move. We will continue to expand our new customer base.

We will continue to expand new logos. Our margin and key fundamentals are stable and we operate with a

discipline. We operated with strong free cash flow and our guidance remains unchanged for fiscal 2018.





I'd like to thank you all for your time and for your interest in Flex and for CEC business. And particularly, I want to

thank the entire Flex family and the CEC team for their cont inued efforts to help us through this transition, and I'm

pleased with the time today.

I think we're going to Q&A, but somebody was trying to message me something different. So I wasn't able to take

pick it up, but thank you very much indeed. ................................................................................................................................................................................................................................


Thank you, Caroline. So we're going to make a quick adjustment to the schedule to get back on track. We're

going to go straight to break right now. We're going to consolidate the Q&A session that was planned for right now

with the Q&A session that we're going to have after Chris. So you'll have a break, a 15-minute break. Again,

check out demos, go get some food, some drinks, and we'll signal you guys when we're going to be beginning the

final session.

[Break] (03:00:02-03:12:55)

Okay. Welcome back. We're going to conclude now with the last session of the day, Igniting Earnings Power. And

it's my pleasure to welcome to the stage our Chief Financial Officer, Chris Collier.

Chris? ................................................................................................................................................................................................................................

Christopher E. Collier Chief Financial Officer, Flex Ltd.

Good afternoon. I'll let you all take your seats. So, I also would like to welcome you all to our New York City

Innovation Hub. It's a pleasure to be here with you today. We're very excited to have you all with us, so we can

share our vision with you. And equally important, we're excited to have the privilege of actually giving you an

immersive experience here at Flex.

So, today, you've heard about how we're igniting intelligence. And then you've heard how we're igniting new

business vectors. [ph] What (03:13:56) I want to take you through is how we're igniting our earnings power. And I

also want to take you through how we're creating shareholder value.

For the last several years, we've been making significant investments into our business. And we provided you

with some insights throughout the day as to how we are thoughtfully making changes to our business model and

to our platform and how we're in an unbelievably strong and powerful position as we move forward.

So with that, what I'd like to do is start talking about how we're uniquely positioned. And as Mike talked earlier, we

unveiled the platform in fiscal 2013 and this was after years and years of developing this. But over the last several

years, we've supercharged this platform with investments and we're creating a very powerful weapon for

ourselves. It had changed the way we engage with our customers, and that's also known as Sketch-to-Scale. So

you've heard a lot about Sketch-to-Scale and you've heard examples throughout the day. But it's that engagement

model that has completely changed as a result of the strength of this platform.





Additionally, it's creating huge opportunities for us in new industries and new markets. It's enabling us to capture

and create massive new TAM for the company, as Mike talked about earlier today. And that unique position that

we have, guided by our financial principles, is enabling us to be on the successful evolution of our portfolio.

Now, our portfolio evolution is focused on getting us to higher margins, longer product life cycle businesses. If you

look, that five-year revenue chart on the left hand side, that's not too impressive and it doesn't tell the story of

Flex. It would look to you that we've been standing and running in the same position the last five years. You have

to dig deeper than that to understand what's underneath this.

We've been a part – we've been investing in driving the company to a new portfolio evolution. And it's reflective in

the middle of this chart here where you see the portfolio evolving the richer mix. You see us moving from the

fiscal 2013 of 28% of IEI and HRS business to now 38%. And what's even more meaningful in that evolution is the

drive from $6.6 billion of revenue for that combined group to over $9 billion in this last five-year period. That's $2.5

billion of incremental revenue. That's substantial. This creates a real foundational element for the company.

And to put it in a completely different perspective, you can take our $9 billion of revenue for this combined group

and you can take and add the similar business revenue for all our North American competitors and they wouldn't

come close to the $9 billion substantial business we have today. I think that's very meaningful and that creates a

foundational element in where we continue to build.

Our financial performance underscores our financial success in this successful evolution. On top of each of these

charts is [ph] work (03:17:31) that clearly defines our [ph] engaging (03:17:35), sustainable 8% compounded

annual growth rate of operating profit expansion. Each and every year for the last five years, we've grown our

gross profit and our operating profit. This last year we closed out with $815 million. Profitable, 9% compounded

annual growth rate of our net income – or our adjusted EPS over the last five years reaching $1.17 all-time high

this past year.

Resiliency of our cash flows, $3.2 billion generated over the last five years, $660 million this past year, consistent

year-in year-out strong cash flow generation. Then there's consistency around our share repurchase program and

our commitment that we made four years ago that we would return over 50% of our free cash flow to our

shareholders through the form of our share repurchase. And every one of these years, we've achieved that

commitment.

Now along this [ph] same (03:18:43) journey, we've been making significant investments in building out the

capabilities that we have today and we have a very well built -out system. Earlier today, Jeannine took you through

the innovation systems that we've been creating, and the spend that's involved with that, and the activities that

are underlaying that. But it's beyond just that innovation system.

Chart on your right displays for you the levels of investment for not only the innovation system but our Sketch-to-

Scale and other new business initiatives that we have. And what you can see is that in the last three years, we

have three times that level of investment. At the same time, we continue to grow our earnings, our operating profit

dollars, and our earnings.

We have significant installed capacity and capability now, whether it's in the level of engineering talents that we

put in place, whether it's the new centers of excellence, Innovation Hub such as this, the new business models

that we're engaging. Every one of these pieces are part of making and creating a much more powerful company

for the future.





What you see here is strong sustainable free cash flow. This is a hallmark of Flex. Chart shows you the $3.2

billion that we generated over the last five years. That fulfilled the commitment we made five years ago where we

said we'd generate $3 billion to $4 billion over the next five years. That's when we were looking at doing all these

different activities, building out our system. And we're very pleased with the performance where we actually grew

almost 10% greater this five-year period than the prior five-year period. But equally as important for you all is to

understand where we're going over the next three years and beyond. What we put together here is our vision for

the next three years in terms of our cash flow generation.

What you see is an operating cash flow generation of over $3.5 billion. That is predicated on continued earnings

expansion over these three years with disciplined execution around our net working capital management where

we anticipate staying within the 6% to 8% of sales each year. And again, consistent disciplined management of

our CapEx whereby we see it growing modestly above our depreciation. Actually not growing, sustaining modestly

above our depreciation as we continue to find and invest in areas of capability and capacity to support our

growing businesses, to drive automation and to fill out our new business model, where you put it all together and

you see a free cash flow generation of greater than $2 billion. So, again this remains a hallmark of Flex.

We are discerning and measured when we consider our M&A, and it is these key criteria that guide us in those

decisions. Over the last five years, we've done 17 transactions and majority of those transactions have been

below $100 million in consideration. The aggregate amount of those transactions was $1.5 billion. 85% of our

transactions over this period have been focused around building up the capacity, capability and technologies that

are embraced in our HRS and IEI businesses.

This will remain a key feature for us as we move forward. We'll be thoughtful and measured in our M&A activities

and we'll be continuously focused around [ph] bending (03:22:44) the exposure to those higher-margin longer

progress cycle businesses as well as expanding our Sketch-to-Scale capabilities.

We're very pleased with the balanced capital structure that we're operating. Over the last several years, [ph] been

(03:23:07) very focused and measured in how we operate our capital structure. We're very thoughtful on the fact

that we have no near-term maturities. And there's no maturities in any one year that are greater than the annual

free cash flow generation that we [ph] anticipate (03:23:21) generating.

So, we've broken out on this chart here for you, the fixed and variable components of our debt. And we're also

highlighting for you on here that we are actually enjoying a very low cost of debt at 3.5%. This is a very attractive

capital structure for us. It's very flexible. And with the significant amount of liquidity that we have coupled with this

structure, we are perfectly situated for our current and prospective business needs.

The title here says it all. We have an unwavering shareholder return commitment. And the numbers here clearly

demonstrate the magnitude of that commitment. Since fiscal 2011, we've repurchased $2.9 billion of our stock,

returning over 35% of our flow. And we are here to tell you today that we remain strongly committed to our share

repurchase program. And we will continue repurchasing our shares because we see the intrinsic value of Flex,

much greater than the current market value.

Our portfolio continues to evolve and we're delivering on this evolution. What you see here is the depiction of how

we've been growing and evolving the portfolio since fiscal 2010. You see us moving to 38% of that mix moving to

have richer mix as I talked about earlier. And we're clearly on-track to go and achieve that 45% mix that we talked

about last year and the year before.





Equally as important is on that journey, we see the trajectory to $13 billion of a combined HRS and IEI business

by 2020. But the key feature in this whole evolution is around the underlying product life cycle measured in years.

If you look back at fiscal 2010, we were right around two years. This past year, we have [ph] looked (03:25:28) at

the average a little over four years. And by the time our portfolio evolves to the 2020 state, we'll have over six

years of an average underlying product useful life. I equate that to recurring revenue. This allows our teams to

have [ph] an ability (03:25:46) to not have to go out and hunt and gather revenue to the same degree as we

historically have. This evolution provides us much more predictability and stability.

We're structured to deliver profitable growth. Throughout today, our teams have delivered information and insight

and examples of how we're structured to-date to grow each of our businesses as we move forward. When I think

about each of the places where the segments where we're operating today, whether it's the HRS and its strong

technical offering, the number of global platforms that we're on, the significantly increasing content inside the

vehicle, the position that we have across multiple product categories and platforms inside of medical. We're in a

different position today than we were last year and the year before.

And so we have the confidence [indiscernible] (03:26:45) to reiterate the 10%. IEI, Doug talked about the massive

amount of bookings, record-level bookings across this broad portfolio. The level of technical selling expertise and

the vastness within what we're operating in IEI, we have a lot of confidence in capturing 10% growth in that

business going forward.

We have CTG, talking about a richer business mix. We talked about the new markets and new partners that

helped foster that and has supported that future growth. And then Caroline just talked to you about the

repositioning of her business and the attractiveness and the wins we're capturing with regards to next -generation

technologies. Put it all together, and you actually have a growth profile.

We're super excited because fiscal 2018 is going to mark the first year of revenue growth for the company in the

last four years. And we see ourselves being able to sustain this targeted growth model for the business, as we

think about our 2020 model and beyond. [ph] The only thing (03:27:47) about this, we're also positioned for

operating profit and margin expansion.

Fiscal 2017 was a really strong year for us as we exited the year and marked our 14th straight quarter of year-

over-year margin expansion. Also at the end of this year, every single one of our segments was within our target

margin range as we exited the year. Those two feats, we're very proud of accomplishing those aspects. This

depiction here of a targeted adjusted operating margin profile is the same as what we had put out last year.

Our trajectory along this journey is never going to be linear. But we continue to make the right decisions, the right

investments to support each of these margin profiles that we anticipate. But the powerful omen about this is on

the right-hand side of that chart, is that by 2020 over 60% of our operating profit is going to be secured by our

HRS and IEI businesses that have greater margin profiles, much longer product life cycles.

And you heard Mike Dennison talk about our expansion in 2019 and 2020 of his targeted range. Once we have

gone through the different ramps and we've put in place the richer business mix and we secured these new

programs. All-in-all, we're actually positioned very well for operating profit growth and a strong margin expansion

as we move forward.

Now, I really want to talk about this new partnership that we're super excited about. In here, we're creating an

opportunity of massive TAM expansion. We're partnered with an iconic brand. And that relationship's going to be

spanning multiple decades. And together, we are modernizing the footwear industry.





This is a journey that we're on with this partner that started two years ago. We're excited about where we're on

and at with this journey. This is going to evolve over several phases. First phase that we're in right now is called

the Invest and Create phase. And where we sit and we've talked about just on our call two weeks ago, we talked

about the accelerated levels of investment that are required in this phase. And the elevated levels of investment

that we're putting in place over these next two quarters will allow ourselves to get up that ramp and to drive to the

meaningful revenue for the year.

So, this year is one where we're going to have investment losses. But as Mike said and [ph] we'll (03:30:23)

reiterate, as we exit 2018, we'll be heading into profits. That provides a very nice uplift as we move into fiscal

2019 and beyond. And as we move into the Rapid Ramp phase, and then we move into the Scaling Solutions

phase, that Scaling Solution phase sees us with a $1 billion plus type of a revenue program. And [ph] not just

(03:30:46) one that has HRS-like margin structure.

What's even more exciting about this transformational journey that we're on is that the industry expansion that we

see in 2020 and beyond has us engaging in textiles, apparel, fashion, conversations with a whole host of other

customers, that are underway today, that will leverage the cycles of learning and activities that have existed

through this [ph] front end (03:31:14) of this journey. And that provides us with massive opportunity for revenue

growth, great revenue and very, very rich high margin business.

We are positioned to deliver meaningful earnings power. This is the exact same chart I put up last year. I didn't

update it for the change in our view around the Sketch-to-Scale. The intent here was to reinforce our conviction

around being able to deliver this meaningful earnings power.

What I want to do next is build out from there and give you some of those foundational blocks and those drivers

that enable us to have that conviction on to that journey of growing our profits three times faster than our revenue

and our EPS four times faster and seeing something north of a 12%-plus type of a compounded annual growth

rate for our EPS.

So, let me take some time on this chart because there's a lot of aspects here I want to highlight. So, this is our

path to delivering substantial earnings leverage. Last year, the model that we depicted [indiscernible] (03:33:30)

from a fiscal 2016 out to 2020, 12% compounded annual growth rate target to [audio gap] (03:33:37). So, that

puts you at is roughly $1.80 of EPS in 2020. What I'm doing here is going to build you from our fiscal 2017 record

EPS of $1.17 up to that $1.80 and give you some insight into some of those aspects.

What you'll see first is HRS. HRS is going to contribute roughly $0.26. It's going to contribute that on the back of

strong double-digit growth across its broad technical portfolio, its increasing Sketch-to-Scale capabilities, and its

innovative partnerships. We've anticipated sustaining in its margin range.

When you combine the growth of that margin range, you see roughly around $0.26 of contribution over the next

three years. And to put that in perspective, the last three years, is roughly $0.22. We're super excited as you

heard from the dialogue with Paul about that business, and you're going to have an opportunity to get involved

here after this presentation to explore more with our automotive team, as well as with our medical team.

The next contributor to the significant driver for this path to the $1.80 and the 12% compounded annual growth,

the CTG business. And that again, is on the back of a richer business mix, as well as the contributions of moving

where we're at in an investment cycle, to a profit cycle with our Nike relationship. Combination of which, we

anticipate roughly $0.22 of contribution.





Next you have our IEI business where you heard Doug talk about the meaningful level of bookings, the broad

based bookings that he's been getting. [ph] Our (03:34:35) technical selling is winning. Our Sketch-to-Scale

penetration is increasing.

How we [ph] leave (03:34:41) fiscal 2017 inside of our target margin range. You put the pieces of the puzzle

together and you see a business of IEI that's going to grow double-digits through to 2020. And you see a business

that's going to be able to operate inside that margin range, the target margin range of 4% to 6% during this three-

year period. That's something that we haven't done the prior three years. Combination of all of that is going to

create another $0.19 of benefit each of these years as we continue to grow in that trajectory.

We have our CEC business where Caroline talked about how she's been repositioning that team. How we've

been thoughtfully managing the legacy parts of that business, so we're perfectly situated across next -generation

technologies and how we see an inflection point coming in this period in which we will return to growth.

We have a revenue guidance range of flat to negative 5% for that business. We think we'll be inside of that range,

at the low-end of that range, as we journey through the next three years with that business, and the richer

business mix that'll exist.

We anticipate actually capturing a couple pennies from that contribution. Any other corporate investments and

new business initiatives and today those are sustaining larger losses. Our vision is several of these businesses,

those losses are going to abate, they're going to be reduced over the next several years. At the same time, we're

going to be introducing other initiatives. But the combination of which, we anticipate being able to actually move

and create from the 2017 position today, a couple pennies of contribution just in terms of how we're operating

some of those underlying businesses.

You then take – and you think about the rich cash flow generation that we have, where I said over $2 billion over

the next three-year period and you partner that with the unwavering commitment that we've put forth with regards

to our share repurchase program. And you can kind of see the combination of that to give roughly $0.12 of

additional incremental contribution here.

Hopefully, you're staying with me. I got one other part here left. Next, the headwinds that we face and that is one

in which we think roughly around $0.20 is going to be attributable to both interest and taxes. And the interest

element is one that is going to be the headwind created by what we anticipate the impacts from U.S. fed rat e

hikes. Couple of slides before [ph] showed you (03:37:27) the variable debt structure that we carry. That, coupled

with our ABS Program, usually considering that almost every rate hike, a 25-basis-point rate hike creates roughly

a $0.01 of headwind for us.

We've already gone through two rate hikes to-date right now. So, if you think about it, we've already captured

$0.02 as we move forward. So, we think about the rate hikes over the next year and into the next several years of

creating some of that headwind. As we think about tax rate, the company's enjoyed a very low tax rate. 8% to

10% is something we've messaged for the last seven-plus years. And 9% is the average over the last nine years.

On our last call two weeks ago, I highlighted that going forward, and similar to what I said last year, we anticipate

seeing a 10% to 15% tax rate range for Flex over the next several years. I said that for fiscal 2018, we'll be at the

low end of that range. But we anticipate given the broader global tax environment pressures, as well as the

company now earning income in higher tax jurisdictions, so that mix of our income plus incremental pressures

globally, will create more pressure. So we anticipate that moving up modestly.





If you take a midpoint of that range, take the viewpoint around the interest, you'll get that $0.20 reduction, that

headwind. Put it all together, you get the $1.80, which is a 12% type of a growth for the company, which we're

completely excited about, and we have clear line of sight to. So, we've been making distinct investments to secure

that. I also have highlighted here a $2.15-plus type of a top side here.

And that's because what I just took you through was non-reflective of other aspects than can contribute to more

favorable performance to the degree we get revenue in these cycles. We actually capture more profits. We get

better absorption. To the extent that we accelerate some of our new business wins and new business endeavors

and we secure profitability quicker, faster and have greater revenues to those. You're going to see additional

upside. And to the extent that our model continues to shift and we continue to get more and more traction on our

Sketch-to-Scale, you can anticipate greater profitability. And if we accelerated some of our share repurchasing,

we'd have another lever. So we're possessing a lot of different levers to really give us confidence in terms of this

journey that we're on in the path to meaningful earnings leverage.

So, where we sit today. We have an unrivaled platform in which we're operating. We have unparalleled insight

into so many different industries. And we have a massively valuable position in terms of our Sketch-to-Scale

engagement and innovation capability that we've never had before. What that enables us is t o have a lot of

confidence around our successful portfolio evolution. We see line of sight to driving meaningful Sketch-to-Scale

adoption in where we sit today, and as we articulated, these multiple new businesses and new markets that exist

for us that are going to create significant TAM expansion for us.

Our platform is positioned perfectly to deliver substantial earnings leverage, and we, at Flex, are structurally and

strategically perfectly positioned to create continuous shareholder value.

So with that, that concludes my framework of how we're going to be igniting our earnings power. And I'd like to

now call Mike up on stage so we can then entertain any and all questions that you guys may have. Thank you.





QUESTION AND ANSWER SECTION

Michael M. McNamara Chief Executive Officer & Director, Flex Ltd. A Okay. Great. So, we have two mic runners, and they're grabbing their mics right now. But what we're going to go

ahead and do, I'm going to call on you guys, if you don't mind, for the webcast, giving your name, the firm you're

with, and then your question. So, I see right here. Steve? ................................................................................................................................................................................................................................

Steven Milunovich Analyst, UBS Securities LLC Q Steve Milunovich, UBS. Two questions. Mike, for you, first of all. What do you see on the competitive front?

You're – identified some very attractive markets, you're moving into higher margin markets. Do you see

competitors that – like Foxconn or somebody that maybe compete with us much today coming into those markets,

or do you think that's not such a threat?

Then Chris, given that EPS probably won't be up much this year, let's just say for the sake of argument, it's about

$0.20. You're talking about a 50% increase in earnings over two years. Is that roughly accurate? And even with

that, do you think there's likely upside or even downside to that $1.80 number? ................................................................................................................................................................................................................................

Michael M. McNamara Chief Executive Officer & Director, Flex Ltd. A Sure. So, on a competitive standpoint, we actually spend way more of our time figuring out how do we navigate

the future. There's so much change and opportunity as a result of new markets and new – of our customers

pivoting into new areas and how they monetize their business. Then we actually spend more time making sure

that we're relevant to take advantage of the opportunities going forward.

And if we think about the competitiveness of how we think about our system, we're trying to compete on a very

different – in a different place. We're trying to compete against cross industries because we have so much

technology and so much capability in leveraging the scale and leveraging the cross-industry technologies, which

as I mentioned earlier, you'll be able to see when you walk around here how many different cross -industry

technologies are actually creating invention for our customers.

So, once you start doing cross-industry competition and actually reinventing entire industries, you're not going to

do it unless you're at scale, unless you have extremely diversified revenue base that you can actually do a cross -

industry solution, and unless you're at scale in the areas where real innovation occurs. If you're not in the middle

of the Silicon Valley, if you're not in the middle of Israel, if you're not in the middle of Shanghai, if you do not have

access points in the world that digital technologies of the future are coming from, even right here in New York, is a

great example of how we're participating into what's actually the second largest venture capital area in the United

States this last year, which is in all the digital innovation going on in New York.

So, when it comes to like who has that footprint, who has that access to the new innovations that are going on

and who has – is at scale at someway different industries, and who has actually built their system for the last five

years to actually take advantage of this cross-industry innovation, I actually don't think there are any competitors.

And it's kind of why I made a comment very early on, it's a little bit like a marketplace of one. But we spend way





more time thinking about how do we maintain our relevancy and agility and our relevance in the future based on

the economy way more than our competitors. ................................................................................................................................................................................................................................

Christopher E. Collier Chief Financial Officer, Flex Ltd. A Hey, Steve. So, good question. What I'd like to kind of frame out for you, if you look back at the last five years,

you've seen 9% compounded annual growth rate on our EPS. Our objective every year is to grow our EPS. This

year, we've talked about more investments. You can actually look back to even the fiscal 2014, in which we also

[indiscernible] (03:45:23-03:45:24) investment year. On the back of that investment year, we grew well north of

20% against that following year.

As you think about the maps that you just laid out, you do see exponentially greater earnings trajectory for 2019

and 2020. What we've tried to highlight throughout the day, by each of the presidents, as well as through my

presentation, are some of those building blocks that made that path to that. So, our objective is to grow earnings

every year, while simultaneously making the right investments off of disciplined way to allow ourselves to go 2020

and beyond.

You will see an accelerated level of 2019 and 2020 in terms of the earnings growth. So, you [ph] could write on

point (03:46:08) with that. You should anticipate us focused on growing earnings every single year. Some years,

we're going to have an accelerated level off of the larger investment year. The back end of this year, we stumbled

into a greater revenue again. We're going to grow revenue fiscal 2018 for the first time in four years, and we see

that revenue growth compounding each [audio gap] (03:46:26). So put it all together, you actually see that trend

of the trajectory presenting itself and we're very confident how we can [audio gap] (03:46:34) ................................................................................................................................................................................................................................

Kevin Kessel Vice President-Investor Relations, Flex Ltd. A Next question is going to come from here, and let's try to keep it a single-part question just going forward because

we won't have a lot of time. [indiscernible] (03:46:40) ................................................................................................................................................................................................................................

A

[indiscernible] (03:46:41) after me. ................................................................................................................................................................................................................................

Kevin Kessel Vice President-Investor Relations, Flex Ltd. A Yeah. It's because you're multipart. ................................................................................................................................................................................................................................

Amit Daryanani Analyst, RBC Capital Markets LLC Q I guess, pardon me, I give one question in two parts. [indiscernible] (03:46:53) a lot of commas. Well, the part I

really want to know is how did you get [indiscernible] (03:46:57). But when you look at this $121 million of

investments in fiscal 2017 you talked about, what is that number for fiscal 2018? And how do you think about

when you're making these investments, how do you think about the payback period, the payout? Because I

suspect all the segment has [indiscernible] (03:47:14) investments. So, what's that number in 2018? How do you

think of the payouts?





And then just a second part to this, Mike, having talked about CTG, we'll see less seasonality in 2018 going

forward. Help me in deciding. Does that mean that September-December uptick that we see normally from CTG

should not happen? If it doesn't, why is that the case and what's the right seasonal metrics to think? ................................................................................................................................................................................................................................

Thomas K. Linton Chief Procurement & Supply Chain Officer, Flex Ltd. A So let me – [ph] hang on a sec (03:47:43). Let me jump into the CTG question first. I'll let Chris answer the other

one. And if you remember Mike's graph, he had a graph that showed the traditional industries and the new

industries. And the traditional industries went down substantially. It's in the traditional industries where there's a

tremendous amount of seasonality. As we seek to balance that portfol io across multiple different product

categories and build some more stable layers like we've talked about before with the Bose or with the Nike, it's

actually going to take the seasonality down. And that's particularly interesting to us, because, as you know, once

you have that seasonality on the way up, you have to hire all these people, and on the way down, you have to

either let them go or find ways to get vacations or do something.

And you have the same condition with capital equipment. It's hard to ramp way up for two or three months of

revenue to take advantage of our Christmas cycle only to take it down when your inventory suggested a marked

cycle. So, we're actually looking, very much looking forward to have a more stable profile, which is going to prove

our profitability [ph] and also (03:48:51) take less swings in the business. So, but if you visualize the graph or take

a look at the graph later of that traditional business going from a 60% level down to like a 35% level or so, that's

what actually creates the seasonality improvement. ................................................................................................................................................................................................................................

Christopher E. Collier Chief Financial Officer, Flex Ltd. A And again, for CTG, it's all about a richer business mix. Last call, two weeks ago, we highlighted two certain

legacy programs that [ph] they are abating (03:49:13) for us. That's going to kind of be what helps that type of

lessened seasonality. As for the investments, the $121 million, try to draw a comparison so you could see that

level, it's not just R&D, it's the innovation system that we've been building out's being here, this type of the

innovation hubs that we're putting in place, the new [indiscernible] (03:49:32), the new Boston centers. It's also

the new businesses and some of the new initiatives around those digital hubs. The combined of that is a

[indiscernible] (03:49:41) of $121 million, three times where it was three years ago.

As we think about stepping forward, it's going to modestly increase. One of the things that probably I tried to

discuss, I mean, [ph] if we're going to (03:49:52) in that chart, was that we've created a significant amount of

installed capacity with what we've done to date. We've moved, as Jeannine said, from a roughly 2,000 design

engineers three years ago, four years ago, to over 3,000 today.

You're not going to see that same level of acceleration take place where we actually have a great level of installed

capability and capacity. It was going to go up this year because [ph] that was (03:50:16) good message. And so,

but it should be leveling up. So what do you start seeing though is the revenue contributions that start kicking in,

driving another leverage into that. I think that was what you're asking. ................................................................................................................................................................................................................................

Thomas K. Linton Chief Procurement & Supply Chain Officer, Flex Ltd. A And I think the key thing, too, is we're not going to invest in anything that we don't see a return. ................................................................................................................................................................................................................................





Christopher E. Collier Chief Financial Officer, Flex Ltd. A Yeah. Sorry. Yeah, you have the return profile. ................................................................................................................................................................................................................................

Thomas K. Linton Chief Procurement & Supply Chain Officer, Flex Ltd. A Yeah. ................................................................................................................................................................................................................................

Christopher E. Collier Chief Financial Officer, Flex Ltd. A And so, Jeannine highlighted we have – it's 18 to 24 months of [indiscernible] (03:50:41) before they start being

able to produce. Every one of our presidents and every one of our businesses goes through a distinct process of

looking at what the opportunity is in what type of return profile, not a margin but a total return, invested capital and

in the attributes, and they all have to seek a risk-adjusted return profile, so every one of these is we're getting

after. We're not going to hit every one correctly, but we have a return profile that guides us in those decision-

making. ................................................................................................................................................................................................................................

Michael M. McNamara Chief Executive Officer & Director, Flex Ltd. A They all think the more you see their graph go up, the more that you should take from that is that we actually see

more and more opportunities to invest in our business to create competitive differentiation and enable our

marketplace. ................................................................................................................................................................................................................................

Kevin Kessel Vice President-Investor Relations, Flex Ltd. A And I'll take that question on the car very carefully. Very, very carefully. ................................................................................................................................................................................................................................

Michael M. McNamara Chief Executive Officer & Director, Flex Ltd. A Better drain the oil. Let's put it that way. [indiscernible] (03:51:30) in here. ................................................................................................................................................................................................................................

Kevin Kessel Vice President-Investor Relations, Flex Ltd. A All right. Right here, we have [ph] Mary (03:51:32) over her. Let's see if we can do better than Amit here. One-part

question. ................................................................................................................................................................................................................................

Q

All right. We'll see. So, I guess very simply, Mike, when you pitch potential customers outside of your traditional

markets on your extensive capabilities, what pushback do you hear from them and what are the key hurdles that

you work hard to overcome to gain their confidence that you're far from a traditional electronics manufacturing

company? ................................................................................................................................................................................................................................

Michael M. McNamara Chief Executive Officer & Director, Flex Ltd. A





Yeah. So, any time you disrupt in an existing system, we're going to have some pushback because there are

some players in the system somewhere in that financial system where there are profi t pools. And once you

optimize and digitize and lean out that entire system, once you [ph] value stream map (03:52:13) the entire

system and understand where those profit pools are and seek to optimize them, some people are going to get cut

out, and disrupting the existing system is probably the biggest challenge. So, I think having a leader who's willing

to step out of the box and say I'm going to reinvent, is really, really important for us.

But without doubt, every time we go into a new industry, we are going to have new challenges that we're going to

have to work through, and we just have to make sure that the industries we pick are big enough and actually have

enough profit pools or inefficiencies to disrupt, that the end user is going to be the beneficiary and will work with

us as a partner to take advantage of those opportunities. ................................................................................................................................................................................................................................

Kevin Kessel Vice President-Investor Relations, Flex Ltd. A Great. Right here. ................................................................................................................................................................................................................................

Steven Fox Analyst, Cross Research LLC Q Steve Fox from Cross Research. So, just one question. Big picture question, Mike. So you laid out a lot of

different areas you're going into. Can you just talk about when it becomes a bridge too far? I'm not asking you to

defend, say, Construction Services, but there's a lot of opportunity. There's a limited amount of resources even for

you guys. So how are you deciding what makes sense and maybe what doesn't? And within that, how are you

incentivizing people to work across all these areas? ................................................................................................................................................................................................................................

Michael M. McNamara Chief Executive Officer & Director, Flex Ltd. A Yeah. That's a really interesting question. The key point for us is when we actually look at the construction

industry, for example, it's actually not too far from the rest of the business that we do. Okay, how do we integrate

design all the way through the supply chain process. Well, what we do is, we said, we don't know about design

and construction. So, we got a partner called RIB Software. And they were the most advanced software company

that we found that actually has been working for decades to actually work with builders, to actually do the design

of the systems. So we're not going to attack that.

But once you actually know what you're going to go buy and the ability to apply the tools to actually how do you

run a supply chain, how do you source, how do you bulk buy, where do you find new sources of material, how do

you drive costs down, how do you move and distribute those materials around the world and get them to the jobs

at the right place at the right time, none of those tools are new. Those are exactly the same tools we have today.

So, I think in that particular case, the way we solve the problem is, let's work with a partner who can handle the

sketch part because there's no way that'd be a bridge too far for us.

In the shoe industry, it's a little bit different. We have a very important customer that helped us work into it. And

we didn't go very far on that one either, believe it or not. They have content expertise, we have all these systems.

The reason they picked us is because we never built a shoe before, but we had access to so many different

innovations and so many different automations in so many different industries and so many different ideas, they

actually thought if you married their content knowledge along with our system to be able to be innovative and use

our entire regional manufacturing system and our distribution systems, our IT systems, that that would create a

good relationship where we could actually reinvent that industry.





So, if it wasn't for that partnership, we won't be doing it. So I think, in every single case, there's going to be a

different answer. But what I can tell you is, we're going to stay focused in those areas where we can generate real

value, and we're going to stay focused on those areas where we're actually using our existing tools, capabilities,

and resources, and leverage those in a heavy way. And we're going to make sure we meter it and not do too

many at a time. I completely agree with you.

And as far as incentivizing people across, this has been an challenge for us for like five years now. How do you

incent the guy that's working in CTG to take that wearables product and actually work on it, so that you can give it

to the automotive guy to have a [ph] key fob (03:56:07). So, I'm not sure there's a great answer to that yet. We

work on it all the time.

One of things you'll find, we have a different way of running like our Digital Health initiative because it goes across

so many different initiatives. And what we did is actually took our Digital Health guy which you guys can meet, Kal

Patel, and he's kind of like [indiscernible] (03:56:27). He actually exists, and his system is built around being able

to leverage all the different technologies everywhere in the company to actually accomplish the objective, which is

an integrated solution to Digital Health. So, we're actually building new models. I'd like to think we're going to be

innovators and some pf the – even the organizational design models that we end up building out of this. But it's a

really good question. ................................................................................................................................................................................................................................

Kevin Kessel Vice President-Investor Relations, Flex Ltd. A Mark? ................................................................................................................................................................................................................................

Mark Delaney Analyst, Goldman Sachs & Co. Q Thanks very much. Mark Delaney with Goldman Sachs. Appreciate the presentation. So if you could elaborate a

little bit more on the bookings, disclosures that you gave for the CTG Group, I think $1 billion of new bookings in

fiscal 2017. Can you talk about how much of the Nike opportunity has already been booked at all of the fiscal

2018 revenue? Would that have shown up in last year's bookings? And is there any of the future years' growth

opportunity associated with shoes that has already been booked or is that all still on the come? ................................................................................................................................................................................................................................

Michael M. McNamara Chief Executive Officer & Director, Flex Ltd. A Yeah. So, rather than giving really detailed information about how much what percent is Nike and what percent is

other things, you've seen some of the new bookings up there. Things like Skullcandy, will.i.am, the lidar demo that

we saw today. I mean, there's a lot of new bookings, all of which – and all those bookings were new bookings this

year. I'm kind of like, when I like to leave some of the Nike date out, one of the things you're going to find is we're

going to – we've been pretty fair disclosure in terms of the Nike relationship and when it's coming, and how it's

coming and what kind of margin profile. But to be tell you the truth, we're going to start metering the transparency

of that data down quite a bit because our customer is starting to get more uncomfortable with it, and it is not our

policy to give too much detailed information about any particular customer.

So, we have to be – we'll start metering that down. The guide that you'll get, everything will be included of course,

but our objective for this year, and I think as a result of that, you need to think about what is the whole segment

guidance, and we continue to maintain a 3% to 5% guidance range for CTG, and I think you just need to think

about is, it's that, that's our bundle.





Kevin Kessel Vice President-Investor Relations, Flex Ltd. A Sure. And by the way, this will be the last question for the webcast. You'll have plenty of access once we break

here for the demos and cocktails, but we want to be cognizant of the time. ................................................................................................................................................................................................................................

Sherri A. Scribner Analyst, Deutsche Bank Securities, Inc. Q Hi. Thanks. Sherri Scribner from Deutsche Bank. Mike, historically, the contract manufacturing business has had

very limited visibility, and so, you've had situations where suddenly revenue was much less than you had thought.

Clearly, you're laying out a path where that visibility is improving, specifically in HRS and IEI. And you've seen

revenue has been growing and operating profit has been more stable. But can you give us some detail on has

visibility improved in the CEC and CTG, and how are you transitioning those other businesses that tend to be

relatively transactional? ................................................................................................................................................................................................................................

Michael M. McNamara Chief Executive Officer & Director, Flex Ltd. A Yeah. I think, CEC actually has reasonable visibility. I mean, most of the product categories were built in probably

three-plus years. They do tend to like if AT&T is buying this year, or Verizon is buying this year, but it tends to be

in swings of 0 to 5 or 5 to 10 or minus 5 to 10, it doesn't swing that much.

I do think they're much more transactional. There's a lot of capacity to go do CEC kind of work, and much of the

traditional CTG kind of work. There's a lot of capacity, there's a lot of know-how. So, it tends to be moved more

towards transactional. As a result of being in transactional, it becomes less and less predictable because your

ability to have a stickier relationship with the customer actually deteriorates.

So, all we can do is try to diversify our portfolio much as you can. As you mentioned, HRS and IEI is a great

example. I mean, it has been our objective to continuously diversify our portfolio into longer product life cycles and

more stable businesses. So that's one thing we can do.

The second thing we can do is to take businesses like in CEC and move them more into a Sketch-to-Scale kind of

a relationship. And once you move to a Sketch-to-Scale kind of relationship, this isn't just designed services. Just

in terms of a clarification on Sketch-to-Scale, it's actually product invention. And the minute we start adding more

value, doing more services, and take more responsibility for the product, and as we add more value, we're going

to see higher margins. And in addition to seeing higher margins, we'll have a stickier relationship because our

customer will be more dependent on us.

So, that's how we think about evolving our entire portfolio to HRS, IEI, how we think about migrating the portfolio

in CEC, and I didn't mentioned CTG yet. But if we can get some structural layers of like a Bose and like a Nike,

which we believe can be a year-after-year increase in revenue in a much more stable way with a much more

stable customer, they can provide like a platform. And then if we could take the rest of the business and move it to

more of a consumer-oriented Sketch-to-Scale kind of business where we have more technology and we're

creating more value, we believe that can become a stickier business as well.

So this is what we're trying to do. We're trying to meter the traditional business down in CEC, we're trying to

increase the amount of technology, we're trying to put in the two layers for Nike and Bose, and then CEC, we're

trying to move the portfolio to more of a Sketch-to-Scale portfolio.





As a bundle, we think it'll continue to diversify and stabilize our business and will provide growth leverage then it'll

be able to have more predictable earnings, which is subjective because we actually can't control the endpoints as

you just said.

Okay. So, just want to thank everybody. So, we're going to move into the next phase of our system here. ................................................................................................................................................................................................................................


Yes. ................................................................................................................................................................................................................................


We're going to do some tours, there's a tour guide. [indiscernible] (04:02:23) ................................................................................................................................................................................................................................


[indiscernible] (04:02:24). All right. So, we're going to need to clean it up [indiscernible] (04:02:30) unless

everybody cooperates. If you've got a blue on your badge, come up to the front, you're going to be with me, we're

going to start with Connected Home. If you've got red, go over here where [ph] Mary (04:02:39) is, she's going to

be heading in the AR/VR, if you don't have a color, go with green. That's for our CEC, that will give us enough

time to clear, and then everybody can flow freely after that. Thank you. Take your [indiscernible] (04:02:53).

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10-May-2017 Flex Ltd. · 10-May-2017 1-877-FACTSET www ... we've done in the past and like I'm sure...

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