#United States #FLEX #Austin #Revathi Advaithi #SpinCo

Flex Spins Off Cloud and Power Infrastructure Segment

In a significant strategic shift, Flex (NASDAQ: FLEX) has announced its intention to separate its Cloud and Power Infrastructure segment, creating a new independent publicly traded company, aptly named SpinCo. This announcement, made on May 5, 2026, was unanimously approved by the company's Board of Directors and is expected to finalize in the first quarter of calendar 2027. The initiative reflects Flex’s ongoing transformation into a technology-centric industrial giant over the past seven years.

Objectives of the Spin-Off

The primary goal of the spin-off is to establish two distinct companies, each with unique growth strategies tailored to capitalize on their respective markets. SpinCo is set to become a leader in delivering critical digital and electrical infrastructure solutions. It will focus on end-to-end power and thermal management technologies, specifically catering to AI data centers and mission-critical applications.

Revathi Advaithi at the Helm of SpinCo

Revathi Advaithi will take the reins as the CEO of SpinCo, transitioning during the separation process. Advaithi expressed her enthusiasm regarding the spin-off, stating that it will empower SpinCo to develop and implement innovative products that are essential for the evolving demands of AI workloads. Concurrently, she will serve as the Chairman of the Board of Directors for Flex during this transitional phase.

In the meantime, Michael Hartung has been designated as the new CEO of Flex, continuing its legacy of manufacturing excellence. His expertise is anticipated to guide Flex in optimizing its manufacturing solutions tailored for diverse sectors, including healthcare, industrial, automotive, and communications.

Strategic Benefits for Both Entities

The separation is expected to yield several strategic advantages:

• - Sharpened focus on distinct markets and enhanced operational execution.
• - Clear, defined financial profiles leading to improved capital allocation strategies.
• - Greater transparency in performance and expectations for both entities.
• - Tailored investment approaches to stimulate long-term, profitable growth.

SpinCo: Focusing on Digital Infrastructure

SpinCo aims to be at the forefront of critical digital infrastructure, particularly in high-density environments like data centers. The company will integrate power, cooling, and computational capabilities as a cohesive unit, moving away from fragmented solutions provided by multiple vendors. This holistic approach promises accelerated deployment times and improved infrastructure reliability, crucial in a landscape marked by rising power intensity and growing infrastructure complexity.

With ambitious revenue growth projections of approximately 65% to 75% for fiscal 2027, followed by an even greater acceleration in fiscal 2028, SpinCo is poised to capitalize on trends such as electrification and the burgeoning AI sector.

Flex: Focused on Advanced Manufacturing

Post-spin-off, Flex will continue to lead in advanced manufacturing. The company will organize its operations into two segments: Integrated Technology Solutions and Regulated Manufacturing Solutions. By leveraging automation and digital processes, Flex aims to enhance its production capabilities across 75 sites globally, thus providing operational resilience in times of supply chain disruptions.

Flex is strategically positioned to benefit from expanding markets, including the growth of connected medical devices, advanced networking, and robotics. The company anticipates maintaining a steady growth trajectory while optimizing its portfolio for higher-margin opportunities.

Michael Hartung remarked on the company's future, stating, “After more than 20 years with the company, I’m honored to help lead Flex into its next chapter.” He emphasized the importance of delivering robust value to shareholders through strategic execution and customer focus.

Conclusion

The spin-off of SpinCo from Flex marks a transformative moment for both entities, setting the stage for significant future growth and enhanced shareholder value. As these two companies embark on their separate paths, the market will be keenly watching how they leverage their distinct competencies in an ever-evolving technological landscape. The full details of the transaction will be available on Flex's official website, further solidifying its commitment to transparency and shareholder engagement.

Citi, PJT Partners, and BofA Securities are advising Flex during this pivotal transition.