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Flextronics expects debt to EBITDA ratio around 1.5 times by year-end
By Jennifer Lanning Drey
Portland, Ore., May 25 - Flextronics International Ltd.'s ratio of debt to EBITDA is trending to be in the range of 1.6 times to 1.5 times by year-end due to the company's prior debt-reduction measures and improving EBITDA, Paul Read, Flextronics' chief financial officer, said during the company's annual analyst meeting, held Tuesday.
"We really think we have a very healthy, very strong and very leverage-able balance sheet for the future," Read said.
The company believes it has the financial flexibility support the business over the next few years, "to make sure that we can play in any market at any time, if that's what fits our strategy," he said.
Flextronics' strategic intent is to enter new markets and leverage the capabilities in which it has invested in recent years, Read said.
The company currently has liquidity of about $4.4 billion, which includes an untapped $2.0 billion revolving credit facility.
In a normalized year, which Flextronics believes it is heading toward, the company's cash-deployment strategy looks for net capital expenditures to be equivalent to depreciation. It then would slate a portion of its cash for tuck-in acquisitions, as well as look to build cash.
The strategy provides excess cash on an annual basis that could potentially be used for further acquisition opportunities, or the company may choose to hold more cash or return it to shareholders, he said.
In fiscal 2010, Flextronics spent less on capital expenditures and acquisitions, focusing on building cash and debt repayment, Read said.
Flextronics is a Singapore-based company that provides manufacturing services to electronics companies.
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