What drove FLEX's EPS surge in Q1 2025?

Flex Ltd.'s (FLEX) EPS surged in Q1 2025 due to several key factors:

1. Record Margins and Operational Efficiency: Flex achieved a record quarterly operating margin of 6.1% and earnings per share (EPS) of $0.77. This was primarily driven by strong strategic execution, improved business mix, and enhanced efficiency across all units.
2. Growth in Data Center Business: The data center segment experienced a substantial 45% year-over-year growth, fueled by AI-driven cloud expansion and increased demand for hyperscale cloud integration. Flex's acquisition of JetCool and Crown Systems has bolstered its data center portfolio with critical technologies, including direct to chip liquid cooling and power solutions, enhancing its service offerings.
3. Medical Device Demand: There was notable demand for medical devices in Q3, with Flex showcasing exceptional capabilities in FDA-regulated medical technology design and manufacturing. This includes securing a significant contract for GLP-1 injectors.
4. Free Cash Flow: The company reported free cash flow of $306 million for the quarter, with a fiscal year-to-date total of $757 million, setting them on track to surpass their full-year target of $800 million.

In summary, Flex's EPS surge in Q1 2025 was driven by a combination of record margins, strategic acquisitions, growth in high-margin businesses such as the data center segment, and strong operational efficiency.