Shares of manufacturing services provider Flex Ltd. (NASDAQ:FLEX) slumped on Friday after the company reported mixed fourth-quarter results and provided earnings guidance that fell short of analyst expectations. As of 11:15 a.m. EDT, the stock was down about 16%.
Flex reported fourth-quarter revenue of $6.41 billion, up 9.3% year over year and about $130 million above the average analyst estimate. The company returned to revenue growth in fiscal 2018, with CEO Mike McNamara pointing to investments in Sketch-to-Scale capabilities as a key revenue driver.
Non-GAAP earnings per share came in at $0.28, down from $0.29 in the prior-year period and $0.02 below analyst expectations. GAAP EPS was a loss of $0.04 thanks in part to $82.7 million of restructuring charges. Non-GAAP gross margin was 6.7% during the quarter, down from 7.1% in the prior-year period.
Along with its results, Flex disclosed that the audit committee of the board of directors is investigating allegations made by an employee regarding improper accounting for obligations in a customer contract and certain related reserves. The company does not yet know if these issues will have a material impact on previously reported financial results.
For the first quarter, Flex expects to produce revenue between $6.3 billion and $6.7 billion, compared to analyst expectations for $6.3 billion. Profits won't be quite as rosy, with the company foreseeing non-GAAP EPS between $0.22 and $0.26. That range is well below the average analyst estimate of $0.32.
While Flex has returned to growth, its bottom line is disappointing investors. The earnings shortfall and lackluster earnings guidance were enough for the market to push down the stock.