Flex Ltd. FLEX has announced a definitive agreement to acquire Crown Technical Systems for $325 million in an all-cash deal. The acquisition is anticipated to be accretive within the first year following buyout completion. It is expected to be finalized by December 2024, pending standard closing conditions, including regulatory approvals.

This acquisition enhances Flex's presence in rapidly expanding and profitable markets, particularly in modular data center adoption and medium-voltage power distribution. This move broadens Flex's power portfolio into the utility power sector, capitalizing on ongoing trends in grid modernization and increased energy generation. Furthermore, it bolsters Flex's critical power offerings and accelerates U.S. data center market growth.

Based in California’s Inland Empire region, Crown Technical Systems has nearly 30 years of expertise in tackling critical power distribution and control challenges. The company offers extensive modular solutions, medium voltage switchgear and control and relay products. It serves diverse long-standing customers, including utilities, data centers and power generation. It has facilities in California, Texas and Canada. For fiscal 2025, which concludes on March 31, 2025, Crown Technical Systems is projected to generate around $120 million in revenues, along with a high-teens earnings before interest, taxes, depreciation and amortization (EBITDA) margin.

Flex highlighted that acquiring Crown Technical Systems enhances its ability to support customers facing power, heat and scalability challenges in the data center industry, in line with its long-term growth objectives.

FLEX Focused on Bolstering its Data Center Power Portfolio

Flex is working on bolstering its data center power portfolio to expand its footprint in the lucrative data center power market. 

On Aug. 22, 2024, Flex’s subsidiary, Anord Mardix, known for its expertise in critical power distribution and protection, opened a new state-of-the-art facility in Dundalk, Ireland. This facility will serve as an assembly hub for switchgear and modular power systems, meeting the increasing global demand for safe and reliable data center power solutions, particularly as artificial intelligence (AI) technology advances.

In May 2024, the company bolstered its offerings by acquiring FreeFlow, a leading provider in global secondary markets focused on asset disposition and digital circular economy tracking. This acquisition aims to expand Flex's service reach in emerging markets like data centers, enterprises and lifestyle sectors, unlocking new revenue streams while promoting sustainability through second-life products.

With these initiatives, Flex is poised to significantly enhance its revenue growth in the evolving data center landscape and improve financial performance in the long term.

Flex Ltd. Price and Consensus

Flex Ltd. price-consensus-chart | Flex Ltd. Quote

Flex offers advanced manufacturing solutions and additional value to customers through a wide array of services, including design and engineering, component services, rapid prototyping, fulfillment and circular economy solutions. Flex is well poised to gain from robust momentum in automotive, cloud and data center power.

However, due to weak macro trends in core industrial, revenues in Reliability Solutions are likely to be down in the high single-digit to mid-teens in the fiscal second quarter. Sluggishness in enterprise IT will keep Agility Solutions revenues flat to slightly down in the fiscal second quarter.

FLEX’s Zacks Rank & Stock Price Performance

FLEX currently carries a Zacks Rank #4 (Sell). Shares of the company have gained 89.5% in the past year compared with the sub-industry's growth of 5.8%.

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Stocks to Consider

Some better-ranked stocks from the broader technology space are Itron, Inc. ITRI, Cirrus Logic, Inc. CRUS and SS&C Technologies Holdings, Inc. SSNC.  ITRI & CRUS presently sports a Zacks Rank #1 (Strong Buy), whereas SSNC carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Itron is a technology and services company and one of the leading global suppliers of a wide range of standard, advanced, and smart meters and meter communication systems. It delivered an earnings surprise of 57%, on average, in the trailing four quarters. In the last reported quarter, ITRI pulled off an earnings surprise of 26%. 

Cirrus Logic’s performance is driven by increasing shipments in the smartphone market. Steady momentum in the laptop market and standout next-generation flagship smartphone design cushion the top line. CRUS delivered an earnings surprise of 56.6%, on average, in the trailing four quarters.

SS&C Technologies Holdings delivers investment and financial management software and related services focused exclusively on the financial services industry. It delivered an earnings surprise of 3.1%, on average, in the trailing four quarters. In the last reported quarter, SSNC pulled off an earnings surprise of 4.9%.

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