C-Suite Conversations on Consumer Health, Earnings

Summary

Bloomberg Businessweek: C-Suite Conversations on Consumer Health, Earnings

Date: May 7, 2026
Hosts: Carol Massar & Tim Stanweck (Stanweck = Tim Stenoveck)

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Episode Overview

This episode features insightful interviews with top executives across animal health, fintech, and manufacturing, focusing on the resilience and transformation of consumer-facing sectors. The hosts explore how C-suite leaders are navigating macroeconomic forces, technological change, and shifting consumer behaviors, giving listeners a front-row seat to boardroom strategies and industry pivots in animal health, consumer lending, and data center infrastructure.

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Key Segments & Discussion Points

1. Animal Health in a Changing Consumer Landscape

Guest: Jeff Simmons, CEO of Elanco Animal Health
Timestamps: [02:19] – [06:55]

Highlights

• Strong Industry Growth:

  • Elanco recently reported its best quarter since spinning out from Eli Lilly (2018), with 10% growth on both pet and farm animal sides.
  • U.S. and international markets are both contributing, with 70% of new puppies now outside the U.S.

• Consumer Trends:

  • Spending on pets continues to rise, with average annual spend up by $500 per household.
  • High expectations for pet care and increased willingness to pay for convenience and value.

• Competitive Edge:

  • Elanco is outperforming major rivals (e.g., Merck Animal Health, Zoetis), gaining market share due to innovation and a broad product distribution strategy, from high-tech vet clinics to dollar stores and online.
  • Recent expansion into new channels, including Dollar Store and Costco.

• Diversification as Strategy:

  • Diversified business across pet, beef, swine, and poultry; leading in beef and swine.
  • Long-term growth outlook: "mid single digit, consistent on the top, high on the bottom and double digit, low double digit on EPS".

    Jeff Simmons [04:20]: “When you’re dependent on one innovation in one country, you become dependent. Elanco for the rest of this decade ... we feel very good about that.”

• Protein Trend:

  • Protein consumption is being driven by intersecting trends such as wellness and aging populations.
  • Over 1,000 new dairy products launched, and a focus on muscle retention for an aging demographic.

    Jeff Simmons [06:24]: “It’s not one trend, it’s many trends, and it’s not just the U.S., it’s global wellness…Muscle retention is the key thing for that aging population.”

Memorable Moments:

• Carol Massar [06:57]: “The dog food we feed our pets, man, it is specialized, different ages, keeping them thin. It’s interesting stuff.”

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2. Smart Credit: AI & the U.S. Consumer

Guest: Gal Krubiner, Co-founder & CEO, Pagaya Technologies
Timestamps: [09:37] – [17:18]

Highlights

• Company Focus:

  • Pagaya uses AI to help major U.S. banks and fintechs make more inclusive and accurate credit decisions—serving personal loans, auto loans, and point-of-sale lending.
  • New partnerships with Upstart and Sezzle broaden their BNPL (buy now, pay later) footprint.

• Health of the Consumer:

  • Contrary to headlines, Pagaya’s data (across over $1 trillion in applications per year) shows stable performance among prime and near-prime borrowers (~$115k income, 660–670 FICO).

    Gal Krubiner [11:28]: “There is a differentiation between what Wall Street and Main Street is experiencing … Our borrowers’ performance is very stable and they are buying a lot of cars in the last tax season … the U.S. economy is very steady.”

• BNPL Stability:

  • BNPL portfolios are performing robustly, with growth focused on longer-term installment loans rather than ‘pay-in-4’ products.
  • Pagaya avoids lower-quality/short-term BNPL exposure.

• Diverging Consumer Realities:

  • CEO addresses CEO of Kraft Heinz’s warnings (“consumers are literally running out of money at the end of the month.”)

    Gal Krubiner [14:00]: “You spoke about the very low income, and that’s potentially things that are getting very squeezed by inflation… But when we’re talking about people that could borrow $10,000–20,000 … they have an income of $115,000. That’s twice as high as the average middle America.”

  • Framework: "K-shaped recovery" — higher-income consumers stable, lower-income challenged.

• Risk, AI, and Credit Models:

  • Pagaya uses AI for real-time underwriting and risk management; responded to Q4 capital market stress by proactively tightening credit standards (cut volume by $1 billion).

    Gal Krubiner [16:19]: “The first thing we did as risk managers is to reduce our risk posture…our results this quarter are after almost $1 billion of a cut…”

Memorable Moments:

• Carol Massar [13:11]: “Are people buying groceries on buy now, pay later?”
• Gal Krubiner [13:14]: “I really hope they don’t.”

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3. Big Bets on Data Centers, Power, and Supply Chains

Guest: Revathi Advaithi, CEO of Flex & incoming CEO, Cloud and Power Infrastructure spin-off
Timestamps: [20:19] – [31:11]

Highlights

• Company Transformation:

  • Flex, a major contract manufacturer (clients: Apple, Microsoft, Amazon), will spin off its cloud and power infrastructure (CPI) business in early 2027.
  • Spin-off aims to focus on high-growth “products” segment for data centers/utilities, leaving Flex to focus on agile contract manufacturing.

• Growth & Industry Drivers:

  • CPI segment grew 38% last fiscal year, guided for 65–75% in current year, and 80%+ in the next—driven by data center buildout and changing power infrastructure.

    Revathi Advaithi [24:49]: “Growth in the CPI business last year was around 38%...guided to this year being 65 to 75% and then next year being 80 plus percent. Obviously, heavy growth.”

• Technology Inflection Point:

  • Data centers are increasingly power-hungry (“power density has become a huge thing”), needing new electrical infrastructure and distributed power.

  • Anticipates fundamental shifts: “solid-state transformers,” distributed grid, and the utility sector’s transformation.

    Revathi Advaithi [25:40]: “Electrical infrastructure is going to change…It means distributed power is going to change, it’s going to look different. So there’s a technology revolution also happening.”

• Resilience & Supply Chains:

  • Flex has proved its resilience amid tariffs, trade wars, supply chain crises, and COVID disruption.

    Revathi Advaithi [30:23]: “We have managed through tariff issues, geopolitical issues, through trade wars, through supply chain crisis, through a pandemic...Flex is very competent to manage through any supply chain crisis that’s thrown in front of us.”

• Power Crisis & Solution Thinking:

  • Short-term: energy prices rising due to supply/demand imbalance (“zero sum game”), companies rely on co-generation, solar, and other alternative energy sources.
  • Long-term: nuclear (SMRs), broad grid overhaul required for data center and utility reliability.

    Revathi Advaithi [28:32]: “We are going through a generational change right now… new forms of power generation like SMR nuclear reactors...is an important way to think about this.”

Memorable Moments:

• Carol Massar [26:32]: “Whether data centers are up in Mars…at some point that growth slows down. So is it data center really fueling the growth now…and longer-term, do you feel like it will be utilities that are the engine of growth?”
• Revathi Advaithi [27:07]: “Today data centers are fueling the growth, but data centers are also fueling the issue that the technology needs to change.”

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Notable Quotes by Timestamp

• Pets & Spending:

  • Jeff Simmons [02:45]: “We see no slowing. Spend is up $500 a year plus on pets … If you bring value and convenience, and you can reach the global market...the willingness to spend, we’re seeing it.”

• Consumer Credit Realities:

  • Gal Krubiner [14:00]: “You spoke about the very low income, and that’s potentially things that are getting very squeezed by inflation... But when we’re talking about people that could borrow $10,000–20,000 and to go to vacation or to buy a car...they have an income of $115,000. That’s twice as high as the average middle America.”

• Transforming Infrastructure:

  • Revathi Advaithi [25:40]: “Electrical infrastructure is going to change. Distributed power is going to change, it's going to look different. So there's a technology revolution also happening.”

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Timestamps for Important Segments

• [02:19] Animal health market outlook – Interview with Jeff Simmons, Elanco
• [09:37] Consumer credit & AI lending – Interview with Gal Krubiner, Pagaya
• [20:19] Data center spin-off & supply chain resilience – Interview with Revathi Advaithi, Flex

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Tone & Style

The episode maintains a professionally inquisitive and deeply informative tone, balancing hard numbers and future-focused strategy with real-world consumer and investor impact. The hosts probe, challenge, and contextualize remarks, drawing out industry insights and actionable intelligence for both executives and everyday listeners.

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Takeaway

Pet industry, consumer credit, and tech manufacturing are being reshaped by innovation, resilience, and profound shifts in consumer demand and infrastructure. C-suite leaders are betting on technology, new channels, and diversified business models to maintain growth and capture emerging opportunities—while being keenly aware of the challenges posed by macroeconomic uncertainty, income inequality, and the evolving needs of both customers and global supply chains.

Transcript

[Chase Business Representative]

Small businesses are the pulse of every community. They bring people together, create opportunities and drive growth. Chase for Business helps business owners like you with personalized guidance and convenient digital tools all in one place. With that guidance and your determination, you can take your business farther and help build a brighter future for your community. Learn [e-mail] business chase for business Make More of what's Yours the Chase Mobile app is available for select mobile devices. Message and data rates may apply JP Morgan Chase Bank NA Member FDIC Copyright 2026 JPMorgan Chase Co.

[IBM Representative]

So there's a lot of noise about AI, but time's too tight for more promises. So let's talk about results. At IBM, we work with our employees to integrate technology right into the systems they need. Now a Global workforce of 300,000 can use AI to fill their HR questions, resolving 94% of common questions. Not noise Proof of how we can help companies get smarter by putting AI where it actually pays off, deep in the work that move the business. Let's create smarter business IBM okay, before

[Microsoft/Windows Representative]

we get into it, little side note for the IT leaders listening in, I was reading up on a Microsoft Commission survey the other day and learned that teams using Windows 11 Pro PCs report 62% fewer security incidents compared to Windows 10 PCs, including three times fewer firmware attacks. Pretty significant. With security built in, you'll have AI ready it. That sets you up for operational efficiency as well as long term resilience. Upgrade to Windows 11 Pro@Windows means business.com

[Podcast Host (Carol Massar or Tim Stanweck)]

Bloomberg Audio Studios Podcasts Radio News this is Bloomberg BusinessWeek Daily reporting from the magazine that helps global leaders stay ahead with insight on the people, companies and trends shaping today's complex economy. Plus global business, finance and tech news as it happens. The Bloomberg businessweek Daily Podcast with Carol Massar and Tim Stanweck on Bloomberg Radio.

[Carol Massar]

We want to get a read though on the macro, Tim, and we've got one from the C Suite, a stock that rallied big time yesterday, but it's given back a bunch today.

[Tim Stanweck]

Yeah, we're talking about Elanco Animal Health, $11.8 billion Market Cap Company reported earnings yesterday. Here to talk about the results, the outlook and the macro coming at the company is the President CEO of Elon Co, Jeff Simmons with us from Greenfield, Indiana. Jeff, good to have you on the program. What are you seeing that gives you a picture of whether or not we are slowing down when it comes to our spending on pets?

[Jeff Simmons]

Yeah, I will just say Animal Health has just completed one of the biggest years we had in 2025 10% growth on the farm side up high single digit on the pet side and we see no slowing. We just recently completed a survey. Some of this is part of the industry in our company where spend is up $500 a year plus on if the expectation of care is high, you've got to bring value, you've got to bring convenience. But if you do that and you can reach the global market, 70% of new puppies are outside the US so that global footprint matters. Listen, with expectation of care growing, the willingness to spend, we're seeing it. And that's what turned in the best quarter since we spun out of eli Lilly in 2018 that we turned in and announced yesterday with 10% growth. And we saw that growth on both sides, Pet Farm International and us.

[Carol Massar]

Yeah, it's a great read and you know, it's interesting. It's in contrast to what we're seeing from some other players in this space, Oedis and also Merck's animal health segment. I want to ask about those results because you did as a result of what you reported, Jeff, it seems to see seem that you guys are actually gaining share out there as some of your rivals are having a tougher time. First time in many years that we've seen your company outperform some of the competitors that are out there. Investors are focused on durability of these gains. They want it to be not just a one quarter thing. So how heavy is the company cutting prices trying to hold on to that share and gain even more?

[Jeff Simmons]

Thank you for the question. I mean I'll just say we've been on a path. We're in the midst of three years of consistent growth. And let me contrast a little bit. First of all, I think the industry is extremely durable and we can come back to it. But you know, animal protein is growing significantly. I mean meat case sales are up 100% the last five years. Right. Cottage cheese, meat sticks, the milkshakes, the new dietary guideline, GLP. So protein is, you know, we're expecting 5% growth in protein and then on this pet side, as I said, high single digit growth. So then, well, what's going on underneath when you start to look at companies? Elanco, let me contrast a little bit. First it's innovation. Just like on the pharmaceutical side we've launched six blockbusters in major markets. $2 billion derm market, we got the two fastest growing products, $6 billion parasiticide market, we've got the best medicine and just shared record market share growth there. Y and then the beef market. We know what's going on in beef. So I think it's innovation one two is we bought Bayer a few years ago to really they had a retail business. We've got an Omni Channel we announced yesterday we're in the dollar store now all the way to Costco. We have the OTC leadership in pet. I can take you online to Chewy and Amazon to the dollar store, all the way to a complex product in the vet clinic. Nobody reaches more pet owners where they want to shop at the price point than Elanco. And then we've got a big farm animal business. We're number one in beef, swine, poultry. So that diversity matters. Reaching more customers. When you're dependent on one innovation in one country, you become dependent Elanco for the rest of this decade. And we laid out in our investor conference we're looking at mid single digit, consistent on the top, high on the bottom and double digit, low double digit on eps. And we feel very good about that. And I think our stock performance has shown that over the last 12 to 14 months. And I'm more excited about the 12 to 14 months.

[Tim Stanweck]

Hey Jeff, we only have 20 seconds left. But the durability of the protein craze right now. How do you know that that's here for good? Very briefly.

[Jeff Simmons]

Yeah, I think you just it's not one trend, it's many trends and it's not just the U.S. it's global wellness. We used to be all about oh get meat into the diet or milk or whatever. The protein is higher quality, a lot more. Over a thousand new products in dairy and people are seeing this, that hey protein, you know, muscle retention is the key thing for, for that aging population GLP use. So I see many more converging trends and it's going to drive volume growth, not just share growth.

[Podcast Host (Carol Massar or Tim Stanweck)]

I got to say the dog food

[Carol Massar]

we feed our pets, man, it is specialized, different ages, keeping them thin. It's interesting stuff. Jeff, come back soon. We'd love to do more with you. Jeff Simmons, of course, the CEO of Elanco. This is Bloomberg.

[Tim Stanweck]

Stay with us. More from Bloomberg Businessweek Daily coming up after this.

[Carol Massar]

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[IBM Representative]

so there's a lot of noise about AI, but time's too tight for more promises. So let's talk about results. At IBM, we work with our employees to integrate technology right into the systems they need. Now a Global workforce of 300,000 can use AI to fill their HR questions, resolving 94% of common questions. Not noise. Proof of how we can help companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business.

[Microsoft/Windows Representative]

IBM support for the show comes from Public Lately it feels like there are two types of investing platforms. Some are traditional brokerages that haven't changed much in decades, and others feel less like investing and more like a game. Public is positioned differently. It's an investing platform for people who are serious about building their wealth on public. You can build a portfolio of stocks, options, bonds, crypto without all the bugs or the confetti. Retirement accounts? Yep. High yield cash? Yes again. They even have direct indexing. Public has modern design, powerful tools and customer support that actually helps go to public.com market and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com market ad paid for by Public Holdings Brokerage Services by Public Investing member Finra SIPC Advisory services By Public Advisors SEC Registered Advisor Crypto Services By ZeroHash all investing involves risk of loss. See complete [e-mail] disclosures.

[Podcast Host (Carol Massar or Tim Stanweck)]

You're listening to the Bloomberg Businessweek Daily Podcast. Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business Apple or watch us live on YouTube.

[Tim Stanweck]

Shares rising today as much as 15.6%. This after the company reported adjusted earnings per share for the first quarter that beat the average analyst estimate. The company also announced that this chief strategy officer will become CFO that's effective next month and narrowed its adjusted EBITDA forecast for the full year. Back with us, Gal Krubiner, co founder and CEO at the $1.3 billion market cap pagua Technologies. Always good to have you on the program. You use AI, machine learning. You help financial firms make credit decisions. Before we get to the most recent quarter, just remind everybody where specifically you operate when it comes to the spectrum of consumers and credit.

[Gal Krubiner]

So Tim, Carol, thank you so much for having me. Yeah, in general terms, it's exactly what you Said we are using a very strong AI capabilities that we have built and we are connected to banks and we're helping them to approve more customers that otherwise maybe we'll find their approval somewhere else. And we are working with the biggest banks in the United States. So you can think about US bank and many others like L A Bank. And we do that across three different markets. We are doing that in personal loan, we're doing that in auto loan and we are doing that in point of sale. Just this quarter we actually announced the addition of Upstart and Sezzle, which are two very big. One of them personal loan originator, actually public and one of them Sezzle, which they Buy Now, Pay Later, a public company too to help them approve more customers under their brand.

[Carol Massar]

Gal, one thing I want to ask you about, so you said you're connected to banks so you're helping them with basically credit analysis like where the risks are, like who's going to be a good customer to give credit to. So talk to me about what you are seeing as a result. Lots of data that you are seeing. What are you seeing about the quality of consumer credit today?

[Gal Krubiner]

So I can't express how much there is a differentiation between what Wall street and Main street is experiencing. So as we think about the consumer and we're talking about our average consumer is a good strong American $115,000, 660, 670fico. Their performance is very stable and they are being buying a lot of cars in the last tax season. They got additional money in the tax season, their payments are in due and the performance that we are seeing on these borrowers that we are lending to are actually at a very strong place. Now that is very contrary to the news that we see out there about geopolitical and other pieces and things that might will change the future. But as for now, as for the data we have and we see over a trillion dollar of applications a year, we are seeing a very steady U.S. economy. U.S. consumer.

[Carol Massar]

I do want to push a little bit though the BNPL Buy Now Pay. What are you seeing the alternative credit growth in this system? I mean you guys back Klarna's portfolio in the U.S. can you dig a little bit deeper into that area?

[Gal Krubiner]

Yeah, I can't obviously comment on specific partner or the other but I will say that Buy Now Pay later is performing well too. In our point of sale book is as robust as it's ever been. It is true that this is changing in some respect. Some credit card transactions that otherwise will do. We are focusing on the more longer dated loans. So a little bit less of the paying for and stuff like that. So all our official loans with official credit bureau. So we are exposed to the real main meat and bone of the US consumer, kind of like lending. And there we see quite strong stability.

[Carol Massar]

Are people buying groceries on buy now, pay later?

[Gal Krubiner]

I really hope they don't.

[Carol Massar]

But are you seeing it?

[Gal Krubiner]

We can't, we can't speak about the specific transactions but like in general, again the, the things that we are dealing with are for TVs, for vacations, for other stuff. And in that area, as you see a very strong momentum like the US economy is continuing to perform very strongly.

[Tim Stanweck]

How do you, how do you reconcile what you see with what we heard from Kraft Heinz as CEO that quote, talking about consumers, quote, they're literally running out of money at the end of the month. We're seeing negative cash flows in the lower income brackets where we're seeing where, where they're dipping into savings. How do you reconcile what, what we heard from the Kraftine CEO and what we're seeing?

[Gal Krubiner]

You had exactly the answer in the question. You spoke about the very low income and that's potentially things that are getting very squeezed by inflation, by gasoline prices, by all the second and third derivative effect of the oil and the geopolitical situation. But when we are talking about the people that have access to unconsumer debt and the people that could borrow 10, $20,000 and to go to vacation or to buy a car of $50,000, usually they tend to be in the, if not the first 10% but like at the top 50%. So when we are thinking about the borrowers that we are actually lending to, they have an income of $115,000. That's twice as high as the average middle America. Right. So you need to take these things in perspective. Some call it the K shaped form economy, some call it other ways. But what drive really the economy and its kind of like strength, definitely the people who earn more. The unemployment is still very low and the ability of Pagaya to work with many more banks and to offer that capabilities is actually allowing them to lend more and to live a better life. And that's really the mission that we are behind. And a lot of the growth that we are experiencing is more banks are calling us and telling us that they want to serve their customers better. So they are connecting to the Pagua network to be able to do that. And they are millions of Americans having a good income, they're having a good fico but just not getting the credit that they need. And that's what Pagaya is here to solve.

[Carol Massar]

Hey, one of the things I'm curious about just coming off of Milken did a whole thing on consumer credit. And so part of the questions that we asked about is how folks are kind of adjusting their models to make sure that they are testing well for the current environment. I want to know, are you guys using AI for lending specifically? And with those expectations of a cooling US labor market later this year, are your models being tested in a way that they haven't been since the company went public? And how is the AI adjusting your underwriting in real time to account for rising default risks? I mean, we've been doing some reporting about that too, especially for folks who have student loans, the amount of debt they have and the amount of kind of rising default rates that we are seeing.

[Gal Krubiner]

So that's a great question. And I think from my perspective as a CEO, you can think about growth and prudent risk that goes hand in hand. So when we looked on Q4 and we started to see some dislocation in the capital markets and many other pieces, the first thing we did as risk managers is to reduce our risk posture. So what you've seen in our in our results this quarter is actually after almost $1 billion of a cut, which is a 10% of what we believe to be should have been the production of the loans by now if we didn't take these precautious preliminary actions. And I do agree with the things you spoke about in Milken and we need to be very cautious about the way to do it. And uniquely our business model is positioned as such that we have the luxury to do these adjustments and to be able to actually provide the consumer credit only to the people that we believe are going to be much more immune right these type of various situations.

[Carol Massar]

All right, we have to leave it there. Come back soon because you're such a great read on what's going on with consumers. Gal Kuberner, co founder and CEO of Pagua Technologies.

[Tim Stanweck]

Stay with us. More from Bloomberg businessweek Daily Coming up after this.

[Podcast Host (Carol Massar or Tim Stanweck)]

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[Microsoft/Windows Representative]

Support for the show comes from Public Lately it feels like there are two types of investing platforms. Some are traditional brokerages that haven't changed much in decades, and others feel less like investing and more like a game. Public is positioned differently. It's an investing platform for people who are serious about building their wealth on public. You can build a portfolio of stocks, options, bonds, crypto without all the bugs or the confetti. Retirement accounts?

[Gal Krubiner]

Yep.

[Microsoft/Windows Representative]

High yield cash? Yes again. They even have direct indexing. Public has modern design, powerful tools and customer support that actually helps go to public.com market and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com market and paid for by Public Holdings Brokerage Services by Public Investing member FINRA SIPC Advisory Services by Public Advisors SEC Registered Advisor crypto services by ZeroHash all investing involves risk of loss. See complete [e-mail] disclosures small businesses are

[Chase Business Representative]

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[Podcast Host (Carol Massar or Tim Stanweck)]

You're listening to the Bloomberg Business Week daily podcast. Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app or watch us live on YouTube.

[Tim Stanweck]

Shares of Flex searched a whopping 40 yes 4 0% yesterday. This after the electronic manufacturing services company issued profit guidance for 2027 and exceeded consensus estimates today, the stock hit a new all time high as well. Additionally, Carol, the company announced that it will spin off its cloud and power infrastructure segment into a public company that has investors excited.

[Carol Massar]

Yeah, we're excited Too. To hear more, keep in mind this company, some of the biggest customers include Apple, Microsoft and Amazon. It's a who's who I feel like of the tech world. With us to talk more is Robothi Advantage Advaithi. She is CEO of the $50 billion market cap company and she joins us from Austin. She will be the CEO of the new company as well. Rovathi, nice to have you here with Tim and me. Why does this spin off make sense right now? Tell us kind of the fundamental reason for doing this and why you want to be with that part of the business.

[Rovathi Advaithi]

Yeah. First Tim and Carol, thanks for having me. And maybe the best part way to tell this story is to tell a little bit about Flex. Flex is one of the world's largest contract manufacturing company. We're the name behind the brand. So we make everything for folks who are in the automotive industry, in the healthcare industry and industrial companies, consumer brands, think of something. We probably make that through the years. When I joined Flex in 2019, I don't have a contract manufacturing background. I came from industrial companies. I ran Eaton's electrical business, worked in Honeywell, so didn't know much about contract manufacturing when I joined. But I knew one thing is that the world in contract manufacturing was changing. Contract manufacturing is built on the logic of labor arbitrage, scale, lowest cost and with geopolitics and how the world was changing, it felt like a new model needed to emerge. So what we started doing at Flex was really other than kind of fixing the fundamentals of the business, exiting some kind of non core parts of the portfolio. We spun off an asset called Next Tracker in the solar space. That's a $17 billion market cap company today. But then we focused on kind of a few end markets that we felt had potential. One of them, this was much before the ChatGPT moment was power in the data center space. And now me, coming from electrical and running Eaton's electrical business, noticed that Flex made the power that powered the chip. And I thought, well, compute is going to get power hungry someday. Let's figure out how to invest in power end to end. And we started putting a whole bunch of acquisitions together to really put together compute cooling because there was a lot of heat getting generated and the power of the chip itself and all the power up to utilities. So the last seven years we have created this business that is focused on data centers and utilities that has been scaling up really, really fast. And so it felt like the perfect time to take that part of the company, which is more like A products business and then spin it off into standalone business that is catering to data center space and utilities and then keep the contract manufacturing portion of the company focused on investing in kind of new growth markets.

[Tim Stanweck]

So we see for investors watching and understanding how you report right now, does it mean that the flexibility solutions part of the business is the part that's being spun off? Are there parts from both of these reportable segments that are being spun into the spinco?

[Rovathi Advaithi]

Yeah. So Tim, till our fiscal year just ended. So we just started a new fiscal year and we changed our reporting segments to help clarify this because our data center portfolio was split between parts of agility and parts of reliability. So compute was an agility, power was in reliability and so it wasn't all together in terms of external reporting segments. So we've just changed that in our new fiscal year. It's called cloud and power infrastructure CPI and that is the segment that will be getting spun off into a new end.

[Tim Stanweck]

So what's the growth in that segment versus the growth in the traditional manufacturing segment?

[Rovathi Advaithi]

Yeah, so the growth in the CPI business last year was around 38% which was our last fiscal year. We have guided to this year being 65 to 75% and then next year being 80 plus percent. So obviously heavy growth in all the rest of the business right now we have guided to kind of low to mid single digit growth in that also in this part of energy infrastructure that's growing fast, consumer is growing slowly. So net net we're more comfortable about the low to mid single digit growth for what will remain in flex.

[Carol Massar]

So kind of almost, I hate to say old versus new economy, but it is very much a play on the AI Build out. Correct. It's fair to say that that's what this represents.

[Rovathi Advaithi]

It is a little bit of the build out but really it is what is changing from a technology perspective. So I talked about, you know, if you think about the electrical infrastructure, what is going to change? I would say in that infrastructure is pretty significant and driven by data centers in the sense that data centers are power hungry and power density has become a huge thing. But that is going to change how electrical infrastructure structure gets delivered within kind of the context of data center to grid. So a big reason is yes, the growth of data center, but electrical infrastructure is going to change. So it means that distributed power is going to change, it's going to look different. So there's a technology revolution also happening. The growth is driving it, but the technology change is also driving why this makes sense sense at this point. In time.

[Carol Massar]

You know, Robot, I want to ask you though, that's interesting because I do think some of the conversations we're having, starting slowly, while everybody says we're early innings in this build out for AI, that this idea of an exit plan, at some point, whether data centers are up in Mars, you know, up in space, like at some point that growth slows down. So is it the data center really fueling the growth now along with utilities, but longer term, do you feel like it will be utilities that are really the engine of growth? Longer, longer term?

[Rovathi Advaithi]

I believe so, Carol. So I believe that today data centers are fueling the growth, but data centers are also fueling the issue that the technology needs to change. Power density is so significant that we can't deliver power the same way that we were dealing with it before. So this idea of solid state transformers and how power is going to get delivered is becoming a very important way, which means that the grid needs to change, which means that utilities need to change. So it is the growth is driven by data centers, the technology revolution is driven by them, but that has to make its way to the utility sector. So my belief is that now what you're seeing is with data centers, but that's going to translate into how power is getting distributed, how it's getting transmitted. All of that is going to change with time, which is going to drive a different kind of growth.

[Tim Stanweck]

Yeah. The big question that we've been asking, and we've been reporting on this a lot is, is the, is the effect that it has on consumers. And in a world where we don't necessarily have all of that power right now. So where do you think that that power ends up coming from? And what happens if we don't have the grids resilient enough to handle that power and we don't have a way to produce it in a way that doesn't cause all of these prices to go up for all of us.

[Rovathi Advaithi]

Yeah. Unfortunately, in the short term, you know, prices have been going up because there is so much power getting consumed. And right now it's somewhat of a zero sum game in the sense that new power generation methodologies are not coming up fast enough. So a lot of people are making do by putting CO generation systems, solar and alternate energy systems to get things up and running in the interim. But in the larger, in the longer time frame, things like what is happening with nuclear and small medium reactors, those kinds of alternate forms of power generation have to come into play. I have been in the energy space, Tim and Carol, for a Long period of time. I remember going to so many utilities, facilities, companies talking about we needed to change our distribution system, our substations, our transmission systems. Money wasn't there to be invested. So we are going through a generational change right now. And the idea that we're going to have to have new forms of power generation like smr, nuclear reactors, I think is an important way to think about this. I would say that we're making do in the medium term with other forms of power generation, but we will have to have new forms of this moving forward.

[Carol Massar]

Yeah, I feel like everybody we talk to about data centers and we say, what kind of power? Solar, renewables, you know, carbon and nuclear, they're like check, check, check. We need it all. Hey, we only have about 40, 50 seconds left here. You guys have a network of more than 100 facilities in approximately 30 countries across four continents. Excuse me. How resilient are your supply chains with what you guys have to do?

[Rovathi Advaithi]

You know, Carol, we're built for this purpose. I mean, I wouldn't take any credit for this, but we have managed through tariff issues, geopolitical issues, through trade wars, you know, through supply chain crisis, through a pandemic. We have such complex systems built both from a software perspective, a very complex set of supply chain metrics that we track and manage on behalf of our customers and ourselves that Flex is very competent to manage through any supply chain crisis that's thrown in front of us. And I would say this is our core competency. We do it amazingly well.

[Carol Massar]

Well, as when does the spin off? When is it completed? Just real quickly.

[Rovathi Advaithi]

We have said early next year, calendar year.

[Carol Massar]

All right, listen, stay in touch. I feel like we always learn something when we spend some time with you. Thank you so much. Roboti Advaithi. She is CEO of Flex. I do feel like we do and I think it's interesting the separation of the company and it is about data centers, but the power play is a really fascinating aspect.

[Tim Stanweck]

Yeah, and don't forget the company's DNA. It's in the physical hardware, the stuff that we use each and every day.

[Carol Massar]

I just. Such a great conversation.

[Rovathi Advaithi]

This is Bloomberg.

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