Jabil (JBL) 17 Dec 192020 Q1 Earnings call transcript

Greetings, and welcome to the Jabil First Quarter Fiscal Year 2020 Earnings Conference Call and Webcast. [Operator Instructions].

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Adam Berry. Please go ahead, sir.

to Quarter welcome Earnings Fiscal and Call. morning, Jabil's of First XXXX Good

today's Executive are and me call Joining on Chief Officer, Dastoor. Chief Mike Officer, Financial Mondello; Mark

on during is Please today's follow you along and be being will our discussion To prepared the the webcast and to Jabil's referencing note slides. remarks, will today's call, of At the be end call call website. logged live, view that in Relations the with the need will Investor to a presentation our be of webcast we available on and jabil.com. slides, replay both

conference These will our cause including, outlook of today's to are new Form An the expectations, these current statements net quarter assumptions or on as making regarding any result among and results differ business forward-looking 'XX obligation report expected risks list are second based intention risks could ended on to During statements events our filings. that annual call, uncertainties otherwise. and and and we uncertainties for and actual forecasts those earnings. other involving and and things, August or outcomes Jabil and fiscal be XX, XX-K or of statements, any disclaims materially. whether future forward-looking other extensive a XXXX, revise identified information, for update year fiscal in revenue

the hand Mark With to now call over to that, pleasure my it's Mondello.

join and business to getting their every making at at I'll into hand, like our also and of for work Thanks, season. Adam. our Jabil a wish my commitment. each and hard today. you to all safety continued to folks want appreciate extend safe personal sincere Good their peaceful and call priority. gratitude time to I by taking for thanking employee morning. begin I everyone And our before here the holiday I'd results Jabil

where Slide to turn X our we'll results. quarter at please look Now first

in on billion, core $X.XX of $XXX margin of and core earnings Our operating revenues a of resulting share team operating income core $X.X million generated per X.X%. of

quarter, record exception formed our in to business, revenue During the forecasted our solution this most me, was which is adopted what's being of and we but cloud gave our favorable delivered newly the for marketplace. in plan our Overall, is how start above the one This year. with exception, accepted revenue. valuable for well quarter, helpful us a to upside geocentric QX cloud came services being the

provide our during more results As our detail to guidance speak is and forward will remarks. prepared customary, Mike QX around his

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communities around the globe. think I the to and giving care unmatched customer back about

proud. will have mark As year, the our stands so I these is in if that just it hitting as year and us CEO, expect squarely of make behavior through all conduct 'XX, I'm the will, areas, and team banner our appreciative that we'll FY a all a very

picture our the effort our of and Slide terrific picture, a composition commercial to underscores shows see you'll which portfolio. team. effectiveness the This picture on Moving of X, a

our to is unique intentional the the the to fact, years, repeatedly few commercial our considering and makeup our Furthermore, Diversification special, I've the enterprise. portfolio business. our diversification on addressed past of Over full deliberate impact it the key when positive and increase has is performance. in

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year. update us And that Slide to brings X. to our the for Please turn

is Our company positioned. well

revenues financial will As billion when fiscal Margins, we 'XX. roughly focused on $X.X We flows. intensely cash in September, metrics: and year-on-year compared be X highlighted to we're earnings up anticipate

increase income in we the income outlook $XXX September. see year, in earnings, X.X%. importantly, Therefore, in translates operating our improved for of to $X.XX margin be the This coming the now More income core outlook the neighborhood year core by share the $X.XX confirming core a the up will we to revenue. with of offered for side side through target million from

committed we delivering Lastly, year. in of to remain $XXX the flow free excess million for cash

reliable and parts. the I best each our considering and brands and structure, as role and team Strategy Progress than work. better, has sum a of simple day, disciplined partner we steady. little the little our greater clear. bit body the been been our and total of world our and explicit a In the forward consistent to our believe a and our the bit truly the culture path where ushered just far making has closing, every bit is is smile Jabil many responsible by on ahead little a value of healthier when and is safer planet. I We're whole

that organizational momentum I this once team special a feel past want of year. the acknowledge is execution into the carrying strongly I again to as to our and will thanks good the team half offer back continue their our execution quarter. near-perfect during

on call everyone like now over I'll that, safe and With the to the I'd holiday. Mike. to wish peaceful a call turn

earnings $X.X quarter was billion, and $XXX core X.X%. the quarter of both everyone. of during and was Mark, an saw operating segments. increase income ways. for morning, Net share increase year-over-year, the performances GAAP quarter year-over-year. an interest Core was many $X.XX. income and and quarter Thank margin strong diluted was operating per million QX than diversification excellent expense better good We $XXX revenue was operating good during XX% you, an other was in first the representing expected. million, by of X% our Net GAAP a

expense interest quarter during net borrowing by the lower was quarter. driven inventory Our during the better-than-expected levels less to intra-quarter due

Our core in was for quarter XX%, tax with rate the line expectations.

ahead a on per over diluted expectations was quarter $X.XX, prior the based improvement Core earnings $X.XX X previous approximately factors. and share year of XX%

in First, focused associated product efficiencies on we operational as DMS segments and excellent products with both EMS. in across saw operational year's execution new awards seasonal successfully ramped we last

continues geocentric Mark offering hyperscale players. deliberately our It's a service highlighted, to cloud resonate and as cloud a is our unique with reminding worth structured offering. asset-light been as bit has everyone, Second, business

able highly volumes, configuration demand given $XXX appropriately solution were With additional compounding that mind, we this coupled the and in an the swiftly nature is revenue. flexible This capitalize Our in agile. content, both we with on materials higher content during in flexible million effect the of and quarter, increased increase to experienced approximately led model. of to

expected. and our just in finally, other than better And came I expense interest mentioned, as

Now moving results. GAAP to our

the million result in XXXX As expected plan on related and, remain a in restructuring largely in as track expected, incurred charges an continues This $XX to to September. announced restructuring to in reminder, we plan the we we during $XX QX, cost second half of $XX customers savings million quarter, approximately the 'XX. in a of with noncore in of mainly incremental million space. FY certain Also the renewable incurred associated energy distressed benefit charge is

for was DMS segment our first X.X%. Revenue quarter turning a segment segment the at on X% of our Core in results. Now margins an $X.X basis. for came an increase to billion, impressive year-over-year

DMS is health yet our and very several key diversification another in devices. is This well, Our strength segment broad-based proof driven point performed markets, edge strategy working. end including care by that

cloud, From at for EMS market by year-over-year in Revenue Core came than industrial the to X.X%, margins end XG billion. higher slightly $X.X in as by and expected. expected, increased came for offset XX% our an rollouts. segment slower automotive perspective, segment

our sheet. now flows and cash balance Turning to

closing a inventory This in at third our during of strategic XX asset-light spite days, total strong the coming inventory health one As at by and quarter. I teams of the the of referenced end than quarter in earlier, our quarter, wave by days were levels by day better reflecting our and timing sales care nature of cloud QX, Improved during business. offset collaboration were largest the during mainly the the execution of driven higher was outstandings our sequentially, decline expected, the of days sales. of of

approximately million of flows quarter the exited total totaled levels by $XXX $XX net debt core EBITDA cash $XXX million. were X.Xx expenditures to capital operations and in QX Cash provided We with balances million. of and

$XXX million we approximately $XX repurchased we million part in as of X-year for September. million During shares QX, our announced X.X authorization

we a Before standard I'd in adopted like September. turning new to to guidance, QX review accounting

provisions we companies QX, lease the sheet. adopted new During on to required of Under the this standard, XXXX-XX. standard, balance are most accounting their leases record now ASU

on You effects the the of adopted of statement asset will has retrospective effect lease arrangements. or standard of we've our a modified recorded lease a operations for the as under material adoption payments adoption required this flows. approach. obligation and see right-of-use corresponding We the no cash statement our This on

billion. on revenue quarter basis increase on second DMS basis is billion, while is to our year-over-year to segment to expected to $X.XX year-over-year now a to guidance. $X segment a EMS X% X% increase Turning revenue the expected

income $X.XX. total the to diluted second share to of of range margin $X with million in GAAP $X.XX revenue to the for range in to of in X.X%. to per $X.XX XXXX $X.X increase be the is X.X% $XXX midpoint the to an company quarter of to of $X.XX. Core diluted is expect the in range expected operating Core billion billion be the to the the earnings be estimated fiscal We in at of core operating to share in of range be per range earnings $XXX of range. million estimated is X%

outlook for The and volumes to 'XX revenue collaboration. is going and end health beyond. better-than-expected results in today's I'd expectations our for revenue market. sets like by in health Next, care our year up Within well driven DMS, strong care updated and transition extremely higher strategic with fiscal by FY outline packaging associated suggests us 'XX

to to be X.X% on We for the of billion. revenue margins expect $XX.X DMS year on approximately continue

EMS. Turning to

auto Energy. and higher cloud, Industrial cap expect Given our we semi and to start & strong the be to now year, for revenue

We continue the for billion. revenue be expect X.X% to year of EMS approximately on $XX.X margins on to

the am In with strong pleased year. start the summary, to I

as For most unfolding is our and assumptions days does remain as unchanged focus. XX the ago, part, that it's the worth noting year planned, high-level from our

prior core improved This million. of operating per outlook For revenues translates up from anticipate guidance the core year, roughly to share income will be $XXX for $XXX to increased now earnings we and the million $X.XX has year.

free cash core $XXX million delivering to and operating to year committed margin the flows in expanding remain our excess also We of for X.X%.

capital balanced our aligned to is Importantly, long-term focused allocation and on framework driving approach shareholders. creation

move continue and improved capital earnings into in and growth underway flow we our through the in margin on free cash As momentum expansion to build positive expect we quarter, meaningful come both our future to second business working efficiency. and

now turn begin I'll Adam Q&A. to to over call the

Mike. Thanks,

begin any session, address not As our product-specific per Q&A call we appreciate will We the participants to customer that like cooperation. remind questions. customer our or I'd your agreements, we

Operator, now Q&A. for we are ready

[Operator Instructions].

question today from Tindle from is Adam first Raymond Our coming James.

now muted a on think incremental like is fiscal the you'll operating quite more into under the revenue expansion just I year, upper this about start a year. for margin but healthy. acknowledging on X% wanted at fiscal Mark, coming margin of the looks strong more was for story the end that start implies growth, start Jabil the digits to Congrats revenue. which updated for kind by I year, it of I'll year just that revenue mid-single grow on expectations the to

seeing like are accretive who but looks it's their taking on not culling you're we're than from what more. business, taking that it business So on, different competitors good,

point. update at So on maybe us on growth willingness just more to take the this

Thanks, Nothing has Yes. changed Adam. ago. since days XX

think we've to got serve. I customers

continue to we're do we've to shareholders. can foremost, we to and for good But services. really solutions going and got deliver everything First

scale about our uptick the revenue remarks, $XXX think our a or top about give I squarely trying the $XXX know, for business, think was uptick, marketplace. squarely business prepared then $XXX is the my EMS that on said out to of just I his in of from in million the the revenue how don't in came the as the rate services air cloud services received with in but in quarter cloud was million was our I And large. prepared figure EMS. up, said about kind X% remarks, which that not are I If about $XXX million DMS scattered the Mike think line and EMS it's in business, so I line. business across of of million. take being

some what think the in about pleased and uptick quarters with the I nicely through is unlike through 'XX, in I'm is, income additional revenue. came came

for, light if things is, just really your that $XXX portion And I like make context year and driving million a they to $XXX we consistency. are squarely quarter days XX relative good of of take we're what where think beginning to be again, the So and million, not of I I think I the outlook. ago. is consistency the September, thought out, is would

that XQ? stay what each And XQ it DMS the weight $XX some of to year. in view north shape in the half early that's half the think restructuring, fiscal Okay. Mike, full million that would model And enable it's follow-up, or back the back does of wanted got dig think implied margin of and of just into the maybe quarter know to X% in have I suggest. just With as as kind but the this still nuances of a a year, year? we I good of we've does I operating to more

for any really So XQ XQ. just understanding help expectations on versus

Yes.

come So of half come million, Adam, the second in savings in, in year. the do The $XX the then. does

in be QX. X% to You'll close the QX,

X% around be I think and level. that QX be QX X% higher would will than just

from Our next coming is from Fox question Cross Steven Research.

questions of A couple from me.

What quicker. margin with cloud mentioned the you've upside. from there impact and high the revenue upside, the upside? -- content that also J&J Especially on with given cloud ramping was the services First was material specifically services

swing. let me Steve, take a

characterize So I ways. would it a couple

level talk a Let enterprise. me up the maybe it and about take

We I point in revenue million, So where our to leverage $XXX guide uptick a to million. quarter $X million center our $X got was. really guide of about our for DMS $XX to of great tribute about We was the on million. that delivered was team. million think That's spot on DMS $XXX

the effect across what uptick and saw really income all though, On call shake characterize leverage. some of other XG. a as $XXX bit areas of as And the still during There million $XXX $XXX the the from that also again, we came where we're The the million, well leverage deleverage it on but we again, the got rollout. bullish Steve, so EMS of in I basis net-net I'm on acceptable pleased as the a cloud QX through EMS the deleverage, would saw XG were enterprise, little some million you we revenue. with with that upsides up, net the additional EMS

& Okay. then That's business on the again. Johnson a And as Johnson follow-up just helpful.

it and better given maybe as longer around so wondering So term, done since bit sort just days with could J&J was to planned of And months, Obviously, terms it's I than little relationship a a like what look you the general ramping of far? originally happened. more you you've you XX in if color how execution XX that put was XX sounds little ago, implications what good. the is out about

services want Yes, job into team just and I. Yes. much around of our really, and firstly too health the business Thanks do nice health again, get details into care with speaking Don't it. to whole business, really that But kind care a our marketplace. again. continues with overall, to solutions

And think higher last revenue $X With than end I year on that and with billion. to $X what be would upper the to would range JJMD for think 'XX of this we $XXX is year times slightly for Mike that million the revenue year have was the alluded maybe of I fiscal in collaboration specifically, said that be I what would billion. multiple might think

So working in terms really going of really, we're that hard business, to it's and well JJMD. serve

XX will on ramp. wasn't think the that a effect the DMS us. has And points bit 'XX, In we be Steve, call, a it margins of for strategic strategic FY about highlighted basis higher I the dilutive if September XX for collaboration to collaboration

case. And that's be still to going the

true. Yes. That's

were I In think margins we the FY on would is think X%. a FY be year. for uptick XX point, about basis in for DMS said margins that's September, a DMS point around I 'XX, good there 'XX

Mike be things transition how X.X%., still as up JJMD in a so mode basis what year is overall, through FY with I'd of But are year-on-year. health said, points pleased again, 'XX. kind ramp closer consider kind So margins that, going, care into XX moving you JJMD. semi if 'XX the would of exclude And for to DMS

And guidance. that's our into already baked

Yes. Thanks, Steve.

from today Suva is Jim next from question Our Citigroup. coming

pick time And any my same order. so can at I will the you both ask questions

You have great This about many versus is product newer and far like importantly, following term companies providers of aren't cloud initiative completely cloud private some had Jabil visibility better. mentioned help bit production been us offering? two doing used clouds? understand more you a cloud can a there quarter really as kind to the Just extrapolate then more used hearing. initiative that bit little years little to And who's on And a it as of this ceased solution, who of many placing. us and that or were the cloud. public significant or the Can a upside is are for the long

overly you robust. yet automotive Then my SAAR not global question is second mentioned upside, has been

like I more side that production. production auto won content could that stronger, that -- auto take this upside. So gets auto it auto if seems assume see even maybe or would And the more you some it

If markets. two you could those on end comment

Thanks, Jim.

lot. a was That Okay.

been about very, business. into cloud had try earnings slide of So pieces. there around of understood think very little that a good as a done I consistent thing solution If a couple we've break was our we that a we've couple the me it actually the talking of where a confusing. we in The back specific to think cloud is be can fiscal let calls job I bit 'XX, reasonably to

would asset-light I the expect cloud characterize services solution business the -- Our go away. a to providing geocentric that business. I as we're don't

very it's well providing, I the tangential think we're I solving we're with in think and And Jim. that services being few marketplace. the solutions different a received problems

configuration. solution with in agility, is some is and do to have part very it that cloud fulfillment much The so other model, the unit capital, a working has of overall it of reducing we flexibility

a business be EMS business So we've unlike might and very aligned in design, asset-intensive. that of model team has white intentionally that some up cloud been the asset-light a our more with the a thoughtful manner. setting up, set box that very pure be that more business very, are businesses might standard been a thoughtful in very We've

And the with ebb demand. again, flow in so can and infrastructure overall the fluctuations and cost quite nicely

anxiety have the of I some So lot don't a demand of fluctuations. around

a I that QX, bit think the the to there there anticipate, I level fluctuation. is nice that come with will is like we business that do thing there will be was income do think if upside some along in of

one automotive I been that we've significant reliant end we're job terms sales. the what automotive things, our very, very choosing markets a play of team overall the A business is automotive, is of which nice think, call not of done of in. our on would In the part portion of has sector I selective automotive to in

content electronic vehicles the So is increase and an more and type in of sensors. if sensing think the about our well as as electrification, business nature I automobiles, on and combustion predicated of automotive electronic legacy engines overall

going proxy when then and electrical be a what's automotive thinking sales around would overall So content. electrification vehicles better overall our business, I I'm about of think on than

questions. those answer I hope So your

some Jim, post in September just And videos I briefing. our could We did at if investor add.

the video to more if you think E&I want a good bit cloud, little is watch. color a on one I

from Our is from Ruplu Bhattacharya next Bank coming of question America.

$XXX for the this we Mike. about then still flow question stage? that year, think How for should should about over First And I the think the your during we at how of year? think free case? target Is cash was buybacks the cadence original million.

Yes.

We're continue still is to million plus, that that I $XXX number. phrase all We we confident committed about used. to the be think,

a as So I'd $XXX just that plus. million take

As did $XX far we million buybacks concerned, as QX. are in

talked in million $XXX That I of in $XXX we still think FY to was authorization. in September, be million $XXX 'XX. a 'XX, about million stands. going that

So three of we'll probably balance over 'XX. the next quarters $XXX the in million do the FY

Maybe for Okay, that's one helpful. Mark.

this that in the fiscal any by into year EPS mean, should raised well? EPS? think to looking the as $X.XX. I You've guidance, great. $X That's thoughts the there's that guidance on 'XX, we I for mean, upside

a year. of Ruplu. Let's slow, go We lot to work this deliver ahead got

I again, firm the think And for margin. the and I with stay $X $X the would now, is X% important.

margin X% the we're focused what me, For is on. all

$X.XX, $X if next the let's is the whether EPS that $X.XX, call $X.XX, $X.XX, So year for X%. really and June about the dialed at at in the $X, we're on things more margin. of talk we'll now and terms But change all, in keep in X% it And March call.

Our next question from from Matt is Stifel. Sheerin coming

Yes.

Just outlook Mark. question the for your just a year, first regarding

energy also in seeing OEMs more addition know there? segments cloud, And upside, You have us some the Could weak. side, semi that and relatively you're seeing where about talked out several been -- where XG. the then And on You including then color we give to also flip called weakness? you networking actually you cap. you're

appreciated. be would there color any So

around Matt, just asking the Are for or QX to you clarify. year?

For yes, term too, the both. near Well, year, yes. and

Yes.

in to change, portion edge and of where no device that seeing you year-on-year, were we bit September, and coming reference health a at kind a think down the look we're that's as for we portfolio. JJMD showed, showing the If flat. but we that of that So will be which products. collaboration, reshape mobility of in lifestyle chart the care a overall green, if nice Mike blue packaging, kind uptick year, of We're I back roughly

could and covers think whatever pretty coming we're edge I think, packaging $XXX by business, number lifestyle, which device that year-on-year, excited about about. as that we being that reshape million, health replaced -- And care and I is, kind about $XXX it's the or of think and Matt. some down as, You million DMS,

about taken think the of takes for If semi and puts we've and for kind automotive year, cap up EMS year-on-year. I

about And year, semi question, just taken the in $X last short for of our think billion automotive, So summer, been for cap recovery that. catalyst year. consistent Again, semi then has what we've to up of this billion pat cap said frame. talked and which was in about kind the the $X.X I Suva's time very still I a we're with in that range, automotive, maybe staying we on the September

the be it'll of but are then weakness And bit softness will uptick on enterprise for in uptick the in the some it's We I XG, And again, the we're in Industrial year, lastly, And an early We're Mike areas the area. think long the the little Energy. with very off his imagine come but received a choppiness. the & bit a some we prepared other legacy bullish business. XG seeing lumpiness cloud, and cloud term marketplace. starting again, days again, some customers. that then XG saw on quarter still then remarks little in that, talked we're in of well about And being in back.

very sort question. of bigger-picture That's a Okay. then And Great. helpful.

the question As we're Adam server, from particularly customers of your and the suppliers? disciplined In be those from the are as continuing seeing EMS are are walk to like shift earlier, Or seeing seeing perhaps opportunities some share the term, you pointed we shifts? your long for competitors? the of to you leverage datacom just out networking deals, some we space. Are away in storage competitors his in

want lies. I to debate don't where leverage

reliant I customers, I provide think on heavy for service great we're hope heavily and heavily, we them. -- our

people from it's like bad for think our -- I don't I In that. away why it's competitors If walking things from our terms know of of good business. some if business, industry away are walk

us, be to received. think if sticking seem I you out services head that will, our down, solutions well and For kind keeping of to rolling we're our knitting,

would not We I your focused again, cash through September. talked chasing about I to about and 'XX. on and answer we that We talked flow. question revenue in close think really are my we margin that are, with

put So business And of clear, good I can be sure not walking going bucket. job support customers grow, be from business, we kind an want to that to best that doing margins you in head we're sand of to if but have that not can our XXX% grow just again, are away we're that's that sure our and driving in we goal in keeping our the area continues 'XX. being we're down X% to

Andrew Research. question today is Wolfe next coming from Our from Vadheim

to as the wanted a returns market, 'XX. similar CapEx terms in million for earmarked about the from still F care? of out XX% the end from Just And ask seeing should about be thinking around by in you're we $XXX in health coming with breakdown laid growth QX the then breakdown call

that in continue half No health Yes, major September. changes will we to the and from to CapEx outlook come the outlined care side.

that might going on of How repayment. debt latter categories If a should maybe $XXX M&A then those thinking and/or And question. you that be of we lid be Okay. repurchase extrapolate two out, imply just the a sort might about follow-up share million the on we kind keeping forward?

million in in we'll in about change stated million We FY $XXX a at that. FY and all $XXX September, It's exactly as we we $XXX do said No million to 'XX authorization. 'XX. and talked

continue $XXX that I think with million we'll FY in just 'XX

you. Thank

our We have reached session. the end question-and-answer of

Let's turn further to the for or floor back over Adam comments. closing any

Thank This call. our for holidays. Happy now us. joining concludes you

and webcast. conclude This Thank teleconference you. today's does

at line have time, your for thank your a disconnect you day. may this We and participation today. You wonderful