Jabil (JBL) 16 Jun 222022 Q3 Earnings call transcript

Greetings. Welcome to Jabil's Third Quarter Fiscal Year 2022 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note, this conference is being recorded. turn Investor over Relations. I'll Vice Adam time, of President this the to conference Berry, At Adam, may you now begin.

Good third morning, quarter Jabil's of fiscal and XXXX earnings welcome to call.

Mondello; call note of To Please today's playback our the section. I'd Investor today's with the follow referencing conclusion the beginning slides, prepared be call you audio Relations live, the today's slides Executive of for now on remarks, that website, will Mike webcast presentation that are with on call, session please our being ask along At within entirety website. during me Financial earnings Officer, with today's the follow on Officer, Joining like visit forward-looking slides. Mark posted and and to is our statement. we Chief Dastoor. be Chief jabil.com our will

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

join Thanks, thank another. customers, attention for for our the morning. you taking Jabil. to manner saying in by appreciate offer here accept thanks Adam. care our to and which people you call you one the all time tireless of I I'll you our today. at begin everyone Good Thank for and

Slide catalyst capabilities. we revenue from computing being was and the of another electric And our address strong of margin growth, think earnings or which review operating I collection is turn and think $X.XX allow execution. primary momentum disruptions our third the the continued start Markets market the momentum, demand share our per business, and markets. assembly never-ending in here foundation the chart good and where over of resulting now double-digit about higher increase slide, XG, and of earnings the the X. outstanding quarter to and about supply the basis more of of well-diversified 'XX. output Altogether, we're we that simply a All health refinement our shown past scale makeup In the a chains that modified. This a carrying think the our we include built presence lean core resiliency Let's team times hard be X personalized during to next FY which to essence, team that I'll many quarter One, behind when built run threefold. this which developed level I'm combined by energy. with Capabilities faced believe vehicles, our into years. typical and growth with delivered business resulted our And reflects fluctuations. the a we We're need in macro revenue drive of geopolitical driven The on in Slide during finally, of And clean brands traditional when billion. large-scale, will has $X.X core results. the Jabil's in now notable need cloud new five most commercial of simplify to many Markets portfolio, and about massive I Two, world's pie care, six portfolio, our commercial to built point be X.X%, team's the complex all, quite a improvement pleased as to year-on-year. today. quarter. especially or for as XX QX businesses. third Either us things having when is output of times and that with corporation. resultant work trying for business Jabil's

Moving X. to Slide

increase per You'll see year-on-year. an be management's share outlook for $X.XX, We're anticipating earnings XX% to core of the year.

outlook fiscal improvement $XX.X a point year-on-year. to revenue, now remains margin operating for As for be steady looks XX basis our 'XX core X.X%, billion, while at

us complete later an while session and We'll explain year 'XX. plan wrapping review these open addition, and of sustainable the date cash priorities our we confirming FY share we flows. for full this and this FY by a 'XX. is We'll in follow flow delivering of free FY million expand core a FY navigating we to results. committed fourth margins blend return minimum quarter environment, $XXX capital for observations year terrific In sharing to cash remain although of September also 'XX. have a Mike through will Altogether, our markets. then reliable business tough the summer. will our we're held we fiscal Management for 'XX. our mind, briefing with consistent up formalize margin With forward will how be hosting 'XX we and in this as our Briefing. to operating Annual be fifth how late will September. Investor framework Adam past look end reporting consider to guide the share exact years, our on session, plan a will opportunities in And ample with And priorities In further

today. as and purpose, where a lots and to have let's slide, the commercially. wonderful to our Expectations back with such as behaviors, act to expectations. We In our never is really, they comes of so, their operationally I communities embrace stuff, our conduct like at about it of safe, do put a With behaviors safer every protecting day. like a the story we ensuring team closing, the to little and giving and our acceptance. that, important It's each we and importance respect At final these purpose. tell bit exceptional. to welcome with addressing doing behaviors bit purpose, people little of Jabil, And the tolerance, I'm and been make we're they customers. by we around look why purpose we At certain workplace world best a environment, the in Jabil, challenges, share financially, I'd a as challenges better, proud build and we my these talk have our and little healthier when keeping Within as and our bit do are Jabil, really well. decisions making. forth

a belief As world call my when Mike. Jabil when I and the executes Thank I alluded interest over really our difficult. prepared in is moment. are are messy executes times well turn believe remarks, joining do I'll call, you well to to times thanks is now What the more for passionate steady, bit even earlier that at your I'm in Jabil. the for in my Jabil but

you for thank us joining Thanks, Mark, today. and

the really China, and with in of supply action. a core team Our enterprise in resiliency results and In chain diversification per shutdowns third diluted exceptional I'm environment still of quarter challenging the of a operating was our level. pleased great momentum well-publicized delivered in and portfolio the margin our illustration revenue, earnings spite the at core sustainable share.

on $XX demand quarter strong GAAP by quarter, expense income the billion, share COVID of at a $XXX million, year-over-year, interest very a XX diluted was was prior Net QX $XXX of over interest XX% in due came basis was the demand year-over-year diluted within expectations level, million driven enterprise improvement combination XX% QX, $X.XX. by $X.XX, our operating forecast, operating over earnings rising ahead Core remain working XX% and approximately XX% our DMS. core grew end income For offset prior and Altogether, by representing an of across higher year. year In to up well sporadic earnings within per of revenue above Core $X.X increase revenue sequentially share markets a EMS, rates. partially the supply. X.X%, per GAAP capital million, in margin our and quarter. of as operating was was points ahead challenges during the

quarter third our an increase to next slide. our EMS a results turning on for Revenue $X.X was segment on year-over-year basis. Now the of billion, segment X%

wireless of we the segment segment billion, upside health and came still an came experienced margin performance we our year-over-year additional during Core limited ahead in on year-over-year our strength Although well and Revenue and XX% in networking with for care within segment for in March. our end storage in mobility, DMS. stronger in gained at our and year-over-year increase broad-based, growth was market quarter. cloud X.X%. every of for where EMS the $X.X businesses, quarter a plans XG the in and The EMS at basis share was extremely in automotive,

chains result, control for prior segment critical parts execute supply in exceptional revenue. the As Core on reflecting to year, and points XX higher-than-anticipated the complex up components. deliver a X.X%, cost margin ability and our was basis over

one inventory levels with and inventory our in Shanghai day of impacted deposits to from XX and balance at in shutdowns chains. quarter. to days, reside in inventory on March, accrued Net flows inventory and days expectations We XX our due sheet. higher offset and In these QX, cash were supply above mainly down the expenses deposits a downstream Turning also the one sheet. of within deposits, item line came portion previous our days balance customers, now upstream down sequentially the the QX, in from day which inventory

on end our mainly inventory business of require of XX% as not with kicking MRP that issues system. a anticipation request inventory at QX. inventory components. and triggering customer inventory we of orders As a purchase within approximately a order is take small raw continues of to risk a our Majority such of timing the materials reminder, finished quick before our do result very level in associated represented At of goods designed a sales. consistent with QX, All purchase model be

Our quarter quarter $XXX the core flows we approximately operations net level, were cash capital exited from X.Xx expenditures a with totaled and million, third balances EBITDA cash From billion. and debt $X.X total $XXX of to million.

for shareholders. and shares shares million QX, million, we the returning capital million $XXX $XXX year, During for repurchased approximately for X.X repurchased to remain we've committed million we as X.X to

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

operating is of $X.XX to estimated in share be to in be is 'XX GAAP to $X.XX. the of fourth XX%. GAAP Core billion. The to diluted $XXX At core is fiscal to total an is $X.XX. XX to Core the $X.XX of be expect tax $XXX core the the in X.X%. be earnings range to $XXX $XXX representing income expected points million million. of in midpoint, for QX, billion rate be quarter a We quarter the approximately of range estimated per per in range $X.X this to company to million, expected to basis to million in In income of the the diluted range of range share be range year. earnings is is fourth improvement operating revenue the margin to prior of $X.X in the estimated X.X%

be to have markets Markets our take dynamic we positioned of extremely our overall our levels to partner continue strong slowdowns Healthcare, Across a the economic end overall demand portfolio been resilient that few majority global replicate. portfolio. key been Personalized of provides that today, years. capabilities more well but outstrip particularly continues market-leading moments the as from proactive to tailwinds. also slows markets business these our markets few due susceptible may resiliency normally The summary, diversified, the provide to markedly and to end believe efforts strategically like from business, resilient a to Infrastructure, majority Cloud in even continue the growth markets is large and end Jabil XG economic brands Smart by with tomorrow's our Semi-Cap, highlight resilient to these such market. businesses has to supply and critical Electric sustained and benefit I'd and across to more and Clean hard portfolio diversification to in Infrastructure, end serve if our end secular multi-year that last we markets, Next, align diversify product This portfolio and to In solid the Medicine within and represent growth as will we over of trends. are Energy Jabil Vehicles,

neighborhood on of of the income over Notably, flow now X.X% with core EPS result, demand be FY another that, 'XX a resilient and free revenue in the With of and see the approximately of we 'XX. $X.XX core will business X first is gives through expect strong strong balance to us for the our for look we respectively. outlook be per All in $XXX million, and as We're We now now revenue. and strong our flow the cash into $XX.X turn anticipating to billion. during year momentum call performance coming year. we months increase anticipate to As and feel this to all, out the share of FY close cash excellent margin I'll Adam.

Mike. Thanks,

that I'd Thank your product-specific now ready cannot for understanding. we're we move Q&A, Operator, into all to customer address Q&A. for remind you or Before participants we like questions.

comes Bhattacharya of Instructions] [Operator question. the Our you. Thank Bank first America. proceed with from with of Please question line Ruplu your

a on Hi, end for growth. and thanks revenue my stronger a did taking like Looks expected. Revenues your for the growth Or a growth looks in segment, questions. bit. in you And Mark, markets? first XX%. any there revenues it guidance mobility is see demand auto you've all strong revenue your revenue of forward X% had much execution than where you on pull quarter. saw versus the question of like little in XQ? Was year same fiscal was the congrats My from question, EMS, the estimate higher reduced fiscal just And DMS for

So you your Or end are lower is supply ability fulfill limiting the see do demand? market it demand? that to constraints

with what at those comps of we'd something, a are, missed quarter, quarter your bit which there's lot so DMS I Ruplu, do was through a probably at everything think beginning questions was there. if guide to the two I back think, start relative thought One, broad-based. where indexing business the me conservative it. Number beginning quarter, execution the the quarter we're But the to the the going I looking overall, it DMS. I if exceptional, of really and fundamental two, with is bring you're on. for think I'll you're we from. numbers in our at little and

a but -- in at point I you at data well, that you, maybe know a other look used green as I So from term if for good conversations go kind on the if March and today, reflective take you of and slide look you look back we our side EMS where I we at the where think, and annual exceptional some year. execution, strength numbers our the it, was for saw what are presented blue of

really if was Number beginning say I little I'd I in bit There little a with appreciation combination ability know in that in supply So to A, demand. great. that a during of to and -- situations think the up a forward, our don't And the customers are quarter a it's at I continued supply allowed going of bit conservative And of issues. think say this everything the navigating share on. of, pick have good some I environment, execution some the chain uptick us chain quarter. was help two, would pull

whether really to be in about speak our job chain. bit think relative we the So the saying business, internally, I my it side of also moment. well a said EMS controllables. if a side, The or just factory scale the at on that's world EMS think that's of difficult kind I basis, the EMS. does good Ruplu, being is it controlling I at something remarks what a supply execution on the little the were really, we And our side, did Jabil I prepared

although, Shanghai. on One, the side, the mobility. On somewhat And bit on threefold. it it shutdown we a a were certainly DMS in we the And again, in I time guide, bit terms a was of didn't our on in was think length Two, of three, was health was care. it conservative bit anticipate it auto.

challenges look in a tough very doing a what's there environment, general Although for if up the basis, some auto, and the mostly some be on a us really were with to were impacted not silicon. results enterprise we're going stacking then timing Probably and vacuum. in on a specific quarter on you in some again there year but And shifts mobility. at with overall good volumes

results of with that's and of say back kind happened I EMS the March. in of terms what DMS our So terms would summary in of in guide a

strengths various I CapEx you details more you given you. in we the all specific this Mark. also this the think that markets DMS, think can which That's ask, helpful. do And in and end there should areas to -- you're for year? need thanks year? all Yes, invest you are seeing how EMS And about in Thank

over, to about year's CapEx is this be Well, be going it's year. I to this what so going --

of will X.X%, think and September. probably about and don't in talked back overall revenue. I that to we I between be, know, X% think somewhere It's it closer X.X% I

of would 'XX So terms allocation managing Day I is CapEx, has too our 'XX. get I the 'XX to Investor in I revenue, the we're of been during quite FY similar think, the on that year into for I good. actually CapEx September. way fact expect CapEx look an the exceptional. have capital We'll throughout upcoming will FY overall FY in think off opinion indexing

we'll flows, and help that the margins continue our to X%. In invest cash businesses your have terms to drive question, in last of sustainable areas part of great

the for the on quarter. congrats And question. again Thanks taking

you. Thank

with proceed question. Please Sheerin of your Next comes line Stifel. question from the Matt with

couple you improve -- X% quarters. mix? call continued leverage? guidance, leverage OpEx driven margins. Do or strong in you're It And the talking just and on And Yes. looks on I Thank guiding so? by margins like question gross a is margin regarding just expect it, last here that you're OpEx the very to, specifically you, to and good the or of morning.

So margins? what is driving those

Well, bit think which I it's company where the is of mix of today. is around it's story I business, little one, a -- big a again, the across think, thesis a our

we'll think strength I in decent Auto. quarter-on-quarter, -- see see we

mix, our in the at quarter. the 'XX, we'll fourth for the bigger is in shut look the hard doesn't and for Shanghai business overall op and and execution. I the a not ends annual good think think QX the for always strength the I substantial see intentional EMS up driving to the I it back strong down because picture, think on And relative we I see, business step on want I a in health basis quarter being of marker it's we'll and entire business where again, Healthcare of on and overall Packaging. is take further assuming EMS if business, an 'XX margins. QX to enterprise I it's mean, again, X% us

different could And and add. have profiles. Matt, if I margin EMS gross slightly just DMS businesses

which can a margin well. versa. as the in low, be in The EMS, as gross think good will well SG&A QX vice which and I quarter outperformed be OpEx can QX, have but the lower

of the your of margin On around regulations go the requirements because higher, DMS that. of higher are because gross side, is SG&A FDA where percentages sort industries, regulated that your qualification but

focus I you we'll at continue mix, We're than marching on more margin. gross would we, profile encourage as That's will folks down so depending profiles DMS. a and and at margin. the it's look on EMS deliver up towards a go to internally. X% gross and to and what operating look Gross management margin quarter-by-quarter So to that. change encourage I different for just team, operating beyond, margin very margin

supply would supply is supply your available headwinds that. upside Okay. impacting more or you how regarding your easing the any Thank of then even the most seeing And side more or for chain if semiconductor DMS that COVID-related you Are businesses. have on were signs there In guidance? of either production? there, you hit other And the words, restrictions? that

I've couple been saying of the quarters. last this

demand way, variables there off, and strong. First the impacted DMS, was by remains multiple that

not And number So guide to relative all our our that with our that -- It was Shanghai. some think of than again, I company, supply that auto shutdown probably are that's is caveat other the supply weeks impacted think as across volumes think getting I then all. which March I timing markets. chain of the I I in that chain end better. overall it's semiconductors. It's about the delta last our we say is very And interesting golden in mobility. this And chain, acknowledge issues it in shift I'll did challenges call screw. we But getting had -- whole an and a takeaway December continue and Again, DMS better, and to I as the was, more just and not did, specialized think, think when call. chain at supply the from supply some the wasn't call, just the a in silicon,

we resins gamut everything to precision everything to run of buy. in have We just that from metals our machining the

some chain again, also bit quarter and chain into a ability basis thought is getting the that played said still I think There's better. helping also hard for X% But on a would chains that the this us around normalizes third That say in supply chain relative a But So most. push I components. get continues better. may fourth the bit to are some the towards thought than select us navigate better I one constraints margins that drive A, things supply year. of is the of and our end overall, in I quarter to 'XX. calendar supply have supply

Okay. Thanks so answer. much the for

Yes. Matt. Thanks

with question. proceed from The with Advisors. next your question Steven of is Fox Fox Please line the

good questions, could. I if Hi, Two morning.

operating all, know too I give but XX year-over-year. year, basis are want -- think much you of you margins to don't next when points up First your on

how of much have follow-up. sales I margins on think was of because of mix? more mix. terms some And just I your is then improving in talk you a that Can you based mentioned about of just left sort

want much don't about moment. right. at to the We 'XX You're say

that, to we growing I say the I at it we heck in look into 'XX I think this we're substantially to alluded around then think I deep And a terms FY and headed. here think I bit maybe back, in -- go in we'll margins. FY the line I years proxy margins is I'd our This of would op will Investor of greater today, X-year 'XX's Day in stretch few prepared about remarks to just the year, deliver I X.X%. my guess diversifying company a and where Steve, some QX a September. ran kind we X.X%. margin it building today, 'XX, of the in were have little going was took company And up where we than I X.X%. platform be guess say, is and I of a the and out of think, around sitting and is

an relative navigating We're a things of reasonably a at well very on So us on on the I scale, moment. around overall, going them scale. there's absolute well lot think,

more come to So in September.

That's helpful. just as product on I'm any if the some Lightning as on a gains can I'll you I share of that of rest more provide before you interim about think guess of forget, finals. in being the sustainable? wish Stanley mature Cup an that? feeling areas. we some the gap? the other And were Or there's do And follow-up, sort luck mentioned just color you curious market And then I

was that. going hoping to say were I you

think your the going Rangers three really to team, I awfully an next You and they're to good be good years. four are what, know really,

had for for of converting to weeks. So appreciate Lightning couple thanks And fan we you. fan the Thank night, that. them -- a the on. next loss least a tough but rooting at They we're we last the Ranger appreciate

On how the helping that. supply Is that sustainable? know and needed chain We number out I when some favors did navigating -- they them don't of by customers some help. don't I share would know. a gain, I to handicap

green it But you look know of where FY you Digital will blue we what we deck March the 'XX, remember relativity Print of slide that the if you days be, one think and take and a I XG of Wireless deck do I look pull Retail the Cloud XX said what the is we numbers, if XX green post think won't. 'XX, it I -- a think take March some FY blue ago. but said what I though, out 'XX. you slide, from kind ago. from and last the the gives FY in sit versus at from your Some the year we exact again, call Storage. at days is we up said in for and today, Network I don't up of

hear think in get So about I I Will to our and factories that share, that supply up we I some proxy execute product picked around a and think some think for you'll of good of us? chain that's so, September. where again, largely ability customers. of some with stick

Thanks again.

Yes, you're welcome.

line Goldman is Mark of question proceed with from Sachs. next with Our Please question. Delaney your the

morning. you very taking for much the Thank Good questions.

these customer for data X environment. you point you customers that guys are things being schedules are actual be markets just one Or And Mark, months commented of seeing starting the first terms can slowing? if of on you I'm to is something that there is in end are points are to reported? economic the slow? there. XX any And out out uncertain Are macroeconomic The there indicating headlines actual there that may some And are to? this that are curious, are on

corporation place, our But say a I into tough that large world it's at tough I chances. to go say would going what's would like the -- I is again, any if and not boy, customer I'm data. Well, a good for back place we news get is to the so moment. --

like you If be back remember right, if that, and September, thought billion with year we're think in million. like environment I $XX.X now a everything, at I we $XX.X would something up in go or the tough

So we the reflective positioned execute speaks a again, how I And in that's it I think environment. to think tough portfolio have. of again, ability we're our with to

come again, puts to this? step and Are on secular look the see pretty an may And I gets and look I takes, In this of terms year about peak some puts I like end we've secular the back spoken it very 'XX if those maybe, more thing opportunities trough have about, of where feel think takes some talked and Electric I we up, the to in -- and we that. I we talked changes are environment connected for talking we and this Vehicles, to about we to know, other is over But about earnings think -- 'XX as about peak of -- some the Healthcare, been those Maybe. always good take year. devices. going what I abrupt about And think at P&L our way talk that calls in wonderful and is trough? of through and year people the overall, talk what advancements don't Personalized some real have is I so. and and But current you started guide be

the going in think what's space. retail of and I terms about on Automation

what's our what's built being think Semi-Cap about going I about fabs the think in on on in business, XG going build-out. with I new

I good to think all at what of quarter. reasonably types a then we'll good those -- things feel All not massive think look and improved also say equal, But impact our about the more to you the certainly legacy and get into in we I might will businesses, when think some recession, things refined have of all, I they're And So negative. have businesses, being as you business. those we've again, September. how in fourth about if

of for better be example, you post do XX%, those into it China some extent not it's back what of To parts open, you headlines think sorts That's business resuming China? things in shutdowns in Could are helpful. when things question went these what seeing the on March is to back lockdown? volumes, extent volumes Thanks. and characterize we're may XX%? full if Shanghai, back at levels? Or And second some are My still to maybe full to you relative different of is China. to of region, back when

China our now. say numbers, runs the -- me to quarter, in attention but and what you'll me say, don't handicapped I'm get to China too volumes And is the assumption something at, -- full let's to say. but that trying pay fourth to illustratively back just little we've be we'll a think you let that bit much I in let

If things When way, enough quickly. our if that XX%, things QX capacity, China you that there, be go QX. XQ, assuming overall XX%, we that's our to the say the By capacity in you assuming bump I night, difficult XX%, QX is capacity that as good shut were will in also say all at that's let's that going and at I variable are we're why And up. not to set. we're pretty do would XX%. think will, just run and take is going a quite we assumption for -- as things indications are run a the up make they or things to margins residual have to down in assume things capacity get

for That's helpful. congratulations Thanks the questions. very the good And on results. taking

you. Thank

Please with next of Chung the proceed JPMorgan. is question. line your with Our from Paul question

for taking questions. Hi, my thanks

offsetting then just ups are free and moving despite flow, working expecting mentioned normalization So on step cash on of year, some takes here on offers macro you guidance there here later some tough steady in you inventory? investments about maybe And the structural puts pretty this cap some Talk heavy forward? some but backdrop.

So Paul, thanks question. for that

the the of you it's our up if again up earnings, quarter-over-quarter. It's -- are beginning look earnings think year. from I at up

up I Working was bit. higher was think number little capital expected. than what the slightly a inventory we

those a complex didn't feel reasons the flow we get we free can number. But help. overall, supply think shutdowns the COVID cash of very to chain, are our It's still sort clear. I for

reduction some We capital will see working in in QX.

last if fact, look this you what ahead point cash we of In at in versus year, we're time, flow free actually at last year. this our year were

So number, million I good about $XXX feel cash that flow Paul. free

then And Great. automation just the side. follow-up a on

from robotics kind and some CapEx M&A the you the you. seems kind part how know leveraging technology are at can you enhance of opportunities to you It are where small, have of that see. of I but So incremental what across some business business? firm's for here momentum seeing is of Thank kind the I Badger like capabilities?

we're think a of I really good that. doing job

our very is the lot it's analytics, A, we're factories, we really perfect. the in think reflected proud spend far time are But about through both if would automation, that a I world. is, with IT, able XX% we business that so really 'XX our a to et build AI, to we from that's we factory as about and less. think factories And CapEx for of will investments going of starting we we've is of stuff, of carry and in SG&A the think numbers things data control. XX% really, overall, think be One have of think to should investments the continue of if well, about I I stuff, the at cetera, would thing. we're the can going come build you well, with And through I the core operate to in overall more that we're and business, very, internal also, factories made what good along OpEx of 'XX. operations, do our got control factories. our we And simple. best network that the say also in today, say And to which I our overall And

you. Thank Great.

welcome. you're Yes,

Thank Adam closing remarks. I'll the you. question-and-answer to We've now reached call the end Berry turn of session. for the over

our now This concludes call. joining. for everyone, Thanks,

conference. This will participation. conclude you today's your for Thank