Jabil at Barclays Conference: Strategic Outlook on Growth and Challenges

On Tuesday, 06 May 2025, Jabil Circuit Inc (NYSE:JBL) presented at the Barclays Americas Select Franchise Conference 2025, outlining a strategic overview that balances optimism with caution. The company emphasized its engineering-led approach and strong supply chain capabilities as competitive edges, while also addressing challenges such as tariffs and the need for increased factory utilization.

Key Takeaways

• Jabil aims for a 6% operating margin in the medium term through cost optimization and improved factory utilization.
• The company is allocating 80% of its free cash flow to share buybacks, with a $1 billion program set for this fiscal year.
• Jabil is expanding in intelligent infrastructure, healthcare, and the EV market, aiming to leverage secular trends.
• Regionalization of supply chains is a key strategy to navigate tariffs and regulatory changes.
• Current factory utilization is at 75%, with a target to increase to 85%.

Financial Results

• Margin and Free Cash Flow:

- Aiming for margin accretion and strong free cash flow generation.

- Targeting a 6% operating margin in the medium term.

• Revenue Growth:

- Intelligent Infrastructure segment grew by $2 billion, a 40% increase year-over-year.

- Revenue growth expected from net share gains, new program wins, and product launches.

• Capital Allocation:

- 80% of free cash flow dedicated to share buybacks.

- $1.2 billion free cash flow guidance for the year.

- $1 billion share buyback program to be completed this fiscal year.

Operational Updates

• Tariff Management:

- Jabil assists customers with tariff navigation through its global presence.

- 90% of operations in Mexico comply with USMCA regulations.

• Supply Chain:

- Significant investments in supply chain capabilities with a focus on regionalization and onshoring.

• Manufacturing:

- Operating in 30 countries with 30 sites in the US.

- Employing a work cell model for dedicated customer teams.

• Capacity Utilization:

- Current utilization at 75%, aiming for 85%.

• Restructuring:

- September restructuring expected to improve margins in the latter half of the fiscal year.

Future Outlook

• Intelligent Infrastructure:

- Continued growth in AI-related businesses, expanding semi-cap equipment, testing, and data cloud infrastructure.

• Healthcare:

- Growth in GLP-1 auto-injector pens and insulin pens, expanding into pharma filling and packaging.

• Automotive:

- Commitment to the EV sector despite short-term challenges, with growth in China’s market.

• Renewables:

- Positioned to benefit from the Inflation Reduction Act.

• Expansion and Capabilities:

- Focus on acquisitions for capability enhancement rather than revenue.

Q&A Highlights

• Tariffs: Companies are waiting for final tariff decisions before relocating operations.
• Intelligent Infrastructure: Strong performance in AI-related businesses, especially data cloud infrastructure.
• Margin Improvement: Restructuring and improved capacity utilization are key strategies.
• Capital Allocation: Continued focus on share buybacks and strategic acquisitions.

For a more detailed understanding, readers are encouraged to refer to the full transcript below.

Full transcript - Barclays Americas Select Franchise Conference 2025:

George Wen, Analyst, Barclays: We have Michael Destor, CEO of Jabil, and Gregory Hoba, CFO, and Adam Berry, head of investor relations. My name is George Wen. I’m the analyst covering IT hardware and company equipment at Barclays. So let’s just get into it.

So so, Mike, kinda high level, can you give a high level intro on Jabil, especially for some of the European audience? They don’t know Jabil so well, so maybe you can give a high level kind of pitch on on Jabil story.

Michael Destor, CEO, Jabil: Sure. So Jabil is a US domiciled company. We have 30,000,000,000 of revenue and a 50,000, people in the in the organization. The way I like describing Jabil, it’s an engineering led supply chain enabled manufacturing company. I think most people think of us as manufacturing.

We’re not. We have the engineering piece. We have about 10,000 engineers in the company, and and we normally lead boostify engagements with customers through engineering. We have advanced systems for supply chain. We have long term relationships, and I think during constraints, our supply chain team actually does really well.

So supply chain, very important critical part of what of our offering. And then, obviously, manufacturing, we manufacture in 30 countries, top brands in multiple end markets such as health care, such as intelligent infrastructure where we have the data center infrastructure, we have semi cap, we have communications, we have opticals, we have networking equipment, and then we have warehouse automation and consumer products as well. So pretty widespread in terms of the the end markets that we that we serve today. Yeah. I don’t know if you have anything else.

Adam Berry, Head of Investor Relations, Jabil: No. I think that was great. I I know, really glad to be here. George, thanks for having us, and, you know, we’re we’re happy to be here with you today.

George Wen, Analyst, Barclays: Great. Great. You against this uncertain world, there was tariff and the macro backdrop. Maybe kind of if you narrow down kind of Greg and Mike, can you come talk about top three or four kind of priorities on your desk you are kinda working on, especially as we almost kinda halfway through 2025 and kinda heading forward over the next twelve months? Maybe you can talk about kind of we’ll talk key priorities kinda you are working on.

Michael Destor, CEO, Jabil: Sure. So I I think the margin and free cash flow accretion, if you go back over the last five, six years, the Jibble story has been all about margin accretion, has been all about free cash flow. We do a whole bunch of buybacks. We’re a good value play company. Yeah.

So we’ll we’ll maintain that priority. That is priority number one. Obviously, with the tariffs, George, the the situation today is a lot of the companies that we serve need help, and that is our priority to help companies move around. Like I said, we’re in 30 countries. We’ve been in those 30 countries for, on average, twenty plus years.

We have 30 sites in The US itself. We have a whole bunch of sites in Mexico, which most of the stuff where we operate in Mexico is USMCA compliant. So, obviously, that focus on tariffs and how we can enable our customers, continues. And then the third one is, to me, is, continuing to invest in our capabilities. We we don’t go and make big acquisitions.

We do capable capability based tuck in acquisitions. What what are the approaches we have is to keep going vertical in what we offer. So we obviously do engineering, we do supply chain, we have manufacturing. We’re within manufacturing, we go vertical in different in with different capabilities. So we we’ll continue to invest in that, continue to invest in our supply chain systems, and I think the the next few months in particular will be taken up by the tariff situation.

George Wen, Analyst, Barclays: Got it. And then, Mike, kind of, you know, overall, within kind of EMS and Centimeters landscape, you know, obviously, Jabil is a diverse kind of portfolio. And and how is would you say it’s a key differentiation for Jabil kind of versus some of the peers? You know, from my IT hardware coverage, I also cover some key names like, you know, Flex and Celestica and Fabrinet. So can you come talk about, you know, competitive advantage, kind of compare the contrast, and how does Jabil uniquely approach customer relationships?

Michael Destor, CEO, Jabil: Sure. So I’ll talk about Jabil more than the competitors. I I think we I I said we’re engineering led. We have 10,000 engineers, and it is it is a trend today. Yeah.

If you look at customers, they don’t come to us with a predesigned product. They come to us with a concept, and we help take it to to market. We do the NPI. We do the we do the supply chain for them. We industrialize the product, and then we can manufacture for them in any part of the world that they need us to.

So definitely, the engineering piece is is critical. We do have a work cell model that we, apply, and what what do I mean by work cell? That is very unique, even amongst our peers. It’s we have dedicated teams all the way down the factories for individual customers. So one customer, one team, and the team is almost like a virtual customer team and they wear the customers’ logos and it’s it’s actually a big advantage especially today in the tariff world where you’re not worried about the manufacturing teams trying to maintain their production in certain geographies.

This one individual from a customer liaison standpoint is responsible for that customer, and he’ll decide with the customer where to manufacture, and the and the and the manufacturing location will be the best location for for the for the customer. I I talked about supply chain. We’ve been investing heavily in supply chain over the last few years. We’ve been buying some level of software, some systems, people. We’ve made a couple of acquisitions on on some procurement services, etcetera.

So I feel really good about that as a as a as a differentiator. And then there’s, you know, other parts like global footprint. There are pockets of manufacturers who are heavily Asia indexed or heavily European indexed or heavily Americas indexed. We have a we have a good breadth of of global footprint.

Adam Berry, Head of Investor Relations, Jabil: And, George, I might add that capabilities are incredibly important, but we also have the longest tenured management team in the industry. Right? So relationships are really, really important in our industry. We’ve had some long, long term relationships with some key customers for a very long time. I think Mike’s been here about twenty years.

Greg’s been here about seventeen. So I think I twenty five years? Sorry. Mike’s been here twenty five years, so I I I think that’s a key differentiator between us and some of our large scale competitors.

Michael Destor, CEO, Jabil: So if you look at our my direct reports, there’s 10 of them. The the number of years of tenure in my team is almost two hundred and thirty years. It’s on average twenty three years per per individual, so really good because there are not many companies that have that level of long tenureship.

George Wen, Analyst, Barclays: Got it. Got it. Also talking about supply chain, obviously, tariff is kind of a focal point, and, you know, obviously, Jabil grew over the cycle everything since the Trump won’t auto. So kind of, you know, can you kind of brief us in terms of latest thoughts on tariffs? Obviously, you guys talk about kind of indirect, most of a pass through from the earnings call.

The last time and also your production manufacturing in Mexico is largely USMCA compliant. So kind of can you talk about being most of a a a pass through impact on tariff and any sort of any other refreshed thoughts kind of given the development over the last few months?

Michael Destor, CEO, Jabil: So so let me just talk about Trump one point o since you brought that up. Trump one point o actually did lead to regionalization of supply chains. That process started way back 02/2016 to 02/2020, that four year China was always China plus one. Trump two point o has got that even more on steroids. Not many people are moving today.

I I think there’s a lot of concern in in terms of the regulations changing constantly, so people are waiting to see what the regulations are, what the final tariffs are gonna be, and then decide to move. It’s not simple to just take production and move it across because you have to find locations. And more than anything else in The US, labor will be a will be a big concern. The availability is just not is just not there, and it will require a lot of automation, a lot of robotics, and and we can do all that. We’ve been doing that for a number of years, so we’re really well positioned to help the the customers.

I I mentioned we have 30 sites in The US. Most of our sites have expansion sort of options where we can build on the plot of land next to us, so capacity wouldn’t be an issue. We can build on build on that capacity as well. And then USMCA compliant, you mentioned Mexico, that is 90% of our business is US Met is USMCA compliant, which means there’s no tariffs. We do add value to our to our components in Mexico.

So that will continue to generate more business for Mexico, especially for the North American market. So we have solutions for North America. We have solutions for Europe. We have solutions for Asia. And and as I mentioned before, this whole regionalization that’s that’s been taking place over the years, that’s just gonna continue.

And I think it’s it’s companies like Jabil, which is a slightly underappreciated story. Well well, folks don’t understand how difficult it is to do that, and you need someone like Jabil to manage your footprint for you.

George Wen, Analyst, Barclays: Yeah. I I think that’s a good segue to talk about journey for regionalization, on shoring, right shoring. You know, that that’s always being a key thematic investment for Jabil stock. And kinda how far do you think the journey you alluded to obviously earlier? And which end markets are you seeing kinda moving the quickest in terms of this onshoring trend?

Michael Destor, CEO, Jabil: That that’s a really good question because, again, you people think you just lift a manufacturing side and move it across. I’ll give you an example. In health care, it is extremely difficult to do. You need eighteen to twenty four months of FDA qualification in the health care side. So if you’re building up a new site, you’ll have to have two sites running at the same time.

Once the the the the new factory is built, it needs eighty to twenty four months of FDA qualification before you can run revenue through it. So you’re talking about a two or three year window before you can even start production on the on the health care side. Our intelligent infrastructure business today is very US based anyway. It’s US centric. We do most of our manufacturing and our engineering in in The US, so not expecting big changes.

We have some a lot of warehouse automation, consumer products in Mexico, which will continue with the USMCA compliant business. And then there’s pockets of business here and there, which we’ll look at moving. Like I said, we’ve been doing this for years. This is not a this is not a new thing. Manufacturing, if you go back over the years, there was always a shift from US to Europe to South South Asia, then China, then back again.

So it’s it’s it’s something we do all the time. And and if you want to if you wanna be able to sort of leverage our experience, I think a company like Jabil probably is the best option for you from a manufacturing and engineering and supply chain. Supply chains have become critical now. You don’t you can’t just lift manufacturing and put in The US if your supply chain is still from China. It’s still gonna have the same impact.

All you’re gonna save on is the value add piece, in The US. So supply chains have to move across as well, and, again, we will, enable that as well.

George Wen, Analyst, Barclays: Got it. Maybe you can double click in terms of the tailwinds from being The US domiciled, kind of US centric manufacturing, especially you guys talk about kind of for the intelligent infrastructure and health care. It’s a it’s a really predominantly US centric. So can you come talk about maybe, you know, the share gain already happened just because of this macro backdrop or coming year to come kind of provides nice tailwinds over the next few quarters?

Michael Destor, CEO, Jabil: Sure. So I I we we did take our guidance up on that piece by over over the last six months. We’ve taken it up almost by $2,000,000,000. I think we’re up 40% year on year. So that business is going really well.

All these all these rumors about AI being dead, that’s not true at all. We’re seeing a whole bunch of new business show up. Let me just explain what we do in that ecosystem as well because that’s important. We we do semi cap equipment at the front end, and we do testing at the back end of semiconductors. The testing is going really well.

All the new chips that are coming up, all the new custom chips, the new technologies constantly changing and evolving technologies. It requires a lot of testing. So testing is doing really well for us. We have the optics business, the transceiver. We have the OSAT, the CPO, which is in very early development stage.

We’ve been winning some business on the on the transceiver side. We actually made an acquisition maybe twenty four months ago from Intel where we acquired a whole bunch of silicon photonics engineers, and that capability is really working out well for us. And then data cloud infrastructure, we’ve been doing that for a number of years, and the the the revenues in that particular area in in terms of data centers is just is just going through the the roof. And last but not least is, yeah, we have the the the cooling where we have to worry about power from the grid to the chip, so there’s power management that we work on. And then you have liquid from chip back to the outside, and that’s something we’re working on as well.

We made an acquisition for liquid cooling about six months ago, and that’s, again, working out really well. So overall, different pockets of of this business. One consistent theme is it’s doing really well for us because we have the capability, we have the we have the footprint, we have the teams available to expand in that area, and I I I think that area is the one that I’m most excited about for that.

George Wen, Analyst, Barclays: Got it. I I think that’s a good segue to talk about kind of a margin improvement, especially you talk about some AI potentially being accretive, some health care as well. So kind of, you know, against your medium term target of 6% OP margin, kind of can you kind of compare contrast in terms of different portfolios and the kind

Michael Destor, CEO, Jabil: of module profile? Sure. So I I I’ll talk about intelligent infrastructure first because it’s it’s where varied. It’s not one it’s not just a standardized margin across the board. If you think of our semi cap equipment, it’s accretive.

Testing equipment, it’s accretive. OSAT, silicon photonics, CPO, all that will be accretive. The data cloud infrastructure piece is at enterprise level, and our liquid cooling will be will be accretive along with our networking, switching equipment as well. So overall, different parts of our intelligent infrastructure business is accretive. If you go beyond intelligent infrastructure into, let’s say, health care health care is accretive today.

I think, yeah, automotive’s been a little bit down. We we we’re really robust on the EV side. We quickly adapted to so we’re agnostic in terms of which technologies we’re now, whether it’s hybrid, whether it’s EV or ICE, we’re well positioned to serve, all of that. And then you have your warehouse automation, robotics. We’re actually working on humanoids and robots that’s coming for the future, and and we have that capability today.

And and I think that’s the piece, again, that will be exciting in the future. Today, it’s still a smaller base, but, again, that’s a creative margin as well. So the 6% is not something we just made up. There’s definitely a path to that.

George Wen, Analyst, Barclays: Yeah. Maybe, Greg, we can add some color in terms of lever to juice this margin profile in the medium term. Kind of you guys talk about kind of ramping some capacity utilization. Yeah. So as you feel, the the capacity in the factories then can recapture some margin, but also some cost optimization in the back half.

Gregory Hoba, CFO, Jabil: Yeah. So I think there are a few things as you noted. Cost optimization is absolutely a key focus for us. You know, we’re continuing to push our our operations to be more efficient across our factories. So when we’re looking at gross margins, you know, and continuing to try to improve those numbers and also on SG and A being really diligent on our cost structure as well.

On utilization, you know, we we we’re running right now around 75% utilized across our factories and, you know, like to get that higher up to, like, that 85% level, so definitely a lot of opportunities there. And then I think the, you know, the other key thing is, as Mike noted and and is really key to getting to 6% and beyond is just the mix of our business, you know, continuing to focus on those higher margin businesses where we’re investing and, you know, continue to to really focus on that.

George Wen, Analyst, Barclays: Can you also talk about kind of nuance of some ramp, you know, I e, the start up costs? Like, earlier, guys had talked about some potential higher costs associated with the the product ramp. Now it seems that we are kinda behind that. And then can you talk about maybe the tailwind from potentially kind of will continue kinda acceleration in some of the revenue backfilling and and they can kind of, you know, continue to trend higher for them.

Gregory Hoba, CFO, Jabil: Yeah. So, you know, the this year, we you know, when you look at the first half of our of our f y ’25, and, again, our our year end is in August. You know, the first half of the year, we’re right around 5% on our operating margins. For the year, we’re giving guidance of 5.4. You know, a couple of things have happened, you know, where we’re really confident on the second half.

You know, one is is to to your point, George, is is ramps. And we’ve had ramps in our intelligent infrastructure and and our warehouse automation with with several customers. So we’re gonna see those scale and and really, you generate more margins on the back half. Also, when we’re looking at restructuring, we had a restructuring announcement back in September, those the pickup we’re going to see on the margins from that, we’ll definitely see in the back half as well. And then just some of the cyclicality we see with the EMS business.

You know, health care typically is is very strong in in q three and q four. So I really feel good just just about our margin profile going forward.

George Wen, Analyst, Barclays: Yeah. Mike, maybe we can go back to kind of full intelligent infrastructure. And earlier, you alluded to expanded capabilities for for Jabil. Kinda maybe we can talk about solution based kind of approach for for Jabil as nowadays the hyperscalers and the tier two cloud are kind of demanding and most of the end to end solutions, especially, you know, given kind of what you beefed up on the liquid cooling capability. And you you kind of, you know, do across entire sort of supply chain ecosystem, if you will.

Michael Destor, CEO, Jabil: So can you talk about, like, how that sort of expanded capability, you know, can aid into the share gains for Jabil? Sure. So one of the first things we do with any any sort of part of our business is design engineering. And especially in intelligent infrastructure, we’ve made sure that we have that design engineering architecture, capability. It’s critical.

It’s important, whether you’re helping customers design the products or you’re helping them, transit or transition into a large scale manufacturing operation as well. There’s always a handshake that takes place between the customer and a company that manufactures for them, and the and the yield at launch is critical, in the intelligent infrastructure space. Yields at launch in in the data center world with today’s complexities and GPUs is is is critical. The lower your yield to launch, the more expensive it’s gonna be, for the hyperscaler. Lead with design engineering architecture, I I think we we talked I talked a little bit about the Intel acquisition we made on silicon photonics.

Transceiver business is going really well. We’re working on 200, four hundred and eight hundred. We’re winning some market share there at OFC, which is two or three weeks ago. We actually launched a 1.6 transceiver. It was extremely well received, and it’s generated a lot of interest from potential customers today.

Again, very small base, but it’s it’s for the future. I think 1.6 at some point becomes cost beneficial. Today, the 400, eight hundred is probably more cost beneficial. As the GPUs evolve, as technology evolves, the 1.6 is gonna be norm, but that will be in the next twelve, eighteen months. I think CPO is another development piece that we’ve looked at.

We’ve invested in co packaged optics. I see that maybe further that 1.6. It’s sort of in maybe two years, three years, but we’re gonna be right there in the in the development stages, and and I think you you talked about liquid cooling. Liquid cooling, when we made that acquisition, it was all engineers that we acquired. It wasn’t it wasn’t a revenue, so we didn’t pay some absurd amount for a p and l.

We paid for the potential. And these engineers have been doing working on the latest technologies, and I think the the key technology in the liquid cooling space is liquid to liquid. Today, 80% of your data centers, maybe even more, are liquid to air. The future is liquid to liquid as GPUs throw out more heat, the thermal management, the power requirements, all of that leads to a bigger liquid to liquid demand, and we’ll be right in the in the middle of that as well. Again, we’re getting a lot of interest, a lot of folks going through our acquisition property, and it’s it’s just a it’s just a great breadth.

You’re almost across the entire ecosystem, and that’s that’s that’s critical for future growth.

George Wen, Analyst, Barclays: Yeah. Michael, can you kind talk about kind of how do you approach kind of your own IP, kind your own product versus a more traditional Centimeters and EMS? Obviously, Jabil is still largely kind of Centimeters, EMS, and, you know, the IP is probably mostly on the optical transceiver. So so, obviously, you know, that that’s gonna be continue to be a very small mix. So can you kind of talk about, you know, the the different approach kind of maybe, obviously, you want to keep a, you know, both of the balance?

Michael Destor, CEO, Jabil: Correct. So I I think from an optical transceiver perspective, I think we’re agnostic. Agnostic. If a customer wants us to sell them transceivers under the Jabil brand, we’ll do that because it’s it’s a capability we have. A lot of the customers prefer to have their own brand name.

Our entire model is based off of IP being owned by the customer. Jibo owns the manufacturing IP and the engineering that we do with them, but the the product IP, the design of the product, all that rests with the customer. That way, you’re not competing with the customer as well. So overall, again, we try to adapt as much as possible, and maybe in the in the transceiver space, we’ll will help customers who have whatever way they wanted to. I I think being able to do that is critical, not so much.

We don’t wanna go down a particular path and be nonflexible.

George Wen, Analyst, Barclays: Yeah. Mike, maybe you can talk about kind of Amazon setting the large hyperscale to the extent you can. Obviously, well, paragraph for the for the Amazon post warrants. But, also, I I think second, a larger customer could be underappreciated. You could be more of the medium term, could be a more critical so so can you kind of talk about, you know, maybe diversification beyond Amazon?

Michael Destor, CEO, Jabil: Right. So I I I think you you mentioned the word data cloud infrastructure today is mainly on the on the server rack integration. Again, like I said, it has design engineering architecture built into that into that capability and offering, so it’s it’s it’s critical. This business with the second hyperscaler that you’re alluding to is not in the data center sort of typical data center piece. It’s not servers and racks.

It is on the optical side. It’s on the transceiver side. It’s silicon photonics. That demand is going higher. One of the things we always try to do is we look at a customer, we offer one part of the ecosystem, and then we try and vertically integrate across, the entire ecosystem that I’ve, mentioned before.

So, think of this as an entry point. It the entry point itself is today, it’s in that 405 hundred million dollar range. We see that getting up to a billion dollars plus, and and this is not even considering some of the the adjacencies that we can help the customer with. So that that’s always been our our our method is to try and offer end to end solutions because it creates stickiness. I think the the customers value a relationship which is based off of engineering as opposed to a relationship which is just commoditized manufacturing.

Adam Berry, Head of Investor Relations, Jabil: So, George, I I think this is a really key point, and, you know, customers today are looking for end to end solutions. So earlier in the conversation, you used the term Centimeters or contract manufacturer. So I understand why you’d use that for our fifty five year history, but to me, contract manufacturer is we’ve already designed the product. We already know what the supply chain looks like, what the components look like. We just want someone to build it.

There is a business out there that would, you know, thrive on that type of model, but it’s probably gonna be high volume, low margin. Today, the partnerships that we look for are deeper than that. Right? So customers come to us and say, could you help us with the design? Could you help us with the supply chain?

And I think that’s some of the things that Mike was talking about. So totally understand why you used the word contract manufacturer. It’s certainly a term that’s used to describe our industry. But I I’d say some of the players like a Jabil have elevated beyond that. I think that the margin expansion has shown, you know, that we’ve been successful in that journey.

George Wen, Analyst, Barclays: Michael, we we talk a lot about compute. I I think the other piece is is networking switching. Maybe you can double click, you know, the a huge attend there. And especially given kind of the liquid cooling kind of switch, I think that should help as the the data center kind of thermal management becomes a more critical issue. So can you kind of double click on the switching part of the the side aside from computers?

Michael Destor, CEO, Jabil: So we’ve been we’ve been working on switches for thirty years, with customers. Obviously, those weren’t liquid cooled. Today, the trend is having networks, networking switching gear, being liquid cooled just because of the heat. Again, that’s, that’s generated. We’re seeing a complete sort of transition, where we call it the legacy networking, business.

We’ve been, getting out of that slowly, over time because it’s commoditized. We’ve been doing that for thirty years, and, the margin, the margins are lower there. So one of the things we’ve been doing is over the the last few years, networking legacy business is going down, and it’s being replaced by, the the advanced switching as we, call it, with with liquid cooling, with transceivers, with, opticals, in that, again, there’s a vertical solution there for us to provide as well since we do the transceivers ourselves. So, it’s something we’re, offering, but that’s that’s a good point. We do have a whole bunch of business on the networking, side as well.

And then if you take it beyond, there’s there’s business in the wireless communication piece as well. So while we play in five g and and and right now, that’s the that’s the current technology. If that changes, we’ll be we’ll be in that as well. We’ve been evolving through all those technologies. Once upon a time, was two g, three g, four g, LTE.

Yeah. We’ve been through all of those, and we’ll continue, to, adapt and make sure we make the right investments. I think that’s the point I’ve been trying to raise is we we do make these investments and capabilities that that are good.

George Wen, Analyst, Barclays: Shifting beyond AI, I’d be remiss not to talk about other parts of the portfolio such as health care. So so, Michael, can you kind of talk about maybe high level kind of outsourcing trends within health care as the penetration increases in terms of outsourcing? That’s what the if I think you raise the TAM for health care and some of the secular trends in terms of more complex products in the GLP one. So can you talk about some of the latest development and the kind of tailwinds?

Gregory Hoba, CFO, Jabil: Yeah. Maybe I’ll maybe I’ll start that, George. So, you know, health care has been a really solid business for us. We’re seeing tremendous demand and growth in the GLP one space. You know, we are one of the largest manufacturers of of the auto injector pens and insulin pens.

So we have two two sites in The US. We’re we’re ramping up a site in Croatia for for the European market. So we’re really confident of, you know, you know, just the trajectory of of health care and and the pharma delivery systems. On the other side is medical devices. You know, we we have a lot of capabilities, wide breadth of products in in health care, and and we’ve been, you know, partnering with with medical companies where they’re looking to outsource.

So we really like that trend and and looking to do more of that because that is a very good, strong, you know, high margin business for us.

Michael Destor, CEO, Jabil: And and I think three three or four months ago, made this acquisition. It was a it was a pharma acquisition. It was for pharma filling. Today, we work on the on the injector itself, not on the filling or the packaging. By making this acquisition, we’re opening ourselves up to the filling, packaging capability, just on the auto injector side, but on the dry dosage side as well.

Again, this was a capability based acquisition. It opens up doors for us, and we’ve had a whole bunch of pharma companies go through our factory again after the acquisition with with a huge amount of interest on that on that filling capability. That filling capability, again, is bigger dollars. So the the the revenue dollars that can be generated would probably be, yeah, 10 times what you get on a on an injector just because of the just because of how complex it is. So that’s that’s a big area.

And then if you go beyond GLP ones as well, we have a whole bunch of health care business diagnostics, medical devices. We make orthopedic three d based knees. We do hip replacements. There’s a whole bunch of, business there as well, and then we have some level of you know, the the new future is gonna be consumer based sort of health care where automation, your apps talking to one another, reports going directly from your replace me to the doctor’s office, stuff like that. So big player in in healthcare and the future there, it’s been it’s steady any business.

It’s high margin business. It’s actually long product life cycles. Once you build a health care product, it’s there for ten, fifteen years because health care products don’t change out as often as, say, a consumer product would. So health care is a great space to be in.

George Wen, Analyst, Barclays: Shifting to EV automotive, Mike, can you kind of talk about some of the tailwinds kind of on the on the content increase per vehicle, you know, against some of the well known headwinds in in terms of some of the macro uncertainty in the space?

Gregory Hoba, CFO, Jabil: Yeah. So first, I’d say, you know, we we continue to be super committed to to the EV space. You know, one of the things we’re looking at is continuing to increase our content and and be agnostic to the type of vehicles, you know, whether it’s EVs or hybrids. But but, again, that that’s that’s a a space for us where, you know, definitely some bumpy short term growth issues right now with with the markets, but we feel really confident for that over the long term. You know, one one spot of the EV markets that we really like right now is is China.

You know, we continue to have some growth and and winning new customers and programs in China for China and looking for that to be, you know, growing over time globally. So the EV space, although it’s it’s, you know, down for now, we we feel good about that long term.

Adam Berry, Head of Investor Relations, Jabil: You know, George, going forward, if you think about EVs today as a percentage of total car sales, it’s low, four to 5% maybe. You could see that number doubling or even tripling over the next couple years, and that would be a huge amount of growth for us if that happened. Now to Greg’s point, we’re not seeing that today based on what’s going on around the world in the macro with EVs. But, you know, I I think to Greg’s point, you know, we’re very bullish on EVs over the longer term future, and it’s a higher margin business for us too. And we’ve been able to guide and deliver last year mid five margins with one of our higher margin businesses and EVs being, you know, facing some headwinds.

So I think as we go to 6% or at least try to get to 6%, I think some of the EV business coming back would be really helpful.

George Wen, Analyst, Barclays: How how about for the renewables and the coal industrial? Kind of can you talk about the latest trends? And, you know, how about any tailwinds from the supply chain consolidation kind of, you know, narrow to fewer suppliers? Could it benefit Jabil?

Gregory Hoba, CFO, Jabil: Yes. So, you know, just to back up on that, you know, when you look at the inflation reduction act that was put in place, what we saw in that whole space where companies moving or coming back to The US for manufacturing, that also came at a time where demand was dropping. So those two things, you know, all these renewable companies started looking at their supply chain, and we’ve really been able to to prosper on that where, you know, the the relationships we have, you know, the supply chain structure that we have, it’s it’s really helped us continue to be positioned well for renewables. Again, similar to EVs, it’s it’s it’s pretty low right now from a demand perspective, and I think we’re really well positioned going forward for renewables.

George Wen, Analyst, Barclays: So so shifting to financials. So so, Greg, kind of you look at the guidance kind of grew growth over the recent years, like, you know, how would you pass out in terms of, you know, expanding to new markets kind of for share gains, you know, share shift. Can kind of just overall, can you kind of talk about, you know, in this macro kind of heading to over the next twelve months?

Gregory Hoba, CFO, Jabil: Like, you know, can can you maybe still some of the calls or the attributes are still intact? Yeah. I I think net share gains, especially in intelligent infrastructure, you know, we continue to see, and hopefully that will continue. New program wins across multiple end markets, what we’re we’re, you know, looking looking to do and and really confident about that as well, and then just new product launches. So we we feel good about, you know, just across those various spaces for for continued revenue growth.

George Wen, Analyst, Barclays: And and can you kind of talk about, you know, current guidance? You guys are probably putting some some buffer just because of a conservatism with this, you know, macro. So and, you know, can you kind of talk about, you know, potentials of a downside support just as given the Yeah. So first, you

Gregory Hoba, CFO, Jabil: know, the guidance we gave in mid March, you know, we thought it’s very prudent. You know, we’re we’re we’ve looked at all the markets. I I think, you know, we’re we’re cautious on when we look at renewables, auto EVs, and and five g, you know, where there’s, you know, potential upside that that we’ve talked about and we feel is in the numbers is is in intelligent infrastructure and in the AI space.

George Wen, Analyst, Barclays: And, also, kind of, in this environment, obviously, very fluid. Just just how about any, you know, capital allocation? Yeah. You know, I assume it’s intact. Just how how would you, you know, balance kind of more shareholder return versus kind of tuck in deals?

Gregory Hoba, CFO, Jabil: Are you seeing, obviously, that the valuation is shifting just in terms of bolt on acquisitions? So so do you think that you could potentially more front load some of the share buybacks? So just to take a step back on on our capital allocation, you know, this year, we’re giving guidance of of roughly 1,200,000,000.0 of of free cash flow, and and we’re allocating 80% of that to to share buybacks. So we have a billion dollar share share buyback program, which will be, you know, completing this fiscal year August. So still feel really bullish on on buying back our our stock, and and we’ll continue to to allocate, you know, 80% of our of our capital to that.

You know, the 20% roughly is is, to your point, is is to tuck in acquisitions. You know, we’re continuing to to broaden our portfolio and where we have, you know, gaps where we wanna continue to fill. So so we really like that strategy of 20% and and been focusing again on intelligent infrastructure with liquid cooling acquisition we did, and health care with the acquisition we did there. So just continuing to broaden and strengthen the the full portfolio for

Michael Destor, CEO, Jabil: Just just to over the last seven, eight years, we’ve almost harmed our outstanding shares. So our share buyback strategy has worked. It is working. It’ll continue to be a focus area.

George Wen, Analyst, Barclays: So so we have one minute left. Maybe my kind of closing comments, any misconceptions about Jabil kind of who you want to talk about, like, anything else that investors could be missing about Jabil’s story?

Michael Destor, CEO, Jabil: I I I I don’t know if it’s a misconception, but I think it’s underappreciated. I think this whole ability for us to help companies who are our customers and companies who aren’t even our customers move manufacturing across the world. We have a whole presence in North America between 30 sites in The US and and and maybe double the capacity, in, in Mexico. So I think that is going well. The Asia piece, I I think, is underappreciated.

Europe, it’s the ability to help engineering supply chain and manufacturing locally, which is critical.

George Wen, Analyst, Barclays: Great. Great. I I think that’s a wrap. And once again, thanks so much, Mike, CEO, and Greg, CFO. Thank you.

Michael Destor, CEO, Jabil: Thank you, Josh.

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