Jabil Inc.

Hello and welcome to the JBL fourth quarter fiscal year 2020 earnings call and investor briefing. At this time, all participants are in listen-only mode. If anyone should require operator assistance, please press star zero on your telephone keypad. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to your host, Adam Berry, Vice President, Investor Relations. Adam, please go ahead.

Good morning and welcome to Jabil's fourth quarter of fiscal 2020 earnings call and investor briefing. Joining me on today's call are Chief Executive Officer Mark Mondello and Chief Financial Officer Mike Dasdor. We'll begin today with Mike, who will review our fourth quarter and fiscal 2020 results. These slides are currently posted on our website at jabil.com. Following those comments, we will transition to our third annual investor briefing, where Mark will review our business overview and Mike will provide an outlook for our first quarter and fiscal 2021. We will then open it up for your questions. Please note, to view our investor briefing slides during today's session, you will need to be logged into our webcast at Jabil.com. Following today's session, you will find our entire slide deck for both our fourth quarter earnings and investor briefing on our website. The entirety of today's call will be recorded and posted for audio playback on Jabil.com within the investors section. Our fourth quarter press release, slides, and corresponding webcasts are also available on our website. In these materials, you will find the earnings information that we cover during this conference call. Before handing the call over to Mike, I'd now ask that you follow our earnings presentation with slides on the website, beginning with our forward-looking statement. During this conference call, we will be making forward-looking statements, including, among other things, those regarding the anticipated outlook for our business, such as our currently expected first quarter net revenue and earnings. These statements are based on current expectations, forecasts, and assumptions involving risks and uncertainties that could cause actual outcomes and results to differ materially. An extensive list of these risks and uncertainties are identified in our annual report on Form 10-K for the fiscal year ended August 31, 2019, and other filings. JABL disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. With that, it's now my pleasure to turn the call over to Mike.

Thank you, Adam, and good morning, everyone. I'm very pleased with our fourth quarter performance. Both segments executed extremely well and delivered financial results that came in well about the guidance we provided on June 19th. The overperformance was driven mainly by two factors. First, during Q4, we experienced fewer COVID-related disruptions than we anticipated in June, which resulted in higher than expected throughput in our plants, a more efficient supply chain, and lower COVID-related expenses. And second, our teams in both segments quickly moved to capitalize on upside demand, mainly in the mobility, 5G wireless, and cloud end markets. The compounding effects of higher than expected sales, improved productivity, and lower costs allowed us to deliver strong revenue core operating income, and core delivered earnings per share in Q4, well above our expectations in June. With that, I'll now review our Q4 and fiscal 20 financial results. Net revenue for the fourth quarter was $7.3 billion, an increase of 11% year-over-year. GAAP operating income was $197 million, and our GAAP delivered earnings per share was 44 cents. Core operating income during the quarter was $255 million, well above our expectations in June, driven mainly by the aforementioned higher sales and lower COVID-related impact that came in approximately $25 million lower than anticipated. Net interest expense during the quarter was $46 million. Our core tax rate for the quarter was 24%. Core delivered earnings per share was 98 cents. and 11% improvement over the prior year quarter. For the full fiscal year, net revenue was $27.3 billion, up 8% year over year. FY20 GAAP operating income was $500 million, with GAAP net income of $54 million. GAAP net diluted earnings per share was 35 cents for the year. Core operating income was $864 million, representing a core operating margin of 3.2%. Core deleted earnings per share for the year was $2.90. Now, turning to our fourth quarter and FY20 segment results. Revenue for our DMS segment was $2.8 billion, up 17% year-over-year. This growth was mainly due to our mobility and healthcare end markets. Core margins for the segment improved 60 basis points year-over-year to 3.5%. Revenue for our EMS segment increased by 8% year-over-year to $4.5 billion, driven mainly by the Semicap, 5G Wireless, and Cloud N markets. Core margins for the segment were 3.5% during the quarter. For the year, our DMS segment revenue was $10.7 billion, up 8% year-over-year, mainly due to our healthcare business. Core margins for the segment were 3.9%. Moving to EMS. In FY20, revenue increased by 8% year-over-year to $16.6 billion, as our value proposition continues to be well-received in the areas of 5G wireless, cloud, and SEMICAP. Core margins for the segment were 2.7%. Turning now to our cash flows and balance sheet. In Q4, inventory days came in better than expected at 56 days, a decline of 11 days sequentially. Net capital expenditures for the fourth quarter were $241 million, and for the full fiscal year came in as expected at $796 million. Our fourth quarter cash flows from operations were very strong, coming in at $687 million. As a result, the strong fourth quarter performance in cash flow generation adjusted free cash flow for the fiscal year came in higher than expected at approximately $461 million. We exited the quarter with total debt to core EBITDA levels of approximately 1.7 times and cash balances of $1.4 billion. To further strengthen our balance sheet during Q4, we issued a $600 million 3% senior note maturing in January of 2031. We used the proceeds to redeem our $400 million 5.625% senior notes due in December 2020. We ended Q4 with committed capacity under the global credit facilities of $3.8 billion. With this available capacity, along with our quarter end cash balance, J will end at Q4 with access to more than $5.2 billion of available liquidity, which we believe provides us ample flexibility to navigate the current market environment. During Q4, we repurchased approximately 760,000 shares for $25 million, bringing our total year-to-date repurchases to $215 million. In closing, I am very pleased with our strong execution and resiliency in a challenging environment, and I'm encouraged by the positive momentum we carry into fiscal 21. With that, I'll now turn the call over to Mark.