Jabil Inc.

Greetings, and welcome to the J-Bull first quarter fiscal year 2025 earnings conference call and webcast. 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. You may be placed into question queue at any time by pressing star one on your telephone keypad. It's now my pleasure to introduce our host, Adam Berry, Senior Vice President, IR and Communications. Adam, please go ahead.

Good morning, and welcome to Jabil's first quarter fiscal year 2025 earnings call. My name is Adam Berry, and I'm Senior Vice President of Investor Relations and Communications. Joining me on today's call are Chief Financial Officer Greg Hebert and Chief Executive Officer Mike Destor. We're happy to be joining you today from St. Petersburg, Florida. As a reminder, we conducted our September earnings call hours before Hurricane Helene made landfall in the Tampa Bay area, followed by Milton thereafter. Although these storms caused significant damage to the southeast, our two sites in St. Petersburg, Florida, and our two sites in North Carolina were all operational within 10 days. The tireless efforts of our employees to get these sites back up and running considering many of them experienced damage to their own homes and communities, was incredible. Thank you to all those that helped. With that, please note that today's presentation is being live streamed. And during our prepared remarks, we will be referencing slides. To view these slides, please visit the investor relations section of Jabil.com. After today's presentation concludes, A complete recording will be available on the website for playback. In addition, we will be making forward-looking statements during this presentation, including, among other things, those regarding the anticipated outlook for our business, such as our currently expected fiscal year 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, 2024, and other filings with the SEC. The table 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, I'd now like to turn the call over to Greg.

Thank you, Adam. Good morning, everyone. Thanks for taking the time to join our call today. I'm pleased to report that we're off to a solid start for FY25, with Q1 revenue coming in at $7 billion, up 1% year on year, excluding the approximately $1.45 billion associated with the mobility divestiture in the prior year quarter. Poor operating income for the quarter came in at $347 million. Poor operating margins came in at 5% in spite of a roughly 10 to 20 basis points of hurricane-related impact. Net interest expense in Q1 came in better than anticipated at $60 million, reflecting continued good working capital management by the team. On a GAAP basis, operating income was $197 million, And our gap diluted earnings per share was $0.88. Core diluted earnings per share was $2. Turning now to our performance by segment in the quarter, our regulated industry segment reported revenue of roughly $3 billion, down 7% year on year due to continued weakness in our renewable energy and EV markets. Despite this, Core operating margins for the segment increased by 10 basis points to 4.7%. In the intelligent infrastructure segment, we saw revenue of $2.5 billion, up 5% year-on-year. This growth was primarily driven by strong demand in our AI-related cloud, data center infrastructure, and capital equipment markets. The core operating margin for the segment was 4.8%. a 10 basis point improvement compared to the prior year quarter. In our connected living and digital commerce segment, revenues were $1.5 billion, down 46% year on year due to our mobility divestiture. Excluding the mobility divestiture from the prior year, revenue growth for this segment was approximately 12%, reflecting strong year on year growth across our digital commerce and warehouse automation markets. Our operating margins for the segment came in at 5.8% in Q1. Shifting gears to our cash flow and balance sheet metrics where we continue to see robust results. Inventory at the end of Q1 was flat sequentially at 76 days. After adjusting for inventory deposits, Net inventory days were 56, a two-day increase quarter over quarter, but as expected and within our long-term target range of 55 to 60 days. Thanks to disciplined working capital management by the team, our first quarter cash flow from operations were very strong, coming in at $312 million. Net capital expenditures for the first quarter were $86 million. And for the full year, we continue to expect net CapEx to be between 1.5% to 2% of revenue. As a result of the solid first quarter performance in cash flow generation, adjusted free cash flow for the quarter came in at $226 million. We continue to expect strong free cash flow for the year to come at $1.2 billion. We exited the first quarter with a healthy balance sheet with debt to core EBITDA levels of approximately 1.4 times and cash balances of approximately $2.1 billion. In Q1, we repurchased 1.8 million shares for $232 million. We have $768 million remaining on our current $1 billion share repurchase authorization as of the end of Q1. We remain fully committed to completing the current share repurchase authorization by the end of FY25. Before I discuss the next quarter guidance, I would like to conclude my remarks on Q1 by acknowledging the JABL team's strong execution this quarter, which delivered solid results to start FY25 amid a highly dynamic environment. The company continues to demonstrate high resilience as well positioned for future revenue growth, margin enhancement, and robust free cash flow generation. With that, let's turn to the next slide for our Q2 FY25 guidance. Beginning with revenue by segment, we anticipate revenue for our regulated industries will be $2.7 billion, down 8% year on year, reflecting continued softness in the renewable energy and EV markets. For our intelligent infrastructure segment, we expect revenue for the quarter to be $2.4 billion, up 8% year over year, reflecting broad-based growth across capital equipment, advanced networking, cloud, and data center infrastructure markets. In our connected living and digital commerce segment, revenues are expected to be $1.2 billion. This is down 20% year over year, mainly due to our mobility divestiture. Total company revenue for Q2 is expected to be in the range of $6.1 billion to $6.7 billion. Core operating income for Q2 is estimated to be in the range of $286 million to $346 million. GAAP operating income is expected to be in the range of $183 million to $263 million. Core diluted earnings per share is estimated to be in the range of $1.60 to $2.00. GAAP diluted earnings per share is expected to be in the range of $0.69 to $1.27. Net interest expense in the second quarter is estimated to be approximately $60 million. And for FY25, we now expect it will be $235 million, down from what we thought in September. Our core tax rate for Q2 and for the year is expected to be 21%. With that, I'd like to thank you for your time this morning and for your interest in Jabil. I'll now turn the call over to Mike to dive deeper into our strategic growth areas and the exciting opportunities ahead. Thanks, Greg.