Jabil Inc.

Greetings and welcome to Jabil's third quarter fiscal year 2025 conference call and webcast. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone requires operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Adam Barry, Investor Relations. Thank you. Please go ahead.

Good morning, and welcome to Jabil's third quarter fiscal 2025 conference call. Joining me on today's call are Chief Financial Officer Greg Hebert and Chief Executive Officer Mike Destor. 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 our 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. 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 hand the call over to Greg.

Thanks, Adam. Good morning, everyone. Thanks for joining our call today. I'm very pleased with our third quarter performance, which at the enterprise level came in well above our expectations across revenue, core operating income, and core earnings per share. In the quarter, we saw significant upside in our intelligent infrastructure business led by the segment's AI-related revenue. At the same time, our regulated and CLDC segments came in largely as planned. The environment remains dynamic, but our performance this quarter demonstrates the strength of our operating model and our ability to deliver consistent results, even as conditions shift. Let's walk through the details for the quarter. For Q3, the team delivered $7.8 billion in net revenue. up an impressive 16% year-over-year, and $800 million above the midpoint of the guidance range we gave in March. Upside strength and revenue was primarily driven by cloud and data center infrastructure. Additionally, it's worth noting both our capital equipment and connected living end markets also saw higher than expected demand in the quarter. Given all this strength, Core operating income for the quarter came in solidly above our range at $420 million. Core operating margins were at 5.4%, a 20 basis point improvement year over year. Net interest expense in Q3 was $66 million. On a GAAP basis, operating income was $403 million, and our GAAP diluted earnings per share was $2.03. Core diluted earnings per share for Q3 was $2.55, up 35% compared to Q3 of last year. Turning now to our performance by segment in the quarter. Our regulated industries reported revenue of $3.1 billion, roughly in line with our expectations and flat year over year. This reflects ongoing softness in the EV and renewable end markets, partially offset by growth in our healthcare business. Our operating margin for this segment was 5.5%, up 70 basis points sequentially. However, this is down 50 basis points year over year as EVs and renewables remain below normalized levels of profitability. In the intelligent infrastructure segment, we saw revenue of $3.4 billion, up approximately 51% year on year and well ahead of our expectations for the third quarter. This growth continues to be driven by sustained, strong demand in our AI-related cloud and data center infrastructure business, including power, cooling, and server rack solutions. Capital equipment was also strong in the quarter, as the need for testing gear remains robust. This growth was offset slightly by lower demand in our networking and communications end market due to softer 5G demand. Our operating margin for the segment was 5.3%. In our connected living and digital commerce segment, revenue was $1.3 billion, slightly higher than what we thought 90 days ago. On a year-over-year basis, this segment was down approximately 7%. This is mainly reflecting softness and consumer-driven products offset by growth in areas such as warehouse and retail automation. Core operating margins for this segment came in at 5.3% in Q3. 210 basis points year-over-year reflecting both the benefits from the restructuring actions taken earlier this year to reduce costs as well as a changing mix of business within this segment next I'll provide an update on our cash flow and balance sheet metrics for the end of q3 inventory days decreased sequentially by six days to 74 days net of inventory deposits from our customers inventory days were 59 and an improvement of two days sequentially and within our targeted range. In Q3, cash flow from operations was strong at $406 million. Net capital expenditures for the third quarter were $80 million. As a result of this solid performance, adjusted free cash flow for the quarter came in at $326 million, bringing our year-to-date adjusted free cash flow to $813 million. With our results through three quarters, we are well on track to generate over $1.2 billion in free cash flow for the year. We exited the third quarter with a healthy balance sheet with debt to core EBITDA levels of approximately 1.4 times and cash balances of approximately $1.5 billion. In Q3, we repurchased $339 million of our shares. we're on track to complete our current $1 billion share repurchase authorization in Q4. With that, let's turn to the next slide for our Q4 FY25 guidance. Beginning with revenue by segment, we anticipate revenue for regulated industries will be $2.9 billion, down 5% year-on-year as we maintain a prudent near-term outlook on the EV and renewable markets. We are also closely monitoring potential impacts, positive or negative, arising from the impending legislation in the U.S. For our intelligent infrastructure segment, we expect strong growth to continue with the revenue for the quarter to be $3.3 billion, up approximately 42% year-over-year. We expect this increase to be driven by sustained, broad-based, AI-related growth in cloud, data center infrastructure, and capital equipment markets. In our connected living and digital commerce segment, revenues are expected to be $1.3 billion, down 21% year-on-year, reflecting continued softness and consumer-centric products offset slightly by growth in warehouse and retail automation markets. Putting it all together at the enterprise level, total company revenue for Q4 is expected to be in the range of $7.1 billion to $7.8 billion. Core operating income for Q4 is estimated to be in the range of $428 million to $488 million. GAAP operating income is expected to be in the range of $331 million to $411 million. Core diluted earnings per share is estimated to be in the range of $2.64 to $3.04. GAAP diluted earnings per share is expected to be in the range of $1.79 to $2.37. Net interest expense in the fourth quarter is estimated to be approximately $65 million. Our court tax rate for Q4 and for the full year is expected to remain at 21%. In closing, the Jabil team's execution thus far in FY25 amid heightened geopolitical uncertainty has been tremendous. Our ability to execute effectively is a testament to the strength of our diversified portfolio and our strategic alignment with high growth secular trends such as AI and industrial automation. This resilience not only reinforces our competitive position, but also sets the stage in the coming years for continued revenue expansion, margin enhancement, and robust free cash flow generation. With that, I'd like to thank you for your time this morning and your interest in Jabil. I'll now turn the call over to Mike.