Jabil Inc.

Greetings. Welcome to Jabil's first quarter fiscal year 2026 financial results conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the form of presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Adam Berry, SVP, IR, and Communications. Thank you. You may begin.

Good morning. And welcome to Jabil's first quarter fiscal 2026 conference call. Joining me on today's call are Chief Executive Officer Mike Destor and Chief Financial Officer Greg Hebert. 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 second quarter and full fiscal year 2026 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 is identified in our annual report on Form 10-K for the fiscal year ended August 31, 2025 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, and good morning, everyone. Thanks for joining our call today. This quarter, we exceeded expectations across the board. Revenue, core operating income, core margins, and core earnings per share all came in strong. Our performance underscores the value of our diversified portfolio and our consistent execution. Intelligent infrastructure led the way with impressive growth, while regulated industries and connected living and digital commerce delivered steady results in line with or above our outlook. Let's now walk through our numbers. Net revenue for Q1 was $8.3 billion at the high end of our guidance range. The mix in revenue and ongoing cost discipline helped us achieve core operating income of $454 million and a core operating margin of 5.5%. On a GAAP basis, operating income was $283 million and GAAP diluted earnings per share was $1.35. Core diluted earnings per share for Q1 was $2.85. coming in at the upper end of our guidance range. Turning now to performance by segment in the quarter. Regulated industries generated $3.1 billion in revenue, in line with expectations and up 4% year-over-year. Automotive and renewables came in largely as expected, and healthcare continued to deliver steady, reliable revenue performance. Core operating margin was 5.8%, up 110 basis points year-over-year, reflecting solid and disciplined execution across the segment and ongoing strength in healthcare. Intelligent infrastructure revenue was $3.9 billion, ahead of expectations. The upside was primarily driven by strength in our cloud and data center infrastructure, as well as our networking and markets. In cloud and DCI, we saw higher revenue due to strong execution as we ramp our second hyperscale customer in Mexico, along with robust results from our data center power operations in Memphis. The upside in networking was primarily driven by stronger demand for next-generation liquid-cooled platforms, which we currently support in India. Core operating margin for the segment was 5.2%. of 40 basis points year-over-year, supported by mixed and strong execution. Connected living and digital commerce revenue was $1.4 billion, ahead of expectations with broad-based strength in automation, robotics, and retail warehouse programs. Our operating margin for the segment was 5.5%. Next, I'll provide an update on our cash flow and balance sheet metrics. Inventory days for the quarter came in at 70 days. Net of inventory deposits from customers' inventory days were 57 days, consistent with our targeted range of 55 to 60 days. Cash flow from operations in Q1 was $323 million, and net capital expenditures were $51 million, resulting in adjusted free cash flow of $272 million for the quarter. We remain on track to deliver $1.3 billion in adjusted free cash flow for the full year. We ended the quarter with a healthy balance sheet, including net debt to core EBITDA of 1.2 times and cash balances of $1.6 billion. During Q1, we repurchased $300 million of shares under our existing share repurchase authorization. With that, let's turn to our guidance for Q2 FY26. Beginning with revenue by segment, we anticipate regulated industries revenue of $2.78 billion, up 2% year-on-year, reflecting an appropriately disciplined outlook for automotive and renewables with continued growth in healthcare. Intelligent infrastructure revenue of $3.76 billion, up 42% year-on-year, supported by sustained strong demand across cloud, data center infrastructure, data center power, networking, liquid cooling, and capital equipment. This also includes a modest contribution from the previously announced Henley Energy Acquisition, which our guidance assumes will close sometime in January. Connected living and digital commerce revenue of $1.21 billion, down 10%, reflecting planned program attrition and customer pruning, partially offset by continued growth in warehouse and retail automation. Putting it all together at the enterprise level, total company revenue for Q2 is expected to be in the range of $7.5 billion to $8 billion. Core operating income is expected to be in the range of $375 million to $435 million. GAAP operating income is expected to be in the range of $312 million to $382 million. Core diluted earnings per share is expected to be in the range of $2.27 to $2.67. GAAP diluted earnings per share is expected to be in the range of $1.70 to $2.19. We expect second quarter net interest expense to be approximately $69 million. and full-year interest expense to be approximately $270 million. The increase in interest expense next quarter reflects two key factors. First, additional debt associated with the anticipated acquisition of Hanley Energy Group, which we intend to fund through a combination of cash and new borrowings. And second, the anticipated refinancing of our existing senior notes maturing in April. Our core tax rate for Q2 and the full year is 21%. In closing, Q1 was a strong start to the year and we carried good momentum into Q2. Our results reflect the strength of our diversified portfolio and the consistency of our execution. As we move through the balance of the year, we remain focused on margin expansion, capital efficiency, and sustained cash generation. With that, I'll turn the call back to Mike, who will offer additional color on fiscal 2026 and our updated guidance.