Jabil Inc.

Greetings, ladies and gentlemen, and welcome to the JABL third quarter of fiscal year 2026 financial results conference call. At this time, all participants are on 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 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 fourth 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 are identified in our annual report on Form 10-K for the fiscal year ended August 31, 2025, and on 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 hand the call over to Greg.

Thank you, Adam. Good morning, everyone, and thank you for joining our call today. Before getting into the details, I want to take a moment on how the quarter came together. We feel very good about Q3. Demand remains strong, our teams executed well, and we delivered ahead of expectations across revenue, margin, EPS, and free cash flow. Revenue upside in the quarter was broad-based across the portfolio, and I'll walk through the segment details shortly. Just as important, margins were strong and free cash flow was robust, giving us good momentum as we move into Q4. For the third quarter, revenue was approximately $8.8 billion, up 12% year-over-year and $250 million above the midpoint of our outlook. On a GAAP basis, Operating income was $445 million, or 5.1% of revenue. Core operating income was $504 million, and core operating margin was 5.8%. GAAP diluted earnings per share for the quarter was $2.59. And core diluted earnings per share was $3.16, up 24% year over year. Turning now to segment performance in the third quarter, regulated industry's revenue was $3.2 billion, up 4% year-over-year and above our outlook for the quarter. The upside was primarily driven by automotive and transportation, where demand was stronger than we expected. Core operating margin was 5.6%, up 10 basis points over the prior year. Intelligent infrastructure revenue was $4.2 billion, up 21% year over year, reflecting continued strong demand and performance in line with our outlook for the quarter. Growth was broad-based across the segment. Capital equipment and cloud and data center infrastructure were both double digits, while networking and communications was up more than 50%, supported by a strong networking ramp in India. Overall, this continues to be a very strong growth business for Jabil. And as we look from Q3 into Q4, we expect another meaningful step up in revenue across all three end markets, supported by continued strength in AI-related programs and the timing of customer ramps. Our operating margin for the segment was 6.1%, up 80 basis points over prior year Q3. Connected living and digital commerce revenue was $1.4 billion, up 5% year-over-year and above our outlook for the quarter. Relative to our Q3 outlook, the upside came largely from connected living, where consumer-related demand was better than the cautious assumptions we had embedded in the guide. Our operating margin for the segment was 4.9%. Turning now to cash flow and balance sheet metrics. Free cash flow is better than we expected in Q3, supported by strong profitability and continued discipline across the business. Cash flow from operations was $535 million, and net capital expenditures were $176 million, resulting in adjusted free cash flow of $359 million for the quarter. On working capital, inventory days were 84. Net of inventory deposits from customers, inventory days were approximately 68, which was above our normal targeted range of 55 to 60 days. The higher inventory was largely tied to the timing of customer shipments and intelligent infrastructure, and we expect this to normalize back toward our targeted range in Q4. Given how our performance through Q3 and the outlook for Q4, we now expect adjusted free cash flow of more than $1.4 billion for the full fiscal year, up from our prior outlook of more than $1.3 billion. Our balance sheet remains in excellent shape. We ended Q3 with $1.4 billion in cash and debt to court EBITDA of 1.3 times, and we remain fully committed to maintaining our investment grade credit profile. During the quarter, we repurchased approximately $291 million of shares under our existing $1 billion share repurchase authorization, which we intend to fully complete in Q4. With that, I'll walk through our guidance for Q4 FY26. Starting with the segments, we expect regulated industries revenue of approximately $3.3 billion, up 6% year over year. This reflects continued stability in healthcare and packaging, ongoing improvement in renewables, and automotive and transportation performing better than we expected earlier in the year. For intelligent infrastructure, we expect revenue of approximately $4.9 billion, up about 32% year over year. This represents a meaningful sequential step up from Q3, reflecting continued strength in AI-related programs, customer ramp timing, and the timing of shipments, as discussed earlier. And in connected living and digital commerce, we expect revenue of approximately $1.4 billion, roughly flat year over year. Digital commerce growth remains healthy, while connected living continues to reflect a mixed consumer environment, although one that has performed better than our more cautious assumptions. At the enterprise level, we expect Q4 revenue to be in the range of $9.2 billion to $10 billion, or about 16% year-over-year growth at the midpoint. We expect core operating income to be in the range of $589 million to $649 million, which implies a core operating margin of approximately 6.4% at the midpoint. We expect core diluted earnings per share to be in the range of $3.80 to $4.20. We expect fourth quarter net interest expense to be approximately $80 million, and our core tax rate remains approximately 21%. Taken together, this would represent a strong finish to the year with continued revenue growth, margin expansion, and free cash flow generation. For fiscal 2026, we now expect revenue of approximately $35 billion, core operating margin of approximately 5.8%, core diluted earnings per share of approximately $12.70, and adjusted free cash flow of more than $1.4 billion. Let me close by saying Q3 delivered strong results and gives us greater confidence as we enter the final quarter of fiscal 2026. Our performance this quarter highlights the strength of our diversified portfolio, the momentum and intelligent infrastructure, and the disciplined execution of our teams around the world. As we move through Q4 and look ahead to fiscal 2027, our priorities remain clear and consistent. Profitable growth, margin expansion, capital efficiency, and sustained cash generation. With that, I'll turn the call over to Mike, who will share more on fiscal 2026 outlook and how we're thinking about the setup into fiscal 2027.