All right, we're gonna get started, everyone. Good afternoon. Thanks everyone for joining. My name is David Vogt. I'm the UBS Enterprise Hardware and Networking Analyst, and we're excited to have with us Jabil. We've got Kenny Wilson on my left, Chief Executive Officer, and Adam Berry from Investor Relations on my right. Before we get started, I'm just gonna read a brief disclosure from UBS perspective. There are important disclosures pertaining to our discussion today on the UBS website. If you have any questions, please email me or go to www.ubs.com/disclosures. So I think with those disclosures out of the way, why don't we jump in? I'm gonna throw my questions down for a second, and then talk about. I'll give Kenny a chance to talk about the 8-K that they just published, not too long ago, about business trends for the quarter. And so why don't we start there? Kind of, Kenny, what did you see in the quarter that sort of necessitated sort of the, 8-K that you just filed not too long ago? Sure. Well, thanks for having us, David, and thanks everyone for your interest in our company. So what we've seen really toward the back end of our quarter was a marked slowdown in demand from our customers, and really broad-based. So we evaluated that, and the reason we came out with our announcement today was not so much for Q1, but we see that we don't see recovery in the short term, so we think it's an inventory correction. We see it, and we give some preliminary guidance for Q2. So we think that that will continue through our Q2, and to the extent that we think we'll be off by directionally 7% for the fiscal year, so $31 billion. So, so we felt it was important to get that information out to, to the investment community. What we do—we, we spend a lot of time. What we do internally, obviously, is, is there's things that we can absolutely control, and so it's, it's how we react to that. So, so we, we try to guide on, you know, from a margin perspective and from an EPS perspective, so that you can see that we think our business is in pretty good shape. We've just—we, we've spent a lot of time diversifying the company. So if you look at through, you know, where there's been major financial impacts historically, we, we think that we're, we're in a much better position to be able to ride through that, that. So it was really to give the message that, "Look, we will react to softness in end markets." We think being diversified really helps us there. We think our model is robust, and we don't see any change in trajectory from us, from our... We were going directionally, but we just wanted to get that information out there to the investment community. So that was the logic behind us announcing today, so that we could also be informative to the teams, to the folks out here also. So, I mean, I think since you touch on so many different end markets, you're a pretty good barometer or a pretty good read on what's happening, maybe with a little bit of a lag. But, you know, we were just talking earlier, maybe, you know, if you have some color or commentary, maybe we could share it with the audience in terms of how some of the markets are trending. Whether it's you wanna touch on different industry verticals that are still growing and what's trended over the last, you know, several weeks, and so on and so forth, to kind of give people a sense for maybe where the areas of softness are that maybe weren't anticipated at this point. Sure. So again, you know, for those that follow our stock, you know we're pretty conservative. You know, we have division leads who run each of our end markets, and they're really in touch with our customers, so we've got tight relationships there. I mean, what we've seen was, as I mentioned, really broad-based. But where we anticipated growth, we're seeing growth. It's just not at the same rate. And where we anticipated that our revenues would be off, it is off, but it's the decline is deeper. So, I mean, if you look in the consumer, softer, if you look in our print and retail and digital print and retail, it is softer also. Network and storage, we're taking a hit there. And a lot of that you'd see is consistent with the customers that we serve in those end markets. If you look at 5G, it's soft, and, you know, we are really well diversified in the 5G space, geographically, but it's soft across all the geos, specifically, particularly in North America. But we are seeing growth in the automotive and transport space, we're seeing growth in healthcare, and we're seeing growth in renewables. But it's just that our anticipation was that we'd be growing faster in the end markets we expected to grow in, and we wouldn't see this deeper decline. Right. I n some of the other end markets. Right. So really, really broad-based. I think the thing that ties them all together is that, and remember, we're pretty intimate with our customers, is that it generally seems to be that there is inventory in channel, and so there was an anticipation that the demand would be higher. So they're working through an inventory that's kind of locked in the channel. And then we think when that clears up, the growth that we expected and we forecasted will continue. So we do see it as a correction. We're not, you know, we're still as confident and as bullish as we are about our business in the longer term, but we just got to work through that with our customers. So that's, that's helpful. So when you think about demand is a little bit softer, when you look at sort of the signals in your internal models, I think you mentioned that you think it's another one to two quarters of inventory digestion. Yeah. What's been sort of a good signpost to determine whether or not you're gonna see, you know, maybe macro be more supportive? Is it strictly GDP growth? Is it rate driven? Is it consistency in terms of geopolitical conflict? I'm just trying to get a sense for, 'cause we're hearing a lot from a lot of customers, that there is this, you know, persistent macro headwind. You know, you hear it from the publicly traded networking companies, even on the storage side, couple of companies reported tonight. So just wanted to kind of get a sense what you're looking at as maybe a sign that gives you a little bit more confidence as we go through a quarter or two, that the business and the industry and the demand is on a more solid footing. Yeah. So I think it varies by end market. You know, if you look in the consumer space, it's, you know, how much money they've got to spend, GDP growth, you know, just confidence and, you know, generally. If you look into renewables, obviously, interest rates plays a big part in how quickly the renewables is going to be rolled out. Also, we, you know, we're pretty close on, you know, what's happening from a government policies perspective around how is IRA getting untangled, and is that going to free up, and the same in Europe. So I think it really varies by end market, and that obviously affects the EV space. So, so we're pretty we spend a lot of time on that. But we've also got as a proxy, we've also got the interaction and relationships have with our customers who are who are, you know, kind of for, for. And remember that we've got, like, 27,000 some suppliers, and we spend a lot of time with our with the supply base. So, I mean, you know, we, we've got a meeting later this week with Phil Gallagher and the Avnet team. So we're, we're close, you know, whether it's Sean with that, we're close with the distributors, so we see what they are seeing. You know, we, we've got our, our commodity team, you know, were in Samsung last week talking about the memory market. So we got enough information from all of those indicators to tell us that, you know, that we're pretty confident in, you know, what we're seeing. But sometimes you get a surprise, and that's why we wanted to be upfront and communicate. Yeah. So just maybe one final question on this point. When you think about, you mentioned Avnet, and you talked to the distributors. From your perspective, it sounds like you think there's still another quarter or two of inventory at the distributor level. Is that a fair takeaway? Yeah, and also, you know, when we look at what our customers are trying to sell through, so we think there's inventory in the channel that the customers are selling through also. Got it. We're not- I mean, if you look at from an inventory perspective, you know, we talk about we think we should be in the kind of mid-50s, you know, as a sweet spot for us. We were 58 in Q4. You know, we don't think our inventory is going to go up significantly beyond that when- obviously, we're not closed out our quarter yet. But we think it's some in the distributors and some in the channel right now that's being worked through. Got it. So, you know, work around here, these news. So mobility, obviously, that transaction is still kind of working forward here. Any updates that you can share with us in terms of, you know, timing and your thought process around, you know, use of proceeds in terms of... You know, given the news tonight, does that change kind of your view of, of how maybe the capital is deployed going forward at this point? Yeah, I mean, firstly, it would be remiss of me not to mention that, you know, I used to run our mobility business along with Todd Munson. So I'm pretty intimate with that business and close to the people who helped us grow that business. So, it's with a heavy heart that we agreed with our customer and with BYD to sell that business. But it's the best move for our people, it's the best move for our customer, and it's the best move for investors and also for BYD. So we feel comfortable it's the right call. I was in Shenzhen with Chairman Wang and the BYD team a couple of weeks ago. We're developing a really good relationship with the team. They spent a lot of time in our factories, our folks have spent a lot of time in the BYD factories, and we're making good progress. We don't see any red flags now. You know, obviously, there's been a lot of work between our organizations. So we are anticipating that will close. We said I think it'll close sometime in our Q2. We are very confident that's going to happen. If anything, it'll be sooner in Q2 than we expected. From a use of funds perspective, I think Mike, our CFO, was clear on, you know, we're really, really focused, and we think our company's... If you look in the longer term, we think our company's undervalued. And we think the best use of our, of our, the cash we get is buying back our stock. You know, we get that read back to us almost unanimously when we talk to the investment community. So there's no change in our, in our, plan there that, I think, I think the net proceeds. Obviously, we've got some stranded costs, $200 million of stranded costs that we'll work through. But outside of that, we think the net proceeds is like $1.7 billion, and we, we've got an ASR out there, which is actively buying back stock, and we'll continue to do that. You know, I know you've mentioned that most of your investor base is comfortable with the buyback strategy. Yeah. We do get questions from time to time about, you know, M&A. Yeah. You know, obviously, you're getting roughly $1.7 billion net proceeds, net of tax, coming in. I mean, is there a scenario where it makes sense to add, you know, capabilities, you know, buying another EMS company or where you need maybe, you know, a deeper footprint with the relationships that you currently have? Or, you know, as we sit here today, from an NPV perspective, buying your stock is clearly the best use of your proceeds. Yeah. I mean, they're not mutually exclusive. You know, we, if you look at our lab, you know, we're at kind of one time. So So we got a lot of dry powder. We do a lot of tuck-in acquisitions, you know, maybe three, four, five per year that we don't publicly talk about. And our view is that we think our culture's kinda unique and we don't wanna change our culture by doing, you know, large acquisitions that just sit at the side and you know, just for a capability play. So we do focus on something that we can integrate, and we do a lot of that. But for sure, I mean, if you look at what happened with our JJMD deal, so we have a lot of discussions in the healthcare space around the kind of B2B, and that's quite active. We are actively working on some acquisitions that will help us drive capabilities. We just did a deal with Intel that you probably have seen in the silicon photonics space, that we think helps us vertically in the cloud space. We can talk about that later. But we for sure are looking at, is there something we should do, you know, whether it's in... And if you look at the markets we've talked about from a growth perspective, you know, whether that be in healthcare or in renewables, something that can help us drive capabilities in cloud. So we're quite active in that space. The last large acquisition we did was Nypro. I mean, that was successful. Prior to that was Green Point. Again, a success. So we've got a good track record, and I think maybe over the next two, three, four years, that'll be something that we'll definitely be looking to do. But we will be opportunistic because we've got a lot of dry powder if something, you know, gets our interest in the short term also. Got it. And then, so when you look at the portfolio today, post the transaction, you've got some really nice growing businesses like EV transportation, renewables, healthcare, despite the slowdown that we're seeing now. When you look at the mix of end markets that you're currently competing in, pro forma basis, is there anything that you need in the portfolio that you think would be sort of accretive to growth in other parts of the business? Is there something that's out there like, "Hey, we're under-penetrated in XYZ end market, and that's something we're looking at," or maybe conversely, this is a great end market portfolio exposure, kind of a strategic decision post-mobility, is where we're gonna basically make our bet in the short term? If that's the case, putting aside what we're seeing today, what do you think kind of the longer term growth dynamic looks like for the company? Yeah. So, I mean, I mentioned the Intel deal we did on silicon photonics. So we've been in that business since 2015. We did a small acquisition, and you know, that was a kinda telco acquisition at the time. What was clear to us at the time was this was gonna be a data com play. And you know, if you look at the relationships we've got in the cloud and hyperscale space, customers are asking us: "We wanna deal with fewer suppliers. Can you add more capabilities? Because if you can do that, we can deal with less people." And COVID was great for us because it demonstrated that people think they're diversifying their supply chain by having more suppliers. Sometimes it makes it worse, and you're better doubling down with someone that you can trust. So we see that. Give me a second. Sorry, could you repeat that? Yeah. So when you think about the portfolio, and let's say, we'll talk—we can use the silicon photonics business, are there adjacencies that help the core portfolio? Yeah. G oing forward? And, and, well, since you brought up silicon photonics, and I guess that would be considered sort of like a cloud-centric solution. Yeah. N ot semi cap, right? It goes, so it, it kind of expands your capability within the cloud vertical, effectively. So is that kind of the strategy going forward? And then what do you think the kind of growth rate of the core business, putting aside sort of the, the inventory digestion today, looks like pro forma maybe for the mobility transaction? Yeah, yeah. So we are, if you look at... We focus on—I mean, if I take our... We think we'll grow, like, five, six, 7%. So we think that's where, you know, the kind of growth trajectory. Sorry, could you repeat your question? Well, so can you add adjacencies like the silicon photonics that help the business grow faster? Meaning other parts of the business that are growing. Let's say, hypothetically, your cloud business is growing at x. Does the completion of a transaction or the bringing in of a capability help maybe some of the legacy Jabil businesses grow a little bit faster? There's sort of a natural synergy. Yeah, yeah. Apologies. So if you look at, let's take cloud, for example. We see that, and we get asked questions about our cloud business. But our customers are asking us for, as I mentioned, "Can you, if we get— We'd like to deal with fewer suppliers. Right. So if you look at the whole data center space, and there's a big disaggregation going on in the data center. So we've been asked now and we're looking at, should we do? Is there something we can do in liquid cooling, for example? You know, can we do more, if that gets disaggregated, what capabilities can we bring to bear? An example would be also in the, if you look in the, we had an industrial business, and the industrial business, we got a capability that allows us to get involved in electrification. So electrification, we use that into the EV space, and also we're using that in the renewable space. Right. So we try and develop capabilities, and the capabilities we look to be able to leverage across multiple end markets. You know, an example would be, we get asked in the consumer space. You know, why do you double down in consumer? And what we find in the consumer space is that the velocity and the rate of change of the consumer space is significantly quicker and faster than like the auto motor or in industrial. So we can incubate capabilities there that we can then leverage into other end markets. So for example, we got an optics business, and our optics business, which we acquired in 2007 from Carl Zeiss. So that we use that and to develop capabilities in consumer, and then we're using that in, like in ADAS, for example, and in LiDAR. So what we try to do is we try to focus on capabilities that we can incubate quickly and then we can leverage across multiple end markets. So it sounds like focus on capabilities first, and then it gets applied to the different end market sort of categories, right? So you're looking for leverageable capabilities and skill sets that can kind of propel the business forward. Yeah. And what that does is it means that we don't wanna try and guess, you know, let's go and invest in something that's too disconnected from our core. So what we try to do is we try to look at, you know, kind of if it's one standard deviation from our core, something that's consistent with what we've done historically, that allows us to then grow our business and grow our end markets. But it's relatively consistent with what we've done historically. Right. That's how we've grown the company. We think that's a safe path for us from an investment perspective, because we're not placing wild bets and hoping for the best. You know, if you look at how we've grown in EVs, leveraging what we did in industrial, if you look at the stuff we're doing in optics, we will leverage that into the EV space also. An example also, I mentioned about our silicon photonics business, where we did a tuck-in acquisition back in 2015. Those things where we can incubate them, and then we can develop them. Then what happens if you look at if we were a pure play photonics company, you know, we could make photonics modules. Right. But we wouldn't be making line cards, and we wouldn't be making systems. So that can leverage a lot of vertical opportunities for us, and that's how our model works, and that's how we focus on developing our business. Got it. So when you think about the business going forward, you know, obviously you're gonna have considerably less exposure to a very large customer. Is there anything... You know, you mentioned it's a good solution for you, your employees, you know, your potential partner, BYD. What, what other kind of metrics are you looking at to kinda determine the portfolio as it stands today, maybe something that's not core anymore, right? So print and retail or, or connected devices. You mentioned consumer has, you know, faster turnover, but is there--are other items in the portfolio today, as you see it, that are--I don't want you to get out on ahead of your skis here on another transaction, but when you look at the business and you kind of look at the return characteristics or the cash flow generation, whatever the right metric is, that maybe just doesn't meet the standards of what you've seen with EV and transport or renewables or in healthcare, some of your, you know, faster, better growing businesses. Yeah. Kinda, what are you looking at as kind of the, sort of, the metrics to determine whether this makes sense within the portfolio? Yes. So, we've been prudent fiscally and, you know, so don't expect us to be involved in a business where, you know, we're having to invest significant amount of dollars. You know, we talked about our investment will be, like, 2%-2.2%-2.3% of revenues. So, we're always looking, talking to customers and customers understand that that's, you know, from an investment perspective. You know, if you look at our ROIC, you know, our ROIC is pretty strong, so we're always looking at, you know, business that will be north of, you know, be accretive from an ROIC perspective. The thing that's been clear for me is on cash flows is critically important in our business. So, you know, we're always looking at what's the cash flow generation gonna be in that end market? And then obviously, our aggregated margin. So some business will be accretive from a margin perspective, some not. But, you know, we look at the blend of, you know, cash flows, ROICs, margins, what we need to invest, and it becomes about managing a portfolio. So as long as we're doing a good job of managing that portfolio, we think we're in decent shape. I mean, we think we've got some trimming to do in the business that we have right now, but, you know, we're feeling pretty confident that we're well positioned for the future. So when you think about the portfolio, then, putting aside the trimming for a second, you know, at least from the guide tonight that you mentioned, you know, you're gonna do a pretty, you know, pretty good job of maintaining margins as the goal over the next couple of quarters. How does the portfolio today play into your view about margin expansion going forward? Right, so you've had really strong margin expansion. We've got a little bit of an inventory. Yeah. K ind of hiccup now. The reason why I'm asking is 'cause we've heard from some investors that, you know, obviously there's been some potentially, you know, overaggressive ordering, potentially, which maybe has helped other companies maintain better margins than. Yeah N ormal. So how do you think about where, today from a margin perspective against that dynamic? And does that change your view over the next, you know, couple of years in terms of what you can do with margins with this portfolio? Yeah. So, so we've always talked about... Look, for, for us, it's, it becomes about, it becomes value. How much, how much value can we add for our customers? And we think our customers should be able to- should be, pay appropriately for, for the value that we, that, that we add. If you look at, if you look at the, the, the, at aggregate, our business, we're trying to grow in areas that are kinda longer term and stickier, and we, we, we, they've got accretive margins. And so if we continue to grow and, and, and our, our business grows in that, in that, direction, then the margins take care of themselves.... So we, we're not going back to customers and telling them: Hey, we need to be at 6% margin, therefore, we're increasing your pricing. The conversation we're having with customers is: Hey, we're gonna add more value, or can we add more value? Or, hey, we've got other capabilities that we can bring to support you. So we think that the way we drive that and the model we've got will increase our margins. I mean, we've said that, you know, we were, you know, four or five years ago, 3.5%, and then we got to 5% last year. You know, we're between 5.3%-5.5% this year. Internally, we're goaling ourselves on 6%. The only way we get there is by adding more value, is by being efficient and running a good company and adding more value, and making our facilities flexible so that we can absorb, you know, changes and ups and downs in end markets. The solution lies in our ability to add more value and to be efficient. So more value-oriented versus, like, volume-driven? Yeah. It's not a loss of volume leverage, kind of, compresses margin. Conversely, if revenue comes back stronger, let's say in 2025, it's not necessarily a clean shot at towards six, effectively. Yeah. You gotta watch it. You do... Within a certain band, you do get deleverage. So you've got to watch that and... But no, we've got a good path. We've got a good path, and a lot of that was cleaning up what we've done, and making sure we're running a really good opera- We've got to run good factories. If we run good factories and we offer value for our customers, we take care of our customers, then we've got a good chance of being successful. We wouldn't talk about 6% margin if we didn't think we could get there. And we think we get there by kinda leaning into the end markets that we've talked about. Got it. If you don't mind, maybe. Sure, go ahead. I'll add a little bit there, too, and try to take the, you know, the question in a little bit different direction. So obviously, as you know, Kenny and David have talked about, we're squarely focused on margins and cash flows. But and over time, we think we're gonna grow margin, right? So hitting a little bit of an air pocket here, but over time, we've taken margins from, let's call it, 3.5% to almost 5.5%. So we're really happy with that. But when you look at the air pocket that we've hit or the bump in the road or whatever you wanna call it, so we're taking growth in a little bit. If you looked at Jabil historically, that would have cratered our margins, that would have cratered our EPS. But today, given the construct of the company and where we sit today, we feel like we're more resilient in a downturn, right? So we just took about 7% of revenue out for the year. Typically, in a high fixed cost business, you'd have much more deleverage than we think we'll see. So we think that's just another proof point that, you know, the way we've constructed the company today to focus on margins and cash flows, it's a little bit different this time. So obviously, you know, the proof will be in the pudding when we put up results. Right. But, you know, that was an important point that we wanted to get out and talk to the investment community and with our shareholders, is that, yes, there is a bump in the road, but our strategy remains the same. Our customer base remains largely the same. Obviously, we're selling the mobility business, but that's a little bit different deal. So we're really confident in our path, and we feel like we're. Can I follow up on that? Absolutely. You talked about taking 7% of revenue out of the outlook, and if I do the math quickly, it looks like a similar amount on EPS. Is that kind of the takeaway? Well, you know, go back. I know it was a vague statement, at least $9. Go, go back and read the press release. It was in excess- In exces. Of $9, which I believe was beautifully written. So look, you know, nobody wants to take their outlook down. We certainly didn't feel great doing it. But you can believe that we're gonna work on behalf of, you know, customers, shareholders, employees alike, to make sure we deliver on, you know, what we put forth going forward here. And, you know, it's worth noting, you know, it's November twenty-eighth. We're gonna go into our kind of formal quiet period. You know, our accountants are gonna get together. We're gonna do a forecasting process. We'll come out in mid-December, as we always do. We'll give a much more granular update on the year, but, look, we're still happy with the direction of the company. Yeah, but at a high level, I mean, to your point, the leverage would have cratered EPS. You know, let's look back at 2014. You know, revenue was down, maybe... Even go back to '08, '09, maybe that's a better example. You know, revenue down 10%, earnings down 20. Right. We feel like it's a little bit better outlook this time around. Got it. So maybe just one final question for Kenny. And, you know, we talked a lot about what's kind of going on today, but I don't think we talked enough about your vision of the business. And you touched on it a little bit in some of the questions, and I would be remiss if I didn't let you kind of talk about, you know, where do you see this business over the intermediate term and long term, strategically? How do you think it's positioned today versus, you know, to add to this point, if we go back to '08 or '09 or the last downturn, and how much more resilient do you think the business is, you know, over the long term, given sort of the economic backdrop? Yeah. So, just a little bit of background on the way our company's got. When we make things, we've got a single instance of SAP. We've got a single instance of our manufacturing engineering, manufacture our MES. And what that means is that we got 100 factories. We got factories around the world that are using the same systems, processes. We've got a unified culture. What it means is that our ability to, if you look at what's happening geopolitically or, you know, with regionalization of manufacturing, that plays to our strengths because we can do the same things across the world. We've got the same quality systems, the same processes. So we think that, going forward, we've got a phenomenal footprint in Asia. We've got the same as in the Americas and in Europe, and we're able to leverage best practice, to move products, to support customers in multiple end markets, multiple geographies. So we think that we're pretty well future-proofed from that perspective. You know, we're not a North American company with a unique culture just trying to operate in, you know, in Asia, China, or Southeast Asia. We've been there for a long time. So we think that the future is really, really positive for us. We think we've got a good customer set. We think as our customers expand their service offerings, that we can support them. We're. We've got capabilities to be vertical, to really be able to allow them to minimize the sup. The number of suppliers they've got in their supply chain. We think we're well diversified in the right end markets. We think those end markets give us opportunities to grow and develop, and we spent a lot of time on that. You know, we've got a leadership team that's all in on our company. And you know, we're committed to developing our organization so that in the next five to 10 years, we've got a really, really robust organization. So we're feeling pretty bullish about the future. Our folks around the world are feeling pleased, happy to be working in our company, and you know, we think we're a safe pair of hands for our customers and for our investors. Great. And with that, I think we're out of time. So, Kenny, thank you. Adam, thank you for your time, and, look forward to having you again in future conferences. So thank you, everyone, for joining, and, Thank you. We'll talk soon.