Greetings, welcome to the Jabil first quarter of fiscal year 2023 earnings call. At this time, all participants are in a listen-only mode. The question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the call over to Adam Berry, Vice President, Investor Relations. Thank you. You may begin. Good morning, and welcome to Jabil's first quarter of fiscal 2023 earnings call. Joining me on today's call is Chairman and Chief Executive Officer, Mark Mondello, and Chief Financial Officer, Mike Dastoor. Please note that today's call is being webcast live, and during our prepared remarks, we will be referencing slides. To follow along with the slides, please visit jabil.com within our investor relations section. At the conclusion of today's call, the entirety will be posted for audio playback on our website. I'd now like to ask that you follow our earnings presentation with slides on the website, beginning with a forward-looking statement. During this conference call, we will be making forward-looking statements, including, among other things, those regarding the anticipated outlook for our business, such as our currently expected second quarter and 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 on our annual report on Form 10-K for the fiscal year ended August 31, 2022, and other filings. Jabil disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. I'd now like to shift our focus to our solid quarter. To kick off the fiscal year, the team delivered approximately $9.6 billion in revenue, well ahead of our forecast and at the top end of our guidance range. Driven by even better than expected revenue in automotive, healthcare, and industrial. All other end markets largely performed consistent to our expectations from 90 days ago. When you put all of this together at the enterprise level, revenue grew by 12% year-over-year and 7% sequentially. Core operating income during the quarter was $461 million, an increase of 15% year-over-year, representing a core operating margin of 4.8%. This is up 10 basis points over the prior year and in line with expectations. From a GAAP perspective, operating income was $362 million, and our GAAP diluted earnings per share was $1.61. Net interest expense in the quarter came in higher than expectations at $66 million as the combination of higher interest rates and better than expected demand drove our working capital needs higher during the quarter. During the quarter, we also repurchased 2.6 million shares for $161 million. Core diluted earnings per share was $2.31, a 20% improvement over the prior year quarter and at the higher end of our range, as core operating income grew much faster than net interest expense. Turning to the segments. Revenue for the DMS segment was $5.1 billion, an increase of 8% on a year-over-year basis and ahead of our plan from September. Core operating margin for the segment came in at 5.2%. Slightly below expectations as upside strength in automotive and healthcare was offset by operational inefficiencies associated with mobility in China. Revenue for our EMS segment came in at four and a half billion dollars, an increase of 18% on a year-over-year basis, while core margins for the segment was 4.3%, up 50 basis points year-over-year, reflecting solid operational execution on strong revenue growth. In summary, another strong quarter is in the books for Jabil. I know the team here is extremely proud of the strides we've made to not only improve our business over the last 10 years, but also make it stronger and more resilient. In a moment, I'll turn the call over to Mark and Mike to provide some additional thoughts on our performance in the quarter and update our outlook for fiscal 2023. I think you'll see there's still so much opportunity as we move into fiscal 2023 and beyond. Thanks for your time today. It's now my pleasure to turn the call over to Mike. Thanks, Adam. As Adam just detailed, our performance in Q1 was quite strong. I continue to be extremely pleased with the strength of our business, which delivered double-digit growth in revenue, core operating income, and core diluted earnings per share in the quarter. Our diversified portfolio and continued participation in end markets with long-term secular trends was once again reflected in our Q1 performance. I'd now like to walk you through our balance sheet and cash flow performance in the quarter. In Q1, cash flow from operations was $166 million, and net capital expenditures totaled $164 million. As a reminder, our customers routinely co-invest in plant, property, and equipment with us as part of our ongoing business model. We often pay for these co-investments upfront, which are then later reimbursed to us by customers. Due to the high dollar value of these co-investments from our customers and how they're reflected on our cash flow statement, it is important to net the two line items shown on the slide to reflect the true CapEx number and what we refer to as net capital expenditures. For the quarter, inventory days came in at 78, down one day sequentially on improved working capital management by the team. As a reminder, we offset a portion of our inventory levels with inventory deposits from our customers. Net of these deposits, inventory days was 61 in Q1, also down one day from Q4. We continue to be fully focused on bringing this metric down further in FY 2023 as some of the supply chain constraints continue to improve. We exited the quarter with total debt to core EBITDA levels of approximately 1.2 times on cash balances of $1.2 billion. Turning now to our 2nd quarter guidance on the next slide. We expect total company revenue in the 2nd quarter of fiscal 2023 to be in the range of $7.8 billion-$8.4 billion. At the midpoint, this anticipates DMS and EMS revenue to be $4.1 billion and $4 billion, respectively. core operating income is estimated to be in the range of $347 million-$407 million. GAAP operating income is expected to be in the range of $319 million-$379 million. Core diluted earnings per share is estimated to be in the range of $1.64-$2.04. GAAP diluted earnings per share is expected to be in the range of $1.44-$1.84. Interest expense in the second quarter is estimated to be approximately $67 million and for the year to be in the range of $265 million-$270 million, which is higher than we forecasted in September due to more conservative interest rate and working capital assumptions. The tax rate on core earnings in the second quarter is estimated to be approximately 19%. Moving to the next slide, where I'll offer an update on the end market demand assumptions that we noted in September. Our FY 2023 guidance assumed a moderate economic slowdown and some moderation in growth in the second half of our fiscal year. Based on what we know today, our assumptions from a demand perspective remain largely consistent. Across many of our end markets, demand has been extremely resilient, particularly in areas that continue to benefit from strong secular tailwinds like electric vehicles, healthcare, renewable energy infrastructure, 5G, and cloud. We continue to expect these secular markets to expand in the face of an economic slowdown. We also continue to expect some consumer-centric end markets to underperform year-on-year, consistent with our thoughts in September. We still expect good growth in FY 2023, as you'll see detailed on the next slide. Starting with our automotive business, which continues to outperform despite global supply chain issues as a transition to EV accelerates. We've seen this rapid acceleration manifest in FY 2023 automotive revenue growth expected to be in excess of 40% year-on-year. We're also expecting double-digit year-over-year growth in our healthcare business, which continues to benefit from an outsourcing of manufacturing trend and has historically been recession resistant with long product life cycles, accretive margins, and stable cash flows. Further, our industrial business is also expected to expand by double digits this year, fueled by growth in clean and smart energy infrastructure as government legislation such as the Inflation Reduction Act in the U.S. accelerates investment in this space. In 5G wireless, we continue to expect solid year-on-year growth. Infrastructure rollouts are accelerating, and our localized manufacturing capabilities are leading to growth in other geos such as India. We expect these rollouts to play out over the next several years, regardless of near-term economic conditions. Within our cloud business in September, we detailed our plan to ship certain components we procure and integrate from a purchase and resale model to a customer-controlled consignment service model. This transition, in fact, began in November, which is earlier than our expectations 90 days ago. A result, revenue will be lower than previously expected as an incremental $300 million of components was shipped to the new model. This is an addition to the $500 million of consignment impact we announced in September. Adjusting for the shift, we expect continued robust unit growth in the cloud space in FY 2023 and beyond. In summary, we feel the outlook for our business is solid and expect demand across many of our end markets to remain strong, with year-over-year revenue growth at an enterprise level to be approximately 3% for FY 2023, despite an assumed economic slowdown in the second half of the fiscal year. Turning to the next slide. We have intentionally structured our business with the aim of delivering core operating margin expansion, sustainable earnings growth, strong predictable cash flows, and shareholder returns. With that in mind, while we continue to expect growth in our business despite recessionary headwinds, we have identified certain cost savings, mainly in our SG&A and support organization for the second half of our fiscal year as we continue to look at doing more with less. The non-core expenses associated with our optimization activities will be approximately $45 million, with the benefits expected in the back half of the fiscal year. We anticipate these costs will result in a net benefit to core earnings per share of approximately $0.10 in FY 2023 and $0.20 in FY 2024. This benefit has been considered in our updated core EPS outlook for FY 2023 of $8.40. We expect the cash outlay associated with our optimization efforts to be incurred over the next two quarters, and we continue to expect free cash flow of more than $900 million in the fiscal year. We expect the momentum underway across our business to continue even in a subdued economic environment, and feel the steps we've taken to optimize our business are appropriate and make us stronger. I would like to wish everyone a safe and happy holiday. Thank you for your time today, and thank you for your interest in Jabil. I'll now turn the call over to Mark. Thanks, Mike. Good morning. I appreciate everyone taking time to join our call today. I'll begin by saying thanks to our team here at Jabil. Thank you for your attention to detail, and thank you for the way you care for and accept one another. Your attitude's amazing, and your dedication is incredible. With that, let's move to our next slide. It's staggering when I think about what our team has built and tailored over the past five to six years. A large-scale portfolio of business sectors. Eight discrete, yet interwoven sectors, which offer Jabil a high degree of resiliency during times of macro and geopolitical disruption, as well as during times when we simply welcome the ongoing demands placed on us by our customers. In looking at this slide, I think about a world where countless products and a massive number of supply chains need to be created, redesigned, or modified. Therefore, placing Jabil deep in the heart of essential end markets. Before moving to our next slide, it's worth revisiting a topic that we addressed during our Investor Day event back in September. The topic being the intentional output of the portfolio you see in front of you, with the intention being that no single product contributes more than 5% to Jabil's overall earnings. This result is a good thing. It's a really good thing, especially when we think about dependability and sustainability. It also shines a bright light on the strategic importance of diversification and scale, and the clear impact it has when operating our business. In recognizing our Q1 results, along with our 2Q guide as detailed by Adam and Mike, combined with a watchful eye on the back half of the year, we find ourselves with an updated financial plan for FY 2023. An outlook which has us increasing core earnings per share to $8.40, an increase of $0.25 from our forecast roughly 90 days ago. In addition, we believe that core operating margin will hold at 4.8% for the year on revenue of roughly $34.5 billion, while free cash flow remains north of $900 million. Integral to this outlook is the fact that our team is doing an exceptional job of proactively managing costs and controlling what they can control in today's environment. Moving to our next slide, I'll share thoughts on our path forward. Shown here are fundamental catalysts which are key to favorable results and future outcomes for Jabil. The unique combination of our approach, structure and experience. Our ability to execute combined with our engineering expertise. Financial plans that are grounded in rational assumptions. Our commitment to returning capital to shareholders. In rounding out our path forward, maybe it makes sense to step back a bit and think about the past few years. The data suggests that what we're doing is working. A testament of just how well our team is managing the business. I'd now like to transition from our path to our purpose. Here at Jabil, we're never confused about our obligation to deliver a fair return to shareholders. With this obligation well understood, and considering the upcoming holiday season, we're taking a little extra time to heighten our focus on ensuring a meaningful purpose in all we do. We're encouraging our employees to take a deep breath and a short pause, creating a little time for reflection. Reflect on our team, reflect on their personal lives, and reflect on giving back to those in need. Speaking of reflection, when it comes to helping those in need, I'm proud to report that our employees around the world just surpassed 1 million hours of personal volunteer time for calendar 2022. What a positive difference created for so many around the world, so many who need it most. Our team's effort was extraordinary, in multiple ways, their effort was life changing. Here at Jabil, we fully embrace the meaning and importance of carrying a purpose, both at home and in the workplace, we do so with exceptional conduct and care. I'm just so honored to serve such a strong and steady team. Their approach is responsible and reliable. They value the relationships we have with all of those that we serve. Each day, we welcome the challenges put forth by our customers, and in doing so, Jabil's making the world just a little bit better. In closing, to all of you here at Jabil, please know that you can be your true self without anxiety or fear of recourse each day when you come to work. To everyone on the call today, I wish you a safe and peaceful holiday season. With that, I'll now turn the call back over to Adam. Thanks, Mark. Operator, we're now ready for Q&A. Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for your questions. Our first questions come from the line of Steven Fox with Fox Advisors. Please proceed with your questions. Hi, good morning and happy holidays. Two questions if I could, please. First on inventories, Mike, a little bit of improvement there quarter-over-quarter, and it looks like you were able to get more components on the auto side. I wonder how close we are to just sort of calling spring in terms of normalizing inventories during the course of the next 12 months, and then I had a follow-up. Hey, Steve. Yes. The inventory days that we just printed, 61 days, down one day from Q4. A normalized run rate, Steve, would be around that 55-57. That's what I expect. Not anytime soon, but that is the ultimate sort of aim. I do expect that 61 days to continue to go down to that 58-59 level. There will be quarterly nuances, timing nuances, et cetera. Overall, the trend would be in the downward direction, particularly with the supply chain constraints easing, as you mentioned. Thanks. That's helpful. Then as a follow-up, I was wondering if you could talk a little bit more of some of the stuff you're doing on the energy infrastructure side. It seems to be supporting some good growth in industrial. From the standpoint of how the new program backlog looks, what, you know, what's your right to play in those markets, whether it's increasing and where you're seeing production interest? Thanks. Hey, Steve. That's an area of our business. As you know, it's embedded in our industrial business. We don't tend to break out all the individual products, but in terms of overall energy management, clean energy, et cetera, that's an area where if you take a look at our overall industrial growth, I would say that the growth rate of that component of our industrial business is greater than most of the other industrial business. Whether it be solar, whether it be off-grid battery storage, whether it be new efficiency of off-grid power generation. Mobile power generation, it's an area that's from a strategy standpoint, very important in the next three to four years of the overall industrial business. I'd equate it. I don't know that the growth will be as secular as maybe EVs. Five, six years ago, when we made decisions to go hard into the EV market and move a lot of our resources that way, you could think of it a bit the same in terms of our overall industrial business. That part of our industrial business is getting a lot of attention. Any skill sets you would point out as to why you guys are winning in that segment in particular? Thanks for the questions. Yeah, you're welcome. I guess I'd make a general statement and a specific statement. I think, one of the interesting characteristics of Jabil is, you know, to be really effective in this business over the long term, I think scale matters. In one of the slides that we just indexed through, if you look at the overall portfolio today that make up the $34 billion-$35 billion of revenue, the balance of the portfolio is substantial. Again, coming back to your specific question, when I think about the markets that you're referring to, A, we've got a whole set of engineering staff that are, let's just say, expert in that area. Much like all of our businesses, they also have a vast pool of engineering resources in other sectors, that they also get to confer with and talk to and think about being creative, in terms of overall solutions in the industrial space, and I think that makes a big difference. Great. Thanks again. Yeah, you're welcome. Thank you. Our next question is coming from the line of Jim Suva with Citi. Please proceed with your questions. Thank you. You mentioned a little bit of manufacturing challenges with the DMS segment. I assume that has to do with the COVID closures and things. Can you just update us as we sit here now around December 15th? Have those kind of been back to normalized? Are there still inefficiencies going on or any changes in how we should think about those efficiencies and inefficiencies? Hey, Jim. I think for the quarter, so if we backward look to September, October, November, with the kind of zero COVID policy, everything that was in the media around China and then kind of our exposure to that and our experience with that, in very round numbers, I would say that the kind of overall China COVID activities probably impacted Q1 by about $10 million, give or take. As you've seen recently, and maybe you're referring to this with some recent changes around the zero COVID policy, we'll continue to manage that in much the same way, being very careful, practical, thoughtful, in terms of managing China coming out of a zero COVID policy. We've been doing that around the world since January of 2020. I think our protocols around the world and in China are kind of best in class. I think protocols and processes aside, Jim, I give a huge amount of credit to our leadership team and our supervisors on the ground in China. They have a fabulous relationship with our people and our employees, and that in and of itself makes a huge difference. Anyway, that's our intent. Then as I follow up on a different topic, you mentioned some more consignment. Is that with kind of the same customer, or is it expanding more or the relationship getting deeper or, you know, is it kind of getting broader for the consignment? I'm just kind of curious. It seems like to me, I should think about the consignment as a good thing for like more sticky business and sticky relationships. Thank you. Yeah. I'm not gonna get into customer specific. I think when it comes to, parts of our cloud business, Jim, we've been very, very consistent, and I don't know the first time we came out on a call and started talking about, our entry into the cloud business based on our right to play and the solutions that our team, wanted to bring forward. What we talked about maybe back in 2018 and through 2019 and even through 2020 and COVID and on and on and on, we've been extremely consistent with the fact that our value proposition in that area of our business is very geocentric and very asset light. Said differently, we do a very good job of aligning variable costs with the puts and takes of the revenue. This is nothing more than that continuing, and the team has done a absolutely fantastic job of growing that business. I think, on one of the slides again that we showed, you can see our cloud business, or let's just say cloud and 5G, is now $6 billion, give or take. I think that's a proxy for how successful they've been. Again, we'll continue and our intent is just to continue to run that in an asset light way. Jim, if I could just, add, I think when we gave guidance in September, our assumption was that the consignment would start sometime in March. We actually managed to get it done, far earlier in November. You're seeing, an earlier impact of this consignment piece showing up in a little bit in Q1, but mainly in Q2. Thank you, and happy holidays to you and all your teams. Thank you. Thanks, Jim. You as well. Thank you. Our next question's come from the line of Shannon Cross with Credit Suisse. Please proceed with your questions. Thank you very much. I wanted to understand a little bit more about the decision to reduce costs. You know, productivity improvements that you can do, but I'm wondering sort of what you saw out there that led you to do this and, you know, how much of it is proactive versus, you know, changes you've already seen in customer behavior. I have a follow-up. Thanks. I think it's a natural decision. You know, the world's, I don't know if I'd use the word difficult, but let's just for lack of a better word, you know, things are a bit choppy right now, a little bit difficult and, you know, whether it's running our business, and each sector of our business, in a different way based on what customers need, whether it's our execution, whether it's overall cost management. I think when we sat here in August, September, and we're taking a hard look at the year, our belief is that we should be maybe a bit more cautious to the back half of the year as we sit today. Mike and I got together with our leadership team, and I'm really pleased with the outcome. By the way, this was, this was a hard press by the overall team. We're just being proactive in terms of largely, in terms of overhead costs and maybe costs that sit on top of the factories. I think that Mike said in his prepared remarks, I think one thing I think it's worth differentiating. Being proactive in the methods, in the way we're being proactive in terms of cost management is to me way different than say, writing off or writing down assets. It's really about taking a look at the business, being aggressive and proactive, and then being sure that shareholders get a very fair return on that in short order. I think Mike, in his prepared remarks somewhere said, on our cost management and the charge we took in the quarter, investors will get about $0.10 back at the back half of this year. More importantly is I think the payback for 2024 and into perpetuity will be $0.20, $0.25. I think it's good use of our effort and nice returns for shareholders. Shannon, our business assumptions continue to be extremely robust. I think I highlighted some of the secular trends that we're actually participating in. All of those continue to show very decent growth. Great. Thank you. Then I, just one other question. How when you talk to your customers, how are they thinking about geographic distribution of manufacturing these days? You know, given the challenges in China, I know it's starting to open up again, but obviously it comes and goes. I'm wondering, you know, how much of a discussion customers are having about Eastern Europe and India and, you know, obviously you're pretty well positioned to help them as they move production around. Thank you, and happy holidays to all of you as well. Well, thank you, happy holidays to you, too. I don't know that there's a general theme. I think, you know, we have 400 plus customers, and I think our customers' thoughts are all over the map, and they're doing the best for their business based on their products. Everything this will give you a little bit of a feel for the complexity of it. By the way, it's why our structure is so efficient and so optimal in terms of customer solutions. Here at Jabil, we don't run our business on a factory basis. We run it customer by customer, line item by line item. The reason we do that is, let's just take a product that, let's say the unit cost is X, but the ability to move that product around the world in terms of distributing the product is very expensive. Well, that would suggest maybe we build it in region. We have other products that cost Y, and moving that product around the world is very small relative to the cost of the product, and we might consolidate that to a single spot in the world. You add to it all the different geopolitical issues, the very unfortunate issue that continues to wane on in the Ukraine. I, you know, it's hard for me to go, geez, this is kind of the herd mentality of our customers 'cause the business just doesn't act that way. I would suggest that when you look at our portfolio and you look at the eight sectors that we define, then you think about all the sub-sectors of the business, again, one of the things I think is a huge strength at Jabil is the diversification, and with that diversification becomes endless amounts of solutions. Again, I take you back to our approach and our structure. We kind of work with each customer in a very unique way, accommodating their needs. With that being said, I would say that you'll probably see us do some expansion in Eastern Europe. You'll probably see us continue to expand in Mexico. I think we feel pretty good about our footprint in China, and you'll probably see some expansion over the next couple of years in India. Great. Thank you. You're welcome. Thank you. Our next question's come from the line of Matt Sheerin with Stifel. Please proceed with your questions. Yes. Thanks. Good morning, everyone. I have a question, Mark, regarding your updated revenue guidance for FY 2023. You're raising the outlook for auto and healthcare. Is that related to just a better supply conditions or demand related? Why taking that number up? Taking those numbers up? We're taking them up because we can. I mean, you know, as we sit here today, you know, one could look at it and go, why would you guys take the numbers up if you're, if you're somewhat cautious about the back half of the year, or gosh knows what's gonna happen in 2023, based on what the U.S. Fed is doing in the markets, et cetera, et cetera. I think we use, you know, we use very good judgment. Again, a real good charm about Jabil is we break our business up into really, really, really small pieces. It gives us really good acuity, high resolution of all elements of our business. In a more general sense, I think the again, referring back to one of the slides that one of us spoke to is as we sit today, we think we'll see double-digit growth in the areas of auto and transportation, largely driven by EVs. Healthcare, I think we showed on the slide, would be maybe north of 10%, and then same with our industrial semi-cap business largely being led by on the industrial side. The growth in all three of those areas, A, supply chain is getting better and getting better faster. One caveat there is legacy semiconductors in the EV space are still tight. Supply chain is getting markedly better. Our ability to gather parts relative to others is very strong. In certain aspects of those, based on certain trends, demand's holding reasonably well. Okay, great. Thank you for that. Then a question, Mike, regarding the incremental consignment revenue that you talked about. Total $800 million in revenue going to consignment for your cloud customer. Does that move the needle on gross margin at all? Is there any change in terms of the operating margin or operating income on that business? Yes, it does move the needle a little bit on margin, but there's been some offsets. I think Adam highlighted some inefficiencies that we had on the mobility side in China, particularly in Q1. We've made some assumptions around further COVID, et cetera, as well in parts of the world, and that does have a little bit of an impact on margin. Yeah, you're right. On the consign side, it has a small margin improvement impact. That's one of the reasons we pursue this with, along with the customer. If I could add to that, here's a real simple way to think about it in very round numbers. Two years ago, the overall op margin for the company was 4.2%. Last year was 4.6%. This year, at the beginning of the year, we suggested that the op margin for the year would be 4.8%. We're holding to that 4.8%, which we're proud of. There's a 20 bps expansion between 2022 and 2023. About half of that is based on our cost management for the back half of the year, as well as continuing to advance our asset light nature of our cloud business, and the other half of that is for lack of a better word, the core business. What's interesting is, I don't even like differentiating that 'cause for me, all of this activity goes hand in hand with running a good business. But in terms of your modeling and the way to think about it, I think that's a reasonable way to think about it. Okay, very good. Thanks so much. Happy holidays. You as well. Thank you. Our next question has come from the line of Ruplu Bhattacharya with Bank of America. Please proceed with your questions. Good morning. Thanks for taking my questions, and congrats on the quarter. My first question is on the DMS segment. Mark, you're seeing strong growth in automotive and healthcare, and you've taken up those two segments combined by $600 million for the full year. Like you said, the consumer-facing end markets in that segment are weaker, and you're taking that down by 200 basis points. Net, when I look at operating margin, it's down 10 bps. My question to you is, if the consumer-facing end markets get weaker, can you talk us through your thoughts on margin risk in DMS? I mean, you know, do you think margins can go lower in that segment, or what offsets do you have? Typically, you know, the reason I'm asking this is because typically one would think automotive and healthcare to be higher margin end markets. If you're seeing a mix shift into that, what's driving the 10 basis points lower, and how do you see risk to that if the consumer-facing markets go lower? Hey, Ruplu. That's a little bit of an open-ended question because, you know, I don't know if you mean it this way, but I'll answer it how I understand it, which is, you know, if the bottom falls out of all consumer-facing products, could the overall DMS margins go down further? Maybe. As we sit today, I think we've done a reasonably good job of, for what we know, handicapping the back half of the year. The way you state it is largely correct. We've really kind of haircut and handicapped any consumer-facing products. Again, the reciprocal of that is we feel good about industrial, automotive, and healthcare. As you're, as you're putting your model together for the year, we, you know, we just reported first quarter, we just gave you a hard guide on 2Q. As I think about Q3 and Q4, our DMS margins, as you start putting numbers together and do your after calls and whatnot, I think what you'll find is, doing the math, is to have our DMS business end up being at 5% or 5.1% margin, whatever it ends up being, Q4 is gonna end up being a pretty strong quarter. I think that's reflective of exactly what you said, which is some of the higher margins in auto and in healthcare. I would also, why we're on the topic of the year is let's be sure it's not lost on us, the hard work and the complementary work that our EMS team is doing in terms of their business and margins for the year as well. When we went into 1Q on the EMS side, we thought margins would be in the 4%-4.1% range. They came in 4.3%. If you take a look at our guide and do your math on that, you'll see the strong margins returns in 2Q. Then if you think about the year on the EMS side, last year, I don't remember the exact number, but EMS was 4.2%, 4.3%. Beginning of the year, we thought EMS would be, for the year, EMS would be around $4.4 billion, $4.5 billion, and I think EMS is going to come in closer to $4.6 billion, $4.7 billion. Again, let's step back and just have an appreciation for the fact that the business is a kind of an entire portfolio. I say that respectfully, I understand your question was around DMS. I hope that helps. Yeah. Thanks for all the details there. I appreciate that. For my second question, if I can ask Mike, you know, 4.8% operating margin total for the company, can you help us quantify the inflation pass-through impact on that? I'm assuming like other EMS companies, as component costs have gone up, you're passing that through. I'm not sure if it's a $1 for $1, but if it is, then your revenue should be hurting. I'm sorry, your margin should be hurting because of that. You know, what would that 4.8% have been if there was no inflation pass-through? When we think about modeling margins, you know, if we look back, you know, the slide 13 that you have, you've kind of shown us the last five years and how the margins have progressed since fiscal 2019. Very strong performance. I mean, as we model out going forward, what are the puts and takes here? Like, I mean, you're going to get a benefit as inflation goes down, that should help margins. What are the other things that can drive margins? Any guidance you can give to how to think about what the target margins can be in the long term? Hey, Rup, well, I'll intercept that one for a minute. Wow, that was a lot. Let me bring you back to what I think was the first part of the question, which is, yes, you're correct. In the first quarter, at an enterprise level, margins were 4.8%. I kind of think you answered your own question, which is 1Q of last year, margins were 4.7%. We thought that the first quarter would come in. Back in August, September, we were guiding and anticipating the margins for Q1 would be 4.8%. They came in right on top of the 4.8%. Again, I'll bring you back to DMS margins. We're down about 20 basis points. EMS margins, we're up 20 basis points. Again, indication of the size scale, but again, the wonderful diversification we have. If we didn't have good understandings with our customers in terms of equitable sharing, when variable costs go up and down, we wouldn't have delivered the 4.8. I don't say that, I don't say that to drive a concern. I say that it much in an opposite way, which is the way we have our business set up, the way we have our customer relationships set up, are very satisfactory to our leadership team. In terms of what else could have impacts on the overall margins for the year, it could be anything. On the downside, it could be that the macro gets worse, on the... You know, what do I worry about? Yeah, the macro could collapse, this, that, and the other, it'll, you know, that instability will be there for everybody. What I don't worry about is I don't worry about our team's ability to execute. I don't worry about our team, in and of itself. I love the portfolio that we have. I don't worry about the size of the market. I don't worry about our ability to continue to gain share. Maybe you wrap all that up, I think, I think our team, both at a factory level and above factory does a really, really nice job of controlling what we can control. Got it. I mean, really appreciate all those details. Wondering, let me know if I can sneak one more quick one in. I know you've announced Kenny Wilson to be the new CEO, effective May first, and you're gonna take on more of a strategy corporate development role. Can you just talk about, you know, from now till then, what are some of the handover activities you're going to do? Should we think of any change in direction to the company, or how should we think about this transition? Thank you so much. Congrats again on the quarter. Well, that's an interesting question. I've been at this a long time. I'd make this comment not directly around my relationship with Kenny. Whether my relationships with Kenny or Borges or Dastoor or McCoy or JJ or all the folks that you've met, we have a significantly tight-knit group. We've all been at this a long time. Sometimes that becomes problematic because it feels sometimes like we complete each other's sentences, so we got to continue to challenge ourselves so we don't have a group think. Kenny's been with us a long time, so has the balance of the team. I don't envision any of this being revolutionary. I think it'll be evolutionary. We also added some other new leadership to the team recently with LaSean and Christine in legal. I think we'll carry on. With that being said, as I continue to move more and more throughout the year into an active chairman role, and you're right, I'll have my hands firmly involved with investors and our foundation and strategy and other stuff, I hope the team takes my 10 or 11 years and is disruptive in a positive sense. I think one of the things that this team has done over and over and over and over and time and time again over, you know, 30 years is, I think we're proactive. I think we change, when we need to change. We don't change for the sake of changing. I'd say Kenny and some of the expanded leadership team is probably, in some sense, a little bit more edgy than I can be. I think that's a good thing. I think there'll be some good changes. You can think of them as evolutionary, not revolutionary changes, because the foundation we've built for this business has never been stronger. I'm really, really, really looking forward to the next two, three, four years to see how things shake out. Thanks for all the details. Yeah, you're welcome. Thank you. Our next question has come from the line of Paul Chung with JP Morgan. Please proceed with your questions. Hi, thanks for taking my question. Just on, you know, cash flow, you typically seen more cash investments, you know, in 1Q, but, you know, you actually squeezed out some free cash flow this quarter. You know, is this more about timing or maybe less need for, you know, working cap investments kinda given elevated build last year? Any comments there in the, in the kinda shape of free cash flow for the year? Also on guidance, you know, it remains unchanged. How are you kinda offsetting the increase in interest expense and kinda cash outlays on, you know, optimization or was that kind of included in your projections last quarter? Oh, yeah. The free cash flow assumptions that we have today, they reflect everything. They reflect, they reflect the sort of charge that we've taken, the cash outlay associated with that. Don't forget there's the savings on the other side of that as well. There is definitely everything that's out there is reflected in the free cash flow. From a Q1 standpoint, I think it's more timing. We've talked about our CapEx being in that 2.5% range. Not much changes from that 2.5% guidance that we provided in September. You'll always have timing differences. You'll have nuances. Uh, uh, from a, from a shape of the year perspective, I sort of, um, I just use shapes from previous years. I think it'll be very similar, uh, to that. Obviously, uh, timing moves things here and there a little bit, uh, but overall, uh, we still feel committed to our, uh, $900 million, uh, free cash flow number for the year as well. Gotcha. Just to follow up on, you know, op margin seeing very kind of, you know, good progression here over the last two years, some nice benefits from cloud consignment. You know, can you expand on the drivers to get to that 5% mark and kind of the pace beyond fiscal year 2023? You're doing some cost optimizations here. Will it be more a function of mix, kind of efficiencies or even scale as you guys are approaching, you know, $10 billion in quarterly revenue, you know, revenue run right now. Thank you. Happy holidays. I would suggest all of the above, Paul. I think it's definitely mix, operational efficiency, something we always execute on. We've always invested in the past around automation, robotics, et cetera, so we feel good about that as well. Overall, the margin, does it go beyond 5 and a half as well? We're not stopping at 4.8, and we're definitely not stopping it at 5% either. It's something we're actively engaged in and feel very strongly about. Great. Thank you. Thank you. Our next question has come from the line of David Vogt with UBS. Please proceed with your questions. Great, guys. Thanks for squeezing me in. I have a big picture macro question on sort of demand. You talked about your demand characteristics being relatively consistent with 90 days ago. I'm trying to square it with your commentary as being a little bit more cautious as we move through the back half of this year. I guess my question is, when you think about, you know, what's happening in the marketplace, we're seeing some intensity drop from a capital spend in telcos and cloud, how much of your demand visibility or your revenue visibility has to do with, you know, elevated backlogs because supply chain has been sort of elevated for quite some time versus, you know, the in-period demand that you're seeing today from your customers? I have another question. Hey, David. Well, first off, welcome to the group. I think you just started coverage on us and we look forward to spending more time with you so you can better understand the business. In terms of, in terms of your questions, there's pent-up demand, but I would caveat answering your question similar to a prior question, which is, I don't wanna make a blanket statement because as an example, let's take networking or say legacy telco. That part of our business today is about $3 billion on a $35 billion base. In terms of what type of backlog we see from the telco folks or the networking folks, I guess it's relevant, but in terms of our overall corporate results, I'm not sure how impactful that might be. I think 100%, we have seen pent-up demand and backlog across almost every single area of our business where supply chain constraints existed. If I could paint it with a broad brush and take this with a degree of inaccuracy, I'd guess, because I'm trying to paint it with a broad brush across a large-scale portfolio. I think that most of the pent-up demand and the backlog in general will probably be alleviated by late 1Q of 2023 or into the 2Q of 2023. Say the first half of 2023. I think most of the pockets of backlog clear and normalize as we get to the back half of calendar 2023. Again, I don't know if that's helpful or not, but that's kind of a general statement as we look across the business. No, that's helpful. What we're trying to kind of understand is sort of the normal cadence of sort of order trajectory of the business, stripping aside what we've kind of lived through the past couple of years. That's helpful. We appreciate it. Then maybe just a final question on cash flow and capital priorities. You know, you've done a great job, you know, in terms of returning shareholder capital and managing cash flow, you know, over the last couple of years. Does your commentary about the second half or maybe some of the cash used for the restructuring change any of your priorities the balance of this year? I wouldn't think so, but just wanted to just confirm with you. No, there's no change to our capital allocation. We've talked about it in September. We have another $1.1 billion left of our authorization. We continue to use it. We use quite a bit of that in Q1, and we'll be doing, yeah, in the range of 150-200+ type of buybacks every quarter. Nothing that happens in the second half will alter that, but actually be an opportunity to do some more, in fact, if things start going south. Great. Thank you very much. Thanks, David. Thank you. We have reached the end of our question and answer session. This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day, and happy holidays.