捷普科技 (JBL) 2015 Q3 法說會逐字稿

Welcome to the Jabil third-quarter 2015 fiscal-year earnings call. Beth Walters, Senior Vice President, Communications and Investor Relations, please go ahead.

Thank you. Welcome to our third quarter of FY15 earnings call. Joining me today are CEO, Mark Mondello, and our Chief Financial Officer, Forbes Alexander.

This call is being recorded and will be posted for audio playback on the Jabil website at Jabil.com in the Investor section. Our third-quarter press release, slides, and corresponding webcast links are also available on our website. In these materials, you will find the financial information that we will cover during this call. We ask that you follow along our presentation with the slides on the website, beginning with slide 2, our forward-looking statement.

During this conference, call we will be making forward-looking statements, including those regarding the anticipated outlook for our business, our currently expected fourth-quarter of FY15 net revenue and earnings results, financial performance for the Company, and our long-term outlook for the Company. 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 10K for the fiscal year ended August 31, 2013, on subsequent reports on form 10-Q and form 8-K, and our other securities 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.

For today's call we'll begin with some opening remarks from Mark Mondello. We will then move on to the third-quarter results and updated guidance for fiscal fourth quarter of 2015 from Forbes Alexander. We will then open it up to questions from call attendees. I'll turn the call over to Mark.

Thanks, Beth. Good afternoon, everyone. I appreciate you taking time to join our call today.

As always, I'd like to begin the call by thanking our people here at Jabil. I couldn't be more proud of our Team. They're simply the best.

As for our third-quarter results, we delivered core operating income of $160 million on revenues of $4.36 billion. These results illustrate that we're clearly delivering the plan and executing our strategy, a strategy firmly grounded on serving a diverse portfolio of businesses and brands. Forbes will provide more detailed results and discuss our fourth-quarter guidance during his prepared remarks.

For now, I'd like to discuss the current state of our business. Our strategy is fully intact. For the back half of this year, we'll realize strong performance from our EMS division in terms of core operating income. At the same time, we're making significant investments within our DMS division in preparation for a fast start to FY16. For the full fiscal year, FY15, I remain confident that we'll deliver $2 in core earnings per share.

As I've stated during our past two earnings calls, we believe that expanding our investments at this time makes perfect sense if opportunities surface, specifically, growth opportunities that align with our strategy. As such, we've made a decision to expedite further expansion of our newly-formed campus in Chengdu, China. We made this decision based on optimizing our construction costs and modeling our needs for additional capacity, capacity based on our growth projections for the next two to three years. We're fortunate to find ourselves in the situation where business conditions dictate the need for an increase in our overall manufacturing square footage.

In addition, Management has approved incremental capital investments for our Electronics Manufacturing Services division. The result of these two decisions will be an increase of $140 million to $180 million against the high end of the capital expenditure range I provided six months ago during our December earnings call. With this, it should be noted that we're still well positioned to deliver $150 million to $250 million of free cash flow this year, a reflection of strong cash generation across the Corporation.

Looking forward, our business continues to exhibit excellent momentum. As we approach FY16, I'll judge our success throughout the year by the following. Excellent retention, development, and care of our people; continued positive trends and trajectory of our net promoter scores; further expansion of our strategic capabilities; year-on-year revenue growth above 5% for our EMS division; year-on-year revenue growth above 15% for our DMS division; and a minimum of 20% year-on-year growth of core EPS.

My confidence in our ability to deliver is reinforced by very real catalysts, catalysts such as the current outlook of our share wallet expansion and continued market share gains; the scale of product ramps currently underway inside of our factories; the attractive opportunities available throughout the markets we serve; the collective aggregation of computing power, cloud access and storage, digitization, mobility, sensors, and predictive analytics; and finally, the secular trend specific to connected devices that's so pervasive. With that said, I'll provide more complete details and guidance specific to FY16 during our September earnings call.

A simple, yet impact, full proof point of how we're advancing our go-to-market approach is clearly illustrated inside of our Blue Sky Innovation Center in Silicon Valley. We hosted 1,000-plus customers, friends, and suppliers at our formal grand opening back in April. Our center offers easy access to our leading capabilities, as they're now showcased under one roof.

Blue Sky is where we bring together multi-functional experts to talk and think, think about what-if scenarios, brainstorm in a collaborative manner, look beyond the device, look beyond the hardware itself. How are real problems addressed in today's world? How are solutions implemented with incredible speed and accuracy?

Since April, we've hosted roughly 50 customer meetings at Blue Sky, with a full pipeline of additional meetings planned for and confirmed through the balance of our fiscal year. It's early days, but the zeal and passion around Blue Sky is simply awesome.

Our Team here at Jabil loves being part of a high-energy ecosystem centered around growth, innovation, and complex technical challenges. Why is this so important? It's important because when the day is done, it's all about having an inspired Team, a Team that excels when it comes to taking great care of our customers.

In concluding my prepared remarks, I think about the resiliency of our business. Our strategy to lean into diversified growth is proving positive, both at a corporate level and a divisional level. Growth remains top of mind for our entire Team.

I believe we're squarely on track to deliver a strong FY16. We have a great Team, outstanding customers, incredible reach, massive scale, and unique solutions, solutions which align perfectly with the needs of today's marketplace. Our Team will continue to provide more and more products across more and more end markets, and do so on behalf of the greatest brands in the world. Thank you, and I'll now turn the call over to Forbes.

Thank you, Mark. If you're following along, I'd now ask you to turn to slide 3 of the presentation posted on our website, where I'll review the results for our third fiscal quarter.

Net revenue for the third quarter was $4.36 billion, an increase of 15% on a year-over-year basis. Our GAAP operating income was $135 million, while GAAP net income was $72 million, GAAP net diluted earnings per share being $0.37. Core operating income, excluding amortization of intangibles, stock-based compensation, and restructuring expense was $160 million, or 3.7% of revenue. Core diluted earnings per share were $0.49.

Now, turning to slide 4 for our third-quarter segment discussion. Our Diversified Manufacturing Services segment saw revenues increase 41% on a year-over-year basis, in line with our expectations. Revenue for the segment was approximately $1.62 billion, representing 37% of total Company revenue. Core operating income for this segment was $65 million, or 4% of revenue, reflecting continued investment in product development, capacity, and multiple product ramp pre-positioning as we approach FY16.

The Electronic Manufacturing Services segment performed extremely well during the quarter, despite end-market-related softness in our Enterprise & Infrastructure business. Revenue for this segment was $2.74 billion, an increase of 4% on a year-over-year basis. Core operating income for this segment was $95 million, or 3.5% of revenue. The improvement in profitability for this segment was a result of favorable mix coupled with strong execution and the benefits of previously announced restructuring activity.

I'd now like to review our cash, return mix metrics, and capital expenditures on slide 5. We ended the quarter with cash balances of $963 million. Core EBITDA for the quarter was approximately $290 million, or 6.7% of revenue. Our year-to-date EBITDA is $875 million, representing 6.6% of revenue, while core returns on invested capital were 17.1%.

Net capital expenditures during the quarter were $259 million, bringing our yearly investment spend to $722 million as we maintain our focus on growth for FY16 and FY17. We are extremely pleased with our operating cash flow generation during the quarter of $358 million. With this performance, cash flows from operations for the nine months were $883 million, and as a result, we remain extremely well positioned to achieve $200 million of free cash flow for the full fiscal year.

Now, I'll ask you to turn to slide 7, our outlook for the fourth fiscal quarter. We expect revenue in the fourth quarter to be in the range of $4.45 billion to $4.65 billion, or at its mid point, an increase of 12% on a year-over-year basis. Core operating income is estimated to be in the range of $135 million to $165 million, and core operating margin in the range of 3% to 3.5%.

Core earnings per share are estimated to be in the range of $0.40 to $0.50 per diluted share, and GAAP earnings per share are expected to be in the range of $0.27 to $0.38 per diluted share. This based upon a diluted share count of 197 million shares. Based on current estimates of production, the tax rate on core operating income is expected to be 26% for the quarter.

The Diversified Manufacturing Services segment is expected to increase approximately 35% on a year-over-year basis, with revenues estimated to be approximately $1.75 billion, while the Electronic Manufacturing Services segment is expected to increase approximately 1.5%, or with revenues of $2.8 billion.

Now, I ask to turn to slide 8 for the full fiscal year. Our expectations for the full fiscal year are that overall Company revenue will grow 13%, to $17.8 billion, while our DMS segment is anticipated to grow 36%, to $7 billion, and our EMS segment 2%, to $10.8 billion. The earnings-per-share estimate for the full fiscal year remains at $2.

In summary the full fiscal year remains on track to be a strong year. Operational cash flows continue to facilitate rapidly-expanding capacity and footprint investments, investments that are uniquely positioning Jabil for continued strong growth in revenues and earnings in FY16 and beyond. I'd now like to hand the call back over to Beth.

Thanks, Forbes and Mark. Before we begin the question-and answer-session, I'd like to remind our call participants on the other side that in customary fashion, we will not address any customer- or product-specific questions. Thank you for your cooperation. Operator? Ready to play on.

Your first question comes from the line of Steven Fox with Cross Research.

Thanks, good afternoon. Two questions for me. First of all, Mark, looking at some of your comments for next fiscal year, especially around sales growth, can you just maybe highlight some of the drivers that you're most confident in, in setting those bars like you did?

And then just secondly, Forbes, looking at your gross margins for the quarter, they continue to creep up pretty consistently. Was there anything in particular you would highlight relative to the quarter just completed around the gross margin improvement? Thanks.

Hey, Steve. So I think in general, we're seeing good opportunities across the Company, and that's why I made the comments I made around the growth rates for both EMS and our DMS divisions, EMS being at the high end of the range, if not beyond, and DMS being above and beyond the long-term range. The long-term range of our DMS division for growth is I think 8% to 12%, and I think we'll do 15% or greater. And again, we're just seeing really nice opportunities for the Company across the entire business. And I think again, it's reflected in the CapEx that you're seeing for this year.

The second part of your question, Steven, in terms of gross margins, yes, I think you're correct, sequentially, it's about 10-basis point move upward. Nothing extraordinary in the quarter. As I said in my prepared remarks, we really had an outstanding quarter in terms of performance from our EMS segment, really based around favorable mix, strong execution, and the benefits of some restructuring that we'd initiated last year. And I think as we move into FY16, we could see continued growth in that gross margin as we focus on reigning in some of that SG&A expense.

Great. And then just real quick follow-up. On the incremental CapEx you're talking about in terms of spending this year versus where you were saying six months ago, should we think of those projects as you're getting a return on that in FY17 not FY16?

On the incremental I talked about, so I would say 40%,50% of that, I think we'll get a return on in FY16 and the balance in FY17, Steve.

Great. That's very helpful.

The CapEx for the EMS business, we're going to get a pretty quick return on based on the opportunities that we booked. And then as far as finishing out or continuing construction on the Chengdu campus, that's going to be late FY16 and into FY17.

Got it. Thank you very much.

You're welcome.

Your next question comes from the line of Sean Hannan with Needham.

Yes, thanks for taking my questions. First one here, in terms of the expanded investments, did I interpret this correctly? It sounds like there's a decision to expedite these investments in an incremental fashion versus what you had already signaled last quarter's call for this upcoming fourth quarter and into FY16. Can you help me to better understand the incremental here?

Yes, Sean, so let me answer it this way, and tell me if I missed the mark, and we can keep talking. So to put it into perspective, we -- if I look back a year ago from right now, and I look at where we're headed by the first and second quarter of FY16, rough numbers, we'll have added 4 million to 5 million square feet of manufacturing space in Asia, so it's a massive undertaking, and that's what's driven a big part of our CapEx. The reason we didn't capture it at the beginning of the year is our models at the beginning of the year suggested that we may not need it until FY17 and FY18 and, that's just not the case. So again, just to frame out the magnitude, we're adding an awful lot of square footage in Asia.

What we decided to do in Q3, and now in Q4, is we got construction crews on site in Chengdu. And by the way, we've also expanded, as I said in the March call, we're expanding in Indonesia, Malaysia, and then we're adding two or three additional factories for our Nypro business.

But where most of this is being driven is, is we've got construction crews on site, we got Jabil people supervising the construction from a safety and environmental perspective, and we could go ahead and stop all of that based on CapEx budgets, or we can continue to move forward with the momentum we have and just continue, from an optimization standpoint, around costs versus bringing crews back and forth. So that's the decision we've made, and I think it's an appropriate decision for the business the way things sit today.

Okay. That's fair, and that's helpful. Now, in terms of a followup here, I think that we've been getting some signals from you folks that there has been a lot of effort in terms of further diversification for other mobility or other types of customers within your DMS space, as well as the progress that you're making at Nypro, perhaps year over year stepping up the growth levels there. Can we get a little bit more clarity in terms of how you're viewing those pieces of your business as a growth profile, versus the other -- well, primarily one main other area within DMS, so basically you don't have just one customer pushing DMS to try to get better clarity around the other diversified drivers within DMS that are pushing revenues forward? Thanks.

Yes, Sean, so I just can't give you -- I know it's unsatisfying. I just can't give you a lot of detail. I can tell you that the macro conditions we're seeing with growth rates contracting a bit in China, what we're seeing in the southern part of Europe, and what we're seeing in the US, if we're able to take our EMS business year on year from FY15 to FY16 and grow it 5% or greater, and if we're able to grow our diversified business in the range of 15% or greater, I believe that's a heck of an accomplishment in the context of what's going on from the overall macro environment. And I will tell you that the growth that we're seeing is very well diversified. So at this point, I'll leave it at that, and as I committed in my prepared comments and remarks, we'll provide more color for you and a full-year model in our earnings call in September.

Thanks so much.

Your next question comes from the line of Brian Alexander with Raymond James.

Yes, just a question on margins for each of the businesses. For EMS, 3.5% operating margin, Forbes, that was the highest result in I think several years. Just curious what drove this and how sustainable this is, especially given that the revenue came in below expectations this quarter, and it looks like you're expecting deceleration next quarter.

And for the DMS business, 4% operating margin, I'm just curious, did you experience any timing difference or change to the $60 million of second-half costs for DMS you called out a quarter ago? Looks like the 4% margin was probably below most peoples' expectations, and I don't know if you're still expecting $130 million to $160 million for second-half DMS operating income that you talked about a quarter ago. Thanks.

Sure, Brian. So on EMS side, yes, you're right. Outstanding performance in the quarter, 3.5 points, so 50 basis points above the long-term mid-point range for that business.

What happened in the quarter was we saw some favorable mix, even with the shortfalls in revenue, if you will, around the Enterprise & Infrastructure business. So the mix swung favorably. We saw nice growth within our Industrial business in the quarter. That certainly -- had some activity there. The execution was particularly strong across all market-facing portions of the business there.

And then we did talk previously about some restructuring activity kicking in in the back half of this fiscal year. We announced our restructuring plan four, six quarters ago, and it's really starting to take effect now where we unfortunately did close out in the year a facility here in the United States and have made significant headcount reductions in Western Europe, so all those coupled together really helped support that.

Now, as we move forward, you are going to see some of this ramping business that Mark's referred to in terms of investments there, so I'd encourage everyone to model that business. We are efforting for around the 3% mark or the midpoint of our overall long-term range.

On the DMS side, we still expect to be in the range of that $130 million to $165 million for the back half of the year. Just given the scale of ramps, perhaps towards the lower end of that range, but certainly, yes, we're on track there to deliver at least $130 million in the back half of the year, and that will set us up very, very strongly as we move into Q1 of FY16.

So as you look to next year, and I know we're not giving explicit guidance, but we have enough information to back into an expected operating margin of 4% for next year based on the revenue growth that you gave and the EPS growth that you gave. Should we assume that within that, DMS gets back above 6% operating margins for the full year, given that it looks like for the second half it's actually going to be below 4% if I use the low end of the range that you just gave? So how do we get from below 4% in the second half to 6% or above, which I think you would need to achieve to get to the 4% margin for the Company for next year? Thanks.

Hey, Brian, it's Mark. So I'll talk -- why don't we talk more about that in the September call? And again, our commitment is, is to give you better detail, better color around FY16 in September.

But I wouldn't look at a 4% range for DMS for FY16. We've talked about for the last number of quarters is our story is for this fiscal year is that it would be a strong half, strong first half for DMS, which it was. And the business itself is still quite strong for DMS, but the back half was going to be an investment period for us, and that's exactly what's happening.

On EMS, we talked about for the last couple quarters the fact that the back half of the year would be stronger for our EMS business, and again, that's exactly what's happening. As we move into FY16, again I think the information we'll provide in September will give you a good opportunity to shape out your models, but at a high level, I would again envision the first half of FY16 to be strong for DMS, and I'd view EMS to be strong for all four quarters. And strong for EMS would be margins in the middle of the range, which I think is 2% to 4%.

Could you just confirm that you're still expecting $60 million of one-time costs for the back half? That's my last question.

Yes, that's confirmed. And again, if you take a look at what we published for Q3 and what we're publishing for Q4, and you can work your math pretty quickly and get an idea of the fact that we're going to be towards the low end of the range I gave you for DMS for the back half of the year, but if you sum up the cumulative operating profit for DMS and you add $60 million to that, you'll see that the margins normalize nicely. So again, it validates what we've been telling you, that it's Q3 and Q4 are an investment period for us as we prepare for the first half of FY16, yes.

Okay, thanks a lot guys.

You're welcome, Brian.

Your next question comes from the line of Shawn Harrison with Longbow Research.

Good afternoon. This is (inaudible) calling in for Shawn. Just piggybacking off of that -- the $60 million in one-time costs, so we should expect that all of that will be gone by the fourth quarter; correct?

You can expect that all of that will be gone by the first quarter, so 1Q of FY16.

And secondly, with regards to the CapEx guidance, you mentioned that it's going to be about $140 million to $180 million above what you had previously provided. Is that -- does that bring up the range -- I think last time you said $650 million to $750 million, so does that bring that up to the $890 million-plus range, or does the $650 million mentioned last time incorporate that as well?

No, I think you're thinking of that correctly. As we sit today, and again there's, whatever, 60 days left in the year, I think our overall CapEx for Jabil for the fiscal year will be in the $900 million range. That's correct. That's the proper way to think about that.

Okay, sounds good. That's it for me, thank you.

Your next question comes from the line of Amit Daryanani with RBC Capital Markets.

Hi, this is Mitch Steves filling in for Amit. I just had a quick question on the operating margin line as well. So based on what you're guiding for the $60 million impact, does that imply that Q4, August, should be the trough and then we'll see margin expansion starting in Q1 of next year? Is that -- am I understanding correctly?

I think that's a fair way to think about it; correct.

Okay. And then secondly, I'm going to piggyback on Brian's original question there. If I run the math and just run it roughly 3% margins and assume your DMS gets back to that 6% range, but getting to higher than 4.5% or so at the end of the year, so is that something that you guys think is achievable, or is that just a very aggressive ramp up towards the end of FY16?

Again, what I talked about in my prepared comments, again, was the growth rate for DMS and EMS, and what I believe is very achievable for us is to take our core earnings per share up 20% year on year as a minimum. So again, I'd work with that, and we'll dial this in with better resolution as we get towards the first half of the year in the September call.

Okay. That's it for me, thank you.

Yes.

The next question comes from the line of Matt Sheerin with Stifel Nicolaus.

Thanks. Just a question regarding the core EMS business and the weakness you're talking about in Enterprise & Infrastructure, could you give us some more color there? Obviously, you're not the only one talking about weakness in telecom-related spending, storage, and other areas, but could you give us some more color?

Sure. So I think in the third quarter, and then a bit for the fourth quarter, our Enterprise & Infrastructure business is a bit weak, so it's coming out of that group.

I'd remind you our EMS business is made up in three tranches, right? We've got our Enterprise & Infrastructure; we've got our High Velocity, which is our commodity-type consumer business; and we got Industrial & Energy. Industrial & Energy is holding nicely. High Velocity is actually doing reasonably well.

And then Enterprise & Infrastructure, and it's really spread across the board. It's not any one segment or any one customer. That business is quite broad, and it's sprinkled across the business in general. I do believe that we'll see a decent recovery in Enterprise & Infrastructure as we get into the first part of FY16.

Okay. And the 5% revenue growth expectation for EMS next year, is that contingent on any core growth in the Enterprise & Infrastructure, or is it just mostly incremental new business wins and growth in High Velocity and the Industrial area?

The 5% I stated in EMS is framed out with the current environment we're in today. So I envision a bit of a recovery in our Enterprise & Infrastructure business, not a lot, but a bit. And then combine that with market-share wins.

And other thing I've said in previous calls is I'm really happy about the fact that our business has grown both vertically and horizontally. So we're adding new customers, and then we're also in a really good position right now where we're expanding our share of wallet with the current brands that we serve. So all of that put together is what's driving the growth rate for EMS.

Okay. And just lastly, could you tell us if you had any 10% customers and what the top 10 customers made up as a percentage of sales?

We have one customer about 10%, and the top 10 is right about 58%, I believe it is.

Okay. Thanks, Forbes.

Your next question comes from the line of Sherri Scribner with Deutsche Bank.

Hi, thanks. Just wanted to follow up on the growth next year for the EM segment. Mark, talking about the Enterprise & Infrastructure segment, a lot of companies have talked about a back-half recovery in telecom and wireless equipment. I just wanted to get a sense of if you're also seeing that? And is that 5% growth predicated on a recovery in that segment, or is there any particular piece of the infrastructure piece that's going to do better? Tanks.

Yes, Sherri, I think it's a great question, and I'd say yes and yes. So there was some artificial demand issues in our Q3 to carry over to Q4 in Asia, specifically China, where demand was not halted but certainly cut a bit short in our third quarter and will carry over into the fourth. We think that will recover. And in general, to your commentary, I do think that we'll see a back-half recovery versus where we sit today, and that back-half recovery is in our estimates when I talk about a 5% or greater growth rate in EMS for FY16.

Okay. And in terms of the other segments, HVS and Industrial, are those going to just continue at the growth rates that they're at? Do you think they will accelerate based on your program wins? What are you seeing there? Thanks.

Yes, again, I would just stick with modeling out a 5% growth rate, maybe a little greater in EMS as we move to FY16, and that's cumulative over Enterprise Infrastructure, High Velocity, and Industrial.

Okay, thanks.

Your next question comes from Jim Suva with Citi.

Thank you, guys, and congratulations. Can you just help us better understand what's going on with the profitability of the DMS, the Diversified Manufacturing Services margins? They declined quarter over quarter, where one should assume that yields and production efficiencies help out. So are you doing restructuring there that is being asked by customers, or Jabil's footprint needs to change, or installation of equipment, or yield issues, or why would your margins decline quarter over quarter in the DMS business? And then I have a follow-up question.

Sure, Jim. So overall margins in the back half of the year for DMS, we, as expected, as we talked about in our last call, expect to come in right about 4% for the back half of the year. And that's really the impact of our spending in the region of our $60 million to add incremental capacity and building that capacity across multiple program ramps. So no restructuring going on. We're in the right locations to serve our customers broadly across that space.

But I think earlier in the call, in answer to a question, Mark had noted, but essentially, but as we get through the calendar year here, we'll have added another 4 million to 5 million square feet in China. So think of that $60 million being applied to that additional square footage that's going up and bringing in the labor force and pre-production ramps around these programs. So as we move into FY16, you'll see that rebound very strongly going into Q1 of FY16, but it's really all around an investment phase that sets us up beautifully for FY16.

Got you. Then my follow-up question is, is it a fair assumption to say that these investments will pay off future profitability next year because the EPS we are talking about 20% or more than 20% next year in earnings growth, therefore, one should also assume that you get the traction and this incremental capacity expansion this year isn't a perpetual going to happen again next year, because otherwise, you would be facing ramping costs next year that would suppress margins. Is that fair, or am I missing is some pieces of the puzzle?

I'm not sure -- Jim, this is Mark. I'm not sure I quite understand your question. Let me try to answer it this way. So we're -- we believe we'll do roughly $2 a share in core EPS this year. Next year, my prepared remarks would suggest we'll do $2.40 of core EPS or greater.

If I take a look at the capital investments we've made this year, and I apply an appropriate percentage of those investments to growth and income in FY16, that plus productivity gains and efficiencies that we believe we'll get across the business end up tying off to the $2.40 a share that the math worked out to be per my prepared comments. So that's how I would think about it, Jim.

That makes sense. Thank you very much, guys.

Your last question comes from the line of Amitabh Passi with UBS.

Hi, this is (inaudible) on behalf of Amitabh. Most of my questions were asked, but could you talk a little bit about the consumer and auto subsegments? How did they do in the quarter? And also, were there any geographic trends that you'd highlight?

What was the last part of the question?

Were there any geographic trends that you'd highlight?

The only geographic trend I would highlight would be, again, we saw some weakness in Enterprise & Infrastructure out of Asia, and other than that, nothing that was a big surprise. Again, overall, our observation is the macro is still relatively weak, and -- but we had accounted for that going into our third quarter, and certainly going into the fourth.

As far as automotive and other parts of our sectors, we really don't break that down or discuss it, although I'll tell you that in general terms, I believe that the automotive marketplace is moving in a direction that's very favorable to a company like Jabil.

Operator, is that the last question?

Yes, ma'am that was the last question. There are no further questions at this time.

Okay, very good. Thank you all for joining us for the call today. We look forward to following up with any follow-up questions you have on our third quarter and/or our fourth quarter and outlook. Thank you very much.

Thank you. This concludes today's conference call. You may now disconnect.