Jabil FY 2Q17 Earnings Call Notes

Mark Mondello

We’re running a lot of simulations on tax stuff

“Hi Sean. It’s Mark. So since mid-January, Forbes and myself and other management have probably have been on about 60 to 80 calls from customers asking, hey, could we run some simulations, can we run some models, what if, what if, what if? One of the things that we are not doing is, is we are not offering the customers positions or thoughts about what may or may not happen in terms of tariff, tax, et cetera. But I think we are in a great position to run a bunch of different what-if scenarios. One of things we have encouraged our customers to do is run three, four, five scenarios so they kind of get it into muscle memory and therefore depending on whatever happens in terms of DC and the U.S. government, we are ready to act swiftly. I think we are very well positioned on an absolute basis and a relative basis. If you think about business coming back into the U.S., Jabil has a significant amount of capacity in the U.S. and resource and headcount. We have also been building product in the U.S. forever. If you think about Jabil from a political standpoint, we are an NYSE U.S. domiciled company. So I think both practically and politically, we are in a very, very good position to help. And then I would supplement that by saying, our digital cloud-based analytic tools in terms of supply chain analytics are being exercised quite heavily at the moment running a bunch of these different scenarios. So for us, it’s kind of being well prepared, helping our customers be well prepared and we will see what happens in the coming months out of Washington.”

Jabil 3Q15 Earnings Call Notes

Mark Mondello

Current decline in demand is more acute than in past years

” the current decline in demand we’ve seen in existing products is more acute than in past years, thereby amplifying the negative impact to the earnings this quarter.”

We’re dealing with a single issue that cuts deep emanating from one sector of our business

“As I try to articulate in today’s prepared remarks, we’re dealing with a single issue of being an issue that today cuts deep. The company is in great shape and we’ll get past these product demand issues that emanate from one sector of our business, a business that’s quite broad. ”

We do expect a snap back in FY Q1

“when it comes to our Green Point business, again I mentioned during my prepared comments that it’s really about what happens with phone demand and phone sell-through through the calendar year and our first quarter being September, October, November, is right in the middle of that. So, in terms of in Q1, as we sit today, we do expect a snapback. Everything that we’re looking at in terms of demand, the product launches on new products that go in as expected and are on track, so, hence my comments about the snapback for Q1.”

Jabil FY 2Q16 Earnings Call Notes

Jabil Circuit’s (JBL) CEO Mark Mondello on Q2 2016 Results

Jabil is 50 years old

“I’d like to take a minute and acknowledge our 50th anniversary here at Jabil. 2016 is Jabil’s 50th year as a going concern. To me that’s an amazing accomplishment.”

Volatility in the mobile market can be maddening

“I’d now like to circle back to our Green Point business. As we know, this business has a well understood high-beta characteristic. Our Green Point team manages large scale demand fluctuations really well. In fact, I’d argue they do it better than anyone. Dealing with this volatility can be maddening. With that said, our continued participation in the mobility market is key to Jabil’s holistic approach to the overall ecosystem, a technology ecosystem that squarely relies on handheld computing.”

Mobile devices are here to stay

“Mobile devices are here to stay. They monitor and control an infinite number of connected devices as well as connect all of us in our daily lives. Apple remains dominant in this space and we’re fully committed to serving their brand.”

Weakness in mobility really hit us hard in the last four weeks or so

“Sure Steve. So we started seeing some softness in our Greenpoint business in the late January early February timeframe and I think that’s because of our position in supply chain. So we started seeing the softness in January and it really accelerated in February. And we had some modest declines that impacted Q2. So as I mentioned in my prepared remarks, we were down about $150 million in revenue but the outlook and the abruptness of the outlook for most certainly Q3 and then a portion of Q4 really hit us hard in I would say the last four weeks so.”

We are very very supportive with our largest customer

“let me start with, I love our biggest customer. And we’ll continue to make investments for them and we will be prudent in that. I think our ability to partner with them is outstanding, I think our ability to handle their volatility if and when it occurs is really, really good and I have a lot of confidence in Apple. So on the diversification side, what I can tell you is we are very, very supportive with our largest customer. We are seeing very good diversification within that large customer, but at the same time, we have a balance sheet such that we are leaning hard into our healthcare business, we are leaning hard into our EMS business”

The volatility sucks, but it is a lot different than 14 for us because we’ve diversified a bit more

“Yes, it sucks. I mean, as far as – I would love to be able to run our business on a quarter-to-quarter basis and I don’t like it at all and I take it to it heart, we have committed investors and it bothers me. But I think it’s drastically different, Amit, as far as fiscal year ’14. If you take a look at fiscal year ’14, we had a dramatic downturn as everybody knows on a program and for that year the company – I don’t remember the exact numbers, but I think we made about $340 million dollars in operating income. Today, we’ve got some abrupt downturns and the company is going to do $700 million. So I think it’s drastically different and I think what’s different about it is is we started three, three-and-half years ago to really drive in diversification throughout the company”