Jabil Inc. (NYSE:JBL) Q3 2019 Earnings Conference Call - Final Transcript

Jun 18, 2019 • 04:30 pm ET


Jabil Inc. (NYSE:JBL) Q3 2019 Earnings Conference Call - Final Transcript


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Q & A

Thank you. At this time we will be conducting a question-and-answer session. (Operator Instructions) Our first question comes from the line of Adam Tindle with Raymond James. Please proceed with your question.

Adam Tindle

Okay. Thanks, and good afternoon. I just wanted to start, Mark. It looks like you're on track for the $3 EPS target that you talked about around three years ago based on this quarter and guidance. At the end of last fiscal year you gave a navigational beacon of $4 of EPS and a free cash flow number per share that implied a similar amount. So, the question is, I'm just hoping that maybe you can reflect on the obstacles related to the $3 that looks like you're on track to achieve and how the path to that $4 navigational beacon may be similar or different. It sounds like Mike kind of mentioned obviously margin improvement and cash flow improvement for the $4 whereas the $3 was more revenue growth. So, if you could just touch on those dynamics to start that would be helpful?

Mark T. Mondello

All right. Well, good multi-question for question one. I think the best way to think about it Adam is as follows. I think all year back starting in September we've been talking about $400 million of free cash flow margins at about 3.5%, core EPS in the neighborhood of three bucks. If you take the midpoint of our guidance, sum everything together, I think, it sums it like $2.97 or $2.98, which I think puts us squarely in the neighborhood of three bucks. So, check the bucks to that.

What I'm pleased with is, at the beginning of the year, we thought operating income would be about $850 million. I think we took that up either in the second quarter call, first or second quarter, December or March call, we took it up to like $865. And now if you take the midpoint of our guidance it's all the way up at $875. So, one of the things I'm really pleased with is, is the operational earnings power of the company is stronger than we thought, and I thought we had some pretty aggressive numbers at the beginning of the year. As I think about where the company is headed in fiscal '20 and '21, maybe a really simplistic way to think about the company financially.

Our tax rate overall for this year is higher than I'd like. That's just a direct calculation in which both geographies, jurisdictions incomes generated, I think, that will normalize back to a more normalized level as we move forward to '20 and '21.

In addition to that our interest expense is a little more fluffy for lack of a better word than we thought it would be beginning of the year, we thought interest expense would be in the $210 million maybe $215 million range, it's probably going to be more like $225 million for the year that will normalize as well, if I think of one of