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
Mark T. Mondello

the reasons -- one of the ways I look at interest expense for the company is kind of as a percentage of EBITDA we're probably 150, 200 basis points higher than what I'd call normal.

But that's a bit intentional and what I mean by that is, we've taken on what I think is very, very good new business wins that's come very naturally to us. I use the term in the slides this time kind of natural growth it wasn't forced and so what I think of is very short-term it's a bit of trade-off of interest expense on a temporary basis being a little higher than we thought. But it really sets the foundation nicely for fiscal '20 and '21. If I think back to the navigational beacon, I think, I shared two slides back in September.

One was a navigational beacon where I thought we'd get to or on a path to 4% operating margins. And then I showed kind of a fiscal '21 outlay where I thought we'd get to about $3.80 in earnings also with very good margins.

So, I think, what we'll be able to share with you in September is our plan is a little bit ahead of schedule and I think we'll be able to share with you that by taking on a little bit more interest expense in '19 as you start seeing where we're going in 20 and then '21.

As I said in my prepared remarks, one is as I think you're going to see -- continue to see double-digit growth on the core EPS line. I think free cash flow next year will be in the range of about $500 million. And again we'll continue to press on margins. So, again all-in-all if I think about what we said we do at the beginning of the year where we're at today really, really pleased with the earning power on a core up-line and certainly the journey for us is to get the company to $4 a share in earnings as well as 4% margins.

Adam Tindle

Okay, that's helpful. And I'll keep it to one part on a quick follow-up more near-term on EMS revenue guidance for the Q4 quarter. You've had a number of customers experiencing weakness in the old E&I segment. So, just maybe hoping that you can talk about the build up for EMS revenue in Q4 because it looks still fairly healthy obviously year-over-year is benefiting from ramps. But I'm just thinking on a normal seasonal sequential basis, it seems pretty stable versus the customers who are experiencing some weakness. So, helping, just trying to understand where the delta lies in terms of the strength you're seeing? Thanks.

Mark T. Mondello

Yes, I think, one thing that's really cool is, we are seeing weakness in legacy EMS business. We kind of have our EMS business broken up into two sectors kind of enterprise infrastructure and then our engineering solutions group.

I think we'll confirm that we're seeing some weakness