Jabil Inc. (JBL) Earnings Call Transcript & Summary

Senior management from Jabil, we have Michael Dastoor, CEO of Jabil; and Gregory Hebard, CFO; and Adam Berry, Head of Investor Relations. My name is George Wang. I'm the analyst covering IT hardware and comm equipment at Barclays. So let's just get into it. So Mike, kind of high level, can you give a high-level intro on Jabil, especially for some of the European audience who maybe don't know Jabil so well. So maybe you can give a high-level kind of pitch on Jabil's story.

Sure. So Jabil is a U.S.-domiciled company. We have $30 billion of revenue and 150,000 people in the organization. The way I like describing Jabil is an engineering-led supply chain-enabled manufacturing company. I think most people think of us as manufacturing. We're not. We have the engineering piece. We have about 10,000 engineers in the company, and we normally lead most of our engagements with customers through engineering. We have advanced systems for supply chain. We have long-term relationships. And I think during constraints, our supply chain team actually does really well. So supply chain, very important critical part of our offering. And then obviously, manufacturing, we manufacture in 30 countries, top brands and multiple end markets such as health care, such as intelligent infrastructure where we have the data center infrastructure, we have semi cap, we have communications, we have opticals, we have networking equipment. And then we have warehouse automation and consumer products as well. So pretty widespread in terms of the end markets that we serve today. I don't know if you have anything else.

No, I think that was great. I'm really glad to be here. George, thanks for having us, and we're happy to be here with you today.

Great. Great. Just against this uncertain world with tariff and the macro backdrop, maybe kind of if you narrow down kind of, for Greg and Mike, can you kind of talk about top 3 or 4 kind of priorities on your desk you are kind of working on, especially as we're almost kind of halfway through 2025 and kind of heading forward over the next 12 months? Maybe you can talk about kind of key priorities kind of you are working on.

Sure. So I think the margin and free cash flow accretion, if you go back over the last 5, 6 years, the Jabil story has been all about margin accretion. It's been all about free cash flow. We do a whole bunch of buybacks. We're a good value play company. So we'll maintain that priority. That is priority #1. Obviously, with the tariffs, George, the situation today is a lot of the companies that we serve need help. And that is our priority to help companies move around. Like I said, we're in 30 countries. We've been in those 30 countries for, on average, 20-plus years. We have 30 sites in the U.S. itself. We have a whole bunch of sites in Mexico, which most of the stuff where we operate in Mexico is USMCA compliant. So obviously, that focus on tariffs and how we can enable our customers continues. And then the third one is, to me, is continuing to invest in our capabilities. We don't go and make big acquisitions. We do capability-based tuck-in acquisitions. One of the approaches we have is to keep going vertical in what we offer. So we obviously do engineering, we do supply chain. We have manufacturing. Within manufacturing, we go vertical in different -- with different capabilities. So we'll continue to invest in that, continue to invest in our supply chain systems. And I think the next few months, in particular, will be taken up by the tariff situation.

Got it. And then Mike, kind of overall, within kind of EMS, the CM landscape, obviously, Jabil has a diverse kind of portfolio. And how is -- would you say it's a key differentiation for Jabil kind of versus some of the peers? From my IT hardware coverage, I also cover some key names like Flex, Celestica and Fabrinet. So can you kind of talk about competitive advantage, kind of compare and contract? And how does Jabil uniquely approach customer relationships?

Sure. So I'll talk about Jabil more than the competitors. I think we -- I said we're engineering led. We have 10,000 engineers. And it is a trend today. Yes, if you look at customers, they don't come to us with a predesigned product. They come to us with a concept and we help take it to market. We do the NPI, we do the supply chain for them. We industrialize the product and then we can manufacture for them in any part of the world that they need us to. So definitely, the engineering piece is critical. We do have a work cell model that we apply. And what do I mean by work, that is very unique, even amongst our peers. It's -- we have dedicated teams all the way down into the factories for individual customers. So one customer, one team, and the team is almost like a virtual customer team and they wear the customers' logos, and it's actually a big advantage, especially today in the tariff world where you're not worried about the manufacturing teams trying to maintain their production in certain geographies. This one individual from a customer liaison standpoint is responsible for that customer. And he'll decide with the customer where to manufacture, and the manufacturing location will be the best location for the customer. I talked about supply chain. We've been investing heavily in supply chain over the last few years. We've been buying some level of software, some systems, people. We've made a couple of acquisitions on some procurement services, et cetera. So I feel really good about that as a differentiator. And then there's other parts like global footprint. There are pockets of manufacturers who are heavily Asia indexed or heavily European indexed or heavily Americas indexed. We have a good breadth of global footprint.

And George, I might add that capabilities are incredibly important, but we also have the longest tenured management team in the industry, right? So relationships are really, really important in our industry. We've had some long, long-term relationships with some key customers for a very long time. I think Mike's been here about 20 years. Greg has been here about 17. So I think 25 years -- sorry, Mike's been here 25 years. So I think that's a key differentiator between us and some of our large-scale competitors.

If you look at our -- my direct reports, there's 10 of them, the number of years of tenure in my team is almost 230 years. It's on average, 23 years per individual. So really good because there are not many companies that have that level of long tenureship.

Got it. Got it. Also talking about supply chain, obviously, tariff is kind of a focal point. And obviously, Jabil grew over the cycle, everything is the Trump 1.0. So kind of can you kind of brief us in terms of latest thoughts on tariffs? Obviously, you guys talked about kind of indirect and most of a pass-through from the earnings call last time and also your production manufacturing in Mexico is largely USMCA compliant. So kind of can you talk about being most of a pass-through impact on tariff and sort of any other refreshed thoughts given the development over the last few months?

So let me just talk about Trump 1.0 since you brought that up. Trump 1.0 actually did lead to regionalization of supply chains. That process started way back 2016 to 2020, that 4-year trend. It was always China plus 1. Trump 2.0 has got that even more on steroids. Not many people are moving today. I think there's a lot of concern in terms of the regulations changing constantly. So what people are waiting to see what the regulations are, what the final tariffs are going to be and then decide to move. It's not simple to just take production and move it across because you have to find locations. And more than anything else in the U.S., labor will be a bit concerned. The availability is just not there, and it will require a lot of automation, a lot of robotics. And we can do all that. We've been doing that for a number of years. So we're really well positioned to help the customers. I mentioned we have 30 sites in the U.S. Most of our sites have expansion sort of options where we can build on the plot of land next to us. So capacity wouldn't be an issue. We can build on that capacity as well. And then USMCA compliant, you mentioned Mexico, that is 80%, 90% of our business is USMCA compliant, which means there's no tariffs. We do add value to our components in Mexico. So that will continue to generate more business for Mexico, especially for the North American market. So we have solutions for North America. We have solutions for Europe. We have solutions for Asia. And as I mentioned before, this whole regionalization that's been taking place over the years, that's just going to continue. And I think it's companies like Jabil, which is a slightly underappreciated story, where folks don't understand how difficult it is to do that and you need someone like a Jabil to manage your footprint for you.

Yes. I think that's a good segue to talk about journey for regionalization onshoring, reshoring. That's obviously been a key thematic investment for Jabil stock. And kind of how far do you think the journey you alluded to, obviously, earlier? And which end markets are you seeing kind of moving the quickest in terms of this onshoring trend?

That's a really good question because, again, people think you just lift manufacturing side and move it across. I'll give you an example. In health care, it is extremely difficult to do. You need 18 to 24 months of FDA qualification in the health care side. So if you're building up a new site, you'll have to have 2 sites running at the same time. Once the new factory is built, it needs 18 to 24 months of FDA qualification before you can run revenue through it. So you're talking about a 2- or 3-year window before you can even start production on the health care side. Our intelligent infrastructure business today is very U.S.-based anyway. It's U.S.-centric. We do most of our manufacturing and our engineering in the U.S., so not expecting big changes. We have some -- a lot of warehouse automation, consumer products in Mexico, which will continue with the USMCA-compliant business. And then there's pockets of business here and there, which we'll look at moving. Like I said, we've been doing this for years. This is not a new thing. Manufacturing, if you go back over the years, there was always shift from U.S. to Europe to South Asia, then China, then back again. So it's something we do all the time. And if you want to be able to sort of leverage our experience, I think a company like Jabil probably is the best option for you from a manufacturing and engineering and supply chain. Supply chains have become critical now. You don't -- you can't just lift manufacturing and put in the U.S., if your supply chain is still from China, it's still going to have the same impact. All you're going to save on is the value-add piece in the U.S. So supply chains have to move across as well. And again, we will enable that as well.

Got it. Maybe you can double-click in terms of the tailwinds from being the U.S. domiciled, kind of U.S.-centric manufacturing, especially you guys talked about kind of for the intelligent infrastructure and health care. It's really predominantly U.S.-centric. So can you kind of talk about maybe the share gain already happened just because of this macro backdrop or kind of yet to come kind of provide nice tailwinds over the next few quarters?

Sure. So I -- we did take our guidance up on that piece by over the last 6 months, we've taken it up almost by $2 billion. I think we're up 40% year-on-year. So that business is going really well. All these rumors about AI being dead, that's not true at all. We're seeing a whole bunch of new business show up. Let me just explain what we do in that ecosystem as well because that's important. We do semi-cap equipment at the front end, and we do testing at the back end of semiconductors. The testing is going really well. All the new chips that are coming up, all the new custom chips, the new technologies constantly changing and evolving technologies requires a lot of testing. So testing is doing really well for us that we have the optics business, the transceiver, we have the OSAT, the CPO, which is in very early development stage. We've been winning some business on the transceiver side. We actually made an acquisition maybe 24 months ago from Intel, where we acquired a whole bunch of silicon photonics engineers. And that capability is really working out well for us. And then data cloud infrastructure. We've been doing that for a number of years, and the revenues in that particular area in terms of data centers is just going through the roof. And last but not least is we have the cooling where we have to worry about power from the grid to the chip. So there's power management that we work on. And then you have liquid from chip back to the outside. And that's something we're working on as well. We made an acquisition for liquid cooling about 6 months ago and that's, again, working out really well. So overall, different pockets of this business, one consistent theme is it's doing really well for us because we have the capability, we have the footprint. We have the teams available to expand in that area. And I think that area is the one that I'm most excited about for that.

Got it. I think that's good segue to talk about kind of from margin improvement, especially you talked about some AI potentially being accretive, some health care as well. So kind of against your medium-term target of 6% OP margin, kind of -- can you kind of compare contrast in terms of different portfolios and the kind of margin profile?

Sure. So I'll talk about intelligent infrastructure first because it's varied. It's not one. It's not just a standardized margin across the board. If you think of our semi-cap equipment, it's accretive; testing equipment, it's accretive; OSAT; silicon photonics; CPO; all that will be accretive. The data cloud infrastructure piece is at enterprise level. And our liquid cooling will be accretive along with our networking, switching equipment as well. So overall, different parts of our intelligent infrastructure business is accretive. If you go beyond intelligent infrastructure into, let's say, health care, health care is accretive today. I think automotive has been a little bit down. We're really robust on the EV side. We've quickly adapted. So we're agnostic in terms of which technologies went out, whether it's hybrid, whether it's EV or ICE, we're well positioned to serve all of that. And then you have your warehouse automation, robotics. We're actually working on humanoids and robots that's coming for the future. And we have that capability today. And I think that's the piece, again, that will be exciting in the future. Today, it's still a smaller base. But again, that's accretive margin as well. So the 6% is not something we just made up. There's definitely a path to that.

Maybe, Greg, you can add some color in terms of lever to juice this margin profile in the medium term, kind of you guys talk about kind of ramping some capacity utilization. So as you feel the capacity in the factories that can recapture some margin, but also some cost optimization in the back half.

Yes. So I think there are a few things. As you noted, our cost optimization is absolutely a key focus for us. We're continuing to push our operations to be more efficient across our factories. So when we're looking at gross margins and continuing to try to improve those numbers and also on SG&A being really diligent on our cost structure as well. On utilization, we're running right now around 75% utilized across our factories and we'd like to get that higher up to like that 85% level. So definitely a lot of opportunities there. And then I think the other key thing, as Mike noted, and is really key to getting to 6% and beyond is just the mix of our business, continuing to focus on those higher-margin businesses where we're investing and continuing to really focus on that.

Can you also talk about kind of nuance of some ramp, i.e., the start-up costs? Like earlier, you guys talked about some potential higher costs associated with the product ramp. Now it seems that we are kind of behind that. And then can you talk about maybe the tailwind from potentially kind of continued kind of acceleration in some of the revenue backfilling and they can kind of continue to trend higher for you?

Yes. So this year, we -- when you look at the first half of our FY '25, and again, our year-end is in August, the first half of the year, we're right around 5% on our operating margins. For the year, we're giving guidance of 5.4%. A couple of things have happened where we're really confident on the second half. One is, to your point, George, is ramps, and we've had ramps in our intelligent infrastructure and our warehouse automation with several customers. So we're going to see those scale and really generate more margins on the back half. Also when we're looking at restructuring, we had a restructuring announcement back in September, and those -- the pickup we're going to see on the margins from that, we'll definitely see in the back half as well. And then just some of the cyclicality we see with the EMS business, health care typically is very strong in Q3 and Q4. So I really feel good just about our margin profile going forward.

Yes. Mike, maybe we can go back to kind of intelligent infrastructure. And earlier, you alluded to expanded capabilities for Jabil. Kind of maybe we can talk about solution-based kind of approach for Jabil, as nowadays the hyperscalers and the Tier 2 cloud are kind of demanding most of the end-to-end solutions, especially given kind of you beefed up on the liquid cooling capability. And then you kind of do across the entire sort of supply chain ecosystem, if you will. So can you talk about like how that sort of expanded capability can aid into the share gains for Jabil?

Sure. So one of the first things we do with any sort of part of our business is design engineering. And especially in intelligent infrastructure, we've made sure that we have that design engineering architecture capability. It's critical. It's important, whether you're helping customers design the products or you're helping them transit or transition into a large-scale manufacturing operation as well. There's always a handshake that takes place between the customer and a company that manufactures for them and the yield at launch is critical, especially in the intelligent infrastructure space. Yields at launch in the data center world with today's complexities and GPUs is critical. The lower yield to launch, the more expensive it's going to be for the hyperscaler. So lead design engineering architecture, I think we talked -- I talked a little bit about the Intel acquisition we made on silicon photonics, transceiver business is going really well. We're working on 200, 400 and 800. We're winning some market share there at OFC, which was 2 or 3 weeks ago. We actually launched a 1.60T transceiver. It was extremely well received, and it's generated a lot of interest from potential customers today, again, very small base, but it's for the future. I think 1.60T at some point becomes cost beneficial. Today, the 400, 800 is probably more cost beneficial. As the GPUs evolve, as technology evolves, the 1.6T is going to be norm, but that will be in the next 12, 18 months. I think CPO is another development piece that we've looked at. We've invested in co-packaged optics. I see that maybe further than 1.60T, it's sort of in maybe 2 years, 3 years, but we're going to be right there in the development stages. And I think you talked about liquid cooling. Liquid cooling, when we made that acquisition, it was all engineers that we acquired. It wasn't a revenue, so we didn't pay some absurd amount for a P&L. We paid for the potential. And these engineers have been doing -- working on the latest technologies. And I think the key technology in the liquid cooling space is liquid to liquid. Today, 80% of your data centers, maybe even more are liquid to air. The future is liquid to liquid. As GPUs throw out more heat, the thermal management, the power requirements, all of that leads to a bigger liquid-to-liquid demand and we'll be right in the middle of that as well. Again, we're getting a lot of interest, a lot of folks going through our acquisition properly. It's just a great breadth. You're almost across the entire ecosystem, and that's critical for future growth.

Yes. Michael, can you kind of talk about kind of how do you approach kind of your own IP, kind of your own products versus more traditional CM and EMS? Obviously, Jabil still largely kind of CM, EMS and the IP is probably mostly on optical transceiver. So obviously, that's going to be -- continue to be a very small mix. So can you kind of talk about the different approach kind of maybe -- obviously, you want to keep both of the balance?

Correct. So I think from an optical transceiver perspective, I think we're agnostic. If a customer wants us to sell them transceivers under the Jabil brand, we'll do that because it's a capability we have. A lot of the customers prefer to have their own brand name. Our entire model is based of IP being owned by the customer. Jabil owns the manufacturing IP and the engineering that we do with them. But the product IP, the design of the product, all that rests with the customer. That way, you're not competing with the customer as well. So overall, again, we try to adapt as much as possible. And maybe in the transceiver space, we'll help customers whatever way they wanted to. I think being able to do that is critical, not so much. We don't want to go down a particular path and be nonflexible.

Yes. Mike, maybe you can talk about kind of for Amazon, second large hyperscale to the extent you can, obviously, well [ cartographed ] for the Amazon post warrants. But also I think a second large customer could be underappreciated. You could be -- more of the medium term could be more critical. So can you kind of talk about maybe diversification beyond Amazon?

Right. So I think you mentioned the word data cloud infrastructure today is mainly on the server rack integration. Again, like I said, it has designed engineering architecture built into that capability and offering. So it's critical. This business with the second hyperscaler that you're alluding to is not in the data center sort of typical data center pieces, not servers and racks. It is on the optical side, it's on the transceiver side, it's silicon photonics. That demand is going higher. One of the things we always try to do as we look at a customer, we offer one part of the ecosystem and then we try and vertically integrate across the entire ecosystem that I've mentioned before. So think of this as an entry point. The entry point itself is today, it's in that $400 million, $500 million range. We see that getting up to $1 billion plus. And this is not even considering some of the adjacencies that we can help the customer with. So that's always been our method is to try and offer end-to-end solution because it creates stickiness. I think the customers value a relationship, which is based off of engineering as opposed to a relationship, which is just commoditized manufacturing.

George, I think this is a really key point. And customers today are looking for end-to-end solutions. So earlier in the conversation, you used the term CM, or contract manufacturer. So I understand why you've used that for our 55-year history. But to me, contract manufacturer is we've already designed the product, we already know what the supply chain looks like, what the components look like. We just want someone to build it. There is a business out there that would thrive on that type of model, but it's probably going to be high volume, low margin. Today, the partnerships that we look for are deeper than that, right? So customers come to us and say, "Could you help us with the design? Could you help us with the supply chain?" And I think that's some of the things that Mike was talking about. So I totally understand why you used the word contract manufacturer. It's certainly a term that's used to describe our industry. But I'd say some of the players like Jabil have elevated beyond that. I think that the margin expansion has shown that we've been successful in that journey.

Michael, we talk a lot about compute. I think the other piece is networking switching. Maybe you can double-click a huge attempt there. And especially given kind of the liquid cooling kind of switch, I think that should help as the data center kind of thermal management becomes a more critical issue. So can you kind of double-click on the switching part of the side, aside from compute?

So we've been working on switches for 30 years with customers. Obviously, those weren't liquid cooled today, the trend is having networks -- networking switching gear being liquid cooled just because of the heat. Again, that's generated. We're seeing a complete sort of transition where we call it the legacy networking business. We've been getting out of that slowly over time because it's commoditized. We've been doing that for 30 years, and the margins are lower there. So one of the things we've been doing is over the last few years, networking legacy business is going down, and it's being replaced by the advanced switching, as we call it, with liquid cooling, with transceivers, with opticals in that. Again, there's a vertical solution there for us to provide as well since we do the transceivers ourselves. So it's something we're offering. Well, that's a good point. We do have a whole bunch of business on the networking side as well. And then if you take it beyond, there's business in the wireless communication piece as well. So we play in 5G. And right now, that's the current technology. If that changes, we'll be in that as well. We've been evolving through all these technologies. Once upon a time, there was 2G, 3G, 4G, LTE. We've been through all of those, and we'll continue to adapt and make sure we make the right investments. I think that's the point I've been trying to raise is we do make these investments and capabilities that are critical.

So shifting beyond AI, I'd be remiss not to talk about other parts of the portfolio, such as health care. So Michael, can you kind of talk about maybe high-level kind of outsourcing trends within health care as the penetration increases in terms of outsourcing, that's how effectively you raised the TAM for health care and some of the secular trends in terms of more complex products in the GLP-1. So can you talk about some of the latest development and the kind of tailwinds?

Maybe I'll start that, George. So health care has been a really solid business for us. We're seeing tremendous demand and growth in the GLP-1 space. We are one of the largest manufacturers of the auto-injector pens and insulin pens. So we have 2 sites in the U.S. We're ramping up a site in Croatia for the European market. So we're really confident of just the trajectory of health care and the pharma delivery systems. On the other side is medical devices. We have a lot of capabilities, wide breadth of products in health care, and we've been partnering with medical companies where they're looking to outsource. So we really like that trend and looking to do more of that because that is a very good, strong high-margin business for us.

And I think 3 or 4 months ago, we made this acquisition. It was a pharma acquisition. It was for pharma filling. Today, we work on the injector itself, not on the filling or the packaging. By making this acquisition, we're opening ourselves up to the filling, packaging capability, not just on the auto-injector side, but on the dry dosage side as well. Again, this was a capability-based acquisition. It opens up doors for us. So we've had a whole bunch of pharma companies go through our factory again after the acquisition with a huge amount of interest on that filling capability. That filling capability, again, is bigger dollars. So the revenue dollars that can be generated will probably be 10x what you get on an injector just because of how complex it is. So that's a big area. And then if you go beyond GLP-1s as well, we have a whole bunch of health care business diagnostics, medical devices. We make orthopedic 3D-based knees. We do hip replacements. There's a whole bunch of business there as well. And then we have some level of -- the new future is going to be consumer-based sort of health care where automation, your apps, talking to one another, reports going directly from your replacing knee to the doctor's office, stuff like that. So a big player in health care. And the future there has been -- it's Steady Eddie business. It's high-margin business. It's actually long product life cycles. Once you build a health care product, it's there for 10, 15 years because health care products don't change out as often as, say, a consumer product would. So health care is a great space to be in.

Shifting to EV automotive. Michael, can you kind of talk about some of the tailwinds kind of the content increase per vehicle against some of the well-known headwinds in terms of some of the macro uncertainty in the space?

Yes. So first, I'd say we continue to be super committed to the EV space. One of the things we're looking at is continuing to increase our content and be agnostic to the type of vehicles, whether it's EVs or hybrids. But again, that's a space for us where definitely some bumpy short-term growth issues right now with the markets, but we feel really confident for that over the long term. One spot of the EV markets that we really like right now is China. We continue to have some growth and winning new customers and programs in China for China and looking for that to be growing over time globally. So the EV space, although it's down for now, we feel good about that long term.

George, going forward, if you think about EVs today as a percentage of total car sales, it's low, 4% to 5% maybe. You could see that number doubling or even tripling over the next couple of years, and that would be a huge amount of growth for us if that happen. Now to Greg's point, we're not seeing that today based on what's going on around the world in the macro with EVs. But I think to Greg's point, we're very bullish on EVs over the longer-term future, and it's a higher-margin business for us, too. And we've been able to guide and deliver last year mid-5% margins with one of our higher-margin businesses and EVs being facing some headwinds. So I think as we go to 6% or at least try to get to 6%, I think some of the EV business coming back would be really helpful.

How about for the renewables and the core industrial kind of? Can you talk about the latest trends? And how about any tailwinds from the supply chain consolidation kind of narrow to fewer suppliers? Could they benefit Jabil?

Yes. So just to back up on that, when you look at the Inflation Reduction Act, that was put in place. What we saw in that whole space where companies moving or coming back to the U.S. for manufacturing. That also came at a time where demand was dropping. So those 2 things, all these renewable companies are looking at their supply chain. And we've really been able to prosper on that, where the relationships we have, the supply chain structure that we have, it's really helped us, continue to be positioned well for renewables. Again, similar to EVs, it's pretty low right now from a demand perspective. And I think we're really well positioned going forward for renewables.

So shifting to financials. So Greg, kind of, if you look at the guidance kind of growth over the recent years, like how would you pass out in terms of expanding into new markets, kind of in net share gains, share shifts? Kind of just overall, can you kind of talk about in this macro kind of heading to over the next 12 months, like can you maybe still -- some of the core attributes are still intact?

Yes, I think net share gains, especially in intelligent infrastructure, we continue to see and hopefully that will continue. New program wins across multiple end markets, we're looking to do and really confident about that as well. And then just new product launches. So we feel good about just across those various bases for continued revenue growth.

And can you kind of talk about the current guidance? You guys are probably putting some buffer just because of conservatism with this macro. So -- and can you kind of talk about potential for a downside support just as given...

Yes. So first, the guidance we gave in mid-March, we thought it's very prudent. We're -- we've looked at all the markets. I think we're cautious on when we look at renewables, auto EVs and 5G, where there's potential upside that we've talked about and we feel it's in the numbers is an intelligent infrastructure in the AI space.

And also kind of in this environment, obviously, very fluid. Just talk about any capital allocation. I assume it's intact. Just how would you balance kind of shareholder return versus kind of tuck-in deals? Are you seeing -- obviously, the valuation is shifting just in terms of bolt-on acquisitions. So do you think that you could potentially more front load some of the share buybacks?

So just to take a step back on our capital allocation, this year, we're giving guidance of roughly $1.2 billion of free cash flow. And we're allocating 80% of that to share buybacks. So we have a $1 billion share buyback program, which we'll be completing this fiscal year, end of August. So still feel really bullish on buying back our stock, and we'll continue to allocate 80% of our capital to that. The 20% roughly is, to your point, is to tuck-in acquisitions. We're continuing to broaden our portfolio and where we have gaps, we want to continue to fill. So we really like that strategy of 20% and been focusing again on intelligent infrastructure with the liquid cooling acquisition we did and health care with the acquisition we did there. So just continuing to broaden and strengthen the whole portfolio.

Just to -- over the last 7, 8 years, we've almost halved our outstanding shares. So our share buyback strategy has worked. It is working. It will continue to be a focus area.

So we have 1 minute left. Maybe, Mike, kind of closing comments, any misconceptions about Jabil, kind of you want to talk about like anything else that investors could be missing about Jabil's story.

I don't know if it's a misconception, but I think it's underappreciated. I think this whole ability for us to help companies who are our customers and companies who aren't even our customers move manufacturing across the world. We have a whole presence in North America between 30 sites in the U.S. and maybe double the capacity in Mexico. So I think that is going well. The Asia piece I think is underappreciated. Europe, it's the ability to help engineering, supply chain and manufacturing locally, which is critical.

Great. Great. I think that's a wrap. And once again, thanks so much, Mike, CEO; and Greg, CFO.

Thank you.

Thanks, George.