Greetings, and welcome to Jabil’s Third Quarter Fiscal Year 2025 Conference Call and Webcast. — Operator Instructions — This conference is being recorded. It is now my pleasure to introduce your host, Adam Berry, Investor Relations. Thank you. Please go ahead.

Good morning, and welcome to Jabil’s Third Quarter Fiscal 2025 Conference Call. Joining me on today’s call are Chief Financial Officer, Greg Hebard; and Chief Executive Officer, Mike Dastoor. Please note that today’s presentation is being live streamed. And during our prepared remarks, we will be referencing slides. To view these slides, please visit the Investor Relations section of jabil.com. After today’s presentation concludes, a complete recording will be available on our website for playback. In addition, we will be making forward-looking statements during this presentation, including, among other things, those regarding the anticipated outlook for our business, such as our currently expected fiscal year net revenue and earnings. 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 10-K for the fiscal year ended August 31, 2024, and other filings with the SEC. 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. 1 With that, I’d now like to hand the call over to Greg.

Thanks, Adam. Good morning, everyone. Thanks for joining our call today. I’m very pleased with our third quarter performance, which at the enterprise level came in well above our expectations across revenue, core operating income and core earnings per share. In the quarter, we saw significant upside in our Intelligent Infrastructure business, led by the segment’s AI-related revenue. At the same time, our Regulated and CLDC segments came in largely as planned. The environment remains dynamic, but our perfor- mance this quarter demonstrates the strength of our operating model and our ability to deliver consistent results even as conditions shift. Let’s walk through the details for the quarter. For Q3, the team delivered $7.8 billion in net revenue, up an impressive 16% year-over-year and $800 million above the midpoint of the guidance range we gave in March. Upside strength in revenue was primarily driven by cloud and data center infrastructure. Additionally, it’s worth noting both our capital equipment and connected living end markets also saw higher-than-expected demand in the quarter. Given all this strength, core operating income for the quarter came in solidly above our range at $420 million. Core operating margins were at 5.4%, a 20 basis point improvement year-over-year. Net interest expense in Q3 was $66 million. On a GAAP basis, oper- ating income was $403 million, and our GAAP diluted earnings per share was $2.03. Core diluted earnings per share for Q3 was $2.55, up 35% compared to Q3 of last year. Turning now to our performance by segment in the quarter. Our Regulated Industries reported revenue of $3.1 billion, roughly in line with our expectations and flat year-overyear. This reflects ongoing softness in the EV and renewable end markets, partially offset by growth in our health care business. Core operating margin for the segment was 5.5%, 2 up 70 basis points sequentially. However, this is down 50 basis points year-over-year as EVs and renewables remain below normalized levels of profitability. In the Intelligent Infrastructure segment, we saw revenue of $3.4 billion, up approximately 51% year-on-year and well ahead of our expectations for the third quarter. This growth continues to be driven by sustained strong demand in our AI-related cloud and data center infrastructure business, including power, cooling and server rack solutions. Capital equipment was also strong in the quarter as the need for testing gear remains robust. This growth was offset slightly by lower demand in our networking and communications end market due to softer 5G demand. Core operating margin for the segment was 5.3%. In our Connected Living & Digital Commerce segment, revenue was $1.3 billion, slightly higher than what we thought 90 days ago. On a year-over-year basis, this segment was down approximately 7%. This is mainly reflecting softness in consumer-driven products, offset by growth in areas such as warehouse and retail automation. Core operating margins for this segment came in at 5.3% in Q3, up 210 basis points year-over-year, reflecting both the benefits from the restructuring actions taken earlier this year to reduce costs as well as the changing mix of business within this segment. Next, I’ll provide an update on our cash flow and balance sheet metrics for the end of Q3. Inventory days decreased sequentially by 6 days to 74 days. Net of inventory deposits from our customers, inventory days were 59, an improvement of 2 days sequentially and within our targeted range. In Q3, cash flow from operations was strong at $406 million. Net capital expenditures for the third quarter were $80 million. As a result of this solid performance, adjusted free cash flow for the quarter came in at $326 million, bringing our year-to-date adjusted free cash flow to $813 million. With our results through 3 quarters, we are well on track to 3 generate over $1.2 billion in free cash flow for the year. We exited the third quarter with a healthy balance sheet with debt to core EBITDA levels of approximately 1.4x and cash balances of approximately $1.5 billion. In Q3, we repurchased $339 million of our shares. We’re on track to complete our current $1 billion share repurchase authorization in Q4. With that, let’s turn to the next slide for our Q4 FY ’25 guidance. Beginning with revenue by segment, we anticipate revenue for Regulated Industries will be $2.9 billion, down 5% year-on-year as we maintain a prudent near-term outlook on the EV and renewable markets. We are also closely monitoring potential impacts, positive or negative, arising from the impending legislation in the U.S. For our Intelligent Infrastructure segment, we expect strong growth to continue with the revenue for the quarter to be $3.3 billion, up approximately 42% year-over-year. We expect this increase to be driven by sustained broad-based AI-related growth in cloud, data center infrastructure and capital equipment markets. In our Connected Living & Digital Commerce segment, revenues are expected to be $1.3 billion, down 21% year-on-year, reflecting continued softness in consumer-centric products, offset slightly by growth in warehouse and retail automation markets. Putting it all together at the enterprise level, total company revenue for Q4 is expected to be in the range of $7.1 billion to $7.8 billion. Core operating income for Q4 is estimated to be in the range of $428 million to $488 million. GAAP operating income is expected to be in the range of $331 million to $411 million. Core diluted earnings per share is estimated to be in the range of $2.64 to $3.04. GAAP diluted earnings per share is expected to be in the range of $1.79 to $2.37. Net interest expense in the fourth quarter is estimated to be approximately $65 million. Our core tax 4 rate for Q4 and for the full year is expected to remain at 21%. In closing, the Jabil team’s execution thus far in FY ’25 amid heightened geopolitical uncertainty has been tremendous. Our ability to execute effectively is a testament to the strength of our diversified portfolio and our strategic alignment with high-growth secular trends such as AI and industrial automation. This resilience not only reinforces our competitive position, but also sets the stage in the coming years for continued revenue expansion, margin enhancement and robust free cash flow generation. With that, I’d like to thank you for your time this morning and your interest in Jabil. I’ll now turn the call over to Mike.

Thanks, Greg, and good morning, everyone. I want to start by acknowledging the tremendous work of our global team. Their consistent execution in a complex environment is the driving force behind our performance and our ability to deliver for our customers. The dedication I see across the organization is remarkable, and I am grateful for their efforts, a dedication which is fundamental to our strategy, especially as we navigate the evolving geopolitical landscape. Today, most of our manufacturing has migrated local-for-local and region-for-region. This focus on manufacturing, mainly in region has continued to play out well for us, particularly in today’s geopolitical environment. And furthermore, I continue to see our global and growing U.S. footprint as a significant competitive advantage. Our ability to offer customers diverse, resilient and localized manufacturing solutions has become more valu- able than ever. Being a U.S. domiciled company with deep experience across 30 countries allows us to partner with customers to navigate issues like potential tariffs and supply chain complex5 ities, a capability, I believe, is unmatched in the industry. Now turning to our performance in the quarter. As Greg detailed, our third quarter results were very strong, reflecting higher-than-expected growth in cloud and data center infrastructure, capital equipment and connected living end markets. At the same time, health care, automotive, digital commerce and networking and communications were largely in line with our expectations from March. As a result, the team delivered $7.8 billion in revenue, 5.4% core operating margins and $2.55 in core diluted earnings per share, up 35% from Q3 last year. As I contextualize these strong results with our year-to-date performance and projected FY ’25 revenue by end market, several key points become evident. First, our Intelligent Infrastructure segment continues to stand out as it remains squarely at the epicenter of the AI revolution. Demand for AI hardware is not slowing down. If anything, it’s accelerating. The need for complex server and rack integration, advanced networking and innovative power and cooling solutions is surging. Our holistic approach to the data center, our deep engineering and design architecture collaboration and our ability to execute complex high-volume production at scale makes us a go-to partner for the world’s leading hyperscalers and silicon providers. Our teams are executing with urgency, ramping capacity, optimizing supply chains and staying ahead of customer needs, whether it’s racks, photonics, advanced networking or storage, we’re delivering. Given this momentum, we now project our AI-related revenue will reach approximately $8.5 billion this fiscal year, a 50%-plus increase year-on-year. And to support this growth, I’m excited to share that this morning, we announced we will be opening a new site in the Southeastern U.S. to help fulfill the ongoing increase in AI data center infrastructure demand. 6 As part of this plan, we expect to invest approximately $500 million over the next several years to expand our U.S. footprint as we remain focused on supporting cloud and AI data center infrastructure customers. With the addition of this new factory, we will now operate more than 30 sites across the United States. This investment is a significant commitment, and there are a few things to keep in mind. We’re in the final stages of site selection now, and we expect the facility to be operational by mid-calendar year 2026. This site will further enable our design, architecture and large-scale manufacturing capabilities in high complexity AI racks with increased power requirements and infrastructure fit-out for liquid cooling. We fully anticipate that this new site will help diversify our revenue growth in the AI hyperscale space. We do not expect this investment to change our outlook for our annual CapEx spend, which currently stands at 1.5% to 2% of revenue. And finally, it is important to highlight that as the new site is projected to come online towards the end of FY ’26, we do not expect it to have a material impact on our financial results until FY ’27. Another area of exciting growth in ’25 and beyond is digital commerce. The team continues to drive innovation in retail and logistics, helping a diverse set of customers au- tomate everything, from the warehouse to the aisle and checkout. As we’ve discussed before, labor dynamics and fulfillment speed are driving structural investment here, and our solutions are resonating with customers. As we look further down the road, we see a long runway ahead as robotics, automation and even humanoids become central to the future of day-to-day life. Turning to Regulated Industries, where trends have been more mixed. As expected, EV and renewable energy markets in the U.S. remain soft. Moving forward, we continue to monitor the potential impact of the impending U.S. legislation on these end markets. 7 We’re managing these potential headwinds with discipline, staying close to our customers and continuing to focus on markets with accretive long-term margin potential. Health care, on the other hand, remains a bright spot. We are focusing on higher-value segments such as drug delivery devices, diagnostic equipment, and pharma solutions, where our Pii acquisition is already opening new doors. We continue to believe this business will be a margin and cash flow contributor over the long term as we continue to add vertical capabilities in various areas of this end market. With that, let’s move to our updated outlook for the full year. We are raising our revenue guidance for fiscal 2025 to approximately $29 billion, while we believe core operating margins will be in the range of 5.4%. As a result, we now expect to deliver core diluted earnings per share of $9.33 for the year. And importantly, we expect to generate in excess of $1.2 billion in adjusted free cash flow. As we close out fiscal 2025, it’s worth noting that our diversification strategy continues to aid our results as the demand profile of the end markets we serve are considerably dynamic. For instance, despite persistent weakness in EVs, renewables and 5G, we’re approaching record levels of core EPS. Looking ahead, we remain focused on enhancing core margins, optimizing cash flow and returning value to shareholders, primarily through share repurchases and targeted investments in higher-margin opportunities. This focus, together with our disciplined financial approach, creates a favorable setup for sustained value creation in the coming years. To close, I want to thank the Jabil team for their outstanding contributions and our investors for their continued confidence in our strategy. I am incredibly optimistic about the future we’re building together. I will now turn the call back over to Adam. 8

Thanks, Mike. Before moving into Q&A, I’d like to quickly summarize our key messages from today’s call. First, Jabil delivered strong Q3 results with core EPS above the high end of our guidance, driven primarily by an outstanding performance in intelligent infrastructure. And we provided Q4 guidance that reflects continued robust momentum in AI and data center markets, balanced with a prudent assumption for other areas. Second, we announced further U.S. investments in our AI and data center footprint, which will position us well for future growth. And finally, Jabil remains exceptionally well positioned due to our diversified portfolio, advanced manufacturing and engineering capa- bilities, and a clear strategy focused on profitable growth and shareholder returns. To that end, I’m pleased to share that we’ll be hosting our 8th Annual Virtual Investor briefing in late September. During that briefing, we intend to provide a comprehensive full year outlook. This will include our customary commentary on the markets we serve, our growth priorities and our disciplined approach to capital allocation. Specifically, we will outline our expectations for fiscal year 2026 across core operating margins, core EPS and adjusted free cash flow. I remain incredibly optimistic about the future we’re building, and we look forward to sharing our plan with you at that time. Thank you. Operator, we’re now ready for Q&A.

— Operator Instructions — Our first question today is coming from Ruplu Bhattacharya of Bank of America.

Mike, you’re seeing strong growth in data center and cloud revenues. And today, you 9 guided AI-related revenues to $8.5 billion for fiscal ’25. What’s a reasonable level of growth to expect in this segment for fiscal ’26 and beyond? And can you help us rank order the revenue growth and margins for the different segments within intelligent infrastructure? So for capital equipment, cloud, data center and networking comms, how should we think about revenue growth and margins for these?

Ruplu, so I think before I even start, I think the $8.5 billion of revenue in the AI world is a big achievement for the team. I think the team has performed and executed solidly. I think they worked 24/7 over the last over the last few weeks. So a really good result in our Q3 quarter. I think the 8.5% is just a testament to the growth rate from ’24 to ’25 being almost 50%. So really well done there. From a growth rate and margin, Ruplu, we’ll provide more guidance in September for ’26. I don’t want to touch on ’26 right now. But I think overall, if you look at margin in the 3 different end markets in that segment, I do think capital equipment would be accretive. I think if you look at wafer fab equipment side on the capital equipment, that’s a slightly higher margin. The automated testing, where the bulk of our growth has been is slightly lower margin than WFE. So a mixed sort of margin profile in capital equipment. I think cloud data center, we’ve mentioned this a few times before, it’s at enterprise level. And I think the explosive growth that we continue to see in that area will be good for ’26. And then from a networking and comms perspective, networking, I expect that to be slightly accretive, while communications and mainly 5G is a lot more dilutive to our margin. So mix profile, I think it’s different for different end markets even within the same segment.

Okay. Thanks for the details there, Mike. Can I ask fiscal year ’25 operating margin, you’re 10 holding steady at 5.4%. What needs to happen for operating margins to get to 6% plus? I mean what do you need to see in terms of revenues and other things to get the operating margin to that level?

Sure. So if you look at – we’ve talked about this in the past. Today, we find ourselves with a little bit of underutilized capacity. Our normal capacity utilization is in the 85%, 86% range. Today, we’re still at the 75% range. Even with the explosive growth that you see in the AI world, the underutilized capacity still exists because there’s a mismatch in geographies. The AI growth is all in the U.S., while the underutilized capacity is in countries outside of the U.S. So I do expect 20 bps to come back from a better utilization, and I’m not suggesting that would happen next year. It would all depend on recovery of end markets and our ability to execute to those end markets. So 20 bps on utilization, I would expect another 20 bps on SG&A leverage. I think as we continue to grow, our SG&A and especially at the corporate level, will continue to hold steady, and that will have a big impact on margins going forward. Again, not suggesting 20 bps in ’26. It’s a very high-level number over the next 2, 3 years. And then last but not least, 20 bps from a mix standpoint, it’s growth in higher-margin business as we get into some of the other better performing markets, I think that 20 bps does come through. And then if you go beyond 6% as well, we’re not just going to stop at 6%. There’s a whole bunch of vertical integration. We’ve talked about things like pharma filling. We’ve talked about other parts that we can collaborate on with customers in a deeper end-to-end solution. That’s what that will get us to that next step beyond 6%.

The next question is coming from Mark Delaney of Goldman Sachs. 11

Congratulations on the strong results. First, I’m hoping to better understand how you’re assessing the potential risk that some of the strong sales that you saw in the third quarter was due to pull-in buying perhaps because of tariff uncertainty. And is that a factor in the guidance for a sequential moderation in revenue in the fourth quarter?

So no, I think if you look, bulk of our revenue beat was in capital equipment and in the cloud data center infrastructure. Both of those are U.S.-centric. Tariff impact is minimal there. So I don’t expect to see any pull-ins. We’re not overall, even beyond that, Mark, I don’t think we’re seeing pull-ins of any magnitude. Right now, the whole tariff situation is still fluid, still dynamic. Things are moving around, and nobody wants to make decisions based on paying too much of a tariff or too little of a tariff. So I think at this stage, we’re just customers and Jabil, we’re collaborating. We’re obviously having a lot of discussions, but no pull-in of significance, at least we’re not seeing that.

Very helpful. My second question was around the announced planned expansion in the U.S. Is this primarily to support current customers and programs? Or do you see incremental opportunities that’s given you the confidence to commit more capital domesti- cally?

No. So I think the best part about this new investment, it’s not due to just existing customers. It’s a portfolio that we’re looking at. It’s diversified, expanding our hyperscaler base, expanding our Colo base. So I think overall, it is expanding our customer base in a really positive manner. I really have good thoughts about this site. Once it’s up and running, it’s not just going to be in the cloud data center. We’re going to look at liquid 12 cooling, power management. So everything associated with that entire AI ecosystem will be sort of showcased in that facility.

The next question is coming from Steven Fox of Fox Advisors.

A couple of questions, if I could. First, just looking at the quarter just reported, can you just sort of discuss the II margins quarter-over-quarter? So it looks like you were flat at 5.3% on almost an $800 million increase in revenue. So what specifically were the puts and takes there that we should consider and how those apply maybe going forward? And then I had a follow-up.

Yes. Steve, it’s Greg. So on margins for II, it was at 5.3%, similar to what we saw in Q2. What we did see with the very strong growth during the quarter, we did incremental investments during the quarter that did put some pressure on margins for the segment. And as we get that to scale, we do see that improving to get at and above our enterprise level margins.

There’s always some level of cost associated with an explosive growth level at this scale, Steve. So I think overall, we will continue to get leverage going forward. We did get some leverage, by the way, on the cloud and DCI side. I think you don’t see it all in the intelligent infrastructure because our communications 5G side is a little bit dilutive there. So there’s a little bit of a mix effect going on in Intelligent Infrastructure as well.

Great. That’s very helpful. And then just sort of looking ahead, not just necessarily for this 13 quarter but beyond, Mike, how do we think about just managing all of this growth? You mentioned – you highlighted a new plant coming online, new customers. There seems to be vendor consolidation going on, new opportunities for other technologies to – for you guys to focus on. How do you sort of ensure that you’re adding capacity at the right rate, focused on the right technologies, et cetera. But just any thoughts there given how great the growth is and going forward?

Yes. So the team is really focused on this expansion, Steve. They’re talking to customers constantly. One of the things we were seeing is a chicken and egg situation with capacity versus new customers and new orders, customers – potential customers want to see a site as well. So I think the team is fully engaged. They’ve been talking to multiple players. They’ve been talking to multiple customers and potential customers. And obviously, we feel like there’s certainly a path to filling out that site over the next few years. So overall, I do think that expansion continues in good shape. Don’t forget beyond cloud data center, we have the photonics side. We’re winning some liquid cooling sort of customers as well. So it’s across the board, thermal management, power management, all of that will come into play here. And it just allows us to showcase our entire end-to-end solution, again, in that side across the entire ecosystem.

The next question is coming from Melissa Fairbanks of Raymond James.

Great news on the U.S. manufacturing investment. You mentioned that this is largely AIdriven or AI-related data center business that’s driving this investment. Are there any other segments or end markets that are exploring moving to the U.S. or maybe consolidating in other geographies longer term? Are you seeing more customer conversations 14 about this given the tariff uncertainty?

So Melissa, I think overall, if you look at what we’ve done over the last few years, we’ve regionalized our manufacturing base. A lot of our manufacturing is done in region. So there’s not that much of a tariff impact, sure, there will be odds and bits here and there in terms of tariff impact. But I think from a customer perspective, we seem to be in a decent shape in terms of where they’re located. And most of the locations are close to their end consumer market. So we’re in good shape there. We’ll constantly look at moving things around. I think the end markets that suit better to the U.S., obviously, health care is a big one. The entire Intelligent Infrastructure segment is one. And then if you look at digital commerce as well, that’s an area that we’re focused on. And bits and pieces could move to the U.S. on that as well as automation, as robotics, as some of the some of the capabilities that we have in that space get more meaningful and more necessary as we expand in the U.S.

Okay. Great. And then just to give you a little break from the cloud and AI questions. I was wondering, the stock has obviously moved up pretty considerably recently. Free cash flow is outstanding. Just wondering how you’re thinking about capital allocation. You mentioned that this U.S. investment was not going to change your CapEx levels, but thinking about how you’re looking at deploying cash in the future?

Melissa, what I would say is we continue to remain committed to returning value to our shareholders. To your point, free cash flow is looking very strong this year at $1.2 billion. returning 80% of our free cash flow to buybacks. We’re committed to that. We do see our current $1 billion share authorization program being completed in Q4. And our typical 15 cadence of new authorizations and continuing that type of policy, we typically announce between July and September. So more to come on that in the coming months.

And Melissa, if I may just add, I think if you remember the mobility divestiture, once we completed that divestiture, our CapEx requirements have gone down considerably. Our free cash flow is in really, really good shape. We’re almost a completely different company from a capital allocation perspective. We continue to see share buybacks as a major sort of part of our strategy. So everything is moving in the right direction as it relates to cash flows.

Great. Fantastic job managing it.

Thank you.

The next question is coming from Tim Long of Barclays.

Yes, two as well, if I could. First, back to the cloud data center, obviously, upside in the quarter and in the guide pretty meaningfully. Could you just give us a little update on – I think you talked about some of the product breadth that you’re seeing in that upside. Could you just maybe double-click on that, and also talk about kind of customer diversity within that bucket, how broad that’s getting? And then the follow-up on the – I was just hoping you could update us on the transceiver business. Anything new on customer activity there? And now that we’re a few months away from the release of the 1.6T, any customer feedback or outlook on timing there 16 would be helpful.

So a couple of drivers in the Intelligent Infrastructure segment. We talked about capital equipment. I think the automated – the testing cycle is in full play. I think with the custom chip requirements with new technologies, with all the complexity with AI-based infrastructure, that whole testing is expanding considerably. And I think it’s got pretty long legs overall. So WFE on that side is a little bit sluggish, but AI on WFE is actually doing quite well. The sluggishness is more on the automotive consumer side. And then the cloud data center itself, if you the bulk of the increase in revenue was driven by our server rack integration. Don’t forget that server rack integration is heavily, heavily driven by our design architecture and engineering teams where we create a situation where there’s the handshake between the hyperscaler and us brings the yields to launch to a much more acceptable percentage. So it’s not just by chance that we’re winning that business. Obviously, end market is growing. It continues to grow. It’s actually accelerating in my view. And we’re winning market share there as well. Obviously, for the future, we’ll be looking at liquid cooling and some of the other power management, thermal management pieces, but those are in early stages yet. And again, big drivers for growth in the future.

And on the transceiver side?

Yes. So on the transceiver side, we’re seeing really good growth. I think if you go back a couple of years, we made this the photonics acquisition from Intel. We acquired a design 17 and engineering capability. So there was a whole bunch of engineers that we acquired with clean rooms and capacity to build out the transceivers. Demand for transceivers is obviously on the rise. Today, we’re moving the 200, 400, moving to 800G. We showcased our 1.6T capability at OFC 2 or 3 months ago, and that’s been well received by our customer base. Obviously, 1.6T is more advanced and probably towards the end of the year, early part of next calendar year is when we’ll see an uptick there. But we’re definitely seeing 200, 400s moving to the 800s. And at some point in time, that will continue into the 1.6T as well.

The next question is coming from Samik Chatterjee of JPMorgan.

I guess maybe if I start with the Q4 guide and Mike, the run rate that you have for Q4 in Regulated Industries and Connected Living & Digital Commerce, both of them are down modestly in Q4, while Intelligent Infrastructure is growing rapidly. I’m just trying to think in terms of when we look below that headline number for Regulated Industries and Connected Living, are there drivers that as you go over the next 12 months, drive those seg- ments back to growth? Or it should be the sort of starting assumption for the next 12 months be that those 2 segments remain a bit sluggish, while most of the growth comes from Intelligent Infrastructure? And I have a follow-up.

Samik, this is Greg. I’ll start with your question on Q4. For regulated, we’re still being very prudent on our guidance, especially when you look at EVs and renewables. So that’s definitely impacting our guidance for Q4. And then on Consumer Living & Digital Commerce, we definitely have been very prudent as well on the revenue guide there. We have been pruning various customers and programs in the consumer-related area. Still 18 feel good about the margins that we’re seeing there. But again, just being prudent and conservative on the guidance for those 2 segments.

And anything in terms of drivers to call out that change as we go into fiscal ’26?

No, no specific drivers. I mean, other than just we’re not seeing any turnaround yet in automotive and also in the renewable energy market. So still to be determined there. And then also just on consumer, yes, we’re just being conservative.

I do see some level of growth in health care and the digital commerce. Those are accretive margins. So really good progress there in terms of what we’re seeing coming again in the health care space from booking to actually getting into the factory, there is an 18-, 24month time lag. We are winning business. Some of it will hit towards the end of ’26. Some of it will hit in ’27 and ’28. So just something to be aware of. But health care is definitely an area that we’re quite excited about. If you look at digital commerce, that’s another area that we’re pretty excited about. You’re looking at warehouse automation. You’re looking at a whole bunch of handheld devices. We’re looking at humanoid robots. That’s further out. Obviously, that’s not going to be anytime soon. And then there’s the retail shelf piece as well. So that entire digital commerce is an exciting area for us as well.

Got it. Got it. And for my follow-up, if I can just go back to the announcement on the manufacturing capacity. Any broad way for us to think about the $500 million, how to split that between capital versus operating expenses over the time period? 19 And maybe, Mike, in terms of your reference to this being largely capacity for incremental sort of customer wins, in terms of tightening up utilization in the international locations, do you see sort of over time, tilting your manufacturing more to the U.S. and maybe sort of restructuring some of the manufacturing in international locations to achieve that better utilization? Or do you see enough demand to fill the international locations where you have a bit more underutilization at this point?

I do think today, our manufacturing base is really well regionalized. We are manufacturing in region. So we’re in the right locations for manufacturing. Some of it will make sense to bring back to the U.S. Some of it won’t because it’s region-for-region and local-for-local. So it will have to be within the region or within the country itself. I don’t think the U.S. – the site here is specifically for Intelligent Infrastructure, it’s not a multi-end market site. I do think the whole CapEx piece will be a long term. The $500 million is not a year 1, year 2, year 3 thing. It’s over multiple years, and it’s a little bit of a chicken and egg as well as we win business, the capital expenditure will occur as it gets pushed out. It will slow down. So there’s a whole bunch of dynamics in that side. I wouldn’t focus too much on the $500 million. I think we did say from a CapEx standpoint, we’re still extremely comfortable with our 1.5% to 2% range, and that’s not going to change going forward. So it will all be within the 1.5% to 2% range in terms of capital expenditure.

The next question is coming from David Vogt UBS.

And Mike, I know you said not to focus on the $500 million, but I’m going to focus on it anyway. Can you help frame sort of the revenue opportunity that underpins that incremental $500 million of investment over the next couple of years? And without that $500 20 million, do you have enough capacity to kind of hit your growth plan over the next 2 to 3 years, particularly in cloud and data center? And then my follow-up is on the networking side, obviously, you called out weakness in 5G. Can you maybe speak to the trends underneath 5G? What I mean by that is ex-5G, how is networking trending over the last couple of quarters? And how should we think about that going forward if we strip out the 5G business?

So I’ll answer your second question first. I think 5G is a little bit dilutive to our business. I think excluding that, the margins are accretive in that networking space. I think we’ll provide more guidance in September. I think photonics is ramping in that networking line item. I think we’ve done maybe $300 million to $400 million in ’25. We’re looking at maybe $750 million, $800 million in ’26, and then could be $1 billion beyond that as well. So good growth rates expected for that line item. Can you repeat your first question, please?

Yes. On the $500 million investment, obviously, you’re mostly local-for-local, as we’ve talked about pretty extensively. But without the $500 million, could you hit your growth targets today within Intelligent Infrastructure? Or is this critical capacity addition needed to kind of hit your multiyear plan? And what kind of – if so, what kind of revenue can be supported by this incremental $500 million of capacity if we just think about what your gross PP&E looks on the balance sheet. I’m just trying to make sort of an extrapolation of how to think about what the incremental revenue could look like, particularly within that segment?

I think over time, the revenue will be considerable, will be material. I wouldn’t suggest 21 any numbers yet. But the $500 million, again, is a very long-term sort of number. It’s not first 2, 3 or 4 years. It’s over multiple years. I do think the site with all the capabilities that we have, the execution of the team, they should be able to ramp up relatively soon. I did highlight that it only comes online in the middle of calendar year ’26. I don’t expect much of an impact in ’26 itself. In ’27, there will be a step up and ’28 will be an even bigger step up. So I do think very high potential for the site. In terms of growth rate for our existing outside of that site, I think we have capacity. We’re ramping different parts of that Intelligent Infrastructure in different locations as well. So overall, we do have a decent path to growth even beyond that site.

The next question is coming from Ruplu Bhattacharya of Bank of America.

Mike, a lot of things are going strong for Jabil. What’s the biggest risk you see to the story today? And also, you’ve done some acquisitions in the past over the last couple of years, you’ve bought the Intel transceiver business, liquid cooling. How would you prioritize M&A versus buybacks over the next year?

So a couple of end markets aren’t performing as well, and we’ve highlighted those over the last several quarters. Obviously, EV has taken a little bit of a downward move and then renewables. Now I do want to highlight that in that line item of renewables, energy and infrastructure, renewables is only $600 million. So when I say downside, I’m thinking of maybe $200 million, $300 million, most there couldn’t be an upside of $200 million, $300 million in that line item as well. I think even from an automotive and EV perspective, one of the things we’ve got 3 or 4 22 dynamics going on there where obviously, our China business is doing well. We’re actually gaining new customers there. We manufacture in region in that EV space for most of our customers, so very minimal tariff impact. And then the power business for our largest customer is doing reasonably well, and that’s a little bit of an offset to lower car volume sales. And most of all, we’re – we’ve been very conservative and prudent already in that line item. So answer to your question in terms of what risk, those are more small sort of hiccups. I don’t see that as major items to get worried about. What was the second question again?

Just on M&A versus buybacks.

I see a follow-up to your follow-up. So look, we’ve always made tuck-in acquisitions. Most of them are capability driven. If you go and look back at our history over the last maybe 24 months, the silicon photonics from Intel, the liquid cooling Mikros acquisition, the Pii drug filling acquisition, they’re all capability driven. Those are all – they all open up huge TAMs for us. And that’s – that will continue to be the approach. I think right now, the focus is still no change in the whole buyback capital allocation methodology. We’re looking at 80% being allocated to buybacks. So no major change there. We’ll probably renew our buyback authorization in July with the Board. So I think overall, no major change in the M&A piece. Having said that, if a larger M&A does come through, which we think would be highly accretive for Jabil, we’ll execute on that as well. One thing to remember is our debtto-EBITDA is very low. It’s only 1.4x, and there’s plenty of room to move around in that 23 leverage as well, if needed.

Thank you. At this time, I would like to turn the floor back over to Mr. Berry for closing comments.

Thank you. That’s our call today. If you have any questions, please reach out.

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