Melissa Fairbanks

Melissa Fairbanks inquired if Plexus is observing increasing lead times for components, and how this might affect customer program ramps or internal working capital investments. She also asked about the need for new capacity additions given the numerous new manufacturing wins and program ramps.

Answer

Oliver Mihm, Executive Vice President and Chief Operating Officer, confirmed observing some lead time increases in semiconductors and APAC PCBs, but noted Plexus is mitigating this through pre-positioning inventory, extended PO coverage, and customer partnerships. Todd Kelsey, President and Chief Executive Officer, added that Plexus is better positioned than in previous periods. Patrick Jermain, Executive Vice President and Chief Financial Officer, stated that Plexus can comfortably support approximately $6 billion in revenue with its existing footprint, with ample capacity across all regions.

Melissa Fairbanks asked if increasing lead times for components are impacting customer program ramps or Plexus' working capital investments. She also questioned how close Plexus is to needing new capacity additions to support current and projected growth.

Answer

Oliver Mihm (EVP and COO) confirmed seeing some lead time increases in semiconductors and APAC PCBs, but Plexus is mitigating risks by pre-positioning inventory, extending PO coverage, and collaborating with customers for forecast visibility. Patrick Jermain (EVP and CFO) stated Plexus can comfortably support approximately $6 billion in revenue with its existing footprint, with significant available capacity. Oliver Mihm added that efficiency initiatives like AutoStore and SMT optimization are creating additional usable space.

Melissa Fairbanks inquired about the drivers behind the recent strength in Plexus Corp.'s Healthcare Life Sciences business, specifically whether it's due to the mitigation of inventory overhang or new program ramps. She also asked for the outlook on the broadband communications subsector within industrial, given its historically lumpy nature.

Answer

Oliver Mihm, COO, explained that the strength in Healthcare Life Sciences is a combination of both new program ramps and the working through of inventory overhang, with modest market growth now expected. Regarding broadband communications, he described it as 'nonlinear' or 'lumpy,' noting that a Q4 beat included orders for legacy products, and generally muted demand is expected for fiscal 2026.

Melissa Fairbanks asked about the drivers behind the strength in the Healthcare Life Sciences business, specifically whether it's due to the mitigation of inventory overhang or new program ramps, and sought insight into the future outlook for the broadband communications subsector within industrial.

Answer

Oliver Mihm, COO, explained that the strength in Healthcare Life Sciences was a combination of both new program ramps and the working through of inventory overhang, with modest market growth now expected. For broadband communications, he described it as 'nonlinear' or 'lumpy,' noting a Q4 beat from legacy product orders, but generally muted broader industrial demand for fiscal 2026.

Melissa Fairbanks from Raymond James asked about Jabil's automotive and transport segment, noting the maintained full-year outlook (down year-over-year) and inquiring about changes in business mix, geographical trends (e.g., cautious European suppliers), and the near-term complexion of the business. She also followed up on the data center business, specifically asking about the proportion of new programs with the second hyperscale customer that are on a consignment model, similar to the lead hyperscale customer, and its potential impact on gross versus net revenue.

Answer

CEO Mike Dastoor stated that Jabil remains 'appropriately conservative' on automotive, believing it has hit a bottom with potential upside in FY27/28. He highlighted investments in powertrain-agnostic technologies like software-defined vehicles and ADAS, which apply to all engine types. He also noted opportunities from OEMs wanting to own design and IP, leading to program wins expected in FY27/28. For the second hyperscaler, Mike Dastoor indicated that new programs are a mix, with the consignment model being more specific to the largest customer, and that Jabil is currently factoring in gross revenue levels rather than widespread consignment for other hyperscalers.

Melissa Fairbanks asked about the Automotive and Transport outlook, which was maintained as down year-over-year, inquiring about changes in business mix or geographical trends, especially given caution from European suppliers. She also asked about the consignment model for the second hyperscaler customer and whether new programs are on consignment, potentially leading to higher gross revenue than net revenue.

Answer

CEO Mike Dastoor stated that Jabil remains 'appropriately conservative' on Automotive, believing it has hit a bottom with potential upside in 2027-2028. He emphasized investment in powertrain-agnostic technologies like software-defined vehicles and ADAS, which are driving program wins for future years. Regarding the consignment model, Dastoor clarified that it is 'more the largest customer perspective,' and for other customers, discussions are ongoing, but gross revenue recognition is 'more likely than consignment models popping up everywhere.'

Melissa Fairbanks from Raymond James inquired about any emerging trends among Jabil's healthcare customers related to the recent Section 232 issues, specifically asking about potential tariff impacts on customer behavior. She also asked about Jabil's overall capacity utilization and inefficiencies, particularly those outside the U.S. linked to the auto business, and questioned if Jabil has the capacity to handle potential upside. Finally, she inquired about the new North Carolina facility, asking for expectations regarding its timeline for full loading, demand support, margin profile, revenue contribution, and depreciation expense.

Answer

Steve Borges, EVP of Regulated Industries, noted that Jabil's healthcare and auto businesses are region-for-region consumption, placing them in a good manufacturing position, viewing potential pharmaceutical tariffs as a net positive. He confirmed Jabil has capacity for auto business upsides, though growth isn't predicted for the current fiscal year. Matt Crowley, EVP of Intelligent Infrastructure, stated that demand is strong for the North Carolina facility, but it's not expected to be fully loaded until mid-2027. Greg Hebard, CFO, added that most of the $75-$100 million CapEx investment for North Carolina will occur in FY26, remaining within Jabil's overall CapEx range.

Melissa Fairbanks asked about trends with healthcare customers related to the latest Section 232 issues (tariffs), inquiring about changes in customer behavior, MCA compliance, and the net impact. She also questioned Jabil's overall capacity utilization and inefficiencies, particularly outside the U.S. related to the auto business, and whether Jabil has capacity for potential auto upside. Finally, she asked about expectations for the new North Carolina facility, including its timeline to be fully loaded, margin profile, revenue contribution, and depreciation expense.

Answer

Steve Borges, EVP of Regulated Industries, Jabil, viewed potential pharmaceutical tariffs as a net positive, creating opportunities for U.S. production in PII operations due to region-for-region consumption, noting Jabil does not play in commodity areas affected by tariffs. He confirmed Jabil has capacity for auto upsides, though no growth is predicted for FY26 due to volatility and portfolio resets, with future growth expected from software-defined vehicle architecture. Matt Crowley, EVP of Intelligent Infrastructure, Jabil, stated the North Carolina facility has plenty of demand, will be ready in H2 FY26, and fully loaded by mid-2027, expecting significant contribution in FY27. Greg Hebard, CFO, Jabil, added that most of the $75-100 million investment for the facility will be in FY26 CapEx, within the 1.5-2% of revenue range.

Asked for an update on the automotive and transport end markets, specifically regarding EV weakness, and inquired about the new post-divestiture seasonality of the business.

Answer

The company sees near-term weakness and uncertainty in the EV market outside of China but remains positioned to support various platforms (ICE, hybrid, EV). The business's seasonality is now less pronounced; the second-half margin ramp is driven by the timing of program ramps (DCI, warehouse automation), the recovery in higher-margin semi-cap, and cost optimization efforts, not just the absence of the former Mobility business.

Inquired about pricing pressure from hyperscalers in the data center space, sought an update on the healthcare equipment business (robotics, imaging), and asked about any impact on customer planning from the upcoming election.

Answer

Management stated that while pricing pressure from customers is constant and part of the business, it's not unusually high and presents opportunities for Jabil to add value. In healthcare, the company sees growth in diagnostics, robotic surgery equipment, and GLP-1 related devices. Regarding the election, there is a slight 'wait-and-see' approach from customers in the EV and renewables markets, but management is confident in the long-term drivers for these sectors regardless of the outcome.