Melissa Fairbanks

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 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 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.