Matt Sheerin: Yes, thank you, and good morning. I wanted to dig a little deeper on some of the end market commentary, particularly on the consumer side. It looks like you actually took up your connected devices guidance a little bit for the year, but still down double-digits. Are you seeing any signs of consumer bottoming here or any outlook that gives you some confidence that you’re going to get back to growth at some point?
Kenny Wilson: Yes, I think Mike mentioned it quite well in his prepared remarks about that we’re cautious of the near-term macro. We’re very, very well-diversified in the connected devices space and — but sometimes you get pleasant surprises in the upside like we had in Q3, but we still think it’s choppy and spotty and we think we’re bumped along the bottom. I would also mention, Matt, that as we look at our business here, we did get a COVID pickup effectively and we’re probably run at the run rates that we were in 2019, 2020, 2021, that kind of level. That said, we have won more than our fair share of opportunities in this space. So, we do expect as the macro corrects, that we should see a pickup in connected devices. But right now, I’d say, visibility is quite short and we’re just being really, really cautious.
Matt Sheerin: Okay. Great. Thank you for that. And I also wanted to just talk about the inventory reduction that you’ve seen and the general supply environment. I know you’ve had some headwinds certainly in Auto, EV, and some other markets, are you starting to see some signs of supply easing or is that still a gating factor in Auto or some of your other businesses?
Mike Dastoor: So, Matt, the inventory did go down by seven days, sequentially the team has done a fantastic job. I think last quarter I had mentioned, I expect inventory to sort of bounce between 60 and 65 days in the short-to-medium term. We’re seeing that coming through. In the longer term, we can take it down into the mid-to-high 50s, we’re confident of that. But the supply chain remains patchy. It is sort of easing in a lot of areas, offset by constraints in others. So if you look at Automotive, you look at Semiconductors, you look at any power-related components, MCUs, all of them seem to be still in a constrained situation. So, we are seeing a mixed bag here on the supply chain side. The golden screw issue is still there.
That’s not gone away, although it’s easing a little bit. So the best way to characterize this is, it is easing, but nowhere near normal yet. So, just something to keep watching, we’re focused on it. And we’ll continue to evolve out with the supply chain changes.
Kenny Wilson: I have a comment on that, just to support that of Mike’s and just to give you some context. So, we are tracking, in the semiconductor space, the automotive semiconductors, and whereas 12 months ago we were tracking 1,200 components that were classed as golden screws for different assemblies, that number is probably half now as the number that we’re managing, so it’s down a lot, but it’s still an issue for us that we continue to navigate. So, it’s getting better for sure, but it’s not gone yet.
Matt Sheerin: Got it. Okay. Thanks very much.
Kenny Wilson: You’re welcome.
Operator: Thank you. Next question is coming from Steven Fox from Fox Advisors. Your line is now live.
Steven Fox: Hi, good morning. Two questions from me as well. First off, thanks for the extra disclosure on Industrial and Auto. On the Industrial piece, I was wondering if you could give us a little more color as to how Jabil is differentiating in those markets. I know some of the programs you mentioned you’ve been in for quite a while, what’s sort of changed beyond the secular that’s driving that 40% growth? And then I have a follow-up.
Kenny Wilson: Yes, so, thanks, Steve. So, firstly, we get through a process every year, Steve, where we will look at our long-range plan, and we plan out three, four, five years. So, this hasn’t just suddenly appeared as an opportunity for us. We’ve been looking at this for a long time. Brent Tompkins who runs that group has been really, really focused on, we need to develop capabilities to support things like grid-level energy storage, which would be new for us just from a scaling perspective, but also leaning into the things we’ve done historically in the EMS side of our business. So, it’s been a little bit over, like for example, we opened a new facility in Salt Lake City. So, that’s been a few years in the making, it’s pretty much full now, we’re looking to expand that with multiple customers which is good.
So, it’s really just been leaning it into our customers’ roadmaps, looking at the capabilities that we have, augmenting that with other capabilities and been able to support things like, as we mentioned, grid-level energy storage which we see as a key area for us, smart power conversion, and energy management, so we’re feeling pretty good that we’re in — we’ve got the right capabilities developed to be able to support our customers for the foreseeable future.
Steven Fox: Great. That’s super helpful. And then just on the Auto sort of an opposite end of spectrum financial question, which is, the growth is tremendous and it doesn’t seem to be hurting the overall margins at all. But can you give us a sense for how that’s possible, and yes, I would imagine that these aren’t mature margins whatever you’re producing within the Auto sector when you’re growing 60%, so just sort of maybe give us a little perspective on that. Thank you.
Kenny Wilson: Yes, and look — Steven, the good thing about the Auto industry for us is that, it’s hard and the fact that it’s hard means it’s difficult for people to engage. So, I mean, you’ve seen our facilities. So the ability to introduce products globally, consistently, the same quality standards, use in complex automation, that’s difficult. And your ability to get up to speed quickly as expected where you can lean into the margins in the short term. When Mike talked about this kind of that we’ve — where your margin profile is under expectations as you go through the ramp and then normalizes above corporate averages. So, we’re starting to get through that a little bit, although obviously we introduced new products and new programs and we’re expanding our footprint, as you know.
So I think it’s albeit our ability to take a new product, deploy them, and ramp them globally is going to be what’s going to dictate how effective our margins are, but we’re doing a reasonable job there, I’d say. So, we’re pretty bullish about where we will land in the future. I’d remind you also that we are active across multiple OEMs here. So, we’ve got opportunities coming out across the world with different customers, which makes us feel quite bullish about our future.
Mike Dastoor: And Steve, if I can just add, the product lifecycle in Automotive extends out to six or seven years. As you get deeper into the bulk of that — that Kenny mentioned with some of the automation that we’ve introduced, it really suits long product life-cycle products such as automotive where operational efficiencies continue to drive margin even beyond end market sort of impact. So, just something to keep in mind that the longer a product lifecycle, the higher the operational efficiencies as a result of automation, which again drives margins upwards as well.
Steven Fox: Great. That’s all very helpful. Thank you.
Operator: Thank you. Next question is coming from Shannon Cross from Credit Suisse. Your line is now live.
Shannon Cross: Thank you very much. I wanted to talk a bit about the Healthcare business. Clearly, you’ve done well with the [indiscernible] relationship and that business continues to grow. I’m wondering where you’re seeing the best opportunity looking forward, because I would assume this will be a pretty solid grower given demographics and everybody needs, unfortunately surgeries as they all get older. So if you can just provide a bit more there and then I had a question on margin. Thank you.
