Hello and welcome to Jabil’s Second Quarter of Fiscal Year 2023 Earnings Conference Call and Webcast. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It’s now my pleasure to turn the call over to Adam Berry, Vice President of Investor Relations. Please go ahead, Adam.

Good morning. And welcome to Jabil’s second quarter of fiscal 2023 earnings call. Joining me on today’s call is Chairman and CEO, Mark Mondello; incoming CEO, Kenny Wilson; and CFO, Mike Dastoor. In terms of agenda, Mike, Kenny and I will be offering today’s prepared remarks, while Mark will join for the question-and-answer session. Please note that today’s call is being webcast live, and during our prepared remarks, we will be referencing slides. To follow along with the slides, please visit jabil.com within the Investor Relations section of our website. At the conclusion of today’s call, a recording of the entirety will be posted for audio playback on our website. I’d now like to ask that you follow our earnings presentation with slides on the website, beginning with the forward-looking statement. During this conference call, we will be making forward-looking statements, including among other things, those regarding the anticipated outlook for our business, such as our currently expected third quarter and 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 on our annual report on Form 10-K for the fiscal year ended August 31, 2022 and other filings. 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. With that, I’d now like to shift our focus to our second quarter results, where the team delivered approximately $8.1 billion in revenue in line with our forecast. As you dig a little deeper, it’s worth noting we saw strength in areas such as industrial, driven by continued robust demand for renewable energy generation and storage, automotive driven by the transition to electric vehicles, and healthcare as large OEMs in that space continue to partner with Jabil to deliver best-in-class personal care. Conversely, a portion of the year-over-year strength was offset by weakness in Semi-Cap and other consumer-oriented portions of our business. Putting it all together at the enterprise level, revenue grew by an impressive 8% year-over-year. Core operating income during the quarter was $391 million, an increase of 14% year-over-year, representing a core operating margin of 4.8%. This is up 20 basis points over the prior year and just ahead of our expectations from 90 days ago based on great operational execution within our EMS businesses. Net interest in the quarter came in higher than expectations at $74 million. In the quarter, we also repurchased 1.7 million shares for $127 million leaving us with $975 million remaining on our current repurchase authorization. From a GAAP perspective, operating income was $359 million our GAAP diluted earnings per share was $1.52. Core diluted earnings per share was $1.88, a 12% improvement over the prior year quarter and slightly ahead of the midpoint of our range. Now turning to the segments, revenue for the DMS segment was $4.1 billion, an increase of 8% on a year-over-year basis and in line with our expectations, while core operating margin for the segment came in at 4.6% as expected, as a result of strong returns in auto and healthcare, offset by weakness in consumer markets. Revenue for our EMS segment came in at $4.1 billion, an increase of 7% year-over-year, while core margins for the segment was 5.1%, up 110 basis points year-over-year reflecting solid leverage on strong revenue growth. So in summary, a strong close to the first half of our fiscal year. As we sit today, I know the team here is extremely proud of the strides we have made to not only improve our business over the last several years, but also make it more strong and more resilient. This improved resiliency in our business was reflected in the Q2 results. In a moment, I will turn the call over to Mike and Kenny to provide some additional thoughts on our performance in the quarter and update our outlook for fiscal 2023 and I think you will see there’s so much opportunity as we look towards fiscal 2024 and beyond. Thanks for your time today. It’s now my pleasure to turn the call over to Mike.

Thanks, Adam. Good morning, everyone. Q2 marked a solid close to the first half of the fiscal year. Through the first two quarters of FY 2023, the team delivered strong year-over-year growth in revenue, core operating income and core earnings per share, while also expanding core margins by 20 basis points compared to the first half of FY 2022. Growth year-to-date has been headlined by areas of our businesses experiencing long-term secular growth trends, offset slightly by some of our more consumer-centric markets and Semi-Cap. The team’s impressive performance through the first half of our fiscal year, despite what continues to be an extremely dynamic macroeconomic environment underscores the strength of our diversified portfolio and the improved resiliency of our business. Next, I’d like to begin with an update on our cash flow and balance sheet metrics as of the end of Q2 beginning with inventory, which came in higher than expected mainly due to timing and continued component constraints on the automotive supply chain. The team did a good job offsetting a portion of our inventory levels with inventory deposits from our customers. Net of these deposits, inventory days was 69 in Q2. We continue to be fully focused on bringing this metric down further in FY 2023 and beyond, targeting net inventory days ranging between 60 days to 65 days in the medium-term and expecting to normalize in the 55 days to 60 days range in the long-term. Our second-quarter cash flows from operations came in at $414 million, while net capital expenditures totaled $304 million. With this, we ended the quarter with cash balances of $1.2 billion and a total debt to core EBITDA level of approximately 1.1. Turning now to our third quarter guidance on the next slide, we expect total company revenue in the third quarter of fiscal 2023 to be in the range of $7.9 billion to $8.5 billion. At the midpoint, this anticipates DMS and EMS revenue will both be $4.1 billion. Core operating income is estimated to be in the range of $363 million to $423 million. GAAP operating income is expected to be in the range of $336 million to $396 million. Core diluted earnings per share is estimated to be in the range of $1.70 to $2.10. GAAP diluted earnings per share is expected to be in the range of $1.50 to $1.90. Net interest expense in the third quarter is estimated to be approximately $80 million and for the year to be in the range of $295 million to $300 million, which is higher than we forecasted in December, due to more conservative interest rate and working capital assumptions. As inventory levels normalize, I expect these interest costs to gradually decrease over the mid- to long-term. The tax rate on core earnings in the third quarter is estimated to be approximately 19%. Moving to the next slide, where I will offer an update on the end market demand assumptions and how these translate to our FY 2023 revenue expectations. At a high level, our year so far is playing out consistent with our assumptions in December. The industry continues to benefit from outsourcing of manufacturing as a macro trend due to dynamics such as onshoring closer to end consumers, complex supply chain dynamics and greater content due to ever-increasing design complexities and products. We continue to expect areas of our businesses benefiting from strong long-term secular growth trends like electric vehicles, healthcare, renewable energy infrastructure, 5G and cloud to drive solid year-over-year growth. An area where our outlook has improved since December is in our industrial business where we see robust demand for renewable energy infrastructure, which we expect to drive double-digit year-over-year revenue growth. Electric vehicle demand also continues to remain extremely strong as we continue to gain share in an end market with strong robust growth as we navigate product manufacturing life cycles and ramps at different stages in their maturity curves, constrained by a tight component supply chain. We expect a portion of the solid growth from our secular markets to be offset by lower demand in our consumer-facing markets and in Semi-Cap. In summary, we feel the outlook for our business is solid and expect the secular demand across many of our end markets to remain strong. Considering this updated demand picture, let’s now turn to the next slide to get a view of our updated guidance for FY 2023. We expect our improved mix of business will drive incremental operating leverage, thereby giving us the confidence to raise our core margins by 10 basis points to 4.9% for FY 2023 on revenue of $34.5 billion. We continue to anticipate core EPS will be $8.40, which is reflective of our improved core operating income, offset by higher interest expense. Importantly, for the year, we also remain committed to generating an excess of $900 million in free cash flow. Overall, our performance during the first half of the year gives us excellent momentum as we look to close out another strong year and drive the company to core margins beyond 5%. And with that, I would now like to turn the call over to Kenny.

Thanks, Mike. I am pleased to be joining the call today. It is truly humbling to reflect back 23 years to when I joined Jabil in our manufacturing facility in Livingston, Scotland. Since then I have been afforded the opportunity to grow and lead several areas of our business. Most recently, I had the privilege to live and work in Asia, leading our Jabil Green Point organization, which has played a major role in building out multiple key capabilities that continue to be leverage across the company. Going forward, I am excited to lead Jabil as CEO, alongside a team of extremely talented and long tenured industry leaders. I would like to share a few thoughts on what you should expect from us going forward. As Mark mentioned 90 days ago, think of this as evolutionary, not revolutionary, it is our term to carry the torch and prepare our organization for future growth. First, we have a customer-centric organization, always have been, always will be. As such, we will continue to work tirelessly on behalf of our customers and shareholders to deliver long-term value. Second, we will continue to cultivate our unique culture, which attracts, retains, empowers, and enables our people, allowing their true selves to turn up to work every day. Third, we will remain focused on increasing margins and delivering sustainable free cash flow through a combination of enhancing the mix of our business and excellent operational execution. It’s my belief that this in turn will allow us to earn an appropriate return on investment for the value we provide. Moving on to our business, today we see incredible tailwinds driving our business forward. For instance, this year, we are seeing robust growth in our industrial business in areas like renewable energy generation and storage. In automotive, the team continues to navigate multiple complex program introductions, increasing both our scale and addressable content per vehicle. And in healthcare, we continue to win new business in areas such as digital health and precision medicine as the industry outsource trend accelerates. The success we are seeing in these areas is a key proof point of our team’s ability to leverage multiple capabilities across fiscal end markets as we continue to diversify our service offerings. Moving on to the year, I am pleased with the momentum underway in the business. We expect good growth and operating leverage, which gives us the confidence to raise our expectations for core margins to 4.9% for fiscal 2023. At the same time, we remain highly focused on delivering more than $900 million in free cash flow and when I think about Jabil beyond fiscal year 2023, there is a tremendous amount of opportunity ahead. Between the mix of business and the growth trends underpinned by our long tenured management team, I am confident that we can drive the company at above 5% core margins with sustainable strong cash flows. This will afford us tremendous flexibility in our capital allocation. In the coming years, we will remain focused on executing buybacks when they produce strong returns for shareholders and remain committed to a dividend. As it relates to M&A, you will see us continue to focus on capability building deals consistent with the past several years. And finally, we will ensure our capital structure is optimized and remain committed to maintaining our investment-grade credit profile. In closing, I feel it is appropriate to send a message to our people here at Jabil. I have spent over 20 years at our company and I am excited to be a leader. I will strive to make you proud. At Jabil, our people are our greatest asset. Our strength is in our ability to bring together a collection of people from diverse backgrounds, different experiences and multiple generations and moved into a culture that across the world is both consistent and a true differentiator. Being no doubt that all that matters every day is that you give away your best, focus on performance and strive to be the leader or coworker you wish you had. In summary, bring your true self to work each and every day without anxiety or fear of recourse. I am truly grateful to each and every one of you for all that you do. I will now turn the call over to Adam.

Thanks, Kenny. Operator, we are now ready for Q&A.

Thank you. Our first question today is from Ruplu Bhattacharya from Bank of America. Your line is now live.

Hi. Thank you for taking my questions. Kenny, good to have you on board and on the earnings call. Let me start by asking you a question on automotive. Jabil’s revenue from automotive has been pretty strong and you have been manufacturing components, like you said, for EVs for a long time. However, this space may get crowded over the next two to three years, I am thinking about media reports indicating at least one large Taiwanese EMS company looking to manufacture EVs. So when you look over the next two years to three years, do you think Jabil has a competitive advantage in this space that can sustain over the medium-term and how much of your auto revenues today are from EVs and do you see that percent growing over the next few years?

Thank you for your message, Ruplu. I really appreciate it. As you are aware, working in the automotive industry requires a considerable amount of time for qualification, with programs typically lasting five to seven years. Additionally, it's important to leverage that capability consistently across various regions worldwide. This aspect aligns with our strengths, and we believe there are sufficient opportunities and growth potential for numerous suppliers and competitors. Therefore, we are confident that our value proposition will allow us to continue expanding our automotive business over the long term. Currently, approximately 80% to 90% of our total automotive business is derived from electric vehicles and autonomous technologies. We are optimistic about our positioning in this market, as we have established relationships with most of the major original equipment manufacturers, and we anticipate robust growth across various regions in the future.

Okay. Thanks, Kenny, for the details there. For my follow-up, let me ask a question to Mike. So you beat the midpoint of your fiscal 2Q EPS guide by about $0.04 and you are raising the operating margin outlook for fiscal 2023 looks like by 10 bps, but you kept the full year EPS guide of $8.40. So my question is, Mike, when you look at the remaining year, at the second half of the year, do you see a weaker operating environment in the second half or is there some conservatism in the guidance, just if you can give us your thoughts? And also, EMS had a very strong margin performance in fiscal 2Q, do you think that will sustain going forward? Thanks.

EBIT has increased by approximately $25 million since December. However, we have also seen a rise in interest costs. Our core operating business and the trends in our end markets are performing better than we had expected, leading us to raise our EBIT. Unfortunately, we are dealing with a slightly higher inventory level which stems from various factors, such as the timing of inventory arrivals at the end of the quarter. This is reflected in our accounts payable, but I’m not overly concerned about it. The auto supply chain remains tight, and while we hoped for improvements throughout the quarter and the year, we haven't observed any significant changes yet. It hasn’t worsened, but it hasn't improved either. Regarding interest rates, the short end of the curve has steepened recently, which has increased our short-term borrowing costs for financing working capital. Overall, our underlying business performance is strong despite these temporary challenges with inventory and interest rates. We anticipate that in the next few quarters, interest costs will decrease, and our inventory levels will improve as well. Currently, our inventory stands at around 68 to 69 days, and we expect it to get to 60 to 65 days in the medium term, and ultimately around 55 to 60 days in the long term. We expect to see positive momentum in the future.

Hi, Ruplu. This is Mark. I wanted to add a comment based on Mike's response. Considering the current macro environment and looking ahead at the second half of the year, our DMS margins are projected to be around 5%, which aligns with our expectations from September, even though the consumer sector is facing significant challenges, at least for now. The EMS margins for the second half are expected to be about 5%, potentially slightly stronger, which is an increase of 30 to 40 basis points compared to our September outlook. Additionally, the enterprise margins for this period are also anticipated to be around 5%, representing an increase of 10 to 20 basis points from what we had estimated back in September. Furthermore, at an enterprise level, we have margins from 22% to 4.6%, and as you mentioned in your question, we anticipate an increase of 30 basis points year-on-year at the enterprise level. Overall, considering everything, our business has been managed and executed exceptionally well.

Okay, Mark, thanks for all the details there and congrats on the strong execution.

Thank you. Next question is coming from Steven Fox from Fox Advisors. Your line is now live.

Hi. Good morning. Two questions if I could. Just one follow-up on the auto details that you provided. When we think about the really tremendous growth you have had the last two years, I assume it slows next year. How do we think about sort of the impact this growth has had on margin mix, et cetera, and as it slows, what’s the impact to margins overall? And as a second question, I was just curious if you could expand on the comment about outsourcing accelerating in digital health and precision medicine, like, any further color around what that means for Jabil? Thanks.

Thanks, Steve. Are you saying or suggesting. I couldn’t quite hear you correctly. Are you saying automotive is going to slow next year?

Well, I am assuming hitting 50% growth again for the third year in a row might be difficult, but I could be wrong on that?

So we have done…. I didn’t know. I just wanted to clarify. I don’t know if you are asking in terms of a macro slowdown, slowdown to Jabil, slowdown in absolute dollars or slowdown on our CAGR growth rates, so?

Yeah. I was talking about your specific growth rate market.

I think that's fair. We have experienced significant growth, with the business expanding over 40% from 2021 to 2022, and if current trends continue, we anticipate similar growth from 2022 to 2023. However, I doubt we will see growth above 40% next year. If I were to speculate, I believe our automotive and transport sectors will probably lead the growth from 2023 to 2024 relative to our other sectors. Regarding margins, I’m quite pleased with our overall performance, having achieved an increase of 10 basis points for the year. We are currently very active in the electric vehicle space, and much of that activity is still developing, with expectations for maturation in 2024. Regardless of whether next year's growth is 10%, 20%, or 30%, I am confident that our current efforts in that area will yield positive results and a favorable outlook for 2024.

Thanks for that. And then in terms of the healthcare outsourcing accelerating?

I believe we have been consistent in our perspective since the JJMD deal, and then we faced the impact of COVID. Philosophically, we feel we are on the right track regarding our potential to capture more outsourcing in the personalized digital healthcare space. It is a structured marketplace, so decision-making is thorough and involves many patients. Our views and discussions from the past couple of years about the market and our positioning within it remain unchanged. While the timing has been slower than we expected, the overall trajectory is still very positive.

Great. That’s a very helpful. Thank you.

Yeah.

Thank you. Next question is coming from Melissa Fairbanks from Raymond James. Your line is now live.

Hi, guys. Thanks very much. I have got two questions, they may be related, so I will just ask them both at once. It’s great to see you raise the full-year revenue target for industrial and Semi-Cap. You did mention the strong growth in renewables. I was wondering if you could give us an update on your expectations for the other businesses in that segment, Semi-Cap and elsewhere? And then as a second, very nice move higher on the operating margin target for EMS as Mark highlighted, what’s driving that upside? Thanks.

I will start, and Mike and Kenny can join in. At the beginning of the year, we estimated that the industrial Semi-Cap market would be around $4.2 billion to $4.3 billion. We now have it indexed at approximately $4.5 billion. The positive aspect is that we are observing the importance of diversifying our business. We are noticing some overall weakness in Semi-Cap, but we believe it will make a solid recovery over time. Compared to September, we expect the combined industrial Semi-Cap to increase by $200 million or possibly more. A significant factor in this is the benefits we are experiencing from the Inflation Reduction Act. For our industrial business that is heavily invested in solar and clean energy renewables, this is advantageous. As we look ahead to fiscal year 2024, we anticipate continued benefits in this area. What was the second part of your question?

Just wondering if that’s kind of what’s driving the higher operating margin target for EMS, just a mix up or is there is internal efficiencies or what else?

I believe that when considering the operating income line year-on-year, it's one of the best financial metrics we have in the company. This success starts with the strong team led by Fred McCoy and his entire team, who are doing an excellent job in execution. There are several catalysts contributing to this, including the Inflation Reduction Act, which positively impacts the overall industrial sector. Parts of our wireless infrastructure and cloud services remain robust as well. In terms of income, it's a combination of outstanding execution, exceptional customer care, and our overall EMS portfolio. Although we present it across four different sectors, it consists of a vast number of customers, and I believe that diversification plays a significant role in our success.

Excellent. Thanks very much.

You are welcome.

Thank you. Next question is coming from Paul Chung from JPMorgan. Your line is now live.

Hi. Thanks for taking my questions. So just on the manufacturing footprint in Mexico and North America, are you seeing some increasing competition from some of the Asia competitors and any resulting price-based competition there? And if you could expand on some of the competitive advantages you have here in North America, just seems some favorable growth trends? And then I have a follow-up.

We consistently notice competition. I don't want to quantify it, but I believe we are a U.S.-based company and feel confident about our competitive stance, especially in the Americas. We have a strong history of effective operations and exemplary customer service out of Mexico and the U.S. The competition we face is similar globally. If you're suggesting that growth rates in North America and Mexico could be promising in the coming years, then I agree we are very well positioned in both regions.

Got you. Nice home field advantage. And then on connected devices and mobility here, are we kind of seeing a bottom here in guidance revisions and can we start to see maybe rebounding order flow as we head into second half of calendar year? Just your thoughts on those key markets and how kind of margins also evolved? Thank you.

You are welcome. When I reflect on fiscal year 2022, our outlook from September, and the current situation, mobility has remained relatively stable, fluctuating around $100 million on a nearly $4 billion base. Therefore, mobility is aligning with our expectations both in absolute terms and compared to September in fiscal year 2022, although there are various factors at play. However, our overall consumer business is weaker compared to 2022 and has not met our expectations from September. It's uncertain whether it has reached its lowest point, so we will need to wait and see. There are numerous variables involved, especially with recent developments in the banking industry and potential government and Federal Reserve responses. The positive aspect is that our consumer business is well diversified. Regarding the overall sector or market, I don't have enough insight to determine if it has hit the bottom, but it's clear that we have experienced a significant decline in consumer performance. I believe our outlook for the latter half of the year is sensible, and as a result, we are increasing our margin expectations by 10 basis points, which makes us feel quite optimistic. This reflects the current composition of our company as a whole.

Great. Thank you.

You are welcome.

Thank you. Our next question is coming from Shannon Cross from Credit Suisse. Your line is now live.

Hi. Thank you very much. Speaking of turmoil in the banking system we are still here.

Congratulations.

Thank you. Yes. To all the clients out there we are alive and kicking. I have a couple of questions. Regarding the EMS margin, you mentioned that the improvement is due to scale leverage. Can you elaborate on that? Additionally, could you discuss how you see scale, mix, and cost optimization impacting the operating margin as you look ahead? I have a follow-up as well.

Let me clarify, you are talking about the margin expansion in EMS?

Yes.

I may have previously implied it, but I don’t believe I suggested that the factors influencing our performance are solely about scale and leverage. It's primarily about the business composition, as well as the experience and execution. I hold this perspective about our entire company. Our EMS team possesses a level of experience and an overall approach that is unmatched in our industry. Leadership is vital, and the team's contribution is significant. While my thoughts may seem mixed since the results are strong, I don't think these outcomes are coincidental. They stem from the effectiveness of our leadership team, which we have restructured somewhat. Earlier this year, we eliminated some costs, as Mike mentioned back in December. The way we diversify and our ongoing opportunities to capture market share in targeted areas have been crucial. We have made difficult decisions regarding underperforming relationships. Additionally, I believe that, generally, scale provides us with a significant competitive edge for various reasons—not just for the sake of scale. When combined with our geographic reach, expertise, and the sophistication of our IT systems, along with substantial investments of hundreds of millions over the past few years in automation, AI, robotics, and data analytics, all of this contributes to our success.

Thank you. As you consider capital allocation, share repurchase is clearly a priority. How are you weighing the growth opportunities in the auto sector against the need to return cash to shareholders? I understand you likely conduct a returns-based analysis, but how do you view the situation in a broader sense, including the possibility of making small acquisitions?

I don’t want to answer this. I think I will waive the Jabil flag a little bit. I believe, in my opinion and I have had lots and lots and lots of debates with sell-side, buy-side folks. I think from June of 2016 through today, we never get it right, we never get it perfect and we will never be exactly aligned with the sell-side, buy-side partners. But I think we have done an exceptional job with our capital allocation strategy both strategically, tactically and financially. And it is a lot of about a lot of data, a lot of data analytics and we have come at that all the time with an eye on what do we truly believe is best for the long-term health of the business and then, of course, shareholders and customers and we will continue to behave in that exact manner.

Great. Thank you so much.

You are welcome.

Thank you. Next question is coming from Matt Sheerin from Stifel. Your line is now live.

Yeah. Thanks and good morning. A couple of questions from me, first, on your wireless and cloud segment, just looking for more color what you are seeing in demand there. I know you are guiding that segment down for fiscal 2023, but part of that is due to the incremental consigned inventory at your cloud customers. We are hearing, obviously, from some competitors and suppliers that, that business has been weakening and pretty lumpy. So any color there would be great?

If you consider the business, particularly how we integrate 5G wireless, infrastructure, and cloud, I believe we have revised our guidance upward by about $100 million compared to our December outlook, moving closer to the levels we anticipated back in September. While there are some areas where we observe slight weakening, it’s important to note that our 5G wireless business is quite global. Therefore, if there are any signs of weakness in North America—not that I’m implying there are—it’s beneficial that our business is well-diversified. Overall, our cloud solutions are performing slightly better than planned.

Okay. Thank you for that. And then on the supply constraints that you are seeing in automotive, I know in previous quarters you have had supply issues across other businesses, including healthcare and some other markets. Could you comment on the availability of parts in those areas, and on the automotive side, are you getting a sense that that supply will improve over the next few quarters?

Yeah. This is a recurring topic and rightfully so because it’s been awful the last 18 months. We started tapping the drum and then maybe pounding the drum as we exited the summer of 2022, moved into fall of 2023 with opinions that the supply chain would probably get better sooner relative to maybe some other projections. It also, I think, is illustrative of advantage point we have with our scale cutting across so many different end markets. That’s played out to be true. And I would say, in general terms, I believe we talked about maybe during the September Investor Day that we thought the supply chain, although, maybe not fully back to normal, would normalize by late winter, spring time of 2023 and that’s shown to be true. So, all in all, as we continue to move into the summertime of calendar 2023 and into the fall we see the supply chain getting better and better.

Okay. Thanks very much.

You are very welcome.

Thank you. Next question is coming from Mark Delaney from Goldman Sachs. Your line is now live.

Hey. Good morning. Thank you for taking my questions. Kenny, congratulations on the expanding responsibilities. First on the full-year revenue guidance, I recognize there’s no change to the overall guidance. If I look at the second half, in particular, it does imply year-over-year revenue declines especially in the EMS segment. I recognize there’s a high base that’s perhaps a factor. But could you double click a little bit on what’s happening in the second half? How much is maybe that high base in program timing and how much might be macro factors that are contributing to that?

Mark, there seems to be some disruption on the line, so I may not have fully grasped your question. I'll answer based on what I understood, but please correct me if I missed anything. It sounds like you want to know about the second half of the year concerning revenue. If I can break that down, our DMS revenue is expected to be down about $200 million compared to our estimates in September, and this decline is mainly in the consumer space. Our EMS revenue is expected to be around $50 to $100 million in line with our September expectations, so we can consider that flat and mostly as anticipated. At the enterprise level, we expect the second half to be down about $150 to $200 million, which also includes the consumer business. In simple terms, that's our outlook for the second half of the year compared to what we projected in September.

That’s helpful, Mark. Hopefully, you can hear me a little bit better now, I removed my headset. But I was also trying to get at whether or not you thought the declines in the second half was due to program timing and just a high base from last year or you would attribute it to macroeconomic trends?

Which declines are you speaking to?

Well, specifically in the EMS part of the business being down year-on-year. It looked like it was a tough comp. So was it kind of more program timing or would you attribute it more to macroeconomic factors?

You are talking about on a year-on-year basis?

Correct.

The majority of that is consignment. Looking at year-on-year performance, I'll round the numbers, which might not be exact, but if we divide it into the four sectors we report on: Digital print and retail is up year-on-year, Industrial Semi-Cap has seen a significant increase year-on-year despite a likely temporary downturn in Semi-Cap. Our network and storage business is also up for the year, while 5G wireless and cloud have declined for the year, though all of that decline comes from consignment. However, that sector has seen an increase in unit volumes.

That’s very helpful. Thank you.

You are welcome.

Thank you. We have reached the end of our question-and-answer session. I’d like to turn the floor back to management for any further or closing comments.

Thank you for your time today. Please reach out if you have any further questions.

Thank you. That does conclude today’s teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.