Jabil Circuit Earnings Call Nuggets: Restructuring Activities and Operating Margin Guidance

Jabil Circuit (NYSE:JBL) recently reported its third quarter earnings and discussed the following topics in its earnings conference call.

Restructuring Activities

Steven Fox – Cross Research: Just on the restructuring activities, I understand that you are limited on what you want to talk about, but is there any way we could sort of dive a little bit deeper into sort of some of the strategic rationale either by market or region? And then could you – Mark, could you put it a little bit in context relative to the some of the expansion you’re doing, whether, I don’t know whether it’s related to backtracking on any recent expansion or any shifts in some of the other strategic initiatives we heard about in the last six months? That will be appreciated. Thanks.

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Mark T. Mondello – CEO: Sure. Yeah, I don’t think it’s backtracking on anything recently. As I mentioned in the prepared comments, the last time we’ve, again, really taken a hard formal look at our structural costs and our foundation was six, seven years ago and since then we’ve evolved the Company, added a lot of manufacturing square footage. I feel good about the footprint we have, the foundation we have. I just think it’s really prudent – I don’t want to be having one-off charges and doing this every two years, every three years. Every so often having the appropriate hygiene to go in and optimize our structural costs makes a lot of sense. So as I said, strategically I think this is a good thing for us to be doing. We’ve got good line of sight of ’14 and early parts of FY ’15, and again, none of this has to do with anything that we’ve done in the last two or three years as far as expanding footprint.

Steven Fox – Cross Research: Then just secondly on – just looking at the waterfall chart you’ve provided with regards to Nypro. Is there anymore color you can add when we think about Nypro on a full year basis in terms of what kind of growth you are factoring in to the $0.16 to $0.22 in margins et cetera to get there and any synergies that you are expecting in the first year?

Mark T. Mondello – CEO: Well, I think that is a full year outlook. The illustration is for FY ’14, alright. So I think if you make some assumptions around what you think the packaging and healthcare revenues are going to be, and you look at the center point of our guidance there or illustration, it’s around $0.19. I think that’s a fair – I think it’s a fair range. I’d focus you on the $0.16 to $0.22 and when you think about – we haven’t even closed the deal yet. We’ve got all approvals. We’re excited about getting the deal closed, July 1. And then if unclosed, we’ll immediately start doing some of the things that need to be done and prepping it for growth synergies. But we’ve got a lot of work to do with the teams and positioning the companies for ’14, ’15 and beyond…

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