Beth Walters - IR Mark Mondello - CEO Forbes Alexander - CFO.

Ruplu Bhattacharya - Bank of America Merrill Lynch Matt Sheerin - Stifel Jim Suva - Citi Sherri Scribner - Deutsche Bank Mark Delaney - Goldman Sachs Herve Francois - B. Riley Sean Hannan - Needham & Company.

Presentation:.

Ladies and gentlemen, thank you for standing by, and welcome to Jabil's Third Quarter 2016 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you.

I would now like to turn today’s conference over to Beth Walters, Senior Vice President of Communications and Investor Relations. Please go ahead..

Great, thank you so much. Welcome to our third quarter of 2016 earnings call. Joining me today are our CEO, Mark Mondello; and Chief Financial Officer, Forbes Alexander. Our website provider had some technical difficulties today, so please be sure you have the June 15, 2016 third quarter financial results presentation.

If you are not seeing the 2016 presentation you may need to refresh your browser, with that this call is being recorded and will be posted for audio playback on the Jabil Web site jabil.com in the Investors section. Our third quarter press release, slides and corresponding webcast links are also available on our Web site.

In these materials, you will find the financial information that we will cover during this conference call. We ask that you follow our presentation with the slides on the website, beginning with Slide 2, our forward-looking statement.

During this conference call, we will be making forward-looking statements, including those regarding the anticipated outlook for our business, our currently expected fourth quarter of fiscal 2016 net revenue and earnings results, the financial performance for the company and our long-term outlook for the company.

These statements are based on current expectations, forecasts and assumptions involving risks and uncertainties that could cause actual results and outcomes to differ materially.

An extensive list of these risks and uncertainties are identified in our Annual Report on Form 10-K for the fiscal year ended August 31, 2016, and on subsequent reports on Form 10-Q and Form 8-K and our other securities 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. Today's call will begin with comments from CEO Mark Mondello and followed by comments on the quarter and guidance from Forbes.

We will then move on to questions and answers for all of our call attendees. Turning the call over to Mark..

Thanks Beth. Good afternoon. I appreciate everyone taking time to join our call today. As always I'd like to thank our wonderful people here at Jabil and express my appreciation for the continued focus on keeping our employees safe each and every day.

I'd also like to offer our thoughts and prayers to the victims and families of the mass shooting which took place in Orlando this past Sunday. The magnitude of this cowardly act of violence is hard to comprehend. It hit so close to home for so many especially those living in Florida. I'll begin today by addressing our third quarter results.

Our EMS business remained robust throughout the quarter in terms of both revenue and margin. While our DMS business faced much anticipated headwinds from declining product demand. Through it all, our team did a great job managing cost and executing the business at hand. This resulted in $0.17 of core earnings per share on $4.3 billion in revenues.

I am pleased with the results considering the current circumstances. Forbes will speak to our forward guidance and highlight more detail around our Q3 results during his prepared remarks. I’ll now offer thoughts as to what’s driving our business, starting with DMS and our Jabil Green Point business.

90 days ago our forecast suggests that a rebound of our handset business would occur in the June time frame. We now anticipate this to occur in August, based on the most recent near-term demand signals. Notwithstanding our team’s exceptional execution, the large scale demand fluctuations will adversely impact our fourth quarter in a significant way.

Please note that our Green Point team is aggressively managing cost. However, they’re also navigating very complicated product ramps which are critical to our customer. Jabil’s fourth fiscal quarter typically exhibits deep investments and under-absorbed capacity within our Green Point business. This year is no different.

However, the current decline in demand we’ve seen in existing products is more acute than in past years, thereby amplifying the negative impact to the earnings this quarter. The good news is as we sit today, new product ramps are going largely as planned.

In combining this data point with the hyper operating leverage of the Green Point business and our unchanged market share position with the world’s leading brand in the space, Jabil is well positioned for a snapback type recovery. We believe this recovery should begin in the next five to six weeks. Next, let me talk about our healthcare business.

Our healthcare business is accelerating. We continue to benefit from broad technology disruptions in the areas of pharmaceuticals, medical devices, and patient diagnostics. The hardware platforms and the ecosystems that support this space endeavor to be connected as well as optimize for cloud, data and analytics. This is all good news for Jabil.

Combining this with rapid advancements in wearable technologies and data science applications, we have a suit of catalyst for growth across products and services. Quite simply, our healthcare team continues to deliver on its mission of delighting customers while improving the way in people live.

Importantly, the acquisition of Nypro also brought forth the modest packaging business and offered a solid platform from which this business will grow. Through steady focus, our growth in this business has been up into the right for the past two years.

I am also happy to report that the integration of our Plasticos acquisition is ahead of plan, giving us sufficient access to the European packaging markets. The overall packaging space coupled with our ability to cross sell to the world’s leading brands we already serve makes this market highly promising for Jabil.

Moving on to our $11 billion EMS business. The team has done a wonderful job of increasing core operating margins throughout this year. Taking our structural margin profile from what was 2.3% to 2.4%, five to six quarters ago, the core operating margins solidly above 3%.

I firmly believe this new margin structure is sustainable throughout FY17 and beyond. The current marketplace offers technology and business model transitions, as well as secular trends that favored Jabil’s EMS business.

So in summary, the scale, proven experience and broad diversification of this legacy yet evolving business provide the stable foundation for our EMS business. So what is all this mean as we head into the first half of FY ’17. We have an EMS business which continues to perform to plan.

I believe this large scale business will grow 3% to 4% in terms of core earnings year-on-year when comparing the first half of FY ’17 to the first half of FY ’16. Our healthcare and packaging businesses remain strong. We anticipate their growth first half to first half to be in the range of 8% to 10% in terms of core earnings year-on-year.

So this brings us to our Green Point business. The financial results for the first half of FY ’17 will be dependent on the overall product demand in the mobility market. The Green Point team is outstanding and well positioned for the upcoming product ramps. Product ramps around new products.

Our Green Point business exhibits a rare and valuable combination of capability, capacity and what I would call optimal readiness at scale. Moreover, I’ll reemphasize that Jabil’s market share with out largest customer remains very consistent. This leads me to a final topic, capital allocation.

Management received Board approval to commence a $400 million share repurchase. This initiative tranche of share buybacks is a subset of our capital return framework for fiscal year '17 and fiscal year '18. Let me explain.

Under this framework we plan to return 40% of the company’s cash flow from operations to shareholders by way of dividends and share buybacks through fiscal year '18 with a cap not to exceed $1 billion in total for this time period.

To place this in appropriate context, this commitment doubles the magnitude of capital returned back to our shareholders on a percentage basis, moving from approximately 20% to 40% [ph] of cash flows from operations.

For the time being we plan to leave our dividend unchanged, therefore the entire increase in capital returned to shareholders will come in the form of share repurchases.

Our rationale for the significant increase of capital being returned to shareholders is underpinned by intense cost management, our confidence in sound levels of future cash flows and our commitment to shareholders. On a related topic, I'd like to confirm that management will host the Jabil Analyst Day on Tuesday, September 27th, here in Florida.

We're excited to share with you a deeper look into our business. We'll offer a comprehensive understanding of where we're headed, why we're heading there and how we'll get there. We'll drill down into the different businesses we steward and manage. Businesses where we believe Jabil exercises a clear parenting advantage.

In closing I acknowledge that the earnings in the back half of fiscal year '16 are disappointing, especially coming directly on the heels of a record first half. But I ask that we keep this in perspective. As I try to articulate in today's prepared remarks, we're dealing with a single issue of being an issue that today cuts deep.

The company is in great shape and we’ll get past these product demand issues that emanate from one sector of our business, a business that's quite broad. We're agile and a most cost effective operator of our business. Management will continue to care for our customers and take great care of our shareholders.

We will make Jabil the most technically advanced manufacturing service company and do so in a profitable manner. With that thank you and I'll now turn the call over to Forbes..

Thanks Mark. Good afternoon everyone. I’ll ask you to turn to Slide 3 for our review of third quarter results. Net revenue for the third quarter was $4.3 billion, a decrease of 1% on a year-over-year basis. GAAP operating income was $60 million while GAAP net income was $5 million. GAAP net diluted earnings per share were $0.03 for the quarter.

Core operating income excluding the amortization of intangibles, stock based compensation and restructuring costs was $87 million and represented 2% of revenue. Core diluted earnings per share were $0.17.

Turning to Slide 4 in our segment discussion, revenue for our diversified manufacturing services segment was approximately $1.45 billion, a decrease of 9% on a year-over-year basis representing 34% of total company revenue. The segment had a core operating margin loss of 1%.

Sequential revenue declined some $300 million and the resultant operating loss in the quarter are principally attributed to the declines in mobility product demand. Our electronics manufacturing services segment revenue was $2.85 billion, an increase of 4% on a year-over-year basis, and represented 66% of total company revenue.

Core operating income for this segment was 3.5%. Revenues exceeded expectation in the quarter primarily as a result of strengthened demand across our telecommunication's customers. While operational performance in our EMS segment continues to show strength. The core tax rate for the third quarter was 37%.

Turning to Slide 5, some other key metrics, we ended the quarter with cash balances of approximately $900 million. The quarter was a strong one from an operational cash flow perspective with $416 million of cash flow generated in the period.

Our sale cycle for the quarter was seven days, an improvement of six days from the prior quarter, cash flows from operations for the year-to-date approximate $500 million and we're well positioned for continued strong cash flows in our upcoming quarter and beyond.

Net capital expenditures in the period totaled $201 million with the full year capital expenditures estimated to be $115 million [ph]. Core EBITDA for this quarter was $261 million and for the nine months in the fiscal year we have now generated $1 billion in EBITDA representing 7.25% of revenue.

The core return on invested capital the quarter was disappointing at 7%, reflecting reducing levels of revenues and returns associated with demand for our mobility business. For the full fiscal year, our core return on invested capital continues to be estimated above our weighted average cost of capital and is expected to be 14%.

Now you can turn to Slide 7 where I'd like to discuss our business outlook for the fourth quarter and an update on the full fiscal year.

We expect revenue in the fourth quarter in the range of $4.15 billion to $4.35 billion and at its midpoint the decline of 9% on a year-over-year basis, reflective of continued demand reductions in our mobility business.

Core operating income is estimated to improve over the recent quarter and be in the range of $95 million to $125 million, with core operating margins in the range of 2.3% to 2.9%. GAAP earnings per share are expected to be in the range of a loss of $0.02 to income of $0.19 per diluted share.

Core diluted earnings per share are estimated to be in the range of $0.15 to $0.35 This is based upon dilutive share count of 195 million shares and the guidance at its midpoint assumes a tax rate for the quarter of 36%. It now means the effective tax rate for the full fiscal year is estimated at 29%.

As a results of this guidance core diluted earnings per share for the full year are now estimated to be $1.85. I'll now ask you turn Slide 8 where I'll review our segment outlook for the quarter.

Our diversified manufacturing services segment is expected to decline 20% on a year-over-year basis, with revenues estimated to be $1.5 billion, were relatively consistent with those of the third quarter. The electronics manufacturing services segment is expected to be consistent on a year-over-year basis with revenues estimated to be $2.75 billion.

We now expect total company revenue to be approximately $18.2 billion for the full fiscal year. The diversified manufacturer service segment is expected to be $7.2 billion, growth of 1% on a year-over-year basis.

The electronics manufacturing services segment is expected to be $11 billion in the fiscal year consistent with our estimates of earlier this year.

The year is reflective of strong operational performance within the segment resulting in operating margins solidly in the 3% to 3.5% range, an improvement of some 50 basis points over fiscal ’15 and a profile we believe is very sustainable. And finally I would like to make some comments with regards to shareholder returns.

As Mark noted in the prepared remark, our Board of Directors have approved the framework to allow us to return 40% of cash flow from operations via dividends and share repurchases through fiscal 2018. Most immediately a $400 million stock repurchase program has been approved.

With continued discipline and working capital management, we're very well placed to deliver an excess of $2 billion of cash flows from operations through fiscal 2018.

Reduced levels of capital expenditures should still afford us the ability to support growth initiatives and opportunities in the business this while maintaining in investment grade balance sheet. Thank you. And I’d now like to hand the call back to Beth..

Great, thanks Forbes. Before we begin the Q&A session, I would like to remind our call participants that in customary fashion, we will not address any customer or product specific question. Thank you so much for your cooperation. Operator, we're ready to begin the Q&A period..

[Operator Instructions] Your first question comes from the line of Ruplu Bhattacharya of Bank of America Merrill Lynch..

The first one for Mark. Mark I was wondering if you could talk about the portion of your Green Point business ex your largest customer.

How did that portion perform in the quarter and is there any reason to think that that portion can't continue to grow in the high single digits year-on-year?.

That part of our business performed well. So as I think about FY '17 I would say that portion of our business will grow, 8% to 10% is a fair way to look at that. .

Okay great, and then when we look at fiscal '17 typically the November quarter is a strong quarter for DMS margins.

Given what you're seeing in the mobility space do you think that in the November quarter you can get to above 6% in that from margins in DMS or is it too soon to say at this point?.

Well I think it's you know again, as I said in my prepared comments it's all going to be depending on the fall sell through on the mobile products. If the sell through occurs at the rate we anticipate sitting here today, I think that 6% is achievable..

Okay great thanks, and the last one from me for Forbes, after this CapEx spend in fiscal '16, just wondering how much revenue can your existing infrastructure support and in the past you've talked about free cash flow improving going forward, so can we think that free cash flow in fiscal '17 will be better than '16..

Yes, so the first part of that question, you know the footprint in class that we have in place can certainly support a revenue base of 20 billion to 21 billion, so we're well placed as we look out through fiscal '17 and '18 and that's you know referencing my comments and the reduced capital expenditures as we move forward here.

And then I think the second part was around your free cash flows. Yes we expect a strong year of cash flows both in '17 and '18. Coming off the year you know we saw strong quarter and I expect that to continue in the out quarters, very well positioned in that regard..

Okay, great, thank you so much..

Your next question comes from the line of Matt Sheerin of Stifel. .

Yes, thanks and good afternoon. I just had a question regarding the EMS business that you talked about being above expectations and it sounds like the margins should remain above the 3% level. What are you doing specifically to keep those margins up when we're seeing some of your peer margins actually come down a little bit.

Is it just ball blocking and tackling, is the product mix or other initiatives that you have going on?.

Yes, so I think it's a combination of all that. You know one thing to think about is, our EMS business today probably comprises, and this in rough numbers, 130 to 150 customers. So when I think about the diversification of that business, again a portion of our business is around running our factories efficiently.

We've got tremendous diversification and then when I think about the value proposition.

When I think about some of the acquisitions we made in the last 18 months and how that’s changed some of our value proposition, I think all of that is adding up to -- you know we started talking some time in mid fiscal year '15, and I don't remember the exact numbers but in early '15 the margins in that business were a hair above 2% and we started talking about different value propositions and solution selling in that and across the EMS business and today we're seeing the results and I think that's quite sustainable for FY '17..

Okay great, and on the healthcare business you talked about the profitability growth opportunities looking forward, but you don't yet break that business out specifically in terms of revenue, could you give us an idea for the revenue run rate and the growth rate that you're seeing organically in that business..

Like it's said on the call I think it's fair to say, we'll see that business year-on-year '16 to '17 going forward at a growth rate of probably 8% to 10% in terms of core [ph] income and yes we don't break that out, and as that business continues to gain more and more scale from a revenue perspective we'll give considerations about breaking that out..

Okay, thanks a lot..

Your next question comes from the line of Jim Suva with Citi..

Thank you very much, I have two questions, one's probably for CEO, second one for CFO, but on the first one, on the DMS if I look correctly at Slide 4, it's looks like it's operated at a loss for the quarter, maybe if I'm right or wrong on that can you confirm and it looks like if it is right that you have never had a loss in this segment before even with lower revenues.

So maybe if you can address a little bit about you know, Mark has something structurally changed in this, is it a lot more capital intense today, and what we kind of need to get to for a break even run rate or why wouldn't you just flex the model more.

And then maybe for CFO, Alexander, maybe you can -- Forbes if you can mention a little bit on the stock buyback, you'd mentioned I think the share count outlook you gave.

Am I correct that does not include you buying back any stock for this quarter or it does include some? Because I believe what you guided is actually the share count to be above what you just reported? Thank you..

Thanks Jim. I’ll take the first part of that and then I’ll turn it over to Forbes. So, in our DMS business and specifically our Green Point business, again we’ve put investments in and I’ll tell you that there is two -- I think there is two main catalysts are variables for 3Q which we just reported.

One is, again we took a hard hit in volumes that were abrupt and couldn’t get out of some of the variable cost. In addition to that, Jim, most of our cost allocation for our Chengdu campus today is allocated to the Green Point business and the way we run our business is in a very strict ADC accounting methodology.

And so our DMS/Green Point business fixed up a lot of that fixed cost capacity. And so we’ve made investments to expand the footprint, vis-à-vis fixed cost investments over the last 18 months or so.

The nice thing is if there ever were a downturn in the Green Point business to the DMS business long-term, that square footage and campus is very fungible. But those are the two variables that impacted Q3..

And Jim in terms of that share count. Yes, the guidance I gave, I assumed a normal accretion of shares, it does not assume any share repurchases at this time as we move forward here we’ll clearly take a view on that, any repurchases that would be made in the fourth fiscal quarter would be relatively modest given we’re a month through that..

Your next question comes from the line of Brian Alexander with Raymond James..

Thank you. This is Adam in for Brian.

Two questions, can you speak to how the EPS recovery and trajectory in fiscal ’17 should compared to the recovery in fiscal ’15 given the comments about a snapback expected in the next four to six weeks?.

So we’re not going to provide any highlights or guidance for the fiscal year, fiscal year ’17 that is. I think when you triangulate some of the comments you heard on the call today. So, I talked about EMS, so that’s put in context.

Keep in mind our EMS business I know everybody gets focused on our Green Point business and I understand the rationale for that. But our EMS business is $11 billion business. I talked about that year-on-year first half of ’16 versus first half of ’17 to be growing at 3% to 4% in terms of core operating income.

So I think that’s a good data point for your models. I talked about our healthcare and packaging business growing more like 8% to 10%, first half to second half in terms of core operating income.

And then when it comes to our Green Point business, again I mentioned during my prepared comments that it's really about what happens with phone demand and phone sell-through through the calendar year and our first quarter being September, October, November, is right in the middle of that.

So, in terms of in Q1, as we sit today, we do expect a snapback. Everything that we’re looking at in terms of demand, the product launches on new products that go in as expected and are on track, so, hence my comments about the snapback for Q1..

And is there any change to your longer term view on DMS targets set to 8% to 12% growth and 5% to 7% margins in light of the recent results in mobility? Or are those targets no longer valid?.

I think those targets largely hold, but we’ll talk more about that during the analyst meeting in the fall. One other data point I’d mention to you to help you triangulate the models is, I think during Forbes’ prepared comments, when he was talking and weaved it into the capital allocation frame work we’re talking about.

I think Forbes’ made mentioned that as we look at ’17 and ’18, we feel pretty good about overall cash flow from operations been in the $2 billion range.

So if you take a look at ’16 figure out the growth rates that we talked about the math is pretty straight forward on where we think cash flow from operations would be in ’17 and if you assume that ’17 will be slightly softer than ’18 you’ll be able to back into a reasonable model for FY ’17 in terms of core-op income..

And just quickly on that cash flow, can you just talk about how you’re thinking about CapEx and capital intensity going forward?.

Sure Adam, I’ll take that one. If you look over the last two years, if we take that as a proxy, we’ve actually invested about $1.8 billion into the business in terms of 90% of the cash flow from operations. So as we move forward over the next couple of years we certainly expect that to be well south of that as low as half of that.

So, significant drop off in CapEx and as I just said earlier, answered the question -- previous caller’s question, we have appropriate capacity in place, our footprint capabilities here to grow the company to a revenue seemed at 21 billion, so, yes, you're going to see a step down here as we move through '17 and into '18..

Your next question comes from the line of Sherri Scribner with Deutsche Bank..

I just wanted to ask on the buyback, what is your expectation for the pace of that buyback, is that something that you plan to accelerate as we move into fiscal '17, should it be front end loaded or should it be pretty consistent on a quarterly basis?.

I'd ask you to model that on a relatively consistent basis as we follow the cash flows here, as we move through the fiscal year. So, yes, that you think it that way and relatively modest here in the fourth quarter as we say, we're already amongst into the quarter here..

And then looking at the margin with the negative margins in DMS this quarter and the guidance for 4Q, are we going to move back into positive territory for the DMS segment in 4Q, would you expect us to be positive or do you think they'll be negative?.

No, I think there's an opportunity here to get it back, sail into breakeven and into the positive. I think as Mark said, we're in the process of an extensive ramps here and as we move into the August month, that's certainly affords us that opportunity..

Your next question comes from the line of Mark Delaney with Goldman Sachs..

The first question relates -- two part question related to the DMS guidance for the August quarter.

The first part, can you clarify, why exactly you're seeing a push out versus your prior expectations for the Green Point business? And then the second part is, can you help us bridge the 20% year-on-year revenue decline in DMS, I think you already said you expect your market share to be consistent, so, is that all over units or is there a pricing pressure that's maybe factoring into the 20% decline?.

So, I think they're tied, so, as I said in my prepared remarks, when we got together in March we saw some abrupt declines that were somewhat surprising to us that impacted Q3 and as we sit today we saw additional declines, but let me clarify, those declines are on existing products.

So, let's differentiate the fact that polls and what not in our DMS business have been slow and certainly more severe than -- or lack of polls than we would have expected. But again, I’d contrast that with our current ramps and all of our development work on new product platforms is going as expected.

I think those same comments apply to wider revenue maybe off and at this point when I think about market share and when I think about overall economics, nothing's changed..

And second question would be around, the talk about having lower CapEx as you go from here, does that limit your potential market share or how much revenue you would expect to generate in DMS in fiscal '17 or '18?.

If we put in perspective our CapEx the last couple of years has been somewhere in the $1.8 billion to $2 billion range. Going forward we're still going to invest in the business. So, when Forbes talks about the fact that CapEx is been pulled back, we still anticipate putting a 1 billion to 1.2 billion into the business over the next couple of years.

And so we've got plenty of capital to continue to invest, our intent will still be to support all of our customers. But what's changed here is quite simply we've made some substantial investments over the last 24 to 30 months and we intend to leverage those investments because we're really well positioned to do so over the next couple of years..

And just one last from me, I think Mark you said, you expect consistent share at your largest customer and last quarter the comment was Jabil's gaining share at your largest customer.

Am I reading too much into the wording change or has something actually changed on the market share?.

Yes, nothing has changed..

[Operator Instructions] Your next question comes from the line of Herve Francois of B. Riley..

I wanted to follow-up on, I think on your last call you had said that there were like six to eight new programs that took place in the fiscal second quarter that potentially could ramp in the May and June timeframe, can you give us an update on if those ramped and how those ramps are progressing? And then secondly I don't know -- I don't think you mentioned anything specific about new program wins in this fiscal third quarter that just wrapped up?.

So, I don't quite remember exactly which businesses or under which context you're talking about the program ramps, we've got a number of program ramps occurring and had occurred in our 3Q, largely around our EMS business. And we also have some program ramps in our healthcare and wellness business for sure.

And then we had just kicked off and started our significant large scale ramps towards the end of 3Q for our Green Point business that has escalated in and picked up momentum as we went into the fourth quarter.

And you're correct, we haven't talked about program ramps or programs wins during this call, that's not because they haven't occurred, we just didn't mention it during the call and I would say that the amount of share wallet and market share gains we’re picking up as we sit today is very similar to where we were 90 days ago.

And the nice thing is I think the financial results will reflect that as we move into fiscal year '17..

So I guess is the Green Point biz that has escalated here in the fiscal fourth quarter, is that escalation that you were talking about earlier that ramps significantly in the next five to six weeks?.

I think what I said and let me clarify, if I was confusing. So our Q4 typically is a quarter that we have under loaded fixed assets and fixed capacity and we have a substantial amount of what I would call OpEx investment and again this year is no different.

The issue is as we’ve had some demand cuts on some of those assets at the same time our costs are up through development in program ramps.

What I said in the prepared remarks is, is that, all of this correction that we've been talking about we see, we see to take hold probably just five or six weeks from now as both new products ramps and other demand comes back..

Your next question comes from the line of Sean Hannan of Needham & Company..

Just want to see if I could maybe get some perspective from you at a little bit of higher level, over the course of the last year you've drawn a lot of criticism in the degree of investments that you've made particularly in support of I think the mobility platform where we're getting this volatility.

We've also heard a tremendous amount about at least in some aspect share gains, as well as incremental diversification across all platforms with that main customer.

So as we stand here today and we've had two pretty notable estimate revisions downward for the year, just trying to understand where some of this diversification is coming through and ultimately when do we think we can at least see something that is where we have a model that's at least able to withstand this a little bit better than what we're seeing today? Thanks..

Hi, Sean, fair question.

I think you'll see some of that diversification coming through in the first half of FY ’17, but I'll tell you that with the diversification, so the diversification has occurred, there is a greater percentage of our fixed assets today that diversified across different products, different product families and products that are not connected directly to the mobile space.

But with all that said, if demand doesn't take on the mobility side again it has a fairly significant impact to earnings and financial performance. So that's what where we're up against at the moment..

There are no other questions at this time. I would now like to turn the conference back over to Beth Walters for any closing remarks..

Great. Thank you so much everyone for joining us on our fiscal Q3 earnings call. We will look forward to having conversations and meeting with you over the next several months and seeing you here on September 27 for our Analyst Meeting. Thank you again for joining us and we'll talk to you soon..

Thank you for participating in today's conference. You may now disconnect and have a wonderful day..