Ladies and gentlemen, thank you for standing by, and welcome to Jabil's First Quarter Fiscal Year 2018 Earnings Conference Call. [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.

Thank you, operator, and welcome, everyone, to our first quarter of fiscal year 2018 earnings call. Joining me today are our CEO, Mark Mondello; and our Chief Financial Officer, Forbes Alexander. This call is being recorded and will be posted for audio playback on the Jabil website, jabil.com, in the Investors section. Our first quarter press release, slides and corresponding webcast links are also available on our website. 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 second quarter of fiscal 2018 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 outcomes and results to differ materially. An extensive list of these risk and uncertainties are identified in our annual report on Form 10-K for the fiscal year ended August 31, 2017, 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 Mark, with his comments on our outlook for the business in fiscal 2018. Forbes will follow with comments on our first fiscal quarter results and guidance for our second quarter of 2018. Following our prepared remarks, we will open it up to questions from our call attendees. I'll now turn the call over to Mark.

Thanks, Beth. Good afternoon. I always appreciate everyone taking time to join our call. I'll begin by thanking our folks here at Jabil for their continued dedication and commitment. I'd also like to extend my sincere gratitude to each and every employee here at Jabil for making safety their personal priority. You see, keeping people safe is Job 1 in all we do. And finally, I'd like to wish each of you a peaceful and blessed holiday season. Now let's take a look at our first quarter results. The quarter was excellent as the team delivered $227 million in core operating income on revenues of approximately $5.6 billion, resulting in core earnings per share of $0.80. For me, these results further illustrate the strength and diversification of Jabil's income, especially when paired with our outlook for the balance of the year. I'm pleased with the quarter and the nice start to fiscal 2018. As customary, Forbes will provide more detail around our results during his prepared remarks. I'd now like to address current business at hand, starting with our EMS segment. Jabil's EMS team is driving a progressive transformation, advancing their methods in which they serve a broad range of end markets. Markets such as energy, industrial, print and retail, automotive, semi-cap equipment, networking telecom and data storage. A key element of the transformation is the deliberate pivot towards higher-margin businesses, as the team leverages engineering excellence and deep domain know-how day in and day out. In short, this is what we refer to as EMS 2.0. Clearly, our EMS value proposition has taken hold. Our team has done an outstanding job performing to plan, seeing core operating margins approach 4% for the year, while showing revenue growth of 3.5% year-on-year. It's good news all the way around. Next, I'll…

Thank you, Mark. Good afternoon, everyone. I'd ask you to turn to Slide 3, where I'll review our first quarter fiscal 2018 results. Net revenue for the first quarter was $5.6 billion, growth of 9% on a year-over-year basis. GAAP operating income was $146 million, with GAAP net income of $64 million. GAAP net diluted earnings per share was $0.35 for the quarter. Core operating income, excluding the amortization of intangibles, stock-based compensation, business interruption, restructuring and related charges, was $227 million, and represented 4.1% of revenue. Core diluted earnings per share were $0.80. Now turning to Slide 4, I'll discuss our first quarter segments. Revenue from our Diversified Manufacturing Services segment was $2.7 billion, an increase of 13% on a year-over-year basis and in line with previous guidance. This represented 49% of total company revenue. Operating income for the quarter was 5.2%. Our Electronics Manufacturing Services segment revenue was $2.9 billion, an increase of 6% on a year-over-year basis and represented 51% of total company revenue. Operating income for this segment was 3%. Net capital expenditures for the first fiscal quarter totaled $198 million. Net capital expenditures for the full fiscal year remain on track with our previous expectations of $700 million. As anticipated, our first quarter was characterized by expansion of working capital and as a result, cash flows used in operations were $54 million. Cash flows from operations for the full fiscal year continue to be expected in excess of $1 billion. Our core return on invested capital for the quarter was 21%, an improvement of some 340 basis points on a year-over-year basis. Core EBITDA for the quarter was approximately $412 million, representing 7.4% of revenue. Our total debt to EBITDA levels at the end of the quarter were 2x, while cash balances were $746 million.…

Thanks, Forbes. As we begin our Q&A session, I would like to remind all of our call participants that, in customary fashion, we will not be able to address any customer or product specific questions. So, thank you very much for your cooperation in advance. Operator, we're ready for the Q&A session.

Certainly [Operator Instructions] Your first question comes the line of Adam Tindle of Raymond James.

Okay thanks and good evening. Just wanted to start on your fiscal 2018 EPS guidance. It seems to imply a similar shape as last year in terms of first half versus second half percentage weights of total EPS. Maybe just help us understand how you're thinking about the cadence of this year versus last year, because I think, if we think about last year, about 75% of total DMS profit dollars came in the first half of last year. And I think there was some hope that this year might be a little bit more linear. So, any comments on the cadence of first half versus second half? Thanks.

Hi, Adam, thanks for the question. So, I don't know if you're speaking solely for the whole company or one of the segments. I think, if you looked up - and I don't remember the exact numbers, right, but in fiscal year 2017, our first half was about $360 million, I think, in profits, and the first half this year was quite a bit stronger, over $400 million, if we hit guidance as suggested today. So, kind of first half to first half 2017 to 2018 will probably be up in the ballpark of 15%, and then, second half of 2017 to second half of 2018. Again, if you kind of take the $2.60, extrapolate out what the back half looks like, second half to second half, I think, also, will be up about 15%.

Okay. That's helpful. I wanted to ask also, Mark, on the capital return program. I understand you're committed to the two-year return program. You certainly delivered thus far. You've also outlined some exciting growth opportunities ahead. So, as you think beyond the fiscal 2018, when this commitment ends, how are you thinking about the balance between investing in these new areas versus returning cash?

So, I'm always bullish on investing, and cash flows, when we - I think we put this plan in place in June of 2016, we did so because we felt like over the two-plus years, we had enough cash flow to make investments required, which for me is kind of a Number 1 priority, and still return a substantial amount of our cash flows to investors. We'll have conversations with our board, both in the upcoming January board meeting, and then, the April board meeting. And as we move through the year, either on the March call or the June call, you can expect additional color and detail around what capital returns might look like in fiscal year 2019 and 2020.

Okay. And just to clarify, for fiscal 2018, I think, before, you were talking about CapEx in the neighborhood of $700 million, but it's annualized a little bit higher than that. Is $700 million still the right way to think about fiscal 2018 CapEx?

Hi, Adam, this is Forbes. Yes. $700 million is where we're targeting. A little bit heavier in the first quarter, but it's following a similar pattern to last year. So, $700 million. I think, I'd just also add, in terms of the overall cash flows, what we outlined at our Analyst Day, just over a year ago, was expectations generate about $3.5 billion of operational cash flow over fiscal year 2017, 2018 and 2019. So that's still very much in play. So, I think we have plenty of liquidity, plenty of cash generation as we move forward here to both support shareholder returns and investments for growth.

Got it. Thank you.

Your next question comes the line of Steve Milunovich, UBS.

Thanks. This is Tejas Venkatesh on for Steve Milunovich. I want to ask about the Green Point and your efforts to diversify there. In our supply chain checks, we constantly hear of new Asian competition to deliver casings. How concerned are you? And then, maybe you could speak to the diversification efforts there?

We're always concerned about competition, but we have been for the last 25 years. So - and that's kind of across the whole company. I don't know. I'd just be careful in kind of maybe what you hear, and try to differentiate kind of fact from fiction. But as I said in my prepared remarks, I think we're doing an awfully good job across our Green Point business, in terms of diversification. And I forget the words I used, but that's in technologies and different hardware products and platform.

And across customers? And new customers as well?

Yes. New customers for sure.

Okay. And as a follow up, could you talk about what drove strength in EMS this quarter? There's a lot in there.

Well, we had good strength in terms of revenue. I would suggest that we had slight weakness for EMS in Q1. We thought Q1 EMS would be in 3.1% to 3.2% range in terms of op margins. I think we printed a 3.0, and that was due to we've got a lot of moving parts as you heard in my prepared remarks, and I didn't cover all of them. But the end markets and the businesses inside of EMS encapsulate a large number of end markets, and probably, I don't know, 200-plus customers. So overall, really pleased with the quarter. We had a lot of product transitions, product ramps. I would say that op income was maybe off by 10, 20 basis points, which is $5 million, not overly concerning. And areas where we continue to see near-term strength are areas of automotive, energy, semi-cap equipment, and various areas of industrial.

Your next question comes from the line of Ruplu Bhattacharya, Bank of America Merrill Lynch.

Hi. Thanks for taking my questions. The first question is on packaging and health care. Mark, I think you talked about 20% to 25% growth over the next three years. Is that an acceleration from what you had said in the past? I think, last quarter you said 20%. So, are the revenues in health care and packaging growing faster than you thought? And then, can you also comment on the margins in that space? Are they well within the 5% to 7% range that you have for DMS?

Thanks for the question. So, just to be sure we clarify, what I've commented on in the last three calls, inclusive of this call, is that from, say, fiscal year 2016 through fiscal year 2019, we see packaging and health care growing at a rate of, say, a 20% CAGR. I think in my prepared remarks a few minutes ago, I said it was 20% to 25%, and that will - we have confidence in that through fiscal year 2019. And again, it's just the overall strength of the business, the disruption of both of those businesses and I think we continue to be very well positioned. In terms of margins, we just - at this point, we just don't break that out as my belief would be as health care and packaging continue to be more and more material, at some point, we might break out those businesses or those sectors.

Okay, thanks for the color on that. You said your EMS margins are pretty much on line to get to 4% this year. When we look at the overall guide for the next quarter, it would imply that the DMS margins are a little bit weaker. Is there - is that related to the cost challenges you had in the September quarter? Any color on the DMS margins next quarter would be helpful.

No. I wouldn't read too much into that. In my prepared remarks, I think I said something about EMS approaching 4%. So, for the year, I think we're in pretty good shape to hit 3.9%, 4% for the whole fiscal year 2018. If you take our guide, we've kind of guided revenue, but we haven't really guided specific percentages. But I would envision Q2 of 2018 versus Q2 of 2017 to be very close in terms of op margin. I didn't talk about it too much on this call, but the last call I talked about EMS kind of top line bottom line year-on-year 2017 to 2018 growing about 3%. We're seeing revenue maybe slightly stronger than that. I think, today, I said revenue would grow closer to 3.5%, and the shape of the year would be similar to last year, and that still holds.

Okay, thanks for the color on that. That's helpful. And last question for me, for Forbes, I think you've guided the tax rate for next quarter to 23% versus 26% guide for this quarter. Anything happening on the tax rate? And how should we think about the tax rate for the full year?

Yes. So, for the full year, Ruplu, I'd ask you to model 26% type rate. So not dissimilar to what I said 90 days ago. What we're seeing is a shift in the mix of earnings from tax advantaged areas quarter-by-quarter, a little bit different than I expected at the start of the year. So, 23% in Q2, and then you'll see it come back up to that 26%, 27% in the second half of the year, averaging out at 26% for the full-year.

Okay, thanks and congrats on the quarter.

Thank you.

Your next question comes from the line of Steven Fox, Cross Research.

Hi, good afternoon. I was wondering if you'd talk a little bit more about, you mentioned in your prepared remarks, Mark, about some specialized solutions that are helping growth in CPS and Nypro. Is there any other color you can provide exactly what you meant by that? And then, I had a quick follow-up.

Well, it's certainly around sensors. It's certainly around the digital platforms we're creating. It's certainly around some material sciences, and it's certainly around the way that we're running the factories, both with packaging and health care. I think that the one good news, Steve, on kind of a macro basis is our observations are that the overall health care wellness area is going through, again, a bit of a disruption, where people are just adamant about what I would say maybe fair health care services at a much better price point. And that leans perfectly into kind of what we do for a living if you combine our capabilities with our cost structure and our solutions. On the packaging side, we're seeing, again, a lot of disruption going on. If you think about somebody like Amazon coming into the retail space, you think about how Millennials are acquiring just about everything. Intelligent packaging and then, the way the exterior of the package looks, the shape of the package, the protection of the package, that's all changing, and I think, again, in large favor to what we do really, really well. So again, for the last 2, 2.5 years, we've been banging the drum pretty hard and pretty bullish in those two areas. And again, that's still holds today, and we think will hold certainly through fiscal 2019 and hopefully through fiscal year 2020.

Great. That's really helpful. And then, just as a quick follow up, a little bit embarrassed to ask this, since I was so bullish on the EMS margins last quarter. But the slight disappointment in the EMS margins, you're saying that it's nothing unusual during the quarter. It was just a little bit here, a little bit there, and you wouldn't call out anything specifically. Is that clear? Is that the right way to look at it?

Yes. I wouldn't worry about that. It's $5 million, $6 million, and not to make light of $5 million, $6 million, but all of that business, if we kind of shake it up and looking at it holistically, is in good shape for the year.

Okay, thanks so much.

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

Yes, thanks and good afternoon. Just a question regarding the DMS guidance for up 25% or so year-over-year. That implies better than seasonality if you look historically. And I know there's product cycle going on right now. Just trying to figure out how much of that is due to specific product cycles or the diversification that you talked about, particularly at Green Point, where you're seeing opportunities across customers in product sets.

Yes. So, I think it's a combination of maybe a change in - maybe a change in what historically has been seasonality in parts of that business, and the other part of that is health care packaging, and then, kind of staggered overall program launches, as well as the diversification. So, if I try to think about the strength, I think it cuts across all three or four areas. The DMS business today, and this is what gets kind of tricky and maybe frustrating for the investment community, is the business, it's just so hard to kind of compare it even to two years ago because our DMS business, the way it's shaped and looks today, as well as the overall content of that business, it's just - it's changed significantly, and I think it will change even more over the next two years.

Okay. That's helpful. And just a follow-up for Forbes. Regarding the guidance of roughly $2.60 in EPS for fiscal 2018. Does that include or assumption for the buyback, the remaining $360 million or so in share repurchases?

It does, Matt. Yes. Assume that, that $450 million is consumed by the end of August.

Okay, great. Thanks a lot, and happy holidays.

Thank you.

Thanks Matt.

Your next question comes from the line of Amit Daryanani, RBC Capital.

Thanks a lot. Thanks for taking my question guys. I guess two for me. One, maybe to follow-up on Matt's question. The DMS guide that you guys are implying for Feb is down less than what it typically is. A lot of companies in the supply chain, I guess, at our Big Apple exposure have talked about seasonality kind of getting pushed out one quarter. For Mark, I mean, do you think there's a point where, maybe, the May quarter numbers in DMS will be down more than what historical seasonal patterns are because of that push out? Or that doesn't seem to be the case from what you guys see so far?

Well, you're right. The decline - if you look sequentially Q1 of 2017 to Q2 of 2017, and you compare that Q1 of 2018 to Q2 of 2018, our guide would suggest a much smaller decline, that's true. I just think, again, when you think about our diversification, I think you got to think through when you're talking about market data, market data according to what? What customers? What products? What end markets? Again, our DMS business overall continues to become more diversified. It does encapsulate health care and packaging. And then, within, say, the mobility space and the consumer lifestyle space, our business, again, continues to change both based on what we're doing internally, products that we're on, and then, some external changes to the shape of the end markets. So again, it's just - I hate to say this, but it's true. It's just - it's getting harder and harder to compare kind of year-on-year.

Fair enough. I guess, just on the EMS side, to shift gears. You mentioned a couple of times, I guess the way you ran the math was op margins and EMS will go from 3% in November to, call it, 3.7% in Feb. I think you said it will be flat year-over-year, if I'm not mistaken. Just help me understand, how do you get to that margin expansion? Because I don't think revenues are going to go up that dramatically for you guys, in the Feb quarter, on a sequential basis. So, what enabled the 60, 70 basis points of margin expansion, when the revenue tailwind isn't there?

I'll try to think through the math in my head. So, stick with me. I think we just printed 3% in EMS for Q1. I said that Q2 of 2018 would be similar to 2017, so what we'd be looking at is 3.6%, 3.7% on the op margin line. If you compare what we just said in terms of our guide for Q2 of 2018 for EMS, the revenue looks awfully familiar to the revenue in Q2 of 2017. So again, as you can imagine, our teams running this large, $11 billion-plus, $12 billion business. There's a lot of moving parts in terms of cost and investments. So that's all it is. In terms of the strength, the bullishness of the business, I bring it back to 3, 3.5 years ago, we were running that business at 2%, 2.5% margins. And this year we're going to be bouncing right up against 4%. So again, I wouldn't read too much into the quarter-on-quarter numbers for the year. That business remains very healthy.

Got it. And just a final one, I'll cede the floor. Forbes, how do we think about your tax rate with the potential passage of tax reform at this point? Is there a way to think about what the structural rate could look like, if this tax bill gets through?

Yes. So structurally, little impact if we do see these changes suggesting to on the corporate rate, 21%. We're not a big U.S. taxpayer. Most of our operations are out of the country. So, no structural change there. I think, where the opportunity lies, is when we look at cash repatriation on a forward-looking basis. So clearly, all in favor of that and a territorial system. And so hopefully, we'll hear more about this in the coming weeks.

Thank you.

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

Thanks so much. You gave a lot of details on the presentation and questions. So, I guess I'll switch and not focus on DMS, but rather on EMS. It looks like you had a better-than-expected quarter for the November quarter with, I think, revenues were up around 6% year-over-year. Can you give any insights about kind of what end markets or where the strength in EMS came from? And then, it's interesting to note, if I read your slides correctly, it looks like the February outlook is for up 1%. So, a bit of a deceleration from this quarter. Can you kind of help us bridge the strength to a bit of a deceleration?

Sure, Jim. So again, so many moving parts as I've said before, kind of hard, always, to put this in 90-day buckets. If I think about commentary for EMS the last couple of calls, been pretty bullish on the growth rate, both top and bottom line. Took the revenue number up a little bit higher. So, I think last call I said that EMS top line would be up around 3%. I think, in today's prepared remarks, I said that might be closer to 3.5%. In terms of 1Q, it's just the business performed extremely well. Again, the reason we were off, maybe, 10, 20 basis points on margin is a lot of product ramps, transitions, which drove the strength in revenue. And you're correct, I think, 1Q of 2018 compared to Q1 of 2017, it was up about 6%. And then, Q2 of 2018, Q2 of 2017. It's up, I would just say, marginally to flat. But if I take a look at kind of the first half of 2018 versus the first half of 2017 and you blend all that together, I think EMS will be up a little over 3% first half to first half. And then, the back half, I would imagine, would be about the same. And again, aggregate all that up, I think revenue for the year will be up around 3.5% for EMS as a whole. In terms of where we're seeing strength, I commented earlier. Certainly, automotive energy a bit across some of our industrial businesses, and then semi-cap equipment, and I could add 3 or 4 other sectors on to that, but it's fairly modest so that's right. I think some of the strengths coming from, if I look at it, on an annual basis.

Thanks so much for all the details and happy holidays.

Yeah, you as well Jim.

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

Hi, it's Adrienne Colby for Sherri. Thanks for taking the question. I was wondering, within the EMS segment, if you could comment on the trends you're seeing in legacy storage and server business as well as trends in your cloud-related business?

I would say that we're seeing areas of kind of neutral to softness across some storage platforms. In terms of overall kind of hyper cloud and cloud data storage, certainly stronger than in the areas of kind of legacy data storage, if that's helpful.

It is. Thanks. And as a follow up, I was wondering, in the quarter, you talked about opening two new Blue Sky innovations, I think one in Singapore and one in Italy. Just wondering if you could talk about the strategy for those centers, how you're - how many you're planning to have. What the startup costs are? And your expectations in terms of areas that these centers will be focusing on?

Probably won't get into that detail. I would say that as a corporation, we - our Blue Sky Innovation Center for the - for kind of the globe is in San Jose. We had such a great acceptance in reaction to what we're doing in San Jose. That various business sectors have opened up what I would call kind of working development centers in different geographies, so that's all that is, whether it be Italy, whether it be Spain, Singapore. So, the main innovation Blue Sky Center for customers, that kind of holistically captures the theme and the pedigree of the whole company is San Jose. The other, what we'd characterize as Blue Sky centers are really more working R&D labs, and the work that they're doing cuts across various sectors of the business.

Thank you.

You’re welcome.

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

Yeah, thanks. Good evening folks. Nice work on the results and the guide here. So, really just one question for me. I think that, Mark, you had referenced some expansion of services that you had in the Green Point business. So, I wanted to see if there is a way you can expand upon the nature of those services and the nature of application.

I'll try. So, I think the reason I put that in my prepared remarks, Sean, is differentiating Green Point from the rest of DMS. I think that there is a lot of conversation going on around Green Point being maybe expert and heavily weighted towards mechanics and machining, precision mechanics, to be specific, and that's largely true. But as we expand across different product platforms, as we expand across customers, as we expand across different end markets within Green Point, we're seeing a lot more intricate assembly coming in to complement the precision mechanics, and that's really good for us. We're very, very good at precision mechanics, and - but we have a long, long history of complicated intricate assembly work, so the two of those complementing each other is a good story for Jabil.

Okay. So, from an application standpoint, though, can you expand on that a little bit more in terms of the relevance to, let's say, handset markets or further expansion into other types of markets and products?

Yes. So, I'll just give you some hypotheticals. You know we play in the handset space, and I won't say anything more than that on the handset space. But you think about what's going on with augmented reality, virtual reality, you think about what's happening with the density and the package miniaturization with optics and cameras, and then we have a whole - we have kind of a whole - people forget about our Consumer lifestyle business, and people also forget about the fact that there's a lot of other mobile products out there other than handsets. So that will give you kind of an idea of the different areas we're playing in.

That’s very helpful. Thank you.

Have a great holiday.

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

Yes, good afternoon. Thanks for taking the questions. I guess, first question, just trying to get a higher-level perspective, Mark, what you're seeing in terms of macroeconomic trends. I know you talked a little bit about what you're seeing in EMS and maybe some broader industrial pickup. But if you could just talk, maybe, any differences geographically? Or have you seen kind of improved global GDP-type of an environment. Just curious of your thoughts there.

Sure, Mark. One thing I feel good about is, whether global GDP is 2.5, 2.8, 3, 3.2, whatever the number might be, I feel really good about the fact that our earnings, if you go off of the basis when we delivered whatever it was, $1.85, $1.86, extrapolate that to last year at $2.10, $2.11, our outlook for this year being $2.60, and next year, something greater than that. We're probably at 4x or 5x global GDP. I feel really, really good about that. In terms of overall macro, as we're traveling around and around the road a lot, it feels like the economy is getting better. I would say that maybe not across the board, I would say we've got some kind of long in the tube legacy businesses that, based on technologies and things like that are maybe slow to slightly declining. But certainly, across the U.S. in our travels, parts of Europe, a little bit in Japan, things just feel a little better. I think we'll see what happens with this tax plan. I don't think anything - I wouldn't think of a significant step function up, but maybe an upward slight glide path over the next couple of years feels about right. And if that happens, that would be outstanding, because the last number of years, we've been fighting some interesting headwinds and getting a little wind in our back for the next couple of years would be great.

That's helpful. I had a follow-up question, just on inventory. I know it was up and I think days or maybe similar, but I think inventory dollars were up and just trying - if you could provide some context for why inventory increased.

Yes. You're correct. It was up, I think, $250 million, $300 million. No particular reason. Just if you think about the way our quarter aligns with calendar quarters and such like and Consumer buying season, if you will, so we'll see that correct itself as we move through second quarter, i.e., contract with the quarter end on November and then you still got pull-through in sales in the December period. It's not untypical.

I think the other thing - I think the other thing there, Mark, if you just kind of step back and look at everything, if you look at - we've been - certain parts of the component market have been tight. We see that starting to loosen up a little bit. So, we made some buys a little bit early to be sure that we had continuity of supply, but you take a look across the whole company in Q2 of 2017 versus Q2 of 2018, revenue is up quite a bit. And if you just kind of index out to the back half of the year and you look at what our revenues might be relative to the back half of 2017, knock on wood, they'll be up as well. So, I think all that plays into inventories being a little bit fluffy at the moment.

If I could just ask a third one. I know NAFTA has been under negotiation for a while, and hasn't been renewed. I mean, do you guys have any conversations about that with your customers? And any kind of contingency planning? Just sort of curious what you guys would do there. Thank you, very much, and happy holidays.

Thanks Mark. At this point, no. It - we'll see if that becomes real. I - let's just wait and see what happens there. That would be an issue for a lot of industries and a lot of companies. So, we'll see how that goes. But at the moment, there's not a lot of real conversation going on around that.

Your next question comes in the line of Paul Coster, JPMorgan.

This is Paul Chung on for Coster. Thanks for taking my question. So, just one quick follow up on Green Point. So, given the ramp up costs are now behind you, can you quantify any scale benefits you expect as we move through the year? And respective impact on margins? And how that carries over to the next product cycle?

I would say that we addressed and talked about some of the cost and ramp issues we had going back to the July, August and part of September. Those were all largely behind us, and I think we're in relatively good shape across both DMS and Green Point for the balance of the year.

Okay. And then, how should - just quickly on, how should we think about stock comp for the rest of the year after the big step up in 1Q and, also, your restructuring charges for the full year?

Yes, let me handle the restructuring charges first. $11 million in Q1, we expect about $35 million for the full year, so $24 million. Probably, I would say, most of that would be the second half of the year, based on current expectations. In terms of stock comp, that will move back to more normal cadence of around $15 million, $16 million a quarter, starting in the second fiscal quarter.

Thank you.

We have reached our allotted time for questions. I would now like to turn the floor back over to Beth Walters for any closing remarks.

Thank you so much, everyone, for joining us today. Please feel free to reach out with any follow-up questions on the financial results, or clearly, on the outlook of the company. And I'll just reiterate, Mark and Forbes' comments of happy holidays to everyone and enjoy the season. Thank you.

Thank you for participating in today's conference. You may now disconnect.