Greetings, and welcome to the Jabil First Quarter of Fiscal Year 2021 Earnings. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Adam Berry, Vice President of Investor Relations.

Good morning, and welcome to Jabil's first quarter of fiscal 2021 earnings call. Joining me on today's call are Chief Executive Officer, Mark Mondello; and Chief Financial Officer, Mike Dastoor. 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 our Investor Relations section. At the conclusion of today's call, the entire call will be posted for audio playback on our website. Before handing the call over to Mark, I'd like to now ask that you follow our earnings presentation with the 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 second 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 in our Annual Report on Form 10-K for the fiscal year ended August 31st, 2020 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, it's now my pleasure to turn the call over to Mark.

Thanks, Adam. Good morning. I appreciate everyone taking time to join our call today. I'll begin by offering my sincere gratitude to all of you here at Jabil, and thanks for hanging in there during these trying times, while making safety your number one priority. At Jabil, we're fundamentally in the people business. The manner in which we care for and accept one another is truly what makes us who we are today. And again, thank you. Let's please turn to Slide 5, where we'll look at our results for the first quarter. The quarter came in well ahead of expectations, as the team delivered core operating income of $365 million on record revenue of $7.8 billion, resulting in a core operating margin of 4.7%. The 4.7% margin is a 100 basis point increase year-on-year Q1 2021 to Q1 2020, which as a reminder, was a pre-COVID quarter occurring in September, October and November of 2019. Moreover, I'm really pleased with the financial makeup of the quarter. Well-balanced contributions from our EMS and DMS segments, supplemented with substantial upsides from our cloud computing, connected devices and mobility sectors. Q1 overall gives us excellent momentum to what looks to be another outstanding year. As is customary, Mike will provide more detail around our Q1 results during his prepared remarks. Moving to Slide 6, you'll see a terrific illustration, which underscores the effectiveness of our team. When I look at the slide, what gets me most enthused is the fact that we get one plus one equals three in so many ways across our two business segments. One example of this are the financial goals and objectives for each segment. Our DMS segment focuses on expanding margins, while offering reliable cash flows, while our EMS segment focuses on expanding cash flows while…

Thank you, Mark, and good morning, everyone. Q1 was an exceptional quarter. The team delivered record results on three fronts: revenue, core operating income and core diluted earnings per share. We saw broad-based strength across both segments, which allowed us to deliver financial results that came in above what we expected in September. Our overperformance in the quarter was largely driven by three factors. For starters, our multi-year journey to both diversify and reposition the Company continues to pay dividends. During the quarter, our healthcare, automotive and semi-cap businesses all performed at or near the high end of our expectations for the quarter. Consequently, these results alone would have put us near the top end of our guidance range for Q1. On top of this, during the quarter, a few of our highly regarded strategic customers in our mobility, connected devices and cloud businesses experienced unexpected high levels of demand in Q1, which caused revenue to come in much higher than expected. Clearly, our value proposition across key end markets continues to resonate with customers as a result of our unique set of capabilities in design, engineering and global supply chain and manufacturing. And then finally, our interest and tax expense came in better than expected. The proactive steps we've taken over the last few quarters to bolster our balance sheet afforded us the flexibility to efficiently access the debt capital markets, thereby reducing net interest expense during the quarter. The compounding effects of higher-than-expected revenue and the associated leverage, along with lower interest and tax expense, allowed us to deliver record revenue, core operating income and core diluted earnings per share in Q1. With that, I will now review our Q1 financial results. Net revenue for the first quarter was $7.8 billion, $800 million above the midpoint of our…

Thanks Mike. As we begin the Q&A session, I'd like to remind our call participants that per our customer agreements, we cannot address any customer or product-specific questions. We appreciate your understanding and cooperation. Operator, we're now ready for Q&A.

Thank you. [Operator Instructions] Our first question today is from Adam Tindle of Raymond James. Please proceed with your question.

Okay, thanks. Good morning and congrats on the strong results and outlook. Mark, I wanted to start on the outlook, the $4.60 for the full-year and go into this question with acknowledging you've done what you said you're going to do, have a very good track record, but I think that incremental $0.60 implies an increase in the back half of the fiscal year. I know you're getting some benefit in the first-half, but still an increase in the back half of the fiscal year. And just wanted to ask what gave you the confidence to raise that far out? Imagine we're going to get some investor questions with the context that mobility seems like an unusual potential cycle, uncertain ending. There's something different about this fiscal year level of visibility that you had versus years passed where ending of the cycles has surprised the supply chain?

I don't know that I look at a timeframe change. I mean, we - in September, we talked about the full-year at $4. So, we felt compelled to address the $4 or a change to it. So I don't think anything has changed in terms of confidence of the business relative to September. If I break the answer up into a couple of things: one, we - we've been on the six, seven-year journey, where we've really focused - we focused a number of years on driving the top line, because our strategic belief in a business like us when we're a service business, the more diversified we become, the more resilient, the more predictable, the better the Company is. And so, it was all hands on deck. And what's interesting, Adam, about that is the proof is in the pudding. One could say, geez, you guys chased a lot of growth. That's true, but we went through a period of time from fiscal 2016 to - I think even fiscal 2019, maybe fiscal 2015 to 2019. We're through a lot of the period of time when we were diversifying the margins of the corporation at an enterprise level were around 3.5%. And I would contend that we must have done a pretty good job of the diversification, not only diversifying the different end markets, but the quality of - the quality of revenue we brought into the Company, which has allowed us largely to come into this year and offer $4 a share. The second part of your question in terms of the $4.60. I think what I just said gives us confidence in the $4.60. We had a midpoint of $1.25 for 1Q. We delivered a $1.60. So you take a look at the spread on that to…

Okay, that's very helpful.

Something else I think is worth noting. We thought long and hard on how do we - we felt compelled to update the year, right? And because we started with a look to the year in September. So, we thought long and hard on how conservative do we want to be and we just kind of laid out the numbers and we went over this multiple times. And to us, $4.60 feels like a good number. But I think what's really, really important for this call is to suggest that as a leadership team, that $4.60 and the 4.1% that we - that we've now put out there is our outlook for the year. I think a very important element of that is the $4.60 and the 4.1% are now kind of foundational for us to build off of for fiscal 2022. So I think that's - I don't think that point should be lost.

That's helpful. Yes, that definitely doesn't stop there. Mike, I wanted to just on a follow-up on CapEx. Mobility is upsiding, forecasts are increasing. In the past, as this happened, CapEx crept up over the course of the year. Just curious, you talked on the last call about keeping CapEx flattish year-over-year. I think you maintained your free cash flow guidance this year. What's enabling this upcycle to be different than previous cycles, where CapEx increased? How can you maintain share, if you don't increase capacity?

Adam. That's a good question. I think we've been - I'm extremely pleased with the discipline that we're showing on the CapEx front. The entire team is being extremely thoughtful about CapEx. And we're pushing back on customers where we feel that the CapEx is not warranted. So good discipline, Adam. I would sort of think of CapEx at a 3 percent-ish rate on revenue. I think we've been 2.9%, we've been 3.1%. We've been 3% in the last four, five years, but I think a 3% sounds like a good sort of gauge for CapEx going forward.

Adam, if I could comment on something that I think you hit on that. I also think I wouldn't want loss, because there is a lot of numbers - good numbers on this call. And as we were growing the business and focusing on diversification, and I would now contend we're well diversified. So it's a journey, but I think the Company is very well diversified at the moment, again, result of a lot of hard work and effort. But two things happen when you're in that type of mode. Number one is we got a little bit fluffy in terms of headcount and overhead and we dealt with a lot of that this past summer. That's coming through in the results. Number two is the working capital management. And the working capital management, I've seen out of our team in the last six to nine months has been absolutely fabulous. And I think the fact that we're looking, our outlook reflects another $1 billion of revenue for the year and we're still keeping cash flows north of $600 million speaks volumes of that in terms of us being very, very intentional on working capital and working capital management.

Yes. It seems like a structural change. I appreciate the color. Thank you.

Yes. Thanks, Adam.

The next question is from Jim Suva of Citigroup Investment Research. Please proceed with your question.

Thank you very much, Mark and Mike, and congratulations to you and your team and for being safe as well as delivering results. My question is again on your capital discipline and big upside. The question I have is, any commentary you can give about like utilization rates or machine optimization rates or something like that? Because it just seems like you're getting more and more efficiencies out of your plants and equipments. If I understand it correctly, because it sounds like you're not having to really invest a significant more amount of capital and therefore returning more cash flow. Can you comment a little bit on that because I think some people may wonder are you maxing out and not able to fit any more business into your sites, whether it be healthcare, whether it be packaging, whether it be DMS? Any commentary would be great. Thank you.

Thanks, Jim. I'll try it in a couple of different ways. One is, as Mike said, I think it's - I think a good proxy for modeling going forward is CapEx to be about 3 points of revenue, plus or minus. Some quarters, it will be less. Some quarters, it will be more. Here's what we can I think assure you on. If CapEx goes up a bit, actually look at that as a good thing because with the disciplines we've put in, with the company being well-diversified, the pipeline that we have today on an organic basis, it's probably about $3.5 billion, $4 billion of topline, which by the way we absolutely will intentionally walk away from some of that. So the kind of the purposeful nature of bringing additional topline into the Company I think is as high as it's ever been. If CapEx were to go up to 3.1% or 3.2% or something like that, again, you can be rest assured that that's going to be accretive both the cash flows and margins going forward and by the way in a relatively short-term basis in terms of bringing the business on. So - but that's kind of one. Number 2 is getting back to your question specifically around factories. What our operational people have done? And we - the genesis of what we do for living is we build stuff. We have - everybody is important. Our finance group is important, HR is important, commercial - but our operational people are at the very core of what we do, Jim. And what they've done in terms of navigating COVID, keeping our factories up and running. I said something in my prepared remarks around the fact that COVID has proven to us to be an essential business, but…

And as my follow-up, in the past, many of the supply chains have talked about component shortages whether it be microprocessors or memory or capacitors or something like that. Has the component shortages completely worked itself out because I know now you have a strong position in cloud as well as mobility? Any thoughts around component shortages. And is that backlog completely worked through, or is there still some shortages out there that could have actually give you more upside?

I'll give you a two-part answer to that. Number 1, I'll give that's a great - that's a great opening for me to give a shout out to our supply chain folks. If you - as you do, Jim, you know us around the industry, we have - I think we have fundamentally one of the most respected supply chain global teams in the world and they do a fabulous job for us when markets get tight and otherwise. With that being said, of the 100 or 200 things that Dastoor and I worry about day in and day out with our team, as we sit today, supply shortages is one of them.

The next question is from Ruplu Bhattacharya of Bank of America. Please proceed with your question.

Thanks for taking my questions and congrats on the strong results and the strong guide. I have two questions, one on DMS and one on EMS. Maybe on the diversified manufacturing side, can you give us some guidance on seasonality and margin progression during the year? Given that automotive is now part of that segment. And in mobility, if we have - if we continue to have two launches of phones every year. Should we still expect that the third quarter would be the lowest margin quarter for DMS? Or - any guidance on quarter-to-quarter seasonality and margin progression would be very helpful. Thank you.

Okay, Ruplu. If I don't give you a complete answer, shout back at me because there was quite a bit there and I was kind of thinking through it, as you were talking. I think - I don't know what order I'll get this in, but let me try a couple of things. I think - I think foundationally, fundamentally, however you want to look at it, the thing - we talked a lot about diversification. And I know your question was largely around DMS, but if I could, for a moment. The most amazing thing today about the construct of the Company is - is if you extrapolate out the numbers that we've given today, you could - DMS will be in the range of about $15 billion for the year topline. EMS will be in the range of about $12.5 billion topline. That's with the new model on our cloud services business. And then you look at these complementary segments, Ruplu, DMS today - and again, this isn't hard and fast guidepost, but it's directionally how we think about the business and behave. Our DMS segment, so the $15 billion is the way to think about that is, it's about expanding margins and ensuring good reliable cash flows. The complement to that on the EMS side, which is a $12.5 billion, is really about expanding cash flows, while being sure that they focus on reliable margins. And those complements, as I said in my prepared notes, is I really think we get one plus one equals three. More specific to your question, when I think about kind of the year overall, I - Q1, we saw some - we saw - in Q1, we saw strength across the entire business other than maybe two or three pockets. So…

Okay, thanks. I mean thanks for all the details. Really appreciated. That was very helpful. Maybe I'll ask a different question for my follow-up, which is how do you think about uses of cash, given where we are in the economic cycle? Is it relevant - is it - would it be meaningful for Jabil to look at acquisitions, maybe look at inorganic growth? And how would you prioritize that against buybacks, maintaining the dividend and any debt paydown? So if you can just give us your thoughts on use of cash and your strategy on inorganic growth. And thanks. Thanks so much.

Yes. Thanks, Ruplu. This is a Dastoor question, but let me jump in, because you started with M&A. And then Mike can complement it, if I - if I don't get this all correct. But I think what - I think what Mike did in September, if I remember right, he laid out kind of a - our capital allocation construct. It was a single slide. I don't remember all the details on the slide. We reviewed that and talked about that a bit coming into this call. That structurally hasn't changed. And I think that and I've said this a number of times before, in my opinion, and opinions certainly defer, I think we've been a very reasonable and reasonably friendly to shareholders in terms of our - in terms of our capital allocation strategy where because our belief in the Company and where we are headed, we've been - we've been reasonably aggressive in our buyback since June 2016 which in a few months will be coming up on five years of that type of behavior. I think that will continue for a period of time. When I think about growth, I mentioned earlier Ruplu that right now our organic pipeline, a pipeline that will be at or accretive to margins, is probably $3.5 billion, $4 billion. Again, we'll selectively walk away from some of that, but for sure, organic growth is by far the most optimized growth for shareholders. When we think about M&A, we do - we typically buy four to five companies a year. It's typically around engineering and engineering talent. What we pay for those is more on an asset basis. It doesn't cost us much more, and at times, it's less expensive than just hiring the people. And then - and then, we're always looking at strategic types of things like strategic patents that we like and whatnot. So as we sit today, at least for the - at least for the balance of '21, I don't - I don't think there's going to be any behaviors of big acquisitions for the Company's strategic or otherwise. Mike, you got anything to add?

Yes. From a buyback basis, Ruplu, while we have a $600 million authorization out there, we will continue to be thoughtful, we will continue to be opportunistic. As things start returning to normal, once the vaccine takes hold, we might accelerate some of that purchase that we did in Q1. We're taking it slowly right now, but we'll accelerate that if circumstances warrant.

The next question is from Steven Fox of Fox Advisors. Please proceed with your question.

I had two questions. First of all, on the cloud business, can you - I understand that there is a lot going on that's Jabil specific and it's providing upside. Can you talk about sort of how much of that is reflected in - what you did in the quarter and you're thinking for the rest of the year and also your ability to sort of diversify among service providers? And then secondly, Mark, you've mentioned a couple of times now some of the investments in machine learning and automation. Can you talk about how much of that is sort of table stakes versus maybe creating other areas for you to generate some operating leverage going forward? Thanks.

Yes. So first part of your question. I don't want to get into - I don't want to get into a lot of details, Steve, on our cloud business. I can say at a high level, we started down this journey two years ago, 2.5 years ago. The service that we provide again is asset-light geocentric. We've been very consistent on that. The adoption and the acceptance of that model by the end market has been very, very good. There is a little indication that that's going to change in the near term. As we said before, I think we - I think we continue - we will continue to invest in that as long as we've got a service and a solution that's well embraced. I think we - we derisk the downside to that business. So again, overall, I - that's all the detail I'd like to provide at the moment because, again, I think, we've got continued momentum in that space. In terms of operational investments, so machine learning, IT, automation, flexible automation, data analytics, etc., I would say 30%, 40% of investments are table stakes where technology is going. And I would say, 50%, 60%, maybe a little more, is differentiation and has to do with, again, if you look at fiscal '16, '17, '18 throughout fiscal year '20 with COVID. But we're talking about uplifting margins on a $27 billion, $28 billion, $29 billion, $30 billion based company, we're talking about uplifting margins by 60 basis points, 70 basis points. We'll see what '22 holds. A material contributor to that is, is the methodology to which we've invested in IT and machine learning and different things to help us optimize our factory floors. I do think what's fact is, is we have 50-plus-million square feet of manufacturing space around the world. We have some of the most incredible systems in terms of supply chain, both of those areas. So, when you think about the core of what we do as a living, we build stuff. The barrier to entry to building stuff is getting higher and higher because of the scale of the investments, the global nature, the risks, etc. And when I think about the two things that are most profound at our core, one is building stuff, two is supply chain. And I would suggest that the investments we continue to make there are differentiated. And one data point on that would be, I don't know of any other company of our scale, in terms of the manufacturing services and solutions world, that has 50 million square feet of manufacturing space connected on a holistic IT system. And I would contend that one example gives us a definitive competitive advantage. And I could go deeper, but I won't on the same thing on supply chain.

The next question is from Paul Coster of JPMorgan. Please proceed with your question.

It's Paul Chung on for Coster. Thanks for taking our questions. So, your outlook in DMS is seeing raises in every segment. Is this kind of a function of pent-up demand and a more market share gains or expanding business with existing customers or all three? And then, has COVID structurally changed manufacturing strategy from many of your customers? Are they accelerating the shift from in-house to outsourcing?

Yes. Thanks, Paul. I think that - I think it's all three. I think that as we look - and I think your question was specific to DMS, although I think part of my answer would be for the whole corporation, inclusive of EMS. But I would say, again, sums market share gains, sums expansion of growth and being side by side with our current customers participating in their growth. So we've got market share gains for sure. We've got growth with our current customers, for sure. And then, again, as I mentioned earlier, this robust organic pipeline, a decent amount of that is brands that we don't currently serve. So I would say the outlook on DMS - again, I think in fiscal '20, our DMS revenue was just a hair over $13 billion. I think this year, it will be a hair over $15 billion and all three of those things would contribute. There was a second part to your question.

Yes, just COVID accelerating the shift.

Yes. So I - our observation would suggest that, let's say February-March time frame of this year through probably the spring of '21, I actually think COVID has put a halt on most fundamental strategic shifts and decisions by many corporations in terms of what they want to do with their manufacturing structurally. Although my guess is and having participated in some of this, there is lots of discussions, but much like our Mike Dastoor was alluding to, I think a lot of companies have battened down the hatches in terms of preservation of cash. Everybody kind of want to see where COVID goes, does this vaccine work, what's the vaccine distribution look like, what's the timing of the vaccine taking hold, et cetera., et cetera. If there is any good news in what has been a horrific pandemic, it's that as we get to middle of calendar '21, back half of '21 and into '22, I think what has been kind of a discussion points through COVID ends up converting to some actions once people feel like COVID has stabilized or somewhat behind us. So I think that'd be a good thing.

If I can just add, I think more than COVID per se, if you look at the convergence of technology that's been expedited by 5G, some of it is expedited by the work and learn from home environment, which probably extends beyond COVID as well. I think that's driving this big push into technology. And I think we're seeing the benefits of that. I think it's a very long legged sort of approach on that one. And I think we're in the right spaces. Right now, we're in all the right end markets and I think we're seeing the fruits of all of that.

And then my follow up is on free cash flow. All your metrics on revenues and op margins have increased, but your free cash flow was reiterated of exceeding $600 million, but I assume the magnitude of the exceed is larger today than it was in 4Q. First, is that kind of a fair assumption? And second, what can swing free cash flow higher as we kind of navigate through fiscal year '21? Any puts and takes you want to call out? Thank you.

All right. So we did have - we did see a bit of an increase in revenue that comes with some working capital. We still feel strongly that our free cash flow will be above $600 million. I talked about discipline in CapEx. I think Mark alluded to our working capital discipline. The team is fully engaged, fully focused. So there's a number of levers that we're focused on in that free cash flow bucket, so to speak. And I feel, over time, that just keeps getting more and more attention, that keeps getting higher and higher. So I think right now, we feel good with the $600-plus million. And I think I'd highlight the plus there. And I think the focus that we have continues to bear fruit, again.

The next question is from Shannon Cross of Cross Research. Please proceed with your question.

I was just wondering in your conversations with your customers and obviously COVID has played into it, but just in general, how things changed in terms of their desire to onshore or diversify the countries where they manufacture. And I'm just wondering, we obviously have a new administration coming in. Have things shifted at all in terms of the conversation over the year, or do you think people are sort of remain on track thinking that maybe onshoring a bit more, as well as diversifying is the way to go? Thank you.

Thanks, Shannon. I think the - I think there's been lots of conversations over the last two, 2.5 years between trade tariff and COVID. I think, and again, lots and lots and lots and lots of discussions. And the one thing is, is when you do what we do, you're in the middle of all those discussions because we are the primary manufacturing partner to so many outstanding customers and brands. But when it comes to actioning on those, I just - I don't think that - I don't think there has been a lot of change. There's - we've talked about this many times over on calls, we've had some customers that have wanted to derisk Mainland China. That's been the exception, not the rule. We've been there for them. One of the benefits you have when - you have a partner like Jabil is we have a really, really optimized footprint all over the world. If I add COVID on top of that, again, lots and lots of discussions. But in the end, I think that the manufacturing and value supply chain ends up following the dollars and following end-market consumption based on a product-by-product basis. And largely, I don't see that changing.

And then I'm just curious, during the quarter in terms of linearity, were there any - anything to point out within your segments maybe that improved during the quarter versus weakened toward the end of the quarter? Thank you.

No. Actually, this quarter - 1Q had really nice linearity.

The next question is from Matt Sheerin of Stifel. Please proceed with your question.

Just another question on DMS in the upside to guidance across those sectors, specifically in healthcare. Could you update us on how J&J programs have been ramping? And are you beginning to see that as a contributor to the strong operating margin expansion you've seen year-over-year in that segment?

Yes. I won't go too deep into the J&J relationship, specifically JJMD. I'd just say that we've talked about this at a high level, when we first engaged. We kind of laid out a path forward. What's been really nice is, is the path we laid out is the path that we've realized, which is a huge acknowledgment both to J&J and our team. And yes, I think the JJMD relationship is getting to a scale where for sure it's a contributor to our healthcare and packaging business. And through all this, JJMD has been a wonderful partner for us.

And then on the cloud business, you talked about the strength that you're seeing from customers there and I know you've gone through that transition to a consignment model with the largest customer. Is that largely in the numbers now? And Mike, were there any near-term impact to cash flows because of that transition?

I think it's all part and parcel of our strategy, Matt. We've been working on that for a while. There will be pros and cons to that. I think largely pros, obviously, working capital improves, margins improve. So the consignment piece is strategic in nature. It wasn't something that just happened to us. It's something we've been working on now for a while. And now, over the year, over the coming few quarters, it will hopefully get fully implemented.

The next question is from Mark Delaney of Goldman Sachs. Please proceed with your question.

Thanks very much for taking the questions, and congratulations on the good reports. Mark, thanks for all the comments you made around sustainability and Jabil's efforts there. And I was hoping to just better understand Jabil's ability to offer more environmentally-friendly manufacturing. Can you talk about some of the business implications from that, both in terms of what it may mean for some of the customer relationships and your ability to sustain good market positions? But then to the extent there is any added costs to implement a cleaner manufacturing and clean energy, how does that impact margins and is that something customer pay for or is that more of a shared expense?

Yes. Thanks, Mark. I'd first comment on kind of a macro level and then maybe break it down a bit. I try to express either through these Q&A sessions or more on a prepared remarks basis. The financial results are super important. They are really important to shareholders. But to me, the results themselves are really an output of us taking great care of customers and obsessing around our customers. And along with obsession around our customers that drive these financial results, we also spend, I think, just a tremendous amount of time as a leadership team, talking about approach because results can be derived in many different ways. And when we think about approach inside the Company, one is about an amazing culture that we have, two is about kind of carrying about people and foundational beliefs around diversity and inclusion for all, and then the other one certainly, Mark, is more core to your question, which is around the ESG, social and environmental. I think Jabil, the best thing we can do for our customers, our suppliers, is lead by example. We made a comment - I made a comment in September that said, we're committed to reducing our gas house emissions in - across the Company in the next five to six years by 25%, 30%. And we're on a path to do that. I would suggest that where people get - I think, get confused is, is jeez, that's going to cost us a lot of money. In reality, it's the timing of the costs, but all of that ends up being a net pickup because running the company with lower greenhouse gas emissions, clean energy has a really nice ROI to it. So one, the best thing we can do is lead by example by…

And thanks for everything the Company is doing with those efforts. My follow-up question was on financials. And Mike and Mark, you both talked about some more structural savings, you think are going to be sustained around interest expense and tax rates. Is the right way to think about what those levels may mean is to use the guidance for fiscal 2Q and expect to those sorts of level to continue? Or is there a better way for us to be thinking about interest expense and tax rate beyond the second quarter? Thanks.

Yes. I would sort of estimate interest to be in that $40 million-ish range. I think we delivered about $35 million in Q1. I'd feel better if the estimates going forward are in the $40 million. That's sort of substantially lower than what we thought at the beginning of the quarter. And similarly for tax, I think I'd go with the 26-ish-percent tax rate. Again, that is about 100 basis points lower than we actually indicated at the beginning of the year.

There are no additional questions at this time. I would like to turn the call back to Adam Berry for closing remarks.

Thank you everyone for joining our call today. If you have any follow-up questions, please reach out to us. Other than that, please stay safe, but stay healthy. Thank you. Bye.

Thank you.