(JBL)
Q4 2021 Earnings-Transcript
Adam Berry - Vice President, Investor Relations
Michael Dastoor - Chief Financial Officer
Mark T. Mondello - Chief Executive Officer
Adam Tindle - Raymond James - Analyst
Steven Fox - Fox Advisors - Analyst
Jim Suva - Citigroup - Analyst
Ruplu Bhattacharya - Bank of America Merrill Lynch - Analyst
Shannon Cross - Cross Research - Analyst
Paul Chung - J.P. Morgan - Analyst
Matt Sheerin - Stifel Nicolaus & Company, Inc. - Analyst
Mark Delaney - Goldman Sachs - Analyst
Operator
Greetings, and welcome to Jabil's Fourth Quarter and Fiscal Year 2021 Earnings Conference Call and Webcast. [Operator Instructions] As a reminder, this conference is being recorded.
It is now my pleasure to introduce your host, Adam Berry, Vice President, Investor Relations. Thank you. You may begin.
Adam Berry - Vice President, Investor Relations
Good morning, and welcome to Jabil's fourth quarter of fiscal 2021 earnings call and investor briefing. We have a great session planned for you today. And as an organization, we're excited to provide you with a little extra detail about our business as typical for our September call. Over the next 60 minutes or so, we will review our strong fourth quarter and fiscal 2021 results, followed by yet another great outlook for fiscal 2022.
As usual, you will hear from both Mark Mondello, our CEO; as well as Mike Dastoor, our CFO. Along this journey, we'll discuss our approach to the end markets we serve, the uniqueness of our supply chain solutions and the innovation underway within our global network of factories. Additionally, throughout our presentation today, we will do our very best to help you understand what makes Jabil so unique and so special, and we'll pick that write-off with the following brief video.
Constantly changing consumer demand, supply chain constraints, network security concerns, the acceleration of market disrupting technologies. These are just some of the forces driving the complexity of doing business today. Added to that complexity, the unprecedented pressure to ensure pervasive and uninterrupted connectivity and bandwidth and the convergence of technologies in our day-to-day lives as the world faces a pandemic with unforeseen global impacts. The world is changing quickly and doing business is more difficult than ever. Jabil has a distinct advantage in this environment. Not only does our diversified portfolio of end-market experience and expertise keep our business sound and dependable, but our customers can also take advantage of our diversification and industry leadership to bring innovative solutions to their customers. With over 260,000 of the most talented people in the industry, we strive to be the most technologically advanced and trusted manufacturing solutions provider. We combine an unmatched breadth and depth of end-market experience, technical and design capabilities, manufacturing know-how supply chain insights and global product management expertise to enable success the world's leading brands. All of this is made possible because our talented, dedicated people around the world. In an environment where everyone can be their true authentic selves, our entrepreneurial spirit goes beyond the business and can be seen in the way each of our 100 plus sites used to make a difference in the communities where they work and live. And while our efforts are locally driven, the impact is global. Throughout the world, Jabil uplift people in underrepresented communities by providing opportunities, giving individuals the tools to overcome challenges and achieve success. Jabil believes people with disabilities deserve opportunities to shine bright and realize their true potential, mirroring our commitment to inclusivity in the workplace and we believe in preserving our environment for future generations. Our sites actively participate in reforestation, coastal habitat restoration, litter removal and recycling programs around the globe. Our diverse and talented people really are our biggest differentiator. everyone's voice is heard and we worked for each other, our communities, our customers and our shareholders to make anything possible and everything better.
Such a great video. As we all know, the world is complex and only getting more so each and every day. But as Mark often says, our people are our greatest differentiator and that couldn't be more apparent as you visit our global network of factories and meet the roughly 260,000 people that make Jabil's foundation so strong. To our people, thank you again, for all you do to help keep the world connected despite the seemingly never endless set of new challenges thrown on your way.
Our foundation is solid. Through over 50 million square feet of manufacturing space and 100 plus sites, our people strive to make anything possible and everything better for over 400 of the world's most recognizable brands. Our agility and global scale enable us to respond quickly and flexibly to meet customer needs in key end markets, like mobility, industrial in semi-cap, automotive and health care, just to name a few. These wide-ranging end markets represent a diverse and thoughtfully designed portfolio that over the years has helped reduce volatility and improve the reliability of our financial results.
To help illustrate our diversification strategy over the past few years, I'd now ask that you turn to the next slide, which shows our revenue growth in the end markets we serve. As you may know, the EMS industry has long struggled with customer concentration and this dynamic has created a lot of variability in operating performance from one year to the next. In 2016, our management team concluded that our model was missing an important characteristic if we are going to deliver upon our financial priorities consistently and sustainably. This important characteristic was product diversification. So beginning roughly in the 2017 time frame, we embarked on a journey to grow and diversify our business in areas such as 5G, cloud, healthcare, packaging, connected devices, automotive and semi capital equipment. As a result of our efforts to diversify the business, revenue has grown rapidly and since 2017, we have added more than $10 billion in revenue across several key end markets. And it's important to note this growth has been very intentional in focus.
Moving to the right side of the chart, you'll see the composition of our $29.3 billion in revenue, and you'll likely notice that no end market dominates our diverse portfolio. In each of these areas, Jabil partners with some of the world's most recognizable companies to accelerate their speed to market through product engineering, supply chain design, and of course manufacturer.
In healthcare, think of drug delivery systems such as inhalers and insulin pens, diagnostics, medical devices, orthopedics and instruments that all meet exacting FDA standards. Our healthcare business serves programs and products with long stable lifecycles of 10 to 20 years with high cost of change, thus providing stable earnings and cash flows. In packaging, we design and manufacture are highly engineered rigid plastic packaging for many leading consumer brands, bringing to bear capabilities and ideation, product design, material sciences and eco-friendly barrier technologies.
Within mobility and connected devices, we generally focus on machining, tooling and molding of highly engineered plastic and metal parts, leveraging a strong product development skill set. In areas such as digital print and retail, we're focused on 3D print, large form factor printing and retail automation. And in industrial in semi-cap, 5G wireless and cloud and networking and storage, we participate in the design, product development, industrialization and manufacturing of some of the most sophisticated tech products on the marketplace today.
And then in automotive, the bulk of our business focuses on the electrification of auto supported by a nearly 10-year relationship with the world's leading EV company. So from mobility to retail automation to complex heavy industrial equipment, Jabil helps customers navigate large complex material supply chains, while effectively managing change, mitigating risks and delivering quickly and efficiently.
In summary, our business has grown rapidly over the last several years to serve a diverse blend of end markets that today are benefiting from long-term secular trends. And again, this gives us the confidence and comfort to not only provide financial guidance more than one quarter out, but also invest in things like factory innovation. And when you drill down one level deeper, you'll again notice an incredibly diverse set of customers representing some of the largest most innovative and successful organizations in the world today. This is by no means is a complete list of the customers we serve, but it's certainly impressive by any standard, especially when considering many of these customers rely on Jabil as the sole source for their products.
I'm sure most of you will recognize some of our incredible partners such as Apple, HP, Ericsson, Amazon, Cisco, John Deere, Tesla and J&J. In all of our customer relationships, we are incredibly focused on delivering consistent value and reliable value, from early in the product lifecycle like product innovation and design to more mature products where we offer planning, automation, supply chain management, and of course, manufacturer.
At the end of the day, we build stuff Jabil and we do it really, really well. This leads me to our financial priorities as a management team. We're squarely focused on three areas, expanding operating margins, increasing earnings per share, and generating strong cash flows. In fact, this focus has been further sharpened as we've embedded core margins, core earnings per share and free cash flow within our short-term and long-term compensation programs as we believe this effectively aligns management and shareholders. And over the next several minutes, we plan to provide you with a credible plan to improve all of these three metrics in fiscal 22.
Following me today will be Mike, who joined Jabil in 2000 as a regional controller based in Hong Kong. Mike will walk you through our fiscal '21 results and our robust financial plan for fiscal '22. He will also spend some time highlighting our end markets and discussing some of the trends, which should drive our business for many years to come. Then Mark, who joined Jabil in 1992 as a manufacturing supervisor, who'll share some of the value that Jabil provides its customers through our people, our culture, and our best-in-class manufacturing capabilities. Before handing the call over to Mike, I now ask that you follow our presentation with the slides on the website, beginning with our forward-looking statements.
During today's presentation, we will be making forward-looking statements, including among other things, those regarding the anticipated outlook for our business in the first quarter of fiscal '22 and beyond. 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 31, 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 Mike.
Michael Dastoor - Chief Financial Officer
Thank you, Adam, and thank you for joining us today, and for your interest in Jabil. As Adam highlighted, our business model is fundamentally structured to deliver core margin expansion and strong predictable cash flows and our capital structure has been optimized to maximize our flexibility. This flexibility has enabled us reshape our end market portfolio over the last several years and in the last 18 months our strategy has been pressure tested and our diversified well balanced portfolio performed extremely well, evidenced by a solid Q4 and exceptionally strong FY '21 results.
In Q4, the teams in both segments successfully managed to navigate an incredibly dynamic supply chain environment. During the quarter, demand continued to be broad-based and robust, but revenue came in slightly lower than expected due to some incremental tightness in the supply chain, mainly in healthcare, industrial and cloud. This was partly offset by upsides in connected devices and networking and storage. Despite this, our core operating margin performance in the quarter was quite strong, coming in at 4.2%, approximately 10 basis points higher than expected, a testament to our team's execution in the quarter, solid cost optimization and are at the more resilient end market portfolio.
In Q4, our interest and tax expense also came in better than expected, which when combined the strong margin performance allowed us to deliver strong core diluted earnings per share in Q4, putting it altogether on the next slide. Net revenue for the fourth quarter was $7.4 billion, up 1% over the prior year quarter. GAAP operating income was $265 million and our GAAP diluted earnings per share was $1.16. Core operating income during the quarter was $314 million, an increase of 23% year-over-year, representing a core operating margin of 4.2%, a 70 basis point improvement over the prior year. Net interest expense in Q4 was $36 billion and core tax rate came in at approximately 22.3%. Core diluted earnings per share was $1.44, a 47% improvement over the prior year quarter.
Now turning to our fourth quarter segment results on the next slide. Revenue for our DMS segment was $3.9 billion, an increase of 9.7% on a year-over-year basis. The strong year-over-year performance in our DMS segment was broad-based with strength across our healthcare, automotive and mobility businesses. Core margins for the segment came in at 4.1%, 20 basis points higher than the previous year. Revenue for our EMS segment came in at $3.5 billion, down 6.4%, primarily driven by our previously announced transition to a consignment model. Core margin for the segment was 4.3%, up 120 basis points over the prior year, reflecting solid execution by the team. For the year, our DMS segment revenue was $15.4 billion, an increase of 17% over the prior year, while core operating income for the segment was up an impressive 49% year-over-year. This resulted in core margins expanding 110 basis points to 4.8%, reflective of our improved mix. In EMS for the year, core margins were also up strong coming in our 3.7%, 100 basis points higher than the prior year, on revenue of $13.9 billion.
Turning now to our cash flows and balance sheet. Net capital expenditures for the fourth quarter was $202 million and for the full fiscal year came in better than expected at $793 million or 2.7% of net revenues. We sometimes hear from investors seeking clarification on our net capex, so I'd like to take a moment to walk you through the components. As a reminder, our customers sometimes co-invest in plant, property and equipment with us as part of our ongoing business model. We often pair for these co-investments upfront, which are then subsequently reimbursed to us by customers. The line item, acquisition of property, plant and equipment on our statement of cash flows includes the full upfront payment made by us. The reimbursements by our customers are reflected as a sale of assets in the line item proceeds and advances from sale of property, plant and equipment on our statement of cash flows.
The net of these two items reflects our true spend and what we refer to as net capital expenditure. In Q4, inventory days came in higher than expected at 71 days, an increase of three days sequentially, driven by the previously mentioned incremental tightness in the supply chain. While these higher inventory days may continue in the short-term, we expect it to normalize below 60 over the mid-to-longer-term. The management team continues to be fully focused on this metric, particularly in the current environment. In spite of this, our fourth quarter cash flows from operations were very strong, coming in at $762 million. As a result of the strong fourth quarter performance in cash flow generation, adjusted free cash flow for the fiscal year came in higher than expected at approximately $640 million.
We exited the quarter with total debt to core EBITDA levels of approximately 1.4 times and cash balances of $1.6 billion. During the fourth quarter, we repurchased 2.9 million shares, bringing total shares repurchased in FY'21 to 8.8 million shares of $477 million. This brings our cumulative shares repurchased since FY'13 to approximately 90 million shares at an average price under $27, bringing our total returns to shareholders including repurchases and dividends to approximately $3 billion, reflective of our ongoing commitment to return capital to shareholders. In summary, I'm extremely pleased with the resiliency of our portfolio and sustainable broad-based momentum underway across the business, which has allowed us to deliver exceptionally strong results in fiscal '21.
Next, I'd like to take a few moments to highlight Jabil's unique position across multiple end markets benefiting from long-term secular trends and the convergence of technology in our day-to-day lives. We believe these trends will continue to drive sustainable growth and margins across the enterprise in FY'22 and beyond.
In healthcare today, on the next slide, the industry is undergoing tremendous change due to rising costs, aging populations, the demand for better healthcare in emerging markets and the accelerated pace of change and innovation. Consequently, we are witnessing healthcare companies shifting their core competencies away from manufacturing towards innovative and connected product solutions. We continue to be in the early days of outsourcing of manufacturing in the healthcare space. Our strategic collaboration, which we have highlighted in previous years has enhanced our credibility within the industry and has further enable Jabil to benefit from this outsourcing trend. On top of this, we are also seeing the impact of connectivity, digitization and personalized care across healthcare. I expect these trends to accelerate over the next few years.
Our deep domain expertise within the healthcare industry, uniquely positions us to grow technology-enabled products, which help our customers excel in today's evolution of healthcare. Another end market experiencing a rapid shift in technology is the automotive market. Climate change, fuel efficiency and emissions are ongoing concerns and regulatory policies worldwide are beginning to mandate more ecofriendly technologies. As a result, OEMs are making substantial investments into vehicle electrification efforts.
The bulk of our automotive business is focused on electrification of cars, which we believe still has plenty of room to grow. Over the next three years, we expect the fastest growing area of our auto business will be in what's known as ACE, autonomous, connectivity, and electrification. Today, electric vehicles account for a small fraction of total vehicles in the market, but the EV segment overall is growing rapidly and gaining a larger share of the total vehicle market. Jabil long-standing capabilities and over 10 years of experience and credibility in the space have positioned us extremely well to benefit from this ongoing trend.
We are also extremely well positioned to build the infrastructure that will power tomorrow, be it cloud, semicap, 5G infrastructure and the associated connected devices, or power generation and energy storage. 5G is expected to transform the way we live, work, play and educate. As the underlying infrastructure continues to roll out, 5G adoption is accelerating. Jabil is well positioned to benefit from both, the worldwide infrastructure rollouts and with the devices which will be needed to recognize the full potential of a robust 5G network. 5G is also accelerating secular expansion of cloud adoption and infrastructure growth. This, coupled with the value proposition, Jabil offers to cloud hyperscalers is helping us gain market share in an expanding market evidenced by the significant growth over the last three years.
In power generation and energy storage, we offer differentiated solutions across the entire energy value chain, from energy generation, power conversion, transmission storage and metering to the management of power inside of homes and buildings. In this space, we serve a diversified set of customers across numerous markets, including oil and gas, wind, power inverters and converters, smart meters, smart grid communications, building automation, home automation and energy storage. As the convergence of technology in our day-to-day lives accelerates, demand for semiconductors has increased exponentially, which has generated a huge backlog in this industry. Jabil is well positioned to help customers in the semi-cap space with end-to-end solutions, spanning the front end with design and complex fabrication equipment along with the back-end with validation and test solutions.
So what do all these trends translate to in terms of Jabil. You can see our revenue growth expectations by end market in the coming fiscal year. In FY'22 in spite of supply chain headwinds, we expect incredibly strong growth in automotive and continued solid growth in healthcare and packaging, industrial, semi-cap, 5G wireless and cloud. Today, both segments are in great shape. We positioned our business to serve critical and long life cycle products while also providing the foundation for predictable yet strong cash flows and margins. For FY'22, we expect both gross profit margins and core operating margins to improve 30 basis points over the prior year, mainly driven by our end market growth and improved mix of business. We also expect the investments we made in areas such as IT, automation and factory digitization will drive improved optimization across our footprint, which will translate to higher margins. We expect these gains will be slightly offset by continued tightness in the supply chain, especially in the first half of our fiscal year. However, we're incredibly confident in our team's ability to successfully execute in this market given our track record over the last several years.
Key to executing amidst an incredibly dynamic environment is our expertise and the investments we made in our IT and supply chain. We've got the tools and technologies that allow us to progressively manage with analytics and data some of the most complex supply chains in the world. This has certainly been evident over the last two years. Let's hear from our supply chain leaders and how they're executing for our customers.
Jabil is uniquely positioned because we are an essential a central manufacturing solutions provider to the world. We do this on a global scale and we have the benefit of more than 50 years of experience to draw from. And because we are comprised of individual business units, ensures that we are hypermarket focused, folks still taking advantage of Jabil's aggregation and orchestration capabilities. Simply said, we've got experience, the expertise credibility, the architect, the most efficient and effective supply chains in the world. Our strategic investment in tools and technologies allow us to proactively manage global supply chains with data, analytics, speed and resiliency. We are privileged to serve or 400 of the most premier brand customers in the world, where we have access to the latest innovative products and component intelligence.
So when we interact with their supply base, we do so with a world view which is very unique and that benefits Jabil, and of course, our customers. That's the value of an aggregator like Jabil as manufacturing solutions providers we see the world, we can move at the speed that the value could be created and we don't have to make a new investment every time. We're positioning our business at the speed that business changes. We've invested in infrastructure with an eye in shooting our suppliers and customers who experienced successful outcomes. We have a global commodity management organization facing our suppliers each and every day. Therefore, we are in the market each and every day.
During those collaborative discussions, we're talking about allocation, we're talking about pricing and we're talking about technology roadmaps. So we hire individuals for the manufacturing solutions provider space, that deep-rooted knowledge of that particular market. But at the same thing, we've complemented those individuals with the hiring of component specialist so having that balance between experience on the manufacturing solutions provider side is where lies the component manufacturers is really something of a differentiator within this market and within this space.
I think one of the things that really makes a difference in terms of the Jabil relationship with our customers is our ability to really take this challenge, use our processes and our people, our tools, our global footprint, our experience in multiple markets to come up with collaborative solutions that really will help improve the performance, address the challenges that we have in the market and really make a difference in terms of delivering product to the customer when they want it.
While there is the disruption around commodity supplies, logistics, or global economic [Indecipherable] subject matter expertise can truly help our customers respond in speed, agility and performance [Phonetic]
I would like to take a moment to thank the entire supply chain team from the leaders we just heard from to our teams in our factories who have helped our customers navigate through some very complex supply chains.
Turning now to our capex guidance for FY'22. Net capital expenditures are expected to be in the range of $830 million or 2.6% of net revenue. This will come through a combination of both maintenance and strategic investments for future growth. Let's talk about our maintenance capex for a moment. We now have 100 sites in more than 30 countries. At this scale, our factories require approximately $500 million in annual maintenance investments. Areas of investment are inclusive of IT and data analytics, automation and factories digitation, which will drive innovation across our footprint. This along with upgrading of our equipment sets based on appropriate cost benefit analysis will improve first pass yields and help produce ongoing maintenance costs.
We are also investing in strategic growth in targeted areas about the business that are expected to deliver strong margin expansion and free cash flow. The bulk of our strategic growth capex will be in the healthcare, automotive, 5G wireless, power generation and energy storage, semi-cap and eco-friendly packaging end markets. All of this positions us well to deliver higher margins as highlighted earlier in my margin waterfall slide. Our improved profitability, strong operational performance and disciplined investments have yielded significant cash flows over the last few years, which has allowed the company to strategically invest in higher return areas of our business. Moving forward, we expect to continue generating strong cash flows in spite of higher working capital associated with our robust growth in targeted areas I highlighted earlier. This is possible as a result of earnings expansion along with our team's disciplined approach and ability to execute.
In FY'22, we expect to generate adjusted free cash flow of $700 million. As I mentioned earlier, we've intentionally targeted higher return areas. In doing so, we've focused on end markets that offer higher profitability and good cash flow dynamics. This discipline has translated to much higher returns on invested capital. Moving forward, we will continue to prioritize investments in areas of our business with higher margins, which we expect will translate into strong returns. Another key aspect of delivering higher returns and delivering long-term value to shareholders is ensuring our capital structure is appropriately balanced and optimized.
Over the last few years, our team has done an outstanding job of building a solid and flexible debt and liquidity profile with current maturities appropriately staggered and at very attractive interest rates. We ended FY '21 with committed capacity under the global credit facilities of $3.8 billion. With this available capacity along with our year-end cash balance, Jabil ended the year with access to more than $5.3 billion of available liquidity, which we believe affords us ample flexibility. And importantly, we are fully committed to maintaining our investment grade credit profile.
Turning now to our capital allocation framework. In fiscal '22 and beyond, we expect to generate significant free cash flow. Given this dynamic thought, it would be appropriate to reiterate our capital allocation priorities and at a high level how we plan to deploy our capital over the next two years. As a reminder, in July, earlier this year, we announced a $1 billion buyback authorization from our Board of Directors over the next two years. Our capital return framework beyond organic investments will continue to prioritize commitment to our dividend, share repurchases, and a combination of targeted M&A and capital structure optimization. Moving forward, we are comfortable with our ability to generate strong cash flows and will remain balanced and thoughtful and how we allocate our capital.
Turning now to our first quarter guidance on the next slide. DMS segment revenue is expected to increase 10% on a year-over-year basis to $4.7 billion, while the EMS segment revenue is expected to be $3.6 billion consistent with the prior year. We expect total company revenue in the first quarter of fiscal '22 to be in the range of $8 billion to $8.6 billion. Core operating income is estimated to be in the range of $365 million to $425 million. GAAP operating income is expected to be in the range of $321 million to $381 million. Core diluted earnings per share is estimated to be in the range of $1.70 to $1.90. GAAP diluted earnings per share is expected to be in the range of $1.40 to $1.61.
The tax rate on core earnings in the first quarter is estimated to be approximately 25%. As we transition to my final slide, you can really begin to see the earnings power of a diversified and balanced Jabil. Today, our business serves a diverse blend of end markets, in areas that provide confidence in future earnings and cash flows. We have deep domain expertise complemented by investments we made in capabilities, all of which gives us confidence in our ability to deliver 4.5% in core margins in FY'22, along with $6.35 in core EPS and $700 million in free cash flow. And importantly, our balanced capital allocation framework approach is aligned and focused on driving long-term value creation to shareholders.
I'd like to thank you for your time today, and thank you for your interest in Jabil.
I'll now turn the call over to Mark.
Mark T. Mondello - Chief Executive Officer
Thanks, Mike. Good morning. I appreciate everyone taking time to join our call today. I'll begin by saying thanks to all of our employees here at Jabil. Thank you for hanging in there during these trying times, while never compromising the safety of our people. Your attitude is amazing and your stamina is incredible. It was your collective body of work that drove the terrific results we just posted. Results you delivered while overcoming COVID quarantine mandates, supply chain challenges, factory inefficiencies, and in many cases a lack of face-to-face interaction.
Fiscal '21 came in well ahead of plan, resulting in a core operating margin of 4.2%. All in all, a really nice year across all fronts. Today marks our fourth annual Investor session, a session where we take a little extra time to lay out the groundwork for the upcoming year. As you heard earlier from Adam and Mike, our business is strong and what we're doing is working. Much of our progress comes from the construct and the pedigree of our company.
So let's start with our approach, beginning with diversity, equity and inclusion. We know that each employee is critical to our success and has the right to be treated with dignity and respect each day and every day. At Jabil, we operate our business in 30 plus countries. We employ people that don't look the same, don't talk the same, people that practice different religions, have different sexual orientations, people with physical limitations and narrow diversities. We understand that the current diversity of our team simply makes us better, but we have so much more work to do and we're holding ourselves accountable through actions.
An example of the type of actions we're taking is the addition of our internal DE&I council, which was established in 2020. A nine person council which guides us and advocates for the broader Jabil. We also co-chaired an external DE&I certification program. A program attended by 165,000 participants, of which the vast majority earned their formal certificates. And one other example is around the upcoming 2022 Special Olympics, where Jabil is a premium sponsor for the U.S. games. And the best part of our partnership with Special Olympics is that it offers our employees the opportunity to spend time with the athletes and their coaches. So in summary, our team continues to safeguard our work environment and does so with the acceptance of individual differences.
The second aspect of our approach pertains to the area of ESG, where we aim to always do what's right. Much like our effort with DE&I, our behavior around ESG is grounded on actions. An example of one of our actions is our greenhouse gas emissions, where our goal is a 25% reduction by 2025 and a 50% reduction by 2030. Another set of actions that we have underway are directed towards our heightened focus on mental health, a topic that impacts almost all of us either directly or indirectly. And one final action worth mentioning is our commitment to giving back. Our employees will look to complete 1 million volunteer hours in aggregate during calendar 2022. What a positive difference this will make throughout the communities where we work and we live. As you might sense, DE&I and ESG are important elements of who we are and they set the foundation for our approach.
Next, I'd like to talk about our solutions and how they're enabled by our structure, our investments, and our customers. Our structure enables our collaboration, which allows us to move with precision and speed. Our investments enable our execution which allows us to take the ordinary and apply the extraordinary, and our customers enable our obsession which allows us to solve the complex. So not to be overly simplistic, but at the center of Jabil's core, we build stuff. That's just what we do. Therefore, we'll continue to be aggressive with our investments in the areas of factory automation, robotics and machine learning. And to help illustrate how we apply and leverage these investments, I'd now like to share a short video.
My role at Jabil is to ensure we have the world's best and most progressive factories. At Jabil, we're implementing solutions that bring significant value to customers today and set us up to continually advance as technologies progress. The future of our manufacturing will be shaped by strong digital connectivity and the use of big data, having complete process control, traceability and predictability, and skilled employees who work safely alongside machines that learn, think and act. We're delivering this future by applying emerging automation and digital technologies to our production systems into the entire value chain to build differentiated capabilities and enable of predictable self-correcting environment. Our operating model is enabling us to implement these new technologies with speed, standardized processes to deliver consistency across every factory and an ability to aggregate and rapidly deploy improvements and innovation. This means we leverage our scale and the full power of our workforce to the benefits from ono factory are felt by all.
Our integrated ecosystem is powering our journey as it brings together system-to-system integration, machine-to-machine integration, and data integration. This level of integration enables access to data, information and insights not previously available, which is delivering actionable business intelligence, as well as standardization and control across hundreds of business processes. This translates into the ability to quickly solve business critical issues, accelerated deployments and factory startups, reduced application footprint and costs and the ability to run and optimize factory, while continually reducing non-value-added activities.
We're also well positioned to take full advantage of the increasing demand for automation. We have hundreds of certified automation engineers and technicians strategically positioned in our regional automation centers, which gives us deep technical competence needed to design, build, integrate and implement full automation solutions anywhere in the world. Our proprietary, flexible, modular automation platform handles a variety of production processes and is reconfigurable and redeployable. This means our Jabil automation gear can be reused on different programs for years to come, extending automation equipment life and improving asset utilization. We've also developed completely autonomous material handling solutions, from the production floor to the warehouse we're leveraging automation to enable speed, maximum space and resource utilization. One of the foundations of our manufacturing ecosystem is information technology. Operations partners closely with our IT experts to develop and deploy these solutions.
So the word IT can actually play is really truly transform and actually uniquely place Jabil through use of technology, through digital transformation to actually learning IT, operation technology and ET together so that we truly collaborate and work in unison so that we create the right solution for our customers. We are actually bringing connectivity to the factory, but we connect machine, people, materials energy, do those are the keepingd that we are connecting in the factory. What's more important is that the use of data, the use of analytics, the use of AI, AR technology all into this factory. So this is true assembly of how we can actually add value from IT to the company.
Our operation strategy builds on our strongest source of innovation, the people working directly with these technologies and process. There's a powerful relationship between employee engagement in digital transformation by putting our people at the center of our journey and actively engaging employees and using their ideas, we can more easily incorporate new technology into day-to-day operations and become more digitally mature. As a result of our initiatives in our operating model, we continue to realize year-on-year improvements from quality improvements to increase asset utilization, we're realizing efficiency gains, productivity gains and cost savings across the board. We're on an exciting path as we continue to focus on delivering for our customers in the world's best most progressive factories.
Thanks, JJ. Thank you, May. What powerful messages. And to all of our employees that spend long hours on our factory floor day in and day out, thank you. Thank you for taking great care of our customers.
As we move to our next slide, you'll see a colorful pie chart, which illustrates the current makeup of our commercial portfolio. Today, our business is diversified and diversified at scale. This provides Jabil a real competitive advantage when we consider the performance and balance of earnings. I'd now like to go a degree deeper into the makeup of our business. These eight sectors exhibit the diversified nature of our revenue with each sector having a material contribution to our results.
We've been very diligent in pursuing the end markets we serve. We've also spent significant time successfully positioning the company that captured possible tailwinds offered by various secular trends. This portfolio is a wonderful mix of cash flows and margins. And for sure, the composition of our business is the catalyst for our FY'22 outlook.
As we now look at our plan for fiscal '22, you can see the earnings power of the company. We look to deliver a core operating margin of 4.5% and revenues of $31.5 billion, a 30 basis point expansion when compared to fiscal '21. This translates to $6.35 in core earnings per share, or 13% earnings growth year-on-year. In wrapping up our fiscal 2002 forecast, I'd like to note that our strategy is well understood across the company and what needs to be done is crystal clear. If we take our FY'21 results and our FY'22 guidance and step back just a bit, this aperture suggests that what we're doing is in fact working. This slide offers a fantastic backdrop to our ongoing story. All in all, I feel good about where we've been, but I feel even better about where we're going.
Moving on from our financials, I'd like to talk a bit about our purpose. As a management team, we have a purpose that serves as our ultimate guide post. Our purpose enable our path and does so with an emphasis on carrying integrity and proper intentions. Speaking of our path, our path forward is formed by the beliefs shown on this slide. For FY '22, we're trusting these beliefs as we work to deliver to our commitments. For me, we'll measure our success based on financial performance, but will also measure our success based on keeping our people safe, customer care, and improving in the areas of ESG and DE&I. If our team accomplishes all of the above, it will be another year of humble achievement.
One additional thought as I wrap up my prepared remarks. As we consider our outlook for fiscal '22 and the current trajectory of margins and cash flows, it's clear that our journey is nowhere near complete. In closing, we've made tremendous progress as customers and shareholders remain at the forefront of our actions. To our entire Jabil team, Thank you for making Jabil, Jabil. Most importantly, I want each of you to always be your true self without fear or anxiety, without harm or recourse. I'm honored to serve such a trustworthy team.
With that, I'll now turn the call back over to Adam.
Adam Berry - Vice President, Investor Relations
Thanks, Mark. As planned, we shared quite a bit over the past hour. To summarize, we begin by describing how Jabil has undergone deep and sustainable improvements to its business model and we highlighted the solid foundation upon which Jabil sits today. And Mike walked you through our financial results and outlook, which demonstrate the strength of our portfolio, which has been structured to navigate varying fluctuations in demand, while also benefiting from long-term secular tailwinds. And finally, Mark shared with you our unique approach, solutions, portfolio and path forward. These truly are exciting times at Jabil. I'd like to thank you for your time and we appreciate your interest.
Operator, we're now ready for Q&A.
Operator
Thank you. [Operator Instructions] Our first question is coming from the line of Adam Tindle with Raymond James. Please proceed with your question.
Adam Tindle - Raymond James - Analyst
Okay, thanks, and good morning, Mark, you talked about diversification in the secular trends, auto, healthcare, cloud, and I couldn't help but notice reference customers like Tesla, J&J, and Amazon, I was just wondering if you could maybe talk through the new customer acquisition efforts, the sales motion to perhaps leverage this reference customer list? And if you could maybe tap into pipeline and timing because I couldn't help but notice over 40% auto growth expected in fiscal '22, I'm wondering if maybe there's some new logos in there? Thanks.
Mark T. Mondello - Chief Executive Officer
Thanks, Adam, I want to get into, we just over the years we may be right or wrong, we have a reluctance or hesitancy to dig too deep in the new wins and new customer wins, a lot of that is at the back and call of the customers themselves. I'd say this, just very rough math, right. If you look at - if you look at kind of fiscal '19 to fiscal '20, we grew our top line at scale, like 7% to 8%. So in '19, we are just a hair over $25 billion. We took the company to like $27 billion in '20, that was a COVID year as everybody knows, then we go from '20 to '21, we had another $2 billion of revenues, that's another 7% to 8% growth at scale.
And now if you take a look at the outline that Mike and I provided, I'll look for '22 is, call it $31.5 billion, that's another 7% or 8%. The vast majority of those gains from say fiscal '18 to fiscal '22 are organic in nature and I would say that organic pipeline continues to remain robust. Again, we gave a lot of thought to the outlook and how we wanted to guide '22. We wanted to be sure we handicapped it appropriately for things like the ongoing supply chain issues. So I - and when you think about, when you think about the growth rates on both, I think Mike had three areas where growth rates were double digits, automotive and transport or transportation was one, I think digital print and retail was one and then the healthcare area. So, and then right behind that we had - we had other areas of growth of the eight sectors that were strong single-digit. So I think maybe a way to think about that Adam is, I would say our organic pipeline today on a gross basis is probably $4 billion or $5 billion.
Again, as we think about fiscal '23 and the maturation and how long it takes to kind of germinate at all those organic opportunities. But if we were to give you that up, I think what you'd see is as we got pretty good growth across the board or at least six of the eight sectors. And I do think, I think I feel like grossly overused term in the world today is the secular trends. It seems like, it's kind of like back in the day with IoT and digitization and other things, I think it's used a lot. But I think Mike did a really nice job of hitting some secular trends that at least for our business where we sit today are very, very real and we think will - all things being equal will provide some nice tailwinds for us for the next three years.
Adam Tindle - Raymond James - Analyst
Got it. That's helpful. Mark. Thanks. And just maybe as a follow-up, Mike. I wanted to touch on normalized free cash flow. I know you're guiding to $700 million for the year. How much is related to supply constraint or working capital because I think back into your net income guidance it's over $900 million, so wondering how to think about normalized free cash flow?
Michael Dastoor - Chief Financial Officer
There is an element of supply chain constraints and the impact on inventory that's included in that $700 million now. I think you've got to - you got to look at it from a growth perspective as well. We're growing revenue by $2.2 billion in over '21 to '22. That comes with associated working capital as well. So for us to go from $640 million to $700 million in spite of us growing revenues by $2.2 billion or 8% is pretty healthy and I think the management team is fully, fully focused on free cash flow. So I feel good. We're looking at working capital, we're looking at capex. So the $700 million, can it go higher if things loosen their grip a little bit on the supply chain constraints, absolutely. But at this stage $700 million is a pretty strong free cash flow number I think.
Mark T. Mondello - Chief Executive Officer
Hey, Adam, if I could interject. I think - I think in this that Mike respond to that. If you do think about - if you do think about the growth we've been on largely organic that working capital needs and then you do think we've gotten a little bit fluffy on an inventory based on the supply chain and challenges is that stuff kind of plays out through fiscal '22. If we can imagine fiscal '23, there is an opportunity in fiscal '23 for us to deliver even stronger cash flows.
Adam Tindle - Raymond James - Analyst
Yeah, that's exciting and we'll look forward to that. Thank you, guys. I appreciate it.
Mark T. Mondello - Chief Executive Officer
Yeah, thanks.
Operator
Thank you. Our next question is coming from Steven Fox with Fox Advisors. Please proceed with your questions.
Steven Fox - Fox Advisors - Analyst
Thanks, good morning. Mark, you guys took a much earned victory lap on the diversification story with the presentation. So I was just curious as we think about diversification going out maybe two, three, four years, how do you think you'll mix changes and what would the impact be on operating margins? And then I have follow-up.
Mark T. Mondello - Chief Executive Officer
I don't know. To try to speculate how it changes, I would tell you that we have no intention of - we've been - we've been on, we've been on a journey for five, six, seven years. We've talked repeatedly about the fact that back six, seven years ago, and I think Adam alluded to it, which I really liked in his prepared remarks in terms of - historically in our industry and the industry has changed substantially, but EMS companies would get over weighted on a single customer and I think with that comes risk. I look at the - I look at the job our team has done and it's unbelievable in this one area for sure and you look at that pie chart that we put up during the presentation. We think diversification is so important, again just because it absolutely drives resiliency. How that might look. How might that look, three, four, five years from now. I can tell you that it will look however it needs to look for us to continue to drive margin and cash flows.
And when you look at our business today and you go back to that pie chart in the presentation, there are some slices of that pie chart that deliver both margin and cash flows. There is some parts of that pie chart that deliver very strong cash flows and support margins and then there's other parts of that pie chart that deliver really good margins and support cash flow. So when I think about the collective tie, if you will, boy, it has us positioned really well and I do think that hangs with us for the next two, three, four years.
Steven Fox - Fox Advisors - Analyst
Great, that's helpful. And then just secondly, at the risk of using the word secular trend, but the 5G trend is pretty strong but your connectivity in mobile - mobility markets, it doesn't look like you're looking for much growth this year. I was just curious if you could tie those points together and explain that a little bit more? Thanks.
Mark T. Mondello - Chief Executive Officer
Yeah, I think, I think there's a couple of things going depending on whether you're looking at a proxy of kind of '19, '20 to '21, '22 or you look in '21 to '22. One thing that we've transitioned to in that sector is the consignment model again that should have done a play out by the end of '21, early '22. So, and then overall I think one of the things that's going on in that marketplace is I think we're doing a very, very good job in terms of our solutions and services to hyperscalers and cloud, but the other thing that's going on there is we were - we were a very, very material partner in terms of wireless infrastructure. And so in some of that as infrastructure comes forward, there is going to be kind of a swap out or a conversion from legacy 2.5G, 3G, LTE, etc., to 5G. So on a net revenue basis, maybe the growth rates won't be as reflective as maybe what you alluded to is, for sure 5G cloud-based infrastructure, I would agree with you and I think it is a secular trend.
But in time in terms of Jabil's portfolio, there's going to be kind of a swap out of conversion of hardware. So forget the number that Mike put up, but I think the growth rate in that area was like strong single digits, which by the way we really like. But I think that's the main reason for it. We are – we are positioned very, very well for anything to do with wireless 5G cloud infrastructure type of secular trends, we're positioned very, very well.
Michael Dastoor - Chief Financial Officer
And Steve, if I could just add a little bit on the mobility piece. We've been pushing for diversification. As a company, we've been pushing for diversification. From a product standpoint, we think we're getting there, we're being extremely disciplined on capex and on our free cash flows. So I think the mobility piece, the lack of growth there is something we watch very carefully and it's something we're actually pushing towards.
Steven Fox - Fox Advisors - Analyst
Great, that's very helpful. Thanks, again.
Mark T. Mondello - Chief Executive Officer
Thank you.
Operator
Thank you. Our next question is coming from Jim Suva with Citigroup. Please proceed with your question.
Jim Suva - Citigroup - Analyst
Thank you. Regarding the challenges in the supply chain, kind of where you sit today, is it kind of stabilizing a little bit or getting incrementally better or incrementally more challenged? And the reason why I ask is, hopefully COVID at some point gets behind us but you also now hear discussions about power outages in China, in rationing of power and things like that. Are those impacting you? Or how should we think about that? And relative to your outlook, is it kind of the same amount of cushion or you're building in a little bit more? Thank you.
Mark T. Mondello - Chief Executive Officer
Thanks, Jim. I don't know where to start with that. I would say we've - as we've indexed through '21, you take a look at - every every single quarter, Mike and I get together along with Steve Borges, Mike Loparco, Kenny Wilson, our ops group and we kind of hold hands, look hard, hard at the business and then risk-adjust, accordingly give guidance and then work really hard to deliver to our guidance in our commitments. I think we did that really, really well, Q1, Q2, Q3 and in fact we kind of topped off revenue to the upside in each of those quarters. Q4, if I look back on that, maybe we should have risk adjusted a little bit differently back in June, but boy, we certainly felt good about our guide and then what happened Jim is, literally two, three weeks after our call in June the supply chain issues inside of our 4Q just we saw incremental tightness and I think Mike use that term and I think that term is very reflective of exactly the kind of the situation and the way the world look to us as we marched through most of the fourth quarter.
As we sit today and we gave a lot of very, very careful thought in terms of our outlook for '22, the $31.5 billion that we have in our outlook for '22, again a 7% to 8% upside. The $6.35 in core EPS, again substantial uplift to the $5.60 or $0.61 for '21. The cash flows and then I think as important or more importantly than any of those is the 4.5% margin and the trajectory and margins. We spent a lot of time talking through COVID, COVID variance, we spend a lot of time talking through every single element of supply chain risk and we did our best to handicap that. So when does the fever break on that, it's really hard to tell because I think it's going to be a combination of the demand and the supply side. Does demand start to soften a bit, does the supply start to strengthen a bit, and there is a significant amount of variables there. The way that we think about it is, we think - we think our first quarter and second quarter of fiscal '22 were, we're going to still see tightness about equivalent to what we saw in the last two months of '21. So very tight - very tight supply in components, Q1, Q2 of '22. We think that our estimate is and as Frank [Indecipherable] said in our supply chain video that you just saw. I think our team - I think our team is rated well to have strong opinions on the supply chain because of the 400 customers we serve, our geographic landscape and just the amount of overall parts we buy. I think that things will start to maybe move in a better direction as we get into the back half of '22, whereby by no means suggesting that the supply chain is back to normalized levels by the back half of the year. But again, just to be repetitive because I think it's that important.
Q1, Q2, we've kind of handicapped those with the same level of tightness that we experienced in July and August as we rounded out FY'21, we think things will get a bit better as we get into the back half of '22 if demand holds and we're working through this solely on the supply side, then I would think that we don't see normal conditions in the supply chain until we get into maybe the first half of '23 or the way things sit today. The one thing Jim, and I think Mike said this during his prepared remarks when we showed the supply chain video. For us to have delivered a year in '21 where topline was up 7% to 8% in this marketplace, it's congrats to the entire team. But boy, the job our supply chain folks have done in the last six to eight months is is outstanding.
Jim Suva - Citigroup - Analyst
Thank you so much for the details.
Mark T. Mondello - Chief Executive Officer
Yeah. You're welcome. Thank you.
Operator
Thank you. Our next question is coming from Ruplu Bhattacharya with Bank of America. Please proceed with your question.
Ruplu Bhattacharya - Bank of America Merrill Lynch - Analyst
Hi, thank you for taking my questions. I think I heard in the prepared remarks something about change in the compensation program to focus more on operating margins, cash flows and EPS. Mark, you're guiding about 30 basis points improvement in operating margin overall for fiscal '22 and also to $31 plus billion in terms of revenues. But going forward, should we take this as an indication that there is more focus now on margins versus revenue growth? And in that vein, can you remind us what is the long-term range for margins for DMS as well as the EMS segment? I mean, you're projecting 5% operating margin for DMS for fiscal '22, how much more upside do you think there is in that segment? And the same question for EMS, I mean 3.8% margins in fiscal '22. How should investors think about the long-term range for that segment?
Mark T. Mondello - Chief Executive Officer
Okay Ruplu, there was a lot there. Let me process for a second and figure out which order I want to try to address that. So if I forget something, bring me back because there's a lot of content in a short question. Let me start with compensation. So I think we're a company led by our Board and highly, highly supported by myself and Mike, where we have a huge belief in pay for performance. And I don't know if Adam said change in comp or alluded to comp and I wasn't listening that closely to that portion of his prepared remarks, but for sure I think what Adam was communicating is when it comes to our leadership team and our management team, we absolutely want a significant amount of our compensation tied to the commitments we're making to shareholders and customers, and we've had that mindset for many years. I think that what you would see in the forward proxy if I had to guess is you'll see another year where the commitments that we're making to everybody on this call and our shareholders, specifically in terms of the 4.5% margin, the $700 million in cash flow and then the $6.35 in EPS, I think you'll see those firmly embedded in our compensation plans.
In terms of where margins might go, I think, again as we've talked about many, many times, starting two years ago there is just a - there is an intense focus on, we love the portfolio that we have. I'll say it again, being well diversified with some of the greatest brands on the planet, across eight different sectors has given us a foundation inside the company that we love. And with that foundation, It's - don't know a goofy analogy would be built in the house. You can have a really nice kitchen and really firm walls. If you don't have a firm foundation, it doesn't last very long. And I think - I bring that up because our commercial portfolio the way it exists today is really the foundation of the company and then you add to it some of the things that we talked about in prepared remarks. You look at our structure, you look at our team, you look at our approach, those would be the - those would be the walls and the trust is in the roof of of the Jabil house. And from that I think that - we took margins up, we took - when we were - when we were building the foundation, our margin ranges were around - the core op margins were - as an enterprise were around 3.5%. Then we came into '21. In fact it was a year ago now where we made a commitment and gave an outlook to everybody to say we think we can deliver 4% this year and we end up delivering 20 basis points higher than that 4.2%. And now we're sitting is saying okay, we think we can stretch that 30 basis points in '22 to get to 4.5% and again I would suggest that all that's around just the foundational strength of the company again, as well as solutions approach, structure and team.
And then I said something in my prepared remarks around, I think we've got - I think we've got more to do and maybe - maybe there is - maybe there is two parts of that comment. For sure, we got a lot of hard work ahead of us to deliver what I think is a very appropriate outlook for '22, so therefore that's kind of derivative number one of my comment on we got more to do. But a big part of why I made the comment on more to do has to do with fiscal '23 and '24 and I would like to see us and hope that that we can keep the positive trajectory on margins and drive margins past the 4.5%.
In terms of DMS, I don't know, I don't want to get into that break down now. I think your math is - I think your math is correct and I validated the math and one of the blue, green slides that I think the one I showed that we think diversified will be 5% this year. Given a range to that, I don't know. We kind of have thoughts in our head. But I look at the diversified groupings of business, businesses that Kenny and Steve run, and we've taken that from 3.7% in '20 to an outlook now of 5%. I think that expansion is tremendous. And then you look at our legacy business that's run by Mike Loparco and his team, and we've taken that from 2.7% and that's all of EMS. That's our former high velocity business, etc., etc., and now we're now we've got an outlook of 3.8%. I don't know if we get there in '22. But we keep doing what we're doing on the legacy and the EMS side of our business, which by the way I think I'm doing a huge disservice to even use the word legacy because the business that we're running on the EMS side of the house today is distinctly different than it looked five years ago. But if things went right there, I don't see any reason why we can't run the electronic side of our business at at 4%. So again, you kind of do the math on a weighted average basis and all that and I think you get margins higher than 4.5% going forward.
Ruplu Bhattacharya - Bank of America Merrill Lynch - Analyst
Great. I mean, I appreciate all the details on that, so thank you for that. For my follow-up if I can just ask, Mike. I think you guided another $330 million I think for growth capex this year. Can you remind us like based on your existing infrastructure, how much revenue can that support today? And then once you have that $330 million of investment, what would be the max revenue that your infrastructure would be able to support? Thank you.
Michael Dastoor - Chief Financial Officer
Sure, Ruplu, so the things we look at it from a different perspective, we look at it from an end market perspective because different end markets have different capex requirements. It's not just about existing capacity and forward-looking capacity. I think we've been on a journey, we're continuing on this growth path, the secular trends very much alive and doing well and Jabil saws a growth capex in that $300 million plus range is what will drive our capacity going forward as well. But it's all over the place Ruplu is the simplest answer, it's - I can't put my hand on a particular, for this capacity left or this will take us to x dollars of revenue.
Mark T. Mondello - Chief Executive Officer
Hey, Ruplu, maybe I could interject. I think I know where you're going some of that, but one of the things that we had - we had some shareholders time and all over us five, six years ago on having strong opinions around our capital allocation, use of cash and some other things, and that's our shareholders should be and will be. As I look at the landscape today, I don't know over time where we've ever been more diligent and use of cash both internal capital investments, opex investments and then returns to shareholders. So here we sit - here we sit in the current landscape. A few weeks back we announced a $1 billion, another billion dollar buyback. I think capital returns to shareholders will always be part of our plans - in our plans especially for the next number of years.
And then I think about - I think about the processes we have inside the company today in terms of the diligence to which we allocate capital internally. And again these won't be exact numbers, but will be directionally correct. We're going from maybe historics where our capex investments might have been 3.2%, 3.3% of revenue. I think Mike had a chart there somewhere that shows capex as a percent of revenue down at 2.6% and I see no reason why we might not naive and drive that a little bit or would drive that a little bit lower. But the other thing that we look at is, is, with that capex investments, with their EBITDA, etc., etc., again the $700 plus million of free cash flow. And I believe Mike also shared a slide talking about our real ROIC on all in investments is upwards of 30%. So we feel pretty good about about how closely we're watching each and every penny in terms of both opex and capex investments.
Ruplu Bhattacharya - Bank of America Merrill Lynch - Analyst
Okay, thanks for all the details and congrats on the strong execution.
Mark T. Mondello - Chief Executive Officer
Thank you. Thank you. Our next question is coming from Shannon Cross with Cross Research. Please proceed with your question.
Shannon Cross - Cross Research - Analyst
Thank you very much. I just - the inflationary pressures that are out there right now and how you're looking at managing them, whether it's head count or commodities or logistics as you look to next year as well as going forward, how much do you think is transitory and how much you think is here to stay? Thank you.
Mark T. Mondello - Chief Executive Officer
Yeah, thanks for the question. It's a complicated one. Think about half of the smart people that you listen to suggest it's transitory and half the smart people you listen to believe something different. I think the way - the way we're handling it inside the company is we showed - I'd start with - we showed three videos and one of the videos was around kind of the factory investments automation, factory productivity. And I think factory productivity is something we continually focus on. When you think about the construct to Jabil today, you're talking about a company that has, I don't know 55 million square feet factory space all around the world. So driving productivity, driving cost optimization, it's just what we do, it's integral to what we do, and a lot of that effort year in and year out is to offset wage increase, inflationary costs, it keeps us competitive, it allows us to offer customers cost reductions when appropriate, we eliminate waste.
But the other thing that's happening with all of that is the fact that a big part of those efforts are also helping with our margin expansion. So again I think it was my response to that either Jim or Ruplu, we will continue to obsess about taking great customer - great care of our customers and at the same time keeping our people safe. That's in the forefront along with the purpose that I talked about in my prepared remarks. If we do that, then I think - then I think the financial returns come along with that. But one of the things that adds a little bit of complexity to it is, is the dynamics around inflationary costs. I think that we've done a good job. We've done a good job having long conversations around what we think those could be, how much of that will be offset by the factory productivity and cost management. I think we've been very aggressive going into '22 in terms of our base cost because that's directly inside of our control. And I again I think that's fully embedded in our FY'22 to guide. What we're trying to do is we're trying to do our part in serving our customers in an environment that at least currently has inflation embedded in it, whether that goes beyond '22 or not I don't know.
Shannon Cross - Cross Research - Analyst
Okay, thank you. And then just one specific. I'm just wondering the 13% growth in digital print and retail. Is that just a return to normal or what's driving that? Thank you.
Mark T. Mondello - Chief Executive Officer
I don't think it's return to normal. I think our digital - let me make a comment that will be inaccurate in some ways, but will give you an idea of where I'm, what I'm trying to - what I'm trying to get at. A number of years ago when we would talk about print as a business or a sector, you would think about - you would think about print. So you would think about putting income paper and then setting the other. And by the way that's still a very important aspect to that business. But when we look at digital print and retail today, there is a reason that we use the term digital. I think I said earlier, it's an overused term and so maybe we're over using it to, but I think it's still appropriate in this business sector from the standpoint of when we look at what's in that sector today, along with whether it'd be any type of office printing or large form factor printing. I also think about digitization and mobile printing. I think about scanners and printing in terms of factory efficiencies. If inflation is here to stay, factory productivity, warehouse productivity, retail productivity is going to be hugely important because dollar for dollar, all of that effort is going to help to offset passing on inflationary cost to customers, which for those businesses and those customers is going to be huge in terms of them protecting their cash flows and margins. So we're doing a ton in that area.
And then the other areas, Fred McCoy and his team who'll oversee that sector of our business. They're doing a bunch of amazing things in terms of kind of the transformation going on in the retail space in terms of automation, and again overall productivity optimization and efficiencies where the retail space connects with the consumer. So those are the areas that are driving growth in that sector.
Shannon Cross - Cross Research - Analyst
Thank you.
Mark T. Mondello - Chief Executive Officer
Your welcome.
Operator
Thank you. Our next question is coming from Paul Chung with J.P. Morgan. Please proceed with your question.
Paul Chung - J.P. Morgan - Analyst
Hi, thanks for taking my questions. So you called out healthcare where you're seeing an acceleration from kind of a small penetration rate of insourcing. So given the kind of attractive margin profiles there, do you expect to see continued structural step up in margins as we look further out beyond '22 as is trying to accelerate given it's kind of your second largest segment today? And then I have a follow-up.
Mark T. Mondello - Chief Executive Officer
Sure. So we're going to see a step-up in margin, I don't know. What I believe is I think that there is a really good opportunity for a step-up of margins if we continue to do our job and the macro holes of bla, bla, I think we're not done at enterprise level margins at 4.5% and I think that you stated it, it's interesting isn't it that in FY'22 our healthcare and packaging business is now our second largest sector hope by the way. That sector has doubled in size in like three or four short years. So I think this gives me a nice opportunity to give a shout out to Steve Borges and his whole team, what they've done there and then the contributions we're getting from our consumer packaging team.
I think that Mike or Adam alluded to this. I think that there is a - maybe a newer found trust between the most awesome health care brands out there, whether it'd be diagnostics, whether it'd be pharma, whether it'd be med device, I think that, whether it'd be - whether it be by the way personalized health - personalized healthcare, on body diagnostics and tracking, I think that there is a - I think that there is a newer found trust with the capabilities that a company like Jabil has today with which again are night and day compared to what we were doing six, seven years ago. I think that trust will open up more and more conversation around opportunities where maybe they look a little bit like what we did with JJMD.
I think the other thing that plays well for us there is, is if you can imagine maybe hardware businesses that maybe we take our experience in connected devices and sensors and things like that and we start leveraging those parts of our business along with our wireless expertise, etc., etc., again for personalized healthcare on body health monitoring and again individual medicine, I think that also is going to drive continued growth in the healthcare space for us.
Paul Chung - J.P. Morgan - Analyst
Okay, great. And then Mike on free cash you've hit highest level in four fiscal years despite some higher than usual working cap drag, nice guide for for '22 and you mentioned some baked in supply constraints there, so assume kind of some working cap drag continues, if you could talk about the puts and takes in operating cash and your view on timing of normalization? Thanks.
Michael Dastoor - Chief Financial Officer
Yeah, I think, like I said before I really feel comfortable with the $700 million free cash flow guidance that we provided for '22. I think that discipline in our working capital, discipline in our capex, all of that continues. Our earnings potential is extremely strong, our revenue is growing by a couple of billion dollars, and that comes with some level of associated working capital. I think over time as supply chain constraints normalize, I expect this $700 million to go higher, if that happens sooner than later. I think at this time it's appropriately sort of derisked at the $700 million level, it can go higher if supply chain constraints ease earlier. And I think that sort of growth level would be possible beyond '22 as well.
Paul Chung - J.P. Morgan - Analyst
Great, thanks.
Mark T. Mondello - Chief Executive Officer
Thank you.
Operator
Thank you. Our next question is coming from Matt Sheerin with Stifel. Please proceed with your question.
Matt Sheerin - Stifel Nicolaus & Company, Inc. - Analyst
Yes, thanks. Good morning, Mark and Mike. I wanted to get back to an earlier question regarding your strong guide for automotive for FY'22, particularly against the backdrop of global production cuts due to the chip shortage. So is this more of a function of new program wins with existing or new customers and is primarily around EV or are there other growth drivers there such as autonomous safety in entertainment or infotainment, any color you can add would be great?
Mark T. Mondello - Chief Executive Officer
Well, I think you said it well. I think it's - I think it's it's all of the above. I mean, it seems so in congruent. We can sit here - we can sit here in this environment and offer up a presentation which suggest that our auto and transportation sector is going to go from $2 billion, $2.2 billion in '21 and be over $3 billion in '22, it may be lax logic in this environment, but I think you said it well. I think; A, I'd start with - we worked with Chad Morley and his team that run that sector and gave a lot of thought to how to handicap or risk-adjust that for '22. We went through a lot of discussion points around supply chain risk and for sure there is risk around silicon and semiconductor supply chain headwinds in automotive, as everybody on the call knows. But in doing that, we also looked at kind of our current relationships, new customer relationships. And again I think a couple of the positive variables there is we started down a path, probably three and a half, four years ago where we over-indexed hard towards autonomous driving and maybe more accurately electrification of vehicles.
I think Mike had a slide during his presentation and there is this this acronym ACE that Mike alluded to. I have to go back and look at that particular slide because I think it's for a single slide there is a lot there and it's very illustrative of some of the areas that we're focused on both from an engineering standpoint, a capability standpoint, a design standpoint. So you take that slide, you combine it with some of the marquee brands that I think actually Adam showed on a slide under automotive and transportation and I think if you shake all that up and that gives - that's what gives us the confidence that automotive and transportation sector will be over $3 billion in '22.
Matt Sheerin - Stifel Nicolaus & Company, Inc. - Analyst
Okay, great, that's very helpful. And then just for my follow-up regarding your outlook for the Networking and Storage segment which our modeling down, is that a function of end markets outlook or a function of you de-emphasizing some programs as you're continuing to focus on higher value at higher margin areas?
Mark T. Mondello - Chief Executive Officer
It's both. And I don't want to - I don't want to, it all suggests that networking and storage customers aren't higher value add. I think that even though we're indexing networking and storage down, I think from what was like $2.7 billion, $2.8 billion in '21 down to like $2.6 billion in '22. That's not - that's not a reflection of most of our customer relationships in that area. That sector is still extremely material for us and more than anything that sector, although margins arguably are very tight in that sector for us, it comes off of some of the long lasting legacy brands. The cash flows on that sector are very good. And again it has a very, very integral part to our overall composition and forward-looking for '22 and '23 in terms of appropriate contributions to the overall financial returns of the company. So I think that's - that kind of gives you an idea of why that might look like it looks.
Matt Sheerin - Stifel Nicolaus & Company, Inc. - Analyst
Got it. Thanks very much.
Mark T. Mondello - Chief Executive Officer
Yeah, you're welcome.
Operator
Thank you. Our next question is coming from Mark Delaney with Goldman Sachs. Please proceed with your question.
Mark Delaney - Goldman Sachs - Analyst
Yeah, good morning, and thanks for taking the questions. A number of companies have talked about trying to improve the resiliency of their supply chains going forward in terms of inventory management strategies, adding new suppliers and so I think there'll be opportunities for cable as a result of that. Can you talk about to what extent you're expecting to see any benefits from some of those supply chain resiliency efforts in fiscal '22? Or is it supply chain is still so tight in '22 that it's going to be hard to implement any of those sort of improvement and that's perhaps more of an opportunity for Jabil in fiscal '23 and beyond?
Mark T. Mondello - Chief Executive Officer
I think in the near-term there is little to no opportunities because we're scratch incline [Phonetic] fighting day in and day out just to get the parts we need to build the products to hit our commitments. So in the near-term its kind of hand-to-hand combat and and very tactical in nature. Oh, by the way, if we're going to be in hand-to-hand combat and it's going to be very tactical in nature, I'll take our supply chain team every day. So again, I think that's kind of - that's kind of the fogginess on the horizon right now and I think I alluded to it earlier. I think we're in that - in that stage. Certainly, the first half of '22 could be a little bit longer.
What I then think happens assuming that the macro holds and assuming the world is still somewhat round and assuming that because of that there is still decent demand, then maybe there is a little bit of - maybe there is a little bit of an uptick as pipelines are getting filled as people think about supply chains again. I don't think - I don't think it'll be a good idea if the reaction to all of this, but we've been through this before. We went through the tech wreck, we went through the financial crisis. We've been through these ebbs and flows. I think there'll be maybe a period of time where there will be a rebuilding of inventory and maybe that - maybe that provides kind of a small degree of upside over a small time frame. But I think that - I don't think building inventory and having redundancies here and there are a good solution. I think a better solution is, is - we invest, I don't know the exact number, but we invest, call it $250 million, $300 million of opex a year and a portion of those investments are around very sophisticated supply chain, tools, data analytics. And I think Jabil continuing to invest in tools like that, so that we can go back and challenge customers in terms of historical behavior, forward looking forecast, and do it with kind of again data analytics and a higher degree of sophistication from an IT standpoint, I think tools like that will become more and more valuable. And then you add to it the fact that we're going to connect those tools to our, to what we're doing in our factories in terms of machine learning, robotics and automation. And you think about that inside of a company like Jabil, that'll be bumping up against $34 billion, $35 billion in scale, factories all over the globe. I think the way we're thinking about that, boy, we're going to be really well positioned to to help a lot of the customers we serve in terms of how to further optimize supply chains going forward.
Mark Delaney - Goldman Sachs - Analyst
That's helpful, thanks. And for my second question was on the EMS segment margins in the four quarter, somebody already spoke to the reasons for the strength and margins on a year-over-year basis, but I was hoping you could touch on the reasons for strength on a sequential basis, revenue was slightly down quarter-to-quarter but margins were up nicely, maybe it's the same reason around the inventory strategy with cloud, but perhaps it's something out on a quarter-to-quarter basis and if so, I was hoping to better understand what it may be? Thank you.
Mark T. Mondello - Chief Executive Officer
Yeah, sure Mark. I think - I think the year-on-year comp is distorted because Q4 '20 we were still wrestling around with COVID stuff, and I think all our metrics in '20 were distorted to the downside. This is unintentional, but we've kind of, the way - this is more coincidental than anything. So the way the construct of Mike's and his team's electronics business stacks up is it just aligns with the fact that our 4Q ends up typically being stronger for that part of our business and that's not - that's not an intentional thing, that's just - that's how we run our business from a bottoms up makeup. So I think what you're seeing - I think what you saw in the fourth quarter was just a repeat of again another strong 4Q by the electronic side of our business.
And in fact if you kind of map what we said for '22, we kind of gave you - we kind of gave you everything you need to map out Q1. If you think about the fact that we believe and I think we gave you the full year. So I think revenue for '22 first half to second half is going to be about 50-50 for the company. You'll probably be able to get some math that says, once again we think our electronics business in terms of margin will be stronger in the second half of '22 and probably strongest in the fourth quarter. And again, that's really just a makeup of customers sectors and markets and it happens to fall into our fourth quarter. What I'm more interested in for sure is we have an electronics business that if you just go back to, I don't know, like fiscal '19 the electronics part of our business, the way we define it today was in the 2.9%, 3% range all in, and I'm most interested in our ability to try to get that part of our business bumping up against 4% margins.
Mark Delaney - Goldman Sachs - Analyst
Thank you.
Mark T. Mondello - Chief Executive Officer
Oh, by the way - the numbers that we just - we'd offered during the presentation which also has a high degree of satisfaction f we can execute is I think - I think we gave you numbers that would suggest that that part of our business is going to grow nearly 5% on the topline. And so with that growth at that scale if we can get that part of our business bumping up against 4%, boy, that does wonders for our overall portfolio.
Mark Delaney - Goldman Sachs - Analyst
Thank you.
Mark T. Mondello - Chief Executive Officer
Yeah, you're welcome.
Operator