Prompt:
Human: But before I begin, I'd like to take a minute to recognize the hard work of our team at Invesco, like most everybody, our employees have been working in a work-from-home or hybrid environment for more than a year now, and they've achieved these results in a very challenging environment.
And with the success of the virus, many of us have been coming back to the office and working together in the last few months and I can tell you, it's good to see our colleagues once again.
And we are in different stages of reopening around the globe and one thing that I hear from everybody that is able to get back to the offices upgraded us to see one another and work together.
And as always, we'll follow the status of COVID and local guidelines as we transition back to the office, meeting client needs, helping them ensure continued health and well-being of our employees.
So now, let me turn to the results.
We achieved a new record in the second quarter for long-term net inflows totaling $31 billion.
This follows net inflows of $24.5 billion last quarter and up nearly $18 billion in the second half of last year.
Growth was led by net inflows into institutional ETFs, fixed income, and but as alternative capabilities.
And as you can see on Slide 3, the key capability areas where we have scale, investment readiness, competitive strength, drove growth again in the quarter.
These are areas where our investment performance is strong, we're highly competitive and well-positioned for growth.
Looking at our ETFs, excluding the Qs, they generated net long-term inflows of $12 billion during the quarter.
Net long-term inflows from alternatives during the quarter were $4.3 billion, including strength in our private markets business.
We launched two CLOs during the period, raising $1 billion and generated net inflows into our real estate business of a billion dollars.
We continue to focus and invest in our alternative capabilities space where we also see the benefit of our partnership with MassMutual which we highlighted last quarter.
MassMutual has committed over $1 billion to various alternative strategies, materially increasing the speed with which [Phonetic] we can get to market for the benefit of our clients.
We continue to innovate with strategies for retail investors through the launch of products such as INREIT and the partnership we announced with UBS, in which we will provide bespoke Global Property Investment Services for management clients of UBS in Switzerland, other parts of EMEA and Asia.
We also have $5 billion in direct real estate capital available for deployment.
We had net long-term inflows of $8.8 billion into active fixed income and within the active global equities, our $52 billion [Phonetic] developing markets fund, a key capability that came with the Oppenheimer combination, continued to see net inflows of nearly $1 billion dollars during the quarter.
Second-quarter flows included net long-term inflows of $3 billion from Greater China and our Chinese joint venture continues to be a source of strength and differentiation for us as an organization.
In addition, our solutions enable institutional pipeline accounts for 35% of the pipeline at quarter-end, this following the funding of a large passive mandate from Australia in the second quarter which was enabled by our Solutions team.
Allison will add more information in a moment on flows, the pipeline results in the quarter, including the continued progress toward our net savings target.
But I would note, the growth we are experiencing is driving positive operating leverage producing an adjusted operating margin of 41.5% for the quarter.
Strong cash flows being generated from our business improved our cash position, helping build a stronger balance sheet and improving our financial flexibility for the future.
Our investment performance was strong in the second quarter with 72% of actively managed funds in the top half of peers or feeding benchmark on a five-year and a 10-year basis.
This reflected continued strength in fixed income, global equities, including emerging market equities and Asian equities.
All areas where we continue to see demand from clients globally.
Moving to Slide 5.
We ended the quarter with $1.525 trillion in AUM.
Of the $121 billion in AUM growth, approximately $66 billion is a function of increased market values.
Our diversified platform generated gross inflows in the second quarter of $114.4 billion.
This [Technical Issues] 82% improvement from one year ago.
Net long-term inflows in the second quarter were $31.1 billion, representing 10.6% annualized organic growth.
Active AUM net long-term inflows were $2.1 billion and passive AUM net long-term inflows were $29 billion.
The retail channel generated net long-term inflows of $9.5 billion in the quarter, driven by positive ETF flows.
This represents a $24.1 billion improvement in net long-term inflows from one year ago, driven by significant improvement in equities in the Americas.
The institutional channel generated net long-term inflows of $21.6 billion in the quarter, augmented by the funding of the nearly $18 billion Australian passive mandate.
Looking at retail net inflows, our ETF, excluding the QQQ, generated net long-term inflows of $12.1 billion.
Our global ETF platform, again excluding QQQ, again captured flows in excess of its market share of AUM in the second quarter and for the first half of 2021 with net ETF inflows in the United States included a continued high level of interest and our S&P 500 equal weight ETF, which generated $2.6 billion in net inflows in the second quarter, following $4 billion of net inflows in the first quarter.
Looking at flows by geography on Slide 6.
You'll note that the Americas had net long-term inflows of $5 billion in the quarter, driven by net inflows into ETFs, various fixed income strategies, private market CLOs, and the direct real estate net long-term inflows that Marty mentioned.
Asia-Pacific again delivered another strong quarter with net long-term inflows of $28.3 billion.
Net inflows were diversified across the region, nearly $18 billion was from the large passive Australian mandate that funded from our institutional pipeline in May.
The balance reflects $4.8 billion of net long-term inflows from Japan, $3 billion in inflows from Greater China of which the majority was from our China JV, $1.8 billion from Singapore, and the remainder arising from other areas across the region.
Long-term inflows for EMEA excluding the UK were $1 billion driven by retail flows including net inflows into alternative [Phonetic], particularly our US and European senior loan funds.
ETFs, the net inflows in EMEA were $2.2 billion in the quarter.
And finally, the UK experienced net long-term outflows of $3.2 billion in the second quarter, driven largely by net institutional outflows in multi-asset and investment-grade capabilities.
$2.4 billion of these net long-term outflows relate to our Global Targeted Return capability, which had $10.2 billion globally in AUM at the end of June.
The overall UK net long-term outflows in the second quarter were an improvement of $2.7 billion as compared to the first quarter net long-term outflows of $5.9 billion.
This improvement was driven by UK Retail, primarily inflows into the European Equity Funds and lower net outflows during the quarter across a number of fixed income and UK equity capabilities.
Turning to flows across the asset classes.
Equity net long-term inflows of $15 billion [Phonetic] reflect a good portion of the Australian mandate and ETF, including our S&P 500 equal weight ETF that I mentioned.
We continued to see broad strength in fixed income in the second quarter with net long-term inflows of $13.6 billion.
Driver to fixed income flows include institutional net flows into investment-grade strategies and retail net long-term inflows, and the various municipal funds and fixed maturity products in Asia.
It's worth noting that although we did have fund launches in China in the second quarter, they were not at the pace of what we experienced in the first quarter.
You see this largely reflected in the $9.1 billion decrease in the net flows in the balance asset class during the quarter to net outflows of $1.8 billion.
Our alternative asset class has many different capabilities, and this is reflected in the flows we saw in the second quarter.
Net long-term flows in alternative improved by $4.5 billion over the first quarter, driven primarily by our private markets business through a combination of inflows from the newly launched CLOs, direct real estate, senior loan and commodity capability.
Included in these alternative flow results is also the GTR net outflow that I just noted.
If you do exclude the global GTR net outflows, alternative net long-term inflows were $7.2 billion, quite significant in the quarter.
Moving to Slide 7.
Our institutional pipeline was $33.3 billion at June 30, reflecting the funding of the large passive indexing mandate in Asia Pacific, assisted by our custom solution advisory team.
Excluding the impact of the $18 billion passive mandate in the first quarter, the pipeline has increased in size and remained relatively consistent to prior quarter levels in terms of asset and fee composition.
Overall, the pipeline is diversified across asset classes and geographies and our solutions capability enabled 35% of the global institutional pipeline and created wins in customized mandates.
This has contributed to meaningful growth across our institutional network, warranting our continuing investment and focus.
Turning to slide 11 [Phonetic], you'll note that our net revenues increased $52 million or 4.1% from the first quarter as a result of higher average AUM in the second quarter.
The net revenue yield, excluding performance fees of 34.8 basis points, a decrease was 0.90 of a basis point from the first quarter yield level.
The decrease was driven mainly by asset mix shift, including higher QQQ and money market average balances, as well as the impact of the large passive of Australian mandate that funded in May.
This decrease was partially offset by the improvement in markets in the quarter.
The incremental impact relative to Q1 of higher discretionary money market fee waivers was minimal in the second quarter, but the full impact on the net revenue yield for the second quarter was 0.70 of a basis point.
We do expect fee waiver to remain in place for the foreseeable future until rates begin to recover to more normalized levels.
Total adjusted operating expenses increased 1.9% in the second quarter.
The $14.4 million increase in operating expenses was mainly driven by variable compensations and marketing.
Higher variable compensation as a result of higher revenue offset by the reduction in payroll taxes and certain benefits from the seasonally higher levels that we experienced in the first quarter.
We also recognized sales -- excuse me, we also further recognized savings in the quarter, resulting from our strategic evaluation.
Marketing expenses increased $9.8 million in the second quarter, mainly due to seasonally higher levels relative to the first quarter, which is typically the low point for marketing spend annually.
We also reevaluated the timing of various branding campaigns and launched targeted initiatives in the quarter across the globe.
Operating expenses remained at lower than historic activity levels due to pandemic driven impact to discretionary spending, travel, and other business operations.
However, we did reduce some client activity and business travel late in the second quarter, which is reflected in both marketing and G&A expense.
As we look ahead to the third quarter, our expectations are for third-quarter operating expenses to be modestly higher compared to the second quarter, assuming no change in markets and FX levels from June 30.
We expect that the higher AUM levels driven by net inflows and market improvement in the second quarter will have a modest carryover impact on both revenues and associated variable expenses in the third quarter.
We also expect a modest seasonal increase in marketing-related expenses, as spend [Phonetic] typically increases in the third and fourth quarters.
One area that's still more difficult to forecast at this point is when COVID impacted travel and entertainment expense levels will begin to normalize.
We are engaging in more domestic travel and in-person engagements and we do expect to see continued modest resumption of these activities across the third quarter.
Additionally, our US mutual funds Board has approved certain changes to the pricing of transfer agency services that we provide to our fund.
As a result, we anticipate that our outsourced administration costs which we reflect in property, office, and technology expenses, will increase by approximately $25 million on an annual basis.
Offsetting this will be a corresponding increase in service to distribution revenues, resulting in a minimal impact to operating income.
We expect this new pricing structure to go into effect in the third quarter and to be fully in place by the fourth quarter.
Moving to Slide 9.
We update you on the progress we've made with our strategic evaluation.
As we've noted before, we are looking across four key areas of our expense base, our organizational model, our real estate footprint, management of third-party spend, and technology and operations efficiency.
Through this evaluation, we will continue to invest in key areas of growth, including ETF, fixed income, China Solutions, alternatives, and global equities.
In the second quarter, we realized $7.5 million in cost savings.
$2 million of the savings was related to compensation expense and $5 million related to property, office, and technology expense.
The $7.5 million in cost savings or $30 million annualized, combined with the $95 million in annualized savings realized through the first quarter of '21 brings us to $125 million in total or 63% [Phonetic] of our $200 million net savings expectations.
As it relates to timing, we still expect approximately $150 million or 75% of the run rate savings to be achieved by the end of this year, with the remainder realized by the end of '22.
Of the $150 million in net savings by the end of this year, we anticipate we will realize roughly 70% of the savings through compensation expense.
The remaining 30% would be spread across occupancy, tech spend, and G&A.
We expect the total program savings to be 65% in comps -- in compensation and about 35% spread across the other categories.
So the $125 million of the expected $150 million in net savings by the end of this year already in the quarterly run rate, the degree of net savings per quarter, we will continue to moderate going forward.
In the second quarter, we incurred $20 million of restructuring costs.
In total, we recognized nearly $170 million of our estimated $250 million to $275 million in restructuring costs that were associated with this program.
We expect the remaining transaction costs for the realization of this program to be in a range of $85 million to $105 million through the end of 2022.
As a reminder, the cost associated with the strategic evaluation are not reflected in our non-GAAP result.
Moving to Slide 10.
Adjusted operating income improved $38 million to $541 million for the quarter, driven by the factors we just reviewed.
Adjusted operating margin improved 130 basis points to 41.5% when compared to the first quarter.
Most importantly, our degree of positive operating leverage reflected in our non-GAAP results was 1.8 times for the quarter, underscoring our focus on driving scale and profitability across our diversified platform.
I'll also point out that our adjusted operating margin back in the third quarter of 2019, which was our first full quarter following the Oppenheimer acquisition, was 40.9%.
At that time we reported a net revenue yield excluding performance fees of 40.7 basis points.
At the end of the second quarter of 2021, our net revenue yield ex-performance fees was 34.8 basis points, yet our adjusted operating margin was 41.5%.
We have been building out our product suite to meet client demand and client demand has been a lower fee product.
We're focused on aligning our expense base with changes in our business mix, enabling the firm to generate positive operating leverage and operating margin improvement.
Non-operating income included $42 million in net gains for the quarter, compared to $26 million in net gains last quarter, primarily from increased unrealized gains on seed money and co-investment portfolios.
The effective tax rate for the second quarter was 22.8% as compared to 24% in the first quarter.
The effective tax rate on net income was lower in the second quarter, primarily due to a change in the mix of income across taxing jurisdictions.
We estimate our non-GAAP effective tax rate to be between 23% and 24% for the third quarter.
The actual effective rate may vary from investments due to the impact of non-recurring items on pre-tax income and discrete tax items.
Few comments on Slide 11.
Balance sheet cash position was $1.3 billion at June 30 and approximately $750 million of this cash is held for regulatory requirements.
Our cash position has improved considerably over the past year, increasing by nearly $350 million, largely driven by the improvement in our operating income.
Our debt profile has improved considerably as well with no draws on our revolver at quarter-end.
As a result, we've substantially improved our net leverage position.
During the quarter, we repaid the remaining $177 million forward share repurchase liability in April.
And there are no remaining share repurchase contract liabilities.
In terms of future cash requirements, in the second quarter, we recorded an adjustment for the MLP liability associated with the Oppenheimer purchase, reducing this liability from our original estimate of nearly $385 million, down to $300 million.
We anticipate funding this liability in the fourth quarter of '21, but we do anticipate a degree of insurance recovery related to the matter.
The insurance claims process is inherently complex and we do not have an update at this stage of the timing or size of that recovery.
Overall, we believe we're making solid progress in our efforts to improve liquidity and build financial flexibility.
In summary, we continue to see growth in our key capabilities.
We remain focused on executing the strategy that aligns all these areas while completing our strategic evaluation and reallocating our resources to position us for growth.
And finally, we remain prudent in our approach to capital management.
We're in a strong position to meet client needs, run a disciplined business, and to continue to invest in and grow our franchise over the long term.
And with that, I'll ask the operator to open up the line for Q&A.
 Assistant:

Chosen response:
net long-term inflows were $31.1 billion for q2 of 2021, compared to inflows of $24.5 billion in q1 of 2021.
qtrly gaap operating revenues $1,721.4 million versus $1,659.7 million in q1 2021.


Prompt:
Human: 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.
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 on our annual report on Form 10-K for the fiscal year ended August 31, 2021 and other filings.
With that, I'd now like to shift our focus to our strong quarter and outstanding results.
First off, the team delivered $400 million of core operating income on roughly $8.6 billion in revenue, resulting in a core operating margin of 4.7%.
These results were primarily driven by broad-based strength in several key end markets, including healthcare, industrial and semi cap, and of course, mobility, as customary for our first fiscal quarter.
And finally, it's worth noting that our team was able to accomplish all of this in spite of the chaotic global supply chain environment.
In summary, we delivered strong results, grew in key end markets, and successfully navigated a dynamic global supply chain, clearly demonstrating the power of Jabil by way of our scale, tools, team, and relationships.
In a few moments, both Mike and Mark will provide more details on the quarter, while also addressing our improved outlook for the year.
But before I hand it over, I'll pass along some thoughts from Jabil's procurement and supply chain team, as you may find it helpful when modeling our year.
In short, demand continues to outstrip supply, particularly as it relates to semiconductors, an issue that has persisted since 2019.
That said, Jabil continues to leverage best-in-class tools and relationships to maximize our allocation and keep the factories in production to the best of our ability.
So far, we have been extremely successful.
As we move ahead, we anticipate continued supply chain challenges, which have been incorporated in our guidance similar to previous quarters.
We do expect some relief toward the back half of the fiscal year, but the general consensus is that demand will remain ahead of supply for the next six months.
As Adam just highlighted, Q1 was an exceptional quarter.
The team delivered strong results on three fronts: revenue, core operating income, and core diluted earnings per share.
Our results were better than expected due to a combination of continued end-market strength and excellent operational execution by the entire Jabil team, along with lower tax and interest expense.
Net revenue for the first quarter was $8.6 billion, up 9.4% over the prior-year quarter.
GAAP operating income was $350 million, and our GAAP diluted earnings per share was $1.63.
Core operating income during the quarter was $400 million, an increase of 9.6% year over year, representing a core operating margin of 4.7%.
Core diluted earnings per share was $1.92, a 20% improvement over the prior-year quarter.
Now turning to our first quarter segment results on the next slide.
Revenue for our DMS segment was $4.7 billion, an increase of 11.1% 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 margin for the segment came in at 5.4%.
Revenue for our EMS segment came in at $3.9 billion, an increase of 7.4% on a year-over-year basis.
The stronger year-over-year performance in our EMS segment was also broad-based, with strength across our digital print and retail, industrial and semi cap, and 5G wireless and cloud businesses.
Core margin for the segment was 3.8%, 40 basis points higher than the prior year, reflecting solid execution by the team.
Turning now to our cash flows and balance sheet.
In Q1, inventory days came in at 66 days, a decline of five days sequentially.
The management team continues to be fully focused on this metric, particularly in the current environment.
And I expect over the medium to longer term, our inventory days to normalize below 60.
Cash flows used in operations were $46 million in Q1 and net capital expenditures totaled $73 million.
We exited the quarter with total debt-to-core EBITDA levels of approximately 1.3 times and cash balances of $1.2 billion.
During Q1, we repurchased approximately 2.1 million shares or $127 million.
Turning now to our second quarter guidance on the next slide.
DMS segment revenue is expected to increase 4% on a year-over-year basis to $3.8 billion, while the EMS segment revenue is expected to increase 14% on a year-over-year basis to $3.6 billion.
We expect total company revenue in the second quarter of fiscal '22 to be in the range of $7.1 billion to $7.7 billion.
Core operating income is estimated to be in the range of $290 million to $350 million.
GAAP operating income is expected to be in the range of $266 million to $326 million.
Core diluted earnings per share is estimated to be in the range of $1.35 to $1.55.
GAAP diluted earnings per share is expected to be in the range of $1.19 to $1.39.
The tax rate on core earnings in the second quarter is estimated to be approximately 24%.
Next, I'd like to take a few moments to highlight our balanced portfolio of businesses by end market.
Today, both segments are in incredibly good shape.
In September, I highlighted several long-term sustainable secular trends in strategically important end markets, such as Healthcare, Automotive, Cloud, Semi-Cap, 5G Infrastructure, and the associated connected devices, along with power generation and energy storage.
For the remainder of FY '22 and beyond, we continue to expect these secular trends to drive strong growth.
Our electric vehicle business in particular continues to outperform in spite of global supply chain issues as the transition to ED accelerates.
And importantly, our broad-based growth associated with these secular trends is expected to drive solid year-over-year core operating margin expansion in both segments.
All of which gives us confidence in our ability to deliver strong financial results for FY '22.
And a balanced capital allocation framework approach is aligned and focused on driving long-term value creation to shareholders.
I would like to wish each and every one of you a safe and happy holiday.
I'd also like to recognize their hard work and tireless commitment, which drove solid results for our first fiscal quarter.
Not only did our team deliver a favorable first quarter, but the diversification of our business was fundamental to the results, with each sector having a material contribution in the solutions we offer our customers and with each sector having a material contribution to our financial results.
Specifically, the four sectors in our DMS segment focus on margins while offering reliable cash flows, while the four sectors in our EMS segment focus on cash flows, while offering reliable margins, a perfect complement as the well-diversified construct of Jabil continues to drive our execution.
If we dig a little deeper, we find secular trends embedded within certain sectors, secular markets where we now play and have a substantial presence.
We believe these markets will drive our growth, with the overwhelming majority of such growth occurring organically as we place our attention on secular opportunities, opportunities such as 5G, electric vehicles, personalized healthcare, cloud computing, and clean energy.
Furthermore, our commercial portfolio is intentional, and we think quite special.
Each slice of this pie harbors domain expertise, affording us an essential collection of valuable capabilities.
Although what's most impactful is the way in which we merge these capabilities with precision and speed as we serve our customers.
Our approach is further enhanced by seamless collaboration across the organization, combined with our unique Jabil structure.
And when done correctly, we simplify the complex for many of the world's most remarkable brands.
And we do so as we lean into a massive market, where things need to be built and supply chains need to be optimized.
One of the key outcomes of our approach is the fact that with each passing year, our results become less dependent on any single product or product family, which improves our resiliency, especially during times of macro disruption and cyclical demand.
I'll now take you through an update to our fiscal '22 financial plan where you'll see the continued earnings power of the company.
We've increased core earnings per share to $6.55 for the year, up $0.20 from our September outlook.
We've also increased revenue to $31.8 billion, up from our initial guide of $31.5 billion.
In addition, we're committed to delivering free cash flow in excess of $700 million, while maintaining a core margin of 4.5% for the year as we navigate this challenging environment.
In concert with these strong numbers, please note that our path forward is well understood throughout the company and what needs to be done remains crystal clear.
Quite simply, what we're doing is working a positive testament on how our team is managing the business.
Moving on from the financials, I'd like to talk about purpose.
At Jabil, purpose serves as our guidepost.
When we think about purpose, we think about our behaviors, behaviors such as keeping our people safe, servant leadership, DE&I, protecting the environment, and giving back to the many communities where we live.
Please note that these behaviors, as displayed by our team, are exceptional.
In closing, our improvement is steady and our strategy is consistent.
And as a team, we value our role as a responsible and reliable partner to those we serve.
All in all, I feel good about where we've been, but I feel even better about where we're going.
In simple terms, at Jabil, we build stuff, and we do so really, really well.
We also solve problems over and over again.
I want each of you to always be your true self without fear or anxiety as you care for one another.
To everyone on the call today, I wish you a safe and peaceful holiday.
Before we begin our Q&A session, I'd like to remind everyone on our call that we cannot address customer or product-specific questions.
Otherwise, we're now ready for your Q&A.
 Assistant:

Chosen response:
compname posts q1 earnings per share of $1.63.
q1 non-gaap core earnings per share $1.92.
q1 gaap earnings per share $1.63.
q1 revenue $8.6 billion.
sees q2 net revenue $7.1 billion to $7.7 billion.
sees q2 core diluted earnings per share $1.35 to $1.55 per diluted share.
sees q2 u.s. gaap diluted earnings per share $1.19 to $1.39 per diluted share.
sees fy22 revenue $31.8 billion.
core earnings per share will increase to $6.55 for fy22.


Prompt:
Human: 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.
And we'll kick that right off with the following brief video.
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.
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 and semi cap, automotive, and healthcare, 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 and 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 were 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 and focused.
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, manufacture.
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 life cycles of 10 to 20 years with high cost of change, thus providing stable earnings and cash flows.
In packaging, we design and manufacture highly engineered rigid plastic packaging for many leading consumer brands, bringing to bear capabilities in ideation, product design, material scientists, 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 skillset.
In areas such as digital print and retail, we're focused on 3D print, large form factor printing, and retail automation.
And in industrial and 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 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 recognized 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're incredibly focused on delivering consistent value and reliable value from early in the product life cycle, like product innovation and design, to more mature products where we offer planning, automation, supply chain management and, of course, manufacturing.
At the end of the day, we build stuff at 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, will share some of the value that Jabil provides to its customers through our people, our culture, and our best-in-class manufacturing capabilities.
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.
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 to 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 our ever more resilient end-market portfolio.
In Q4, our interest and tax expense also came in better than expected, which when combined with the strong margin performance allowed us to deliver strong core diluted earnings per share in Q4, putting it all together 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 million, 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 margin 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 at 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 were $202 million and for the full fiscal year came in better than expected at $793 million or 2.7% of net revenue.
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 pay 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 expenditures.
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 and 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 or $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're witnessing healthcare companies shifting their core competencies away from manufacturing toward 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 enabled 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 build technology-enabled products which help our customers excel in today's evolution of healthcare.
Another end market experiencing a rapid shift in technologies is the automotive market.
Climate change, fuel efficiency, and emissions are ongoing concerns, and regulatory policies worldwide are beginning to mandate more eco-friendly 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's long-standing capabilities and over 10 years of experience and credibility in this 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, semi cap, 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've repositioned 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 to be 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 amid 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.
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 factory digitization, 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 reduce ongoing maintenance costs.
We are also investing in strategic growth in targeted areas of our 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're 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 causes forges 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, I 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 in 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 give us confidence in our ability to deliver 4.5% in core margins in FY '22 along with $6.35 in core earnings per share 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 appreciate everyone taking time to join our call today.
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 neurodiversities.
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.
A 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 toward our heightened focus on mental health, a topic that impacts most 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.
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 to capture 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 a 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% on 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 '22 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 guidepost.
Our purpose enables our path and does so with an emphasis on caring, integrity, and proper intentions.
Speaking of our path, our path forward is formed by the beliefs shown on this slide.
For FY '22, we'll trust in these beliefs as we work to deliver to our commitments.
For me, we'll measure our success based on financial performance.
But we'll 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.
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.
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.
As planned, we shared quite a bit over the past hour.
To summarize, we began 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.
Then 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.
Operator, we're now ready for Q&A.
 Assistant:

Chosen response:
jabil q4 gaap earnings per share $1.16.
q4 non-gaap core earnings per share $1.44.
q4 gaap earnings per share $1.16.
q4 revenue $7.4 billion versus refinitiv ibes estimate of $7.67 billion.
sees q1 net revenue $8.0 billion to $8.6 billion.
sees q1 u.s. gaap diluted earnings per share $1.41 to $1.61 per diluted share.
sees q1 core diluted earnings per share (non-gaap) $1.70 to $1.90 per diluted share.


Prompt:
Human: Joining me on the call today are Johnson Controls' Chairman and Chief Executive Officer, George Oliver; and our Chief Financial Officer, Olivier Leonetti.
In discussing our results during the call, references to adjusted earnings per share, EBITA and EBIT exclude restructuring and integration costs as well as other special items.
Additionally, all comparisons to the prior year are on a continuing ops basis.
I'm going to start off with a quick look back at 2021 and update you on a few of our long-term strategic priorities.
Olivier will provide a detailed review of our fourth quarter results and provide you with our fiscal 2022 guidance.
Let's get started on slide three.
We rounded out fiscal '21 with another quarter of solid financial results, having met or exceeded all of our original commitments for the year, in what turned out to be a much more difficult environment than originally planned.
The ability to deliver these results, while navigating through unprecedented levels of inflation and supply chain disruptions, is a testament to the operational discipline and agility demonstrated throughout the organization.
And for that, I am incredibly grateful for the efforts of the entire Johnson Controls team.
Despite the challenging external environment, our end market demand remains strong.
Robust retrofit activity, coupled with a pickup in new nonresidential construction we are starting to see, creates a strong future demand trend.
This is evidenced by the continued momentum we are seeing in our order books and the record backlog we have built.
We also remain focused on the big picture, moving ahead with bold new commitments, doubling down with ambitious new ESG goals set earlier this year, embarking on a substantial new productivity program designed to drive a step-function change in profitability.
And just recently, at our Investor Day in September, we committed to a new set of three year financial commitments.
We made significant progress in advancing our growth strategy, scaling our OpenBlue digital platform, launching eight new major offerings and greatly expanding our partner ecosystem, investing in the refresh of our product portfolio, focusing on accelerating our service growth and improving our attachment rate.
And we are capitalizing on strong secular trends for healthy buildings, decarbonization and smart connected equipment and buildings.
As end markets continue to recover and the adoption of these trends continue to expand globally, I am confident we are uniquely positioned from a competitive standpoint to continue to outperform.
In addition to the strong financial results and advancement on our strategic initiatives, we have also continued to lead in ESG, including continued progress toward both our 2025 sustainability goals and our new ESG commitments.
This is not, by any means, an exhaustive list, but I am extremely pleased with what our teams have accomplished in the last year.
We are committed to net zero, committed to reducing emissions within our own operations and that of our customers.
Our science-based targets have been approved.
Our leadership team is aligned from a governance perspective, and we are extending our leadership in sustainable financing as well.
Tomorrow, I travel to COP26 in Glasgow.
We made great progress in driving home the understanding that buildings represent approximately 40% of global greenhouse gas emissions, and there is no tackling climate change without substantial investment in buildings.
Governments are now acting on this and mobilizing billions to upgrade buildings.
And Johnson Controls is perfectly positioned to deliver those solutions.
At COP26, I will meet with government and business leaders to build momentum and ensure action.
Turning to slide five.
I wanted to take a few minutes to highlight several new strategic developments in the quarter.
Most recently, we signed an MOU with two significant technology leaders, Accenture and Alibaba, to address sustainable infrastructure needs.
This collaboration will focus on an estimated multibillion-dollar market for digital solutions serving data centers in China.
We also signed a foundational technology agreement with Tempered Networks, building upon our recent cybersecurity partnerships with Pelion and DigiCert.
Each of these partnerships embeds a critical layer of trust, security and operational capability into our OpenBlue platform and connected devices.
These elements differentiate our products and services to help protect the integrity of our customers' operations and data.
Tempered brings an industry-leading zero-trust secure network capability that helps us drive customer confidence and, in turn, accelerate the adoption of OpenBlue services.
Our partnerships with UL, Safe Traces and with Phylagen are powerful examples of how we are innovating to extend our Healthy Buildings leadership, providing new indoor environmental quality solutions to address our customers' most pressing challenges.
Our near-term focus is on the education vertical as there is a clear and compelling need to help those customers optimize their investments.
With an estimated $195 billion in government stimulus earmarked for K-12 spending, this provides a significant opportunity.
Additionally, we entered into an exclusive joint development agreement and investment with Phylagen, a leading biotech company working on the identification of indoor bacteria and viruses that are all around us in buildings.
Our work with Phylagen is a commitment to developing the cutting-edge capabilities to deliver and maintain healthy buildings.
At our Investor Day, we shared with you our three pillars for delivering above-market growth over the next three years and beyond.
One of those pillars related to gaining share through innovative product development centered around digital and sustainability.
As planned, we launched over 150 new products in fiscal 2021, spanning nearly all business units, resulting in continued share gains in both Q4 and the full year.
In 2022, we are well positioned to gain share with another 175 new products across four main categories: sustainability, smart buildings, digital and residential, with heat pumps central to our product development strategy.
These are just a sample of what is expected to launch over the next 90 days, with a steady pipeline behind us.
Turning to slide seven.
Service plays a central role in everything we do.
Over the last 18 months, we have strengthened our market-leading capabilities to best position ourselves for the shifting industry demographics and evolving digital technologies that are enabling outcome-based solution models.
At the start of last year, we began articulating our intentions to accelerate service growth to a couple of points above market levels, part of which would be the result of increasing our attachment rate by leveraging our large installed base and the digital transformation of our business.
In fiscal 2021, we saw the early benefits of our efforts shine through.
We exited the year with service revenues up 8% in the fourth quarter with high single-digit growth in all three regions in nearly all business domains.
For the full year, service revenue grew 4%, which is up two to three points over 2019 levels, despite a slow start to the year as we manage through lingering site access restrictions and abnormal customer budget pressures.
Looking ahead, we see service accelerating through fiscal 2022, in line with our goal to outpace the market.
The order strength we've seen in the second half of the year bolsters that view.
Service orders were up 7% in Q4 and, importantly, up low single digits organically versus 2019 levels.
Additionally, we improved our attach rate to approximately 40%.
Turning to slide eight.
The third pillar is our vectors of growth, which we believe, on a combined basis, represents an incremental market opportunity of $250 billion over the next decade.
Our unique portfolio is a competitive advantage across all three areas.
And from a financial performance perspective, we have significantly increased both revenue and orders in fiscal 2021.
This positions us very well for continued strong performance as we move forward.
Next, on slide nine, I wanted to highlight a key customer win related to one of our key vectors of growth.
In Q4, we were awarded a Buildings as a Service project by one of our long-standing customers, the University of North Dakota.
This is the second long-term Performance Infrastructure contract we have been awarded with this university in the last two years.
It leverages not only our expertise in Performance Contracting, but also the OpenBlue Enterprise Manager software.
The total contract value was nearly $220 million over the life of the project, with a smaller portion of that booked during the quarter.
Before I turn things over to Olivier, let me conclude with a few thoughts.
I remain extremely encouraged by the demand patterns we are seeing across most of our end markets and the ability of our teams to capitalize on more than our fair share of that demand.
We see this decade as being one of the most exciting for the smart building industry, which Johnson Controls is positioned to lead.
Underlying momentum in our short-cycle businesses continues to improve despite pressure from ongoing supply chain and component availability constraints.
Our longer-cycle install business, driven by the new buildings market, also continues to recover, although extended lead times and inflation are delaying some investment decisions, particularly on larger projects.
Retrofit activity remains an important driver of our business, and we see plenty of opportunity to capitalize on this activity going forward.
All of that said, we are very mindful of the macro backdrop and our outlook does not assume any significant near-term improvement in supply chain conditions or inflation over the next couple of quarters.
On price/cost, given the progressive rise in inflation for almost all input costs throughout the year, we took decisive steps on pricing and cost to stay ahead of the curve.
And I am confident we will continue to manage through these challenges.
Looking ahead to fiscal 2022, our focus turns to accelerating and demonstrating our growth capabilities.
Our proven product technology leadership, combined now with OpenBlue, truly differentiates the solutions we can bring to our customers.
In fact, we believe we are best positioned to lead the revolution of smart buildings, and we are fully committed to creating healthier, safer and more sustainable buildings.
Let me start with a brief financial summary on slide 10.
Sales in the quarter were up 5% organically, led by Global Products, which is truly a reflection of the team's strong execution.
Underlying momentum in this business continue to improve, as evidenced by mid-single digits growth on a two year stack basis.
Our longer-cycle field business continue to recover, led by strong growth in services, up 8% in the quarter.
Segment EBITA increased 10% versus the prior year, margin expanding 30 basis points to 15.9%.
Better leverage on higher volumes, favorable mix and the incremental benefit of our SG&A actions more than offset the headwind from the reversal of temporary cost reductions and price/cost, including significant supply chain disruptions.
EPS of $0.88 was at the high end of our guidance range and increased 16% year-over-year, benefiting from higher profitability as well as lower share count.
Free cash flow in the quarter was approximately $300 million, reflecting the reversal of timing benefits experienced in the first three quarters of the year, as expected.
On a full year basis, we achieved 105% free cash flow conversion.
Orders for our field businesses increased 9%, led by low double-digit growth in install on strong double-digit growth in retrofit activity.
We are also seeing continued strength in our service business, with orders up 7%, driven by strong growth in North America and EMEALA.
Backlog grew 10% to more than $10 billion, with service backlog up 5% and install backlog up 11%.
The sequential improvement was led by strong retrofit activity as new construction continues to recover from depressed level in fiscal '20, particularly in North America.
Turning to our earnings per share bridge on slide 12.
Let me touch on a few key items.
Overall, operations contributed $0.09 versus the prior year, including a $0.04 benefit from our SG&A productivity program, achieving our targeted savings in fiscal '21.
We are well on track to achieve our SG&A and COGS savings in fiscal '22 and beyond.
Similar to last quarter, excluding the headwind from the prior year temporary actions, underlying incrementals in Q4 were approximately 30%.
Corporate was a $0.03 headwind year-over-year and other items netted to a $0.06 tailwind, primarily related to lower share count, lower net financing charges and FX.
Let's discuss our segment results in more details on slide 13.
My commentary will also refer to the segment end-market performance included on slide 14.
North America revenue grew 4% organically, led by strength in services, which was higher in all domain.
Install revenue was up low single digits, primarily due to strong demand from shorter-cycle retrofit and upgrade projects, and positive growth in new construction.
Both our internal and customer supply chain restrictions negatively impacted our North America install business.
By domain, Commercial Applied HVAC revenue grew mid-single digits, while Fire & Security increased low single digits in the quarter.
We had another strong quarter in Performance Infrastructure, which grew revenue low double digits, the fifth consecutive quarter of double-digit growth, a good reflection on our customers' demand for decarbonization solution.
Segment margin decreased 20 basis points year-over-year to 15.2%, primarily due to the reversal of temporary cost from the mitigation actions in the prior year.
Orders in North America were up 11% versus the prior year, with high single-digit growth in both Commercial HVAC and Fire & Security.
Performance Infrastructure orders were up nearly 40%.
Applied HVAC orders increased 10% overall, driven by strong retrofit activity, with another strong quarter of equipment orders up over 20% in Q4.
Backlog of $6.5 billion increased 10% year-over-year.
Revenue in EMEALA increased 3% organically, led by continued strength in our service business, particularly in our Applied HVAC and Industrial Refrigeration businesses.
Fire & Security, which account for nearly 60% of segment revenues, grew at mid-single digits rate in Q4, with strength across our enterprise accounts and residential security businesses, including a rebound in our retail platform.
Industrial Refrigeration also grew mid-single digits, while Commercial HVAC & Controls declined low single digits.
By geography, revenue growth was broad-based, with strength in Europe and Latin America, partially offset by low double-digit decline in the Middle East.
Segment EBITA margins declined 30 basis points, driven by a prior year gain on sales.
Underlying margin performance improved as favorable mix, positive price/cost and the benefit of SG&A savings this year more than offset the temporary mitigation actions taken in the prior year.
Order in EMEALA continued to accelerate, increasing 7% in the quarter, with strong mid-teens growth in Commercial HVAC and high single-digit growth in Fire & Security.
APAC revenue increased 7% organically, led by low double digits growth in Commercial HVAC & Controls.
EBITA margins expanded 80 basis points year-over-year to 15.5%, driven by a favorable reserve adjustment.
APAC underlying margin declined year-over-year as volume leverage and net productivity was offset by unfavorable mix and negative price/cost.
APAC orders grew 4%, driven by continued strength in Commercial HVAC.
Global Products revenue grew 7% on an organic basis in the quarter, with broad-based strength across the portfolio.
Our Global Residential HVAC business was up 5% in the quarter.
North America Resi HVAC grew 4% in the quarter, benefiting from both higher volume and pricing.
Outside of North America, our Residential HVAC business grew mid-single digits, led by strong double-digit growth in Europe and driven in part by the launch of our new Hitachi air-to-water residential heat pump, which was well received by the market.
In APAC, Residential HVAC declined low single digits as a result of softer industry demand in Japan, given the COVID-related state of emergency in place for much of the quarter.
We continue to gain shares in Japan, up more than 100 basis points in the quarter, as we continue to launch new premium products with indoor air quality technologies.
Although not reflected in our revenue growth, our Hisense JV revenue grew over 40% year-over-year in Q4, expanding our leading position in China.
Commercial HVAC product sales were up low double digits overall, led by mid-teens growth in our indirect Applied business, including strong chiller demand within the data center end market.
Light Commercial grew high single digits overall, with North America unitary equipment down 2% and VRF up high single digits.
Our Light Commercial business in Asia was up low double digits, including a significant win in Taiwan to supply high-efficiency ductless unit with indoor air quality technology to all schools across the country.
Fire & Security products grew high single digits in aggregate, led by our access and control and video solutions business and return to pre-pandemic levels for parts of our fire suppression business.
EBITA margin expanded 90 basis points year-over-year to 18.7% as volume leverage, higher equity income and the benefit of SG&A actions more than offset the temporary cost action in the prior year and price/cost, including the significant supply chain disruptions.
Turning to slide 15.
Corporate expense increased significantly year-over-year off an abnormal low level to $83 million.
For modeling purposes, we have included an outlook for some of our below-the-line items in financial year '22.
I will point out that amortization expense reflects the full year run rate impact of Silent-Aire as well as additional software R&D.
Net financing charges returned to a more normal level as fiscal '21 benefited from significant FX gain.
Noncontrolling interest reflects continued growth in our Hitachi JV.
Turning to our balance sheet and cash flow on slide 16.
Our balance sheet remains in great shape.
We ended the year with $1.3 billion in available cash and net debt at 1.8 times, still below our targeted range of two to 2.5 times.
On cash, we generated a little over $300 million in free cash flow in the quarter, bringing us to nearly $2 billion year-to-date and achieving our target of 105% conversion for the year.
As you will recall from our guidance last quarter, we expected a reversal in some of the timing benefits we experienced earlier in the year.
I am extremely pleased with our cash performance and remain confident that we will sustain 100% conversion over the next several years.
During the fourth quarter, we repurchased a little over four million shares for approximately $300 million, which for the full year, brings us to around 23 million shares or $1.3 billion.
As you can see, Q1 typically represents less than 15% of our full year earnings per share given our normal seasonality.
For Q1 of fiscal '22, we expect to be above that level, with Q1 guidance representing about 16% of our full year at the midpoint.
Additionally, we expect an improving first half, second half versus historical seasonality.
As we look at fiscal '22 overall, on slide 18, we are entering the year with record backlog, and underlying markets are continuing to improve.
With that said, we do expect supply chain constraints and the inflationary environment to continue, at least over the next couple of quarters.
On a full year basis, we expect high single-digit organic revenue growth, with 70 to 80 basis points of segment EBITA margin expansion.
Although we expect to remain price/cost positive on an earnings per share basis, the inflated level of pricing will result in margin headwinds of approximately 40 basis points for the year.
Underlying margins are expanding to 110 to 120 basis points.
Additionally, we expect another year of strong earnings growth, with adjusted earnings per share in the range of $3.22 to $3.32, which represents year-over-year growth of 22% to 25%.
Turning to slide 19.
We can see that our expectations for fiscal '22 are very much in line with the growth expectations we provided at our recent Investor Day, and we are accelerating growth in each area.
Last, on slide 20, I want to reiterate that we are well on our way to our '24 targets.
 Assistant:

Chosen response:
q4 adjusted earnings per share $0.88 from continuing operations excluding items.
sees fy adjusted earnings per share $3.22 to $3.32 excluding items.
initiates fiscal 2022 adjusted earnings per share guidance of $3.22 to $3.32.
qtrly sales of $6.4 billion increased 7% compared to prior year on an as reported basis.
sees 2022 organic revenue growth of mid-to-high single digits year-over-year.
supply chain disruptions and inflation headwinds are expected to continue near term.
johnson controls - sees q1 organic revenue up mid-single digits year-over-year.