Jabil Inc.

The stable outlook reflects our expectation that Jabil's recent business wins will enable it to deliver EBITDA growth and that it will reduce net debt such that leverage reaches the mid-2x area in fiscal 2020, despite the potential for some volatility because of trade or macroeconomic uncertainties, and large customer programs. We expect revenue growth to moderate to the low-single-digit area in 2020 as large customer wins from 2019 do not recur, which will allow it to improve production efficiencies on the new lines and improve working capital ratios, resulting in cash flow metrics more in line with the 'BBB-' rating. In addition, the rating incorporates our expectation that Jabil can manage acquisitions and shareholder returns while maintaining leverage below

...Leverage is at our downgrade threshold of 3x, but we expect it to fall to mid-2x in fiscal 2020. Leverage is at our downgrade threshold of 3x as of May 31, 2019 because of an increase in debt to support the Johnson & Johnson (J&J) acquisition and an increase in accounts receivable program utilization to support increased working capital from double-digit revenue growth. We expect leverage to fall to the mid-2x area in 2020 on EBITDA growth and net debt reduction. We expect revenue growth to slow to the low-single digits in 2020, more in line with our expectations for the technology hardware industry, as large customer wins do not recur. This will allow the company to reduce its receivable program utilization and reduce debt incurred for the J&J acquisition and new cloud and automotive customers. We believe Jabil will also improve production efficiencies on new programs, allowing it to drive EBITDA growth through margin expansion. A 10% tariff on list 4 products would be manageable, while...

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