Sign in

    Jabil Inc (JBL)

    You might also like

    Business Description

    Jabil Inc. is a leading provider of worldwide manufacturing services and solutions, offering comprehensive electronics design, production, and product management services to companies across various industries and end markets . The company operates through two main segments: Electronics Manufacturing Services (EMS) and Diversified Manufacturing Services (DMS) . Jabil's revenue is primarily derived from production and product management services, which involve manufacturing tangible components built to customer specifications . The company has a global presence, with a substantial portion of its revenue generated from international operations .

    1. Electronics Manufacturing Services (EMS) - Leverages IT, supply chain design, and engineering technologies centered on core electronics, serving industries such as 5G, wireless and cloud, digital print and retail, industrial and semi-capital equipment, and networking and storage .
    2. Diversified Manufacturing Services (DMS) - Provides engineering solutions with an emphasis on material sciences, technologies, and healthcare, catering to automotive and transportation, connected devices, and healthcare and packaging industries .

    Q1 2025 Summary

    Initial Price$108.89August 30, 2024
    Final Price$135.83November 30, 2024
    Price Change$26.94
    % Change+24.74%

    What went well

    • Jabil increased its AI-related revenue guidance from $5-6 billion to $6.5 billion, reflecting robust growth in the AI, cloud, and data center infrastructure segments. This includes an additional $500 million increase in the AI space. ,
    • The Intelligent Infrastructure segment is expected to be a significant growth driver over the next few years, with margins above 5%, and is performing "relatively well" especially with capital equipment.
    • Anticipated strong growth in automated test equipment (ATE), driven by increased demand from new silicon chips and the shift to smaller nanometer nodes, is expected to significantly boost the semi cap equipment business.

    What went wrong

    • Continued weakness in renewable energy and electric vehicle (EV) markets is causing underutilization of capacity and weighing on margins in Jabil's Regulated Industries segment. , ,
    • Despite increased revenue expectations, operating margins are not improving, indicating potential margin pressure and profitability risks. ,
    • Uncertainty in the automotive and renewable energy sectors, exacerbated by post-election uncertainties, has led Jabil to adjust forecasts downward, suggesting potential growth challenges ahead. ,

    Q&A Summary

    1. AI Revenue Growth
      Q: Has your AI revenue expectation changed?
      A: Jabil increased its AI-related revenue expectation from $6 billion to $6.5 billion for fiscal '25, with an additional $500 million entirely in the AI space. This growth is driven by $100 million in semiconductor capital equipment and $400 million in data cloud infrastructure, deepening relationships with hyperscale customers. The AI segment is expected to drive significant future growth, representing a 30% year-on-year increase on a $5 billion base from last year.

    2. Margins and Guidance
      Q: How should we think about margins recovery?
      A: Margins are expected to be north of 5% for all three segments: Regulated Industries, Intelligent Infrastructure, and Connected Living. Current underutilization in EV and renewables is a drag but presents greater opportunities as these markets recover. Intelligent Infrastructure margins are above 5% and show the biggest growth potential over the next few years. Connected Living is anticipated to have high margins with double-digit growth rates from a lower base. Overall, margins are healthy, and the guidance provided is appropriate without being overly conservative.

    3. Capital Allocation Plans
      Q: What's your plan for share buybacks and M&A?
      A: Jabil is allocating 80% of free cash flow to share buybacks and is committed to completing its $1 billion share repurchase authorization in fiscal '25, with buybacks weighted more heavily in the first half. M&A remains a focus, targeting capabilities expansion in growth markets like healthcare and intelligent infrastructure. Recent acquisitions, such as Mikros for liquid cooling technology, enhance engineering capabilities rather than immediate revenue, positioning Jabil for future growth.

    4. Hyperscaler Relationships
      Q: Are you deepening ties with your largest customer?
      A: Yes, Jabil is winning new business and strengthening its relationship with its largest hyperscale customer, leading to significant growth potential. Additionally, the company is expanding into silicon photonics with a second hyperscaler customer. Currently working on 100G, 200G, and 400G technologies, Jabil plans to quote 800G in the first half of '25 and explore 1.6T towards the end of '25. This expansion leverages the acquisition from Intel last year, enhancing engineering capabilities and opening opportunities in silicon photonics.

    5. Tariffs and U.S. Manufacturing
      Q: How do U.S. costs compare to Mexico?
      A: While costs in the U.S. are higher than in Mexico, automation and robotics help mitigate the difference. The impact varies by end market, depending on price elasticity and the ability to pass on or absorb costs. Jabil views tariffs as pass-through costs and has nearly doubled revenues since the last administration took office, seeing growth as a positive outcome. With 30 U.S. sites and the ability to expand capacity quickly, Jabil is well-positioned to meet customers' needs and navigate tariff-related shifts in manufacturing.

    6. Automotive and EV Outlook
      Q: What is the impact of EV tax credit repeal?
      A: The potential repeal of the EV tax credit may impact certain OEMs, but Jabil's largest customer in this space is less affected due to lower reliance on credits. OEMs are expected to respond appropriately, and any impact is largely already reflected in Jabil's forecasts. The company does not anticipate significant EV business growth in fiscal '25 or '26 but remains well-positioned across internal combustion engine (ICE), hybrid, and EV platforms to capture future opportunities.

    7. Silicon Photonics Growth
      Q: What's the upside in silicon photonics?
      A: Starting from a small base after acquiring Intel's silicon photonics business last year, Jabil has grown this segment to the $300 million to $400 million range. With enhanced engineering capabilities, the company aims to expand offerings to more customers. Working on 100G, 200G, and 400G technologies today, 800G is expected to gain traction next year, with plans for 1.6T developments. While growth will be gradual, silicon photonics holds exciting potential over the next few years.

    8. Inventory and Cash Flow
      Q: How will inventory levels trend?
      A: Jabil expects inventory levels to remain within 55 to 60 days, aiming for the lower end of that range in the back half of fiscal '25 despite higher revenue growth. The company is confident in its ability to manage inventory effectively, contributing to improved cash flows and maintaining operational efficiency.

    9. Seasonality Post Mobility Divestiture
      Q: Is there seasonality within the new segments?
      A: Following the divestiture of the mobility business, which previously introduced significant seasonality and was dilutive to margins, Jabil now benefits from a 25 to 30 basis point positive impact on margins. Current ramps are in areas like data center infrastructure (DCI) and warehouse automation in the first half, with higher-margin semiconductor capital equipment recovery expected in the second half. Cost optimization initiatives are projected to add another 10 to 20 basis points to margins, particularly benefiting the fourth quarter.

    Guidance Changes

    Quarterly guidance for Q2 2025:

    • Revenue: $6.1B to $6.7B (lowered from $6.3B to $6.9B )
    • Core Operating Income: $286M to $346M (lowered from $304M to $364M )
    • GAAP Operating Income: $183M to $263M (raised from $143M to $223M )
    • Core Diluted EPS: $1.60 to $2.00 (lowered from $1.65 to $2.05 )
    • GAAP Diluted EPS: $0.69 to $1.27 (raised from $0.26 to $0.83 )
    • Net Interest Expense: $60M (lowered from $65M )
    • Core Tax Rate: 21% (no change from prior guidance )

    Annual guidance for FY 2025:

    • Revenue: Approximately $27.3B (raised from $27B )
    • Core Operating Margins: 5.4% (no change from 5.4% )
    • Core EPS: $8.70 (raised from $8.65 )
    • Free Cash Flow: $1.2B (no change from $1.2B )
    • Net Interest Expense: $235M (lowered from $245M )
    • Net Capital Expenditures: 1.5% to 2% of revenue (no change from 1.5% to 2% )

    Key Metrics

    View all financials →

    Executive Team

    NamePositionStart DateShort Bio
    Adam E. BerrySenior Vice President, Investor Relations & CommunicationsJune 2024Adam E. Berry was named Senior Vice President, Investor Relations & Communications at Jabil in June 2024. He previously served as Vice President, Investor Relations from September 2018 and has held various roles of increasing responsibility since joining Jabil in 2010 as Director of Investor Relations .
    Steven D. BorgesExecutive Vice President, Global Business UnitsMay 2024Steven D. Borges was named Executive Vice President, Global Business Units in May 2024. He previously served as Executive Vice President, Chief Executive Officer, Diversified Manufacturing Services from June 2022, and held various leadership roles at Jabil since joining the company in 1993 .
    Matthew CrowleyExecutive Vice President, Global Business UnitsMay 2024Matthew Crowley was named Executive Vice President, Global Business Units in May 2024. He most recently served as Senior Vice President, Global Business Units from May 2022, and from March 2019 until April 2022, as Vice President, Global Business Units. Before joining Jabil in 2018, Mr. Crowley held positions with Dell and Amazon Web Services .
    Michael DastoorChief Executive OfficerMay 2024Michael Dastoor was named Chief Executive Officer of Jabil Inc. in May 2024. He has been with Jabil since 2000, holding multiple leadership roles across the company's global markets. Prior to becoming CEO, he served as Chief Financial Officer from April 2018 to April 2024 and as Senior Vice President, Controller from July 2010 .
    Gregory B. HebardChief Financial OfficerMay 2024Gregory B. Hebard was named Chief Financial Officer of Jabil Inc. in May 2024. He joined Jabil in 2009 and has held various roles of increasing responsibility in finance, including Senior Vice President, Treasurer since 2021, Senior Vice President, CFO Green Point from 2017 to 2021, and Vice President, Financial Planning & Analysis from 2013 to 2017 .
    Frederic E. McCoyExecutive Vice President, OperationsMay 2024Frederic E. McCoy was named Executive Vice President, Operations at Jabil in May 2024. He previously served as Executive Vice President, Global Business Units since August 2023, and as Executive Vice President & Chief Executive Officer, Electronics Manufacturing Services, from December 2021. Mr. McCoy joined Jabil in 2001 .
    Francis ("Frank") G. McKaySenior Vice President, Chief Procurement OfficerJanuary 2019Francis ("Frank") G. McKay was named Senior Vice President, Chief Procurement Officer at Jabil in January 2019. Prior to his current role, he served as Vice President, Procurement & Purchasing Services from October 2014 and has held a variety of management positions in Europe, Asia, and the US since joining Jabil in 1997 .
    Kristine MelachrinoSenior Vice President, General CounselOctober 2022Kristine Melachrino was named Senior Vice President, General Counsel at Jabil in October 2022. She joined Jabil in 2007, holding various roles in the legal department supporting the functional and business teams globally. Prior to her current role, she served as Vice President, Senior Deputy General Counsel for the global Commercial legal team .
    Andrew D. PriestleyExecutive Vice President, Global Business UnitsMay 2024Andrew D. Priestley, aged 53, was named Executive Vice President, Global Business Units in May 2024. He most recently served as Senior Vice President, Global Business Units from April 2014. Since joining Jabil in 1996, he has held positions of increasing responsibility across the company, including as Vice President, Global Business Units since 2012 .
    Gary K. SchickSenior Vice President and Chief Human Resources OfficerOctober 2023Gary K. Schick was named Senior Vice President and Chief Human Resources Officer in October 2023. He previously served as Vice President, HR Operations from October 2022. Mr. Schick has held several positions of increasing responsibility in human resources since joining Jabil in August 2018 as a Senior Director, Human Resources .
    May Y. YapSenior Vice President, Chief Information OfficerSeptember 2020May Y. Yap was named Senior Vice President, Chief Information Officer at Jabil in September 2020. She joined Jabil in 2014 as Vice President and CIO of Jabil Green Point. Ms. Yap holds an MBA and a master's in Computer Science from the University of Hull and a doctorate in business administration and management from New York University .

    Questions to Ask Management

    1. Your utilization rates have dropped to around 70% due to surplus capacity, yet you have decided not to restructure or reduce the number of sites, believing end markets will come back. How confident are you in this approach, and what is the risk to margins if demand does not recover as expected?
    2. In fiscal '24, you divested your mobility business and reshaped your portfolio away from legacy networking, accounting for $2.4 billion in revenue loss. How do you plan to achieve organic growth in fiscal '25, and what strategies are in place to offset this significant reduction in revenue?
    3. Given the anticipated 12% year-on-year growth in the Intelligent Infrastructure segment, primarily driven by AI and data center infrastructure, are you seeing any signs of slowdown or risks to sustaining this growth rate, especially considering potential impacts from consignment in fiscal '25?
    4. With your AI-related businesses expected to deliver margins in line with or slightly accretive to enterprise targets, can you provide more clarity on the profitability of these investments, and how sustainable are these margins given the rapid pace of technology advancement and competition in AI hardware?
    5. Despite acknowledging challenges in harnessing AI and the need for significant investment in capabilities such as advanced packaging OSAT and process development for photonics, how are you addressing these challenges to ensure Jabil remains competitive, and what are the potential risks if these investments do not yield the expected returns?

    Share Repurchase Program

    Program DetailsProgram 1Program 2
    Approval DateQ1 FY 2024 Q1 FY 2025
    End Date/DurationQ1 FY 2025 Not specified
    Total additional amount$2,500 million $1,000 million
    Remaining authorization$0 million $916 million
    DetailsAmended from $1,000 million to $2,500 million in September 2023 N/A

    Past Guidance

    Q4 2024 Earnings Call

    • Issued Period: Q4 2024
    • Guided Period: Q1 2025 and FY 2025

    FY 2025 Guidance:

    • Revenue: Approximately $27 billion .
    • Core Margins: Expected to be 5.4% .
    • Core Earnings Per Share (EPS): Expected to be $8.65 .
    • Free Cash Flow: Forecasted to be around $1.2 billion .
    • Capital Expenditures (CapEx): Expected to be between 1.5% to 2% of revenue .
    • Core Tax Rate: Expected to be 21% for the year, with anticipation of higher rates beyond FY '25 in the range of 23% to 24% .

    Q1 FY 2025 Guidance:

    • Total Company Revenue: Expected to be in the range of $6.3 billion to $6.9 billion .
    • Core Operating Income: Estimated to be in the range of $304 million to $364 million .
    • GAAP Operating Income: Expected to be in the range of $143 million to $223 million .
    • Core Diluted EPS: Estimated to be in the range of $1.65 to $2.05 .
    • GAAP Diluted EPS: Expected to be in the range of $0.26 to $0.83 .
    • Net Interest Expense: Estimated to be approximately $65 million for Q1, and $245 million for FY '25 .
    • Core Tax Rate: Expected to be 21% for Q1 .

    Segment Revenue Guidance for Q1 FY 2025:

    • Regulated Industry Segment: Expected revenue of $2.9 billion, down 9% year-on-year .
    • Intelligent Infrastructure Segment: Expected revenue of $2.3 billion, down 4% year-on-year .
    • Connected Living and Digital Commerce Segment: Expected revenue of $1.4 billion .

    Q3 2024 Earnings Call

    • Issued Period: Q3 2024
    • Guided Period: Q4 2024 and FY 2024

    Q4 2024 Guidance:

    • Total Company Revenue: Expected to be in the range of $6.3 billion to $6.9 billion .
    • Core Operating Income: Estimated to be in the range of $365 million to $425 million .
    • GAAP Operating Income: Expected to be in the range of $285 million to $355 million .
    • Core Diluted EPS: Estimated to be in the range of $2.03 to $2.43 .
    • GAAP Diluted EPS: Expected to be in the range of $1.40 to $1.88 .
    • Net Interest Expense: Estimated to be approximately $67 million .
    • Core Tax Rate: Expected to be 20% .

    FY 2024 Guidance:

    • Revenue: Expected to be $28.5 billion .
    • Core Margins: Expected to be 5.6%, a 60 basis point improvement over the prior year .
    • EPS: Expected to be $8.40 for the year .
    • Adjusted Free Cash Flow: Committed to generating over $1 billion .

    Q2 2024 Earnings Call

    • Issued Period: Q2 2024
    • Guided Period: Q3 2024 and FY 2024

    Q3 2024 Guidance:

    • Total Company Revenue: $6.2 billion to $6.8 billion .
    • Core Operating Income: $325 million to $385 million .
    • GAAP Operating Income: $221 million to $301 million .
    • Core Diluted EPS: $1.65 to $2.05 .
    • GAAP Diluted EPS: $0.82 to $1.38 .
    • Net Interest Expense: $75 million .

    FY 2024 Guidance:

    • Core Operating Margin: 5.6% .
    • Revenue: $28.5 billion .
    • Core EPS: $8.40 .
    • Free Cash Flow: More than $1 billion .

    Q1 2024 Earnings Call

    • Issued Period: Q1 2024
    • Guided Period: Q2 2024 and FY 2024

    Q2 2024 Guidance:

    • Revenue: $7 billion to $7.6 billion .
    • Core Operating Income: $339 million to $399 million .
    • GAAP Operating Income: $260 million to $301 million .
    • Core Diluted EPS: $1.73 to $2.13 .
    • GAAP Diluted EPS: $0.77 to $1.37 .
    • Net Interest Expense: $62 million .

    FY 2024 Guidance:

    • Revenue: Approximately $31 billion .
    • Core Operating Margins: 5.3% to 5.5% .
    • Core EPS: In excess of $9 per share .
    • Adjusted Free Cash Flow: In excess of $1 billion .

    Latest news

    Recent developments and announcements about JBL.

    Financial Reporting

      Earnings Call

      ·
      Dec 18, 2024, 3:51 PM

      Jabil has recently released its earnings call transcript for the first quarter of fiscal year 2025. Here are the key points from the call:

      • Revenue and Profit Performance: Jabil reported Q1 revenue of $7 billion, which is a 1% increase year-on-year, excluding the impact of a $1.45 billion mobility divestiture from the prior year. Core operating income for the quarter was $347 million, with core operating margins at 5% despite some impact from hurricanes. GAAP operating income was $197 million, and GAAP diluted earnings per share was $0.88, while core diluted earnings per share was $2 .

      • Management’s Forward Guidance: For the second quarter, Jabil expects total company revenue to be between $6.1 billion and $6.7 billion. Core operating income is projected to be between $286 million and $346 million, with GAAP operating income expected to range from $183 million to $263 million. Core diluted earnings per share is estimated to be between $1.60 and $2, and GAAP diluted earnings per share is expected to be between $0.69 and $1.27 .

      • Market Conditions and Strategic Initiatives: Jabil is seeing strong demand in its Intelligent Infrastructure segment, particularly in AI-related cloud and data center infrastructure markets. The company is also focusing on expanding its capabilities in thermal management and data center ecosystems through acquisitions like Mikros Technologies .

      • Analyst Questions and Management Responses: Analysts inquired about the impact of new silicon in the cloud segment and its implications for Jabil's business. Management indicated that while it's early days, they expect it to drive growth and new business opportunities. They also discussed the impact of hurricanes on margins and the strategic focus on M&A to enhance capabilities in growth markets like healthcare and intelligent infrastructure .

      • Capital Allocation: Jabil is committed to completing its $1 billion share repurchase authorization by the end of FY '25, with 80% of free cash flow allocated to share buybacks and 20% to M&A. The company is focusing on expanding capabilities in growth markets through strategic acquisitions .

      Overall, Jabil is optimistic about its growth prospects, driven by strong performance in key segments and strategic initiatives aimed at enhancing its market position.

      Earnings Report

      ·
      Dec 18, 2024, 1:06 PM

      Jabil Inc. has released its earnings results for the first quarter of fiscal year 2025, reporting strong financial performance. The company achieved a net revenue of $7.0 billion, with a U.S. GAAP operating income of $197 million and a U.S. GAAP diluted earnings per share of $0.88. On a non-GAAP basis, the core operating income was $347 million, and the core diluted earnings per share was $2.00. The results were driven by strength in the Cloud, Data Center Infrastructure, and Digital Commerce end-markets .

      Looking ahead, Jabil has raised its fiscal 2025 outlook, now anticipating approximately $27.3 billion in net revenue and core operating margins of 5.4%. The core earnings per share are expected to be $8.75, with robust adjusted free cash flow generation of $1.2 billion for the year .

      For the second quarter of fiscal year 2025, Jabil projects net revenue between $6.1 billion and $6.7 billion, U.S. GAAP operating income between $183 million and $263 million, and U.S. GAAP diluted earnings per share ranging from $0.69 to $1.27. The core operating income is expected to be between $286 million and $346 million, with core diluted earnings per share between $1.60 and $2.00 .