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Jabil Posts Second Quarter Results

Today, Jabil Inc. (NYSE: JBL), reported preliminary, unaudited financial results for its second quarter of fiscal year 2024.

“Despite revenue headwinds this year, which are expected to be short-term, I’m pleased with the resiliency of our model and our team’s demonstrated ability to execute,” said CEO Kenny Wilson. “Even under these conditions, we expect to deliver strong core operating margins and free cash flow in FY24,” he added.

Second Quarter of Fiscal Year 2024 Highlights:

  • Net revenue: $6.8 billion
  • U.S. GAAP operating income: $1.1 billion
  • U.S. GAAP diluted earnings per share: $7.31
  • Core operating income (Non-GAAP): $338 million
  • Core diluted earnings per share (Non-GAAP): $1.68

Third Quarter of Fiscal Year 2024 Outlook:

• Net revenue

 

$6.2 billion to $6.8 billion

 

• U.S. GAAP operating income (1)

 

$221 million to $301 million

 

• U.S. GAAP diluted earnings per share (1)

 

$0.82 to $1.38 per diluted share

 

• Core operating income (Non-GAAP) (2)

 

$325 million to $385 million

 

• Core diluted earnings per share (Non-GAAP) (2)

 

$1.65 to $2.05 per diluted share

 

_________________________

(1)

Excludes certain post-closing adjustments associated with the divestiture of the Mobility business that are expected to be finalized in the third quarter of fiscal year 2024.

(2)

Core operating income and core diluted earnings per share exclude anticipated adjustments of $12 million for amortization of intangibles (or $0.09 per diluted share) and $17 million for stock-based compensation expense and related charges (or $0.14 per diluted share) and $75 million to $55 million (or $0.60 to $0.44 per diluted share) for restructuring, severance and related charges.

Fiscal Year 2024 Updated Outlook:

• Net revenue

 

$28.5 billion

• Core operating margin (Non-GAAP)

 

5.6%

• Core diluted earnings per share (Non-GAAP)

 

$8.40 per diluted share

• Adjusted free cash flow (Non-GAAP)

 

$1+ billion

“Fiscal year 24 was always going to be a transitional year for Jabil, one in which we successfully completed the largest transaction in the Company’s history with the mobility sale, and the subsequent efforts by our teams to optimize our footprint and cost structure for the go-forward Company,” said CEO Kenny Wilson. “As I think about exiting this fiscal year as a more streamlined Company, coupled with key opportunities across our diversified end-market portfolio, I am confident in our ability to expand margins year-on-year, while also delivering core EPS of $10.65 for FY25,” he added.

(Definitions: “U.S. GAAP” means U.S. generally accepted accounting principles. Jabil defines core operating income as U.S. GAAP operating income less amortization of intangibles, stock-based compensation expense and related charges, restructuring, severance and related charges, distressed customer charges, loss on disposal of subsidiaries, settlement of receivables and related charges, impairment of notes receivable and related charges, goodwill impairment charges, business interruption and impairment charges, net, gain from the divestiture of businesses, acquisition and divestiture related charges, plus other components of net periodic benefit cost. Jabil defines core earnings as core operating income, less loss on debt extinguishment, loss (gain) on securities, other components of net periodic benefit cost, income (loss) from discontinued operations, gain (loss) on sale of discontinued operations and certain other expenses, net of tax and certain deferred tax valuation allowance charges. Jabil defines core diluted earnings per share as core earnings divided by the weighted average number of outstanding diluted shares as determined under U.S. GAAP. Jabil defines adjusted free cash flow as net cash provided by (used in) operating activities less net capital expenditures (acquisition of property, plant and equipment less proceeds and advances from sale of property, plant and equipment). Jabil reports core operating income, core earnings, core diluted earnings per share and adjusted free cash flow to provide investors an additional method for assessing operating income, earnings, diluted earnings per share and free cash flow from what it believes are its core manufacturing operations. See the accompanying reconciliation of Jabil’s core operating income to its U.S. GAAP operating income, its calculation of core earnings and core diluted earnings per share to its U.S. GAAP net income and U.S. GAAP earnings per share and additional information in the supplemental information.)

Forward Looking Statements: This release contains forward-looking statements, including those regarding our anticipated financial results for our second quarter of fiscal year 2024 and our guidance for future financial performance in our third quarter of fiscal year 2024 (including, net revenue, U.S. GAAP operating income, U.S. GAAP diluted earnings per share, core operating income (Non-GAAP), core diluted earnings per share (Non-GAAP) results and the components thereof, including but not limited to amortization of intangibles, stock-based compensation expense and related charges and restructuring, severance and related charges); our full year 2024 (including net revenue, core operating margin (Non-GAAP), core diluted earnings per share (Non-GAAP) results, the components thereof and Adjusted Free Cash Flow (Non-GAAP)); our full year 2025 (including, margins and core earnings per share) and our plans to reduce costs. The statements in this release are based on current expectations, forecasts and assumptions involving risks and uncertainties that could cause actual outcomes and results to differ materially from our current expectations. Such factors include, but are not limited to: our determination as we finalize our financial results for our second quarter of fiscal year 2024 that our financial results and conditions differ from our current preliminary unaudited numbers set forth herein; unexpected costs or unexpected liabilities that may arise from the Mobility transaction; scheduling production, managing growth and capital expenditures and maximizing the efficiency of our manufacturing capacity effectively; managing rapid declines or increases in customer demand and other related customer challenges that may occur; the effect of COVID-19 on our operations, sites, customers and supply chain; our dependence on a limited number of customers; our ability to purchase components efficiently and reliance on a limited number of suppliers for critical components; risks arising from relationships with emerging companies; changes in technology and competition in our industry; our ability to introduce new business models or programs requiring implementation of new competencies; competition; transportation issues; our ability to maintain our engineering, technological and manufacturing expertise; retaining key personnel; risks associated with international sales and operations, including geopolitical uncertainties; energy price increases or shortages; our ability to achieve expected profitability from acquisitions; risk arising from our restructuring activities; issues involving our information systems, including security issues; regulatory risks (including the expense of complying, or failing to comply, with applicable regulations; risk arising from design or manufacturing defects; risk arising from compliance, or failure to comply, with environmental, health and safety laws or regulations and intellectual property risk); financial risks (including customers or suppliers who become financially troubled; turmoil in financial markets; tax risks; credit rating risks; risks of exposure to debt; currency fluctuations; and asset impairment); changes in financial accounting standards or policies; risk of natural disaster, climate change or other global events; and risks arising from expectations relating to environmental, social and governance considerations. Additional factors that could cause such differences can be found in our Annual Report on Form 10-K for the fiscal year ended August 31, 2023 and our other filings with the Securities and Exchange Commission. We assume no obligation to update these forward-looking statements.

Supplemental Information Regarding Non-GAAP Financial Measures: Jabil provides supplemental, non-GAAP financial measures in this release to facilitate evaluation of Jabil’s core operating performance. These non-GAAP measures exclude certain amounts that are included in the most directly comparable U.S. GAAP measures, do not have standard meanings and may vary from the non-GAAP financial measures used by other companies. Management believes these “core” financial measures are useful measures that facilitate evaluation of the past and future performance of Jabil’s ongoing operations on a comparable basis.

Jabil reports core operating income, core earnings, core diluted earnings per share and adjusted free cash flows to provide investors an additional method for assessing operating income, earnings, earnings per share and free cash flow from what it believes are its core manufacturing operations. Among other uses, management uses non-GAAP financial measures to make operating decisions, assess business performance and as a factor in determining certain employee performance when determining incentive compensation.

The Company determines an annual normalized tax rate (“normalized core tax rate”) for the computation of the non-GAAP (core) income tax provision to provide better consistency across reporting periods. In estimating the normalized core tax rate annually, the Company utilizes a full-year financial projection of core earnings that considers the mix of earnings across tax jurisdictions, existing tax positions, and other significant tax matters. The Company may adjust the normalized core tax rate during the year for material impacts from new tax legislation or material changes to the Company’s operations.

Detailed definitions of certain of the core financial measures are included above under “Definitions” and a reconciliation of the disclosed core financial measures to the most directly comparable U.S. GAAP financial measures is included under the heading “Supplemental Data” at the end of this release.

Meeting and Replay Information: Jabil will hold a conference call today at 8:30 a.m. ET to discuss its earnings for the second quarter of fiscal year 2024. To access the live audio webcast and view the accompanying slide presentation, visit the Investor Relations section of Jabil’s website, located at https://investors.jabil.com. An archived replay of the webcast will also be available after completion of the call.

About Jabil: At Jabil (NYSE: JBL), we are proud to be a trusted partner for the world's top brands, offering comprehensive engineering, manufacturing, and supply chain solutions. With over 50 years of experience across industries and a vast network of over 100 sites worldwide, Jabil combines global reach with local expertise to deliver both scalable and customized solutions. Our commitment extends beyond business success as we strive to build sustainable processes that minimize environmental impact and foster vibrant and diverse communities around the globe. Discover more at www.jabil.com.

JABIL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions)

 

 

February 29, 2024

 

 

 

(unaudited)

 

August 31, 2023

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

2,566

 

 

$

1,804

 

Accounts receivable, net

 

2,648

 

 

 

3,647

 

Contract assets

 

1,086

 

 

 

1,035

 

Inventories, net

 

4,821

 

 

 

5,206

 

Prepaid expenses and other current assets

 

1,349

 

 

 

1,109

 

Assets held for sale

 

 

 

 

1,929

 

Total current assets

 

12,470

 

 

 

14,730

 

Property, plant and equipment, net

 

3,045

 

 

 

3,137

 

Operating lease right-of-use asset

 

363

 

 

 

367

 

Goodwill and intangible assets, net

 

823

 

 

 

763

 

Deferred income taxes

 

131

 

 

 

159

 

Other assets

 

291

 

 

 

268

 

Total assets

$

17,123

 

 

$

19,424

 

LIABILITIES AND EQUITY

 

 

 

Current liabilities:

 

 

 

Current installments of notes payable and long-term debt

$

 

 

$

 

Accounts payable

 

5,041

 

 

 

5,679

 

Accrued expenses

 

5,548

 

 

 

5,515

 

Current operating lease liabilities

 

102

 

 

 

104

 

Liabilities held for sale

 

 

 

 

1,397

 

Total current liabilities

 

10,691

 

 

 

12,695

 

Notes payable and long-term debt, less current installments

 

2,878

 

 

 

2,875

 

Other liabilities

 

374

 

 

 

319

 

Non-current operating lease liabilities

 

272

 

 

 

269

 

Income tax liabilities

 

110

 

 

 

131

 

Deferred income taxes

 

140

 

 

 

268

 

Total liabilities

 

14,465

 

 

 

16,557

 

Commitments and contingencies

 

 

 

Equity:

 

 

 

Jabil Inc. stockholders’ equity:

 

 

 

Preferred stock

 

 

 

 

 

Common stock

 

 

 

 

 

Additional paid-in capital

 

2,877

 

 

 

2,795

 

Retained earnings

 

5,512

 

 

 

4,412

 

Accumulated other comprehensive loss

 

(17

)

 

 

(17

)

Treasury stock, at cost

 

(5,714

)

 

 

(4,324

)

Total Jabil Inc. stockholders’ equity

 

2,658

 

 

 

2,866

 

Noncontrolling interests

 

 

 

 

1

 

Total equity

 

2,658

 

 

 

2,867

 

Total liabilities and equity

$

17,123

 

 

$

19,424

 

JABIL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except for per share data)

(Unaudited)

 

 

 

Three months ended

 

Six months ended

 

 

February 29, 2024

 

February 28, 2023

 

February 29, 2024

 

February 28, 2023

Net revenue

 

$

6,767

 

 

$

8,134

 

$

15,154

 

 

$

17,769

Cost of revenue

 

 

6,137

 

 

 

7,473

 

 

13,749

 

 

 

16,365

Gross profit

 

 

630

 

 

 

661

 

 

1,405

 

 

 

1,404

Operating expenses:

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

308

 

 

 

285

 

 

622

 

 

 

604

Research and development

 

 

10

 

 

 

8

 

 

20

 

 

 

17

Amortization of intangibles

 

 

9

 

 

 

9

 

 

15

 

 

 

17

Restructuring, severance and related charges

 

 

70

 

 

 

 

 

197

 

 

 

45

Gain from the divestiture of businesses

 

 

(944

)

 

 

 

 

(944

)

 

 

Acquisition and divestiture related charges

 

 

46

 

 

 

 

 

61

 

 

 

Operating income

 

 

1,131

 

 

 

359

 

 

1,434

 

 

 

721

Interest and other, net

 

 

69

 

 

 

72

 

 

137

 

 

 

135

Income before income tax

 

 

1,062

 

 

 

287

 

 

1,297

 

 

 

586

Income tax expense

 

 

135

 

 

 

80

 

 

176

 

 

 

156

Net income

 

 

927

 

 

 

207

 

 

1,121

 

 

 

430

Net income attributable to noncontrolling interests, net of tax

 

 

 

 

 

 

 

 

 

 

Net income attributable to Jabil Inc.

 

$

927

 

 

$

207

 

$

1,121

 

 

$

430

Earnings per share attributable to the stockholders of Jabil Inc.:

 

 

 

 

 

 

 

 

Basic

 

$

7.41

 

 

$

1.55

 

$

8.80

 

 

$

3.21

Diluted

 

$

7.31

 

 

$

1.52

 

$

8.66

 

 

$

3.14

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

 

125.2

 

 

 

133.6

 

 

127.4

 

 

 

134.2

Diluted

 

 

126.9

 

 

 

136.3

 

 

129.5

 

 

 

137.1

JABIL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

(Unaudited)

 

 

Six months ended

 

February 29, 2024

 

February 28, 2023

Cash flows provided by operating activities:

 

 

 

Net income

$

1,121

 

 

$

430

 

Depreciation, amortization, and other, net

 

356

 

 

 

514

 

Gain from the divestiture of businesses

 

(944

)

 

 

 

Change in operating assets and liabilities, exclusive of net assets acquired

 

133

 

 

 

(364

)

Net cash provided by operating activities

 

666

 

 

 

580

 

Cash flows provided by (used in) investing activities:

 

 

 

Acquisition of property, plant and equipment

 

(554

)

 

 

(637

)

Proceeds and advances from sale of property, plant and equipment

 

109

 

 

 

169

 

Cash paid for business and intangible asset acquisitions, net of cash

 

(93

)

 

 

 

Proceeds from the divestiture of businesses, net of cash

 

2,108

 

 

 

 

Other, net

 

(12

)

 

 

(16

)

Net cash provided by (used in) investing activities

 

1,558

 

 

 

(484

)

Cash flows used in financing activities:

 

 

 

Borrowings under debt agreements

 

1,799

 

 

 

2,021

 

Payments toward debt agreements

 

(1,866

)

 

 

(2,070

)

Payments to acquire treasury stock

 

(1,325

)

 

 

(288

)

Dividends paid to stockholders

 

(22

)

 

 

(23

)

Net proceeds from exercise of stock options and issuance of common stock under employee stock purchase plan

 

31

 

 

 

27

 

Treasury stock minimum tax withholding related to vesting of restricted stock

 

(67

)

 

 

(36

)

Other, net

 

(5

)

 

 

(2

)

Net cash used in financing activities

 

(1,455

)

 

 

(371

)

Effect of exchange rate changes on cash and cash equivalents

 

(7

)

 

 

(3

)

Net increase (decrease) in cash and cash equivalents

 

762

 

 

 

(278

)

Cash and cash equivalents at beginning of period

 

1,804

 

 

 

1,478

 

Cash and cash equivalents at end of period

$

2,566

 

$

1,200

JABIL INC. AND SUBSIDIARIES

SUPPLEMENTAL DATA

RECONCILIATION OF U.S. GAAP FINANCIAL RESULTS TO NON-GAAP MEASURES

(in millions, except for per share data)

(Unaudited)

 

 

Three months ended

 

Six months ended

 

February 29, 2024

 

February 28, 2023

 

February 29, 2024

 

February 28, 2023

Operating income (U.S. GAAP)

$

1,131

 

 

$

359

 

 

$

1,434

 

 

$

721

 

Amortization of intangibles

 

9

 

 

 

9

 

 

 

15

 

 

 

17

 

Stock-based compensation expense and related charges

 

23

 

 

 

20

 

 

 

69

 

 

 

62

 

Restructuring, severance and related charges(1)

 

70

 

 

 

 

 

 

197

 

 

 

45

 

Net periodic benefit cost

 

3

 

 

 

3

 

 

 

5

 

 

 

7

 

Gain from the divestiture of businesses

 

(944

)

 

 

 

 

 

(944

)

 

 

 

Acquisition and divestiture related charges

 

46

 

 

 

 

 

 

61

 

 

 

 

Adjustments to operating income

 

(793

)

 

 

32

 

 

 

(597

)

 

 

131

 

Core operating income (Non-GAAP)

$

338

 

 

$

391

 

 

$

837

 

 

$

852

 

Net income attributable to Jabil Inc. (U.S. GAAP)

$

927

 

 

$

207

 

 

$

1,121

 

 

$

430

 

Adjustments to operating income

 

(793

)

 

 

32

 

 

 

(597

)

 

 

131

 

Net periodic benefit cost

 

(3

)

 

 

(3

)

 

 

(5

)

 

 

(7

)

Adjustments for taxes

 

82

 

 

 

20

 

 

 

37

 

 

 

21

 

Core earnings (Non-GAAP)

$

213

 

 

$

256

 

 

$

556

 

 

$

575

 

Diluted earnings per share (U.S. GAAP)

$

7.31

 

 

$

1.52

 

 

$

8.66

 

 

$

3.14

 

Diluted core earnings per share (Non-GAAP)

$

1.68

 

 

$

1.88

 

 

$

4.30

 

 

$

4.19

 

Diluted weighted average shares outstanding (U.S. GAAP & Non-GAAP)

 

126.9

 

 

 

136.3

 

 

 

129.5

 

 

 

137.1

 

 

_________________________

(1)

 

Charges recorded during the three months and six months ended February 29, 2024, related to the 2024 Restructuring Plan.

JABIL INC. AND SUBSIDIARIES

SUPPLEMENTAL DATA

ADJUSTED FREE CASH FLOW

(in millions)

(Unaudited)

 

 

Six months ended

 

February 29, 2024

 

February 28, 2023

Net cash provided by operating activities (U.S. GAAP)

$

666

 

 

$

580

 

Acquisition of property, plant and equipment (“PP&E”)(1)

 

(554

)

 

 

(637

)

Proceeds and advances from sale of PP&E(1)

 

109

 

 

 

169

 

Adjusted free cash flow (Non-GAAP)

$

221

 

 

$

112

 

_________________________

(1)

 

Certain customers co-invest in PP&E with us. As we acquire PP&E, we recognize the cash payments in acquisition of PP&E. When our customers reimburse us and obtain control, we recognized the cash receipts in proceeds and advances from the sale of PP&E.

 

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