- Q1 Revenue: $7 billion, up 1% year-on-year excluding the Mobility divestiture.
- Core Operating Income: $347 million.
- Core Operating Margin: 5%.
- Net Interest Expense: $60 million.
- GAAP Operating Income: $197 million.
- GAAP Diluted EPS: $0.88.
- Core Diluted EPS: $2.
- Regulated Industries Revenue: $3 billion, down 7% year-on-year.
- Intelligent Infrastructure Revenue: $2.5 billion, up 5% year-on-year.
- Connected Living and Digital Commerce Revenue: $1.5 billion, down 46% year-on-year.
- Inventory Days: 56 days, flat sequentially.
- Cash Flow from Operations: $312 million.
- Net Capital Expenditures: $86 million.
- Adjusted Free Cash Flow: $226 million.
- Debt to Core EBITDA: Approximately 1.4 times.
- Cash Balances: Approximately $2.1 billion.
- Share Repurchase: 1.8 million shares for $232 million.
- Q2 Revenue Guidance: $6.1 billion to $6.7 billion.
- Q2 Core Operating Income Guidance: $286 million to $346 million.
- Q2 GAAP Operating Income Guidance: $183 million to $263 million.
- Q2 Core Diluted EPS Guidance: $1.60 to $2.
- Q2 GAAP Diluted EPS Guidance: $0.69 to $1.27.
- FY25 Revenue Guidance: Approximately $27.3 billion.
- FY25 Core Operating Margin Guidance: 5.4%.
- FY25 Core EPS Guidance: $8.70.
- FY25 Free Cash Flow Guidance: $1.2 billion.
Release Date: December 18, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Jabil Inc (JBL, Financial) reported a solid start to FY25 with Q1 revenue of $7 billion, up 1% year-on-year excluding the Mobility divestiture.
- Core operating income for the quarter was $347 million, with core operating margins at 5%, despite hurricane-related impacts.
- The Intelligent Infrastructure segment saw a 5% year-on-year revenue increase, driven by strong demand in AI-related cloud and data center infrastructure.
- Jabil Inc (JBL) demonstrated strong cash flow management, with Q1 cash flow from operations at $312 million and adjusted free cash flow at $226 million.
- The company repurchased 1.8 million shares for $232 million, with $768 million remaining on the current $1 billion share repurchase authorization, showing commitment to returning capital to shareholders.
Negative Points
- The Regulated Industries segment reported a 7% year-on-year revenue decline due to continued weakness in renewable energy and EV markets.
- Connected Living and Digital Commerce segment revenues were down 46% year-on-year due to the mobility divestiture.
- Jabil Inc (JBL) anticipates continued softness in the renewable energy and EV markets, with a projected 8% year-on-year revenue decline for the Regulated Industries segment in Q2.
- The company faces challenges with underutilization of capacity in the EV and renewable sectors, impacting margins.
- Despite strong performance in some areas, Jabil Inc (JBL) remains cautious about the potential impact of geopolitical changes and tariff implications on its operations.
Q & A Highlights
Q: Can you talk about the relative margins of each segment and what we should expect for fiscal '25, particularly for regulated industries, Intelligent Infrastructure, and Connected Living? Which segment has the most upside to margins?
A: Mike Dastoor, CEO: Margins for all three segments are expected to be north of 5%. Currently, there's some underutilization in the EV and renewable sectors, but there's potential for margin improvement as these markets recover. Intelligent Infrastructure is also above 5% and is expected to grow significantly over the next few years. Connected Living, driven by consumer demand, shows high seasonality, but digital commerce within this segment is expected to drive future growth with high margins.
Q: Has your expectation for AI-related revenues changed? You previously guided $6 billion for AI revenues in fiscal '25. Do you think your revenues related to AI can be higher?
A: Mike Dastoor, CEO: We have increased our AI-related revenue expectations to $6.5 billion, up from $5 billion to $6 billion previously. This increase is driven by $500 million in the AI space, with $100 million from semiconductor capital equipment and $400 million from data cloud infrastructure, where we have strengthened our relationship with our largest hyperscaler.
Q: Can you talk about your capital allocation plans, including the cadence of buybacks and any focus on M&A this year?
A: Gregory Hebard, CFO: We plan to allocate 80% of our free cash flow to share buybacks and are committed to completing our $1 billion share repurchase authorization in FY25. Buybacks will be more heavily weighted in the first half of the year. Regarding M&A, our recent acquisition of Mikros Technologies was for its engineering capabilities rather than direct revenue, and we see significant future growth opportunities in verticals like data centers and thermal management.
Q: Could you elaborate on your deepening relationship with your largest hyperscale customer and the potential size of the opportunity with the second hyperscale customer in the silicon photonics space?
A: Mike Dastoor, CEO: We are winning new business with our largest hyperscale customer due to a strong relationship and performance. For the second hyperscale customer, we are focusing on silicon photonics, currently working on 100, 200, and 400G, with plans to quote 800G in the first half of '25 and 1.60G later. Our acquisition from Intel last year is paying dividends, and we aim to expand our capabilities in this area.
Q: How should we expect inventory levels to change in the back half of fiscal '25, given the anticipated higher revenue growth?
A: Gregory Hebard, CFO: We expect inventory levels to remain within our target range of 55 to 60 days, with the back half of the year likely being at the lower end of that range. We are confident in our ability to manage inventory effectively despite the expected revenue growth.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
