Release Date: March 20, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Jabil Inc (JBL, Financial) reported strong Q2 results with $6.7 billion in revenue, a 3% increase year-on-year when excluding the divested mobility business.
- Core operating income for the quarter was $334 million, with core operating margins at 5%.
- The Intelligent Infrastructure segment saw an 18% year-on-year revenue increase, driven by strong demand in AI-related cloud, data center infrastructure, and capital equipment markets.
- Jabil Inc (JBL) anticipates free cash flow for the year to exceed $1.2 billion, reflecting strong cash flow generation.
- The company is well-positioned to navigate potential tariff impacts due to its large-scale global manufacturing footprint and significant US presence.
Negative Points
- The Regulated Industries segment reported an 8% year-on-year revenue decrease due to weakness in renewable energy and EV markets.
- The Connected Living and Digital Commerce segment experienced a 13% year-on-year revenue decline, impacted by the Mobility divestiture.
- Inventory days increased to 80 days, slightly above the targeted range, due to timing within the Intelligent Infrastructure segment.
- Jabil Inc (JBL) remains cautious about the EV and renewable energy markets, reflecting appropriate caution in its guidance.
- The company faces potential challenges from geopolitical situations and tariff implementations, which could impact end customer demand.
Q & A Highlights
Q: Can you talk about your existing footprint in the US and your ability to support customers who want to move manufacturing?
A: We have 30 sites in the US, and our expertise and capabilities allow us to support manufacturing shifts. Our experience in setting up operations quickly, as demonstrated last year, shows our ability to adapt to customer needs. The decision to move manufacturing depends on end markets and cost considerations.
Q: Can you elaborate on the opportunity with silicon photonics and your plans in Gujarat?
A: Our AI-related revenue is expected to grow significantly, with silicon photonics playing a key role. We acquired capabilities from Intel, which positions us well in this market. Our expansion in Gujarat will support photonics capabilities, and we anticipate strong growth in this area.
Q: What is driving the increased confidence in Intelligent Infrastructure, and what changes have occurred?
A: Growth in semi-cap and cloud data center infrastructure is driving confidence. The demand for custom chips and testing is increasing, and our cloud data center infrastructure business is gaining momentum. We are seeing robust growth expectations in Intelligent Infrastructure.
Q: How are tariffs impacting customer behavior, and what is included in your fiscal '25 guidance regarding tariffs?
A: Customers are considering scenario analyses and planning for potential tariffs. Our guidance assumes minimal impact from tariffs, as our exposure in China, Canada, and Mexico is limited. We are being prudent in our forecasts, considering potential macroeconomic impacts.
Q: Can you discuss the supply chain dynamics and any changes in customer procurement behavior?
A: There are ongoing discussions about localizing supply chains, but no major changes have been completed yet. Moving an entire supply chain takes time, and we are actively discussing potential movements with customers to ensure alignment with manufacturing shifts.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
