Executive Summary
Jabil (JBL) reported Q2 FY2024 revenue of $6.767 billion, a year-over-year decline of 16.8%, driven by the prior-year mobility divestiture and softer near-term market conditions. Core operating income totaled $338 million for the quarter (about 5% of revenue), gaining 20 basis points year over year due to favorable mix, with GAAP operating income substantially boosted to roughly $1.1 billion by the lifecycle gain from the mobility sale to BYD Electronics. Diluted GAAP EPS was $7.31, reflecting the substantial sale gain, while Core diluted EPS was $1.68, modestly above the December guidance midpoint. The company completed the mobility divestiture for approximately $2.2 billion, reallocating proceeds to share repurchases and deleveraging the balance sheet. Management underscored AI as a multi-end-market growth driver, highlighting AI-related net revenue trajectory toward roughly $6 billion in FY25 (a ~20% YoY advance) across data center, optics, and AI-driven infrastructure, with significant margin potential from a favorable mix shift.
Segment performance showed EMS revenue of about $3.3 billion and DMS revenue around $3.4 billion. DMS delivered a 5.6% core operating margin (vs. year-ago margin expansion of ~100 bps), while EMS margin was 4.4% (down ~70 bps YoY) due to a shift to consignments in cloud and dampened demand in 5G/renewables. The quarterly cash flow beat was modest, with $218 million cash flow from operations and $48 million of adjusted free cash flow after capex of $170 million; the quarter featured $825 million of share repurchases (6.5 million shares), bringing year-to-date repurchases to $1.3 billion. The company finished Q2 with $2.566 billion in cash and total debt of $3.252 billion, yielding a net debt position of $0.686 billion and a gross debt-to-core-EBITDA ratio of ~1.2x.
Management retained a constructive long-term outlook, reiterating a target core EPS of $10.65 for FY25 and signaling more than $1 billion in free cash flow for FY25, aided by accelerated buybacks and a favorable mix shift toward higher-margin AI-centric end markets. However, near-term demand headwinds remain, notably in 5G and renewable energy, with India’s 5G rollout pullback and channel inventory corrections weighing on EMS/DS end-market visibility. Investors should monitor AI-related revenue progression, cloud/data-center demand, and the pace of renewables and 5G recoveries as primary drivers of JBL’s next leg of growth.
Key Performance Indicators
QoQ: -19.32% | YoY:-16.81%
QoQ: -18.32% | YoY:-4.24%
QoQ: 377.84% | YoY:347.83%
QoQ: 393.33% | YoY:377.42%
Key Insights
Revenue: $6.767B, down 16.8% YoY; Gross Margin: 9.35%; Operating Margin (core): 5.0% (core), GAAP operating margin 16.3% aided by mobility sale; Net Income: $927M; Net Margin: 13.7% (GAAP, aided by one-time sale gains); Core Diluted EPS: $1.68; GAAP Diluted EPS: $7.31; End markets: DMS $3.4B, EMS $3.3B; Segment margins: DMS 5.6%, EMS 4.4%; Cash from ops: $218M; Capex: $170M; Free Cash Flow (adjusted): $48M; Cash at period end: $2.566B; Total debt: $3.252B; Net debt: $0.686B; Inventory days: 87 d...
Financial Highlights
Revenue: $6.767B, down 16.8% YoY; Gross Margin: 9.35%; Operating Margin (core): 5.0% (core), GAAP operating margin 16.3% aided by mobility sale; Net Income: $927M; Net Margin: 13.7% (GAAP, aided by one-time sale gains); Core Diluted EPS: $1.68; GAAP Diluted EPS: $7.31; End markets: DMS $3.4B, EMS $3.3B; Segment margins: DMS 5.6%, EMS 4.4%; Cash from ops: $218M; Capex: $170M; Free Cash Flow (adjusted): $48M; Cash at period end: $2.566B; Total debt: $3.252B; Net debt: $0.686B; Inventory days: 87 days (62 days net of deposits); Current ratio: 1.166x; Quick ratio: 0.715x; Debt to core EBITDA: 1.2x; WASO guidance: $123-126M FY24, $110-113M FY25.
Key quarterly and forward-looking metrics to watch include: (1) AI-related net revenue trajectory to ~$6B in FY25 (driven by data center, optics, and AI-enabled infrastructure), (2) margin resilience via mix shift and cost optimization, (3) ramp timing of AI data center programs and pluggable transceivers, (4) 5G/renewables demand recovery timing, and (5) continued share buyback cadence and its impact on earnings per share.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
6.77B |
-16.81% |
-19.32% |
| Gross Profit |
633.00M |
-4.24% |
-18.32% |
| Operating Income |
315.00M |
-12.26% |
3.96% |
| Net Income |
927.00M |
347.83% |
377.84% |
| EPS |
7.40 |
377.42% |
393.33% |
Key Financial Ratios
operatingProfitMargin
4.65%
operatingCashFlowPerShare
$1.74
freeCashFlowPerShare
$-0.38
dividendPayoutRatio
1.08%
Management Commentary
- Strategy and portfolio: JBL pivot post-mobility sale to BYD Electronics (~$2.2B) to focus on higher-growth, higher-margin AI data center, automotive, and healthcare opportunities; “silicon to solution” approach and expansion into silicon photonics and optical modules. - Operations and cost discipline: emphasis on agile manufacturing, footprint optimization, and fixed-cost recoveries to support margins; management highlighted that margin erosion from macro headwinds is being mitigated through cost structure alignment and recoveries. - Market conditions and AI momentum: management highlighted AI investments in data centers and cloud, with AI GPU volumes up 200x higher in H1 2024 versus H1 2023; reference to AI-centric demand across EVs, healthcare, and cloud computing end markets. - Near-term headwinds: 5G and renewables remain weak in FY24, with India 5G rollout pausing; JBL executed conservative guidance for Q3 and the full year to reflect these dynamics. - Capital allocation: accelerated buybacks ahead of schedule; expectations to complete remaining $1.2B authorization in FY24; confidence in long-term margins and growth through AI and diversified end markets.
"our AI GPU volume in the first half of 2024 is 200 times that of the level of 2023."
— Michael Dastoor
"I am confident that we're well positioned to drive multiple paths of growth in FY '25... deliver core EPS of $10.65 in FY '25."
— Kenny Wilson
Forward Guidance
- Q3 FY24 guidance: Revenue $6.2B–$6.8B; Core OI $325M–$385M; GAAP OI $221M–$301M; Core Diluted EPS $1.65–$2.05; GAAP Diluted EPS $0.82–$1.38; Net interest expense ~$75M. - FY24 guidance reaffirmation with improved margin visibility: Core operating margin targeted at 5.6% and revenue of $28.5B; Core EPS $8.40; Free cash flow >$1B. - FY25 outlook: AI-related net revenue target of ~$6B (approx. +20% YoY), with AI-related contributions increasingly spread across multiple end markets (data centers, optics, switching, silicon photonics). Margin objective of >5.7% core; EPS target of $10.65; WASO and buyback cadence expected to support above-market shareholder value; risk factors include near-term 5G/renewables softness, potential supply chain constraints, and macro demand volatility. - Monitoring factors: end-market demand in EVs/healthcare, AI data-center capex cycles, memory/semiconductor commentary, and any geopolitical or supply chain disruptions that could affect lead times and pricing.