01—Abstract
Summary
Summary of the 10-Q filed January 9, 2024. Cited figures are marked; the original filing is the authoritative source.
Jabil Inc. reported net revenue of $8.39 billiona for the three months ended November 30, 2023, down from $9.64 billion a year earlier, a decrease the filing states as 12.9%.
The filing attributes the decline mainly to the EMS segment, where revenue fell 21%, driven by lower 5G, wireless and cloud revenue as that business moved to a customer-controlled consignment model, along with declines in digital print and retail and in industrial and semi-capital equipment. The DMS segment's revenue fell 6%. Gross profit rose to $775 millionb from $743 million, and gross margin widened to 9.2% from 7.7%, which the filing attributes to product mix, improved profitability across various businesses, and no longer recording depreciation on assets held for sale.
Operating income declined to $303 millionc from $362 million because restructuring, severance and related charges rose to $127 million from $45 million. Net income attributable to Jabil was $194 million, or $1.47 per diluted share, compared with $223 million, or $1.61 per diluted share. Non-GAAP diluted core earnings per share were $2.60, versus $2.31.
Cash flow and capital returns were stronger. Net cash provided by operating activities was $448 milliond, versus $166 million, and adjusted free cash flow was $173 million, versus $2 million. Cash and cash equivalents were $1.55 billion at quarter end, and notes payable and long-term debt totaled $2.88 billion.
The company completed a $500 million accelerated share repurchase in the first quarter of fiscal 2024 and has $2.0 billion remaining under its 2023 Share Repurchase Program. Its 2024 Restructuring Plan is expected to cost approximately $300 million in pre-tax charges over fiscal 2024, with about $200 million in net cash expenditures payable over fiscal 2024 and 2025. The filing also reports the sale of the mobility business to an affiliate of BYD Electronic (International) for approximately $2.2 billion in cash, which closed on December 29, 2023, after the quarter ended.
Assets and liabilities of the business were classified as held for sale at quarter end. The five largest customers accounted for approximately 44% of net revenue during the quarter.
02—Key points
Key Highlights
- Net revenue was $8.39 billion, down from $9.64 billion, a decrease of 12.9% as stated in the filing, with EMS revenue down 21% and DMS revenue down 6%.
- Gross margin improved to 9.2% from 7.7%, with gross profit of $775 million versus $743 million.
- Operating income fell to $303 million from $362 million, reflecting restructuring, severance and related charges of $127 million versus $45 million.
- Diluted EPS was $1.47 versus $1.61; non-GAAP diluted core EPS was $2.60 versus $2.31.
- Operating cash flow was $448 million versus $166 million, and adjusted free cash flow was $173 million versus $2 million.
- The mobility business sale to an affiliate of BYD Electronic for approximately $2.2 billion closed on December 29, 2023.
- The company completed a $500 million accelerated share repurchase and has $2.0 billion remaining under its 2023 Share Repurchase Program; the 2024 Restructuring Plan is expected to cost about $300 million in fiscal 2024.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2024, Jabil kept $0.02.
- Revenue$8.39B100.0%
- Cost of revenue−$7.61B90.8%
- Gross profit$775.0M9.2%
- Operating costs−$472.0M5.6%
- Operating income$303.0M3.6%
- Interest, other & tax−$109.0M1.3%
- Net income$194.0M2.3%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2024filed January 9, 2024Financial Statements
Q1 FY2024 against Q1 FY2023
| Line item | Q1 FY2024Q1 FY2023 | Change |
|---|---|---|
| Revenue | $8.39B$9.63B | −13.0% |
| Cost of Revenue | $7.61B$8.89B | −14.4% |
| Gross Profit | $775.00M$743.00M | +4.3% |
| R&D Expenses | $10.00M$9.00M | +11.1% |
| SG&A Expenses | $314.00M$319.00M | −1.6% |
| Operating Income | $303.00M$362.00M | −16.3% |
| Net Income | $194.00M$223.00M | −13.0% |
| EPS (Basic) | $1.49$1.65 | −9.7% |
| EPS (Diluted) | $1.47$1.61 | −8.7% |
| Shares Outstanding (Basic) | 129.60M134.80M | −3.9% |
| Shares Outstanding (Diluted) | 132.10M138.00M | −4.3% |
05—Questions
Frequently Asked Questions
Why did net revenue decline this quarter?
Net revenue fell to $8.39 billion from $9.64 billion, a decrease of 12.9% as stated in the filing. EMS revenue decreased 21%, mainly due to a 12% decline in existing 5G, wireless and cloud customers as that business transitioned to a customer-controlled consignment model, plus declines in digital print and retail and in industrial and semi-capital equipment. DMS revenue decreased 6%, led by connected devices and mobility, partly offset by a 2% increase in automotive and transportation.
What is the 2024 Restructuring Plan and what will it cost?
The Board approved the plan on September 26, 2023 to realign the cost base for stranded costs from the mobility business sale and to optimize the global footprint, including SG&A headcount reductions and capacity realignment. The company expects approximately $300 million in pre-tax restructuring and related costs over fiscal 2024, with net cash expenditures of about $200 million payable over fiscal 2024 and 2025. Charges recorded this quarter were $127 million.
How did cash generation and the balance sheet look at quarter end?
Operating cash flow was $448 million, up from $166 million, and adjusted free cash flow was $173 million. Cash and cash equivalents were $1.55 billion, and notes payable and long-term debt was $2.88 billion. The company was in compliance with its debt covenants, and it had $3.8 billion of unused borrowing capacity under its revolving credit facilities.
What is the status of the mobility business sale?
Jabil agreed to sell its product manufacturing business in Chengdu, including supporting component manufacturing in Wuxi, to an affiliate of BYD Electronic (International) for approximately $2.2 billion in cash, subject to customary adjustments. The sale closed on December 29, 2023. The business was classified as held for sale at quarter end, and its operating results remained in the DMS segment until closing.
What are the company's capital return plans?
The company completed a $500 million accelerated share repurchase in the first quarter of fiscal 2024, receiving 3.9 million shares at an average price of $128.61. As of November 30, 2023, $2.0 billion remained available under the 2023 Share Repurchase Program. Management expects to continue paying regular quarterly dividends similar to past declarations, and the quarterly dividend declared in October 2023 was $0.08 per share.
06—Continue