01—Abstract
Summary
Summary of the 10-Q filed July 9, 2024. Cited figures are marked; the original filing is the authoritative source.
Jabil Inc. reported third-quarter fiscal 2024 results (quarter ended May 31, 2024) with net revenue of $6.77 billiona, down from $8.48 billion a year earlier, and nine-month net revenue of $21.92 billion versus $26.24 billion.
Net income attributable to Jabil Inc. was $129 millionb for the quarter versus $233 million in the prior-year quarter, and $1.25 billion for the nine months, which includes a $944 million pre-tax gain from the divestiture of its mobility business. Diluted earnings per share were $1.06 for the quarter and $9.86 for the nine months, while diluted core earnings per share (non-GAAP) were $1.89 for the quarter versus $1.99 a year earlier. The mobility business, a product manufacturing business in Chengdu including supporting component manufacturing in Wuxi, was sold to an affiliate of BYD Electronic (International) Co. Ltd. on December 29, 2023 for approximately $2.2 billion in pre-tax cash proceeds, subject to adjustments.
The company also recorded $252 millionc in nine-month restructuring, severance and related charges tied to its 2024 Restructuring Plan, which it expects to total approximately $300 million over fiscal 2024. Cash and cash equivalents rose to $2.46 billion from $1.80 billion at August 31, 2023, while total debt was $2.88 billion, and the company repurchased $1.8 billion of common stock during the nine months, with an additional $555 million of accelerated share repurchase agreements entered in June 2024. Total stockholders' equity was $2.28 billion at May 31, 2024, down from $2.87 billion at August 31, 2023, reflecting the share repurchases.
Net cash provided by operating activities was $1.18 billiond for the nine months, and the company reiterated that its liquidity sources are adequate for the next 12 months and beyond. Investors should note the concentration of revenue among a few customers, with the five largest accounting for approximately 37% of nine-month net revenue, and the shift in segment mix following the mobility divestiture.
02—Key points
Key Highlights
- Net revenue fell to $6.77 billion for the quarter from $8.48 billion, and to $21.92 billion for the nine months from $26.24 billion, with the DMS segment decline largely attributed to the mobility divestiture.
- Net income attributable to Jabil Inc. was $129 million for the quarter versus $233 million a year earlier; nine-month net income of $1.25 billion includes a $944 million pre-tax gain on the mobility divestiture.
- Diluted earnings per share were $1.06 for the quarter and $9.86 for the nine months; diluted core earnings per share (non-GAAP) were $1.89 for the quarter versus $1.99 a year earlier.
- Mobility business sale to an affiliate of BYD Electronic closed on December 29, 2023 for approximately $2.2 billion in pre-tax cash proceeds, subject to post-closing adjustments.
- The 2024 Restructuring Plan drove $252 million of nine-month restructuring, severance and related charges, with approximately $300 million expected over fiscal 2024.
- The company repurchased $1.8 billion of common stock during the nine months, reducing total stockholders' equity to $2.28 billion, and entered into $555 million of ASR agreements in June 2024.
- Cash and cash equivalents increased to $2.46 billion from $1.80 billion at August 31, 2023, while total notes payable and long-term debt was $2.88 billion; $4.0 billion of unused revolving credit capacity was available.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2024, Jabil kept $0.02.
- Revenue$6.76B100.0%
- Cost of revenue−$6.16B91.0%
- Gross profit$608.0M9.0%
- Operating costs−$347.0M5.1%
- Operating income$261.0M3.9%
- Interest, other & tax−$132.0M2.0%
- Net income$129.0M1.9%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2024filed July 9, 2024Financial Statements
Q3 FY2024 against Q3 FY2023
| Line item | Q3 FY2024Q3 FY2023 | Change |
|---|---|---|
| Revenue | $6.76B$8.47B | −20.2% |
| Cost of Revenue | $6.16B$7.78B | −20.8% |
| Gross Profit | $608.00M$697.00M | −12.8% |
| R&D Expenses | $9.00M$8.00M | +12.5% |
| SG&A Expenses | $268.00M$307.00M | −12.7% |
| Operating Income | $261.00M$375.00M | −30.4% |
| Net Income | $129.00M$233.00M | −44.6% |
| EPS (Basic) | $1.08$1.76 | −38.6% |
| EPS (Diluted) | $1.06$1.72 | −38.4% |
| Shares Outstanding (Basic) | 119.90M132.30M | −9.4% |
| Shares Outstanding (Diluted) | 121.70M135.10M | −9.9% |
05—Questions
Frequently Asked Questions
Why did net income decline in the third quarter despite a stable operating model?
Quarterly net income attributable to Jabil Inc. was $129 million versus $233 million a year earlier. Operating income fell to $261 million from $375 million, driven by lower net revenue, $55 million of restructuring charges tied to the 2024 Restructuring Plan, and $3 million of acquisition and divestiture related charges. The effective income tax rate rose to 35.7% from 24.0%, partly due to a change in the jurisdictional mix of earnings driven in part by restructuring charges.
How did the mobility business divestiture affect the financial results?
The company completed the sale of its mobility business on December 29, 2023 for approximately $2.2 billion in pre-tax cash proceeds and recorded a pre-tax gain of $944 million, subject to post-closing adjustments still being finalized. The company derecognized approximately $1.2 billion of net assets and incurred about $64 million of transaction and disposal costs in the nine months. The DMS segment's revenue decline was largely attributed to this divestiture, and the transaction also resulted in $58 million of income tax expense recorded in the quarter ended February 29, 2024.
What is the company doing with its excess cash and how does it affect the balance sheet?
During the nine months, the company repurchased $1.8 billion of common stock under its amended 2023 Share Repurchase Program, which had $676 million remaining as of May 31, 2024. In June 2024, it repurchased an additional $121 million and entered into ASR agreements for $555 million more. Total stockholders' equity declined to $2.28 billion from $2.87 billion at August 31, 2023, while cash and cash equivalents increased to $2.46 billion.
What liquidity sources does the company cite for the coming year?
Management stated that its liquidity sources, including cash on hand, available borrowings under revolving credit facilities and its commercial paper program, additional proceeds available under its securitization and uncommitted trade receivable sale programs, operating cash flows, and access to capital markets, will be adequate to fund capital expenditures, dividends, share repurchases, potential acquisitions, working capital and contractual obligations for the next 12 months and beyond. As of May 31, 2024, the company had $4.0 billion of unused revolving credit capacity and up to $693 million of available liquidity under its trade accounts receivable sale programs, with no available liquidity under the global asset-backed securitization program.
How concentrated is the company's customer base?
The filing states that during the nine months ended May 31, 2024, the five largest customers accounted for approximately 37% of net revenue and 86 customers accounted for approximately 90% of net revenue. Sales to these customers were reported in the EMS and DMS segments, and the company notes it depends on a relatively small number of customers for a significant percentage of its net revenue.
06—Continue