Jabil Projects Growth and Outlines FY ’25 Strategy

Jabil Inc. (JBL) Financial Results for Q4 and Fiscal Year 2024

Jabil Inc., a prominent player in manufacturing solutions, announced impressive financial results for the fourth quarter and the entirety of fiscal year 2024, surpassing previous guidance with Q4 revenues around $7 billion. The company successfully executed a $2.5 billion share repurchase initiative and unveiled an additional $1 billion buyback plan for fiscal year 2025.

For Q1 of fiscal year 2025, Jabil projects revenue in the range of $6.3 billion to $6.9 billion, with core earnings per share expected to be between $1.65 and $2.05. The comprehensive revenue forecast for the full year stands at $27 billion, with anticipated core earnings per share of $8.65. A strategic reorganization into three distinct segments aims to sharpen the focus and growth potential of the company, along with a commitment to returning 80% of its free cash flow to shareholders.

Key Highlights

• Jabil achieved Q4 revenue of $7 billion, alongside a core operating income of $401 million.
• The Mobility business was divested for $2.2 billion, with substantial portions of the proceeds returned to shareholders.
• The restructured segments now include Regulated Industries, Intelligent Infrastructure, and Connected Living & Digital Commerce.
• The new $1 billion share repurchase plan is set to be fully executed in FY ’25.
• Fiscal year 2025 revenue expectations are pegged at $27 billion, with a core earnings per share forecast of $8.65.
• Growth investments in healthcare, automotive, and data center industries are seen as key drivers.
• New facilities in the Dominican Republic and Croatia will bolster medical device production efforts.

Company Outlook

• Revenue projections for Q1 FY ’25 range from $6.3 billion to $6.9 billion.
• The expectation for total revenue in FY ’25 is $27 billion, supported by core earnings per share of $8.65.
• The anticipated long-term growth rate for the enterprise is set at 5-7%, with gross margins expected to be between 9-10%.
• Core earnings per share growth is forecast at 12-15%.

Challenges and Opportunities

Bearish Signals:

• A year-over-year revenue drop of $6 billion attributed to the Mobility business divestiture.
• Excess capacity levels are expected to be higher-than-normal in FY ’25, which may negatively impact core operating margins.
• Continued pricing pressures are observed in cloud and data center segments.

Bullish Signals:

• Strong demand in the healthcare sector, especially in connected care and personalized medicine.
• Investments targeting renewable energy solutions, classifying Jabil as a leader for anticipated growth due to a projected 60% rise in global electricity demand by 2040.
• Strategic OEM partnerships in the automotive sector, particularly in electric vehicle technology.

Concerns

• The exit from a major networking customer resulted in a projected revenue loss of approximately $700 million for FY ’24.

Q&A Insights

During the earnings call, management emphasized their focus on attaining profitable growth and highlighted the significance of free cash flow. They expressed optimism about achieving the target for $1.2 billion in free cash flow for FY ’25, while acknowledging challenges in the automotive market tempered by a long-term outlook for electric vehicle expansion.

Jabil’s earnings report indicates a company actively adapting to market dynamics while strategically repositioning itself for future growth in the healthcare, automotive, and digital commerce sectors. Their approach to divestments and segment focus reflects a commitment to shareholder value and successful navigation of the current economic environment as they aim to meet financial objectives for fiscal year 2025.