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.