Jabil (JBL) delivered a solid Q3 FY2024 despite a dynamic demand environment. Reported revenue of $6.765 billion with GAAP operating income of $261 million and core operating income of $350 million, implying core operating margins of roughly 5.2% and 5.0% respectively. The company highlighted a meaningful mix shift toward connected devices and AI data-center end markets, supported by a preponderance of strength in the Diversified Manufacturing Services (DMS) and Electronics Manufacturing Services (EMS) platforms. DMS revenue was $3.4 billion, with core margins of 4.6% (up 50 bps year over year), while EMS revenue was also around $3.4 billion with core margins of 5.7% (up 20 bps year over year). Net income was $129 million (GAAP), and diluted core EPS was $1.89, modestly above the midpoint of guidance. Cash flow from operations was robust at $515 million, with adjusted free cash flow around $450 million for the quarter, aided by disciplined working capital management and a six-day sequential reduction in inventory days to 81 days. The balance sheet remained healthy, with approximately $2.46 billion of cash and cash equivalents and a net debt position of about $803 million. JBL reaffirmed a long-standing commitment to a strong capital return program, repurchasing $500 million of stock in Q3 and signaling the intention to complete the $2.5 billion authorization by year-end.
Management tempered near-term visibility by rescinding FY25 guidance, citing soft end markets (notably auto in China and semi-cap equipment) and a softer healthcare environment, while emphasizing AI data-center opportunities and a portfolio reshaping plan designed to lift margins and free cash flow over the medium term. The firm maintained FY24 guidance of roughly $28.5 billion in revenue and 5.6% core margins with over $1 billion in adjusted free cash flow, but signaled an approximate $800 million revenue headwind in FY25 as it de-risks and reallocates toward higher-return end markets. Looking ahead, JBL expects elevated net interest expense and a higher core tax rate in FY25 (core tax rate 22-24% due to Pillar Two), while positioning for a recovery in AI-enabled data centers and select health/industrial end-markets to be the key catalysts. Investors should monitor the timing of end-market recoveries, the progression of AI data-center investments, capex intensity, and the pace of further portfolio optimization.