Jabil 10-Q 2023-02-28

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended February 28, 2023

or

☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-14063

JABIL INC.

(Exact name of registrant as specified in its charter)

Delaware						38-1886260
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

10800 Roosevelt Boulevard North, St. Petersburg, Florida 33716

(Address of principal executive offices) (Zip Code)

(727) 577-9749

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class			Trading symbol(s)			Name of each exchange on which registered
Common Stock, $0.001 par value per share			JBL			New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer			☒			Accelerated filer			☐
Non-accelerated filer			☐			Smaller reporting company			☐
						Emerging growth company			☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of March 29, 2023, there were 132,684,313 shares of the registrant’s Common Stock outstanding.

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JABIL INC. AND SUBSIDIARIES INDEX

Part I – Financial Information
Item 1.			Financial Statements
			Condensed Consolidated Balance Sheets as of February 28, 2023 and August 31, 2022			1
			Condensed Consolidated Statements of Operations for the three months and six months ended February 28, 2023 and 2022			2
			Condensed Consolidated Statements of Comprehensive Income for the three months and six months ended February 28, 2023 and 2022			3
			Condensed Consolidated Statements of Stockholders’ Equity for the three months and six months ended February 28, 2023 and 2022			4
			Condensed Consolidated Statements of Cash Flows for the six months ended February 28, 2023 and 2022			5
			Notes to Condensed Consolidated Financial Statements			6
Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations			18
Item 3.			Quantitative and Qualitative Disclosures About Market Risk			27
Item 4.			Controls and Procedures			27
Part II – Other Information
Item 1.			Legal Proceedings			28
Item 1A.			Risk Factors			28
Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds			28
Item 3.			Defaults Upon Senior Securities			28
Item 4.			Mine Safety Disclosures			28
Item 5.			Other Information			28
Item 6.			Exhibits			29
			Signatures			31

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PART I—FINANCIAL INFORMATION

JABIL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions, except for share data)

			February 28, 2023 (Unaudited)						August 31, 2022
ASSETS
Current assets:
Cash and cash equivalents			$	1,200					$	1,478
Accounts receivable, net of allowance for credit losses			3,715						3,995
Contract assets			1,175						1,196
Inventories, net			6,519						6,128
Prepaid expenses and other current assets			1,172						1,111
Total current assets			13,781						13,908
Property, plant and equipment, net of accumulated depreciation of $5,963 as of February 28, 2023 and $5,624 as of August 31, 2022			3,903						3,954
Operating lease right-of-use asset			501						500
Goodwill			710						704
Intangible assets, net of accumulated amortization of $489 as of February 28, 2023 and $471 as of August 31, 2022			142						158
Deferred income taxes			217						199
Other assets			313						294
Total assets			$	19,567					$	19,717
LIABILITIES AND EQUITY
Current liabilities:
Current installments of notes payable and long-term debt			$	323					$	300
Accounts payable			6,965						8,006
Accrued expenses			5,866						5,272
Current operating lease liabilities			128						119
Total current liabilities			13,282						13,697
Notes payable and long-term debt, less current installments			2,577						2,575
Other liabilities			297						272
Non-current operating lease liabilities			405						417
Income tax liabilities			206						182
Deferred income taxes			126						122
Total liabilities			16,893						17,265
Commitments and contingencies
Equity:
Jabil Inc. stockholders’ equity:
Preferred stock, $0.001 par value, authorized 10,000,000 shares; no shares issued and no shares outstanding			—						—
Common stock, $0.001 par value, authorized 500,000,000 shares; 273,531,447 and 270,891,715 shares issued and 133,238,368 and 135,493,980 shares outstanding as of February 28, 2023 and August 31, 2022, respectively			—						—
Additional paid-in capital			2,742						2,655
Retained earnings			4,046						3,638
Accumulated other comprehensive income (loss)			9						(42)
Treasury stock at cost, 140,293,079 and 135,397,735 shares as of February 28, 2023 and August 31, 2022, respectively			(4,124)						(3,800)
Total Jabil Inc. stockholders’ equity			2,673						2,451
Noncontrolling interests			1						1
Total equity			2,674						2,452
Total liabilities and equity			$	19,567					$	19,717

See accompanying notes to Condensed Consolidated Financial Statements.

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JABIL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except for per share data)

(Unaudited)

			Three months ended												Six months ended
			February 28, 2023						February 28, 2022						February 28, 2023						February 28, 2022
Net revenue			$	8,134					$	7,553					$	17,769					$	16,120
Cost of revenue			7,473						6,944						16,365						14,836
Gross profit			661						609						1,404						1,284
Operating expenses:
Selling, general and administrative			285						280						604						588
Research and development			8						8						17						17
Amortization of intangibles			9						8						17						16
Restructuring, severance and related charges			—						—						45						—
Operating income			359						313						721						663
Other expense (income)			17						(4)						32						(3)
Interest income			(17)						—						(30)						(1)
Interest expense			72						33						133						66
Income before income tax			287						284						586						601
Income tax expense			80						62						156						138
Net income			207						222						430						463
Net income attributable to noncontrolling interests, net of tax			—						—						—						—
Net income attributable to Jabil Inc.			$	207					$	222					$	430					$	463
Earnings per share attributable to the stockholders of Jabil Inc.:
Basic			$	1.55					$	1.55					$	3.21					$	3.22
Diluted			$	1.52					$	1.51					$	3.14					$	3.15
Weighted average shares outstanding:
Basic			133.6						143.5						134.2						143.8
Diluted			136.3						146.4						137.1						147.0

See accompanying notes to Condensed Consolidated Financial Statements.

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JABIL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in millions)

(Unaudited)

			Three months ended												Six months ended
			February 28, 2023						February 28, 2022						February 28, 2023						**Februa

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Overview

We are one of the leading providers of worldwide manufacturing services and solutions. We provide comprehensive electronics design, production and product management services to companies in various industries and end markets. Our services enable our customers to reduce manufacturing costs, improve supply-chain management, reduce inventory obsolescence, lower transportation costs and reduce product fulfillment time. Our manufacturing and supply chain management services and solutions include innovation, design, planning, fabrication and assembly, delivery and managing the flow of resources and products. We derive substantially all of our revenue from production and product management services (collectively referred to as “manufacturing services”), which encompass the act of producing tangible components that are built to customer specifications and are then provided to the customer.

We serve our customers primarily through dedicated business units that combine highly automated, continuous flow manufacturing with advanced electronic design and design for manufacturability. We currently depend, and expect to continue to depend for the foreseeable future, upon a relatively small number of customers for a significant percentage of our net revenue, which in turn depends upon their growth, viability and financial stability.

We conduct our operations in facilities that are located worldwide, including but not limited to, China, Ireland, Malaysia, Mexico, Singapore and the United States. We derived a substantial majority, 84.0% and 85.0%, of net revenue from our international operations for the three months and six months ended February 28, 2023, respectively. Our global manufacturing production sites allow customers to manufacture products simultaneously in the optimal locations for their products. Our global presence is key to assessing and executing on our business opportunities.

We have two reporting segments: Electronics Manufacturing Services (“EMS”) and Diversified Manufacturing Services (“DMS”), which are organized based on the economic profiles of the services performed, including manufacturing capabilities, market strategy, margins, return on capital and risk profiles. Our EMS segment is focused around leveraging IT, supply chain design and engineering, technologies largely centered on core electronics, utilizing our large scale manufacturing infrastructure and our ability to serve a broad range of end markets. Our EMS segment is a high volume business that produces product at a quicker rate (i.e. cycle time) and in larger quantities and includes customers primarily in the 5G, wireless and cloud, digital print and retail, industrial and semi-cap, and networking and storage industries. Our DMS segment is focused on providing engineering solutions, with an emphasis on material sciences, technologies and healthcare. Our DMS segment includes customers primarily in the automotive and transportation, connected devices, healthcare and packaging, and mobility industries.

We monitor the current economic environment and its potential impact on both the customers we serve as well as our end-markets and closely manage our costs and capital resources so that we can respond appropriately as circumstances change.

Refer to Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" section contained in our Annual Report on Form 10-K for the fiscal year ended August 31, 2022 for further discussion of the items disclosed in Item 2. "Management's Discussion and Analysis of Financial Condition and Results of Operations" section as of February 28, 2023 contained herein.

COVID-19

The COVID-19 pandemic has had, and continues to have, significant impacts in countries where we operate. Travel and business operation restrictions arising from governmental virus containment efforts have continued to impact our operations in Asia during this fiscal year.

Certain of our suppliers continue to experience supply chain constraints, including difficulty sourcing materials necessary to fulfill customer production requirements and challenges in transporting completed products to our end customers.

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Summary of Results

The following table sets forth, for the periods indicated, certain key operating results and other financial information (in millions, except per share data):

			Three months ended												Six months ended
			February 28, 2023						February 28, 2022						February 28, 2023						February 28, 2022
Net revenue			$	8,134					$	7,553					$	17,769					$	16,120
Gross profit			$	661					$	609					$	1,404					$	1,284
Operating income			$	359					$	313					$	721					$	663
Net income attributable to Jabil Inc.			$	207					$	222					$	430					$	463
Earnings per share—basic			$	1.55					$	1.55					$	3.21					$	3.22
Earnings per share—diluted			$	1.52					$	1.51					$	3.14					$	3.15

Key Performance Indicators

Management regularly reviews financial and non-financial performance indicators to assess the Company’s operating results. Changes in our operating assets and liabilities are largely affected by our working capital requirements, which are dependent on the effective management of our sales cycle as well as timing of payments. Our sales cycle measures how quickly we can convert our manufacturing services into cash through sales. We believe the metrics set forth below are useful to investors in measuring our liquidity as future liquidity needs will depend on fluctuations in levels of inventory, accounts receivable and accounts payable.

The following table sets forth, for the quarterly periods indicated, certain of management’s key financial performance indicators:

			Three months ended
			February 28, 2023						November 30, 2022						February 28, 2022
Sales cycle(1)			50 days						39 days						35 days
Inventory turns (annualized)(2)			4 turns						5 turns						4 turns
Days in accounts receivable(3)			41 days						42 days						38 days
Days in inventory(4)			93 days						78 days						86 days
Days in accounts payable(5)			84 days						81 days						89 days

(1)The sales cycle is calculated as the sum of days in accounts receivable and days in inventory, less the days in accounts payable; accordingly, the variance in the sales cycle quarter over quarter was a direct result of changes in these indicators.

(2)Inventory turns (annualized) are calculated as 360 days divided by days in inventory.

(3)Days in accounts receivable is calculated as accounts receivable, net, divided by net revenue multiplied by 90 days.

(4)Days in inventory is calculated as inventories, net and contract assets divided by cost of revenue multiplied by 90 days. During the three months ended February 28, 2023, the increase in days in inventory from the prior sequential quarter and the three months ended February 28, 2022, was primarily due to higher raw material balances related to supply chain constraints, particularly in the automotive supply chain.

(5)Days in accounts payable is calculated as accounts payable divided by cost of revenue multiplied by 90 days. During the three months ended February 28, 2023, the increase in days in accounts payable from the prior sequential quarter was primarily due to an increase in material purchases and timing of payments during the quarter. During the three months ended February 28, 2023, the decrease in days in accounts payable from the three months ended February 28, 2022, was primarily due to cash payments and timing of purchases during the quarter.

Critical Accounting Policies and Estimates

The preparation of our Condensed Consolidated Financial Statements and related disclosures in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) requires management to make estimates and judgments that affect our reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. On an on-going basis, we evaluate our estimates and assumptions based upon historical experience and various other factors and circumstances. Management believes that our estimates and assumptions are reasonable under the circumstances; however, actual results may vary from these estimates and assumptions under different future circumstances. For further discussion of our

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significant accounting policies, refer to Note 1 — “Description of Business and Summary of Significant Accounting Policies” to the Consolidated Financial Statements and “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates” in our Annual Report on Form 10-K for the fiscal year ended August 31, 2022.

Recent Accounting Pronouncements

See Note 18 – “New Accounting Guidance” to the Condensed Consolidated Financial Statements for a discussion of recent accounting guidance.

Results of Operations

Net Revenue

Generally, we assess revenue on a global customer basis regardless of whether the growth is associated with organic growth or as a result of an acquisition. Accordingly, we do not differentiate or separately report revenue increases generated by acquisitions as opposed to existing business. In addition, the added cost structures associated with our acquisitions have historically been relatively insignificant when compared to our overall cost structure.

The distribution of revenue across our segments has fluctuated, and will continue to fluctuate, as a result of numerous factors, including the following: fluctuations in customer demand; efforts to diversify certain portions of our business; business growth from new and existing customers; specific product performance; and any potential termination, or substantial winding down, of significant customer relationships.

			Three months ended																		Six months ended
(dollars in millions)			February 28, 2023						February 28, 2022						Change						February 28, 2023						February 28, 2022						Change
Net revenue			$	8,134					$	7,553					7.7		%				$	17,769					$	16,120					10.2		%

Net revenue increased during the three months ended February 28, 2023, compared to the three months ended February 28, 2022. Specifically, the DMS segment net revenue increased 8% due to: (i) a 6% increase in revenues from existing customers within our automotive and transportation business, (ii) a 5% increase in revenues from existing customers within our mobility business, and (iii) a 4% increase in revenues from existing customers within our healthcare and packaging business. The increase is partially offset by a 7% decrease in revenues from existing customers within our connected devices business. The EMS segment net revenue increased 7% due to: (i) a 4% increase in revenues from existing customers within our industrial and capital equipment business, (ii) a 2% increase in revenues from existing customers within our digital print and retail business, and (iii) a 2% increase in revenues from existing customers within our networking and storage business. The increase is partially offset by a 1% decrease in revenues from existing customers within our 5G, wireless and cloud business.

Net revenue increased during the six months ended February 28, 2023, compared to the six months ended February 28, 2022. Specifically, the EMS segment net revenue increased 13% due to: (i) a 4% increase in revenues from existing customers within our industrial and capital equipment business, (ii) a 4% increase in revenues from existing customers within our digital print and retail business, (iii) a 3% increase in revenues from existing customers within our networking and storage business, and (iv) a 2% increase in revenues from existing customers within our 5G, wireless and cloud business. The DMS segment net revenue increased 8% due to: (i) a 7% increase in revenues from existing customers within our automotive and transportation business, (ii) a 4% increase in revenues from existing customers within our healthcare and packaging business, and (iii) a 1% increase in revenues from existing customers within our mobility business. The increase is partially offset by a 4% decrease in revenues from existing customers within our connected devices business.

We continue to expect $800 million in components that we procure and integrate for our cloud business will shift from a purchase and resale model to a customer-controlled consignment service model during fiscal year 2023. As a result of this continued transition, revenue associated with these components are shown on a net basis and as a result, we expect higher gross margins and lower cash used in this business.

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The following table sets forth, for the periods indicated, revenue by segment expressed as a percentage of net revenue:

			Three months ended												Six months ended
			February 28, 2023						February 28, 2022						February 28, 2023						February 28, 2022
EMS			50		%				50		%				48		%				47		%
DMS			50		%				50		%				52		%				53		%
Total			100		%				100		%				100		%				100		%

The following table sets forth, for the periods indicated, foreign source revenue expressed as a percentage of net revenue:

			Three months ended												Six months ended
			February 28, 2023						February 28, 2022						February 28, 2023						February 28, 2022
Foreign source revenue			84.0		%				83.5		%				85.0		%				84.2		%

Gross Profit

			Three months ended																		Six months ended
(dollars in millions)			February 28, 2023						February 28, 2022												February 28, 2023						February 28, 2022
Gross profit			$	661					$	609											$	1,404					$	1,284
Percent of net revenue			8.1		%				8.1		%										7.9		%				8.0		%

Gross profit as a percentage of net revenue remained relatively consistent for the three months and six months ended February 28, 2023, compared to the three months and six months ended February 28, 2022.

Selling, General and Administrative

			Three months ended																		Six months ended
(dollars in millions)			February 28, 2023						February 28, 2022						Change						February 28, 2023						February 28, 2022						Change
Selling, general and administrative			$	285					$	280					$	5					$	604					$	588					$	16

Selling, general and administrative expenses increased during the three months ended February 28, 2023, compared to the three months ended February 28, 2022. The increase is primarily due to a $4 million increase in stock-based compensation expense due to awards granted during the three months ended November 30, 2022.

Selling, general and administrative expenses increased during the six months ended February 28, 2023, compared to the six months ended February 28, 2022. The increase is primarily due to a $11 million increase in stock-based compensation expense due to higher anticipated achievement levels for certain performance-based stock awards and awards granted during the three months ended November 30, 2022.

Research and Development

			Three months ended																		Six months ended
(dollars in millions)			February 28, 2023						February 28, 2022												February 28, 2023						February 28, 2022
Research and development			$	8					$	8											$	17					$	17
Percent of net revenue			0.1		%				0.1		%										0.1		%				0.1		%

Research and development expenses remained consistent as a percentage of net revenue during the three months and six months ended February 28, 2023, compared to the three months and six months ended February 28, 2022.

Amortization of Intangibles

			Three months ended																		Six months ended
(dollars in millions)			February 28, 2023						February 28, 2022						Change						February 28, 2023						February 28, 2022						Change
Amortization of intangibles			$	9					$	8					$	1					$	17					$	16					$	1

Amortization of intangibles remained relatively consistent during the three months and six months ended February 28, 2023, compared to the three months and six months ended February 28, 2022.

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Restructuring, Severance and Related Charges

			Three months ended																		Six months ended
(dollars in millions)			February 28, 2023						February 28, 2022						Change						February 28, 2023						February 28, 2022						Change
Restructuring, severance and related charges			$	—					$	—					$	—					$	45					$	—					$	45

Restructuring, severance and related charges increased during the six months ended February 28, 2023, compared to the six months ended February 28, 2022 primarily related to a headcount reduction to further optimize our business activities during the three months ended November 30, 2022.

Other Expense (Income)

			Three months ended																		Six months ended
(dollars in millions)			February 28, 2023						February 28, 2022						Change						February 28, 2023						February 28, 2022						Change
Other expense (income)			$	17					$	(4)					$	21					$	32					$	(3)					$	35

The change in other expense (income) during the three months ended February 28, 2023, compared to the three months ended February 28, 2022, is primarily due to: (i) $15 million related to an increase in fees associated with the securitization programs and higher utilization of and higher interest rates for the trade accounts receivable sales programs, (ii) $4 million primarily related to higher net periodic benefit costs, and (iii) $2 million arising from an increase in other expense.

The change in other expense (income) during the six months ended February 28, 2023, compared to the six months ended February 28, 2022, is primarily due to: (i) $31 million related to an increase in fees associated with the securitization programs and higher utilization of and higher interest rates for the trade accounts receivable programs, and (ii) $7 million primarily related to higher net periodic benefit costs. The change is partially offset by $3 million arising from a decrease in other expense.

Interest Income

			Three months ended																		Six months ended
(dollars in millions)			February 28, 2023						February 28, 2022						Change						February 28, 2023						February 28, 2022						Change
Interest income			$	17					$	—					$	17					$	30					$	1					$	29

Interest income increased during the three months and six months ended February 28, 2023, compared to the three months and six months ended February 28, 2022, primarily due to higher interest rates on cash equivalents (investments that are readily convertible to cash with maturity dates of 90 days or less).

Interest Expense

			Three months ended																		Six months ended
(dollars in millions)			February 28, 2023						February 28, 2022						Change						February 28, 2023						February 28, 2022						Change
Interest expense			$	72					$	33					$	39					$	133					$	66					$	67

Interest expense increased during the three months and six months ended February 28, 2023, compared to the three months and six months ended February 28, 2022, primarily due to higher interest rates on our commercial paper program and credit facilities.

Income Tax Expense

			Three months ended																		Six months ended
			February 28, 2023						February 28, 2022						Change						February 28, 2023						February 28, 2022						Change
Effective income tax rate			27.6		%				21.7		%				5.9		%				26.6		%				22.8		%				3.8		%

The effective income tax rate differed for the three months and six months ended February 28, 2023, compared to the three months and six months ended February 28, 2022, primarily due to: (i) a change in the jurisdictional mix of earnings, driven in part by restructuring charges for the six months ended February 28, 2023 and (ii) a $10 million income tax benefit associated with the reversal of a non-U.S. partial valuation allowance during the three months ended February 28, 2023.

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Non-GAAP (Core) Financial Measures

The following discussion and analysis of our financial condition and results of operations include certain non-GAAP financial measures as identified in the reconciliations below. The non-GAAP financial measures disclosed herein do not have standard meaning and may vary from the non-GAAP financial measures used by other companies or how we may calculate those measures in other instances from time to time. Non-GAAP financial measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with U.S. GAAP. Among other uses, management uses non-GAAP “core” financial measures to make operating decisions, assess business performance and as a factor in determining certain employee performance when evaluating incentive compensation. Also, our “core” financial measures should not be construed as an indication by us that our future results will be unaffected by those items that are excluded from our “core” financial measures.

For fiscal year 2023, the Company adopted an annual normalized tax rate (“normalized core tax rate”) for the computation of the non-GAAP (core) income tax provision to provide better consistency across reporting periods. In estimating the normalized core tax rate annually, the Company utilizes a full-year financial projection of core earnings that considers the mix of earnings across tax jurisdictions, existing tax positions, and other significant tax matters. The Company may adjust the normalized core tax rate during the year for material impacts from new tax legislation or material changes to the Company’s operations.

Prior to fiscal year 2023, the Company determined the tax effect of the items included and excluded from core earnings quarterly.

Included in the tables below are reconciliations of the non-GAAP financial measures to the most directly comparable U.S. GAAP financial measures as provided in our Condensed Consolidated Financial Statements:

Reconciliation of U.S. GAAP Financial Results to Non-GAAP Measures

			Three months ended												Six months ended
(in millions, except for per share data)			February 28, 2023						February 28, 2022						February 28, 2023						February 28, 2022
Operating income (U.S. GAAP)			$	359					$	313					$	721					$	663
Amortization of intangibles			9						8						17						16
Stock-based compensation expense and related charges			20						16						62						51
Restructuring, severance and related charges(1)			—						—						45						—
Net periodic benefit cost(2)			3						7						7						14
Adjustments to operating income			32						31						131						81
Core operating income (Non-GAAP)			$	391					$	344					$	852					$	744
Net income attributable to Jabil Inc. (U.S. GAAP)			$	207					$	222					$	430					$	463
Adjustments to operating income			32						31						131						81
Net periodic benefit cost(2)			(3)						(7)						(7)						(14)
Adjustments for taxes			20						—						21						—
Core earnings (Non-GAAP)			$	256					$	246					$	575					$	530
Diluted earnings per share (U.S. GAAP)			$	1.52					$	1.51					$	3.14					$	3.15
Diluted core earnings per share (Non-GAAP)			$	1.88					$	1.68					$	4.19					$	3.60
Diluted weighted average shares outstanding (U.S. GAAP and Non-GAAP)			136.3						146.4						137.1						147.0

(1)Recorded during the six months ended February 28, 2023, related to headcount reduction to further optimize our business activities.

(2)We are reclassifying the pension components in other expense to core operating income as we assess operating performance, inclusive of all components of net periodic benefit cost, with the related revenue. There is no impact to core earnings or diluted core earnings per share for this adjustment.

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Adjusted Free Cash Flow

			Six months ended
(in millions)			February 28, 2023						February 28, 2022
Net cash provided by operating activities (U.S. GAAP)			$	580					$	200
Acquisition of property, plant and equipment (“PP&E”)(1)			(637)						(704)
Proceeds and advances from sale of PP&E(1)			169						430
Adjusted free cash flow (Non-GAAP)			$	112					$	(74)

(1)Certain customers co-invest in property, plant and equipment (“PP&E”) with us. As we acquire PP&E, we recognize the cash payments in acquisition of PP&E. When our customers reimburse us and obtain control, we recognized the cash receipts in proceeds and advances from the sale of PP&E.

Liquidity and Capital Resources

We believe that our level of liquidity sources, which includes cash on hand, available borrowings under our revolving credit facilities and commercial paper program, additional proceeds available under our global asset-backed securitization program and under our uncommitted trade accounts receivable sale programs, cash flows provided by operating activities and access to the capital markets, will be adequate to fund our capital expenditures, the payment of any declared quarterly dividends, any share repurchases under the approved programs, any potential acquisitions, our working capital requirements and our contractual obligations for the next 12 months and beyond. We continue to assess our capital structure and evaluate the merits of redeploying available cash.

Cash and Cash Equivalents

As of February 28, 2023, we had approximately $1.2 billion in cash and cash equivalents, of which a significant portion was held by our foreign subsidiaries. Most of our foreign cash and cash equivalents as of February 28, 2023 could be repatriated to the United States without potential tax expense.

Notes Payable and Credit Facilities

Following is a summary of principal debt payments and debt issuance for our notes payable and credit facilities:

(in millions)			4.900% Senior Notes						3.950% Senior Notes						3.600% Senior Notes						3.000% Senior Notes						1.700% Senior Notes						4.250% Senior Notes						Borrowings under revolving credit facilities**(1)(2)**												Borrowings under loans						Total notes payable and credit facilities
Balance as of August 31, 2022			$	300					$	497					$	496					$	592					$	497					$	493					$	—											$	—					$	2,875
Borrowings			—						—						—						—						—						—						2,021												—						2,021
Payments			—						—						—						—						—						—						(1,998)												—						(1,998)
Other			—						—						—						1						—						1						—												—						2
Balance as of February 28, 2023			$	300					$	497					$	496					$	593					$	497					$	494					$	23											$	—					$	2,900
Maturity Date			Jul 14, 2023						Jan 12, 2028						Jan 15, 2030						Jan 15, 2031						Apr 15, 2026						May 15, 2027						Jan 22, 2025 and Jan 22, 2027												Jul 31, 2026
Original Facility/ Maximum Capacity(2)			$300 million						$500 million						$500 million						$600 million						$500 million						$500 million						$3.8 billion(2)												$1 million

(1)On February 10, 2023, we entered into an amendment (the “Amendment”) to our senior unsecured credit agreement dated as of January 22, 2020 (as amended, the “Credit Facility”). The Amendment, among other things, (i) instituted certain amendments to the sustainability-linked adjustments to the interest rates applicable to borrowings under the three-year revolving credit facility (the “Three-Year Revolving Credit Facility”) and the five-year revolving credit facility (the “Five-Year Revolving Credit Facility”), (ii) established customary SOFR, CDOR, EURIBOR and TIBOR provisions, which replaced the LIBOR provisions set forth in the existing agreement, and (iii) extended the termination date of the Three-Year Revolving Credit Facility to January 22, 2025, and of the Five-Year Revolving Credit Facility to January 22, 2027.

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(2)As of February 28, 2023, we had $3.8 billion in available unused borrowing capacity under our revolving credit facilities. The Credit Facility acts as the back-up facility for commercial paper outstanding, if any. We have a borrowing capacity of up to $3.2 billion under our commercial paper program. Commercial paper borrowings with an original maturity of 90 days or less are recorded net within the Condensed Consolidated Statements of Cash Flows, and have been excluded from the table above.

We have a shelf registration statement with the SEC registering the potential sale of an indeterminate amount of debt and equity securities in the future to augment our liquidity and capital resources.

Our Senior Notes and our credit facilities contain various financial and nonfinancial covenants. A violation of these covenants could negatively impact our liquidity by restricting our ability to borrow under the notes payable and credit facilities and potentially causing acceleration of amounts due under these notes payable and credit facilities. As of February 28, 2023 and August 31, 2022, we were in compliance with our debt covenants. Refer to Note 5 – “Notes Payable and Long-Term Debt” to the Condensed Consolidated Financial Statements for further details.

Global Asset-Backed Securitization Program

Certain Jabil entities participating in the global asset-backed securitization program continuously sell designated pools of trade accounts receivable to a special purpose entity, which in turn sells certain of the receivables at a discount to conduits administered by an unaffiliated financial institution on a monthly basis. In addition, a foreign entity participating in the global asset-backed securitization program sells certain receivables at a discount to conduits administered by an unaffiliated financial institution on a daily basis.

We continue servicing the receivables sold and in exchange receive a servicing fee under the global asset-backed securitization program. Servicing fees related to the global asset-backed securitization program recognized during the three months and six months ended February 28, 2023 and 2022 were not material. We do not record a servicing asset or liability on the Condensed Consolidated Balance Sheets as we estimate that the fee we receive to service these receivables approximates the fair market compensation to provide the servicing activities.

The special purpose entity in the global asset-backed securitization program is a wholly-owned subsidiary of the Company and is included in our Condensed Consolidated Financial Statements. Certain unsold receivables covering up to the maximum amount of net cash proceeds available under the domestic, or U.S., portion of the global asset-backed securitization program are pledged as collateral to the unaffiliated financial institution as of February 28, 2023.

The global asset-backed securitization program expires on November 25, 2024 and the maximum amount of net cash proceeds available at any one time is $600 million. During the three months and six months ended February 28, 2023, we sold $1.0 billion and $2.1 billion, respectively, of trade accounts receivable and we received cash proceeds of $1.0 billion and $2.0 billion, respectively. As of February 28, 2023, we had no available liquidity under our global asset-backed securitization program.

The global asset-backed securitization program requires compliance with several covenants including compliance with the interest ratio and debt to EBITDA ratio of the Credit Facility. As of February 28, 2023 and August 31, 2022, we were in compliance with all covenants under our global asset-backed securitization program. Refer to Note 6 – “Asset-Backed Securitization Program” to the Condensed Consolidated Financial Statements for further details on the program.

Trade Accounts Receivable Sale Programs

As of February 28, 2023, we may elect to sell receivables and the unaffiliated financial institutions may elect to purchase specific accounts receivable at any one time up to a: (i) maximum aggregate amount available of $2.1 billion under nine trade accounts receivable sale programs, (ii) maximum amount available of 400 million CNY under one trade accounts receivable sale program and (iii) maximum amount available of 100 million CHF under one trade accounts receivable sale program. The trade accounts receivable sale programs expire on various dates through 2025.

During the three months and six months ended February 28, 2023, we sold $2.9 billion and $6.5 billion, respectively, of trade accounts receivable under these programs and we received cash proceeds of $2.9 billion and $6.4 billion, respectively. As of February 28, 2023, we had up to $1.3 billion in available liquidity under our trade accounts receivable sale programs.

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Cash Flows

The following table sets forth selected consolidated cash flow information (in millions):

						Six months ended
						February 28, 2023						February 28, 2022
Net cash provided by operating activities						$	580					$	200
Net cash used in investing activities						(484)						(292)
Net cash used in financing activities						(371)						(381)
Effect of exchange rate changes on cash and cash equivalents						(3)						(1)
Net decrease in cash and cash equivalents						$	(278)					$	(474)

Operating Activities

Net cash provided by operating activities during the six months ended February 28, 2023, was primarily due to non-cash expenses and net income and a decrease in accounts receivable, accounts payable, accrued expenses and other liabilities, contract assets. These decreases were partially offset by an increase in inventories and prepaid expenses and other current assets. The decrease in accounts receivable is primarily driven by the timing of collections. The decrease in accounts payable, accrued expenses and other liabilities is primarily due to the timing of purchases and cash payments. The decrease in contract assets is primarily due to timing of revenue recognition for over time customers. The increase in inventories is primarily due to higher raw material balances related to supply chain constraints, particularly in the automotive supply chain. The increase in prepaid expenses and other current assets is primarily due to the timing of payments.

Investing Activities

Net cash used in investing activities during the six months ended February 28, 2023 consisted primarily of capital expenditures, principally to support ongoing business in the DMS and EMS segments, partially offset by proceeds and advances from the sale of property, plant and equipment.

Financing Activities

Net cash used in financing activities during the six months ended February 28, 2023 was primarily due to (i) payments for debt agreements, (ii) the repurchase of our common stock under our share repurchase authorization, (iii) the purchase of treasury stock under employee stock plans, and (iv) dividend payments. Net cash used in financing activities was partially offset by borrowings under debt agreements.

Capital Expenditures

For Fiscal Year 2023, we anticipate our net capital expenditures will be approximately $875 million. In general, our capital expenditures support ongoing maintenance in our DMS and EMS segments and investments in capabilities and targeted end markets. The amount of actual capital expenditures may be affected by general economic, financial, competitive, legislative and regulatory factors, among other things.

Dividends and Share Repurchases

We currently expect to continue to declare and pay regular quarterly dividends of an amount similar to our past declarations. However, the declaration and payment of future dividends are discretionary and will be subject to determination by our Board of Directors each quarter following its review of our financial performance and global economic conditions.

In July 2021, the Board of Directors approved an authorization for the repurchase of up to $1.0 billion of our common stock (the “2022 Share Repurchase Program”). As of February 28, 2023, 16.5 million shares had been repurchased for $1.0 billion and no authorization remains under the 2022 Share Repurchase Program.

In September 2022, the Board of Directors approved an authorization for the repurchase of up to $1.0 billion of the Company’s common stock (the “2023 Share Repurchase Program”). As of February 28, 2023, 0.3 million shares had been repurchased for $25 million and $975 million remains available under the 2023 Share Repurchase Program.

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Contractual Obligations

As of the date of this report, other than the new operating and finance leases, (see Note 4 – “Leases” to the Condensed Consolidated Financial Statements), there were no material changes outside the ordinary course of business, since August 31, 2022, to our contractual obligations and commitments and the related cash requirements.

There have been no material changes in our primary risk exposures or management of market risks from those disclosed in our Annual Report on Form 10-K for the fiscal year ended August 31, 2022.

Evaluation of Disclosure Controls and Procedures

We carried out an evaluation required by Rules 13a-15 and 15d-15 under the Exchange Act (the “Evaluation”), under the supervision and with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15 and 15d-15 under the Exchange Act as of February 28, 2023. Based on the Evaluation, our CEO and CFO concluded that the design and operation of our disclosure controls were effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) accumulated and communicated to our senior management, including our CEO and CFO, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

For our fiscal quarter ended February 28, 2023, we did not identify any modifications to our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings

See the discussion in Note 17 - “Commitments and Contingencies” to the Condensed Consolidated Financial Statements.

For information regarding risk factors that could affect our business, results of operations, financial condition or future results, see Part I, “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended August 31, 2022. For further information on our forward-looking statements see Part I of this Quarterly Report on Form 10-Q.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table provides information relating to our repurchase of common stock during the three months ended February 28, 2023:

Period			Total Number of Shares Purchased**(1)**						Average Price Paid per Share						Total Number of Shares Purchased as Part of Publicly Announced Programs**(2)(3)**						Approximate Dollar Value of Shares that May Yet Be Purchased Under the Programs (in millions)****(2)(3)
December 1, 2022 - December 31, 2022			957,704						$	70.30					957,593						$	1,035
January 1, 2023 - January 31, 2023			407,990						$	71.90					360,859						$	1,009
February 1, 2023 - February 28, 2023			405,292						$	82.33					405,292						$	975
Total			1,770,986						$	73.42					1,723,744

(1)The purchases include amounts that are attributable to 47,242 shares surrendered to us by employees to satisfy, in connection with the vesting of restricted stock unit awards, their tax withholding obligations.

(2)In July 2021, our Board of Directors authorized the repurchase of up to $1.0 billion of our common stock as publicly announced in a press release on July 23, 2021 (the “2022 Share Repurchase Program”). No authorization remains under the 2022 Share Repurchase Program as of February 28, 2023.

(3)In September 2022, our Board of Directors authorized the repurchase of up to $1.0 billion of our common stock as publicly announced in a press release on September 27, 2022 (the “2023 Share Repurchase Program”).

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

None.

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Index to Exhibits

															Incorporated by Reference Herein
Exhibit No.						Description									Form									Exhibit									Filing Date/Period End Date
3.1						Registrant’s Certificate of Incorporation, as amended.									10-Q									3.1						5/31/2017
3.2						Registrant’s Bylaws, as amended.									10-Q									3.2						8/31/2022
4.1						Form of Certificate for Shares of the Registrant’s Common Stock. (P)									S-1															3/17/1993
4.2						Indenture, dated January 16, 2008, with respect to Senior Debt Securities of the Registrant, between the Registrant and The Bank of New York Mellon Trust Company, N.A. (formerly known as The Bank of New York Trust Company, N.A.), as trustee.									8-K									4.2						1/17/2008
4.3						Form of 4.250% Registered Senior Notes due 2027 (included as Exhibit A to the Officers’ Certificate filed herewith as Exhibit 4.8).									8-K									4.1						5/4/2022
4.4						Officers’ Certificate, dated as of January 17, 2018, establishing the 3.950% Senior Notes due 2028.									8-K									4.1						1/17/2018
4.5						Officers’ Certificate, dated as of January 15, 2020, establishing the 3.600% Senior Notes due 2030.									8-K									4.1						1/15/2020
4.6						Officers’ Certificate, dated as of July 13, 2020, establishing the 3.000% Senior Notes due 2031.									8-K									4.1						7/13/2020
4.7						Officers’ Certificate, dated as of April 14, 2021, establishing the 1.700% Senior Notes due 2026.									8-K									4.1						4/14/2021
4.8						Officers’ Certificate, dated as of May 4, 2022, establishing the 4.250% Senior Notes due 2027.									8-K									4.1						5/4/2022
10.1						Amendment No. 2 to Credit Agreement dated as of February 10, 2023 among Jabil Inc.; the lenders named therein; Citibank, N.A., as administrative agent; Sumitomo Mitsui Banking Corporation and Citibank, N.A., as sustainability agents; JPMorgan Chase Bank, N.A. and Bank of America, N.A., as co-syndication agents; BNP Paribas, Credit Agricole Corporate and Investment Bank, Mizuho Bank, Ltd., Sumitomo Mitsui Banking Corporation and U.S. Bank National Association, as documentation agents; and Citibank, N.A., JPMorgan Chase Bank, N.A., BofA Securities, Inc., BNP Paribas Securities Corp., Credit Agricole Corporate and Investment Bank, Mizuho Bank, Ltd., Sumitomo Mitsui Banking Corporation and U.S. Bank National Association, as joint lead arrangers and joint bookrunners.									8-K									10.1						2/13/2023
31.1*						Rule 13a-14(a)/15d-14(a) Certification by the Chief Executive Officer.
31.2*						Rule 13a-14(a)/15d-14(a) Certification by the Chief Financial Officer.
32.1*						Section 1350 Certification by the Chief Executive Officer.
32.2*						Section 1350 Certification by the Chief Financial Officer.
101						The following financial information from Jabil’s Quarterly Report on Form 10-Q for the quarterly period ended February 28, 2023, formatted in Inline XBRL: (i) Condensed Consolidated Balance Sheets as of February 28, 2023 and August 31, 2022, (ii) Condensed Consolidated Statements of Operations for the three months and six months ended February 28, 2023 and 2022, (iii) Condensed Consolidated Statements of Comprehensive Income for the three months and six months ended February 28, 2023 and 2022, (iv) Condensed Consolidated Statements of Stockholders’ Equity for the three months and six months ended February 28, 2023 and 2022, (v) Condensed Consolidated Statements of Cash Flows for the six months ended February 28, 2023 and 2022, and (vi) the Notes to Condensed Consolidated Financial Statements.
104						Cover Page Interactive Data File (Embedded within the inline XBRL Document in Exhibit 101).
*						Filed or furnished herewith

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Certain instruments with respect to long-term debt of the Registrant and its consolidated subsidiaries are not filed herewith pursuant to Item 601(b)(4)(iii) of Regulation S-K since the total amount of securities authorized under each such instrument does not exceed 10% of the total assets of the Registrant and its subsidiaries on a consolidated basis. The Registrant agrees to furnish a copy of any such instrument to the Securities and Exchange Commission upon request.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

			JABIL INC. Registrant
Date: April 5, 2023			By:			/s/ MARK T. MONDELLO
						Mark T. Mondello Chief Executive Officer
Date: April 5, 2023			By:			/s/ MICHAEL DASTOOR
						Michael Dastoor Chief Financial Officer