filings.toolsItem 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
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, Mexico, Singapore, Malaysia, and the United States. We derived a substantial majority, 80.8% of net revenue from our international operations for the three months ended November 30, 2024. 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.
As of September 1, 2024, we are reporting our business in the following three segments: Regulated Industries, Intelligent Infrastructure, and Connected Living and Digital Commerce, which are also the Company’s reportable segments. Our Regulated Industries segment is focused on regulated markets and includes revenues from customers primarily in the automotive and transportation, healthcare and packaging, and renewable energy infrastructure industries. Our Intelligent Infrastructure segment is focused on the modern digital ecosystem including artificial intelligence (“AI”) infrastructure and includes revenues from customers primarily in the capital equipment, cloud and data center infrastructure, and networking and communications industries. Our Connected Living and Digital Commerce segment is focused on digitalization and automation, including warehouse automation and robotics, and includes revenues from customers primarily in the connected living and digital commerce 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, 2024, 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 November 30, 2024, contained herein.
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):
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| November 30, 2024 | November 30, 2023 | ||||||||||||||||||||||
| Net revenue | $ | 6,994 | $ | 8,387 | |||||||||||||||||||
| Gross profit | $ | 606 | $ | 775 | |||||||||||||||||||
| Operating income | $ | 197 | $ | 303 | |||||||||||||||||||
| Net income attributable to Jabil Inc. | $ | 100 | $ | 194 | |||||||||||||||||||
| Earnings per share – basic | $ | 0.89 | $ | 1.49 | |||||||||||||||||||
| Earnings per share – diluted | $ | 0.88 | $ | 1.47 |
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:
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| November 30, 2024 | August 31, 2024 | November 30, 2023 | |||||||||||||||
| Sales cycle(1) | 27 days | 34 days | 42 days | ||||||||||||||
| Inventory turns (annualized)(2) | 5 turns | 5 turns | 5 turns | ||||||||||||||
| Days in accounts receivable(3) | 48 days | 46 days | 43 days | ||||||||||||||
| Days in inventory(4) | 76 days | 76 days | 78 days | ||||||||||||||
| Days in accounts payable(5) | 97 days | 88 days | 78 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. During the three months ended November 30, 2024, the increase in days in accounts receivable from the prior sequential quarter and the three months ended November 30, 2023, was primarily driven by timing of payments.
(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 November 30, 2024, the decrease in days in inventory from the three months ended November 30, 2023, was primarily driven by higher consumption of inventory to support sales during the quarter and improved working capital management.
(5)Days in accounts payable is calculated as accounts payable divided by cost of revenue multiplied by 90 days. During the three months ended November 30, 2024, the increase in days in accounts payable from the prior sequential quarter and the three months ended November 30, 2023, was primarily due to higher purchases of customer-controlled consignment components and timing of cash payments.
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 ongoing 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 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, 2024.
Recent Accounting Pronouncements
See Note 20 – “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.
As discussed in the “Overview” section, as of September 1, 2024, we are reporting our business in the following three segments – Regulated Industries, Intelligent Infrastructure, and Connected Living and Digital Commerce. In conjunction with this reorganization, there have been certain reclassifications made within the reported segments.
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| (dollars in millions) | November 30, 2024 | November 30, 2023 | Change | ||||||||||||||||||||||||||||||||
| Net revenue | $ | 6,994 | $ | 8,387 | (16.6) | % |
Net revenue decreased during the three months ended November 30, 2024, compared to the three months ended November 30, 2023. Specifically, the Connected Living and Digital Commerce segment net revenue decreased 46% due to a 50% decrease in revenues primarily driven by the divestiture of our Mobility Business within our connected living business. The decrease is partially offset by a 4% increase in revenues from existing customers within our digital commerce business. The Regulated Industries segment net revenue decreased 7% primarily due to: (i) a 6% decrease in revenues from existing customers within our renewable energy infrastructure business and (ii) a 1% decrease in revenues from existing customers within our automotive and transportation business. The Intelligent Infrastructure segment net revenue increased 5% primarily due to: (i) a 14% increase in revenues from existing customers within our cloud and data center infrastructure business and (ii) a 6% increase in revenues from existing customers within our capital equipment business. The increase is partially offset by a 15% decrease in revenues from existing customers within our networking and communications business.
The following table sets forth, for the periods indicated, revenue by segment expressed as a percentage of net revenue:
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| November 30, 2024 | November 30, 2023 | ||||||||||||||||||||||
| Regulated Industries | 42 | % | 38 | % | |||||||||||||||||||
| Intelligent Infrastructure | 36 | % | 28 | % | |||||||||||||||||||
| Connected Living and Digital Commerce | 22 | % | 34 | % | |||||||||||||||||||
| Total | 100 | % | 100 | % |
The following table sets forth, for the periods indicated, foreign source revenue expressed as a percentage of net revenue:
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| November 30, 2024**(1)** | November 30, 2023 | ||||||||||||||||||||||
| Foreign source revenue | 80.8 | % | 86.4 | % |
(1)Decrease from the prior period is primarily driven by the divestiture of the Mobility Business during the three months ended February 29, 2024.
Gross Profit
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| (dollars in millions) | November 30, 2024 | November 30, 2023 | |||||||||||||||||||||||||||||||||
| Gross profit | $ | 606 | $ | 775 | |||||||||||||||||||||||||||||||
| Percent of net revenue | 8.7 | % | 9.2 | % |
Gross profit as a percentage of net revenue decreased for the three months ended November 30, 2024, compared to the three months ended November 30, 2023, primarily due to product mix in our Connected Living and Digital Commerce segment.
Selling, General and Administrative
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| (in millions) | November 30, 2024 | November 30, 2023 | Change | ||||||||||||||||||||||||||||||||
| Selling, general and administrative | $ | 305 | $ | 314 | $ | (9) |
Selling, general and administrative expenses decreased during the three months ended November 30, 2024, compared to the three months ended November 30, 2023, primarily due to a decrease in office and support costs.
Research and Development
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| (dollars in millions) | November 30, 2024 | November 30, 2023 | |||||||||||||||||||||||||||||||||
| Research and development | $ | 8 | $ | 10 | |||||||||||||||||||||||||||||||
| Percent of net revenue | 0.1 | % | 0.1 | % |
Research and development expenses remained consistent as a percentage of net revenue during the three months ended November 30, 2024, compared to the three months ended November 30, 2023.
Amortization of Intangibles
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| (in millions) | November 30, 2024 | November 30, 2023 | Change | ||||||||||||||||||||||||||||||||
| Amortization of intangibles | $ | 13 | $ | 6 | $ | 7 |
Amortization of intangibles increased during the three months ended November 30, 2024, compared to the three months ended November 30, 2023, primarily due to amortization related to the Green Point trade name, which was reclassified to a definite-lived intangible asset during fiscal year 2024.
Restructuring, Severance and Related Charges
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| (in millions) | November 30, 2024 | November 30, 2023 | Change | ||||||||||||||||||||||||||||||||
| Restructuring, severance and related charges | $ | 83 | $ | 127 | $ | (44) |
Restructuring, severance, and related charges decreased during the three months ended November 30, 2024, compared to the three months ended November 30, 2023, primarily due to higher restructuring, severance and related charges, related to the 2024 Restructuring Plan, during the three months ended November 30, 2023. This current quarter decrease is partially offset by increased restructuring, severance and related charges, related to the 2025 Restructuring Plan, during the three months ended November 30, 2024.
2025 Restructuring Plan
On September 24, 2024, our Board of Directors approved a restructuring plan to align our support infrastructure to further optimize organizational effectiveness. This action includes headcount reductions across our Selling, General and Administrative (“SG&A”) and manufacturing cost base and capacity realignment (the “2025 Restructuring Plan”). The 2025 Restructuring Plan reflects our intention only and restructuring decisions, including the timing of such decisions, at certain locations remain subject to consultation with the Company’s employees and their representatives.
We currently expect to recognize approximately $150 million to $200 million in pre-tax restructuring and other related costs over the course of our 2025 fiscal year. The charges relating to the 2025 Restructuring Plan are currently expected to result in net cash expenditures of approximately $100 million to $130 million that will be payable over the course of our fiscal years 2025 and 2026. The exact timing of these charges and cash outflows, as well as the estimated cost ranges by category type, have not been finalized. This information will be subject to the finalization of timetables for the transition of functions, consultation with employees and their representatives as well as the statutory severance requirements of the jurisdictions impacted, and the amount and timing of the actual charges may vary due to a variety of factors. Our estimates for the charges discussed above exclude any potential income tax effects.
2024 Restructuring Plan
On September 26, 2023, our Board of Directors approved a restructuring plan to (i) realign our cost base for stranded costs associated with the sale and realignment of our Mobility Business and (ii) optimize our global footprint. This action includes headcount reductions across our SG&A cost base and capacity realignment (the “2024 Restructuring Plan”).
The 2024 Restructuring Plan, totaling approximately $300 million in pre-tax restructuring and other related costs, was substantially complete as of August 31, 2024.
See Note 14 – “Restructuring, Severance and Related Charges” to the Condensed Consolidated Financial Statements for further discussion of restructuring, severance and related charges.
Acquisition and Divestiture Related Charges
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| (in millions) | November 30, 2024 | November 30, 2023 | Change | ||||||||||||||||||||||||||||||||
| Acquisition and divestiture related charges | $ | — | $ | 15 | $ | (15) |
Acquisition and divestiture related charges recorded during the three months ended November 30, 2023, related to transaction and disposal costs incurred in connection with the divestiture of our Mobility Business.
See Note 17 – “Business Acquisitions and Divestitures” to the Condensed Consolidated Financial Statements for additional information.
Other Expense
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| (in millions) | November 30, 2024 | November 30, 2023 | Change | ||||||||||||||||||||||||||||||||
| Other expense | $ | 20 | $ | 21 | $ | (1) |
Other expense remained relatively consistent during the three months ended November 30, 2024, compared to the three months ended November 30, 2023.
Interest Expense, Net
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| (in millions) | November 30, 2024 | November 30, 2023 | Change | ||||||||||||||||||||||||||||||||
| Interest expense, net | $ | 38 | $ | 47 | $ | (9) |
Interest expense, net decreased during the three months ended November 30, 2024, compared to the three months ended November 30, 2023, due to lower interest rates and lower borrowings primarily on our credit facilities and commercial paper program.
Income Tax Expense
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| November 30, 2024 | November 30, 2023 | Change | |||||||||||||||||||||||||||||||||
| Effective income tax rate | 28.0 | % | 17.6 | % | 10.4 | % |
The effective income tax rate differed for the three months ended November 30, 2024, compared to the three months ended November 30, 2023, primarily due to: (i) a change in the jurisdictional mix of earnings, driven in part by decreased income before income taxes in low tax rate jurisdictions for the three months ended November 30, 2024, (ii) an $18 million income tax benefit for the reversal of an unrecognized tax benefit due to a lapse of statute for the three months ended November 30, 2024, (iii) a $19 million income tax benefit for the reversal of an unrecognized tax benefit due to audit closure for the three months ended November 30, 2023, and (iv) an $11 million income tax benefit for the reversal of a portion of the U.S. valuation allowance related to an acquisition for the three months ended November 30, 2023.
The Organization for Economic Co-operation and Development (“OECD”) and participating countries continue to work toward the enactment of a 15% global minimum corporate tax rate. Many countries, including countries in which we have tax incentives, have enacted or are in the process of enacting laws based on the OECD’s proposals. We do not currently expect a material impact to our effective tax rate for the fiscal year ending August 31, 2025.
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.
We determine 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, we utilize 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. We may adjust the normalized core tax rate during the year for material impacts from new tax legislation or material changes to our operations.
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
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| (in millions, except for per share data) | November 30, 2024 | November 30, 2023 | |||||||||||||||||||||
| Operating income (U.S. GAAP) | $ | 197 | $ | 303 | |||||||||||||||||||
| Amortization of intangibles | 13 | 6 | |||||||||||||||||||||
| Stock-based compensation expense and related charges | 44 | 46 | |||||||||||||||||||||
| Restructuring, severance and related charges(1) | 83 | 127 | |||||||||||||||||||||
| Net periodic benefit cost(2) | 1 | 2 | |||||||||||||||||||||
| Business interruption and impairment charges, net(3) | 9 | — | |||||||||||||||||||||
| Acquisition and divestiture related charges | — | 15 | |||||||||||||||||||||
| Adjustments to operating income | 150 | 196 | |||||||||||||||||||||
| Core operating income (Non-GAAP) | $ | 347 | $ | 499 | |||||||||||||||||||
| Net income attributable to Jabil Inc. (U.S. GAAP) | $ | 100 | $ | 194 | |||||||||||||||||||
| Adjustments to operating income | 150 | 196 | |||||||||||||||||||||
| Net periodic benefit cost(2) | (1) | (2) | |||||||||||||||||||||
| Adjustments for taxes(4) | (21) | (45) | |||||||||||||||||||||
| Core earnings (Non-GAAP) | $ | 228 | $ | 343 | |||||||||||||||||||
| Diluted earnings per share (U.S. GAAP) | $ | 0.88 | $ | 1.47 | |||||||||||||||||||
| Diluted core earnings per share (Non-GAAP) | $ | 2.00 | $ | 2.60 | |||||||||||||||||||
| Diluted weighted average shares outstanding (U.S. GAAP and Non-GAAP) | 114.0 | 132.1 | |||||||||||||||||||||
(1)Charges recorded during the three months ended November 30, 2024, and 2023, primarily related to the 2025 Restructuring Plan and 2024 Restructuring Plan, respectively.
(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.
(3)Charges recorded during the three months ended November 30, 2024, relate primarily to costs associated with damage from Hurricanes Helene and Milton, which impacted our operations in St. Petersburg, Florida and Asheville and Hendersonville, North Carolina.
(4)Tax adjustments for the three months ended November 30, 2023, were partially driven by an income tax benefit for the reversal of an unrecognized tax benefit due to audit closure.
Adjusted Free Cash Flow
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| (in millions) | November 30, 2024 | November 30, 2023 | |||||||||
| Net cash provided by operating activities (U.S. GAAP) | $ | 312 | $ | 448 | |||||||
| Acquisition of property, plant and equipment (“PP&E”)(1) | (97) | (288) | |||||||||
| Proceeds and advances from sale of PP&E(1) | 11 | 13 | |||||||||
| Adjusted free cash flow (Non-GAAP) | $ | 226 | $ | 173 |
(1)Certain customers co-invest in 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 recognize the cash receipts in proceeds and advances from the sale of PP&E.
Acquisitions and Divestitures
Acquisitions
Fiscal Year 2025
On October 1, 2024, we completed the acquisition of Mikros Technologies LLC for consideration transferred of $63 million. Mikros Technologies LLC is a leader in the engineering and manufacturing of liquid cooling solutions for thermal management. The final purchase price is subject to adjustment based on certain customary conditions as outlined in the purchase agreement.
The acquisition of Mikros Technologies was accounted for as a business combination using the acquisition method of accounting. Assets acquired of $63 million, including $40 million in intangible assets and $15 million in goodwill, were recorded at their estimated fair values as of the acquisition date. The preliminary estimates and measurements are subject to change during the measurement period for assets acquired, liabilities assumed and tax adjustments. The excess of the purchase price over the fair value of the acquired assets and assumed liabilities was recorded to goodwill and was fully allocated to the Intelligent Infrastructure segment. The majority of the goodwill is currently expected to be deductible for income tax purposes. The results of operations were included in our condensed consolidated financial results beginning on October 1, 2024. Pro forma information has not been provided as the acquisition of Mikros Technologies is not deemed to be significant.
Fiscal Year 2024
On November 1, 2023, we completed the acquisition of ProcureAbility Inc. (“ProcureAbility”) for approximately $60 million in cash. ProcureAbility is a procurement services provider specializing in technology-enabled advisory, managed services, digital, staffing, and recruiting solutions.
The acquisition of ProcureAbility was accounted for as a business combination using the acquisition method of accounting. Assets acquired of $87 million, including $40 million in intangible assets and $38 million in goodwill, and liabilities assumed of $26 million were recorded at their estimated fair values as of the acquisition date. The excess of the purchase price over the fair value of the acquired assets and assumed liabilities was recorded to goodwill and was fully allocated to the Regulated Industries segment. The majority of the goodwill is currently not expected to be deductible for income tax purposes. The results of operations were included in our condensed consolidated financial results beginning on November 1, 2023. Pro forma information has not been provided as the acquisition of ProcureAbility is not deemed to be significant.
Divestitures
Fiscal Year 2024
We announced on September 26, 2023, that, through our indirect subsidiary, Jabil Circuit (Singapore) Pte. Ltd., a Singapore private limited company (“Singapore Seller”), we agreed to sell to an affiliate of BYD Electronic (International) Co. Ltd., a Hong Kong limited liability company (“Purchaser” or “BYDE”), its product manufacturing business in Chengdu, including its supporting component manufacturing in Wuxi, the Mobility Business, for cash consideration of approximately $2.2 billion, subject to certain customary purchase price adjustments.
As of August 31, 2023, we determined the Mobility Business met the criteria to be classified as held for sale. Assets and liabilities classified as held for sale had a carrying value less than the estimated fair value less cost to sell and, thus, no adjustment to the carrying value of the disposal group was necessary. Depreciation and amortization expense for long-lived assets was not recorded for the period in which these assets were classified as held for sale. The divestiture did not meet the criteria to be reported as discontinued operations, and we continued to report the operating results for the Mobility Business in our Condensed Consolidated Statements of Operations in the DMS segment until the Closing Date.
On December 29, 2023, the Closing Date, we completed the sale of the Mobility Business. As a result of the transaction, we derecognized net assets of approximately $1.2 billion and recorded a pre-tax gain of $942 million, subject to certain post-closing adjustments that are still being finalized. In addition, we agreed to indemnify BYDE from certain liabilities that may arise post-close that relate to periods prior to the Closing Date. We incurred transaction and disposal costs in connection with the sale of approximately $67 million during the fiscal year ended August 31, 2024, which are included in continuing operations in our Condensed Consolidated Statements of Operations.
Refer to Note 17 – “Business Acquisitions and Divestitures” to the Condensed Consolidated Financial Statements for discussion.
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 November 30, 2024, we had approximately $2.1 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 November 30, 2024, 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) | 3.950% Senior Notes | 3.600% Senior Notes | 3.000% Senior Notes | 1.700% Senior Notes | 4.250% Senior Notes | 5.450% Senior Notes | Borrowings under revolving credit facilities**(1)** | Borrowings under loans | Total notes payable and credit facilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of August 31, 2024 | $ | 498 | $ | 497 | $ | 594 | $ | 499 | $ | 496 | $ | 296 | $ | — | $ | — | $ | 2,880 | |||||||||||||||||||||||||||||||||||||||||||||||
| Borrowings | — | — | — | — | — | — | 100 | — | 100 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Payments | — | — | — | — | — | — | (100) | — | (100) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other | — | — | — | — | 1 | 1 | — | — | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of November 30, 2024 | $ | 498 | $ | 497 | $ | 594 | $ | 499 | $ | 497 | $ | 297 | $ | — | $ | — | $ | 2,882 | |||||||||||||||||||||||||||||||||||||||||||||||
| Maturity Date | Jan 12, 2028 | Jan 15, 2030 | Jan 15, 2031 | Apr 15, 2026 | May 15, 2027 | Feb 1, 2029 | Jan 22, 2026 and Jan 22, 2028 | Jul 31, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Original Facility/ Maximum Capacity | $500 million | $500 million | $600 million | $500 million | $500 million | $300 million | $4.0 billion(1) | $1 million |
(1)As of November 30, 2024, we had $4.0 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 November 30, 2024, and August 31, 2024, we were in compliance with our debt covenants. Refer to Note 6 – “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 an immaterial servicing fee under the global asset-backed securitization program. 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 November 30, 2024.
Effective November 21, 2024, the terms of the global asset-backed securitization program were amended to extend the termination date from November 2024 to January 2025. The maximum amount of net cash proceeds available at any one time is $700 million. During the three months ended November 30, 2024, we sold $1.1 billion of trade accounts receivable, and we received cash proceeds of $1.1 billion. As of November 30, 2024, 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 November 30, 2024, and August 31, 2024, we were in compliance with all covenants under our global asset-backed securitization program. Refer to Note 7 – “Asset-Backed Securitization Program” to the Condensed Consolidated Financial Statements for further details on the program.
Trade Accounts Receivable Sale Programs
Following is a summary of the trade accounts receivable sale programs with unaffiliated financial institutions. Under the programs we may elect to sell receivables, and the unaffiliated financial institutions may elect to purchase, at a discount, on an ongoing basis (in millions):
| Program | Maximum Amount**(1)** | Type of Facility | Expiration Date | ||||||||||||||||||||
| A | $ | 350 | Uncommitted | (2) | |||||||||||||||||||
| B | $ | 120 | Uncommitted | (2) | |||||||||||||||||||
| C | 1,900 | CNY | Uncommitted | (2) | |||||||||||||||||||
| D | $ | 230 | Uncommitted | May 4, 2028(2) | |||||||||||||||||||
| E | $ | 170 | Uncommitted | (3) | |||||||||||||||||||
| F | $ | 50 | Uncommitted | (3) | |||||||||||||||||||
| G | $ | 100 | Uncommitted | (2) | |||||||||||||||||||
| H | $ | 1,200 | Uncommitted | (2) | |||||||||||||||||||
| I | $ | 250 | Uncommitted | (2) | |||||||||||||||||||
| J | 8,100 | INR | Uncommitted | (2) | |||||||||||||||||||
| K | $ | 100 | Uncommitted | (2) | |||||||||||||||||||
| L | $ | 75 | Uncommitted | January 23, 2025(2) |
(1)Maximum amount of trade accounts receivable that may be sold under a facility at any one time.
(2)Any party may elect to terminate the agreement upon 30 days prior notice.
(3)Any party may elect to terminate the agreement upon 15 days prior notice.
During the three months ended November 30, 2024, we sold $1.7 billion of trade accounts receivable under these programs and we received cash proceeds of $1.7 billion. As of November 30, 2024, we had up to $1.8 billion in available liquidity under our trade accounts receivable sale programs.
Cash Flows
The following table sets forth selected consolidated cash flow information (in millions):
| Three months ended | ||||||||||||||
| November 30, 2024 | November 30, 2023 | |||||||||||||
| Net cash provided by operating activities | $ | 312 | $ | 448 | ||||||||||
| Net cash used in investing activities | (136) | (75) | ||||||||||||
| Net cash used in financing activities | (312) | (620) | ||||||||||||
| Effect of exchange rate changes on cash and cash equivalents | (7) | (7) | ||||||||||||
| Net decrease in cash and cash equivalents | $ | (143) | $ | (254) |
Operating Activities
Net cash provided by operating activities during the three months ended November 30, 2024, was primarily due to an increase in accounts payable, accrued expense and other liabilities and non-cash expenses and net income. Net cash provided by operating activities was partially offset by an increase in prepaid expenses and other current assets, an increase in accounts receivable, an increase in inventories and an increase in contract assets. The increase in accounts payable, accrued expenses and other liabilities is primarily due to the timing of purchases and cash payments. The increase in prepaid expenses and other current assets is primarily due to the timing of payments. The increase in accounts receivable is primarily driven by the timing of collections. The increase in inventories is primarily to support expected sales levels in the second quarter of fiscal year 2025. The increase in contract assets is primarily due to timing of revenue recognition for the over time customers.
Investing Activities
Net cash used in investing activities during the three months ended November 30, 2024, consisted primarily of capital expenditures, principally to support ongoing business in the Regulated Industries, Intelligent Infrastructure, and Connected Living and Digital Commerce segments and the acquisition of Mikros Technologies LLC, partially offset by proceeds and advances from the sale of property, plant and equipment.
Financing Activities
Net cash used in financing activities during the three months ended November 30, 2024, was primarily due to (i) the repurchase of our common stock under our share repurchase authorization, (ii) payments for debt agreements, (iii) treasury stock minimum tax withholding related to vesting of restricted stock, and (iv) dividend payments. Net cash used in financing activities was partially offset by borrowings under debt agreements.
Capital Expenditures
For Fiscal Year 2025, we anticipate our net capital expenditures to be in the range of 1.5 percent to 2.0 percent of net revenue. In general, our capital expenditures support ongoing maintenance in our Regulated Industries, Intelligent Infrastructure, and Connected Living and Digital Commerce 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.
We repurchase shares of our common stock under share repurchase programs authorized by our Board of Directors. The following Board approved share repurchase programs were executed through a combination of open market transactions and accelerated share repurchase (“ASR”) agreements (in millions):
| Board Approval Date | Amount Authorized | Shares Repurchased | Total Cash Utilized | Remaining Authorization | Authorization Completion Date | ||||||||||||||||||||||||||||||
| 2022 Share Repurchase Program | Q4 FY 2021 | $ | 1,000 | 16.5 | $ | 1,000 | $ | — | Q2 FY 2023 | ||||||||||||||||||||||||||
| 2023 Share Repurchase Program | Q1 FY 2023 | $ | 1,000 | 2.7 | $ | 224 | (1) | Q4 FY 2023 | |||||||||||||||||||||||||||
| Amended 2023 Share Repurchase Program(2) | Q1 FY 2024 | $ | 2,500 | 20.4 | $ | 2,500 | $ | — | Q1 FY 2025 | ||||||||||||||||||||||||||
| 2025 Share Repurchase Program(3) | Q1 FY 2025 | $ | 1,000 | 4.3 | $ | 636 | $ | 364 | |||||||||||||||||||||||||||
(1)In September 2023, the Board of Directors amended and increased the 2023 Share Repurchase Program to allow for the repurchase of up to $2.5 billion of our common stock.
(2)In September 2024, an ASR transaction was completed, and 1.0 million additional shares were delivered under the Q4 FY 2024 ASR agreements. As of November 30, 2024, no authorization remained under the amended 2023 Share Repurchase Program.
(3)As of January 2, 2025, 4.3 million shares had been repurchased for $636 million and $364 million remains available under the 2025 Share Repurchase Program.
Under ASR agreements, we make payments to the participating financial institutions and receive an initial delivery of shares of common stock. The final number of shares delivered upon settlement of the ASR agreements is determined based on a discount to the volume weighted average price of our common stock during the term of the agreements. At the time the shares are received by the Company, the initial delivery and the final receipt of shares upon settlement of the ASR agreements results in an immediate reduction of the outstanding shares used to calculate the weighted-average common shares outstanding for basic and diluted earnings per share.
The terms of ASR agreements, structured as outlined above, were as follows (in millions, except average price):
| Agreement Execution Date | Agreement Settlement Date | Agreement Amount | Initial Shares Delivered | Additional Shares Delivered | Total Shares Delivered | Average Price Paid Per Share | ||||||||||||||||||||||||||||||||||||||
| Q1 FY 2024 | Q1 FY 2024 | $ | 500 | 3.3 | 0.6 | 3.9 | $ | 128.61 | ||||||||||||||||||||||||||||||||||||
| Q4 FY 2024 | Q1 FY 2025 | $ | 555 | 4.2 | 1.0 | 5.2 | $ | 107.08 | ||||||||||||||||||||||||||||||||||||
| Q2 FY 2025 | Q3 FY 2025 | $ | 310 | 1.8 | (1) | (1) | $ | 145.00 |
(1)In December 2024, as part of the 2025 Share Repurchase Program, we entered into ASR agreements to repurchase $310 million, excluding excise tax, of our common stock. Under the ASR agreements, we made payments of $310 million to participating financial institutions and received an initial delivery of shares of common stock. The delivery of any remaining shares will occur at the final settlement of the transactions under the ASR agreements.
In addition, we repurchased shares of its common stock through the open market as follows (in millions):
| Three months ended | ||||||||||||||||||||||||||||||||||||||||||||||||||
| November 30, 2024 | November 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Cost | Shares | Cost | |||||||||||||||||||||||||||||||||||||||||||||||
| Open market share repurchases(1) | 1.8 | $ | 232 | 0.0 | $ | — |
(1)As of November 30, 2024, $768 million remains available under the 2025 Share Repurchase Program.
Warrants
On December 27, 2024, we issued a warrant (the “Warrant”) to Amazon.com NV Investment Holdings LLC (“Warrantholder”) to acquire up to 1,158,539 of our ordinary shares (“Warrant Shares”) at an initial exercise price of $137.7671 per share, which is the preceding 30 trading day VWAP. The Warrant allows for cashless exercise and expires December 27, 2031. The Warrant Shares are subject to vesting for payments for purchased products and services over the Warrant term, with a portion of the Warrant Shares having vested as of the Warrant issuance.
Upon the consummation of an acquisition transaction (as defined in the Warrant), subject to certain exceptions, the unvested portion of the Warrant will vest in full. So long as the Warrant is unexercised, the Warrant does not entitle the Warrantholder to any voting rights or any other common stockholder rights. The exercise price and the number of Warrant Shares are subject to customary anti-dilution adjustments.
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, 2024, to our contractual obligations and commitments and the related cash requirements.
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