ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended August 31, 2024
or
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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, Florida33716
(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
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐No☒
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
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Accelerated filer
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Non-accelerated filer
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Smaller reporting company
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Emerging growth company
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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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
The aggregate market value of the voting common stock held by non-affiliates of the registrant based on the closing sale price of the Common Stock as reported on the New York Stock Exchange on February 29, 2024, was approximately $15.2 billion. For purposes of this determination, shares of Common Stock held by each officer and director and by each person who owns 10% or more of the outstanding Common Stock have been excluded in that such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes. The number of outstanding shares of the registrant’s Common Stock as of the close of business on October 21, 2024, was 112,843,194. The registrant does not have any non-voting stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
We have incorporated by reference portions of our Proxy Statement for our annual meeting of shareholders expected to be held on January 23, 2025, into Part III hereof, to the extent indicated herein.
This Annual Report on Form 10-K (“Form 10-K”) contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties. Many of the forward-looking statements are located in Part II, Item 7 of this Form 10-K under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Forward-looking statements can also be identified by words such as “future,” “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “will,” “would,” “should,” “could,” “can,” “may,” and similar terms. Forward-looking statements are not guarantees of future performance and the Company’s actual results may differ significantly from the results discussed in the forward-looking statements. Achievement of anticipated results is subject to substantial risks, uncertainties and inaccurate assumptions. Should known or unknown risks or uncertainties materialize, or should underlying assumptions prove inaccurate, actual results could vary materially from past results and those anticipated, estimated or projected. You should bear this in mind as you consider forward-looking statements, and you are cautioned not to put undue reliance on forward-looking statements. We undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law or by the rules and regulations of the SEC. You are advised, however, to consult any further disclosures we make on related subjects. Factors that might cause such differences include, but are not limited to, those discussed in Part I, Item 1A of this Form 10-K under the heading “Risk Factors,” which are incorporated herein by reference. References in this report to “the Company,” “Jabil,” “we,” “our,” or “us” mean Jabil Inc. together with its consolidated subsidiaries, except where the context otherwise requires.
We are one of the leading providers of manufacturing services and solutions worldwide. We provide comprehensive electronics design, production, and product management services to companies in various industries and end markets. 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. Our services enable our customers to reduce manufacturing costs, improve supply chain management, reduce inventory obsolescence, lower transportation costs, and reduce product fulfillment times.
We serve our customers primarily through dedicated business units that combine highly automated, continuous flow manufacturing with advanced electronic design and design for manufacturability. Each business unit team serves as a single point of contact between a customer and Jabil. Business unit teams are supported by cross-functional teams, which leverage the power of our global expertise and capabilities to carry out work at the site level.
We conduct our operations in facilities that are located worldwide, including but not limited to China, Mexico, Singapore, and the United States. 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. For the fiscal year ended August 31, 2024, we had net revenues of $28.9 billion and net income attributable to Jabil Inc. of $1.4 billion.
On December 29, 2023 (“the Closing Date”), we completed the sale of our product manufacturing business in Chengdu, including its supporting component manufacturing in Wuxi (the “Mobility Business”) to an affiliate of BYD Electronic (International) Co. Ltd. (“BYDE”) for pre-tax cash proceeds of approximately $2.2 billion, subject to certain post-closing adjustments. See Note 17 – “Business Acquisitions and Divestitures” to the Consolidated Financial Statements for additional information.
At August 31, 2024, we had 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 on 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-capital equipment, and networking and storage industries. Our DMS segment is focused on providing engineering solutions, with an emphasis on material sciences, machining, tooling, and molding of highly engineered plastic and metal parts. Our DMS segment includes customers primarily in the automotive and transportation, connected devices, and healthcare and packaging industries. The DMS segment included the results of the Mobility Business prior to the Closing Date.
Beginning September 1, 2024, we reorganized our internal structure to focus on speed, precision, and solutions and as a result of our organizational realignment, we will report our business in the following three segments: Regulated Industries, Intelligent Infrastructure, and Connected Living and Digital Commerce. 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.
Additional financial information regarding our reportable operating segments is included in Item 7 of this report and Note 14 – “Concentration of Risk and Segment Data” to the Consolidated Financial Statements.
Our industry was historically composed of companies that provide a range of design and manufacturing services to companies that utilize electronics components in their products. The industry subsequently expanded to include customers that require products and services beyond electronic components, including plastics and metal components, packaging, and injection molding.
We monitor the current economic environment and its potential impact on both the customers we serve as well as our end markets; we closely manage our costs and capital resources so that we can respond appropriately as circumstances change. Over the long term we believe the factors driving our customers and potential customers to use our industry’s services include:
•Efficient Manufacturing. Manufacturing solutions providers are often able to manufacture products at a reduced total cost to companies. These cost advantages result from higher utilization of capacity and efficiencies of scale because of diversified product demand and, generally, a greater focus on the components of manufacturing cost. Companies are increasingly seeking to reduce their investment in inventory, facilities, and equipment used in manufacturing and prioritizing capital investments in other activities, such as sales and marketing and research and development (“R&D”). This strategic shift in capital deployment has contributed to increased demand for and interest in outsourcing to external manufacturing service providers.
•Accelerated Product Time-to-Market and Time-to-Volume. Manufacturing solutions providers are often able to deliver accelerated production start-ups and achieve high efficiencies in bringing new products to production. Providers are also able to more rapidly scale production for changing markets and to position themselves in global locations that serve the leading world markets. With increasingly shorter product life cycles, these key services allow new products to be sold in the marketplace in an accelerated time frame.
•Access to Advanced Design and Manufacturing Technologies. By utilizing manufacturing solutions providers, customers gain access to additional advanced technologies in manufacturing processes, as well as to product and production design, which can offer customers significant improvements in the performance, quality, cost, time-to-market and manufacturability of their products.
•Improved Inventory Management and Purchasing Power. Manufacturing solutions providers are often able to more efficiently manage both procurement and inventory. Providers have demonstrated proficiency in purchasing components at improved pricing due to the scale of their operations and continuous interaction with the materials marketplace.
•Global Reach and Regional Manufacturing. Manufacturing solutions providers operate globally and are often able to more efficiently transition the location of manufacturing processes for products in response to changing macroeconomic and geopolitical environments relying on installed footprints, local teams, and consistent processes.
Our Strategy
Our vision for the future is to become the world’s most technologically advanced and trusted manufacturing solutions provider. As we work to achieve our vision, we continue to pursue the following strategies:
•Establish and Maintain Long-Term Customer Relationships. An important element of our strategy is to establish and maintain long-term relationships with leading companies in expanding industries with size and growth characteristics that can benefit from highly automated, continuous flow manufacturing on a global scale. We focus on maintaining long-term relationships with our customers and seek to expand these relationships to include additional product lines and services. In addition, we focus on identifying and developing relationships with new customers that meet our targeted profile, which includes financial stability, the need for technology-driven turnkey manufacturing, anticipated unit volume, and long-term relationship stability.
•Product Diversification. We focus on balancing our portfolio of products and product families to those that align with higher return areas of our business. This includes manufacturing, supply chain management services, comprehensive electronics design, production, and product management services for markets such as cloud and data infrastructure, healthcare, packaging, automotive and transportation, warehouse automation, networking and communications, and semi-capital equipment. We have made concentrated efforts to diversify our industry sectors and customer base. Because of these efforts, we have experienced business growth from both existing and new customers as well as from acquisitions.
•Utilize Customer-Centric Business Units. Most of our business units are dedicated to serve one customer each and operate by primarily utilizing dedicated production equipment, production workers, supervisors, buyers, planners, and engineers to provide comprehensive manufacturing solutions that are customized to each customer’s needs. We believe our customer-centric business units promote increased responsiveness to our customers’ needs, particularly for customer relationships that extend across multiple production locations.
•Leverage Global Production. We believe that global production is a key strategy to reduce obsolescence risk and secure the lowest possible landed costs while simultaneously supplying products of equivalent or comparable quality throughout the world. Consistent with this strategy, we have established or acquired operations in the Americas, Europe and Asia. Our extensive global footprint positions us well to implement safe and practical solutions in order to select production locations which best serve the needs of our customers. We believe that our global footprint is strengthened by our centralized procurement process, which, when coupled with our single Enterprise Resource Planning system, affords our customers with end-to-end supply chain visibility.
•Offer Systems Assembly, Direct-Order Fulfillment, and Configure-to-Order Services. Our systems assembly, direct-order fulfillment and configure-to-order services allow our customers to reduce product cost and risk of product obsolescence by reducing total work-in-process and finished goods inventory. These services are available at all of our manufacturing locations.
•Offer Design Services. We offer a wide spectrum of value-add design services to achieve improvements in performance, cost, time-to-market, and manufacturability.
•Pursue Acquisition Opportunities Selectively. The primary goals of our acquisition strategy are to complement our current capabilities, diversify our business into new industry sectors and with new customers, and expand the scope of the services we can offer to our customers.
Our Approach to Manufacturing
To achieve high levels of manufacturing performance, we have adopted the following approaches:
•Decentralized Business Unit Model. Most of our business units are dedicated to serve one customer each and are empowered to formulate strategies tailored to an individual customer’s needs. Our business units generally have dedicated production lines consisting of equipment, production workers, supervisors, buyers, planners, and engineers. Under certain circumstances, a production line may serve more than one business unit to maximize resource utilization. Business units have direct responsibility for manufacturing results and time-to-volume production, thereby promoting a sense of individual commitment and ownership. The business unit approach is modular and enables us to grow incrementally without disrupting the operations of other business units. Business unit management reviews the customer financial information to assess whether the business units are meeting their designated responsibilities and to ensure that the daily execution of manufacturing activities is being effectively managed. The business units aggregate into operating segments based on the end markets they serve.
•Automated Continuous Flow. We use a highly automated, continuous flow approach to manufacturing, whereby different pieces of equipment are joined directly or by conveyor to create an in-line assembly process. This process contrasts with a batch approach, whereby individual pieces of assembly equipment are operated as freestanding work-centers. The elimination of waiting time prior to sequential operations results in faster manufacturing, which improves production efficiencies and quality control and reduces inventory work-in-process. We believe continuous flow manufacturing provides cost reductions and quality improvement when applied to high volumes of product.
•Computerized Control and Monitoring. We support all aspects of our manufacturing activities with advanced computerized control and monitoring systems. Component inspection and vendor quality are monitored electronically in real-time. Materials planning, purchasing, stockroom, and shop floor control systems are supported through a computerized manufacturing resource planning system.
•Electronic Supply Chain Management. We make available to our customers and suppliers an electronic commerce system/electronic data interchange and cloud-based tools to implement a variety of supply chain management programs. Our customers use these tools to share demand and product forecasts and deliver purchase orders, and we use these tools with our suppliers for just-in-time delivery, supplier-managed inventory, and consigned supplier-managed inventory.
We offer a wide spectrum of value-add design services to enhance our relationships with current customers and to help develop relationships with our new customers. Our teams are strategically staffed to support Jabil customers for all development projects, from turnkey system design and joint development to industrialization and product optimization activities. Our design services support products across all markets we serve and include products such as cloud data center server platforms; medical and consumer health devices; automotive assemblies for software defined vehicles, advanced driver assistance systems, autonomous systems, and electrification; connected consumer products and appliances; digital commerce ecosystem products for retail environments; power and storage products to support the energy infrastructure; and smart controls and security for digital building and utilities. These design services include:
•Electronic Design. Our Electronic Design team provides electronic hardware and embedded software design services for analog, digital, radio frequency, power, sensor, and optical component applications. This ranges from initial concept and system architecture through design implementation and new product introduction to mass production.
•Experience Design. Our Experience Design team works with product design teams to create product experiences that resonate with consumers through user research, industrial design, user interface design, and human factors.These capabilities are used to create, develop, and connect concepts and specifications that optimize the function, value, and appearance of products to satisfy the needs of consumers and manufacturing partners.
•Mechanical Design. Our Mechanical Design team specializes in mechanical design of plastic and metal components, enclosures, sub-assemblies, assemblies, and systems to meet product requirements with the analysis of electronic, electro-mechanical and optical assemblies using state of the art modeling and analytical tools. This includes all aspects of product concept, detail design, wide-ranging environmental applications, thermal management, and tooling management.
•Optical Design. Our Optical Design team focuses on applying our knowledge in advanced optics to provide optical product solutions for virtual and/or augmented reality, Light Detection and Ranging (“LiDAR”), 3D sensing, projection, and imaging.Throughout the design process, we develop the required processes, equipment, and testing specific to optics in order to take the customer from design to precision mass production.
•Industrialization Engineering Services. Our engineering services combine multiple functions to work with design teams to optimize products for maximum performance, highest quality, and time to market while balancing cost and manufacturability. These functions include our computer-assisted design (“CAD”) team, to provide PCBA design services using advanced CAD engineering tools, our Value Analysis and Value Engineering (“VAVE”) team, to increase value and decrease cost of both electrical and mechanical assemblies, and our Engineering Prototyping teams for all development stages.
•Product Verification. Our Product Verification team provides complete product verification throughout the full design cycle and executes specific test services.This includes product verification, failure analysis, regulatory, compliance and safety, packaging, simulation, and data analysis.
•Manufacturing Test Solution Development. Our Manufacturing Test Solution Development team provides integral support to the design teams to embed design with testability and to promote efficient capital and resource investment in the manufacturing process. The use of software driven instrumentation and test process design and management reduces human dependent test processes and allows customer product test traceability and visibility throughout the manufacturing test process.
Fabrication and Assembly
We offer systems assembly, test, direct-order fulfillment, and configure-to-order services to our customers. Our systems assembly services extend our range of assembly activities to include assembly of higher-level sub-systems and systems incorporating multiple PCBAs. In addition, based on quality assurance programs developed with our customers, we provide testing services for our PCBAs, sub-systems, and systems products. Our quality assurance programs include product testing under various environmental conditions to help ensure that our products meet or exceed required customer specifications.
We believe that our manufacturing and testing technologies are among the most advanced in our industry. To meet our customers’ increasingly sophisticated needs, we continuously engage in R&D activities designed to create new and improved products and manufacturing solutions for our customers. Through our R&D efforts, we intend to continue offering our customers efficient manufacturing processes with high quality and differentiating product solutions using the latest technologies. These technologies and R&D activities include:
•Automation, including automated tooling
•Electronic interconnection
•Advanced polymer and metal material science
•Single/multi-shot injection molding, stamping, and in-mold labeling
•Multi-axis computer numerical control
•Vacuum metallization
•Physical vapor deposition
•Digital printing
•Anodization
•Thermal-plastic composite formation
•Plastic with embedded electronics
•Metal and plastic covers with insert-molded or dies-casting features for assembly
•Display cover with integrated touch sensor
•Material processing research (including plastics, metal, glass, and ceramic)
•Additive manufacturing
•Outsourced semiconductor assembly and test (“OSAT”) capabilities
•Advanced electric assembly processes
•Co-packaged optics
•Liquid cooling
•Silicon photonics
•Sustainable materials and design
•Artificial intelligence and machine learning
Our R&D efforts span the markets we serve to provide our customers leading edge technologies and solutions.
Customers and Marketing
A key tenet of our strategy is to establish and maintain long-term relationships with leading companies in expanding industries with the size and growth characteristics that can benefit from highly automated, continuous flow manufacturing on a global scale. A small number of customers and significant industry sectors have historically comprised a major portion of our net revenue. We also market our services and solutions through our website and social media platforms.
In fiscal year 2024, our five largest customers accounted for approximately 36% of our net revenue and 88 customers accounted for approximately 90% of our net revenue. The table below sets forth the respective portion of net revenue attributable to the customer that accounted for a significant concentration of our net revenue during the periods indicated:
Fiscal Year Ended August 31,
2024
2023
2022
Apple, Inc.
11
%
17
%
19
%
Competition
Our business is highly competitive. We compete against numerous domestic and foreign electronic manufacturing solutions providers, diversified manufacturing service providers, and design providers. We also face competition from the manufacturing operations of our current and potential customers, who are continually evaluating the merits of manufacturing products internally against the advantages of outsourcing.
We compete with different companies depending on the type of service we are providing or the geographic area in which an activity takes place. We believe that the principal competitive factors in the manufacturing services market are: cost; accelerated production time-to-market; higher efficiencies; global locations; rapid scaling of production; advanced technologies; quality; and improved pricing of components. We believe we are extremely competitive with regard to all of these factors.
Components Procurement
We procure components from a broad group of suppliers, determined on an assembly-by-assembly basis. Our global sourcing and purchasing locations are strategically placed in various countries throughout the world along with our global commodity management and supplier relationship teams. These locations manage our end-to-end procurement lifecycle. This regionalized expertise along with our supplier relationships provide efficient procurement operations.
Some of the products we manufacture contain one or more components that are only available from a single source. Some of these components are allocated from time to time in response to supply shortages. In some cases, supply shortages will substantially curtail production of all assemblies using a particular component.
Proprietary Rights
We regard certain aspects of our technology, design, production and product management, supply chain, and other services as proprietary intellectual property. We rely largely upon a combination of intellectual property laws, non-disclosure agreements with our customers, employees, and suppliers and our internal security systems, policies, and procedures. We currently have a relatively modest number of patents for various innovations. We believe that our intellectual property portfolio will continue to evolve as we expand our business activities. Other factors significant to our proprietary rights include the knowledge and experience of our management and workforce and our ability to develop, enhance, and market our technology and services.
We license some technology and intellectual property rights from third parties. Generally, the license agreements that govern such third-party technology and intellectual property rights grant us the right to use the subject technology anywhere in the world and terminate upon a material breach by us.
Human Capital Management
As of August 31, 2024, our workforce includes diverse, talented, and dedicated employees across approximately 100 locations in more than 30 countries who differentiate us from our competitors. To maintain our edge, we continually invest in our employees, so that they can take care of our customers, shareholders and communities. Following is a summary of employees by region (in thousands):
Region
Number of Employees
Asia(1)
75
Americas
48
Europe
15
Total(2)
138
(1)Decrease from prior period is driven by the divestiture of the Mobility Business during the fiscal year ended August 31, 2024. See Note 17 – “Business Acquisitions and Divestitures” to the Consolidated Financial Statements for additional information.
(2)Total headcount includes permanent, temporary and contingent workers.
None of our U.S. employees are represented by a labor union. In certain international locations, our employees are represented by labor unions and by works councils. We promote positive employee relations globally and have not experienced a significant work stoppage or strike.
Safety
“Safety First. Always.” is a fundamental value that is ingrained in our culture. We are committed to safety standards in all of our facilities, so that our employees are protected and can return home safely after each work shift. We have implemented a continuous improvement-based Health and Safety Management System, including annual training assessments coupled with engaged leaders and employees who prioritize safety.
We believe that respect for fundamental human rights as an essential element of responsible corporate citizenship. We are a founding member of the Responsible Business Alliance (RBA), which is one of the world’s largest industry coalitions for corporate social responsibility in global supply chains. The RBA sets (1) standards regarding excessive working hours and unfair wages, (2) controls to prohibit child labor and human trafficking, and (3) avenues for employees to raise and address workplace health and safety concerns. We have aligned our work programs, processes, and procedures to the RBA Code of Conduct to help support safe working conditions, treat employees with respect and dignity, and environmentally responsible manufacturing process and practices.
Diversity, Equity, and Inclusion
Our diverse workforce provides us with the innovation and creativity that have allowed us to continue our success. Respect is the foundation of our culture, and we want all our employees to feel valued and psychologically and physically safe. Welcoming a spectrum of backgrounds, experiences, viewpoints, and abilities, we collaborate to create a culture of belonging where everyone can be their authentic selves and contribute to Jabil’s success.
In alignment with our Code of Conduct, we are dedicated to establishing a discrimination-free and harassment-free environment globally. Guided by our enterprise-wide priorities of mitigating biases, cultivating inclusive leadership, and developing diverse talent, we are proud to foster a culture of belonging.
In fiscal year 2024, we further advanced diversity, equity, and inclusion (DEI) by expanding our DEI programming to include the formation of Regional DEI Committees. The role of the DEI Committees is to drive engagement, identify regional needs, and share feedback and best practices globally. They are comprised of cross-functional employees with a passion for contributing to Jabil’s commitment to inclusion, and are located in the Americas, Europe, and Asia.
During fiscal year 2024, numerous initiatives were launched in alignment with Jabil’s external goals to increase the representation of women in leadership and programming around disability inclusion. We hosted a women-focused event series, creating the opportunity for women leaders across our functional teams, to share their experiences and advice. While geared toward women, all employees at all levels at Jabil were welcome to participate in these six engaging sessions focused on both professional and personal development. We also launched our second cohort of the Women in Leadership Sponsorship program, a nomination-based program that combines executive-level sponsorship with individual and group coaching for women at the director level.
We are proud to have received a top score on the 2024 Disability Equality Index by Disability:IN for the fourth consecutive year. Our global sites developed and implemented programs focused on employment and retention of employees with disabilities, physical and digital infrastructure, and training programs to foster an inclusive environment for all. In collaboration with our Operations team and utilizing best practices from Disability:IN, we have also established a baseline for site accessibility.
Compensation and Benefits
Jabil’s compensation programs are designed to align the compensation of our employees with Jabil’s performance and to provide the proper incentives to attract, retain, and motivate employees to achieve superior results. Specifically:
•We provide employee pay levels that are competitive and consistent with employee positions, skill levels, experience, knowledge, and geographic location.
•Salary increases and incentive compensation are based on merit and performance.
•All full-time U.S. employees are eligible for health insurance, paid and unpaid leaves, a retirement plan, and life and disability/accident coverage. Benefits outside the U.S. are provided based upon country-specific practices and are intended to support the health and wellbeing of our employees and their families.
•Supporting the mental health and emotional wellbeing of our employees and their families is a high priority at Jabil, and we have implemented several programs and benefits over the past several years to help de-stigmatize mental health issues and assist employees in finding and leveraging appropriate resources. These include a global employee assistance program (EAP), on-site behavioral health resources in some locations, and education for our leaders on ways to recognize and respond to signs of mental health and substance abuse issues. By focusing on training our leaders in mental health awareness, we believe we are creating the right environment for mental health issues to be recognized and addressed. Additionally, our Health and Wellbeing programs help to strengthen mental health resilience.
•The majority of our employees around the world are eligible to participate in our Employee Stock Purchase Plan, allowing them to become owners of Jabil stock at a discount.
Career Growth and Development
At Jabil, we have historically invested in the professional and personal growth and development of our employees at all levels of the organization. Our learning solutions empower employees to enhance their knowledge and skills, enabling them to work more effectively, develop stronger capabilities, and guide their teams to success and further reinforce the organization’s vision. Jabil offers learning programs and offerings for all level of employees (hourly, professional, management). In fiscal year 2024, there were more than 21,000 internal promotions at various levels in Jabil, a testament to our ability to grow and develop our own talent.
As part of our talent strategy, we have introduced the LinkedIn Learning platform to enhance employees' access to the tools, resources, and support needed to take charge of their career development. We made this significant investment by providing free access to LinkedIn Learning for over 30,000 employees worldwide, including all professional, management, and executive leaders. Employees are encouraged to utilize LinkedIn Learning for both leadership and technical development, reinforcing our commitment to continuous learning and growth.
Employee Engagement
In May 2024, we conducted our global Your Voice Matters Pulse Survey to measure the impact of action plans developed from the 2023 global survey. A third party was used to administer the survey. Action plans resulting from the 2023 global survey have been modified accordingly and further action plans have been developed and are being executed at all sites to promote continued excellence in employee engagement at Jabil.
Cultural Initiatives
Our commitment to our employees’ safety and wellbeing goes beyond physical health to include social, emotional, and mental health.At Jabil, we provide our full-time employees two days of paid time off for health and wellbeing and one day for community service. From January to August 2024, approximately 79,000 employees have utilized their wellness days, and approximately 19,000 employees have completed a paid day of community service.
To support our commitment to serve our communities where we live and operate, in 2023, Jabil employees completed over 1 million volunteer hours, reaching that milestone for the second consecutive year. From January to August 2024, Jabil employees spent approximately 330,000 service hours in the areas of education, empowerment, and the environment. We believe that while our efforts are locally driven, the impact is global.
Jabil hosted four “Global Volunteer Days,” large-scale volunteer events designed to create shared experiences across the organization around a particular cause. The four Global Volunteer Days held in 2024 were International Women’s Day, Earth Day, World Environment Day, and World Food Day.
Jabil hosted its annual Deliver Best Practices Global Finals in October 2023, with 31 employees and teams competing, representing 19 global locations from nine different countries. This continuous improvement program, which started in 2009, embodies the best of Jabil’s culture while focusing on our key business drivers (People, Process, Social & Environmental, and Technology & Innovation).
As a core part of Jabil’s culture, recognition plays an important role in appreciating others for going above and beyond their normal job duties and doing what’s right for our customers, people, and communities. Jabil acknowledges these well-deserved efforts through our Respect, Recognize. Reward. program, which recognized 1,528 people from 142 sites and 25 countries in fiscal year 2024.
We are subject to a variety of federal, state, local, and foreign environmental, health and safety, product stewardship, and producer responsibility laws and regulations, including those relating to the use, storage, discharge, and disposal of hazardous chemicals used during our manufacturing process; those governing worker health and safety; those requiring design changes, supply chain investigation, or conformity assessments; or those relating to the recycling or reuse of products we manufacture.
Information about our Executive Officers
Executive officers are appointed by the Board of Directors and serve at the discretion of the Board. There are no family relationships among our executive officers and directors. There are no arrangements or understandings between any of our executive officers and any other persons pursuant to which any of such executive officers were selected. Below is a list of our executive officers:
Adam E. Berry (age 47) was named Senior Vice President, Investor Relations & Communications in June 2024.He previously served as Vice President, Investor Relations from September 2018. Mr. Berry held other roles of increasing responsibility since joining Jabil in 2010 as Director of Investor Relations.Mr. Berry holds a bachelor’s in Communications from Boston College and an MBA from Georgia Institute of Technology.
Steven D. Borges (age 56) was named Executive Vice President, Global Business Units in May 2024. He previously served as Executive Vice President, Chief Executive Officer, Diversified Manufacturing Services from June 2022; Executive Vice President, Chief Executive Officer, Regulated Industries, from September 2020, with additional responsibility for additive Manufacturing; and as Executive Vice President, Chief Executive Officer, Healthcare from September 2016 through August 2020. Mr. Borges joined Jabil in 1993. He holds a bachelor’s in Business Administration and Management from Fitchburg State University.
Matthew Crowley (age 49) was named Executive Vice President, Global Business Units in May 2024. He most recently served as Senior Vice President, Global Business Units from May 2022, and from March 2019 until April 2022, as Vice President, Global Business Units, and from February 2018 to February 2019 as Senior Director, Cloud. Before joining Jabil in 2018, Mr. Crowley held positions with Dell and Amazon Web Services.
Michael Dastoor (age 59) was named Chief Executive Officer in May 2024.Over his 24-year tenure at Jabil, he has held multiple leadership roles across Jabil’s global markets, including serving as Executive Vice President, Chief Financial Officer from April 2018. Mr. Dastoor previously served as Senior Vice President, Controller from July 2010. Mr. Dastoor joined Jabil in 2000. He holds a degree in Finance and Accounting from the University of Bombay and is a Chartered Accountant from the Institute of Chartered Accountants in England and Wales.
Gregory B. Hebard (age 55) was named Chief Financial Officer in May 2024. He most recently served as Senior Vice President, Treasurer since 2021. Since joining Jabil in 2009, Mr. Hebard has held roles of increasing responsibility in finance, including Senior Vice President, CFO Green Point from 2017 to 2021 and Vice President, Financial Planning & Analysis from 2013 to 2017. He holds a master’s in Business from DePaul University and a bachelor’s in Finance from the University of Iowa.
Frederic E. McCoy (age 56) was named Executive Vice President, Operations in May 2024. He most recently served as Executive Vice President, Global Business Units since August 2023; Executive Vice President & Chief Executive Officer, Electronics Manufacturing Services, from December 2021 and Senior Vice President, Global Business Units from October 2017. Mr. McCoy joined Jabil in 2001. He holds a master’s in International Affairs and Economics from the School of Advanced International Studies (SAIS) at Johns Hopkins University and a bachelor’s in Foreign Service from Georgetown University.
Francis (“Frank”) G. McKay (age 54) was named Senior Vice President, Chief Procurement Officer, in January 2019. Prior to his current role, he served as Vice President, Procurement & Purchasing Services from October 2014 and held a variety of management positions in Europe, Asia and the US since joining Jabil in 1997. Mr. McKay holds a bachelor’s from University of Strathclyde.
Kristine Melachrino (age 46) was named Senior Vice President, General Counsel, in October 2022. She joined Jabil in 2007 holding various roles in the legal department supporting the functional and business teams globally. Prior to this role, Ms. Melachrino served as Vice President, Senior Deputy General Counsel for the global Commercial legal team, advising on
complex legal and regulatory matters to facilitate business growth; and Assistant Corporate Secretary. She holds a Juris Doctor from Stetson University College of Law, and an MBA from Stetson University.
Mark T. Mondello (age 60) was named Chairman of Jabil’s Board of Directors effective November 2021 and has been a member of the Board since March 2013. Mr. Mondello served as our Chief Executive Officer until May 2023. Mr. Mondello has retained various executive responsibilities. Mr. Mondello joined Jabil in 1992. He holds a bachelor’s in Mechanical Engineering from the University of South Florida.
Andrew D. Priestley (age 53) was named Executive Vice President, Global Business Units in May 2024. He most recently served as Senior Vice President, Global Business UnitsApril 2014. Since joining Jabil in 1996, he has held positions of increasing responsibility across the Company, including as Vice President, Global Business Units since 2012. Mr. Priestley holds an honour’s in Engineering with Management from the Edinburgh Napier University.
Gary K. Schick (age 54) was named Senior Vice President and Chief Human Resources Officer in October 2023.He most recently served as Vice President, HR Operations from October 2022. Mr. Schick has held several other positions of increasing responsibility in human resources since joining Jabil in August 2018 as a Senior Director, Human Resources.Mr. Schick holds a bachelor’s in Economics from Northwestern University and a Juris Doctor from the University of Pittsburgh School of Law.
May Y. Yap (age 54) was named Senior Vice President, Chief Information Officer in September 2020. She joined Jabil in 2014 as Vice President and CIO of Jabil Green Point. Ms. Yap holds an MBA and a master’s in Computer Science from University of Hull and a doctorate in business administration and management from New York University.
Additional Information
Our principal executive offices are located at 10800 Roosevelt Boulevard North, St. Petersburg, Florida 33716, and our telephone number is (727) 577-9749. We were incorporated in Delaware in 1992. Our website is located at http://www.jabil.com. Through a link on the “Investors” section of our website, we make available our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q, our Current Reports on Form 8-K and any amendments to those reports, free of charge, as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC. The “Investors” section of our website contains a significant amount of information about our Company, including a Sustainability Report, financial and other information for investors. The information that we post on the “Investors” section of our website could be deemed to be material information. We encourage investors, the media and others interested in Jabil to visit our website. Information on our website, however, is not a part of this report.
Our ability to schedule production, manage capital expenditures, and maximize the efficiency of our manufacturing capacity is highly dependent on the actions of our customers, who generally do not commit to long-term production schedules and cancel orders, change production quantities, delay production, and/or change sourcing strategy.
Most of our customers do not commit to firm production schedules for more than one quarter. We make significant decisions, including determining the levels of business that we will seek and accept, production schedules and locations, component procurement commitments, personnel needs, and other resource requirements, based on our estimate of customer requirements. Our inability to forecast the level of customer orders with certainty makes it difficult to schedule production and maximize utilization of our manufacturing capacity and supply chain capabilities.
Many factors outside of our control impact our customers and their ordering behavior, including recession in end markets, changing technology and industry standards, commercial acceptance for products and shifting market demand, product obsolescence, global pandemics, and loss of business. Customers have canceled their orders, changed production quantities or designs, delayed production, changed their sourcing strategy, and terminated their relationships with us. We cannot assure you that present or future customers will not terminate their service arrangements with us or significantly change, reduce, cancel, or delay the amount of services ordered. Such changes, delays, and cancellations have led to, and may lead in the future to, a decline in our production and our possession of excess or obsolete inventory that we may not be able to sell to customers or third parties. This has, and may again, result in write downs of inventories, reduction in the number of products that we sell, delays in payment for inventory that we purchased, and reductions in the use of our manufacturing facilities. As many of our costs and operating expenses are relatively fixed, a reduction in customer demand, particularly a reduction in demand for a product that represents a significant amount of revenue, can harm our gross profit margins and results of operations. In the past, we have also been required to increase staffing and other expenses in order to meet anticipated demand. On occasion, customers have required rapid increases in production for one or more of their products or requested that we relocate our manufacturing operations or transfer manufacturing from one facility to another, which stresses our resources and may reduce operating margins.
Our business at times experiences periods of rapid growth which can place considerable demands upon our management team and our operational, financial, and management information systems. Our ability to manage growth effectively requires us to continue to implement and improve these systems; avoid cost overruns; maintain customer, supplier, and other favorable business relationships during transition periods; efficiently and effectively dedicate resources to existing customers as well as new projects; acquire or construct additional facilities; occasionally transfer operations to different facilities; acquire equipment in anticipation of demand; procure materials and components; continue to develop the management skills of our managers and supervisors; adapt relatively quickly to new markets or technologies and continue to hire, train, motivate and manage our employees. Our failure to effectively manage growth, as well as our failure to realize the anticipated benefits of the actions we take to try to manage our growth, could have a material adverse effect on our results of operations.
In addition, we sometimes experience difficulty forecasting the timing of our receipt of payment from customers. The necessary process to begin manufacturing can be lengthy. Because we make capital expenditures during this ramping-up process and do not receive payment until after we produce and ship the customer’s products, any delays or unanticipated costs in the ramping-up process have, and may again have, a significant adverse effect on our cash flows and our results of operations. Servicing our largest customers may also require us to increase our capital expenditures.
Because we depend on a limited number of customers, a reduction in sales to any one of those customers has and could again cause a significant decline in our revenue.
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 and upon their continued existence, growth, viability, and financial stability. See “Business – The Company.” In some instances, particular manufacturing services we provide for a customer represent a significant portion of the overall revenue we receive from that customer. As a result of this concentration, a reduction in business from one or more of our largest customers could have a material adverse effect on our results of operations. In addition, if one or more of our significant customers were to become insolvent or otherwise become unable to pay us on a timely basis, or at all, our operating results and financial condition could be adversely affected.
Efficient component and material purchasing is critical to our manufacturing processes and contractual arrangements. A shortage of components or an increase in price could interrupt our operations and reduce our profit, increase our inventory carrying costs, increase our risk of exposure to inventory obsolescence and cause us to purchase components of a lesser quality.
Strategic and efficient component and materials purchasing is an aspect of our strategy. Inflation rates have increased and may continue to rise. Our suppliers have raised their prices and may continue to raise prices. When prices rise, they impact our margins and results of operations if we are not able to pass the increases through to our customers or otherwise offset them. Most of our significant long-term customer contracts permit quarterly or other periodic prospective adjustments to pricing based on decreases and increases in component prices and other factors; however, we could bear the risk of component price increases that occur between any such re-pricings or, if such re-pricing is not permitted, during the balance of the term of the particular customer contract. There can be no assurance that we will continue to be able to purchase the components and materials needed to manufacture customer products at favorable prices. Accordingly, certain component price increases could adversely affect our gross profit margins and results of operations.
Some of the products we manufacture require one or more components that are only available from a single source. Some of these components are subject to supply shortages from time to time. In some cases, supply shortages will substantially curtail production of all assemblies using a particular component. A supply shortage can also increase our cost of goods sold if we have to pay higher prices for components in limited supply, or cause us to have to redesign or reconfigure products to accommodate a substitute component. In the past there have been industry wide conditions, pandemics, natural disasters and global events that have caused material and component shortages. In fiscal year 2023, our supply chain was impacted by component shortages, most notably in the semiconductor industry. Our production of a customer’s product has and could again be negatively impacted by any quality, reliability or availability issues with any of our component suppliers. The financial condition of our suppliers could affect their ability to supply us with components and their ability to satisfy any warranty obligations they may have, which could have a material adverse effect on our results of operations.
If a component shortage is threatened or anticipated, we have and may in the future purchase such components early to avoid a delay or interruption in our operations. Purchasing components early has, and may again cause us to incur additional inventory carrying costs and experience inventory obsolescence, both of which may not be recoverable from our customers and could adversely affect our gross profit margins and results of operations. A component shortage will require us to look to second tier vendors or to procure components through brokers. Component availability may be impacted by a supplier’s decision to change part design, performance specifications, manufacturing process, manufacturing locations, and/or use of subcontractors, or by both planned and unforeseen product discontinuation.
Although the impact of the Russia/Ukraine conflict on our supply chain has not been significant, some sub-tier suppliers providing raw materials such as palladium, neon gas, and high-grade aluminum are partially dependent on supply from the regions that may be impacted by the conflict. We will continue to closely monitor the supply availability and price fluctuations of these raw materials. In addition, we source some parts from certain suppliers located in Israel. Although the impact of the Russia/Ukraine conflict and conflicts in the Middle East on our supply chain has not been significant to date, we cannot assure you that this will continue to be the case. Price increases resulting from such shortages and/or other factors which we cannot recover from our customers may adversely impact our results of operations.
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business – Components Procurement.”
Customer relationships with emerging companies present more risks than with established companies.
Customer relationships with emerging companies present special risks because we do not have an extensive product or customer relationship history. There is less demonstration of market acceptance of their products, making it harder for us to anticipate requirements as compared to established customers. Our credit risk on these customers, especially in trade accounts receivable and inventories, and the risk that these customers will be unable to fulfill indemnification obligations to us, are potentially increased. We sometimes offer these customers extended payment terms, loans, and other support and financial accommodations which increases our financial exposure and has impacted our financial results in the past.
The success of our business is dependent on our ability to keep pace with technological changes and competitive conditions in our industry and our ability to effectively adapt our services as our customers react to technological changes and competitive conditions in their respective industries.
If we are unable to offer technologically advanced, cost effective, quick response manufacturing services that are differentiated from our competition (including utilization of machine learning and artificial intelligence) and adapt those services as our customers’ requirements change, demand for our services will decline.
Introducing new business models or programs requiring implementation of new competencies, such as new process technologies and our development of new products or services, has and could affect our operations and financial results.
The introduction of new business models or programs requiring implementation or development of new competencies, such as new process technology within our operations and our independent development of new products or services, presents challenges in addition to opportunities. The success of new business models or programs depends on a number of factors including, but not limited to, a sufficient understanding of the new business or markets, timely and successful product development (by us and/or our customer), market acceptance, our ability to manage the risks associated with new business models or programs and new product production ramp-up, the effective management of purchase commitments and inventory levels in line with anticipated product demand, our development or acquisition of appropriate intellectual property, the availability of supplies in adequate quantities and at appropriate costs to meet anticipated demand, and the risk that new products may have quality or other defects in the early stages of introduction. Accordingly, we cannot determine in advance the ultimate result of new business models or programs.
As a result, we must make long-term investments, develop or obtain appropriate intellectual property, and commit significant resources before knowing whether our assumptions will accurately reflect customer demand. After the development of a new business model, program, product, or service, we typically must be able to manufacture appropriate volumes quickly and at low cost. To accomplish this, we endeavor to accurately forecast volumes, mixes of products and configurations; however, we do not always succeed at doing so.
The addition of new customers has also introduced different demand cycles. For example, cloud-based service providers are cyclically different from our traditional customers, creating changes to our historical revenue patterns and increasing the complexity of the management of our working capital requirements.
We compete with numerous other diversified manufacturing service providers, electronic manufacturing services, design providers, and others.
Our business is highly competitive, and our manufacturing processes are generally not subject to significant proprietary protection. We compete against numerous domestic and foreign electronic manufacturers, manufacturing service providers, design providers, and others. The significant purchasing power and market power of these competitors, many of which are large companies, has and could increase pricing and competitive pressures for us. Most of our competitors have international operations and significant financial resources and some have substantially greater manufacturing, research and development (R&D) and marketing resources. These competitors may:
•respond more quickly to new or emerging technologies or changes in customer requirements;
•have technological expertise, engineering capabilities, and/or manufacturing resources that are greater than ours;
•have greater name recognition, critical mass, and geographic market presence;
•be better able to take advantage of acquisition opportunities;
•devote greater resources to the development, promotion, and sale of their services and execution of their strategy;
•be better positioned to compete on price for their services;
•have excess capacity, and be better able to utilize such excess capacity;
•have greater direct buying power from component suppliers, distributors, and raw material suppliers;
•have lower cost structures as a result of their geographic location or the services they provide;
•be willing or able to make sales or provide services at lower margins than we do;
•have increased vertical capabilities, providing them greater cost savings.
We also face competition from the manufacturing operations of our current and potential customers, who are continually evaluating the merits of manufacturing products internally against the advantages of outsourcing. In the past, some of our customers moved a portion of their manufacturing from us in order to more fully utilize their excess internal manufacturing capacity.
The actions of competitors and current and potential customers have and could cause a decline in our sales and/or compression of our profits.
Our business has and could be adversely affected by any delays, or increased costs, resulting from common carrier or transportation issues.
We rely on a variety of common carriers across the globe to transport our materials from our suppliers and to our customers. Problems suffered by any of these common carriers, including natural disaster, pandemic, labor problems, increased energy prices, or criminal activity, has and could result in shipping delays for products or materials, increased costs, or other supply chain disruptions, and could therefore have a negative impact on our ability to receive products from suppliers and deliver products to customers, resulting in a material adverse effect on our operations.
We may not be able to maintain our engineering, technological, and manufacturing expertise.
Many of the markets for our manufacturing and engineering services are characterized by rapidly changing technology and evolving process development. The continued success of our business will depend upon our ability to:
•hire, retain and expand our pool of qualified engineering and technical personnel;
•maintain and continually improve our technological expertise;
•develop and market manufacturing services that meet changing customer needs; and
•anticipate and respond to technological changes in manufacturing processes on a cost-effective and timely basis.
Although we use the assembly and testing technologies, equipment, and processes that are currently required by our customers, we cannot be certain that we will be able to maintain or develop the capabilities required by our customers in the future. The emergence of new technology, industry standards, or customer requirements may render our equipment, inventory, or processes obsolete or noncompetitive. The acquisition and implementation of new technologies and equipment and the offering of new or additional services to our customers has in the past and may again in the future require significant expense or capital investment, which could reduce our operating margins and our operating results. In facilities that we newly establish or acquire, we may not be able to insert or maintain our engineering, technological and manufacturing process expertise. Our failure to anticipate and adapt to our customers’ changing technological needs and requirements or to hire sufficient personnel to maintain our engineering, technological and manufacturing expertise could have a material adverse effect on our results of operations.
We depend on attracting and retaining officers, managers, and skilled personnel.
Our success depends to a large extent upon the continued services of our officers, managers, and skilled personnel. These employees are not generally bound by employment or non-competition agreements, and we cannot assure you that we will retain them. To aid in managing our growth and strengthening our pool of management and skilled personnel, we will need to internally develop, recruit, and retain skilled management personnel. If we are not able to do so, our business and our ability to continue to grow could be harmed.
We derive a substantial majority of our revenues from our international operations, which are subject to a number of different risks and often require more management time and expense than our domestic operations.
Our international operations are subject to a number of risks, including:
•difficulties in staffing and managing foreign operations and attempting to ensure compliance with our policies, procedures, and applicable local laws;
•less flexible employee relationships that can be difficult and expensive to terminate due to, among other things, labor laws and regulations;
•rising labor costs (including the introduction or expansion of certain social programs), in particular within the lower-cost regions in which we operate, due to, among other things, demographic changes and economic development in those regions;
•labor unrest and dissatisfaction, including potential labor strikes or claims;
•increased scrutiny by the media and other third parties of labor practices within our industry (including working conditions, compliance with employment and labor laws and compensation) which may result in allegations of violations, more stringent and burdensome labor laws, and regulations, higher labor costs, and/or loss of revenues if our customers become dissatisfied with our labor practices and diminish or terminate their relationship with us;
•burdens of complying with a wide variety of foreign laws, including those relating to export and import duties, domestic and foreign import and export controls, trade barriers (including tariffs and quotas), environmental policies and privacy issues, and local statutory corporate governance rules;
•risk of non-compliance with the U.S. Foreign Corrupt Practices Act (the “FCPA”) or similar regulations in other jurisdictions;
•less favorable, less predictable, or relatively undefined, intellectual property laws;
•lack of sufficient or available locations from which to operate or inability to renew leases on terms that are acceptable to us or at all;
•unexpected changes in regulatory requirements and laws or government or judicial interpretations of such regulatory requirements and laws and adverse trade policies, and adverse changes to any of the policies of either the U.S. or any of the foreign jurisdictions in which we operate;
•adverse changes in tax rates or accounting rules and the manner in which the U.S. and other countries tax multinational companies or interpret their tax laws or accounting rules or restrictions on the transfer of funds to us from our operations outside the U.S.;
•limitations on imports or exports of components or products, or other trade sanctions;
•political and economic instability and unsafe working conditions;
•geopolitical unrest, including the invasion of Ukraine, the possibility of military activity in countries near or adjacent to Ukraine, and the sanctions and other actions taken by the European Union, the United States, and other governments around the world in response;
•the Israel-Hamas war, attacks on shipping vessels in the Red Sea, the possibility of military activity in countries near or adjacent to Israel, and the sanctions and other actions that have or may be taken by other governments around the world in response could impact the Company although we have limited business in Israel;
•risk of governmental expropriation of our property;
•inadequate infrastructure for our operations (e.g., lack of adequate power, water, transportation, and raw materials);
•legal or political constraints on our ability to maintain or increase prices;
•health concerns, epidemics, and related government actions;
•increased travel costs and difficulty in coordinating our communications and logistics across geographic distances and multiple time zones;
•longer customer payment cycles and difficulty collecting trade accounts receivable;
•fluctuations in currency exchange rates;
•economies that are emerging or developing or that are subject to greater currency volatility, negative growth, high inflation, limited availability of foreign exchange, and other risks;
•higher potential for theft, misappropriation, or unauthorized access to or use of technology, data, or intellectual property; and
•international trade disputes have and could result in tariffs and other protectionist measures that have and could adversely affect our business. Tariffs have and could increase the costs of the components and raw materials we use in the manufacturing process as well as import and export costs for finished products. Countries could adopt other protectionist measures that could limit our ability to manufacture products or provide services. Increased costs to our U.S. customers who use our non-U.S. manufacturing sites and components may adversely impact demand for our services and our results of operation and financial condition. Additionally, international trade disputes may cause our customers to decide to relocate the manufacturing of their products to another location, either within country, or into a new country. Relocations may require considerable management time as well as expenses related to market, personnel and facilities development before any significant revenue is generated, which may negatively affect our margin. Furthermore, there can be no assurance that all customer manufacturing needs can be met in available locations within the desired timeframe, or at all, which may cause us to lose business, which may negatively affect our financial condition and results of operation.
In particular, a significant portion of our manufacturing, design, support and storage operations are conducted in our facilities in China, and revenues associated with our China operations are important to our success. Therefore, our business, financial condition, and results of operations may be materially adversely affected by economic, political, legal, regulatory, competitive, infrastructure and other factors in China. International trade disputes or political differences with China have and could result in tariffs and other measures that could adversely affect the Company’s business. The Chinese economy differs from the economies of most developed countries in many respects, including the level of government involvement and control over economic growth. In addition, our operations in China are governed by Chinese laws, rule, and regulations, some of which are relatively new. The Chinese legal system continues to rapidly evolve, which may result in uncertainties with respect to the interpretation and enforcement of Chinese laws, rules, and regulations that could have a material adverse effect on our business. China experiences high turnover of direct labor in the manufacturing sector due to the intensely competitive and fluid market for labor, and the retention of adequate labor is a challenge. If our labor turnover rates are higher than we expect, or we otherwise fail to adequately manage our labor needs, then our business and results of operations could be adversely affected. We are also subject to risks associated with our subsidiaries organized in China. For example, regulatory and registration requirements and government approvals affect the financing that we can provide to our subsidiaries. If we fail to receive required registrations and approvals to fund our subsidiaries organized in China, or if our ability to remit currency out of China is limited, then our business and liquidity could be adversely affected.
These factors may harm our results of operations. Also, any measures that we may implement to reduce risks of our international operations may not be effective, may increase our expenses, and may require significant management time and effort. Entry into new international markets requires considerable management time as well as start-up expenses related to market, personnel and facilities development before any significant revenue is generated. As a result, initial operations in a new market may operate at low margins or may be unprofitable.
Although we have implemented policies and procedures designed to cause compliance with the FCPA and similar laws, there can be no assurance that all of our employees and agents, as well as those companies to which we outsource certain of our business operations, will not take actions in violation of our policies which could have a material adverse effect on our operations.
Energy price increases or shortages may negatively impact our results of operations.
Certain of the components that we use in our manufacturing activities are petroleum-based. In addition, we, along with our suppliers and customers, rely on various energy sources (including oil) in our facilities and transportation activities. An increase in energy prices, which have been volatile historically, or energy shortages or restrictions could cause disruption in our operations and/or increase in our raw material costs and transportation costs. In addition, increased transportation costs of certain of our suppliers and customers could be passed along to us. We may not be able to increase our product prices enough to offset these increased costs. In addition, any increase in our product prices may reduce our future customer orders and profitability.
We have on occasion not achieved, and may not in the future achieve, expected profitability from our acquisitions; divestitures may adversely affect our business, reputation, financial condition, results of operations, or cash flows.
We have in the past and will continue to seek and complete acquisitions and divestitures. We cannot assure you that we will be able to successfully integrate the operations and management of our recent acquisitions. Similarly, we cannot assure you that we will be able to identify future strategic acquisitions and adequately conduct due diligence, consummate these potential acquisitions on favorable terms, if at all, or if consummated, successfully integrate the operations and management of future acquisitions. Acquisitions involve significant risks, which could have a material adverse effect on us including:
•Financial risks, such as: (1) overpayment; (2) an increase in our expenses and working capital requirements; (3) exposure to liabilities of the acquired businesses, with contractually-based time and monetary limitations on a seller’s obligation to indemnify us; (4) integration costs or failure to achieve synergy targets; (5) incurrence of additional debt; (6) valuation of goodwill and other intangible assets; (7) possible adverse tax and accounting effects; (8) the risk that we acquire manufacturing facilities and assume significant contractual and other obligations with no guaranteed levels of revenue; (9) the risk that, in the future, we may have to close or sell acquired facilities at our cost, which may include substantial employee severance costs and asset write-offs, which have resulted, and may result, in our incurring significant losses; and (10) costs associated with environmental risks including fines, remediation and clean-up.
•Operating risks, such as: (1) the diversion of management’s attention and resources to the integration of the acquired businesses and their employees and to the management of expanding operations; (2) the risk that the acquired businesses will fail to maintain the quality of services that we have historically provided; (3) the need to implement financial and other systems and add management resources; (4) the need to maintain customer, supplier or other favorable business relationships of acquired operations and restructure or terminate unfavorable relationships; (5) the potential for deficiencies in internal controls of the acquired operations; (6) the inability to attract and retain the employees necessary to support the acquired businesses; (7) potential inexperience in a line of business that is either new to us or that has become materially more significant to us as a result of the transaction; (8) unforeseen difficulties (including any unanticipated liabilities) in the acquired operations; (9) the impact on us of any unionized work force we may acquire or any labor disruptions that might occur; (10) the possibility that the acquired business’s past transactions or practices before our acquisition may lead to future commercial or regulatory risks; (11) the difficulty of presenting a unified corporate image; (12) the possibility that we will have unutilized capacity due to our acquisition activity; (13) when acquiring an operation from a customer and continuing or entering into a supply arrangement, our inability to meet the expectations of the customer as to volume, product quality, timeliness and cost reductions.
Although we conduct what we believe to be a prudent level of due diligence regarding the businesses we purchase, in light of the circumstances of each transaction, an unavoidable level of risk remains regarding the actual condition of these businesses. Until we actually assume operating control of such businesses and their assets and operations, we may not be able to ascertain the actual value or understand the potential liabilities of the acquired entities and their operations.
Many of our acquisitions involve operations outside of the U.S., which are subject to various risks including those described in “Risk Factors – We derive a substantial majority of our revenue from our international operations, which may be subject to a number of risks and often require more management time and expense than our domestic operations.”
We have acquired and may continue to pursue the acquisition of manufacturing and supply chain management operations from our customers (or potential customers). In these acquisitions, the divesting company will typically enter into a supply arrangement with the acquirer. Therefore, our competitors often also pursue these acquisitions. In addition, certain divesting companies may choose not to offer to sell their operations to us because of our current supply arrangements with other companies or may require terms and conditions that may impact our profitability. If we are unable to attract and consummate some of these acquisition opportunities at favorable terms, our growth and profitability could be adversely impacted.
In addition, divestitures involve significant risks, including without limitation, difficulty finding financially sufficient buyers or selling on acceptable terms in a timely manner. Divestitures could adversely affect our profitability and, under certain circumstances, require us to record impairment charges or a loss as a result of the transaction. In addition, completing divestitures is costly, diverts management’s attention and could leave us with certain continuing liabilities.
These and other factors could harm our ability to achieve anticipated levels of profitability or realize other anticipated benefits of an acquisition or divestiture and could adversely affect our business and operating results.
We face risks arising from the restructuring of our operations.
In recent years, we have undertaken initiatives to restructure our business operations with the intention of improving utilization and realizing cost savings. These initiatives have included changing the number and location of our production facilities, largely to align our capacity and infrastructure with current and anticipated customer demand. The process of restructuring entails, among other activities, moving production between facilities, transferring programs from higher cost geographies to lower cost geographies, closing facilities, reducing the level of staff, realigning our business processes, and reorganizing our management.
Restructurings could adversely affect us, including a decrease in employee morale, delays encountered in finalizing the scope of, and implementing, the restructurings, failure to achieve targeted cost savings, and failure to meet operational targets and customer requirements due to the restructuring process. These risks are further complicated by our extensive international operations, which subject us to different legal and regulatory requirements that govern the extent and speed of our ability to reduce our manufacturing capacity and workforce.
We have and may be required to take additional charges in the future to align our operations and cost structures with global economic conditions, market demands, cost competitiveness, and our geographic footprint as it relates to our customers' production requirements or following divestitures. We have and may consolidate or divest certain manufacturing facilities or transfer certain of our operations to other geographies. If we are required to take additional restructuring charges in the future, our operating results, financial condition, and cash flows could be adversely impacted.
Disruptions to our information systems, including security breaches, losses of data or outages, and other security issues, have and could in the future adversely affect our operations.
We rely on information systems, some of which are managed by third parties, to store, process, and transmit confidential information, including financial reporting, inventory management, procurement, invoicing, and electronic communications, belonging to our customers, our suppliers, our employees, and/or us. Any delay in the implementation of these information systems could result in material adverse consequences, including disruption of operations, loss of information, and unanticipated increases in costs. We monitor and mitigate our exposure to cybersecurity issues and modify our systems when warranted, and we have implemented certain business continuity items including data backups at alternative sites. Nevertheless, these systems are vulnerable to, and at times have suffered from, among other things, damage from power loss or natural disasters, computer system and network failures, loss of telecommunication services, physical and electronic loss of data, terrorist attacks, computer viruses, cyberattacks, and security breaches, ranging from uncoordinated individual attempts to gain unauthorized access to our IT systems to sophisticated and targeted measures. These include industrial espionage attacks, data theft, malware, phishing, ransomware attacks, or other cybersecurity threats or incidents. The increased use of mobile technologies and the internet of things can heighten these and other operational risks. If we, or the third parties who own and operate certain of our information systems, are unable to prevent such breaches, losses of data, and outages, our operations could be disrupted. Also, the time and funds spent on monitoring and mitigating our exposure and responding to breaches, including the training of employees, the purchase of protective technologies and the hiring of additional employees and consultants to assist in these efforts could adversely affect our financial results. The increasing sophistication of cyberattacks requires us to continually evaluate the threat landscape and new technologies and processes intended to detect and prevent these attacks. There can be no assurance that the security measures and systems configurations we choose to implement will be sufficient to protect the data we manage. Any theft or misuse of information resulting from a security breach could result in, among other things, loss of significant and/or sensitive information, litigation by affected parties, financial obligations resulting from such theft or misuse, higher insurance premiums, governmental investigations, negative reactions from current and potential future customers (including potential negative financial ramifications under certain customer contract provisions), and poor publicity. Any of these could adversely affect our financial results. In addition, we must comply with increasingly complex regulations intended to protect business and personal data in the U.S. and globally. In many cases, these laws apply not only to third-party transactions, but also restrict transfers of personal information among the Company and its international subsidiaries. Several jurisdictions have passed laws in this area, and additional jurisdictions are considering imposing additional restrictions or have laws that are pending. These laws continue to develop and may be inconsistent from jurisdiction to jurisdiction. Complying with emerging and changing requirements causes the Company to incur substantial costs and has required and may in the future require the Company to change its business practices. Compliance with these regulations can be costly and any failure to comply could result in legal and reputational risks as well as penalties, fines and damages that could adversely affect our financial results.
We are subject to extensive government regulations and industry standards and the terms of complex contracts; a failure to comply with current and future regulations and standards, or the terms of our contractual arrangements, could have an adverse effect on our business, customer relationships, reputation, and profitability.
We are subject to extensive government regulation and industry standards relating to the products we design and manufacture as well as how we conduct our business, including regulations and standards relating to labor and employment practices, workplace health and safety, the environment, sourcing and import/export practices, the market sectors we support, privacy and data protection, the regulations that apply to government contracts, machine learning, and artificial intelligence, and many other facets of our operations. The regulatory climate in the U.S. and other countries has become increasingly complex and fragmented, and regulatory activity has increased in recent periods. Failure or noncompliance with such regulations or standards could have an adverse effect on our reputation, customer relationships, profitability, and results of operations. In addition, we regularly enter into a large number of complex contractual arrangements as well as operate pursuant to the terms of a significant number of ongoing intricate contractual arrangements. Our failure or our customers’ failure to comply with the terms of such arrangements could expose us to claims or other demands and could have an adverse effect on our reputation, customer relationships, profitability, and results of operations.
If we manufacture products containing design or manufacturing defects, demand for our services may decline, our reputation may be damaged, and we may be subject to liability claims.
Our customers’ products and the manufacturing processes and design services that we use to produce them often are highly complex. Defects in the products we manufacture or design, whether caused by a design, manufacturing or component failure or error, or deficiencies in our manufacturing processes, have occurred and may result in delayed shipments to customers or reduced or canceled customer orders. If these defects or deficiencies are significant, our business reputation may also be damaged. The failure of the products that we manufacture or of our manufacturing processes or facilities may subject us to regulatory enforcement, fines, or penalties and, in some cases, require us to shut down, temporarily halt operations or incur considerable expense to correct a manufacturing process or facility. In addition, these defects have resulted in, and may in the future result in, liability claims against us, expose us to liability to pay for the recall or remanufacture of a product, or adversely affect product sales or our reputation. Even if our customers are responsible for the defects or defective specifications, they may not, or may not have resources to, assume responsibility for any costs or liabilities arising from these defects, which could expose us to additional liability claims. Any of these actions could increase our expenses, reduce our revenue or damage our reputation as a supplier to these customers.
We may face heightened liability risks specific to our medical device business as a result of additional healthcare regulatory related compliance requirements and the potential severe consequences (e.g., death or serious injury) that could result from manufacturing defects or malfunctions of the medical devices we manufacture or design.
As a service provider engaged in the business of designing and manufacturing medical devices for our customers, we have compliance requirements in addition to those relating to other industries we serve within our business. We are required to register with the U.S. Food and Drug Administration (“FDA”) and are subject to periodic inspection by the FDA for compliance with the FDA’s Quality System Regulation (“QSR”), including current Good Manufacturing Practices (cGMPs). This regulation establishes requirements for manufacturers of medical devices to implement design and process manufacturing controls, quality control, labeling, handling, and documentation procedures. The FDA, through periodic inspections and post-market surveillance, continuously and rigorously monitors compliance with these QSR requirements and other applicable regulatory requirements. If any FDA inspection reveals noncompliance, and we do not address the FDA’s concerns to its satisfaction, the FDA may elect to take enforcement action against us, including issuing inspection observations or a notice of violation or a warning letter, imposing fines, bringing an action against the Company and its officers, requiring a recall of the products we manufactured, issuing an import detention on products entering the U.S. from an offshore facility, or temporarily halting operations at or shutting down a manufacturing facility.
Beyond the FDA, our medical device business is also subject to applicable state and foreign regulatory requirements. Within the European Union (“EU”), we are required to fulfill certain internationally recognized standards and must undergo periodic inspections to obtain and maintain certifications to these standards. Continued noncompliance to the EU regulations could stop the flow of products into the EU from us or from our customers. In China, the National Medical Products Administration controls and regulates the manufacture and commerce of healthcare products. We must comply with the regulatory laws applicable to medical device manufacturers, or our ability to manufacture products in China could be impacted. In Japan, the Pharmaceutical Affairs Laws regulate the manufacture and commerce of healthcare products. These regulations also require that subcontractors manufacturing products intended for sale in Japan register with authorities and submit to regulatory audits. Other foreign countries where we operate have similar laws regarding the regulation of medical device manufacturing. In the event of any noncompliance with these requirements, interruption of our operations and/or ability to allow commerce in these markets could occur, which in turn could cause our reputation and business to suffer.
Compliance or the failure to comply with current and future environmental, health and safety, product stewardship, and producer responsibility laws or regulations could cause us significant expense.
We are subject to a variety of federal, state, local, and foreign environmental, health and safety, product stewardship, and producer responsibility laws and regulations, including those arising from global pandemics or relating to the use, generation, storage, discharge, and disposal of hazardous chemicals used during our manufacturing process, those governing worker health and safety, those requiring design changes, supply chain investigation or conformity assessments, and those relating to the recycling or reuse of products we manufacture. If we fail to comply with any present or future regulations or timely obtain any needed permits, we could become subject to liabilities, and we could face fines or penalties, the suspension of production, or prohibitions on sales of products we manufacture. In addition, such regulations could restrict our ability to expand our facilities or could require us to acquire costly equipment, or to incur other significant expenses, including expenses associated with the recall of any non-compliant product or with changes in our operational, procurement, and inventory management activities.
Certain environmental laws impose liability for the costs of investigation, removal, and remediation of hazardous or toxic substances on an owner, occupier, or operator of real estate, or on parties who arranged for hazardous substance treatment or disposal, even if such person or company was unaware of, or not responsible for, contamination at the affected site. Soil and groundwater contamination may have occurred at or near, or may have arisen from, some of our facilities. From time to time we investigate, remediate, and monitor soil and groundwater contamination at certain of our operating sites. In certain instances where contamination existed prior to our ownership or occupation of a site, landlords or former owners have retained some contractual responsibility for contamination and remediation. However, failure of such persons to perform those obligations could result in us being required to address such contamination. As a result, we may incur clean-up costs in such potential removal or remediation efforts. In other instances, we may be responsible for clean-up costs and other liabilities, including the possibility of claims due to health risks by both employees and non-employees, as well as other third-party claims in connection with contaminated sites.
In addition, there is an increasing governmental focus around the world on global warming and environmental impact issues, which has resulted in new environmental, health, and safety regulations that may affect us, our suppliers, and our customers. This could cause us to incur additional direct costs for compliance, as well as increased indirect costs resulting from our customers, suppliers, or both, incurring additional compliance costs that get passed on to us. These costs may adversely impact our operations and financial condition.
We have limited insurance coverage for potential environmental liabilities associated with current operations, and we do not anticipate increasing such coverage in the future.
We are subject to litigation and proceedings, which may result in substantial expenses, settlement costs, or judgments; require the time and attention of key management resources; and result in adverse publicity, any of which may negatively impact our financial performance.
We are party to various legal actions incidental to our business, as plaintiff or defendant, as well as various other claims, suits, investigations, and legal or governmental proceedings. Regardless of the merits of the claims, litigation or governmental proceedings may be both time-consuming and disruptive to our business. The defense and ultimate outcome of any lawsuits or other legal proceedings may result in higher expenses, which could have a material adverse effect on our business, financial condition, or results of operations. We cannot predict the final outcome of such lawsuits or proceedings or the likelihood that other proceedings will be initiated against us. Accordingly, the cost of defending against such lawsuits or proceedings, or any future lawsuits or proceedings, may be high and, in any event, these legal proceedings may result in the diversion of our management's time and attention away from our business. In the event that there is an adverse ruling in any legal proceeding,
we may be required to make payments to third parties that could be in excess of any amounts accrued and could have a material adverse effect on our reputation, financial condition, and/or results of operations.
Our operations result in exposure to intellectual property claims.
Our operations expose us to intellectual property rights claims from third parties, some of whom may hold key intellectual property rights in areas in which we operate. Intellectual property clearance or licensing efforts or activities, if any, may be inadequate to anticipate and avoid intellectual property claims. Our customers or suppliers, or their customers or suppliers, could also become subject to intellectual property claims.
Even though many, but not all, of our contracts require others to indemnify Jabil for intellectual property claims relating to their products, designs, or technology, any such party may not, or may not have the resources to, assume responsibility for such claims. We may be responsible for claims that our services, designs, technologies, products, or components, equipment, or processes we supply or use, infringe, misappropriate, or otherwise violate third party intellectual property rights. Providing turnkey design solutions, designs, technologies, products, and other services may expose us to different or greater potential liabilities than those we face providing traditional manufacturing services. These liabilities may include an increase in exposure to claims that products we design or supply, or processes, materials, or components we use, infringe, misappropriate, or otherwise violate third-party intellectual property rights. Customers for our products and services in which we provide significant design or technology contributions sometimes require that we indemnify them against risk of intellectual property claims.
If any intellectual property claims are brought, regardless of their merits, we could be required to expend significant resources in the defense or settlement of such claims, or in the defense or settlement of related indemnification claims. Intellectual property rights claims could subject us to significant liability for damages, potential injunctive action, or hamper our normal operations such as by interfering with the availability of components or have a material adverse effect on our results of operations and financial position. In the event of such a claim, we may spend significant amounts of money and effort to develop non-infringing alternatives or obtain and maintain licenses. We may not be successful in developing such alternatives or obtaining and maintaining such licenses on reasonable terms or at all. We, or suppliers or customers, may be required to or decide to discontinue products or services, and such discontinuance may result in a significant decrease in our business and/or could have a material adverse effect on our results of operations and financial position. These risks may be heightened in connection with our customer relationships with emerging companies.
The success of certain aspects of our business depends in part on our ability to obtain, protect, and leverage intellectual property rights.
In certain circumstances, we strive to obtain and protect certain intellectual property rights related to solutions, designs, processes, and products that we create. We believe that obtaining a significant level of protected proprietary technology may give us a competitive advantage. In addition to selectively relying on patent rights, we rely on unpatented proprietary know-how and trade secrets and employ various methods, including non-disclosure agreements, with our customers, employees, and suppliers and our internal security systems, policies, and procedures to protect our know-how and trade secrets. However, we cannot be certain the measures we employ will result in protected intellectual property rights or will result in the prevention of unauthorized use of our technology. If we are unable to obtain and protect intellectual property rights embodied within our solutions, designs, processes, and products, this could reduce or eliminate competitive advantages of our proprietary technology, which would harm our business and could have a material adverse effect on our results of operations and financial position.
Even if we take steps to protect certain intellectual property rights, these mechanisms may not afford complete or sufficient protection, and misappropriation or unauthorized use may still occur. Further, there can be no assurance that we will be able to acquire or enforce our patent or other rights, if any, and that others will not independently develop similar know-how and trade secrets, or develop better solutions, designs, processes and products than us. We have not historically sought patent protection for many of our proprietary processes, designs or other patentable intellectual property. Further, we may not be able to prevent current or former customers, employees, contractors and other parties from breaching non-disclosure agreements and misappropriating proprietary information. If any of the foregoing occur, it could impair our ability to compete, result in a significant decrease in our business and/or could have material adverse effect on our results of operations and financial position.
Exposure to financially troubled customers or suppliers may adversely affect our financial results.
We provide manufacturing services to companies and industries that have in the past, and may in the future, experience financial difficulty. When customers experience financial difficulty, we have difficulty recovering amounts owed to us from these customers, and demand for our products from these customers sometimes declines. Additionally, if our suppliers experience financial difficulty, we could have difficulty sourcing supplies necessary to fulfill production requirements. When one or more of our customers becomes insolvent or otherwise is unable to pay for the services provided by us on a timely basis, or at all, our operating results and financial condition are adversely affected. Such adverse effects have included and may in the future include one or more of the following: an increase in our provision for doubtful accounts, a charge for inventory writeoffs, an impairment of contract assets, a reduction in revenue, and an increase in our working capital requirements due to higher inventory levels and increases in days our accounts receivable are outstanding. In addition, because we securitize certain of our accounts receivable, our securitization programs could be negatively affected by customer financial difficulty affecting the recovery of a significant amount of receivables.
When financial markets experience significant turmoil, the financial arrangements we may need to enter into, refinance or repay and our customers may be adversely affected.
Credit market turmoil could negatively impact the counterparties and lenders to our forward foreign exchange contracts, trade accounts receivable securitization and sale programs, unsecured credit and term loan facilities, commercial paper program, various foreign subsidiary credit facilities and other debt facilities. These potential negative impacts could limit our ability to borrow under these financing agreements, contracts, facilities and programs or renew or obtain future additional financing. Credit market turmoil could also negatively impact certain of our customers and certain of their respective customers, which could cause them to reduce or cancel their orders and have a negative effect on our results of operations.
We are subject to the risk of increased taxes.
We base our tax position upon the anticipated nature and conduct of our business and upon our understanding of the tax laws of the various countries in which we have assets or conduct activities. Our tax position, however, is subject to review and possible challenge by taxing authorities (including application of transfer pricing rules to our intercompany transactions) and to possible changes in law. We cannot determine in advance the extent to which some jurisdictions may assess additional tax or interest and penalties on such additional taxes. In addition, our effective tax rate has been and may be increased by changes in the mix of earnings between jurisdictions, changes in the valuation of deferred tax assets and liabilities, changes in our cash management strategies, changes in local tax rates, or taxing authorities adopting more aggressive interpretations of tax laws. In addition, acquisitions and/or divestitures may cause our effective tax rate to increase, depending on the jurisdictions in which the operations are located.
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. Our effective tax rate and cash tax liability could be adversely impacted by these rules beginning in fiscal year 2025, with the full impact occurring in subsequent years.
Several countries in which we are located allow for tax incentives to attract and retain business. We have obtained incentives where available and practicable. Our taxes could increase if certain tax incentives are retracted, which could occur if we are unable to satisfy the conditions on which such incentives are based, if they are not renewed upon expiration, or if tax rates applicable to us in such jurisdictions otherwise increase. Further, the global minimum tax is expected to reduce the benefits achieved from tax incentives.
Our credit is and certain of our financial instruments and our commercial paper are rated by credit rating agencies. Any potential future negative change in our credit ratings may make it more expensive for us to raise additional capital on terms that are acceptable to us, if at all; negatively impact the price of our common stock; increase our interest payments under existing debt agreements; cause us to lose the ability to utilize our commercial paper program; and have other negative implications on our business, many of which are beyond our control. In addition, the interest rate payable under the Credit Facility (as such terms are defined in Note 7 – “Notes Payable and Long-Term Debt” to the Consolidated Financial Statements) is subject to adjustment from time to time if our credit ratings change. Thus, any potential future negative change in our credit rating may increase the interest rate payable on the Credit Facility and certain of our other borrowings.
Our amount of debt could significantly increase in the future.
The Company has a number of debt facilities. Refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources” and Note 7 – “Notes Payable and Long-Term Debt” to the Consolidated Financial Statements for further details.
Should we desire to consummate significant additional acquisition opportunities, undertake significant additional expansion activities, or make substantial investments in our infrastructure or in support of customer opportunities, our capital needs would increase and could result in our need to increase borrowings under our revolving credit facilities or access public or private debt and equity markets. There can be no assurance, however, that we would be successful in raising additional debt or equity on terms that we would consider acceptable. An increase in the level of our indebtedness, among other things, could:
•make it difficult for us to obtain any necessary financing in the future for other acquisitions, working capital, capital expenditures, debt service requirements, or other purposes;
•limit our flexibility in planning for, or reacting to changes in, our business;
•make us more vulnerable in the event of a downturn in our business; and
•impact certain financial covenants that we are subject to in connection with our debt and asset-backed securitization programs.
There can be no assurance that we will be able to meet future debt service obligations.
An adverse change in the interest rates for our borrowings has and could adversely affect our financial condition.
We pay interest on outstanding borrowings under our revolving credit facilities and certain other long term debt obligations at interest rates that fluctuate based upon changes in various base interest rates. An adverse change in the base rates upon which our interest rates are determined has and may continue to have a material adverse effect on our financial position, results of operations and cash flows. If certain economic or fiscal issues occur, interest rates have and could rise, which would increase our interest costs and reduce our net income. Also, increased interest rates could make any future fixed interest rate debt obligations more expensive.
We are subject to risks of currency fluctuations and related hedging operations.
Although a significant number of our operations are located outside the United States, the majority of our business is conducted in U.S. dollars. Changes in exchange rates will affect our net revenue, cost of sales, operating margins, and net income. We cannot predict the impact of future exchange rate fluctuations. We use financial instruments, primarily forward contracts, to hedge our exposure to exchange rate fluctuations. We believe that our hedging activities enable us to largely protect ourselves from future exchange rate fluctuations. If, however, these hedging activities are not successful, if the counterparties to these hedging activities default on their obligations to us or if we change or reduce these hedging activities in the future, we may experience significant unexpected expenses from fluctuations in exchange rates. In addition, certain countries in which we operate have adopted, or may adopt, currency controls requiring that local transactions be settled only in local currency. Such controls could require us to hedge larger amounts of local currency than we have in the past.
An impairment in the value of our assets would reduce the value of our assets and reduce our net income in the year in which the write-off occurs.
We have recorded intangible assets, including goodwill, in connection with business acquisitions. We perform a goodwill impairment analysis on an annual basis and whenever events or changes in circumstances indicate that the carrying value may not be recoverable. If the carrying amount of the reporting unit exceeds its fair value, goodwill is considered impaired. Refer to Note 6 – “Goodwill and Other Intangible Assets” to the Consolidated Financial Statements for further discussion of the impairment testing of goodwill and identifiable intangible assets. A decline in general economic conditions or global equity valuations could impact the judgments and assumptions about the fair value of our businesses, and we could be required to record impairment charges on our goodwill or other identifiable intangible assets in the future, which could impact our consolidated balance sheet, as well as our consolidated statements of operations.
General Risk Factors
Changes in financial accounting standards or policies have affected, and in the future may affect, our reported financial condition or results of operations.
We prepare our financial statements in conformity with U.S. GAAP. These principles are subject to interpretation by the Financial Accounting Standards Board (FASB), the American Institute of Certified Public Accountants, the SEC, and various bodies formed to interpret and create appropriate accounting policies. A change in these policies can have a significant effect on our reported results and may affect our reporting of transactions that are completed before a change is announced. Changes to those rules or questions as to how we interpret or implement them may have a material adverse effect on our reported financial results or on the way we conduct business.
We are subject to risks associated with natural disasters, climate change, and global events.
Our operations and those of our customers and suppliers have been and may again be subject to natural disasters, climate change-related events, pandemics, or other business disruptions, which could seriously harm our results of operation and increase our costs and expenses. We are susceptible to losses and interruptions caused by hurricanes (including in Florida, where our headquarters are located), earthquakes, power shortages, telecommunications failures, water or other natural resource shortages, tsunamis, floods, typhoons, drought, fire, extreme weather conditions, rising sea level, geopolitical events such as direct or indirect terrorist acts or acts of war, other natural or manmade disasters, boycotts and sanctions, or widespread criminal activities. Such events could make it difficult or impossible to manufacture or to deliver products to our customers, receive production materials from our suppliers, or perform critical functions, which could adversely affect our business globally or in certain regions. While we maintain similar manufacturing capacities at different locations and coordinate multi-source supplier programs on many of our materials, which we believe better enables us to respond to these types of events, we cannot be sure that our plans will fully protect us from all such disruptions. Our insurance coverage with respect to natural disasters is limited and is subject to deductibles and coverage limits. Such coverage may not be adequate or may not continue to be available at commercially reasonable rates and terms.
While we manufacture our products in a large number of diversified facilities and maintain insurance covering our facilities, including business interruption insurance, a catastrophic loss of the use of all or a portion of one of our key manufacturing facilities due to accident, labor issues, weather conditions, natural disaster or otherwise, whether short- or long-term, could have a material adverse effect on us.
Expectations relating to environmental, social, and governance considerations expose the Company to potential liabilities, increased costs, reputational harm, and other adverse effects on the Company’s business.
Many governments, regulators, investors, employees, customers and other stakeholders are increasingly focused on environmental, social and governance considerations relating to businesses, including climate change and greenhouse gas emissions, human and civil rights, and diversity, equity, and inclusion. In addition, we make statements about our environmental, social, and governance goals and initiatives through our sustainability report. Responding to these environmental, social, and governance considerations and implementation of these goals and initiatives involves risks and uncertainties and requires investments. We cannot guarantee that we will achieve our goals and initiatives. Any failure, or perceived failure, to achieve our goals, further our initiatives, adhere to our public statements, comply with federal, state, or international environmental, social, and governance laws and regulations, or meet evolving and varied shareholder expectations and standards could result in legal and regulatory proceedings against us and materially adversely affect our business, reputation, results of operations, financial condition, and stock price.
There are no unresolved written comments from the SEC staff regarding our periodic or current reports.
Item 1C. Cybersecurity
Risk Management and Strategy
We are committed to reducing the risk of cybersecurity compromise, either intentional or unintentional, to our customers, employees, and company proprietary information resources.
Our cybersecurity risk management program is integrated into our global enterprise risk management framework, which is designed to help identify, monitor, and mitigate key strategic risks. Our enterprise risk assessment, which includes data protection and cybersecurity, is developed annually to provide insight into the risks with the greatest potential to impact Jabil’s strategy and our financial goals. Key components of our cybersecurity risk management program include the following:
•Cybersecurity policies. We leverage cybersecurity industry-standard frameworks and insights from internal assessments to develop policies to guide the use of our information assets (for example, business information and information resources such as mobile phones, computers, and workstations), access to specific intellectual property or technologies, and protection of personal information. The Company has also established written policies and procedures to help ensure that cybersecurity incidents are quickly assessed and addressed.
•Risk assessment.The Company uses routine risk assessment processes to identify and prioritize cybersecurity risks, employ operational controls to mitigate risks, report incidents, and analyze trends, and employ a corrective action process to address nonconformities. Key risk indicators are used across all business functions to monitor and measure our cybersecurity risk exposure. Through this cross-functional approach, management identifies potential operational and strategic risks which could impact our strategy and financial goals.
•System safeguards.We implement industry-standard technical safeguards that are designed to protect our information systems, operations, and sensitive information from cybersecurity threats. By collaborating with internal stakeholders across the company, we integrate foundational cybersecurity principles throughout our organization, including multiple layers of cybersecurity defenses and restricted access based on business need. We frequently conduct vulnerability assessments to identify new risks and periodically test the efficacy of our safeguards through both internal and external penetration tests.
•Security Awareness and Training. Cybersecurity education contributes to safety of the Company, customer data, and employee sensitive data and assets. Our employees undergo regular training on information security, cybersecurity awareness, and the protection of confidential information. This training is designed to promote an understanding of the behaviors and technical requirements needed to safeguard Company data. Additionally, we provide ongoing education to help employees recognize and report suspicious activity. In addition, higher risk employees undergo routine anti-phishing testing and training.
•Assessments.We periodically assess and test our cybersecurity policies, standards, processes, and practices that are designed to address threats. This includes monthly metrics review, threat modeling, vulnerability testing, and other exercises to evaluate our cybersecurity effectiveness. We regularly engage third parties to assist with our assessments and testing. Where appropriate, we adjust our cybersecurity policies, standards, processes, and practices accordingly based on internal and external assessment and testing results.
•Engagement of third-party service providers. The Company utilizes third-party cybersecurity experts to assess the Company’s cybersecurity risks and conduct penetration testing to measure our cybersecurity risk management program relative to industry-standard frameworks. The Company has established a standardized process for assessing and managing potential risks associated with the engagement of third-party service providers that request access to the Company’s information systems.
•Incident response. The Cybersecurity Incident Response Team (“CIRT”), deploys, maintains, and monitors various tools and processes designed to safeguard against and detect cybersecurity incidents that may occur. As part of our incident response program, members of management are informed about and monitor the prevention, detection, mitigation, and remediation of cybersecurity incidents. In accordance with established written policies and procedures, escalation protocols are used to provide information to, and engage with, executive management, the Cybersecurity Committee and the Board, throughout the incident response process. The CIRT reviews these controls regularly, and makes enhancements as needed to incorporate lessons learned, updated industry standards, and any new or revised legal requirements.
As of the date of this report, we are not aware of any risks from cybersecurity threats, including as a result of any cybersecurity incidents, which have materially affected us or are reasonably likely to materially affect us, including our business strategy, results of operations, or financial condition. Additional information about our cybersecurity risks is discussed in “Disruptions to our information systems, including security breaches, losses of data or outages, and other security issues, have and could in the future adversely affect our operations” in Item 1A. Risk Factors, which should be read in conjunction with the information above.
Governance
The Board oversees risk management directly and through its committees. Generally, the Board oversees risks that may affect the business of Jabil as a whole, including operational matters. The Cybersecurity Committee (“the Committee”) assists the Board in fulfilling its oversight responsibilities with regard to the Company’s cybersecurity programs and risks, including the cybersecurity practices, procedures, and controls management uses to identify, assess, and manage the Company’s key cybersecurity programs and risks, to protect the confidential intellectual property information and data of the Company and its customers and to comply with applicable data protection laws and regulations.
The Committee of the Board meets quarterly. At each meeting, it receives reports from the Chief Information Security Officer (“CISO”).
As part of its role in overseeing risk management, the Committee periodically reports to the Board regarding briefings provided by management and advisors as well as the Committees’ own analysis and conclusions regarding cybersecurity risks faced by the Company. The Committee will review with management and the Board, and advise them regarding the following matters, as necessary:
•Management’s implementation of cybersecurity programs, policies, and procedures and management’s actions to safeguard their effectiveness;
•The effectiveness of the Company’s cybersecurity programs and its practices for identifying, assessing, and mitigating cybersecurity risks across all business functions;
•The Company’s controls to prevent, detect and respond to cyber-attacks or information or data breaches involving the Company;
•Cyber crisis preparedness, incident response plans, and disaster recovery capabilities;
•Reports and presentations received from management and the Company’s advisors regarding the management of cybersecurity programs and risks, including protection of confidential intellectual property, information, and data.
The CISO leads the Corporate Information Security organization which oversees the security posture of Jabil’s data, networks, and resources. The CISO is responsible for notifying and providing updates on cybersecurity incidents to the Chief Information Officer (“CIO”). The CIO is responsible for overseeing global IT operations and digital transformation across the Company and leads the strategic direction on IT polices to safeguard company and client assets against cybersecurity threats.
The CISO has over 38 years of experience working in cybersecurity, risk management, and infrastructure technology and network architecture. Our CISO holds industry-recognized cybersecurity certifications, including Certified Information Systems Security Professional (CISSP) certification. The CIO has over 32 years of experience focused on corporate strategy formulation and implementation, IT management including cybersecurity, and business and process transformation.
We own or lease facilities located primarily in the geographies listed below. We believe that our properties are generally in good condition, are well maintained, and are generally suitable and adequate to carry out our business at expected capacity for the foreseeable future. The majority of the square footage is active manufacturing space and are reported in both the EMS and DMS operating segments, as both use these properties. Our corporate headquarters is located in St. Petersburg, Florida.
The table below lists the approximate square footage for our facilities as of August 31, 2024 (in millions):
Region
Approximate Square Footage
Asia(1)
21
Americas
13
Europe
4
Total(2)(3)
38
(1)Decrease from prior period is driven by the divestiture of the Mobility Business during the fiscal year ended August 31, 2024. See Note 17 – “Business Acquisitions and Divestitures” to the Consolidated Financial Statements for additional information.
(2)Approximately 8% of our total square footage is not currently used in business operations.
(3)Consists of 13 million square feet in facilities that we own with the remaining 25 million square feet in leased facilities.
Our manufacturing facilities are ISO certified to ISO 9001:2008 standards and most are also certified to ISO-14001:2004 environmental standards.
Item 3. Legal Proceedings
See the discussion in Note 19 – “Commitments and Contingencies” to the Consolidated Financial Statements.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market Information and Dividends
Our common stock trades on the New York Stock Exchange under the symbol “JBL.” See discussion of our cash dividends declared to common shareholders in Note 13 – “Stockholders’ Equity” to the Consolidated Financial Statements.
We expect to continue to declare and pay 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.
On October 21, 2024, the closing sales price for our common stock as reported on the New York Stock Exchange was $124.37. As of October 21, 2024, there were 1,040 holders of record of our common stock. A substantially greater number of holders of our common stock are “street name” or beneficial holders, whose shares are held of record by banks, brokers, and other financial institutions.
Information regarding equity compensation plans is incorporated by reference to the information set forth in Item 12 of Part III of this report.
Stock Performance Graph
The performance graph and table show a comparison of cumulative total stockholder return, assuming the reinvestment of dividends, from a $100 investment in the common stock of Jabil over the five-year period ending August 31, 2024, with the cumulative stockholder return of the (1) S&P 400 Index, (2) S&P 500 Index, and (3) peer group which includes Celestica Inc., Flex Ltd., Hon-Hai Precision Industry Co. Ltd, Plexus Corp., and Sanmina Corp.
(1)During the fiscal year ended August 31, 2024, we were added to the S&P 500 Index. We were previously a member of the S&P 400 Index.
Issuer Purchases of Equity Securities
The following table provides information relating to our repurchase of common stock, excluding excise tax, during the three months ended August 31, 2024:
Period
Total Number
of Shares
Purchased(1)
Average Price Paid per Share
Total Number of
Shares Purchased
as Part of Publicly
Announced Program(2)
Approximate
Dollar Value of
Shares that May
Yet Be Purchased
Under the Program
(in millions)(2)
June 1, 2024 – June 30, 2024
5,275,487
$
112.44
5,275,487
$
—
July 1, 2024 – July 31, 2024
2,983
$
110.54
—
$
—
August 1, 2024 – August 31, 2024
—
$
—
—
$
—
Total
5,278,470
$
112.44
5,275,487
(1)The purchases include amounts that are attributable to 2,983 shares surrendered to us by employees to satisfy, in connection with the vesting of restricted stock units and the exercise of stock options and stock appreciation rights, their tax withholding obligations.
(2)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”). In September 2023, our 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 as publicly announced in a press release on September 28, 2023. For more information, see “Liquidity and Capital Resources - Dividends and Share Repurchases”.
Item 7. 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. 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.
On December 29, 2023 (“the Closing Date”), we completed the sale of our product manufacturing business in Chengdu, including its supporting component manufacturing in Wuxi (the “Mobility Business”) to an affiliate of BYD Electronic (International) Co. Ltd. (“BYDE”) for pre-tax cash proceeds of approximately $2.2 billion, subject to certain post-closing adjustments.
At August 31, 2024, we had 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 on 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-capital equipment, 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, and healthcare and packaging industries. The DMS segment included the results of the Mobility Business prior to the Closing Date.
Beginning September 1, 2024, we reorganized our internal structure to focus on speed, precision, and solutions and as a result of our organizational realignment, we will report our business in the following three segments: Regulated Industries, Intelligent Infrastructure, and Connected Living and Digital Commerce. 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.
Our cost of revenue includes the cost of electronic components and other materials that comprise the products we manufacture; the cost of labor and manufacturing overhead; and adjustments for excess and obsolete inventory. As a provider of turnkey manufacturing services, we are responsible for procuring components and other materials. This requires us to commit significant working capital to our operations and to manage the purchasing, receiving, inspecting, and stocking of materials. At times, we collect deposits from our customers related to the purchase of inventory in order to effectively manage our working capital. Although we bear the risk of fluctuations in the cost of materials and excess scrap, our ability to purchase components and materials efficiently may contribute significantly to our operating results. While we periodically negotiate cost of materials adjustments with our customers, rising component and material prices may negatively affect our margins. Net revenue from each product that we manufacture consists of an element based on the costs of materials in that product and an element based on the labor and manufacturing overhead costs allocated to that product. Our gross margin for any product depends on the mix between the cost of materials in the product and the cost of labor and manufacturing overhead allocated to the product.
Our operating results are impacted by the level of capacity utilization of manufacturing facilities; indirect labor costs; and selling, general, and administrative expenses. Operating income margins have generally improved during periods of high production volume and high capacity utilization. During periods of low production volume, we generally have reduced operating income margins.
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 try to respond appropriately as circumstances change.
We have consistently utilized advanced circuit design, production design and manufacturing technologies to meet the needs of our customers. To support this effort, our engineering staff focuses on developing and refining design and manufacturing technologies to meet specific needs of specific customers. Most of the expenses associated with these customer-specific efforts are reflected in our cost of revenue. In addition, our engineers engage in research and development (“R&D”) of new technologies that apply generally to our operations. The expenses of these R&D activities are reflected in the research and development line item within our Consolidated Statements of Operations.
An important element of our strategy is the expansion of our global production facilities. The majority of our revenue and materials costs worldwide are denominated in U.S. dollars, while our labor and utility costs in operations outside the U.S. are denominated in local currencies. We economically hedge certain of these local currency costs, based on our evaluation of the potential exposure as compared to the cost of the hedge, through the purchase of foreign currency exchange contracts. Changes in the fair market value of such hedging instruments are reflected within the Consolidated Statements of Operations and the Consolidated Statements of Comprehensive Income.
See Note 14 – “Concentration of Risk and Segment Data” to the Consolidated Financial Statements.
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):
Fiscal Year Ended August 31,
2024
2023
2022
Net revenue
$
28,883
$
34,702
$
33,478
Gross profit
$
2,676
$
2,867
$
2,632
Operating income
$
2,013
$
1,537
$
1,393
Net income attributable to Jabil Inc.
$
1,388
$
818
$
996
Earnings per share – basic
$
11.34
$
6.15
$
7.06
Earnings per share – diluted
$
11.17
$
6.02
$
6.90
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
August 31, 2024
May 31, 2024
August 31, 2023(1)
Sales cycle(2)
34 days
47 days
43 days
Inventory turns (annualized)(3)
5 turns
4 turns
5 turns
Days in accounts receivable(4)
46 days
45 days
40 days
Days in inventory(5)
76 days
81 days
80 days
Days in accounts payable(6)
88 days
79 days
77 days
(1)The calculation of these key performance indicators includes assets and liabilities held for sale for the three months ended August 31, 2023.
(2)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 is a direct result of changes in these indicators.
(3)Inventory turns (annualized) are calculated as 360 days divided by days in inventory.
(4)Days in accounts receivable is calculated as accounts receivable, net, divided by net revenue multiplied by 90 days. During the three months ended August 31, 2024, the increase in days in accounts receivable from the three months ended August 31, 2023, was primarily due to the timing of collections.
(5)Days in inventory is calculated as inventory and contract assets divided by cost of revenue multiplied by 90 days. During the three months ended August 31, 2024, the decrease in days in inventory from the prior sequential quarter and the three months ended August 31, 2023, was primarily driven by higher consumption of inventory to support sales during the quarter and improved working capital management.
(6)Days in accounts payable is calculated as accounts payable divided by cost of revenue multiplied by 90 days. During the three months ended August 31, 2024, the increase in days in accounts payable from the prior sequential quarter and the three months ended August 31, 2023, was primarily due to timing of purchases and cash payments during the quarter.
Critical Accounting Policies and Estimates
The preparation of our 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. We have identified the following critical accounting policies that affect the more significant judgments and estimates used in the preparation of our Consolidated Financial Statements. 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.
Revenue Recognition
For our over time customers, we believe the measure of progress which best depicts the transfer of control is based on costs incurred to date, relative to total estimated cost at completion (i.e., an input method). This method is a faithful depiction of the transfer of goods or services because it results in the recognition of revenue on the basis of our to-date efforts in the satisfaction of a performance obligation relative to the total expected efforts in the satisfaction of the performance obligation. We believe that the use of an input method best depicts the transfer of control to the customer, which occurs as we incur costs on our contracts. The transaction price of each performance obligation is generally based upon the contractual standalone selling price of the product or service.
Inventory Valuation
We purchase inventory based on forecasted demand and record inventory at the lower of cost and net realizable value. Management regularly assesses inventory valuation based on current and forecasted usage, customer inventory-related contractual obligations, and other lower of cost and net realizable value considerations. If actual market conditions or our customers’ product demands are less favorable than those projected, additional valuation adjustments may be necessary.
Long-Lived Assets
We have recorded intangible assets, including goodwill, in connection with business acquisitions. Estimated useful lives of amortizable intangible assets are determined by management based on an assessment of the period over which the asset is expected to contribute to future cash flows. The fair value of acquired amortizable intangible assets impacts the amounts recorded as goodwill. We review amortizable intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
We perform a goodwill impairment analysis on an annual basis and whenever events or changes in circumstances indicate that the carrying value may not be recoverable. We may elect to perform a qualitative assessment to determine whether it is more likely than not that a reporting unit is impaired. If the qualitative assessment is not performed or if we determine that it is not more likely than not that the fair value of the reporting unit exceeds the carrying value, the recoverability of goodwill is measured at the reporting unit level by comparing the reporting unit’s carrying amount, including goodwill, to the fair value of the reporting unit. If the carrying amount of the reporting unit exceeds its fair value, goodwill is considered impaired, and a loss is recognized in the amount equal to that excess.
For further discussion related to impairment analyses performed during fiscal year 2024, and performed in connection with the divestiture of the Mobility Business, refer to Note 6– “Goodwill and Other Intangible Assets” and Note 17 – “Business Acquisitions and Divestitures” to the Consolidated Financial Statements.
Income Taxes
We estimate our income tax provision in each of the jurisdictions in which we operate, a process that includes estimating exposures related to examinations by taxing authorities. We must also make judgments regarding the ability to realize deferred tax assets. The carrying value of our net deferred tax assets is based on our belief that it is more likely than not that we will generate sufficient future taxable income in certain jurisdictions to realize these deferred tax assets. A valuation allowance has been established for deferred tax assets that we do not believe meet the “more likely than not” criteria. We assess whether an uncertain tax position taken or expected to be taken in a tax return meets the threshold for recognition and measurement in the Consolidated Financial Statements. Our judgments regarding future taxable income as well as tax positions taken or expected to be taken in a tax return may change due to changes in market conditions, changes in tax laws or other factors. If our assumptions and consequently our estimates change in the future, the valuation allowances and/or tax reserves established may be increased or decreased, resulting in a respective increase or decrease in income tax expense. For further discussion related to our income taxes, refer to Note 16 – “Income Taxes” to the Consolidated Financial Statements.
Recent Accounting Pronouncements
See Note 20 – “New Accounting Guidance” to the Consolidated Financial Statements for a discussion of recent accounting guidance.
Results of Operations
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, 2023, for the results of operations discussion for the fiscal year ended August 31, 2023, compared to the fiscal year ended August 31, 2022.
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.
Fiscal Year Ended August 31,
Change
(dollars in millions)
2024
2023
2022
2024 vs. 2023
2023 vs. 2022
Net revenue
$
28,883
$
34,702
$
33,478
(16.8)
%
3.7
%
2024 vs. 2023
Net revenue decreased during the fiscal year ended August 31, 2024, compared to the fiscal year ended August 31, 2023. Specifically, the EMS segment net revenue decreased 18% primarily due to: (i) a 9% decrease in revenues from existing customers within our 5G, wireless, and cloud business, primarily driven by the continued transitioning to a customer-controlled consignment model in our cloud business during fiscal year 2024, (ii) a 4% decrease in revenues from existing customers within our industrial and semi-capital equipment business, (iii) a 3% decrease in revenues from existing customers within our digital print and retail business, and (iv) a 2% decrease in revenues from existing customers within our networking and storage business. The DMS segment net revenue decreased 16% due to: (i) a 13% decrease primarily driven by the divestiture of the Mobility Business, (ii) a 3% decrease in revenues from existing customers within our connected devices business, and (iii) a 1% decrease in revenues from existing customers within our healthcare and packaging business. The decrease is partially offset by a 1% increase in revenues from existing customers within our automotive and transportation business.
On December 29, 2023, we completed the sale of the Mobility Business. See Note 17 – “Business Acquisitions and Divestitures” to the Consolidated Financial Statements for additional information.
The following table sets forth, for the periods indicated, revenue by segment expressed as a percentage of net revenue:
Fiscal Year Ended August 31,
2024
2023
2022
EMS
48
%
48
%
50
%
DMS
52
%
52
%
50
%
Total
100
%
100
%
100
%
The following table sets forth, for the periods indicated, foreign source revenue expressed as a percentage of net revenue:
Fiscal Year Ended August 31,
2024(1)
2023
2022
Foreign source revenue
82.5
%
85.8
%
83.9
%
(1)Decrease from prior periods is driven by the divestiture of the Mobility Business during the fiscal year ended August 31, 2024. See Note 17 – “Business Acquisitions and Divestitures” to the Consolidated Financial Statements for additional information.
Gross Profit
Fiscal Year Ended August 31,
(dollars in millions)
2024
2023
2022
Gross profit
$
2,676
$
2,867
$
2,632
Percent of net revenue
9.3
%
8.3
%
7.9
%
2024 vs. 2023
Gross profit as a percentage of net revenue increased for the fiscal year ended August 31, 2024, compared to the fiscal year ended August 31, 2023, primarily due to product mix and depreciation and amortization for long-lived assets related to the Mobility Business divestiture no longer being recorded while these assets were classified as held for sale.
Selling, General and Administrative
Fiscal Year Ended August 31,
Change
(in millions)
2024
2023
2022
2024 vs. 2023
2023 vs. 2022
Selling, general and administrative
$
1,160
$
1,206
$
1,154
$
(46)
$
52
2024 vs. 2023
Selling, general and administrative expenses decreased during the fiscal year ended August 31, 2024, compared to the fiscal year ended August 31, 2023. The decrease is primarily due to lower salary and salary related expenses.
Research and development expenses remained consistent as a percent of net revenue during the fiscal year ended August 31, 2024, compared to the fiscal year ended August 31, 2023.
Amortization of Intangibles
Fiscal Year Ended August 31,
Change
(in millions)
2024
2023
2022
2024 vs. 2023
2023 vs. 2022
Amortization of intangibles
$
40
$
33
$
34
$
7
$
(1)
2024 vs. 2023
Amortization of intangibles increased during the fiscal year ended August 31, 2024, compared to the fiscal year ended August 31, 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. The increase is partially offset by certain intangible assets that were fully amortized during fiscal year 2023.
Restructuring, Severance, and Related Charges
Fiscal Year Ended August 31,
Change
(in millions)
2024
2023
2022
2024 vs. 2023
2023 vs. 2022
Restructuring, severance and related charges
$
296
$
57
$
18
$
239
$
39
2024 vs. 2023
Restructuring, severance and related charges increased during the fiscal year ended August 31, 2024, compared to the fiscal year ended August 31, 2023, primarily due to charges related to the 2024 Restructuring Plan.
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 the Mobility Business and (ii) optimize our global footprint. This action includes headcount reductions across our Selling, General and Administrative (“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.
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 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.
Based on the analysis done to date, 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.
See Note 15 – “Restructuring, Severance and Related Charges” to the Consolidated Financial Statements for further discussion of restructuring, severance and related charges.
Gain from the Divestiture of Businesses
Fiscal Year Ended August 31,
Change
(in millions)
2024
2023
2022
2024 vs. 2023
2023 vs. 2022
Gain from the divestiture of businesses
$
(942)
$
—
$
—
$
(942)
$
—
In the second quarter of fiscal year 2024, we completed the divestiture of the Mobility Business. As a result of the transaction, we recorded a pre-tax gain of $942 million, subject to certain post-closing adjustments that are still being finalized.
See Note 17 – “Business Acquisitions and Divestitures” to the Condensed Consolidated Financial Statements for additional information.
Acquisition and Divestiture Related Charges
Fiscal Year Ended August 31,
Change
(in millions)
2024
2023
2022
2024 vs. 2023
2023 vs. 2022
Acquisition and divestiture related charges
$
70
$
—
$
—
$
70
$
—
Acquisition and divestiture related charges recorded during the fiscal year ended August 31, 2024, primarily related to transaction and disposal costs incurred in connection with the divestiture of the Mobility Business.
See Note 17 – “Business Acquisitions and Divestitures” to the Condensed Consolidated Financial Statements for additional information.
Loss on Debt Extinguishment
Fiscal Year Ended August 31,
Change
(in millions)
2024
2023
2022
2024 vs. 2023
2023 vs. 2022
Loss on debt extinguishment
$
—
$
—
$
4
$
—
$
(4)
2024 vs. 2023
There were no losses on extinguishment of debt during the fiscal years ended August 31, 2024, and 2023.
Other Expense
Fiscal Year Ended August 31,
Change
(in millions)
2024
2023
2022
2024 vs. 2023
2023 vs. 2022
Other expense
$
89
$
69
$
12
$
20
$
57
2024 vs. 2023
Other expense increased during the fiscal year ended August 31, 2024, compared to the fiscal year ended August 31, 2023, due to an increase in fees primarily due to higher interest rates on our trade accounts receivable sales programs and global asset-backed securitization program, as well as higher utilization of our global asset-backed securitization program.
Interest expense, net decreased during the fiscal year ended August 31, 2024, compared to the fiscal year ended August 31, 2023, due to lower borrowings primarily on our credit facilities and commercial paper program. The decrease is partially offset by an increase due to higher interest rates primarily on our credit facilities and commercial paper program.
Income Tax Expense
Fiscal Year Ended August 31,
Change
2024
2023
2022
2024 vs. 2023
2023 vs. 2022
Effective income tax rate
20.7
%
35.2
%
19.1
%
(14.5)
%
16.1
%
2024 vs. 2023
The effective income tax rate decreased for the fiscal year ended August 31, 2024, compared to the fiscal year ended August 31, 2023, primarily due to: (i) the gain from the divestiture of the Mobility Business and corresponding $58 million of income tax expense for the fiscal year ended August 31, 2024, and (ii) an income tax expense of $146 million related to a change in the indefinite reinvestment assertion associated with the divestiture of the Mobility Business for the fiscal year ended August 31, 2023. These decreases were partially offset by a change in the jurisdictional mix of earnings, driven in part by restructuring charges, for the fiscal year ended August 31, 2024.
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 reconciliation 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. Also, our “core” financial measures should not be construed as an inference by us that our future results will be unaffected by those items that are excluded from our “core” financial measures.
Management believes that the non-GAAP “core” financial measures set forth below are useful to facilitate evaluating the past and future performance of our ongoing manufacturing operations over multiple periods on a comparable basis by excluding the effects of the amortization of intangibles, stock-based compensation expense and related charges, restructuring, severance and related charges, distressed customer charges, loss on disposal of subsidiaries, settlement of receivables and related charges, impairment of notes receivable and related charges, goodwill impairment charges, business interruption and impairment charges, net, gain from the divestiture of businesses, acquisition and divestiture related charges, loss on debt extinguishment, (gain) loss on securities, income (loss) from discontinued operations, gain (loss) on sale of discontinued operations and certain other expenses, net of tax and certain deferred tax valuation allowance charges. 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.
In 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.
We are reporting “core” operating income, “core” earnings and cash flows to provide investors with an additional method for assessing operating income and earnings, by presenting what we believe are our “core” manufacturing operations. A significant portion (based on the respective values) of the items that are excluded for purposes of calculating “core” operating income and “core” earnings also impacted certain balance sheet assets, resulting in a portion of an asset being written off without a corresponding recovery of cash we may have previously spent with respect to the asset. In the case of restructuring, severance and related charges, we may make associated cash payments in the future. In addition, although, for purposes of calculating “core” operating income and “core” earnings, we exclude stock-based compensation expense (which we anticipate continuing to incur in the future) because it is a non-cash expense, the associated stock issued may result in an increase in our outstanding shares of stock, which may result in the dilution of our stockholders’ ownership interest. We encourage you to consider these matters when evaluating the utility of these non-GAAP financial measures.
Adjusted free cash flow is defined as net cash provided by (used in) operating activities less net capital expenditures (acquisition of property, plant and equipment less proceeds and advances from the sale of property, plant and equipment). We report adjusted free cash flow as we believe this non-GAAP financial measure is useful to investors in measuring our ability to generate cash internally and fund future growth and to provide a return to shareholders.
Included in the tables below are a reconciliation of the non-GAAP financial measures to the most directly comparable U.S. GAAP financial measures as provided in our Consolidated Financial Statements:
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, 2023 for the non-GAAP financial measures discussion for the fiscal year ended August 31, 2023 compared to the fiscal year ended August 31, 2022.
Reconciliation of U.S. GAAP Financial Results to Non-GAAP Measures
Fiscal Year Ended August 31,
(in millions, except for per share data)
2024
2023
2022
Operating income (U.S. GAAP)
$
2,013
$
1,537
$
1,393
Amortization of intangibles
40
33
34
Stock-based compensation expense and related charges
89
95
81
Restructuring, severance and related charges(1)
296
57
18
Net periodic benefit cost(2)
6
11
17
Business interruption and impairment charges, net(3)
16
—
—
Gain from the divestiture of businesses(4)
(942)
—
—
Acquisition and divestiture related charges(4)
70
—
—
Adjustments to operating income
(425)
196
150
Core operating income (Non-GAAP)
$
1,588
$
1,733
$
1,543
Net income attributable to Jabil Inc. (U.S. GAAP)
$
1,388
$
818
$
996
Adjustments to operating income
(425)
196
150
Loss on debt extinguishment
—
—
4
Net periodic benefit cost(2)
(6)
(11)
(17)
Adjustment for taxes(5)
99
169
(28)
Core earnings (Non-GAAP)
$
1,056
$
1,172
$
1,105
Diluted earnings per share (U.S. GAAP)
$
11.17
$
6.02
$
6.90
Diluted core earnings per share (Non-GAAP)
$
8.49
$
8.63
$
7.65
Diluted weighted average shares outstanding (U.S. GAAP and Non-GAAP)
124.3
135.9
144.4
(1)Charges recorded during the fiscal year ended August 31, 2024, related to the 2024 Restructuring Plan. Charges recorded during the fiscal year ended August 31, 2023, related to headcount reduction to further optimize our business activities.
(2)Pension service cost is recognized in cost of revenue and all other components of net periodic benefit cost, including return on plan assets, are presented in other expense. 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 fiscal year ended August 31, 2024, related to costs associated with product quality liabilities, which is classified as a component of cost of revenue and selling, general and administrative expenses in the Consolidated Statements of Operations.
(4)We completed the divestiture of our Mobility Business and recorded a pre-tax gain of $942 million, subject to certain post-closing adjustments that are still being finalized. We incurred $70 million of acquisition and divestiture related charges during the fiscal year ended August 31, 2024, primarily related to the divestiture of our Mobility Business.
(5)The majority of the adjustment for taxes for the fiscal year ended August 31, 2024, was driven by income tax expense associated with the divestiture of the Mobility Business. The adjustment for taxes for the fiscal year ended August 31, 2023, primarily related to a change in the indefinite reinvestment assertion associated with operations that were classified as held for sale.
Adjusted Free Cash Flow
Fiscal Year Ended August 31,
(in millions)
2024
2023
2022
Net cash provided by operating activities (U.S. GAAP)
$
1,716
$
1,734
$
1,651
Acquisition of property, plant and equipment (“PP&E”)(1)
(784)
(1,030)
(1,385)
Proceeds and advances from sale of PP&E(1)
123
322
544
Adjusted free cash flow (Non-GAAP)
$
1,055
$
1,026
$
810
(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.
Quarterly Results (Unaudited)
The following table sets forth certain unaudited quarterly financial information for the three months ended August 31, 2024, and 2023. In the opinion of management, this information has been presented on the same basis as the audited consolidated financial statements appearing elsewhere, and all necessary adjustments (consisting primarily of normal recurring accruals) have been included in the amounts stated below to present fairly the unaudited quarterly results when read in conjunction with the audited consolidated financial statements and related notes thereto. The operating results for any quarter are not necessarily indicative of results for any future period.
Three Months Ended
(in millions, except for per share data)
August 31, 2024
August 31, 2023
Net revenue
$
6,964
$
8,458
Gross profit
$
663
$
766
Operating income
$
318
$
441
Net income attributable to Jabil Inc.
$
138
$
155
Earnings per share – basic
$
1.20
$
1.18
Earnings per share – diluted
$
1.18
$
1.15
Acquisitions and Divestitures
Acquisitions
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 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 DMS 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.
On October 1, 2024, we completed the acquisition of Mikros Technologies LLC for consideration transferred of $62 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 conditions within the purchase agreement.
Divestitures
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 the Mobility Business to an affiliate of BYDE 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. Accordingly, we presented the assets and liabilities of the Mobility Business as held for sale in the Consolidated Balance Sheets as of August 31, 2023. 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 Consolidated Statements of Operations in the DMS segment until the Closing Date (defined below).
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 Consolidated Statements of Operations.
We perform a goodwill impairment analysis on an annual basis and whenever events or changes in circumstances indicate that the carrying value may not be recoverable. In connection with the preparation of the Company’s financial statements for the quarter ended February 29, 2024, we completed an impairment analysis for goodwill recorded within the reporting unit impacted by the divestiture of the Mobility Business. The quantitative assessment was used, and we determined that the fair value of the impacted reporting unit exceeded the carrying value and that no impairment existed immediately prior to or subsequent to divesting the Mobility Business. We allocated goodwill to the disposal group based on the relative fair value of the Mobility Business as compared to the impacted reporting unit.
In the second quarter of fiscal year 2024 and in connection with the divestiture of the Mobility Business, we made a strategic decision that the indefinite-lived (“Green Point”) trade name valued at $51 million acquired during the acquisition of Green Point should no longer be classified as an indefinite-lived intangible asset. Accordingly, prior to reclassifying the trade name to a finite-lived intangible asset, we completed a quantitative assessment for impairment and determined the fair value of the asset exceeded the carrying value. The trade name was assigned a two-year estimated useful life and is being amortized on a straight-line basis as of the Closing Date.
Refer to Note 17 – “Business Acquisitions and Divestitures” to the 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 program, 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.
As of August 31, 2024, we had approximately $2.2 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 August 31, 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)
4.900% Senior Notes
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)(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
—
—
—
—
—
—
298
3,749
—
4,047
Payments
(300)
—
—
—
—
—
—
(3,747)
—
(4,047)
Other
—
—
—
1
1
2
(2)
(2)
—
—
Balance as of August 31, 2023
—
497
496
593
498
495
296
—
—
2,875
Borrowings
—
—
—
—
—
—
—
1,992
—
1,992
Payments
—
—
—
—
—
—
—
(1,992)
—
(1,992)
Other
—
1
1
1
1
1
—
—
—
5
Balance as of August 31, 2024
$
—
$
498
$
497
$
594
$
499
$
496
$
296
$
—
$
—
$
2,880
Maturity Date
Jul 14, 2023
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
$300 million
$500 million
$500 million
$600 million
$500 million
$500 million
$300 million
$4.0 billion(2)
$1 million
(1)On February 23, 2024, 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”) and (ii) extended the termination date of the Three-Year Revolving Credit Facility (with respect to the available commitments of the extending lenders) to January 22, 2026, and of the Five-Year Revolving Credit Facility (with respect to the available commitments of the extending lenders) to January 22, 2028, in each case subject to an additional one-year extension at the option of the Company.
(2)As of August 31, 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 Consolidated Statements of Cash Flows, and have been excluded from the table above.
In the ordinary course of business, we have letters of credit and surety bonds with banks and insurance companies outstanding of $58 million as of August 31, 2024. Unused letters of credit were $60 million as of August 31, 2024. Letters of credit and surety bonds are generally available for draw down in the event we do not perform.
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 August 31, 2024, and 2023, we were in compliance with our debt covenants. Refer to Note 7 – “Notes Payable and Long-Term Debt” to the Consolidated Financial Statements for further details.
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 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 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 August 31, 2024.
The global asset-backed securitization program expires on November 25, 2024. Effective February 20, 2024, the terms of the global asset-backed securitization program were amended to increase the maximum amount of net cash proceeds available at any one time from $600 million to $700 million. During the fiscal year ended August 31, 2024, we sold $4.0 billion of trade accounts receivable, and we received cash proceeds of $4.0 billion. As of August 31, 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 August 31, 2024, we were in compliance with all covenants under our global asset-backed securitization program. Refer to Note 8 – “Asset-Backed Securitization Programs” to the Consolidated Financial Statements for further details on the programs.
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
$
150
Uncommitted
May 4, 2028(2)
E
$
170
Uncommitted
(3)
F
$
50
Uncommitted
(3)
G
$
100
Uncommitted
(2)
H
$
800
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 fiscal year ended August 31, 2024, we sold $8.2 billion of trade accounts receivable under these programs and we received cash proceeds of $8.2 billion. As of August 31, 2024, we had up to $1.7 billion in available liquidity under our trade accounts receivable sale programs.
The following table sets forth selected consolidated cash flow information (in millions):
Fiscal Year Ended August 31,
2024
2023
2022
Net cash provided by operating activities
$
1,716
$
1,734
$
1,651
Net cash provided by (used in) investing activities
1,351
(723)
(858)
Net cash used in financing activities
(2,668)
(680)
(888)
Effect of exchange rate changes on cash and cash equivalents
(2)
(5)
6
Net increase (decrease) in cash and cash equivalents
$
397
$
326
$
(89)
Operating Activities
Net cash provided by operating activities during the fiscal year ended August 31, 2024, was primarily due to non-cash expenses and net income, a decrease in inventories and an increase in accounts payable, accrued expenses, and other liabilities. Net cash provided by operating activities was partially offset by an increase in prepaid expenses and other current assets, an increase in accounts receivable and an increase in contract assets. The decrease in inventories is primarily due to higher consumption of inventory to support sales and improved working capital management. 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 contract assets is primarily due to timing of revenue recognition for the over time customers.
Investing Activities
Net cash provided by investing activities during the fiscal year ended August 31, 2024, consisted primarily of proceeds from the divestiture of our Mobility Business and proceeds and advances from the sale of property, plant and equipment, partially offset by capital expenditures, principally to support ongoing business in the DMS and EMS segments and the acquisition of ProcureAbility and certain other third-party assets.
Financing Activities
Net cash used in financing activities during the fiscal year ended August 31, 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 (i) borrowings under debt agreements and (ii) net proceeds from the exercise of stock options and issuance of common stock under the employee stock purchase plan.
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
Following is a summary of the dividends and share repurchases for the fiscal years indicated below (in millions):
(1)The difference between dividends declared and dividends paid is due to dividend equivalents for unvested restricted stock units that are paid at the time the awards vest.
(2)Excludes commissions and excise taxes.
We currently expect to continue to declare and pay regular quarterly dividends in amounts 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
Q1 FY 2024
$
2,500
20.4
$
2,500
$
—
Q1 FY 2025
2025 Share Repurchase Program(2)
Q1 FY 2025
$
1,000
0.7
$
84
$
916
(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)As of October 21, 2024, 0.7 million shares had been repurchased for $84 million and $916 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
In addition, we repurchased shares of our common stock through the open market as follows (in millions):
Fiscal Year Ended August 31,
2024
2023
2022
Shares
Cost
Shares
Cost
Shares
Cost
Open market share repurchases
11.3
$
1,445
6.7
$
487
11.8
$
696
Contractual Obligations
Our contractual obligations as of August 31, 2024, are summarized below. As disclosed below, while we have certain non-cancelable purchase order obligations for property, plant and equipment, we generally do not enter into non-cancelable purchase orders for materials until we receive a corresponding purchase commitment from our customer. Non-cancelable purchase orders do not typically extend beyond the normal lead time of several weeks, at most. Purchase orders beyond this time frame are typically cancellable.
Future interest on notes payable and long-term debt(1)
424
102
187
103
32
Operating lease obligations(2)
425
106
144
89
86
Finance lease obligations(2)(3)(4)
398
129
147
31
91
Non-cancelable purchase order obligations(5)
466
265
151
50
—
Pension and postretirement contributions and payments(6)
64
31
6
6
21
Other(7)
17
7
10
—
—
Total contractual obligations(8)
$
4,674
$
640
$
1,640
$
1,073
$
1,321
(1)Consists of interest on notes payable and long-term debt outstanding as of August 31, 2024.
(2)Excludes $25 million of payments related to leases signed but not yet commenced. Additionally, certain leases signed but not yet commenced contain residual value guarantees and purchase options not deemed probable.
(3)Includes $124 million of payments related to a lease with a variable interest entity (“VIE”), for which the Company is not the primary beneficiary. This is also the Company’s maximum exposure to loss related to the VIE.
(4)Excludes $274 million of residual value guarantees that could potentially come due in future periods. The Company does not believe it is probable that any amounts will be owed under these guarantees. Therefore, no amounts related to the residual value guarantees are included in the lease payments used to measure the right-of-use assets and lease liabilities.
(5)Consists of purchase commitments entered into as of August 31, 2024, primarily for property, plant and equipment and software pursuant to legally enforceable and binding agreements.
(6)Includes the estimated company contributions to funded pension plans during fiscal year 2025 and the expected benefit payments for unfunded pension and postretirement plans from fiscal years 2025 through 2034. These future payments are not recorded on the Consolidated Balance Sheets but will be recorded as incurred.
(7)Consists of $17 million related to the one-time transition tax as a result of the Tax Cuts and Jobs Act of 2017 that will be paid in annual installments through fiscal year 2026.
(8)As of August 31, 2024, we have $99 million recorded as a long-term liability for uncertain tax positions. 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 are not able to reasonably estimate the timing of payments, or the amount by which our liability for these uncertain tax positions will increase or decrease over time, and accordingly, this liability has been excluded from the above table.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk