JABIL INC Q2 FY2025 earnings call

• Greg Hebard highlighted strong Q2 results with $6.7 billion in revenue, core operating income of $334 million, core operating margins of 5%, GAAP diluted earnings per share of $1.06, and core diluted earnings per share of $1.94.
• Cash flow: Q2 cash flow from operations was $334 million, net capital expenditures were $73 million, with FY net CapEx expected to be between 1.5% to 2% of revenue, and adjusted free cash flow for the quarter at $261 million, YTD at $487 million, with FY FCF expected to exceed $1.2 billion.
• Mike Dastoor discussed Jabil's strong position with a global manufacturing footprint, 30 U.S. sites, and ability to navigate tariff complexities, along with results driven by growth in capital equipment, cloud/data center infrastructure, and digital commerce, and acquisitions like Pharmaceutical International Inc. for aseptic filling/dry oral dosage.
• AI-related revenue expected to be ~$7.5 billion in FY 2025, a 40% Y/Y increase, with silicon photonics expansion in Gujarat.

Regulated Industry segment reported revenue of roughly $2.7 billion, a decrease of 8% year-on-year due to weakness in renewable energy and EV markets, with core operating margin increasing by 20 basis points to 4.8%. Intelligent Infrastructure segment saw revenue of $2.6 billion, up 18% year-on-year, driven by strong demand in AI-related cloud, data center infrastructure, and capital equipment markets, with core operating margin at 5.3%, a 110 basis point improvement. Connected Living & Digital Commerce segment had revenue of $1.3 billion, down 13% year-on-year due to mobility divestiture, but excluding the divested business, revenue growth was ~4%, with core operating margin at 4.5%.

• Q3 2025: Total company revenue expected to be in the range of $6.7 billion to $7.3 billion, core operating income estimated to be in the range of $348 million to $408 million, GAAP operating income expected to be in the range of $282 million to $352 million, core diluted earnings per share estimated to be in the range of $2.08 to $2.48, GAAP diluted earnings per share expected to be in the range of $1.50 to $1.99.
• FY 2025: Anticipates approximately $27.9 billion in revenue with core operating margins of 5.4%, core earnings per share expected to be $8.95, and free cash flow generation of more than $1.2 billion.

• Tariff uncertainties: Impact on end customer demand, pass-through costs for Jabil, uncertainty in reciprocal tariffs.
• Market dynamics: Weakness in EV, renewables, 5G; seasonality in Connected Living segment.

Q: Ruplu Bhattacharya asks about Jabil's US footprint and ability to support customer manufacturing moves.

A: Mike Dastoor responds about 30 US sites, speed of setting up new sites, and ability to help customers.

Q: Ruplu Bhattacharya asks about cloud revenues and silicon photonics.

A: Mike Dastoor talks about AI revenue growth, silicon photonics capabilities from Intel acquisition, and plans in Gujarat.

Q: Samik Chatterjee asks about Intelligent Infrastructure growth and margin in Connected Living.

A: Mike Dastoor discusses semi-cap and cloud data center growth, and seasonality in Connected Living.

Q: Mark Delaney asks about tariffs and revenue impact.

A: Mike Dastoor addresses minimal exposure to China/Canada, US MCA compliance in Mexico, and prudence in guidance.

Q: David Vogt asks about year-over-year growth and guidance prudence.

A: Greg Hebard and Mike Dastoor discuss removing legacy business impact and prudence in guidance across end markets.

Q: Steven Fox asks about GPU racks and auto segment.

A: Mike Dastoor talks about yield improvement and prudence in auto segment forecasts.

Q: George Wang asks about transceiver and CPO.

A: Mike Dastoor discusses progress in silicon photonics and CPO development.

Q: Melissa Fairbanks asks about supply chain and acquisitions.

A: Greg Hebard talks about pharmaceutical acquisition interest and ongoing tuck-in acquisitions