Jabil(JBL) - 2025 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue for Q2 2025 was $6.7 billion, a 3$250 million from the divested mobility business in the prior year quarter [8] - Core operating income was $334 million with core operating margins at 5$1.06, while core diluted earnings per share was $1.94, up$0.26 from Q2 of last year [9][30] - Adjusted free cash flow for Q2 was $261 million, bringing year-to-date adjusted free cash flow to$487 million, with expectations to exceed $1.2 billion for the year [16][37] Performance by Business Segment - Regulated Industry segment reported revenue of approximately$2.7 billion, down 8% year-on-year due to weakness in renewable energy and EV markets, but core operating margin increased to 4.8% [10] - Intelligent Infrastructure segment saw revenue of $2.6 billion, up 18$1.3 billion, down 13% year-on-year, but grew approximately 4% when excluding the divested mobility business [12] Market Data and Key Metrics Changes - Anticipated revenue for the Intelligent Infrastructure segment in Q3 is expected to be $2.8 billion, up approximately 22$1.2 billion, down 16% year-over-year [20] - Overall company revenue for Q3 is expected to be in the range of $6.7 billion to$7.3 billion [21] Company Strategy and Industry Competition - The company is focusing on maintaining a large-scale global manufacturing footprint to navigate geopolitical complexities and potential tariffs [25] - Jabil is well-positioned to support customers in shifting manufacturing to the U.S., with 30 sites across the country [45] - The company anticipates strong growth in AI-related business, expecting approximately $7.5 billion in revenue for FY 2025, representing a 40$20 billion addressable market [35] - Inventory days increased to 80 days sequentially but decreased by 7 days year-on-year, reflecting typical seasonality [13] Q&A Session Summary Question: Can you talk about your existing footprint in the US and the ability to support customers who want to move manufacturing? - Management highlighted the extensive U.S. footprint with 30 sites and the capability to quickly establish operations to support customer needs [45][46] Question: Can you elaborate on the opportunity with silicon photonics and how you see that market growing? - Management indicated strong growth in AI revenue and highlighted the acquisition from Intel that enhanced capabilities in silicon photonics [51][52] Question: What should we read into the slight reductions in networking and healthcare forecasts for fiscal 2025? - Management clarified that the reductions were primarily due to uncertainties in the 5G infrastructure market [56] Question: Can you expand on the comment about GPU racks and liquid cooling continuing to accelerate? - Management explained that improved yields at launch are driven by design architecture and engineering capabilities, with significant potential in liquid cooling solutions [101][102] Question: How confident are you about EV production for the second half of the year? - Management expressed prudence in forecasts but noted that there are positive developments in the Chinese EV market that could offset some concerns [105][106]