Jabil(JBL) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For Q4, the company reported approximately $8.3 billion in revenue, exceeding guidance by roughly $800 million, with core operating income at $519 million and a core operating margin of 6.3%, a 50 basis point improvement year-over-year [9][10] - Core diluted earnings per share was $3.29, while GAAP diluted earnings per share came in at $1.99 [9] - Full-year adjusted free cash flow was over $1.3 billion, with a healthy balance sheet showing a debt-to-core EBITDA ratio of 1.3 times and cash balances of approximately $1.9 billion [12][13] Segment Performance Changes - Regulated Industries revenue was $3.1 billion, with a year-over-year increase of approximately 3% and a core operating margin of 6.5% [10] - Intelligent Infrastructure revenue reached $3.7 billion, $400 million above expectations, with a core operating margin of 5.9% [10][11] - Connected Living and Digital Commerce revenue totaled $1.4 billion, reflecting a year-over-year decline of approximately 14%, but with a core operating margin increase to 6.6% [11] Market Data and Key Metrics Changes - The automotive and transportation market is expected to decline by 5% in FY26, while healthcare outsourcing is entering a growth phase, particularly in drug delivery systems [49][50] - AI-related revenue is projected to grow by roughly 25% in FY26, reaching about $11.2 billion, driven by strong demand in cloud and data center infrastructure [53][54] Company Strategy and Industry Competition - The company is focusing on system-level integration across its segments, particularly in Intelligent Infrastructure, to capture AI-related growth [51][52] - In Connected Living and Digital Commerce, the strategy involves pruning lower-margin programs while investing in higher-margin opportunities like digital commerce and robotics [55][56] Management's Comments on Operating Environment and Future Outlook - Management highlighted the resilience of the diversified model despite mixed dynamics across end markets, with strong performance in AI-related sectors offsetting softness in automotive and renewables [35][36] - The company aims for approximately 5% revenue growth in FY26, with core operating margin expansion to around 5.6% [56] Other Important Information - The company completed a $1 billion share repurchase authorization and plans to return about 80% of free cash flow to shareholders [14][57] - A new facility in North Carolina is set to come online in summer 2026 to address capacity constraints in AI manufacturing [54] Q&A Session Summary Question: Can you provide details on growth areas in AI? - The company expects 25% year-on-year growth in AI revenue, with significant growth in capital equipment and cloud and data center infrastructure, while maintaining strong positions in existing markets [64][65] Question: What is the outlook for healthcare growth? - Growth is anticipated in drug delivery systems and healthcare outsourcing, with a healthy pipeline of new business expected to contribute to margins [66]