Jabil Inc. Q4 FY2025 earnings call

Key managerial messages include:

• Greg Hebard walked through fiscal 2025 results and first quarter fiscal 2026 outlook, discussing balance sheet, free cash flow, and capital allocation.
• Steve Borges discussed regulated industries, covering automotive/transportation (emerging from correction, focusing on future tech), health care (dynamic environment with innovation, personalized medicine, and supply chain simplification), and renewables/energy infrastructure (dynamic macro picture with growth in solar, energy storage, etc.).
• Matt Crowley covered intelligent infrastructure, emphasizing being positioned across the AI hardware ecosystem, focusing on cloud/data center integration, thermal management, capital equipment, and networking/communications.
• Andy Priestley talked about Connected Living & Digital Commerce, with Digital Commerce & Robotics growing due to automation and AI, and Consumer Devices evolving towards more sophisticated technology.
• Mike Dastoor, Fred McCoy, and Frank McKay discussed Jabil Advantage pillars: long-tenured team, regional manufacturing footprint, scale rationalization/diversification, supply chain orchestration, and automation/AI in factories. Also, long-term targets for core operating margins and free cash flow.

For the fourth quarter, Jabil's segments had the following performance:

• Regulated Industries: Revenue was $3.1 billion, up ~3% year-over-year with core operating margin expanding to 6.5% (up 40 basis points). Health care was in line, while automotive and transportation, and renewable and energy infrastructure exceeded expectations due to incentive-related demand pull forward and stronger volumes.
• Intelligent Infrastructure: Revenue was $3.7 billion, $400 million above expectations. Driven by cloud and data center factors like faster efficiency, better mix, and stronger demand, core operating margin was 5.9%.
• Connected Living & Digital Commerce: Revenue totaled $1.4 billion, slightly ahead of outlook, but down ~14% year-over-year due to softness in consumer-driven products, with core operating margin at 6.6% (up 210 basis points).

Fiscal 2026 guidance:

• Total company revenue expected to be in range of $7.7 billion to $8.3 billion.
• Regulated Industries: Flat revenue with margin expansion as health care growth offsets automotive and renewables decline.
• Intelligent Infrastructure: Expected 18% revenue growth, with AI-related revenue growing ~25% to ~$11.2 billion, core operating margin mid-5% range.
• Connected Living & Digital Commerce: Expected ~13% revenue decline.
• Overall, FY 2026 expected ~5% revenue growth to ~$31.3 billion, core operating margin ~5.6%, core earnings per share $11, free cash flow >$1.3 billion. Capital allocation priorities: invest in high-return areas, pursue acquisitions, return ~80% of free cash flow to shareholders.

Risks discussed include market volatility affecting segments like automotive, potential tariff impacts on health care and pharma, supply chain complexities with over 38,000 global suppliers and over 700,000 unique parts, and capacity constraints in certain regions impacting margins.

Q: Can you give more details on AI growth areas and share shifts?

A: Matt Crowley said AI revenue growing 25% YOY, gaining share especially in data center infrastructure.

Q: Talk about health care growth and Croatia facility?

A: Steven Borges said health care growth led by drug delivery, Croatia facility on track.

Q: How is Jabil managing data center capacity?

A: Matt Crowley said operating sites 24/7, retrofitting sites for liquid cooling.

Q: Thoughts on EV decline in FY 2026?

A: Steven Borges said EV market share decline in US, but China growth and new OEM customers offsetting softness.