Jabil Powers Ahead: Strong Q1 Performance Amid Challenges
The first quarter of fiscal year 2025 was a significant milestone for Jabil, with the company delivering a solid performance despite facing numerous challenges. In their recent earnings conference call and webcast, Jabil's leadership team provided an update on the company's financial results and outlook.
Greg Hebard, Chief Financial Officer, reported that the company's revenue came in at $7 billion for Q1, up 1% year-on-year excluding the impact of the Mobility divestiture. Core operating income for the quarter was $347 million, with core operating margins coming in at 5%. Net interest expense was also lower than anticipated at $60 million, reflecting good working capital management by the team.
On a GAAP basis, operating income was $197 million, and diluted earnings per share were $0.88. However, the company's core diluted earnings per share were significantly higher at $2, demonstrating the strength of Jabil's business model.
A breakdown of performance by segment revealed some notable trends. The Regulated Industries segment reported revenue of roughly $3 billion, down 7% year-on-year due to weakness in renewable energy and EV markets. Despite this, core operating margins for the segment increased by 10 basis points to 4.7%. In contrast, the Intelligent Infrastructure segment saw revenue growth of 5% year-on-year, driven by strong demand in AI-related cloud, data center infrastructure, and capital equipment markets.
The Connected Living and Digital Commerce segment reported a decline in revenue due to the Mobility divestiture. However, excluding this impact, revenue growth for the segment was approximately 12%, reflecting strong year-on-year growth across digital commerce and warehouse automation markets.
Jabil's cash flow and balance sheet metrics also continued to show robust results. Inventory days were flat sequentially at 56 days, with net inventory days increasing by 2 days quarter-over-quarter but remaining within the company's long-term target range of 55 to 60 days. First-quarter cash flow from operations was strong at $312 million, with net capital expenditures for the period coming in at $86 million.
The company's adjusted free cash flow for the quarter came in at $226 million, and Jabil continues to expect strong free cash flow for the year, reaching $1 billion. This performance demonstrates the company's ability to navigate challenges while maintaining a solid financial foundation.
