JABIL INC 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Overview We are one of the leading providers of worldwide manufacturing services and solutions. We provide comprehensive electronics design, production and product management services to companies in various industries and end markets. Our services enable our customers to reduce manufacturing costs, improve supply-chain management, reduce inventory obsolescence, lower transportation costs and reduce product fulfillment time. Our manufacturing and supply chain management services and solutions include innovation, design, planning, fabrication and assembly, delivery and managing the flow of resources and products. We derive substantially all of our revenue from production and product management services (collectively referred to as “manufacturing services”), which encompass the act of producing tangible components that are built to customer specifications and are then provided to the customer. We serve our customers primarily through dedicated business units that combine highly automated, continuous flow manufacturing with advanced electronic design and design for manufacturability. We currently depend, and expect to continue to depend for the foreseeable future, upon a relatively small number of customers for a significant percentage of our net revenue, which in turn depends upon their growth, viability and financial stability. We conduct our operations in facilities that are located worldwide, including but not limited to, China, Ireland, Malaysia, Mexico, Singapore and the United States. We derived a substantial majority, 83.5% and 84.2%, of net revenue from our international operations for the three months and six months ended February 28, 2022, respectively. Our global manufacturing production sites allow customers to manufacture products simultaneously in the optimal locations for their products. Our global presence is key to assessing and executing on our business opportunities. We have two reporting segments: Electronics Manufacturing Services (“EMS”) and Diversified Manufacturing Services (“DMS”), which are organized based on the economic profiles of the services performed, including manufacturing capabilities, market strategy, margins, return on capital and risk profiles. Our EMS segment is focused around leveraging IT, supply chain design and engineering, technologies largely centered on core electronics, utilizing our large scale manufacturing infrastructure and our ability to serve a broad range of end markets. Our EMS segment is a high volume business that produces product at a quicker rate (i.e. cycle time) and in larger quantities and includes customers primarily in the 5G, wireless and cloud, digital print and retail, industrial and semi-cap, and networking and storage industries. Our DMS segment is focused on providing engineering solutions, with an emphasis on material sciences, technologies and healthcare. Our DMS segment includes customers primarily in the automotive and transportation, connected devices, healthcare and packaging, and mobility industries. We monitor the current economic environment and its potential impact on both the customers we serve as well as our end-markets and closely manage our costs and capital resources so that we can respond appropriately as circumstances change. Refer to Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" section contained in our Annual Report on Form 10-K for the fiscal year ended August 31, 2021 for further discussion of the items disclosed in Item 2. "Management's Discussion and Analysis of Financial Condition and Results of Operations" section as of February 28, 2022 contained herein. COVID-19 The COVID-19 pandemic, which began to impact us in January 2020, has continued to affect our business and the businesses of our customers and suppliers. Travel and business operation restrictions arising from virus containment efforts of governments around the world have continued to impact our operations in Asia, Europe and the Americas. Essential activity exceptions from these restrictions have allowed us to continue to operate but virus containment efforts have resulted in additional direct costs. The impact on our suppliers has led to supply chain constraints, including difficulty sourcing materials necessary to fulfill customer production requirements and challenges in transporting completed products to our end customers. Summary of Results The following table sets forth, for the periods indicated, certain key operating results and other financial information (in millions, except per share data): 18 Table of Contents Three months ended Six months ended February 28, 2022 February 28, 2021 February 28, 2022 February 28, 2021 Net revenue $ 7,553 $ 6,828 $ 16,120 $ 14,661 Gross profit $ 609 $ 569 $ 1,284 $ 1,204 Operating income $ 313 $ 236 $ 663 $ 550 Net income attributable to Jabil Inc. $ 222 $ 152 $ 463 $ 352 Earnings per share—basic $ 1.55 $ 1.01 $ 3.22 $ 2.34 Earnings per share—diluted $ 1.51 $ 0.99 $ 3.15 $ 2.30 Key Performance Indicators Management regularly reviews financial and non-financial performance indicators to assess the Company’s operating results. Changes in our operating assets and liabilities are largely affected by our working capital requirements, which are dependent on the effective management of our sales cycle as well as timing of payments. Our sales cycle measures how quickly we can convert our manufacturing services into cash through sales. We believe the metrics set forth below are useful to investors in measuring our liquidity as future liquidity needs will depend on fluctuations in levels of inventory, accounts receivable and accounts payable. The following table sets forth, for the quarterly periods indicated, certain of management’s key financial performance indicators: Three months ended February 28, 2022 November 30, 2021 February 28, 2021 Sales cycle (1) 35 days 22 days 25 days Inventory turns (annualized) (2) 4 turns 5 turns 6 turns Days in accounts receivable (3) 38 days 41 days 40 days Days in inventory (4) 86 days 66 days 65 days Days in accounts payable (5) 89 days 85 days 81 days (1) The sales cycle is calculated as the sum of days in accounts receivable and days in inventory, less the days in accounts payable; accordingly, the variance in the sales cycle quarter over quarter was a direct result of changes in these indicators. (2) Inventory turns (annualized) are calculated as 360 days divided by days in inventory. (3) Days in accounts receivable is calculated as accounts receivable, net, divided by net revenue multiplied by 90 days. During the three months ended February 28, 2022, the decrease in days in accounts receivable from the prior sequential quarter was primarily due to lower sales and timing of collections. (4) Days in inventory is calculated as inventory and contract assets divided by cost of revenue multiplied by 90 days. During the three months ended February 28, 2022, the increase in days in inventory from the prior sequential quarter and the three months ended February 28, 2021 was primarily due to higher raw material balances due to supply chain constraints. (5) Days in accounts payable is calculated as accounts payable divided by cost of revenue multiplied by 90 days. During the three months ended February 28, 2022, the increase in days in accounts payable from the prior sequential quarter was primarily due to timing of purchases and cash payments during the quarter. During the three months ended February 28, 2022, the increase in days in accounts payable from the three months ended February 28, 2021 was primarily due to an increase for material purchases and the timing of payments. Critical Accounting Policies and Estimates The preparation of our Condensed Consolidated Financial Statements and related disclosures in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) requires management to make estimates and judgments that affect our reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. On an on-going basis, we evaluate our estimates and assumptions based upon historical experience and various other factors and circumstances. Management believes that our estimates and assumptions are reasonable under the circumstances; however, actual results may vary from these estimates and assumptions under different future circumstances. For further discussion of our significant accounting policies, refer to Note 1 — “Description of Business and Summary of Significant Accounting Policies” to the Consolidated Financial Statements and “Management’s Discussion and Analysis of Financial Condition and Results of 19 Table of Contents Operations – Critical Accounting Policies and Estimates” in our Annual Report on Form 10-K for the fiscal year ended August 31, 2021. Recent Accounting Pronouncements See Note 17 – “New Accounting Guidance” to the Condensed Consolidated Financial Statements for a discussion of recent accounting guidance. Results of Operations Net Revenue Generally, we assess revenue on a global customer basis regardless of whether the growth is associated with organic growth or as a result of an acquisition. Accordingly, we do not differentiate or separately report revenue increases generated by acquisitions as opposed to existing business. In addition, the added cost structures associated with our acquisitions have historically been relatively insignificant when compared to our overall cost structure. The distribution of revenue across our segments has fluctuated, and will continue to fluctuate, as a result of numerous factors, including the following: fluctuations in customer demand; efforts to diversify certain portions of our business; business growth from new and existing customers; specific product performance; and any potential termination, or substantial winding down, of significant customer relationships. Three months ended Six months ended (dollars in millions) February 28, 2022 February 28, 2021 Change February 28, 2022 February 28, 2021 Change Net revenue $ 7,553 $ 6,828 10.6 % $ 16,120 $ 14,661 10.0 % Net revenue increased during the three months ended February 28, 2022, compared to the three months ended February 28, 2021. Specifically, the EMS segment net revenue increased 19% due to: (i) a 10% increase in revenues from existing customers within our 5G, wireless and cloud business, (ii) a 5% increase in revenues from existing customers within our digital print and retail business, (iii) a 3% increase in revenues from existing customers within our industrial and capital equipment business, and (iv) a 1% increase in revenues from existing customers within our networking and storage business. The DMS segment net revenue increased 4% due to: (i) a 7% increase in revenues from existing customers in our automotive and transportation business, (ii) a 3% increase in revenues from existing customers within our healthcare and packaging business, and (iii) a 3% increase in revenues from existing customers within our connected devices business. The increase is partially offset by a 9% decrease in revenues from existing customers within our mobility business. Net revenue increased during the six months ended February 28, 2022, compared to the six months ended February 28, 2021. Specifically, the EMS segment net revenue increased 13% due to: (i) a 7% increase in revenues from existing customers within our 5G, wireless and cloud business, (ii) a 4% increase in revenues from existing customers within our industrial and capital equipment business, and (iii) a 3% increase in revenues from existing customers within our digital print and retail business. The increase is partially offset by a 1% decrease in revenues from existing customers within our networking and storage business. The DMS segment net revenue increased 8% due to: (i) a 6% increase in revenues from existing customers in our automotive and transportation business, and (ii) a 3% increase in revenues from existing customers within our healthcare and packaging business. The increase is partially offset by a 1% decrease in revenues from existing customers within our mobility business. The following table sets forth, for the periods indicated, revenue by segment expressed as a percentage of net revenue: Three months ended Six months ended February 28, 2022 February 28, 2021 February 28, 2022 February 28, 2021 EMS 50 % 47 % 47 % 46 % DMS 50 % 53 % 53 % 54 % Total 100 % 100 % 100 % 100 % The following table sets forth, for the periods indicated, foreign source revenue expressed as a percentage of net revenue: 20 Table of Contents Three months ended Six months ended February 28, 2022 February 28, 2021 February 28, 2022 February 28, 2021 Foreign source revenue 83.5 % 84.7 % 84.2 % 84.1 % Gross Profit Three months ended Six months ended (dollars in millions) February 28, 2022 February 28, 2021 February 28, 2022 February 28, 2021 Gross profit $ 609 $ 569 $ 1,284 $ 1,204 Percent of net revenue 8.1 % 8.3 % 8.0 % 8.2 % Gross profit as a percentage of net revenue decreased for the three months and six months ended February 28, 2022 compared to the three months and six months ended February 28, 2021, primarily due to product mix. Selling, General and Administrative Three months ended Six months ended (dollars in millions) February 28, 2022 February 28, 2021 Change February 28, 2022 February 28, 2021 Change Selling, general and administrative $ 280 $ 306 $ (26) $ 588 $ 609 $ (21) Selling, general and administrative expenses decreased during the three months ended February 28, 2022, compared to the three months ended February 28, 2021. The decrease is primarily due to: (i) a $14 million decrease due to lower salary and salary related expenses and (ii) a $7 million decrease in stock-based compensation expense due to certain one-time awards granted during the second quarter of fiscal year 2021 and higher anticipated achievement levels during the three months ended February 28, 2021 for certain performance-based stock awards. Selling, general and administrative expenses decreased during the six months ended February 28, 2022, compared to the six months ended February 28, 2021. The decrease is primarily due to: (i) a $9 million decrease due to lower salary and salary related expenses and (ii) a $6 million decrease in stock-based compensation expense due to certain one-time awards granted during the second quarter of fiscal year 2021 and higher anticipated achievement levels during the six months ended February 28, 2021 for certain performance-based stock awards. Research and Development Three months ended Six months ended (dollars in millions) February 28, 2022 February 28, 2021 February 28, 2022 February 28, 2021 Research and development $ 8 $ 9 $ 17 $ 17 Percent of net revenue 0.1 % 0.1 % 0.1 % 0.1 % Research and development expenses remained consistent as a percentage of net revenue during the three months and six months ended February 28, 2022, compared to the three months and six months ended February 28, 2021. Amortization of Intangibles Three months ended Six months ended (dollars in millions) February 28, 2022 February 28, 2021 Change February 28, 2022 February 28, 2021 Change Amortization of intangibles $ 8 $ 12 $ (4) $ 16 $ 23 $ (7) Amortization of intangibles decreased during the three months and six months ended February 28, 2022, compared to the three months and six months ended February 28, 2021 primarily driven by reduced amortization related to the Nypro trade name. Restructuring, Severance and Related Charges 21 Table of Contents Three months ended Six months ended (dollars in millions) February 28, 2022 February 28, 2021 Change February 28, 2022 February 28, 2021 Change Restructuring, severance and related charges $ — $ 6 $ (6) $ — $ 5 $ (5) Restructuring, severance and related charges decreased during the three months and six months ended February 28, 2022, compared to the three months and six months ended February 28, 2021 as the 2020 Restructuring Plan was complete as of August 31, 2021. Other Income Three months ended Six months ended (dollars in millions) February 28, 2022 February 28, 2021 Change February 28, 2022 February 28, 2021 Change Other income $ 4 $ 2 $ 2 $ 3 $ 3 $ — Other income remained relatively consistent during the three months and six months ended February 28, 2022 compared to the three months and six months ended February 28, 2021. Interest Income Three months ended Six months ended (dollars in millions) February 28, 2022 February 28, 2021 Change February 28, 2022 February 28, 2021 Change Interest income $ — $ 2 $ (2) $ 1 $ 4 $ (3) Interest income remained relatively consistent during the three months and six months ended February 28, 2022, compared to the three months and six months ended February 28, 2021. Interest Expense Three months ended Six months ended (dollars in millions) February 28, 2022 February 28, 2021 Change February 28, 2022 February 28, 2021 Change Interest expense $ 33 $ 31 $ 2 $ 66 $ 63 $ 3 Interest expense remained relatively consistent during the three months and six months ended February 28, 2022, compared to the three months and six months ended February 28, 2021. Income Tax Expense Three months ended Six months ended February 28, 2022 February 28, 2021 Change February 28, 2022 February 28, 2021 Change Effective income tax rate 21.7 % 26.9 % (5.2) % 22.8 % 28.5 % (5.7) % The effective income tax rate decreased for the three months and six months ended February 28, 2022, compared to the three months and six months ended February 28, 2021, primarily due to decreased losses in tax jurisdictions with existing valuation allowances for the three months and six months ended February 28, 2022. Non-GAAP (Core) Financial Measures The following discussion and analysis of our financial condition and results of operations include certain non-GAAP financial measures as identified in the reconciliations below. The non-GAAP financial measures disclosed herein do not have standard meaning and may vary from the non-GAAP financial measures used by other companies or how we may calculate those measures in other instances from time to time. Non-GAAP financial measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with U.S. GAAP. Among other uses, management uses non-GAAP “core” financial measures to make operating decisions, assess business performance and as a factor in determining certain employee performance when evaluating incentive compensation. Also, our “core” financial measures should not be 22 Table of Contents construed as an indication by us that our future results will be unaffected by those items that are excluded from our “core” financial measures. We determine the tax effect of the items excluded from “core” earnings and “core” diluted earnings per share based upon evaluation of the statutory tax treatment and the applicable tax rate of the jurisdiction in which the pre-tax items were incurred, and for which realization of the resulting tax benefit, if any, is expected. In certain jurisdictions where we do not expect to realize a tax benefit (due to existing tax incentives or a history of operating losses or other factors resulting in a valuation allowance related to deferred tax assets), a reduced or 0% tax rate is applied. Included in the tables below are reconciliations of the non-GAAP financial measures to the most directly comparable U.S. GAAP financial measures as provided in our Condensed Consolidated Financial Statements: Reconciliation of U.S. GAAP Financial Results to Non-GAAP Measures Three months ended Six months ended (in millions, except for per share data) February 28, 2022 February 28, 2021 February 28, 2022 February 28, 2021 Operating income (U.S. GAAP) $ 313 $ 236 $ 663 $ 550 Amortization of intangibles 8 12 16 23 Stock-based compensation expense and related charges 16 23 51 57 Restructuring, severance and related charges — 6 — 5 Net periodic benefit cost (1) 7 7 14 12 Business interruption and impairment charges, net — (1) — (1) Acquisition and integration charges (2) — 2 — 4 Adjustments to operating income 31 49 81 100 Core operating income (Non-GAAP) $ 344 $ 285 $ 744 $ 650 Net income attributable to Jabil Inc. (U.S. GAAP) $ 222 $ 152 $ 463 $ 352 Adjustments to operating income 31 49 81 100 Net periodic benefit cost (1) (7) (7) (14) (12) Adjustments for taxes — — — (1) Core earnings (Non-GAAP) $ 246 $ 194 $ 530 $ 439 Diluted earnings per share (U.S. GAAP) $ 1.51 $ 0.99 $ 3.15 $ 2.30 Diluted core earnings per share (Non-GAAP) $ 1.68 $ 1.27 $ 3.60 $ 2.87 Diluted weighted average shares outstanding (U.S. GAAP and Non-GAAP) 146.4 153.0 147.0 153.1 (1) We are reclassifying the pension components in other expense to core operating income as we assess operating performance, inclusive of all components of net periodic benefit cost, with the related revenue. There is no impact to core earnings or diluted core earnings per share for this adjustment. (2) Charges related to our strategic collaboration with Johnson & Johnson Medical Devices Companies (“JJMD”). Adjusted Free Cash Flow Six months ended (in millions) February 28, 2022 February 28, 2021 Net cash provided by operating activities (U.S. GAAP) $ 200 $ 86 Acquisition of property, plant and equipment (704) (661) Proceeds and advances from sale of property, plant and equipment 430 267 Adjusted free cash flow (Non-GAAP) $ (74) $ (308) Liquidity and Capital Resources We believe that our level of liquidity sources, which includes available borrowings under our revolving credit facilities and commercial paper program, additional proceeds available under our global asset-backed securitization program and under our 23 Table of Contents uncommitted trade accounts receivable sale programs, cash on hand, cash flows provided by operating activities and access to the capital markets, will be adequate to fund our cash requirements, including capital expenditures, the payment of any declared quarterly dividends, any share repurchases under the approved program, any potential acquisitions and our working capital requirements for the next 12 months and beyond. We continue to assess our capital structure and evaluate the merits of redeploying available cash. Cash and Cash Equivalents As of February 28, 2022, we had approximately $1.1 billion in cash and cash equivalents, of which a significant portion was held by our foreign subsidiaries. Most of our foreign cash and cash equivalents as of February 28, 2022 could be repatriated to the United States without potential tax expense. Notes Payable and Credit Facilities Following is a summary of principal debt payments and debt issuance for our notes payable and credit facilities: (in millions) 4.700% Senior Notes 4.900% Senior Notes 3.950% Senior Notes 3.600% Senior Notes 3.000% Senior Notes 1.700% Senior Notes Borrowings under revolving credit facilities (1) Borrowings under loans Total notes payable and credit facilities Balance as of August 31, 2021 $ 499 $ 300 $ 496 $ 495 $ 591 $ 496 $ — $ 1 $ 2,878 Borrowings — — — — — — 984 — 984 Payments — — — — — — (984) — (984) Other 1 — — 1 1 — — — 3 Balance as of February 28, 2022 $ 500 $ 300 $ 496 $ 496 $ 592 $ 496 $ — $ 1 $ 2,881 Maturity Date Sep 15, 2022 Jul 14, 2023 Jan 12, 2028 Jan 15, 2030 Jan 15, 2031 Apr 15, 2026 Jan 22, 2024 and Jan 22, 2026 Jul 31, 2026 Original Facility/ Maximum Capacity $500 million $300 million $500 million $500 million $600 million $500 million $3.8 billion (1) $3 million (1) As of February 28, 2022, we had $3.8 billion in available unused borrowing capacity under our revolving credit facilities. The senior unsecured credit agreement dated as of January 22, 2020 and amended on April 28, 2021 (the “Credit Facility”) acts as the back-up facility for commercial paper outstanding, if any. We have a borrowing capacity of up to $3.2 billion under our commercial paper program, which was increased from $1.8 billion on February 18, 2022. Borrowings with an original maturity of 90 days or less are recorded net within the Condensed Consolidated Statement of Cash Flows, and have been excluded from the table above. We have a shelf registration statement with the SEC registering the potential sale of an indeterminate amount of debt and equity securities in the future to augment our liquidity and capital resources. Our Senior Notes and our credit facilities contain various financial and nonfinancial covenants. A violation of these covenants could negatively impact our liquidity by restricting our ability to borrow under the notes payable and credit facilities and potentially causing acceleration of amounts due under these notes payable and credit facilities. As of February 28, 2022 and August 31, 2021, we were in compliance with our debt covenants. Refer to Note 5 – “Notes Payable and Long-Term Debt” to the Condensed Consolidated Financial Statements for further details. Global Asset-Backed Securitization Program Certain Jabil entities participating in the global asset-backed securitization program continuously sell designated pools of trade accounts receivable to a special purpose entity, which in turn sells certain of the receivables at a discount to conduits administered by an unaffiliated financial institution on a monthly basis. In addition, a foreign entity participating in the global asset-backed securitization program sells certain receivables at a discount to conduits administered by an unaffiliated financial institution on a daily basis. We continue servicing the receivables sold and in exchange receive a servicing fee under the global asset-backed securitization program. Servicing fees related to the asset-backed securitization programs recognized during the three months and six months ended February 28, 2022 and 2021 were not material. We do not record a servicing asset or liability on the Condensed 24 Table of Contents Consolidated Balance Sheets as we estimate that the fee we receive to service these receivables approximates the fair market compensation to provide the servicing activities. The special purpose entity in the global asset-backed securitization program is a wholly-owned subsidiary of the Company and is included in our Condensed Consolidated Financial Statements. Certain unsold receivables covering up to the maximum amount of net cash proceeds available under the domestic, or U.S., portion of the global asset-backed securitization program are pledged as collateral to the unaffiliated financial institution as of February 28, 2022. The global asset-backed securitization program expires on November 25, 2024 and the maximum amount of net cash proceeds available at any one time is $600 million. During the three months and six months ended February 28, 2022, we sold $1.0 billion and $2.0 billion, respectively, of trade accounts receivable and we received cash proceeds of $1.0 billion and $2.0 billion, respectively. As of February 28, 2022, we had no available liquidity under our global asset-backed securitization program. The global asset-backed securitization program requires compliance with several covenants including compliance with the interest ratio and debt to EBITDA ratio of the Credit Facility. As of February 28, 2022 and August 31, 2021, we were in compliance with all covenants under our global asset-backed securitization program. Refer to Note 6 – “Asset-Backed Securitization Program” to the Condensed Consolidated Financial Statements for further details on the program. Trade Accounts Receivable Sale Programs As of February 28, 2022, we may elect to sell receivables and the unaffiliated financial instit ution may elect to purchase specific accounts receivable at any one time up to a: (i) maximum aggregate amount available of $2.0 billion under nine trade accounts receivable sale programs, (ii) maximum amount available of 400 million CNY under one trade accounts receivable sale program and (iii) maximum amount available of 100 million CHF under one trade accounts receivable sale program. The trade accounts receivable sale programs expire on various dates through 2025. During the three months and six months ended February 28, 2022, we sold $2.0 billion and $3.9 billion, respectively, of trade accounts receivable under these programs and we received cash proceeds of $2.0 billion and $3.9 billion, respectively. As of February 28, 2022, we had up to $1.6 billion in available liquidity under our trade accounts receivable sale programs. Capital Expenditures For Fiscal Year 2022, we anticipate our net capital expenditures will be approximately $850 million. In general, our c apital expenditures support ongoing maintenance in our DMS and EMS segments and investments in capabilities and targeted end markets. The amount of actual capital expenditures may be affected by general economic, financial, competitive, legislative and regulatory factors, among other things. Cash Flows The following table sets forth selected consolidated cash flow information (in millions): Six months ended February 28, 2022 February 28, 2021 Net cash provided by operating activities $ 200 $ 86 Net cash used in investing activities (292) (447) Net cash used in financing activities (381) (189) Effect of exchange rate changes on cash and cash equivalents (1) (6) Net decrease in cash and cash equivalents $ (474) $ (556) Operating Activities Net cash provided by operating activities during the six months ended February 28, 2022, was primarily due to net income and non-cash expenses and an increase in accounts payable, accrued expenses and other liabilities; partially offset by: an increase in inventories, contract assets, prepaid expenses and other current assets and accounts receivable. The increase in accounts payable, accrued expenses and other liabilities is primarily due to the timing of purchases and cash payments. The increase in inventories was primarily due to higher raw material balances due to supply chain constraints. The increase in contract assets is primarily due to timing of revenue recognition for over time customers. The increase in prepaid expenses and other current 25 Table of Contents assets is primarily due to the timing of payments. The increase in accounts receivable is primarily driven by higher sales and the timing of collections. Investing Activities Net cash used in investing activities during the six months ended February 28, 2022 consisted primarily of capital expenditures, principally to support ongoing business in the DMS and EMS segments, partially offset by proceeds and advances from the sale of property, plant and equipment. Financing Activities Net cash used in financing activities during the six months ended February 28, 2022 was primarily due to (i) payments for debt agreements, (ii) the repurchase of our common stock under our share repurchase authorization and (iii) the purchase of treasury stock under employee stock plans. Net cash used in financing activities was partially offset by borrowings under debt agreements. Contractual Obligations As of the date of this report, other than the new operating and finance leases, (see Note 4 – “Leases” to the Condensed Consolidated Financial Statements), there were no material changes outside the ordinary course of business, since August 31, 2021 to our contractual obligations and commitments and the related cash requirements. Dividends and Share Repurchases We currently expect to continue to declare and pay regular quarterly dividends of an amount similar to our past declarations. However, the declaration and payment of future dividends are discretionary and will be subject to determination by our Board of Directors each quarter following its review of our financial performance and global economic conditions. In July 2021, the Board of Directors approved an authorization for the repurchase of up to $1.0 billion of our common stock (the “2022 Share Repurchase Program”). As of February 28, 2022, 5.1 million shares had been repurchased for $314 million and $686 million remains available under the 2022 Share Repurchase Program. Item 3. Quantitative and Qualitative Disclosures About Market Risk There have been no material changes in our primary risk exposures or management of market risks from those disclosed in our Annual Report on Form 10-K for the fiscal year ended August 31, 2021.