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, India, Malaysia, Mexico, Singapore and the United States. We derived a substantial majority, 82.5% and 84.7%, of net revenue from our international operations for the three months and six months ended February 29, 2024, 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-capital equipment, 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. On December 29, 2023 (the “Closing Date”), we completed the sale of our product manufacturing business in Chengdu, including its supporting component manufacturing in Wuxi (the “Business”) for pre-tax cash proceeds of approximately $2.2 billion, subject to certain post-closing adjustments. The sale of the Business represented the divestiture of our mobility business. 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, 2023 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 29, 2024 contained herein. 20 Table of Contents 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): Three months ended Six months ended February 29, 2024 February 28, 2023 February 29, 2024 February 28, 2023 Net revenue $ 6,767 $ 8,134 $ 15,154 $ 17,769 Gross profit $ 630 $ 661 $ 1,405 $ 1,404 Operating income $ 1,131 $ 359 $ 1,434 $ 721 Net income attributable to Jabil Inc. $ 927 $ 207 $ 1,121 $ 430 Earnings per share – basic $ 7.41 $ 1.55 $ 8.80 $ 3.21 Earnings per share – diluted $ 7.31 $ 1.52 $ 8.66 $ 3.14 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 29, 2024 November 30, 2023 (1) February 28, 2023 Sales cycle (2) 48 days 42 days 50 days Inventory turns (annualized) (3) 4 turns 5 turns 4 turns Days in accounts receivable (4) 35 days 43 days 41 days Days in inventory (5) 87 days 78 days 93 days Days in accounts payable (6) 74 days 78 days 84 days (1) The calculation of these key performance indicators includes assets and liabilities held for sale for the three months ended November 30, 2023. (2) 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. (3) Inventory turns (annualized) are calculated as 360 days divided by days in inventory. (4) Days in accounts receivable is calculated as accounts receivable, net, divided by net revenue multiplied by 90 days. During the three months ended February 29, 2024, the decrease in days in accounts receivable from the prior sequential quarter and the three months ended February 28, 2023, was primarily due to the timing of collections. (5) Days in inventory is calculated as inventories, net and contract assets divided by cost of revenue multiplied by 90 days. During the three months ended February 29, 2024, the increase in days in inventory from the prior sequential quarter was primarily driven by the timing of sales. During the three months ended February 29, 2024, the decrease in days in inventory from the three months ended February 28, 2023, was primarily driven by improved working capital management. (6) Days in accounts payable is calculated as accounts payable divided by cost of revenue multiplied by 90 days. During the three months ended February 29, 2024, the decrease 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 29, 2024, the decrease in days in accounts payable from the three months ended February 28, 2023, was primarily driven by improved working capital management. 21 Table of Contents 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 Operations – Critical Accounting Policies and Estimates” in our Annual Report on Form 10-K for the fiscal year ended August 31, 2023. Recent Accounting Pronouncements See Note 18 – “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 29, 2024 February 28, 2023 Change February 29, 2024 February 28, 2023 Change Net revenue $ 6,767 $ 8,134 (16.8) % $ 15,154 $ 17,769 (14.7) % Net revenue decreased during the three months ended February 29, 2024, compared to the three months ended February 28, 2023. Specifically, the EMS segment net revenue decreased 18% primarily due to: (i) a 12% decrease in revenues from existing customers primarily within our 5G and wireless business, and the continued transitioning to a customer-controlled consignment model in our cloud business during fiscal year 2024, (ii) a 5% decrease in revenues from existing customers within our digital print and retail business, and (iii) a 4% decrease in revenues from existing customers within our industrial and semi-capital equipment business. The decrease is partially offset by a 3% increase in revenues from existing customers within our networking and storage business. The DMS segment net revenue decreased 16% due to: (i) a 17% decrease primarily driven by the divestiture of our mobility business and (ii) a 2% decrease in revenues from existing customers within our connected devices business. The decrease is partially offset by a 3% increase in revenues from existing customers within our automotive and transportation business. Net revenue decreased during the six months ended February 29, 2024, compared to the six months ended February 28, 2023. Specifically, the EMS segment net revenue decreased 20% primarily due to: (i) a 12% decrease in revenues from existing customers within our 5G, wireless and cloud business, primarily driven by the continued transitioning to a customer-controlled consignment model in our cloud business during fiscal year 2024, (ii) a 6% decrease in revenues from existing customers within our digital print and retail business, and (iii) a 3% decrease in revenues from existing customers within our industrial and semi-capital equipment business. The decrease is partially offset by a 1% increase in revenues from existing customers within our networking and storage business. The DMS segment net revenue decreased 10% due to: (i) a 9% decrease primarily driven by the divestiture of our mobility business and (ii) a 4% decrease in revenues from existing customers within our connected devices business. The decrease is partially offset by a 3% increase in revenues from existing customers within our automotive and transportation business. 22 Table of Contents On September 26, 2023, we announced the signing of a definitive agreement to divest our mobility business to an affiliate of BYD Electronic (International) Company Limited (“BYDE”) in a cash transaction valued at approximately $2.2 billion, subject to certain customary purchase price adjustments. On December 29, 2023, the Closing Date, we completed the sale. See Note 15 – “Business Acquisitions and Divestitures” to the Consolidated Financial Statements for additional information. 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 29, 2024 February 28, 2023 February 29, 2024 February 28, 2023 EMS 49 % 50 % 46 % 48 % DMS 51 % 50 % 54 % 52 % Total 100 % 100 % 100 % 100 % The following table sets forth, for the periods indicated, foreign source revenue expressed as a percentage of net revenue: Three months ended Six months ended February 29, 2024 February 28, 2023 February 29, 2024 February 28, 2023 Foreign source revenue 82.5 % 84.0 % 84.7 % 85.0 % Gross Profit Three months ended Six months ended (dollars in millions) February 29, 2024 February 28, 2023 February 29, 2024 February 28, 2023 Gross profit $ 630 $ 661 $ 1,405 $ 1,404 Percent of net revenue 9.3 % 8.1 % 9.3 % 7.9 % Gross profit as a percentage of net revenue increased for the three months and six months ended February 29, 2024, compared to the three months and six months ended February 28, 2023, primarily due to depreciation and amortization for long-lived assets related to the mobility divestiture no longer being recorded while these assets were classified as held for sale and product mix. Selling, General and Administrative Three months ended Six months ended (in millions) February 29, 2024 February 28, 2023 Change February 29, 2024 February 28, 2023 Change Selling, general and administrative $ 308 $ 285 $ 23 $ 622 $ 604 $ 18 Selling, general and administrative expenses increased during the three months ended February 29, 2024, compared to the three months ended February 28, 2023. The increase is primarily due to a $19 million increase in salary and salary related expenses. Selling, general and administrative expenses increased during the six months ended February 29, 2024, compared to the six months ended February 28, 2023. The increase is primarily due to a $13 million increase in salary and salary related expenses. Research and Development Three months ended Six months ended (dollars in millions) February 29, 2024 February 28, 2023 February 29, 2024 February 28, 2023 Research and development $ 10 $ 8 $ 20 $ 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 29, 2024, compared to the three months and six months ended February 28, 2023. 23 Table of Contents Amortization of Intangibles Three months ended Six months ended (in millions) February 29, 2024 February 28, 2023 Change February 29, 2024 February 28, 2023 Change Amortization of intangibles $ 9 $ 9 $ — $ 15 $ 17 $ (2) Amortization of intangibles remained relatively consistent during the three months and six months ended February 29, 2024, compared to the three months and six months ended February 28, 2023. Restructuring, Severance and Related Charges Three months ended Six months ended (in millions) February 29, 2024 February 28, 2023 Change February 29, 2024 February 28, 2023 Change Restructuring, severance and related charges $ 70 $ — $ 70 $ 197 $ 45 $ 152 Restructuring, severance and related charges increased during the three months and six months ended February 29, 2024, compared to the three months and six months ended February 28, 2023, primarily due to charges related to the 2024 Restructuring Plan. 2024 Restructuring Plan On September 26, 2023, our Board of Directors approved a restructuring plan to (i) realign our cost base for stranded costs associated with the sale and realignment of our mobility business and (ii) optimize our global footprint. This action includes headcount reductions across our Selling, General and Administrative (“SG&A”) cost base and capacity realignment (the “2024 Restructuring Plan”). The 2024 Restructuring Plan reflects our intention only and restructuring decisions, and the timing of such decisions, at certain locations, are still subject to consultation with our employees and their representatives. Based on the analysis done to date, we currently expect to recognize approximately $300 million in pre-tax restructuring and other related costs over the course of our 2024 fiscal year. The restructuring and other related charges are expected to include $150 million to $180 million of employee severance and benefit costs; $80 million to $120 million of asset write-off costs; and $30 million to $40 million of contract termination costs and other related costs. The charges relating to the 2024 Restructuring Plan are currently expected to result in net cash expenditures of approximately $200 million that will be payable over the course of our fiscal years 2024 and 2025. The exact timing of these charges and cash outflows, as well as the estimated cost ranges by category type, have not been finalized. The amount and timing of the actual charges may vary due to a variety of factors, including the finalization of timetables for the transition of functions, consultation with employees and their representatives, as well as the impact of jurisdictional statutory severance requirements. Our estimates for the charges discussed above exclude any potential income tax effects. See Note 12 – “Restructuring, Severance and Related Charges” to the Condensed Consolidated Financial Statements for further discussion of restructuring, severance and related charges. Gain from the Divestiture of Businesses Three months ended Six months ended (in millions) February 29, 2024 February 28, 2023 Change February 29, 2024 February 28, 2023 Change Gain from the divestiture of businesses $ (944) $ — $ (944) $ (944) $ — $ (944) In the second quarter of fiscal year 2024, we completed the divestiture of our mobility business. As a result of the transaction, we recorded a pre-tax gain of $944 million, subject to certain post-closing adjustments that are expected to be finalized in the third quarter of fiscal year 2024. See Note 15 – “Business Acquisitions and Divestitures” to the Condensed Consolidated Financial Statements for additional information. 24 Table of Contents Acquisition and Divestiture Related Charges Three months ended Six months ended (in millions) February 29, 2024 February 28, 2023 Change February 29, 2024 February 28, 2023 Change Acquisition and divestiture related charges $ 46 $ — $ 46 $ 61 $ — $ 61 Acquisition and divestiture related charges increased during the three months and six months ended February 29, 2024, related to transaction and disposal costs incurred in connection with the divestiture of our mobility business. See Note 15 – “Business Acquisitions and Divestitures” to the Condensed Consolidated Financial Statements for additional information. Other Expense Three months ended Six months ended (in millions) February 29, 2024 February 28, 2023 Change February 29, 2024 February 28, 2023 Change Other expense $ 22 $ 17 $ 5 $ 43 $ 32 $ 11 The change in other expense during the three months and six months February 29, 2024, compared to the three months and six months February 28, 2023, is primarily due to an increase in fees due to higher interest rates on our trade accounts receivable sales programs and global asset-backed securitization programs. Interest Expense, Net Three months ended Six months ended (in millions) February 29, 2024 February 28, 2023 Change February 29, 2024 February 28, 2023 Change Interest expense, net $ 47 $ 55 $ (8) $ 94 $ 103 $ (9) Interest expense, net decreased during the three months and six months ended February 29, 2024, compared to the three months and six months ended February 28, 2023, primarily due to lower borrowings on our credit facilities and commercial paper program. Income Tax Expense Three months ended Six months ended February 29, 2024 February 28, 2023 Change February 29, 2024 February 28, 2023 Change Effective income tax rate 12.7 % 27.6 % (14.9) % 13.6 % 26.6 % (13.0) % The effective income tax rate differed for the three months and six months ended February 29, 2024, compared to the three months and six months ended February 28, 2023, primarily due to: (i) a change in the jurisdictional mix of earnings, driven in part by restructuring charges and (ii) the gain from the divestiture of the mobility business and corresponding $58 million of income tax expense during the three months ended February 29, 2024. 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 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 an annual normalized tax rate (“normalized core tax rate”) for the computation of the non-GAAP (core) income tax provision to provide better consistency across reporting periods. In estimating the normalized core tax rate annually, we utilize a full-year financial projection of core earnings that considers the mix of earnings across tax jurisdictions, existing tax 25 Table of Contents positions, and other significant tax matters. We may adjust the normalized core tax rate during the year for material impacts from new tax legislation or material changes to our operations. 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 29, 2024 February 28, 2023 February 29, 2024 February 28, 2023 Operating income (U.S. GAAP) $ 1,131 $ 359 $ 1,434 $ 721 Amortization of intangibles 9 9 15 17 Stock-based compensation expense and related charges 23 20 69 62 Restructuring, severance and related charges (1) 70 — 197 45 Net periodic benefit cost (2) 3 3 5 7 Gain from the divestiture of businesses (3) (944) — (944) — Acquisition and divestiture related charges (3) 46 — 61 — Adjustments to operating income (793) 32 (597) 131 Core operating income (Non-GAAP) $ 338 $ 391 $ 837 $ 852 Net income attributable to Jabil Inc. (U.S. GAAP) $ 927 $ 207 $ 1,121 $ 430 Adjustments to operating income (793) 32 (597) 131 Net periodic benefit cost (2) (3) (3) (5) (7) Adjustments for taxes (4) 82 20 37 21 Core earnings (Non-GAAP) $ 213 $ 256 $ 556 $ 575 Diluted earnings per share (U.S. GAAP) $ 7.31 $ 1.52 $ 8.66 $ 3.14 Diluted core earnings per share (Non-GAAP) $ 1.68 $ 1.88 $ 4.30 $ 4.19 Diluted weighted average shares outstanding (U.S. GAAP and Non-GAAP) 126.9 136.3 129.5 137.1 (1) Charges recorded during the three months and six months ended February 29, 2024, related to the 2024 Restructuring Plan. Charges recorded during the three months and six months ended February 28, 2023, related to headcount reduction to further optimize our business activities. (2) 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. (3) We completed the divestiture of our mobility business and recorded a pre-tax gain of $944 million, subject to certain post-closing adjustments that are expected to be finalized in the third quarter of fiscal year 2024. We incurred transaction and disposal costs in connection with the sale of approximately $46 million and $61 million during the three months and six months ended February 29, 2024, respectively. (4) Tax adjustments for the three months and six months ended February 29, 2024, were partially driven by an income tax expense associated with the divestiture of the mobility business. Adjusted Free Cash Flow Six months ended (in millions) February 29, 2024 February 28, 2023 Net cash provided by operating activities (U.S. GAAP) $ 666 $ 580 Acquisition of property, plant and equipment (“PP&E”) (1) (554) (637) Proceeds and advances from sale of PP&E (1) 109 169 Adjusted free cash flow (Non-GAAP) $ 221 $ 112 (1) Certain customers co-invest in PP&E with us. As we acquire PP&E, we recognize the cash payments in acquisition of PP&E. When our customers reimburse us and obtain control, we recognized the cash receipts in proceeds and advances from the sale of PP&E. 26 Table of Contents Acquisitions and Divestitures Acquisitions On November 1, 2023, we completed the acquisition of ProcureAbility Inc. (“ProcureAbility”) for approximately $60 million in cash. ProcureAbility is a procurement services provider specializing in technology-enabled advisory, managed services, digital, staffing, and recruiting solutions. The acquisition of ProcureAbility was accounted for as a business combination using the acquisition method of accounting. Assets acquired of $87 million, including $40 million in intangible assets and $38 million in goodwill, and liabilities assumed of $26 million were recorded at their estimated fair values as of the acquisition date. The excess of the purchase price over the fair value of the acquired assets and assumed liabilities was recorded to goodwill and was fully allocated to the DMS segment. The majority of the goodwill is currently not expected to be deductible for income tax purposes. The results of operations were included in our condensed consolidated financial results beginning on November 1, 2023. Pro forma information has not been provided as the acquisition of ProcureAbility is not deemed to be significant. Divestitures We announced on September 26, 2023 that, through our indirect subsidiary, Jabil Circuit (Singapore) Pte. Ltd., a Singapore private limited company (“Singapore Seller”), we agreed to sell to an affiliate of BYD Electronic (International) Co. Ltd., a Hong Kong limited liability company (“Purchaser” or “BYDE”), our product manufacturing business in Chengdu, including our supporting component manufacturing in Wuxi (the “Business”) for cash consideration of approximately $2.2 billion, subject to certain customary purchase price adjustments. As of August 31, 2023, we determined the Business met the criteria to be classified as held for sale. Accordingly, we presented the assets and liabilities of the Business as held for sale in the Consolidated Balance Sheets as of November 30, 2023 and August 31, 2023. Asset and liabilities classified as held for sale had a carrying value less than the estimated fair value less cost to sell and, thus, no adjustment to the carrying value of the disposal group was necessary. Depreciation and amortization expense for long-lived assets was not recorded for the period in which these assets were classified as held for sale. The divestiture did not meet the criteria to be reported as discontinued operations and we continued to report the operating results for the Business in the Condensed Consolidated Statement of Operations in the DMS segment until the Closing Date. On December 29, 2023, the Closing Date, we completed the sale. As a result of the transaction, we derecognized net assets of approximately $1.2 billion, and recorded a pre-tax gain of $944 million, subject to post-closing adjustments, subject to certain post-closing adjustments that are expected to be finalized in the third quarter of fiscal year 2024. In addition, we agreed to indemnify the Purchaser from certain liabilities that may arise post-close that relate to periods prior to the Closing Date. We incurred transaction and disposal costs in connection with the sale of approximately $46 million and $61 million during the three months and six months ended February 29, 2024, respectively, which are included in continuing operations in the Condensed Consolidated Statement of Operations. We perform a goodwill impairment analysis on an annual basis and whenever events or changes in circumstances indicate that the carrying value may not be recoverable. In connection with the preparation of the Company’s financial statements for the quarter ended February 29, 2024, we completed an impairment analysis for goodwill recorded within the reporting unit impacted by the divestiture of the Business. The quantitative assessment was used, and we determined that it is more likely than not that the fair value of the impacted reporting unit is in excess of the carrying value and that no impairment existed subsequent to the closing of the Business. We allocated goodwill to the disposal group based on the relative fair value of the Business as compared to the impacted reporting unit. In the second quarter of fiscal year 2024 and in connection with the divestiture of the Business, we made a strategic decision that the indefinite-lived (“Green Point”) trade name of $51 million acquired during the acquisition of Green Point should no longer be classified as an indefinite-lived intangible asset. Accordingly, prior to reclassifying the trade name to a finite-lived intangible asset, we completed a quantitative assessment for impairment and determined the fair value of the asset exceeded the carrying value. As such, the trade name was assigned a two-year estimated useful life and is being amortized on a straight-line basis as of the Closing Date. Refer to Note 15 – “Business Acquisitions and Divestitures” to the Condensed Consolidated Financial Statements for discussion. 27 Table of Contents Liquidity and Capital Resources We believe that our level of liquidity sources, which includes cash on hand, available borrowings under our revolving credit facilities and commercial paper program, additional proceeds available under our global asset-backed securitization program and under our uncommitted trade accounts receivable sale programs, cash flows provided by operating activities and access to the capital markets, will be adequate to fund our capital expenditures, the payment of any declared quarterly dividends, any share repurchases under the approved programs, any potential acquisitions, our working capital requirements and our contractual obligations 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 29, 2024, we had approximately $2.6 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 29, 2024 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) 3.950% Senior Notes 3.600% Senior Notes 3.000% Senior Notes 1.700% Senior Notes 4.250% Senior Notes 5.450% Senior Notes Borrowings under revolving credit facilities (1)(2) Borrowings under loans Total notes payable and credit facilities Balance as of August 31, 2023 $ 497 $ 496 $ 593 $ 498 $ 495 $ 296 $ — $ — $ 2,875 Borrowings — — — — — — 1,799 — 1,799 Payments — — — — — — (1,799) — (1,799) Other 1 1 — — 1 — — — 3 Balance as of February 29, 2024 $ 498 $ 497 $ 593 $ 498 $ 496 $ 296 $ — $ — $ 2,878 Maturity Date Jan 12, 2028 Jan 15, 2030 Jan 15, 2031 Apr 15, 2026 May 15, 2027 Feb 1, 2029 Jan 22, 2026 and Jan 22, 2028 Jul 31, 2026 Original Facility/ Maximum Capacity $500 million $500 million $600 million $500 million $500 million $300 million $3.9 billion (2) $1 million (1) On February 23, 2024, we entered into an amendment (the “Amendment”) to our senior unsecured credit agreement dated as of January 22, 2020 (as amended, the “Credit Facility”). The Amendment, among other things, (i) instituted certain amendments to the sustainability-linked adjustments to the interest rates applicable to borrowings under the three-year revolving credit facility (the “Three-Year Revolving Credit Facility”) and the five-year revolving credit facility (the “Five-Year Revolving Credit Facility”) and (ii) extended the termination date of the Three-Year Revolving Credit Facility (with respect to the available commitments of the extending lenders) to January 22, 2026, and of the Five-Year Revolving Credit Facility (with respect to the available commitments of the extending lenders) to January 22, 2028, in each case subject to an additional one-year extension at the option of the Company. (2) As of February 29, 2024, we had $3.9 billion in available unused borrowing capacity under our revolving credit facilities. 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. Commercial paper borrowings with an original maturity of 90 days or less are recorded net within the Condensed Consolidated Statements 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 29, 2024 and August 31, 2023, we were in compliance with our debt covenants. Refer to Note 4 – “Notes Payable and Long-Term Debt” to the Condensed Consolidated Financial Statements for further details. 28 Table of Contents 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 global asset-backed securitization program recognized during the three months and six months ended February 29, 2024 and February 28, 2023 were not material. We do not record a servicing asset or liability on the Condensed 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 29, 2024. The global asset-backed securitization program expires on November 25, 2024. Effective February 20, 2024, the terms of the global asset-backed securitization program were amended to increase the maximum amount of net cash proceeds available at any one time from $600 million to $700 million. During the three months and six months ended February 29, 2024, we sold $1.0 billion and $2.0 billion, respectively, of trade accounts receivable and we received cash proceeds of $1.0 billion and $1.9 billion, respectively. As of February 29, 2024, we had up to $15 million in 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 29, 2024 and August 31, 2023, we were in compliance with all covenants under our global asset-backed securitization program. Refer to Note 5 – “Asset-Backed Securitization Program” to the Condensed Consolidated Financial Statements for further details on the program. Trade Accounts Receivable Sale Programs As of February 29, 2024, we may elect to sell receivables and the unaffiliated financial institutions may elect to purchase specific accounts receivable at any one time, at a discount, on an ongoing basis up to a: (i) maximum aggregate amount available of $2.1 billion under nine trade accounts receivable sale programs, (ii) maximum amount available of 100 million CHF under one trade accounts receivable sale program, (iii) maximum amount available of 8.1 billion INR under one trade accounts receivable sale program, and (iv) maximum amount available of 1.4 billion CNY under one trade accounts receivable sale program. The trade accounts receivable sale programs either expire on various dates through 2028 or do not have expiration dates and may be terminated upon election of the Company or the unaffiliated financial institutions. In April 2024, we terminated our $700 million trade accounts receivable sale program which was set to expire on December 5, 2025 and entered into a new trade accounts receivable sale program with a maximum amount available of $200 million. During the three months and six months ended February 29, 2024, we sold $1.8 billion and $3.9 billion, respectively, of trade accounts receivable under these programs and we received cash proceeds of $1.8 billion and $3.8 billion, respectively. As of February 29, 2024, we had up to $1.0 billion in available liquidity under our trade accounts receivable sale programs. Cash Flows The following table sets forth selected consolidated cash flow information (in millions): Six months ended February 29, 2024 February 28, 2023 Net cash provided by operating activities $ 666 $ 580 Net cash provided by (used in) investing activities 1,558 (484) Net cash used in financing activities (1,455) (371) Effect of exchange rate changes on cash and cash equivalents (7) (3) Net increase (decrease) in cash and cash equivalents $ 762 $ (278) 29 Table of Contents Operating Activities Net cash provided by operating activities during the six months ended February 29, 2024, was primarily due to a decrease in accounts receivable and inventories and non-cash expenses and net income. Net cash provided by operating activities was partially offset by a decrease in accounts payable, accrued expense and other liabilities and an increase in prepaid expenses and other current assets, and in contract assets. The decrease in accounts receivable is primarily driven by the timing of collections. The decrease in inventories is primarily due to higher consumption of inventory to support sales and improved working capital management. The decrease in accounts payable, accrued expenses and other liabilities is primarily due to the timing of purchases and cash payments. The increase in prepaid expenses and other current assets is primarily due to the timing of payments. The increase in contract assets is primarily due to timing of revenue recognition for the over time customers. Investing Activities Net cash provided by investing activities during the six months ended February 29, 2024 consisted primarily of proceeds from the divestiture of our mobility business and proceeds and advances from the sale of property, plant and equipment, partially offset by capital expenditures, principally to support ongoing business in the DMS and EMS segments and the acquisition of ProcureAbility and certain assets of Motorola Solutions Video Manufacturing. Financing Activities Net cash used in financing activities during the six months ended February 29, 2024 was primarily due to (i) payments for debt agreements, (ii) the repurchase of our common stock under our share repurchase authorization, (iii) treasury stock minimum tax withholding related to vesting of restricted stock, and (iv) dividend payments. Net cash used in financing activities was partially offset by (i) borrowings under debt agreements and (ii) net proceeds from the exercise of stock options and issuance of common stock under the employee stock purchase plan. Capital Expenditures For Fiscal Year 2024, we anticipate our net capital expenditures to be in the range of 2.2 percent to 2.5 percent of net revenue. Upon closing of the Company’s sale of its mobility business, we anticipate our longer-term net capital expenditures to be in the range of 2.0 to 2.3 percent of net revenue. In general, our capital 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. 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, 2023, 16.5 million shares had been repurchased for $1.0 billion and no authorization remained under the 2022 Share Repurchase Program. In September 2022, the Board of Directors approved an authorization for the repurchase of up to $1.0 billion of our common stock (the “2023 Share Repurchase Program”). As of August 31, 2023, 2.7 million shares had been repurchased for $224 million, excluding excise tax. In September 2023, the Board of Directors amended and increased the 2023 Share Repurchase Program to allow for the repurchase of up to $2.5 billion of our common stock. As part of the amended 2023 Share Repurchase Program, we entered into an accelerated share repurchase (“ASR”) agreement with a bank in September 2023 to repurchase $500 million of our common stock. During the first quarter of 2024, the ASR transaction was completed, and 3.9 million shares were delivered under the ASR agreement at an average price of $128.61. The final number of shares delivered upon settlement of the ASR agreement was determined based on a discount to the volume weighted average price of our common stock during the term of the agreement. As of February 29, 2024, 10.4 million shares had been repurchased for $1.3 billion, excluding excise tax, and $1.2 billion remains available under the amended 2023 Share Repurchase Program. Contractual Obligations As of the date of this report, there were no material changes outside the ordinary course of business, since August 31, 2023, to our contractual obligations and commitments and the related cash requirements. 30 Table of Contents 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, 2023.