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Several developments from Jabil (JBL +10%) today culminated in a significant push higher. The electronic circuit board maker exceeded top and bottom-line estimates for the second consecutive quarter in Q4 (Aug), issued relatively uplifting FY25 guidance, and authorized up to $1.0 bln, or roughly 7% of its outstanding shares, for buybacks. JBL also approved a restructuring plan, including reducing its headcount. Lastly, JBL announced it would transition its reporting segments in FY25 from DMS and EMS to three new segments: Regulated Industries, Intelligent Infrastructure, and Connected Living & Digital Commerce. The move follows the divestiture of its mobility business for $2.2 bln earlier this year.

• Quarterly numbers were decent. JBL's EPS of $2.30 marked a 6.1% drop yr/yr, dragged down primarily by a 17.7% tumble in revs to $6.96 bln. JBL has posted double-digit percentage declines on its top line for four straight quarters, illuminating the persistent softness across various end markets, including automotive, 5G, renewable energy, and digital print. Still, investors are not fixating on this weak point, especially since sales were still better than the $6.30-6.90 bln JBL predicted.
  • By segment, DMS was down around 22% yr/yr, underpinning the mobility divestiture and some weakness in its automotive business. In EMS, revs did tick 13% lower yr/yr. However, management observed growth in its cloud, semi-cap, and warehouse automation markets, pushing core margins 90 bps higher yr/yr to 6.1%.
• Guidance was sound. JBL's FY25 earnings outlook of $8.65 was a hair higher than consensus, while its revenue forecast of $27.0 bln met analyst targets. While JBL touched on numerous end markets and how demand may shape up in the year ahead, a couple items stuck out.
  • In its new Intelligent Infrastructure segment, which will include many end markets in EMS, JBL is eyeing around +7-10% growth over the long haul, a solid financial goal given the declines in the last several periods.
  • JBL predicted a roughly +2% growth rate in health care in FY25, performing below the overall health care market growth rate of around 3-4%. GLP-1 drugs were the culprit. Management mentioned that these have hurt its medical device segment. This commentary is interesting as it could be a troubling sign ahead for companies with relatively high exposure to this industry, such as Intuitive Surgical (ISRG) and Stryker (SYK).
• JBL's restructuring plan follows a relatively significant divestiture of mobility, which has already helped to balance its geographical footprint. Around a third of revenue stems from each of the three regions: Americas, Europe, and Asia. Management emphasized that no capacity restructuring will occur, reflecting confidence in depressed end markets eventually bouncing back.

JBL's Q4 report and the announcements that followed were mostly good news. A headcount reduction does underscore some challenges ahead. However, becoming a leaner organization should help fortify JBL's already sturdy foundation, supporting its capacity to capture an eventual recovery across the many end markets still stuck in decline.