ST. PETERSBURG, FL – Jabil’s board of directors has approved a restructuring plan to eliminate stranded costs after the divestiture of its Chinese electronic components manufacturing business in a $2.2 billion sale to BYD Electronic.

The plan is estimated to recognize $300 million in pre-tax restructuring and related costs throughout 2024, according to a statement filed with the US Securities and Exchange Commission. The restructuring will also result in job cuts and the realignment of functions and capacity related to the divested business when the deal closes, which is expected during the second quarter of next year, CFO Mike Dastoor said during an earnings call earlier this month.

Jabil’s Chinese mobility business manufactured and assembled various electronic components, including those used in Apple products. Following the sale, no single customer will represent 10% or more of revenue, according to Dastoor.

In total, stranded costs, or operating expenses retained by Jabil following the divestiture, are expected to result in cash expenditures of around $200 million over 2024 and 2025, while full-year revenue is expected to fall between $33 billion and $34 billion following the sale, or just below 2023 revenue of $34.7 billion, according to the earnings report.

"Full-year 24 is a pivotal year in our journey," Dastoor said. "Jabil is well-positioned to navigate the current economic climate. We are not only well-diversified but also markedly more resilient than we were several years ago due to our internal efforts to invest and align our resources with areas in key end markets that are undergoing multiyear secular growth."

Jabil plans to accelerate share buybacks using proceeds from the deal with BYD, according to Dastoor, who said the board of directors approved an expansion of the current share repurchase program to $2.5 billion. Jabil is also launching a $500 million accelerated repurchase transaction this month to make up for lost buybacks due to restrictions around the sale during the last quarter, he said.

In total, Jabil has reduced outstanding shares through buybacks by 35% since 2013, Dastoor said.

After the divestiture, Jabil will focus most of its strategic growth capital expenditures on its electric vehicles business, health care and renewable energy end markets.

"In terms of management bandwidth, [the deal will] free up some of our time to go double down in these strong secular growth areas," CEO Kenny Wilson said.

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