Earnings Release
Jabil Posts Third Quarter Results
Today, Jabil Inc. (JBL), reported preliminary, unaudited financial
results for its third quarter of fiscal year 2017, including third
quarter net revenue of $4.5 billion.
For the third quarter of fiscal year 2017, U.S. GAAP (as defined below)
operating income was $43.4 million and U.S. GAAP diluted loss per share
was $(0.14). Core operating income ((Non-U.S. GAAP) as defined below)
was $113.8 million and core diluted earnings per share ((Non-U.S. GAAP)
as defined below) was $0.31.
"I’m pleased with our third quarter results as both business segments
performed quite well," said CEO Mark Mondello. "In Diversified
Manufacturing Services, the team delivered exceptional execution and
cost controls against product road maps exhibiting massive scale and
complexity, while we continued to see strong double-digit growth in
healthcare and packaging. At the same time, our Electronics
Manufacturing Services team continues to do an excellent job building
broad revenue diversification, while developing end-market domain
expertise, resulting in solid margin expansion," he added.
Fiscal Year 2017 Fourth Quarter Guidance:
? Net revenue
$4.7 billion to $5.1 billion
? U.S. GAAP operating income
$95 million to $165 million
? U.S. GAAP diluted earnings per share
$0.13 to $0.48 per diluted share
? Core operating income (Non-U.S. GAAP)
$165 million to $215 million
? Core diluted earnings per share (Non-U.S. GAAP)
$0.50 to $0.74 per diluted share
? Diversified Manufacturing Services
Increase revenue 26 percent year-on-year
? Electronics Manufacturing Services
Increase revenue 2 percent year-on-year
? Total company
Increase revenue 11 percent year-on-year
"Near-term, we expect to deliver the best fourth quarter in the
company’s history in terms of core operating income. Beyond that, our
forecast suggests the growth in both DMS and EMS in fiscal 2018 will
result in core EPS in the neighborhood of $2.60. We remain committed to
complete our two-year capital return framework plan, achieve $3.00 per
share in core EPS in fiscal 2019, and ultimately become the world’s most
technologically advanced manufacturing solutions company," said Mondello.
(U.S. GAAP diluted earnings per share for the fourth quarter of fiscal
year 2017 are currently estimated to include $0.05 per share for
amortization of intangibles, $0.08 per share for stock-based
compensation expense and related charges and $0.24 to $0.13 per share
for restructuring and related charges.)
(Definitions: "U.S. GAAP" means U.S. generally accepted
accounting principles. Jabil defines core operating income as U.S. GAAP
operating income before amortization of intangibles, stock-based
compensation expense and related charges, restructuring and related
charges, distressed customer charges, acquisition costs and certain
purchase accounting adjustments, loss on disposal of subsidiaries,
settlement of receivables and related charges, impairment of notes
receivable and related charges and goodwill impairment charges. Jabil
defines core earnings as U.S. GAAP net income before amortization of
intangibles, stock-based compensation expense and related charges,
restructuring and related charges, distressed customer charges,
acquisition costs and certain purchase accounting adjustments, loss on
disposal of subsidiaries, settlement of receivables and related charges,
impairment of notes receivable and related charges, goodwill impairment
charges, impairment on securities, income (loss) from discontinued
operations, gain (loss) on sale of discontinued operations and certain
other expenses, net of tax and certain deferred tax valuation allowance
charges. Jabil defines core diluted earnings per share as core earnings
divided by the weighted average number of outstanding diluted shares as
determined under U.S. GAAP. Jabil calculates its quarterly core return
on invested capital by annualizing its after-tax core operating income
for its most recently ended quarter and dividing that by a two quarter
average of its net invested capital base. Jabil calculates its annual
core return on invested capital by taking its after-tax core operating
income for its most recently ended fiscal year and dividing that by a
two year average of its net invested capital base. Jabil reports core
operating income, core earnings, core diluted and basic earnings per
share and core return on invested capital to provide investors an
additional method for assessing operating income, earnings, diluted
earnings per share and return on invested capital from what it believes
are its core manufacturing operations. See the accompanying
reconciliation of Jabil’s core operating income to its U.S. GAAP
operating income, its calculation of core earnings and core diluted
earnings per share to its U.S. GAAP net income and U.S. GAAP earnings
per share, its calculation of core return on invested capital and
additional information in the supplemental information.)
Forward Looking Statements: This news release contains
forward-looking statements, including those regarding our anticipated
financial results for our third quarter of fiscal year 2017; our
guidance for future financial performance in our fourth quarter of
fiscal year 2017 (including, net revenue, total company and segment
revenue, U.S. GAAP operating income, U.S. GAAP diluted earnings (loss)
per share, core operating income (Non-U.S. GAAP), and core diluted
earnings per share (Non-U.S. GAAP) results and the components thereof,
in each case for our fourth quarter of fiscal year 2017); statements
that relate to the Company’s capital allocation framework, including our
share repurchase program thereunder, the amount of shares to be
repurchased and the timing of such repurchase; and statements regarding
our future earnings per share expectations. The statements in this press
release are based on current expectations, forecasts and assumptions
involving risks and uncertainties that could cause actual outcomes and
results to differ materially from our current expectations. Such factors
include, but are not limited to: our determination as we finalize our
financial results for our third quarter of fiscal year 2017 that our
financial results and conditions differ from our current preliminary
unaudited numbers set forth herein; unexpected, adverse seasonal impacts
on demand; performance in the markets in which we operate; changes in
macroeconomic conditions; the occurrence of, success and expected
financial results from, product ramps; our ability to maintain and
improve costs, quality and delivery for our customers; whether our
restructuring activities and the realignment of our capacity will
adversely affect our cost structure, ability to service customers and
labor relations; changes in technology; competition; anticipated growth
for us and our industry that may not occur; managing rapid growth;
managing rapid declines in customer demand and other related customer
challenges that may occur; our ability to successfully consummate
acquisitions and divestitures; managing the integration of businesses we
acquire; risks associated with international sales and operations;
retaining key personnel; and our dependence on a limited number of large
customers. Additional factors that could cause such differences can be
found in our Annual Report on Form 10-K for the fiscal year ended
August 31, 2016 and our other filings with the Securities and Exchange
Commission. We assume no obligation to update these forward-looking
statements.
Supplemental Information Regarding Non-GAAP Financial Measures: Jabil
provides supplemental, non-U.S. GAAP financial measures in this release
to facilitate evaluation of Jabil’s core operating performance.
These non-U.S. GAAP measures exclude certain amounts that are included
in the most directly comparable U.S. GAAP measures, do not have standard
meanings and may vary from the non-U.S. GAAP financial measures used by
other companies. Management believes these "core" financial measures are
useful measures that facilitate evaluation of the past and future
performance of Jabil’s ongoing operations on a comparable basis.
Jabil reports core operating income, core return on invested capital,
core earnings and core diluted and basic earnings per share to provide
investors an additional method for assessing operating income, return on
invested capital, earnings and earnings per share from what it believes
are its core manufacturing operations. Among other uses, management
uses non-U.S. GAAP financial measures to make operating decisions,
assess business performance and as a factor in determining certain
employee performance when determining incentive compensation. The
Company determines the tax effect of the items excluded from core
earnings and core basic and 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 the Company does not expect to realize a tax
benefit (due to a history of operating losses or other factors resulting
in a valuation allowance related to deferred tax assets), a 0% tax rate
is applied. Detailed definitions of certain of the core financial
measures are included above under "Definitions" and a reconciliation of
the disclosed core financial measures to the most directly comparable
U.S. GAAP financial measures is included under the heading "Supplemental
Data" at the end of this release.
Company Conference Call Information: Jabil will hold a conference
call to discuss its third quarter results and fiscal 2017 outlook today
at 4:30 p.m. ET live on the Internet at http://www.jabil.com.
The call will be recorded and archived on the web at http://www.jabil.com.
A taped replay of the conference call will also be available June 14,
2017 at approximately 7:30 p.m. ET through midnight on June 21, 2017. To
access the replay, call (855) 859-2056 from within the United States, or
(404) 537-3406 outside the United States. The pass code is: 24813639. An
archived webcast of the conference call will be available at http://www.jabil.com/investors/.
About Jabil: Jabil (JBL) is a product solutions company
providing comprehensive electronics design, production and product
management services. Offering complete product supply chain management
from facilities in 28 countries, Jabil provides comprehensive,
individualized-focused solutions to customers in a broad range of
industries. Further information is available on Jabil’s website:
jabil.com.
JABIL INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
Cash and cash equivalents
$
743,931
$
912,059
Accounts receivable, net
1,445,148
1,359,610
Inventories
2,706,530
2,456,612
Prepaid expenses and other current assets
997,752
1,120,100
Total current assets
5,893,361
5,848,381
Property, plant and equipment, net
3,210,107
3,331,879
Goodwill and intangible assets, net
896,534
891,727
Deferred income taxes
189,881
148,859
Other assets
139,766
101,831
Total assets
$
10,329,649
$
10,322,677
Current installments of notes payable, long-term debt and capital
$
538,985
$
45,810
Accounts payable
3,641,247
3,593,195
Accrued expenses
1,937,003
1,929,051
Total current liabilities
6,117,235
5,568,056
Notes payable, long-term debt and capital lease obligations, less
1,644,590
2,074,012
Other liabilities
80,943
78,018
Income tax liabilities
92,197
90,804
Deferred income taxes
51,841
54,290
Total liabilities
7,986,806
7,865,180
Commitments and contingencies
Jabil Inc. stockholders’ equity:
Additional paid-in capital
2,078,833
2,034,525
Retained earnings
1,698,704
1,660,820
Accumulated other comprehensive income (loss)
15,927
(39,877)
Treasury stock, at cost
(1,466,240)
(1,217,547)
Total Jabil Inc. stockholders’ equity
2,327,477
2,438,171
Noncontrolling interests
15,366
19,326
Total equity
2,342,843
2,457,497
Total liabilities and equity
$
10,329,649
$
10,322,677
JABIL INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except for per share data)
Three months ended
Nine months ended
May 31,
May 31,
May 31,
May 31,
Net revenue
$ 4,489,557
$ 4,310,752
$ 14,040,092
$
13,922,323
Cost of revenue
4,163,142
3,989,665
12,920,267
12,718,268
Gross profit
326,415
321,087
1,119,825
1,204,055
Selling, general and administrative
233,884
239,646
665,879
716,097
Research and development
7,274
7,675
21,982
24,431
Amortization of intangibles
9,174
9,711
26,262
26,150
Restructuring and related charges
32,700
4,460
113,529
8,349
Operating income
43,383
59,595
292,173
429,028
Interest and other, net
47,601
35,322
117,552
102,202
(Loss) income before income tax
(4,218 )
24,273
174,621
326,826
Income tax expense
21,481
18,434
93,495
110,639
Net (loss) income
(25,699 )
5,839
81,126
216,187
Net (loss) income attributable to noncontrolling interests, net of
(418 )
626
(2,285 )
159
Net (loss) income attributable to Jabil Inc.
$
(25,281 )
$
5,213
$
83,411
$
216,028
(Loss) earnings per share attributable to the stockholders of Jabil
Basic
$
(0.14 )
$
0.03
$
0.46
$
1.13
Diluted
$
(0.14 )
$
0.03
$
0.45
$
1.12
Weighted average shares outstanding:
Basic
181,038
191,206
182,982
190,841
Diluted
181,038
193,069
186,621
193,058
JABIL INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Cash flows from operating activities:
Net income
$
81,126
$
216,187
Adjustments to reconcile net income to net cash provided by
Depreciation and amortization
570,557
512,972
Restructuring and related charges
58,613
--
Recognition of stock-based compensation expense and related charges
33,377
58,505
Deferred income taxes
(44,916)
(24,403)
Loss on sale of property, plant and equipment
1,362
13,229
Change in operating assets and liabilities, exclusive of net assets
Accounts receivable
(85,761)
180,830
Inventories
(216,149)
229,187
Prepaid expenses and other current assets
100,397
(131,682)
Other assets
(28,852)
(7,466)
Accounts payable, accrued expenses and other liabilities
38,341
(565,558)
Net cash provided by operating activities
533,023
488,209
Cash flows from investing activities:
Acquisition of property, plant and equipment
(482,739)
(668,505)
Proceeds from sale of property, plant and equipment
43,437
18,710
Cash paid for business and intangible asset acquisitions, net of cash
(36,620)
(206,039)
Issuance of notes receivable
--
(29,300)
Net cash used in investing activities
(477,282)
(890,384)
Cash flows from financing activities:
Borrowings under debt agreements
5,432,503
4,748,060
Payments toward debt agreements
(5,370,936)
(4,268,839)
Payments to acquire treasury stock
(237,135)
(54,567)
Dividends paid to stockholders
(45,550)
(47,122)
Net proceeds from exercise of stock options and issuance of common
under employee stock purchase plan
11,246
10,660
Treasury stock minimum tax withholding related to vesting of
(11,558)
(10,490)
Net cash (used in) provided by financing activities
(222,926)
375,744
Effect of exchange rate changes on cash and cash equivalents
(943)
(541)
Net decrease in cash and cash equivalents
(168,128)
(26,972)
Cash and cash equivalents at beginning of period
912,059
913,963
Cash and cash equivalents at end of period
$
743,931
$
886,991
JABIL INC. AND SUBSIDIARIES
RECONCILIATION OF U.S. GAAP FINANCIAL RESULTS TO NON-U.S. GAAP
(in thousands, except for per share data)
Three months ended
Nine months ended
May 31,
May 31,
May 31,
May 31,
Operating income (U.S. GAAP)
$
43,383
$
59,595
$ 292,173
$
429,028
Amortization of intangibles
9,174
9,711
26,262
26,150
Stock-based compensation expense and related charges
18,350
13,445
33,377
58,505
Restructuring and related charges
32,700
4,460
113,529
8,349
Distressed customer charges
10,198
--
10,198
--
Core operating income (Non-U.S. GAAP)
$
113,805
$
87,211
$ 475,539
$
522,032
Net (loss) income attributable to Jabil Inc. (U.S. GAAP)
$ (25,281)
$
5,213
$
83,411
$
216,028
Amortization of intangibles
9,174
9,711
26,262
26,150
Stock-based compensation expense and related charges
18,350
13,445
33,377
58,505
Restructuring and related charges
32,700
4,460
113,529
8,349
Distressed customer charges
10,198
--
10,198
--
Impairment on securities
11,539
--
11,539
--
Adjustments for taxes
431
(866)
(2,793)
(2,842)
Core earnings (Non-U.S. GAAP)
$
57,111
$
31,963
$ 275,523
$
306,190
(Loss) earnings per share (U.S. GAAP):
Basic
$
(0.14)
$
0.03
$
0.46
$
1.13
Diluted
$
(0.14)
$
0.03
$
0.45
$
1.12
Core earnings per share (Non-U.S. GAAP):
Basic
$
0.32
$
0.17
$
1.51
$
1.60
Diluted
$
0.31
$
0.17
$
1.48
$
1.59
Weighted average shares outstanding used in the calculations
of earnings per share (U.S. GAAP):
Basic
181,038
191,206
182,982
190,841
Diluted
181,038
193,069
186,621
193,058
Weighted average shares outstanding used in the calculations
of earnings per share (Non-U.S. GAAP):
Basic
181,038
191,206
182,982
190,841
Diluted
184,940
193,069
186,621
193,058
JABIL INC. AND SUBSIDIARIES
RECONCILIATION OF U.S. GAAP FINANCIAL RESULTS TO NON-U.S. GAAP
CALCULATION OF RETURN ON INVESTED CAPITAL
AND CORE RETURN ON INVESTED CAPITAL
The Company calculates: (1) its "Return on Invested Capital" by
annualizing its "after-tax U.S. GAAP operating income" for its most
recently-ended quarter and dividing that by the average of its "net
invested capital asset base" and (2) its "Core Return on Invested
Capital" by annualizing its "after-tax non-U.S. GAAP core operating
income" for its most recently-ended quarter and dividing that by the
"average net invested capital asset base."
The Company calculates: (1) its "after-tax U.S. GAAP operating
income" by subtracting a certain tax effect (the calculation of
which is explained below) from its U.S. GAAP operating income and
(2) its "after-tax non-U.S. GAAP core operating income" as its
non-U.S. GAAP core operating income less a certain tax effect (the
calculation of which is explained below). See elsewhere in this
earnings release for a reconciliation of the Company’s non-U.S. GAAP
core operating income to its U.S. GAAP operating income.
The Company calculates its "average net invested capital asset base"
as the sum of the averages (the calculations of which are explained
below) of its stockholders’ equity, current and non-current portions
of its notes payable, long-term debt and capital lease obligations
less the average (the calculation of which is explained below) of
its cash and cash equivalents.
The following table reconciles (1) "Return on Invested Capital," as
calculated using "after-tax U.S. GAAP operating income" to (2) "Core
Return on Invested Capital," as calculated using "after-tax non-U.S.
GAAP core operating income":
Operating income (U.S. GAAP)
$
43,383
$
59,595
Tax effect(1)
(21,481 )
(18,516 )
After-tax operating income
21,902
41,079
Annualized after-tax operating income
$
87,608
$
164,316
Core operating income (Non-U.S. GAAP)
$
113,805
$
87,211
Tax effect(2)
(21,218 )
(19,340 )
After-tax core operating income
92,587
67,871
Annualized after-tax core operating income
$
370,348
$
271,484
Average total Jabil Inc. stockholders’ equity(3)
$ 2,369,391
$
2,479,722
Average notes payable, long-term debt and capital lease obligations,
current installments(3)
1,850,068
1,801,124
Average current installments of notes payable, long-term debt and
lease obligations(3)
293,154
449,089
Average cash and cash equivalents(3)
(749,514 )
(885,104 )
Net invested capital asset base
$ 3,763,099
$
3,844,831
Return on Invested Capital (U.S. GAAP)
2.3 %
4.3 %
Adjustments noted above
7.5 %
2.8 %
Core Return on Invested Capital (Non-U.S. GAAP)
9.8 %
7.1 %
__________
(1) This amount is calculated by adding the amount of income taxes
attributable to its operating income (U.S. GAAP) and its interest
expense.
(2) This amount is calculated by adding the amount of income taxes
attributable to its core operating income (Non-U.S. GAAP) and its
interest expense.
(3) The average is based on the addition of the account balance at the
end of the most recently-ended quarter to the account balance at the end
of the prior quarter and dividing by two.
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SOURCE: Jabil Circuit, Inc.
Beth Walters, 727-803-3511
Senior Vice President, Investor Relations & Communications
Senior Director, Investor Relations
