Jabil Posts Record First Quarter Results
Business Wire 18-Dec-2018 4:05 PM
Diversification Strategy Delivers Strong Performance
Today, Jabil Inc. (NYSE:JBL), reported preliminary, unaudited financial
results for its first quarter of fiscal year 2019.
"I'm extremely pleased with our outstanding first quarter results. The
team continued to ramp challenging new programs in targeted markets and
achieved double-digit growth through excellent operational execution,"
said CEO Mark Mondello. "These strong results reflect record revenue,
operating income and core EPS. The exceptional performance is proof that
our diversification strategy is working and delivering predictable
returns," he added.
First Quarter of Fiscal Year 2019 Highlights:
-
Net revenue: $6.5 billion
-
Diversified Manufacturing Services (DMS) year-on-year revenue growth:
10 percent
-
Electronics Manufacturing Services (EMS) year-on-year revenue growth:
22 percent
-
U.S. GAAP operating income: $216.7 million
-
U.S. GAAP diluted earnings per share: $0.76
-
Core operating income (Non-GAAP): $253.7 million
-
Core diluted earnings per share (Non-GAAP): $0.90
"We expect this positive momentum to continue into our second quarter
driven by strength in end-markets like automotive, cloud, healthcare and
5G wireless. I'm also pleased that the outlook for fiscal 2019 remains
consistent as we deliver value for shareholders through strong earnings
growth and year-over-year increasing cash flows," added Mondello.
Second Quarter of Fiscal Year 2019 Guidance:
|
• Net revenue
|
|
$5.8 billion to $6.4 billion
|
|
• U.S. GAAP operating income
|
|
$116 million to $168 million
|
|
• U.S. GAAP diluted earnings per share
|
|
$0.20 to $0.48 per diluted share
|
|
• Core operating income (Non-GAAP) (1)
|
|
$165 million to $205 million
|
|
• Core diluted earnings per share (Non-GAAP) (1)
|
|
$0.51 to $0.71 per diluted share
|
|
• Diversified Manufacturing Services revenue
|
|
Increase 6 percent year-on-year
|
|
• Electronics Manufacturing Services revenue
|
|
Increase 23 percent year-on-year
|
|
• Total company revenue
|
|
Increase 15 percent year-on-year
|
---------------------------------
(1) Core operating income and core diluted earnings per share
exclude anticipated adjustments of $8.0 million for amortization of
intangibles (or $0.05 per diluted share), $16.0 million for stock-based
compensation expense and related charges (or $0.10 per diluted share),
$9.0 million to $3.0 million for restructuring and related charges (or
$0.06 to $0.02 per diluted share) and $16.0 million to $10.0 million for
acquisition and integration charges (or $0.10 to $0.06 per diluted
share).
(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 and integration
charges, loss on disposal of subsidiaries, settlement of receivables and
related charges, impairment of notes receivable and related charges,
goodwill impairment charges and business interruption and impairment
charges, net. 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 and integration charges, loss on disposal of
subsidiaries, settlement of receivables and related charges, impairment
of notes receivable and related charges, goodwill impairment charges,
business interruption and impairment charges, net, 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 core return on invested capital ("ROIC") by
annualizing its after-tax core operating income for its most recently
ended quarter and dividing that by a two quarter average net invested
capital base. The Company calculates its after-tax core operating income
as its core operating income less a certain tax effect (the amount is
determined by adding the amount of income taxes attributable to its core
operating income and its interest expense). The Company calculates its
average net invested capital base as the sum of the averages of its
stockholders' equity, current and non-current portions of its notes
payable and long-term debt less the average of its cash and cash
equivalents. The calculation of the averages discussed in the previous
sentence 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. Jabil defines adjusted free cash flow
as net cash provided by (used in) operating activities plus cash
receipts on sold receivables less net capital expenditures (acquisition
of property, plant and equipment less proceeds and advances from sale of
property, plant and equipment). Jabil reports core operating income,
core earnings, core diluted earnings per share, core ROIC and adjusted
free cash flow to provide investors an additional method for assessing
operating income, earnings, diluted earnings per share and free cash
flow 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 and additional information in the supplemental
information.)
Forward Looking Statements: This release contains forward-looking
statements, including those regarding our anticipated financial results
for our first quarter of fiscal year 2019 and our guidance for future
financial performance in our second quarter of fiscal year 2019
(including, net revenue, total company and segment revenue, U.S. GAAP
operating income, U.S. GAAP diluted earnings per share, core operating
income (Non-GAAP), core diluted earnings per share (Non-GAAP) results
and the components thereof, including but not limited to amortization of
intangibles, stock-based compensation expense and related charges,
restructuring and related charges and acquisition and integration
charges). The statements in this 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 first quarter of fiscal year 2019 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; reliance on
a limited number of suppliers for critical components; 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; our
dependence on a limited number of large customers; and adverse changes
in political conditions, in the U.S. and internationally, including,
among others, adverse changes in tax laws and rates and our ability to
estimate and manage their impact. 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, 2018 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-GAAP financial measures in this release to
facilitate evaluation of Jabil's core operating performance. These
non-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-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 earnings, core diluted
earnings per share, core ROIC and adjusted free cash flows to provide
investors an additional method for assessing operating income, earnings,
earnings per share and free cash flow from what it believes are its core
manufacturing operations. Among other uses, management uses non-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 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 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. 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.
Meeting and Replay Information: Jabil will hold a conference call
to discuss its first quarter results today at 4:30 p.m. ET. To access
the live audio webcast and view the accompanying slide presentation,
visit the Investor Relations section of Jabil's website, located at https://investors.jabil.com.
An archived replay of the webcast will also be available after the call.
About Jabil: Jabil (NYSE:JBL) is a product solutions company
providing comprehensive design, manufacturing, supply chain and product
management services. Operating from over 100 facilities in 29 countries,
Jabil delivers innovative, integrated and tailored solutions to
customers across a broad range of industries. For more information,
visit jabil.com.
|
JABIL INC. AND SUBSIDIARIES
|
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
(in thousands)
|
|
|
|
|
|
|
|
|
|
November 30, 2018
|
|
|
|
|
|
(unaudited)
|
|
August 31, 2018
|
|
ASSETS
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
804,409
|
|
|
$
|
1,257,949
|
|
|
Accounts receivable, net
|
|
2,777,601
|
|
|
1,693,268
|
|
|
Inventories, net
|
|
3,214,513
|
|
|
3,457,706
|
|
|
Contract assets
|
|
761,405
|
|
|
—
|
|
|
Prepaid expenses and other current assets
|
|
662,811
|
|
|
1,141,000
|
|
|
Total current assets
|
|
8,220,739
|
|
|
7,549,923
|
|
|
Property, plant and equipment, net
|
|
3,271,559
|
|
|
3,198,016
|
|
|
Goodwill and intangible assets, net
|
|
896,115
|
|
|
906,876
|
|
|
Deferred income taxes
|
|
216,209
|
|
|
218,252
|
|
|
Other assets
|
|
173,715
|
|
|
172,574
|
|
|
Total assets
|
|
$
|
12,778,337
|
|
|
$
|
12,045,641
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
Current installments of notes payable and long-term debt
|
|
$
|
25,193
|
|
|
$
|
25,197
|
|
|
Accounts payable
|
|
5,458,398
|
|
|
4,942,932
|
|
|
Accrued expenses
|
|
2,551,720
|
|
|
2,262,744
|
|
|
Total current liabilities
|
|
8,035,311
|
|
|
7,230,873
|
|
|
Notes payable and long-term debt, less current installments
|
|
2,487,912
|
|
|
2,493,502
|
|
|
Other liabilities
|
|
96,317
|
|
|
94,617
|
|
|
Income tax liabilities
|
|
136,480
|
|
|
148,884
|
|
|
Deferred income taxes
|
|
116,804
|
|
|
114,385
|
|
|
Total liabilities
|
|
10,872,824
|
|
|
10,082,261
|
|
|
Commitments and contingencies
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
Jabil Inc. stockholders' equity:
|
|
|
|
|
|
Preferred stock
|
|
—
|
|
|
—
|
|
|
Common stock
|
|
259
|
|
|
257
|
|
|
Additional paid-in capital
|
|
2,235,827
|
|
|
2,218,673
|
|
|
Retained earnings
|
|
1,911,451
|
|
|
1,760,097
|
|
|
Accumulated other comprehensive loss
|
|
(31,948
|
)
|
|
(19,399
|
)
|
|
Treasury stock, at cost
|
|
(2,223,673
|
)
|
|
(2,009,371
|
)
|
|
Total Jabil Inc. stockholders' equity
|
|
1,891,916
|
|
|
1,950,257
|
|
|
Noncontrolling interests
|
|
13,597
|
|
|
13,123
|
|
|
Total equity
|
|
1,905,513
|
|
|
1,963,380
|
|
|
Total liabilities and equity
|
|
$
|
12,778,337
|
|
|
$
|
12,045,641
|
|
|
JABIL INC. AND SUBSIDIARIES
|
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
(in thousands, except for per share data)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
Three months ended
|
|
|
|
November 30, 2018
|
|
November 30, 2017
|
|
Net revenue
|
|
$
|
6,506,275
|
|
|
$
|
5,585,532
|
|
Cost of revenue
|
|
5,986,625
|
|
|
5,116,247
|
|
Gross profit
|
|
519,650
|
|
|
469,285
|
|
Operating expenses:
|
|
|
|
|
|
Selling, general and administrative
|
|
278,126
|
|
|
293,055
|
|
Research and development
|
|
11,143
|
|
|
9,109
|
|
Amortization of intangibles
|
|
7,646
|
|
|
9,979
|
|
Restructuring and related charges
|
|
6,025
|
|
|
11,388
|
|
Operating income
|
|
216,710
|
|
|
145,754
|
|
Interest and other, net
|
|
51,823
|
|
|
38,315
|
|
Income before income tax
|
|
164,887
|
|
|
107,439
|
|
Income tax expense
|
|
40,813
|
|
|
43,520
|
|
Net income
|
|
124,074
|
|
|
63,919
|
|
Net income attributable to noncontrolling interests, net of tax
|
|
474
|
|
|
124
|
|
Net income attributable to Jabil Inc.
|
|
$
|
123,600
|
|
|
$
|
63,795
|
|
Earnings per share attributable to the stockholders of Jabil Inc.:
|
|
|
|
|
|
Basic
|
|
$
|
0.77
|
|
|
$
|
0.36
|
|
Diluted
|
|
$
|
0.76
|
|
|
$
|
0.35
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
Basic
|
|
161,557
|
|
|
176,936
|
|
Diluted
|
|
163,670
|
|
|
180,203
|
|
JABIL INC. AND SUBSIDIARIES
|
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
(in thousands)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
Three months ended
|
|
|
|
November 30, 2018
|
|
November 30, 2017
|
|
Cash flows provided by (used in) operating activities:
|
|
|
|
|
|
Net income
|
|
$
|
124,074
|
|
|
$
|
63,919
|
|
|
Adjustments to reconcile net income to net cash provided by (used
in) operating activities:
|
|
|
|
|
|
Depreciation and amortization
|
|
188,836
|
|
|
194,633
|
|
|
Restructuring and related charges
|
|
184
|
|
|
6,812
|
|
|
Recognition of stock-based compensation expense and related charges
|
|
17,249
|
|
|
44,974
|
|
|
Deferred income taxes
|
|
4,371
|
|
|
(11,507
|
)
|
|
Other, net
|
|
44,282
|
|
|
3,812
|
|
|
Change in operating assets and liabilities, exclusive of net assets
acquired:
|
|
|
|
|
|
Accounts receivable
|
|
(600,630
|
)
|
|
(872,907
|
)
|
|
Contract assets
|
|
(761,910
|
)
|
|
—
|
|
|
Inventories
|
|
242,506
|
|
|
(320,814
|
)
|
|
Prepaid expenses and other current assets
|
|
(103,040
|
)
|
|
(99,635
|
)
|
|
Other assets
|
|
(2,528
|
)
|
|
(13,549
|
)
|
|
Accounts payable, accrued expenses and other liabilities
|
|
754,913
|
|
|
354,617
|
|
|
Net cash used in operating activities
|
|
(91,693
|
)
|
|
(649,645
|
)
|
|
Cash flows provided by (used in) investing activities:
|
|
|
|
|
|
Acquisition of property, plant and equipment
|
|
(231,513
|
)
|
|
(218,617
|
)
|
|
Proceeds and advances from sale of property, plant and equipment
|
|
10,227
|
|
|
20,330
|
|
|
Cash paid for business and intangible asset acquisitions, net of cash
|
|
—
|
|
|
(95,858
|
)
|
|
Cash receipts on sold receivables
|
|
96,846
|
|
|
596,058
|
|
|
Other, net
|
|
(6,812
|
)
|
|
(1,067
|
)
|
|
Net cash (used in) provided by investing activities
|
|
(131,252
|
)
|
|
300,846
|
|
|
Cash flows provided by (used in) financing activities:
|
|
|
|
|
|
Borrowings under debt agreements
|
|
3,071,559
|
|
|
1,792,000
|
|
|
Payments toward debt agreements
|
|
(3,078,197
|
)
|
|
(1,748,599
|
)
|
|
Payments to acquire treasury stock
|
|
(204,587
|
)
|
|
(93,309
|
)
|
|
Dividends paid to stockholders
|
|
(14,528
|
)
|
|
(16,231
|
)
|
|
Treasury stock minimum tax withholding related to vesting of
restricted stock
|
|
(9,715
|
)
|
|
(20,745
|
)
|
|
Other, net
|
|
8
|
|
|
(3,912
|
)
|
|
Net cash used in financing activities
|
|
(235,460
|
)
|
|
(90,796
|
)
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
4,865
|
|
|
(4,066
|
)
|
|
Net decrease in cash and cash equivalents
|
|
(453,540
|
)
|
|
(443,661
|
)
|
|
Cash and cash equivalents at beginning of period
|
|
1,257,949
|
|
|
1,189,919
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
804,409
|
|
|
$
|
746,258
|
|
|
JABIL INC. AND SUBSIDIARIES
|
|
SUPPLEMENTAL DATA
|
|
RECONCILIATION OF U.S. GAAP FINANCIAL RESULTS TO NON-GAAP MEASURES
|
|
(Unaudited)
|
|
|
|
|
|
|
|
Three months ended
|
|
(in thousands, except for per share data)
|
|
November 30, 2018
|
|
November 30, 2017
|
|
Operating income (U.S. GAAP)
|
|
$
|
216,710
|
|
|
$
|
145,754
|
|
|
Amortization of intangibles
|
|
7,646
|
|
|
9,979
|
|
|
Stock-based compensation expense and related charges
|
|
17,249
|
|
|
52,745
|
|
|
Restructuring and related charges
|
|
6,025
|
|
|
11,388
|
|
|
Business interruption and impairment charges, net
|
|
(2,860
|
)
|
|
7,354
|
|
|
Acquisition and integration charges
|
|
8,890
|
|
|
—
|
|
|
Adjustments to operating income
|
|
36,950
|
|
|
81,466
|
|
|
Core operating income (Non-GAAP)
|
|
$
|
253,660
|
|
|
$
|
227,220
|
|
|
Net income attributable to Jabil Inc. (U.S. GAAP)
|
|
$
|
123,600
|
|
|
$
|
63,795
|
|
|
Adjustments to operating income
|
|
36,950
|
|
|
81,466
|
|
|
Adjustments for taxes(1)
|
|
(13,743
|
)
|
|
(717
|
)
|
|
Core earnings (Non-GAAP)
|
|
$
|
146,807
|
|
|
$
|
144,544
|
|
|
Diluted earnings per share (U.S. GAAP)
|
|
$
|
0.76
|
|
|
$
|
0.35
|
|
|
Diluted core earnings per share (Non-GAAP)
|
|
$
|
0.90
|
|
|
$
|
0.80
|
|
|
Diluted weighted average shares outstanding (U.S. GAAP and Non-GAAP)
|
|
163,670
|
|
|
180,203
|
|
---------------------------------
(1) Includes a $13.3 million tax benefit for the effects of
the Tax Act for the three months ended November 30, 2018.
|
JABIL INC. AND SUBSIDIARIES
|
|
SUPPLEMENTAL DATA
|
|
ROIC & Core ROIC
|
|
(in thousands)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
Three months ended
|
|
|
|
November 30, 2018
|
|
November 30, 2017
|
|
Numerator:
|
|
|
|
|
|
Operating income (U.S. GAAP)
|
|
$
|
216,710
|
|
$
|
145,754
|
|
Tax effect (1)
|
|
(43,083)
|
|
(44,362)
|
|
After-tax operating income
|
|
173,627
|
|
101,392
|
|
|
|
x4
|
|
x4
|
|
Annualized after-tax operating income
|
|
$
|
694,508
|
|
$
|
405,568
|
|
Core operating income (Non-GAAP)
|
|
$
|
253,660
|
|
$
|
227,220
|
|
Tax effect (2)
|
|
(57,035)
|
|
(44,726)
|
|
After-tax core operating income
|
|
196,625
|
|
182,494
|
|
|
|
x4
|
|
x4
|
|
Annualized after-tax core operating income
|
|
$
|
786,500
|
|
$
|
729,976
|
|
Denominator:
|
|
|
|
|
|
Average total Jabil Inc. stockholders' equity (3)
|
|
$
|
1,921,086
|
|
$
|
2,341,627
|
|
Average notes payable and long-term debt, less current installments
(3)
|
|
2,490,707
|
|
1,663,013
|
|
Average current installments of notes payable and long-term debt
(3)
|
|
25,195
|
|
436,259
|
|
Average cash and cash equivalents (3)
|
|
(1,031,179)
|
|
(968,089)
|
|
Net invested capital base
|
|
$
|
3,405,809
|
|
$
|
3,472,810
|
|
|
|
|
|
|
|
Return on Invested Capital (U.S. GAAP)
|
|
20.4%
|
|
11.7%
|
|
Adjustments noted above
|
|
2.7%
|
|
9.3%
|
|
Core Return on Invested Capital (Non-GAAP)
|
|
23.1%
|
|
21.0%
|
---------------------------------
(1) This amount is calculated by adding the amount of income
taxes attributable to operating income (U.S. GAAP) and interest expense.
(2) This amount is calculated by adding the amount of income
taxes attributable to core operating income (Non-GAAP) and 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.
|
JABIL INC. AND SUBSIDIARIES
|
|
SUPPLEMENTAL DATA
|
|
ADJUSTED FREE CASH FLOW
|
|
(in thousands)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
Three months ended
|
|
|
|
November 30, 2018
|
|
November 30, 2017
|
|
Net cash used in operating activities (U.S. GAAP)(1)
|
|
$
|
(91,693
|
)
|
|
$
|
(649,645
|
)
|
|
Cash receipts on sold receivables
|
|
96,846
|
|
|
596,058
|
|
|
Adjusted cash provided by (used in) operating activities
(Non-GAAP)
|
|
$
|
5,153
|
|
|
$
|
(53,587
|
)
|
|
Acquisition of property, plant and equipment
|
|
(231,513
|
)
|
|
(218,617
|
)
|
|
Proceeds and advances from sale of property, plant and equipment
|
|
10,227
|
|
|
20,330
|
|
|
Adjusted free cash flow (Non-GAAP)
|
|
$
|
(216,133
|
)
|
|
$
|
(251,874
|
)
|
---------------------------------
(1) In the first quarter of fiscal year 2019, the adoption of
Accounting Standards Updated ("ASU") 2016-15, "Classification of Certain
Cash Receipts and Cash Payments" resulted in a reclassification of cash
flows from operating activities to investing activities for cash
receipts for the deferred purchase price receivable on asset-backed
securitization transactions. The adoption of this standard does not
reflect a change in the underlying business or activities. The effects
of this change are applied retrospectively to all prior periods.
View source version on businesswire.com: https://www.businesswire.com/news/home/20181218005688/en/
