Jabil Delivers Another Strong Fiscal Year

St. Petersburg, FL – September 25, 2018. Today, Jabil Inc. (NYSE: JBL), reported preliminary, unaudited financial results for its fourth quarter and fiscal year ended August 31, 2018.

“I’m really pleased with our fiscal 2018 results and the positive momentum we’re seeing across the business,” said CEO Mark Mondello. “Our team’s performance during the year culminated in double-digit revenue growth, 24 percent core EPS expansion and core ROIC of 19 percent, an increase of approximately 400 basis points year-on-year. At the same time, we made strategically important investments in areas like additive manufacturing and factory automation, while the underlying business allowed for nearly $1 billion in cash flow generation and $500 million in shareholder returns. By many measures, 2018 was another great year as we position the company to continue to deliver on our stated goals,” he added.

Fiscal Year 2018 Highlights:

  • Net revenue: $22.1 billion
  • Diversified Manufacturing Services (DMS) year-on-year revenue growth: 23 percent
  • Electronics Manufacturing Services (EMS) year-on-year revenue growth: 11 percent
  • U.S. GAAP operating income: $542.2 million
  • U.S. GAAP diluted earnings per share: $0.49
  • Core operating income (Non-GAAP): $768.1 million
  • Core diluted earnings per share (Non-GAAP): $2.62

“As we begin fiscal 2019, we’re steadfast in our commitment to deliver value for shareholders. We’ll continue to pursue strategic capabilities and technologies in select end-markets that should result in even more sustainable earnings and cash flows over the next three to four years.” added Mondello.

First Quarter of Fiscal Year 2019 Guidance:

•     Net revenue                                                                              $5.8 billion to $6.4 billion

•     U.S. GAAP operating income                                                  $158 million to $223 million

•     U.S. GAAP diluted earnings per share                                    $0.45 to $0.74 per diluted share

•     Core operating income (Non-GAAP) (1)                                $215 million to $265 million

•     Core diluted earnings per share (Non-GAAP) (1)                 $0.79 to $0.99 per diluted share

•     Diversified Manufacturing Services                                        Increase revenue 5 percent year-on-year

•     Electronics Manufacturing Services                                        Increase revenue 13 percent year-on-year

•     Total company                                                                           Increase revenue 9 percent year-on-year

_______________________________________________

(1) Core operating income and core diluted earnings per share exclude anticipated adjustments of $8 million for amortization of intangibles (or $0.05 per diluted share), $24 million for stock-based compensation expense and related charges (or $0.14 per diluted share), $7 million to $2 million for restructuring and related charges (or $0.04 to $0.01 per diluted share) and $18 million to $8 million for acquisition and integration charges (or $0.11 to $0.05 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 reports core operating income, core earnings and core diluted and basic earnings per share to provide investors an additional method for assessing operating income, earnings and diluted earnings per share 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 fourth quarter and full fiscal year 2018 and our guidance for future financial performance in our first 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, net interest expense, and core tax rate(Non-GAAP). 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 fourth quarter and full fiscal year 2018 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, 2017 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 ROIC and core diluted and basic earnings per share to provide investors an additional method for assessing operating income, earnings and earnings per share 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 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 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 today at 8:30 a.m. ET to discuss its earnings for the fourth quarter and full fiscal year 2018 and to provide an investor briefing. To access the live audio webcast and view the accompanying slide presentations, 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 completion of 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.

 

Adam Berry

Vice President, Investor Relations (727) 803-5772

adam_berry@jabil.com

 

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

 

 

Current assets:

Cash and cash equivalents

$             1,257,949

$             1,189,919

Accounts receivable, net

1,693,268

1,397,424

Inventories, net

3,457,706

2,942,083

Prepaid expenses and other current assets

1,141,000

1,097,257

Total current assets

7,549,923

6,626,683

Property, plant and equipment, net

3,198,016

3,228,678

Goodwill and intangible assets, net

906,876

892,780

Deferred income taxes

218,252

205,722

Other assets

                  172,574

                  142,132

Total assets

$           12,045,641

$           11,095,995

LIABILITIES AND EQUITY

 

 

Current liabilities:

Current installments of notes payable and long-term debt

$                  25,197

$                444,255

Accounts payable

4,942,932

4,257,623

Accrued expenses

               2,262,744

               2,168,715

Total current liabilities

7,230,873

6,870,593

Notes payable and long-term debt, less current installments

2,493,502

1,606,017

Other liabilities

94,617

100,812

Income tax liabilities

148,884

100,902

Deferred income taxes

                   114,385

                    49,327

Total liabilities

10,082,261

8,727,651

Commitments and contingencies

 

 

Equity:

 

 

Jabil Inc. stockholders’ equity:

Preferred stock

Common stock

257

253

Additional paid-in capital

2,218,673

2,104,203

Retained earnings

1,760,097

1,730,893

Accumulated other comprehensive (loss) income

(19,399)

54,620

Treasury stock, at cost

(2,009,371)

(1,536,455)

Total Jabil Inc. stockholders’ equity

1,950,257

2,353,514

Noncontrolling interests

                    13,123

                    14,830

Total equity

               1,963,380

               2,368,344

Total liabilities and equity

$           12,045,641

$           11,095,995

 

 

 

ASSETS

August 31, 2018

           (unaudited)                   August 31, 2017      

 

 
   



CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except for per share data) (Unaudited)

 

 

Three Months Ended                                   Fiscal Year Ended

 

August 31, 2018

August 31, 2017

 

 

August 31, 2018

August 31, 2017

Net revenue

$          5,771,831

$

5,023,029

 

 

$        22,095,416

$        19,063,121

Cost of revenue

5,329,684

4,597,211

 

 

20,388,624

17,517,478

Gross profit

442,147

 

425,818

 

 

1,706,792

1,545,643

Operating expenses:

 

 

 

 

 

 

Selling, general and administrative

261,234

241,823

 

 

1,050,716

907,702

Research and development

10,996

7,698

 

 

38,531

29,680

Amortization of intangibles

8,581

9,262

 

 

38,490

35,524

Restructuring and related charges

7,440

46,866

 

 

36,902

160,395

Loss on disposal of subsidiaries

2,112

 

 

2,112

Operating income

153,896

118,057

 

 

542,153

410,230

Interest and other, net

45,349

36,445

 

 

168,752

153,997

Income before income tax

108,547

81,612

 

 

373,401

256,233

Income tax expense

165,155

35,571

 

 

285,860

129,066

Net (loss) income

Net income (loss) attributable to noncontrolling

(56,608)

46,041

 

 

87,541

127,167

interests, net of tax

706

362

1,211

(1,923)

Net (loss) income attributable to Jabil Inc.

$            (57,314) $

45,679

$             86,330

$              129,090

(Loss) earnings per share attributable to the stockholders of Jabil Inc.:

 

 

 

 

 

 

 

 

Diluted                                                                     $                                                                                 (0.34)

$                 0.25

$                 0.49

$                 0.69

 

 

 

Basic                                                                        $                (0.34) $                                                                                 0.26   $      0.50   $                                                                                 0.71

Weighted average shares outstanding:

Basic

166,968

178,697

172,237

181,902

Diluted

166,968

182,977

175,044

185,838

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands) (Unaudited)

 

 

Fiscal Year Ended

August 31, 2018                August 31, 2017

 

 

Net income

$                  87,541

$                127,167

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

773,704

760,405

Restructuring and related charges

16,264

94,346

Recognition of stock-based compensation expense and related charges

90,664

48,544

Deferred income taxes

52,705

(63,001)

Provision for allowance for doubtful accounts

38,030

10,112

Other, net

(13,600)

22,109

Change in operating assets and liabilities, exclusive of net assets acquired:

 

 

Accounts receivable

(316,262)

(31,353)

Inventories

(499,105)

(445,089)

Prepaid expenses and other current assets

(76,602)

19,346

Other assets

(34,747)

(30,413)

Accounts payable, accrued expenses and other liabilities

815,258

744,470

Net cash provided by operating activities

933,850

1,256,643

Cash flows used in investing activities:

 

Acquisition of property, plant and equipment

(1,036,651)

(716,485)

Proceeds and advances from sale of property, plant and equipment

350,291

175,000

Cash paid for business and intangible asset acquisitions, net of cash

(109,664)

(36,620)

Other, net

(2,360)

(1,360)

Net cash used in investing activities

(798,384)

(579,465)

Cash flows used in financing activities:

 

 

Borrowings under debt agreements

9,677,424

7,434,107

Payments toward debt agreements

(9,206,016)

(7,479,150)

Payments to acquire treasury stock

(450,319)

(306,640)

Dividends paid to stockholders

(57,833)

(59,959)

Net proceeds from exercise of stock options and issuance of common stock

 

 

under employee stock purchase plan

24,865

21,791

Treasury stock minimum tax withholding related to vesting of restricted stock

(22,597)

(12,268)

Other, net

(12,568)

(2,427)

Net cash used in financing activities

(47,044)

(404,546)

Effect of exchange rate changes on cash and cash equivalents

                   (20,392)

                      5,228

Net increase in cash and cash equivalents

68,030

277,860

Cash and cash equivalents at beginning of period

1,189,919

912,059

Cash and cash equivalents at end of period

$             1,257,949

$             1,189,919

 

RECONCILIATION OF U.S. GAAP FINANCIAL RESULTS TO NON-GAAP MEASURES

(in thousands, except for per share data) (Unaudited)

 

 

Three Months Ended                         Fiscal Year Ended

 

 

 

August 31, 2018      August 31, 2017

August 31, 2018

August 31, 2017

Operating income (U.S. GAAP)

$        153,896

$          118,057

$          542,153

$          410,230

Amortization of intangibles

8,581                          9,262

38,490

35,524

Stock-based compensation expense and related charges

15,689                          15,167

98,511

48,544

Restructuring and related charges

7,440                        46,866

36,902

160,395

Distressed customer charge

18,004                                 —

32,710

10,198

Business interruption and impairment charges, net

577                            —

11,299

Loss on disposal of subsidiaries

—                      2,112

2,112

Acquisition and integration charges

8,082                               —

8,082

Adjustments to operating income

            58,373

73,407

225,994

256,773

Core operating income (Non-GAAP)

$        212,269   $          191,464

$          768,147

$          667,003

Net (loss) income attributable to Jabil Inc. (U.S. GAAP

)     $      (57,314)

$            45,679

$            86,330

$          129,090

Adjustments to operating income

58,373                          73,407

225,994

256,773

Impairment on securities

—                          —

11,539

Adjustments for taxes(1)

117,167                             (1,933)

146,206

(4,726)

Core earnings (Non-GAAP)

$        118,226

$          117,153

$          458,530

$          392,676

(Loss) earnings per share (U.S. GAAP):

 

 

 

Basic

$             (0.34) $               0.26

$                0.50

$                0.71

Diluted

$             (0.34) $               0.25

$                0.49

$                 0.69

Core earnings per share (Non-GAAP):

 

 

 

 

Basic

$              0.71   $                0.66

$                2.66

$                2.16

Diluted

$              0.70

$                0.64

$                2.62

$                 2.11

Weighted average shares outstanding used in the calculations of earnings per share (U.S. GAAP):

 

 

 

Basic

166,968

178,697

172,237

181,902

Diluted

166,968

182,977

175,044

           185,838

Weighted average shares outstanding used in the calculations of earnings per share (Non-GAAP):

 

 

 

 

Basic

166,968

178,697

172,237

           181,902

Diluted

169,728

182,977

175,044

185,838

 
   

 

(1) Includes a $111.4 million and $142.3 million provisional estimate to account for the effects of the Tax Cuts and Jobs Act for the three months and fiscal year ended August 31, 2018, respectively.

 

RETURN ON INVESTED CAPITAL AND CORE RETURN ON INVESTED CAPITAL

(in thousands) (Unaudited)

Three Months Ended                         Fiscal Year Ended

 

August 31, 2018      August 31, 2017                   August 31, 2018                   August 31, 2017

Numerator:

 

 

 

 

Operating income (U.S. GAAP)

$      153,896

$      118,057

$      542,153

$      410,230

Tax effect (1)

(88,126)

(35,771)

(300,979)

(137,087)

After-tax operating income

65,770

82,286

241,174

273,143

 

x4

x4

x1

x1

Annualized after-tax operating income

$ 263,080

$      329,144

$      241,174

$      273,143

Core operating income (Non-GAAP)

$      212,269

$      191,464

$      768,147

$      667,003

Tax effect (2)

(49,875)

(37,610)

(144,261)

(134,930)

After-tax core operating income

162,394

153,854

623,886

532,073

 

x4

x4

x1

x1

Annualized after-tax core operating income

$ 649,576

$      615,416

$      623,886

$      532,073

Denominator:

 

 

 

 

Average total Jabil Inc. stockholders' equity (3)

$ 2,061,699

$ 2,340,495

$ 2,151,886

$ 2,395,843

Average notes payable and long-term debt, less current

installments (3)                                                                                                                                 2,321,562                                                                                                     1,638,591                                                                                                     2,063,047                                                                                                     1,853,302

Average current installments of notes payable and long- debt (3)

term

148,698

 

492,241

 

235,348

 

245,654

Average cash and cash equivalents (3)

(967,720)

(966,925)

(1,223,934)

(1,050,989)

Net invested capital base

$ 3,564,239    

$ 3,504,402

$ 3,226,347

$ 3,443,810

 

Return on Invested Capital (U.S. GAAP)

7.4%

9.4%

7.5%

7.9%

Adjustments noted above

10.8%

8.2%

11.8%

7.6%

Core Return on Invested Capital (Non-GAAP)

18.2%

17.6%

19.3%

15.5%

 
   

 

(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-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 for the three months ended August 31, 2018 and 2017, respectively, and dividing by two. The average is based on the addition of the account balance at the end of the most recently-ended fiscal year to the account balance at the end of the prior fiscal year for the fiscal years ended August 31, 2018 and 2017, respectively, and dividing by two.