Jabil Delivers Strong Fourth Quarter Results

Positive Momentum Expected to Continue

ST. PETERSBURG, Fla. – September 24, 2020 Today, Jabil Inc. (NYSE: JBL), reported preliminary, unaudited financial results for its fourth quarter and fiscal year ended August 31, 2020.

“I’m thrilled with our ability to deliver such strong financial results to close out FY20,” said CEO Mark Mondello. “Over the past several years, we’ve strategically positioned Jabil in attractive end-markets, while building the most desired products and serving the world’s most successful brands. At the same time, we’ve streamlined the organization, creating a more optimized cost structure. These collective efforts allowed us to beat expectations in the fourth quarter, despite the various complexities brought about by the global pandemic,” he added.

Fourth Quarter of Fiscal Year 2020 Highlights:

  • Net revenue: $7.3 billion
  • Diversified Manufacturing Services (DMS) year-on-year revenue growth: 17 percent
  • Electronics Manufacturing Services (EMS) year-on-year revenue growth: 8 percent
  • U.S. GAAP operating income: $197.1 million
  • U.S. GAAP diluted earnings per share: $0.44
  • Core operating income (Non-GAAP): $255.2 million
  • Core diluted earnings per share (Non-GAAP): $0.98

Fiscal Year 2020 Highlights:

  • Net revenue: $27.3 billion
  • Diversified Manufacturing Services (DMS) year-on-year revenue growth: 8 percent
  • Electronics Manufacturing Services (EMS) year-on-year revenue growth: 8 percent
  • U.S. GAAP operating income: $499.8 million
  • U.S. GAAP diluted earnings per share: $0.35
  • Core operating income (Non-GAAP): $864.1 million
  • Core diluted earnings per share (Non-GAAP): $2.90

“As we exit FY20 and look ahead, I am excited with the momentum underway in our business,” said CFO Mike Dastoor. “Several of our key businesses remain especially strong including Mobility, Healthcare and Cloud. At the same time, we’re permanently transitioning certain components we procure in our EMS segment from the current purchase-and-resale model to a consignment service model,” he added.

First Quarter of Fiscal Year 2021 Outlook:

•    Net revenue

 

$6.7 billion to $7.3 billion

 

•    U.S. GAAP operating income

 

$238 million to $283 million

 

•    U.S. GAAP diluted earnings per share

 

$0.79 to $1.02 per diluted share

 

•    Core operating income (Non-GAAP) (1)

 

$295 million to $335 million

 

•    Core diluted earnings per share (Non-GAAP) (1)

 

$1.15 to $1.35 per diluted share

 

•    Total company revenue

 

Decrease 7 percent year-on-year

 

 

 

 

 

 

 

 

 

 

 

(1) Core operating income and core diluted earnings per share exclude anticipated adjustments of $12.0 million for amortization of intangibles (or $0.07 per diluted share), $31.0 million for stock-based compensation expense and related charges (or $0.20 per diluted share), $10.0 million to $5.0 million for restructuring, severance and related charges (or $0.06 to $0.03 per diluted share) and $4.0 million for acquisition and integration charges (or $0.03 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 less amortization of intangibles, stock-based compensation expense and related charges, restructuring, severance 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 plus other components of net periodic benefit cost. Jabil defines core earnings as U.S. GAAP net income before amortization of intangibles, stock-based compensation expense and related charges, restructuring, severance 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, loss 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 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 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 the fourth quarter and fiscal year 2020 and our guidance for future financial performance in our first quarter of fiscal year 2021 (including, net revenue, total company 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, severance 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 the fourth quarter and fiscal year 2020 that our financial results and conditions differ from our current preliminary unaudited numbers set forth herein; the scope and duration of the COVID-19 outbreak and its impact on our operations, sites, customers and supply chain; managing growth effectively; our dependence on a limited number of customers; competitive challenges affecting our customers; managing rapid declines or increases in customer demand and other related customer challenges that may occur; changes in technology; our ability to introduce new business models or programs requiring implementation of new competencies; competition; transportation issues; our ability to maintain our engineering, technological and manufacturing expertise; retaining key personnel; our ability to purchase components efficiently and reliance on a limited number of suppliers for critical components; risks associated with international sales and operations; our ability to achieve expected profitability from acquisitions; risk arising from our restructuring activities; issues involving our information systems, including security issues; regulatory risks; financial and market risks; 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, 2019 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 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 today at 8:30 a.m. ET to discuss its earnings for the fourth quarter and full fiscal year ended August 31, 2020 and to provide an investor briefing. 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 completion of the call.

About Jabil: Jabil (NYSE: JBL) is a manufacturing solutions provider with over 260,000 employees across 100 locations in 30 countries. The world's leading brands rely on Jabil's unmatched breadth and depth of end-market experience, technical and design capabilities, manufacturing know-how, supply chain insights and global product management expertise. Driven by a common purpose, Jabil and its people are committed to making a positive impact on their local community and the environment. Visit www.jabil.com to learn more.

Investor Contact

Adam Berry

Vice President, Investor Relations

(727) 577-9749

Adam_Berry@jabil.com

 

Media Contact

Michelle Smith

Vice President, Corporate Communications

(727) 577-9749

Michelle_Smith@jabil.com

 

JABIL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

 

 

 

August 31, 2020

 

 

 

 

(unaudited)

 

August 31, 2019

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

1,393,557

 

 

$

1,163,343

 

Accounts receivable, net

 

2,847,743

 

 

2,745,226

 

Contract assets

 

1,104,700

 

 

911,940

 

Inventories, net

 

3,131,783

 

 

3,023,003

 

Prepaid expenses and other current assets

 

657,102

 

 

501,573

 

Total current assets

 

9,134,885

 

 

8,345,085

 

Property, plant and equipment, net

 

3,665,312

 

 

3,333,750

 

Operating lease right-of-use asset

 

362,847

 

 

 

Goodwill and intangible assets, net

 

906,723

 

 

879,108

 

Deferred income taxes

 

165,407

 

 

198,827

 

Other assets

 

162,242

 

 

213,705

 

Total assets

 

$

14,397,416

 

 

$

12,970,475

 

LIABILITIES AND EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Current installments of notes payable and long-term debt

 

$

50,194

 

 

$

375,181

 

Accounts payable

 

5,687,038

 

 

5,166,780

 

Accrued expenses

 

3,211,528

 

 

2,990,144

 

Current operating lease liabilities

 

110,723

 

 

 

Total current liabilities

 

9,059,483

 

 

8,532,105

 

Notes payable and long-term debt, less current installments

 

2,678,288

 

 

2,121,284

 

Other liabilities

 

268,925

 

 

163,821

 

Non-current operating lease liabilities

 

302,035

 

 

 

Income tax liabilities

 

148,629

 

 

136,689

 

Deferred income taxes

 

114,657

 

 

115,818

 

Total liabilities

 

12,572,017

 

 

11,069,717

 

Commitments and contingencies

 

 

 

 

Equity:

 

 

 

 

Jabil Inc. stockholders’ equity:

 

 

 

 

Preferred stock

 

 

 

 

Common stock

 

264

 

 

260

 

Additional paid-in capital

 

2,413,616

 

 

2,304,552

 

Retained earnings

 

2,040,922

 

 

2,037,037

 

Accumulated other comprehensive loss

 

(34,168

)

 

(82,794

)

Treasury stock, at cost

 

(2,609,250

)

 

(2,371,612

)

Total Jabil Inc. stockholders’ equity

 

1,811,384

 

 

1,887,443

 

Noncontrolling interests

 

14,015

 

 

13,315

 

Total equity

 

1,825,399

 

 

1,900,758

 

Total liabilities and equity

 

$

14,397,416

 

 

$

12,970,475

 

 

JABIL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except for per share data)

(Unaudited)

 

 

 

Three Months Ended

 

Fiscal Year Ended

 

 

August 31, 2020

 

August 31, 2019

 

August 31, 2020

 

August 31, 2019

Net revenue

 

$

7,300,015

 

 

$

6,573,453

 

 

$

27,266,438

 

 

$

25,282,320

 

Cost of revenue

 

6,809,314

 

 

6,078,375

 

 

25,335,625

 

 

23,368,919

 

Gross profit

 

490,701

 

 

495,078

 

 

1,930,813

 

 

1,913,401

 

Operating expenses:

 

 

 

 

 

 

 

 

Selling, general and administrative

 

257,922

 

 

276,597

 

 

1,174,694

 

 

1,111,347

 

Research and development

 

10,496

 

 

10,114

 

 

44,143

 

 

42,861

 

Amortization of intangibles

 

12,649

 

 

8,890

 

 

55,544

 

 

31,923

 

Restructuring, severance and related charges

 

12,581

 

 

9,732

 

 

156,586

 

 

25,914

 

Operating income

 

197,053

 

 

189,745

 

 

499,846

 

 

701,356

 

Loss on securities

 

36,420

 

 

29,632

 

 

48,625

 

 

29,632

 

Interest and other, net

 

45,385

 

 

58,200

 

 

190,483

 

 

221,020

 

Income before income tax

 

115,248

 

 

101,913

 

 

260,738

 

 

450,704

 

Income tax expense

 

46,339

 

 

48,152

 

 

203,959

 

 

161,230

 

Net income

 

68,909

 

 

53,761

 

 

56,779

 

 

289,474

 

Net income attributable to noncontrolling interests, net of tax

 

1,178

 

 

1,086

 

 

2,867

 

 

2,363

 

Net income attributable to Jabil Inc.

 

$

67,731

 

 

$

52,675

 

 

$

53,912

 

 

$

287,111

 

Earnings per share attributable to the stockholders of Jabil Inc.:

 

 

 

 

 

 

 

 

Basic

 

$

0.45

 

 

$

0.34

 

 

$

0.36

 

 

$

1.85

 

Diluted

 

$

0.44

 

 

$

0.34

 

 

$

0.35

 

 

$

1.81

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

150,590

 

 

153,327

 

 

151,613

 

 

155,613

 

Diluted

 

154,453

 

 

156,981

 

 

155,274

 

 

158,647

 

 

JABIL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

 

 

Fiscal Year Ended

 

 

August 31, 2020

 

August 31, 2019

Cash flows provided by operating activities:

 

 

 

 

Net income

 

$

56,779

 

 

$

289,474

 

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

 

 

 

 

Depreciation and amortization

 

794,581

 

 

771,833

 

Restructuring and related charges

 

41,356

 

 

(3,566

)

Recognition of stock-based compensation expense and related charges

 

83,084

 

 

61,346

 

Deferred income taxes

 

29,209

 

 

20,998

 

Loss (gain) on sale of property, plant and equipment

 

29,393

 

 

(2,522

)

Provision for allowance for doubtful accounts

 

32,066

 

 

15,867

 

Loss on securities

 

36,420

 

 

29,632

 

Other, net

 

34,130

 

 

39,539

 

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

 

 

 

 

Accounts receivable

 

(135,973

)

 

(586,511

)

Contract assets

 

(104,601

)

 

(878,469

)

Inventories

 

(77,320

)

 

483,074

 

Prepaid expenses and other current assets

 

(144,152

)

 

28,897

 

Other assets

 

(10,669

)

 

(38,188

)

Accounts payable, accrued expenses and other liabilities

 

592,972

 

 

961,662

 

Net cash provided by operating activities

 

1,257,275

 

 

1,193,066

 

Cash flows used in investing activities:

 

 

 

 

Acquisition of property, plant and equipment

 

(983,035

)

 

(1,005,480

)

Proceeds and advances from sale of property, plant and equipment

 

186,655

 

 

218,708

 

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

 

(146,909

)

 

(153,239

)

Cash receipts on sold receivables

 

 

 

96,846

 

Other, net

 

22,176

 

 

(29,289

)

Net cash used in investing activities

 

(921,113

)

 

(872,454

)

Cash flows used in financing activities:

 

 

 

 

Borrowings under debt agreements

 

12,777,055

 

 

11,985,978

 

Payments toward debt agreements

 

(12,544,456

)

 

(12,013,004

)

Payments to acquire treasury stock

 

(214,510

)

 

(350,323

)

Dividends paid to stockholders

 

(50,462

)

 

(52,004

)

Net proceeds from exercise of stock options and issuance of common stock under employee stock purchase plan

 

30,117

 

 

26,999

 

Treasury stock minimum tax withholding related to vesting of restricted stock

 

(23,128

)

 

(11,918

)

Other, net

 

(39,739

)

 

(1,500

)

Net cash used in financing activities

 

(65,123

)

 

(415,772

)

Effect of exchange rate changes on cash and cash equivalents

 

(40,825

)

 

554

 

Net increase (decrease) in cash and cash equivalents

 

230,214

 

 

(94,606

)

Cash and cash equivalents at beginning of period

 

1,163,343

 

 

1,257,949

 

Cash and cash equivalents at end of period

 

$

1,393,557

 

 

$

1,163,343

 

 

JABIL INC. AND SUBSIDIARIES

SUPPLEMENTAL DATA

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, 2020

 

August 31, 2019

 

August 31, 2020

 

August 31, 2019

Operating income (U.S. GAAP)

 

$

197,053

 

 

$

189,745

 

 

$

499,846

 

 

$

701,356

 

Amortization of intangibles

 

12,649

 

 

8,890

 

 

55,544

 

 

31,923

 

Stock-based compensation expense and related charges

 

20,870

 

 

13,894

 

 

83,084

 

 

61,346

 

Restructuring, severance and related charges

 

12,581

 

 

9,732

 

 

156,586

 

 

25,914

 

Distressed customer charge

 

 

 

6,235

 

 

14,963

 

 

6,235

 

Net periodic benefit cost(1)

 

8,680

 

 

 

 

16,078

 

 

 

Business interruption and impairment charges, net

 

1,211

 

 

 

 

5,785

 

 

(2,860

)

Acquisition and integration charges

 

2,162

 

 

17,631

 

 

32,167

 

 

52,697

 

Adjustments to operating income

 

58,153

 

 

56,382

 

 

364,207

 

 

175,255

 

Core operating income (Non-GAAP)

 

$

255,206

 

 

$

246,127

 

 

$

864,053

 

 

$

876,611

 

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

 

$

67,731

 

 

$

52,675

 

 

$

53,912

 

 

$

287,111

 

Adjustments to operating income

 

58,153

 

 

56,382

 

 

364,207

 

 

175,255

 

Loss on securities

 

36,420

 

 

29,632

 

 

48,625

 

 

29,632

 

Net periodic benefit cost(1)

 

(8,680

)

 

 

 

(16,078

)

 

 

Adjustments for taxes(2)

 

(2,259

)

 

(796

)

 

(1,093

)

 

(18,633

)

Core earnings (Non-GAAP)

 

$

151,365

 

 

$

137,893

 

 

$

449,573

 

 

$

473,365

 

Diluted earnings per share (U.S. GAAP)

 

$

0.44

 

 

$

0.34

 

 

$

0.35

 

 

$

1.81

 

Diluted core earnings per share (Non-GAAP)

 

$

0.98

 

 

$

0.88

 

 

$

2.90

 

 

$

2.98

 

Diluted weighted average shares outstanding (U.S. GAAP and Non-GAAP)

 

154,453

 

 

156,981

 

 

155,274

 

 

158,647

 

 

 

(1)    Following the adoption of Accounting Standards Update 2017-07, Compensation - Retirement Benefits (Topic 715) (“ASU 2017-07”), pension service cost is recognized in cost of revenue and all other components of net periodic benefit cost, including return on plan assets, are presented in other expense. We are reclassifying the pension components in other expense to core operating income as we assess operating performance, inclusive of all components of net periodic benefit cost, with the related revenue. There is no impact to core earnings or diluted core earnings per share for this adjustment.

(2)    The fiscal year ended August 31, 2019 includes a $13.3 million income tax benefit for the effects of the Tax Act, recorded during the three months ended November 30, 2018.

 

 

JABIL INC. AND SUBSIDIARIES

SUPPLEMENTAL DATA

ADJUSTED FREE CASH FLOW

(in thousands)

(Unaudited)

 

Fiscal Year Ended

 

August 31, 2020

 

August 31, 2019(1)

Net cash provided by operating activities (U.S. GAAP)

$

1,257,275

 

 

$

1,193,066

 

Cash receipts on sold receivables

 

 

96,846

 

Acquisition of property, plant and equipment

(983,035

)

 

(1,005,480

)

Proceeds and advances from sale of property, plant and equipment

186,655

 

 

218,708

 

Adjusted free cash flow (Non-GAAP)

$

460,895

 

 

$

503,140

 

 

 

(1)    In fiscal year 2019, the adoption of Accounting Standards Update ("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