Jabil Posts Record First Quarter Results

Raises FY21 Financial Outlook

ST. PETERSBURG, Fla. – December 17, 2020 Today, Jabil Inc. (NYSE: JBL), reported preliminary, unaudited financial results for its first quarter of fiscal year 2021.

“I’m thrilled with the strong start to the fiscal year,” said CEO Mark Mondello. “Our unique positioning as a critical and trusted supplier for so many of the world’s leading brands is allowing us to benefit from powerful end-market trends. As a result, our team delivered record quarterly results for revenue, core operating income and core EPS. Importantly, these impressive results show that our multi-year strategy to create a more optimized commercial portfolio is working,” he added.

First Quarter of Fiscal Year 2021 Highlights:

  • Net revenue: $7.8 billion
  • Diversified Manufacturing Services (DMS) year-on-year revenue growth: 13 percent
  • Electronics Manufacturing Services (EMS) year-on-year revenue decrease: 4 percent
  • U.S. GAAP operating income: $314.0 million 
  • U.S. GAAP diluted earnings per share: $1.31
  • Core operating income (Non-GAAP): $364.9 million 
  • Core diluted earnings per share (Non-GAAP): $1.60

Second Quarter of Fiscal Year 2021 Outlook:

  • Net revenue

 

$6.2 billion to $6.8 billion

 

  • U.S. GAAP operating income

 

$173 million to $226 million

 

  • U.S. GAAP diluted earnings per share

 

$0.60 to $0.82 per diluted share

 

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

 

$210 million to $260 million

 

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

 

$0.83 to $1.03 per diluted share

 

  • Total company revenue

 

Increase 6 percent year-on-year

 

 

 

 

 

 

 

 

 

Fiscal Year 2021 Updated Outlook:

"Given our strong start to the year, combined with our improved forecast, we now expect FY21 revenue will be in the neighborhood of $27.5 billion, while core margin and core EPS will increase to 4.1% and $4.60, respectively," added Mondello.

 

 

(1) Core operating income and core diluted earnings per share exclude anticipated adjustments of $11.0 million for amortization of intangibles (or $0.07 per diluted share), $18.0 million for stock-based compensation expense and related charges (or $0.11 per diluted share), $6.0 million to $3.0 million for restructuring, severance and related charges (or $0.04 to $0.02 per diluted share) and $2.0 million for acquisition and integration charges (or $0.01 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 first quarter of fiscal year 2021 and our guidance for future financial performance in our second 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) and in fiscal year 2021 (including revenue, core margin and core diluted earnings per share. 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 first quarter of fiscal year 2021 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; risks arising from relationships with emerging companies; 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 (including the expense of complying, or failing to comply, with applicable regulations; risk arising from design or manufacturing defects; and intellectual property risk); financial risks (including customers or suppliers who become financially troubled; turmoil in financial markets; tax risks; credit rating risks; risks of exposure to debt; currency fluctuations; energy prices; and asset impairment); changes in financial accounting standards or policies; and risk of natural disaster, climate change or other global events.  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, 2020 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 first quarter of fiscal year 2021. 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)

 

 

November 30, 2020

 

 

 

(unaudited)

 

August 31, 2020

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

1,107,573 

 

 

$

1,393,557 

 

Accounts receivable, net

3,651,869 

 

 

2,847,743 

 

Contract assets

1,088,059 

 

 

1,104,700 

 

Inventories, net

3,271,842 

 

 

3,131,783 

 

Prepaid expenses and other current assets

727,849 

 

 

657,102 

 

Total current assets

9,847,192 

 

 

9,134,885 

 

Property, plant and equipment, net

3,792,091 

 

 

3,665,312 

 

Operating lease right-of-use asset

391,004 

 

 

362,847 

 

Goodwill and intangible assets, net

905,426 

 

 

906,723 

 

Deferred income taxes

165,264 

 

 

165,407 

 

Other assets

168,501 

 

 

162,242 

 

Total assets

$

15,269,478 

 

 

$

14,397,416 

 

LIABILITIES AND EQUITY

 

 

 

Current liabilities:

 

 

 

Current installments of notes payable and long-term debt

$

50,195 

 

 

$

50,194 

 

Accounts payable

6,431,567 

 

 

5,687,038 

 

Accrued expenses

3,061,092 

 

 

3,211,528 

 

Current operating lease liabilities

119,150 

 

 

110,723 

 

Total current liabilities

9,662,004 

 

 

9,059,483 

 

Notes payable and long-term debt, less current installments

2,679,005 

 

 

2,678,288 

 

Other liabilities

331,093 

 

 

268,925 

 

Non-current operating lease liabilities

324,379 

 

 

302,035 

 

Income tax liabilities

163,459 

 

 

148,629 

 

Deferred income taxes

115,587 

 

 

114,657 

 

Total liabilities

13,275,527 

 

 

12,572,017 

 

Commitments and contingencies

 

 

 

Equity:

 

 

 

Jabil Inc. stockholders’ equity:

 

 

 

Preferred stock

— 

 

 

— 

 

Common stock

266 

 

 

264 

 

Additional paid-in capital

2,445,582 

 

 

2,413,616 

 

Retained earnings

2,228,729 

 

 

2,040,922 

 

Accumulated other comprehensive loss

(14,346)

 

 

(34,168)

 

Treasury stock, at cost

(2,680,860)

 

 

(2,609,250)

 

Total Jabil Inc. stockholders’ equity

1,979,371 

 

 

1,811,384 

 

Noncontrolling interests

14,580 

 

 

14,015 

 

Total equity

1,993,951 

 

 

1,825,399 

 

Total liabilities and equity

$

15,269,478 

 

 

$

14,397,416 

 

 

 

JABIL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except for per share data)

(Unaudited)

 

 

Three months ended

 

November 30, 2020

 

November 30, 2019

Net revenue

$

7,832,529 

 

 

$

7,505,698 

 

Cost of revenue

7,197,969 

 

 

6,951,859 

 

Gross profit

634,560 

 

 

553,839 

 

Operating expenses:

 

 

 

Selling, general and administrative

302,752 

 

 

328,899 

 

Research and development

8,118 

 

 

10,770 

 

Amortization of intangibles

11,455 

 

 

16,140 

 

Restructuring, severance and related charges

(1,715)

 

 

45,251 

 

Operating income

313,950 

 

 

152,779 

 

Interest and other, net

28,543 

 

 

50,139 

 

Income before income tax

285,407 

 

 

102,640 

 

Income tax expense

84,400 

 

 

61,926 

 

Net income

201,007 

 

 

40,714 

 

Net income attributable to noncontrolling interests, net of tax

565 

 

 

292 

 

Net income attributable to Jabil Inc.

$

200,442 

 

 

$

40,422 

 

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

 

 

 

Basic

$

1.33 

 

 

$

0.26 

 

Diluted

$

1.31 

 

 

$

0.26 

 

Weighted average shares outstanding:

 

 

 

Basic

150,157 

 

 

153,100 

 

Diluted

152,918 

 

 

156,462 

 

 

 

JABIL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

 

 

Three months ended

 

November 30, 2020

 

November 30, 2019

Cash flows provided by operating activities:

 

 

 

Net income

$

201,007 

 

 

$

40,714 

 

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

 

 

 

Depreciation and amortization

205,766 

 

 

202,859 

 

Restructuring and related charges

(1,556)

 

 

18,347 

 

Recognition of stock-based compensation expense and related charges

33,541 

 

 

30,223 

 

Deferred income taxes

(1,869)

 

 

(6,645)

 

Provision for allowance for doubtful accounts

2,426 

 

 

10,413 

 

Other, net

11,247 

 

 

1,179 

 

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

 

 

 

Accounts receivable

(791,492)

 

 

(863,210)

 

Contract assets

27,971 

 

 

(68,322)

 

Inventories

(134,723)

 

 

(286,775)

 

Prepaid expenses and other current assets

(54,243)

 

 

(31,413)

 

Other assets

(8,142)

 

 

(8,162)

 

Accounts payable, accrued expenses and other liabilities

575,527 

 

 

981,736 

 

Net cash provided by operating activities

65,460 

 

 

20,944 

 

Cash flows used in investing activities:

 

 

 

Acquisition of property, plant and equipment

(352,881)

 

 

(230,393)

 

Proceeds and advances from sale of property, plant and equipment

110,792 

 

 

23,209 

 

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

(18,417)

 

 

(116,767)

 

Other, net

(3,367)

 

 

(1,779)

 

Net cash used in investing activities

(263,873)

 

 

(325,730)

 

Cash flows used in financing activities:

 

 

 

Borrowings under debt agreements

200,000 

 

 

1,779,801 

 

Payments toward debt agreements

(201,969)

 

 

(1,787,243)

 

Payments to acquire treasury stock

(50,029)

 

 

(96,390)

 

Dividends paid to stockholders

(13,814)

 

 

(13,731)

 

Treasury stock minimum tax withholding related to vesting of restricted stock

(21,581)

 

 

(19,317)

 

Net cash used in financing activities

(87,393)

 

 

(136,880)

 

Effect of exchange rate changes on cash and cash equivalents

(178)

 

 

(1,835)

 

Net decrease in cash and cash equivalents

(285,984)

 

 

(443,501)

 

Cash and cash equivalents at beginning of period

1,393,557 

 

 

1,163,343 

 

Cash and cash equivalents at end of period

$

1,107,573 

 

 

$

719,842 

 

 

 

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

 

November 30, 2020

 

November 30, 2019

Operating income (U.S. GAAP)

$

313,950 

 

 

$

152,779 

 

Amortization of intangibles

11,455 

 

 

16,140 

 

Stock-based compensation expense and related charges

33,541 

 

 

30,223 

 

Restructuring, severance and related charges

(1,715)

 

 

45,251 

 

Distressed customer charge

— 

 

 

14,963 

 

Net periodic benefit cost (1)

5,593 

 

 

1,825 

 

Acquisition and integration charges

2,113 

 

 

16,134 

 

Adjustments to operating income

50,987 

 

 

124,536 

 

Core operating income (Non-GAAP)

$

364,937 

 

 

$

277,315 

 

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

$

200,442 

 

 

$

40,422 

 

Adjustments to operating income

50,987 

 

 

124,536 

 

Net periodic benefit cost (1)

(5,593)

 

 

(1,825)

 

Adjustments for taxes

(595)

 

 

497 

 

Core earnings (Non-GAAP)

$

245,241 

 

 

$

163,630 

 

Diluted earnings per share (U.S. GAAP)

$

1.31 

 

 

$

0.26 

 

Diluted core earnings per share (Non-GAAP)

$

1.60 

 

 

$

1.05 

 

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

152,918 

 

 

156,462 

 

 

 

  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.

 

 

JABIL INC. AND SUBSIDIARIES

SUPPLEMENTAL DATA

ADJUSTED FREE CASH FLOW

(in thousands)

(Unaudited)

 

Three months ended

 

November 30, 2020

 

November 30, 2019

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

$

65,460 

 

 

$

20,944 

 

Acquisition of property, plant and equipment

(352,881)

 

 

(230,393)

 

Proceeds and advances from sale of property, plant and equipment

110,792 

 

 

23,209 

 

Adjusted free cash flow (Non-GAAP)

$

(176,629)

 

 

$

(186,240)