Jabil Posts Second Quarter Results Reiterates Positive Outlook

Reiterates Positive Outlook

St. Petersburg, FL – March 15, 2018. Today Jabil Inc. (NYSE: JBL), reported preliminary, unaudited financial results for its second quarter of fiscal year 2018, including second quarter net revenue of $5.3 billion. For the second quarter of fiscal year 2018, U.S. GAAP (as defined below) operating income was $129.5 million and U.S. GAAP diluted earnings per share was $0.21.

Second Quarter of Fiscal Year 2018 Highlights:

  • Diversified Manufacturing Services (DMS) revenue growth: 38 percent

  • Electronics Manufacturing Services (EMS) revenue growth: 7 percent

  • Core operating income (Non-GAAP): $178.6 million

  • Core diluted earnings per share (Non-GAAP): $0.66

    “I’m pleased with the results of our second quarter, which was characterized by strong revenue growth, core operating income expansion and healthy cash flow generation,” said CEO Mark Mondello. “Additionally, we invested in several key new programs, returned approximately $150 million to shareholders via our capital return program and successfully renewed 10- year senior notes at a more favorable rate. These activities, both operational and strategic, position us well as we remain focused on diversifying our earnings and cash flows,” he added.

Third Quarter of Fiscal Year 2018 Guidance:

  • Net revenue                                                                            $4.75 billion to $5.05 billion

  • U.S. GAAP operating income                                                 $85 million to $135 million

  • U.S. GAAP diluted earnings per share                                  $0.12 to $0.38 per diluted share

  • Core operating income (Non-GAAP)                                     $125 million to $165 million

  • Core diluted earnings per share (Non-GAAP)                      $0.35 to $0.55 per diluted share

  • Diversified Manufacturing Services                                       Increase revenue 10 percent year-on-year 

  • Electronics Manufacturing Services                                      Increase revenue 8 percent year-on-year

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

“Looking ahead to the second half of fiscal 2018, we expect the broad-based growth across both of our segments to continue as we approach $21 billion in revenue for the year. At the same time, we remain committed to delivering $1 billion in operating cash flows and core earnings per share of approximately $2.60 for the year,” added Mondello.

(U.S. GAAP diluted earnings per share for the third quarter of fiscal year 2018 are currently estimated to include $0.06 per share for amortization of intangibles, $0.08 per share for stock-based compensation expense and related charges and $0.09 to $0.03 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, 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 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, 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 news release contains forward-looking statements, including those regarding our anticipated financial results for our second quarter of fiscal year 2018; our guidance for future financial performance in our third quarter of fiscal year 2018 (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), and core diluted earnings per share (Non-GAAP) results and the components thereof, in each case for our third quarter of fiscal year 2018) and full year 2018 (net revenue, operating cash flows and core earnings per share (Non-GAAP)). 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 second quarter of 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 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 in the Supplemental Data at the end of this release.

Company Conference Call Information: Jabil will hold a conference call to discuss its second quarter results today at 4:30 p.m. ET live on the Internet at www.jabil.com. The call will be recorded and archived on the web at www.jabil.com. A taped replay of the conference call will also be available through midnight ET on March 22, 2018. 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: 7399186. An archived webcast of the conference call will be available at https://investors.jabil.com/.

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.

Company Contacts:
Beth Walters
Senior Vice President, Investor Relations & Communications,  (727) 803-3511
beth_walters@jabil.com

Adam Berry
Senior Director, Investor Relations,  (727) 803-5772                                                                                                                                                                                        adam_berry@jabil.com 

 

JABIL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

 

 

February 28, 2018 (unaudited)

 

August 31, 2017

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$940,796

 

 

 

$

1,189,919

 

Accounts receivable, net

 

1,549,899

 

 

1,397,424

 

Inventories, net

 

3,387,995

 

 

2,942,083

 

Prepaid expenses and other current assets

 

1,157,485

 

 

1,097,257

 

Total current assets

 

7,036,175

 

 

6,626,683

 

Property, plant and equipment, net

 

3,141,952

 

 

3,228,678

 

Goodwill and intangible assets, net

 

927,599

 

 

892,780

 

Deferred income taxes

 

216,281

 

 

205,722

 

Other assets

 

166,250

 

 

142,132

 

Total assets

 

$11,488,257

 

 

 

$

11,095,995

 

LIABILITIES AND EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Current installments of notes payable, long-term debt and capital lease obligations

 

$27,158

 

 

 

$

445,498

 

Accounts payable

 

4,642,860

 

 

4,257,623

 

Accrued expenses

 

2,095,042

 

 

2,167,472

 

Total current liabilities

 

6,765,060

 

 

6,870,593

 

Notes payable, long-term debt and capital lease obligations, less current installments

 

2,181,478

 

 

1,632,592

 

Other liabilities

 

73,197

 

 

74,237

 

Income tax liabilities

 

136,310

 

 

100,902

 

Deferred income taxes

 

37,866

 

 

49,327

 

Total liabilities

 

9,193,911

 

 

8,727,651

 

Commitments and contingencies

 

 

 

 

Equity:

 

 

 

 

Jabil Inc. stockholders’ equity:

 

 

 

 

Preferred stock

 

 

 

 

Common stock

 

257

 

 

253

 

Additional paid-in capital

 

2,176,764

 

 

2,104,203

 

Retained earnings

 

1,802,372

 

 

1,730,893

 

Accumulated other comprehensive income

 

86,608

 

 

54,620

 

Treasury stock, at cost

 

(1,783,906

)

 

(1,536,455

)

Total Jabil Inc. stockholders’ equity

 

2,282,095

 

 

2,353,514

 

Noncontrolling interests

 

12,251

 

 

14,830

 

Total equity

 

2,294,346

 

 

2,368,344

 

Total liabilities and equity

 

$11,488,257

 

 

 

$

11,095,995

 

 

JABIL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except for per share data)

(Unaudited)

 

 

Three months ended

 

Six months ended

 

 

February 28, 2018

 

February 28, 2017

 

February 28, 2018

 

February 28, 2017

Net revenue

 

$

5,301,101

 

 

$

4,445,637

 

 

$

10,886,633

 

 

$

9,550,535

 

Cost of revenue

 

4,903,968

 

 

4,083,733

 

 

10,020,215

 

 

8,757,125

 

Gross profit

 

397,133

 

 

361,904

 

 

866,418

 

 

793,410

 

Operating expenses:

 

 

 

 

 

 

 

 

Selling, general and administrative

 

243,940

 

 

217,943

 

 

536,995

 

 

431,995

 

Research and development

 

8,344

 

 

7,085

 

 

17,453

 

 

14,708

 

Amortization of intangibles

 

9,890

 

 

8,766

 

 

19,869

 

 

17,088

 

Restructuring and related charges

 

5,427

 

 

44,927

 

 

16,815

 

 

80,829

 

Operating income

 

129,532

 

 

83,183

 

 

275,286

 

 

248,790

 

Interest and other, net

 

43,270

 

 

34,882

 

 

81,585

 

 

69,951

 

Income before income tax

 

86,262

 

 

48,301

 

 

193,701

 

 

178,839

 

Income tax expense

 

48,734

 

 

28,177

 

 

92,254

 

 

72,014

 

Net income

 

37,528

 

 

20,124

 

 

101,447

 

 

106,825

 

Net income (loss) attributable to noncontrolling interests, net of tax

 

220

 

 

(541

)

 

344

 

 

(1,867

)

Net income attributable to Jabil Inc.

 

$

37,308

 

 

$

20,665

 

 

$

101,103

 

 

$

108,692

 

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

 

 

 

 

 

 

 

 

Basic

 

$

0.21

 

 

$

0.11

 

 

$

0.58

 

 

$

0.59

 

Diluted

 

$

0.21

 

 

$

0.11

 

 

$

0.57

 

 

$

0.58

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

174,635

 

 

182,632

 

 

175,792

 

 

183,970

 

Diluted

 

176,953

 

 

185,010

 

 

178,578

 

 

186,463

 

 

JABIL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

 

 

Six months ended

 

 

February 28, 2018

 

February 28, 2017

Cash flows from operating activities:

 

 

 

 

Net income

 

$101,447

 

 

 

$

106,825

 

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

 

 

 

 

Depreciation and amortization

 

382,322

 

 

380,317

 

Restructuring and related charges

 

9,263

 

 

46,775

 

Recognition of stock-based compensation expense and related charges

 

59,938

 

 

15,027

 

Deferred income taxes

 

(24,535

)

 

(31,680

)

Provision for allowance for doubtful accounts

 

17,271

 

 

4,705

 

Other, net

 

(792

)

 

4,978

 

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

 

 

 

 

Accounts receivable

 

(131,947

)

 

(77,649

)

Inventories

 

(418,307

)

 

(19,521

)

Prepaid expenses and other current assets

 

(46,549

)

 

145,527

 

Other assets

 

(19,272

)

 

(41,971

)

Accounts payable, accrued expenses and other liabilities

 

369,346

 

 

(187,130

)

Net cash provided by operating activities

 

298,185

 

 

346,203

 

Cash flows from investing activities:

 

 

 

 

Acquisition of property, plant and equipment

 

(544,401

)

 

(320,674

)

Proceeds and advances from sale of property, plant and equipment

 

236,316

 

 

18,963

 

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

 

(95,858

)

 

(5,256

)

Other, net

 

(2,360

)

 

(1,360

)

Net cash used in investing activities

 

(406,303

)

 

(308,327

)

Cash flows from financing activities:

 

 

 

 

Borrowings under debt agreements

 

4,690,570

 

 

3,453,390

 

Payments toward debt agreements

 

(4,555,233

)

 

(3,471,329

)

Payments to acquire treasury stock

 

(225,108

)

 

(151,488

)

Dividends paid to stockholders

 

(30,431

)

 

(30,940

)

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

 

12,838

 

 

11,250

 

Treasury stock minimum tax withholding related to vesting of restricted stock

 

(22,343

)

 

(10,796

)

Other, net

 

(11,237

)

 

(1,499

)

Net cash used in financing activities

 

(140,944

)

 

(201,412

)

Effect of exchange rate changes on cash and cash equivalents

 

(61

)

 

6,575

 

Net decrease in cash and cash equivalents

 

(249,123

)

 

(156,961

)

Cash and cash equivalents at beginning of period

 

1,189,919

 

 

912,059

 

Cash and cash equivalents at end of period

 

$940,796

 

 

 

$

755,098

 

 

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

 

Six months ended

 

 

February 28, 2018

 

February 28, 2017

 

February 28, 2018

 

February 28, 2017

Operating income (U.S. GAAP)

 

$129,532

 

 

 

$

83,183

 

 

$

275,286

 

 

$

248,790

 

Amortization of intangibles

 

9,890

 

 

8,766

 

 

19,869

 

 

17,088

 

Distressed customer charge

 

14,706

 

 

 

 

14,706

 

 

 

Stock-based compensation expense and related charges

 

15,039

 

 

15,318

 

 

67,784

 

 

15,027

 

Restructuring and related charges

 

5,427

 

 

44,927

 

 

16,815

 

 

80,829

 

Business interruption and impairment charges, net

 

4,002

 

 

 

 

11,356

 

 

 

Adjustments to operating income

 

49,064

 

 

69,011

 

 

130,530

 

 

112,944

 

Core operating income (Non-GAAP)

 

$

178,596

 

 

$

152,194

 

 

$

405,816

 

 

$

361,734

 

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

 

$

37,308

 

 

$

20,665

 

 

$

101,103

 

 

$

108,692

 

Adjustments to operating income

 

49,064

 

 

69,011

 

 

130,530

 

 

112,944

 

Adjustments for taxes(1)

 

29,771

 

 

(899

)

 

29,054

 

 

(3,224

)

Core earnings (Non-GAAP)

 

$116,143

 

 

 

$

88,777

 

 

$

260,687

 

 

$

218,412

 

Earnings per share (U.S. GAAP):

 

 

 

 

 

 

 

 

Basic

 

$0.21

 

 

 

$

0.11

 

 

$

0.58

 

 

$

0.59

 

Diluted

 

$0.21

 

 

 

$

0.11

 

 

$

0.57

 

 

$

0.58

 

Core earnings per share (Non-GAAP):

 

 

 

 

 

 

 

 

Basic

 

$

0.67

 

 

$

0.49

 

 

$

1.48

 

 

$

1.19

 

Diluted

 

$

0.66

 

 

$

0.48

 

 

$

1.46

 

 

$

1.17

 

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

 

 

 

 

 

 

 

 

Basic

 

174,635

 

 

182,632

 

 

175,792

 

 

183,970

 

Diluted

 

176,953

 

 

185,010

 

 

178,578

 

 

186,463

 

(1)    Includes a $30.9 million provisional estimate to account for the effects of the Tax Cuts and Jobs Act for the three months and six months ended February 28, 2018.