Reaffirms EPS Targets for FY18 and FY19;
Extends Capital Return Framework
Jabil Inc. (NYSE: JBL), reported preliminary, unaudited
financial results for its third quarter of fiscal year 2018.
Third Quarter of Fiscal Year 2018 Highlights:
- Net revenue: $5.4 billion
- Diversified Manufacturing Services
(DMS) Year-on-year revenue growth: 36 percent
- Electronics Manufacturing Services
(EMS) Year-on-year revenue growth: 12 percent
- U.S. GAAP operating income: $113.0
million
- U.S. GAAP diluted earnings per share:
$0.25
- Core operating income (Non-GAAP):
$150.1 million
- Core diluted earnings per share
(Non-GAAP): $0.46
“Our team achieved a strong third quarter characterized by solid
revenue growth and core margin expansion, year-on-year, while
navigating a challenging components market,” said CEO Mark
Mondello. “Our DMS segment grew by 36 percent, well-ahead of
expectations, and posted meaningful income growth on a yearly
basis. Similarly, our EMS segment grew both revenue and earnings by
double-digits during the quarter. Most importantly, these results
reflect one of our most diversified earnings performances in recent
memory giving us confidence in both our enterprise-level strategy
and outlook,” he added.
Fourth Quarter of Fiscal Year 2018 Guidance:
• Net revenue $5.2 billion to $5.6 billion • U.S. GAAP
operating income $144 million to $199 million • U.S. GAAP diluted
earnings per share $0.38 to $0.65 per diluted share • Core
operating income (Non-GAAP) (1) $175 million to $225 million • Core
diluted earnings per share (Non-GAAP) (1) $0.56 to $0.80 per
diluted share • Diversified Manufacturing Services Consistent
revenue year-on-year • Electronics Manufacturing Services Increase
revenue 13 percent year-on-year • Total company Increase revenue 8
percent year-on-year
(1) Fourth quarter core operating income and core diluted
earnings per share exclude anticipated adjustments of $8.6 million
for amortization of intangibles (or $0.05 per diluted share), $15.4
million for stock-based compensation expense and related charges
(or $0.09 per diluted share) and $7.0 million to $2.0 million for
restructuring and related charges (or $0.04 to $0.01 per diluted
share).
“Based on our strong year-to-date results and the guidance we’re
providing today for the fourth fiscal quarter, we now expect fiscal
2018 revenue and core earnings per share growth of 14 percent and
23 percent, respectively, as we deliver on our core earnings per
share target of $2.60. Additionally, given the confidence we have
in delivering $3.00 per share in fiscal 2019 and the value we see
in our business, we’ve elected to increase and extend our capital
return framework through fiscal 2019. This updated capital return
framework now perfectly aligns with the final portion of our
three-year strategic plan, and reflects management’s confidence to
generate additional cash flows on top of our desired investments
for the business,” added Mondello.
Jabil’s Board Authorizes $350 Million Share
Repurchase:
Since the inception of the Capital Return Framework in 2016,
Jabil has repurchased $716 million in Jabil common stock and
distributed $118 million to shareholders via its quarterly
dividend. At the end of the third fiscal quarter, $134 million in
capacity remains outstanding on our current share repurchase
authorization that expires on August 31, 2018.
Today, Jabil is announcing that its Board of Directors has
authorized an additional share repurchase program for the purchase
of up to $350 million in Jabil common stock. The share repurchase
authorization expires on August 31, 2019. The shares will be
repurchased from time-to-time through various methods, including
open market repurchases, at the Company's discretion and subject to
market conditions and other factors.
(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 third quarter of fiscal year
2018; our guidance for future financial performance in our fourth
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 fourth quarter of fiscal year 2018)
and full year 2018 (net revenue, operating cash flows and core
earnings per share (Non-GAAP)); and our plans to repurchase stock.
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 third 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; 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
under the heading “Supplemental Data” at the end of this
release.
Company Conference Call Information: Jabil will hold a
conference call to discuss its third 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 June 21, 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: 1466207. 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.
JABIL INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED
BALANCE SHEETS (in thousands) May 31,
2018 (unaudited) August 31, 2017 ASSETS
Current assets: Cash and cash equivalents $ 677,492 $ 1,189,919
Accounts receivable, net 1,586,685 1,397,424 Inventories, net
3,343,782 2,942,083 Prepaid expenses and other current assets
1,124,028 1,097,257 Total current assets 6,731,987
6,626,683 Property, plant and equipment, net 3,127,083 3,228,678
Goodwill and intangible assets, net 919,824 892,780 Deferred income
taxes 230,751 205,722 Other assets 165,865 142,132
Total assets $ 11,175,510 $ 11,095,995
LIABILITIES
AND EQUITY Current liabilities: Current installments of notes
payable, long-term debt and capital lease obligations $ 273,500 $
445,498 Accounts payable 4,327,659 4,257,623 Accrued expenses
1,980,266 2,167,472 Total current liabilities
6,581,425 6,870,593 Notes payable, long-term debt and capital lease
obligations, less current installments 2,175,133 1,632,592 Other
liabilities 66,690 74,237 Income tax liabilities 132,338 100,902
Deferred income taxes 34,366 49,327 Total liabilities
8,989,952 8,727,651 Commitments and contingencies
Equity: Jabil Inc. stockholders’ equity: Preferred stock — — Common
stock 257 253 Additional paid-in capital 2,191,406 2,104,203
Retained earnings 1,830,921 1,730,893 Accumulated other
comprehensive income 25,932 54,620 Treasury stock, at cost
(1,875,375 ) (1,536,455 ) Total Jabil Inc. stockholders’ equity
2,173,141 2,353,514 Noncontrolling interests 12,417 14,830
Total equity 2,185,558 2,368,344 Total
liabilities and equity $ 11,175,510 $ 11,095,995
JABIL INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS (in thousands, except for per share
data) (Unaudited) Three months
ended Nine months ended May 31, 2018
May 31, 2017 May 31, 2018 May 31, 2017
Net revenue $ 5,436,952 $ 4,489,557 $ 16,323,585 $ 14,040,092 Cost
of revenue 5,038,725 4,163,142 15,058,940
12,920,267 Gross profit 398,227 326,415 1,264,645 1,119,825
Operating expenses: Selling, general and administrative 252,487
233,884 789,482 665,879 Research and development 10,082 7,274
27,535 21,982 Amortization of intangibles 10,040 9,174 29,909
26,262 Restructuring and related charges 12,647 32,700
29,462 113,529 Operating income 112,971 43,383
388,257 292,173 Interest and other, net 41,818 47,601
123,403 117,552 Income (loss) before income tax
71,153 (4,218 ) 264,854 174,621 Income tax expense 28,451
21,481 120,705 93,495 Net income (loss) 42,702
(25,699 ) 144,149 81,126 Net income (loss) attributable to
noncontrolling interests, net of tax 161 (418 ) 505
(2,285 ) Net income (loss) attributable to Jabil Inc. $ 42,541
$ (25,281 ) $ 143,644 $ 83,411 Earnings (loss)
per share attributable to the stockholders of Jabil Inc.: Basic $
0.25 $ (0.14 ) $ 0.83 $ 0.46 Diluted $ 0.25
$ (0.14 ) $ 0.81 $ 0.45 Weighted average
shares outstanding: Basic 170,514 181,038 174,013
182,982 Diluted 173,279 181,038 176,997
186,621
JABIL INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (in thousands)
(Unaudited) Nine months ended May 31,
2018 May 31, 2017 Cash flows from operating
activities: Net income $ 144,149 $ 81,126 Adjustments to reconcile
net income to net cash provided by operating activities:
Depreciation and amortization 583,646 570,557 Restructuring and
related charges 14,838 58,613 Recognition of stock-based
compensation expense and related charges 74,977 33,377 Deferred
income taxes (39,762 ) (44,916 ) Provision for allowance for
doubtful accounts 20,577 8,524 Other, net (4,059 ) 17,766 Change in
operating assets and liabilities, exclusive of net assets acquired:
Accounts receivable (186,231 ) (85,761 ) Inventories (379,658 )
(216,149 ) Prepaid expenses and other current assets (32,981 )
100,397 Other assets (21,542 ) (28,852 ) Accounts payable, accrued
expenses and other liabilities 20,897 38,341 Net cash
provided by operating activities 194,851 533,023 Cash
flows from investing activities: Acquisition of property, plant and
equipment (819,167 ) (482,739 ) Proceeds and advances from sale of
property, plant and equipment 246,370 43,437 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
(684,821 ) (477,282 ) Cash flows from financing activities:
Borrowings under debt agreements 6,847,756 5,432,503 Payments
toward debt agreements (6,472,728 ) (5,370,936 ) Payments to
acquire treasury stock (316,394 ) (237,135 ) Dividends paid to
stockholders (44,274 ) (45,550 ) Net proceeds from exercise of
stock options and issuance of common stock under employee stock
purchase plan 12,844 11,246 Treasury stock minimum tax withholding
related to vesting of restricted stock (22,526 ) (11,558 ) Other,
net (11,876 ) (1,496 ) Net cash used in financing activities (7,198
) (222,926 ) Effect of exchange rate changes on cash and cash
equivalents (15,259 ) (943 ) Net decrease in cash and cash
equivalents (512,427 ) (168,128 ) Cash and cash equivalents at
beginning of period 1,189,919 912,059 Cash and cash
equivalents at end of period $ 677,492 $ 743,931
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 Nine
months ended May 31, 2018 May 31, 2017
May 31, 2018 May 31, 2017 Operating income
(U.S. GAAP) $ 112,971 $ 43,383 $ 388,257 $
292,173 Amortization of intangibles 10,040 9,174 29,909
26,262 Stock-based compensation expense and related charges 15,038
18,350 82,822 33,377 Restructuring and related charges 12,647
32,700 29,462 113,529 Distressed customer charge — 10,198 14,706
10,198 Business interruption and impairment charges, net (634 ) —
10,722 — Adjustments to operating income
37,091 70,422 167,621 183,366
Core
operating income (Non-GAAP) $ 150,062 $ 113,805 $
555,878 $ 475,539
Net income (loss) attributable
to Jabil Inc. (U.S. GAAP) $ 42,541 $ (25,281 ) $ 143,644 $
83,411 Adjustments to operating income 37,091 70,422 167,621
183,366 Impairment on securities — 11,539 — 11,539 Adjustments for
taxes(1) (16 ) 431 29,037 (2,793 )
Core earnings
(Non-GAAP) $ 79,616 $ 57,111 $ 340,302 $
275,523
Earnings (loss) per share (U.S. GAAP): Basic
$ 0.25 $ (0.14 ) $ 0.83 $ 0.46 Diluted $ 0.25
$ (0.14 ) $ 0.81 $ 0.45
Core earnings per
share (Non-GAAP): Basic $ 0.47 $ 0.32 $ 1.96
$ 1.51 Diluted $ 0.46 $ 0.31 $ 1.92
$ 1.48
Weighted average shares outstanding used in
the calculations of earnings per share (U.S. GAAP): Basic
170,514 181,038 174,013 182,982 Diluted
173,279 181,038 176,997 186,621
Weighted average shares outstanding used in the calculations of
earnings per share (Non-GAAP):
Basic 170,514 181,038 174,013 182,982
Diluted 173,279 184,940 176,997 186,621
(1) Includes a $30.9 million provisional estimate to account for
the effects of the Tax Cuts and Jobs Act for the nine months ended
May 31, 2018.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180614006029/en/
Jabil Inc.Beth Walters, 727-803-3511Senior Vice President,
Investor Relations & Communicationsbeth_walters@jabil.comorAdam
Berry, 727-803-5772Senior Director, Investor
Relationsadam_berry@jabil.com
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