Positive Momentum Expected to Continue
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.
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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200924005168/en/
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
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