JBL Jabil Inc

Expects Positive Momentum to Continue

Today, Jabil Inc. (NYSE: JBL), reported preliminary, unaudited financial results for its fourth quarter and fiscal year ended August 31, 2018.

“I’m really pleased with our fiscal 2018 results and the positive momentum we’re seeing across the business,” said CEO Mark Mondello. “Our team’s performance during the year culminated in double-digit revenue growth, 24 percent core EPS expansion and core ROIC of 19 percent, an increase of approximately 400 basis points year-on-year. At the same time, we made strategically important investments in areas like additive manufacturing and factory automation, while the underlying business allowed for nearly $1 billion in cash flow generation and $500 million in shareholder returns. By many measures, 2018 was another great year as we position the company to continue to deliver on our stated goals,” he added.

Fiscal Year 2018 Highlights:

• Net revenue: $22.1 billion
• Diversified Manufacturing Services (DMS) year-on-year revenue growth: 23 percent
• Electronics Manufacturing Services (EMS) year-on-year revenue growth: 11 percent
• U.S. GAAP operating income: $542.2 million
• U.S. GAAP diluted earnings per share: $0.49
• Core operating income (Non-GAAP): $768.1 million
• Core diluted earnings per share (Non-GAAP): $2.62

“As we begin fiscal 2019, we’re steadfast in our commitment to deliver value for shareholders. We’ll continue to pursue strategic capabilities and technologies in select end-markets that should result in even more sustainable earnings and cash flows over the next three to four years.” added Mondello.

First Quarter of Fiscal Year 2019 Guidance:

• Net revenue     $5.8 billion to $6.4 billion • U.S. GAAP operating income $158 million to $223 million • U.S. GAAP diluted earnings per share $0.45 to $0.74 per diluted share • Core operating income (Non-GAAP) (1) $215 million to $265 million • Core diluted earnings per share (Non-GAAP) (1) $0.79 to $0.99 per diluted share • Diversified Manufacturing Services Increase revenue 5 percent year-on-year • Electronics Manufacturing Services Increase revenue 13 percent year-on-year • Total company Increase revenue 9 percent year-on-year  

(1) Core operating income and core diluted earnings per share exclude anticipated adjustments of $8 million for amortization of intangibles (or $0.05 per diluted share), $24 million for stock-based compensation expense and related charges (or $0.14 per diluted share), $7 million to $2 million for restructuring and related charges (or $0.04 to $0.01 per diluted share) and $18 million to $8 million for acquisition and integration charges (or $0.11 to $0.05 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 before amortization of intangibles, stock-based compensation expense and related charges, restructuring 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. 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 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, 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 release contains forward-looking statements, including those regarding our anticipated financial results for our fourth quarter and full fiscal year 2018 and our guidance for future financial performance in our first quarter of fiscal year 2019 (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), core diluted earnings per share (Non-GAAP) results and the components thereof, net interest expense, and core tax rate(Non-GAAP). 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 our fourth quarter and full 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, core ROIC 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.

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 2018 and to provide an investor briefing. To access the live audio webcast and view the accompanying slide presentations, 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 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)         August 31, 2018 (unaudited) August 31, 2017 ASSETS Current assets: Cash and cash equivalents $ 1,257,949 $ 1,189,919 Accounts receivable, net 1,693,268 1,397,424 Inventories, net 3,457,706 2,942,083 Prepaid expenses and other current assets   1,141,000     1,097,257   Total current assets 7,549,923 6,626,683 Property, plant and equipment, net 3,198,016 3,228,678 Goodwill and intangible assets, net 906,876 892,780 Deferred income taxes 218,252 205,722 Other assets   172,574     142,132   Total assets $ 12,045,641   $ 11,095,995   LIABILITIES AND EQUITY Current liabilities: Current installments of notes payable and long-term debt $ 25,197 $ 444,255 Accounts payable 4,942,932 4,257,623 Accrued expenses   2,262,744     2,168,715   Total current liabilities 7,230,873 6,870,593 Notes payable and long-term debt, less current installments 2,493,502 1,606,017 Other liabilities 94,617 100,812 Income tax liabilities 148,884 100,902 Deferred income taxes   114,385     49,327   Total liabilities   10,082,261     8,727,651   Commitments and contingencies Equity: Jabil Inc. stockholders’ equity: Preferred stock — — Common stock 257 253 Additional paid-in capital 2,218,673 2,104,203 Retained earnings 1,760,097 1,730,893 Accumulated other comprehensive (loss) income (19,399 ) 54,620 Treasury stock, at cost   (2,009,371 )   (1,536,455 ) Total Jabil Inc. stockholders’ equity 1,950,257 2,353,514 Noncontrolling interests   13,123     14,830   Total equity   1,963,380     2,368,344   Total liabilities and equity $ 12,045,641   $ 11,095,995       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, 2018     August 31, 2017 August 31, 2018     August 31, 2017 Net revenue $ 5,771,831 $ 5,023,029 $ 22,095,416 $ 19,063,121 Cost of revenue   5,329,684     4,597,211   20,388,624   17,517,478   Gross profit 442,147 425,818 1,706,792 1,545,643 Operating expenses: Selling, general and administrative 261,234 241,823 1,050,716 907,702 Research and development 10,996 7,698 38,531 29,680 Amortization of intangibles 8,581 9,262 38,490 35,524 Restructuring and related charges 7,440 46,866 36,902 160,395 Loss on disposal of subsidiaries   —     2,112   —   2,112   Operating income 153,896 118,057 542,153 410,230 Interest and other, net   45,349     36,445   168,752   153,997   Income before income tax 108,547 81,612 373,401 256,233 Income tax expense   165,155     35,571   285,860   129,066   Net (loss) income (56,608 ) 46,041 87,541 127,167 Net income (loss) attributable to noncontrolling interests, net of tax   706     362   1,211   (1,923 ) Net (loss) income attributable to Jabil Inc. $ (57,314 ) $ 45,679 $ 86,330 $ 129,090   (Loss) earnings per share attributable to the stockholders of Jabil Inc.: Basic $ (0.34 ) $ 0.26 $ 0.50 $ 0.71   Diluted $ (0.34 ) $ 0.25 $ 0.49 $ 0.69   Weighted average shares outstanding: Basic   166,968     178,697   172,237   181,902   Diluted   166,968     182,977   175,044   185,838       JABIL INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (Unaudited)     Fiscal Year Ended August 31, 2018     August 31, 2017 Cash flows from operating activities: Net income $ 87,541 $ 127,167 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 773,704 760,405 Restructuring and related charges 16,264 94,346 Recognition of stock-based compensation expense and related charges 90,664 48,544 Deferred income taxes 52,705 (63,001 ) Provision for allowance for doubtful accounts 38,030 10,112 Other, net (13,600 ) 22,109 Change in operating assets and liabilities, exclusive of net assets acquired: Accounts receivable (316,262 ) (31,353 ) Inventories (499,105 ) (445,089 ) Prepaid expenses and other current assets (76,602 ) 19,346 Other assets (34,747 ) (30,413 ) Accounts payable, accrued expenses and other liabilities   815,258     744,470   Net cash provided by operating activities   933,850     1,256,643   Cash flows used in investing activities: Acquisition of property, plant and equipment (1,036,651 ) (716,485 ) Proceeds and advances from sale of property, plant and equipment 350,291 175,000 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   (798,384 )   (579,465 ) Cash flows used in financing activities: Borrowings under debt agreements 9,677,424 7,434,107 Payments toward debt agreements (9,206,016 ) (7,479,150 ) Payments to acquire treasury stock (450,319 ) (306,640 ) Dividends paid to stockholders (57,833 ) (59,959 ) Net proceeds from exercise of stock options and issuance of common stock under employee stock purchase plan 24,865 21,791 Treasury stock minimum tax withholding related to vesting of restricted stock (22,597 ) (12,268 ) Other, net   (12,568 )   (2,427 ) Net cash used in financing activities   (47,044 )   (404,546 ) Effect of exchange rate changes on cash and cash equivalents   (20,392 )   5,228   Net increase in cash and cash equivalents 68,030 277,860 Cash and cash equivalents at beginning of period   1,189,919     912,059   Cash and cash equivalents at end of period $ 1,257,949   $ 1,189,919       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, 2018     August 31, 2017 August 31, 2018     August 31, 2017 Operating income (U.S. GAAP) $ 153,896   $ 118,057   $ 542,153 $ 410,230   Amortization of intangibles 8,581 9,262 38,490 35,524 Stock-based compensation expense and related charges 15,689 15,167 98,511 48,544 Restructuring and related charges 7,440 46,866 36,902 160,395 Distressed customer charge 18,004 — 32,710 10,198 Business interruption and impairment charges, net 577 — 11,299 — Loss on disposal of subsidiaries — 2,112 — 2,112 Acquisition and integration charges   8,082     —     8,082   —   Adjustments to operating income   58,373     73,407     225,994   256,773   Core operating income (Non-GAAP) $ 212,269   $ 191,464   $ 768,147 $ 667,003   Net (loss) income attributable to Jabil Inc. (U.S. GAAP) $ (57,314 ) $ 45,679 $ 86,330 $ 129,090 Adjustments to operating income 58,373 73,407 225,994 256,773 Impairment on securities — — — 11,539 Adjustments for taxes(1)   117,167     (1,933 )   146,206   (4,726 ) Core earnings (Non-GAAP) $ 118,226   $ 117,153   $ 458,530 $ 392,676   (Loss) earnings per share (U.S. GAAP): Basic $ (0.34 ) $ 0.26   $ 0.50 $ 0.71   Diluted $ (0.34 ) $ 0.25   $ 0.49 $ 0.69   Core earnings per share (Non-GAAP): Basic $ 0.71   $ 0.66   $ 2.66 $ 2.16   Diluted $ 0.70   $ 0.64   $ 2.62 $ 2.11   Weighted average shares outstanding used in the calculations of earnings per share (U.S. GAAP): Basic   166,968     178,697     172,237   181,902   Diluted   166,968     182,977     175,044   185,838   Weighted average shares outstanding used in the calculations of earnings per share (Non-GAAP):         Basic   166,968     178,697     172,237   181,902   Diluted   169,728     182,977     175,044   185,838     (1)   Includes a $111.4 million and $142.3 million provisional estimate to account for the effects of the Tax Cuts and Jobs Act for the three months and fiscal year ended August 31, 2018, respectively.     JABIL INC. AND SUBSIDIARIES SUPPLEMENTAL DATA RETURN ON INVESTED CAPITAL AND CORE RETURN ON INVESTED CAPITAL (in thousands) (Unaudited)         Three Months Ended Fiscal Year Ended August 31, 2018     August 31, 2017 August 31, 2018     August 31, 2017 Numerator: Operating income (U.S. GAAP) $ 153,896 $ 118,057 $ 542,153 $ 410,230 Tax effect (1)   (88,126 )   (35,771 )   (300,979 )   (137,087 ) After-tax operating income 65,770

 

82,286 241,174 273,143 x4 x4 x1 x1 Annualized after-tax operating income $ 263,080   $ 329,144   $ 241,174   $ 273,143   Core operating income (Non-GAAP) $ 212,269 $ 191,464 $ 768,147 $ 667,003 Tax effect (2)   (49,875 )   (37,610 )   (144,261 )   (134,930 ) After-tax core operating income 162,394 153,854 623,886 532,073 x4 x4 x1 x1 Annualized after-tax core operating income $ 649,576   $ 615,416   $ 623,886   $ 532,073   Denominator: Average total Jabil Inc. stockholders' equity (3) $ 2,061,699 $ 2,340,495 $ 2,151,886 $ 2,395,843 Average notes payable and long-term debt, less current installments (3) 2,321,562 1,638,591 2,063,047 1,853,302 Average current installments of notes payable and long-term debt (3) 148,698 492,241 235,348 245,654 Average cash and cash equivalents (3)   (967,720 )   (966,925 )   (1,223,934 )   (1,050,989 ) Net invested capital base $ 3,564,239   $ 3,504,402   $ 3,226,347   $ 3,443,810     Return on Invested Capital (U.S. GAAP) 7.4 % 9.4 % 7.5 % 7.9 % Adjustments noted above 10.8 % 8.2 % 11.8 % 7.6 % Core Return on Invested Capital (Non-GAAP) 18.2 % 17.6 % 19.3 % 15.5 %   (1)   This amount is calculated by adding the amount of income taxes attributable to its operating income (U.S. GAAP) and its interest expense.

(2)

This amount is calculated by adding the amount of income taxes attributable to its core operating income (Non-GAAP) and its interest expense.

(3)

The average is based on the addition of the account balance at the end of the most recently-ended quarter to the account balance at the end of the prior quarter for the three months ended August 31, 2018 and 2017, respectively, and dividing by two. The average is based on the addition of the account balance at the end of the most recently-ended fiscal year to the account balance at the end of the prior fiscal year for the fiscal years ended August 31, 2018 and 2017, respectively, and dividing by two.

 

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Jabil Inc.Adam Berry, 727-803-5772Vice President, Investor Relationsadam_berry@jabil.com