Positive Momentum Expected to Continue
Today, Jabil Inc. (NYSE: JBL), reported preliminary, unaudited
financial results for its second quarter of fiscal year 2023.
“The Jabil team delivered another outstanding quarter,
highlighted by excellent operational execution and solid revenue
growth,” said Chairman and CEO Mark Mondello. “Our diversified
portfolio allowed us to successfully navigate a very dynamic macro
environment and deliver robust year-on-year financial results,” he
added.
Second Quarter of Fiscal Year 2023 Highlights:
- Net revenue: $8.1 billion
- Diversified Manufacturing Services (DMS) year-on-year revenue
growth: 8 percent
- Electronics Manufacturing Services (EMS) year-on-year revenue
growth: 7 percent
- U.S. GAAP operating income: $359 million
- U.S. GAAP diluted earnings per share: $1.52
- Core operating income (Non-GAAP): $391 million
- Core diluted earnings per share (Non-GAAP): $1.88
Third Quarter of Fiscal Year 2023 Outlook:
• Net revenue
$7.9 billion to $8.5 billion
• U.S. GAAP operating income
$336 million to $396 million
• U.S. GAAP diluted earnings per share
$1.50 to $1.90 per diluted share
• Core operating income (Non-GAAP) (1)
$363 million to $423 million
• Core diluted earnings per share
(Non-GAAP) (1)
$1.70 to $2.10 per diluted share
Fiscal Year 2023 Updated Outlook:
“I remain confident in both our plan moving forward and with the
momentum underway across our business,” said incoming CEO Kenny
Wilson. “For the fiscal year, we now believe the team will deliver
4.9% core operating margin on $34.5 billion in revenue,” added
Wilson.
________________
(1) Core operating income and core diluted earnings per share
exclude anticipated adjustments of $8 million for amortization of
intangibles (or $0.06 per diluted share) and $19 million for
stock-based compensation expense and related charges (or $0.14 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 core
operating income, less loss on debt extinguishment, loss (gain) on
securities, other components of net periodic benefit cost, 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 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 our second quarter of fiscal year
2023 and our guidance for future financial performance in our third
quarter of fiscal year 2023 (including, net 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 and stock-based compensation
expense and related charges) and our full year 2023 (including
revenue and core operating margin (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 second
quarter of fiscal year 2023 that our financial results and
conditions differ from our current preliminary unaudited numbers
set forth herein; scheduling production, managing growth and
capital expenditures and maximizing the efficiency of our
manufacturing capacity effectively; managing rapid declines or
increases in customer demand and other related customer challenges
that may occur; the scope and duration of the COVID-19 outbreak and
its impact on our operations, sites, customers and supply chain;
our dependence on a limited number of customers; our ability to
purchase components efficiently and reliance on a limited number of
suppliers for critical components; risks arising from relationships
with emerging companies; changes in technology and competition in
our industry; 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;
risks associated with international sales and operations, including
geopolitical uncertainties in Russia and Ukraine; energy price
increases or shortages; 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; 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, 2022 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.
For fiscal year 2023, the Company adopted an annual normalized
tax rate (“normalized core tax rate”) for the computation of the
non-GAAP (core) income tax provision to provide better consistency
across reporting periods. In estimating the normalized core tax
rate annually, the Company utilizes a full-year financial
projection of core earnings that considers the mix of earnings
across tax jurisdictions, existing tax positions, and other
significant tax matters. The Company may adjust the normalized core
tax rate during the year for material impacts from new tax
legislation or material changes to the Company’s operations.
Prior to fiscal year 2023, the Company determined the tax effect
of the items included and excluded from core earnings
quarterly.
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 second quarter of fiscal year 2023. 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 250,000 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 millions)
February 28, 2023
(unaudited)
August 31, 2022
ASSETS
Current assets:
Cash and cash equivalents
$
1,200
$
1,478
Accounts receivable, net
3,715
3,995
Contract assets
1,175
1,196
Inventories, net
6,519
6,128
Prepaid expenses and other current
assets
1,172
1,111
Total current assets
13,781
13,908
Property, plant and equipment, net
3,903
3,954
Operating lease right-of-use asset
501
500
Goodwill and intangible assets, net
852
862
Deferred income taxes
217
199
Other assets
313
294
Total assets
$
19,567
$
19,717
LIABILITIES AND EQUITY
Current liabilities:
Current installments of notes payable and
long-term debt
$
323
$
300
Accounts payable
6,965
8,006
Accrued expenses
5,866
5,272
Current operating lease liabilities
128
119
Total current liabilities
13,282
13,697
Notes payable and long-term debt, less
current installments
2,577
2,575
Other liabilities
297
272
Non-current operating lease
liabilities
405
417
Income tax liabilities
206
182
Deferred income taxes
126
122
Total liabilities
16,893
17,265
Commitments and contingencies
Equity:
Jabil Inc. stockholders’ equity:
Preferred stock
—
—
Common stock
—
—
Additional paid-in capital
2,742
2,655
Retained earnings
4,046
3,638
Accumulated other comprehensive income
(loss)
9
(42
)
Treasury stock, at cost
(4,124
)
(3,800
)
Total Jabil Inc. stockholders’ equity
2,673
2,451
Noncontrolling interests
1
1
Total equity
2,674
2,452
Total liabilities and equity
$
19,567
$
19,717
JABIL INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(in millions, except for per
share data)
(Unaudited)
Three months ended
Six months ended
February 28, 2023
February 28, 2022
February 28, 2023
February 28, 2022
Net revenue
$
8,134
$
7,553
$
17,769
$
16,120
Cost of revenue
7,473
6,944
16,365
14,836
Gross profit
661
609
1,404
1,284
Operating expenses:
Selling, general and administrative
285
280
604
588
Research and development
8
8
17
17
Amortization of intangibles
9
8
17
16
Restructuring, severance and related
charges
—
—
45
—
Operating income
359
313
721
663
Interest and other, net
72
29
135
62
Income before income tax
287
284
586
601
Income tax expense
80
62
156
138
Net income
207
222
430
463
Net income attributable to noncontrolling
interests, net of tax
—
—
—
—
Net income attributable to Jabil Inc.
$
207
$
222
$
430
$
463
Earnings per share attributable to the
stockholders of Jabil Inc.:
Basic
$
1.55
$
1.55
$
3.21
$
3.22
Diluted
$
1.52
$
1.51
$
3.14
$
3.15
Weighted average shares outstanding:
Basic
133.6
143.5
134.2
143.8
Diluted
136.3
146.4
137.1
147.0
JABIL INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(in millions)
(Unaudited)
Six months ended
February 28, 2023
February 28, 2022
Cash flows provided by operating
activities:
Net income
$
430
$
463
Depreciation, amortization, and other,
net
514
524
Change in operating assets and
liabilities, exclusive of net assets acquired
(364
)
(787
)
Net cash provided by operating
activities
580
200
Cash flows used in investing
activities:
Acquisition of property, plant and
equipment
(637
)
(704
)
Proceeds and advances from sale of
property, plant and equipment
169
430
Cash paid for business and intangible
asset acquisitions, net of cash
—
(18
)
Other, net
(16
)
—
Net cash used in investing activities
(484
)
(292
)
Cash flows used in financing
activities:
Borrowings under debt agreements
2,021
984
Payments toward debt agreements
(2,070
)
(1,038
)
Payments to acquire treasury stock
(288
)
(272
)
Dividends paid to stockholders
(23
)
(25
)
Net proceeds from exercise of stock
options and issuance of common stock under employee stock purchase
plan
27
26
Treasury stock minimum tax withholding
related to vesting of restricted stock
(36
)
(44
)
Other, net
(2
)
(12
)
Net cash used in financing activities
(371
)
(381
)
Effect of exchange rate changes on cash
and cash equivalents
(3
)
(1
)
Net decrease in cash and cash
equivalents
(278
)
(474
)
Cash and cash equivalents at beginning of
period
1,478
1,567
Cash and cash equivalents at end of
period
$
1,200
$
1,093
JABIL INC. AND
SUBSIDIARIES
SUPPLEMENTAL DATA
RECONCILIATION OF U.S. GAAP
FINANCIAL RESULTS TO NON-GAAP MEASURES
(in millions, except for per
share data)
(Unaudited)
Three months ended
Six months ended
February 28, 2023
February 28, 2022
February 28, 2023
February 28, 2022
Operating income (U.S. GAAP)
$
359
$
313
$
721
$
663
Amortization of intangibles
9
8
17
16
Stock-based compensation expense and
related charges
20
16
62
51
Restructuring, severance and related
charges
—
—
45
—
Net periodic benefit cost(1)
3
7
7
14
Adjustments to operating income
32
31
131
81
Core operating income
(Non-GAAP)
$
391
$
344
$
852
$
744
Net income attributable to Jabil Inc.
(U.S. GAAP)
$
207
$
222
$
430
$
463
Adjustments to operating income
32
31
131
81
Net periodic benefit cost(1)
(3
)
(7
)
(7
)
(14
)
Adjustments for taxes
20
—
21
—
Core earnings (Non-GAAP)
$
256
$
246
$
575
$
530
Diluted earnings per share (U.S. GAAP)
$
1.52
$
1.51
$
3.14
$
3.15
Diluted core earnings per share
(Non-GAAP)
$
1.88
$
1.68
$
4.19
$
3.60
Diluted weighted average shares
outstanding (U.S. GAAP & Non-GAAP)
136.3
146.4
137.1
147.0
__________________
(1)
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 millions)
(Unaudited)
Six months ended
February 28, 2023
February 28, 2022
Net cash provided by operating
activities (U.S. GAAP)
$
580
$
200
Acquisition of property, plant and
equipment (“PP&E”)(1)
(637
)
(704
)
Proceeds and advances from sale of
PP&E(1)
169
430
Adjusted free cash flow
(Non-GAAP)
$
112
$
(74
)
__________________
(1)
Certain customers co-invest in property,
plant and equipment (“PP&E”) with us. As we acquire PP&E,
we recognize the cash payments in acquisition of PP&E. When our
customers reimburse us and obtain control, we recognized the cash
receipts in proceeds and advances from the sale of PP&E.
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version on businesswire.com: https://www.businesswire.com/news/home/20230316005227/en/
Investor Contact Adam Berry Vice President, Investor
Relations Adam_Berry@jabil.com
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