Jabil Posts Second Quarter Results

March 13, 2020

ST. PETERSBURG, Fla.--(BUSINESS WIRE)-- Today, Jabil Inc. (NYSE: JBL), reported preliminary, unaudited financial results for its second quarter of fiscal year 2020.

“After a stronger than expected start to the fiscal quarter, our factories were adversely impacted by workforce and supply chain disruptions associated with COVID-19,” said CEO Mark Mondello. “First and foremost, the safety and well-being of our people is our number one priority. Despite the near-term financial setback, our long-term strategy remains unchanged,” he added.

The second quarter expenses directly associated with business interruption caused by COVID-19 were approximately $53 million.

Second Quarter of Fiscal Year 2020 Highlights:

  • Net revenue: $6.1 billion
  • Diversified Manufacturing Services (DMS) year-on-year revenue growth: 1 percent
  • Electronics Manufacturing Services (EMS) year-on-year revenue growth: 1 percent
  • U.S. GAAP operating income: $90.6 million
  • U.S. GAAP diluted loss per share: $(0.02)
  • Core operating income (Non-GAAP): $159.4 million
  • Core diluted earnings per share (Non-GAAP): $0.50

Employee Update:

“In times of uncertainty and disruption, such as these, I’m continually inspired by the collective spirit and resiliency of our global workforce,” Mondello added.

Fiscal Year 2020 Update:

Our FY20 full year guidance, previously issued on December 17, 2019, did not anticipate the impact of a global pandemic. As a result, given the rapidly changing situation, we are withdrawing our FY20 full year guidance until we are able to update and quantify the underlying business assumptions.

(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 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 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, restructuring of securities loss, 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 our second quarter of fiscal year 2020. 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 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 sites, customers and supply chain; managing growth effectively; our dependence on a limited number of customers; competitive challenges affecting our customers; managing rapid declines in customer demand and other related customer challenges that may occur; changes in technology; the occurrence of, success and expected financial results from, product ramps; competition; our ability to maintain and improve costs, quality and delivery for our customers; 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; performance in the markets in which we operate; 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 second quarter of fiscal year 2020. 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 that delivers comprehensive design, manufacturing, supply chain and product management services. Leveraging the power of over 200,000 people across 100 sites strategically located around the world, Jabil simplifies complexity and delivers value in a broad range of industries, enabling innovation, growth and customer success. For more information, visit jabil.com

JABIL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

         

 

 

February 29, 202

 

 

 

 

(unaudited)

 

August 31, 201

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

696,745

 

 

$

1,163,343

 

Accounts receivable, net

 

2,314,055

 

 

2,745,226

 

Contract assets

 

1,057,656

 

 

911,940

 

Inventories, net

 

3,339,890

 

 

3,023,003

 

Prepaid expenses and other current assets

 

569,493

 

 

501,573

 

Total current assets

 

7,977,839

 

 

8,345,085

 

Property, plant and equipment, net

 

3,462,038

 

 

3,333,750

 

Operating lease right-of-use asset

 

373,413

 

 

 

Goodwill and intangible assets, net

 

935,574

 

 

879,108

 

Deferred income taxes

 

194,468

 

 

198,827

 

Other assets

 

196,346

 

 

213,705

 

Total assets

 

$

13,139,678

 

 

$

12,970,475

 

LIABILITIES AND EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Current installments of notes payable and long-term debt

 

$

637,841

 

 

$

375,181

 

Accounts payable

 

4,652,138

 

 

5,166,780

 

Accrued expenses

 

3,015,129

 

 

2,990,144

 

Current operating lease liabilities

 

100,033

 

 

 

Total current liabilities

 

8,405,141

 

 

8,532,105

 

Notes payable and long-term debt, less current installments

 

2,086,359

 

 

2,121,284

 

Other liabilities

 

315,875

 

 

163,821

 

Non-current operating lease liabilities

 

311,879

 

 

 

Income tax liabilities

 

143,161

 

 

136,689

 

Deferred income taxes

 

118,123

 

 

115,818

 

Total liabilities

 

11,380,538

 

 

11,069,717

 

Commitments and contingencies

 

 

 

 

Equity:

 

 

 

 

Jabil Inc. stockholders’ equity:

 

 

 

 

Preferred stock

 

 

 

 

Common stock

 

263

 

 

260

 

Additional paid-in capital

 

2,363,839

 

 

2,304,552

 

Retained earnings

 

2,048,954

 

 

2,037,037

 

Accumulated other comprehensive loss

 

(102,943

)

 

(82,794

)

Treasury stock, at cost

 

(2,563,282

)

 

(2,371,612

)

Total Jabil Inc. stockholders’ equity

 

1,746,831

 

 

1,887,443

 

Noncontrolling interests

 

12,309

 

 

13,315

 

Total equity

 

1,759,140

 

 

1,900,758

 

Total liabilities and equity

 

$

13,139,678

 

 

$

12,970,475

 

JABIL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except for per share data)

(Unaudited)

 

Three months ended

 

Six months ended

 

February 29, 2020

 

February 28, 2019

 

February 29, 2020

 

February 28, 2019

Net revenue

$

6,125,083

 

 

$

6,066,990

 

 

$

13,630,781

 

 

$

12,573,265

 

Cost of revenue

5,694,958

 

 

5,612,116

 

 

12,646,817

 

 

11,598,741

 

Gross profit

430,125

 

 

454,874

 

 

983,964

 

 

974,524

 

Operating expenses:

 

 

 

 

 

 

 

Selling, general and administrative

285,024

 

 

282,142

 

 

613,923

 

 

560,268

 

Research and development

11,290

 

 

10,155

 

 

22,060

 

 

21,298

 

Amortization of intangibles

13,577

 

 

7,777

 

 

29,717

 

 

15,423

 

Restructuring and related charges

29,604

 

 

817

 

 

74,855

 

 

6,842

 

Operating income

90,630

 

 

153,983

 

 

243,409

 

 

370,693

 

Impairment on securities

12,205

 

 

-

 

 

12,205

 

 

-

 

Interest and other, net

49,348

 

 

53,157

 

 

99,487

 

 

104,980

 

Income before income tax

29,077

 

 

100,826

 

 

131,717

 

 

265,713

 

Income tax expense

31,658

 

 

33,219

 

 

93,584

 

 

74,032

 

Net (loss) income

(2,581

)

 

67,607

 

 

38,133

 

 

191,681

 

Net income attributable to noncontrolling interests,

                     

net of tax

702

 

 

253

 

 

994

 

 

727

 

Net (loss) income attributable to Jabil Inc.

$

(3,283

)

 

$

67,354

 

 

$

37,139

 

 

$

190,954

 

(Loss) earnings per share attributable to the

             

stockholders of Jabil Inc.:

 

 

 

 

 

 

 

Basic

$

(0.02

)

 

$

0.44

 

 

$

0.24

 

 

$

1.21

 

Diluted

$

(0.02

)

 

$

0.43

 

 

$

0.24

 

 

$

1.19

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

Basic

152,058

 

 

154,725

 

 

152,579

 

 

158,160

 

Diluted

152,058

 

 

156,737

 

 

156,171

 

 

160,413

 

JABIL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

 

Six months ended

 

February 29, 2020

 

February 28, 2019

Cash flows provided by operating activities:

 

 

 

Net income

$

38,133

 

 

$

191,681

 

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

 

 

 

Depreciation and amortization

402,347

 

 

381,510

 

Restructuring and related charges

33,061

 

 

(3,212

)

Recognition of stock-based compensation expense and related charges

45,332

 

 

32,946

 

Deferred income taxes

3,087

 

 

23,921

 

Provision for allowance for doubtful accounts

10,185

 

 

5,598

 

Other, net

13,838

 

 

38,559

 

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

 

 

 

Accounts receivable

424,971

 

 

(365,192

)

Contract assets

(63,302

)

 

(815,144

)

Inventories

(279,664

)

 

225,036

 

Prepaid expenses and other current assets

(62,881

)

 

(4,895

)

Other assets

(8,438

)

 

(10,170

)

Accounts payable, accrued expenses and other liabilities

(472,503

)

 

407,127

 

Net cash provided by operating activities

84,166

 

 

107,765

 

Cash flows used in investing activities:

 

 

 

Acquisition of property, plant and equipment

(448,765

)

 

(537,140

)

Proceeds and advances from sale of property, plant and equipment

36,624

 

 

144,968

 

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

(141,195

)

 

(80,778

)

Cash receipts on sold receivables

 

 

96,846

 

Other, net

(2,013

)

 

(13,504

)

Net cash used in investing activities

(555,349

)

 

(389,608

)

Cash flows provided by (used in) financing activities:

 

 

 

Borrowings under debt agreements

5,063,358

 

 

6,182,931

 

Payments toward debt agreements

(4,835,697

)

 

(6,046,181

)

Payments to acquire treasury stock

(168,660

)

 

(350,323

)

Dividends paid to stockholders

(26,280

)

 

(27,422

)

Net proceeds from exercise of stock options and issuance of common stock under

employee stock purchase plan

16,179

 

 

14,587

 

Treasury stock minimum tax withholding related to vesting of restricted stock

(23,010

)

 

(11,204

)

Other, net

(11,617

)

 

(1,500

)

Net cash provided by (used in) financing activities

14,273

 

 

(239,112

)

Effect of exchange rate changes on cash and cash equivalents

(9,688

)

 

12,063

 

Net decrease in cash and cash equivalents

(466,598

)

 

(508,892

)

Cash and cash equivalents at beginning of period

1,163,343

 

 

1,257,949

 

Cash and cash equivalents at end of period

$

696,745

 

 

$

749,057

 

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 29, 2020

 

February 28, 2019

 

February 29, 2020

 

February 28, 2019

Operating income (U.S. GAAP)

$

90,630

 

 

$

153,983

 

 

$

243,409

 

 

$

370,693

 

Amortization of intangibles

13,577

 

 

7,777

 

 

29,717

 

 

15,423

 

Stock-based compensation expense and related

charges

15,109

 

 

15,697

 

 

45,332

 

 

32,946

 

Restructuring and related charges

29,604

 

 

817

 

 

74,855

 

 

6,842

 

Distressed customer charge

 

 

 

 

14,963

 

 

 

Net periodic benefit cost (1)

2,776

 

 

 

 

4,601

 

 

 

Business interruption and impairment charges, net

 

 

 

 

 

 

(2,860

)

Acquisition and integration charges

7,752

 

 

12,785

 

 

23,886

 

 

21,675

 

Adjustments to operating income

68,818

 

 

37,076

 

 

193,354

 

 

74,026

 

Core operating income (Non-GAAP)

$

159,448

 

 

$

191,059

 

 

$

436,763

 

 

$

444,719

 

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

GAAP)

$

(3,283

)

 

$

67,354

 

 

$

37,139

 

 

$

190,954

 

Adjustments to operating income

68,818

 

 

37,076

 

 

193,354

 

 

74,026

 

Impairment on securities

12,205

 

 

 

 

12,205

 

 

 

Net periodic benefit cost (1)

(2,776

)

 

 

 

(4,601

)

 

 

Adjustments for taxes(2)

3,091

 

 

(4,219

)

 

3,588

 

 

(17,962

)

Core earnings (Non-GAAP)

$

78,055

 

 

$

100,211

 

 

$

241,685

 

 

$

247,018

 

Diluted (loss) earnings per share (U.S. GAAP)

$

(0.02

)

 

$

0.43

 

 

$

0.24

 

 

$

1.19

 

Diluted core earnings per share (Non-GAAP)

$

0.50

 

 

$

0.64

 

 

$

1.55

 

 

$

1.54

 

Diluted weighted average shares outstanding (U.S.

GAAP)

152,058

 

 

156,737

 

 

156,171

 

 

160,413

 

Diluted weighted average shares outstanding (Non-

GAAP)

155,714

 

 

156,737

 

 

156,171

 

 

160,413

 

  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 six months ended February 28, 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)

     

 

 

Six months ended

 

 

February 29, 2020

 

February 28, 2019(1)

Net cash provided by operating activities (U.S. GAAP)

 

$

84,166

 

 

$

107,765

 

Cash receipts on sold receivables

 

 

 

96,846

 

Acquisition of property, plant and equipment

 

(448,765

)

 

(537,140

)

Proceeds and advances from sale of property, plant and equipment

 

36,624

 

 

144,968

 

Adjusted free cash flow (Non-GAAP)

 

$

(327,975

)

 

$

(187,561

)

(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.

Investor Contact
Adam Berry
Vice President, Investor Relations
Adam_Berry@jabil.com

Source: Jabil, Inc.

Email Alerts
RSS News Feeds
Information Request
Contact Us
Search