8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 OR 15(d)

of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) December 18, 2018

 

 

Jabil Inc.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   001-14063   38-1886260

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

10560 Dr. Martin Luther King, Jr. Street North, St. Petersburg, Florida 33716

(Address of principal executive offices)    (Zip Code)

Registrant’s telephone number, including area code (727) 577-9749

N/A

(Former name or former address, if changed since last report.)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 


Item 2.02 Results of Operations and Financial Condition.

On December 18, 2018, Jabil Inc. (the “Company”) issued a press release announcing its results of operations for the first fiscal quarter ended November 30, 2018. A copy of the press release is furnished as Exhibit 99.1 hereto and is incorporated herein by reference.

The information furnished herewith pursuant to Item 2.02 of this Current Report, including Exhibit 99.1, shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section. The information in this Current Report shall not be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date of this Current Report, regardless of any general incorporation language in the filing.

Item 9.01. Financial Statements and Exhibits.

(d)    Exhibits

The following exhibit is furnished herewith:

 

Exhibit No.   

Description

99.1    Press Release dated December 18, 2018.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

   

JABIL INC.

(Registrant)

December 18, 2018     By:  

/s/ MICHAEL DASTOOR

      Michael Dastoor
      Chief Financial Officer
EX-99.1

Exhibit 99.1

 

LOGO

Jabil Posts Record First Quarter Results

Diversification Strategy Delivers Strong Performance

ST. PETERSBURG, Fla. – December 18, 2018 Today, Jabil Inc. (NYSE: JBL), reported preliminary, unaudited financial results for its first quarter of fiscal year 2019.

“I’m extremely pleased with our outstanding first quarter results. The team continued to ramp challenging new programs in targeted markets and achieved double-digit growth through excellent operational execution,” said CEO Mark Mondello. “These strong results reflect record revenue, operating income and core EPS. The exceptional performance is proof that our diversification strategy is working and delivering predictable returns,” he added.

First Quarter of Fiscal Year 2019 Highlights:

 

   

Net revenue: $6.5 billion

 

   

Diversified Manufacturing Services (DMS) year-on-year revenue growth: 10 percent

 

   

Electronics Manufacturing Services (EMS) year-on-year revenue growth: 22 percent

 

   

U.S. GAAP operating income: $216.7 million

 

   

U.S. GAAP diluted earnings per share: $0.76

 

   

Core operating income (Non-GAAP): $253.7 million

 

   

Core diluted earnings per share (Non-GAAP): $0.90

“We expect this positive momentum to continue into our second quarter driven by strength in end-markets like automotive, cloud, healthcare and 5G wireless. I’m also pleased that the outlook for fiscal 2019 remains consistent as we deliver value for shareholders through strong earnings growth and year-over-year increasing cash flows,” added Mondello.

Second Quarter of Fiscal Year 2019 Guidance:

 

•  Net revenue

  

$5.8 billion to $6.4 billion

•  U.S. GAAP operating income

  

$116 million to $168 million

•  U.S. GAAP diluted earnings per share

  

$0.20 to $0.48 per diluted share

•  Core operating income (Non-GAAP) (1)

  

$165 million to $205 million

•  Core diluted earnings per share (Non-GAAP) (1)

  

$0.51 to $0.71 per diluted share

•  Diversified Manufacturing Services revenue

  

Increase 6 percent year-on-year

•  Electronics Manufacturing Services revenue

  

Increase 23 percent year-on-year

•  Total company revenue

  

Increase 15 percent year-on-year

(1) Core operating income and core diluted earnings per share exclude anticipated adjustments of $8.0 million for amortization of intangibles (or $0.05 per diluted share), $16.0 million for stock-based compensation expense and related charges (or $0.10 per diluted share), $9.0 million to $3.0 million for restructuring and related charges (or $0.06 to $0.02 per diluted share) and $16.0 million to $10.0 million for acquisition and integration charges (or $0.10 to $0.06 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 calculates its core return on invested capital (“ROIC”) by annualizing its after-tax core operating income for its most recently ended quarter and dividing that by a two quarter average net invested capital base. The Company calculates its after-tax core operating income as its core operating income less a certain tax effect (the amount is determined by adding the amount of income taxes attributable to its core operating income and its interest expense). The Company calculates its average net invested capital base as the sum of the averages of its stockholders’ equity, current and non-current portions of its notes payable and long-term debt less the average of its cash and cash equivalents. The calculation of the averages discussed in the previous sentence 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 and dividing by two. 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, core ROIC 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 first quarter of fiscal year 2019 and our guidance for future financial performance in our second 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, including but not limited to amortization of intangibles, stock-based compensation expense and related charges, restructuring 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 our first quarter of fiscal year 2019 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, 2018 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, core ROIC 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 to discuss its first quarter results today at 4:30 p.m. ET. 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 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.

Investor Contact

Adam Berry

Vice President, Investor Relations

(727) 803-5772

Adam_Berry@jabil.com

Media Contact

Michelle Smith

Vice President, Corporate Communications

(727) 803-3534

Michelle_Smith@jabil.com


JABIL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

 

     November 30, 2018
(unaudited)
  August 31, 2018
ASSETS         

Current assets:

    

Cash and cash equivalents

   $ 804,409     $ 1,257,949  

Accounts receivable, net

     2,777,601       1,693,268  

Inventories, net

     3,214,513       3,457,706  

Contract assets

     761,405        

Prepaid expenses and other current assets

     662,811       1,141,000  
  

 

 

 

 

 

 

 

Total current assets

     8,220,739       7,549,923  

Property, plant and equipment, net

     3,271,559       3,198,016  

Goodwill and intangible assets, net

     896,115       906,876  

Deferred income taxes

     216,209       218,252  

Other assets

     173,715       172,574  
  

 

 

 

 

 

 

 

Total assets

   $ 12,778,337     $ 12,045,641  
  

 

 

 

 

 

 

 

LIABILITIES AND EQUITY         

Current liabilities:

    

Current installments of notes payable and long-term debt

   $ 25,193     $ 25,197  

Accounts payable

     5,458,398       4,942,932  

Accrued expenses

     2,551,720       2,262,744  
  

 

 

 

 

 

 

 

Total current liabilities

     8,035,311       7,230,873  

Notes payable and long-term debt, less current installments

     2,487,912       2,493,502  

Other liabilities

     96,317       94,617  

Income tax liabilities

     136,480       148,884  

Deferred income taxes

     116,804       114,385  
  

 

 

 

 

 

 

 

Total liabilities

     10,872,824       10,082,261  
  

 

 

 

 

 

 

 

Commitments and contingencies

    

Equity:

    

Jabil Inc. stockholders’ equity:

    

Preferred stock

            

Common stock

     259       257  

Additional paid-in capital

     2,235,827       2,218,673  

Retained earnings

     1,911,451       1,760,097  

Accumulated other comprehensive loss

     (31,948     (19,399

Treasury stock, at cost

     (2,223,673     (2,009,371
  

 

 

 

 

 

 

 

Total Jabil Inc. stockholders’ equity

     1,891,916       1,950,257  

Noncontrolling interests

     13,597       13,123  
  

 

 

 

 

 

 

 

Total equity

     1,905,513       1,963,380  
  

 

 

 

 

 

 

 

Total liabilities and equity

   $ 12,778,337     $ 12,045,641  
  

 

 

 

 

 

 

 


JABIL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except for per share data)

(Unaudited)

 

     Three months ended
     November 30, 2018    November 30, 2017

Net revenue

   $ 6,506,275      $ 5,585,532  

Cost of revenue

     5,986,625        5,116,247  
  

 

 

 

  

 

 

 

Gross profit

     519,650        469,285  

Operating expenses:

     

Selling, general and administrative

     278,126        293,055  

Research and development

     11,143        9,109  

Amortization of intangibles

     7,646        9,979  

Restructuring and related charges

     6,025        11,388  
  

 

 

 

  

 

 

 

Operating income

     216,710        145,754  

Interest and other, net

     51,823        38,315  
  

 

 

 

  

 

 

 

Income before income tax

     164,887        107,439  

Income tax expense

     40,813        43,520  
  

 

 

 

  

 

 

 

Net income

     124,074        63,919  

Net income attributable to noncontrolling interests, net of tax

     474        124  
  

 

 

 

  

 

 

 

Net income attributable to Jabil Inc.

   $ 123,600      $ 63,795  
  

 

 

 

  

 

 

 

Earnings per share attributable to the stockholders of Jabil Inc.:

     

Basic

   $ 0.77      $ 0.36  
  

 

 

 

  

 

 

 

Diluted

   $ 0.76      $ 0.35  
  

 

 

 

  

 

 

 

Weighted average shares outstanding:

     

Basic

     161,557        176,936  
  

 

 

 

  

 

 

 

Diluted

     163,670        180,203  
  

 

 

 

  

 

 

 


JABIL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

 

     Three months ended
     November 30, 2018   November 30, 2017

Cash flows provided by (used in) operating activities:

    

Net income

   $ 124,074     $ 63,919  

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

    

Depreciation and amortization

     188,836       194,633  

Restructuring and related charges

     184       6,812  

Recognition of stock-based compensation expense and related charges

     17,249       44,974  

Deferred income taxes

     4,371       (11,507

Other, net

     44,282       3,812  

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

    

Accounts receivable

     (600,630     (872,907

Contract assets

     (761,910      

Inventories

     242,506       (320,814

Prepaid expenses and other current assets

     (103,040     (99,635

Other assets

     (2,528     (13,549

Accounts payable, accrued expenses and other liabilities

     754,913       354,617  
  

 

 

 

 

 

 

 

Net cash used in operating activities

     (91,693     (649,645
  

 

 

 

 

 

 

 

Cash flows provided by (used in) investing activities:

    

Acquisition of property, plant and equipment

     (231,513     (218,617

Proceeds and advances from sale of property, plant and equipment

     10,227       20,330  

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

           (95,858

Cash receipts on sold receivables

     96,846       596,058  

Other, net

     (6,812     (1,067
  

 

 

 

 

 

 

 

Net cash (used in) provided by investing activities

     (131,252     300,846  
  

 

 

 

 

 

 

 

Cash flows provided by (used in) financing activities:

    

Borrowings under debt agreements

     3,071,559       1,792,000  

Payments toward debt agreements

     (3,078,197     (1,748,599

Payments to acquire treasury stock

     (204,587     (93,309

Dividends paid to stockholders

     (14,528     (16,231

Treasury stock minimum tax withholding related to vesting of restricted stock

     (9,715     (20,745

Other, net

     8       (3,912
  

 

 

 

 

 

 

 

Net cash used in financing activities

     (235,460     (90,796
  

 

 

 

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

     4,865       (4,066
  

 

 

 

 

 

 

 

Net decrease in cash and cash equivalents

     (453,540     (443,661

Cash and cash equivalents at beginning of period

     1,257,949       1,189,919  
  

 

 

 

 

 

 

 

Cash and cash equivalents at end of period

   $ 804,409     $ 746,258  
  

 

 

 

 

 

 

 


JABIL INC. AND SUBSIDIARIES

SUPPLEMENTAL DATA

RECONCILIATION OF U.S. GAAP FINANCIAL RESULTS TO NON-GAAP MEASURES

(Unaudited)

 

     Three months ended
(in thousands, except for per share data)    November 30, 2018   November 30, 2017

Operating income (U.S. GAAP)

   $ 216,710     $ 145,754  
  

 

 

 

 

 

 

 

Amortization of intangibles

     7,646       9,979  

Stock-based compensation expense and related charges

     17,249       52,745  

Restructuring and related charges

     6,025       11,388  

Business interruption and impairment charges, net

     (2,860     7,354  

Acquisition and integration charges

     8,890       —    
  

 

 

 

 

 

 

 

Adjustments to operating income

     36,950       81,466  
  

 

 

 

 

 

 

 

Core operating income (Non-GAAP)

   $ 253,660     $ 227,220  
  

 

 

 

 

 

 

 

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

   $ 123,600     $ 63,795  

Adjustments to operating income

     36,950       81,466  

Adjustments for taxes(1)

     (13,743     (717
  

 

 

 

 

 

 

 

Core earnings (Non-GAAP)

   $ 146,807     $ 144,544  
  

 

 

 

 

 

 

 

Diluted earnings per share (U.S. GAAP)

   $ 0.76     $ 0.35  
  

 

 

 

 

 

 

 

Diluted core earnings per share (Non-GAAP)

   $ 0.90     $ 0.80  
  

 

 

 

 

 

 

 

Diluted weighted average shares outstanding (U.S. GAAP and Non-GAAP)

     163,670       180,203  
  

 

 

 

 

 

 

 

 

  (1)

Includes a $13.3 million tax benefit for the effects of the Tax Act for the three months ended November 30, 2018.


JABIL INC. AND SUBSIDIARIES

SUPPLEMENTAL DATA

ROIC & Core ROIC

(in thousands)

(Unaudited)

 

     Three months ended
     November 30, 2018   November 30, 2017

Numerator:

    

Operating income (U.S. GAAP)

   $ 216,710     $ 145,754  

Tax effect (1)

     (43,083     (44,362
  

 

 

 

 

 

 

 

After-tax operating income

     173,627       101,392  
     x     x
  

 

 

 

 

 

 

 

Annualized after-tax operating income

   $ 694,508     $ 405,568  
  

 

 

 

 

 

 

 

Core operating income (Non-GAAP)

   $ 253,660     $ 227,220  

Tax effect (2)

     (57,035     (44,726
  

 

 

 

 

 

 

 

After-tax core operating income

     196,625       182,494  
     x     x
  

 

 

 

 

 

 

 

Annualized after-tax core operating income

   $ 786,500     $ 729,976  
  

 

 

 

 

 

 

 

Denominator:

    

Average total Jabil Inc. stockholders’ equity (3)

   $ 1,921,086     $ 2,341,627  

Average notes payable and long-term debt, less current installments (3)

     2,490,707       1,663,013  

Average current installments of notes payable and long-term debt (3)

     25,195       436,259  

Average cash and cash equivalents (3)

     (1,031,179     (968,089
  

 

 

 

 

 

 

 

Net invested capital base

   $ 3,405,809     $ 3,472,810  
  

 

 

 

 

 

 

 

Return on Invested Capital (U.S. GAAP)

     20.4     11.7

Adjustments noted above

     2.7     9.3

Core Return on Invested Capital (Non-GAAP)

     23.1     21.0

 

  (1) 

This amount is calculated by adding the amount of income taxes attributable to operating income (U.S. GAAP) and interest expense.

  (2) 

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


JABIL INC. AND SUBSIDIARIES

SUPPLEMENTAL DATA

ADJUSTED FREE CASH FLOW

(in thousands)

(Unaudited)

 

     Three months ended
     November 30, 2018   November 30, 2017

Net cash used in operating activities (U.S. GAAP)(1)

   $ (91,693   $ (649,645

Cash receipts on sold receivables

     96,846       596,058  
  

 

 

 

 

 

 

 

Adjusted cash provided by (used in) operating activities (Non-GAAP)

   $ 5,153     $ (53,587

Acquisition of property, plant and equipment

     (231,513     (218,617

Proceeds and advances from sale of property, plant and equipment

     10,227       20,330  
  

 

 

 

 

 

 

 

Adjusted free cash flow (Non-GAAP)

   $ (216,133   $ (251,874
  

 

 

 

 

 

 

 

 

  (1) 

In the first quarter of fiscal year 2019, the adoption of Accounting Standards Updated (“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.