8-K
JABIL INC false 0000898293 0000898293 2020-03-13 2020-03-13

 

 

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) March 13, 2020

 

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

(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))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

 

Trading

symbol(s)

 

Name of each exchange

on which registered

Common Stock, $0.001 par value per share

 

JBL

 

New York Stock Exchange

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 March 13, 2020, Jabil Inc. (the “Company”) issued a press release announcing its results of operations for the second fiscal quarter ended February 29, 2020. 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 March 13, 2020.

         
 

104

   

Cover Page Interactive Data File - Embedded within the inline XBRL document


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)

             

March 13, 2020

 

 

By:

 

/s/ Michael Dastoor

 

 

 

Michael Dastoor

 

 

 

Chief Financial Officer

EX-99.1

Exhibit 99.1

 

LOGO

Jabil Posts Second Quarter Results

ST. PETERSBURG, Fla. – March 13, 2020 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

Investor Contact

Adam Berry

Vice President, Investor Relations

Adam_Berry@jabil.com


JABIL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

 

     February 29, 2020        
     (unaudited)     August 31, 2019  
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.