8-K
JABIL INC false 0000898293 0000898293 2020-06-19 2020-06-19

 

 

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) June 19, 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 June 19, 2020, Jabil Inc. (the “Company”) issued a press release announcing its results of operations for the third fiscal quarter ended May 31, 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 June 19, 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)

June 19, 2020

 

   

By:

   

/s/ Michael Dastoor

 

 

   

Michael Dastoor

 

 

   

Chief Financial Officer

EX-99.1

Exhibit 99.1

 

LOGO

Jabil Posts Third Quarter Results

Provides Fourth Quarter Outlook

ST. PETERSBURG, Fla. – June 19, 2020 Today, Jabil Inc. (NYSE: JBL), reported preliminary, unaudited financial results for its third quarter of fiscal year 2020.

“Our ability to deliver strong cash flows and solid revenue growth in the midst of a global pandemic suggests we’re doing something right,” said CEO Mark Mondello. “I want to offer my sincere appreciation to all those who work so hard to keep our people safe. The unique combination of efficiently operating our factories, and the strength of our well-diversified commercial portfolio, has allowed us to successfully navigate an extremely challenging macro environment,” he added.

Third Quarter of Fiscal Year 2020 Highlights:

 

   

Net revenue: $6.3 billion

 

   

Diversified Manufacturing Services (DMS) year-on-year revenue growth: 13 percent

 

   

Electronics Manufacturing Services (EMS) year-on-year revenue decrease: 2 percent

 

   

U.S. GAAP operating income: $59.4 million

 

   

U.S. GAAP diluted loss per share: $(0.34)

 

   

Core operating income (Non-GAAP): $172.1 million

 

   

Core diluted earnings per share (Non-GAAP): $0.37

Fourth Quarter of Fiscal Year 2020 Outlook:

 

•  Net revenue

  

$5.8 billion to $6.6 billion

•  U.S. GAAP operating income

  

$79 million to $189 million

•  U.S. GAAP diluted earnings per share

  

$0.04 to $0.50 per diluted share

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

  

$145 million to $245 million

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

  

$0.46 to $0.86 per diluted share

•  Diversified Manufacturing Services revenue

  

Increase 1 percent year-on-year

•  Electronics Manufacturing Services revenue

  

Decrease 8 percent year-on-year

•  Total company revenue

  

Decrease 5 percent year-on-year

 

(1) 

Core operating income and core diluted earnings per share exclude anticipated adjustments of $13.0 million for amortization of intangibles (or $0.08 per diluted share), $22.0 million for stock-based compensation expense and related charges (or $0.14 per diluted share), $25.0 million to $15.0 million for restructuring, severance and related charges (or $0.16 to $0.10 per diluted share) and $6.0 million for acquisition and integration charges (or $0.04 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 U.S. GAAP net income before 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, 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 third quarter of fiscal year 2020 and our guidance for future financial performance in our fourth quarter of fiscal year 2020 (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, severance 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 third 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 operations, 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 third 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

(727) 577-9749

Adam_Berry@jabil.com

Media Contact

Michelle Smith

Vice President, Corporate Communications

(727) 577-9749

Michelle_Smith@jabil.com


JABIL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

 

     May 31, 2020
(unaudited)
    August 31, 2019  
ASSETS             

Current assets:

    

Cash and cash equivalents

   $ 763,337     $ 1,163,343  

Accounts receivable, net

     2,579,803       2,745,226  

Contract assets

     1,086,035       911,940  

Inventories, net

     3,283,701       3,023,003  

Prepaid expenses and other current assets

     553,416       501,573  
  

 

 

   

 

 

 

Total current assets

     8,266,292       8,345,085  

Property, plant and equipment, net

     3,485,669       3,333,750  

Operating lease right-of-use asset

     377,540       —    

Goodwill and intangible assets, net

     922,245       879,108  

Deferred income taxes

     173,008       198,827  

Other assets

     166,122       213,705  
  

 

 

   

 

 

 

Total assets

   $ 13,390,876     $ 12,970,475  
  

 

 

   

 

 

 
LIABILITIES AND EQUITY             

Current liabilities:

    

Current installments of notes payable and long-term debt

   $ 399,737     $ 375,181  

Accounts payable

     5,019,286       5,166,780  

Accrued expenses

     3,246,977       2,990,144  

Current operating lease liabilities

     102,284       —    
  

 

 

   

 

 

 

Total current liabilities

     8,768,284       8,532,105  

Notes payable and long-term debt, less current installments

     2,087,593       2,121,284  

Other liabilities

     321,065       163,821  

Non-current operating lease liabilities

     311,939       —    

Income tax liabilities

     143,368       136,689  

Deferred income taxes

     113,323       115,818  
  

 

 

   

 

 

 

Total liabilities

     11,745,572       11,069,717  
  

 

 

   

 

 

 

Commitments and contingencies

    

Equity:

    

Jabil Inc. stockholders’ equity:

    

Preferred stock

     —         —    

Common stock

     263       260  

Additional paid-in capital

     2,380,094       2,304,552  

Retained earnings

     1,985,546       2,037,037  

Accumulated other comprehensive loss

     (149,403     (82,794

Treasury stock, at cost

     (2,584,198     (2,371,612
  

 

 

   

 

 

 

Total Jabil Inc. stockholders’ equity

     1,632,302       1,887,443  

Noncontrolling interests

     13,002       13,315  
  

 

 

   

 

 

 

Total equity

     1,645,304       1,900,758  
  

 

 

   

 

 

 

Total liabilities and equity

   $ 13,390,876     $ 12,970,475  
  

 

 

   

 

 

 


JABIL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except for per share data)

(Unaudited)

 

     Three months ended      Nine months ended  
     May 31, 2020     May 31, 2019      May 31, 2020     May 31, 2019  

Net revenue

   $ 6,335,642     $ 6,135,602      $ 19,966,423     $ 18,708,867  

Cost of revenue

     5,879,494       5,691,803        18,526,311       17,290,544  
  

 

 

   

 

 

    

 

 

   

 

 

 

Gross profit

     456,148       443,799        1,440,112       1,418,323  

Operating expenses:

         

Selling, general and administrative

     302,849       274,482        916,772       834,750  

Research and development

     11,587       11,449        33,647       32,747  

Amortization of intangibles

     13,178       7,610        42,895       23,033  

Restructuring, severance and related charges

     69,150       9,340        144,005       16,182  
  

 

 

   

 

 

    

 

 

   

 

 

 

Operating income

     59,384       140,918        302,793       511,611  

Impairment on securities

     —         —          12,205       —    

Interest and other, net

     45,611       57,840        145,098       162,820  
  

 

 

   

 

 

    

 

 

   

 

 

 

Income before income tax

     13,773       83,078        145,490       348,791  

Income tax expense

     64,036       39,046        157,620       113,078  
  

 

 

   

 

 

    

 

 

   

 

 

 

Net (loss) income

     (50,263     44,032        (12,130     235,713  

Net income attributable to noncontrolling interests, net of tax

     695       550        1,689       1,277  
  

 

 

   

 

 

    

 

 

   

 

 

 

Net (loss) income attributable to Jabil Inc.

   $ (50,958   $ 43,482      $ (13,819   $ 234,436  
  

 

 

   

 

 

    

 

 

   

 

 

 

(Loss) earnings per share attributable to the stockholders of Jabil Inc.:

         

Basic

   $ (0.34   $ 0.28      $ (0.09   $ 1.50  
  

 

 

   

 

 

    

 

 

   

 

 

 

Diluted

   $ (0.34   $ 0.28      $ (0.09   $ 1.47  
  

 

 

   

 

 

    

 

 

   

 

 

 

Weighted average shares outstanding:

         

Basic

     150,723       152,889        151,956       156,384  
  

 

 

   

 

 

    

 

 

   

 

 

 

Diluted

     150,723       155,678        151,956       159,036  
  

 

 

   

 

 

    

 

 

   

 

 

 


JABIL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

 

     Nine months ended  
     May 31, 2020     May 31, 2019  

Cash flows provided by operating activities:

    

Net (loss) income

   $ (12,130   $ 235,713  

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

    

Depreciation and amortization

     600,692       574,922  

Restructuring and related charges

     39,292       (3,555

Recognition of stock-based compensation expense and related charges

     62,214       47,452  

Deferred income taxes

     18,279       14,008  

Provision for allowance for doubtful accounts

     14,636       10,734  

Other, net

     20,979       34,204  

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

    

Accounts receivable

     142,470       (528,597

Contract assets

     (92,574     (865,408

Inventories

     (229,398     349,252  

Prepaid expenses and other current assets

     (44,331     6,910  

Other assets

     (9,089     (16,700

Accounts payable, accrued expenses and other liabilities

     59,686       253,721  
  

 

 

   

 

 

 

Net cash provided by operating activities

     570,726       112,656  
  

 

 

   

 

 

 

Cash flows used in investing activities:

    

Acquisition of property, plant and equipment

     (648,945     (789,226

Proceeds and advances from sale of property, plant and equipment

     93,679       167,653  

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

     (145,595     (153,239

Cash receipts on sold receivables

     —         96,846  

Other, net

     21,398       (26,129
  

 

 

   

 

 

 

Net cash used in investing activities

     (679,463     (704,095
  

 

 

   

 

 

 

Cash flows (used in) provided by financing activities:

    

Borrowings under debt agreements

     9,521,853       9,482,468  

Payments toward debt agreements

     (9,533,522     (9,073,684

Payments to acquire treasury stock

     (189,500     (350,323

Dividends paid to stockholders

     (38,411     (39,736

Net proceeds from exercise of stock options and issuance of common stock under employee stock purchase plan

     16,179       14,582  

Treasury stock minimum tax withholding related to vesting of restricted stock

     (23,085     (11,898

Other, net

     (13,106     (1,500
  

 

 

   

 

 

 

Net cash (used in) provided by financing activities

     (259,592     19,909  
  

 

 

   

 

 

 

Effect of exchange rate changes on cash and cash equivalents

     (31,677     7,667  
  

 

 

   

 

 

 

Net decrease in cash and cash equivalents

     (400,006     (563,863

Cash and cash equivalents at beginning of period

     1,163,343       1,257,949  
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 763,337     $ 694,086  
  

 

 

   

 

 

 


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      Nine months ended  
     May 31, 2020     May 31, 2019      May 31, 2020     May 31, 2019  

Operating income (U.S. GAAP)

   $ 59,384     $ 140,918      $ 302,793     $ 511,611  
  

 

 

   

 

 

    

 

 

   

 

 

 

Amortization of intangibles

     13,178       7,610        42,895       23,033  

Stock-based compensation expense and related charges

     16,882       14,506        62,214       47,452  

Restructuring, severance and related charges

     69,150       9,340        144,005       16,182  

Distressed customer charge

     —         —          14,963       —    

Net periodic benefit cost (1)

     2,797       —          7,398       —    

Business interruption and impairment charges, net

     4,574       —          4,574       (2,860

Acquisition and integration charges

     6,119       13,391        30,005       35,066  
  

 

 

   

 

 

    

 

 

   

 

 

 

Adjustments to operating income

     112,700       44,847        306,054       118,873  
  

 

 

   

 

 

    

 

 

   

 

 

 

Core operating income (Non-GAAP)

   $ 172,084     $ 185,765      $ 608,847     $ 630,484  
  

 

 

   

 

 

    

 

 

   

 

 

 

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

   $ (50,958   $ 43,482      $ (13,819   $ 234,436  

Adjustments to operating income

     112,700       44,847        306,054       118,873  

Impairment on securities

     —         —          12,205       —    

Net periodic benefit cost (1)

     (2,797     —          (7,398     —    

Adjustments for taxes(2)

     (2,422     125        1,166       (17,837
  

 

 

   

 

 

    

 

 

   

 

 

 

Core earnings (Non-GAAP)

   $ 56,523     $ 88,454      $ 298,208     $ 335,472  
  

 

 

   

 

 

    

 

 

   

 

 

 

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

   $ (0.34   $ 0.28      $ (0.09   $ 1.47  
  

 

 

   

 

 

    

 

 

   

 

 

 

Diluted core earnings per share (Non-GAAP)

   $ 0.37     $ 0.57      $ 1.93     $ 2.11  
  

 

 

   

 

 

    

 

 

   

 

 

 

Diluted weighted average shares outstanding (U.S. GAAP)

     150,723       155,678        151,956       159,036  
  

 

 

   

 

 

    

 

 

   

 

 

 

Diluted weighted average shares outstanding (Non-GAAP)

     152,693       155,678        154,412       159,036  
  

 

 

   

 

 

    

 

 

   

 

 

 

 

(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 nine months ended May 31, 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)

 

     Nine months ended  
     May 31, 2020     May 31, 2019(1)  

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

   $ 570,726     $ 112,656  

Cash receipts on sold receivables

     —         96,846  

Acquisition of property, plant and equipment

     (648,945     (789,226

Proceeds and advances from sale of property, plant and equipment

     93,679       167,653  
  

 

 

   

 

 

 

Adjusted free cash flow (Non-GAAP)

   $ 15,460     $ (412,071 ) 
  

 

 

   

 

 

 

 

(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.