Form 8-K
JABIL INC false 0000898293 0000898293 2020-09-24 2020-09-24

 

 

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) September 24, 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 September 24, 2020, Jabil Inc. (the “Company”) issued a press release announcing its results of operations for the fourth fiscal quarter and full fiscal year ended August 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 September 24, 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)
September 24, 2020     By:  

/s/ MICHAEL DASTOOR

      Michael Dastoor
      Chief Financial Officer
EX-99.1

Exhibit 99.1

 

LOGO

Jabil Delivers Strong Fourth Quarter Results

Positive Momentum Expected to Continue

ST. PETERSBURG, Fla. – September 24, 2020 Today, Jabil Inc. (NYSE: JBL), reported preliminary, unaudited financial results for its fourth quarter and fiscal year ended August 31, 2020.

“I’m thrilled with our ability to deliver such strong financial results to close out FY20,” said CEO Mark Mondello. “Over the past several years, we’ve strategically positioned Jabil in attractive end-markets, while building the most desired products and serving the world’s most successful brands. At the same time, we’ve streamlined the organization, creating a more optimized cost structure. These collective efforts allowed us to beat expectations in the fourth quarter, despite the various complexities brought about by the global pandemic,” he added.

Fourth Quarter of Fiscal Year 2020 Highlights:

 

   

Net revenue: $7.3 billion

 

   

Diversified Manufacturing Services (DMS) year-on-year revenue growth: 17 percent

 

   

Electronics Manufacturing Services (EMS) year-on-year revenue growth: 8 percent

 

   

U.S. GAAP operating income: $197.1 million

 

   

U.S. GAAP diluted earnings per share: $0.44

 

   

Core operating income (Non-GAAP): $255.2 million

 

   

Core diluted earnings per share (Non-GAAP): $0.98

Fiscal Year 2020 Highlights:

 

   

Net revenue: $27.3 billion

 

   

Diversified Manufacturing Services (DMS) year-on-year revenue growth: 8 percent

 

   

Electronics Manufacturing Services (EMS) year-on-year revenue growth: 8 percent

 

   

U.S. GAAP operating income: $499.8 million

 

   

U.S. GAAP diluted earnings per share: $0.35

 

   

Core operating income (Non-GAAP): $864.1 million

 

   

Core diluted earnings per share (Non-GAAP): $2.90

“As we exit FY20 and look ahead, I am excited with the momentum underway in our business,” said CFO Mike Dastoor. “Several of our key businesses remain especially strong including Mobility, Healthcare and Cloud. At the same time, we’re permanently transitioning certain components we procure in our EMS segment from the current purchase-and-resale model to a consignment service model,” he added.

First Quarter of Fiscal Year 2021 Outlook:

 

•  Net revenue

   $6.7 billion to $7.3 billion

•  U.S. GAAP operating income

   $238 million to $283 million

•  U.S. GAAP diluted earnings per share

   $0.79 to $1.02 per diluted share

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

   $295 million to $335 million

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

   $1.15 to $1.35 per diluted share

•  Total company revenue

   Decrease 7 percent year-on-year

 

(1) Core operating income and core diluted earnings per share exclude anticipated adjustments of $12.0 million for amortization of intangibles (or $0.07 per diluted share), $31.0 million for stock-based compensation expense and related charges (or $0.20 per diluted share), $10.0 million to $5.0 million for restructuring, severance and related charges (or $0.06 to $0.03 per diluted share) and $4.0 million for acquisition and integration charges (or $0.03 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, loss 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 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 the fourth quarter and fiscal year 2020 and our guidance for future financial performance in our first quarter of fiscal year 2021 (including, net revenue, total company 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 the fourth quarter and 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 or increases in customer demand and other related customer challenges that may occur; changes in technology; our ability to introduce new business models or programs requiring implementation of new competencies; competition; transportation issues; our ability to maintain our engineering, technological and manufacturing expertise; retaining key personnel; 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; issues involving our information systems, including security issues; regulatory risks; financial and market risks; 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 fourth quarter and full fiscal year ended August 31, 2020 and to provide an investor briefing. To access the live audio webcast and view the accompanying slide presentation, visit the Investor Relations section of Jabil’s website, located at https://investors.jabil.com. An archived replay of the webcast will also be available after completion of the call.

About Jabil: Jabil (NYSE: JBL) is a manufacturing solutions provider with over 260,000 employees across 100 locations in 30 countries. The world’s leading brands rely on Jabil’s unmatched breadth and depth of end-market experience, technical and design capabilities, manufacturing know-how, supply chain insights and global product management expertise. Driven by a common purpose, Jabil and its people are committed to making a positive impact on their local community and the environment. Visit www.jabil.com to learn more.

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)

 

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

Current assets:

    

Cash and cash equivalents

   $ 1,393,557     $ 1,163,343  

Accounts receivable, net

     2,847,743       2,745,226  

Contract assets

     1,104,700       911,940  

Inventories, net

     3,131,783       3,023,003  

Prepaid expenses and other current assets

     657,102       501,573  
  

 

 

   

 

 

 

Total current assets

     9,134,885       8,345,085  

Property, plant and equipment, net

     3,665,312       3,333,750  

Operating lease right-of-use asset

     362,847       —    

Goodwill and intangible assets, net

     906,723       879,108  

Deferred income taxes

     165,407       198,827  

Other assets

     162,242       213,705  
  

 

 

   

 

 

 

Total assets

   $ 14,397,416     $ 12,970,475  
  

 

 

   

 

 

 
LIABILITIES AND EQUITY     

Current liabilities:

    

Current installments of notes payable and long-term debt

   $ 50,194     $ 375,181  

Accounts payable

     5,687,038       5,166,780  

Accrued expenses

     3,211,528       2,990,144  

Current operating lease liabilities

     110,723       —    
  

 

 

   

 

 

 

Total current liabilities

     9,059,483       8,532,105  

Notes payable and long-term debt, less current installments

     2,678,288       2,121,284  

Other liabilities

     268,925       163,821  

Non-current operating lease liabilities

     302,035       —    

Income tax liabilities

     148,629       136,689  

Deferred income taxes

     114,657       115,818  
  

 

 

   

 

 

 

Total liabilities

     12,572,017       11,069,717  
  

 

 

   

 

 

 

Commitments and contingencies

    

Equity:

    

Jabil Inc. stockholders’ equity:

    

Preferred stock

     —         —    

Common stock

     264       260  

Additional paid-in capital

     2,413,616       2,304,552  

Retained earnings

     2,040,922       2,037,037  

Accumulated other comprehensive loss

     (34,168     (82,794

Treasury stock, at cost

     (2,609,250     (2,371,612
  

 

 

   

 

 

 

Total Jabil Inc. stockholders’ equity

     1,811,384       1,887,443  

Noncontrolling interests

     14,015       13,315  
  

 

 

   

 

 

 

Total equity

     1,825,399       1,900,758  
  

 

 

   

 

 

 

Total liabilities and equity

   $ 14,397,416     $ 12,970,475  
  

 

 

   

 

 

 


JABIL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except for per share data)

(Unaudited)

 

     Three Months Ended      Fiscal Year Ended  
     August 31, 2020      August 31, 2019      August 31, 2020      August 31, 2019  

Net revenue

   $ 7,300,015      $ 6,573,453      $ 27,266,438      $ 25,282,320  

Cost of revenue

     6,809,314        6,078,375        25,335,625        23,368,919  
  

 

 

    

 

 

    

 

 

    

 

 

 

Gross profit

     490,701        495,078        1,930,813        1,913,401  

Operating expenses:

           

Selling, general and administrative

     257,922        276,597        1,174,694        1,111,347  

Research and development

     10,496        10,114        44,143        42,861  

Amortization of intangibles

     12,649        8,890        55,544        31,923  

Restructuring, severance and related charges

     12,581        9,732        156,586        25,914  
  

 

 

    

 

 

    

 

 

    

 

 

 

Operating income

     197,053        189,745        499,846        701,356  

Loss on securities

     36,420        29,632        48,625        29,632  

Interest and other, net

     45,385        58,200        190,483        221,020  
  

 

 

    

 

 

    

 

 

    

 

 

 

Income before income tax

     115,248        101,913        260,738        450,704  

Income tax expense

     46,339        48,152        203,959        161,230  
  

 

 

    

 

 

    

 

 

    

 

 

 

Net income

     68,909        53,761        56,779        289,474  

Net income attributable to noncontrolling interests, net of tax

     1,178        1,086        2,867        2,363  
  

 

 

    

 

 

    

 

 

    

 

 

 

Net income attributable to Jabil Inc.

   $ 67,731      $ 52,675      $ 53,912      $ 287,111  
  

 

 

    

 

 

    

 

 

    

 

 

 

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

           

Basic

   $ 0.45      $ 0.34      $ 0.36      $ 1.85  
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted

   $ 0.44      $ 0.34      $ 0.35      $ 1.81  
  

 

 

    

 

 

    

 

 

    

 

 

 

Weighted average shares outstanding:

           

Basic

     150,590        153,327        151,613        155,613  
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted

     154,453        156,981        155,274        158,647  
  

 

 

    

 

 

    

 

 

    

 

 

 


JABIL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

 

     Fiscal Year Ended  
     August 31, 2020     August 31, 2019  

Cash flows provided by operating activities:

    

Net income

   $ 56,779     $ 289,474  

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

    

Depreciation and amortization

     794,581       771,833  

Restructuring and related charges

     41,356       (3,566

Recognition of stock-based compensation expense and related charges

     83,084       61,346  

Deferred income taxes

     29,209       20,998  

Loss (gain) on sale of property, plant and equipment

     29,393       (2,522

Provision for allowance for doubtful accounts

     32,066       15,867  

Loss on securities

     36,420       29,632  

Other, net

     34,130       39,539  

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

    

Accounts receivable

     (135,973     (586,511

Contract assets

     (104,601     (878,469

Inventories

     (77,320     483,074  

Prepaid expenses and other current assets

     (144,152     28,897  

Other assets

     (10,669     (38,188

Accounts payable, accrued expenses and other liabilities

     592,972       961,662  
  

 

 

   

 

 

 

Net cash provided by operating activities

     1,257,275       1,193,066  
  

 

 

   

 

 

 

Cash flows used in investing activities:

    

Acquisition of property, plant and equipment

     (983,035     (1,005,480

Proceeds and advances from sale of property, plant and equipment

     186,655       218,708  

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

     (146,909     (153,239

Cash receipts on sold receivables

     —         96,846  

Other, net

     22,176       (29,289
  

 

 

   

 

 

 

Net cash used in investing activities

     (921,113     (872,454
  

 

 

   

 

 

 

Cash flows used in financing activities:

    

Borrowings under debt agreements

     12,777,055       11,985,978  

Payments toward debt agreements

     (12,544,456     (12,013,004

Payments to acquire treasury stock

     (214,510     (350,323

Dividends paid to stockholders

     (50,462     (52,004

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

     30,117       26,999  

Treasury stock minimum tax withholding related to vesting of restricted stock

     (23,128     (11,918

Other, net

     (39,739     (1,500
  

 

 

   

 

 

 

Net cash used in financing activities

     (65,123     (415,772
  

 

 

   

 

 

 

Effect of exchange rate changes on cash and cash equivalents

     (40,825     554  
  

 

 

   

 

 

 

Net increase (decrease) in cash and cash equivalents

     230,214       (94,606

Cash and cash equivalents at beginning of period

     1,163,343       1,257,949  
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 1,393,557     $ 1,163,343  
  

 

 

   

 

 

 


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     Fiscal Year Ended  
     August 31, 2020     August 31, 2019     August 31, 2020     August 31, 2019  

Operating income (U.S. GAAP)

   $ 197,053     $ 189,745     $ 499,846     $ 701,356  
  

 

 

   

 

 

   

 

 

   

 

 

 

Amortization of intangibles

     12,649       8,890       55,544       31,923  

Stock-based compensation expense and related charges

     20,870       13,894       83,084       61,346  

Restructuring, severance and related charges

     12,581       9,732       156,586       25,914  

Distressed customer charge

     —         6,235       14,963       6,235  

Net periodic benefit cost(1)

     8,680       —         16,078       —    

Business interruption and impairment charges, net

     1,211       —         5,785       (2,860

Acquisition and integration charges

     2,162       17,631       32,167       52,697  
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjustments to operating income

     58,153       56,382       364,207       175,255  
  

 

 

   

 

 

   

 

 

   

 

 

 

Core operating income (Non-GAAP)

   $ 255,206     $ 246,127     $ 864,053     $ 876,611  
  

 

 

   

 

 

   

 

 

   

 

 

 

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

   $ 67,731     $ 52,675     $ 53,912     $ 287,111  

Adjustments to operating income

     58,153       56,382       364,207       175,255  

Loss on securities

     36,420       29,632       48,625       29,632  

Net periodic benefit cost(1)

     (8,680     —         (16,078     —    

Adjustments for taxes(2)

     (2,259     (796     (1,093     (18,633
  

 

 

   

 

 

   

 

 

   

 

 

 

Core earnings (Non-GAAP)

   $ 151,365     $ 137,893     $ 449,573     $ 473,365  
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted earnings per share (U.S. GAAP)

   $ 0.44     $ 0.34     $ 0.35     $ 1.81  
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted core earnings per share (Non-GAAP)

   $ 0.98     $ 0.88     $ 2.90     $ 2.98  
  

 

 

   

 

 

   

 

 

   

 

 

 

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

     154,453       156,981       155,274       158,647  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(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 fiscal year ended August 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)

 

     Fiscal Year Ended  
     August 31, 2020     August 31, 2019(1)  

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

   $ 1,257,275     $ 1,193,066  

Cash receipts on sold receivables

     —         96,846  

Acquisition of property, plant and equipment

     (983,035     (1,005,480

Proceeds and advances from sale of property, plant and equipment

     186,655       218,708  
  

 

 

   

 

 

 

Adjusted free cash flow (Non-GAAP)

   $ 460,895     $ 503,140  
  

 

 

   

 

 

 

 

(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.