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8-K - FORM 8-K - JABIL INCd356669d8k.htm

Exhibit 99.1

 

LOGO

Jabil Posts Second Quarter Results

St. Petersburg, FL – March 15, 2017. Today Jabil Circuit, Inc. (NYSE: JBL), reported preliminary, unaudited financial results for its second quarter of fiscal year 2017, including second quarter net revenue of $4.4 billion.

For the second quarter of fiscal year 2017, U.S. GAAP (as defined below) operating income was $83.2 million and U.S. GAAP diluted earnings per share was $0.11. Core operating income ((Non-U.S. GAAP) as defined below) was $152.2 million and core diluted earnings per share ((Non-U.S. GAAP) as defined below) was $0.48.

“The performance of our team during the second quarter was exceptional with nearly all of our businesses delivering at or above plan,” said CEO Mark Mondello. “I believe our results reflect the effectiveness of our strategy to increase the quality and diversification of our cash flows and earnings,” he added.

 

Fiscal Year 2017 Third Quarter Guidance:

  

•    Net revenue

   $4.25 billion to $4.55 billion

•    U.S. GAAP operating (loss) income

   $(9) million to $51 million

•    U.S. GAAP diluted loss per share

   $(0.34) to $(0.03) per diluted share

•    Core operating income (Non-U.S. GAAP)

   $90 million to $130 million

•    Core diluted earnings per share (Non-U.S. GAAP)

   $0.19 to $0.39 per diluted share

•    Diversified Manufacturing Services

   Increase revenue 9 percent year-on-year

•    Electronics Manufacturing Services

   Decrease revenue 1 percent year-on-year

•    Total company

   Increase revenue 2 percent year-on-year

“Jabil’s focus remains on our commitment to return capital to shareholders, our multi-year financial objectives and the goal of becoming the world’s most advanced manufacturing solutions company,” said Mondello.

(U.S. GAAP diluted earnings per share for the third quarter of fiscal year 2017 are currently estimated to include $0.05 per share for amortization of intangibles, $0.21 per share for stock-based compensation expense and related charges and $0.16 to $0.27 per share for restructuring and related charges.)

(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 costs and certain purchase accounting adjustments, loss on disposal of subsidiaries, settlement of receivables and related charges, impairment of notes receivable and related charges and goodwill impairment charges. 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 costs and certain purchase accounting adjustments, loss on disposal of subsidiaries, settlement of receivables and related charges, impairment of notes receivable and related charges, goodwill impairment charges, 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 quarterly core return on invested capital by annualizing its after-tax core operating income for its most recently ended quarter and dividing that by a two quarter average of its net invested capital base. Jabil calculates its annual core return on invested capital by taking its after-tax core operating income for its most recently ended fiscal year and dividing that by a two year average of its net invested capital base. Jabil reports core operating income, core earnings, core diluted and basic earnings per share and core return on invested capital to provide investors an additional method for assessing operating income,


earnings, diluted earnings per share and return on invested capital 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, its calculation of core return on invested capital and additional information in the supplemental information.)

Forward Looking Statements: This news release contains forward-looking statements, including those regarding our anticipated financial results for our second quarter of fiscal year 2017; our guidance for future financial performance in our third quarter of fiscal year 2017 (including, net revenue, total company and segment revenue, U.S. GAAP operating income, U.S. GAAP diluted earnings (loss) per share, core operating income (Non-U.S. GAAP), and core diluted earnings per share (Non-U.S. GAAP) results and the components thereof, in each case for our third quarter of fiscal year 2017); and statements that relate to the Company’s capital allocation framework, including our share repurchase program thereunder, the amount of shares to be repurchased and the timing of such repurchase. The statements in this press 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 2017 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; 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; and our dependence on a limited number of large customers. 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, 2016 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-U.S. GAAP financial measures in this release to facilitate evaluation of Jabil’s core operating performance. These non-U.S. 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-U.S. 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 return on invested capital, core earnings and core diluted and basic earnings per share to provide investors an additional method for assessing operating income, return on invested capital, earnings and earnings per share from what it believes are its core manufacturing operations. Among other uses, management uses non-U.S. 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 basic and 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 a history of operating losses or other factors resulting in a valuation allowance related to deferred tax assets), a 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. 


Company Conference Call Information: Jabil will hold a conference call to discuss its second quarter results and fiscal 2017 outlook today at 4:30 p.m. ET live on the Internet at http://www.jabil.com. The call will be recorded and archived on the web at http://www.jabil.com. A taped replay of the conference call will also be available March 15, 2017 at approximately 7:30 p.m. ET through midnight on March 22, 2017. To access the replay, call (855) 859-2056 from within the United States, or (404) 537-3406 outside the United States. The pass code is: 77128570. An archived webcast of the conference call will be available at http://www.jabil.com/investors/.

About Jabil: Jabil (NYSE: JBL) is a product solutions company providing comprehensive electronics design, production and product management services. Offering complete product supply chain management from facilities in 28 countries, Jabil provides comprehensive, individualized-focused solutions to customers in a broad range of industries. Further information is available on Jabil’s website: jabil.com.

Company Contacts:

Beth Walters

Senior Vice President, Investor Relations & Communications

(727) 803-3511    

beth_walters@jabil.com    

Adam Berry

Senior Director, Investor Relations    

(727) 803-5772

adam_berry@jabil.com


JABIL CIRCUIT, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

 

     February 28,        
     2017     August 31,  
     (Unaudited)     2016  
ASSETS     

Current assets:

    

Cash and cash equivalents

   $ 755,098     $ 912,059  

Accounts receivable, net

     1,433,676       1,359,610  

Inventories

     2,498,137       2,456,612  

Prepaid expenses and other current assets

     949,610       1,120,100  
  

 

 

   

 

 

 

Total current assets

     5,636,521       5,848,381  

Property, plant and equipment, net

     3,177,728       3,331,879  

Goodwill and intangible assets, net

     877,096       891,727  

Deferred income taxes

     175,300       148,859  

Other assets

     148,183       101,831  
  

 

 

   

 

 

 

Total assets

   $ 10,014,828     $ 10,322,677  
  

 

 

   

 

 

 
LIABILITIES AND EQUITY     

Current liabilities:

    

Current installments of notes payable, long-term debt and capital lease obligations

   $ 47,324     $ 45,810  

Accounts payable

     3,301,826       3,593,195  

Accrued expenses

     1,952,056       1,929,051  
  

 

 

   

 

 

 

Total current liabilities

     5,301,206       5,568,056  

Notes payable, long-term debt and capital lease obligations, less current installments

     2,055,545       2,074,012  

Other liabilities

     85,301       78,018  

Income tax liabilities

     96,080       90,804  

Deferred income taxes

     49,598       54,290  
  

 

 

   

 

 

 

Total liabilities

     7,587,730       7,865,180  
  

 

 

   

 

 

 

Commitments and contingencies

    

Equity:

    

Jabil Circuit, Inc. stockholders’ equity:

    

Preferred stock

     —         —    

Common stock

     253       250  

Additional paid-in capital

     2,060,742       2,034,525  

Retained earnings

     1,738,823       1,660,820  

Accumulated other comprehensive loss

     (8,679     (39,877

Treasury stock, at cost

     (1,379,831     (1,217,547
  

 

 

   

 

 

 

Total Jabil Circuit, Inc. stockholders’ equity

     2,411,308       2,438,171  

Noncontrolling interests

     15,790       19,326  
  

 

 

   

 

 

 

Total equity

     2,427,098       2,457,497  
  

 

 

   

 

 

 

Total liabilities and equity

   $ 10,014,828     $ 10,322,677  
  

 

 

   

 

 

 


JABIL CIRCUIT, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except for per share data)

(Unaudited)

 

     Three months ended     Six months ended  
     February 28,     February 29,     February 28,     February 29,  
     2017     2016     2017     2016  

Net revenue

   $ 4,445,637     $ 4,403,594     $ 9,550,535     $ 9,611,571  

Cost of revenue

     4,083,733       4,004,161       8,757,125       8,728,603  
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     361,904       399,433       793,410       882,968  

Operating expenses:

        

Selling, general and administrative

     217,943       224,905       431,995       476,451  

Research and development

     7,085       8,465       14,708       16,757  

Amortization of intangibles

     8,766       8,599       17,088       16,439  

Restructuring and related charges

     44,927       2,535       80,829       3,888  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     83,183       154,929       248,790       369,433  

Interest and other, net

     34,882       34,142       69,951       66,879  
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income tax

     48,301       120,787       178,839       302,554  

Income tax expense

     28,177       42,354       72,014       92,206  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     20,124       78,433       106,825       210,348  

Net loss attributable to noncontrolling interests, net of tax

     (541     (497     (1,867     (467
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to Jabil Circuit, Inc.

   $ 20,665     $ 78,930     $ 108,692     $ 210,815  
  

 

 

   

 

 

   

 

 

   

 

 

 

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

        

Basic

   $ 0.11     $ 0.41     $ 0.59     $ 1.11  
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ 0.11     $ 0.41     $ 0.58     $ 1.09  
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average shares outstanding:

        

Basic

     182,632       190,957       183,970       190,656  
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     185,010       193,294       186,463       193,429  
  

 

 

   

 

 

   

 

 

   

 

 

 


JABIL CIRCUIT, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

 

     Six months ended  
     February 28,     February 29,  
     2017     2016  

Cash flows from operating activities:

    

Net income

   $ 106,825     $ 210,348  

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

    

Depreciation and amortization

     380,317       329,301  

Restructuring and related charges

     46,775       —    

Recognition of stock-based compensation expense and related charges

     15,027       45,060  

Deferred income taxes

     (31,680     (22,940

Loss on sale of property, plant and equipment

     852       11,633  

Other, net

     8,831       4,334  

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

    

Accounts receivable

     (77,649     20,027  

Inventories

     (19,521     223,140  

Prepaid expenses and other current assets

     145,527       (17,010

Other assets

     (41,971     (3,486

Accounts payable, accrued expenses and other liabilities

     (187,130     (727,749
  

 

 

   

 

 

 

Net cash provided by operating activities

     346,203       72,658  
  

 

 

   

 

 

 

Cash flows from investing activities:

    

Acquisition of property, plant and equipment

     (320,674     (456,028

Proceeds from sale of property, plant and equipment

     18,963       7,196  

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

     (5,256     (206,670

Issuance of notes receivable

     —         (28,500

Other, net

     (1,360     (5,250
  

 

 

   

 

 

 

Net cash used in investing activities

     (308,327     (689,252
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Borrowings under debt agreements

     3,407,000       3,404,241  

Payments toward debt agreements

     (3,424,939     (2,726,027

Payments to acquire treasury stock

     (151,488     (54,567

Dividends paid to stockholders

     (30,940     (31,795

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

     11,250       10,660  

Treasury stock minimum tax withholding related to vesting of restricted stock

     (10,796     (10,329

Other, net

     (1,499     (1,500
  

 

 

   

 

 

 

Net cash (used in) provided by financing activities

     (201,412     590,683  
  

 

 

   

 

 

 

Effect of exchange rate changes on cash and cash equivalents

     6,575       (4,834
  

 

 

   

 

 

 

Net decrease in cash and cash equivalents

     (156,961     (30,745

Cash and cash equivalents at beginning of period

     912,059       913,963  
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 755,098     $ 883,218  
  

 

 

   

 

 

 


JABIL CIRCUIT, INC. AND SUBSIDIARIES

SUPPLEMENTAL DATA

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

(in thousands, except for per share data)

(Unaudited)

 

     Three months ended     Six months ended  
     February 28,     February 29,     February 28,     February 29,  
     2017     2016     2017     2016  

Operating income (U.S. GAAP)

   $ 83,183     $ 154,929     $ 248,790     $ 369,433  

Amortization of intangibles

     8,766       8,599       17,088       16,439  

Stock-based compensation expense and related charges

     15,318       20,268       15,027       45,060  

Restructuring and related charges

     44,927       2,535       80,829       3,888  
  

 

 

   

 

 

   

 

 

   

 

 

 

Core operating income (Non-U.S. GAAP)

   $ 152,194     $ 186,331     $ 361,734     $ 434,820  
  

 

 

   

 

 

   

 

 

   

 

 

 

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

   $ 20,665     $ 78,930     $ 108,692     $ 210,815  

Amortization of intangibles

     8,766       8,599       17,088       16,439  

Stock-based compensation expense and related charges

     15,318       20,268       15,027       45,060  

Restructuring and related charges

     44,927       2,535       80,829       3,888  

Adjustments for taxes

     (899     (988     (3,224     (1,975
  

 

 

   

 

 

   

 

 

   

 

 

 

Core earnings (Non-U.S. GAAP)

   $ 88,777     $ 109,344     $ 218,412     $ 274,227  
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per share (U.S. GAAP):

        

Basic

   $ 0.11     $ 0.41     $ 0.59     $ 1.11  
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ 0.11     $ 0.41     $ 0.58     $ 1.09  
  

 

 

   

 

 

   

 

 

   

 

 

 

Core earnings per share (Non-U.S. GAAP):

        

Basic

   $ 0.49     $ 0.57     $ 1.19     $ 1.44  
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ 0.48     $ 0.57     $ 1.17     $ 1.42  
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average shares outstanding used in the calculations of earnings per share (U.S. GAAP and Non-U.S. GAAP):

        

Basic

     182,632       190,957       183,970       190,656  
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     185,010       193,294       186,463       193,429  
  

 

 

   

 

 

   

 

 

   

 

 

 


JABIL CIRCUIT, INC. AND SUBSIDIARIES

SUPPLEMENTAL DATA

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

(in thousands)

(Unaudited)

CALCULATION OF RETURN ON INVESTED CAPITAL

AND CORE RETURN ON INVESTED CAPITAL

The Company calculates: (1) its “Return on Invested Capital” by annualizing its “after-tax U.S. GAAP operating income” for its most recently-ended quarter and dividing that by the average of its “net invested capital asset base” and (2) its “Core Return on Invested Capital” by annualizing its “after-tax non-U.S. GAAP core operating income” for its most recently-ended quarter and dividing that by the “average net invested capital asset base.”

The Company calculates: (1) its “after-tax U.S. GAAP operating income” by subtracting a certain tax effect (the calculation of which is explained below) from its U.S. GAAP operating income and (2) its “after-tax non-U.S. GAAP core operating income” as its non-U.S. GAAP core operating income less a certain tax effect (the calculation of which is explained below). See elsewhere in this earnings release for a reconciliation of the Company’s non-U.S. GAAP core operating income to its U.S. GAAP operating income.

The Company calculates its “average net invested capital asset base” as the sum of the averages (the calculations of which are explained below) of its stockholders’ equity, current and non-current portions of its notes payable, long-term debt and capital lease obligations less the average (the calculation of which is explained below) of its cash and cash equivalents.

The following table reconciles (1) “Return on Invested Capital,” as calculated using “after-tax U.S. GAAP operating income” to (2) “Core Return on Invested Capital,” as calculated using “after-tax non-U.S. GAAP core operating income”:

 

     Three months ended  
     February 28,     February 29,  
     2017     2016  

Numerator:

    

Operating income (U.S. GAAP)

   $ 83,183     $ 154,929  

Tax effect(1)

     (28,808     (42,312
  

 

 

   

 

 

 

After-tax operating income

     54,375       112,617  
     x4       x4  
  

 

 

   

 

 

 

Annualized after-tax operating income

   $ 217,500     $ 450,468  
  

 

 

   

 

 

 

Core operating income (Non-U.S. GAAP)

   $ 152,194     $ 186,331  

Tax effect(2)

     (29,344     (43,307
  

 

 

   

 

 

 

After-tax core operating income

     122,850       143,024  
     x4       x4  
  

 

 

   

 

 

 

Annualized after-tax core operating income

   $ 491,400     $ 572,096  
  

 

 

   

 

 

 

Denominator:

    

Average total Jabil Circuit, Inc. stockholders’ equity(3)

   $ 2,392,626     $ 2,424,798  

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

     2,061,629       1,814,834  

Average current installments of notes payable, long-term debt and capital lease obligations(3)

     45,261       443,303  

Average cash and cash equivalents(3)

     (751,257     (1,006,781
  

 

 

   

 

 

 

Net invested capital asset base

   $ 3,748,259     $ 3,676,154  
  

 

 

   

 

 

 

Return on Invested Capital (U.S. GAAP)

     5.8     12.3

Adjustments noted above

     7.3     3.3

Core Return on Invested Capital (Non-U.S. GAAP)

     13.1     15.6

 

(1) This amount is calculated by adding the amount of income taxes attributable to its operating income (U.S. GAAP) and its interest expense.
(2) This amount is calculated by adding the amount of income taxes attributable to its core operating income (Non-U.S. GAAP) and its 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.