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8-K - FORM 8-K - JABIL INCd374502d8k.htm

Exhibit 99.1

 

LOGO

Jabil Posts Third Quarter Results

St. Petersburg, FL – June 14, 2017. Today, Jabil Inc. (NYSE: JBL), reported preliminary, unaudited financial results for its third quarter of fiscal year 2017, including third quarter net revenue of $4.5 billion.

For the third quarter of fiscal year 2017, U.S. GAAP (as defined below) operating income was $43.4 million and U.S. GAAP diluted loss per share was $(0.14). Core operating income ((Non-U.S. GAAP) as defined below) was $113.8 million and core diluted earnings per share ((Non-U.S. GAAP) as defined below) was $0.31.

“I’m pleased with our third quarter results as both business segments performed quite well,” said CEO Mark Mondello. “In Diversified Manufacturing Services, the team delivered exceptional execution and cost controls against product road maps exhibiting massive scale and complexity, while we continued to see strong double-digit growth in healthcare and packaging. At the same time, our Electronics Manufacturing Services team continues to do an excellent job building broad revenue diversification, while developing end-market domain expertise, resulting in solid margin expansion,” he added.

Fiscal Year 2017 Fourth Quarter Guidance:

 

   Net revenue    $4.7 billion to $5.1 billion
   U.S. GAAP operating income    $95 million to $165 million
   U.S. GAAP diluted earnings per share    $0.13 to $0.48 per diluted share
   Core operating income (Non-U.S. GAAP)    $165 million to $215 million
   Core diluted earnings per share (Non-U.S. GAAP)    $0.50 to $0.74 per diluted share
   Diversified Manufacturing Services    Increase revenue 26 percent year-on-year
   Electronics Manufacturing Services    Increase revenue 2 percent year-on-year
   Total company    Increase revenue 11 percent year-on-year

“Near-term, we expect to deliver the best fourth quarter in the company’s history in terms of core operating income. Beyond that, our forecast suggests the growth in both DMS and EMS in fiscal 2018 will result in core EPS in the neighborhood of $2.60. We remain committed to complete our two-year capital return framework plan, achieve $3.00 per share in core EPS in fiscal 2019, and ultimately become the world’s most technologically advanced manufacturing solutions company,” said Mondello.

(U.S. GAAP diluted earnings per share for the fourth quarter of fiscal year 2017 are currently estimated to include $0.05 per share for amortization of intangibles, $0.08 per share for stock-based compensation expense and related charges and $0.24 to $0.13 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, impairment on securities, income (loss) from discontinued operations, gain (loss) on sale of discontinued operations and certain other expenses, net of tax and certain deferred tax valuation allowance charges. Jabil defines core diluted earnings per share as core earnings divided by the weighted average number of outstanding diluted shares as determined under U.S. GAAP. Jabil calculates its 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 third quarter of fiscal year 2017; our guidance for future financial performance in our fourth 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 fourth quarter of fiscal year 2017); 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; and statements regarding our future earnings per share expectations. 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 third 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 third 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 June 14, 2017 at approximately 7:30 p.m. ET through midnight on June 21, 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: 24813639. 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 INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

 

     May 31,
2017
(Unaudited)
    August 31,
2016
 

ASSETS

    

Current assets:

    

Cash and cash equivalents

   $ 743,931     $ 912,059  

Accounts receivable, net

     1,445,148       1,359,610  

Inventories

     2,706,530       2,456,612  

Prepaid expenses and other current assets

     997,752       1,120,100  
  

 

 

   

 

 

 

Total current assets

     5,893,361       5,848,381  

Property, plant and equipment, net

     3,210,107       3,331,879  

Goodwill and intangible assets, net

     896,534       891,727  

Deferred income taxes

     189,881       148,859  

Other assets

     139,766       101,831  
  

 

 

   

 

 

 

Total assets

   $ 10,329,649     $ 10,322,677  
  

 

 

   

 

 

 

LIABILITIES AND EQUITY

    

Current liabilities:

    

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

   $ 538,985     $ 45,810  

Accounts payable

     3,641,247       3,593,195  

Accrued expenses

     1,937,003       1,929,051  
  

 

 

   

 

 

 

Total current liabilities

     6,117,235       5,568,056  

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

     1,644,590       2,074,012  

Other liabilities

     80,943       78,018  

Income tax liabilities

     92,197       90,804  

Deferred income taxes

     51,841       54,290  
  

 

 

   

 

 

 

Total liabilities

     7,986,806       7,865,180  
  

 

 

   

 

 

 

Commitments and contingencies

    

Equity:

    

Jabil Inc. stockholders’ equity:

    

Preferred stock

     —         —    

Common stock

     253       250  

Additional paid-in capital

     2,078,833       2,034,525  

Retained earnings

     1,698,704       1,660,820  

Accumulated other comprehensive income (loss)

     15,927       (39,877

Treasury stock, at cost

     (1,466,240     (1,217,547
  

 

 

   

 

 

 

Total Jabil Inc. stockholders’ equity

     2,327,477       2,438,171  

Noncontrolling interests

     15,366       19,326  
  

 

 

   

 

 

 

Total equity

     2,342,843       2,457,497  
  

 

 

   

 

 

 

Total liabilities and equity

   $ 10,329,649     $ 10,322,677  
  

 

 

   

 

 

 


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,
2017
    May 31,
2016
     May 31,
2017
    May 31,
2016
 

Net revenue

   $ 4,489,557     $ 4,310,752      $ 14,040,092     $ 13,922,323  

Cost of revenue

     4,163,142       3,989,665        12,920,267       12,718,268  
  

 

 

   

 

 

    

 

 

   

 

 

 

Gross profit

     326,415       321,087        1,119,825       1,204,055  

Operating expenses:

         

Selling, general and administrative

     233,884       239,646        665,879       716,097  

Research and development

     7,274       7,675        21,982       24,431  

Amortization of intangibles

     9,174       9,711        26,262       26,150  

Restructuring and related charges

     32,700       4,460        113,529       8,349  
  

 

 

   

 

 

    

 

 

   

 

 

 

Operating income

     43,383       59,595        292,173       429,028  

Interest and other, net

     47,601       35,322        117,552       102,202  
  

 

 

   

 

 

    

 

 

   

 

 

 

(Loss) income before income tax

     (4,218     24,273        174,621       326,826  

Income tax expense

     21,481       18,434        93,495       110,639  
  

 

 

   

 

 

    

 

 

   

 

 

 

Net (loss) income

     (25,699     5,839        81,126       216,187  

Net (loss) income attributable to noncontrolling interests, net of tax

     (418     626        (2,285     159  
  

 

 

   

 

 

    

 

 

   

 

 

 

Net (loss) income attributable to Jabil Inc.

   $ (25,281   $ 5,213      $ 83,411     $ 216,028  
  

 

 

   

 

 

    

 

 

   

 

 

 

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

         

Basic

   $ (0.14   $ 0.03      $ 0.46     $ 1.13  
  

 

 

   

 

 

    

 

 

   

 

 

 

Diluted

   $ (0.14   $ 0.03      $ 0.45     $ 1.12  
  

 

 

   

 

 

    

 

 

   

 

 

 

Weighted average shares outstanding:

         

Basic

     181,038       191,206        182,982       190,841  
  

 

 

   

 

 

    

 

 

   

 

 

 

Diluted

     181,038       193,069        186,621       193,058  
  

 

 

   

 

 

    

 

 

   

 

 

 


JABIL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

 

     Nine months ended  
     May 31,
2017
    May 31,
2016
 

Cash flows from operating activities:

    

Net income

   $ 81,126     $ 216,187  

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

    

Depreciation and amortization

     570,557       512,972  

Restructuring and related charges

     58,613       —    

Recognition of stock-based compensation expense and related charges

     33,377       58,505  

Deferred income taxes

     (44,916     (24,403

Loss on sale of property, plant and equipment

     1,362       13,229  

Other, net

     24,928       6,408  

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

    

Accounts receivable

     (85,761     180,830  

Inventories

     (216,149     229,187  

Prepaid expenses and other current assets

     100,397       (131,682

Other assets

     (28,852     (7,466

Accounts payable, accrued expenses and other liabilities

     38,341       (565,558
  

 

 

   

 

 

 

Net cash provided by operating activities

     533,023       488,209  
  

 

 

   

 

 

 

Cash flows from investing activities:

    

Acquisition of property, plant and equipment

     (482,739     (668,505

Proceeds from sale of property, plant and equipment

     43,437       18,710  

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

     (36,620     (206,039

Issuance of notes receivable

     —         (29,300

Other, net

     (1,360     (5,250
  

 

 

   

 

 

 

Net cash used in investing activities

     (477,282     (890,384
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Borrowings under debt agreements

     5,432,503       4,748,060  

Payments toward debt agreements

     (5,370,936     (4,268,839

Payments to acquire treasury stock

     (237,135     (54,567

Dividends paid to stockholders

     (45,550     (47,122

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

     11,246       10,660  

Treasury stock minimum tax withholding related to vesting of restricted stock

     (11,558     (10,490

Other, net

     (1,496     (1,958
  

 

 

   

 

 

 

Net cash (used in) provided by financing activities

     (222,926     375,744  
  

 

 

   

 

 

 

Effect of exchange rate changes on cash and cash equivalents

     (943     (541
  

 

 

   

 

 

 

Net decrease in cash and cash equivalents

     (168,128     (26,972

Cash and cash equivalents at beginning of period

     912,059       913,963  
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 743,931     $ 886,991  
  

 

 

   

 

 

 


JABIL 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     Nine months ended  
     May 31,
2017
    May 31,
2016
    May 31,
2017
    May 31,
2016
 

Operating income (U.S. GAAP)

   $ 43,383     $ 59,595     $ 292,173     $ 429,028  

Amortization of intangibles

     9,174       9,711       26,262       26,150  

Stock-based compensation expense and related charges

     18,350       13,445       33,377       58,505  

Restructuring and related charges

     32,700       4,460       113,529       8,349  

Distressed customer charges

     10,198       —         10,198       —    
  

 

 

   

 

 

   

 

 

   

 

 

 

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

   $ 113,805     $ 87,211     $ 475,539     $ 522,032  
  

 

 

   

 

 

   

 

 

   

 

 

 

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

   $ (25,281   $ 5,213     $ 83,411     $ 216,028  

Amortization of intangibles

     9,174       9,711       26,262       26,150  

Stock-based compensation expense and related charges

     18,350       13,445       33,377       58,505  

Restructuring and related charges

     32,700       4,460       113,529       8,349  

Distressed customer charges

     10,198       —         10,198       —    

Impairment on securities

     11,539       —         11,539       —    

Adjustments for taxes

     431       (866     (2,793     (2,842
  

 

 

   

 

 

   

 

 

   

 

 

 

Core earnings (Non-U.S. GAAP)

   $ 57,111     $ 31,963     $ 275,523     $ 306,190  
  

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) earnings per share (U.S. GAAP):

        

Basic

   $ (0.14   $ 0.03     $ 0.46     $ 1.13  
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ (0.14   $ 0.03     $ 0.45     $ 1.12  
  

 

 

   

 

 

   

 

 

   

 

 

 

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

        

Basic

   $ 0.32     $ 0.17     $ 1.51     $ 1.60  
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ 0.31     $ 0.17     $ 1.48     $ 1.59  
  

 

 

   

 

 

   

 

 

   

 

 

 

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

        

Basic

     181,038       191,206       182,982       190,841  
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     181,038       193,069       186,621       193,058  
  

 

 

   

 

 

   

 

 

   

 

 

 

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

        

Basic

     181,038       191,206       182,982       190,841  
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     184,940       193,069       186,621       193,058  
  

 

 

   

 

 

   

 

 

   

 

 

 


JABIL 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  
     May 31,
2017
    May 31,
2016
 

Numerator:

    

Operating income (U.S. GAAP)

   $ 43,383     $ 59,595  

Tax effect(1)

     (21,481     (18,516
  

 

 

   

 

 

 

After-tax operating income

     21,902       41,079  
     x4       x4  
  

 

 

   

 

 

 

Annualized after-tax operating income

   $ 87,608     $ 164,316  
  

 

 

   

 

 

 

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

   $ 113,805     $ 87,211  

Tax effect(2)

     (21,218     (19,340
  

 

 

   

 

 

 

After-tax core operating income

     92,587       67,871  
     x4       x4  
  

 

 

   

 

 

 

Annualized after-tax core operating income

   $ 370,348     $ 271,484  
  

 

 

   

 

 

 

Denominator:

    

Average total Jabil Inc. stockholders’ equity(3)

   $ 2,369,391     $ 2,479,722  

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

     1,850,068       1,801,124  

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

     293,154       449,089  

Average cash and cash equivalents(3)

     (749,514     (885,104
  

 

 

   

 

 

 

Net invested capital asset base

   $ 3,763,099     $ 3,844,831  
  

 

 

   

 

 

 

Return on Invested Capital (U.S. GAAP)

     2.3     4.3

Adjustments noted above

     7.5     2.8

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

     9.8     7.1

 

(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.