Jabil Delivers Another Strong Fiscal Year

September 25, 2018

Expects Positive Momentum to Continue

ST. PETERSBURG, Fla.--(BUSINESS WIRE)--Sep. 25, 2018-- Today, Jabil Inc. (NYSE: JBL), reported preliminary, unaudited financial results for its fourth quarter and fiscal year ended August 31, 2018.

“I’m really pleased with our fiscal 2018 results and the positive momentum we’re seeing across the business,” said CEO Mark Mondello. “Our team’s performance during the year culminated in double-digit revenue growth, 24 percent core EPS expansion and core ROIC of 19 percent, an increase of approximately 400 basis points year-on-year. At the same time, we made strategically important investments in areas like additive manufacturing and factory automation, while the underlying business allowed for nearly $1 billion in cash flow generation and $500 million in shareholder returns. By many measures, 2018 was another great year as we position the company to continue to deliver on our stated goals,” he added.

Fiscal Year 2018 Highlights:

  • Net revenue: $22.1 billion
  • Diversified Manufacturing Services (DMS) year-on-year revenue growth: 23 percent
  • Electronics Manufacturing Services (EMS) year-on-year revenue growth: 11 percent
  • U.S. GAAP operating income: $542.2 million
  • U.S. GAAP diluted earnings per share: $0.49
  • Core operating income (Non-GAAP): $768.1 million
  • Core diluted earnings per share (Non-GAAP): $2.62

“As we begin fiscal 2019, we’re steadfast in our commitment to deliver value for shareholders. We’ll continue to pursue strategic capabilities and technologies in select end-markets that should result in even more sustainable earnings and cash flows over the next three to four years.” added Mondello.

First Quarter of Fiscal Year 2019 Guidance:

• Net revenue     $5.8 billion to $6.4 billion
• U.S. GAAP operating income     $158 million to $223 million
• U.S. GAAP diluted earnings per share     $0.45 to $0.74 per diluted share
• Core operating income (Non-GAAP) (1)     $215 million to $265 million
• Core diluted earnings per share (Non-GAAP) (1)     $0.79 to $0.99 per diluted share
• Diversified Manufacturing Services     Increase revenue 5 percent year-on-year
• Electronics Manufacturing Services     Increase revenue 13 percent year-on-year
• Total company     Increase revenue 9 percent year-on-year
       

(1) Core operating income and core diluted earnings per share exclude anticipated adjustments of $8 million for amortization of intangibles (or $0.05 per diluted share), $24 million for stock-based compensation expense and related charges (or $0.14 per diluted share), $7 million to $2 million for restructuring and related charges (or $0.04 to $0.01 per diluted share) and $18 million to $8 million for acquisition and integration charges (or $0.11 to $0.05 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 before amortization of intangibles, stock-based compensation expense and related charges, restructuring and related charges, distressed customer charges, acquisition and integration charges, loss on disposal of subsidiaries, settlement of receivables and related charges, impairment of notes receivable and related charges, goodwill impairment charges and business interruption and impairment charges, net. Jabil defines core earnings as U.S. GAAP net income before amortization of intangibles, stock-based compensation expense and related charges, restructuring and related charges, distressed customer charges, acquisition and integration charges, loss on disposal of subsidiaries, settlement of receivables and related charges, impairment of notes receivable and related charges, goodwill impairment charges, business interruption and impairment charges, net, impairment on securities, 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 reports core operating income, core earnings and core diluted and basic earnings per share to provide investors an additional method for assessing operating income, earnings and diluted earnings per share 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 fourth quarter and full fiscal year 2018 and our guidance for future financial performance in our first quarter of fiscal year 2019 (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, net interest expense, and core tax rate(Non-GAAP). 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 fourth quarter and full fiscal year 2018 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; reliance on a limited number of suppliers for critical components; 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; our dependence on a limited number of large customers; 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, 2017 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 ROIC and core diluted and basic earnings per share to provide investors an additional method for assessing operating income, earnings and earnings per share 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 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 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 2018 and to provide an investor briefing. To access the live audio webcast and view the accompanying slide presentations, 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 product solutions company providing comprehensive design, manufacturing, supply chain and product management services. Operating from over 100 facilities in 29 countries, Jabil delivers innovative, integrated and tailored solutions to customers across a broad range of industries. For more information, visit jabil.com.

 
JABIL INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
             
      August 31, 2018      
      (unaudited)     August 31, 2017
ASSETS            
Current assets:            
Cash and cash equivalents     $ 1,257,949       $ 1,189,919  
Accounts receivable, net       1,693,268         1,397,424  
Inventories, net       3,457,706         2,942,083  
Prepaid expenses and other current assets       1,141,000         1,097,257  
Total current assets       7,549,923         6,626,683  
Property, plant and equipment, net       3,198,016         3,228,678  
Goodwill and intangible assets, net       906,876         892,780  
Deferred income taxes       218,252         205,722  
Other assets       172,574         142,132  
Total assets     $ 12,045,641       $ 11,095,995  
LIABILITIES AND EQUITY            
Current liabilities:            
Current installments of notes payable and long-term debt     $ 25,197       $ 444,255  
Accounts payable       4,942,932         4,257,623  
Accrued expenses       2,262,744         2,168,715  
Total current liabilities       7,230,873         6,870,593  
Notes payable and long-term debt, less current installments       2,493,502         1,606,017  
Other liabilities       94,617         100,812  
Income tax liabilities       148,884         100,902  
Deferred income taxes       114,385         49,327  
Total liabilities       10,082,261         8,727,651  
Commitments and contingencies            
Equity:            
Jabil Inc. stockholders’ equity:            
Preferred stock                
Common stock       257         253  
Additional paid-in capital       2,218,673         2,104,203  
Retained earnings       1,760,097         1,730,893  
Accumulated other comprehensive (loss) income       (19,399 )       54,620  
Treasury stock, at cost       (2,009,371 )       (1,536,455 )
Total Jabil Inc. stockholders’ equity       1,950,257         2,353,514  
Noncontrolling interests       13,123         14,830  
Total equity       1,963,380         2,368,344  
Total liabilities and equity     $ 12,045,641       $ 11,095,995  
             
 
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, 2018     August 31, 2017     August 31, 2018     August 31, 2017
Net revenue     $ 5,771,831       $ 5,023,029     $ 22,095,416     $ 19,063,121  
Cost of revenue       5,329,684         4,597,211       20,388,624       17,517,478  
Gross profit       442,147         425,818       1,706,792       1,545,643  
Operating expenses:                        
Selling, general and administrative       261,234         241,823       1,050,716       907,702  
Research and development       10,996         7,698       38,531       29,680  
Amortization of intangibles       8,581         9,262       38,490       35,524  
Restructuring and related charges       7,440         46,866       36,902       160,395  
Loss on disposal of subsidiaries               2,112             2,112  
Operating income       153,896         118,057       542,153       410,230  
Interest and other, net       45,349         36,445       168,752       153,997  
Income before income tax       108,547         81,612       373,401       256,233  
Income tax expense       165,155         35,571       285,860       129,066  
Net (loss) income       (56,608 )       46,041       87,541       127,167  
Net income (loss) attributable to noncontrolling interests, net of tax       706         362       1,211       (1,923 )
Net (loss) income attributable to Jabil Inc.     $ (57,314 )     $ 45,679     $ 86,330     $ 129,090  
(Loss) earnings per share attributable to the stockholders of Jabil Inc.:                        
Basic     $ (0.34 )     $ 0.26     $ 0.50     $ 0.71  
Diluted     $ (0.34 )     $ 0.25     $ 0.49     $ 0.69  
Weighted average shares outstanding:                        
Basic       166,968         178,697       172,237       181,902  
Diluted       166,968         182,977       175,044       185,838  
                         
 
JABIL INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
       
      Fiscal Year Ended
      August 31, 2018     August 31, 2017
Cash flows from operating activities:            
Net income     $ 87,541       $ 127,167  
Adjustments to reconcile net income to net cash provided by operating activities:            
Depreciation and amortization       773,704         760,405  
Restructuring and related charges       16,264         94,346  
Recognition of stock-based compensation expense and related charges       90,664         48,544  
Deferred income taxes       52,705         (63,001 )
Provision for allowance for doubtful accounts       38,030         10,112  
Other, net       (13,600 )       22,109  
Change in operating assets and liabilities, exclusive of net assets acquired:            
Accounts receivable       (316,262 )       (31,353 )
Inventories       (499,105 )       (445,089 )
Prepaid expenses and other current assets       (76,602 )       19,346  
Other assets       (34,747 )       (30,413 )
Accounts payable, accrued expenses and other liabilities       815,258         744,470  
Net cash provided by operating activities       933,850         1,256,643  
Cash flows used in investing activities:            
Acquisition of property, plant and equipment       (1,036,651 )       (716,485 )
Proceeds and advances from sale of property, plant and equipment       350,291         175,000  
Cash paid for business and intangible asset acquisitions, net of cash       (109,664 )       (36,620 )
Other, net       (2,360 )       (1,360 )
Net cash used in investing activities       (798,384 )       (579,465 )
Cash flows used in financing activities:            
Borrowings under debt agreements       9,677,424         7,434,107  
Payments toward debt agreements       (9,206,016 )       (7,479,150 )
Payments to acquire treasury stock       (450,319 )       (306,640 )
Dividends paid to stockholders       (57,833 )       (59,959 )
Net proceeds from exercise of stock options and issuance of common stock under employee stock purchase plan       24,865         21,791  
Treasury stock minimum tax withholding related to vesting of restricted stock       (22,597 )       (12,268 )
Other, net       (12,568 )       (2,427 )
Net cash used in financing activities       (47,044 )       (404,546 )
Effect of exchange rate changes on cash and cash equivalents       (20,392 )       5,228  
Net increase in cash and cash equivalents       68,030         277,860  
Cash and cash equivalents at beginning of period       1,189,919         912,059  
Cash and cash equivalents at end of period     $ 1,257,949       $ 1,189,919  
                     
 
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, 2018     August 31, 2017     August 31, 2018     August 31, 2017
Operating income (U.S. GAAP)     $ 153,896       $ 118,057       $ 542,153     $ 410,230  
Amortization of intangibles       8,581         9,262         38,490       35,524  
Stock-based compensation expense and related charges       15,689         15,167         98,511       48,544  
Restructuring and related charges       7,440         46,866         36,902       160,395  
Distressed customer charge       18,004                 32,710       10,198  
Business interruption and impairment charges, net       577                 11,299        
Loss on disposal of subsidiaries               2,112               2,112  
Acquisition and integration charges       8,082                 8,082        
Adjustments to operating income       58,373         73,407         225,994       256,773  
Core operating income (Non-GAAP)     $ 212,269       $ 191,464       $ 768,147     $ 667,003  
Net (loss) income attributable to Jabil Inc. (U.S. GAAP)     $ (57,314 )     $ 45,679       $ 86,330     $ 129,090  
Adjustments to operating income       58,373         73,407         225,994       256,773  
Impairment on securities                             11,539  
Adjustments for taxes(1)       117,167         (1,933 )       146,206       (4,726 )
Core earnings (Non-GAAP)     $ 118,226       $ 117,153       $ 458,530     $ 392,676  
(Loss) earnings per share (U.S. GAAP):                        
Basic     $ (0.34 )     $ 0.26       $ 0.50     $ 0.71  
Diluted     $ (0.34 )     $ 0.25       $ 0.49     $ 0.69  
Core earnings per share (Non-GAAP):                        
Basic     $ 0.71       $ 0.66       $ 2.66     $ 2.16  
Diluted     $ 0.70       $ 0.64       $ 2.62     $ 2.11  
Weighted average shares outstanding used in the calculations of earnings per share (U.S. GAAP):                        
Basic       166,968         178,697         172,237       181,902  
Diluted       166,968         182,977         175,044       185,838  
Weighted average shares outstanding used in the calculations of earnings per share (Non-GAAP):                        
Basic       166,968         178,697         172,237       181,902  
Diluted       169,728         182,977         175,044       185,838  
                         
(1)   Includes a $111.4 million and $142.3 million provisional estimate to account for the effects of the Tax Cuts and Jobs Act for the three months and fiscal year ended August 31, 2018, respectively.
     
 
JABIL INC. AND SUBSIDIARIES
SUPPLEMENTAL DATA
RETURN ON INVESTED CAPITAL AND CORE RETURN ON INVESTED CAPITAL
(in thousands)
(Unaudited)
             
      Three Months Ended     Fiscal Year Ended
      August 31, 2018     August 31, 2017     August 31, 2018     August 31, 2017
Numerator:                        
Operating income (U.S. GAAP)     $ 153,896       $ 118,057       $ 542,153       $ 410,230  
Tax effect (1)       (88,126 )       (35,771 )       (300,979 )       (137,087 )
After-tax operating income       65,770  

 

    82,286         241,174         273,143  
      x4     x4     x1     x1
Annualized after-tax operating income     $ 263,080       $ 329,144       $ 241,174       $ 273,143  
Core operating income (Non-GAAP)     $ 212,269       $ 191,464       $ 768,147       $ 667,003  
Tax effect (2)       (49,875 )       (37,610 )       (144,261 )       (134,930 )
After-tax core operating income       162,394         153,854         623,886         532,073  
      x4     x4     x1     x1
Annualized after-tax core operating income     $ 649,576       $ 615,416       $ 623,886       $ 532,073  
Denominator:                        
Average total Jabil Inc. stockholders' equity (3)     $ 2,061,699       $ 2,340,495       $ 2,151,886       $ 2,395,843  
Average notes payable and long-term debt, less current installments (3)       2,321,562         1,638,591         2,063,047         1,853,302  
Average current installments of notes payable and long-term debt (3)       148,698         492,241         235,348         245,654  
Average cash and cash equivalents (3)       (967,720 )       (966,925 )       (1,223,934 )       (1,050,989 )
Net invested capital base     $ 3,564,239       $ 3,504,402       $ 3,226,347       $ 3,443,810  
                         
Return on Invested Capital (U.S. GAAP)       7.4 %       9.4 %       7.5 %       7.9 %
Adjustments noted above       10.8 %       8.2 %       11.8 %       7.6 %
Core Return on Invested Capital (Non-GAAP)       18.2 %       17.6 %       19.3 %       15.5 %
                         
(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-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 for the three months ended August 31, 2018 and 2017, respectively, and dividing by two. The average is based on the addition of the account balance at the end of the most recently-ended fiscal year to the account balance at the end of the prior fiscal year for the fiscal years ended August 31, 2018 and 2017, respectively, and dividing by two.

     

 

Source: Jabil Circuit, Inc.

Jabil Inc.
Adam Berry, 727-803-5772
Vice President, Investor Relations
adam_berry@jabil.com

 

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