Today Jabil Circuit, Inc. (NYSE: JBL), reported preliminary, unaudited financial results for its first quarter of fiscal year 2015. The company reported first quarter net revenue of $4.55 billion, a 5 percent increase from the first quarter of fiscal 2014.
“We had a very strong start to the fiscal year as our team exceeded expectations,” said Mark T. Mondello, Chief Executive Officer. “Our results reflect strong demand within our Diversified Manufacturing Services segment as well as solid execution and performance across the entire business,” he added.
Jabil’s two reporting segments delivered the following revenue results for the company’s first fiscal quarter:
- Electronics Manufacturing Services: $2.63 billion.
- Diversified Manufacturing Services: $1.92 billion.
Generally accepted accounting principles (GAAP) operating income for the first quarter was $144.8 million and GAAP net diluted earnings per share was $0.37.
Core operating income (as defined below) was $180.6 million and core diluted earnings per share (as defined below) was $0.55.
(Definitions used: "GAAP" means U.S. generally accepted accounting principles. Jabil defines core operating income as 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 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 GAAP. Jabil calculates its 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 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 GAAP operating income, its calculation of core earnings and core diluted earnings per share to its GAAP net income and GAAP earnings per share, its calculation of core return on invested capital and additional information in the supplemental information.)
Quarterly Results | Q1 2015 | Q1 2014 | ||||||
| Net revenue | $4.6 billion | $4.3 billion | ||||||
| GAAP operating income | $144.8 million | $155.4 million | ||||||
| GAAP net income | $72.2 million | $117.9 million | ||||||
| GAAP net diluted earnings per share | $0.37 | $0.57 | ||||||
| GAAP return on invested capital | 14.2% | 16.3% | ||||||
| Core operating income | $180.6 million | $160.1 million | ||||||
| Core earnings | $108.2 million | $89.0 million | ||||||
| Core diluted earnings per share | $0.55 | $0.43 | ||||||
| Core return on invested capital | 19.0% | 14.8% |
Business Update
“I’m encouraged by how we’ve positioned Jabil to capture transformative technologies that we see on the horizon. As a result, we will continue to expand in key areas through thoughtful investment across our business,” Mondello said. Management increased its fiscal year 2015 revenue outlook to $17.5 - $18.5 billion and core earnings per share to $1.85 - $2.15.
| Second quarter fiscal 2015 guidance: | ||||
Net revenue | $4.15 billion to $4.35 billion | |||
GAAP operating income | $106 million to $142 million | |||
GAAP net diluted earnings per share | $0.25 to $0.38 per diluted share | |||
Core operating income | $135 million to $165 million | |||
Core diluted earnings per share | $0.39 to $0.50 per diluted share | |||
Electronics Manufacturing Services | Increase 3 percent year over year | |||
Diversified Manufacturing Services | Increase 53 percent year over year |
(GAAP net diluted earnings per share for the second quarter of fiscal year 2015 are currently estimated to include $0.03 per share for amortization of intangibles, $0.07 per share for stock-based compensation expense and related charges and $0.02 to $0.04 per share for restructuring and related charges.)
FORWARD LOOKING STATEMENT: This news release contains forward-looking statements, including those regarding our anticipated financial results for our first quarter of fiscal year 2015; the positioning of Jabil to capture transformative technologies that we believe are on the horizon; our expectation that we will continue to expand in key areas through thoughtful investment across our business; our currently expected fiscal year 2015 revenues and core earnings per share; and our currently expected second quarter of fiscal year 2015 net revenue (including that of our segments), core and GAAP operating income, core and GAAP diluted earnings per share results and the components thereof. The statements in this news release are based on current expectations, forecasts and assumptions involving risks and uncertainties that could cause actual outcomes and results to differ materially. These risks and uncertainties include, but are not limited to: our determination as we finalize our financial results for our first quarter of fiscal year 2015 that our financial results and conditions differ from our current preliminary unaudited numbers set forth herein; fluctuations in our stock’s market price; fluctuations in operating results and cash flows; unexpected, adverse seasonal impacts on demand; changes in macroeconomic conditions, both in the U.S. and internationally; the occurrence of, success and expected financial results from, product ramps; our financial performance during and after the current economic conditions; our ability to maintain and improve costs, quality and delivery for our customers; risks and costs inherent in litigation; whether our realignment of our capacity will adversely affect our cost structure, ability to service customers and labor relations; our ability to take advantage of perceived benefits of offering customers vertically integrated services; 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; business and competitive factors generally affecting the electronic manufacturing services industry, our customers and our business; other factors that we may not have currently identified or quantified; and other risks, relevant factors and uncertainties identified in our Annual Report on Form 10-K for the fiscal year ended August 31, 2014, subsequent Reports on Forms 10-Q and 8-K and our other securities filings. Jabil disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Supplemental Information: The financial results disclosed in this release include certain measures calculated and presented in accordance with GAAP. In addition to the GAAP financial measures, Jabil provides supplemental, non-GAAP financial measures to facilitate evaluation of Jabil's core operating performance. The non-GAAP financial measures disclosed in this release exclude certain amounts that are included in the most directly comparable GAAP measures. The non-GAAP or core financial measures disclosed in this release do not have standard meanings and may vary from the non-GAAP financial measures used by other companies. Management believes core financial measures (which exclude the effects of the 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) are a useful measure that facilitates evaluating 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, earnings and earnings per share from what it believes are its core manufacturing operations. Included in this release are Condensed Consolidated Statements of Operations as well as a reconciliation of the disclosed core financial measures to the most directly comparable GAAP financial measures.
Company Conference Call Information: Jabil will hold a conference call to discuss the first quarter of fiscal year 2015 earnings 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 December 17, 2014 at approximately 7:30 p.m. ET through midnight on December 31, 2014. 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: 44928993. An archived webcast of the conference call will be available at http://www.jabil.com/investors/.
About Jabil
Jabil is an electronic product solutions company providing comprehensive electronics design and manufacturing product management services to global electronics and technology companies. Offering complete product supply chain management from facilities in 24 countries, Jabil provides comprehensive, individualized-focused solutions to customers in a broad range of industries. Jabil common stock is traded on the New York Stock Exchange under the symbol, “JBL”. Further information is available on Jabil’s website: jabil.com.
| JABIL CIRCUIT, INC. AND SUBSIDIARIES | ||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
| (in thousands) | ||||||||
| November 30, | ||||||||
| 2014 (Unaudited) | August 31, 2014 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 921,504 | $ | 1,000,249 | ||||
| Accounts receivable, net | 1,584,794 | 1,208,516 | ||||||
| Inventories | 2,099,214 | 2,008,077 | ||||||
| Prepaid expenses and other current assets | 1,049,745 | 1,057,562 | ||||||
| Deferred income taxes | 61,595 | 64,944 | ||||||
| Assets of discontinued operations | 20,505 | 19,669 | ||||||
| Total current assets | 5,737,357 | 5,359,017 | ||||||
| Property, plant and equipment, net | 2,314,464 | 2,271,705 | ||||||
| Goodwill and intangible assets, net | 620,944 | 627,700 | ||||||
| Deferred income taxes | 89,428 | 92,702 | ||||||
| Other assets | 107,715 | 128,622 | ||||||
| Total assets | $ | 8,869,908 | $ | 8,479,746 | ||||
| LIABILITIES AND EQUITY | ||||||||
| Current liabilities: | ||||||||
| Current installments of notes payable, long-term debt and capital lease obligations | $ | 11,487 | $ | 12,960 | ||||
| Accounts payable | 3,358,871 | 3,060,814 | ||||||
| Accrued expenses | 1,340,732 | 1,235,106 | ||||||
| Deferred income taxes | 5,040 | 5,094 | ||||||
| Liabilities of discontinued operations | 6,798 | 7,123 | ||||||
| Total current liabilities | 4,722,928 | 4,321,097 | ||||||
| Notes payable, long-term debt and capital lease obligations, less current installments | 1,666,377 | 1,669,585 | ||||||
| Other liabilities | 74,314 | 79,471 | ||||||
| Income tax liabilities | 93,268 | 87,555 | ||||||
| Deferred income taxes | 59,109 | 61,670 | ||||||
| Total liabilities | 6,615,996 | 6,219,378 | ||||||
|
Commitments and contingencies
Equity: | ||||||||
| Jabil Circuit, Inc. stockholders’ equity: | ||||||||
| Preferred stock | — | — | ||||||
| Common stock | 245 | 244 | ||||||
| Additional paid-in capital | 1,892,279 | 1,874,219 | ||||||
| Retained earnings | 1,305,041 | 1,245,772 | ||||||
| Accumulated other comprehensive income | 49,710 | 86,962 | ||||||
| Treasury stock, at cost | (1,012,117 | ) | (965,369 | ) | ||||
| Total Jabil Circuit, Inc. stockholders’ equity | 2,235,158 | 2,241,828 | ||||||
| Noncontrolling interests | 18,754 | 18,540 | ||||||
| Total equity | 2,253,912 | 2,260,368 | ||||||
| Total liabilities and equity | $ | 8,869,908 | $ | 8,479,746 | ||||
JABIL CIRCUIT, INC. AND SUBSIDIARIES | |||||||
| Three months ended | |||||||
| November 30, | November 30, | ||||||
| 2014 | 2013 | ||||||
| Net revenue | $ | 4,550,418 | $ | 4,342,711 | |||
| Cost of revenue | 4,167,431 | 4,008,460 | |||||
| Gross profit | 382,987 | 334,251 | |||||
| Operating expenses: | |||||||
| Selling, general and administrative | 214,380 | 142,470 | |||||
| Research and development | 6,005 | 9,054 | |||||
| Amortization of intangibles | 5,590 | 6,321 | |||||
| Restructuring and related charges | 12,257 | 21,003 | |||||
| Operating income | 144,755 | 155,403 | |||||
| Interest and other, net | 31,833 | 33,774 | |||||
| Income from continuing operations before tax | 112,922 | 121,629 | |||||
| Income tax expense | 39,788 | 19,676 | |||||
| Income from continuing operations, net of tax | 73,134 | 101,953 | |||||
| Discontinued operations: | |||||||
| Income from discontinued operations, net of tax | 853 | 16,112 | |||||
| Loss on sale of discontinued operations, net of tax | (1,611 | ) | — | ||||
| Discontinued operations, net of tax | (758 | ) | 16,112 | ||||
| Net income | 72,376 | 118,065 | |||||
| Net income attributable to noncontrolling interests, net of tax | 214 | 143 | |||||
| Net income attributable to Jabil Circuit, Inc. | $ | 72,162 | $ | 117,922 | |||
| Earnings per share attributable to the stockholders of Jabil Circuit, Inc.: | |||||||
| Basic: | |||||||
| Income from continuing operations, net of tax | $ | 0.38 | $ | 0.50 | |||
| Discontinued operations, net of tax | $ | 0.00 | $ | 0.08 | |||
| Net income | $ | 0.37 | $ | 0.58 | |||
| Diluted: | |||||||
| Income from continuing operations, net of tax | $ | 0.37 | $ | 0.49 | |||
| Discontinued operations, net of tax | $ | 0.00 | $ | 0.08 | |||
| Net income | $ | 0.37 | $ | 0.57 | |||
| Weighted average shares outstanding: | |||||||
| Basic | 193,502 | 204,762 | |||||
| Diluted | 195,314 | 206,813 | |||||
JABIL CIRCUIT, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) | ||||||||
| Three months ended | ||||||||
| November 30, 2014 | November 30, 2013 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | 72,376 | $ | 118,065 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 122,380 | 125,596 | ||||||
| Restructuring and related charges | 3,292 | 782 | ||||||
| Recognition of stock-based compensation expense and related charges | 18,043 | (24,566 | ) | |||||
| Deferred income taxes | 2,618 | (5,429 | ) | |||||
| Other, net | 14,388 | 2,977 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (398,334 | ) | (146,619 | ) | ||||
| Inventories | (100,831 | ) | 137,407 | |||||
| Prepaid expenses and other current assets | (1,491 | ) | (11,909 | ) | ||||
| Other assets | 15,077 | 5,259 | ||||||
| Accounts payable and accrued expenses | 441,583 | (83,857 | ) | |||||
| Net cash provided by operating activities | 189,101 | 117,706 | ||||||
| Cash flows from investing activities: | ||||||||
| Acquisition of property, plant and equipment | (197,676 | ) | (202,992 | ) | ||||
| Proceeds from sale of property, plant and equipment | 3,764 | 5,819 | ||||||
| Other, net | 3,600 | — | ||||||
| Net cash used in investing activities | (190,312 | ) | (197,173 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Borrowings under debt agreements | 1,458,495 | 2,066,000 | ||||||
| Payments towards debt agreements | (1,461,871 | ) | (2,180,326 | ) | ||||
| Payments to acquire treasury stock | (40,040 | ) | — | |||||
| Dividends paid to stockholders | (16,607 | ) | (19,261 | ) | ||||
| Treasury stock minimum tax withholding related to vesting of restricted stock | (6,708 | ) | (32,717 | ) | ||||
| Other, net | 63 | 2,390 | ||||||
| Net cash used in financing activities | (66,668 | ) | (163,914 | ) | ||||
| Effect of exchange rate changes on cash and cash equivalents | (10,866 | ) | 1,231 | |||||
| Net decrease in cash and cash equivalents | (78,745 | ) | (242,150 | ) | ||||
| Cash and cash equivalents at beginning of period | 1,000,249 | 1,011,373 | ||||||
| Cash and cash equivalents at end of period | $ | 921,504 | $ | 769,223 | ||||
| JABIL CIRCUIT, INC. AND SUBSIDIARIES | ||||||||
| SUPPLEMENTAL DATA | ||||||||
| RECONCILIATION OF GAAP FINANCIAL RESULTS TO NON-GAAP MEASURES | ||||||||
| (in thousands, except for per share data) | ||||||||
| (Unaudited) | ||||||||
| Three months ended | ||||||||
| November 30, | November 30, | |||||||
| 2014 | 2013 | |||||||
| Operating income (GAAP) | $ | 144,755 | $ | 155,403 | ||||
| Amortization of intangibles | 5,590 | 6,321 | ||||||
| Stock-based compensation expense and related charges | 18,043 | (22,586 | ) | |||||
| Restructuring and related charges | 12,257 | 21,003 | ||||||
| Core operating income (Non-GAAP) | $ | 180,645 | $ | 160,141 | ||||
| Net income attributable to Jabil Circuit, Inc. (GAAP) | $ | 72,162 | $ | 117,922 | ||||
| Amortization of intangibles, net of tax | 5,589 | 1,173 | ||||||
| Stock-based compensation expense and related charges, net of tax | 17,694 | (22,606 | ) | |||||
| Restructuring and related charges, net of tax | 11,948 | 17,697 | ||||||
| Acquisition costs and certain purchase accounting adjustments, net of tax | — | (9,064 | ) | |||||
| Income from discontinued operations, net of tax | (853 | ) | (16,112 | ) | ||||
| Loss on sale of discontinued operations, net of tax | 1,611 | — | ||||||
| Core earnings (Non-GAAP) | $ | 108,151 | $ | 89,010 | ||||
| Earnings per share: (GAAP) | ||||||||
| Basic | $ | 0.37 | $ | 0.58 | ||||
| Diluted | $ | 0.37 | $ | 0.57 | ||||
| Core earnings per share: (Non-GAAP) | ||||||||
| Basic | $ | 0.56 | $ | 0.43 | ||||
| Diluted | $ | 0.55 | $ | 0.43 | ||||
| Weighted average shares outstanding used in the calculations of earnings per share (GAAP and Non-GAAP): | ||||||||
| Basic | 193,502 | 204,762 | ||||||
| Diluted | 195,314 | 206,813 | ||||||
JABIL CIRCUIT, INC. AND SUBSIDIARIES
SUPPLEMENTAL DATA
RECONCILIATION
OF GAAP FINANCIAL RESULTS TO NON-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 GAAP operating income" for its most recently-ended quarter and dividing that by a two quarter average of its "net invested capital asset base" and (2) its "Core Return on Invested Capital" by annualizing its "after-tax non-GAAP core operating income" for its most recently-ended quarter and dividing that by a two quarter “average net invested capital asset base."
The Company calculates: (1) its "after-tax GAAP operating income" by subtracting a certain tax effect (the calculation of which is explained below) from its GAAP operating income and (2) its "after-tax non-GAAP core operating income" as its non-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-GAAP core operating income to its 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 GAAP operating income" to (2) "Core Return on Invested Capital," as calculated using "after-tax non-GAAP core operating income":
| Three months ended | ||||||
November 30, | November 30, | |||||
| 2014 | 2013 | |||||
| Numerator: | ||||||
| Operating income (GAAP) | $ | 144,755 | $ | 155,403 | ||
| Tax effect (1) | (39,786) | (19,752) | ||||
| After-tax operating income | 104,969 | 135,651 | ||||
| x4 | x4 | |||||
| Annualized after-tax operating income | $ | 419,876 | $ | 542,604 | ||
| Core operating income (Non-GAAP) | $ | 180,645 | $ | 160,141 | ||
| Tax effect (2) | (40,445) | (37,352) | ||||
| After-tax core operating income | 140,200 | 122,789 | ||||
| x4 | x4 | |||||
| Annualized after-tax core operating income | $ | 560,800 | $ | 491,156 | ||
| Denominator: | ||||||
| Average total Jabil Circuit, Inc. stockholders’ equity (3) | $ | 2,238,493 | $ | 2,363,080 | ||
| Average notes payable, long-term debt and capital lease obligations, less current installments (3) | 1,667,981 | 1,684,126 | ||||
| Average current installments of notes payable, long-term debt and capital lease obligations (3) | 12,223 | 166,339 | ||||
| Average cash and cash equivalents (3) | (960,877) | (890,298) | ||||
| Net invested capital asset base | $ | 2,957,820 | $ | 3,323,247 | ||
| Return on Invested Capital (GAAP) | 14.2% | 16.3% | ||||
| Adjustments noted above | 4.8% | (1.5)% | ||||
| Core Return on Invested Capital (Non-GAAP) | 19.0% | 14.8% | ||||
(1) This amount is calculated by adding the amount of income taxes attributable to its operating income (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 and dividing by two.
Contacts:
Investor & Media Contact:
Beth
Walters, 727-803-3511
Senior Vice President, Investor Relations &
Communications
beth_walters@jabil.com
