Jabil Posts First Quarter Results

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Jabil Posts First Quarter Results

Impressive Strength in Specialized Services

ST. PETERSBURG, Fla.--(BUSINESS WIRE)-- Today Jabil Circuit, Inc. (NYS: JBL) , announced its preliminary, unaudited financial results for the first quarter of fiscal year 2013. The company reported first quarter revenue of $4.6 billion. "Diversified Manufacturing Services increased to 47 percent of our overall business, paced by outstanding growth in Specialized Services," said Timothy L. Main, President and CEO of Jabil.


Jabil's Diversified Manufacturing Services business grew 20 percent in the first quarter of fiscal 2013 when compared to results of the first quarter of fiscal year 2012. The company's Enterprise & Infrastructure business increased 17 percent from the first quarter of fiscal year 2012 while Jabil's High Velocity business declined 20 percent during the first quarter of fiscal year 2013, as compared to fiscal 2012.

Generally accepted accounting principles (GAAP) operating income for the first quarter of fiscal year 2013 was $170 million. Excluding amortization of intangibles and stock-based compensation, core operating income was $193 million. GAAP diluted earnings per share was $0.51 cents and core diluted earnings per share was $0.61 cents.

"We are pleased to have generated cash flow from operations of $152 million during the quarter. As a result of this outstanding performance and the ongoing strength of our balance sheet, we were able to return $148 million in capital to shareholders during the first quarter of fiscal year 2013 through dividends and share repurchases," said Chief Financial Officer Forbes Alexander. "We see this positive performance continuing and continue to estimate operating cash flow of $1 billion in fiscal 2013," Alexander noted.

(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 impairment charges, goodwill impairment charges, certain distressed customer charges, settlement of receivables and related charges and loss on disposal of subsidiaries. Jabil defines core earnings as GAAP net income before amortization of intangibles, stock-based compensation expense and related charges, restructuring and impairment charges, goodwill impairment charges, certain distressed customer charges, settlement of receivables and related charges, loss on disposal of subsidiaries, 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 determined under GAAP. Jabil calculates 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 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.)

Operational Highlights Fiscal Q1 2013 versus Fiscal Q1 2012

  • Diversified Manufacturing Services increased 20 percent.
    • Specialized Services revenue expanded 51 percent.
    • Healthcare & Instrumentation revenue declined 22 percent.
    • Industrial & Clean Tech revenue declined 9 percent.
  • Enterprise & Infrastructure revenue increased 17 percent.
  • High Velocity revenue decreased 20 percent.
  • Cash flow from operations increased to $152 million.

Quarterly Results

   

Q1 2013

   

Q1 2012

 
Net revenue$4.6 billion$4.3 billion
GAAP operating income$170.3 million$170.8 million
GAAP net income$105.8 million$112.9 million
GAAP diluted earnings per share$0.51$0.54
GAAP return on invested capital21%26%
Core operating income$192.5 million$194.6 million
Core earnings$127.8 million$136.2 million
Core diluted earnings per share$0.61$0.65
Core return on invested capital24%30%
 

Repurchased $129 million worth of shares and returned $19 million to shareholders via dividends during the quarter.

Business Update

"Expectations for the second fiscal quarter of 2013 are consistent with seasonal patterns of demand," said Jabil CEO Timothy Main. "End market demand remains muted in business sectors exposed to government and business spending. Although environmental conditions continue to be uncertain, we maintain our expectation that fiscal 2013 will be another record year for Jabil."

Fiscal Q2 2013 Guidance Range

 
Net revenue   $4.3 billion to $4.5 billion
Core operating income$165 million to $185 million
Core earnings per share$0.50 to $0.58 per diluted share
GAAP earnings per share$0.40 to $0.48 per diluted share
 

(GAAP earnings per share for the second quarter of fiscal 2013 are currently estimated to include $0.02 per share for amortization of intangibles and $0.08 per share for stock-based compensation).

FORWARD LOOKING STATEMENT: This news release contains forward-looking statements, including those regarding our anticipated financial results for our first quarter of fiscal year 2013; our positive performance continuing, specifically our fiscal year 2013 operating cash flow and our strong balance sheet; our expectations for the second quarter of fiscal year 2013 being consistent with seasonal patterns of demand; end market demand remaining muted in business sectors exposed to government and business spending; our expectation that fiscal year 2013 will be another company record year for Jabil; and our currently expected second quarter of fiscal year 2013 net revenue, core operating income, core and GAAP 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 fiscal quarter of fiscal year 2013 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; 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, 2012, subsequent Reports on Form 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 impairment charges, goodwill impairment charges, certain distressed customer charges, settlement of receivables and related charges, loss on disposal of subsidiaries, 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 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 fiscal quarter 2013 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 19, 2012 at approximately 7:30 p.m. ET through midnight on December 31, 2012. 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: 77599645. 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, manufacturing and aftermarket product management services to global electronics and technology companies. Offering complete product supply chain management from facilities in 29 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'swebsite: jabil.com.

 
JABIL CIRCUIT, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
  
November 30,August 31,
2012 (Unaudited)2012
 
ASSETS
Current assets:
Cash and cash equivalents$1,030,034$1,217,256
Accounts receivable, net1,430,4681,125,015
Inventories2,465,8012,268,949
Prepaid expenses and other current assets980,494989,326
Income taxes receivable10,72710,949
Deferred income taxes 28,552  27,833 
 
Total current assets5,946,0765,639,328
 
Property, plant and equipment, net1,859,1661,779,155
Goodwill and intangible assets, net211,569214,071
Deferred income taxes71,36473,411
Other assets 97,325  97,176 
 
Total assets$8,185,500 $7,803,141 
 
LIABILITIES AND EQUITY
Current liabilities:

Current installments of notes payable and long-term debt

$9,650$18,031
Accounts payable3,374,9272,992,865
Accrued expenses852,199808,480
Income taxes payable28,41635,665
Deferred income taxes 4,298  3,955 
 
Total current liabilities4,269,4903,858,996
 

Notes payable and long-term debt, less current installments

1,656,0581,658,326
Other liabilities85,08785,714
Income tax liability76,15268,525
Deferred income taxes 22,668  24,245 
 
Total liabilities 6,109,455  5,695,806 
 
Commitments and contingencies

Equity:

Jabil Circuit, Inc. stockholders' equity:
Preferred stock
Common stock237232
Additional paid-in capital1,775,1681,752,847
Retained earnings855,819766,934
Accumulated other comprehensive income112,890106,275
Treasury stock, at cost (670,401) (521,231)
 
Total Jabil Circuit, Inc. stockholders' equity 2,073,713  2,105,057 
 
Noncontrolling interests 2,332  2,278 
 
Total equity 2,076,045  2,107,335 
 
Total liabilities and equity$8,185,500 $7,803,141 
 

JABIL CIRCUIT, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except for per share data)

(Unaudited)

 
Three months ended
November 30, November 30,
2012 2011

 

Net revenue$4,637,018$4,326,769
Cost of revenue 4,286,423   3,986,759
 
Gross profit350,595340,010
 
Operating expenses:
Selling, general and administrative169,600157,823
Research and development7,2636,271
Amortization of intangibles 3,451   5,074
Operating income170,281170,842
 
Interest and other, net 30,663   27,646
 
Income before income tax139,618143,196
 
Income tax expense 34,034   29,415
 
Net income105,584113,781
 

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

 (263)  

909

 
Net income attributable to Jabil Circuit, Inc.$105,847  $112,872
 

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

Basic$0.52  $0.55
Diluted$0.51  $0.54
 
Weighted average shares outstanding:
Basic 204,318   205,388
Diluted 207,816   209,937
 
JABIL CIRCUIT, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
 
 Three months ended
November 30,
2012
 November 30,
2011
Cash flows from operating activities:
Net income$105,584$113,781
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization95,20385,861
Recognition of stock-based compensation expense18,80318,665
Other, net1,498(561)
Changes in operating assets and liabilities, exclusive of net assets acquired:
Accounts receivable(308,487)(29,659)
Inventories(195,316)(173,336)
Prepaid expenses and other current assets10,256(49,009)
Other assets2336,319
Accounts payable and accrued expenses424,119147,107
Income taxes payable 21  (4,595)
 
Net cash provided by operating activities 151,914  114,573 
 
Cash flows from investing activities:
Acquisition of property, plant and equipment(166,485)(103,234)
Proceeds from sale of property, plant and equipment1,9818,148
Cost of receivables acquired, net of cash collections   510 
 
Net cash used in investing activities (164,504) (94,576)
 
Cash flows from financing activities:
Borrowings under debt agreements776,517
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