Jabil Posts Second Quarter Results

Jabil Posts Second Quarter Results

Results Reflect Steady Performance

ST. PETERSBURG, Fla.--(BUSINESS WIRE)-- Today Jabil Circuit, Inc. (NYS: JBL) , announced preliminary, unaudited financial results for its second quarter of fiscal year 2013. For the quarter, Jabil reported revenue of $4.4 billion, an increase of 4.3 percent over the second quarter of fiscal 2012. "We are pleased with these results for the quarter, despite the obviously challenging macro environment," said Jabil's Chief Executive Officer, Mark T. Mondello. "During the quarter we made great progress on the Nypro acquisition and believe the market opportunities of our combined capabilities are considerable," said Mondello. "We look forward to a successful completion of this deal in our fourth fiscal quarter."


Jabil's three reporting segments delivered the following year over year revenue results:

  • Diversified Manufacturing Services grew 11 percent.

  • Enterprise & Infrastructure increased 12 percent.

  • High Velocity declined 15 percent.

Generally accepted accounting principles (GAAP) operating income for the second quarter of fiscal year 2013 was $149 million and GAAP diluted earnings per share were $0.43 cents.

Core operating income results excluding amortization of intangibles and stock-based compensation was $170 million and core diluted earnings per share was $0.53 cents. Acquisition-related expenses were $5 million above the company's second quarter forecast. This portion of the expenses was originally forecasted to be incurred during Jabil's third fiscal quarter.

(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 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

Q2 2013

Q2 2012

Net revenue

$4.4 billion

$4.2 billion

GAAP operating income

$149.0 million

$150.2 million

GAAP net income

$88.5 million

$97.7 million

GAAP diluted earnings per share

$0.43

$0.46

GAAP return on invested capital

16.9%

20.5%

Core operating income

$170.2 million

$176.2 million

Core earnings

$109.3 million

$123.2 million

Core diluted earnings per share

$0.53

$0.58

Core return on invested capital

19.9%

24.6%

Fiscal Q3 2013 Guidance

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 operating income

$144 million to $164 million

GAAP earnings per share

$0.40 to $0.48 per diluted share

(GAAP earnings per share for the third 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)

Segment Revenue Guidance:

  • Diversified Manufacturing Services to remain consistent.

  • Enterprise & Infrastructure to remain consistent.

  • High Velocity to increase 13 percent.

FORWARD LOOKING STATEMENT: This news release contains forward-looking statements, including those regarding our anticipated financial results for our second quarter of fiscal year 2013; the anticipated closing date of the Nypro acquisition; the market opportunities for our capabilities combined with Nypro's; and our currently expected third quarter of fiscal year 2013 net revenue, core operating income, GAAP 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 second fiscal quarter of fiscal year 2013 that our financial results and conditions differ from our current preliminary unaudited numbers set forth herein; the Nypro transaction failing to close or closing later than expected; our ability to manage the integration of Nypro's business with ours; changes in our strategy; our ability to successfully develop engineering and capability intensive businesses; our ability to effectively compete in the global healthcare provider, food and beverage, household, personal care and rigid plastic packaging markets; our ability to retain the desired customers and personnel of Nypro; the post-acquisition performance of Nypro; Nypro having potential unanticipated liabilities; 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 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 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 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 second 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 March 20, 2013 at approximately 7:30 p.m. ET through midnight on March 27, 2013. 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: 20346794. 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 30 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)

February 28,

2013

(Unaudited)

August 31,

2012

ASSETS

Current assets:

Cash and cash equivalents

$

1,061,655

$

1,217,256

Accounts receivable, net

1,300,046

1,125,015

Inventories

2,496,618

2,268,949

Prepaid expenses and other current assets

997,647

989,326

Income taxes receivable

11,312

10,949

Deferred income taxes

29,995

27,833

Total current assets

5,897,273

5,639,328

Property, plant and equipment, net

1,961,492

1,779,155

Goodwill and intangible assets, net

212,363

214,071

Deferred income taxes

72,621

73,411

Other assets

103,892

97,176

Total assets

$

8,247,641

$

7,803,141

LIABILITIES AND EQUITY

Current liabilities:

Current installments of notes payable and

long-term debt

$

109,598

$

18,031

Accounts payable

3,142,825

2,992,865

Accrued expenses

951,169

808,480

Income taxes payable

20,130

35,665

Deferred income taxes

4,866

3,955

Total current liabilities

4,228,588

3,858,996

Notes payable and long-term debt,

less current installments

1,653,708

1,658,326

Other liabilities

86,042

85,714

Income tax liabilities

75,968

68,525

Deferred income taxes

25,345

24,245

Total liabilities

6,069,651

5,695,806

Commitments and contingencies

Equity:

Jabil Circuit, Inc. stockholders' equity:

Preferred stock

Common stock

237

232

Additional paid-in capital

1,800,595

1,752,847

Retained earnings

927,361

766,934

Accumulated other comprehensive income

118,624

106,275

Treasury stock, at cost

(670,714

)

(521,231

)

Total Jabil Circuit, Inc. stockholders' equity

2,176,103

2,105,057

Noncontrolling interests

1,887

2,278

Total equity

2,177,990

2,107,335

Total liabilities and equity

$

8,247,641

$

7,803,141

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,

2013

2012

2013

2012

Net revenue

$

4,417,251

$

4,236,174

$

9,054,269

$

8,562,943

Cost of revenue

4,092,724

3,914,010

8,379,147

7,900,769

Gross profit

324,527

322,164

675,122

662,174

Operating expenses:

Selling, general and administrative

164,360

160,811

333,960

318,634

Research and development

7,655

6,264

14,918

12,535

Amortization of intangibles

3,471

4,871

6,922

9,945

Operating income

149,041

150,218

319,322

321,060

Interest and other, net

30,314

27,953

60,977

55,599

Income before income tax

118,727

122,265

258,345

265,461

Income tax expense

30,638

24,020

64,672

53,435

Net income

88,089

98,245

193,673

212,026

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

(444

)

547

(707

)

1,456

Net income attributable to Jabil Circuit, Inc.

$

88,533

$

97,698

$

194,380

$

210,570

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

Basic

$

0.44

$

0.47

$

0.96

$

1.02

Diluted

$

0.43

$

0.46

$

0.94

$

1.00

Weighted average shares outstanding:

Basic

202,458

207,287

203,393

206,337

Diluted

206,804

212,148

207,474

211,410

JABIL CIRCUIT, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)


(Unaudited)

Six months ended

February 28,
2013

February 29,
2012

Cash flows from operating activities:

Net income

$

193,673

$

212,026

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

Depreciation and amortization

195,022

173,734

Recognition of stock-based compensation expense

36,513

39,734

Other, net

5,519

(7,661

)

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

Accounts receivable

(172,161

)

(1,024

)

Inventories

(222,645

)

(119,816

)

Prepaid expenses and other current assets

(6,349

)

(31,761

)

Other assets

(2,799

)

(1,719

)

Accounts payable and accrued expenses

288,004

(259,021

)

Income taxes payable

(9,093

)

736