Jabil Posts Fourth Quarter & Fiscal Year 2013 Results

Jabil Posts Fourth Quarter & Fiscal Year 2013 Results

Solid Revenue Growth and Strong Cash Flow Generation

ST. PETERSBURG, Fla.--(BUSINESS WIRE)-- Today Jabil Circuit, Inc. (NYS: JBL) , announced preliminary, unaudited financial results for its fourth quarter and full fiscal year, ended August 31, 2013.


"Delivering record revenues, generating more than a billion dollars of cash flow from operations, and achieving a core return on invested capital of 21 percent are clear highlights of our fiscal year," said Jabil's Chief Executive Officer Mark Mondello. "In addition, we are pleased to return nearly $200 million in capital to shareholders through dividends and share repurchases, while continuing to thoughtfully invest capital back into the business, both organically and acquisitively, with an eye on long-term earnings growth," said Mondello.

The company reported fourth quarter revenue of $4.8 billion and fiscal year revenue of $18.3 billion.

Jabil's three reporting segments delivered the following revenue results for the company's fourth fiscal quarter:

  • Diversified Manufacturing: $2.1 billion.

  • Enterprise & Infrastructure: $1.4 billion.

  • High Velocity: $1.3 billion.

"I would like to acknowledge the continued dedication of our employees because it is their efforts and commitment that truly differentiate Jabil and enable us to achieve our goals," said Mondello.

Generally accepted accounting principles (GAAP) operating income for the fourth quarter was $88.4 million and $511.4 million for the full fiscal year, ended August 31, 2013. GAAP diluted earnings per share for the fourth quarter were $0.61 and $1.79 for the fiscal year. The company said that $89.5 million in restructuring activity during the year and a $25.6 million non-cash charge related to a note receivable and related charges in the third quarter impacted the fiscal year GAAP operating income and $61.1 million in restructuring activity impacted the fourth quarter GAAP operating income.

Core operating income results, excluding amortization of intangibles, stock-based compensation and related charges, restructuring and related charges, impairment of notes receivable and related charges and acquisition costs and purchase accounting adjustments, was $721.1 million and core diluted earnings per share was $2.26.

(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, impairment of notes receivable and related charges, goodwill impairment charges, certain distressed customer charges, settlement of receivables and related charges, loss on disposal of subsidiaries and acquisition costs and purchase accounting adjustments. Jabil defines core earnings as GAAP net income before amortization of intangibles, stock-based compensation expense and related charges, restructuring and related charges, impairment of notes receivable and related charges, goodwill impairment charges, certain distressed customer charges, settlement of receivables and related charges, loss on disposal of subsidiaries, acquisition costs and purchase accounting adjustments, 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

Q4 2013

Q4 2012

Net revenue

$4.8 billion

$4.3 billion

GAAP operating income

$88.4 million

$144.3 million

GAAP net income

$127.0 million

$82.8 million

GAAP diluted earnings per share

$0.61

$0.39

GAAP return on invested capital

22%

17%

Core operating income

$181.4 million

$175.1 million

Core earnings

$117.2 million

$113.3 million

Core diluted earnings per share

$0.56

$0.54

Core return on invested capital

21%

22%

Fiscal Year Results

Fiscal 2013

Fiscal 2012

Net revenue

$18.3 billion

$17.2 billion

GAAP operating income

$511.4 million

$621.9 million

GAAP net income

$371.5 million

$394.7 million

GAAP diluted earnings per share

$1.79

$1.87

GAAP return on invested capital

17%

22%

Core operating income

$721.1 million

$736.2 million

Core earnings

$469.9 million

$507.1 million

Core diluted earnings per share

$2.26

$2.40

Core return on invested capital

21%

26%

Business Update

"We are fortunate to have a strong balance sheet, broad-based capabilities that deliver innovative solutions, outstanding employees and a roster of market-leading customers as we head into fiscal year 2014," said Jabil CEO, Mark Mondello. Jabil provided guidance for its first fiscal quarter of 2014, which began on September 1st.

Fiscal Q1 2014 Guidance:

Net revenue

$4.35 billion to $4.65 billion

Core operating income

$165 million to $195 million

Core earnings per share

$0.50 to $0.60 per diluted share

GAAP operating income

$110 million to $140 million

GAAP earnings per share

$0.25 to $0.35 per diluted share

(GAAP earnings per share for the first quarter of fiscal 2014 are currently estimated to include $0.03 per share for amortization of intangibles, $0.09 per share for stock-based compensation and $0.13 per share for restructuring and related charges.)

Year over Year Segment Revenue Guidance:

  • Diversified Manufacturing Services to increase 7 percent.

  • Enterprise & Infrastructure to remain consistent.

  • High Velocity to decline 25 percent.

In addition to the segment guidance, Jabil said its previously announced restructuring of global operations continued through the quarter. It is currently estimated that the balance of $99 million will be recorded in fiscal years 2014 and 2015.

The company also announced it expects approximately $35 to $85 million of charges in fiscal year 2014 related to ongoing discussions with Blackberry, Jabil's second largest customer in fiscal 2013.

FORWARD LOOKING STATEMENT: This news release contains forward-looking statements, including those regarding our anticipated financial results for our fourth quarter of fiscal year 2013 and our full fiscal year 2013; our thoughtful investment of capital back into the business, both organically and acquisitively, with an eye on long term earnings growth; our balance sheet, capabilities, employees and customers as we head into fiscal year 2014; and our currently expected first quarter of fiscal year 2014 net revenue (including that of our segments), 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 fourth quarter of fiscal year 2013 and our full fiscal year 2013 that our financial results and conditions differ from our current preliminary unaudited numbers set forth herein; changes to our capital investment strategy over time; our ability to generate long term earnings growth from our capital investments; 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 and8-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, impairment of notes receivable and related charges, goodwill impairment charges, certain distressed customer charges, settlement of receivables and related charges, loss on disposal of subsidiaries, acquisition costs and purchase accounting adjustments, 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 fourth 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 September 25, 2013 at approximately 7:30 p.m. ET through midnight on October 2, 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: 55279234. 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 31 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)

(Unaudited)

August 31,

2013

August 31,

2012

ASSETS

Current assets:

Cash and cash equivalents

$

1,011,373

$

1,217,256

Accounts receivable, net

1,281,425

1,125,015

Inventories

2,302,155

2,268,949

Prepaid expenses and other current assets

1,165,984

989,326

Income taxes receivable

13,048

10,949

Deferred income taxes

46,260

27,833

Total current assets

5,820,245

5,639,328

Property, plant and equipment, net

2,395,598

1,779,155

Goodwill and intangible assets, net

740,435

214,071

Deferred income taxes

94,069

73,411

Other assets

103,434

97,176

Total assets

$

9,153,781

$

7,803,141

LIABILITIES AND EQUITY

Current liabilities:

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

$

215,536

$

18,031

Accounts payable

3,301,235

2,992,865

Accrued expenses

1,301,078

808,480

Income taxes payable

40,332

35,665

Deferred income taxes

6,253

3,955

Total current liabilities

4,864,434

3,858,996

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

1,690,426

1,658,326

Other liabilities

89,813

85,714

Income tax liabilities

80,368

68,525

Deferred income taxes

73,173

24,245

Total liabilities

6,798,214

5,695,806

Commitments and contingencies

Equity:

Jabil Circuit, Inc. stockholders' equity:

Preferred stock

Common stock

238

232

Additional paid-in capital

1,853,409

1,752,847

Retained earnings

1,071,175

766,934

Accumulated other comprehensive income

81,248

106,275

Treasury stock, at cost

(670,783

)

(521,231

)

Total Jabil Circuit, Inc. stockholders' equity

2,335,287

2,105,057

Noncontrolling interests

20,280

2,278

Total equity

2,355,567

2,107,335

Total liabilities and equity

$

9,153,781

$

7,803,141

JABIL CIRCUIT, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except for per share data)
(Unaudited)

Three months ended

Twelve months ended

August 31,

August 31,

August 31,

August 31,

2013

2012

2013

2012

Net revenue

$

4,814,858

$

4,338,080

$

18,336,894

$

17,151,941

Cost of revenue

4,462,613

4,020,532

16,977,032

15,842,896

Gross profit

352,245

317,548

1,359,862

1,309,045

Operating expenses:

Selling, general and administrative

189,979

163,070

688,752

644,452

Research and development

7,075

6,784

28,468

25,837

Amortization of intangibles

5,760

3,426

16,154

16,825

Restructuring and related charges

61,061

89,453

Impairment of notes receivable and related charges

25,597

Operating income

88,370

144,268

511,438

621,931

Interest and other, net

32,547

29,804

125,374

113,031

Income before income tax

55,823

114,464

386,064

508,900

Income tax (benefit) expense

(70,967

)

31,999

15,973

112,811

Net income

126,790

82,465

370,091

396,089

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

(229

)

(332

)

(1,391

)

1,402

Net income attributable to Jabil Circuit, Inc.

$

127,019

$

82,797

$

371,482

$

394,687