EX-99.1 2 d202570dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

 

LOGO

Jabil Posts Third Quarter Results

Company Announces Two-Year Capital Allocation Framework

St. Petersburg, FL – June 15, 2016. Today Jabil Circuit, Inc. (NYSE: JBL), reported preliminary, unaudited financial results for its third quarter of fiscal year 2016, including third quarter net revenue of $4.3 billion.

U.S. GAAP (as defined below) operating income for the third quarter was $59.6 million and U.S. GAAP net diluted earnings per share was $0.03. Core operating income (as defined below) was $87.2 million and core diluted earnings per share (as defined below) was $0.17.

“Our Electronics Manufacturing Services business performed ahead of plan supported by near-perfect execution during the quarter,” said CEO Mark Mondello. “However as expected, our third quarter results also reflected a soft environment within our mobility business. These challenges will continue to negatively impact our Diversified Manufacturing Services business for the balance of our fiscal year,” he added.

 

Fiscal Year 2016 Fourth Quarter Guidance:

  

•    Net revenue

   $4.15 billion to $4.35 billion

•    U.S. GAAP operating income

   $60 million to $92 million

•    U.S. GAAP net diluted (loss) earnings per share

   ($0.02) to $0.19 per diluted share

•    Core operating income

   $95 million to $125 million

•    Core diluted earnings per share

   $0.15 to $0.35 per diluted share

•    Diversified Manufacturing Services

   Decrease net revenue 20 percent year-on-year

•    Electronics Manufacturing Services

   Consistent net revenue year-on-year

•    Total company

   Decrease net revenue 9 percent year-on-year

(U.S. GAAP net diluted earnings per share for the fourth quarter of fiscal year 2016 are currently estimated to include $0.05 per share for amortization of intangibles, $0.09 per share for stock-based compensation expense and related charges and $0.03 to $0.02 per share for restructuring and related charges.)

Management updated the fiscal year 2016 revenue outlook to approximately $18.2 billion; U.S. GAAP net diluted earnings per share outlook to approximately $1.20 and core diluted earnings per share outlook to approximately $1.85.

Capital Allocation Outlook

As part of a framework to increase capital returns to shareholders over the next two fiscal years, Jabil’s Board of Directors authorized a $400 million share repurchase program. The overarching capital allocation framework is designed to return approximately 40% of cash flows from operations through dividends and share repurchases over the next two years, not to exceed $1 billion in total.

“This framework announced today reflects our confidence in our ability to generate in excess of $2 billion of cash flows from operations over the next two fiscal years,” said CFO Forbes I.J. Alexander. “Moving ahead, we remain confident in our ability to effectively leverage our asset base, maintain relationships with both new and existing customers and grow earnings per share,” he added.


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 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 U.S. 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 U.S. 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 of its 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 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, its calculation of core return on invested capital and additional information in the supplemental information.

Forward Looking Statements: This news release includes “forward-looking statements,” which are statements that are not historical facts, including statements that relate to our share repurchase program including the amount of shares to be repurchased and timing of such repurchases; the Company’s updated capital allocation framework; and our projected fiscal year 2016 fourth-quarter and full-year financial performance including assumptions regarding our effective tax rate. 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 from our current expectations. Such factors include, but are not limited to, our determination as we finalize our financial results for our third quarter of fiscal year 2016 that our financial results and conditions differ from our current preliminary unaudited numbers set forth herein; unexpected, adverse seasonal impacts on demand; performance of the markets in which we operate; changes in macroeconomic conditions; expected financial results from, product ramps; managing rapid declines in customer demand and other related customer challenges that may occur; and our dependence on a limited number of large customers. Additional factors that could cause such differences can be found in our Form 10-K for the year ended August 31, 2015, Form 10-Q for the quarters ended November 30, 2015, and February 29, 2016 and in our other SEC filings. We assume no obligation to update these forward-looking statements.

Supplemental Information: The financial results disclosed in this release include certain measures calculated and presented in accordance with U.S. GAAP. In addition to the U.S. GAAP financial measures, Jabil provides supplemental, non-U.S. GAAP financial measures to facilitate evaluation of Jabil’s core operating performance. The non-U.S. GAAP financial measures disclosed in this release exclude certain amounts that are included in the most directly comparable U.S. GAAP measures. The non-U.S. GAAP or core financial measures disclosed in this release do not have standard meanings and may vary from the non-U.S. 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. Among other uses, management uses non-U.S. GAAP financial measures as a factor in determining certain employee performance when determining incentive compensation. 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 U.S. GAAP financial measures.

Company Conference Call Information: Jabil will hold a conference call to discuss its third quarter results and fiscal 2016 outlook 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 June 15, 2016 at approximately 7:30 p.m. ET through midnight on June 22, 2016. 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: 19885929. An archived webcast of the conference call will be available at http://www.jabil.com/investors/.


About Jabil

Jabil is a product solutions company providing comprehensive electronics design, production and product management services to global electronics and technology companies. Offering complete product supply chain management from facilities in 28 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.

Company Contacts:

Beth Walters

Senior Vice President, Investor Relations & Communications

(727) 803-3511

beth_walters@jabil.com

Adam Berry

Senior Director, Investor Relations

(727) 803-5772

adam_berry@jabil.com


JABIL CIRCUIT, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

 

     May 31,
2016
(Unaudited)
    August 31,
2015
 
ASSETS     

Current assets:

    

Cash and cash equivalents

   $ 886,991      $ 913,963   

Accounts receivable, net

     1,296,924        1,467,247   

Inventories

     2,292,350        2,507,264   

Prepaid expenses and other current assets

     1,056,461        898,790   

Deferred income taxes

     —          79,045   
  

 

 

   

 

 

 

Total current assets

     5,532,726        5,866,309   

Property, plant and equipment, net

     3,218,141        2,804,333   

Goodwill and intangible assets, net

     893,615        745,918   

Deferred income taxes

     150,836        85,169   

Other assets

     110,756        101,478   
  

 

 

   

 

 

 

Total assets

   $ 9,906,074      $ 9,603,207   
  

 

 

   

 

 

 
LIABILITIES AND EQUITY     

Current liabilities:

    

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

   $ 359,885      $ 323,833   

Accounts payable

     3,191,304        3,663,264   

Accrued expenses

     1,836,475        1,685,589   

Deferred income taxes

     —          2,455   
  

 

 

   

 

 

 

Total current liabilities

     5,387,664        5,675,141   

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

     1,791,028        1,346,558   

Other liabilities

     68,275        67,951   

Income tax liabilities

     91,071        96,379   

Deferred income taxes

     56,779        82,167   
  

 

 

   

 

 

 

Total liabilities

     7,394,817        7,268,196   
  

 

 

   

 

 

 

Commitments and contingencies

    

Equity:

    

Jabil Circuit, Inc. stockholders’ equity:

    

Preferred stock

     —          —     

Common stock

     249        247   

Additional paid-in capital

     2,024,526        1,955,104   

Retained earnings

     1,637,392        1,468,910   

Accumulated other comprehensive loss

     (46,107     (50,854

Treasury stock, at cost

     (1,123,608     (1,058,551
  

 

 

   

 

 

 

Total Jabil Circuit, Inc. stockholders’ equity

     2,492,452        2,314,856   

Noncontrolling interests

     18,805        20,155   
  

 

 

   

 

 

 

Total equity

     2,511,257        2,335,011   
  

 

 

   

 

 

 

Total liabilities and equity

   $ 9,906,074      $ 9,603,207   
  

 

 

   

 

 

 


JABIL CIRCUIT, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except for per share data)

(Unaudited)

 

     Three months ended     Nine months ended  
     May 31,      May 31,     May 31,      May 31,  
     2016      2015     2016      2015  

Net revenue

   $ 4,310,752       $ 4,358,641      $ 13,922,323       $ 13,218,382   

Cost of revenue

     3,989,665         3,982,804        12,718,268         12,091,739   
  

 

 

    

 

 

   

 

 

    

 

 

 

Gross profit

     321,087         375,837        1,204,055         1,126,643   

Operating expenses:

          

Selling, general and administrative

     239,646         228,476        716,097         653,183   

Research and development

     7,675         6,997        24,431         19,502   

Amortization of intangibles

     9,711         5,724        26,150         17,097   

Restructuring and related charges

     4,460         (782     8,349         31,833   
  

 

 

    

 

 

   

 

 

    

 

 

 

Operating income

     59,595         135,422        429,028         405,028   

Interest and other, net

     35,322         31,041        102,202         94,670   
  

 

 

    

 

 

   

 

 

    

 

 

 

Income from continuing operations before tax

     24,273         104,381        326,826         310,358   

Income tax expense

     18,434         32,124        110,639         107,186   
  

 

 

    

 

 

   

 

 

    

 

 

 

Income from continuing operations, net of tax

     5,839         72,257        216,187         203,172   
  

 

 

    

 

 

   

 

 

    

 

 

 

Discontinued operations:

          

Loss from discontinued operations, net of tax

     —           (1,514     —           (5,224

Gain (loss) on sale of discontinued operations, net of tax

     —           1,681        —           (875
  

 

 

    

 

 

   

 

 

    

 

 

 

Discontinued operations, net of tax

     —           167        —           (6,099
  

 

 

    

 

 

   

 

 

    

 

 

 

Net income

     5,839         72,424        216,187         197,073   

Net income attributable to noncontrolling interests, net of tax

     626         221        159         756   
  

 

 

    

 

 

   

 

 

    

 

 

 

Net income attributable to Jabil Circuit, Inc.

   $ 5,213       $ 72,203      $ 216,028       $ 196,317   
  

 

 

    

 

 

   

 

 

    

 

 

 

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

          

Basic:

          

Income from continuing operations, net of tax

   $ 0.03       $ 0.37      $ 1.13       $ 1.05   
  

 

 

    

 

 

   

 

 

    

 

 

 

Discontinued operations, net of tax

   $ 0.00       $ 0.00      $ 0.00       $ (0.03
  

 

 

    

 

 

   

 

 

    

 

 

 

Net income

   $ 0.03       $ 0.37      $ 1.13       $ 1.01   
  

 

 

    

 

 

   

 

 

    

 

 

 

Diluted:

          

Income from continuing operations, net of tax

   $ 0.03       $ 0.37      $ 1.12       $ 1.03   
  

 

 

    

 

 

   

 

 

    

 

 

 

Discontinued operations, net of tax

   $ 0.00       $ 0.00      $ 0.00       $ (0.03
  

 

 

    

 

 

   

 

 

    

 

 

 

Net income

   $ 0.03       $ 0.37      $ 1.12       $ 1.00   
  

 

 

    

 

 

   

 

 

    

 

 

 

Weighted average shares outstanding:

          

Basic

     191,206         193,785        190,841         193,617   
  

 

 

    

 

 

   

 

 

    

 

 

 

Diluted

     193,069         196,304        193,058         195,793   
  

 

 

    

 

 

   

 

 

    

 

 

 


JABIL CIRCUIT, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

 

     Nine months ended  
     May 31,     May 31,  
     2016     2015  

Cash flows from operating activities:

    

Net income

   $ 216,187      $ 197,073   

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

    

Depreciation and amortization

     512,972        385,136   

Restructuring and related charges

     —          4,567   

Provision for allowance for doubtful accounts

     240        8,193   

Recognition of stock-based compensation expense and related charges

     58,505        53,101   

Deferred income taxes

     (24,403     (14,143

Loss on sale of property, plant and equipment

     13,229        10,045   

Other, net

     5,906        9,856   

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

    

Accounts receivable

     180,830        (43,982

Inventories

     229,187        (253,579

Prepaid expenses and other current assets

     (131,682     37,687   

Other assets

     (7,466     14,417   

Accounts payable, accrued expenses and other liabilities

     (565,558     474,550   
  

 

 

   

 

 

 

Net cash provided by operating activities

     487,947        882,921   
  

 

 

   

 

 

 

Cash flows from investing activities:

    

Proceeds from sale of discontinued operations, net of cash

     —          9,663   

Acquisition of property, plant and equipment

     (668,505     (735,459

Proceeds from sale of property, plant and equipment

     18,710        13,187   

Cash paid for business and intangible asset acquisitions, net of cash

     (206,039     (78,007

Issuance of notes receivable

     (29,300     —     

Other, net

     (5,250     (6,645
  

 

 

   

 

 

 

Net cash used in investing activities

     (890,384     (797,261
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Borrowings under debt agreements

     4,748,060        4,723,083   

Payments toward debt agreements

     (4,268,839     (4,731,894

Payments to acquire treasury stock

     (54,567     (40,040

Dividends paid to stockholders

     (47,122     (47,623

Net proceeds from exercise of stock options and issuance of common stock under employee stock purchase plan

     10,660        9,004   

Treasury stock minimum tax withholding related to vesting of restricted stock

     (10,490     (7,536

Other, net

     (1,696     (99
  

 

 

   

 

 

 

Net cash provided by (used in) financing activities

     376,006        (95,105
  

 

 

   

 

 

 

Effect of exchange rate changes on cash and cash equivalents

     (541     (28,010
  

 

 

   

 

 

 

Net decrease in cash and cash equivalents

     (26,972     (37,455

Cash and cash equivalents at beginning of period

     913,963        1,000,249   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 886,991      $ 962,794   
  

 

 

   

 

 

 


JABIL CIRCUIT, INC. AND SUBSIDIARIES

SUPPLEMENTAL DATA

RECONCILIATION OF U.S. GAAP FINANCIAL RESULTS TO NON-U.S. GAAP MEASURES

(in thousands, except for per share data)

(Unaudited)

 

     Three months ended     Nine months ended  
     May 31,      May 31,     May 31,      May 31,  
     2016      2015     2016      2015  

Operating income (U.S. GAAP)

   $ 59,595       $ 135,422      $ 429,028       $ 405,028   

Amortization of intangibles

     9,711         5,724        26,150         17,097   

Stock-based compensation expense and related charges

     13,445         20,094        58,505         53,106   

Restructuring and related charges

     4,460         (782     8,349         31,833   
  

 

 

    

 

 

   

 

 

    

 

 

 

Core operating income (Non-U.S. GAAP)

   $ 87,211       $ 160,458      $ 522,032       $ 507,064   
  

 

 

    

 

 

   

 

 

    

 

 

 

Net income attributable to Jabil Circuit, Inc. (U.S. GAAP)

   $ 5,213       $ 72,203      $ 216,028       $ 196,317   

Amortization of intangibles, net of tax

     8,959         5,528        24,066         16,893   

Stock-based compensation expense and related charges, net of tax

     13,321         19,949        57,738         52,471   

Restructuring and related charges, net of tax

     4,470         (1,029     8,358         31,172   

Loss from discontinued operations, net of tax

     —           1,514        —           5,224   

(Gain) loss on sale of discontinued operations, net of tax

     —           (1,681     —           875   
  

 

 

    

 

 

   

 

 

    

 

 

 

Core earnings (Non-U.S. GAAP)

   $ 31,963       $ 96,484      $ 306,190       $ 302,952   
  

 

 

    

 

 

   

 

 

    

 

 

 

Net earnings per share (U.S. GAAP):

          

Basic

   $ 0.03       $ 0.37      $ 1.13       $ 1.01   
  

 

 

    

 

 

   

 

 

    

 

 

 

Diluted

   $ 0.03       $ 0.37      $ 1.12       $ 1.00   
  

 

 

    

 

 

   

 

 

    

 

 

 

Core earnings per share (Non-U.S. GAAP):

          

Basic

   $ 0.17       $ 0.50      $ 1.60       $ 1.56   
  

 

 

    

 

 

   

 

 

    

 

 

 

Diluted

   $ 0.17       $ 0.49      $ 1.59       $ 1.55   
  

 

 

    

 

 

   

 

 

    

 

 

 

Weighted average shares outstanding used in the calculations of earnings per share (U.S. GAAP and Non-U.S. GAAP):

          

Basic

     191,206         193,785        190,841         193,617   
  

 

 

    

 

 

   

 

 

    

 

 

 

Diluted

     193,069         196,304        193,058         195,793   
  

 

 

    

 

 

   

 

 

    

 

 

 


JABIL CIRCUIT, INC. AND SUBSIDIARIES

SUPPLEMENTAL DATA

RECONCILIATION OF U.S. GAAP FINANCIAL RESULTS TO NON-U.S. 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 U.S. GAAP operating income” for its most recently-ended quarter and dividing that by the average of its “net invested capital asset base” and (2) its “Core Return on Invested Capital” by annualizing its “after-tax non-U.S. GAAP core operating income” for its most recently-ended quarter and dividing that by the “average net invested capital asset base.”

The Company calculates: (1) its “after-tax U.S. GAAP operating income” by subtracting a certain tax effect (the calculation of which is explained below) from its U.S. GAAP operating income and (2) its “after-tax non-U.S. GAAP core operating income” as its non-U.S. 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-U.S. GAAP core operating income to its U.S. 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 U.S. GAAP operating income” to (2) “Core Return on Invested Capital,” as calculated using “after-tax non-U.S. GAAP core operating income”:

 

     Three months ended  
     May 31,     May 31,  
     2016     2015  

Numerator:

    

Operating income (U.S. GAAP)

   $ 59,595      $ 135,422   

Tax effect(1)

     (18,516     (31,830
  

 

 

   

 

 

 

After-tax operating income

     41,079        103,592   
     x4        x4   
  

 

 

   

 

 

 

Annualized after-tax operating income

   $ 164,316      $ 414,368   
  

 

 

   

 

 

 

Core operating income (Non-U.S. GAAP)

   $ 87,211      $ 160,458   

Tax effect(2)

     (19,340     (32,471
  

 

 

   

 

 

 

After-tax core operating income

     67,871        127,987   
     x4        x4   
  

 

 

   

 

 

 

Annualized after-tax core operating income

   $ 271,484      $ 511,948   
  

 

 

   

 

 

 

Denominator:

    

Average total Jabil Circuit, Inc. stockholders’ equity(3)

   $ 2,479,722      $ 2,278,112   

Average notes payable, long-term debt and capital lease obligations, less current installments(3)

     1,801,124        1,661,320   

Average current installments of notes payable, long-term debt and capital lease obligations(3)

     449,089        11,312   

Average cash and cash equivalents(3)

     (885,104     (964,604
  

 

 

   

 

 

 

Net invested capital asset base

   $ 3,844,831      $ 2,986,140   
  

 

 

   

 

 

 

Return on Invested Capital (U.S. GAAP)

     4.3     13.9

Adjustments noted above

     2.8     3.2

Core Return on Invested Capital (Non-U.S. GAAP)

     7.1     17.1

 

(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-U.S. 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.