MRO Magazine

Jabil Delivers Solid Fourth Quarter & Fiscal Year 2015 Results


September 24, 2015
By Business Wire News

ST. PETERSBURG, Fla.

Today Jabil Circuit, Inc. (NYSE: JBL), announced preliminary, unaudited financial results for its fourth quarter and full fiscal year, ended August 31, 2015. The company reported fourth quarter net revenue of $4.7 billion and fiscal year net revenue of $17.9 billion.

“I am extremely pleased with our fiscal 2015 results and in particular the financial strength demonstrated as we exited the year. We exceeded nearly every financial target provided at the outset of the year, culminating with core earnings per share of $2.07 and free cash flow of approximately $300 million,” said Mark T. Mondello, Chief Executive Officer. “Our strong cash generation provided us the financial flexibility to complete a number of strategic acquisitions, aggressively re-invest in the business and return approximately $150 million to shareholders via dividend and share repurchases,” he added.

Fiscal 2015 Financial Highlights

  • Total Company revenue of $17.9 billion, an increase of 14% year-over-year.
    • Diversified Manufacturing Services revenue: $7.1 billion, an increase of 39% year-over-year.
    • Electronics Manufacturing Services revenue: $10.8 billion, an increase of 1% year-over-year.
  • Generated $1.24 billion in cash flow from operations.
  • Returned approximately $150 million to shareholders via dividend and share repurchases.

For the fourth quarter of fiscal year 2015, U.S. generally accepted accounting principles (U.S. GAAP) operating income was $150.4 million and U.S. GAAP net diluted earnings per share was $0.45. For fiscal year 2015, U.S. GAAP operating income was $555.4 million and U.S. GAAP net diluted earnings per share was $1.45.

For the fourth quarter of fiscal year 2015, core operating income (as defined below) was $162.9 million and core diluted earnings per share (as defined below) was $0.53. For fiscal year 2015, core operating income (as defined below) was $670.0 million and core diluted earnings per share (as defined below) was $2.07.

Jabil’s two reporting segments delivered the following revenue results for the company’s fourth fiscal quarter:

  • Diversified Manufacturing Services: $1.9 billion.
  • Electronics Manufacturing Services: $2.8 billion.

(Definitions used: “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 (loss) and U.S. GAAP earnings (loss) per share, its calculation of core return on invested capital and additional information in the supplemental information.)

Quarterly Results       Q4 2015     Q4 2014
Net revenue $4.7 billion $4.1 billion
U.S. GAAP operating income $150.4 million $46.6 million
U.S. GAAP net income (loss) $87.7 million $(26.2) million
U.S. GAAP net diluted earnings (loss) per share $0.45 $(0.13)
U.S. GAAP return on invested capital 15.9% 1.5%
Core operating income $162.9 million $79.5 million
Core earnings $103.2 million $10.2 million
Core diluted earnings per share $0.53 $0.05
Core return on invested capital 17.6% 5.8%
 
Fiscal Year Results Fiscal Year 2015 Fiscal Year 2014
Net revenue $17.9 billion $15.8 billion
U.S. GAAP operating income $555.4 million $204.1 million
U.S. GAAP net income $284.0 million $241.3 million
U.S. GAAP net diluted earnings per share $1.45 $1.19
U.S. GAAP return on invested capital 14.0% 4.1%
Core operating income $670.0 million $345.4 million
Core earnings $406.2 million $108.1 million
Core diluted earnings per share $2.07 $0.53
Core return on invested capital 17.8% 7.8%

Business Outlook

“Our team is positioned for another solid year in fiscal 2016,” said Mark T. Mondello, Chief Executive Officer. “Jabil’s strong first quarter guidance can be directly attributed to the commitment of our employees, the exceptional brands we serve and a focused pursuit of our growth strategy,” he added. Management anticipates fiscal year 2016 revenue of approximately $20 billion and core diluted earnings per share of $2.60.

First Quarter of Fiscal Year 2016 Guidance

— Net revenue

        $5.1 billion to $5.3 billion
— U.S. GAAP operating income $188 million to $232 million
— U.S. GAAP net diluted earnings per share $0.56 to $0.74 per diluted share
— Core operating income $220 million to $260 million
— Core diluted earnings per share $0.72 to $0.88 per diluted share
— Diversified Manufacturing Services Increase revenue 33% percent year-over-year
— Electronics Manufacturing Services Consistent revenue year-over-year

(U.S. GAAP net diluted earnings per share for the first quarter of fiscal year 2016 are currently estimated to include $0.03 per share for amortization of intangibles, $0.10 per share for stock-based compensation expense and related charges and $0.03 to $0.01 per share for restructuring and related charges.)

FORWARD LOOKING STATEMENTS: This news release contains forward-looking statements, including those regarding our anticipated financial results for our fourth quarter of fiscal year 2015 and full fiscal year 2015; our positioning for future financial performance in fiscal 2016; our delivery of revenue growth and core earnings per share for fiscal 2016; our currently expected fiscal year 2016 net revenue (including that of our segments), core and U.S. GAAP operating income, core and U.S. 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 fourth quarter of fiscal year 2015 and our full 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 engineering 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 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 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. 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 the earnings for the fourth quarter and full fiscal year, ended August 31, 2015, 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 24, 2015 at approximately 7:30 p.m. ET through midnight on October 1, 2015. 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: 16275444. 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, production and product management services to global electronics and technology companies. Offering complete product supply chain management from facilities in 27 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)
       
August 31,
2015 August 31,
(Unaudited) 2014
ASSETS
Current assets:
Cash and cash equivalents $ 913,963 $ 1,000,249
Accounts receivable, net 1,467,247 1,208,516
Inventories 2,507,264 2,008,077
Prepaid expenses and other current assets 898,790 1,057,562
Deferred income taxes 79,045 64,944
Assets of discontinued operations       19,669  
Total current assets 5,866,309 5,359,017
Property, plant and equipment, net 2,804,333 2,271,705
Goodwill and intangible assets, net 745,918 627,700
Deferred income taxes 85,169 92,702
Other assets   101,478     128,622  
Total assets $ 9,603,207   $ 8,479,746  
LIABILITIES AND EQUITY
Current liabilities:
Current installments of notes payable, long-term debt and capital lease obligations $ 323,833 $ 12,960
Accounts payable 3,663,264 3,060,814
Accrued expenses 1,685,589 1,235,106
Deferred income taxes 2,455 5,094
Liabilities of discontinued operations       7,123  
Total current liabilities 5,675,141 4,321,097
Notes payable, long-term debt and capital lease obligations, less current installments 1,346,558 1,669,585
Other liabilities 67,951 79,471
Income tax liabilities 96,379 87,555
Deferred income taxes   82,167     61,670  
Total liabilities   7,268,196     6,219,378  
Commitments and contingencies
Equity:
Jabil Circuit, Inc. stockholders’ equity:
Preferred stock
Common stock 247 244
Additional paid-in capital 1,955,104 1,874,219
Retained earnings 1,468,910 1,245,772
Accumulated other comprehensive (loss) income (50,854 ) 86,962
Treasury stock, at cost   (1,058,551 )   (965,369 )
Total Jabil Circuit, Inc. stockholders’ equity 2,314,856 2,241,828
Noncontrolling interests   20,155     18,540  
Total equity   2,335,011     2,260,368  
Total liabilities and equity $ 9,603,207   $ 8,479,746  
 
 
JABIL CIRCUIT, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except for per share data)
(Unaudited)
 
Three months ended Fiscal year ended
August 31, August 31, August 31, August 31,
2015   2014   2015   2014  
Net revenue $ 4,680,813 $ 4,056,245 $ 17,899,196 $ 15,762,146
Cost of revenue   4,304,239     3,793,993     16,395,978     14,736,543  
Gross profit 376,574 262,252 1,503,218 1,025,603
Operating expenses:
Selling, general and administrative 209,465 177,934 862,647 675,730
Research and development 8,142 7,224 27,645 28,611
Amortization of intangibles 7,352 5,677 24,449 23,857
Restructuring and related charges 1,232 19,717 33,066 85,369
Loss on disposal of subsidiaries     5,057       7,962  
Operating income 150,383 46,643 555,411 204,074
Interest and other, net   29,095     32,243     123,765     131,951  
Income from continuing operations before tax 121,288 14,400 431,646 72,123
Income tax expense   30,276     32,788     137,461     73,711  
Income (loss) from continuing operations, net of tax   91,012     (18,388 )   294,185     (1,588 )
Discontinued operations:
(Loss) income from discontinued operations, net of tax (2,473 ) (961 ) (7,698 ) 20,554
(Loss) gain on sale of discontinued operations, net of tax     (6,243 )   (875 )   223,299  
Discontinued operations, net of tax   (2,473 )   (7,204 )   (8,573 )   243,853  
Net income (loss) 88,539 (25,592 ) 285,612 242,265
Net income attributable to noncontrolling interests, net of tax   837     605     1,593     952  
Net income (loss) attributable to Jabil Circuit, Inc. $ 87,702   $   (26,197 ) $ 284,019   $   241,313  
Earnings per share attributable to the stockholders of Jabil
Circuit, Inc.:
Basic:
Income (loss) from continuing operations, net of tax $ 0.47   $   (0.10 ) $ 1.51   $   (0.01 )
Discontinued operations, net of tax $ (0.01 ) $   (0.04 ) $ (0.04 ) $   1.20  
Net income (loss) $ 0.45   $   (0.13 ) $ 1.47   $   1.19  
Diluted:
Income (loss) from continuing operations, net of tax $ 0.46   $   (0.10 ) $ 1.49   $   (0.01 )
Discontinued operations, net of tax $ (0.01 ) $   (0.04 ) $ (0.04 ) $   1.20  
Net income (loss) $ 0.45   $   (0.13 ) $ 1.45   $   1.19  
 
Weighted average shares outstanding:
Basic   193,904     198,053     193,689     202,497  
Diluted   196,351     198,053     196,005     202,497  
 
JABIL CIRCUIT, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
 
Fiscal year ended
August 31, August 31,
2015   2014  
Cash flows from operating activities:
Net income $ 285,612 $ 242,265
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 529,176 487,278
Gain on sale of discontinued operations (230,878 )
Restructuring and related charges 4,445 42,534
Provision for allowance for doubtful accounts 9,752 16,268
Recognition of stock-based compensation expense and related charges 62,560 10,624
Deferred income taxes (10,912 ) (38,971 )
Excess tax benefit related to stock awards (246 ) (782 )
Loss on disposal of subsidiaries 7,962
Loss (gain) on sale of property, plant and equipment 12,316 (1,773 )
Other, net 659 8,689
Change in operating assets and liabilities, exclusive of net assets acquired:
Accounts receivable (292,706 ) (116,458 )
Inventories (483,071 ) 160,790
Prepaid expenses and other current assets 113,012 73,492
Other assets 25,034 6,552
Accounts payable, accrued expenses and other liabilities   984,651     (168,735 )
Net cash provided by operating activities   1,240,282     498,857  
Cash flows from investing activities:
Cash paid for business and intangible asset acquisitions, net of cash (177,632 )
Proceeds from sale of discontinued operations and subsidiaries, net of cash 10,191 531,189
Acquisition of property, plant and equipment (963,145 ) (624,060 )
Proceeds from sale of property, plant and equipment 15,784 161,138
Investments in non-marketable equity securities (11,939 ) (3,600 )
Other, net   5,294     (4,000 )
Net cash (used in) provided by investing activities   (1,121,447 )   60,667  
Cash flows from financing activities:
Borrowings under debt agreements 5,966,937 6,175,953
Payments toward debt agreements (5,988,232 ) (6,400,089 )
Payments to acquire treasury stock (85,576 ) (260,274 )
Dividends paid to stockholders (63,138 ) (68,211 )
Net proceeds from exercise of stock options and issuance of common stock
under employee stock purchase plan 18,062 15,771
Treasury stock minimum tax withholding related to vesting of restricted stock (7,606 ) (34,312 )
Cash paid to purchase noncontrolling interest (345 ) (1,720 )
Excess tax benefit related to stock awards 246 782
Other, net   (2,897 )   (4,719 )
Net cash used in financing activities   (162,549 )   (576,819 )
Effect of exchange rate changes on cash and cash equivalents   (42,572 )   6,171  
Net decrease in cash and cash equivalents (86,286 ) (11,124 )
Cash and cash equivalents at beginning of period   1,000,249     1,011,373  
Cash and cash equivalents at end of period $ 913,963   $ 1,000,249  
 
 
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 Fiscal year ended
August 31, August 31, August 31, August 31,
2015   2014   2015   2014  
Operating income (U.S. GAAP) $ 150,383 $ 46,643 $ 555,411 $ 204,074
Amortization of intangibles 7,352 5,677 24,449 23,857
Stock-based compensation expense and related charges 9,459 2,367 62,563 8,994
Restructuring and related charges 1,232 19,717 33,066 85,369
Distressed customer charges 15,113
Acquisition costs and certain purchase accounting adjustments (5,480 ) (5,480 )
Loss on disposal of subsidiaries     5,057       7,962  
Core operating income (Non-U.S. GAAP) $ 162,946   $ 79,461   $ 670,009   $   345,369  
 
Net income (loss) attributable to Jabil Circuit, Inc. (U.S. GAAP) $ 87,702 $ (26,197 ) $ 284,019 $ 241,313
Amortization of intangibles, net of tax 7,032 5,644 23,925 20,728
Stock-based compensation expense and related
charges, net of tax 10,443 2,019 62,914 7,903
Restructuring and related charges, net of tax 1,048 17,449 32,219 72,892
Distressed customer charges, net of tax (991 ) 10,243
Acquisition costs and certain purchase accounting
adjustments, net of tax (5,480 ) (5,480 ) (9,064 )
Loss on disposal of subsidiaries, net of tax 5,057 7,962
Loss (income) from discontinued operations, net of tax 2,473 961 7,698 (20,554 )
Loss (gain) on sale of discontinued operations, net of tax     6,243     875     (223,299 )
Core earnings (Non-U.S. GAAP) $ 103,218   $ 10,185   $ 406,170   $   108,124  
 
Net earnings (loss) per share (U.S. GAAP):
Basic $ 0.45   $ (0.13 ) $ 1.47   $   1.19  
Diluted $ 0.45   $ (0.13 ) $ 1.45   $   1.19  
 
Core earnings per share (Non-U.S. GAAP):
Basic $ 0.53   $ 0.05   $ 2.10   $   0.53  
Diluted $ 0.53   $ 0.05   $ 2.07   $   0.53  
 
Weighted average shares outstanding used in the calculations
of earnings per share (U.S. GAAP):
Basic 193,904   198,053   193,689   202,497  
Diluted 196,351   198,053   196,005   202,497  
 
Weighted average shares outstanding used in the calculations
of earnings per share (Non-U.S. GAAP):
Basic 193,904   198,053   193,689   202,497  
Diluted 196,351   199,967   196,005   204,269  
 
 
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 Twelve months
ended     ended
August 31, August 31,
2015   2015  
Numerator:
Operating income (U.S. GAAP) $ 150,383 $ 555,411
Tax effect(1)   (29,498 )   (136,083 )
After-tax operating income 120,885 419,328
  x4   x1
Annualized after-tax operating income $   483,540   $ 419,328  
 
Core operating income (Non-U.S. GAAP) $ 162,946 $ 670,009
Tax effect(2)   (29,103 )   (137,385 )
After-tax core operating income 133,843 532,624
  x4   x1
Annualized after-tax core operating income $   535,372   $ 532,624  
 
Denominator:
Average total Jabil Circuit, Inc. stockholders’ equity(3) $ 2,313,258 $ 2,278,342
Average notes payable, long-term debt and capital lease obligations, less
current installments(3) 1,503,210 1,508,072
Average current installments of notes payable, long-term debt and capital
lease obligations(3) 167,599 168,396
Average cash and cash equivalents(3)   (938,378 )   (957,106 )
Net invested capital asset base $   3,045,689   $ 2,997,704  
 
Return on Invested Capital (U.S. GAAP) 15.9

%

 

14.0

%

 

Adjustments noted above 1.7

%

 

3.8

%

 

Core Return on Invested Capital (Non-U.S. GAAP) 17.6

%

 

17.8

%

 

 

__________

(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 for the three months ended August 31, 2015 and dividing by two. The average is based on the addition of the account balance at the end of the most recently-ended fiscal year to the account balance at the end of the prior fiscal year for the twelve months ended August 31, 2015 and dividing by two.

Jabil Circuit, Inc.
Investor & Media Contact:
Beth Walters, 727-803-3511
Senior Vice President, Investor Relations & Communications
beth_walters@jabil.com