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Press release from Business Wire

Jabil Posts Fourth Quarter & Fiscal Year 2012 Results

<p class='bwalignc'> <i>Record Fiscal Year Despite Macro Weakness</i> </p>

Tuesday, September 25, 2012

Jabil Posts Fourth Quarter & Fiscal Year 2012 Results16:02 EDT Tuesday, September 25, 2012 ST. PETERSBURG, Fla. (Business Wire) -- Today Jabil Circuit, Inc. (NYSE:JBL), announced its preliminary, unaudited financial results for the fourth quarter and full fiscal year, ended August 31, 2012. The company reported fourth quarter revenue of $4.3 billion and fiscal year revenue of $17.2 billion. “In this environment, posting another record fiscal year in revenue, income and earnings was quite an achievement,” said Timothy L. Main, President and CEO of Jabil. Market share gains, new customer wins and new production from existing customers allowed Jabil to grow its targeted markets during the fiscal year while most of the industry contracted. Jabil's Diversified Manufacturing Services business grew 24 percent in fiscal 2012. Although Jabil picked up share gains in its Enterprise & Infrastructure business during the year, overall demand weakened, resulting in a decrease of 2 percent from fiscal 2011. Jabil's High Velocity business declined 14 percent during the fiscal year. “Results for the fourth quarter were negatively impacted by a challenging new program ramp in our Specialized Services sector,” said Main. “Additionally demand remained weak in most of our business segments.” Generally accepted accounting principles (GAAP) operating income for the quarter was $144 million. These results were negatively impacted by a distressed customer charge of $5.9 million. Excluding amortization of intangibles, stock-based compensation and distressed customer charges, operating income was $175 million. GAAP diluted earnings per share was $0.39 cents and core diluted earnings per share was $0.54 cents. “We are pleased to have generated cash flow from operations of $443 million during the quarter and $634 million over the course of the year. Due to this outstanding performance and ongoing strength of the balance sheet, we were able to return $136 million in capital to shareholders during the fiscal year through dividends and share repurchases,” said Chief Financial Officer Forbes Alexander. “We see this positive performance continuing and are estimating operating cash flow of $1 billion in fiscal 2013,” Alexander noted. Management also announced that the Jabil Board of Directors has authorized the repurchase of up to $100 million worth of shares of the Company's common stock during the next twelve months. The shares will be repurchased from time-to-time in open market or through privately negotiated transactions at the Company's discretion, subject to factors such as market conditions, levels of cash generation from operations, cash requirements for capital expenses and acquisitions and stock price. The repurchased shares should help to minimize the dilution from the Company's employee equity issuance. (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 2012 versus Fiscal 2011 Revenue from Diversified Manufacturing Services increased 24 percent. Specialized Services revenue expanded 48 percent. Healthcare & Instrumentation revenue grew 7 percent. Industrial & Clean Tech revenue improved 2 percent. Enterprise & Infrastructure revenue contracted by 2 percent. High Velocity revenue decreased 14 percent. Generated $634 million in cash flow from operations during fiscal 2012. GAAP return on invested capital of 22 percent. Returned $65 million in dividends to shareholders during fiscal 2012.   Quarterly Results       Q4 2012       Q4 2011 Net revenue $4.3 billion $4.3 billion GAAP operating income $144.3 million $165.6 million GAAP net income $82.8 million $114.3 million GAAP diluted earnings per share $0.39 $0.52 GAAP return on invested capital 17% 26% Core operating income $175.1 million $187.2 million Core earnings $113.3 million $136.3 million Core diluted earnings per share $0.54 $0.62 Core return on invested capital 22% 30%   Fiscal Year ResultsFiscal 2012Fiscal 2011 Net revenue $17.2 billion $16.5 billion GAAP operating income $621.9 million $578.7 million GAAP net income $394.7 million $381.1 million GAAP diluted earnings per share $1.87 $1.73 GAAP return on invested capital 22% 23% Core operating income $736.2 million $715.2 million Core earnings $507.1 million $516.3 million Core diluted earnings per share $2.40 $2.34 Core return on invested capital 26% 29%   Business Update “We are fortunate to have a healthy balance sheet, strong operations, dedicated employees and a roster of market-leading customers heading into fiscal 2013,” said Jabil CEO Timothy Main. “While the macroeconomic climate remains challenging, our long-term goals and competitive position are intact and we expect earnings to increase between five and ten percent in fiscal 2013.” Jabil provided guidance for its first fiscal quarter of 2013, which began on September 1st.         Fiscal Q1 2013 Guidance Range Net revenue $4.3 to $4.5 billion GAAP operating income $140 to $175 million GAAP earnings per share $0.37 to $0.50 per diluted share Core operating income $170 to $200 million Core earnings per share $0.51 to $0.62 per diluted share (GAAP earnings per share for the first quarter of fiscal 2013 are currently estimated to include $0.02 per share for amortization of intangibles and $0.10 to $0.12 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 fourth quarter of fiscal year 2012; our estimated operating cash flows in fiscal year 2013; potential repurchases of our common stock; our balance sheet, operations, employees and roster of customers heading into fiscal year 2013; the macroeconomic climate; our long-term goals and competitive position; our fiscal year 2013 earnings and our currently expected first 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 fourth fiscal quarter of fiscal year 2012 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 (including, with respect to the acquisition of the Italian and French sites, potential unknown liabilities and the costs associated with addressing potential reduced business activity at these sites); 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, 2011, subsequent Reports on Form 10-Q and 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 fourth fiscal quarter 2012 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, 2012 at approximately 7:30 p.m. ET through midnight on October 2, 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: 29777922. 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 SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS(In thousands)     August 31, August 31, 2012 (Unaudited)   2011   ASSETS Current assets: Cash and cash equivalents $ 1,217,256 $ 888,611 Accounts receivable, net 1,125,015 1,100,926 Inventories 2,268,949 2,227,339 Prepaid expenses and other current assets 989,326 868,892 Income taxes receivable 10,949 33,855 Deferred income taxes   27,833     15,737     Total current assets 5,639,328 5,135,360   Property, plant and equipment, net 1,779,155 1,641,335 Goodwill and intangible assets, net 214,071 125,305 Deferred income taxes 73,411 74,989 Income taxes receivable 15,651 - Other assets   81,525     80,951     Total assets $ 7,803,141   $ 7,057,940     LIABILITIES AND EQUITY Current liabilities: Current installments of notes payable and long-term debt $ 18,031 $ 74,160 Accounts payable 2,992,865 2,885,168 Accrued expenses 808,480 892,391 Income taxes payable 35,665 32,987 Deferred income taxes   3,955     5,182     Total current liabilities 3,858,996 3,889,888   Notes payable and long-term debt, less current installments 1,658,326 1,112,594 Other liabilities 85,714 67,423 Income tax liability 68,525 88,451 Deferred income taxes 24,245 15,761   Total liabilities   5,695,806     5,174,117   Commitments and contingencies Equity: Jabil Circuit, Inc. stockholders' equity Common stock 232 225 Additional paid-in capital 1,752,847 1,649,431 Retained earnings 766,934 441,793 Accumulated other comprehensive income 106,275 194,706 Treasury stock, at cost   (521,231 )   (419,035 )   Total Jabil Circuit, Inc. stockholders' equity   2,105,057     1,867,120     Noncontrolling interests   2,278     16,703     Total equity   2,107,335     1,883,823     Total liabilities and equity $ 7,803,141   $ 7,057,940     JABIL CIRCUIT, INC. AND SUBSIDIARIESCONDENSED 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,   2012     2011   2012   2011   Net revenue $ 4,338,080 $ 4,280,295 $ 17,151,941 $ 16,518,827 Cost of revenue   4,020,532     3,951,092   15,842,896   15,264,257   Gross profit 317,548 329,203 1,309,045 1,254,570   Operating expenses: Selling, general and administrative 163,070 152,204 644,452 590,572 Research and development 6,784 6,209 25,837 25,034 Amortization of intangibles 3,426 5,230 16,825 22,051 Restructuring and impairment charges - - - 628 Settlement of receivables and related charges - - - 13,607 Loss on disposal of subsidiaries   -     -   -   23,944 Operating income 144,268 165,560 621,931 578,734   Interest and other, net   29,804     24,527   113,031   97,547   Income before income tax 114,464 141,033 508,900 481,187   Income tax expense   31,999     25,492   112,811   98,229   Net income 82,465 115,541 396,089 382,958   Net income (loss) attributable to noncontrolling interests, net of income tax expense   (332 )   1,253   1,402   1,895   Net income attributable to Jabil Circuit, Inc. $ 82,797   $ 114,288 $ 394,687 $ 381,063   Earnings per share attributable to the stockholders of Jabil Circuit, Inc.: Basic $ 0.40   $ 0.54 $ 1.91 $ 1.78 Diluted $ 0.39   $ 0.52 $ 1.87 $ 1.73   Weighted average shares outstanding: Basic   205,666     212,753   206,160   214,502 Diluted   210,847     219,494   211,181   220,719 JABIL CIRCUIT, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(in thousands)(Unaudited)     Twelve months endedAugust 31,2012   August 31,2011 Cash flows from operating activities: Net income $ 396,089 $ 382,958 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 353,492 319,179 Recognition of stock-based compensation expense 81,405 76,230 Settlement of receivables and related charges — 12,673 Loss on disposal of subsidiaries — 23,944 Other, net 15,477 12,804 Change in operating assets and liabilities, exclusive of net assets acquired: Accounts receivable (22,626 ) 48,232 Inventories (53,268 ) (158,545 ) Prepaid expenses and other current assets (141,526 ) (212,265 ) Other assets (2,745 ) 3,205 Accounts payable and accrued expenses 21,955 305,814 Income taxes payable   (14,027 )   13,780     Net cash provided by operating activities   634,226     828,009     Cash flows from investing activities: Cash paid for business and intangible asset acquisitions, net of cash acquired (125,098 ) 3,985 Acquisition of property, plant and equipment (497,697 ) (458,989 ) Proceeds from sale of property, plant and equipment 16,408 23,483 Proceeds from disposal of available for sale investments — 5,800 Cost of receivables acquired, net of cash collections   517     (557 )   Net cash used in investing activities   (605,870 )   (426,278 )   Cash flows from financing activities: Payments toward debt agreements (8,748,420 ) (7,586,754 ) Borrowings under debt agreements 9,233,414 7,572,157 Dividends paid to stockholders (65,240 ) (60,411 ) Dividends paid to noncontrolling interest (333 ) — Net proceeds from exercise of stock options and issuance of common stock under employee stock purchase plan 26,003 31,644 Payments to acquire treasury stock (70,991 ) (200,226 ) Treasury stock minimum tax withholding related to vesting of restricted stock (31,205 ) (9,763 ) Debt issuance costs (6,254 ) (14,549 ) Excess tax benefit related to stock awards 885 180 Cash paid to purchase noncontrolling interest   (20,501 )   —     Net cash provided by (used in) financing activities   317,358     (267,722 )   Effect of exchange rate changes on cash and cash equivalents   (17,069 )   10,273     Net increase in cash and cash equivalents 328,645 144,282 Cash and cash equivalents at beginning of fiscal year   888,611     744,329     Cash and cash equivalents at end of fiscal year   1,217,256     888,611     JABIL CIRCUIT, INC. AND SUBSIDIARIESSUPPLEMENTAL DATARECONCILIATION OF GAAP FINANCIAL RESULTS TO NON-GAAP MEASURES(In thousands, except for per share data)(Unaudited)     Three months ended   Twelve months ended August 31,   August 31, August 31,   August 31, 2012 2011 2012 2011   Operating income (GAAP) $ 144,268 $ 165,560 $ 621,931 $ 578,734 Amortization of intangibles 3,426 5,230 16,825 22,051 Distressed customer charge 5,865 - 16,014 - Stock-based compensation and related charges 21,552 16,376 81,409 76,230 Restructuring and impairment charges - - - 628 Loss on disposal of subsidiaries - - - 23,944 Settlement of receivables and related charges   -   -   -   13,607 Core operating income (Non-GAAP) $ 175,111 $ 187,166 $ 736,179 $ 715,194         Net income attributable to Jabil Circuit, Inc. (GAAP) $ 82,797 $ 114,288 $ 394,687 $ 381,063 Amortization of intangibles, net of tax 3,327 5,213 16,425 21,998 Distressed customer charge, net of tax 5,865 - 16,014 - Stock-based compensation and related charges, net of tax 21,329 16,790 79,985 75,068 Restructuring and impairment charges, net of tax - - - 628 Loss on disposal of subsidiaries, net of tax - - - 23,944 Settlement of receivables and related charges, net of tax   -   -   -   13,607 Core earnings (Non-GAAP) $ 113,318 $ 136,291 $ 507,111 $ 516,308   Earnings per share: (GAAP) Basic $ 0.40 $ 0.54 $ 1.91 $ 1.78 Diluted $ 0.39 $ 0.52 $ 1.87 $ 1.73   Core earnings per share: (Non-GAAP) Basic $ 0.55 $ 0.64 $ 2.46 $ 2.41 Diluted $ 0.54 $ 0.62 $ 2.40 $ 2.34   Weighted average shares outstanding used in the calculations of earnings per share (GAAP and Non-GAAP): Basic   205,666   212,753   206,160   214,502 Diluted   210,847   219,494   211,181   220,719         JABIL CIRCUIT, INC. AND SUBSIDIARIESSUPPLEMENTAL DATARECONCILIATION OF GAAP FINANCIAL RESULTS TO NON-GAAP MEASURES(In thousands)(Unaudited)CALCULATION OF RETURN ON INVESTED CAPITAL ANDCORE RETURN ON INVESTED CAPITAL The Company calculates (1) "Return on Invested Capital" by annualizing its "after-tax GAAP operating income" for its most recently-ended quarter and dividing that by a two quarter average of its "net invested capital asset base" and (2) "Core Return on Invested Capital" by annualizing its "after-tax non-GAAP core operating income" for its most recently-ended quarter and dividing that by a two quarter average of its "net invested capital asset base." The Company calculates: (1) its "after-tax GAAP operating income" by subtracting a certain tax effect (the calculation of which is explained below) from its GAAP operating income and (2) its "after-tax non-GAAP core operating income" by subtracting a certain tax effect (the calculation of which is explained below) from its non-GAAP core operating income. See elsewhere in this earnings release for a reconciliation of the Company's non-GAAP core operating income to its GAAP operating income. The Company calculates "net invested capital asset base" as the sum of the averages (the calculation of which are explained below) of (1) its stockholders' equity, (2) the non-current portion of its notes payable and long term debt and (3) the current portion of its notes payable and long term debt, 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 GAAP operating income" to (2) "Core Return on Invested Capital," as calculated using "after-tax non-GAAP core operating income":   Three months ended   Twelve months ended August 31, August 31, 2012 2012 Numerator:Operating income (GAAP) $ 144,268 $ 621,931 Tax effect (1)   (32,552 )   (114,341 ) After-tax operating income 111,716 507,590 x4   x1   Annualized after-tax operating income $ 446,864   $ 507,590     Core Operating Income (Non-GAAP) $ 175,111 $ 736,179 Tax effect (2)   (32,761 )   (115,905 ) After-tax core operating income 142,350 620,274 x4   x1   Annualized after-tax core operating income $ 569,400   $ 620,274     Denominator: Average total Jabil Circuit, Inc. stockholders' equity (3) $ 2,059,312 $ 1,986,089 Average notes payable and long-term debt, less current installments (3) 1,399,240 1,385,460 Average current installments of notes payable and long-term debt (3) 157,225 46,096 Average cash and cash equivalents (3)   (979,693 )   (1,052,934 ) Net invested capital asset base $ 2,636,084   $ 2,364,711     Return on Invested Capital (GAAP)17.0%21.5%Adjustments noted above4.6%4.7%Core Return on Invested Capital (Non-GAAP)21.6%26.2% (1) This amount is calculated by adding the amount of income taxes attributable to its operating income (GAAP) and its interest expense. (2) This amount is calculated by adding the amount of income taxes attributable to its core operating income (Non-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, 2012 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, 2012 and dividing by two. Jabil Circuit, Inc.Investor & Media Contact:Beth Walters, 727-803-3511Senior Vice President, Investor Relations & Communicationsbeth_walters@jabil.com