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Press release from Business Wire

Jabil Posts Fourth Quarter & Fiscal Year 2013 Results

<p class='bwalignc'> <i>Solid Revenue Growth and Strong Cash Flow Generation</i> </p>

Wednesday, September 25, 2013

Jabil Posts Fourth Quarter & Fiscal Year 2013 Results

16:02 EDT Wednesday, September 25, 2013

ST. PETERSBURG, Fla. (Business Wire) -- Today Jabil Circuit, Inc. (NYSE: 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 and 8-K and our other securities filings. Jabil disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Supplemental Information: The financial results disclosed in this release include certain measures calculated and presented in accordance with GAAP. In addition to the GAAP financial measures, Jabil provides supplemental, non-GAAP financial measures to facilitate evaluation of Jabil's core operating performance. The non-GAAP financial measures disclosed in this release exclude certain amounts that are included in the most directly comparable GAAP measures. The non-GAAP or core financial measures disclosed in this release do not have standard meanings and may vary from the non-GAAP financial measures used by other companies. Management believes core financial measures (which exclude the effects of the amortization of intangibles, stock-based compensation expense and related charges, restructuring and 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
 
Earnings per share attributable to the stockholders of Jabil Circuit, Inc.:
Basic $ 0.63   $ 0.40   $ 1.83   $ 1.91
Diluted $ 0.61   $ 0.39   $ 1.79   $ 1.87
 
Weighted average shares outstanding:
Basic   202,959     205,666     203,096     206,160
Diluted   208,502     210,847     207,815     211,181

JABIL CIRCUIT, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

 
Twelve months ended
August 31,
2013
  August 31,
2012
Cash flows from operating activities:
Net income $ 370,091 $ 396,089
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 418,117 353,492
Recognition of stock-based compensation expense 68,383 81,405
Deferred income taxes (123,165 ) (9,201 )
Impairment of notes receivable and related charges 25,597
Excess tax benefit related to stock awards (14,605 ) (885 )
Other, net 12,616 25,563
Changes in operating assets and liabilities, exclusive of net assets acquired:
Accounts receivable 750 (22,626 )
Inventories 50,229 (53,268 )
Prepaid expenses and other current assets (82,756 ) (141,526 )
Other assets (5,025 ) (2,745 )
Accounts payable and accrued expenses 485,972 21,955
Income taxes payable   7,685     (14,027 )
 
Net cash provided by operating activities   1,213,889     634,226  
 
Cash flows from investing activities:
Acquisition of property, plant and equipment (736,858 ) (497,697 )
Cash paid for business and intangible asset acquisitions, net of cash acquired (650,054 ) (125,098 )
Proceeds from sale of property, plant and equipment 15,792 16,408
Cost of receivables acquired, net of cash collections 517
Investments in non-marketable equity securities   (3,342 )    
 
Net cash used in investing activities   (1,374,462 )   (605,870 )
 
Cash flows from financing activities:
Borrowings under debt agreements 5,764,400 9,233,414
Payments towards debt agreements (5,586,738 ) (8,748,420 )
Payments to acquire treasury stock (129,262 ) (70,991 )
Dividends paid to stockholders (67,181 ) (65,240 )
Dividends paid to noncontrolling interest (333 )
Net proceeds from exercise of stock options and issuance of common stock under employee stock purchase plan 18,285 26,003
Debt issuance costs (6,254 )
Treasury stock minimum tax withholding related to vesting of restricted stock (20,290 ) (31,205 )
Cash paid to purchase noncontrolling interest (17,500 ) (20,501 )
Excess tax benefit related to stock awards 14,605 885
Capital contribution to noncontrolling interest 316
Bank overdraft   372      
 
Net cash (used in) provided by financing activities   (22,993 )   317,358  
 
Effect of exchange rate changes on cash and cash equivalents   (22,317 )   (17,069 )
 
Net (decrease) increase in cash and cash equivalents (205,883 ) 328,645
Cash and cash equivalents at beginning of period   1,217,256     888,611  
 
Cash and cash equivalents at end of period $ 1,011,373   $ 1,217,256  
JABIL CIRCUIT, INC. AND SUBSIDIARIES
SUPPLEMENTAL DATA
RECONCILIATION 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,
2013 2012 2013 2012

 

Operating income (GAAP) $ 88,370 $ 144,268 $ 511,438 $ 621,931
Amortization of intangibles 5,760 3,426 16,154 16,825
Distressed customer charge 5,865 16,014
Stock-based compensation and related charges 16,182 21,552 68,383 81,409
Restructuring and related charges 61,061 89,453
Impairment of notes receivable and related charges 25,597
Acquisition costs and purchase accounting adjustments 10,037 10,037
Core operating income (Non-GAAP) $ 181,410 $ 175,111 $ 721,062 $ 736,179
 
Net income attributable to Jabil Circuit, Inc. (GAAP) $ 127,019 $ 82,797 $ 371,482 $ 394,687
Amortization of intangibles, net of tax (15,104) 3,327 (5,269) 16,425
Distressed customer charge 5,865 16,014
Stock-based compensation and related charges, net of tax 16,365 21,329 68,480 79,985
Restructuring and related charges, net of tax 59,252 85,827
Impairment of notes receivable and related charges, net of tax 19,748
Acquisition costs and purchase accounting adjustments, net of tax (70,363) (70,363)
Core earnings (Non-GAAP) $ 117,169 $ 113,318 $ 469,905 $ 507,111
 
Earnings per share: (GAAP)
Basic $ 0.63 $ 0.40 $ 1.83 $ 1.91
Diluted $ 0.61 $ 0.39 $ 1.79 $ 1.87
 
Core earnings per share: (Non-GAAP)
Basic $ 0.58 $ 0.55 $ 2.31 $ 2.46
Diluted $ 0.56 $ 0.54 $ 2.26 $ 2.40
 
Weighted average shares outstanding used in the calculations of earnings per share (GAAP and Non-GAAP):
Basic 202,959 205,666 203,096 206,160
Diluted 208,502 210,847 207,815 211,181

JABIL CIRCUIT, INC. AND SUBSIDIARIES

SUPPLEMENTAL DATA

RECONCILIATION OF GAAP FINANCIAL RESULTS TO NON-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 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) its "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 calculations of which are explained below) of (1) its stockholders' equity, (2) the non-current portion of its notes payable, long-term debt and capital lease obligations and (3) the current portion 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 GAAP operating income" to (2) "Core Return on Invested Capital," as calculated using "after-tax non-GAAP core operating income":

 

Three months

ended

August 31,

 

Twelve months

ended

August 31,

  2013     2013  
Numerator:
Operating income (GAAP) $ 88,370 $ 511,438
Tax effect (1)   72,217     (16,151 )
After-tax operating income 160,587 495,287
x4 x1
Annualized after-tax operating income $ 642,348   $ 495,287  
 
Core operating income (Non-GAAP) $ 181,410 $ 721,062
Tax effect (2)   (32,134 )   (128,095 )
After-tax core operating income 149,276 592,967
x4 x1
Annualized after-tax core operating income $ 597,104   $ 592,967  
 
Denominator:
Average total Jabil Circuit, Inc. stockholders' equity (3) $ 2,270,437 $ 2,220,172
Average notes payable, long-term debt and capital lease obligations, less current installments (3) 1,670,893 1,674,376
Average current installments of notes payable, long-term debt and capital lease obligations (3) 112,498 116,784
Average cash and cash equivalents (3)   (1,181,550 )   (1,114,315 )
Net invested capital asset base $ 2,872,278   $ 2,897,017  
 
Return on Invested Capital (GAAP) 22.4 % 17.1 %
Adjustments noted above (1.6 )% 3.4 %
Core Return on Invested Capital (Non-GAAP) 20.8 % 20.5 %

(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, 2013 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, 2013 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

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