Business Wire | Mar 16, 2021 08:00AM EDT

Jabil Posts Second Quarter Results; Raises Outlook for Fiscal Year

Mar. 16, 2021

ST. PETERSBURG, Fla.--(BUSINESS WIRE)--Mar. 16, 2021--Today, Jabil Inc. (NYSE: JBL), reported preliminary, unaudited financial results for its second quarter of fiscal year 2021.

"Our second quarter performance was outstanding," said CEO Mark Mondello. "The combination of broad end-market strength, more favorable product mix, and excellent operational execution by the team allowed us to deliver $285 million in core operating income on revenue of $6.8 billion," he added.

Second Quarter of Fiscal Year 2021 Highlights:

* Net revenue: $6.8 billion * Diversified Manufacturing Services (DMS) year-on-year revenue growth: 26 percent * Electronics Manufacturing Services (EMS) year-on-year revenue decrease: 1 percent * U.S. GAAP operating income: $236.4 million * U.S. GAAP diluted earnings per share: $0.99 * Core operating income (Non-GAAP): $284.6 million * Core diluted earnings per share (Non-GAAP): $1.27

Third Quarter of Fiscal Year 2021 Outlook:

? Net revenue $6.6 billion to $7.2 billion

? U.S. GAAP operating income $188 million to $238 million

? U.S. GAAP diluted earnings per share $0.69 to $0.89 per diluted share

? Core operating income (Non-GAAP) ^(1) $220 million to $270 million

? Core diluted earnings per share (Non-GAAP) ^ $0.90 to $1.10 per diluted(1) share

? Total company revenue Increase 9 percent year-on-year

Fiscal Year 2021 Updated Outlook:

"I'm extremely confident in our plan moving forward, which is supported by both strong secular tailwinds and accelerated momentum in many of the end-markets we serve. As a result, we are raising our financial outlook for the balance of the year. We now expect FY21 to deliver revenue in the range of $28.5 billion and core EPS of approximately $5," added Mondello.

____________________^(1) Core operating income and core diluted earnings per share excludeanticipated adjustments of $12.0 million for amortization of intangibles (or$0.08 per diluted share), $17.0 million for stock-based compensation expenseand related charges (or $0.11 per diluted share) and $3.0 million forrestructuring, severance and related charges (or $0.02 per diluted share).

(Definitions: "U.S. GAAP" means U.S. generally accepted accounting principles. Jabil defines core operating income as U.S. GAAP operating income less amortization of intangibles, stock-based compensation expense and related charges, restructuring, severance and related charges, distressed customer charges, acquisition and integration charges, loss on disposal of subsidiaries, settlement of receivables and related charges, impairment of notes receivable and related charges, goodwill impairment charges and business interruption and impairment charges, net plus other components of net periodic benefit cost. Jabil defines core earnings as U.S. GAAP net income before amortization of intangibles, stock-based compensation expense and related charges, restructuring, severance and related charges, distressed customer charges, acquisition and integration charges, loss on disposal of subsidiaries, settlement of receivables and related charges, impairment of notes receivable and related charges, goodwill impairment charges, business interruption and impairment charges, net, loss on securities, 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 defines adjusted free cash flow as net cash provided by (used in) operating activities plus cash receipts on sold receivables less net capital expenditures (acquisition of property, plant and equipment less proceeds and advances from sale of property, plant and equipment). Jabil reports core operating income, core earnings, core diluted earnings per share and adjusted free cash flow to provide investors an additional method for assessing operating income, earnings, diluted earnings per share and free cash flow 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 and additional information in the supplemental information.)

Forward Looking Statements: This release contains forward-looking statements, including those regarding our anticipated financial results for our second quarter of fiscal year 2021 and our guidance for future financial performance in our third quarter of fiscal year 2021 (including, net revenue, total company revenue, U.S. GAAP operating income, U.S. GAAP diluted earnings per share, core operating income (Non-GAAP), core diluted earnings per share (Non-GAAP) results and the components thereof, including but not limited to amortization of intangibles, stock-based compensation expense and related charges, and restructuring, severance and related charges) and in fiscal year 2021 (including revenue, and core earnings per share. The statements in this 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 second quarter of fiscal year 2021 that our financial results and conditions differ from our current preliminary unaudited numbers set forth herein; the scope and duration of the COVID-19 outbreak and its impact on our operations, sites, customers and supply chain; managing growth effectively; our dependence on a limited number of customers; competitive challenges affecting our customers; managing rapid declines or increases in customer demand and other related customer challenges that may occur; risks arising from relationships with emerging companies; changes in technology; our ability to introduce new business models or programs requiring implementation of new competencies; competition; transportation issues; our ability to maintain our engineering, technological and manufacturing expertise; retaining key personnel; our ability to purchase components efficiently and reliance on a limited number of suppliers for critical components; risks associated with international sales and operations; our ability to achieve expected profitability from acquisitions; risk arising from our restructuring activities; issues involving our information systems, including security issues; regulatory risks (including the expense of complying, or failing to comply, with applicable regulations; risk arising from design or manufacturing defects; and intellectual property risk); financial risks (including customers or suppliers who become financially troubled; turmoil in financial markets; tax risks; credit rating risks; risks of exposure to debt; currency fluctuations; energy prices; and asset impairment); changes in financial accounting standards or policies; and risk of natural disaster, climate change or other global events. Additional factors that could cause such differences can be found in our Annual Report on Form 10-K for the fiscal year ended August 31, 2020 and our other filings with the Securities and Exchange Commission. We assume no obligation to update these forward-looking statements.

Supplemental Information Regarding Non-GAAP Financial Measures: Jabil provides supplemental, non-GAAP financial measures in this release to facilitate evaluation of Jabil's core operating performance. These non-GAAP measures exclude certain amounts that are included in the most directly comparable U.S. GAAP measures, do not have standard meanings and may vary from the non-GAAP financial measures used by other companies. Management believes these "core" financial measures are useful measures that facilitate evaluation of the past and future performance of Jabil's ongoing operations on a comparable basis.

Jabil reports core operating income, core earnings, core diluted earnings per share and adjusted free cash flows to provide investors an additional method for assessing operating income, earnings, earnings per share and free cash flow from what it believes are its core manufacturing operations. Among other uses, management uses non-GAAP financial measures to make operating decisions, assess business performance and as a factor in determining certain employee performance when determining incentive compensation. The Company determines the tax effect of the items excluded from core earnings and core diluted earnings per share based upon evaluation of the statutory tax treatment and the applicable tax rate of the jurisdiction in which the pre-tax items were incurred, and for which realization of the resulting tax benefit, if any, is expected. In certain jurisdictions where the Company does not expect to realize a tax benefit (due to existing tax incentives or a history of operating losses or other factors resulting in a valuation allowance related to deferred tax assets), a reduced or 0% tax rate is applied. Detailed definitions of certain of the core financial measures are included above under "Definitions" and a reconciliation of the disclosed core financial measures to the most directly comparable U.S. GAAP financial measures is included under the heading "Supplemental Data" at the end of this release.

Meeting and Replay Information: Jabil will hold a conference call today at 8:30 a.m. ET to discuss its earnings for the second quarter of fiscal year 2021. To access the live audio webcast and view the accompanying slide presentation, visit the Investor Relations section of Jabil's website, located at https://investors.jabil.com. An archived replay of the webcast will also be available after completion of the call.

About Jabil: Jabil (NYSE: JBL) is a manufacturing solutions provider with over 260,000 employees across 100 locations in 30 countries. The world's leading brands rely on Jabil's unmatched breadth and depth of end-market experience, technical and design capabilities, manufacturing know-how, supply chain insights and global product management expertise. Driven by a common purpose, Jabil and its people are committed to making a positive impact on their local community and the environment. Visit www.jabil.com to learn more.

JABIL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

February 28, 2021

(unaudited) August 31, 2020

ASSETS

Current assets:

Cash and cash equivalents $ 838,099 $ 1,393,557

Accounts receivable, net 3,062,742 2,847,743

Contract assets 993,363 1,104,700

Inventories, net 3,558,970 3,131,783

Prepaid expenses and other current assets 690,479 657,102

Total current assets 9,143,653 9,134,885

Property, plant and equipment, net 3,696,373 3,665,312

Operating lease right-of-use asset 365,043 362,847

Goodwill and intangible assets, net 924,049 906,723

Deferred income taxes 154,706 165,407

Other assets 210,339 162,242

Total assets $ 14,494,163 $ 14,397,416

LIABILITIES AND EQUITY

Current liabilities:

Current installments of notes payable and $ 50,197 $ 50,194 long-term debt

Accounts payable 5,644,359 5,687,038

Accrued expenses 3,037,158 3,211,528

Current operating lease liabilities 110,663 110,723

Total current liabilities 8,842,377 9,059,483

Notes payable and long-term debt, less current 2,679,819 2,678,288 installments

Other liabilities 305,410 268,925

Non-current operating lease liabilities 306,044 302,035

Income tax liabilities 161,416 148,629

Deferred income taxes 97,155 114,657

Total liabilities 12,392,221 12,572,017

Commitments and contingencies

Equity:

Jabil Inc. stockholders' equity:

Preferred stock - -

Common stock 267 264

Additional paid-in capital 2,488,366 2,413,616

Retained earnings 2,368,012 2,040,922

Accumulated other comprehensive loss (4,270 ) (34,168 )

Treasury stock, at cost (2,763,214 ) (2,609,250 )

Total Jabil Inc. stockholders' equity 2,089,161 1,811,384

Noncontrolling interests 12,781 14,015

Total equity 2,101,942 1,825,399

Total liabilities and equity $ 14,494,163 $ 14,397,416

JABIL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except for per share data)

(Unaudited)

Three months ended

Six months ended

February 28, 2021

February 29, 2020

February 28, 2021

February 29, 2020

Net revenue

$

6,828,546

$

6,125,083

$

14,661,075

$

13,630,781

Cost of revenue

6,258,621

5,694,958

13,456,590

12,646,817

Gross profit

569,925

430,125

1,204,485

983,964

Operating expenses:

Selling, general and administrative

305,942

285,024

608,694

613,923

Research and development

9,368

11,290

17,486

22,060

Amortization of intangibles

11,639

13,577

23,094

29,717

Restructuring, severance and related charges

6,626

29,604

4,911

74,855

Operating income

236,350

90,630

550,300

243,409

Impairment on securities

-

12,205

-

12,205

Interest and other, net

27,812

49,348

56,355

99,487

Income before income tax

208,538

29,077

493,945

131,717

Income tax expense

56,184

31,658

140,584

93,584

Net income (loss)

152,354

(2,581

)

353,361

38,133

Net income attributable to noncontrolling interests, net of tax

700

702

1,265

994

Net income (loss) attributable to Jabil Inc.

$

151,654

$

(3,283

)

$

352,096

$

37,139

Earnings (loss) per share attributable to the stockholders of Jabil Inc.:

Basic

$

1.01

$

(0.02

)

$

2.34

$

0.24

Diluted

$

0.99

$

(0.02

)

$

2.30

$

0.24

Weighted average shares outstanding:

Basic

150,257

152,058

150,206

152,579

Diluted

152,975

152,058

153,051

156,171

JABIL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except for per share data)

(Unaudited)

Three months ended Six months ended

February 28, February 29, February 28, February 29, 2021 2020 2021 2020

Net revenue $ 6,828,546 $ 6,125,083 $ 14,661,075 $ 13,630,781

Cost of revenue 6,258,621 5,694,958 13,456,590 12,646,817

Gross profit 569,925 430,125 1,204,485 983,964

Operating expenses:

Selling,general and 305,942 285,024 608,694 613,923 administrative

Research and 9,368 11,290 17,486 22,060 development

Amortization of 11,639 13,577 23,094 29,717 intangibles

Restructuring,severance and 6,626 29,604 4,911 74,855 related charges

Operating 236,350 90,630 550,300 243,409 income

Impairment on - 12,205 - 12,205 securities

Interest and 27,812 49,348 56,355 99,487 other, net

Income before 208,538 29,077 493,945 131,717 income tax

Income tax 56,184 31,658 140,584 93,584 expense

Net income 152,354 (2,581 ) 353,361 38,133 (loss)

Net incomeattributable tononcontrolling 700 702 1,265 994 interests, netof tax

Net income(loss) $ 151,654 $ (3,283 ) $ 352,096 $ 37,139 attributable toJabil Inc.

Earnings (loss)per shareattributable to thestockholders ofJabil Inc.:

Basic $ 1.01 $ (0.02 ) $ 2.34 $ 0.24

Diluted $ 0.99 $ (0.02 ) $ 2.30 $ 0.24

Weightedaverage shares outstanding:

Basic 150,257 152,058 150,206 152,579

Diluted 152,975 152,058 153,051 156,171

JABIL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

Six months ended

February 28, 2021

February 29, 2020

Cash flows provided by operating activities:

Net income

$

353,361

$

38,133

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

Depreciation and amortization

420,416

402,347

Restructuring and related charges

3,036

33,061

Recognition of stock-based compensation expense and related charges

57,354

45,332

Deferred income taxes

(8,330

)

3,087

Provision for allowance for doubtful accounts

5,313

10,185

Other, net

15,489

13,838

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

Accounts receivable

(200,130

)

424,971

Contract assets

123,258

(63,302

)

Inventories

(421,255

)

(279,664

)

Prepaid expenses and other current assets

(31,279

)

(62,881

)

Other assets

(20,688

)

(8,438

)

Accounts payable, accrued expenses and other liabilities

(210,600

)

(472,503

)

Net cash provided by operating activities

85,945

84,166

Cash flows used in investing activities:

Acquisition of property, plant and equipment

(661,153

)

(448,765

)

Proceeds and advances from sale of property, plant and equipment

266,725

36,624

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

(49,394

)

(141,195

)

Other, net

(3,367

)

(2,013

)

Net cash used in investing activities

(447,189

)

(555,349

)

Cash flows (used in) provided by financing activities:

Borrowings under debt agreements

379,111

5,063,358

Payments toward debt agreements

(392,878

)

(4,835,697

)

Payments to acquire treasury stock

(131,995

)

(168,660

)

Dividends paid to stockholders

(25,879

)

(26,280

)

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

20,354

16,179

Treasury stock minimum tax withholding related to vesting of restricted stock

(21,969

)

(23,010

)

Other, net

(15,999

)

(11,617

)

Net cash (used in) provided by financing activities

(189,255

)

14,273

Effect of exchange rate changes on cash and cash equivalents

(4,959

)

(9,688

)

Net decrease in cash and cash equivalents

(555,458

)

(466,598

)

Cash and cash equivalents at beginning of period

1,393,557

1,163,343

Cash and cash equivalents at end of period

$

838,099

$

696,745

JABIL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

Six months ended

February February 29, 28, 2021 2020

Cash flows provided by operating activities:

Net income $ 353,361 $ 38,133

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

Depreciation and amortization 420,416 402,347

Restructuring and related charges 3,036 33,061

Recognition of stock-based compensation expense and 57,354 45,332 related charges

Deferred income taxes (8,330 ) 3,087

Provision for allowance for doubtful accounts 5,313 10,185

Other, net 15,489 13,838

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

Accounts receivable (200,130 ) 424,971

Contract assets 123,258 (63,302 )

Inventories (421,255 ) (279,664 )

Prepaid expenses and other current assets (31,279 ) (62,881 )

Other assets (20,688 ) (8,438 )

Accounts payable, accrued expenses and other (210,600 ) (472,503 )liabilities

Net cash provided by operating activities 85,945 84,166

Cash flows used in investing activities:

Acquisition of property, plant and equipment (661,153 ) (448,765 )

Proceeds and advances from sale of property, plant 266,725 36,624 and equipment

Cash paid for business and intangible asset (49,394 ) (141,195 )acquisitions, net of cash

Other, net (3,367 ) (2,013 )

Net cash used in investing activities (447,189 ) (555,349 )

Cash flows (used in) provided by financing activities:

Borrowings under debt agreements 379,111 5,063,358

Payments toward debt agreements (392,878 ) (4,835,697 )

Payments to acquire treasury stock (131,995 ) (168,660 )

Dividends paid to stockholders (25,879 ) (26,280 )

Net proceeds from exercise of stock options andissuance of common stock under employee stock 20,354 16,179 purchase plan

Treasury stock minimum tax withholding related to (21,969 ) (23,010 )vesting of restricted stock

Other, net (15,999 ) (11,617 )

Net cash (used in) provided by financing activities (189,255 ) 14,273

Effect of exchange rate changes on cash and cash (4,959 ) (9,688 )equivalents

Net decrease in cash and cash equivalents (555,458 ) (466,598 )

Cash and cash equivalents at beginning of period 1,393,557 1,163,343

Cash and cash equivalents at end of period $ 838,099 $ 696,745

JABIL INC. AND SUBSIDIARIES

SUPPLEMENTAL DATA

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

(in thousands, except for per share data)

(Unaudited)

Three months ended

Six months ended

February 28, 2021

February 29, 2020

February 28, 2021

February 29, 2020

Operating income (U.S. GAAP)

$

236,350

$

90,630

$

550,300

$

243,409

Amortization of intangibles

11,639

13,577

23,094

29,717

Stock-based compensation expense and related charges

23,813

15,109

57,354

45,332

Restructuring, severance and related charges

6,626

29,604

4,911

74,855

Distressed customer charge

-

-

-

14,963

Net periodic benefit cost (1)

5,723

2,776

11,316

4,601

Business interruption and impairment charges, net

(806

)

-

(806

)

-

Acquisition and integration charges

1,261

7,752

3,374

23,886

Adjustments to operating income

48,256

68,818

99,243

193,354

Core operating income (Non-GAAP)

$

284,606

$

159,448

$

649,543

$

436,763

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

$

151,654

$

(3,283

)

$

352,096

$

37,139

Adjustments to operating income

48,256

68,818

99,243

193,354

Impairment on securities

-

12,205

-

12,205

Net periodic benefit cost (1)

(5,723

)

(2,776

)

(11,316

)

(4,601

)

Adjustments for taxes

(553

)

3,091

(1,148

)

3,588

Core earnings (Non-GAAP)

$

193,634

$

78,055

$

438,875

$

241,685

Diluted earnings (loss) per share (U.S. GAAP)

$

0.99

$

(0.02

)

$

2.30

$

0.24

Diluted core earnings per share (Non-GAAP)

$

1.27

$

0.50

$

2.87

$

1.55

Diluted weighted average shares outstanding (U.S. GAAP)

152,975

152,058

153,051

156,171

Diluted weighted average shares outstanding (Non-GAAP)

152,975

155,714

153,051

156,171

JABIL INC. AND SUBSIDIARIES

SUPPLEMENTAL DATA

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

(in thousands, except for per share data)

(Unaudited)

Three months ended Six months ended

February February February February 28, 2021 29, 2020 28, 2021 29, 2020

Operating income (U.S. GAAP) $ 236,350 $ 90,630 $ 550,300 $ 243,409

Amortization of intangibles 11,639 13,577 23,094 29,717

Stock-based compensation 23,813 15,109 57,354 45,332 expense and related charges

Restructuring, severance and 6,626 29,604 4,911 74,855 related charges

Distressed customer charge - - - 14,963

Net periodic benefit cost ^(1) 5,723 2,776 11,316 4,601

Business interruption and (806 ) - (806 ) - impairment charges, net

Acquisition and integration 1,261 7,752 3,374 23,886 charges

Adjustments to operating 48,256 68,818 99,243 193,354 income

Core operating income $ 284,606 $ 159,448 $ 649,543 $ 436,763 (Non-GAAP)

Net income (loss) attributable $ 151,654 $ (3,283 ) $ 352,096 $ 37,139 to Jabil Inc. (U.S. GAAP)

Adjustments to operating 48,256 68,818 99,243 193,354 income

Impairment on securities - 12,205 - 12,205

Net periodic benefit cost ^(1) (5,723 ) (2,776 ) (11,316 ) (4,601 )

Adjustments for taxes (553 ) 3,091 (1,148 ) 3,588

Core earnings (Non-GAAP) $ 193,634 $ 78,055 $ 438,875 $ 241,685

Diluted earnings (loss) per $ 0.99 $ (0.02 ) $ 2.30 $ 0.24 share (U.S. GAAP)

Diluted core earnings per $ 1.27 $ 0.50 $ 2.87 $ 1.55 share (Non-GAAP)

Diluted weighted average 152,975 152,058 153,051 156,171 shares outstanding (U.S. GAAP)

Diluted weighted average 152,975 155,714 153,051 156,171 shares outstanding (Non-GAAP)

____________________(1)

Following the adoption of Accounting Standards Update 2017-07, Compensation - Retirement Benefits (Topic 715) ("ASU 2017-07"), pension service cost is recognized in cost of revenue and all other components of net periodic benefit cost, including return on plan assets, are presented in other expense. We are reclassifying the pension components in other expense to core operating income as we assess operating performance, inclusive of all components of net periodic benefit cost, with the related revenue. There is no impact to core earnings or diluted core earnings per share for this adjustment.

____________________ ^Following the adoption of Accounting Standards Update 2017-07, Compensation - Retirement Benefits (Topic 715) ("ASU 2017-07"), pension service cost is recognized in cost of revenue and all other components of^ net periodic benefit cost, including return on plan assets, are presented(1) in other expense. We are reclassifying the pension components in other expense to core operating income as we assess operating performance, inclusive of all components of net periodic benefit cost, with the related revenue. There is no impact to core earnings or diluted core earnings per share for this adjustment.

JABIL INC. AND SUBSIDIARIES

SUPPLEMENTAL DATA

ADJUSTED FREE CASH FLOW

(in thousands)

(Unaudited)

Six months ended

February 28, 2021

February 29, 2020

Net cash provided by operating activities (U.S. GAAP)

$

85,945

$

84,166

Acquisition of property, plant and equipment

(661,153

)

(448,765

)

Proceeds and advances from sale of property, plant and equipment

266,725

36,624

Adjusted free cash flow (Non-GAAP)

$

(308,483

)

$

(327,975

)

View source version on businesswire.com: https://www.businesswire.com/news/home/20210316005237/en/

CONTACT: Investor Contact Adam Berry Vice President, Investor Relations (727) 577-9749 Adam_Berry@jabil.com

CONTACT: Media Contact Michelle Smith Vice President, Corporate Communications (727) 577-9749 Michelle_Smith@jabil.com