Jabil Posts First Quarter Results

December 14, 2023

Reiterates Amended Fiscal Year 2024 Financial Outlook

Today, Jabil Inc. (NYSE: JBL), reported preliminary, unaudited financial results for its first quarter of fiscal year 2024.

“As previously announced, we experienced a broad-based softening in demand during the final stretch of our first quarter, which you can see reflected in our first quarter revenue,” said CEO Kenny Wilson. “Despite softer demand, the team delivered good year-over-year growth in core margins and core earnings per share,” he added.

First Quarter of Fiscal Year 2024 Highlights:

  • Net revenue: $8.4 billion
  • U.S. GAAP operating income: $303 million
  • U.S. GAAP diluted earnings per share: $1.47
  • Core operating income (Non-GAAP): $499 million
  • Core diluted earnings per share (Non-GAAP): $2.60

Second Quarter of Fiscal Year 2024 Outlook:

• Net revenue

 

$7.0 billion to $7.6 billion

 

• U.S. GAAP operating income (1)

 

$216 million to $301 million

 

• U.S. GAAP diluted earnings per share (1)

 

$0.77 to $1.37 per diluted share

 

• Core operating income (Non-GAAP) (2)

 

$339 million to $399 million

 

• Core diluted earnings per share (Non-GAAP) (2)

 

$1.73 to $2.13 per diluted share

 

______________________

(1) 

Excludes the anticipated gain on the divestiture of the Mobility business.

(2)

Core operating income and core diluted earnings per share exclude anticipated adjustments of $6 million for amortization of intangibles (or $0.05 per diluted share), $17 million for stock-based compensation expense and related charges (or $0.13 per diluted share) and $100 million to $75 million (or $0.78 to $0.58 per diluted share) for restructuring, severance and related charges.

Fiscal Year 2024 Updated Outlook:

• Net revenue

 

$31 billion

 

• Core operating margin (Non-GAAP)

 

5.3% - 5.5%

 

• Core diluted earnings per share (Non-GAAP)

 

$9.00+ per diluted share

 

• Adjusted Free Cash Flow (Non-GAAP)

 

$1+ billion

 

(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, business interruption and impairment charges, net and costs from the divestiture of businesses plus other components of net periodic benefit cost. Jabil defines core earnings as core operating income, less loss on debt extinguishment, loss (gain) on securities, other components of net periodic benefit cost, 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 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 first quarter of fiscal year 2024 and our guidance for future financial performance in our second quarter of fiscal year 2024 (including, net 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 our full year 2024 (including net revenue, core operating margin (Non-GAAP), core diluted earnings per share (Non-GAAP) results, the components thereof and Adjusted Free Cash Flow (Non-GAAP)). 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. Forward-looking statements could be affected by the following factors, among others, related to the sale of the Mobility business to BYD Electronic (International) Company Limited (“BYDE”): the occurrence of any event, change or other circumstance that could give rise to the termination of the definitive agreement, or the failure to satisfy closing conditions and consummate the potential transaction; the ability of Jabil or BYDE to obtain required regulatory approvals for the potential transaction and the timing and conditions for such approvals, which may be obtained sooner than expected; the ability to obtain any approval required from the stockholders of BYDE; disruption from the potential transaction, including potential adverse changes to relationships with customers, employees, suppliers or other parties resulting from the failure to consummate the potential transaction; potential proceedings relating to the potential transaction that could be instituted against Jabil; unexpected costs or unexpected liabilities that may arise from the potential transaction, whether or not consummated; the inability to retain key personnel; the impact of changes in economic, market, political or social conditions; and future regulatory or legislative actions that could adversely affect the parties. Other factors that could impact forward-looking statements include, but are not limited to: our determination as we finalize our financial results for our first quarter of fiscal year 2024 that our financial results and conditions differ from our current preliminary unaudited numbers set forth herein; scheduling production, managing growth and capital expenditures and maximizing the efficiency of our manufacturing capacity effectively; managing rapid declines or increases in customer demand and other related customer challenges that may occur; the effect of COVID-19 on our operations, sites, customers and supply chain; our dependence on a limited number of customers; our ability to purchase components efficiently and reliance on a limited number of suppliers for critical components; risks arising from relationships with emerging companies; changes in technology and competition in our industry; 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; risks associated with international sales and operations, including geopolitical uncertainties; energy price increases or shortages; 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; risk arising from compliance, or failure to comply, with environmental, health and safety laws or regulations 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; and asset impairment); changes in financial accounting standards or policies; risk of natural disaster, climate change or other global events; and risks arising from expectations relating to environmental, social and governance considerations. 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, 2023 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 an annual normalized tax rate (“normalized core tax rate”) for the computation of the non-GAAP (core) income tax provision to provide better consistency across reporting periods. In estimating the normalized core tax rate annually, the Company utilizes a full-year financial projection of core earnings that considers the mix of earnings across tax jurisdictions, existing tax positions, and other significant tax matters. The Company may adjust the normalized core tax rate during the year for material impacts from new tax legislation or material changes to the Company’s operations.

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 first quarter of fiscal year 2024. 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 250,000 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 millions)

 

 

November 30, 2023

 

 

 

(unaudited)

 

August 31, 2023

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

1,550

 

 

$

1,804

 

Accounts receivable, net

 

3,693

 

 

 

3,647

 

Contract assets

 

1,090

 

 

 

1,035

 

Inventories, net

 

5,124

 

 

 

5,206

 

Prepaid expenses and other current assets

 

1,235

 

 

 

1,109

 

Assets held for sale

 

1,962

 

 

 

1,929

 

Total current assets

 

14,654

 

 

 

14,730

 

Property, plant and equipment, net

 

3,134

 

 

 

3,137

 

Operating lease right-of-use asset

 

354

 

 

 

367

 

Goodwill and intangible assets, net

 

838

 

 

 

763

 

Deferred income taxes

 

155

 

 

 

159

 

Other assets

 

279

 

 

 

268

 

Total assets

$

19,414

 

 

$

19,424

 

LIABILITIES AND EQUITY

 

 

 

Current liabilities:

 

 

 

Current installments of notes payable and long-term debt

$

 

 

$

 

Accounts payable

 

5,630

 

 

 

5,679

 

Accrued expenses

 

5,840

 

 

 

5,515

 

Current operating lease liabilities

 

96

 

 

 

104

 

Liabilities held for sale

 

1,464

 

 

 

1,397

 

Total current liabilities

 

13,030

 

 

 

12,695

 

Notes payable and long-term debt, less current installments

 

2,876

 

 

 

2,875

 

Other liabilities

 

342

 

 

 

319

 

Non-current operating lease liabilities

 

269

 

 

 

269

 

Income tax liabilities

 

118

 

 

 

131

 

Deferred income taxes

 

243

 

 

 

268

 

Total liabilities

 

16,878

 

 

 

16,557

 

Commitments and contingencies

 

 

 

Equity:

 

 

 

Jabil Inc. stockholders’ equity:

 

 

 

Preferred stock

 

 

 

 

 

Common stock

 

 

 

 

 

Additional paid-in capital

 

2,827

 

 

 

2,795

 

Retained earnings

 

4,595

 

 

 

4,412

 

Accumulated other comprehensive loss

 

(6

)

 

 

(17

)

Treasury stock, at cost

 

(4,881

)

 

 

(4,324

)

Total Jabil Inc. stockholders’ equity

 

2,535

 

 

 

2,866

 

Noncontrolling interests

 

1

 

 

 

1

 

Total equity

 

2,536

 

 

 

2,867

 

Total liabilities and equity

$

19,414

 

 

$

19,424

 

JABIL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except for per share data)

(Unaudited)

 

 

Three months ended

 

November 30, 2023

 

November 30, 2022

Net revenue

$

8,387

 

$

9,635

Cost of revenue

 

7,612

 

 

8,892

Gross profit

 

775

 

 

743

Operating expenses:

 

 

 

Selling, general and administrative

 

314

 

 

319

Research and development

 

10

 

 

9

Amortization of intangibles

 

6

 

 

8

Restructuring, severance and related charges

 

127

 

 

45

Costs from the divestiture of businesses

 

15

 

 

Operating income

 

303

 

 

362

Interest and other, net

 

68

 

 

63

Income before income tax

 

235

 

 

299

Income tax expense

 

41

 

 

76

Net income

 

194

 

 

223

Net income attributable to noncontrolling interests, net of tax

 

 

 

Net income attributable to Jabil Inc.

$

194

 

$

223

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

 

 

 

Basic

$

1.49

 

$

1.65

Diluted

$

1.47

 

$

1.61

Weighted average shares outstanding:

 

 

 

Basic

 

129.6

 

 

134.8

Diluted

 

132.1

 

 

138.0

JABIL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

(Unaudited)

 

 

Three months ended

 

November 30, 2023

 

November 30, 2022

Cash flows provided by operating activities:

 

 

 

Net income

$

194

 

 

$

223

 

Depreciation, amortization, and other, net

 

206

 

 

 

263

 

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

 

48

 

 

 

(320

)

Net cash provided by operating activities

 

448

 

 

 

166

 

Cash flows used in investing activities:

 

 

 

Acquisition of property, plant and equipment

 

(288

)

 

 

(314

)

Proceeds and advances from sale of property, plant and equipment

 

13

 

 

 

150

 

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

 

(59

)

 

 

 

Proceeds from the divestiture of businesses

 

258

 

 

 

 

Other, net

 

1

 

 

 

(12

)

Net cash used in investing activities

 

(75

)

 

 

(176

)

Cash flows used in financing activities:

 

 

 

Borrowings under debt agreements

 

395

 

 

 

1,026

 

Payments toward debt agreements

 

(436

)

 

 

(1,061

)

Payments to acquire treasury stock

 

(500

)

 

 

(161

)

Dividends paid to stockholders

 

(12

)

 

 

(12

)

Treasury stock minimum tax withholding related to vesting of restricted stock

 

(67

)

 

 

(33

)

Net cash used in financing activities

 

(620

)

 

 

(241

)

Effect of exchange rate changes on cash and cash equivalents

 

(7

)

 

 

(10

)

Net decrease in cash and cash equivalents

 

(254

)

 

 

(261

)

Cash and cash equivalents at beginning of period

 

1,804

 

 

 

1,478

 

Cash and cash equivalents at end of period

$

1,550

 

 

$

1,217

 

JABIL INC. AND SUBSIDIARIES

SUPPLEMENTAL DATA

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

(in millions, except for per share data)

(Unaudited)

 

 

Three months ended

 

November 30, 2023

 

November 30, 2022

Operating income (U.S. GAAP)

$

303

 

 

$

362

 

Amortization of intangibles

 

6

 

 

 

8

 

Stock-based compensation expense and related charges

 

46

 

 

 

42

 

Restructuring, severance and related charges(1)

 

127

 

 

 

45

 

Net periodic benefit cost

 

2

 

 

 

4

 

Costs from the divestiture of businesses

 

15

 

 

 

 

Adjustments to operating income

 

196

 

 

 

99

 

Core operating income (Non-GAAP)

$

499

 

 

$

461

 

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

$

194

 

 

$

223

 

Adjustments to operating income

 

196

 

 

 

99

 

Net periodic benefit cost

 

(2

)

 

 

(4

)

Adjustments for taxes

 

(45

)

 

 

1

 

Core earnings (Non-GAAP)

$

343

 

 

$

319

 

Diluted earnings per share (U.S. GAAP)

$

1.47

 

 

$

1.61

 

Diluted core earnings per share (Non-GAAP)

$

2.60

 

 

$

2.31

 

Diluted weighted average shares outstanding (U.S. GAAP & Non-GAAP)

 

132.1

 

 

 

138.0

 

_________________

(1)

Charges recorded during the three months ended November 30, 2023, related to the 2024 Restructuring Plan.

JABIL INC. AND SUBSIDIARIES

SUPPLEMENTAL DATA

ADJUSTED FREE CASH FLOW

(in millions)

(Unaudited)

 

 

Three months ended

 

November 30, 2023

 

November 30, 2022

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

$

448

 

 

$

166

 

Acquisition of property, plant and equipment (“PP&E”)(1)

 

(288

)

 

 

(314

)

Proceeds and advances from sale of PP&E(1)

 

13

 

 

 

150

 

Adjusted free cash flow (Non-GAAP)

$

173

 

 

$

2

 

_________________

(1)

Certain customers co-invest in PP&E with us. As we acquire PP&E, we recognize the cash payments in acquisition of PP&E. When our customers reimburse us and obtain control, we recognized the cash receipts in proceeds and advances from the sale of PP&E.

 

Investor Contact
Adam Berry
Vice President, Investor Relations
Adam_Berry@jabil.com

Source: Jabil, Inc.