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TheStreet Open House

Jabil Posts Third Quarter Results

Stocks in this article: JBL

Jabil Circuit, Inc. (NYSE: JBL), today reported preliminary, unaudited third quarter net revenue of $4.3 billion for fiscal year 2012. “We are pleased to post core EBITDA margins of 6.5 percent in the quarter, our highest level since 2005. Core operating margins also expanded to 4.5 percent,” said Timothy L. Main, President and CEO of Jabil. “This is particularly gratifying during a period of more subdued revenue growth for the company overall.”

Revenue from Diversified Manufacturing Services increased to $1.9 billion, a 22 percent year over year increase, and accounted for 44 percent of total revenue in the third fiscal quarter of 2012.

Jabil’s High Velocity business represented 25 percent of total revenue and its Enterprise & Infrastructure business accounted for 31 percent of the quarter’s revenue.

(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 calculates core operating margin as core operating income divided by net revenue. Jabil defines its core EBITDA margin as core operating income before depreciation expense divided by net revenue. 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 earnings per share as core earnings divided by the weighted average number of outstanding 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 operating margin, core EBITDA margin, core earnings, core earnings per share and core return on invested capital to provide investors an additional method for assessing operating income, earnings, 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 operating margin, Jabil’s core earnings and core earnings per share to its GAAP net income and GAAP earnings per share, its calculation of core return on invested capital, its calculation of core EBITDA margin and additional information in the supplemental information.)

Operational Highlights Fiscal Q3 2012 versus Fiscal Q3 2011

  • Core EBITDA margin increased to 6.5 percent.
  • GAAP operating income increased 3 percent.
  • GAAP diluted earnings per share increased 2 percent.
  • Operating margins expanded 10 basis points year-over-year to 3.7 percent.
  • Core operating margins expanded 30 basis points year-over-year to 4.5 percent.
  • Cash flow from operations increased to $186 million.
  • Repurchased $31 million worth of shares and returned $17 million to shareholders via dividends during the quarter.
  • Cost of revenue was impacted by a $10.1 million distressed customer charge related to a specific solar customer. Excluding the charge, gross profit margin and GAAP diluted earnings per share would have been 8 percent and $0.53 for the quarter, respectively.
                       

Quarterly Results

Q3 2012

Q3 2011

Net revenue $4.3 billion $4.2 billion
GAAP operating income $156.6 million $152.5 million
GAAP net income $101.3 million $104.7 million
GAAP diluted earnings per share $0.48 $0.47
GAAP return on invested capital 19% 24%
Core operating income $190.3 million $177.8 million
Core earnings $134.4 million $129.1 million
Core diluted earnings per share $0.64 $0.58
Core return on invested capital 24% 29%

Business Update

“We are delighted with the outstanding performance of our Diversified Manufacturing Services sector overall and we are actively expanding our capacity in order to meet the growing demands of numerous customers and products,” said Jabil CEO Timothy Main. “The ramp-up of new products, combined with specific customer challenges and muted end-markets give us plenty to focus on in the fourth fiscal quarter,” said Jabil CEO Timothy Main. “We believe success in the fourth quarter will set the stage for a brisk fiscal 2013 and a continuation of record setting years.”

       

Fiscal Q4 2012 Guidance Range

Net revenue             $4.1 billion - $4.35 billion
Core operating income $170 million - $200 million
Core earnings per share $0.54 to $0.66 per diluted share
GAAP earnings per share $0.43 to $0.55 per diluted share

(GAAP earnings per share for the fourth quarter of fiscal 2012 are currently estimated to include $0.02 per share for amortization of intangibles and $0.09 per share for stock-based compensation).

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