01—Abstract
Summary
Summary of the 10-K filed October 20, 2016. Cited figures are marked; the original filing is the authoritative source.
Jabil Circuit, Inc. (now Jabil Inc.) reported fiscal 2016 (year ended August 31, 2016) net revenue of $18.35 billiona, up 2.5% from $17.90 billion in fiscal 2015, driven mainly by higher mobility business revenue in the first half of the year and new telecommunications business with existing customers.
Gross profit was roughly flat at $1.53 billionb (8.3% of net revenue versus 8.4%), while operating income fell to $522.8 million from $555.4 million. Net income attributable to Jabil Circuit, Inc. was $254.1 million, or $1.32 per diluted share, compared with $284.0 million, or $1.45 per diluted share, in fiscal 2015. Core operating income, a non-U.S. GAAP measure, decreased 5.9% to $630.3 million.
The company reported that its DMS segment was affected by weaker-than-anticipated product demand in the second through fourth fiscal quarters, and that a single customer, Apple, Inc., accounted for 24% of net revenue. Cash flow from operations was $916.2 millionc, and capital expenditures were $924.2 million. Cash and cash equivalents stood at $912.1 million against total notes payable, long-term debt and capital lease obligations of $2.12 billion.
The board authorized a $400.0 milliond share repurchase program in June 2016, of which $124.6 million had been used through October 6, 2016. Subsequent to year end, on September 15, 2016, the board approved a 2017 Restructuring Plan expected to incur approximately $195.0 million in pre-tax restructuring and related costs over fiscal 2017 and 2018, with net cash expenditures of approximately $50.0 million. The company also disclosed an IRS field examination for fiscal years 2009 through 2011 with proposed adjustments that would imply a tax payment of approximately $28.6 million if the IRS prevails.
02—Key points
Key Highlights
- Net revenue rose 2.5% to $18.35 billion in fiscal 2016, with DMS revenue up 3% and EMS revenue up 2%.
- Net income attributable to Jabil Circuit, Inc. declined to $254.1 million ($1.32 diluted EPS) from $284.0 million ($1.45 diluted EPS) in fiscal 2015.
- Operating income decreased to $522.8 million from $555.4 million, while gross margin held near 8.3% of net revenue.
- Apple, Inc. accounted for 24% of fiscal 2016 net revenue, and the five largest customers accounted for approximately 49%.
- Operating cash flow was $916.2 million, with capital expenditures of $924.2 million and cash and equivalents of $912.1 million at August 31, 2016.
- A $400.0 million share repurchase program was authorized in June 2016, and a 2017 Restructuring Plan approved September 15, 2016 is expected to cost approximately $195.0 million.
- Total backlog was approximately $4.5 billion at August 31, 2016, down from $5.0 billion a year earlier.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2016, Jabil kept $0.01.
- Revenue$18.35B100.0%
- Cost of revenue−$16.83B91.7%
- Gross profit$1.53B8.3%
- Operating costs−$1.00B5.5%
- Operating income$522.8M2.8%
- Interest, other & tax−$268.7M1.5%
- Net income$254.1M1.4%
Where FY2016 revenue went
$18.35B- Cost of revenue: $16.83B, 92% of revenue
- Net income: $254.1M, 1.4% of revenue
- R&D: $32.0M, 0.2% of revenue
- SG&A: $924.4M, 5.0% of revenue
- Interest, other & tax: $268.7M, 1.5% of revenue
Kept 1.4% as net incomeNet income $254.1M · 1.4%R&D $32.0M · 0.2%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2016filed October 20, 2016Financial Statements
FY2016 against FY2015
| Line item | FY2016FY2015 | Change |
|---|---|---|
| Revenue | $18.35B$17.90B | +2.5% |
| Cost of Revenue | $16.83B$16.40B | +2.6% |
| Gross Profit | $1.53B$1.50B | +1.6% |
| R&D Expenses | $31.95M$27.64M | +15.6% |
| SG&A Expenses | $924.43M$862.65M | +7.2% |
| Operating Income | $522.83M$555.41M | −5.9% |
| Interest Expense | $136.54M$128.09M | +6.6% |
| Net Income | $254.09M$284.02M | −10.5% |
| EPS (Basic) | $1.33$1.47 | −9.5% |
| EPS (Diluted) | $1.32$1.45 | −9.0% |
| Shares Outstanding (Basic) | 190.41M194K | +98208.6% |
| Shares Outstanding (Diluted) | 192.75M196K | +98239.3% |
05—Questions
Frequently Asked Questions
How did Jabil perform financially in fiscal 2016?
Net revenue grew 2.5% to $18.35 billion, but operating income fell to $522.8 million from $555.4 million and net income attributable to Jabil Circuit, Inc. fell to $254.1 million from $284.0 million. Diluted EPS was $1.32 compared with $1.45 in fiscal 2015. The company attributed the revenue increase mainly to mobility business growth in the first half of the year and telecommunications business growth from existing customers.
How concentrated is Jabil's customer base?
Concentration is significant. Apple, Inc. accounted for 24% of net revenue in fiscal 2016, and the five largest customers together accounted for approximately 49%. The filing states that 85 customers accounted for approximately 90% of net revenue. The company notes that it depends on a relatively small number of customers and that reduced purchases by any major customer could materially affect results.
What restructuring actions did Jabil announce after fiscal year-end?
On September 15, 2016, the Board approved the 2017 Restructuring Plan to realign global capacity and administrative infrastructure, including headcount reductions in selling, general and administrative functions and capacity realignment in higher cost locations. The company expects approximately $195.0 million in pre-tax restructuring and related costs over fiscal 2017 and 2018, with net cash expenditures of approximately $50.0 million.
What is Jabil's liquidity and debt position?
At August 31, 2016, the company had cash and cash equivalents of $912.1 million, total notes payable, long-term debt and capital lease obligations of $2.1 billion, and $1.9 billion of available liquidity under its revolving credit facilities. Up to $289.9 million was available under its trade accounts receivable securitization and uncommitted sale programs. The company stated it was in compliance with all debt covenants at year end.
What is the status of the IRS tax examination?
The IRS completed a field examination of fiscal years 2009 through 2011 and issued a Revenue Agent's Report on May 27, 2015, updated June 22, 2016, proposing adjustments primarily related to U.S. taxation of intercompany transactions. If the IRS prevails, the income tax payment due would be approximately $28.6 million after utilization of loss carryforwards. Jabil disagrees with the proposed adjustments and intends to contest them, and management believes the resolution will not have a material adverse effect on its financial position, results of operations or cash flows.
06—Continue