01—Abstract
Summary
Summary of the 10-K filed October 19, 2017. Cited figures are marked; the original filing is the authoritative source.
Jabil Inc. (JBL) reported fiscal 2017 (year ended August 31, 2017) net revenue of $19.1 billiona, up 3.9% from $18.4 billion in fiscal 2016, driven by new business from existing customers in its consumer lifestyles and wearable technologies, healthcare and mobility businesses.
Net income attributable to Jabil Inc. was $129.1 millionb, down from $254.1 million in fiscal 2016, and diluted EPS was $0.69 versus $1.32. The decline was largely driven by restructuring and related charges of $160.4 million (up from $11.4 million), including $94.3 million of asset write-offs, and an effective tax rate of 50.4% versus 34.1% a year earlier. Management's core (non-GAAP) earnings rose 9.4% to $392.7 million, or $2.11 per diluted share, and core operating income rose 5.8% to $667.0 million.
The company's 91.4% international revenue mix, customer concentration (Apple accounted for 24% of net revenue, and five largest customers for approximately 47%) and a $2.1 billionc receivables-based financing footprint are key risk and structural features. Operating income fell to $410.2 million from $522.8 million. Working capital turned negative at $(243.9) million, with inventories rising to $2.94 billion and accounts payable to $4.26 billion.
Cash and equivalents were $1.19 billiond, against $2.08 billion of total notes payable and long-term debt and capital lease obligations. The board authorized a new $450.0 million share repurchase program in July 2017, and the company disclosed a 2017 Restructuring Plan expected to yield annualized savings of $70.0 million to $90.0 million beginning in fiscal 2019.
Subsequent to year-end, a hurricane caused significant damage to the company's Cayey, Puerto Rico operations in September 2017, and management anticipates asset impairments and business interruption costs in the first half of fiscal 2018, though most costs are expected to be offset by insurance. The company also completed the acquisition of True-Tech Corporation on September 1, 2017 for $95.9 million in cash.
02—Key points
Key Highlights
- Net revenue rose 3.9% to $19.1 billion, led by new business from existing customers in consumer lifestyles and wearables, healthcare and mobility.
- GAAP net income attributable to Jabil Inc. fell to $129.1 million from $254.1 million, with diluted EPS of $0.69 versus $1.32, reflecting $160.4 million of restructuring and related charges.
- Management's non-GAAP core earnings increased 9.4% to $392.7 million ($2.11 diluted core EPS), and core operating income rose 5.8% to $667.0 million.
- The effective tax rate increased to 50.4% from 34.1%, partly offset by a $27.5 million benefit from reversing non-U.S. valuation allowances.
- Customer concentration remains high: Apple accounted for 24% of net revenue, and the five largest customers for approximately 47%; 91.4% of revenue came from international operations.
- Working capital was negative $(243.9) million at August 31, 2017, versus $280.3 million a year earlier, as inventories rose to $2.94 billion and accounts payable to $4.26 billion.
- The board authorized a $450.0 million share repurchase program in July 2017, and the company disclosed a 2017 Restructuring Plan expected to produce $70.0 million to $90.0 million of annualized savings starting in fiscal 2019.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2017, Jabil kept $0.01.
- Revenue$19.06B100.0%
- Cost of revenue−$17.52B91.9%
- Gross profit$1.55B8.1%
- Operating costs−$1.14B6.0%
- Operating income$410.2M2.2%
- Interest, other & tax−$281.1M1.5%
- Net income$129.1M0.7%
Where FY2017 revenue went
$19.06B- Cost of revenue: $17.52B, 92% of revenue
- Net income: $129.1M, 0.7% of revenue
- R&D: $29.7M, 0.2% of revenue
- SG&A: $907.7M, 4.8% of revenue
- Other operating costs: $198.0M, 1.0% of revenue
- Interest, other & tax: $281.1M, 1.5% of revenue
Kept 0.7% as net incomeNet income $129.1M · 0.7%R&D $29.7M · 0.2%Other operating costs $198.0M · 1.0%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2017filed October 19, 2017Financial Statements
FY2017 against FY2016
| Line item | FY2017FY2016 | Change |
|---|---|---|
| Revenue | $19.06B$18.35B | +3.9% |
| Cost of Revenue | $17.52B$16.83B | +4.1% |
| Gross Profit | $1.55B$1.53B | +1.2% |
| R&D Expenses | $29.68M$31.95M | −7.1% |
| SG&A Expenses | $907.70M$924.43M | −1.8% |
| Operating Income | $410.23M$522.83M | −21.5% |
| Interest Expense | $138.07M$136.54M | +1.1% |
| Net Income | $129.09M$254.09M | −49.2% |
| EPS (Basic) | $0.71$1.33 | −46.6% |
| EPS (Diluted) | $0.69$1.32 | −47.7% |
| Shares Outstanding (Basic) | 181.90M190.41M | −4.5% |
| Shares Outstanding (Diluted) | 185.84M192.75M | −3.6% |
05—Questions
Frequently Asked Questions
Why did GAAP earnings decline despite higher revenue?
Operating income fell to $410.2 million from $522.8 million, primarily because restructuring and related charges increased to $160.4 million from $11.4 million, including $94.3 million of asset write-offs. The effective tax rate also rose to 50.4% from 34.1%, reducing net income attributable to Jabil Inc. to $129.1 million from $254.1 million.
What does management's core earnings measure show?
Management reports non-GAAP core earnings of $392.7 million, or $2.11 per diluted share, up 9.4% from the prior year. Core operating income rose 5.8% to $667.0 million. The measure excludes amortization of intangibles, stock-based compensation, restructuring charges and other items, and the filing notes it is not a substitute for GAAP results.
How concentrated is Jabil's customer base?
The company depends on a relatively small number of customers. Apple, Inc. accounted for 24% of net revenue in each of fiscal 2015, 2016 and 2017. The five largest customers accounted for approximately 47% of fiscal 2017 net revenue, while 83 customers accounted for approximately 90%.
What is the outlook for the 2017 Restructuring Plan and the hurricane impact?
The 2017 Restructuring Plan is expected to total approximately $195.0 million in charges, with $154.2 million incurred in fiscal 2017 and the remainder in fiscal 2018, and is expected to yield $70.0 million to $90.0 million of annualized savings from fiscal 2019. After year-end, hurricane damage to the Cayey, Puerto Rico operations is expected to cause asset impairments and business interruption costs in the first half of fiscal 2018, most of which the company expects insurance to offset.
How strong is the balance sheet and liquidity position?
Cash and cash equivalents were $1.19 billion at August 31, 2017, and total notes payable, long-term debt and capital lease obligations were $2.08 billion. The company had $1.9 billion of unused revolving credit capacity and reported compliance with all debt covenants. Working capital was negative $(243.9) million, and approximately $841.1 million of cash held by foreign subsidiaries could not be repatriated without potential tax consequences.
06—Continue