01—Abstract
Summary
Summary of the 10-K filed October 22, 2020. Cited figures are marked; the original filing is the authoritative source.
Jabil Inc. (JBL) reported fiscal 2020 (year ended August 31, 2020) net revenue of $27.3 billiona, up from $25.3 billion in fiscal 2019, but net income attributable to Jabil Inc. fell to $53.9 million from $287.1 million.
Operating income declined to $499.8 millionb from $701.4 million, and diluted EPS was $0.35 versus $1.81 a year earlier. The filing attributes the margin pressure largely to COVID-19, which it says resulted in $141.9 million of direct costs, including incremental and idle labor and personal protection equipment, as well as $156.6 million of restructuring, severance and related charges. The company states that COVID-19 will continue to have a material and adverse impact on its financial position, results of operations and cash flows in the near term.
Management expects annual savings of approximately $40.0 million to $50.0 millionc from its workforce reduction, and reports core earnings (non-GAAP) of $449.6 million, or $2.90 per diluted share. Balance sheet and liquidity were stable. Cash and cash equivalents were $1.39 billion at August 31, 2020, and total assets were $14.40 billion.
Notes payable and long-term debt totaled $2.73 billiond, including a $600.0 million 3.000% Senior Note issued in July 2020 that was used to redeem $400.0 million of 5.625% notes due December 2020. Management stated it was in compliance with its debt covenants. The company repurchased $213.9 million of stock under its 2020 Share Repurchase Program, leaving $386.1 million available.
Backlog was approximately $7.4 billion, compared with $6.2 billion a year earlier. Customer concentration remains significant: the five largest customers accounted for approximately 47% of net revenue, and Apple, Inc. accounted for 20%.
The filing also notes that about $1.0 billion in cloud-business components will shift from a purchase-and-resale model to a consignment model in fiscal 2021, which management expects to lower revenue but raise gross margins and reduce cash used. Net capital expenditures for fiscal 2021 are expected to be approximately $800.0 million.
02—Key points
Key Highlights
- Net revenue rose to $27.27 billion in fiscal 2020 from $25.28 billion, while net income attributable to Jabil Inc. declined to $53.9 million from $287.1 million.
- Diluted EPS was $0.35 versus $1.81 in fiscal 2019; non-GAAP diluted core EPS was $2.90 versus $2.98.
- COVID-19 direct costs totaled $141.9 million, and restructuring, severance and related charges were $156.6 million for the year.
- Operating income fell to $499.8 million from $701.4 million, and gross profit as a percent of net revenue declined to 7.1% from 7.6%.
- Backlog was approximately $7.4 billion at August 31, 2020, up from $6.2 billion a year earlier.
- Cash and cash equivalents were $1.39 billion, and the company issued $600.0 million of 3.000% Senior Notes due 2031 in July 2020.
- Customer concentration remains high: the five largest customers were about 47% of net revenue and Apple, Inc. about 20%.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2020, Jabil kept $0.00.
- Revenue$27.27B100.0%
- Cost of revenue−$25.34B92.9%
- Gross profit$1.93B7.1%
- Operating costs−$1.43B5.2%
- Operating income$500.0M1.8%
- Interest, other & tax−$446.0M1.6%
- Net income$54.0M0.2%
Where FY2020 revenue went
$27.27B- Cost of revenue: $25.34B, 93% of revenue
- Net income: $54.0M, 0.2% of revenue
- R&D: $43.0M, 0.2% of revenue
- SG&A: $1.18B, 4.3% of revenue
- Other operating costs: $213.0M, 0.8% of revenue
- Interest, other & tax: $446.0M, 1.6% of revenue
Kept 0.2% as net incomeNet income $54.0M · 0.2%R&D $43.0M · 0.2%Other operating costs $213.0M · 0.8%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2020filed October 22, 2020Financial Statements
FY2020 against FY2019
| Line item | FY2020FY2019 | Change |
|---|---|---|
| Revenue | $27.27B$25.28B | +7.8% |
| Cost of Revenue | $25.34B$23.37B | +8.4% |
| Gross Profit | $1.93B$1.91B | +0.9% |
| R&D Expenses | $43.00M$43.00M | 0.0% |
| SG&A Expenses | $1.18B$1.11B | +5.8% |
| Operating Income | $500.00M$701.00M | −28.7% |
| Interest Expense | $174.00M$188.00M | −7.4% |
| Net Income | $54.00M$287.00M | −81.2% |
| EPS (Basic) | $0.36$1.85 | −80.5% |
| EPS (Diluted) | $0.35$1.81 | −80.7% |
| Shares Outstanding (Basic) | 151.60M155.60M | −2.6% |
| Shares Outstanding (Diluted) | 155.30M158.60M | −2.1% |
05—Questions
Frequently Asked Questions
Why did net income fall so sharply in fiscal 2020?
Net income attributable to Jabil Inc. fell to $53.9 million from $287.1 million. The filing points to lower operating income ($499.8 million versus $701.4 million), driven by COVID-19 costs of $141.9 million, restructuring, severance and related charges of $156.6 million, a $48.6 million loss on securities, and an effective income tax rate of 78.2%.
How is the company managing its liquidity and debt?
Cash and cash equivalents were $1.39 billion at August 31, 2020. Notes payable and long-term debt totaled $2.73 billion. The company issued $600.0 million of 3.000% Senior Notes due 2031 and used the proceeds to redeem $400.0 million of 5.625% Senior Notes due December 2020. It had $3.7 billion of unused revolving credit capacity and reported compliance with its debt covenants.
What does the company expect for fiscal 2021?
Management expects lower revenue in fiscal 2021 because about $1.0 billion of cloud-business components will move to a consignment model, which the filing says should raise gross margins and reduce cash used. It expects net capital expenditures of approximately $800.0 million and annual savings of approximately $40.0 million from the 2020 Restructuring Plan, and it says COVID-19 will continue to have a negative impact over the next fiscal year.
How concentrated is Jabil's customer base?
The company depends on a relatively small number of customers. In fiscal 2020 the five largest customers accounted for approximately 47% of net revenue, and 73 customers accounted for approximately 90%. Apple, Inc. represented 20% of net revenue, down from 22% in fiscal 2019, and Amazon.com represented 11%.
What returns are being returned to shareholders?
In fiscal 2020 the company paid $50.5 million in dividends and repurchased $213.9 million of common stock under the 2020 Share Repurchase Program. Quarterly dividends were $0.08 per share, and $386.1 million remained available under the repurchase authorization as of August 31, 2020.
06—Continue