Jabil Inc 10-Q for FY2023 Q1

Jabil Inc (JBL)

10-Q 2023-01-06 For: 2022-11-30

Added on April 11, 2026

About this 10-Q

Jabil Inc filed this 10-Q on January 6, 2023, covering the quarter ended November 30, 2022 (FY2023 Q1).

Headline figures

Quarter ended November 30, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $9.64B; up 12.5% from $8.57B a year earlier
Net income: $223M; down 7.5% from net income of $241M a year earlier
Diluted EPS: $1.61; down 1.2% from $1.63 a year earlier

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Delaware						38-1886260
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)


Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 par value per share	JBL	New York Stock Exchange


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐


Part I – Financial Information
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets as of November 30, 2022 and August 31, 2022	1
	Condensed Consolidated Statements of Operations for the three months ended November 30, 2022 and 2021	2
	Condensed Consolidated Statements of Comprehensive Income for the three months ended November 30, 2022 and 2021	3
	Condensed Consolidated Statements of Stockholders’ Equity for the three months ended November 30, 2022 and 2021	4
	Condensed Consolidated Statements of Cash Flows for the three months ended November 30, 2022 and 2021	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25
Item 4.	Controls and Procedures	25

Part II – Other Information
Item 1.	Legal Proceedings	26
Item 1A.	Risk Factors	26
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26
Item 3.	Defaults Upon Senior Securities	26
Item 4.	Mine Safety Disclosures	26
Item 5.	Other Information	26
Item 6.	Exhibits	27
	Signatures	29


	November 30, 2022 (Unaudited)		August 31, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	1,217	$	1,478
Accounts receivable, net of allowance for credit losses	4,498		3,995
Contract assets	1,282		1,196
Inventories, net	6,429		6,128

Prepaid expenses and other current assets	1,252		1,111
Total current assets	14,678		13,908
Property, plant and equipment, net of accumulated depreciation of $5,812 as of November 30, 2022 and $5,624 as of August 31, 2022	3,928		3,954
Operating lease right-of-use asset	524		500
Goodwill	708		704
Intangible assets, net of accumulated amortization of $480 as of November 30, 2022 and $471 as of August 31, 2022	150		158
Deferred income taxes	208		199
Other assets	310		294
Total assets	$	20,506	$	19,717
LIABILITIES AND EQUITY
Current liabilities:
Current installments of notes payable and long-term debt	$	300	$	300
Accounts payable	8,042		8,006

Accrued expenses	5,901		5,272
Current operating lease liabilities	129		119
Total current liabilities	14,372		13,697
Notes payable and long-term debt, less current installments	2,576		2,575
Other liabilities	292		272
Non-current operating lease liabilities	421		417
Income tax liabilities	196		182
Deferred income taxes	119		122
Total liabilities	17,976		17,265
Commitments and contingencies
Equity:
Jabil Inc. stockholders’ equity:
Preferred stock, $0.001 par value, authorized 10,000,000 shares; no shares issued and no shares outstanding	—		—
Common stock, $0.001 par value, authorized 500,000,000 shares; 272,753,393 and 270,891,715 shares issued and 134,231,300 and 135,493,980 shares outstanding as of November 30, 2022 and August 31, 2022, respectively	—		—
Additional paid-in capital	2,696		2,655
Retained earnings	3,849		3,638
Accumulated other comprehensive loss	(22)		(42)
Treasury stock at cost, 138,522,093 and 135,397,735 shares as of November 30, 2022 and August 31, 2022, respectively	(3,994)		(3,800)
Total Jabil Inc. stockholders’ equity	2,529		2,451
Noncontrolling interests	1		1
Total equity	2,530		2,452
Total liabilities and equity	$	20,506	$	19,717


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	Three months ended
		November 30, 2022		November 30, 2021
Net revenue		$	9,635	$	8,567
Cost of revenue		8,892		7,892
Gross profit		743		675
Operating expenses:
Selling, general and administrative		319		308
Research and development		9		9
Amortization of intangibles		8		8
Restructuring, severance and related charges		45		—

Operating income		362		350


Other expense		15		1
Interest income		(13)		(1)
Interest expense		61		33
Income before income tax		299		317
Income tax expense		76		76
Net income		223		241
Net income attributable to noncontrolling interests, net of tax		—		—
Net income attributable to Jabil Inc.		$	223	$	241
Earnings per share attributable to the stockholders of Jabil Inc.:
Basic		$	1.65	$	1.68
Diluted		$	1.61	$	1.63
Weighted average shares outstanding:
Basic		134.8		144.1
Diluted		138.0		147.7


	November 30, 2022		August 31, 2022
Raw materials	$	5,446	$	4,918
Work in process	546		687
Finished goods	517		605
Reserve for excess and obsolete inventory	(80)		(82)
Inventories, net	$	6,429	$	6,128


	Payments due by period
	Total		Less than 1 year		1-3 years		3-5 years		After 5 years
Operating lease obligations(1)	$	57	$	15	$	23	$	14	$	5
Finance lease obligations(1)	$	71	$	45	$	24	$	2	$	—


	Maturity Date	November 30, 2022		August 31, 2022

4.900% Senior Notes	Jul 14, 2023	$	300	$	300
3.950% Senior Notes	Jan 12, 2028	497		497
3.600% Senior Notes	Jan 15, 2030	496		496
3.000% Senior Notes	Jan 15, 2031	592		592
1.700% Senior Notes	Apr 15, 2026	497		497
4.250% Senior Notes	May 15, 2027	494		493
Borrowings under credit facilities(1)	Jan 22, 2024 and Jan 22, 2026	—		—
Borrowings under loans	Jul 31, 2026	—		—
Total notes payable and long-term debt		2,876		2,875
Less current installments of notes payable and long-term debt		300		300
Notes payable and long-term debt, less current installments		$	2,576	$	2,575


	November 30, 2022		August 31, 2022
Inventory deposits	$	1,690	$	1,586
Contract liabilities(1)	1,070		796
Accrued compensation and employee benefits	798		806

Other accrued expenses	2,343		2,084
Accrued expenses	$	5,901	$	5,272


	Foreign Currency Translation Adjustment		Derivative Instruments		Actuarial Gain (Loss)		Prior Service (Cost) Credit		Total
Balance as of August 31, 2022	$	(88)	$	(3)	$	65	$	(16)	$	(42)
Other comprehensive income (loss) before reclassifications	4		(25)		—		—		(21)
Amounts reclassified from AOCI	—		43		(3)		1		41
Other comprehensive income (loss)(1)	4		18		(3)		1		20
Balance as of November 30, 2022	$	(84)	$	15	$	62	$	(15)	$	(22)


		Three months ended
Comprehensive Income Components	Financial Statement Line Item		November 30, 2022		November 30, 2021
Realized losses on derivative instruments:(1)
Foreign exchange contracts	Cost of revenue		$	43	$	1
Interest rate contracts	Interest expense		—		1

Actuarial gain	(2)		(3)		(5)
Prior service cost	(2)		1		1
Total amounts reclassified from AOCI(3)			$	41	$	(2)



	November 30, 2022
Unrecognized stock-based compensation expense—restricted stock units	$	79
Remaining weighted-average period for restricted stock units expense	1.5 years


	Three months ended
	November 30, 2022		November 30, 2021
Cash flows provided by (used in) operating activities:
Net income	$	223	$	241
Depreciation, amortization, and other, net	263		269







Change in operating assets and liabilities, exclusive of net assets acquired	(320)		(556)






Net cash provided by (used in) operating activities	166		(46)
Cash flows used in investing activities:
Acquisition of property, plant and equipment	(314)		(281)
Proceeds and advances from sale of property, plant and equipment	150		208


Other, net	(12)		—
Net cash used in investing activities	(176)		(73)
Cash flows used in financing activities:
Borrowings under debt agreements	1,026		550
Payments toward debt agreements	(1,061)		(574)
Payments to acquire treasury stock	(161)		(127)
Dividends paid to stockholders	(12)		(14)

Treasury stock minimum tax withholding related to vesting of restricted stock	(33)		(43)

Net cash used in financing activities	(241)		(208)
Effect of exchange rate changes on cash and cash equivalents	(10)		(11)
Net decrease in cash and cash equivalents	(261)		(338)
Cash and cash equivalents at beginning of period	1,478		1,567


	Three months ended
		November 30, 2022		November 30, 2021
Trade accounts receivable sold(1)		$	3,528	$	1,968
Cash proceeds received		$	3,518	$	1,967
Pre-tax losses on sale of receivables(2)		$	10	$	1


	Three months ended
		November 30, 2022		November 30, 2021
Trade accounts receivable sold(1)		$	1,066	$	1,032
Cash proceeds received(2)		$	1,058	$	1,030

Pre-tax losses on sale of receivables(3)		$	8	$	2


	Three months ended
		November 30, 2022(1)		November 30, 2021
Employee severance and benefit costs		$	40	$	1
Lease costs		—		(1)
Asset write-off costs		1		—
Other costs		4		—
Total restructuring, severance and related charges(2)		$	45	$	—


	Fair Value Hierarchy		November 30, 2022		August 31, 2022
Assets:
Cash and cash equivalents:
Cash equivalents	Level 1	(1)	$	8	$	14
Prepaid expenses and other current assets:
Short-term investments	Level 1		22		16

Forward foreign exchange contracts:
Derivatives designated as hedging instruments (Note 9)	Level 2	(2)	12		3
Derivatives not designated as hedging instruments (Note 9)	Level 2	(2)	29		13


Other assets:

Forward interest rate swap:
Derivatives designated as hedging instruments (Note 9)	Level 2	(3)	19		13
Liabilities:
Accrued expenses:
Forward foreign exchange contracts:
Derivatives designated as hedging instruments (Note 9)	Level 2	(2)	$	31	$	32
Derivatives not designated as hedging instruments (Note 9)	Level 2	(2)	60		76


	Three months ended
(dollars in millions)		November 30, 2022		November 30, 2021		Change



Net revenue		$	9,635	$	8,567	12.5	%


	Three months ended
(in millions, except for per share data)		November 30, 2022		November 30, 2021
Operating income (U.S. GAAP)		$	362	$	350
Amortization of intangibles		8		8
Stock-based compensation expense and related charges		42		35
Restructuring, severance and related charges(1)		45		—

Net periodic benefit cost(2)		4		7



Adjustments to operating income		99		50
Core operating income (Non-GAAP)		$	461	$	400
Net income attributable to Jabil Inc. (U.S. GAAP)		$	223	$	241
Adjustments to operating income		99		50


Net periodic benefit cost(2)		(4)		(7)
Adjustments for taxes		1		—
Core earnings (Non-GAAP)		$	319	$	284


Diluted earnings per share (U.S. GAAP)		$	1.61	$	1.63


Diluted core earnings per share (Non-GAAP)		$	2.31	$	1.92


Diluted weighted average shares outstanding (U.S. GAAP and Non-GAAP)		138.0		147.7


	Three months ended
(in millions)	November 30, 2022		November 30, 2021
Net cash provided by (used in) operating activities (U.S. GAAP)	$	166	$	(46)
Acquisition of property, plant and equipment (“PP&E”)(1)	(314)		(281)
Proceeds and advances from sale of PP&E(1)	150		208
Adjusted free cash flow (Non-GAAP)	$	2	$	(119)


(in millions)	4.900% Senior Notes		3.950% Senior Notes		3.600% Senior Notes		3.000% Senior Notes		1.700% Senior Notes		4.250% Senior Notes		Borrowings under revolving credit facilities(1)		Borrowings under loans		Total notes payable and credit facilities
Balance as of August 31, 2022	$	300	$	497	$	496	$	592	$	497	$	493	$	—	$	—	$	2,875
Borrowings	—		—		—		—		—		—		1,026		—		1,026
Payments	—		—		—		—		—		—		(1,026)		—		(1,026)
Other	—		—		—		—		—		1		—		—		1
Balance as of November 30, 2022	$	300	$	497	$	496	$	592	$	497	$	494	$	—	$	—	$	2,876
Maturity Date	Jul 14, 2023		Jan 12, 2028		Jan 15, 2030		Jan 15, 2031		Apr 15, 2026		May 15, 2027		Jan 22, 2024 and Jan 22, 2026		Jul 31, 2026
Original Facility/ Maximum Capacity(1)	$300 million		$500 million		$500 million		$600 million		$500 million		$500 million		$3.8 billion(1)		$2 million


Period	Total Number of Shares Purchased(1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Programs(2)(3)	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Programs (in millions)(2)(3)
September 1, 2022 - September 30, 2022	866,599	$	58.66	866,599	$	1,212
October 1, 2022 - October 31, 2022	1,083,125	$	60.33	584,631	$	1,178
November 1, 2022 - November 30, 2022	1,174,634	$	66.21	1,149,721	$	1,102
Total	3,124,358	$	62.08	2,600,951


	JABIL INC. Registrant

Date: January 6, 2023	By:	/s/ MARK T. MONDELLO
		Mark T. Mondello Chief Executive Officer

Date: January 6, 2023	By:	/s/ MICHAEL DASTOOR
		Michael Dastoor Chief Financial Officer


Cumulative EPS for Three Fiscal Years Beginning September 1, 2022 and Ending August 31, 2025	Percentage of Shares Vested
Below [**Redacted]		0	%
[**Redacted]		20	%
[**Redacted]		100	%
[**Redacted]		150	%


Full Years of Continuous Service
20 Years	25 Years	30 or More Years
2 years	3 years	Full vesting period


Age	Full Years of Continuous Service
	5 Years	10 Years	15 Years	20 or More Years
50 – 54	None	None	1 year	2 years
55 – 57	None	None	2 years	Full vesting period
58 – 61	None	2 years	3 years	Full vesting period
62 or Older	Full vesting period	Full vesting period	Full vesting period	Full vesting period


Company TSR relative to the TSR of the companies in the Index		Percentage of Units/Shares Vested
25th percentile or below		[**Redacted]
Median		[**Redacted]
75th percentile and above		[**Redacted]


1.			I have reviewed this quarterly report on Form 10-Q of Jabil Inc.;


2.			Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.			Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.			The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a – 15 (e) and 15d – 15 (e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a – 15(f) and 15d – 15(f)) for the registrant and have:


			a)			Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


			b)			Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


			c)			Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


			d)			Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and