Jabil Inc 10-Q for FY2020 Q1

Jabil Inc (JBL)

10-Q 2020-01-03 For: 2019-11-30

Added on April 11, 2026

About this 10-Q

Jabil Inc filed this 10-Q on January 3, 2020, covering the quarter ended November 30, 2019 (FY2020 Q1).

Headline figures

Quarter ended November 30, 2019, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $7.51B; up 15.4% from $6.51B a year earlier
Net income: $40.42M; down 67.3% from net income of $123.6M a year earlier
Diluted EPS: $0.26; down 65.8% from $0.76 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, 2019 and August 31, 2019	1
	Condensed Consolidated Statements of Operations for the three months ended November 30, 2019 and 2018	3
	Condensed Consolidated Statements of Comprehensive Income for the three months ended November 30, 2019 and 2018	4
	Condensed Consolidated Statements of Stockholders’ Equity for the three months ended November 30, 2019 and 2018	5
	Condensed Consolidated Statements of Cash Flows for the three months ended November 30, 2019 and 2018	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	36
Item 4.	Controls and Procedures	36

Part II – Other Information
Item 1.	Legal Proceedings	37
Item 1A.	Risk Factors	37
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37
Item 3.	Defaults Upon Senior Securities	37
Item 4.	Mine Safety Disclosures	37
Item 5.	Other Information	37
Item 6.	Exhibits	38
	Signatures	40



	November 30, 2019 (Unaudited)			August 31, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	719,842		$	1,163,343
Accounts receivable, net of allowance for doubtful accounts of $30,343 as of November 30, 2019 and $17,221 as of August 31, 2019	3,596,145			2,745,226
Contract assets	1,060,580			911,940
Inventories, net	3,342,198			3,023,003
Prepaid expenses and other current assets	533,466			501,573
Total current assets	9,252,231			8,345,085
Property, plant and equipment, net of accumulated depreciation of $4,221,124 as of November 30, 2019 and $4,110,496 as of August 31, 2019	3,450,211			3,333,750
Operating lease right-of-use asset	405,895			—
Goodwill	678,391			622,255
Intangible assets, net of accumulated amortization of $353,988 as of November 30, 2019 and $337,841 as of August 31, 2019	240,849			256,853
Deferred income taxes	203,945			198,827
Other assets	213,441			213,705
Total assets	$	14,444,963		$	12,970,475
LIABILITIES AND EQUITY
Current liabilities:
Current installments of notes payable and long-term debt	$	375,180		$	375,181
Accounts payable	5,920,277			5,166,780
Accrued expenses	3,167,951			2,990,144
Current operating lease liabilities	98,640			—
Total current liabilities	9,562,048			8,532,105
Notes payable and long-term debt, less current installments	2,115,715			2,121,284
Other liabilities	319,369			163,821
Non-current operating lease liabilities	337,981			—
Income tax liabilities	143,187			136,689
Deferred income taxes	117,370			115,818
Total liabilities	12,595,670			11,069,717
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; 262,337,466 and 260,406,796 shares issued and 152,300,356 and 153,520,380 shares outstanding as of November 30, 2019 and August 31, 2019, respectively	262			260
Additional paid-in capital	2,332,307			2,304,552
Retained earnings	2,064,758			2,037,037
Accumulated other comprehensive loss	(74,322		)	(82,794		)
Treasury stock at cost, 110,037,110 and 106,886,416 shares as of November 30, 2019 and August 31, 2019, respectively	(2,487,319		)	(2,371,612		)
Total Jabil Inc. stockholders’ equity	1,835,686			1,887,443
Noncontrolling interests	13,607			13,315
Total equity	1,849,293			1,900,758
Total liabilities and equity	$	14,444,963		$	12,970,475



☒	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, 2019			November 30, 2018
Net revenue	$	7,505,698		$	6,506,275
Cost of revenue	6,951,859			5,986,625
Gross profit	553,839			519,650
Operating expenses:
Selling, general and administrative	328,899			278,126
Research and development	10,770			11,143
Amortization of intangibles	16,140			7,646
Restructuring and related charges	45,251			6,025
Operating income	152,779			216,710
Other expense	11,172			13,550
Interest income	(5,944		)	(4,379		)
Interest expense	44,911			42,652
Income before income tax	102,640			164,887
Income tax expense	61,926			40,813
Net income	40,714			124,074
Net income attributable to noncontrolling interests, net of tax	292			474
Net income attributable to Jabil Inc.	$	40,422		$	123,600
Earnings per share attributable to the stockholders of Jabil Inc.:
Basic	$	0.26		$	0.77
Diluted	$	0.26		$	0.76
Weighted average shares outstanding:
Basic	153,100			161,557
Diluted	156,462			163,670



	Maximum Amount of Net Cash Proceeds (in millions)⁽¹⁾		Expiration Date
North American	$	390.0	November 22, 2021
Foreign	$	400.0	September 30, 2021



	Three months ended
	November 30, 2019		November 30, 2018⁽³⁾
Trade accounts receivable sold	$	1,162	$	750
Cash proceeds received⁽¹⁾	$	1,156	$	744
Pre-tax losses on sale of receivables⁽²⁾	$	6	$	6


⁽¹⁾	The amounts primarily represent proceeds from collections reinvested in revolving-period transfers.


⁽²⁾	Recorded to other expense within the Condensed Consolidated Statements of Operations.


⁽³⁾	Excludes $650.3 million of trade accounts receivable sold, $488.1 million of cash and $13.9 million of net cash received prior to the amendment of the foreign asset-backed securitization program and under the previous North American asset-backed securitization program which occurred during the first quarter of fiscal year 2019.



Program⁽¹⁰⁾	Maximum Amount (in millions)⁽¹⁾			Type of Facility	Expiration Date
A	$	800.0		Uncommitted	August 31, 2022⁽²⁾
B	$	150.0		Uncommitted	November 30, 2020⁽³⁾
C	800.0		CNY	Uncommitted	June 30, 2020
D	$	150.0		Uncommitted	May 4, 2023⁽⁴⁾
E	$	50.0		Uncommitted	August 25, 2020
F	$	150.0		Uncommitted	January 25, 2020⁽⁵⁾
G	$	50.0		Uncommitted	February 23, 2023⁽²⁾
H	$	100.0		Uncommitted	August 10, 2020⁽⁶⁾
I	$	100.0		Uncommitted	July 21, 2020⁽⁷⁾
J	$	740.0		Uncommitted	February 28, 2020⁽⁸⁾
K	$	110.0		Uncommitted	April 11, 2020⁽⁹⁾


⁽²⁾	Any party may elect to terminate the agreement upon 15 days prior notice.



	Three months ended
	November 30, 2019			November 30, 2018
Total stockholders' equity, beginning balances	$	1,900,758		$	1,963,380
Common stock:
Beginning balances	260			257
Vesting of restricted stock	2			2
Ending balances	262			259
Additional paid-in capital:
Beginning balances	2,304,552			2,218,673
Shares issued under employee stock purchase plan	—			8
Vesting of restricted stock	(2		)	(2		)
Recognition of stock-based compensation	27,757			17,148
Ending balances	2,332,307			2,235,827
Retained earnings:
Beginning balances	2,037,037			1,760,097
Declared dividends	(12,701		)	(13,101		)
Cumulative effect adjustment for adoption of new accounting standards	—			40,855
Net income attributable to Jabil Inc.	40,422			123,600
Ending balances	2,064,758			1,911,451
Accumulated other comprehensive loss:
Beginning balances	(82,794		)	(19,399		)
Other comprehensive income (loss)	8,472			(12,549		)
Ending balances	(74,322		)	(31,948		)
Treasury stock:
Beginning balances	(2,371,612		)	(2,009,371		)
Purchases of treasury stock under employee stock plans	(19,317		)	(9,715		)
Treasury shares purchased	(96,390		)	(204,587		)
Ending balances	(2,487,319		)	(2,223,673		)
Noncontrolling interests:
Beginning balances	13,315			13,123
Net income attributable to noncontrolling interests	292			474
Ending balances	13,607			13,597
Total stockholders' equity, ending balances	$	1,849,293		$	1,905,513



	Three months ended
	November 30, 2019			November 30, 2018
Cash flows provided by (used in) operating activities:
Net income	$	40,714		$	124,074
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	202,859			188,836
Restructuring and related charges	18,347			184
Recognition of stock-based compensation expense and related charges	30,223			17,249
Deferred income taxes	(6,645		)	4,371
Provision for allowance for doubtful accounts	10,413			856
Other, net	1,179			43,426
Change in operating assets and liabilities, exclusive of net assets acquired:
Accounts receivable	(863,210		)	(600,630		)
Contract assets	(68,322		)	(761,910		)
Inventories	(286,775		)	242,506
Prepaid expenses and other current assets	(31,413		)	(103,040		)
Other assets	(8,162		)	(2,528		)
Accounts payable, accrued expenses and other liabilities	981,736			754,913
Net cash provided by (used in) operating activities	20,944			(91,693		)
Cash flows used in investing activities:
Acquisition of property, plant and equipment	(230,393		)	(231,513		)
Proceeds and advances from sale of property, plant and equipment	23,209			10,227
Cash paid for business and intangible asset acquisitions, net of cash	(116,767		)	—
Cash receipts on sold receivables	—			96,846
Other, net	(1,779		)	(6,812		)
Net cash used in investing activities	(325,730		)	(131,252		)
Cash flows used in financing activities:
Borrowings under debt agreements	1,779,801			3,071,559
Payments toward debt agreements	(1,787,243		)	(3,078,197		)
Payments to acquire treasury stock	(96,390		)	(204,587		)
Dividends paid to stockholders	(13,731		)	(14,528		)
Treasury stock minimum tax withholding related to vesting of restricted stock	(19,317		)	(9,715		)
Other, net	—			8
Net cash used in financing activities	(136,880		)	(235,460		)
Effect of exchange rate changes on cash and cash equivalents	(1,835		)	4,865
Net decrease in cash and cash equivalents	(443,501		)	(453,540		)
Cash and cash equivalents at beginning of period	1,163,343			1,257,949
Cash and cash equivalents at end of period	$	719,842		$	804,409


⁽¹⁾	Maximum amount available at any one time.


⁽¹⁾	Maximum amount available at any one time.


⁽³⁾	The program will automatically extend for one year at each expiration date unless either party provides 10 days notice of termination.


⁽⁴⁾	Any party may elect to terminate the agreement upon 30 days prior notice.


⁽⁵⁾	The program will be automatically extended through January 25, 2023 unless either party provides 30 days notice of termination.


⁽⁶⁾	The program will be automatically extended through August 10, 2023 unless either party provides 30 days notice of termination.


⁽⁷⁾	The program will be automatically extended through August 21, 2023 unless either party provides 30 days notice of termination.


⁽⁸⁾	As of the date of this filing, program J is no longer being utilized as it has been replaced with a new $500.0 million program (see footnote 10 below for details).


⁽⁹⁾	The program will be automatically extended each year through April 11, 2025 unless either party provides 30 days notice of termination.


⁽¹⁰⁾	The Company entered into two new trade accounts receivable sale programs on December 5, 2019 with maximum amounts of $500.0 million and CHF 100.0 million, respectively.



	Three months ended
	November 30, 2019		November 30, 2018
Trade accounts receivable sold	$	1,962	$	1,834
Cash proceeds received	$	1,957	$	1,826
Pre-tax losses on sale of receivables⁽¹⁾	$	5	$	8



	November 30, 2019			August 31, 2019
Raw materials	$	2,566,716		$	2,310,081
Work in process	418,750			468,217
Finished goods	447,983			314,258
Reserve for excess and obsolete inventory	(91,251		)	(69,553		)
Inventories, net	$	3,342,198		$	3,023,003



	Financial Statement Line Item	November 30, 2019
Assets
Operating lease assets ⁽¹⁾	Operating lease right-of-use assets	$	405,895
Finance lease assets ⁽²⁾	Property, plant and equipment, net	152,846
Total lease assets		$	558,741
Liabilities
Current
Operating lease liabilities	Current operating lease liabilities	$	98,640
Finance lease liabilities	Accrued expenses	6,635
Non-current
Operating lease liabilities	Non-current operating lease liabilities	337,981
Finance lease liabilities	Other liabilities	154,801
Total lease liabilities		$	598,057



	November 30, 2019
Operating lease cost	$	27,735
Finance lease cost
Amortization of leased assets	1,136
Interest on lease liabilities	1,189
Other	2,691
Net lease cost⁽¹⁾	$	32,751


⁽¹⁾	Lease costs are primarily recognized in cost of revenue.



	November 30, 2019
	Weighted-average remaining lease term	Weighted-average discount rate
Operating leases	5.7 years	3.25	%
Finance leases	6.5 years	4.35	%



	November 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases⁽¹⁾	$	26,864
Operating cash flows from finance leases⁽¹⁾	1,189
Financing activities from finance leases⁽²⁾	1,120
Non-cash right-of-use assets obtained in exchange for new lease liabilities:
Operating leases	17,901
Finance leases	111,591


⁽¹⁾	Included in accounts payable, accrued expenses and other liabilities in Operating Activities of the Company's Condensed Consolidated Statements of Cash Flows.


⁽²⁾	Included in payments toward debt agreements in Financing Activities of the Company's Condensed Consolidated Statements of Cash Flows.



Twelve months ended November 30,	Operating Leases⁽¹⁾			Finance Leases			Total
2020	$	110,223		$	11,635		$	121,858
2021	93,597			11,676			105,273
2022	75,609			12,140			87,749
2023	56,764			11,694			68,458
2024	46,447			11,829			58,276
Thereafter	103,899			132,235			236,134
Total minimum lease payments	$	486,539		$	191,209		$	677,748
Less: Interest	(49,918		)	(29,773		)	(79,691		)
Present value of lease liabilities	$	436,621		$	161,436		$	598,057


⁽¹⁾	Excludes $18.4 million of payments related to leases signed but not yet commenced. Additionally, certain leases signed but not yet commenced contain residual value guarantees and purchase options not deemed probable.



Fiscal Year Ending August 31,	Amount
2020	$	118,312
2021	102,915
2022	84,729
2023	63,206
2024	51,091
Thereafter	182,932
Total minimum lease payments	$	603,185