Jabil Inc 10-Q for FY2020 Q3

Jabil Inc (JBL)

10-Q 2020-06-29 For: 2020-05-31

Added on April 11, 2026

About this 10-Q

Jabil Inc filed this 10-Q on June 29, 2020, covering the quarter ended May 31, 2020 (FY2020 Q3).

Headline figures

Quarter ended May 31, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $6.34B; up 3.3% from $6.14B a year earlier
Net loss: $50.96M; compared with net income of $43.48M a year earlier
Diluted EPS: -$0.34; compared with $0.28 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 May 31, 2020 and August 31, 2019	1
	Condensed Consolidated Statements of Operations for the three months and nine months ended May 31, 2020 and 2019	3
	Condensed Consolidated Statements of Comprehensive Income for the three months and nine months ended May 31, 2020 and 2019	4
	Condensed Consolidated Statements of Stockholders’ Equity for the three months and nine months ended May 31, 2020 and 2019	5
	Condensed Consolidated Statements of Cash Flows for the nine months ended May 31, 2020 and 2019	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	43
Item 4.	Controls and Procedures	43

Part II – Other Information
Item 1.	Legal Proceedings	44
Item 1A.	Risk Factors	44
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	44
Item 3.	Defaults Upon Senior Securities	45
Item 4.	Mine Safety Disclosures	45
Item 5.	Other Information	45
Item 6.	Exhibits	46
	Signatures	48



	May 31, 2020 (Unaudited)			August 31, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	763,337		$	1,163,343
Accounts receivable, net of allowance for doubtful accounts of $32,239 as of May 31, 2020 and $17,221 as of August 31, 2019	2,579,803			2,745,226
Contract assets	1,086,035			911,940
Inventories, net	3,283,701			3,023,003
Prepaid expenses and other current assets	553,416			501,573
Total current assets	8,266,292			8,345,085
Property, plant and equipment, net of accumulated depreciation of $4,452,228 as of May 31, 2020 and $4,110,496 as of August 31, 2019	3,485,669			3,333,750
Operating lease right-of-use asset	377,540			—
Goodwill	700,735			622,255
Intangible assets, net of accumulated amortization of $380,850 as of May 31, 2020 and $337,841 as of August 31, 2019	221,510			256,853
Deferred income taxes	173,008			198,827
Other assets	166,122			213,705
Total assets	$	13,390,876		$	12,970,475
LIABILITIES AND EQUITY
Current liabilities:
Current installments of notes payable and long-term debt	$	399,737		$	375,181
Accounts payable	5,019,286			5,166,780
Accrued expenses	3,246,977			2,990,144
Current operating lease liabilities	102,284			—
Total current liabilities	8,768,284			8,532,105
Notes payable and long-term debt, less current installments	2,087,593			2,121,284
Other liabilities	321,065			163,821
Non-current operating lease liabilities	311,939			—
Income tax liabilities	143,368			136,689
Deferred income taxes	113,323			115,818
Total liabilities	11,745,572			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; 263,312,358 and 260,406,796 shares issued and 150,574,036 and 153,520,380 shares outstanding as of May 31, 2020 and August 31, 2019, respectively	263			260
Additional paid-in capital	2,380,094			2,304,552
Retained earnings	1,985,546			2,037,037
Accumulated other comprehensive loss	(149,403		)	(82,794		)
Treasury stock at cost, 112,738,322 and 106,886,416 shares as of May 31, 2020 and August 31, 2019, respectively	(2,584,198		)	(2,371,612		)
Total Jabil Inc. stockholders’ equity	1,632,302			1,887,443
Noncontrolling interests	13,002			13,315
Total equity	1,645,304			1,900,758
Total liabilities and equity	$	13,390,876		$	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						Nine months ended
	May 31, 2020			May 31, 2019			May 31, 2020			May 31, 2019
Net revenue	$	6,335,642		$	6,135,602		$	19,966,423		$	18,708,867
Cost of revenue	5,879,494			5,691,803			18,526,311			17,290,544
Gross profit	456,148			443,799			1,440,112			1,418,323
Operating expenses:
Selling, general and administrative	302,849			274,482			916,772			834,750
Research and development	11,587			11,449			33,647			32,747
Amortization of intangibles	13,178			7,610			42,895			23,033
Restructuring, severance and related charges	69,150			9,340			144,005			16,182
Operating income	59,384			140,918			302,793			511,611
Impairment on securities	—			—			12,205			—
Other expense	5,602			14,084			25,275			39,391
Interest income	(1,864		)	(6,758		)	(13,144		)	(15,897		)
Interest expense	41,873			50,514			132,967			139,326
Income before income tax	13,773			83,078			145,490			348,791
Income tax expense	64,036			39,046			157,620			113,078
Net (loss) income	(50,263		)	44,032			(12,130		)	235,713
Net income attributable to noncontrolling interests, net of tax	695			550			1,689			1,277
Net (loss) income attributable to Jabil Inc.	$	(50,958	)	$	43,482		$	(13,819	)	$	234,436
(Loss) earnings per share attributable to the stockholders of Jabil Inc.:
Basic	$	(0.34	)	$	0.28		$	(0.09	)	$	1.50
Diluted	$	(0.34	)	$	0.28		$	(0.09	)	$	1.47
Weighted average shares outstanding:
Basic	150,723			152,889			151,956			156,384
Diluted	150,723			155,678			151,956			159,036



Program	Maximum Amount (in millions)⁽¹⁾			Type of Facility	Expiration Date
A	$	600.0		Uncommitted	December 5, 2020⁽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, 2021⁽⁵⁾
G	$	50.0		Uncommitted	February 23, 2023⁽⁶⁾
H	$	100.0		Uncommitted	August 10, 2020⁽⁷⁾
I	$	100.0		Uncommitted	July 21, 2020⁽⁸⁾
J	$	650.0		Uncommitted	December 4, 2020⁽⁹⁾
K	$	135.0		Uncommitted	April 11, 2021⁽¹⁰⁾
L	100.0		CHF	Uncommitted	December 5, 2020⁽²⁾


⁽¹⁾	Maximum amount of trade accounts receivable that may be sold under a facility at any one time.


⁽²⁾	The program will be automatically extended each year through December 5, 2025 unless either party provides 30 days’ notice of termination.


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



	Three months ended						Nine months ended
	May 31, 2020			May 31, 2019			May 31, 2020			May 31, 2019
Total stockholders' equity, beginning balances	$	1,759,140		$	1,858,852		$	1,900,758		$	1,963,380
Common stock:
Beginning balances	263			260			260			257
Shares issued under employee stock purchase plan	—			—			1			1
Vesting of restricted stock	—			—			2			2
Ending balances	263			260			263			260
Additional paid-in capital:
Beginning balances	2,363,839			2,264,966			2,304,552			2,218,673
Shares issued under employee stock purchase plan	—			(5		)	16,179			14,582
Vesting of restricted stock	—			—			(2		)	(2		)
Recognition of stock-based compensation	16,255			14,448			59,365			46,156
Ending balances	2,380,094			2,279,409			2,380,094			2,279,409
Retained earnings:
Beginning balances	2,048,954			1,966,100			2,037,037			1,760,097
Declared dividends	(12,450		)	(12,681		)	(37,672		)	(38,487		)
Cumulative effect adjustment for adoption of new accounting standards	—			—			—			40,855
Net (loss) income attributable to Jabil Inc.	(50,958		)	43,482			(13,819		)	234,436
Ending balances	1,985,546			1,996,901			1,985,546			1,996,901
Accumulated other comprehensive loss:
Beginning balances	(102,943		)	(13,253		)	(82,794		)	(19,399		)
Other comprehensive loss	(46,460		)	(36,752		)	(66,609		)	(30,606		)
Ending balances	(149,403		)	(50,005		)	(149,403		)	(50,005		)
Treasury stock:
Beginning balances	(2,563,282		)	(2,370,898		)	(2,371,612		)	(2,009,371		)
Purchases of treasury stock under employee stock plans	(75		)	(694		)	(23,086		)	(11,898		)
Treasury shares purchased	(20,841		)	—			(189,500		)	(350,323		)
Ending balances	(2,584,198		)	(2,371,592		)	(2,584,198		)	(2,371,592		)
Noncontrolling interests:
Beginning balances	12,309			11,677			13,315			13,123
Net income attributable to noncontrolling interests	695			550			1,689			1,277
Acquisition of noncontrolling interests	—			—			—			1,112
Disposition of noncontrolling interests	—			—			—			(1,785		)
Declared dividends to noncontrolling interests	(2		)	—			(2,002		)	(1,500		)
Ending balances	13,002			12,227			13,002			12,227
Total stockholders' equity, ending balances	$	1,645,304		$	1,867,200		$	1,645,304		$	1,867,200



	Nine months ended
	May 31, 2020			May 31, 2019
Cash flows provided by operating activities:
Net (loss) income	$	(12,130	)	$	235,713
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	600,692			574,922
Restructuring and related charges	39,292			(3,555		)
Recognition of stock-based compensation expense and related charges	62,214			47,452
Deferred income taxes	18,279			14,008
Provision for allowance for doubtful accounts	14,636			10,734
Other, net	20,979			34,204
Change in operating assets and liabilities, exclusive of net assets acquired:
Accounts receivable	142,470			(528,597		)
Contract assets	(92,574		)	(865,408		)
Inventories	(229,398		)	349,252
Prepaid expenses and other current assets	(44,331		)	6,910
Other assets	(9,089		)	(16,700		)
Accounts payable, accrued expenses and other liabilities	59,686			253,721
Net cash provided by operating activities	570,726			112,656
Cash flows used in investing activities:
Acquisition of property, plant and equipment	(648,945		)	(789,226		)
Proceeds and advances from sale of property, plant and equipment	93,679			167,653
Cash paid for business and intangible asset acquisitions, net of cash	(145,595		)	(153,239		)
Cash receipts on sold receivables	—			96,846
Other, net	21,398			(26,129		)
Net cash used in investing activities	(679,463		)	(704,095		)
Cash flows (used in) provided by financing activities:
Borrowings under debt agreements	9,521,853			9,482,468
Payments toward debt agreements	(9,533,522		)	(9,073,684		)
Payments to acquire treasury stock	(189,500		)	(350,323		)
Dividends paid to stockholders	(38,411		)	(39,736		)
Net proceeds from exercise of stock options and issuance of common stock under employee stock purchase plan	16,179			14,582
Treasury stock minimum tax withholding related to vesting of restricted stock	(23,085		)	(11,898		)
Other, net	(13,106		)	(1,500		)
Net cash (used in) provided by financing activities	(259,592		)	19,909
Effect of exchange rate changes on cash and cash equivalents	(31,677		)	7,667
Net decrease in cash and cash equivalents	(400,006		)	(563,863		)
Cash and cash equivalents at beginning of period	1,163,343			1,257,949



	May 31, 2020			August 31, 2019
Raw materials	$	2,524,454		$	2,310,081
Work in process	412,834			468,217
Finished goods	425,894			314,258
Reserve for excess and obsolete inventory	(79,481		)	(69,553		)
Inventories, net	$	3,283,701		$	3,023,003


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


⁽⁷⁾	The program will be automatically extended through August 10, 2023 unless either party provides 30 days’ notice of termination.


⁽⁸⁾	The program will be automatically extended through August 21, 2023 unless either party provides 30 days’ notice of termination.


⁽⁹⁾	The program will be automatically extended each year through December 5, 2024 unless either party provides 30 days’ notice of termination.


⁽¹⁰⁾	The program will be automatically extended each year through April 11, 2025 unless either party provides 30 days’ notice of termination.


⁽¹⁾	Recorded to other expense within the Condensed Consolidated Statement of Operations.



	Financial Statement Line Item	May 31, 2020
Assets
Operating lease assets ⁽¹⁾	Operating lease right-of-use assets	$	377,540
Finance lease assets ⁽²⁾	Property, plant and equipment, net	149,956
Total lease assets		$	527,496
Liabilities
Current
Operating lease liabilities	Current operating lease liabilities	$	102,284
Finance lease liabilities	Accrued expenses	7,047
Non-current
Operating lease liabilities	Non-current operating lease liabilities	311,939
Finance lease liabilities	Other liabilities	155,546
Total lease liabilities		$	576,816



	May 31, 2020
	Weighted-average remaining lease term	Weighted-average discount rate
Operating leases	5.5 years	3.21	%
Finance leases	6.0 years	4.32	%



	Nine months ended
	May 31, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases⁽¹⁾	$	83,427
Operating cash flows for finance leases⁽¹⁾	3,693
Financing activities for finance leases⁽²⁾	4,451
Non-cash right-of-use assets obtained in exchange for new lease liabilities:
Operating leases	82,552
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 May 31,	Operating Leases⁽¹⁾			Finance Leases			Total
2020	$	112,866		$	11,964		$	124,830
2021	88,654			12,354			101,008
2022	68,909			11,783			80,692
2023	56,144			11,917			68,061
2024	41,127			43,059			84,186
Thereafter	92,130			98,846			190,976
Total minimum lease payments	$	459,830		$	189,923		$	649,753
Less: Interest	(45,607		)	(27,330		)	(72,937		)
Present value of lease liabilities	$	414,223		$	162,593		$	576,816


⁽¹⁾	Excludes $43.4 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



	Maturity Date	May 31, 2020		August 31, 2019
5.625% Senior Notes	Dec 15, 2020	$	399,555	$	398,886
4.700% Senior Notes	Sep 15, 2022	498,496		498,004
4.900% Senior Notes	Jul 14, 2023	299,239		299,057
3.950% Senior Notes	Jan 12, 2028	495,286		494,825
3.600% Senior Notes⁽¹⁾	Jan 15, 2030	494,616		—
Borrowings under credit facilities^(2)(3)(4)	Apr 23, 2021, Jan 22, 2023 and Jan 22, 2025	—		—
Borrowings under loans⁽²⁾	Jan 22, 2025	300,138		805,693
Total notes payable and long-term debt		2,487,330		2,496,465
Less current installments of notes payable and long-term debt		399,737		375,181
Notes payable and long-term debt, less current installments		$	2,087,593	$	2,121,284


⁽¹⁾	On January 15, 2020, the Company issued $500.0 million of publicly registered 3.600% Senior Notes due 2030 (the “3.600% Senior Notes”). The net proceeds from the offering were used for the repayment of term loan indebtedness.


⁽⁴⁾	As of May 31, 2020, the Company has $3.7 billion in available unused borrowing capacity under its revolving credit facilities. The Revolving Credit Facility under the Credit Facility acts as the back-up facility for commercial paper outstanding, if any. The Company has a borrowing capacity of up to $1.8 billion under its commercial paper program.



	Maximum Amount of Net Cash Proceeds (in millions)⁽¹⁾⁽²⁾		Expiration Date
North American	$	390.0	November 22, 2021
Foreign	$	400.0	September 30, 2021


⁽²⁾	As of May 31, 2020, the Company had up to $136.6 million in available liquidity under its asset-backed securitization programs.


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


⁽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.