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09:06am EDT 15-Mar-99 Thomas Weisel Partners LLC (Jim Savage
212-350-4045) JBL JBL: Init'g Cov'g/STRONG BUY-Positioning for
Explosive Growth (Part 1 of 2) Story 0749 (B/DY C/CNA C/CUS I/ELE
JBL S/INI S/SEO)
March 15, 1999 Thomas Weisel Partners, LLC
Jim Savage JABIL CIRCUIT - STRONG BUY
(212) 350-4045 INITIATING COVERAGE: POSITIONING FOR EXPLOSIVE
GROWTH
jsavage@tweisel.com WITH NEW CUSTOMERS, MARKET SHARE GAINS
Eric Gomberg Electronics Manufacturing NYSE: JBL - $38
11/16
(212) 350-4042
egomberg@tweisel.com
Initiating Coverage
Executive Summary
· A Top Five global EMS company, expected to double quarterly revenues
and operating profits between summer 1998 and summer 1999.
· Historical outperformance (5-year revenue and net income growth of 36%
and 120%), with excellent visibility for near-term acceleration of
growth.
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09:06am EDT 15-Mar-99 Thomas Weisel Partners LLC (Jim Savage
212-350-4045) JBL JBL: Init'g Cov'g/STRONG BUY-Positioning for
Explosive Growth (Part 1 of 2)
· Exceptional financial metrics. In 1QFY99, Jabil posted 11x inventory
turns, 36 receivable DSOs, 13.3% ROA and 29.6% ROE.
· We expect 35%+ L-T CAGR driven by new customers and market share
gains. We believe Jabil, with its excellent earnings visibility
and strong track record, merits a premium multiple in line with
industry leaders. Initiating with Strong Buy and $60 6-12 month
target price (35x CY2000 EPS).
Key Data: 1998 1999 2000
52-Week Range: $39 5/8-$11 EPS
Market Cap.(MM): $3,006 Q1 $0.25 A $0.25 A
$0.37 E
Shares Out.(MM): 77.7 Q2 $0.26 A $0.27 E
$0.40 E
Avg Daily Vol.(K): 1,033 Q3 $0.22 A $0.29 E
$0.41 E
Fiscal Year End: 12/31 Q4 $0.17 A $0.33 E
$0.43 E
Year $0.91 $1.15
$1.61
P/E 42.5x 33.6x
24.0x
P/E/G 121.4% 96.0%
68.6%
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09:06am EDT 15-Mar-99 Thomas Weisel Partners LLC (Jim Savage
212-350-4045) JBL JBL: Init'g Cov'g/STRONG BUY-Positioning for
Explosive Growth (Part 1 of 2)
Total value/EBITDA: 13.9 Revenues
Debt/Total Capital: 25.2% Q1 $319.5 A $447.9 A
$700.0 E
Secular Growth Rate: 35% Q2 $330.7 A $480.0 E
$740.0 E
Q3 $309.6 A $535.0 E
$760.0 E
Q4 $317.6 A $620.0 E
$800.0 E
Year $1,277.4 $2,082.9
$3,000.0
Company Description: Jabil Circuit, a Top 5 global EMS company,
is well-positioned to accelerate growth as it penetrates
key communications and computer sector leaders. Jabil's balance
sheet, strengthened by a successful equity offering, provides the
ammunition for both internal growth and OEM divestitures. The
Company's focused business unit model provides highly
responsive and flexible services to global technology companies,
including H-P, Cisco, Nortel Networks and Gateway.
COMPANY OVERVIEW
Since its FY1994, Jabil Circuit has more than quintupled its revenues
(to a current annual run rate near $2 billion), while growing its
earnings eightfold.
The Company has transformed its customer base, and it now has strategic
manufacturing relationships with mutliple industry leaders in key
technology
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09:06am EDT 15-Mar-99 Thomas Weisel Partners LLC (Jim Savage
212-350-4045) JBL JBL: Init'g Cov'g/STRONG BUY-Positioning for
Explosive Growth (Part 1 of 2) sectors, including networking,
computers and peripherals.
Jabil's work cell model provides focused manufacturing services to its
core customers and increasingly allows the Company to function as
the virtual manufacturing arm of its customers. Each business
unit can be designed to provide a broad range of services,
including flexible, global, continuous flow manufacturing, worldwide
materials management, project management from prototype to end of
life, engineering design, system assembly and direct order
fulfillment. It has enabled Jabil to rapidly gain market share with
core customers, as it provides manufacturing services to some
of the most sophisticated OEMs in the technology
marketplace, including Cisco, H-P, Nortel Networks and Gateway.
Jabil's high level of value added content has led to its achieving the
highest margins in the core EMS industry. Its mix, intentionally
skewed toward higher manufacturing content communications products
for a broad range of customers including Cisco (20% of revenues),
Ascend, 3Com, Nortel Networks, Dialogic and Network Appliance, is
also a contributing factor in the Company's margin structure.
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09:06am EDT 15-Mar-99 Thomas Weisel Partners LLC (Jim Savage
212-350-4045) JBL JBL: Init'g Cov'g/STRONG BUY-Positioning for
Explosive Growth (Part 1 of 2) After achieving stronger than
industry average internal growth throughout its history, in August
1998, Jabil completed its first acquisition, of
Hewlett-Packard's PCB assembly operations for LaserJet printers. With
the acquisition, which included sites in Boise, Idaho and
Bergamo, Italy, Jabil became H-P's sole source for LaserJet PCBAs
worldwide. Within one quarter Jabil achieved significant accretion.
In our opinion, the success of the H-P acquisition is likely
to serve as a model for further purchases of OEM
manufacturing operations.
Jabil's recently completed follow-on equity offering, which raised $200
million for the Company, positions it to finance both acquisitions
and substantial internal growth. While the Company is capable
of financing 30-35% revenue growth solely through operating cash
flows, we believe Jabil will use the additional capital to fund
more rapid growth.
(Continued in Part 2 of 2)
Jabil Circuit will be presenting at Thomas Weisel Partners' 1st
Electronics
Manufacturing Services and Components Investment Conference, "Core
Manufacturing
in the New Economy" at the Pierre Hotel in New York on April 21, 1999.
Please
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09:06am EDT 15-Mar-99 Thomas Weisel Partners LLC (Jim Savage
212-350-4045) JBL JBL: Init'g Cov'g/STRONG BUY-Positioning for
Explosive Growth (Part 1 of 2) contact your Thomas Weisel
Partners salesperson for information on this exciting event.
Additional information is available upon request.
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09:06am EDT 15-Mar-99 Thomas Weisel Partners LLC (Jim Savage
212-350-4045) JBL JBL: Init'g Cov'g/STRONG BUY-Positioning for
Explosive Growth (Part 1 of 2) financial advice based on their
own particular circumstances before making an investment decision
on the basis of the recommendations in this report.
Thomas Weisel Partners LLC, 1999. All rights reserved. Any
unauthorized use, duplication or disclosure is prohibited by law and
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