Jabil Circuit Results Set Earnings Record; Earnings Increase 112 Percent
05:22 p.m Dec 16, 1997 Eastern
ST. PETERSBURG, Fla.--(BUSINESS WIRE)--Dec. 16, 1997--Jabil Circuit Inc. (NASDAQ:JBIL),
electronics contract manufacturer to the world market for circuit board assemblies, Tuesday reported
record earnings for the first fiscal quarter of 1998 ended Nov. 30, 1997.
Revenue for the quarter increased 57 percent to $320 million compared to $203 million for the same
period of fiscal 1997.
Jabil's first quarter of fiscal 1998 net income increased 116 percent to $19.1 million or $.49 per share
compared with $8.8 million or $.23 per share for the first quarter of fiscal 1997.
Gross profit for Jabil's first quarter increased 79 percent to $41.3 million or 12.9 percent of revenues
compared to $23.1 million or 11.4 percent of revenue for the corresponding quarter of fiscal 1997.
Operating income for the first fiscal quarter of 1998 increased 100 percent to $29.4 or 9.2 percent of
revenue compared to $14.7 or 7.2 percent of revenue for the first fiscal quarter of 1997.
Jabil Circuit President Thomas A. Sansone said: "We are pleased with the record earnings level for the
first quarter of fiscal 1998, especially in light of the fact that during the quarter we moved into new
facilities in Malaysia, Scotland and Mexico. These results reflect a 32 percent compound annual
growth rate (CAGR) in operating income. This demonstrates the kind of operational capability we have
developed over the last several years." Income Statement -- Sequential Trend Highlights
-- Revenue in the first fiscal quarter increased by
$14.3 million, a five percent increase from the fourth
quarter, reflecting an increase in production levels.
-- Gross margin continued at 12.9 percent of revenue, as in
the prior quarter, reflecting the ongoing concentration
of product mix in high value added products and
continued high levels of plant loading.
-- SG&A increased slightly to $11.1 million, or 3.5 percent
of revenue. This is a reduction from 3.6 percent of
revenue in the previous quarter.
-- R & D increased slightly in absolute dollars to
$912 thousand, continuing to represent .3 percent of
revenue.
-- Operating income increased sequentially by 7.2 percent
to $29.4 million, or 9.2 percent of revenue. Operating
income growth is our key financial objective.
-- Net interest expense increased by $554 thousand, to
$713 thousand, representing .2 percent of revenue.
-- Income tax rates decreased to 33.4 percent of income
compared to 33.7 percent in the prior sequential
quarter, slightly lower than our normalized rate of
34.5 percent.
-- Net income after tax was $19.1 million or 6.0 percent of
revenue, as in the prior sequential quarter. This
resulted in an EPS of $.49 on an average 38,675,000 shares
during the period, fully diluted.
Balance Sheet -- Sequential Trend Highlights
For the first quarter, we maintained similar asset turnover ratios from August, generating positive cash
flow from operations for the eighth consecutive quarter.
-- Accounts receivable increased by $17 million to
$134 million in the first quarter of fiscal 1998 as
compared to $117 million in the fourth quarter of fiscal
1997.
-- Inventories increased by $16 million in the first quarter
to $112 million as compared to $96 million as of the end
of August. Calculated inventory turns were approximately
10, lower than 11 turns in the August quarter, but on target
to the company goal.
-- Cash balances were $43 million at the end of the first
fiscal quarter, as compared to $45 million at the end of
the fourth quarter of fiscal 1997.
-- Fixed Assets increased by $24 million to $164 million
reflecting $31 million in capital expenditures, offset by
$7 million in depreciation.
-- We are currently utilizing $10 million of our revolving
credit facility in order to fund expansion in Mexico, and
growth in other international locations.
-- Long term debt decreased by $2 million to $50 million in
the first quarter. Our long-term debt is represented by
the $50 million private placement debt funded in May of
last fiscal year. Principal payments on this debt begin
mid1999.
-- The company's debt to capitalization ratio is now at
23 percent. Total liabilities to equity ratio at the end
of the quarter was 1.3 to 1.
-- For the quarter, our average return on assets was
17.6 percent, with an average return on equity of
39.9 percent.
Business Notes (NOTE: The following statements are forward looking; actual results may differ
materially.) Recent Developments.
Fears about Asian financial turmoil and earnings pre-announcement comments from some of our
customers have led to speculation on adverse impact to our future business. We think this speculation
is not well grounded, because we do not produce the products significantly affected by these
developments.
-- Asia. The Financial decline of Asian economies is of
modest impact to us. We estimate that less than
six percent of our revenue is ultimately consumed in Asian
markets. The short-term effect of devaluation of the
Malaysian currency will be to reduce manufacturing costs
from our Malaysian factory. This could have the effect of
modestly increasing Malaysian income.
-- 3Com. 3Com recently announced that they would no(sic) attain
current earnings estimates. We do not produce the modem
products and systems products that 3Com identified as the
source of shortfalls in earnings. We anticipate that 3Com
will continue to drive near 20 percent of revenue and
operating income growth for our company.
-- Quantum. Quantum pre-announced anticipated earnings
shortfalls based primarily on lower demand for hard disk
drive products. Our production for Quantum is exclusively
for tape drive products, which currently enjoy strong
demand. New product transitions may slow growth somewhat,
but demand appears solid.
New Business.
Jabil launched production for Gateway computer during the first quarter in both the Florida and Mexico
plants. Gateway is anticipated to become a truly global customer in a few months when additional
parallel production launches in both Malaysia and Scotland. Initial products produced for Gateway will
be business class desktop personal computer motherboards. New Plants.
-- Mexico Plant. Factory fit out, equipment installation and
launch of mass production was completed in November.
Current plans call for aggressive increases in production
volume for Gateway, with the launch of production for
additional customers planned in the next several months.
-- Scotland Plant. Transfer of equipment, production and staff
is underway and will be largely completed by the end of
December.
-- Malaysian Plant. The Malaysian plant completed the transfer
of all production to the new factory during November.
Outlook
Sansone commented that the results for the first quarter were excellent and show continuing delivery
of targeted growth rates in operating income. "We think the fear in financial markets is overstated and
is painting the electronics industry with too broad a brush. We look forward to continuing strength in
our business for the balance of fiscal 1998," said Sansone.
Jabil Circuit, Inc. is an electronic manufacturer of circuit board assemblies for international original
equipment manufacturers in the communications, personal computer, computer peripheral, automotive,
medical and consumer markets. Jabil offers circuit design, board design from schematic, prototype
assembly, volume board assembly and system assembly services from automated manufacturing
facilities in Florida, Michigan, California, Scotland Malaysia and Mexico.
Statement of operations and balance sheet data for Q198
attached.
This release contains certain forward-looking statements, which are subject to a number of risks and
uncertainties. Some factors that could cause actual results to differ materially include: business
conditions and growth in the contract manufacturing industry and the general economy; variability of
operating results; dependence on a limited number of customers; limited availability of components;
dependence on certain industries; variability of customer requirements; and other risk factors described
in the company's most recently filed SEC documents such as the Form 10-K, filed 12/1/97.
JABIL CIRCUIT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(in thousands, except for per share data)
Three months ended
November 30,
1996 1997
(Unaudited)
Net revenue $203,070 $319,512
Cost of revenue 179,978 278,167
Gross profit 23,092 41,345
Operating expenses:
Selling, general and
administsrative 7,727 11,077
Research and development 705 912
Operating income 14,660 29,356
Interest expense 658 713
Income before income taxes 14,002 28,643
Income taxes 5,174 9,572
Net income $ 8,828 $ 19,071
Net income per share $ 0.23 $ 0.49
Weighted average number of
shares of common stock and
common stock equivalents 37,884 38,675
JABIL CIRCUIT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
August 31, Nov. 30,
1997 1997
(Unaudited)
ASSETS
Current assets
Cash $ 45,457 $ 43,151
Accounts receivable - Net 116,987 134,357
Inventories 96,187 111,779
Prepaid expenses and other
current assets 776 801
Deferred income taxes 6,591 6,046
Total current assets 265,998 296,134
Property, plant and equipment,
net 139,520 163,989
Other assets 385 962
$405,903 $461,085
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Note payable to bank $ -- $ 10,000
Current installments of long
term debt 2,475 --
Accounts payable 125,741 149,847
Accrued expenses 34,248 30,424
Income taxes payable 6,186 14,448
Total current liabilities 168,650 204,719
Long term debt, less current
installments 50,000 50,000
Deferred income taxes 3,663 3,824
Deferred grant revenue 2,105 1,902
Total liabilities 224,418 260,445
Stockholders' equity
Common stock 37 37
Additional paid in capital 61,632 61,716
Retained earnings 119,816 38,887
Total stockholders'
equity 181,485 200,640
$405,903 $461,085
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