Comment by David Ristau

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David Ristau
June 22nd, 2010 at 4:09 pm

Update on Jabil:

Earnings were extremely good. EPS at 0.40. Expectations were for 0.33. Stock up over 8% in after markets.

Third Quarter 2010

Net revenue for the third quarter of fiscal 2010 was $3.5 billion compared to $2.6 billion for the same period of fiscal 2009.

GAAP results:

GAAP operating income for the third quarter of fiscal 2010 was $96.5 million compared to a loss of $7.8 million for the same period of fiscal 2009.

GAAP net income for the third quarter of fiscal 2010 was $52.0 million compared to a net loss of $28.8 million for the same period of fiscal 2009.

GAAP diluted earnings per share for the third quarter of fiscal 2010 was $0.24 compared to a loss per share of $0.14 for the same period of fiscal 2009.

Core results:

Core operating income for the third quarter of fiscal 2010 was $131.9 million or 3.8 percent of net revenue compared to $29.0 million or 1.1 percent of net revenue for the same period of fiscal 2009.

Core earnings for the third quarter of fiscal 2010 were $86.7 million compared to $8.5 million for the same period of fiscal 2009.

Core diluted earnings per share for the third quarter of fiscal 2010 was $0.40 compared to $0.04 for the same period of fiscal 2009.

Sequential Third Quarter Fiscal 2010

Operational Highlights

 

• GAAP operating income increased 56.3 percent.
• GAAP earnings increased $0.10 per fully diluted share.
• Core operating income increased 38.0 percent.
• Core earnings increased $0.11 per fully diluted share.

 

Balance Sheet and Cash Flow Highlights

 

• Cash flow from operations for the quarter was approximately $37 million.
• Sales cycle was 16 days for the third quarter of fiscal 2010.
• Annualized inventory turns were seven turns for the third quarter of fiscal 2010.
• Capital expenditures for the third quarter of fiscal 2010 were approximately $129 million.
• Depreciation for the third quarter of fiscal 2010 was approximately $63 million.
• Cash and cash equivalent balances were $600 million at the end of the third quarter of fiscal 2010.
• Core return on invested capital was 22 percent for the third quarter of fiscal 2010.
• A $0.07 dividend was paid on June 1, 2010.

 

Jabil also announced that it has entered into a letter of intent to divest its remaining manufacturing operations in France and Italy. Divested operations would include four sites and approximately 1,500 people. This transaction is expected to close during the course of the fourth fiscal quarter and is subject to final negotiation of acquisition related documents, customary regulatory filings and approvals and consultation with and approval of employees and their representatives. The company currently anticipates that the loss on divested operations to be approximately $0.05 per share.

Business Update

“Our presence in rapidly growing sectors such as healthcare and life sciences, clean tech and advanced enterprise IT hardware is expected to be complemented by strong growth in smart phone devices and mechanical components,” said Timothy L Main, Jabil’s President and CEO.

Jabil management indicated that it expects net revenue for its fourth quarter of fiscal 2010 to increase 10 to 16 percent sequentially, ranging from $3.8 billion to $4.0 billion.

Jabil estimated that its core operating income for its fourth quarter of fiscal 2010 will grow 9 to 21 percent sequentially, ranging from 3.8 to 4.0 percent of net revenue.

Jabil indicated that it expects its core earnings per share for its fourth quarter of fiscal 2010 to improve 13 to 25 percent sequentially, ranging from $0.45 to $0.50 per diluted share.

GAAP earnings per share are expected to be in a range from $0.28 to $0.34 per diluted share. (GAAP earnings per share for the fourth quarter of fiscal 2010 is currently estimated to include $0.03 per share for amortization of intangibles; $0.07 to $0.08 per share for stock-based compensation and related charges; $0.01 per share for restructuring and impairment charges; and $0.05 per share for loss on disposal of subsidiary.)

“We remain focused on superior execution and satisfaction of our customers’ needs as they deal with an increasingly complex and changing world. We expect to increase our share in targeted markets while delivering financial results consistent with our long-term objectives,” Main said.