This summary is based on the first quarter fiscal 2009 earnings call conducted by Jabil Circuit Inc. (JBL) on December 19, 2008.
Management:
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VP, Communications & IR: Beth Walters
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President and CEO: Tim Main
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CFO: Forbes Alexander
Key Investors Issues
- Revenues of $3.38 billion, were up from $3.37 billion in the prior year.
- Net income was $46 million or 22 cents a share, down 27%.
First Quarter Highlights
On revenues of $3.38 billion, up marginally from $3.37 billion in the prior year, net income was $46 million or 22 cents a share, down 27% from $62 million or 30 cents a share in the prior period due to lower margins.
- The EMS division represented revenues of 59% or $2 billion, a decline of 6% as compared to the fourth quarter of fiscal 2008 with core operating income at 2.7% of revenue.
- Production levels in the automotive sector grew 7% versus the prior quarter, primarily reflecting seasonality across much of the customer base.
- Computing and storage sector decreased 5% from the quarter reflecting scheduled declines across the majority of customers in the sector.
- Industrial, instrumentation and medical sectors declined 4% from the current quarter, primarily reflecting clients and point of sale products.
Networking sector levels of production decreased by 10% from the previous quarter while the telecommunication sector increased 4% reflecting new product ramps with new and existing customers.
- The consumers division represented approximately 36% or $1.2 billion, a sequential increase of 24% reflecting seasonal growth and the ramp of new business wins across the mobility and peripheral sectors.
- Core operating income was 3.1% of revenue as the display sectors increased 41% from the fourth quarter, on the back of a seasonal European demand across the customer base in the sector.
- Mobility sector increased by 43%, reflecting seasonal volume growth and the ramp of new program wins with a broad range of sectors customers in the sector.
- The peripheral sector increased by 2% as a result of more muted seasonal demand for set top boxes than previously anticipated.
During the period, two customers accounted for more than 10% of revenue, Cisco and HP, with ten customers accounting for 57% of revenue as compared to 60% last quarter.
- Selling, general and administrative expenses were consistent with the fourth quarter at $170 million.
- Research and development costs were $5.7 million and stock-based compensation was $14.8 million.
- Net interest expense for the quarter was $23.8 million.
- The company’s sales cycle expanded by four days to 24 days and days sales outstanding grew by four days to 44 days, reflecting growth in seasonal consumer sales and the new product ramps during November.
Accounts payable days and inventory days were consistent with prior quarter, inventory turns remaining at eight.
- Cash flows used in operations was approximately $33 million in the fiscal quarter despite some net working capital expansion.
- Cash and cash equivalents were $580 million with capital expenditures of $150 million, primarily reflecting investments in IT infrastructure, capacity to support new programs being run in the mobility sector.
- Operating performance at the low-end of the previous guidance was a function of broad based schedule declines, but networking capital expanded by approximately $160 million.
- Accounts receivable expanded by $200 million as a result of the revenue profile within the quarter associated with consumer seasonal demand and the launch of new product volumes in November.
- Cash payments associated with restructuring activity was $19 million.
Fiscal 2009 Outlook:
- Revenues is estimated to be in the range of $2.8 billion to $3 billion for the second quarter with core earnings per share expected to be in the range of 12 cents to 16 cents.
- Capital expenditures are estimated to be in the range of $40 million to $50 million, reflecting ongoing IT infrastructure refreshes, and ongoing investments in the mobility sector.
Key questions and answers from the first quarter earnings call conducted by Jabil Circuit Inc. (JBL) on December 19, 2008.
Louis Miscioscia (Cowen & Co.):
Can you walk us through y our debt profile?
Forbes Alexander: We have two accounts receivable programs, that total right about $400 million that we have applied. Those come due in March and April respectively of 2009, so our plans are to renew those. That marketplace remains open. In fact, securtizations are getting done on a regular basis. So we feel very comfortable in that regard.
With regards to the next maturity, that is in mid to late 2010 and those are senior notes we put in place in 2003, the $300 million. In terms of refinancing those, that parlays into the cash generation that we expect in the balance of this fiscal year and beyond.
As we move through the balance of the year, I would expect continued cash generation both for the fiscal year somewhere in the region of $400 million to $500 million of operating cash generation. Our CapEx levels are slowing, I would estimate somewhere in the region of 200 to 225 for the year.
