This summary is based on the fourth quarter fiscal 2008 earnings call conducted by Jabil Circuit Inc. (JBL) on September 26, 2008.
Management:
President and CEO: Tim Main
CFO: Forbes Alexander
VP, Communications and IR: Beth Walters
Key Investor Issues:
- Q4 net revenue increased 4% to $3.3 billion from the previous year period.
- Quarterly GAAP EPS jumped 367% to 28 cents versus 6 cents in the year ago quarter.
- The Q4 GAAP operating income rose 74% to $87.8 million versus $50.5 million in the previous year quarter.
Fiscal 2008 Highlights:
- Fiscal 2008 net revenues increased 4% to $12.8 billion compared with $12.3 billion in 2007.
- The GAAP operating income firmed 38% to $251.4 million versus $181.9 million in 2007.
- GAAP net income for the year gained 83% to $133.9 million compared with $73.2 million last year.
- The GAAP diluted EPS advanced 86% to 65 cents from 35 cents in fiscal 2007.
- The core operating income put on 15% to $379.9 million or 3% of net revenue versus $331.6 million or 2.7% of net revenue in 2007.
- The core EPS increased 18% to $231 million from $1.12 compared with 95 cents last year.
Fourth Quarter Fiscal 2008 Highlights:
The company reported that the quarterly GAAP core operating income increased 1% to $104.7 million or 3.2% of net revenue.
- This is in comparison with $103.8 million or 3.3% of net revenue for Q4 of 2007.
- The core earnings rose 3% to $61.7 million compared with $59.9 million in the same quarter last year.
- The quarterly core EPS advanced 3% to 30 cents from 29 cents in the year ago quarter.
The reported sequential Q4 operational and balance sheet highlights were all positive.
- GAAP operating income and core operating income rose 39% and 23% respectively.
- The GAAP EPS grew 9 cents and core earnings increased 4 cents per share during the quarter.
- The cash flow used in operations for Q4 was about $7 million.
- The company reported a sales cycle of 20 days for the quarter.
- The effective core tax rate was 25% during the quarter.
- The annualized inventory turns remained constant at eight runs for Q4 of 2008.
- The depreciation for the quarter was approximately $62 million.
- The cash and cash equivalent balances were $773 million at the end of the fourth quarter.
- The company paid a 7 cent dividend on September 2, 2008.
The EMS Division represented approximately 65% or $2.1 billion of revenue and this was consistent with the third quarter.
- The Q4 core operating income for the division in the quarter was 3.5% of revenue.
- The production levels in the automotive sector declined 13% versus the prior quarter primarily reflecting typical summer seasonality and a continued difficult automotive industry.
- The computing and storage sector declined 1% from the third quarter.
- Industrial, instrumentation and medical sector increased 7% from the prior quarter reflecting growth across multiple customers in this sector including new assemblies within the medical customer base and strength in the point of sale products.
- The networking sector levels of production decreased by 2% from the previous quarter.
- The management reported that the Telecommunications sector increased 6% sequentially reflecting strength in Europe for microwave products.
- For the full fiscal year, EMS revenues represented approximately $8.2 billion or 64% of total company revenues, a year over year growth of 9%.
- For the full fiscal year core operating income was 3.4% of revenues.
- The
Consumer Division represented approximately 30% of revenues or $1 billion in the fourth fiscal quarter.
- This represents a sequential increase of 21% reflecting new business wins across the mobility and peripherals sector.
- The core operating income for the division in the quarter was 1.8% of revenue.
- The displays sector rose 8% from the third quarter reflective of a very challenging European demand environment with customers in this sector.
- The mobility sector increased 15% from the prior quarter.
- The peripherals sector increased by 39% from the third fiscal quarter as a result of strength in printing products and the ramp of a new set top box product with existing customers.
- On a full fiscal year basis, revenues represented approximately 31% or $3.9 billion, a decline of 6% on a year over year basis as a result of declines in displays and mobility sectors.
- The core operating income for the full fiscal year was 1.3% of revenue.
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The Aftermarket Services Division represented approximately 5% of overall company revenue in the fourth fiscal quarter.
- The company reported that core operating income for the division in the quarter was 8% of revenue and revenue was consistent with the prior quarter.
- For the full fiscal year, the revenues of $700 million represent 5% of total company revenue with growth of 13% from the prior fiscal year and core operating income of 7.5% for the full fiscal year.
During the fourth quarter and full year, two customers accounted for more than 10% of revenues.
- The two customers were Cisco Systems and Hewlett Packard.
- The top 10 customers in the quarter accounted for approximately 60% of total revenue as compared to 63% last quarter.
- For the full fiscal year, the top 10 customers accounted for approximately 62% of revenues.
The Q4 selling, general and administrative expenses of $117 million were consistent with the third quarter.
- The research and development costs were $8.6 million in the quarter.
- Stock based compensation was $7 million in the quarter, lower than anticipated as a result of the reversal of stock based compensation associated with performance based restricted stock which is no longer expected to vest.
- The net interest expense was in line with previous guidance at $23 million, an increase of approximately $3 million from the third quarter.
- The increase reflects a full quarter of interest associated with the $150 million, 8.25% 10 year senior unsecured note offerings completed during the third quarter.
- The tax rate on net core operating income in the quarter was 25% as compared to the previous forecast of 20%.
- The company advised that this represents about $4 million of additional tax expense in the quarter as a result of higher income levels and forecasts in higher tax jurisdictions during the quarter.
