This summary is based on the fourth quarter fiscal 2007 earnings call conducted by Jabil Circuit, Inc. (JBL) on September 27, 2007.
President, CEO: Tim Main
IR: Beth Walters
CFO: Forbes Alexander
Key Investors Issues
- EPS were 6 cents a share compared to a loss of 22 cents a share last year.
- Profit was $11.7 million compared to a loss of $45.6 million in the year-ago period.
- Revenue rose to $3.1 billion from $3 billion a year ago.
Fourth Quarter Highlights
Revenues were $3.1 billion and GAAP operating income increased to $50.5 million.
This compares to $7.6 million GAAP operating loss on revenues of $3 billion for the same period in the prior year.
- Core operating income, excluding amortization of intangibles, stock-based compensation and restructuring charges, was $103.8 million, or 3.3% of revenue, as compared to $90.2 million, or 3.1% for the same period in the prior year. Core earnings per share were 29 cents.
- Legal and accounting costs associated with the recent reviews were approximately $2 million.
- On a year-over-year basis, this represents a 6% growth in revenue and a 15% increase in core operating profits. On a sequential basis, revenues increased by 4%, while core operating income increased 19%.
Production levels in the automotive sector decreased 10% from the prior quarter, reflecting the seasonal nature of this sector.
- Computing and storage sector increased 9% from the third quarter, reflecting additional business awards with two customers in this sector.
- The consumer product sector decreased 3% from the third quarter, reflecting the transition of business mix in this sector. Instrumentation and medical sector was better than expectations, and increased 7% from the third quarter. This is a result of sequential growth with more than 90% of customers.
- The networking sector levels of production increased by 12% from the previous quarter, reflecting demand strength in the largest customer from this sector.
- The peripherals sector increased by 8% over the third quarter, reflecting the continued ramp of previously discussed new business awards with an existing customer.
- The telecommunications sector decreased 8% sequentially, better than expectations.
Sector information in percentage terms is as follows:
- Automotive was 4%.
- Computing and storage sector was 12%.
- The consumer sector was 24%.
- Instrumentation and medical sector represented 19% of revenues.
- The networking sector was 22% of revenues.
- The peripherals sector represented 9% of revenues.
- The telecommunications sector represented 5%. Other sector represented 5%.
Stock-based compensation expense declined $14 million to $5.1 million.
This is the result of costs associated with the Internal Revenue Code Section 409-A incurred last quarter and will not be an ongoing cost; $6 million in the reversal of stock-based compensation expense previously incurred as a result of performance-based restricted stock grants that is now no longer expected to vest.
The company''s sales cycle improved 6 days to 19 days.
- Days sales and accounts payable days outstanding improved by one day each, as compared to the third quarter.
- Inventory days improved four days to 43 days, or 8.4 turns, a reduction of approximately $70 million. Cash flow from operations is approximately $250 million.
- Return on invested capital improved to 11% as compared to 10% in the previous quarter.
- Cash and cash equivalents were $664 million as compared to $558 million at the end of the third quarter, after paying down $70 million of bridge facility.
- Capital expenditures were approximately $93 million, including approximately $33 million of expenditures related to expansion of facilities in China, India, Poland and the Ukraine, these building expansions being ahead of previous expectations.
- Depreciation was approximately $57 million, with EBITDA being $161 million.
The company amended its revolving credit facility from $500 million to $800 million of capacity with a five-year term through July 2012.
In conjunction with this, the company entered into a $400 million term loan A with the same five-year maturity. Proceeds from this term loan were used to pay down $400 million of the bridge facility in place to fund recent Green Point acquisition. $400 million remains outstanding on the bridge facility, expiring on the 20th of December, 2007. The company intends to replace this outstanding bridge financing with permanent longer-term capital prior to that date.
The company continues to manage overall rationalization plan according to previously announced plan.
The company recorded charges of approximately $39 million. Total charges recorded to date against overall plan are approximately $191 million. Cash payments associated with these restructuring activities were approximately $17 million. Total cash payments to date against the plan are approximately $75 million.
