This summary is based on the second quarter fiscal 2008 earnings call conducted by Jabil Circuit, Inc. (JBL: chart) on March 25, 2008.
Management:
President & Chief Executive Officer: Timothy L. Main
Chief Financial Officer: Forbes I.J. Alexander
Vice President, Communications & Investor Relations: Beth A. Walters
Key Investors Issues
- EPS were a loss of 12 cents a share compared to 7 cents a share last year.
- Profit was s loss of $24 million compared to a profit of $13.9 million a year ago.
- Revenue rose 4% to $3.1 billion from last-year''s $2.9 billion.
Second Quarter Highlights
On revenues of $3.06 billion, GAAP operating income was $1.6 million.
This compares to $36.7 million GAAP operating income on revenues of $2.93 billion for the same period in the prior year. The reduction principally due to restructuring charges, which were $41 million higher than the year-ago period.
- Core operating income excluding amortization of intangibles, stock-based compensation, and restructuring charges was $67.8 million, or 2.2% of revenue, as compared to 55.6 or 1.9 for the same period in the prior year.
- Core earnings per share were 20 cents per share, as compared to 14 cents per share for the same period in the prior year. On a year-over-year basis, this represents a 4% growth in revenue and a 22% increase in core operating profits. On a sequential basis, revenues decreased 9% while core operating income decreased 44%, reflecting the seasonal nature of the consumer division.
EMS division represented revenue of 66%, or $2 billion, growth of 2% on a sequential basis.
- Core operating income for the division was 3.2% of revenue.
- Production levels in the automotive sector declined by 13% versus the prior quarter, primarily reflecting seasonal demand; computing and storage sector increased 1% from the first quarter; industrial, instrumentation and medical sector declined by 3% from the prior quarter, reflecting decline in product revenues in line with previous expectations and guidance; the networking sector levels of production increased by 2% from the previous quarter; telecommunications sector increased 26% sequentially as a result of a full quarter’s revenue from the Nokia Siemens network relationship announced in the first fiscal quarter.
The consumer division represented approximately 29%, or $900 million, a sequential decline of 28%, reflecting the seasonal nature of this division.
- Core operating income for the division was negative 1% of revenue.
- Sequential sector movements are as follows: mobility and display product sector decreased 36% from the prior quarter, reflecting the seasonal nature in this sector across both the displays and mobile products; mobility decreased by 31% and displays by 40%. The peripherals sector decreased by 9% from the first fiscal quarter, reflecting less seasonality than previously estimated.
- The after market services division represented approximately 5% of overall company revenue. Core operating income for the division was 7% of revenue.
Divisional and sector information in percentage terms is as follows:
Automotive, 4%; computing and storage, 13%; industrial, instrumentation, and medical, 18%; networking, 22%; telecom, 7%; and other, 2%. In the consumer division: displays, 7%; mobility, 11%; peripherals, 11%. The after market services, as mentioned, is 5% of revenues overall.
- Two customers accounted for more than 10% of revenues, Cisco Systems and Hewlett Packard. Top 10 customers accounted for approximately 64% of revenue, which is consistent with last fiscal quarter.
- Selling, general and administration expenses declined by $1 million, reflecting ongoing cost management initiatives. Research and development costs were $9.9 million, or approximately $3.3 million higher than in the previous quarter, reflecting ongoing investments in collaborative design services.
- Net interest expense fell $3 million from the first quarter, reflecting lower average debt balances. The tax rate was 8% as a result of sources of income from lower tax jurisdictions during the quarter and year-to-date.
The company’s sales cycle expanded by one day to 23 days.
- Days sales outstanding decreased by three days while accounts payable days outstanding were consistent with the prior quarter at 63 days.
- Inventory days increased by four days from the prior quarter, inventory turns being eight. In dollar terms, inventory grew by $10 million versus the November quarter, as a result of the scheduled declines seen in mid to late February impacting third quarter.
- Cash flows from operations were approximately $134 million versus zero in the same period in the previous fiscal year.
- Returns on invested capital were 8% as compared to 7% in the same period of fiscal 2007.
- Cash and cash equivalents were $531 million, $133 million lower than the previous quarter, reflecting the repayment of $150 million on revolving credit facility.
Capital expenditures were approximately $87 million, including approximately $27 million related to ongoing expansions in China, India, Poland, and the Ukraine, along with associated IT infrastructure of $20 million.
