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Jabil (JBL) Q3 Earnings Beat Estimates, Revenues Rise Y/Y

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Jabil (JBL - Free Report) reported third-quarter fiscal 2021 earnings of $1.30 per share, which beat the Zacks Consensus Estimate by 26.2% and improved substantially from the year-ago quarter’s figure of 37 cents.

Revenues increased 13.9% year over year to $7.21 billion that beat management’s guidance of $6.6-$7.2 billion. The figure also surpassed the Zacks Consensus Estimate by 4.9%.

Jabil’s third-quarter results reflected continued end-market strength and solid operational execution. The company witnessed strong top-line growth in mobility, cloud-connected devices, and semi-cap in the reported quarter.

However, Jabil witnessed some supply-chain headwinds in the fiscal third quarter, which is expected to continue in the fiscal fourth quarter. The company expects supply-chain issues to hurt through early (until the spring or summer) fiscal 2022.

Jabil, Inc. Price and Consensus

 

Jabil, Inc. Price and Consensus

Jabil, Inc. price-consensus-chart | Jabil, Inc. Quote

Quarter Details

Electronics Manufacturing Services (EMS) revenues accounted for 50% of total revenues and increased 8% year over year to $3.6 billion. The growth was primarily driven by robust performances by cloud and semi-cap businesses.

Diversified Manufacturing Services (DMS) revenues accounted for rest of the total revenues and improved 21% year over year to $3.6 billion. The upside can be attributed to growth in several end-markets, such as connected devices, healthcare, automotive and mobility.

Gross margin, on a GAAP basis, expanded 70 basis points (bps) year over year to 8.3%.

Core EBITDA margin expanded 110 bps on a year-over-year basis to 6.8%.

As a percentage of revenues, selling, general and administrative (SG&A) expenses declined 50 bps year over year to 4.2%, while research & development (R&D) expenses were unchanged on a year-over-year basis at 0.1%.

Non-GAAP core operating margin expanded 110 bps on a year-over-year basis to 3.8%. The strong expansion was driven by solid top-line growth.

EMS operating margin expanded 90 bps year over year to 3.8%. Moreover, DMS operating margin expanded 140 bps year over year to 3.9%.

Balance Sheet & Cash flow

As of May 31, 2021, cash and cash equivalents were $1.24 billion compared with $838 million as of Feb 28, 2021. The company ended third-quarter fiscal 2021 with committed capacity under the global credit facilities of $3.8 billion.

Jabil reported cash flow from operations of $585 million and adjusted $388 million in the reported quarter.

The company also repurchased approximately 2.5 million shares for $130 million.

Guidance

For fourth-quarter fiscal 2021, Jabil expects total revenues between $7.3 billion and $7.9 billion, suggesting an increase of 4% on a year-over-year basis at the midpoint of the range.

DMS revenues are expected to be $3.95 billion, which suggests an increase of 11% year over year. EMS revenues are forecast at $3.65 billion, which indicates a decline of 2% year over year.

Core operating income is estimated in the $280-$340 million range. The company’s earnings are expected between $1.25 and $1.45 per share on a non-GAAP basis.

Jabil raised its outlook for fiscal 2021 following impressive third-quarter results. Revenues are expected to be around $29.5 billion, with expected core margin of 4.2%.

DMS segment revenues are expected at $15.4 billion, with expected core margin of 4.7% for fiscal 2021.

Further, EMS segment revenues are expected to be $14.1 billion, with core margin projected to be 3.6%.

The company’s earnings are expected to be $5.50 per share on a non-GAAP basis.

Moreover, free cash flow for fiscal 2021 is expected to be more than $630 million.

Zacks Rank & Stocks to Consider

Jabil currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology sector include Micron (MU - Free Report) , CalAmp (CAMP - Free Report) and Cognyte (CGNT - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Cognyte, CalAmp and Micron are set to reported quarterly results on Jun 22, 24 and 30, respectively.

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