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Jabil (JBL) Q4 Earnings Beat Estimates, Revenues Fall Short

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Jabil (JBL - Free Report) reported fourth-quarter fiscal 2021 earnings of $1.44 per share, which beat the Zacks Consensus Estimate by 5.88% and increased 46.9% from the year-ago quarter.

Revenues increased 1.5% year over year to $7.40 billion and were within the guidance of $7.3-$7.9 billion. The figure, however, missed the Zacks Consensus Estimate by 2.9%.

Jabil witnessed some supply-chain headwinds in the fiscal fourth quarter, mainly in healthcare, industrial and cloud. This was partly offset by upsides in connected devices and networking and storage.

Jabil, Inc. Price, Consensus and EPS Surprise

Jabil, Inc. Price, Consensus and EPS Surprise

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

Quarter Details

Electronics Manufacturing Services (EMS) revenues accounted for 47% of total revenues and decreased 6% year over year to $3.48 billion due to the previously announced transition to a consignment model.

Diversified Manufacturing Services (DMS) revenues accounted for the rest of the total revenues and improved 10% year over year to $3.92 billion. The strong year-over-year performance in the DMS segment was broad-based with strength across healthcare, automotive and mobility businesses.

Gross margin, on a GAAP basis, expanded 120 basis points (bps) year over year to 7.9%.

Core EBITDA margin expanded 120 bps on a year-over-year basis to 7.2%.

As a percentage of revenues, selling, general and administrative (SG&A) expenses expanded 50 bps year over year to 4%, while research & development (R&D) expenses contracted 10 bps on a year-over-year basis to 0.1%.

Non-GAAP core operating margin expanded 70 bps on a year-over-year basis to 4.2%. The strong expansion was driven by steady top-line growth.

Balance Sheet & Cash Flow

As of Aug 31, 2021, cash and cash equivalents were $1.56 billion compared with $1.24 billion as of May 31, 2021. The company ended fourth-quarter fiscal 2021 with committed capacity under the global credit facilities of $3.8 billion. With this available capacity, along with year-end cash balance, Jabil ended fiscal 2021 with access to more than $5.3 billion of available liquidity.

During the fiscal fourth quarter, the company repurchased 2.9 million shares, bringing the total shares repurchased in fiscal 2021 to 8.8 million shares or $477 million.

Guidance

For first-quarter fiscal 2022, Jabil expects total revenues between $8 billion and $8.6 billion.

DMS revenues are expected to be $4.7 billion, which suggests an increase of 10% year over year. EMS revenues are forecast to remain unchanged year over year at $3.6 billion.

Core operating income is estimated in the $365-$425 million range. The company’s earnings are expected between $1.41 and $1.61 per share on a non-GAAP basis.

Zacks Rank & Stocks to Consider

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

Some better-ranked stocks in the broader technology sector include Applied Materials, Inc. (AMAT - Free Report) , Cognizant Technology Solutions Corporation (CTSH - Free Report) and Garmin Ltd. (GRMN - 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.

The long-term earnings growth rate for Applied Materials, Cognizant Technology Solutions Corporation and Garmin Ltd. is currently pegged at 19.3%, 11% and 6.8%, respectively.

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