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Jabil (JBL) Q2 Earnings Miss, Coronavirus Dents Y/Y Growth

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Jabil (JBL - Free Report) reported second-quarter fiscal 2020 earnings of 50 cents per share, which lagged the Zacks Consensus Estimate by 16.7% and decreased 21.9% year over year.

The earnings figure also lagged management’s guided range of 62-82 cents per share on a non-GAAP basis.

Notably, Jabil spent nearly $53 million related to business interruptions caused by COVID-19 (coronavirus) outbreak.

Revenues increased 1% year over year to $6.13 billion that beat the Zacks Consensus Estimate by 0.02%. The figure also surpassed the guided range of $6-$6.7 billion.
 

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 63% of total revenues and increased 1% year over year to $3.8 billion. Diversified Manufacturing Services (DMS) revenues accounted for 37% of total revenues and improved 1% year over year to $2.3 billion.

Gross margin, on a GAAP basis, contracted 50 basis points (bps) year over year to 7%.

Core EBITDA margin contracted 60 bps on a year-over-year basis to 5.6%.

Operating expenses on a GAAP basis expanded 60 bps on a year-over-year basis to 5.5%. Both selling, general and administrative (SG&A) expenses and research & development (R&D) expenses as a percentage of revenues were unchanged on a year-over-year basis.

Jabil incurred $30 million in restructuring and severance-related charges in the second-quarter, primarily related to the 2020 restructuring plan announced in September 2019.

Non-GAAP core operating margin contracted 50 bps on a year-over-year basis to 2.6%.

Balance Sheet & Cash Flow

As of Feb 29, 2020, cash and cash equivalents were $696.7 million compared with $719.8 million as of Nov 30, 2019.

Jabil has more than $3 billion of global revolver credit facilities and at the end of the second-quarter, over 90% of these facilities were available. The company exited the quarter with total debt-to-core EBITDA of approximately 1.7 times.

In second-quarter fiscal 2020, Jabil repurchased approximately 1.8 million shares for $72 million as part of a two-year $600 million authorization announced in September 2019.

Guidance

Jabil withdrew its previously provided guidance for fiscal 2020 due to the uncertainty related to coronavirus outbreak.

Zacks Rank & Stocks to Consider

Jabil currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the broader technology sector include Microsoft (MSFT - Free Report) , Intel (INTC - Free Report) and Garmin (GRMN - Free Report) . All three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Microsoft, Intel and Garmin is currently pegged at 13.2%, 7.5% and 7.4% respectively.


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