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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 2020 earnings of 37 cents per share, which beat the Zacks Consensus Estimate by 8.8%. However, the figure decreased 35.1% year over year due to disruptions caused by coronavirus outbreak.

Revenues increased 3.3% year over year to $6.33 billion and beat the Zacks Consensus Estimate by 13.7%.
 
Quarter Details

Electronics Manufacturing Services (EMS) revenues accounted for 62% of total revenues and decreased 2% year over year to $3.9 billion. However, Diversified Manufacturing Services (DMS) revenues accounted for 38% of total revenues and improved 13% year over year to $2.4 billion.

Gross margin, on a GAAP basis, remained flat year over year at 7.2%.

Core EBITDA margin contracted 40 bps on a year-over-year basis to 5.6%.

Jabil, Inc. Price, Consensus and EPS Surprise

Jabil, Inc. Price, Consensus and EPS Surprise

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

Operating expenses on a GAAP basis expanded 130 bps on a year-over-year basis to 6.3%. As a percentage of revenues, while selling, general and administrative (SG&A) expenses expanded 30 bps year over year to 4.8%, research & development (R&D) expenses remained unchanged on a year-over-year basis.

Jabil spent $50 million for restructuring workforce in the third quarter, primarily related to severance costs and extended health care benefits to those impacted by coronavirus.

Non-GAAP core operating margin contracted 30 bps on a year-over-year basis to 2.7%.

Balance Sheet & Cash Flow

As of May 31, 2020, cash and cash equivalents were $763.3 million compared with $696.7 million as of Feb 29, 2020.

Jabil added $625 million in liquidity, bringing available committed capacity under the global credit facilities to $3.7 billion at the end of third-quarter fiscal 2020.

In third-quarter fiscal 2020, Jabil repurchased approximately 800,000 million shares for $21 million bringing total year-to-date repurchases to $190 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 the coronavirus outbreak.

For fourth-quarter fiscal 2020, Jabil expects total revenues between $5.8 billion and $6.6 billion.

DMS revenues are forecast to be $2.5 billion, up 1% year over year. EMS revenues are forecast to be $3.8 billion, down nearly 8% year over year.

Core non-GAAP operating income is estimated to be $145-$245 million. The company’s core earnings are expected between 46 cents and 86 cents per share on a non-GAAP basis.

For fiscal 2020, revenues are expected to be around $26.2 billion. Core operating income is expected to be around $850 million.

For DMS segment, revenues are expected to be $10.3 billion with expected core margin of 3.8% for fiscal 2020.

Further, EMS segment revenues are expected to be $15.9 billion with expected core margin of 2.6% for fiscal 2020.

The company’s core earnings are expected to be $2.6 per share on a non-GAAP basis.

Adjusted free cash flow is expected to be more than $400 million.

Zacks Rank & Stocks to Consider

Jabil currently carries a Zacks Rank #5 (Strong Sell).

Some better-ranked stocks in the broader technology sector include PTC Inc. (PTC - Free Report) , Citrix Systems (CTXS - Free Report) and ServiceNow (NOW - Free Report) . All three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for PTC, Citrix Systems and ServiceNow is currently pegged at 32.4%, 28.2% and 8.2%, respectively.

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