WASHINGTON (dpa-AFX) - Electronic product solutions company Jabil Circuit Inc. (JBL) is moving forward with improved product diversification and exceptional productivity across both of its business segments, against a favorable backdrop of end-markets that include mobility, consumer lifestyles, healthcare and consumer packaging. The company says it is 'well-positioned for a solid 2016.'
The stock on our radar - Jabil Circuit manufactures technologies like optics, wearables and unique sensor solutions that drive connection-enabled solutions in multiple industries, including healthcare, wellness and automotive.
Pacing at about $11 billion in annual revenue, Jabil's Electronics Manufacturing Services or EMS business grew modestly and improved profitability as it enhanced its value proposition. EMS segment is focused around leveraging IT, supply chain design and engineering, technologies largely centered on core electronics, sharing of large scale manufacturing infrastructure and the ability to serve a broad range of end markets.
The company believes its Diversified Manufacturing Services or DMS business - that generated $7 billion in revenue and represented a wide array of products - is uniquely positioned to generate further growth and diversity for the company as it leverage tremendous levels of engineering aptitude to drive innovation in the areas of material sciences, precision machining and tooling.
Customer Concentration
Based on net revenue, for the fiscal year ended August 31, 2015, the company's largest customers include Apple Inc., Cisco Systems Inc., LM Ericsson Telephone Company, General Electric Company, Hewlett-Packard Company, Ingenico S.A., NetApp Inc., Sony Mobile Communications Inc., Valeo S.A. and Zebra Technologies Corp.
In fiscal 2015, 2014, and 2013, Apple Inc. accounted for about 24%, 18%, and 20% of the company's net revenue, respectively. In fiscal year 2015, Jabil's five largest customers accounted for about 50% of its net revenue and 81 customers accounted for about 90% of the company's net revenue.
For the fiscal year 2015, the company had net revenues of about $17.9 billion and net income attributable to Jabil Circuit of about $284.0 million.
FY16 In Focus
Mark Mondello, Chief Executive Office, said, 'Our strategic investments continue to pay dividends as evidenced by our 24 percent core return on invested capital in the first quarter. I am also pleased that our outlook for the balance of the fiscal year remains on track, supported by our customized supply chain management and engineering solutions, both of which are increasingly important in this digital age.'
The company reiterated fiscal 2016 revenue guidance of about $20 billion and increased its core earnings outlook to about $2.65 per share.
For the second quarter of fiscal 2016, the company projects net revenue in the range of $4.4 billion - $4.7 billion, with GAAP operating income of $136 million - $180 million, and GAAP earnings of $0.37 - $0.55 per share.
Core operating income for the second quarter is expected to be in the range of $170 million - $210 million, and core earnings between $0.54 and $0.70 per share.
The DMS segment is expected to increase about 14% on a year-over-year basis with revenues estimated to be about $1.9 billion. The EMS segment is expected to remain consistent on a year-over-year basis with revenues estimated to be about $2.6 billion.
Latest Q1 Overview
The company's first-quarter GAAP net income was $131.9 million or $0.68 per share compared to $72.2 million or $0.37 per share in the prior year period.
Core earnings rose to $164.9 million or $0.85 per share from the previous year's $108.2 million or $0.55 per share.
GAAP operating income was $214.5 million versus $144.8 million last year, and Core operating income was $248 million compared to $180.6 million reported a year ago.
Net revenue totaled $5.2 billion for the latest first quarter, higher than the prior year's revenue of $4.6 billion.
The company's DMS segment revenue was about $2.5 billion, an increase of 30% on a year-over-year basis, representing 48% of total company revenue. EMS segment revenue was $2.7 billion, up 3% over last year, representing 52% of total company revenue.
Jabil ended the quarter with cash balances of about $1.1 billion. Cash flow from operations for the quarter was $145 million. Net capital expenditures were as expected and totaled $249 million. Capital expenditures for the full fiscal year remain in the range of $800 million - $1 billion, as the company continues to invest for future growth opportunities.
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