Positive Momentum Expected to Continue

Today, Jabil Inc. (NYSE:JBL), reported preliminary, unaudited financial results for its second quarter of fiscal year 2023.

"The Jabil team delivered another outstanding quarter, highlighted by excellent operational execution and solid revenue growth," said Chairman and CEO Mark Mondello. "Our diversified portfolio allowed us to successfully navigate a very dynamic macro environment and deliver robust year-on-year financial results," he added.

Second Quarter of Fiscal Year 2023 Highlights:

Net revenue: $8.1 billion
Diversified Manufacturing Services (DMS) year-on-year revenue growth: 8 percent
Electronics Manufacturing Services (EMS) year-on-year revenue growth: 7 percent
U.S. GAAP operating income: $359 million
U.S. GAAP diluted earnings per share: $1.52
Core operating income (Non-GAAP): $391 million
Core diluted earnings per share (Non-GAAP): $1.88

Third Quarter of Fiscal Year 2023 Outlook:

• Net revenue			$7.9 billion to $8.5 billion
• U.S. GAAP operating income			$336 million to $396 million
• U.S. GAAP diluted earnings per share			$1.50 to $1.90 per diluted share
• Core operating income (Non-GAAP) ⁽¹⁾			$363 million to $423 million
• Core diluted earnings per share (Non-GAAP) ⁽¹⁾			$1.70 to $2.10 per diluted share

Fiscal Year 2023 Updated Outlook:

"I remain confident in both our plan moving forward and with the momentum underway across our business," said incoming CEO Kenny Wilson. "For the fiscal year, we now believe the team will deliver 4.9% core operating margin on $34.5 billion in revenue," added Wilson.

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⁽¹⁾ Core operating income and core diluted earnings per share exclude anticipated adjustments of $8 million for amortization of intangibles (or $0.06 per diluted share) and $19 million for stock-based compensation expense and related charges (or $0.14 per diluted share).

(Definitions: "U.S. GAAP" means U.S. generally accepted accounting principles. Jabil defines core operating income as U.S. GAAP operating income less amortization of intangibles, stock-based compensation expense and related charges, restructuring, severance and related charges, distressed customer charges, acquisition and integration charges, loss on disposal of subsidiaries, settlement of receivables and related charges, impairment of notes receivable and related charges, goodwill impairment charges and business interruption and impairment charges, net plus other components of net periodic benefit cost. Jabil defines core earnings as core operating income, less loss on debt extinguishment, loss (gain) on securities, other components of net periodic benefit cost, income (loss) from discontinued operations, gain (loss) on sale of discontinued operations and certain other expenses, net of tax and certain deferred tax valuation allowance charges. Jabil defines core diluted earnings per share as core earnings divided by the weighted average number of outstanding diluted shares as determined under U.S. GAAP. Jabil defines adjusted free cash flow as net cash provided by (used in) operating activities less net capital expenditures (acquisition of property, plant and equipment less proceeds and advances from sale of property, plant and equipment). Jabil reports core operating income, core earnings, core diluted earnings per share and adjusted free cash flow to provide investors an additional method for assessing operating income, earnings, diluted earnings per share and free cash flow from what it believes are its core manufacturing operations. See the accompanying reconciliation of Jabil's core operating income to its U.S. GAAP operating income, its calculation of core earnings and core diluted earnings per share to its U.S. GAAP net income and U.S. GAAP earnings per share and additional information in the supplemental information.)

Forward Looking Statements: This release contains forward-looking statements, including those regarding our anticipated financial results for our second quarter of fiscal year 2023 and our guidance for future financial performance in our third quarter of fiscal year 2023 (including, net revenue, U.S. GAAP operating income, U.S. GAAP diluted earnings per share, core operating income (Non-GAAP), core diluted earnings per share (Non-GAAP) results and the components thereof, including but not limited to amortization of intangibles and stock-based compensation expense and related charges) and our full year 2023 (including revenue and core operating margin (Non-GAAP)). The statements in this release are based on current expectations, forecasts and assumptions involving risks and uncertainties that could cause actual outcomes and results to differ materially from our current expectations. Such factors include, but are not limited to: our determination as we finalize our financial results for our second quarter of fiscal year 2023 that our financial results and conditions differ from our current preliminary unaudited numbers set forth herein; scheduling production, managing growth and capital expenditures and maximizing the efficiency of our manufacturing capacity effectively; managing rapid declines or increases in customer demand and other related customer challenges that may occur; the scope and duration of the COVID-19 outbreak and its impact on our operations, sites, customers and supply chain; our dependence on a limited number of customers; our ability to purchase components efficiently and reliance on a limited number of suppliers for critical components; risks arising from relationships with emerging companies; changes in technology and competition in our industry; our ability to introduce new business models or programs requiring implementation of new competencies; competition; transportation issues; our ability to maintain our engineering, technological and manufacturing expertise; retaining key personnel; risks associated with international sales and operations, including geopolitical uncertainties in Russia and Ukraine; energy price increases or shortages; our ability to achieve expected profitability from acquisitions; risk arising from our restructuring activities; issues involving our information systems, including security issues; regulatory risks (including the expense of complying, or failing to comply, with applicable regulations; risk arising from design or manufacturing defects; and intellectual property risk); financial risks (including customers or suppliers who become financially troubled; turmoil in financial markets; tax risks; credit rating risks; risks of exposure to debt; currency fluctuations; and asset impairment); changes in financial accounting standards or policies; and risk of natural disaster, climate change or other global events. Additional factors that could cause such differences can be found in our Annual Report on Form 10-K for the fiscal year ended August 31, 2022 and our other filings with the Securities and Exchange Commission. We assume no obligation to update these forward-looking statements.

Supplemental Information Regarding Non-GAAP Financial Measures: Jabil provides supplemental, non-GAAP financial measures in this release to facilitate evaluation of Jabil's core operating performance. These non-GAAP measures exclude certain amounts that are included in the most directly comparable U.S. GAAP measures, do not have standard meanings and may vary from the non-GAAP financial measures used by other companies. Management believes these "core" financial measures are useful measures that facilitate evaluation of the past and future performance of Jabil's ongoing operations on a comparable basis.

Jabil reports core operating income, core earnings, core diluted earnings per share and adjusted free cash flows to provide investors an additional method for assessing operating income, earnings, earnings per share and free cash flow from what it believes are its core manufacturing operations. Among other uses, management uses non-GAAP financial measures to make operating decisions, assess business performance and as a factor in determining certain employee performance when determining incentive compensation.

For fiscal year 2023, the Company adopted an annual normalized tax rate ("normalized core tax rate") for the computation of the non-GAAP (core) income tax provision to provide better consistency across reporting periods. In estimating the normalized core tax rate annually, the Company utilizes a full-year financial projection of core earnings that considers the mix of earnings across tax jurisdictions, existing tax positions, and other significant tax matters. The Company may adjust the normalized core tax rate during the year for material impacts from new tax legislation or material changes to the Company's operations.

Prior to fiscal year 2023, the Company determined the tax effect of the items included and excluded from core earnings quarterly.

Detailed definitions of certain of the core financial measures are included above under "Definitions" and a reconciliation of the disclosed core financial measures to the most directly comparable U.S. GAAP financial measures is included under the heading "Supplemental Data" at the end of this release.

Meeting and Replay Information: Jabil will hold a conference call today at 8:30 a.m. ET to discuss its earnings for the second quarter of fiscal year 2023. To access the live audio webcast and view the accompanying slide presentation, visit the Investor Relations section of Jabil's website, located at https://investors.jabil.com. An archived replay of the webcast will also be available after completion of the call.

About Jabil: Jabil (NYSE:JBL) is a manufacturing solutions provider with over 250,000 employees across 100 locations in 30 countries. The world's leading brands rely on Jabil's unmatched breadth and depth of end-market experience, technical and design capabilities, manufacturing know-how, supply chain insights and global product management expertise. Driven by a common purpose, Jabil and its people are committed to making a positive impact on their local community and the environment. Visit www.jabil.com to learn more.


JABIL INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in millions)

	February 28, 2023
	(unaudited)			August 31, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	1,200		$	1,478
Accounts receivable, net		3,715			3,995
Contract assets		1,175			1,196
Inventories, net		6,519			6,128
Prepaid expenses and other current assets		1,172			1,111
Total current assets		13,781			13,908
Property, plant and equipment, net		3,903			3,954
Operating lease right-of-use asset		501			500
Goodwill and intangible assets, net		852			862
Deferred income taxes		217			199
Other assets		313			294
Total assets	$	19,567		$	19,717
LIABILITIES AND EQUITY
Current liabilities:
Current installments of notes payable and long-term debt	$	323		$	300
Accounts payable		6,965			8,006
Accrued expenses		5,866			5,272
Current operating lease liabilities		128			119
Total current liabilities		13,282			13,697
Notes payable and long-term debt, less current installments		2,577			2,575
Other liabilities		297			272
Non-current operating lease liabilities		405			417
Income tax liabilities		206			182
Deferred income taxes		126			122
Total liabilities		16,893			17,265
Commitments and contingencies
Equity:
Jabil Inc. stockholders' equity:
Preferred stock		—			—
Common stock		—			—
Additional paid-in capital		2,742			2,655
Retained earnings		4,046			3,638
Accumulated other comprehensive income (loss)		9			(42	)
Treasury stock, at cost		(4,124	)		(3,800	)
Total Jabil Inc. stockholders' equity		2,673			2,451
Noncontrolling interests		1			1
Total equity		2,674			2,452
Total liabilities and equity	$	19,567		$	19,717


JABIL INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, except for per share data) (Unaudited)

	Three months ended				Six months ended
	February 28, 2023		February 28, 2022		February 28, 2023		February 28, 2022
Net revenue	$	8,134	$	7,553	$	17,769	$	16,120
Cost of revenue		7,473		6,944		16,365		14,836
Gross profit		661		609		1,404		1,284
Operating expenses:
Selling, general and administrative		285		280		604		588
Research and development		8		8		17		17
Amortization of intangibles		9		8		17		16
Restructuring, severance and related charges		—		—		45		—
Operating income		359		313		721		663
Interest and other, net		72		29		135		62
Income before income tax		287		284		586		601
Income tax expense		80		62		156		138
Net income		207		222		430		463
Net income attributable to noncontrolling interests, net of tax		—		—		—		—
Net income attributable to Jabil Inc.	$	207	$	222	$	430	$	463
Earnings per share attributable to the stockholders of Jabil Inc.:
Basic	$	1.55	$	1.55	$	3.21	$	3.22
Diluted	$	1.52	$	1.51	$	3.14	$	3.15
Weighted average shares outstanding:
Basic		133.6		143.5		134.2		143.8
Diluted		136.3		146.4		137.1		147.0


JABIL INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) (Unaudited)

	Six months ended
	February 28, 2023			February 28, 2022
Cash flows provided by operating activities:
Net income	$	430		$	463
Depreciation, amortization, and other, net		514			524
Change in operating assets and liabilities, exclusive of net assets acquired		(364	)		(787	)
Net cash provided by operating activities		580			200
Cash flows used in investing activities:
Acquisition of property, plant and equipment		(637	)		(704	)
Proceeds and advances from sale of property, plant and equipment		169			430
Cash paid for business and intangible asset acquisitions, net of cash		—			(18	)
Other, net		(16	)		—
Net cash used in investing activities		(484	)		(292	)
Cash flows used in financing activities:
Borrowings under debt agreements		2,021			984
Payments toward debt agreements		(2,070	)		(1,038	)
Payments to acquire treasury stock		(288	)		(272	)
Dividends paid to stockholders		(23	)		(25	)
Net proceeds from exercise of stock options and issuance of common stock under employee stock purchase plan		27			26
Treasury stock minimum tax withholding related to vesting of restricted stock		(36	)		(44	)
Other, net		(2	)		(12	)
Net cash used in financing activities		(371	)		(381	)
Effect of exchange rate changes on cash and cash equivalents		(3	)		(1	)
Net decrease in cash and cash equivalents		(278	)		(474	)
Cash and cash equivalents at beginning of period		1,478			1,567
Cash and cash equivalents at end of period	$	1,200		$	1,093


JABIL INC. AND SUBSIDIARIES SUPPLEMENTAL DATA RECONCILIATION OF U.S. GAAP FINANCIAL RESULTS TO NON-GAAP MEASURES (in millions, except for per share data) (Unaudited)

	Three months ended						Six months ended
	February 28, 2023			February 28, 2022			February 28, 2023			February 28, 2022
Operating income (U.S. GAAP)	$	359		$	313		$	721		$	663
Amortization of intangibles		9			8			17			16
Stock-based compensation expense and related charges		20			16			62			51
Restructuring, severance and related charges		—			—			45			—
Net periodic benefit cost⁽¹⁾		3			7			7			14
Adjustments to operating income		32			31			131			81
Core operating income (Non-GAAP)	$	391		$	344		$	852		$	744
Net income attributable to Jabil Inc. (U.S. GAAP)	$	207		$	222		$	430		$	463
Adjustments to operating income		32			31			131			81
Net periodic benefit cost⁽¹⁾		(3	)		(7	)		(7	)		(14	)
Adjustments for taxes		20			—			21			—
Core earnings (Non-GAAP)	$	256		$	246		$	575		$	530
Diluted earnings per share (U.S. GAAP)	$	1.52		$	1.51		$	3.14		$	3.15
Diluted core earnings per share (Non-GAAP)	$	1.88		$	1.68		$	4.19		$	3.60
Diluted weighted average shares outstanding (U.S. GAAP & Non-GAAP)		136.3			146.4			137.1			147.0

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⁽¹⁾

Pension service cost is recognized in cost of revenue and all other components of net periodic benefit cost, including return on plan assets, are presented in other expense. We are reclassifying the pension components in other expense to core operating income as we assess operating performance, inclusive of all components of net periodic benefit cost, with the related revenue. There is no impact to core earnings or diluted core earnings per share for this adjustment.


JABIL INC. AND SUBSIDIARIES SUPPLEMENTAL DATA ADJUSTED FREE CASH FLOW (in millions) (Unaudited)

	Six months ended
	February 28, 2023			February 28, 2022
Net cash provided by operating activities (U.S. GAAP)	$	580		$	200
Acquisition of property, plant and equipment ("PP&E")⁽¹⁾		(637	)		(704	)
Proceeds and advances from sale of PP&E⁽¹⁾		169			430
Adjusted free cash flow (Non-GAAP)	$	112		$	(74	)

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⁽¹⁾	Certain customers co-invest in property, plant and equipment ("PP&E") with us. As we acquire PP&E, we recognize the cash payments in acquisition of PP&E. When our customers reimburse us and obtain control, we recognized the cash receipts in proceeds and advances from the sale of PP&E.

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Jabil Posts Second Quarter Results