Jabil (JBL) Q1 Earnings Beat Estimates, Revenues Rise Y/Y

Jabil JBL reported first-quarter fiscal 2021 earnings of $1.60 per share, which beat the Zacks Consensus Estimate by 53.8% and increased 52.4% year over year.

Revenues increased 4.4% year over year to $7.83 billion backed by contract wins in healthcare, automotive, cloud and 5G. The figure beat the Zacks Consensus Estimate by 11.9%.

Quarter Details

Electronics Manufacturing Services (EMS) revenues contributed 46% to total revenues and declined 4% year over year to $3.6 billion.

Diversified Manufacturing Services (DMS) revenues contributed 54% to total revenues and improved 13% year over year to $4.23 billion. The upside can be attributed to growth in its $5-billion healthcare and packaging business, which serves many of the most critical healthcare, medical device and consumer packaged goods companies in the world.

Gross margin, on a GAAP basis, expanded 70 basis points (bps) year over year to 8.1%.

Core EBITDA margin expanded 100 bps on a year-over-year basis to 7.1%.

Operating expenses, on a GAAP basis, contracted 130 bps on a year-over-year basis to 4.1%. As a percentage of revenues, while selling, general and administrative (SG&A) expenses contracted 50 bps year over year to 3.9%, research & development (R&D) expenses remained unchanged on a year-over-year basis.

Non-GAAP core operating margin expanded 100 bps on a year-over-year basis to 4.7%.

Balance Sheet & Cash Flow

As of Nov 30, 2020, cash and cash equivalents were $1.1 billion compared with $1.39 billion as of Aug 31, 2020. The company ended first-quarter fiscal 2021 with committed capacity under the global credit facilities of $3.8 billion.

In first-quarter fiscal 2021, Jabil repurchased approximately 1.5 million shares for $50 million, bringing total year-to-date repurchases to $216.5 million, as part of a two-year $600-million authorization announced in September 2019.

Guidance

For second-quarter fiscal 2021, Jabil expects total revenues between $6.2 billion and $6.8 billion.

DMS revenues are forecast to be $3.5 billion, which suggests an increase of 22% year over year. EMS revenues are forecast to be $3 billion, which indicates a decline of nearly 8% year over year.

Core non-GAAP operating income is estimated to be $210-$260 million. The company’s core earnings are expected between 83 cents and $1.03 per share on a non-GAAP basis.

For fiscal 2021, revenues are expected to be around $27.5 billion with expected core margin of 4.1%.

DMS segment revenues are expected to be $15 billion with expected core margin of 4.5% for fiscal 2021.

Further, EMS segment revenues are expected to be $12.5 billion with core margin projected to be 3.6%.

The company’s core earnings are expected to be $4.6 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 Sanmina Corporation SANM, Dell Technologies (NYSE:DELL) Inc. DELL and Vertiv Holdings (NYSE:VRT) VRT, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Long-term earnings growth rate for Sanmina Corporation, Dell and Vertiv Holdings is currently pegged at 12%, 12% and 38.9%, respectively.

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