Jabil Circuit's Results in its Own Words

Sep.27.06 | About: Jabil Circuit (JBL)

Excerpt from Jabil Circuit's earnings conference call; CFO Forbes Alexander is speaking:

Revenue for our fourth fiscal quarter ’06 was at the upper end of guidance at $2.955 billion. On a year-over-year basis, the quarter represents a 45% growth in revenue, and on a sequential basis, revenues increased by 14%. Please turn to slide 3.

Revenues for fiscal year 2006 were $10.267 billion, representing a 36% growth over fiscal 2005. Now I will ask you to turn to slide 4.

Fourth quarter revenues increased 14% over the third quarter. Production levels in the automotive sector decreased 4% from the prior quarter, reflecting seasonal lower levels of production. The computing and storage sector increased by 14% over the third quarter as a result of higher production levels than we had forecast.

Consumer products sector decreased by 5% from third quarter. Instrumentation and medical sector increased by 7% from the third quarter. Networking sector, levels of production there increased by 141% from the previous quarter. This increase reflects the results of our partnering with one of our communications customers in new lean manufacturing initiatives.

The peripherals sector decreased by 10% in the previous quarter, and finally, the telecommunications sector increased 6% over the third quarter. Now I will ask you to turn to slide 5.

Reviewing our sector information for the quarter and the fiscal year in percentage terms, they were as follows -- I will cover the fourth quarter first:

  • Automotive was 5%;
  • Computing and storage, 12%;
  • Consumer, 31%;
  • Instrumentation and medical, 17%;
  • Networking, 18%;
  • Peripherals, 6%;
  • Telecom, 6%; and
  • Other was 5%.

For the full fiscal year:

  • The automotive sector was 5%;
  • Computing and storage, 12%;
  • Consumer, 36%;
  • Instrumentation and medical, 17%;
  • Networking, 13%;
  • Peripherals, 7%;
  • Telecom, 6%; and
  • Other, 4%.

On a year-over-year basis, we have added approximately $2.75 billion worth of revenue, with our computing and storage sector growing 27%, our consumer sector growing 68%, storage 51%, networking 16%, peripherals 27%, our services sector, 34%, while automotive and telecom were consistent with the previous year.

In the fiscal year, two customers accounted for more than 10% of revenue. Those were Nokia (NYSE:NOK) with 20% and Phillips (NYSE:PHG) at 12%. Our top-ten customers accounted for approximately 66% of our revenue. Please now turn to slide 6.

Reviewing selected ratios and balance sheet items, the company’s sales cycle in the fourth fiscal quarter fell by five days to the lowest level in our history at 14 days. Inventory turns for the quarter were consistent with that of the third quarter at eight. Cash and cash equivalents were $774 million, as compared to $855 million at the end of the third quarter. The lower cash balance reflects the use of $200 million to repurchase shares and the payment in June of our first quarterly dividend of approximately $15 million, offset by cash generated from operations.

Our capital expenditures during the quarter were approximately $95 million, at the higher end of our previous guidance, reflecting the continued investment to support forecasted future demand. Capital expenditures for the fiscal year were approximately $280 million.

With regard to our stock repurchase, on the 28th of June, 2006, our Board of Directors authorized the repurchase of up to $200 million worth of shares of the company’s common stock. On the 27th of July, 2006, we completed this share repurchase program, repurchasing approximately 8.4 million shares at an average price of $23.76 per share.

As we move into fiscal year 2007, we are well-positioned to continue to generate cash flow from operations in excess of our investing activities.

As we discussed on our last earnings call in May, based upon the strength of our expected future cash flows, and as a commitment to working capital discipline, we announced a quarterly dividend. A second such dividend was announced on August 2, 2006, of $0.07 per share. This was paid on September 1, 2006.

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