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Jabil Circuit Inc. (NYSE:JBL)

Annual Shareholder Meeting

January 26, 2012 10:00 AM ET

Executives

Beth Walters – Senior Vice President of Communications and Investor Relations

Bob Paver – Executive Vice President, Chief Executive Officer of Manufacturing Services Group

Douglas Ives – Inspector of Election

Timothy Main – President and CEO

Analysts

Gerhard Brown [ph]

Beth Walters

Good morning, shareholders, employees, board. I am Beth Walters Senior Vice President of Communications and Investor Relations for Jabil. And on behalf of the management of Jabil, welcome to our 2011 annual meeting of shareholders.

I’ll begin this morning by introducing the companies board of directors who are with us today, starting with Bill Morean, Chairman of the board who will preside over the meeting today, Thomas Sansone, the Vice-Chair, Martha Brooks, who’s new to our board. At our first annual meeting, she joined us last spring.

Mel Lavitt, Timothy Main, our President and CEO, Lawrence Murphy, Frank Newman, Steve Raymund, and David Stout.

It is a good board, isn’t it? Next, I’d like to take a minute to introduce – to introduce some of our corporate executives who are able to join us today, our Chief Operating Officer, Mark Mondello, our Chief Financial Officer, Forbes Alexander, our Corporate Secretary and General Council, Bob Paver, our Executive Vice President, Chief Executive Officer of Manufacturing Services Group, Bill Muir, Hartmut Liebel our Executive Vice President, Chief Executive Officer of our After Market Services Group.

HH Chiang, who is our Executive Vice President, Chief Executive Officer of our Materials Technology Group, Mike Dastoor, our Senior Vice President and Controller whose hand is not raised because he must not be here, okay.

Sergio Cadavid, our Treasurer. Great. I know we have several other officers that are in attendance today. If you could just raise your hand in recognition of your attendance here? A lot of other officers. See, I could have been introducing people for a really long time.

Also with us today are Mr. James Efti [ph] and Mr. Steve Nichols of Ernst and Young LLP, Jabil’s independent registered certified public accounting firm. If questions arise during the meeting, Mr. Efti or Mr. Nichols should appropriately addresses, they will be glad to respond.

We are audio webcasting this meeting live on Jabil’s website at jabil.com. In addition, an index replay of the webcast will be available at approximately 1:30 this afternoon, Thursday, January 26.

This replay will be posted on Jabil’s website in the Investor Relations section. We’ll begin our annual meeting today with the formal business of voting on the matters identified in the notice of this meeting.

Our General Council and Corporate Secretary Bob Paver will handle the official voting portion of our meeting described in the notice of this annual meeting that was mailed to shareholders of record as of November 28, 2011.

Following the business portion of the meeting, we have a video presentation which I will note, will not be webcast, and then we’ll have some comments from our President and Chief Executive Officer, Tim Main. We’ll follow Tim’s presentation with a question and answer session.

And Tim will be joined by our Chief Financial Offer Forbes Alexander. Jabil board meeting will reconvene immediately following this meeting which will conclude by 11 o’clock. I will not turn the meeting over to Bob Paver.

Bob Paver

Thank you, Beth. Good morning. The meeting is now called to order. We will be considering and voting on each of the following four matters today, the election of nine directors, the ratification of the appointment of Ernst & Young LLP as Jabil’s independent registered certified public accounting firm for the fiscal year ending August 31, 2012.

An advisory vote on executive compensation, and finally an advisory vote on the frequency of future advisory votes on executive compensation. I have received proof by affidavit, the notice of this meeting has been duly given, and that a proxy statement, proxy card, in 2011 annual report have been furnished to all stock holders of record as of November 28, 2011.

These materials were mailed on or about December 15, 2011. Additionally, the Inspector of Election, Douglas Ives of Computershare Trust Company, Jabil’s transfer agent, is in attendance and has signed the oath of office, both the affidavit of mailing and the oath of Inspector of Election will be filed with the minutes of this meeting.

Mr. Ives has advised me that we have present in person or by proxy, a sufficient number of shares to constitute a quorum, and thus, this meeting is duly constituted. I’d like to take a few moments to explain the voting procedures that we will use here this morning. Voting today, will be by vote, proxies and ballots.

If you have previously turned in a proxy and do not intend to change your vote, then it is not necessary that you vote here today. If you did turn in a proxy or wish to change to your vote, please raise your hand now, and we’ll provide you with the ballot. If however, you have brought your proxy card with you, you may vote using that as well. At the end of the formal business portion of this meeting, we will collect any additional proxy cards and ballots.

We will now turn to the items of business to be considered at this meeting. The first item of business to consider and vote upon, is the election of nine directors for terms ending at the next annual meeting of stockholders.

The companies nominees for directors are, William D. Morean, Thomas A. Sansone, Martha F. Brooks, Mel S. Lavitt, Timothy L. Main, Lawrence J. Murphy, Frank A. Newmann, Steven A. Raymund, and David M. Stout.

No other nominations have been received from stockholders.

The second item of business to consider and vote upon, is a proposal to ratify the appointment of the firm of Ernst & Young LLP as the company’s independent registered certified public accounting firm for the fiscal year ending August 31, 2012.

The third item of business to consider and vote upon is an advisory vote on executive officer compensation. This was disclosed in the proxy statement mailed to stockholders for this meeting in 2011.

The fourth and final item of business to consider and vote upon is an advisory vote on the frequency of future advisory votes on executive compensation. At this time, I’ll now entertain a motion to vote on each of these four items in accordance with the recommendation set forth in our proxy statement.

I recognize Joana Cole [ph] as a stockholder of the company.

Joana Cole

I move to vote in each of these four items in accordance with the recommendation set fourth in the proxy statement.

Bob Paver

Is there a second? I recognize Kim Grosworth [ph] a stockholder of the company.

Kim Grosworth

I second the motion.

Bob Paver

We will at this time, proceed to vote on each of these items. For those voting in person today, please mark your proxy card of ballot indicating the way you wish to vote. The voting on these four items is now closed.

We’d ask that you pass any proxy cards or ballots to the center so that they may be collected and recorded. And at this time, we’ll take a few moments to allow the Inspector of Election to review these proxies and ballots.

At this time I’d like to recognize Mr. Douglas Ives, the Inspector of Election, to report on the results of voting.

Douglas Ives

Based upon the tabulation of proxies and balance received with respect to the first motion. Each of the directors named in the proxy statement has been elected by more than the majority of the votes actually cast with respect to the director's election.

With respect to the proposal to ratify the appointment of Ernst & Young LLP as the company’s independent registered certified public accounting firm for the fiscal year ending August 31st, 2012, such appointment has been ratified by more than the majority of the chairs present or represented by proxy and actually cast on this proposal.

With respect to the advisory vote on executive compensation, such compensation has been approved by more than the majority of the chairs present or represented by proxy and actually cast on this item.

With respect to the advisory vote on the frequency of future advisory votes on executive compensation, a one year frequency has received the highest number of votes cast by stockholders.

Bob Paver

Thank you, Douglas. A final tabulation of the votes will be included in a certificate of Inspector of Election, to be filed with the minutes of this meeting and will also be reported in a current report on Form 8-K to be file within four business days of this meeting.

This concludes the formal business portion of this meeting. And there being no further business, is there a motion to adjourn the formal portion of the meeting?

Unidentified Participant

I salute.

Bob Paver

Is there a second?

Unidentified Participant

I second the motion.

Bob Paver

All in favor of adjourning the formal portion of the meeting, please say aye.

Unidentified Participant

Aye.

Unidentified Participant

Aye.

Bob Paver

All those oppose, please say nay.

The ayes have it, the motion carries and the formal business portion of the meeting is now adjourned.

I’d like to turn the meeting back over to Beth Walters. Beth?

Beth Walters

I’m glad we got that formal stuff out of the way. Now we can get to the good stuff. The eye test. This is our forward-looking statement.

So, during the course of our comments and during the question-and-answer portion of the program, we may make forward-looking statements regarding future events or the future financial performance of Jabil.

We remind you that such statements are merely predictions and actual events or results may differ materially. So please refer to documents we file with the SEC, specifically our most recent 10-K filed October 27th, 2011 and our most recent 10Q filed January 9th, 2012. These documents contain and identify important factors that may cause our actual results to differ materially.

From those contained in any projections or any forward-looking comments. So just quick snapshot as we enter our fiscal 2012, we’re entering our 46th year in business, almost as old as I am.

Today, we are the third largest global electronics manufacturer in the world, something that we’re quite proud of. We never – our goal was never to be the biggest, just to be the best but the world’s third largest today.

We are in the 23 million manufacturing square feet around the world in 60 different sites in 25 different countries with 121,000 employees. As I mentioned, our goal is not to be the biggest but actually to be best. So I just thought I’d share with you our mission statement which is, Jabil is built on a foundation of empowered employees, strives to be the world’s leading global manufacturing services partner through the continued growth of customers and targeted market by offering differentiated capabilities and cost-effective services.

So at this time, we’d like to share with you a video to illustrate some of the work behind this in our various locations around the world. And again, for those of you joining us on the web, you will not see the video.

Beth Walters

Great. Thank you now. I’d like to turn it over to Tim Main, our President and Chief Executive Officer.

Timothy Main

Thanks, Beth. Good morning.

So it’s a sunny day here. Your friends from all over the world, from Germany, in Taiwan. I’m sure from a number of other locations.

So welcome, it’s a beautiful day here. The sun shining on Jabil as well. We had a great year. It’s our second consecutive record year, $16.5 billion.

This fiscal year, most analysts expected Jabil to post another record year, or be at a little bit slower growth of around $17.5 billion in revenue. So the company is growing in size and is thriving in a difficult economy.

We have some of the greatest brands in the world today. We don’t often talk about our customers, but you can see from some of these logos that in a very diverse set of industries, we do business with the leading brands in the world. And that’s really fuel for our business and allows us to grow organically in a continuous and sustain basis.

This is a little bit of review from last year, consistent with the video. We report our business today in three areas, diversified manufacturing services which we hope to grow aggressively at company annual growth rate of 20% to 30% over the next three or five years, be the primary engine of growth through areas like materials technology after market services, healthcare instrumentation, industrial energy and clean tech.

Great growth areas for the company with a lot of macro economic in the world trend tailwinds. And we also have a significant business and enterprise infrastructure to the companies like network appliance, Cisco, IBM, HP, and then High Velocity. Some consumer electronics, things like running point of sale systems, very, very high volume, lower mix.

So a good diverse set of industries, diversification has been a key strategic goal of the company for the past five or six years. We’ve reached the level of diversification, it does allow a company to grow even when parts of our business are suffering due to either softness in the macro economic environment or individual customer issues.

So we’re very happy with our diversification. We’re not done yet though. Our goal is to drive the diversified manufacturing services area of our business to as much as 50% of our business.

That point in time I think the investment community will stop talking about Jabil as a derivative or driven by the tech industry, and start talking about Jabil in terms of the really high value, high technology expertise and know how we have in some really great growth areas.

People are saying nice things about us again which is always good to hear from Wall Street analysts. And some of them are actually calling for Jabil to receive a premium multiple to the industry sector which would be wonderful. It would be great for the share price to receive a higher multiple. I think we’re recognized as the best in breed in our industry, we’re very proud of that today.

Very financially solid business. We’ve been paying dividends since 2006. We’re in a very good position from a cash and liquidity standpoint.

And hopefully, if we continue on the sustained basis and consistently deliver results with a sound in solid balance sheet, the bond rating agencies will upgrade us to investment grade. We do carry the highest ratings in our industry today which we are quite proud of. So adequate liquidity and availability of capital for the company.

This is a chart I haven’t been able to show in a while. So I want to leave this up for a few minutes. Maybe while we do Q&A we’ll just leave this up.

We are – we’ve smoked the S&P this year, significantly exceeded S&P returns and over the last three years we've also done better than the S&P 500. And, you know, when analysts asked me, “Well why should Jabil receive another multiple?” Here it is.

This maybe a challenging business from a margin standpoint and we've made a great amount of stuff all over the world, so it’s like, it’s a difficult industry. But look, we grow faster, we've expanded margins and now we’re returning to shareholders at a much higher rate than any other S&P 500 companies are.

In fact, we’re one of nine Fortune 500 companies that have grown at our rate since the depth of the recession in 2008. So we’re getting to be in fairly elite company today and our goal and objective as a management team is to sustain this rate of growth and this superior performance relative to other industrial alternatives that you may be able to invest in.

I should also mention that we've increased our dividends by 14%. And I’ve executed some share repurchased, okay? That’s it. Great.

Okay we can go to – anybody have any questions, Forbes, would you like to join me?

Question-and-Answer Session

Beth Walters

If anyone has a question, we ask you, you step to the microphone so that those on the webcast could here the question as well.

Timothy Main

I guess the stock appreciation is enough. Oh, there is a question.

Unidentified Participant

Should I go over there?

Beth Walters

Yes, please.

Timothy Main

Okay.

Unidentified Participant

Good morning to all. First, I really want to thank you for increasing the dividend. As a retired guy, that really means a lot to me. In my work history, I worked all over the place but I didn’t really stay long enough in one place to get a nice retirement package.

So my income comes from my investment. And so Jabil increasing new dividend – when I bought Jabil, I had no intention of ever thinking about any dividends from Jabil. That industry or the industry that you guys are in, don’t usually offer dividends. So as one stockholder, I want to really say thank you for thinking about that and certainly about raising it and let you know I really use that when it comes in. So, thank you.

Unidentified Participant

I wanted to just mention a housekeeping item. I noticed on the news releases that you handed out, that on one of them from (inaudible), it indicated that you only had a 100,000 employees, not a 120. So is the number – 121 is best as shown or is the – this is a March 23rd, ’11 news release from – time that indicated only 100,000 employees, is that just an error?

Timothy Main

We probably had some growth March of ’11.

Unidentified Participant

But that was March 23, so it’s not that long ago.

Timothy Main

Of 2011?

Unidentified Participant

Yes, 2011.

Timothy Main

Oh, business is points and figure, so.

Unidentified Participant

So it has been – how many employees added since March 23?

Timothy Main

Yes, roughly, I mean there is fluctuation in our employment levels. The seasonal aspects of the business take place.

Unidentified Participant

Is that – that means a lot of growth. That’s – a heck of a lot of people to put on and – what is that, nine months or something?

Timothy Main

Yes, yes.

Unidentified Participant

Well, good then, that’s our growth, right? And I want to mention, yesterday, on CNBC, it was announced that Apple has become the world’s largest company and they put up a display of all of the suppliers to Apple, and Jabil’s name was like the third one down on that display. Can you mention or tell us what percentage of Jabil’s business comes from Apple product?

Timothy Main

We’re actually not allowed to discuss customers. I will tell you this though...

Unidentified Participant

Well, they put it up nationally for everybody to see.

Timothy Main

Well, we are a supplier to Apple. So, I mean, that’s clear. I’m just talking about business levels with customers is confidential because of what the customer requires, not because I wouldn’t be delighted to tell you exactly how much revenue we do with that customer.

But I will tell you this. For the past years, we’ve had two customers that comprise over 10% of our business; RIM and Cisco. In our last conference call we mentioned that we have a third customer over 10%. So, we can put those things together and…

Unidentified Participant

Okay. Thank you. Well, I was surprised to see it. I didn’t realize that you know, Jabil had been so involved with Apple and there it was.

Timothy Main

The relationship that has blossomed from the materials technology group. So if you carried around a device, there’s a very good chance an Apple device, a very good chance that’s come out in one of our factories on the mechanic side.

Unidentified Participant

Yes.

Timothy Main

The plastics, the metals, the glass laminations, those types of things.

Unidentified Participant

Yes. Well, that’s great. I’m glad to see that. And I’ve been with Jabil a long time, more than some 15 years, and I’ve certainly enjoyed the ride. So, I hope the giddyup [ph] is still there as we move to the future.

So I believe in what the guy said on the screen, “If it doesn’t make profit, it doesn’t make sense.”

Timothy Main

Yes. We’re going to put that Johnny’s – on the bulletin board for sure.

Anybody else? Yes.

Gerhard Brown

Good morning, everybody. My name is Gerhard Brown. I’m a shareholder from overseas, Germany. And as I stand for the alien shareholders, I would like to ask a few questions, maybe some core questions. Because most of the financial detail were already explained to us in full detail and it seems there is nothing open.

Well, first of all, it has been mentioned that Jabil is number three in the world. Who the hell is number one and number two? And second, what stands Jabil – I mean the meaning of the word Jabil, like what does it stand – what it means?

Timothy Main

Okay.

Gerhard Brown

And another question is how do you contact your customers or do they come to you? I mean do you contact them by visiting them? And if you really win somebody over, how are you going to calculate let’s say, a certain product would be manufactured in your facilities. If you have never done it before, how would you know or if it is a lump sum that varies up and down according to unexpected differences may come up?

And then I would like to know, let’s say, you have two customers that are main competitors in the same field. How do you avoid conflict of interests?

Timothy Main

Okay. Well, first...

Gerhard Brown

And, last but not least...

Timothy Main

Okay.

Gerhard Brown

...it has nothing to do with Jabil actually because I come from Europe and our main difficulties over there is how to rescue the Euro. And the Germans are asked prominently, “Come on rescue us.” So I can tell you that the Germans are absolutely unhappy to pay for the debts of others, who lift above their limits.

Let me give you two examples. The Greece people for instance, they even get cash rewards to show up in time at the office. That is one thing. The other thing is they get 15-month salary even the year is only 12. And their pension if they retire, let’s say 55, is nearly a 100% of the last salary. So how will you figure out why somebody else who was working hard, you know, is going to pay for their debt.

So that’s what it is, thank you.

Timothy Main

Okay. I will test my 54-year-old memory.

So number one and number two, our Foxconn, they’re over $100 billion a year in revenue.

Gerhard Brown

Yes. Some from this?

Timothy Main

Yes, yes. They have some very abusive policies, employment policies. And I think their business will begin to suffer because of the way they treated their employees. And you can all be quite comfortable and proud that, you know, that’s not your company.

Your company has a lot of very progressive policies and, you know, we treat people like human beings like we want to, you know, treat our own kids. So you don’t have to worry about that with us.

In terms of customers, I’ll tackle that one next. We do a lot of business development. I think now that our reputation in size has grown, more people do call us.

But we try and identify industries and sectors that are associated with good global growth trends and offer an opportunity for Jabil to provide differentiated services so that customer relationship can last over a long period of time.

A number of our customers have been with us for 20, 25 years. And so these are long, long term relationships where the customers will be relying on Jabil to provide a significant amount of their supply chain management and manufacturing and design infrastructure for them.

So we become very strategic partners. You actually have a question about conflicts between customers in the same industry. And we find that the more matured customers are very comfortable. They buy integrated circuits from TI for instance and TI sales that to a number of different customers.

So they understand that to be in a business that leverages manufacturing and supply change services that we need to do business with competition. Sometimes, we keep them in separate factories. We certainly do not cross-pollinate designed teams or that type of thing. So they can be comfortable with that.

Euro, we certainly hope that the European economic problems, you know, certainly I don’t think any American can preach to any other country to be physically responsible of its country has been a bit physically responsible. But, you know, I think that most people think Europe’s already in a recession. I think in terms of a business impact at Jabil, we certainly hope that that mild short-lived recession, that our business will be able to, you know, continue on.

Right now, well, we think that the $17.3, $17.4 billion that analysts expect from us this year is still consistent with our own internal expectations and we don’t think the issues in Europe will be significant to us. So what was the other one? I don’t know if I’m missing something.

Oh, the name, the most important one. So, you want to explain?

Unidentified Participant

Sure. You have to go back through our 50 years. And you guys did (inaudible) together it was a James Goldman [ph], my father. And it’s a very common practice in small companies in areas to find the names of the (inaudible).

Timothy Main

Factory selection? Products we never made, right, right. So that’s kind of interesting. You know, we – we actually do a lot of new things and in our healthcare industry I think it’s a good example.

For years we attempted to penetrate that industry and you know what we found is we really like the internal expertise. And so the groups that are responsible for that the (inaudible) went out higher that industry experts brought in quality people, design people, manufacturing people, establish certifications, you know, and really made it much easier for healthcare companies to be comfortable that Jabil had the expertise.

So we – over the years – I mean we’re very adaptable. We service the customers through dedicated business units ourselves. And we – you know once we get on that learning curve, we learn very, very rapidly. And that begets more confidence from other customers.

So that allows to kind of build on success. And our strong preference is to build the business organically, customer by customer and, you know, build the know-how from within. And sometimes we want to accelerate that that’s why we go out and make acquisition, like the Telmar acquisition that brought us some great engineering expertise in telecommunications.

Okay. Any other questions? I fail the short term memory test. Okay, thank you very much.

Beth Walters

Well this concludes our meeting. Thank you very much.

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