Jabil earnings drop, goodwill under review
St. Petersburg electronics manufacturer Jabil Circuit Inc. reported steady revenues but a 27-percent drop in quarterly earnings in the latest three month period ending No. 30. Net income fell to $46.2-million or 22 cents a share in the quarter, its first fiscal quarter of 2009, from $62-million or 30 cents a share a year ago. Revenues held steady at about $3.4-billion. Here's Jabil's earnings release.
Jabil's financial performance is of particular local interest in the Tampa Bay area. The slumping economy could delay Jabil Circuit's plans for a new world headquarters in St. Petersburg and could jeopardize $34-million in state and local incentives designed to help fuel the high-tech company's growth, the St. Petersburg Times reported this week. St. Petersburg officials are finalizing a deal that would require Jabil to start building on its Gandy Boulevard property by 2009 and maintain at least 1,838 employees in exchange for the city's $14-million share of the incentive package.
Jabil CEO Tim Main (shown in photo) in a statement this morning said the company has plenty of cash -- $1.4-billion at the end of the last quarter -- but would take "a conservative position regarding demand for our second quarter."
Main added: “Although end markets are weak, the opportunity to expand our market share in targeted areas is very good. We intend to capitalize on the present opportunities to ensure a more robust future when end markets stabilize and the recovery cycle begins.”
However, Jabil also said market conditions could require it to revise and reduce its reported earnings.
"Due to the deteriorating macro-economic environment, illiquidity in the credit markets, declines in the stock market and the decline in the price of the company's common stock, the company has experienced a significant decline in its market capitalization. As a result the company has determined that an indicator of potential goodwill impairment is present for its first fiscal quarter."
As a result, Jabil said it's starting a "goodwill impairment analysis" and should finish next month. In the event that the Company determines that its goodwill is impaired in whole or part, a non-cash charge, "which could be significant and would reduce reported GAAP net income and earnings per share for the fiscal first quarter of 2009," would be required.
Shares in Jabil closed at a paltry $6.46 Thursday, leaving the company with a lean market value of just $1.36-billion. Jabil shares traded as high as $18.78 in the past year and over $40 in 2006. That drop in share value has lopped off more than $6-billion in market capitalization in less than three years.
Analysts polled by FactSet Research estimated, on average, quarterly earnings per share of 28 cents and sales of $3.43-billion. In the second quarter of 2009, Jabil sees a profit of just 4 cents to 8 cents a share and revenue of $2.8-billion to $3-billion. Jabil will hold an earnings conference with analysts this morning and we'll catch up with more details at that time.
-- Robert Trigaux, Times Business Columnist