Jabil expects federal tax changes to give it flexibility on strategic investing

ST. PETERSBURG — Some corporations already have announced plans to pay bonuses or raises with additional money they'll realize thanks to the tax bill Congress passed in December, but Jabil executives Thursday said it's too soon to give a full or detailed assessment of what the law means for them.

"We're working through that; the legislation's just been passed in the last four weeks," Jabil chief financial officer Forbes Alexander told a stockholder who asked about the possibility of employee raises during the company's annual shareholder meeting.

The reduction in the U.S. corporate tax rate is not expected to have any impact on Jabil, one of the Tampa Bay area's biggest companies, which earns most of its money overseas.

But the bill's provision allowing corporations that pay a transition tax to bring income earned overseas back to the United States should give the company "a little bit more freedom of movement of cash," Alexander said.

With 42 million square feet of manufacturing space spread across 29 countries, Jabil CEO Mark Mondello talked about the need to make strategic investments to keep the company competitive in making electronics for the next generation of cars — not only self-driving vehicles, but ones with electric instead of gas-powered drive trains — as well as in energy production, 5G wireless communications, robotics, automation and data analytics.

"I think for us the tax reform does two things," Mondello said after the meeting. "No. 1, it certainly helps on liquidity and will, over time, reduce our indebtedness, which will be great. And it gives us real freedom of action to move cash around the globe."

Precisely how much cash Jabil, which has a market cap of about $4.7 billion, could be in a position to move is still "to be determined," Mondello said, but the amount "is not immaterial."

Billions?

"Probably not billions," he said, "but substantial for our company."

Mondello declined to comment on the tariffs on solar panels and washing machines that President Trump announced this week, but he raised no alarms about their potential impact on Jabil's business.

"Jabil is a company that's very, very well-positioned to support our customers, regardless of tariffs and regardless of geographies, because of the broad nature of the company," he said.

And Mondello said Jabil is not looking to move its headquarters out of St. Petersburg, though he would not discuss whether it could move within St. Petersburg, from north of Gandy Boulevard to, say, downtown.

"We've spent the last two to three years with lots of inquiries from different states all around the country," he said. "I think it's fair to say we are deeply committed to the Tampa Bay area, and I'd take it a step further and say we're committed to St. Pete. ... When we make a final decision and get all the t's crossed and i's dotted ... you'll be the first to know."

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Jabil, which has 170,000 employees worldwide, had $19.1 billion in revenues in its 2017 fiscal year — 58 percent from its electronics manufacturing operations and 42 percent from diversified manufacturing.

COVERAGE FROM 2017: Jabil reports strong fourth quarter, closes fiscal year with bullish outlook

Diversified manufacturing grew 9 percent year over year, Mondello said, while electronics manufacturing grew its core margins to 3.9 percent, up 1.5 percent or more from three or four years ago.

Jabil shares were trading at just under $27 a share shortly mid-afternoon Thursday, down less than a 10th of a percent.

Contact Richard Danielson at rdanielson@tampabay.com or (813) 226-3403. Follow @Danielson_Times