Contract electronics manufacturer Jabil Circuit, Inc. (JBL) said Tuesday after the markets closed that its second quarter loss widened from last year due to lower revenue and higher income tax expenses. However, the company's quarterly earnings per share, excluding items, beat analysts' estimate by a penny. At the same time, the company forecast third quarter earnings below analysts' current consensus estimates.
The St. Petersburg, Florida-based company reported a GAAP net loss for the second quarter of $42.1 million or $0.20 per share, compared to a GAAP net loss of $24.0 million or $0.12 per share for the year-ago quarter.
Jabil Circuit noted that the GAAP figures for the latest quarter are preliminary pending the company's completion of its review of goodwill for potential impairment and resulting deferred tax valuation allowance charges for the quarter.
Due to further deterioration of the macro-economic environment and the continued decline in the price of the company's common stock resulting in a sustained market capitalization below the company's net book value, Jabil Circuit has determined that an indicator of potential goodwill impairment is present for its second quarter. The company said it has commenced performing a goodwill impairment analysis and that it currently expects to complete such analysis in early April.
The company also said if it determines that its goodwill is impaired in whole or part, a non-cash charge, which is likely to be significant and would further increase reported GAAP net loss and loss per share for the second quarter of 2009.
That would mark the second time this year that Jabil has revised its results to reflect a goodwill write-down. In January, the company recorded a $318 million impairment in its fiscal first quarter, nearly a month after it reported preliminary results. Following the charges, the company's GAAP net income of $46.22 million or $0.22 per share reported in its preliminary first quarter results in December last year was revised to a GAAP net loss of $275.86 million or $1.34 per share.
Excluding stock options expense, restructuring charges and other items, core earnings for the second quarter were $27.2 million or $0.13 per share, compared to $42.0 million or $0.20 per share in the prior year quarter.
On average, 10 analysts polled by Thomson Reuters expected the company to earn $0.12 per share for the second quarter. Analysts' estimates typically exclude special items.
GAAP operating loss for the second quarter was a loss of $0.5 million, compared to GAAP operating income of $1.6 million in the second quarter of last year.
Core operating income for the second quarter fell 25% to $51.2 million or 1.8% of net revenue from $67.8 million or 2.2% of net revenue a year earlier.
Net revenue for the second quarter decreased 5.6% to $2.89 billion from $3.06 billion in the same quarter last year. Nine analysts had a consensus revenue estimate of $2.81 billion for the second quarter.
Jabil Circuit said sales cycle was 20 days for the second quarter and annualized inventory turns were constant at eight turns.
Jabil Circuit makes products for companies including networking gear maker Cisco Systems, Inc. (CSCO), mobile phone giant Nokia Corp. (NOK) and PC maker Hewlett-Packard Co. (HPQ).
At the end of the second quarter, Jabil had about $775 million in cash and $800 million available under a five-year revolving credit facility expiring in 2012.
For the first six months of its fiscal year, the company reported a GAAP net loss of $317.9 million or $1.54 per share, compare to GAAP net income of $38.0 million or $0.18 per share for the same period last year.
Core earnings for the first-half were $90.1 million or $0.43 per share, compared to $116.6 million or $0.56 per share in the prior year period.
Net revenue for the first-half fell to $6.27 billion from $6.43 billion in the last year's first-half.
Like other sectors, the electronics industry is also reeling under the recession, experiencing a steep drop in demand, as consumers rein in discretionary purchases and companies curb their electronics and IT spending.
The consumer electronics industry is projected to generate $171 billion in U.S. shipment revenues in 2009, down 0.6% from 2008, according to the semi-annual industry forecast released by the Consumer Electronics Association.
In January, Jabil Circuit said it would cut 3000 jobs worldwide and reduce its manufacturing capacity in certain geographies as part of a restructuring to meet the changing demands of its customers.
Looking forward to the third quarter, the company expects net revenue of $2.5 billion to $2.7 billion and GAAP loss of $0.07 to $0.23 per share. The company expects third quarter core earnings to range from a loss of $0.08 per share to profit of $0.08 per share. Analysts currently expect the company to earn $0.11 per share on revenue of $2.75 billion for the third quarter.
The company noted it was taking a conservative position regarding third quarter guidance, as end-markets remain difficult with limited visibility.
Liquidity and balance sheet strength are key advantages in this market environment, said Jabil CEO Timothy Main. We will continue to focus on controlling our capital, reducing costs and refining our value proposition. When end-markets stabilize and recovery begins, we will be ready with an outstanding, well-funded solution for a growing marketplace.
Jabil shares, which have traded in a range of $3.10 to $18.78 over the past year, closed Tuesday's regular trading session at $3.81, down 50 cents or 11.60 but gained 10 cents or 2.62% in after hours trading.
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