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JABIL INC.

(JBL)
  Report
Delayed Nyse  -  04:00 2022-09-28 pm EDT
60.12 USD   +4.70%
09/28JPMorgan Adjusts Jabil Price Target to $80 From $82, Maintains Overweight Rating
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09/28Goldman Sachs Adjusts Price Target on Jabil to $78 From $73 Amid Strong Q4 Results, Keeps Buy Rating
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09/28Raymond James Adjusts Price Target on Jabil to $72 From $80, Reiterates Strong Buy Rating
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JABIL INC Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

07/01/2022 | 08:07am EDT

Overview


We are one of the leading providers of worldwide manufacturing services and
solutions. We provide comprehensive electronics design, production and product
management services to companies in various industries and end markets. Our
services enable our customers to reduce manufacturing costs, improve
supply-chain management, reduce inventory obsolescence, lower transportation
costs and reduce product fulfillment time. Our manufacturing and supply chain
management services and solutions include innovation, design, planning,
fabrication and assembly, delivery and managing the flow of resources and
products. We derive substantially all of our revenue from production and product
management services (collectively referred to as "manufacturing services"),
which encompass the act of producing tangible components that are built to
customer specifications and are then provided to the customer.

We serve our customers primarily through dedicated business units that combine
highly automated, continuous flow manufacturing with advanced electronic design
and design for manufacturability. We currently depend, and expect to continue to
depend for the foreseeable future, upon a relatively small number of customers
for a significant percentage of our net revenue, which in turn depends upon
their growth, viability and financial stability.

We conduct our operations in facilities that are located worldwide, including
but not limited to, China, Ireland, Malaysia, Mexico, Singapore and the United
States. We derived a substantial majority, 82.6% and 83.7%, of net revenue from
our international operations for the three months and nine months ended May 31,
2022, respectively. Our global manufacturing production sites allow customers to
manufacture products simultaneously in the optimal locations for their products.
Our global presence is key to assessing and executing on our business
opportunities.

We have two reporting segments: Electronics Manufacturing Services ("EMS") and
Diversified Manufacturing Services ("DMS"), which are organized based on the
economic profiles of the services performed, including manufacturing
capabilities, market strategy, margins, return on capital and risk profiles. Our
EMS segment is focused around leveraging IT, supply chain design and
engineering, technologies largely centered on core electronics, utilizing our
large scale manufacturing infrastructure and our ability to serve a broad range
of end markets. Our EMS segment is a high volume business that produces product
at a quicker rate (i.e. cycle time) and in larger quantities and includes
customers primarily in the 5G, wireless and cloud, digital print and retail,
industrial and semi-cap, and networking and storage industries. Our DMS segment
is focused on providing engineering solutions, with an emphasis on material
sciences, technologies and healthcare. Our DMS segment includes customers
primarily in the automotive and transportation, connected devices, healthcare
and packaging, and mobility industries.

We monitor the current economic environment and its potential impact on both the
customers we serve as well as our end-markets and closely manage our costs and
capital resources so that we can respond appropriately as circumstances change.

Refer to Item 7. "Management's Discussion and Analysis of Financial Condition
and Results of Operations" section contained in our Annual Report on Form 10-K
for the fiscal year ended August 31, 2021 for further discussion of the items
disclosed in Item 2. "Management's Discussion and Analysis of Financial
Condition and Results of Operations" section as of May 31, 2022 contained
herein.

COVID-19


The COVID-19 pandemic, which began to impact us in January 2020, has continued
to affect our business and the businesses of our customers and suppliers. Travel
and business operation restrictions arising from virus containment efforts of
governments around the world have continued to impact our operations in Asia,
Europe and the Americas. Essential activity exceptions from these restrictions
have allowed us to continue to operate but virus containment efforts have
resulted in additional direct costs.

The impact on our suppliers has led to supply chain constraints, including difficulty sourcing materials necessary to fulfill customer production requirements and challenges in transporting completed products to our end customers.

Summary of Results

The following table sets forth, for the periods indicated, certain key operating results and other financial information (in millions, except per share data):

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                                                       Three months ended                             Nine months ended
                                              May 31, 2022            May 31, 2021           May 31, 2022           May 31, 2021
Net revenue                                 $     8,328             $       7,215          $      24,448          $      21,876
Gross profit                                $       619             $         568          $       1,903          $       1,772
Operating income                            $       321             $      

240 $ 984 $ 790 Net income attributable to Jabil Inc. $ 218

             $         169          $         681          $         521
Earnings per share-basic                    $      1.55             $        1.14          $        4.77          $        3.49
Earnings per share-diluted                  $      1.52             $        1.12          $        4.67          $        3.41


Key Performance Indicators

Management regularly reviews financial and non-financial performance indicators
to assess the Company's operating results. Changes in our operating assets and
liabilities are largely affected by our working capital requirements, which are
dependent on the effective management of our sales cycle as well as timing of
payments. Our sales cycle measures how quickly we can convert our manufacturing
services into cash through sales. We believe the metrics set forth below are
useful to investors in measuring our liquidity as future liquidity needs will
depend on fluctuations in levels of inventory, accounts receivable and accounts
payable.

The following table sets forth, for the quarterly periods indicated, certain of management's key financial performance indicators:

                                                        Three months ended
                                   May 31, 2022            February 28, 2022       May 31, 2021
Sales cycle(1)                           37 days                       35 days           25 days
Inventory turns (annualized)(2)          4 turns                       4 turns           5 turns
Days in accounts receivable(3)           35 days                       38 days           40 days
Days in inventory(4)                     85 days                       86 days           68 days
Days in accounts payable(5)              83 days                       89 days           84 days




(1)The sales cycle is calculated as the sum of days in accounts receivable and
days in inventory, less the days in accounts payable; accordingly, the variance
in the sales cycle quarter over quarter was a direct result of changes in these
indicators.
(2)Inventory turns (annualized) are calculated as 360 days divided by days in
inventory.
(3)Days in accounts receivable is calculated as accounts receivable, net,
divided by net revenue multiplied by 90 days. During the three months ended May
31, 2022, the decrease in days in accounts receivable from the prior sequential
quarter and the three months ended May 31, 2021, was primarily due to timing of
collections.
(4)Days in inventory is calculated as inventory and contract assets divided by
cost of revenue multiplied by 90 days. During the three months ended May 31,
2022, the increase in days in inventory from the three months ended May 31, 2021
was primarily due to higher raw material balances due to supply chain
constraints.
(5)Days in accounts payable is calculated as accounts payable divided by cost of
revenue multiplied by 90 days. During the three months ended May 31, 2022, the
decrease in days in accounts payable from the prior sequential quarter was
primarily due to timing of purchases and cash payments during the quarter.

Critical Accounting Policies and Estimates


The preparation of our Condensed Consolidated Financial Statements and related
disclosures in conformity with U.S. generally accepted accounting principles
("U.S. GAAP") requires management to make estimates and judgments that affect
our reported amounts of assets and liabilities, revenues and expenses, and
related disclosures of contingent assets and liabilities. On an on-going basis,
we evaluate our estimates and assumptions based upon historical experience and
various other factors and circumstances. Management believes that our estimates
and assumptions are reasonable under the circumstances; however, actual results
may vary from these estimates and assumptions under different future
circumstances. For further discussion of our significant accounting policies,
refer to Note 1 - "Description of Business and Summary of Significant Accounting
Policies" to the Consolidated Financial Statements and "Management's Discussion
and Analysis of Financial Condition and Results of Operations - Critical
Accounting Policies and Estimates" in our Annual Report on Form 10-K for the
fiscal year ended August 31, 2021.
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Recent Accounting Pronouncements

See Note 17 - "New Accounting Guidance" to the Condensed Consolidated Financial Statements for a discussion of recent accounting guidance.

Results of Operations

Net Revenue


Generally, we assess revenue on a global customer basis regardless of whether
the growth is associated with organic growth or as a result of an acquisition.
Accordingly, we do not differentiate or separately report revenue increases
generated by acquisitions as opposed to existing business. In addition, the
added cost structures associated with our acquisitions have historically been
relatively insignificant when compared to our overall cost structure.

The distribution of revenue across our segments has fluctuated, and will
continue to fluctuate, as a result of numerous factors, including the following:
fluctuations in customer demand; efforts to diversify certain portions of our
business; business growth from new and existing customers; specific product
performance; and any potential termination, or substantial winding down, of
significant customer relationships.

                                       Three months ended                                                 Nine months ended
(dollars in millions)         May 31, 2022            May 31, 2021            Change             May 31, 2022           May 31, 2021            Change

Net revenue                 $     8,328             $       7,215                15.4  %       $      24,448          $      21,876                11.8  %




Net revenue increased during the three months ended May 31, 2022, compared to
the three months ended May 31, 2021. Specifically, the EMS segment net revenue
increased 23% due to: (i) a 10% increase in revenues from existing customers
within our 5G, wireless and cloud business, (ii) a 5% increase in revenues from
existing customers within our networking and storage business, (iii) a 4%
increase in revenues from existing customers within our digital print and retail
business, and (iv) a 4% increase in revenues from existing customers within our
industrial and capital equipment business. The DMS segment net revenue increased
7% due to: (i) a 5% increase in revenues from existing customers within our
automotive and transportation business, and (ii) a 2% increase in revenues from
existing customers within our healthcare and packaging business.

Net revenue increased during the nine months ended May 31, 2022, compared to the
nine months ended May 31, 2021. Specifically, the EMS segment net revenue
increased 16% due to: (i) a 8% increase in revenues from existing customers
within our 5G, wireless and cloud business, (ii) a 4% increase in revenues from
existing customers within our industrial and capital equipment business, and
(iii) a 4% increase in revenues from existing customers within our digital print
and retail business. The DMS segment net revenue increased 8% due to: (i) a 5%
increase in revenues from existing customers within our automotive and
transportation business, and (ii) a 3% increase in revenues from existing
customers within our healthcare and packaging business.

The following table sets forth, for the periods indicated, revenue by segment expressed as a percentage of net revenue:


                 Three months ended                       Nine months ended
           May 31, 2022         May 31, 2021        May 31, 2022        May 31, 2021
EMS                   54  %             50  %                 50  %             48  %
DMS                   46  %             50  %                 50  %             52  %
Total                100  %            100  %                100  %            100  %

The following table sets forth, for the periods indicated, foreign source revenue expressed as a percentage of net revenue:


                                                         Three months ended                               Nine months ended
                                                May 31, 2022            May 31, 2021            May 31, 2022            May 31, 2021
Foreign source revenue                                  82.6  %                 82.7  %                 83.7  %                 83.6  %


Gross Profit
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                                   Three months ended                            Nine months ended
(dollars in millions)     May 31, 2022             May 31, 2021            May 31, 2022      May 31, 2021
Gross profit             $       619              $      568              $     1,903       $     1,772
Percent of net revenue           7.4   %                 7.9   %                  7.8  %            8.1  %


Gross profit as a percentage of net revenue decreased for the three months and
nine months ended May 31, 2022, compared to the three months and nine months
ended May 31, 2021, primarily due to product mix.

Selling, General and Administrative


                                  Three months ended                                            Nine months ended

(dollars in millions) May 31, 2022 May 31, 2021 Change May 31, 2022 May 31, 2021

           Change
Selling, general and
administrative           $       282          $         305          $   (23)         $       870          $         914          $   (44)

Selling, general and administrative expenses decreased during the three months ended May 31, 2022, compared to the three months ended May 31, 2021. The decrease is primarily due to lower salary and salary related expenses.


Selling, general and administrative expenses decreased during the nine months
ended May 31, 2022, compared to the nine months ended May 31, 2021. The decrease
is primarily due to: (i) a $30 million decrease due to lower salary and salary
related expenses, (ii) a $9 million decrease in stock-based compensation expense
due to certain one-time awards granted during the second quarter of fiscal year
2021 and higher anticipated achievement levels during the nine months ended May
31, 2021 for certain performance-based stock awards, and (iii) a $4 million
decrease in acquisition and integration charges related to our strategic
collaboration with a healthcare company.

Research and Development

                                                        Three months ended                                  Nine months ended
(dollars in millions)                           May 31, 2022           May 31, 2021                 May 31, 2022          May 31, 2021
Research and development                      $          8            $         10                $         25           $         27
Percent of net revenue                                 0.1    %                0.1  %                      0.1   %                0.1  %


Research and development expenses remained consistent as a percentage of net
revenue during the three months and nine months ended May 31, 2022, compared to
the three months and nine months ended May 31, 2021.

Amortization of Intangibles


                                         Three months ended                                            Nine months ended
(dollars in millions)            May 31, 2022          May 31, 2021           Change          May 31, 2022          May 31, 2021           Change

Amortization of intangibles $ 8 $ 12 $ (4) $ 24 $ 35 $ (11)



Amortization of intangibles decreased during the three months and nine months
ended May 31, 2022, compared to the three months and nine months ended May 31,
2021, primarily driven by reduced amortization related to the Nypro trade name.



Restructuring, Severance and Related Charges


                                      Three months ended                                            Nine months ended
(dollars in millions)        May 31, 2022           May 31, 2021           Change          May 31, 2022           May 31, 2021           Change
Restructuring, severance
and related charges         $          -          $           1          $    (1)         $          -          $           6          $    (6)


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Restructuring, severance and related charges decreased during the three months
and nine months ended May 31, 2022, compared to the three months and nine months
ended May 31, 2021 as the 2020 Restructuring Plan was complete as of August 31,
2021.

Loss on Debt Extinguishment
                                          Three months ended                                            Nine months ended
(dollars in millions)            May 31, 2022           May 31, 2021           Change          May 31, 2022           May 31, 2021           Change
Loss on debt extinguishment     $          4          $           -          $     4          $          4          $           -          $     4


Loss on debt extinguishment is due to the "make-whole" premium incurred during
the three months ended May 31, 2022, for the redemption of the 4.700% Senior
Notes due 2022.

Gain on Securities
                                      Three months ended                                            Nine months ended
(dollars in millions)        May 31, 2022           May 31, 2021           Change          May 31, 2022           May 31, 2021           Change
Gain on securities          $          -          $           2          $    (2)         $          -          $           2          $    (2)

Gain on securities is due to cash proceeds received in connection with the sale of an investment during the three months ended May 31, 2021.

Other Expense (Income)


                                      Three months ended                                            Nine months ended

(dollars in millions) May 31, 2022 May 31, 2021 Change May 31, 2022 May 31, 2021

           Change

Other expense (income) $ 1 $ (4) $

5 $ (2) $ (7) $ 5



The change in other expense (income) during the three months ended May 31, 2022,
compared to the three months ended May 31, 2021, is primarily due to an increase
in fees associated with higher utilization of the trade accounts receivable
sales programs.

The change in other expense (income) during the nine months ended May 31, 2022,
compared to the nine months ended May 31, 2021, is primarily due to: (i) $6
million arising from an increase in other expense and (ii) $3 million related to
an increase in fees associated with higher utilization of the trade accounts
receivable sales programs. The change is partially offset by $4 million related
to lower net periodic benefit costs.

Interest Income

                                      Three months ended                                            Nine months ended
(dollars in millions)        May 31, 2022           May 31, 2021           Change          May 31, 2022           May 31, 2021           Change
Interest income             $          1          $           1          $     -          $          2          $           5          $    (3)


Interest income remained relatively consistent during the three months and nine
months May 31, 2022, compared to the three months and nine months ended May 31,
2021.

Interest Expense
                                     Three months ended                                           Nine months ended
(dollars in millions)        May 31, 2022          May 31, 2021           Change          May 31, 2022         May 31, 2021           Change
Interest expense            $         39          $         34          $     5          $       105          $         97          $     8


Interest expense increased during the three months and nine months ended May 31,
2022, compared to the three months and nine months ended May 31, 2021, primarily
due to higher interest rates and higher borrowings on our credit facilities and
commercial paper program. Additionally, the increase is due to higher borrowings
on our senior notes.
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Income Tax Expense
                               Three months ended                                                   Nine months ended
                      May 31, 2022            May 31, 2021             Change             May 31, 2022            May 31, 2021             Change
Effective income
tax rate                      21.8  %                 20.3  %              1.5  %                 22.5  %                 26.0  %             (3.5) %


The effective income tax rate differed for the three months and nine months
ended May 31, 2022, compared to the three months and nine months ended May 31,
2021, primarily due to: (i) decreased losses in tax jurisdictions with existing
valuation allowances for the three months and nine months ended May 31, 2022 and
(ii) a $17 million income tax expense during the three months ended May 31, 2022
for an unrecognized tax benefit related to the taxation of certain prior year
intercompany transactions.

Non-GAAP (Core) Financial Measures


The following discussion and analysis of our financial condition and results of
operations include certain non-GAAP financial measures as identified in the
reconciliations below. The non-GAAP financial measures disclosed herein do not
have standard meaning and may vary from the non-GAAP financial measures used by
other companies or how we may calculate those measures in other instances from
time to time. Non-GAAP financial measures should not be considered a substitute
for, or superior to, measures of financial performance prepared in accordance
with U.S. GAAP. Among other uses, management uses non-GAAP "core" financial
measures to make operating decisions, assess business performance and as a
factor in determining certain employee performance when evaluating incentive
compensation. Also, our "core" financial measures should not be construed as an
indication by us that our future results will be unaffected by those items that
are excluded from our "core" financial measures.

Management believes that the non-GAAP "core" financial measures set forth below
are useful to facilitate evaluating the past and future performance of our
ongoing manufacturing operations over multiple periods on a comparable basis by
excluding the effects of the amortization of intangibles, stock-based
compensation expense and related charges, restructuring, severance and related
charges, distressed customer charges, acquisition and integration charges, loss
on disposal of subsidiaries, settlement of receivables and related charges,
impairment of notes receivable and related charges, goodwill impairment charges,
business interruption and impairment charges, net, loss on debt extinguishment,
(gain) loss on securities, income (loss) from discontinued operations, gain
(loss) on sale of discontinued operations and certain other expenses, net of tax
and certain deferred tax valuation allowance charges. Among other uses,
management uses non-GAAP "core" financial measures to make operating decisions,
assess business performance and as a factor in determining certain employee
performance when evaluating incentive compensation.

We determine the tax effect of the items excluded from "core" earnings and
"core" diluted earnings per share based upon evaluation of the statutory tax
treatment and the applicable tax rate of the jurisdiction in which the pre-tax
items were incurred, and for which realization of the resulting tax benefit, if
any, is expected. In certain jurisdictions where we do not expect to realize a
tax benefit (due to existing tax incentives or a history of operating losses or
other factors resulting in a valuation allowance related to deferred tax
assets), a reduced or 0% tax rate is applied.

Included in the tables below are reconciliations of the non-GAAP financial measures to the most directly comparable U.S. GAAP financial measures as provided in our Condensed Consolidated Financial Statements:

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Reconciliation of U.S. GAAP Financial Results to Non-GAAP Measures

                                                           Three months ended                              Nine months ended
(in millions, except for per share data)           May 31, 2022            May 31, 2021           May 31, 2022           May 31, 2021
Operating income (U.S. GAAP)                    $       321               $        240          $       984             $        790
Amortization of intangibles                               8                         12                   24                       35
Stock-based compensation expense and related
charges                                                  16                         19                   67                       76
Restructuring, severance and related charges              -                          1                    -                        6

Net periodic benefit cost(1)                              7                          5                   21                       17
Business interruption and impairment charges,
net                                                       -                          -                    -                       (1)

Acquisition and integration charges(2)                    -                          -                    -                        4
Adjustments to operating income                          31                         37                  112                      137
Core operating income (Non-GAAP)                $       352               $        277          $     1,096             $        927
Net income attributable to Jabil Inc. (U.S.
GAAP)                                           $       218               $        169          $       681             $        521
Adjustments to operating income                          31                         37                  112                      137
Loss on debt extinguishment(3)                            4                          -                    4                        -
Gain on securities                                        -                         (2)                   -                       (2)
Net periodic benefit cost(1)                             (7)                        (5)                 (21)                     (17)
Adjustments for taxes                                     -                         (1)                   -                       (2)
Core earnings (Non-GAAP)                        $       246               $        198          $       776             $        637

Diluted earnings per share (U.S. GAAP)          $      1.52               $       1.12          $      4.67             $       3.41

Diluted core earnings per share (Non-GAAP)      $      1.72               $       1.30          $      5.32             $       4.17

Diluted weighted average shares outstanding
(U.S. GAAP and Non-GAAP)                              143.3                      152.0                145.8                    152.8




(1)We are reclassifying the pension components in other expense to core
operating income as we assess operating performance, inclusive of all components
of net periodic benefit cost, with the related revenue. There is no impact to
core earnings or diluted core earnings per share for this adjustment.
(2)Charges related to our strategic collaboration with Johnson & Johnson Medical
Devices Companies ("JJMD").
(3)Charges related to the redemption of our 4.700% Senior Notes due 2022.

Adjusted Free Cash Flow
                                                                           Nine months ended
 (in millions)                                                    May 31, 2022           May 31, 2021
Net cash provided by operating activities (U.S. GAAP)            $        

745 $ 671


Acquisition of property, plant and equipment                           (1,068)                  (878)

Proceeds and advances from sale of property, plant and equipment 470

                    287
Adjusted free cash flow (Non-GAAP)                               $        

147 $ 80

Liquidity and Capital Resources


We believe that our level of liquidity sources, which includes available
borrowings under our revolving credit facilities and commercial paper program,
additional proceeds available under our global asset-backed securitization
program and under our uncommitted trade accounts receivable sale programs, cash
on hand, cash flows provided by operating activities and access to the capital
markets, will be adequate to fund our cash requirements, including capital
expenditures, the payment of any declared quarterly dividends, any share
repurchases under the approved program, any potential acquisitions and our
working capital requirements for the next 12 months and beyond. We continue to
assess our capital structure and evaluate the merits of redeploying available
cash.

Cash and Cash Equivalents
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As of May 31, 2022, we had approximately $1.1 billion in cash and cash equivalents, of which a significant portion was held by our foreign subsidiaries. Most of our foreign cash and cash equivalents as of May 31, 2022 could be repatriated to the United States without potential tax expense.

Notes Payable and Credit Facilities

Following is a summary of principal debt payments and debt issuance for our notes payable and credit facilities:

                                                                                                                                                                                                    Borrowings                                         Total notes
                                                                                                                                                                                                       under                                             payable
                                                 4.700%                4.900%                3.950%                                                                                                  revolving                   Borrowings                and
                                                 Senior                Senior                Senior            3.600% Senior       3.000% Senior  
    1.700% Senior        4.250% Senior             credit                  
     under                credit
(in millions)                                   Notes(1)                Notes                 Notes                Notes               Notes               Notes              Notes(1)             facilities(2)                    loans              facilities
Balance as of August 31, 2021               $         499          $        300          $        496          $      495          $      591          $      496          $          -          $            -                $          1          $      2,878
Borrowings                                              -                     -                     -                   -                   -                   -                   498                   2,123                           -                 2,621
Payments                                             (500)                    -                     -                   -                   -                   -                     -                  (2,123)                          -                (2,623)
Other                                                   1                     -                     1                   1                   1                   -                    (5)                      -                           -                    (1)
Balance as of May 31, 2022                  $           -          $        300          $        497          $      496          $      592          $      496          $        493          $            -                $          1          $      2,875
                                                                                                                                                                                                 Jan 22, 2024 and
Maturity Date                               Sep 15, 2022           Jul 14,

2023 Jan 12, 2028 Jan 15, 2030 Jan 15, 2031 Apr 15, 2026 May 15, 2027 Jan 22, 2026

                  Jul 31, 2026
Original Facility/
Maximum Capacity                              $500 million          $300 million          $500 million         $500 million        $600 million        $500 million         $500 million          $3.8 billion(2)                $2 million




(1)On May 4, 2022, we issued $500 million of registered 4.250% Senior Notes due
2027 (the "Green Bonds" or the "4.250% Senior Notes"). On May 31, 2022, the net
proceeds from the offering were used to redeem our 4.700% Senior Notes due in
2022 and pay the applicable "make-whole" premium and accrued interest. In
addition, we intend to allocate an amount equal to the net proceeds from this
offering to finance or refinance eligible expenditures under our new green
financing framework.
(2)As of May 31, 2022, we had $3.8 billion in available unused borrowing
capacity under our revolving credit facilities. The senior unsecured credit
agreement dated as of January 22, 2020 and amended on April 28, 2021 (the
"Credit Facility") acts as the back-up facility for commercial paper
outstanding, if any. We have a borrowing capacity of up to $3.2 billion under
our commercial paper program, which was increased from $1.8 billion on February
18, 2022. Borrowings with an original maturity of 90 days or less are recorded
net within the Condensed Consolidated Statement of Cash Flows, and have been
excluded from the table above.

We have a shelf registration statement with the SEC registering the potential
sale of an indeterminate amount of debt and equity securities in the future to
augment our liquidity and capital resources.

Our Senior Notes and our credit facilities contain various financial and
nonfinancial covenants. A violation of these covenants could negatively impact
our liquidity by restricting our ability to borrow under the notes payable and
credit facilities and potentially causing acceleration of amounts due under
these notes payable and credit facilities. As of May 31, 2022 and August 31,
2021, we were in compliance with our debt covenants. Refer to Note 5 - "Notes
Payable and Long-Term Debt" to the Condensed Consolidated Financial Statements
for further details.

Global Asset-Backed Securitization Program


Certain Jabil entities participating in the global asset-backed securitization
program continuously sell designated pools of trade accounts receivable to a
special purpose entity, which in turn sells certain of the receivables at a
discount to conduits administered by an unaffiliated financial institution on a
monthly basis. In addition, a foreign entity participating in the global
asset-backed securitization program sells certain receivables at a discount to
conduits administered by an unaffiliated financial institution on a daily basis.

We continue servicing the receivables sold and in exchange receive a servicing
fee under the global asset-backed securitization program. Servicing fees related
to the asset-backed securitization programs recognized during the three months
and nine months ended May 31, 2022 and 2021 were not material. We do not record
a servicing asset or liability on the Condensed Consolidated Balance Sheets as
we estimate that the fee we receive to service these receivables approximates
the fair market compensation to provide the servicing activities.

The special purpose entity in the global asset-backed securitization program is
a wholly-owned subsidiary of the Company and is included in our Condensed
Consolidated Financial Statements. Certain unsold receivables covering up to the
maximum
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amount of net cash proceeds available under the domestic, or U.S., portion of
the global asset-backed securitization program are pledged as collateral to the
unaffiliated financial institution as of May 31, 2022.

The global asset-backed securitization program expires on November 25, 2024 and
the maximum amount of net cash proceeds available at any one time is
$600 million. During the three months and nine months ended May 31, 2022, we
sold $1.0 billion and $3.0 billion, respectively, of trade accounts receivable
and we received cash proceeds of $1.0 billion and $3.0 billion, respectively. As
of May 31, 2022, we had no available liquidity under our global asset-backed
securitization program.


The global asset-backed securitization program requires compliance with several
covenants including compliance with the interest ratio and debt to EBITDA ratio
of the Credit Facility. As of May 31, 2022 and August 31, 2021, we were in
compliance with all covenants under our global asset-backed securitization
program. Refer to Note 6 - "Asset-Backed Securitization Program" to the
Condensed Consolidated Financial Statements for further details on the program.

Trade Accounts Receivable Sale Programs


As of May 31, 2022, we may elect to sell receivables and the unaffiliated
financial institution may elect to purchase specific accounts receivable at any
one time up to a: (i) maximum aggregate amount available of $2.0 billion under
nine trade accounts receivable sale programs, (ii) maximum amount available of
400 million CNY under one trade accounts receivable sale program and (iii)
maximum amount available of 100 million CHF under one trade accounts receivable
sale program. The trade accounts receivable sale programs expire on various
dates through 2025.


During the three months and nine months ended May 31, 2022, we sold $2.6 billion and $6.5 billion, respectively, of trade accounts receivable under these programs and we received cash proceeds of $2.6 billion and $6.5 billion, respectively. As of May 31, 2022, we had up to $905 million in available liquidity under our trade accounts receivable sale programs.

Capital Expenditures


For Fiscal Year 2022, we anticipate our net capital expenditures will be
approximately $850 million. In general, our capital expenditures support ongoing
maintenance in our DMS and EMS segments and investments in capabilities and
targeted end markets. The amount of actual capital expenditures may be affected
by general economic, financial, competitive, legislative and regulatory factors,
among other things.

Cash Flows

The following table sets forth selected consolidated cash flow information (in
millions):

                                                                                Nine months ended
                                                                       May 31, 2022            May 31, 2021
Net cash provided by operating activities                           $        745              $        671
Net cash used in investing activities                                       (616)                     (644)
Net cash used in financing activities                                       (639)                     (177)
Effect of exchange rate changes on cash and cash equivalents                  13                        (3)
Net decrease in cash and cash equivalents                           $       (497)             $       (153)


Operating Activities

Net cash provided by operating activities during the nine months ended May 31,
2022, was primarily due to net income and non-cash expenses and an increase in
accounts payable, accrued expenses and other liabilities; partially offset by:
an increase in inventories, contract assets, prepaid expenses and other current
assets and accounts receivable. The increase in accounts payable, accrued
expenses and other liabilities is primarily due to the timing of purchases and
cash payments. The increase in inventories is primarily due to higher raw
material balances due to supply chain constraints. The increase in contract
assets is primarily due to timing of revenue recognition for over time
customers. The increase in prepaid expenses and other current assets is
primarily due to the timing of payments. The increase in accounts receivable is
primarily driven by higher sales and the timing of collections.

Investing Activities

                                       26

--------------------------------------------------------------------------------

Table of Contents


Net cash used in investing activities during the nine months ended May 31, 2022
consisted primarily of capital expenditures, principally to support ongoing
business in the DMS and EMS segments, partially offset by proceeds and advances
from the sale of property, plant and equipment.

Financing Activities


Net cash used in financing activities during the nine months ended May 31, 2022
was primarily due to (i) payments for debt agreements, (ii) the repurchase of
our common stock under our share repurchase authorization, (iii) the purchase of
treasury stock under employee stock plans, and (iv) dividend payments. Net cash
used in financing activities was partially offset by borrowings under debt
agreements.

Contractual Obligations


As of the date of this report, other than the borrowings on the 4.250% Senior
Notes, (see Note 5 - "Notes Payable and Long-Term Debt" to the Condensed
Consolidated Financial Statements) and the new operating and finance leases,
(see Note 4 - "Leases" to the Condensed Consolidated Financial Statements),
there were no material changes outside the ordinary course of business, since
August 31, 2021 to our contractual obligations and commitments and the related
cash requirements.

Dividends and Share Repurchases


We currently expect to continue to declare and pay regular quarterly dividends
of an amount similar to our past declarations. However, the declaration and
payment of future dividends are discretionary and will be subject to
determination by our Board of Directors each quarter following its review of our
financial performance and global economic conditions.

In July 2021, the Board of Directors approved an authorization for the
repurchase of up to $1.0 billion of our common stock (the "2022 Share Repurchase
Program"). As of May 31, 2022, 8.6 million shares had been repurchased for $517
million and $483 million remains available under the 2022 Share Repurchase
Program.

© Edgar Online, source Glimpses

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