Jabil 10-Q 2021-11-30

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended November 30, 2021

or

☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-14063

JABIL INC.

(Exact name of registrant as specified in its charter)

Delaware						38-1886260
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

10800 Roosevelt Boulevard North, St. Petersburg, Florida 33716

(Address of principal executive offices) (Zip Code)

(727) 577-9749

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class			Trading symbol(s)			Name of each exchange on which registered
Common Stock, $0.001 par value per share			JBL			New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer			☒			Accelerated filer			☐
Non-accelerated filer			☐			Smaller reporting company			☐
						Emerging growth company			☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of December 31, 2021, there were 143,484,377 shares of the registrant’s Common Stock outstanding.

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JABIL INC. AND SUBSIDIARIES INDEX

Part I – Financial Information
Item 1.			Financial Statements
			Condensed Consolidated Balance Sheets as of November 30, 2021 and August 31, 2021			1
			Condensed Consolidated Statements of Operations for the three months ended November 30, 2021 and 2020			2
			Condensed Consolidated Statements of Comprehensive Income for the three months ended November 30, 2021 and 2020			3
			Condensed Consolidated Statements of Stockholders’ Equity for the three months ended November 30, 2021 and 2020			4
			Condensed Consolidated Statements of Cash Flows for the three months ended November 30, 2021 and 2020			5
			Notes to Condensed Consolidated Financial Statements			6
Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations			17
Item 3.			Quantitative and Qualitative Disclosures About Market Risk			25
Item 4.			Controls and Procedures			25
Part II – Other Information
Item 1.			Legal Proceedings			26
Item 1A.			Risk Factors			26
Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds			26
Item 3.			Defaults Upon Senior Securities			26
Item 4.			Mine Safety Disclosures			26
Item 5.			Other Information			26
Item 6.			Exhibits			27
			Signatures			29

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PART I—FINANCIAL INFORMATION

JABIL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions, except for share data)

			November 30, 2021 (Unaudited)						August 31, 2021
ASSETS
Current assets:
Cash and cash equivalents			$	1,229					$	1,567
Accounts receivable, net of allowance for doubtful accounts			3,917						3,141
Contract assets			1,133						998
Inventories, net			4,681						4,414
Prepaid expenses and other current assets			852						757
Total current assets			11,812						10,877
Property, plant and equipment, net of accumulated depreciation of $5,189 as of November 30, 2021 and $5,033 as of August 31, 2021			3,976						4,075
Operating lease right-of-use asset			470						390
Goodwill			713						715
Intangible assets, net of accumulated amortization of $449 as of November 30, 2021 and $442 as of August 31, 2021			173						182
Deferred income taxes			176						176
Other assets			268						239
Total assets			$	17,588					$	16,654
LIABILITIES AND EQUITY
Current liabilities:
Current installments of notes payable and long-term debt			$	500					$	—
Accounts payable			7,483						6,841
Accrued expenses			3,871						3,734
Current operating lease liabilities			111						108
Total current liabilities			11,965						10,683
Notes payable and long-term debt, less current installments			2,379						2,878
Other liabilities			332						334
Non-current operating lease liabilities			403						333
Income tax liabilities			189						178
Deferred income taxes			113						111
Total liabilities			15,381						14,517
Commitments and contingencies
Equity:
Jabil Inc. stockholders’ equity:
Preferred stock, $0.001 par value, authorized 10,000,000 shares; no shares issued and no shares outstanding			—						—
Common stock, $0.001 par value, authorized 500,000,000 shares; 269,843,564 and 267,418,092 shares issued and 144,166,009 and 144,496,077 shares outstanding as of November 30, 2021 and August 31, 2021, respectively			—						—
Additional paid-in capital			2,567						2,533
Retained earnings			2,917						2,688
Accumulated other comprehensive loss			(48)						(25)
Treasury stock at cost, 125,677,555 and 122,922,015 shares as of November 30, 2021 and August 31, 2021, respectively			(3,230)						(3,060)
Total Jabil Inc. stockholders’ equity			2,206						2,136
Noncontrolling interests			1						1
Total equity			2,207						2,137
Total liabilities and equity			$	17,588					$	16,654

See accompanying notes to Condensed Consolidated Financial Statements.

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JABIL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except for per share data)

(Unaudited)

									Three months ended
															November 30, 2021						November 30, 2020
Net revenue															$	8,567					$	7,833
Cost of revenue															7,892						7,198
Gross profit															675						635
Operating expenses:
Selling, general and administrative															308						303
Research and development															9						8
Amortization of intangibles															8						11
Restructuring, severance and related charges															—						(1)
Operating income															350						314
Other expense (income)															1						(1)
Interest income															(1)						(2)
Interest expense															33						32
Income before income tax															317						285
Income tax expense															76						84
Net income															241						201
Net income attributable to noncontrolling interests, net of tax															—						1
Net income attributable to Jabil Inc.															$	241					$	200
Earnings per share attributable to the stockholders of Jabil Inc.:
Basic															$	1.68					$	1.33
Diluted															$	1.63					$	1.31
Weighted average shares outstanding:
Basic															144.1						150.2
Diluted															147.7						152.9

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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, 84.8% of net revenue, from our international operations for the three months ended November 30, 2021. 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 November 30, 2021 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
															November 30, 2021						November 30, 2020
Net revenue															$	8,567					$	7,833
Gross profit															$	675					$	635
Operating income															$	350					$	314
Net income attributable to Jabil Inc.															$	241					$	200
Earnings per share—basic															$	1.68					$	1.33
Earnings per share—diluted															$	1.63					$	1.31

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
			November 30, 2021						August 31, 2021						November 30, 2020
Sales cycle(1)			22 days						19 days						16 days
Inventory turns (annualized)(2)			5 turns						5 turns						7 turns
Days in accounts receivable(3)			41 days						38 days						42 days
Days in inventory(4)			66 days						71 days						55 days
Days in accounts payable(5)			85 days						90 days						80 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 November 30, 2021, the increase in days in accounts receivable from the prior sequential quarter was primarily due to an increase in accounts receivable, primarily driven by higher sales and 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 November 30, 2021, the decrease in days in inventory from the prior sequential quarter was due to increased sales activity during the quarter. During the three months ended November 30, 2021, the increase in days in inventory from the three months ended November 30, 2020 was primarily due to supply chain constraints and increased materials purchases to support expected sales levels in the second quarter of fiscal year 2022.

(5)Days in accounts payable is calculated as accounts payable divided by cost of revenue multiplied by 90 days. During the three months ended November 30, 2021, 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. During the three months ended November 30, 2021, the increase in days in accounts payable from the three months ended November 30, 2020 was primarily due to an increase for material purchases and the timing of payments.

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

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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.

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
(dollars in millions)																					November 30, 2021						November 30, 2020						Change
Net revenue																					$	8,567					$	7,833					9.4		%

Net revenue increased during the three months ended November 30, 2021, compared to the three months ended November 30, 2020. Specifically, the DMS segment net revenue increased 11% due to: (i) a 6% increase in revenues from existing customers within our mobility business, (ii) a 4% increase in revenues from existing customers in our automotive and transportation business, and (iii) a 3% increase in revenue from existing customers within our healthcare and packaging business. The increase is partially offset by a 2% decrease in revenues from existing customers within our connected devices business. The EMS segment net revenue increased 7% due to: (i) a 4% increase from existing customers within our industrial and capital equipment business, (ii) a 4% increase from existing customers within our 5G, wireless and cloud business, and (iii) a 2% increase from existing customers within our digital print and retail business. The increase is partially offset by a 3% decrease from existing customers within our networking and storage business.

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

									Three months ended
															November 30, 2021						November 30, 2020
EMS															45		%				46		%
DMS															55		%				54		%
Total															100		%				100		%

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

									Three months ended
															November 30, 2021						November 30, 2020
Foreign source revenue															84.8		%				83.6		%

Gross Profit

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															Three months ended
(dollars in millions)																					November 30, 2021						November 30, 2020
Gross profit																					$	675					$	635
Percent of net revenue																					7.9		%				8.1		%

Gross profit as a percentage of net revenue decreased for the three months ended November 30, 2021 compared to the three months ended November 30, 2020, primarily due to product mix for the DMS segment.

Selling, General and Administrative

															Three months ended
(dollars in millions)																					November 30, 2021						November 30, 2020						Change
Selling, general and administrative																					$	308					$	303					$	5

Selling, general and administrative expenses remained relatively consistent during the three months ended November 30, 2021, compared to the three months ended November 30, 2020.

Research and Development

															Three months ended
(dollars in millions)																					November 30, 2021						November 30, 2020
Research and development																					$	9					$	8
Percent of net revenue																					0.1		%				0.1		%

Research and development expenses remained relatively consistent as a percentage of net revenue during the three months ended November 30, 2021, compared to the three months ended November 30, 2020.

Amortization of Intangibles

															Three months ended
(dollars in millions)																					November 30, 2021						November 30, 2020						Change
Amortization of intangibles																					$	8					$	11					$	(3)

Amortization of intangibles remained relatively consistent during the three months ended November 30, 2021, compared to the three months ended November 30, 2020.

Restructuring, Severance and Related Charges

															Three months ended
(dollars in millions)																					November 30, 2021						November 30, 2020						Change
Restructuring, severance and related charges																					$	—					$	(1)					$	1

Restructuring, severance and related charges remained relatively consistent during the three months ended November 30, 2021, compared to the three months ended November 30, 2020. The 2021 Restructuring Plan was complete as of August 31, 2021.

Other Expense (Income)

															Three months ended
(dollars in millions)																					November 30, 2021						November 30, 2020						Change
Other expense (income)																					$	1					$	(1)					$	2

Other expense (income) remained relatively consistent during the three months ended November 30, 2021 compared to the three months ended November 30, 2020.

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Interest Income

															Three months ended
(dollars in millions)																					November 30, 2021						November 30, 2020						Change
Interest income																					$	1					$	2					$	(1)

Interest income remained relatively consistent during the three months ended November 30, 2021, compared to the three months ended November 30, 2020.

Interest Expense

															Three months ended
(dollars in millions)																					November 30, 2021						November 30, 2020						Change
Interest expense																					$	33					$	32					$	1

Interest expense remained relatively consistent during the three months ended November 30, 2021, compared to the three months ended November 30, 2020.

Income Tax Expense

															Three months ended
																					November 30, 2021						November 30, 2020						Change
Effective income tax rate																					23.9		%				29.6		%				(5.7)		%

The effective income tax rate decreased for the three months ended November 30, 2021, compared to the three months ended November 30, 2020, primarily due to decreased losses in tax jurisdictions with existing valuation allowances for the three months ended November 30, 2021.

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.

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
(in millions, except for per share data)															November 30, 2021						November 30, 2020
Operating income (U.S. GAAP)															$	350					$	314
Amortization of intangibles															8						11
Stock-based compensation expense and related charges															35						34
Restructuring, severance and related charges															—						(1)
Net periodic benefit cost (1)															7						5
Acquisition and integration charges (2)															—						2
Adjustments to operating income															50						51
Core operating income (Non-GAAP)															$	400					$	365
Net income attributable to Jabil Inc. (U.S. GAAP)															$	241					$	200
Adjustments to operating income															50						51
Net periodic benefit cost (1)															(7)						(5)
Adjustments for taxes															—						(1)
Core earnings (Non-GAAP)															$	284					$	245
Diluted earnings per share (U.S. GAAP)															$	1.63					$	1.31
Diluted core earnings per share (Non-GAAP)															$	1.92					$	1.60
Diluted weighted average shares outstanding (U.S. GAAP and Non-GAAP)															147.7						152.9

(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”).

Adjusted Free Cash Flow

			Three months ended
(in millions)			November 30, 2021						November 30, 2020
Net cash (used in) provided by operating activities (U.S. GAAP)			$	(46)					$	65
Acquisition of property, plant and equipment			(281)						(353)
Proceeds and advances from sale of property, plant and equipment			208						111
Adjusted free cash flow (Non-GAAP)			$	(119)					$	(177)

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

As of November 30, 2021, we had approximately $1.2 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 November 30, 2021 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:

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(in millions)															4.700% Senior Notes						4.900% Senior Notes						3.950% Senior Notes						3.600% Senior Notes						3.000% Senior Notes						1.700% Senior Notes						Borrowings under revolving credit facilities (1)												Borrowings under loans						Total notes payable and credit facilities
Balance as of August 31, 2021															$	499					$	300					$	496					$	495					$	591					$	496					$	—											$	1					$	2,878
Borrowings															—						—						—						—						—						—						550												—						550
Payments															—						—						—						—						—						—						(550)												—						(550)
Other															1						—						—						—						—						—						—												—						1
Balance as of November 30, 2021															$	500					$	300					$	496					$	495					$	591					$	496					$	—											$	1					$	2,879
Maturity Date															Sep 15, 2022						Jul 14, 2023						Jan 12, 2028						Jan 15, 2030						Jan 15, 2031						Apr 15, 2026						Jan 22, 2024 and Jan 22, 2026												Jul 31, 2026
Original Facility/ Maximum Capacity															$500 million						$300 million						$500 million						$500 million						$600 million						$500 million						$3.8 billion(1)												$2 million

(1)As of November 30, 2021, 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 $1.8 billion under our commercial paper program. Borrowings with an original maturity of 90 days or less are recorded net within the 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 November 30, 2021 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 ended November 30, 2021 and 2020 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 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 November 30, 2021.

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 ended November 30, 2021, we sold $1.0 billion of trade accounts receivable and we received cash proceeds of $1.0 billion. As of November 30, 2021, 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 November 30, 2021 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.

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Trade Accounts Receivable Sale Programs

As of November 30, 2021, 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 ended November 30, 2021, we sold $2.0 billion of trade accounts receivable under these programs and we received cash proceeds of $2.0 billion. As of November 30, 2021, we had up to $1.4 billion 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 $830 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):

						Three months ended
						November 30, 2021						November 30, 2020
Net cash (used in) provided by operating activities						$	(46)					$	65
Net cash used in investing activities						(73)						(264)
Net cash used in financing activities						(208)						(87)
Effect of exchange rate changes on cash and cash equivalents						(11)						—
Net decrease in cash and cash equivalents						$	(338)					$	(286)

Operating Activities

Net cash used in operating activities during the three months ended November 30, 2021 was primarily due to an increase in accounts receivable, inventories, contract assets, prepaid expenses and other current assets; partially offset by: an increase in accounts payable, accrued expenses and other liabilities, non-cash expenses and net income. The increase in accounts receivable is primarily driven by higher sales and the timing of collections. The increase in inventories is primarily due to supply chain constraints and higher materials purchases to support expected sales levels in the second quarter of fiscal year 2022. 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 payable, accrued expenses and other liabilities is primarily due to the timing of purchases and cash payments.

Investing Activities

Net cash used in investing activities during the three months ended November 30, 2021 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 three months ended November 30, 2021 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

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As of the date of this report, other than 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 November 30, 2021, 2.8 million shares had been repurchased for $169 million and $831 million remains available under the 2022 Share Repurchase Program.