Reports Strong Consolidated Q3
Margins
People & Places Solutions
(P&PS) Record Backlog1 Grows by
Double Digits with Book-to-Bill Ratio 1.53x
Delivered Strong P&PS and PA Consulting
Operating Margin Performance
Robust Cash Flow Performance;
Executed $151M of Share Buybacks During
Quarter
DALLAS, Aug. 6, 2024
/PRNewswire/ -- Jacobs Solutions Inc. (NYSE: J) today announced its
financial results for the fiscal third quarter ended June 28,
2024.
Q3 2024 Highlights:
- Cash flow from operations of $483
million; expecting greater than 100% fiscal year reported
free cash flow conversion1
- EPS of $1.17, down 9% y/y;
adjusted EPS from continuing operations1 of $1.96, up 11% y/y
- Backlog1 of $30.6
billion, up 6% y/y; gross profit in backlog1 up
5.5% y/y; book-to-bill 1.29x
- Record P&PS backlog1 of $19.3 billion, up 10.2% y/y; gross profit in
backlog1 up 9% y/y; book-to-bill 1.53x
- PA Consulting backlog1 of $369 million, up 3.9% y/y
- P&PS operating margin on gross revenue of 10.6%, and
adjusted operating margin of 15.3%1 on adjusted net
revenue
Jacobs' CEO Bob Pragada
commented, "We are pleased to report that Jacobs has sustained its
strong margin profile in the third quarter, reflecting our
commitment to strategic, disciplined execution. This quarter, we
made significant strides in our portfolio optimization, focusing on
high-growth sectors that emphasize sustainability and
infrastructure resilience. Our bookings and backlog remain strong,
demonstrating the trust our clients place in our ability to deliver
innovative solutions for complex challenges. We're nearing
completion of the planned spin-off of our Critical Mission
Solutions and Cyber & Intelligence Businesses and merger with
Amentum. This major milestone is underscored by the recent public
filing of the Form 10 related to the transaction and Amentum's
upcoming Capital Markets Day on August
13."
Jacobs' Special Advisor to the CEO Kevin
Berryman added, "We delivered solid third quarter results
while continuing to expand operating profit margins. Gross profit
in backlog continued to improve in Q3, which provides visibility
supporting our fiscal year 2024 outlook and beyond. We repurchased
$151 million in shares in Q3 as our
healthy financial position and strong reported free cash flow
conversion allowed us to re-invest in the business while returning
capital to shareholders."
Jacobs' CFO Venk Nathamuni added, "We continue to focus on
operational excellence and expect to end fiscal year 2024 with
strong profitability. With the anticipated completion of the
planned spin-off in the coming months, we are excited to share our
enhanced strategic plan for Jacobs following the anticipated
separation at our next Investor Day on February 18, 2025 in Miami, Florida."
Financial Outlook2
The company has narrowed its fiscal 2024 adjusted EPS outlook to
a range of $7.85 to $8.05, representing 10% growth year-over-year at
the mid-point and has not changed adjusted EBITDA range of
$1,540M to $1,585M.
Update on Planned Separation Transaction
On November 20, 2023, Jacobs
announced that it had entered into a definitive agreement to
separate and combine its CMS and portions of the Divergent
Solutions businesses (the "Separated Businesses") with Amentum in a
tax-efficient Reverse Morris Trust transaction. Until closing, the
Separated Businesses will operate as business units of Jacobs and
financial results for the businesses will be reported in continuing
operations. Closing of the transaction is subject to various
customary closing conditions. The Company has made strong progress
towards the separation. The Company has received all approvals
and clearances under competition and foreign direct investment laws
which were conditions to the consummation of the separation
transaction. In addition, an updated Form 10 Registration Statement
relating to the transaction was publicly filed yesterday with the
U.S. Securities and Exchange Commission by Amazon Holdco Inc., but
has not yet been declared effective. Currently, the Company expects
to fulfill the remaining closing conditions, and the transaction to
close, in the second half of September
2024.
|
1See
"Non-GAAP Financial Measures and Operating Metrics" and the GAAP
Reconciliation tables that follow for additional detail.
2Reconciliation of fiscal 2024 adjusted EBITDA, adjusted
EPS and expectations for fiscal year 2024 reported free cash flow
conversion to the most directly comparable GAAP measure is not
available without unreasonable efforts because the Company cannot
predict with sufficient certainty all the components required to
provide such reconciliation, including with respect to the costs
and charges relating to transaction expenses, restructuring and
integration to be incurred in fiscal 2024. The Company's forecasts
assume full year contribution from the Separated
Businesses.
|
Third Quarter Review (in thousands, except
per-share data)
|
Fiscal Q3
2024
|
Fiscal Q3
2023
|
Change
|
|
Revenue
|
$4,231,580
|
$4,186,702
|
$44,878
|
|
Adjusted Net
Revenue1
|
$3,406,385
|
$3,382,643
|
$23,742
|
|
GAAP Net Earnings
from Continuing Operations
|
$146,449
|
$163,945
|
$(17,496)
|
|
GAAP Earnings Per
Diluted Share (EPS) from Continuing Operations
|
$1.17
|
$1.29
|
($0.12)
|
|
Adjusted Net
Earnings from Continuing Operations1,3
|
$246,122
|
$224,368
|
$21,754
|
|
Adjusted EPS from
Continuing Operations1,3
|
$1.96
|
$1.76
|
$0.20
|
The Company's adjusted net earnings from continuing operations
and adjusted EPS from continuing operations for the third quarter
of fiscal 2024 and fiscal 2023 exclude certain adjustments that are
further described in the section entitled "Non-GAAP Financial
Measures" at the end of this release. For a reconciliation of
Revenue to Adjusted Net Revenue, see "Segment Information",
below.
The Company's U.S. GAAP effective tax rate from continuing
operations is 30.0% for the fiscal third quarter 2024, and fiscal
third quarter 2024 adjusted earnings per share from continuing
operations reflects an adjusted effective tax rate of 24.5%. The
Company's U.S. GAAP effective tax rate from continuing operations
was 23.9% for the fiscal third quarter 2023, and fiscal third
quarter 2023 adjusted effective tax rate from continuing operations
was 23.1%.
Jacobs is hosting a conference call at 10:00 A.M. ET on Tuesday, August 6, 2024,
which it is webcasting live at www.jacobs.com.
|
3Beginning
with our fiscal first quarter in 2024, the Company has revised its
presentation of adjusted net earnings from continuing operations
and adjusted EPS from continuing operations to no longer apply an
adjustment which previously resulted in the application of the
expected annual effective tax rate to all quarterly periods. Prior
comparable periods are also being presented on this
basis.
|
Forward-Looking Statements
Certain statements contained in this press release constitute
forward-looking statements within the meaning of the United States
Private Securities Litigation Reform Act of 1995. Forward-looking
statements are statements that do not directly relate to any
historical or current fact. When used herein, words such as
"expects," "anticipates," "believes," "seeks," "estimates,"
"plans," "intends," "future," "will," "would," "could," "can,"
"may," "target," "goal" and similar words are intended to identify
forward-looking statements. Examples of forward-looking statements
include, but are not limited to, statements we make concerning our
expectations as to our future growth, prospects, financial outlook
and business strategy, including our expectations for our fiscal
year 2024 adjusted EBITDA, adjusted EPS, and reported free cash
flow conversion, as well as our expectations for margin expansion,
our fiscal year 2024 effective tax rates, and the expected timing
for closing the proposed transaction to spin off and merge the
Separated Businesses with Amentum (together the "Combined Company")
in a proposed transaction that is intended to be tax-free to
stockholders for U.S. federal income tax purposes (hereinafter
referred to as the "Separation Transaction"), and any assumptions
underlying any of the foregoing. Although such statements are based
on management's current estimates and expectations, and/or
currently available competitive, financial, and economic data,
forward-looking statements are inherently uncertain, and you should
not place undue reliance on such statements as actual results may
differ materially. We caution the reader that there are a variety
of risks, uncertainties and other factors that could cause actual
results to differ materially from what is contained, projected or
implied by our forward-looking statements. Such factors include the
possibility that closing conditions for the Separation Transaction
may not be satisfied or waived, on a timely basis or otherwise,
uncertainties as to the impact of the Separation Transaction on
Jacobs' and the Combined Company's businesses if the transaction is
completed, including a possible impact on Jacobs' credit profile,
and a possible decrease in the trading price of Jacobs' and/or the
Combined Company's shares, the possibility that the Separation
Transaction, if completed, may not qualify for the expected tax
treatment, the ability to obtain all required regulatory approvals,
the risk that any consents or approvals required in connection with
the Separation Transaction may not be received, the risk that the
Separation Transaction may not be completed on the terms or in the
time-frame expected by the parties, uncertainties as to our and our
stockholders' respective ownership percentages of the combined
company and the value to be derived from the disposition of Jacobs'
stake in the combined company, unexpected costs, charges or
expenses resulting from the Separation Transaction, business and
management strategies and the growth expectations of the Combined
Company, the inability of Jacobs and the Combined Company to retain
and hire key personnel, customers or suppliers while the Separation
Transaction is pending or after it is completed, and the ability of
the Company to eliminate all stranded costs, as well as other
factors related to our business, such as our ability to fully
execute on our three-year corporate strategy, including our ability
to invest in the tools needed to implement our strategy,
competition from existing and future competitors in our target
markets, our ability to achieve the cost-savings and synergies
contemplated by our recent acquisitions within the expected time
frames or to achieve them fully and to successfully integrate
acquired businesses, the impact of acquisitions, strategic
alliances, divestitures, and other strategic events resulting from
evolving business strategies, including on the Company's ability to
maintain its culture and retain key personnel, the impact of any
pandemic, and any resulting economic downturn on our results,
prospects and opportunities, measures or restrictions imposed by
governments and health officials in response to the pandemic, the
timing of the award of projects and funding and potential changes
to the amounts provided for under the Infrastructure Investment and
Jobs Act, as well as other legislation related to governmental
spending, any changes in U.S. or foreign tax laws, statutes, rules,
regulations or ordinances that may adversely impact our future
financial positions or results of operations, financial market
risks that may affect the Company, including by affecting the
Company's access to capital, the cost of such capital and/or the
Company's funding obligations under defined benefit pension and
postretirement plans, as well as general economic conditions,
including inflation and the actions taken by monetary authorities
in response to inflation, changes in interest rates, and foreign
currency exchange rates, changes in capital markets, instability in
the banking industry, or the impact of a possible recession or
economic downturn on our results, prospects and opportunities, and
geopolitical events and conflicts among others. The impact of such
matters includes, but is not limited to, the possible reduction in
demand for certain of our product solutions and services and the
delay or abandonment of ongoing or anticipated projects due to the
financial condition of our clients and suppliers or to governmental
budget constraints or changes to governmental budgetary priorities;
the inability of our clients to meet their payment obligations in a
timely manner or at all; potential issues and risks related to a
significant portion of our employees working remotely; illness,
travel restrictions and other workforce disruptions that have and
could continue to negatively affect our supply chain and our
ability to timely and satisfactorily complete our clients'
projects; difficulties associated with retaining and hiring
additional employees; and the inability of governments in certain
of the countries in which we operate to effectively mitigate the
financial or other impacts of any future pandemics or infectious
disease outbreaks on their economies and workforces and our
operations therein. The foregoing factors and potential future
developments are inherently uncertain, unpredictable and, in many
cases, beyond our control. For a description of these and
additional factors that may occur that could cause actual results
to differ from our forward-looking statements see our Annual Report
on Form 10-K for the year ended September
29, 2023, and in particular the discussions contained
therein under Item 1 - Business; Item 1A - Risk Factors; Item 3 -
Legal Proceedings; and Item 7 - Management's Discussion and
Analysis of Financial Condition and Results of Operations, and Part
II, Item 1A - Risk Factors, in our most recently filed Quarterly
Report on Form 10-Q, as well as the Company's other filings with
the U.S. Securities and Exchange Commission. The Company is not
under any duty to update any of the forward-looking statements
after the date of this press release to conform to actual results,
except as required by applicable law.
About Jacobs
At Jacobs, we're challenging today to reinvent tomorrow by
solving the world's most critical problems for thriving cities,
resilient environments, mission-critical outcomes, operational
advancement, scientific discovery and cutting-edge manufacturing,
turning abstract ideas into realities that transform the world for
good. With approximately $16 billion in annual revenue and a
talent force of more than 60,000, Jacobs provides a full spectrum
of professional services including consulting, technical,
scientific and project delivery for the government and private
sectors. Visit jacobs.com and connect with Jacobs on LinkedIn, X,
Facebook and Instagram.
|
Financial
Highlights:
|
|
|
Results of
Operations (in thousands, except per-share
data):
|
|
|
For the Three Months
Ended
|
|
For the Nine Months
Ended
|
|
Unaudited
|
June 28,
2024
|
|
June 30,
2023
|
|
June 28,
2024
|
|
June 30,
2023
|
|
Revenues
|
$
4,231,580
|
|
$
4,186,702
|
|
$ 12,659,898
|
|
$ 12,063,702
|
|
Direct cost of
contracts
|
(3,314,800)
|
|
(3,329,959)
|
|
(9,987,965)
|
|
(9,501,953)
|
|
Gross profit
|
916,780
|
|
856,743
|
|
2,671,933
|
|
2,561,749
|
|
Selling, general and
administrative expenses
|
(656,316)
|
|
(587,002)
|
|
(1,926,417)
|
|
(1,764,341)
|
|
Operating
Profit
|
260,464
|
|
269,741
|
|
745,516
|
|
797,408
|
|
Other Income
(Expense):
|
|
|
|
|
|
|
|
|
Interest
income
|
10,321
|
|
7,830
|
|
27,960
|
|
18,467
|
|
Interest
expense
|
(45,801)
|
|
(43,787)
|
|
(133,385)
|
|
(124,477)
|
|
Miscellaneous income
(expense), net
|
1,166
|
|
(7,099)
|
|
(6,605)
|
|
(14,920)
|
|
Total other expense,
net
|
(34,314)
|
|
(43,056)
|
|
(112,030)
|
|
(120,930)
|
|
Earnings from
Continuing Operations Before
Taxes
|
226,150
|
|
226,685
|
|
633,486
|
|
676,478
|
|
Income Tax Expense from
Continuing Operations
|
(67,739)
|
|
(54,166)
|
|
(118,743)
|
|
(123,329)
|
|
Net Earnings of the
Group from Continuing
Operations
|
158,411
|
|
172,519
|
|
514,743
|
|
553,149
|
|
Net Earnings (Loss) of
the Group from
Discontinued Operations
|
485
|
|
294
|
|
(857)
|
|
(489)
|
|
Net Earnings of the
Group
|
158,896
|
|
172,813
|
|
513,886
|
|
552,660
|
|
Net Earnings
Attributable to Noncontrolling
Interests from Continuing Operations
|
(8,551)
|
|
(8,204)
|
|
(23,117)
|
|
(23,038)
|
|
Net Earnings
Attributable to Redeemable
Noncontrolling interests
|
(3,411)
|
|
(370)
|
|
(10,112)
|
|
(13,225)
|
|
Net Earnings
Attributable to Jacobs from
Continuing Operations
|
146,449
|
|
163,945
|
|
481,514
|
|
516,886
|
|
Net Earnings
Attributable to Jacobs
|
$
146,934
|
|
$
164,239
|
|
$
480,657
|
|
$
516,397
|
|
Net Earnings Per
Share:
|
|
|
|
|
|
|
|
|
Basic Net Earnings
from Continuing Operations
Per Share
|
$
1.17
|
|
$
1.29
|
|
$
3.85
|
|
$
4.08
|
|
Basic Net Loss from
Discontinued Operations
Per Share
|
$
—
|
|
$
—
|
|
$
(0.01)
|
|
$
—
|
|
Basic Earnings Per
Share
|
$
1.17
|
|
$
1.30
|
|
$
3.84
|
|
$
4.07
|
|
|
|
|
|
|
|
|
|
Diluted Net Earnings
from Continuing
Operations Per Share
|
$
1.17
|
|
$
1.29
|
|
$
3.83
|
|
$
4.06
|
|
Diluted Net Loss from
Discontinued Operations
Per Share
|
$
—
|
|
$
—
|
|
$
(0.01)
|
|
$
—
|
|
Diluted Earnings Per
Share
|
$
1.17
|
|
$
1.29
|
|
$
3.82
|
|
$
4.06
|
|
Segment
Information (in thousands):
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
Unaudited
|
June 28,
2024
|
|
June 30,
2023
|
|
June 28,
2024
|
|
June 30,
2023
|
|
Revenues from External
Customers:
|
|
|
|
|
|
|
|
|
Critical Mission
Solutions
|
$
1,155,806
|
|
$
1,190,845
|
|
$
3,513,635
|
|
$
3,457,076
|
|
People & Places
Solutions
|
$
2,564,698
|
|
$
2,469,694
|
|
$
7,556,999
|
|
$
7,041,744
|
|
Pass Through
Revenue
|
(796,389)
|
|
(783,143)
|
|
(2,390,107)
|
|
(2,177,366)
|
|
People & Places
Solutions Adjusted Net
Revenue
|
$
1,768,309
|
|
$
1,686,551
|
|
$
5,166,892
|
|
$
4,864,378
|
|
Divergent
Solutions
|
$
222,805
|
|
$
239,289
|
|
$
701,025
|
|
$
694,978
|
|
Pass Through
Revenue
|
(28,806)
|
|
(20,916)
|
|
(98,459)
|
|
(52,019)
|
|
Divergent Solutions
Adjusted Net Revenue
|
$
193,999
|
|
$
218,373
|
|
$
602,566
|
|
$
642,959
|
|
PA
Consulting
|
$
288,271
|
|
$
286,874
|
|
$
888,239
|
|
$
869,904
|
|
Total
Revenue
|
$
4,231,580
|
|
$
4,186,702
|
|
$
12,659,898
|
|
$
12,063,702
|
|
Adjusted Net
Revenue
|
$
3,406,385
|
|
$
3,382,643
|
|
$
10,171,332
|
|
$
9,834,317
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
June 28,
2024
|
|
June 30,
2023
|
|
June 28,
2024
|
|
June 30,
2023
|
|
Segment Operating
Profit:
|
|
|
|
|
|
|
|
|
Critical Mission
Solutions
|
$
100,318
|
|
$
99,141
|
|
$
297,373
|
|
$
275,304
|
|
People & Places
Solutions
|
271,157
|
|
242,673
|
|
763,919
|
|
701,498
|
|
Divergent Solutions
(1)
|
12,394
|
|
20,794
|
|
38,951
|
|
57,623
|
|
PA
Consulting
|
62,889
|
|
60,864
|
|
177,513
|
|
177,521
|
|
Total Segment Operating
Profit
|
446,758
|
|
423,472
|
|
1,277,756
|
|
1,211,946
|
|
Other Corporate
Expenses (2)
|
(118,040)
|
|
(118,486)
|
|
(356,413)
|
|
(319,796)
|
|
Restructuring,
Transaction and Other Charges
(3)
|
(68,254)
|
|
(35,245)
|
|
(175,827)
|
|
(94,742)
|
|
Total U.S. GAAP
Operating Profit
|
260,464
|
|
269,741
|
|
745,516
|
|
797,408
|
|
Total Other Expense,
net
|
(34,314)
|
|
(43,056)
|
|
(112,030)
|
|
(120,930)
|
|
Earnings Before Taxes
from Continuing
Operations
|
$
226,150
|
|
$
226,685
|
|
$
633,486
|
|
$
676,478
|
|
|
|
(1)
|
For the nine months
ended June 28, 2024, operating profit included an approximate
$15 million pre-tax non-cash charge associated with an inventory
write down during the fiscal 2024 period comprised of cumulative
adjustments of immaterial inventory misstatements previously
reported which would not have been material to any prior period
financial statements nor to any amounts reported in the current
period.
|
|
(2)
|
Other corporate
expenses included intangibles amortization of $52.5 million and
$52.0 million for the three months ended June 28, 2024 and
June 30, 2023, respectively, and $156.3 million and $152.2
million for the nine months ended June 28, 2024 and June 30,
2023, respectively, along with an approximately $11.0 million
intangibles impairment charge in the nine month period ended
June 28, 2024. Additionally, the comparison of the nine month
period of fiscal 2024 to the corresponding 2023 period was
unfavorably impacted by the one-time net favorable impact of $41
million relating mainly to changes in employee benefits programs in
the prior year, partly offset by year over year favorable
department spending as well as favorable impacts of corporate
functional overhead cost recovery by our lines of
business.
|
|
(3)
|
The three and nine
months ended June 28, 2024 included $54.8 million and
$133.9 million, respectively, in restructuring and other
charges and $7.1 million and $26.5 million, respectively, of
transaction charges, mainly relating to the Separation Transaction
(primarily professional services and employee separation costs).
The three and nine months ended June 30, 2023 included
$17.2 million in restructuring and other charges relating to
the Company's investment in PA Consulting (primarily employee
separation costs) and $13.4 million relating to the separation
activities (mainly professional services) around the Separation
Transaction, and the nine months ended June 30, 2023 included
$38.1 million in real estate impairment charges related to the
Company's transformation initiatives.
|
|
Balance Sheets
(in thousands):
|
|
|
June 28,
2024
|
|
September 29,
2023
|
|
Unaudited
|
|
|
|
ASSETS
|
|
|
|
|
Current
Assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
1,208,661
|
|
$
926,582
|
|
Receivables and
contract assets
|
3,774,227
|
|
3,558,806
|
|
Prepaid expenses and
other
|
154,721
|
|
204,965
|
|
Total current
assets
|
5,137,609
|
|
4,690,353
|
|
Property, Equipment and
Improvements, net
|
366,231
|
|
357,032
|
|
Other Noncurrent
Assets:
|
|
|
|
|
Goodwill
|
7,404,867
|
|
7,343,526
|
|
Intangibles,
net
|
1,156,577
|
|
1,271,943
|
|
Deferred income tax
assets
|
101,748
|
|
53,131
|
|
Operating lease
right-of-use assets
|
383,911
|
|
414,384
|
|
Miscellaneous
|
497,347
|
|
486,740
|
|
Total other noncurrent
assets
|
9,544,450
|
|
9,569,724
|
|
$
15,048,290
|
|
$
14,617,109
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
Current maturities of
long-term debt
|
$
825,166
|
|
$
61,430
|
|
Accounts
payable
|
1,262,783
|
|
1,143,802
|
|
Accrued
liabilities
|
1,303,207
|
|
1,301,644
|
|
Operating lease
liability
|
147,659
|
|
152,077
|
|
Contract
liabilities
|
965,440
|
|
763,608
|
|
Total current
liabilities
|
4,504,255
|
|
3,422,561
|
|
Long-term
debt
|
2,091,456
|
|
2,813,471
|
|
Liabilities relating to
defined benefit pension and retirement plans
|
268,166
|
|
258,540
|
|
Deferred income tax
liabilities
|
147,006
|
|
221,158
|
|
Long-term operating
lease liability
|
482,262
|
|
543,230
|
|
Other deferred
liabilities
|
144,250
|
|
125,088
|
|
Commitments and
Contingencies
|
—
|
|
—
|
|
Redeemable
Noncontrolling interests
|
734,465
|
|
632,979
|
|
Stockholders'
Equity:
|
|
|
|
|
Capital
stock:
|
|
|
|
|
Preferred stock, $1
par value, authorized - 1,000,000 shares; issued and
outstanding - none
|
—
|
|
—
|
|
Common stock, $1 par
value, authorized - 240,000,000 shares; issued and outstanding
- 124,253,511 shares and 125,976,998 shares as of June 28,
2024 and September 29,
2023, respectively
|
124,254
|
|
125,977
|
|
Additional paid-in
capital
|
2,741,750
|
|
2,735,325
|
|
Retained
earnings
|
4,557,204
|
|
4,542,872
|
|
Accumulated other
comprehensive loss
|
(806,415)
|
|
(857,954)
|
|
Total Jacobs
stockholders' equity
|
6,616,793
|
|
6,546,220
|
|
Noncontrolling
interests
|
59,637
|
|
53,862
|
|
Total Group
stockholders' equity
|
6,676,430
|
|
6,600,082
|
|
$
15,048,290
|
|
$
14,617,109
|
|
Statements of
Cash Flows (in thousands):
|
|
|
For the Three Months
Ended
|
|
For the Nine Months
Ended
|
|
Unaudited
|
June 28,
2024
|
|
June 30,
2023
|
|
June 28,
2024
|
|
June 30,
2023
|
|
Cash Flows from
Operating Activities:
|
|
|
|
|
|
|
|
|
Net earnings
attributable to the Group
|
$
158,896
|
|
$
172,813
|
|
$
513,886
|
|
$
552,660
|
|
Adjustments to
reconcile net earnings to net cash flows provided by
operations:
|
|
|
|
|
|
|
|
|
Depreciation and
amortization:
|
|
|
|
|
|
|
|
|
Property, equipment
and improvements
|
24,448
|
|
21,184
|
|
74,171
|
|
76,870
|
|
Intangible
assets
|
52,529
|
|
51,985
|
|
156,292
|
|
152,232
|
|
Stock based
compensation
|
18,994
|
|
20,623
|
|
54,170
|
|
55,908
|
|
Equity in earnings of
operating ventures, net of return on capital
distributions
|
(6,571)
|
|
(32)
|
|
(13,554)
|
|
(2,963)
|
|
Loss on disposals of
assets, net
|
(177)
|
|
(238)
|
|
1,033
|
|
590
|
|
Impairment of
long-lived assets
|
—
|
|
914
|
|
—
|
|
38,131
|
|
Deferred (benefit)
loss on income taxes
|
(42,137)
|
|
(15,841)
|
|
(116,103)
|
|
4,944
|
|
Changes in assets and
liabilities, excluding the effects of businesses
acquired:
|
|
|
|
|
|
|
|
|
Receivables and
contract assets, net of contract liabilities
|
41,772
|
|
(41,038)
|
|
23,440
|
|
22,191
|
|
Prepaid expenses and
other current assets
|
33,601
|
|
2,696
|
|
54,512
|
|
(7,244)
|
|
Miscellaneous other
assets
|
25,185
|
|
26,746
|
|
68,666
|
|
70,218
|
|
Accounts
payable
|
102,456
|
|
124,251
|
|
117,220
|
|
109,142
|
|
Accrued
liabilities
|
58,931
|
|
(56,430)
|
|
(107,709)
|
|
(285,287)
|
|
Other deferred
liabilities
|
11,170
|
|
9,476
|
|
22,243
|
|
(44,420)
|
|
Other, net
|
3,505
|
|
3,952
|
|
9,874
|
|
12,428
|
|
Net cash provided by operating activities
|
482,602
|
|
321,061
|
|
858,141
|
|
755,400
|
|
Cash Flows from
Investing Activities:
|
|
|
|
|
|
|
|
|
Additions to property
and equipment
|
(37,664)
|
|
(30,851)
|
|
(82,772)
|
|
(98,240)
|
|
Disposals of property
and equipment and other assets
|
13
|
|
1,522
|
|
158
|
|
1,537
|
|
Capital contributions
to equity investees, net of return of capital
distributions
|
—
|
|
(420)
|
|
1,660
|
|
7,964
|
|
Acquisitions of
businesses, net of cash acquired
|
—
|
|
—
|
|
(14,000)
|
|
(17,685)
|
|
Net cash used for investing activities
|
(37,651)
|
|
(29,749)
|
|
(94,954)
|
|
(106,424)
|
|
Cash Flows from
Financing Activities:
|
|
|
|
|
|
|
|
|
Net repayments of
borrowings
|
(86,152)
|
|
(284,712)
|
|
(622)
|
|
(338,555)
|
|
Debt issuance
costs
|
—
|
|
(508)
|
|
(1,606)
|
|
(11,896)
|
|
Proceeds from
issuances of common stock
|
12,754
|
|
12,677
|
|
35,414
|
|
38,051
|
|
Common stock
repurchases
|
(150,919)
|
|
(125,047)
|
|
(346,382)
|
|
(265,569)
|
|
Taxes paid on vested
restricted stock
|
(217)
|
|
(551)
|
|
(33,389)
|
|
(23,760)
|
|
Cash dividends to
shareholders
|
(36,302)
|
|
(32,884)
|
|
(106,439)
|
|
(95,672)
|
|
Net dividends
associated with noncontrolling interests
|
(3,267)
|
|
(6,004)
|
|
(17,516)
|
|
(17,287)
|
|
Repurchase of
redeemable noncontrolling interests
|
(17,428)
|
|
(32,072)
|
|
(41,788)
|
|
(90,425)
|
|
Proceeds from
issuances of redeemable noncontrolling interests
|
19,761
|
|
34,771
|
|
19,761
|
|
34,771
|
|
Net cash used for financing activities
|
(261,770)
|
|
(434,330)
|
|
(492,567)
|
|
(770,342)
|
|
Effect of Exchange Rate
Changes
|
(5,416)
|
|
11,548
|
|
12,215
|
|
61,309
|
|
Net Increase (Decrease)
in Cash and Cash Equivalents and Restricted Cash
|
177,765
|
|
(131,470)
|
|
282,835
|
|
(60,057)
|
|
Cash and Cash
Equivalents, including Restricted Cash, at the Beginning of the
Period
|
1,034,515
|
|
1,225,620
|
|
929,445
|
|
1,154,207
|
|
Cash and Cash
Equivalents, including Restricted Cash, at the End of the
Period
|
$
1,212,280
|
|
$
1,094,150
|
|
$
1,212,280
|
|
$
1,094,150
|
|
Backlog (in
millions):
|
|
|
June 28,
2024
|
|
June 30,
2023
|
|
Critical Mission
Solutions
|
$
8,450
|
|
$
8,097
|
|
People & Places
Solutions
|
19,277
|
|
17,498
|
|
Divergent
Solutions
|
2,521
|
|
2,965
|
|
PA
Consulting
|
369
|
|
355
|
|
Total
|
$
30,617
|
|
$
28,915
|
|
Non-GAAP Financial Measures and Operating
Metrics:
In this press release, the Company has included certain non-GAAP
financial measures as defined in Regulation G promulgated under the
Securities Exchange Act of 1934, as amended. These non-GAAP
measures are described below.
Adjusted net revenue is calculated excluding pass through
revenue of the Company's People & Places Solutions and
Divergent Solutions segments from the Company's revenue from
continuing operations. Pass through revenues are amounts we bill to
clients on projects where we are procuring subcontract labor or
third-party materials and equipment on behalf of the client. These
amounts are considered pass throughs because we receive no or only
a minimal mark-up associated with the billed amounts. We have
amended our name and convention for revenue, excluding pass-through
costs from "net revenue" to "adjusted net revenue." Note, this is
simply a name change intended to make the non-GAAP nature of this
measure more prominent and does not impact measurement.
Adjusted earnings from continuing operations before taxes,
adjusted income taxes from continuing operations, adjusted net
earnings from continuing operations and adjusted EPS from
continuing operations are calculated by:
|
1.
|
Excluding items
collectively referred to as Restructuring, Transaction and Other
Charges, which include:
|
|
a.
|
costs and other charges
associated with our Focus 2023 transformation initiatives,
including activities associated with the re-scaling and repurposing
of physical office space, employee separations, contractual
termination fees and related expenses, referred to as "Focus 2023
Transformation, mainly real estate rescaling efforts";
|
|
b.
|
transaction costs and
other charges incurred in connection with the Separation
Transaction and acquisitions of BlackLynx and StreetLight and the
strategic investment in PA Consulting, including advisor fees,
change in control payments, and the impact of the quarterly
adjustment to the estimated performance based payout of contingent
consideration to the sellers in connection with certain
acquisitions; impacts resulting from the EPS numerator adjustment
relating to the redeemable noncontrolling interests preference
share repurchase and reissuance activities and similar transaction
costs and expenses (collectively referred to as "Transaction
Costs");
|
|
c.
|
recoveries, costs and
other charges associated with restructuring activities implemented
in connection with the Separation Transaction, including advisor
fees, involuntary terminations and related costs, the acquisitions
of CH2M, BlackLynx, and StreetLight, the strategic investment in PA
Consulting, the sale of the ECR business and other cost reduction
and restructuring initiatives, which included involuntary
terminations of officers and employees, costs associated with
co-locating offices of acquired companies, separating physical
locations of continuing operations, professional services and
personnel costs, amounts relating to certain commitments and
contingencies relating to discontinued operations of the CH2M
business, including the final settlement charges relating to the
Legacy CH2M Matter, net of previously recorded reserves, third
party recoveries recorded as receivables reducing SG&A, and
charges associated with the impairment and final closing activities
of our AWE ML joint venture (collectively referred to as
"Restructuring, integration, separation and other
charges").
|
|
|
|
2.
|
Excluding items
collectively referred to as "Other adjustments",1 which
include:
|
|
a.
|
adding back intangible
assets amortization and impairment charges;
|
|
b.
|
impact of certain
subsidiary level contingent equity-based agreements in connection
with the transaction structure of our PA Consulting investment;
and
|
|
c.
|
impacts related to tax
rate increases in the UK in a prior period.
|
|
|
1 Beginning
with our first fiscal quarter in 2024, the Company has revised its
presentation of adjusted net earnings from continuing operations
and adjusted EPS to no longer reflect adjustments to align these
non-GAAP measures to our annual effective tax rates.
|
Adjustments to derive adjusted net earnings from continuing
operations and adjusted EPS from continuing operations are
calculated on an after-tax basis.
Free cash flow (FCF) is calculated as net cash provided by
operating activities as reported on the statement of cash flows
less additions to property and equipment.
Adjusted EBITDA is calculated by adding income tax expense,
depreciation expense and interest expense to, and deducting
interest income from, adjusted net earnings from continuing
operations.
P&PS Adjusted Operating Margin is a ratio of the GAAP
operating profit for the segment to the segment's adjusted net
revenue. For a reconciliation of revenue to adjusted net revenue,
see "Segment Information".
We believe that the measures listed above are useful to
management, investors and other users of our financial information
in evaluating the Company's operating results and understanding the
Company's operating trends by excluding or adding back the effects
of the items described above and below, the inclusion or exclusion
of which can obscure underlying trends. Additionally, management
uses such measures in its own evaluation of the Company's
performance, particularly when comparing performance to past
periods, and believes these measures are useful for investors
because they facilitate a comparison of our financial results from
period to period.
This press release also contains certain financial and operating
metrics which management believes are useful in evaluating the
Company's performance. Backlog represents revenue or gross profit,
as applicable, we expect to realize for work to be completed by our
consolidated subsidiaries and our proportionate share of work to be
performed by unconsolidated joint ventures. Gross margin in backlog
refers to the ratio of gross profit in backlog to gross revenue in
backlog. For more information on how we determine our backlog, see
our Backlog Information in our most recent annual report filed with
the Securities and Exchange Commission. Adjusted EBITDA margin
refers to a ratio of adjusted EBITDA to adjusted net revenue. Cash
conversion refers to a ratio of cash flow from operations to GAAP
net earnings from continuing operations. Reported FCF conversion
refers to a ratio of FCF to GAAP net earnings from continuing
operations. We regularly monitor these operating metrics to
evaluate our business, identify trends affecting our business, and
make strategic decisions.
The Company provides non-GAAP measures to supplement U.S. GAAP
measures, as they provide additional insight into the Company's
financial results. However, non-GAAP measures have limitations as
analytical tools and should not be considered in isolation and are
not in accordance with, or a substitute for, U.S. GAAP measures. In
addition, other companies may define non-GAAP measures differently,
which limits the ability of investors to compare non-GAAP measures
of the Company to those used by our peer companies.
The following tables reconcile the components and values of U.S.
GAAP earnings from continuing operations before taxes, income taxes
from continuing operations, net earnings attributable to Jacobs
from continuing operations, Diluted Net Earnings from Continuing
Operations Per Share (which we refer to as EPS from continuing
operations), to the corresponding "adjusted" amount, net cash
provided by operating activities to reported free cash flow and
revenue to adjusted net revenue. For the comparable period
presented below, such adjustments consist of amounts incurred in
connection with the items described above. Amounts are shown in
thousands, except for per-share data (note: earnings per share
amounts may not total due to rounding).
|
Reconciliation of
Earnings from Continuing Operations Before Taxes to Adjusted
Earnings from Continuing Operations Before Taxes (in
thousands)
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
June 28,
2024
|
|
June 30,
2023
|
|
June 28,
2024
|
|
June 30,
2023
|
|
Earnings from
Continuing Operations Before Taxes
|
$
226,150
|
|
$
226,685
|
|
$
633,486
|
|
$
676,478
|
|
Restructuring,
Transaction and Other Charges (1):
|
|
|
|
|
|
|
|
|
Focus 2023
Transformation, mainly real estate rescaling efforts
|
10
|
|
1,129
|
|
59
|
|
39,296
|
|
Transaction
costs
|
10,165
|
|
4,062
|
|
34,442
|
|
15,613
|
|
Restructuring,
integration, separation and other charges
|
58,078
|
|
29,783
|
|
141,326
|
|
38,900
|
|
Other Adjustments
(2):
|
|
|
|
|
|
|
|
|
Amortization of
intangibles
|
52,529
|
|
51,985
|
|
156,292
|
|
152,232
|
|
Other
|
4,718
|
|
4,016
|
|
22,153
|
|
5,142
|
|
Adjusted Earnings
from Continuing Operations Before Taxes
|
$
351,650
|
|
$
317,660
|
|
$
987,758
|
|
$
927,661
|
|
|
|
(1) Includes pre-tax
charges primarily relating to the Separation Transaction for the
three- and nine- months ended June 28, 2024. Includes real estate
impairments charges associated with the Company's Focus 2023
transformation program of $0.9 million and $38.1 million for the
three- and nine- months ended June 30, 2023, respectively, as well
as charges associated with various transaction costs and activity
associated with Company restructuring and integration
programs.
|
|
(2) Includes pre-tax
charges for the removal of amortization of intangible assets for
the three- and nine- months ended June 28, 2024 and the impact of
certain subsidiary level contingent equity-based agreements in
connection with the transaction structure of our PA Consulting
investment of $4.7 million and $4.0 million for the three months
ended June 28, 2024 and June 30, 2023, respectively. The nine
months ended June 28, 2024 also includes an approximate $11 million
intangibles impairment charge.
|
|
Reconciliation
of Income Tax Expense from Continuing Operations to Adjusted Income
Tax Expense from Continuing Operations (in
thousands)
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
June 28,
2024
|
|
June 30,
2023
|
|
June 28,
2024
|
|
June 30,
2023
|
|
Income Tax Expense from
Continuing Operations
|
$
(67,739)
|
|
$
(54,166)
|
|
$
(118,743)
|
|
$
(123,329)
|
|
Tax Effects of
Restructuring, Transaction and Other Charges (1)
|
|
|
|
|
|
|
|
|
Focus 2023
Transformation, mainly real estate rescaling efforts
|
(3)
|
|
(286)
|
|
(15)
|
|
(9,870)
|
|
Transaction
costs
|
(2,295)
|
|
(173)
|
|
(7,753)
|
|
(2,910)
|
|
Restructuring,
integration, separation and other charges
|
(3,083)
|
|
(5,599)
|
|
(22,738)
|
|
(7,795)
|
|
Tax Effects of Other
Adjustments (2)
|
|
|
|
|
|
|
|
|
Amortization of
intangibles
|
(13,174)
|
|
(12,393)
|
|
(39,201)
|
|
(36,304)
|
|
Other
|
(2)
|
|
(761)
|
|
(2,629)
|
|
(1,009)
|
|
Adjusted Income Tax
Expense from Continuing Operations
|
$
(86,296)
|
|
$
(73,378)
|
|
$
(191,079)
|
|
$
(181,217)
|
|
|
|
(1) Includes
estimated income tax impacts on restructuring activities primarily
relating to the Separation Transaction for the three- and nine-
months ended June 28, 2024, along with impacts on real estate
impairments associated with the Company's Focus 2023 transformation
program and charges associated with various transaction costs and
Company restructuring and integration programs for the three months
ended June 30, 2023.
|
|
(2) Includes estimated
income tax impacts on amortization of intangible assets and on
certain subsidiary level contingent equity-based agreements in
connection with the transaction structure of our PA Consulting
investment for the three- and nine- months ended June 28, 2024 and
June 30, 2023. The nine months ended June 28, 2024 also includes
the income tax impact on an approximate $11 million intangibles
impairment charge.
|
|
Reconciliation of
Net Earnings Attributable to Jacobs from Continuing Operations to
Adjusted Net Earnings Attributable to Jacobs from
Continuing Operations (in thousands)
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
June 28,
2024
|
|
June 30,
2023
|
|
June 28,
2024
|
|
June 30,
2023
|
|
Net Earnings
Attributable to Jacobs from Continuing Operations
|
$
146,449
|
|
$
163,945
|
|
$
481,514
|
|
$
516,886
|
|
After-tax effects of
Restructuring, Transaction and Other Charges (1):
|
|
|
|
|
|
|
|
|
Focus 2023
Transformation, mainly real estate rescaling efforts
|
8
|
|
843
|
|
45
|
|
29,426
|
|
Transaction
costs
|
7,568
|
|
3,155
|
|
25,690
|
|
10,947
|
|
Restructuring,
integration, separation and other charges
|
54,044
|
|
19,571
|
|
116,383
|
|
26,492
|
|
After-tax effects of
Other Adjustments (2):
|
|
|
|
|
|
|
|
|
Amortization of
intangibles
|
34,760
|
|
34,623
|
|
103,245
|
|
101,055
|
|
Other
|
3,293
|
|
2,231
|
|
16,064
|
|
2,772
|
|
Adjusted Net
Earnings Attributable to Jacobs from Continuing
Operations
|
$
246,122
|
|
$
224,368
|
|
$
742,941
|
|
$
687,578
|
|
|
|
(1) Includes
estimated after-tax impacts primarily relating to the Separation
Transaction for the three- and nine- months ended June 28, 2024,
along with non-cash real estate impairment charges associated the
Company's Focus 2023 program and charges associated with various
transaction costs and activity associated with Company
restructuring and integration programs for the three- and nine-
months ended June 30, 2023.
|
|
(2) Includes estimated
after-tax and noncontrolling interest impacts from amortization of
intangible assets and estimated tax impacts on certain subsidiary
level contingent equity-based agreements in connection with the
transaction structure of our PA Consulting investment for the
three- and nine- months ended June 28, 2024 and June 30, 2023. The
nine months ended June 28, 2024 also includes the estimated
after-tax impact from an approximate $11 million intangibles
impairment charge.
|
|
Reconciliation of
Diluted Net Earnings from Continuing Operations Per Share to
Adjusted Diluted Net Earnings from Continuing Operations Per
Share
(in thousands)
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
June 28,
2024
|
|
June 30,
2023
|
|
June 28,
2024
|
|
June 30,
2023
|
|
Diluted Net Earnings
from Continuing Operations Per Share
|
$
1.17
|
|
$
1.29
|
|
$
3.83
|
|
$
4.06
|
|
After-tax effects of
Restructuring, Transaction and Other Charges (1):
|
|
|
|
|
|
|
|
|
Focus 2023
Transformation, mainly real estate rescaling efforts
|
—
|
|
0.01
|
|
—
|
|
0.23
|
|
Transaction
costs
|
0.06
|
|
0.02
|
|
0.19
|
|
0.09
|
|
Restructuring,
integration, separation and other charges
|
0.43
|
|
0.15
|
|
0.92
|
|
0.21
|
|
After-tax effects of
Other Adjustments (2):
|
|
|
|
|
|
|
|
|
Amortization of
intangibles
|
0.28
|
|
0.27
|
|
0.83
|
|
0.79
|
|
Other
|
0.03
|
|
0.02
|
|
0.11
|
|
0.02
|
|
Adjusted Diluted Net
Earnings from Continuing Operations Per Share
|
$
1.96
|
|
$
1.76
|
|
$
5.89
|
|
$
5.40
|
|
|
|
(1) Includes
estimated per-share impacts from the restructuring activities
primarily relating to the Separation Transaction for the three- and
nine- months ended June 28, 2024, along with real estate
impairments associated with the Company's Focus 2023 transformation
program and impacts associated with various transaction costs and
costs associated with Company restructuring and integration
programs for the nine months ended June 30, 2023.
|
|
(2) Includes
estimated per-share impacts from amortization of intangible assets
and certain subsidiary level contingent equity-based agreements in
connection with the transaction structure of our PA Consulting
investment for the three- and nine- months ended June 28, 2024 and
June 30, 2023. The nine months ended June 28, 2024 also includes
the per-share impact from an approximate $11 million intangibles
impairment charge.
|
|
Reconciliation of
Free Cash Flow (in thousands)
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
June 28,
2024
|
|
June 30,
2023
|
|
June 28,
2024
|
|
June 30,
2023
|
|
Net cash (used for)
provided by operating activities
|
$
482,602
|
|
$
321,061
|
|
$
858,141
|
|
$
755,400
|
|
Additions to property
and equipment
|
(37,664)
|
|
(30,851)
|
|
(82,772)
|
|
(98,240)
|
|
Free cash
flow
|
$
444,938
|
|
$
290,210
|
|
$
775,369
|
|
$
657,160
|
|
|
|
|
|
|
|
|
|
Net cash used for
investing activities
|
$
(37,651)
|
|
$
(29,749)
|
|
$
(94,954)
|
|
$
(106,424)
|
|
Net cash used for
financing activities
|
$
(261,770)
|
|
$
(434,330)
|
|
$
(492,567)
|
|
$
(770,342)
|
|
Earnings Per
Share:
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
Unaudited
|
June 28,
2024
|
|
June 30,
2023
|
|
June 28,
2024
|
|
June 30,
2023
|
|
Numerator for Basic
and Diluted EPS:
|
|
|
|
|
|
|
|
|
Net earnings
attributable to Jacobs from continuing operations
|
$
146,449
|
|
$
163,945
|
|
$
481,514
|
|
$
516,886
|
|
Preferred Redeemable
Noncontrolling interests redemption value
adjustment
|
(20)
|
|
—
|
|
1,746
|
|
—
|
|
Net earnings from
continuing operations allocated to common
stock for EPS calculation
|
$
146,429
|
|
$
163,945
|
|
$
483,260
|
|
$
516,886
|
|
|
|
|
|
|
|
|
|
Net earnings (loss)
from discontinued operations allocated to
common stock for EPS calculation
|
$
485
|
|
$
294
|
|
$
(857)
|
|
$
(489)
|
|
|
|
|
|
|
|
|
|
Net earnings
allocated to common stock for EPS calculation
|
$
146,914
|
|
$
164,239
|
|
$
482,403
|
|
$
516,397
|
|
|
|
|
|
|
|
|
|
Denominator for
Basic and Diluted EPS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used for
calculating basic EPS attributable to common stock
|
125,163
|
|
126,646
|
|
125,660
|
|
126,785
|
|
|
|
|
|
|
|
|
|
Effect of dilutive
securities:
|
|
|
|
|
|
|
|
|
Stock compensation
plans
|
453
|
|
492
|
|
553
|
|
546
|
|
Shares used for
calculating diluted EPS attributable to common stock
|
125,616
|
|
127,138
|
|
126,213
|
|
127,331
|
|
|
|
|
|
|
|
|
|
Net Earnings Per
Share:
|
|
|
|
|
|
|
|
|
Basic Net Earnings
from Continuing Operations Per Share
|
$
1.17
|
|
$
1.29
|
|
$
3.85
|
|
$
4.08
|
|
Basic Net Loss from
Discontinued Operations Per Share
|
$
—
|
|
$
—
|
|
$
(0.01)
|
|
$
—
|
|
Basic Earnings Per
Share
|
$
1.17
|
|
$
1.30
|
|
$
3.84
|
|
$
4.07
|
|
Diluted Net Earnings
from Continuing Operations Per Share
|
$
1.17
|
|
$
1.29
|
|
$
3.83
|
|
$
4.06
|
|
Diluted Net Loss from
Discontinued Operations Per Share
|
$
—
|
|
$
—
|
|
$
(0.01)
|
|
$
—
|
|
Diluted Earnings Per
Share
|
$
1.17
|
|
$
1.29
|
|
$
3.82
|
|
$
4.06
|
Note: Per share amounts may not add due to
rounding.
For additional information contact:
Investors:
Ayan Banerjee
JacobsIR@jacobs.com
Media:
Louise White
louise.white@jacobs.com
469-724-0810
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SOURCE Jacobs
