First Quarter Revenue up 9.5%
Year-Over-Year
People and Places Solutions Revenue up
10.9% Year-Over-Year
Reported EPS up 28% Year-Over-Year;
Adjusted EPS up 28% Year-Over-Year1
Reported $418M in Cash Flow from Operations; Repurchased
$100M in Shares
Announced 11.5% Quarterly Dividend
Increase
Reiterates Fiscal 2024 Adjusted
EBITDA and Adjusted EPS Outlook
DALLAS, Feb. 6, 2024
/PRNewswire/ -- Jacobs Solutions Inc. (NYSE: J) today announced its
financial results for the fiscal first quarter ended
December 29, 2023.
Q1 2024 Highlights:
- Revenue of $4.2 billion up 9.5%
y/y; adjusted net revenue1 increased 7.0% y/y and up
5.4% in constant currency1
- Backlog1 of $29.6
billion, up 4.7% y/y; gross profit in backlog1 up
6.1% y/y
- EPS of $1.37, up 28% y/y;
adjusted EPS from continuing operations1 of $2.02, up 28% y/y, which includes a $0.49/share non-cash deferred tax benefit and
($0.09)/share non-cash inventory
write down
- Strong cash flow from operations of $418
million; continue to expect greater than 100% fiscal year
adjusted free cash flow conversion1
Jacobs' CEO Bob Pragada
commented, "We kicked off fiscal 2024 with strong performance,
underpinned by robust organic revenue growth in our People and
Places Solutions (P&PS) business, reflecting the broad-based
strength that we see in global infrastructure and sustainability
investment. We are diligently working to create a leaner operating
model that delivers higher growth, higher margin value for our
stakeholders by focusing on disciplined execution and project
delivery excellence. Aligned with our position as a global leader
in science-based, digitally-enabled solutions, our portfolio
remains resilient. We are pleased with the progress we continue to
make toward the merger of our Critical Mission Solutions (CMS) and
Cyber & Intelligence businesses with Amentum as we look to
stand up two independent companies."
Jacobs CFO Claudia Jaramillo
added, "Jacobs delivered $418M in
cash flow from operations and $401M
in free cash flow1 while repurchasing $100M in shares and increasing our dividend. We
remain committed to the consistent return of capital to
shareholders, and will look to increase return of capital while
maintaining discipline and an investment grade credit profile."
Financial Outlook2
The Company reiterates its outlook for fiscal 2024 adjusted
EBITDA of $1,530M to $1,600M and adjusted EPS of $7.70 to $8.20, up
9% and 10% at the midpoints, respectively.
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
adjusted 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.
|
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 including regulatory approvals,
receipt of a private letter ruling from the Internal Revenue
Service, opinions from tax advisors and the effectiveness of a
registration statement with the U.S. Securities and Exchange
Commission. The Company continues to make progress towards the
separation and expects the transaction to close in the second half
of fiscal year 2024.
First Quarter Review
|
Fiscal Q1
2024
|
Fiscal Q1
2023
|
Change
|
Revenue
|
$4.2 billion
|
$3.8 billion
|
$0.4 million
|
Adjusted Net
Revenue1
|
$3.3 billion
|
$3.1 billion
|
$0.2 million
|
GAAP Net Earnings
from Continuing Operations
|
$172 million
|
$136 million
|
$36 million
|
GAAP Earnings Per
Diluted Share (EPS) from Continuing Operations
|
$1.37
|
$1.07
|
$0.30
|
Adjusted Net
Earnings from Continuing Operations1,3
|
$256 million
|
$201 million
|
$55 million
|
Adjusted EPS from
Continuing Operations1,3
|
$2.02
|
$1.57
|
$0.45
|
The Company's adjusted net earnings from continuing operations
and adjusted EPS from continuing operations for the first 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 for continuing
operations is (9.8)% for the fiscal first quarter 2024, and fiscal
first quarter 2024 adjusted earnings per share from continuing
operations reflects an adjusted effective tax rate of 4.2%.
The current quarter adjusted effective tax rate benefited from a
$61.6 million non cash deferred tax
benefit2. The Company's U.S. GAAP effective tax rate for
continuing operations was 25.4% for the fiscal first quarter 2023,
and fiscal first quarter 2023 adjusted earnings per share from
continuing operations was 24.9%.
Jacobs is hosting a conference call at 10:00 A.M. ET on Tuesday February 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 adjusted free
cash flow conversion, as well as our expectations for how our
Separated Businesses are tracking against their forecasts, our plan
to increase return of capital to shareholders, and our fiscal year
2024 effective tax rates, 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
uncertainties as to the structure and timing of the proposed
transaction to spin off and merge with Amentum the Separated
Businesses 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"), 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
possibility that closing conditions for the Separation Transaction
may not be satisfied or waived, on a timely basis or otherwise, 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 while retaining 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
|
Unaudited
|
December 29,
2023
|
|
December 30,
2022
|
Revenues
|
$
4,159,225
|
|
$
3,798,668
|
Direct cost of
contracts
|
(3,308,687)
|
|
(2,983,955)
|
Gross profit
|
850,538
|
|
814,713
|
Selling, general and
administrative expenses
|
(646,475)
|
|
(576,908)
|
Operating
Profit
|
204,063
|
|
237,805
|
Other Income
(Expense):
|
|
|
|
Interest
income
|
8,233
|
|
3,007
|
Interest
expense
|
(43,352)
|
|
(40,077)
|
Miscellaneous
expense
|
(3,195)
|
|
(3,254)
|
Total other expense,
net
|
(38,314)
|
|
(40,324)
|
Earnings from
Continuing Operations Before Taxes
|
165,749
|
|
197,481
|
Income Tax benefit
(expense) from Continuing Operations
|
16,279
|
|
(50,103)
|
Net Earnings of the
Group from Continuing Operations
|
182,028
|
|
147,378
|
Net Loss of the Group
from Discontinued Operations
|
(574)
|
|
(708)
|
Net Earnings of the
Group
|
181,454
|
|
146,670
|
Net Earnings
Attributable to Noncontrolling Interests from Continuing
Operations
|
(7,226)
|
|
(7,031)
|
Net Earnings
Attributable to Redeemable Noncontrolling interests
|
(2,618)
|
|
(3,992)
|
Net Earnings
Attributable to Jacobs from Continuing Operations
|
172,184
|
|
136,355
|
Net Earnings
Attributable to Jacobs
|
$
171,610
|
|
$
135,647
|
Net Earnings Per
Share:
|
|
|
|
Basic Net Earnings
from Continuing Operations Per Share
|
$
1.38
|
|
$
1.08
|
Basic Net Loss from
Discontinued Operations Per Share
|
$
—
|
|
$
(0.01)
|
Basic Earnings Per
Share
|
$
1.37
|
|
$
1.07
|
|
|
|
|
Diluted Net Earnings
from Continuing Operations Per Share
|
$
1.37
|
|
$
1.07
|
Diluted Net Loss from
Discontinued Operations Per Share
|
$
—
|
|
$
(0.01)
|
Diluted Earnings Per
Share
|
$
1.37
|
|
$
1.06
|
|
|
|
|
Segment
Information (in thousands):
|
|
|
Three Months
Ended
|
Unaudited
|
December 29,
2023
|
|
December 30,
2022
|
Revenues from External
Customers:
|
|
|
|
Critical Mission
Solutions
|
$
1,128,603
|
|
$
1,075,175
|
People & Places
Solutions
|
2,470,441
|
|
2,226,985
|
Pass Through
Revenue
|
(826,480)
|
|
(710,158)
|
People & Places
Solutions Adjusted Net Revenue
|
$
1,643,961
|
|
$
1,516,827
|
Divergent
Solutions
|
$
254,180
|
|
$
214,465
|
Pass Through
Revenue
|
(43,907)
|
|
(13,714)
|
Divergent Solutions
Adjusted Net Revenue
|
$
210,273
|
|
$
200,751
|
PA
Consulting
|
$
306,001
|
|
$
282,043
|
Total
Revenue
|
$
4,159,225
|
|
$
3,798,668
|
Adjusted Net
Revenue
|
$
3,288,838
|
|
$
3,074,796
|
|
|
Three Months
Ended
|
|
December 29,
2023
|
|
December 30,
2022
|
Segment Operating
Profit:
|
|
|
|
Critical Mission
Solutions
|
$
93,407
|
|
$
82,220
|
People & Places
Solutions
|
224,998
|
|
226,619
|
Divergent Solutions
(1)
|
7,581
|
|
11,967
|
PA
Consulting
|
54,455
|
|
51,027
|
Total Segment Operating
Profit
|
380,441
|
|
371,833
|
Other Corporate
Expenses (2)
|
(121,060)
|
|
(93,686)
|
Restructuring,
Transaction and Other Charges (3)
|
(55,318)
|
|
(40,342)
|
Total U.S. GAAP
Operating Profit
|
204,063
|
|
237,805
|
Total Other Expense,
net
|
(38,314)
|
|
(40,324)
|
Earnings Before Taxes
from Continuing Operations
|
$
165,749
|
|
$
197,481
|
|
|
(1)
|
Includes an approximate
$15 million pre-tax non-cash charge associated with an inventory
write down during the fiscal 2024 period.
|
(2)
|
Other corporate
expenses included intangibles amortization of $51.1 million and
$49.8 million for the three months ended December 29, 2023 and
December 30, 2022, respectively, along with an approximate $10
million intangibles impairment charge in the three month ended
December 29, 2023 period. Additionally, the comparison of the
three month period of fiscal 2024 to the corresponding 2023 period
was unfavorably impacted by the one-time net favorable impacts 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 months ended
December 29, 2023 included $40.1 million in restructuring and
$11.0 million of transaction charges, mainly relating to the
Separation Transaction (primarily professional services and
employee separation costs). Included in the three months ended
December 30, 2022 were mainly $27.1 million in restructuring
and other charges associated mainly with real estate impairments
with the remainder associated with other miscellaneous separation
and transaction professional services costs from the prior
year.
|
Balance Sheets
(in thousands):
|
|
|
December 29,
2023
|
|
September 29,
2023
|
|
Unaudited
|
|
|
ASSETS
|
|
|
|
Current
Assets:
|
|
|
|
Cash and cash
equivalents
|
$
1,142,227
|
|
$
926,582
|
Receivables and
contract assets
|
3,676,508
|
|
3,558,806
|
Prepaid expenses and
other
|
156,533
|
|
204,965
|
Total current
assets
|
4,975,268
|
|
4,690,353
|
Property, Equipment and
Improvements, net
|
353,305
|
|
357,032
|
Other Noncurrent
Assets:
|
|
|
|
Goodwill
|
7,421,398
|
|
7,343,526
|
Intangibles,
net
|
1,268,329
|
|
1,271,943
|
Deferred income tax
assets
|
46,525
|
|
53,131
|
Operating lease
right-of-use assets
|
405,748
|
|
414,384
|
Miscellaneous
|
481,631
|
|
486,740
|
Total other noncurrent
assets
|
9,623,631
|
|
9,569,724
|
|
$
14,952,204
|
|
$
14,617,109
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
Liabilities:
|
|
|
|
Short-term
debt
|
$
55,839
|
|
$
61,430
|
Accounts
payable
|
1,114,790
|
|
1,143,802
|
Accrued
liabilities
|
1,375,553
|
|
1,301,644
|
Operating lease
liability
|
152,472
|
|
152,077
|
Contract
liabilities
|
945,892
|
|
763,608
|
Total current
liabilities
|
3,644,546
|
|
3,422,561
|
Long-term
debt
|
2,834,880
|
|
2,813,471
|
Liabilities relating to
defined benefit pension and retirement plans
|
276,307
|
|
258,540
|
Deferred income tax
liabilities
|
153,869
|
|
221,158
|
Long-term operating
lease liability
|
522,670
|
|
543,230
|
Other deferred
liabilities
|
131,006
|
|
125,088
|
Commitments and
Contingencies
|
|
|
|
Redeemable
Noncontrolling interests
|
654,076
|
|
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
- 125,599,058 shares and 125,976,998 shares as of December 29,
2023 and
September 29, 2023, respectively
|
125,599
|
|
125,977
|
Additional paid-in
capital
|
2,729,416
|
|
2,735,325
|
Retained
earnings
|
4,604,850
|
|
4,542,872
|
Accumulated other
comprehensive loss
|
(781,591)
|
|
(857,954)
|
Total Jacobs
stockholders' equity
|
6,678,274
|
|
6,546,220
|
Noncontrolling
interests
|
56,576
|
|
53,862
|
Total Group
stockholders' equity
|
6,734,850
|
|
6,600,082
|
|
$
14,952,204
|
|
$
14,617,109
|
Statements of
Cash Flows (in thousands):
|
|
|
For the Three Months
Ended
|
Unaudited
|
December 29,
2023
|
|
December 30,
2022
|
Cash Flows from
Operating Activities:
|
|
|
|
Net earnings
attributable to the Group
|
$
181,454
|
|
$
146,670
|
Adjustments to
reconcile net earnings to net cash flows (used for) provided by
operations:
|
|
|
|
Depreciation and
amortization:
|
|
|
|
Property, equipment
and improvements
|
25,169
|
|
27,979
|
Intangible
assets
|
51,119
|
|
49,773
|
Stock based
compensation
|
19,310
|
|
20,231
|
Equity in earnings of
operating ventures, net of return on capital
distributions
|
1,870
|
|
2,613
|
Loss on disposals of
assets, net
|
608
|
|
241
|
Impairment of
long-lived assets and equity method investment
|
—
|
|
27,142
|
Deferred (benefit)
loss on income taxes
|
(58,239)
|
|
13,797
|
Changes in assets and
liabilities, excluding the effects of businesses
acquired:
|
|
|
|
Receivables and
contract assets, net of contract liabilities
|
102,705
|
|
127,144
|
Prepaid expenses and
other current assets
|
50,216
|
|
8,219
|
Miscellaneous other
assets
|
28,385
|
|
42,578
|
Accounts
payable
|
(35,843)
|
|
(51,669)
|
Accrued
liabilities
|
37,584
|
|
(127,043)
|
Other deferred
liabilities
|
(1,665)
|
|
8,462
|
Other, net
|
15,688
|
|
6,160
|
Net cash provided by operating activities
|
418,361
|
|
302,297
|
Cash Flows from
Investing Activities:
|
|
|
|
Additions to property
and equipment
|
(17,306)
|
|
(32,187)
|
Disposals of property
and equipment and other assets
|
43
|
|
8
|
Capital contributions
to equity investees, net of return of capital
distributions
|
1,266
|
|
384
|
Acquisitions of
businesses, net of cash acquired
|
—
|
|
(16,943)
|
Net cash used for investing activities
|
(15,997)
|
|
(48,738)
|
Cash Flows from
Financing Activities:
|
|
|
|
Net payments of
borrowings
|
(33,613)
|
|
(7,421)
|
Debt issuance
costs
|
(1,606)
|
|
—
|
Proceeds from
issuances of common stock
|
11,355
|
|
14,798
|
Common stock
repurchases
|
(100,016)
|
|
(140,522)
|
Taxes paid on vested
restricted stock
|
(22,387)
|
|
(22,530)
|
Cash dividends to
shareholders
|
(33,366)
|
|
(29,811)
|
Net dividends
associated with noncontrolling interests
|
(4,708)
|
|
(2,307)
|
Repurchase of
redeemable noncontrolling interests
|
(24,360)
|
|
(58,353)
|
Net cash used for financing activities
|
(208,701)
|
|
(246,146)
|
Effect of Exchange Rate
Changes
|
34,148
|
|
51,806
|
Net Increase in Cash
and Cash Equivalents and Restricted Cash
|
227,811
|
|
59,219
|
Cash and Cash
Equivalents, including Restricted Cash, at the Beginning of the
Period
|
929,445
|
|
1,154,207
|
Cash and Cash
Equivalents, including Restricted Cash, at the End of the
Period
|
$
1,157,256
|
|
$
1,213,426
|
Backlog (in
millions):
|
|
|
December 29,
2023
|
|
December 30,
2022
|
Critical Mission
Solutions
|
$
8,311
|
|
$
7,632
|
People & Places
Solutions
|
17,857
|
|
17,243
|
Divergent
Solutions
|
3,110
|
|
3,077
|
PA
Consulting
|
317
|
|
306
|
Total
|
$
29,595
|
|
$
28,258
|
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 operating profit, 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 related cost
reduction initiatives, which included involuntary terminations,
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;
|
|
c
|
impacts related to tax
rate increases in the UK in a prior period.
|
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 free cash flow
is calculated as Free Cash Flow adjusted for certain non-recurring
adjustments (such as restructuring, transaction, legal and tax
related items).
Adjusted EBITDA is calculated by adding income tax expense,
depreciation expense and interest expense, and deducting interest
income from adjusted net earnings from continuing operations.
1Beginning
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.
|
Certain percentage changes are quantified on a constant currency
basis, which provides information assuming that foreign currency
exchange rates have not changed between the prior and current
periods. For purposes of constant currency calculations, we use the
prior period average exchange rates as applied to the current
period adjusted amounts.
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 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. 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. FCF conversion refers to a ratio of FCF to adjusted net
earnings attributable to Jacobs from continuing operations.
Adjusted FCF conversion refers to a ratio of adjusted FCF to
adjusted net earnings attributable to Jacobs 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), operating profit, to the corresponding "adjusted"
amount, net cash provided by operating activities to 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
|
|
December 29,
2023
|
|
December 30,
2022
|
Earnings from
Continuing Operations Before Taxes
|
$
165,749
|
|
$
197,481
|
Restructuring,
Transaction and Other Charges (1):
|
|
|
|
Focus 2023
Transformation, mainly real estate rescaling efforts
|
49
|
|
27,172
|
Transaction
costs
|
13,949
|
|
5,270
|
Restructuring,
integration, separation and other charges
|
41,320
|
|
7,272
|
Other Adjustments
(2):
|
|
|
|
Amortization of
intangibles
|
51,119
|
|
49,773
|
Other
|
11,386
|
|
4,290
|
Adjusted Earnings
from Continuing Operations Before Taxes
|
$
283,572
|
|
$
291,258
|
|
(1) Includes pre-tax
non-cash charges primarily relating to the Separation Transaction
for the three months ended December 29, 2023, and real estate
impairments charges associated with the Company's Focus 2023
transformation program of $27.1 million charges associated
with various transaction costs incurred with our acquisition and
restructuring related activity associated with Company
restructuring and integration programs for the three-months ended
December 30, 2022.
|
(2) Includes pre-tax
charges for the removal of amortization of intangible assets and
the impact of certain subsidiary level contingent equity-based
agreements in connection with the transaction structure of our PA
Consulting investment of $1.6 million and $4.3 million
for the three months ended December 29, 2023 and
December 30, 2022, respectively. The three months ended
December 29, 2023 also includes an approximate $10 million
intangibles impairment charge.
|
Reconciliation of
Income Tax Benefit (Expense) from Continuing Operations to Adjusted
Income Tax Expense
from Continuing Operations (in thousands)
|
|
|
Three Months
Ended
|
|
December 29,
2023
|
|
December 30,
2022
|
Income Tax Benefit
(Expense) from Continuing Operations
|
$
16,279
|
|
$
(50,103)
|
Tax Effects of
Restructuring, Transaction and Other Charges (1)
|
|
|
|
Focus 2023
Transformation, mainly real estate rescaling efforts
|
(12)
|
|
(6,677)
|
Transaction
costs
|
(3,140)
|
|
(1,250)
|
Restructuring,
integration, separation and other charges
|
(9,900)
|
|
(1,788)
|
Tax Effects of Other
Adjustments (2)
|
|
|
|
Amortization of
intangibles
|
(12,824)
|
|
(11,880)
|
Other
|
(2,414)
|
|
(944)
|
Adjusted Income Tax
Expense from Continuing Operations
|
$
(12,011)
|
|
$
(72,642)
|
|
(1) Includes estimated
income tax impacts on restructuring activities primarily relating
to the Separation Transaction for the three months ended
December 29, 2023, along with impacts on real estate
impairments associated with the Company's Focus 2023 transformation
program and charges associated with various transaction costs
incurred with our acquisition and restructuring related activity
associated with Company restructuring and integration programs for
the three months ended December 30, 2022.
|
(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 months ended December 29, 2023 and
December 30, 2022. The three months ended December 29,
2023 also includes the income tax impact on an approximate $10
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
|
|
December 29,
2023
|
|
December 30,
2022
|
Net Earnings
Attributable to Jacobs from Continuing Operations
|
$
172,184
|
|
$
136,355
|
After-tax effects of
Restructuring, Transaction and Other Charges (1):
|
|
|
|
Focus 2023
Transformation, mainly real estate rescaling efforts
|
37
|
|
20,495
|
Transaction
costs
|
10,451
|
|
3,551
|
Restructuring,
integration, separation and other charges
|
31,064
|
|
5,484
|
After-tax effects of
Other Adjustments (2):
|
|
|
|
Amortization of
intangibles
|
33,653
|
|
32,857
|
Other
|
8,497
|
|
2,232
|
Adjusted Net
Earnings Attributable to Jacobs from Continuing
Operations
|
$
255,886
|
|
$
200,974
|
|
(1) Includes estimated
after-tax impacts primarily relating to the Separation Transaction
for the three months ended December 29, 2023, along with
non-cash real estate impairment charges associated the Company's
Focus 2023 program and charges associated with various transaction
costs incurred with our acquisition and restructuring related
activity associated with Company restructuring and integration
programs for the three months ended December 30,
2022.
|
(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
months ended December 29, 2023 and December 30, 2022. The
three months ended December 29, 2023 also includes the
estimated after-tax impact from an approximate $10 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
|
|
December 29,
2023
|
|
December 30,
2022
|
Diluted Net Earnings
from Continuing Operations Per Share
|
$
1.37
|
|
$
1.07
|
After-tax effects of
Restructuring, Transaction and Other Charges (1):
|
|
|
|
Focus 2023
Transformation, mainly real estate rescaling efforts
|
—
|
|
0.16
|
Transaction
costs
|
0.07
|
|
0.03
|
Restructuring,
integration, separation and other charges
|
0.24
|
|
0.04
|
After-tax effects of
Other Adjustments (2):
|
|
|
|
Amortization of
intangibles
|
0.27
|
|
0.26
|
Other
|
0.06
|
|
0.02
|
Adjusted Diluted Net
Earnings from Continuing Operations Per Share
|
$
2.02
|
|
$
1.58
|
|
(1) Includes estimated
per-share impacts from the restructuring activities primarily
relating to the Separation Transaction for the three months ended
December 29, 2023, along with real estate impairments
associated with the Company's Focus 2023 transformation program and
impacts associated with various transaction costs incurred with our
acquisition and restructuring related activity costs associated
with Company restructuring and integration programs for the three
months ended December 30, 2022.
|
(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 months ended December 29, 2023 and
December 30, 2022. The three months ended December 29,
2023 also includes the per-share impact from an approximate $10
million intangibles impairment charge.
|
Reconciliation of
Free Cash Flow (in thousands)
|
|
|
Three Months
Ended
|
|
December 29,
2023
|
|
December 30,
2022
|
Net cash provided by
operating activities
|
$
418,361
|
|
$
302,297
|
Additions to property
and equipment
|
(17,306)
|
|
(32,187)
|
Free cash
flow
|
$
401,055
|
|
$
270,110
|
Net cash used for
investing activities
|
$
(15,997)
|
|
$
(48,738)
|
Net cash used for
financing activities
|
$
(208,701)
|
|
$
(246,146)
|
Reconciliation
from Adjusted Net Revenue to constant currency Adjusted Net
Revenue
|
|
|
Three Months
Ended
|
(in
thousands)
|
December 29,
2023
|
|
December 30,
2022
|
|
%
Change
|
Adjusted Net
Revenue
|
$
3,288,838
|
|
$
3,074,796
|
|
7.0 %
|
Exchange rate
effect
|
$
(49,482)
|
|
|
|
|
Constant currency
Adjusted Net Revenue
|
$
3,239,356
|
|
|
|
5.4 %
|
Earnings Per
Share:
|
|
|
Three Months
Ended
|
Unaudited
|
December 29,
2023
|
|
December 30,
2022
|
Numerator for Basic
and Diluted EPS:
|
|
|
|
Net earnings
attributable to Jacobs from continuing operations
|
$
172,184
|
|
$
136,355
|
Preferred Redeemable
Noncontrolling interests redemption value adjustment
|
1,766
|
|
—
|
Net earnings from
continuing operations allocated to common stock for
EPS calculation
|
$
173,950
|
|
$
136,355
|
|
|
|
|
Net loss from
discontinued operations allocated to common stock for
EPS calculation
|
$
(574)
|
|
$
(708)
|
|
|
|
|
Net earnings
allocated to common stock for EPS calculation
|
$
173,376
|
|
$
135,647
|
|
|
|
|
Denominator for
Basic and Diluted EPS:
|
|
|
|
|
|
|
|
Shares used for
calculating basic EPS attributable to common stock
|
126,105
|
|
126,824
|
|
|
|
|
Effect of dilutive
securities:
|
|
|
|
Stock compensation
plans
|
708
|
|
672
|
Shares used for
calculating diluted EPS attributable to common stock
|
126,813
|
|
127,496
|
|
|
|
|
Net Earnings Per
Share:
|
|
|
|
Basic Net Earnings
from Continuing Operations Per Share
|
$
1.38
|
|
$
1.08
|
Basic Net Loss from
Discontinued Operations Per Share
|
$
—
|
|
$
(0.01)
|
Basic Earnings Per
Share
|
$
1.37
|
|
$
1.07
|
Diluted Net Earnings
from Continuing Operations Per Share
|
$
1.37
|
|
$
1.07
|
Diluted Net Loss from
Discontinued Operations Per Share
|
$
—
|
|
$
(0.01)
|
Diluted Earnings Per
Share
|
$
1.37
|
|
$
1.06
|
Note: Per share amounts may not add due to
rounding.
For additional information contact:
Investors:
Jonathan Evans
JacobsIR@jacobs.com
Media:
Louise White
louise.white@jacobs.com
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SOURCE Jacobs