Press Release May 3, 2022

Jacobs Reports Fiscal Second Quarter 2022 Earnings

Q2 Year-Over-Year Revenue Growth Across All Lines of Business

Strong Bookings Driving Revenue Backlog up 9% Year-Over-Year with Improving Profitability

PA Consulting Revenue up Double-Digits with 23% Operating Profit Margin

Reiterates Multi-Year Growth Targets, Driven by Alignment to Multiple Secular Growth Trends

Reinforces Full-Year Adjusted Cash Conversion Expectations


DALLAS, May 3, 2022 /PRNewswire/ -- Jacobs Engineering Group Inc. (NYSE: J) today announced its financial results for the fiscal second quarter ended April 1, 2022.

Q2 2022 Highlights:

  • Revenue of $3.8 billion up 8.1% year-over-year and net revenue increased 10.1% year-over-year
  • Backlog increased $2.2 billion to $27.8 billion, up 8.7% year-over-year
  • EPS from continuing operations of $0.68, primarily reflecting a charge of $0.63 for the final settlement of the Legacy CH2M Matter and associated legal fees incurred during the quarter
  • Adjusted EPS from continuing operations of $1.72, up 4% year-over-year
  • Cash flow from operations of $125 million; on track to achieve FY22 adjusted cash conversion target, excluding the Legacy CH2M Matter settlement outflow
  • Updates fiscal 2022 adjusted EBITDA and adjusted EPS outlook, with mid-point of range unchanged1

Jacobs' Chair and CEO Steve Demetriou commented, "We are seeing accelerating demand across all end markets, with incremental opportunities to scale in the areas of Climate Response, Consulting & Advisory and Data Solutions. These compelling opportunities are reflected in our results with strong bookings performance during the first half of the fiscal year and 9% backlog growth in the second quarter, which positions us well for the remainder of fiscal 2022." Demetriou continued, "Executing on our new strategy begins with our people, by unleashing a culture that combines inclusion, innovation and inspiration to enable the delivery of cutting-edge solutions for our clients."

Jacobs' President and CFO Kevin Berryman added, "This quarter we delivered year-over-year revenue growth across all lines of business and witnessed another double-digit organic growth quarter for PA Consulting. We expect further strong performance in the second half of the fiscal year with cash flow from operations on track to achieve our adjusted cash flow conversion to adjusted net income expectations. Given our strong growth expectations for the business, to date we have repurchased $135 million of shares since the beginning of March."

In the quarter Jacobs launched their updated Climate Action Plan to align their net zero commitments with the new, international standard, and were recognized as one of the world's first companies to have validated net zero targets approved by the Science Based Targets Initiative.

Financial Outlook 1  

The company now expects fiscal 2022 adjusted EBITDA of $1,385 million to $1,435 from $1,370 million to $1,450 million and adjusted EPS of $6.95 to $7.35 from $6.85 to $7.45.

Jacobs is aligned to multiple secular growth drivers across ESG, Infrastructure & Supply Chain Modernization, Data Solutions, and National Security, which positions the company to achieve their three-year financial targets communicated during the recent strategy launch.

1Reconciliation of the adjusted EPS outlook and adjusted EBITDA outlook for the full fiscal 2022 year and beyond 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 2022 and beyond.

Second Quarter Review

 

Fiscal Q2 2022

Fiscal Q2 2021

Change

Revenue

$3.8 billion

$3.5 billion

$0.3 billion

Net Revenue

$3.3 billion

$3.0 billion

$0.3 billion

GAAP Net Earnings from Continuing Operations

$89 million

$0 million

$89 million

GAAP Earnings Per Diluted Share (EPS) from Continuing Operations

$0.68

$0.00

$0.68

Adjusted Net Earnings from Continuing Operations

$223 million

$218 million

$5 million

Adjusted EPS from Continuing Operations

$1.72

$1.66

$0.06

The Company's adjusted net earnings from continuing operations and adjusted EPS from continuing operations for the second quarter of fiscal 2022 and fiscal 2021 exclude the adjustments set forth in the table below. For additional information regarding these adjustments and a reconciliation of adjusted net earnings and adjusted EPS to net earnings and EPS, respectively, as well as a reconciliation of net revenue to revenue, refer to the section entitled "Non-GAAP Financial Measures" at the end of this release.

 

Fiscal Q2 2022

Fiscal Q2 2021

GAAP Net Earnings from Continuing Operations and Diluted Earnings Per
Share (EPS)

$89 million ($0.68 per
share)

$0 million ($0.00 per
share)

Adjustments to add back after-tax restructuring, transaction costs and other
charges ($115.3 million and $327.0 million for the fiscal 2022 and 2021
periods, respectively before income taxes), comprised mainly of (i) a $91.3
million charge related to the final pre-tax settlement related to the Legacy
CH2M Matter, net of previously recorded reserves in the fiscal 2022 period
and (ii) $267 million in pre-tax post acquisition compensation costs
associated with the PA transaction in the fiscal 2021 period.

$94 million ($0.72 per
share)

$209 million ($1.59
per share)

Other adjustments are comprised mainly of:

(a) add-back of amortization of intangible assets of $48.4 million and $30.6
million in the 2022 and 2021 periods, respectively,

(b) the removal of $32.1 million in fair value adjustments related to our
former investment holdings in Worley and C3.ai, Inc. ("C3") stock and certain
foreign currency revaluations relating to the ECR sale of $34.1 million in the
2021 period,

(c) the exclusion of impacts on the Company's effective tax rates associated
with revised estimates on U.S. taxation of certain foreign earnings and certain
tax return filing adjustments,

(d) applicable redeemable noncontrolling interests impacts for the above
adjustment items and

(e) income tax expense adjustments for the above pre-tax adjustment items.

$41 million ($0.31 per
share)

$10 million ($0.07 per
share)

Adjusted Net Earnings from Continuing Operations and Adjusted EPS from
Continuing Operations

$223 million ($1.72
per share)

$218 million ($1.66
per share)

(note: dollar amounts and earnings per share amounts may not add due to rounding)

The Company's U.S. GAAP effective tax rate for continuing operations is 29.7% for the fiscal second quarter 2022 and fiscal second quarter 2022 adjusted earnings per share from continuing operations reflects an estimated full year 21.7% adjusted effective tax rate.

Jacobs is hosting a conference call at 10:00 A.M. ET on Tuesday May 3, 2022, which it is webcasting live at www.jacobs.com.

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 $14 billion in annual revenue and a talent force of approximately 55,000, 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, Twitter, Facebook and Instagram.

Forward-Looking Statements

Certain statements contained in this press release constitute forward-looking statements as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and such statements are intended to be covered by the safe harbor provided by the same. Statements made in this press release that are not based on historical fact are forward-looking statements. When used herein, words such as "expects," "anticipates," "believes," "seeks," "estimates," "plans," "intends," "future," "will," "would," "could," "can," "may," and similar words are intended to identify forward-looking statements. Examples of forward-looking statements include, but are not limited to, statements regarding our expectations as to our future growth, prospects, financial outlook and business strategy for fiscal 2022 or future fiscal years, including our expectations for our fiscal 2022 adjusted EBITDA, adjusted EPS and adjusted cash conversion. Although such statements are based on management's current estimates and/or expectations, and 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 our ability to execute on our newly-announced three-year corporate strategy, including our ability to invest in the tools needed to fully 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 and to successfully integrate acquired businesses while retaining key personnel, the impact of the COVID-19 pandemic, including the emergence and spread of variants of COVID-19, 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 under the Infrastructure Investment and Jobs Act as well as general economic conditions, including inflation, changes in interest rates, foreign currency exchange rates, changes in capital markets, 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 key employees or 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 the COVID-19 pandemic 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 the discussions contained 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 in our most recently filed Annual Report on Form 10-K, and the discussions contained under Part I, Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations; Part II, Item 1 - Legal Proceedings; 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 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.

Financial Highlights:

Results of Operations (in thousands, except per-share data):

 

For the Three Months Ended

 

For the Six Months Ended

Unaudited

April 1, 2022

 

April 2, 2021

 

April 1, 2022

 

April 2, 2021

Revenues

$       3,834,059

 

$      3,547,873

 

$       7,214,684

 

$       6,929,708

Direct cost of contracts

(2,963,649)

 

(2,780,860)

 

(5,547,800)

 

(5,530,636)

Gross profit

870,410

 

767,013

 

1,666,884

 

1,399,072

Selling, general and administrative expenses

(704,195)

 

(808,125)

 

(1,323,336)

 

(1,226,246)

Operating Profit (Loss)

166,215

 

(41,112)

 

343,548

 

172,826

Other Income (Expense):

             

     Interest income

381

 

608

 

1,882

 

1,732

     Interest expense

(21,995)

 

(15,464)

 

(41,421)

 

(32,777)

     Miscellaneous income (expense), net

10,681

 

(56,313)

 

20,362

 

100,047

Total other (expense) income, net

(10,933)

 

(71,169)

 

(19,177)

 

69,002

Earnings (Loss) from Continuing Operations Before
Taxes

155,282

 

(112,281)

 

324,371

 

241,828

Income Tax (Expense) Benefit from Continuing
Operations

(46,166)

 

20,772

 

(62,054)

 

(66,250)

Net Earnings (Loss) of the Group from Continuing
Operations

109,116

 

(91,509)

 

262,317

 

175,578

Net (Loss) Earnings of the Group from Discontinued
Operations

(1)

 

11,320

 

(233)

 

11,305

Net Earnings (Loss) of the Group

109,115

 

(80,189)

 

262,084

 

186,883

Net Earnings Attributable to Noncontrolling Interests
from Continuing Operations

(10,261)

 

(10,158)

 

(19,514)

 

(20,184)

Net (Earnings) Loss Attributable to Redeemable
Noncontrolling interests

(10,038)

 

101,392

 

(19,721)

 

101,392

Net Earnings (Loss) Attributable to Jacobs from
Continuing Operations

88,817

 

(275)

 

223,082

 

256,786

Net Earnings Attributable to Jacobs

$             88,816

 

$            11,045

 

$          222,849

 

$          268,091

     Net Earnings Per Share:

             

     Basic Net Earnings from Continuing Operations
     Per Share

$                  0.69

 

$¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬† ‚ÄĒ

 

$                  1.72

 

$                  1.97

     Basic Net Earnings from Discontinued Operations
     Per Share

$¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬† ‚ÄĒ

 

$                 0.09

 

$¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬† ‚ÄĒ

 

$                  0.09

     Basic Earnings Per Share

$                  0.69

 

$                 0.08

 

$                  1.72

 

$                  2.06

               

     Diluted Net Earnings from Continuing Operations
     Per Share

$                  0.68

 

$¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬† ‚ÄĒ

 

$                  1.71

 

$                  1.96

     Diluted Net Earnings from Discontinued
     Operations Per Share

$¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬† ‚ÄĒ

 

$                 0.09

 

$¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬† ‚ÄĒ

 

$                  0.09

     Diluted Earnings Per Share

$                  0.68

 

$                 0.08

 

$                  1.71

 

$                  2.04

               

 

Segment Information (in thousands):

 

Three Months Ended

 

Six Months Ended

Unaudited

April 1, 2022

 

April 2, 2021

 

April 1, 2022

 

April 2, 2021

Revenues from External Customers:

             

     Critical Mission Solutions

$       1,366,313

 

$       1,309,573

 

$       2,528,818

 

$       2,604,860

     People & Places Solutions

2,170,356

 

2,139,990

 

4,098,502

 

4,226,538

          Pass Through Revenue

(563,668)

 

(576,629)

 

(1,036,048)

 

(1,225,306)

     People & Places Solutions Net Revenue

$       1,606,688

 

$       1,563,361

 

$       3,062,454

 

$       3,001,232

     PA Consulting

297,390

 

98,310

 

587,364

 

98,310

          Total Revenue

$       3,834,059

 

$       3,547,873

 

$       7,214,684

 

$       6,929,708

          Net Revenue

$       3,270,391

 

$       2,971,244

 

$       6,178,636

 

$       5,704,402

 
 

Three Months Ended

 

Six Months Ended

 

April 1, 2022

 

April 2, 2021

 

April 1, 2022

 

April 2, 2021

Segment Operating Profit:

             

     Critical Mission Solutions

$          113,241

 

$          113,933

 

$          224,737

 

$          224,002

     People & Places Solutions

191,144

 

202,030

 

382,837

 

398,330

     PA Consulting

68,332

 

27,917

 

131,402

 

27,917

Total Segment Operating Profit

372,717

 

343,880

 

738,976

 

650,249

     Other Corporate Expenses (1)

(89,232)

 

(63,327)

 

(194,592)

 

(133,667)

     Restructuring, Transaction and Other Charges (2)

(117,270)

 

(321,665)

 

(200,836)

 

(343,756)

Total U.S. GAAP Operating Profit (Loss)

166,215

 

(41,112)

 

343,548

 

172,826

     Total Other (Expense) Income, net (3)

(10,933)

 

(71,169)

 

(19,177)

 

69,002

Earnings (Loss) from Continuing Operations Before Taxes

$          155,282

 

$        (112,281)

 

$          324,371

 

$          241,828

   

(1)

Other corporate expenses also include intangibles amortization of $48.4 million and $30.6 million for the three months ended April 1, 2022 and April 2, 2021, respectively, and $95.3 million and $53.8 million for the six months ended April 1, 2022 and April 2, 2021, respectively, with the increase mainly attributable to the PA Consulting investment.

(2)

Included in the three and six months ended April 1, 2022 is $91.3 million related to the final pre-tax settlement of the Legacy CH2M Matter, net of previously recorded reserves and included in the six months ended April 1, 2022 are $74.6 million of real estate impairment charges related to the Company's transformation initiatives. Included in the three and six months ended April 2, 2021 are $296.1 million and $300.2 million, respectively, of costs incurred in connection with the investment in PA Consulting, in part classified as compensation costs.

(3)

The six months ended April 1, 2022 include $3.5 million in income associated with final exit activities associated with our AWE ML investment and a gain of $7.1 million related to a lease termination. The three and six months ended April 2, 2021 include $29.7 million and $(63.5) million, respectively, in fair value adjustments related to our investment in Worley stock (net of Worley stock dividend) and certain foreign currency revaluations relating to the ECR sale and $34.1 million and $(48.6) million, respectively, in fair value adjustments related to our investment in C3 stock. The six months ended April 2, 2021 also includes $33.2 million related to impairment of our AWE ML investment. The investments in Worley and C3 were sold in fiscal 2021 and therefore there are no comparable amounts in the current quarter.

 

Balance Sheet (in thousands):

 

April 1, 2022

 

October 1, 2021

 

Unaudited

   

ASSETS

     

Current Assets:

     

     Cash and cash equivalents

$               1,235,422

 

$               1,014,249

     Receivables and contract assets

3,302,868

 

3,101,418

     Prepaid expenses and other

152,989

 

176,228

          Total current assets

4,691,279

 

4,291,895

Property, Equipment and Improvements, net

326,596

 

353,117

Other Noncurrent Assets:

     

     Goodwill

7,492,015

 

7,197,000

     Intangibles, net

1,553,283

 

1,565,758

     Deferred income tax assets

68,376

 

103,193

     Operating lease right-of-use assets

556,686

 

650,097

     Miscellaneous

495,057

 

471,549

          Total other noncurrent assets

10,165,417

 

9,987,597

 

$            15,183,292

 

$            14,632,609

LIABILITIES AND STOCKHOLDERS' EQUITY

     

Current Liabilities:

     

     Current maturities of long-term debt

$                    52,911

 

$                    53,456

     Accounts payable

921,372

 

908,441

     Accrued liabilities

1,955,327

 

1,533,559

     Operating lease liability

162,817

 

172,414

     Contract liabilities

672,265

 

542,054

          Total current liabilities

3,764,692

 

3,209,924

Long-term Debt

3,196,374

 

2,839,933

Liabilities relating to defined benefit pension and retirement plans

366,788

 

418,080

Deferred income tax liabilities

211,341

 

214,380

Long-term operating lease liability

688,604

 

758,358

Other deferred liabilities

163,988

 

559,375

Commitments and Contingencies

     

Redeemable Noncontrolling interests

669,527

 

657,722

Stockholders' Equity:

     

     Capital stock:

     

Preferred stock, $1 par value, authorized - 1,000,000 shares; issued and outstanding -
none

‚ÄĒ

 

‚ÄĒ

Common stock, $1 par value, authorized - 240,000,000 shares; issued and outstanding
- 128,899,796 shares and 128,892,540 shares as of April 1, 2022 and October 1, 2021,
respectively

128,900

 

128,893

     Additional paid-in capital

2,667,256

 

2,590,012

     Retained earnings

4,069,664

 

4,015,578

     Accumulated other comprehensive loss

(788,374)

 

(794,442)

          Total Jacobs stockholders' equity

6,077,446

 

5,940,041

     Noncontrolling interests

44,532

 

34,796

          Total Group stockholders' equity

6,121,978

 

5,974,837

 

$            15,183,292

 

$            14,632,609

 

Statement of Cash Flow (in thousands):

 

For the Three Months Ended

 

For the Six Months Ended

Unaudited

April 1, 2022

 

April 2, 2021

 

April 1, 2022

 

April 2, 2021

Cash Flows from Operating Activities:

             

    Net earnings (loss) attributable to the Group

$        109,115

 

$          (80,189)

 

$        262,084

 

$        186,883

     Adjustments to reconcile net earnings to net cash flows provided by operations:

             

     Depreciation and amortization:

             

          Property, equipment and improvements

26,383

 

25,090

 

52,620

 

48,079

          Intangible assets

48,431

 

30,598

 

95,338

 

53,753

     Gain on sale of ECR business

‚ÄĒ

 

(15,608)

 

‚ÄĒ

 

(15,608)

     Loss (gain) on investment in equity securities

‚ÄĒ

 

75,925

 

‚ÄĒ

 

(114,443)

     Stock based compensation

18,147

 

15,136

 

25,161

 

26,977

     Equity in earnings of operating ventures, net of return on capital distributions

531

 

5,194

 

13,280

 

6,353

     Loss on disposals of assets, net

270

 

487

 

421

 

353

     Impairment of long-lived assets and equity method investment

2,319

 

5,295

 

74,585

 

33,197

     Deferred income taxes (benefit)

33,699

 

(11,945)

 

16,040

 

41,063

     Changes in assets and liabilities, excluding the effects of businesses acquired:

             

          Receivables and contract assets, net of contract liabilities

(197,416)

 

40,292

 

(33,881)

 

73,542

          Prepaid expenses and other current assets

(16,370)

 

(10,623)

 

15,916

 

14,521

          Miscellaneous other assets

42,583

 

59,837

 

67,201

 

76,401

          Accounts payable

106,918

 

(88,765)

 

18,448

 

(152,750)

          Accrued liabilities

(28,719)

 

230,774

 

(119,982)

 

99,198

          Other deferred liabilities

(14,898)

 

(38,981)

 

(33,305)

 

(22,490)

      Other, net

(6,382)

 

(4,902)

 

(7,670)

 

(4,797)

          Net cash provided by operating activities

124,611

 

237,615

 

446,256

 

350,232

Cash Flows from Investing Activities:

             

     Additions to property and equipment

(28,905)

 

(28,287)

 

(48,223)

 

(45,053)

     Disposals of property and equipment and other assets

1,021

 

427

 

1,064

 

427

     Capital contributions to equity investees, net of return of capital distributions

1,562

 

(763)

 

1,082

 

(4,193)

     Acquisitions of businesses, net of cash acquired

(182,935)

 

(1,568,050)

 

(412,748)

 

(1,741,062)

     Disposal of investment in equity securities

‚ÄĒ

 

13,027

 

‚ÄĒ

 

13,027

     Proceeds related to sales of businesses

‚ÄĒ

 

36,360

 

‚ÄĒ

 

36,360

          Net cash used for investing activities

(209,257)

 

(1,547,286)

 

(458,825)

 

(1,740,494)

Cash Flows from Financing Activities:

             

     Net proceeds from borrowings

155,726

 

1,687,359

 

387,113

 

1,782,357

     Debt issuance costs

‚ÄĒ

 

(2,697)

 

‚ÄĒ

 

(2,697)

     Proceeds from issuances of common stock

10,325

 

9,044

 

28,187

 

18,585

     Common stock repurchases

(50,000)

 

(148)

 

(50,000)

 

(24,949)

     Taxes paid on vested restricted stock

(172)

 

(308)

 

(28,398)

 

(25,642)

     Cash dividends to shareholders

(29,749)

 

(27,388)

 

(57,247)

 

(52,438)

     Net contributions (dividends) associated with noncontrolling interests

4,651

 

(18,773)

 

(9,416)

 

(29,442)

     Repurchase of redeemable noncontrolling interests

‚ÄĒ

 

‚ÄĒ

 

(35,095)

 

‚ÄĒ

            Net cash provided by financing activities

90,781

 

1,647,089

 

235,144

 

1,665,774

Effect of Exchange Rate Changes

(15,514)

 

(7,575)

 

(12,792)

 

28,918

Net (Decrease) Increase in Cash and Cash Equivalents and Restricted Cash

(9,379)

 

329,843

 

209,783

 

304,430

Cash and Cash Equivalents, including Restricted Cash, at the Beginning of the Period

1,245,737

 

837,012

 

1,026,575

 

862,424

Cash and Cash Equivalents, including Restricted Cash, at the End of the Period

$     1,236,358

 

$     1,166,855

 

$     1,236,358

 

$     1,166,854

 

Backlog (in millions):

 

April 1, 2022

 

April 2, 2021

Critical Mission Solutions

$                    10,556

 

$                       9,779

People & Places Solutions

16,965

 

15,512

PA Consulting

269

 

280

            Total

$                    27,790

 

$                    25,571

Non-GAAP Financial Measures:

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. The non-GAAP financial measures included in this press release are net revenue, adjusted net earnings, adjusted EPS from continuing operations, adjusted EBITDA outlook, adjusted EPS outlook and adjusted effective tax rate.

Net revenue is calculated excluding pass-through revenue of the Company's People & Places Solutions segment from the Company's revenue from continuing operations. Adjusted net earnings from continuing operations and adjusted EPS from continuing operations are calculated by (i) excluding costs and other charges associated with restructuring activities implemented in connection with the acquisitions of CH2M, John Wood Group nuclear business, BlackLynx, Buffalo Group 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 ECR and continuing operations, professional services and personnel costs, expenses 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; (ii) excluding the costs and other charges associated with our Focus 2023 transformation initiatives, which included costs and charges associated with the re-scaling and repurposing of physical office space, voluntary employee separations, contractual termination fees and related expenses (the amounts referred in (i) and (ii) are collectively referred to as the "Restructuring and other charges"); (iii) excluding transaction costs and other charges incurred in connection with closing of Buffalo Group, BlackLynx and StreetLight acquisitions and the strategic investment in PA Consulting, including advisor fees, change in control payments and the impact of the quarterly adjustment to the estimated future payout of contingent consideration to the sellers in connection with acquisitions; certain consideration amounts for PA Consulting that were required to be treated as post-completion compensation expense given retention related requirements applicable to the distribution of such funds to PA Consulting employees, and impacts resulting from the non-cash purchase accounting adjustment related to the investment in PA Consulting to reflect a change in the preliminary purchase price allocation for the redeemable non-controlling interests; certain equity based compensation expenses associated with PA Consulting's benefit programs; and similar transaction costs and expenses (collectively referred to as "transaction costs"); (iv) adding back amortization of intangible assets; (v) the removal of fair value adjustments and dividend income related to the Company's investments in Worley and C3 stock and certain foreign currency revaluations relating to ECR sale proceeds; (vi) excluding charges resulting from the revaluation of certain deferred tax assets/liabilities in connection tax rate increases in the United Kingdom during fiscal 2021; (vii) charges associated with the impairment of our investment in our AWE ML investment; (viii) charges to interest expense associated with one-time deal related bank fees; (ix) certain non-routine income tax adjustments for the purposes of calculating the Company's annual non-GAAP effective tax rate to facilitate a more meaningful evaluation of the Company's current operating performance and comparisons to the Company's operating performance in other periods; and (x) other income tax adjustments associated with the pre-tax income adjustments above. Adjustments to derive adjusted net earnings from continuing operations and adjusted EPS from continuing operations are calculated on an after-tax basis.

Adjusted EBITDA is calculated by adding income tax expense, depreciation expense and adjusted interest expense, and deducting interest income from adjusted net earnings from continuing operations.

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.

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 net earnings and EPS from continuing operations to the corresponding "adjusted" amount, revenue from continuing operations to net revenue. For the comparable periods 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 add across due to rounding). Reconciliation of the adjusted EPS and adjusted EBITDA outlook for fiscal 2022 and beyond and fiscal 2022 net revenue growth 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. See footnote 1 on page 3 for additional information.

U.S. GAAP Reconciliations for the three and six month periods of fiscal 2022 and 2021

 

Three Months Ended

 

April 1, 2022

Unaudited

U.S. GAAP

 

Effects of
Restructuring,
Transaction
and Other
Charges (1)

 

Other
Adjustments
(2)

 

Adjusted

Revenues

$   3,834,059

 

$¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬† ‚ÄĒ

 

$¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬† ‚ÄĒ

 

$  3,834,059

Pass through revenue

‚ÄĒ

 

‚ÄĒ

 

(563,668)

 

(563,668)

Net revenue

3,834,059

 

‚ÄĒ

 

(563,668)

 

3,270,391

Direct cost of contracts

(2,963,649)

 

‚ÄĒ

 

563,668

 

(2,399,981)

Gross profit

870,410

 

‚ÄĒ

 

‚ÄĒ

 

870,410

Selling, general and administrative expenses

(704,195)

 

117,270

 

48,431

 

(538,494)

Operating Profit (Loss)

166,215

 

117,270

 

48,431

 

331,916

     Total other expense, net

(10,933)

 

(2,007)

 

‚ÄĒ

 

(12,940)

Earnings from Continuing Operations Before Taxes

155,282

 

115,263

 

48,431

 

318,976

Income Tax Expense from Continuing Operations

(46,166)

 

(21,424)

 

(1,628)

 

(69,218)

Net Earnings of the Group from Continuing Operations

109,116

 

93,839

 

46,803

 

249,758

Net Earnings Attributable to Noncontrolling Interests
from Continuing Operations

(10,261)

 

‚ÄĒ

 

‚ÄĒ

 

(10,261)

Net Earnings Attributable to Redeemable
Noncontrolling interests

(10,038)

 

(270)

 

(5,960)

 

(16,268)

Net Earnings Attributable to Jacobs from Continuing
Operations

88,817

 

93,569

 

40,843

 

223,229

Net Loss Attributable to Discontinued Operations

(1)

 

‚ÄĒ

 

‚ÄĒ

 

(1)

Net Earnings attributable to Jacobs

$         88,816

 

$          93,569

 

$        40,843

 

$      223,228

Diluted Net Earnings from Continuing Operations Per
Share

$              0.68

 

$               0.72

 

$             0.31

 

$             1.72

Diluted Net Earnings from Discontinued Operations Per
Share

$¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬† ‚ÄĒ

 

$¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬† ‚ÄĒ

 

$¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬† ‚ÄĒ

 

$¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬† ‚ÄĒ

Diluted Earnings Per Share

$              0.68

 

$               0.72

 

$             0.31

 

$             1.72

Operating profit margin

4.3%

         

10.1%

 

(1) Includes charges associated with various restructuring, transaction and other related activity costs associated with Company transformation initiatives and acquisition related programs, including $91.3 million related to the final pre-tax settlement of the Legacy CH2M Matter, net of previously recorded reserves.

(2) Includes (a) the removal of pass through revenues and costs for the People & Places Solutions line of business for the calculation of operating profit margin as a percentage of net revenue of $563.7 million, (b) the removal of amortization of intangible assets of $48.4 million, (c) the exclusion of impacts on the Company's effective tax rates associated with revised estimates on US taxation of certain foreign earning and, certain tax return filing adjustments, (d) applicable redeemable noncontrolling interests impacts for the above adjustment items and (e) income tax expense adjustments for the above pre-tax adjustment items.

 

 

Three Months Ended

 

April 2, 2021

Unaudited

U.S. GAAP

 

Effects of
Restructuring,
Transaction
and Other
Charges (1)

 

Other
Adjustments
(2)

 

Adjusted

Revenues

$  3,547,873

 

$¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬† ‚ÄĒ

 

$¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬† ‚ÄĒ

 

$  3,547,873

Pass through revenue

‚ÄĒ

 

‚ÄĒ

 

(576,629)

 

(576,629)

Net revenue

3,547,873

 

‚ÄĒ

 

(576,629)

 

2,971,244

Direct cost of contracts

(2,780,860)

 

194

 

576,629

 

(2,204,037)

Gross profit

767,013

 

194

 

‚ÄĒ

 

767,207

Selling, general and administrative expenses

(808,125)

 

321,471

 

30,598

 

(456,056)

Operating (Loss) Profit

(41,112)

 

321,665

 

30,598

 

311,151

     Total other (expense) income, net

(71,169)

 

5,295

 

63,719

 

(2,155)

(Loss) Earnings from Continuing Operations Before Taxes

(112,281)

 

326,960

 

94,317

 

308,996

Income Tax Benefit (Expense) from Continuing Operations

20,772

 

(11,015)

 

(83,298)

 

(73,541)

Net (Loss) Earnings of the Group from Continuing
Operations

(91,509)

 

315,945

 

11,019

 

235,455

Net Earnings Attributable to Noncontrolling Interests from
Continuing Operations

(10,158)

 

‚ÄĒ

 

‚ÄĒ

 

(10,158)

Net Loss (Earnings) Attributable to Redeemable
Noncontrolling interests

101,392

 

(107,033)

 

(1,367)

 

(7,008)

Net (Loss) Earnings from Continuing Operations
attributable to Jacobs

(275)

 

208,912

 

9,652

 

218,289

Net Earnings Attributable to Discontinued Operations

11,320

 

‚ÄĒ

 

‚ÄĒ

 

11,320

Net Earnings attributable to Jacobs

$        11,045

 

$       208,912

 

$          9,652

 

$      229,609

Diluted Net Earnings from Continuing Operations Per Share
(3)

$¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬† ‚ÄĒ

 

$              1.59

 

$             0.07

 

$             1.66

Diluted Net Earnings from Discontinued Operations Per
Share (3)

$             0.09

 

$¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬† ‚ÄĒ

 

$¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬† ‚ÄĒ

 

$             0.09

Diluted Earnings Per Share (3)

$             0.08

 

$              1.59

 

$             0.07

 

$             1.75

Operating profit margin

(1.2)%

         

10.5%

 

(1)  Includes charges associated with various restructuring, transaction and other related activity costs associated with Company transformation initiatives and acquisition related programs, along with after-tax $292.0 million in one time PA Consulting transaction-related costs.

(2) Includes mainly (a) the removal of pass through revenues and costs for the People & Places Solutions line of business for the calculation of operating profit margin as a percentage of net revenue of $576.6 million, (b) the removal of amortization of intangible assets of $30.6 million, (c) the removal of $29.7 million in fair value adjustments related to our investment in Worley stock and certain foreign currency revaluations relating to the ECR sale, (d) the removal of the fair value adjustment of the Company's investment in C3 of $34.1 million, (e) applicable redeemable noncontrolling interests impacts for the above adjustment items and (f) income tax expense adjustments for the above pre-tax adjustment items.

(3) Because U.S. GAAP net (loss) earnings from continuing operations was a loss, the effect of antidilutive securities of 902 equivalent shares was excluded from the denominator in calculating diluted EPS. Because adjusted net (loss) earnings from continuing operations was income, the effective of the securities was dilutive and was included in the denominator in calculating adjusted diluted EPS.

 

 

Six Months Ended

 

April 1, 2022

Unaudited

U.S. GAAP

 

Effects of
Restructuring,
Transaction
and Other
Charges (1)

 

Other
Adjustments
(2)

 

Adjusted

Revenues

$   7,214,684

 

$¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬† ‚ÄĒ

 

$¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬† ‚ÄĒ

 

$  7,214,684

Pass through revenue

‚ÄĒ

 

‚ÄĒ

 

(1,036,048)

 

(1,036,048)

Net revenue

7,214,684

 

‚ÄĒ

 

(1,036,048)

 

6,178,636

Direct cost of contracts

(5,547,800)

 

3

 

1,036,048

 

(4,511,749)

Gross profit

1,666,884

 

3

 

‚ÄĒ

 

1,666,887

Selling, general and administrative expenses

(1,323,336)

 

200,833

 

95,338

 

(1,027,165)

Operating Profit (Loss)

343,548

 

200,836

 

95,338

 

639,722

     Total other (expense) income, net

(19,177)

 

(10,551)

 

5

 

(29,723)

Earnings from Continuing Operations Before Taxes

324,371

 

190,285

 

95,343

 

609,999

Income Tax Expense from Continuing Operations

(62,054)

 

(37,101)

 

(33,214)

 

(132,369)

Net Earnings of the Group from Continuing Operations

262,317

 

153,184

 

62,129

 

477,630

Net Earnings Attributable to Noncontrolling Interests
from Continuing Operations

(19,514)

 

‚ÄĒ

 

‚ÄĒ

 

(19,514)

Net Earnings Attributable to Redeemable
Noncontrolling interests

(19,721)

 

(262)

 

(11,850)

 

(31,833)

Net Earnings Attributable to Jacobs from Continuing
Operations

223,082

 

152,922

 

50,279

 

426,283

Net Loss Attributable to Discontinued Operations

(233)

 

‚ÄĒ

 

‚ÄĒ

 

(233)

Net Earnings attributable to Jacobs

$       222,849

 

$       152,922

 

$        50,279

 

$      426,050

Diluted Net Earnings from Continuing Operations Per
Share

$              1.71

 

$               1.18

 

$             0.39

 

$             3.28

Diluted Net Earnings from Discontinued Operations Per
Share

$¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬† ‚ÄĒ

 

$¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬† ‚ÄĒ

 

$¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬† ‚ÄĒ

 

$¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬† ‚ÄĒ

Diluted Earnings Per Share

$              1.71

 

$               1.18

 

$             0.39

 

$             3.27

Operating profit margin

4.8%

         

10.4%

 

(1) Includes charges associated with various restructuring, transaction and other related activity costs associated with Company transformation initiatives and acquisition related programs, including $91.3 million related to the final pre-tax settlement of the Legacy CH2M Matter, net of previously recorded reserves, as well as $74.6 million for the Company's real estate impairment.

(2) Includes (a) the removal of pass through revenues and costs for the People & Places Solutions line of business for the calculation of operating profit margin as a percentage of net revenue of $1.04 billion, (b) the removal of amortization of intangible assets of $95.3 million, (c) the exclusion of impacts on the Company's effective tax rates associated with revised estimates on US taxation of certain foreign earnings and certain tax return filing adjustments, (d) applicable redeemable noncontrolling interests impacts for the above adjustment items and (e) income tax expense adjustments for the above pre-tax adjustment items.

 

 

Six Months Ended

 

April 2, 2021

Unaudited

U.S. GAAP

 

Effects of
Restructuring,
Transaction
and Other
Charges (1)

 

Other
Adjustments
(2)

 

Adjusted

Revenues

$  6,929,708

 

$¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬† ‚ÄĒ

 

$¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬† ‚ÄĒ

 

$  6,929,708

Pass through revenue

‚ÄĒ

 

‚ÄĒ

 

(1,225,306)

 

(1,225,306)

Net revenue

6,929,708

 

‚ÄĒ

 

(1,225,306)

 

5,704,402

Direct cost of contracts

(5,530,636)

 

286

 

1,225,306

 

(4,305,044)

Gross profit

1,399,072

 

286

 

‚ÄĒ

 

1,399,358

Selling, general and administrative expenses

(1,226,246)

 

343,470

 

53,727

 

(829,049)

Operating Profit

172,826

 

343,756

 

53,727

 

570,309

     Total other income (expense), net

69,002

 

37,197

 

(112,298)

 

(6,099)

Earnings (Loss) from Continuing Operations Before Taxes

241,828

 

380,953

 

(58,571)

 

564,210

Income Tax Expense from Continuing Operations

(66,250)

 

(22,111)

 

(45,921)

 

(134,282)

Net Earnings (Loss) of the Group from Continuing
Operations

175,578

 

358,842

 

(104,492)

 

429,928

Net Earnings Attributable to Noncontrolling Interests from
Continuing Operations

(20,184)

 

‚ÄĒ

 

‚ÄĒ

 

(20,184)

Net Earnings (Loss) Attributable to Redeemable
Noncontrolling interests

101,392

 

(107,033)

 

(1,367)

 

(7,008)

Net Earnings (Loss) from Continuing Operations
attributable to Jacobs

256,786

 

251,809

 

(105,859)

 

402,736

Net Earnings Attributable to Discontinued Operations

11,305

 

‚ÄĒ

 

‚ÄĒ

 

11,305

Net Earnings (Loss) attributable to Jacobs

$      268,091

 

$       251,809

 

$     (105,859)

 

$      414,041

Diluted Net Earnings (Loss) from Continuing Operations Per
Share

$             1.96

 

$               1.92

 

$            (0.81)

 

$             3.07

Diluted Net Earnings (Loss) from Discontinued Operations
Per Share

$             0.09

 

$¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬† ‚ÄĒ

 

$¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬† ‚ÄĒ

 

$             0.09

Diluted Earnings (Loss) Per Share

$             2.04

 

$               1.92

 

$            (0.81)

 

$             3.16

Operating profit margin

2.5%

         

10.0%

 

(1) Includes charges associated with various restructuring, transaction and other related activity costs associated with Company transformation initiatives and acquisition related programs, impairment charges relating to our investment in our AWE ML investment, along with after-tax $295.1 million in one time PA Consulting deal related costs.

(2) Includes mainly (a) the removal of pass through revenues and costs for the People & Places Solutions line of business for the calculation of operating profit margin as a percentage of net revenue of $1.23 billion, (b) the removal of amortization of intangible assets of $53.8 million, (c) the removal of $63.5 million in fair value adjustments related to our investment in Worley stock and certain foreign currency revaluations relating to the ECR sale, (d) the removal of the fair value adjustment of the Company's investment in C3 of $48.6 million, (e) applicable redeemable noncontrolling interests impacts for the above adjustment items and (f) income tax expense adjustments for the above pre-tax adjustment items.

 

Earnings Per Share:

 

Three Months Ended

 

Six Months Ended

Unaudited

April 1, 2022

 

April 2, 2021

 

April 1, 2022

 

April 2, 2021

Numerator for Basic and Diluted EPS:

             
               

Net earnings (loss) from continuing operations allocated to
common stock for EPS calculation

$        88,817

 

$            (275)

 

$     223,082

 

$     256,786

               

Net (loss) earnings from discontinued operations allocated
to common stock for EPS calculation

$                 (1)

 

$        11,320

 

$            (233)

 

$        11,305

               

Net earnings allocated to common stock for EPS calculation

$        88,816

 

$        11,045

 

$     222,849

 

$     268,091

               

Denominator for Basic and Diluted EPS:

             
               

Shares used for calculating basic EPS attributable to
common stock

129,333

 

130,262

 

129,337

 

130,115

               

Effect of dilutive securities:

             

Stock compensation plans (1)

640

 

‚ÄĒ

 

796

 

1,042

Shares used for calculating diluted EPS attributable to
common stock

129,973

 

130,262

 

130,133

 

131,157

               

Net Earnings Per Share:

             

     Basic Net Earnings from Continuing Operations Per Share

$             0.69

 

$¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬† ‚ÄĒ

 

$             1.72

 

$             1.97

     Basic Net Earnings from Discontinued Operations Per Share

$¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬† ‚ÄĒ

 

$             0.09

 

$¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬† ‚ÄĒ

 

$             0.09

Basic Earnings Per Share

$             0.69

 

$             0.08

 

$             1.72

 

$             2.06

     Diluted Net Earnings from Continuing Operations Per Share

$             0.68

 

$¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬† ‚ÄĒ

 

$             1.71

 

$             1.96

     Diluted Net Earnings from Discontinued Operations Per Share

$¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬† ‚ÄĒ

 

$             0.09

 

$¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬† ‚ÄĒ

 

$             0.09

Diluted Earnings Per Share

$             0.68

 

$             0.08

 

$             1.71

 

$             2.04

 

(1) For the three months ended April 2, 2021, because net earnings (loss) from continuing operations allocated to common stock for EPS was a loss, the effect of antidilutive securities of 902 equivalent shares were excluded from the denominator in calculating diluted EPS.

 

For additional information contact:

Investors:
Jonathan Doros, 214-583-8596
jonathan.doros@jacobs.com

Media:
Marietta Hannigan, 214-920-8035
marietta.hannigan@jacobs.com

 

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SOURCE Jacobs