FWLT (MM)

On January 25, 2012, Jacobs Engineering Group Inc. (JEC) reported its financial results for the first quarter 2012 with earnings per diluted share of 70 cents in the quarter, up from 52 cents reported in the year-ago quarter, based on solid sales and operations performance on the backdrop of improving markets. The results were in line with the Zacks Consensus Estimate.

Total revenue in the first quarter jumped 11.7% year over year to $2,631.8 million, below the Zacks Consensus Estimate of $2,717.0 million.

Revenues from Technical Professional Services (58.4% of total revenue) increased to $1,538.0 million from $1,204.8 million in the year-ago quarter, while revenues from Field Services (41.6% of total revenue) decreased marginally to $1,093.7 million from $1,151.4 million in the year-ago quarter.

During the quarter, direct costs of contracts, a major expenditure for Jacobs, was recorded at $2,210.7 million compared with $ 2,025.1 million in the prior-year quarter. Selling, general and administrative (SG&A) expenses, came in at $279.1 million up from $227.4 in the year-ago quarter. Operating profit improved to $142 million from $103.6 million in the year-ago quarter.

At the end of the first quarter, backlog was approximately $14.5 billion, including a technical professional services component of $9.5 billion, up from $13.0 billion, including a technical professional services component of $7.9 billion at the end of the first quarter 2011.

Jacobs’ cash and cash equivalents, exiting the first quarter, was approximately $959.2 million, down from $1,039.7 million a year ago, while total debt increased to $535.7 million from $82.4 million in the previous year quarter.

Outlook: Jacobs reaffirmed its earnings guidance for fiscal year 2012 within a range of $2.80 to $3.20 per share based on a steady backlog and improved growth prospects.

Jacobs Engineering Group, one of the world's largest and most diverse providers of technical, professional, and construction services, serves a variety of industrial, commercial and government clients across a global network. The company directly competes with its peers, such as Fluor Corporation (FLR) and Foster Wheeler AG (FWLT).

We currently hold a Neutral recommendation on the stock. Jacobs has a Zacks #2 Rank, implying a short-term (1-3 months) Buy rating.

 
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