Jacobs Engineering Group Inc. (NYSE:JEC) today announced its
financial results for the fourth quarter and fiscal year ended
September 29, 2017.
Fiscal 2017 Highlights:
- Q4 2017 net earnings of $94.1 million,
or $0.78 per diluted share, and fiscal 2017 net earnings of $293.7
million, or $2.42 per diluted share;
- Q4 2017 adjusted net earnings of $118.3
million, or $0.98 per diluted share, and fiscal 2017 adjusted net
earnings of $392.2 million, or $3.24 per diluted share;
- Positive improvement in sequential
revenue performance for the quarter (up 5% over third
quarter);
- Record high backlog of $19.8 billion at
year end, up $1.2 billion vs. prior quarter and over $1.0 billion a
year ago; total professional services backlog is up $581 million
from year end 2016;
- Continued strong gross margin
performance in Q4, contributing to 160 basis point annual
improvement in 2017;
- Continued strong cash flow from
operations of $194 million in the quarter, resulting in cash flow
from operations totaling $575 million for the year; and
- On track to close CH2M acquisition
mid-December 2017.
Commenting on the results for the fourth quarter and fiscal year
2017, Steve Demetriou, Jacobs Chairman and CEO, said, “I am pleased
with the continued momentum and performance in our final quarter of
fiscal 2017. Results included sequential revenue growth, a
significant increase in backlog, and strong margin performance, all
of which were aligned with our strategic initiatives outlined in
December of last year. This organic growth momentum combined with
the previously announced acquisition of CH2M will further
strengthen our position as a global leader in providing innovative
solutions to our clients. Importantly, we remain confident that we
will close the CH2M transaction before the end of the year.”
Kevin Berryman, Jacobs CFO, added, "Our fourth quarter and full
year results demonstrate our success in our first year
implementation of our strategic plan. Growth is gaining traction,
margin has improved and cash flow has continued to be strong. We
believe that our positive momentum will continue into fiscal year
2018, with expected adjusted EPS (excluding impacts from the CH2M
acquisition) in the range of $3.25-$3.60.”
Fourth Quarter Review
Jacobs reported net earnings of $94.1 million, or $0.78 per
diluted share, on revenues of $2.7 billion for the fourth
quarter ended September 29, 2017. This compares to net earnings of
$29.6 million, or $0.24 per diluted share, on revenues of $2.6
billion for the fourth quarter ended September 30, 2016.
Jacobs’ net earnings for the fourth fiscal quarter of 2017
included approximately $24.2 million, or $0.20 per diluted share,
in after tax charges comprised of:
- $13.6 million, or $0.11 per diluted
share, in after-tax Restructuring and other charges, driven
primarily by an acceleration in restructuring activities associated
with the Company’s announced definitive agreement to acquire CH2M
and, consistent with previous guidance, final charges recognized in
connection with the 2015 Restructuring, which was completed this
quarter; and
- after-tax charges of $10.6 million, or
$0.09 per diluted share, in professional fees and related costs
associated with the CH2M acquisition.
Jacobs’ net earnings for fourth fiscal quarter of 2016 results
included approximately $63 million, or $0.53 per diluted share, in
after-tax restructuring and other charges including:
- after-tax charges of $36 million, or
$0.30 per diluted share, in connection with the 2015
Restructuring;
- additional restructuring charges of $17
million, or $0.14 per diluted share, as a result of our strategic
decision to exit our French operation and divest our French
subsidiary; and
- a non-cash write-down on an equity
investment of $10 million, or $0.09 per diluted share.
Excluding the items mentioned above, Jacobs’ adjusted net
earnings for the fourth quarter ended September 29, 2017 totaled
$118.3 million, or $0.98 per diluted share, favorable in comparison
to $93.1 million, or $0.77 per diluted share, for the corresponding
period for 2016.
Our fourth quarter U.S. GAAP and adjusted results include
one-time net tax and tax related benefit items of $8.0 million, or
$0.07 per diluted share, for fourth quarter 2017, and $4.1 million,
or $0.03 per diluted share, in net tax benefit and other items for
fourth quarter fiscal 2016.
Fiscal Year Review
For the fiscal year ended September 29, 2017, the company
reported net earnings of $293.7 million, or $2.42 per diluted
share, on revenues of $10.0 billion. This compares to net earnings
of $210.5 million, or $1.73 per diluted share, on revenues of $11.0
billion for the prior fiscal year.
On an annual basis, the combined impact of the Restructuring and
other charges and the CH2M acquisition related costs was $98.5
million, or $0.82 per diluted share, for 2017. The Restructuring
and other charges for 2016 amounted to $163.1 million, or $1.35 per
diluted share.
On an annual basis, our adjusted net earnings excluding these
items amounted to $392.2 million after tax, or $3.24 per diluted
share, for fiscal 2017 and $373.6 million, or $3.08 per diluted
share, for fiscal 2016.
For the full fiscal year 2017 and 2016, total one-time net
benefits from tax and other items included in our U.S. GAAP and
adjusted results amounted to $12.0 million after tax, or $0.10 per
diluted share, and $18.7 million after tax, or $0.16 per diluted
share, respectively.
Jacobs is hosting a conference call at 9:00 A.M. CT on Tuesday,
November 21, 2017, which it is webcasting live on the internet at
www.jacobs.com.
Jacobs is one of the world's largest and most diverse providers
of full-spectrum technical, professional and construction services
for industrial, commercial and government organizations globally.
The Company employs over 54,000 people and operates in more than 25
countries around the world. For more information, visit
www.jacobs.com.
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, including
statements regarding whether and when the proposed transaction with
CH2M will be consummated and the anticipated benefits thereof.
Although such statements are based on management's current
estimates and 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. The potential risks and uncertainties include, among
others, the possibility that CH2M may be unable to obtain required
stockholder approval or that other conditions to closing the
transaction may not be satisfied, such that the transaction will
not close or that the closing may be delayed; general economic
conditions; the transaction may involve unexpected costs,
liabilities or delays; risks that the transaction disrupts current
plans and operations of the parties to the transaction; the ability
to recognize the benefits of the transaction; the amount of the
costs, fees, expenses and charges related to the transaction the
outcome of any legal proceedings related to the transaction; the
occurrence of any event, change or other circumstances that could
give rise to the termination of the transaction agreement. For a
description of some 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 period ended September
30, 2016, and when filed with the Securities and Exchange
Commission (the “SEC”), our Annual Report on Form 10-K for the year
ended September 29, 2017, and in particular 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, as well
as the Company’s other filings with the Securities and Exchange
Commission. Neither the Company nor CH2M is 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):
Three Months Ended Year
Ended September 29, 2017 September 30, 2016
September 29, 2017 September 30, 2016 Revenues
$ 2,653,865 $ 2,640,587 $ 10,022,788 $ 10,964,157 Costs and
Expenses: Direct cost of contracts (2,179,575 ) (2,208,895 )
(8,250,536 ) (9,196,326 ) Selling, general and administrative
expenses (367,298 ) (348,881 ) (1,379,983 )
(1,429,233 ) Operating Profit 106,992 82,811 392,269 338,598
Other Income (Expense): Interest income 3,051 2,740 8,748 7,848
Interest expense (708 ) (4,945 ) (12,035 ) (15,260 ) Gain/(Loss) on
disposal of business and investments 10,880 (41,410 ) 10,880
(41,410 ) Miscellaneous expense, net (766 ) (3,523 )
(6,645 ) (3,053 ) Total other income (expense), net
12,457 (47,138 ) 948 (51,875 ) Earnings
Before Taxes 119,449 35,673 393,217 286,723 Income Tax Expense
(26,021 ) (5,790 ) (105,842 ) (72,208 )
Net Earnings of the Group 93,428 29,883 287,375 214,515 Net
Earnings (Loss) Attributable to Non-controlling Interests
714 (239 ) 6,352 (4,052 ) Net Earnings
Attributable to Jacobs $ 94,142 $ 29,644 $ 293,727 $ 210,463 Net
Earnings Per Share: Basic $ 0.78 $ 0.25 $ 2.43 $ 1.75 Diluted $
0.78 $ 0.24 $ 2.42 $ 1.73
Segment Information (in
thousands):
Three Months Ended
Year Ended September 29, 2017 September
30, 2016 September 29, 2017 September
30, 2016 Revenues from External Customers: Aerospace &
Technology $ 620,706 $ 649,993 $ 2,360,613 $ 2,657,433 Buildings
& Infrastructure 639,211 557,508 2,452,321 2,253,512 Industrial
727,877 749,061 2,743,662 2,793,713 Petroleum & Chemicals
666,071 684,025 2,466,192 3,259,499
Total $ 2,653,865 $ 2,640,587 $ 10,022,788 $ 10,964,157
Three Months Ended Year
Ended September 29, 2017 September 30, 2016
September 29, 2017 September 30, 2016
Operating Profit: Aerospace & Technology $ 55,861 $ 46,947 $
202,595 $ 203,808 Buildings & Infrastructure (1) 54,499 41,564
193,455 174,648 Industrial 33,714 13,052 115,262 81,268 Petroleum
& Chemicals 25,532 34,410 113,858
126,604 Total Segment Operating Profit 169,606 135,973 625,170
586,328 Other Corporate Expenses (25,975 ) (1,926 ) (81,595 )
(60,100 ) Restructuring and Other Charges (19,539 ) (51,236 )
(134,206 ) (187,630 ) CH2M Professional Fees and Integration costs
(17,100 ) — (17,100 ) —
Total U.S. GAAP Operating Profit
106,992 82,811 392,269 338,598 Gain/(Loss) on disposal of business
and investments 10,880 (41,410 ) 10,880 (41,410 ) Total Other
Expense (2) 1,577 (5,728 ) (9,932 )
(10,465 ) Earnings Before Taxes $ 119,449
$
35,673 $ 393,217 $ 286,723 (1) Excludes $
23,844 in restructuring and other charges for the fiscal year ended
September 29, 2017. (2) Years ended September 29, 2017 and
September 30, 2016 amounts include Restructuring and other charges
of $1,233 and $277, respectively.
Other Operational Information (in
thousands):
Three Months Ended
Year ended September 29, 2017 September
30, 2016 September 29, 2017 September
30, 2016 Depreciation (pre-tax) $ 23,700 $ 18,916 $ 76,418 $ 82,363
Amortization of Intangibles (pre-tax) $ 11,204 $ 12,109 $ 46,095 $
47,608 Pass-Through Costs Included in Revenues $ 677,698 $ 602,304
$ 2,539,311 $ 2,489,924 Capital Expenditures $ 44,508 $ 21,285 $
118,060 $ 67,688
Balance Sheet (in
thousands):
September 29, 2017 September
30, 2016 ASSETS Current Assets: Cash and cash
equivalents $ 774,151 $ 655,716 Receivables 2,102,543 2,115,663
Prepaid expenses and other 119,486 93,091 Total
current assets 2,996,180 2,864,470 Property,
Equipment, and Improvements, Net 349,911 319,673
Other Noncurrent Assets: Goodwill 3,009,826 3,079,628 Intangibles,
net 332,920 336,922 Miscellaneous 692,022 759,329
Total other noncurrent assets 4,034,768 4,175,879 $
7,380,859 $ 7,360,022
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities: Notes payable $ 3,071 $ 2,421 Accounts payable
683,605 522,427 Accrued liabilities 939,687 938,378 Billings in
excess of costs 299,864 319,460 Total current
liabilities 1,926,227 1,782,686 Long-term Debt
235,000 385,330 Other Deferred Liabilities 732,281
861,824 Commitments and Contingencies 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—120,385,544 shares and 120,950,899 shares as
of September 29, 2017 and September 30, 2016, respectively 120,386
120,951 Additional paid-in capital 1,239,782 1,168,272 Retained
earnings 3,721,698 3,586,647 Accumulated other comprehensive loss
(653,514 ) (610,594 ) Total Jacobs stockholders’
equity 4,428,352 4,265,276
Non-controlling interests
58,999 64,906 Total Group stockholders’ equity
4,487,351 4,330,182 $ 7,380,859 $ 7,360,022
Backlog (in millions):
September 29, 2017
September 30, 2016 Aerospace & Technology $ 6,231.4 $
5,110.0 Buildings & Infrastructure 5,412.4 5,033.5 Industrial
2,836.9 3,106.6 Petroleum & Chemicals $ 5,307.9 $ 5,510.4 Total
$ 19,788.6 $ 18,760.5
Non-U.S. 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 adjusted net earnings
and adjusted EPS.
Adjusted net earnings and adjusted EPS are non-GAAP financial
measures that are calculated by excluding the after-tax costs
related to (i) the 2015 Restructuring activities, which included
involuntary terminations, the abandonment of certain leased
offices, combining operational organizations and the co-location of
employees into other existing offices; charges associated with our
Europe, U.K. and Middle East region, which included write-offs on
contract accounts receivable and charges for statutory redundancy
and severance costs; and restructuring activities associated with
the Company’s announced definitive agreement to acquire CH2M, which
included involuntary terminations (collectively referred to as
“Restructuring and other charges”), and (ii) professional fees,
integration costs and related costs associated with the CH2M
acquisition (collectively referred to as “CH2M professional fees
and integration costs”), which are not considered by management to
be part of the Company’s ordinary operations. We believe that the
adjusted net earnings and adjusted EPS 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 the effects of the
Restructuring and other charges and the professional fees,
integration costs and related costs associated with CH2M
acquisition, which can obscure underlying trends. Additionally,
management uses adjusted net earnings and adjusted EPS 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 to the corresponding "adjusted" amounts.
For the comparable periods presented below, such adjustments
consist of amounts incurred in connection with the Restructuring
and other charges and the CH2M professional fees and integration
costs. Amounts are shown in thousands, except for per-share
data:
U.S. GAAP Reconciliation for the fourth
quarter of fiscal 2017 and 2016:
Three Months Ended September 29,
2017 U.S. GAAP
Effects of
Restructuring
and Other
Charges
Effects of
CH2M
professional
fees and
integration
costs
Adjusted Revenue $ 2,653,865 $ — $
—
$ 2,653,865 Direct cost of contracts (2,179,575 ) — — (2,179,575 )
Selling, general and administrative expenses (367,298 ) 19,539
17,100 (330,659 ) Total other (expense) income, net 12,457
— — 12,457 Earnings Before Taxes 119,449
19,539 17,100 156,088 Income Tax (Expense) Benefit (26,021 )
(5,980
)
(6,498
)
(38,499 ) Net earnings of the Group 93,428 13,559 10,602 117,589
Net Earnings Attributable to Non-controlling interests 714
— — 714 Net earnings Attributable to Jacobs $
94,142 $ 13,559 $ 10,602 $ 118,303 Diluted earnings per share $
0.78 $ 0.11 $ 0.09 $ 0.98
Three
Months Ended September 30, 2016 U.S. GAAP
Effects of 2015
Restructuring
and other items
Adjusted Revenue $ 2,640,587 $ — $
2,640,587 Direct cost of contracts (2,208,895 ) — (2,208,895 )
Selling, general and administrative expenses (348,881 ) 51,236
(297,645 ) Total other income (expense), net (47,138 )
41,410
(5,728
) Earnings Before Taxes 35,673 92,646 128,319 Income Tax (Expense)
Benefit (5,790 ) (29,162 ) (34,952 ) Net
earnings of the Group 29,883 63,484 93,367 Net Earnings
Attributable to Non-controlling interests (239 ) —
(239 ) Net earnings Attributable to Jacobs $ 29,644 $ 63,484
$ 93,128 Diluted earnings per share $ 0.24 $ 0.53 $ 0.77
U.S. GAAP Reconciliation for the fiscal
years ended September 29, 2017 and September 30, 2016:
Year Ended September 29, 2017
U.S. GAAP
Effects of
Restructuring
and Other
Charges
Effects of
CH2M
professional
fees and
integration
costs
Adjusted Revenue $ 10,022,788 $
17,526 $ — $ 10,040,314 Direct cost of contracts (8,250,536 ) 4,913
— (8,245,623 ) Selling, general and administrative expenses
(1,379,983 ) 111,767 17,100 (1,251,116 ) Total other income
(expense), net 948 1,233 — 2,181
Earnings Before Taxes 393,217 135,439 17,100 545,756 Income Tax
(Expense) Benefit (105,842 ) (42,663 )
(6,498
)
(155,003 ) Net earnings of the Group 287,375 92,776 10,602 390,753
Net Earnings Attributable to Non-controlling interests 6,352
(4,913
)
— 1,439 Net earnings Attributable to Jacobs $ 293,727
$ 87,863 $ 10,602 $ 392,192 Diluted earnings per share $ 2.42 $
0.73 $ 0.09 $ 3.24
Year Ended September 30, 2016
U.S. GAAP
Effects of 2015
Restructuring
and other items
Adjusted Revenue $ 10,964,157 $ — $
10,964,157 Direct cost of contracts (9,196,326 ) — (9,196,326 )
Selling, general and administrative expenses (1,429,233 ) 187,630
(1,241,603 ) Total other income (expense), net (51,875 )
41,687 (10,188 ) Earnings Before Taxes 286,723
229,317 516,040 Income Tax (Expense) Benefit (72,208 )
(66,225 ) (138,433 ) Net earnings of the Group
214,515 163,092 377,607 Net Earnings Attributable to
Non-controlling interests (4,052 ) — (4,052 )
Net earnings Attributable to Jacobs $ 210,463 $ 163,092 $ 373,555
Diluted earnings per share $ 1.73 $ 1.35 $ 3.08
Additional Information and Where to Find It
In connection with the proposed acquisition of CH2M Hill
Companies Ltd. (“CH2M”) by Jacobs Engineering Group Inc. (the
“Company”) pursuant to the terms of an Agreement and Plan of Merger
by and among CH2M, the Company and Basketball Merger Sub Inc., a
wholly owned subsidiary of the Company (“Merger Sub”), the Company
filed with the Securities and Exchange Commission (the “SEC”) a
Registration Statement on Form S-4 (the “Form S-4”) on September
19, 2017, Amendment No. 1 to the Form S-4 on October 24, 2017 and
Amendment No. 2 to the Form S-4 on November 8, 2017, which filings
contain a proxy statement of CH2M and a prospectus of the Company.
The Form S-4 (as amended) was declared effective on November 9,
2017, and the definitive proxy statement/prospectus was mailed or
otherwise disseminated to CH2M’s stockholders on or about November
10, 2017. BEFORE MAKING ANY VOTING OR INVESTMENT DECISION,
INVESTORS ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS
(INCLUDING ALL AMENDMENTS AND SUPPLEMENTS) BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION ABOUT THE COMPANY, CH2M AND THE
MERGER. Investors may obtain free copies of the proxy
statement/prospectus when it becomes available, as well as other
filings containing information about the Company and CH2M, without
charge, at the SEC’s Internet website (http://www.sec.gov). Copies
of these documents may also be obtained for free from the
companies’ websites at www.jacobs.com or www.ch2m.com.
Participants in Solicitation
The Company, CH2M and their respective officers and directors
may be deemed to be participants in the solicitation of proxies
from the stockholders of CH2M in connection with the proposed
Merger of Merger Sub with and into CH2M. Information about the
Company’s executive officers and directors is set forth in its
Annual Report on Form 10-K, which was filed with the SEC on
November 21, 2017 and its proxy statement for its 2017 annual
meeting of stockholders, which was filed with the SEC on December
9, 2016. Information about CH2M’s executive officers and directors
is set forth in its Annual Report on Form 10-K, which was filed
with the SEC on March 7, 2017, and the proxy statements for its
2017 annual meeting of stockholders, which was filed with the SEC
on April 24, 2017. Investors may obtain more detailed information
regarding the direct and indirect interests of the Company, CH2M
and their respective executive officers and directors in the
acquisition by reading the preliminary and definitive proxy
statement/prospectus regarding the proposed transaction that was
filed with the SEC. You may obtain free copies of these documents
as described in the preceding paragraph.
No Offer or Solicitation
This press release relates to a proposed
business combination between the Company and CH2M. This press
release is for informational purposes only and shall not constitute
an offer to sell or the solicitation of an offer to buy any
securities, nor shall there be any sale of securities in any
jurisdiction in which such offer, solicitation or sale would be
unlawful prior to the registration or qualification under the
securities laws of any such jurisdiction. This document is not a
substitute for the prospectus or any other document that the
Company or CH2M may file with the SEC in connection with the
proposed transaction. No offering of securities shall be made,
except by means of a prospectus meeting the requirements of Section
10 of the Securities Act of 1933, as amended.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171121005353/en/
Jacobs Engineering Group Inc.Kevin C. BerrymanExecutive Vice
President and Chief Financial Officer214-583-8500
Jacobs Engineering (NYSE:JEC)
Historical Stock Chart
From Mar 2024 to Apr 2024
Jacobs Engineering (NYSE:JEC)
Historical Stock Chart
From Apr 2023 to Apr 2024