Jacobs Engineering Group Inc. (NYSE:JEC) today announced its
financial results for the second quarter of fiscal 2017 ended March
31, 2017.
Second Quarter Fiscal 2017 Highlights:
- U.S. GAAP net earnings of $50 million,
or $0.41 per share;
- Adjusted net earnings of $95 million,
or $0.78 per share;
- Backlog of $18.5 billion – up $307
million vs. prior quarter and $247 million vs. year ago; highest
professional services backlog in eight quarters;
- Gross margin improvement of over 200
basis points vs. prior year, driven by strong project execution and
increased focus on more profitable business;
- U.S. GAAP G&A down 2% vs. FY16Q2;
continued cost focus supporting adjusted G&A decline of 7%
compared to prior year;
- Repurchased 0.9 million shares during
second quarter for $51 million; dividends paid of $18 million.
Jacobs reported U.S. GAAP net earnings of $50 million, or $0.41
per share, on revenue of $2.3 billion for the second quarter ended
March 31, 2017. This compares to U.S. GAAP net earnings of $65
million, or $0.54 per share, on revenues of $2.8 billion for the
second quarter ended April 1, 2016.
Jacobs’ second quarter 2017 results include approximately $45
million, or $0.37 per share, in after-tax costs associated with the
2015 Restructuring as well as other charges associated with our
strategic review of our Europe, U.K. and Middle East regional
operations (collectively referred to as “Restructuring and other
charges”). Our second quarter 2016 results included approximately
$26 million, or $0.21 per share, in charges related to the 2015
Restructuring. The increase in restructuring costs year over year
drove a decline in the Company’s U.S. GAAP net earnings of 23%
versus the year ago quarter.
Excluding the 2015 Restructuring and other charges above,
Jacobs’ second quarter 2017 adjusted net earnings totaled $95
million, or $0.78 per share, up 4% as compared to $91 million, or
$0.75 per share, from the corresponding period for 2016.
Our U.S. GAAP and adjusted results for the second fiscal quarter
of 2017 include a net benefit of $0.05 per share associated with
one-time benefit plan changes in India partly offset by certain
legal settlements. Additionally, the Company’s fiscal 2016 second
quarter adjusted net earnings reflected a net benefit of $0.03 per
share related to several items, including the release of a foreign
tax reserve and a one-time benefit in non-controlling interests
pertaining to certain work performed by one of our partially owned
subsidiaries; partially off-set by the impact of a customer
bankruptcy and a litigation settlement.
Total backlog was $18.5 billion at March 31, 2017, including a
professional services component of $12.4 billion, as compared to
total backlog of $18.2 billion and a professional services
component of $11.4 billion for the corresponding period last year.
On a sequential basis, gross margin associated with our Q2 backlog
continued to improve from our Q1 FY17 levels.
Commenting on the results for the second quarter 2017, Steve
Demetriou, Jacobs Chairman and CEO said, "We are excited about the
benefits from the significant steps we have taken over the past two
years to improve our operating performance and capabilities,
resulting in our first year over year adjusted operating profit
improvement in almost 3 years. While commodity oriented markets
continue to be impacted by weak prices, our results give us further
confidence in our ability to deliver on a more profitable growth
track, as evidenced by the growth in our backlog, improved gross
margins and lower SG&A costs.”
The Company’s cash flow from operations was $96 million in the
second quarter. Additionally, during the quarter, we repurchased
0.9 million shares of common stock at a total cost of $51 million
and paid dividends of $18 million.
Outlook
Kevin Berryman, Jacobs CFO, added, "We are beginning to show
improved profit momentum, as evidenced by a 4% improvement in
adjusted earnings per share versus the year ago quarter. We have
augmented this positive momentum with a more balanced capital
return strategy, as evidenced by the authorization and payment of
our inaugural dividend of $0.15 per share. Given our Q2 and year to
date results, our expectations remain unchanged for the year, with
a range of total adjusted EPS for the year at $3.00 to $3.30 per
share.”
Jacobs will host a conference call today at 10:00 A.M. CT, which
will be streamed live on 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.
Statements made in this press release that are not based on
historical fact are forward-looking statements. 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.
For a description of some of the 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 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. We also caution the readers of this release that we do
not undertake to update any forward-looking statements made in this
release.
Financial Highlights:
Results of Operations (in thousands,
except per-share data):
For the Three Months Ended For the Six
Months Ended March 31, 2017 April 1, 2016 March 31,
2017 April 1, 2016 Revenues $ 2,302,567 $ 2,781,763 $
4,854,171 $ 5,629,697 Costs and Expenses: Direct cost of contracts
(1,883,283 ) (2,337,547 ) (4,015,575 ) (4,745,007 ) Selling,
general and administrative expenses (351,111 )
(357,435 ) (681,795 ) (738,459 ) Operating Profit
68,173 86,781 156,801 146,231 Other Income (Expense): Interest
income 2,088 2,264 3,574 4,484 Interest expense (3,755 ) (2,200 )
(7,273 ) (5,743 ) Miscellaneous (expense) income, net (6,015
) 3,611 (6,731 ) 3,271 Total
other (expense) income, net (7,682 ) 3,675
(10,430 ) 2,012 Earnings Before Taxes 60,491
90,456 146,371 148,243 Income Tax Expense (16,326 )
(27,067 ) (41,053 ) (34,548 ) Net Earnings of the
Group 44,165 63,389 105,318 113,695 Net Earnings Attributable to
Noncontrolling Interests 5,853 1,861
5,236 (1,931 ) Net Earnings Attributable to
Jacobs $ 50,018 $ 65,250 $ 110,554 $ 111,764
Net Earnings Per Share: Basic $ 0.41 $ 0.54 $
0.91 $ 0.93 Diluted $ 0.41 $ 0.54 $
0.91 $ 0.92 Weighted Average Shares Used to
Calculate EPS Basic 119,484 120,216 119,416 120,554 Diluted 121,714
121,143 121,801 121,553
Segment Information (in
thousands):
For the Three Months Ended For the Six
Months Ended March 31, 2017 April 1, 2016 March 31,
2017 April 1, 2016 Revenues from External Customers:
Aerospace & Technology $ 577,040 $ 669,464 $ 1,154,476 $
1,339,655 Buildings & Infrastructure 585,242 579,128 1,165,859
1,142,458 Industrial 582,458 666,556 1,334,196 1,338,656 Petroleum
& Chemicals 557,827 866,615
1,199,640 1,808,928 Total $ 2,302,567 $
2,781,763 $ 4,854,171 $ 5,629,697 For
the Three Months Ended For the Six Months Ended March 31, 2017
April 1, 2016 March 31, 2017 April 1, 2016 Operating Profit:
Aerospace & Technology $ 45,057 $ 55,121 $ 96,144 $ 103,120
Buildings & Infrastructure 43,987 42,463 82,784 82,915
Industrial 24,073 12,417 49,202 39,772 Petroleum & Chemicals
35,619 30,945 59,271
62,548 Total Segment Operating Profit 148,736 140,946
287,401 288,355 Other Corporate Expenses (8,338 ) (18,797 ) (26,634
) (38,373 ) Restructuring and Other Charges (72,225 )
(35,368 ) (103,966 ) (103,751 ) Total Operating
Profit 68,173 86,781 156,801 146,231 Total Other (Expense) income
(6,449 ) 3,675 (9,197 ) 2,012 Total Other (Expense) income -
Restructuring (1,233 ) - (1,233 )
- Earnings Before Taxes $ 60,491 $ 90,456
$ 146,371 $ 148,243
Other Operational Information (in
thousands):
For the Three Months Ended For the Six Months
Ended March 31, 2017 April 1, 2016 March 31, 2017
April 1, 2016 Depreciation (pre-tax) $ 17,858 $
21,059 $ 34,479 $ 43,226 Amortization of Intangibles (pre-tax) $
11,299 $ 11,725 $ 23,213 $ 23,451 Pass-Through Costs Included in
Revenues $ 560,565 $ 601,129 $ 1,233,545 $ 1,271,460 Capital
Expenditures $ 24,707 $ 13,322 $ 45,761 $ 29,309
Balance Sheet (in
thousands):
At March 31, 2017 and September 30,
2016
March 31, 2017(Unaudited)
September 30,2016
ASSETS Current Assets: Cash and cash equivalents $ 674,596 $
655,716 Receivables 2,058,005 2,115,663 Prepaid expenses and other
88,545 93,091 Total current assets
2,821,146 2,864,470 Property, Equipment
and Improvements, Net 316,077 319,673 Other Noncurrent Assets:
Goodwill 2,862,364 3,079,628 Intangibles 319,821 336,922
Miscellaneous 766,595 759,329 Total
other non-current assets 3,948,780 4,175,879
$ 7,086,003 $ 7,360,022
LIABILITIES AND
STOCKHOLDERS’ EQUITY Current Liabilities: Notes payable $ 2,941
$ 2,421 Accounts payable 468,138 522,427 Accrued liabilities
872,858 938,378 Billings in excess of costs 389,279
319,460 Total current liabilities 1,733,216
1,782,686 Long-term Debt 334,925 385,330 Other
Deferred Liabilities 843,606 861,824 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—120,453,954 shares and
120,950,899 shares as of March 31, 2017 and September 30, 2016,
respectively
120,454 120,951 Additional paid-in capital 1,217,248 1,168,272
Retained earnings 3,611,953 3,586,647 Accumulated other
comprehensive loss (835,008 ) (610,594 ) Total Jacobs
stockholders’ equity 4,114,647 4,265,276 Noncontrolling interests
59,609 64,906 Total Group stockholders’
equity 4,174,256 4,330,182 $ 7,086,003
$ 7,360,022
Backlog (in millions):
March 31, 2017 April 1, 2016 Aerospace
& Technology $ 5,490.7 $ 4,887.2 Buildings & Infrastructure
5,270.3 4,838.9 Industrial 2,361.2 3,304.3 Petroleum &
Chemicals 5,334.7 5,179.4 Total $ 18,456.9 $ 18,209.8
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,
adjusted EPS, adjusted operating profit, adjusted revenue, adjusted
direct cost of contracts, adjusted selling, general, and
administrative (“G&A”) expenses, and adjusted total other
income and expense.
Adjusted net earnings and adjusted EPS are non-GAAP financial
measures that are calculated by excluding the after-tax costs
related to the 2015 Restructuring activities as well as other
charges associated with our Europe, U.K. and Middle East region
(collectively referred to as “Restructuring and other charges”),
which are not considered by management to be part of the Company’s
ordinary operations. Adjusted revenue, adjusted direct cost of
contracts, adjusted operating profit, adjusted G&A expense and
adjusted total other income and expense are calculated by excluding
the pre-tax costs related to the Restructuring and other charges.
We believe that the adjusted net earnings, adjusted EPS, adjusted
operating profit, adjusted revenue, adjusted direct cost of
contracts, adjusted G&A expense and adjusted total other income
and expense measurements 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, which can obscure underlying trends. Additionally,
management uses adjusted net earnings, adjusted EPS, adjusted
operating profit, adjusted revenue, adjusted direct cost of
contracts, adjusted G&A expenses and adjusted total other
income and expense 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 U.S. GAAP values of net
earnings, EPS, revenue, direct cost of contracts, G&A expenses,
operating profit and total other income and expense, 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. Amounts are
shown in thousands, except for per-share data:
U.S. GAAP Reconciliation for the second
quarter of fiscal 2017 and 2016:
Three Months Ended March 31, 2017 U.S. GAAP
Effects ofRestructuring andOther
Charges
WithoutRestructuring andOther Charges
Revenue $ 2,302,567 $ 16,529 $ 2,319,096 Direct cost of
contracts 1,883,283 (4,663 ) 1,878,620 Selling, general and
administrative expenses 351,111 (51,033 ) 300,078 Operating
Profit 68,173 72,225 140,398 Total other (expense) income,
net (7,682 ) 1,233 (6,449 )
Earnings Before Taxes 60,491 73,458 133,949 Income Tax (Expense)
Benefit (16,326 ) (23,587 ) (39,913 ) Net
earnings of the Group 44,165 49,871 94,036 Net Earnings
Attributable to Non-controlling interests 5,853
(4,663 ) 1,190 Net earnings Attributable to
Jacobs $ 50,018 $ 45,208 $ 95,226 Diluted
earnings per share $ 0.41 $ 0.37 $ 0.78
Three Months Ended April 1, 2016 U.S. GAAP
Effects of 2015Restructuring
Without 2015Restructuring
Selling, general and administrative expenses $ 357,435 $ (35,183 )
$ 322,252 Operating Profit 86,781 35,183 121,964
Total other income (expense), net 3,675 185 3,860 Earnings
Before Taxes 90,456 35,368 125,824 Income Tax (Expense) Benefit
(27,067 ) (9,668 ) (36,735 ) Net earnings of
the Group 63,389 25,700 89,089 Net Earnings Attributable to
Non-controlling interests 1,861 —
1,861 Net earnings Attributable to Jacobs $ 65,250
$ 25,700 $ 90,950 Diluted earnings per share $
0.54 $ 0.21 $ 0.75
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version on businesswire.com: http://www.businesswire.com/news/home/20170509005649/en/
Jacobs Engineering Group Inc.Kevin C. BerrymanExecutive Vice
President and Chief Financial Officer214-583-8500
Jacobs Engineering (NYSE:JEC)
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