DALLAS, Oct. 21, 2018 /PRNewswire/ -- Jacobs
Engineering Group Inc. (NYSE: JEC) today announced that it has
entered into a definitive agreement to sell its Energy, Chemicals
and Resources (ECR) segment to WorleyParsons Limited (ASX: WOR) for
$3.3 billion, consisting of
$2.6 billion in cash and $700 million in WorleyParsons ordinary
shares. The transaction value represents a multiple of more
than 11.5 times trailing twelve-month (TTM) adjusted EBITDA for the
ECR business1.
Following the completion of the transaction, Jacobs will be
focused solely on its two higher growth, higher margin lines of
business – Aerospace, Technology, Environmental & Nuclear
(ATEN) and Buildings,
Infrastructure & Advanced Facilities (BIAF).
"For Jacobs, this transaction marks an inflection point in our
portfolio transformation focused on more consistent, higher-margin
growth as a leader solving the world's critical challenges," said
Jacobs Chairman and CEO Steve
Demetriou. "The increased financial flexibility we gain from
this sale better positions us to invest in our ATEN and BIAF businesses, focusing our premier
talent and expertise on technology, innovation and sustainable
solutions that are priorities for our infrastructure and government
services clients. These capabilities, along with our strong backlog
and efficient global platform, will further strengthen our global
leadership in these segments to drive meaningful value
creation."
The company will report results for fiscal 2018 on Nov. 20.
"While we are in the process of finalizing our fiscal 2018
results, our current view is materially consistent with previously
announced guidance for the year," said Jacobs CFO Kevin Berryman. "In addition, we continue to
believe that the adjusted EPS guidance provided for fiscal 2019
remains appropriate, keeping in mind that such guidance did not
reflect any impact from the pending transaction announced
today."
"Upon closing of this transaction, we plan to initially apply
proceeds to pay down floating-rate debt," Berryman added. "Beyond
that, our strong financial flexibility and free cash flow will
support incremental profitable growth investments and capital
returns to shareholders, consistent with our record of disciplined
allocation yielding attractive growth and value creation. And of
course, Jacobs will continue to benefit from our ECR business'
earnings and cash flow through the closing of the
transaction."
Use of Proceeds
Upon closing, Jacobs expects to
receive approximately $2.6 billion in
net proceeds from the transaction, which initially will be used to
pay down floating-rate debt, while also maintaining a disciplined
approach to deploy capital for increased shareholder value,
including mergers and acquisitions. The company will provide
further details about its capital allocation strategy, as well as
its updated pro forma financial outlook, at the company's investor
day on February 19, 2019.
WorleyParsons Equity
Together, ECR and WorleyParsons
will be a global leader with the talent, industry sector, customer
and geographic diversity needed to compete and win. The structure
of the transaction enables Jacobs to benefit from the near-term
upside created by the combination and the oil and gas market
recovery.
At the close of the transaction, Jacobs will receive
approximately 58.2 million shares of WorleyParsons stock, which
will equate to approximately 11 percent of WorleyParsons ordinary
shares based on WorleyParsons' outstanding shares post-close. The
shares will be subject to a six-month holding requirement (but not
earlier than Aug. 31) following the
transaction's closing.
Approvals and Time to Close
The Jacobs Board of
Directors and the WorleyParsons Board of Directors each have
approved the transaction. The transaction is expected to
close in the first half of calendar 2019, subject to customary
closing conditions and regulatory approvals.
Advisors
Perella Weinberg Partners LP is serving as
financial advisor to Jacobs, and Fried, Frank, Harris, Shriver
& Jacobson LLP is serving as legal counsel.
Wachtell, Lipton, Rosen & Katz also served as legal advisor
to Jacobs. Centerview Partners provided financial advice to the
company.
Conference Call
Jacobs will host a conference call
tomorrow, Monday, Oct. 22, at
8:00 AM ET to discuss this
announcement with the financial community. The conference call can
be accessed by dialing (866) 324-3683 (U.S./Canada) or (509) 844-0959 (international), and
by entering the passcode 9868327. A replay will be available
by dialing (855) 859-2056, or (404) 537-3406. Use the code 9868327
to access the replay.
Interested parties can listen to the conference call and view
accompanying slides on the investor page at www.jacobs.com.
About Jacobs
Jacobs leads the global professional
services sector delivering solutions for a more connected,
sustainable world. With $15 billion
in fiscal 2017 revenue when combined with full-year CH2M revenues
and a talent force of more than 77,000, Jacobs provides a full
spectrum of services including scientific, technical, professional
and construction- and program-management for business, industrial,
commercial, government and infrastructure sectors. For more
information, visit www.jacobs.com, and connect with Jacobs on
LinkedIn, Twitter, Facebook and Instagram.
Aerospace, Technology, Environmental and
Nuclear
Through its ATEN
business, Jacobs stands as one of the world's largest diversified
government services providers. ATEN's talent force of approximately 15,500
professionals support operational mission planning and execution,
cybersecurity, scientific research, environmental planning,
assessment and remediation, and nuclear solutions for government
and commercial clients.
Buildings, Infrastructure and Advanced
Facilities
Jacobs' BIAF business provides complete solutions
delivery for private and public-sector clients in high growth
markets of water, transportation, aviation, buildings, life
sciences and electronics. With a talent force of more than 33,000
professionals providing a range of services from planning and
design through construction- and program-management and operations
utilizing a number of delivery platforms.
Non-GAAP Financial Measures
Pro-forma adjusted
earnings before interest, taxes, depreciation and amortization
("EBITDA") for the Energy, Chemicals and Resources ("ECR") business
is calculated by adding back depreciation and amortization expense
to ECR segment operating profit (as defined in Jacobs' quarterly
filings on Form 10-Q and annual reports on Form 10-K).
Additionally, CH2M results (including depreciation and
amortization) associated with the ECR segment are included on a
pro-forma basis as if the acquisition occurred as of the beginning
of the trailing twelve-month ("TTM") period presented.
Finally, other corporate adjustments deemed related to ECR which
were not previously reported in the ECR segment operating results
have been allocated to the ECR segment as noted below. The
following table reconciles ECR segment operating profit to the
Adjusted TTM EBITDA. Amounts are shown in thousands, except
Enterprise Value to Adjusted TTM EBITDA ratio:
Non-GAAP
Reconciliation Table
|
TTM ended
6/29/2018
|
ECR Segment Operating
profit
|
$
205,965
|
Depreciation and
Amortization
|
$
52,800
|
Other corporate and
pro forma adjustments
|
$
26,300
|
Adjusted TTM
EBITDA
|
$
285,065
|
|
|
Enterprise
Value
|
$
3,300,000
|
Enterprise
Value/Adjusted TTM EBITDA
|
11.58
|
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 transaction between
Jacobs and WorleyParsons 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 Jacobs
and WorleyParsons may be unable to obtain regulatory 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
possibility of unexpected costs, liabilities or delays in
connection with the transaction; risks that the transaction
disrupts our current plans and operations; 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 Stock and Asset Purchase Agreement. For a
description of some additional factors that may occur that could
cause actual results to differ from forward-looking statements see
our Annual Report on Form 10-K for the year ended September 29, 2017, in particular the "Risk
Factors" discussions thereunder as well as our 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.
For additional information contact:
Investors:
Jonathan Doros, 214-583-8596
jonathan.doros@jacobs.com
Media:
Lorrie Paul Crum, 303-525-2916
lorrie.crum@jacobs.com
__________________________
1 TTM based on June 2018.
See reconciliation table at the end of this press release.
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SOURCE Jacobs Engineering Group Inc.