Le Lézard
Classified in: Science and technology, Business, Covid-19 virus
Subjects: ERN, ERP

Jacobs Reports Fiscal Third Quarter 2022 Earnings


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

Double-Digit Pro Forma Year-Over-Year Revenue Growth in Constant Currency 

Revenue Backlog up 10% Year-Over-Year and up 13% in Constant Currency

Awarded $3.9B 10-Year Contract to Support NASA Johnson Engineering, Technology and Science Strategy

Strong Recurring Revenue Visibility with Acceleration from Climate, Data and Consultancy Solutions

Reinforces Full-Year 100% Adjusted Cash Conversion Expectations1

DALLAS, Aug. 1, 2022 /PRNewswire/ -- Jacobs Engineering Group Inc. (NYSE: J) today announced its financial results for the fiscal third quarter ended July 1, 2022.

Q3 2022 Highlights:

Jacobs' Chair and CEO Steve Demetriou commented, "We are creating a more resilient portfolio including substantial recurring revenue that is complemented by accelerating growth in the areas of Climate Response, Consulting & Advisory and Data Solutions. Our strong base business combined with an early ramp from our accelerators drove 13% constant currency backlog growth in the third quarter, providing significant revenue visibility." Demetriou continued, "Our focus on a high performance culture and agile deployment of capital enables us to generate compelling returns for our shareholders through times of economic uncertainty."

Jacobs' President and CFO Kevin Berryman added, "We demonstrated a strong quarter of year-over-year revenue growth across our lines of business and PA Consulting. Our increased backlog, and alignment to well-funded public and private sector initiatives, provides us with confidence for long-term adjusted EBITDA profit growth. We also expect continued robust cash flow generation, which will strengthen an already healthy balance sheet, affording us opportunities to further increase shareholder value."

Financial Outlook1 

The company expects fiscal fourth quarter adjusted EBITDA of $340 to $360 million and adjusted EPS of $1.75 to $1.85.

Since providing the original fiscal 2022 outlook in November, FX translation has impacted our full year fiscal 2022 net revenue outlook by approximately $320M, adjusted EBITDA outlook by $40M and adjusted EPS outlook by 20 cents, based on actual foreign currency translation adjustments for the first nine months and an estimated adjustment to our forecast for the fourth quarter based on current spot rates.

On a constant currency basis, the mid-point of our latest full year outlook remains consistent with the original guidance provided at the beginning of the fiscal year.

1Reconciliation of adjusted cash conversion for the full fiscal year 2022, the adjusted EPS outlook and adjusted EBITDA outlook for the fourth quarter, and the foreign currency translation impact on the adjusted revenue outlook, adjusted EBITDA outlook, and adjusted EPS outlook for the full fiscal 2022 year 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 and timing of costs and charges relating to expenses, restructuring and integration costs to be incurred in fiscal 2022.

Third Quarter Review


Fiscal Q3 2022

Fiscal Q3 2021

Change

Revenue

$3.8 billion

$3.6 billion

$0.2 billion

Net Revenue

$3.2 billion

$3.0 billion

$0.2 billion

GAAP Net Earnings from Continuing Operations

$196 million

$165 million

$31 million

GAAP Earnings Per Diluted Share (EPS) from Continuing
Operations

$1.52

$0.82

$0.70

Adjusted Net Earnings from Continuing Operations

$240 million

$216 million

$24 million

Adjusted EPS from Continuing Operations

$1.86

$1.64

$0.22

The Company's adjusted net earnings from continuing operations and adjusted EPS from continuing operations for the third 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 Q3 2022

Fiscal Q3 2021

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

$196 million ($1.52 per
share)

$165 million ($0.82 per
share)

Adjustments to add back after-tax restructuring, transaction costs and other
charges ($10.0 million and $7.6 million for the fiscal 2022 and 2021 periods,
respectively before income taxes) and $(57.3) million, or $(0.44) per share, in EPS
numerator adjustments relating to PA preference shares redemption value, which
does not affect net earnings, in the fiscal 2021 period.

$7 million ($0.06 per
share)

$4 million ($0.47 per
share)

Other adjustments are comprised mainly of:

(a) add-back of amortization of intangible assets of $51.6 million and $49.6
million in the 2022 and 2021 periods, respectively,

(b) the removal of the fair value adjustments related to our former investment
holdings in Worley and C3.ai, Inc. ("C3") stock of $1.0 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) the removal of $30.8 million in additional income tax expense attributable to
tax rate increases in the UK during 2021,

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

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

$36 million ($0.28 per
share)

$46 million ($0.35 per
share)

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

$240 million ($1.86 per
share)

$216 million ($1.64 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 21.9% for the fiscal third quarter 2022 and fiscal third 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 8:00 A.M. ET on Monday August 1, 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 more than 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 cash conversion, our our fourth quarter adjusted EPS and adjusted EBITDA, and the impact of foreign currency translation on our fiscal 2022 financial outlook. 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, financial market risks that may affect the Company's funding obligations under defined benefit pension and postretirement plans, as well as general economic conditions, including inflation and the actions taken by monetary authorities in response to 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 Nine Months Ended

Unaudited


July 1, 2022


July 2, 2021


July 1, 2022


July 2, 2021

Revenues


$    3,827,093


$    3,576,436


$   11,041,777


$   10,506,144

Direct cost of contracts


(3,002,618)


(2,759,501)


(8,550,418)


(8,290,137)

Gross profit


824,475


816,935


2,491,359


2,216,007

Selling, general and administrative expenses


(558,713)


(553,189)


(1,882,049)


(1,779,435)

Operating Profit


265,762


263,746


609,310


436,572

Other Income (Expense):









Interest income


1,042


1,001


2,924


2,733

Interest expense


(26,129)


(20,011)


(67,551)


(52,788)

Miscellaneous income, net


31,440


38,658


51,802


138,705

Total other income (expense), net


6,353


19,648


(12,825)


88,650

Earnings from Continuing Operations Before Taxes


272,115


283,394


596,485


525,222

Income Tax Expense from Continuing Operations


(59,491)


(109,186)


(121,545)


(175,437)

Net Earnings of the Group from Continuing Operations


212,624


174,208


474,940


349,785

Net (Loss) Earnings of the Group from Discontinued
Operations


(343)


384


(576)


11,690

Net Earnings of the Group


212,281


174,592


474,364


361,475

Net Earnings Attributable to Noncontrolling Interests
from Continuing Operations


(8,773)


(9,182)


(28,286)


(29,366)

Net (Earnings) Loss Attributable to Redeemable
Noncontrolling interests


(7,525)


384


(27,246)


101,776

Net Earnings Attributable to Jacobs from Continuing
Operations


196,326


165,410


419,408


422,195

Net Earnings Attributable to Jacobs


$      195,983


$      165,794


$      418,832


$      433,885

Net Earnings Per Share:









Basic Net Earnings from Continuing Operations Per
Share


$           1.53


$           0.83


$           3.25


$           2.80

Basic Net Earnings from Discontinued Operations
Per Share


$               ?


$              ?


$              ?


$           0.09

Basic Earnings Per Share


$           1.53


$           0.83


$           3.25


$           2.89










Diluted Net Earnings from Continuing Operations Per
Share


$           1.52


$           0.82


$           3.23


$           2.78

Diluted Net Earnings from Discontinued Operations
Per Share


$               ?


$              ?


$              ?


$           0.09

Diluted Earnings Per Share


$           1.52


$           0.83


$           3.23


$           2.87










 

Segment Information (in thousands):



Three Months Ended


Nine Months Ended

Unaudited

July 1, 2022


July 2, 2021


July 1, 2022


July 2, 2021

Revenues from External Customers:








Critical Mission Solutions

$    1,317,109


$    1,218,089


$    3,845,927


$     3,822,949

People & Places Solutions

2,232,404


2,102,550


6,330,906


6,329,088

Pass Through Revenue

(635,419)


(612,045)


(1,671,467)


(1,837,350)

People & Places Solutions Net Revenue

$    1,596,985


$    1,490,505


$    4,659,439


$     4,491,738

PA Consulting

$       277,580


$       255,797


$       864,944


$        354,107

Total Revenue

$    3,827,093


$    3,576,436


$  11,041,777


$   10,506,144

Net Revenue

$    3,191,674


$    2,964,391


$    9,370,310


$     8,668,794



Three Months Ended


Nine Months Ended


July 1, 2022


July 2, 2021


July 1, 2022


July 2, 2021

Segment Operating Profit:








Critical Mission Solutions

$      104,305


$      108,131


$      329,042


$      332,133

People & Places Solutions

210,046


205,324


592,883


603,654

PA Consulting

51,448


56,791


182,850


84,708

Total Segment Operating Profit

365,799


370,246


1,104,775


1,020,495

Other Corporate Expenses (1)

(89,887)


(104,532)


(284,479)


(238,198)

Restructuring, Transaction and Other Charges (2)

(10,150)


(1,968)


(210,986)


(345,725)

Total U.S. GAAP Operating Profit

265,762


263,746


609,310


436,572

Total Other Income (Expense), net (3)

6,353


19,648


(12,825)


88,650

Earnings from Continuing Operations Before Taxes

$      272,115


$      283,394


$      596,485


$      525,222



(1)

Other corporate expenses also included intangibles amortization of $51.6 million and $49.6 million for the three
months ended July 1, 2022 and July 2, 2021, respectively, and $146.9 million and $103.3 million for the nine months
ended July 1, 2022 and July 2, 2021, respectively, with the comparative year-to-date period increase mainly attributable
to higher amortization from the PA Consulting investment.

(2)

Included in the nine months ended July 1, 2022 is $91.3 million in charges related to the final pre-tax settlement of the
Legacy CH2M Matter, net of previously recorded reserves and $74.6 million of real estate impairment charges and
$24.5 million in other transformation and other charges related to the Company's transformation initiatives. Included
in the nine months ended July 2, 2021 are $297.4 million of costs incurred in connection with the investment in PA
Consulting, in part classified as compensation costs.

(3)

The three and nine months ended July 1, 2022 included a $13.9 million gain related to a cost method investment sold
during the period. The nine months ended July 1, 2022 included a gain of $7.1 million related to a lease termination.
The three and nine months ended July 2, 2021 include $38.7 million and $102.2 million, respectively, in fair value
adjustments related to our investment in Worley stock (including Worley stock dividends) and certain foreign currency
revaluations relating to the ECR sale and $1.0 million and $49.6 million, respectively, in fair value adjustments related
to our investment in C3 stock, with both of these investments sold in fiscal 2021. The nine months ended July 2, 2021
also includes $38.9 million related to impairment of our AWE ML investment.

 

Balance Sheet (in thousands):




July 1, 2022


October 1, 2021



Unaudited



ASSETS





Current Assets:





Cash and cash equivalents


$         1,102,284


$         1,014,249

Receivables and contract assets


3,303,279


3,101,418

Prepaid expenses and other


148,592


176,228

Total current assets


4,554,155


4,291,895

Property, Equipment and Improvements, net


327,906


353,117

Other Noncurrent Assets:





Goodwill


7,328,384


7,197,000

Intangibles, net


1,472,641


1,565,758

Deferred income tax assets


49,328


103,193

Operating lease right-of-use assets


519,045


650,097

Miscellaneous


470,751


471,549

Total other noncurrent assets


9,840,149


9,987,597



$        14,722,210


$        14,632,609

LIABILITIES AND STOCKHOLDERS' EQUITY





Current Liabilities:





Current maturities of long-term debt


$               51,630


$               53,456

Accounts payable


945,422


908,441

Accrued liabilities


1,374,948


1,533,559

Operating lease liability


155,760


172,414

Contract liabilities


661,573


542,054

Total current liabilities


3,189,333


3,209,924

Long-term Debt


3,520,494


2,839,933

Liabilities relating to defined benefit pension and retirement plans


314,975


418,080

Deferred income tax liabilities


242,703


214,380

Long-term operating lease liability


651,261


758,358

Other deferred liabilities


158,511


559,375

Commitments and Contingencies





Redeemable Noncontrolling interests


664,519


657,722

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 -
127,577,542 shares and 128,892,540 shares as of July 1, 2022 and October 1, 2021,
respectively


127,578


128,893

Additional paid-in capital


2,666,157


2,590,012

Retained earnings


4,082,070


4,015,578

Accumulated other comprehensive loss


(942,512)


(794,442)

Total Jacobs stockholders' equity


5,933,293


5,940,041

Noncontrolling interests


47,121


34,796

Total Group stockholders' equity


5,980,414


5,974,837



$        14,722,210


$        14,632,609

 

Statement of Cash Flow (in thousands):



For the Three Months Ended


For the Nine Months Ended

Unaudited


July 1, 2022


July 2, 2021


July 1, 2022


July 2, 2021

Cash Flows from Operating Activities:









Net earnings attributable to the Group


$     212,281


$     174,592


$     474,364


$     361,475

Adjustments to reconcile net earnings to net cash flows (used for) provided by
operations:









Depreciation and amortization:









Property, equipment and improvements


25,301


26,405


77,921


74,484

Intangible assets


51,551


49,555


146,889


103,308

Gain on sale of ECR business


?


?


?


(15,608)

Gain on investment in equity securities


(13,862)


(37,702)


(13,862)


(152,145)

Stock based compensation


16,544


14,542


41,705


41,519

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


942


(3,092)


14,222


3,261

(Gain) Loss on disposals of assets, net


(5,183)


396


(4,762)


749

Impairment of long-lived assets and equity method investment


?


6,941


74,585


40,138

Deferred income taxes (benefit)


46,104


(2,644)


62,144


38,419

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









Receivables and contract assets, net of contract liabilities


(80,726)


158,450


(114,607)


231,992

Prepaid expenses and other current assets


13,047


32,681


28,963


47,202

Miscellaneous other assets


52,037


31,510


119,238


107,911

Accounts payable


35,974


2,014


54,422


(150,736)

Accrued liabilities


(547,886)


(257,970)


(667,868)


(158,772)

Other deferred liabilities


(41,254)


(22,495)


(74,559)


(44,985)

      Other, net


(13,957)


158


(21,626)


(4,639)

          Net cash (used for) provided by operating activities


(249,087)


173,341


197,169


523,573

Cash Flows from Investing Activities:









Additions to property and equipment


(31,830)


(20,617)


(80,053)


(65,670)

Disposals of property and equipment and other assets


8,222


41


9,286


468

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


1,674


?


2,756


(4,193)

Acquisitions of businesses, net of cash acquired


(24,335)


?


(437,083)


(1,741,062)

Disposal of investment in equity securities


13,862


38,994


13,862


52,021

Proceeds related to sales of businesses


?


?


?


36,360

          Net cash (used for) provided by investing activities


(32,407)


18,418


(491,232)


(1,722,076)

Cash Flows from Financing Activities:









Net proceeds from (payments of) borrowings


412,038


(358,503)


799,151


1,423,854

Debt issuance costs


?


(50)


?


(2,747)

Proceeds from issuances of common stock


12,800


11,130


40,987


29,715

Common stock repurchases


(200,709)


?


(250,709)


(24,949)

Taxes paid on vested restricted stock


(176)


(154)


(28,574)


(25,796)

Cash dividends to shareholders


(29,341)


(27,363)


(86,588)


(79,801)

Net dividends associated with noncontrolling interests


(6,687)


(10,641)


(16,103)


(40,083)

Repurchase of redeemable noncontrolling interests


(10,979)


?


(46,074)


?

Proceeds from issuances of redeemable noncontrolling interests


49,738


?


49,738


?

            Net cash provided by (used for) financing activities


226,684


(385,581)


461,828


1,280,193

Effect of Exchange Rate Changes


(67,127)


5,699


(79,919)


34,617

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


(121,937)


(188,123)


87,846


116,307

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


1,236,358


1,166,854


1,026,575


862,424

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


$   1,114,421


$     978,731


$   1,114,421


$     978,731

 

Backlog (in millions):



July 1, 2022


July 2, 2021

Critical Mission Solutions

$             10,222


$               9,565

People & Places Solutions

17,542


15,557

PA Consulting

326


314

            Total

$             28,090


$             25,436

 

Non-GAAP Financial Measures and Operating Metrics:

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 from continuing operations, adjusted EPS from continuing operations, adjusted EBITDA outlook, adjusted EPS outlook, adjusted effective tax rate and adjusted cash conversion expectations.

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 the acquisitions of the Buffalo Group, BlackLynx and StreetLight 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 with 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.

Adjusted cash conversion is the ratio of adjusted free cash flow to adjusted net earnings from continuing operations (calculated as previously described). Adjusted free cash flow is calculated by taking cash flow from operations, subtracting capital expenditures, and then adjusting for other one-time charges and receipts to the extent such items are not included in adjusted net earnings from continuing operations.

The Company's year-over-year revenue growth rate is presented on a constant currency basis, which provides information on the percentage change in revenue assuming that foreign currency exchange rates have not changed between the prior and current periods. For purposes of constant currency calculations, we use the prior period average exchange rates as applied to the current period reported amounts.

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.

This press release also contains certain operating metrics which management believes are useful in evaluating the Company's performance. We regularly monitor these operating metrics to evaluate our business, identify trends affecting our business, and make strategic decisions. Revenue Backlog is the total dollar amount of revenues we expect to record in the future as a result of performing work under contracts that have been awarded to us. Book-to-bill ratio is an operational measure representing the ratio of change in revenue backlog since the prior quarterly reporting period plus reported revenue for the reporting period to the reported revenues for the same 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 and 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 adjusted cash conversion, adjusted EPS and adjusted EBITDA outlook for fiscal 2022 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. See footnote 1 on page 3 for additional information.

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



Three Months Ended

(in thousands)

July 1, 2022

Unaudited

U.S. GAAP


Effects of
Restructuring,
Transaction
and Other
Charges (1)


Other
Adjustments
(2)


Adjusted

Revenues

$  3,827,093


$              ?


$             ?


$  3,827,093

Pass through revenue

?


?


(635,419)


(635,419)

Net revenue

3,827,093


?


(635,419)


3,191,674

Direct cost of contracts

(3,002,618)


?


635,419


(2,367,199)

Gross profit

824,475


?


?


824,475

Selling, general and administrative expenses

(558,713)


10,150


51,551


(497,012)

Operating Profit

265,762


10,150


51,551


327,463

Total other income (expense), net

6,353


(131)


?


6,222

Earnings from Continuing Operations Before Taxes

272,115


10,019


51,551


333,685

Income Tax Expense from Continuing Operations

(59,491)


(2,440)


(10,479)


(72,410)

Net Earnings of the Group from Continuing Operations

212,624


7,579


41,072


261,275

Net Earnings Attributable to Noncontrolling Interests from Continuing Operations

(8,773)


?


?


(8,773)

Net Earnings Attributable to Redeemable Noncontrolling interests

(7,525)


(162)


(4,993)


(12,680)

Net Earnings Attributable to Jacobs from Continuing Operations

196,326


7,417


36,079


239,822

Net Loss Attributable to Discontinued Operations

(343)


?


?


(343)

Net Earnings attributable to Jacobs

$    195,983


$        7,417


$     36,079


$    239,479

Diluted Net Earnings from Continuing Operations Per Share

$          1.52


$          0.06


$         0.28


$          1.86

Diluted Net Earnings from Discontinued Operations Per Share

$             ?


$             ?


$            ?


$             ?

Diluted Earnings Per Share

$          1.52


$          0.06


$         0.28


$          1.86

Operating profit margin

6.9 %






10.3 %


(1) Includes charges associated with various restructuring, transaction and other related activity costs associated with Company transformation
initiatives and acquisition related programs.

(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 $635.4 million, (b) the removal of amortization of intangible assets of $51.6 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

(in thousands)

July 2, 2021

Unaudited

U.S. GAAP


Effects of
Restructuring,
Transaction
and Other
Charges (1)


Other
Adjustments
(2)


Adjusted

Revenues

$  3,576,436


$              ?


$             ?


$  3,576,436

Pass through revenue

?


?


(612,045)


(612,045)

Net revenue

3,576,436


?


(612,045)


2,964,391

Direct cost of contracts

(2,759,501)


(3)


612,045


(2,147,459)

Gross profit (loss)

816,935


(3)


?


816,932

Selling, general and administrative expenses

(553,189)


1,971


49,555


(501,663)

Operating Profit

263,746


1,968


49,555


315,269

Total other income (expense), net

19,648


5,674


(39,693)


(14,371)

Earnings from Continuing Operations Before Taxes

283,394


7,642


9,862


300,898

Income Tax (Expense) Benefit from Continuing Operations

(109,186)


(7,287)


56,107


(60,366)

Net Earnings of the Group from Continuing Operations

174,208


355


65,969


240,532

Net Earnings Attributable to Noncontrolling Interests from Continuing Operations

(9,182)


?


?


(9,182)

Net Loss (Earnings) Attributable to Redeemable Noncontrolling interests

384


3,553


(19,614)


(15,677)

Net Earnings from Continuing Operations attributable to Jacobs

165,410


3,908


46,355


215,673

Net Earnings Attributable to Discontinued Operations

384


?


?


384

Net Earnings attributable to Jacobs

$    165,794


$         3,908


$     46,355


$    216,057

Preferred Redeemable Noncontrolling interests redemption value adjustment

(57,307)


57,307


?


?

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

$    108,103


$       61,215


$     46,355


$    215,673

Diluted Net Earnings from Continuing Operations Per Share (3)

$          0.82


$           0.47


$         0.35


$          1.64

Diluted Net Earnings from Discontinued Operations Per Share (3)

$             ?


$              ?


$            ?


$             ?

Diluted Earnings Per Share (3)

$          0.83


$           0.47


$         0.35


$          1.64

Operating profit margin

7.4 %






10.6 %


(1) Includes charges associated with various restructuring, transaction and other related activity costs associated with Company transformation and
acquisition related programs. Also includes $(57.3) million or $(0.44) per share in EPS numerator adjustments relating to the PA preference shares
redemption value, which did not affect net earnings.

(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 $612.0 million, (b) the removal of amortization of intangible assets of $49.6 million,
(c) the removal of $38.7 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 $1.0 million, (e) the exclusion of impacts on the
Company's effective tax rates associated with revised estimates on US taxation of certain foreign earnings, certain tax return filing adjustments and
removal of $30.8 million in additional income tax expense attributable to tax rate increases in the UK during 2021, (f) applicable redeemable noncontrolling
interest impacts for the above adjustment items and (g) income tax expense adjustments for the above pre-tax adjustment items.

 


Nine Months Ended

(in thousands)

July 1, 2022

Unaudited

U.S. GAAP


Effects of
Restructuring,
Transaction
and Other
Charges (1)


Other
Adjustments
(2)


Adjusted

Revenues

$ 11,041,777


$             ?


$            ?


$ 11,041,777

Pass through revenue

?


?


(1,671,467)


(1,671,467)

Net revenue

11,041,777


?


(1,671,467)


9,370,310

Direct cost of contracts

(8,550,418)


3


1,671,467


(6,878,948)

Gross profit

2,491,359


3


?


2,491,362

Selling, general and administrative expenses

(1,882,049)


210,983


146,889


(1,524,177)

Operating Profit

609,310


210,986


146,889


967,185

Total other (expense) income, net

(12,825)


(10,682)


5


(23,502)

Earnings from Continuing Operations Before Taxes

596,485


200,304


146,894


943,683

Income Tax Expense from Continuing Operations

(121,545)


(39,541)


(43,693)


(204,779)

Net Earnings of the Group from Continuing Operations

474,940


160,763


103,201


738,904

Net Earnings Attributable to Noncontrolling Interests from Continuing Operations

(28,286)


?


?


(28,286)

Net Earnings Attributable to Redeemable Noncontrolling interests

(27,246)


(424)


(16,844)


(44,514)

Net Earnings Attributable to Jacobs from Continuing Operations

419,408


160,339


86,357


666,104

Net Loss Attributable to Discontinued Operations

(576)


?


?


(576)

Net Earnings attributable to Jacobs

$    418,832


$     160,339


$     86,357


$    665,528

Diluted Net Earnings from Continuing Operations Per Share

$          3.23


$           1.24


$         0.67


$          5.13

Diluted Net Earnings from Discontinued Operations Per Share

$             ?


$              ?


$            ?


$             ?

Diluted Earnings Per Share

$          3.23


$           1.24


$         0.67


$          5.13

Operating profit margin

5.5 %






10.3 %


(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 $1.67 billion, (b) the removal of amortization of intangible assets of $146.9 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.

 


Nine Months Ended

(in thousands)

July 2, 2021

Unaudited

U.S. GAAP


Effects of
Restructuring,
Transaction
and Other
Charges (1)


Other
Adjustments
(2)


Adjusted

Revenues

$ 10,506,144


$              ?


$             ?


$ 10,506,144

Pass through revenue

?


?


(1,837,350)


(1,837,350)

Net revenue

10,506,144


?


(1,837,350)


8,668,794

Direct cost of contracts

(8,290,137)


283


1,837,350


(6,452,504)

Gross profit

2,216,007


283


?


2,216,290

Selling, general and administrative expenses

(1,779,435)


345,442


103,282


(1,330,711)

Operating Profit

436,572


345,725


103,282


885,579

Total other income (expense), net

88,650


42,871


(151,992)


(20,471)

Earnings (Loss) from Continuing Operations Before Taxes

525,222


388,596


(48,710)


865,108

Income Tax (Expense) Benefit from Continuing Operations

(175,437)


(29,398)


10,186


(194,649)

Net Earnings (Loss) of the Group from Continuing Operations

349,785


359,198


(38,524)


670,459

Net Earnings Attributable to Noncontrolling Interests from Continuing Operations

(29,366)


?


?


(29,366)

Net Earnings (Loss) Attributable to Redeemable Noncontrolling interests

101,776


(103,480)


(20,981)


(22,685)

Net Earnings (Loss) from Continuing Operations attributable to Jacobs

422,195


255,718


(59,505)


618,408

Net Earnings Attributable to Discontinued Operations

11,690


?


?


11,690

Net Earnings (Loss) attributable to Jacobs

$    433,885


$     255,718


$     (59,505)


$    630,098

Preferred Redeemable Noncontrolling interests redemption value adjustment

(57,307)


57,307


?


?

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

$    364,888


$     313,025


$    (59,505)


$    618,408

Diluted Net Earnings (Loss) from Continuing Operations Per Share

$          2.78


$           2.39


$        (0.45)


$          4.71

Diluted Net Earnings (Loss) from Discontinued Operations Per Share

$          0.09


$              ?


$            ?


$          0.09

Diluted Earnings (Loss) Per Share

$          2.87


$           2.39


$        (0.45)


$          4.80

Operating profit margin

4.2 %






10.2 %


(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 $287.2 million in one-time
PA Consulting deal related costs. Also includes $(57.3) million or $(0.44) per share in EPS numerator adjustments relating to the PA preference shares
redemption value, which did not affect net earnings.

(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 $1.8 billion, (b) the removal of amortization of intangible assets of $103.3 million, (c) the removal of $102.2
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 $49.6 million, (e) the exclusion of impacts on the Company's effective tax rates associated
with revised estimates on US taxation of certain foreign earnings, certain tax return filing adjustments and the removal of $30.8 million in additional income
tax expense attributable to tax rate increases in the UK during in 2021, (f) applicable redeemable noncontrolling interest impacts for the above adjustment
items and (g) income tax expense adjustments for the above pre-tax adjustment items.

 

This press release contains comparisons of current period results to prior periods on a pro forma adjusted basis. Prior fiscal periods are presented as if acquisitions and the PA Consulting investment had occurred prior to the comparable periods, as adjusted for the exclusion of restructuring and other related charges and transaction expenses and other adjustments described in this press release.

Reconciliation from GAAP to non-GAAP constant currency Pro Forma Revenues and Net Revenue



Three Months Ended



(in millions)

July 1, 2022


July 2, 2021


% Change

Total Pro Forma Revenue






Pro Forma Revenue

$        3,827.1


$        3,598.4


6.4 %

Exchange rate effect

130.1





Constant currency Pro Forma Revenue

$        3,957.2




10.0 %







Total Net Revenue






Net Revenue

$        3,191.7


$        2,964.4


7.7 %

Exchange rate effect

112.7





Constant currency Net Revenue

$        3,304.4




11.5 %







 

Earnings Per Share:




Three Months Ended


Nine Months Ended

Unaudited


July 1, 2022


July 2, 2021


July 1, 2022


July 2, 2021

Numerator for Basic and Diluted EPS:









Net earnings attributable to Jacobs from continuing operations


$   196,326


$   165,410


$   419,408


$   422,195

Preferred Redeemable Noncontrolling interests redemption value
adjustment


?


(57,307)


?


(57,307)

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


$   196,326


$   108,103


$   419,408


$   364,888










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


$         (343)


$          384


$         (576)


$     11,690










Net earnings allocated to common stock for EPS calculation


$   195,983


$   108,487


$   418,832


$   376,578










Denominator for Basic and Diluted EPS:


















Shares used for calculating basic EPS attributable to common
stock


128,225


130,385


128,966


130,205










Effect of dilutive securities:









Stock compensation plans


708


1,035


767


1,040

Shares used for calculating diluted EPS attributable to common
stock


128,933


131,420


129,733


131,245










Net Earnings Per Share:









Basic Net Earnings from Continuing Operations Per Share


$        1.53


$        0.83


$        3.25


$        2.80

Basic Net Earnings from Discontinued Operations Per Share


$           ?


$           ?


$           ?


$        0.09

Basic Earnings Per Share


$        1.53


$        0.83


$        3.25


$        2.89

Diluted Net Earnings from Continuing Operations Per Share


$        1.52


$        0.82


$        3.23


$        2.78

Diluted Net Earnings from Discontinued Operations Per Share


$           ?


$           ?


$           ?


$        0.09

Diluted Earnings Per Share


$        1.52


$        0.83


$        3.23


$        2.87

 

For additional information contact:

Investors:
Jonathan Doros, 214-583-8596
[email protected]

Media:
Marietta Hannigan, 214-920-8035
[email protected]

Jacobs Logo (PRNewsfoto/Jacobs)

 

SOURCE Jacobs


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