Jacobs Reports Fiscal Third Quarter Earnings

Source: www.gulfoilandgas.com 8/3/2021, Location: North America

- Increasing Full-Year Fiscal 2021 Outlook; Reflecting Continued Strong Year-to Date Results
- PA Consulting Q3 Revenue Up 36% Year-Over-Year; Increasing FY21 Expected Accretion
- Strong Cash Flow to Further Enable Value-Creating Capital Deployment
- Accelerating Decarbonization and Energy Transition Opportunities Stemming from Climate Change
- Launched "Reimagined Perspectives" Thought Leadership to Drive ESG Solutions
- Wins Strategic Counterintelligence Analytics Contract with Army INSCOM

Jacobs Engineering Group Inc. announced its financial results for the fiscal third quarter ended July 2, 2021.

Q3 2021 Highlights:
- Revenue of $3.6 billion1 grew 9.7% year-over-year and net revenue up 10.6% year-over-year
- EPS from continuing operations of $0.82, impacted by $(0.44) related to an updated non-cash valuation allocation between PA Consulting preferred and common shares, with no impact to the original consideration2
- Adjusted EPS from continuing operations of $1.64
- Backlog increased $1.8 billion to $25.4 billion, up 7% year-over-year
- Cash flow from operations of $173 million; expecting to exceed FY21 cash conversion target
- Increases fiscal 2021 adjusted EBITDA and adjusted EPS outlook3

Jacobs' Chair and CEO Steve Demetriou commented, "We believe we are entering an attractive growth period for Jacobs, driven by strong global trends in infrastructure modernization, energy transition, national security and a potential super-cycle in global supply chain investments. We see these opportunities leading to an increasing and robust sales pipeline developing in FY22 and into FY23." Demetriou continued, "We are confident that our strong culture, deep domain knowledge and investments in the latest enabled solutions have positioned us as the leader in helping our clients solve these complex global challenges."

Jacobs' President and CFO Kevin Berryman added, "Our people continue to execute against our strategic and financial goals, leading to another quarter of strong results across our lines of business with PA Consulting continuing to outperform our initial expectations. Cash flow from operations was robust as we maintained our focus on efficient use of working capital. This disciplined execution throughout the fiscal year has again resulted in our ability to raise our full-year outlook. Looking into fiscal 2022 we are well-positioned to achieve double-digit adjusted EBITDA growth3, driven by our alignment to long-term secular trends."

Financial Outlook
The company now expects fiscal 2021 adjusted EBITDA of $1,210 million to $1,275 million and adjusted EPS of $6.15 to $6.35 from its previous outlook of adjusted EBITDA of $1,200 million to $1,270 million and adjusted EPS of $6.00 to $6.30.3

The company is also increasing the expected adjusted EPS net accretion from PA Consulting to $0.35 to $0.37 from $0.32 to $0.34; net of 35% non-controlling interest and incremental interest costs required to fund the company's investment consideration.3

2 PA Consulting
The company closed its strategic investment in PA Consulting on March 2, 2021. Per U.S. GAAP, $267 million (pre-tax and before non-controlling interest portion) of the estimated aggregate consideration for PA Consulting was required to be treated as post-completion compensation expense in the second fiscal quarter 2021 given retention related requirements applicable to the distribution of such funds to PA Consulting employees. This $267 million impact relative to the announced investment consideration was reflected in Q2 GAAP SG&A and excluded from adjusted results. The total consideration for PA Consulting remained consistent at 1.4 billion pounds.

Of the total price consideration, $261 million in final consideration amounts (net of forfeitures during the quarter) has been reflected in fiscal third quarter cash flows from operations as the net payment given the compensation accounting treatment noted above.

Additionally, the fiscal third quarter earnings per share reflect $(57.3) million or $(0.44) related to an updated non-cash valuation allocation between PA Consulting preferred and common shares, with no impact to the original consideration.

See quarterly report on Form 10-Q for discussion of accounting implications of the PA Consulting transaction.

1Reflects continuing operations as reported in accordance with GAAP.
3Reconciliation of the adjusted EPS outlook and adjusted EBITDA outlook for the full fiscal 2021 year and fiscal 2022 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 relating to transaction expenses, restructuring and integration to be incurred in fiscal 2021 and 2022.

The company's adjusted net earnings from continuing operations and adjusted EPS from continuing operations for the third quarter of fiscal 2021 and fiscal 2020 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.

The Company's U.S. GAAP effective tax rate for continuing operations is 38.5% for the fiscal third quarter 2021 and includes a $30.8 million impact from an increase in UK statutory income tax rates during the period. Fiscal third quarter 2021 adjusted earnings per share from continuing operations reflects a 20% adjusted effective tax rate to adjust for a change in the company's estimated annual adjusted effective tax rate to 22.5% from 23.8%. The change in estimated tax rate resulted in an 8 cents per share tax benefit during the third quarter.


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