- Jacobs Engineering Group reported Tuesday that profits in its first fiscal quarter tumbled almost 48% to $134 million, or $1.03 per share, and revenue was flat at $3.38 billion as declines in its U.S. operations outweighed gains overseas, particularly in Europe, Australia and New Zealand.
- The Dallas-based technical, professional and construction services firm also took a charge of $72.3 million, or 41 cents a share, in the quarter ending Dec. 31, as it abandoned several of its office buildings.
- The company, currently working on projects such as a new runway at Denver International Airport (shown above) and Phase 2 of the Leonard Water Treatment Plant in Texas, confirmed its financial guidance for fiscal 2022, and will publish a comprehensive overview of its new three-year strategy on March 4.
Jacobs' backlog rose 12% to $28 billion. Both its critical mission solutions (CMS) and people and places solutions (P&PS) segments added around $1 billion to backlog respectively. Its PA Consulting segment added $276 million in backlog.
"We're on the front end of a multiyear growth cycle for the company. This is driven by a combination of secular growth opportunities and our core sectors, such as U.S. infrastructure investment, climate response, a supercycle of supply chain investments and electronics, as well as being at the nexus of disruptive new technologies in domains of space, cyber and software analytics," said Jacobs CEO Steven Demetriou during a Feb. 8 investor call. "We expect these opportunities to drive accelerated revenue growth for the balance of the year."
The increase in backlog in P&PS was primarily due to new business awards in the advanced facilities business, while the CMS backlog was driven by new opportunities in the U.S. government space, plus the company’s $235 million cash purchase of BlackLynx in November.
The acquisition of BlackLynx, a provider of high-performance software, will support Jacobs’ work in government services, as well as critical infrastructure sectors of transportation, water and smart cities.
Takeaways from earnings
In another strategic acquisition, on Monday Jacobs purchased StreetLight Data, a mobility analytics company, to further bolster its focus on environmental, social and governance investments while growing its digital services portfolio. The tool, designed for smart cities and the transportation industry, tracks mobility analytics to support infrastructure planning, investment and policy decisions.
"We have built a strong business providing data and cyber solutions at scale to protect national security," said Demetriou. "We see accelerating requests for our data and cyber solutions from our critical infrastructure customers."
But the pandemic continues to weigh on its business, and excluding all one-time charges, Jacobs' operating earnings and revenue both slightly missed analysts' consensus forecasts.
"Jacobs delivered a mixed quarter," said Matt Arnold, an industrial analyst with Edward Jones in a research note. "While earnings and revenue were short of expectations, profitability improved. This reflects the company's ongoing shift toward higher-value consulting services. The company is still expecting double-digit growth in earnings per share this year, which is consistent with our expectations."
The year-over-year decrease in operating profit was driven by the decline in lower revenues and higher costs associated with labor, travel and real estate footprint reduction. Kevin Berryman, Jacobs' president and CFO, said the real estate downside is a result of "our ability to further leverage technology" as the company adapts to "new strategic way of working."