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Jacobs (J) Q4 Earnings Beat, Revenues Miss Estimates

Jacobs Engineering Group Inc. J reported fourth-quarter fiscal 2021 (ended Oct 1, 2021) results, wherein earnings beat the Zacks Consensus Estimate but revenues missed the same.

In connection with the earnings release, the company’s president and CFO Kevin Berryman said, "We achieved the high end of our fiscal 2021 outlook while continuing to invest ahead of multi-year secular growth opportunities. The combination of enhancing our portfolio to higher growth, higher margin solutions, while maintaining operational excellence, drove double-digit earnings growth and cash flow that exceeded expectations. Our Focus 2023 initiative is executing well and unlocking further capacity to invest in our growth accelerators. Looking into fiscal 2022 and beyond we expect double-digit adjusted EBITDA and adjusted EPS growth with continued strong cash flow conversion and value-creating capital deployment."

Following the results, its shares fell 1.9% in the pre-market trading session.

Earnings & Revenue Discussion

For the reported quarter, adjusted earnings of $1.58 per share outpaced the consensus estimate of $1.49 by 6%. The figure was down 3% from the year-ago period, given a lower tax rate impact of 17 cents in the year-ago period.

Jacobs’ revenues totaled $3.59 billion, which missed the consensus mark of $3.79 billion by 5.3% but increased 1.9% year over year.

Backlog at fiscal 2021-end amounted to $26.6 billion, up 12% from a year ago.

Segment Details

Revenues from the Critical Mission Solutions segment of $1.26 billion decreased 4.9% year over year. Backlog at quarter-end was $10.59 billion, up 16.3% year over year.

Revenues from the People & Places Solutions segment totaled $2.05 billion, which dropped 6.5% year over year. Backlog at quarter-end was $15.74 billion, up 7% year over year.

Meanwhile, PA Consulting contributed $273.3 million to revenues for the fiscal fourth quarter. Quarter-end backlog amounted to $304 million.

Margins Profile

For the quarter under review, adjusted gross profit decreased to $257.9 million from the year-ago level of $969.9 million.

Adjusted operating margin expanded to 9.11% from 8.85% in the prior-year quarter. Adjusted EBITDA was $310.1 million, up 12% year over year.

Fiscal 2021 Highlights

Revenues came in at $14.1 billion, up from $13.57 billion a year ago. Adjusted earnings of $6.29 per share also grew 15% from fiscal 2020. Adjusted EBITDA grew 18% from the year-ago quarter to $1,244 million.

Balance Sheet & Cash Flow

At fiscal 2021-end (Oct 1, 2021), Jacobs had cash and cash equivalents of $1,014.2 million, up from $862.4 million at fiscal 2020-end (Oct 2, 2020). Long-term debt increased to $2.84 billion at fiscal 2021-end from $1.68 billion as of Oct 2, 2020.

The company provided $726.3 million cash for operating activities in fiscal 2021 compared with $806.8 million in the year-ago period. It generated free cash flow of $175.6 million in fourth-quarter fiscal 2021 and $633.5 million in the full year.

Fiscal 2022 Guidance

Jacobs expects adjusted EBITDA between $1,370 million and $1,450 million. Also, it anticipates adjusted earnings within $6.85-$7.45 per share.

The company expects adjusted EPS of $10.00 in fiscal 2025. The guidance includes expected benefits to People and Places Solutions from the recently passed Infrastructure Investment and Jobs Act. Jacobs has a robust Critical Mission Solutions sales pipeline and sees sustained growth in PA Consulting.

Zacks Rank

Jacobs currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Recent Performance of Some Other Engineering – R&D Services Companies

Quanta Services Inc. PWR reported third-quarter 2021 results, wherein adjusted earnings not only surpassed the Zacks Consensus Estimate by 0.7% but also grew 5.7% on a year-over-year basis. Revenues also improved 10.9% from a year ago but missed the consensus mark by 2.2%.

Quanta currently carries a Zacks Rank #3. PWR has gained 67.4% year to date compared with a 35.7% rise of the Zacks Engineering - R and D Services industry it belongs to.

KBR, Inc. KBR reported third-quarter 2021 results, wherein earnings and revenues topped the Zacks Consensus Estimate by 12.3% and 18.8%, respectively. The company also raised its full-year view. Earnings and revenues grew 45.5% and 33.6% year over year, respectively. KBR benefited from solid Government Solutions organic growth and strong execution across the business.

KBR currently carries a Zacks Rank #3. The stock has gained 49.8% year to date.

Fluor Corporation FLR reported impressive third-quarter 2021 results, wherein earnings surpassed the Zacks Consensus Estimate by 43.8% but revenues missed the same by 6.3%. Fluor made significant progress toward strategic goals of reducing outstanding debt by 30% and identified ways for more than $150 million in annual cost savings.

Fluor currently carries a Zacks Rank #3. The stock has gained 43.4% year to date.


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