Jacobs Reports Fiscal Fourth Quarter Earnings

11/25/2019
Achieves Strong Top and Bottom Line Fiscal Year 2019 Results
Launches New Global Brand Showcasing Technology-Enabled Solutions
Expands into Germany with Landmark Win to Deliver Solutions for Renewable Energy
Secures Cybersecurity Contract with Department of Defense, Marking Major KeyW Synergy

DALLAS, Nov. 25, 2019 /PRNewswire/ -- Jacobs Engineering Group Inc. (NYSE: JEC) today announced its financial results for the fiscal fourth quarter and fiscal year ended September 27, 2019.

Q4 Financial Highlights:

  • Q4 2019 revenue of $3.4 billion1 grew 13% year-over-year; up 15% on a net revenue basis
  • Q4 2019 EPS1 of $0.16 and adjusted EPS of $1.48, up 29% on an adjusted basis year-over-year
  • Executed accelerated share repurchase of $250 million during Q4 to be completed in December 2019
  • Paid $390 million in cash taxes reflected in cash flow from operations related to the $935 million gain on the Q3 close of $3.4 billion sale of Energy, Chemicals and Resources (ECR) business

Fiscal Year Highlights:

  • FY19 portfolio transformation continued with completion of the sale of ECR, $903 million acquisition of KeyW and announcement of the approximately $300 million pending acquisition of Wood Nuclear PLC
  • FY19 revenue growth of 20% and pro forma net revenue growth of 11%
  • Operating profit growth of 4% and adjusted EBITDA growth of 22%
  • FY19 EPS1 of $2.09 and adjusted EPS of $5.05, up 30% on an adjusted basis year-over-year
  • FY20 outlook initiated for $1,050 million to $1,150 million adjusted EBITDA2, representing double-digit growth for adjusted EBITDA and EPS2 versus FY19

Brand Launch Highlights:

  • Strategic transformation further strengthened by launch of new brand that focuses employees to redefine what is possible by embracing innovative thinking and exploration
  • Celebrates Jacobs' inclusive and diverse perspectives; inspires employees to advance the communities where they live, work and play

Fiscal 2019 was a year of transformation and growth at Jacobs. The company updated its strategy and financial targets at its Investor Day in February, completed the divestiture of its Energy, Chemicals and Resources business in April, completed the acquisition of KeyW in June, and announced its acquisition of Wood's nuclear business in August. All of these actions are in line with the company's strategic focus in higher value solutions. Concurrent with its proactive portfolio transformation, Jacobs also made inroads in the investment in its people, culture and inclusion.

Jacobs launched its new brand globally today, culminating its transition from engineering and construction to a global technology-forward solutions company, resulting both in a planned name change for the company to Jacobs Solutions Inc. and an NYSE stock ticker symbol change to "J". Trading under this symbol will be effective Dec. 10, 2019. Jacobs' lines of business are also changing names to better reflect outcome-focused solutions for their customers; Aerospace, Technology and Nuclear is changing to Critical Mission Solutions, and Buildings, Infrastructure and Advanced Facilities is changing to People & Places Solutions. These name changes have no impact on reported financials, line of business leadership or customer relationships.

In a first for the company, the earnings call is taking place at its new London flagship office in the Cottons Centre, a Jacobs-designed office on the banks of the Thames. The new office features flexible workspace for up to 1,000 employees. This innovative office pilots many of Jacobs' digital consulting solutions, delivers some of the world's most iconic projects and is the catalyst for further expansion in Europe and the Middle East.

"Our team has demonstrated strong execution by exceeding our three-year revenue and operating profit guidance that was established at our inaugural investor day in 2016.  Our transformed portfolio is well aligned to major secular growth trends such as environmental resiliency, IT/OT convergence and national security. Today we embrace a future of infinite possibilities with a new brand that reflects who we are and where we are going. We are adopting a new tagline - Challenging today. Reinventing tomorrow. - to capture the shared passion, pride and drive of our people as we work with our clients and partners to solve some of the world's biggest challenges," said Chair and CEO Steve Demetriou. "And as we do so, our values continue to drive our behaviors, relationships and outcomes: We do things right. We challenge the accepted. We aim higher. We live inclusion."

Jacobs' CFO, Kevin Berryman, added, "It's clear the strategic actions we have taken are resulting in a high-performance culture with strong execution discipline. This is demonstrated by our fiscal 2019 financial results, including solid operating profit growth and achieving results at the high end of our original guidance, leading to double-digit adjusted EBITDA growth. During the fourth quarter, we opportunistically initiated a $250 million accelerated share repurchase program, culminating in more than $850 million in fiscal 2019 buy-backs.  We are initiating a fiscal 2020 outlook of $1.05 billion to $1.15 billion in adjusted EBITDA2 and are off to a strong start in achieving our 2021 revenue and profitability targets."

1Reflects continuing operations as reported in accordance with GAAP.

2Reconciliation of the adjusted EPS outlook and adjusted EBITDA outlook for the full fiscal 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 relating to transaction expenses, restructuring and integration to be incurred in fiscal 2020.

Fourth Quarter Review



Fiscal 4Q 2019

Fiscal 4Q 2018

Change

Revenue

$3.4 billion

$3.0 billion

$0.4 billion

Net Revenue

$2.7 billion

$2.3 billion

$0.4 billion

GAAP Net Earnings from Continuing Operations

$22 million

$(77) million

$99 million

GAAP Earnings Per Diluted Share (EPS) from Continuing Operations

$0.16

($0.54)

$0.70

Adjusted Net Earnings from Continuing Operations

$201 million

$165 million

$36 million

Adjusted EPS from Continuing Operations

$1.48

$1.14

$0.34

The company's adjusted net earnings and adjusted EPS for the fourth quarter of fiscal 2019 and fiscal 2018 exclude the charges and costs 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, refer to the section entitled "Non-GAAP Financial Measures" at the end of this release.


Fiscal 4Q 2019

Fiscal 4Q 2018

After-tax restructuring and other charges ($106.4 million and $30.9 million for the fiscal 2019 and 2018 periods, respectively, before income taxes)

$83 million ($0.61 per diluted
share)

$22 million ($0.15 per diluted
share)

After-tax transaction costs incurred in connection with the closing of the CH2M and KeyW acquisitions and pending acquisition of John Wood Group Nuclear business ($7.1 million and $4.1 million for the fiscal 2019 and 2018 periods, respectively before income taxes)

$5 million ($0.04 per diluted
share)

$2 million ($0.01 per diluted
share)

Other adjustments include:

(a) addback of amortization of intangible assets of $23.4 million and $19.1 million in the 2019 and 2018 periods, respectively,

(b) the allocation to discontinued operations of estimated stranded corporate costs of $0.0 million and $6.4 million in the 2019 and 2018 periods, respectively, that will be reimbursed or otherwise eliminated in connection with the sale of the ECR business,

(c) the reclassification of revenues under the Company's Transition Services Agreement (TSA) with Worley of $21.3 million included in other income for U.S. GAAP reporting purposes to SG&A and the exclusion of $0.7 million in remaining unreimbursed costs associated with the TSA during the fiscal 2019 fourth quarter,

(d) the removal of $64.8 million in fair value adjustments and dividend income related to our investment in Worley stock and certain foreign currency revaluations relating to ECR sale proceeds in the 2019 period,

(e) the allocation to discontinued operations of estimated interest expense amounts in 2019 and 2018 related to long-term debt that has been paid down in connection with the sale of the ECR business of $0.0 million and $17.8 million, respectively,

(f) the add-back of charges resulting from the revaluation of certain deferred tax assets/liabilities in connection with U.S. tax reform of $24.0 and $184.5 million in the 2019 and 2018 periods and

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

$91 million ($0.67 per diluted
share)

$218 million ($1.51 per diluted
share)

Adjusted EPS from Continuing Operations

$201 million ($1.48 per diluted
share)

$165 million ($1.14 per diluted
share)


(note: earnings per share amounts may not add due to rounding)

Fiscal fourth quarter 2019 adjusted earnings per share from continuing operations reflect an adjusted effective tax rate of 23.4%, excluding a $0.09 benefit from discrete tax items.

Fiscal 2019 Review



Fiscal 2019

Fiscal 2018

Change

Revenue

$13 billion

$11 billion

$2 billion

Net Revenue

$10 billion

$8 billion

$2 billion

GAAP Net Earnings from Continuing Operations

$291 million

$(4) million

$295 million

GAAP Earnings Per Diluted Share (EPS) from Continuing Operations

$2.09

($0.03)

$2.12

Adjusted Net Earnings from Continuing Operations

$704 million

$540 million

$164 million

Adjusted EPS from Continuing Operations

$5.05

$3.87

$1.18

The company's adjusted net earnings and adjusted EPS for fiscal 2019 and fiscal 2018 exclude the charges and costs 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, refer to the section entitled "Non-GAAP Financial Measures" at the end of this release.


Fiscal 2019

Fiscal 2018

After-tax restructuring and other charges ($311.5 million and $153.6 million for the fiscal 2019 and 2018 periods, respectively, before income taxes)

$244 million ($1.75 per diluted
share)

$113 million ($0.81 per diluted
share)

After-tax transaction costs incurred in connection with the closing of the CH2M and KeyW acquisitions and pending acquisition of John Wood Group Nuclear business ($21.4 million and $82.2 million for the fiscal 2019 and 2018 periods, respectively before income taxes)

$16 million ($0.12 per diluted
share)

$61 million ($0.44 per diluted
share)

Other adjustments include:

(a) addback of amortization of intangible assets of $79.1 million and $68.1 million in the 2019 and 2018 periods, respectively,

(b) the allocation to discontinued operations of estimated stranded corporate costs of $14.8 million and $25.6 million in the 2019 and 2018 periods, respectively, that will be reimbursed or otherwise eliminated in connection with the sale of the ECR business,

(c) the reclassification of revenues under the Company's Transition Services Agreement (TSA) with Worley of $35.4 million included in other income for U.S. GAAP reporting purposes to SG&A and the exclusion of $3.9 million in remaining unreimbursed costs associated with the TSA during the fiscal 2019 year,

(d) the allocation to discontinued operations of estimated interest expense amounts in 2019 and 2018 related to long-term debt that has been paid down in connection with the sale of the ECR business of $42.3 million and $51.0 million, respectively,

(e) the removal of $64.8 million in fair value adjustments and dividend income related to our investment in Worley stock and certain foreign currency revaluations relating to ECR sale proceeds in the 2019 period,

(f) the exclusion of a $37 million one-time favorable adjustment in the 2019 period associated with reduction of deferred income taxes for permanently reinvested earnings from non-U.S. subsidiaries in connection with the sale of the ECR business,

(g) the add-back of charges resulting from the revaluation of certain deferred tax assets/liabilities in connection with U.S. tax reform of $35.0 million and $259.2 million in the 2019 and 2018 periods, respectively and other income tax adjustments of $1.5 million in the current year and

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

$153 million ($1.10 per diluted
share)

$371 million ($2.66 per diluted
share)

Adjusted EPS from Continuing Operations

$704 million ($5.05 per diluted
share)

$540 million ($3.87 per diluted
share)


(note: earnings per share amounts may not add due to rounding)

Fiscal year 2019 adjusted earnings per share from continuing operations reflect an adjusted effective tax rate of 23.3%, excluding benefits from discrete tax items of $0.32 cents per share.

Jacobs is hosting a conference call at 8:00 A.M. ET on Monday November 25, 2019, which will be webcast live at www.jacobs.com.

John Wood Group's Nuclear Business Acquisition

On August 20, 2019, Jacobs announced that it has entered into an agreement to acquire John Wood Group's Nuclear business for an enterprise value of £250 million (approx. $300 million) on a debt-free, cash-free basis. The transaction is expected to close in the fiscal 2020 second quarter.

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 $13 billion in revenue and a talent force of approximately 52,000, 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. 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. For a description of some additional factors that may occur that could cause actual results to differ from our forward-looking statements see our Annual Report on Form 10-K for the year ended September 27, 2019, and in particular the discussions contained therein 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, 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) (Quarterly data unaudited):



For the Three Months Ended


For the Years Ended


September 27,
2019


September 28,
2018


September 27,
2019


September 28,
2018

Revenues

$

3,392,862



$

2,991,856



$

12,737,868



$

10,579,773


Direct cost of contracts

(2,727,329)



(2,385,625)



(10,260,840)



(8,421,223)


Gross profit

665,533



606,231



2,477,028



2,158,550


Selling, general and administrative expenses

(566,447)



(445,385)



(2,072,177)



(1,771,107)


Operating Profit

99,086



160,846



404,851



387,443


Other Income (Expense):








Interest income

2,315



2,088



9,487



8,984


Interest expense

(10,120)



(26,652)



(83,847)



(76,760)


Miscellaneous income (expense), net

(37,744)



6,118



20,468



11,314


Total other (expense) income, net

(45,549)



(18,446)



(53,892)



(56,462)


Earnings From Continuing Operations Before Taxes

53,537



142,400



350,959



330,981


Income Tax Benefit (Expense) for Continuing Operations

(24,124)



(215,402)



(36,954)



(325,632)


Net Earnings (Loss) of the Group from Continuing Operations

29,413



(73,002)



314,005



5,349


Net Earnings (Loss) of the Group from Discontinued Operations

120,378



41,579



559,214



167,793


Net Earnings (Loss) of the Group

149,791



(31,423)



873,219



173,142


Net Earnings Attributable to Noncontrolling Interests from Continuing Operations

(7,467)



(3,995)



(23,045)



(9,534)


Net Earnings (Loss) Attributable to Jacobs from Continuing Operations

21,946



(76,997)



290,960



(4,185)


Net Earnings Attributable to Noncontrolling Interests from Discontinued Operations



(2,123)



(2,195)



(177)


Net Earnings (Loss) Attributable to Jacobs from Discontinued Operations

120,378



39,456



557,019



167,616


Net Earnings (Loss) Attributable to Jacobs

$

142,324



$

(37,541)



$

847,979



$

163,431


Net Earnings Per Share:








Basic Net Earnings (Loss) from Continuing Operations Per Share

$

0.16



$

(0.54)



$

2.11



$

(0.03)


Basic Net Earnings from Discontinued Operations Per Share

$

0.89



$

0.28



$

4.03



$

1.21


Basic Earnings (Loss) Per Share

$

1.06



$

(0.26)



$

6.14



$

1.18


Diluted Net Earnings (Loss) from Continuing Operations Per Share

$

0.16



$

(0.54)



$

2.09



$

(0.03)


Diluted Net Earnings from Discontinued Operations Per Share

$

0.88



$

0.28



$

4.00



$

1.21


Diluted Earnings (Loss) Per Share

$

1.04



$

(0.26)



$

6.08



$

1.18


 

Segment Information (in thousands) (Quarterly data and Non-GAAP unaudited):



For the Three Months Ended


For the Years Ended


September 27,
2019


September 28,
2018


September 27,
2019


September 28,
2018

Revenues from External Customers:








Critical Mission Solutions

$

1,300,137



$

1,069,062



$

4,551,162



$

3,725,365


People & Places Solutions

2,092,725



1,922,794



8,186,706



6,854,408


Pass Through Revenue

(702,786)



(650,547)



(2,543,358)



(2,254,477)


People & Places Solutions Net Revenue

$

1,389,939



$

1,272,247



$

5,643,348



$

4,599,931


              Total Revenue

$

3,392,862



$

2,991,856



$

12,737,868



$

10,579,773


 Net Revenue

$

2,690,076



$

2,341,309



$

10,194,510



$

8,325,296







For the Three Months Ended


For the Years Ended


September 27,
2019


September 28,
2018


September 27,
2019


September 28,
2018

Segment Operating Profit:








Critical Mission Solutions (1)

$

87,754



$

73,109



$

310,043



$

255,718


People & Places Solutions (2)

198,929



153,091



714,394



527,900


Total Segment Operating Profit

286,683



226,200



1,024,437



783,618


Other Corporate Expenses (3)

(78,679)



(30,626)



(264,351)



(161,788)


Restructuring and Other Charges

(103,487)



(31,207)



(337,066)



(153,951)


Transaction Costs

(5,431)



(3,521)



(18,169)



(80,436)


Total U.S. GAAP Operating Profit

99,086



160,846



404,851



387,443


Total other (expense) income, net (4)

(45,549)



(18,446)



(53,892)



(56,462)


Earnings from Continuing Operations Before Taxes

$

53,537



$

142,400



$

350,959



$

330,981




(1)

Includes $15.0 million in charges during the year ended September 28, 2018 associated with a legal matter.



(2)

Includes $25.0 million in charges associated with a certain project for the year ended September 27, 2019.



(3)

Other corporate expenses include costs that were previously allocated to the ECR segment prior to discontinued operations presentation in connection with the ECR sale in the approximate amounts of $- and $14.8 million for the three month period and year ended September 27, 2019, respectively, and $6.4 million and $25.6 million for the three month period and year ended and September 28, 2018, respectively. Other corporate expenses also include intangibles amortization of $79.1 million and $68.1 million for the years ended September 27, 2019 and September 28, 2018, respectively, and $23.4 million and $19.1 million for the three month periods ended September 27, 2019 and September 28, 2018, respectively.



(4)

Includes gain on the settlement of the CH2M retiree medical plans of $0.4 and $35.0 million for the three month period and year ended September 27, 2019. Includes the amortization of deferred financing fees related to the CH2M acquisition of $1.8 million and $3.2 million for the three month period and year ended September 27, 2019, respectively, as well as $0.6 million and $1.8 million for the three month period and year ended September 28, 2018, respectively. Also includes revenues under the Company's TSA agreement with Worley of $21.3 million and $35.4 million for the three month period and year ended September 27, 2019 for which the related costs are included in SG&A. This is offset by $64.8 million for fair value adjustments (unrealized losses) and dividend income related to our investment in Worley stock and certain foreign currency revaluations relating to ECR sale proceeds for the three month period and year ended September 27, 2019.

 

Other Operational Information (in thousands):


Unaudited

For the Three Months Ended


For the Years Ended

Continuing Operations

September 27,
2019


September 28,
2018


September 27,
2019


September 28,
2018

Depreciation (pre-tax)

$

20,508



$

21,567



$

88,061



$

91,230


Amortization of Intangibles (pre-tax)

$

22,752



$

18,352



$

78,484



$

67,404


Pass-Through Costs Included in Revenues

$

702,786



$

650,547



$

2,543,358



$

2,254,477


Capital Expenditures

$

29,307



$

26,240



$

126,773



$

75,215


 

Balance Sheet (in thousands):



September 27,
2019


September 28,
2018

ASSETS




Current Assets:




Cash and cash equivalents

$

631,068



$

634,870


Receivables and contract assets

2,840,209



2,513,934


Prepaid expenses and other

639,539



171,096


Current assets held for sale

952



1,236,684


Total current assets

4,111,768



4,556,584


Property, Equipment and Improvements, net

308,143



257,859


Other Noncurrent Assets:




Goodwill

5,432,544



4,795,856


Intangibles, net

665,076



572,952


Miscellaneous

918,202



760,854


Noncurrent assets held for sale

26,978



1,701,690


Total other noncurrent assets

7,042,800



7,831,352



$

11,462,711



$

12,645,795


LIABILITIES AND STOCKHOLDERS' EQUITY




Current Liabilities:




Short-term debt

$

199,901



$

3,172


Accounts payable

1,072,645



776,189


Accrued liabilities

1,384,379



1,167,002


Contract liabilities

414,208



442,760


Current liabilities held for sale

2,573



756,570


Total current liabilities

3,073,706



3,145,693


Long-term Debt

1,201,245



2,144,167


Other Deferred Liabilities

1,419,005



1,260,977


Noncurrent liabilities held for sale

97



150,604


Commitments and Contingencies




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 - 132,879,395 shares and 142,217,933 shares as of September 27, 2019 and September 28, 2018, respectively

132,879



142,218


Additional paid-in capital

2,559,450



2,708,839


Retained earnings

3,939,174



3,809,991


Accumulated other comprehensive loss

(916,812)



(806,703)


Total Jacobs stockholders' equity

5,714,691



5,854,345


Noncontrolling interests

53,967



90,009


Total Group stockholders' equity

5,768,658



5,944,354



$

11,462,711



$

12,645,795


 

Cash Flows (In thousands) (Quarterly data unaudited)



For the Three Months Ended


For the Years Ended


September 27,
2019


September 28,
2018


September 27,
2019


September 28,
2018

Cash Flows from Operating Activities:








Net earnings (loss) attributable to the Group

$

149,791



$

(31,423)



$

873,219



$

173,142


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








Depreciation and amortization:








Property, equipment and improvements

20,508



29,141



90,171



117,856


Intangible assets

22,752



22,236



79,098



80,731


      Gain on sale of ECR business

(17,416)





(935,110)




(Gain) Loss on disposal of other businesses and investments



21,411



9,608



20,967


(Gain) Loss on investment in equity securities

80,283





78,108




Stock based compensation

21,796



17,421



69,137



79,242


Equity in (earnings) loss of operating ventures, net

(1,152)



5,748



(8,784)



(2,639)


(Gain) Loss on disposals of assets, net

4,224



7,436



6,222



17,491


(Gain) Loss on pension and retiree medical plan changes

1,534



1,595



(33,087)



5,414


Deferred income taxes

(158,531)



295,500



(105,939)



288,126


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








Receivables and contract assets

846



(118,812)



(401,770)



(435,198)


Prepaid expenses and other current assets

(19,116)



(24,754)



(13,117)



(19,134)


Accounts payable

227,368



44,344



295,146



183,057


Income taxes payable

(367,659)



(32,481)



(294,995)



68,970


Accrued liabilities

(71,873)



55,622



(305,716)



(37,746)


Contract liabilities

(85,886)



(28,427)



333,876



6,268


Other deferred liabilities

23,212



(58,273)



(106,256)



(79,280)


Other, net

23,196



5,918



3,753



13,885


Net cash (used for) provided by operating activities

(146,123)



212,202



(366,436)



481,152


Cash Flows from Investing Activities:








Additions to property and equipment

(29,307)



(31,476)



(135,977)



(94,884)


Disposals of property and equipment and other assets

(123)



2,865



7,177



3,293


Distributions of capital from (contributions to) equity investees

(4,857)



(13,030)



(8,761)



(5,416)


Acquisitions of businesses, net of cash acquired



210



(575,110)



(1,488,336)


Disposals of investment in equity securities





64,708




Proceeds (payments) related to sales of businesses

4,691



4,333



2,801,425



7,736


      Purchases of noncontrolling interests





(1,113)




Net cash (used for) provided by investing activities

(29,596)



(37,098)



2,152,349



(1,577,607)


Cash Flows from Financing Activities:








Proceeds from long-term borrowings

575,000



413,000



2,782,193



5,784,355


Repayments of long-term borrowings

(395,290)



(602,052)



(3,996,970)



(4,572,182)


Proceeds from short-term borrowings



(1,149)



200,001



712


Repayments of short-term borrowings

(22,664)



(2,692)



(28,566)



(3,391)


Debt issuance costs

(174)





(3,915)




Proceeds from issuances of common stock

18,815



19,996



64,958



53,584


Common stock repurchases

(329,058)



1



(853,676)



(2,981)


Taxes paid on vested restricted stock

(454)



(3,133)



(26,641)



(31,108)


Cash dividends, including to noncontrolling interests

(24,139)



(21,337)



(106,396)



(86,569)


Net cash (used for) provided by financing activities

(177,964)



(197,366)



(1,969,012)



1,142,420


Effect of Exchange Rate Changes

(13,491)



(8,750)



20,809



(26,758)


Net (Decrease) Increase in Cash and Cash Equivalents

(367,174)



(31,012)



(162,290)



19,207


Cash and Cash Equivalents at the Beginning of the Period

998,242



824,370



793,358



774,151


Cash and Cash Equivalents at the End of the Period

631,068



793,358



631,068



793,358


Less Cash and Cash Equivalents included in Assets held for Sale



(158,488)





(158,488)


Cash and Cash Equivalents of Continuing Operations at the End of the Period

$

631,068



$

634,870



$

631,068



$

634,870



See the accompanying Notes to Consolidated Financial Statements.

 

Backlog (in millions):


Unaudited

September 27, 2019


September 28, 2018

Critical Mission Solutions

8,460



7,130


People & Places Solutions

14,109



12,825


            Total

$

22,569



$

19,955











Non-GAAP Financial Measures:

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 operating profit and adjusted EBITDA.

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, adjusted EPS from continuing operations and adjusted operating profit are non-GAAP financial measures that are calculated by (i) excluding the costs related to the 2015 restructuring activities, which included involuntary terminations, the abandonment of certain leased offices, combining operational organizations and the co-location of employees into other existing offices; and charges associated with our Europe, U.K. and Middle East region, which included write-offs on contract accounts receivable and charges for statutory redundancy and severance costs (collectively, the "2015 Restructuring and other items"); (ii) excluding costs and other charges associated with restructuring activities implemented in connection with the CH2M acquisition, the ECR divestiture, the KeyW acquisition and other related cost reduction initiatives, which included involuntary terminations, costs associated with co-locating Jacobs, KeyW and CH2M offices, separating physical locations of ECR and continuing operations, costs and expenses of the Integration Management Office and Separation Management Office, including professional services and personnel costs, costs and charges associated with the divestiture of joint venture interests to resolve potential conflicts arising from the CH2M acquisition, expenses relating to certain commitments and contingencies relating to discontinued operations of the CH2M business, charges associated with certain operations in India, which included write-offs on contract accounts receivable and other accruals, and similar costs and expenses (collectively referred to as the "Restructuring and other charges"); (iii) excluding transaction costs and other charges incurred in connection with closing of the KeyW and CH2M acquisitions, the pending acquisition of Wood Group's nuclear business, and sale of the ECR business (to the extent incurred prior to the closing), including advisor fees, change in control payments, costs and expenses relating to the registration and listing of Jacobs stock issued in connection with the CH2M acquisition, and similar transaction costs and expenses (collectively referred to as "transaction costs"); (iv) adding back amortization of intangible assets; (v) allocating to discontinued operations estimated stranded corporate costs that will be reimbursed or otherwise eliminated in connection with the sale of the ECR business; (vi) the reclassification of revenue under the Company's transition services agreement (TSA) included in other income for U.S. GAAP reporting purposes to SG&A and the exclusion of remaining unreimbursed costs associated with the TSA; (vii) allocating to discontinued operations estimated interest expense relating to long-term debt that was paid down with the proceeds of the ECR sale; (viii) the removal of fair value adjustments and dividend income related to the Company's investment in Worley stock and certain foreign currency revaluations relating to ECR sale proceeds in the 2019 period; (ix) the exclusion of a one-time favorable adjustment in the fiscal 2019 period associated with a reduction of deferred income taxes for permanently reinvested earnings from non-U.S. subsidiaries in connection with the sale of the ECR business; (x) excluding charges resulting from the revaluation of certain deferred tax assets/liabilities in connection with U.S. tax reform; (xi) adding back depreciation and amortization relating to the ECR business of the Company that was ceased as a result of the application of held-for-sale accounting; and (xii) other income tax adjustments. Adjustments to derive adjusted net earnings from continuing operations, adjusted EPS from continuing operations and adjusted operating profit are calculated on an after-tax basis. We believe that net revenue, adjusted net earnings from continuing operations, adjusted EPS from continuing operations, adjusted operating profit and adjusted EBITDA 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, 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.

Adjusted EBITDA for prior periods is calculated by adding depreciation expense to adjusted operating profit from continuing operations.  For fiscal 2020 outlook, the Company calculated adjusted EBITDA by adding income tax expense, depreciation expense and interest expense, and deducting interest income from adjusted net earnings from continuing operations.

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 revenue, net earnings from continuing operations, EPS from continuing operations, operating profit and revenue to the corresponding "adjusted" amounts. 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 the adjusted EPS and adjusted EBITDA outlook for the full fiscal 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 (note: earnings per share amounts may not add across due to rounding).

U.S. GAAP Reconciliation for the fourth quarter of fiscal 2019 and 2018



Three Months Ended


September 27, 2019

Unaudited

U.S. GAAP


Effects of
Restructuring
and Other
Charges


Effects of
Transaction
Costs (1)


Other
Adjustments (2)


Adjusted

Revenues

$

3,392,862



$



$



$



$

3,392,862


Pass through revenue







(702,786)



(702,786)


Net revenue

3,392,862







(702,786)



2,690,076


Direct cost of contracts

(2,727,329)



3,000





702,786



(2,021,543)


Gross profit

665,533



3,000







668,533


Selling, general and administrative expenses

(566,447)



100,487



5,431



45,301



(415,228)


Operating Profit

99,086



103,487



5,431



45,301



253,305


Total other (expense) income, net

(45,549)



2,864



1,670



43,530



2,515


Earnings from Continuing Operations Before Taxes

53,537



106,351



7,101



88,831



255,820


Income Tax (Expense) Benefit for Continuing Operations

(24,124)



(23,346)



(1,743)



2,060



(47,153)


Net Earnings of the Group from Continuing Operations

29,413



83,005



5,358



90,891



208,667


Net Earnings Attributable to Noncontrolling Interests from Continuing Operations

(7,467)









(7,467)


Net Earnings from Continuing Operations attributable to Jacobs

21,946



83,005



5,358



90,891



201,200


Net Earnings attributable to Discontinued Operations

120,378









120,378


Net Earnings attributable to Jacobs

$

142,324



$

83,005



$

5,358



$

90,891



$

321,578


Diluted Net Earnings from Continuing Operations Per Share

$

0.16



$

0.61



$

0.04



$

0.67



$

1.48


Diluted Net Earnings from Discontinued Operations Per Share

$

0.88



$



$



$



$

0.88


Diluted Earnings Per Share

$

1.04



$

0.61



$

0.04



$

0.67



$

2.36


Operating Profit Margin

2.92

%








9.42

%



(1)

Includes after-tax CH2M transaction costs and adjustments of $1.3 million, after-tax transaction costs associated with the acquisition of KeyW of $0.2 million and after tax-transaction costs associated with the acquisition of John Wood Group's Nuclear Business of $3.9 million.



(2)

Includes (a) the removal of pass through revenues and costs for the People & Places Solutions ("PPS") line of business for the calculation of operating profit margin as a percentage of net revenue of $702.8 million, (b) the removal of amortization of intangible assets of $23.4 million, (c) the reclassification of revenues under the Company's TSA of $21.3 million included in other income for U.S. GAAP reporting purposes to SG&A and the exclusion of $0.7 million in remaining unreimbursed costs associated with this agreement, (d) the removal of $64.8 million in fair value adjustments and dividend income related to our investment in Worley stock and certain foreign currency revaluations relating to ECR sale proceeds, (e) the add-back of charges resulting from the revaluation of certain deferred tax assets/liabilities in connection with U.S. tax reform of $24.0 million and (f) associated income tax expense adjustments for the above pre-tax adjustment items.

 


For the Three Months Ended


September 28, 2018

Unaudited

U.S. GAAP


Effects of
Restructuring
and Other
Charges


Effects of
Transaction
Costs (1)


Other
Adjustments (2)


Adjusted

Revenues

$

2,991,856



$



$



$



$

2,991,856


Pass through revenue







(650,547)



(650,547)


Net revenue

2,991,856







(650,547)



2,341,309


Direct cost of contracts

(2,385,625)



1,269





650,547



(1,733,809)


Gross profit

606,231



1,269







607,500


Selling, general and administrative expenses

(445,385)



29,938



3,521



25,488



(386,438)


Operating Profit

160,846



31,207



3,521



25,488



221,062


Total other (expense) income, net

(18,446)



(311)



585



17,787



(385)


Earnings from Continuing Operations Before Taxes

142,400



30,896



4,106



43,275



220,677


Income Tax (Expense) Benefit for Continuing Operations

(215,402)



(8,902)



(2,125)



174,582



(51,847)


Net Earnings of the Group from Continuing Operations

(73,002)



21,994



1,981



217,857



168,830


Net Earnings Attributable to Noncontrolling Interests from Continuing Operations

(3,995)









(3,995)


Net Earnings from Continuing Operations attributable to Jacobs

(76,997)



21,994



1,981



217,857



164,835


Net Earnings attributable to Discontinued Operations

39,456



17,465





(15,612)



41,309


Net Earnings attributable to Jacobs

$

(37,541)



$

39,459



$

1,981



$

202,245



$

206,144


Diluted Net Earnings from Continuing Operations Per Share (3)

$

(0.54)



$

0.15



$

0.01



$

1.51



$

1.14


Diluted Net Earnings from Discontinued Operations Per Share (3)

$

0.28



$

0.12



$



$

(0.11)



$

0.29


Diluted Earnings Per Share (3)

$

(0.26)



$

0.27



$

0.01



$

1.40



$

1.43


Operating Profit Margin

5.38

%








9.44

%



(1)

Includes pre-tax CH2M transaction costs and adjustments of $(0.4 million) as well as transaction costs associated with the recently announced sale of our ECR line of business of $4.5 million.



(2)

Includes (a) the removal of pass through revenues and costs for the PPS line of business for the calculation of operating profit margin as a percentage of net revenue of $650.5 million, (b) the removal of amortization of intangible assets of $19.1 million, (c) the allocation to discontinued operations of estimated stranded corporate costs of $6.4 million that would have been reimbursed under the ECR transition service agreement (TSA) with Worley or otherwise eliminated from the ongoing operations in connection with the sale of the ECR business, (d) estimated 2018 impacts of $19.0 million from overhead allocation realignments in connection with the Company's CH2M business in the first quarter of fiscal 2019 had those changes been put into effect in first quarter of fiscal 2018 ( the net impact of which was zero for consolidated selling, general and administrative expenses, (e) the allocation to discontinued operations of estimated interest expense for the full period related to long-term debt that has been paid down as a result of the ECR sale of $17.8 million, (f) the add-back of charges resulting from the revaluation of certain deferred tax assets/liabilities in connection with U.S. tax reform of $184.5 million and (g) associated income tax expense adjustments for the above pre-tax adjustment items.



(3)

Diluted Earnings Per Share from Continuing Operations, Diluted Earnings Per Share from Discontinued Operations and Diluted Earnings Per Share for GAAP EPS assume no dilution from stock compensation plans because Net Earnings from Continuing Operations attributable to Jacobs is a loss. However, because Non-GAAP add-backs and Non-GAAP Net Earnings from Continuing Operations attributable to Jacobs are income rather than losses, the dilution from stock compensation plans is considered in the weighted average diluted shares outstanding in the calculation of Non-GAAP Diluted Earnings Per Share.

 

U.S. GAAP Reconciliation for fiscal years 2019 and 2018



For the Year Ended


September 27, 2019

Unaudited

U.S. GAAP


Effects of
Restructuring
and Other
Charges


Effects of
Transaction
Costs (1)


Other
Adjustments (2)


Adjusted

Revenues

$

12,737,868



$



$



$



$

12,737,868


Pass through revenue







(2,543,358)



(2,543,358)


Net revenue

12,737,868







(2,543,358)



10,194,510


Direct cost of contracts

(10,260,840)



4,969





2,543,358



(7,712,513)


Gross profit

2,477,028



4,969







2,481,997


Selling, general and administrative expenses

(2,072,177)



332,097



18,169



133,164



(1,588,747)


Operating Profit

404,851



337,066



18,169



133,164



893,250


Total other (expense) income, net

(53,892)



(25,596)



3,214



71,639



(4,635)


Earnings from Continuing Operations Before Taxes

350,959



311,470



21,383



204,803



888,615


Income Tax (Expense) Benefit for Continuing Operations

(36,954)



(67,789)



(5,252)



(51,722)



(161,717)


Net Earnings of the Group from Continuing Operations

314,005



243,681



16,131



153,081



726,898


Net Earnings Attributable to Noncontrolling Interests from Continuing Operations

(23,045)









(23,045)


Net Earnings from Continuing Operations attributable to Jacobs

290,960



243,681



16,131



153,081



703,853


Net Earnings attributable to Discontinued Operations

557,019



(587)



8,948



(55,622)



509,758


Net Earnings attributable to Jacobs

$

847,979



$

243,094



$

25,079



$

97,459



$

1,213,611


Diluted Net Earnings from Continuing Operations Per Share

$

2.09



$

1.75



$

0.12



$

1.10



$

5.05


Diluted Net Earnings from Discontinued Operations Per Share

$

4.00



$



$

0.06



$

(0.40)



$

3.66


Diluted Earnings Per Share

$

6.08



$

1.74



$

0.18



$

0.70



$

8.71


Operating Profit Margin

3.18

%








8.76

%



(1)

Includes after-tax CH2M transaction costs and adjustments of $2.4 million, after tax-transaction costs associated with the sale of our ECR line of business of $8.9 million, after-tax transaction costs associated with the acquisition of KeyW of $9.8 million and after-tax transaction costs associated with the acquisition of John Wood Group's Nuclear Business of $3.9 million.



(2)

Includes (a) the removal of pass through revenues and costs for the PPS line of business for the calculation of operating profit margin as a percentage of net revenue of $2.54 billion, (b) the removal of amortization of intangible assets of $79.1 million, (c) the allocation to discontinued operations of estimated stranded corporate costs of $14.8 million prior to the sale that will be reimbursed under the ECR transition services agreement (TSA) with Worley or otherwise eliminated from the ongoing operations in connection with the sale of the ECR business, (d) the reclassification of revenues under the Company's TSA of $35.4 million included in other income for U.S. GAAP reporting purposes to SG&A and the exclusion of $3.9 million in remaining unreimbursed costs associated with this agreement (e) the allocation to discontinued operations of estimated interest expense for the month of April prior to the sale related to long-term debt that has been paid down as a result of the ECR sale of $42.3 million, (f) the removal of $64.8 million in fair value adjustments and dividend income related to our investment in Worley stock and certain foreign currency revaluations relating to ECR sale proceeds (g) the exclusion of approximately $37.0 million in one-time favorable income tax adjustment from the second quarter associated with reduction of deferred income taxes for permanently reinvested earnings from non-U.S. subsidiaries in connection with the sale of the ECR business, (h) the add-back of charges resulting from the revaluation of certain deferred tax assets/liabilities in connection with U.S. tax reform from the first quarter of $35.0 million and other adjustments of $1.5 million, (i) the add-back of depreciation relating to the ECR business that was ceased as a result of the application of held-for-sale accounting of $17.3 million and (j) associated income tax expense adjustments for the above pre-tax adjustment items.

 


For the Year Ended


September 28, 2018

Unaudited

U.S. GAAP


Effects of
Restructuring
and Other
Charges


Effects of
Transaction
Costs (1)


Other
Adjustments (2)


Adjusted

Revenues

$

10,579,773



$



$



$



$

10,579,773


Pass through revenue







(2,254,477)



(2,254,477)


Net revenue

10,579,773







(2,254,477)



8,325,296


Direct cost of contracts

(8,421,223)



3,845





2,254,477



(6,162,901)


Gross profit

2,158,550



3,845







2,162,395


Selling, general and administrative expenses

(1,771,107)



150,106



80,436



93,740



(1,446,825)


Operating Profit

387,443



153,951



80,436



93,740



715,570


Total other (expense) income, net

(56,462)



(311)



1,774



50,992



(4,007)


Earnings from Continuing Operations Before Taxes

330,981



153,640



82,210



144,732



711,563


Income Tax (Expense) Benefit for Continuing Operations

(325,632)



(40,254)



(21,488)



225,791



(161,583)


Net Earnings of the Group from Continuing Operations

5,349



113,386



60,722



370,523



549,980


Net Earnings Attributable to Noncontrolling Interests from Continuing Operations

(9,534)



(577)







(10,111)


Net Earnings from Continuing Operations attributable to Jacobs

(4,185)



112,809



60,722



370,523



539,869


Net Earnings attributable to Discontinued Operations

167,616



27,259





(48,219)



146,656


Net Earnings attributable to Jacobs

$

163,431



$

140,068



$

60,722



$

322,304



$

686,525


Diluted Net Earnings from Continuing Operations Per Share (3)

$

(0.03)



$

0.81



$

0.44



$

2.66



$

3.87


Diluted Net Earnings from Discontinued Operations Per Share (3)

$

1.21



$

0.20



$



$

(0.35)



$

1.05


Diluted Earnings Per Share (3)

$

1.18



$

1.01



$

0.44



$

2.31



$

4.93


Operating Profit Margin

3.66

%








8.60

%



(1)

Includes pre-tax CH2M transaction costs and adjustments of $77.7 million as well as transaction costs associated with the recently announced sale of our ECR line of business of $4.5 million.



(2)

Includes (a) the removal of pass through revenues and costs for the PPS line of business for the calculation of operating profit margin as a percentage of net revenue of $2.25 billion, (b) the removal of amortization of intangible assets of $68.1 million, (c) the allocation to discontinued operations of estimated stranded corporate costs of $25.6 million that would have been reimbursed under the ECR transition service agreement (TSA) with Worley or otherwise eliminated from the ongoing operations in connection with the sale of the ECR business, (d) estimated 2018 impacts of $70.0 million from overhead allocation realignments in connection with the Company's CH2M business in the first quarter of fiscal 2019 had those changes been put into effect in first quarter of fiscal 2018 ( the net impact of which was zero for consolidated selling, general and administrative expenses, (e) the allocation to discontinued operations of estimated interest expense for the full period related to long-term debt that has been paid down as a result of the ECR sale of $51.0 million, (f) the add-back of charges resulting from the revaluation of certain deferred tax assets/liabilities in connection with U.S. tax reform of $259.2 million and (g) associated income tax expense adjustments for the above pre-tax adjustment items.



(3)

Diluted Earnings Per Share from Continuing Operations, Diluted Earnings Per Share from Discontinued Operations and Diluted Earnings Per Share for GAAP EPS assume no dilution from stock compensation plans because Net Earnings from Continuing Operations attributable to Jacobs is a loss. However, because Non-GAAP add-backs and Non-GAAP Net Earnings from Continuing Operations attributable to Jacobs are income rather than losses, the dilution from stock compensation plans is considered in the weighted average diluted shares outstanding in the calculation of Non-GAAP Diluted Earnings Per Share.

 

Reconciliation of Operating Profit from Continuing Operations Attributable to Jacobs to Adjusted EBITDA



For the Year Ended


September 27, 2019


September 28, 2018

Adjusted operating profit from continuing operations

893,250


715,570

Depreciation expense

88,061


91,230

Adjusted EBITDA

981,311


806,800

 

Earnings Per Share:



For the Three Months Ended


For the Years Ended


September 27,
2019


September 28,
2018


September 27,
2019


September 28,
2018

Numerator for Basic and Diluted EPS:








Net earnings (loss) attributable to Jacobs from continuing operations

$

21,946



$

(76,997)



$

290,960



$

(4,185)


Net earnings (loss) from continuing operations allocated to participating securities

(16)





(415)




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

$

21,930



$

(76,997)



$

290,545



$

(4,185)










Net earnings (loss) attributable to Jacobs from discontinued operations

$

120,378



$

39,456



$

557,019



$

167,616


Net earnings (loss) from discontinued operations allocated to participating securities

(88)



(105)



(795)



(808)


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

$

120,290



$

39,351



$

556,224



$

166,808










Net earnings allocated to common stock for EPS calculation

142,220



(37,646)



846,769



162,623










Denominator for Basic and Diluted EPS:








Weighted average basic shares

134,625



142,575



138,104



138,182


Shares allocated to participating securities

(99)



(379)



(197)



(646)


Shares used for calculating basic EPS attributable to common stock

134,526



142,196



137,907



137,536










Effect of dilutive securities:








Stock compensation plans

1,579





1,299




Shares used for calculating diluted EPS attributable to common stock

136,105



142,196



139,206



137,536










Net Earnings Per Share:








Basic Net Earnings (Loss) from Continuing Operations Per Share

$

0.16



$

(0.54)



$

2.11



$

(0.03)


Basic Net Earnings (Loss) from Discontinued Operations Per Share

$

0.89



$

0.28



$

4.03



$

1.21


Basic EPS

$

1.06



$

(0.26)



$

6.14



$

1.18


Diluted Net Earnings (Loss) from Continuing Operations Per Share

$

0.16



$

(0.54)



$

2.09



$

(0.03)


Diluted Net Earnings from Discontinued Operations Per Share

$

0.88



$

0.28



$

4.00



$

1.21


Diluted EPS

$

1.04



$

(0.26)



$

6.08



$

1.18




(1)

For the fiscal 2018 year-to-date period, because net earnings (loss) from continuing operations was a loss, the effect of antidilutive securities of 1,176 were excluded from the denominator in calculating diluted EPS. For the three-month period fiscal 2018 period, the effect of antidilutive securities of 1,168 were excluded from the denominator in calculating diluted EPS.

For additional information contact:

Investors:
Jonathan Doros, 214-583-8596
jonathan.doros@jacobs.com

Media:
Marietta Hannigan, 214-920-8035
marietta.hannigan@jacobs.com

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SOURCE Jacobs

Statements that are not based on historical fact are forward-looking statements.   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.  We, therefore, caution the reader that there are a variety of factors that could cause business conditions and results to differ materially from what is contained in our forward-looking statements.

For a description of some of the factors which may occur that could cause actual results to differ from our forward-looking statements please refer to our 2009 Form 10-K, and in particular the discussions contained under Items 1 - Business, 1A - Risk Factors, 3 - Legal Proceedings, and 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations. We caution readers that we do not undertake to update any forward-looking.