DALLAS--(BUSINESS WIRE)--
Jacobs Engineering Group Inc. (NYSE:JEC) today announced its financial
results for the first quarter of fiscal 2017 ended December 30, 2016.
First Quarter Fiscal 2017 Highlights:
-
Q1 2017 U.S. GAAP net earnings of $61M, or $0.50 per share, up 30%
from FY16Q1;
-
Q1 2017 adjusted net earnings of $83M, or $0.68 per share, in line
with our expectations;
-
Backlog of $18.1B; Highest professional services backlog in seven
quarters;
-
Restructuring effort supporting a 13% reduction in U.S. GAAP G&A
-
Cash flows from operations of $105 million for the quarter, versus $27
million in the year-ago quarter;
-
Repurchased 0.6M shares during first quarter for $30 million.
Jacobs’ reported U.S. GAAP net earnings of $61 million, or $0.50 per
share, on revenue of $2.6 billion for the first quarter ended December
30, 2016. This compares to U.S. GAAP net earnings of $47 million, or
$0.38 per share, on revenues of $2.8 billion for the first quarter ended
January 1, 2016.
Jacobs’ first quarter 2017 results include approximately $23 million, or
$0.18 per share, in after-tax costs related to certain restructuring
activities that began during fiscal 2015 (the "2015 Restructuring"). Our
first quarter 2016 results included approximately $48 million, or $0.40
per share, in charges related to these activities.
Excluding the restructuring items above, Jacobs’ first quarter 2017
adjusted net earnings totaled $83 million, or $0.68 per share, as
compared to $95 million, or $0.78 per share, from the corresponding
period for 2016. Our U.S. GAAP and adjusted results for first quarter
2016 included a one-time tax-related item of $11 million, or $0.09 per
share.
Total backlog was $18.1 billion at December 30, 2016, including a
professional services component of $12.2 billion, as compared to total
backlog of $18.2 billion and a professional services component of $11.4
billion for the corresponding period last year. On a sequential basis,
gross margin associated with our Q1 backlog moderately improved from our
Q4 FY16 levels.
The Company’s cash flow from operations was $105 million in the first
quarter due mainly to improvements in working capital levels.
Additionally, during the quarter, we repurchased 0.6 million shares of
common stock at a total cost of $30 million.
Commenting on the results for the first quarter 2017, Steve Demetriou,
Jacobs Chairman and CEO, said, "This quarter marked our transition from
nearly two years of significant cost restructuring and organizational
realignment to a priority focus on profitable top-line growth. Although
revenue continued to be pressured by prior year market challenges, we
are pleased with the strong sales bookings during the quarter and the
robust pipeline of opportunities that fit our skill sets and strategy.
The continuing growth in our higher margin professional services
backlog, the largest reported in 21 months, demonstrates the benefits of
our disciplined approach on leveraging synergies across the company to
drive more profitable work. Additionally, this success in winning front
end engineering opportunities positions us well for full service
delivery in subsequent phases of the projects."
Outlook
Kevin Berryman, Jacobs CFO, added, "The continuing positive trends in
unit margins, cash flows, and working capital reflect the cultural
change and added financial rigor we are seeing at Jacobs. While our
outlook for the year remains unchanged, we are committed to enhancing
shareholder value and are very pleased to return excess capital to our
shareholders in the form of our inaugural $0.15 quarterly dividend that
was recently announced, as well as the continuation of our share
repurchase program."
The Company also notes that as discussed in the footnote in the
accompanying balance sheet, an adjustment was made to correct an error
in translation rates used in reporting U.S. Dollar goodwill values held
by foreign subsidiaries in its September 30, 2016 Consolidated Balance
Sheet. These adjustments had no impact on the Company’s Consolidated
Statements of Earnings or Cash Flows.
Jacobs is hosting a conference call at 10:00 A.M. Central Time on
Wednesday, February 8, 2017, which it is webcasting live on the internet
at www.jacobs.com.
Jacobs is one of the world's largest and most diverse providers of
full-spectrum technical, professional and construction services for
industrial, commercial and government organizations globally. The
company employs over 54,000 people and operates in more than 25
countries around the world. For more information, visit www.jacobs.com
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 of the 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 period ended September 30,
2016, and in particular 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 , as well as the Company’s other
filings with the Securities and Exchange Commission. We also caution the
readers of this release that we do not undertake to update any
forward-looking statements made in this release.
|
|
|
Financial Highlights:
|
|
Results of Operations (in thousands,
except per-share data):
|
|
|
|
|
|
For the Three Months Ended
|
|
|
|
|
December 30,
2016
|
|
|
January 1,
2016
|
|
|
Revenues
|
|
$
|
2,551,604
|
|
|
$
|
2,847,934
|
|
|
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
Direct cost of contracts
|
|
|
(2,132,292
|
)
|
|
|
(2,407,460
|
)
|
|
Selling, general and administrative expenses
|
|
|
(330,684
|
)
|
|
|
(381,024
|
)
|
|
Operating Profit
|
|
|
88,628
|
|
|
|
59,450
|
|
|
Other Income (Expense):
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
1,486
|
|
|
|
2,220
|
|
|
Interest expense
|
|
|
(3,518
|
)
|
|
|
(3,543
|
)
|
|
Miscellaneous income (expense), net
|
|
|
(716
|
)
|
|
|
(340
|
)
|
|
Total other income(expense), net
|
|
|
(2,748
|
)
|
|
|
(1,663
|
)
|
|
Earnings Before Taxes
|
|
|
85,880
|
|
|
|
57,787
|
|
|
Income Tax Expense
|
|
|
(24,727
|
)
|
|
|
(7,481
|
)
|
|
Net Earnings of the Group
|
|
|
61,153
|
|
|
|
50,306
|
|
|
Net Earnings Attributable to Noncontrolling Interests
|
|
|
(617
|
)
|
|
|
(3,792
|
)
|
|
Net Earnings Attributable to Jacobs
|
|
$
|
60,536
|
|
|
$
|
46,514
|
|
|
Net Earnings Per Share:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.50
|
|
|
$
|
0.38
|
|
|
Diluted
|
|
$
|
0.50
|
|
|
$
|
0.38
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Shares Used to Calculate EPS
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
119,438
|
|
|
|
120,888
|
|
|
Diluted
|
|
|
121,851
|
|
|
|
121,959
|
|
|
|
|
|
|
Segment Information (in thousands):
|
|
|
|
|
|
For the Three Months Ended
|
|
|
|
December 30, 2016
|
|
|
January 1,
2016
|
|
Revenues from External Customers:
|
|
|
|
|
|
|
|
|
Aerospace & Technology
|
|
$
|
577,436
|
|
|
$
|
670,191
|
|
Buildings & Infrastructure
|
|
|
580,617
|
|
|
|
563,330
|
|
Industrial
|
|
|
751,738
|
|
|
|
672,100
|
|
Petroleum & Chemicals
|
|
|
641,813
|
|
|
|
942,313
|
|
Total
|
|
$
|
2,551,604
|
|
|
$
|
2,847,934
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
|
|
|
December 30,
2016
|
|
|
January 1,
2016
|
|
|
Operating Profit:
|
|
|
|
|
|
|
|
|
|
Aerospace & Technology
|
|
$
|
51,087
|
|
|
$
|
47,999
|
|
|
Buildings & Infrastructure
|
|
|
38,797
|
|
|
|
40,452
|
|
|
Industrial
|
|
|
25,129
|
|
|
|
27,355
|
|
|
Petroleum & Chemicals
|
|
|
23,652
|
|
|
|
31,603
|
|
|
Total Segment Operating Profit
|
|
|
138,665
|
|
|
|
147,409
|
|
|
Other Corporate Expenses
|
|
|
(18,296
|
)
|
|
|
(19,576
|
)
|
|
Restructuring Charges in SG&A
|
|
|
(31,741
|
)
|
|
|
(68,383
|
)
|
|
Total Operating Profit
|
|
|
88,628
|
|
|
|
59,450
|
|
|
Total Other Expense
|
|
|
(2,748
|
)
|
|
|
(1,663
|
)
|
|
Earnings Before Taxes
|
|
$
|
85,880
|
|
|
$
|
57,787
|
|
|
|
|
|
|
Other Operational Information (in
thousands):
|
|
|
|
|
|
For the Three Months Ended
|
|
|
|
December 30,
2016
|
|
|
January 1,
2016
|
|
Depreciation (pre-tax)
|
|
$
|
16,621
|
|
|
$
|
22,167
|
|
Amortization of Intangibles (pre-tax)
|
|
$
|
11,914
|
|
|
$
|
11,726
|
|
Pass-Through Costs Included in Revenues
|
|
$
|
672,979
|
|
|
$
|
670,331
|
|
Capital Expenditures
|
|
$
|
21,054
|
|
|
$
|
15,987
|
|
|
|
|
|
Balance Sheet (in thousands):
|
|
|
|
At December 30, 2016 and September 30, 2016
|
|
|
|
|
|
December 30,
2016
(Unaudited)
|
|
|
September 30,
2016
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
736,546
|
|
|
$
|
655,716
|
|
|
Receivables
|
|
|
2,092,854
|
|
|
|
2,115,663
|
|
|
Prepaid expenses and other
|
|
|
93,998
|
|
|
|
93,091
|
|
|
Total current assets
|
|
|
2,923,398
|
|
|
|
2,864,470
|
|
|
Property, Equipment and Improvements, Net
|
|
|
314,406
|
|
|
|
319,673
|
|
|
Other Noncurrent Assets:
|
|
|
|
|
|
|
|
|
|
Goodwill
|
|
|
2,821,995
|
|
|
|
3,079,628
|
|
|
Intangibles
|
|
|
318,266
|
|
|
|
336,922
|
|
|
Miscellaneous
|
|
|
731,968
|
|
|
|
759,329
|
|
|
Total other non-current assets
|
|
|
3,872,229
|
|
|
|
4,175,879
|
|
|
|
|
$
|
7,110,033
|
|
|
$
|
7,360,022
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
|
|
|
|
Notes payable
|
|
$
|
2,899
|
|
|
$
|
2,421
|
|
|
Accounts payable
|
|
|
502,832
|
|
|
|
522,427
|
|
|
Accrued liabilities
|
|
|
834,028
|
|
|
|
938,378
|
|
|
Billings in excess of costs
|
|
|
409,907
|
|
|
|
319,460
|
|
|
Total current liabilities
|
|
|
1,749,666
|
|
|
|
1,782,686
|
|
|
Long-term Debt
|
|
|
387,000
|
|
|
|
385,330
|
|
|
Other Deferred Liabilities
|
|
|
837,674
|
|
|
|
861,824
|
|
|
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—121,165,713 shares and 120,950,899
shares as of December 30, 2016 and September 30, 2016, respectively
|
|
|
121,166
|
|
|
|
120,951
|
|
|
Additional paid-in capital
|
|
|
1,206,443
|
|
|
|
1,168,272
|
|
|
Retained earnings
|
|
|
3,621,528
|
|
|
|
3,586,647
|
|
|
Accumulated other comprehensive loss
|
|
|
(878,911
|
)
|
|
|
(610,594
|
)
|
|
Total Jacobs stockholders’ equity
|
|
|
4,070,226
|
|
|
|
4,265,276
|
|
|
Noncontrolling interests
|
|
|
65,467
|
|
|
|
64,906
|
|
|
Total Group stockholders’ equity
|
|
|
4,135,693
|
|
|
|
4,330,182
|
|
|
|
|
$
|
7,110,033
|
|
|
$
|
7,360,022
|
|
|
|
During the first quarter of fiscal 2017, the Company determined that its
prior year financial statements contained immaterial misstatements
related to incorrect translation rates used in reporting U.S. Dollar
values of goodwill held by foreign subsidiaries. Accordingly, the
Company recorded adjustments in the current quarter to correct the
carrying values of these accounts. Goodwill and accumulated other
comprehensive income in the Company’s September 30, 2016 Consolidated
Balance Sheet (which have not been adjusted) were each overstated by
$209.9 million. These adjustments had no impact on the Company’s
Consolidated Statements of Earnings or Cash Flows.
|
|
|
Backlog (in millions):
|
|
|
|
|
|
December 30,
2016
|
|
|
January 1,
2016
|
|
Backlog:
|
|
|
|
|
|
|
|
|
Aerospace & Technology
|
|
$
|
5,135.4
|
|
|
$
|
4,871.4
|
|
Buildings & Infrastructure
|
|
|
5,151.6
|
|
|
|
4,742.8
|
|
Industrial
|
|
|
2,493.7
|
|
|
|
3,417.5
|
|
Petroleum & Chemicals
|
|
|
5,368.8
|
|
|
|
5,190.7
|
|
Total
|
|
$
|
18,149.4
|
|
|
$
|
18,222.4
|
|
|
Non-U.S. 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 adjusted net earnings, adjusted EPS
and adjusted selling, general, and administrative (“G&A”) expenses.
Adjusted net earnings and adjusted EPS are non-GAAP financial measures
that are calculated by excluding the after-tax costs related to the 2015
Restructuring activities, which are not considered by management to be
part of the company’s ordinary operations. Adjusted G&A expense is
calculated by excluding the pre-tax costs related to the 2015
Restructuring. We believe that the adjusted net earnings, adjusted EPS
and adjusted G&A expense measurements 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 the effects of the 2015 Restructuring, which can
obscure underlying trends. Additionally, management uses adjusted net
earnings, adjusted EPS, and adjusted G&A expenses 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.
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 U.S. GAAP values of net earnings, EPS
and G&A expenses to the corresponding "adjusted" amounts. For the
comparable periods presented below, such adjustments consist of amounts
incurred in connection with the 2015 Restructuring. Amounts are shown in
thousands, except for per-share data:
|
|
|
U.S. GAAP Reconciliation for the first
quarter of fiscal 2017 and 2016:
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
December 30, 2016
|
|
|
|
|
U.S. GAAP
|
|
|
Effects of 2015
Restructuring
|
|
|
Without 2015
Restructuring
|
|
|
Selling, general and administrative expenses
|
|
$
|
330,684
|
|
|
$
|
(31,741
|
)
|
|
$
|
298,943
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings Before Taxes
|
|
$
|
85,880
|
|
|
$
|
(31,741
|
)
|
|
$
|
117,621
|
|
|
Income Tax Benefit (Expense)
|
|
|
(24,727
|
)
|
|
|
8,938
|
|
|
|
(33,665
|
)
|
|
Net earnings of the Group
|
|
|
61,153
|
|
|
|
(22,803
|
)
|
|
|
83,956
|
|
|
Net Earnings Attributable to Non-controlling interests
|
|
|
(617
|
)
|
|
|
—
|
|
|
|
(617
|
)
|
|
Net earnings Attributable to Jacobs
|
|
$
|
60,536
|
|
|
$
|
(22,803
|
)
|
|
$
|
83,339
|
|
|
Diluted earnings per share
|
|
$
|
0.50
|
|
|
$
|
(0.18
|
)
|
|
$
|
0.68
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
January 1, 2016
|
|
|
|
|
U.S. GAAP
|
|
|
Effects of 2015
Restructuring
|
|
|
Without 2015
Restructuring
|
|
|
Selling, general and administrative expenses
|
|
$
|
381,024
|
|
|
$
|
(68,383
|
)
|
|
$
|
312,641
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings Before Taxes
|
|
$
|
57,787
|
|
|
$
|
(68,383
|
)
|
|
$
|
126,170
|
|
|
Income Tax Benefit (Expense)
|
|
|
(7,481
|
)
|
|
|
20,247
|
|
|
|
(27,728
|
)
|
|
Net earnings of the Group
|
|
|
50,306
|
|
|
|
(48,136
|
)
|
|
|
98,442
|
|
|
Net Earnings Attributable to Non-controlling interests
|
|
|
(3,792
|
)
|
|
|
—
|
|
|
|
(3,792
|
)
|
|
Net earnings Attributable to Jacobs
|
|
$
|
46,514
|
|
|
$
|
(48,136
|
)
|
|
$
|
94,650
|
|
|
Diluted earnings per share
|
|
$
|
0.38
|
|
|
$
|
(0.40
|
)
|
|
$
|
0.78
|
|
|
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20170208005358/en/
Source: Jacobs Engineering Group Inc.