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Jacobs Reports Fiscal Fourth Quarter and Fiscal Year 2022 Earnings

11/21/2022

Double-Digit Fourth Quarter Operating Profit and EPS Year-Over-Year Growth 

Robust Q4 Cash Flow From Operations Generation With Over 100% Cash Conversion

PA Consulting-led Team Selected by UK Ministry of Defence to Deliver Software Defined Defense Solutions

Robust Backlog and Pipeline Driven by Global Climate Response, Infrastructure, Supply Chain Modernization and National Security

DALLAS, Nov. 21, 2022 /PRNewswire/ -- Jacobs Solutions Inc. (NYSE: J) today announced its financial results for the fiscal fourth quarter and fiscal year ended September 30, 2022.

Q4 2022 Financial Highlights:

  • Revenue of $3.9 billion grew 8.2% year-over-year; net revenue1 up 11% in constant currency1

  • Net earnings of $225 million and EPS from continuing operations of $1.75

  • Adjusted EPS1 from continuing operations of $1.80, up 14% year-over-year and 18% in constant currency

  • Adjusted EBITDA1 of $350 million, up 13% year-over-year and up 17% in constant currency

  • Cash flow from operations of $278 million and free cash flow1 of $230 million, driven by strong DSO performance

  • Backlog1 increased $1.2 billion to $27.9 billion, up 5% year-over-year and 8% in constant currency

Fiscal Year 2022 Highlights:

  • Revenue growth of 5.9% and net revenue up 10% year-over-year in constant currency

  • Net earnings from continuing operations of $644 million, up 38%, and FY22 EPS of $4.98 up 60%

  • Adjusted EPS of $6.93, up 10% year-over-year; $7.12 on a constant currency basis up 13%

  • Adjusted EBITDA year-over-year growth of 10% to $1.4 billion and up 12% in constant currency

  • Cash flow from operations of $475 million and free cash flow of $347 million, includes previously announced Legacy CH2M Matter settlement outflow of $475 million2 during Q3, $55 million tax repayment and $63 million of other items.

Jacobs' Chair and CEO Steve Demetriou commented, "We finished fiscal 2022 with strong top and bottom line performance positioning the company for continued growth in fiscal 2023. Within Jacobs and PA Consulting, our scientists, engineers and thought leaders address many of the world's most complex challenges, like partnering with NASA to launch humans into deep space, driving energy transition solutions across the globe, and delivering software defined solutions to protect the next-generation digitally enabled UK soldier. Our focus on strong values and a brand promise to continue 'Challenging today. Reinventing tomorrow' is the intangible competitive differentiator that truly makes Jacobs a company like no other."

Jacobs' President and CFO Kevin Berryman added, "We achieved strong revenue growth and operating margin expansion during the fourth quarter, and full fiscal year 2022, driven by our determination on delivering higher value, higher margin solutions with a disciplined focus on operational excellence. We are excited about the results and building momentum of our infrastructure and advanced facilities People & Places Solutions business. Our fourth quarter cash flow was robust and full year cash flow was in-line with our expectations. Looking into fiscal 2023 and beyond, we are aligned to multiple large, growing and well-funded priorities including global infrastructure modernization, climate response, investments in critical supply chains and national security."

Financial Outlook3

Given the volatility of FX rates we are providing our outlook under two FX scenarios 1) an outlook based on constant currency which provides greater insight of underlying business performance, and 2) an outlook based on recent FX rates.

Based on fiscal 2022 average FX rates, the Company's outlook for fiscal 2023 adj. EBITDA is $1,465M to $1,545M, and adj. EPS of $7.60 to $7.90, up 10% and 12% respectively at the midpoints.

Based on FX rates in early November, the Company's outlook for fiscal 2023 adj. EBITDA is $1,400M to $1,480M and adjusted EPS of $7.20 to $7.50, both up 6% at the midpoints.

On a net revenue basis the difference between these two scenarios is approximately $430 million.

Our constant currency fiscal 2023 outlook is based off of our estimate of year-over-year FX impact to operating profit. The constant currency impact excludes the impact of year-over-year FX translation on other income from items such as pension costs, unrealized exchange gains and losses and income taxes.

1See Non-GAAP Financial Measures and Operating Metrics, and GAAP Reconciliations, beginning on page 13, for additional detail.

2On April 12, 2022, the Company paid cash of AUD640 million, or approximately $475 million using mid-April 2022 exchange rates, which represents the final pre-tax settlement of Legacy CH2M Matter.

3Reconciliation of fiscal 2023 adjusted EBITDA and adjusted EPS, based on either FX rate scenario, 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 2023.

 

Fourth Quarter Review


Fiscal Q4 2022

Fiscal Q4 2021

Change

Revenue

$3.9 billion

$3.6 billion

$0.3 billion

Net Revenue

$3.2 billion

$3.0 billion

$0.2 billion

GAAP Net Earnings from Continuing Operations

$225 million

$45 million

$180 million

GAAP Earnings Per Diluted Share (EPS) from Continuing Operations

$1.75

$0.34

$1.41

Adjusted Net Earnings from Continuing Operations

$231 million

$207 million

$24 million

Adjusted EPS from Continuing Operations

$1.80

$1.58

$0.22

 

The Company's adjusted net earnings from continuing operations and adjusted EPS from continuing operations for the fourth quarter of fiscal 2022 and fiscal 2021 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.

 


Fiscal Q4 2022

Fiscal Q4 2021

GAAP Net Earnings from Continuing Operations and Diluted Earnings Per Share (EPS)

$225 million ($1.75 per share)

$45 million ($0.34 per share)

Adjustments for Restructuring, transaction costs and other (recoveries) charges on an after-tax basis ($(14.9) million and $4.3 million for the fiscal 2022 and 2021 periods, respectively, before income taxes).

$(42) million ($(0.33) per diluted share)

$49 million ($0.37 per diluted share)

Other adjustments include:

(a) add-back of amortization of intangible assets of $51.7 million and $46.5 million in the 2022 and 2021 periods, respectively,

(b) the removal of $67.5 million in fair value gains and (losses) related to our investment in Worley stock (net of Worley stock dividend) and certain foreign currency revaluations relating to ECR sale in the 2021 period,

(c) the exclusion of impacts on the Company's effective tax rates associated with revised estimates on U.S. taxation of certain foreign earnings and certain tax return filing adjustments,

(d) the removal of $(1.7) million in additional income tax expense attributable to tax rate increases in the UK during in 2021,

(e) applicable redeemable noncontrolling interests impacts for the above adjustment items and

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

$49 million ($0.38 per diluted share)

$114 million ($0.86 per diluted share)

Adjusted Net Earnings from Continuing Operations and Adjusted EPS from Continuing Operations

$231 million ($1.80 per diluted share)

$207 million ($1.58 per diluted share)

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

 

The Company's U.S. GAAP effective tax rate for continuing operations is 14% for the fiscal fourth quarter 2022 and fiscal fourth quarter 2022 adjusted earnings per share from continuing operations reflects a 20% adjusted effective tax rate.

 

Fiscal 2022 Review


Fiscal 2022

Fiscal 2021

Change

Revenue

$14.9 billion

$14.1 billion

$0.8 billion

Net Revenue

$12.6 billion

$11.7 billion

$0.9 billion

GAAP Net Earnings from Continuing Operations

$644 million

$467 million

$177 million

GAAP Earnings Per Diluted Share (EPS) from Continuing Operations

$4.98

$3.12

$1.86

Adjusted Net Earnings from Continuing Operations

$897 million

$826 million

$71 million

Adjusted EPS from Continuing Operations

$6.93

$6.29

$0.64

 

The Company's adjusted net earnings and adjusted EPS for fiscal 2022 and fiscal 2021 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, 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.

 


Fiscal 2022

Fiscal 2021

GAAP Net Earnings from Continuing Operations and Diluted Earnings Per Share (EPS)

$644 million ($4.98 per share)

$467 million ($3.12 per share)

Adjustments for after-tax Restructuring, transaction costs and other charges ($185.4 million and $392.9 million for the fiscal 2022 and 2021 periods, respectively, before income taxes), comprised mainly of (i) a pre-tax $91.3 million charge related to the final settlement related to the Legacy CH2M Matter, net of previously recorded reserves and approximately $27 million in third party recoveries was recorded as receivables reducing SG&A, (ii) $78.3 for the Company's real estate impairment in the fiscal 2022 period and (iii) PA Consulting one time deal related charges, including $261 million in pre-tax compensation costs associated with the transaction and $(57.3) million, or $(0.44) per share, in EPS numerator adjustments relating to PA preference shares redemption value, which does not affect net earnings in the fiscal 2021 period.

$118 million ($0.91 per diluted share)

$304 million ($2.76 per diluted share)

Other adjustments include:

 

(a) add-back of amortization of intangible assets of $198.6 million and $149.8 million in the 2022 and 2021 periods, respectively,

(b) the removal of $34.7 million in fair value gains and (losses) related to our investment in Worley stock (net of Worley stock dividend) and certain foreign currency revaluations relating to ECR sale in the 2021 period,

(c) the removal of the fair value gains and (losses) for the Company's investment in C3.ai, Inc. ("C3") of $49.6 million in the 2021 period,

(d) the removal of $29.1 million in additional income tax expense attributable to tax rate increases in the UK during in 2021,

(e) applicable noncontrolling interests impacts for the above adjustment items and

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

$135 million ($1.04 per diluted share)

$54 million ($0.41 per diluted share)

Adjusted Net Earnings from Continuing Operations and Adjusted EPS from Continuing Operations

$897 million ($6.93 per diluted share)

$826 million ($6.29 per diluted share)

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

 

The Company's U.S. GAAP effective tax rate for continuing operations is 18% for the fiscal year 2022 and fiscal year 2022 adjusted earnings per share from continuing operations reflects a 21% adjusted effective tax rate.

Jacobs is hosting a conference call at 10:00 A.M. ET on Monday November 21, 2022, which will be webcast live at www.jacobs.com.

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 approximately $15 billion in annual revenue and a talent force of approximately 60,000, 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 within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that do not directly relate to any historical or current fact. When used herein, words such as "expects," "anticipates," "believes," "seeks," "estimates," "plans," "intends," "future," "will," "would," "could," "can," "may," and similar words are intended to identify forward-looking statements. Examples of forward-looking statements include, but are not limited to, statements regarding our expectations as to our future growth, prospects, financial outlook and business strategy for future fiscal years, including our expectations for our fiscal 2023 adjusted EBITDA and adjusted EPS, under different FX rate scenarios, as well as our expectations for the foreign currency translation impact on net revenue. You should not place undue reliance on these forward-looking statements. Although such statements are based on management's current estimates and expectations, and/or 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. Such factors include our ability to execute on our three-year corporate strategy, including our ability to invest in the tools needed to implement our strategy, competition from existing and future competitors in our target markets, our ability to achieve the cost-savings and synergies contemplated by our recent acquisitions within the expected time frames or to achieve them fully and to successfully integrate acquired businesses while retaining key personnel, the impact of the COVID-19 pandemic, and any resulting economic downturn on our results, prospects and opportunities, measures or restrictions imposed by governments and health officials in response to the pandemic, the timing of the award of projects and funding under the Infrastructure Investment and Jobs Act, financial market risks that may affect the Company's funding obligations under defined benefit pension and postretirement plans, as well as general economic conditions, including inflation and the actions taken by monetary authorities in response to inflation, changes in interest rates, and foreign currency exchange rates, changes in capital markets, the possibility of a recession, and geopolitical events and conflicts among others. The impact of such matters includes, but is not limited to, the possible reduction in demand for certain of our product solutions and services and the delay or abandonment of ongoing or anticipated projects due to the financial condition of our clients and suppliers or to governmental budget constraints or changes to governmental budgetary priorities; the inability of our clients to meet their payment obligations in a timely manner or at all; potential issues and risks related to a significant portion of our employees working remotely; illness, travel restrictions and other workforce disruptions that have and could continue to negatively affect our supply chain and our ability to timely and satisfactorily complete our clients' projects; difficulties associated with retaining and hiring additional employees; and the inability of governments in certain of the countries in which we operate to effectively mitigate the financial or other impacts of the COVID-19 pandemic on their economies and workforces and our operations therein. The foregoing factors and potential future developments are inherently uncertain, unpredictable and, in many cases, beyond our control. For a description of these and 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 30, 2022, 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 30, 2022


October 1, 2021


September 30, 2022


October 1, 2021

Revenues

$   3,881,048


$   3,586,487


$ 14,922,825


$ 14,092,632

Direct cost of contracts

(3,045,367)


(2,758,723)


(11,595,785)


(11,048,860)

Gross profit

835,681


827,764


3,327,040


3,043,772

Selling, general and administrative expenses

(527,141)


(576,248)


(2,409,190)


(2,355,683)

Operating Profit

308,540


251,516


917,850


688,089

Other (Expense) Income:








Interest income

1,565


770


4,489


3,503

Interest expense

(32,695)


(19,926)


(100,246)


(72,714)

Miscellaneous income (expense), net

2,452


(61,981)


54,254


76,724

Total other (expense) income, net

(28,678)


(81,137)


(41,503)


7,513

Earnings From Continuing Operations Before Taxes

279,862


170,379


876,347


695,602

Income Tax Expense from Continuing Operations

(39,358)


(99,344)


(160,903)


(274,781)

Net Earnings of the Group from Continuing Operations

240,504


71,035


715,444


420,821

Net Earnings (Loss) of the Group from Discontinued Operations

544


(1,682)


(32)


10,008

Net Earnings of the Group

241,048


69,353


715,412


430,829

Net Earnings Attributable to Noncontrolling Interests from Continuing Operations

(8,502)


(9,847)


(36,788)


(39,213)

Net (Earnings) Loss Attributable to Redeemable Noncontrolling interests

(7,339)


(16,362)


(34,585)


85,414

Net Earnings Attributable to Jacobs from Continuing Operations

224,663


44,826


644,071


467,022

Net Earnings Attributable to Jacobs

$     225,207


$       43,144


$     644,039


$     477,030

Net Earnings Per Share:








Basic Net Earnings from Continuing Operations Per Share

$          1.76


$          0.34


$          5.01


$          3.15

Basic Net (Loss) Earnings from Discontinued Operations Per Share

$             —


$         (0.01)


$             —


$          0.08

Basic Earnings Per Share

$          1.76


$          0.33


$          5.01


$          3.22

Diluted Net Earnings from Continuing Operations Per Share

$          1.75


$          0.34


$          4.98


$          3.12

Diluted Net (Loss) Earnings from Discontinued Operations Per Share

$             —


$         (0.01)


$             —


$          0.08

Diluted Earnings Per Share

$          1.75


$          0.33


$          4.98


$          3.20

 

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

 


For the Three Months Ended


For the Years Ended


September 30, 2022


October 1, 2021


September 30, 2022


October 1, 2021

Revenues from External Customers:








Critical Mission Solutions

$    1,387,702


$    1,264,102


$    5,233,629


$    5,087,052

People & Places Solutions

2,238,994


2,049,091


8,569,900


8,378,179

Pass Through Revenue

(647,265)


(544,435)


(2,318,732)


(2,381,785)

People & Places Solutions Net Revenue

$    1,591,729


$    1,504,656


$    6,251,168


$    5,996,394

PA Consulting

$      254,352


$      273,294


$    1,119,296


$      627,401

              Total Revenue

$    3,881,048


$    3,586,487


$  14,922,825


$   14,092,632

 Net Revenue

$    3,233,783


$    3,042,052


$  12,604,093


$   11,710,847

 


For the Three Months Ended


For the Years Ended


September 30, 2022


October 1, 2021


September 30, 2022


October 1, 2021

Segment Operating Profit:








Critical Mission Solutions

$       95,343


$      115,028


$      424,385


$      447,161

People & Places Solutions (1)

230,681


176,726


823,564


780,380

PA Consulting

49,375


66,363


232,225


151,071

Total Segment Operating Profit

375,399


358,117


1,480,174


1,378,612

Other Corporate Expenses (2)

(79,961)


(101,932)


(364,440)


(340,129)

Restructuring, Other and Recoveries (Charges) (3)

13,102


(4,669)


(197,884)


(350,394)

Total U.S. GAAP Operating Profit

308,540


251,516


917,850


688,089

Total Other (Expense) Income, Net (4)

(28,678)


(81,137)


(41,503)


7,513

Earnings from Continuing Operations Before Taxes

$     279,862


$     170,379


$     876,347


$      695,602

 

(1)

Includes $19.5 million, net, in charges related to a legal settlement for the three-month period and year ended October 1, 2021.

(2)

Other corporate expenses includes intangibles amortization of $51.7 million and $46.5 million for the three-month periods ended September 30, 2022 and October 1, 2021, respectively, and $198.6 million and $149.8 million for the years ended September 30, 2022 and October 1, 2021, respectively.

(3)

Included in the year ended September 30, 2022 is $91.3 million pre-tax related to the final settlement of the Legacy CH2M Matter, net of previously recorded reserves, approximately $27 million in third party recoveries was recorded as receivables reducing SG&A, and $78.3 million of real estate impairment charges. Included in the year ended October 1, 2021 is $297.8 million of costs incurred in connection with the investment in PA Consulting, in part classified as compensation costs.

(4)

The year ended September 30, 2022 included a $13.9 million gain related to a cost method investment sold during the period and a gain of $8.7 million related to lease terminations. The three-month period and year ended October 1, 2021 included $(67.5) million and $34.7 million, respectively, in fair value adjustments related to our investment in Worley stock (net of Worley stock dividends) and certain foreign currency revaluations relating to the ECR sale. The year ended October 1, 2021 included $49.6 million in fair value adjustments related to our investment in C3 stock, both of these investments sold in fiscal 2021. The year ended October 1, 2021 also included $38.6 million related to impairment of our AWE ML investment. Additionally, the increase in net interest expense year over year is primarily due to the higher levels of debt outstanding due to the funding of the StreetLight and BlackLynx acquisitions and increased borrowings associated with the payment of the Legacy CH2M Matter settlement in the current year, in addition to higher interest rates.

 

Balance Sheet (in thousands):


September 30, 2022


October 1, 2021

ASSETS




Current Assets:




Cash and cash equivalents

$         1,140,479


$      1,014,249

Receivables and contract assets

3,405,381


3,101,418

Prepaid expenses and other

176,134


176,228

Total current assets

4,721,994


4,291,895

Property, Equipment and Improvements, net

346,676


353,117

Other Noncurrent Assets:




Goodwill

7,184,658


7,197,000

Intangibles, net

1,394,052


1,565,758

Deferred income tax assets

31,480


103,193

Operating lease right-of-use assets

476,913


650,097

Miscellaneous

504,646


471,549

Total other noncurrent assets

9,591,749


9,987,597


$       14,660,419


$    14,632,609

LIABILITIES AND STOCKHOLDERS' EQUITY




Current Liabilities:




Current maturities of long-term debt

$            50,415


$           53,456

Accounts payable

966,792


908,441

Accrued liabilities

1,441,762


1,533,559

Operating lease liability

150,171


172,414

Contract liabilities

641,705


542,054

Total current liabilities

3,250,845


3,209,924

Long-term debt

3,357,256


2,839,933

Liabilities relating to defined benefit pension and retirement plans

271,332


418,080

Deferred income tax liabilities

269,077


214,380

Long-term operating lease liability

607,447


758,358

Other deferred liabilities

167,548


559,375

Commitments and Contingencies




Redeemable Noncontrolling Interests

632,522


657,722

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 - 127,393,378 shares and 128,892,540 shares as of September 30, 2022 and October 1, 2021, respectively

127,393


128,893

Additional paid-in capital

2,682,009


2,590,012

Retained earnings

4,225,784


4,015,578

Accumulated other comprehensive loss

(975,130)


(794,442)

Total Jacobs stockholders' equity

6,060,056


5,940,041

Noncontrolling interests

44,336


34,796

Total Group stockholders' equity

6,104,392


5,974,837


$       14,660,419


$    14,632,609

 

Cash Flows (in thousands) (Quarterly data unaudited)

 


For the Three Months Ended


For the Years Ended


September 30, 2022


October 1, 2021


September 30, 2022


October 1, 2021

Cash Flows from Operating Activities:








Net earnings attributable to the Group

$       241,048


$         69,353


$       715,412


$       430,829

Adjustments to reconcile net earnings to net cash flows provided by operations:








Depreciation and amortization:








Property, equipment and improvements

24,533


26,540


102,454


101,024

Intangible assets

51,713


46,468


198,602


149,776

       Gain on sale of ECR business




(15,608)

 Loss (Gain) on investment in equity securities


80,820


(13,862)


(71,325)

Stock based compensation

11,678


14,702


53,383


56,221

Equity in earnings of operating ventures, net of return on capital distributions

4,069


7,680


18,291


10,941

(Gain) loss on disposals of assets, net

82


254


(4,680)


1,003

Impairment of equity method investment and other long term assets

3,707


502


78,292


40,640

 Loss on pension and retiree medical plan changes

123


2,783


123


2,783

Deferred income taxes

49,702


75,204


111,846


113,623

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








Receivables and contract assets, net of contract liabilities

(153,340)


10,162


(267,947)


242,154

Prepaid expenses and other current assets

(28,957)


(40,402)


6


6,800

Miscellaneous other assets

(5,388)


8,186


113,850


116,097

Accounts payable

32,980


(14,766)


87,402


(165,502)

Income taxes payable

4,428


(40,100)


(70,258)


20,961

Accrued liabilities

41,146


(32,472)


(552,036)


(252,305)

Other deferred liabilities

862


(18,930)


(73,697)


(63,915)

Other, net

(846)


6,720


(22,472)


2,079

Net cash provided by operating activities

277,540


202,704


474,709


726,276

Cash Flows from Investing Activities:








Additions to property and equipment

(47,562)


(27,144)


(127,615)


(92,814)

Disposals of property and equipment and other assets

106


6


9,392


474

Capital contributions to equity investees, net of return of capital distributions

269


(823)


3,025


(5,016)

Acquisitions of businesses, net of cash acquired



(437,083)


(1,741,062)

Disposals of investment in equity securities


369,294


13,862


421,315

Payments related to sales of businesses




36,360

Net cash (used for) provided by investing activities

(47,187)


341,333


(538,419)


(1,380,743)

Cash Flows from Financing Activities:








Net (repayments of) proceeds from borrowings

(80,176)


(203,414)


718,975


1,220,440

Debt issuance costs




(2,747)

Proceeds from issuances of common stock

10,047


8,362


51,034


38,077

Common stock repurchases

(31,217)


(249,999)


(281,926)


(274,948)

Taxes paid on vested restricted stock

(13)


(71)


(28,587)


(25,867)

Cash dividends to shareholders

(29,360)


(27,387)


(115,948)


(107,188)

Net dividends associated with noncontrolling interests

(10,879)


(8,701)


(26,982)


(48,784)

Repurchase of redeemable noncontrolling interests



(46,074)


Proceeds from issuances of redeemable noncontrolling interests

4



49,742


Net cash (used for) provided by financing activities

(141,594)


(481,210)


320,234


798,983

Effect of Exchange Rate Changes

(48,973)


(14,983)


(128,892)


19,635

Net Increase in Cash and Cash Equivalents and Restricted Cash

39,786


47,844


127,632


164,151

Cash and Cash Equivalents, including Restricted Cash, at the Beginning of the Period

1,114,421


978,731


1,026,575


862,424

Cash and Cash Equivalents, including Restricted Cash, at the End of the Period

$     1,154,207


$     1,026,575


$     1,154,207


$     1,026,575

See the accompanying Notes to Consolidated Financial Statements.

 

Backlog (in millions):

 

Unaudited

September 30, 2022


October 1, 2021

Critical Mission Solutions

$               10,561


$               10,589

People & Places Solutions

17,032


15,738

PA Consulting

269


304

            Total

$               27,862


$               26,631

 

Non-GAAP Financial Measures and Operating Metrics:

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 EBITDA, adjusted EBITDA outlook, adjusted EPS outlook, expected foreign currency translation to impact on fiscal year 2023 revenue, adjusted EBITDA and adjusted EPS, free cash flow, and adjusted effective tax rate.

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 and adjusted EPS from continuing operations are calculated by (i) excluding recoveries, costs and other charges associated with restructuring activities implemented in connection with the acquisitions of CH2M, John Wood Group nuclear business, Buffalo Group, BlackLynx, StreetLight, the strategic investment in PA Consulting, the sale of the ECR business and other related cost reduction initiatives, which included involuntary terminations, costs associated with co-locating offices of acquired companies, separating physical locations of ECR and continuing operations, professional services and personnel costs, amounts relating to certain commitments and contingencies relating to discontinued operations of the CH2M business, including the final settlement charges relating to the Legacy CH2M Matter, net of previously recorded reserves; (ii) excluding the costs and other charges associated with our Focus 2023 transformation initiatives, which included costs and charges associated with the re-scaling and repurposing of physical office space, employee separations, contractual termination fees and related expenses (the amounts referred in (i) and (ii) are collectively referred to as the "Restructuring, transaction costs and other (recoveries)" or "Restructuring, transaction costs and other charges"); (iii) excluding transaction costs and other charges incurred in connection with the acquisitions of Buffalo Group, BlackLynx and StreetLight and the strategic investment in PA Consulting, including advisor fees, change in control payments, and the impact of the quarterly adjustment to the estimated future payout of contingent consideration to the sellers in connection with certain acquisitions; certain consideration amounts for PA Consulting that were required to be treated as post-completion compensation expense given retention related requirements applicable to the distribution of such funds to PA Consulting employees, and impacts resulting from the non-cash purchase accounting adjustment related to the investment in PA Consulting to reflect a change in the preliminary purchase price allocation for the redeemable non-controlling interests, certain equity based compensation expenses associated with PA Consulting's benefit programs; and similar transaction costs and expenses (collectively referred to as "transaction costs"); (iv) adding back amortization of intangible assets; (v) the removal of fair value adjustments and dividend income related to the Company's investments in Worley and C3 stock and certain foreign currency revaluations relating to ECR sale proceeds; (vi) excluding charges resulting from the revaluation of certain deferred tax assets/liabilities in connection with tax rate increases in the United Kingdom during fiscal 2021; (vii) charges associated with the impairment of our AWE ML investment; (viii) charges to interest expense associated with one-time deal related bank fees; (ix) certain non-routine income tax adjustments for the purposes of calculating the Company's annual non-GAAP effective tax rate to facilitate a more meaningful evaluation of the Company's current operating performance and comparisons to the Company's operating performance in other periods; and (x) other income tax adjustments associated with the pre-tax income adjustments above. Adjustments to derive adjusted net earnings from continuing operations and adjusted EPS from continuing operations are calculated on an after-tax basis.

Free cash flow is calculated using the reported statement of cash flows, provided from operations less additions to property and equipment.

Adjusted EBITDA is calculated by adding income tax expense, depreciation expense and adjusted interest expense, and deducting interest income from adjusted net earnings from continuing operations.

Adjusted interest expense excludes one-time fees related on our debt facilities that are included in our interest expense under GAAP.

Cash conversion is the ratio of cash flow from operations to GAAP net earnings from continuing operations.

Certain percentage changes are quantified on a constant currency basis, which provides information assuming that foreign currency exchange rates have not changed between the prior and current periods. For purposes of constant currency calculations, we use the prior period average exchange rates as applied to the current period adjusted amounts. The constant currency impact on the fourth quarter and fiscal year 2022 adjusted EPS from continuing operations is calculated by applying the FX rates from the prior period to operating profit and utilizing our adjusted income tax rate and fully diluted share count. The constant currency impact on the fourth quarter and fiscal year 2022 adjusted EBITDA results is calculated by applying the FX rates from the prior period to operating profit.

We believe that the measures listed above 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 and below, 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.

This press release also contains certain operating metrics which management believes are useful in evaluating the Company's performance. We regularly monitor these operating metrics to evaluate our business, identify trends affecting our business, and make strategic decisions. Revenue Backlog is the total dollar amount of revenues we expect to record in the future as a result of performing work under contracts that have been awarded to us.

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 net earnings and EPS from continuing operations to the corresponding "adjusted" amount and revenue from continuing operations to net revenue. 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 adjusted EPS and adjusted EBITDA outlook for fiscal 2023, under either FX rate scenario, 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. See footnote 3 on page 3 for additional information.

 

U.S. GAAP Reconciliation for the fourth quarter of fiscal 2022 and 2021

 


Three Months Ended


September 30, 2022

Unaudited

U.S. GAAP


Effects of Restructuring, Transaction and Other Charges


Other Adjustments (2)


Adjusted

Revenues

$ 3,881,048


$              —


$           —


$ 3,881,048

Pass through revenue



(647,265)


(647,265)

Net revenue

3,881,048



(647,265)


3,233,783

Direct cost of contracts

(3,045,367)


1,630


647,265


(2,396,472)

Gross profit

835,681


1,630



837,311

Selling, general and administrative expenses

(527,141)


(14,732)


51,713


(490,160)

Operating Profit

308,540


(13,102)


51,713


347,151

Total other expense, net

(28,678)


(1,810)



(30,488)

Earnings from Continuing Operations Before Taxes

279,862


(14,912)


51,713


316,663

Income Tax (Expense) Benefit for Continuing Operations

(39,358)


(26,347)


2,251


(63,454)

Net Earnings of the Group from Continuing Operations

240,504


(41,259)


53,964


253,209

Net Earnings Attributable to Noncontrolling Interests from Continuing Operations

(8,502)




(8,502)

Net (Earnings) Loss Attributable to Redeemable Noncontrolling interests

(7,339)


(1,087)


(5,221)


(13,647)

Net Earnings attributable to Jacobs from Continuing Operations

224,663


(42,346)


48,743


231,060

Net Earnings attributable to Discontinued Operations

544




544

Net Earnings attributable to Jacobs

$   225,207


$     (42,346)


$     48,743


$   231,604

Diluted Net Earnings from Continuing Operations Per Share

$        1.75


$        (0.33)


$        0.38


$        1.80

Diluted Net (Loss) Earnings from Discontinued Operations Per Share

$           —


$             —


$           —


$           —

Diluted Earnings Per Share

$        1.75


$        (0.33)


$        0.38


$        1.80

Operating Profit Margin

7.9 %






10.7 %

 

(1)

Includes charges associated with various restructuring, transaction and other related activity costs associated with Company transformation and acquisition related programs.

(2)

Includes (a) the removal of pass through revenues and costs for the People & Places Solutions line of business for the calculation of operating profit margin as a percentage of net revenue of $647.3 million, (b) the removal of amortization of intangible assets of $51.7 million, (c) applicable redeemable noncontrolling interests impacts for the above adjustment items and (d) income tax expense adjustments for the above pre-tax adjustment items.

 


Three Months Ended


October 1, 2021

Unaudited

U.S. GAAP


Effects of Restructuring, Transaction and Other Charges


Other Adjustments (2)


Adjusted

Revenues

$ 3,586,487


$             —


$           —


$ 3,586,487

Pass through revenue



(544,435)


(544,435)

Net revenue

3,586,487



(544,435)


3,042,052

Direct cost of contracts

(2,758,723)


(274)


544,435


(2,214,562)

Gross profit

827,764


(274)



827,490

Selling, general and administrative expenses

(576,248)


4,943


46,467


(524,838)

Operating Profit

251,516


4,669


46,467


302,652

Total other (expense) income, net

(81,137)


(323)


67,515


(13,945)

Earnings from Continuing Operations Before Taxes

170,379


4,346


113,982


288,707

Income Tax Expense for Continuing Operations

(99,344)


36,127


5,958


(57,259)

Net Earnings of the Group from Continuing Operations

71,035


40,473


119,940


231,448

Net Earnings Attributable to Noncontrolling Interests from Continuing Operations

(9,847)




(9,847)

Net (Earnings) Loss Attributable to Redeemable Noncontrolling Interests

(16,362)


8,234


(6,326)


(14,454)

Net Earnings from Continuing Operations attributable to Jacobs

44,826


48,707


113,614


207,147

Net Loss attributable to Discontinued Operations

(1,682)




(1,682)

Net Earnings attributable to Jacobs

$     43,144


$       48,707


$   113,614


$   205,465

Diluted Net Earnings from Continuing Operations Per Share

$        0.34


$          0.37


$        0.86


$        1.58

Diluted Net Earnings from Discontinued Operations Per Share

$      (0.01)


$             —


$           —


$      (0.01)

Diluted Earnings Per Share

$        0.33


$          0.37


$        0.86


$        1.56

Operating Profit Margin

7.0 %






9.9 %

 

(1)

Includes charges associated with various restructuring, transaction and other related activity costs associated with Company transformation and acquisition related programs.

(2)

Includes (a) the removal of pass through revenues and costs for the People & Places Solutions line of business for the calculation of operating profit margin as a percentage of net revenue of $544.4 million, (b) the removal of amortization of intangible assets of $46.5 million, (c) the removal of $(67.5) million in fair value gains and (losses) related to our investment in Worley stock and certain foreign currency revaluations relating to ECR sale, (d) the removal of $(1.7) million additional income tax expense attributable to tax rate increases in the UK during 2021, (e) applicable redeemable noncontrolling interests impacts for the above adjustment items and (f) income tax expense adjustments for the above pre-tax adjustment items.

 

U.S. GAAP Reconciliation for fiscal years 2022 and 2021

 


For the Year Ended


September 30, 2022

Unaudited

U.S. GAAP


Effects of Restructuring, Transaction and Other Charges 


Other Adjustments (2)


Adjusted

Revenues

$ 14,922,825


$            —


$           —


$ 14,922,825

Pass through revenue



(2,318,732)


(2,318,732)

Net revenue

14,922,825



(2,318,732)


12,604,093

Direct cost of contracts

(11,595,785)


1,633


2,318,732


(9,275,420)

Gross profit

3,327,040


1,633



3,328,673

Selling, general and administrative expenses

(2,409,190)


196,251


198,602


(2,014,337)

Operating Profit

917,850


197,884


198,602


1,314,336

Total other (expense) income, net

(41,503)


(12,492)


5


(53,990)

Earnings from Continuing Operations Before Taxes

876,347


185,392


198,607


1,260,346

Income Tax Expense for Continuing Operations

(160,903)


(65,888)


(41,442)


(268,233)

Net Earnings of the Group from Continuing Operations

715,444


119,504


157,165


992,113

Net Earnings Attributable to Noncontrolling Interests from Continuing Operations

(36,788)




(36,788)

Net Earnings Attributable to Redeemable Noncontrolling interests

(34,585)


(1,511)


(22,065)


(58,161)

Net Earnings attributable to Jacobs from Continuing Operations

644,071


117,993


135,100


897,164

Net Loss attributable to Discontinued Operations

(32)




(32)

Net Earnings attributable to Jacobs

$    644,039


$     117,993


$   135,100


$    897,132

Diluted Net Earnings from Continuing Operations Per Share

$         4.98


$         0.91


$        1.04


$         6.93

Diluted Net Earnings from Discontinued Operations Per Share

$            —


$            —


$           —


$            —

Diluted Earnings Per Share

$         4.98


$         0.91


$        1.04


$         6.93

Operating Profit Margin

6.2 %






10.4 %

 

(1)

Includes charges associated with various restructuring, transaction and other related activity costs associated with Company transformation initiatives and acquisition related programs, including $91.3 million pre-tax related to the final settlement of the Legacy CH2M Matter, net of previously recorded reserves, approximately $27 million in third party recoveries was recorded as receivables reducing SG&A, and $78.3 million for the Company's real estate impairment.

(2)

Includes (a) the removal of pass through revenues and costs for the People & Places Solutions line of business for the calculation of operating profit margin as a percentage of net revenue of $2.3 billion, (b) the removal of amortization of intangible assets of $198.6 million, (c) applicable redeemable noncontrolling interests impacts for the above adjustment items and (d) income tax expense adjustments for the above pre-tax adjustment items.

 


For the Year Ended


October 1, 2021

Unaudited

U.S. GAAP


Effects of Restructuring, Transaction and Other Charges


Other Adjustments (2)


Adjusted

Revenues

$ 14,092,632


$            —


$           —


$  14,092,632

Pass through revenue



(2,381,785)


(2,381,785)

Net revenue

14,092,632



(2,381,785)


11,710,847

Direct cost of contracts

(11,048,860)


9


2,381,785


(8,667,066)

Gross profit

3,043,772


9



3,043,781

Selling, general and administrative expenses

(2,355,683)


350,385


149,749


(1,855,549)

Operating Profit

688,089


350,394


149,749


1,188,232

Total other expense, net

7,513


42,549


(84,477)


(34,415)

Earnings from Continuing Operations Before Taxes

695,602


392,943


65,272


1,153,817

Income Tax Expense for Continuing Operations

(274,781)


6,729


16,144


(251,908)

Net Earnings of the Group from Continuing Operations

420,821


399,672


81,416


901,909

Net Earnings Attributable to Noncontrolling Interests from Continuing Operations

(39,213)




(39,213)

Net Loss (Earnings) Attributable to Redeemable Noncontrolling Interests

85,414


(95,246)


(27,307)


(37,139)

Net Earnings attributable to Jacobs from Continuing Operations

467,022


304,426


54,109


825,557

Net Earnings attributable to Discontinued Operations

10,008





10,008

Net Earnings attributable to Jacobs

$   477,030


$     304,426


$     54,109


$     835,565

Preferred Redeemable Noncontrolling interests redemption value adjustment

(57,307)


57,307


$           —


Net earnings from continuing operations

allocated to common stock for EPS calculation

$   409,715


$     361,733


$     54,109


$     825,557

Diluted Net Earnings from Continuing Operations Per Share

$        3.12


$          2.76


$        0.41


$          6.29

Diluted Net Earnings from Discontinued Operations Per Share

$        0.08


$            —


$           —


$          0.08

Diluted Earnings Per Share

$        3.20


$          2.76


$        0.41


$          6.37

Operating Profit Margin

4.9 %






10.1 %

 

(1)

Includes charges associated with various restructuring, transaction and other related activity costs associated with Company transformation initiatives and acquisition related programs, impairment charges relating to our investment in AWE ML, along with pre-tax $297.8 million in PA Consulting deal related costs and applicable redeemable noncontrolling interests impacts for the above adjustment items. Also includes $(57.3) million or $(0.44) per share in EPS numerator adjustments relating to the PA preference shares redemption value, which does not affect net earnings.

(2)

Includes (a) the removal of pass through revenues and costs for the People & Places Solutions line of business for the calculation of operating profit margin as a percentage of net revenue of $2.4 billion, (b) the removal of amortization of intangible assets of $149.8 million, (c) the removal of $34.7 million in fair value gains and (losses) related to our investment in Worley stock and certain foreign currency revaluations relating to ECR sale, (d) the removal of the fair value gains and (losses) of the Company's investment in C3 of $49.6 million, (e) the removal of $29.1 million additional income tax expense attributable to tax rate increases in the UK during 2021, (f) associated noncontrolling interest impacts for the above adjustment items and (g) income tax expense adjustments for the above pre-tax adjustment items.

 

 

Reconciliation of Adjusted EBITDA (in thousands):


Three Months Ended


Twelve Months Ended


September 30, 2022


October 1, 2021


September 30, 2022


October 1, 2021

Adj Net earnings from Continuing Operations

$   231,060


$   207,147


$   897,164


$   825,557

     Adj. Income Tax Expense for Continuing Operations

(63,454)


(57,259)


(268,233)


(251,908)

Adj. Net earnings from Continuing Operations attributable to Jacobs before income taxes

294,514


264,406


1,165,397


1,077,465

    Depreciation expense

24,533


26,540


102,454


101,024

    Interest income

(1,565)


(770)


(4,489)


(3,503)

    Adj. Interest expense (1)

32,695


19,926


100,246


68,714

Adjusted EBITDA

$   350,177


$   310,102


$ 1,363,608


$ 1,243,700

 

 (1) Year ended October 1, 2021 has been adjusted to exclude one-time PA Consulting deal related finance costs of $4.0 million.

 

Reconciliation of Free Cash Flow (in thousands):

 


Three Months Ended


Twelve Months Ended


September 30, 2022


October 1, 2021


September 30, 2022


October 1, 2021

 Net cash provided by operating activities

$   277,540


$   202,704


$   474,709


$   726,276

Additions to property and equipment

(47,562)


(27,144)


(127,615)


(92,814)

Free cash flow

$   229,978


$   175,560


$   347,094


$   633,462

 

Reconciliation from GAAP to non-GAAP constant currency Net Revenue

 


Three Months Ended


Twelve Months Ended

(in thousands)

September 30, 2022


October 1, 2021


% Change


September 30, 2022


October 1, 2021


% Change

Total Net Revenue












Net Revenue

$ 3,233,783


$ 3,042,052


6.3 %


$ 12,604,093


$ 11,710,847


7.6 %

Exchange rate effect

143,931






292,727





Constant currency Net Revenue

$ 3,377,714




11.0 %


$ 12,896,820




10.1 %

 

Reconciliation from non-GAAP Adjusted EPS from Continuing Operations to non-GAAP constant currency Adjusted EPS from Continuing Operations

 


Three Months Ended


Twelve Months Ended


September 30, 2022


October 1, 2021


% Change


September 30, 2022


October 1, 2021


% Change

Total Adjusted EPS from Continuing Operations (1)












Adjusted EPS from Continuing Operations

$        1.80


$        1.58


13.9 %


$        6.93


$        6.29


10.2 %

Exchange rate effect

0.07






0.19





Constant currency Adjusted EPS from Continuing Operations

$        1.87




18.4 %


$        7.12




13.2 %

 

Reconciliation from GAAP to non-GAAP constant currency Adjusted EBITDA

 


Three Months Ended


Twelve Months Ended

(in thousands)

September 30, 2022


October 1, 2021


% Change


September 30, 2022


October 1, 2021


% Change

Total Adjusted EBITDA












Adjusted EBITDA

$   350,177


$   310,102


12.9 %


$ 1,363,608


$ 1,243,700


9.6 %

Exchange rate effect

11,627






30,357





Constant currency Adjusted EBITDA

$   361,804




16.7 %


$ 1,393,965




12.1 %

 

Reconciliation from GAAP to non-GAAP constant currency Backlog

 

(in thousands)

September 30, 2022


October 1, 2021


% Change

Total Backlog






Backlog

$ 27,862,061


$ 26,629,753


4.6 %

Exchange rate effect



(720,006)



Constant currency Backlog



$ 25,909,747


7.5 %

 

Earnings Per Share (in thousands):

 


For the Three Months Ended


For the Years Ended


September 30, 2022


October 1, 2021


September 30, 2022


October 1, 2021

Numerator for Basic and Diluted EPS:








Net earnings attributable to Jacobs from continuing operations

$      224,663


$        44,826


$      644,071


$      467,022

Preferred Redeemable Noncontrolling interests redemption value adjustment




(57,307)

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

$      224,663


$        44,826


$      644,071


$      409,715









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

$            544


$         (1,682)


$            (32)


$        10,008









Net earnings allocated to common stock for EPS calculation

$      225,207


$        43,144


$      644,039


$      419,723









Denominator for Basic and Diluted EPS:








Weighted average basic shares

127,759


130,162


128,665


130,194

Shares allocated to participating securities












Shares used for calculating basic EPS attributable to common stock

127,759


130,162


128,665


130,194









Effect of dilutive securities:








Stock compensation plans

818


1,200


780


1,080

Shares used for calculating diluted EPS attributable to common stock

128,577


131,362


129,445


131,274









Net Earnings Per Share:








Basic Net Earnings from Continuing Operations Per Share

$           1.76


$           0.34


$           5.01


$           3.15

Basic Net Earnings from Discontinued Operations Per Share

$              —


$          (0.01)


$              —


$           0.08

Basic Earnings Per Share:

$           1.76


$           0.33


$           5.01


$           3.22

Diluted Net Earnings from Continuing Operations Per Share

$           1.75


$           0.34


$           4.98


$           3.12

Diluted Net Earnings from Discontinued Operations Per Share

$              —


$          (0.01)


$              —


$           0.08

Diluted Earnings Per Share:

$           1.75


$           0.33


$           4.98


$           3.20

 

For additional information contact:

Investors:
Jonathan Doros
jonathan.doros@jacobs.com

Media:
Louise White, 469-724-0810
louise.white@jacobs.com

 

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