On August 6, 2024, Jacobs Solutions Inc (J, Financial) released its 8-K filing detailing its financial results for the fiscal third quarter ended June 28, 2024. Jacobs Solutions is a global provider of engineering, design, procurement, construction, and maintenance services, as well as cyber engineering and security solutions. The firm serves industrial, commercial, and government clients across various sectors, including water, transportation, healthcare, technology, and chemicals. The company employs approximately 60,000 workers and generated $16.4 billion in revenue and $1.3 billion in adjusted operating income in fiscal 2023.
Performance Overview
Jacobs Solutions Inc (J, Financial) reported earnings per share (EPS) of $1.17 for Q3 2024, a 9% year-over-year decline from $1.29 in Q3 2023. Adjusted EPS from continuing operations was $1.96, an 11% increase from $1.76 in the same period last year. Despite the adjusted EPS growth, the reported EPS fell short of the analyst estimate of $1.66. Revenue for the quarter was $4.23 billion, slightly up from $4.19 billion in Q3 2023, and above the analyst estimate of $3.99 billion.
Key Financial Achievements
Jacobs Solutions Inc (J, Financial) achieved several notable financial milestones in Q3 2024:
- Cash flow from operations was $483 million, with an expectation of greater than 100% fiscal year reported free cash flow conversion.
- Backlog reached $30.6 billion, up 6% year-over-year, with a book-to-bill ratio of 1.29x.
- Record People & Places Solutions (P&PS) backlog of $19.3 billion, up 10.2% year-over-year, with a book-to-bill ratio of 1.53x.
- PA Consulting backlog increased by 3.9% to $369 million.
- Executed $151 million of share buybacks during the quarter.
Income Statement Highlights
| Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Revenue | $4,231,580 | $4,186,702 | $44,878 |
| Adjusted Net Revenue | $3,406,385 | $3,382,643 | $23,742 |
| GAAP Net Earnings from Continuing Operations | $146,449 | $163,945 | $(17,496) |
| GAAP EPS from Continuing Operations | $1.17 | $1.29 | $(0.12) |
| Adjusted Net Earnings from Continuing Operations | $246,122 | $224,368 | $21,754 |
| Adjusted EPS from Continuing Operations | $1.96 | $1.76 | $0.20 |
Commentary and Analysis
Jacobs' CEO Bob Pragada commented, "We are pleased to report that Jacobs has sustained its strong margin profile in the third quarter, reflecting our commitment to strategic, disciplined execution. This quarter, we made significant strides in our portfolio optimization, focusing on high-growth sectors that emphasize sustainability and infrastructure resilience."
Jacobs' CFO Venk Nathamuni added, "We continue to focus on operational excellence and expect to end fiscal year 2024 with strong profitability. With the anticipated completion of the planned spin-off in the coming months, we are excited to share our enhanced strategic plan for Jacobs following the anticipated separation at our next Investor Day on February 18, 2025 in Miami, Florida."
Financial Metrics and Analysis
Jacobs Solutions Inc (J, Financial) reported robust cash flow performance, with cash flow from operations at $483 million. The company's backlog, a critical metric in the construction industry, grew to $30.6 billion, indicating strong future revenue potential. The P&PS segment, which saw a record backlog of $19.3 billion, highlights the company's strength in this area.
Despite the positive adjusted EPS and revenue growth, the decline in GAAP net earnings and EPS from continuing operations indicates some underlying challenges. The company's focus on high-growth sectors and strategic portfolio optimization is expected to drive future performance, but the current shortfall against analyst estimates may raise concerns among investors.
Overall, Jacobs Solutions Inc (J, Financial) demonstrated strong operational performance and strategic focus, but the decline in GAAP earnings and EPS highlights the need for continued vigilance in managing costs and optimizing operations.
Explore the complete 8-K earnings release (here) from Jacobs Solutions Inc for further details.
