- Total Gross Revenue (Q4): Increased 4% year-over-year.
- Adjusted Net Revenue (Q4): Increased 4% year-over-year.
- GAAP EPS from Continuing Operations (Q4): $2.38, including a $0.19 impact from transaction restructuring and other related costs.
- Adjusted EPS (Q4): $1.37, a 28% increase compared to the previous year.
- Adjusted EBITDA (Q4): $289 million, representing a 12% growth versus FY23.
- Total Gross Revenue (FY24): Increased 6% year-over-year.
- Adjusted Net Revenue (FY24): Increased 5% year-over-year.
- GAAP EPS from Continuing Operations (FY24): $4.79.
- Adjusted EPS (FY24): $5.28, a 16% increase compared to the previous year.
- Adjusted EBITDA (FY24): $1.06 billion, representing a 9% increase versus FY23.
- Consolidated Backlog (Q4): Increased 23% year-over-year to $21.8 billion.
- Trailing 12-Month Book-to-Bill Ratio: 1.35 times.
- Q4 Book-to-Bill Ratio: 1.67 times.
- Free Cash Flow from Continuing Operations (FY24): $718 million.
- Net Debt (End of FY24): Approximately $1.1 billion, with a net leverage ratio of 1.0 times on LTM adjusted EBITDA.
- Dividend Declared: $0.29, a 12% increase year-over-year.
- Fiscal '25 Outlook - Adjusted Net Revenue Growth: Mid- to high single digits year-over-year.
- Fiscal '25 Outlook - Adjusted EBITDA Margin: 13.8% to 14%.
- Fiscal '25 Outlook - Adjusted EPS: $5.80 to $6.20.
- Fiscal '25 Outlook - Free Cash Flow Conversion: More than 100%.
Release Date: November 19, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Jacobs Solutions Inc (J, Financial) achieved a significant milestone by closing the separation transaction of its Critical Mission Solutions and Cyber Intelligence businesses, which was well-received by the market.
- The company reported a 4% increase in total gross revenue for Q4 and a 28% increase in adjusted EPS compared to the previous year.
- Jacobs Solutions Inc (J) saw a 23% year-on-year increase in its consolidated backlog in Q4, with a strong book-to-bill ratio of 1.67 times.
- The company secured substantial wins across various geographies, including a major project in Los Angeles for water infrastructure and a new semiconductor facility in India.
- Jacobs Solutions Inc (J) is well-positioned for growth in FY25, with a focus on water and environmental, life sciences, and advanced manufacturing end markets, supported by strong secular growth tailwinds.
Negative Points
- The company faced an unfavorable revenue adjustment related to an EV battery manufacturer customer bankruptcy in Europe, impacting its life sciences and advanced manufacturing segment.
- There is a noted softness within the federal market, which constitutes about 10% of Jacobs Solutions Inc (J)'s business, although the Department of Defense infrastructure pipeline remains strong.
- The fiscal '25 tax rate is expected to be higher than in previous years, which could impact net earnings.
- Despite strong backlog growth, the revenue guidance for FY25 is only mid- to high single digits, indicating potential challenges in converting backlog to revenue.
- The restructuring costs related to the separation transaction are expected to continue into fiscal '25, with projected cash outflows of $75 million to $95 million.
Q & A Highlights
Q: Can you discuss the pipeline growth across your major end markets and how much of your 2025 net revenues and EBITDA are currently in backlog?
A: Pipeline growth has been strong, with double-digit increases in water and environmental, advanced facilities driven by life sciences, and critical infrastructure, particularly in Europe, the UK, Australia, and New Zealand. The contracted component for FY25 is a strong number, with a higher percentage of next fiscal year's revenue in backlog compared to historical levels.
Q: How is Jacobs positioning itself relative to the upcoming US elections and potential federal government changes?
A: We see the overall impact as net neutral. Our focus is on state and local projects, particularly in water and environmental sectors, which are less affected by federal changes. The federal market represents about 10% of our business, mainly in DoD infrastructure, which continues to have a strong pipeline.
Q: Can you explain the discrepancy between the 22.5% backlog growth and the mid- to high single-digit revenue guidance for 2025?
A: The significant backlog growth includes large, multiyear bookings in life sciences and water sectors, which are not margin-degrading. The revenue guidance accounts for the multiyear nature of these projects and allows for variability in project life cycles.
Q: What is the outlook for PA Consulting in terms of margins and revenue growth for fiscal year 2025?
A: PA Consulting has maintained strong margins and is expected to continue this trend. We have good visibility into their pipeline, and we anticipate an inflection point in revenue growth for fiscal 2025, contributing to our overall guidance.
Q: How does Jacobs plan to allocate capital following the recent portfolio changes, and are there areas where M&A could fill gaps?
A: Our priorities include investing in organic growth, returning cash to shareholders through buybacks and dividends, and considering M&A as a long-term accelerant. We have significant optionality due to our strong balance sheet and free cash flow.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
