OREANDA-NEWS. Jacobs Engineering Group Inc. (NYSE:JEC) today announced its financial results for the second quarter of fiscal 2016 ended April 1, 2016.

Second Quarter Fiscal 2016 Highlights:

  • U.S. GAAP net earnings and EPS of $65M and $0.54, respectively;
  • Adjusted net earnings and EPS of $91M and $0.75, respectively;
  • Backlog at April 1, 2016 of $18.2B, steady at Q1 of fiscal 2016 level;
  • Restructuring – cost reduction initiative delivering strong results – now targeting annual savings of $240M-$270M;
  • Cash flow from operations of $238M; an increase of $272M over the prior year;
  • Repurchased 800 thousand shares of common stock during the second quarter of fiscal 2016 for $30M.

Jacobs reported today adjusted net earnings of $91 million, or $0.75 per diluted share, on revenues of $2.8 billion for its second quarter of fiscal 2016 ended April 1, 2016 (U.S. GAAP net earnings and EPS were $65 million and $0.54, respectively). This compares to adjusted net earnings of $92 million, or $0.72 per diluted share, on revenues of $2.9 billion for the second quarter of fiscal 2015 ended March 27, 2015 (U.S. GAAP net earnings and EPS were $82 million and $0.64, respectively).

Included in the Company’s fiscal 2016 second quarter adjusted net earnings is a net benefit of $0.03 per share related to several items, including the release of a foreign tax reserve and a one-time benefit in noncontrolling interests relating to certain work performed by one of our partially owned subsidiaries; partially off-set by the impact of a customer bankruptcy and a litigation settlement. The Company's adjusted net earnings for the second quarter of fiscal 2016 exclude the after-tax costs related to certain restructuring activities that began during fiscal 2015 (the "2015 Restructuring") totaling $26 million, or $0.21 per diluted share.

Jacobs also announced total backlog of $18.2 billion at April 1, 2016.

Commenting on the results for the second quarter of fiscal 2016, Jacobs President and CEO Steve Demetriou stated, “I am pleased with the strong operational execution during the quarter, allowing the Company to mitigate challenges in certain end markets. The strength of our diversity, our improved project delivery performance and continued successful cost reduction efforts were key drivers in our ability to perform in the current environment. The Company’s new line of business organization and subsequent incremental reporting is enhancing discipline and accountability, while providing additional insight to our shareholders.”

Jacobs Chief Financial Officer Kevin Berryman added, “I would also like to note the sizeable improvement in cash flow and working capital for the quarter, both of which are indicative of a building momentum to become more effective in our working capital performance. Finally, our first half results give us greater confidence to reach our objectives for the year, and as a result, we are narrowing our guidance for the full year to an adjusted EPS of $2.90-$3.20.”

Jacobs is hosting a conference call at 11:00 a.m. Eastern Time on Thursday, May 5, 2016, 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 technical, professional and construction services.

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 October 2, 2015, 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 herein.

Financial Highlights:

Results of Operations (in thousands, except per-share data):

               
      For the Three Months Ended     For the Six Months Ended  
      April 1, 2016     March 27, 2015     April 1, 2016     March 27, 2015  
Revenues     $ 2,781,763     $ 2,903,332     $ 5,629,697     $ 6,090,337  
Costs and Expenses:                                  
Direct cost of contracts       (2,337,547 )     (2,412,388 )     (4,745,007 )     (5,079,947 )
Selling, general and administrative expenses       (357,435 )     (357,899 )     (738,459 )     (719,122 )
Operating Profit       86,781       133,045       146,231       291,268  
Other Income (Expense):                                  
Interest income       2,264       1,580       4,484       3,856  
Interest expense       (2,200 )     (4,548 )     (5,743 )     (9,866 )
Miscellaneous income (expense), net       3,611       (1,115 )     3,271       (1,601 )
Total other income (expense), net       3,675       (4,083 )     2,012       (7,611 )
Earnings Before Taxes       90,456       128,962       148,243       283,657  
Income Tax Expense       (27,067 )     (40,852 )     (34,548 )     (89,352 )
Net Earnings of the Group       63,389       88,110       113,695       194,305  
Net Loss (Earnings) Attributable to Noncontrolling Interests       1,861       (6,143 )     (1,931 )     (12,259 )
Net Earnings Attributable to Jacobs     $ 65,250     $ 81,967     $ 111,764     $ 182,046  
Net Earnings Per Share:                                  
Basic     $ 0.54     $ 0.65     $ 0.93     $ 1.43  
Diluted     $ 0.54     $ 0.64     $ 0.92     $ 1.42  
                                   

Segment Information (in thousands):

               
      For the Three Months Ended     For the Six Months Ended  
     

April 1, 2016

    

March 27, 2015

    

April 1, 2016

    

March 27, 2015

  
Revenues from External Customers:                                  
Petroleum & Chemicals     $ 866,615     $ 1,046,767     $ 1,808,928     $ 2,207,219  
Aerospace & Technology       669,464       701,115       1,339,655       1,435,342  
Buildings & Infrastructure       579,128       602,062       1,142,458       1,226,792  
Industrial       666,556       553,388       1,338,656       1,220,984  
Total     $ 2,781,763     $ 2,903,332     $ 5,629,697     $ 6,090,337  
                                   
                                   
      For the Three Months Ended     For the Six Months Ended  
     

April 1, 2016

    

March 27, 2015

    

April 1, 2016

    

March 27, 2015

  
Operating Profit:                                  
Petroleum & Chemicals     $ 30,945     $ 28,656     $ 62,548     $ 63,755  
Aerospace & Technology       55,121       53,072       103,120       103,033  
Buildings & Infrastructure       42,463       42,428       82,915       80,392  
Industrial       12,417       47,877       39,772       76,850  
Total Segment Operating Profit       140,946       172,033       288,355       324,030  
Other Corporate Expenses       (18,797 )     (24,950 )     (38,373 )     (18,724 )
Restructuring Charges       (35,368 )     (14,038 )     (103,751 )     (14,038 )
Total Other Income (Expense)       3,675       (4,083 )     2,012       (7,611 )
Earnings Before Taxes     $ 90,456     $ 128,962     $ 148,243     $ 283,657  
                                   

Other Operational Information (in thousands):

             
      For the Three Months Ended     For the Six Months Ended
      April 1, 2016     March 27, 2015     April 1, 2016     March 27, 2015
Depreciation (pre-tax)     $ 21,059     $ 25,149     $ 43,226     $ 51,155
Amortization of Intangibles (pre-tax)     $ 11,725     $ 12,554     $ 23,451     $ 25,535
Pass-Through Costs Included in Revenues     $ 601,129     $ 615,336     $ 1,271,460     $ 1,322,166
Capital Expenditures     $ 13,322     $ 25,402     $ 29,309     $ 59,177
                                 

Balance Sheet (in thousands):

               
     

April 1,
2016
(Unaudited)

    

October 2,
2015

  
ASSETS                  
Current Assets:                  
Cash and cash equivalents     $ 559,722     $ 460,859  
Receivables       2,415,092       2,548,743  
Prepaid expenses and other       98,014       113,076  
Total current assets       3,072,828       3,122,678  
Property, Equipment and Improvements, Net       343,550       381,238  
Other Noncurrent Assets:                  
Goodwill       3,054,798       3,048,778  
Intangibles       342,367       353,419  
Deferred income taxes       375,244       374,064  
Miscellaneous       528,018       505,749  
Total other non-current assets       4,300,427       4,282,010  
      $ 7,716,805     $ 7,785,926  
LIABILITIES AND STOCKHOLDERS’ EQUITY                  
Current Liabilities:                  
Notes payable     $ 2,727     $ 13,364  
Accounts payable       487,810       566,866  
Accrued liabilities       1,054,229       1,090,985  
Billings in excess of costs       373,649       309,951  
Total current liabilities       1,918,415       1,981,166  
Long-term Debt       530,000       584,434  
Other Deferred Liabilities       829,416       863,868  
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—122,146,182 shares and 123,152,966 shares, respectively

       122,146       123,153  
Additional paid-in capital       1,149,777       1,137,144  
Retained earnings       3,554,291       3,496,212  
Accumulated other comprehensive loss       (450,196 )     (464,764 )
Total Jacobs stockholders’ equity       4,376,018       4,291,745  
Noncontrolling interests       62,956       64,713  
Total Group stockholders’ equity       4,438,974       4,356,458  
      $ 7,716,805     $ 7,785,926  
                   

Backlog (in millions):

             
      April 1, 2016     March 27, 2015
Backlog:                
Petroleum & Chemicals     $ 5,179.4     $

6,533.9
Aerospace & Technology       4,887.2       5,379.3
Buildings & Infrastructure       4,838.9       4,639.2
Industrial       3,304.3      

2,314.6
Total     $ 18,209.8     $ 18,867.0
                 

Non-U.S. GAAP Financial Measures:

The following tables reconcile the U.S. GAAP values of certain elements of the Company's results of operations to the corresponding "adjusted" amounts. For the comparable periods presented below, such adjustments consist of amounts incurred in connection with the 2015 Restructuring. Although such adjusted amounts are non-GAAP in nature, they are presented because management believes it provides a better view of the Company’s operating results to investors to assess the Company’s performance and operating trends. Amounts are shown in thousands, except for per-share data:

U.S. GAAP Reconciliation for the second quarter fiscal 2016 and 2015:

         
      Three Months Ended  
     

April 1, 2016

  
     

 

     Effects of 2015     Without 2015  
     

U.S. GAAP

     Restructuring     Restructuring  
Consolidated pre-tax earnings     $ 90,456     $ (35,368 )   $ 125,824  
Tax expense       (27,067 )     9,668       (36,735 )
Net earnings of the Group       63,389       (25,700 )     89,089  
Non-controlling interests       1,861       —       1,861  
Net earnings of Jacobs     $ 65,250     $ (25,700 )   $ 90,950  
Diluted earnings per share     $ 0.54     $ (0.21 )   $ 0.75  
                           
                           
      Three Months Ended  
     

March 27, 2015

  
     

 

     Effects of 2015     Without 2015  
     

U.S. GAAP

     Restructuring     Restructuring  
Consolidated pre-tax earnings     $ 128,962     $ (14,038 )   $ 143,000  
Tax expense       (40,852 )     4,422       (45,274 )
Net earnings of the Group       88,110       (9,616 )     97,726  
Non-controlling interests       (6,143 )     —       (6,143 )
Net earnings of Jacobs     $ 81,967     $ (9,616 )   $ 91,583  
Diluted earnings per share     $ 0.64     $ (0.08 )   $ 0.72