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

Third Quarter Fiscal 2016 Highlights:

  • Revenues of $2.7B; Backlog of $18.3B, up sequentially from last quarter;
  • U.S. GAAP net earnings and EPS of $69M and $0.57, respectively;
  • Adjusted net earnings and EPS of $95M and $0.78, respectively;
  • Restructuring effort supporting an 11% reduction in G&A costs versus FY15Q3.

Jacobs reported adjusted net earnings of $95 million, or $0.78 per diluted share, on revenues of $2.7 billion for the third quarter of fiscal 2016 ended July 1, 2016 (U.S. GAAP net earnings and EPS were $69 million and $0.57, respectively). This compares to adjusted net earnings of $121 million, or $0.97 per diluted share, on revenues of $2.9 billion for the third quarter of fiscal 2015 ended June 26, 2015 (U.S. GAAP net earnings and EPS were $91 million and $0.73, respectively). The year-ago results include a $0.19 per share discrete tax benefit, related to the 2015 inter-company debt refinancing that was completed during the three months ended June 26, 2015.

The company's adjusted net earnings for the third 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 a total backlog of $18.3 billion at July 1, 2016, including a technical professional services component of $11.9 billion. Total backlog and professional services backlog are both up sequentially by $0.1 billion and $0.6 billion, respectively, from the second quarter.

Commenting on the results for the third quarter of fiscal 2016, Jacobs Chairman and CEO Steve Demetriou stated, “While certain end-markets remain challenged, our drive to improve project delivery excellence and increase commercial discipline is gaining momentum, and I am pleased with our cost savings and margin improvement. Our stable backlog is a clear sign of a more focused approach to sales within our new line of business structure, as our teams leverage our client diversity.”

The Company’s cash flow from operations was $181 million in the third quarter due to significant improvement in working capital management. Operational working capital was reduced to $515 million, calculated as current assets minus current liabilities, excluding cash and debt. During the quarter, Jacobs repurchased 0.6 million shares of common stock for $30 million.

Jacobs Chief Financial Officer, Kevin Berryman said, “We are seeing improvements in margin, cash flow and working capital, indicative of our ability to sharpen execution. Our year to date and third quarter performance increases our confidence to meet our adjusted full year earnings per share target.”

 

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 Nine Months Ended  
        July 1, 2016       June 26, 2015         July 1, 2016       June 26, 2015  
Revenues       $ 2,693,873       $ 2,907,541         $ 8,323,570       $ 8,997,878  
Costs and Expenses:                                            
Direct cost of contracts         (2,242,424 )       (2,422,944 )         (6,987,431 )       (7,502,891 )
Selling, general and administrative expenses         (341,893 )       (384,163 )         (1,080,352 )       (1,103,286 )
Operating Profit         109,556         100,434           255,787         391,701  
Other Income (Expense):                                            
Interest income         624         1,697           5,108         5,553  
Interest expense         (4,572 )       (5,509 )         (10,315 )       (15,374 )
Miscellaneous income (expense), net         (2,801 )       566           470         (1,034 )
Total other income (expense), net         (6,749 )       (3,246 )         (4,737 )       (10,855 )
Earnings Before Taxes         102,807         97,188           251,050         380,846  
Income Tax Benefit (Expense)         (31,870 )       120           (66,418 )       (89,233 )
Net Earnings of the Group         70,937         97,308           184,632         291,613  
Net Earnings Attributable to Noncontrolling Interests         (1,882 )       (6,246 )         (3,813 )       (18,505 )
Net Earnings Attributable to Jacobs       $ 69,055       $ 91,062         $ 180,819       $ 273,108  
Net Earnings Per Share:                                            
Basic       $ 0.58       $ 0.74         $ 1.50       $ 2.17  
Diluted       $ 0.57       $ 0.73         $ 1.49       $ 2.15  
                                             

Segment Information (in thousands):

                
                 
        For the Three Months Ended       For the Nine Months Ended
        July 1, 2016     June 26, 2015       July 1, 2016     June 26, 2015
Revenues from External Customers:                                    
Petroleum & Chemicals       $ 766,546     $ 983,887       $ 2,575,474     $ 3,191,106
Aerospace & Technology         667,785       699,118         2,007,440       2,134,460
Buildings & Infrastructure         553,546       593,834         1,696,004       1,820,626
Industrial         705,996       630,702         2,044,652       1,851,686
Total       $ 2,693,873     $ 2,907,541       $ 8,323,570     $ 8,997,878
                                     
        For the Three Months Ended       For the Nine Months Ended  
        July 1, 2016     June 26, 2015       July 1, 2016     June 26, 2015  
Operating Profit:                                      
Petroleum & Chemicals       $ 29,646     $ 42,011       $ 92,194     $ 105,765  
Aerospace & Technology         53,741       46,467         156,861       149,500  
Buildings & Infrastructure         50,168       41,625         133,083       122,017  
Industrial         28,444       21,511         68,216       98,361  
Total Segment Operating Profit         161,999       151,614         450,354       475,643  
Other Corporate Expenses         (19,523 )     (7,558 )       (57,896 )     (26,282 )
Restructuring Charges         (32,920 )     (43,622 )       (136,671 )     (57,660 )
Total Other Expense         (6,749 )     (3,246 )       (4,737 )     (10,855 )
Earnings Before Taxes       $ 102,807     $ 97,188       $ 251,050     $ 380,846  
                                       

Other Operational Information (in thousands):
                   
        For the Three Months Ended         For the Nine Months Ended
        July 1, 2016         June 26, 2015         July 1, 2016         June 26, 2015
Depreciation (pre-tax)       $ 20,221         $ 24,563         $ 63,447         $ 75,718
Amortization of Intangibles (pre-tax)       $ 12,048         $ 12,555         $ 35,499         $ 38,090
Pass-Through Costs Included in Revenues       $ 616,160         $ 574,350         $ 1,887,620         $ 1,896,516
Capital Expenditures       $ 17,094         $ 10,120         $ 46,403         $ 69,297
                                               

Balance Sheet (in thousands):

                    
                     
       

July 1,
2016
(Unaudited)

        

October 2,
2015

  
ASSETS                        
Current Assets:                        
Cash and cash equivalents       $ 616,391         $ 460,859  
Receivables         2,234,178           2,548,743  
Prepaid expenses and other         78,020           113,076  
Total current assets         2,928,589           3,122,678  
Property, Equipment and Improvements, Net         325,130           381,238  
Other Noncurrent Assets:                        
Goodwill         3,079,821           3,048,778  
Intangibles         333,608           353,419  
Deferred income taxes         356,444           374,064  
Miscellaneous         397,200           505,749  
Total other non-current assets         4,167,073           4,282,010  
        $ 7,420,792         $ 7,785,926  
LIABILITIES AND STOCKHOLDERS’ EQUITY                        
Current Liabilities:                        
Notes payable       $ 8,941         $ 13,364  
Accounts payable         479,217           566,866  
Accrued liabilities         1,020,762           1,090,985  
Billings in excess of costs         297,520           309,951  
Total current liabilities         1,806,440           1,981,166  
Long-term Debt         479,000           584,434  
Other Deferred Liabilities         646,070           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—121,703,665 shares and 123,152,966

shares as of July 1, 2016 and October 2, 2015, respectively

         121,704           123,153  
Additional paid-in capital         1,156,064           1,137,144  
Retained earnings         3,600,121           3,496,212  
Accumulated other comprehensive loss         (453,263 )         (464,764 )
Total Jacobs stockholders’ equity         4,424,626           4,291,745  
Noncontrolling interests         64,656           64,713  
Total Group stockholders’ equity         4,489,282           4,356,458  
        $ 7,420,792         $ 7,785,926