Jacobs Solutions Inc. J reported mixed results for fourth-quarter fiscal 2024 (ended Sept. 27, 2024). Earnings surpassed the Zacks Consensus Estimate, but revenues lagged the same. Nonetheless, both earnings and revenues increased on a year-over-year basis. Shares of this construction and technical services company gained 1.3% in the pre-market trading session, following the earnings release.
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Notably, Jacobs completed the separation of its Critical Mission Solutions (CMS) and portions of Divergent Solutions (i.e., Cyber & Intelligence) through a Reverse Morris Trust with Amentum on Sept. 27, 2024. Jacobs received $911 million in cash after adjustments and retained a 7.5% ownership in Amentum with the potential for an additional 0.5%.
Additionally, $575 million of the 2020 Term Loan Facility and $333 million of revolving credit were repaid, leading to a net-zero impact on cash balances. Jacobs shareholders received 51% of Amentum shares, with a potential increase to 55%, reflecting enhanced value post-transaction.
Jacobs Solutions Inc. Price, Consensus and EPS Surprise
Jacobs Solutions Inc. price-consensus-eps-surprise-chart | Jacobs Solutions Inc. Quote
Inside Jacobs’ Q4 Results
J reported adjusted earnings per share (EPS) of $1.37, which beat the consensus estimate of $1.36 by 0.7%. The reported figure was up 28% from the year-ago figure of $1.07 per share, depicting stronger operational efficiency.
Jacobs’ total revenues of $2.96 billion missed the consensus mark of $2.99 billion by 1.1% but grew 4.4% year over year. Adjusted net revenues were also up 4.3% year over year.
Adjusted operating profit grew 9.4% to $280 million from a year ago. Adjusted operating margin expanded 73 basis points (bps) from a year ago to 13.2%. Adjusted EBITDA was $289 million (up 12.5% year over year), with a margin of 13.6% (up from 12.6% a year ago).
Fiscal 2024-end backlog increased 22.5% year over year to $21.8 billion, underpinned by strong project wins. The book-to-bill ratio was 1.67x in the quarter, highlighting robust demand and future revenue stability.
Jacobs’ Segment Details
Revenues in the Infrastructure & Advanced Facilities (IA&F) segment totaled $2.67 billion, which increased 4.9% year over year. Adjusted net revenues (excluding Pass-Through revenue) were $1.83 billion, up 4.9% year over year. Its adjusted operating profit grew 12.4% from the prior-year quarter to $219 million, and the margin improved 87 bps to 12%.
The backlog at the quarter’s end was $21.47 billion, up from $17.53 billion a year ago. The segment achieved strong results from critical infrastructure (transportation, cities, and energy projects) and water and environmental projects. Life sciences and advanced manufacturing segments faced temporary headwinds due to an EV battery manufacturer’s bankruptcy, but fiscal 2025 growth is anticipated.
PA Consulting generated $289.4 million in revenues, up 0.5% from the year-ago quarter period. Its adjusted operating profit was $62 million, down 0.5% from a year ago. Its adjusted operating margin, however, improved 41 bps year over year to 21.3%. The quarter-end backlog amounted to $378 million, up from $311 million a year ago.
Jacobs’ Fiscal 2024 Highlights
GAAP revenue climbed to $11.5 billion (up 6% from a year ago), while adjusted net revenue reached $8.3 billion (up 5.1%). Adjusted EPS reached $5.28 (up 15.8% from a year ago), showcasing successful cost management and operational leverage. Adjusted EBITDA hit $1.059 billion, with a margin of 12.8% (up 40 bps).
Jacobs’ Balance Sheet & Cash Flow
At the fiscal 2024-end, Jacobs had cash and cash equivalents of $1.14 billion, up from $770.9 million at the fiscal 2023-end (Sept. 29, 2023). Long-term debt decreased to $1.35 billion at the fiscal 2024-end from $2.81 billion at the fiscal 2023-end.
Net cash provided by operating activities totaled $1.05 billion in fiscal 2024 compared with $974.8 million in the year-ago period. The free cash flow was $933.6 million, up from $837.3 million a year ago.
Fiscal 2025 Guidance for Jacobs
Adjusted net revenue is projected to grow at mid-to-high single digits year over year, with sequential improvements expected quarterly. Adjusted EBITDA margins are forecasted to be in the range of 13.8%-14.0%, indicating continued efficiency improvements.
Adjusted EPS is expected to be between $5.80 and $6.20, representing 10%-17% year-over-year growth. The company expects greater than 100% free cash flow conversion from net income, underscoring strong cash generation capability.
J Stock’s Zacks Rank
Jacobs currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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