PresentationAdam SeidenBarclays Bank PLC, Research Division All right. Hate to interrupt the smooth jazz, but we'll get going here. So my name is Adam Seiden. I lead the U.S. machinery and construction effort here at Barclays. Thanks for joining us again for the Industrials Conference. So for this session here, we have the folks from Jacobs. So we have both Bob and Venk, CEO and CFO. So really excited for these guys to be joining us. From the -- for the format of this session, like a lot of the others here ...

Summary of Jacobs Conference Call Company Overview - **Company**: Jacobs - **Industry**: Engineering and Construction Core Points and Arguments 1. **Progress in Redefining Asset Life Cycle**: Jacobs has made significant progress in redefining the asset life cycle, focusing on higher value services and early involvement in client decision-making processes. This shift has positively impacted financial results, marking one of the best quarters in recent history [6][7][8]. 2. **Backlog and Book-to-Bill Ratio**: The backlog is at record levels, with a Book-to-Bill ratio of 2.0 in the last quarter, rising from 1.2 to 1.4 over the trailing twelve months. The backlog is well-diversified, with 50% in critical infrastructure, 25% in life sciences and advanced manufacturing, and 25% in water and environmental sectors [12][13][14]. 3. **Revenue Guidance and Market Dynamics**: Jacobs raised its revenue guidance, with expectations for mid-single-digit growth. The pace of tech manufacturing jobs and a ramp-up in Q2 will influence whether they meet the higher end of guidance [15][16]. 4. **Data Center Business Growth**: The data center segment currently accounts for approximately 3-3.5% of revenues, growing rapidly. The scope of engagement has increased significantly, moving from design to comprehensive solutions including site selection and utility needs [26][30]. 5. **Sustainability of Growth in Key Markets**: The growth in life sciences and advanced manufacturing is deemed sustainable, with a 24-month visibility on pipeline compared to the previous 6-12 months. AI and drug discovery advancements are accelerating the market [23][24]. 6. **AI Integration and Digital Tools**: Jacobs has integrated AI into its operations, enhancing efficiency and client engagement. The use of AI-enabled platforms is driving growth and improving margins, particularly in water and life sciences sectors [40][41][42]. 7. **International Growth**: International business has outpaced domestic growth, particularly in Australia, New Zealand, and the Middle East. The UK market has also shown strength following political stabilization [76][77]. 8. **Capital Allocation Strategy**: Jacobs prioritizes organic growth and share repurchases, with a commitment to return at least 65% of free cash flow. The company has also increased its dividend by 12.5% year-on-year [86][87]. 9. **Industry Consolidation Outlook**: While sector-based consolidation is likely, Jacobs remains focused on organic growth opportunities. The company is not currently prioritizing large-scale M&A [81][82][86]. 10. **Long-term Margin Goals**: Jacobs aims to achieve adjusted EBITDA margins of 16%+ by fiscal 2029, driven by operating leverage, gross margin expansion, and an improved commercial mix [94][95]. Other Important Insights - **Client Relationships**: Jacobs emphasizes long-term client relationships and early involvement in projects, which has been beneficial in securing contracts [8]. - **Digital Transformation**: The company has invested in digital capabilities, enhancing its competitive position in the consulting space [57][60]. - **Market Positioning**: Jacobs is well-positioned in the energy and power sector, experiencing double-digit organic growth [89][91]. This summary encapsulates the key insights from the Jacobs conference call, highlighting the company's strategic direction, market performance, and future outlook.

Dallas, Texas-based Jacobs Solutions Inc. (J) is a consulting firm with a market cap of $16 billion. It delivers technical, design, and strategic advisory services for infrastructure, advanced facilities, and water to industrial and commercial clients. This industrial company has underperformed the broader market over the past 52 weeks. Shares of J have gained 5.9% over this time frame, while the broader S&P 500 Index ($SPX) has soared 11.9%. However, on a YTD basis, the stock is up 3%, outpacing SPX’s ma ...

PresentationI'm very excited to have Jacobs with us today. We have Bob Pragada, who is the Chief Executive Officer. We've got Venk Nathamuni, who is our -- who is the CFO of Jacobs. So I'm going to come over to you guys, and maybe Bob or Venk if you have a couple of prepared remarks, and then we'll get ready to Q&A.Robert PragadaCEO & Chair of the Board Sure. Well, first, Andy, thanks for having us. Just a couple of comments. One, coming off of a great quarter. Q1 was probably in recent years, in fact, we h ...

Summary of Jacobs Solutions Conference Call Company Overview - **Company**: Jacobs Solutions (NYSE:J) - **Date**: February 17, 2026 - **Key Speakers**: Bob Pragada (CEO), Venk Nathamuni (CFO) Key Industry Insights Financial Performance - **Q1 Growth**: Achieved an organic top-line growth of **8.2%** and a book-to-bill ratio of **2.0**, indicating strong demand and pipeline growth [2][4] - **Margin Expansion**: Continued margin expansion trend with an EBITDA margin increase of **110 basis points** in fiscal 2025 and a forecasted increase of **50-80 basis points** for fiscal 2026 [58][60] Market Segments - **Data Centers**: Significant growth in data center bookings, contributing to **20%** of overall bookings in Q1, with broad-based growth across water, semiconductors, and transportation sectors [11][12] - **Life Sciences and Advanced Manufacturing**: Strong growth driven by advancements in AI and chip manufacturing, with potential for double-digit revenue growth [110][148] - **Water Sector**: Expected high single-digit growth, supported by large multi-year projects [88][89] - **Environmental Sector**: Experienced some softness due to regulatory volatility but is seeing a rebound in pipeline growth [80][85] Competitive Advantages - **Technology Integration**: Jacobs is leveraging AI and data analytics to enhance operational efficiency and expand serviceable available market (SAM) [18][29] - **Decades of Experience**: The company has a significant advantage due to its long history of unstructured data, which is being transformed into structured data for better decision-making [47][56] - **Global Delivery Model**: The use of global delivery centers is expected to drive margin expansion, particularly in life sciences and advanced manufacturing projects [69][70] Strategic Initiatives Acquisition of PA Consulting - Jacobs is acquiring the remaining **35%** of PA Consulting, which is expected to enhance growth opportunities and operational synergies, particularly in defense and security sectors [171][186] - PA Consulting's expertise in energy, utilities, and health sciences aligns well with Jacobs' existing capabilities [186] Future Growth Prospects - **Geographic Expansion**: Strong growth anticipated in the Middle East, India, and Australia, driven by infrastructure projects and local demand [193][200] - **Free Cash Flow**: Guidance for free cash flow margin increased to **7-8.5%** for fiscal 2026, with a long-term target of **10%+** by 2029 [214][215] Additional Insights - **Client Demand**: Clients are increasingly asking for faster project delivery, particularly in the context of climate change and energy transition [40][46] - **Pricing Strategy**: Pricing remains stable, with opportunities for margin improvement through efficiencies rather than significant price increases [62][65] - **Emerging Trends**: The integration of AI in project delivery and the importance of regulatory compliance in various sectors are critical for maintaining competitive advantage [156][159] Conclusion Jacobs Solutions is positioned for continued growth through strategic acquisitions, technological advancements, and a focus on high-demand sectors such as life sciences, advanced manufacturing, and infrastructure. The company's strong financial performance and proactive approach to market dynamics suggest a positive outlook for the coming years.

Core Insights - Jacobs, in partnership with PA Consulting, has secured a four-year contract extension from the U.K. Department for Transport to lead the National Security Science and Research (NSSR) program, aimed at enhancing transport security across air, road, and rail networks in the U.K. [1] Group 1: Contract and Collaboration - The consortium includes Jacobs, PA Consulting, QinetiQ, TNO, Iconal Technology, Cambridge University Technical Services Limited, and Prometheus Policing Services, focusing on delivering science-led solutions to anticipate risks and respond to emerging threats [1] - The contract extension emphasizes the collaboration between government and industry to strengthen security and resilience in U.K. transport systems [1] Group 2: Expertise and Contributions - Jacobs contributes capabilities in transport infrastructure, systems integration, and resilience planning, while PA Consulting brings expertise in quantum, cyber, aviation security, and program management [1] - The program aims to apply science, technology, and agile delivery to address real-world transport security challenges, supporting the long-term goal of a secure and adaptable transport network [1] Group 3: Global Operations and Impact - Jacobs supports various complex transport programs globally, including projects in the U.K., Australia, and New York, showcasing its extensive experience in managing critical infrastructure [1] - The partnership with PA Consulting is positioned to enhance national security while ensuring the safe operation of U.K. transport systems [1]

Market Overview - February has started with a subdued market sentiment, characterized by an AI-driven sell-off in U.S. stocks as investors reassess high expectations [1] - Concerns have emerged regarding the potential erosion of pricing power for software stocks due to AI tools, alongside fears of a slowdown in hyperscaler AI capital expenditures impacting chip and data-center suppliers [1] - The market is seeking clearer monetization strategies and disciplined spending from companies [1] Investment Recommendations - Retail investors may find it challenging to identify stocks for solid long-term returns, but following broker recommendations can simplify this process [2] - Stocks such as Jacobs Solutions Inc. (J), Envista Holdings Corporation (NVST), and Tapestry, Inc. (TPR) are highlighted as potential investment opportunities [2] Broker Insights - Brokers develop informed views by engaging with senior management, analyzing public disclosures, and participating in earnings calls, which helps contextualize a company's fundamentals within the broader economic landscape [3] - Upgrades from brokers are often based on new evidence, such as updated guidance or channel checks, which can indicate an inflection point before it is reflected in market consensus [4] Stock Screening Strategy - A screening strategy is proposed to identify potential winning stocks, focusing on those with broker rating upgrades of 1% or more over the past four weeks [6] - Stocks must have a current price greater than $5 and an average 20-day trading volume exceeding 100,000 to ensure liquidity [6] Specific Stock Performances - Jacobs Solutions is expected to see a 16.5% year-over-year increase in fiscal 2026 earnings and has experienced a 6.3% upward revision in broker ratings recently [9] - Envista Holdings, with a diversified portfolio in dental solutions, is projected to have a 17.7% increase in earnings for 2026 and has seen an 18.5% upward revision in broker ratings [10] - Tapestry is anticipated to achieve a 19% year-over-year earnings growth in fiscal 2026, with a 5% increase in broker ratings [11]

Core Insights - Jacobs has been awarded a contract under the U.S. Missile Defense Agency's SHIELD program, with a ceiling value of $151 billion, focusing on scalable, software-enabled systems [1] - The contract aims to enhance the development and integration of advanced solutions across complex, mission-critical environments, emphasizing speed and agility in delivery [1] - Jacobs provides a wide range of services supporting national security infrastructure, including mission management, advanced data processing, cyber capabilities, artificial intelligence, and space engineering [1] Company Overview - Jacobs reported approximately $12 billion in annual revenue and employs nearly 43,000 people, offering end-to-end services across various sectors including advanced manufacturing, energy, and transportation [1] - The company is committed to creating a more connected and sustainable world through its diverse service offerings, which include advisory, planning, design, and lifecycle management [1]

Core Viewpoint - Growth stocks are appealing due to their potential for above-average financial growth, but identifying the right ones can be challenging due to associated risks and volatility [1] Group 1: Company Overview - Jacobs Solutions is currently recommended as a growth stock by the Zacks Growth Style Score system, which evaluates a company's growth prospects beyond traditional metrics [2] - The company holds a top Zacks Rank, indicating strong potential for performance [2] Group 2: Earnings Growth - Historical EPS growth for Jacobs Solutions is 0.2%, but projected EPS growth for this year is 16.5%, significantly higher than the industry average of 10.6% [5] Group 3: Asset Utilization - Jacobs Solutions has an asset utilization ratio (sales-to-total-assets ratio) of 1.09, outperforming the industry average of 0.85, indicating efficient asset use to generate sales [6] Group 4: Sales Growth - The company's sales are expected to grow by 9.4% this year, compared to the industry average of 4.2%, showcasing strong sales growth potential [7] Group 5: Earnings Estimate Revisions - There has been a positive trend in earnings estimate revisions for Jacobs Solutions, with the Zacks Consensus Estimate for the current year increasing by 0.9% over the past month [8] Group 6: Investment Positioning - Jacobs Solutions has achieved a Zacks Rank of 2 and a Growth Score of A, positioning it well for potential outperformance in the growth stock category [10]

Core Viewpoint - Investors are evaluating Jacobs Solutions (J) and Advanced Drainage Systems (WMS) to determine which stock offers better value for investment at the current time [1] Group 1: Zacks Rank and Earnings Outlook - Both Jacobs Solutions and Advanced Drainage Systems currently hold a Zacks Rank of 2 (Buy), indicating a positive earnings outlook due to favorable analyst estimate revisions [3] - The Zacks Rank is a reliable indicator for value investors as it emphasizes companies with improving earnings forecasts [2] Group 2: Valuation Metrics - Jacobs Solutions has a forward P/E ratio of 20.88, while Advanced Drainage Systems has a higher forward P/E of 29.09 [5] - The PEG ratio for Jacobs Solutions is 1.54, compared to Advanced Drainage Systems' PEG ratio of 2.26, indicating Jacobs Solutions may be undervalued relative to its expected earnings growth [5] - Jacobs Solutions has a P/B ratio of 5.07, while Advanced Drainage Systems has a P/B ratio of 7, further suggesting that Jacobs Solutions is a more attractive value option [6] Group 3: Value Grades - Based on the valuation metrics, Jacobs Solutions has earned a Value grade of B, whereas Advanced Drainage Systems has received a Value grade of D, indicating a stronger value proposition for Jacobs Solutions [6]