Core Insights - A new pediatric hospital project in Dallas, Texas, is being developed by a joint venture between Children's Health and UT Southwestern Medical Center, with Jacobs selected as the owner's program manager [1][2] - The new campus aims to address the anticipated doubling of the pediatric population in the region by 2050, increasing bed capacity by 38% and expanding emergency department space [2][3] - The facility will feature the largest Level IV Neonatal Intensive Care Units in Dallas, along with a new fetal care center and over 20 acres of green space [2][3] Company Overview - Jacobs is a global company with approximately $12 billion in annual revenue and a workforce of nearly 45,000, providing end-to-end services across various sectors including advanced manufacturing, energy, and life sciences [4] - The company has extensive experience in program management, having delivered 50 academic research centers and 15 children's hospital campuses globally [2][4] - Jacobs emphasizes the importance of healthcare infrastructure in supporting community wellbeing and regional economic vitality [3]

Core Insights - Jacobs Solutions reported Q3 FY2025 results with Non-GAAP EPS of $1.62, exceeding the consensus of $1.53, while GAAP revenue was $3.03 billion, slightly below the estimate of $3.07 billion [1][2] - The company achieved a 24.6% year-over-year growth in adjusted EPS, despite a decline in free cash flow [1][2] - Strategic focus remains on high-growth areas such as smart infrastructure, sustainability, and digital transformation [4][15] Financial Performance - Non-GAAP EPS reached $1.62, a 24.6% increase from $1.30 in Q3 FY2024 [2] - GAAP revenue grew 5.1% year-over-year from $2.88 billion in Q3 FY2024 [2][6] - Adjusted net revenue was $2.23 billion, up 7.2% from $2.08 billion in Q3 FY2024 [2] - Adjusted EBITDA increased by 13.5% year-over-year [5] - Free cash flow (non-GAAP) fell 39.1% to $271 million from $445 million [2][8] Business Overview and Strategic Focus - The company operates in infrastructure, advanced facilities, and digital consulting, focusing on sectors like water, energy, and life sciences [3] - Recent strategic initiatives include targeting energy transition, water infrastructure, and digital transformation [4] - The company has made strategic acquisitions and divestitures to enhance its portfolio [4] Market Demand and Growth Drivers - Strong demand in the I&AF division was driven by life sciences, data centers, energy, and transportation [6] - Backlog reached a record $22.7 billion, up 14.3% year-over-year, indicating healthy order intake [7] - PA Consulting segment reported 15% revenue growth year-over-year [6] Capital Returns and Shareholder Value - The company repurchased $653 million in shares, retiring about 4% of shares outstanding in FY2025 [7] - Dividends increased from $0.29 to $0.32 per share, marking consecutive years of dividend growth [9][10] - A 10% dividend increase is planned for FY2025 [15] Future Outlook - Adjusted EPS guidance for FY2025 is raised to $6.00 to $6.10, with a target of approximately 5.5% adjusted net revenue growth [15] - Free cash flow conversion is expected to exceed 100% of net income for FY2025 [15] - Key areas to monitor include backlog conversion, free cash flow generation, and performance in digital and consulting businesses [15]

Core Insights - Jacobs Solutions Inc. reported mixed Q3 fiscal 2025 results, with adjusted earnings exceeding estimates while revenues fell short, although both metrics showed year-over-year growth [1][4][10] Financial Performance - Adjusted EPS was $1.62, beating the Zacks Consensus Estimate of $1.56 by 3.9%, and up from $1.30 in the same quarter last year [4][10] - Revenues totaled $3.03 billion, missing the consensus mark of $3.07 billion by 1.1%, but grew 5.2% year over year [4][10] - Adjusted net revenues were $2.23 billion, reflecting a 7.2% year-over-year increase [4] - Adjusted operating profit increased 13.7% to $308.4 million, with an adjusted operating margin of 13.8%, up 80 basis points year over year [5] - Adjusted EBITDA was $314.3 million, up 13.5% year over year, with a margin of 14.1%, also up 80 basis points [5] Backlog and Demand - Fiscal Q3 backlog rose 14% year over year to $22.69 billion, indicating strong project wins and future revenue stability, with a book-to-bill ratio of 1.2x [5][10] - The Infrastructure & Advanced Facilities segment reported revenues of $2.7 billion, a 4% increase year over year, with adjusted net revenues of $1.9 billion, up 5.7% [6] - The Critical Infrastructure business saw gross revenues rise 6.1% year over year to $1.14 billion, while Life Sciences and Advanced Manufacturing grew 7.2% to $754 million [8] Segment Performance - PA Consulting segment generated $332.7 million in revenues, a 15.4% increase from the previous year [9] - The Water & Environmental business experienced a decline in gross revenues by 1.5% year over year to $803 million [8] Balance Sheet and Cash Flow - Cash and cash equivalents at the end of Q3 were $1.29 billion, up from $1.14 billion at the end of fiscal 2024 [12] - Long-term debt increased to $2.51 billion from $1.35 billion at the end of fiscal 2024 [12] - Net cash provided by operating activities was $303.6 million in the first nine months of fiscal 2025, down from $858.1 million in the same period last year [13] Guidance - Adjusted net revenues are expected to grow approximately 5.5% year over year, with an adjusted EBITDA margin projected at about 13.9% [14] - Adjusted EPS guidance has been raised to between $6.00 and $6.10, up from the previous range of $5.85-$6.20 [15]

Financial Data and Key Metrics Changes - Adjusted EPS grew 25% to $1.62, supported by 7% net revenue growth and significant year-over-year margin expansion [4][6] - Adjusted EBITDA increased by more than 13% to $314 million, with an adjusted EBITDA margin of 14.1%, an increase of 80 basis points year-over-year [14][15] - Consolidated backlog rose 14% year-over-year to a record $22.7 billion, with a trailing twelve-month book-to-bill ratio of 1.2x [15][22] Business Line Data and Key Metrics Changes - Water and Environmental adjusted net revenue grew over 5% in Q3, with expectations for similar growth in Q4 [16] - Life Sciences and Advanced Manufacturing adjusted net revenue also increased approximately 5% in Q3, with anticipated growth in Q4 [16] - Critical Infrastructure adjusted net revenue rose over 6% year-on-year, with Energy and Power being the fastest-growing sector [17] Market Data and Key Metrics Changes - Strong demand in the water sector, with significant project wins in wastewater treatment and environmental modernization [9][12] - Data centers are becoming the fastest-growing submarket, with increased scope in power and water requirements [10][29] - Growth in transportation and energy sectors in Europe and the Middle East, driven by stabilization in government budgets [55] Company Strategy and Development Direction - The company aims to redefine the asset lifecycle, focusing on expanding addressable markets with core clients [8][25] - Continued investment in digital twin technologies and partnerships, such as with NVIDIA, to enhance service offerings [10][30] - The strategy includes leveraging global expertise in capital project execution to meet energy and sustainability goals [12][13] Management's Comments on Operating Environment and Future Outlook - Management feels positive about the operating environment, citing secular growth drivers in various sectors [5][22] - The company expects to build on strong Q3 performance into Q4 and fiscal year 2026, with revenue growth anticipated to exceed fiscal year 2025 [23][24] - Management highlighted the importance of backlog growth and pipeline strength as indicators of future success [25] Other Important Information - Free cash flow for Q3 was $271 million, with significant share repurchases and capital returns to shareholders [20][21] - The company is on track to return over 100% of adjusted free cash flow in fiscal year 2025 [21][22] - The updated outlook for fiscal year 2025 includes adjusted net revenue growth of approximately 5.5% and adjusted EPS in the range of $6 to $6.1 [22] Q&A Session Summary Question: Can you expand on the data center submarket growth? - The company is seeing increased scope in data center projects, including power and water requirements, and is expanding its delivery model to full project delivery [29][30] Question: What is the makeup of the backlog and the expected pace of burn? - The backlog is growing in advanced facilities and water sectors, with longer duration projects expected to provide visibility beyond fiscal year 2026 [32][35] Question: How do you assess the impact of new federal policies on business? - The company sees stability in state and local government spending, particularly in transportation and water, as a net positive for business [40][42] Question: What are the expected one-time costs associated with the separation? - One-time restructuring costs are expected to be between $75 million and $95 million, significantly lower than the previous fiscal year [45][46] Question: What is the outlook for fiscal year 2026 growth? - The company expects growth in fiscal year 2026 to exceed that of fiscal year 2025, driven by life sciences, data centers, and water sectors [49][51] Question: How is the environmental sector performing? - The environmental sector experienced a slowdown but is expected to recover as regulatory environments stabilize [97] Question: What is the status of the investment in PA Consulting? - The dialogue with PA Consulting continues positively, with a focus on performance and synergistic value moving forward [100][101]

Financial Data and Key Metrics Changes - Adjusted EPS grew 25% to $1.62, supported by 7% net revenue growth and significant year-over-year margin expansion [4][6] - Adjusted EBITDA increased by more than 13% to $314 million, with an adjusted EBITDA margin of 14.1%, an increase of 80 basis points year-over-year [13][14] - Consolidated backlog rose 14% year-over-year to a record $22.7 billion, with a trailing twelve-month book-to-bill ratio of 1.2x [14][20] Business Line Data and Key Metrics Changes - In the water and environmental sector, adjusted net revenue grew over 5% in Q3, with expectations for similar growth in Q4 [15] - Life sciences and advanced manufacturing also saw adjusted net revenue growth of approximately 5% in Q3, with data centers becoming the fastest-growing submarket [15][9] - Critical infrastructure adjusted net revenue increased over 6% year-on-year, with energy and power being the fastest-growing sector [16] Market Data and Key Metrics Changes - Strong demand in the water sector, with significant project wins in wastewater treatment and environmental modernization [8][11] - Growth in the cities and places vertical in the Middle East, driven by upcoming major events [52] - Positive trends in the UK and European markets, particularly in transportation infrastructure spending [51] Company Strategy and Development Direction - The company is focused on redefining the asset lifecycle and expanding addressable markets with core clients [7][12] - Continued investment in digital twin technologies and partnerships, such as with NVIDIA, to enhance service offerings in AI data centers [9][10] - The strategy aims to leverage global expertise in capital project execution to meet energy and sustainability goals [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the operating environment, citing secular growth drivers in various sectors [5][25] - The company expects to build on strong Q3 performance into Q4 and anticipates revenue growth ahead of FY 2025 in FY 2026 [23][25] - Management highlighted the importance of backlog growth and pipeline strength as indicators of future performance [25] Other Important Information - Free cash flow for Q3 was $271 million, with significant share repurchases totaling $653 million year-to-date [20] - The company plans to return over 100% of adjusted free cash flow in FY 2025, supported by a strong balance sheet [20][22] - Adjusted net revenue growth for FY 2025 is now expected to be approximately 5.5% year-over-year [22] Q&A Session Summary Question: Can you expand on the data center submarket growth? - The company is seeing increased scope in data center projects, including power and water requirements, and is expanding from design to full project delivery [28][30] Question: What is the makeup of the backlog and the expected pace of burn? - The backlog is growing in advanced facilities and water sectors, with longer duration projects expected to provide visibility beyond FY 2026 [32][34] Question: How do you assess the impact of new federal policies on business? - Management sees stability in state and local government spending, particularly in transportation and water, as a net positive for the business [40][42] Question: What are the expected one-time costs associated with the separation? - One-time restructuring costs are expected to be between $75 million and $95 million, significantly lower than the previous fiscal year [44][45] Question: What is the outlook for FY 2026 growth? - The company expects growth in FY 2026 to be ahead of FY 2025, driven by life sciences, data centers, and water projects [48][50] Question: How is the environmental sector performing? - The environmental sector experienced a slowdown but is expected to recover as regulatory environments stabilize [95] Question: What is the status of the investment in PA Consulting? - Ongoing discussions with PA Consulting are positive, focusing on performance and synergistic value moving forward [98]

Financial Performance - GAAP gross revenue reached $3 billion, showing a year-over-year increase of 51%[10] - Adjusted net revenue was $22 billion, up 70% year-over-year[10] - GAAP net income increased significantly to $181 million, a 1186% rise year-over-year[10] - Adjusted net income grew to $195 million, representing a 192% increase year-over-year[10] - Adjusted EBITDA stood at $314 million, a 135% increase year-over-year, with an adjusted EBITDA margin of 141% on adjusted net revenue[10] - GAAP EPS was $156, up 1364% year-over-year, and adjusted EPS was $162, a 246% increase year-over-year[10] Backlog and Cash Flow - The company reported a Q3 Book-to-Bill ratio of 12x, with a trailing twelve-month (TTM) ratio also at 12x[10] - Q3 FY 2025 cash flow from operations (CFFO) was $293 million[19] - Q3 FY 2025 free cash flow (FCF) amounted to $271 million[19] Segment Performance - Infrastructure and Advanced Facilities (I&AF) operating profit was $236 million, a 134% increase year-over-year, representing 124% of adjusted net revenue[18] - PA Consulting operating profit was $72 million, a 152% increase year-over-year, remaining at 218% of revenue[18] Outlook - The company is raising its FY 2025 adjusted EPS guidance to $600-$610[23] - The company anticipates adjusted net revenue growth of approximately 55% year-over-year[23]

Core Insights - Jacobs Solutions reported quarterly earnings of $1.62 per share, exceeding the Zacks Consensus Estimate of $1.56 per share, but down from $1.96 per share a year ago, representing an earnings surprise of +3.85% [1] - The company posted revenues of $3.03 billion for the quarter ended June 2025, missing the Zacks Consensus Estimate by 1.07%, and down from $4.23 billion year-over-year [2] - Jacobs Solutions has surpassed consensus EPS estimates in all four of the last quarters, but has only topped revenue estimates once in the same period [2] Earnings Outlook - The future performance of Jacobs Solutions' stock will largely depend on management's commentary during the earnings call and the trends in earnings estimate revisions [3][4] - The current consensus EPS estimate for the upcoming quarter is $1.67 on revenues of $3.2 billion, and for the current fiscal year, it is $5.99 on revenues of $12.1 billion [7] Industry Context - The Technology Services industry, to which Jacobs Solutions belongs, is currently ranked in the top 41% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - The performance of Jacobs Solutions' stock may also be influenced by the overall industry outlook, as empirical research shows a strong correlation between near-term stock movements and earnings estimate revisions [5][8]

Business Transformation and Strategy - Jacobs has transformed into a science-based consulting and advisory leader, focusing on delivering resilient, digitally enabled solutions for sustainability and critical infrastructure challenges [167]. - The company announced its multi-year growth strategy, "Challenge Accepted," aimed at driving profitable growth and delivering scalable solutions across Water and Environmental, Life Sciences, and Advanced Manufacturing [168]. - Jacobs invested in a 65% stake in PA Consulting, enhancing its capabilities in high-end advisory services and creating significant opportunities for clients [178]. - Jacobs' strategic partnerships and acquisitions are aimed at addressing global challenges such as urbanization and infrastructure modernization, enhancing its market position [169]. Financial Performance - For the three months ended June 27, 2025, revenues were $3.03 billion, an increase of $148.4 million, or 5.1%, compared to $2.88 billion for the same period last year [190]. - Net earnings attributable to the Company from continuing operations for the third fiscal quarter of 2025 were $181.2 million, or $1.56 per diluted share, an increase of $98.3 million from $82.9 million, or $0.66 per diluted share, for the corresponding period last year [186]. - Gross profit for the third fiscal quarter of 2025 was $758.4 million, an increase of $37.5 million, or 5.2%, from $720.9 million for the same period last year, with gross profit margins of 25.0% for both periods [192]. - Selling, general and administrative expenses for the three months ended June 27, 2025 were $523.4 million, a decrease of $26.6 million, or 4.8%, from $550.0 million for the same period last year [194]. - Net interest expense for the three months ended June 27, 2025 was $28.8 million, a decrease of $7.3 million, or 20.3%, from $36.1 million for the same period last year [195]. - For the nine months ended June 27, 2025, revenues were $8.88 billion, an increase of $334.3 million, or 3.9%, from $8.54 billion for the same period last year [190]. - Net earnings attributable to the Company from continuing operations for the nine months ended June 27, 2025 were $175.3 million, or $1.53 per diluted share, a decrease of $128.2 million from $303.5 million, or $2.42 per diluted share, for the same period last year [188]. - Gross profit for the nine months ended June 27, 2025 was $2.22 billion, an increase of $120.4 million, or 5.7%, from $2.10 billion for the same period last year [192]. Segment Performance - Revenues for the Infrastructure & Advanced Facilities segment for the three months ended June 27, 2025, were $2.70 billion, a 4.0% increase from $2.60 billion in the same period last year [212]. - Operating profit for the Infrastructure & Advanced Facilities segment for the three months ended June 27, 2025, was $236.0 million, reflecting a 13.4% increase from $208.2 million in the prior year [213]. - PA Consulting segment revenues for the three months ended June 27, 2025, were $332.7 million, a 15.4% increase from $288.3 million in the same period last year [214]. - Operating profit for the PA Consulting segment for the three months ended June 27, 2025, was $72.4 million, up 15.2% from $62.9 million in the prior year [215]. Cash Flow and Liquidity - Cash and cash equivalents increased by $148.5 million to $1.29 billion as of June 27, 2025, compared to $1.14 billion at September 27, 2024 [224]. - Net cash provided by operating activities for the nine months ended June 27, 2025, was $303.6 million, a decrease of $554.5 million from $858.1 million in the prior year period [224]. - Net cash used for investing activities was $46.4 million for the nine months ended June 27, 2025, down from $95.0 million in the prior year [225]. - Net cash used for financing activities was $126.2 million, driven by share repurchases of $653.2 million and dividends of $114.8 million [226]. - The company believes it has adequate liquidity and capital resources to fund projected cash requirements for acquisitions and financing activities for the next twelve months [236]. Debt and Financing - Long-term debt increased by $1.2 billion to $2.51 billion as of June 27, 2025, primarily due to the 2025 Term Loan Facility [231]. - Short-term debt decreased by $875.8 million to $1.1 billion as of June 27, 2025, due to the Equity-for-Debt Transaction and the 2025 Term Loan Facility [232]. - The company had approximately $1.29 billion in cash and cash equivalents from continuing operations at the end of the period [224]. - As of June 27, 2025, the company had $1.42 billion in outstanding borrowings under its Revolving Credit Facility and 2025 Term Loan Facility, with interest rates subject to adjustments based on the Consolidated Leverage Ratio [242]. - The company has a notional value of $200 million in a swap agreement to convert variable rate interest liabilities into fixed rate liabilities, leaving $1.22 billion subject to variable interest rate risk [243]. - For the nine months ended June 27, 2025, the company's weighted average borrowings subject to floating rate exposure were approximately $1.19 billion, with a potential interest expense increase of $8.9 million if rates rose by 1.00% [244]. Taxation - The effective tax rate for the three months ended June 27, 2025, was 21.9%, down from 33.2% for the same period in 2024, primarily due to U.S. state income tax and foreign earnings tax impacts [198]. - For the nine months ended June 27, 2025, the effective tax rate was 45.6%, significantly higher than 14.9% for the same period in 2024, largely due to $63.1 million in unfavorable tax impacts from non-deductible losses on Amentum stock [200]. - The company expects ongoing impacts from U.S. state income tax and foreign earnings tax on its effective tax rate for the remainder of the fiscal year [200]. Restructuring and Charges - The company incurred approximately $20.5 million in restructuring charges during the nine months ended June 27, 2025, with expected annualized pre-tax cash savings of $155 million to $190 million [204]. - The company recorded a reserve related to an unfavorable interim ruling against a consolidated joint venture, impacting revenues and operating profits for the nine months ended June 27, 2025 [212]. Currency and Risk Management - The company has $1.08 billion in notional value of exchange rate sensitive instruments to limit foreign currency risk as of June 27, 2025 [245]. - The company has $1.08 billion in notional value of foreign exchange contracts to mitigate currency fluctuations [245]. - Foreign currency translation positively impacted revenues by approximately $18.9 million and $8.3 million for the three and nine months ended June 27, 2025, respectively [212]. - The company is monitoring potential impacts from recent international trade issues, including tariffs, which may affect business operations and financial condition [252]. Internal Controls and Governance - There were no changes to the company's internal control over financial reporting that materially affected its effectiveness during the quarter ended June 27, 2025 [248]. - The company's management evaluated the effectiveness of its disclosure controls and procedures as of June 27, 2025, concluding they were effective [247]. Share Repurchase Programs - The company authorized a share repurchase program of up to $1.0 billion on January 25, 2023, and completed the remaining repurchases during the second fiscal quarter of 2025 [255]. - An incremental share repurchase program of up to $1.5 billion was authorized on January 30, 2025, with 810,859 shares repurchased at an average price of $123.36 [257].

Gross Revenue Grows 5.1% y/y and Adjusted Net Revenue Grows 7.0% y/y in Fiscal Third Quarter 2025 Backlog Grows by 14% Year-Over-Year with TTM Book-to-Bill Ratio of 1.2x Repurchased $101 Million of Jacobs Shares in Fiscal Third Quarter 2025 and Record $653 Million Fiscal YTD Increasing FY 2025 Adjusted EPS Guidance Midpoint DALLAS, Aug. 5, 2025 /PRNewswire/ -- Jacobs Solutions Inc. (NYSE: J) today announced its financial results for the fiscal third quarter ended June 27, 2025. Q3 2025 Highlights1: Jacobs' ...

Financial Performance - Gross revenue for Q3 2025 reached $3.0 billion, an increase of 5.1% year-over-year; adjusted net revenue was $2.2 billion, up 7.0% year-over-year[7] - GAAP net earnings from continuing operations were $181.2 million, a 119% increase year-over-year; GAAP EPS was $1.56, up 136% year-over-year[7] - Adjusted EBITDA for Q3 2025 was $314.3 million, reflecting a 13.5% year-over-year increase; adjusted EBITDA margin is projected to be approximately 13.9%[7][5] - Revenue growth was driven by strong performance in Infrastructure & Advanced Facilities and PA Consulting, with PA Consulting revenue increasing by 15% year-over-year[4] - Net earnings for the three months ended June 27, 2025, were $189,723 thousand, an increase from $158,896 thousand for the same period in 2024, representing a growth of 19.3%[21] - Net earnings attributable to Jacobs from continuing operations for the three months ended June 27, 2025, were $181,234,000, compared to $82,924,000 for the same period in 2024, representing a significant increase[48] - Adjusted net earnings attributable to Jacobs from continuing operations for the three months ended June 27, 2025, were $194,833,000, compared to $163,441,000 in the same period last year[48] Backlog and Revenue Growth - Backlog increased to $22.7 billion, representing a 14.3% year-over-year growth; the book-to-bill ratio for Q3 was 1.2x[7] - The total backlog increased to $22,690 million as of June 27, 2025, compared to $19,858 million on June 28, 2024, reflecting a growth of 9.2%[22] - Total revenue for the nine months ended June 27, 2025, reached $8,875,139, a 3.9% increase from $8,540,791 for the same period in 2024[16] Shareholder Returns - The company repurchased $101 million of shares in Q3 2025, totaling $653 million year-to-date, which is over 100% of free cash flow[3] - The company has retired approximately 4% of its shares in fiscal 2025 while maintaining a net leverage ratio at the low end of its target range of 1.0-1.5x[4] Cash Flow and Liquidity - Cash and cash equivalents as of June 27, 2025, were $1,293,307, an increase from $1,144,795 as of September 27, 2024[20] - Net cash provided by operating activities for the nine months ended June 27, 2025, was $303,619 thousand, compared to $858,141 thousand for the same period in 2024, indicating a decrease of 64.7%[21] - Free cash flow for the three months ended June 27, 2025, was $270,542,000, compared to $444,938,000 for the same period in 2024, indicating a decrease[49] Tax and Expenses - The effective tax rate from continuing operations decreased to 21.9% from 33.2% year-over-year[8] - The adjusted effective tax rate from Continuing Operations for the nine months ended June 27, 2025, was 26.0%, compared to 16.5% for the same period in 2024[36] - Restructuring, integration, separation, and other charges for the three months ended June 27, 2025, amounted to $22,254, down from $53,961 in the same period of 2024, a decrease of 58.8%[34] Operational Efficiency - Jacobs' adjusted operating profit margin is calculated based on adjusted net revenue, providing a clearer view of operational efficiency[29] - The adjusted EBITDA margin is a key metric for evaluating operational performance, reflecting the company's focus on profitability[28] - The company emphasizes the importance of non-GAAP measures to provide additional insights into financial results, aiding in performance evaluation[32]