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]

Key Takeaways Jacobs is expected to report Q3 EPS of $1.56, down 20.4% YOY, on $3.07B in revenues, down 27.6%.Global macro headwinds, FX impact and inflation may weigh on the Infrastructure and PA Consulting segments.Cost streamlining initiatives could partially offset margin pressures from labor and IT investments.Jacobs Solutions, Inc. (J) is slated to report third-quarter fiscal 2025 results on Aug. 5, before the opening bell.In the last reported quarter, the company’s adjusted earnings topped the Zacks ...