Core Viewpoint - A lawsuit has been filed by seven Italian civil society groups against Leonardo, a state-controlled defense group, and the Italian government, aiming to annul contracts related to arms sales and supply [1] Group 1: Lawsuit Details - The lawsuit targets the contracts for the sale and supply of arms, indicating a significant legal challenge to the operations of Leonardo [1] - The civil society groups are seeking to annul any existing contracts, which could impact Leonardo's business and revenue streams [1] Group 2: Implications for the Defense Industry - This legal action reflects growing scrutiny and opposition to arms sales in Italy, potentially influencing public perception and regulatory environment for defense companies [1] - The outcome of the lawsuit may set a precedent for future contracts and operations within the defense sector in Italy [1]

Core Insights - Jacobs Solutions Inc. reported stronger-than-expected fiscal fourth-quarter earnings with adjusted EPS of $1.75, exceeding the analyst forecast of $1.67 [1] - The company generated revenue of $3.2 billion for the quarter, surpassing consensus expectations of $3.15 billion, marking a 6.6% year-over-year increase [1] - Jacobs' backlog reached a record $23.1 billion, up 5.6% from the prior year, supported by a book-to-bill ratio of 1.1x [2] Financial Performance - Adjusted net revenue rose 5.8% to $2.2 billion [1] - Adjusted EPS increased 27.7% year over year, while adjusted EBITDA rose 12% to $324 million [2] - GAAP earnings were impacted by mark-to-market adjustments related to the company's former holdings in Amentum [2] Future Projections - For fiscal 2026, Jacobs projected adjusted EPS between $6.90 and $7.30, representing 16% growth at the midpoint compared to fiscal 2025 [3] - The midpoint of $7.10 was slightly above the analyst consensus of $7.01 [3] - The company anticipates adjusted net revenue growth of 6% to 10% for the year [3]

Core Insights - Jacobs Solutions Inc. reported strong fiscal fourth-quarter 2025 results, with earnings and revenues exceeding expectations, driven by broad-based strength across various sectors [1][2][8] - The company's share price increased by over 3.5% following the earnings announcement [1] Revenue & Earnings Performance - Fiscal Q4 2025 revenues reached $3.15 billion, a 6.6% year-over-year increase, slightly above the Zacks Consensus Estimate of $3.14 billion [2] - Adjusted net revenue rose 5.8% year-over-year to $2.24 billion, indicating healthy growth in core markets [2] - Adjusted EPS was $1.75, up 27.7% from $1.37 last year, surpassing the Zacks Consensus Estimate of $1.67 [3] Margin Improvement - Gross profit increased to $766.9 million from $735.1 million a year earlier [4] - Adjusted EBITDA grew 12% year-over-year to $324 million, with a margin expansion to 14.4% from 13.6% [4] - Adjusted operating profit rose to $326 million from $280.5 million, with an adjusted operating margin improvement to 14.5%, up 134 basis points year-over-year [4] Segment Performance - Infrastructure & Advanced Facilities (I&AF) generated $2.84 billion in revenues, a 6% increase from last year, with adjusted net revenues of $1.92 billion [5] - PA Consulting reported revenues of $318.5 million, a 10% year-over-year increase, with operating profit improving to $72 million [6] - Total company backlog reached a record $23.06 billion, up 5.6% year-over-year, with a healthy book-to-bill ratio of 1.1X [6] Financial Position - Jacobs ended Q4 with $1.24 billion in cash and cash equivalents, compared to $1.14 billion at the end of fiscal 2024 [7] - Long-term debt stood at $2.24 billion, with a net debt-to-EBITDA ratio of 0.8x, below the targeted range of 1.0–1.5x [7] Full-Year Highlights - For fiscal 2025, gross revenue rose 4.6% year-over-year to $12.0 billion, while adjusted net revenue increased 5.3% to $8.7 billion [10] - Adjusted EBITDA grew 13.9% year-over-year to $1.2 billion, yielding a margin improvement to 13.9% [10] - Adjusted EPS increased 15.9% year-over-year to $6.12, reflecting expanding operating leverage [10] Fiscal 2026 Outlook - Jacobs projects 6–10% adjusted net revenue growth for fiscal 2026, with an adjusted EBITDA margin of 14.4–14.7% and adjusted EPS of $6.90–$7.30 [11] - Management emphasized continued strength in secular growth markets and the benefits of a record backlog entering the new fiscal year [11]

Financial Data and Key Metrics Changes - The company reported a 28% year-over-year increase in Q4 adjusted EPS, driven by a 6% net revenue growth and a record adjusted EBITDA margin of over 14.4% [5][10] - For the full fiscal year 2025, adjusted EPS grew by 16%, supported by mid-single-digit net revenue growth and strong margin expansion [5][11] - The consolidated backlog increased by 6% year-over-year to a record $23.1 billion, with a trailing 12-month book-to-bill ratio of 1.1x [11][12] Business Line Data and Key Metrics Changes - In Q4, gross revenue increased by 7% year-over-year, while adjusted net revenue grew by 6% [10] - The Infrastructure and Advanced Facilities segment saw a 16% increase in operating profit year-over-year in Q4, with a 13% increase for the full fiscal year [16] - PA Consulting's revenue increased by 10% year-over-year in Q4, contributing to a 17% increase in operating profit [16] Market Data and Key Metrics Changes - Net revenue growth across the three end markets was consistent, with water and environmental and life sciences and advanced manufacturing growing just over 4%, and critical infrastructure at about 6% for fiscal year 2025 [12] - In Q4, net revenue in critical infrastructure increased by more than 9% year-on-year, driven by key programs in the transportation sector [13] - The water and environmental end market saw flat year-on-year revenue in Q4, with mixed demand trends [15] Company Strategy and Development Direction - The company aims to redefine the asset life cycle and expand its addressable market with core clients, particularly in the water sector, which remains a high-growth area [6][8] - The strategy includes leveraging AI and digital capabilities to enhance service delivery and operational efficiency [42][43] - The company is focused on maintaining a disciplined capital returns policy while investing in growth opportunities [17][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in entering FY 2026 with strong momentum, backed by a record backlog and expanding margins [21][19] - The company anticipates continued tailwinds in the transportation and energy sectors, with expectations for water to remain a key growth driver [14][15] - Management highlighted the importance of regulatory stability in the environmental sector for future growth [31] Other Important Information - Free cash flow generation for fiscal year 2025 was $607 million, with a return of approximately 150% of free cash flow to shareholders [17] - The company approved a $0.32 per share dividend, representing a 10% year-over-year growth [18] Q&A Session Summary Question: Impact of federal government shutdown on fiscal 2026 bookings - Management indicated that there was no impact from the federal government shutdown on fiscal 2025 bookings, as awards occurred before the shutdown [24] Question: Update on PA Consulting negotiations - Management confirmed that negotiations are progressing and a decision is expected before March 2026 [25] Question: Softness in environmental business - Management noted that regulatory volatility and a pause in spending from private sector clients contributed to the softness in the environmental sector [30][31] Question: Free cash flow guidance and unusual items - Management explained that the guidance includes a one-time tax event and cash expenses related to the PA Consulting combination [34] Question: Margin performance in infrastructure and advanced facilities - Management expects a sequential slowdown in Q1 margins but anticipates a linear progression throughout FY 2026 [40] Question: AI leverage and margin opportunities - Management highlighted ongoing AI initiatives and partnerships that are expected to contribute to margin expansion [42][43] Question: Regional performance across end markets - Management reported strong growth across all regions, with double-digit growth in the Middle East and recovery in Europe [49] Question: Pipeline outlook and conversion expectations - Management indicated that the fastest-growing pipelines are in data centers, semiconductors, and life sciences, with strong conversion expected in FY 2026 [67]

Financial Data and Key Metrics Changes - The company reported a 28% year-over-year increase in adjusted EPS for Q4, driven by a 6% net revenue growth and a record adjusted EBITDA margin of over 14.4% [6][12] - For the full fiscal year 2025, adjusted EPS grew by 16%, supported by mid-single-digit net revenue growth and strong margin expansion [6][12] - The consolidated backlog increased by 6% year-over-year to a record $23.1 billion, with a trailing 12-month book-to-bill ratio of 1.1 times [12][19] Business Line Data and Key Metrics Changes - Infrastructure and Advanced Facilities operating profit increased by 16% year-over-year in Q4, with a 13% increase for the full fiscal year [16][17] - PA Consulting's revenue grew by 10% year-over-year in Q4, contributing to a 17% increase in operating profit [17] - The water and environmental sector saw net revenue growth of just over 4% for the fiscal year, while critical infrastructure grew by about 6% [13][15] Market Data and Key Metrics Changes - In Q4, net revenue in critical infrastructure increased by more than 9% year-over-year, driven by key programs in the transportation sector [13][14] - The life sciences and advanced manufacturing sector experienced a net revenue growth of just over 5% in Q4, with strong growth in life sciences and data centers [15] - The water and environmental end market was roughly flat year-over-year in Q4, with mixed demand impacting performance [16] Company Strategy and Development Direction - The company aims to redefine the asset life cycle and expand its addressable market with core clients, particularly in the water sector, which remains a high-growth area [7][9] - The strategy includes leveraging AI and digital capabilities to enhance service delivery and operational efficiency [46][47] - The company is focused on maintaining a disciplined capital returns policy while investing in growth opportunities [18][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in entering FY26 with strong momentum, backed by a record backlog and healthy demand across sectors [21][20] - The company anticipates continued tailwinds in transportation and energy sectors, with expectations for water to remain a key growth driver [15][16] - Management highlighted the importance of regulatory stability in the environmental sector for future growth [32] Other Important Information - Free cash flow generation for fiscal year 2025 was $607 million, with a commitment to return approximately 150% of free cash flow to shareholders [18] - The company approved a $0.32 per share dividend, representing a 10% year-over-year growth [19] - The fiscal year 2026 outlook includes expectations for adjusted net revenue growth of 6%-10% and adjusted EPS growth of 16% year-over-year [19][20] Q&A Session Summary Question: Impact of federal government shutdown on fiscal 2026 bookings - Management indicated that there was no impact from the federal government shutdown on bookings, as awards occurred before the shutdown [24][25] Question: Update on PA Consulting negotiations - Management confirmed that negotiations are progressing and a decision is expected before March 2026 [26] Question: Softness in environmental business - Management noted that regulatory volatility and a pause in spending from private sector clients contributed to softness in the environmental sector [32][33] Question: Free cash flow guidance and unusual items - Management explained that the guidance includes a one-time tax event and cash expenses related to PA Consulting negotiations [36] Question: Margin performance in infrastructure and advanced facilities - Management expects a sequential slowdown in Q1 margins but anticipates a linear progression throughout FY26 [43] Question: Leveraging AI for margin opportunities - Management highlighted ongoing AI initiatives and partnerships that are expected to contribute to margin expansion [46][47] Question: Transportation funding visibility under IIJ - Management confirmed that transportation remains a catalyst for growth, with strong performance seen globally [52] Question: Regional performance across end markets - Management reported double-digit growth in the Middle East and recovery in Europe, with strong performance across all regions [53] Question: Bridging margin expansion between fiscal years - Management outlined several factors contributing to margin expansion, including global delivery and operational efficiencies [60][61] Question: Changes in data center assignments - Management noted increased interest in data center projects in the Middle East and Europe, with a fivefold increase in the pipeline [64][71]

Financial Data and Key Metrics Changes - The company reported a 28% year-over-year increase in adjusted EPS for Q4, driven by a 6% net revenue growth and a record adjusted EBITDA margin of over 14.4% [6][12] - For the full fiscal year 2025, adjusted EPS grew by 16%, supported by mid-single-digit net revenue growth and strong margin expansion [6][12] - The consolidated backlog increased by 6% year-over-year to a record $23.1 billion, with a trailing 12-month book-to-bill ratio of 1.1 times [12][18] Business Line Data and Key Metrics Changes - Infrastructure and Advanced Facilities operating profit increased by 16% year-over-year in Q4, with a 13% increase for the full fiscal year [16][17] - PA Consulting's revenue grew by 10% year-over-year in Q4, contributing to a 17% increase in operating profit [17] - The water and environmental sector saw flat revenue year-over-year in Q4, while critical infrastructure net revenue increased by over 9% [15][16] Market Data and Key Metrics Changes - Net revenue growth across the three end markets was consistent, with water and environmental and life sciences and advanced manufacturing growing just over 4%, and critical infrastructure at about 6% for fiscal year 2025 [14] - The company experienced strong growth in the transportation sector, particularly in the U.S. and internationally, with significant projects in New York and the U.K. [10][15] Company Strategy and Development Direction - The company aims to redefine the asset life cycle and expand its addressable market with core clients, particularly in the water sector, which remains a high-growth area [7][10] - The strategy includes leveraging AI and digital capabilities to enhance service delivery and operational efficiency [49][50] - The company is focused on maintaining a disciplined capital returns policy while investing in growth opportunities [18][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in entering fiscal year 2026 with strong momentum, backed by a record backlog and expanding margins [22][20] - The company anticipates continued tailwinds in the transportation and energy sectors, with expectations for water to remain a key growth driver [15][16] - Management noted that fiscal year 2026 will include an extra week in Q4, which is expected to positively impact revenue growth [19] Other Important Information - Free cash flow generation for fiscal year 2025 was $607 million, with a commitment to return approximately 150% of free cash flow to shareholders [18] - The company approved a $0.32 per share dividend, representing a 10% year-over-year increase [18] Q&A Session Summary Question: Impact of federal government shutdown on fiscal 2026 bookings - Management indicated that there was no impact from the federal government shutdown on fiscal 2025 bookings, as awards occurred before the shutdown [24][25] Question: Update on PA Consulting negotiations - Management confirmed that negotiations are progressing and a decision is expected before March 2026 [26] Question: Softness in environmental business - Management explained that regulatory volatility and a pause in spending from private sector clients contributed to the softness in the environmental sector [31][35] Question: Guidance on free cash flow - Management clarified that the guidance includes a one-time tax event and cash expenses related to the PA Consulting combination [39] Question: Margin performance in infrastructure and advanced facilities - Management noted that margins are expected to show a linear progression throughout fiscal year 2026, with Q1 being the slowest [46][48] Question: Transportation funding visibility under IIJ - Management confirmed that transportation remains a catalyst for growth, with strong performance seen globally [57] Question: Regional performance across end markets - Management reported double-digit growth in the Middle East and recovery in Europe, with strong performance across all regions [58][59] Question: Pipeline outlook and conversion - Management highlighted strong growth in the data center and semiconductor sectors, with a 5x increase in the data center pipeline [86][87]

Core Insights - Jacobs Solutions reported revenue of $3.15 billion for the quarter ended September 2025, reflecting a year-over-year increase of 6.6% [1] - The earnings per share (EPS) for the quarter was $1.75, up from $1.37 in the same quarter last year, surpassing the consensus estimate of $1.67 by 4.79% [1] - The revenue exceeded the Zacks Consensus Estimate of $3.14 billion, resulting in a surprise of 0.55% [1] Financial Performance Metrics - Adjusted Net Revenues for Infrastructure & Advanced Facilities were reported at $1.92 billion, slightly below the estimated $1.93 billion [4] - Revenues from PA Consulting were $318.46 million, compared to the average estimate of $326.47 million, marking a year-over-year increase of 10% [4] - Segment Operating Profit for Infrastructure & Advanced Facilities was $254.03 million, exceeding the estimated $247.77 million [4] - Segment Operating Profit for PA Consulting was reported at $72 million, slightly below the estimated $74.75 million [4] Stock Performance - Shares of Jacobs Solutions have declined by 8% over the past month, while the Zacks S&P 500 composite has decreased by only 0.3% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]

Financial Performance - Q4 FY2025 - GAAP gross revenue reached $3.2 billion, a year-over-year increase of 6.6%, while adjusted net revenue was $2.2 billion, up 5.8% year-over-year[10] - Adjusted EBITDA stood at $324 million, reflecting a 12% increase year-over-year, with an adjusted EBITDA margin of 14.4% on adjusted net revenue[10, 14] - Adjusted EPS increased by 27.7% year-over-year to $1.75[10, 14] Financial Performance - FY2025 - GAAP gross revenue was $12.0 billion, up 4.6% year-over-year, and adjusted net revenue was $8.7 billion, up 5.3% year-over-year[10, 17] - Adjusted EBITDA reached $1.2 billion, a 13.9% increase year-over-year, resulting in an adjusted EBITDA margin of 13.9% on adjusted net revenue[10, 17] - Adjusted EPS increased by 15.9% year-over-year to $6.12[10, 17] Backlog and Book-to-Bill Ratio - The company reported a Q4 book-to-bill ratio of 1.1x and a trailing twelve-month (TTM) book-to-bill ratio of 1.1x[10] - Backlog increased from $21.8 billion in 2024 to $23.1 billion in 2025[14, 17] Segment Performance - I&AF End Market (Q4 FY2025) - Critical Infrastructure saw gross revenue of $1.2 billion and adjusted net revenue of $989 million, with year-over-year growth of 5.9% and 9.2% respectively[20] - Water & Environmental had gross revenue of $807 million and adjusted net revenue of $583 million, experiencing a decrease of 4% and 1.1% respectively[20] - Life Sciences & Advanced Manufacturing reported gross revenue of $831 million and adjusted net revenue of $352 million, with year-over-year growth of 19% and 5.3% respectively[20] FY2026 Outlook - The company projects adjusted net revenue growth of 6% to 10% year-over-year[26] - Adjusted EPS is expected to be in the range of $6.90 to $7.30[26] - Free cash flow margin is projected to be between 7% and 8%[26]

Core Viewpoint - Jacobs Solutions reported quarterly earnings of $1.75 per share, exceeding the Zacks Consensus Estimate of $1.67 per share, and showing an increase from $1.37 per share a year ago, representing an earnings surprise of +4.79% [1][2] Financial Performance - The company achieved revenues of $3.15 billion for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 0.55%, and up from $2.96 billion in the same quarter last year [2] - Over the last four quarters, Jacobs Solutions has consistently surpassed consensus EPS estimates [2] Stock Performance - Jacobs Solutions shares have increased approximately 8.6% since the beginning of the year, while the S&P 500 has gained 12.9% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $1.60 on revenues of $3.16 billion, and for the current fiscal year, it is $7.00 on revenues of $12.98 billion [7] - The trend of estimate revisions for Jacobs Solutions was mixed prior to the earnings release, which may change following the recent results [6] Industry Context - The Building Products - Miscellaneous industry, to which Jacobs Solutions belongs, is currently ranked in the bottom 38% of over 250 Zacks industries, suggesting potential challenges ahead [8] - The performance of Jacobs Solutions may be influenced by the overall outlook for the industry [8]

Financial Performance - Revenues for the fiscal year ended September 26, 2025, were $12,029,783, an increase of 4.6% from $11,500,941 in the previous year[307] - Gross profit for the same period was $2,984,934, reflecting a gross margin of approximately 24.8%[307] - Operating profit increased to $863,634, up 24.7% from $692,436 in the prior year[307] - Net earnings attributable to Jacobs from continuing operations were $313,302, a decrease of 48.9% compared to $612,804 in the previous year[307] - Basic earnings per share from continuing operations were $2.59, down from $4.81 in the prior year[307] - The company recognized a direct cost of contracts totaling $9,044,849, which represents 75.2% of total revenues[307] - Miscellaneous expense for fiscal 2025 was $(189.7) million, an increase of $409.1 million compared to income of $219.5 million in the prior year, primarily due to mark-to-market losses[319] - Selling, general & administrative expenses for fiscal 2025 were $2.12 billion, a decrease of 0.9% from $2.14 billion in the prior year, impacted by a decrease in restructuring charges[316] - Income taxes increased by $84.1 million in fiscal 2025, primarily due to higher pre-tax book income[310] - Net (loss) earnings from discontinued operations for fiscal 2025 were $(24.0) million, a decrease of 112.4% from $193.3 million in the prior year[311] Segment Performance - For the year ended September 26, 2025, total revenues for the Infrastructure & Advanced Facilities segment were $10.76 billion, an increase of $0.44 billion or 4.3% from the previous year[346] - Segment operating profit for the Infrastructure & Advanced Facilities segment was $903.5 million for the year ended September 26, 2025, compared to $798.4 million in the previous year[346] - Operating profit for the I&AF segment for the year ended September 26, 2025 was $903.5 million, an increase of $105.2 million, or 13.2%, from $798.4 million for the prior year[348] - Revenues for the PA Consulting segment for the year ended September 26, 2025 were $1.27 billion, up $87.9 million, or 7.5%, from $1.18 billion for the prior year[352] - Operating profit for the PA Consulting segment for the year ended September 26, 2025 was $278.5 million, an increase of $39.2 million, or 16.4%, from $239.3 million for the prior year[353] Backlog and Future Prospects - Backlog at September 26, 2025 was $23.1 billion, up $1.2 billion from $21.8 billion in the prior year, indicating strong new prospects and sales[312] - Total backlog as of September 26, 2025 was $23.06 billion, an increase from $21.85 billion as of September 27, 2024[359] - Backlog in Infrastructure & Advanced Facilities increased to $22.65 billion as of September 26, 2025, driven by growth across various end markets[360] - Approximately $6.77 billion, or 29.3%, of total backlog at September 26, 2025 is expected to be realized as revenues within the next fiscal year[362] Cash Flow and Debt Management - Cash and cash equivalents at September 26, 2025 were $1.24 billion, an increase of $90.7 million from $1.14 billion at September 27, 2024[365] - Net cash provided by operating activities for fiscal 2025 was $686.7 million, a decrease of $368.0 million compared to $1.05 billion for the prior year[366] - Long-term debt as of September 26, 2025 increased by $887.9 million compared to September 27, 2024, primarily due to the 2025 Term Loan Facility[372] - Short-term debt decreased by $875.8 million as of September 26, 2025, primarily due to the Equity-for-Debt Transaction, which extinguished $311.5 million under the GBP 2021 Term Loan[373] - Jacobs received a cash payment of approximately $911 million from SpinCo during Q4 FY 2024, which was used to repay the outstanding short-term 2020 Term Loan Facility totaling $834.9 million[374] - The company had an aggregate of $1.15 billion in outstanding borrowings under the Revolving Credit Facility and 2025 Term Loan Facility as of September 26, 2025[391] Restructuring and Cost Management - The company incurred approximately $28.2 million, $42.0 million, and $17.5 million in pre-tax cash charges related to restructuring initiatives for the years ended September 26, 2025, September 27, 2024, and September 29, 2023, respectively[333] - Estimated gross annualized pre-tax cash savings from restructuring initiatives are projected to be between $165 million and $200 million[333] - The company recorded $58.8 million in restructuring and other charges related to the Separation Transaction for the year ended September 26, 2025[338] - The company expects to incur additional charges under the restructuring program through calendar year 2025, which will lead to further savings in future periods[333] Compliance and Risk Management - 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[379] - The company was in compliance with all of its debt covenants as of September 26, 2025[379] - If floating interest rates had increased by 1.00%, the interest expense for the year ended September 26, 2025, would have increased by approximately $12.0 million[393] - The company has $491.9 million in notional value of exchange rate sensitive instruments as of September 26, 2025, to limit exposure to fluctuating foreign currencies[394] - As of September 26, 2025, there was approximately $142.1 million of total unrecognized compensation cost related to equity-based incentive grants anticipated to vest upon a liquidity event[378] - The company is evaluating the impact of new accounting standards, including ASU 2025-05 and ASU 2025-03, which will be effective in fiscal years 2027 and 2028 respectively[383][384]