Jacobs Solutions (US:J)2025-05-06 10:50Company Overview - Jacobs has a team of almost 45,000 and provides end-to-end services across various sectors including advanced manufacturing, energy, and environmental markets [168]. - The company has undergone a transformation over the last seven years, focusing on becoming a science-based consulting and advisory solutions provider, including acquiring a 65% stake in PA Consulting Group in fiscal 2021 [170]. - In February 2025, Jacobs announced a multi-year growth strategy called "Challenge Accepted," aimed at driving profitable growth and delivering market-leading solutions [171]. - Jacobs emphasizes the importance of addressing urbanization, infrastructure modernization, and environmental resilience in its business strategy [172]. - Jacobs' clients include national, state, and local governments, as well as multinational and local private sector clients globally, indicating a diverse customer base [179]. Financial Performance - Revenues for the second fiscal quarter of 2025 were $2.91 billion, an increase of $63.2 million, or 2.2%, from $2.85 billion for the same period last year [193]. - Gross profit for the second fiscal quarter of 2025 was $738.3 million, an increase of $26.4 million, or 3.7%, with gross profit margins of 25.4% [194]. - Net earnings attributable to the Company from continuing operations for the second fiscal quarter of 2025 were $11.2 million, a decrease of $81.1 million from $92.2 million for the same period last year [189]. - Net loss attributable to the Company from discontinued operations for the second fiscal quarter of 2025 was $(5.6) million, a decrease of $75.4 million from net earnings of $69.9 million for the same period last year [190]. - Selling, general and administrative expenses for the second fiscal quarter of 2025 were $529.7 million, an increase of $1.0 million, or 0.2%, compared to $528.7 million for the same period last year [196]. - Net interest expense for the second fiscal quarter of 2025 was $29.1 million, a decrease of $6.5 million, or 18.2%, from $35.5 million for the same period last year [197]. - Loss on extinguishment of debt for the second fiscal quarter of 2025 was $20.5 million, associated with the Equity-for-Debt Transaction executed on March 13, 2025 [198]. - Miscellaneous expense for the second fiscal quarter of 2025 was $(103.3) million, an increase of $(99.6) million from $(3.7) million for the same period last year [199]. - The effective tax rate from continuing operations for the second fiscal quarter of 2025 was 90.6%, significantly higher than the statutory U.S. federal corporate tax rate of 21.0% [200]. - For the six months ended March 28, 2025, net loss attributable to the Company from continuing operations was $(6.0) million, a decrease of $226.5 million from net earnings of $220.6 million for the same period last year [191]. - The effective tax rate for the six months ended March 28, 2025, was 98.9%, significantly higher than 4.8% for the same period in 2024, primarily due to $70.1 million in unfavorable tax impacts from Amentum stock losses [202]. Segment Performance - Revenues for the Infrastructure & Advanced Facilities segment for the three and six months ended March 28, 2025, were $2.60 billion and $5.23 billion, reflecting increases of 1.9% and 3.4% year-over-year [212]. - Operating profit for the Infrastructure & Advanced Facilities segment for the six months ended March 28, 2025, was $413.5 million, an increase of 11.3% compared to $371.5 million for the same period last year [213]. - Revenues for the PA Consulting segment for the three and six months ended March 28, 2025, were $307.7 million and $614.4 million, representing increases of 4.7% and 2.4% year-over-year [214]. - Operating profit for the PA Consulting segment for the six months ended March 28, 2025, was $134.1 million, an increase of 17.0% from $114.6 million in the corresponding period last year [215]. - The total backlog as of March 28, 2025, was $22.16 billion, up from $18.47 billion as of March 29, 2024, driven by growth in Infrastructure & Advanced Facilities and PA Consulting segments [219]. Cash Flow and Liquidity - At March 28, 2025, the company had $1.20 billion in cash and cash equivalents and $1.44 billion of available borrowing capacity under its $2.25 billion revolving credit agreement [222]. - Net cash provided by operating activities for the six months ended March 28, 2025, was $11.0 million, a decline of $364.5 million compared to $375.5 million in the prior year [224]. - Net cash used for investing activities was $24.3 million, a decrease from $57.3 million in the prior year, attributed to lower additions to property and equipment and no acquisitions [225]. - Net cash provided by financing activities was $106.6 million, driven by net proceeds from borrowings of $746.4 million, offset by share repurchases of $552.4 million and dividends of $75.9 million [226]. - Long-term debt increased by $1.3 billion to $2.63 billion as of March 28, 2025, primarily due to the 2025 Term Loan Facility and increased draw on the revolving credit facility [230]. - Short-term debt decreased by $875.8 million to $1.16 billion, mainly due to the Equity-for-Debt Transaction and the entry into the 2025 Term Loan Facility [231]. - The Company believes it has adequate liquidity and capital resources to fund projected cash requirements for the next twelve months [235]. Share Repurchase and Capital Management - The Board of Directors authorized a share repurchase program of up to $1.0 billion on January 25, 2023, and an additional $1.5 billion on January 30, 2025 [255]. - A total of 2,724,398 shares were repurchased during the second quarter of fiscal 2025, with an average price per share of $125.77 to $135.59 [257]. - The approximate dollar value of shares that may yet be purchased under the 2023 and 2025 repurchase authorizations is $1,420,011,932 [257]. Risk Management and Compliance - The Company is monitoring potential impacts from recent international trade issues, including tariffs and counter tariffs, which may negatively affect business [252]. - There were no changes to internal control over financial reporting that materially affected the Company during the quarter ended March 28, 2025 [248]. - The Company concluded that its disclosure controls and procedures were effective as of March 28, 2025 [247]. - There were no sales of unregistered securities during the second fiscal quarter of 2025 [254]. - The Company has not identified any defaults upon senior securities [259]. - No changes in risk factors have been reported, except for factual updates provided in the Quarterly Report [251].