Jacobs Solutions (US:J)2025-08-05 10:51Business 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].