Jacobs Solutions (US:J)2025-11-20 16:00Financial 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]