Jacobs Solutions Inc. (J Quick QuoteJ - Free Report) reported impressive first-quarter fiscal 2024 (ended Dec 29, 2023) results, with earnings and revenues surpassing their respective Zacks Consensus Estimate.

Earnings and revenues increased on a year-over-year basis, backed by robust organic revenue growth in its People and Places Solutions (P&PS) business. This reflects the company's broad-based strength in global infrastructure and sustainability investment.

The company is striving to create a leaner operating model that delivers higher growth and higher margin value for stakeholders. This can be achieved by focusing on disciplined execution and project delivery excellence. Furthermore, J is optimistic about the progress made toward the merger of its Critical Mission Solutions (CMS) and Cyber & Intelligence businesses with Amentum as it looks to establish two independent companies.

Shares of this construction and technical services company jumped 1.75% in the pre-market trading session on Feb 6, 2024, following its earnings release.

Earnings & Revenue Discussion

For the reported quarter, adjusted earnings of $2.02 per share topped the consensus estimate of $1.50. Also, the reported figure was up 28% from the year-ago period.

Jacobs’ revenues totaled $4.16 billion, which topped the consensus mark of $4.01 billion by 3.7% and increased 9.5% year over year. Adjusted net revenues were up 7% year over year (5.4% in constant currency).

Adjusted operating profit declined 3.1% to $322 million from a year ago. The adjusted operating margin of 9.8% contracted 102 basis points (bps) year over year.

Adjusted EBITDA fell 3.1% year over year to $328 million and adjusted EBITDA margin contracted 104 bps year over year to 10%.

The backlog at the end of first-quarter fiscal 2024 amounted to $29.6 billion, up 4.7% from a year ago.

Segment Details

Revenues in the CMS segment of $1.13 billion increased by 5% year over year. The segment’s operating profit was up 13.6% to $93 million from a year ago, with a margin expansion of 63 bps to 8.3%. The backlog at the fiscal first-quarter end was $8.311 billion, up from $7.632 billion a year ago.

Revenues in the P&PS segment totaled $2.47 billion, which increased by 10.9% year over year. Net revenues (excluding Pass-Through Revenue) were up by 8.4% year over year. Its operating profit declined 0.7% from the prior-year quarter to $225 million and the margin fell by 125 bps to 13.7%. The backlog at the quarter’s end was $17.86 billion, up from $17.24 billion a year ago.

Revenues in the Divergent Solutions segment totaled $254.2 million, which increased 18.5% year over year. Divergent Solutions’ net revenues were up 4.7% year over year. Segment operating profit declined 36.7% from the prior-year quarter to $8 million. Its operating margin of 3.6% also fell 236 bps year over year. The backlog at the quarter’s end was $3.110 billion, up from $3.077 billion a year ago.

PA Consulting generated $306 million in revenues, up 8.5% from the year-ago quarter’s period. Its operating profit was $54 million, up 6.7% from $51 million a year ago. Its operating margin fell by 30 bps year over year to 17.8%. The quarter-end backlog amounted to $317 million, up from $306 million a year ago.

Balance Sheet & Cash Flow

At the fiscal first-quarter end, Jacobs had cash and cash equivalents of $1,142.2 million, up from $926.6 million at the fiscal 2023-end (Sep 29, 2023). Long-term debt increased to $2.83 billion at the fiscal first-quarter end from $2.81 billion at the fiscal 2023 end.

Net cash provided by operating activities totaled $418.4 million in the quarter compared with $302.3 million in the year-ago quarter. The free cash flow was $401 million during the fiscal first quarter.

Fiscal 2024 Guidance Maintained

Jacobs expects adjusted EBITDA between $1,530 million and $1,600 million, up 9% from the previous year, considering the mid-point. It anticipates adjusted earnings within $7.70-$8.20 per share, up 10%year-over-year at the mid-point.

Zacks Rank

Jacobs currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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