Jacobs Reports Lower Earnings

Yesterday, Jacobs Engineering Group Inc. (JEC) announced expected financial results for the fiscal year and fourth quarter ended October 2, 2009, considering the difficult economic environment. Net earnings were $399.9 million, or $3.21 per diluted share compared to $420.7 million or $3.38 per diluted share in fiscal 2008. 

This fall in earnings was attributable to construction services, which was hit by project cancellations. Revenues of $11.5 billion for its fiscal year ended October 2, 2009 were almost flat compared to $11.3 billion in the fiscal year 2008. For the fourth quarter of fiscal 2009, Jacobs reported net earnings of $79.3 million, or $0.63 per diluted share, on revenues of $2.6 billion. 

This compares to net earnings of $114.4 million, or $0.92 per diluted share, on revenues of $3.2 billion for the fourth quarter of fiscal 2008. Jacobs also announced backlog totaling $15.2 billion at October 2, 2009, including a technical professional services component of $8.2 billion. This compares to total backlog and technical professional services backlog of $16.7 billion and $8.1 billion, respectively, at September 26, 2008. 

During the quarter ended October 2, 2009, approximately $320 million was removed from backlog as a result of project cancellations, primarily from one project in the upstream oil and gas market. Looking ahead, management expects full-year 2010 earnings per share to be in a range of $2.00 to $2.60. 

The company’s diversification in terms of markets, geography and services will continue to facilitate future growth. Moreover, Jacobs’ cost focus puts it in a dominant position to expand margins under difficult economic circumstances. Jacobs is among those infrastructure stocks that may benefit from the coming construction boom. Looking forward, as banks get healthy and are willing to lend and the next round of stimulus begins, investors can expect infrastructure projects to increase.

Read the full analyst report on JEC