Jacobs' 2Q Misses
by Zacks Equity ResearchMay 01, 2012 | Comments : 0 Recommended this article: (0)
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Jacobs Engineering Group Inc. (JEC) posted second-quarter 2012 earnings per share of 65 cents, missing the Zacks Consensus Estimate of 74 cents. Results, however, surpassed the earnings per share of 63 cents reported in the year-ago comparable quarter.
Total revenue in the reported quarter climbed 5.7% year over year to $2702.9 million, below the Zacks Consensus Estimate of $2,765.0 million.
Revenues from Technical Professional Services (61.2% of total revenue) increased to $1,654.7 million, up 11% year over year. However, revenues from Field Services (38.8% of total revenue) inched down 1.8% to settle at $1,048.1 million.
During the quarter, direct costs of contracts, a major expenditure for Jacobs, increased to $2,276.6 million, up 5.0% from the year-ago quarter. Selling, general and administrative (SG&A) expenses came in at $293.1 million, up 12.2% year over year.
Operating profit improved to $133.1 million, a 4.0% improvement over the year-ago quarter.
Including technical professional services component of $9.9 billion, backlog was approximately $15.1 billion at the end of the reported quarter. This compared favorably with total backlog of $14.0 billion, including a technical professional services component of $8.7 billion, at the end of the second quarter of 2011.
Exiting the reported quarter, Jacobs’ cash and cash equivalents were approximately $921.5 million, up 23.2% year over year. Total debt increased 24.6% above the previous year quarter, recording $541.2 million as of March 30, 2012.
Outlook: Jacobs revised its earnings guidance for fiscal 2012 within the range of $2.80 to $3.00 per share compared with the earlier guidance range of $2.80 to $3.20. The guidance revision is a consequence of higher-than-expected expenses in the quarter along with reduced margins across revenue segments.
The company’s growing international exposure through contract wins and diversification have been quite impressive, since long. This, in turn, is expected to raise investor confidence, while challenging industry players such as Fluor Corporation ( FLR - Analyst Report ) and Foster Wheeler AG (FWLT).
We maintain a long-term ‘Neutral’ recommendation on the stock. Also, the company holds a Zacks #3 Rank, which translates into a short-term (1-3 months) ‘Hold’ rating.
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