Jacobs Engineering Group Inc. reported first-quarter fiscal 2019 (ended Dec 28, 2018) results, wherein earnings and revenues missed the Zacks Consensus Estimate by 25.7% and 19.1%, respectively. That said, shares of this construction and technical services company were up 1.9% in the pre-market trading session following the earnings release at the time of writing.
However, its earnings from continuing operations of 78 cents per share increased from the year-ago figure of 46 cents. The upsurge was mainly attributable to strong revenues and margins.
Segmental Performance Drives Revenues
In the quarter under review, Jacobs’ revenues totaled $3,083.8 million, reflecting healthy growth of 73% from the year-ago quarter (up 12% on a pro-forma basis). The improvement was driven by healthy segmental businesses.
Backlog at the end of the fiscal first quarter was $20.3 billion, increasing 8% year over year.
ECR Sale
On Oct 21, Jacobs agreed to offload its Energy, Chemicals and Resources (“ECR”) business unit to Australia’s WorleyParsons Ltd., as it intends to focus more on “highest-margin growth businesses”.
The deal, which is expected to close within Jun 30, is valued at $3.3 billion. Jacobs will receive $2.6 billion in cash and around $700 million worth of shares that equals to about 11% stake in WorleyParsons.
Segment Details
Effective first-quarter fiscal 2019, the company’s segments have been realigned. Jacobs now reports revenues under two segments — Aerospace, Technology, Environmental and Nuclear; and Buildings, Infrastructure and Advanced Facilities.
Revenues from the Aerospace, Technology, Environmental and Nuclear segment were $1,035 million, increasing 45.6% year over year. It represented 33.6% of the total revenues in the reported quarter. Backlog at the end of the quarter was roughly $7.2 billion, up 7.8% year over year.
Revenues from the Buildings, Infrastructure and Advanced Facilities segment totaled $2,048.8 million, increasing 90.9% year over year. It represented 66.4% of revenues in the quarter under review. Backlog at the end of the quarter was roughly $13.2 billion, up 7.4% year over year.
Margins Profile
In the quarter under review, Jacobs’ direct cost of contracts (adjusted for restructuring and other costs) surged 74.2% year over year to $2,512.4 million. It represented 81.5% of revenues compared with 80.8% in the year-ago quarter. Adjusted gross profit increased 67% year over year to $571.4 million. Adjusted selling, general and administrative expenses flared up 56% year over year to $411 million. It represented 13.3% of revenues, down from 14.8% a year ago.
Adjusted operating margin expanded 79 basis points to 5.2% in the quarter.
Balance Sheet and Cash Flow
At fiscal first quarter-end, Jacobs’ cash and cash equivalents were $886.7 million, up from $793.4 million at the end of fiscal 2018. Long-term debt balance increased to $2.67 billion at the end of the quarter from $2.14 billion at fiscal 2018-end.
2019 View Up
The company now expects fiscal 2019 adjusted EPS in the range of $5.10-$5.50 (assuming full-year ECR results), up from prior expectation of $5.00-$5.40 per share. Meanwhile, Jacobs continues to expect full-year adjusted EBITDA between $920 million and $1 billion (excluding ECR).
Zacks Rank & Other Stocks to Consider
Jacobs currently carries a Zacks Rank #2 (Buy).
Other top-ranked stocks from the Zacks Construction sector include EMCOR Group, Inc. (EME - Free Report) , Gates Industrial Corporation plc (GTES - Free Report) and Altair Engineering Inc. (ALTR - Free Report) , each carrying a Zacks Rank #2. You can the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
EMCOR’s earnings per share are expected to increase 7.1% in 2019.
Gates Industrial is expected to record an EPS growth rate of 9.7% in 2019.
Altair Engineering has an expected earnings growth rate of 69.8% for 2019.
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Jacobs Engineering Group Inc. reported first-quarter fiscal 2019 (ended Dec 28, 2018) results, wherein earnings and revenues missed the Zacks Consensus Estimate by 25.7% and 19.1%, respectively. That said, shares of this construction and technical services company were up 1.9% in the pre-market trading session following the earnings release at the time of writing.
However, its earnings from continuing operations of 78 cents per share increased from the year-ago figure of 46 cents. The upsurge was mainly attributable to strong revenues and margins.
Segmental Performance Drives Revenues
In the quarter under review, Jacobs’ revenues totaled $3,083.8 million, reflecting healthy growth of 73% from the year-ago quarter (up 12% on a pro-forma basis). The improvement was driven by healthy segmental businesses.
Backlog at the end of the fiscal first quarter was $20.3 billion, increasing 8% year over year.
ECR Sale
On Oct 21, Jacobs agreed to offload its Energy, Chemicals and Resources (“ECR”) business unit to Australia’s WorleyParsons Ltd., as it intends to focus more on “highest-margin growth businesses”.
The deal, which is expected to close within Jun 30, is valued at $3.3 billion. Jacobs will receive $2.6 billion in cash and around $700 million worth of shares that equals to about 11% stake in WorleyParsons.
Segment Details
Effective first-quarter fiscal 2019, the company’s segments have been realigned. Jacobs now reports revenues under two segments — Aerospace, Technology, Environmental and Nuclear; and Buildings, Infrastructure and Advanced Facilities.
Revenues from the Aerospace, Technology, Environmental and Nuclear segment were $1,035 million, increasing 45.6% year over year. It represented 33.6% of the total revenues in the reported quarter. Backlog at the end of the quarter was roughly $7.2 billion, up 7.8% year over year.
Revenues from the Buildings, Infrastructure and Advanced Facilities segment totaled $2,048.8 million, increasing 90.9% year over year. It represented 66.4% of revenues in the quarter under review. Backlog at the end of the quarter was roughly $13.2 billion, up 7.4% year over year.
Margins Profile
In the quarter under review, Jacobs’ direct cost of contracts (adjusted for restructuring and other costs) surged 74.2% year over year to $2,512.4 million. It represented 81.5% of revenues compared with 80.8% in the year-ago quarter. Adjusted gross profit increased 67% year over year to $571.4 million. Adjusted selling, general and administrative expenses flared up 56% year over year to $411 million. It represented 13.3% of revenues, down from 14.8% a year ago.
Adjusted operating margin expanded 79 basis points to 5.2% in the quarter.
Balance Sheet and Cash Flow
At fiscal first quarter-end, Jacobs’ cash and cash equivalents were $886.7 million, up from $793.4 million at the end of fiscal 2018. Long-term debt balance increased to $2.67 billion at the end of the quarter from $2.14 billion at fiscal 2018-end.
2019 View Up
The company now expects fiscal 2019 adjusted EPS in the range of $5.10-$5.50 (assuming full-year ECR results), up from prior expectation of $5.00-$5.40 per share. Meanwhile, Jacobs continues to expect full-year adjusted EBITDA between $920 million and $1 billion (excluding ECR).
Zacks Rank & Other Stocks to Consider
Jacobs currently carries a Zacks Rank #2 (Buy).
Other top-ranked stocks from the Zacks Construction sector include EMCOR Group, Inc. (EME - Free Report) , Gates Industrial Corporation plc (GTES - Free Report) and Altair Engineering Inc. (ALTR - Free Report) , each carrying a Zacks Rank #2. You can the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
EMCOR’s earnings per share are expected to increase 7.1% in 2019.
Gates Industrial is expected to record an EPS growth rate of 9.7% in 2019.
Altair Engineering has an expected earnings growth rate of 69.8% for 2019.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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