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Jacobs' (J) Arm to Support UKAEA's Nuclear Fusion Research

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Jacobs Engineering Group Inc.’s (J - Free Report) excellent project execution has been one of the main characteristics driving its performance. The company has been fortifying the business with continues contract flows, and high-value Critical Mission Solutions (CMS) as well as People & Places Solutions (P&PS) businesses.

Recently, its CMS unit secured a place in United Kingdom Atomic Energy Authority’s (UKAEA) Engineering, Design and Build Framework for Electrical Assemblies. Per the deal, Jacobs will support UKAEA's research and development work in the Remote Applications in Challenging Environments facility, located at Culham Science Centre in Oxfordshire, England.

The work involves engineering design and installation of control panels, safety interlock panels, along with wiring looms for a control cubicle to support the testing of a new range of actuators being developed by UKAEA. The design and building assemblies work will take place at its manufacturing, fabrication and welding facility in Barton, Lincolnshire, U.K.

In addition to research and development work, Jacobs — which shares space with AECOM (ACM - Free Report) , KBR, Inc. (KBR - Free Report) and Fluor Corporation (FLR - Free Report) in the Zacks Engineering - R and D Services industry — also received a technical and specialist nuclear services contract under the UKAEA's Engineering Design Services Framework.

Exceptional Project Execution Strategy to Support Growth

Jacobs has an impressive earnings surprise history, having surpassed earnings estimates in nine of the trailing 11 quarters. The trend is expected to continue in the near term, courtesy of its solid first-half fiscal 2020 performance and efficient project execution. The company’s ongoing contract wins are a testimony to the fact. Backlog at the end of second-quarter fiscal 2020 grew 12.5% from the year-ago period.

Precisely, CMS backlog — which grew 25.4% year over year to $9.1 billion for the fiscal second quarter — provides strong visibility into the base business. Its overall 2021 sales pipeline of more than $37 billion remains robust. This segment is benefiting from well-funded government programs and cyber, mission-IT, space, as well as 5G-related projects.

Although the current market scenario remains unpredictable owing to the COVID-19 pandemic, its long-term outlook for the business remains intact. It projects 3-5% net organic revenue growth through 2021. The top-line growth is expected to be driven by recurring revenues that roughly occupy two-thirds of Jacobs’ total revenues. This will enable the company to reduce overall risks of market volatility.

Also, it aims a 125-175 basis-point expansion of adjusted operating margins in the long run. The margin expansion is expected to be driven by a combination of higher-margin backlog, and focus on generating efficiencies through digital as well as technological solutions.

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