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Jacobs (J) Tops Q3 Earnings & Revenue Estimates, Updates View

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Jacobs Engineering Group Inc. (J - Free Report) reported third-quarter fiscal 2022 (ended Jul 1, 2022) results, with earnings and revenues surpassing their respective Zacks Consensus Estimate and rising year over year.

The company, however, provided lower-than-expected fiscal fourth-quarter earnings outlook. Shares of this construction and technical services company slipped 1.7% following the earnings release on Aug 1, 2022.

In connection with the earnings release, the company’s chair and CEO Steve Demetriou stated, “Our strong base business combined with an early ramp from our accelerators drove 13% constant currency backlog growth in the third quarter, providing significant revenue visibility.” He further added, “Our increased backlog, and alignment to well-funded public and private sector initiatives, provides us with confidence for long-term adjusted EBITDA profit growth. We also expect continued robust cash flow generation, which will strengthen an already healthy balance sheet, affording us opportunities to further increase shareholder value."

Earnings & Revenue Discussion

For the reported quarter, adjusted earnings of $1.86 per share topped the consensus estimate of $1.83 by 1.6%. Also, the figure was up 13% from the year-ago period.
Jacobs’ revenues totaled $3.83 billion, topped the consensus mark of $3.75 billion by 2% and grew 7% year over year. Net revenues improved 7.7% year over year, backed by substantial recurring revenues that are complemented by accelerating growth in the areas of Climate Response, Consulting & Advisory and Data Solutions.

Backlog at fiscal third-quarter end amounted to $28.1 billion, up 10.4% from a year ago (up 13% in constant currency).

Segment Details

Revenues from the CMS segment of $1.32 billion increased 8.1% year over year. Yet, segment operating profit of $104.3 million was down from $108.1 million reported a year ago. Backlog at quarter-end was $10.2 billion, up from $9.57 billion a year ago.

Revenues from the P&PS segment totaled $2.23 billion, which inched up 6.2% year over year. Segment operating profit grew 2.3% from the prior-year quarter to $210 million. Backlog at quarter-end was $17.5 billion, up from $15.6 billion a year ago.

PA Consulting generated $277.6 million in revenues in the fiscal third quarter, up 8.5% from the year-ago quarter’s figure of $255.8 million. Segment operating profit was $51.4 million, down 62.2% from the prior-year quarter’s levels. Quarter-end backlog amounted to $326 million, up from $314 million a year ago.

Margins Profile

For the quarter under review, adjusted gross profit increased to $824.5 million from the year-ago level of $816.9 million.

Adjusted operating margin contracted to 10.3% from 10.6% in the prior-year quarter.

Balance Sheet & Cash Flow

At the fiscal third-quarter end, Jacobs had cash and cash equivalents of $1,102.3 million, up from $1,014.2 million at the fiscal 2021-end (Oct 1, 2021). Long-term debt increased to $3.52 billion at the fiscal third-quarter end from $2.84 billion as of Oct 1, 2021.

Net cash used for operating activities totaled $249.1 million in the quarter compared with $173.3 million of cash provided by operating activities in the year-ago quarter.

Fiscal 2022 Guidance

Jacobs expects adjusted EBITDA between $340 million and $360 million and adjusted earnings within $1.75-$1.85 per share. The Zacks Consensus Estimate for the company’s fiscal fourth-quarter earnings is currently pegged at $1.97 per share.

Following the announcement of the fiscal 2022 outlook in November, FX translation has adversely impacted Jacobs’ net revenue outlook by approximately $320 million, adjusted EBITDA outlook by $40 million and adjusted EPS outlook by 20 cents. Nonetheless, on a constant-currency basis, the mid-point of the latest full-year outlook remains consistent with the original guidance provided at the beginning of the fiscal year.

Zacks Rank

Jacobs currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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