We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Jacobs (J) Earnings Miss Estimates in Q3, Backlog Increases
Read MoreHide Full Article
Jacobs Engineering Group Inc. (J - Free Report) reported mixed results for third-quarter fiscal 2023 (ended Jun 30, 2023), with earnings missing the Zacks Consensus Estimate but revenues surpassing the same.
Earnings declined year over year, but revenues increased on the back of solid performance across the portfolio. It also reported a near-record backlog thanks to a robust opportunity set, led by People and Places Solutions’ operating profit growth of 13% year-over-year.
On May 9, the company announced its intent to separate the Critical Mission Solutions (“CMS”) business. This marks one of its strategic portfolio transformation initiatives to create a higher-growth and higher-margin business portfolio focused on critical infrastructure and sustainability. Jacobs expects to complete the transaction in the second half of fiscal 2024.
Shares of this construction and technical services company fell slightly in the pre-market trading session on Aug 8, 2023, following the earnings release.
Inside the Headlines
For the reported quarter, adjusted earnings of $1.82 per share lagged the consensus estimate of $1.84 by 1.1%. Also, the reported figure was down 2.2% from the year-ago period due to benefits received from a cost-method investment sold in the previous year.
Jacobs Solutions Inc. Price, Consensus and EPS Surprise
Jacobs’ revenues totaled $4.19 billion, which topped the consensus mark of $4.05 billion by 3.4% and grew 9.4% year over year. Net revenues were up 7.5% year over year on an adjusted basis and up 8% in constant currency.
Adjusted operating profit grew 10.2% to $361 million from a year ago. The adjusted operating margin of 10.7% expanded by 27 basis points (bps).
Adjusted EBITDA fell 2.1% and adjusted EBITDA margin also contracted 100 bps year over year.
The backlog at the end of third-quarter fiscal 2023 amounted to $28.9 billion, up 3% from a year ago.
Segment Details
Revenues from the CMS segment of $1.19 billion increased 7.4% year over year. The segment’s operating profit of $99 million was up 12.2% from $88 million reported a year ago, with a margin expansion of 36 bps to 8.3%. The backlog at the fiscal third-quarter end was $8.097 billion, up from $7.22 billion a year ago.
Revenues from the People & Places Solutions or P&PS segment totaled $2.47 billion, which increased 11.1% year over year. Net revenues (excluding Pass-Through Revenue) were up 8.9% year over year. Segment operating profit grew 13.4% from the prior-year quarter to $243 million and the margin rose 58 bps to 14.4%. The backlog at the quarter’s end was $17.5 billion, marginally down from $17.53 billion a year ago.
Revenues from the Divergent Solutions segment totaled $239.3 million, which grew 9.8% year over year. Divergent Solutions’ net revenues were up 3% year over year. Segment operating profit improved 72% from the prior-year quarter to $21 million. Operating margin of 9.5% also grew 384 bps year over year. The backlog at the quarter’s end was $2.965 billion, down from $3.02 billion a year ago.
PA Consulting generated $286.9 million in revenues in the quarter, up 3.3% from the year-ago quarter’s figure of $277.6 million. Segment operating profit was $61 million, up 18.3% from $51 million a year ago. Segment operating improved by 268 bps to 21.2%. The quarter-end backlog amounted to $355 million, up from $326 million a year ago.
Balance Sheet & Cash Flow
At the fiscal third-quarter end, Jacobs had cash and cash equivalents of $1,092.1 million, down from $1,140.5 million at the end of fiscal 2022 (Sep 30, 2022). Long-term debt decreased to $3.15 billion at the fiscal third-quarter end from $3.36 billion at the fiscal 2022-end.
Net cash provided by operating activities totaled $321.1 million in the quarter versus net cash used in operating activities of $249.1 million in the year-ago quarter.
Fiscal 2023 Guidance Reiterated
Jacobs expects adjusted EBITDA between $1,420 million and $1,470 million and adjusted earnings within $7.25-$7.45 per share. The Zacks Consensus Estimate for the company’s fiscal 2023 earnings is currently pegged at $7.35 per share.
Quanta Services Inc. (PWR - Free Report) reported mixed results for second-quarter 2023, wherein adjusted earnings missed the Zacks Consensus Estimate but revenues surpassed the same. Both metrics were up on a year-over-year basis.
The company continues to experience high demand for its infrastructure solutions that support energy transition initiatives and increase reliability, safety and efficiency. Project activity associated with renewable generation has been going strong and is expected to continue throughout the year.
KBR, Inc. (KBR - Free Report) reported mixed second-quarter 2023 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same. Earnings beat the consensus estimate for the seventh straight quarter. Revenues, on the other hand, surpassed the mark in three of the trailing seven quarters and missed on other four occasions.
Although KBR’s quarterly earnings were impacted by losses related to convertible notes and a legacy legal matter, the company delivered a strong quarter of financial and environmental, social and governance or ESG performance, underpinned by its mission focus and operational discipline.
Fluor Corporation (FLR - Free Report) reported stellar results for second-quarter 2023, wherein earnings and revenues surpassed the respective Zacks Consensus Estimate and increased from the previous year, given solid demand for its engineering and construction solutions.
Given the strong underlying performance of the company’s non-legacy portfolio and large Energy Solutions projects, Fluor lifted its expectations for 2023.
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Shutterstock
Jacobs (J) Earnings Miss Estimates in Q3, Backlog Increases
Jacobs Engineering Group Inc. (J - Free Report) reported mixed results for third-quarter fiscal 2023 (ended Jun 30, 2023), with earnings missing the Zacks Consensus Estimate but revenues surpassing the same.
Earnings declined year over year, but revenues increased on the back of solid performance across the portfolio. It also reported a near-record backlog thanks to a robust opportunity set, led by People and Places Solutions’ operating profit growth of 13% year-over-year.
On May 9, the company announced its intent to separate the Critical Mission Solutions (“CMS”) business. This marks one of its strategic portfolio transformation initiatives to create a higher-growth and higher-margin business portfolio focused on critical infrastructure and sustainability. Jacobs expects to complete the transaction in the second half of fiscal 2024.
Shares of this construction and technical services company fell slightly in the pre-market trading session on Aug 8, 2023, following the earnings release.
Inside the Headlines
For the reported quarter, adjusted earnings of $1.82 per share lagged the consensus estimate of $1.84 by 1.1%. Also, the reported figure was down 2.2% from the year-ago period due to benefits received from a cost-method investment sold in the previous year.
Jacobs Solutions Inc. Price, Consensus and EPS Surprise
Jacobs Solutions Inc. price-consensus-eps-surprise-chart | Jacobs Solutions Inc. Quote
Jacobs’ revenues totaled $4.19 billion, which topped the consensus mark of $4.05 billion by 3.4% and grew 9.4% year over year. Net revenues were up 7.5% year over year on an adjusted basis and up 8% in constant currency.
Adjusted operating profit grew 10.2% to $361 million from a year ago. The adjusted operating margin of 10.7% expanded by 27 basis points (bps).
Adjusted EBITDA fell 2.1% and adjusted EBITDA margin also contracted 100 bps year over year.
The backlog at the end of third-quarter fiscal 2023 amounted to $28.9 billion, up 3% from a year ago.
Segment Details
Revenues from the CMS segment of $1.19 billion increased 7.4% year over year. The segment’s operating profit of $99 million was up 12.2% from $88 million reported a year ago, with a margin expansion of 36 bps to 8.3%. The backlog at the fiscal third-quarter end was $8.097 billion, up from $7.22 billion a year ago.
Revenues from the People & Places Solutions or P&PS segment totaled $2.47 billion, which increased 11.1% year over year. Net revenues (excluding Pass-Through Revenue) were up 8.9% year over year. Segment operating profit grew 13.4% from the prior-year quarter to $243 million and the margin rose 58 bps to 14.4%. The backlog at the quarter’s end was $17.5 billion, marginally down from $17.53 billion a year ago.
Revenues from the Divergent Solutions segment totaled $239.3 million, which grew 9.8% year over year. Divergent Solutions’ net revenues were up 3% year over year. Segment operating profit improved 72% from the prior-year quarter to $21 million. Operating margin of 9.5% also grew 384 bps year over year. The backlog at the quarter’s end was $2.965 billion, down from $3.02 billion a year ago.
PA Consulting generated $286.9 million in revenues in the quarter, up 3.3% from the year-ago quarter’s figure of $277.6 million. Segment operating profit was $61 million, up 18.3% from $51 million a year ago. Segment operating improved by 268 bps to 21.2%. The quarter-end backlog amounted to $355 million, up from $326 million a year ago.
Balance Sheet & Cash Flow
At the fiscal third-quarter end, Jacobs had cash and cash equivalents of $1,092.1 million, down from $1,140.5 million at the end of fiscal 2022 (Sep 30, 2022). Long-term debt decreased to $3.15 billion at the fiscal third-quarter end from $3.36 billion at the fiscal 2022-end.
Net cash provided by operating activities totaled $321.1 million in the quarter versus net cash used in operating activities of $249.1 million in the year-ago quarter.
Fiscal 2023 Guidance Reiterated
Jacobs expects adjusted EBITDA between $1,420 million and $1,470 million and adjusted earnings within $7.25-$7.45 per share. The Zacks Consensus Estimate for the company’s fiscal 2023 earnings is currently pegged at $7.35 per share.
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.
Some Recent Construction Releases
Quanta Services Inc. (PWR - Free Report) reported mixed results for second-quarter 2023, wherein adjusted earnings missed the Zacks Consensus Estimate but revenues surpassed the same. Both metrics were up on a year-over-year basis.
The company continues to experience high demand for its infrastructure solutions that support energy transition initiatives and increase reliability, safety and efficiency. Project activity associated with renewable generation has been going strong and is expected to continue throughout the year.
KBR, Inc. (KBR - Free Report) reported mixed second-quarter 2023 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same. Earnings beat the consensus estimate for the seventh straight quarter. Revenues, on the other hand, surpassed the mark in three of the trailing seven quarters and missed on other four occasions.
Although KBR’s quarterly earnings were impacted by losses related to convertible notes and a legacy legal matter, the company delivered a strong quarter of financial and environmental, social and governance or ESG performance, underpinned by its mission focus and operational discipline.
Fluor Corporation (FLR - Free Report) reported stellar results for second-quarter 2023, wherein earnings and revenues surpassed the respective Zacks Consensus Estimate and increased from the previous year, given solid demand for its engineering and construction solutions.
Given the strong underlying performance of the company’s non-legacy portfolio and large Energy Solutions projects, Fluor lifted its expectations for 2023.