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Jacobs' (JEC) Q4 Earnings & Revenues Surpass Estimates

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Jacobs Engineering Group Inc. ended fiscal 2019 on a strong note. The company reported fourth-quarter fiscal 2019 (ended Sep 27, 2019) results, wherein earnings and revenues beat the Zacks Consensus Estimate, courtesy of its transformed portfolio, focus on continued innovation, solid project execution, and diversification into new high-margin growth opportunities.

The company reported adjusted earnings per share of $1.48, surpassing the consensus mark of $1.28 by 15.6%. The reported figure also grew 29.8% year over year, driven by cost-saving initiatives and prudent strategy execution.

Segmental Performance

During the reported quarter, Jacobs’ revenues came in at $3.39 billion, surpassing the consensus mark of $3.31 billion by 2.6%. Revenues also grew 13.4% year over year. The improvement was driven by healthy segmental businesses and the KeyW acquisition. Backlog as of Sep 27, 2019 totaled $22.57 billion, up 13.1% from $19.96 billion reported in the comparable year-ago period.

Strategic Initiatives & Change of Ticker Symbol

Fiscal 2019 was a transformational year for Jacobs. It completed the divestiture of the Energy, Chemicals and Resources or ECR business in April, acquisition of KeyW in June, and announced the buyout of Wood's nuclear business in August. These moves were in sync with its strategic focus on transitioning from engineering and construction to a global technology-forward solutions company. In view of this, Jacobs launched its new brand globally during the fiscal fourth quarter earnings call and reported that the company will trade in NYSE under the ticker symbol "J" effective Dec 10, 2019.

Segment Details

The names of Jacobs’ business lines have also changed to better reflect outcome-focused solutions for customers. The Aerospace, Technology and Nuclear segment will now be known as Critical Mission Solutions, and Buildings, Infrastructure and Advanced Facilities segment’s name is changed to People & Places Solutions. Notably, these name changes have had no impact on reported financials, line of business leadership or customer relationships.

Revenues from the Critical Mission Solutions segment of $1,300.1 million (representing 38.3% of total revenues) increased 21.6% year over year. Backlog at the end of the quarter was roughly $8.5 billion, up 18.7% year over year.

Revenues from the People & Places Solutions segment totaled $2,092.7 million, increasing 8.8% year over year and accounting for 61.7% of revenues in the quarter under review. Backlog at the end of the quarter was roughly $14.1 billion, up 10% year over year.

Margins Profile

In the quarter under review, adjusted gross profit increased 10% year over year to $668.5 million. Adjusted selling, general and administrative expenses — which grew 7.5% from the prior-year quarter to $415.2 million — represented 12.2% of its total revenues. Adjusted operating profit, as a percentage of net revenues, was flat year over year at 9.4% in the quarter.

Balance Sheet and Cash Flow

At the end of fiscal 2019, Jacobs had cash and cash equivalents of $631.1 million, down from $634.9 million at fiscal 2018-end. Long-term debt balance decreased to $1.2 billion at the end of fiscal 2019 from $2.14 billion at fiscal 2018-end.

In the fiscal fourth quarter, the company used cash in operating activities of $146.1 million compared with cash provided by operations of $212.2 million a year ago.

Fiscal 2019 Highlights

Total revenues of $12.74 billion grew 20.4% from fiscal 2018. Adjusted earnings came in at $5.05 per share, up 30% from fiscal 2018.

2020 Guidance

The company expects adjusted EBITDA between $1,050 million and $1,150 million. It expects double-digit growth in adjusted EBITDA as well as adjusted EPS.

Zacks Rank & Peer Releases

Currently, Jacobs carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

KBR, Inc. (KBR - Free Report) reported strong results in third-quarter 2019. The top and bottom lines beat the Zacks Consensus Estimate and improved year over year on continued solid organic growth across the business. Also, the company raised its 2019 guidance.

Quanta Services Inc (PWR - Free Report) reported solid results in third-quarter 2019. The top and the bottom lines surpassed the respective Zacks Consensus Estimate, and increased year over year. It reported adjusted earnings of $1.14 per share, which beat the consensus mark of $1.04 by 9.6%.

Fluor Corporation (FLR - Free Report) reported third-quarter 2019 adjusted earnings of 71 cents per share, beating the Zacks Consensus Estimate of 38 cents by 86.8%. The reported figure also increased from the year-ago quarter’s earnings of 55 cents by 29.1%.

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