Jacobs Reports Fiscal First Quarter Earnings

DALLAS, Feb. 4, 2020 /PRNewswire/ -- Jacobs Engineering Group Inc. (NYSE: J) today announced its financial results for the fiscal first quarter ended December 27, 2019.

Q1 2020 Highlights:

    --  Gross revenue of $3.4 billion(1) grew 9.0% year-over-year; net revenue
        grew 5% pro forma(1)
    --  EPS from continuing operations of $1.33, results include benefit from
        mark to market impact of Worley stock
    --  Adjusted EPS from continuing operations of $1.20, including $0.06 in
        discrete tax expenses
    --  Backlog increased $2.3 billion to $22.7 billion, up 11% year-over-year
        and up 6% on a pro forma basis(1)
    --  Maintaining fiscal 2020 adjusted EBITDA outlook of $1.050 billion to
        $1.150 billion(2)
    --  Maintaining fiscal 2020 adjusted pro forma EPS outlook of $5.30 -
        $5.80(2)
    --  Increased share repurchase authorization by $1 billion; total
        authorization now $1.4 billion

Jacobs' Chair and CEO Steve Demetriou commented, "Our transformed company continues to deliver consistent performance as we benefit from multiple secular growth trends; such as smart water solutions, environmental resiliency, urbanization, national security and the build out of 5G telecom infrastructure. We are excited about our new brand, which focuses employees to redefine what is possible by challenging traditional thinking and reimagining the future for our clients. The combination of our scale, expertise and innovation bolsters our sales pipeline, further supporting our multi-year financial targets of double-digit adjusted EBITDA growth across both lines of business."

Jacobs will be ringing the Opening Bell at the NYSE later today to celebrate its 30th year listing on the NYSE, proudly exemplifying its new brand and transformation to a global technology-forward solutions company.

Jacobs' President and CFO Kevin Berryman added, "Our strong first quarter profit performance was driven by the successful execution of our strategy to focus on higher growth, higher margin opportunities where our expertise and scale provide a competitive advantage. We are in the final stages of successful M&A restructuring and separation initiatives, which positions us to deliver improved free cash flow generation over the balance of fiscal 2020 and beyond. We are reaffirming our fiscal 2020 adjusted EBITDA outlook of $1.050 billion to $1.150 billion(2). Given our solid financial flexibility, we have increased our remaining share repurchase authorization to $1.4 billion."


                        (1)Reflects continuing operations as
                         reported in accordance with GAAP.


                        (2)Reconciliation of the adjusted pro
                         forma EPS outlook and adjusted
                         EBITDA outlook for the full fiscal
                         year to the most directly comparable
                         GAAP measure is not available
                         without unreasonable efforts because
                         the Company cannot predict with
                         sufficient certainty all the
                         components required to provide such
                         reconciliation, including with
                         respect to the costs and charges
                         relating to transaction expenses,
                         restructuring and integration to be
                         incurred in fiscal 2020.

First Quarter Review


                         
     
       Fiscal Q1 2020 
     
        Fiscal Q1 2019   
        
          Change


        Revenue              
       $3.4 billion     
         $3.1 billion    
        $0.3 billion


        Net Revenue          
       $2.7 billion     
         $2.4 billion    
        $0.3 billion


        GAAP Net
         Earnings from
         Continuing
         Operations          
       $179 million      
         $65 million    
        $114 million


        GAAP Earnings
         Per Diluted
         Share (EPS)
         from Continuing
         Operations                     $1.33                   $0.45                 $0.88


        Adjusted Net
         Earnings from
         Continuing
         Operations          
       $162 million     
         $144 million     
        $18 million


        Adjusted EPS
         from Continuing
         Operations                     $1.20                   $1.00                 $0.20

    ---

The company's adjusted net earnings from continuing operations and adjusted EPS from continuing operations for the first quarter of fiscal 2020 and fiscal 2019 exclude the adjustments set forth in the table below. For additional information regarding these adjustments and a reconciliation of adjusted net earnings and adjusted EPS to net earnings and EPS, respectively, as well as a reconciliation of net revenue to revenue, refer to the section entitled "Non-GAAP Financial Measures" at the end of this release.


                                            
              Fiscal Q1 2020                        
          Fiscal Q1 2019


        After-tax restructuring
         and other charges
         ($52.0 million and
         $45.1 million for the
         fiscal 2020 and 2019
         periods, respectively
         before income taxes)                       
              $39 million ($0.29 per share)    
             $35 million ($0.25 per share)


        After-tax transaction
         costs ($1.6 million and
         $0.5 million for the
         fiscal 2020 and 2019
         periods, respectively
         before income taxes),                     
              $1.2 million ($0.01 per share)      
             $0.4 million ($- per share)


        Other adjustments
         include:                               
              $(58) million ($(0.43) per share)    
             $43 million ($0.30 per share)

         (a) addback of
          amortization of
          intangible assets of
          $21.8 million and $18.7
          million in the 2020 and
          2019 periods,
          respectively,

         (b) the allocation to
          discontinued operations
          of estimated stranded
          corporate costs of $6.4
          million in the 2019
          period that will be
          reimbursed or otherwise
          eliminated in
          connection with the
          sale of the ECR
          business,

         (c) the reclassification
          of revenues under the   unreimbursed costs
          Company's Transition    associated with the TSA
          Services Agreement      during the fiscal 2020
          (TSA) with Worley of    period,
          $12.0 million, included
          in other income for
          U.S. GAAP reporting
          purposes to SG&A and
          the exclusion of $0.7
          million in remaining

         (d) the removal of
          $(99.1) million in fair
          value adjustments
          related to our
          investment in Worley
          stock and certain
          foreign currency
          revaluations relating
          to the ECR sale in the
          2020 period,

         (e) the allocation to
          discontinued operations
          of estimated interest
          expense amounts in 2019
          related to long-term
          debt that was paid down
          in connection with the
          closing of the sale of
          the ECR business of
          $18.1 million,

         (f) the add-back of
          charges resulting from
          the revaluation of
          certain deferred tax
          assets/liabilities in
          connection with U.S.
          tax reform of $11.0
          million in the 2019
          period,

         (g) the add-back of
          depreciation and
          amortization relating
          to the ECR business
          that was ceased as a
          result of the
          application of held for
          sale accounting in the
          2019 period of $5.2
          million and

         (h) associated income
          tax expense adjustments
          for the above pre-tax
          adjustment items.


        Adjusted EPS from
         Continuing Operations                     
              $162 million ($1.20 per share)   
             $144 million ($1.00 per share)

    ---



                            (note: earnings per share
                             amounts may not add due to
                             rounding)

Fiscal first quarter 2020 adjusted earnings per share from continuing operations reflect an adjusted effective tax rate of 24.0%, excluding discrete tax expense items of $7.8 million, or $0.06 per share. Fiscal first quarter 2019 included $0.07 in a discrete tax benefit.

Jacobs is hosting a conference call at 11:00 A.M. ET on Tuesday February 4, 2020, which it is webcasting live at www.jacobs.com.

John Wood Group's Nuclear Business Acquisition

On August 20, 2019, Jacobs announced that it has entered into an agreement to acquire John Wood Group's Nuclear business for an enterprise value of £250 million (approximately $300 million) on a debt-free, cash-free basis. The transaction is expected to close in the fiscal 2020 second quarter.

About Jacobs
At Jacobs, we're challenging today to reinvent tomorrow by solving the world's most critical problems for thriving cities, resilient environments, mission-critical outcomes, operational advancement, scientific discovery and cutting-edge manufacturing, turning abstract ideas into realities that transform the world for good. With $13 billion in annual revenue and a talent force of approximately 52,000, Jacobs provides a full spectrum of professional services including consulting, technical, scientific and project delivery for the government and private sectors. Visit jacobs.com and connect with Jacobs on LinkedIn, Twitter, Facebook and Instagram.

Forward-Looking Statements

Certain statements contained in this press release constitute forward-looking statements as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and such statements are intended to be covered by the safe harbor provided by the same. Statements made in this press release that are not based on historical fact are forward-looking statements. Although such statements are based on management's current estimates and expectations, and currently available competitive, financial, and economic data, forward-looking statements are inherently uncertain, and you should not place undue reliance on such statements as actual results may differ materially. We caution the reader that there are a variety of risks, uncertainties and other factors that could cause actual results to differ materially from what is contained, projected or implied by our forward-looking statements. For a description of some additional factors that may occur that could cause actual results to differ from our forward-looking statements see our Annual Report on Form 10-K for the year ended September 27, 2019, and in particular the discussions contained under Item 1 - Business; Item 1A - Risk Factors; Item 3 - Legal Proceedings; and Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations, and our Quarterly Report on Form 10-Q for the quarter ended December 27, 2019, and in particular the discussions contained under Part I, Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations; Part II, Item 1 - Legal Proceedings; and Part II, Item 1A - Risk Factors, as well as the Company's other filings with the Securities and Exchange Commission. The Company is not under any duty to update any of the forward-looking statements after the date of this press release to conform to actual results, except as required by applicable law.

Financial Highlights:



       
                
                  
             Results of Operations (in thousands, except per-share data):

    ---



                                                                                For the Three Months Ended


                                    Unaudited                     December 27,                                          December 28,
                                                                          2019                                   2018

    ---


       Revenues                                                                 $
              3,360,049                               $
          3,083,788


        Direct cost of contracts                                   (2,715,478)                             (2,515,268)



       Gross profit                                                   644,571                                  568,520


        Selling, general and
         administrative expenses                                     (493,226)                               (455,390)



       Operating Profit                                               151,345                                  113,130



       Other Income (Expense):



       Interest income                                                    946                                    2,104



       Interest expense                                              (14,817)                                (25,325)


        Miscellaneous income
         (expense), net                                                116,695                                    2,282


        Total other income
         (expense), net                                                102,824                                 (20,939)


        Earnings from Continuing
         Operations Before Taxes                                       254,169                                   92,191


        Income Tax Expense for
         Continuing Operations                                        (68,489)                                (22,758)


        Net Earnings of the Group
         from Continuing Operations                                    185,680                                   69,433


        Net Earnings of the Group
         from Discontinued
         Operations                                                     77,587                                   60,158


        Net Earnings of the Group                                      263,267                                  129,591


        Net Earnings Attributable to
         Noncontrolling Interests
         from Continuing Operations                                    (6,257)                                 (4,539)


        Net Earnings Attributable to
         Jacobs from Continuing
         Operations                                                    179,423                                   64,894


        Net (Earnings) Losses
         Attributable to
         Noncontrolling Interests
         from Discontinued
         Operations                                                          -                                   (756)


        Net Earnings Attributable to
         Jacobs from Discontinued
         Operations                                                     77,587                                   59,402


        Net Earnings Attributable to
         Jacobs                                                                    $
              257,010                                 $
          124,296



       Net Earnings Per Share:


        Basic Net Earnings from
         Continuing Operations Per
         Share                                                                        $
              1.35                                    $
          0.45


        Basic Net Earnings from
         Discontinued Operations Per
         Share                                                                        $
              0.58                                    $
          0.42


        Basic Earnings Per Share                                                      $
              1.93                                    $
          0.87




        Diluted Net Earnings from
         Continuing Operations Per
         Share                                                                        $
              1.33                                    $
          0.45


        Diluted Net Earnings from
         Discontinued Operations Per
         Share                                                                        $
              0.58                                    $
          0.41


        Diluted Earnings Per Share                                                    $
              1.91                                    $
          0.86



       
                
                  
                    Segment Information (in thousands):

    ---



                                                                                                      For the Three Months Ended



       
                
                  Unaudited                                            December 27,                                       December 28,
                                                                                                 2019                                2018

    ---


       Revenues from External Customers:



       Critical Mission Solutions                                                                      $
              1,182,457                           $
        1,035,028



       People & Places Solutions                                                                       $
              2,177,592                           $
        2,048,760



       Pass Through Revenue                                                                (701,754)                            (674,278)



       People & Places Solutions Net Revenue                                                           $
              1,475,838                           $
        1,374,482



       Total Revenue                                                                                   $
              3,360,049                           $
        3,083,788



       Net Revenue                                                                                     $
              2,658,295                           $
        2,409,510







                                                                                                      For the Three Months Ended


                                                                                         December 27,                                       December 28,
                                                                                                 2019                                2018



       Segment Operating Profit:



       Critical Mission Solutions                                                                         $
              90,422                              $
        72,152



       People & Places Solutions                                                             178,328                               159,459



       Total Segment Operating Profit                                                        268,750                               231,611



       Other Corporate Expenses (1)                                                         (66,719)                             (71,247)



       Restructuring and Other Charges                                                      (49,663)                             (47,234)



       Transaction Costs                                                                     (1,023)



       Total U.S. GAAP Operating Profit                                                      151,345                               113,130



       Total Other (Expense) Income, net (2)                                                 102,824                              (20,939)



       Earnings from Continuing Operations Before Taxes                                                  $
              254,169                              $
        92,191




              (1)              Other corporate expenses include
                                  costs that were previously
                                  allocated to the ECR segment prior
                                  to discontinued operations
                                  presentation in connection with
                                  the ECR sale in the approximate
                                  amount of $6.4 million for the
                                  three-month period ended December
                                  28, 2018. Other corporate expenses
                                  also include intangibles
                                  amortization of $21.8 million and
                                  $18.7 million for the three-month
                                  periods ended December 27, 2019
                                  and December 28, 2018,
                                  respectively.





              (2)              Includes revenues under the
                                  Company's TSA with Worley of $12.0
                                  million, $99.1 million of fair
                                  value adjustments (unrealized
                                  gains) related to our investment
                                  in Worley stock and certain
                                  foreign currency revaluations
                                  relating to the ECR sale and the
                                  amortization of deferred financing
                                  fees related to the CH2M
                                  acquisition of $0.6 million for
                                  the three months ended December
                                  27, 2019. For the three months
                                  ended December 28, 2018, primarily
                                  includes interest expense of $25.3
                                  million and the amortization of
                                  deferred financing fees related to
                                  the CH2M acquisition of $0.5
                                  million. Also, includes items
                                  related to restructuring and other
                                  charges for the three months ended
                                  December 27, 2019 and December 28,
                                  2018, which are the loss on
                                  settlement of the CH2M portion of
                                  the U.S. pension plan of $2.4
                                  million and the gain on the
                                  settlement of the CH2M retiree
                                  medical plans of $2.2 million,
                                  respectively.



       
                
                  
                    Other Operational Information (in thousands):

    ---




       
                
                  Unaudited                                                                   For the Three Months Ended

    ---


       
                
                  Continuing Operations                                          December 27, 2019                       December 28, 2018



       Depreciation (pre-tax)                                                                                         $
              22,152              $
        18,211



       Amortization of Intangibles (pre-tax)                                                                          $
              21,845              $
        18,671



       Capital Expenditures                                                                                           $
              22,260              $
        19,467



       
                
                  
                    Balance Sheet (in thousands):

    ---




       
                
                  Unaudited                                                 December 27, 2019                             September 27, 2019

    ---


       
                ASSETS



       Current Assets:



       Cash and cash equivalents                                                                                  $
        619,212                           $
         631,068



       Receivables and contract assets                                                               3,056,115                   2,840,209



       Prepaid expenses and other                                                                      699,237                     639,539



       Current assets held for sale                                                                      4,022                         952



       Total current assets                                                                          4,378,586                   4,111,768



       Property, Equipment and Improvements, net                                                       308,672                     308,143



       Other Noncurrent Assets:



       Goodwill                                                                                      5,437,422                   5,432,544



       Intangibles, net                                                                                645,468                     665,076



       Miscellaneous                                                                                 1,403,881                     918,202



       Noncurrent assets held for sale                                                                  26,530                      26,978



       Total other noncurrent assets                                                                 7,513,301                   7,042,800


                                                                                                                $
        12,200,559                        $
         11,462,711



       
                LIABILITIES AND STOCKHOLDERS' EQUITY



       Current Liabilities:



       Short-term debt                                                                                            $
        199,936                           $
         199,901



       Accounts payable                                                                              1,032,820                   1,072,645



       Accrued liabilities                                                                           1,162,872                   1,384,379



       Contract liabilities                                                                            435,211                     414,208



       Current liabilities held for sale                                                                   797                       2,573



       Total current liabilities                                                                     2,831,636                   3,073,706



       Long-term Debt                                                                                1,414,903                   1,201,245



       Other Deferred Liabilities                                                                    1,891,797                   1,419,005



       Noncurrent Liabilities Held for Sale                                                                 52                          97



       Commitments and Contingencies



       Stockholders' Equity:



       Capital stock:


        Preferred stock, $1 par value, authorized -1,000,000 shares; issued and outstanding -
         none                                                                                                 -


        Common stock, $1 par value, authorized -240,000,000 shares; issued and outstanding -
         133,001,493 shares and 132,879,395 shares as of December 27, 2019 and September 27,
         2019, respectively                                                                             133,001                     132,879



       Additional paid-in capital                                                                    2,605,765                   2,559,450



       Retained earnings                                                                             4,145,825                   3,939,174



       Accumulated other comprehensive loss                                                          (880,166)                  (916,812)



       Total Jacobs stockholders' equity                                                             6,004,425                   5,714,691



       Noncontrolling interests                                                                         57,746                      53,967



       Total Group stockholders' equity                                                              6,062,171                   5,768,658


                                                                                                                $
        12,200,559                        $
         11,462,711



       
                
                  
                    Statement of Cash Flow (in thousands):

    ---



                                                                                             For the Three Months Ended


                                    Unaudited                                 December 27, 2019                                    December 28, 2018

    ---


       Cash Flows from Operating Activities:


        Net earnings attributable to the
         Group                                                                                    $
              263,267                            $
      129,591


        Adjustments to reconcile net earnings to net cash flows
         (used for) provided by operations:



       Depreciation and amortization:


        Property, equipment and improvements                                             22,152                             20,321



       Intangible assets                                                                21,845                             19,285


        Gain on sale of ECR business                                                   (61,943)


        (Gain) Loss on investment in equity
         securities                                                                   (105,319)



       Stock based compensation                                                         14,279                             15,594


        Equity in earnings of operating
         ventures, net                                                                    (715)                           (3,141)


        (Gain) Loss on disposals of assets,
         net                                                                                 36                                511


        Loss (Gain) on pension and retiree
         medical plan changes                                                             2,651                            (2,172)



       Deferred income taxes                                                           102,487                           (26,080)


        Changes in assets and liabilities, excluding the effects
         of businesses acquired:


        Receivables and contract assets                                               (121,532)                         (299,061)


        Prepaid expenses and other current
         assets                                                                         (4,152)                            39,198



       Accounts payable                                                               (35,380)                            18,891



       Accrued liabilities                                                           (236,090)                         (169,948)



       Contract liabilities                                                             25,457                            119,641



       Other deferred liabilities                                                     (60,562)                          (80,439)



             Other, net                                                                 36,333                            (6,892)


                  Net cash (used for) provided by
                   operating activities                                               (137,186)                         (224,701)



       Cash Flows from Investing Activities:


        Additions to property and equipment                                            (22,260)                          (20,721)


        Disposals of property and equipment
         and other assets                                                                     -                               205


        Distributions of capital from
         (contributions to) equity investees                                           (12,000)                             (966)


        Purchases of noncontrolling interests                                                 -                           (1,113)


                   Net cash provided by (used for)
                    investing activities                                               (34,260)                          (22,595)



       Cash Flows from Financing Activities:


        Net (payments) proceeds from
         borrowings                                                                     210,616                            527,057


        Proceeds from issuances of common
         stock                                                                            6,201                              7,582



       Common stock repurchases                                                              -                         (141,799)


        Taxes paid on vested restricted stock                                          (24,334)                          (18,512)


        Cash dividends, including to
         noncontrolling interests                                                      (25,618)                          (28,603)


        Net cash provided by (used for)
         financing activities                                                           166,865                            345,725


        Effect of Exchange Rate Changes                                                 (7,275)                            22,115


        Net Increase (decrease) in Cash and
         Cash Equivalents                                                              (11,856)                           120,544


        Cash and Cash Equivalents at the
         Beginning of the Period                                                        631,068                            793,358


        Cash and Cash Equivalents at the End
         of the Period                                                                  619,212                            913,902


        Less Cash and Cash Equivalents
         included in Assets held for Sale                                                     -                          (27,195)


        Cash and Cash Equivalents of
         Continuing Operations at the End of
         the Period                                                                               $
              619,212                            $
      886,707



       
                
                 
     Backlog (in millions):

    ---



                                                            December 27, 2019                   December 28, 2018



       Critical Mission Solutions                                             $
      8,473                     $
        7,158



       People & Places Solutions                                      14,197            13,177



                   Total                                                     $
      22,670                    $
        20,335

Non-GAAP Financial Measures:

In this press release, the Company has included certain non-GAAP financial measures as defined in Regulation G promulgated under the Securities Exchange Act of 1934, as amended. The non-GAAP financial measures included in this press release are net revenue, adjusted net earnings from continuing operations, adjusted EPS from continuing operations, adjusted operating profit and adjusted EBITDA.

Net revenue is calculated excluding pass-through revenue of the Company's People & Places Solutions segment from the Company's revenue from continuing operations. Adjusted net earnings from continuing operations, adjusted EPS from continuing operations and adjusted operating profit are non-GAAP financial measures that are calculated by (i) excluding the costs related to the 2015 restructuring activities, which included involuntary terminations, the abandonment of certain leased offices, combining operational organizations and the co-location of employees into other existing offices; and charges associated with our Europe, U.K. and Middle East region, which included write-offs on contract accounts receivable and charges for statutory redundancy and severance costs (collectively, the "2015 Restructuring and other items"); (ii) excluding costs and other charges associated with restructuring activities implemented in connection with the KeyW and CH2M acquisitions, the sale of the ECR business and other related cost reduction initiatives, which included involuntary terminations, costs associated with co-locating Jacobs, KeyW and CH2M offices, separating physical locations of ECR and continuing operations, costs and expenses of the Integration Management Office and Separation Management Office, including professional services and personnel costs, costs and charges associated with the divestiture of joint venture interests to resolve potential conflicts arising from the CH2M acquisition, expenses relating to certain commitments and contingencies relating to discontinued operations of the CH2M business, charges associated with certain operations in India, which included write-offs on contract accounts receivable and other accruals, and similar costs and expenses (collectively referred to as the "Restructuring and other charges"); (iii) excluding transaction costs and other charges incurred in connection with closing of the KeyW and CH2M acquisitions, the pending acquisition of Wood Group's nuclear business, and sale of the ECR business (to the extent incurred prior to the closing), including advisor fees, change in control payments, costs and expenses relating to the registration and listing of Jacobs stock issued in connection with the CH2M acquisition, and similar transaction costs and expenses (collectively referred to as "transaction costs"); (iv) adding back amortization of intangible assets; (v) allocating to discontinued operations estimated stranded corporate costs that will be reimbursed or otherwise eliminated in connection with the sale of the ECR business; (vi) the reclassification of revenue under the Company's transition services agreement (TSA) included in other income for U.S. GAAP reporting purposes to SG&A and the exclusion of remaining unreimbursed costs associated with the TSA; (vii) allocating to discontinued operations estimated interest expense relating to long-term debt that was paid down with the proceeds of the ECR sale; (viii) the removal of fair value adjustments and dividend income related to the Company's investment in Worley stock and certain foreign currency revaluations relating to ECR sale proceeds; (ix) the exclusion of a one-time favorable adjustment in the fiscal 2019 period associated with a reduction of deferred income taxes for permanently reinvested earnings from non-U.S. subsidiaries in connection with the sale of the ECR business; (x) excluding charges resulting from the revaluation of certain deferred tax assets/liabilities in connection with U.S. tax reform; (xi) adding back depreciation and amortization relating to the ECR business of the Company that was ceased as a result of the application of held-for-sale accounting; and (xii) other income tax adjustments. Adjustments to derive adjusted net earnings from continuing operations, adjusted EPS from continuing operations and adjusted operating profit are calculated on an after-tax basis. We believe that net revenue, adjusted net earnings from continuing operations, adjusted EPS from continuing operations, adjusted operating profit and adjusted EBITDA are useful to management, investors and other users of our financial information in evaluating the Company's operating results and understanding the Company's operating trends by excluding or adding back the effects of the items described above, the inclusion or exclusion of which can obscure underlying trends. Additionally, management uses such measures in its own evaluation of the Company's performance, particularly when comparing performance to past periods, and believes these measures are useful for investors because they facilitate a comparison of our financial results from period to period.

Adjusted EBITDA for prior periods is calculated by adding depreciation expense to adjusted operating profit from continuing operations. For fiscal 2020 outlook, the Company calculated adjusted EBITDA by adding income tax expense, depreciation expense and interest expense, and deducting interest income from adjusted net earnings from continuing operations.

The Company provides non-GAAP measures to supplement U.S. GAAP measures, as they provide additional insight into the Company's financial results. However, non-GAAP measures have limitations as analytical tools and should not be considered in isolation and are not in accordance with, or a substitute for, U.S. GAAP measures. In addition, other companies may define non-GAAP measures differently, which limits the ability of investors to compare non-GAAP measures of the Company to those used by our peer companies.

The following tables reconcile the components and values of U.S. GAAP revenue, net earnings from continuing operations, EPS from continuing operations, operating profit and revenue to the corresponding "adjusted" amounts. For the comparable periods presented below, such adjustments consist of amounts incurred in connection with the items described above. Amounts are shown in thousands, except for per-share data (note: earnings per share amounts may not add across due to rounding). Reconciliation of the adjusted EPS and adjusted EBITDA outlook for the full fiscal year to the most directly comparable GAAP measure is not available without unreasonable efforts because the Company cannot predict with sufficient certainty all the components required to provide such reconciliation (note: earnings per share amounts may not add across due to rounding).



       
                
           
             U.S. GAAP Reconciliation for the first quarter of fiscal 2020 and 2019

    ---



                                                                                                           
              
               Three Months Ended


                                                                                                            
              
               December 27, 2019


                             Unaudited                     U.S. GAAP                                                   Effects of                                 Effects of                               Other                      Adjusted
                                                                                                        Restructuring                                Transaction                          Adjustments
                                                                                                         and Other                                   Costs (1)                                       (2)
                                                                                                           Charges

    ---


       Revenues                                                       $
              3,360,049                                                                     
              $                            
           $                             
              $                  $
           3,360,049


        Pass through revenue                                       -                                                                                                                                                     (701,754)               (701,754)


        Net revenue                                        3,360,049                                                                                                                                                      (701,754)               2,658,295


        Direct cost of
         contracts                                       (2,715,478)                                                                                                                                                       701,754              (2,013,724)


        Gross profit                                         644,571                                                                                                                                                                                644,571


        Selling, general and
         administrative
         expenses                                          (493,226)                                                                 49,663                                                  1,023                            34,520                (408,020)


        Operating Profit                                     151,345                                                                  49,663                                                  1,023                            34,520                  236,551


        Total other income
         (expense), net                                      102,824                                                                   2,378                                                    620                         (111,107)                 (5,285)


        Earnings from
         Continuing
         Operations Before
         Taxes                                               254,169                                                                  52,041                                                  1,643                          (76,587)                 231,266


        Income Tax Expense
         for Continuing
         Operations                                         (68,489)                                                               (13,032)                                                  (400)                           18,640                 (63,281)


        Net Earnings of the
         Group from
         Continuing
         Operations                                          185,680                                                                  39,009                                                  1,243                          (57,947)                 167,985


        Net Earnings
         Attributable to
         Noncontrolling
         Interests from
         Continuing
         Operations                                          (6,257)                                                                                                                                                                               (6,257)


        Net Earnings from
         Continuing
         Operations
         attributable to
         Jacobs                                              179,423                                                                  39,009                                                  1,243                          (57,947)                 161,728


        Net Earnings
         Attributable to
         Discontinued
         Operations                                           77,587                                                                                                                                                                                 77,587


        Net earnings
         attributable to
         Jacobs                                                          $
              257,010                                                                                  $
       39,009                          $
              1,243                           $
       (57,947)    $
            239,315


        Diluted Net Earnings
         from Continuing
         Operations Per
         Share                                                              $
              1.33                                                                                    $
       0.29                           $
              0.01                             $
       (0.43)       $
            1.20


        Diluted Net Earnings
         from Discontinued
         Operations Per
         Share                                                              $
              0.58                                                                     
              $                            
           $                             
              $                      $
            0.58


        Diluted Earnings Per
         Share                                                              $
              1.91                                                                                    $
       0.29                           $
              0.01                             $
       (0.43)       $
            1.78


        Operating profit
         margin                                        4.5
            %                                                                                                                                                 8.9
            %

                                                                                                                                                                                                                                         ===



               (1) Includes after-tax transaction
                costs associated mainly with the
                acquisition of John Wood Group's
                Nuclear Business.




               (2) Includes (a) the removal of pass
                through revenues and costs for the
                People & Places Solutions line of
                business for the calculation of
                operating profit margin as a
                percentage of net revenue of $701.8
                million, (b) the removal of
                amortization of intangible assets
                of $21.8 million, (c) the
                reclassification of revenues under
                the Company's TSA of $12.0 million
                included in other income for U.S.
                GAAP reporting purposes to SG&A and
                the exclusion of $0.7 million in
                remaining unreimbursed costs
                associated with this agreement, (d)
                the removal of $99.1 million in
                fair value adjustments related to
                our investment in Worley stock and
                certain foreign currency
                revaluations relating to the ECR
                sale and (e) associated income tax
                expense adjustments for the above
                pre-tax adjustment items.


                                                                        
              
               Three Months Ended


                                                                         
              
               December 28, 2018


                             Unaudited     U.S. GAAP                                Effects of                                Effects of                                Other                       Adjusted
                                                                       Restructuring                              Transaction                          Adjustments
                                                                        and Other                                 Costs (1)                                     (2)
                                                                          Charges

    ---


       Revenues                                     $
          3,083,788                                                       
              $                            
            $                              
              $                   $
           3,083,788


        Pass through revenue                                                                                                                                                           (674,278)               (674,278)


        Net revenue                        3,083,788                                                                                                                                    (674,278)               2,409,510


        Direct cost of
         contracts                       (2,515,268)                                              2,870                                                                                   674,278              (1,838,120)


        Gross profit                         568,520                                               2,870                                                                                                           571,390


        Selling, general and
         administrative
         expenses                          (455,390)                                             44,364                                                                                    25,071                (385,955)


        Operating Profit                     113,130                                              47,234                                                                                    25,071                  185,435


        Total other income
         (expense), net                     (20,939)                                                                             (2,175)                         515                                 18,067                        (4,532)



        Earnings from
         Continuing
         Operations Before
         Taxes                                92,191                                              45,059                                                 515                                 43,138                  180,903


        Income Tax Expense
         for Continuing
         Operations                         (22,758)                                            (9,695)                                               (125)                                   138                 (32,440)


        Net Earnings of the
         Group from
         Continuing
         Operations                           69,433                                              35,364                                                 390                                 43,276                  148,463


        Net Earnings
         Attributable to
         Noncontrolling
         Interests from
         Continuing
         Operations                          (4,539)                                                                                                                                                             (4,539)


        Net Earnings from
         Continuing
         Operations
         attributable to
         Jacobs                               64,894                                              35,364                                                 390                                 43,276                  143,924


        Net Earnings
         Attributable to
         Discontinued
         Operations                           59,402                                             (4,723)                                               4,795                               (23,310)                  36,164


        Net earnings
         attributable to
         Jacobs                                        $
          124,296                                                                    $
       30,641                            $
              5,185                            $
         19,966    $
             180,088


        Diluted Net Earnings
         from Continuing
         Operations Per
         Share                                            $
          0.45                                                                      $
       0.25                 
            $                                               $
         0.30       $
             1.00


        Diluted Net Earnings
         from Discontinued
         Operations Per
         Share                                            $
          0.41                                                                    $
       (0.03)                            $
              0.03                            $
         (0.16)      $
             0.25


        Diluted Earnings Per
         Share                                            $
          0.86                                                                      $
       0.22                             $
              0.03                              $
         0.14       $
             1.25


        Operating profit
         margin                        3.7
            %                                                                                                                               7.7
            %



               (1) Includes after-tax transaction
                costs associated mainly with the sale
                of our former ECR business.




               (2) Includes (a) the removal of pass
                through revenues and costs for the
                People & Places Solutions line of
                business for the calculation of
                operating profit margin as a
                percentage of net revenue of $674.3
                million, (b) the removal of
                amortization of intangible assets of
                $18.7 million, (c) the allocation to
                discontinued operations of estimated
                stranded corporate costs of $6.4
                million that would have been
                reimbursed under the ECR transition
                services agreement (TSA) with Worley
                Parsons or otherwise eliminated from
                the ongoing operations in connection
                with the sale of the ECR business,
                (d) the allocation to discontinued
                operations of estimated interest
                expense for the full period related
                to long-term debt that was paid down
                as a result of the closing of the
                sale of the ECR business of $18.1
                million, (e) the add-back of
                depreciation and amortization
                relating to the ECR business that was
                ceased as a result of application of
                held for sale accounting of $5.2
                million, (f) the add-back of charges
                resulting from the revaluation of
                certain deferred tax assets/
                liabilities in connection with U.S.
                tax reform of $11.0 million and (g)
                associated income tax expense
                adjustments for all the above pre-
                tax adjustment items.



       
                
                  Earnings Per Share:

    ---



                                                                              Three Months Ended


                                    Unaudited               December 27, 2019                              December 28, 2018

    ---

                     Numerator for Basic and Diluted EPS:


        Net earnings (loss)
         attributable to Jacobs
         from continuing
         operations                                                            $
              179,423                      $
        64,894


        Net earnings (loss) from
         continuing operations
         allocated to
         participating securities                                        (92)                       (135)


                     Net earnings (loss) from
                      continuing operations
                      allocated to common
                      stock for EPS
                      calculation                                              $
              179,331                      $
        64,759




        Net earnings (loss)
         attributable to Jacobs
         from discontinued
         operations                                                             $
              77,587                      $
        59,402


        Net earnings (loss) from
         discontinued operations
         allocated to
         participating securities                                        (40)                       (124)


                     Net earnings (loss) from
                      discontinued operations
                      allocated to common
                      stock for EPS
                      calculation                                               $
              77,547                      $
        59,278




                     Net earnings allocated to
                      common stock for EPS
                      calculation                                              $
              256,878                     $
        124,037




                     Denominator for Basic and Diluted EPS:


        Weighted average basic
         shares                                                       133,202                      142,451


        Shares allocated to
         participating securities                                        (68)                       (297)


                     Shares used for
                      calculating basic EPS
                      attributable to common
                      stock                                           133,134                      142,154




                     Effect of dilutive securities:


        Stock compensation plans                                        1,484                        1,424


                     Shares used for
                      calculating diluted EPS
                      attributable to common
                      stock                                           134,618                      143,578




                     Net Earnings Per Share:


        Basic Net Earnings from
         Continuing Operations
         Per Share                                                                $
              1.35                        $
        0.45


        Basic Net Earnings from
         Discontinued Operations
         Per Share                                                                $
              0.58                        $
        0.42


                     Basic EPS                                                    $
              1.93                        $
        0.87


        Diluted Net Earnings from
         Continuing Operations
         Per Share                                                                $
              1.33                        $
        0.45



        Diluted Net Earnings from
         Discontinued Operations
         Per Share                                                                $
              0.58                        $
        0.41



                     Diluted EPS                                                  $
              1.91                        $
        0.86

For additional information contact:

Investors:
Jonathan Doros, 214-583-8596
jonathan.doros@jacobs.com

Media:
Marietta Hannigan, 214-920-8035
marietta.hannigan@jacobs.com

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SOURCE Jacobs