Jacobs Reports Fiscal Second Quarter Earnings
DALLAS, May 6, 2020 /PRNewswire/ -- Jacobs Engineering Group Inc. (NYSE: J) today announced its financial results for the fiscal second quarter ended March 27, 2020.
Q2 2020 Highlights:
-- Gross revenue of $3.4 billion(1) grew 10.9% year-over-year; net revenue
grew 7.5% pro forma
-- EPS from continuing operations of $(0.92); results include $1.94 charge
from mark to market impact of Worley stock
-- Adjusted EPS from continuing operations of $1.39, including $0.07 in
discrete tax benefits
-- Backlog increased $2.6 billion to $23.3 billion, up 12.5% year-over-year
and up 5% on a pro forma basis
-- Cash flow from operations of $152 million, expect strong free cash flow
for the balance of FY20
-- Fiscal 2020 outlook to reflect COVID-19 impact, continues to represent
year-over-year adjusted EBITDA growth
Jacobs' Chair and CEO Steve Demetriou commented, "During this time our focus has remained on keeping our people safe, ensuring business continuity and shifting our focus to aid in COVID-19 relief efforts by delivering solutions for our customers. Our cultural and portfolio transformation over the past several years provided the foundation for rapid, thoughtful decision-making at the beginning of the crisis - and allowed us to accelerate existing digital transformation plans to quickly shift our 55,000-person global workforce to remote working, demonstrating our resiliency and ability to navigate and weather this pandemic." Demetriou continued, "This has also enabled us to demonstrate new approaches to working on a global scale, maximizing our digital strategy and tools, to shape our 'new normal' - and reinforcing our global resilience and operational readiness. And perhaps most importantly, our behaviors during this crisis have strengthened our brand with our people and allowed us to retain top talent, setting us up for long-term success."
Jacobs' President and CFO Kevin Berryman added, "Our transformed portfolio has demonstrated strong financial flexibility in the face of one of the most abrupt shocks ever to the safety, health and economic well-being of the global community. Our long-term outlook for the business, despite the short term challenges associated with COVID-19, remains intact and we expect to generate strong free cash flow for the remainder of 2020. Furthermore, our financial flexibility affords us the opportunity to invest further in our people and our business as we look to improve our capabilities, productivity and efficiencies gained as a result of the crisis. We expect to emerge from the pandemic a more agile company that is positioned for growth in fiscal 2021 and beyond."
Financial Outlook
The company now expects fiscal 2020 adjusted EBITDA of $950 million to $1,050(2) million and adjusted EPS of $4.80 to $5.30(2).
Second Quarter Review
Fiscal Q2 2020
Fiscal Q2 2019
Change
Revenue
$3.4 billion
$3.1 billion
$0.3 billion
Net Revenue
$2.8 billion
$2.5 billion
$0.3 billion
GAAP Net (Loss) Earnings from Continuing Operations
($122 million)
$115 million
($237 million)
GAAP (Loss) Earnings Per Diluted Share (EPS) from Continuing Operations ($0.92) $0.82 ($1.74)
Adjusted Net Earnings from Continuing Operations
$186 million
$166 million
$20 million
Adjusted EPS from Continuing Operations $1.39 $1.19 $0.20
---
The company's adjusted net earnings from continuing operations and adjusted EPS from continuing operations for the second 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 (loss) 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 Q2 2020
Fiscal Q2 2019
GAAP Net (Loss) Earnings
from Continuing
Operations and Diluted
Earnings Per Share
(EPS)
$(122) million ($(0.92) per share)
$115 million ($0.82 per share)
After-tax
restructuring,
transaction costs, and
other charges ($44.2
million and $67.3
million for the fiscal
2020 and 2019 periods,
respectively before
income taxes)
$33 million ($0.25 per share)
$55 million ($0.39 per share)
Other adjustments
include:
$275 million ($2.06 per share)
$(5) million ($(0.03) per share)
(a) add-back of
amortization of
intangible assets of
$22.1 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
Company's Transition
Services Agreement
(TSA) with Worley of
$2.2 million, included
in other income for
U.S. GAAP reporting
purposes to SG&A during
the fiscal 2020 period,
(d) the removal of
$341.0 million in fair period,
value adjustments
related to our
investment in Worley
stock (net of Worley
stock dividend) and
certain foreign
currency revaluations
relating to the ECR
sale in the 2020
(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
$18.4 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 $37
million in the 2019
period and
(g) associated income
tax expense adjustments
for the above pre-tax
adjustment items.
Adjusted Net Earnings
from Continuing
Operations and EPS
$186 million ($1.39 per share)
$166 million ($1.19 per share)
---
(note: earnings per share
amounts may not add due to
rounding)
Fiscal second quarter 2020 adjusted earnings per share from continuing operations reflect an adjusted effective tax rate of 20.7%, excluding discrete tax benefit items of $9.5 million, or $0.07 per share.
Jacobs is hosting a conference call at 4:45 P.M. ET on Wednesday May 6, 2020, which it is webcasting live at www.jacobs.com.
The conference call can also be accessed by dialing (833) 520-0069 and providing passcode 9842818.
John Wood Group's Nuclear Business Acquisition
On March 6, 2020, Jacobs completed the acquisition of John Wood Group's Nuclear consulting, remediation and program management business.
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 55,000, 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. Examples of forward-looking statements include, but are not limited to, statements we make concerning the potential effects of the COVID-19 pandemic on our business, financial condition and results of operations and our expectations as to our future growth, prospects, financial outlook and business strategy for fiscal 2020 or future fiscal years. 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. Such factors include the magnitude, timing, duration and ultimate impact of the COVID-19 pandemic and any resulting economic downturn on our results, prospects and opportunities. Such impact includes, but is not limited to, the possible reduction in demand for certain of our services and the delay or abandonment of ongoing or anticipated projects due to the financial condition of our clients and suppliers or to governmental budget constraints; the inability of our clients to meet their payment obligations in a timely manner or at all; potential issues and risks related to a significant portion of our employees working remotely; illness, travel restrictions and other workforce disruptions that could negatively affect our supply chain and our ability to timely and satisfactorily complete our clients' projects; difficulties associated with hiring additional employees or replacing any furloughed employees; increased volatility in the capital markets that may affect our ability to access sources of liquidity on acceptable pricing or borrowing terms or at all; and the inability of governments in certain of the countries in which we operate to effectively mitigate the financial or other impacts of the COVID-19 pandemic on their economies and workforces and our operations therein. The foregoing factors and potential future developments are inherently uncertain, unpredictable and, in many cases, beyond our control. For a description of these and 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 March 27, 2020, 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.
(1)Reflects continuing operations as reported in accordance with GAAP.
(2)Reconciliation of the adjusted 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.
Financial Highlights:
Results of Operations (in thousands, except per-share data):
---
For the Three Months Ended For the Six Months Ended
Unaudited March 27, 2020 March 29, 2019 March 27, 2020 March 29, 2019
---
Revenues $
3,427,180 $
3,091,596 $
6,787,229 $
6,175,384
Direct cost of contracts (2,779,045) (2,474,755) (5,494,522) (4,990,023)
Gross profit 648,135 616,841 1,292,707 1,185,361
Selling, general and
administrative expenses (480,357) (514,160) (973,582) (969,551)
Operating Profit 167,778 102,681 319,125 215,810
Other (Expense) Income:
Interest income 985 1,670 1,931 3,774
Interest expense (15,154) (29,423) (29,971) (54,749)
Miscellaneous (expense)
income, net (330,414) 36,904 (213,719) 39,186
Total other (expense)
income, net (344,583) 9,151 (241,759) (11,789)
(Loss) Earnings from
Continuing Operations
Before Taxes (176,805) 111,832 77,366 204,021
Income Tax Benefit (Expense)
for Continuing Operations 61,122 7,947 (7,368) (14,811)
Net (Loss) Earnings of the
Group from Continuing
Operations (115,683) 119,779 69,998 189,210
Net Earnings (Loss) of the
Group from Discontinued
Operations 29,880 (57,006) 107,468 3,153
Net (Loss) Earnings of the
Group (85,803) 62,773 177,466 192,363
Net Earnings Attributable to
Noncontrolling Interests
from Continuing Operations (6,284) (5,024) (12,540) (9,562)
Net (Loss) Earnings
Attributable to Jacobs from
Continuing Operations (121,967) 114,755 57,458 179,648
Net Earnings Attributable to
Noncontrolling Interests
from Discontinued
Operations - (832) (1,588)
Net Earnings (Loss)
Attributable to Jacobs from
Discontinued Operations 29,880 (57,838) 107,468 1,565
Net (Loss) Earnings
Attributable to Jacobs $
(92,087) $
56,917 $
164,926 $
181,213
Net (Loss) Earnings Per Share:
Basic Net (Loss) Earnings
from Continuing Operations
Per Share $
(0.92) $
0.83 $
0.43 $
1.28
Basic Net Earnings (Loss)
from Discontinued
Operations Per Share $
0.23 $
(0.42) $
0.81 $
0.01
Basic (Loss) Earnings Per
Share $
(0.69) $
0.41 $
1.24 $
1.29
Diluted Net (Loss) Earnings
from Continuing Operations
Per Share $
(0.92) $
0.82 $
0.43 $
1.27
Diluted Net Earnings (Loss)
from Discontinued
Operations Per Share $
0.23 $
(0.41) $
0.80 $
0.01
Diluted (Loss) Earnings Per
Share $
(0.69) $
0.41 $
1.23 $
1.28
Segment Information (in thousands):
---
Three Months Ended
Six Months Ended
Unaudited March 27, 2020 March 29, 2019 March 27, 2020 March 29, 2019
---
Revenues from External
Customers:
Critical Mission Solutions $
1,243,378 $
1,059,508 $
2,425,835 $
2,094,537
People & Places Solutions 2,183,802 2,032,088 4,361,394 4,080,847
Pass Through Revenue (641,393) (632,359) (1,343,147) (1,306,637)
People & Places Solutions
Net Revenue $
1,542,409 $
1,399,729 $
3,018,247 $
2,774,210
Total Revenue $
3,427,180 $
3,091,596 $
6,787,229 $
6,175,384
Net Revenue $
2,785,787 $
2,459,237 $
5,444,082 $
4,868,747
Three Months Ended
Six Months Ended
March 27, 2020 March 29, 2019 March 27, 2020 March 29, 2019
Segment Operating Profit:
Critical Mission Solutions $
84,293 $
73,831 $
174,715 $
145,982
People & Places Solutions 189,082 172,689 367,411 332,148
Total Segment Operating
Profit 273,375 246,520 542,126 478,130
Other Corporate Expenses
(1) (61,216) (49,901) (127,934) (121,149)
Restructuring, Transaction
and Other Charges (44,381) (93,938) (95,067) (141,171)
Total U.S. GAAP Operating
Profit 167,778 102,681 319,125 215,810
Total Other (Expense)
Income, net (2) (344,583) 9,151 (241,759) (11,789)
(Loss) Earnings from
Continuing Operations
Before Taxes $
(176,805) $
111,832 $
77,366 $
204,021
(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 and $12.8 million for
the three and six month periods
ended March 29, 2019. Other
corporate expenses also include
intangibles amortization of
$22.1 million and $18.7 million
for the three-month periods
ended March 27, 2020 and March
29, 2019, respectively, and
$43.9 million and $37.3 million
for the six months ended March
27, 2020 and March 29, 2019,
respectively.
(2) For the three and six month
periods ended March 27, 2020,
includes revenues under the
Company's TSA with Worley of
$2.2 million and $14.2 million,
respectively, $(341.0) million
and $(241.9) million in fair
value adjustments related to
our investment in Worley stock
(net of Worley stock dividend)
and certain foreign currency
revaluations relating to the
ECR sale, respectively, the
amortization of deferred
financing fees related to the
CH2M acquisition of $0.1
million and $0.7 million,
respectively, and the loss on
settlement of the U.S. pension
plan of $0 and $2.7 million
respectively. For the three and
six month periods ended March
29, 2019, includes the
amortization of deferred
financing fees related to the
CH2M acquisition of $0.5
million and $1.0 million,
respectively and the gain on
settlement of the CH2M portion
of the U.S. pension plan of
$32.4 million and $34.6
million, respectively.
Other Operational Information (in thousands):
---
Unaudited For the Six Months Ended
---
Continuing
Operations March 27, 2020 March 29, 2019
Depreciation (pre-
tax) $
44,718 $
41,702
Amortization of
Intangibles (pre-
tax) $
43,939 $
37,349
Capital
Expenditures $
61,337 $
58,909
Balance Sheet (in thousands):
---
Unaudited March 27, 2020 September 27, 2019
---
ASSETS
Current Assets:
Cash and cash equivalents $
1,655,879 $
631,068
Receivables and contract assets 3,178,580 2,840,209
Prepaid expenses and other 332,395 639,539
Current assets held for sale 952
Total current assets 5,166,854 4,111,768
Property, Equipment and Improvements, net 330,505 308,143
Other Noncurrent Assets:
Goodwill 5,596,156 5,432,544
Intangibles, net 689,795 665,076
Miscellaneous 1,351,303 918,202
Noncurrent assets held for sale 26,978
Total other noncurrent assets 7,637,254 7,042,800
$
13,134,613 $
11,462,711
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Short-term debt
$ $
199,901
Accounts payable 1,030,263 1,072,645
Accrued liabilities 1,178,612 1,384,379
Contract liabilities 416,009 414,208
Current liabilities held for sale 2,573
Total current liabilities 2,624,884 3,073,706
Long-term Debt 3,099,456 1,201,245
Other Deferred Liabilities 1,797,290 1,419,005
Noncurrent Liabilities Held for Sale 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 -129,984,887 shares and
132,879,395 shares as of March 27, 2020
and September 27, 2019, respectively 129,985 132,879
Additional paid-in capital 2,569,417 2,559,450
Retained earnings 3,808,698 3,939,174
Accumulated other comprehensive loss (946,317) (916,812)
Total Jacobs stockholders' equity 5,561,783 5,714,691
Noncontrolling interests 51,200 53,967
Total Group stockholders' equity 5,612,983 5,768,658
$
13,134,613 $
11,462,711
Statement of Cash Flow (in thousands):
---
For the Three Months Ended For the Six Months Ended
Unaudited March 27, 2020 March 29, 2019 March 27, 2020 March 29, 2019
---
Cash Flows from Operating Activities:
Net (loss) earnings attributable to
the Group $
(85,803) $
62,773 $
177,466 $
192,363
Adjustments to reconcile net earnings
to net cash flows (used for)
provided by operations:
Depreciation and amortization:
Property, equipment and improvements 22,566 23,491 44,718 43,812
Intangible assets 22,094 18,678 43,939 37,963
Gain on sale of ECR business (19,967) (81,910)
Loss on investment in equity
securities 375,544 270,225
Stock based compensation 9,557 13,322 23,835 28,916
Equity in (loss) earnings of
operating ventures, net 950 (2,184) 235 (5,325)
(Gain) Loss on disposals of assets,
net (283) 3,219 (247) 3,730
(Gain) Loss on pension and retiree
medical plan changes (32,449) 2,651 (34,621)
Deferred income taxes (29,047) (4,928) 73,440 (31,008)
Changes in assets and liabilities,
excluding the effects of businesses
acquired:
Receivables and contract assets, net
of contract liabilities (117,610) (15,430) (213,685) (194,850)
Prepaid expenses and other current
assets (4,625) 8,535 (8,777) 47,733
Accounts payable (117,285) (25,645) (152,665) (6,754)
Accrued liabilities 182,523 112,185 (53,567) (57,763)
Other deferred liabilities (92,946) 31,678 (153,508) (48,761)
Other, net 6,486 (23,776) 42,818 (30,667)
Net cash provided by (used for)
operating activities 152,154 169,469 14,968 (55,232)
Cash Flows from Investing Activities:
Additions to property and equipment (39,077) (40,759) (61,337) (61,480)
Disposals of property and equipment
and other assets 38 7,035 38 7,240
Distributions of capital from
(contributions to) equity investees (358) (2,938) (12,358) (3,904)
Acquisitions of businesses, net of
cash acquired (286,534) (286,534)
Proceeds (payments) related to sales
of businesses (5,061) (5,061)
Purchases of noncontrolling interests (1,113)
Net cash (used for) provided by
investing activities (330,992) (36,662) (365,252) (59,257)
Cash Flows from Financing Activities:
Net proceeds from borrowings 1,500,755 168,514 1,711,371 695,571
Debt issuance costs (1,807) (3,741) (1,807) (3,741)
Proceeds from issuances of common
stock 12,719 18,363 18,920 25,945
Common stock repurchases (285,822) (346,636) (285,822) (488,435)
Taxes paid on vested restricted stock (407) (1,805) (24,742) (20,317)
Cash dividends, including to
noncontrolling interests (37,913) (27,787) (63,530) (56,390)
Net cash provided by (used for)
financing activities 1,187,525 (193,092) 1,354,390 152,633
Effect of Exchange Rate Changes 27,980 (2,979) 20,705 19,136
Net Increase (decrease) in Cash and
Cash Equivalents 1,036,667 (63,264) 1,024,811 57,280
Cash and Cash Equivalents at the
Beginning of the Period 619,212 913,902 631,068 793,358
Cash and Cash Equivalents at the End
of the Period 1,655,879 850,638 1,655,879 850,638
Less Cash and Cash Equivalents
included in Assets held for Sale (176,090) (176,090)
Cash and Cash Equivalents of
Continuing Operations at the End of
the Period $
1,655,879 $
674,548 $
1,655,879 $
674,548
Backlog (in millions):
---
March 27, 2020 March 29, 2019
Critical
Mission
Solutions $
9,135 $
7,285
People
&
Places
Solutions 14,156 13,428
Total $
23,291 $
20,713
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 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 and adjusted EPS from continuing operations 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, CH2M and John Wood Group nuclear business 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, CH2M and John Wood Group nuclear business acquisitions, 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 and adjusted EPS from continuing operations are calculated on an after-tax basis. We believe that net revenue, adjusted net earnings from continuing operations, adjusted EPS from continuing operations 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 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 second quarter of fiscal 2020 and 2019
---
Three Months Ended
March 27, 2020
Unaudited U.S. GAAP Effects of Other Adjusted
Restructuring, Adjustments
(1)
Transaction and
Other Charges
---
Revenues $
3,427,180
$
$ $
3,427,180
Pass through revenue (641,393) (641,393)
Net revenue 3,427,180 (641,393) 2,785,787
Direct cost of
contracts (2,779,045) 641,393 (2,137,652)
Gross profit 648,135 648,135
Selling, general and
administrative
expenses (480,357) 44,381 24,359 (411,617)
Operating Profit 167,778 44,381 24,359 236,518
Total other
(expense) income,
net (344,583) (200) 338,797 (5,986)
(Loss) Earnings from
Continuing
Operations Before
Taxes (176,805) 44,181 363,156 230,532
Income Tax Benefit
(Expense) for
Continuing
Operations 61,122 (11,349) (87,833) (38,060)
Net (Loss) Earnings
of the Group from
Continuing
Operations (115,683) 32,832 275,323 192,472
Net Earnings
Attributable to
Noncontrolling
Interests from
Continuing
Operations (6,284) (6,284)
Net (Loss) Earnings
from Continuing
Operations
attributable to
Jacobs (121,967) 32,832 275,323 186,188
Net Earnings
Attributable to
Discontinued
Operations 29,880 29,880
Net (Loss) Earnings
attributable to
Jacobs $
(92,087) $
32,832 $
275,323 $
216,068
Diluted Net (Loss)
Earnings from
Continuing
Operations Per
Share $
(0.92) $
0.25 $
2.06 $
1.39
Diluted Net Earnings
(Loss) from
Discontinued
Operations Per
Share $
0.23
$
$ $
0.22
Diluted (Loss)
Earnings Per Share $
(0.69) $
0.25 $
2.06 $
1.62
Operating profit
margin 4.9
% 8.5
%
(1) 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 $641.4 million, (b)
the removal of amortization of
intangible assets of $22.1 million, (c)
the reclassification of revenues under
the Company's TSA of $2.2 million
included in other income for U.S. GAAP
reporting purposes to SG&A, (d) the
removal of $341.0 million in fair value
adjustments related to our investment
in Worley stock (net of Worley stock
dividend) and certain foreign currency
revaluations relating to the ECR sale
and (e) associated income tax expense
adjustments for the above pre-tax
adjustment items.
(2) Because GAAP net (loss) earnings
from continuing operations was a loss,
the effect of antidilutive securities
of 1,032 was excluded from the
denominator in calculating diluted EPS.
Because adjusted net (loss) earnings
from continuing operations was income,
the effective of the securities was
dilutive and was included in the
denominator in calculating adjusted
diluted EPS.
Three Months Ended
March 29, 2019
Unaudited U.S. GAAP Effects of Other Adjusted
Restructuring, Adjustments
Transaction and (1)
Other Charges
---
Revenues $
3,091,596
$
$ $
3,091,596
Pass through revenue (632,359) (632,359)
Net revenue 3,091,596 (632,359) 2,459,237
Direct cost of
contracts (2,474,755) (3,383) 632,359 (1,845,779)
Gross profit 616,841 (3,383) 613,458
Selling, general and
administrative
expenses (514,160) 97,321 25,078 (391,761)
Operating Profit 102,681 93,938 25,078 221,697
Total other income
(expense), net 9,151 (26,602) 18,403 952
Earnings from
Continuing
Operations Before
Taxes 111,832 67,336 43,481 222,649
Income Tax Benefit
(Expense) for
Continuing
Operations 7,947 (11,949) (48,097) (52,099)
Net Earnings (Loss)
of the Group from
Continuing
Operations 119,779 55,387 (4,616) 170,550
Net Earnings
Attributable to
Noncontrolling
Interests from
Continuing
Operations (5,024) (5,024)
Net Earnings from
Continuing
Operations
attributable to
Jacobs 114,755 55,387 (4,616) 165,526
Net (Loss) Earnings
Attributable to
Discontinued
Operations (57,838) 3,783 (24,489) (78,544)
Net earnings
attributable to
Jacobs $
56,917 $
59,170 $
(29,105) $
86,982
Diluted Net Earnings
(Loss) from
Continuing
Operations Per
Share $
0.82 $
0.39 $
(0.03) $
1.19
Diluted Net Earnings
(Loss) from
Discontinued
Operations Per
Share $
(0.41) $
0.02 $
(0.18) $
(0.56)
Diluted Earnings Per
Share $
0.41 $
0.43 $
(0.21) $
0.62
Operating profit
margin 3.32
% 9.01
%
(1) 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 $632.4
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 $18.4
million, (e) the exclusion of
approximately $37.0 million in one-
time favorable income tax adjustment
associated with reduction of deferred
income taxes for permanently
reinvested earnings from non-U.S.
subsidiaries in connection with the
sale of the ECR business, (f) the
add-back of depreciation relating to
the ECR business that was ceased as a
result of the application of held-
for-sale accounting of $(5.8)
million and (g) associated income tax
expense adjustments for all the above
pre-tax adjustment items.
Six Months Ended
March 27, 2020
Unaudited U.S. GAAP Effects of Other Adjusted
Restructuring, Adjustments
Transaction and (1)
Other Charges
---
Revenues $
6,787,229
$
$ $
6,787,229
Pass through revenue (1,343,147) (1,343,147)
Net revenue 6,787,229 (1,343,147) 5,444,082
Direct cost of
contracts (5,494,522) 1,343,147 (4,151,375)
Gross profit 1,292,707 1,292,707
Selling, general and
administrative
expenses (973,582) 95,067 58,879 (819,636)
Operating Profit 319,125 95,067 58,879 473,071
Total other
(expense) income,
net (241,759) 2,799 227,691 (11,269)
Earnings from
Continuing
Operations Before
Taxes 77,366 97,866 286,570 461,802
Income Tax Expense
for Continuing
Operations (7,368) (24,782) (69,193) (101,343)
Net Earnings of the
Group from
Continuing
Operations 69,998 73,084 217,377 360,459
Net (Earnings) Loss
Attributable to
Noncontrolling
Interests from
Continuing
Operations (12,540) (12,540)
Net Earnings from
Continuing
Operations
attributable to
Jacobs 57,458 73,084 217,377 347,919
Net Earnings
Attributable to
Discontinued
Operations 107,468 107,468
Net earnings
attributable to
Jacobs $
164,926 $
73,084 $
217,377 $
455,387
Diluted Net Earnings
from Continuing
Operations Per
Share $
0.43 $
0.54 $
1.62 $
2.59
Diluted Net Earnings
from Discontinued
Operations Per
Share $
0.80
$
$ $
0.80
Diluted Earnings Per
Share $
1.23 $
0.54 $
1.62 $
3.39
Operating profit
margin 4.70
% 8.69
%
(1) 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 $1.3 billion, (b) the
removal of amortization of intangible
assets of $43.9 million, (c) the
reclassification of revenues under the
Company's TSA of $14.2 million included
in other income for U.S. GAAP reporting
purposes to SG&A, (d) the removal of
$241.9 million in fair value
adjustments related to our investment
in Worley stock (net of Worley stock
dividend) and certain foreign currency
revaluations relating to the ECR sale
and (e) associated income tax expense
adjustments for the above pre-tax
adjustment items.
Six Months Ended
March 29, 2019
Unaudited U.S. GAAP Effects of Other Adjusted
Restructuring, Adjustments
Transaction and (1)
Other Charges
---
Revenues $
6,175,384
$
$ $
6,175,384
Pass through revenue (1,306,637) (1,306,637)
Net revenue 6,175,384 (1,306,637) 4,868,747
Direct cost of
contracts (4,990,023) (512) 1,306,637 (3,683,898)
Gross profit 1,185,361 (512) 1,184,849
Selling, general and
administrative
expenses (969,551) 141,683 50,149 (777,719)
Operating Profit 215,810 141,171 50,149 407,130
Total other
(expense) income,
net (11,789) (28,262) 36,470 (3,581)
Earnings from
Continuing
Operations Before
Taxes 204,021 112,909 86,619 403,549
Income Tax Expense
for Continuing
Operations (14,811) (21,769) (47,959) (84,539)
Net Earnings of the
Group from
Continuing
Operations 189,210 91,140 38,660 319,010
Net (Earnings) Loss
Attributable to
Noncontrolling
Interests from
Continuing
Operations (9,562) (9,562)
Net Earnings from
Continuing
Operations
attributable to
Jacobs 179,648 91,140 38,660 309,448
Net Earnings
Attributable to
Discontinued
Operations 1,565 3,855 (47,799) (42,379)
Net earnings
attributable to
Jacobs $
181,213 $
94,995 $
(9,139) $
267,069
Diluted Net Earnings
from Continuing
Operations Per
Share $
1.27 $
0.65 $
0.27 $
2.18
Diluted Net Earnings
from Discontinued
Operations Per
Share $
0.01 $
0.03 $
(0.34) $
(0.30)
Diluted Earnings Per
Share $
1.28 $
0.67 $
(0.06) $
1.88
Operating profit
margin 3.49
% 8.36
%
(1) 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 $1.31 billion, (b) the
removal of amortization of intangible
assets of $37.3 million, (c) the
allocation to discontinued operations of
estimated stranded corporate costs of
$12.8 million that will be 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 has been
paid down as a result of the ECR sale
of$36.5 million, (e) the exclusion of
approximately $37.0 million in one-time
favorable income tax adjustment
associated with reduction of deferred
income taxes for permanently reinvested
earnings from non-U.S. subsidiaries in
connection with the sale of the ECR
business, (f) the add-back of charges
resulting from the revaluation of
certain deferred tax assets/liabilities
in connection with U.S. tax reform from
the first quarter of $11.0 million and
(g) the add-back of depreciation
relating to the ECR business that was
ceased as a result of the application of
held-for-sale accounting of $(11.0)
million and (h) associated income tax
expense adjustments for all the above
pre-tax adjustment items.
Earnings Per Share:
---
Three Months Ended Six Months Ended
Unaudited March 27, 2020 March 29, 2019 March 27, 2020 March 29, 2019
---
Numerator for Basic and
Diluted EPS:
Net (loss) earnings
attributable to Jacobs
from continuing
operations $
(121,967) $
114,755 $
57,458 $
179,648
Net earnings from
continuing operations
allocated to
participating securities (191) (20) (338)
Net (loss) earnings from
continuing operations
allocated to common
stock for EPS
calculation $
(121,967) $
114,564 $
57,438 $
179,310
Net earnings (loss)
attributable to Jacobs
from discontinued
operations $
29,880 $
(57,838) $
107,468 $
1,565
Net (earnings) loss from
discontinued operations
allocated to
participating securities 96 (38) (3)
Net earnings (loss) from
discontinued operations
allocated to common
stock for EPS
calculation $
29,880 $
(57,742) $
107,430 $
1,562
Net (loss) earnings
allocated to common
stock for EPS
calculation $
(92,087) $
56,822 $
164,868 $
180,872
Denominator for Basic and
Diluted EPS:
Weighted average basic
shares 132,556 138,566 132,879 140,509
Shares allocated to
participating securities (25) (231) (47) (264)
Shares used for
calculating basic EPS
attributable to common
stock 132,531 138,335 132,832 140,245
Effect of dilutive
securities:
Stock compensation plans
(1) 981 1,258 1,202
Shares used for
calculating diluted EPS
attributable to common
stock 132,531 139,316 134,090 141,447
Net Earnings Per Share:
Basic Net (Loss) Earnings
from Continuing
Operations Per Share $
(0.92) $
0.83 $
0.43 $
1.28
Basic Net Earnings from
Discontinued Operations
Per Share $
0.23 $
(0.42) $
0.81 $
0.01
Basic (Loss) Earnings Per
Share $
(0.69) $
0.41 $
1.24 $
1.29
Diluted Net (Loss)
Earnings from Continuing
Operations Per Share $
(0.92) $
0.82 $
0.43 $
1.27
Diluted Net Earnings from
Discontinued Operations
Per Share $
0.23 $
(0.41) $
0.80 $
0.01
Diluted (Loss) Earnings
Per Share $
(0.69) $
0.41 $
1.23 $
1.28
(1) For the three months ended
March 27, 2020, because net
(loss) earnings from continuing
operations was a loss, the
effect of antidilutive
securities of 1,032 was
excluded from the denominator
in calculating diluted EPS.
For additional information contact:
Investors:
Jonathan Doros, 214-583-8596
jonathan.doros@jacobs.com
Media:
Marietta Hannigan, 214-920-8035
marietta.hannigan@jacobs.com
View original content to download multimedia:http://www.prnewswire.com/news-releases/jacobs-reports-fiscal-second-quarter-earnings-301054264.html
SOURCE Jacobs
