Jacobs Reports Fiscal Third Quarter Earnings
DALLAS, Aug. 3, 2020 /PRNewswire/ -- Jacobs Engineering Group Inc. (NYSE: J) today announced its financial results for the fiscal third quarter ended June 26, 2020.
Q3 2020 Highlights:
-- Gross revenue of $3.3 billion(1) grew 2.9% year-over-year; net revenue
down 4% pro forma
-- EPS from continuing operations of $1.73 up significantly year over year
-- Adjusted EPS from continuing operations of $1.26, including $0.05 in
discrete tax benefits
-- Backlog increased $1.2 billion to $23.7 billion, up 5% year-over-year
and up 4% on a pro forma basis
-- Cash flow from operations and free cash flow well over $300M, increasing
FY20 outlook to approaching $400M
-- Revised fiscal 2020 outlook represents improved year-over-year adjusted
EBITDA and adjusted EPS growth
Jacobs' Chair and CEO Steve Demetriou commented, "We have maintained focus on our top priority: keeping our people safe and ensuring business continuity for our customers. I am extremely proud of how our people have responded, not only to the COVID-19 pandemic, but also our company-wide support for social justice and global equality. We continue to align our culture around our values, particularly 'We live inclusion,' combined with our willingness to continuously learn - and turn that learning into action and solutions. Our values based culture is a key competitive advantage for Jacobs that will foster growth over the coming years." Demetriou continued, "From a business standpoint, our ability to solve highly technical challenges across a diverse set of end markets, at scale, in virtual environments provides us with the ability to grow in a variety of economic scenarios. Our teams across the globe have demonstrated strong business acumen while delivering innovative solutions for customers in one of the most disruptive periods in history."
Jacobs' President and CFO Kevin Berryman added, "The strategy we developed and have been executing since 2016 to build a company aligned to sustainable higher growth markets has proved its resilience during one of the most severe economic shocks in history. The highly recurring mission-critical nature of our work, combined with our ability to rapidly adjust virtually, enabled us to deliver solid earnings and strong free cash flow generation during this unprecedented pandemic. Given our ability to adapt in this new environment, we expect to continue to drive solid results for the remainder of fiscal 2020, further transforming Jacobs through technology-focused innovations that will enable profitable growth in fiscal 2021 and beyond."
Financial Outlook
The company now expects fiscal 2020 adjusted EBITDA of $1,000 million to $1,050(2) million and adjusted EPS of $5.05 to $5.30(2) from its previous outlook of adjusted EBITDA of $950 million to $1,050 million and adjusted EPS of $4.80 to $5.30.
Third Quarter Review
Fiscal Q3 2020
Fiscal Q3 2019 Change
Revenue
$3.3 billion
$3.2 billion
$0.1 billion
Net Revenue
$2.7 billion
$2.6 billion
$0.1 billion
GAAP Net
Earnings from
Continuing
Operations
$227 million
$89 million
$138 million
GAAP Earnings
Per Diluted
Share (EPS)
from Continuing
Operations $1.73 $0.65 $1.08
Adjusted Net
Earnings from
Continuing
Operations
$165 million
$193 million
($28 million)
Adjusted EPS
from Continuing
Operations $1.26 $1.40 ($0.14)
---
The company's adjusted net earnings from continuing operations and adjusted EPS from continuing operations for the third 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 Q3 2020
Fiscal Q3 2019
GAAP Net Earnings from
Continuing Operations
and Diluted Earnings
Per Share (EPS)
$227 million ($1.73 per share)
$89 million ($0.65 per share)
After-tax
restructuring,
transaction costs and
other charges ($20.5
million and $106.5
million for the
fiscal 2020 and 2019
periods, respectively
before income taxes)
$14 million ($0.11 per share)
$80 million ($0.58 per share)
Other adjustments
include:
$(76) million ($(0.58) per share)
$24 million ($0.17 per share)
(a) add-back of
amortization of
intangible assets of
$23.1 million and
$18.4 million in the
2020 and 2019
periods,
respectively,
(b) the allocation to
discontinued Energy, Chemicals and
operations of Resources ("ECR")
estimated stranded business,
corporate costs of
$2.0 million in the
2019 period that were
reimbursed or
otherwise eliminated
in connection with
the sale of the
(c) the
reclassification of SG&A and the
revenues under the exclusion of $0.1
Company's Transition million and $3.2
Services Agreement million in remaining
(TSA) with Worley of unreimbursed costs
$1.0 million and associated with the
$14.1 million, TSA during the fiscal
included in other 2020 and 2019
income for U.S. GAAP periods, respectively
reporting purposes to
(d) the removal of
$(123.1) million in the 2020 period,
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 in
(e) the allocation to
discontinued of $5.8 million,
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
(f) other income tax
adjustments of $1.5
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
Adjusted EPS from
Continuing Operations
$165 million ($1.26 per share)
$193 million ($1.40 per share)
---
(note: earnings per share
amounts may not add due to
rounding)
Fiscal third quarter 2020 adjusted earnings per share from continuing operations reflect an adjusted effective tax rate of 25%, excluding favorable discrete tax impacts of $6.7 million, or $0.05 per share.
Jacobs is hosting a conference call at 12:00 P.M. ET on Monday August 3, 2020, which it is webcasting live at www.jacobs.com.
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 continued 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, the timeline for easing or removing "shelter-in-place", "stay-at-home", social distancing, travel restrictions and similar orders, measures or restrictions imposed by governments and health officials in response to the pandemic, or if such orders, measures or restrictions are re-imposed after being lifted or eased, including as a result of increases in cases of COVID-19; and the development, effectiveness and distribution of vaccines or treatments for COVID-19. The impact of such matters 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 June 26, 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.
Financial Highlights:
Results of Operations (in thousands, except per-share data):
---
For the Three Months Ended For the Nine Months Ended
Unaudited June 26, 2020 June 28, 2019 June 26, 2020 June 28, 2019
---
Revenues $
3,260,057 $
3,169,622 $
10,047,286 $
9,345,005
Direct cost of contracts (2,631,031) (2,543,488) (8,125,554) (7,533,511)
Gross profit 629,026 626,134 1,921,732 1,811,494
Selling, general and administrative expenses (434,650) (536,180) (1,408,232) (1,505,731)
Operating Profit 194,376 89,954 513,500 305,763
Other Income (Expense):
Interest income 1,249 3,398 3,180 7,172
Interest expense (18,193) (18,978) (48,163) (73,727)
Miscellaneous income (expense), net 126,249 19,025 (87,470) 58,211
Total other income (expense), net 109,305 3,445 (132,453) (8,344)
Earnings from Continuing Operations Before Taxes 303,681 93,399 381,047 297,419
Income Tax (Expense) Benefit from Continuing Operations (67,674) 1,981 (75,041) (12,829)
Net Earnings of the Group from Continuing Operations 236,007 95,380 306,006 284,590
Net Earnings of the Group from Discontinued Operations 18,043 435,684 125,511 438,837
Net Earnings of the Group 254,050 531,064 431,517 723,427
Net Earnings Attributable to Noncontrolling Interests from Continuing Operations (9,121) (6,015) (21,662) (15,578)
Net Earnings Attributable to Jacobs from Continuing Operations 226,886 89,365 284,344 269,012
Net Earnings Attributable to Noncontrolling Interests from Discontinued Operations - (607) (2,195)
Net Earnings Attributable to Jacobs from Discontinued Operations 18,043 435,077 125,511 436,642
Net Earnings Attributable to Jacobs $
244,929 $
524,442 $
409,855 $
705,654
Net Earnings Per Share:
Basic Net Earnings from Continuing Operations Per Share $
1.74 $
0.65 $
2.15 $
1.93
Basic Net Earnings from Discontinued Operations Per Share $
0.14 $
3.18 $
0.95 $
3.14
Basic Earnings Per Share $
1.88 $
3.83 $
3.11 $
5.07
Diluted Net Earnings from Continuing Operations Per Share $
1.73 $
0.65 $
2.13 $
1.92
Diluted Net Earnings from Discontinued Operations Per Share $
0.14 $
3.15 $
0.94 $
3.11
Diluted Earnings Per Share $
1.87 $
3.80 $
3.08 $
5.02
Segment Information (in thousands):
---
Three Months Ended
Nine Months Ended
Unaudited June 26, 2020 June 28, 2019 June 26, 2020 June 28, 2019
---
Revenues from External Customers:
Critical Mission Solutions $
1,211,143 $
1,156,488 $
3,636,978 $
3,251,024
People & Places Solutions 2,048,914 2,013,134 6,410,308 6,093,981
Pass Through Revenue (578,717) (533,935) (1,921,863) (1,840,572)
People & Places Solutions Net Revenue $
1,470,197 $
1,479,199 $
4,488,445 $
4,253,409
Total Revenue $
3,260,057 $
3,169,622 $
10,047,286 $
9,345,005
Net Revenue $
2,681,340 $
2,635,687 $
8,125,423 $
7,504,433
Three Months Ended Nine Months Ended
June 26, 2020 June 28, 2019 June 26, 2020 June 28, 2019
Segment Operating Profit:
Critical Mission Solutions $
89,608 $
76,306 $
264,323 $
222,289
People & Places Solutions 190,453 183,318 557,864 515,465
Total Segment Operating Profit 280,061 259,624 822,187 737,754
Other Corporate Expenses (1) (65,213) (64,525) (193,148) (185,674)
Restructuring, Transaction and Other Charges (20,472) (105,145) (115,539) (246,317)
Total U.S. GAAP Operating Profit 194,376 89,954 513,500 305,763
Total Other Income (Expense), net (2) 109,305 3,445 (132,453) (8,344)
Earnings from Continuing Operations Before Taxes $
303,681 $
93,399 $
381,047 $
297,419
(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 $2.0 million and $14.8
million for the three and nine
month periods ended June 28,
2019, respectively. Other
corporate expenses also include
intangibles amortization of
$23.1 million and $18.4 million
for the three-month periods
ended June 26, 2020 and June 28,
2019, respectively, and $67.1
million and $55.7 million for
the nine months ended June 26,
2020 and June 28, 2019,
respectively.
(2) For the three and nine month
periods ended June 26, 2020,
includes revenues under the
Company's TSA with Worley of
$1.0 million and $15.2 million,
respectively, $122.9 million and
$(119.0) 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, respectively, the
amortization of deferred
financing fees related to the
acquisition of CH2M HILL
Companies Ltd. ("CH2M") in
December 2017 (the "CH2M
acquisition") of $-million and
$0.7 million, respectively, and
the loss on settlement of the
U.S. pension plan of $-million
and $2.7 million respectively.
For the three and nine month
periods ended June 28, 2019,
includes the amortization of
deferred financing fees related
to the CH2M acquisition of $0.5
million and $1.5 million,
respectively, and the gain on
settlement of the CH2M portion
of the U.S. pension plan of $0.0
million and $34.6 million,
respectively. Also includes
revenues under the Company's TSA
with Worley of $14.1 million for
the three and nine month periods
ended June 28, 2019, for which
the related costs are included
in SG&A.
Other Operational Information (in thousands):
---
Unaudited For the Nine Months Ended
---
Continuing Operations June 26, 2020 June 28, 2019
Depreciation (pre-tax) $
66,994 $
67,553
Amortization of Intangibles (pre- $
67,074 $
55,732
tax)
Capital Expenditures $
88,821 $
97,466
Balance Sheet (in thousands):
---
Unaudited June 26, 2020 September 27, 2019
---
ASSETS
Current Assets:
Cash and cash equivalents $
1,024,810 $
631,068
Receivables and contract assets 3,153,664 2,840,209
Prepaid expenses and other 433,837 639,539
Current assets held for sale - 952
Total current assets 4,612,311 4,111,768
Property, Equipment and Improvements, net 346,637 308,143
Other Noncurrent Assets:
Goodwill 5,616,849 5,432,544
Intangibles, net 676,005 665,076
Miscellaneous 1,359,964 918,202
Noncurrent assets held for sale - 26,978
Total other noncurrent assets 7,652,818 7,042,800
$
12,611,766 $
11,462,711
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Short-term debt
$ $
199,901
Accounts payable 1,049,224 1,072,645
Accrued liabilities 1,228,924 1,384,379
Contract liabilities 450,326 414,208
Current liabilities held for sale - 2,573
Total current liabilities 2,728,474 3,073,706
Long-term Debt 2,155,166 1,201,245
Other Deferred Liabilities 1,843,132 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 -130,180,415 shares and 132,879,395 shares as of June 26, 2020 and September
27, 2019, respectively 130,180 132,879
Additional paid-in capital 2,589,263 2,559,450
Retained earnings 4,028,062 3,939,174
Accumulated other comprehensive loss (911,692) (916,812)
Total Jacobs stockholders' equity 5,835,813 5,714,691
Noncontrolling interests 49,181 53,967
Total Group stockholders' equity 5,884,994 5,768,658
$
12,611,766 $
11,462,711
Statement of Cash Flow (in thousands):
---
For the Three Months Ended For the Nine Months Ended
Unaudited June 26, 2020 June 28, 2019 June 26, 2020 June 28, 2019
---
Cash Flows from Operating Activities:
Net earnings attributable to the Group $
254,050 $
531,064 $
431,517 $
723,427
Adjustments to reconcile net earnings to net cash flows (used for) provided by
operations:
Depreciation and amortization:
Property, equipment and improvements 22,276 25,851 66,994 69,663
Intangible assets 23,135 18,383 67,074 56,346
Gain on sale of ECR business (31,456) (917,697) (113,366) (917,697)
Loss on disposal of other businesses and investments 9,608 9,608
(Gain) Loss on investment in equity securities (131,350) (2,175) 138,875 (2,175)
Stock based compensation 12,373 18,425 36,208 47,341
Equity in earnings of operating ventures, net (1,924) (2,307) (1,689) (7,632)
(Gain) Loss on disposals of assets, net (54) (1,732) (301) 1,998
(Gain) Loss on pension and retiree medical plan changes 2,651 (34,621)
Deferred income taxes (10,967) 83,600 62,473 52,592
Changes in assets and liabilities, excluding the effects of businesses acquired:
Receivables and contract assets, net of contract liabilities 78,070 211,996 (135,615) 17,146
Prepaid expenses and other current assets 28,679 (41,734) 19,902 5,999
Accounts payable 37,585 74,532 (115,080) 67,778
Accrued liabilities (25,296) (103,416) (78,863) (161,179)
Other deferred liabilities 97,082 (80,707) (56,426) (129,468)
Other, net 7,305 11,228 50,122 (19,439)
Net cash provided by (used for) operating activities 359,508 (165,081) 374,476 (220,313)
Cash Flows from Investing Activities:
Additions to property and equipment (27,484) (45,190) (88,821) (106,670)
Disposals of property and equipment and other assets 58 60 96 7,300
Capital contributions to equity investees (12,358) (3,904)
Acquisitions of businesses, net of cash acquired (575,110) (286,534) (575,110)
Disposals of investment in equity securities 64,708 64,708
(Payments) proceeds related to sales of businesses 2,796,734 (5,061) 2,796,734
Purchases of noncontrolling interests (1,113)
Net cash (used for) provided by investing activities (27,426) 2,241,202 (392,678) 2,181,945
Cash Flows from Financing Activities:
Net proceeds from borrowings (954,863) (1,895,959) 756,508 (1,200,388)
Debt issuance costs (1,807) (3,741)
Proceeds from issuances of common stock 9,873 20,198 28,793 46,143
Common stock repurchases (36,183) (285,822) (524,618)
Taxes paid on vested restricted stock (2,913) (5,870) (27,655) (26,187)
Cash dividends, including to noncontrolling interests (33,991) (25,867) (97,521) (82,257)
Net cash (used for) provided by financing activities (981,894) (1,943,681) 372,496 (1,791,048)
Effect of Exchange Rate Changes 18,743 15,164 39,448 34,300
Net (Decrease) increase in Cash and Cash Equivalents (631,069) 147,604 393,742 204,884
Cash and Cash Equivalents at the Beginning of the Period 1,655,879 850,638 631,068 793,358
Cash and Cash Equivalents at the End of the Period $
1,024,810 $
998,242 $
1,024,810 $
998,242
Backlog (in
millions):
---
June 26, 2020 June 28, 2019
Critical Mission
Solutions $
9,066 $
8,456
People & Places
Solutions 14,608 14,011
Total $
23,674 $
22,467
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; (ii) excluding costs and other charges associated with restructuring activities implemented in connection with the acquisitions of The KeyW Holding Corporation ("KeyW"), CH2M and John Wood Group nuclear business, 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.
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 third quarter of fiscal 2020 and 2019
---
Three Months Ended
June 26, 2020
Unaudited U.S. GAAP Effects of Other Adjusted
Restructuring, Adjustments
Transaction and (1)
Other Charges
---
Revenues $
3,260,057
$
$ $
3,260,057
Pass through revenue - (578,717) (578,717)
Net revenue 3,260,057 (578,717) 2,681,340
Direct cost of contracts (2,631,031) 1,841 578,717 (2,050,473)
Gross profit 629,026 1,841 630,867
Selling, general and administrative expenses (434,650) 18,631 24,083 (391,936)
Operating Profit 194,376 20,472 24,083 238,931
Total other income (expense), net 109,305 (123,971) (14,666)
Earnings from Continuing Operations Before Taxes 303,681 20,472 (99,888) 224,265
Income Tax (Expense) Benefit from Continuing Operations (67,674) (6,351) 24,125 (49,900)
Net Earnings of the Group from Continuing Operations 236,007 14,121 (75,763) 174,365
Net Earnings Attributable to Noncontrolling Interests from Continuing Operations (9,121) (9,121)
Net Earnings Attributable to Jacobs from Continuing Operations 226,886 14,121 (75,763) 165,244
Net Earnings Attributable to Discontinued Operations 18,043 18,043
Net Earnings (Loss) attributable to Jacobs $
244,929 $
14,121 $
(75,763) $
183,287
Diluted Net Earnings (Loss) from Continuing Operations Per Share $
1.73 $
0.11 $
(0.58) $
1.26
Diluted Net Earnings from Discontinued Operations Per Share $
0.14
$
$ $
0.14
Diluted Earnings (Loss) Per Share $
1.87 $
0.11 $
(0.58) $
1.40
Operating profit margin 6.0
% 8.9
%
===
(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 $578.7
million, (b) the removal of
amortization of intangible assets
of $23.1 million, (c) the
reclassification of revenues under
the Company's TSA of $1.0 million
included in other income for U.S.
GAAP reporting purposes to SG&A,
(d) the removal of $(123.1) 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.
Three Months Ended
June 28, 2019
Unaudited U.S. GAAP Effects of Other Adjusted
Restructuring, Adjustments
Transaction (1)
and Other
Charges
---
Revenues $
3,169,622
$
$ $
3,169,622
Pass through revenue (533,935) (533,935)
Net revenue 3,169,622 (533,935) 2,635,687
Direct cost of contracts (2,543,488) 2,481 533,935 (2,007,072)
Gross profit 626,134 2,481 628,615
Selling, general and administrative expenses (536,180) 102,664 37,714 (395,802)
Operating Profit 89,954 105,145 37,714 232,813
Total other income (expense), net 3,445 1,346 (8,362) (3,571)
Earnings from Continuing Operations Before Taxes 93,399 106,491 29,352 229,242
Income Tax (Expense) Benefit from Continuing Operations 1,981 (26,183) (5,823) (30,025)
Net Earnings of the Group from Continuing Operations 95,380 80,308 23,529 199,217
Net Earnings Attributable to Noncontrolling Interests from Continuing Operations (6,015) (6,015)
Net Earnings from Continuing Operations attributable to Jacobs 89,365 80,308 23,529 193,202
Net Earnings (Loss) Attributable to Discontinued Operations 435,077 4,505 (7,823) 431,759
Net earnings attributable to Jacobs $
524,442 $
84,813 $
15,706 $
624,961
Diluted Net Earnings from Continuing Operations Per Share $
0.65 $
0.58 $
0.17 $
1.40
Diluted Net Earnings (Loss) from Discontinued Operations Per Share $
3.15 $
0.03 $
(0.06) $
3.13
Diluted Earnings Per Share $
3.80 $
0.61 $
0.11 $
4.53
Operating profit margin 2.84
% 8.83
%
(1) Includes after-tax CH2M transaction
costs and adjustments of $0.4
million, after-tax transaction
costs associated with the sale of
our ECR line of business of $2.4
million and after-tax transaction
costs associated with the
acquisition of KeyW of $9.6
million.
(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 $533.9
million, (b) the removal of
amortization of intangible assets
of $18.4 million, (c) the
allocation to discontinued
operations of estimated stranded
corporate costs of $2.0 million
that would have been reimbursed
under the TSA with Worley 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
$5.8 million, (e) 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 $2.6
million and (f) the
reclassification of revenues under
the TSA of $14.1 million included
in other income for U.S. GAAP
reporting purposes to SG&A and the
exclusion of $3.2 million in
remaining unreimbursed costs
associated with this agreement, (g)
other income tax adjustments of
$1.5 million and (h) associated
income tax expense adjustments for
all the above pre-tax adjustment
items.
Nine Months Ended
June 26, 2020
Unaudited U.S. GAAP Effects of Other Adjusted
Restructuring, Adjustments
Transaction and (1)
Other Charges
---
Revenues $
10,047,286
$
$ $
10,047,286
Pass through revenue (1,921,863) (1,921,863)
Net revenue 10,047,286 (1,921,863) 8,125,423
Direct cost of contracts (8,125,554) 1,841 1,921,863 (6,201,850)
Gross profit 1,921,732 1,841 1,923,573
Selling, general and administrative expenses (1,408,232) 113,698 82,962 (1,211,572)
Operating Profit 513,500 115,539 82,962 712,001
Total other (expense) income, net (132,453) 2,799 103,720 (25,934)
Earnings from Continuing Operations Before Taxes 381,047 118,338 186,682 686,067
Income Tax Expense from Continuing Operations (75,041) (31,133) (45,069) (151,243)
Net Earnings of the Group from Continuing Operations 306,006 87,205 141,613 534,824
Net (Earnings) Loss Attributable to Noncontrolling Interests (21,662) (21,662)
from Continuing Operations
Net Earnings from Continuing Operations attributable to Jacobs 284,344 87,205 141,613 513,162
Net Earnings Attributable to Discontinued Operations 125,511 125,511
Net earnings attributable to Jacobs $
409,855 $
87,205 $
141,613 $
638,673
Diluted Net Earnings from Continuing Operations Per Share $
2.13 $
0.65 $
1.06 $
3.85
Diluted Net Earnings from Discontinued Operations Per Share $
0.94
$
$ $
0.94
Diluted Earnings Per Share $
3.08 $
0.65 $
1.06 $
4.80
Operating profit margin 5.11
% 8.76
%
(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 $1.9
billion, (b) the removal of
amortization of intangible assets
of $67.1 million, (c) the
reclassification of revenues under
the TSA of $15.2 million included
in other income for U.S. GAAP
reporting purposes to SG&A, (d) the
removal of $118.8 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.
Nine Months Ended
June 28, 2019
Unaudited U.S. GAAP Effects of Other Adjusted
Restructuring, Adjustments
Transaction and (1)
Other Charges
---
Revenues $
9,345,005
$
$ $
9,345,005
Pass through revenue (1,840,572) (1,840,572)
Net revenue 9,345,005 (1,840,572) 7,504,433
Direct cost of contracts (7,533,511) 1,969 1,840,572 (5,690,970)
Gross profit 1,811,494 1,969 1,813,463
Selling, general and administrative expenses (1,505,731) 244,348 87,863 (1,173,520)
Operating Profit 305,763 246,317 87,863 639,943
Total other (expense) income, net (8,344) (26,916) 28,109 (7,151)
Earnings from Continuing Operations Before Taxes 297,419 219,401 115,972 632,792
Income Tax Expense from Continuing Operations (12,829) (47,952) (53,782) (114,563)
Net Earnings of the Group from Continuing Operations 284,590 171,449 62,190 518,229
Net (Earnings) Loss Attributable to Noncontrolling Interests (15,578) (15,578)
from Continuing Operations
Net Earnings from Continuing Operations attributable to Jacobs 269,012 171,449 62,190 502,651
Net Earnings (Loss) Attributable to Discontinued Operations 436,642 8,361 (55,622) 389,381
Net earnings attributable to Jacobs $
705,654 $
179,810 $
6,568 $
892,032
Diluted Net Earnings from Continuing Operations Per Share $
1.92 $
1.22 $
0.44 $
3.58
Diluted Net Earnings (Loss) from Discontinued Operations Per Share $
3.11 $
0.06 $
(0.40) $
2.77
Diluted Earnings Per Share $
5.02 $
1.28 $
0.05 $
6.35
Operating profit margin 3.27
% 8.53
%
(1) Includes after-tax CH2M transaction
costs and adjustments of $1.2
million, after-tax transaction costs
associated with the sale of the ECR
business of $8.9 million and after-
tax transaction costs associated with
the acquisition of KeyW of $9.6
million.
(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 $1.84
billion, (b) the removal of
amortization of intangible assets of
$55.7 million, (c) the allocation to
discontinued operations of estimated
stranded corporate costs of $14.8
million that will be reimbursed under
the TSA with Worley 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$42.3
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 other
adjustments of $1.5 million, (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 $17.3
million, (h) the reclassification of
revenues under the TSA of $14.1
million included in other income for
U.S. GAAP reporting purposes to SG&A
and the exclusion of $3.2 million in
remaining unreimbursed costs
associated with this agreement and
(i) associated income tax expense
adjustments for all the above pre-
tax adjustment items.
Earnings Per Share:
---
Three Months Ended Nine Months Ended
Unaudited June 26, 2020 June 28, 2019 June 26, 2020 June 28, 2019
---
Numerator for Basic and Diluted EPS:
Net earnings attributable to Jacobs from continuing operations $
226,886 $
89,365 $
284,344 $
269,012
Net earnings from continuing operations allocated to participating securities (24) (105) (77) (444)
Net earnings from continuing operations allocated to common stock for EPS calculation $
226,862 $
89,260 $
284,267 $
268,568
Net earnings attributable to Jacobs from discontinued operations $
18,043 $
435,077 $
125,511 $
436,642
Net earnings from discontinued operations allocated to participating securities (2) (513) (34) (720)
Net earnings from discontinued operations allocated to common stock for EPS calculation $
18,041 $
434,564 $
125,477 $
435,922
Net earnings allocated to common stock for EPS calculation $
244,903 $
523,824 $
409,744 $
704,490
Denominator for Basic and Diluted EPS:
Weighted average basic shares 130,229 136,772 131,995 139,263
Shares allocated to participating securities (14) (161) (36) (230)
Shares used for calculating basic EPS attributable to common 130,215 136,611 131,959 139,033
stock
Effect of dilutive securities:
Stock compensation plans 1,048 1,212 1,188 1,206
Shares used for calculating diluted EPS attributable to common stock 131,263 137,823 133,147 140,239
Net Earnings Per Share:
Basic Net Earnings from Continuing Operations Per Share $
1.74 $
0.65 $
2.15 $
1.93
Basic Net Earnings from Discontinued Operations Per Share $
0.14 $
3.18 $
0.95 $
3.14
Basic Earnings Per Share $
1.88 $
3.83 $
3.11 $
5.07
Diluted Net Earnings from Continuing Operations Per Share $
1.73 $
0.65 $
2.13 $
1.92
Diluted Net Earnings from Discontinued Operations Per Share $
0.14 $
3.15 $
0.94 $
3.11
Diluted Earnings Per Share $
1.87 $
3.80 $
3.08 $
5.02
Investors:
Jonathan Doros, 214-583-8596
jonathan.doros@jacobs.com
Media:
Marietta Hannigan, 214-920-8035
marietta.hannigan@jacobs.com
(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.
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SOURCE Jacobs
