Contract Galore-JEC Wins a Couple - Analyst Blog


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Contract galore and steady wins continue for Jacobs Engineering Group Inc . ( JEC ). Recently, the company announced receipt of a contract from Vale Canada Ltd. (Vale) to design and supply a new sulfuric acid plant for its Sudbury smelter in Ontario, Canada.

The acid plant contract from Vale Canada Ltd includes the design of the complete sulfuric acid plant contact section as well as supply of equipment and materials. The plant will be featuring Jacobs' proprietary Chemetics ® equipment expected to be fabricated at Jacobs' facility in Pickering, Ontario. . These equipments include stainless steel converter (with internal exchanger), radial flow gas-gas exchangers, acid coolers and SARAMET ® distributors and piping. The bulk of the proprietary equipment is expected to be fabricated at Jacobs' facility in Pickering, Ontario.  The value of the contract is estimated to be around $55 million.

The new acid plant, the second major project for Jacobs' at the Sudbury Basin Site, is a part of Vale's Clean Atmospheric Emissions Reduction ( AER ) Project. Vale considers the Clean AER Project to be the most significant environmental investment in the Sudbury Basin, which is designed to cut sulfur dioxide emissions by more than 70% from current levels.

Back in 2002, Jacob's was awarded with a contract to modernize the existing acid plant. In addition, the Company served numerous orders for proprietary equipments at the outset of the original acid plant built in the 90s.

On the same day, the company also announced that it has been awarded its first option year by NASA for its Manufacturing Support and Facility Operations Contract (MSFOC) at the George C. Marshall Space Flight Center's Michoud Assembly Facility (MAF).

MAF, managed by the Marshall Space Flight Center in New Orleans, provides a unique capability for manufacturing large aerospace structures at a single location. Engaged in designing, assembling and manufacturing of the Space Shuttle external tank, MAF continues to support the development and manufacture of hardware for future spaceflight programs.

Jacobs will continue to support NASA at Michoud and is ready to extent its honorary contribution to the U.S. space exploration in future. The option year has a potential value of $137 million.

About Jacobs

Jacobs Engineering Group, one of the world's largest and most diverse providers of technical, professional, and construction services, serves a variety of industrial, commercial and government clients across a global network.

Our Take

Jacobs presently has a significant market share in the huge global infrastructure market. The company's growing international exposure and diversification across markets, geographies and services through strategic contract wins have given it a competitive edge over its peers, such as Fluor Corporation ( FLR ) and Foster Wheeler AG ( FWLT ).

We currently hold a Neutral recommendation on the stock. Jacobs has a Zacks #3 Rank, which translates into a short-term (1-3 months) Hold rating.

FLUOR CORP-NEW ( FLR ): Free Stock Analysis Report
FOSTER WHELR AG ( FWLT ): Free Stock Analysis Report
JACOBS ENGIN GR ( JEC ): Free Stock Analysis Report
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