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Jacobs' (JEC) Q4 Earnings Beat Estimates, Revenues Miss


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Jacobs Engineering Group Inc. JEC reported fourth-quarter fiscal 2018 (ended Sep 28, 2018) results, wherein earnings surpassed the Zacks Consensus Estimate by 7.4% but revenues lagged the same by 2.5%.

The company's adjusted earnings in the reported quarter were $1.31 per share, increasing 34% from the year-ago figure of 98 cents. The upsurge was driven by accelerated CH2M cost savings along with strong operational execution.

Segmental Performance Drives Revenues

In the quarter under review, Jacobs' revenues totaled $4,142.6 million, reflecting healthy growth of 56% from the year-ago quarter (up 7% on a pro-forma basis). The improvement was driven by healthy segmental businesses.

Backlog at the end of fiscal 2018 was $27.3 billion, increasing 38% year over year.

The company reports revenues in three segments - Aerospace, Technology, Environmental and Nuclear; Buildings, Infrastructure and Advanced Facilities; and Energy, Chemicals and Resources. The segmental information is briefly discussed below:

Revenues from the Aerospace, Technology, Environmental and Nuclear segment were $1,299.1 million, increasing 100.3% year over year. It represented 31.4% of the total revenues in the reported quarter. Backlog at the end of the quarter was roughly $8.86 billion, up 39.3% year over year.

Revenues from the Buildings, Infrastructure and Advanced Facilities segment totaled $1,687.6 million, increasing 67.6% year over year. It represented 40.7% of its revenues in the quarter under review. Backlog at the end of the quarter was roughly $11.38 billion, up 67.6% year over year.

Revenues from the Energy, Chemicals and Resources segment totaled $1,155.9 million, increasing 15.8% year over year. It represented 27.9% of the reported quarterly revenues. Backlog at the end of the quarter was roughly $7.07 billion, up 6.4% year over year.

Jacobs Engineering Group Inc. Price, Consensus and EPS Surprise

Jacobs Engineering Group Inc. Price, Consensus and EPS Surprise | Jacobs Engineering Group Inc. Quote

Margins Profile

In the quarter under review, Jacobs' cost of contracts surged 53.8% year over year to $3,351.2 million. It represented 80.9% of revenues compared with 82.1% in the year-ago quarter. Adjusted gross margin increased 130 basis points (bps) year over year to 19.2%. Adjusted selling, general and administrative expenses flared up 56% year over year to $516 million. It represented 12.5% of revenues, flat year over year.

Adjusted operating margin expanded 140 bps to 6.8% in the quarter.

Balance Sheet and Cash Flow

At fiscal 2018-end, Jacobs' cash and cash equivalents were $793.4 million, up from $774.2 million at the end of fiscal 2017. Long-term debt balance decreased to $2.15 billion from $2.35 billion at the end of fiscal 2017.

Fiscal 2018 Highlights

Adjusted earnings came in at $4.47 per share, reflecting an increase of 38% year over year. Revenues were $15 billion during the fiscal year, increasing 49.5% from fiscal 2017.

ECR Sale

On Oct 21, Jacobs agreed to offload its Energy, Chemicals and Resources ("ECR") business unit to Australia's WorleyParsons Ltd., as it intends to focus more on "highest-margin growth businesses".

The deal, which is expected to close in the first half of calendar 2019, is valued at $3.3 billion. Jacobs will receive $2.6 billion in cash and around $700 million worth of shares that equals to about 11% stake in WorleyParsons.

Fiscal 2019 View

Buoyed by stellar performance in fiscal 2018, Jacobs expects fiscal 2019 adjusted EBITDA between $920 million and $1 billion (excluding ECR).

Zacks Rank & Other Stocks to Consider

Jacobs currently carries a Zacks Rank #2 (Buy).

Other top-ranked stocks from the same industry include KBR, Inc. KBR , Dycom Industries, Inc. DY and EMCOR Group, Inc. EME , each carrying a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

KBR surpassed earnings estimates in three of the past four quarters, resulting in average positive surprise of 12.6%.

Dycom has a three-five year expected EPS growth rate of 8.5%.

EMCOR has an expected earnings growth rate of 20% for 2018.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



This article appears in: Investing , Business , Earnings , Stocks
Referenced Symbols: DY , JEC , EME , KBR



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