Jacobs (JEC) Tops Q1 Earnings, Misses Revenue Estimates
Jacobs Engineering Group Inc.JEC reported mixed results for fiscal first-quarter 2016 (ended Jan 1, 2016). In first-quarter fiscal 2016, adjusted earnings, excluding the impact of restructuring activities, came in at 78 cents per share, a penny higher than the year-ago tally of 77 cents. The bottom line surpassed the Zacks Consensus Estimate of 69 cents by 13%.
Revenues in the quarter decreased 10.6% year over year to $2,847.9 million. The top line even missed the Zacks Consensus Estimate of $2,930 million. Technical Professional Services revenues came in at $1646.6 million, down 14.8% year over year. Field Services revenues totaled $1201.3 million, down 4.2% over year.
Direct cost of contracts, a major expenditure for Jacobs, fell 9.8% year over year to $2407.5 million. Selling, general and administrative expenses were $381 million, up 5.5% year over year. However, the company's operating margin came in at 2.1%, down 290 basis points (bps) year over year.
Exiting the quarter, Jacobs' backlog was $18,222.4 million, down 4.6% year over year. This includes a backlog of $11,421.4 million from the Technical Professional Services division compared with $13,222.4 million recorded as of Dec 26, 2014. Backlog from the Field Services segment was $6,801 million compared with the year-ago tally of $5,885 million.
Balance Sheet/Share Repurchase Update
Jacobs' cash and cash equivalents at the end of first-quarter fiscal 2016 were approximately $443.7 million, down from $460.9 million recorded a year ago. Total debt increased to roughly $621.9 million from $584.4 million reported in the prior-year quarter. The company's capital expenditure at the end of the first quarter amounted to $16 million, down 52.7% year over year.
During first-quarter fiscal 2016, the company repurchased 1 million shares of common stock for $42 million.
Jacobs remains keen on growth driven by tactical restructuring programs. The company intends to improve its business on the back of strategic cost-saving plans and record backlog levels. However, Jacobs anticipates macroeconomic headwinds such as appreciation of the U.S. dollar and weakness in the global commodity as well as energy market prices to weigh on its revenues and earnings in the near future. Based on the current market scenario, Jacobs expects earnings within $2.80-$3.30 for fiscal 2016.
Other Stocks to Consider
Jacobs currently holds a Zacks Rank #4 (Sell). Some better-ranked stocks within the industry include Fluor Corporation FLR , Albany International Corp. AIN and Astec Industries, Inc. ASTE . All three companies presently carry a Zacks Rank #2 (Buy).