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    2. Asset 1logo-3Jacobs Logo_Blue_RGB
      Press Release

      Jacobs Reports Earnings for the Third Quarter of Fiscal 2019

      Strong Top- and Bottom-Line Q3 Results; Increasing Fiscal 2019 Outlook Delivering Innovative Solutions and Disciplined Execution

      DALLAS, Aug. 5, 2019 /PRNewswire/ --?Jacobs Engineering Group Inc. (NYSE: JEC) today announced its financial results for the fiscal third quarter ended June?28, 2019.

      Q3 2019 Highlights:

      • Gross revenue of $3.2 billion1 grew 8.0% year-over-year; net revenue grew organically by 11.1%2
      • EPS from continuing operations of $0.65, results impacted by higher restructuring and transaction costs
      • Adjusted EPS from continuing operations of $1.40, up 13% year-over-year, including a discrete tax benefit
      • Backlog increased $2.6 billion to $22.5 billion, up 8% on an organic basis2
      • Increasing fiscal 2019 adjusted pro forma EPS outlook to $4.75 - $5.00 (excluding full year ECR)3
      • Completed $350 million of $1 billion share repurchase authorization through August 2nd

      Jacobs' Chair and CEO Steve Demetriou commented, "Our strong third quarter results and increased earnings outlook are yet another example of driving an innovative culture, strengthening our execution discipline and scaling our global network of expertise. As we execute against our strategy, we are profitably?winning a greater level of business in our existing sectors, while diversifying into new high margin growth opportunities. We are creating a company like no other, putting our knowledge and imagination together to shape the next generation of innovative solutions. Our?KeyW acquisition is already delivering with a growing pipeline of new and enhanced opportunities as we bring the two organizations together."

      Jacobs' CFO Kevin Berryman added, "We delivered another quarter of solid results across both lines of business with accelerating growth in our sales pipelines, during the most transformative period in our company's history. The CH2M integration has exceeded our revenue and cost targets and is on track to be completed by the end of calendar 2019. Our divestiture of ECR is moving into the final stages of separation. We are raising our fiscal 2019 outlook and now expect adjusted EBITDA in the range of $965 million - $1 billion and adjusted pro forma EPS of $4.75 - $5.00.3 From a long-term standpoint, we have created a transformed business with a stronger balance sheet."

      Third Quarter Review



      Fiscal 3Q 2019

      Fiscal 3Q 2018

      Change

      Revenue

      $3.2 billion

      $2.9 billion

      $0.3 billion

      Net Revenue

      $2.6 billion

      $2.4 billion

      $0.2 billion

      GAAP Net Earnings from Continuing Operations

      $89 million

      $113 million

      -$24 million

      GAAP Earnings Per Diluted Share (EPS) from Continuing Operations

      $0.65

      $0.79

      -$0.14

      Adjusted Net Earnings from Continuing Operations

      $193 million

      $178 million

      $15 million

      Adjusted EPS from Continuing Operations

      $1.40

      $1.24

      $0.16

      The company's adjusted net earnings from continuing operations and adjusted EPS from continuing operations for the third quarter of fiscal 2019 and fiscal 2018 exclude the charges and costs set forth in the table below. For additional information regarding these adjustments and a reconciliation of adjusted net earnings and adjusted EPS to net earnings and EPS, respectively, refer to the section entitled "Non-GAAP Financial Measures" at the end of this release.


      Fiscal 3Q 2019

      Fiscal 3Q 2018

      After-tax restructuring and other charges ($93.2 million and $30.1 million for the fiscal 2019 and 2018 periods, respectively before income taxes)

      $70 million ($0.51 per share)

      $22 million ($0.15 per share)

      After-tax transaction costs incurred in connection with the closing of the CH2M and KeyW acquisitions ($13.3 million and $5.4 million for the fiscal 2019 and 2018 periods, respectively before income taxes)

      $10 million ($0.07 per share)

      $4 million ($0.03 per share)

      Other adjustments include:

      ?(a) addback of amortization of intangible assets of $18.4 million and $19.3 million in the 2019 and 2018 periods, respectively,

      ?(b) the allocation to discontinued operations of estimated stranded corporate costs of $2.0 million and $6.4 million in the 2019 and 2018 periods, respectively, that will be reimbursed or otherwise eliminated in connection with the sale of the ECR business,

      ?(c) the allocation to discontinued operations of estimated interest expense amounts in 2019 and 2018 related to long-term debt that has been paid down in connection with the sale of the ECR business of $5.8 million and $16.1 million, respectively,

      (d) the reclassification of revenues under the Company's Transition Services Agreement (TSA) with WorleyParsons 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 the TSA during the fiscal 2019 third quarter,

      ?(e) the add-back of charges resulting from the revaluation of certain deferred tax assets/liabilities in connection with U.S. tax reform of $5.3 million in the 2018 period and other income tax adjustments of $1.5 million in the current quarter and

      ?(f) associated income tax expense adjustments for the above pre-tax adjustment items.

      $24 million ($0.17 per share)

      $38 million ($0.27 per share)

      Adjusted EPS from Continuing Operations

      $193 million ($1.40 per share)

      $178 million ($1.24 per share)


      (note: earnings per share amounts may not add due to rounding)

      Fiscal third quarter 2019 earnings per share from continuing operations reflect an adjusted effective tax rate of 22.6%, excluding discrete tax items of 16 cents per share. Fiscal third quarter 2018 included an 8 cent benefit from discrete tax items.

      Jacobs is hosting a conference call at 11:00 A.M. ET on Monday August 5, 2019, which it is webcasting live at www.xinzhuang.net.cn.

      Energy, Chemicals and Resources (ECR) Sale to WorleyParsons

      On April 26, 2019, Jacobs completed the previously announced sale of the Jacobs' ECR business to WorleyParsons Limited.

      KeyW Acquisition

      On June 12, 2019,?Jacobs completed the previously announced acquisition of The KeyW Holding Corporation.

      About Jacobs

      Jacobs leads the global professional services sector providing solutions for a more connected, sustainable world. With approximately $12 billion in revenue and a talent force of more than 50,000, Jacobs provides a full spectrum of services including scientific, technical, professional and construction- and program-management for business, industrial, commercial, government and infrastructure sectors. For more information, visit www.xinzhuang.net.cn, and connect with Jacobs on www.xinzhuang.net.cn, 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. 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. For a description of some 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?28, 2018, 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 quarters ended December 28, 2018 and March 29, 2019, 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.

      1Reflects continuing operations as reported in accordance with GAAP.
      2Excludes $23.9 million in revenue and $1.1 billion in backlog contribution from KeyW.
      3Reconciliation of the adjusted pro forma 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 2019.

      Financial Highlights:


      Results of Operations (in thousands, except per-share data):



      For the Three Months Ended


      For the Nine Months Ended

      Unaudited

      June?28, 2019


      June?29, 2018


      June?28, 2019


      June?29, 2018

      Revenues

      $

      3,169,622



      $

      2,933,623



      $

      9,345,005



      $

      7,587,916


      Direct cost of contracts

      (2,543,488)



      (2,325,028)



      (7,533,511)



      (6,035,598)


      Gross profit

      626,134



      608,595



      1,811,494



      1,552,318


      Selling, general and administrative expenses

      (536,180)



      (446,083)



      (1,505,731)



      (1,325,722)


      Operating Profit

      89,954



      162,512



      305,763



      226,596


      Other Income (Expense):








      Interest income

      3,398



      1,277



      7,172



      6,896


      Interest expense

      (18,978)



      (23,788)



      (73,727)



      (50,107)


      Miscellaneous income (expense), net

      19,025



      6,632



      58,211



      5,195


      Total other (expense) income, net

      3,445



      (15,879)



      (8,344)



      (38,016)


      Earnings from Continuing Operations Before Taxes

      93,399



      146,633



      297,419



      188,580


      Income Tax Benefit (Expense) for Continuing Operations

      1,981



      (31,174)



      (12,829)



      (110,230)


      Net Earnings of the Group from Continuing Operations

      95,380



      115,459



      284,590



      78,350


      Net Earnings of the Group from Discontinued Operations

      435,684



      34,612



      438,837



      126,215


      Net Earnings of the Group

      531,064



      150,071



      723,427



      204,565


      Net Earnings Attributable to Noncontrolling Interests from Continuing Operations

      (6,015)



      (2,123)



      (15,578)



      (5,539)


      Net Earnings Attributable to Jacobs from Continuing Operations

      89,365



      113,336



      269,012



      72,811


      Net (Earnings) Losses Attributable to Noncontrolling Interests from Discontinued Operations

      (607)



      2,274



      (2,195)



      1,946


      Net Earnings Attributable to Jacobs from Discontinued Operations

      $

      435,077



      $

      36,886



      $

      436,642



      $

      128,161


      Net Earnings Attributable to Jacobs

      $

      524,442



      $

      150,222



      $

      705,654



      $

      200,972


      Net Earnings Per Share:








      Basic Net Earnings from Continuing Operations Per Share

      $

      0.65



      $

      0.79



      $

      1.93



      $

      0.53


      Basic Net Earnings from Discontinued Operations Per Share

      $

      3.18



      $

      0.26



      $

      3.14



      $

      0.94


      Basic Earnings Per Share

      $

      3.83



      $

      1.05



      $

      5.07



      $

      1.47










      Diluted Net Earnings from Continuing Operations Per Share

      $

      0.65



      $

      0.79



      $

      1.92



      $

      0.53


      Diluted Net Earnings from Discontinued Operations Per Share

      $

      3.15



      $

      0.26



      $

      3.11



      $

      0.93


      Diluted Earnings Per Share

      $

      3.80



      $

      1.05



      $

      5.02



      $

      1.46










      ?

      Segment Information (in thousands):



      For the Three Months Ended


      For the Nine Months Ended

      Unaudited

      June?28, 2019


      June?29, 2018


      June?28, 2019


      June?29, 2018

      Revenues from External Customers:








      Aerospace, Technology and Nuclear

      $

      1,156,488



      $

      1,021,523



      $

      3,251,024



      $

      2,656,303


      Buildings, Infrastructure and Advanced Facilities

      2,013,134



      1,912,100



      6,093,981



      4,931,613


      Pass Through Revenue

      (533,935)



      (583,423)



      (1,840,572)



      (1,603,930)


      Buildings, Infrastructure and Advanced Facilities Net Revenue

      $

      1,479,199



      $

      1,328,677



      $

      4,253,409



      $

      3,327,683


      Total Revenue

      $

      3,169,622



      $

      2,933,623



      $

      9,345,005



      $

      7,587,916


      Net Revenue

      $

      2,635,687



      $

      2,350,200



      $

      7,504,433



      $

      5,983,986







      For the Three Months Ended


      For the Nine Months Ended


      June?28, 2019


      June?29, 2018


      June?28, 2019


      June?29, 2018

      Segment Operating Profit:








      Aerospace, Technology and Nuclear

      $

      76,306



      $

      69,085



      $

      222,289



      $

      182,609


      Buildings, Infrastructure and Advanced Facilities

      183,318



      163,193



      515,465



      374,809


      Total Segment Operating Profit

      259,624



      232,278



      737,754



      557,418


      Other Corporate Expenses (1)

      (64,525)



      (34,802)



      (185,674)



      (131,163)


      Restructuring and Other Charges

      (92,407)



      (30,544)



      (233,579)



      (122,744)


      Transaction Costs

      (12,738)



      (4,420)



      (12,738)



      (76,915)


      Total U.S. GAAP Operating Profit

      89,954



      162,512



      305,763



      226,596


      Total Other (Expense) Income, net (2)

      3,445



      (15,879)



      (8,344)



      (38,016)


      Earnings from Continuing Operations Before Taxes

      $

      93,399



      $

      146,633



      $

      297,419



      $

      188,580



      (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 amounts of $2.0 million and $6.4 million for the three-month periods ended June?28, 2019 and June?29, 2018, respectively, and $14.8 million and $19.2 million for the nine-month periods ended June?28, 2019 and June?29, 2018, respectively. Other corporate expenses also include intangibles amortization of $18.4 million and $19.3 million for the three-month periods ended June?28, 2019 and June?29, 2018, respectively, and $55.7 million and $49.1 million for the nine-month periods ended June?28, 2019 and June?29, 2018, respectively.


      (2)Includes gain on the settlement of the CH2M retiree medical plans of $0.0 million and $34.6 million, respectively, and the amortization of deferred financing fees related to the CH2M acquisition of $0.5 million and $1.5 million, respectively, for the three- and nine-month periods ended June?28, 2019, as well as amortization of deferred financing fees related to the CH2M acquisition of $0.5 million and $1.2 million, respectively, for the three- and nine-month periods ended June?29, 2018. Also includes revenues under the Company's TSA with WorleyParsons of $14.1 million, respectively, 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?28, 2019


      June?29, 2018

      Depreciation (pre-tax)

      $

      67,553



      $

      69,663


      Amortization of Intangibles (pre-tax)

      $

      55,732



      $

      49,052


      Pass-Through Costs Included in Revenues

      $

      1,840,572



      $

      1,603,930


      Capital Expenditures

      $

      97,466



      $

      48,975


      ?

      Balance Sheet (in thousands):


      Unaudited

      June?28, 2019


      September 28, 2018

      ASSETS




      Current Assets:




      Cash and cash equivalents

      $

      998,242



      $

      634,870


      Receivables and contract assets

      2,779,189



      2,513,934


      Prepaid expenses and other

      695,810



      171,096


      Current assets held for sale

      2,704



      1,236,684


      Total current assets

      4,475,945



      4,556,584


      Property, Equipment and Improvements, net

      305,266



      257,859


      Other Noncurrent Assets:




      Goodwill

      5,370,741



      4,795,856


      Intangibles, net

      694,117



      572,952


      Miscellaneous

      768,102



      760,854


      Noncurrent assets held for sale

      27,091



      1,701,690


      Total other noncurrent assets

      6,860,051



      7,831,352



      $

      11,641,262



      $

      12,645,795


      LIABILITIES AND STOCKHOLDERS' EQUITY




      Current Liabilities:




      Short-term debt

      $

      222,687



      $

      3,172


      Accounts payable

      884,992



      776,189


      Accrued liabilities

      1,673,272



      1,167,002


      Contract liabilities

      506,394



      442,760


      Current liabilities held for sale

      2,103



      756,570


      Total current liabilities

      3,289,448



      3,145,693


      Long-term Debt

      1,025,198



      2,144,167


      Other Deferred Liabilities

      1,218,499



      1,260,977


      Noncurrent Liabilities Held for Sale



      150,604


      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—135,848,893 shares and 142,217,933 shares as of June 28, 2019 and September 28, 2018, respectively

      135,849



      142,218


      Additional paid-in capital

      2,634,177



      2,708,839


      Retained earnings

      4,053,626



      3,809,991


      Accumulated other comprehensive loss

      (763,589)



      (806,703)


      Total Jacobs stockholders' equity

      6,060,063



      5,854,345


      Noncontrolling interests

      48,054



      90,009


      Total Group stockholders' equity

      6,108,117



      5,944,354



      $

      11,641,262



      $

      12,645,795


      ?

      Statement of Cash Flow (in thousands):



      For the Three Months Ended


      For the Nine Months Ended

      Unaudited

      June?28, 2019


      June?29, 2018


      June?28, 2019


      June?29, 2018

      Cash Flows from Operating Activities:








      Net earnings attributable to the Group

      $

      531,064



      $

      150,071



      $

      723,427



      $

      204,565


      Adjustments to reconcile net earnings to net cash flows provided by operations:








      Depreciation and amortization:








      Property, equipment and improvements

      25,851



      29,576



      69,663



      88,715


      Intangible assets

      18,383



      22,447



      56,346



      58,495


      (Gain) Loss on disposal of ECR business

      (917,697)





      (917,697)




      (Gain) Loss on disposal of other businesses and investments

      9,608



      (444)



      9,608



      (444)


      (Gain) Loss on investment in equity securities

      (2,175)





      (2,175)




      Stock based compensation

      18,425



      14,939



      47,341



      61,821


      Equity in earnings of operating ventures, net

      (2,307)



      (9,174)



      (7,632)



      (8,387)


      (Gain) Losses on disposals of assets, net

      (1,732)



      6,138



      1,998



      10,055


      Loss (Gain) on pension and retiree medical plan changes





      (34,621)



      3,819


      Deferred income taxes

      83,600



      (14,173)



      52,592



      (7,374)


      Changes in assets and liabilities, excluding the effects of businesses acquired:








      Receivables and contract assets

      (149,885)



      (144,474)



      (402,616)



      (316,386)


      Prepaid expenses and other current assets

      (41,734)



      7,981



      5,999



      5,620


      Accounts payable

      74,532



      120,741



      67,778



      138,713


      Accrued liabilities

      (103,416)



      28,708



      (161,179)



      8,083


      Contract liabilities

      361,881



      1,096



      419,762



      34,695


      ?Other deferred liabilities

      (80,707)



      (3,587)



      (129,468)



      (21,007)


      ????? Other, net

      11,228



      4,901



      (19,439)



      7,967


      ????????? Net cash (used for) provided by operating activities

      (165,081)



      214,746



      (220,313)



      268,950


      Cash Flows from Investing Activities:








      Additions to property and equipment

      (45,190)



      (18,563)



      (106,670)



      (63,408)


      Disposals of property and equipment and other assets

      60





      7,300



      428


      Distributions of capital from (contributions to) equity investees



      15,310



      (3,904)



      7,614


      Acquisitions of businesses, net of cash acquired

      (575,110)



      (3,729)



      (575,110)



      (1,488,546)


      Disposals of investment in equity securities

      64,708





      64,708




      Proceeds (payments) related to sales of businesses

      2,796,734





      2,796,734



      3,403


      Purchases of noncontrolling interests





      (1,113)




      ?????????? Net cash provided by (used for) investing activities

      2,241,202



      (6,982)



      2,181,945



      (1,540,509)


      Cash Flows from Financing Activities:








      Net (payments) proceeds from borrowings

      (1,895,959)



      (159,814)



      (1,200,388)



      1,402,387


      Debt issuance costs





      (3,741)




      Proceeds from issuances of common stock

      20,198



      6,952



      46,143



      33,588


      Common stock repurchases

      (36,183)



      (31)



      (524,618)



      (2,982)


      Taxes paid on vested restricted stock

      (5,870)



      (10,835)



      (26,187)



      (27,975)


      Cash dividends, including to noncontrolling interests

      (25,867)



      (20,999)



      (82,257)



      (65,232)


      Net cash provided by (used for) financing activities

      (1,943,681)



      (184,727)



      (1,791,048)



      1,339,786


      Effect of Exchange Rate Changes

      15,164



      (34,082)



      34,300



      (18,008)


      Net Increase (decrease) in Cash and Cash Equivalents

      147,604



      (11,045)



      204,884



      50,219


      Cash and Cash Equivalents at the Beginning of the Period

      850,638



      835,415



      793,358



      774,151


      Cash and Cash Equivalents at the End of the Period

      998,242



      824,370



      998,242



      824,370


      Less Cash and Cash Equivalents included in Assets held for Sale



      (161,666)





      (161,666)


      Cash and Cash Equivalents of Continuing Operations at the End of the Period

      $

      998,242



      $

      662,704



      $

      998,242



      $

      662,704


      ?

      Backlog (in millions):



      June?28, 2019


      June?29, 2018

      Aerospace, Technology and Nuclear

      $

      8,456



      $

      7,147


      Buildings, Infrastructure and Advanced Facilities

      14,011



      12,693


      ??????????? Total

      $

      22,467



      $

      19,840


      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.

      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 CH2M acquisition, the ECR divestiture, the KeyW acquisition and other related cost reduction initiatives, which included involuntary terminations, costs associated with co-locating Jacobs and 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, 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 and CH2M acquisitions and sale of the ECR business, 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) excluding charges resulting from the revaluation of certain deferred tax assets/liabilities in connection with U.S. tax reform; (v) 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; (vi) adding back amortization of intangible assets; (vii) allocating to discontinued operations estimated stranded corporate costs that will be reimbursed or otherwise eliminated in connection with the sale of the ECR business; (viii) allocating to discontinued operations estimated interest expense relating to long-term debt that was paid down with the proceeds of the ECR sale; (ix) 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; (x) 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; and (xi) 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. Adjusted EBITDA is calculated by adding depreciation expense to adjusted operating profit from continuing operations. Net revenue is calculated by excluding pass-through revenues of the BIAF line of business.? 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 net revenue, adjusted net earnings from continuing operations, adjusted EPS from continuing operations and adjusted EBITDA 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.

      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 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.

      U.S. GAAP Reconciliation for the third quarter of fiscal 2019 and 2018



      Three Months Ended


      June?28, 2019

      Unaudited

      U.S. GAAP


      Effects of
      Restructuring
      and Other
      Charges


      Effects of
      Transaction
      Costs (1)


      Other
      Adjustments
      (2)


      Adjusted

      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)



      89,926



      12,738



      37,714



      (395,802)


      Operating Profit

      89,954



      92,407



      12,738



      37,714



      232,813


      Total other (expense) income, net

      3,445



      831



      515



      (8,362)



      (3,571)


      Earnings from Continuing Operations Before Taxes

      93,399



      93,238



      13,253



      29,352



      229,242


      Income Tax Benefit (Expense) for Continuing Operations

      1,981



      (22,924)



      (3,259)



      (5,823)



      (30,025)


      Net Earnings of the Group from Continuing Operations

      95,380



      70,314



      9,994



      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



      70,314



      9,994



      23,529



      193,202


      Net Earnings Attributable to Discontinued Operations

      435,077



      2,058



      2,447



      (7,823)



      431,759


      Net earnings attributable to Jacobs

      $

      524,442



      $

      72,372



      $

      12,441



      $

      15,706



      $

      624,961


      Diluted Net Earnings from Continuing Operations Per Share

      $

      0.65



      $

      0.51



      $

      0.07



      $

      0.17



      $

      1.40


      Diluted Net Earnings from Discontinued Operations Per Share

      $

      3.15



      $

      0.01



      $

      0.02



      $

      (0.06)



      $

      3.13


      Diluted Earnings Per Share

      $

      3.80



      $

      0.52



      $

      0.09



      $

      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 BIAF 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 for the month of April prior to the sale 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 month of April prior to the sale related to long-term debt that has been paid down as a result of the ECR sale 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, (f) the reclassification of revenues under the Company's 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.

      ?


      Three Months Ended


      June?29, 2018

      Unaudited

      U.S. GAAP


      Effects of
      Restructuring
      and Other
      Charges


      Effects of
      CH2M
      Transaction
      Costs


      Other
      ?Adjustments
      (1)


      Adjusted

      Revenues

      $

      2,933,623



      $



      $



      $



      $

      2,933,623


      Pass through revenue







      (583,423)



      (583,423)


      Net revenue

      2,933,623







      (583,423)



      2,350,200


      Direct cost of contracts

      (2,325,028)



      2,576





      583,423



      (1,739,029)


      Gross profit

      608,595



      2,576







      611,171


      Selling, general and administrative expenses

      (446,083)



      27,967



      4,422



      25,699



      (387,995)


      Operating Profit

      162,512



      30,543



      4,422



      25,699



      223,176


      Total other (expense) income, net

      (15,879)



      (466)



      933



      16,069



      657


      Earnings from Continuing Operations Before Taxes

      146,633



      30,077



      5,355



      41,768



      223,833


      Income Tax Benefit (Expense) for Continuing Operations

      (31,174)



      (7,433)



      (1,483)



      (3,478)



      (43,568)


      Net Earnings of the Group from Continuing Operations

      115,459



      22,644



      3,872



      38,290



      180,265


      Net Earnings Attributable to Noncontrolling Interests from Continuing Operations

      (2,123)



      (577)







      (2,700)


      Net Earnings from Continuing Operations attributable to Jacobs

      113,336



      22,067



      3,872



      38,290



      177,565


      Net Earnings Attributable to Discontinued Operations

      36,886



      12,683





      (14,800)



      34,769


      Net earnings attributable to Jacobs

      $

      150,222



      $

      34,750



      $

      3,872



      $

      23,490



      $

      212,334


      Diluted Net Earnings from Continuing Operations Per Share

      $

      0.79



      $

      0.15



      $

      0.03



      $

      0.27



      $

      1.24


      Diluted Net Earnings from Discontinued Operations Per Share

      $

      0.26



      $

      0.09



      $



      $

      (0.10)



      $

      0.24


      Diluted Earnings Per Share

      $

      1.05



      $

      0.24



      $

      0.03



      $

      0.16



      $

      1.48


      Operating profit margin

      5.54

      %








      9.50

      %


      (1) Includes (a) the removal of pass through revenues and costs for the BIAF line of business for the calculation of operating profit margin as a percentage of net revenue of $583.4 million, (b) the removal of amortization of intangible assets of $22.4 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) estimated 2018 impacts of $19.2 million from overhead allocation realignments in connection with the Company's CH2M business in the first quarter of fiscal 2019 had those changes been put into effect in first quarter of fiscal 2018 (the net impact of which was zero for consolidated selling, general and administrative expenses), (e) 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 $16.1 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 $5.3 million and (g) associated income tax expense adjustments for all the above pre-tax adjustment items.

      ?


      Nine Months Ended


      June?28, 2019

      Unaudited

      U.S. GAAP


      Effects of
      Restructuring
      and Other
      Charges


      Effects of
      Transaction
      Costs (1)


      Other
      Adjustments
      (2)


      Adjusted

      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)



      231,610



      12,738



      87,863



      (1,173,520)


      Operating Profit

      305,763



      233,579



      12,738



      87,863



      639,943


      Total other (expense) income, net

      (8,344)



      (28,460)



      1,544



      28,109



      (7,151)


      Earnings from Continuing Operations Before Taxes

      297,419



      205,119



      14,282



      115,972



      632,792


      Income Tax Expense for Continuing Operations

      (12,829)



      (44,443)



      (3,509)



      (53,782)



      (114,563)


      Net Earnings of the Group from Continuing Operations

      284,590



      160,676



      10,773



      62,190



      518,229


      Net (Earnings) Loss Attributable to Noncontrolling Interests from Continuing Operations

      (15,578)









      (15,578)


      Net Earnings from Continuing Operations attributable to Jacobs

      269,012



      160,676



      10,773



      62,190



      502,651


      Net Earnings Attributable to Discontinued Operations

      436,642



      (587)



      8,948



      (55,622)



      389,381


      Net earnings attributable to Jacobs

      $

      705,654



      $

      160,089



      $

      19,721



      $

      6,568



      $

      892,032


      Diluted Net Earnings from Continuing Operations Per Share

      $

      1.92



      $

      1.14



      $

      0.08



      $

      0.44



      $

      3.58


      Diluted Net Earnings from Discontinued Operations Per Share

      $

      3.11



      $



      $

      0.06



      $

      (0.40)



      $

      2.77


      Diluted Earnings Per Share

      $

      5.02



      $

      1.14



      $

      0.14



      $

      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 our ECR line of 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 BIAF 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 for the month of April prior to the sale 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 month of April prior to the sale 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 from the second quarter 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 Company's 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.

      ?


      Nine Months Ended


      June?29, 2018

      Unaudited

      U.S. GAAP


      Effects of
      Restructuring
      and Other
      Charges


      Effects of
      CH2M
      Transaction
      Costs


      Other
      Adjustments
      (1)


      Adjusted

      Revenues

      $

      7,587,916



      $



      $



      $



      $

      7,587,916


      Pass through revenue







      (1,603,930)



      (1,603,930)


      Net revenue

      7,587,916







      (1,603,930)



      5,983,986


      Direct cost of contracts

      (6,035,598)



      2,576





      1,603,930



      (4,429,092)


      Gross profit

      1,552,318



      2,576







      1,554,894


      Selling, general and administrative expenses

      (1,325,722)



      120,168



      76,915



      68,252



      (1,060,387)


      Operating Profit

      226,596



      122,744



      76,915



      68,252



      494,507


      Total other (expense) income, net

      (38,016)





      1,189



      33,205



      (3,622)


      Earnings from Continuing Operations Before Taxes

      188,580



      122,744



      78,104



      101,457



      490,885


      Income Tax Expense for Continuing Operations

      (110,230)



      (31,352)



      (19,363)



      51,210



      (109,735)


      Net Earnings of the Group from Continuing Operations

      78,350



      91,392



      58,741



      152,667



      381,150


      Net (Earnings) Loss Attributable to Noncontrolling Interests from Continuing Operations

      (5,539)



      (577)







      (6,116)


      Net Earnings from Continuing Operations attributable to Jacobs

      72,811



      90,815



      58,741



      152,667



      375,034


      Net Earnings Attributable to Discontinued Operations

      128,161



      9,794





      (32,607)



      105,348


      Net earnings attributable to Jacobs

      $

      200,972



      $

      100,609



      $

      58,741



      $

      120,060



      $

      480,382


      Diluted Net Earnings from Continuing Operations Per Share

      $

      0.53



      $

      0.66



      $

      0.43



      $

      1.11



      $

      2.72


      Diluted Net Earnings from Discontinued Operations Per Share

      $

      0.93



      $

      0.07



      $



      $

      (0.24)



      $

      0.76


      Diluted Earnings Per Share

      $

      1.46



      $

      0.73



      $

      0.43



      $

      0.87



      $

      3.49


      Operating profit margin

      2.99

      %








      8.26

      %


      (1) Includes (a) the removal of pass through revenues and costs for the BIAF line of business for the calculation of operating profit margin as a percentage of net revenue of $1.60 billion; (b) the removal of amortization of intangible assets of $58.5 million, (c) the allocation to discontinued operations of estimated stranded corporate costs of $19.2 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) estimated 2018 impacts of $51.2 million from overhead allocation realignments in connection with the Company's CH2M business in the first quarter of fiscal 2019 had those changes been put into effect in first quarter of fiscal 2018 (the net impact of which was zero for consolidated selling, general and administrative expenses), (e) 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 $33.2 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 $74.7 million and (g) associated income tax expense adjustments for all the above pre-tax adjustment items.

      ?

      Earnings Per Share:



      Three Months Ended


      Nine Months Ended

      Unaudited

      June?28, 2019


      June?29, 2018


      June?28, 2019


      June?29, 2018

      Numerator for Basic and Diluted EPS:








      Net earnings (loss) attributable to Jacobs from continuing operations

      $

      89,365



      $

      113,336



      $

      269,012



      $

      72,811


      Net earnings (loss) from continuing operations allocated to participating securities

      (105)



      (475)



      (444)



      (325)


      Net earnings (loss) from continuing operations allocated to common stock for EPS calculation

      $

      89,260



      $

      112,861



      $

      268,568



      $

      72,486










      Net earnings (loss) attributable to Jacobs from discontinued operations

      $

      435,077



      $

      36,886



      436,642



      128,161


      Net earnings (loss) from discontinued operations allocated to participating securities

      (513)



      (155)



      (720)



      (573)


      Net earnings (loss) from discontinued operations allocated to common stock for EPS calculation

      $

      434,564



      $

      36,731



      $

      435,922



      $

      127,588










      Net earnings allocated to common stock for EPS calculation

      $

      523,824



      $

      149,592



      $

      704,490



      $

      200,074










      Denominator for Basic and Diluted EPS:








      Weighted average basic shares

      136,772



      142,612



      139,263



      136,717


      Shares allocated to participating securities

      (161)



      (597)



      (230)



      (743)


      Shares used for calculating basic EPS attributable to common stock

      136,611



      142,015



      139,033



      135,974










      Effect of dilutive securities:








      Stock compensation plans

      1,212



      1,014



      1,206



      1,028


      Shares used for calculating diluted EPS attributable to common stock

      137,823



      143,029



      140,239



      137,002










      Net Earnings Per Share:








      Basic Net Earnings from Continuing Operations Per Share

      $

      0.65



      $

      0.79



      $

      1.93



      $

      0.53


      Basic Net Earnings from Discontinued Operations Per Share

      $

      3.18



      $

      0.26



      $

      3.14



      $

      0.94


      Basic EPS

      $

      3.83



      $

      1.05



      $

      5.07



      $

      1.47


      Diluted Net Earnings from Continuing Operations Per Share

      $

      0.65



      $

      0.79



      $

      1.92



      $

      0.53


      Diluted Net Earnings from Discontinued Operations Per Share

      $

      3.15



      $

      0.26



      $

      3.11



      $

      0.93


      Diluted EPS

      $

      3.80



      $

      1.05



      $

      5.02



      $

      1.46


      For additional information contact:

      Investors:
      Jonathan Doros, 214-583-8596
      jonathan.doros@jacobs.com

      Media:
      Marietta Hannigan, 214-920-8035
      marietta.hannigan@jacobs.com

      Jacobs Logo (PRNewsfoto/Jacobs Engineering Group Inc.)

      ?

      Cision View original content to download multimedia:http://www.prnewswire.com/news-releases/jacobs-reports-earnings-for-the-third-quarter-of-fiscal-2019-300896088.html

      SOURCE Jacobs

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