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Share Name | Share Symbol | Market | Type |
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Jacobs Engineering Group Inc | NYSE:JEC | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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0.00 | 0.00% | 85.84 | 0 | 01:00:00 |
Jacobs Engineering Group Inc. (NYSE:JEC) today announced its financial results for the fourth quarter and fiscal year ended September 29, 2017.
Fiscal 2017 Highlights:
Commenting on the results for the fourth quarter and fiscal year 2017, Steve Demetriou, Jacobs Chairman and CEO, said, “I am pleased with the continued momentum and performance in our final quarter of fiscal 2017. Results included sequential revenue growth, a significant increase in backlog, and strong margin performance, all of which were aligned with our strategic initiatives outlined in December of last year. This organic growth momentum combined with the previously announced acquisition of CH2M will further strengthen our position as a global leader in providing innovative solutions to our clients. Importantly, we remain confident that we will close the CH2M transaction before the end of the year.”
Kevin Berryman, Jacobs CFO, added, "Our fourth quarter and full year results demonstrate our success in our first year implementation of our strategic plan. Growth is gaining traction, margin has improved and cash flow has continued to be strong. We believe that our positive momentum will continue into fiscal year 2018, with expected adjusted EPS (excluding impacts from the CH2M acquisition) in the range of $3.25-$3.60.”
Fourth Quarter Review
Jacobs reported net earnings of $94.1 million, or $0.78 per diluted share, on revenues of $2.7 billion for the fourth quarter ended September 29, 2017. This compares to net earnings of $29.6 million, or $0.24 per diluted share, on revenues of $2.6 billion for the fourth quarter ended September 30, 2016.
Jacobs’ net earnings for the fourth fiscal quarter of 2017 included approximately $24.2 million, or $0.20 per diluted share, in after tax charges comprised of:
Jacobs’ net earnings for fourth fiscal quarter of 2016 results included approximately $63 million, or $0.53 per diluted share, in after-tax restructuring and other charges including:
Excluding the items mentioned above, Jacobs’ adjusted net earnings for the fourth quarter ended September 29, 2017 totaled $118.3 million, or $0.98 per diluted share, favorable in comparison to $93.1 million, or $0.77 per diluted share, for the corresponding period for 2016.
Our fourth quarter U.S. GAAP and adjusted results include one-time net tax and tax related benefit items of $8.0 million, or $0.07 per diluted share, for fourth quarter 2017, and $4.1 million, or $0.03 per diluted share, in net tax benefit and other items for fourth quarter fiscal 2016.
Fiscal Year Review
For the fiscal year ended September 29, 2017, the company reported net earnings of $293.7 million, or $2.42 per diluted share, on revenues of $10.0 billion. This compares to net earnings of $210.5 million, or $1.73 per diluted share, on revenues of $11.0 billion for the prior fiscal year.
On an annual basis, the combined impact of the Restructuring and other charges and the CH2M acquisition related costs was $98.5 million, or $0.82 per diluted share, for 2017. The Restructuring and other charges for 2016 amounted to $163.1 million, or $1.35 per diluted share.
On an annual basis, our adjusted net earnings excluding these items amounted to $392.2 million after tax, or $3.24 per diluted share, for fiscal 2017 and $373.6 million, or $3.08 per diluted share, for fiscal 2016.
For the full fiscal year 2017 and 2016, total one-time net benefits from tax and other items included in our U.S. GAAP and adjusted results amounted to $12.0 million after tax, or $0.10 per diluted share, and $18.7 million after tax, or $0.16 per diluted share, respectively.
Jacobs is hosting a conference call at 9:00 A.M. CT on Tuesday, November 21, 2017, which it is webcasting live on the internet at www.jacobs.com.
Jacobs is one of the world's largest and most diverse providers of full-spectrum technical, professional and construction services for industrial, commercial and government organizations globally. The Company employs over 54,000 people and operates in more than 25 countries around the world. For more information, visit www.jacobs.com.
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, including statements regarding whether and when the proposed transaction with CH2M will be consummated and the anticipated benefits thereof. 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. The potential risks and uncertainties include, among others, the possibility that CH2M may be unable to obtain required stockholder approval or that other conditions to closing the transaction may not be satisfied, such that the transaction will not close or that the closing may be delayed; general economic conditions; the transaction may involve unexpected costs, liabilities or delays; risks that the transaction disrupts current plans and operations of the parties to the transaction; the ability to recognize the benefits of the transaction; the amount of the costs, fees, expenses and charges related to the transaction the outcome of any legal proceedings related to the transaction; the occurrence of any event, change or other circumstances that could give rise to the termination of the transaction agreement. 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 period ended September 30, 2016, and when filed with the Securities and Exchange Commission (the “SEC”), our Annual Report on Form 10-K for the year ended September 29, 2017, 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, as well as the Company’s other filings with the Securities and Exchange Commission. Neither the Company nor CH2M is 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):
Three Months Ended Year Ended September 29, 2017 September 30, 2016 September 29, 2017 September 30, 2016 Revenues $ 2,653,865 $ 2,640,587 $ 10,022,788 $ 10,964,157 Costs and Expenses: Direct cost of contracts (2,179,575 ) (2,208,895 ) (8,250,536 ) (9,196,326 ) Selling, general and administrative expenses (367,298 ) (348,881 ) (1,379,983 ) (1,429,233 ) Operating Profit 106,992 82,811 392,269 338,598 Other Income (Expense): Interest income 3,051 2,740 8,748 7,848 Interest expense (708 ) (4,945 ) (12,035 ) (15,260 ) Gain/(Loss) on disposal of business and investments 10,880 (41,410 ) 10,880 (41,410 ) Miscellaneous expense, net (766 ) (3,523 ) (6,645 ) (3,053 ) Total other income (expense), net 12,457 (47,138 ) 948 (51,875 ) Earnings Before Taxes 119,449 35,673 393,217 286,723 Income Tax Expense (26,021 ) (5,790 ) (105,842 ) (72,208 ) Net Earnings of the Group 93,428 29,883 287,375 214,515 Net Earnings (Loss) Attributable to Non-controlling Interests 714 (239 ) 6,352 (4,052 ) Net Earnings Attributable to Jacobs $ 94,142 $ 29,644 $ 293,727 $ 210,463 Net Earnings Per Share: Basic $ 0.78 $ 0.25 $ 2.43 $ 1.75 Diluted $ 0.78 $ 0.24 $ 2.42 $ 1.73Segment Information (in thousands):
Three Months Ended Year Ended September 29, 2017 September 30, 2016 September 29, 2017 September 30, 2016 Revenues from External Customers: Aerospace & Technology $ 620,706 $ 649,993 $ 2,360,613 $ 2,657,433 Buildings & Infrastructure 639,211 557,508 2,452,321 2,253,512 Industrial 727,877 749,061 2,743,662 2,793,713 Petroleum & Chemicals 666,071 684,025 2,466,192 3,259,499 Total $ 2,653,865 $ 2,640,587 $ 10,022,788 $ 10,964,157 Three Months Ended Year Ended September 29, 2017 September 30, 2016 September 29, 2017 September 30, 2016 Operating Profit: Aerospace & Technology $ 55,861 $ 46,947 $ 202,595 $ 203,808 Buildings & Infrastructure (1) 54,499 41,564 193,455 174,648 Industrial 33,714 13,052 115,262 81,268 Petroleum & Chemicals 25,532 34,410 113,858 126,604 Total Segment Operating Profit 169,606 135,973 625,170 586,328 Other Corporate Expenses (25,975 ) (1,926 ) (81,595 ) (60,100 ) Restructuring and Other Charges (19,539 ) (51,236 ) (134,206 ) (187,630 ) CH2M Professional Fees and Integration costs (17,100 ) — (17,100 ) —Total U.S. GAAP Operating Profit
106,992 82,811 392,269 338,598 Gain/(Loss) on disposal of business and investments 10,880 (41,410 ) 10,880 (41,410 ) Total Other Expense (2) 1,577 (5,728 ) (9,932 ) (10,465 ) Earnings Before Taxes $ 119,449$
35,673 $ 393,217 $ 286,723 (1) Excludes $ 23,844 in restructuring and other charges for the fiscal year ended September 29, 2017. (2) Years ended September 29, 2017 and September 30, 2016 amounts include Restructuring and other charges of $1,233 and $277, respectively.Other Operational Information (in thousands):
Three Months Ended Year ended September 29, 2017 September 30, 2016 September 29, 2017 September 30, 2016 Depreciation (pre-tax) $ 23,700 $ 18,916 $ 76,418 $ 82,363 Amortization of Intangibles (pre-tax) $ 11,204 $ 12,109 $ 46,095 $ 47,608 Pass-Through Costs Included in Revenues $ 677,698 $ 602,304 $ 2,539,311 $ 2,489,924 Capital Expenditures $ 44,508 $ 21,285 $ 118,060 $ 67,688Balance Sheet (in thousands):
September 29, 2017 September 30, 2016 ASSETS Current Assets: Cash and cash equivalents $ 774,151 $ 655,716 Receivables 2,102,543 2,115,663 Prepaid expenses and other 119,486 93,091 Total current assets 2,996,180 2,864,470 Property, Equipment, and Improvements, Net 349,911 319,673 Other Noncurrent Assets: Goodwill 3,009,826 3,079,628 Intangibles, net 332,920 336,922 Miscellaneous 692,022 759,329 Total other noncurrent assets 4,034,768 4,175,879 $ 7,380,859 $ 7,360,022 LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities: Notes payable $ 3,071 $ 2,421 Accounts payable 683,605 522,427 Accrued liabilities 939,687 938,378 Billings in excess of costs 299,864 319,460 Total current liabilities 1,926,227 1,782,686 Long-term Debt 235,000 385,330 Other Deferred Liabilities 732,281 861,824 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—120,385,544 shares and 120,950,899 shares as of September 29, 2017 and September 30, 2016, respectively 120,386 120,951 Additional paid-in capital 1,239,782 1,168,272 Retained earnings 3,721,698 3,586,647 Accumulated other comprehensive loss (653,514 ) (610,594 ) Total Jacobs stockholders’ equity 4,428,352 4,265,276Non-controlling interests
58,999 64,906 Total Group stockholders’ equity 4,487,351 4,330,182 $ 7,380,859 $ 7,360,022Backlog (in millions):
September 29, 2017 September 30, 2016 Aerospace & Technology $ 6,231.4 $ 5,110.0 Buildings & Infrastructure 5,412.4 5,033.5 Industrial 2,836.9 3,106.6 Petroleum & Chemicals $ 5,307.9 $ 5,510.4 Total $ 19,788.6 $ 18,760.5Non-U.S. 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 adjusted net earnings and adjusted EPS.
Adjusted net earnings and adjusted EPS are non-GAAP financial measures that are calculated by excluding the after-tax costs related to (i) 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; 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; and restructuring activities associated with the Company’s announced definitive agreement to acquire CH2M, which included involuntary terminations (collectively referred to as “Restructuring and other charges”), and (ii) professional fees, integration costs and related costs associated with the CH2M acquisition (collectively referred to as “CH2M professional fees and integration costs”), which are not considered by management to be part of the Company’s ordinary operations. We believe that the adjusted net earnings and adjusted EPS 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 the effects of the Restructuring and other charges and the professional fees, integration costs and related costs associated with CH2M acquisition, which can obscure underlying trends. Additionally, management uses adjusted net earnings and adjusted EPS 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 net earnings and EPS to the corresponding "adjusted" amounts. For the comparable periods presented below, such adjustments consist of amounts incurred in connection with the Restructuring and other charges and the CH2M professional fees and integration costs. Amounts are shown in thousands, except for per-share data:
U.S. GAAP Reconciliation for the fourth quarter of fiscal 2017 and 2016:
Three Months Ended September 29, 2017 U.S. GAAPEffects of
Restructuring
and Other
Charges
Effects of
CH2M
professional
fees and
integration
costs
Adjusted Revenue $ 2,653,865 $ — $—
$ 2,653,865 Direct cost of contracts (2,179,575 ) — — (2,179,575 ) Selling, general and administrative expenses (367,298 ) 19,539 17,100 (330,659 ) Total other (expense) income, net 12,457 — — 12,457 Earnings Before Taxes 119,449 19,539 17,100 156,088 Income Tax (Expense) Benefit (26,021 )(5,980
)
(6,498
)
(38,499 ) Net earnings of the Group 93,428 13,559 10,602 117,589 Net Earnings Attributable to Non-controlling interests 714 — — 714 Net earnings Attributable to Jacobs $ 94,142 $ 13,559 $ 10,602 $ 118,303 Diluted earnings per share $ 0.78 $ 0.11 $ 0.09 $ 0.98 Three Months Ended September 30, 2016 U.S. GAAP
Effects of 2015
Restructuring
and other items
Adjusted Revenue $ 2,640,587 $ — $ 2,640,587 Direct cost of contracts (2,208,895 ) — (2,208,895 ) Selling, general and administrative expenses (348,881 ) 51,236 (297,645 ) Total other income (expense), net (47,138 ) 41,410(5,728
) Earnings Before Taxes 35,673 92,646 128,319 Income Tax (Expense) Benefit (5,790 ) (29,162 ) (34,952 ) Net earnings of the Group 29,883 63,484 93,367 Net Earnings Attributable to Non-controlling interests (239 ) — (239 ) Net earnings Attributable to Jacobs $ 29,644 $ 63,484 $ 93,128 Diluted earnings per share $ 0.24 $ 0.53 $ 0.77U.S. GAAP Reconciliation for the fiscal years ended September 29, 2017 and September 30, 2016:
Year Ended September 29, 2017 U.S. GAAPEffects of
Restructuring
and Other
Charges
Effects of
CH2M
professional
fees and
integration
costs
Adjusted Revenue $ 10,022,788 $ 17,526 $ — $ 10,040,314 Direct cost of contracts (8,250,536 ) 4,913 — (8,245,623 ) Selling, general and administrative expenses (1,379,983 ) 111,767 17,100 (1,251,116 ) Total other income (expense), net 948 1,233 — 2,181 Earnings Before Taxes 393,217 135,439 17,100 545,756 Income Tax (Expense) Benefit (105,842 ) (42,663 )(6,498
)
(155,003 ) Net earnings of the Group 287,375 92,776 10,602 390,753 Net Earnings Attributable to Non-controlling interests 6,352 (4,913
)
— 1,439 Net earnings Attributable to Jacobs $ 293,727 $ 87,863 $ 10,602 $ 392,192 Diluted earnings per share $ 2.42 $ 0.73 $ 0.09 $ 3.24Year Ended September 30, 2016 U.S. GAAP
Effects of 2015
Restructuring
and other items
Adjusted Revenue $ 10,964,157 $ — $ 10,964,157 Direct cost of contracts (9,196,326 ) — (9,196,326 ) Selling, general and administrative expenses (1,429,233 ) 187,630 (1,241,603 ) Total other income (expense), net (51,875 ) 41,687 (10,188 ) Earnings Before Taxes 286,723 229,317 516,040 Income Tax (Expense) Benefit (72,208 ) (66,225 ) (138,433 ) Net earnings of the Group 214,515 163,092 377,607 Net Earnings Attributable to Non-controlling interests (4,052 ) — (4,052 ) Net earnings Attributable to Jacobs $ 210,463 $ 163,092 $ 373,555 Diluted earnings per share $ 1.73 $ 1.35 $ 3.08Additional Information and Where to Find It
In connection with the proposed acquisition of CH2M Hill Companies Ltd. (“CH2M”) by Jacobs Engineering Group Inc. (the “Company”) pursuant to the terms of an Agreement and Plan of Merger by and among CH2M, the Company and Basketball Merger Sub Inc., a wholly owned subsidiary of the Company (“Merger Sub”), the Company filed with the Securities and Exchange Commission (the “SEC”) a Registration Statement on Form S-4 (the “Form S-4”) on September 19, 2017, Amendment No. 1 to the Form S-4 on October 24, 2017 and Amendment No. 2 to the Form S-4 on November 8, 2017, which filings contain a proxy statement of CH2M and a prospectus of the Company. The Form S-4 (as amended) was declared effective on November 9, 2017, and the definitive proxy statement/prospectus was mailed or otherwise disseminated to CH2M’s stockholders on or about November 10, 2017. BEFORE MAKING ANY VOTING OR INVESTMENT DECISION, INVESTORS ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS (INCLUDING ALL AMENDMENTS AND SUPPLEMENTS) BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE COMPANY, CH2M AND THE MERGER. Investors may obtain free copies of the proxy statement/prospectus when it becomes available, as well as other filings containing information about the Company and CH2M, without charge, at the SEC’s Internet website (http://www.sec.gov). Copies of these documents may also be obtained for free from the companies’ websites at www.jacobs.com or www.ch2m.com.
Participants in Solicitation
The Company, CH2M and their respective officers and directors may be deemed to be participants in the solicitation of proxies from the stockholders of CH2M in connection with the proposed Merger of Merger Sub with and into CH2M. Information about the Company’s executive officers and directors is set forth in its Annual Report on Form 10-K, which was filed with the SEC on November 21, 2017 and its proxy statement for its 2017 annual meeting of stockholders, which was filed with the SEC on December 9, 2016. Information about CH2M’s executive officers and directors is set forth in its Annual Report on Form 10-K, which was filed with the SEC on March 7, 2017, and the proxy statements for its 2017 annual meeting of stockholders, which was filed with the SEC on April 24, 2017. Investors may obtain more detailed information regarding the direct and indirect interests of the Company, CH2M and their respective executive officers and directors in the acquisition by reading the preliminary and definitive proxy statement/prospectus regarding the proposed transaction that was filed with the SEC. You may obtain free copies of these documents as described in the preceding paragraph.
No Offer or Solicitation
This press release relates to a proposed business combination between the Company and CH2M. This press release is for informational purposes only and shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction. This document is not a substitute for the prospectus or any other document that the Company or CH2M may file with the SEC in connection with the proposed transaction. No offering of securities shall be made, except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.
View source version on businesswire.com: http://www.businesswire.com/news/home/20171121005353/en/
Jacobs Engineering Group Inc.Kevin C. BerrymanExecutive Vice President and Chief Financial Officer214-583-8500
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