Jacobs Solutions Inc. Q1 FY2021 Earnings Call

· Earnings call transcript and AI-powered summary

Overview

  • Management: CEO Steve Demetriou, COO Bob Pragada, CFO Kevin Berryman.
  • Overall strong start to FY2021 despite COVID-19 headwinds.
  • Backlog up 11% year-over-year (7% on a pro forma basis).
  • Net revenue up 3% year-over-year; adjusted EBITDA up 8% year-over-year.
  • Raised FY2021 adjusted EBITDA and EPS guidance midpoint.

Financial Performance Highlights

  • Q1 adjusted EPS: $1.41, up 17% from the prior year period.
  • Q1 adjusted EBITDA: $280 million, up 8%.
  • GAAP EPS benefited from mark-to-market gains in Worley stake (+$0.54) and C3.ai investment (+$0.47).
  • Free cash flow: $96 million, materially stronger than recent Q1 trends due to improved DSOs and lower restructuring headwinds.
  • Net debt: ~$1 billion before factoring in equity holdings; net debt/EBITDA approx. 0.4x when including C3.ai and Worley equity.

Line of Business Performance

Critical Mission Solutions (CMS)
  • Revenue up 9.5% year-over-year (+3% pro forma).
  • Operating profit up 22% (+15% pro forma).
  • Operating margin improved 90 bps to 8.5%.
  • Backlog: $9.7 billion, up 14% year-over-year.
  • Key growth drivers: digital modernization, strategic data utilization, low-earth orbit satellites, hypersonics, and cybersecurity.

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Operator: Ladies and gentlemen, thank you for standing by and welcome to the Jacobs Fiscal First Quarter 2021 Earnings Conference Call and Webcast. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions]. I would now like to hand the conference over to your speaker today, Jonathan Doros, Investor Relations. Thank you. Please go ahead. Jonathan Doros: Thank you. During this presentation, we'll be referring to certain non-GAAP financial measures. Please refer to Slide 2 of the presentation for more information on these figures. In addition, during the presentation, we will discuss comparisons of current results to prior-period on a pro forma basis. See Slide 2 for more information on the calculations of these pro forma measures. Our pro forma comparisons current and prior-period excludes the results of the Woods Nuclear business which closed in March 2020 and Buffalo Group which closed in November of 2020. We provide historical pro forma results in the Appendix of the investor presentation. Turning to the agenda on Slide 3. Speaking on today's call will be Jacobs' Chair and CEO, Steve Demetriou; President and Chief Operating Officer, Bob Pragada; and President and Chief Financial Officer, Kevin Berryman. Steve will begin by updating the progress we're making against our strategy and reviewing our commitments to ESG and sustainability solutions. Bob will then review our perfo

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