Jacobs Solutions Inc. Q1 FY2023 Earnings Call

· Earnings call transcript and AI-powered summary

Executive Overview

  • Management emphasized continued strong underlying business performance amid strategic transformation toward higher-value opportunities.
  • CEO Bob Pragada highlighted three priorities:
    • Maintaining an inclusive, inspirational culture.
    • Driving higher structural growth via climate response, data solutions, and consulting/advisory.
    • Enhancing returns through operational discipline and improved cash flow.
  • Incoming CFO Claudia Jaramillo introduced; transition planned later in the year.

Financial Performance (Compared to Fiscal Q1 2022 unless noted)

  • Gross revenue up 12% year-over-year.
  • Net revenue up 8%, or 12% in constant currency (faster than FY22’s 8% constant currency growth).
  • Adjusted gross margin at 26% of net revenue (down ~130 bps YoY) primarily due to Idaho remediation contract mix and PA utilization issues.
  • Adjusted G&A 15.5% of net revenue (down 130 bps YoY).
  • GAAP operating profit: $238M; Adjusted operating profit: $332M (up 8%; +15% constant currency).
  • Adjusted EPS: $1.67 (up 7%).
  • Adjusted EBITDA: $339M (up 9%), representing 10.8% of net revenue.
  • Backlog up 1% YoY, or 2% constant currency. Gross margin in backlog up 100 bps YoY.

Segment Performance Highlights

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Operator: Good morning. My name is Chris, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Jacobs Solutions Fiscal First Quarter 2023 Earnings Conference Call and Webcast. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session [Operator Instructions]. Jonathan Doros, Investor Relations, you may begin. Jonathan Doros: Thank you. Good morning to all. Our earnings announcement and 10-Q were filed this morning, and we have posted a copy of the slide presentation on our Web site, which we will reference during the call. I'd like to refer you to Slide 2 of this presentation materials for information about our forward-looking statements and non- GAAP financial measures. Turning to the agenda. Speaking on today's call will be Jacobs' CEO, Bob Pragada; and Chief Financial Officer, Kevin Berryman. We are also joined today by our incoming CFO, Claudia Jaramillo. Bob will begin by summarizing highlights from our first quarter results, discuss our commitment to sustainability and then provide an update on our strategy. Kevin will provide a more in-depth discussion of our financial metrics as well as a review of our balance sheet and cash flow. Finally, Bob will provide details on our updated outlook along with closing remarks, and then we'll open up the call for your questions. In the appendix of the presentation, we provide additional ESG related information,

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