Jacobs Solutions Inc. Q2 FY2020 Earnings Call

· Earnings call transcript and AI-powered summary

Overview

  • Jacobs reported solid fiscal Q2 2020 results despite widespread COVID‑19 impacts, with strategic portfolio transformation and diversified end‑markets supporting resilience.
  • Pro forma backlog increased 5% year-over-year and pro forma net revenue grew 7.5% year-over-year.
  • The company introduced its Climate Action Plan, committing to 100% renewable energy and net zero carbon by the end of 2020, and carbon negative operations by 2030.
  • Management emphasized that COVID‑19–related disruptions are temporary and primarily tied to physical distancing limitations, not underlying demand.

Financial Performance Highlights (Comparisons vs. Fiscal Q2 2019)

  • Gross revenue up 11% year-over-year.
  • Pro forma net revenue up 7.5% (P&PS +10%, CMS +4%).
  • Adjusted gross margin: 23% (down 160 bps), mainly due to lower client reimbursement rates following synergy-driven G&A reductions.
  • G&A as percentage of net revenue: 14.8% (improved by 110 bps).
  • GAAP operating profit: $168M (+63%). Adjusted operating profit: $237M (+7%).
  • Adjusted EPS: $1.39 (up 11% on underlying basis excluding discrete tax items).
  • Adjusted EBITDA: $261M (9.4% margin), in line with expectations.
  • Pro forma book‑to‑bill ratio: ~1.1 overall, with CMS at ~1.2 and P&PS at ~1.0.

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Operator: Good afternoon. May name is Jacking. I’ll be your conference operator today. At this time, I would like to welcome everyone to the Jacobs Fiscal Second Quarter 2020 Earnings Conference Call. [Operator Instructions] Thank you.I will now turn the call over to your host, Jonathan Doros. Please go ahead, sir. Jonathan Doros: Good evening to all. Our earnings announcement was filed this evening and we have posted a copy of this slide presentation and prepared remarks to our website, which we will reference during the call. I'd like to refer you to our forward-looking statement disclaimer, which is summarized on slide 2.Certain statements contained in this presentation constitute forward-looking statements, as such term is defined in Section 27A of the Securities Act of 1933, as amended; and 21E of the Securities and 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 presentation and an update on historical facts are forward-looking statements. Examples of forward-looking statements include, but are not limited to, statements we make concerning the potential effects of the COVID-19 pandemic on our business, financial condition and results of operations and our expectations as to our future growth, prospects, financial outlook and business strategy for fiscal 2020 or future fiscal years. Although such statements are based on management's current estimates and expectations, and cu

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