Jacobs Solutions Inc. Q2 FY2024 Earnings Call

· Earnings call transcript and AI-powered summary

Overall Performance

  • Q2 gross revenue increased 5% year-over-year; adjusted net revenue grew 3% (entirely organic).
  • Backlog rose 2% year-over-year with a 50 bps increase in gross margin within backlog, signaling stronger profitability ahead.
  • Adjusted EPS was $1.91, down 7% year-over-year. Excluding a $0.32 tax benefit in the prior-year quarter, EPS grew approximately 10%.
  • Adjusted EBITDA rose 10% year-over-year to $393 million (11.3% adjusted net revenue margin).
  • Free cash flow for the first half of FY24 remains at ~100% conversion despite a Q2 working capital–related outflow.

Guidance

  • FY24 adjusted EBITDA narrowed to a range of $1.54–$1.585 billion.
  • FY24 adjusted EPS tightened to $7.80–$8.10, implying 9–10% growth year-over-year at midpoints.
  • Expected 13% EPS growth in the second half of FY24 versus the year-ago period.

Strategic & Operational Updates

  • Separation of Critical Mission Solutions (CMS) and Cyber Intelligence businesses remains on track for completion in the second half of Q4 FY24; all regulatory approvals received.
  • Interim CFO Kevin Berryman returns to lead financial operations until the next CFO is appointed.
  • Cost optimization program continues, focused on simplifying operations, improving margins, and delivering higher‑value services.

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Operator: Thank you for standing by. My name is Christa, and I will be your conference operator today. At this time, I would like to welcome everyone to the Jacobs Engineering Second Quarter 2024 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] Thank you. I will now turn the conference over to Ayan Banerjee, Senior Vice President, Finance, Treasury, Investor Relations, Corporate Development. Ayan, you may begin your conference. Ayan Banerjee: Thank you. Good morning. Our earnings announcement was filed this morning and we have posted a slide presentation on our website, which we'll reference during the call. I would like to refer you to Slide 2 of the presentation material for information about our forward-looking statements, non-GAAP financial measures, and operating metrics. Turning to the agenda on Slide 3. Speaking on today's call will be Jacobs' CEO, Bob Pragada; and Interim CFO, Kevin Berryman. Bob will begin by providing an overview of recent activities, then summarizing highlights from our second quarter results. Kevin will provide a more in-depth discussion of our financial metrics as well as a review of our balance sheet and cash flow. With that, I'll turn it over to CEO, Bob Pragada. Robert Pragada: Thank you, Ayan. Good day everyone and thank you for joining us to discuss our second quarter fiscal year 2024 busi

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