Jacobs Solutions Inc. Q3 FY2021 Earnings Call

· Earnings call transcript and AI-powered summary

Quarter Overview

  • Net revenue increased 11% year-over-year (compared to Q3 FY20).
  • Adjusted EBITDA grew 26% year-over-year.
  • Backlog rose 7% year-over-year (3% on a pro forma basis). Including the Idaho National Labs award, backlog would have increased 11% year-over-year.
  • PA Consulting continued exceptional performance with 36% revenue growth and 23% adjusted EBITDA margins.
  • Adjusted EPS was $1.64, up 30% year-over-year. PA Consulting contributed $0.15 of accretion in the quarter.
  • Free cash flow was $153 million reported, but underlying free cash flow exceeded $430 million after adjusting for PA-related compensation and restructuring costs.

Strategic Highlights

  • Company reaffirmed commitment to portfolio alignment toward high-growth sectors such as infrastructure modernization, energy transition, national security, and advanced supply chain investment.
  • Leadership expects strong sales pipeline conversion for FY22 and FY23.
  • Focus 2023 initiative continues to modernize operations, automate workflows, and free up talent for innovation. Savings in FY22 will be reinvested into the business.
  • ESG remains a strategic priority with nearly $5 billion of sustainable-solution-related revenue.

Line of Business Performance

Critical Mission Solutions (CMS)

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Operator: Ladies and gentlemen, thank you for standing by, and welcome to the Jacobs’ Fiscal Third Quarter 2021 Earnings Conference Call and Webcast [Operator Instructions] I would now like to turn the call over to Jonathan Doros. Thank you. Please go ahead. Jonathan Doros: Thank you. Good morning to all. Our earnings announcement was filed this morning. And we have posted a copy of this slide presentation on our website, which we will reference during the call. During the presentation, we'll be in forward-looking statements, including with respect to the continuing effects of the COVID-19 pandemic, potential government stimulus programs, expected benefits of our strategic investment in PA Consulting, our financial outlook, amongst others. I would like to refer you to our forward-looking statement disclaimer, which is included on Slide 2 regarding these and other forward-looking statements. 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 prior periods on a pro forma basis. See Slide 2 for more information on the calculation of these pro forma metrics. For pro forma comparisons, current and prior periods include the results of the Wood Nuclear business, which closed in March of 2020 and the Buffalo Group, which closed in November of 2020 and the PA Consulting investment whic

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