Jacobs Solutions Inc. Q4 FY2023 Earnings Call

· Earnings call transcript and AI-powered summary

Overview

  • Jacobs delivered record revenue, operating profit, and free cash flow in Q4 and FY 2023, with all results entirely organic.
  • A major strategic milestone was announced: Jacobs will separate its Critical Mission Solutions (CMS) business and the Cyber & Intelligence unit via a tax-efficient Reverse Morris Trust and merge them with Amentum, creating a new ~$13B revenue government services leader.
  • Jacobs shareholders will receive 51% of the new combined entity, and Jacobs will retain an additional 7.5%–12% stake, plus a $1B cash dividend at close.
  • Jacobs will focus on becoming a pure-play critical infrastructure and sustainability company with materially improved margins and cash flow.

Financial Highlights – Q4 2023

  • Gross revenue increased 10.5% year-over-year.
  • Adjusted net revenue grew 8.9% year-over-year.
  • GAAP operating profit: $278M.
  • Adjusted operating margin: 11%, up 14 bps year-over-year.
  • Adjusted EPS: $1.90, up 6% year-over-year.
  • Adjusted EBITDA: $384M, up 10%, representing 11.1% of adjusted net revenue.
  • Backlog increased 4% year-over-year; gross profit in backlog up 8%.

Financial Highlights – FY 2023

  • Gross revenue grew 10% and net revenue grew 7% year-over-year.
  • GAAP EPS: $5.31; Adjusted EPS: $7.20, up 4% year-over-year.
  • Adjusted operating profit up 9% (11% constant currency).

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Operator: Ladies and gentlemen, thank you for standing by. My name is Sheryl and I will be your conference operator today. At this time, I would like to welcome everyone to the Jacobs Fiscal Fourth Quarter 2023 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. I would now like to turn the call over to Jonathan Evans, Vice President of Corporate Development, Investor Relations. Please go ahead. Jonathan Evans: 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. Our 10-K will be filed later today. I would like to refer you to slide two of the presentation material for information about our forward-looking statements and non-GAAP financial measures. Turning to the agenda on slide three. Speaking on today's call will be Jacobs' CEO, Bob Pragada; and CFO, Claudia Jaramillo. Bob will begin by providing an overview of recent activities, then summarizing highlights from our fourth quarter results. Claudia 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 questions. With that, I'll turn it over to our CEO, Bob Pragada. Bob Pragada:

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