Asset 1logo-3Jacobs Logo_Blue_RGB
            Press Release

            Jacobs Reports Earnings for the Third Quarter of Fiscal 2019

            Strong Top- and Bottom-Line Q3 Results; Increasing Fiscal 2019 Outlook Delivering Innovative Solutions and Disciplined Execution

            DALLAS, Aug. 5, 2019 /PRNewswire/ --?Jacobs Engineering Group Inc. (NYSE: JEC) today announced its financial results for the fiscal third quarter ended June?28, 2019.

            Q3 2019 Highlights:

            • Gross revenue of $3.2 billion1 grew 8.0% year-over-year; net revenue grew organically by 11.1%2
            • EPS from continuing operations of $0.65, results impacted by higher restructuring and transaction costs
            • Adjusted EPS from continuing operations of $1.40, up 13% year-over-year, including a discrete tax benefit
            • Backlog increased $2.6 billion to $22.5 billion, up 8% on an organic basis2
            • Increasing fiscal 2019 adjusted pro forma EPS outlook to $4.75 - $5.00 (excluding full year ECR)3
            • Completed $350 million of $1 billion share repurchase authorization through August 2nd

            Jacobs' Chair and CEO Steve Demetriou commented, "Our strong third quarter results and increased earnings outlook are yet another example of driving an innovative culture, strengthening our execution discipline and scaling our global network of expertise. As we execute against our strategy, we are profitably?winning a greater level of business in our existing sectors, while diversifying into new high margin growth opportunities. We are creating a company like no other, putting our knowledge and imagination together to shape the next generation of innovative solutions. Our?KeyW acquisition is already delivering with a growing pipeline of new and enhanced opportunities as we bring the two organizations together."

            Jacobs' CFO Kevin Berryman added, "We delivered another quarter of solid results across both lines of business with accelerating growth in our sales pipelines, during the most transformative period in our company's history. The CH2M integration has exceeded our revenue and cost targets and is on track to be completed by the end of calendar 2019. Our divestiture of ECR is moving into the final stages of separation. We are raising our fiscal 2019 outlook and now expect adjusted EBITDA in the range of $965 million - $1 billion and adjusted pro forma EPS of $4.75 - $5.00.3 From a long-term standpoint, we have created a transformed business with a stronger balance sheet."

            Third Quarter Review



            Fiscal 3Q 2019

            Fiscal 3Q 2018

            Change

            Revenue

            $3.2 billion

            $2.9 billion

            $0.3 billion

            Net Revenue

            $2.6 billion

            $2.4 billion

            $0.2 billion

            GAAP Net Earnings from Continuing Operations

            $89 million

            $113 million

            -$24 million

            GAAP Earnings Per Diluted Share (EPS) from Continuing Operations

            $0.65

            $0.79

            -$0.14

            Adjusted Net Earnings from Continuing Operations

            $193 million

            $178 million

            $15 million

            Adjusted EPS from Continuing Operations

            $1.40

            $1.24

            $0.16

            The company's adjusted net earnings from continuing operations and adjusted EPS from continuing operations for the third quarter of fiscal 2019 and fiscal 2018 exclude the charges and costs set forth in the table below. For additional information regarding these adjustments and a reconciliation of adjusted net earnings and adjusted EPS to net earnings and EPS, respectively, refer to the section entitled "Non-GAAP Financial Measures" at the end of this release.


            Fiscal 3Q 2019

            Fiscal 3Q 2018

            After-tax restructuring and other charges ($93.2 million and $30.1 million for the fiscal 2019 and 2018 periods, respectively before income taxes)

            $70 million ($0.51 per share)

            $22 million ($0.15 per share)

            After-tax transaction costs incurred in connection with the closing of the CH2M and KeyW acquisitions ($13.3 million and $5.4 million for the fiscal 2019 and 2018 periods, respectively before income taxes)

            $10 million ($0.07 per share)

            $4 million ($0.03 per share)

            Other adjustments include:

            ?(a) addback of amortization of intangible assets of $18.4 million and $19.3 million in the 2019 and 2018 periods, respectively,

            ?(b) the allocation to discontinued operations of estimated stranded corporate costs of $2.0 million and $6.4 million in the 2019 and 2018 periods, respectively, that will be reimbursed or otherwise eliminated in connection with the sale of the ECR business,

            ?(c) the allocation to discontinued operations of estimated interest expense amounts in 2019 and 2018 related to long-term debt that has been paid down in connection with the sale of the ECR business of $5.8 million and $16.1 million, respectively,

            (d) the reclassification of revenues under the Company's Transition Services Agreement (TSA) with WorleyParsons of $14.1 million included in other income for U.S. GAAP reporting purposes to SG&A and the exclusion of $3.2 million in remaining unreimbursed costs associated with the TSA during the fiscal 2019 third quarter,

            ?(e) the add-back of charges resulting from the revaluation of certain deferred tax assets/liabilities in connection with U.S. tax reform of $5.3 million in the 2018 period and other income tax adjustments of $1.5 million in the current quarter and

            ?(f) associated income tax expense adjustments for the above pre-tax adjustment items.

            $24 million ($0.17 per share)

            $38 million ($0.27 per share)

            Adjusted EPS from Continuing Operations

            $193 million ($1.40 per share)

            $178 million ($1.24 per share)


            (note: earnings per share amounts may not add due to rounding)

            Fiscal third quarter 2019 earnings per share from continuing operations reflect an adjusted effective tax rate of 22.6%, excluding discrete tax items of 16 cents per share. Fiscal third quarter 2018 included an 8 cent benefit from discrete tax items.

            Jacobs is hosting a conference call at 11:00 A.M. ET on Monday August 5, 2019, which it is webcasting live at www.simian1.com.cn.

            Energy, Chemicals and Resources (ECR) Sale to WorleyParsons

            On April 26, 2019, Jacobs completed the previously announced sale of the Jacobs' ECR business to WorleyParsons Limited.

            KeyW Acquisition

            On June 12, 2019,?Jacobs completed the previously announced acquisition of The KeyW Holding Corporation.

            About Jacobs

            Jacobs leads the global professional services sector providing solutions for a more connected, sustainable world. With approximately $12 billion in revenue and a talent force of more than 50,000, Jacobs provides a full spectrum of services including scientific, technical, professional and construction- and program-management for business, industrial, commercial, government and infrastructure sectors. For more information, visit www.simian1.com.cn, and connect with Jacobs on www.simian1.com.cn, LinkedIn, Twitter, Facebook and Instagram.

            Forward-Looking Statements

            Certain statements contained in this press release constitute forward-looking statements as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities 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 press release that are not based on historical fact are forward-looking statements. Although such statements are based on management's current estimates and expectations, and currently available competitive, financial, and economic data, forward-looking statements are inherently uncertain, and you should not place undue reliance on such statements as actual results may differ materially. We caution the reader that there are a variety of risks, uncertainties and other factors that could cause actual results to differ materially from what is contained, projected or implied by our forward-looking statements. For a description of some additional factors that may occur that could cause actual results to differ from our forward-looking statements, see our Annual Report on Form 10-K for the year ended September?28, 2018, and in particular the discussions contained under Item 1 - Business; Item 1A - Risk Factors; Item 3 - Legal Proceedings; and Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations, and our Quarterly Report on Form 10-Q for the quarters ended December 28, 2018 and March 29, 2019, and in particular the discussions contained under Part I, Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations; Part II, Item 1 - Legal Proceedings; and Part II, Item 1A - Risk Factors, as well as the Company's other filings with the Securities and Exchange Commission. The Company is not under any duty to update any of the forward-looking statements after the date of this press release to conform to actual results, except as required by applicable law.

            1Reflects continuing operations as reported in accordance with GAAP.
            2Excludes $23.9 million in revenue and $1.1 billion in backlog contribution from KeyW.
            3Reconciliation of the adjusted pro forma EPS outlook and adjusted EBITDA outlook for the full fiscal year to the most directly comparable GAAP measure is not available without unreasonable efforts because the Company cannot predict with sufficient certainty all the components required to provide such reconciliation, including with respect to the costs and charges relating to transaction expenses, restructuring and integration to be incurred in fiscal 2019.

            Financial Highlights:


            Results of Operations (in thousands, except per-share data):



            For the Three Months Ended


            For the Nine Months Ended

            Unaudited

            June?28, 2019


            June?29, 2018


            June?28, 2019


            June?29, 2018

            Revenues

            $

            3,169,622



            $

            2,933,623



            $

            9,345,005



            $

            7,587,916


            Direct cost of contracts

            (2,543,488)



            (2,325,028)



            (7,533,511)



            (6,035,598)


            Gross profit

            626,134



            608,595



            1,811,494



            1,552,318


            Selling, general and administrative expenses

            (536,180)



            (446,083)



            (1,505,731)



            (1,325,722)


            Operating Profit

            89,954



            162,512



            305,763



            226,596


            Other Income (Expense):








            Interest income

            3,398



            1,277



            7,172



            6,896


            Interest expense

            (18,978)



            (23,788)



            (73,727)



            (50,107)


            Miscellaneous income (expense), net

            19,025



            6,632



            58,211



            5,195


            Total other (expense) income, net

            3,445



            (15,879)



            (8,344)



            (38,016)


            Earnings from Continuing Operations Before Taxes

            93,399



            146,633



            297,419



            188,580


            Income Tax Benefit (Expense) for Continuing Operations

            1,981



            (31,174)



            (12,829)



            (110,230)


            Net Earnings of the Group from Continuing Operations

            95,380



            115,459



            284,590



            78,350


            Net Earnings of the Group from Discontinued Operations

            435,684



            34,612



            438,837



            126,215


            Net Earnings of the Group

            531,064



            150,071



            723,427



            204,565


            Net Earnings Attributable to Noncontrolling Interests from Continuing Operations

            (6,015)



            (2,123)



            (15,578)



            (5,539)


            Net Earnings Attributable to Jacobs from Continuing Operations

            89,365



            113,336



            269,012



            72,811


            Net (Earnings) Losses Attributable to Noncontrolling Interests from Discontinued Operations

            (607)



            2,274



            (2,195)



            1,946


            Net Earnings Attributable to Jacobs from Discontinued Operations

            $

            435,077



            $

            36,886



            $

            436,642



            $

            128,161


            Net Earnings Attributable to Jacobs

            $

            524,442



            $

            150,222



            $

            705,654



            $

            200,972


            Net Earnings Per Share:








            Basic Net Earnings from Continuing Operations Per Share

            $

            0.65



            $

            0.79



            $

            1.93



            $

            0.53


            Basic Net Earnings from Discontinued Operations Per Share

            $

            3.18



            $

            0.26



            $

            3.14



            $

            0.94


            Basic Earnings Per Share

            $

            3.83



            $

            1.05



            $

            5.07



            $

            1.47










            Diluted Net Earnings from Continuing Operations Per Share

            $

            0.65



            $

            0.79



            $

            1.92



            $

            0.53


            Diluted Net Earnings from Discontinued Operations Per Share

            $

            3.15



            $

            0.26



            $

            3.11



            $

            0.93


            Diluted Earnings Per Share

            $

            3.80



            $

            1.05



            $

            5.02



            $

            1.46










            ?

            Segment Information (in thousands):



            For the Three Months Ended


            For the Nine Months Ended

            Unaudited

            June?28, 2019


            June?29, 2018


            June?28, 2019


            June?29, 2018

            Revenues from External Customers:








            Aerospace, Technology and Nuclear

            $

            1,156,488



            $

            1,021,523



            $

            3,251,024



            $

            2,656,303


            Buildings, Infrastructure and Advanced Facilities

            2,013,134



            1,912,100



            6,093,981



            4,931,613


            Pass Through Revenue

            (533,935)



            (583,423)



            (1,840,572)



            (1,603,930)


            Buildings, Infrastructure and Advanced Facilities Net Revenue

            $

            1,479,199



            $

            1,328,677



            $

            4,253,409



            $

            3,327,683


            Total Revenue

            $

            3,169,622



            $

            2,933,623



            $

            9,345,005



            $

            7,587,916


            Net Revenue

            $

            2,635,687



            $

            2,350,200



            $

            7,504,433



            $

            5,983,986







            For the Three Months Ended


            For the Nine Months Ended


            June?28, 2019


            June?29, 2018


            June?28, 2019


            June?29, 2018

            Segment Operating Profit:








            Aerospace, Technology and Nuclear

            $

            76,306



            $

            69,085



            $

            222,289



            $

            182,609


            Buildings, Infrastructure and Advanced Facilities

            183,318



            163,193



            515,465



            374,809


            Total Segment Operating Profit

            259,624



            232,278



            737,754



            557,418


            Other Corporate Expenses (1)

            (64,525)



            (34,802)



            (185,674)



            (131,163)


            Restructuring and Other Charges

            (92,407)



            (30,544)



            (233,579)



            (122,744)


            Transaction Costs

            (12,738)



            (4,420)



            (12,738)



            (76,915)


            Total U.S. GAAP Operating Profit

            89,954



            162,512



            305,763



            226,596


            Total Other (Expense) Income, net (2)

            3,445



            (15,879)



            (8,344)



            (38,016)


            Earnings from Continuing Operations Before Taxes

            $

            93,399



            $

            146,633



            $

            297,419



            $

            188,580



            (1) Other corporate expenses include costs that were previously allocated to the ECR segment prior to discontinued operations presentation in connection with the ECR sale in the approximate amounts of $2.0 million and $6.4 million for the three-month periods ended June?28, 2019 and June?29, 2018, respectively, and $14.8 million and $19.2 million for the nine-month periods ended June?28, 2019 and June?29, 2018, respectively. Other corporate expenses also include intangibles amortization of $18.4 million and $19.3 million for the three-month periods ended June?28, 2019 and June?29, 2018, respectively, and $55.7 million and $49.1 million for the nine-month periods ended June?28, 2019 and June?29, 2018, respectively.


            (2)Includes gain on the settlement of the CH2M retiree medical plans of $0.0 million and $34.6 million, respectively, and the amortization of deferred financing fees related to the CH2M acquisition of $0.5 million and $1.5 million, respectively, for the three- and nine-month periods ended June?28, 2019, as well as amortization of deferred financing fees related to the CH2M acquisition of $0.5 million and $1.2 million, respectively, for the three- and nine-month periods ended June?29, 2018. Also includes revenues under the Company's TSA with WorleyParsons of $14.1 million, respectively, for the three- and nine-month periods ended June?28, 2019, for which the related costs are included in SG&A.

            ?

            Other Operational Information (in thousands):


            Unaudited

            For the Nine Months Ended

            Continuing Operations

            June?28, 2019


            June?29, 2018

            Depreciation (pre-tax)

            $

            67,553



            $

            69,663


            Amortization of Intangibles (pre-tax)

            $

            55,732



            $

            49,052


            Pass-Through Costs Included in Revenues

            $

            1,840,572



            $

            1,603,930


            Capital Expenditures

            $

            97,466



            $

            48,975


            ?

            Balance Sheet (in thousands):


            Unaudited

            June?28, 2019


            September 28, 2018

            ASSETS




            Current Assets:




            Cash and cash equivalents

            $

            998,242



            $

            634,870


            Receivables and contract assets

            2,779,189



            2,513,934


            Prepaid expenses and other

            695,810



            171,096


            Current assets held for sale

            2,704



            1,236,684


            Total current assets

            4,475,945



            4,556,584


            Property, Equipment and Improvements, net

            305,266



            257,859


            Other Noncurrent Assets:




            Goodwill

            5,370,741



            4,795,856


            Intangibles, net

            694,117



            572,952


            Miscellaneous

            768,102



            760,854


            Noncurrent assets held for sale

            27,091



            1,701,690


            Total other noncurrent assets

            6,860,051



            7,831,352



            $

            11,641,262



            $

            12,645,795


            LIABILITIES AND STOCKHOLDERS' EQUITY




            Current Liabilities:




            Short-term debt

            $

            222,687



            $

            3,172


            Accounts payable

            884,992



            776,189


            Accrued liabilities

            1,673,272



            1,167,002


            Contract liabilities

            506,394



            442,760


            Current liabilities held for sale

            2,103



            756,570


            Total current liabilities

            3,289,448



            3,145,693


            Long-term Debt

            1,025,198



            2,144,167


            Other Deferred Liabilities

            1,218,499



            1,260,977


            Noncurrent Liabilities Held for Sale



            150,604


            Commitments and Contingencies




            Stockholders' Equity:




            Capital stock:




            ??????????????? Preferred stock, $1 par value, authorized - 1,000,000 shares; issued and outstanding - none




            ??????????????? Common stock, $1 par value, authorized - 240,000,000 shares; issued and outstanding—135,848,893 shares and 142,217,933 shares as of June 28, 2019 and September 28, 2018, respectively

            135,849



            142,218


            Additional paid-in capital

            2,634,177



            2,708,839


            Retained earnings

            4,053,626



            3,809,991


            Accumulated other comprehensive loss

            (763,589)



            (806,703)


            Total Jacobs stockholders' equity

            6,060,063



            5,854,345


            Noncontrolling interests

            48,054



            90,009


            Total Group stockholders' equity

            6,108,117



            5,944,354



            $

            11,641,262



            $

            12,645,795


            ?

            Statement of Cash Flow (in thousands):



            For the Three Months Ended


            For the Nine Months Ended

            Unaudited

            June?28, 2019


            June?29, 2018


            June?28, 2019


            June?29, 2018

            Cash Flows from Operating Activities:








            Net earnings attributable to the Group

            $

            531,064



            $

            150,071



            $

            723,427



            $

            204,565


            Adjustments to reconcile net earnings to net cash flows provided by operations:








            Depreciation and amortization:








            Property, equipment and improvements

            25,851



            29,576



            69,663



            88,715


            Intangible assets

            18,383



            22,447



            56,346



            58,495


            (Gain) Loss on disposal of ECR business

            (917,697)





            (917,697)




            (Gain) Loss on disposal of other businesses and investments

            9,608



            (444)



            9,608



            (444)


            (Gain) Loss on investment in equity securities

            (2,175)





            (2,175)




            Stock based compensation

            18,425



            14,939



            47,341



            61,821


            Equity in earnings of operating ventures, net

            (2,307)



            (9,174)



            (7,632)



            (8,387)


            (Gain) Losses on disposals of assets, net

            (1,732)



            6,138



            1,998



            10,055


            Loss (Gain) on pension and retiree medical plan changes





            (34,621)



            3,819


            Deferred income taxes

            83,600



            (14,173)



            52,592



            (7,374)


            Changes in assets and liabilities, excluding the effects of businesses acquired:








            Receivables and contract assets

            (149,885)



            (144,474)



            (402,616)



            (316,386)


            Prepaid expenses and other current assets

            (41,734)



            7,981



            5,999



            5,620


            Accounts payable

            74,532



            120,741



            67,778



            138,713


            Accrued liabilities

            (103,416)



            28,708



            (161,179)



            8,083


            Contract liabilities

            361,881



            1,096



            419,762



            34,695


            ?Other deferred liabilities

            (80,707)



            (3,587)



            (129,468)



            (21,007)


            ????? Other, net

            11,228



            4,901



            (19,439)



            7,967


            ????????? Net cash (used for) provided by operating activities

            (165,081)



            214,746



            (220,313)



            268,950


            Cash Flows from Investing Activities:








            Additions to property and equipment

            (45,190)



            (18,563)



            (106,670)



            (63,408)


            Disposals of property and equipment and other assets

            60





            7,300



            428


            Distributions of capital from (contributions to) equity investees



            15,310



            (3,904)



            7,614


            Acquisitions of businesses, net of cash acquired

            (575,110)



            (3,729)



            (575,110)



            (1,488,546)


            Disposals of investment in equity securities

            64,708





            64,708




            Proceeds (payments) related to sales of businesses

            2,796,734





            2,796,734



            3,403


            Purchases of noncontrolling interests





            (1,113)




            ?????????? Net cash provided by (used for) investing activities

            2,241,202



            (6,982)



            2,181,945



            (1,540,509)


            Cash Flows from Financing Activities:








            Net (payments) proceeds from borrowings

            (1,895,959)



            (159,814)



            (1,200,388)



            1,402,387


            Debt issuance costs





            (3,741)




            Proceeds from issuances of common stock

            20,198



            6,952



            46,143



            33,588


            Common stock repurchases

            (36,183)



            (31)



            (524,618)



            (2,982)


            Taxes paid on vested restricted stock

            (5,870)



            (10,835)



            (26,187)



            (27,975)


            Cash dividends, including to noncontrolling interests

            (25,867)



            (20,999)



            (82,257)



            (65,232)


            Net cash provided by (used for) financing activities

            (1,943,681)



            (184,727)



            (1,791,048)



            1,339,786


            Effect of Exchange Rate Changes

            15,164



            (34,082)



            34,300



            (18,008)


            Net Increase (decrease) in Cash and Cash Equivalents

            147,604



            (11,045)



            204,884



            50,219


            Cash and Cash Equivalents at the Beginning of the Period

            850,638



            835,415



            793,358



            774,151


            Cash and Cash Equivalents at the End of the Period

            998,242



            824,370



            998,242



            824,370


            Less Cash and Cash Equivalents included in Assets held for Sale



            (161,666)





            (161,666)


            Cash and Cash Equivalents of Continuing Operations at the End of the Period

            $

            998,242



            $

            662,704



            $

            998,242



            $

            662,704


            ?

            Backlog (in millions):



            June?28, 2019


            June?29, 2018

            Aerospace, Technology and Nuclear

            $

            8,456



            $

            7,147


            Buildings, Infrastructure and Advanced Facilities

            14,011



            12,693


            ??????????? Total

            $

            22,467



            $

            19,840


            Non-GAAP Financial Measures:

            In this press release, the Company has included certain non-GAAP financial measures as defined in Regulation G promulgated under the Securities Exchange Act of 1934, as amended. The non-GAAP financial measures included in this press release are net revenue, adjusted net earnings from continuing operations, adjusted EPS from continuing operations and adjusted EBITDA.

            Adjusted net earnings from continuing operations and adjusted EPS from continuing operations are non-GAAP financial measures that are calculated by (i) excluding the costs related to the 2015 restructuring activities, which included involuntary terminations, the abandonment of certain leased offices, combining operational organizations and the co-location of employees into other existing offices; and charges associated with our Europe, U.K. and Middle East region, which included write-offs on contract accounts receivable and charges for statutory redundancy and severance costs (collectively, the "2015 Restructuring and other items"); (ii) excluding costs and other charges associated with restructuring activities implemented in connection with the CH2M acquisition, the ECR divestiture, the KeyW acquisition and other related cost reduction initiatives, which included involuntary terminations, costs associated with co-locating Jacobs and KeyW and CH2M offices, separating physical locations of ECR and continuing operations, costs and expenses of the Integration Management Office and Separation Management Office, including professional services and personnel costs, costs and charges associated with the divestiture of joint venture interests to resolve potential conflicts arising from the CH2M acquisition, expenses relating to certain commitments and contingencies relating to discontinued operations of the CH2M business, and similar costs and expenses (collectively referred to as the "Restructuring and other charges"); (iii) excluding transaction costs and other charges incurred in connection with closing of the KeyW and CH2M acquisitions and sale of the ECR business, including advisor fees, change in control payments, costs and expenses relating to the registration and listing of Jacobs stock issued in connection with the CH2M acquisition, and similar transaction costs and expenses (collectively referred to as "transaction costs"); (iv) excluding charges resulting from the revaluation of certain deferred tax assets/liabilities in connection with U.S. tax reform; (v) adding back depreciation and amortization relating to the ECR business of the Company that was ceased as a result of the application of held-for-sale accounting; (vi) adding back amortization of intangible assets; (vii) allocating to discontinued operations estimated stranded corporate costs that will be reimbursed or otherwise eliminated in connection with the sale of the ECR business; (viii) allocating to discontinued operations estimated interest expense relating to long-term debt that was paid down with the proceeds of the ECR sale; (ix) the reclassification of revenue under the Company's transition services agreement (TSA) included in other income for U.S. GAAP reporting purposes to SG&A and the exclusion of remaining unreimbursed costs associated with the TSA; (x) the exclusion of a one-time favorable adjustment in the fiscal 2019 period associated with a reduction of deferred income taxes for permanently reinvested earnings from non-U.S. subsidiaries in connection with the sale of the ECR business; and (xi) other income tax adjustments. Adjustments to derive adjusted net earnings from continuing operations and adjusted EPS from continuing operations are calculated on an after-tax basis. Adjusted EBITDA is calculated by adding depreciation expense to adjusted operating profit from continuing operations. Net revenue is calculated by excluding pass-through revenues of the BIAF line of business.? We believe that net revenue, adjusted net earnings from continuing operations, adjusted EPS from continuing operations and adjusted EBITDA are useful to management, investors and other users of our financial information in evaluating the Company's operating results and understanding the Company's operating trends by excluding or adding back the effects of the items described above, the inclusion or exclusion of which can obscure underlying trends. Additionally, management uses net revenue, adjusted net earnings from continuing operations, adjusted EPS from continuing operations and adjusted EBITDA in its own evaluation of the Company's performance, particularly when comparing performance to past periods, and believes these measures are useful for investors because they facilitate a comparison of our financial results from period to period.

            The Company provides non-GAAP measures to supplement U.S. GAAP measures, as they provide additional insight into the Company's financial results. However, non-GAAP measures have limitations as analytical tools and should not be considered in isolation and are not in accordance with, or a substitute for, U.S. GAAP measures. In addition, other companies may define non-GAAP measures differently, which limits the ability of investors to compare non-GAAP measures of the Company to those used by our peer companies.

            The following tables reconcile the components and values of U.S. GAAP revenue, net earnings from continuing operations, EPS from continuing operations to the corresponding "adjusted" amounts. For the comparable periods presented below, such adjustments consist of amounts incurred in connection with the items described above. Amounts are shown in thousands, except for per-share data (note: earnings per share amounts may not add across due to rounding). Reconciliation of the adjusted EPS and adjusted EBITDA outlook for the full fiscal year to the most directly comparable GAAP measure is not available without unreasonable efforts because the Company cannot predict with sufficient certainty all the components required to provide such reconciliation.

            U.S. GAAP Reconciliation for the third quarter of fiscal 2019 and 2018



            Three Months Ended


            June?28, 2019

            Unaudited

            U.S. GAAP


            Effects of
            Restructuring
            and Other
            Charges


            Effects of
            Transaction
            Costs (1)


            Other
            Adjustments
            (2)


            Adjusted

            Revenues

            $

            3,169,622



            $



            $



            $



            $

            3,169,622


            Pass through revenue







            (533,935)



            (533,935)


            Net revenue

            3,169,622







            (533,935)



            2,635,687


            Direct cost of contracts

            (2,543,488)



            2,481





            533,935



            (2,007,072)


            Gross profit

            626,134



            2,481







            628,615


            Selling, general and administrative expenses

            (536,180)



            89,926



            12,738



            37,714



            (395,802)


            Operating Profit

            89,954



            92,407



            12,738



            37,714



            232,813


            Total other (expense) income, net

            3,445



            831



            515



            (8,362)



            (3,571)


            Earnings from Continuing Operations Before Taxes

            93,399



            93,238



            13,253



            29,352



            229,242


            Income Tax Benefit (Expense) for Continuing Operations

            1,981



            (22,924)



            (3,259)



            (5,823)



            (30,025)


            Net Earnings of the Group from Continuing Operations

            95,380



            70,314



            9,994



            23,529



            199,217


            Net Earnings Attributable to Noncontrolling Interests from Continuing Operations

            (6,015)









            (6,015)


            Net Earnings from Continuing Operations attributable to Jacobs

            89,365



            70,314



            9,994



            23,529



            193,202


            Net Earnings Attributable to Discontinued Operations

            435,077



            2,058



            2,447



            (7,823)



            431,759


            Net earnings attributable to Jacobs

            $

            524,442



            $

            72,372



            $

            12,441



            $

            15,706



            $

            624,961


            Diluted Net Earnings from Continuing Operations Per Share

            $

            0.65



            $

            0.51



            $

            0.07



            $

            0.17



            $

            1.40


            Diluted Net Earnings from Discontinued Operations Per Share

            $

            3.15



            $

            0.01



            $

            0.02



            $

            (0.06)



            $

            3.13


            Diluted Earnings Per Share

            $

            3.80



            $

            0.52



            $

            0.09



            $

            0.11



            $

            4.53


            Operating profit margin

            2.84

            %








            8.83

            %


            (1) Includes after-tax CH2M transaction costs and adjustments of $0.4 million, after-tax transaction costs associated with the sale of our ECR line of business of $2.4 million and after-tax transaction costs associated with the acquisition of KeyW of $9.6 million.


            (2) Includes (a) the removal of pass through revenues and costs for the BIAF line of business for the calculation of operating profit margin as a percentage of net revenue of $533.9 million, (b) the removal of amortization of intangible assets of $18.4 million, (c) the allocation to discontinued operations of estimated stranded corporate costs of $2.0 million for the month of April prior to the sale that will be reimbursed under the ECR transition services agreement (TSA) with Worley Parsons or otherwise eliminated from the ongoing operations in connection with the sale of the ECR business, (d) the allocation to discontinued operations of estimated interest expense for the month of April prior to the sale related to long-term debt that has been paid down as a result of the ECR sale of $5.8 million, (e) the add-back of depreciation relating to the ECR business that was ceased as a result of the application of held-for-sale accounting of $2.6 million, (f) the reclassification of revenues under the Company's TSA of $14.1 million included in other income for U.S. GAAP reporting purposes to SG&A and the exclusion of $3.2 million in remaining unreimbursed costs associated with this agreement, (g) other income tax adjustments of $1.5 million and (h) associated income tax expense adjustments for all the above pre-tax adjustment items.

            ?


            Three Months Ended


            June?29, 2018

            Unaudited

            U.S. GAAP


            Effects of
            Restructuring
            and Other
            Charges


            Effects of
            CH2M
            Transaction
            Costs


            Other
            ?Adjustments
            (1)


            Adjusted

            Revenues

            $

            2,933,623



            $



            $



            $



            $

            2,933,623


            Pass through revenue







            (583,423)



            (583,423)


            Net revenue

            2,933,623







            (583,423)



            2,350,200


            Direct cost of contracts

            (2,325,028)



            2,576





            583,423



            (1,739,029)


            Gross profit

            608,595



            2,576







            611,171


            Selling, general and administrative expenses

            (446,083)



            27,967



            4,422



            25,699



            (387,995)


            Operating Profit

            162,512



            30,543



            4,422



            25,699



            223,176


            Total other (expense) income, net

            (15,879)



            (466)



            933



            16,069



            657


            Earnings from Continuing Operations Before Taxes

            146,633



            30,077



            5,355



            41,768



            223,833


            Income Tax Benefit (Expense) for Continuing Operations

            (31,174)



            (7,433)



            (1,483)



            (3,478)



            (43,568)


            Net Earnings of the Group from Continuing Operations

            115,459



            22,644



            3,872



            38,290



            180,265


            Net Earnings Attributable to Noncontrolling Interests from Continuing Operations

            (2,123)



            (577)







            (2,700)


            Net Earnings from Continuing Operations attributable to Jacobs

            113,336



            22,067



            3,872



            38,290



            177,565


            Net Earnings Attributable to Discontinued Operations

            36,886



            12,683





            (14,800)



            34,769


            Net earnings attributable to Jacobs

            $

            150,222



            $

            34,750



            $

            3,872



            $

            23,490



            $

            212,334


            Diluted Net Earnings from Continuing Operations Per Share

            $

            0.79



            $

            0.15



            $

            0.03



            $

            0.27



            $

            1.24


            Diluted Net Earnings from Discontinued Operations Per Share

            $

            0.26



            $

            0.09



            $



            $

            (0.10)



            $

            0.24


            Diluted Earnings Per Share

            $

            1.05



            $

            0.24



            $

            0.03



            $

            0.16



            $

            1.48


            Operating profit margin

            5.54

            %








            9.50

            %


            (1) Includes (a) the removal of pass through revenues and costs for the BIAF line of business for the calculation of operating profit margin as a percentage of net revenue of $583.4 million, (b) the removal of amortization of intangible assets of $22.4 million, (c) the allocation to discontinued operations of estimated stranded corporate costs of $6.4 million that would have been reimbursed under the ECR transition services agreement (TSA) with Worley Parsons or otherwise eliminated from the ongoing operations in connection with the sale of the ECR business, (d) estimated 2018 impacts of $19.2 million from overhead allocation realignments in connection with the Company's CH2M business in the first quarter of fiscal 2019 had those changes been put into effect in first quarter of fiscal 2018 (the net impact of which was zero for consolidated selling, general and administrative expenses), (e) the allocation to discontinued operations of estimated interest expense for the full period related to long-term debt that has been paid down as a result of the ECR sale of $16.1 million, (f) the add-back of charges resulting from the revaluation of certain deferred tax assets/liabilities in connection with U.S. tax reform of $5.3 million and (g) associated income tax expense adjustments for all the above pre-tax adjustment items.

            ?


            Nine Months Ended


            June?28, 2019

            Unaudited

            U.S. GAAP


            Effects of
            Restructuring
            and Other
            Charges


            Effects of
            Transaction
            Costs (1)


            Other
            Adjustments
            (2)


            Adjusted

            Revenues

            $

            9,345,005



            $



            $



            $



            $

            9,345,005


            Pass through revenue







            (1,840,572)



            (1,840,572)


            Net revenue

            9,345,005







            (1,840,572)



            7,504,433


            Direct cost of contracts

            (7,533,511)



            1,969





            1,840,572



            (5,690,970)


            Gross profit

            1,811,494



            1,969







            1,813,463


            Selling, general and administrative expenses

            (1,505,731)



            231,610



            12,738



            87,863



            (1,173,520)


            Operating Profit

            305,763



            233,579



            12,738



            87,863



            639,943


            Total other (expense) income, net

            (8,344)



            (28,460)



            1,544



            28,109



            (7,151)


            Earnings from Continuing Operations Before Taxes

            297,419



            205,119



            14,282



            115,972



            632,792


            Income Tax Expense for Continuing Operations

            (12,829)



            (44,443)



            (3,509)



            (53,782)



            (114,563)


            Net Earnings of the Group from Continuing Operations

            284,590



            160,676



            10,773



            62,190



            518,229


            Net (Earnings) Loss Attributable to Noncontrolling Interests from Continuing Operations

            (15,578)









            (15,578)


            Net Earnings from Continuing Operations attributable to Jacobs

            269,012



            160,676



            10,773



            62,190



            502,651


            Net Earnings Attributable to Discontinued Operations

            436,642



            (587)



            8,948



            (55,622)



            389,381


            Net earnings attributable to Jacobs

            $

            705,654



            $

            160,089



            $

            19,721



            $

            6,568



            $

            892,032


            Diluted Net Earnings from Continuing Operations Per Share

            $

            1.92



            $

            1.14



            $

            0.08



            $

            0.44



            $

            3.58


            Diluted Net Earnings from Discontinued Operations Per Share

            $

            3.11



            $



            $

            0.06



            $

            (0.40)



            $

            2.77


            Diluted Earnings Per Share

            $

            5.02



            $

            1.14



            $

            0.14



            $

            0.05



            $

            6.35


            Operating profit margin

            3.27

            %








            8.53

            %


            (1) Includes after-tax CH2M transaction costs and adjustments of $1.2 million, after-tax transaction costs associated with the sale of our ECR line of business of $8.9 million and after-tax transaction costs associated with the acquisition of KeyW of $9.6 million.


            (2) Includes (a) the removal of pass through revenues and costs for the BIAF line of business for the calculation of operating profit margin as a percentage of net revenue of $1.84 billion, (b) the removal of amortization of intangible assets of $55.7 million, (c) the allocation to discontinued operations of estimated stranded corporate costs of $14.8 million for the month of April prior to the sale that will be reimbursed under the ECR? transition services agreement (TSA) with Worley Parsons or otherwise eliminated from the ongoing operations in connection with the sale of the ECR business, (d) the allocation to discontinued operations of estimated interest expense for the month of April prior to the sale related to long-term debt that has been paid down as a result of the ECR sale of $42.3 million, (e) the exclusion of approximately $37.0 million in one-time favorable income tax adjustment from the second quarter associated with reduction of deferred income taxes for permanently reinvested earnings from non-U.S. subsidiaries in connection with the sale of the ECR business, (f) the add-back of charges resulting from the revaluation of certain deferred tax assets/liabilities in connection with U.S. tax reform from the first quarter of $11.0 million and other adjustments of $1.5 million,? (g) the add-back of depreciation relating to the ECR business that was ceased as a result of the application of held-for-sale accounting of $17.3 million, (h) the reclassification of revenues under the Company's TSA of $14.1 million included in other income for U.S. GAAP reporting purposes to SG&A and the exclusion of $3.2 million in remaining unreimbursed costs associated with this agreement and (i) associated income tax expense adjustments for all the above pre-tax adjustment items.

            ?


            Nine Months Ended


            June?29, 2018

            Unaudited

            U.S. GAAP


            Effects of
            Restructuring
            and Other
            Charges


            Effects of
            CH2M
            Transaction
            Costs


            Other
            Adjustments
            (1)


            Adjusted

            Revenues

            $

            7,587,916



            $



            $



            $



            $

            7,587,916


            Pass through revenue







            (1,603,930)



            (1,603,930)


            Net revenue

            7,587,916







            (1,603,930)



            5,983,986


            Direct cost of contracts

            (6,035,598)



            2,576





            1,603,930



            (4,429,092)


            Gross profit

            1,552,318



            2,576







            1,554,894


            Selling, general and administrative expenses

            (1,325,722)



            120,168



            76,915



            68,252



            (1,060,387)


            Operating Profit

            226,596



            122,744



            76,915



            68,252



            494,507


            Total other (expense) income, net

            (38,016)





            1,189



            33,205



            (3,622)


            Earnings from Continuing Operations Before Taxes

            188,580



            122,744



            78,104



            101,457



            490,885


            Income Tax Expense for Continuing Operations

            (110,230)



            (31,352)



            (19,363)



            51,210



            (109,735)


            Net Earnings of the Group from Continuing Operations

            78,350



            91,392



            58,741



            152,667



            381,150


            Net (Earnings) Loss Attributable to Noncontrolling Interests from Continuing Operations

            (5,539)



            (577)







            (6,116)


            Net Earnings from Continuing Operations attributable to Jacobs

            72,811



            90,815



            58,741



            152,667



            375,034


            Net Earnings Attributable to Discontinued Operations

            128,161



            9,794





            (32,607)



            105,348


            Net earnings attributable to Jacobs

            $

            200,972



            $

            100,609



            $

            58,741



            $

            120,060



            $

            480,382


            Diluted Net Earnings from Continuing Operations Per Share

            $

            0.53



            $

            0.66



            $

            0.43



            $

            1.11



            $

            2.72


            Diluted Net Earnings from Discontinued Operations Per Share

            $

            0.93



            $

            0.07



            $



            $

            (0.24)



            $

            0.76


            Diluted Earnings Per Share

            $

            1.46



            $

            0.73



            $

            0.43



            $

            0.87



            $

            3.49


            Operating profit margin

            2.99

            %








            8.26

            %


            (1) Includes (a) the removal of pass through revenues and costs for the BIAF line of business for the calculation of operating profit margin as a percentage of net revenue of $1.60 billion; (b) the removal of amortization of intangible assets of $58.5 million, (c) the allocation to discontinued operations of estimated stranded corporate costs of $19.2 million that would have been reimbursed under the ECR? transition services agreement (TSA) with Worley Parsons or otherwise eliminated from the ongoing operations in connection with the sale of the ECR business, (d) estimated 2018 impacts of $51.2 million from overhead allocation realignments in connection with the Company's CH2M business in the first quarter of fiscal 2019 had those changes been put into effect in first quarter of fiscal 2018 (the net impact of which was zero for consolidated selling, general and administrative expenses), (e) the allocation to discontinued operations of estimated interest expense for the full period related to long-term debt that has been paid down as a result of the ECR sale of $33.2 million, (f) the add-back of charges resulting from the revaluation of certain deferred tax assets/liabilities in connection with U.S. tax reform of $74.7 million and (g) associated income tax expense adjustments for all the above pre-tax adjustment items.

            ?

            Earnings Per Share:



            Three Months Ended


            Nine Months Ended

            Unaudited

            June?28, 2019


            June?29, 2018


            June?28, 2019


            June?29, 2018

            Numerator for Basic and Diluted EPS:








            Net earnings (loss) attributable to Jacobs from continuing operations

            $

            89,365



            $

            113,336



            $

            269,012



            $

            72,811


            Net earnings (loss) from continuing operations allocated to participating securities

            (105)



            (475)



            (444)



            (325)


            Net earnings (loss) from continuing operations allocated to common stock for EPS calculation

            $

            89,260



            $

            112,861



            $

            268,568



            $

            72,486










            Net earnings (loss) attributable to Jacobs from discontinued operations

            $

            435,077



            $

            36,886



            436,642



            128,161


            Net earnings (loss) from discontinued operations allocated to participating securities

            (513)



            (155)



            (720)



            (573)


            Net earnings (loss) from discontinued operations allocated to common stock for EPS calculation

            $

            434,564



            $

            36,731



            $

            435,922



            $

            127,588










            Net earnings allocated to common stock for EPS calculation

            $

            523,824



            $

            149,592



            $

            704,490



            $

            200,074










            Denominator for Basic and Diluted EPS:








            Weighted average basic shares

            136,772



            142,612



            139,263



            136,717


            Shares allocated to participating securities

            (161)



            (597)



            (230)



            (743)


            Shares used for calculating basic EPS attributable to common stock

            136,611



            142,015



            139,033



            135,974










            Effect of dilutive securities:








            Stock compensation plans

            1,212



            1,014



            1,206



            1,028


            Shares used for calculating diluted EPS attributable to common stock

            137,823



            143,029



            140,239



            137,002










            Net Earnings Per Share:








            Basic Net Earnings from Continuing Operations Per Share

            $

            0.65



            $

            0.79



            $

            1.93



            $

            0.53


            Basic Net Earnings from Discontinued Operations Per Share

            $

            3.18



            $

            0.26



            $

            3.14



            $

            0.94


            Basic EPS

            $

            3.83



            $

            1.05



            $

            5.07



            $

            1.47


            Diluted Net Earnings from Continuing Operations Per Share

            $

            0.65



            $

            0.79



            $

            1.92



            $

            0.53


            Diluted Net Earnings from Discontinued Operations Per Share

            $

            3.15



            $

            0.26



            $

            3.11



            $

            0.93


            Diluted EPS

            $

            3.80



            $

            1.05



            $

            5.02



            $

            1.46


            For additional information contact:

            Investors:
            Jonathan Doros, 214-583-8596
            jonathan.doros@jacobs.com

            Media:
            Marietta Hannigan, 214-920-8035
            marietta.hannigan@jacobs.com

            Jacobs Logo (PRNewsfoto/Jacobs Engineering Group Inc.)

            ?

            Cision View original content to download multimedia:http://www.prnewswire.com/news-releases/jacobs-reports-earnings-for-the-third-quarter-of-fiscal-2019-300896088.html

            SOURCE Jacobs

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