DALLAS, Nov. 20, 2018 /PRNewswire/ -- Jacobs (NYSE:JEC) today announced its financial results for the fiscal fourth quarter and fiscal year ended September 28, 2018.
- Q4 2018 revenue of $4.1 billion grew 56% year-over-year, up 7% on a pro forma basis
- Q4 2018 operating profit margin and adjusted operating
- Q4 2018 EPS of $(0.16) and fiscal 2018 EPS of $1.28, impacted by tax reform and CH2M acquisition related charges
- Q4 2018 adjusted EPS of $1.31 up 34% year-over-year, fiscal 2018 adjusted EPS of $4.47 up 38%
- Q4 gross debt declined a further $194 million versus Q3, reducing gross debt to adjusted EBITDA to 1.7x
- Portfolio transformation accelerated with announced $3.3 billion sale of Energy, Chemicals and Resources business
- Fiscal 2019 expectation reaffirmed for $920 million to $1 billion of adjusted EBITDA1, excluding ECR results
"This was an exciting year at Jacobs. We accelerated our profitable growth strategy with the acquisition of CH2M and continued to transform the portfolio with the announced sale of our ECR business, all while delivering strong financial results across each segment," said Jacobs' Chair and CEO, Steve Demetriou. "We continued our relentless focus on a culture of accountability, strong operational execution and profitable growth. Our emphasis on driving performance excellence resulted in fiscal 2018 pro forma revenue growth of over 9% and adjusted operating profit margin of 6.0% - achieving our 2019 strategic profit margin objective one year early. Looking forward, our active portfolio management has positioned the company to deliver higher-value sustainable and digitally-enabled solutions for our infrastructure and government clients worldwide."
The company further reduced gross debt by nearly $200 million during the quarter to $2.2 billion, which resulted in a gross debt leverage ratio of 1.7x adjusted EBITDA, well in line with its communicated target of under 2x. On a pro forma basis which adjusts for the sale of ECR, the company's net cash would be $1.2 billion with gross debt to adjusted EBITDA of 0.5x.
Jacobs' CFO, Kevin Berryman, added, "Our fourth quarter and fiscal 2018 results showed continued disciplined execution against our strategy on growing in higher margin less cyclical markets. We delivered strong revenue growth and gross and operating profit margin percentage increases over 130 basis points in the quarter. Our fourth quarter adjusted cash flow from operations continued to be healthy at over $250 million, when excluding a $50 million voluntary pension payment." Berryman also confirmed the company's fiscal 2019 outlook. "Following our strong performance in 2018, we continue to expect $920 million to $1 billion in adjusted EBITDA, excluding the ECR results for fiscal 2019."
The company's adjusted net earnings and adjusted EPS for the fourth quarter of fiscal 2018 and fiscal 2017 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.
Included within fiscal fourth quarter after-tax restructuring and other charges is a $21.0 million predominately non-cash loss on the sale of the Company's ownership interest in its Brazilian joint venture.
The fiscal fourth quarter 2018 effective tax rate was 25% excluding the U.S. tax reform adjustment mentioned above.
The company's adjusted net earnings and adjusted EPS for fiscal 2018 and fiscal 2017 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.
For fiscal year 2018, the effective tax rate was 23% excluding the U.S. tax reform adjustment mentioned above.
Jacobs is hosting a conference call at 10:00 A.M. ET on Tuesday November 20, 2018, which it is webcasting live at www.jacobs.com .
Energy, Chemicals and Resources (ECR) Sale to WorleyParsons
On October 21, 2018, WorleyParsons entered into a Stock and Asset Purchase Agreement to acquire the Jacobs' ECR business for a purchase price of $3.3 billion consisting of (i) $2.6 billion in cash plus (ii) ordinary shares of the Buyer equal to $700 million, subject to adjustments for changes in working capital and certain other items (the "Transaction"). The Transaction, which has been approved by the boards of directors of the company and WorleyParsons, is expected to close in the first half of calendar year 2019.
Jacobs leads the global professional services sector delivering solutions for a more connected, sustainable world. With $15 billion in fiscal 2018 revenue and a talent force of more than 80,000, 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.jacobs.com, and connect with Jacobs on LinkedIn, Twitter, Facebook and Instagram.
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 29, 2017 and our subsequent Quarterly Report on Form 10-Q for the first fiscal quarter of 2018, and when filed with the Securities and Exchange Commission (the "SEC"), 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, 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.
In the fourth quarter of 2018, the Company updated certain provisional amounts reflected in the preliminary purchase price allocation for the CH2M acquisition, including with respect to certain pre-acquisition legal matters. Accrued liabilities and other deferred liabilities in the preliminary purchase price allocation include approximately $385.3 million at September 28, 2018 for provisional estimates related to various CH2M legal and other pre-acquisition contingent liabilities accounted for under ASC 450.
Pro Forma Figures
In this press release, comparisons of current quarter results to the historical results of Jacobs and CH2M on a pro forma basis for fiscal year 2017 were calculated by using revenue and backlog of the combined Jacobs and CH2M entities as if the acquisition of CH2M had occurred prior to the historical period, as adjusted for (i) deconsolidation of CH2M's investment in Chalk River as if deconsolidated on October 1, 2016 and the exclusion of the revenue and operating results associated with CH2M's MOPAC project. We believe this information helps provide additional insight into the underlying trends of our business when comparing current performance against prior periods. Readers should consider this information together with a comparison to Jacobs' historical financial results as reported in Jacobs' filings with the SEC, which reflect Jacobs-only performance for periods prior to the closing of the CH2M acquisition on December 15, 2017, and CH2M's historical financial results as reported in CH2M's filings with the SEC.
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 adjusted net earnings, adjusted EPS, adjusted operating margin and adjusted EBITDA.
Adjusted net earnings, adjusted EPS and adjusted operating margin are non-GAAP financial measures that are calculated by excluding (i) 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) costs and other charges associated with restructuring activities implemented in connection with the CH2M acquisition, which include involuntary terminations, costs associated with co-locating Jacobs and CH2M offices, costs and expenses of the Integration 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, and similar costs and expenses (collectively referred to as the "CH2M Restructuring and other charges"); (iii) transaction costs and other charges incurred in connection with closing of the CH2M acquisition, including advisor fees, change in control payments, costs and expenses relating to the registration and listing of Jacobs stock issued in connection with the acquisition, and similar transaction costs and expenses (collectively referred to as "CH2M transaction costs"); (iv) charges resulting from the revaluation of certain deferred tax assets/liabilities in connection with U.S. tax reform and (v) transaction costs and expenses incurred in connection with the pending sale of the ECR business of the Company. Adjustments to derive adjusted net earnings and adjusted EPS are calculated on an after-tax basis. Adjusted EBITDA is calculated in accordance with the Company's existing credit facilities. We believe that adjusted net earnings, adjusted EPS, adjusted operating margin 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 the effects of the items described above, which can obscure underlying trends. Additionally, management uses adjusted net earnings, adjusted EPS, adjusted operating margin 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 net earnings, EPS and operating margin 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)
For additional information contact:
Jonathan Doros, 214-583-8596
Marietta Hannigan, 214-920-8035
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SOURCE Jacobs Engineering Group Inc.