Jacobs Reports Fiscal Fourth Quarter and Fiscal Year 2021 Earnings

Achieved Double-Digit Growth in Fiscal Year 2021 Backlog, Operating Profit and EPS

Exceeded Cash Flow from Operations and Free Cash Flow Expectations

Expect Double-Digit Adj. EBITDA and Adj. EPS Growth in Fiscal Year 2022 and Beyond³

Awarded Engineering of Semiconductor Fabs to Manufacture Intel's Most Advanced Process Technologies

Closed BlackLynx Acquisition, a Leader in Edge Computing and Hybrid Cloud Infrastructure

DALLAS, Nov. 23, 2021 /PRNewswire/ -- Jacobs Engineering Group Inc. (NYSE: J) today announced its financial results for the fiscal fourth quarter and fiscal year ended October 1, 2021.

Q4 2021 Financial Highlights:

• Revenue of $3.6 billion grew 1.9% year-over-year; pro forma net revenue¹ up 6% year-over-year

• Net earnings was $45 million, down 36%, and EPS from continuing operations was $0.34, down 36%, mainly impacted by $(0.45) of discrete tax items and $(0.42) from sale of Worley shares

• Adjusted EPS from continuing operations of $1.58, down 3% year-over-year driven by a lower year ago tax rate impact of $0.17

• Adjusted EBITDA was $310 million, up 12% year-over-year

• Cash flow from operations of $203 million and free cash flow of $176 million, driven by strong DSO performance

• Backlog increased $2.8 billion to $26.6 billion, up 12% year-over-year

Fiscal Year 2021 Highlights:

• Revenue growth of 3.9% and pro forma net revenue growth¹ up 3% year-over-year

• Net earnings from continuing operations of $467 million, up 32%, and FY21 EPS of $3.12 up 17%; includes previously disclosed PA Consulting² and tax items

• Adjusted EPS of $6.29, up 15% year-over-year

• Adjusted EBITDA year-over-year growth of 18% to $1,244 million

• Cash flow from operations of $726 million and free cash flow of $633 million, representing strong cash conversion and exceeding expectations

Jacobs' Chair and CEO Steve Demetriou commented, "Fiscal 2021 results represent another year of achieving the cultural, strategic and financial targets we communicated to our key stakeholders. Looking forward, our deep domain knowledge and cutting-edge digital solutions uniquely position us to capitalize on emerging transformational opportunities within global infrastructure modernization, climate response and industry digitization. Our brand promise of 'Challenging today. Reinventing tomorrow.' is critical to executing our new strategy, driving the next generation of digital transformation for our clients, and growth for our people and shareholders."

Jacobs' President and CFO Kevin Berryman added, "We achieved the high end of our fiscal 2021 outlook while continuing to invest ahead of multi-year secular growth opportunities. The combination of enhancing our portfolio to higher growth, higher margin solutions, while maintaining operational excellence, drove double-digit earnings growth and cash flow that exceeded expectations. Our Focus 2023 initiative is executing well and unlocking further capacity to invest in our growth accelerators. Looking into fiscal 2022 and beyond we expect double-digit adjusted EBITDA and adjusted EPS growth³ with continued strong cash flow conversion and value-creating capital deployment."

Financial Outlook³

The company expects fiscal 2022 adjusted EBITDA of $1,370 million to $1,450 million and adjusted EPS of $6.85 to $7.45.

The company expects adjusted EPS of approximately $10.00 in fiscal 2025, which incorporates anticipated benefits to People and Places Solutions from the recently passed Infrastructure Investment and Jobs Act, executing against a robust Critical Mission Solutions sales pipeline, continued growth in PA Consulting, and assumes a 23.5% effective adjusted tax rate, modest capital deployment and net leverage of <0.5x adjusted EBITDA.

²PA Consulting

The company closed its strategic investment in PA Consulting on March 2, 2021. Per U.S. GAAP, $261 million (pre-tax and before non-controlling interest portion) of the estimated aggregate consideration for PA Consulting was required to be treated as post-completion compensation expense in fiscal 2021 given retention related requirements applicable to the distribution of such funds to PA Consulting employees. This $261 million impact relative to the announced investment consideration was reflected in US GAAP SG&A and cash flows from operations and excluded from adjusted results. The total consideration for PA Consulting remained consistent at 1.4 billion pounds.

Additionally, the fiscal year-end earnings per share reflect $(57.3) million, or $(0.44) per share, related to an updated non-cash valuation allocation related to PA Consulting equity, with no impact to the original consideration.

See Annual Report on Form 10-K for discussion of accounting implications of the PA Consulting transaction.

Fourth Quarter Review

The Company's adjusted net earnings from continuing operations and adjusted EPS from continuing operations for the fourth quarter of fiscal 2021 and fiscal 2020 exclude the adjustments 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, as well as a reconciliation of net revenue and pro forma net revenue to revenue, refer to the section entitled "Non-GAAP Financial Measures" at the end of this release.

The Company's U.S. GAAP effective tax rate for continuing operations is 58% for the fiscal fourth quarter 2021 and fiscal fourth quarter 2021 adjusted earnings per share from continuing operations reflects a 20% adjusted effective tax rate.

Fiscal 2021 Review

The Company's adjusted net earnings and adjusted EPS for fiscal 2021 and fiscal 2020 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, as well as a reconciliation of net revenue and pro forma net revenue to revenue, refer to the section entitled "Non-GAAP Financial Measures" at the end of this release.

The Company's U.S. GAAP effective tax rate for continuing operations is 40% for the fiscal year 2021 and includes a $29.1 million impact from the increase in UK statutory income tax rates during the year. Fiscal year 2021 adjusted earnings per share from continuing operations reflects a 24% adjusted effective tax rate, excluding favorable discrete tax impacts of $22.4 million, or $0.17 per share.

Jacobs is hosting a conference call at 10:00 A.M. ET on Tuesday November 23, 2021, which will be webcast live at www.jacobs.com.

About Jacobs

At Jacobs, we're challenging today to reinvent tomorrow by solving the world's most critical problems for thriving cities, resilient environments, mission-critical outcomes, operational advancement, scientific discovery and cutting-edge manufacturing, turning abstract ideas into realities that transform the world for good. With approximately $14 billion in annual revenue and a talent force of approximately 55,000, Jacobs provides a full spectrum of professional services including consulting, technical, scientific and project delivery for the government and private sectors. Visit jacobs.com and connect with Jacobs on 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. Examples of forward-looking statements include, but are not limited to, statements regarding our expectations as to our future growth, prospects, financial outlook and business strategy for fiscal 2022 or future fiscal years, including fiscal 2025 adjusted EPS expectations, and statements regarding our expectations from our PA Consulting investment and the anticipated benefits of that strategic investment, which are based, in part, on estimates and assumptions regarding the potential continued effects of the COVID-19 pandemic on our business, financial condition and results of operations. 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. Such factors include the magnitude, timing, duration and ultimate impact of the COVID-19 pandemic, including the emergence and spread of variants of COVID-19, and any resulting economic downturn on our results, prospects and opportunities, the timeline for easing or removing "shelter-in-place", "stay-at-home", social distancing, travel restrictions and similar orders, measures or restrictions imposed by governments and health officials in response to the pandemic, or if such orders, measures or restrictions are re-imposed after being lifted or eased, including as a result of increases in cases of COVID-19; the development, effectiveness and distribution of vaccines or treatments for COVID-19; the timing and scope of any government stimulus programs enacted in response to the impacts of the COVID-19 pandemic, including, but not limited to, any additional infrastructure-related stimulus programs, and the timing of the award of projects and funding under the Infrastructure Investment and Jobs Act signed into law by President Biden on November 15, 2021; and the impact of such matters includes, but is not limited to, the possible reduction in demand for certain of our services and the delay or abandonment of ongoing or anticipated projects due to the financial condition of our clients and suppliers or to governmental budget constraints or changes to governmental budgetary priorities; the inability of our clients to meet their payment obligations in a timely manner or at all; potential issues and risks related to a significant portion of our employees working remotely; illness, travel restrictions and other workforce disruptions that have and could continue to negatively affect our supply chain and our ability to timely and satisfactorily complete our clients' projects; difficulties associated with hiring of additional employees; and the inability of governments in certain of the countries in which we operate to effectively mitigate the financial or other impacts of the COVID-19 pandemic on their economies and workforces and our operations therein. The foregoing factors and potential future developments are inherently uncertain, unpredictable and, in many cases, beyond our control. For a description of these and 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 October 1, 2021, and in particular the discussions contained therein 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.

Financial Highlights:

Includes $19.5 million, net, in charges related to a legal settlement for the three-month period and year ended October 1, 2021.

(2)

Other corporate expenses includes intangibles amortization of $46.5 million and $23.5 million for the three-month periods ended October 1, 2021 and October 2, 2020, respectively, and $149.8 million and $90.6 million for the years ended October 1, 2021 and October 2, 2020, respectively.

(3)

Included in the three-month period and year ended October 1, 2021 are $0.4 million and $297.8 million of costs incurred in connection with the investment in PA Consulting, in part classified as compensation costs.

(4)

Other income and expense includes $(67.5) million and $44.5 million in fair value gains and (losses) related to our investment in Worley stock (net of Worley stock dividends) (sold in the fourth fiscal quarter) and certain foreign currency revaluations relating to ECR sale proceeds for the three-month periods ended October 1, 2021 and October 2, 2020, respectively, and $34.7 million and $(74.5) million for the years ended October 1, 2021 and October 2, 2020, respectively; and revenues under the Company's TSA with Worley of $— million and $0.1 million for the three-month periods ended October 1, 2021 and October 2, 2020, respectively, and $0.2 million and $15.8 million and for the years ended October 1, 2021 and October 2, 2020, respectively. The year ended October 1, 2021 includes $38.6 million related to impairment of our AWE Management Ltd. investment and $49.6 million in fair value adjustments related to our investment in C3 stock.