Slide 1: Fiscal Year 2017 – 3rd Quarter Earnings Conference Call
Fiscal Year 2017 – 3rd Quarter Earnings Conference Call August 8, 2017 www.jacobs.com | worldwide
Slide 2: Forward-Looking Statement Disclaimer
Forward-Looking Statement Disclaimer Certain statements contained in this presentation 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 i
Slide 3: Additional Information and Where to Find It
Additional Information and Where to Find It In connection with the proposed acquisition of CH2M Hill Companies, Ltd. (“CH2M”) by Jacobs Engineering Group Inc. (the “Company”) pursuant to the terms of an Agreement and Plan of Merger by and among CH2M, the Company and Basketball Merger Sub Inc., a who
Slide 4: Agenda
Agenda • Business Review – CH2M Acquisition – Q3 Highlights – Line of Business Industries • Financials Review – Q3 Results – Investments – Capital Allocation • Summary & FY17 Outlook 4
Slide 5: CH2M Acquisition: Creating a Premier, Global Solutions Leader
CH2M Acquisition Jacobs + CH2M – Creating A Premier, Global Solutions Leader • A Compelling Strategic Fit That Delivers on Our Strategy Blueprint – Targets highest growth, highest margin industries – Builds on common cultures and shared values – Expected to achieve significant financial benefits • E
Slide 6: Jacobs + CH2M: $150 M of Cost Synergies
Jacobs + CH2M $150 M of Cost Synergies – Proven Capability to Deliver • Significant Due Diligence Conducted; Confirmed: – Exit of power EPC & transportation design-build – Risk mitigation steps implemented on remaining two projects – Transformation driving measurable improvement – Step-change in pro
Slide 7: FY17Q3 Highlights
FY17Q3 Highlights Improving Growth Momentum Supports 2018 Expectations • Sequential revenue improvement across all four LOB’s • Maintained strong gross margins • Steady operating profit • Positive EPS Momentum • Continued Strong Cash Flow Continuing to Execute Against Our 3-year Strategic Plan 7
Slide 8: Backlog
Backlog Highest Professional Services Backlog in 9 Quarters Field Services Backlog ($ B) Professional Services Backlog ($ B) 18.3 18.5 18.6 5.6 5.3 6.1 5.9 6.4 12.6 11.9 12.4 2.2 5.4 Aerospace & Technology Buildings & Infrastructure Petroleum & Chemicals Industrial Industrial & Chemicals Petroleum F
Slide 9: Aerospace & Technology
Aerospace & Technology Strong Execution Driving Continued Gross Margin Improvements • Sales Pipeline Remains Robust; Steady – Strategic wins supporting nuclear strategy – Continuing improvement in gross margin in backlog – Over $600 M in contract wins not yet backlogged due to protests – Specialty R
Slide 10: Buildings & Infrastructure
Buildings & Infrastructure Strong Sales Growth Across Key Sectors • Buildings – Steady – Investments in the US Federal, Healthcare and Education sectors present significant opportunities across the US – Large scale Design, Design-Build and PM/CM opportunities • Infrastructure – Strong – Major driver
Slide 11: Industrial
Industrial Strong Field Services Revenue Burn Pressuring Industrial Backlog • Life Sciences – Strong – Focus on mid-capital projects globally – Significant sustaining capital wins and geographic expansion • Mining, Minerals, and Specialty Chemicals – Recovering – Strong study prospects in Australia
Slide 12: Petroleum & Chemicals
Petroleum & Chemicals Sequential Backlog Improvement Supported by Downstream Awards • Upstream – Slight Uptick in Activity – Natural gas is gaining share in all sectors – FERC & EPA filing processes improving – Power generation to lead the switch from coal to natural gas – Increasing opportunities i
Slide 13: FY17Q3 Financial Metrics
FY17Q3 Financial Metrics Sequential Revenue Improvement Materialized • Revenues of $2.51 B; GAAP EPS of $0.74 (Adj. EPS1 of $0.79) • Gross Margin of 18.3%, Up 150 bps YoY • Backlog at $18.6 B, Up $100 M Sequentially and $234 M YoY • Book-to-Bill for TTM of 1.0 • SG&A Down 3% YoY • OP Margin of 5.1%
Slide 14: FY17Q3 Lines of Business Segment Financials
FY17Q3 Lines of Business Segment Financials Line of Business Operating Profit vs. FY16Q3 OP Margin vs. FY16Q3 Aerospace & Tech. $50.6 M -5.9% 8.6% (+59 bps) Buildings & Infra. $56.2 M +12.0% 8.7% (-38 bps) Industrial $32.3 M +13.7% 4.7% (+72 bps) Petroleum & Chem. $29.1 M -2.0% 4.8% (+97 bps) Non-al
Slide 15: Restructuring & Strategic Investments
Restructuring & Strategic Building A More Sustainable Investments Profitable Growth Strategy • 2015 Restructuring Program Substantially Complete – Program to date cost of $437 M – Annualized savings estimate of $285 M • Previously Announced FY17 Strategic Investments of $30 M – Q3 impact of approxim
Slide 16: Capital Allocation
Capital Allocation Delivering Enhanced Shareholder Value • CH2M Acquisition – $2.85 B equity value – 60% cash / 40% equity – Combination of existing cash and revolver capacity – New committed $1.2 B 3-year term loans • $500 M Share Buy-Back Authorization Over 3 Years – Repurchased 5.2 M shares to da
Slide 17: Summary: Our Transformative Journey Continues
Summary Our Transformative Journey Continues • Continued Stable FY17 Outlook Projected – Stable revenues & strong underlying operational performance – Adj. EPS guidance revised to $3.00 - $3.15 due to costs associated with our acquisition • Growth Prospects Building Optimism for 2018+ Momentum • Del
Slide 18: Thank You!
Thank You! © Copyright Jacobs August 8, 2017 www.jacobs.com | worldwide
Slide 19: Non-US GAAP Financial Measures
Non-US GAAP Financial Measures The following tables reconcile the U.S. GAAP values of net earnings, EPS, revenue, SG&A expenses, operating profit, gross margin, and gross profit, to the corresponding "adjusted" amounts. For the comparable periods presented below, such adjustments consist of amounts
Slide 20: Non-US GAAP Financial Measures (cont’d)
Non-US GAAP Financial Measures (cont’d) Adjusted net earnings and adjusted EPS are non-GAAP financial measures that are calculated by excluding the after-tax costs related to the 2015 Restructuring activities and other charges associated with our Europe, UK, and Middle East region (collectively refe