Jacobs Solutions Inc. · NYSE:J
Jacobs Solutions — Jacobs — Investor Day (February 2019)
119 slides from Jacobs Solutions's investor day presentation, Feb 19, 2019
Slide 1: Jacobs 2019 Investor Day
Jacobs 2019 Investor Day February 19, 2019
Slide 2: Investor Day at a Glance
Investor Day at a Glance Welcome & Opening Remarks Jon Doros, VP, Investor Relations 12:30 Company Vision & Strategy Steve Demetriou, Chair & CEO Darren Kraabel, SVP, Chief Technology & Innovation Officer Innovation Heather Wishart-Smith, VP, Jacobs Connected Enterprise Aerospace, Technology & Nucle
Slide 3: 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 4: Corporate Strategy & Vision
Corporate Strategy & Vision Steve Demetriou, Chair & CEO
Slide 5: Resiliency in Miami-Dade
Resiliency in Miami-Dade Proclametion ‘The Miami-Dade County Office of the Mayor and Board of Commissioners Whereas: Jacobs leads the global professional services sector delivering infrastructure solutions for a more connected, sustainable world Jacobs isthe largest and most diverse provider of tech
Slide 6: Key Messages
Key Messages 1 Outperformed strategic targets and transformed the portfolio 2 Launching accelerated profitable growth strategy 3 Empowering our culture; flexing our innovation muscle 4 Targeting top decile operational performance 5 Committing to continued strong Total Shareholder Return 6
Slide 7: Delivering on 2016 Investor Day commitments
Delivering on 2016 Investor Day commitments 2015 2016 Today Great Legacy – Launched Delivered on Significant Challenges Transformational Strategy Commitments • Stagnant backlog • Build culture of accountability, • Achieved strong sales growth inspirational leadership, innovation • Record high write-
Slide 8: Bold organizational actions drove accountability and reduced cost
Bold organizational actions drove accountability and reduced cost Organizational Enhancements Cost & Capital Optimization • Created Global Lines of Businesses (LOBs) and • Decreased write-offs by ~60% streamlined Functions • Accelerated global business services utilization • Increased accountability
Slide 9: Organizational Health Assessment (OHA) improved two quartiles
Organizational Health Assessment (OHA) improved two quartiles Benchmark 1. Shared Vision 2. Strategic Clarity Top Quartile 3. Employee Involvement Second Quartile 34. Top-down Innovation Direction 35. Bottom-up Innovation 36. Knowledge Sharing +12 37. Capturing External Ideas 4. Authoritative Leader
Slide 10: Drove performance through organizational transformation
Drove performance through organizational transformation Safety Positive Accountability Inclusion & Diversity BeyondZero® Mental Health • Industry leading • Drove accountability and • Stress – Identified as 21st • Launched CEO-led Inclusion safety performance empowerment Century’s #1 health epidemic1
Slide 11: Two deliberate actions significantly transforming our portfolio
Two deliberate actions significantly transforming our portfolio Pending Divestiture of Energy, Acquisition of CH2M Chemicals & Resources (ECR) 11
Slide 12: Acquired CH2M to accelerate growth strategy
Acquired CH2M to accelerate growth strategy Enhanced • Achieved #1 Global Design Firm ranking Market Leadership • Expanded into higher margin segments, e.g. water and environmental Successfully • Achieved rapid integration and stable retention Integrated Cultures • Enhanced Inclusion & Diversity and
Slide 13: Divestiture of ECR will further transform our portfolio
Divestiture of ECR will further transform our portfolio • Exit highly cyclical and commoditized markets Strategic Rationale • Simplify portfolio, focus on higher margin, higher growth ATN & BIAF businesses • Immediate benefit of a 150 bps gross margin increase Financial Benefits • Provides strong ca
Slide 14: Delivering on commitments
Delivering on commitments 2019 Growth 2016 – 2019 2016-2019E Investor Day Target Forecast Organic Revenue Growth 2 to 4% (CAGR) 2%+ (CAGR) Adj. Operating Profit Margin 100 to 150 bps >150 bps Pro Forma ROIC 50 to 150 bps, or ~10% <50 bps Tracking well against our 3-year Strategic Plan 14
Slide 15: Superior shareholder performance – Outperformed our peers
Superior shareholder performance – Outperformed our peers Oct 2015 – Feb 2019 Jacobs 89% S&P 500 53% Traditional Jacobs S&P 500 Traditional Peers Peers1 5% Oct-15 Oct-16 Oct-17 Oct-18 Feb-19 1 Traditional peers include AECOM, Fluor, McDermott, KBR, SNC-Lavalin, Stantec, WSP and Wood Group 15 SOURCE:
Slide 16: Reimagining tomorrow. Today.
Reimagining tomorrow. Today.
Slide 17: What If Video
What If Video What If
Slide 18: New Jacobs: Industry leader poised for growth
New Jacobs: Industry leader poised for growth Industry-leading Differentiation Q1 FY19 Revenue, excluding ECR 6% 40% LOB Mix1 Risk cybersecurity 60% Profile 94% Buildings, Infrastructure and Reimbursable/Fixed Price Services Advanced Facilities (BIAF) resiliency Fixed Price Construction Aerospace, T
Slide 19: Pivot point in our Company's history
Pivot point in our Company’s history ATN Government Services Inspirational Industry 4.0 Leadership Inclusion and Disruptors Urbanization Enablers Diversity Environment Leveraging our interconnected Innovation portfolio Disciplined Capital Geopolitics Deployment Operational Technology Excellence BIAF
Slide 20: Strong performance positions us for next generation strategy
Strong performance positions us for next generation strategy 3 Strategic Pillars 2016-2018 Jacobs 2019+ Build A High Get basics right Performance Culture Focus on Transform Fundamentals INNOVATION ` Our Connective the Core Foundation Grow Make Hard Choices Profitably 20
Slide 21: Be the employer of choice
Be the employer of choice Attract, retain and develop the world’s best talent • Inspirational leadership and clarity of strategy • Employee empowerment through inclusion and diversity INNOVATION • Innovation and entrepreneurial opportunities Our Connective Foundation • PlanBeyond℠ sustainability str
Slide 22: Building a strong, more diverse, inclusive leadership team
Building a strong, more diverse, inclusive leadership team New to Executive Leadership Team: • Promoted from within • New to Jacobs • Legacy CH2M Leader Steve Demetriou Kevin Berryman Joanne Caruso Terry Hagen Bob Pragada Chair & CEO EVP & CFO EVP, Chief Legal & COO & President, ATN COO & President,
Slide 23: Advancing our culture through employee engagement & empowerment
Advancing our culture through employee engagement & empowerment Inclusion & Diversity CEO led Inclusion Diverse Employee Conscious Global Catalyst’s CEO attracts & retains the & Diversity Networks with Inclusion training Inclusion Week Male Champions of best talent Council executive for all employee
Slide 24: New sustainability strategy launched – PlanBeyond
New sustainability strategy launched – PlanBeyond℠ People Places Partnerships Being the employer Creating sustainable Enabling change through of choice places to live and work smart solutions • Improving our health & • Optimizing our • Leading through wellbeing footprint innovation • Maximizing incl
Slide 25: Technology-enabled execution for enhanced performance
Technology-enabled execution for enhanced performance • Invest in technology to increase efficiency and productivity – Implement enterprise system architecture – Continue global delivery tool rationalization – Leverage our cybersecurity and data analytics expertise in-house • Drive improvement throu
Slide 26: Connected, sustainable solutions to enhance profitable growth
Connected, sustainable solutions to enhance profitable growth • Accelerate Jacobs Connected Enterprise (JCE) • Invest in 5 enterprise-wide Innovation Hubs aligned to top market disrupters and client challenges Cybersecurity Applied Automated Internet Predictive INNOVATION Geospatial Science Design o
Slide 27: Our strategic direction is clear
Our strategic direction is clear ATN BIAF Delivering solutions for mission critical, Solving critical, global government priorities infrastructure challenges • Expand our Government Services business, becoming a • Capitalize on high-value, diversified portfolio recognized top tier provider • Deliber
Slide 28: Unleashing Jacobs potential through joint innovation
Unleashing Jacobs potential through joint innovation Delivering digitally-enabled solutions Aligning around national Solving critical, global government priorities infrastructure challenges Reduce Extend life cycle of Less Enhance Data Privacy operating cost facility & infrastructure energy safety +
Slide 29: Setting bold growth targets
Setting bold growth targets FY19-21 Growth Targets Organic Revenue 3 to 5% CAGR Adj. Operating Margin 125 to 175 bps Adj. EBITDA Double digit growth Pro Forma ROIC1 100 to 150 bps 29 1 Excludes ECR and includes CH2M for full year
Slide 30: Maintaining agile, disciplined capital deployment
Maintaining agile, disciplined capital deployment Innovation Hubs Technology enhancements Investing in the Company Investment in our People Committed to Increased Offset dilution growth with Share buyback Dividends Remain agile earnings Align to strategy Accretive for shareholders Accelerate growth
Slide 31: Ensuring strong governance through highly engaged Board
Ensuring strong governance through highly engaged Board • Ensure independent leadership through Lead Independent Director • Provide oversight of strategic objectives, including M&A, cybersecurity, compliance, risk management and sustainability • Set performance-based executive comp Annual Long Term
Slide 32: Path to accelerated growth
Path to accelerated growth ✔ Squarely delivered on commitments ✔ Focused on top decile operational performance ✔ Exciting growth plans in ATN and BIAF ✔ Doubling-down on culture and innovation ✔ Maintaining commitment to industry-leading TSR 32
Slide 33: Innovation
Innovation Transforming complexity into opportunity Darren Kraabel, Chief Technology & Innovation Officer Heather Wishart-Smith, VP, Jacobs Connected Enterprise (JCE)
Slide 34: Key Messages
Key Messages 1 Innovation is our heritage and the foundation for our future 2 Differentiated by our diverse domain expertise, digital technology capability, and delivery experience 3 Focused on big challenges; investing in applying mature technology across risk-averse industries 4 Uniquely positione
Slide 35: Innovation is Our Heritage and Our Future
Innovation is Our Heritage and Our Future 35
Slide 36: Digital Capability + Domain Expertise
We see things differently Digital Capability + Domain Expertise 36
Slide 37: Jacobs is a company like no other
Jacobs is a company like no other Core Competencies Digital Domain Delivery Capability Expertise Experience JACOBS Strong OT & IT with deep domain expertise E&C COMPANIES Seek to partner with Tech companies to fill gap TECH COMPANIES Seek to partner with E&C to understand industry applicability CONS
Slide 38: Investing in solutions aimed at critical global challenges
Investing in solutions aimed at critical global challenges Solutions enabled by digital capability, informed by domain expertise Applied Automated Internet Predictive Cybersecurity Geospatial Science Design of Things Analytics Reduce Extend life cycle of Less Enhance Data Privacy operating cost faci
Slide 39: Capitalizing on the global opportunity
Capitalizing on the global opportunity Highly Scalable, Leveraging our digital Customized capability + domain expertise Solutions Smart Solutions Adoption Decades-long Technology cost/risk are now Trend sound investments 1 Digital Master Planning 3 Scale Global Requires Jacobs’ global reach Opportun
Slide 40: Smart Solution Case Studies
Smart Solution Case Studies Intelligent Asset Management NASA Langley Research Center Digital Twin West Point Water Treatment Plant 40
Slide 41: NASA Langley Research Center
NASA Langley Research Center
Slide 42: Intelligent Asset Management moves clients from reactive to predictive
Our Intelligent Asset Management (IAM) solution moves clients from reactive to predictive NASA Wind Tunnel Fan Motor Vibration (1 of 120K sensors) Predictive Centralized Traditional Analysis Monitoring inches per second Manufacturer Alarm Setting Jacobs Alert Setting Time Preceding Failure Event = $
Slide 43: IAM delivers positive client outcomes while driving Jacobs' growth
IAM delivers positive client outcomes while driving Jacobs’ growth NASA Langley outcomes realized from IAM • Eliminated major unplanned outages (4 yrs running), maximizing availability for paying test customers • Reduced annual maintenance budget by >35%, natural gas consumption by 47%, water consum
Slide 44: Broad, diverse opportunities for Intelligent Asset Management application
Broad, diverse opportunities for Intelligent Asset Management application Defense Navy Mayport differentiator, value-pricing Water Saved $300M; 0.5B gallons of annual sewer overflow Nuclear OPEX, maintain critical operations Life Sciences Digital Roadmap to maximize 44 manufacturing productivity
Slide 45: Understanding and capitalizing on the impact of digital twins
Understanding and capitalizing on the impact of digital twins Real-time Data Synthetic Data Digital Twin Applications • Evaluating design options • Analysis of alternatives – assessing impact of Domain Expertise change to process condition, material or Lifecycle Data physical change to system • Simu
Slide 46: Understanding and capitalizing on the impact of digital twins
Understanding and capitalizing on the impact of digital twins Real-time Data Synthetic Data Jacobs’ Differentiation Domain Expertise • Strong digital capabilities allow us to recreate assets • Deep domain expertise provides: Lifecycle Data – Real world context – Past performance to anticipate future
Slide 47: Leading proprietary digital twin software
Leading proprietary digital twin software ReplicaTM Proprietary, developed by CH2M, specialized for water Proven on 70+ projects Client challenges Sophisticated simulation on • Shrinking budgets variety of complex operations • Unplanned failures v System-wide approach • Disruption, lost revenue • In
Slide 48: West Point Wastewater Treatment Plant Digital Twin
West Point Wastewater Treatment Plant Digital Twin Design Alternatives Digital Twin Outcomes • Optimized capital investment • Asset uptime • Lifecycle extension • Enhanced reliability • Lower total cost of ownership • Optimized O&M • Increased efficiency • Strategic planning 48 Reducing risk by mode
Slide 49: Broad, diverse opportunities for Digital Twin application
Broad, diverse opportunities for Digital Twin application Industrial Energy 33% Automotive Productivity 20% Buildings Historically significant landmark Smart Cities Geospatial data city-wide 49 digital twin
Slide 50: Delivering new and differentiated solutions to our clients
Delivering new and differentiated solutions to our clients Intelligent Asset Digital Twin Management Connected and Pharma Plant of Autonomous Vehicles the Future Drones Data Analytics Laser Scanning Smart Cities 50 Digital Capability + Domain Expertise
Slide 51: Jacobs is a company like no other
Jacobs is a company like no other ATN INNOVATION BIAF 51 Digital Capability + Domain Expertise
Slide 52: Solutions for a More Connected, Sustainable World
Solutions for a More Connected, Sustainable World Robert Poche Nina Wollman Derek Madan Raja Kadiyala Natasha Luthra Intelligent Asset Management Intelligent Asset Management Industrial Analytics Digital Twin Automated Design Gus Tome Jane Murdoch Greg Sharp Vincent Mihalik Barb Schmitz Kate Williso
Slide 53: Aerospace, Technology & Nuclear
Aerospace, Technology & Nuclear Solving for Tomorrow Terry Hagen, COO & President
Slide 54: Key Messages
Key Messages 1 Met our 2016 Promises 2 Differentiated government services business, rapidly gaining market share 3 Foundation of long-term enterprise contracts in mission-critical government programs 4 Excellent cash flow dynamics and low capital intensity 5 Leveraging technology, innovation and cyb
Slide 55: Delivered 2016 Investor Day commitments
Delivered 2016 Investor Day commitments • Met or exceeded 2016 strategy 400 commitments for Revenue growth, Organic $350 Operating Profit (OP) and OP Margin 350 • Created a diverse leadership team and 300 expanded sales capacity 2018 250 OP Target $205 $231 • Improved on already top quartile OHA res
Slide 56: Delivery of 2016 strategy created a solid foundation for continued growth
Delivery of 2016 strategy created a solid foundation for continued growth 2% 9% 11% 8% 13% 43% Risk Sectors Revenue Duration Profile 17% 18% 87% 92% Civil Cost Reimbursible Recurring Defense Fixed Price Services Non-Recurring Intelligence Fixed Price EPCM / DB International NASA U.S. Department of D
Slide 57: ATN has a foundation of large, multi-year highly technical contracts
ATN has a foundation of large, multi-year highly technical contracts Agency Award Size Duration Contract Scope $4.6B 8.5 years Operating the Missile Defense Integrated Operations Center, supporting its network to 2025 infrastructure, modeling and simulation, and development of systems ✓ ~75% of scop
Slide 58: Resilient business yielding good returns with low capital intensity
Resilient business yielding good returns with low capital intensity Long term stability with strong pipeline for growth Risk balanced portfolio • Foundation of recurring revenue work • Cost Reimbursable: 87% (~92%) with a core of long-cycle enterprise • Fixed Price Services: 11% contracts (~75%) • F
Slide 59: Steady Jacobs ATN organic OP growth despite major economic and defense spending swings
Steady Jacobs ATN organic OP growth despite major economic and defense spending swings Great Recession Sequestration Expansion 300 250 Jacobs ATN1 Delivering 200 outstanding resiliency 150 Defense Budget 100 50 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 59 1Indexed to 2008 US D
Slide 60: With strong markets, focused investment and value extraction drives growth
With strong markets, focused investment and value extraction from existing platforms drives growth TotalAnnual Addressable Industry Highly Fragmented Market Market 5yr CAGR Key Organic Growth Areas Government Services Market • Next Gen capabilities of cyber, cloud and analytics Contractors >0.5% • E
Slide 61: Jacobs ATN differentiators will continue to enable market share gains
Jacobs ATN differentiators will continue to enable market share gains Key Areas of Differentiation Customer Responsiveness Performance Efficiency Innovation • Localized accountability • Technically deep • Lean, highly competitive, • Recognized for innovation structure with customized staff with prov
Slide 62: Jacobs ATN well positioned to capitalize on favorable market trends
Jacobs ATN well positioned to capitalize on favorable market trends Government Commercial Services International Telecom Auto Positive Budget Outlook Return to “Best Value” & IDIQ Vehicles Data / Technology Revolution Increasing Cybersecurity Demand Supply Chain Consolidation Talent Shortages Invest
Slide 63: The Jacobs ATN strategy is clear
The Jacobs ATN strategy is clear • Expand our Government Services core business, becoming a premier provider, and grow in highly profitable, complementary niche markets • Accelerate our Cyber Engineering practice with focus on the Information Technology / Operation Technology (IT/OT) convergence • I
Slide 64: Targeting growth in higher value Government Services
Targeting growth in higher value Government Services ✓ Next Gen Capabilities Enterprise ✓ IT Infrastructure Design & Implementation DoD ✓ Systems Engineering & Integration Intelligence Community Systems Services/ NASA ✓ C5ISR - Command, Control, Communications, Federal Admin. Agencies Data Analytics
Slide 65: Driving scale in Cyber Engineering to enhance overall Jacobs growth
Driving scale in Cyber Engineering to enhance overall Jacobs growth Targeted Areas for Growth Disciplines Deepen solutions for Government Services clients Security Security Security Industrial Controls Engineering Operations Compliance Security Market Sectors Enable differentiated growth across all
Slide 66: Strong pipeline with new opportunities in larger, longer contracts
Strong pipeline with new opportunities in larger, longer contracts Opportunities over $100M in Revenue $30B+ Pipeline 75 7 65 6 • Intelligence Community • U.S. Army Average Duration - Years 55 5 # of Opportunities • U.K. Remediation 45 4 • U.S. Navy 35 3 • NASA 25 • Dept. of Energy / Environmental M
Slide 67: Foundation of recurring work supports operating profit growth
Foundation of recurring work supports operating profit growth New Bid • Continued growth in Enterprise contracts and expansion of new shorter duration projects • Historical >50% new bid win rate • Estimated new win rate of 30% as we move into adjacent markets Rebid • Rebid cycle of recurring contrac
Slide 68: Attractive, achievable organic growth targets
Attractive, achievable organic growth targets 2018 PF 2021 Targets Revenue $3.9B 2-3%1 Adj. Operating Profit $265M 8-10%1 +100 to Adj. Operating Profit Margin ~7% 150 bps Strong profit growth while retaining excellent free cash flow dynamics 68 1 Three year CAGR
Slide 69: Market leading OP growth with impressive margin expansion
Market leading OP growth with impressive margin expansion while retaining desirable Free Cash Flow dynamics 1 Proven business model with demonstrated returns • Long term, recurring contracts • Focus on mission critical government work • Technical solutions move us up the value chain • Desirable free
Slide 70: Buildings, Infrastructure & Advanced Facilities
Buildings, Infrastructure & Advanced Facilities Keeping the world moving forward Bob Pragada, COO & President
Slide 71: Key Messages
Key Messages 1 Achieved strong 3-year double-digit organic operating profit growth 2 Strategy focused on organic growth in core infrastructure markets and geographic expansion 3 Leverage connected cross-market solutions 4 Optimize global platform through integrated delivery 5 Advance capabilities in
Slide 72: Exceeded 2016 Strategy Operating Profit commitments
Exceeded 2016 Strategy Operating Profit commitments $528 • Acute focus on strategic end-markets and $220 creation of a global line of business CH2M1 • Achieved higher margin through enhanced CH2M 2018 Organic project delivery systems and doctrine OP Target improvement $M $395 $263 • Exceeded FY16 St
Slide 73: Jacobs BIAF accelerated transformation with CH2M integration
Jacobs BIAF accelerated transformation with CH2M integration 2018 Company Rankings1 Revenue 2X Growth Surpassed revenue #1 Global Design Firms2 Amplified growth expectations #2 Program Management and differentiated solutions in core #1 Pharmaceuticals2 infrastructure sectors #1 Semiconductors2 Expan
Slide 74: Differentiated value to clients built on a high-margin and diversified portfolio
Differentiated value to clients built on a high-margin and diversified portfolio Iconic Global Scale Projects + Revenue Synergies 10% 8% 5% 19% 17% 22% Risk Delivery Sectors Profile Type 27% 78% 22% 92% Confidential Etihad Freight Rail Water Reimbursable / Fixed Price Services Consulting/Engineering
Slide 75: Core markets and healthy industries provide platform for growth
Core markets and healthy industries provide platform for growth Jacobs Market Industry 5yr CAGR Addressable Market Water $85B 4%-5% • Addressable market includes Jacobs services in target geographies with heavy focus on: Transportation $66B 3%-4% – Industrialized geographies Advanced Facilities $100
Slide 76: Global industry trends create a catalyst for growth
Global industry trends create a catalyst for growth Advanced Water Transportation Facilities Environment Buildings Climate Resiliency Urbanization Delivery Speed Talent Shortages Data / Technology Revolution Global Workforce Client Consolidation Aging Infrastructure 76
Slide 77: BIAF is uniquely differentiated to capitalize on these trends
BIAF is uniquely differentiated to capitalize on these trends Key Areas of Differentiation Performance Global Integrated Infrastructure Excellence Innovation Delivery Leader • Customer intimacy • Early adopter of digital • Global design centers • End-to-end skillset in all and accountability solutio
Slide 78: Strategy focused on 3 facets of connectivity
Strategy focused on 3 facets of connectivity Digital Market Connectivity Global Connectivity Connectivity Leveraging expertise from Utilizing mature, global Building on strong foundation our end markets to provide delivery platform to deliver of innovation with investment end-to-end solutions to the
Slide 79: End-market connectivity positions us to outpace market growth
End-market connectivity positions us to outpace market growth Market Key Organic Growth Areas Water Water Resources, Conveyance, Treatment Transportation Rail, Highways, Aviation, Ports Cross-Market Connected Solutions Advanced Facilities Life Sciences, Electronics, Mission Critical Remediation, Rev
Slide 80: Global connectivity optimizes global platform through integrated delivery
Global connectivity optimizes global platform through integrated delivery Poland BIAF Presence Select Design Centers1 Oregon Philippines India Malaysia • Drives innovative solutions • Utilizes best talent around the world • Enhances competitive differentiation Mature global delivery platform enables
Slide 81: Shifting delivery model to digitally-enabled solutions
Shifting delivery model to digitally-enabled solutions Applied Geospatial Science 100% Extend life cycle Automated Reduce of facility Less Enhance Data Privacy operating cost & infrastructure energy safety + Protection Design Portfolio Mix Common Client Challenges Cybersecurity 0% Jacobs’ Domain Exp
Slide 82: Expand services to gain share of new digital consulting market
Expand services to gain share of new digital consulting market $25B Addressable Market in digital consulting 4-5% Industry CAGR Opportunities for Repositioning Competitive Advantage Brand awareness Access to Client Base Market fragmentation Domain knowledge Early adopter and proven Economies of scal
Slide 83: Attractive, achievable organic growth targets and margin expansion
Attractive, achievable organic growth targets and margin expansion 2018 PF3 2021 Targets3 Net Revenue $6.3B 4-6%1 Adj. Operating Profit $629M 10-12%1 +110 to Adj. Operating Profit Margin2 10% 140 bps 1 Three year CAGR 2 % of Net Revenue 83 3 Includes GES
Slide 84: Transformational growth, margin expansion and superior client solutions
Transformational growth, margin expansion and superior client solutions 1 Proven ability to deliver – far exceeded our 2016 commitments 2 Focused strategy built on industry leadership in core markets, global connectivity and digitally-enabled solutions 3 Ideally positioned to outpace end-market grow
Slide 85: Financial Overview
Financial Overview Kevin Berryman, EVP & CFO
Slide 86: Key Messages
Key Messages 1 Stronger financial profile driven through execution excellence and proactive portfolio management over 2016 – 2018 2 Transformed higher margin portfolio aligned to secular growth opportunities 3 Delivered on commitments; introducing new 3-year plan underpinned by growth and continued
Slide 87: Strong execution against strategic and financial goals
Strong execution against strategic and financial goals 2016-2018 2017 2019 Strategic CH2M Acquisition Strategic ECR Sale Operational Improvements ($3.3B, ~7.0x EBITDA, incl. synergies) ($3.3B, 11.5x multiple) • Aligned lines of business to improve • Accelerated strategy in key markets – • Increases
Slide 88: Drove significant operational improvement
Drove significant operational improvement Write Off reduction from Project Delivery focus Jacobs Standalone ~60% Reduction 2015 2016 2017 2018 G&A as a % of Gross Profit1 Pro Forma Operational DSO2 71.3% 70.9% 64 64 69.4% 62 2016 2017 2018 2016 2017 2018 1 2016 represents adjusted Jacobs standalone.
Slide 89: Delivering on commitments
Delivering on commitments 2016-2019 2016 Investor Day 2016-2019E Baseline Targets Forecast Organic Gross Revenue Growth Flat 2 to 4% (CAGR) 2%+ (CAGR) ~65% Revenue in Priority Growth Areas 50% >75% (incl. M&A) Adj. Operating Profit Margin 4.8% 100 to 150 bps >150 bps 50 to 150 bps, Pro Forma ROIC 8.
Slide 90: Pro Forma Portfolio Profile (excl. ECR)
Pro Forma Portfolio Profile (excl. ECR) Geographic Mix Gross Revenue Strong Stability Attractive Profitability 67% 7.2% 29% recurring gross revenue Adj. Operating Profit as a % of 70% of Next 12 Months 71% Net Revenue (FY18) US (NTM) Gross Revenue International in Backlog Deep Technical Expertise Si
Slide 91: Sale of ECR creates stronger, less cyclical portfolio
Sale of ECR creates stronger, less cyclical portfolio Organic Revenue ECR Jacobs excl. ECR1 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 91 1Historical gross revenue for Jacobs excluding ECR and excluding the first year inorganic impact from material acquisitions
Slide 92: Focusing on higher growth, higher margin sectors
Focusing on higher growth, higher margin sectors 2016-2019 Strategy 2019-2021 Strategy (Illustrative) (Illustrative) • Targeting secular growth markets • Exiting direct hire construction • More profitable geographies • Expanding in secular growth markets Higher Technology • Higher margin solutions S
Slide 93: Future portfolio offers solid Free Cash Flow conversion
Future portfolio offers solid Free Cash Flow conversion Adj. PF Net Income ex amort. of acquired intangibles of $556M = ~90% conversion Discrete CH2M Pension Contribution Continuing working capital improvement will support higher free cash flow conversion 93
Slide 94: Retaining prior FY19 Outlook
Retaining prior FY19 Outlook FY19 Outlook • Maintaining previous adjusted EPS expectation of $5.10 to $5.50, which assumes the full-year benefit from ECR • Confirming adjusted pro forma EBITDA of $920M to $1.0B, excluding ECR Continued strong underlying financial outlook 94
Slide 95: Updating financial metrics, aligned with profitability and cash generation
Updating financial metrics, aligned with profitability and cash generation Pro Forma Net Revenue Metrics FY19 Outlook (excl. ECR) • Net revenue1 growth of 16% in fiscal 2018 Adjusted Pro Forma EBITDA (excl. ECR) of $920M to $1.0B • Adj. operating profit as a percentage of net revenue • Depreciation
Slide 96: Setting 2021 Financial Targets
Setting 2021 Financial Targets 2018 Pro Forma 2021 Organic Baseline Targets Organic Net Revenue Growth 16% 3% to 5% CAGR Adj. Net Operating Profit Margin 7.2% 125 to 175 bps Double-Digit Adj. EBITDA Growth 13% CAGR ROIC 9.2% 100 to 150 bps Consistent growth plus continued margin expansion to drive h
Slide 97: Drivers for Revenue Growth
Drivers for Revenue Growth 3% to 5% Organic Net Revenue Growth Robust Sales Pipeline Core Growth with Upside From Strong Revenue Stability within Current Markets Expanding Adjacent Markets Total • Pipeline has increased ~15% y/y • Infrastructure Secular Growth • 67% of revenue recurring • Focused sa
Slide 98: Drivers for Operating Profit Margin Expansion
Drivers for Operating Profit Margin Expansion 125 to 175 bps of adj. operating profit margin expansion Gross Margin In Backlog to Strategic Investments That Global Service Model Drive Incremental Profitability Drive Profitable Growth • Drive increased utilization of global • Gross Margin % in backlo
Slide 99: Drivers for ROIC Improvement
Drivers for ROIC Improvement 100 to 150 bps of ROIC Improvement Organic Operating Income Growth Lower Working Capital Low Fixed Capital Intensity • Strong operating leverage from • Improving DSO execution across • Overall fixed asset investments existing portfolio the business remain limited • Focus
Slide 100: Focused, disciplined and agile capital allocation
Focused, disciplined and agile capital allocation Organic Profitable Growth Strategy Focus • Lines of Business aligned to long-term strategy • Investment in higher margin businesses • Disciplined cost management • Proactive, ongoing portfolio evaluation Targeting Value-Creating M&A Discipline Contin
Slide 101: Balance sheet strength post-ECR provides significant incremental value creation opportunities
Balance sheet strength post-ECR provides significant incremental value creation opportunities $3.0 Reported Net Debt Pro Forma Net Cash FY19 Q1 FY19 Q11 $2.0 $1.0 $0.5 $0.0 -$1.0 -$2.0 $(1.8) -$3.0 $3B of pro forma Balance Sheet Capacity post ECR transaction 1Assumes Q1 FY19 cash includes WorleyPars
Slide 102: Multiple paths to create value
Multiple paths to create value Fiscal 2019 Potential 2021 Earnings Power Guidance ~$8 ~$7 Leverage >2.5x Leverage <2x $4.40 to $4.80 Strong organic growth – combined with balance sheet capacity – drives significant EPS upside 102
Slide 103: Strong and consistent value creation algorithm
Strong and consistent value creation algorithm $7 to $8 Per Share of Potential Earnings Power by Fiscal 2021 Cumulative Balance Sheet Strong Organic Growth + Continued Margin Expansion + Capacity at Investment Grade Government Services Urbanization Inclusive & Execution Disciplined M&A Execution Res
Slide 104: Pushing beyond possible.
Pushing beyond possible. 104
Slide 105: Strong and consistent value creation algorithm
Strong and consistent value creation algorithm $7 to $8 Per Share of Potential Earnings Power by Fiscal 2021 Cumulative Balance Sheet Strong Organic Growth + Continued Margin Expansion + Capacity at Investment Grade Government Services Urbanization Inclusive & Execution Disciplined M&A Execution Res
Slide 106: Join us for a Showcase Reception
Join us for a Showcase Reception: Solutions for a Connected, Sustainable World Innovation Sustainability Inclusion Experience how we are using technology and Join us on an interactive journey to understand Speak to our passionate business leaders innovating to develop solutions that: how we are plan
Slide 107: Appendix
Appendix Appendix 107
Slide 108: Steve Demetriou | Chair & CEO
Steve Demetriou | Chair & CEO Steve joined Jacobs as CEO in 2015 and the following year was appointed Chair of the Board of Directors. Steve has steered a profound reshaping of Jacobs’ business portfolio, operations and culture, including its transformative acquisition of CH2M and pending divestitur
Slide 109: Kevin Berryman | Executive Vice President and CFO
Kevin Berryman | Executive Vice President and CFO Kevin has been the CFO and Executive Vice President of Jacobs since 2015. He oversees all aspects of corporate finance, including accounting investor relations, mergers and acquisitions, tax, treasury, and real estate. He is also responsible for the
Slide 110: Terry Hagen | COO & President, ATN
Terry Hagen | COO & President, Aerospace, Technology & Nuclear (ATN) Terry leads Jacobs’ ATN business, which provides tailored, mission- oriented solutions for the aerospace, defense, automotive, telecommunications and nuclear industries on a global basis. He also oversees several corporate teams in
Slide 111: Bob Pragada | COO & President, BIAF
Bob Pragada | COO & President, Buildings, Infrastructure & Advanced Facilities (BIAF) Bob leads Jacobs’ global BIAF business, recently expanded to include (non- nuclear) environmental solutions, as well as corporate Contracts Management and State and Local Government Relations. With 29 years of publ
Slide 112: Darren Kraabel | Chief Technology & Innovation Officer
Darren Kraabel | Chief Technology & Innovation Officer (CTIO) Darren was appointed to the newly created CTIO role to build on Jacobs’ leadership as an innovative, data-driven solutions provider. In this role, he will capitalize on the company’s deep knowledge of client applications and broad-based e
Slide 113: Heather Wishart-Smith | VP, Jacobs Connected Enterprise
Heather Wishart-Smith | VP, Jacobs Connected Enterprise Heather spearheads the growth and development of Jacobs’ Connected Enterprise Solutions (JCE) strategy and innovation for the company’s global BIAF business. In leadership roles spanning design, consulting and program management, Heather brings
Slide 114: Recast 2018 Pro Forma Segment Financials (Preliminary)
Recast 2018 Pro Forma Segment Financials (Preliminary) Q1 2018 Q2 2018 Q3 2018 Q4 2018 FY 2018 Q1 2019 ATN Backlog 6,642 7,174 7,148 7,130 7,130 7,158 Revenue 842 924 1,021 1,069 3,856 1,035 Operating Profit 57 58 73 77 265 72 as a % of revenue 6.8% 6.2% 7.1% 7.2% 6.9% 7.0% BIAF Backlog 12,269 12,08
Slide 115: Recast 2018 Pro Forma Consolidated Financials (Preliminary)
Recast 2018 Pro Forma Consolidated Financials (Preliminary) Q1 2018 Q2 2018 Q3 2018 Q4 2018 FY 2018 Q1 2019 Backlog 18,911 19,262 19,841 19,955 19,955 20,335 Revenue 2,746 2,871 2,933 2,992 11,542 3,084 Net Revenue 2,298 2,577 2,599 2,674 10,148 2,560 Gross Profit 545 585 592 594 2,316 571 Adjusted
Slide 116: Non-GAAP Financial Measures
Non-GAAP Financial Measures 116
Slide 117: Non-US GAAP Financial Measures (cont'd)
Non-US GAAP Financial Measures (cont’d) 117
Slide 118: Non-GAAP Financial Measures (cont'd)
Non-GAAP Financial Measures (cont’d) Adjusted net income, adjusted operating profit and adjusted operating profit margin are non-GAAP financial measures that are calculated by (i) excluding the costs related to the 2015 restructuring activities, which included involuntary terminations, the abandonme
Slide 119: Glossary of Terms
Glossary of Terms • A&D: Aerospace & Defense • GID: Global Integrated Delivery • ASR: Accelerated Share Repurchase • I&D: Inclusion and Diversity • ATN: Aerospace, Technology & Nuclear • IAM: Intelligent Asset Management • BIAF: Buildings, Infrastructure & Advanced Facilities • IDIQ: Indefinite Deli