Jacobs Solutions Inc. · NYSE:J
Jacobs Solutions — SunTrust Industrials and Services Summit (December 2019)
32 slides from Jacobs Solutions's conference presentation, Dec 10, 2019
Slide 1: Investor Presentation
Investor Presentation November 2019
Slide 2: Disclaimer
Disclaimer Forward-Looking Statement Disclaimer Non-GAAP Financial Measures Pro Forma Figures Certain statements contained in this presentation constitute forward- To supplement the financial results presented in accordance with During this presentation, we may discuss comparisons of current looking
Slide 3: Jacobs: Delivering innovative solutions & disciplined execution
Jacobs: Delivering innovative solutions & disciplined execution FY19 ($ in billions) Reimbursable and Net Revenue Lower Risk Fixed Public/Private Pro forma for KeyW Gross Backlog U.S./Int’l Mix Talent Base Price Services Sector 73%/27% ~52,000 94% 69%/31% $8.5 Transformed Portfolio Positioned for Su
Slide 4: Strong execution against strategic and financial goals
Strong execution against strategic and financial goals 2016-2018 2017 2019 CH2M Acquisition ECR Sale KeyW Acquisition Operational Improvements ($3.3B, ~7.0x TTM EBITDA1) ($3.3B, 11.5x TTM multiple) ($0.8B, ~10x 20202 multiple) • Aligned lines of business to • Accelerated strategy in key • Increases
Slide 5: Setting 2021 Financial Targets
Setting 2021 Financial Targets 2018 Pro Forma 2021 Target1 Baseline Organic Net Revenue Growth 16% 3% to 5% CAGR Adj. Net Operating Profit Margin 8.3% 125 to 175 bps Adj. EBITDA Growth 13% Double-Digit CAGR ROIC 9.2% 100 to 150 bps Consistent growth plus continued margin expansion to drive higher re
Slide 6: 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 1Historical gross revenue for Jacobs excluding ECR and excluding the first year inorganic impact from material acquisitions 6
Slide 7: 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 8: Challenging today. Reinventing tomorrow.
Arrow pointing up and to the right signaling: Impact on the future Infinite potential and optimism Forward advancement through innovative and creative solutions 2 Reinventing tomorrow. Challenging today. 1 Upward arc symbolizing: Agility to change course Boldness to go against convention Courage to
Slide 9: Solutions enabled by digital capability, informed by domain expertise
Solutions enabled by digital capability, informed by domain expertise Applied Automated Internet Predictive Cyber- Geospatial security Design of Things Analytics Science 9
Slide 10: Critical Mission Solutions
Critical Mission Solutions Critical Mission Solutions Snapshot Unique Delivery Model (TTM including KeyW) U.S./International 89% / 11% ▪ One of the largest diversified government services providers Government ~86% ▪ Leveraging strong technical expertise, localized delivery model and efficient cost s
Slide 11: A foundation of large, multi-year highly technical contracts
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 scope is rel
Slide 12: Steady Jacobs CMS organic OP growth despite major economic and defense spending swings
Steady Jacobs CMS 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 12 1Indexed to 2008 US D
Slide 13: KeyW is additive to CMS's organic growth outlook
KeyW is additive to CMS’s organic growth outlook 2021 Organic Est. KeyW 2018 PF Targets Additional Impact (Feb 2019) >100 Revenue $3.9B 2-3%1 bps >200 Adj. Operating Profit $265M 8-10%1 bps +100 to Adj. Operating Profit Margin ~7% 150 bps >50 bps 1 Three Year CAGR 13
Slide 14: People & Places Solutions
People & Places Solutions People & Places Solutions Snapshot (TTM) U.S./International 70% / 30% Growth Underpinned by Multiple Secular Trends Public / Private Sector 59% / 41% ▪ Climate change resiliency driving long-term opportunities Reimbursable and ~91% ▪ Urbanization creating infrastructure dev
Slide 15: Global connectivity optimizes global platform through integrated delivery
Global connectivity optimizes global platform through integrated delivery Poland PPS 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 16: People & Places Solutions: organic growth targets and margin expansion
People & Places Solutions Attractive, achievable organic growth targets and margin expansion 2018 PF3 2021 Targets3 Net Revenue $5.1B 4-6%1 Adj. Operating Profit $629M 10-12%1 +110 to Adj. Operating Profit Margin2 12% 140 bps 1 Three year CAGR 2 % of Net Revenue 16 3 Includes GES
Slide 17: Fiscal Q4 2019 results
Fiscal Q4 2019 results Revenue increased 13% y/y and Pro Forma Net Revenue increased 10% y/y GAAP Operating Profit of $99M and Operating Profit Margin of 2.9% Adj. Operating Profit (OP) of $253M and Net Revenue Adj. OP Margin of 9.4% GAAP Net Earnings of $22 million and EPS from Continuing Operation
Slide 18: Fiscal 2019 results
Fiscal 2019 results Revenue increased 20% y/y and PF Net Revenue increased 11% y/y GAAP Operating Profit of $405M and Operating Profit Margin of 3.2% Adj. Operating Profit (OP) of $893M and Net Adj. OP Margin of 8.8% GAAP Net Earnings of $291 million and EPS from Continuing Operations of $2.09 impac
Slide 19: Segment financials
Segment financials $’s in millions Q4 Q4 Fiscal Fiscal 20182 2019 20182,3 2019 Critical Mission Solutions Operating Profit 77 88 264 310 as a % of revenue 7.2% 6.7% 6.9% 6.8% People & Places Solutions Operating Profit 167 199 629 714 as a % of net revenue 13.1% 14.3% 12.2% 12.7% Adjusted Unallocated
Slide 20: M&A and divestiture update
M&A and divestiture update ECR Update ▪ Incurred $153M of over $200M transaction, separation and restructuring costs to date ▪ On track to complete separation and restructuring costs by mid CY20 KeyW Acquisition at Year End ▪ Achieved $11M of $15M in run-rate synergies ▪ Incurred $17M of estimated $
Slide 21: Balance sheet and cash flow
Balance sheet and cash flow Healthy Underlying Free Cash Flow Generation ▪ Negative free cash flow in Q4 impacted primarily by ECR cash taxes of $390M ▪ Underlying FY19 free cash flow conversion to adjusted net income in-line with Q4 Leverage Metrics expectations over course of year versus slow Q1 s
Slide 22: Focused on delivering superior Shareholder Value
Focused on delivering superior Shareholder Value ▪ Inspiring a high-performance culture ▪ Capturing growth opportunities through innovation ▪ Disciplined capital allocation that drives value creation FY20 Financial Outlook Initiating adj. EBITDA1 of $1,050M to $1,150M Initiating adj. EPS1 of $5.30 -
Slide 23: se rs xa Cr
se rs xa Cr
Slide 24: Recast consolidated financials
Recast consolidated financials PF Q1 $’s in millions Q2 2018 Q3 2018 Q4 2018 FY 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 FY 2019 20181 Critical Mission Solutions Backlog 6,641 7,174 7,148 7,130 7,130 7,158 7,285 8,393 8,460 8,460 Revenue 842 924 1,021 1,069 3,856 1,035 1,060 1,156 1,300 4,551 Operating
Slide 25: Recast consolidated financials
Recast consolidated financials PF Q1 $’s in millions Q2 2018 Q3 2018 Q4 2018 FY 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 FY 2019 20181 Backlog 18,910 19,262 19,840 19,955 19,955 20,335 20,713 22,404 22,569 22,569 Revenue 2,746 2,870 2,934 2,992 11,541 3,084 3,092 3,170 3,393 12,738 Net Revenue 2,059 2,2
Slide 26: Other operational metrics from continuing operations
Other operational metrics from continuing operations $’s in thousands Q1 2018 Q2 2018 Q3 2018 Q4 2018 FY 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 FY 2019 Depreciation (pre-tax) 25,6071 26,764 24,423 21,567 98,3611 18,211 23,491 25,851 20,508 88,061 Amortization of 11,547 18,205 19,299 18,352 67,403 18,6
Slide 27: Non GAAP financial measures
Non GAAP financial measures The following tables reconcile the U.S. GAAP values of net revenue, net earnings, EPS, operating profit and operating profit margin to the corresponding "adjusted" amounts. For the comparable periods presented below, such adjustments consist of amounts incurred in connect
Slide 28: Non GAAP financial measures
Non GAAP financial measures The following tables reconcile the U.S. GAAP values of net revenue, net earnings, EPS, operating profit and operating profit margin to the corresponding "adjusted" amounts. For the comparable periods presented below, such adjustments consist of amounts incurred in connect
Slide 29: Non GAAP financial measures
Non GAAP financial measures The following tables reconcile the U.S. GAAP values of net revenue, net earnings, EPS, operating profit and operating profit margin to the corresponding "adjusted" amounts. For the comparable periods presented below, such adjustments consist of amounts incurred in connect
Slide 30: Non GAAP financial measures
Non GAAP financial measures The following tables reconcile the U.S. GAAP values of net revenue, net earnings, EPS, operating profit and operating profit margin to the corresponding "adjusted" amounts. For the comparable periods presented below, such adjustments consist of amounts incurred in connect
Slide 31: Reconciliation of net earnings from continuing operations to adjusted EBITDA
Reconciliation of net earnings from continuing operations attributable to Jacobs to adjusted EBITDA 31
Slide 32: Non-GAAP financial measures (cont'd)
Non-GAAP financial measures (cont’d) Net revenue is calculated excluding pass-through revenue of the Company’s People & Places Solutions segment from the Company’s revenue from continuing operations. Adjusted net earnings from continuing operations, adjusted EPS from continuing operations, adjusted
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