Slide 1: Fiscal Year 2016 – 2nd Quarter Earnings Conference Call
Fiscal Year 2016 – 2nd Quarter Earnings Conference Call May 5, 2016 www.jacobs.com | worldwide
Slide 2: Forward-Looking Statement Disclaimer
Forward-Looking Statement Disclaimer Statements included in this presentation 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,
Slide 3: Outline
Outline • Business Review – Safety & BeyondZero – Q2 highlights & end-markets update • Financials Review – Key financials – Restructuring & capital allocation • Next Steps – Project delivery – Strategic review • Closing Comments 3
Slide 4: Best-in-class safety performance leads to superior business performance
• Leading Safety in the Industry • Injury Rates Continue to Trend Down • Safety Week Engagement • Named New Global Safety Leader Catriona Schmolke “Best-in-class safety performance SVP, Global Health, Safety & Environment and Security leads to superior business performance” 4
Slide 5: FY16Q2 Highlights
FY16Q2 Highlights * Lower Cost & Improved Execution Mitigating Challenging End Markets • Revenues of $2.8 B • Backlog Stable at $18.2 B • YTD G&A Cost Reduction of $70 M (Down 10%) * • Project Delivery Improvements Gaining Momentum • Gross Margin % Up vs. Q1 • EPS of $0.75, Up 4% From FY15Q2 * • Bal
Slide 6: YTD Business Segment Financial Metrics
YTD Business Segment Financial Metrics Revenues Segment Operating Profit * Aerospace & Technology 24% 22% 32% 36% Buildings & Infrastructure 14% 20% Industrial 24% 29% (Incl. Field Services) Petroleum & Chemicals * Excludes non-allocated corporate expenses 6 * Financials reflect adjusted figures GAA
Slide 7: Petroleum & Chemicals
Petroleum & Chemicals Stabilizing Backlog in Difficult Market Environment • Oil & Gas – Challenged – Low oil prices significantly impacting customer spending – Midstream providing opportunities • Refining – Steady – Maintenance, turnaround, & sustaining capital opportunities – Focus on feed flexibil
Slide 8: Industrial
Industrial Robust Life Sciences Business Supporting Backlog • Mining & Minerals – Weak – Opportunities in sustaining capital and select projects – Price volatility continues • Life Sciences – Robust – Notable increases in pharma-bio capex, especially in biologics – Strong global project pipeline, mo
Slide 9: Buildings & Infrastructure
Buildings & Infrastructure Diverse Opportunities Globally • Buildings – Steady – Increasing healthcare opportunities – Leveraging existing clients in corporate building markets – Growth in mission critical; however delays with major customer • Infrastructure – Steady – Building positive momentum in
Slide 10: Aerospace & Technology
Aerospace & Technology Improving Margins in Backlog • Growing Momentum – $250M+ of contracts awarded in FY16 not yet in backlog – Strong recent contract rebid success rate – Increasing demand in mission critical facilities – Nuclear sector remains solid in US & UK • Recent Major Awards – Atomic Weap
Slide 11: Financial Review
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Slide 12: Q2 Adjusted Financial Metrics
Q2 Adjusted Financial Metrics* Strong Working Capital Performance Driving Improved Cash Flow • Revenues of $2.8 B; Backlog of $18.2 B • Book-to-Bill for Trailing Twelve of 0.94, Up From Q1 • Gross Margin of $444 M, Up From Q1 • G&A Reduced by $70 M, Down 10% YTD * • Operating Profit of $122 M * • EP
Slide 13: Backlog
Backlog Business Diversity Supporting Backlog Professional Engineering Services Backlog ($ Billion) Field Services Backlog ($ Billion) FY16 - Q2 11.4 6.9 18.2 5.2 4.9 FY16 - Q1 11.4 6.8 18.2 FY15 - Q2 12.6 6.3 18.9 3.3 4.8 FY14 - Q2 12.6 5.8 18.4 FY13 - Q2 10.9 5.9 16.8 Aerospace & Technology Buildi
Slide 14: Segment Financials – Adjusted YTD Results
Segment Financials – Adjusted YTD Results Line of Business Operating Profit Change vs. FY15 Operating Profit Margin (Change vs. FY15) Aerospace & Tech. $103M Flat 7.7% (+50 bps) Buildings & Infra. $83M +3% 7.3% (+70 bps) Industrial $40M -48% 3.0% (-330 bps) Petroleum & Chem. $63M -2% 3.5% (+60 bps)
Slide 15: Restructuring Update
Restructuring Update Greater Annualized Savings • Benefits Continue to Accelerate – Final expected savings of $240 M - $270 M (80% cash) – Final headcount reduction of 4,000+ – 80+ offices impacted – Final revised cost through Q3 of $330 M - $350 M (cash payback of 0.8 years) • Re-investing in Peopl
Slide 16: Capital Allocation
Capital Allocation Increasing Shareholder Value • Share Buy-Back Status – $500 M share buy-back continuing over remainder of 3-year period – $72 M spent YTD – 5.4% reduction in shares outstanding YoY • Updated Capital Structure Strategy Aligned with Strategic Review 16
Slide 17: Next Steps
Next Steps 17
Slide 18: Project Delivery Excellence
Project Delivery Excellence Excel & Foster Culture of Delivery Excellence • Key Initiatives – Upgrade/standardize tools & streamline procedures – Leverage global footprint to strengthen strategic sourcing – Expand culture of innovation – Talent & career development • Improvement Gaining Momentum – P
Slide 19: Strategic Review
Strategic Review Strategic & Cultural Transformation • Appointed Alan Dick to Lead Global Strategy Effort • Corporate Strategy will Focus on Total Shareholder Return – Optimize cost position – Drive profitable growth – Improve return profile • Other Key Elements of Strategy – Capital deployment – Bu
Slide 20: Summary
Summary Stable FY16 Outlook • FY16 2H Outlook – Strong focus on execution & achieving future growth – Continuing opportunities to increase cost savings – FY16 EPS guidance of $2.90 to $3.20 • Jacobs Strengths – Diversity of business – Smart use of cash – Investing in our future 20
Slide 21: Thank You!
Thank You! © Copyright Jacobs May 5, 2016 www.jacobs.com | worldwide
Slide 22: Non-US GAAP Financial Measures
Non-US GAAP Financial Measures The following table reconciles, for Q2FY16, net earnings attributable to Jacobs, diluted EPS, Selling General & Administrative expenses, and Operating Profit determined on the basis of U.S. GAAP to their respective “adjusted” (i.e., non-GAAP) amounts. The adjustment re