Jacobs Solutions Inc. · NYSE:J
Jacobs Solutions — Jacobs — Investor Day (December 2016)
115 slides from Jacobs Solutions's investor day presentation, Dec 1, 2016
Slide 1: Jacobs 2016 Investor Day
Jacobs 2016 Investor Day December 1, 2016 www.jacobs.com | worldwide
Slide 2: Agenda
Agenda Welcome & Opening Remarks Kevin Berryman, EVP & CFO 8:00 AM Company Direction & Strategy Steve Demetriou, Chairman & CEO Petroleum & Chemicals Gary Mandel, President Industrial Bob Pragada, President Q&A Demetriou, Mandel, Pragada BREAK 9:50 AM Buildings & Infrastructure Bob Pragada, Presiden
Slide 3: 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 4: Company Overview & Strategy
Company Overview & Strategy | Steve Demetriou, Chairman & CEO NASA, International Space Station – Alpha Magnetic Spectrometer in Space
Slide 5: The Jacobs Connected Enterprise
THE JACOBS CONNECTED ENTERPRISE A D V A N C I N G T H E A R T O F T H E P O S S I B L E
Slide 6: What You Will Hear About Today
What You Will Hear About Today • New, experienced management team with fresh perspective • Strong foundation in place • Multi-year business transformation underway • Driving culture change; discipline, accountability, performance • Profitable growth framework • Strong cash generation; new capital de
Slide 7: Our Journey Begins With Our Management Team
Our Journey Begins With Our Management Team New to Jacobs within the last 3 years Steve Demetriou Chairman & CEO Joined: 2015 Terry Hagen Gary Mandel Bob Pragada Kevin Berryman Lori Sundberg Michael Tyler Barbie Bigelow Alan Dick Jeff Goldfarb President, President, President, EVP & CFO HR Legal CIO
Slide 8: Jacobs At A Glance
Jacobs At A Glance 2016 Revenue 2016 Op. Profit* $11B $586M Listed JEC (NYSE) Employees ~54,000 21% 30% 30% 21% Countries 30+ 24% 14% 25% 35% Locations 230+ Petroleum & Chemicals (P&C) Industrial Aerospace & Technology (A&T) Buildings & Infrastructure (B&I) *Segment operating profit excludes non-all
Slide 9: Markets We Serve
Sadara Chemical Company Oyu Tolgoi Project, Mongolia Markets We Serve Petroleum & Oil & gas upstream, refining & Chemicals chemical markets Mining & minerals, specialty Industrial chemicals & manufacturing, life sciences, field services Grand Central Terminal NASA, Space Launch System (Orion) East S
Slide 10: Jacobs Has Been Built On Key Acquisitions
Jacobs Has Been Built On Key Acquisitions… Revenue ($B) 20 18 FNS Federal Network Systems 16 P&C ZATE 14 Stork 12 Engineering 10 Humphreys & Group Glasgow 8 6 4 2 - 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 Acquired 80+ Companies 10
Slide 11: And Is Well Positioned Globally
…And Is Well Positioned Globally Norway Finland Netherlands Canada Belgium Sweden Mongolia Ireland Germany UK Switzerland Spain US Italy China Qatar Morocco U.A.E. Saudi Arabia India Hong Kong Mexico Oman Philippines Thailand Colombia Ethiopia Ivory Coast Malaysia Kenya Indonesia Brazil Singapore Co
Slide 12: Our Strategic Review Identified Certain Gaps
…However, Our Strategic Review Identified Certain Gaps • Lack of Global Strategy – Office-centric approach with focus on billable hours – Insufficient focus on expanding client base • M&A Integration Challenges – Fragmented systems and processes – Lacking integration excellence • Cultural Gaps – Und
Slide 13: Jacobs Transformation Underway
Jacobs Transformation Underway Reorganized Restructured Reenergized Market-focused structure Streamlined footprint New path forward • Clarified leadership, • Rightsized overhead • Employee survey informing accountability, responsibility – 90+ offices impacted decisions • Four global lines of busines
Slide 14: Our Strategic Focus
Our Strategic Focus Leverage Our Strong Foundation Implement Set of Strategic Imperatives Execute Disciplined Capital Deployment 14
Slide 15: Leveraging Our Strong Foundation
Leveraging Our Strong Foundation Core Strengths Differentiation ü BeyondZero® Committed, ü Experienced ü Culture of caring Safety Performance Passionate ü New perspectives Leadership ü Global reach ü End markets and clients ü Large Attractive Markets ü Project mix and size Diversification ü Global i
Slide 16: Strategic Imperatives
Strategic Imperatives Build A High Build culture of accountability, inspirational leadership and Performance innovation that will lead to outperformance over the long term Culture Transform Fundamentally change the way we operate to improve project The Core delivery, sales effectiveness and business
Slide 17: Build A High Performance Culture
Build A High Performance Culture Four Focus Areas Empowerment Strategy and Alignment Accountability Organizational Health Assessment Results Top 2nd 3rd 4th Quartile Quartile Quartile Quartile A&T P&C B&I Industrial Leadership and World Class People Execution and Development Innovation Leadership Co
Slide 18: Transform The Core: Strengthen Project Delivery
Transform The Core: Strengthen Project Delivery Focus & Objectives • Framework – Invest in tools, systems Specific Initiatives - Year 1 – Standardize procedures – Maximize Project Delivery Center of Excellence • Deploy consistent project controls platform • Governance • Streamline policies and proce
Slide 19: Transform The Core: Enhance Sales Effectiveness
Transform The Core: Enhance Sales Effectiveness Focus & Objectives • Differentiated solutions – Client-based value proposition – End-to-end offering Specific Initiatives - Year 1 • Global connectivity • Implement Client Relationship Management system – Sales Center of Excellence – Technical hubs • I
Slide 20: Transform The Core: Achieve Business Excellence
Transform The Core: Achieve Business Excellence Focus & Objectives • Systems improvement – Business intelligence Specific Initiatives - Year 1 – Financial processes • Upgrade financial processes and systems • Achieve “as sold” margin • Strengthen M&A talent and execution • M&A process improvement –
Slide 21: Grow Profitably: End Market Priorities In Focus
Grow Profitably: End Market Priorities In Focus P&C Industrial B&I A&T Downstream Life Sciences Transportation US Gov’t Services Upstream & Licensed Social Telecom Midstream Technologies Infrastructure Non-US Gov’t Consumer Goods Water Services Mining & Minerals Mission Critical Priority growth area
Slide 22: Total Global Addressable Market
Total Global Addressable Market 5-year Industry Line of Business CAGR ~$7T Petroleum & Chemicals 5 - 6% Total Global Industrial (Life Sciences) 5 - 6% Addressable Buildings & Infrastructure 4 - 5% Market Aerospace & Technology 2 - 3% Note: Expected cumulative 2017 – 2021; based on internal assessmen
Slide 23: Grow Profitably: Focused On Higher Growth Markets
Grow Profitably: Focused On Higher Growth Markets Rationale Downstream Priority Growth Markets • Solid, stable industry growth rates Life Sciences • Size of total market capital spend • Our capability to outperform Transportation Social Approach Infrastructure • Penetrate existing clients and develo
Slide 24: New M&A Framework
New M&A Framework Focus Areas Financial Hurdles • M&A committee established • High growth markets • Cost synergies • Extensive integration framework developed with key milestones • Superior technology, IP • Double-digit ROI • Embedded strength • Strong NPV • Rigorous post-deal tracking of financial
Slide 25: Managing Risk And Optimizing Portfolio Profitability
Managing Risk And Optimizing Portfolio Profitability Managing Risk Profile… …And Eliminating Loss-making Business Illustrative 18% 20% 15% - Unprofitable 25% Fixed 82% 80% Breakeven + Reimbursable 60% Profitable FY16 Goal 3-YR Ave Goal Balanced Capex/Opex Portfolio Supports Long-term Sustainable Gro
Slide 26: 2019 Financial Framework
2019 Financial Framework 2016 Actual 2019 Target Organic Revenue Flat 2-4% Growth, CAGR Operating Profit Margin1 4.8% 100-150 bps ROIC1 8.9% 50-150 bps 1 Non-GAAP measure, GAAP reconciliation tables at end of presentation * Excludes acquisitions Our Transformation Will Drive Results 26
Slide 27: New Strategy: Building From A Strong Foundation
New Strategy: Building From A Strong Foundation • Our transformation is underway • Delivering increased value to our clients • Executing focused set of priorities to drive profitable growth • Achieving higher quality of earnings, including through M&A • Employing disciplined capital framework New Pe
Slide 28: Petroleum & Chemicals Overview
Petroleum & Chemicals Overview | Gary Mandel, President BP, CAT Fractionator
Slide 29: Key Messages
Key Messages • Grow profitably by focusing on increased market share downstream in NA and Europe while increasing penetration across the Middle East • Cost reductions of $132M (2015 - 2016) have led to margin improvement despite industry headwinds; backlog growing Eesti Energia Õlitööstus AS Narva S
Slide 30: Petroleum & Chemical (P&C) Snapshot
Petroleum & Chemical (P&C) Snapshot FY16 Segment Results End Markets Served (% OF 2016 REVENUE) Revenue $3.3B CHEMICALS 43% OP Margin 3.9% REFINING 41% OIL & GAS 16% Backlog $5.5B Representative Clients Countries 18 Oxy DSM Total Vopak Shell Reliance Indian Oil SABIC Phillips 66 Chevron Lubrizol Cel
Slide 31: P&C Portfolio Underpinned By Reliable Income Streams
P&C Portfolio Underpinned By Reliable Income Streams P&C Project Mix Current Mix1 FY19 Goal 36% 50% 50% 64% Capital Projects Sustaining Capital2 1 Estimated FY17 revenue mix 2 Sustaining capital defined as programs and projects executed to maintain production, extend asset life, improve safety, or e
Slide 32: P&C Industry Dynamics
P&C Industry Dynamics Jacobs’ Points of Strength Oil & Gas • Top refining and chemicals Upstream: Potential capex rebound but resume lower than 2014 peak Midstream: NA and ME will stabilize • 30 years high value engineering center Refining experience in India NA, ME and Asia Pacific (ex-China) are r
Slide 33: P&C Total Addressable Market
P&C Total Addressable Market Market 5-year Industry Size CAGR $2.8T Oil & Gas $2.2T 6 - 7% Total Global Chemicals $348B 6 - 7% Addressable Market Refining $300B 5 - 6% Note: Expected cumulative 2017 – 2021; based on internal assessment and third-party research. NA And Europe Sizeable Markets; ME And
Slide 34: Opportunities Identified Through Strategic Review
Opportunities Identified Through Strategic Review… To Further Develop In Order To Differentiate Ourselves • IoT, JPRO, digitization of data (leverage disruptive technologies to further innovate our capital projects and sustaining capital deliveries) • Improve our integrated EPC skills, capabilities,
Slide 35: Segment Imperatives: Petroleum & Chemicals
Segment Imperatives: Petroleum & Chemicals • Redefine career development pathways to recruit, develop and retain high Build A High potential talent Performance • Strengthen KPI metrics to drive culture of efficiency, performance and Culture accountability • Upgrade engineering, procurement and const
Slide 36: Grow Profitably: Further Strengthen Our Global Position
Grow Profitably: Further Strengthen Our Global Position • Deepen relationships through targeted NA and Europe Middle East services, including end-to-end EPC and Downstream Increase Upstream EPCM Opportunities Penetration and (Enhanced Expand into Other • Identify local project Capabilities) Countrie
Slide 37: Increase Upstream Penetration, Expand In Middle East
Increase Upstream Penetration, Expand In Middle East • Expand operations on West Coast (i.e., Yanbu, Jeddah) Near Term Saudi • Develop local construction delivery partners, pursue potential JVs Arabia • Leverage General Engineering Services (GES) framework contracts to capture larger share of Operat
Slide 38: JPRO: Innovating Process Safety
JPRO: Innovating Process Safety • ISA84 compliance • Uptime reliability & productivity • Technology upgrades • Sustainable solutions • Cyber security 38
Slide 39: P&C Backlog And 2019 Targets
P&C Backlog And 2019 Targets Backlog $B $6.4 2019 $5.6 $5.5 2016 Targets Revenue $3.3B 2 - 3% (organic growth target) annual growth Segment Operating 3.9% 5 - 6% Profit Margin1 2014 2015 2016 1 Excludes non-allocated corporate expenses 39
Slide 40: P&C Summary
P&C Summary BP Exploration Operating Company Ltd., Sullom Voe Terminal • Transform our Core – Common tools, work processes and management systems – KPI’s to drive culture of accountability, revitalize our sales process to offer solutions to new clients and further build our EPC skills, depth and cap
Slide 41: Industrial Overview
Industrial Overview | Bob Pragada, President Gedeon Richter Plc., biotechnology R&D and manufacturing facility
Slide 42: Key Messages
Key Messages • Established market leader with deep client relationships • Diverse business with a focused, prioritized approach • Leverage existing relationships to expand offering to full project lifecycle University of North Carolina (UNC) at Chapel Hill, Cogeneration Facility Turbine Generator •
Slide 43: Industrial Snapshot
Industrial Snapshot FY16 Segment Results End Markets Served (% OF 2016 REVENUE) Revenue $2.8B FIELD SERVICES* 46% LIFE SCIENCES 36% OP Margin 2.9% MINING & MINERALS 9% CONS. GOODS & MFG. 6% Backlog $3.1B SPECIALTY CHEMICALS 3% Representative Clients Countries 25 ADM Biogen Eastman Kimberly-Clark She
Slide 44: Diverse, Full Service Offerings In Our End Markets
Diverse, Full Service Offerings In Our End Markets Overview Position Trend • Full project lifecycle engineering, construction, Mining & commissioning and maintenance service Minerals Leader and Specialty • Proprietary sulfuric and phosphoric acid plant, and Chemicals sulfur recovery technology with
Slide 45: Global Field Services
Global Field Services Capabilities And Resources Integrate • Industry leader in safety with our world Align Project class BeyondZero® Culture of Caring Sales Delivery • Integrated Project Delivery (EPC/EPCM), Construction and Technical Services, PM/CM and Sustaining Services Drive Harness • Deep exp
Slide 46: Segment Imperatives: Industrial
Segment Imperatives: Industrial • Drive innovation-centric environment and accountability through empowerment Build A High • Establish a global mindset; individually and organizationally Performance • Recruit, develop and retain subject matter experts and project management Culture professionals abl
Slide 47: Life Sciences Total Addressable Market
Life Sciences Total Addressable Market Market 5-year Industry Size CAGR $42B Pharma $20B 3 - 4% Total Global Biopharma $14B 8 - 9% Addressable Market MedTech, Animal Health $8B 5 - 6% Note: Expected cumulative 2017 – 2021; based on internal assessment and third-party research. 47
Slide 48: Research Trends Drive Long-term Growth Opportunity
Research Trends Drive Long-term Growth Opportunity Pharma Biopharma MedTech • Population growth and • Deeper understanding of accelerated increase in cancer driving demand for • Interest in minimally invasive surgical chronic disease states highly targeted biopharma techniques has given rise to opti
Slide 49: Life Sciences Strengths And Differentiators
Life Sciences Strengths And Differentiators How We Are Differentiated • Subject matter experts with cutting-edge facility innovation • Integrated EPCM project delivery expertise Large • Diverse geographic footprint Projects • Depth and scale of resource • Strong brand with track record of success •
Slide 50: Several Opportunities Identified Through Strategic Review
Several Opportunities Identified Through Strategic Review Further Develop Capabilities • Implement Lean execution principles Large • Expand global SME through Technical Fellows Program Projects • Grow scale and expertise in Global Integrated Delivery (GID) Small to Mid • Leverage low overhead, local
Slide 51: Portfolio Underpinned By Reliable Income Streams
Portfolio Underpinned By Reliable Income Streams Life Sciences Project Mix Current Mix1 FY19 Goal 20% 35% 65% 80% Capital Projects Sustaining Capital 1 Current mix based on FY16 Life Sciences revenue 51
Slide 52: Building Out Services And Geographies To Fuel Growth
Building Out Services And Geographies To Fuel Growth 1 Target project life cycle opportunity by offering comprehensive end-to-end solutions Current Position Opportunity Strong Moderate Concept / Construction Commissioning Engineering Procurement Feasibility Management & Qualification Limited Capture
Slide 53: Global Integrated Delivery Enables Our Growth
Global Integrated Delivery Enables Our Growth • 80% of workflow is multi-office execution • India presence enables ability to scale – 500+ experienced personnel delivering pharmaceutical engineering – Significant platform positioned for growth • Provides cost leadership and increased access to talen
Slide 54: Industrial Backlog And 2019 Targets
Industrial Backlog And 2019 Targets Backlog $B 2019 $3.7 2016 $3.1 Targets $2.5 Revenue 9 - 10% (organic growth target) $2.8B annual growth Segment Operating 2.9% 3.5 - 4.5% Profit Margin1 2014 2015 2016 1 Excludes non-allocated corporate expenses 54
Slide 55: Industrial Summary
Industrial Summary • Global LOB structure serves as catalyst for executing growth strategy • Pharma and biopharma expected to be largest and Unilever San.ve Tic Turk, A.S., fastest growing sub-sectors over next 5 years Bosphorus Ice Cream Project • Longer-term growth opportunity in existing markets
Slide 56: Solutions for a more connected, sustainable world
Solutions for a more connected, sustainable world
Slide 57: Buildings & Infrastructure Overview
Buildings & Infrastructure Overview | Bob Pragada, President GSA Mid - Atlantic Region 3, Social Security Administration National Support Center
Slide 58: Video - FasTracks
Video - FasTracks JACOBS
Slide 59: Key Messages
Key Messages • Market leader within fragmented market • Business built on a series of key acquisitions • Driving global integration for optimal local solutions DART Rail Station at Terminal A, DFW International Airport • Integration driving alignment of processes and tools Woodall Rodgers Park Found
Slide 60: Buildings & Infrastructure (B&I) Snapshot
Buildings & Infrastructure (B&I) Snapshot FY16 Segment Results End Markets Served (% OF 2016 REVENUE) Revenue $2.3B TRANSPORTATION 56% OP Margin 7.8% SOCIAL INFRASTRUCTURE 38% WATER 6% Backlog $5.0B Representative Clients Countries 14 US Navy Crossrail US Army Corps of Engineers Main Roads – Queensl
Slide 61: Historical Growth Driven By Acquisitions
Historical Growth Driven By Acquisitions 1994 2016 VERTICALS HISTORY OF CAPABILITY Buildings Water Healthcare Education Gov’t Buildings Aviation Rail Highways Power Mission Critical 61
Slide 62: Market Leadership Underpinned By Distinctive Service Offerings
Market Leadership Underpinned By Distinctive Service Offerings ENR 2016 Industry Rankings #2 TRANSPORTATION GOV’T BUILDINGS #2 OVERALL (Global Buildings and Infrastructure Space) Comprehensive Program And Project Delivery Are Key Differentiators 62
Slide 63: B&I Total Addressable Market
B&I Total Addressable Market Market 5-year Industry Size CAGR $800B Social Infrastructure $400B 5 - 7% Total Global Transportation $300B 3 - 4% Addressable Market Water $100B 4 - 5% Note: Expected cumulative 2017 – 2021; based on internal assessment and third-party research. We Target Large, Growing
Slide 64: Within End Market Sub-verticals, Several Strong Trends
Within End Market Sub-verticals, Several Strong Trends Government Aviation Buildings Water • Air traffic growth expected • Funding gaps at the US • Water scarcity is worsening to continue (5% CAGR) Federal and State level are globally, incentivizing increasing focus on total investment in desalinati
Slide 65: Segment Imperatives: Buildings & Infrastructure
Segment Imperatives: Buildings & Infrastructure Build A High • Drive accountability through empowerment and measurement Performance • Leverage a globally-connected, value-based organization Culture • Mindset change; aggressive focus on selective growth • Formalize Technical Fellows, Graduate Develop
Slide 66: Build On Strengths To Capture Underpenetrated Markets
Build On Strengths To Capture Underpenetrated Markets • Leverage leadership position in key areas of US, UK, Ireland and Australia Highways • Globalize diverse technical expertise in sub-verticals (e.g., high speed, freight) & Rail • Integrate Jacobs Connected Enterprise with smart solutions • Diver
Slide 67: B&I Backlog And 2019 Targets
B&I Backlog And 2019 Targets Backlog $B $4.7 $5.0 $4.5 Revenue $2.3B 4 - 5% (organic growth target) (annual growth) Segment Operating 7.8% 7.5 - 8.5% Profit Margin1 2014 2015 2016 1 Excludes non-allocated corporate expenses 67
Slide 68: B&I Summary
B&I Summary • Proven ability and track record of globalizing Gold Coast University Hospital, businesses for long-term growth GCUH Engineering JV (Jacobs and Aurecon) • Targeted M&A to capitalize on strategy and market momentum • Uniquely positioned to deliver superior value LAC+USC Medical Center Re
Slide 69: Aerospace & Technology Overview
Aerospace & Technology Overview | Terry Hagen, President NASA, Orion Space Capsule
Slide 70: Key Messages
U.S. DoD, Key Messages Aberdeen Test Center in Aberdeen Proving Ground • Large, stable and fragmented market presents meaningful share growth opportunity • Differentiated delivery model, cost posture and integration capability provides strong growth foundation • Expand sales capacity and enhance cap
Slide 71: Aerospace & Technology (A&T) Snapshot
Aerospace & Technology (A&T) Snapshot FY16 Segment Results End Markets Served (% OF 2016 REVENUE) Revenue $2.7B GOV'T SERVICES 76% NUCLEAR 11% OP Margin 7.7% COMM. AUTO & AERO 5% COMM. TELECOM 5% Backlog $5.1B ENVIRONMENTAL 3% Representative Clients Countries 3 BMW AT&T EDF UK Nuclear Decommissionin
Slide 72: A&T Portfolio Mix Is Characterized By Recurring Revenue
A&T Portfolio Mix Is Characterized By Recurring Revenue Customer Base Contract Type Contract Duration 15% 14% 10% 21% 65% 85% 90% Government Cost Reimbursable Long-term Contracts Commercial Fixed Price Discrete Projects Time & Materials *Percentages based on 2016 revenue 72
Slide 73: Core Capabilities: Broad And Deep Suite Of Services
Core Capabilities: Broad And Deep Suite Of Services Capability Description Examples • NASA Kennedy Space Center O&M Sustainment Operate and maintain complex • Ford Drivability Test Facility and O&M technical facilities and infrastructure • Aberdeen Proving Ground • Federal Network Systems portfolio
Slide 74: A&T Total Addressable Market
A&T Total Addressable Market Market 5-year Industry Size CAGR $2.0T Gov’t Services $1.5T 1 - 3% Total Global International Defense $400B 4 - 6% Addressable Environmental $161B 4 - 5% Market Commercial Automotive $15B 3 - 4% Note: Expected cumulative 2017 – 2021; based on internal assessment and thir
Slide 75: Industry Dynamics
Industry Dynamics Competitive Pricing Global defense services still extremely price competitive; expected to persist Industry Consolidation Aerospace & Defense (A&D) firms leveraging M&A to increase scale, lower cost structure and build capabilities Disruptive Technology IoT, big data analytics with
Slide 76: Strengths And Competitive Differentiation
Strengths And Competitive Differentiation • Dedicated operating model has resulted in long-term relationships – Industry leading customer satisfaction rates – Higher-than-industry rebid win rates – Delivery model tailored to needs of government contracts • Lower cost posture versus industry • Manage
Slide 77: Proven Ability To Derive Value From M&A
Proven Ability To Derive Value From M&A TYBRIN TechTeam Trompeter FNS Van Dyke Expanded Customer Base Added Technical Capability Captured Adjacent Growth/Scale Achieved Financial Expectations TBD 2009 2010 2013 2013 2016 Recent Transactions Represent Over 25% Of A&T’s 2016 Net Operating Profit 77
Slide 78: Segment Imperatives: Aerospace & Technology
Segment Imperatives: Aerospace & Technology Build A High • Sustain first quartile OHA results Performance • Refine and enhance application of Dedicated Model Culture • Expand talent development and Leadership Development Program to UK • Continue to implement pricing initiatives and intelligently exp
Slide 79: Grow Core Markets
Grow Core Markets • Focus on areas of national priority spend (e.g., expand IC footprint) Government • Leverage existing capabilities into underpenetrated agencies (e.g., missile defense) Services • Aggressively defend leadership positions while improving unit margins (e.g., NASA) • Leverage positio
Slide 80: Focused on New Growth Areas
Focused on New Growth Areas Focus Rationale Approach • Represents majority of • Leverage existing capabilities Penetrate weapons system lifecycle in asset management and Weapons spend (expected to be ~$75B enterprise operations Sustainment over next five years) Market • US represents $115B market •
Slide 81: Introducing Jacobs Connected Enterprise (JCE)
Introducing Jacobs Connected Enterprise (JCE) Data Collection Leveraging our Business Connect devices/controls to collective systems Network collect data across an integration industrial enterprise expertise and applying it to large, Integrated traditional E&C Operations, Data Analysis customer base
Slide 82: A&T Backlog And 2019 Targets
A&T Backlog And 2019 Targets Backlog $B $5.0 $4.9 $5.1 Revenue $2.7B 5 - 7% (organic growth target) annual growth Segment Operating 7.7% 7.5 - 8.5% Profit Margin1 2014 2015 2016 1 Excludes non-allocated corporate expenses 82
Slide 83: Summary
Summary • Well positioned to capture share in large, stable and fragmented market – Highly competitive cost posture – Culture of accountability and innovation U.S. Air Force, C-17 Globemaster III Refueling KC-135 Stratotanker – Demonstrated ability to integrate M&A in A&T (USAF/Staff Sgt. Nathan All
Slide 84: Financial Overview
Financial Overview | Kevin Berryman, EVP & CFO RTD, FasTracks Program Support Consultant - Union Station
Slide 85: Key Messages
Key Messages • Strategic review complete; organization realigned – Greater visibility and accountability – Early emphasis on right-sizing and working capital improvements (DSO) – Improved financial discipline and transformation well underway • Flexible balance sheet bolstered by strong Free Cash Flo
Slide 86: Market, Operational Challenges Led To Need For Change
Market, Operational Challenges Led To Need For Change Revenue ($B) Operating Profit1 ($M) $12.7 $12.1 $686 $600 $14.00 $12.00 $11.0 $526 $10.00 $8.00 $6.00 $528 $446 $4.00 $2.00 $339 $- 2014 2015 2016 2014 2015 2016 EPS1 ROIC1 $3.30 $3.26 $3.08 11.0% 9.2% 8.9% $2.48 $2.40 $1.70 8.3% 6.8% 5.0% 2014 2
Slide 87: Restructuring Has Positioned Us Well To Invest In Growth
Restructuring Has Positioned Us Well To Invest In Growth • Restructuring efforts initiated in mid-2015 $260 - 270M • Final targeted annualized savings of $260 - 270M – Office consolidation: 90+ – Headcount reduction: 5,100 – Cash payback vs. $225M in cash cost = 1 year Total Achieved • Final expecte
Slide 88: Over 33% of Physical Footprint Has Been Closed Or Downsized
Over 33% of Physical Footprint Has Been Closed Or Downsized Offices Impacted by Restructuring 88
Slide 89: Restructuring Efforts Mitigating Market Pressures
Restructuring Efforts Mitigating Market Pressures Segment Operating Profit1 YoY LOBs FY15 FY16 Change Aerospace & Technology 7.0% 7.7% +70 bps Buildings & Infrastructure 5.9% 7.8% +190 bps Industrial 5.0% 2.9% -210 bps2 Petroleum & Chemicals 3.3% 3.9% +60 bps 1 Excludes non-allocated corporate expen
Slide 90: Growth Momentum Building Despite Challenged End Markets
Growth Momentum Building Despite Challenged End Markets Backlog ($B) Months in Backlog1 17.8 18.1 18.5 18.6 20.6 17.3 18.5 18.8 19.2 17.5 $19.1 $18.9 $18.8 $18.8 $18.8 17.5 $18.4 $18.2 $18.3 $18.3 $17.2 $15.9 2012 2013 2014 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 2015 2016 90 1 Months in bac
Slide 91: Segment Operating Profit
Segment Operating Profit 2014 2016 28% 30% Buildings & Infrastructure + 14 ppts Aerospace & Technology 23% Industrial 35% Petroleum & Chemicals 22% 14% 27% 21% Transitioning To Less Commodity-based, Higher Margin Mix 91
Slide 92: Further Strengthened Balance Sheet
Further Strengthened Balance Sheet ($M) FY14 FY15 FY16 Net Earnings Attributable to the Group 352 329 215 Depreciation & Amortization 145 149 130 Other 6 52 7 Changes in Working Capital 219 (45) 328 Cash Flow From Operations 722 485 680 Less: Capex (132) (88) (68) Free Cash Flow 590 397 612 Net (Deb
Slide 93: Working Capital Management An Important Part Of Story
Working Capital Management An Important Part Of Story Total Operating Working Capital at Year-end ($M)1 $918 $676 $694 $428 2013 2014 2015 2016 Average WC 6.9% 6.3% 5.9% 5.4% DSO (Days) 79 78 77 70 1 Operating Working Capital equals total current assets, ex cash – total current liabilities, ex curre
Slide 94: FY 2017 Guidance
FY 2017 Guidance • Strong operating profit improvement includes $30M in investments to support strategy, operating profit growth – $0.15 EPS in FY17 associated with investments – More than offsetting lost benefits of discrete items in 2016 • Adjusted EPS $3.00 - $3.30 94
Slide 95: Our Path Forward
Our Path Forward Greater Discipline, Accountability, Focus to Drive Profitable Growth Improved Margins Greater Options for Enhanced ROIC for Reduced SG&A Use of Cash Shareholders Reduced WC Increased Free Cash Flow Disciplined Focus On Profitable Growth 95
Slide 96: We Are Transforming Our Portfolio
We Are Transforming Our Portfolio Illustrative Representation: 3-year Historical Average Profitable Breakeven 25% $50 - 100M Unprofitable 60% Opportunity 15% 96
Slide 97: Focus On FCF Generation And Disciplined Use Of Cash
Focus On FCF Generation And Disciplined Use Of Cash… Growth Returns • Focus on profitable growth opportunities • Continued share buyback program – Improve loss-making portions of the portfolio – Buyback authorization ($500M in FY 4Q14 and $500M in FY 4Q15) • Incremental investment in high ROI capex
Slide 98: Capital Allocation Framework
Capital Allocation Framework (Use Of Cash Flow From Operations) Illustrative 2012 - 2016 2017- 2019 • Confidence in ability to generate M&A strong and consistent FCF M&A Growth ‒ Profitable growth focus ‒ Improving W/C CapEx ‒ 1.0x cash conversion target CapEx Dividends Expected • Balance sheet flex
Slide 99: Our Future Financial Framework
Our Future Financial Framework 2016 Actual 2019 Target 2 - 4% Organic Growth Flat (CAGR) Revenue in Priority ~65% 50% Growth Areas (incl. M&A) Operating Profit Margin1 4.8% 100 - 150 bps ROIC1 8.9% 50 - 150 bps 1 Non-GAAP figure, GAAP reconciliation tables at end of presentation 99
Slide 100: Summary
Summary • Strategy in place; clear growth and margin expansion opportunities • Strong capital position; flexible balance sheet bolstered by strong free cash flow generation to support growth initiatives • Disciplined capital deployment framework; balancing growth and returns – Profitable growth focu
Slide 101: Closing Remarks
Closing Remarks | Steve Demetriou, Chairman & CEO GSA, FBI Miami Field Offices
Slide 102: Why Jacobs
Why Jacobs • Performance culture transformation • Investment in tools and systems that enhance operational execution • Targeting markets and geographies with strong underlying growth potential • Three-year plan to deliver organic growth, increased margins and higher ROIC • Disciplined M&A with empha
Slide 103: Solutions for a more connected, sustainable world
Solutions for a more connected, sustainable world
Slide 104: Appendix
Appendix www.jacobs.com | worldwide
Slide 105: Non-US GAAP Financial Measures
Non-US GAAP Financial Measures The following table reconciles, for FY14, FY15 and FY16, net earnings attributable to Jacobs, diluted EPS, Operating Profit and Operating Profit Rate, and Return on Invested Capital (ROIC) determined on the basis of U.S. GAAP to their respective “adjusted” (i.e., non-G
Slide 106: Non-US GAAP Financial Measures (cont'd)
Non-US GAAP Financial Measures (cont’d) 106
Slide 107: Non-US GAAP Financial Measures (cont'd)
Non-US GAAP Financial Measures (cont’d) 107
Slide 108: Non-US GAAP Financial Measures (cont'd)
Non-US GAAP Financial Measures (cont’d) 2013 2014 2015 2016 2013 2014 2015 2016 GAAP Net income 328,108 302,971 210,463 NonGAAP Net income 437,290 410,885 373,555 Average Invested Capital Average Invested Capital Total Stockholders' Equity 4,213,097 4,469,255 4,291,745 4,265,276 Total Stockholders'
Slide 109: Non-US GAAP Financial Measures (cont'd)
Non-US GAAP Financial Measures (cont’d) For fiscal year 2016, adjusted operating profit and profit rate, adjusted earnings, adjusted EPS and adjusted return on invested capital (“ROIC”) are non-GAAP financial measures that are calculated by excluding the after-tax costs related to certain restructur
Slide 110: Steve Demetriou | Chairman & CEO
Steve Demetriou | Chairman & CEO Steve joined Jacobs as its CEO in 2015 and the following year was appointed Chairman of the Board of Directors. He brings an international business perspective and more than 30 years of experience in leadership and senior management roles. Prior to joining Jacobs, St
Slide 111: Gary Mandel | President, P&C
Gary Mandel | President, P&C Gary is President of Jacobs’ Petroleum & Chemicals Line of Business, which generates more than $3B in annual revenue serving clients in the oil & gas, refining and chemicals market sectors. He also leads Jacobs’ global Mining and Minerals business. Gary joined Jacobs in
Slide 112: Bob Pragada | President, B&I and Industrial
Bob Pragada | President, B&I and Industrial Bob is President of Jacobs’ Buildings & Infrastructure Line of Business as well as Jacobs’ Industrial Line of Business, which includes the Global Field Services unit. Together these lines of business generate more than $5B in annual revenue serving clients
Slide 113: Terry Hagen | President, Aerospace & Technology
Terry Hagen | President, Aerospace & Technology Terry is President of Jacobs’ Aerospace & Technology Line of Business which generates more than $2.5B in annual revenue serving clients in the government, commercial, and industrial sectors. Terry joined Jacobs in 1987 as a government contractor in env
Slide 114: Kevin Berryman | EVP and CFO
Kevin Berryman | EVP and CFO Kevin oversees all aspects of Jacobs’ corporate finance including accounting, investor relations, treasury, tax, financial planning and analysis, controlling, real estate, and information technology functions. Prior to joining Jacobs in 2015, Kevin served as EVP and CFO
Slide 115: Glossary of Terms Used
Glossary of Terms Used • A&D: Aerospace & Defense • JCE: Jacobs Connected Enterprise • A&T: Aerospace & Technology • JPRO: Jacobs Process Risk Optimization • B&I: Buildings & Infrastructure • LOB: Lines of Business • Capex: Capital Expenditure • O&M: Operations & Maintenance • CM: Construction Manag