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Introduction & Market Context
Jacobs Engineering Group Inc (NYSE:J) released its fiscal second-quarter 2025 results on May 6, 2025, showing strong growth in adjusted metrics despite significant legal challenges impacting GAAP results. The engineering and professional services firm’s shares dropped 5.24% in premarket trading following the release, suggesting investor concerns about the gap between adjusted and GAAP performance.
The company reported mixed results, with adjusted figures showing solid growth while GAAP metrics were heavily impacted by a legal reserve following an interim ruling against a consolidated joint venture in the Water & Environmental segment. This divergence highlights the challenges Jacobs faces in balancing growth with risk management in complex infrastructure projects.
Quarterly Performance Highlights
Jacobs reported GAAP gross revenue of $2.9 billion, up 2.2% year-over-year, and adjusted net revenue of $2.1 billion, representing a 3.1% increase compared to the same period last year. However, GAAP net income fell dramatically to $11 million, down 87.9% year-over-year, while adjusted net income rose 18.8% to $176 million.
As shown in the following comprehensive results summary:
The company’s adjusted EBITDA grew 8.1% year-over-year to $287 million, with a margin of 13.4% on adjusted net revenue. Adjusted earnings per share increased significantly to $1.43, up 22.2% compared to Q2 FY 2024, while GAAP EPS plummeted 86.3% to just $0.10 per share.
The quarter’s book-to-bill ratio stood at 1.1x, with a trailing twelve-month ratio of 1.3x, indicating continued strong demand for Jacobs’ services. This is further evidenced by the company’s backlog, which grew 20.0% year-over-year to $22.2 billion.
The following chart clearly illustrates the growth in key financial metrics compared to the previous year:
Segment Performance & Market Analysis
Jacobs’ Infrastructure and Advanced Facilities (I&AF) segment showed varied performance across its end markets. Water & Environmental revenue declined 1.7% year-over-year on a gross basis but increased 1.7% on an adjusted net basis. Life Sciences & Advanced Manufacturing demonstrated strong performance with 5.8% gross revenue growth and 5.6% adjusted net revenue growth, driven by strength in Life Sciences and Data Centers. Critical Infrastructure revenue increased 2.2% on a gross basis and 2.4% on an adjusted net basis, with good growth in Transportation and Energy & Power partially offset by weakness in Cities & Places.
The following breakdown shows the performance across Jacobs’ end markets:
PA Consulting continued to be a high-margin contributor to Jacobs’ overall results, though specific growth figures for this segment were not highlighted in the main presentation slides.
Strategic Initiatives & Project Wins
During the quarter, Jacobs secured several significant project wins in its Infrastructure and Advanced Facilities segment, reinforcing its position in key growth markets. Notable awards included cybersecurity services for Hampton Roads Sanitation District in Virginia Beach, planning and design services for water treatment plant upgrades in Boynton Beach, Florida, master planning and design for PsiQuantum’s utility-scale quantum computing facility in Brisbane, Australia, and program management for Denver International Airport’s Consolidated Rent-a-Car Facility.
As illustrated in the following project highlights:
These wins demonstrate Jacobs’ continued success in securing high-value contracts across diverse sectors, from water infrastructure to advanced technology facilities and transportation hubs.
Balance Sheet & Capital Allocation
Jacobs reported negative cash flow from operations of $96 million and negative free cash flow of $114 million for Q2 FY 2025. Despite these challenges, the company significantly increased its share repurchases to $351 million, up 268% year-over-year, and declared a quarterly dividend of $0.32 per share, representing a 10% increase from the previous year.
The company maintained a net debt position of $1.4 billion with a net debt to LTM adjusted EBITDA ratio of 1.26x, indicating a relatively conservative leverage profile. The weighted interest rate on the company’s debt stood at approximately 5.5% at the end of Q2.
The following slide details the company’s balance sheet and cash flow metrics:
Forward-Looking Statements
Despite the challenges faced in Q2, Jacobs reaffirmed its financial targets for fiscal year 2025. The company continues to expect mid-to-high single-digit growth in adjusted net revenue, an adjusted EBITDA margin of 13.8-14.0%, adjusted EPS of $5.85-$6.20, and free cash flow conversion exceeding 100% of net income.
Management noted that they expect adjusted net revenue to rise sequentially in Q3 and Q4, suggesting confidence in the company’s ability to accelerate growth in the second half of the fiscal year.
The following slide outlines Jacobs’ reaffirmed financial targets for FY 2025:
Sustainability Initiatives
Jacobs continues to emphasize its commitment to sustainability and corporate responsibility, highlighting various initiatives, commitments, and recognitions. The company received a 2024 Gold Medal in the EcoVadis Sustainability Ratings and achieved ISS Prime Status for its ESG corporate rating, positioning it as a leader in environmental and social governance within its industry.
As detailed in the following sustainability overview:
These sustainability credentials may help Jacobs secure additional contracts in sectors increasingly focused on environmental impact and social responsibility, particularly in public infrastructure and advanced facilities projects.
Conclusion
Jacobs’ Q2 FY 2025 results present a mixed picture, with strong adjusted performance metrics contrasting sharply with GAAP results impacted by legal challenges. The company’s 20% backlog growth and significant project wins in key sectors provide a solid foundation for future revenue, while management’s reaffirmation of full-year guidance suggests confidence in overcoming the current challenges.
However, the negative market reaction indicates investor concerns about the legal reserve and negative cash flow in the quarter. As Jacobs moves forward, its ability to convert its growing backlog into positive cash flow while managing legal and operational risks will be crucial for restoring investor confidence and achieving its full-year targets.
Full presentation:
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