Jacobs Engineering Boasts Near-Record Backlog as Refining, Chemicals Demand Grows, Lowers Capex

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Researched by Industrial Info Resources (Sugar Land, Texas)--Jacobs Engineering Group Incorporated (NYSE:JEC) (Pasadena, California), a leading worldwide provider of technical and construction services, reported solid profits in the third quarter of the company's 2015 fiscal year, as cost cuts and strong business from the Petroleum Refining and Chemicals Processing industries more than offset a drop in revenues. Industrial Info is tracking more than $77 billion in active projects involving Jacobs.

Among the largest potential U.S.-based projects for Jacobs is the $1 billion expansion of Monsanto Company's (NYSE:MON) (St. Louis, Missouri) herbicides plant in Luling, Louisiana, for which Jacobs is performing engineering, procurement and construction (EPC) services. The project, which would take three to five years if approved, would involve constructing a new building to house the increased production of Monsanto's branded crop protection products, particularly the Roundup Ready Xtend Crop System. Monsanto says it will make a final investment decision in early 2016, according to the company's website.

Capital expenditures for the quarter totaled $10.12 million, compared with $25.08 million in the same period last year. For the first three quarters of fiscal-year 2015, capital spending totaled $69.3 million, compared with $92.03 million in the first three quarter of 2014.

Net earnings for the quarter were reported to be $91.06 million, a 40.44% increase from third-quarter 2014, while total revenues stood at $2.91 billion, a 10.03% decrease from the same period last year. In a quarterly presentation, Jacobs executives attributed much of the profits to stringent cost reductions in the past year. They also noted that the company incurred $30.1 million in costs related to ongoing restructuring activities that are focused on enhancing cost effectiveness. The major end-markets for Jacobs were Chemicals, National Government and Downstream Refining, which accounted for 22%, 21% and 16% of revenues during the quarter, respectively.

Executives also noted that the company's backlog stood at $18.8 billion, which was close to the quarterly record. About two-thirds of that amount was attributed to the Technical Professional Services business; the remainder was attributed to Field Services. The company's book-to-bill ratio for the trailing 12 months stands at 1.03; a ratio of more than 1 indicates a company has a demand for orders that exceeds what it can immediately supply.

"We saw good sales progress in our third quarter resulting in near-record backlog," said Noel Watson, the executive chairman of Jacobs, in a conference call. "Consistent with our views from last quarter, we continue to be cautious in our short-term outlook and remain confident in the long-term growth potential of our global business."

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