Jacobs Engineering Holds $18.9 Billion Backlog for Second Quarter of Fiscal 2015, Eyes $300 Million in U.S. Federal Contracts

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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, maintained a strong backlog amid crumbling commodity prices in the second quarter of its 2015 fiscal year. Net earnings were reported to be $81.97 million, a 1.79% decrease from the second quarter of the 2014 fiscal year.

Industrial Info is tracking more than $75 billion in active projects involving Jacobs, including almost $8 billion for rail systems. The largest of these is the Maryland Department of Transportation's Red Line in Baltimore, which is set for a $2.57 billion addition that will begin in October. Jacobs and STV Incorporated (Baltimore) will perform design-engineering services for 14.1 miles of light rail that will connect several major points in eastern Baltimore, featuring a tunnel near Leakin Park, a 3.5-mile downtown tunnel, and 19 stations, five of which are underground. It also will feature a rail-car storage and heavy maintenance facility. A second, $1.6 billion expansion is planned to begin in mid- 2016.

Total revenues stood at $2.9 billion, an 8.59% decrease from the same period last year. The second-quarter 2015 bottom line was negatively affected by $9.6 million in after-tax costs and expenses related to restructuring activities. However, during the first half of the year, Jacobs signed more than $300 million in contracts with the U.S. federal government to design and procure innovative information technology and telecommunications solutions, including operational systems.

During the second quarter, the company expanded its role in China after subsidiary Jacobs Projects Shanghai Company Limited acquired a controlling interest in Suzhou Han's Chemical Engineering Company Limited, now called Jacobs Engineering Suzhou Company Limited. The acquisition gives Jacobs two specialty "Class A" design licenses for China's chemical, petrochemical and pharmaceutical industries, opening Jacobs up to provide engineering design for a smorgasbord of chemical projects in China.

Also during the quarter, Saudi Industry Property Authority awarded Jacobs a two-year contract to assist in the development of three industrial cities in Saudi Arabia. The project, which is part of Saudi Arabia's multi-billion dollar investment in about 40 industrial cities, includes roads, water distribution, power and telecommunications. Jacobs did not disclose the contract value for either the Chinese or Saudi agreements.

Capital expenditures were reported to be $25.4 million for the quarter and $59.18 million for the first six months of the fiscal year, compared with $29 million and $66.95 million in second-quarter and first-half 2014, respectively.

"We believe that our second-quarter results are indicative of a stronger level of profitability than a straight comparative would suggest," said Kevin Berryman, the executive vice president and chief financial officer of Jacobs, in a conference call. "It supports the view that our underlying profit level is relatively flat year-over-year, after recognizing that many of the specific items are expected not to be continued over the balance of the [fiscal] year 2015."

Jacobs' backlog stood at a near-record $18.89 billion at the end of the quarter, compared with $18.41 billion at the end of second-quarter 2014. Executives cited strong end-market demand, which offset the negative impact of low commodity prices. Nonetheless, the company is maintaining a cautious outlook amid the low commodity prices and the strengthening U.S. dollar, which puts downward pressure on international sales.

"This backlog represents a book-to-bill [ratio] over the trailing 12-month period of 1.05," Berryman said in the conference call. (A ratio of more than 1 indicates a company has a demand for orders that exceeds what it can immediately supply.) "Importantly, our success in selling work is resulting in our backlog remaining at this near-record level, and it gives us continued confidence that our longer-term growth prospects are robust."

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