Jacobs Engineering Reports Profit, Backlog Gains for Fiscal First-Quarter 2012, Sees Market Improvement Ahead

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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 strong overall results in the fiscal first quarter of 2012, as improving markets boosted the company's sales and grew its backlog. Net income for the quarter was reported to be $89.71 million, a 36.29% increase from the fiscal first quarter of 2011.

Total revenues stood at $2.63 billion, an 11.7% increase from the same period last year. Jacobs' total backlog reached $14.5 billion at the end of calendar year 2011, which is 11.5% higher than it was a year earlier. The Technical Professional Services segment drove the gains, accounting for two-thirds of the total. The company has a book-to-bill ratio of 1.14; a ratio of more than 1 indicates a company has a demand for orders that exceeds what it can immediately supply. The biggest areas of revenue for Jacobs during the quarter included government work, the Petroleum Refining industry, the Chemical Processing industry, and infrastructure.

Industrial Info is tracking more than $26 billion in active projects involving Jacobs Engineering, including a $700 million restart and upgrade at the Climax Molybdenum Company's molybdenum mine, which has been closed since 1995, in Climax, Colorado. The project involves restarting and upgrading the open pit mine and concentrator to eventually produce up to 30 million pounds per year. The company also is working on BP plc's (NYSE:BP) (London, England) $500 million expansion at a petroleum refinery in Whiting, Indiana, as part of a larger, $3.8 billion sour Canadian crude project. BP and Jacobs will increase the capacity of the 449-ton-per-day sulfur recovery complex to 1,300 tons per day by constructing two additional sulfur recovery units, two tail-gas treaters, two amine systems, and two sour water strippers.

"The market remains pretty competitive," said Craig L. Martin, the president and chief executive officer of Jacobs, in a conference call. "We are seeing improvements here and there from a cost point of view. The public sector probably has more pressure on it than it has had in the past. The private sector seems to be stable; in fact, pricing may be improving just a little bit there, but our focus on keeping our costs down will remain unchanged."

The Field Services segment saw small drops in revenue and backlog, but the Technical Professional Services segment more than made up for the difference:

• The Technical Professional Services segment reported $1.54 billion in revenue, a 27.66% increase from fiscal first-quarter 2011, and $9.53 billion in backlog, a 21.06% increase.
• The Field Services segment reported $1.09 billion in revenue, a 5.01% decrease from the same period last year, and $4.95 billion in backlog, a 3.21% decrease.

Martin said that the company is maintaining a positive outlook for the remainder of the year. Among the areas where he sees the most growth are North American infrastructure; government work, including cyber security; the onshore oil and gas industry, particularly oil sands; the chemicals market, which Martin said is set to grow rapidly during the next few years, as evidenced by $10 billion in ethylene projects that have been announced for the Gulf Coast; and the mining and minerals market, where the demand for raw materials, particularly copper and gold, is driving new investments in regions where Jacobs is well-established, such as Australia. He also cited a promising market in Latin America.

"We're a major player in the mining and minerals market [in South America], and we're seeing lots of growth," Martin said in the conference call. "Interestingly enough, we think South America represents a very significant refining opportunity; there's something on the order of $80 billion in refinery projects that have been announced in Latin America. ... You'll see more of Jacobs in Latin America." He added that there are emerging pharmaceutical-biotech and food markets in some of the most populated areas of the region.

For more information, visit Industrial Info's North American Industrial Manufacturing Project Database, North American Metals and Minerals Project Database, North American Chemical Processing Project Database, and North American Petroleum Refining Project Database.

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