Jacobs Engineering Group Inc. (JEC) reported mixed results for fiscal first-quarter 2015 (ended Dec 26, 2014). Earnings and revenues missed the respective Zacks Consensus Estimate but improved from the respective year-ago tallies.
Adjusted earnings came in at 77 cents per share, up 8.5% from 71 cents earned a year ago. However, quarterly earnings missed the Zacks Consensus Estimate of 78 cents by a penny.
Revenues
Revenues improved 3.9% year over year to $3187 million, lower than the Zacks Consensus Estimate of $3214 million. Technical Professional Services revenues came in at $1932.5 million, up 15.5% from the prior-year quarter. Field Services revenues were $1254.5 million, down from $1395.5 million reported in the fourth quarter of fiscal 2014.
Costs/Margin
Direct costs of contracts, a major expenditure for Jacobs, climbed 2% from the year-ago quarter to settle at $2668.6 million. Selling, general and administrative expenses stood at $361.2 million, up 17% year over year. Operating margin was 5%, up 28 basis points year over year.
Backlog
Exiting the quarter, backlog was $19107.4 million, rising 5.8% from $18054.2 million at prior year quarter end. This includes a backlog of $13222.4 million from the Technical Professional Services component compared with $12279.7 million at the end of first-quarter fiscal 2014. Backlog from the Field Services segment was $5885 million as against the year-ago value of $5775 million.
Balance Sheet/Share Repurchase Update
Jacobs’ cash and cash equivalents at the end of first-quarter fiscal 2015 aggregated approximately $670.0 million, down from $1011.2 million in the year-ago period. Total debt decreased to approximately $751 million from $1095.6 million in first-quarter fiscal 2014. The company’s working capital at the end of the reported quarter amounted to $1447.1 million, down 19.8% from the year-ago tally. During the quarter, the company repurchased 2.5 million shares of its common stock for $113.7 million.
Outlook
In fiscal 2015, Jacobs intends to strengthen its financials by adopting certain cost-reduction strategies in its business. By maintaining record backlog levels, the company aims to trigger long-term growth potentiality as well as competitive strength. However, considering the short-term market challenges led by fluctuating oil and commodity prices, the company has aligned its outlook toward the lower end of the previously stated earnings guidance of $3.35–$3.85.
With a market capitalization of $5.01 billion, Jacobs currently carries a Zacks Rank #5 (Strong Sell). Some better-ranked stocks in the industry include VSE Corp. (VSEC), Willdan Group, Inc. (WLDN) and Pernix Group Inc. (PRXG). While both VSE Corp. and Willdan Group sport a Zacks Rank #1 (Strong Buy), Pernix Group holds a Zacks Rank #2 (Buy).
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