Jacobs Engineering Group Inc. JEC reported weak results for fiscal second-quarter 2015 (ended Mar 27, 2015). Earnings and revenues missed the respective Zacks Consensus Estimates for the quarter as well as the year-ago tallies.
Adjusted earnings, excluding the impact of restructuring activities, came in at 72 cents per share, down 12.2% from the year-ago tally. The bottom line also missed the Zacks Consensus Estimate of 79 cents by 8.9%.
Revenues
Revenues decreased 8.6% year over year to $2903.3 million, missing the Zacks Consensus Estimate of $3232.0 million. Technical Professional Services revenues came in at $1862.1 million, down 0.5% from the prior-year quarter; while Field Services revenues totaled $1041.3 million, down 20.2% from the year-ago quarter.
Costs/Margin
Direct costs of contracts, a major expenditure for Jacobs, decreased 9.3% from the year-ago quarter to settle at $2412.4 million. Selling, general and administrative expenses stood at $357.9 million, down 9.2% year over year. Helped by a decrease in operating expenses, the company’s operating margin came in at 4.6%, up 70 basis points year over year.
Backlog
Exiting the quarter, backlog was $18867.0 million, rising 2.5% from the prior-year quarter. This includes a backlog of $12601.2 million from the Technical Professional Services component compared with $12554.9 million at the end of second-quarter fiscal 2014. Backlog from the Field Services segment was $6265.8 million as against the year-ago value of $5857.9 million.
Balance Sheet/Share Repurchase Update
Jacobs’ cash and cash equivalents at the end of second-quarter fiscal 2015 aggregated approximately $465.0 million, down from $691.3 million recorded a year ago. Total debt decreased to roughly $755.4 million from $996.3 million in the prior-year quarter. The company’s working capital at the end of the reported quarter amounted to $1411.4 million, down 15.3% year over year.
During the quarter, the company spent $140.5 million to buy back 3.3 million shares.
Outlook
Jacobs expects adjusted earnings within $2.90–$3.20 per share for full-year fiscal 2015. Considering persistent headwinds in the global commodity and energy markets, the company remains doubtful about its short-term growth. However, over the long run, Jacobs aims to expand revenues and margins on the back of its record backlog levels and strategic service-diversification plans.
Stocks to Consider
With a market capitalization of $5.99 billion, Jacobs currently carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the industry include Analog Devices, Inc. ADI, Actua Corporation ACTA and Accretive Health, Inc. ACHI. All the three stocks carry a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment