JACOBS SOLUTIONS INC. Q1 FY2025 earnings call

• Investor Day: Hosting 2025 Investor Day on February 18 in Miami to lay out the vision for Jacobs' next chapter.
• Financial Performance: Total gross revenue increased over 4% in Q1, adjusted net revenue rose over 5%, adjusted EPS was $1.33 (8% decrease YOY), adjusted EBITDA was $282 million (24% YOY increase), consolidated backlog increased 19% YOY.
• Segment Wins: Substantial wins in Water and Environmental (e.g., 10-year contract with JXN Water), Life Sciences (double-digit net revenue growth), and Critical Infrastructure (e.g., River Torrens to Darlington project, BusConnects Dublin program).
• Cash and Balance Sheet: Free cash flow was $97 million in Q1, repurchased $202 million in shares, net leverage ratio remained 1.1x, and Board approved a new $1.5 billion share repurchase authorization.

Infrastructure and Advanced Facilities: Adjusted net revenue in Water and Environmental increased 11% YOY, with all major geographies showing strength. Life Sciences and Advanced Manufacturing saw growth, with Life Sciences having double-digit net revenue growth in Q1 and Advanced Manufacturing expected to improve in the second half. Critical Infrastructure adjusted net revenue was up 5% YOY, with North America outpacing total growth. PA Consulting: Revenue was roughly flat year-on-year, but operating profit increased 22.6% YOY and 19.6% on a constant currency basis. Revenue contribution details weren't explicitly broken down by percentage, but the focus was on the financial performance and trends within each segment.

• Fiscal '25 adjusted net revenue expected to grow mid- to high single digits YOY, adjusted EBITDA margin to range from 13.8% to 14%, and free cash flow conversion more than 100%.
• Adjusted EPS guidance raised from $5.80-$6.20 to $5.85-$6.20.
• Q2 adjusted EBITDA margin expected to be below Q1 but on track for full-year margin guidance of 13.8%-14%.

• FX Movement: Potential adverse translation effect on revenue and operating income if the dollar strengthens, particularly regarding British pound conversation rates.
• Political Narrative: Impact on customer behavior, but management doesn't see dramatic shifts in customer behavior due to political narrative.
• TSA Costs: Transition services agreement costs, but expecting to optimize post-TSA to improve profitability.

Q: Sabahat Khan asks about customer sentiment and backlog A: Bob Pragada states customer sentiment remains positive, and backlog growth continues with double-digit pipeline growth across end market sectors Q: Sabahat Khan asks about margin guidance and initiatives A: Venk Nathamuni mentions margin improvement due to cost controls, operating leverage, mix optimization, and global delivery model, with Q2 margin expected to be lower but on track for full-year guidance Q: Andy Kaplowitz asks about Water and Environmental growth and Advanced Manufacturing A: Bob Pragada and Venk Nathamuni discuss strong Water and Environmental growth with visibility into '26, and Advanced Manufacturing expected to improve in H2 with green shoots in Industrial Manufacturing Q: Andrew Wittmann asks about TSA and backlog A: Venk Nathamuni says TSA is still a profitable engagement, and trailing 12-month backlog is a better reflection of work profile Q: Sangita Jain asks about PA Consulting revenue and capital allocation A: Bob Pragada and Venk Nathamuni talk about PA Consulting revenue ramp with pipeline and backlog growth, and capital allocation priorities on organic growth, share repurchases, and M&A as an accelerator Q: Unidentified Analyst asks about U.S. federal government exposure A: Bob Pragada states less than 10% of business is tied to federal agencies, and no major effects seen from political narratives Q: Michael Dudas asks about European, Middle East, Australia business and cash flow A: Bob Pragada discusses positive trends in these regions, and Venk Nathamuni talks about cash flow and margin expectations for full-year conversion Q: Judah Aronovitz asks about international infrastructure reacceleration A: Bob Pragada mentions consistent growth in water market and cities/places work driving reacceleration Q: Adam Bubes asks about program management and margins A: Bob Pragada and Venk Nathamuni discuss program management as a cross-cutting capability and its benefit to margins Q: Kevin Wilson asks about tariffs and restructuring costs A: Bob Pragada and Venk Nathamuni address tariffs as an opportunity to advise clients and confirm restructuring costs guidance remains $75M-$95M for the year