Jacobs Reports Fiscal Fourth Quarter and Fiscal Year 2023 Earnings

Q4 2023 Financial Highlights:

• Revenue of $4.3 billion grew 10.5% year-over-year; adjusted net revenue¹ up 7.3% in constant currency¹
• Net earnings of $150 million and EPS from continuing operations of $1.25
• Adjusted EPS¹ from continuing operations of $1.90
• Cash flow from operations of $219 million and free cash flow¹ of $180 million, driven by strong DSO performance
• Backlog increased $1.2 billion to $29.1 billion, up 4% year-over-year

Fiscal Year 2023 Highlights:

• Revenue growth of 9.6% and adjusted net revenue¹ up 8.8% year-over-year in constant currency¹
• Net earnings from continuing operations of $667 million, up 4%, and FY23 EPS of $5.31, up 7%
• Adjusted EPS¹ from continuing operations of $7.20, up 4% year-over-year
• Cash flow from operations of $975 million and free cash flow¹ of $837 million

Jacobs' CEO Bob Pragada commented, "We've concluded fiscal 2023 on a high note, achieving remarkable milestones across our operations. Our strategic initiatives have propelled us forward, positioning Jacobs for continued success. Following a robust evaluation of all alternatives, we are excited to announce a definitive agreement to spin-off and combine our Critical Mission Solutions (CMS) and Cyber & Intelligence businesses with Amentum to create a new, publicly-traded leading player in the government services sector. This is a strategic move that underlines our dedication to optimizing our portfolio and focusing on higher-margin, higher-growth opportunities. We expect the separation to enable us to sharpen our focus, streamline operations and enhance value for both our company and our stakeholders. Looking ahead, we remain steadfast in our pursuit of delivering innovative solutions, leveraging our diverse capabilities and continuing to drive positive outcomes for our clients, our people and our shareholders."

Jacobs' CFO Claudia Jaramillo added, "Our fourth-quarter and full-year results reflect the resilience and commitment of our global team, consistently delivering strong performance while establishing the foundation for the businesses to be separated. We're optimistic about the results of our People & Places Solutions business and the building momentum of our data solutions. Looking into fiscal 2024 and beyond, we are aligned to multiple large, growing and well-funded priorities including global infrastructure modernization, climate response and investments in critical supply chains. Further, we are committed to delivering on a bold cost optimization plan and targeting at least 300 basis points of margin improvement in fiscal year 2025."

Financial Outlook²

The Company's outlook for fiscal 2024 adjusted EBITDA is $1,530M to $1,600M and adjusted EPS of $7.70 to $8.20, up 9% and 10% at the midpoints, respectively.

Update on Planned Separation of Critical Mission Solutions ("CMS") business

On May 9, Jacobs announced its intent to pursue a separation of the Critical Mission Solutions (CMS) business. Jacobs announced yesterday that it has entered into a definitive agreement to separate and combine its Critical Mission Solutions and Cyber & Intelligence (C&I) businesses with Amentum in a tax-efficient Reverse Morris Trust transaction, including a $1.0 billion cash dividend payment to Jacobs. Additionally, Jacobs and its shareholders will own up to 63% of the combined company's common shares upon consummation of the transaction, consisting of 51% Jacobs' shareholders ownership and Jacobs retaining 7.5-12%. The exact amount of the retained stake will be determined based on achievement of certain fiscal year 2024 operating profit targets. Jacobs is also expected to realize additional value after closing through the disposition of its retained equity stake in the combined company within 12 months. The transaction is expected to close in the second half of fiscal year 2024.

Until closing, CMS and C&I will operate as business units of Jacobs and financial results for the businesses will be reported in continuing operations. Closing of the transaction will be subject to various customary closing conditions including regulatory approvals, receipt of a private letter ruling from the Internal Revenue Service, opinions from tax advisors and the effectiveness of a registration statement with the U.S. Securities and Exchange Commission. Amentum has received all the necessary shareholder approvals to complete the transaction; no vote of Jacobs' shareholders is required for the transaction. A copy of the news release and accompanying presentation announcing the transaction is available on the investor page at www.jacobs.com.

Fourth Quarter Review

The Company's adjusted net earnings from continuing operations and adjusted EPS from continuing operations for the fourth quarter of fiscal 2023 and fiscal 2022 exclude certain adjustments that are further described in the section entitled "Non-GAAP Financial Measures" at the end of this release. For a reconciliation of Revenue to Adjusted Net Revenue, see "Segment Information" below.

The Company's U.S. GAAP effective tax rate for continuing operations is 30% for the fiscal fourth quarter 2023, and fiscal fourth quarter 2023 adjusted earnings per share from continuing operations reflects a 23% adjusted effective tax rate. Our U.S. GAAP and adjusted effective tax rates for the quarter and year include certain tax adjustments for deferred tax valuation allowances and audit assessments amounting to a negative EPS impact of $.06 per share.

Fiscal 2023 Review

The Company's adjusted net earnings from continuing operations and adjusted EPS from continuing operations for fiscal 2023 and fiscal 2022 exclude certain adjustments that are further described in the section entitled "Non-GAAP Financial Measures" at the end of this release. For a reconciliation of Revenue to Adjusted Net Revenue, see "Segment Information" below.

The Company's U.S. GAAP effective tax rate for continuing operations is 21% for the fiscal year 2023, and fiscal year 2023 adjusted earnings per share from continuing operations reflects a 22% adjusted effective tax rate. Our U.S. GAAP and adjusted effective tax rates for the quarter and year include certain tax adjustments for deferred tax valuation allowances and audit assessments amounting to a negative EPS impact of $.06 per share.

Jacobs is hosting a conference call at 10:00 A.M. ET on Tuesday November 21, 2023, which will be webcast live at www.jacobs.com.

Forward-Looking Statements

Certain statements contained in this press release constitute forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that do not directly relate to any historical or current fact. When used herein, words such as "expects," "anticipates," "believes," "seeks," "estimates," "plans," "intends," "future," "will," "would," "could," "can," "may," "target," "goal" and similar words are intended to identify forward-looking statements. Examples of forward-looking statements include, but are not limited to, statements we make concerning our expectations as to our future growth, prospects, financial outlook and business strategy, including our expectations for our fiscal year 2024 adjusted EBITDA and adjusted EPS, free cash flow conversion, and net interest expense, multi-year earnings growth, our expectations for at least 300 basis points of margin improvement in 2025, as well as our expectations for our fiscal year 2024 effective tax rates, our plans to spin off and merge with Amentum our Critical Missions Solutions ("CMS")  business and a portion of our Divergent Solutions business in a proposed transaction that is intended to be tax-free to stockholders for U.S. federal income tax purposes, our and our stockholders respective ownership percentages of the combined company, the amount of cash payment and value to be derived from the disposition of Jacobs' stake in the combined company, the expected timing, structure and tax treatment of the proposed transaction, the ability of the parties to complete the proposed transaction, and the potential benefits and synergies of the proposed transaction, including the future financial and operating results and strategic benefits, and any assumptions underlying any of the foregoing. Although such statements are based on management's current estimates and expectations, and/or currently available competitive, financial, and economic data, forward-looking statements are inherently uncertain, and you should not place undue reliance on such statements as actual results may differ materially. We caution the reader that there are a variety of risks, uncertainties and other factors that could cause actual results to differ materially from what is contained, projected or implied by our forward-looking statements. Such factors include uncertainties as to the structure and timing of the proposed transaction, the impact of the proposed transaction on Jacobs' and the combined company's businesses if the transaction is completed, including a possible impact on Jacobs' credit profile, and a possible decrease in the trading price of Jacobs' and/or the combined company's shares, the possibility that the proposed transaction, if completed, may not qualify for the expected tax treatment, the ability to obtain all required regulatory approvals, the possibility that closing conditions for the proposed transaction may not be satisfied or waived, on a timely basis or otherwise, the risk that any consents or approvals required in connection with the proposed transaction may not be received, the risk that the proposed transaction may not be completed on the terms or in the time-frame expected by the parties, unexpected costs, charges or expenses resulting from the proposed transaction, business and management strategies and the growth expectations of the combined company, the inability of Jacobs' and the combined company to retain and hire key personnel, customers or suppliers while the proposed transaction is pending or after it is completed, and the ability of the Company to eliminate all stranded costs, as well as other factors related to our business, such as our ability to fully execute on our three-year corporate strategy, including our ability to invest in the tools needed to implement our strategy, competition from existing and future competitors in our target markets, our ability to achieve the cost-savings and synergies contemplated by our recent acquisitions within the expected time frames or to achieve them fully and to successfully integrate acquired businesses while retaining key personnel, the impact of any pandemic, and any resulting economic downturn on our results, prospects and opportunities, measures or restrictions imposed by governments and health officials in response to the pandemic, the timing of the award of projects and funding and potential changes to the amounts provided for under the Infrastructure Investment and Jobs Act, as well as other legislation related to governmental spending, any changes in U.S. or foreign tax laws, statutes, rules, regulations or ordinances that may adversely impact our future financial positions or results of operations, financial market risks that may affect the Company, including by affecting the Company's access to capital, the cost of such capital and/or the Company's funding obligations under defined benefit pension and postretirement plans, as well as general economic conditions, including inflation and the actions taken by monetary authorities in response to inflation, changes in interest rates, and foreign currency exchange rates, changes in capital markets, instability in the banking industry, or the impact of a possible recession or economic downturn on our results, prospects and opportunities, and geopolitical events and conflicts among others. The impact of such matters includes, but is not limited to, the possible reduction in demand for certain of our product solutions and services and the delay or abandonment of ongoing or anticipated projects due to the financial condition of our clients and suppliers or to governmental budget constraints or changes to governmental budgetary priorities; the inability of our clients to meet their payment obligations in a timely manner or at all; potential issues and risks related to a significant portion of our employees working remotely; illness, travel restrictions and other workforce disruptions that have and could continue to negatively affect our supply chain and our ability to timely and satisfactorily complete our clients' projects; and the inability of governments in certain of the countries in which we operate to effectively mitigate the financial or other impacts of any future pandemics or infectious disease outbreaks on their economies and workforces and our operations therein. The foregoing factors and potential future developments are inherently uncertain, unpredictable and, in many cases, beyond our control. For a description of these and additional factors that may occur that could cause actual results to differ from our forward-looking statements see our Annual Report on Form 10-K for the year ended September 29, 2023, and in particular the discussions contained therein under Item 1 - Business; Item 1A - Risk Factors; Item 3 - Legal Proceedings; and Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations, as well as the Company's other filings with the Securities and Exchange Commission. The Company is not under any duty to update any of the forward-looking statements after the date of this press release to conform to actual results, except as required by applicable law.

About Jacobs

At Jacobs, we're challenging today to reinvent tomorrow by solving the world's most critical problems for thriving cities, resilient environments, mission-critical outcomes, operational advancement, scientific discovery and cutting-edge manufacturing, turning abstract ideas into realities that transform the world for good. With approximately $16 billion in annual revenue and a talent force of approximately 60,000, Jacobs provides a full spectrum of professional services including consulting, technical, scientific and project delivery for the government and private sectors. Visit jacobs.com and connect with Jacobs on LinkedIn, X, Facebook and Instagram. 

	For the Three Months Ended				For the Years Ended
Unaudited	September 29, 2023		September 30, 2022		September 29, 2023		September 30, 2022
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