Assuming CH2M shareholders approve that company’s acquisition by Jacobs Engineering in a few weeks, Jacobs Chairman and CEO Steve Demetriou sees the combined company getting off to “a running start.”
During a conference call with Wall Street analysts on Nov. 21 following release of Jacobs’ quarterly earnings, Demetriou said he has already visited many CH2M offices and met with clients that would be affected by the merger of the two engineering and infrastructure companies. Demetriou dubbed it an effort at “winning the hearts and minds of the combined employee base.” The Jacobs CEO did not reveal if any of the clients he visited were involved in cleanup of Department of Energy nuclear sites.
CH2M shareholders are set to vote on the $3.27 billion deal on Dec. 13. With their blessing, Demetriou expects the merger to close in mid-December, creating a $15 billion company with over 70,000 employees based on current payrolls.
The companies have already notched necessary regulatory approvals from governments in the United States, Canada, and Europe. Jacobs says the combination will create a top-tier nuclear and environmental services provider.
Jacobs reported fiscal fourth-quarter 2017 net earnings of $94.1 million, $0.78 per diluted share, on $2.7 billion in revenue. That beats fourth-quarter 2016 net earnings of $29.6 million, $0.24 per diluted share, on revenue of $2.6 billion.
Jacobs reported net earnings of almost $294 million for all of fiscal 2017, compared to $210 million in the prior budget year.
For the Aerospace and Technology segment, which includes its Department of Energy business, Jacobs reported an operating profit of about $56 million for the most recent quarter, which compares to roughly $47 million for the final quarter of fiscal 2016. For the just-completed fiscal year, the same business reported operating profit of less than $203 million, compared to about $204 million in operating profit for fiscal 2016.
Jacobs’ latest quarterly net earnings included about $24.2 million, or $0.20 per diluted share, in after-tax charges associated with the CH2M merger.
This included expenses Jacobs paid aimed at speeding up certain restructuring connected with the deal. The rest tended to be professional services and costs linked to the merger.
During the call, Demetriou noted that Jacobs has been trying to expand its footprint in government markets such as DOE. Jacobs is part of Mission Support Alliance, which provides infrastructure and other services across the Hanford Site in Washington state. MSA has confirmed that it plans to be active in a recent draft solicitation from DOE that will lead to a final request for proposals for a successor contract, potentially worth $4 billion, which would start in mid-2019.
The CEO also cited the Dallas-based company’s role as part of the Honeywell-led Mission Support and Test Services group that landed the new management and operations contract for DOE’s Nevada Nuclear Security Site earlier this year.
Denver-based CH2M has a larger role than Jacobs on DOE nuclear cleanup projects, including significant stand-alone and partnership contracts at the Hanford site in Washington state, the Oak Ridge Reservation in Tennessee, and the Paducah Gaseous Diffusion Plant in Kentucky.
