Less than a week after announcing their planned merger, Department of Energy contractors Jacobs Engineering and CH2M on Tuesday posted improved earnings figures in their latest quarterly reports.
Jacobs’ $3.27 billion acquisition of CH2M, scheduled to close by the end of the year, would significantly deepen the Dallas-based professional services company’s reach into the DOE complex. Understandably, the deal was a focus of executives’ comments during Jacobs’ quarterly earnings conference call.
“This strategic investment serves as the beginning of the next exciting chapter in the history of Jacobs and will significantly enhance opportunities in targeted high-growth industries and reinforce our drive to be a world premier global design, engineering, construction, operations and maintenance technical services firm,” Jacobs President and CEO Steven Demetriou told financial analysts.
Jacobs reported $2.5 billion in revenue for the fiscal third quarter ended June 30, which produced $89 million in net earnings ($0.74 per share). Revenue dipped a bit from $2.7 billion in third-quarter 2016, but net earnings were up significantly from last year’s $69.1 million ($0.57 per share).
Management said $3.5 million in net earnings ($0.02 per share) derived from professional service fees connected to the CH2M buyout.
Meanwhile, CH2M’s gross revenue changed little on a year-over-year basis: from $1.29 billion for the three months ended June 24, 2016, to $1.28 billion for the period ending June 30 of this year. However, operating income skyrocketed from a $14.1 million loss last year to a $72.6 million gain in 2017; net income rose from a $154.2 million loss to a $46.6 million gain.
Among its work across the DOE complex, CH2M heads environmental cleanup of the Central Plateau at Hanford, partners with AECOM to management remediation of the Oak Ridge Site in Tennessee, and leads the team that in May secured the contract for cleanup of the Paducah Gaseous Diffusion Plant in Kentucky.
Revenue in the company’s National Governments segment was also effectively frozen at roughly $481 million, according to the earnings report. The company took in additional revenue from federal consulting on U.S. nuclear cleanup, countered by lower volumes from a joint nuclear venture in Canada and the wrapping up of an environmental and nuclear consultancy in the United Kingdom.
In its 10-Q report filed Tuesday with the U.S. Securities and Exchange Commission, CH2M said it is still waiting on a ruling from the Civilian Board of Contract Appeals regarding a $40.1 million fee claim for work done by a subsidiary that was the cleanup contractor at DOE’s Idaho site until 2016.
Jacobs’ DOE footprint is smaller than CH2M’s, but not negligible: It is a partner in Mission Support Alliance, which provides emergency services and other support activities at DOE’s Hanford Site in Washington state. The company is also partnering with Honeywell and Stoller Newport News Nuclear on Mission Support and Test Services, which is transitioning into its new management and operations role for the Nevada National Security Site.
