Jacobs Engineering on Monday reported a slight bump in revenue for its fiscal third quarter, from $3.2 billion in 2019 to $3.3 billion this year. Net revenue took a similarly modest step up for the three-month period ending June 26, from $2.6 billion to $2.7. billion on a year-over-year basis.
The Department of Energy contractor split the difference on its earnings numbers. Generally accepted accounting principles (GAAP) earnings rose from $89 million ($0.65 per share) in third-quarter 2019 to $227 million ($1.73) this year. However, adjusted net earnings from continuing operations dipped from $193 million ($1.40) to $165 million ($1.26).
Management gave a small boost to its earnings guidance for the full fiscal 2020: Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) is now expected in a range of $1 billion to $1.0502 billion ($5.05 to $5.302 per share), up from $950 million to $1.050 billion ($4.80 to $5.30).
“As we approach five months of battling the coronavirus, we remain focused on keeping our people safe first and foremost, and delivering on our commitments to our clients,” CEO Steve Demetriou said Monday during the company’s quarterly earnings conference call. “As the duration of the pandemic has extended, Jacobs’ strong culture of caring and particularly our emphasis on employee wellbeing has really come to the forefront. Our teams have responded with new programs for engaging our people in supportive ways, including deep dive series on mental health resiliency.”
Through its 2017 acquisition of CH2M, the Dallas-based company is the prime cleanup contractor for the Energy Department’s Hanford Site in Washington state and partners with Amentum on similar work at the Oak Ridge Site in Tennessee. Jacobs is one of the members of Four Rivers Nuclear Partnership, deactivation and remediation prime at DOE’s Paducah Site in Kentucky.
The Energy Department in December issued a new contract for Hanford Central Plateau remediation, worth up to $10 billion over a decade, to Central Plateau Cleanup Co., a team made up of Amentum, Fluor, and Atkins. At deadline Friday, the new vendor had not received authorization to begin the transition to operations.
Jacobs had led one of the other bidding teams. “Depending upon how Hanford plays out, the Hanford Plateau project, obviously, will be off the books over the course of 2021, that assumes that the current protest dynamic doesn’t change any material direction there,” Jacobs Chief Financial Officer Kevin Berryman said Tuesday during the company’s earnings call with financial analysts.
In better news, a Jacobs-BWX Technologies joint venture in April received a 39-month, $243 million extension to its DOE contract for cleanup at the West Valley Demonstration Project in New York state. Just before the quarter began, Jacobs also completed its roughly $320 million acquisition of the John Wood Group’s nuclear business. “Integration continues to progress and we are on track to achieve our targeted $12 million run rate cost savings,” Berryman said.
Ninety percent of that business is done in the United Kingdom, encompassing decommissioning, radioactive waste management, and other operations across the nuclear life cycle. In 2019, Wood was among six corporate groups selected to compete for over $500 million in decommissioning business at the retired Dounreay fast-reactor site in Scotland. It also holds a contract worth up to $1 billion over 20 years for engineering design at the Sellafield nuclear processing and cleanup complex in Cumbria.
Jacobs’ Critical Mission Solutions (CMS) business houses its Energy Department and nuclear work. Quarterly revenue there rose from just over $2 billion in 2019 to nearly $2.1 billion this year. Operating profit was up from $76.3 million to $89.6 million.
Some major wins for that business in the quarter came from the Pentagon, including a $434 million award for the Air Force for system support and integration at the North American Aerospace Defense Command (NORAD). The Defense Department generally generates 20% of revenue for CMS.
A Jacobs subsidiary also holds the $350 million contract for cleanup at the Parks Township, Pa., Shallow Land Disposal Area under the U.S. Army Corps of Engineers’ Formerly Utilized Sites Remedial Action Program (FUSRAP).
Some nuclear cleanup jobs remain subject to physical distancing measures to avoid spreading COVID-19 among the workforce, Jacobs said. But the situation is expected to improve by early in the company’s 2021 fiscal year.
“During the third quarter, our CMS business performed better than the COVID outlook we provided in the second quarter,” President and Chief Operating Officer Bob Pragada said during the call. “Our solid third quarter results demonstrate CMS’s resiliency and agility to work and perform at the highest levels for our clients.”
Through nine months of fiscal 2020, the CMS business reported an operating profit of $264.3 million, compared to $222.3 million at this time last year. That was derived from $6.4 billion in revenue, rising from almost $6.1 billion.
Company-wide revenue over nine months stepped up from $9.3 billion to just shy of $10.1 billion. That has generated an operating profit of $513.5 million, more than $200 million above the 2019 figure of $305.8 million.
