Dive Brief:
- Dallas-based technical, professional and construction services firm Jacobs Engineering group posted revenue of $3.6 billion in the fourth quarter of 2021, a 1.9% increase from $3.5 billion tallied in the fourth quarter of 2020.
- Jacobs' fiscal year 2021 revenue increased $500 million, or 3.7%, compared to 2020 to hit $14.1 billion. During the year, the company's revenue came from these sectors: civil (34%), defense (25%), international (18%), intelligence (15%) and commercial (8%).
- Jacobs' backlog rose $2.8 billion in the fourth quarter to a record-high $26.6 billion year-over-year, a 12% increase. Sequentially, backlog grew 4.7% from $25.4 billion in the third quarter of 2021. At the end of 2019, before the COVID-19 pandemic began, Jacobs' backlog sat at $22.6 billion.
Dive Insight:
While fourth-quarter results took center stage on Jacobs' earnings call last week, a deeper strategy change is occurring at the company. As part of that process, the company has "aligned investment resources to capture three multi-decade growth opportunities: global infrastructure modernization, climate response and the digitization of industry," CEO Steve Demetriou said on the call.
The company is "taking a transformational approach to executing against these opportunities," Demetriou said, noting that more information will be forthcoming at an investor event in early March.
Demetriou also noted the passage of the $1.2 trillion Infrastructure Investment and Jobs Act provided clarity for the spending environment going forward. "We now have certainty surrounding the unprecedented U.S. infrastructure funding," he said on the call.
Recently, stock market analysts pointed to Jacobs as one of the firms that stand to benefit the most from the infrastructure package. Matt Arnold, senior equity analyst for St. Louis-based financial services firm Edward Jones, said that the company's foothold in the transportation, water and environmental markets put it in a strong position.
During the Jacobs earnings call, President and CFO Kevin Berryman said infrastructure funding should start hitting the company's books by mid-2022.
"We expect mid-single-digit reported revenue growth in the first quarter of fiscal 2022 with an acceleration in the second half of our fiscal year driven by U.S. infrastructure spending and the ramp-up of new awards in our CMS [critical mission solutions] business," Berryman said.
Looking ahead
But infrastructure won't be the only driver of business. In addition, the need for additional semiconductor manufacturing capacity and post-pandemic life sciences needs should boost Jacobs' advanced facilities business, the executives said.
"And more broadly, global infrastructure modernization and national security needs are accelerating as our government and commercial clients address the challenges of climate change, advancement of the digitization strategies and increasing cyber threats," Demetriou said on the call.
Jacobs is currently working on a "further optimization" of its real estate footprint as it plans for revenue growth. In the process, the company is identifying space that it intends to abandon or market for sublease. In fiscal 2022, it could accrue up to $70 million in potential charges for these plans.
"Our new footprint will facilitate virtual work options that leverage new technology and more collaborative workspaces in our offices," Berryman said on the earnings call.
Q4 highlights
Jacobs executives also provided updates on a number of large projects, including:
- 5G: With 5G cellular technology investments from clients like AT&T, Verizon, DirecTV, T-Mobile and Dish Network, the company is seeing strong demand in its telecom business. The infrastructure bill includes $2.5 billion for the 5G rollout at U.S. military bases, which should provide more opportunities for the company.
- Army: Jacobs was awarded a multi-year contract by the U.S. Army's Engineer Research and Development Center to integrate nature-based solutions designed to grow climate resilience across defense department facilities.
- Rikers Island: Jacobs was selected to reimagine New York's Rikers Island correctional facilities. As the first phase in a 20-year program across the entire city, the company will consolidate four aging wastewater facilities into a 1-billion-gallon-per-day water resource recovery facility with a renewable energy hub.
