Jacobs' Q2 Earnings Top, Revenues Miss, FY 2025 Guidance Retained

Jacobs Solutions Inc. J reported mixed second-quarter fiscal 2025 (ended March 28, 2025) results, with adjusted earnings beating the Zacks Consensus Estimate while revenues missed the same. On a year-over-year basis, the bottom and top lines grew.

Shares of this construction and technical services company moved down 1.3% during today’s pre-market trading session, following the earnings release.

The quarterly results reflect strong contributions from both the reportable segments, Infrastructure & Advanced Facilities and PA Consulting. Although unfavorable foreign currency translation and high selling, general and administrative (SG&A) expenses were discouraging, leverage from the increased top line and favorable year-over-year mix aided the quarter’s results.

Inside Jacobs’ Q2 Results

The company reported adjusted earnings per share (EPS) of $1.43, which topped the Zacks Consensus Estimate of $1.41 by 1.4%. In the year-ago quarter, it reported an adjusted EPS of $1.17.

Jacobs’ revenues of $2.91 billion missed the consensus mark of $3.02 billion by 3.6% but grew 2.2% year over year. Adjusted net revenues of $2.14 billion were also up 3.1% year over year. (Find the latest earnings estimates and surprises on Zacks Earnings Calendar.)

Jacobs Solutions Inc. Price, Consensus and EPS Surprise

Jacobs Solutions Inc. price-consensus-eps-surprise-chart | Jacobs Solutions Inc. Quote

Adjusted operating profit grew 2.4% to $270.6 million from a year ago. Adjusted operating margin remained flat year over year at 12.7%. Adjusted EBITDA was $286.6 million (up 8.1% year over year), with a margin of 13.4%, up 60 basis points (bps) from a year ago.

Fiscal second-quarter end backlog increased 20% year over year to $22.16 billion, underpinned by strong project wins. The book-to-bill ratio was 1.3x in the trailing 12-month period, highlighting robust demand and future revenue stability.

Jacobs’ Segment Details

Infrastructure & Advanced Facilities (IA&F): This segment’s revenues totaled $2.6 billion, which increased 2% year over year from $2.55 billion. Adjusted net revenues (excluding Pass-Through revenues) were $1.83 billion, up 2.8% year over year. Its adjusted operating profit inched down 0.4% from the prior-year quarter to $203.3 million and the margin contracted 40 bps to 11.1%, due to operational efficiencies and favorable project execution.

The backlog at the quarter’s end was $21.77 billion, up from $18.13 billion a year ago. The segment achieved strong results because of exceptional performance in its Advanced Facilities and Asia, Pacific and Middle East (APME) business operations.

The Critical Infrastructure business also delivered growth during the quarter, with gross revenues rising 2.2% year over year to $1.11 billion. The Life Sciences and Advanced Manufacturing business also witnessed 5.8% year-over-year growth in its gross revenues to $728 million. In contrast, the Water & Environmental business witnessed a setback in its gross revenues by 1.7% year over year to $767 million.

PA Consulting: The segment generated $307.7 million in revenues, which were up from $294 million reported in the year-ago quarter. Its adjusted operating profit was $67.3 million, up 11.9% from a year ago. Its adjusted operating margin improved 140 bps year over year to 21.9%. The quarter-end backlog amounted to $392 million, up from $344 million a year ago.

Jacobs’ Balance Sheet & Cash Flow

At the fiscal second-quarter end, Jacobs had cash and cash equivalents of $1.2 billion, up from $1.14 billion at the fiscal 2024-end (Sept. 27, 2024). Long-term debt increased to $2.63 billion as of March 28, 2025, from $1.35 billion at the fiscal 2024-end.

Net cash provided by operating activities totaled $11.03 million in the first six months of fiscal 2025 compared with $375.5 million in the comparable year-ago period. The free cash flow was $(113.7) million compared with $(70.6) million a year ago.

Fiscal 2025 Guidance Retained by Jacobs

Adjusted net revenues are still projected to grow mid-to-high single digits year over year. Adjusted EBITDA margins are still expected to be in the range of 13.8-14%, indicating continued efficiency improvements.

Adjusted EPS expectations are retained between $5.85 and $6.20. The company expects more than 100% free cash flow conversion from net income, underscoring strong cash generation capability. Capital expenditures are expected to be about 1% of its consolidated revenues.

J Stock’s Zacks Rank & a Recent Business Services Release

Jacobs currently carries a Zacks Rank #3 (Hold).

Acuity Inc. AYI reported mixed results in the second quarter of fiscal 2025 (ended Feb. 28, 2025). Earnings surpassed the Zacks Consensus Estimate, but net sales missed the same.

Solid contributions from the Intelligent Spaces segment and the company's focus on product vitality and innovation helped it drive performance and improve profitability. The acquisition of QSC added $95.1 million in sales. Higher net sales in Distech and Atrius products also supported growth. Also, Acuity's emphasis on cost optimization and operational efficiency enhancement helped drive margin expansion.

Stocks With the Favorable Combinations

Here are some companies in the Zacks Business Services sector, which, according to our model, have the right combination of elements to beat on earnings in their respective quarters to be reported. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 increases the odds of an earnings beat. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stantec Inc. STN currently has an Earnings ESP of +2.42% and a Zacks Rank of 2.

The company’s earnings for the first quarter of 2025 are expected to grow 17.9%. Stantec reported better-than-expected earnings in each of the last four quarters, the average surprise being 6.9%.

Bit Digital, Inc. BTBT currently has an Earnings ESP of +78.95% and a Zacks Rank of 3.

The company’s earnings for the first quarter of fiscal 2025 are expected to decline 266.7% year over year. Bit Digital reported better-than-expected earnings in two of the last four quarters and missed on the other two occasions, the negative average surprise being 35.4%.

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This article originally published on Zacks Investment Research (zacks.com).

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