Jacobs Solutions Inc. Q4 FY2025 earnings call

• Bob Pragada highlighted strong Q4 and FY 2025 results, with double-digit growth in adjusted EPS, consolidated backlog at $23.1 billion (a new record), and PA Consulting's double-digit revenue and operating profit growth. Notable infrastructure and advanced facility project awards were mentioned, with strong momentum in water, life sciences, advanced manufacturing, and critical infrastructure end markets.
• Venkatesh R. Nathamuni discussed FY 2025 financial results: gross revenue up ~5%, adjusted net revenue up over 5%, adjusted EBITDA and EPS up, consolidated backlog at $23.1 billion, free cash flow $607 million, share repurchases of $754 million and dividends of $153 million, and outlined the FY 2026 outlook.

Infrastructure and Advanced Facilities: In Q4, operating profit increased 16% year over year, with a modest tailwind from FX. In fiscal year 2025, operating profit increased 13% year over year on a constant currency basis. PA Consulting: Q4 revenue increased 10% year over year, contributing to a 17% increase in operating profit (13% in constant currency) with an operating margin of 23%. For fiscal year 2025, operating growth for PA was in line with Q4 performance.

• FY 2026 adjusted net revenue expected to increase 6%-10%, adjusted EBITDA margin 14.4%-14.7%, adjusted EPS 6.90-7.30, free cash flow margin 7%-8%.
• Q1 net revenue growth forecasted at 5.5%-7.5% with a mid-thirteen percent margin, noting Q1 is seasonally slow due to holiday timing.

• Regulatory volatility in the environmental sector led to softness in private sector spending. Delays in FEMA funding and state budget reorganizations affected the environmental business. One-time tax events and potential cash expenses related to PA Consulting combination are factors in the guidance.

Q: Can you talk about the impact of the federal government shutdown on fiscal 2026 bookings?

A: No. The bookings trend was those awards in the federal government happened before the shutdown.

Q: Update on PA Consulting process?

A: Negotiations continue and are progressing. We are on track to make a decision on or before March 2026.

Q: Water and environment segment softness?

A: In the environmental sector, regulatory volatility and private sector pullback; water sector strong with high single-digit growth expected moving forward into FY 2026 and beyond Q: Margin performance in Infrastructure and Advanced Facilities and AI leverage?

A: Margin performance in I and AF continues to improve; AI is leveraged as an accelerant and differentiator, with solutions provided to clients in various sectors like data centers, transportation, etc.

Q: Transportation growth and funding visibility?

A: Transportation is a contributor to growth, with strong momentum globally including in Europe, Middle East, Australia, and New Zealand; funding visibility is positive with no delays seen Q: Pipeline and margin expansion bridge?

A: Pipeline growth in sectors like data centers (up 5x), semiconductor, life sciences, and water; margin expansion driven by global delivery, commercial models, and operating leverage Q: Data center pipeline and scope?

A: Data center pipeline up 5x, scope expanding into new geographies (Middle East, Europe) and including more innovation in server racks, power requirements, and reclaimed water; pipeline is $200 million today with growth potential Q: Top line outlook and end markets for high end of range?

A: High end of range driven by life sciences, data centers, semiconductor fabrication facilities, international transportation, and major prospects in cities/places