Jacobs Engineering Group Inc. (NYSE: JEC) reported mixed results for fiscal third-quarter 2014 (ended Jun 27, 2014), with earnings surpassing the Zacks Consensus Estimate but revenues falling short of the same. However, both top-line and bottom-line results improved year over year.
Adjusted earnings were 84 cents per share, a penny higher than the year-ago figure of 83 cents. Quarterly earnings also beat the Zacks Consensus Estimate of 80 cents by 5.0%.
Adjusted earnings excluded 35 cents of tax impact related to certain restructuring activities. On a GAAP-basis, earnings per share came in at 49 cents.
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Revenues
Revenues improved 4.9% year over year to $3.23 billion, lower than the Zacks Consensus Estimate of $3.41 billion. Technical Professional Services component's revenues came in at $1.89 billion, up from $1.72 billion in the prior-year quarter. Field Services component's revenues were $1.34 billion, down from $1.36 billion reported in the third quarter of fiscal 2013.
Costs/Margin
Direct costs of contracts, a major expenditure for Jacobs, climbed 2.1% from the year-ago quarter and settled at $2.67 billion. Selling, general and administrative expenses came in at $437.8 million, up 46.6% year over year.
In the quarter, operating margin was 3.83%, declining 163 basis points year over year.
Backlog
Exiting the quarter, backlog was $18.5 billion, rising 7.6% from $17.2 billion in the year-ago quarter. It includes backlog of $12.3 billion from the Technical Professional Services component compared with $11.1 billion at the end of the third-quarter fiscal 2013; with the remainder coming from the Field Services component.
Balance Sheet/Cash Flow
Jacobs' cash and cash equivalents at the end of fiscal third-quarter were approximately $772.6 million, up from $691.3 million recorded at the end of the previous quarter. Total debt at quarter-end decreased to $830.8 million from $996.3 million as of Mar 28, 2014.
Jacobs incurred capital expenditure of $25.1 million in the quarter, down from $27.0 million spent in the prior-year quarter.
Outlook
The third-quarter results were impacted by certain one-time items. However, increased revenues and backlog reflect the strengths of the quarter. Jacobs aims to consummate its restructuring activities in fiscal 2014. The company reaffirmed its fiscal 2014 earnings per share in the lower range of $3.15–$3.55.
Other Stocks to Consider
With a market capitalization of $7.1 billion, Jacobs currently holds a Zacks Rank #4 (Sell). Some better-ranked stocks in the industry include Toll Brothers Inc. (NYSE: TOL), Fluor Corporation (NYSE: FLR) and Beazer Homes USA Inc. (NYSE: BZH). Each of these stocks carry a Zacks Rank #2 (Buy).
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