filings.toolsJacobs Solutions 10-Q 2021-12-31
Filed 2022-02-08. 8 sections, 197K characters. Original on sec.gov · Markdown · JSON
Cover and table of contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one)
☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended December 31, 2021
☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from to
Commission File Number 1-7463
JACOBS ENGINEERING GROUP INC.
(Exact name of registrant as specified in its charter)
| Delaware | 95-4081636 | |||||||||||||
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) | |||||||||||||
| 1999 Bryan Street | Suite 1200 | Dallas | Texas | 75201 | ||||||||||
| (Address of principal executive offices) | (Zip Code) |
(214) 583 – 8500
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
_________________________________________________________________
| Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered | |||||||||
| Common Stock | $1 par value | J | New York Stock Exchange |
Indicate by check-mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: ☒ Yes ☐ No
Indicate by check-mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No
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Indicate by check-mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☒ | Accelerated filer | ☐ | |||||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | ☐ | |||||||||||
| Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check-mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No
Number of shares of common stock outstanding at January 28 2022: 129,216,695
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JACOBS ENGINEERING GROUP INC.
INDEX TO FORM 10-Q
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Part I - FINANCIAL INFORMATION
Item 1. Financial Statements.
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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share information)
| December 31, 2021 | October 1, 2021 | ||||||||||
| (Unaudited) | |||||||||||
| ASSETS | |||||||||||
| Current Assets: | |||||||||||
| Cash and cash equivalents | $ | 1,245,024 | $ | 1,014,249 | |||||||
| Receivables and contract assets | 2,992,814 | 3,101,418 | |||||||||
| Prepaid expenses and other | 134,165 | 176,228 | |||||||||
| Total current assets | 4,372,003 | 4,291,895 | |||||||||
| Property, Equipment and Improvements, net | 328,631 | 353,117 | |||||||||
| Other Noncurrent Assets: | |||||||||||
| Goodwill | 7,350,494 | 7,197,000 | |||||||||
| Intangibles, net | 1,618,913 | 1,565,758 | |||||||||
| Deferred income tax assets | 102,416 | 103,193 | |||||||||
| Operating lease right-of-use assets | 563,124 | 650,097 | |||||||||
| Miscellaneous | 468,513 | 471,549 | |||||||||
| Total other noncurrent assets | 10,103,460 | 9,987,597 | |||||||||
| $ | 14,804,094 | $ | 14,632,609 | ||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| Current Liabilities: | |||||||||||
| Short-term debt | $ | 53,400 | $ | 53,456 | |||||||
| Accounts payable | 816,815 | 908,441 | |||||||||
| Accrued liabilities | 1,486,618 | 1,533,559 | |||||||||
| Operating lease liability | 162,949 | 172,414 | |||||||||
| Contract liabilities | 605,801 | 542,054 | |||||||||
| Total current liabilities | 3,125,583 | 3,209,924 | |||||||||
| Long-term Debt | 3,073,067 | 2,839,933 | |||||||||
| Liabilities relating to defined benefit pension and retirement plans | 404,421 | 418,080 | |||||||||
| Deferred income tax liabilities | 211,900 | 214,380 | |||||||||
| Long-term operating lease liability | 706,288 | 758,358 | |||||||||
| Other deferred liabilities | 545,226 | 559,375 | |||||||||
| Commitments and Contingencies | |||||||||||
| Redeemable Noncontrolling interests | 637,664 | 657,722 | |||||||||
| Stockholders’ Equity: | |||||||||||
| Capital stock: | |||||||||||
| Preferred stock, $1 par value, authorized - 1,000,000 shares; issued and outstanding - none | — | — | |||||||||
| Common stock, $1 par value, authorized - 240,000,000 shares; issued and outstanding 129,153,184 shares and 128,892,540 shares as of December 31, 2021 and October 1, 2021, respectively | 129,153 | 128,893 | |||||||||
| Additional paid-in capital | 2,641,059 | 2,590,012 | |||||||||
| Retained earnings | 4,087,390 | 4,015,578 | |||||||||
| Accumulated other comprehensive loss | (787,656) | (794,442) | |||||||||
| Total Jacobs stockholders’ equity | 6,069,946 | 5,940,041 | |||||||||
| Noncontrolling interests | 29,999 | 34,796 | |||||||||
| Total Group stockholders’ equity | 6,099,945 | 5,974,837 | |||||||||
| $ | 14,804,094 | $ | 14,632,609 |
See the accompanying Notes to Consolidated Financial Statements – Unaudited.
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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
Three Months Ended December 31, 2021 and January 1, 2021
(In thousands, except per share information)
(Unaudited)
| For the Three Months Ended | |||||||||||
| December 31, 2021 | January 1, 2021 | ||||||||||
| Revenues | $ | 3,380,625 | $ | 3,381,836 | |||||||
| Direct cost of contracts | (2,584,151) | (2,749,776) | |||||||||
| Gross profit | 796,474 | 632,060 | |||||||||
| Selling, general and administrative expenses | (619,141) | (418,120) | |||||||||
| Operating Profit | 177,333 | 213,940 | |||||||||
| Other Income (Expense): | |||||||||||
| Interest income | 1,501 | 1,124 | |||||||||
| Interest expense | (19,426) | (17,313) | |||||||||
| Miscellaneous income, net | 9,682 | 156,360 | |||||||||
| Total other (expense) income, net | (8,243) | 140,171 | |||||||||
| Earnings from Continuing Operations Before Taxes | 169,090 | 354,111 | |||||||||
| Income Tax Expense from Continuing Operations | (15,889) | (87,023) | |||||||||
| Net Earnings of the Group from Continuing Operations | 153,201 | 267,088 | |||||||||
| Net Earnings of the Group from Discontinued Operations | (232) | (14) | |||||||||
| Net Earnings of the Group | 152,969 | 267,074 | |||||||||
| Net Earnings Attributable to Noncontrolling Interests from Continuing Operations | (9,252) | (10,026) | |||||||||
| Net Earnings Attributable to Redeemable Noncontrolling interests | (9,683) | — | |||||||||
| Net Earnings Attributable to Jacobs from Continuing Operations | 134,266 | 257,062 | |||||||||
| Net Earnings Attributable to Jacobs | $ | 134,034 | $ | 257,048 | |||||||
| Net Earnings Per Share: | |||||||||||
| Basic Net Earnings from Continuing Operations Per Share | $ | 1.04 | $ | 1.98 | |||||||
| Basic Net Earnings from Discontinued Operations Per Share | $ | — | $ | — | |||||||
| Basic Earnings Per Share | $ | 1.04 | $ | 1.98 | |||||||
| Diluted Net Earnings from Continuing Operations Per Share | $ | 1.03 | $ | 1.96 | |||||||
| Diluted Net Earnings from Discontinued Operations Per Share | $ | — | $ | — | |||||||
| Diluted Earnings Per Share | $ | 1.03 | $ | 1.96 |
See the accompanying Notes to Consolidated Financial Statements - Unaudited.
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JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Three Months Ended December 31, 2021 and January 1, 2021
(In thousands)
(Unaudited)
| For the Three Months Ended | |||||||||||
| December 31, 2021 | January 1, 2021 | ||||||||||
| Net Earnings of the Group | $ | 152,969 | $ | 267,074 | |||||||
| Other Comprehensive Income: | |||||||||||
| Foreign currency translation adjustment | (8,685) | 86,338 | |||||||||
| Gain on cash flow hedges | 8,855 | 3,583 | |||||||||
| Change in pension and retiree medical plan liabilities | 8,039 | (19,353) | |||||||||
| Other comprehensive income before taxes | 8,209 | 70,568 | |||||||||
| Income Tax Benefit (Expense): | |||||||||||
| Foreign currency translation adjustment | 2,990 | (14,445) | |||||||||
| Cash flow hedges | (2,945) | 221 | |||||||||
| Change in pension and retiree medical plan liabilities | (1,468) | (826) | |||||||||
| Income Tax Expense: | (1,423) |
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
General
The purpose of this Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is to provide a narrative analysis explaining the reasons for material changes in the Company’s (i) financial condition from the most recent fiscal year-end to December 31, 2021 and (ii) results of operations during the current fiscal period(s) as compared to the corresponding period(s) of the preceding fiscal year. In order to better understand such changes, readers of this MD&A should also read:
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The discussion of the critical and significant accounting policies used by the Company in preparing its consolidated financial statements. The most current discussion of our critical accounting policies appears in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations of our 2021 Form 10-K, and the most current discussion of our significant accounting policies appears in Note 2- Significant Accounting Polices in Notes to Consolidated Financial Statements of our 2021 Form 10-K;
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The Company’s fiscal 2021 audited consolidated financial statements and notes thereto included in our 2021 Form 10-K; and
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Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our 2021 Form 10-K.
In addition to historical information, this MD&A and other parts of this Quarterly Report on Form 10-Q may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that do not directly relate to any historical or current fact. When used herein, words such as “expects,” “anticipates,” “believes,” “seeks,” “estimates,” “plans,” “intends,” “future,” “will,” “would,” “could,” “can,” “may,” and similar words are intended to identify forward-looking statements. Examples of forward-looking statements include, but are not limited to, statements we make concerning the potential continued effects of the COVID-19 pandemic on our business, financial condition and results of operations and our expectations as to our future growth, prospects, financial outlook and business strategy for fiscal 2022 or future fiscal years and the anticipated benefits of acquisitions and the strategic investment in PA Consulting. You should not place undue reliance on these forward-looking statements. Although such statements are based on management’s current estimates and expectations, and/or currently available competitive, financial, and economic data, forward-looking statements are inherently uncertain, and you should not place undue reliance on such statements as actual results may differ materially. We caution the reader that there are a variety of risks, uncertainties and other factors that could cause actual results to differ materially from what is contained, projected or implied by our forward-looking statements. Such factors include the magnitude, timing, duration and ultimate impact of the COVID-19 pandemic, including the emergence and spread of variants of COVID-19, and any resulting economic downturn on our results, prospects and opportunities, measures or restrictions imposed by governments and health officials in response to the pandemic, or if such orders, measures or restrictions are re-imposed after being lifted or eased, including as a result of increases in cases of COVID-19; the effectiveness and distribution of vaccines or treatments for COVID-19; the timing and scope of any government stimulus programs enacted in response to the impacts of the COVID-19 pandemic, including, but not limited to, any additional infrastructure-related stimulus programs, and the timing of the award of projects and funding under the Infrastructure Investment and Jobs Act signed into law by President Biden on November 15, 2021. The impact of such matters includes, but is not limited to, the possible reduction in demand for certain of our services and the delay or abandonment of ongoing or anticipated projects due to the financial condition of our clients and suppliers or to governmental budget constraints or changes to governmental budgetary priorities; the inability of our clients to meet their payment obligations in a timely manner or at all; potential issues and risks related to a significant portion of our employees working remotely; illness, travel restrictions and other workforce disruptions that could negatively affect our supply chain and our ability to timely and satisfactorily complete our clients’ projects; difficulties associated with hiring additional employees; and the inability of governments in certain of the countries in which we operate to effectively mitigate the financial or other impacts of the COVID-19 pandemic on their economies and workforces and our operations therein. The foregoing factors and potential future developments are inherently uncertain, unpredictable and, in many cases, beyond our control. For a description of these and additional factors that may occur that could cause actual results to differ from our forward-looking statements, see those listed and discussed in Item 1A, Risk Factors included in our 2021 Form 10-K and our Quarterly Reports on Form 10-Q. We undertake no obligation to release publicly any revisions or updates to any forward-looking statements. We encourage you to read carefully the risk factors, as well as the financial and business disclosures contained in this Quarterly Report on Form 10-Q and in other documents we file from time to time with the United States Securities and Exchange Commission ("the SEC").
Impact of COVID-19 on Our Business
On March 11, 2020, the World Health Organization characterized the outbreak of the novel coronavirus (“COVID-19”) as a global pandemic and recommended certain containment and mitigation measures. On March 13, 2020,
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the United States declared a national emergency concerning the outbreak, and the vast majority of states and many municipalities have declared public health emergencies or taken similar actions. Along with these declarations, there were extraordinary and wide-ranging actions taken by international, federal, state and local public health and governmental authorities to contain and combat outbreaks of COVID-19 in regions across the United States and around the world. These actions included quarantines and “stay-at-home” or “shelter-in-place” orders, social distancing measures, travel restrictions, school closures and similar mandates for many individuals in order to substantially restrict daily activities and orders for many businesses to curtail or cease normal operations unless their work is critical, essential or life-sustaining. Although most jurisdictions in which we operate have lifted or eased such restrictions to various degrees, some jurisdictions have subsequently reimposed restrictions to varying degrees in response to increased cases caused by variants of COVID-19. In addition, governments and central banks in the United States and other countries in which we operate have periodically enacted fiscal and monetary stimulus and assistance measures to counteract the economic impacts of COVID-19.
As it became clear that the pandemic was unparalleled in the rate of community spread, we took early, decisive action to put people first, help flatten the curve and take care of our clients and communities. We successfully transitioned the vast majority of our employees to a remote working environment to support physical distancing. Where the essential and mission-critical nature of our work requires us to maintain staff at certain sites or locations, we worked closely with our clients and established project-specific plans designed to ensure the safety of our people and the integrity of our operations. Using technology and optimizing our networks, we continue to offer flexible work scenarios for our people, and to deliver business continuity for and continued collaboration with our clients.
Notwithstanding our continued critical operations, COVID-19 negatively impacted our business, and may have further adverse impacts, on our operations, including those listed and discussed in Item 1A, Risk Factors included in our 2021 Form 10-K. Accordingly, at the height of the pandemic, we temporarily reduced spending broadly across the Company, only proceeding with operating and capital spending that was critical. We had also temporarily ceased all non-essential hiring and reduced discretionary expenses, including temporarily suspending certain employee benefits and compensation through the end of fiscal 2020. Subsequently, we have adjusted our response according to the circumstances and local laws in the jurisdictions in which we operate, including the emergence and spread of variants, such as the omicron variant. Looking ahead, we have developed contingency plans if the situation further deteriorates or lasts longer than current expectations. We will continue to actively monitor the situation and may take further actions that alter our business operations as may be necessary or appropriate for the health and safety of employees, contractors, customers, suppliers or others or as required by international, federal, state or local authorities.
The impacts of the COVID-19 pandemic continue to be felt in our operating results as compared to business levels pre-pandemic, although not significantly impacting the current fiscal quarter as compared to the corresponding quarter of the 2021 fiscal year. Further, for future periods, significant uncertainty continues to exist concerning the magnitude, duration and impacts of the COVID-19 pandemic, including with regard to the effects on our customers, customer demand for our services and disruptions to supply chains and labor forces. Accordingly, actual results for future fiscal periods could differ materially versus current expectations and current results and financial condition discussed herein may not be indicative of future operating results and trends.
For a discussion of risks and uncertainties related to COVID-19, including the potential impacts on our business, financial condition and results of operations, see Item 1A - Risk Factors contained in our 2021 Form 10-K.
Business Overview
At Jacobs, we’re challenging today to reinvent tomorrow by solving the world’s most critical problems for thriving cities, resilient environments, mission-critical outcomes, operational advancement, scientific discovery and cutting-edge manufacturing.
**Revenue by Type (Q1 FY2022)**1
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1 Due to COVID-19 and the actions taken by governmental authorities and others related thereto, some of the information provided in this summary relating to sources of revenue could be substantially different in the remainder of fiscal 2022.
Lines of Business
The services we provide fall into the following two lines of business (LOB): Critical Mission Solutions (CMS) and People & Places Solutions (P&PS). The LOBs and a majority investment in PA Consulting (PA) constitute the Company’s reportable segments. For additional information regarding our segments, including information about our financial results by segment and financial results by geography, see Note 5 - Revenue Accounting for Contracts of Notes to Consolidated Financial Statements.
Critical Mission Solutions (CMS)
Our Critical Mission Solutions line of business provides a full spectrum of cyber, data analytics, systems and software application integration services and consulting, enterprise level operations and maintenance and mission IT, engineering and design, enterprise operations and maintenance, program management, and other highly technical consulting solutions to government agencies as well as commercial customers and international markets. Our representative clients include the U.S. Department of Defense (DoD), the Combatant Commands, the U.S. Intelligence Community, NASA, the U.S. Department of Energy (DoE), U.K. Ministry of Defence, the U.K. Nuclear Decommissioning Authority (NDA) and the Australian Department of Defence, as well as private sector customers mainly in the aerospace, automotive, energy and telecom sectors.
The U.S. government is the world’s largest buyer of technical services, and in fiscal 2021, approximately 74% of CMS’s revenue was earned from serving the DoD, intelligence community and Federal Civilian governmental entities. Our international customers, which accounted for 18% of fiscal 2021 revenue, have also increased demand for our IT and cybersecurity solutions and nuclear projects, and the U.K. Ministry of Defence continues to focus on accelerating its strategic innovative and technology focused initiatives.
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People & Places Solutions (P&PS)
Jacobs' People & Places Solutions line of business provides end-to-end solutions for our clients’ most complex challenges - whether climate change, energy transition, connected mobility, integrated water management, smart cities or vaccine manufacturing. In doing so, we incorporate the full spectrum of data science and technology-enabled toolsets within a human-centric solution development and delivery framework. We embrace inclusive engagement of partners and stakeholders and generate enduring social equity/value through consulting, planning, architecture, design and engineering project outcomes, as well as long-term operation of facilities and infrastructure. Solutions may be delivered as standalone engagements or through comprehensive program management that integrates disparate workstreams to yield additional benefits not attainable through project-by-project implementation. We also provide progressive design-build and construction management at-risk delivery solutions in targeted markets.
Our clients include national, state and local government in the U.S., Canada, Europe, U.K., Middle East, Australia, New Zealand and Asia, as well as multinational private sector clients throughout the world.
PA Consulting
In fiscal 2021, Jacobs invested in a 65% stake in PA, the consultancy that is Bringing Ingenuity to Life. Its diverse teams of experts combine innovative thinking and breakthrough use of technologies to progress further, faster. PA’s clients adapt and transform and achieve enduring results. An innovation and transformation consultancy, PA's roughly 3,300 employees work across seven sectors: consumer and manufacturing, defense and security, energy and utilities, financial services, government, health and life sciences, and transport. PA people are strategists, innovators, designers, consultants, digital experts, scientists, engineers and technologists. The team operates globally from offices across the U.K., U.S., Nordics and the Netherlands.
PA offers end-to-end innovation, accelerating new growth ideas from concept, through design, development, and to commercial success, and revitalizing organizations, building the leadership, culture, systems and processes to make innovation a reality. PA has a diverse mix of private and public sector clients, from global household names to start-ups, to national and local public services.
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Results of Operations for the three months ended December 31, 2021 and January 1, 2021
(in thousands, except per share information)
| For the Three Months Ended | |||||||||||
| December 31, 2021 | January 1, 2021 | ||||||||||
| Revenues | $ | 3,380,625 | $ | 3,381,836 | |||||||
| Direct cost of contracts | (2,584,151) | (2,749,776) | |||||||||
| Gross profit | 796,474 | 632,060 | |||||||||
| Selling, general and administrative expenses | (619,141) | (418,120) | |||||||||
| Operating Profit | 177,333 | 213,940 | |||||||||
| Other Income (Expense): | |||||||||||
| Interest income | 1,501 | 1,124 | |||||||||
| Interest expense | (19,426) | (17,313) | |||||||||
| Miscellaneous income, net | 9,682 | 156,360 | |||||||||
| Total other (expense) income, net | (8,243) | 140,171 | |||||||||
| Earnings from Continuing Operations Before Taxes | 169,090 | 354,111 | |||||||||
| Income Tax Expense from Continuing Operations | (15,889) | (87,023) | |||||||||
| Net Earnings of the Group from Continuing Operations | 153,201 | 267,088 | |||||||||
| Net Earnings of the Group from Discontinued Operations | (232) | (14) | |||||||||
| Net Earnings of the Group | 152,969 | 267,074 | |||||||||
| Net Earnings Attributable to Noncontrolling Interests from Continuing Operations | (9,252) | (10,026) | |||||||||
| Net Earnings Attributable to Redeemable Noncontrolling interests | (9,683) | — | |||||||||
| Net Earnings Attributable to Jacobs from Continuing Operations | 134,266 | 257,062 | |||||||||
| Net Earnings Attributable to Jacobs | $ | 134,034 | $ | 257,048 | |||||||
| Net Earnings Per Share: | |||||||||||
| Basic Net Earnings from Continuing Operations Per Share | $ | 1.04 | $ | 1.98 | |||||||
| Basic Net Earnings from Discontinued Operations Per Share | $ | — | $ | — | |||||||
| Basic Earnings Per Share | $ | 1.04 | $ | 1.98 | |||||||
| Diluted Net Earnings from Continuing Operations Per Share | $ | 1.03 | $ | 1.96 | |||||||
| Diluted Net Earnings from Discontinued Operations Per Share | $ | — | $ | — | |||||||
| Diluted Earnings Per Share | $ | 1.03 | $ | 1.96 |
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Overview – Three Months Ended December 31, 2021
Net earnings attributable to the Company from continuing operations for the first fiscal quarter ended December 31, 2021 were $134.3 million (or $1.03 per diluted share), a decrease of $122.8 million, or 47.8%, from net earnings of $257.1 million (or $1.96 per diluted share) for the corresponding period last year. The first fiscal quarter of 2022 was impacted by $75.0 million in pre-tax Restructuring and other charges and transaction costs associated mainly with the Company's transformation initiatives relating to real estate which is discussed in Note 18- Restructuring and Other Charges. This decrease was partially offset by the current quarter operating results benefiting from our BlackLynx, Inc. ("BlackLynx"), PA Consulting and Buffalo Group investing activities. The comparable period ended January 1, 2021 benefited from $93.1 million in pre-tax unrealized appreciation gains recorded in miscellaneous income (expense), net, associated with our investment in Worley stock and certain foreign currency revaluations relating to the ECR sale and pre-tax unrealized appreciation gains associated with our investment in C3.ai, Inc. ("C3") of $82.6 million, which were both sold during the fiscal year ended 2021. These were partially offset by $27.9 million in fiscal 2021 pre-tax other-than-temporary impairment charges in respect of our AWE investment.
For discussion of discontinued operations, see Note 17 - Sale of Energy, Chemicals and Resources ("ECR") Business.
On November 19, 2021, a subsidiary of Jacobs acquired BlackLynx. For further discussion, see Note 16- Other Business Combinations.
On March 2, 2021, Jacobs completed the strategic investment of a 65% interest in PA Consulting. For further discussion, see Note 15 - PA Consulting Business Combination.
On November 24, 2020, a subsidiary of Jacobs completed the acquisition of Buffalo Group. For further discussion, see Note 16- Other Business Combinations.
Consolidated Results of Operations
Revenues for the first fiscal quarter of 2022 were $3.38 billion, in line with our revenues reported in the corresponding period last year. The slight decrease in revenues for the year over year period was in part due to certain contract wind downs in the U.S. and volume decreases in our P&PS America's business due to softer U.S. market conditions as well as lower pass-through revenues in advanced facilities. In addition, revenue decreases from the prior year resulted from prior year favorable foreign currency translation in our international businesses of $24.1 million, with no significant impact in the current period. This is partly offset due to fiscal 2022 incremental revenues from the PA Consulting investment and the BlackLynx and Buffalo Group acquisitions. Pass-through costs included in revenues for the three months ended December 31, 2021 amounted to $472.4 million, a decrease of $176.3 million, or 27.2%, from $648.7 million from the corresponding period last year, which was primarily attributable to our advanced facilities business.
Gross profit for the first quarter of 2022 was $796.5 million, an increase of $164.4 million, or 26.0%, from $632.1 million from the corresponding period last year. Our gross profit margins were 23.6% and 18.7% for the three months ended December 31, 2021 and January 1, 2021, respectively, with these trend differences being mainly attributable to favorable margin trends from our recent PA Consulting investment, the BlackLynx and Buffalo Group acquisitions, partially offset by market conditions and certain contract wind downs in our U.S. businesses.
See Segment Financial Information discussion for further information on the Company’s results of operations at the operating segment.
SG&A expenses for the three months ended December 31, 2021 were $619.1 million, an increase of $201.0 million, or 48.1%, from $418.1 million for the corresponding period last year. The current year's three months ended results were impacted by incremental SG&A expenses from recent business acquisitions (mainly PA Consulting), of $93.5 million and higher personnel-related costs, partly offset by lower other operational overhead costs. Additionally, higher Restructuring and other charges for the three-month period of 2022 related in part to $73.2 million in costs associated in part with the Company's transformation initiatives relating to real estate which is discussed in Note 18- Restructuring and Other Charges. Prior year SG&A expenses included unfavorable impacts from foreign currency of $3.8 million, with no significant impact in the current year period.
Net interest expense for the three months ended December 31, 2021 was $17.9 million, an increase of $1.7 million from $16.2 million for the corresponding period last year. The increase in net interest expense for the three month
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period year over year is due to higher levels of average debt outstanding relating in part to the funding of the PA Consulting investment and the BlackLynx acquisition, in addition to higher interest rates.
Miscellaneous income, net for the three months ended December 31, 2021 was $9.7 million in comparison to $156.4 million for the corresponding period last year. The $146.7 million decrease from the prior year three-month period was due primarily to prior year pre-tax unrealized gains on the Company's equity investments in Worley and C3, which were sold during fiscal year 2021. The three months ended January 1, 2021 included $93.1 million in pre-tax unrealized gains associated with changes in the fair value of our investment in Worley stock and certain foreign currency revaluations relating to the ECR sale and $82.6 million in net gains related to the C3 investment. These were partially offset by $27.9 million in fiscal 2021 pre-tax other-than-temporary impairment charges in respect of our AWE investment.
The Company’s effective tax rates from continuing operations for the three months ended December 31, 2021 and January 1, 2021 were 9.4% and 24.6%, respectively. The Company’s effective tax rate from continuing operations for the three months ended December 31, 2021 was lower than the corresponding rate in the prior period primarily due to a current year tax benefit of $15.7 million related to the release of previously reserved foreign tax credits, $4.2 million excess tax benefit attributable to stock compensation, and $4.0 million benefit from filing amended status returns.
The amount of income taxes the Company pays is subject to ongoing audits by tax jurisdictions around the world. In the normal course of business, the Company is subject to examination by tax authorities throughout the world, including such major jurisdictions as Australia, Canada, India, the Netherlands, the United Kingdom and the United States. Our estimate of the potential outcome of any uncertain tax issue is subject to our assessment of the relevant risks, facts, and circumstances existing at the time. The Company believes that it has adequately provided for reasonably foreseeable outcomes related to these matters. However, future results may include favorable or unfavorable adjustments to our estimated tax liabilities in the period the assessments are made or resolved, which may impact our effective tax rate.
Segment Financial Information
The following table provides selected financial information for our operating segments and includes a reconciliation of segment operating profit to total U.S. GAAP operating profit from continuing operations by including certain corporate-level expenses, Restructuring and other charges and transaction and integration costs (in thousands).
| Three Months Ended | |||||||||||
| December 31, 2021 | January 1, 2021 | ||||||||||
| Revenues from External Customers: | |||||||||||
| Critical Mission Solutions | $ | 1,162,505 | $ | 1,295,287 | |||||||
| People & Places Solutions | 1,928,146 | 2,086,549 | |||||||||
| PA Consulting | 289,974 | — | |||||||||
| Total | $ | 3,380,625 | $ | 3,381,836 |
| Three Months Ended | |||||||||||
| December 31, 2021 | January 1, 2021 | ||||||||||
| Segment Operating Profit: | |||||||||||
| Critical Mission Solutions | $ | 111,496 | $ | 110,072 | |||||||
| People & Places Solutions | 191,692 | 196,300 | |||||||||
| PA Consulting | 63,071 | — | |||||||||
| Total Segment Operating Profit | 366,259 | 306,372 | |||||||||
| Other Corporate Expenses (1) | (105,360) | (70,341) | |||||||||
| Restructuring, Transaction and Other Charges (2) | (83,566) | (22,091) | |||||||||
| Total U.S. GAAP Operating Profit | 177,333 | 213,940 | |||||||||
| Total Other (Expense) Income, net (3) | (8,243) | 140,171 | |||||||||
| Earnings Before Taxes from Continuing Operations | $ | 169,090 | $ | 354,111 |
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| (1) | Other corporate expenses also include intangibles amortization of $46.9 million and $23.2 million for the three months ended December 31, 2021 and January 1, 2021, respectively, with this increase mainly attributable to the PA Consulting investment. | ||||
| (2) | Included in the three months ended December 31, 2021 is $72.3 million of real estate impairment charges related to the Company's transformation initiatives. | ||||
| (3) | The three months ended December 31, 2021 include $1.7 million in income associated with final distributions from the exit of our AWE investment and a gain of $6.9 million related to a lease termination. The three months ended January 1, 2021 include $93.1 million in fair value adjustments related to our investment in Worley stock (net of Worley stock dividend) and certain foreign currency revaluations relating to the ECR sale, $82.6 million in fair value adjustments related to our investment in C3 stock and $(27.9) million related to impairment charges on our AWE Management Ltd. investment. The investments in Worley and C3 were sold in fiscal 2021 and therefore there are no comparable amounts in the current quarter. |
Critical Mission Solutions
| Three Months Ended | |||||||||||
| December 31, 2021 | January 1, 2021 | ||||||||||
| Revenue | $ | 1,162,505 | $ | 1,295,287 | |||||||
| Operating Profit | $ | 111,496 | $ | 110,072 |
Critical Mission Solutions (CMS) segment revenues for the three months ended December 31, 2021 were $1.16 billion, a decrease of $132.8 million, or 10.3%, from $1.30 billion for the corresponding period last year. The decrease in revenue was primarily driven by several large contracts winding down in the U.S., partially offset by revenue growth from certain elements of our legacy portfolio, driven by increased spending by customers in the U.S. government business sector and our legacy international clients. Impacts on revenues from favorable foreign currency translation were approximately $2.2 million for the three month period ended December 31, 2021 compared to $4.6 million in favorable impacts in the corresponding prior year period.
Operating profit for the segment was $111.5 million for the three months ended December 31, 2021, an increase of $1.4 million, or 1.3%, from $110.1 million for the corresponding period last year. This slight increase from the prior year was mainly attributable to growth in higher margin U.S. government business sectors as well as our recent acquisitions, offsetting impacts from the large contract wind downs mentioned above. Impacts on operating profit from foreign currency were not significant for either period.
People & Places Solutions
| Three Months Ended | |||||||||||
| December 31, 2021 | January 1, 2021 | ||||||||||
| Revenue | $ | 1,928,146 | $ | 2,086,549 | |||||||
| Operating Profit | $ | 191,692 | $ | 196,300 |
Revenues for the People & Places Solutions (P&PS) segment for the three months ended December 31, 2021 was $1.93 billion, a decrease of $158.4 million, or 7.6%, from $2.09 billion for the corresponding period last year. The decrease in revenue for the three months ended December 31, 2021 was primarily driven by volume decreases in our U.S. markets and lower pass through costs within our advanced facilities business. Foreign currency translation had a $2.6 million unfavorable impact on revenues in our international businesses for the current year period. Comparatively, favorable impacts on revenues from foreign currency translation was approximately $19.5 million for the three month period ended January 1, 2021.
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Operating profit for the segment for the three months ended December 31, 2021 was $191.7 million, a decrease of $4.6 million, or 2.3%, from $196.3 million for the corresponding period last year. The year-over-year decrease in operating profit for the three months ended December 31, 2021 was driven mainly by the decline in lower revenues mentioned above and higher costs associated labor, travel, and other spending as COVID-19 mitigation efforts were moderated as well as incremental investments in support of projected future growth later this year. Impacts on operating profit from foreign currency were not significant for the current year period, compared to $2.1 million in favorable impacts in the corresponding prior year period.
PA Consulting
| Three Months Ended | |||||||||||
| December 31, 2021 | January 1, 2021 | ||||||||||
| Revenue | $ | 289,974 | $ | — | |||||||
| Operating Profit | $ | 63,071 | $ | — |
Revenues for the PA Consulting segment for the three months ended December 31, 2021 were $290.0 million. Operating profit for the segment for the three months ended January 1, 2021 was $63.1 million. There were no comparable periods in the prior year, given the transaction closed on March 2, 2021.
Other Corporate Expenses
Other corporate expenses for the three months ended December 31, 2021 were $105.4 million, an increase of $35.0 million from $70.3 million for the corresponding period last year. This increase was due primarily to higher intangible amortization expense from the PA Consulting investment and other acquisitions, as well as impacts from higher Company benefit program costs and other department spend increases.
Included in other corporate expenses in the above table are costs and expenses which relate to general corporate activities as well as corporate-managed benefit and insurance programs. Such costs and expenses include: (i) those elements of SG&A expenses relating to the business as a whole; (ii) those elements of our incentive compensation plans relating to corporate personnel whose other compensation costs are not allocated to the LOBs; (iii) the amortization of intangible assets acquired as part of business combinations; (iv) the quarterly variances between the Company’s actual costs of certain of its self-insured integrated risk and employee benefit programs and amounts charged to the LOBs; and (v) certain adjustments relating to costs associated with the Company’s international defined benefit pension plans. In addition, other corporate expenses may also include from time to time certain adjustments to contract margins (both positive and negative) associated with projects, as well as other items, where it has been determined that such adjustments are not indicative of the performance of the related LOB.
Restructuring and Other Charges
See Note 18- Restructuring and Other Charges for information on the Company’s activity relating to restructuring and other charges.
Backlog Information
We include in backlog the total dollar amount of revenues we expect to record in the future as a result of performing work under contracts that have been awarded to us. Our policy with respect to Operations & Maintenance ("O&M") contracts, however, is to include in backlog the amount of revenues we expect to receive for one succeeding year, regardless of the remaining life of the contract. For national government programs (other than national government O&M contracts, which are subject to the same policy applicable to all other O&M contracts), our policy is to include in backlog the full contract award, whether funded or unfunded, excluding option periods. Because of variations in the nature, size, expected duration, funding commitments, and the scope of services required by our contracts, the timing of when backlog will be recognized as revenues can vary greatly between individual contracts.
Consistent with industry practice, substantially all of our contracts are subject to cancellation or termination at the option of the client, including our U.S. government work. While management uses all information available to determine
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backlog, at any given time our backlog is subject to changes in the scope of services to be provided as well as increases or decreases in costs relating to the contracts included therein. Backlog is not necessarily an indicator of future revenues.
Because certain contracts (e.g., contracts relating to large Engineering, Procurement & Construction ("EPC") projects as well as national government programs) can cause large increases to backlog in the fiscal period in which we recognize the award, and because many of our contracts require us to provide services that span over several fiscal quarters (and sometimes over fiscal years), we evaluate our backlog on a year-over-year basis, rather than on a sequential, quarter-over-quarter basis.
The following table summarizes our backlog at December 31, 2021 and January 1, 2021 (in millions):
| December 31, 2021 | January 1, 2021 | ||||||||||
| Critical Mission Solutions | $ | 10,798 | $ | 9,683 | |||||||
| People & Places Solutions | 16,932 | 15,422 | |||||||||
| PA Consulting | 276 | — | |||||||||
| Total | $ | 28,006 | $ | 25,105 |
The increase in backlog in Critical Mission Solutions (CMS) from January 1, 2021 was primarily driven by success in closing on a number of key opportunities in the U.S government space and the BlackLynx acquisition.
The increase in backlog in People & Places Solutions (P&PS) from January 1, 2021 was primarily driven by new business awards in our advanced facilities business.
Backlog in PA Consulting as of December 31, 2021 was $276.0 million. The PA Consulting transaction closed on March 2, 2021.
Consolidated backlog differs from the Company’s remaining performance obligations as defined by ASC 606 primarily because of our national government contracts (other than national government O&M contracts). Our policy is to generally include in backlog the full contract award, whether funded or unfunded excluding the option periods while our remaining performance obligations represent a measure of the total dollar value of work to be performed on contracts awarded and in progress. Additionally, the Company includes our proportionate share of backlog related to unconsolidated joint ventures which is not included in our remaining performance obligations.
Liquidity and Capital Resources
At December 31, 2021, our principal sources of liquidity consisted of $1.25 billion in cash and cash equivalents and $1.67 billion of available borrowing capacity under our $2.25 billion revolving credit agreement (the "Revolving Credit Facility"). We finance much of our operations and growth through cash generated by our operations.
The amount of cash and cash equivalents at December 31, 2021 represented an increase of $230.8 million from $1.01 billion at October 1, 2021, the reasons for which are described below.
Our cash flow provided by operations of $321.6 million during the three months ended December 31, 2021 was favorable by $209.0 million in comparison to the cash flow provided by operations of $112.6 million for the corresponding prior year period. This improvement was due mainly to improved working capital performance along with favorable impacts from net cash earnings year over year. The improvement in working capital performance was primarily driven by favorability in accounts receivable collections trends along with less cash used in accrued liabilities year over year.
Our cash used for investing activities for the three months ended was $249.6 million, compared to cash used for investing activities of $193.2 million in the corresponding prior year period, with this change due primarily to the acquisition of BlackLynx in the current quarter and Buffalo Group in the prior year.
Our cash provided by financing activities of $144.4 million for the three months ended December 31, 2021 resulted mainly from net proceeds from borrowings of $231.4 million mainly in connection with the BlackLynx acquisition,
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partly offset by cash used for repurchase of redeemable noncontrolling interests of $35.1 million and $41.6 million in dividends to shareholders and noncontrolling interests. Cash provided by financing activities in the corresponding prior year period was $18.7 million, due primarily to net proceeds from borrowings of $95.0 million, offset by cash used for share repurchases of $24.8 million and $35.7 million in dividends to shareholders and noncontrolling interests.
At December 31, 2021, the Company had approximately $162.2 million in cash and cash equivalents held in the U.S. and $1.08 billion held outside of the U.S. (primarily in the U.K., the Eurozone, Australia, India, Japan and the United Arab Emirates), which is used primarily for funding operations in those regions. Other than the tax cost of repatriating funds to the U.S. (see Note 7- Income Taxes of Notes to Consolidated Financial Statements included in our 2021 Form 10-K), there are no material impediments to repatriating these funds to the U.S.
The Company had $273.7 million in letters of credit outstanding at December 31, 2021. Of this amount, $1.7 million was issued under the Revolving Credit Facility and $272.0 million was issued under separate, committed and uncommitted letter-of-credit facilities.
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On February 4, 2022, the Company acquired StreetLight Data, Inc., ("StreetLight") for a purchase price based on an enterprise value of $209 million on a cash-free, debt-free basis, subject to customary post-closing adjustments. StreetLight is a pioneer of mobility analytics who uses its data and machine learning resources to shed light on mobility and enable users to solve complex transportation problems.
On November 19, 2021, a subsidiary of Jacobs acquired all outstanding shares of common stock of BlackLynx, a provider of high-performance software, to complement Jacobs' portfolio of cyber, intelligence and digital solutions. The Company paid total base consideration of approximately $234.9 million in cash to the former owners of BlackLynx. In addition, the transaction involved the potential payment of future consideration that is contingent upon the achievement of certain revenue and gross margin thresholds being achieved in calendar year 2022. The estimated fair value of the contingent consideration on the acquisition date is $1.3 million. The future contingent consideration will be paid, if and to the extent achieved, in second quarter of fiscal 2023. In conjunction with the acquisition, the Company also paid off BlackLynx's debt of approximately $5.3 million simultaneously with the consummation of the acquisition.
On March 2, 2021, Jacobs completed the strategic investment of a 65% interest in PA Consulting, a UK-based leading innovation and transformation consulting firm. The total consideration paid by the Company was $1.7 billion, funded through cash on hand, proceeds from a new term loan and draws on the Company's existing revolving credit facility. Further, in connection with the transaction, an additional $261 million in investment proceeds had not yet been distributed at the investment date due to continuing employment requirements of associated management owners. Consequently, this amount represented compensation expense incurred related to the investment that was expensed subsequent to the acquisition date, and was reflected in selling, general and administrative expense and cash from operations for the fiscal year ended October 1, 2021. The remaining 35% interest was acquired by PA Consulting employees, whose redeemable noncontrolling interests had a fair value of $582.4 million on the closing date, including subsequent purchase accounting adjustments. PA Consulting is accounted for as a consolidated subsidiary and as a separate operating segment under U.S. GAAP accounting rules. See Note 15- PA Consulting Business Combination for more discussion on the investment and Note 12- Borrowings for more discussion on the financing for the transaction.
On January 20, 2021, the Company entered into an unsecured delayed draw term loan facility (the “2021 Term Loan Facility”) with a syndicate of financial institutions as lenders. Under the 2021 Term Loan Facility, the Company borrowed an aggregate principal amount of $200.0 million and £650.0 million. The proceeds of the term loans were used primarily to fund the investment in PA Consulting. The 2021 Term Loan Facility contains affirmative and negative covenants and events of default customary for financings of this type that are consistent with those included in the Revolving Credit Facility and the 2020 Term Loan Facility.
On November 24, 2020, a subsidiary of Jacobs completed the acquisition of Buffalo Group, a leader in advanced cyber and intelligence solutions which allows Jacobs to further expand its cyber and intelligence solutions offerings to government clients. The Company paid total consideration of $190.1 million, which was comprised of approximately $182.4 million in cash to the former owners of Buffalo Group and contingent consideration of $7.7 million, The contingent consideration was subsequently recognized as an offset to selling, general and administrative expense when it was determined no amounts would be paid. In conjunction with the acquisition, the Company assumed the Buffalo Group's debt of approximately $7.7 million. The Company repaid all of the assumed Buffalo Group debt by the end of the first fiscal quarter of 2021. The Company has recorded its final purchase price allocation associated with the acquisition, which is summarized in Note 16- Other Business Combinations.
We believe we have adequate liquidity and capital resources to fund our projected cash requirements for the next twelve months based on the liquidity provided by our cash and cash equivalents on hand, our borrowing capacity and our continuing cash from operations. We further believe that our financial resources and discretionary spend controls, as well as near term benefits from government assistance programs, will allow us to continue managing the negative impacts of the COVID-19 pandemic on our business operations for the foreseeable future. We continue to evaluate the impact of the pandemic on our business and reassess accordingly.
We were in compliance with all of our debt covenants at December 31, 2021.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
We do not enter into derivative financial instruments for trading, speculation or other similar purposes that would expose the Company to market risk. In the normal course of business, our results of operations are exposed to risks associated with fluctuations in interest rates and currency exchange rates.
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Interest Rate Risk
Please see the Note 12- Borrowings in Notes to Consolidated Financial Statements appearing under Part I, Item 1 of this Quarterly Report on Form 10-Q, which is incorporated herein by reference, for a discussion of the Revolving Credit Facility, Term Loan Facilities and Note Purchase Agreement.
Our Revolving Credit Facility, Term Loan Facilities and certain other debt obligations are subject to variable rate interest which could be adversely affected by an increase in interest rates. As of December 31, 2021, we had an aggregate of $2.63 billion in outstanding borrowings under our Revolving Credit Facility and Term Loan Facilities. Interest on amounts borrowed under these agreements is subject to adjustment based on the Company’s Consolidated Leverage Ratio (as defined in the credit agreements governing the Revolving Credit Facility and the Term Loan Facilities). Depending on the Company’s Consolidated Leverage Ratio, borrowings denominated in U.S. dollars under the Revolving Credit Facility and the Term Loan Facilities bear interest at a Eurocurrency rate plus a margin of between 0.875% and 1.625% or a base rate plus a margin of between 0.0% and 0.625% including applicable margins while borrowings denominated in British pounds under these respective facilities bear interest at an adjusted SONIA rate plus a margin of between 0.875% and 1.625%. Additionally, if our Consolidated Leverage Ratio exceeds a certain amount, the interest on the Senior Notes may increase by 75 basis points. However, as discussed in Note 19- Commitments and Contingencies and Derivative Financial Instruments, we are party to swap agreements with an aggregate notional value of $923.5 million to convert the variable rate interest based liabilities associated with a corresponding amount of our debt into fixed interest rate liabilities, leaving $1.71 billion in principal amount subject to variable interest rate risk.
For the three months ended December 31, 2021, our weighted average borrowings that are subject to floating rate exposure were approximately $1.78 billion. If floating interest rates had increased by 1.00%, our interest expense for the three months ended December 31, 2021 would have increased by approximately $4.5 million.
Foreign Currency Risk
In situations where the Company incurs costs in currencies other than our functional currency, we sometimes enter into foreign exchange contracts to limit our exposure to fluctuating foreign currencies. We follow the provisions of ASC No. 815, Derivatives and Hedging in accounting for our derivative contracts. The Company has $503.5 million in notional value of exchange rate sensitive instruments at December 31, 2021. See Note 19- Commitments and Contingencies and Derivative Financial Instruments for discussion.
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Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are those controls and procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) are recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chair and Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer), to allow timely decisions regarding required disclosure.
The Company’s management, with the participation of its Chair and Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer), evaluated the effectiveness of the Company’s disclosure controls and procedures as defined by Rule 13a-15(e) of the Exchange Act defined above, as of December 31, 2021, the end of the period covered by this Quarterly Report on Form 10-Q (the “Evaluation Date”). Based on that evaluation, the Company’s management, with the participation of the Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer) concluded that the Company’s disclosure controls and procedures, as of the Evaluation Date, were effective to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to the Company’s management, including the Company’s Chair and Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer), as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting
There were no changes to our internal control over financial reporting which were identified in connection with the evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act during the quarter ended December 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
The information required by this Item 1 is included in the Note 19- Commitments and Contingencies and Derivative Financial Instruments included in the Notes to Consolidated Financial Statements appearing under Part I, Item 1 of this Quarterly Report on Form 10-Q, which is incorporated herein by reference.
Item 1A. Risk Factors.
Please refer to Item 1A- Risk Factors in our 2021 Form 10-K, which is incorporated herein by reference, for a discussion of some of the factors that have affected our business, financial condition, and results of operations in the past and which could affect us in the future. There have been no material changes to those risk factors. Before making an investment decision with respect to our common stock, you should carefully consider those risk factors, as well as the financial and business disclosures contained in this Quarterly Report on Form 10-Q and our other current and periodic reports filed with the SEC.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
There were no sales of unregistered equity securities during the first fiscal quarter of 2022.
Share Repurchases
On January 16, 2020, the Company's Board of Directors authorized a share repurchase program of up to $1.0 billion of the Company's common stock, to expire on January 15, 2023 (the "2020 Repurchase Authorization"). In the fourth quarter of fiscal 2021, the Company initiated an accelerated share repurchase program by advancing $250 million to a financial institution in a privately negotiated transaction, with final non-cash settlement on the program during the first quarter of fiscal 2022 of 342,054 shares as depicted in the table below.
The following table summarizes the activity under the 2020 Repurchase Authorization through the first fiscal quarter of 2022:
| Amount Authorized (2020 Repurchase Authorization) | Average Price Per Share (1) | Shares Repurchased | Total Shares Retired | |||||||||||||||||
| $1,000,000,000 | $137.55 | 342,054 | 342,054 |
(1)Includes commissions paid and calculated at the average price per share
As of December 31, 2021, the Company has $782.9 million remaining under the 2020 Repurchase Authorization.
Our share repurchase program does not obligate the Company to purchase any shares. Share repurchases may be executed through various means including, without limitation, accelerated share repurchases, open market transactions, privately negotiated transactions, purchases pursuant to Rule 10b5-1 plans or otherwise. The authorization for the share repurchase programs may be terminated, increased or decreased by the Company’s Board of Directors in its discretion at any time. The timing, amount and manner of share repurchases may depend upon market conditions and economic circumstances, availability of investment opportunities, the availability and costs of financing, currency fluctuations, the market price of the Company's common stock, other uses of capital and other factors.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosure.
None.
Item 5. Other Information.
None.
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Item 6. Exhibits.
Management contract or compensatory plan or arrangement
- Filed herewith
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
JACOBS ENGINEERING GROUP INC.
| By: | /s/ Kevin C. Berryman | ||||
| Kevin C. Berryman | |||||
| President | |||||
| and Chief Financial Officer | |||||
| (Principal Financial Officer) | |||||
| Date: | February 8, 2022 |
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