J - Earnings call 1 2024 | Jacobs Engineering Group Inc.

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Operator

Good morning. My name is Audra, and I will be your conference operator today. At this time, I would like to welcome everyone to the Jacobs Fiscal First Quarter 2024 Earnings Conference Call and Webcast. Today's conference is being recorded. [Operator Instructions]. like of the Relations. Corporate I'd Jonathan over time, VP Evans, Development this to conference turn to At and Investor go ahead. Please

Jonathan Evans

Thank morning. Good you, Audra.

Our to reference about non-GAAP during we call. I for morning, presentation filed information to our our of the earnings financial refer the like operating a material you on we'll statements posted metrics. X measures slide and which website, would announcement was Slide forward-looking have and this presentation

supplement that financial new certain We information, non-GAAP have a also our consolidates tables. including introduced

Additionally, apply this comparable beginning annual expected adjusted the net are periods continuing with no this in basis. quarter, the presented Prior the and an earnings tax also company being will rate operations EPS, longer resulted of adjusted which to previously adjustment all on to application periods. from quarterly

X. the to on Turning agenda Slide

Speaking and Pragada; discussion Claudia providing and financial CEO; as quarter our as on CFO, begin well flow. of metrics be overview first our Claudia summarizing of call today's by Jacobs' of more in-depth will and activities provide a cash review sheet recent from an Bob Bob balance our will highlights will a Jaramillo. results.

turn Bob to over With CEO, I'll that, it Pragada.

Robert Pragada

you Good performance. fiscal for Jonathan. and first us day, you, our everyone, year to discuss Thank joining business thank quarter XXXX

business We lines of our across optimizing continue accelerating our prioritize and simplifying margin expansion model, profitable business. to our cost growth structure and .

the benefit as us infrastructure and are digitally dedication delivering create our better-than-expected solutions At as leaner continues global companies. standing the clients. delivered level, X that investments. And in from model results see of and enabled to position to a team leader QX, great corporate working we global in up resilience the working while aligns to broad-based we task Our we science-based a operating added to sustainability demonstrate that in to allowing underlying also fully strength diligently independent Jacobs'

foundation to the actions for profitability we we providing to in are margins, multiyear and forward that taking the look quarters in and come. are detail confident are our We improvement more sharing

to on Intelligence brief our spin-off update to X. with Solutions few and Cyber momentum. and want milestones I Turning to Slide key provide the in merger businesses of Critical related a Mission a

closing the preparing We to momentum, in and XXXX, our fiscal transaction. transaction XX towards with rooming progress expectations. with are half established of our the of line Form the making continue request year the time second previous on progress we private keeping consistent Together with in letter of

antitrust filing we analysts are and we to spring. Upon aim XX, Additionally, progressing to team of comprehensive and this information later public filings combined to regulatory and offer introducing investors the Form more our forward the approvals. leadership the look

cost would the like to plan that I briefly also optimization quarter. last on outlined we touch

underway. followable portfolio well transformation higher-margin to is a Our less and

to ways operating profitability. targets, are continue We it in And while long-term to find our increasingly is model. our to too revise early our our we streamline to new enhance ability confident positively

we As optimizing better cost to we units. progress to now align the structure, are business corporate separation towards our and costs applicable able

decision will the unallocated the segment, to greater P&PS shift current allow made costs As have which some of a recovery result, we overhead. corporate long-term corporate our for into

that we in our from weighing our gradually will segment bottom margins, has has temporarily on effect impact long no today. the While run profitability corporate operating the boost cost this this of recover this our EBITDA on Rather, line as upside drive post XX.X% the Providing target adjusted This adds multiyear Jacobs, value our shared margin for to initial beyond conviction sector stand-alone that creation. will transformation last quarter. clients. we public separation set

basis gross adjusted gross increased margin organic. quarter boosting revenue businesses is year-over-year, XX report revenue X% to confidence entirely profitable points their trends. driven by In Backlog to and growth X.X% X. Slide improved that a can that Turning year-over-year, QX, net and first X.X% pleased growth in I'm continue our backlog strong

write-down. quarter's $XX inventory noncash million onetime include results a This

operating Excluding versus ultimate P&PS free $XXX revenue QX that year we adjusted be million, strong net profit increased operating and XX% conversion growth. to in fiscal to conversion our free Star. X.X% We cash this long-term cash to Strong create adjusted of with ability item, value robust our hallmark XXXX. business our of of had would growth the flow is of matter cash saw free growth have greater asset-light and adjusted $XXX North organic generate prior QX remain in cash per will with share, cash than year million a period. and continuation expect is a a XXX% model year-over-year. in We continue flow The in of flow, up flow

Slide X. to Turning

Places generated growth of & consecutive line growth. than adjusted revenue with the up business X% net year-over-year, People strong Our X.X% quarter greater organic line top fifth of marking

gross We continue year-over-year. growth profitable to increasing execute backlog demonstrated of as by profit absolute and our against strategy growth prioritizing X% over

and robust, continue we to full mentioned remains in pipeline margins single increase allocation in P&PS of to We growth P&PS overhead year operating Our adjusted increase previously of the to costs. expect organic of 'XX. -- inclusive mid- digits high anticipate we FY year-over-year,

continues depleted growth a to market significantly the management quality of demand of across and to Decades and and affecting water water quantity address people. solutions resources. within desalinization. in reuse, developing is billions the population agricultural Water increasing have scarcity, water The groundwater to the remains a including company. leader trend water In of Jacobs be pacesetter particular, globe, scarcity

Notably, semiconductor facility adopting of the positive California currently recently have similar strides the selected the for reuse. building is phase in project first Arizona. campuses industrial and of water a regulations. In and plants. Americas, TSMC, regulations delivery for potable largest adopted new is direct been Colorado We've chipmaker, reclaimed design And the the world's towards Arizona making

In in developing to and supply addition, multiple are water U.S. availability states economic water plans balance regional the growth.

County, Florida in the for and water of Johns example work, project $XXX St. reclamation As of million such an were delivery a awarded we design facility. project a

beneficial gallons transitioning million of for X.XX for daily reuse will resident water miles XX irrigation. to with facility central pipelines reclaimed water deliver of This

the have awarded California. Federal in with the partnership the a with West been design transportation, as successfully to grants In rail funding. Brightline through Southern West Vegas a Brightline secured have of part XXX-mile Las Nevada Administration Railroad we in $X from the long-term high-speed and link billion relationship of IGA

diabetes increased manufacturing we're with In including for and obesity injectable permitting [indiscernible] Life Sciences, for medicines, supporting Germany, their to in their support demand conceptual their [indiscernible] portfolio. design and facility an

in to We large additional continue Middle secure the engagements East.

and in supervision Saudi including Wadi infrastructure, and utility Arabia. Gate appointed [indiscernible] to preliminary services been major example Diriyah and X for design upgrades road for and Safar detail For provide road

profit very is 'XX. In XX% and basis independent pipeline the performed FY CMS's in schedule. they company. team continuing and revenue strong X% growth light year The demonstrated prospects margin well award was trend outlook CMS CMS, 'XX QX, a of points well has profitability remains recompete expansion. and XX we be as operating in over QX Its behind increased FY great in with momentum and executing major an to prepare up

continues December. to light a to a share be Consulting continues due the environment, revenue Margins in in macro growth softness to what were X.X% PA by in choppy some demonstrated U.K. particularly take as

goal. confidence full we year have to the adjusted However, manage continue to margins approximately expect variable our for ability in achieve and XX% costs operating that to

program and advance markets electricity new supply services PA, we practices in with celebrated for and gas office that safe and of the of with management U.K. secure wins hydrogen. the the Together regulatory will

strong onetime quarter. for Solutions million impacted operating X% connection been would in Our by expectations $XX merger. performance excluded adjusted the and quarter Adjusted the solid have diverged Profits growth. exceeded write-down. basis unit an points and a in Underlying operating approximately approximately business XXX were delivered this was higher with net the revenue our margins with

we we cash as to two companies. excellence grow which enable conversion, continue a as our and science-based path clients our sustainable to well we forward independent shareholders connected capital digitally-enabled remain world. summary, solutions positioned generating In free strong new return will to serving more chart while flow delivering us for and with And

the in Now call I'll to financial results our review turn to further Claudia detail. over

Claudia Jaramillo

Bob. you, Thank

came above results, our our QX with pleased expectations. are which We in

results Our of our flow shareholders. on a generating significant returning free financial to the and same our while time, deliver illustrate cash to long-standing portion at ability our strong objectives, cash

by summarizing quarter few on a X. the of for begin the highlights me Slide let So

grew the quarter million First for X.X% $XXX net adjusted million million and the revenue of related year-over-year with associated CMS. costs. and grew includes quarter gross profit $XX amortization included This million totaled revenue for oil separation separation $XX restructuring of and X%. other operating $XX GAAP and of transaction, intangibles acquired

underlying margin adjusted X.X%. Our I'll during reported dynamics was discuss review. operating the segment the

costs. intangibles from continuing other amortization $X.XX a share. from charge transaction, and related restructuring per EPS operations included was impact the to related acquired $X.XX And $X.XX and of Top

adjusted quarter $X.XX, First items, these Excluding was year-over-year. XX% up EPS

discrete a EPS to noncash adjusted to $X.XX headwind benefit Our write-down. $X.XX and related a a item related included the tax inventory

XX% $XXX down be flat in was from QX X.X% EBITDA million of representing $XX.X inventory adjusted year-over-year. and would was year-over-year, excluding of adjusted effective X.X% capital, gains benefited continue million associated forecast adjusted with discrete The our rate tax and networking in roughly write-down, year annual XXXX. benefits the was tax EBITDA XX% capital tax overseas to This subsidiary. we the guidance the to fiscal incorporated tax benefit related permanent to annual reinvestment our an effective rate was

our full non-GAAP align rate no adjusting with be will tax We our longer EPS to expectations. effective year

tax rate benefit tax now year. to we quarter XX% for to in deferred effective the each of entirety approximate of the the quarterly QX, or expect With the fiscal remainder XX%

year-over-year. ratio was profit and year-over-year. X.X% with was our revenue backlog Finally, up X% increasing backlog gross book-to-bill X.XXx, The just

Slide [indiscernible] to our of in let's performance the the X. turn quarter, Regarding business

Solutions. was resulting and operating slightly, profit Adjusted revenue down Places adjusted Starting X.X% of People operating adjusted margins XX.X%. with was year-over-year. QX net in up

profit changes in However, resulted adjusted year-over-year previously growth. cost would mentioned, of the impact operating excluding have approximately X% allocation

see business margins of increase full mentioned operating year-over-year, profitability adjusted previously solid both increase allocation in of in to in costs. to continue momentum year the growth and the overhead and P&PS inclusive We anticipates

Moving Critical Solutions. to Mission

year-over-year backlog over X% Our increased QX revenue up trend a quarters. of X%. consistent single-digit growth with multiple high Continuing

avenues margins improvement points with CMS also continue by to We through operational rising basis XX operating find year-over-year.

by QX, net strong. increased revenue In execution operating $XX including Adjusted solutions. divergent inventory to million the was Shifting Underlying profit adjusted was million, year-over-year. X.X% $X write-down. our

one-off Excluding the performance above write-down, was expectations.

and Consulting. turn QX saw revenue Now to X.X% PA positive deliver increase. ongoing attention our to PA bookings year-over-year an continues momentum in pipeline. let's

we our year. approximately standpoint. that in cycle confident for ongoing it each margins are was risks XX% segments ability quarter factors by macro closely the and an execution are However, election adjusted the strong from remain of these full variable costs our for total, U.K.'s We to managing In monitoring. navigate operating introduces targeting a

Our were in adjusted million costs $XX unallocated QX. corporate

previously now P&PS are excluded quarter's costs that being This segment. cost mentioned the to allocated

$XXX or operational model and quarter our pressure. to to item towards million efficiencies line post enhance continue debt optimize annually million this we $XX operating As expect we trend per

Turning earnings quality cash to cash another our flow. Slide We of cash of and of sheet to flow posted and quarter conversion. is our generation, discuss which balance the X strong indicative

generated strong As Bob quarterly free mentioned, of cash we $XXX flow million.

result, earnings. deliver net to adjusted a our flow conversion are free reported cash As adjusted well and we anticipated to positioned XXX%

we million authorization. flow allocation, goal $XXX opportunistically quarter, million returning cash will delivering we with during our shareholders free our have overarching consistent still reflecting have remain capital dedicated capital year's $XXX repurchase share. our returns compounding we We to Regarding aligning remaining to repurchased of in to commitment shares And per of as shareholders. said, the to last under

debt committed of the quarter of cash investment-grade ended We $X.X remain our to gross billion credit $X.XX maintaining with billion. profile. and We

to debt the is sheet. of clear adjusted balance continued indication Our net approximately QX of of our strength EBITDA a X.Xx

end rate As interest average is debt our QX, was debt, approximately floating tied of of our and of X.X%. XX% rate approximately weighted the to

cash per have With we we over free has quarterly be paid since our committed XXXX, to increased each driving that dividends to dividend Finally, XX% our and period. quarter, March an and quarterly strong flow, dividend. dividend XX. authorized Board nearly our year on $X.XX sheet our remain a increase The balance will CAGR XX.X% this,

Now I will Bob. back turn to it

Robert Pragada

you, Thank Claudia.

XX. to Turning Slide

with Internally, solutions against operational as we be remain deliver objectives. for and interest Jacobs our digitally-enabled execution clients focused the adjusted a . We XXXX science-based fiscal of shared incorporates This to this billion, to our remains on $X.XX each $X.XX Claudia complex as representing XX, as and continuing QX outlook of effective of respectively. and to to of XX% their engage challenges. solve XX% adjusted growth fiscal and most tax to midpoints, billion financial energized $X. EPS for reiterate X% at rate continue our quarter EPS to XX% guidance adjusted $X.XX $X.XX robust year. in We EBITDA adjusted remainder

anticipate we cost structure heavier we [indiscernible] EPS second accelerating half year. in Though particularly the than until normal a separation, of growth expect , the in fiscal

standing and both for value and our both independent while closing, Jacobs companies model creation. on and CMS up operating In optimizing long-term streamlining success focus we've maintained for positioning

for we will call questions. Operator, open now the

Operator

Baird. to We'll first Instructions] [Operator go Andy Whitman at

Andrew J. Wittmann

Oh, what can you're who you segment, you myself including reimbursable show some great. it's -- I for think for in on customers segment those is if paid basically these unfamiliar, the get to I the public if if sector are into have, in reallocation you SG&A extent saying costs. -- guess here, those can that the there

I maybe, about amount line basis what reallocation the from the Claudia, to an mechanism. the wanted the think clarify that's on the SG&A And I segment? dollar just talk could . is you into annual that. on

Robert Pragada

great actually nice a a It's question. Yes, lead-in. Andy, it's

and kind of just shared costs. a separation So moment of correct. kind Pre, of we pre of that moment, if planning for just you is a the pick your outpost. had for lot assessment recoverability And

And since and applying cycle, segment the audit was to now have full of it not we And this, applied. government a are beginning being line in in right the where of cycle we clear. the audit great direct have now sight direct QX Hit the to these costs. opportunity the applicability the started had as through those so of year

So that's correct. -- that's

the I this quarter be of we sense. year. each that this would remember, because amount, makes the X. that recover million it Now on $XX I'm identified goes this that the down But quarter multiplied sorry, effect. full [indiscernible] hope over by year

Andrew J. Wittmann

moved? have I million does. so million higher. the -- benefits $XX it at million the unallocated in for I The see. $XX I saying -- number -- is unadjusted, In the -- mean would reported guess words, was quarter other been with from you're the I guess, Yes, what corporate that $XX that guess that I [indiscernible]

Robert Pragada

correct. That's

Andrew J. Wittmann

the notable about or separation just SG&A But a you of unallocated things that the line? lot that know initiatives, these underlying through other -- other or you've talk efficiency should that wasn't excluded is line for we costs from been talked right underlying in now. -- any the costs business else unallocated. -- are there's Certainly, that there Can corporate Bob, that there anything underlying Were about terms corporate about.

Robert Pragada

from we of positive No. right and making on million progress transition cost of it. we'll or the will year. was get optimization we million overall costs took I to plan able To we kind No, then started it it say, be last move on million are $XX . standpoint, Andy, that $XX we were $X our to of reductions the at on that P&PS identified and what the where -- of the a into recoverability beginning quarter.

Operator

Partners. We'll Research go next to Mike Vertical Dudas at

Michael Dudas

the Maybe today. can pipeline share stands bit you relative on it little to as more a PP&S

on design maybe some the You in do better the as of go talked share as revenue some projects? in does and a improvement of getting the projects, these in areas higher-margin your -- little early 'XX? we remarks you are about segment consulting booking that track move bit through prepared in through year margin XXXX? work Is growth anticipate backlog. advisory this And you relative what we better PP&S How to

Robert Pragada

Yes. Mike, a great question. it's

So the is short answer yes.

mix. are And that water the market probably on profile the We mix. more according I'd index margin right see now starting and increase to towards the to the

up you bookings XX%. a in give have our to Just in statistic, growth water year-on-year gone

East. cash both but margin from what what's kind the a has hitting a The been of it's of we're that positive been I'd That traditionally built of about -- and those and component cities by standpoint it's targets other of which say business, thought XX%. never sector type company-wide standpoint, the Middle and East, this our really but business. water our then of the And margin And is driven environment kind about we our been year-on-year places, of kind notable one in higher-margin is call positive. before, has I Middle a

trends X there. of kind So

Michael Dudas

work Perfect. are et given cetera. , through for [indiscernible] areas areas, science, those we you and move there or as And XXXX? the Are outlook what other life semi about concentrated bookings

Robert Pragada

Yes.

starting hot hasn't seen That about we've life the some in So we've but moving forward, within as it last -- it's developments we're been for couple years. several of hasn't talked pretty happening declined, the world. red say, it -- I'd sciences the exciting to before, was past. the see accelerating quarters, it been it way

we've Tier hopefully, forever, be are in Just we've quarter clients had the last that news weeks, some those these conversations deep with really we'll some reporting next on really jobs. good X had X

strong. acquisition GLP-X and Novo's job continued are to the mention the Germany. facilities we be be Novo Those going around in That has portfolio, already the Catalent Catalent. did need middle work. just Lilly I were to in of announced to of specifically retrofitted

too. a So positive real that's

I'd new manufacturing So the kind And semi work -- been on then standpoint, chip cycle. from the life a of at as back. sciences we're look external upswing getting the world continued has now our an market of design at

so the OEM. more seeing And we're work tool around

lot of higher-powered support to facilities a driven AI by in bookings. a work So really on these order the manufacturing nice has early chips been R&D

So there. kind happening that's work of concept

Operator

Citigroup. from to Kaplowitz question We'll move our at next Andrew

Andrew Kaplowitz

question. So Bob, just up on following Mike's

that overall, water areas But side. great. overall places are which are there Middle driving in business, that mentioned any the worried is your people you East about You on

to mentioned You nicely your And people up sequentially it not from for rise U.K. Does was the quarter. the continue but really backlog PA, in here? places. for in just

Robert Pragada

yes. P&L year-on-year -- is margin I answer feel our last mentioned that we a the Andy, script, in margin the part, to comfortable the perspective, real. I'd increase that And Yes, is from say from a

published say I'd flat stay We've the the a but to high been we of attention where too some areas government areas that for same years. soft were of with next there XX If year-on-year. But It to did spend, able U.K., And XXX report increased level are committing I a there positive. the in it margin U.K. the national inflation. got the have U.K. GBP construction and on. if for which the of infrastructure was is here, is just over Friday. consideration course the might billion year-on-year think strong, we've so be level And

that that's continue that positive. overall we're some attention put an make on area we So sure to to but grow, to continuing

Andrew Kaplowitz

but to write-down. is RMT, been go maybe piece then like good, color And helpful. underlying know, I on little quarters. bit of inventory That's more on solutions. a the margin a it's divergent you place of the the a Divergence just as last know kind going several but with little just it is all the over over maybe

go So Jacobs? let's for look what Divergence forward, say, as post you like RMT

Robert Pragada

Yes.

So Andy. financials perimeter one me And the will of that actually let just and has thing, with really the disposition. and part to had do write-down in and is a clarify Intelligence inventory that & separation we to the be inventory business, The it's Cyber going.

will not around the the now more entirety with doing of working model this operating digital the that's on Jacobs. we're cross that horizontal right piece water in in business. So independent built of now. it enablement, we're what environment and a see -- continue transportation, through and the strong . We cutter being

and digital well And the we what into all So as Jacobs. reporting enablement. had simplifying and the successes now transportation will our that them as taking integrating water independent be digitization within

that. so to much follow on more And

Operator

move . Fisher at to UBS. we'll Next, Steven

Steven Fisher

year. cost that the on with beginning of mentioned you're you Bob, the identified you the expectations track at

of keep so, that. than that million be going much to million? to incurred getting Or be $XX $XX numbers and still that million $XXX Is to if you're has $XX date? reimbursed how mean been of restructuring of plus the million million are lower of now for mind. costs And that does the should some $X temporary So in the the the

Robert Pragada

Steve, good Yes. thanks for Yes, question. a clarification. That's the

those So the and the was quarter. I'd million yes, the in first what not part in the $XX of still first on that's -- $XX much your $XXX say very million $X the the question is was incurred million million, are play.

in so And we're indexing the first of next half the than balance the would and the the probably course be more quarters, over half. second X

. But yes, why that. the are costs previous clarifies million on track million that within with the that $XX segment. They're included. numbers highlighted into us. is recoverable. still that in is we That's quarter. we're our hopefully, moved So $XX we The them The not

Claudia Jaramillo

And prepared add million a also $XX for Steve, in that we're track. I'll my it's I million, the $XXX on to mentioned remarks. And that,

Steven Fisher

it then XX.X% is helpful. get the on is. XX.X% how basis so, QX? P&PS, if the of full we that for lighter as quickly then above do that That's to QX? deliver Okay. it in And the for XX.X% given assume kind the the year margin same in and And side I

Robert Pragada

And quarters. to first Yes. I'd next the few question is Steve, the say yes. the within answer

Steven Fisher

Okay.

So be still to in other expecting words, QX, that? be we should it below Or...

Robert Pragada

sequentially over will increase next year. It where no. were to last be no, no, will where QX the few No, . we above quarters

Steven Fisher

. just I'm Okay.

Robert Pragada

For the year. Yes.

Steven Fisher

this For year?

Robert Pragada

be higher year, last this For will than year-on-year year. This the year total.

Steven Fisher

Right. This year, you're right? have Do guiding that to right? I XX.X%,

Robert Pragada

Better than XX.X%.

So be then year. this XX.X%. And year last XX.X% was will better year than full

Steven Fisher

being better you're XX.X% you to start for if quarter, And XX.X%. got than the

So quickly guess how than get figure [indiscernible] . that just trying XX.X%. I'm out better I Is we to

Claudia Jaramillo

gradual It'll be increase. a

Robert Pragada

Yes, That's I it'll financials. that . and over why within indexed second Steve, a our we'll that's why reported -- half, quarters. few that said see the

Operator

at Sachs. next Goldman Jerry Revich question our take from We'll

Unknown Analyst

ramp Can This the plus of higher the decline is sequentially? bit revenues talk more through today. then drives the about margin on balance even XXX with -- Jerry Consulting about talk year? what visibility the I a And on PA Adam for in can margin drove you what

Robert Pragada

Sure.

PA, would Adam. pipeline So call in The its stock the optimism work is we the driving -- backlog, there. it part second as but -- the answer well first, of as

of structure as to defense it's what little business, kind within discretionary clients entity. some and have of the in work. and the public As well around services-oriented. . The it -- the spend by business drop and a the Jacobs, probably arms as going bit December. with was was team And a asset-light more government, and in U.K. of sector security U.K. Similar was people our on the around cost driven does well volatility as the really better variable

And we so can't those that that stops was a if on make kind of dime, actions. cost -- -- it variable

that in it, to quarter. returned costs we year. similar in we what so That the variable of ended up and then we're managing ahead mid-last since did has of And kind our seeing

Unknown Analyst

then comps but on little high digits, get outlook harder the the single quarter, thinking this And of a from the year How growth solid the growth line, are here. the you organic in balance mid. top about

of in U.K. the on Some things market? the going

Robert Pragada

Yes.

in I that of mid mid-single digits years kind think X we're in to still high has singles. . [indiscernible] that growth. double-digit been

so still growing. And we're

we're in think of kind probably that mid-single-digit I now. growth

Operator

move to next, at And Dillard we'll Bernstein Chad

Charles Albert Dillard

a to seeing a standpoint, So on booking wanted and I places. in spend like time little people you're more just what from

like is semiconductor first on So just the side. place

So just domestic unlock it international To like grants a with think what what in seeing like more are design you of number March. like do Design. by perspective, there's activity from be extent announced versus you to the And U.S. a [indiscernible] for potentially from then that a sounds just standpoint.

Robert Pragada

Yes.

Chad, the answer first some note just me writing let So one, time.

On and the need are buy device coming that these grants full in the utilized of production Mike the -- I and to thinking their or semiconductor output start-up are plants. timing or integrated larger the out, large those what manufacturers right? get side, about to cycle, to to right, probably Dudas the IDM Because more so is larger those said the grants predominantly I probably are R&D would being similar facilities that

happening, OEMs. at those advancements to tool that's grants where the technology are happening go and So then

Jacobs right actually The and understand tool OEMs. now well, for those those that's -- the requirements we're of technology about the of so our And kind driving is here bookings great the facility thing them. of tools as inside

kind bookings a got position SME the what's of there, within that's the we piece. nice and driving So

now, say I'd Right predominantly, domestic. it's that

growth seeing really domestic the we're investment just are probably say towards the in activity watching the there and direct is and around India. Act. midst business the was foreign in in Is December. But chips I piece. Europe more some that are in We EU country would the indexed of the really, that

chip And into China from in India. as India, manufacturing pivots potentially so

clients end well, that so both Indian non-Indian as on are as And of front of we're well kind as the clients large-scale in India. foreign companies that coming

Charles Albert Dillard

then super just [indiscernible] places. from in reallocation helpful. And people to Allocated back it. Got going That's the to cost

it a Just a the how sense for hit before actually wanted cycle. you through like to to will P&L. long like go can take get have bid Do you

do you backlog have over words, other to fully benefits? like you turn the before those see in So

Robert Pragada

No, It's gradual. gradual. it's

the gradual quarter, starts even those that, about with a that of from in, XX-month goes improvement our next to just of it's kind those say So we're full I'd margin year-on-year reiterate a But reiterating that . costs cycle. recoverability actualization of XX- the overhead.

Operator

We'll go next to . Sabahat Khan at RBC.

Sabahat Khan

a but on in in the the the business see follow-up is Obviously, clients talking that bookings you're we guess, where are macro than I P&PS of the conversations just your conversation aren't earlier. wondering right for now impacted Just that as business more backlog sort you the that PA build bit space, to But The pipeline number. line? there. bit obviously up a business seeing a of a are

Robert Pragada

And is market in of today's areas clients' as a Sure. sector. PA world of to PA low ubiquitous I'd say so the use business X of driver in I'll end that, getting AI our as world. an the we're business as that transformation. enablement within then actually within and kind the Is X AI go

it's for of here, to it's And the kind good In the start AI enablement good conversation. of the for is that PA, so toggle Jacobs.

we does get into as cycle. engagement, into how P&L. clients we kind to the in as of some of where backlog, in we get are realize an kind quickly That's goes far now think this are I where that right now

our is clients booking speed AI how and the big is So of driving a cycle. embracing the some driver. timing But of it are

from second Life Sciences. market standpoint end The is an

transformation whole And the and of other take the rightly in of been as that's of more types but AI, so gotten clinical of middle look especially has that. has been kind for program, PA at each not with patient-centric to the study right all PA patient. able therapies just different knowledge of

it on well. And so as that got tail kind a of

does then are And the is around and more I kind stage. clearly, of ahead. Tier to kind piece, clients. PA at the in the But really really, of standpoint in and way from develop of mean one Tier it our is transform going out early-stage Tier pipeline Xs the use how drug to really early last discovery X that AI X of that's a of starting it's

some some So right own of get business. say thinking while quickly how their causing near-term are the timing this now good I'd is clients embraced of stuff. about softness. those that

Sabahat Khan

And been the discussion larger there's P&PS around NPS. you line I of maybe just there the really maybe what And IRA. But top Great. when government the side, or contribution provide for on the got or how funding much And about color it is expectations? a guidance from IIJA bit kind of from little PN is is tracking -- kind funding to some of some if -- relative base business the of how initial your from then assumption of in guess could going. and level packages

Robert Pragada

of pretty And we're outlied, XX% some mid- we're the there specifically, money. mentioned guidance where that that, is kind I X been standpoint, component rail on actual high time saw say through, outlaid the single-digit the halfway larger X% there just from IIJA that of the statistic and we're a the quarters, that we've to growth. that and line that of obligated statistics we to but I XX% for XX% that end high we've on range I'd true seeing is and of to Yes, or highway on been last Sure. a some -- X% -- right

growth. that going been that looks is definitely But to positive a like big is cycle hasn't it So the news . X-year get extended. the of it piece

Operator

question . Subin next Bert comes at from Our Stifel.

Bert Subin

into beyond follow that that, facilities not look in is just Bob, If like 'XX your large improving of advanced on P&PS. we and parts it point. up but past to in and maybe generally sounds 'XX just visibility

above programs? drive a flow under segment, about is specific would funding the view it what As that? Or toggling Is of some you your think larger medium-term some of is potentially what function projects? of more for these the that you're winning

Robert Pragada

the to facilities seeing independent are Yes, sectors other advanced inclusive non-advanced of. kind you Bert. facility are of And of to

Bert Subin

No.

earlier guess, you on will and think we're you. your that the of path what more some Bob, seeing sounds feel you be beneficial I like I upslope to of, it CapEx sort you're in saying, like for you're comments, that of inclusive from

thinking about IIJA just your including the visibility some what and you good. quite it of other about and mentioned programs, So that seems like is

larger funding look If that growth than and growing you just I'm Or out X% you more is just curious time? it now, of needs those to there? are to from range. sort say, at to at your function X% of faster were if a winning were of years or projects that's X% the several on some you flow

Robert Pragada

rate water it at the that continues it say I would only we're IIJA say, the those mentioned actually driven would in in the I but kind quarter, at the announced and and where towards we're It's not big [indiscernible] one with that same water. has from is water continues it's is index conversation right water But winning not funding to I pipeline the growth this other. transportation projects are scarcity. a but and that for now, Is I'd and each continued applied, water environmental interdependent seeing as X be this kind the clip then lot of of having and those it is water, being comment. transportation, last quarter. and quarters market more being the X around as The of as now, X is probably on of even Bert,

it's at it. figure and have got enough don't we to and out look find much we where it how California it got now, to on and out we And figure put to to got too we treat in what's right either or going

And so say. oversimplifying, I'm I'd but that's what probably

Bert Subin

Got it.

on Okay. and cost that That's put super bullish to of much in just how through cutting that helpful. If that the XX.X%, just of the sounds in guys from Maybe us related that bridge P&PS. is deck pretty opportunity going you're improved we look XX.X% side can like a help is at you just think margin much mix how cost you question.

a it XX-XX? So projects? of cost it is Or Or is you're function sort cutting? is that just better getting of more

Robert Pragada

of balanced. if level variability than We leaner not, with right? a mix, now get XX-XX. want is of to XX% the of, recoverability a straight say it's XX% There's steady but you spend QX, optimization organization started Probably of a you're you're I'd we've in busy, as structure and and the cost cut of rather you if in our more state.

Operator

for And remarks. turn I at conference the like Bob closing time. this to there are no over questions further Pragada would to

Robert Pragada

A giving quarters forward lot we the come. you, right now, on look for updates the us exciting happening Thank and joining of further you in to everyone, call. business things to Yes. in

Operator

you today's participation. concludes this And for call. your conference Thank

may You disconnect. now

Jacobs Engineering (J) 6 Feb 242024 Q1 Earnings call transcript