J — Jacobs Solutions Inc.

Jacobs Q3 2026 Earnings Call Summary

1. Key Financial Results and Metrics

• Adjusted EPS: Increased by approximately 14% to $1.84.
• Adjusted Net Revenue: Grew by more than 8% year-over-year, all organic.
• Net Revenue for I&AF Segment: Reached nearly $2.1 billion, a 10% year-over-year increase, marking a quarterly record.
• Backlog: Rose 27% to a record $29 billion, with a trailing 12-month book-to-bill ratio of 1.4x on gross revenue and 1.2x on net revenue.
• Adjusted EBITDA Margin: Improved to 15.2%, up 109 basis points year-over-year.
• Adjusted Free Cash Flow: Generated $541 million in Q3, bringing year-to-date total to $633 million.

2. Strategic Updates and Business Highlights

• Jacobs secured significant project awards, including:
  • Environmental restoration services for the U.S. Navy.
  • A major water infrastructure project in Utah.
  • An EPCM contract for Hut 8’s AI data center campus in Texas.
• The company is leveraging its long-standing relationships in the semiconductor sector, anticipating continued growth driven by AI investments.
• Jacobs is expanding its service offerings in AI infrastructure, which now represents 11% of adjusted net revenue, up from 10% last quarter.

3. Forward Guidance and Outlook

• Fiscal Year 2026 Guidance: Adjusted net revenue growth range increased to 9.5% to 10%, with adjusted EBITDA margin narrowed to 14.7% to 14.8%. Adjusted EPS guidance raised to $7.20 to $7.30.
• Q4 Expectations: Anticipated adjusted EBITDA margin of approximately 16% and year-over-year net revenue growth of about 14%.
• The company expects strong growth momentum to continue into FY '27, with a focus on maintaining or exceeding long-term growth averages.

4. Bad News, Challenges, or Points of Concern

• Environmental Sector Headwinds: Although there were notable project wins, the Water & Environmental segment faced challenges, with only 1% net revenue growth. However, improvement is expected in Q4.
• Temporary Disruption in PA Consulting: Recent changes in U.K. governmental leadership caused delays in project start dates, although a return to normal operations is anticipated.
• Market Volatility: The company noted potential lumpiness in book-to-bill ratios, particularly in gross revenue, due to the nature of larger project bookings.

5. Notable Q&A Insights

• Backlog Growth: Analysts inquired about the sustainability of backlog growth, with management expressing confidence in maintaining growth rates in FY '27.
• Data Center Business: The data center segment is expected to continue its double-digit growth trajectory, driven by increasing demand and established client relationships.
• International Activity: International growth is stable, particularly in Australia and New Zealand, with the Middle East showing some stability but potential for future growth.
• Operating Leverage: The company is successfully managing SG&A expenses, resulting in improved operating leverage, which is expected to continue into Q4 and beyond.
• Environmental Sector Outlook: Management indicated that recent project wins in the environmental sector would begin to contribute to revenue growth in Q4 and FY '27, with a positive outlook for the sector.

Overall, Jacobs reported strong financial performance in Q3 2026, with robust growth in key segments and a positive outlook for the remainder of the fiscal year, despite some challenges in specific areas.