Jacobs prepares for tough year

Acquisitions, contracts lead growth in difficult times

The past year has been all about growth for Jacobs Engineering Group Inc. The Pasadena, Calif.-based company added nearly 8,000 employees, made acquisitions all over the world and won large Defense Department and military contracts.

Those successes led to a backlog of nearly $17 billion, a 50 percent increase in net earnings to $420.7 million and revenue of $11.3 billion, a 33 percent increase from the previous year. Those numbers put Jacobs at No. 19 on this year’s Top 100 list with $1.6 billion in federal information technology contracts.

Company officials did not return phone calls for this article, but it’s safe to say that much of Jacobs’ success during the past year is attributable to key contract wins. One of the largest was a task-order contract from the Defense Information Systems Agency. Jacobs, one of 14 companies on the agency’s Encore II Information Technology Solutions contract, is providing network-centric solutions, including network engineering, analysis and support to various agencies, under the $12.2 billion deal.

Another large win for Jacobs was a $492 million contract from the Army to provide test and evaluation support to the Aberdeen Test Center at the Aberdeen Proving Ground in Maryland. The company, which has been providing such work to the Army since 2001, will be testing and evaluating a broad range of military weapons systems and equipment.

Jacobs also won a contract early in 2008 to provide engineering and technology acquisition support services to Hanscom Air Force Base in Massachusetts. The three-year, $480 million contract requires Jacobs to provide engineering and technical services to the Electronic Systems Center, which provides command-and-control and information systems to the Air Force.

The company’s 2008 growth also came from acquisitions, including buying a one-third share in AWE Management Limited, a joint venture between British Nuclear Fuels, Lockheed Martin Corp. and Serco to manage the Atomic Weapons Establishment on behalf of the U.K. Ministry of Defence. Jacobs also scooped up Rintekno, an engineering company in Finland, and L.E.S. Engineering Ltd., a maintenance, construction and services contractor in Grimsby, U.K.

In addition to acquisitions, Jacobs continued to solidify its international presence with several contract wins for large construction projects. The General Directorate hired the company for National Roads and Motorways in Poland to provide consulting and construction supervision services. The $17.6 million contract supports the widening of a national road in central Poland. The company is also providing engineering, procurement and construction management services for a new fungicide manufacturing plant in Grangemouth, Scotland.

Like many companies, Jacobs is bracing for a tough 2009. The year started with an offer by TRC Capital Corp., a merger and acquisition consulting firm, to buy 2 million shares of Jacobs’ common stock, which would be less than 2 percent of the company’s outstanding shares. In a statement, the company declined to make a recommendation to its shareholders and noted that the offer to buy the shares at $42.50 a share was lower than what the stock was trading at the day before the offer was made. The stock now trades at about $40 a share.

The company recently announced that net earnings fell 6 percent between the first quarter and second quarter of this year, something that hasn’t happened in 15 quarters, according to a statement.

“Going forward, we expect the markets to remain complex,” said Craig Martin, president and chief executive officer of Jacobs, in a statement. “Our public-sector business remains strong, while the heavy process business is highly uncertain.”

More stats on Jacobs.

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