Jacobs weathers bruising 2009

Hunkering down with what Jacobs Engineering Group Inc. calls baseload work kept the company relatively unscathed from severe economic injury during 2009's global recession. Aside from some financial scrapes and bruises, the company ended its 2009 fiscal year Oct. 2 with a $15.2 billion contracts backlog. Still, Jacobs’ net earnings dropped, project delays increased and awards of new contracts slowed.

Second-quarter fiscal 2010 results likewise were disappointing. For the six months ending April 2, Jacobs reported net earnings of $149.9 million, or $1.20 per diluted share, on revenues of $5.1 billion. That compares to net earnings of $225.6 million, or $1.82 per diluted share, on revenues of $6.2 billion for the same period in fiscal 2009.

Still, the company's success in the government market during fiscal 2009 landed it at No. 20 on the 2010 Top 100 list, a drop of only one slot from last year, with $1.6 billion in information technology-related prime contracts.

Going forward, Jacobs Chief Executive Officer and President Craig Martin said he is "faintly optimistic. There's reason to believe the overall economy is on the mend. Our portfolio of businesses has been more recession-resistant than others'. It's helped us through what could have been a very, very ugly downturn."

So why the hint of a smile? International growth, for one.

Martin said he would like to balance the company's mix of domestic and international business, which favors the domestic side about 2-to-1. Jacobs already has substantial government-related business in Australia, Britain and France. Potential ventures in the Middle East, India and Southeast Asia could sweeten the pie, significantly expanding the company's global reach.

In early May, Jacobs closed a deal with DuPont to provide engineering, procurement and construction management services for DuPont's operations in Asia, Europe and North America. According to the terms of the three-year agreement — Jacobs isn't disclosing contract value — the company will execute projects at DuPont manufacturing facilities on all three continents.

"Most of our [future] work will tend to be offshore," Martin said. "We see opportunities for both organic growth and growth from acquisition outside domestic markets."

One notable buy closer to home was Jacobs' December 2009 acquisition of Tybrin Corp., a 1,500-person professional services firm in Fort Walton Beach, Fla. Tybrin supplies mission-planning solutions, systems engineering, software development, modeling and combat environment simulation, engineering and testing, range safety, and other services primarily to federal government clients.

Although Jacobs did not disclose the terms of the transaction, Tybrin was ranked 86th in 2009 among Washington Technology's Top 100 contractors, with revenues of about $188 million.

"Tybrin was the first of what we hope will be several deals to expand our share of the aerospace and defense markets," Martin said. "We think there's organic growth to be had, but at someone else's expense. We don't think the pie will grow. But the opportunity to take [domestic] market share is there."

Given the growing competition, Martin said he believes maintaining cost effectiveness and cost efficiencies will be critical to Jacobs' profitability during the next 18 to 24 months. Recent contract-ceiling increases, such as the $250 million added by NASA's Marshall Space Flight Center and $50 million coming from the Special Operations Command, should help.