By rebrand and recasting itself, Jacobs begins to tell investors a different story about the company with the acquisition of KeyW Corp. a critical piece of that new narrative.
Jacobs is turning the page from one era of how the company has talked about itself and moving into another in the same year it made an acquisition that explains that very shift.
During Jacobs’ fiscal fourth quarter earnings call Monday, executives gave more detail to investors regarding how that acquisition of KeyW Corp. has changed Jacob's overall profile and how the company formerly known as “Jacobs Engineering Group” is recasting itself as more of a technology business and less so of an engineering and construction firm.
CEO Steve Demetriou told analysts that Jacobs’ recent win of a potential $216 million task order for training-related services to support the Defense Department’s Cyber Crime Center is one example of a revenue synergy with KeyW in tow.
Acquired in June for nearly $815 million, KeyW also has evidently checked the box of customer access and particularly those difficult to reach via organic growth -- a main criteria for acquisitions in the government contracting market.
“Prior to KeyW, we were at about 50 percent of the (intelligence) agencies across the whole $60 billion intell business,” Demetrou said. “Now with KeyW, we’re 100-percent covered with all of the agencies.”
“That's where we're getting excited about the pipeline, maybe more than we had thought prior to acquiring it,” Demetrou added. “Whereas we talk about the space intelligence as a tremendous opportunity, we're now getting even more excited about the cyber side and the intell side, the mission IT side.”
The mix of new opportunities Jacobs sees from the acquisition is changing to some extent. Post-close, KeyW is operating as part of Jacobs’ just-rebranded critical mission solutions segment that was formerly called aerospace, technology and nuclear. This “CMS” segment contains the vast majority of Jacobs’ government IT and professional services work.
Demetrou said that some of the opportunity arising out of the KeyW addition “may actually spill over into” Jacobs’ other segment that also just rebranded to a new name: people and places solutions versus what was once buildings, infrastructure and advanced facilities.
That “PPS” business focuses on infrastructure areas such as smart cities and water but is also becoming technology-driven with lines of work like data analytics, automation and software development.
Dallas-based Jacobs is also changing its formal name from Jacobs Engineering Group to Jacobs Solutions Inc., a move in line with the segment rebrands.
Jacobs reported $12.7 billion in revenue for its 2019 fiscal year ended Sept. 27, up 10.4 percent year-over-year, with $981 million in adjusted earnings before interest, taxes, depreciation and amortization expenses for a margin of 9.6 percent.
U.S. government revenue represented approximately 27 percent of total sales or $3.4 billion, according to Jacobs’ 10-K regulatory filing that details its full fiscal year. Nearly 71 percent of federal revenue is in the critical mission solutions segment.
Overall year-end backlog was $22.6 billion, or 15.4-percent higher than what was reported at the end of FY 2019. Nearly 39.1 percent of that total backlog is from federal government work, according to the regulatory filing.
Jacobs’ guidance for its FY 2020 calls for adjusted EBITDA of $1.05 billion-$1.15 billion with no guidance given for revenue.
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