The paragraph is an introduction to Jacobs Solutions' Fiscal First Quarter 2025 Earnings Conference Call. Krista, the conference operator, introduces Bert Subin, the Senior Vice President of Investor Relations, who outlines the agenda. The presentation includes an overview of recent activities and first quarter results by CEO Bob Pragada and a detailed financial performance review by CFO Venk Nathamuni. The paragraph also mentions the upcoming 2025 Investor Day in Miami, where Jacobs will discuss its future vision and plans.

In Q1, total gross revenue grew by over 4%, with adjusted net revenue increasing by over 5%. The company reported a GAAP EPS loss of $0.10, impacted by a $1.16 mark-to-market loss on its investment in Amentum. Adjusted EPS, excluding certain items, was $1.33, showing an 8% decrease due to a favorable tax item in the previous year. Adjusted EBITDA increased by 24% year-on-year to $282 million, indicating strong business performance and improvements in EBITDA margin. A 1.3x trailing 12-month book-to-bill ratio and a 19% rise in backlog reflect strong new awards in late 2024. The company achieved significant wins and revenue growth, especially in the Infrastructure and Advanced Facilities segment, and globally in Water and Environmental sectors, with a notable 10-year contract with JXN Water enhancing water service for Jackson, Mississippi residents.

The paragraph highlights strong performance in Life Sciences and Advanced Manufacturing, with significant net revenue growth and a robust project backlog. In Critical Infrastructure, the company achieved milestones, being selected for the River Torrens to Darlington project in South Australia and the BusConnects Dublin program in Ireland. These projects aim to improve transportation and connectivity. The company sees growing demand for large-scale international infrastructure projects, complementing U.S. momentum. They express optimism about sustainable, profitable growth and plan to share their strategic vision for the future at an upcoming Investor Day.

In the first quarter, the company experienced significant financial growth, with gross revenue increasing by 4% and adjusted net revenue rising by 5% year-over-year. Adjusted EBITDA grew by 24% to $282 million, with a strong margin of 13.5%. Despite a decrease in adjusted EPS by 8% due to an unfavorable tax comparison, GAAP EPS was affected by an unrealized pretax loss from an investment adjustment. The backlog increased by 19% to $21.8 billion, indicating strong sales performance. The book-to-bill ratio was stable at 1.0x, and gross profit and backlog rose by 12% over the trailing 12 months. The company plans to focus on trailing 12-month performance for better growth indicators. Demand in the Water and Environmental Services sector is robust, with an 11% increase in adjusted net revenue, driven by a strong backlog and pipeline.

In Q1, the company experienced a slight growth in adjusted net revenue for Life Sciences and Advanced Manufacturing, with robust growth in Life Sciences offset by a softer Advanced Manufacturing performance. They anticipate improved growth for Advanced Manufacturing in the latter half of the year. Critical Infrastructure saw a 5% year-over-year revenue increase, especially in North America, and an optimistic outlook is supported by a strong pipeline. Overall, operating profit for Infrastructure and Advanced Facilities rose significantly, and PA Consulting had solid bottom-line execution with flat revenue. Free cash flow was strong at $97 million, and $202 million in shares were repurchased, maintaining the net leverage ratio at 1.1x, below their target range midpoint.

The company expects its free cash flow for the year to align with previous expectations but will be more weighted towards the second half due to higher cash tax payments in the first two quarters, which are expected to decrease in the third. Their strong balance sheet supports continued business investment and shareholder returns through share repurchases and dividend growth. In Q1, they had $271 million left in authorization, and the Board approved a new $1.5 billion share repurchase, the largest in company history. They are committed to returning capital to shareholders, evidenced by a growing dividend and increased share repurchases. They plan to sell their stake in Amentum by the first half of 2025, improving financials. They maintain their fiscal 2025 outlook with adjusted net revenue growth in the mid to high single digits, an adjusted EBITDA margin between 13.8% and 14%, and over 100% free cash flow conversion. Adjusted EPS guidance is raised slightly, indicating over 14% growth, and adjusted EBITDA growth is expected at approximately 15%, emphasizing a positive business outlook.

In the paragraph, the company anticipates a sequential rise in revenue through the year-end, with a significant boost expected between Q2 and Q3. Although the Q2 adjusted EBITDA margin is expected to be below Q1 due to the timing of the Christmas holiday, the company remains confident in achieving its full-year margin guidance of 13.8% to 14%. Additionally, foreign exchange movements, especially concerning the British pound, are being monitored, but the initial conservative approach in forecasts means no significant headwind is currently seen. However, a stronger dollar could negatively impact revenue and income. Looking forward, the company is optimistic about fiscal '25, planning to leverage growth, return capital to shareholders, and expand market share. The call will now be opened for questions.

The discussion involves a company maintaining a positive outlook despite a robust political environment. Bob Pragada states that customer sentiment remains positive across U.S. government and commercial sectors, with no significant changes due to political narratives. The company's pipeline continues to grow, evidenced by their backlog increase. Sabahat Khan then inquires about margin guidance and initiatives taken since a recent business spin-off. Venk Nathamuni responds, noting the company achieved a solid performance in the first quarter with an EBITDA margin of 13.5%.

The paragraph discusses the factors contributing to the company's current performance, highlighting their focus on cost controls, revenue growth leading to operating leverage, and improved margin profiles by engaging with customers earlier in the asset lifecycle. They are also enhancing their global delivery model. Despite a slight decrease in EBITDA margin in Q2 due to holiday timing, they are on track to reach their full-year goals. In response to a question about the Water and Environmental sector, Bob Pragada expresses confidence in continued growth based on urbanization, aging infrastructure, and climate effects, unaffected by the new U.S. administration's deregulation focus.

The paragraph discusses the growth observed in the water sector across various regions, with deregulation acting as a catalyst for job acceleration despite expectations to the contrary. Venk Nathamuni and Andy Kaplowitz highlight the visibility and confidence in future Water and Environmental solutions due to large project executions. In the Advanced Manufacturing sector, there is currently weak performance, particularly in the semiconductor business, though some projects are expected to ramp up later in the year. However, the Life Sciences sector is performing strongly, and data centers are experiencing double-digit growth, contributing positively to the overall growth of the company.

The paragraph discusses the outlook and financial dynamics for a company related to the Industrial Manufacturing sector. The company sees positive leads, particularly due to reshoring efforts benefiting the U.S., and is cautiously optimistic about its backlog despite some uncertainties. Andy Kaplowitz asks a follow-up question to Andrew Wittmann about financial specifics. Wittmann seeks clarification about a transition services agreement (TSA) affecting the company's financials, indicating a discrepancy of $4 million on a GAAP basis and additional costs. Venk Nathamuni responds by acknowledging the situation and expresses confidence that the TSA costs can be optimized to improve profitability once the agreement ends, assuring it won’t pose a future financial headwind.

In the paragraph, Bob Pragada addresses a follow-up question about the company's shift to focusing on trailing 12-month (TTM) backlog as a better reflection of business performance. He clarifies that this shift is not because of any weakening in the pipeline, but rather due to the impact of large wins, particularly in life sciences and water, which can distort quarterly comparisons. By using TTM, they aim to showcase consistent year-over-year growth in the backlog, which has been in double digits for several quarters. This approach provides a clearer picture of the company's diverse work profile, including consulting, advisory, and larger delivery projects. Andrew Wittmann acknowledges the explanation, and the operator then transitions to another caller, Sangita Jain from KeyBanc, who asks about PA Consulting's strong margins but slower revenue growth.

In the paragraph, Bob Pragada discusses revenue growth and its sources, noting a slow start due to delayed U.K. government procurements but anticipation of improvement once contracts are finalized. Despite this, there's strong growth in the U.S., and the business is in a hiring phase with improved utilization and margins. Sangita Jain asks about capital allocation strategies, including share buybacks and potential M&A considerations in response to U.S. market conditions. Venk Nathamuni confirms a focus on organic growth, emphasizing an aggressive pace in share repurchases, with $202 million spent in the last quarter.

The paragraph features a discussion about a company's strategic focus, emphasizing organic growth as the top priority along with returning cash through buybacks and dividends. Mergers and acquisitions (M&A) are considered an option to accelerate growth but are not the immediate focus. During the Q&A, a query about Jacobs' exposure to the U.S. federal government is addressed, noting minimal exposure to DOGE efforts and highlighting that less than 10% of their business is tied to federal agencies, primarily in defense infrastructure. The firm has not experienced major effects from political narratives and maintains close customer interactions. The conversation shifts as Michael Dudas from Vertical Research begins to ask questions.

Bob Pragada discusses the company's business growth in the Middle East, Europe, and Australia. In the Middle East, particularly Saudi Arabia, they are seeing a strong pipeline of projects, especially in water and infrastructure. In Europe, their focus is on energy transition, grid modernization, and advanced facilities, with growth in life sciences and semiconductor sectors, along with significant awards in Scandinavian transportation. Australia has been a key growth region, driven by transportation and water sector projects. Overall, the company is experiencing incremental growth across these regions despite economic uncertainties.

The paragraph discusses the company's financial outlook and expectations for organic growth and cash flow conversion through 2025. Michael Dudas asks about operating cash flow and achieving conversion targets. Venk Nathamuni responds by emphasizing organic growth as a key objective, mentioning a strong start to the year with a 13.5% EBITDA margin, and projecting some financial fluctuations due to timing and tax payments. However, they remain confident in achieving over 100% free cash flow conversion for the year. The operator also introduces a question from Judah Aronovitz of UBS, who inquires about the anticipated reacceleration of international infrastructure markets and what underpins their confidence in this expectation.

In the paragraph, Bob Pragada discusses the company's growth in various international markets, particularly in the water market and "cities and places" projects, such as GigaCity programs. He highlights growth in the Middle East, the U.K., Australia, and Southeast Asia and describes the diversified promise of these international markets. Adam Bubes, substituting for Jerry Revich, asks about the company's program management service line, which holds a strong market position. Pragada explains that program management is a cross-cutting capability rather than a vertical, contributing significantly to the company's growth by enabling work across the entire asset life cycle and driving business transformation.

In the discussion, Adam Bubes asks about the impact of early engagement with clients on margins, particularly in advisory consulting. Venk Nathamuni explains that early involvement provides better visibility into clients' long-term plans and allows for shaping those plans, leading to higher margins than the corporate average, though they vary depending on the project and market. Kevin Wilson then inquires about the impact of U.S. tariffs on the firm's international projects and competitive positioning. Bob Pragada acknowledges the question but the paragraph ends without his full response.

The paragraph is an excerpt from an earnings call discussion. It highlights that the company is focusing on supporting clients, particularly around impacts on supply chains, without speculating on broader narratives. They see this as an opportunity to strengthen client relationships. In terms of restructuring costs, the company reaffirms its guidance of $75 million to $95 million for the year and notes that expenses will be steady without major spikes. The call ends with an invitation to an upcoming Investor Day to discuss long-term strategy.

The paragraph marks the end of a conference call, with the operator thanking participants and indicating that they can now disconnect.

This summary was generated with AI and may contain some inaccuracies.