With a combined revenue of $21 trillion and $2.1 trillion in profits, the 2026 Fortune 500 is the definitive list of America's largest companies.

Fortune 500

Almost $20 trillion in revenue—and a record-breaking $1.87 trillion in profits. Introducing the 2025 Fortune 500, the definitive list of the biggest companies in America.

The 300 companies on this year’s list brought in over $12.6 trillion in revenue for the latest 12 months, with the median revenue figure at $22 billion.

America's Most Innovative Companies

Industries included in the sector are advertising, diversified outsourcing services, and financial data services.

Fortune Sector Leaders: Business Services

The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

The 25th Fortune World’s Most Admired Companies list suggests that tech giants’ peers respect them as much as ever.

World's Most Admired Companies

The Fortune 500, in its 69th year in 2023, ranks the biggest U.S. companies by revenue.

Just as it dominates our economy, Big Tech now dominates Fortune’s annual ranking of corporate reputation.

This year’s Fortune 500 marks the 68th running of the list.

After a year in which humanity leaned more heavily than ever on tech giants, see which companies topped Fortune's ranking of corporate reputation.

This year’s Fortune 500 marks the 67th running of the list.

F500-2021-225-Jacobs Engineering Group

In addition to providing construction services, Jacobs Engineering Group provides scientific and specialty consulting for a broad range of international clients.

Collectively, the ranked companies produced a three-year average shareholder return of 33%, vs. 19% for the S&P 500.

FGC 2021-Jacobs Engineering Group

100 Fastest-Growing Companies

For an astounding 13th straight year, Apple claims the top spot in Fortune’s annual ranking of corporate reputation, based on a survey of almost 3,800 executives, directors, and analysts.

This year's Fortune 500 marks the 66th running of the list.

F500-2020-206-Jacobs-Engineering-Group

The Dallas-based engineering company offers design, construction, consulting, and maintenance services for clients in a diverse range of industries, including energy, infrastructure, mobility, and cybersecurity.

Here are the World's Most Admired Companies for 2019 as ranked in their industries. See who made the list.

This year's Fortune 500 marks the 65th running of the list.

Here are the World's Most Admired Companies for 2018 as ranked in their industries. See who made the list.

This year's Fortune 500 marks the 64th running of the list.

Here are the World's Most Admired Companies for 2017 as ranked in their industries. See who made the list.

This year's Fortune 500 marks the 63rd running of the list.

Here are the World's Most Admired Companies for 2016 as ranked in their industries. See who made the list.

This year's Fortune 500 marks the 62nd running of the list.

Business insiders have spoken: Asked which companies they most admire, more than 4,100 executives, directors, and analysts chose these top 50 All-Stars.

This year's Fortune 500 marks the 61st running of the list. Wal-Mart claims the top spot again. See who made the list.

Sector

Industry

Industry Rank

Previous Industry Rank

Overall Score

Innovation

People Management

Use of Corporate Assets

Social Responsibility

Quality of Management

Financial Soundness

Long-Term Investment Value

Quality of Products/Services

Global Competitiveness

Fastest-growing Companies

Revenue 3 Yr Growth Rank

Revenue 3 Yr Annual Growth Rate

EPS 3 Yr Growth Rank

EPS 3 Yr Annual Growth Rate

Total Return 3 Yr Rank

Total Return 3 Yr Annual Rate

Beat S&P 500 3 Yr Return

Years on List

Culture rank

Process rank

Product rank

Years on list

Previous rank

Key Financials (last Fiscal Year)

Revenues ($M)

Profits ($M)

Assets ($M)

Total Stockholder Equity ($M)

Profit Ratios

Profit as % of Revenues

Profits as % of Assets

Profits as % of Stockholder Equity

Earnings Per Share (last Fiscal Year)

Earnings Per Share ($)

EPS % Change (from prior fiscal year)

EPS % Change (5 year annual rate)

EPS % Change (10 year annual rate)

Total Return

Total Return to Investors (last year)

Total Return to Investors (5 year, annualized)

Total Return to Investors (10 year, annualized)

Jacobs Solutions operates globally, providing infrastructure and consulting services across a range of industries. For example, the company handles consulting, planning, architecture, design, engineering, and infrastructure delivery services, as well as overseeing construction management and long-term facility operations. Jacobs Solutions was founded in 1947.

Q3 2026

Q2 2026

Q1 2026

Q4 2025

Q3 2025

Q2 2025

Q1 2025

Jacobs Solutions (J): Company Profile, Stock Price, News, Rankings

legacy

Jacobs Solutions

jacobs solutions

Ladies and gentlemen, thank you for standing by. My name is Krista, and I will be your conference operator today. At this time, I would like to welcome everyone to the Jacobs Fiscal Second Quarter twenty twenty five Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.

Thank you. And I would now like to turn the conference over to Bert Supin, Senior Vice President, Investor Relations. Bert, you may begin.

Thank you, Krista, and good morning, everyone. Our earnings announcement and 10 Q were filed this morning, and we have posted a slide presentation on our website, which we'll reference during the call. I would like to refer you to Slide two of the presentation material for information about our forward looking statements, non GAAP financial measures and operating metrics. Now let's turn to the agenda on Slide three. Speaking on today's call will be Jacob's Chair and CEO, Bob Pagoda and CFO, Bank, Nathamuni.

Bob will begin by providing comments on the business as well as highlights from our second quarter results and a recap of notable awards. Bank will then provide a detailed review of our financial performance, including commentary on end market trends, cash flows and balance sheet data. Finally, Bob will provide closing remarks, and then we'll open up the call for questions. With that, I'll turn it over to our Chair and CEO, Bob Regatta.

Good day everyone and thank you for joining us to discuss our second quarter twenty twenty five business performance. I'm pleased to begin today's call by highlighting several key milestones we achieved in the separation of our former CMS and C and I businesses during March and April. This includes completing the planned equity for debt exchange and finalizing the remaining post closing adjustments. These actions enabled us to exit our retained stake, reduce outstanding indebtedness and on May 30, we will make a final distribution of Momentum shares to our shareholders. While we will continue to provide transition services to Momentum for the next few months, we view the primary aspects of the transaction as now complete.

We delivered strong operating performance during Q2 and I'd like to highlight a few key points. First, our adjusted EPS grew over 22% to $1.43 supported by solid year over year margin expansion. Second, PA Consulting's revenue growth inflected positively reaching mid single digits and driving double digit operating profit growth. And third, our backlog grew 20% to more than $22,000,000,000 a new record. Overall, we are very pleased with our Q2 results.

A good start to the first half paired with strong bookings momentum enables us to reaffirm our full year guidance metrics. As noted in our earnings press release, we recorded a reserve during quarter as a result of a legal matter involving a consolidated JV in which we have a 50% interest. The impact to adjusted net revenue and adjusted operating profit was meaningful. The associated project falls within our water and environmental end market in INAF and has been ongoing since 2016, but is now over 97% complete. The fact that we were able to absorb this impact in Q2, grow adjusted EBITDA, adjusted EBITDA margin and particularly adjusted EPS by 22% year over year is a testament to our strong operating performance and capital return strategy.

Before I get into more details on the quarter, I'd like to briefly touch on the current geopolitical backdrop. Overall, our business remains well positioned with infrastructure and consulting services in high demand and opportunities to capitalize on secular growth trends in front of us. The impact related to the rollout of the Department of Government Efficiency or Doge has so far been de minimis and we continue to anticipate growth opportunities with the U. S. Department of Defense.

As a reminder, approximately 9% of our total revenue comes from U. S. Federal infrastructure and related services, most of which are tied to DoD engagements. Regarding tariffs, we remain focused on supporting our clients as they assess potential supply chain challenges. Our client centric model built on redefining the asset life cycle will create opportunities to add value as our clients navigate this period of uncertainty.

Turning to slide four and focusing on our results. Adjusted net revenue rose over 3% in Q2. Revenue growth during Q2 was adversely impacted by the JV matter I noted earlier as well as FX. On a constant currency basis alone, we would have grown 80 basis points faster or approximately 4% year on year. Adjusted EBITDA for Q2 was $287,000,000 representing an 8% year on year increase.

We are seeing very good traction on adjusted EBITDA margin improvement with solid underlying business performance. Excluding the mark to market impact from our investment in the momentum stock and other items, Q2 adjusted EPS was $1.43 a robust 22 increase compared to previous year. Our trailing twelve month book to bill was 1.3 times with consolidated backlog of 20% year over year in Q2. Gross profit in backlog increased 15% year over year reflecting another strong quarter for bookings. Our backlog growth and bookings momentum remain positive and we are currently forecasting sequential growth in our second half results which Yvesnk will walk through in more detail shortly.

Turning to slide five, I'd like to highlight a few notable INAF project awards from Q2. As we discussed at our Investor Day in February, the core pillar of our strategy is to redefine the asset lifecycle for our clients. Today and going forward, we'll highlight how our awards align with our five year strategy. In Water and Environmental, we continue to see strong underlying revenue growth, especially in Water, where global demand remains high among the highest in our portfolio. Our differentiation in water stems from our full lifecycle coverage and proprietary technology suite.

In Q2, we secured an OT cybersecurity contract with Hampton Road Sanitation District, one of the largest in The US water sector. This project provides end to end cybersecurity for wastewater treatment operations serving 1,900,000 people in Southeast Virginia. Another key area of focus for our water clients is emerging contaminants. PFAS and other contaminants present major challenges and we are at the forefront of providing early stage solutions for our clients. In Q2, we were selected by the City Of Boynton Beach, Florida to design upgrades at two water treatment plants to remove PFAS from groundwater.

Beyond addressing emerging contaminants regulations, these upgrades will modernize aging infrastructure and meet the region's growing demand for clean drinking water. In life sciences and advanced manufacturing, we continue to deliver strong results. Life sciences and data centers were the primary drivers of end market revenue growth, both seeing double digit increases during the quarter. Life sciences growth is being driven by broad based investment including a new engineering procurement and program management work for Merck's one billion dollars oncology product facility in Delaware. The facility will have the capability to manufacture drugs like Keytruda and we expect to see backlog spend continue through the facility's estimated completion in 2028.

Focusing on data centers, where we offer holistic cross sector solutions that span advanced facilities, energy and power, water, environmental and digital, we were selected by SciQuantum as the owner engineer for one of the world's first utility scale quantum computing facilities in Brisbane, Australia. Backed by our number one ENR ranking in data centers, we're proud to help bring this next generation computing capability to life and see a great opportunity to expand our global data center footprint in the coming quarters. Turning to critical infrastructure, rising global travel demand, transportation modernization, and energy security requirements are reshaping client priorities. We see global aviation investment as a durable growth driver for our transportation segment and one where we can leverage our core competencies in consulting and program management. Notably, in Q2, we were selected as the owner engineer for Denver International Airport's continued expansion of its transportation system.

This is a prime example of Jacobs helping cities prepare for future growth with smarter, more connected infrastructure. In summary, our significant awards this quarter reinforce our alignment to high growth markets. We remain focused on delivering sustainable, profitable growth by providing differentiated, digitally enabled solutions to the world's most complex challenges. Now, I'll turn the call over to Venk to review our financial results in further detail.

Thank you, Bob, and good morning, everybody. Let me begin by summarizing a few of the financial highlights on slide number six, followed by additional context on our quarterly performance. Second quarter gross revenue grew 2% year over year and adjusted net revenue, which excludes pass through revenues, grew by 3%. As Bob noted, we experienced an FX headwind in the second quarter and also absorbed the impact of the previously noted legal reserve in connection with a matter involving a consolidated fifty-fifty joint venture. Due to the consolidation of the joint venture, the full amount of the reserve was taken against revenue and as a result impacted operating profit.

However, the JV partner's allocable portion is included in non controlling interest. Therefore, the impact on EBITDA and EPS is half of the impact on revenue. Q2 adjusted EBITDA was $287,000,000 growing more than eight percent year over year. Our adjusted EBITDA margin during Q2 came in strong at 13.4%, which is an increase of 62 basis points versus the same quarter last year. We were able to offset the anticipated impact in Q2 from holiday timing as well as the impact of the JV matter through some strong performance on gross margin and discipline on G and A costs.

As a result, in the second quarter, adjusted EPS rose to $1.43 a 22% increase year over year. Please note, GAAP EPS was impacted by $109,000,000 pretax loss associated with the mark to market adjustment of our investment in Amendum. This had no impact on adjusted EPS. Finally, backlog was up 20% year over year to a record $22,200,000,000 Our trailing twelve month book to bill of 1.3 times remains very healthy. And gross profit in backlog increased 15% year over year during Q2, a strong indicator of our positioning over the coming quarters and years.

Now regarding our performance by end markets and infrastructure and advanced facilities, let's turn to Slide number seven. Demand for services in the water and environmental end market remains strong across all major geographies with particularly good underlying performance in water during Q2. Not only was core performance positive, but we also continued to grow our revenue and backlog and our pipeline in Water is growing by double digits. Total adjusted net revenue growth for Water and Environmental was 2% in Q2, which includes the adverse impact from the previously mentioned JV Mavic. As we shift into the second half of the year, we expect net revenue growth to improve to the mid to high single digit range.

In our Life Sciences and Advanced Manufacturing end market, adjusted net revenue grew approximately 6% in Q2, pacing better than our guidance that revenue growth will be similar to Q1. We continue to see favorable demand in both the life sciences and data center markets and we expect to see improvement in semiconductors in the coming quarters. Overall, we anticipate life sciences and advanced manufacturing growth will remain healthy in the second half of the year. In critical infrastructure, adjusted net revenue increased over 2% year on year. Within this end market, energy and power is our fastest growing vertical, a trend we expect to continue.

On the transportation side, we saw solid growth aided by The Middle East. Mid single digit revenue growth collectively in these two verticals was partially offset by flatter growth in cities and places due to specific timing related items. Looking ahead, we like our positioning in Critical Infrastructure and anticipate sequential revenue growth from Q2 to Q3. Now moving on to Slide number eight, I'll provide a brief overview of our segment financials. In Q2, Infrastructure and Advanced Facilities operating profit was approximately flat in total and on a constant currency basis versus last year.

As we noted earlier, Q2 operating profit was impacted by the reserve taken in connection with the JV matter. As we guided, PA Consulting delivered a meaningful return to revenue growth this quarter along with strong bottom line execution. This resulted in operating profit increasing 12% year over year in total and on a constant currency basis with a strong 22% margin performance. PA Consulting's momentum in Energy and Utilities and Life Sciences has been augmented by improving public sector spending in The UK. We continue to see favorable trends in PA's backlog and pipeline, both of which serve as positive leading indicators.

Moving on to Slide number nine, we provide an overview of cash generation and our balance sheet. Overall, our balance sheet remains in excellent shape exiting Q2. We returned a record amount of capital back to shareholders during the second quarter with very little effect on our net leverage ratio. As we look ahead to the second half of the year, we're forecasting strong free cash flow generation. Focusing in the quarter, during Q2, free cash flow was negative $114,000,000 which was in line with our expectations and our prior guidance.

This reflects a few seasonal cash timing events consistent with patterns we've seen in prior years. During the quarter, we repurchased $351,000,000 in shares, which is a quarterly record for Jacobs. We also finalized an equity for debt transaction using a retained stake in Momentum, which reduced our outstanding debt by $312,000,000. Summing this all up, we ended the quarter right at the midpoint of our one point zero to 1.5 times net leverage target. Subsequent to Q2, we received $70,000,000 in favorable working capital adjustments and finalized ownership and shares of Momentum that were previously held in escrow.

We used the cash received from the working capital adjustment to further reduce our debt during Q3. In addition, following recent Board approval, we will distribute the Momentum shares released from escrow to our shareholders on a pro rata basis at the end of this month. Based on yesterday's closing price, this represents approximately $159,000,000 in incremental capital returns to shareholders. Our balance sheet strength supports continued investment in the business along with returns to shareholders via share repurchases and long term dividend growth. Our commitment to return capital to shareholders is evidenced by our $0.32 per share dividend, representing 10% year over year growth, as well as our meaningful increase in share repurchase activity in the first half of the year.

In total, we returned $628,000,000 to shareholders through repurchases and dividends over the past two quarters alone. This puts us on track to potentially return more than 100% of adjusted free cash flow in fiscal year twenty twenty five, excluding the distribution of Momentum shares. While we plan to remain consistent buyers of our own shares, we also continue to evaluate increasing our investment in PA Consulting. Finally, please turn to Slide number 10. We are pleased to reaffirm our fiscal twenty twenty five outlook for adjusted net revenue to grow mid to high single digits year over year, adjusted EBITDA margin to range from 13.8% to 14%, reported free cash flow conversion to be more than 100% and adjusted EPS of $5.85 to $6.2 Now to assist with your modeling, let me highlight a few items related to the remainder of fiscal year twenty twenty five.

We continue to anticipate revenue will rise sequentially through year end with Q3 net revenue expected to grow 5% to 7% year on year based on our current view of global market conditions. Notably, a significant portion of our expected revenues in the second half of the year will come from our backlog. On margins, we expect to approach a 14% adjusted EBITDA margin in Q3 and we remain well positioned to meet our full year guidance range of 13.8% to 14%. We will control discretionary spending in response to market conditions. Overall, we feel positive about our adjusted EPS trajectory.

In summary, we continue to expect sequential improvement in net revenue and operating profit as we progress through the second half of the fiscal year. We're very pleased with our margin performance and strong trailing twelve month bookings, both of which set us up for profitable growth in the quarters and years ahead. With that, I'll turn the call back over to Bob.

Thank you, Venk. In closing, with a solid first half of FY twenty twenty five behind us, we see a good setup in the second half of the year aided by continued booking strength and margin momentum. With our sharpened portfolio aligned to critical global megatrends and our five strategy driving focus and discipline, we are confident in our ability to deliver sustainable profitable growth over the long term. Operator, we will now open the call for questions.

Thank you. We will now begin the question and answer session. Your first question comes from the line of Andy Kaplowitz with Citi. Go ahead.

Papa bank, so backlog impressive up 20% year over year. But as you know, that revenue growth is was up 3%. Maybe you can quantify the reserve for us in revenue. And I know you have longer duration projects in backlog, but are you seeing more careful spending with customers? And then sort of that visibility to get to 5% to 7% growth in Q3, do you need to see an acceleration in customer spend to get there in Q3?

So Andy, maybe I'll answer the second half of your question and then on the legal reserve, I'll turn it over to Venk. On the second half of your question, so we were very clear on that the second half, we actually have predominance of that in backlog today and have a level of confidence on how that backlog is going to burn over the course of the next two quarters and beyond. So, our confidence level is strong on that front. As far as customer decisions with the macro backdrop right now, the procurement cycle is extending a bit, Sure. But we see we're not seeing broad cancellations or delays in the execution.

It's probably more in the front end of the procurement cycle. So think with that, maybe the the legal reserve.

Yeah. Thanks, Andy. So, you know, clearly, we we absorbed the impact of the legal reserve, but to kinda quantify it, you know, given that it's a legal matter, we and it's an ongoing JV matter, we wanna be cognizant of all the implications there. But suffice it to say that it is included as part of our noncontrollable interest accounting or NCI accounting. And it's a consolidated JV.

We'll clarify that it's fifty fifty. And so we as we use NCI accounting, which we're fully disclosed in our queue and in our footnotes, it's easy for you to figure out what those numbers are. All I can say is that, you know, this is something that we we feel we're, you know, appropriately reserved for. And, you know, this is something, obviously, it was a headwind to our current quarter, but we clearly absorbed it and came out with the results that we did.

That's helpful. And maybe you guys can talk about what you're seeing by region. You mentioned PA picked up. Backlog there is actually pretty strong. So maybe just PA and then the overall UK business, is it still a little bit more choppy?

Middle East, does it hang in there? And what are you assuming for FX given the recent weakness of the U. S. Dollar?

Sure. Maybe I'll cover kind of the regions and then, Venk, can talk about FX. PA, really good quarter inflecting the growth. Energy and Utilities and Health and Life Sciences in Europe, PA is really starting to see some nice tailwinds there. And PA's U.

S. Business is now up nearly 15% year on year. So, continued growth in The U. S, backlog growing at solid double digits. But one of the areas that probably from a rate of growth with PA is picking up and this kind of goes Andy to your second point with regards to The UK and I'll kind of go into the Jacobs broader enterprise as well is defense and security.

So, PA is one of the leaders in defense and security advising both MOD as well as other EU countries. And that has seen a significant uptick in the quarter and with backlog. So, for the balance of the year, we see a good trajectory there with PA. With the Jacobs business, transportation and water continued to be strong for us in The UK, mid single digits with regards to those areas. Some of the buildings work or what we call cities and places, little bit of a longer procurement cycle.

But overall, we're not seeing any kind of any major headwinds in Europe and more specifically in The UK. If anything, I'd probably characterize it as a bit of a rebound. Middle East, strong. We continue to grow at double digits in The Middle East. Again, we were very selective on the programs that we were in the middle of.

We're now involved with some time based programs that have kind of end dates to them with world events that are happening and tourists coming into The Middle East. So, overall, we're positive on The Middle East and being very sensitive to any type of macro oscillations there. Thank you. Want to talk about FX?

Yes. Thanks, Bob. So as we noted in the prepared remarks, FX was clearly a headwind for us in Q2. I think we said our revenue would have been 80 bps higher if it were not for the FX impact. Now fortunately, as we look ahead into Q3, if FX rates were to remain where they are today, that will be a decent tailwind.

Hard hard to quantify it, but certainly, you know, if things persist as they are so far, it'll be it'll be a positive for us in Q3.

Your next question comes from the line of Andy Wittmann with Baird. Please go ahead.

Yes, great. Thanks for taking my questions. I guess on free cash flow, maybe for Venk. Obviously, there's always in the first half of the year, it's always slower than the second half of the year. But I was just hoping you could kind of help us understand how you get to the 100% greater than 100% conversion this year in terms of the quarterly cadence.

Do you expect here the fiscal third quarter to start chipping away and get you back to where you need to be to hit that level? Or do you feel like it's going to be very fourth quarter loaded?

Andy, thanks for the question. And you're exactly right. This is Q2 tends to be a seasonally slow quarter for cash collections. And usually it's typified by payments of $4.00 1, cash taxes and so forth. And for looking ahead for Q3 and Q4, we feel pretty good about our cash flow outlook.

And it's going to be a pretty substantial step up in Q3. So it's not just Q4 back end loaded. So we feel pretty good about where we're going to end Q3 and that gives us good confidence that our free cash flow for the full year will be in excess of 100%.

Got it. And then maybe Bob for you with my follow-up, I wanted to ask about your profit margins and heard the approaching 14% adjusted EBITDA guidance here that you talked about for the third quarter, maybe if you just talk about the organization right now and discuss where your utilization rate stand this year as compared to last year And progress on any other initiatives that you have in the organization to improve your efficiencies and where those programs and processes stand? Thank you.

Sure. So maybe I'd characterize it in two parts, Andy. Just we did start off the year, I'd call it in kind of early January. And I think we telegraphed a little bit in the last earnings call where utilization was down a bit where we had that kind of shifting of the holiday season spilling over into Q2. Since January, our utilization has picked up.

And I'd say it's on par from where we were in not just last year but previous years. Going into the second half, what we're seeing is, if you remember back in Q3 and Q4 of last year, we had some lumpy wins. That's a good thing. In Q3 and Q4, those early phases of those major programs, those are now inflecting into kind of the detailed design, the production engineering component of those jobs. So, we're seeing utilization just in the early part of Q3 pick up to exceed where we were in previous quarters.

So that's how kind of we're seeing the utilization profile. PA utilization is definitely better than it was last year. And that is a testament to all the initiatives that the team has been working on over the course of the last six plus quarters. I'd say from an initiative standpoint, we are seeing some really, really nice growth in our digital business. So if you look at just, you know, as we measure it as a P and L and then we measure our digital platforms, how they're catalyzing the balance of our business, just as an individual business, that business has grown smaller number, double digit on the bottom line from an OP standpoint.

So, I think the digital enablement really working on that horizontal that we talked in the Investor Day, all of those are coming through in real time.

And if I could add to it, Andy, I would say from a margin perspective, clearly you've seen us execute to the 13.4% for this quarter. We're guiding to close to 14% in Q3. That's driven by the fact that as we mentioned at Investor Day, there are multiple levers that we can pull in terms of margin performance. Utilization obviously is one aspect of it, but clearly from the standpoint of the mix improvements, more global delivery and so forth. So a lot of those things are still in the early stages of implementing and we feel and finally with the operating leverage that we talked about, I think the combination of those things give us good line of sight to get to the close to 14% in Q3 and for the full year at 13.8% to 14% range.

Your next question comes from the line of Steven Fisher with UBS. Please go ahead.

Thanks. Good morning. Just wanted to follow-up about the JV project here and I know it's sensitive topic, so I'm not sure how much more you can say. But it sounds like it's almost complete. Just curious how this ruling is reflective or not on productivity and performance of the project?

Just anything we should be aware of for the remaining handful of percent of complete that needs to get done here?

Yes. I can't necessarily go into that level of detail, Steve. But I would say that we were appropriately reserved. And the remaining items on program are well within reef. So we're not overly concerned there.

As far as any detail on the content of what is about, I can't disclose. But what we will say though is that we are working hard with our partner in order to close it out and and don't have a high level of concern there. I will say this though, Steve, is that this is not indicative of any kind of shift in our risk profile. We still have a low risk profile. And if you kind of track us over the course of the last ten plus years, you know, these are these are events that that are very infrequent if you count them on one finger.

So that's that's kinda how we how we look at it.

Okay. That's helpful. And you were talking before with any capitalists about some of the kind of procurement delays. I mean, we're hearing broadly about just rising costs of construction in recent weeks and it's not surprising in light of steel and tariffs, etcetera. I'm curious what you're hearing from your customers, specifically about higher construction costs.

Does that drive any sort of value engineering opportunity for you? Does it sort of lengthen the planning period since you said it's sort of like kind of front end of the cycle? Just sort of wondering what the balance of puts and takes are for Jacobs on sort of a higher construction cost landscape.

Yes. So maybe I'll start off by saying, the projects that we're involved with that have a pretty sizable field component, these are jobs that are less, if any, discretionary based and more based on business transformation. So, you know, if you think about the private sector, life sciences, data centers, you know, these are investments that the clients are going forward in making. And then in water, these water jobs are long held on the books and have to deal with clean drinking water as well as the effects of climate and other impacts the natural disasters have had. So these are jobs that are going forward.

As far as the delays that we're seeing on those, that's an opportunity for the client to step back. You appropriately said, Steve, look at some value engineering opportunities. But what this is really opening up is supply chain scenario planning. We have been working with our clients on global supply chain networks. PA has got a really nice platform there with regards to supply chain consulting and helping our clients look for alternate avenues in the event because remember a lot of these tariffs have not happened in the event these tariffs occur, what are some of the options that they have?

And so, that has created a bit of some consulting and advisory work for us to be in the middle of this.

Your next question comes from the line of Sabahat Khan with RBC Capital Markets. Please go ahead.

Great. Thanks and good morning. Just I guess, sounds like there's some headline volatility during the quarter, but net net, the backlog turned out well. I'm just curious, was that enough of a macro shock for some of your larger government customers that you deal with to start to think about maybe some level of stimulus spending through the back of this year like we maybe saw post the COVID shock or is it just too early in the sort of the timeline or the macro situation for those type of discussions? Thanks.

Saba, I probably would be not in a good place to articulate the size of it, but you're spot on. Some of those early let's hit the pause button, especially with our DoD infrastructure clients, not knowing kind of which way the winds were going to blow. We are starting to see that come back into the second half. And so, these things, as I mentioned on previous quarters, Saba, these were never canceled. They were only maybe paused or a bit delayed.

And those programs that have been approved and funds been appropriated are starting to come back. On the state and local business, not just in The States but globally, those have not stopped. So, we didn't necessarily see that dynamic. It was probably more federal infrastructure, DoD infrastructure that that applied to.

Great. And then as we kind of think back to some of the areas of focus or the end markets that you're talking about at your Investor Day, some of the things around semiconductors, healthcare, things like that. Just wondering if across some of these end markets you have seen some talk of reassuring related projects or initial discussions, whether it's manufacturing or some of the other end markets that you operate in? Maybe are some of those early discussions happening? Thanks.

They are. They are. So maybe I'll hone in on two end markets, life sciences and our semi focus. These are clients that are looking at global supply chains and have had on their capital roadmap projects that are in multiple locations, predominantly The U. S.

And Europe. So, right now, we're kind of seeing the pull and push on either geography and that's kind of leaning towards The U. S, which kind of plays right into our sweet spot. Semi is the same way. So, some of the high bandwidth manufacturers as well as even some of the larger players are starting to point those jobs into The U.

S. I would say that it's early though. It's early days, which actually still benefits Jacobs because we're on the early front end planning site selection of these programs. So discussions are in real time. And the great thing about kind of the Jacobs platform is that we're there in any form.

And if it goes into one geography over the other, our global delivery model allows us to continue to use that talent across multiple geographies whichever way it goes. But definitely a lot of scenario planning happening in real time.

Your next question comes from the line of Michael Dudas with Vertical Research. Please go ahead.

Bob, maybe you could share some further thoughts you called out in your prepared remarks, fast growing water and fast growing energy power. Any interesting dynamics around that, especially with energy power tied towards some of your larger LSAM customers?

Yes. So the grid modernization and kind of the electrification of all, Mike, has continued, not just in The U. S. Tied to probably more of that data center positioning that's happening right now, but in Europe with regards to some energy security items that are happening and we're seeing it in Southeast Asia as well as Australia and New Zealand. That continues to grow.

That sector though it's a smaller component but growing at a very fast rate continues to grow at strong double digits. And I think tied to the kind of the data center component, we're going to continue to see growth on that front. Water, it is uniform across the world right now. These programs whether it be in The UK, the AMP Bates cycle, as well as some larger frameworks that are coming up now. We, I think, publicly disclosed what's going on with Central Utah, the West Basin in Southern California.

These jobs that we've been working on for nearly a decade are now coming to fruition. And so we're seeing kind of that double digit pipeline growth in multiple geographies as well as strong P and L performance year on year. So we believe that water is going to continue to become a larger part of our overall portfolio. Today, represents about 25%. That's going to continue to grow.

Thank you, Bob. And my follow-up is, maybe share some thoughts on your comments about PA and increasing your investment. What's the genesis of that and how's that evolved over the last couple of years?

Yeah. Maybe I'll I'll I'll start off and then, Ben, you can you can talk about some of the the mechanics. So when we when we went into the PA investment back four years ago, we had we had kind of the PE style approach where partner invested model as well as ourselves with a liquidity event that would occur after year four and before year five. So this is all public information as well. And so now, we're looking at what this is a great opportunity to increase our investment in PA and continue to build on what a lot of hard work and a lot of sweat equity has gone into the partnership and taking it to the next phase.

Really great time. PA is coming off of some real strong backlog growth of reemergence in The UK as well as the Europe business. And together, just like we talked about Investor Day, that strong consulting and advisory business driving the redefining of the asset life cycle is a great opportunity for us looking forward. So more to follow on that piece.

what Bob said, clearly, the standpoint of the partnership, it's deepening, it's strengthening in multitude of ways and we're seeing that showing up in the results and we feel pretty good about the outlook for the remainder of the year at least for Q3 and beyond. So I'd say with that having said, we certainly have a very strong balance sheet, a lot of good cash generation ahead of us as well. And we're committed to returning cash to shareholders. We're also we've stated all along that we are considering an increased stake in PA, and that's something that we're actively looking into. And we'll keep you posted at the right time.

Jacobs Solutions (J) Q2 2025 Earnings Call Transcript

Company Participants