Jacobs Solutions Inc (J) Q3 2025 Earnings Call Highlights: Record Backlog and Raised EPS Guidance

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Adjusted EPS: Increased 25% to $1.62.
Net Revenue Growth: 7% year-over-year.
Backlog: Grew 14% to nearly $23 billion.
Adjusted EBITDA: Increased over 13% to $314 million.
Adjusted EBITDA Margin: 14.1%, up 80 basis points year-over-year.
Gross Revenue: Increased 5% year-over-year.
Free Cash Flow: $271 million in Q3.
Share Repurchases: $101 million in Q3, $653 million fiscal year-to-date.
Dividend: $0.32 per share, representing 10% year-over-year growth.
Book-to-Bill Ratio: 1.2x trailing 12-month.
PA Consulting Revenue Growth: 15% year-over-year.
Adjusted Net Revenue Growth for Water and Environmental: Over 5% in Q3.
Adjusted Net Revenue Growth for Life Sciences and Advanced Manufacturing: Approximately 5% in Q3.
Adjusted Net Revenue Growth for Critical Infrastructure: Over 6% year-on-year.
Fiscal Year '25 Adjusted EPS Guidance: Raised to $6 to $6.10.
Warning! GuruFocus has detected 9 Warning Signs with J.
Release Date: August 05, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Adjusted EPS grew 25% to $1.62, supported by 7% net revenue growth and meaningful year-over-year margin expansion.
PA Consulting delivered double-digit revenue and operating profit growth, capitalizing on strong demand.
Backlog grew 14% to nearly $23 billion, setting a new record for Jacobs Solutions Inc (NYSE:J).
Strong performance in life sciences, semiconductor, data center, energy and power, and water sectors, driving upward trends in spending.
The company raised its FY '25 adjusted EPS guidance for the second time this year, reflecting confidence in future performance.
Negative Points
The environmental sector experienced a slowdown due to regulatory uncertainties, impacting year-on-year comparisons.
The pace of IIJA funding allocation has been slower than anticipated, affecting infrastructure project timelines.
There are concerns about potential impacts from state and local government budget adjustments, particularly in Medicaid and education programs.
The company is still incurring onetime restructuring costs related to the separation, although these are expected to decrease significantly.
The adjusted net revenue growth guidance for FY '25 was slightly reduced, implying a deceleration in Q4 compared to Q3.
Q & A Highlights
Q: Can you expand on the data center submarket growth and the type of work involved? A: Robert Pragada, CEO: The growth involves all aspects, including design, power, and water requirements. We're seeing increased scope in projects, moving from just design to full program delivery. Our partnership with NVIDIA is transformational, as it will serve as a reference design for their customers, leading to more inquiries for Jacobs.
Q: Can you discuss the backlog growth and the pace of burn expected? A: Robert Pragada, CEO: The backlog is growing fastest in advanced facilities and water sectors, which have longer burn profiles. Venkatesh Nathamuni, CFO: Life sciences and advanced manufacturing have faster burn rates, and we expect strong growth in these areas in Q4 and into fiscal 2026.
Q: How does the One Big Beautiful Bill impact Jacobs, especially with federal government policy changes? A: Robert Pragada, CEO: The bill provides stability in state and local government spending, particularly in transportation and water. It also supports DoD infrastructure and FAA opportunities. While there are concerns about Medicaid cuts, the secular trends and needs are expected to prevail.
Q: What are the expected one-time costs associated with the separation, and how will they impact fiscal 2026? A: Venkatesh Nathamuni, CFO: We are on track with our guidance of $75 million to $95 million in one-time restructuring costs, significantly reduced from the previous year. We expect these costs to decrease further in fiscal 2026, with more detailed guidance to be provided next quarter.
Q: What gives you confidence in expecting FY '26 growth to be ahead of FY '25? A: Robert Pragada, CEO: Confidence comes from growth in life sciences, data centers, and water sectors. These areas have shown consistent backlog growth over the past four quarters, and projects are now moving into material burn phases, supporting strong growth projections for FY '26.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.