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Item 2. Management’s Discussion and Analysis

2023-05-09 compared with 2023-02-07 · 166 added, 119 removed, 208 unchanged (58% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The purpose of this Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is to provide a narrative analysis explaining the reasons for material changes in the Company’s (i) financial condition from the most recent fiscal year-end to December 30, 2022 and (ii) results of operations during the current fiscal period(s) as compared to the corresponding period(s) of the preceding fiscal year.

The purpose of this Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is to provide a narrative analysis explaining the reasons for material changes in the Company’s (i) financial condition from the most recent fiscal year-end to March 31, 2023 and (ii) results of operations during the current fiscal period(s) as compared to the corresponding period(s) of the preceding fiscal year.

In order to better understand such changes, readers of this MD&A should also read:

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Forward-looking statements are statements that do not directly relate to any historical or current fact.

When used herein, words such as “expects,” “anticipates,” “believes,” “seeks,” “estimates,” “plans,” “intends,” “future,” “will,” “would,” “could,” “can,” “may,” and similar words are intended to identify forward-looking statements.

Examples of forward-looking statements include, but are not limited to, statements we make concerning our business, financial condition and results of operations and our expectations as to our future growth, prospects, financial outlook and business strategy for fiscal year 2023 or future fiscal years, our expectations for the percentage of backlog we will realize as revenue in fiscal year 2023, and the anticipated benefits of any acquisition or the strategic investment in PA Consulting.

When used herein, words such as “expects,” “anticipates,” “believes,” “seeks,” “estimates,” “plans,” “intends,” “future,” “will,” “would,” “could,” “can,” “may,” "target," "goal" and similar words are intended to identify forward-looking statements.

Examples of forward-looking statements include, but are not limited to, statements we make concerning our business, financial condition and results of operations and our expectations as to our future growth, prospects, financial outlook and business strategy, our expectations for the percentage of backlog we will realize as revenue in fiscal year 2023, and the anticipated benefits of any acquisition or the strategic investment in PA Consulting.

Although such statements are based on management’s current estimates and expectations, and/or currently available competitive, financial, and economic data, forward-looking statements are inherently uncertain, and you should not place undue reliance on such statements as actual results may differ materially.

We caution the reader that there are a variety of risks, uncertainties and other factors that could cause actual results to differ materially from what is contained, projected or implied by our forward-looking statements.

Such factors include our ability to execute on our three-year corporate strategy, including our ability to invest in the tools needed to fully implement our strategy, competition from existing and future competitors in our target markets, our ability to achieve the cost-savings and synergies contemplated by our recent acquisitions within the expected time frames or to achieve them fully and to successfully integrate acquired businesses while retaining key personnel, the impact of the COVID-19 pandemic or any future pandemic, and any resulting economic downturn on our results, prospects and opportunities, measures or restrictions imposed by governments and health officials in response to such pandemic, the timing of the award of projects and funding and potential changes to the amounts provided for, under the Infrastructure Investment and Jobs Act, financial market risks that may affect the Company, including by affecting the Company's access to capital, the cost of such capital and/or the Company's funding obligations under defined benefit pension and postretirement plans, as well as general economic conditions, including inflation and the actions taken by monetary authorities in response to inflation, changes in interest rates and foreign currency exchange rates, changes in capital markets, the impact of a possible recession or economic downturn on our results, prospects and opportunities, and geopolitical events and conflicts, among others.

The impact of such matters includes, but is not limited to, the possible reduction in demand for certain of our product solutions and services and the delay or abandonment of ongoing or anticipated projects due to the financial condition of our clients and suppliers or to governmental budget constraints or changes to governmental budgetary priorities;

Such factors include uncertainties as to the final structure and timing of the separation of our Critical Mission Solutions ("CMS") business, the possibility that closing conditions for a separation transaction may not be satisfied or waived, the impact of the separation on the Company’s and CMS’s businesses, and a possible decrease in the trading price of their shares, if the separation is completed, the possibility that the separation may not qualify for the expected tax treatment, the risk that any consents or approvals required in connection with the separation may not be received, the risk that the separation may be more difficult, time-consuming or costly than expected, and the possibility that we may not retain key employees while the separation is pending or after it is completed, as well as factors related to our business, such as our ability to execute on our three-year corporate strategy, including our ability to invest in the tools needed to fully implement our strategy, competition from existing and future competitors in our target markets, our ability to achieve the cost-savings and synergies contemplated by our recent acquisitions within the expected time frames or to achieve them fully and to successfully integrate acquired businesses while retaining key personnel, the impact of any pandemic, and any resulting economic downturn on our results, prospects and opportunities, measures or restrictions imposed by governments and health officials in response to such pandemic, the timing of the award of projects and funding and potential changes to the amounts provided for, under the Infrastructure Investment and Jobs Act, any changes in U.S.

or foreign tax laws, statutes, rules, regulations or ordinances that may adversely impact our future financial positions or results of operations, financial market risks that may affect the Company, including by affecting the Company's access to capital, the cost of such capital and/or the Company's funding obligations under defined benefit pension and postretirement plans, as well as general economic conditions, including inflation and the actions taken by monetary authorities in response to inflation, changes in interest rates and foreign currency exchange rates, changes in capital markets, the current banking crisis, the impact of a possible recession or economic downturn on our results, prospects and opportunities, and geopolitical events and conflicts, among others.

The impact of such matters includes, but is not limited to, the possibility that we will not complete the spin-off or any separation transaction, the possible reduction in demand for certain of our product solutions and services and the delay or abandonment of ongoing or anticipated projects due to the financial condition of our clients and suppliers or to governmental budget constraints or changes to governmental budgetary priorities;

the inability of our clients to meet their payment obligations in a timely manner or at all;

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difficulties associated with retaining and hiring additional employees;

and the inability of governments in certain of the countries in which we operate to effectively mitigate the financial or other impacts of pandemics on their economies and workforces and our operations therein.

and the inability of governments in certain of the countries in which we operate to effectively mitigate the financial or other impacts of pandemics on their economies and

workforces and our operations therein.

The foregoing factors and potential future developments are inherently uncertain, unpredictable and, in many cases, beyond our control.

For a description of these and additional factors that may occur that could cause actual results to differ from our forward-looking statements, see those listed and discussed in Item 1A, Risk Factors included in our 2022 Form 10-K and our Quarterly Reports on Form 10-Q.

We undertake no obligation to release publicly any revisions or updates to any forward-looking statements.

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Acquisitions of John Wood Group’s nuclear business, The Buffalo Group and most recently BlackLynx and StreetLight further position us as a leader in high-value government services and technology-enabled solutions.

Our Boldly Moving Forward strategy announced in March of 2022 provides Jacobs with a robust focus into 2025 – continuing our aggressive shift to create a fully inclusive, technology-forward company – producing the critical solutions of tomorrow.

We are united by our purpose and recognize that the keys to success in the future will be different from those of today.

We need to remain agile and focus on where our clients need us most, address major challenges such as global constraints on labor, and fully leverage data and technology.

By shaping our future, we will produce outsized results.

Starting in March of 2021, we took a deep dive into global trends, capabilities, and markets to understand the largest opportunities, their projected spend and their growth rates.

The conclusion of this strategic review reinforced that our decades of deep domain expertise and capabilities squarely align with the most attractive markets.

This puts us in a unique position – and creates a great opportunity – to further strengthen our competitive advantage across our core sectors by accelerating the development and scaling of differentiated products and solutions.

To provide focus and enable success, we have concentrated our strategy to zero in on three needle-moving accelerators that catalyze additional growth across all markets:

Climate Response

As a purpose-led company, we know we have a pivotal role to play in addressing the climate emergency in collaboration with our clients, our employees and our entire stakeholder base.

We consider this not only good business, but our duty to channel our technology-enabled expertise and capabilities toward benefiting people and the planet.

Data Solutions

As our clients navigate the digital transformation and growing cyber risks, we have positioned ourselves at the forefront of this growth, adding digital capabilities, products and tools to serve a growing set of customers.

Consulting and Advisory

Together with our visionary partner, PA Consulting, we're establishing our position in high-end advisory services, creating a springboard to expand in high value offerings beyond the core.

We are now focused on broadening our leadership in sustainable, high growth sectors.

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We began trading as “J” on the New York Stock Exchange in December 2019, and in March 2021 our Global Industry Classifications Standard code changed to Research & Consulting Services.

Our Focus 2023 Transformation Office is charged with driving further innovation, delivering value-creating solutions for our clients and leveraging an integrated digital and technology strategy to improve our efficiency and effectiveness, ultimately freeing up valuable time and resources for reinvestment in our people.

Our Transformation Office is charged with driving further innovation, delivering value-creating solutions for our clients and leveraging an integrated digital and technology strategy to improve our efficiency and effectiveness, ultimately freeing up valuable time and resources for reinvestment in our people.

In the fourth quarter fiscal 2022, Jacobs Engineering Group Inc.

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Divergent Solutions (DVS)

Jacobs’ new operating segment, Divergent Solutions (DVS), serves as the core foundation for developing and delivering innovative, next-generation cloud, cyber, data and digital technologies.

Jacobs’ new operating segment, Divergent Solutions, serves as the core foundation for developing and delivering innovative, next-generation cloud, cyber, data and digital technologies.

DVS further strengthens our ability to drive value for clients of both LOBs by leveraging a full spectrum of cyber, data analytics, systems and software application integration services across Jacobs.

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product and service innovation, the future of work, sustainability and climate change.

Results of Operations for the three months ended December 30, 2022 and December 31, 2021

Results of Operations for the three and six months ended March 31, 2023 and April 1, 2022

(in thousands, except per share information)

For the Three Months Ended

December 30, 2022 December 31, 2021

For the Three Months Ended For the Six Months Ended

March 31, 2023 April 1, 2022 March 31, 2023 April 1, 2022

Revenues $ 4,078,332 $ 3,834,059 $ 7,877,001 $ 7,214,684

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Diluted Earnings Per Share $ 1.70 $ 0.68 $ 2.76 $ 1.71

Overview – Three Months Ended December 30, 2022

Net earnings attributable to the Company from continuing operations for the first fiscal quarter ended December 30, 2022 were $136.4 million (or $1.07 per diluted share), an increase of $2.1 million, from net earnings of $134.3 million (or $1.03 per diluted share) for the corresponding period last year.

While operating profit levels were up for the respective three-month periods of fiscal 2023 due primarily to our P&PS business, the first fiscal quarter of 2023 was impacted by $39.7 million in pre-tax Restructuring and other charges and transaction costs compared to fiscal 2022 amounts of $75.0 million, for both periods associated mainly with the Company's transformation initiatives relating to real estate which is discussed in Note 16- Restructuring and Other Charges .

Additionally, the 2023 first fiscal quarter was impacted by approximately $15.0 million in net favorable impacts from overhead cost reductions associated mainly with one-time benefit program changes, while partly offset by higher incentive and other compensation charges and higher investments in company technology platforms.

Also, first quarter fiscal 2023 other expense, net, of $40.3 million was higher by $32.1 million versus first quarter fiscal 2022 amounts of $8.2 million, with the current period primarily impacted by unfavorable higher net interest expense compared to the prior year quarter as discussed further below.

Our reported net earnings for the current year quarter were unfavorably impacted by higher income taxes of $34.2 million compared to the fiscal 2022 period, attributable to higher effective tax rates in the current quarter due mainly to the absence of prior year tax benefits including $15.7 million related to the release of previously valued foreign tax credits and other prior year favorable tax items combined with current quarter income tax expense items further discussed in Note 9- Income Taxes.

Additionally, redeemable noncontrolling interests was $5.7 million lower in the current quarter due to unfavorable net earnings results in our PA Consulting investment compared to the prior year quarter.

Overview – Three and Six Months Ended March 31, 2023

Net earnings attributable to the Company from continuing operations for the second fiscal quarter ended March 31, 2023 were $216.6 million (or $1.70 per diluted share), an increase of $127.8 million, from net earnings of $88.8 million (or $0.68 per diluted share) for the corresponding period last year, driven mainly by higher operating profit levels during the current quarterly period.

Second fiscal quarter of 2023 was impacted by $19.1 million in pre-tax Restructuring and other charges and transaction costs compared to fiscal 2022 amounts of $115.3 million, with the comparative periods both impacted by the Company's transformation initiatives relating to real estate, which is discussed in Note 16- Restructuring and Other Charges.

Fiscal 2022 was also impacted by the final $91.3 million settlement of a legacy litigation matter involving a subsidiary of CH2M (the "Legacy CH2M Matter"), net of previously recorded reserves, which is further discussed in Note 17- Commitments and Contingencies and Derivative Financial Instruments .

Second quarter fiscal 2023 other expense, net, was $37.6 million, an increase of $26.6 million versus second quarter fiscal 2022 amounts of $10.9 million, with the current period primarily impacted by unfavorable higher net interest expense and higher pension costs compared to the prior year quarter, as discussed further below.

Further, our reported net earnings for the current year quarter were favorably impacted by lower income taxes of $27.1 million compared to the fiscal 2022 period, attributable to lower effective tax rates in the current quarter due mainly to uncertain tax positions in the United States that were effectively settled and other current quarter income tax items further discussed in Note 9- Income Taxes.

For the six months ended March 31, 2023, net earnings attributable to the Company from continuing operations were $352.9 million (or $2.77 per diluted share), an increase of $129.9 million, from net earnings of $223.1 million (or $1.71 per diluted share) for the corresponding period last year.

Operating profit levels were also up for the respective year-to-date periods of fiscal 2023 (mainly in P&PS), and were also impacted by the Restructuring and other charges and transactions costs activities mentioned above relating to real estate transformation, only to a larger degree for the year-to-date period, and the final Legacy CH2M Matter settlement in fiscal 2022.

Additionally, the 2023 year-to-date period was impacted by approximately $15.0 million in net favorable impacts from cost reductions associated mainly with first quarter 2023 changes in employee benefit programs, which were partly offset by higher spend in company technology platforms and other personnel and corporate cost increases.

Also, year-to-date fiscal 2023 other expense, net, of $77.9 million was higher by $58.7 million versus the same period in fiscal 2022 amounts of $19.2 million, with the current period impacted by the same unfavorable higher net interest expense and higher pension costs as mentioned above.

Our reported net earnings for the first half of the fiscal year were unfavorably impacted by higher income taxes of $7.1 million compared to the fiscal 2022 period, due to higher levels of pre-tax income but offset by the overall lower effective tax rates in the current quarter due mainly to uncertain tax positions in the United States that were effectively settled, combined with other current quarter income tax items further discussed in Note 9- Income Taxes.

Finally, earnings attributable to redeemable noncontrolling interests were $6.9 million lower for the year-to-date period due to unfavorable net earnings results in our PA Consulting investment compared to the prior year quarter.

On February 4, 2022, the Company acquired StreetLight Data, Inc., ("StreetLight").

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Consolidated Results of Operations

Revenues for the first fiscal quarter of 2023 were $3.80 billion, an increase of $418.0 million, or 12.4%, from $3.38 billion for the corresponding period last year.

Revenue increases for the year over year period were due mainly to the Company's P&PS and CMS legacy businesses and in addition, to a smaller degree, fiscal 2023 incremental revenues benefited from the StreetLight acquisition (owned for the full period in fiscal 2023) and other increases in our DVS business.

Revenues for the second fiscal quarter of 2023 were $4.08 billion, an increase of $244.3 million, or 6.4%, from $3.83 billion for the corresponding period last year.

For the six months ended March 31, 2023, revenues were $7.88 billion, an increase of $662.3 million, or 9.2%, from $7.21 billion for the corresponding period last year.

Revenue increases for the year over year periods were due mainly to the Company's P&PS and CMS legacy businesses and in addition, to a smaller degree, fiscal 2023 incremental revenues benefited from the StreetLight acquisition (owned for the full period in fiscal 2023) and other increases in our DVS business.

The P&PS business benefited primarily from stronger performance in its Advanced Facilities and U.S.

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Department of Energy.

Due to foreign currency translation impacts, revenues in our PA Consulting investment decreased (excluding translation impacts, PA Consulting experienced year over year growth).

Also, revenue was unfavorably impacted by foreign currency translation of $158.5 million for the three months ended December 30, 2022 in our international businesses, with no significant impact in the prior year period.

Pass-through costs included in revenues for the three months ended December 30, 2022 amounted to $673.7 million, an increase of $195.6 million, or 40.9%, from $478.1 million from the corresponding period last year.

Gross profit for the first fiscal quarter of 2023 was $814.7 million, an increase of $18.2 million, or 2.3%, from $796.5 million from the corresponding period last year.

Our gross profit margins were 21.4% and 23.6% for the three months ended December 30, 2022 and December 31, 2021, respectively, with these margin differences being mainly attributable to lower utilization trends primarily in the PA Consulting business, project mix impacts in our legacy CMS portfolio and unfavorable foreign currency translation impacts, partly offset by new program startups won in fiscal 2022 and favorable performance in our P&PS advanced facilities and U.S.

Additionally, gross profit benefited from favorable impacts from overhead cost reductions associated mainly with one-time benefit program changes, while partly offset by higher incentive and other compensation charges and higher investments in company technology platforms in the current year, as mentioned above.

Due to foreign currency translation impacts, our U.S.

dollar reported revenues from our PA Consulting investment increased only slightly for the current quarterly period and decreased for the year-to-date period (on a local currency basis, PA Consulting experienced a more significant quarter over quarter growth as well as overall year over year growth).

Also, revenue was unfavorably impacted by foreign currency translation of $109.0 million and $267.0 million for the three and six months ended March 31, 2023, respectively, across our international businesses, as compared to an unfavorable $51.7 million and $42.5 million for the three and six months ended April 1, 2022, respectively.

Pass-through costs included in revenues for the three and six months ended March 31, 2023 amounted to $646.7 million and $1.32 billion, an increase of $74.1 million and $269.7 million, or 12.9% and 25.7%, respectively, from $572.6 million and $1.05 billion from the corresponding periods last year.

Gross profit for the second fiscal quarter of 2023 was $890.3 million, an increase of $19.9 million, or 2.3%, from $870.4 million from the corresponding period last year.

Our gross profit margins were 21.8% and 22.7% for the three months ended March 31, 2023 and April 1, 2022, respectively.

Gross profit for the six months ended March 31, 2023 was $1.71 billion, an increase of $38.1 million, or 2.3%, from $1.67 billion from the corresponding period last year.

Our gross profit margins were 21.6% and 23.1% for the six months ended March 31, 2023 and April 1, 2022, respectively.

These margin differences were mainly attributable to project mix impacts in our legacy CMS and P&PS portfolios and lower utilization trends primarily in the PA Consulting business, partly offset by new program startups won in fiscal 2022.

Additionally, for the year-to-date period, gross profit was affected by net favorable impacts from cost reductions associated mainly with first quarter 2023 changes in employee benefit programs, which were partly offset by higher spend in company technology platforms and other personnel and corporate cost increases, as mentioned above, and unfavorable foreign currency translation impacts.

See Segment Financial Information discussion for further information on the Company’s results of operations at the operating segment.

SG&A expenses for the three months ended December 30, 2022 were $576.9 million, a decrease of $42.2 million or (6.8)% from $619.1 million for the corresponding period last year.

The current year's three months ended results were impacted by decreases in real estate related costs, as well as other department spend decreases due in part to the Company's transformation initiatives.

Also, Restructuring and other charges for fiscal 2023 and 2022 included $27.1 million and $73.2 million, respectively, in costs associated with the Company's transformation initiatives relating to real

Lastly, SG&A expenses benefited from favorable foreign exchange impacts of $27.5 million for the three months ended December 30, 2022, with no significant impact in the corresponding prior year period.

Net interest expense for the three months ended December 30, 2022 was $37.1 million, an increase of $19.1 million from $17.9 million for the corresponding period last year.

The increase in net interest expense for the three month period was due to higher levels of debt outstanding due to the funding of the StreetLight and BlackLynx acquisitions and increased borrowings associated with the payment of the settlement of a legacy litigation matter involving a subsidiary of CH2M (the "Legacy CH2M Ma tter") in fiscal 2022, in addition to higher interest rates.

Miscellaneous (expense) income, net for the three months ended December 30, 2022 was $(3.3) million in comparison to $9.7 million for the corresponding period last year.

The $12.9 million decrease from the prior three-month comparable period was due primarily to an increase in pension costs due to higher interest rate impacts in the current year along with the prior year $6.9 million gain related to a lease termination.

The Company’s effective tax rates from continuing operations for the three months ended December 30, 2022 and December 31, 2021 were 25.4% and 9.4%, respectively.

SG&A expenses for the three and six months ended March 31, 2023 were $600.4 million and $1.18 billion, respectively, a decrease of $103.8 million and $146.0 million or (14.7)% and (11.0)%, from $704.2 million and $1.32 billion for the corresponding periods last year.

The fiscal 2022 periods were impacted by the final pre-tax $91.3 million settlement of the Legacy CH2M Matter, net of previously recorded reserves, mentioned above.

Also, Restructuring and other charges for the six months ended March 31, 2023 and April 1, 2022 included $37.2 million and $74.6 million, respectively, in costs associated with the Company's transformation initiatives relating to real estate.

The current year's three and six months ended results were also impacted by higher investments in company technology platforms, offset in part by decreases in real estate related costs, as well as other department spend decreases due in part to the Company's transformation initiatives.

Lastly, SG&A expenses benefited from favorable foreign exchange impacts of $23.1 million and $50.6 million, respectively, for the three and six months ended March 31, 2023 as compared to favorable impacts of $11.3 million and $9.0 million for the corresponding periods last year.

Net interest expense for the three and six months ended March 31, 2023 was $33.0 million and $70.1 million, respectively, an increase of $11.4 million and $30.5 million from $21.6 million and $39.5 million, or 52.6% and 77.2%, for the corresponding periods last year.

The increase in net interest expense for the three and six month periods was due to higher interest rates and higher levels of debt outstanding in the current year, with the higher average debt levels during the current year attributable mainly to the funding of the StreetLight and BlackLynx acquisitions and increased borrowings associated with the payment of the settlement of the Legacy CH2M Matter in fiscal 2022.

These increases were offset in part by $6.3 million net interest benefit related to the release of interest accruals associated with the effective settlement of uncertain tax positions during the quarter.

Miscellaneous (expense) income, net for the three and six months ended March 31, 2023 was $(4.6) million and $(7.8) million, respectively, in comparison to $10.7 million and $20.4 million for the corresponding periods last year.

The unfavorable $15.2 million and $28.2 million impacts compared to the prior three and six month comparable periods were due primarily to an increase in pension costs due to higher interest rate impacts in the current year along with unfavorable foreign currency revaluations in the current year compared to the prior year and, additionally, the six-month period of fiscal 2022 also included a $7.1 million gain related to a lease termination.

The Company’s effective tax rates from continuing operations for the three months ended March 31, 2023 and April 1, 2022 were 7.6% and 29.7%, respectively.

The most significant items contributing to the difference between the statutory U.S.

federal corporate tax rate of 21.0% and the Company’s effective tax rate for the three months ended December 30, 2022 were U.S.

federal corporate tax rate of 21.0% and the Company’s effective tax rate for the three months ended March 31, 2023 were a tax benefit of $40.2 million related to uncertain tax positions (“UTPs”) in the United States that were effectively settled, of which $30.8 million relates to positions carried forward from the acquisition of CH2M Hill Companies Ltd.

that was completed in 2018, as well as a tax benefit of $8.6 million for the release of previously valued foreign tax credits.

These benefits were partly offset by U.S.

state income tax expense of $5.9 million and U.S.

tax on foreign earnings of $4.6 million.

Both items are expected to have a continuing impact on the Company's effective tax rate for the remainder of the fiscal year.

These expense items are expected to have a continuing impact on the Company’s effective tax rate for the remainder of the fiscal year.

The most significant items contributing to the difference between the statutory U.S.

federal corporate tax rate of 21.0% and the Company's effective tax rate for the three months ended December 31, 2021 were a tax benefit of $15.7 million related to the release of previously reserved foreign tax credit assets, $4.2 million excess tax benefit attributable to stock compensation, and $4.0 million benefit from filing amended state returns.

federal corporate tax rate of 21.0% and the Company's effective tax rate for the three months ended April 1, 2022 were U.S.

state income tax expense of $5.8 million, discrete foreign tax items of $5.2 million, none of which are individually significant, and U.S tax on foreign earnings of $1.3 million.

The Company's effective tax rates from continuing operations for the six months ended March 31, 2023 and April 1, 2022 were 15.4% and 19.1%, respectively.

The most significant items contributing to the difference between the statutory U.S.

federal corporate tax rate of 21.0% and the Company’s effective tax rate for the six months ended March 31, 2023 were net tax benefits of $39.0 million mostly related to UTPs mentioned above and a tax benefit of $8.6 million for the release of previously valued foreign tax credits, partly offset by U.S.

state income tax expense of $10.5 million and U.S.

tax on foreign earnings of $8.2 million.

The most significant items contributing to the difference between the statutory U.S.

federal corporate tax rate of 21.0% and the Company's effective tax rate for the six months ended April 1, 2022 were a net tax benefit of $12.6 million from the change in valuation allowances for previously valued foreign tax credits and India’s minimum alternate tax credit and a tax benefit of $4.9 million related to filing amended state returns, partly offset by U.S.

state income tax expense of $8.9 million and U.S.

tax on foreign earnings of $4.0 million.

The amount of income taxes the Company pays is subject to ongoing audits by tax jurisdictions around the world.

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GAAP operating profit from continuing operations by including certain corporate-level expenses, Restructuring and other charges and transaction and integration costs (in thousands).

Three Months Ended

December 30, 2022 December 31, 2021

Three Months Ended Six Months Ended

March 31, 2023 April 1, 2022 March 31, 2023 April 1, 2022

Revenues from External Customers:

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Total $ 4,078,332 $ 3,834,059 $ 7,877,001 $ 7,214,684

Three Months Ended

December 30, 2022 December 31, 2021

Three Months Ended Six Months Ended

March 31, 2023 April 1, 2022 March 31, 2023 April 1, 2022

Segment Operating Profit:

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GAAP Operating Profit 289,863 166,215 527,668 343,548

Total Other Income (Expense), net (3) (40,324) (8,243)

Total Other Expense, net (3) (37,550) (10,933) (77,873) (19,177)

Earnings Before Taxes from Continuing Operations

$ 252,313 $ 155,282 $ 449,795 $ 324,371

(1) Other corporate expenses included intangibles amortization of $49.8 million and $46.9 million for the three months ended December 30, 2022 and December 31, 2021, respectively.

Additionally, the three month period of fiscal 2023 included approximately $15.0 million in net favorable impacts from cost reductions compared to the prior year period, which was associated mainly with net favorable impacts during the current quarter from changes in employee benefit programs of $41 million offset by approximately $26 million in higher quarter over quarter spend in company technology platforms and other personnel and corporate cost increases.

(2) Included in the three months ended December 30, 2022 and December 31, 2021 are $27.1 million and $72.3 million, respectively, in real estate impairment charges related to the Company's transformation initiatives.

(3) The three months ended December 31, 2021 included a gain of $6.9 million related to a lease termination.

Additionally, the increase in net interest expense year over year is primarily due to the higher levels of debt outstanding due to the funding of the StreetLight and BlackLynx acquisitions in fiscal 2022 and increased borrowings associated with the payment of the Legacy CH2M Matter settlement also in the prior year, in addition to higher interest rates.

(1) Other corporate expenses included intangibles amortization of $50.5 million and $48.4 million for the three months ended March 31, 2023 and April 1, 2022, respectively, and $100.2 million and $95.3 million, for the six months ended March 31, 2023 and April 1, 2022, respectively.

Additionally, the six month period of fiscal 2023 included approximately $15.0 million in net favorable impacts from cost reductions compared to the prior year period, which was associated mainly with net favorable impacts during first quarter from changes in employee benefit programs of $41 million offset by approximately $26 million in higher spend in company technology platforms and other personnel and corporate cost increases.

(2) The three months ended March 31, 2023 and April 1, 2022 included real estate impairment charges related to the Company's transformation initiatives of $10.1 million and $2.3 million, respectively, and $37.2 million and $74.6 million for the six months ended March 31, 2023 and April 1, 2022, respectively.

Also included in the three and six months ended April 1, 2022 is $91.3 million related to the final pre-tax settlement of the Legacy CH2M Matter, net of previously recorded reserves.

(3) The six month period ended April 1, 2022 included $3.5 million in income associated with final exit activities associated with our AWE ML investment and a gain of $7.1 million related to a lease termination.

Additionally, the unfavorable change in Other Expense, net for the periods presented are attributable mainly to higher net interest expense year over year, primarily due to higher interest rates as well as the full 2023 period impacts of increased levels of debt outstanding due to fiscal 2022 incremental borrowings associated with the funding of the StreetLight and BlackLynx acquisitions and the payment of the Legacy CH2M Matter settlement.

Critical Mission Solutions

Three Months Ended

December 30, 2022 December 31, 2021

Three Months Ended Six Months Ended

March 31, 2023 April 1, 2022 March 31, 2023 April 1, 2022

Revenue $ 1,191,056 $ 1,134,381 $ 2,266,231 $ 2,111,159

Operating Profit $ 93,943 $ 94,617 $ 176,163 $ 185,857

Critical Mission Solutions (CMS) segment revenues for the three months ended December 30, 2022 were $1.08 billion, an increase of $98.4 million, or 10.1%, from $976.8 million for the corresponding period last year.

During the three months ended December 30, 2022, revenue benefited from contracts awarded in late fiscal 2022, including the Department of Energy Nuclear remediation program.

Also, impacts on revenues from unfavorable foreign currency translation were approximately $33.1 million for the three month period ended December 30, 2022, compared to $2.2 million in favorable impacts in the corresponding prior year period.

Operating profit for the segment was $82.2 million for the three months ended December 30, 2022, representing a decrease of $9.0 million, or (9.9)%, from $91.2 million for the corresponding period last year.

Operating profit levels were down from the prior year, with impacts from large contract wind downs in early fiscal 2022, which carried higher profit margins, offset in part by growth in nuclear remediation work for the U.S.

Department of Energy noted above.

Impacts on operating profit from unfavorable foreign currency translation were approximately $3.9 million for the three months ended December 30, 2022, as compared to insignificant impacts in the corresponding prior year period.

Critical Mission Solutions (CMS) segment revenues for the three and six months ended March 31, 2023 were $1.19 billion and $2.27 billion, respectively, an increase of $56.7 million and $155.1 million, or 5.0% and 7.3%, from $1.13 billion and $2.11 billion for the corresponding periods last year.

During the three and six months ended March 31, 2023, revenue benefited from contracts awarded in fiscal 2022, including a nuclear remediation program with the Department of Energy.

Also, impacts on revenues from unfavorable foreign currency translation were approximately $25.5 million and $58.6 million for the three and six-month periods ended March 31, 2023, compared to $10.1 million and $7.9 million in unfavorable impacts in the corresponding prior year periods.

Operating profit for the segment was $93.9 million and $176.2 million, respectively, for the three and six months ended March 31, 2023, which was relatively flat for the quarter-to-date period compared to the prior year and a decrease of $9.7 million, or 5.2%, from $185.9 million for the year-to-date period last year.

Operating profit level trends year over year were impacted by large contract wind downs in early fiscal 2022, which carried higher profit margins, and were offset in part by growth in the nuclear remediation market and the U.S.

government space market.

Impacts on operating profit from unfavorable foreign currency translation were approximately $3.3 million and $7.2 million for the three and six months ended March 31, 2023, as compared to insignificant impacts in the corresponding prior year periods.

Subsequent Event

On May 9, 2023, the Company announced its intention to spin-off our CMS business into an independent publicly traded company to Jacobs’ stockholders.

Jacobs is targeting to complete the separation in the second half of fiscal year 2024 through a distribution that is intended to be tax-free to Jacobs’ shareholders for U.S.

federal income tax purposes.

There can be no assurances with respect to the timing or form of a separation transaction and completion remains subject to final approval by Jacobs’ Board of Directors and other customary conditions.

People & Places Solutions

Three Months Ended

December 30, 2022 December 31, 2021

Three Months Ended Six Months Ended

March 31, 2023 April 1, 2022 March 31, 2023 April 1, 2022

Revenue $ 2,345,065 $ 2,162,994 $ 4,572,050 $ 4,083,990

Operating Profit $ 232,205 $ 192,713 $ 458,825 $ 381,554

Revenues for the People & Places Solutions (P&PS) segment for the three months ended December 30, 2022 was $2.23 billion, an increase of $306.0 million, or 15.9%, from $1.92 billion for the corresponding period last year.

The increase in revenue for the three months ended December 30, 2022 was primarily driven by growth in both our advanced facilities and U.S.

businesses as compared to the prior year corresponding period.

Foreign currency translation had a $83.2 million unfavorable impact on revenues in our international businesses for the three period ended December 30, 2022, respectively, as compared to unfavorable impacts of $2.6 million in the corresponding prior year period.

Operating profit for the segment for the three month period ended December 30, 2022 was $226.6 million, an increase of $37.8 million, or 20.0%, from $188.8 million for the corresponding period last year.

The year-over-year increase in operating profit for the three months ended December 30, 2022 was driven primarily by the revenue growth mentioned above while holding selling, general and administrative expenses relatively flat.

Foreign currency translation had a $15.9 million unfavorable impact on operating profit in our international businesses for the three month periods ended December 30, 2022, respectively as compared to insignificant impacts in the corresponding prior year period.

Revenues for the People & Places Solutions (P&PS) segment for the three and six-months ended March 31, 2023 were $2.35 billion and $4.57 billion, respectively, an increase of $182.1 million and $488.1 million, or 8.4% and 12.0%, from $2.16 billion and $4.08 billion for the corresponding periods last year.

The increases in revenue for the three and six months ended March 31, 2023 were primarily driven by growth in both our advanced facilities and U.S.

businesses as compared to the prior year corresponding periods.

Foreign currency translation had a $51.2 million and $134.5 million unfavorable impact on revenues in our international businesses for the three and six month periods ended March 31, 2023, respectively, as compared to unfavorable impacts of $32.0 million and $34.6 million in the corresponding prior year periods.

Operating profit for the segment for the three and six month period ended March 31, 2023 were $232.2 million and $458.8 million, respectively, an increase of $39.5 million and $77.3 million, or 20.5% and 20.3%, from $192.7 million and $381.6 million for the corresponding periods last year.

The year-over-year increases in operating profit for the three and six months ended March 31, 2023 were driven primarily by the revenue growth mentioned above while holding selling, general and administrative expenses relatively flat.

Foreign currency translation had a $9.5 million and $25.4 million unfavorable impact on operating profit in our international businesses for the three and six month periods ended March 31, 2023, respectively as compared to unfavorable impacts of $6.6 million and $6.8 million in the corresponding prior year periods.

Divergent Solutions

Three Months Ended

December 30, 2022 December 31, 2021

Three Months Ended Six Months Ended

March 31, 2023 April 1, 2022 March 31, 2023 April 1, 2022

Revenue $ 241,224 $ 239,294 $ 455,690 $ 432,171

Operating Profit $ 24,861 $ 17,055 $ 36,828 $ 40,163

Revenues for the Divergent Solutions segment for the three months ended December 30, 2022 were $214.5 million, an increase of $21.6 million, or 11.2%, from $192.9 million for the corresponding period last year.

The increase in revenue for the three months ended December 30, 2022 benefited from incremental revenues from the StreetLight acquisition (owned for the full period in fiscal 2023) and the startup of new programs previously won in fiscal 2022.

Foreign currency translation impacts on revenue were not significant for either period.

Operating profit for the segment was $12.0 million for the three months ended December 30, 2022, a decrease of $11.1 million, or 48.2%, from $23.1 million, for the corresponding period last year.

The decrease in operating profit for the three months ended December 30, 2022 was primarily driven by unfavorable impacts of changes in overhead billing rates during the current year quarter of 2023 vs.

the prior year quarter mainly in our cyber intelligence market.

Impacts on operating profit from foreign currency were not significant for either period.

Revenues for the Divergent Solutions segment for the three and six months ended March 31, 2023 were $241.2 million and $455.7 million, respectively, an increase of $1.9 million and $23.5 million, or 0.8% and 5.4%, from $239.3 million and $432.2 million for the corresponding periods last year.

The increases in revenue for the three and six months ended March 31, 2023 benefited from incremental revenues from the StreetLight acquisition (owned for the full period in fiscal 2023) and the startup of new programs previously won in fiscal 2022.

Foreign currency translation impacts on revenue were not significant for any period presented.

Operating profit for the segment was $24.9 million and $36.8 million, respectively, for the three and six months ended March 31, 2023, an increase of $7.8 million and a decrease of $3.3 million, or 45.8% and (8.3)%, from $17.1 million and $40.2 million for the corresponding periods last year.

The increase in operating profit for the three month period was due mainly to favorable year over year software licensing revenue, with the decrease in operating profit for the six months ended March 31, 2023, primarily driven by unfavorable impacts from overhead billing rate differences during the first quarter of 2023 versus the prior year first quarter mainly in our cyber intelligence market, offset in part by the licensing revenue in the current quarter mentioned above.

Impacts on operating profit from foreign currency were not significant for any periods presented.

PA Consulting

Three Months Ended

December 30, 2022 December 31, 2021

Three Months Ended Six Months Ended

March 31, 2023 April 1, 2022 March 31, 2023 April 1, 2022

Revenue $ 300,987 $ 297,390 $ 583,030 $ 587,364

Operating Profit $ 65,631 $ 68,332 $ 116,658 $ 131,402

Revenues for the PA Consulting segment for the three months ended December 30, 2022 were $282.0 million, a decrease of $7.9 million, or 2.7%, from $290.0 million for the corresponding period last year.

The decrease in revenue for the three months ended December 30, 2022 was driven by f oreign currency translation which had a $41.6 million unfavorable impact on revenues in our international businesses for the three months ended December 30, 2022, and a favorable impact of $5.3 million for the corresponding prior year quarter.

In local currency (primarily GBP), PA Consulting experienced an approximate 10% increase in revenues as compared to the prior year period, primarily due to higher volumes in PA Consulting's existing business for previously delayed projects in fiscal 2022.

Operating profit for the segment for the three months ended December 30, 2022 was $51.0 million, a decrease of $12.0 million, or 19.1%, from $63.1 million, for the corresponding period last year, with the decrease partly due to unfavorable f oreign currency translation impacts in our international business of $6.9 million as compared to $1.0 million in favorable impact in the corresponding prior year period.

Additionally, operating profit was impacted by lower utilization as compared to the prior year quarter.

Revenues for the PA Consulting segment for the three and six months ended March 31, 2023 were $301.0 million and $583.0 million, respectively, an increase of $3.6 million and a decrease $4.3 million, or 1.2% and (0.7)%, from $297.4 million and $587.4 million for the corresponding periods last year.

Revenues for the three and six-months ended March 31, 2023 were impacted by foreign currency translation, which had a $30.7 million and $72.3 million unfavorable impact in our international businesses, and unfavorable impacts of $9.5 million and $4.1 million in the corresponding prior year periods.

In local currency (primarily GBP), PA Consulting experienced an approximate 10% increase in revenues as compared to the prior year periods, primarily due to higher volumes in PA Consulting's existing business for previously delayed projects in fiscal 2022.

Operating profit for the segment for the three and six months ended March 31, 2023 was $65.6 million and $116.7 million, respectively, a decrease of $2.7 million and $14.7 million, or 4.0% and 11.2%, from $68.3 million and $131.4 million, for the corresponding periods last year.

These decreases are mainly due to unfavorable foreign currency translation impacts in our international business of $6.5 million and $13.4 million, for the three and six months ended March 31, 2023, respectively, as compared to $1.4 million and $2.5 million in unfavorable impact in the corresponding prior year periods.

Additionally, operating profit was impacted in the year periods by higher labor costs due to a competitive labor market and lower utilization.

Other Corporate Expenses

Other corporate expenses for the three months ended December 30, 2022 were $93.7 million, a decrease of $11.7 million from $105.4 million for the corresponding period last year.

This decrease during the three month period was primarily driven by approximately $15.0 million in net favorable impacts from overhead cost reductions associated mainly with one-time benefit program changes, while partly offset by higher incentive and other compensation charges and higher investments in company technology platforms.

Other corporate expenses for the three and six months ended March 31, 2023 were $107.6 million and $201.3 million, an increase of $18.4 million and $6.7 million, or 20.6% and 3.5%, from $89.2 million and $194.6 million for the corresponding periods last year.

The increase for the three month period ended March 31, 2023 was primarily driven by continued higher investments in company technology platforms and higher incentive and other compensation charges.

The increase for the year-to-date period was attributable to these higher IT and people costs in the second quarter offset by approximately $15.0 million in net favorable impacts during first quarter 2023 from cost reductions associated mainly with changes in employee benefit programs, partly offset by higher spend in company technology platforms and other personnel and corporate cost increases.

Included in other corporate expenses are costs and expenses which relate to general corporate activities as well as corporate-managed benefit and insurance programs.

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and (v) certain adjustments relating to costs associated with the Company’s international defined benefit pension plans.

In addition, other corporate expenses may also include from time to time certain adjustments to contract margins (both positive and negative)

associated with projects, as well as other items, where it has been determined that such adjustments are not indicative of the performance of the related LOB.

In addition, other corporate expenses may also include from time to time certain adjustments to contract margins (both positive and negative) associated with projects, as well as other items, where it has been determined that such adjustments are not indicative of the performance of the related LOB.

Restructuring and Other Charges

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Backlog Information

We include in backlog the total dollar amount of revenues we expect to record in the future as a result of performing work under contracts that have been awarded to us.

Our policy with respect to Operations & Maintenance ("O&M") contracts, however, is to include in backlog the amount of revenues we expect to receive for one succeeding year, regardless of the remaining life of the contract.

For national government programs (other than national government O&M contracts, which are subject to the same policy applicable to all other O&M contracts), our policy is to include in backlog the full contract award, whether funded or unfunded, excluding option periods.

Because of variations in the nature, size, expected duration, funding commitments, and the scope of services required by our contracts, the timing of when backlog will be recognized as revenues can vary greatly between individual contracts.

Backlog represents revenue we expect to realize for work to be completed by our consolidated subsidiaries and our proportionate share of work to be performed by unconsolidated joint ventures.

Because of variations in the nature, size, expected duration, funding commitments, and the scope of services required by our contracts, the amount and timing of when backlog will be recognized as revenues includes significant estimates and can vary greatly between individual contracts.

Consistent with industry practice, substantially all of our contracts are subject to cancellation or termination at the option of the client, including our U.S.

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Because certain contracts (e.g., contracts relating to large Engineering, Procurement & Construction ("EPC") projects as well as national government programs) can cause large increases to backlog in the fiscal period in which we recognize the award, and because many of our contracts require us to provide services that span over several fiscal quarters (and sometimes over fiscal years), we have presented our backlog on a year-over-year basis, rather than on a sequential, quarter-over-quarter basis.

The following table summarizes our backlog at December 30, 2022 and December 31, 2021 (in millions):

December 30, 2022 December 31, 2021

The following table summarizes our backlog at March 31, 2023 and April 1, 2022 (in millions):

March 31, 2023 April 1, 2022

Critical Mission Solutions $ 8,136 $ 7,509

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Total $ 28,974 $ 27,790

The increase in backlog in Critical Mission Solutions (CMS) from December 31, 2021 was primarily driven by new business awards in the U.S.

The increase in backlog in Critical Mission Solutions (CMS) from April 1, 2022 was primarily driven by new business awards in the U.S.

government space and nuclear remediation sectors offsetting slower growth in the U.S.

Defense market.

The increase in backlog in People & Places Solutions (P&PS) from December 31, 2021 was primarily driven by new business awards in our federal, environmental and advanced facilities business.

The decrease in backlog in Divergent Solutions (DVS) from December 31, 2021 was primarily driven by delays of new awards because of continuing resolution throughout fiscal 2022.

The increase in backlog in PA Consulting from December 31, 2021 was primarily driven by strategic focus on long-term projects as well as organic year over year growth of the business.

Consolidated backlog differs from the Company’s remaining performance obligations as defined by ASC 606 primarily because of our national government contracts (other than national government O&M contracts).

Our policy is to generally include in backlog the full contract award, whether funded or unfunded excluding the option periods while our remaining performance obligations represent a measure of the total dollar value of work to be performed on contracts awarded and in progress.

Additionally, the Company includes our proportionate share of backlog related to unconsolidated joint ventures which is not included in our remaining performance obligations.

The increase in backlog in People & Places Solutions (P&PS) from April 1, 2022 was primarily driven by new business awards in our federal, environmental and advanced facilities business.

The decrease in backlog in Divergent Solutions (DVS) from April 1, 2022 was primarily driven by delays in new awards and shorter contract extensions specifically within the government markets.

The increase in backlog in PA Consulting from April 1, 2022 was primarily driven by strategic focus on long-term projects as well as organic year over year growth of the business.

Consolidated backlog differs from the Company’s remaining performance obligations as defined by ASC 606 primarily because of contract change orders or new wins not yet processed and our national government contracts where our policy is to generally include in backlog the contract award, whether funded or unfunded excluding certain option periods while our remaining performance obligations represent a measure of the total dollar value of work to be performed on contracts awarded and in progress.

Additionally, the Company does not include our proportionate share of backlog related to unconsolidated joint ventures in our remaining performance obligations.

Liquidity and Capital Resources

At December 30, 2022, our principal sources of liquidity consisted of $1.21 billion in cash and cash equivalents and $637.9 million of available borrowing capacity under our $2.25 billion r evolving credit agreement (the "Revolving Credit Facility").

At March 31, 2023, our principal sources of liquidity consisted of $1.22 billion in cash and cash equivalents and $1.17 billion of available borrowing capacity under our $2.25 billion r evolving credit agreement (the "Revolving Credit Facility").

We finance much of our operations and growth through cash generated by our operations.

The amount of cash and cash equivalents at December 30, 2022 represented an increase of $70.6 million from $1.14 billion at September 30, 2022 , the reasons for which are described below.

Our net cash flow provided by operations of $302.3 million during the three months ended December 30, 2022 was unfavorable by $19.3 million in co mparison to the cash flow provided by operations of $321.6 million for the corresponding prior year period.

The year-over-year decrease in cash from operations is primarily attributable to lower earnings after adjustments for non-cash items compared to the prior period, in addition to a small decrease in working capital performance compared to the prior period.

Our net cash used for investing activities for the three months ended December 30, 2022 wa s $48.7 million , compared to cash used for investing activities of $249.6 million in the corresponding prior year period, with this change due primarily to the acquisition of BlackLynx in the prior year.

Our net cash used for financing activities of $246.1 million for the three months ended December 30, 2022 resulted mainly from cash used for share repurchases of $140.5 million, $58.4 million in repurchase of redeemable noncontrolling interests and $29.8 million in dividends to shareholders and $2.3 million in dividends to noncontrolling interest holders, partly offset by net proceeds from issuance of common stock of $14.8 million.

Cash provided by financing activities in the corresponding prior year period was $144.4 million, due primarily to net proceeds from borrowings of $231.4 million, offset by cash used for repurchases of redeemable noncontrolling interests of $35.1 million and $27.5 million in dividends to shareholders and $14.1 million in net dividends to noncontrolling interest holders.

At December 30, 2022, the Company had approximately $210.0 million in cash and cash equivalents held in the U.S.

The amount of cash and cash equivalents at March 31, 2023 represented an increase of $82.9 million from $1.14 billion at September 30, 2022 , the reasons for which are described below.

Our net cash flow provided by operations of $434.3 million during the six months ended March 31, 2023 was unfavorable by $11.9 million in co mparison to the cash flow provided by operations of $446.3 million for the corresponding prior year period.

The year-over-year decrease in cash from operations is primarily attributable to a decrease in working capital performance compared to the prior period, offset in part by higher earnings after adjustments for non-cash items compared to the prior period.

Our net cash used for investing activities for the six months ended March 31, 2023 wa s $76.7 million , compared to cash used for investing activities of $458.8 million in the corresponding prior year period, with this change due primarily to the acquisition of BlackLynx and StreetLight in the prior year.

Our net cash used for financing activities of $336.0 million for the six months ended March 31, 2023 resulted mainly from cash used for share repurchases of $140.5 million, $58.4 million in repurchase of PA Consulting related redeemable noncontrolling interests, $62.8 million in dividends to shareholders and $53.8 million in net repayments of long-term borrowing, partly offset by net proceeds from issuance of common stock of $25.4 million.

Cash provided by financing activities in the corresponding prior year period was $235.1 million, due primarily to net proceeds from borrowings of $387.1 million, offset by cash used for repurchases of PA Consulting related redeemable noncontrolling interests of $35.1 million and $57.2 million in dividends to shareholders and $9.4 million in net dividends to noncontrolling interest holders.

At March 31, 2023, the Company had approximately $217.3 million in cash and cash equivalents held in the U.S.

and $1.0 billion held outside of the U.S.

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(see Note 6- Income Taxes of Notes to Consolidated Financial Statements included in our 2022 Form 10-K), there are no material impediments to repatriating these funds to the U.S.

The Compan y had $292.5 million in letters of credit outstanding at December 30, 2022.

The Compan y had $322.4 million in letters of credit outstanding at March 31, 2023.

Of this amount, $1.3 million was issued under the Revolving Credit Facility and $321.1 million was issued under separate, committed and uncommitted letter-of-credit facilities.

On February 6, 2023, the Company refinanced its Revolving Credit Facility and Term Loan Facilities.

See Note 11- Borrowings for further discussion relating to the terms of the Revolving Credit Facility and Term Loan Facilities following the refinancing.

On February 6, 2023, the Company refinanced its Revolving Credit Facility and Term Loan Facilities and on February 16, the Company issued $500.0 million in Bonds.

See Note 11- Borrowings for further discussion relating to the terms of the Bonds, the Revolving Credit Facility and Term Loan Facilities following the issuance and refinancing.

On February 4, 2022, the Company acquired StreetLight Data, Inc.

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We believe we have adequate liquidity and capital resources to fund our projected cash requirements for the next twelve months based on the liquidity provided by our cash and cash equivalents on hand, our borrowing capacity and our continuing cash from operations.

We were in compliance with all of our debt covenants at December 30, 2022.

We were in compliance with all of our debt covenants at March 31, 2023.

Supplemental Obligor Group Financial Information

On February 6, 2023, Jacobs and its wholly-owned subsidiary, JEGI (together, the "Obligor Group"), filed an automatic shelf registration statement on Form S-3, registering, among other securities, Senior Debt Securities, and Subordinated Debt Securities of Jacobs, which may be fully and conditionally guaranteed by JEGI, and Senior Debt Securities, and Subordinated Debt Securities of JEGI, which may be fully and conditionally guaranteed by Jacobs.

All other subsidiaries of the Company that will not guarantee the registered debt securities of either JEGI or Jacobs are referred to collectively as the "Non-Obligor Subsidiaries".

As of the date of this report, no Senior or Subordinated Debt Securities subject to such guarantees have been issued.

In accordance with the SEC Regulation S-X Rule 13-01, set forth below is the summarized financial information for the Obligor Group on a combined basis after elimination of (i) intercompany transactions and balances between Jacobs and JEGI and (ii) equity in the earnings from and investments in the Non-Obligor Subsidiaries.

On February 16, 2023, Jacobs Engineering Group Inc., a wholly-owned subsidiary of Jacobs Solutions Inc.

(together, the "Obligor Group"), completed an offering of $500 million aggregate principal amount of its 5.9% Sustainability-Linked Bonds due 2033 (the “Bonds”).

The Bonds are fully and unconditionally guaranteed by the Company (the “Guarantee”).

The Bonds and the Guarantee were offered pursuant to a prospectus supplement, dated February 13, 2023, to the prospectus dated February 6, 2023, that forms a part of the Company and JEGI’s automatic shelf registration statement on Form S-3ASR (File Nos.

333-269605 and 333-269605-01) previously filed with the Securities and Exchange Commission.

This summarized financial information (in thousands) has been prepared and presented pursuant to Regulation S-X Rule 13-01, “Financial Disclosures about Guarantors and Issuers of Guaranteed Securities” and is not intended to present the financial position or results of operations of the Obligor Group in accordance with U.S.

Three Months Ended

(in thousands) December 30, 2022

Six Months Ended

(in thousands) March 31, 2023

Summarized Statement of Earnings Data

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Noncontrolling interests $ (370)

(in thousands) December 30, 2022 September 30, 2022

(in thousands) March 31, 2023 September 30, 2022

Summarized Balance Sheet Data

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Current liabilities $ 526,541 $ 573,614

Current liabilities to Non-Guarantor Subsidiaries $ 55,365 $ —

Long-term Debt $ 3,012,542 $ 2,986,124

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis