What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-02-06 compared with 2023-08-08 · 175 added, 206 removed, 187 unchanged (67% 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 June 30, 2023 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 December 29, 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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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 regarding our expectations as to our future growth, prospects, financial outlook and business strategy, including our expectations for the percentage of backlog we will realize as revenue in fiscal year 2023, the anticipated benefits of any acquisition or the strategic investment in PA Consulting, our plans to separate the Critical Missions Solutions ("CMS") business through a spin-off that is intended to be tax-free to stockholders for U.S.

federal income tax purposes, the description of the CMS business following the separation, the timing of completion for the separation, and the perceived benefits for both Jacobs and CMS to be derived from the separation.

Examples of forward-looking statements include, but are not limited to, statements we make concerning the financial condition and results of operations and our expectations as to our future growth, prospects, financial outlook and business strategy for fiscal year 2024 or future fiscal years, including our expectations for the timing of completion of restructuring activities and savings to be realized from such activities, as well as the ability to effectuate the Separation Transaction on the expected terms and on the projected timeline, and any assumptions underlying any of the foregoing.

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 uncertainties as to the final structure and timing of the separation of the CMS business, including with respect to the scope of the businesses to be separated or retained by the Company, 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 fully execute on our three-year corporate strategy, including our ability to invest in the tools needed to 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 the 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 or that the transaction will occur on terms or conditions that are different or less favorable than expected;

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

Such factors include uncertainties as to the timing of the Separation Transaction, the impact of the Separation Transaction on Jacobs' and the combined company's businesses if the transaction is completed, including a possible impact on Jacobs' credit profile and a possible decrease in the trading price of Jacobs' and/or the combined company's shares, the possibility that the Separation Transaction, if completed, may not qualify for the expected tax treatment, the ability to obtain all required regulatory approvals, the possibility that closing conditions for the Separation Transaction may not be satisfied or waived, on a timely basis or otherwise, the risk that any consents or approvals required in connection with the Separation Transaction may not be received, the risk that the Separation Transaction may not be completed on the terms or in the time frame expected by the parties, uncertainties as to our and our stockholders' respective ownership percentages of the combined company and the value to be derived from the disposition of Jacobs’ stake in the combined company, unexpected costs, charges or expenses resulting from the Separation Transaction, business and management strategies and the growth expectations of the combined company, the inability of Jacobs' and the combined company to retain and hire key personnel, customers or suppliers while the Separation Transaction is pending or after it is completed, and the ability of the Company to eliminate all stranded costs, as well as other factors related to our business, such as our ability to fully execute on our three-year corporate strategy, including our ability to invest in the tools needed to 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 the 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, as well as other legislation related to governmental spending, 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, instability in the banking industry, or 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;

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 a pandemic 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 any future pandemics or infectious disease outbreaks 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 in this Quarterly Report on Form 10-Q.

For a description of these and additional factors that may occur that could cause actual results to differ from our forward-looking statements, see Item 1A, Risk Factors included in our 2023 Form 10-K and in this Quarterly Report on Form 10-Q.

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

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At Jacobs, we’re challenging today to reinvent tomorrow by solving the world’s most critical problems for thriving cities, resilient environments, mission-critical outcomes, operational advancement, scientific discovery and cutting-edge manufacturing, turning abstract ideas into realities that transform the world for good.

Leveraging a talent force of more than 60,000, Jacobs provides a full spectrum of professional services including consulting, technical, engineering, scientific and project delivery for the government and private sectors.

Our previous three-year corporate strategy launched at our Investor Day in February 2019 focused on innovation and continued transformation to build upon our position as the leading solutions provider for our clients.

Setting the wheels in motion for our current path, this transformation included acquiring a 65% stake in PA Consulting Group Limited ("PA Consulting") in fiscal year 2021.

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:

Leveraging a talent force of approximately 60,000 , Jacobs provides a full spectrum of professional services including consulting, technical, engineering, scientific and project delivery for the government and private sector.

Over the last seven years, Jacobs has been on a transformation journey, starting with a re-emphasis on business excellence, our culture and brand, and evolving our portfolio to create an inclusive, technology-forward company producing the critical solutions of tomorrow.

This transformation included acquiring a 65% stake in PA Consulting Group Limited ("PA Consulting") in fiscal 2021.

Acquisitions of Buffalo Group, BlackLynx and StreetLight further positioned 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 three-year strategy that builds on our success over the preceding three years and takes advantage of a new lens crafted from the incredible pace of change in the world and in our markets.

We’re now focused on broadening our leadership in high growth sectors aligned with long-term secular trends, such as infrastructure renewal and investment, and the global transition to more sustainable ways of living.

Our strategy is driven by our purpose and values and reflects our vision of becoming a company like no other.

An extensive evaluation of global trends, capabilities and markets to understand the largest opportunities, projected spend and growth rates identified three growth accelerators:

Climate Response, Consulting & Advisory and Data Solutions, which cut across our entire organization and markets creating connections among global market trends, the solutions we deliver and our company purpose.

Our three growth accelerators are delivering significant value for our clients, positioning Jacobs for high-margin growth while advancing sustainability and social value in the communities where we serve.

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.

As a purpose-led company, we know we have a pivotal role to play across the entire Climate Response value chain – focusing on end-to-end solutions in energy transition, decarbonization, adaptation and resilience, and regenerative and nature-based climate solutions.

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.

As our clients navigate multifaceted challenges in a rapidly changing world, we are harnessing our data and digital capabilities, products and tools to help our clients operate more efficiently in a safe environment and capitalize on their data more than ever before.

We're empowering innovation and ingenuity to unlock better outcomes.

We’re investing in big data, artificial intelligence and generative design while building a technology backbone that enables us to add value in a more efficient way.

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.

Together with our visionary partner, PA Consulting, we're expanding our position in high-end advisory services and deploying our collective strengths to create significant opportunities for our clients to adapt, innovate and transform.

We're focused on broadening our leadership in sustainable, higher growth, higher value sectors.

As part of our strategy, our brand promise:

"Challenging today.

Reinventing tomorrow." signals our transition to a global technology-forward solutions

Reinventing tomorrow." signals our transition to a global technology-forward solutions company.

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 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 Focus 2023 Transformation Office drove 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.

(the predecessor parent company) created a new holding company, Jacobs Solutions Inc., which, through a reverse triangular merger, became the new parent company of Jacobs Engineering Group Inc.

(the predecessor parent company) created a new holding company, Jacobs Solutions Inc., which became the new parent company of Jacobs Engineering Group Inc.

As a result of the transaction, the predecessor parent company's then-current stockholders automatically became stockholders of Jacobs Solutions Inc., on a one-for-one basis, with the same number of shares and same ownership percentage of the predecessor parent company’s common stock that they held immediately prior to the transaction.

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Our LOBs, our business unit Divergent Solutions (DVS), which operates as an integrated offering to both LOBs, and a majority investment in PA Consulting (PA) constitute the Company’s reportable segments and are the foundation for how Jacobs helps create a more connected, sustainable world.

For additional information regarding our segments, including information about our financial results by segment and financial results by geography, see Note 4- Revenue Accounting for Contracts of Notes to Consolidated Financial Statements.

For additional information regarding our segments, including information about our financial results by segment and financial results by geography, see Note 18- Segment Information and Note 5- Revenue Accounting for Contracts of Notes to Consolidated Financial Statements.

Critical Mission Solutions (CMS)

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We leverage our deep experience to support clients in the Aerospace, Automotive, Space, Telecom, Intel, Defense and Energy sectors to develop lasting solutions in the communities where we live and work.

On May 9, 2023, the Company announced its intention to separate its CMS business, resulting in two independent publicly traded companies.

Jacobs expects to complete the separation in fiscal 2024 through a distribution to Jacobs' stockholders that is intended to be tax-free to Jacobs’ stockholders 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.

CMS is included as part of the Separation Transaction announced on November 20, 2023, which is expected to close in fiscal year 2024, subject to regulatory approvals and other customary closing conditions.

People & Places Solutions (P&PS)

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Divergent Solutions (DVS)

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

Jacobs’ 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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and international markets.

The Separation Transaction announced on November 20, 2023 includes portions of DVS, including its Cyber & Intelligence business.

PA Consulting

Jacobs invested in a 65% stake in PA Consulting, the consultancy that is "Bringing Ingenuity to Life", which offers end-to-end innovation to accelerate new growth ideas from concept, through design and development and to commercial success.

We revitalize organizations, building the leadership, culture, systems and processes to make innovation a reality.

PA Consulting's team of roughly 4,000 strategists, innovators, designers, consultants, digital experts, scientists, engineers and technologists work across seven sectors:

Jacobs invested in a 65% stake in PA Consulting, the company that is bringing ingenuity to life.

PA accelerates new growth ideas from concept, through design and development and to commercial success, and revitalizes organizations, building leadership, culture, systems and processes to make innovation a reality.

PA Consulting's global team of approximately 4,000, which includes strategists, innovators, designers, consultants, digital experts, scientists, engineers and technologists work across seven sectors:

consumer and manufacturing, defense and security, energy and utilities, financial services, government, health and life sciences, and transport to make a positive impact alongside the clients it supports.

PA Consulting has a diverse mix of private and public sector clients, from global household names to start-ups, to national and local public services.

Recently, PA Consulting has led the digitalization of Schiphol Airport in the Netherlands – one of the busiest in Europe – delivering digital transformation at scale, and managing the migration of operations from legacy systems.

PA Consulting also expanded its work with patented sustainable product and packaging solution, PulPac, with the Blister Packs Collective – an initiative whose aim is to reduce and eliminate the use of PVC and other plastics in tablet packs;

and led leading offshore wind developer, Corio Generation, to secure a fixed-price electricity contract in Ireland’s first offshore wind auction, further establishing it in the renewables space.

Together, the collective strengths of PA Consulting and Jacobs drive value creation for clients around the globe and support projects to address five key trends:

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

Results of Operations for the three and nine months ended June 30, 2023 and July 1, 2022

PA has a diverse mix of private and public sector clients.

Private sector clients include global household names like Unilever and Pret A Manger;

and start-ups like PulPac, which is converting plant fibers into sustainable packaging, and Hydrow, with its award-winning indoor rowing machine.

Public sector clients include national and local government entities like the U.K.’s Ministry of Defence and National Health Service, the Swedish Payments Authority (Utbetalningsmyndigheten), and the U.K.’s Hampshire County Council.

In a fast-moving, complex world, we’re deploying the collective strengths of Jacobs and PA to create significant opportunities for our clients to adapt, innovate and transform.

Alongside Copenhagen Metro – one of the most advanced public transport systems in Europe – we’re providing strategic management and technical services to support its operations and maintenance.

We’ve also been selected by the U.K.

Department for Transport to provide technical and commercial advice on its portfolio of rail and other transport mode agreements, major projects and programs, and its policy and strategic work in transport.

Results of Operations for the three months ended December 29, 2023 and December 30, 2022

(in thousands, except per share information)

For the Three Months Ended For the Nine Months Ended

June 30, 2023 July 1, 2022 June 30, 2023 July 1, 2022

For the Three Months Ended

December 29, 2023 December 30, 2022

Revenues $ 4,159,225 $ 3,798,668

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Interest expense (43,352) (40,077)

Miscellaneous (expense) income, net (7,099) 31,440 (14,920) 51,802

Total other (expense) income, net (43,056) 6,353 (120,930) (12,825)

Miscellaneous expense (3,195) (3,254)

Total other expense, net (38,314) (40,324)

Earnings from Continuing Operations Before Taxes 165,749 197,481

Income Tax Expense from Continuing Operations (54,166) (59,491) (123,329) (121,545)

Income Tax benefit (expense) from Continuing Operations 16,279 (50,103)

Net Earnings of the Group from Continuing Operations 182,028 147,378

Net Earnings (Loss) of the Group from Discontinued Operations 294 (343) (489) (576)

Net Loss of the Group from Discontinued Operations (574) (708)

Net Earnings of the Group 181,454 146,670

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Diluted Earnings Per Share $ 1.37 $ 1.06

Overview – Three and Nine Months Ended June 30, 2023

Net earnings attributable to the Company from continuing operations for the third fiscal quarter ended June 30, 2023 were $163.9 million (or $1.29 per diluted share), a decrease of $32.4 million, from net earnings of $196.3 million (or $1.52 per diluted share) for the corresponding period last year.

Higher year over year underlying operating performance in the third fiscal quarter of 2023 was impacted by $25.0 million higher pre-tax Restructuring and other charges and transaction costs compared to the same fiscal quarter of 2022, with this increase due primarily to PA Consulting restructuring program charges (primarily employee separation costs) and CMS separation expenses (mainly professional services), which is discussed in Note 16- Restructuring and Other Charges.

Third quarter fiscal 2023 other expense, net, was $43.1 million, an increase of $49.4 million versus third quarter fiscal 2022 income of $6.4 million, with the current period primarily impacted by unfavorable higher net interest expense, unfavorable currency exchange gains and losses and higher pension costs compared to the prior year quarter, as discussed further below, with fiscal 2022 benefiting from a $13.9 million pre-tax gain related to a cost method investment sold during the period.

Further, our reported net earnings for the current year quarter were favorably impacted by lower income taxes of $5.3 million compared to the fiscal 2022 period, attributable to lower earnings before taxes offset by a higher effective tax rate in the current quarter.

Finally, net earnings attributable to redeemable noncontrolling interests were $7.2 million lower for the quarter-to-date period due to lower net after-tax earnings results in our PA Consulting investment compared to the prior year.

For the nine months ended June 30, 2023, net earnings attributable to the Company from continuing operations were $516.9 million (or $4.06 per diluted share), an increase of $97.5 million, from net earnings of $419.4 million (or $3.23 per diluted share) for the corresponding period last year.

Operating profit levels were up more significantly 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, the fiscal 2023 PA Consulting and CMS separation related items and the final fiscal 2022 $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.

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 $120.9 million was higher by $108.1 million versus the same period in fiscal 2022 amounts of $12.8 million, with the current period impacted by the same unfavorable higher net interest expense, unfavorable currency exchange gains and losses and higher pension costs, with fiscal 2022 benefiting from the cost method investment sold mentioned above.

Finally, net earnings attributable to redeemable noncontrolling interests were $14.0 million lower for the year-to-date period due to lower net after-tax earnings results in our PA Consulting investment compared to the prior year.

On May 9, 2023, the Company announced its intention to separate its CMS business into an independent publicly traded company.

For further discussion, see Note 1- Basis of Presentation.

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

For further discussion, see Note 15- Other Business Combinations .

Overview – Three Months Ended December 29, 2023

Net earnings attributable to the Company from continuing operations for the first fiscal quarter ended December 29, 2023 were $172.2 million (or $1.37 per diluted share), an increase of $35.8 million, from net earnings of $136.4 million (or $1.07 per diluted share) for the corresponding period last year.

The current results reflected lower operating profit in the first fiscal quarter of 2024, which was impacted by $55.3 million in pre-tax Restructuring and other charges and transaction costs due primarily to expenses incurred relating to the Separation Transaction (mainly professional services and employee separation costs), compared to fiscal 2023 amounts of $39.7 million mainly associated with the Company's transformation initiatives relating to real estate, which are discussed in Note 16- Restructuring and Other Charges.

This is partially offset by the 2023 first fiscal quarter net favorable impact of approximately $15.0 million in overhead cost reductions associated mainly with one-time benefit program changes, which was offset in part by higher incentive and other compensation charges and higher investments in company technology platforms.

First quarter fiscal 2024 other expense, net, was $38.3 million, a decrease of $2.0 million versus first quarter fiscal 2023 amounts of $40.3 million, with the current period primarily impacted by favorable higher interest income, partly offset by unfavorable higher interest expense.

Further, our reported net earnings for the current year quarter were favorably impacted by a decrease in income taxes of $66.4 million compared to the fiscal 2023 period, attributable mainly to a deferred income tax benefit of $61.6 million in Australia.

Consolidated Results of Operations

Revenues for the third fiscal quarter of 2023 were $4.19 billion, an increase of $359.6 million, or 9.4%, from $3.83 billion for the corresponding period last year.

For the nine months ended June 30, 2023, revenues were $12.06 billion, an increase of $1.02 billion, or 9.3%, from $11.04 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, other increases in our DVS and PA Consulting businesses.

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

business operations.

Our CMS business benefited from increased spending in our U.S.

government business sector, which was primarily attributable to fiscal 2022 contract awards for the U.S.

Department of Energy.

Also, revenue was unfavorably impacted by foreign currency translation of $12.4 million and $279.0 million for the three and nine months ended June 30, 2023, respectively, across our international businesses, as compared to an unfavorable $130.1 million and $176.8 million for the three and nine months ended July 1, 2022, respectively.

Pass-through revenues for the three and nine months ended June 30, 2023 amounted to $804.1 million and $2.23 billion, an increase of $124.3 million and $433.5 million, or 18.3% and 24.1%, respectively, from $679.7 million and $1.80 billion from the corresponding periods last year.

Pass-through revenues for the prior periods presented include certain minor adjustments to properly reflect amounts that had not been previously included and conform with the fiscal 2023 amounts presented.

Gross profit for the third fiscal quarter of 2023 was $856.7 million, an increase of $32.3 million, or 3.9%, from $824.5 million from the corresponding period last year and reflecting related gross profit margins of 20.5% and 21.5% for the respective periods.

Gross profit for the nine months ended June 30, 2023 was $2.56 billion, an increase of $70.4 million, or 2.8%, from $2.49 billion from the corresponding period last year with respective gross profit margins of 21.2% and 22.6%.

Project mix impacts in our legacy CMS and P&PS portfolios and lower utilization trends primarily in the PA Consulting business impacted our current year margins, 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.

Revenues for the first fiscal quarter of 2024 were $4.16 billion, an increase of $0.36 billion, or 9.5%, from $3.80 billion for the corresponding period last year.

Revenue increases for the year over year period were due mainly to the Company's P&PS business, as well as revenue increases seen across our other reporting segments.

The P&PS business benefited primarily from stronger performance in its Advanced Facilities, Federal & Environmental and Energy & Power operations.

Our CMS business benefited from increased volume in the nuclear remediation sector in the U.S.

and United Kingdom as well as strong performance in the space, defense, and energy markets.

Also, revenue was favorably impacted by foreign currency translation of $53.1 million for the three months ended December 29, 2023, across our international businesses, as compared to an unfavorable $158.5 million for the three months ended December 30, 2022.

Gross profit for the first fiscal quarter of 2024 was $850.5 million, an increase of $35.8 million, or 4.4%, from $814.7 million from the corresponding period last year, with gross profit margins of 20.4% and 21.4% for the respective periods.

Our absolute increase in gross profit was attributable mainly due to favorable benefits from recent new program startups won in the prior year, with slight margins impacts from year over year mix as well as personnel cost 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 and nine months ended June 30, 2023 were $587.0 million and $1.76 billion, respectively, compared $558.7 million and $1.88 billion for the corresponding periods last year and representing an increase of $28.3 million or 5.1% and a decrease of $117.7 million or (6.3)%, respectively.

Restructuring and other charges for the three and nine months ended June 30, 2023 included approximately $30.0 million in costs associated with the Company's restructuring initiatives relating to its investment in PA Consulting (primarily employee separation costs) and separation activities (mainly professional services) relating to the CMS separation transaction and June 30, 2023 and July 1, 2022 included $38.1 million and $74.6 million, respectively, in costs associated with the Company's transformation initiatives relating to real estate.

Also, the year-to-date fiscal 2022 period was impacted by the final pre-tax $91.3 million settlement of the Legacy CH2M Matter, net of previously recorded reserves, mentioned above.

The current year's three and nine 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 $2.9 million and $53.4 million, respectively, for the three and nine months ended June 30, 2023 as compared to favorable impacts of $26.4 million and $36.8 million for the corresponding periods last year.

Net interest expense for the three and nine months ended June 30, 2023 was $36.0 million and $106.0 million, respectively, an increase of $10.9 million and $41.4 million from $25.1 million and $64.6 million, or 43.3% and 64.0%, for the corresponding periods last year.

The increase in net interest expense for the three and nine month periods was due primarily to higher interest rates in the current year compared to the prior year periods.

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

Miscellaneous (expense) income, net for the three and nine months ended June 30, 2023 was $(7.1) million and $(14.9) million, respectively, in comparison to $31.4 million and $51.8 million for the corresponding periods last year.

The unfavorable $38.5 million and $66.7 million impacts compared to the prior three and nine month comparable periods were due primarily to an increase in pension costs associated with higher interest rate impacts in the current year along with comparatively unfavorable foreign exchange gains and losses in the current year periods.

Also, the three and nine-month periods of fiscal 2022 included a $13.9 million pre-tax gain related to a cost method investment sold during the period and the nine-month period 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 June 30, 2023 and July 1, 2022 were 23.9% and 21.9%, respectively.

For the three months ended June 30, 2023, the primary differences between the statutory U.S.

federal corporate tax rate of 21% and the Company’s effective tax rate were associated with U.S.

state income tax expense of $5.3 million and U.S.

tax on foreign earnings of $5.4 million, partly offset by a $3.5 million tax benefit for the release of previously valued foreign tax credits.

For the three months ended July 1, 2022 the main differences were attributable to U.S.

state income tax expense of $8.4 million and U.S tax on foreign earnings of $5.3 million, partly offset by a $9.1 million tax benefit related to the reversal of a withholding tax accrual on certain intercompany loans.

The Company's effective tax rates from continuing operations for the nine months ended June 30, 2023 and July 1, 2022 were 18.2% and 20.4%, respectively.

The primary differences between the statutory U.S.

federal corporate tax rate of 21.0% and the Company’s effective tax rate for the nine months ended June 30, 2023 were related to net tax benefits of $39.4 million mostly related to uncertain tax positions in the U.S.

that were effectively settled, of which $30.8 million related to positions carried forward from the fiscal 2018 acquisition of CH2M Hill Companies Ltd., as well as a tax benefit of $12.1 million for the release of previously valued foreign tax credits.

These benefits were partly offset by U.S.

SG&A expenses for the three months ended December 29, 2023 were $646.5 million, compared to $576.9 million for the corresponding period last year, representing an increase of $69.6 million or 12.1%.

Restructuring and other charges for the three months ended December 29, 2023 included $40.1 million in restructuring and other charges, primarily related to the Separation Transaction (mainly professional services and employee separation costs).

Additionally, the three months ended December 29, 2023 included an approximate $15 million pre-tax non-cash charge associated with an inventory write down and an approximate $10 million non-cash intangibles impairment.

The three months ended December 30, 2022 included $27.1 million in costs associated with the Company's transformation initiatives relating to real estate.

Lastly, SG&A expenses were impacted by unfavorable foreign currency translation of $9.3 million for the three months ended December 29, 2023 as compared to favorable impacts of $27.5 million for the corresponding period last year with the remainder associated with other miscellaneous separation and transaction professional services costs from the prior year.

Net interest expense for the three months ended December 29, 2023 was $35.1 million, a decrease of $2.0 million from $37.1 million, or 5.3%, for the corresponding period last year.

The decrease in net interest expense for the three month period was due primarily to higher interest rates in the current year compared to the prior year period, resulting in increases in interest income as well as interest expense.

The increase in interest expense is partly offset by lower overall levels of debt compared to the corresponding period last year.

Miscellaneous expense, net for the three months ended December 29, 2023 was $(3.2) million, in comparison to $(3.3) million for the corresponding period last year.

The unfavorable $0.1 million impacts compared to the prior three

month comparable period were due primarily to comparatively unfavorable foreign exchange gains and losses in the current year period.

The Company’s effective tax rates from continuing operations for the three months ended December 29, 2023 and December 30, 2022 were (9.8)% and 25.4%, respectively.

The most significant item 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-month period ended December 29, 2023 relates to a discrete event associated with the election to treat an Australian subsidiary as a corporation versus a partnership for U.S.

tax purposes.

The election resulted in the derecognition of a deferred tax liability, resulting in a discrete income tax benefit of $61.6 million as the Company asserts that a component of the investment will be indefinitely reinvested.

This benefit was partly offset by U.S.

state income tax expense of $3.2 million and U.S.

tax on foreign earnings of $3.2 million.

For the nine months ended July 1, 2022, the main differences were associated with tax benefits of $15.4 million for the release of previously valued foreign tax credits, $9.1 million related to the reversal of a withholding tax accrual on certain intercompany loans, and $4.9 million from filing amended state tax returns.

These benefits were partly offset by U.S.

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 30, 2022, were U.S.

state income tax expense of $4.6 million and U.S.

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Restructuring and Other Charges

During fiscal 2023, the Company implemented certain restructuring and integration initiatives relating to the formation of the reporting and operating segment, Divergent Solutions, which were substantially completed this year.

The Company incurred approximately $8.0 million in pre-tax cash charges in connection with these initiatives during the nine month period ended June 30, 2023, with no significant costs incurred in the current fiscal quarter.

During fiscal 2023, the Company implemented restructuring initiatives relating to the Separation Transaction.

The Company incurred approximately $19.8 million in fiscal 2023 and $10.6 million in the three months ended December 29, 2023, in pre-tax cash ch arges in connection with these initiatives.

These actions, which are expected to be substantially completed before the end of fiscal 2025, are expected to result in estimated gross annualized pre-tax cash savings of approximatel y $72 million to $88 million.

We will likely incur additional charges under this program through fiscal 2025, which are expected to result in additional savings in future periods.

During third quarter fiscal 2023, the Company approved a plan to improve business processes and cost structures of our PA Consulting investment by reorganizing senior management and reducing headcount.

In connection with these initiatives, which are expected to be substantially complete before the end of fiscal 2024, the Company incurred approximately $14.3 million during fiscal 2023 and $1.2 million in the three months ending December 29, 2023, in pre-tax cash charges.

These activities are expected to result in estim ated gross annualized pre-tax cash savings of approximately $40 million to $45 million.

During fiscal 2023, the Company implemented restructuring and cost reduction initiatives relating to the formation of the reporting and operating segment, Divergent Solutions, which were substantially completed in fiscal 2023.

The Company incurred approximately $7.5 million in pre-tax cash charges in connection with these initiatives during the year ended September 29, 2023.

These actions are expected to result in estimated gross annualized pre-tax cash savings of approximately $20 million to $24 million.

During fiscal 2020 and continuing into fiscal 2023, the Company implemented further real estate rescaling efforts that were associated with its fiscal 2020 transformation program relating to real estate.

These activities are expected to be substantially completed before the end of fiscal 2023.

In connection with these efforts, the Company has incurred $39.1 million and $69.9 million for the nine month periods ended June 30, 2023 and July 1, 2022, respectively, with minimal impacts to the three month periods ended June 30, 2023 and July 1, 2022 in pre-tax mainly non-cash charges.

The total amount incurred in costs to date for this program were $111.5 million and the Company expects to incur additional costs of approximately $6.1 million during fiscal 2023.

These activities were substantially completed in fiscal 2023.

In connection with these efforts, the Company has incurred $47.3 million and $72.4 million for the years ended September 29, 2023 and September 30, 2022, respectively, in pre-tax mainly non-cash charges.

These actions resulted in non-cash savings related to the future amortization of lease right-of-use assets over the remaining lease terms.

Additionally, the objective of these initiatives was to create a modern, flexible work platform tailored to employees’ needs due to globalization and digital advances and to create total emissions savings that will be realized as we continue to optimize our real estate footprint.

During third quarter fiscal 2023, the Company approved a plan to improve business processes and cost structure of our PA Consulting investment by reorganizing senior management and reducing headcount.

In connection with these initiatives, the Company incurred approximately $17 million in pre-tax charges during the three and nine month periods ended June 30, 2023, which are expected to be settled in cash by the end of the fiscal year.

These activities, which are expected to be substantially completed before the end of fiscal 2023, are expected to result in estimated gross annualized pre-tax cash savings of approximately $40 million to $50 million.

Refer to Note 16– Restructuring and Other Charges for further information regarding restructuring and integration initiatives.

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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 Nine Months Ended

June 30, 2023 July 1, 2022 June 30, 2023 July 1, 2022

Three Months Ended

December 29, 2023 December 30, 2022

Revenues from External Customers:

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Total $ 4,159,225 $ 3,798,668

Three Months Ended Nine Months Ended

June 30, 2023 July 1, 2022 June 30, 2023 July 1, 2022

Three Months Ended

December 29, 2023 December 30, 2022

Segment Operating Profit:

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GAAP Operating Profit 204,063 237,805

Total Other (Expense) Income, net (3) (43,056) 6,353 (120,930) (12,825)

Total Other Expense, net (38,314) (40,324)

Earnings Before Taxes from Continuing Operations

$ 165,749 $ 197,481

(1) Other corporate expenses included intangibles amortization of $52.0 million and $51.6 million for the three months ended June 30, 2023 and July 1, 2022, respectively, and $152.2 million and $146.9 million, for the nine months ended June 30, 2023 and July 1, 2022, respectively.

Additionally, the nine 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 and nine months ended June 30, 2023 included $17.2 million in restructuring and other charges relating to the Company's investment in PA Consulting (primarily employee separation costs) and $13.4 million relating to the separation activities (mainly professional services) around the CMS separation, and the nine months ended June 30, 2023 and July 1, 2022 included $38.1 million and $74.6 million, respectively in real estate impairment charges relating to the Company's transformation initiatives.

Also included in the nine months ended July 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 three and nine month periods ended July 1, 2022 included a $13.9 million gain related to a cost method investment sold during the period.

The nine months ended July 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.

(1) Includes an approximate $15 million pre-tax non-cash charge associated with an inventory write down during the fiscal 2024 period comprised of adjustments of immaterial cumulative inventory misstatements previously reported which would not have been material to any prior period financial statements nor any amounts reported in the current period.

(2) Other corporate expenses included intangibles amortization of $51.1 million and $49.8 million for the three months ended December 29, 2023 and December 30, 2022, respectively, along with an approximate $10 million intangibles impairment charge in the three month ended December 29, 2023 period.

Additionally, the comparison of the three month period of fiscal 2024 to the corresponding 2023 period was unfavorably impacted by the one-time net favorable impacts of $41 million relating mainly to changes in employee benefits programs in the prior year, partly offset by year over year favorable department spending as well as favorable impacts of corporate functional overhead cost recovery by our lines of business.

(3) The three months ended December 29, 2023 included $40.1 million in restructuring and $11.0 million of transaction charges, mainly relating to the Separation Transaction (primarily professional services and employee separation costs).

Included in the three months ended December 30, 2022 were mainly $27.1 million in restructuring and other charges associated mainly with real estate impairments with the remainder associated with other miscellaneous separation and transaction professional services costs from the prior year.

Critical Mission Solutions

Three Months Ended Nine Months Ended

June 30, 2023 July 1, 2022 June 30, 2023 July 1, 2022

Three Months Ended

December 29, 2023 December 30, 2022

Revenue $ 1,128,603 $ 1,075,175

Operating Profit $ 93,407 $ 82,220

Critical Mission Solutions segment revenues for the three and nine months ended June 30, 2023 were $1.19 billion and $3.46 billion, respectively, an increase of $81.8 million and $236.9 million, or 7.4% and 7.4%, from $1.11 billion and $3.22 billion for the corresponding periods last year.

During the three and nine months ended June 30, 2023, revenue benefited from new contracts in the nuclear remediation sector as well across multiple markets in the U.S.

and United Kingdom.

Also, impacts on revenues from unfavorable foreign currency translation were approximately $2.9 million and $61.5 million for the three and nine-month periods ended June 30, 2023, compared to $26.7 million and $34.6 million in unfavorable impacts in the corresponding prior year periods.

Operating profit for the segment was $99.1 million and $275.3 million, respectively, for the three and nine months ended June 30, 2023, which was an increase of $10.8 million, or 12.2%, from $88.3 million for the quarter-to-date period compared to the prior year and relatively flat compared to the year-to-date period last year.

Operating profit level trends for the year over year quarterly periods were favorably impacted by growth in the nuclear remediation market, U.S.

government space market and international defense market, and for the year to date period, were offset in part by large contract wind downs in early fiscal 2022 that carried higher profit margins.

Impacts on operating profit from unfavorable foreign currency translation were approximately $0.2 million and $7.4 million for the three and nine months ended June 30, 2023, as compared to unfavorable foreign currency translation of approximately $3.9 million and $5.0 million for the three and nine months ended July 1, 2022, respectively.

On May 9, 2023, the Company announced its intention to separate its CMS business, resulting in two independent publicly traded companies.

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

federal income tax purposes.

Critical Mission Solutions segment revenues for the three months ended December 29, 2023 were $1.13 billion, an increase of $0.05 billion, or 5.0%, from $1.08 billion for the corresponding period last year.

During the three months ended December 29, 2023, revenue benefited from increased volume in the nuclear remediation sector in the U.S.

and United Kingdom as well as strong performance in the space, defense, and energy markets.

Our fiscal first quarter 2024 exchange rates compared to our fiscal first quarter 2023 period rates contributed approximately $13.1 million in favorable impacts on revenues for the current period quarter.

In the corresponding prior year period, our fiscal first quarter 2023 exchange rates compared to the rates of our fiscal first quarter 2022 period contributed $33.1 million in unfavorable impacts on revenues.

Operating profit for the segment was $93.4 million, for the three months ended December 29, 2023, which was an increase of $11.2 million, or 13.6%, from $82.2 million for the quarter-to-date period compared to the prior year.

Operating profit level trends for the year-over-year quarterly period were favorably impacted by growth in the nuclear remediation market and strong performance in U.S.

government space market and international defense and energy markets.

Our fiscal first quarter 2024 exchange rates compared to our fiscal first quarter 2023 period rates contributed approximately $1.8 million in favorable impacts for the current period quarter.

In the corresponding prior year period, our fiscal first quarter 2023 exchange rates compared to the rates of our fiscal first quarter 2022 period contributed approximately $3.9 million in unfavorable impacts on operating profit.

People & Places Solutions

Three Months Ended Nine Months Ended

June 30, 2023 July 1, 2022 June 30, 2023 July 1, 2022

Three Months Ended

December 29, 2023 December 30, 2022

Revenue $ 2,470,441 $ 2,226,985

Operating Profit $ 224,998 $ 226,619

Revenues for the People & Places Solutions segment for the three and nine-months ended June 30, 2023 were $2.47 billion and $7.04 billion, respectively, an increase of $247.2 million and $735.2 million, or 11.1% and 11.7%, from $2.22 billion and $6.31 billion for the corresponding periods last year.

The increases in revenue for the three and nine months ended June 30, 2023 were primarily driven by growth in our advanced facilities, U.S.

and Asia Pacific and Middle East businesses as compared to the corresponding prior year periods.

Foreign currency translation had $10.1 million and $144.6 million in unfavorable impacts on revenues in our international businesses for the three and nine month periods ended June 30, 2023, respectively, as compared to unfavorable impacts of $69.1 million and $103.7 million in the corresponding prior year periods.

Operating profit for the segment for the three and nine month period ended June 30, 2023 was $242.7 million and $701.5 million, respectively, an increase of $28.7 million and $106.0 million, or 13.4% and 17.8%, from $213.9 million and $595.5 million for the corresponding periods last year.

The year-over-year increases in operating profit for the three and nine months ended June 30, 2023 were driven primarily by the revenue growth mentioned above while holding selling, general and administrative expenses relatively flat.

Foreign currency translation had a $3.4 million and $28.7 million unfavorable impact on operating profit in our international businesses for the three and nine month periods ended June 30, 2023, respectively as compared to unfavorable impacts of $11.9 million and $18.7 million in the corresponding prior year periods.

Revenues for the People & Places Solutions segment for the three months ended December 29, 2023 was $2.47 billion, an increase of $243.5 million, or 10.9%, from $2.23 billion for the corresponding period last year.

The increase in revenue for the three months ended December 29, 2023 was primarily driven by net revenue growth across all businesses as well as an increase in pass-through revenue within Advanced Facilities.

Our fiscal first quarter 2024 exchange rates compared to our fiscal first quarter 2023 period rates contributed $22.9 million in favorable impacts on revenues for the current period quarter.

In the corresponding prior year period, our fiscal first quarter 2023 exchange rates compared to the rates of our fiscal first quarter 2022 period contributed unfavorable impacts on revenues of $83.2 million.

Operating profit for the People & Places Solutions segment for the three month period ended December 29, 2023 was $225.0 million and approximately flat with the corresponding period last year, with higher year over year segment revenues mentioned above but with offsetting impacts from higher corporate cost allocations versus the prior year period.

Our fiscal first quarter 2024 exchange rates compared to our fiscal first quarter 2023 period rates contributed $4.2 million in favorable impacts on operating profit for the current period quarter.

Divergent Solutions

Three Months Ended Nine Months Ended

June 30, 2023 July 1, 2022 June 30, 2023 July 1, 2022

Three Months Ended

December 29, 2023 December 30, 2022

Revenue $ 254,180 $ 214,465

Operating Profit $ 7,581 $ 11,967

Revenues for the Divergent Solutions segment for the three and nine months ended June 30, 2023 were $239.3 million and $695.0 million, respectively, an increase of $21.3 million and $44.9 million, or 9.8% and 6.9%, from $217.9 million and $650.1 million for the corresponding periods last year.

The increases in revenue for the three and nine months ended June 30, 2023 were due mainly to favorable year over year software licensing revenue and the startup of new programs previously won in fiscal 2022.

Also the year-to-date period benefited from incremental revenues from the StreetLight acquisition (owned for the full period in fiscal 2023).

Foreign currency translation impacts on revenue were not significant for the periods presented.

Operating profit for the segment was $20.8 million and $57.6 million, respectively, for the three and nine months ended June 30, 2023, an increase of $8.7 million and $5.4 million, or 72.0% and 10.3%, from $12.1 million and $52.3 million for the corresponding periods last year.

The increases in operating profit for the three and nine month periods were due mainly to favorable year over year software licensing, and for the year-to-date period, slightly offset 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 business.

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

Revenues for the Divergent Solutions segment for the three months ended December 29, 2023 were $254.2 million, an increase of $39.7 million, or 18.5%, from $214.5 million for the corresponding period last year.

The increase in revenue for the three months ended December 29, 2023 was mainly due to the startup of new programs previously won in fiscal 2023.

Foreign currency translation did not have a material impact on revenue in our Divergent Solutions segment for either period presented.

Operating profit for the segment was $7.6 million, for the three months ended December 29, 2023, a decrease of $4.4 million, or 36.7%, from $12.0 million for the corresponding period last year.

Operating profit for the three month period reflected strong underlying performance in the Cyber & Intelligence business unit and the new programs previously won in fiscal 2023, although fully offset by an approximate one-time $15 million pre-tax non-cash charge associated with an inventory write down during the fiscal 2024 period as mentioned above.

Foreign currency translation had an immaterial impact on operating profit in our Divergent Solutions segment for either period presented.

PA Consulting

Three Months Ended Nine Months Ended

June 30, 2023 July 1, 2022 June 30, 2023 July 1, 2022

Three Months Ended

December 29, 2023 December 30, 2022

Revenue $ 306,001 $ 282,043

Operating Profit $ 54,455 $ 51,027

Revenues for the PA Consulting segment for the three and nine months ended June 30, 2023 were $286.9 million and $869.9 million, respectively, an increase of $9.3 million and $5.0 million, or 3.3% and 0.6%, from $277.6 million and $864.9 million for the corresponding periods last year, primarily due to growth in PA Consulting's Defence & Security, Public Sector and Energy & Utilities businesses.

Revenues for the three-months ended June 30, 2023 were immaterially impacted by foreign currency translation and for the nine-months ended June 30, 2023 were unfavorably impacted by $71.7 million for our international businesses, and for the corresponding prior year periods, were unfavorably impacted by $34.0 million and $38.1 million.

Operating profit for the segment for the three and nine months ended June 30, 2023 was $60.9 million and $177.5 million, respectively, an increase of $9.4 million and a decrease of $5.3 million, or 18.3% and (2.9)%, from $51.4 million and $182.9 million, for the corresponding periods last year.

The increase for the quarter to date period is mainly due to lower incentive costs and includes immaterial impacts from foreign currency in our international business, while the decrease for the year to date period is mainly due to unfavorable foreign currency translation impacts of $12.3 million, as compared to $6.7 million and $8.1 million in unfavorable impact in the corresponding prior year periods.

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

Revenues for the PA Consulting segment for the three months ended December 29, 2023 were $306.0 million, an increase of $24.0 million, or 8.5%, from $282.0 million in the corresponding period last year, primarily due to growth in PA Consulting's Defence & Security, Public Sector, and Energy & Utilities businesses.

Our fiscal first quarter 2024 exchange rates compared to our fiscal first quarter 2023 period rates contributed favorable impacts of $16.7 million on revenues for the current period quarter.

Operating profit for the segment for the three months ended December 29, 2023 was $54.5 million, an increase of $3.4 million, or 6.7%, from $51.0 million in the corresponding period last year, slightly favorable versus the prior year period due mainly to impacts from the revenue growth mentioned above.

Other Corporate Expenses

Other corporate expenses for the three and nine months ended June 30, 2023 were $118.5 million and $319.8 million, an increase of $28.6 million and $35.3 million, or 31.8% and 12.4%, from $89.9 million and $284.5 million for the corresponding periods last year.

The increase for the three month period ended June 30, 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 technology and personnel costs in the third 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.

Other corporate expenses for the three months ended December 29, 2023 were $121.1 million, an increase of $27.4 million, or 29.2%, from $93.7 million for the corresponding period last year.

The comparison of the three month period of fiscal 2024 to the corresponding 2023 period was unfavorably impacted by a one-time net favorable impact of $41 million relating mainly to changes in employee benefits programs in the prior year, partly offset by year over year favorable department spending as well as favorable impacts of corporate functional overhead cost recovery by our lines of business.

Additionally, the fiscal 2024 period reflects approximately $10 million in non-cash intangibles impairment charges.

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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(ii) those elements of our incentive compensation plans relating to corporate personnel whose other compensation costs are not allocated to the LOBs;

(iii) the amortization of intangible assets acquired as part of business combinations;

(iii) the amortization of intangible assets

acquired as part of business combinations;

(iv) the quarterly variances between the Company’s actual costs of certain of its self-insured integrated risk and employee benefit programs and amounts charged to the LOBs;

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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 June 30, 2023 and July 1, 2022 (in millions):

June 30, 2023 July 1, 2022

The following table summarizes our backlog at December 29, 2023 and December 30, 2022 (in millions):

December 29, 2023 December 30, 2022

Critical Mission Solutions $ 8,311 $ 7,632

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Total $ 29,595 $ 28,258

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

The increase in backlog in Critical Mission Solutions from December 30, 2022 was primarily driven by new business awards in the U.S.

government space sector along with growth in the U.K.

defence, nuclear power, and nuclear remediation sectors that offset slower growth in the U.S.

defense and nuclear remediation sectors that offset slower growth in the U.S.

Defense market.

Backlog levels in People & Places Solutions and Divergent Solutions remained consistent year-over-year.

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

Backlog in People & Places Solutions and Divergent Solutions remained relatively consistent year-over-year.

The increase in backlog in PA Consulting from December 30, 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.

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Liquidity and Capital Resources

At June 30, 2023, our principal sources of liquidity consisted of $1.09 billion in cash and cash equivalents and $1.44 billion of available borrowing capacity under our $2.25 billion r evolving credit agreement (the "Revolving Credit Facility").

At December 29, 2023, our principal sources of liquidity consisted of $1.14 billion in cash and cash equivalents and $2.25 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.

Cash and cash equivalents at June 30, 2023 were $1.09 billion, representing a decrease of $48.4 million from $1.14 billion at September 30, 2022 , the reasons for which are described below.

Our net cash flow provided by operations of $755.4 million during the nine months ended June 30, 2023 was favorable by $558.2 million in co mparison to the cash flow provided by operations of $197.2 million for the corresponding prior year period.

The year-over-year increase in cash from operations is primarily attributable to the payment of the Legacy CH2M Matter cash settlement in the third fiscal quarter of 2022 and also included other overall net favorable working capital performance during the 2023 period.

Our net cash used for investing activities for the nine months ended June 30, 2023 wa s $106.4 million , compared to cash used for investing activities of $491.2 million in the corresponding prior year period, with this change due primarily to the BlackLynx and StreetLight acquisitions in the prior year.

Our net cash used for financing activities of $770.3 million for the nine months ended June 30, 2023 resulted mainly from $338.6 million in net repayments of borrowings, cash used for share repurchases of $265.6 million, $55.7 million in net PA Consulting related redeemable noncontrolling interests purchase and issuance activity and $95.7 million in dividends to shareholders.

Cash provided by financing activities in the corresponding prior year period was $461.8 million, due primarily to net proceeds from borrowings of $799.2 million, offset by cash used for share repurchases of $250.7 million and $86.6 million in dividends to shareholders.

At June 30, 2023, the Company had approximately $194.3 million in cash and cash equivalents held in the U.S.

Cash and cash equivalents at December 29, 2023 were $1.14 billion, representing an increase of $215.6 million from $926.6 million at September 29, 2023 , the reasons for which are described below.

Our net cash flow provided by operations of $418.4 million during the three months ended December 29, 2023 was favorable by $116.1 million in co mparison to the cash flow provided by operations of $302.3 million for the corresponding prior year period.

The year-over-year increase in cash from operations is primarily attributable to an improvement in working capital performance, partly offset by lower earnings after adjustments for non-cash items year-over-year.

Our net cash used for investing activities for the three months ended December 29, 2023 wa s $16.0 million , compared to cash used for investing activities of $48.7 million in the corresponding prior year period, with this change due primarily to no acquisitions in the current year, compared to PA Consulting's acquisition of The Cambridge Group in the corresponding prior period, and fewer additions to plant, property and equipment in the current year.

Our net cash used for financing activities of $208.7 million for the three months ended December 29, 2023 is driven by share repurchases of $100.0 million, $33.6 million in net repayments of borrowings, $33.4 million in dividends to shareholders, and $24.4 million in net PA Consulting related redeemable noncontrolling interests purchase and issuance activity.

Cash used by financing activities in the corresponding prior year period was $246.1 million, due primarily to share repurchases of $140.5 million, $58.4 million in net PA Consulting related redeemable noncontrolling interests purchase and issuance activity, $29.8 million in dividends to shareholders, and net repayments from borrowings of $7.4 million.

At December 29, 2023, the Company had approximately $259.4 million in cash and cash equivalents held in the U.S.

and $882.8 million held outside of the U.S.

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(see Note 7- Income Taxes of Notes to Consolidated Financial Statements included in our 2023 Form 10-K), there are no material impediments to repatriating these funds to the U.S.

The Compan y had $326.2 million in letters of credit outstanding at June 30, 2023.

The Compan y had $311.5 million in letters of credit outstanding at December 29, 2023.

Of this amount, $0.9 million was issued under the Revolving Credit Facility and $310.7 million was issued under separate, committed and uncommitted letter-of-credit facilities.

On May 9, 2023, the Company announced its intention to separate its CMS business, resulting in two independent publicly traded companies.

Jacobs expects to complete the separation in fiscal 2024 through a distribution to Jacobs' stockholders that is intended to be tax-free to Jacobs’ stockholders for U.S.

federal income tax purposes.

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 (defined below).

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.

("StreetLight").

StreetLight is a pioneer of mobility analytics who uses its data and machine learning resources to shed light on mobility and enable users to solve complex transportation problems.

The Company paid total base consideration of approximately $190.8 million in cash, and issued $0.9 million in equity and $5.2 million in in-the-money stock options to the former owners of StreetLight.

The Company also paid off StreetLight's debt of approximately $1.0 million simultaneously with the consummation of the acquisition.

On November 19, 2021, Jacobs acquired all outstanding shares of common stock of BlackLynx, a provider of high-performance software, to complement Jacobs' portfolio of cyber, intelligence and digital solutions.

The Company paid total base consideration of approximately $235.4 million in cash to the former owners of BlackLynx.

In conjunction with the acquisition, the Company also paid off BlackLynx's debt of approximately $5.3 million simultaneously with the consummation of the acquisition.

Under the Separation Transaction, Jacobs and its shareholders will own up to 63% of the combined company's common stock upon consummation of the transaction, the exact amount of which will be determined based on the achievement of certain fiscal year 2024 operating profit targets.

Jacobs is also expected to receive $1 billion of cash proceeds at closing, subject to customary adjustments.

Jacobs is also expected to realize additional value after closing through the disposition of its retained equity stake in the combined company within 12 months.

The Company expects to use the cash received at closing to repay outstanding indebtedness.

On February 6, 2023, the Company refinanced its Revolving Credit Facility and Term Loan Facilities, and on February 16, 2023, the Company issued the 5.90% Bonds in the aggregate principal amount of $500.0 million.

On August 18, 2023, the Company issued the 6.35% Bonds in the aggregate principal amount of $600.0 million.

See Note 12 - Borrowings for further discussion relating to the terms of the 5.90% Bonds, the 6.35% Bonds, the Revolving Credit Facility and Term Loan Facilities following the issuances and refinancing.

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 June 30, 2023.

We were in compliance with all of our debt covenants at December 29, 2023.

Supplemental Obligor Group Financial Information

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.

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 all other subsidiaries of the Company that do not guarantee the registered securities of either Jacobs or JEG.

(together, the "Obligor Group"), completed an offering of $500 million aggregate principal amount of 5.90% Bonds, due 2033 and on August 18, 2023, completed an offering of $600 million aggregate principal amount of 6.35% Bonds, due 2028 (collectively the “Bonds”).

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

The Bonds and the respective Guarantees were offered pursuant to prospectus supplements, dated February 13, 2023 and August 15, 2023, respectively, 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 SEC.

In accordance with 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 all other subsidiaries of the Company that do not guarantee the registered securities of either Jacobs or JEG.

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.

Nine Months Ended

(in thousands) June 30, 2023

Three Months Ended

(in thousands) December 29, 2023

Summarized Statement of Earnings Data

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Noncontrolling interests $ 691

(in thousands) June 30, 2023 September 30, 2022

(in thousands) December 29, 2023 September 29, 2023

Summarized Balance Sheet Data

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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