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Item 2. Management’s Discussion and Analysis

2024-08-06 compared with 2024-05-07 · 147 added, 132 removed, 249 unchanged (53% 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 March 29, 2024 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 June 28, 2024 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 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.

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 expected timing for closing the Separation Transaction, 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 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, the impact of acquisitions, strategic alliances, divestitures, and other strategic events resulting from evolving business strategies, including on the Company’s ability to maintain its culture and retain 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.

Such factors include the possibility that closing conditions for the Separation Transaction may not be satisfied or waived, on a timely basis or otherwise, uncertainties as to 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 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, the impact of acquisitions, strategic alliances, divestitures, and other strategic events resulting from evolving business strategies, including on the Company’s ability to maintain its culture and retain 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.

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;

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From sustainable airports with Amsterdam Airport Schiphol and enhanced home security with ADT, to resilient banking with Bankomat, pioneering medtech with Hubly Surgical, and accelerating the energy transition with Invenergy and energyRe.

Public sector clients include the U.K.'s Ministry of Defence, Nuclear Decommissioning Authority, Norwegian Labour and Welfare Administration, and Danish Tax Agency.

Public sector clients include the U.K.'s Ministry of Defence, Norwegian Labour and Welfare Administration, and Danish Tax Agency.

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

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 and six months ended March 29, 2024 and March 31, 2023

We’re also supporting the Frederick Douglass Tunnel program, one of the largest national transportation infrastructure investments in the U.S.

We’re providing technical and commercial advice on the U.K.

Department for Transport’s portfolio of rail and other transport mode agreements, major projects and programs, and its policy and strategic work in transport.

Together, we’re also supporting the U.K.’s Nuclear Decommissioning Authority to transform its approach to asset management, decision-making and planning.

Results of Operations for the three and nine months ended June 28, 2024 and June 30, 2023

(in thousands, except per share information)

For the Three Months Ended For the Six Months Ended

March 29, 2024 March 31, 2023 March 29, 2024 March 31, 2023

For the Three Months Ended For the Nine Months Ended

June 28, 2024 June 30, 2023 June 28, 2024 June 30, 2023

Revenues $ 4,231,580 $ 4,186,702 $ 12,659,898 $ 12,063,702

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Interest expense (45,801) (43,787) (133,385) (124,477)

Miscellaneous expense, net (4,576) (4,567) (7,771) (7,820)

Miscellaneous income (expense), net 1,166 (7,099) (6,605) (14,920)

Total other expense, net (34,314) (43,056) (112,030) (120,930)

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Net Earnings of the Group from Continuing Operations 158,411 172,519 514,743 553,149

Net Loss of the Group from Discontinued Operations (768) (75) (1,342) (783)

Net Earnings (Loss) of the Group from Discontinued Operations 485 294 (857) (489)

Net Earnings of the Group 158,896 172,813 513,886 552,660

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Diluted Earnings Per Share $ 1.17 $ 1.29 $ 3.82 $ 4.06

Overview – Three and Six Month Periods Ended March 29, 2024

Net earnings attributable to the Company from continuing operations for the second fiscal quarter ended March 29, 2024 were $162.9 million (or $1.29 per diluted share), a decrease of $53.7 million, from net ear nings of $216.6 million (or $1.70 per diluted share) for the corresponding period last year.

C urrent quarter favorable underlying operating performance compared to the prior year period was more than offset mainly by $52.3 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), co mpared to fiscal 2023 amounts of $19.1 million mainly associated with the Company's transformation initiatives relating to real estate, which are discussed in Note 16- Restructuring and Other Charges.

Further, our reported net earnings for the current year quarter were unfavorably impacted by an increase in income taxes of $48.2 million compared to the fiscal 2023 period, attributable mainly to a tax benefit in the prior year quarter of $40.2 million related to uncertain tax positions in the U.S.

that were effectively settled as discussed in Note 10 - Income Taxes .

For the six months ended March 29, 2024, net earnings attributable to the Company from continuing operations were $335.1 million (or $2.66 per diluted share), a decrease of $17.9 million , from net earnings of $352.9 million (or $2.77 per diluted share) for the corresponding period last year.

Current favorable underlying operating performance compared to the prior year period was more than offset by approximately $98.5 million in Restructuring and other charges and transactions costs activities relating to the Separation Transaction for the current fiscal year-to-date period, compared to fiscal 2023 amounts of $38.7 million associated with the Company's transformation initiatives relating to real estate, which are discussed in Note 16- Restructuring and Other Charges .

Overview – Three and Nine Month Periods Ended June 28, 2024

Net earnings attributable to the Company from continuing operations for the third fiscal quarter ended June 28, 2024 were $146.4 million (or $1.17 per diluted share), a decrease of $17.5 million, from net ear nings of $163.9 million (or $1.29 per diluted share) for the corresponding period last year.

Current quarter favorable underlying operating performance compared to the prior year period was more than offset mainly by $68.3 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 $35.2 million mainly associated with the Company's restructuring program charges (primarily employee separation costs within PA Consulting) and expenses incurred relating to the Separation Transaction (mainly professional services), which are discussed in Note 16- Restructuring and Other Charges .

Also, miscellaneous net income (expense) for the three months ended June 28, 2024 was favorably impacted by foreign exchange gains and losses compared to the corresponding period last year.

Further, our reported net earnings for the current year quarter were unfavorably impacted by an increase in income taxes of $13.6 million compared to the fiscal 2023 period, attributable mainly to a tax expense of $10.6 million related to intercompany loans settled in the current period that were previously indefinitely reinvested as discussed in Note 10- Income Taxes .

Finally, earnings attributable to redeemable noncontrolling interests were $3.0 million higher for the three months ended June 28, 2024 due to higher net earnings results in our PA Consulting investment compared to the corresponding period last year.

For the nine months ended June 28, 2024, net earnings attributable to the Company from continuing operations were $481.5 million (or $3.83 per diluted share), a decrease of $35.4 million, from net earnings of $516.9 million (or $4.06 per diluted share) for the corresponding period last year.

Current favorable underlying operating performance compared to the prior year period was more than offset by approximately $175.8 million in pre-tax Restructuring and other charges and transactions costs activities relating to the Separation Transaction for the current fiscal year-to-date period, compared to fiscal 2023 amounts of $38.1 million associated with the Company's transformation initiatives relating to real estate, which are discussed in Note 16- Restructuring and Other Charges .

Further, the 2023 first fiscal quarter included a 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.

Our reported net earnings for the first half of fiscal 2024 were also favorably impacted by lower income taxes of $18.2 million compared to the fiscal 2023 period , due mainly to a deferred income tax benefit of $61.6 million related to Australia in the first quarter of fiscal 2024 and offset in part mainly by the uncertain tax positions in the U.S.

that were effectively settled in the prior year period as mentioned above , combined with other current quarter income tax items further discussed in Note 10 - Income Taxes.

Finally, earnings attributable to redeemable noncontrolling interests were $6.2 million lower for the six months ended March 29, 2024 due to lower net earnings results in our PA Consulting investment compared to the corresponding period last year.

Our reported net earnings for the first nine months of fiscal 2024 were also favorably impacted by lower income taxes of $4.6 million compared to the fiscal 2023 period, due mainly to a deferred income tax benefit of $61.6 million related to Australia in the first quarter of fiscal 2024 and offset in part mainly by U.S.

state income tax expense and U.S.

tax on foreign earnings, combined with other current quarter income tax items further discussed in Note 10- Income Taxes.

Consolidated Results of Operations

R evenues for the second fiscal quarter of 2024 were $4.27 billion, an increase of $190.8 million, or 4.7%, from $4.08 billion for the corresponding period last year.

For the six months ended March 29, 2024, revenues were $8.43 billion, an increase of $551.3 million , or 7.0%, from $7.88 billion for the corresponding period last year.

Revenue increases for the quarterly year over year period were due mainly to the Company's P&PS business as well as increases seen in our CMS business.

For the six month periods higher revenue levels in P&PS as well as across all of our lines of businesses contributed to our favorable revenue results.

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

Our revenues were favorably impacted by foreign currency translation of $31.4 million and $82.3 for the three and six months ended March 29, 2024, respectively, across our international businesses, as compared to an unfavorable impact of $109.0 million and $267.0 million for the three and six months ended March 31, 2023, respectively.

Gross profit for the second fiscal quarter of 2024 was $904.6 million, an increase of $14.3 million, or 1.6%, from $890.3 million from the corresponding period last year, with gross profit margins of 21.2% and 21.8% for the respective periods.

Gross profit for the six months ended March 29, 2024 was $1.76 billion, an increase of $50.1 million, or 2.9%, from $1.71 billion from the corresponding period last year.

Our gross profit margins were 20.8% and 21.6% for the six months ended March 29, 2024 and March 31, 2023, respective ly.

The Company's increase in gross profit was mainly attributable to higher revenues as mentioned above, with slight margin impacts from year over year mix as well as personnel cost impacts primarily in the six month period.

Revenues for the third fiscal quarter of 2024 were $4.23 billion, an increase of $44.9 million, or 1.1%, from $4.19 billion for the corresponding period last year.

For the nine months ended June 28, 2024, revenues were $12.66 billion, an increase of $596.2 million, or 4.9%, from $12.06 billion for the corresponding period last year.

Revenue increases for the quarterly year over year period were due mainly to the Company's P&PS business.

For the nine month periods higher revenue levels in P&PS as well as across our other lines of business contributed to our favorable revenue results.

The P&PS business benefited primarily from stronger performance in its Federal & Environmental Solutions, Energy & Power and Advanced Facilities operations while our CMS business benefited from stronger performance in Energy, Security & Technology.

Our revenues were favorably impacted by foreign currency translation of $0.6 million and $82.8 for the three and nine months ended June 28, 2024, respectively, across our international businesses, as compared to an unfavorable impact of $12.4 million and $279.0 million for the three and nine months ended June 30, 2023, respectively.

Gross profit for the third fiscal quarter of 2024 was $916.8 million, an increase of $60.0 million, or 7.0%, from $856.7 million from the corresponding period last year, with gross profit margins of 21.7% and 20.5% for the respective periods.

Gross profit for the nine months ended June 28, 2024 was $2.67 billion, an increase of $110.2 million, or 4.3%, from $2.56 billion from the corresponding period last year, with consistent gross profit margins noted for the comparative periods.

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 six months ended March 29, 2024 were $623.6 million and $1.27 billion respectively, compared to $600.4 million and $1.18 billion for the corresponding period last year, representing an

increase of $23.2 million and $92.8 million or 3.9% and 7.9%, respectively.

SG&A expenses for the three and six months ended March 29, 2024 were impacted by R estructuring and other charges of $47.4 million and $98.5 million respectively, primarily related to the Separation Transaction (mainly professional services and employee separation costs), in comparison to prior period Restructuring and other charges related to real estate related costs of $11.0 million and $38.7 million respectively.

These unfavorable items were offset in part by department spend decreas es compared to the prior year periods in connection with the Company's cost reduction programs.

Also, SG&A expenses were impacted by unfavorable foreign currency translation of $4.6 million and $13.9 million, respectively, for the three and six months March 29, 2024 as compared to favorable impacts of $23.1 million and $50.6 million for the corresponding periods last year.

Net interest expense for the three and six months ended March 29, 2024 was $34.8 million and $69.9 million respectively, an increase of $1.8 million and decrease of $0.1 million from $33.0 million and $70.1 million, or 5.6% and 0.2%, respectively, for the corresponding periods last year.

The increase in net interest expense for the three month period ended March 29, 2024 is due primarily to interest rates increasing throughout fiscal year 2023 and fiscal year 2024.

The increase in interest expense was offset in part by higher interest rates on cash held and by the Company's lower overall levels of outstanding debt compared to the corresponding periods last year.

Miscellaneous expense, net for the three and six months ended March 29, 2024 of $4.6 million and $7.8 million, respectively, remained flat in comparison to $4.6 million and $7.8 million for the corresponding periods last year.

The Company’s effective tax rates from continuing operations for the three months ended March 29, 2024 and March 31, 2023 were 27.9% and 7.6%, respectively.

SG&A expenses for the three and nine months ended June 28, 2024 were $656.3 million and $1.93 billion respectively, compared to $587.0 million and $1.76 billion for the corresponding period last year, representing an increase of $69.3 million and $162.1 million or 11.8% and 9.2%, respectively.

SG&A expenses for the three and nine months ended June 28, 2024 were impacted by Restructuring and other charges and transactions related primarily to the Separation Transaction (mainly professional services and employee separation costs) of $61.9 million and $160.4 million respectively, in comparison to prior period Restructuring and other charges and transactions related mainly to real estate related costs of $0.9 million and $38.1 million respectively.

Further, our reported SG&A expenses were impacted by slight increases in other department spend and personnel costs.

Also, SG&A expenses were impacted by unfavorable foreign currency translation of $0.5 million and $14.4 million, respectively, for the three and nine months ended June 28, 2024 as compared to favorable impacts of $2.9 million and $53.4 million for the corresponding periods last year.

Net interest expense for the three and nine months ended June 28, 2024 was $35.5 million and $105.4 million respectively, a decrease of $0.5 million and $0.6 million from $36.0 million and $106.0 million, or 1.3% and 0.6%, respectively, for the corresponding periods last year.

Interest expense and interest income increased for the three and nine months ended June 28, 2024 compared to the corresponding periods last year due primarily to interest rates increasing throughout fiscal year 2023 and fiscal year 2024.

The increase in interest expense was offset by higher interest rates on cash held and by the Company's lower overall levels of outstanding debt compared to the comparative periods.

Miscellaneous net income (expense) for the three and nine months ended June 28, 2024 was $1.2 million and $(6.6) million, respectively, in comparison to $(7.1) million and $(14.9) million for the corresponding periods last year.

The favorable comparisons to the corresponding periods last year were due primarily to favorable foreign exchange gains and losses in the current year periods, along with decreases in pension and benefit related costs noted for the nine month comparative periods.

The Company’s effective tax rates from continuing operations for the three months ended June 28, 2024 and June 30, 2023 were 30.0% and 23.9%, respectively.

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

federal corporate tax rate of 21% and the Company's effective tax rate for the three-month period ended March 29, 2024 were U.S.

federal corporate tax rate of 21% and the Company's effective tax rate for the three-month period ended June 28, 2024 were U.S.

state income tax expense of $4.4 million and U.S.

tax on foreign earnings of $5.5 million.

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

For the three months ended March 31, 2023, the main differences were attributable to a tax benefit of $40.2 million related to uncertain tax positions (“UTPs”) in the U.S.

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.

tax on foreign earnings of $10.5 million, and income tax expense of $10.6 million related to foreign exchange gains associated with a change in assertion on intercompany loans that were previously deemed indefinitely reinvested.

state income tax and U.S.

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

These expense items were partly offset by a return-to-provision income tax benefit of $7.9 million, mainly attributable to additional research and development credits claimed on the U.S.

federal tax return.

For the three months ended June 30, 2023, the main differences compared to the U.S.

federal statutory rate were attributable to U.S.

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

tax on foreign earnings of $4.6 million.

The Company's effective tax rates from continuing operations for the six months ended March 29, 2024 and March 31, 2023 were 12.6% and 15.4%, respectively.

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.

The Company's effective tax rates from continuing operations for the nine months ended June 28, 2024 and June 30, 2023 were 18.7% and 18.2%, respectively.

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

federal corporate tax rate of 21% and the Company’s effective tax rate for the six-month period ended March 29, 2024 related to a discrete event associated with the election to treat an Australian subsidiary as a corporation versus a partnership for U.S.

federal corporate tax rate of 21% and the Company’s effective tax rate for the nine-month period ended June 28, 2024 is related to a discrete event associated with the election to treat an Australian subsidiary as a corporation versus a partnership for U.S.

tax purposes, with this election resulting in the derecognition of a deferred tax liability and yielding 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 $7.3 million and U.S.

tax on foreign earnings of $8.6 million, which are expected to have a continuing impact on the Company's effective tax rate for the remainder of the fiscal year.

For the six months ended March 31, 2023, the main differences were associated with 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 $11.7 million, U.S.

tax on foreign earnings of $19.1 million, and income tax expense of $10.6 million related to foreign exchange gains associated with a change in assertion on intercompany loans that were previously deemed indefinitely reinvested.

state income tax and U.S.

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

For the nine months ended June 30, 2023, the main differences compared to the U.S.

federal statutory rate were associated with net tax benefits of $39.4 million which were 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.

state income tax expense of $15.8 million and U.S.

tax on foreign earnings of $13.6 million.

In December 2021, the Organization for Economic Cooperation and Development ("OECD") released the Pillar Two Model Rules (also referred to as the global minimum tax or Global Anti-Base Erosion "GloBE" rules), which were designed to ensure large multinational enterprises pay a minimum 15 percent level of tax on the income arising in each jurisdiction in which they operate.

Several jurisdictions in which we operate have enacted these rules, which are effective for the first quarter of the fiscal year ending September 26, 2025.

The Company is continually monitoring developments and evaluating the potential impacts.

At this time, the Company does not anticipate a material tax charge as a result of implementation of these rules.

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

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The Company believes that it has adequately provided for reasonably foreseeable outcomes related to these matters.

However, future results may include favorable or unfavorable adjustments to our estimated tax lia bilities in the period the assessments are made or resolved, which may impact our effective tax rate.

Net earnings attributable to noncontrolling interests for the three and six months ended March 29, 2024 of $11.4 million and $21.3 million, respectively and $16.7 million and $27.7 million for the corresponding periods last year were lower primarily due to lower net earnings results in our PA Consulting investment compared to the prior year quarter.

However, future results may include favorable or unfavorable adjustments to our estimated tax liabilities in the period the assessments are made or resolved, which may impact our effective tax rate.

Net earnings attributable to noncontrolling interests including redeemable noncontrolling interests for the three and nine months ended June 28, 2024 of $12.0 million and $33.2 million, respectively and $8.6 million and $36.3 million for the corresponding periods last year.

The year over year changes were primarily due to changes in net earnings results in our PA Consulting investment compared to the prior year periods.

Restructuring and Other Charges

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

The Company incurred approximately $19.8 million in fiscal 2023 and $19.7 million during the six months ended March 29, 2024, in pre-tax cash charges in connection with these initiatives.

The Company incurred approximately $19.8 million in fiscal 2023 and $42.2 million during the nine months ended June 28, 2024, in pre-tax cash charges 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 approximately $125 million to $152 million.

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

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 $4.2 million in the six months ending March 29, 2024, in pre-tax cash charges.

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 $7.4 million in the nine months ending June 28, 2024, in pre-tax cash charges.

These activities are expected to result in estimated gross annualized pre-tax cash savings of approximately $50 million to $65 million.

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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.

These actions resulted in non-cash savings related mainly 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.

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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 Six Months Ended

March 29, 2024 March 31, 2023 March 29, 2024 March 31, 2023

Three Months Ended Nine Months Ended

June 28, 2024 June 30, 2023 June 28, 2024 June 30, 2023

Revenues from External Customers:

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Total $ 4,231,580 $ 4,186,702 $ 12,659,898 $ 12,063,702

Three Months Ended Six Months Ended

March 29, 2024 March 31, 2023 March 29, 2024 March 31, 2023

Three Months Ended Nine Months Ended

June 28, 2024 June 30, 2023 June 28, 2024 June 30, 2023

Segment Operating Profit:

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$ 226,150 $ 226,685 $ 633,486 $ 676,478

(1) For the six months ended March 29, 2024, operating profit included an approximate $15 million pre-tax non-cash charge associated with an inventory write down during the fiscal 2024 period comprised of cumulative adjustments of immaterial inventory misstatements previously reported which would not have been material to any prior period financial statements nor to any amounts reported in the current period.

(2) Other corporate expenses included intangibles amortization of $52.6 million and $50.5 million for the three months ended March 29, 2024 and March 31, 2023, respectively, and $103.8 million and $100.2 million, for the six months ended March 29, 2024 and March 31, 2023, respectively, along with approximately $11.0 million intangibles impairment charge in the six month period ended, March 29, 2024 .

Additionally, the comparison of the six month period of fiscal 2024 to the corresponding 2023 period was unfavorably impacted by the 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.

(3) The three months and six months ended March 29, 2024 included $38.9 million and $79.1 million, respectively, in restructuring and other charges and $8.4 million and $19.4 million, respectively, of transaction charges, mainly relating to the Separation Transaction (primarily professional services and employee separation costs).

Included in the three months and six months ended March 31, 2023 were $10.1 million and $37.2 million, respectively, mainly in real estate impairment charges related to the Company's transformation initiatives.

(1) For the nine months ended June 28, 2024, operating profit included an approximate $15 million pre-tax non-cash charge associated with an inventory write down during the fiscal 2024 period comprised of cumulative adjustments of immaterial inventory misstatements previously reported which would not have been material to any prior period financial statements nor to any amounts reported in the current period.

(2) Other corporate expenses included intangibles amortization of $52.5 million and $52.0 million for the three months ended June 28, 2024 and June 30, 2023, respectively, and $156.3 million and $152.2 million for the nine months ended June 28, 2024 and June 30, 2023, respectively, along with an approximately $11.0 million intangibles impairment charge in the nine month period ended June 28, 2024.

Additionally, the comparison of the nine month period of fiscal 2024 to the corresponding 2023 period was unfavorably impacted by the 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.

(3) The three and nine months ended June 28, 2024 included $54.8 million and $133.9 million, respectively, in restructuring and other charges and $7.1 million and $26.5 million, respectively, of transaction charges, mainly relating to the Separation Transaction (primarily professional services and employee separation costs).

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 Separation Transaction, and the nine months ended June 30, 2023 included $38.1 million in real estate impairment charges related to the Company's transformation initiatives.

Critical Mission Solutions

Three Months Ended Six Months Ended

March 29, 2024 March 31, 2023 March 29, 2024 March 31, 2023

Three Months Ended Nine Months Ended

June 28, 2024 June 30, 2023 June 28, 2024 June 30, 2023

Revenue $ 1,155,806 $ 1,190,845 $ 3,513,635 $ 3,457,076

Operating Profit $ 100,318 $ 99,141 $ 297,373 $ 275,304

Critical Mission Solutions segment revenues for the three and six months ended March 29, 2024 were $1.23 billion and $2.36 billion respectively, an increase of $38.2 million and $91.6 million, or 3.2% and 4.0%, from reported amounts of $1.19 billion and $2.27 billion for the corresponding periods last year.

During the three and six months ended March 29, 2024, revenue benefited from increased volume in the nuclear remediation and energy sectors in the United Kingdom as well as strong performance in the U.S.

space, defense, and energy markets.

Foreign currency translation had approximately $9.6 million and $22.6 million in favorable impacts on revenues for the three and six months ended March 29, 2024, respectively, compared to $25.5 million and $58.6 million in unfavorable impacts in the corresponding prior year periods.

Operating profit for the segment was $103.6 million and $197.1 million respectively, for the three and six months ended March 29, 2024, which was an increase of $9.7 million and $20.9 million, or 10.3% and 11.9%, from $93.9 million and $176.2 million compared to the corresponding periods in the prior year.

Critical Mission Solutions segment revenues for the three and nine months ended June 28, 2024 were $1.16 billion and $3.51 billion respectively, a decrease of $35.0 million or 2.9% and increase of $56.6 million, or 1.6%, year-to-date, from reported amounts of $1.19 billion and $3.46 billion for the corre sponding periods last year.

During the three months ended June 28, 2024, the decrease is due to contracts in the defense market that completed and were not renewed.

For the nine months ended June 28, 2024, this was offset by benefits from increased volume in the nuclear remediation and energy sectors in the United Kingdom as well as strong performance from large U.S.

Government client programs.

Foreign currency translation had approximately $1.3 million and $23.9 million in favorable impacts on revenues for the three and nine months ended June 28, 2024, respectively, compared to $2.9 million and $61.5 million in unfavorable impact s in the corresponding prior year periods.

Operating profit for the segment was $100.3 million and $297.4 million, respectively, for the three and nine months ended June 28, 2024, which was an increase of $1.2 million and $22.1 million, or 1.2% and 8.0%, from $99.1 million and $275.3 million compared to the corresponding periods in the prior year.

Operating profit level and margin trends for the year-over-year periods were favorably impacted by increased profitability in the United Kingdom and U.S.

nuclear remediation markets, and U.S.

commercial markets.

Foreign currency translation had approximately $1.3 million and $3.1 million in favorable impacts on operating profit for the three and six months ended March 29, 2024, as compared to $3.3 million and $7.2 million in unfavorable impacts in the corresponding prior year periods.

nuclear remediation and energy markets.

Foreign currency translation had approximately $0.1 million and $3.2 million in favorable impacts on operating profit for the three and nine months ended June 28, 2024 , as compared to $0.2 million and $7.4 million in unfavorable impacts in the corresponding prior year periods.

People & Places Solutions

Three Months Ended Six Months Ended

March 29, 2024 March 31, 2023 March 29, 2024 March 31, 2023

Three Months Ended Nine Months Ended

June 28, 2024 June 30, 2023 June 28, 2024 June 30, 2023

Revenue $ 2,564,698 $ 2,469,694 $ 7,556,999 $ 7,041,744

Operating Profit $ 271,157 $ 242,673 $ 763,919 $ 701,498

Revenues for the People & Places Solutions segment for the three and six months ended March 29, 2024 was $2.52 billion and $4.99 billion respectively, an increase of $176.8 million and $420.3 million, or 7.5% and 9.2%, from reported amounts of $2.35 billion and $4.57 billion for the corresponding periods last year.

The increase in revenue for the three and six months ended March 29, 2024 was driven by net revenue growth across all sectors, specifically in water, life sciences and energy.

Foreign currency translation had approximately $8.9 million and $29.6 million in favorable impacts on revenues for the three and six months ended March 29, 2024, as compared to $51.2 million and $134.5 million in unfavorable impacts in the corresponding prior year periods.

Operating profit for the People & Places Solutions segment for the three and six month period ended March 29, 2024 was $267.8 million and $492.8 million respectively, an increase of $35.6 million and $33.9 million, or 15.3% and 7.4%, from $232.2 million and $458.8 million for the corresponding period last year.

The increase in the three and six month periods is a result of higher year over year segment revenues mentioned above with partially offsetting impacts from higher corporate cost allocations versus the prior year period.

Foreign currency translation had approximately $1.9 million and $5.4 million in favorable impacts on operating profit for the three and six months ended March 29, 2024, as compared to $9.5 million and $25.4 million in unfavorable impacts in the corresponding prior year periods.

Revenues for the People & Places Solutions segment for the three and nine months ended June 28, 2024 was $2.56 billion and $7.56 billion, respectively, an increase of $95.0 million and $515.3 million, or 3.8% and 7.3%, from reported amounts of $2.47 billion and $7.04 billion for the corresponding periods last year.

The increase in revenue for the three and nine months ended June 28, 2024 was driven by net revenue growth across all sectors, particularly in water, life sciences and energy.

Foreign currency translation had approximately $3.1 million in unfavorable and $26.5 million in favorable impacts on revenues for the three and nine months ended June 28, 2024, as compared to $10.1 million and $144.6 million in unfavorable impacts in the corresponding prior year periods.

Operating profit for the People & Places Solutions segment for the three and nine month period ended June 28, 2024 was $271.2 million and $763.9 million, respectively, an increase of $28.5 million and $62.4 million, or 11.7% and 8.9%, from $242.7 million and $701.5 million for the corresponding period last year.

The increase in the three and nine month periods is a result of higher year over year segment revenues mentioned above with partially offsetting impacts from higher corporate cost allocations versus the prior year period.

Further, operating profit in the three month period benefited from the non-cash reversal of certain accruals associated with a client program completed in a prior year, which benefit was largely offset by the unfavorable discrete impacts of higher than usual year over year medical and other benefit costs during the quarter.

The net impact of these adjustments was immaterial in the three and nine month periods presented.

Foreign currency translation had approximately $0.7 million in unfavorable and $4.7 million in favorable impacts on operating profit for the three and nine months ended June 28, 2024, as compared to $3.4 million and $28.7 million in unfavorable impacts in the corresponding prior year periods.

Divergent Solutions

Three Months Ended Six Months Ended

March 29, 2024 March 31, 2023 March 29, 2024 March 31, 2023

Three Months Ended Nine Months Ended

June 28, 2024 June 30, 2023 June 28, 2024 June 30, 2023

Revenue $ 222,805 $ 239,289 $ 701,025 $ 694,978

Operating Profit $ 12,394 $ 20,794 $ 38,951 $ 57,623

Revenues for the Divergent Solutions segment for the three and six months ended March 29, 2024 were $224.0 million and $478.2 million, respectively, a change of $(17.2) million and $22.5 million, or (7.1)% and 4.9%, from $241.2 million and $455.7 million for the corresponding periods last year.

The decrease in revenue for the three months ended March 29, 2024 was mainly due to a national government program ending.

The six month increase is due to a startup of new programs previously won in fiscal 2023.

Revenues for the Divergent Solutions segment for the three and nine months ended June 28, 2024 were $222.8 million and $701.0 million, respectively, a decrease of $16.5 million, or 6.9%, and increase of $6.0 million, or 0.9%, from $239.3 million and $695.0 million for the corresponding periods last year.

The decrease in revenue for the three months ended June 28, 2024 was mainly due to a National Government program ending.

The nine month increase is due to 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 $19.0 million and $26.6 million, for the three and six months ended March 29, 2024, respectively, a decrease of $5.9 million and $10.3 million, or 23.7% and 27.9%, from $24.9 million and $36.8 million for the corresponding periods last year.

The three month decrease is driven by higher software licensing revenue in the second quarter of fiscal 2023.

Operating profit for the six 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.

Operating profit for the segment was $12.4 million and $39.0 million, for the three and nine months ended June 28, 2024, respectively, a decrease of $8.4 million and $18.7 million, or 40.4% and 32.4%, from $20.8 million and $57.6 million for the corresponding periods last year.

In addition to revenue declines as mentioned above, the three month decrease is driven by unfavorable impacts of changes in overhead billing rates during the current year quarter of 2024 vs.

the prior year quarter mainly in our Cyber & Intelligence business.

Additionally, operating profit for the nine month period reflected mostly consistent underlying performance in the Cyber & Intelligence business unit and the new programs previously won in fiscal 2023, although substantially offset by an approximate one-time $15 million pre-tax non-cash charge associated with an inventory write down during the fiscal 2024 period.

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

PA Consulting

Three Months Ended Six Months Ended

March 29, 2024 March 31, 2023 March 29, 2024 March 31, 2023

Three Months Ended Nine Months Ended

June 28, 2024 June 30, 2023 June 28, 2024 June 30, 2023

Revenue $ 288,271 $ 286,874 $ 888,239 $ 869,904

Operating Profit $ 62,889 $ 60,864 $ 177,513 $ 177,521

Revenues for the PA Consulting segment for the three and six months ended March 29, 2024 were $294.0 million and $600.0 million, respectively, a change of $(7.0) million and $16.9 million, or (2.3)% and 2.9%, from $301.0 million and $583.0 million in the corresponding periods last year.

The three and six month changes are primarily due to growth in PA Consulting's Defence & Security, Public Sector, Energy & Utilities, and Advanced Facilities businesses with stronger growth during the first fiscal quarter.

Foreign currency translation had approximately $12.4 million and $29.1 million in favorable impacts on revenues for the three and six months ended March 29, 2024, respectively, as compared to $30.7 million and $72.3 million in unfavorable impacts in the corresponding prior year periods.

Operating profit for the segment for the three and six months ended March 29, 2024 was $60.2 million and $114.6 million, respectively, a decrease of $5.5 million and $2.0 million, or 8.3% and 1.7%, from $65.6 million and $116.7 million in the corresponding periods last year, due mainly to impacts from changes in revenue noted above as well as impacts from timing of certain personnel related expenses incurred in connection with our cost management programs.

Revenues for the PA Consulting segment for the three and nine months ended June 28, 2024 were $288.3 million and $888.2 million, respectively, a change of $1.4 million and $18.3 million, or 0.5% and 2.1%, from $286.9 million and $869.9 million in the corresponding periods last year.

The nine month change is primarily due to growth in PA Consulting's Public Sector work.

Foreign currency translation had approximately $31.4 million in favorable impacts on revenues for the nine months ended June 28, 2024, respectively, as compared to $71.7 million in unfavorable impacts in the corresponding prior year period.

Operating profit for the segment for the three and nine months ended June 28, 2024 was $62.9 million and $177.5 million, respectively, an increase of $2.0 million, or 3.3%, and flat, from $60.9 million and $177.5 million in the corresponding periods last year.

The year-on-year improvement in the quarter is due mainly to the higher revenues noted above along with benefits from cost reduction programs while the nine month periods showed consistent performance levels.

Other Corporate Expenses

Other corporate expenses for the three and six months ended March 29, 2024 were $117.3 million and $238.4 million, respectively, an increase of $9.7 million and $37.1 million, or 9.0% and 18.4%, from $107.6 million and $201.3 million for the corresponding periods last year.

The three month period of fiscal 2024 was impacted mainly by increases in expense associated with certain contingent equity-based agreements in connection with our PA Consulting investment.

The comparison of the six months period of fiscal 2024 to the corresponding 2023 period was further unfavorably impacted by a one-time net favorable impact of $41 million relating mainly to changes in employee benefits programs during first quarter 2023, 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.

Other corporate expenses for the three and nine months ended June 28, 2024 were $118.0 million and $356.4 million, respectively, a decrease of $0.4 million, or 0.4%, and increase of $36.6 million, or 11.5%, from $118.5 million and $319.8 million for the corresponding periods last year.

The quarter-to-date period compared to the prior year was relatively flat, while the comparison of the nine months 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 during first quarter 2023, 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 year-to-date period reflects approximately $11 million in one-time non-cash intangibles impairment charges.

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Such costs and expenses include:

(i) those elements of SG&A expenses relating to the business as a whole;

(i) those elements of SG&A

expenses relating to the business as a whole;

(ii) those elements of our incentive compensation plans relating to corporate personnel whose other compensation costs are not allocated 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 March 29, 2024 and March 31, 2023 (in millions):

March 29, 2024 March 31, 2023

The following table summarizes our backlog at June 28, 2024 and June 30, 2023 (in millions):

June 28, 2024 June 30, 2023

Critical Mission Solutions $ 8,450 $ 8,097

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Total $ 30,617 $ 28,915

The increase in backlog in Critical Mission Solutions from March 31, 2023 was primarily driven by growth and increased funding levels in the United Kingdom and U.S.

The increase in backlog in Critical Mission Solutions from June 30, 2023 was primarily driven by growth and increased funding levels in the United Kingdom and U.S.

nuclear remediation markets along with growth in the U.K.

defense sector that offset slower growth in the U.S.

defense sector and U.S.

Telecom market that offset slower growth in the U.S.

Defense sector.

The increase in backlog in People & Places Solutions from March 31, 2023 was predominantly driven by growth in the Life Sciences and Energy markets.

The decrease in backlog in Divergent Solutions (DVS) from March 31, 2023 was primarily due to a major program ending prior than expected, as discussed above.

The increase in backlog in PA Consulting from March 31, 2023 was primarily driven by strategic focus on long-term projects as well as organic year-over-year growth of the business.

The increase in backlog in People & Places Solutions from June 30, 2023 was predominantly driven by growth in the Life Sciences and Water markets.

The decrease in backlog in Divergent Solutions (DVS) from June 30, 2023 was due to a major National Government program ending earlier than expected.

The increase in backlog in PA Consulting from June 30, 2023 was primarily driven by 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 March 29, 2024, our principal sources of liquidity consisted of $1.03 billion in cash and cash equivalents and $2.11 billion of available borrowing capacity under our $2.25 billion revolving credit agreement (the "Revolving Credit Facility").

At June 28, 2024, our principal sources of liquidity consisted of $1.21 billion in cash and cash equivalents and $2.19 billion of available borrowing capacity under our $2.25 billion revolving 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 March 29, 2024 were $1.03 billion, representing an increase of $106.9 million from $926.6 million at September 29, 2023, the reasons for which are described below.

Our net cash flow provided by operations of $375.5 million during the six months ended March 29, 2024 was unfavorable by $58.8 million in comparison to the cash flow provided by operations of $434.3 million for the corresponding prior year period.

The year-over-year decrease in cash from operations is due mainly to higher cash used for income tax payments and increases in accounts receivable, partly offset by higher cash generated from net earnings.

Our net cash used for investing activities for the six months ended March 29, 2024 was $57.3 million, compared to cash used for investing activities of $76.7 million in the corresponding prior year period, with this change due primarily to lower levels of additions to plant, property and equipment in the current year.

Our net cash used for financing activities of $230.8 million for the six months ended March 29, 2024 is driven by share repurchases of $195.5 million, $70.1 million in dividends to shareholders, and $24.4 million in net PA Consulting related redeemable noncontrolling interests purchase and issuance activity, partly offset by net proceeds from borrowings of $85.5 million.

Cash used for financing activities in the corresponding prior year period was $336.0 million, due primarily to share repurchases of $140.5 million, $62.8 million in dividends to shareholders, $58.4 million in net PA Consulting related redeemable noncontrolling interests purchase and issuance activity, and net repayments from borrowings of $53.8 million.

At March 29, 2024, the Company had approximately $250.1 million in cash and cash equivalents held in the U.S.

Cash and cash equivalents at June 28, 2024 were $1.21 billion, representing an increase of $282.1 million from $926.6 million at September 29, 2023, the reasons for which are described below.

Our net cash flow provided by operations of $858.1 million during the nine months ended June 28, 2024 was favorable by $102.7 million in comparison to the cash flow provided by operations of $755.4 million for the corresponding prior year period.

The year-over-year increase in cash from operations is due mainly to higher cash generated from net earnings as adjusted for non-cash income statement activities including favorable net impacts mainly in accrued liabilities, prepaid expenses and other deferred liabilities, while impacts from other net working capital performance were overall consistent year over year.

Our net cash used for investing activities for the nine months ended June 28, 2024 was $95.0 million, compared to cash used for investing activities of $106.4 million in the corresponding prior year period, with this change due primarily to lower levels of additions to plant, property and equipment in the current year.

Our net cash used for financing activities of $492.6 million for the nine months ended June 28, 2024 is driven by share repurchases of $346.4 million, $106.4 million in dividends to shareholders, and $22.0 million in net PA Consulting related redeemable noncontrolling interests purchase and issuance activity, partly offset by proceeds from issuances of common stock of $35.4 million.

Cash used for financing activities in the corresponding prior year period was $770.3 million, due primarily to net repayments from borrowings of $338.6 million, share repurchases of $265.6 million, $95.7 million in dividends to shareholders, and $55.7 million in net PA Consulting related redeemable noncontrolling interests purchase and issuance activity.

At June 28, 2024, the Company had approximately $423.5 million in cash and cash equivalents held in the U.S.

and $785.2 million held outside of the U.S.

(primarily in the U.K., the Eurozone, Australia, India, Canada, Saudi Arabia and the United Arab Emirates), which is used primarily for funding operations in those regions.

Other than the tax cost of

repatriating funds to the U.S.

Other than the tax cost of repatriating funds to the U.S.

(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 Company had $289.7 million in letters of credit outstanding at March 29, 2024.

The Company had $296.1 million in letters of credit outstanding at June 28, 2024.

Of this amount, $0.5 million was issued under the Revolving Credit Facility and $295.6 million was issued under separate, committed and uncommitted letter-of-credit facilities.

Long-term debt as of March 29, 2024 decreased by $648.6 million compared to September 29, 2023 primarily due to the reclassification of $785.7 million from long-term to short-term in March 2024 in connection with the March 25, 2025 scheduled maturity of the 2020 Term Loan Facility.

Long-term debt as of June 28, 2024 decreased by $722.0 million compared to September 29, 2023 primarily due to the reclassification of $785.7 million from long-term to short-term in March 2024 in connection with the March 25, 2025 scheduled maturity of the 2020 Term Loan Facility.

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.

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

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.

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 of the transaction closing date.

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.

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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 March 29, 2024.

We were in compliance with all of our debt covenants at June 28, 2024.

Supplemental Obligor Group Financial Information

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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.

Six Months Ended

(in thousands) March 29, 2024

Nine Months Ended

(in thousands) June 28, 2024

Summarized Statement of Earnings Data

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Noncontrolling interests $ (640)

(in thousands) March 29, 2024 September 29, 2023

(in thousands) June 28, 2024 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