Jacobs Solutions Inc.
02/03/2026 | Press release | Distributed by Public on 02/03/2026 15:14
Quarterly Report for Quarter Ending December 26, 2025 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations.
General
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 26, 2025 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:
•The discussion of the critical and significant accounting policies used by the Company in preparing its consolidated financial statements. The most current discussion of our critical accounting policies appears in Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operationsof our 2025 Form 10-K, and the most current discussion of our significant accounting policies appears in Note 2- Significant Accounting Policesin Notes to Consolidated Financial Statements of our 2025 Form 10-K;
•The Company's fiscal 2025 audited consolidated financial statements and notes thereto included in our 2025 Form 10-K; and
•Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operationsincluded in our 2025 Form 10-K.
In addition to historical information, this MD&A and other parts of this Quarterly Report on Form 10-Q contain forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that do not directly relate to any historical or current fact. When used herein, words such as "expects," "anticipates," "believes," "seeks," "estimates," "plans," "intends," "future," "will," "would," "could," "can," "may," "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 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 but are not limited to:
•uncertainties as to the possibility that the closing conditions for the proposed transaction with PA Consulting may not be satisfied or waived, on a timely basis or otherwise; the risks that any consents or approvals, including any regulatory approvals, required in connection with the proposed transaction may not be received; the risk that the proposed transaction may not be completed on the terms or in the time-frame expected by the parties; unexpected costs, liabilities, charges or expenses related to the proposed transaction and the actual terms of any financings that will be obtained for the transaction; our ability to fully integrate PA Consulting into our business; our ability to realize the estimated synergies of the proposed transaction; and our ability to retain and hire key personnel, customers or suppliers while the proposed transaction is pending or after it is completed;
•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 and stock market volatility, instability in the banking industry, labor shortages, or the impact of a possible recession or economic downturn or changes to monetary or fiscal policies or priorities in the U.S. and the countries where we do business on our results, prospects and opportunities;
•competition from existing and future competitors in our target markets, as well as the possible reduction in demand for certain of our product solutions and services, including delays in the timing of the award of projects or reduction in funding, or the abandonment of ongoing or anticipated projects due to the financial condition of our clients and suppliers or due to governmental budget constraints or changes to governmental budgetary priorities, or the inability of our clients to meet their payment obligations in a timely manner or at all;
•our ability to fully execute on our corporate strategy, including the impact of acquisitions, strategic alliances, divestitures, and other strategic events resulting from evolving business strategies, including on our ability to maintain our culture and retain key personnel, customers or suppliers, or our ability to achieve the cost-savings and synergies contemplated by our recent acquisitions within the expected time frames or to achieve them fully
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and to successfully integrate acquired businesses while retaining key personnel, and our ability to invest in the tools needed to implement our strategy;
•financial market risks that may affect us, including by affecting our access to capital, the cost of such capital and/or our funding obligations under defined benefit pension and post-retirement plans;
•legislative changes, including potential changes to the amounts provided for under the Infrastructure Investment and Jobs Act, as well as other legislation and executive orders, including any directive to federal agencies to reduce federal spending or the size of the federal workforce, and changes in U.S. or foreign tax laws, including the OBBBA, statutes, rules, regulations or ordinances, including the impact of, and changes to, tariffs and retaliatory tariffs or trade policies that may adversely impact our future financial position or results of operations;
•increased geopolitical uncertainty and risks, including policy risks and potential civil unrest, relating to the outcome of elections across our key markets and elevated geopolitical tension and conflicts, including the Russia-Ukraine and Israel-Hamas conflicts and the on-going tensions in the Middle East, among others; and
•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, as well as 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 the Company's filings with the U.S. Securities and Exchange Commission, including in particular the discussions contained in our fiscal 2025 Form 10-K under Item 1 - Business, Item 1A - Risk Factors, Item 3 - Legal Proceedings, and Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations; and in this Quarterly Report on Form 10-Q under Part I, Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations, and Part II, Item 1 - Legal Proceedings and Item 1A - Risk Factors. We undertake no obligation to release publicly any revisions or updates to any forward-looking statements. We encourage you to read carefully the risk factors, as well as the financial and business disclosures contained in this Quarterly Report on Form 10-Q and in other documents we file from time to time with the United States Securities and Exchange Commission (the "SEC").
Business Overview
At Jacobs, our values and our brand promise - Challenging today. Reinventing tomorrow- drive us to deliver innovative solutions and sustainable outcomes for the world's most complex challenges.
With a global team of approximately 43,000, we provide end-to-end capabilities across advanced manufacturing, cities & places, energy, environmental, life sciences, transportation and water. Our services span advisory and consulting, feasibility and planning, through to design, program delivery and lifecycle management - helping to create a more connected and sustainable world.
From addressing water scarcity and aging infrastructure to access to life-saving therapies and cyber resilience, we combine creativity, agility and deep domain expertise to deliver outcomes that matter. Our integrated approach enables clients to meet urgent needs today while preparing for the opportunities of tomorrow.
Over the past eight years, Jacobs has transformed into a science-based consulting and advisory leader, focused on delivering digitally enabled, resilient solutions to complex sustainability, critical infrastructure and advanced manufacturing challenges. Strategic acquisitions, including a 65% stake in PA Consulting Group Limited ("PA Consulting") in fiscal 2021, along with the digital and data business solutions acquired with the BlackLynx and StreetLight acquisitions - have strengthened our capabilities in high-value technology-enabled solutions.
In February 2025, we launched Challenge Accepted, our multi-year growth strategy designed to sharpen our focus and accelerate our performance. Aligned with our long-term financial framework, this strategy positions us to drive profitable growth and deliver scalable, full lifecycle solutions across water and environmental, life sciences and advanced manufacturing, and critical infrastructure.
As global challenges like urbanization, infrastructure modernization, digital evolution and environmental resilience intensify, our integrated delivery model unites the full breadth of our capabilities - from strategy through execution - across our end markets. This synergy enables us to deliver rapid, large-scale outcomes that anticipate evolving client
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needs and advance a more resilient, sustainable future where technology elevates human ingenuity and unlocks new possibilities for collaboration and problem-solving.
We harness our data and digital capabilities, products and tools to help clients operate more efficiently, safely and intelligently. Through the expertise of our people and ongoing investment in artificial intelligence (AI) and next-generation digital solutions, we empower our clients' decision-making across the entire asset lifecycle - from capital planning and operations to cybersecurity and operational technology. Our capabilities in data analytics, digital architecture, advisory and transformation, software development and cybersecurity enable clients to unlock the full value of their data and digital infrastructure to improve performance, resilience and sustainability.
Through our strategic partnership with PA Consulting, we are expanding our high-end advisory services and deploying our collective strengths to help clients adapt, innovate and transform. Together, we deliver integrated support across the full project lifecycle - from early-stage strategy to implementation - enabling clients to tackle complex challenges, accelerate sustainable growth and shape a smarter, more resilient future.
Operating Segments
The services we provide to our end markets fall into the following two operating segments: 1) Infrastructure & Advanced Facilities and 2) our majority investment in PA Consulting. 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 Contractsof Notes to Consolidated Financial Statements.
Infrastructure & Advanced Facilities (I&AF)
Jacobs' Infrastructure & Advanced Facilities line of business provides end-to-end solutions for our clients' most complex challenges related to energy security, environmental resilience, safe and reliable transportation, buildings and infrastructure, integrated water management and biopharmaceutical manufacturing. In doing so, we combine deep experience in Water & Environmental, Life Sciences & Advanced Manufacturing and Critical Infrastructure. Our core skills revolve around consulting, planning, architecture, design, engineering, infrastructure delivery services including project, program and construction management and long-term operation of facilities. Solutions are delivered as standalone professional service engagements, comprehensive program management partnerships, and selective progressive design-build and construction management at-risk delivery services. Increasingly, we use data science and technology-enabled expertise to deliver positive and enduring outcomes for our clients and communities.
We serve national, state and local government clients across multiple regions - including the U.S., U.K., Europe, the Middle East and Asia Pacific - and multinational and local private sector organizations globally.
PA Consulting
PA Consulting, the global innovation and transformation consultancy, 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 about 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, bringing ingenuity to life.
PA Consulting has a diverse mix of private and public sector clients. Private sector clients include global household names like Diageo, Microsoft, Pret A Manger and Unilever, and start-ups like NTx, which is accelerating access to life-changing therapies. PA's work includes applying data and analytics to improve punctuality of flights at Heathrow Airport, accelerating the energy transition with Invenergy and energyRe, creating new digital platforms for the American College of Emergency Physicians, pioneering medtech with Hubly Surgical, accelerating clinical trials with AI for a global life sciences consortium, and enhancing resiliency in banking with Bankomat. Public sector clients include the U.K.'s Ministry of Defence, National Highways, The Norwegian Labour and Welfare Administration, The Danish Tax Agency and The Swedish Environmental Protection Agency.
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On a collective basis, we also benefit from the combined strengths of Jacobs and PA Consulting by deploying Jacobs' deep understanding of infrastructure delivery, capital asset cycles and highly technical program management together with PA Consulting's strategic advisory, innovation and transformation capabilities - enabling us to transform bold ideas into practical, optimized outcomes for our clients worldwide. In the U.S., we're supporting the digital transformation of Dallas Fort Worth International Airport and contributing to the Baltimore & Potomac Tunnel Replacement Program - one of the nation's largest transportation infrastructure investments. In England, we provide engineering, technical advice and innovation services to National Highways. We're building an AI blueprint for Hertfordshire County Council, one of England's largest councils. Through the U.K.'s largest government management consultancy framework, we're providing public sector organizations with streamlined access to advisory services. We're also delivering technical project management for the U.K. Department for Energy Security & Net Zero's Carbon Capture, Usage and Storage program, a cornerstone of the U.K.'s net-zero ambitions.
Separation of Critical Mission Solutions (CMS) and Cyber & Intelligence (C&I)
On September 27, 2024, Jacobs Solutions Inc. ("Jacobs") completed the previously announced Reverse Morris Trust transaction pursuant to which (i) Jacobs first transferred its Critical Mission Solutions business ("CMS") and portions of the Divergent Solutions ("DVS") business (referred to herein as the Cyber & Intelligence business ("C&I") and together with CMS referred to as the "SpinCo Business"), to Amazon Holdco Inc., a Delaware corporation, which has been renamed Amentum Holdings, Inc. ("SpinCo") (the "Separation"), (ii) Jacobs then effectuated a spin-off of SpinCo by distributing 124,084,108 shares of SpinCo common stock, par value $0.01 per share (the "SpinCo Common Stock"), by way of a pro rata distribution to its shareholders such that each holder of shares of Jacobs common stock, par value $1.00 per share (the "Jacobs Common Stock") was entitled to receive one share of SpinCo Common Stock for each share of Jacobs common stock held as of the record date, September 23, 2024 (the "Distribution"), and (iii) finally, Amentum Parent Holdings LLC merged with and into SpinCo, with SpinCo surviving the merger (the "Merger" and together with the Separation and the Distribution, the "Separation Transaction"). The surviving entity of the Separation Transaction is now an independent public company with common stock listed on the New York Stock Exchange under the symbol "AMTM" ("Amentum").
As a result of the Separation Transaction, substantially all SpinCo Business-related assets and liabilities have been separated and distributed (the "Disposal Group"). The Company determined that the Disposal Group should be reported as discontinued operations in accordance with ASC 205-20, Discontinued Operationsbecause their disposal represents a strategic shift that had a major effect on operations and financial results. As such, the financial results of the SpinCo Business are reflected in our Consolidated Statements of Earnings as discontinued operations for all periods presented.
For further information regarding separation activities that took place subsequent to the Separation Transaction closing, see Note 14- Discontinued Operations.
Prior to the Separation Transaction, Jacobs' Critical Mission Solutions business provided a full spectrum of solutions for clients to address evolving challenges like digital transformation and modernization, national security and defense, space exploration, digital asset management, the clean energy transition, and nuclear decommissioning and cleanup. Clients included government agencies, as well as private sector clients mainly in the aerospace, automotive, motorsports, energy and telecom sectors. Prior to the Separation Transaction, the DVS business unit served as the core foundation for developing and delivering innovative, next-generation cloud, cyber, data and digital technologies. DVS clients included government agencies and commercial clients in the U.S. and international markets. Certain portions of the DVS business related to advising on digital strategy and transformation and developing digital solutions that facilitate capital, operational and cybersecurity decisions for our clients across our segments and their end markets were retained and are now part of I&AF.
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Results of Operations for the three months ended December 26, 2025 and December 27, 2024
(in thousands, except per share information)
| For the Three Months Ended | |||||||||||
| December 26, 2025 | December 27, 2024 | ||||||||||
| Revenues | $ | 3,293,281 | $ | 2,932,956 | |||||||
| Direct cost of contracts | (2,528,031) | (2,211,689) | |||||||||
| Gross profit | 765,250 | 721,267 | |||||||||
| Selling, general and administrative expenses | (532,689) | (512,849) | |||||||||
| Operating Profit | 232,561 | 208,418 | |||||||||
| Other Income (Expense): | |||||||||||
| Interest income | 7,629 | 9,656 | |||||||||
| Interest expense | (34,254) | (34,820) | |||||||||
| Miscellaneous income (expense), net | 287 | (130,107) | |||||||||
| Total other expense, net | (26,338) | (155,271) | |||||||||
| Earnings from Continuing Operations Before Taxes | 206,223 | 53,147 | |||||||||
| Income Tax Expense from Continuing Operations | (73,109) | (57,149) | |||||||||
| Net Earnings (Loss) of the Group from Continuing Operations | 133,114 | (4,002) | |||||||||
| Net Earnings (Loss) of the Group from Discontinued Operations, net of tax | 554 | (1,001) | |||||||||
| Net Earnings (Loss) of the Group | 133,668 | (5,003) | |||||||||
| Net Earnings Attributable to Noncontrolling Interests from Continuing Operations | (2,440) | (6,080) | |||||||||
| Net Earnings Attributable to Redeemable Noncontrolling Interests | (5,720) | (7,047) | |||||||||
| Net Earnings (Loss) Attributable to Jacobs from Continuing Operations | 124,954 | (17,129) | |||||||||
| Net Earnings (Loss) Attributable to Jacobs from Discontinued Operations | 554 | (1,001) | |||||||||
| Net Earnings (Loss) Attributable to Jacobs | $ | 125,508 | $ | (18,130) | |||||||
| Net Earnings Per Share: | |||||||||||
| Basic Net Earnings (Loss) from Continuing Operations Per Share | $ | 1.12 | $ | (0.10) | |||||||
| Basic Net Earnings (Loss) from Discontinued Operations Per Share | $ | - | $ | (0.01) | |||||||
| Basic Earnings (Loss) Per Share | $ | 1.12 | $ | (0.11) | |||||||
| Diluted Net Earnings (Loss) from Continuing Operations Per Share | $ | 1.11 | $ | (0.10) | |||||||
| Diluted Net Earnings (Loss) from Discontinued Operations Per Share | $ | - | $ | (0.01) | |||||||
| Diluted Earnings (Loss) Per Share | $ | 1.12 | $ | (0.11) | |||||||
|
Note: Per share amounts may not add due to rounding.
|
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Overview - Three Months Ended December 26, 2025
Net earnings attributable to the Company from continuing operations for the first fiscal quarter of 2026 were $125.0 million (or $1.11 per diluted share), an increase of $142.1 million, from net loss of $(17.1) million (or $(0.10) per diluted share) for the corresponding period last year. Our reported net earnings for the first fiscal quarter of 2026 were favorably impacted by pre-tax items, including higher gross profit of $44.0 million compared to the corresponding period last year, primarily driven by stronger performance in our Infrastructure & Advanced Facilities ("I&AF") operating segment, specifically in our International and Global Operations sectors, as discussed further below in the Segment Financial Informationsection. Current year results from continuing operations for fiscal 2026 were also favorably impacted by a decrease in miscellaneous expense of $130.4 million primarily due to the absence of prior year mark-to-market losses of $145.2 million related to our investment in Amentum stock in connection with the Separation Transaction, partly offset by a decrease in TSA-related income included in miscellaneous income (expense). Further, results were favorably impacted by a decrease in pre-tax Restructuring and other charges and transaction costs of $12.7 million reported in Selling, general & administrative ("SG&A") expenses compared to the fiscal 2025 period, primarily associated with the Separation Transaction (mainly professional services and employee separation costs), which are discussed in Note 16- Restructuring and Other Charges.
Income taxes for the three months ended December 26, 2025 were higher by $16.0 million from the corresponding period last year. Our income tax expense was unfavorably impacted by $16.6 million in additional tax expense related to non-deductible incentive compensation associated with the Company's PA Consulting investment.
For discussion of discontinued operations, see Note 14- Discontinued Operations.
On January 2, 2026, Jacobs entered into an Implementation Deed (the "Implementation Deed") with PA Consulting. Pursuant to the Implementation Deed and certain related agreements, and subject to the terms and conditions thereof, Jacobs will acquire from shareholders of PA Consulting all of the remaining issued share capital of PA Consulting ("PA Shares") owned by the PA Consulting shareholders other than Jacobs and its affiliates. The Company will acquire the PA Shares for an aggregate initial consideration of approximately £1.216 billion to be paid through a combination of cash and new shares of Jacobs' common stock, par value $1.00 per share ("Company Common Stock"), with the number of shares of Company Common Stock set at 20% of the aggregate initial consideration, net of certain PA Consulting shareholder expenses and after making payments with respect to certain PA Shares which the Company has agreed to acquire for 100% cash, and issued at a price of £100.20 per share, as set forth in the Implementation Deed. The initial consideration is subject to adjustment in accordance with the terms of the Implementation Deed. Assuming the transaction closes, on the second anniversary of the effective date as defined under the terms of the Implementation Deed, the Company will pay an additional £75 million in shares of Company Common Stock, cash or a combination thereof, as determined by the Company in its sole discretion (the transactions described in this paragraph, collectively, the "PA Consulting Transaction"). The completion of the PA Consulting Transaction is subject to the satisfaction or waiver of certain closing conditions, including approvals by the PA Consulting shareholders, the High Court of Justice in England and Wales, the UK Secretary of State and the Danish Business Authority, and the consummation of certain related transactions. The PA Consulting Transaction is expected to close in the second quarter of fiscal 2026.
Consolidated Results of Operations
Revenues for the first fiscal quarter of 2026 were $3.29 billion, an increase of $360.3 million, or 12.3%, from $2.93 billion for the corresponding period last year. The increase in revenues was mainly driven by the Company's I&AF business, as well as year-over-year revenue growth in our PA Consulting business. The I&AF segment benefited primarily from stronger performance in our International and Global Operating sectors. Our revenues for the first fiscal quarter of 2026 were also favorably impacted by foreign currency translation of $37.9 million in our international businesses, as compared to a favorable impact of $16.4 million for the for the first fiscal quarter of 2025.
Gross profit for the first fiscal quarter of 2026 was $765.3 million, an increase of $44.0 million, or 6.1%, from $721.3 million for the corresponding period last year, with gross profit margins of 23.2% and 24.6% for the respective periods. The Company's increase in gross profit was mainly attributable to higher revenues as mentioned above, with unfavorable margin impacts from year-over-year project mix as well as increased personnel cost in PA Consulting.
See Segment Financial Informationdiscussion for further information on the Company's results of operations at the operating segment.
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Selling, general & administrative expenses for the three months ended December 26, 2025 were $532.7 million, an increase of $19.8 million or 3.9% from $512.8 million for the corresponding period last year. SG&A expenses for the three months ended December 26, 2025 were impacted by decreases of $12.7 million in Restructuring and other charges associated with the Separation Transaction, mainly comprised of professional services, and reductions of $7.9 million expenses associated with the TSA with Amentum. These favorable items were more than offset by year-over-year increases in incentives of $21.6 million, and underlying personnel costs of $6.9 million, expenses associated with IT related software licensing and other IT costs of $3.8 million as well as other department spend. Lastly, SG&A expenses were further impacted by unfavorable foreign exchange of $7.8 million for the three months ended December 26, 2025, as compared to unfavorable impacts of $3.2 million for the first fiscal quarter of 2025.
Net interest expense for the three months ended December 26, 2025 was $26.6 million, an increase of $1.5 million from $25.2 million, or 5.8% for the corresponding periods last year. The increase in net interest expense for the three months ended December 26, 2025 was primarily due to a decrease in interest income driven by lower interest rates, partly offset by higher levels of cash in the current year compared to the prior year period.
Miscellaneous income, net for the three months ended December 26, 2025 was $0.3 million, an increase of $130.4 million in comparison to net expense of $(130.1) million for the corresponding period last year. The favorability compared to the corresponding period last year was primarily due to the absence of first quarter fiscal 2025 mark-to-market losses and other related expenses associated with our investment in Amentum stock in connection with the Separation Transaction of $145.2 million. These favorable items were partially offset by a decrease of $11.3 million in TSA-related income associated with the Separation Transaction as discussed in Note 14- Discontinued Operations.
The Company's effective tax rates from continuing operations for the three months ended December 26, 2025 and December 27, 2024 were 35.5% and 107.5%, respectively. Significant items contributing to differences 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 26, 2025 were $16.6 million of unfavorable tax impacts related to non-deductible incentive compensation associated with the Company's PA Consulting investment, as well as U.S. state income tax expense of $5.8 million and U.S. tax on foreign earnings of $4.6 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.
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 of 107.5% for the three-month period ended December 27, 2024 were $37.0 million in unfavorable tax impacts associated with the non-deductibility of losses from the Company's investment in Amentum stock as well as U.S. state income tax expense of $5.4 million and U.S. tax on foreign earnings of $4.9 million.
Net earnings attributable to noncontrolling interests including redeemable noncontrolling interests for the three months ended December 26, 2025 were $(8.2) million, as compared to $(13.1) million for the corresponding period last year. The decrease in total noncontrolling interests for the three months ended December 26, 2025 primarily reflects lower comparative earnings impacts of joint venture projects nearing completion in the current year period as well as an increase in the Company's noncontrolling share of expense associated with equity-based incentive grants as discussed in Note 15- PA Consulting Redeemable Noncontrolling Interests. These unfavorable items were partly offset by higher net earnings results in our PA Consulting investment compared to the prior year period.
Restructuring and Other Charges
During fiscal 2023, the Company implemented restructuring initiatives relating to the Separation Transaction. The Company incurred approximately $1.4 million during the three months ended December 26, 2025 and $28.2 million and $42.0 million in fiscal 2025 and fiscal 2024, respectively, in pre-tax cash charges in connection with these initiatives. These actions were substantially completed at the end of calendar year 2025 and are expected to result in estimated gross annualized pre-tax cash savings of approximately $165 million to $200 million.
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 substantially completed, the Company incurred approximately $0.4 million during the three months ended December 26, 2025 and $1.9 million, $6.4 million and $14.3 million in fiscal 2025, 2024 and 2023, respectively, 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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Refer to Note 16- Restructuring and Other Chargesfor further information regarding restructuring and integration initiatives.
Segment Financial Information
The following tables present total revenues, direct cost of contracts, selling, general and administrative expenses and segment operating profit from continuing operations for each reportable segment (in thousands) and includes a reconciliation of segment operating profit to total U.S. GAAP operating profit from continuing operations by including certain corporate-level expenses, Restructuring and other charges (as defined in Note 16- Restructuring and Other Charges) and transaction and integration costs (in thousands) for the periods ended:
| December 26, 2025 | |||||||||||||||||
| Infrastructure & Advanced Facilities | PA Consulting | Total | |||||||||||||||
| Revenues from External Customers | $ | 2,938,848 | $ | 354,433 | $ | 3,293,281 | |||||||||||
|
Direct cost of contracts
|
(2,293,163) | (234,868) | (2,528,031) | ||||||||||||||
|
Selling, general and administrative expenses
|
(430,945) | (34,672) | (465,617) | ||||||||||||||
| Segment Operating Profit | $ | 214,740 | $ | 84,893 | $ | 299,633 | |||||||||||
|
Restructuring, Transaction and Other Charges (1)
|
(29,076) | ||||||||||||||||
| Amortization of Intangible Assets | (37,996) | ||||||||||||||||
| Total U.S. GAAP Operating Profit | $ | 232,561 | |||||||||||||||
|
Total Other (Expense) Income, net
|
(26,338) | ||||||||||||||||
| Earnings from Continuing Operations Before Taxes | $ | 206,223 | |||||||||||||||
| (1) | The three months ended December 26, 2025 included $2.2 million in restructuring and other charges relating to the Separation Transaction (primarily professional services and employee separation costs), as well as $1.8 million in restructuring and other charges relating to the PA Consulting Transaction (primarily professional services and dedicated internal personnel), and $22.7 million in charges for certain subsidiary level compensation based agreements. | ||||
| December 27, 2024 | |||||||||||||||||
| Infrastructure & Advanced Facilities | PA Consulting | Total | |||||||||||||||
| Revenues from External Customers | $ | 2,626,208 | $ | 306,748 | $ | 2,932,956 | |||||||||||
|
Direct cost of contracts
|
(2,019,696) | (191,993) | (2,211,689) | ||||||||||||||
|
Selling, general and administrative expenses
|
(396,237) | (48,017) | (444,254) | ||||||||||||||
| Segment Operating Profit | $ | 210,275 | $ | 66,738 | $ | 277,013 | |||||||||||
|
Restructuring, Transaction and Other Charges (1)
|
(29,934) | ||||||||||||||||
| Amortization of Intangible Assets | (38,661) | ||||||||||||||||
| Total U.S. GAAP Operating Profit | $ | 208,418 | |||||||||||||||
|
Total Other (Expense) Income, net (2)
|
(155,271) | ||||||||||||||||
| Earnings from Continuing Operations Before Taxes | $ | 53,147 | |||||||||||||||
| (1) | The three months ended December 27, 2024 included $15.0 million in restructuring and other charges relating to the Separation Transaction (primarily professional services and employee separation costs), $6.0 million in charges for certain subsidiary level compensation based agreements as well as $7.9 million in charges associated with the Company's TSA with Amentum. | ||||
| (2) | The three months ended December 27, 2024 included $145.2 million in mark-to-market losses associated with our investment in Amentum stock in connection with the Separation Transaction. | ||||
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In evaluating the Company's performance by operating segment, the Chief Operating Decision Maker ("CODM") reviews various metrics and statistical data for Infrastructure & Advanced Facilities and PA Consulting. For more information, please refer to Note 18- Segment Information. In addition, the Company attributes each segment's specific incentive compensation plan costs to the segments. The methods for recognizing revenue, incentive fees, project losses and change orders are consistent among the segments.
Infrastructure & Advanced Facilities
| Three Months Ended | |||||||||||
|
(in thousands)
|
December 26, 2025 | December 27, 2024 | |||||||||
| Revenue | $ | 2,938,848 | $ | 2,626,208 | |||||||
| Operating Profit | $ | 214,740 | $ | 210,275 | |||||||
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Revenues for the I&AF segment for the three months ended December 26, 2025 were $2.9 billion, an increase of $312.6 million, or 12%, compared to $2.6 billion for the corresponding period last year. The increase in revenues for the three months ended December 26, 2025 was driven primarily from stronger performance in its International and Global Operating sectors. Additionally, foreign currency translation had approximately $25.0 million in favorable impacts on revenues for the three months ended December 26, 2025, as compared to $6.9 million in favorable impact in the corresponding prior year period.
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Operating profit for the I&AF segment for the three months ended December 26, 2025 was $214.7 million, an increase of $4.5 million, or 2%, from $210.3 million for the corresponding period last year. The increase for the three months ended December 26, 2025 was driven primarily by the revenue growth mentioned above, partially offset by an increase in Selling, general and administrative expenses. Foreign currency translation had approximately $3.2 million in favorable impacts on operating profit for three months ended December 26, 2025, as compared to $0.7 million in favorable impacts in the corresponding prior year period.
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PA Consulting
| Three Months Ended | |||||||||||
| (in thousands) | December 26, 2025 | December 27, 2024 | |||||||||
| Revenue | $ | 354,433 | $ | 306,748 | |||||||
| Operating Profit | $ | 84,893 | $ | 66,738 | |||||||
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Revenues for the PA Consulting segment for the three months ended December 26, 2025 were $354.4 million reflecting an increase of $47.7 million, or 16% from $306.7 million in the corresponding period last year. The increase in revenue was due primarily to growth in PA Consulting's public services businesses (through the public services and defence and security sectors). Foreign currency translation had approximately $12.9 million in favorable impacts on revenues for the three months ended December 26, 2025, as compared to $9.5 million in favorable impacts in the corresponding prior year period.
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Operating profit for the segment for the three months ended was $84.9 million, an increase of $18.2 million, or 27% from $66.7 million in the corresponding period last year. The year-over-year increase was mainly attributable to improved revenues as mentioned above, as well as favorable impacts from reduced Selling, general and administrative expenses.
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Backlog Information
Backlog represents revenue we expect to realize for work to be completed by our consolidated subsidiaries and our proportionate share of work to be performed by unconsolidated joint ventures. Because of variations in the nature, size, expected duration, funding commitments, and the scope of services required by our contracts, the amount and timing of when backlog will be recognized as revenues includes significant estimates and can vary greatly between individual contracts.
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Consistent with industry practice, substantially all of our contracts are subject to cancellation or termination at the option of the client, including our U.S. government work. While management uses all information available to determine backlog, at any given time our backlog is subject to changes in the scope of services to be provided as well as increases or decreases in costs relating to the contracts included therein. Backlog is not necessarily an indicator of future revenues.
Because certain contracts (e.g., contracts relating to large engineering, procurement & construction projects as well as national government programs) can cause large increases to backlog in the fiscal period in which we recognize the award, and because many of our contracts require us to provide services that span over several fiscal quarters (and sometimes over fiscal years), we have presented our backlog on a year-over-year basis, rather than on a sequential, quarter-over-quarter basis.
The following table summarizes our backlog at December 26, 2025 and December 27, 2024 (in millions):
| December 26, 2025 | December 27, 2024 | ||||||||||
| Infrastructure & Advanced Facilities | $ | 25,902 | $ | 21,484 | |||||||
| PA Consulting | 406 | 331 | |||||||||
| Total | $ | 26,308 | $ | 21,815 | |||||||
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The increase in backlog in I&AF from December 27, 2024 was predominantly driven by growth across Advanced Manufacturing, Life Sciences and Water markets.
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The increase in backlog in PA Consulting from December 27, 2024 was primarily driven by organic year-over-year growth of the business.
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Consolidated backlog differs from the Company's remaining performance obligations as defined by ASC 606 primarily because of contract change orders or new wins not yet processed and our national government contracts where our policy is to generally include in backlog the contract award, whether funded or unfunded excluding certain option periods while our remaining performance obligations represent a measure of the total dollar value of work to be performed on contracts awarded and in progress. Additionally, the Company does not include our proportionate share of backlog related to unconsolidated joint ventures in our remaining performance obligations.
Liquidity and Capital Resources
At December 26, 2025, our principal sources of liquidity consisted of $1.55 billion in cash and cash equivalents and $1.61 billion of available borrowing capacity under our $2.25 billion revolving credit agreement (the "Revolving Credit Facility"). See Note 12- Borrowings for more information. We finance most of our operations and growth through cash generated by our operations.
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Cash and cash equivalents at December 26, 2025 were $1.55 billion, representing an increase of $317.5 million from $1.24 billion at September 26, 2025, the reasons for which are described below. The following table presents selected consolidated cash flow information of the Company for the respective periods shown below:
| For the Three Months Ended | |||||||||||
| (In thousands) | December 26, 2025 | December 27, 2024 | |||||||||
| Net cash provided by operating activities | $ | 380,760 | $ | 107,456 | |||||||
| Cash Flows from Investing Activities: | |||||||||||
| Additions to property and equipment | (15,821) | (10,333) | |||||||||
| Disposals of property and equipment and other assets | - | 1,481 | |||||||||
| Capital contributions to equity investees, net of return of capital distributions | 334 | 932 | |||||||||
| Net cash used for investing activities | (15,487) | (7,920) | |||||||||
| Cash Flows from Financing Activities: | |||||||||||
| Proceeds from long-term borrowings | 719,000 | 589,000 | |||||||||
| Repayments of long-term borrowings | (474,000) | (221,000) | |||||||||
| Repayments of short-term borrowings | - | (5,345) | |||||||||
| Proceeds from issuances of common stock | 7,741 | 7,984 | |||||||||
| Common stock repurchases | (252,082) | (201,626) | |||||||||
| Taxes paid on vested restricted stock | (16,329) | (14,404) | |||||||||
| Cash dividends to shareholders | (38,558) | (36,481) | |||||||||
| Net dividends associated with noncontrolling interests | (5,218) | (2,245) | |||||||||
| Repurchase of redeemable noncontrolling interests | (403) | (3,729) | |||||||||
| Net cash (used for) provided by financing activities | (59,849) | 112,154 | |||||||||
| Effect of Exchange Rate Changes | 11,664 | (58,180) | |||||||||
| Net Increase in Cash and Cash Equivalents and Restricted Cash | 317,088 | 153,510 | |||||||||
| Cash and Cash Equivalents, including Restricted Cash, at the Beginning of the Period | 1,236,816 | 1,146,931 | |||||||||
| Cash and Cash Equivalents, including Restricted Cash, at the End of the Period | $ | 1,553,904 | $ | 1,300,441 | |||||||
Our net cash flow provided by operations of $380.8 million during the three months ended December 26, 2025 was favorable by $273.3 million in comparison to the cash flow provided by operations of $107.5 million in the corresponding prior year period. The increase in cash from operations is driven by stronger year-over-year working capital performance primarily attributable to Receivables and contract assets, net of contract liabilities which included a favorable cash timing item at the end of the quarter that will reverse in the second quarter of fiscal 2026, as well as Accounts Payable. Additionally, there were fewer year-over-year cash tax and Restructuring and Other Charges payments.
Our net cash used for investing activities during the three months ended December 26, 2025 was $15.5 million, compared to cash used for investing activities of $7.9 million in the corresponding prior year period due to higher levels of additions to plant, property and equipment in the current year.
Our net cash used for financing activities during the three months ended December 26, 2025 was $59.8 million. This was driven by share repurchases of $252.1 million, $38.6 million in dividends to shareholders, and $16.3 million in taxes paid on vested restricted stock, partly offset by net proceeds from borrowings of $245.0 million. Net cash provided by financing activities in the corresponding prior year period was $112.2 million, due primarily to net proceeds from borrowings of $362.7 million, partly offset by share repurchases of $201.6 million, $36.5 million in dividends to shareholders, and $14.4 million in taxes paid on vested restricted stock.
At December 26, 2025, the Company had approximately $403.2 million in cash and cash equivalents held in the U.S. and $1.15 billion held outside of the U.S. (primarily in the U.K., the Eurozone, Australia, India, Canada, and the Middle East region). Other than the tax cost of repatriating funds to the U.S., there are no material impediments to repatriating these funds to the U.S.
The Company had $250.1 million in letters of credit outstanding at December 26, 2025. Of this amount, $0.3 million was issued under the Revolving Credit Facility and $249.8 million was issued under separate, committed and uncommitted letter-of-credit facilities.
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Long-term debt as of December 26, 2025 increased by $249.6 million compared to September 26, 2025 primarily due to an increased draw on the revolving credit facility of $245.0 million (see Note 12- Borrowings) used to fund share buybacks, dividends and taxes paid on vested restricted stock.
On March 13, 2025, Jacobs completed the Equity-for-Debt Transaction (see Note 12- Borrowings for additional information), pursuant to which the Company extinguished $311.5 million under the GBP 2021 Term Loan, in exchange for its approximately 19.5 million shares in Amentum. Additionally, as noted below, on March 27, 2025, the Company and its subsidiary, entered into the 2025 Term Loan Facility (as noted below), the proceeds of which were used to extinguish the remaining $531.6 million under the GBP 2021 Term Loan contract. For more information, please refer to Note - 12 Borrowings and Note 14 - Discontinued Operations.
On March 27, 2025, the Company, as guarantor, and JEGI, as borrower, entered into a term loan agreement (the "2025 Term Loan Facility") with Bank of America, N.A., as administrative agent and sole lead arranger, and the lender party thereto. Under the 2025 Term Loan Facility, JEGI borrowed a $200.0 million term loan and £410.0 million term loan for a term of two-years from the date of initial funding, maturing on March 26, 2027. See Note 12- Borrowingsfor additional information.
In connection with the Post-Closing Additional Merger Consideration relating to the Separation Transaction, the Company received approximately 7.3 million Amentum shares from the 9.7 million shares held in escrow. On April 30, 2025, the Company's Board of Directors determined to distribute the 7.3 million shares of Amentum's stock and declared an in kind dividend payable to Jacobs' shareholders of record as of May 16, 2025 which was distributed on a pro rata basis on May 30, 2025. Please refer to Note 14- Discontinued Operations for additional details.
On April 10, 2025, the Company collected $70 million in receivables related to final settlement of the post-closing working capital adjustment from the distribution of the SpinCo Business, the proceeds of which were immediately utilized to pay down amounts owed under the Company's Revolving Credit Facility. Please refer to Note 14 - Discontinued Operations for additional details.
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On February 6, 2023 the Company refinanced its Revolving Credit Facility, 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 - Borrowingsfor further discussion relating to the terms of the 5.90% Bonds, the 6.35% Bonds, and the Revolving Credit Facility following the issuances and refinancing.
On January 2, 2026, Jacobs entered into an Implementation Deed (the "Implementation Deed") with PA Consulting. Pursuant to the Implementation Deed and certain related agreements, and subject to the terms and conditions thereof, Jacobs will acquire from shareholders of PA Consulting all of the remaining issued share capital of PA Consulting ("PA Shares") owned by the PA Consulting shareholders other than Jacobs and its affiliates. The Company will acquire the PA Shares for an aggregate initial consideration of approximately £1.216 billion to be paid through a combination of cash and new shares of Jacobs' common stock, par value $1.00 per share ("Company Common Stock"), with the number of shares of Company Common Stock set at 20% of the aggregate initial consideration, net of certain PA Consulting shareholder expenses and after making payments with respect to certain PA Shares which the Company has agreed to acquire for 100% cash, and issued at a price of £100.20 per share, as set forth in the Implementation Deed. The initial consideration is subject to adjustment in accordance with the terms of the Implementation Deed. Assuming the transaction closes, on the second anniversary of the effective date as defined under the terms of the Implementation Deed, the Company will pay an additional £75 million in shares of Company Common Stock, cash or a combination thereof, as determined by the Company in its sole discretion (the transactions described in this paragraph, collectively, the "PA Consulting Transaction"). The completion of the PA Consulting Transaction is subject to the satisfaction or waiver of certain closing conditions, including approvals by the PA Consulting shareholders, the High Court of Justice in England and Wales, the UK Secretary of State and the Danish Business Authority, and the consummation of certain related transactions. The PA Consulting Transaction is expected to close in the second quarter of fiscal 2026.
The upfront consideration, net of certain transaction expenses payable by the PA Consulting shareholders and after making payments with respect to certain PA Shares which the Company has agreed to acquire for 100% cash, will be paid 80% in cash and 20% in Jacobs' shares. As discussed above, the PA Consulting Transaction also includes deferred consideration of £75 million which is payable in Jacobs' shares as valued on the two-year anniversary following closing, cash, or a combination thereof, at Jacobs' election. Jacobs intends to fund the cash portion of the upfront consideration through a combination of cash-on-hand and existing and incremental debt facilities.
We believe we have adequate liquidity and capital resources to fund our projected cash requirements for acquisitions including the PA Consulting Transaction as well as financing activities such as debt servicing, share buybacks and dividends 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 generated from operations.
We were in compliance with all of our debt covenants at December 26, 2025.
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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 $500.0 million aggregate principal amount of 5.90% Bonds, due 2033 and on August 18, 2023, completed an offering of $600.0 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. GAAP.
| Three Months Ended | |||||
| (in thousands) | December 26, 2025 | ||||
| Summarized Statement of Earnings Data | |||||
| Revenue | $ | 1,045,714 | |||
| Direct Costs | $ | 879,719 | |||
| Selling, General and Administrative Expenses | $ | 103,892 | |||
| Net loss attributable to Guarantor Subsidiaries from continuing operations | $ | 29,637 | |||
| Noncontrolling interests | $ | (863) | |||
| (in thousands) | December 26, 2025 | September 26, 2025 | |||||||||
| Summarized Balance Sheet Data | |||||||||||
| Current assets, less receivables from Non-Guarantor Subsidiaries | $ | 1,178,586 | $ | 938,319 | |||||||
| Current receivables from Non-Guarantor Subsidiaries | $ | 601,844 | $ | 749,475 | |||||||
| Noncurrent assets, less noncurrent receivables from Non-Guarantor Subsidiaries | $ | 625,406 | $ | 642,464 | |||||||
| Noncurrent receivables from Non-Guarantor Subsidiaries | $ | 513,760 | $ | 563,682 | |||||||
| Current liabilities | $ | 1,059,114 | $ | 1,006,916 | |||||||
| Long-term Debt | $ | 2,486,022 | $ | 2,236,456 | |||||||
| Other Noncurrent liabilities, less amounts payable to Non-Guarantor Subsidiaries | $ | 253,310 | $ | 250,106 | |||||||
| Noncurrent liabilities to Non-Guarantor Subsidiaries | $ | 1,083,994 | $ | 1,110,155 | |||||||
| Noncontrolling interests | $ | 8 | $ | 5 | |||||||
| Accumulated deficit | $ | (1,962,852) | $ | (1,709,698) | |||||||
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Jacobs Solutions Inc. published this content on February 03, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on February 03, 2026 at 21:14 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]