Jacobs Solutions Inc. (NYSE:J) Q1 2023 Earnings Call Transcript

Michael Feniger: On the potential DC lockdown or just headlines around a prolonged continuing resolution. Just Maybe, Kevin, you kind of walk through on — I know we talked on IIJ, but even on the CMS side, anything that we should be aware of that could lead to orders being pushed out, rebid being pushed out? Are you hearing any of that based on some of the headlines we’re seeing down in DC?

Bob Pragada: Go ahead, and then I’ll back you up.

Kevin Berryman: Look, I think the bottom line is we have an Omnibus in place for 2023. So what we’re really fundamentally talking about is a continuing resolution for 2024. Look, it remains to be seen how that plays out. Clearly, there’s some differences of opinion in the house right now relative to where we may end up. I would say the good news is relative to this, if there is good news, is that we’re kind of based off a strong Omnibus program in 2023, it could impact new items getting funded, but we’re based on a 23% kind of level, which is pretty straightforward. As it relates to the disruption relative to the debt and whatnot, we think our view is they’ll come to some rational conclusion on that, but we’ll see how that plays out.

Bob Pragada: And right now, the programs, Michael, that we’re looking at are not totally insulated, but we’ve got a strong view on those programs being funded here in the near term — awarded.

Operator: The next question is from Robert Connors with Stifel.

Robert Conners: Well, first off, Bob, if I remember correctly, I’m wishing your birds a good luck next weekend. And I guess for my question, you guys have a lot of tailwinds going into the back half, strong outlook on various end markets. Just sort of wondering what your thinking was with around sort of maintaining the guidance, especially with currency sort of being a tailwind here.

Kevin Berryman: Well, there’s a couple of things that we have to recognize certainly exchange rates are a positive, but also we have incremental interest costs that are largely offsetting that. So there’s gives and takes here. I think given the dynamic of how we’re playing out in DC, I think we’re being prudent relative to our guidance that we’ve provided. And look, there’s gives and takes here. FX isn’t the only one. I would say, certainly, interest is some headwinds that we’re facing and then the business is kind of net off. And I think at the end of the day, we’re I think, positioned for good results for the full year fiscal 2023.

Bob Pragada: And then, Robert, maybe I’ll make a couple of comments on the markets. The reason why we highlighted those four sectors that we did is the tailwinds that we are seeing and it’s materializing in the double digit pipeline growth, the backlog growth that we’re seeing and our bookings performance, all leading indicators to strengthen those markets. The burn of those bookings is something we continue to monitor very closely. But the stage that we’re coming in on those programs are creating a higher level of utilization, specifically in the US for the Jacobs business.

Operator: The next question is from Louie DiPalma with William Blair.

Louie DiPalma: Congrats to everyone on your promotions and new positions. As it relates to the exceptional strength for advanced facilities for this current fiscal 2023 on top of 2022, Kevin, I think you mentioned how this is . And I was wondering, should investors expect a consistent long term upward trajectory for advanced facilities with all of the stimulus funding from the CHIPS Act, or will it be lumpy in certain years as funding maybe inconsistent?