JACOBS SOLUTIONS INC. - 10-Q Filing Summary
Business Context and Reporting Period
Company: Jacobs Solutions Inc.
Filing Type: Form 10-Q (Quarterly Report)
Reporting Period: Three months ended December 26, 2025 (Fiscal Q1 2026)
Business Overview: Jacobs provides technical, professional, and construction services globally through two primary operating segments: Infrastructure & Advanced Facilities (I&AF) and PA Consulting. The company recently completed a strategic separation of its Critical Mission Solutions and Cyber & Intelligence businesses (now Amentum) in September 2024, which are reported as discontinued operations.
Key Financial Metrics
| Metric | Q1 2026 (Current) | Q1 2025 (Prior Year) |
|---|---|---|
| Revenues | $3,293.3 million | $2,933.0 million |
| Gross Profit | $765.3 million | $721.3 million |
| Gross Margin | 23.2% | 24.6% |
| Operating Profit | $232.6 million | $208.4 million |
| Net Earnings Attributable to Jacobs | $125.5 million | $(18.1) million (Loss) |
| Diluted EPS | $1.12 | $(0.11) |
| Operating Cash Flow | $380.8 million | $107.5 million |
| Cash and Equivalents (End of Period) | $1,552.9 million | $1,300.4 million |
| Long-Term Debt | $2,486.0 million | $2,236.5 million |
| Backlog | $26,308 million | $21,815 million |
Material Changes vs. Prior Period
- Revenue Growth: Revenues increased 12.3% year-over-year, driven by strong performance in the I&AF segment (up 12%) and PA Consulting (up 16%). Foreign currency translation provided a favorable impact of $37.9 million.
- Profitability Turnaround: The company reported a net earnings turnaround from a loss of $18.1 million in Q1 2025 to earnings of $125.5 million in Q1 2026. This was primarily due to the absence of a $145.2 million mark-to-market loss on Amentum stock investment recorded in the prior year.
- Operating Cash Flow: Operating cash flow surged to $380.8 million, a $273.3 million increase from the prior year, driven by improved working capital management and fewer restructuring payments.
- Debt Levels: Long-term debt increased by $249.6 million, primarily due to a $245.0 million draw on the revolving credit facility to fund share repurchases and dividends.
Guidance, Outlook, and Material Events
- PA Consulting Acquisition: On January 2, 2026, Jacobs entered into an Implementation Deed to acquire the remaining 29% of PA Consulting for approximately £1.216 billion (80% cash, 20% stock). The transaction is expected to close in Q2 2026. Upon closing, redeemable noncontrolling interests will be eliminated.
- Restructuring: Restructuring and other charges totaled $4.0 million for the quarter, a significant decrease from $14.7 million in the prior year. The company has substantially completed restructuring related to the Amentum separation.
- Capital Allocation: The company repurchased $252.1 million of common stock during the quarter. A quarterly dividend of $0.36 per share was declared on January 29, 2026. Approximately $966.2 million remains available under the 2025 share repurchase authorization.
- Tax Rate: The effective tax rate was 35.5%, compared to 107.5% in the prior year. The prior year rate was skewed by non-deductible losses on the Amentum investment. Current year rates were impacted by non-deductible incentive compensation related to PA Consulting.
- Risks: Key risks include the successful closing of the PA Consulting transaction, integration challenges, geopolitical instability, and potential changes in government spending priorities.
Investor Verification Checklist
- PA Consulting Deal Closure: Verify the status of regulatory approvals (UK High Court, Danish Business Authority) required for the full acquisition of PA Consulting.
- Working Capital Reversal: Monitor Q2 2026 cash flows, as management noted a favorable cash timing item in receivables at the end of Q1 that is expected to reverse in Q2.
- Debt Covenants: Confirm continued compliance with debt covenants, particularly the Consolidated Leverage Ratio, given the increased draw on the revolving credit facility.
- PA Consulting Compensation Costs: Track the recognition of the remaining $178 million in unrecognized compensation costs for PA Consulting equity grants, expected to vest upon the liquidity event (transaction closing).
- Backlog Conversion: Assess the conversion rate of the record $26.3 billion backlog into revenue, noting that 46% of remaining performance obligations are expected to be recognized within 12 months.