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Aging infrastructure and emerging PFAS regulations are driving an increase in water and environmental projects, Jacobs CEO Bob Pragada said during the announcement of the company’s third quarter results this week.
“We achieved double-digit growth in our water and environmental markets,” Pragada said during the earnings call. “Water continues to be a core element of our portfolio, exemplified by key wins in various geographies.”
He highlighted the strength of the company’s water construction sector, citing recent project wins such as the expansion of Singapore’s Kranji Water Reclamation Plant and work in progress Onondaga County New York to solve combined sewer overflow problems. The Miami-Dade County Water and Sewer Department also selected Jacobs in April to design upgrades worth $15 million each to the the three wastewater treatment plants in the region.
“Our pipeline in the water sector has almost doubled compared to this time last year,” Pragada said. “We’re winning the majority of the work we’re chasing, hence the real focus and focus on growth.”
Benefits in PFAS
Major AEC companies have recently focused on cleaning up so-called forever chemicals from the US water supply. Canadian contractor WSP, for example, also identified the drive to clean up PFAS as a strong tendency for water construction during its most recent earnings call on August 1.
Bob Pragada
Courtesy of Jacobs
“In terms of what’s driving it, obviously aging infrastructure is a big piece, the other is the combined sewer overflows and what’s going on with the climate and some of the natural disasters that we’re watching,” Pragada said on the call. “In the drinking water component, we’re seeing an increase in addressing PFAS regulations, specifically in the United States, but also in Germany and elsewhere.”
Along with the water works, Pragada also highlighted the significant impact of the Jobs and Infrastructure Investment Act and the CHIPS Act on Jacobs’ backlog and performance. He noted that about 60% of IIJA funds have been earmarked, with 30% already spent. Pragada estimates that the impact of the IIJA will extend beyond 2026.
“The next wave [of public funding], we are in charge of,” said Pragada. “The money from the CHIPS Act will continue to flow and represent a nice headwind for us.”
In the manufacturing space, Fujifilm Diosynth Biotechnologies, a global biopharmaceutical manufacturer of biologics, vaccines and therapies, recently selected Jacobs to support the delivery of its $1.2 billion manufacturing site expansion in Holly Springs, North Carolina.
“We have very positive momentum in that regard,” Pragada said. “So overall, we are still bullish on the sector and will continue to accelerate growth.”
Numbers Q3
Jacobs reported earnings of $146.93 million for its 2024 third quarter, which ended June 28, a 10.5 percent drop from $164.24 million in profit a year ago despite the Pragada’s optimism. Its revenue for the quarter reached $4.23 billion, up about 1 percent from $4.19 billion in the third quarter last year, according to the company earnings report.
The Dallas-based firm’s money portfolio reached $30.62 billion, up 5.8% from $28.92 billion a year ago. This is heavily weighted by water and advanced facilities, especially life science projects, Pragada said.
Despite the drop in profits, analysts praised the company’s results, largely because of the outlook for opportunities ahead.
“We believe Jacobs delivered solid third-quarter results,” wrote Faisal Hersi, equity analyst at financial services firm Edward Jones. in a research note. “The company expects to see improved profitability based on the quality of project opportunities in the portfolio.”
