Sangeetha Jain

Sangeeta Jain with KeyBanc Capital Markets inquired about the contract structure (fixed price vs. cost reimbursable) for the U.S. LNG FEED project if it progresses to EPC, and sought clarification on the 3%-4% Urban Solutions margin outlook for 2026 compared to previously referenced higher ranges.

Answer

CEO Jim Breuer clarified that the U.S. LNG FEED is for an ancillary scope, not a full train, and any eventual EPC contract would be a 'smart lump sum' with properly allocated risk. CFO John Regan explained that the 3%-4% Urban Solutions margin outlook for 2026 is primarily due to the drag from legacy projects nearing handover, extending their finality, rather than a macro recalibration of margin trends.

Sangeeta Jain followed up on the cash flow, asking for clarification on the Q1 cash flow reversal expected in Q2 and the timing of anticipated cash tax payments in the first half. Jain also inquired about the Sizewell C contract in the UK, specifically its size and the potential for future scope increases.

Answer

CFO Venk Nathamuni explained that the strong Q1 free cash flow was primarily due to excellent working capital performance and a one-time customer timing item (revenue/cash collected in Q1, subcontractor paid later) that will reverse in Q2. He confirmed cash tax payments are a Q2 phenomenon but reiterated confidence in positive free cash flow for the first half. Chair and CEO Bob Pragada clarified that Jacobs is performing enabling works and program management for Sizewell C, which will continue into 2026, and there is opportunity for continued scope growth due to a strong client relationship.

Sangeetha Jain of KeyBanc Capital Markets inquired about the interplay between using overseas technical centers and adopting AI, and asked about the outlook for Net Service Revenue (NSR) growth for the next fiscal year.

Answer

Chairman & CEO Troy Rudd explained that overseas enterprise capability centers and AI are complementary, with AI supporting teams regardless of location to enhance overall capabilities. Chief Financial & Operations Officer Gaurav Kapoor stated that while NSR growth is trending to the lower end of the guidance range for the current year, the strong backlog and win rates provide confidence in the long-term algorithm of 5% to 8% growth for the upcoming year.