JACOBS SOLUTIONS INC. [J] Filings

10-Q 1 jec-20240628.htm 10-Q jec-20240628

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 28, 2024

☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

Commission File Number 1-7463

JACOBS SOLUTIONS INC.

(Exact name of registrant as specified in its charter)

Delaware

88-1121891

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification Number)

1999 Bryan Street

Suite 3500

Dallas

Texas

75201

(Address of principal executive offices)

(Zip Code)

(214) 583 – 8500

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

_________________________________________________________________



Title of Each Class		Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock	$1 par value	J	New York Stock Exchange

Indicate by check-mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: ☒ Yes ☐ No

Indicate by check-mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Page 1

Indicate by check-mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check-mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

Number of shares of common stock outstanding at July 26, 2024: 124,248,327

Page 2

JACOBS SOLUTIONS INC.

INDEX TO FORM 10-Q


			Page No.
PART I	FINANCIAL INFORMATION

	Item 1.	Financial Statements	4

		Consolidated Balance Sheets - Unaudited	5

		Consolidated Statements of Earnings - Unaudited	6

		Consolidated Statements of Comprehensive Income - Unaudited	7

		Consolidated Statements of Stockholders’ Equity - Unaudited	8

		Consolidated Statements of Cash Flows - Unaudited	10

		Notes to Consolidated Financial Statements - Unaudited	11

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	51

	Item 4.	Controls and Procedures	56

PART II	OTHER INFORMATION

	Item 1.	Legal Proceedings	53

	Item 1A.	Risk Factors	53

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	53

	Item 3.	Defaults Upon Senior Securities	53

	Item 4.	Mine Safety Disclosures	53

	Item 5.	Other Information	54

	Item 6.	Exhibits	55

		SIGNATURES	56

Page 3

Part I - FINANCIAL INFORMATION

Item 1. Financial Statements.

Page 4

JACOBS SOLUTIONS INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share information)


	June 28, 2024		September 29, 2023
	(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	1,208,661	$	926,582
Receivables and contract assets	3,774,227		3,558,806
Prepaid expenses and other	154,721		204,965

Total current assets	5,137,609		4,690,353
Property, Equipment and Improvements, net	366,231		357,032
Other Noncurrent Assets:
Goodwill	7,404,867		7,343,526
Intangibles, net	1,156,577		1,271,943
Deferred income tax assets	101,748		53,131
Operating lease right-of-use assets	383,911		414,384
Miscellaneous	497,347		486,740
Total other noncurrent assets	9,544,450		9,569,724
	$	15,048,290	$	14,617,109
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Current maturities of long-term debt	$	825,166	$	61,430
Accounts payable	1,262,783		1,143,802
Accrued liabilities	1,303,207		1,301,644
Operating lease liability	147,659		152,077
Contract liabilities	965,440		763,608
Total current liabilities	4,504,255		3,422,561
Long-term debt	2,091,456		2,813,471
Liabilities relating to defined benefit pension and retirement plans	268,166		258,540
Deferred income tax liabilities	147,006		221,158
Long-term operating lease liability	482,262		543,230
Other deferred liabilities	144,250		125,088
Commitments and Contingencies	—		—
Redeemable Noncontrolling interests	734,465		632,979
Stockholders’ Equity:
Capital stock:
Preferred stock, $1 par value, authorized - 1,000,000 shares; issued and outstanding - none	—		—
Common stock, $1 par value, authorized - 240,000,000 shares; issued and outstanding - 124,253,511 shares and 125,976,998 shares as of June 28, 2024 and September 29, 2023, respectively	124,254		125,977
Additional paid-in capital	2,741,750		2,735,325
Retained earnings	4,557,204		4,542,872
Accumulated other comprehensive loss	(806,415)		(857,954)
Total Jacobs stockholders’ equity	6,616,793		6,546,220
Noncontrolling interests	59,637		53,862
Total Group stockholders’ equity	6,676,430		6,600,082
	$	15,048,290	$	14,617,109

See the accompanying Notes to Consolidated Financial Statements – Unaudited.

Page 5

JACOBS SOLUTIONS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

Three and Nine Months Ended June 28, 2024 and June 30, 2023

(In thousands, except per share information)

(Unaudited)


	For the Three Months Ended				For the Nine Months Ended
	June 28, 2024		June 30, 2023		June 28, 2024		June 30, 2023
Revenues	$	4,231,580	$	4,186,702	$	12,659,898	$	12,063,702
Direct cost of contracts	(3,314,800)		(3,329,959)		(9,987,965)		(9,501,953)
Gross profit	916,780		856,743		2,671,933		2,561,749
Selling, general and administrative expenses	(656,316)		(587,002)		(1,926,417)		(1,764,341)
Operating Profit	260,464		269,741		745,516		797,408
Other Income (Expense):
Interest income	10,321		7,830		27,960		18,467
Interest expense	(45,801)		(43,787)		(133,385)		(124,477)
Miscellaneous income (expense), net	1,166		(7,099)		(6,605)		(14,920)
Total other expense, net	(34,314)		(43,056)		(112,030)		(120,930)
Earnings from Continuing Operations Before Taxes	226,150		226,685		633,486		676,478
Income Tax Expense from Continuing Operations	(67,739)		(54,166)		(118,743)		(123,329)
Net Earnings of the Group from Continuing Operations	158,411		172,519		514,743		553,149
Net Earnings (Loss) of the Group from Discontinued Operations	485		294		(857)		(489)
Net Earnings of the Group	158,896		172,813		513,886		552,660
Net Earnings Attributable to Noncontrolling Interests from Continuing Operations	(8,551)		(8,204)		(23,117)		(23,038)
Net Earnings Attributable to Redeemable Noncontrolling interests	(3,411)		(370)		(10,112)		(13,225)
Net Earnings Attributable to Jacobs from Continuing Operations	146,449		163,945		481,514		516,886
Net Earnings Attributable to Jacobs	$	146,934	$	164,239	$	480,657	$	516,397
Net Earnings Per Share:
Basic Net Earnings from Continuing Operations Per Share	$	1.17	$	1.29	$	3.85	$	4.08
Basic Net Loss from Discontinued Operations Per Share	$	—	$	—	$	(0.01)	$	—
Basic Earnings Per Share	$	1.17	$	1.30	$	3.84	$	4.07

Diluted Net Earnings from Continuing Operations Per Share	$	1.17	$	1.29	$	3.83	$	4.06
Diluted Net Loss from Discontinued Operations Per Share	$	—	$	—	$	(0.01)	$	—
Diluted Earnings Per Share	$	1.17	$	1.29	$	3.82	$	4.06

See the accompanying Notes to Consolidated Financial Statements - Unaudited.

Page 6

JACOBS SOLUTIONS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three and Nine Months Ended June 28, 2024 and June 30, 2023

(In thousands)

(Unaudited)


	For the Three Months Ended				For the Nine Months Ended
	June 28, 2024		June 30, 2023		June 28, 2024		June 30, 2023
Net Earnings of the Group	$	158,896	$	172,813	$	513,886	$	552,660
Other Comprehensive Income:
Foreign currency translation adjustment	1,418		55,482		74,595		242,768
Change in cash flow hedges	(3,659)		15,644		(29,398)		(14,311)
Change in pension plan liabilities	2,245		(6,765)		(4,214)		(29,025)
Other comprehensive income before taxes	4		64,361		40,983		199,432
Income Tax (Expense) Benefit:
Foreign currency translation adjustment	4,390		5,293		4,390		(348)
Cash flow hedges	904		(3,637)		7,573		4,680
Change in pension plan liabilities	(470)		(363)		(1,407)		(1,022)
Income Tax (Expense) Benefit:	4,824		1,293		10,556		3,310
Net other comprehensive income	4,828		65,654		51,539		202,742
Net Comprehensive Income of the Group	163,724		238,467		565,425		755,402
Net Earnings Attributable to Noncontrolling Interests	(8,551)		(8,204)		(23,117)		(23,038)
Net Earnings Attributable to Redeemable Noncontrolling interests	(3,411)		(370)		(10,112)		(13,225)
Net Comprehensive Income Attributable to Jacobs	$	151,762	$	229,893	$	532,196	$	719,139

See the accompanying Notes to Consolidated Financial Statements - Unaudited.

Page 7

JACOBS SOLUTIONS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the Three Months Ended June 28, 2024 and June 30, 2023

(In thousands)

(Unaudited)


	Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total Jacobs Stockholders’ Equity		Noncontrolling Interests		Total Group Stockholders’ Equity
Balances at March 31, 2023	$	126,805	$	2,697,523	$	4,393,351	$	(838,042)	$	6,379,637	$	48,387	$	6,428,024
Net earnings	—		—		164,239		—		164,239		8,204		172,443
Foreign currency translation adjustments, net of deferred taxes of $(5,293)	—		—		—		60,775		60,775		—		60,775
Pension plan liability, net of deferred taxes of $363	—		—		—		(7,128)		(7,128)		—		(7,128)
Change in cash flow hedges, net of deferred taxes of $3,637	—		—		—		12,007		12,007		—		12,007
Dividends	—		—		(33,216)		—		(33,216)		—		(33,216)
Redeemable Noncontrolling interests redemption value adjustment	—		—		34,101		—		34,101		—		34,101
Repurchase and issuance of redeemable noncontrolling interests	—		—		3,599		—		3,599		—		3,599
Noncontrolling interests - distributions and other	—		—		—		—		—		(5,891)		(5,891)
Stock based compensation	—		20,623		—		—		20,623		—		20,623
Issuances of equity securities including shares withheld for taxes	164		12,493		(531)		—		12,126		—		12,126
Repurchases of equity securities	(1,088)		(23,145)		(100,814)		—		(125,047)		—		(125,047)
Balances at June 30, 2023	$	125,881	$	2,707,494	$	4,460,729	$	(772,388)	$	6,521,716	$	50,700	$	6,572,416

Balances at March 29, 2024	$	125,216	$	2,733,758	$	4,576,383	$	(811,243)	$	6,624,114	$	54,348	$	6,678,462
Net earnings	—		—		146,934		—		146,934		8,551		155,485
Foreign currency translation adjustments net of deferred taxes of $(4,390)	—		—		—		5,808		5,808		—		5,808
Pension plan liability, net of deferred taxes of $470	—		—		—		1,775		1,775		—		1,775
Change in cash flow hedges, net of deferred taxes of $(904)	—		—		—		(2,755)		(2,755)		—		(2,755)
Dividends	—		—		(36,561)		—		(36,561)		—		(36,561)
Redeemable Noncontrolling interests redemption value adjustment	—		—		(2,796)		—		(2,796)		—		(2,796)
Repurchase and issuance of redeemable noncontrolling interests	—		—		(338)		—		(338)		—		(338)
Noncontrolling interests - distributions and other	—		—		—		—		—		(3,262)		(3,262)
Stock based compensation	—		18,994		—		—		18,994		—		18,994
Issuances of equity securities including shares withheld for taxes	111		12,463		(37)		—		12,537		—		12,537
Repurchases of equity securities	(1,073)		(23,465)		(126,381)		—		(150,919)		—		(150,919)
Balances at June 28, 2024	$	124,254	$	2,741,750	$	4,557,204	$	(806,415)	$	6,616,793	$	59,637	$	6,676,430

See the accompanying Notes to Consolidated Financial Statements – Unaudited.

Page 8

JACOBS SOLUTIONS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the Nine Months Ended June 28, 2024 and June 30, 2023

(In thousands)

(Unaudited)


	Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total Jacobs Stockholders’ Equity		Noncontrolling Interests		Total Group Stockholders’ Equity
Balances at September 30, 2022	$	127,393	$	2,682,009	$	4,225,784	$	(975,130)	$	6,060,056	$	44,336	$	6,104,392
Net earnings	—		—		516,397		—		516,397		23,038		539,435
Foreign currency translation adjustments, net of deferred taxes of $348	—		—		—		242,420		242,420		—		242,420
Pension liability, net of deferred taxes of $1,022	—		—		—		(30,047)		(30,047)		—		(30,047)
Change in cash flow hedges, net of deferred taxes of $(4,680)	—		—		—		(9,631)		(9,631)		—		(9,631)
Dividends	—		—		(66,652)		—		(66,652)		—		(66,652)
Redeemable Noncontrolling interests redemption value adjustment	—		—		(10,393)		—		(10,393)		—		(10,393)
Repurchase of redeemable noncontrolling interests	—		—		14,936		—		14,936		—		14,936
Noncontrolling interests - distributions and other	—		—		—		—		—		(16,674)		(16,674)
Stock based compensation	—		55,908		—		—		55,908		—		55,908
Issuances of equity securities including shares withheld for taxes	814		18,779		(5,302)		—		14,291		—		14,291
Repurchases of equity securities	(2,326)		(49,202)		(214,041)		—		(265,569)		—		(265,569)
Balances at June 30, 2023	$	125,881	$	2,707,494	$	4,460,729	$	(772,388)	$	6,521,716	$	50,700	$	6,572,416

Balances at September 29, 2023	$	125,977	$	2,735,325	$	4,542,872	$	(857,954)	$	6,546,220	$	53,862	$	6,600,082
Net earnings	—		—		480,657		—		480,657		23,117		503,774
Foreign currency translation adjustments, net of deferred taxes of $(4,390)	—		—		—		78,985		78,985		—		78,985
Pension liability, net of deferred taxes of $1,407	—		—		—		(5,621)		(5,621)		—		(5,621)
Change in cash flow hedges, net of deferred taxes of $(7,573)	—		—		—		(21,825)		(21,825)		—		(21,825)
Dividends	—		—		(73,638)		—		(73,638)		—		(73,638)
Redeemable Noncontrolling interests redemption value adjustment	—		—		(99,358)		—		(99,358)		—		(99,358)
Repurchase and issuance of redeemable noncontrolling interests	—		—		1,560		—		1,560		—		1,560
Noncontrolling interests - distributions and other	—		—		—		—		—		(17,342)		(17,342)
Stock based compensation	—		54,170		—		—		54,170		—		54,170
Issuances of equity securities including shares withheld for taxes	779		6,742		(5,496)		—		2,025		—		2,025
Repurchases of equity securities	(2,502)		(54,487)		(289,393)		—		(346,382)		—		(346,382)
Balances at June 28, 2024	$	124,254	$	2,741,750	$	4,557,204	$	(806,415)	$	6,616,793	$	59,637	$	6,676,430

See the accompanying Notes to Consolidated Financial Statements – Unaudited.

Page 9

JACOBS SOLUTIONS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Nine Months Ended June 28, 2024 and June 30, 2023

(In thousands)

(Unaudited)


	For the Nine Months Ended
	June 28, 2024		June 30, 2023
Cash Flows from Operating Activities:
Net earnings attributable to the Group	$	513,886	$	552,660
Adjustments to reconcile net earnings to net cash flows provided by operations:
Depreciation and amortization:
Property, equipment and improvements	74,171		76,870
Intangible assets	156,292		152,232


Stock based compensation	54,170		55,908
Equity in earnings of operating ventures, net of return on capital distributions	(13,554)		(2,963)
Loss on disposals of assets, net	1,033		590

Impairment of long-lived assets	—		38,131

Deferred income taxes	(116,103)		4,944
Changes in assets and liabilities, excluding the effects of businesses acquired:
Receivables and contract assets, net of contract liabilities	23,440		22,191
Prepaid expenses and other current assets	54,512		(7,244)
Miscellaneous other assets	68,666		70,218
Accounts payable	117,220		109,142
Accrued liabilities	(107,709)		(285,287)
Other deferred liabilities	22,243		(44,420)
Other, net	9,874		12,428
Net cash provided by operating activities	858,141		755,400
Cash Flows from Investing Activities:
Additions to property and equipment	(82,772)		(98,240)
Disposals of property and equipment and other assets	158		1,537
Capital contributions to equity investees, net of return of capital distributions	1,660		7,964
Acquisitions of businesses, net of cash acquired	(14,000)		(17,685)


Net cash used for investing activities	(94,954)		(106,424)
Cash Flows from Financing Activities:
Proceeds from long-term borrowings	2,224,577		2,329,495
Repayments of long-term borrowings	(2,194,423)		(2,671,403)
Proceeds from short-term borrowings	1,106		3,353
Repayments of short-term borrowings	(31,882)		—
Debt issuance costs	(1,606)		(11,896)
Proceeds from issuances of common stock	35,414		38,051
Common stock repurchases	(346,382)		(265,569)
Taxes paid on vested restricted stock	(33,389)		(23,760)
Cash dividends to shareholders	(106,439)		(95,672)
Net dividends associated with noncontrolling interests	(17,516)		(17,287)
Repurchase of redeemable noncontrolling interests	(41,788)		(90,425)
Proceeds from issuances of redeemable noncontrolling interests	19,761		34,771
Net cash used for financing activities	(492,567)		(770,342)
Effect of Exchange Rate Changes	12,215		61,309
Net Increase in Cash and Cash Equivalents and Restricted Cash	282,835		(60,057)
Cash and Cash Equivalents, including Restricted Cash, at the Beginning of the Period	929,445		1,154,207
Cash and Cash Equivalents, including Restricted Cash, at the End of the Period	$	1,212,280	$	1,094,150

See the accompanying Notes to Consolidated Financial Statements – Unaudited.

Page 10

JACOBS SOLUTIONS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.Basis of Presentation

Unless the context otherwise requires:

•References herein to “Jacobs” are to Jacobs Solutions Inc. and its predecessors;

•References herein to the “Company”, “we”, “us” or “our” are to Jacobs Solutions Inc. and its consolidated subsidiaries; and

•References herein to the “Group” are to the combined economic interests and activities of the Company and the persons and entities holding noncontrolling interests in our consolidated subsidiaries.

On August 29, 2022, Jacobs Engineering Group Inc. ("JEGI"), the predecessor to Jacobs Solutions Inc., implemented a holding company structure, which resulted in Jacobs Solutions Inc. becoming the parent company of, and successor issuer to, JEGI (the "Holding Company Reorganization"). For purposes of this report, references to Jacobs and the "Company", "we", "us" or "our" or our management or business at any point prior to the Holding Company Implementation Date refer to JEGI, or JEGI and its consolidated subsidiaries as the predecessor to Jacobs Solutions Inc.

The accompanying consolidated financial statements and financial information included herein have been prepared pursuant to the interim period reporting requirements of Form 10-Q. Consequently, certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) have been condensed or omitted. Readers of this Quarterly Report on Form 10-Q should also read our consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the fiscal year ended September 29, 2023 (“2023 Form 10-K”).

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of our consolidated financial statements as of June 28, 2024, and for the three and nine months ended June 28, 2024.

Our interim results of operations are not necessarily indicative of the results to be expected for the full fiscal year.

On November 20, 2023, Jacobs entered into a definitive agreement to spin-off and combine our Critical Mission Solutions ("CMS") and portions of our Divergent Solutions business, including Cyber & Intelligence (the "Separated Businesses") with Amentum Parent Holdings LLC ("Amentum"), in a Reverse Morris Trust transaction intended to be tax-free to Jacobs’ shareholders for U.S. federal income tax purposes (hereinafter referred to as the “Separation Transaction”). The Separation Transaction, which is expected to close in the second half of September 2024, is subject to regulatory approvals and other customary closing conditions.

On April 26, 2019, Jacobs completed the sale of its Energy, Chemicals and Resources ("ECR") business to Worley Limited ("Worley"), a company incorporated in Australia, for a purchase price of $3.4 billion consisting of (i) $2.8 billion in cash plus (ii) 58.2 million ordinary shares of Worley, subject to adjustments for changes in working capital and certain other items (the “ECR sale”). As a result of the ECR sale, substantially all ECR-related assets and liabilities were sold (the "Disposal Group"). We determined that the Disposal Group should be reported as discontinued operations in accordance with ASC 210-05, Discontinued Operations because their disposal represents a strategic shift that had a major effect on our operations and financial results. As such, the financial results of the ECR business are reflected in our unaudited Consolidated Statements of Earnings as discontinued operations for all periods presented and all of the ECR business to be sold under the terms of the ECR sale had been conveyed to Worley and as such, no amounts remain held for sale.

2. Use of Estimates and Assumptions

The preparation of financial statements in conformity with U.S. GAAP requires us to employ estimates and make assumptions that affect the reported amounts of certain assets and liabilities; the revenues and expenses reported for the periods covered by the financial statements; and certain amounts disclosed in these Notes to the Consolidated Financial Statements. Although such estimates and assumptions are based on management’s most recent assessment of the underlying facts and circumstances utilizing the most current information available and past experience, actual results could differ significantly from those estimates and assumptions. Our estimates, judgments and assumptions are evaluated periodically and adjusted accordingly.

Page 11

JACOBS SOLUTIONS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

Please refer to Note 2- Significant Accounting Policies of Notes to Consolidated Financial Statements included in our 2023 Form 10-K for a discussion of other significant estimates and assumptions affecting our consolidated financial statements.

3. Fair Value and Fair Value Measurements

Certain amounts included in the accompanying consolidated financial statements are presented at fair value. Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants as of the date fair value is determined (the “measurement date”). When determining fair value, we consider the principal or most advantageous market in which we would transact, and we consider only those assumptions we believe a typical market participant would consider when pricing an asset or liability. In measuring fair value, we use the following inputs in the order of priority indicated:

Level 1 - Quoted prices in active markets for identical assets or liabilities.

Level 2 - Observable inputs other than quoted prices in active markets included in Level 1, such as (i) quoted prices for similar assets or liabilities; (ii) quoted prices in markets that have insufficient volume or infrequent transactions (e.g., less active markets); and (iii) model-driven valuations in which all significant inputs are observable or can be derived principally from, or corroborated with, observable market data for substantially the full term of the asset or liability.

Level 3 - Unobservable inputs to the valuation methodology that are significant to the fair value measurement.

Please refer to Note 2- Significant Accounting Policies of Notes to Consolidated Financial Statements included in our 2023 Form 10-K for a more complete discussion of the various items within the consolidated financial statements measured at fair value and the methods used to determine fair value. Please also refer to Note 17- Commitments and Contingencies and Derivative Financial Instruments for discussion regarding the Company's derivative instruments.

The net carrying amounts of cash and cash equivalents, trade receivables and payables and short-term debt approximate fair value due to the short-term nature of these instruments. See Note 12- Borrowings for a discussion of the fair value of long-term debt.

Fair value measurements relating to our business combinations and goodwill allocations related to our Divergent Solutions ("DVS") segment realignment were made primarily using Level 3 inputs including discounted cash flow techniques. Fair value for the identified intangible assets is generally estimated using inputs primarily for the income approach using the multiple period excess earnings method and the relief from royalties method. The significant assumptions used in estimating fair value include (i) revenue projections of the business, including profitability, (ii) attrition rates and (iii) the estimated discount rate that reflects the level of risk associated with receiving future cash flows. Other personal property assets, such as furniture, fixtures and equipment, are valued using the cost approach, which is based on replacement or reproduction costs of the asset less depreciation. The fair value of the contingent consideration is estimated using a Monte Carlo simulation and the significant assumptions used include projections of revenues and probabilities of meeting those projections. Key inputs to the valuation of the noncontrolling interests include projected cash flows and the expected volatility associated with those cash flows.

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JACOBS SOLUTIONS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

4. New Accounting Pronouncements

ASU 2023-09, Income Taxes, (Topic 740): Improvements to Income Tax Disclosures, provides qualitative and quantitative updates to the Company's effective income tax rate reconciliation and income taxes paid disclosures, among others, in order to enhance the transparency of income tax disclosures, including consistent categories and greater disaggregation of information in the rate reconciliation and disaggregation by jurisdiction of income taxes paid. The amendments in ASU 2023-09 are effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The amendments should be applied prospectively; however, retrospective application is also permitted. ASU 2023-09 will be effective for the Company in the first quarter of fiscal 2026. The Company has identified and is implementing changes to processes and internal controls to meet the standard’s updated reporting and disclosure requirements.

ASU 2023-07, Segment Reporting, (Topic 280): Improvements to Reportable Segment Disclosures, requires disclosure of significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items to reconcile to segment profit or loss, and the title and position of the entity’s CODM. The amendments in this update also expand the interim segment disclosure requirements. ASU 2023-07 is effective for annual periods beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted and the amendments in this update are required to be applied on a retrospective basis. ASU 2023-07 will be effective for the Company's annual fiscal 2025 period. The Company is evaluating the impact of this guidance on its consolidated financial statements and related disclosures.

ASU 2023-06, Disclosure Improvements: Amendments - Codification Amendments in Response to the Disclosure Update and Simplification Initiative of the Securities and Exchange Commission ("SEC"). The Financial Accounting Standards Board issued the standard to introduce changes to US GAAP that originate in either SEC Regulation S-X or S-K, which are rules about the form and content of financial reports filed with the SEC. The provisions of the standard are contingent upon instances where the SEC removes the related disclosure provisions from Regulation S-X and S-K. The Company does not expect that the application of this standard will have a material impact on our consolidated financial statements and related disclosures.

5. Revenue Accounting for Contracts

Disaggregation of Revenues

Our revenues are principally derived from contracts to provide a diverse range of technical, professional, and construction services to a large number of industrial, commercial, and governmental clients. We provide a broad range of engineering, design, and architectural services; construction and construction management services; operations and maintenance services; and technical, digital, process, scientific and systems consulting services. We provide our services through offices and subsidiaries located primarily in North America, Europe, the Middle East, India, Australia, Africa, and Asia. We provide our services under cost-reimbursable and fixed-price contracts. Our contracts are with many different customers in numerous industries. Refer to Note 18- Segment Information for additional information on how we disaggregate our revenues by reportable segment.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

The following table further disaggregates our revenue by geographic area for the three and nine months ended June 28, 2024 and June 30, 2023 (in thousands):


	Three Months Ended				Nine Months Ended
	June 28, 2024		June 30, 2023		June 28, 2024		June 30, 2023
Revenues:
United States	$	2,849,019	$	2,816,773	$	8,526,005	$	8,047,887
Europe	939,407		905,917		2,822,187		2,691,479
Canada	67,205		70,164		192,235		193,880
Asia	32,721		35,054		98,334		105,520
India	37,946		39,749		110,963		126,922
Australia and New Zealand	170,971		181,308		509,117		512,416
Middle East and Africa	134,311		137,737		401,057		385,598
Total	$	4,231,580	$	4,186,702	$	12,659,898	$	12,063,702

Contract Liabilities

Contract liabilities represent amounts billed to clients in excess of revenue recognized to date. Revenue recognized for the three and nine months ended June 28, 2024 that was previously included in the contract liability balance on September 29, 2023 was $56.5 million and $531.3 million, respectively. Revenue recognized for the three and nine months ended June 30, 2023 that was included in the contract liability balance on September 30, 2022 was $65.1 million and $483.9 million, respectively.

Remaining Performance Obligation

The Company’s remaining performance obligations as of June 28, 2024 represent a measure of the total dollar value of work to be performed on contracts awarded and in progress. The Company had approximately $18.8 billion in remaining performance obligations as of June 28, 2024. The Company expects to recognize approximately 57% of its remaining performance obligations into revenue within the next twelve months and the remaining 43% thereafter. The majority of the remaining performance obligations after the first twelve months are expected to be recognized over a four-year period.

Although our remaining performance obligations reflect business volumes that are considered to be firm, normal business activities including scope adjustments, deferrals or cancellations may occur that impact volume or expected timing of their recognition. Remaining performance obligations are adjusted to reflect any known project cancellations, revisions to project scope and cost, foreign currency exchange fluctuations and project deferrals, as appropriate.

6. Earnings Per Share and Certain Related Information

Basic and diluted earnings per share (“EPS”) are computed using the two-class method, which is an earnings allocation method that determines EPS for common shares and participating securities. The undistributed earnings are allocated between common shares and participating securities as if all earnings had been distributed during the period. Participating securities and common shares have equal rights to undistributed earnings. Net earnings used for the purpose of determining basic and diluted EPS is determined by taking net earnings, less earnings available to participating securities and the preferred redeemable noncontrolling interests redemption value adjustment associated with the PA Consulting transaction.

The following table reconciles the denominator used to compute basic EPS to the denominator used to compute diluted EPS for the three and nine months ended June 28, 2024 and June 30, 2023 (in thousands):

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)


	Three Months Ended				Nine Months Ended
	June 28, 2024		June 30, 2023		June 28, 2024		June 30, 2023
Numerator for Basic and Diluted EPS:
Net earnings attributable to Jacobs from continuing operations	$	146,449	$	163,945	$	481,514	$	516,886
Preferred Redeemable Noncontrolling interests redemption value adjustment (See Note 15- PA Consulting Redeemable Noncontrolling Interests)	(20)		—		1,746		—



Net earnings from continuing operations allocated to common stock for EPS calculation	$	146,429	$	163,945	$	483,260	$	516,886



Net earnings (loss) from discontinued operations allocated to common stock for EPS calculation	$	485	$	294	$	(857)	$	(489)

Net earnings allocated to common stock for EPS calculation	$	146,914	$	164,239	$	482,403	$	516,397

Denominator for Basic and Diluted EPS:



Shares used for calculating basic EPS attributable to common stock	125,163		126,646		125,660		126,785

Effect of dilutive securities:
Stock compensation plans	453		492		553		546
Shares used for calculating diluted EPS attributable to common stock	125,616		127,138		126,213		127,331

Net Earnings Per Share:
Basic Net Earnings from Continuing Operations Per Share	$	1.17	$	1.29	$	3.85	$	4.08
Basic Net Loss from Discontinued Operations Per Share	$	—	$	—	$	(0.01)	$	—
Basic Earnings Per Share	$	1.17	$	1.30	$	3.84	$	4.07
Diluted Net Earnings from Continuing Operations Per Share	$	1.17	$	1.29	$	3.83	$	4.06
Diluted Net Loss from Discontinued Operations Per Share	$	—	$	—	$	(0.01)	$	—
Diluted Earnings Per Share	$	1.17	$	1.29	$	3.82	$	4.06

Note: Per share amounts may not add due to rounding.

Share Repurchases


On January 16, 2020, the Company's Board of Directors authorized a share repurchase program of up to $1.0 billion of the Company's common stock (the "2020 Repurchase Authorization"). The 2020 Repurchase Authorization expired on January 15, 2023. On January 25, 2023, the Company's Board of Directors authorized an incremental share repurchase program of up to $1.0 billion of the Company's common stock, to expire on January 25, 2026 (the "2023 Repurchase Authorization"). At June 28, 2024, the Company had $528.5 million remaining under the 2023 Repurchase Authorization.

The following table summarizes repurchase activity under the 2023 Repurchase Authorization through the third fiscal quarter of 2024:

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JACOBS SOLUTIONS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)


Amount Authorized (2023 Repurchase Authorization)	Average Price Per Share (1)	Total Shares Retired	Shares Repurchased
$1,000,000,000	$140.42	1,074,763	1,074,763

(1)Includes commissions paid and excise tax due under the Inflation Reduction Act of 2022 and calculated at the average price per share.


Our share repurchase program does not obligate the Company to purchase any shares. Share repurchases may be executed through various means including, without limitation, accelerated share repurchases, open market transactions, privately negotiated transactions, purchases pursuant to Rule 10b5-1 plans or otherwise. The authorization for the share repurchase programs may be terminated, increased or decreased by the Company’s Board of Directors in its discretion at any time. The timing, amount and manner of share repurchases may depend upon market conditions and economic circumstances, availability of investment opportunities, the availability and costs of financing, currency fluctuations, the market price of the Company's common stock, other uses of capital and other factors.

Dividends

On July 11, 2024, the Company’s Board of Directors declared a quarterly dividend of $0.29 per share of the Company’s common stock to be paid on August 23, 2024, to shareholders of record on the close of business on July 26, 2024. Future dividend declarations are subject to review and approval by the Company’s Board of Directors. Dividends paid through the third fiscal quarter of 2024 and the preceding fiscal year are as follows:

Declaration Date

Record Date

Payment Date

Cash Amount (per share)

May 2, 2024

May 24, 2024

June 21, 2024

$0.29

January 25, 2024

February 23, 2024

March 22, 2024

$0.29

September 28, 2023

October 27, 2023

November 9, 2023

$0.26

July 6, 2023

July 28, 2023

August 25, 2023

$0.26

April 27, 2023

May 26, 2023

June 23, 2023

$0.26

January 25, 2023

February 24, 2023

March 24, 2023

$0.26

September 15, 2022

September 30, 2022

October 28, 2022

$0.23

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JACOBS SOLUTIONS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

7. Goodwill and Intangibles

The carrying value of goodwill appearing in the accompanying Consolidated Balance Sheets at June 28, 2024 and September 29, 2023 was as follows (in thousands):


	Critical Mission Solutions		People & Places Solutions		Divergent Solutions		PA Consulting		Total
Balance September 29, 2023	$	2,244,985	$	3,208,193	$	595,712	$	1,294,636	$	7,343,526



Foreign currency translation and other	4,854		6,437		1,289		48,761		61,341
Balance June 28, 2024	$	2,249,839	$	3,214,630	$	597,001	$	1,343,397	$	7,404,867

The following table provides certain information related to the Company’s acquired intangibles in the accompanying Consolidated Balance Sheets at June 28, 2024 and September 29, 2023 (in thousands):


	Customer Relationships, Contracts and Backlog		Developed Technology		Trade Names		Total
Balance September 29, 2023	$	1,022,401	$	74,791	$	174,751	$	1,271,943
Amortization	(134,635)		(11,920)		(9,737)		(156,292)
Acquired	—		—		14,000		14,000

Foreign currency translation and other	20,505		200		6,221		26,926
Balance June 28, 2024	$	908,271	$	63,071	$	185,235	$	1,156,577

The following table presents estimated amortization expense of intangible assets for the remainder of fiscal 2024 and for the succeeding years.


Fiscal Year	(in millions)
2024	$	52.6
2025	210.0
2026	187.0
2027	154.6
2028	143.7
Thereafter	408.7
Total	$	1,156.6

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JACOBS SOLUTIONS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

8. Receivables and Contract Assets

The following table presents the components of receivables and contract assets appearing in the accompanying Consolidated Balance Sheets at June 28, 2024 and September 29, 2023, as well as certain other related information (in thousands):


	June 28, 2024		September 29, 2023
Components of receivables and contract assets:
Amounts billed, net	$	1,597,830	$	1,457,333
Unbilled receivables and other	1,434,073		1,442,486
Contract assets	742,324		658,987
Total receivables and contract assets, net	$	3,774,227	$	3,558,806
Other information about receivables:
Amounts due from the United States federal government, included above, net of contract liabilities	$	806,068	$	802,566

Amounts billed, net consist of amounts invoiced to clients in accordance with the terms of our client contracts and are shown net of an allowance for expected credit losses. We anticipate that substantially all of such billed amounts will be collected over the next twelve months.

Unbilled receivables and other, which represent an unconditional right to payment subject only to the passage of time, are reclassified to amounts billed when they are billed under the terms of the contract. We anticipate that substantially all of such unbilled amounts will be billed and collected over the next twelve months.

Contract assets represent unbilled amounts where the right to payment is subject to more than merely the passage of time and includes performance-based incentives and services that have been provided in advance of agreed contractual milestones. Contract assets are transferred to unbilled receivables when the right to consideration becomes unconditional and are transferred to amounts billed upon invoicing.

9. Accumulated Other Comprehensive Income

The following table presents the Company's roll forward of accumulated other comprehensive income (loss) after-tax as of June 28, 2024 (in thousands):


	Change in Net Pension Obligation		Foreign Currency Translation Adjustment (1)		Gain/(Loss) on Cash Flow Hedges (2)		Total
Balance at September 29, 2023	$	(325,692)	$	(635,937)	$	103,675	$	(857,954)
Other comprehensive (loss) income	(5,621)		78,985		6,964		80,328
Reclassifications from accumulated other comprehensive income (loss)	—		—		(28,789)		(28,789)
Balance at June 28, 2024	$	(331,313)	$	(556,952)	$	81,850	$	(806,415)

(1) Included in the overall foreign currency translation adjustment for the nine months ended June 28, 2024 and June 30, 2023 are $(9.8) million and $(93.5) million, respectively, in unrealized gains (losses) on long-term foreign currency denominated intercompany loans not anticipated to be settled in the foreseeable future.

(2) Included in the Company’s cumulative net unrealized gains from interest rate and cross currency swaps recorded in accumulated other comprehensive income as of June 28, 2024 were approximately $18.3 million in unrealized gains, net of taxes, which are expected to be realized in earnings during the twelve months subsequent to June 28, 2024.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

10. Income Taxes


The Company’s effective tax rates from continuing operations for the three months ended June 28, 2024 and June 30, 2023 were 30.0% and 23.9%, respectively. The most significant items contributing to the difference between the statutory U.S. federal corporate tax rate of 21% and the Company's effective tax rate for the three-month period ended June 28, 2024 were U.S. state income tax expense of $4.4 million and U.S. tax on foreign earnings of $10.5 million, and income tax expense of $10.6 million related to foreign exchange gains associated with a change in assertion on intercompany loans that were previously deemed indefinitely reinvested. The U.S. state income tax and U.S. tax on foreign earnings are expected to have a continuing impact on the Company's effective tax rate for the remainder of the fiscal year. These expense items were partly offset by a return-to-provision income tax benefit of $7.9 million, mainly attributable to additional research and development credits claimed on the U.S. federal tax return. For the three months ended June 30, 2023, the main differences compared to the U.S. federal statutory rate were attributable to U.S. state income tax expense of $5.3 million and U.S. tax on foreign earnings of $5.4 million, partly offset by a $3.5 million tax benefit for the release of previously valued foreign tax credits.

The Company's effective tax rates from continuing operations for the nine months ended June 28, 2024 and June 30, 2023 were 18.7% and 18.2%, respectively. The most significant item contributing to the difference between the statutory U.S. federal corporate tax rate of 21% and the Company’s effective tax rate for the nine-month period ended June 28, 2024 is related to a discrete event associated with the election to treat an Australian subsidiary as a corporation versus a partnership for U.S. tax purposes, with this election resulting in the derecognition of a deferred tax liability and yielding a discrete income tax benefit of $61.6 million as the Company asserts that a component of the investment will be indefinitely reinvested. This benefit was partly offset by U.S. state income tax expense of $11.7 million, U.S. tax on foreign earnings of $19.1 million, and income tax expense of $10.6 million related to foreign exchange gains associated with a change in assertion on intercompany loans that were previously deemed indefinitely reinvested. The U.S. state income tax and U.S. tax on foreign earnings are expected to have a continuing impact on the Company's effective tax rate for the remainder of the fiscal year. For the nine months ended June 30, 2023, the main differences compared to the U.S. federal statutory rate were associated with net tax benefits of $39.4 million which were mostly related to uncertain tax positions in the U.S. that were effectively settled, of which $30.8 million related to positions carried forward from the fiscal 2018 acquisition of CH2M Hill Companies Ltd., as well as a tax benefit of $12.1 million for the release of previously valued foreign tax credits. These benefits were partly offset by U.S. state income tax expense of $15.8 million and U.S. tax on foreign earnings of $13.6 million.

In December 2021, the Organization for Economic Cooperation and Development ("OECD") released the Pillar Two Model Rules (also referred to as the global minimum tax or Global Anti-Base Erosion "GloBE" rules), which were designed to ensure large multinational enterprises pay a minimum 15 percent level of tax on the income arising in each jurisdiction in which they operate. Several jurisdictions in which we operate have enacted these rules, which are effective for the first quarter of the fiscal year ending September 26, 2025. The Company is continually monitoring developments and evaluating the potential impacts. At this time, the Company does not anticipate a material tax charge as a result of implementation of these rules.

The amount of income taxes the Company pays is subject to ongoing audits by tax jurisdictions around the world. In the normal course of business, the Company is subject to examination by tax authorities throughout the world, including such major jurisdictions as Australia, Canada, India, the Netherlands, the United Kingdom and the United States. Our estimate of the potential outcome of any uncertain tax issue is subject to our assessment of the relevant risks, facts, and circumstances existing at the time. The Company believes that it has adequately provided for reasonably foreseeable outcomes related to these matters. However, future results may include favorable or unfavorable adjustments to our estimated tax liabilities in the period the assessments are made or resolved, which may impact our effective tax rate.

11. Joint Ventures, VIEs and Other Investments

For the Company's consolidated variable interest entities ("VIE") joint ventures, the carrying value of assets and liabilities was $406.4 million and $246.8 million, respectively, as of June 28, 2024 and $424.2 million and $279.8 million, respectively, as of September 29, 2023. There are no consolidated VIEs that have debt or credit facilities.

For the Company's proportionate consolidated VIEs, the carrying value of assets and liabilities was $143.8 million and $134.3 million, respectively, as of June 28, 2024, and $132.0 million and $128.9 million, respectively, as of September 29, 2023.

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JACOBS SOLUTIONS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

The carrying values of our investments in equity method joint ventures in the Consolidated Balance Sheets (reported in Other Noncurrent Assets: Miscellaneous) as of June 28, 2024 and September 29, 2023 were $61.0 million and $49.6 million, respectively. Additionally, income from equity method joint ventures (reported in Revenue) was $12.5 million and $7.6 million, respectively, during the three months ended June 28, 2024 and June 30, 2023, with $38 million and $25.1 million, respectively, for the corresponding nine-month periods. As of June 28, 2024, the Company's equity method investment carrying values do not include material amounts exceeding their share of the respective joint ventures' reported net assets.

Accounts receivable from unconsolidated joint ventures accounted for under the equity method was $18.0 million and $16.1 million as of June 28, 2024 and September 29, 2023, respectively.

12. Borrowings

At June 28, 2024 and September 29, 2023, long-term debt consisted of the following (principal amounts in thousands):


	Interest Rate	Maturity	June 28, 2024		September 29, 2023
Revolving Credit Facility	Benchmark + applicable margin (1) (2)	February 2028	$	61,121	$	10,000
2021 Term Loan Facility - USD Portion	Benchmark + applicable margin (1) (3)	February 2026	120,000		120,000
2021 Term Loan Facility - GBP Portion	Benchmark + applicable margin (1) (3)	September 2025	822,705		794,170
2020 Term Loan Facility	Benchmark + applicable margin (1) (4)	March 2025 (6)	824,060		854,246
Fixed-rate:
5.9% Bonds, due 2033	5.9% (5)	March 2033	500,000		500,000
6.35% Bonds, due 2028	6.35%	August 2028	600,000		600,000

Less: Current Portion (6)			(824,060)		(51,773)
Less: Deferred Financing Fees			(12,370)		(13,172)
Total Long-term debt, net			$	2,091,456	$	2,813,471

(1)During the year ended September 29, 2023, the aggregate principal amounts denominated in U.S. dollars under the Revolving Credit Facility, the 2021 Term Loan Facility and the 2020 Term Loan Facility (each as defined below) transitioned from underlying LIBOR benchmarked rates to the Term Secured Overnight Financing Rate ("SOFR"). During fiscal 2022, the aggregate principal amounts denominated in British pounds under the Revolving Credit Facility, 2021 Term Loan Facility and 2020 Term Loan Facility transitioned from underlying LIBOR benchmarked rates to Sterling Overnight Index Average ("SONIA") rates.

(2)Depending on the Company’s Consolidated Leverage Ratio or Debt Rating (each as defined in the Revolving Credit Facility (defined below)), U.S. dollar denominated borrowings under the Revolving Credit Facility bear interest at either a SOFR rate plus a margin of between 0.975% and 1.725% or a base rate plus a margin of between 0% and 0.625%. The applicable SOFR rates, or LIBOR rate for the prior fiscal year end, including applicable margins at June 28, 2024 and September 29, 2023 were approximately 4.90% and 8.75%. Borrowings denominated in British pounds bear interest at an adjusted SONIA rate plus a margin of between 0.908% and 1.658%. There were no amounts drawn in British pounds as of June 28, 2024.

(3)Depending on the Company’s Consolidated Leverage Ratio or Debt Rating (each as defined in the Amended and Restated Term Loan Agreement (defined below)), U.S. dollar denominated borrowings under the 2021 Term Loan Facility bear interest at either a SOFR rate plus a margin of between 0.975% and 1.725% or a base rate plus a margin of between 0% and 0.625%. The applicable SOFR, or LIBOR rate for the prior fiscal year end, including applicable margins for borrowings denominated in U.S. dollars at June 28, 2024 and September 29, 2023 was approximately 6.68% and 6.68%. Borrowings denominated in British pounds bear interest at an adjusted SONIA rate plus a margin of between 0.908% and 1.658%, which was approximately 6.48% and 6.47% at June 28, 2024 and September 29, 2023, respectively.

(4)Depending on the Company’s Consolidated Leverage Ratio or Debt Rating (each as defined in the 2020 Term Loan Agreement), U.S. dollar denominated borrowings under the 2020 Term Loan Facility bear interest at either a SOFR rate plus a margin of between 0.975% and 1.725% or a base rate plus a margin of between 0% and 0.625%. The applicable SOFR, or LIBOR rate for the prior fiscal year end, including applicable margins for borrowings denominated in U.S. dollars at June 28, 2024 and September 29,

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JACOBS SOLUTIONS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

2023 were approximately 6.69% and 6.68%. Borrowings denominated in British pounds bear interest at an adjusted SONIA rate plus a margin of between 0.908% and 1.658%, which was approximately 6.48% and 6.47% at June 28, 2024 and September 29, 2023, respectively.

(5)From and including September 1, 2028 (the “First Step Up Date”), the interest rate payable on the 5.90% Bonds (as defined below) will be increased by an additional 12.5 basis points to 6.025% per annum (the “First Step Up Interest Rate”) unless the Company notifies the Trustee (as defined below) on or before the date that is 15 days prior to the First Step Up Date that the Percentage of Gender Diversity Performance Target (as defined in the First Supplemental Indenture (as defined below)) has been satisfied and receives a related assurance letter verifying such compliance. From and including September 1, 2030 (the “Second Step Up Date”), the interest rate payable on the 5.90% Bonds will be increased by 12.5 basis points to (x) 6.150% per annum if the First Step Up Interest Rate was in effect immediately prior to the Second Step Up Date or (y) 6.025% per annum if the initial interest rate was in effect immediately prior to the Second Step Up Date, unless the Company notifies the Trustee on or before the date that is 15 days prior to the Second Step Up Date that the GHG Emissions Performance Target (as defined in the First Supplemental Indenture) has been satisfied and receives a related assurance letter verifying such compliance.

(6)Balance as of June 28, 2024 is associated with the March 25, 2025 scheduled maturity of the 2020 Term Loan Facility, which was reclassified from long-term debt in March 2024. Previously reported balance as of September 29, 2023 was comprised of the 2020 Term Loan quarterly principal repayments of 1.25%, or $9.1 million and £3.1 million, of the aggregate initial principal amount borrowed, totaling $51.8 million in U.S. dollars for the subsequent twelve months.

Revolving Credit Facility and Term Loans

The Company and certain of its subsidiaries maintain a sustainability-linked $2.25 billion unsecured revolving credit facility (the “Revolving Credit Facility”) established under a third amended and restated credit agreement, dated February 6, 2023 (the "Revolving Credit Agreement"), among Jacobs and certain of its subsidiaries as borrowers and a syndicate of U.S. and international banks and financial institutions. The credit extensions under the Revolving Credit Facility can be funded in U.S. dollars, British Sterling, Euros, Canadian dollars, Australian dollars, Swedish Krona, Singapore dollars and other agreed upon alternative currencies. The Revolving Credit Agreement also provides for a financial letter of credit sub facility of $400.0 million, permits performance letters of credit, and provides for a $100.0 million sub facility for swing line loans. Letters of credit are subject to fees based on the Company’s Consolidated Leverage Ratio and Debt Rating, whichever is more favorable to the Company.

The Revolving Credit Agreement amended and restated the second amended and restated credit agreement dated March 27, 2019, by and among JEGI and certain of its subsidiaries and a syndicate of banks and financial institutions, in order to, among other things, (a) extend the maturity date of the Revolving Credit Facility to February 6, 2028, (b) replace and adjust interest rates based on market conditions and incorporate a sustainability-linked pricing adjustment, (c) revise the commitment fee on the unused portion of the facility to a range of 0.10% to 0.25% depending on the higher of the pricing level associated with JEGI's Debt Rating or the Consolidated Leverage Ratio, (d) increase the Consolidated Leverage Ratio financial covenant to 3.50:1.00 (subject to temporary increases to 4.00:1.00 following the closing of certain material acquisitions), (e) eliminate the net worth financial covenant and (f) add the Company as a guarantor of the obligations of JEGI and its subsidiaries under the Revolving Credit Agreement.

The Company and JEGI maintain an unsecured delayed draft term loan facility (the “2021 Term Loan Facility”) established under an amended and restated term loan agreement dated February 6, 2023 (the "Amended and Restated Term Loan Agreement"), by and among the Company and JEGI and a syndicate of banks and financial institutions. JEGI borrowed $200.0 million and £650.0 million of term loans under the 2021 Term Loan Facility (reflecting scheduled maturities in February 2026 and September 2025, respectively) and the proceeds of such term loans were used primarily to fund JEGI's investment in PA Consulting. The Amended and Restated Term Loan Agreement amended and restated the term loan agreement dated January 15, 2021, by and among JEGI and a syndicate of U.S. banks and financial institutions to, among other things: (a) extend the maturity date of the U.S. dollar term loan to February 6, 2026 and the British sterling term loan to September 1, 2025, (b) replace and adjust interest rates based on market conditions and incorporate a sustainability-linked pricing adjustment, (c) increase the Consolidated Leverage Ratio financial covenant to 3.50:1.00 (subject to temporary increases to 4.00:1.00 following the closing of certain material acquisitions), (d) eliminate the net worth financial covenant, and (e) add Jacobs as a guarantor of the obligations of JEGI under the Amended and Restated Term Loan Agreement.

During the fourth quarter of fiscal 2023, the Company repaid $80.0 million of the USD portion of the 2021 Term Loan Facility.

On March 25, 2020, JEGI and Jacobs U.K., a wholly owned subsidiary of JEGI, entered into a term loan agreement (the "2020 Term Loan Agreement") with a syndicate of banks and financial institutions, which provides for an unsecured term loan facility (the “2020 Term Loan Facility”). Under the 2020 Term Loan Facility, JEGI borrowed an aggregate principal amount of $730.0 million and Jacobs U.K. borrowed an aggregate principal amount of £250.0 million. The

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proceeds of the term loans were used to repay an existing term loan with a maturity date of June 2020 and for general corporate purposes. On February 6, 2023, the 2020 Term Loan Agreement was amended to, among other things: (a) replace and adjust interest rates based on market conditions and incorporate a sustainability-linked pricing adjustment, (b) increase the Consolidated Leverage Ratio financial covenant to 3.50:1.00 (subject to temporary increases to 4.00:1.00 following the closing of certain material acquisitions), (c) eliminate the net worth financial covenant, and (d) add Jacobs as a guarantor of the obligations of JEGI and Jacobs U.K. The 2020 Term Loan facility matures in March 2025 and the related outstanding balances under this facility were reclassified to current maturities of long-term debt in the Company’s March 29, 2024 consolidated balance sheet.

The 2020 Term Loan Facility and the 2021 Term Loan Facility are together referred to as the "Term Loan Facilities".

In the fourth quarter of fiscal 2022, the Revolving Credit Facility and Term Loan Facilities were amended to permit the Holding Company Reorganization.

On December 20, 2023, the Revolving Credit Facility and Term Loan Facilities were amended to adjust the point in time at which certain compliance thresholds are tested in connection with the Separation Transaction.

On April 10, 2024, the Term Loan Facilities were amended to permit the potential exchange of Jacobs' retained equity stake in the combined company after the Separation Transaction for the effective repayment of a portion of the Term Loan Facilities.

We were in compliance with the covenants under the Revolving Credit Facility and Term Loan Facilities at June 28, 2024.

5.90% Bonds, due 2033

On February 16, 2023, JEGI completed an offering of $500 million aggregate principal amount of 5.90% Bonds due 2033 (the “5.90% Bonds”). The 5.90% Bonds are fully and unconditionally guaranteed by the Company (the “5.90% Bonds Guarantee”). The 5.90% Bonds and the 5.90% Bonds Guarantee were offered pursuant to a prospectus supplement, dated February 13, 2023, to the prospectus dated February 6, 2023, that forms a part of the Company's and JEGI’s automatic shelf registration statement on Form S-3ASR previously filed with the SEC, and were issued pursuant to an Indenture, dated as of February 16, 2023, between JEGI, as issuer, the Company, as guarantor, and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”), as amended and supplemented by the First Supplemental Indenture, dated as of February 16, 2023 (the “First Supplemental Indenture”). Interest on the 5.90% Bonds is payable semi-annually in arrears on each March 1 and September 1, commencing on September 1, 2023, until maturity. The 5.90% Bonds bear interest at 5.90% per annum, subject to adjustments as discussed in note (5) to the table above.

Prior to December 1, 2032 (the “5.90% Bonds Par Call Date”), JEGI may redeem the 5.90% Bonds at its option, in whole or in part, at any time and from time to time, at the redemption price calculated by JEGI (expressed as a percentage of principal amount and rounded to three decimal places) equal to the greater of: (1) (a) the sum of the present values of the remaining scheduled payments of principal and interest on the 5.90% Bonds being redeemed, assuming that such 5.90% Bonds matured on the 5.90% Bonds Par Call Date, discounted to the redemption date on a semiannual basis (assuming a 360-day year of twelve 30-day months), at the Treasury Rate (as defined in the First Supplemental Indenture) plus 35 basis points, less (b) interest accrued to the redemption date, and (2) 100% of the principal amount of such 5.90% Bonds to be redeemed, plus, in either case, accrued and unpaid interest on the 5.90% Bonds, if any, to, but excluding, the redemption date. At any time and from time to time on or after the 5.90% Bonds Par Call Date, JEGI may redeem the 5.90% Bonds, at its option, in whole or in part, at a redemption price equal to 100% of the principal amount of the 5.90% Bonds to be redeemed, plus accrued and unpaid interest thereon, if any, up to, but excluding, the redemption date.

6.35% Bonds, due 2028

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On August 18, 2023, JEGI completed an offering of $600 million aggregate principal amount of 6.35% Bonds due 2028 (the “6.35% Bonds”). The 6.35% Bonds are fully and unconditionally guaranteed by the Company (the “6.35% Bonds Guarantee”). The 6.35% Bonds and the 6.35% Bonds Guarantee were offered pursuant to a prospectus supplement, dated August 15, 2023, 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 previously filed with the SEC, and were issued pursuant to the Indenture, as amended and supplemented by the Second Supplemental Indenture, dated as of August 18, 2023 (the “Second Supplemental Indenture”). Interest on the 6.35% Bonds is payable semi-annually in arrears on each February 18 and August 18, commencing on February 18, 2024, until maturity. The Notes will bear interest at a rate of 6.35% per annum and will mature on August 18, 2028. The 6.35% Bonds bear interest at 6.35% per annum.

Prior to July 18, 2028 (the “6.35% Bonds Par Call Date”), JEGI may redeem the 6.35% Bonds at its option, in whole or in part, at any time and from time to time, at the redemption price calculated by JEGI (expressed as a percentage of principal amount and rounded to three decimal places) equal to the greater of: (1) (a) the sum of the present values of the remaining scheduled payments of principal and interest on the 6.35% Bonds being redeemed, assuming that such 6.35% Bonds matured on the 6.35% Bonds Par Call Date, discounted to the redemption date on a semiannual basis (assuming a 360-day year of twelve 30-day months), at the Treasury Rate (as defined in the Second Supplemental Indenture) plus 30 basis points, less (b) interest accrued to the redemption date, and (2) 100% of the principal amount of such 6.35% Bonds to be redeemed, plus, in either case, accrued and unpaid interest on the 6.35% Bonds, if any, to, but excluding, the redemption date. At any time and from time to time on or after the 6.35% Bonds Par Call Date, JEGI may redeem the 6.35% Bonds, at its option, in whole or in part, at a redemption price equal to 100% of the principal amount of the 6.35% Bonds to be redeemed, plus accrued and unpaid interest thereon, if any, to, but excluding, the redemption date.

Other arrangements

During fiscal 2022, the Company entered into two treasury lock agreements with an aggregate notional value of $500.0 million to manage its expected interest rate exposure in anticipation of issuing up to $500.0 million of fixed rate debt. On February 13, 2023 and with the issuance of the 5.90% Bonds, the Company settled these treasury lock agreements. See Note 17- Commitments and Contingencies and Derivative Financial Instruments for more discussion around this transaction.

During fiscal 2020, the Company entered into interest rate and cross currency derivative contracts to swap a portion of our variable rate debt to fixed rate debt. See Note 17- Commitments and Contingencies and Derivative Financial Instruments for discussion regarding the Company's derivative instruments.

The Company has issued $0.5 million in letters of credit under the Revolving Credit Facility, leaving $2.19 billion of available borrowing capacity under the Revolving Credit Facility at June 28, 2024. In addition, the Company had issued $295.6 million under various separate, committed and uncommitted letter-of-credit facilities for issued letters of credit totaling $296.1 million at June 28, 2024.

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