Jacobs Solutions (NYSE:J) reported fiscal third-quarter 2026 results marked by organic revenue growth, margin expansion and a record backlog, prompting the company to raise its full-year outlook for the third consecutive quarter.
Chair and CEO Bob Pragada said adjusted earnings per share increased approximately 14% year over year to $1.84, supported by more than 8% adjusted net revenue growth and more than 100 basis points of margin expansion. The company recorded its sixth consecutive quarter of double-digit adjusted EPS growth, he said.
Record Backlog and Higher Full-Year Outlook
Consolidated backlog rose more than 27% year over year to a record $29 billion. Jacobs reported trailing-12-month book-to-bill ratios of 1.4x on gross revenue and 1.2x on net revenue. Net revenue and gross profit in backlog increased 11% and 14%, respectively, from the prior year.
Pragada said the company sees “convergence of backlog growth and overall revenue growth” and expects another strong bookings performance in the fiscal fourth quarter. Nathamuni said the backlog position provides confidence that fiscal 2027 growth can at least align with the company’s previously stated long-term average, though he deferred specific fiscal 2027 guidance until the next earnings call.
For fiscal 2026, Jacobs raised its outlook for adjusted net revenue growth to 9.5% to 10%. The company narrowed its adjusted EBITDA margin forecast to 14.7% to 14.8% and increased its adjusted EPS outlook to $7.20 to $7.30. The midpoint of the EPS range implies nearly 19% year-over-year adjusted EPS growth, Nathamuni said.
For the fourth quarter, Jacobs expects approximately 14% year-over-year net revenue growth, adjusted EBITDA margin of about 16%, a tax rate near 27.5%, and approximately $150 million in free cash flow.
Advanced Manufacturing and AI Infrastructure Drive Growth
Infrastructure & Advanced Facilities, or I&AF, generated nearly $2.1 billion in net revenue, a quarterly record for the segment. Segment operating profit increased 14% on 10% net revenue growth.
Within I&AF, life sciences and advanced manufacturing net revenue climbed 24% year over year, the company’s highest reported growth rate in that end market since it began disclosing end-market results in late 2024. Data center and semiconductor activity were major contributors, and Jacobs expects the trend to continue in the fourth quarter.
Direct AI infrastructure build-out represented 11% of adjusted net revenue as of the third quarter, up about 100 basis points from the previous quarter. Pragada said Jacobs has expanded its data center scope from technical advisory and design to digital twins and full program delivery, while also applying water, environmental, power and digital capabilities to support both private-sector clients and utilities.
Among its awards, Jacobs received a sole-source engineering, procurement and construction management contract from Hut 8 for the Beacon Point AI data center campus in Texas. The multiphase site is designed to support 1 gigawatt of total capacity, with initial energization targeted for 2027. Jacobs is also leading program delivery for Hut 8’s River Bend campus in Louisiana.
In the semiconductor market, Pragada said customers are pushing the company to accelerate designs. He said Jacobs is working for the largest high-bandwidth memory chip manufacturer in the U.S. and is seeing its pipeline grow, including through its longstanding relationship with Intel.
Water, Environmental and Infrastructure Trends
Critical infrastructure net revenue increased 9% in the quarter, led by transportation and energy and power activity. Nathamuni said Jacobs continues to expect the end market to grow at a mid-to-high single-digit rate over the medium term.
Pragada said transportation growth was led by aviation, rail, ports and maritime, with highways and bridges also contributing during the third quarter. Energy and power posted double-digit growth, primarily from U.S. transmission and distribution activity, while international growth was supported by generation and renewable-energy work.
Water and environmental net revenue grew slightly more than 1%, as strength in water was partly offset by continuing year-over-year environmental headwinds. The company expects sequential improvement in the fourth quarter following recent awards activity.
Jacobs was selected to provide program management and technical environmental services for the U.S. Navy’s Environmental Restoration Program across the Mid-Atlantic and Puerto Rico. The work includes contaminated-site restoration, including PFAS and munitions-related projects. The company also won the Central Utah Water Conservancy District’s Strawberry High Line Improvement Project, part of the broader approximately $1.5 billion Nebo Regional Water Project.
Pragada said environmental awards during the quarter included two sizable, unnamed private-sector industrial contracts, along with public-sector opportunities involving PFAS and Department of Defense regulatory work. He said the environmental business posted book-to-bill above 1.3x for the quarter and is expected to return to its prior growth levels in fiscal 2027.
Cash Flow, Repurchases and PA Consulting
Jacobs generated $541 million in adjusted free cash flow in the third quarter, excluding $110 million of payments related to proceeds from the PA transaction. Year-to-date adjusted free cash flow totaled $633 million.
The company repurchased $614 million of shares through the third quarter, bringing total repurchases since the beginning of fiscal 2025 to $1.4 billion. Including dividends, Jacobs said it is on track to return more than 100% of free cash flow to shareholders for the second consecutive year. Net leverage declined to 1.8x, reaching the company’s below-2.0x target one quarter early. Jacobs still plans to reduce net leverage to about 1.5x by the end of fiscal 2027.
PA Consulting operating profit increased 2% on roughly flat revenue, while its operating margin remained above 22%. Nathamuni said a recent change in U.K. government leadership temporarily delayed project starts, but the company has seen a return toward normal conditions and expects solid sequential revenue growth in the fourth quarter.
Management said future margin expansion should be supported by operating leverage, greater use of global delivery and business mix. Pragada added that Jacobs expects margin improvement to be balanced between I&AF and PA Consulting as it advances cost synergies at PA.
About Jacobs Solutions (NYSE:J)
Jacobs Solutions Inc, commonly known as Jacobs, is a global professional services firm that provides technical, engineering, scientific and project delivery expertise across a broad range of industries. Founded in 1947 by Joseph J. Jacobs in Pasadena, California, the company evolved from a regional engineering consultancy into a diversified provider of design, program and construction management, operations and maintenance, and scientific services for complex infrastructure and industrial programs.
