Jacobs Engineering FY 4Q14 Earnings Call Notes

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This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. Full transcripts can be found at Seeking Alpha

Significant awards in building buildings

“Moving on now to buildings, our buildings list is growing globally, we’ve seen significant awards, we have had some since the quarter closed we had some major awards in the Middle East in the buildings and infrastructure space. Healthcare is another area where we see continuing growth and tremendous opportunity in lots of places in the world people are getting older and that’s going to drive a continuing expansion of spend.’

Oil sands market is very tough for us right now

“we’re seeing real weakness in the oil sands just because of where oil prices are. The oil sands market is apart, it’s a very difficult market for us right now.”

The chemicals industry isn’t as optimistic as the market maybe thinks it should be

“moving on to the chemicals business, lots of FEED and pre-FEED activity out there. It’s all unconventional gas driven FEED gas is the word of the day. We’ve got a great chemicals resume and an ability to deliver globally I think that’s a strength. But, everybody remains very measured in releasing these projects. And frankly, I think that’s going to continue for a while I don’t believe the industry is as optimistic about the prospect for chemicals as perhaps the general market thinks it should be, so we’re going to see very slow and steady releases of project. I think the work is coming, but it’s not coming fast.”

Still plenty of opportunity in wet gas

“I think the unconventional gas is a two-story marketplace. If you have dry gas, it’s not a very attractive business right now. Cost of production is probably higher than the value of the gas once it’s produced. If you have wet gas, so if you’ve got a lot of liquids in your gas, it’s still extremely attractive. And so what we’re seeing is a concentration of investment in those areas that have the good combination of both gas and liquids. The good news about all that is, there’s still lots of that and so it continues even in these lower oil price markets to be a very attractive investment for our customers and we continue to see lots of activity there.”

A lot of projects that are planned are not at the executed phase yet

“We’ve got probably as much FEED business in the company right now in the process industries as we’ve ever had. But at this point it continues to just be FEED work. And the leverage, particularly the leverage for field services is in the execute phase. So probably the top of my list in terms of what will drive that expansion in field services is getting these projects released through the final investment decision into execute. We’ve got a number of customers who are talking about those kinds of things happening in the next two or three months, but frankly I’ve heard that story before.”

I don’t think we’re at an end of the cycle kind of level right now

“I don’t think it’s an end-of-cycle conversation. So I don’t believe that we’re at that stage where everybody says okay, we’re at the end of the cycle and now we’re going to have a prolonged downturn. Generally, when our businesses are booming the cycles already over. And we’re not anywhere near that blooming stage yet. So I think what we may have is more like that a stagflation kind of growth. And I don’t mean that in the economic terms of that, I mean in the sense that growth is going to be slower than a normal up-cycle, but we’re going to continue to see an up-cycle. And that’s kind of where as best I can see it right now things are likely to go.”