By Emily Russell

In less than a decade, the global contracting and consulting firm Jacobs Solutions changed names, moved cities, and shifted strategies. It dropped "Engineering" from its title, relocated its headquarters from Pasadena to Dallas, and spun-off part of its core organization.

Its business is booming.

Bob Pragada, a former engineer for the U.S. Navy who became Jacobs' CEO in 2023 after 17 years with the company, recently told Barron's editor-at-large Andy Serwer that the firm is in a "higher margin, higher growth" mode, with 25,000 projects across three verticals -- water and environment, life sciences and advanced manufacturing, and critical infrastructure -- in 40 countries.

The firm helped Pfizer and Astra Zeneca scale mRNA Covid-19 vaccines to commercial manufacturing in "record time," according to Pragada, who added that Jacobs is now working to design commercial manufacturing facilities for GLP-1 drugs.

That's not all. Pragada said that in New York, Jacobs is designing subway expansions and upgrades for the Metropolitan Transportation Authority -- and in Riyadh, it will serve as program manager for the 2030 World Expo and the 2034 Fifa World Cup.

Pragada discussed the mind-boggling expanse of the firm's work and its evolution in an interview for the At Barron's video series. A transcript of the conversation between Pragada and Serwer, visible below, has been edited and condensed for clarity and is excerpted from a longer video interview.

Barron's: I noticed Jacob's stock really took a huge leap last fall. From September to November, it went up 50%. What was the reason behind that?

Bob Pragada: For years, we had two parts of our business: infrastructure and advanced facilities and then government services, heavily centered around aerospace and defense for large-scale government clients like NASA and the Department of Defense. We hit an inflection point where the external world viewed us as a split company. There were two independent lines of businesses. The government services business had a capital allocation model that was different from our infrastructure and advanced facilities business.

We felt like for the long-term benefit and the long-term growth of the government services business, we were going to divest ourselves of that business and get it into a capital structure that was more facilitative of growth. We were then approached by a similar company in the private sector to merge and create another public company, which today is called Amentum.

That spin happened in September, and as a result, our stock was re-rated.

Is it correct to say the higher margin business is what you kept?

Higher margin, higher growth. And more distributive.

Can you talk about what it did to your revenue?

If you look at the course of the last nine years, we've divested ourselves of our energy and chemicals business and our government service business, while we invested in the water sector and in the advanced facility sector. If you look at the last nine years, we've divested ourselves of about 80% of our revenues and doubled our earnings before interest, taxes, depreciation, and amortization and doubled our Ebitda margin. And as a result, if you go back to 2016, our market capitalization is 2.5 times the size it was back then.

Are you finished with this, or is there still more restructuring along those lines?

We really like where we are as a company today. Our growth trajectory is strong, 6 to 8% top-line growth. We're looking to have double-digit bottomline growth. And those are lagging indicators. But the margin expansion is happening as a result of our value that we bring to our clients and markets that have generational secular growth trends -- the water sector, transportation, novel therapies in the life sciences sector being driven by all the advances of artificial intelligence in drug discovery.

What are the questions that analysts ask you the most? What do they want to hear from you?

Long-term growth with organic execution. That's probably front and center. I think the investor community has applauded the strategic moves we have made and the real myopic focus on end-markets that are growing. For the first time in my career, every one of our end-markets are in growth mode.

Talk about how you keep track of your 25,000 projects around the world. What are your systems that allow you to have visibility?

The project management tools that we use and how we manage the entirety of the business wouldn't look too dissimilar from other enterprise resource planning-based systems. But I would point more to our culture. Our culture is one where we pride ourselves on being global -- not being global because we're in a lot of different locations around the world, but being global because we use global talent to deliver solutions locally.

There might be a predominance, 65-plus percent, of our jobs in the U.S., or a big percentage of our work going on in Europe, but if you go to those jobs they're being delivered from talent that resides all over the world. So we're really optimizing that global talent model.

What about the new administration? Will tariffs impact you at all? What about your workforce in Texas? Taxes?

I think right now we are staying true to one thing: what's going on in our clients' businesses? So those items you talked about -- the effects of tariffs abd the effects of taxes -- we're working very closely with our clients to help them solve for a potential world changing from what it is today. We don't want to capitalize on dislocation. But we're being drawn into our clients business even deeper -- what happens if we can source materials and equipment from the U. S.? Well, we're a global business, so we're helping our client look for alternatives.

Let's follow the client in this time of volatility.

What are your clients saying right now about the economy? How optimistic are they?

Right now I think there is a level of anxiety around the "what if." If we were in speculative markets that didn't have those global market disruptors like water scarcity, the need for novel therapies, the shift in the chip manufacturing world from the East to the West, that volatility would probably be more pronounced. We are seeing our clients continuing to move on because those issues, those market disruptors, they aren't stopping. The world is still evolving. And they're moving forward.

Bob Pragada, CEO of Jacobs, thank you so much for joining us.

Thank you, Andy.

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April 12, 2025 01:00 ET (05:00 GMT)

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