JACOBS SOLUTIONS INC

Previous wording

In addition to historical information, this MD&A and other parts of this Quarterly Report on Form 10-Q contain forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that do not directly relate to any historical or current fact. When used herein, words such as “expects,” “anticipates,” “believes,” “seeks,” “estimates,” “plans,” “intends,” “future,” “will,” “would,” “could,” “can,” “may,” "target," "goal" and similar words are intended to identify forward-looking statements. Examples of forward-looking statements include, but are not limited to, statements we make concerning the financial condition and results of operations and our expectations as to our future growth, prospects, financial outlook and business strategy for fiscal year 2024 or future fiscal years, including our expectations for the timing of completion of restructuring activities and savings to be realized from such activities, as well as the ability to effectuate the Separation Transaction on the expected terms and on the projected timeline, and any assumptions underlying any of the foregoing. Although such statements are based on management’s current estimates and expectations, and/or currently available competitive, financial, and economic data, forward-looking statements are inherently uncertain, and you should not place undue reliance on such statements as actual results may differ materially. We caution the reader that there are a variety of risks, uncertainties and other factors that could cause actual results to differ materially from what is contained, projected or implied by our forward-looking statements. Such factors include uncertainties as to the timing of the Separation Transaction, the impact of the Separation Transaction on Jacobs' and the combined company's businesses if the transaction is completed, including a possible impact on Jacobs' credit profile and a possible decrease in the trading price of Jacobs' and/or the combined company's shares, the possibility that the Separation Transaction, if completed, may not qualify for the expected tax treatment, the ability to obtain all required regulatory approvals, the possibility that closing conditions for the Separation Transaction may not be satisfied or waived, on a timely basis or otherwise, the risk that any consents or approvals required in connection with the Separation Transaction may not be received, the risk that the Separation Transaction may not be completed on the terms or in the time frame expected by the parties, uncertainties as to our and our stockholders' respective ownership percentages of the combined company and the value to be derived from the disposition of Jacobs’ stake in the combined company, unexpected costs, charges or expenses resulting from the Separation Transaction, business and management strategies and the growth expectations of the combined company, the inability of Jacobs' and th…

Excerpt shortened here; the source contains the full paragraph.

Current wording

In addition to historical information, this MD&A and other parts of this Quarterly Report on Form 10-Q contain forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that do not directly relate to any historical or current fact. When used herein, words such as “expects,” “anticipates,” “believes,” “seeks,” “estimates,” “plans,” “intends,” “future,” “will,” “would,” “could,” “can,” “may,” "target," "goal" and similar words are intended to identify forward-looking statements. Examples of forward-looking statements include, but are not limited to, statements we make concerning the financial condition and results of operations and our expectations as to our future growth, prospects, financial outlook and business strategy for fiscal year 2024 or future fiscal years, including our expectations for the timing of completion of restructuring activities and savings to be realized from such activities, as well as the ability to effectuate the Separation Transaction on the expected terms and on the projected timeline, and any assumptions underlying any of the foregoing. Although such statements are based on management’s current estimates and expectations, and/or currently available competitive, financial, and economic data, forward-looking statements are inherently uncertain, and you should not place undue reliance on such statements as actual results may differ materially. We caution the reader that there are a variety of risks, uncertainties and other factors that could cause actual results to differ materially from what is contained, projected or implied by our forward-looking statements. Such factors include uncertainties as to the timing of the Separation Transaction, the impact of the Separation Transaction on Jacobs' and the combined company's businesses if the transaction is completed, including a possible impact on Jacobs' credit profile and a possible decrease in the trading price of Jacobs' and/or the combined company's shares, the possibility that the Separation Transaction, if completed, may not qualify for the expected tax treatment, the ability to obtain all required regulatory approvals, the possibility that closing conditions for the Separation Transaction may not be satisfied or waived, on a timely basis or otherwise, the risk that any consents or approvals required in connection with the Separation Transaction may not be received, the risk that the Separation Transaction may not be completed on the terms or in the time frame expected by the parties, uncertainties as to our and our stockholders' respective ownership percentages of the combined company and the value to be derived from the disposition of Jacobs’ stake in the combined company, unexpected costs, charges or expenses resulting from the Separation Transaction, business and management strategies and the growth expectations of the combined company, the inability of Jacobs' and th…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

Our Boldly Moving Forward strategy announced in March of 2022 provides Jacobs with a three-year strategy that builds on our success over the preceding three years and takes advantage of a new lens crafted from the incredible pace of change in the world and in our markets. We’re now focused on broadening our leadership in high growth sectors aligned with long-term secular trends, such as infrastructure renewal and investment, and the global transition to more sustainable ways of living. Our strategy is driven by our purpose and values and reflects our vision of becoming a company like no other. An extensive evaluation of global trends, capabilities and markets to understand the largest opportunities, projected spend and growth rates identified three growth accelerators: Climate Response, Consulting & Advisory and Data Solutions, which cut across our entire organization and markets creating connections among global market trends, the solutions we deliver and our company purpose. Our three growth accelerators are delivering significant value for our clients, positioning Jacobs for high-margin growth while advancing sustainability and social value in the communities where we serve.

Current wording

Our Boldly Moving Forward strategy announced in March of 2022 provides Jacobs with a three-year strategy that builds on our success over the preceding three years and takes advantage of a new lens crafted from the incredible pace of change in the world and in our markets. We’re now focused on broadening our leadership in high growth sectors aligned with long-term secular trends, such as infrastructure renewal and investment, and the global transition to more sustainable ways of living. Our strategy is driven by our purpose to create a more connected, sustainable world and our values. An extensive evaluation of global trends, capabilities and markets to understand the largest opportunities, projected spend and growth rates identified three growth accelerators: Climate Response, Data Solutions, and Consulting & Advisory, which cut across our entire organization and key sectors creating connections among global market trends, our client solutions and our company purpose. Our three growth accelerators are delivering significant value for our clients, positioning Jacobs for high-margin growth while advancing sustainability and social value in the communities where we serve.

Previous wording

Jacobs' People & Places Solutions line of business provides end-to-end solutions for our clients’ most complex challenges related to climate change, energy transition, connected mobility, integrated water management, smart cities and biopharmaceutical manufacturing. In doing so, we combine deep experience in the following markets - Infrastructure, Cities & Places, Energy & Environmental, Health & Life Sciences and Advanced Manufacturing. Our core capabilities revolve around consulting, planning, science, architecture, design and engineering, as well as infrastructure delivery services and long-term operation of facilities. Solutions may be delivered as standalone professional service engagements, comprehensive program management partnerships, and selective progressive design-build and construction management at-risk delivery services in targeted markets. Increasingly, we leverage our data science and technology-enabled expertise with our core capabilities to deliver positive and enduring solutions for the clients and communities we serve.

Current wording

Jacobs' People & Places Solutions line of business provides end-to-end solutions for our clients’ most complex challenges related to climate change, energy transition, connected mobility, integrated water management, pharmaceutical and semi-conductor manufacturing. In doing so, we combine deep experience in the following end markets - Advanced Manufacturing, Cities & Places, Energy, Environment, Transportation and Water. Our core skills revolve around consulting, planning, architecture, design, engineering, infrastructure delivery services including project, program and construction management and long-term operation of facilities. Solutions are delivered as standalone professional service engagements, comprehensive program management partnerships, and selective progressive design-build and construction management at-risk delivery services. Increasingly, we use data science and technology-enabled expertise to deliver positive and enduring outcomes for the clients and communities we serve.

Previous wording

Our clients include national, state and local governments in the U.S., Europe, U.K., Middle East and Asia-Pacific, as well as multinational and local private sector clients throughout the world.

Current wording

Our clients include national, state and local governments in the U.S., Europe, U.K., Middle East, and Asia Pacific, and multinational and local private sector clients throughout the world.

Previous wording

Jacobs’ operating segment, Divergent Solutions, serves as the core foundation for developing and delivering innovative, next-generation cloud, cyber, data and digital technologies. DVS further strengthens our ability to drive value for clients of both LOBs by leveraging a full spectrum of cyber, data analytics, systems and software application integration services across Jacobs. Our core capabilities include global strategic alliances, innovation collaboration, next-generation technologies, software and data as a service and data and secure solutions. DVS clients include government agencies and commercial clients in the U.S. and international markets. The Separation Transaction announced on November 20, 2023 includes portions of DVS, including its Cyber & Intelligence business.

Current wording

Jacobs’ operating segment, Divergent Solutions, serves as the core foundation for developing and delivering innovative, next-generation cloud, cyber, data and digital technologies. DVS further strengthens our ability to drive value for clients of both LOBs by leveraging a full spectrum of cyber, data analytics, systems and software application integration services across Jacobs. Our core capabilities include global strategic alliances, innovation collaboration, next-generation technologies, software and data as a service, and data and secure solutions, all aligned to high-growth verticals of Water, Transportation, Advanced Manufacturing and National Security. DVS clients include government agencies and commercial clients in the U.S. and international markets. The Separation Transaction announced on November 20, 2023 includes portions of DVS, including its Cyber & Intelligence business.

Previous wording

Jacobs invested in a 65% stake in PA Consulting, the company that is bringing ingenuity to life. PA accelerates new growth ideas from concept, through design and development and to commercial success, and revitalizes organizations, building leadership, culture, systems and processes to make innovation a reality. PA Consulting's global team of approximately 4,000, which includes strategists, innovators, designers, consultants, digital experts, scientists, engineers and technologists work across seven sectors: consumer and manufacturing, defense and security, energy and utilities, financial services, government, health and life sciences, and transport to make a positive impact alongside the clients it supports.

Current wording

Jacobs invested in a 65% stake in PA Consulting, the company that is bringing ingenuity to life. PA Consulting accelerates new growth ideas from concept, through design and development and to commercial success, and revitalizes organizations, building leadership, culture, systems and processes to make innovation a reality. PA Consulting's global team of approximately 4,000, which includes strategists, innovators, designers, consultants, digital experts, scientists, engineers and technologists work across seven sectors: consumer and manufacturing, defense and security, energy and utilities, financial services, government, health and life sciences, and transport to make a positive impact alongside the clients it supports, bringing ingenuity to life.

Previous wording

PA has a diverse mix of private and public sector clients. Private sector clients include global household names like Unilever and Pret A Manger; and start-ups like PulPac, which is converting plant fibers into sustainable packaging, and Hydrow, with its award-winning indoor rowing machine. Public sector clients include national and local government entities like the U.K.’s Ministry of Defence and National Health Service, the Swedish Payments Authority (Utbetalningsmyndigheten), and the U.K.’s Hampshire County Council.

Current wording

PA Consulting has a diverse mix of private and public sector clients. Private sector clients include global household names like Unilever, and start-ups like PulPac, which converts plant fibers into sustainable packaging to reduce single-use plastic. From sustainable airports with Amsterdam Airport Schiphol and enhanced home security with ADT, to resilient banking with Bankomat, pioneering medtech with Hubly Surgical, and accelerating the energy transition with Invenergy and energyRe. Public sector clients include the U.K.'s Ministry of Defence, Nuclear Decommissioning Authority, Norwegian Labour and Welfare Administration, and Danish Tax Agency.

Previous wording

In a fast-moving, complex world, we’re deploying the collective strengths of Jacobs and PA to create significant opportunities for our clients to adapt, innovate and transform. Alongside Copenhagen Metro – one of the most advanced public transport systems in Europe – we’re providing strategic management and technical services to support its operations and maintenance. We’ve also been selected by the U.K. Department for Transport to provide technical and commercial advice on its portfolio of rail and other transport mode agreements, major projects and programs, and its policy and strategic work in transport.

Current wording

In a fast-moving, complex world, we’re deploying the collective strengths of Jacobs and PA Consulting to create significant opportunities for our clients. Alongside Copenhagen Metro – one of the most advanced public transport systems in Europe – we’re providing strategic management and technical services to support its operations and maintenance. We’ve also been selected by the U.K. Department for Transport to provide technical and commercial advice on its portfolio of rail and other transport mode agreements, major projects and programs, and its policy and strategic work in transport.

Previous wording

Results of Operations for the three months ended December 29, 2023 and December 30, 2022

Current wording

Results of Operations for the three and six months ended March 29, 2024 and March 31, 2023

Previous wording

Net earnings attributable to the Company from continuing operations for the first fiscal quarter ended December 29, 2023 were $172.2 million (or $1.37 per diluted share), an increase of $35.8 million, from net earnings of $136.4 million (or $1.07 per diluted share) for the corresponding period last year. The current results reflected lower operating profit in the first fiscal quarter of 2024, which was impacted by $55.3 million in pre-tax Restructuring and other charges and transaction costs due primarily to expenses incurred relating to the Separation Transaction (mainly professional services and employee separation costs), compared to fiscal 2023 amounts of $39.7 million mainly associated with the Company's transformation initiatives relating to real estate, which are discussed in Note 16-Restructuring and Other Charges. This is partially offset by the 2023 first fiscal quarter net favorable impact of approximately $15.0 million in overhead cost reductions associated mainly with one-time benefit program changes, which was offset in part by higher incentive and other compensation charges and higher investments in company technology platforms. First quarter fiscal 2024 other expense, net, was $38.3 million, a decrease of $2.0 million versus first quarter fiscal 2023 amounts of $40.3 million, with the current period primarily impacted by favorable higher interest income, partly offset by unfavorable higher interest expense. Further, our reported net earnings for the current year quarter were favorably impacted by a decrease in income taxes of $66.4 million compared to the fiscal 2023 period, attributable mainly to a deferred income tax benefit of $61.6 million in Australia.

Current wording

For the six months ended March 29, 2024, net earnings attributable to the Company from continuing operations were $335.1 million (or $2.66 per diluted share), a decrease of$17.9 million, from net earnings of $352.9 million (or $2.77 per diluted share) for the corresponding period last year. Current favorable underlying operating performance compared to the prior year period was more than offset by approximately $98.5 million in Restructuring and other charges and transactions costs activities relating tothe Separation Transaction for the current fiscal year-to-date period, compared to fiscal 2023 amounts of $38.7 million associated with the Company's transformation initiatives relating to real estate, which are discussed in Note 16-Restructuring and Other Charges. Further, the 2023 first fiscal quarter included a net favorable impact of approximately $15.0 million in overhead cost reductions associated mainly with one-time benefit program changes, which was offset in part by higher incentive and other compensation charges and higher investments in company technology platforms. Our reported net earnings for the first half of fiscal 2024 were also favorably impacted bylower income taxes of $18.2 million compared to the fiscal 2023 period, due mainly to a deferred income tax benefit of $61.6 million related to Australia in the first quarter of fiscal 2024 and offset in part mainly by the uncertain tax positions in the U.S. that were effectively settled in the prior year period as mentioned above, combined with other current quarter income tax items further discussed in Note 10-Income Taxes. Finally, earnings attributable to redeemable noncontrolling interests were $6.2 million lower for the six months ended March 29, 2024 due to lower net earnings results in our PA Consulting investment compared to the corresponding period last year.

Previous wording

Revenues for the first fiscal quarter of 2024 were $4.16 billion, an increase of $0.36 billion, or 9.5%, from $3.80 billion for the corresponding period last year. Revenue increases for the year over year period were due mainly to the Company's P&PS business, as well as revenue increases seen across our other reporting segments. The P&PS business benefited primarily from stronger performance in its Advanced Facilities, Federal & Environmental and Energy & Power operations. Our CMS business benefited from increased volume in the nuclear remediation sector in the U.S. and United Kingdom as well as strong performance in the space, defense, and energy markets. Also, revenue was favorably impacted by foreign currency translation of $53.1 million for the three months ended December 29, 2023, across our international businesses, as compared to an unfavorable $158.5 million for the three months ended December 30, 2022.

Current wording

Revenues for the second fiscal quarter of 2024 were $4.27 billion, an increase of $190.8 million, or 4.7%, from $4.08 billion for the corresponding period last year. For the six months ended March 29, 2024, revenues were $8.43 billion, an increase of$551.3 million, or 7.0%, from $7.88 billion for the corresponding period last year. Revenue increases for the quarterly year over year period were due mainly to the Company's P&PS business as well as increases seen in our CMS business. For the six month periods higher revenue levels in P&PS as well as across all of our lines of businesses contributed to our favorable revenue results. The P&PS business benefited primarily from stronger performance in its Advanced Facilities, Federal & Environmental and Energy & Power operations while our CMS business benefited from stronger performance in Energy, Security & Technology. Our revenues were favorably impacted by foreign currency translation of $31.4 million and $82.3 for the three and six months ended March 29, 2024, respectively, across our international businesses, as compared to an unfavorable impact of $109.0 million and $267.0 million for the three and six months ended March 31, 2023, respectively.

Previous wording

Gross profit for the first fiscal quarter of 2024 was $850.5 million, an increase of $35.8 million, or 4.4%, from $814.7 million from the corresponding period last year, with gross profit margins of 20.4% and 21.4% for the respective periods. Our absolute increase in gross profit was attributable mainly due to favorable benefits from recent new program startups won in the prior year, with slight margins impacts from year over year mix as well as personnel cost impacts.

Current wording

Gross profit for the second fiscal quarter of 2024 was $904.6 million, an increase of $14.3 million, or 1.6%, from $890.3 million from the corresponding period last year, with gross profit margins of 21.2% and 21.8% for the respective periods. Gross profit for the six months ended March 29, 2024 was $1.76 billion, an increase of $50.1 million, or 2.9%, from $1.71 billion from the corresponding period last year. Our gross profit margins were 20.8% and 21.6% for the six months ended March 29, 2024 and March 31, 2023, respectively. The Company's increase in gross profit was mainly attributable to higher revenues as mentioned above, with slight margin impacts from year over year mix as well as personnel cost impacts primarily in the six month period.

Previous wording

SG&A expenses for the three months ended December 29, 2023 were $646.5 million, compared to $576.9 million for the corresponding period last year, representing an increase of $69.6 million or 12.1%. Restructuring and other charges for the three months ended December 29, 2023 included $40.1 million in restructuring and other charges, primarily related to the Separation Transaction (mainly professional services and employee separation costs). Additionally, the three months ended December 29, 2023 included an approximate $15 million pre-tax non-cash charge associated with an inventory write down and an approximate $10 million non-cash intangibles impairment. The three months ended December 30, 2022 included $27.1 million in costs associated with the Company's transformation initiatives relating to real estate. Lastly, SG&A expenses were impacted by unfavorable foreign currency translation of $9.3 million for the three months ended December 29, 2023 as compared to favorable impacts of $27.5 million for the corresponding period last year with the remainder associated with other miscellaneous separation and transaction professional services costs from the prior year.

Current wording

SG&A expenses for the three and six months ended March 29, 2024 were $623.6 million and $1.27 billion respectively, compared to $600.4 million and $1.18 billion for the corresponding period last year, representing an increase of $23.2 million and $92.8 million or 3.9% and 7.9%, respectively. SG&A expenses for the three and six months ended March 29, 2024 were impacted by Restructuring and other charges of$47.4 million and$98.5 million respectively, primarily related to the Separation Transaction (mainly professional services and employee separation costs), in comparison to prior period Restructuring and other charges related to real estate related costs of$11.0 million and $38.7 million respectively. These unfavorable items were offset in part by department spend decreases compared to the prior year periods in connection with the Company's cost reduction programs. Also, SG&A expenses were impacted by unfavorable foreign currency translation of $4.6 million and $13.9 million, respectively, for the three and six months March 29, 2024 as compared to favorable impacts of $23.1 million and $50.6 million for the corresponding periods last year.

Previous wording

Net interest expense for the three months ended December 29, 2023 was $35.1 million, a decrease of $2.0 million from $37.1 million, or 5.3%, for the corresponding period last year. The decrease in net interest expense for the three month period was due primarily to higher interest rates in the current year compared to the prior year period, resulting in increases in interest income as well as interest expense. The increase in interest expense is partly offset by lower overall levels of debt compared to the corresponding period last year.

Current wording

Net interest expense for the three and six months ended March 29, 2024 was $34.8 million and $69.9 million respectively, an increase of $1.8 million and decrease of $0.1 million from $33.0 million and $70.1 million, or 5.6% and 0.2%, respectively, for the corresponding periods last year. The increase in net interest expense for the three month period ended March 29, 2024 is due primarily to interest rates increasing throughout fiscal year 2023 and fiscal year 2024. The increase in interest expense was offset in part by higher interest rates on cash held and by the Company's lower overall levels of outstanding debt compared to the corresponding periods last year.

Previous wording

The Company’s effective tax rates from continuing operations for the three months ended December 29, 2023 and December 30, 2022 were (9.8)% and 25.4%, respectively. The most significant item contributing to the difference between the statutory U.S. federal corporate tax rate of 21.0% and the Company's effective tax rate for the three-month period ended December 29, 2023 relates to a discrete event associated with the election to treat an Australian subsidiary as a corporation versus a partnership for U.S. tax purposes. The election resulted in the derecognition of a deferred tax liability, resulting in 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 $3.2 million and U.S. tax on foreign earnings of $3.2 million. These expense items are expected to have a continuing impact on the Company's effective tax rate for the remainder of the fiscal year.

Current wording

The Company's effective tax rates from continuing operations for the six months ended March 29, 2024 and March 31, 2023 were 12.6% and 15.4%, 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 six-month period ended March 29, 2024 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 $7.3 million and U.S. tax on foreign earnings of $8.6 million, which are expected to have a continuing impact on the Company's effective tax rate for the remainder of the fiscal year. For the six months ended March 31, 2023, the main differences were associated with net tax benefits of $39.0 million mostly related to UTPs mentioned above and a tax benefit of $8.6 million for the release of previously valued foreign tax credits, partly offset by U.S. state income tax expense of $10.5 million and U.S. tax on foreign earnings of $8.2 million.

Previous wording

During fiscal 2023, the Company implemented restructuring initiatives relating to the Separation Transaction. The Company incurred approximately $19.8 million in fiscal 2023 and $10.6 million in the three months ended December 29, 2023, in pre-tax cash charges in connection with these initiatives. These actions, which are expected to be substantially completed before the end of fiscal 2025, are expected to result in estimated gross annualized pre-tax cash savings of approximately $72 million to $88 million. We will likely incur additional charges under this program through fiscal 2025, which are expected to result in additional savings in future periods.

Current wording

During fiscal 2023, the Company implemented restructuring initiatives relating to the Separation Transaction. The Company incurred approximately $19.8 million in fiscal 2023 and $19.7 million during the six months ended March 29, 2024, in pre-tax cash charges in connection with these initiatives. These actions, which are expected to be substantially completed before the end of fiscal 2025, are expected to result in estimated gross annualized pre-tax cash savings of approximately $94 million to $115 million. We will likely incur additional charges under this program through fiscal 2025, which are expected to result in additional savings in future periods.

Previous wording

During third quarter fiscal 2023, the Company approved a plan to improve business processes and cost structures of our PA Consulting investment by reorganizing senior management and reducing headcount. In connection with these initiatives, which are expected to be substantially complete before the end of fiscal 2024, the Company incurred approximately $14.3 million during fiscal 2023 and $1.2 million in the three months ending December 29, 2023, in pre-tax cash charges. These activities are expected to result in estim ated gross annualized pre-tax cash savings of approximately $40 million to $45 million.

Current wording

During third quarter fiscal 2023, the Company approved a plan to improve business processes and cost structures of our PA Consulting investment by reorganizing senior management and reducing headcount. In connection with these initiatives, which are expected to be substantially complete before the end of fiscal 2024, the Company incurred approximately $14.3 million during fiscal 2023 and $4.2 million in the six months ending March 29, 2024, in pre-tax cash charges. These activities are expected to result in estimated gross annualized pre-tax cash savings of approximately $45 million to $60 million.

Previous wording

Critical Mission Solutions segment revenues for the three months ended December 29, 2023 were $1.13 billion, an increase of $0.05 billion, or 5.0%, from $1.08 billion for the corresponding period last year. During the three months ended December 29, 2023, revenue benefited from increased volume in the nuclear remediation sector in the U.S. and United Kingdom as well as strong performance in the space, defense, and energy markets. Our fiscal first quarter 2024 exchange rates compared to our fiscal first quarter 2023 period rates contributed approximately $13.1 million in favorable impacts on revenues for the current period quarter. In the corresponding prior year period, our fiscal first quarter 2023 exchange rates compared to the rates of our fiscal first quarter 2022 period contributed $33.1 million in unfavorable impacts on revenues.

Current wording

Critical Mission Solutions segment revenues for the three and six months ended March 29, 2024 were $1.23 billion and $2.36 billion respectively, an increase of $38.2 million and $91.6 million, or 3.2% and 4.0%, from reported amounts of $1.19 billion and $2.27 billion for the corresponding periods last year. During the three and six months ended March 29, 2024, revenue benefited from increased volume in the nuclear remediation and energy sectors in the United Kingdom as well as strong performance in the U.S. space, defense, and energy markets. Foreign currency translation had approximately $9.6 million and $22.6 million in favorable impacts on revenues for the three and six months ended March 29, 2024, respectively, compared to $25.5 million and $58.6 million in unfavorable impacts in the corresponding prior year periods.

Previous wording

Revenues for the Divergent Solutions segment for the three months ended December 29, 2023 were $254.2 million, an increase of $39.7 million, or 18.5%, from $214.5 million for the corresponding period last year. The increase in revenue for the three months ended December 29, 2023 was mainly due to the startup of new programs previously won in fiscal 2023. Foreign currency translation did not have a material impact on revenue in our Divergent Solutions segment for either period presented.

Current wording

Revenues for the Divergent Solutions segment for the three and six months ended March 29, 2024 were $224.0 million and $478.2 million, respectively, a change of $(17.2) million and $22.5 million, or (7.1)% and 4.9%, from $241.2 million and $455.7 million for the corresponding periods last year. The decrease in revenue for the three months ended March 29, 2024 was mainly due to a national government program ending. The six month increase is due to a startup of new programs previously won in fiscal 2023. Foreign currency translation did not have a material impact on revenue in our Divergent Solutions segment for either period presented.

Previous wording

Operating profit for the segment was $7.6 million, for the three months ended December 29, 2023, a decrease of $4.4 million, or 36.7%, from $12.0 million for the corresponding period last year. Operating profit for the three month period reflected strong underlying performance in the Cyber & Intelligence business unit and the new programs previously won in fiscal 2023, although fully offset by an approximate one-time $15 million pre-tax non-cash charge associated with an inventory write down during the fiscal 2024 period as mentioned above. Foreign currency translation had an immaterial impact on operating profit in our Divergent Solutions segment for either period presented.

Current wording

Operating profit for the segment was $19.0 million and $26.6 million, for the three and six months ended March 29, 2024, respectively, a decrease of $5.9 million and $10.3 million, or 23.7% and 27.9%, from $24.9 million and $36.8 million for the corresponding periods last year. The three month decrease is driven by higher software licensing revenue in the second quarter of fiscal 2023. Operating profit for the six month period reflected strong underlying performance in the Cyber & Intelligence business unit and the new programs previously won in fiscal 2023, although fully offset by an approximate one-time $15 million pre-tax non-cash charge associated with an inventory write down during the fiscal 2024 period. Foreign currency translation had an immaterial impact on operating profit in our Divergent Solutions segment for both periods presented.

Previous wording

Other corporate expenses for the three months ended December 29, 2023 were $121.1 million, an increase of $27.4 million, or 29.2%, from $93.7 million for the corresponding period last year. The comparison of the three month period of fiscal 2024 to the corresponding 2023 period was unfavorably impacted by a one-time net favorable impact of $41 million relating mainly to changes in employee benefits programs in the prior year, partly offset by year over year favorable department spending as well as favorable impacts of corporate functional overhead cost recovery by our lines of business. Additionally, the fiscal 2024 period reflects approximately $10 million in non-cash intangibles impairment charges.

Current wording

Other corporate expenses for the three and six months ended March 29, 2024 were $117.3 million and $238.4 million, respectively, an increase of $9.7 million and $37.1 million, or 9.0% and 18.4%, from $107.6 million and $201.3 million for the corresponding periods last year. The three month period of fiscal 2024 was impacted mainly by increases in expense associated with certain contingent equity-based agreements in connection with our PA Consulting investment. The comparison of the six months period of fiscal 2024 to the corresponding 2023 period was further unfavorably impacted bya one-time net favorable impact of $41 million relating mainly to changes in employee benefits programs during first quarter 2023, partly offset by year over year favorable department spending as well as favorable impacts of corporate functional overhead cost recovery by our lines of business. Additionally, the fiscal 2024 year-to-date period reflects approximately $11 million in one-time non-cash intangibles impairment charges.

Previous wording

The increase in backlog in Critical Mission Solutions from December 30, 2022 was primarily driven by new business awards in the U.S. government space sector along with growth in the U.K. defense and nuclear remediation sectors that offset slower growth in the U.S. Defense market.

Current wording

The increase in backlog in Critical Mission Solutions from March 31, 2023 was primarily driven by growth and increased funding levels in the United Kingdom and U.S. nuclear remediation markets along with growth in the U.K. defense sector that offset slower growth in the U.S. Defense sector.

Previous wording

At December 29, 2023, our principal sources of liquidity consisted of $1.14 billion in cash and cash equivalents and$2.25 billion of available borrowing capacity under our$2.25 billion revolving credit agreement (the "Revolving Credit Facility"). We finance much of our operations and growth through cash generated by our operations.

Current wording

At March 29, 2024, our principal sources of liquidity consisted of $1.03 billion in cash and cash equivalents and $2.11 billion of available borrowing capacity under our $2.25 billion revolving credit agreement (the "Revolving Credit Facility"). We finance much of our operations and growth through cash generated by our operations.

Previous wording

Cash and cash equivalents at December 29, 2023 were $1.14 billion, representing an increase of $215.6 million from $926.6 million at September 29, 2023, the reasons for which are described below.

Current wording

Cash and cash equivalents at March 29, 2024 were $1.03 billion, representing an increase of $106.9 million from $926.6 million at September 29, 2023, the reasons for which are described below.

Previous wording

Our net cash flow provided by operations of $418.4 million during the three months ended December 29, 2023 was favorableby $116.1 million in comparison to the cash flow provided by operations of $302.3 million for the corresponding prior year period. The year-over-year increase in cash from operations is primarily attributable to an improvement in working capital performance, partly offset by lower earnings after adjustments for non-cash items year-over-year.

Current wording

Our net cash flow provided by operations of $375.5 million during the six months ended March 29, 2024 was unfavorable by $58.8 million in comparison to the cash flow provided by operations of $434.3 million for the corresponding prior year period. The year-over-year decrease in cash from operations is due mainly to higher cash used for income tax payments and increases in accounts receivable, partly offset by higher cash generated from net earnings.

Previous wording

Our net cash used for investing activities for the three months ended December 29, 2023 was$16.0 million, compared to cash used for investing activitiesof $48.7 million inthe corresponding prior year period, with this change due primarily to no acquisitions in the current year, compared to PA Consulting's acquisition of The Cambridge Group in the corresponding prior period, and fewer additions to plant, property and equipment in the current year.

Current wording

Our net cash used for investing activities for the six months ended March 29, 2024 was $57.3 million, compared to cash used for investing activities of $76.7 million in the corresponding prior year period, with this change due primarily to lower levels of additions to plant, property and equipment in the current year.

Previous wording

Our net cash used for financing activities of $208.7 million for the three months ended December 29, 2023 is driven by share repurchases of $100.0 million, $33.6 million in net repayments of borrowings, $33.4 million in dividends to shareholders, and $24.4 million in net PA Consulting related redeemable noncontrolling interests purchase and issuance activity. Cash used by financing activities in the corresponding prior year period was $246.1 million, due primarily to share repurchases of $140.5 million, $58.4 million in net PA Consulting related redeemable noncontrolling interests purchase and issuance activity, $29.8 million in dividends to shareholders, and net repayments from borrowings of $7.4 million.

Current wording

Our net cash used for financing activities of $230.8 million for the six months ended March 29, 2024 is driven by share repurchases of $195.5 million, $70.1 million in dividends to shareholders, and $24.4 million in net PA Consulting related redeemable noncontrolling interests purchase and issuance activity, partly offset by net proceeds from borrowings of $85.5 million. Cash used for financing activities in the corresponding prior year period was $336.0 million, due primarily to share repurchases of $140.5 million, $62.8 million in dividends to shareholders, $58.4 million in net PA Consulting related redeemable noncontrolling interests purchase and issuance activity, and net repayments from borrowings of $53.8 million.

Previous wording

At December 29, 2023, the Company had approximately $259.4 million in cash and cash equivalents held in the U.S. and $882.8 million held outside of the U.S. (primarily in the U.K., the Eurozone, Australia, India, Canada, Saudi Arabia and the United Arab Emirates), which is used primarily for funding operations in those regions. Other than the tax cost of repatriating funds to the U.S. (see Note 7-Income Taxes of Notes to Consolidated Financial Statements included in our 2023 Form 10-K), there are no material impediments to repatriating these funds to the U.S.

Current wording

At March 29, 2024, the Company had approximately $250.1 million in cash and cash equivalents held in the U.S. and $783.4 million held outside of the U.S. (primarily in the U.K., the Eurozone, Australia, India, Canada, Saudi Arabia and the United Arab Emirates), which is used primarily for funding operations in those regions. Other than the tax cost of repatriating funds to the U.S. (see Note 7-Income Taxes of Notes to Consolidated Financial Statements included in our 2023 Form 10-K), there are no material impediments to repatriating these funds to the U.S.

Previous wording

The Company had $311.5 million in letters of credit outstanding at December 29, 2023. Of this amount, $0.9 million was issued under the Revolving Credit Facility and $310.7 million was issued under separate, committed and uncommitted letter-of-credit facilities.

Current wording

The Company had $289.7 million in letters of credit outstanding at March 29, 2024. Of this amount, $0.5 million was issued under the Revolving Credit Facility and $289.2 million was issued under separate, committed and uncommitted letter-of-credit facilities.

Previous wording

Under the Separation Transaction, Jacobs and its shareholders will own up to 63% of the combined company's common stock upon consummation of the transaction, the exact amount of which will be determined based on the achievement of certain fiscal year 2024 operating profit targets. Jacobs is also expected to receive $1 billion of cash proceeds at closing, subject to customary adjustments. Jacobs is also expected to realize additional value after closing through the disposition of its retained equity stake in the combined company within 12 months. The Company expects to use the cash received at closing to repay outstanding indebtedness.

Current wording

Under the Separation Transaction, Jacobs and its shareholders will own up to 63% of the combined company's common stock upon consummation of the transaction, the exact amount of which will be determined based on the achievement of certain fiscal year 2024 operating profit targets. Jacobs is also expected to receive $1 billion of cash proceeds at closing, subject to customary adjustments. The Company expects to use this cash received at closing to repay outstanding indebtedness. Jacobs is also expected to realize additional value after closing through the disposition of its retained equity stake in the combined company within 12 months.