Jacobs Awarded $132 Million UK Ministry of Defence Research and Technology Contract

Rhea-AI Summary

Jacobs (NYSE:J) has been awarded a $132 million contract to provide research and technology services to the United Kingdom's naval nuclear propulsion program, supporting the Royal Navy's submarines. The contract runs until 2032 and includes essential technical support for the reactors powering the submarines, as well as future reactor development. This work is crucial for national security, as the U.K. is building new submarines and developing a new type of submarine under the AUKUS security agreement with the U.S. and Australia. Jacobs also provides nuclear safety and technical advice to the Royal Navy's submarine service under a separate $230 million, 10-year contract. The company's work is expected to support 100 more U.K. jobs, with Jacobs already employing over 11,000 people across the country.

Insights

Defense Industry Analyst

The contract awarded to Jacobs by the UK Ministry of Defence is significant in terms of both its size and its duration. The provision of through-life technical support for naval nuclear reactors is a critical aspect of national defense infrastructure, ensuring the operational readiness and safety of the Royal Navy's submarine fleet. The involvement in both current and future submarine developments positions Jacobs as a key player in the defense sector, potentially influencing the company's stock due to the long-term stability such a contract offers.

From an industry perspective, the focus on nuclear propulsion aligns with global trends towards modernizing and enhancing military capabilities. The contract may also serve as a catalyst for further innovation within the sector, as the development of new reactor types could lead to advancements in technology. The impact on the job market, with the creation of 100 new jobs, indicates a positive economic influence on the local economy, which could be seen favorably by investors.

Market Research Analyst

From a market standpoint, the announcement of this contract could potentially affect investor sentiment towards Jacobs' stock. The financial stability implied by a long-term government contract may be viewed as a reduction in business risk, which could lead to a reevaluation of the company's future earnings potential. The involvement in the AUKUS security agreement, which includes the U.S. and Australia, may also open doors for future international collaborations, expanding Jacobs' market reach.

The contract's value of $132 million, while substantial, must be considered in the context of Jacobs' overall annual revenue of approximately $16 billion. While it represents a fraction of the total revenue, the strategic importance of such contracts can have a disproportionate impact on investor perceptions, particularly regarding the company's expertise in high-integrity engineering and national defense projects.

Financial Analyst

Investors will likely examine the implications of this contract on Jacobs' financial health. The addition of a $132 million contract over an eight-year period provides a predictable revenue stream, which is beneficial for financial planning and stability. Furthermore, the contract extends Jacobs' relationship with the UK Ministry of Defence, potentially leading to future contracts and reinforcing the company's position within the defense sector.

It is also important to analyze the contract in light of Jacobs' broader financial context. With a talent force of more than 60,000 and a diverse range of services, Jacobs' financial performance is not solely dependent on this contract. However, the contract could contribute to a positive outlook for the company's performance in the defense segment, which may be reflected in the company's stock price over time.

Supports safe operation of Royal Navy submarines

DALLAS, Jan. 25, 2024 /PRNewswire/ -- Jacobs (NYSE:J) was selected to supply research and technology services to the United Kingdom's naval nuclear propulsion program.

The $132 million (£108 million) contract, which runs until 2032, covers essential through-life technical support for the reactors which power the Royal Navy's submarines, including the Rolls-Royce PWR2 reactors, and reactor development for future boats.

The U.K. is currently building four new Dreadnought Class ballistic missile submarines and is developing a new type of submarine as part of the AUKUS security agreement with the U.S. and Australia.

"With this contract, Jacobs will play a key role in supporting existing submarines and developing future propulsion plant for the Ministry of Defence," said Jacobs Vice President Andy White. "Our business has supported the Royal Navy's nuclear submarines since design work on the first boat began in 1958. At a time when the U.K. is committed to a long-term investment in a new generation of vessels to safeguard national security, this work is as important as it has ever been."

Jacobs provides comprehensive laboratory and analytical resources and world-leading capability in materials science, high integrity engineering, physics, chemistry and many other disciplines. The company is also responsible for delivering nuclear safety and technical advice to the Royal Navy's submarine service under a $230 million (£185 million), 10-year contract awarded last year.

"We're committed to sustaining the Astute and Vanguard Class submarines and with this contract, the crucial technical support for the reactors that power our submarines will continue to be in good hands," said U.K. Minister for Defence Procurement James Cartlidge. "This will provide another economic boost, supporting 100 more U.K. jobs, with Jacobs already having in excess of 11,000 people across the country."

At Jacobs, we're challenging today to reinvent tomorrow by solving the world's most critical problems for thriving cities, resilient environments, mission-critical outcomes, operational advancement, scientific discovery and cutting-edge manufacturing, turning abstract ideas into realities that transform the world for good. With approximately $16 billion in annual revenue and a talent force of more than 60,000, Jacobs provides a full spectrum of professional services including consulting, technical, scientific and project delivery for the government and private sector. Visit jacobs.com and connect with Jacobs on Facebook, Instagram, LinkedIn and X.

Certain statements contained in this press release constitute forward-looking statements within the meaning of the 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," and similar words are intended to identify forward-looking statements. We base these forward-looking statements on management's current estimates and expectations, as well as currently available competitive, financial and economic data. Forward-looking statements, however, are inherently uncertain. There are a variety of factors that could cause business results to differ materially from our forward-looking statements including, but not limited to, our plans to spin off and merge with Amentum our Critical Missions Solutions  business and a portion of our Divergent Solutions business in a proposed transaction that is intended to be tax-free to stockholders for U.S. federal income tax purposes, the timing of the award of projects and funding and potential changes to the amounts provided for under the Infrastructure Investment and Jobs Act and other legislation related to governmental spending, as well as general economic conditions, including inflation and the actions taken by monetary authorities in response to inflation, changes in interest rates and foreign currency exchange rates, changes in capital markets, the possibility of a recession or economic downturn, geopolitical events and conflicts, and the impact of any future pandemic or infectious disease outbreak, including the related reaction of governments on global and regional market conditions, among others. For a description of some additional factors that may occur that could cause actual results to differ from our forward-looking statements, see the discussions contained under Item 1 - Business; Item 1A - Risk Factors; Item 3 - Legal Proceedings; and Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations in our most recently filed Annual Report on Form 10-K, as well as the company's other filings with the Securities and Exchange Commission. The company is not under any duty to update any of the forward-looking statements after the date of this press release to conform to actual results, except as required by applicable law.

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SOURCE Jacobs

FAQ

What contract was Jacobs awarded?

Jacobs was awarded a $132 million contract to provide research and technology services to the United Kingdom's naval nuclear propulsion program.

What is the ticker symbol for Jacobs?

Jacobs' ticker symbol is J on the New York Stock Exchange (NYSE).

How long does the contract run for?

The contract runs until 2032.

What type of submarines is the U.K. building?

The U.K. is building four new Dreadnought Class ballistic missile submarines and is developing a new type of submarine as part of the AUKUS security agreement with the U.S. and Australia.

How many jobs is Jacobs expected to support in the U.K.?

Jacobs' work is expected to support 100 more U.K. jobs, with the company already employing over 11,000 people across the country.