ConDig (07-Feb-19). Profit at Jacobs Engineering Group Inc tumbled in its fiscal first quarter as the global engineering firm faced higher costs associated with closing its purchase of rival CH2M Hill Cos Ltd, while overall financial results still beat analysts’ estimates.

Net earnings at the Dallas, Texas-based company were $2.2 million for the quarter ended December 29, 2017 compared with $60.5 million in the same period a year earlier.

It comes despite revenue edging up to $2.8 billion in the quarter from $2.6 billion a year earlier.

The drop in profit was largely driven by rising costs, which included $51 million after-tax transaction costs to close the CH2M acquisition, align with $15 million in after-tax restructuring costs. It also faced a $29 million after-tax charge for certain deferred tax assets in connection with US tax reform.

Jacobs reported a project backlog of $26.2 billion as of end of the first quarter and said it expects full-year earnings to be in a range of $3.85 to $4.25 per share.

In August, Jacobs announced the acquisition of rival CH2M in a $3.27 billion cash-and-stock deal aimed at expanding its presence in the government services and infrastructure. It expects about $150 million in cost savings by the end of the second year following the close of the transaction.

“Our first quarter results further demonstrated progress against our strategy to allocate our resources toward both higher growth and higher margin opportunities. We are seeing continued momentum in our Aerospace & Technology and Buildings & Infrastructure businesses as well as improving trends in our more cyclical Energy and Mining & Minerals businesses,” said Steve Demetriou, Jacobs chairman and ceo.

“Furthermore, we are off to a solid start capturing the planned CH2M cost synergies and positioning our combined company for incremental revenue opportunities by offering more comprehensive solutions to our clients.”