Name: This Company Has More Than 25,000 Projects Around the World
Uploaded: 2025-04-10T15:58:00Z
Duration: 19 min 5 s
Description: Bob Pragada, the CEO of the services firm Jacobs, explains how the company keeps track of its 25,000-plus projects around the world, as well as its projects with the MTA in New York City and Middle East "gigacities."

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Bob Pragada, the CEO of the services firm Jacobs, explains how the company keeps track of its 25,000-plus projects around the world, as well as its projects with the MTA in New York City and Middle East "gigacities."

https://m.wsj.net/video/20250410/72151c84-7f88-482e-824f-6e3a27d5d946/1/hls/manifest-hd-wifi.m3u8

This Company Has More Than 25,000 Projects Around the World

Hello everyone, and welcome to "At Barron's." I'm Andy Serwer, and welcome to our guest Bob Pragada, who is the CEO of Jacobs. Bob, good to see you.

Andy, thanks for having me.

So, I always knew the company as Jacobs Engineering, and I guess the technical name is Jacobs Solutions these days, but why did the name change?

Yep, it's actually a great starting point. So for decades, going all the way back in this city in Brooklyn, Jacobs Engineering was founded by Dr. Jacobs. And over the better part of the first five decades, five, six decades, we were a premier engineering company, predominantly in the chemical process industry. So we designed pharmaceutical plants. In fact, Dr. Jacobs was a Merck employee before he started the company.

Merck employee?

Merck employee, one of the first penicillin facilities here in New York City was designed by Dr. Jacobs. So he started the company and grew it from there, went into the hydrocarbon space and then kind of branched out into end markets around the world. So that was Jacobs Engineering.

Andy: Right.

The inflection point was about nine years ago where we really took a look at the company, what we were doing really well, what we were doing. I don't know if we were doing it well or, or not, but we got a little diluted in our offering with regards to in markets, geographies, types of services that we were delivering. And we went through a pretty significant transformation of the company. Because at this point we had gotten so deep in our client's business with our value being engineering, where we were actually co-creating solutions with our clients and developed a strong advisory and consulting component of the company as well. So hence the name change.

Right?

I think it was in 2019 to Jacobs Solutions.

Another thing that happened nine years ago, correct me if I'm wrong, you guys moved from California to Texas, correct?

We did, we did.

Moved the headquarters there. So walk us through the pieces of business that your company operates and give us some specific examples of what you guys are working on.

Absolutely. So the primary end markets, we kind of divide them into three verticals. The first is the water and environmental vertical, and that's the entire lifecycle of the water space. And I can go into that. And then the environmental world, both as a vertical, as well as the environmental needs in all of our other end markets, which I'll get to. The second is around life sciences and advanced manufacturing. So these are complex manufacturing facilities that manufacture everything from novel therapies, vaccines, chip manufacturing, anything that has a sterile or a clean manufacturing environment. We design those facilities as well. And then the third is what we call critical infrastructure. And critical infrastructure is kind of the, you know, the piece of the business that is centered around transportation, highways, bridges, rail, airports, cities and places. So think large sports venues, Giga cities in the Middle East and our energy and power group, which is a high-end energy consulting and design platform as well, which today, that energy and power skillset is literally cutting through every end market that we have.

Alright, so I know you guys have what, 25,000 plus projects around the world?

We do.

Okay. And so maybe you can pick out some that are most emblematic, Bob, that speak to those businesses you talked about.

Absolutely, well, why don't we start right here in New York City. So in the transportation world, we're heavily involved with the MDA where we would be designing rail expansion, rail upgrades, and rail enhancements for the city. In the water sector, we are involved. Everything from the head of our global market for water describes it the best. And she says, you know, we have an issue in the world. We either have no water in certain areas, too much water in certain areas, and our conveyance systems or the distribution is starting to get really age. So we have treatment issues as well. And so we work across that entire life cycle, enhancing those factors.

And where would be a project that you're working on for us?

DC Tillman in Los Angeles. And so with recently, obviously it was in the news for some water scarcity issues. And so we're designing a facility that takes recycled and reclaimed water, treats it and allows it to be used for other potable uses as well.

Right, okay, and another area?

Life sciences.

Yes.

Life sciences think right now been well publicized about the GLP-1 kind of undercurrent that's driving the market.

Which, which is the chemical molecule underpinning the weight loss drugs, correct?

Exactly, exactly.

Yes.

So both obesity as well as diabetes.

Right.

And so as those manufacturers have developed a molecule to go from a bench scale to commercial production, we'll work with the client on how do you design a facility to get it to commercial production, and then we'll design that facility and program manage the entirety of the build.

So in other words, they develop this compound which they then realize has a commercial application and you design the facilities that helps them actually manufacture it and have throughput so that it becomes a product.

Absolutely.

Right.

I think a great example in that space too is something that was really, really earth shattering and saving lives is when the mRNA vaccine was, it was developed a long time ago, but when it was to the point where it was a viable avenue to produce a COVID-19 vaccine, we were called in order to take that from bench scale to commercial scale in record time.

Was that for Moderna?

It, Moderna was a used as a contract manufacturer, but it was for Pfizer and for Astrazeneca.

Right, right, right. So I noticed that the stock really took a huge leap last fall from September to November, it went up 50%. What was the reason behind that?

So for years, we had two parts of our business, the one we're describing right now, which we call infrastructure and advanced facilities. And then we had another part of our business, it was in the government services world. So this was heavily centered around aerospace and defense for large scale government clients, NASA, Department of Defense, other, but in the services space, we kind of hit an inflection point in the business where the external world was viewing us as kind of a split company. There were two independent lines of businesses and that the government services business has a capital allocation model that was different than our infrastructure and advanced facilities business. So we felt like for the long-term benefit and long-term growth of that business, we were going to divest ourselves of that business and get it into a capital structure that was more facilitative for growth. We then were approached with another like company in the private sector to potentially do a spin of the business and merge it and create another public company, which today is called Mentum. That spin happened in September, and as a result, our stock was rerated.

Right.

To look more like our infrastructure peers.

So you kept the, is it correct to say or accurate that it's the higher margin business is what you kept?

Higher margin, higher growth.

Right.

And more distributed. We operate in 40 countries around the world and have a whole plethora of clients across those end markets that I described.

But it was a big piece of your revenue. Can you talk about what it did to your revenue? But still the stock is up from when previously did the deal?

Yeah. So if you look at, over the course of the last nine years, you know, we have, we've divested ourselves of our energy and chemicals business, now our government services business while we invested in the water sector and in the advanced facility sector. So if you look at the last nine years, we've divested ourselves about 80% of our revenues and doubled our EBITDA and doubled our EBITDA margin. And as a result, if you go back to 16 to today, our market cap is two and a half times the size it was back then. So in business school they say you, it was, it was getting smaller in order to get bigger. Ours was probably more in the higher growth, higher margin, more accelerated focus that we had.

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

We're finished.

Are you acquisitive or what are you doing?

We really like where we are as a company today. And so our growth trajectory, if you look at it for the next, we just released our next five year strategy, is strong, six to 8% top line growth. We're looking to have double digit bottom line growth. And those are lagging indicators, the financial results. But the margin expansion is happening as a result of our value that we bring to our clients in markets that have probably generational secular growth trends. So like we went through before. The water sector, and that's just not a US phenomena, that's happening around the world. Transportation, novel therapies in the life sciences sector being driven by all the advances, haven't said it yet, of AI in drug discovery that are now curing ailments that we never thought that we'd be able to cure in the past.

Do you have some nuclear exposure as well? Talk about another growth area.

We don't from a weapon standpoint, but we do from it being a renewable source.

Right.

Of energy.

Yeah.

Yeah.

Right, and what is that exactly then? Are you, are you working on nuclear power plants or is there anything like that now?

Not right now, no.

Okay.

We're not, but we're helping, for example, in the data center world, we're helping our clients on alternative energy sources. Now with the size of the grid needing to expand by three times before 2028.

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

Long-term growth, long-term growth with organic execution. So that's probably front and center. I think the investor community has applauded our strategic moves that we've made where, you know, even though we divested 80% of our revenues, we're still one of the largest engineering companies and consulting and advisory companies in the world. And so that, that real myopic focus on those end markets that are growing. I mean, every, for the first time, probably, Andy, in my career, this is the first time that every one of our end markets is in growth mode just because of what's happening to the world.

Right, and you talked about having projects in the Middle East, there's a lot going on there in terms of new cities and such. What exactly are you doing there?

So we're involved in several of those, those new Giga cities, they call them, around tourist and entertainment. But we're also tied to some of these time-based events. So the World Expo is gonna be in Riyadh. As well as the FIFA World Cup in 2034. And so we're involved, we actually were the program manager for both of those events in the Emirates as well as in Qatar. And we've taken a lot of that knowledge base forward into Saudi.

And getting back to that 25,000 plus projects around the world. Talk about how you keep track of all that. And what are your systems that allow you to have visibility?

Yeah, the project management tools that we use and how we manage the entirety of the business wouldn't look too dissimilar than other ERP based systems. But I think I would point more to, aside from the systematic component, our culture, right? Our culture is one where we pride ourselves on being global and 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, right? So there might be a predominance 65 plus percent of our jobs that are going on in the US 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. And so we're really optimizing that global talent model.

Right?

And so I think about 25,000, 28,000, it works really because of the globality of our business.

Right, what about the new administration, Bob? Tariffs, are they gonna impact you at all? What about workforce in Texas, taxes, regulatory, changes going on affecting your business? How would you describe them?

I think right now, Andy, I think that we are, we're staying true to one thing, what's going on in our client's business, right? And so those items that you talked about, the effects of tariffs, effects of taxes, you know, we're working very closely with our clients to help them solve for a potential world changing from what it is today. So interestingly enough, we don't want to capitalize on dislocation, but we are being drawn into our client's business even deeper in order to solve for, if we're working on the expansion of the Toronto Pearson airport. You know, what happens if we can't source materials and equipment from the US? Well, we're a global business, so we're helping our client look at alternatives for that as well. So we're kind of in the, let's follow the client, let's go to the client in this time of maybe some volatility and be there. 80% of our clients we've been with for 20 plus years. And so they're really leaning on us at this point.

Right, and and what are your clients saying right now? Not so much about the administration, although maybe that too, but about the economy and how optimistic are they?

I think everyone, right, I would probably segregate into two parts. One is the right now. And right now we, I think there's a level of anxiety on what if. I think if we were in speculative markets that didn't have those global market disruptors that I was talking about, water scarcity, the need for innovative novel therapies, that kind of the shift in the chip manufacturing world from the East to the West, which was going on well before this administration. I think that that volatility would be probably more pronounced. We're seeing our clients continuing to move on because those issues, those market disruptors, they're not stopping, you know, the world is still evolving and they're moving forward.

I wanna shift gears a little bit and ask you about you. You graduated from the Naval Academy. How did that inform you and help you in your career?

It was a tremendous experience. I like to say, we were just talking about Annapolis. It's where, you know, a young boy went to school there at 17 and left very prepared for not just military service, but also the business world. It really had a big part of shaping me and who I am today.

And talk about your military service. What, what did you do after the academy?

So I was in, I was in the Seabees, so I was in the--

The Seabees?

The Seabees, the Civil Engineer Corps.

Yeah.

So we build, we fight, but we, I was in the kind of the engineering arm for the Navy doing base construction, base maintenance as well as in times of conflict or natural disaster, we were the ones that would go and assist communities in the rebuild of their countries.

And you also served in some capacity with regard to the White House and the president at Camp David specifically?

I did.

What was that about? What were you doing up at Camp David?

Yeah, it was great. So the Navy has the responsibility for maintaining and constructing and renovating Camp David.

Really, its way up in the woods?

It is, it is.

Why is the Navy in charge of that thing?

Well, I think President Roosevelt wanted the Navy.

Wasn't he the Navy guy?

I think he was. And it was the, it was actually the birth of the Seabees, right when Shangrila, it was called at that time was formed. And so the Navy stayed with it. And my role when I was just coming out of graduate school at the time was to, to be the facilities director at Camp David. And it was a, just a, I mean, Andy, it was a phenomenal experience. I was in my twenties, just had my first child and to be in and around the president and the first family was incredible.

That was the Clinton presidency, right?

It was, it was.

Yeah. and I'm sorry, not to belabor this, but what did you actually do up there, Bob?

So, so there was two jobs.

Yeah.

So when the president and his and his guests or his family would come over the weekend, we kind of took our engineering hats off and we put our concierge extraordinaire hat on. And so essentially it was servicing the first family. As you know, it's one of the only locations in the world that the president can go for a walk. He can drive a car.

Huh, right.

He can do, you know, pretty much he can go for a jog, you know, there might be people following him in the woods. So we facilitated all of those things. There's the care and keeping of the first family and their guests. And then when he would leave, we'd put our engineering hats back on and go into operations maintenance. Remember what President Eisenhower did was effectively anything that the president needed to do in the White House could be done at Camp David as well. So you can imagine the infrastructure that was there had a high level of maintainability.

Alright, last question on this, I promise. Were you guys also doing the security or was that MPs, or who was?

Nope, we were doing the security.

You were doing the security.

Makes sense.

It was the Marines. In fairness, it was, it's it was the Marines.

Marines.

The Marines, okay.

It was the Marines.

There you go.

And just to wrap things up here, Bob, final question and shifting back to your company.

Yep.

What does the future entail hold for Jacobs and most importantly, for people watching, why should they either hold or buy the stock?

Going back to those, those generational effects that are happening to the world, right? Whether it be communities or it be the environment. Jacobs is in the business of having a positive impact on the world and the communities that we serve. Whether it be water, transportation, energy, life sciences, those things that are in the day of the life of the human is what we're focused in on. With deep, deep domain knowledge and science that continues to evolve. We are so deeply embedded in that, that the growth looks very, very good.

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

Thank you, Andy.

This is "At Barron's". I'm Andy Serwer. We'll catch you next time.

This Company Has More Than 25,000 Projects Around the World

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