Kevin Berryman
Chief Financial Officer at Jacobs Solutions
Thank you, Bob. Let's turn to Slide 9 for a financial review of our first-quarter results. First-quarter gross revenue grew 12% Year-over-Year and net revenue grew 8%. Net revenue grew 12% Year-over-Year on a constant-currency basis, an acceleration from our fiscal year 2022 constant-currency growth of 8%. Adjusted gross margin in the quarter as a percentage of net revenue was 26%. So virtually [Phonetic] inline with the fourth-quarter but as expected, was down approximately 130 basis points Year-over-Year, primarily driven by, one, the remaining Year-over-Year, impact of the [Indecipherable] contracts and two lower utilization in PA Consulting. I will provide additional comments regarding our sub-segments later in my remarks.
Both people in places, solutions and divergence solutions gross margins were flat Year-over-Year. We expect total gross margins to remain plus or minus 26% of net revenue for the remainder of the fiscal year. And trending higher as we exit the year from a higher-margin mix of revenue and new higher-margin opportunities from our growth accelerators. Adjusted G&A as a percentage of net revenue was 15.5%, slightly higher than Q4, but down 130 basis points Year-over-Year.
During the quarter, we benefited from lower employee benefit costs, which were mostly offset by miscellaneous other costs. During the remainder of the fiscal year, we plan to make additional investments in employee welfare programs such as higher 401-K match and improved medical benefits as part of our continued investment in improving our culture and employee engagement. These costs are factored into our full-year outlook. As a result, we are still targeting G&A as a percentage of net revenue to stay below 16% for the full-fiscal year 2023.
GAAP operating profit was $238 million for the quarter and included $50 million of amortization from acquired intangibles, and $28 million non-cash charge related to decreasing our real-estate footprint, aligned to our future of work strategy. And finally, other acquisition deal-related costs and restructuring efforts of $17 million. Actual restructuring costs were less than half of these costs and supported the creation of our new divergence solutions for reporting segment. The remaining costs are largely related to PDA non-cash contingent equity-based agreements associated with our PA transaction structure.
Adjusted operating profit was $332 million, up 8% Year-over-Year on a constant-currency basis, adjusted operating profit was up 15% year-over-year. We remain committed to reducing our restructuring-related costs. Consistent with our previous comments, we expect $15 million of restructuring charges for the full-year fiscal year 2023. We also expect another 30 million, CAD in non-cash real-estate impairment charges over the course of Q2 and Q3 as we further execute our future of work strategy.
Finally, we expect approximately $20 million of transaction-related expenses from deal-related integration and other costs, most of which is performance-based incentives that were factored into our total purchase price consideration for these acquisitions. It also includes the non-cash contingent-based equity associated with our PA transaction structure. Our adjusted operating profit to net revenue was 10.6%, flat year-over-year. I'll discuss the underlying dynamics during the review by reporting segment.
GAAP EPS from continuing operations was $1.07 [Phonetic] per share and included $0.26 cents impact related to the amortization charge of acquired intangibles, a $0.16 noncash impairment charge related to reducing our real-estate footprint, a $0.09 adjustment to align to our projected annual tax rate, and $0.09 from the transaction, restructuring, and other related costs. Excluding these items, first-quarter adjusted EPS was $1.67, up 7% year-over-year. Q1 adjusted EBITDA was $339 million and was up 9% Year-over-Year, representing 10.8% of net revenue.
Finally, backlog was up 1% year-over-year and 2% on a constant-currency basis. The revenue book-to-bill ratio was 1.1 times with our gross margin and backlog as a percentage of net revenue up over 100 basis points year-over-year. Our book-to-bill ratios continued to be impacted by the burn of the approaching NASA Kennedy NASA rebid as the projects backlog continues to fall until which time the rebid is awarded.
Regarding our [Indecipherable] performance, let's turn to Slide 10 for Q1. Before delving into the details by segment, I would like to make some overall comments regarding the strength and diversity of Jacobs portfolio. As you all know, all aspects of our portfolio for aligned with long-term secular growth trends. Our results in the quarter exhibit the strength of this diversity and its ability to deliver strong consistent operating profit growth. In this quarter, our People and Places Solutions business led the way. So let's start with them.
Overall, People and Places delivered strong revenue and operating profit results driven by alignment to the secular growth trends that Bob discussed earlier. Q1, net revenue was up 8% year-over-year and up 13% in constant currency. All business units contributed solid and offered [Phonetic], very strong constant-currency growth. Backlog grew 2% Year-over-Year and gross margin and backlog was up double-digits in constant currency with a book-to-bill greater than one. Total People and Places Solutions Q1 gross margins were flat Year-over-Year, with Q1 operating profit up 20% and 28% in constant currency. Operating profit as a percentage of net revenue was 14.5%, up over a 140 basis points Year-over-Year, driven by revenue growth and disciplined management of overhead costs. We continue to expect Year-over-Year improvement in People and Places operating profit margin resulting in strong double-digit growth and full-year operating profit.
Our Advanced Facilities unit, which benefits from investments in the life sciences, semiconductor, and electric vehicle supply chains posted the strongest double-digit revenue and operating profit growth. We continue to monitor the macro demand trends across sectors that impact our Advanced Manufacturing clients and we continue to see robust demand from our life sciences clients, which comprise 2/3 of our People and Places business. Our backlog and sales pipeline remains robust across a diverse set of customers and as a result, we continue to expect our Advanced Facilities growth rate to remain strong during fiscal year 2023, despite the very solid and strong 2022 Year-over-Year comparisons.
Our Americas unit had an outstanding quarter with over 20% Year-over-Year operating profit growth, driven by infrastructure-related monetization wins beginning to convert to revenue. The backlog and sales pipeline provides us confidence as we are seeing many large programs mature for late 2023 or early 2024 award, which should continue to support longer-term momentum.
Our International business, Q1 revenue, and operating profit were up single digits Year-over-Year. On a reported basis, but grew double-digits in constant currency. Our international business will continue to be materially impacted by FX during Q2, with FX neutralizing over the second half of our fiscal year, assuming no large variation from existing current foreign-exchange rates.
Moving to Critical Mission Solutions. CMS benefits from highly recurring multi-year contracts that require limited overhead support, the business is aligned to national security, space exploration, and energy transition priorities, mainly in the U.S., Europe, and Australia as well as infrastructure modernization solutions such as U.S. 5G telecom investments. Q1 revenue was up 10% year-over-year and up 13% in constant currency, driven by the Idaho nuclear remediation project contract that ramped up in Q2 of last year. For the remainder of fiscal year 2023, we expect revenue growth in the mid-single-digits for the CMS business as we now compare two quarters that include the Idaho project. CMS book-to-bill was just over one times and continues to be impacted by the approaching NASA, Kennedy rebid, which we expect to be awarded soon.
Gross -- gross profit margins were down Year-over-Year due to revenue mix impact from the lower-margin remediation project and the year-ago closeout benefits associated with our strong performance on several enterprise contracts. CMS operating profit was $82 million, down 10% year-over-year and down 6% on a constant-currency basis. Operating profit margin was up aligned with expectations. It was down 170 basis points Year-over-Year to 7.6%, but at 60 basis points sequentially from the Q4 figure. We expect operating margins to improve in the second half of fiscal 2023, with the ability to expand margins, as we convert higher-margin opportunities in our sales pipeline.
Moving to Divergence Solutions. Gross revenue was up 11% Year-over-Year and when excluding the impact from pass-throughs, net revenue increased 7% year-over-year. We expect net revenue growth to accelerate materially in the second half of our fiscal year as we start to see growth from our investments in sales data solutions and technology offerings. Gross margins and divergent are inline with our consolidated gross margin, which we believe provides us the ability to significantly expand DVS operating margins as we gain additional scale from our heightened growth investments. Operating profit margins were 6%, driven by early-stage investments and well below our future run-rate projections for this business as we begin to embed integrated data-enabled offerings in our core markets. We expect to diverge and to finish fiscal 2023 with margins approaching double-digits.
Turning to PA Consulting, the translation impact from a stronger U.S. dollar from the year-ago period continued to impact reported revenue and operating profit growth. Revenue from PA was down 3% Year-over-Year in U.S. dollars, but up over 11% British pounds. PA had a solid book-to-bill of over one times. We expect revenue growth and British pounds to remain near or above 10% during fiscal year 2023.
Turning to profitability during fiscal year 2022, PA aggressively hired ahead of increasing demand from secular -- with strong secular growth opportunities across energy transition, sustainable, consumer goods, and strategic and digital transformation opportunities. While the sales pipeline remains robust and backlog continued to grow the delayed conversion of these opportunities [Indecipherable] continues to impact utilization. As a result, Q1 operating profit margins were 18%. While actions have been taken to significantly improve utilization, We expect margins to improve incrementally approaching 20% as we exit the fiscal year.
Our non-allocated corporate costs were $40 million, down Year-over-Year as we made a strategic decision to move towards more flexible pay time off program in the U.S. and invest further enhanced employee welfare plans including improved medical, 401-K match benefits and parental leave offerings. We believe this strategic decision is key to further strengthening our culture and attracting world -- and attracting and retaining world-class talent. While Q1 was lower than our previous quarter run-rate guidance, we do expect that our corporate costs for the year will increase to our previous estimate of $190 million to $210 million, and we are monitoring our medical and other fringe costs closely, which can vary depending upon our revenue and delivering mix as well as seasonality of medical claims.
Turning to Slide 11 to discuss our cash flow and balance sheet. We posted another strong quarter of cash-flow generation, which is indicative of the quality of our earnings power and cash conversion capabilities. Free cash flow was $270 million and included an outflow of $60 million for payment of a CARES Act deferral benefit of payroll taxes and $6 million related to transaction costs and other items. Excluding the unusual payment associated with the CARES Act, our underlying free cash flow for the quarter was a very strong $330 million. In the second quarter, we expect free cash flow to approximate the year-ago figure driven by the very strong Q1 performance.
For the full-year, we continue to anticipate 100% adjusted free-cash-flow conversion to adjusted net earnings. Regarding the deployment of our free cash flow, we repurchased approximately $140 million of share during the quarter. As we previously have discussed -- excuse me as we previously announced, the Board of Directors has also approved a new three-year $1 billion share repurchase authorization. We will remain agile and opportunistic in repurchasing shares if we see price dislocation in our relative valuation. We ended the quarter with cash of $1.2 billion and a gross debt of $3.5 billion, resulting in $2.3 billion of net debt, our Q1 net debt to 2023 expected adjusted EBITDA of approximately 1.5 times is a clear indication of the continued strength of our balance sheet.
We remain committed to maintaining an investment-grade credit profile and given our commitment to inclusion and diversity all of Jacobs bank debt now has a sustainability-linked KPR target of achieving a 40% female representation in our management team as defined as our Vice-President and above population. As of the end of Q1, approximately 60% of our debt is tied to floating-rate debt, which includes our $500 million notional interest-rate lock of 2.7%. As of -- excuse me, the end-of-the first-quarter, our weighted-average interest cost was 0.6%. For your benefit in the appendix of the presentation, we have included additional detail related to our debt maturities, interest-rate derivatives and quarterly interest expense.
Finally, given our strong balance sheet and free cash flow, we remain committed to our quarterly dividend, which was increased 13% Year-over-Year, and which will be paid on March 24th. Now I will turn the call-back over to Bob.
