Bob Pragada
Chief Executive Officer at Jacobs Solutions
Thank you, Ayan. Good day, everyone, and thank you for joining us to discuss our third quarter fiscal year 2024 business performance. I am joined today by my Special Advisor, Kevin Berryman, who acted as Interim CFO into June and will, therefore, report out financials.
I'm delighted to also welcome our new CFO, Venk Nathamuni, on his first earnings call for Jacobs. Venk joined us in June and will provide details on guidance. Venk brings a wealth of knowledge and expertise from his 30-plus year career, and I am excited to work in partnership with him moving forward.
Kevin will continue in his role as Special Advisor to me to drive a successful conclusion to the separation and merger of our Critical Mission Solutions and Cyber Intelligence businesses with Amentum. I'd like to extend my gratitude for Kevin for his ongoing support.
Now moving to Slide 4. We continue to make progress on our strategic shift toward a simpler, higher value, higher margin portfolio and remain confident in driving margin expansion over the coming years.
Turning to Slide 5. I am pleased to report significant progress on the previously announced planned spin-off of our Critical Mission Solutions and Cyber & Intelligence businesses. An updated Form 10 was publicly filed yesterday with the U.S. Securities and Exchange Commission. This filing, made under Amazon Holdco, Inc., includes important business and financial information about the intended merger with Amentum to create a leading publicly-traded global government services provider. Amentum will provide additional details during their Capital Markets Day on Tuesday, August 13, 2024. The transaction is now anticipated to be completed in the second half of September 2024.
Turning to Slide 6 and Q3. I will now share our third quarter achievements, highlighted by strong backlog growth, consolidated margin expansion and P&PS record backlog and strong adjusted operating margin. This period saw a continuation of a mixed shift to higher margin science-based consulting and advisory services that offer significantly higher returns, contributing to an overall margin expansion, notably led by P&PS and our partnership with PA Consulting. We are seeing an accelerating demand for critical infrastructure, particularly in water, environmental and advanced facilities end markets, which are poised for substantial growth.
Consolidated backlog increased 6% year over year, bolstering confidence that our business will accelerate profitable growth as we strategically shift our portfolio to higher value, higher margin solutions. Our consolidated adjusted EBITDA came in at $392 million, an increase of approximately 11% compared to same period last year and representing 11.5% adjusted EBITDA margin. From a cash perspective, we started the second half of the year by delivering very strong operating cash flow of $483 million and free cash flow of $445 million. We continue to expect exceeding 100% reported free cash flow conversion in fiscal year 2024, underscoring the power of our business model.
Turning to Slide 7. People & Places Solutions line of business reported another solid top-line growth along with strong adjusted operating margins of 15.3% and adjusted operating profit growth of 12% year on year. We ended Q3 with a strong book to bill of 1.3 -- 1.53 times and record backlog. Adjusted net revenue was up 5% year over year. Our pipeline remains robust and we continue to expect P&PS -- solid P&PS organic revenue growth for Q4 fiscal year '24.
I'm particularly pleased to report that, during the quarter, we continued to deliver substantial wins in core sectors such as water, environmental and advanced facilities, a testament to our robust market positioning, deep domain expertise and long-term trusted client relationships. We achieved double-digit growth in our water and environmental markets with two-thirds of our water-related business focused in on high-value, science-based consulting and advisory services, driven by aging infrastructure and emerging PFAS regulations.
Water continues to be a foundational element of our portfolio, exemplified by key wins across various geographies, reinforcing our global leadership in the sector. Europe, particularly the U.K., has shown resilience, posting a robust quarter in water-related awards. In Asia, we are appointed by PUB, Singapore's national water agency to engineer and program manage the new Kranji Water Reclamation Plant, designed to enhance Northern Singapore's water treatment capacity by 120 million imperial gallons per day.
Additionally, our partnership with Onondaga county, the Syracuse metropolitan area in Central New York, which began in 2008, continues as they've chosen us to provide program management services for their efforts in controlling increased combined sewer overflow and utilizes our Digital OneWater solutions. This expansion will be critical in remediating aging water infrastructure and supporting industrial growth in the geography.
We're excited by the continued momentum and pipeline build in our advanced facilities portfolio, predominantly driven by life sciences, semiconductor manufacturing and AI chip-driven data center expansion. Specifically in life sciences, we continue to see robust growth, with our pipeline and revenue growing double digits year over year. Approximately two-thirds of our life sciences-related business is concentrated in high-value, science-based consulting and advisory services. We were selected by FUJIFILM Diosynth Biotechnologies to support the $1.2 billion expansion of their large-scale biologics facility -- biologics manufacturing site in Holly Springs, North Carolina, providing engineering, procurement and program management services with the first phase of construction expected to complete in 2025.
We continue to see a growing pipeline in transportation and energy and power supported by ongoing government stimulus. As an example, in transportation, we were selected to provide program management services for Broward County Transportation Department's first ever public transit expansion. This $4.4 billion 30-year initiative will transform the county's transportation infrastructure into a multi-modal transit system with a new light rail connecting Fort Lauderdale-Hollywood International Airport to Port Everglades. Additionally, the quarter was highlighted by several key wins in the energy and sustainability space, as demonstrated by our appointment as program manager for the ARCHES Hydrogen Consortium and Master Services Agreement with Shell Energy in Australia.
PA Consulting delivered an industry-leading adjusted operating margin of 21.8% with robust execution and cost discipline. Our partnership with PA continues to be a differentiator in our science-based consulting and advisory services. Together with PA, we were selected in the Hertfordshire County, U.K. to enhance the public highways network in the county with services valued at approximately $22 million annually. This collaboration focuses on sustainability and aims to deliver long-term value over an initial five-year period, with potential extensions up to 14 years.
In Divergent Solutions, we are encouraged by the ongoing demand for our digitally-enabled infrastructure solutions that will remain with independent Jacobs post close. A testament to our capabilities is our recent selection by the City of Omaha to develop a data analytics and AI-enabled support system for its wastewater network, utilizing Jacobs Digital OneWater solutions, Aqua DNA. CMS delivered 35 basis points of margin expansion, the highest in 10 quarters and has a strong pipeline. Additionally, we're experiencing encouraging trends that support long-term growth as we approach the merger with Amentum.
In summary, we remain confident in our ability to win higher value, higher margin solutions and deliver superior execution to meet our clients' expectations.
Now, I'll turn the call over to Kevin to review our financial results in further detail.