Jonathan Doros – Investor Relations Steve Demetriou – Chairman and CEO Kevin Berryman – Executive Vice President and Chief Financial Officer.

Tahira Afzal – KeyBanc Jamie Cook – Credit Suisse Andrew Kaplowitz – Citi Andrew Wittmann – Baird Michael Dudas – Vertical Research Jerry Revich – Goldman Sachs Chad Dillard – Deutsche Bank.

Good morning. My name is Denise, and I’ll be your conference operator today. At this time, I’d like to welcome everyone to the Jacobs Fiscal First Quarter Earnings Conference Call. [Operator Instructions] Jonathan Doros, Investor Relations you may begin your conference..

Our earnings announcement and Form 10-K were filed this morning, and we have posted a copy of the slide presentation to our website, which we will reference in our prepared remarks. I would like to refer you to our forward-looking statement disclosure, which is summarized on Slide 2.

Certain statements contained in this presentation constitute forward-looking statements as such term is defined in Section 27A of the Securities Act of 1933 as amended in Section 21E of the Securities Exchange Act of 1934, as amended, and such statements are intended to be covered by the Safe Harbor provided by the same.

Statements made in this presentation that are not based on historical fact are forward-looking statements.

Although such statements are based on management’s current estimates and expectations and currently available competitive financial and economic data, forward-looking statements are inherently uncertain, and you should not place undue reliance on such statements as actual results may differ materially.

We caution the reader that there are variety of risks, uncertainties and other factors that could cause actual results to differ materially from what is contained, projected or implied in our forward-looking statements.

For a description of some of the risks, uncertainties and other factors that may occur that could cause actual results to differ from our forward-looking statements, see our annual report on Form 10-K for the period ending September 29, 2017, as well as other filings with the Securities and Exchange Commission.

We are under no duty to update any of the forward-looking statements after this date of this presentation to confirm to actual results, except as required by applicable law. Please now turn to Slide 3 for a review of the agenda for today’s call. I would like to note a few items in regards to our presentation and remarks today.

Our results reported today include a two-week stub period from CH2M, which closed on December 15. During the presentation, we will be referring to Jacobs-only and CH2M-only results, which describes the stand-alone performance of each business for December quarter to provide transparency into periods and trends when comparing prior periods.

We have previously announced that we’ll be moving to three segment lines of business reporting structure as part of our integration of the CH2M business. These three segments will be; Aerospace, Technology, Environmental and Nuclear; Buildings, Infrastructure, Advanced Facilities; and Energy, Chemicals and Resources.

We expect the transition to this new line of business structure to be completed by the end of Q2. However, today, we’ll be discussing our segment results based on the current four lines of business structure.

Our reported results in our press release and those included on Form 10-K filed this morning include the two weeks of CH2M operations in our overall financials. Now turning to the agenda.

Steve will begin with a recap of the first quarter results, including a market review for each of our line of businesses and provide an update on the CH2M integration. Kevin will then provide some more in-depth discussion of our financial metrics as well as a review of our balance sheet, capital allocation strategy.

Steve will then provide our outlook for the fiscal year, along with some closing remarks, and then we’ll open up the call for questions. With that, I’ll now pass it over to our Chairman and CEO, Steve Demetriou..

Thank you, Jon. Welcome, everyone, to our Fiscal Year 2018 First Quarter Earnings Call. Before discussing our financial results, I’d like to begin by reinforcing the priorities that we have set for the company.

These are to further demonstrate our winning culture of safety, integrity and client centricity, to continue to strengthen our industry-leading quality and delivery, to progress our diversification into higher-growth, high-margin programs and projects; and of course, relentlessly drive a successful integration of CH2M, combining the best of both organizations to achieve our committed earnings growth and cash generation targets.

By achieving these objectives, we expect to further differentiate Jacobs competitively, retain and attract the industry’s foremost talent and generate superior value for our stakeholders and society. Now turning to our 2018 fiscal year first quarter results.

We continued to benefit from strong end-market demand across both our Aerospace & Technology and Buildings & Infrastructure lines of business, and we experienced modestly improved fundamentals in our petroleum, chemicals and mining sectors.

First quarter Jacobs-only backlog was relatively flat at $19.6 billion, versus the prior quarters record-high backlog, but up $1.4 billion compared to last year’s first quarter. This reflects the fact that three out of four of our lines of business posted year-over-year backlog growth.

It’s also important to note that our quarter-end backlog continued to exclude the impact of close to $850 million of previous awards that remained under protest at the end of the first quarter. From a P&L standpoint, Jacobs revenue, excluding CH2M, was up 3% versus the prior year.

Total gross margin was solid at 17.7%, up over 100 basis points from last year’s first quarter, as we continue to deliver on our strategy to drive improved project execution and shift our portfolio to higher-value business. Adjusted earnings per share of $0.77 increased 13% year-over-year.

Kevin will cover the components of EPS, including a bridge to GAAP EPS in his remarks. And of course, during the quarter, we closed on our transformational CH2M acquisition on December 15.

I’m pleased to say we’re off to a solid start, capturing targeted cost synergies and positioning our combined company for additional revenue and earnings growth opportunities. Turning to our first quarter backlog performance on Slide 5. We’re pleased with our progress, following a record fourth quarter.

Excluding CH2M, the mix of professional services backlog remain consistent with last quarter. We continued to win higher-value contracts as demonstrated by gross margin and backlog increasing by approximately 200 basis points versus the first quarter last year.

From a line of business perspective, Aerospace & Technology continued to post strong growth in backlog, while Buildings & Infrastructure also maintained a solid performance on a year-over-year basis. And our Petroleum & Chemicals and Industrial line of businesses improved their trajectory as certain end markets began to show signs of recovery.

We’re also pleased to note that CH2M backlog grew over 18% versus prior year on an adjusted basis to $6.6 billion, with gross margin percentage materially higher than the Jacobs-only backlog.

The main reason for this higher margin is that more than 80% of the CH2M backlog is made up of higher-value technology, environmental, water, transportation and advanced facility sectors. I’ll now discuss each line of business in more detail, beginning with Aerospace & Technology on Slide 6.

Our A&T business continued to demonstrate strong execution as first quarter backlog, excluding CH2M, increased 23% year-over-year and was up versus last quarter’s record-high level. And this latest A&T backlog does not yet include two significant awards that cleared the protest process in early January.

The first one cleared is for enterprise operations and maintenance services for SITEC, which is Special Operations Forces Acquisitions, Technology and Logistics supporting the U.S. Special Operations Command. And the second award cleared was JITC, a contract that provide test and evaluation services to the Defense Information Systems Agency.

These two newly cleared awards will add approximately $450 million to our second quarter backlog. At that time, there will still remain nearly $400 million of awards from our previous wins at Army’s Yuma Proving Ground and U.S. Corps of Engineering Shallow Land Disposal that will not be put into backlog until they, too, clear the protest process.

As we mentioned in our fourth quarter earnings call, we also have a large confidential contract renewal opportunity pending in 2019.

For the remainder of this year, we’ll experience a partial offset to backlog growth of approximately $100 million per quarter as we continue to burn revenue from this contract until the potential multiyear rebid award reenters our backlog in fiscal 2019.

From a strategic standpoint, one of the key long-term growth drivers of our A&T business is the ability to capture adjacent opportunities in high-value technology systems development, security and operations.

Through organic investments and bolt-on acquisitions that have added complementary capabilities and unique customer relationships, our A&T business has become a preeminent, multibillion-dollar technology solutions provider. An example of this is the $4.6 billion win with the U.S. Missile Defense Agency that we announced last quarter.

This mission-critical contract maintains the agency’s enterprise-wide communications and IT infrastructure. It also includes modeling and simulation as well as systems integration for emerging technology. These wins are expected to be a major driver for profit growth as we progress through this fiscal year.

Another key pillar of our Aerospace & Technology strategy is to become a Tier 1 nuclear and environmental services provider. The addition of CH2M’s nuclear and environmental business catapults us into a leading position.

In many instances, these nuclear opportunities are highly selective multiyear government contracts worth billions of dollars, often decades-long in duration. In addition to major government programs, we are driving our digital expertise across the entire Jacobs portfolio, which we refer to as Jacobs Connected Enterprise.

For example, within A&T, we’re working with an automotive customer on cyber-penetration testing for its autonomous vehicles. So in summary, the A&T business has built a solid foundation by executing against a focused strategy and is positioned well to deliver double-digit profit growth in fiscal 2018.

Now on to Slide 7 to discuss our Buildings & Infrastructure line of business. Our global B&I team delivered another solid quarter with operating profit, excluding CH2M, up over 30% versus last year, along with revenue and backlog increasing during the same period.

More importantly, the gross profit in our first quarter Jacobs-only B&I backlog continued to trend up on both a year-over-year and sequential basis, demonstrating success in our strategy to focus on high-growth, higher-margin opportunities.

Underpinning our success has been a strong focus on what we see as the big three infrastructure priorities; water, transportation and resilience. While the U.S. is front and center in the news with its infrastructure legislation priorities, we are seeing the same positive momentum globally to modernize and expand infrastructure.

As a global leader across all sectors, Jacobs is well-positioned to capitalize on infrastructure trends in the coming decades. Water is fundamental to the global economy. And in many mature countries such as the U.S. and Western Europe, water infrastructure is nearing the end of its useful life.

And in emerging economies, we need to continue to develop new infrastructure to serve millions of people who lack access to clean water and sanitation.

Together with CH2M, Jacobs is now positioned as a top global leader in all aspects of water, including designing, building and managing supply, delivery, treatment and reuse as well as initiatives to enhance excess waterways.

For example, in the first quarter, we were awarded the design and engineering services for expansion of the South Fort Collins, Colorado sanitation district water reclamation facility where safely cleaned and treated wastewater is returned to the ecosystem.

This market is also one where, in addition to traditional engineering services, we are delivering total design build as well as operations and maintenance services for urban water systems.

Additionally, we are in advanced discussions with clients in countries such as India where there are significant needs to provide the water infrastructure to ensure clean, safe resources to serve a growing population. In the transportation sector, we continue to see strong demand around the world, especially in highways, rails and airports.

Investments in transportation are viewed by governments as one of the most important drivers of unlocking economic investment and productivity. During the first quarter, we had a number of key wins on the transportation sector.

In Melbourne, Australia, we were selected to carry out the engineering design as part of the design build team for the West Gate Tunnel project, one of the most iconic programs in the country’s history.

We landed significant wins for Highways England’s Manchester Northwest Quadrant program and the National Transport Authority Ireland for the Dublin Metro North expansion. And in the U.S., we were awarded the program management for the third track expansion of the Long Island Railroad.

In combination with CH2M, we’re positioned as a leading force, delivering world-class solutions for global transportation requirements. We have a pipeline flushed with opportunities and are poised to capitalize on continued growth in the transportation sector globally.

As we have seen recently in weather extremes and natural disasters around the world, the demand for resiliency program has never been greater, given the rise of urban population migration and the catastrophic impacts such events have on major metropolitan areas.

In addition to recovery efforts, this phenomenon also is driving investments in protective and sustainable infrastructure.

We’re helping governments around the world address these challenges, leading major efforts such as New York City’s East Side Coastal Resiliency program, the Port of San Francisco waterfront project and delivery of a utility-scale, 200-megawatt solar plant that will provide sustainable energy in New South Wales, Australia.

Our B&I team is also accelerating our strategy to bring digital innovation to clients globally for our Jacobs Connected Enterprise platform. We continue to see examples of success.

Among them, we developed a proprietary geographic information system technology called ProjectMapper, which is a cloud-based subscription solution currently being leveraged at multiple transportation customers in the U.K.

In summary, our B&I business is performing extremely well, and we are squarely positioned in priority sectors and geographies for long-term profitable growth. Moving to Slide 8. Our Industrial line of business realized a decrease in backlog compared to the fourth quarter as we continue to work off two sizable life sciences projects.

Backlog was $2.6 billion, down approximately $200 million from the prior quarter, but up over $100 million versus last year, driven by increased field services work in the U.S. Based on improved operational and commercial execution, gross margin in our first quarter Industrial backlog is up year-over-year.

In life sciences, as the wave of bulk biotech expansion ebbs, growth continues to shift to cell and gene therapy where we are capturing increased new business. We are also expecting capacity expansion in the immune disorder market, driven by the needs of an aging population.

As we integrate CH2M, we’re excited about the opportunities to leverage our combined expertise in life sciences, semiconductors and other advanced facilities to increase the pipeline of new sales prospects and drive accelerated profitable growth synergies.

Our Mining & Minerals business continues to pick up with strengthening metal prices, particularly copper, driving modest increases in client investment. We have won several frame agreements and studies that we expect to convert to full execution in late 2018 and into 2019.

A rise in activity by our field services team in the first quarter involved several large planned turnarounds as well as two significant emergency outages by core clients in the U.S. and Canada. Clients seeking to reduce overhead costs are bidding large multisite maintenance contracts.

Our size and expertise positions us well for these opportunities, and we have achieved several strategic wins in the long-term maintenance category, specifically in North America. And now to our Petroleum & Chemicals business on Slide 9.

While our revenue in first quarter P&C backlog, excluding CH2M, was down slightly versus last year, the gross margin in backlog increased year-over-year. I’m very pleased with how our P&C team have held backlog steady through the oil market downturn over the last several years.

This is a direct result of our team’s solid execution against our strategy to focus on improving project delivery and enhancing the mix of new business. As we move forward, we’re now experiencing what appears to be the beginning of modest improvements in industry demand.

In summary, global upstream and midstream CapEx spend are expected to improve based on oil prices stabilizing at three year highs. Within refining, regulatory factors are continuing to drive client capital spending. In Asia and Middle East, there are new greenfield refining projects.

And in the U.S., we’re seeing signs that some refiners will take advantage of the benefit from tax changes that allow for the immediate write-off of CapEx investments. Overall, chemicals continues to remain a strong market.

In the U.S., as the first wave of petrochemical facilities are commissioned, we’re seeing clients discussing and moving forward on the next cycle of petrochemicals facilities.

So our focus in Petroleum & Chemicals will continue to be on global downstream opportunities in refining and chemicals, on continuing to strengthen project execution and leveraging our digital expertise deep into our customer base.

Recent examples of our execution against this strategy include combining our strong consultancy, strategic sales groups and multi-office execution model to win global projects that leverage resources in other regions, such as our key wins with Saudi Aramco Zuluf and Canada Kuwait Petrochemical Corporation.

We continue to progress our existing renewable energy projects. We recently signed a three year engineering services agreement with the energy arm of a company looking to build wind power generation capacity in Canada.

From a Jacobs Connected Enterprise standpoint, we were successful in capturing the network and cyber infrastructure build-out for a downstream customer’s project site that in the past would typically be considered adjacent IT scope of work handled by other IT contractors.

In another Jacobs Connected Enterprise example, at one of our projects in the U.S. Gulf Coast, we’ve deployed network personnel and material tracking as well as digitized safety processes, which historically were pen and paper-based.

We expect this infusion of digital technology to improve site efficiency, safety and provide us with further analytics when building and bidding future projects. From a CH2M cross-selling standpoint, we are excited about the opportunity to now incorporate industry-leading water and environmental capabilities into our P&C client offering.

As an example, just recently, a downstream customer in the U.S. awarded Jacobs the pre-FEED work for steam reliability and optimization project where we are bringing our new combined Jacobs expertise.

In summary, we’re pleased with the way our global P&C team have weathered a challenging energy market by focusing on high-quality execution of our ongoing projects, continuing to strengthen client relationships and maintaining a strong financial profile.

As the energy markets recover, we are well-positioned from both a strategic and from a financial perspective to drive operating leverage in our P&C business. On Slide 10, I’d like to provide an update on the very important integration of CH2M.

Immediately after we announced the transformational acquisition of CH2M in August, we created an Integration Management Office, the IMO.

By the time we completed the deal on December 15, the IMO was comprised of 125 employees from both organizations, working full-time alongside a leading management consultant firm to focus on all aspects of integration planning.

The IMO working with joint leadership have focused on seamlessly combining legacy Jacobs and CH2M cultures and capturing synergies that we expect to create significant shareholder value.

We know the difference between success and failures of mergers and acquisitions typically lies in the ability to get employees of both organizations aligned and excited, not only to ensure they understand our new combined company strategy, but also to get them actively engaged in delivering it.

To this end, over the last five months, our executive leaders have made a concerted effort to host town halls at locations across both businesses and around the world. We’ve taken time to personally communicate about our strategy and the stronger new value proposition we’re creating together.

Based on these efforts and regular surveys we’re conducting, employees are responding favorably, demonstrating genuine excitement and motivation to contribute to a better future for our company and our stakeholders.

We have made it our priority to maintain and build on this momentum in employee engagement, and our clients also are responding positively. A key metric for us is closely monitoring talent retention.

And I’m very pleased that since announcing and closing this major acquisition, voluntary attrition levels are actually trending below pre-acquisition levels. And our employees are driving a lot of excitement in the marketplace, including social media sharing.

And today, we’re attracting five times as many job views, supporting our talent acquisition efforts to meet client service requirements in our combined growing backlog. On the financial side of the integration, Kevin will cover details associated with our cost synergy initiative and deal targets.

I do want to note that we’re solidly on track to achieve the cost savings we communicated at the announcement of the transaction. More importantly, we are seeing early-on evidence of maintaining strong focus on high-quality project execution around the globe in achieving sales bookings targets previously established by both companies.

Our teams have exceeded expectations on how quickly they are coming together to realize revenue growth synergies, leveraging unique capabilities that we now can cross-sell to new and existing clients.

As our sales teams complete their assessment of prospects across our pipelines, their findings so far confirm our original expectation that we have minimal revenue dis-synergies, thanks to limited overlap in our businesses and more importantly, positive complementary potential for growth synergies.

From a top line standpoint, we’re putting the framework in place to drive revenue growth opportunities. Some examples are cross-selling water capabilities into oil, gas and petrochemicals is already gaining traction, with growing opportunities identified in the pipeline for fiscal 2018 and 2019.

In advanced facilities, we see specific opportunities to deliver full EPCM across the high technology and semiconductor sectors. And within transportation, building on recent wins, we believe our combined expertise and scale will result in higher win rates. So now I’ll turn the call over to Kevin..

Thank you, Steve. And moving to Slide 11, you will see a more detailed summary of our financial performance for the first quarter of our fiscal 2018 year. Before I start to review our results, I would like to reiterate what Jon said earlier that our reported results include only 15 days of CH2M in the quarter.

Please note that we have also footnoted the stub period contribution to our reported metrics within our earnings slide presentation, all of which is posted to our Investor Relations website.

So during the quarter, Jacobs legacy revenue continued to gain momentum, growing 3% year-over-year, driven by a strong 10% increase in higher margin professional services revenue.

The increase in Jacobs revenue was driven by solid performance in our Aerospace & Technology and Buildings & Infrastructure lines of businesses, offset by some softness in our Petroleum & Chemicals line of business, which, as Steve highlighted, was driven by the continued challenges in their end markets.

When including the stub period impact of CH2M into our results for the quarter, our revenue actually grew nearly 8% versus the year-ago quarter. Overall gross margins, including the CH2M stub period impact, were 17.7%. And Jacobs legacy gross margins continued to be strong at 17.6%, up 120 basis points year-over-year.

While corporate Q1 G&A costs were up year-over-year, approximately half of the increase was driven by some discreet accrual adjustments, a partial lump sum pension settlement and increased legal fees. Our medical costs are also expected to be up year-over-year, which will put upward pressure on corporate costs for the balance of the year.

While GAAP operating profit margin was 1.7% due to the CH2M-related acquisition and integration costs and a onetime noncash charge associated with the change in the U.S. tax law, our adjusted operating profit margin was 4.9%, up nearly 20 basis points year-over-year.

When excluding the stub period impact from CH2M, adjusted operating profit margin would have been 5%, the fourth straight quarter of at least 5% for the Jacobs legacy business.

GAAP EPS was $0.02, down year-over-year and driven by the onetime $0.23 charge related to tax reform and the $0.52 of CH2M-related restructuring charges to achieve synergies, professional fees and other integration-related expenses, including change in control costs.

When excluding these discrete costs that are noted above, our adjusted EPS was $0.77. Included in the $0.77 is a negative $0.01 contribution from CH2M’s stub period results, representing positive operational contribution, which was offset by the incremental interest and share count due to the transaction.

The immature amount of CH2M earnings contribution was aligned with our expectation for the short stub period, given that the last two weeks of the calendar year typically include significantly less billable days than a normal two-week period due to the holidays.

Our quarter also included a onetime charge of $0.02 associated with a partial lump sum pension settlement. These incremental charges were offset by a lower tax rate in the quarter of 25%, which was driven by the change in the U.S. tax law.

Importantly, all of these items were included in our $0.77 result, effectively offsetting each other, leaving an underlying operational performance indicative of building momentum. You’ll also see this later when we talk about our LOB results and their strong margin and profit results.

Before moving on to the next slide, I would like to quickly comment on the expected ongoing impact of the recent change in the U.S. tax law.

We do expect that our effective tax rate will approach 25% now for the year, given the new law, and the result – and as a result, we expect that our EPS for the year will benefit by approximately $0.30 due to the change. Steve will comment on this later when he discusses our revised outlook for the year.

The tax benefit, however, will be somewhat muted in our second quarter due to the timing of some planned discrete costs of approximately $0.10 in the quarter. To be clear, these discrete incremental costs are embedded on our outlook for the full year that Steve will talk to.

Now let me turn to Slide 12 to discuss CH2M’s fourth quarter and calendar 2017 results. As a reminder, CH2M’s revenue and backlog year-over-year growth are impacted by the deconsolidation of their Chalk River joint venture and the adjustment of the MOPAC and Inpex projects.

We have provided a reconciliation of the CH2M reported to adjusted figures in the appendix of our investor presentation. Excluding the impacts of these items noted, CH2M legacy backlog grew over 18% year-over-year and was driven by an increase in large multiyear U.S. federal program management and operation and maintenance awards.

Adjusted revenue was stable for the December quarter and down 1% versus a year ago and was negatively impacted by the private sector oil and gas business and, to a lesser extent, the national government business. This softness was almost entirely offset by an increase in the state and local business, primarily water and transportation.

For the full calendar year 2017, underlying operational EBITDA was in line with our expectations of $106 million on a GAAP basis and $320 million on an adjusted basis.

It should be noted that during the December quarter, we took the opportunity to align the CH2M project portfolio to our risk standards, which did put some additional pressure on the results for CH2M in the fourth quarter.

As such, we believe the CH2M business is positioned well from a backlog and profitability standpoint to successfully execute against our expected – expectations for the nine-month period – remaining period for our fiscal 2018.

We are therefore maintaining our nine-month accretion expectation from CH2M of $0.30 to $0.35, excluding any impact from the lower corporate tax rate. Flipping to Slide 13. Let’s look at the sequential trends in revenue and gross margin in more detail.

As we have highlighted in the past, we continue to be focused on disciplined project execution, reducing write-downs and targeting higher margin opportunities throughout the cycles in our end markets. We have certainly communicated previously that we would be expecting a building momentum in our revenue in 2018.

During the quarter, this trend certainly played out in our results as we again maintained strong gross margins approaching 18%, while increasing revenue versus year ago on a reported and organic basis. So turning to Slide 14, let’s discuss the line of business sectors.

To ensure the most accurate trend analysis, we have excluded the very short two-week stub period for CH2M from each of our lines of businesses and will only talk to the Jacobs line of business financials for the quarter. Consistent with our transition to growth in 2008, every line of business delivered absolute level of profit growth year-over-year.

The improving performance, combined with the continued improvement in operating margin across three of the four lines of business, gives a clear indication that our disciplined and more focused profitable growth strategy is taking hold.

Regarding A&T, while they showed a slight reduction in OP margin for the quarter, this was a result of their ramping up against the large federal wins that will build revenue momentum over the balance of the year.

Throughout fiscal 2018, we expect A&T to maintain operating margins in the 8% to 9% range, while accelerating revenue growth from the recent strong backlog performance. This combination of profitable revenue growth is expected to drive meaningful improvement in operating profit.

Operating profit for our B&I business increased 32.5% year-over-year to $51 million with margins of 8%, up 150 basis points from the year-ago quarter. We believe there’s an opportunity to expand CH2M’s state and local operating margins to be more in line with our B&I business both organically and additionally through cost synergies.

Meanwhile, our Industrial line of business operating profit increased nearly 52% to $38 million, representing a significant increase of over 170 basis points to their current operating profit margin of 5.1%. This increase was driven by low single-digit revenue growth while expanding gross margins due to improved project performance.

Lastly, our P&C business, Petroleum & Chemicals, saw a 24% increase in operating income to $28 million despite a year-over-year decrease in revenue as gross margins expanded by close to 200 basis points. As a result, margins again improved year-over-year by nearly 120 basis points to 4.9%.

So before moving on to the next slide and while not shown specifically on this slide, I would reiterate our non-allocated corporate overhead increased $24 million year-over-year, which offset some of the impact of the LOB profit growth.

As I’ve previously stated, half of this increase was related to costs that we do not expect to be recurring on a go-forward basis. Regardless, our overall adjusted operating profit improved 8%, and adjusted operating margin increased nearly 30 basis points year-over-year for the legacy Jacobs business to 5.0%.

On Slide 15, now let me provide an update on restructuring and acquisition costs. As Steve alluded to, we remain on track to achieve $150 million of targeted cost synergies we outlined, with an estimated cost to achieve of $225 million.

Through the end of Q1, we have incurred approximately $37 million of the $225 million in cost to achieve these synergies. These initial costs are largely labor-related through the actions taken through the end of Q1. As of the end of Q1, we have achieved a run rate of just over 25% of the expected synergies of $150 million.

By the end of the year, we expect to achieve a run rate savings of approximately 50% of the total $150 million of synergies. Given this ramp-up of the synergies over the course of the year, we project that we will deliver approximately $50 million of synergy benefits in our fiscal year 2018.

As it relates to our expected $225 million of P&L cost to achieve these synergies, we expect that a bit over half of these costs will be cash-related and be incurred over the next couple of years in total.

Finally, as it relates to our CH2M acquisition-related professional fees, change in control and other costs, we have realized approximately $80 million through Q1 on the P&L. So now on to the balance sheet and capital allocation strategy on Slide 16.

We ended the quarter with cash of $1.1 billion and debt of approximately $2.6 billion, leading to a net debt position of $1.5 billion. This net debt position after close is actually an improved position versus our original expectations.

As a result, our net debt to adjusted EBITDA at the end of the quarter is 1.6x, indicative of our strong balance sheet at quarter-end, even after the recent incremental debt was put in place associated with the CH2M deal. Additionally, we continue to have $500 million of liquidity capacity on our existing revolving credit facility.

So now moving to capital allocation. Our short-term cash deployment plans will be focused on paying down our current larger debt position as we continue to focus on maintaining our strong investment-grade credit profile. And we will maintain our dividend program.

During the first quarter, we paid $80 million in dividends, and we recently announced that our board has declared a second quarter dividend of $0.15 per share. Finally, while we will continue to evaluate strategic acquisitions and divestitures, our primary focus will be to reduce debt in the short term.

So let me now turn the call back over to Steve for some closing thoughts..

Thank you, Kevin. Finally, on Slide 17, in summary, we’re executing well against our three-year strategy to maintain the culture of safety, integrity and innovation, while driving operational and financial discipline with a focus on profitable growth.

Our first quarter was a solid start to fiscal year 2018, and we’re optimistic that an improving macro backdrop is unfolding and we’re positioned well to benefit from it. Finally, we remain confident in our previous outlook.

And as a result of a lower expected tax rate, we are raising our fiscal 2018 adjusted earnings per share outlook to a range of $3.85 to $4.25, which is up from last quarter’s guidance range of $3.55 to $3.95. So operator, we’ll now open up the call for questions..

[Operator Instructions] Your first question comes from the line of Tahira Afzal from KeyBanc. Your line is now open..

Thank you very much and congratulations on the quarter..

Thank you, Tahira..

So I guess first question, Kevin, is for yourself.

If I look at the cost savings you’ve seen on an annualized basis and sort of break them down from what might have been in the first quarter, are we seeing sort of margin sort of flattish then outside of the cost savings? Any help on how to look at the underlying business and really scrub it for that would be helpful..

Yes, look, I think the margin profile associated with the synergies, there was very limited synergies in the first quarter. You might remember that we did some – took some actions at the end of the fourth quarter, our fiscal fourth quarter, which probably added $0.015 to the figures, which is embedded into that $0.77 figure.

So I would say it wasn’t material enough to really fundamentally change the margin profile. So I think the flattish numbers kind of remain in place as it relates to that margin profile you’re alluding to..

Got it, okay. And Steve and Kevin, it seems like we’re at a stage based on your bottoms-up commentary and really a backlog where we could potentially start seeing mid to high single-digit revenue growth into fiscal year 2019 or at least mid-single.

To the extent we do, what is the margin profile? How much of that trickles in? Or was this – if you start to go into the high single-digit organic growth rate sort of range, do you need to make some more investments to keep that up?.

Yes. Just, Tahira, I think a couple of points to your question, that we do believe that all four of our lines of business will, from a P&L standpoint, be seeing revenue growth this year versus last year, some more than others.

And from a backlog standpoint, Aerospace & Technology, Buildings & Infrastructure and even modestly on Petroleum & Chemicals, we’re expecting positive backlog momentum through the rest of this year.

The A&T situation will give us probably our biggest boost from a scale to be able to drive both profit growth and margin growth with these large projects that I described starting to move into execution as we get into the second half especially, third and fourth quarter. And so we do expect to see some momentum on both profit and margin growth there.

But you did say it, we are seeing a strong profile, and therefore, we’re making sure that we’re hiring and training and putting in the investments to make sure that we’re positioned for 2019 and beyond.

But all in all, we think that there is still opportunity for margin improvement, but clearly profit growth as we go through the second half of this year..

Got it, thank you..

Let me also say, just on what Steve said, on the revenue side, there is going to be a ramp over the course of the year. And so we’ll – our expectation is we go from low single digits up into the higher end of the single-digit range over the course of the balance of the year.

So A&T will certainly be a part of that ramp-up in terms of revenue growth, too..

Okay, great. Congrats again guys..

Thank you..

Thank you..

Your next question comes from Jamie Cook with Credit Suisse. Your line is open..

Hi, good morning and nice quarter. I guess two questions. One, I was impressed with the margins within the – the margin improvement that we saw in the Petroleum & Chemicals sector.

So can you talk about sort of the sustainability of those margins? And then, Steve, as you look to that market potentially improving, do you see Jacobs participating more in the OpEx cycle or big CapEx cycle within Petroleum & Chemicals moving forward? And then I guess, my second question.

Kevin, you commented, I think, about the second quarter in $0.10 of sort of non-discrete items or whatever.

Can you just talk about that relative – give more color around that? Are you implying that the street is too high, $0.10, just because the modeling gets a little funky with us trying to model CH2M? Hell, I just want to make sure we’re not, better expectations are correct for the second quarter. Thanks..

Thank you, Jamie. So on the Petroleum & Chemicals questions, we’re very pleased with the focus on margin improvement. On both the year-over-year and sequential basis, the Petroleum & Chemicals team had clearly driven up the operating profit margin, which is critical to achieving our strategy.

And as we get through the year, we’re seeing a nice mix of everything from some selective large projects, especially overseas. We have some good things going on in the Middle East and some of the other locations, but also a good mix of sustaining capital and O&M.

And so overall, that profile should allow us to continue to see year-over-year margin improvement as we get through the rest of this year and also start to see that sequential revenue growth in P&C, as they’ve sort of cleaned up from the past and are now benefiting from the higher mix of backlog that they’ve been winning over the last several quarters..

And Steve, just to follow up on the – because obviously, there’s a lot of work that’s going to be happening in the Middle East, and you guys are well-positioned on one specific job that I’m sure you know what I’m talking about.

Can you talk about your willingness? Is this – is energy influx in particular work in the Middle East? Are you comfortable with taking on fixed price risk? Or – I’m just trying to think about how you plan to participate in that market, which could potentially be higher fixed price work..

Yes, we’re – we don’t see a radical change unfolding in the Middle East and internationally on the projects that we’re working on. So other than a couple of selective projects that we have out of our Houston office for U.S. chemical clients that we’ve talked about in the past, everything that we’re working on is very consistent with our risk profile.

And so we’re excited about some of these major projects that are involving both chemicals, some of the chemical derivatives, some large refining projects in Asia Pacific and the Middle East.

And then what CH2M brings us with the water and environmental capabilities to add onto that to really put ourselves in a much stronger position to win these projects because of the wider services that we offer. All in all, Jamie, we just see well positioned with similar risk profile as we go forward..

Okay, thanks. And then just, sorry, Kevin, clarification on the second quarter..

Yes, look, I think to reiterate Steve’s comments, actually, we said in the past that this 80/20 split that we’ve had historically and which is not too dissimilar given CH2M’s portfolio, that we would effectively kind of adhere to that in general terms and that it wouldn’t materially change.

And as you know, the lump sum projects that we do, do are very, very strongly negotiated. So I think that’s an important additional comment to make. It’s not these blind bid lump sum projects, we don’t go down that path, obviously. So that’s just one comment.

As it relates to the second quarter, look, specifically with the increase in the guidance that we have provided relative to the tax, I commented on the corporate G&A cost and that there were some kind of discrete items, the way I would characterize it, it’s more of the same in Q2, which will then fall off in Q3.

There are different costs that will be incurred in Q2 versus those that I outlined. And I just wanted to give you guys a heads-up that, that incremental guide on the tax benefits, we won’t see some of that in the second quarter. And it was just prudent to do so, so you kind of model it correctly..

Okay, thank you. I’ll get back in queue..

Thanks..

Your next question comes from Andrew Kaplowitz with Citi. Your line is open..

Hey, good morning, guys. .

Good morning..

Good morning..

Steve or Kevin, can you give us more color into the expected organic revenue growth at CH2 for 2018? You mentioned that last quarter, it was down a little as oil and gas was a drag, but it was up an underlying 2% in calendar year 2017.

And you’ve previously given us buckets of growth for CH2, water and environment expect to grow 4% to 5%; nuclear start to grow 2% to 3%.

So as you close the deal, do you see any of these CH2 businesses going slower or faster than what you originally thought in 2018?.

Yes. So maybe starting with CH2M because I think you’re asking for both what we’ve acquired but as well as the underlying Jacobs organic growth.

But the strength that we have with the timing of CH2M is their state and local business, which is going to be predominantly integrated with our Buildings & Infrastructure to create this new BIF line of business. The backlog was up 18% in 2017 versus 2016.

So that bodes well for now starting to see the P&L revenue and profit growth from that backlog start to get executed in 2018. And the national sector, which is going to be, for the most part, integrated with our Aerospace & Technology, was up 11%.

The one soft spot was the private sector, but the benefit of putting their private sector now together with, especially the oil and gas side of it, with our Petroleum & Chemicals is really going to be the revenue synergies drive to win new business with the environmental and water capabilities we now bring to the Jacobs’ much larger platform of Petroleum & Chemicals.

The timing of that revenue organic growth into the P&L will probably lag a couple of quarters as we went and start to execute those businesses. But we feel very positive about the timing of the backlog growth and now starting to see that impact the P&L in 2018 for Jacobs on the CH2M side.

Does that answer your question, Andrew?.

Yes, I think it does. Actually, I was mostly asking about CH2. So let me ask you about CH2 in terms of free cash flow and your expectation there going forward. And then related to that, you’ve mentioned that Jacobs’ net debt post the deal close was $1.5 billion. I think you had suggested net debt would be closer to $1.9 billion.

So did CH2 come over with more cash? Was it your higher stock price that helped you in closing the deal? Like maybe you could just talk about the particulars there?.

No, we did have a little bit more cash than we had expected, Andrew, is the short answer to the question. And effectively, that translated into that $1.5 billion net debt. So we’re – the good news is we’re starting from a strong perspective as it relates to that. So look, it doesn’t change our philosophy on how we go forward to delever.

We think that’s an appropriate thing to do, where we’re really committed to this very strong position of being a good solid investment, strong investment-grade rating. Even though we don’t have public debt, we philosophically want to have very strong investment grade kind of metrics, and so we’re committed to that. So I think that bodes well.

I would say, just additional comments maybe on Steve’s comments on the growth. We certainly like the growth outlook in state and local for sure, I think, as well on the federal side, and then there could be some potential pressure on the side of private.

So I think fundamentally, the things that we called out in terms of growth profile is where we think the growth can come from in CH2M..

And Kevin, how do we look at the free cash flow profile of CH2 here coming in over the next year or so?.

Yes. Look, we think that there is an opportunity to improve the cash flow profile. They have higher levels of DSOs, and we also think there’s an ability, and that will happen through synergies and focusing on possible business, which they’ve already started to do. The legacy CH2M team had really started that journey already.

So I think there’s an opportunity for the operational cash flows of CH2M to improve over time. It doesn’t happen immediately. We’ve talked about us being able to get to a conversion number of at least one longer term, and that will be muddied in the short-term because of our costs to try and get the synergies and all that kind of stuff.

But we do fundamentally believe there’s opportunities to improve it longer term..

Thanks, guys..

Thank you..

Your next question comes from Andrew Wittmann with Baird. Your line is open..

Great. Good morning. I guess, I just wanted to get some perspectives from you guys now that you’ve closed on CH2M. Before the deal closed, there’s a public filing where CH2M laid out kind of their view of their multiyear growth period.

With your ownership of that now, how do you feel about that projection that they had out, recognizing that the 2017 number came in a little bit light of what the company has expected at the time?.

So let me start and, Kevin, maybe build on it. 2017 ended up almost spot on to what we had modeled and therefore had used for our projections that we gave with regard to EPS accretion, et cetera. So we’re pleased with the final 2017 number. We feel confident in our 2018 financials as well. As I mentioned, the backlog, very high backlog.

So as far as what we need to grow and achieve our overall guidance that we just gave, we feel very confident in both the CH2M and Jacobs underlying outlook as well as some of the other benefits we’ve talked about.

And then we got super excited about 2019 and beyond because by that time, we’ll have had the time to really leverage the revenue synergies that we’ve been talking about. Obviously, in the early days, we’re very heavily focused on delivering $150 million of cost synergies we’ve talked about.

But we’re not – as the teams have now come together, there’s a lot of excitement about what we can do in 2019 and beyond. Just as a couple of examples that we’ve come to learn over the last couple of months. Bob Pragada, our President of the new BIF, was out in Asia Pacific and Middle East and India.

And the things that he and the combined teams have been talking about are smart city work in India, that CH2M brings a much higher level than we were doing in our infrastructure side where we’ve been heavily focused on Petroleum & Chemicals in India.

They bring the Buildings & Infrastructure innovation side, putting those two together will be powerful. Singapore, deep relationships that the CH2M folks have with the government there, especially in utilities, transportation is combining now with our capabilities.

And then the iconic programs that we’ve talked about several times really showed in some of the Middle East activities they have working on Dubai Expo 2020 and the Qatar World Cup 2022, and now being able to put these capabilities together, and I just gave you just a small sampling of what excites us that’s going to cut across all three of our new lines of business as it relates to growth.

We remain as bullish as we were when we announced the deal and when we closed the deal..

So Andrew, just I guess relative to the CH2M model that was included in the S-4, look, that model was a robust model, and I’ll leave it at that. That doesn’t mean that we didn’t have our own view of very strong financial performance, which was incorporated into our valuation of the deal. So maybe I’ll leave it at that.

And we’re excited about how they finished in 2017 and how they were looking to drive the performance in 2018..

Okay, fair enough. Thank you..

Your next question comes from Michael Dudas with Vertical Research. Your line is open..

Good morning, Jon, Kevin, Steve..

Good morning..

Steve, in your early remarks, talked about improved backlog margin 2017 versus 2016, and there’s pretty impressive numbers.

Could you maybe just explain a little bit on, is it more mix-driven? Is it more demand for your services is improving so you can generate better profit and negotiated margins? Or is it you’ve been more disciplined in like chasing a certain project that the bid list get too high that you’re now putting the time and effort in and be more focused on those margins? And to follow on that, looking at the projects you completed in 2017 versus 2016, how that conversion from the as-sold margin for the backlog to what you guys reported, how that trend’s been?.

Okay, thank you, Mike. And from time to time, we apologize for the sirens in the background. We’re doing this call from our New York City office in Penn Station, and it gets a little loud out there. And so we hope it’s minimal. But Mike, the answer is really all of the above.

And you really laid it out very nicely because it is a combination of all three of those factors that you talked about.

The biggest one, really going back to a few years ago when we launched our new strategy, and we talked about a more disciplined approach, but also a much stronger capability of understanding where we make our money, where we don’t, which offices are driving the higher profitability.

And just – and also really understanding ultimately as we are now going out and bidding and winning business, how we’re going to upfront integrate that with operations on a much more seamless way that preserve the as-sold margin all the way to the end of the project.

But equal to that and pretty impressive has been the added innovation that we’re now bringing in the extended services. This whole Jacobs Connected Enterprise is a major contributor led by Aerospace & Technology.

And when you look at what Terry Hagen and the team have won over the last 1.5 years, we’re getting into – we’re shifting away from these rebid projects that we had about a couple of years ago that were good solid margins but lower margins, to these impressive projects that we are bringing in more IT infrastructure, cybersecurity, additional elements that we weren’t having in several years ago.

And some of these are large projects, some of these are smaller niche projects, but clearly contributing to the type of margin growth. So it really is a combination of commercial excellence, project execution and just a much sharper understanding of the financial and business acumen around selling and delivering projects.

Kevin, anything to add on the as-sold margin piece of Mike’s question?.

Yes. Mike, look, I think everything Steve said reiterate obviously. The second point is the project execution has dramatically improved over the course of the last three years.

If you look at what we call write-downs, which is basically we give away $50,000 here, $100,000 there, $200,000 here, maybe a $1 million or $2 million now and again, those numbers have dramatically been reduced over the period 2015 to 2017. So gross margin improvement has been driven, to some extent, by that.

But actually, those write-downs are down 50% versus the number of 2015. So it is all of the things Steve talked about and really this whole fundamental getting back to project execution, doing good work for our clients, being transparent, not surprising them and executing in a manner that allows us to protect more of that gross margin..

Thanks. And Steve, don’t worry about the sirens. There are a lot more sirens going on a Monday at Wall Street, so we’re cool. Thank you..

Your next question comes from Jerry Revich with Goldman Sachs. Your line is open..

Hi, good morning, everyone. You folks spoke about the infrastructure market in your prepared remarks as, it looks like, as the strongest end market outlook.

Can you just expand on what you’re seeing from a feasibility study standpoint, where do you see the strongest momentum by region? And what’s your sense on the addressable pipeline of opportunities for you folks to get awards from this end market in fiscal 2018? And how does that compare to last year?.

Yes, from a Jacobs-only side, if we start there, clearly, the transportation, it really does come down to that big three that I talked about earlier, Jerry, is airports especially, just a tremendous amount of opportunities globally on airport opportunities.

And we’ve been winning, I would say, more than our fair share compared – the last couple of years compared to the past. And we’re in the mix of some very major projects around the world.

And so the whole global – globalization of that by our Buildings & Infrastructure team to be able to bring the best resources and win projects locally has just been impressive. But big highway jobs in the U.S., transit in Australia, some big waste treatment facilities especially in the U.S. are some examples there.

The resiliency drive that I talked about really over the last couple of years, a tremendous focus and improvement at Jacobs in them being able to bring sustainable solutions, capitalizing on climate change and the things that our clients need.

And then on the buildings side, health care, especially outside of the U.S., some big health care opportunities in Singapore and U.K. and really around the world, mission-critical on our buildings’ data centers. We’re in the mix of some data centers in Asia Pacific and India.

And overall, when we look at our pipeline globally, it’s up 20% year-over-year, the underlying pipeline of opportunity, and that’s why I mentioned we’re sort of flushed with opportunities. Obviously, we got to go out and win those. And so, Jerry, it really is across both the Buildings & Infrastructure platform.

And that’s why I’m positive about now the timing of CH2M coming into the company because they would be saying the same thing if they were a standalone company of the state and local business up 18% and water being critical, environmental solutions needed by all of industries around the world.

And we’ve put that together with Jacobs, and we’re really excited about the opportunities going forward..

And Steve, what we’ve seen for a number of companies in the U.S. infrastructure value chain, if you will, a relatively disappointing 2017, and considering how much visibility you folks have on the feasibility study side, I’m wondering if you can talk about the cadence of the opportunity set in the U.S. specifically as well.

So you mentioned, globally, the pipeline is up 20%. What’s your read on data center pickup in the U.S.

markets specifically based on what you folks are seeing?.

Everything I said, we included the U.S. We’re seeing the budgets improving in the U.S., especially on the state and local side. There was some data that came out yesterday from one of the sources that U.S. transportation funding in 2017 was up, I think, it was 6% or 7% versus prior year.

And all the discussions we’re having with clients, there continues to be that sort of more bullishness. Obviously, waiting to see what happens with the federal side and when and if our U.S. government is going to get together on both sides of the aisle and get this thing across the finish line.

There’s just a lot of – there’s a lot of projects that are not only in the pipeline but appear to have the funding to move to the field, and we’re in the mix on these things. So Jerry, I think it’s consistent in the U.S. of what I said..

Okay. I appreciate the color. And then separately, Kevin, you folks had a really strong 2017 in terms of improvement in line of business margins really across the portfolio.

As you think about what’s in the backlog over the next 9 months to 12 months, can you talk about where do you see room for the margin improvement momentum to continue by line of business versus where should we be thinking about products or projects in various stages of completion that might have a different margin profile as we head through fiscal 2018?.

So Jerry, I think the overall picture is really, and part of the strategy that we put in place back in late 2016 calendar year, is really each of the line of business is focusing on trying to improve their profitability. And that strategy remains.

So consequently, it doesn’t mean that we’re not going to invest in our businesses to ensure that, that growth is there. But we would expect that we would continue to have some ability to improve our margins longer term.

Having said all of that, I do think the one kind of call-out, which could be a little bit different in 2018 specifically is Aerospace & Technology because of their very large enterprise contracts that they’ve won. A good margin business, but they’re not necessarily a higher-margin business.

So as that kind of flows through, through 2018, as A&T ramps up, I would say that they’ll stay in that 8% to 9% range, but may not see some fundamental improvements in operating profit margin. But each of the other organizations are looking to try and drive continued improvement. It won’t all come at once. There will be a journey along that path.

But ultimately, our expectations is the teams will continue to drive towards that..

Yes, I appreciate it. Thank you..

Your next question comes from Chad Dillard with Deutsche Bank. Your line is open..

Hi, good morning, everyone..

Good morning..

Can you provide an update on what you’re seeing in your UK defense? How big of a contributor is it to A&T? And has this customer indicated any change in spending?.

Could you just repeat the question one more time? It wasn’t coming through as clearly as the others..

Sure. Yes.

So can you provide an update on what you’re seeing in your UK defense? How big of a contributor is it to A&T? And has the customer indicated any change in spending?.

So look, if you look at our A&T business, it is largely a U.S.-driven business because of the large federal presence that we have in the various parts of the U.S. government, whether it’s DoD, whether it’s the intelligence communities, whether it’s NASA, all of these initiatives, plus the DOE with environmental spend of the historical Jacobs.

And now, especially with the new business coming at CH2M, it’s even more U.S.-focused. So if you look at those numbers, I don’t know with CH2M what the percentage is of A&T, but it is driven primarily by the U.S., and I would say it’s probably at least 80% of the business relative to that.

Well, don’t hold me to that number, but effectively, it’s a big chunk, especially more so now with CH2M coming into the picture..

Let me just add to that, Kevin. So we do work on some projects and programs for the Ministry of Defence. And I would say, overall, our outlook is stable from 2017 to 2018. Not as robust as the U.S., but still, I would say on a very stable front..

Great, that’s helpful.

And then since the signing of tax reform, have you seen a pickup in engagement with corporates expressing interest to deploy their tax savings on more infrastructure since the year started? Just trying to get a sense for whether we’re actually starting to see actions come through in RFPs or just greater engagement rather than just companies signaling on spending more..

Yes, there’s discussion, but I would say at this stage, sitting here, it’s still very early. I think everyone’s still trying to figure out their tax situation. And just like us, just in the last few weeks, we’ve come to a really better understanding.

So that’s going to pick up, but let me just comment on that, that our hope is that certain industries, like the life science industry, that they’ll use that benefit of being able to repatriate funds and use that to grow infrastructure and grow assets and expand in the U.S. rather than using it all to buy back stock.

And if it’s the former, then we’re going to benefit. I think the industry consolidation is going to heat up as these companies get more sort of confident in investing. And we play a big part in industry consolidation with regard to the studies, master planning, but also helping facilitate the integration and facilities optimization, et cetera.

So there’s a lot refining. I mentioned earlier, we’re seeing a lot – we’re hearing a lot of discussion in the U.S. But with regard to RFPs and real projects unfolding, I think we’re a few quarters away from really understanding how that’s going to unfold..

Got it. Thanks guys..

So Denise, I think we probably, given the schedule here, we’re going to need to cut the questions off at this particular point in time. But I would like to add one comment to those on the call.

Just a note to advise everyone that Terry Hagen, our President of our Aerospace, Technology, Environment and Nuclear business, is going to be presenting at the Cowen conference tomorrow at the Lotte.

And Steve was originally going to be presenting but has a conflict now, so I’ll be joining Terry to talk about some of the specific and unique things that we do on our Aerospace & Technology business for the defense and aerospace industry. So excited about delivering some of the news there as it relates to the strengths and capabilities of our team.

So just wanted to throw that out to the team..

All right. Thanks, everyone, for joining our call today. I’d like to end by saying we’re excited and positive about the road ahead for Jacobs, but be perfectly clear that our top priority is the successful integration of CH2M, and we look forward to keeping you updated. Thank you very much..

This concludes today’s conference call. You may now disconnect..