Q1 2020 Earnings Call

February 4, 2020

Well first quarter 2020, <unk> earnings conference call and webcast at this time all participants are in listen only mode. After the speakers presentation. There will be a question and answer session to ask a question. During the session. You want me to press Star one on your telephone. Please allow yourself one question and one follow up.

Please be advised that today's conference is being recorded.

Your require any further assistance. Please press star zero I would now like to hand, the conference over to your speaker today, Jonathan Doris. Thank you. Please go ahead.

Good morning, an afternoon tall earnings announcement was filed this morning.

Jonathan Doros: Good morning and afternoon to all. Our earnings announcement was filed this morning. We have posted a copy of this slide presentation to our website, which will be referenced in our prepared remarks. I would like to refer you to our forward-looking statement disclaimer, which is summarized on slide 3. 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, and Section 21E of the Securities and 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.

Copy of this slide presentation to our website.

Which were up rents in our prepared remarks I'd like to refer you to our forward looking statements flame are summarized on slide great.

Certain statements contained in this presentation constitute forward looking statements such term as defined in section 20, Sevena, that's the security to after 1933 of them and it.

And section 20, Onee The Securities Exchange Act Nice Cdthirty four as amended and such statements are intended to be covered by the safe Harbor provided by the same [laughter] statements made in this presentation that are not based on historical are forward looking thing.

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.

Although such statements are based on management's current estimate an expectation and currently available competitive financial and economic data.

Forward looking statements are inherently uncertain, you should not place undue reliance on such statement as actual results may differ materially.

Jonathan Doros: You should not place undue reliance on such statements, as actual results may differ materially. We caution the reader that there are a variety of risks, uncertainties, and other factors that could cause actual results to differ materially from what is contained, projected, or implied by our forward-looking statements. For a description of these and other risks, uncertainties, and other factors that may occur that could cause actual results to differ from our forward-looking statement, see our annual report on Form 10-K for the year ended 27 September 2019, and our quarterly report on Form 10-Q for the quarter ended 27 December 2019, which was filed this morning. We're not under any duty to update any of the forward-looking statements after the date of this presentation to conform to actual results, except as required by applicable law.

You should not place undue reliance on such statements, as actual results may differ materially. We caution the reader that there are a variety of risks, uncertainties, and other factors that could cause actual results to differ materially from what is contained, projected, or implied by our forward-looking statements. For a description of these and other risks, uncertainties, and other factors that may occur that could cause actual results to differ from our forward-looking statement, see our annual report on Form 10-K for the year ended 27 September 2019, and our quarterly report on Form 10-Q for the quarter ended 27 December 2019, which was filed this morning. We're not under any duty to update any of the forward-looking statements after the date of this presentation to conform to actual results, except as required by applicable law.

We caution to read out there a variety of risks uncertainties and other factors that could cause actual results to differ materially from what is the same projected or implied are forward looking statement.

A description of these and other risks uncertainties and other factors that may occur that could cause actual results could differ from our forward looking statement see our annual report on form 10-K for the year ended September 27000 my team.

And our quarterly report on form 10-Q for the quarter ended December 27th 2019, which was filed this morning.

We're not under any duty to update any of the forward looking statements. After the date of this presentation to conform to actual results, except as required by applicable law.

Jonathan Doros: During the presentation, we'll be referring to certain non-GAAP financial measures. Please refer to slide two of the presentation for more information on these figures. In addition, during the presentation, we'll discuss comparisons of our current results to prior periods on a pro forma basis. See slide two for more information on the calculation of these pro forma metrics. We have provided historical pro forma results in the appendix of the investor presentation. We believe this information helps provide additional insight into the underlying trends of our business when comparing current period performance against prior periods. Turning to the agenda. Speaking on today's call will be Jacobs' Chair and CEO, Steve Demetriou, President and Chief Operating Officer, Bob Pragada, and President and Chief Financial Officer, Kevin Berryman. Steve will begin by providing a recap of our financial results and discuss key elements of our strategy.

During the presentation, we'll be referring to certain non-GAAP financial measures. Please refer to slide two of the presentation for more information on these figures. In addition, during the presentation, we'll discuss comparisons of our current results to prior periods on a pro forma basis. See slide two for more information on the calculation of these pro forma metrics. We have provided historical pro forma results in the appendix of the investor presentation. We believe this information helps provide additional insight into the underlying trends of our business when comparing current period performance against prior periods. Turning to the agenda.

During the presentation movie, referring to certain non-GAAP financial measures. Please refer to slide to the presentation for more information these big.

In addition, during the presentation will discuss comparisons versus current results prior periods on a pro forma basis.

Slide two for more information on the calculation of these pro forma metric.

We have provided historical for them or adult <unk> under the investor presentation.

We believe this information help provide additional insight to the underlying trends of our business when comparing current her performance against prior period.

Turning to the agenda.

Speaking on today's call will be Jacobs' Chair and CEO, Steve Demetriou, President and Chief Operating Officer, Bob Pragada, and President and Chief Financial Officer, Kevin Berryman. Steve will begin by providing a recap of our financial results and discuss key elements of our strategy.

Speaking on today's call will be Jacobs chair and CEO, Steve to meet your President and Chief operating Officer, Bob Forgotten, and President and Chief Financial Officer, Kevin Bering Sea will begin by providing a recap of our financial results and discuss key elements of our strategy. Bob will then review our performance by line of business.

Jonathan Doros: Bob will then review our performance by line of business, and Kevin will provide some in-depth discussion of our financial metrics, followed by an update on our acquisitions and ECR divestiture, as well as review our balance sheet and cash flow. Finally, Steve will provide an updated outlook along with some closing remarks, and then we'll open the call up for your questions. With that, I'll now pass it over to Steve Demetriou, Chair and CEO.

Bob will then review our performance by line of business, and Kevin will provide some in-depth discussion of our financial metrics, followed by an update on our acquisitions and ECR divestiture, as well as review our balance sheet and cash flow. Finally, Steve will provide an updated outlook along with some closing remarks, and then we'll open the call up for your questions. With that, I'll now pass it over to Steve Demetriou, Chair and CEO.

Kevin will provide some in the discussion of our financial metric followed by an update on our acquisition.

CR divestiture as well as review our balance sheet and Caf one final one Steve will provide an update outlook along with some closing remarks, and then we'll open the call up your question with that I'll now pass it over to see Dimitrios Chair and CEO.

Steve Demetriou: Thanks, John. Turning to slide 4. Thank you for joining us today to discuss our Q1 2020 financial results and the progress we're making executing against our strategy. I continue to reinforce to our key stakeholders that we're on a journey to create a company like no other. Since 2015, we have been transforming our business to a technology-focused solutions company that leverages our global scale, deep technical expertise, and now an enhanced brand. At the same time, we've revolutionized our company culture to align our people around one purpose, which is to challenge the accepted and reinvent our thinking to deliver innovative solutions to our customers. The growth opportunities within our core markets are more attractive today than any time in the company's history.

Thanks, John turning to slide four thank you for joining us today to discuss our first quarter 2020 financial results and the progress, we're making executing against our strategy.

I continue to reinforce to our key stakeholders that we're on a journey to create a company like no. One since 2015, we have been transforming our business with technology focused solutions company that Leverages, our global scale technical expertise and now and enhanced frack.

At the same time Weve revolutionize our company culture to align our people around one purpose, which is the challenge the accepted and reinvent our thinking to deliver innovative solutions to our customers.

The growth opportunities within our core markets more attractive today that anytime in the company's history.

Steve Demetriou: We're benefiting from multiple multi-decade growth trends in the areas of water infrastructure, environmental resiliency, urbanization, space exploration, national security, and 5G. These are all sectors where we have a distinct competitive advantage. Furthermore, I believe the changes we have made to our culture in the areas of diversity of thought and creating an inclusive environment are in the early phases of being a competitive advantage for Jacobs. From a financial standpoint, we posted a strong start to fiscal 2020. Our backlog grew 6% year-over-year on a pro forma basis. Q1 adjusted EBITDA, pro forma for the KeyW acquisition, was up 25%, and adjusted EPS, when excluding the impact of a $0.06 per share discrete tax charge, grew 35%.

We're benefiting from multiple multi-decade growth trends in the areas of water infrastructure, environmental resiliency, urbanization, space exploration, national security, and 5G. These are all sectors where we have a distinct competitive advantage. Furthermore, I believe the changes we have made to our culture in the areas of diversity of thought and creating an inclusive environment are in the early phases of being a competitive advantage for Jacobs. From a financial standpoint, we posted a strong start to fiscal 2020. Our backlog grew 6% year-over-year on a pro forma basis. Q1 adjusted EBITDA, pro forma for the KeyW acquisition, was up 25%, and adjusted EPS, when excluding the impact of a $0.06 per share discrete tax charge, grew 35%.

We're benefiting from multi multiple multi decade group trends in the areas of water infrastructure, environmental resiliency urbanization space exploration National security and Fiveg.

These are all sectors, where we have a distinct competitive advantage.

Furthermore, I believe the changes we have made to our culture and areas of diversity of par and creating an inclusive environment are in the early phases of being a competitive advantage for Jacobs.

From a financial standpoint, we posted a strong start for fiscal 2020.

Backlog grew 6% year over year on a pro forma basis.

First quarter adjusted EBITDA pro forma for the CW acquisition was up 25% and adjusted EPS when excluding the impact of a six cents per share discreet tax charge grew 35%.

Steve Demetriou: Q1 free cash flow is in line with our expectations, and we expect strong free cash flow generation for the remainder of fiscal 2020 and beyond, as we approach the end of our restructuring efforts related to the strategic actions to transform our business. Discipline around optimizing working capital is a significant focus of our team. From a flexibility standpoint, we maintain a healthy balance sheet that provides the optionality on how we further deploy capital toward high return investments. We're announcing today an increase to our share repurchase authorization by an additional $1 billion, which is incremental to the remaining $400 million under our prior buyback authorization. Moving to slide 5.

Q1 free cash flow is in line with our expectations, and we expect strong free cash flow generation for the remainder of fiscal 2020 and beyond, as we approach the end of our restructuring efforts related to the strategic actions to transform our business. Discipline around optimizing working capital is a significant focus of our team. From a flexibility standpoint, we maintain a healthy balance sheet that provides the optionality on how we further deploy capital toward high return investments. We're announcing today an increase to our share repurchase authorization by an additional $1 billion, which is incremental to the remaining $400 million under our prior buyback authorization. Moving to slide 5.

First born free cash flow was in line with our expectations and we expect strong free cash flow generation for the remainder of fiscal 2020 and beyond.

As we approach the end of our restructuring efforts related to the strategic actions to transform our business.

Discipline around optimizing working capital was a significant focus of our team.

From a flexibility standpoint, we maintain a healthy balance sheet that provides the optionality on how we further deployed capital toward high return investments.

We're announcing today increase to our share repurchase authorization by an additional $1 billion, which is incremental to the remaining 400 million under apart buyback authorization.

Moving to slide five.

Steve Demetriou: As we continue to transform our business, sustainability is a key ingredient in our ambition to become a company like no other, and it aligns squarely with our value of we do things right. Plan Beyond, our Jacobs sustainability strategy that is aligned to the United Nations Sustainable Development Goals, which was launched a year ago and provides us a great platform to explore the possibilities of reinventing tomorrow, whether it's through how we operate and how we serve our clients, or at home with our families, or in the communities where we live and serve. Over the last 12 months, we've demonstrated significant progress on that strategy. I want to highlight a couple of actions here. We signed the UN's Global Compact, which commits us to a principle-based approach to doing business in the areas of human rights, labor, environment, and anti-corruption.

As we continue to transform our business, sustainability is a key ingredient in our ambition to become a company like no other, and it aligns squarely with our value of we do things right. Plan Beyond, our Jacobs sustainability strategy that is aligned to the United Nations Sustainable Development Goals, which was launched a year ago and provides us a great platform to explore the possibilities of reinventing tomorrow, whether it's through how we operate and how we serve our clients, or at home with our families, or in the communities where we live and serve.

As we continue to transform our business sustainability of acute ingredients in our ambition to become a company like water and an alliance squarely with our value of we do things right.

Well beyond our Jacobs sustainability strategy that is aligned to the United Nations Sustainable development goals, which was launched a year ago. It provides us with great platform to explore the possibilities of reinvesting tomorrow, whether it's through how we operate and how we serve our clients or at home with our families room, a communities, where we live in Sir.

Over the last 12 months, we've demonstrated significant progress on that strategy. I want to highlight a couple of actions here. We signed the UN's Global Compact, which commits us to a principle-based approach to doing business in the areas of human rights, labor, environment, and anti-corruption.

Over the last 12 months, we've demonstrated significant progress on that strategy I want to highlight a couple of actions here.

We signed a new wins global pump pack, which permits us to a principle based approach to doing business in the area to human rights labor environment Anticorruption, all things that are already part of Jacobs DNA of value system.

Steve Demetriou: All things that are already part of Jacobs' DNA and value system. We also published our first integrated annual report, reflecting the integral nature of our financials and our sustainability focus, and our commitment to robustness and transparency of non-financial data. We're developing a Jacobs Climate Action Plan, which includes a commitment to achieving Net Zero Carbon, with a focus on reducing the emissions associated with our business travel and from the facilities we own or operate.

All things that are already part of Jacobs' DNA and value system. We also published our first integrated annual report, reflecting the integral nature of our financials and our sustainability focus, and our commitment to robustness and transparency of non-financial data. We're developing a Jacobs Climate Action Plan, which includes a commitment to achieving Net Zero Carbon, with a focus on reducing the emissions associated with our business travel and from the facilities we own or operate.

We also published our first integrated annual report, reflecting the integral nature of our financials and our sustainability focus and our commitment to robustness of transparency of non financial data.

We're developing a Jacobs flame an action plan, which includes a commitment to achieving a net zero carbon with a focus on reducing the emissions associated with our business travel and from a facilities we own our offerings.

Steve Demetriou: As part of our walking the talk, is increasing our engagement and thought leadership, ranging from hosting of global sustainability calls with other leaders from government and industry, to participating in this year's World Economic Forum's annual meeting at Davos, where I became co-chair of the Infrastructure and Urban Development Committee, focusing on how the adoption of technology and digital investment in the infrastructure sector can improve productivity and help achieve net zero carbon emissions to tackle the global climate emergency, and our teams are providing sustainable solutions for our clients around the globe, with projects like SuedLink, wind and solar power transmission system in Germany, various high-speed rail projects that help decarbonize transport systems. On the waterfront, in places like Miami Beach, we are leading the Rising Above Climate Change Resiliency program to combat the impact of catastrophic flooding on infrastructure and business.

As part of our walking the talk, is increasing our engagement and thought leadership, ranging from hosting of global sustainability calls with other leaders from government and industry, to participating in this year's World Economic Forum's annual meeting at Davos, where I became co-chair of the Infrastructure and Urban Development Committee, focusing on how the adoption of technology and digital investment in the infrastructure sector can improve productivity and help achieve net zero carbon emissions to tackle the global climate emergency, and our teams are providing sustainable solutions for our clients around the globe, with projects like SuedLink, wind and solar power transmission system in Germany, various high-speed rail projects that help decarbonize transport systems.

As part of our walking the talk is increasing our engagement and thought leadership ranging from hosting of global sustainability calls with other leaders from government and industry to participate again this year as World Economic Forum annual meeting at Davos, where I became culture, we infrastructure urban development committee focusing on how the adopt.

One of technology and digital investment in the infrastructure sector can improve productivity and help achieve that zero carbon emissions to tackle the global climate emergency.

And our teams are providing sustainable solutions for our clients around the globe when projects like Suitland wind and solar power transmission system in Germany, very high speed rail projects that healthy carbonized transport systems, along the waterfront in places like Miami Beach, we're leaving the rising above climate change resiliency program.

On the waterfront, in places like Miami Beach, we are leading the Rising Above Climate Change Resiliency program to combat the impact of catastrophic flooding on infrastructure and business.

Come back the impact of catastrophic flooding on infrastructure can business.

Steve Demetriou: We're also leveraging our proprietary technology, like our Flood Cloud service, for on-demand scenario modeling across all infrastructure types. Climate change is one of the most significant challenges our world is experiencing, and we at Jacobs are making a commitment to work towards solutions through our everyday actions as individuals, as well as with our clients and communities. Now I'll turn the call over to our President and Chief Operating Officer, Bob Pragada, to discuss the performance of our two lines of business.

We're also leveraging our proprietary technology, like our Flood Cloud service, for on-demand scenario modeling across all infrastructure types. Climate change is one of the most significant challenges our world is experiencing, and we at Jacobs are making a commitment to work towards solutions through our everyday actions as individuals, as well as with our clients and communities. Now I'll turn the call over to our President and Chief Operating Officer, Bob Pragada, to discuss the performance of our two lines of business.

We're also leveraging our proprietary technology like our flood cloud service for on demand scenario modeling across all infrastructure type.

Climate change is one of the most significant challenges our world is experiences and we are jacobs or making a commitment to work towards solutions through our everyday actions as individuals as well as with our clients and communities.

Now I'll turn the call over to our President and Chief operating Officer, Bob forgot to discuss the performance of our two lines of business.

Bob Pragada: Thank you, Pete. Now, moving on to slide six to review our Critical Mission Solutions performance. Our Critical Mission Solutions pro forma backlog was up 4% from last year to $8.5 billion, and when accounting for the burn-off of the Hanford Central Plateau remediation contract, our CMS backlog increased by high single digits over prior year. The Department of Energy has not yet announced the winner of the Hanford Tank Closure contract, which is a 10-year, $13 billion opportunity. We had a strong first quarter of wins with our international portfolio, where we were awarded several notable contracts in in support of our nuclear, defense, and commercial clients. We expect the momentum we are seeing in the UK will carry over to our Wood Group nuclear acquisition that is expected to close before the end of Q2.

Thank you Pete and now moving on to slide six to review our critical mission solutions performance are critical mission solutions for pro forma backlog was up 4% from last year to 8.5 billion and when accounting for the burn off a bit hampered central plateau remediation contract, our CMS backlog increased by high single digits over.

Prior year.

Department of energy has not yet announced the winter been Hanford tank closure contract, which the 10 year 13 billion up 13 billion dollar opportunity.

We had a strong first quarter of wins with our international portfolio, where we were awarded several notable contract in support of our nuclear defense and commercial clients. We expect momentum we're seeing in the UK will carry over to our would group nuclear acquisition is expected to close before the end of Q2.

Bob Pragada: Moving to our US government sectors, we are aligned to high-priority areas such as mission IT and modernization, space exploration and intelligence, cybersecurity and nuclear remediation, and the spending outlook within our targeted US federal DoD and related budget is growing in these areas. On the domestic front, in addition to a solid Q1, we've had a strong start to Q2, with two large wins in the Department of Defense. One of these was an 8-year, $225 million research and development contract for the Air Force, and the other is an 8-year, $420 million win, which will be formally announced in the next coming weeks.

Moving to our US government sectors, we are aligned to high-priority areas such as mission IT and modernization, space exploration and intelligence, cybersecurity and nuclear remediation, and the spending outlook within our targeted US federal DoD and related budget is growing in these areas. On the domestic front, in addition to a solid Q1, we've had a strong start to Q2, with two large wins in the Department of Defense. One of these was an 8-year, $225 million research and development contract for the Air Force, and the other is an 8-year, $420 million win, which will be formally announced in the next coming weeks.

Moving to our U.S. government sectors, we are aligned to high priority areas, such as mission IP and modern vision space exploration and intelligence cyber security and nuclear remediation and the spending outlook within our targeted U.S. federal Vo D and related budget is growing in these areas.

And on the domestic front in addition to its solid first quarter. We've had a strong start to the second quarter with two large wins in the department of defense.

One of these with an eight year $225 million research and development contract for the airport and the other is an eight year 420 million dollar when would we form your own forming we announced in the next next coming weeks.

Bob Pragada: From a strategic standpoint, we believe our unique delivery model, which combines strong technical expertise, localized delivery, and an efficient cost structure, affords us the ability to take share within targeted sectors while improving profitability to reach the targets we shared at last year's Investor Day. As an example of our highly technical capabilities, we're awarded a mission-critical win at the Navy's Conventional Prompt Strike Test facility to design and develop next-generation testing equipment for air launch and underwater testing of hypersonic weapon systems. This type of strong technical expertise, combined with our track record executing large enterprise contracts, such as those for the Missile Defense Agency and NASA, presents us with the opportunity to capture incremental, large, multiyear awards that are slated for decision over the next 18 months. Moving on to TW, space intelligence opportunity.

From a strategic standpoint, we believe our unique delivery model, which combines strong technical expertise, localized delivery, and an efficient cost structure, affords us the ability to take share within targeted sectors while improving profitability to reach the targets we shared at last year's Investor Day. As an example of our highly technical capabilities, we're awarded a mission-critical win at the Navy's Conventional Prompt Strike Test facility to design and develop next-generation testing equipment for air launch and underwater testing of hypersonic weapon systems. This type of strong technical expertise, combined with our track record executing large enterprise contracts, such as those for the Missile Defense Agency and NASA, presents us with the opportunity to capture incremental, large, multiyear awards that are slated for decision over the next 18 months. Moving on to TW, space intelligence opportunity.

From a strategic standpoint, we believe our unique delivery model, which combined strong technical expertise localized for beverage and an efficient cost structure affords us the ability to take share within target sectors, while improving profitability to reach the targets, we shared at last year's Investor Day.

As an example of our highly technical capabilities were awarded a mission critical when at the Navy's conventional prostrate test facility to design and develop next generation testing equipment for air launch an underwater testing of hypersonic weapons systems. This type of strong technical expertise combined with our track record executing law.

Our gener price contract such as those for the missile Defense Agency and NAFTA presents us with the opportunity to capture incremental large multi year awards that are slated for decision over the next 18 months.

Moving on to Tw speaking Teligent opportunity, we were recently awarded.

Bob Pragada: We were recently awarded a new multimillion-dollar satellite payload, risk reduction, and technical maturation program. Due to the highly classified nature of the work, we cannot provide details on specific awards and timing of full rate production. We remain extremely positive on the pipeline of opportunities from multiple customers and expect this to translate into meaningful revenue over the next 12 months. In summary, we're pleased with Critical Mission Solutions' performance, and as we look forward, our total pipeline is robust and now stands at a record high, representing a significant year-over-year increase. Now moving on to slide 7. Our People and Places Solutions business continued to execute on our strategic plan and posted strong first quarter results, with backlog growing 8% year-over-year to $14.2 billion.

We were recently awarded a new multimillion-dollar satellite payload, risk reduction, and technical maturation program. Due to the highly classified nature of the work, we cannot provide details on specific awards and timing of full rate production. We remain extremely positive on the pipeline of opportunities from multiple customers and expect this to translate into meaningful revenue over the next 12 months. In summary, we're pleased with Critical Mission Solutions' performance, and as we look forward, our total pipeline is robust and now stands at a record high, representing a significant year-over-year increase. Now moving on to slide 7. Our People and Places Solutions business continued to execute on our strategic plan and posted strong first quarter results, with backlog growing 8% year-over-year to $14.2 billion.

New multimillion dollar satellite payload risk production and technical maturation program.

Due to the high reclassified nature of the work.

We cannot provide details on specific award and timing of full rate production.

Remained extremely positive on the pipeline of opportunities from multiple customers and expected to translate into meaningful revenue over the next 12 months.

In summary, we're pleased with critical mission solutions performance and as we look forward. Our total pipeline is robust and now stands at a record higher representing a significant year on year increase.

Now moving on to slide seven our people in places solutions business continued to execute on our strategic plan and posted strong first quarter results with backlog growing 8% year over year to 14.2 billion.

Bob Pragada: Our People and Places Solutions business benefits from its alignment to a diversified set of industry sectors that are all seeing structural growth, such as water infrastructure, resiliency, and autonomous and AI-driven mobility solutions. We are also seeing strong demand in advanced facilities that are creating the next generation of semiconductors, biotechnology, and cloud computing software. We continue to execute against our market, digital, and global connectivity strategy, which allows us to capture higher-value opportunities by leveraging our deep domain expertise with our global integrated delivery centers, serving as a focal point for excellence and innovation at a global scale. As the digital economy matures, clients across our targeted sectors are seeking companies that can help them transform their business, automate operations, and enhance operational capacity.

Our People and Places Solutions business benefits from its alignment to a diversified set of industry sectors that are all seeing structural growth, such as water infrastructure, resiliency, and autonomous and AI-driven mobility solutions. We are also seeing strong demand in advanced facilities that are creating the next generation of semiconductors, biotechnology, and cloud computing software. We continue to execute against our market, digital, and global connectivity strategy, which allows us to capture higher-value opportunities by leveraging our deep domain expertise with our global integrated delivery centers, serving as a focal point for excellence and innovation at a global scale. As the digital economy matures, clients across our targeted sectors are seeking companies that can help them transform their business, automate operations, and enhance operational capacity.

Our people wait to solutions business benefit from its alignment to a diversified set of industry sectors.

We're all seeing structural growth.

Such as water infrastructure, resiliency, and autonomous and AI driven mobility solution.

We're also seeing strong demand and advanced facilities that are creating the next generation of semiconductors, biotechnology and cloud computing software.

We continue to execute against our market digital and global connectivity strategy, which allows us to capture higher value opportunities by leveraging our deep domain expertise.

With our global integrated delivery centers, serving as a focal point for excellence and innovation at a global scale.

The digital economy matures clients across our targeted sectors are seeking companies that can help them transform their business automate operation and enhance operational capacity.

Bob Pragada: Digital capabilities are becoming ingrained in our delivery model, allowing us to leverage those capabilities with domain expertise to sustain our position as an industry leader. For example, Jacobs has partnered with a key client in the Middle East to develop their smart port expansion master plan, envisioned to expand the port and enhance conventional operations by migrating to automated operations through artificial intelligence and autonomous mobility. Another key part of our digital connectivity strategy is planning for where the market will be a decade from now, whereby advances in neural network technology or machine intelligence will likely unlock exponential opportunities for us to productize our domain knowledge through software applications. Longer term, we envision a higher percentage of our revenue from technology-enabled solutions, which commands higher recurring profitability.... Today, we are incubating the first generation of these AI infrastructure solutions.

Digital capabilities are becoming ingrained in our delivery model, allowing us to leverage those capabilities with domain expertise to sustain our position as an industry leader. For example, Jacobs has partnered with a key client in the Middle East to develop their smart port expansion master plan, envisioned to expand the port and enhance conventional operations by migrating to automated operations through artificial intelligence and autonomous mobility. Another key part of our digital connectivity strategy is planning for where the market will be a decade from now, whereby advances in neural network technology or machine intelligence will likely unlock exponential opportunities for us to productize our domain knowledge through software applications.

Digital capabilities are becoming ingrained in our delivery model, allowing that to leverage those capabilities with domain expertise to sustain our position as an industry leader for example, Jacobs has partnered with the key clients in the middle East and develop their smart port expansion Masterplan in vision to expand the port and enhance conventional operate.

Patients by migrating to automated operations through artificial intelligence and autonomous mobility.

Another key part of our digital connectivity strategy, if planning for where the market will be a decade from now whereby it advances in neural network technology or machine intelligence would likely unlock exponential opportunities for us to prototype our domain knowledge through software application.

Longer term, we envision a higher percentage of our revenue from technology-enabled solutions, which commands higher recurring profitability.... Today, we are incubating the first generation of these AI infrastructure solutions.

Longer term, we envision a higher percentage of our revenue from technology enabled solutions, which command higher recurring profitability.

Today, we are incubating the first generation of these infrastructure solutions last quarter, we discussed a cloud based AI algorithm to auto score water infrastructure.

Bob Pragada: Last quarter, we discussed a cloud-based AI algorithm to auto-score water infrastructure. Within our innovation incubator, we launched Pave, which is a software-as-a-service-based asset management solution that optimizes airfield maintenance, unlocking significant CapEx savings and embedded carbon savings. I'm also excited to talk about a project that combines our expertise in PFAS and digital solutions. We have recently been awarded a project by an agency in the UK to develop a digital risk screening tool to prioritize PFAS investigation of sources across England. These types of solutions can be applied across multiple infrastructure assets and are enhanced by our domain knowledge accumulated from decades of technical expertise. In summary, we're excited about the near-term and long-term opportunities within our people and places business, which has a robust sales pipeline, up more than 30% year-over-year.

Last quarter, we discussed a cloud-based AI algorithm to auto-score water infrastructure. Within our innovation incubator, we launched Pave, which is a software-as-a-service-based asset management solution that optimizes airfield maintenance, unlocking significant CapEx savings and embedded carbon savings. I'm also excited to talk about a project that combines our expertise in PFAS and digital solutions. We have recently been awarded a project by an agency in the UK to develop a digital risk screening tool to prioritize PFAS investigation of sources across England. These types of solutions can be applied across multiple infrastructure assets and are enhanced by our domain knowledge accumulated from decades of technical expertise. In summary, we're excited about the near-term and long-term opportunities within our people and places business, which has a robust sales pipeline, up more than 30% year-over-year.

Within our innovation incubator, we launched paid which is a software as a service based asset management solution that Optimizes airfield maintenance unlocking significant capex savings and embedded carbonfund.

I'm also excited to talk about a project combines our expertise in Pete fast and digital solution.

We have recently been awarded projects by an agency in the UK to develop a digital risks screening tool to prioritize Pete fast investigation of sources across England.

These types of solutions can be applied across multiple infrastructure assets and our enhanced by our domain knowledge accumulated from decades of technical expertise.

In summary, we are excited about the near term and long term opportunities within our people in places business, which has a robust sales line, so pipeline up more than 30% year over year.

Bob Pragada: Now, I'll turn the call over to Kevin to discuss our financial results in more detail.

Now, I'll turn the call over to Kevin to discuss our financial results in more detail.

Now I'll turn the call over to Kevin to discuss our financial results in more detail.

Kevin Berryman: Thank you, Bob, and good morning, good afternoon, everyone. I'm gonna switch to slide 8, where I'll discuss a more detailed summary of our financial performance for Q1 of fiscal 2020. Q1 gross revenue increased 9% year-over-year, with pro forma net revenue, including KeyW, up 5%, with 7% growth coming from people and places, and 3% growth from critical missions. Adjusted gross margin in the quarter as a percentage of net revenue was 24%, up 50 basis points year-over-year, primarily due to lower benefit-related costs. Lower benefit-related costs also reduced unallocated corporate expenses, which I will discuss later. Our adjusted G&A as a percentage of net revenue fell by 70 basis points year-over-year and 90 basis points on a pro forma basis, including KeyW, to 15.3%.

Thank you Bob and good morning, good afternoon, everyone Im going to switch to slide eight were all discussion more detailed summary of our financial performance for the first quarter fiscal 2020.

First quarter gross revenue increased 9% year over year with pro forma net revenue, including KBW up 5% with 7% growth coming from people in places and 3% growth from critical missions.

Adjusted gross margin in the quarter as a percentage of net revenue was 24%.

50 basis points year over year, primarily due to lower benefit related costs lower benefit related costs also reduced unallocated corporate expenses, which I will discuss later.

Our adjusted DNA as a percentage of net revenue fell by 70 basis points year over year, and 90 basis points on a pro forma basis, including key W. 215.3%.

Kevin Berryman: Again, indicating continued strong cost control and the realization of cost synergies from CH2M and KeyW. GAAP operating profit was up 34% to $151 million and included $51 million of restructuring, transaction, and other charges, and $35 million of other charges, consisting of $22 million of amortization from acquired intangibles and $13 million of costs associated with the Worley transition services agreements, of which $12 million of those costs were reimbursed and reported in other income. Adjusting for these items, adjusted operating profit was $237 million, up 28% from the prior year. Moving on, our adjusted operating profit to net revenue was 8.9%, up 120 basis points year-over-year reported, with margin expansion from both lines of business.

Again, indicating continued strong cost control and the realization of cost synergies from CH2M and KeyW. GAAP operating profit was up 34% to $151 million and included $51 million of restructuring, transaction, and other charges, and $35 million of other charges, consisting of $22 million of amortization from acquired intangibles and $13 million of costs associated with the Worley transition services agreements, of which $12 million of those costs were reimbursed and reported in other income. Adjusting for these items, adjusted operating profit was $237 million, up 28% from the prior year. Moving on, our adjusted operating profit to net revenue was 8.9%, up 120 basis points year-over-year reported, with margin expansion from both lines of business.

Again, indicating continued strong cost control and the realization of cost synergies from CHP Lam and tw.

GAAP operating profit was up 34% to $151 million and included $51 million up restructuring transaction and other charges.

And $35 million of other charges, consisting of $22 million of amortization from acquired intangibles and $13 million the costs associated with the orderly transition services agreements of which $12 million up those costs were reimbursed from reported in other income.

Adjusting for these items adjusted operating profit was $237 million up 28% from the prior year.

Moving on our adjusted operating profit to net revenue was 8.9% up 120 basis points year over year reported with margin expansion from both lines of business.

Kevin Berryman: I'll discuss the underlying drivers by line of business later in my remarks. Q1 adjusted EBITDA was $260 million, reaching nearly 10% of net revenue, up 150 basis points year-over-year. GAAP net earnings and EPS from continuing operations were up substantially to $179 million and $1.33 per share, and included $0.30 per share of after-tax restructuring, transaction, and other charges, as noted above, and a net positive $0.43 per share of other adjustments, consisting mainly of favorable mark-to-market adjustments associated with our Worley equity stake and other ECR-related matters of $0.56, partially offset by intangible amortization of $0.12. Excluding these items, first quarter adjusted EPS was $1.20, including a six cents expense from discrete tax items.

I'll discuss the underlying drivers by line of business later in my remarks. Q1 adjusted EBITDA was $260 million, reaching nearly 10% of net revenue, up 150 basis points year-over-year. GAAP net earnings and EPS from continuing operations were up substantially to $179 million and $1.33 per share, and included $0.30 per share of after-tax restructuring, transaction, and other charges, as noted above, and a net positive $0.43 per share of other adjustments, consisting mainly of favorable mark-to-market adjustments associated with our Worley equity stake and other ECR-related matters of $0.56, partially offset by intangible amortization of $0.12. Excluding these items, first quarter adjusted EPS was $1.20, including a six cents expense from discrete tax items.

Ill discuss the underlying drivers by line of business later in my remarks.

Q1, adjusted EBITDA was $260 million, reaching nearly 10% of net revenue.

150 basis points year over year.

GAAP net earnings and EPS from continuing operations were up substantially to $179 million and $1.33 per share and included 30 cents per share of after tax restructuring transaction and other charges as noted above.

And a net positive 43 cents per share of other adjustments, consisting mainly of favorable mark to market adjustments associated with our worldly equity stake and other SCR related matters, a 56 cents.

Partially offset by intangible amortization of 12 cents.

Excluding these items first quarter adjusted EPS was $1.20.

Including pieces six cents expense from discrete tax items.

Kevin Berryman: Excluding discrete tax items in both the current and year-ago quarter, underlying adjusted EPS was up 35% year-over-year. Finally, turning to our bookings during the quarter, we are pleased that our pro forma book-to-bill ratio was above 1x for Q1, despite the Hanford Plateau contract coming to end-of-life. We expect a strong bookings trajectory for the remainder of the year. Regarding our LOB performance, let's turn to slide 9. Starting with critical missions. Pro forma revenue, including KeyW, grew 3% year-over-year during the first quarter. The quarter was impacted by lower procurement revenue, which also supported incremental margin improvement. Operating profit was $90 million and grew 25% year-over-year, and in the mid-teens on a pro forma basis.

Excluding discrete tax items in both the current and year-ago quarter, underlying adjusted EPS was up 35% year-over-year. Finally, turning to our bookings during the quarter, we are pleased that our pro forma book-to-bill ratio was above 1x for Q1, despite the Hanford Plateau contract coming to end-of-life. We expect a strong bookings trajectory for the remainder of the year. Regarding our LOB performance, let's turn to slide 9. Starting with critical missions. Pro forma revenue, including KeyW, grew 3% year-over-year during the first quarter. The quarter was impacted by lower procurement revenue, which also supported incremental margin improvement. Operating profit was $90 million and grew 25% year-over-year, and in the mid-teens on a pro forma basis.

Excluding discrete tax items in both the current 10 year ago quarter underlying adjusted EPS was up 35% year over year.

Finally, turning to our bookings during the quarter. We're pleased that our pro forma book to Bill ratio was above one times for Q1, despite the Hanford Platteville truck contract coming till end of life, we expect that strong bookings trajectory for the remainder of the year.

We got our LLP performance, let's turn to slide nine.

Starting with critical missions.

Pro forma revenue, including KBW grew 3% year over year during the first quarter to quarter was impacted by lower procurement revenue, which also supported incremental margin improvement.

Operating profit was $90 million and grew 25% year over year and in the mid teens on a pro forma basis.

Kevin Berryman: Operating profit margin was up 60 basis points year-over-year to 7.6%, supported by some project closeout pickups on a nuclear remediation project and improved margin associated with the lower headwinds from procurement-related revenue noted earlier. In the second half of fiscal 2020, we expect operating profit margins to benefit on a year-over-year basis from our shift to higher margin, fixed-price services contracts, and a higher contribution from the recently acquired KeyW. Perhaps I can make a few comments regarding KeyW. The strategic logic for the acquisition and associated revenue synergies are continuing to indicate an accelerating growth profile later in 2020 and longer term. As we previously announced in October, we won the $40 million a year DC3 cyber contract. In addition, the KeyW Mission IT business won a strategic $55 million contract renewal, a year contract renewal.

Operating profit margin was up 60 basis points year-over-year to 7.6%, supported by some project closeout pickups on a nuclear remediation project and improved margin associated with the lower headwinds from procurement-related revenue noted earlier. In the second half of fiscal 2020, we expect operating profit margins to benefit on a year-over-year basis from our shift to higher margin, fixed-price services contracts, and a higher contribution from the recently acquired KeyW. Perhaps I can make a few comments regarding KeyW. The strategic logic for the acquisition and associated revenue synergies are continuing to indicate an accelerating growth profile later in 2020 and longer term. As we previously announced in October, we won the $40 million a year DC3 cyber contract. In addition, the KeyW Mission IT business won a strategic $55 million contract renewal, a year contract renewal.

Operating profit margin was up 60 basis points year over year to 7.6% supported by some project Closeouts pickups on a nuclear remediation project.

And improved margin associated with the lower headwinds from procurement related revenue noted earlier.

In the second half of fiscal 2020, we expect operating profit margins to benefit on a year over year basis from our shift to higher margin fixed price services contracts and a higher contribution from the recently acquired tw.

Perhaps I can make a few comments regarding key W. Strategic logic for the acquisition and associated revenue synergies are continuing to indicate an excel any accelerating growth profile later in 2020 and longer term.

As we previously announced in October one the 40 million dollar year DC three cyber contract.

In addition, the key W. mission I T business, when a strategic 55 million dollar contract renewal a year contract renewal and as Bob mentioned earlier, the rapid solutions team won a multi million dollar satellite payload payload contract.

Kevin Berryman: And as Bob mentioned earlier, the Rapid Solutions team won a multimillion-dollar satellite payload contract. As such, we expect a ramp in revenue and EBITDA growth for the remainder of fiscal 2020. Moving to People and Places Solutions. Q1 net revenue grew 7% year-over-year, and operating profit was up 12%. As a percentage of net revenue, operating profit was 12.1% for the quarter, up 50 basis points from a year ago. The business is benefiting from its alignment to multiple secular growth trends, global scale, and a track record of strong project execution in lower-risk verticals. Our non-allocated corporate overhead costs were $32 million for the quarter, down 30% year-over-year, supported by lower benefits-related costs, which I previously mentioned were a factor in our gross margin expansion.

And as Bob mentioned earlier, the Rapid Solutions team won a multimillion-dollar satellite payload contract. As such, we expect a ramp in revenue and EBITDA growth for the remainder of fiscal 2020. Moving to People and Places Solutions. Q1 net revenue grew 7% year-over-year, and operating profit was up 12%. As a percentage of net revenue, operating profit was 12.1% for the quarter, up 50 basis points from a year ago. The business is benefiting from its alignment to multiple secular growth trends, global scale, and a track record of strong project execution in lower-risk verticals. Our non-allocated corporate overhead costs were $32 million for the quarter, down 30% year-over-year, supported by lower benefits-related costs, which I previously mentioned were a factor in our gross margin expansion.

As such we expect the ramp in revenue and EBITDA growth for the remainder of fiscal 2020.

Moving to people in place to solutions.

Q1 never crap Rep net revenue grew 7% year over year, an operating profit was up 12%.

As a percentage of net revenue operating profit was 12.1% for the quarter up 50 basis points from a year ago.

Business is benefiting from its alignment to multiple secular growth trends global scale, a track record of strong project execution and lower risk verticals.

Our non allocated corporate overhead costs were $32 million for the quarter down 30% year over year supported by lower benefits related costs, which I previously mentioned where factor in our gross margin expansion.

Kevin Berryman: We remain focused on cost discipline, but as we have previously stated, we will proactively evaluate incremental investments that will support our digital and innovation journey. As a result, for the remainder of the year, we expect non-allocated corporate costs to be near the high end of the previous $25 to $35 million per quarter guideposts. Finally, we started the year strong in Adjusted EBITDA performance, reaching a level of $260 million for the quarter, up 31% year-over-year, reaching nearly 10% of revenue for the quarter, up 150 basis points versus a year ago. Now turning to Slide 10, I would like to update our initiatives relative to our recent M&A and divestiture actions. Before discussing our most recent efforts, we are pleased that integration of the highly successful CH2M acquisition is largely complete, although some miscellaneous ongoing charges remain for the balance of the year.

We remain focused on cost discipline, but as we have previously stated, we will proactively evaluate incremental investments that will support our digital and innovation journey. As a result, for the remainder of the year, we expect non-allocated corporate costs to be near the high end of the previous $25 to $35 million per quarter guideposts. Finally, we started the year strong in Adjusted EBITDA performance, reaching a level of $260 million for the quarter, up 31% year-over-year, reaching nearly 10% of revenue for the quarter, up 150 basis points versus a year ago.

We remain focused on cost discipline, but as we have pretty previously stated we will proactively evaluate incremental investments that will support our digital and innovation journey.

And that's a result for the remainder of the year, we expect no unallocated corporate costs to be near the high end as a previous $25 million to $35 million per quarter types.

Finally, we started the year strong in adjusted EBITDA performance, reaching a level of $260 million for the quarter up 31% year over year, reaching nearly 10% of revenue for the quarter.

Up 150 basis points versus a year ago.

Now turning to Slide 10, I would like to update our initiatives relative to our recent M&A and divestiture actions. Before discussing our most recent efforts, we are pleased that integration of the highly successful CH2M acquisition is largely complete, although some miscellaneous ongoing charges remain for the balance of the year.

So now turning to slide 10, I would like to update our initiatives relative to our recent M&A and divestiture actions.

Before discussing our most recent efforts we are pleased that integration of the highly successful CH too I'm acquisition is largely complete.

Those some miscellaneous ongoing charges or remain for the balance of year.

Kevin Berryman: Cost synergies exceeded our expectations, and revenue synergies continue to deliver higher growth and are serving as a catalyst for our business transformation. Regarding the sale of ECR, to date, we have incurred $206 million of the approximate $230 million in related transaction, separation, and restructuring costs. We expect the majority of the remaining costs to be incurred by the end of the first half of our fiscal 2020. Regarding KeyW, as of the end of Q1, we effectively achieved the run rate of $15 million in cost synergies, which resulted in our spending $22 million of our estimated $25 million of costs to achieve. To date, we have incurred $13 million of transaction fees and other one-time acquisition-related costs. Finally, our acquisition of Wood's nuclear business remains on track to close in our fiscal Q2.

Cost synergies exceeded our expectations, and revenue synergies continue to deliver higher growth and are serving as a catalyst for our business transformation. Regarding the sale of ECR, to date, we have incurred $206 million of the approximate $230 million in related transaction, separation, and restructuring costs. We expect the majority of the remaining costs to be incurred by the end of the first half of our fiscal 2020. Regarding KeyW, as of the end of Q1, we effectively achieved the run rate of $15 million in cost synergies, which resulted in our spending $22 million of our estimated $25 million of costs to achieve. To date, we have incurred $13 million of transaction fees and other one-time acquisition-related costs. Finally, our acquisition of Wood's nuclear business remains on track to close in our fiscal Q2.

Cost synergies exceeded our expectations and revenue synergies continue to deliver higher growth and our serving as a catalyst for our business transformation.

Regarding the sale of VCR to date, we have incurred $206 million something approximate $230 million on related transaction separation and restructuring costs. We expect a majority of the remaining cost be incurred by the end of the first half of our fiscal 2020.

Regarding tw as of the end of Q1, we effectively achieves the run rate a $15 million in cost synergies, which resulted in our spending 22 of our estimated $25 million up cost to achieve today, we have incurred $13 million that transaction fees and other onetime acquisition related costs.

[music].

Finally, our acquisition of Whats nuclear business remains on track to close in our fiscal Q2.

Kevin Berryman: We continue to expect $12 million in annual cost synergies and expect approximately $30 million of transaction costs and costs to achieve synergies. Now on to cash flow generation and the balance sheet on Slide 11. During the quarter, Free Cash Flow remained impacted by restructuring-related activities. Reported cash flow was negative $159 million, but improved $86 million versus the year-ago quarter. One should note that our cash flow is normally lighter in Q1 due to seasonality, and it continued to be impacted by approximately $50 million of restructuring and separation-related cash outflows, offset partially by insurance proceeds related to the Neue house settlement, and an ECR working capital adjustment. DSOs did increase from Q4 to now, 2019. They're up slightly year-over-year. We expect to significantly improve collections over the course of 2020 and still see ample opportunities to lower our DSA - DSO run rate over the next two years.

We continue to expect $12 million in annual cost synergies and expect approximately $30 million of transaction costs and costs to achieve synergies. Now on to cash flow generation and the balance sheet on Slide 11. During the quarter, Free Cash Flow remained impacted by restructuring-related activities. Reported cash flow was negative $159 million, but improved $86 million versus the year-ago quarter.

We continue to expect $12 million, an annual cost synergies and expect to approximately $30 million up transaction costs and cost to achieve synergies.

Now onto cash flow generation in the balance sheet on slide 11.

During the quarter free cash flow remained impacted by restructuring related activities.

Reported cash flow was negative $159 million, but improved $86 million versus the year ago quarter.

One should note that our cash flow is normally lighter in Q1 due to seasonality, and it continued to be impacted by approximately $50 million of restructuring and separation-related cash outflows, offset partially by insurance proceeds related to the Neue house settlement, and an ECR working capital adjustment. DSOs did increase from Q4 to now, 2019. They're up slightly year-over-year. We expect to significantly improve collections over the course of 2020 and still see ample opportunities to lower our DSA - DSO run rate over the next two years.

One should note that our cash flow is normally lighter in Q1 due to seasonality and a continued to be impacted by approximately $50 million of restructuring and separation related cash outflows offset partially by insurance proceeds related to the new we fell short of a month and any see our working capital adjustment.

Dsos did increase from Q4, two not 2019 are up slightly year over year, we expect to significantly improve collections over the course in 2020 and still see Apple opportunities low Rds say it DSL run rate over the next two years.

Kevin Berryman: As a result, for the full year 2020, we expect free cash flow to be $450 million-plus, including the impact from cash outflows related to restructuring and separation costs, which we believe will approximate $150 million. Our cash flow will strengthen considerably over the balance of the year. We ended the quarter with cash of approximately $600 million and a gross debt level of $1.6 billion, resulting in $1 billion of net debt before attributing the benefit of the Worley equity. Treating the Worley equity as cash, our pro forma net debt to adjusted EBITDA was well less than 1x. Regarding capital deployment, we announced today that we have increased our share repurchase authorization by $1 billion to a total of $1.4 billion, which represents approximately 10% of our market capitalization.

As a result, for the full year 2020, we expect free cash flow to be $450 million-plus, including the impact from cash outflows related to restructuring and separation costs, which we believe will approximate $150 million. Our cash flow will strengthen considerably over the balance of the year. We ended the quarter with cash of approximately $600 million and a gross debt level of $1.6 billion, resulting in $1 billion of net debt before attributing the benefit of the Worley equity. Treating the Worley equity as cash, our pro forma net debt to adjusted EBITDA was well less than 1x. Regarding capital deployment, we announced today that we have increased our share repurchase authorization by $1 billion to a total of $1.4 billion, which represents approximately 10% of our market capitalization.

As a result for the full year 2020, we expect free cash flow to be $450 million, plus including the impact from cash outflows related to restructuring and separation costs, which we believe will approximate $150 million our cash flow was strengthened considerably over the.

Balance at the year.

We ended the quarter with cash of approximately $600 million on a gross debt level of 1.6 billion, resulting in 1 billion of net debt before attributing to benefit at the orally equity.

Trading the Worley equity as cash our pro forma net debt to adjusted EBIT da was well less than one times.

Regarding capital deployment, we announced today that we have increased our share repurchase authorization by $1 billion to a total of $1.4 billion, which represents approximately 10% of our market capitalization.

Kevin Berryman: We continue to believe that our shares are trading at a discount to their intrinsic value, and we expect to fully utilize our remaining share buyback authorization over time. For modeling purposes, we would expect an average share count of approximately $134 million for fiscal year 2020, excluding additional share buybacks. We will continue to be opportunistic in our share buyback activity going forward, and we'll provide an update on our quarterly earnings call relative to share count expectations in the future. Including the discrete charge in Q1, we now expect an effective tax rate of 25% for fiscal 2020, although we continue to believe our normalized tax rate is approximately 24%.

We continue to believe that our shares are trading at a discount to their intrinsic value, and we expect to fully utilize our remaining share buyback authorization over time. For modeling purposes, we would expect an average share count of approximately $134 million for fiscal year 2020, excluding additional share buybacks. We will continue to be opportunistic in our share buyback activity going forward, and we'll provide an update on our quarterly earnings call relative to share count expectations in the future. Including the discrete charge in Q1, we now expect an effective tax rate of 25% for fiscal 2020, although we continue to believe our normalized tax rate is approximately 24%.

We continue to believe that our shares are trading at a discount to their intrinsic value and we expect to fully utilized our remaining share buyback authorization overtime.

For modeling purposes, we would expect an average share count of approximately $134 million for fiscal year 2020, excluding additional share buybacks.

We will continue to be opryland opportunistic and our share buyback activity going forward and will provide an update on our quarterly earnings call relative to share count expectations in the future.

Including the discrete charge in Q1, we now expect an effective tax rate of 25% for fiscal 2020.

No. We continue to believe our normalized tax rate is approximately 24%.

[Analyst] (The Benchmark Company): ... Given our strong balance sheet and free cash flow, we remain committed to our quarterly dividend, which was previously declared at $0.19 per share. As you know, our current dividend level represents an increase of 12% versus a year ago. Now, I'll turn it back over to Steve for some closing thoughts on slide 12.

... Given our strong balance sheet and free cash flow, we remain committed to our quarterly dividend, which was previously declared at $0.19 per share. As you know, our current dividend level represents an increase of 12% versus a year ago. Now, I'll turn it back over to Steve for some closing thoughts on slide 12.

Given our strong balance sheet and free cash flow, we remain committed to our quarterly dividend, which was previously declared at 19 cents per share as you know a current D dividend level represents an increase up 12% versus a year ago.

Now I'll turn it back over to Steve for some closing thoughts on slide 12.

Steve Demetriou: Thank you, Kevin. I'm excited about the continued traction of our business transformation. We're seeing a strong, inclusive culture developing across Jacobs. Our pipeline is increasing year over year with larger, higher-margin opportunities, and we're strategically leveraging our balance sheet, investing in ourselves through timely share backs, as well as disciplined and targeted M&A activities in strong growth sectors. We're maintaining our fiscal 2020 Adjusted EBITDA outlook in the range of $1.05 to, I'm sorry, 1.05 to 1.15 billion dollars, which includes the net impact from other income and non-controlling interest.

You can I'm excited about the continued traction of our business transformation, we're seeing a strong inclusive culture developing across Jacobs, our pipeline is increasing year over year with larger higher margin opportunities and we're strategically leveraging our balance sheet investing in ourselves through time, we sure.

As well as disciplined as targeted M&A activity and strong growth sectors.

We're maintaining our fiscal 2020 adjusted EBITDA outlook in the range of adult but.

Sorry to have $1.05 billion to $1.1 billion, which includes the net impact from other income or non controlling interest.

Steve Demetriou: We are also maintaining our fiscal 2020 Adjusted EPS guidance to a range of $5.30 to $5.80 per share, which at the midpoint, represents 17% year-over-year growth when excluding the impact from fiscal 2019 discrete tax items. In addition, our guidance also factors in approximately a 6-month benefit from the Wood acquisition, which we expect to close by the end of March. As Kevin outlined, the majority of our restructuring charges are coming to an end, and we are highly focused and confident on delivering strong free cash flow for the remaining 3 quarters of this fiscal year. In summary, we're continuing our discipline, intensity, and focus around delivering on our profitable growth strategy and look forward to 2020 and beyond. Operator, we'll now open the call for questions.

We are also maintaining our fiscal 2020 Adjusted EPS guidance to a range of $5.30 to $5.80 per share, which at the midpoint, represents 17% year-over-year growth when excluding the impact from fiscal 2019 discrete tax items. In addition, our guidance also factors in approximately a 6-month benefit from the Wood acquisition, which we expect to close by the end of March. As Kevin outlined, the majority of our restructuring charges are coming to an end, and we are highly focused and confident on delivering strong free cash flow for the remaining 3 quarters of this fiscal year. In summary, we're continuing our discipline, intensity, and focus around delivering on our profitable growth strategy and look forward to 2020 and beyond. Operator, we'll now open the call for questions.

We are also maintaining our fiscal 2020, adjusted EPS guide to a range of $5 in $35.80 per share, which at the midpoint represents 17% year over year growth when excluding the impact from fiscal 2019 discrete tax items.

In addition, our guidance also factors in approximately a six month benefit from the acquisition, which we expect to close by the end of March.

Kevin outline as the majority of our restructuring charges are coming soon.

And we are highly focused and confident on delivering strong free cash flow through the remaining three quarters of this fiscal year.

In summary, we're continuing our discipline intensity and focus around delivering on our profitable growth strategy and look forward to 2020 and beyond.

Operator, we'll now open the call for questions.

Operator: Thank you. As a reminder, to ask a question, you will need to press star one on your telephone. To withdraw your question, press the pound or hash key. Please allow one question and one follow-up only. Please stand by while we compile a Q&A roster. Our first question comes from the line of Joseph DeNardi from Stifel. Your line is open.

Thank you as a reminder to ask a question you will need to press star one on your telephone to withdraw your question press the pound or hash key.

Please allow one question and one follow up only please standby when we come pilots una roster.

And our first question comes from the line of Joseph Denardi from Stifel. Your line is open.

Hey, good morning, good afternoon.

Joseph DeNardi: Hey, good morning, good afternoon. So Bob, you talked about the KeyW contract success you've had lately. I'm wondering if you could just step back. I think prior to the acquisition, they had talked about around 14 opportunities, greater than $100 million in value that they had expected to be awarded sometime in 2019. Can you just level set us on how many of those have been awarded? How many have maybe slipped? How many have you won? How many have you lost? Thank you.

But Bob you talked about the tw.

Contract success, you've had laid I'm wondering if you could just step back I think prior to the acquisition they talk to that around 14 opportunity is greater than $100 million in value that they had expected to be awarded sometime in 2019.

Can you just level set us on how many of those have been awarded how many have maybe slipped how many of you one M&A have you lost.

Thank you.

Yes, Joe.

Bob Pragada: Yeah, Joe, thanks for the question. So really, net, we're actually -- we've seen an increase in the number of opportunities. So that 14 number that was disclosed last year has actually grown to north of 20. And then the ins and outs, I'll just put it this way, we're winning more than we're not, but we're also kind of in an area where we have to consider time as well. The duration of these procurements are can be pretty long.

Thanks for the question so really.

Net net we're actually we've seen an increase in the number of opportunity. So that that 14 number that we've disclosed last year has actually grown to north of 20, and then the ins and outs.

Just put it this way, we're winning more than we're not but we're also kind of in a.

Hi.

In an area, where where we have to consider time as well the duration of these these procurements are can be pretty long.

Joseph DeNardi: Okay. That's helpful. And then you talked about the sensor opportunity. I appreciate you can't talk about certain aspects of it, but just high level, can you talk about whether at this point the risk is more technical or budget in nature? You feel pretty good that this capability is going to work and perform the mission, it just needs to be funded, or is there still a fair degree of technical risk ahead of you? Thank you.

Okay. That's helpful. And then you talked about the sensor opportunity I. Appreciate you can't talk about certain aspects of it but this just high level can you talk about whether at this point.

The risk is more technical or budget in nature, you feel pretty good that this capability is going to work and perform the mission. It just needs to be funded or is there still is fair degree as technical risk ahead of the thank you.

So all these this season.

Steve Demetriou: Now, all these, this feature, Joe, that, you know, the rapid solution side of the business, is playing out as we expected. There are multiple opportunities. Bob, reported today that we had a major win, in one of them around space intelligence. And these things go through different phase gates in the government. And, you know, they're just proceeding on making sure it, you know, they qualify, they're, you know, the winners. And obviously, we got a major qualification hurdle behind us, and we're on track for what, you know, the model was with regard to entering this, you know, space intelligence ISR business with the KeyW acquisition.

Yeah, the rapid solution side of the business.

Is played out as we expected there are multiple opportunities.

Reported today that we had a major wins.

And one of them around space intelligence and these things go through different phase gates and the government.

And they're just.

Proceeding on making sure.

They qualify.

There you know the winners and obviously, we got a major qualification hurdle.

Yes.

We're on track for what the model was with regard to entering this space intelligence is our business.

Acquisition.

Thank you.

Joseph DeNardi: Thank you.

Our next question comes from the line of Josh Sullivan from the Benchmark Company. Your line is open.

Operator: Our next question comes from the line of Josh Sullivan from The Benchmark Company. Your line is open.

Hi, good morning.

[Analyst] (The Benchmark Company): Good morning.

Josh Sullivan: Good morning.

Good morning joint Josh.

Steve Demetriou: Good morning.

Bob Pragada: Good morning, Josh.

[Analyst] (The Benchmark Company): Can you just give us some color, you know, on the backlog here? You know, if you think about margins, you've had some higher value content start to come through. But if you think about margin growth going forward, you know, is it gonna be more driven by the type of work that's been won and is in backlog? Or do you see margin growth, you know, more from some of these restructuring activities, you know, some operational improvements internally?

Josh Sullivan: Can you just give us some color, you know, on the backlog here? You know, if you think about margins, you've had some higher value content start to come through. But if you think about margin growth going forward, you know, is it gonna be more driven by the type of work that's been won and is in backlog? Or do you see margin growth, you know, more from some of these restructuring activities, you know, some operational improvements internally?

Can you just give us some color on the backlog here. If you think about margins they've had some higher value content start to come through but if you think about margin growth going forward is it couldn't be more driven by the type of work that's been one and is in backlog or do you see margin growth more from some of these restructuring activities some operation.

I will improvements internally.

Yes, I think it's a combination of both.

Steve Demetriou: Yeah, I think it's a combination of both. You know, clearly, you're seeing us become a more and more efficient company. Our G&A as a percent of revenue is clearly contributing to an improved operating profit margin, and we're seeing it across both businesses. But it's also just the transformation of our portfolio and within the two lines of businesses, you know, the work that we're winning. The pipeline is richer in margin. If you look at the Critical Mission Solutions business, it's not only the intelligent asset management and, you know, the continued journey of, of those, you know, government projects, but more IDIQ. The whole strategy to increase the mix of IDIQ contracts is gonna be a margin enhancement. KeyW acquisition is a margin enhancement.

Clearly, our youre seeing our us become a more and more efficient company our DNA is.

For center revenue. This is clearly contributing to an improved operating profit margin and we're seeing it across both businesses.

But.

Also just the transformation of our portfolio and within the two lines of businesses.

The work that we're winning a pipeline as richer and margin we looked at the critical mission solutions business, it's not only the intelligent asset management.

Continued journey.

Those government projects, but more IDR too.

Should the whole strategy to increase the mix of IDR two contracts is going to be a margin enhancement to w. acquisition is the margin enhancement when we looked at the would acquisition compared to our based nuclear business at the margin enhancement. So there's a collection of critical mission solutions.

Steve Demetriou: When we look at the Wood acquisition compared to our base nuclear business, it's a margin enhancement. So there's a collection in Critical Mission Solutions. And then you have the same story on the people in places business with regard to the type of projects and programs that we're, you know, we're pursuing and winning in our backlog, but more importantly, in the record pipeline that Bob talked about.

When we look at the Wood acquisition compared to our base nuclear business, it's a margin enhancement. So there's a collection in Critical Mission Solutions. And then you have the same story on the people in places business with regard to the type of projects and programs that we're, you know, we're pursuing and winning in our backlog, but more importantly, in the record pipeline that Bob talked about.

And then you have to the same story on the.

People in places business with regard to but the type of projects and programs that we're we're pursuing and winning in our backlog, but more importantly, and the record pipeline that Bob talked though.

Thanks, and then just the expectation for dsos to improve pretty substantially throughout the year can you talk about what's driving that what actions you guys are taking.

Josh Sullivan: Great. Thanks. And then just the expectation for DSOs to improve, you know, pretty substantially throughout the year. Can you talk about what's driving that? What actions you guys are taking?

Could you repeat the question Josh Thanks.

Kevin Berryman: Could you repeat the question, Josh? Thanks.

Josh Sullivan: Sorry, just the expectation for DSOs to improve pretty substantially throughout the year. Can you talk about what's driving that or, you know, how that dynamic's gonna work out throughout the rest, the remainder of the year?

So I just need the expectation for dsos to improve pretty substantially throughout the year can you talk about what's driving that or how the other dynamics going to work out throughout the throughout the remainder of the year.

Kevin Berryman: Yeah, a couple comments. First one is, Q1 tends to be a more challenged quarter on the metric regardless. But notwithstanding that, we're still not satisfied that we're at the levels that we need to be. And similar to last year, when we initiated a pretty strong level of actions that were being taken relative to improve our collections over the course of the last three quarters of the year, we're doing exactly the same thing. And so we're focused with our project teams relative to executing against that. We feel comfortable that those teams have clarity and sight going forward as it relates to how to deliver some incremental improvements. And it will be important for us to deliver the cash flow dynamics that we've outlined for the full year.

Yeah, a couple a couple of comments first one is a Q1 tends to be it a more challenged quarter on the metric, regardless, but notwithstanding that we're still not satisfied that were at the levels.

That we need to be and similar to last year. When we initiated a pretty strong level of actions that were being taken relative to improve our AR collections over the course of the last three quarters of the year, we're doing exactly the same thing and so we're focused with our project teams relative.

To executing against that we feel comfortable that those teams have clarity and site going forward as it relates to how to to deliver some incremental improvements and it will be important for us to deliver the cash flow dynamics that we've outlined for for the full year. So we're confident that the team is on top of it we.

Kevin Berryman: So we're confident that the team is on top of it. We have the task force team in place relative to focusing on those specific areas that we know that we can make some real positive and strong progress on. And so our expectation is we'll start to see that over the course of the next few quarters.

So we're confident that the team is on top of it. We have the task force team in place relative to focusing on those specific areas that we know that we can make some real positive and strong progress on. And so our expectation is we'll start to see that over the course of the next few quarters.

I have the task force team in place relative to focusing on those specific areas that we know that we can make some real.

Positive and strong progress on and so our expectation is we'll start to see that over the course of the next few quarters.

Okay. Thank you.

Josh Sullivan: Okay. Thank you.

Operator: Our next question comes from the line of Jamie Cook from Credit Suisse. Your line is open.

Our next question comes from the line, it's Jamie Cook from Credit Suisse. Your line is open.

Jamie Cook: Hi, good morning. Kevin, I guess just one, a follow-up on the cash flow question. I think before, like the analyst day last year, you said a big DSO opportunity, I think, was on the CH2M Hill side. So I'm just wondering, is it acquisition or the legacy Jacobs? And then how do we think about the cadence of free cash flow for the year? Should we assume it's more back-end loaded versus should we start to see the improvement in the March quarter? And are there any sort of one-time items embedded in that north of $450 to get us to the free cash flow number? And then my second question, obviously, you guys announced this morning that you increased your authorization on your share repurchase, which I think the market liked.

Hi, Good morning, Kevin I guess, just one follow up on that the cash flow question I think before like the analyst day last year, you said, a big D.S. opportunity I think was under siege, Jim Health side. So I'm just wondering is it acquisition or the legacy Jacobs and then how do we think about the cadence of free cash flow for the year should we assume it's more backend loaded.

This is should we start to CD improvement on in the March quarter and are there any sort of onetime items embedded in that north of 450 to get us to the free cash flow number.

And then my second question, obviously, you guys announced this morning that you increase your authorization on your share repurchase, which I think the market. Like you know is is that a message sort of signaling you know with KBW and with would that maybe M&A is on the back burner right now we focus more on sort of integrating those acquisitions and.

Jamie Cook: You know, is that a message sort of signaling, you know, with KW and with Wood, that maybe M&A is on the back burner right now, and we focus more on sort of integrating those acquisitions and, you know, buying back stock? Thanks.

You know, is that a message sort of signaling, you know, with KW and with Wood, that maybe M&A is on the back burner right now, and we focus more on sort of integrating those acquisitions and, you know, buying back stock? Thanks.

And not buying back stock thanks.

So several questions and that Jamie let me make sure I try and cover a mall first one on the pace of a cash flow. We do believe that will start to see some benefits in Q2 and into Q3 in Q4. So I think that the expectation is consistent with many other years that we have that.

Kevin Berryman: So, several questions in that, Jamie. Let me make sure I try and cover them all. First one, on the pace of cash flow, we do believe that we'll start to see some benefits in Q2 and into Q3 and Q4. So I think that the expectation is consistent with many other years that we have. The expectation is we should start to see some improvements, so I wouldn't necessarily call it back half oriented. I think clearly on the $450 million, we've identified that there is specific restructuring related items approaching $150 million. That's included in that $450 million number. So if you were to exclude that, we'd be more along the lines of a $600 million number. So I think that addresses your question on the one-offs.

Expectation as we should start to see some and improvements I wouldn't necessarily call it back half.

Oriented I think clearly on the Fourfifty Fourfifty, we've identified that there is specific restructuring related items approaching $115 million. That's included in that 450, a number. So if you are to exclude that we'd be more along the lines of a 600 million dollar number so I think that.

Addresses your question on on on the one offs other than that.

Kevin Berryman: Other than that, clearly, we're gonna have to fund the Wood acquisition coming up here in the next couple months. So that's a one-off, not in free cash flow, obviously, but certainly it's one of the uses of cash that we're gonna have this year. And the last one about the authorization and the current number of 1.4, what are the implications on potential acquisitions? Look, I think our pipeline of acquisitions continues to be relatively robust. I wouldn't say that we're out of that market in, by any stretch of the imagination, but by the incremental authorization of 1.4, it's clear that we view that we're- we have an opportunity to add value by executing against the incremental authorization.

Other than that, clearly, we're gonna have to fund the Wood acquisition coming up here in the next couple months. So that's a one-off, not in free cash flow, obviously, but certainly it's one of the uses of cash that we're gonna have this year. And the last one about the authorization and the current number of 1.4, what are the implications on potential acquisitions? Look, I think our pipeline of acquisitions continues to be relatively robust. I wouldn't say that we're out of that market in, by any stretch of the imagination, but by the incremental authorization of 1.4, it's clear that we view that we're- we have an opportunity to add value by executing against the incremental authorization.

Clearly, we're gonna have to too.

Funded the what acquisition coming up here in the next couple of months. So that's a one off not in free cash flow, obviously, but but certainly it's one of that uses of cash that we're going to have this year and the last one about.

The authorization Andy the current number of 1.4, what are the implications on a potential acquisitions look I think our pipeline of acquisitions continues to be be relatively robust I wouldn't say that were out of that market and by any stretch of the imagination, but.

By the incremental authorization of 1.4, it's clear that we view that where we have an opportunity to add value by executing against the incremental authorization. So I wouldn't preclude a other potential transactions, but I think we're being thoughtful and and disciplined in terms of our actually.

Kevin Berryman: So I wouldn't preclude other potential transactions, but I think we're being thoughtful and disciplined in terms of our execution against the share buyback, and we will be opportunistic in that, on that basis to ensure that we're adding shareholder value.

So I wouldn't preclude other potential transactions, but I think we're being thoughtful and disciplined in terms of our execution against the share buyback, and we will be opportunistic in that, on that basis to ensure that we're adding shareholder value.

Fusion against the share buyback and will we will be opportunistic in that on that basis to ensure that we're adding shareholder value.

Thank you I appreciate the color.

Jamie Cook: Thank you. I appreciate the color.

Our next question comes from the line of Andy Kaplowitz from Citi. Your line is open.

Operator: Our next question comes from the line of Andy Kaplowitz from Citi. Your line is open.

Andy Kaplowitz: Good morning, guys.

Hey, good morning, guys.

I want to mourn here nice.

Steve Demetriou: Morning.

Kevin Berryman: Morning, Andy.

Andy Kaplowitz: You had a nice morning. You had a nice uptick in CMS margin in the quarter. You said it might have been mostly lower procurement, but is KeyW beginning to have more of an impact on margin, or are these margins in CMS now sustainable? And then is KeyW still supposed to be about $75 million in EBITDA for the year?

Morning, you the nice up tick in CMS margin Macquarie. He said it might have been.

Mostly lower procurement, but QW getting more of an impact the margin on our these margins and CMS now sustainable and then tw still supposed to be about 75 million EBITDA for the year.

So first thing on the margin profile look I think the the numbers that we have and our expectation is that we will be able to say to see year over year margin improvement on the CMS business and so that is ultimately the expectations that we set far shelf in the balance.

Kevin Berryman: So first thing on the margin profile, look, I think the numbers that we have and our expectation is that we will be able to say, to see year-over-year margin improvement on the CMS business. And so that is ultimately the expectations that we've set for ourselves in the balance of the year for CMS. The team is working hard. Steve alluded to a lot of the things that are already happening relative to going after different contract types, which afford us an ability to have some incremental margin. So we do believe that there is an ability to continue to show some improvements in that margin versus the year ago figures. So yes, on that.

Of the year for CMS. The team is working hard Steve alluded to a lot of the things that are already happening relative to going after different contract types, which affords us an ability to have some incremental margin. So we do believe that there is an ability to continue to show some improvements in that margin versus a year ago figures.

So yes on that I would say on the on the key W. I think the the the 75, we never really talked about pay 75 million dollar number per se. We did talk about the ability of us to ramp up over the course of 2020 and I won't make a specific comment on what the number.

Kevin Berryman: I would say on the KW, I think the seventy-five, we never really talked about a $75 million number per se. We did talk about the ability of us to ramp up over the course of 2020, and I won't make a specific comment on what the number is, but I can tell you that with the developing pipeline and the new wins that are coming to the forefront, specifically on some of the opportunities that we're really excited about for KW, I think we're gonna see some momentum in the back half of the year as those things come into the portfolio, and we start to start to burn some of the revenue against that. So, perhaps a little bit backend, more backended, but we're really excited nonetheless.

I would say on the KW, I think the seventy-five, we never really talked about a $75 million number per se. We did talk about the ability of us to ramp up over the course of 2020, and I won't make a specific comment on what the number is, but I can tell you that with the developing pipeline and the new wins that are coming to the forefront, specifically on some of the opportunities that we're really excited about for KW, I think we're gonna see some momentum in the back half of the year as those things come into the portfolio, and we start to start to burn some of the revenue against that. So, perhaps a little bit backend, more backended, but we're really excited nonetheless.

But I can tell you that with the developing pipeline and the new wins that are coming to two to the forefront specifically on some of the opportunities that we're really excited about for kw I think we're going to see some momentum in the back half the year as those things come into the portfolio and we start to start to burn some.

The revenue against that so perhaps a little bit backend more back ended but we're really excited nonetheless.

Andy Kaplowitz: Kevin, can I follow up on the $600 million in cash flow in 2020, in the sense that, I think you've said this before, sort of mid-80% conversion on adjusted EPS. If I go out into 2021, I know it's a long time away, but would you assume that really all of the noise, or should I say, the one-time items are behind you for the most part, and you get conversion closer to the 100% average that Jacobs has done over the last many years?

Kevin can I follow up on the 600 million in cash flow in 20 in the sense that you've said this before sort of mid 80% conversion on adjusted EPS. If I go out into 21, I know, it's a long time away, but would you assume that really of the newly easy we should I say the onetime items are behind you for the most part.

And you get a conversion closer to the 100% average that you could see has done over the last many years.

I think that as we've cut as we've characterized to all of you. We believed that there is an opportunity for Jacobs to deliver a higher level of conversion on cash flow. Then certainly did we did in 2019, but we all know that that was a lot going on in that particular year to 150.

Kevin Berryman: I think that as we've characterized to all of you, we believe that there is an opportunity for Jacobs to deliver a higher level of conversion on cash flow than we certainly did in 2019, but we all know that that was a lot going on in that particular year. The $150 million that we've talked about in terms of restructuring the one-time efforts, which are kind of the tail end of the substantive transformation that we've been executing against, certainly are going to be reduced to a significant level by the end of not only this year, but kind of more along the lines of our first half of the year.

<unk> million dollars that we've talked about in terms of restructuring the onetime efforts, which are kind of the tail end of the substantive transformation that weve that we've been executing against.

Certainly are going to be reduced to a significant level by the end of not only this year, but kind of more along the lines of our first half of the year. So look.

Kevin Berryman: So look, we're not necessarily done per se, if in fact, we are gonna be talking about acquisitions, and we do think there's a strategic opportunity. There will obviously be some one-time costs, but I think we're talking on a, in a more measured level versus what we've seen historically speaking, because the transformation of the integration of CH and the exit of the ECR business were fundamentally large transformative issues that we had to work through over the last couple of years, all at the same time.

So look, we're not necessarily done per se, if in fact, we are gonna be talking about acquisitions, and we do think there's a strategic opportunity. There will obviously be some one-time costs, but I think we're talking on a, in a more measured level versus what we've seen historically speaking, because the transformation of the integration of CH and the exit of the ECR business were fundamentally large transformative issues that we had to work through over the last couple of years, all at the same time.

We're not necessarily done per say if in fact, we aren't going to be talking about acquisitions, and we do think theres a strategic opportunity. There will obviously be some onetime costs, but I think we're talking a in a more measured level versus what we've seen historically speaking because the transformation.

The integration of C H and the and the exit of the DCR business. We're fundamentally large transformative issues that we had to work through over the last couple of years. All at the same time Chardy I. It are you and ideas that as we go forward, it's going to be a little more clear.

Kevin Berryman: So our view and idea is that as we go forward, it's gonna be a little more clear, a little bit more focused, and consequently, the one-off restructuring or opportunities associated with our, our growth initiatives will be more focused and less robust than what they have been in the past in terms of restructuring related costs.

So our view and idea is that as we go forward, it's gonna be a little more clear, a little bit more focused, and consequently, the one-off restructuring or opportunities associated with our, our growth initiatives will be more focused and less robust than what they have been in the past in terms of restructuring related costs.

Little bit more focused and consequently, the one off strong restructuring our opportunities associated with all our growth initiatives will be more focused.

Less robust than what they have been in the past in terms of restructuring related costs.

Thanks.

Andy Kaplowitz: Thanks.

Our next question comes from the line of Gautam Khanna from Cowen and company. Your line is open.

Operator: Our next question comes from the line of Gautam Khanna from Cowen and Company. Your line is open.

Good morning. This is Jeff Molinari on Ferguson, Thanks for taking my questions.

Jeff Molinari: Good morning, this is Jeff Molinari on for Gautam. Thanks for taking my questions.

Thank you so.

Kevin Berryman: Thank you.

Jeff Molinari: So I got a yep, thank you. So I've got a couple questions on CMS. How big is the current bid pipeline, and what is the dollar value for bids submitted that are awaiting decision?

Yes. Thank you so a couple of questions on CMS.

How big is the current bid pipeline.

And what does the dollar value for bids submitted that are awaiting decision.

Yes, so our dollar our dollar pipeline is is in excess of 35 billion right now.

Bob Pragada: Yeah, so our dollar, our dollar pipeline is in excess of $35 billion right now, and about a quarter of those have been submitted. Probably the better news is that that is up almost fourfold from this time last year.

In about a quarter of those have been had been submitted.

Probably the better news is that that that is up almost fourfold from this time last year.

Okay. Thank you for that and then.

Jeff Molinari: Okay, that's. Thank you for that. And then, what do you anticipate for the book-to-bill to be in the March Q? Do you think you can continue your streak above one times?

Do you anticipate for the book to Bill to be in the March Q do you think you can continue streak above.

When times.

Look I it really it's tough to really forecast an exact book to Bill obviously, given the pipeline that's been talked about our expectation is our book to bill improved over the balance of the year with some of these very large opportunities we feel very good about coming to fruition. So we don't well quoting.

Kevin Berryman: Look, it really, it's tough to really forecast an exact book-to-bill. Obviously, given the pipeline that's been talked about, our expectation is our book-to-bill improves over the balance of the year with some of these very large opportunities we feel very good about coming to fruition. So we won't quote a specific number, but we certainly expect that it'll be improving versus our Q1 numbers.

Specific number, but we certainly expect thatll be improving versus our Q1 numbers.

Okay, and and what percent of.

Jeff Molinari: Okay, and what percent of 2020 sales are up for recompete? Are there any chunky contracts worth calling out?

2020 sales are up for Recompete are there any chunky contracts worth calling out.

Besides a besides the one we've talked about quite a bit.

Bob Pragada: You know, besides the one we've talked about quite a bit, on the Hanford tank closure contract,

Hanford conclude a contract.

Jeff Molinari: Mm-hmm

Bob Pragada: ... I think that's probably the one that we're obviously very focused in on.

But thats probably to the one that we're obviously very focused in on.

Jeff Molinari: Okay, and then one last one.

Yeah, we haven't had been looking out for tank and and we historically had the central plateau remediation contract, which is which is a rebid sets in the process of being processed protests.

Kevin Berryman: Yeah, we have a new bid for the Hanford tank, and we historically had the Central Plateau Remediation contract, which is a rebid that's in the process of being protested.

Okay and then last question is.

Jeff Molinari: Okay. And, and then the last question is, I think you mentioned the guidance includes six months of Wood's. Was that the case previously, or I, I might-

Jeff Molinari: Okay. And, and then the last question is, I think you mentioned the guidance includes six months of Wood's. Was that the case previously, or I might have missed that. Thank you.

I think you mentioned the guidance includes six months of woods.

Was that the case previously or.

Kevin Berryman: Yes

Jeff Molinari: ... I might have missed that. Thank you.

I'm going to Miss that thanks, yes, okay. Thanks, guys.

Kevin Berryman: Yes.

Jeff Molinari: Okay, thanks, guys.

Our next question comes from the line of Jerry Revich from Goldman Sachs. Your line is open.

Operator: Our next question comes from the line of Jerry Revich from Goldman Sachs. Your line is open.

Jerry Revich: Yes, hi, good morning. Just a question on people and places solutions. You folks have had really steady, sustained growth, even though that markets have been a bit choppy over the past couple of years. Can you just talk about where your win rates are today compared to historical levels? Is it, are you having more success on the bids that you're submitting with a wider service offering, or what would you attribute the sustained outperformance here to when you think about it in terms of win rates and project selection?

Yes, hi, good morning.

Just a question on people in place the solutions, you folks really steady sustained growth, even though that markets.

Had been a choppy over the past couple of years can you just talk about where your win rates are today compared to historical levels is it are you having more success on the bids that your submitting with the water service offering or what would you attribute the.

Sustained performance here too when you pick about in terms of win rates and project selection.

It's kind of all of your bug Jerry So our win rate has dramatically gone up over the course at call. It 24 months and in is north of 50% right now two ways of looking at it one is that maybe we're not bidding enough work that's not the case.

Bob Pragada: Yeah, it's kind of all of the above, Jerry. So our win rate has dramatically gone up over the course, I'd call it 24 months, and is north of 50% right now. You know, two ways of looking at it. One is that maybe we're not bidding enough work, that's not the case. But we're bidding in an area from a technical consulting and technical solutions area where our solution is differentiated, and so we attribute that to the win rate. On your other question, with regards to the opportunities, we're actually seeing, it's a pretty opportunity-rich environment right now across the globe.

But we're bidding in an area from a technical consulting and technical solutions area, where our solution is is differentiated in so we attribute that to to the win rate on your other question with regards the opportunity we're actually seeing it's it's a pretty opportunity rich environment right now across the globe.

Bob Pragada: So there's no shortage of activity from a bid as well as a win rate, and I think you're seeing it in the lagging indicators with regards to the financials.

So there's no shortage of activity from a bid as well as a win rate, and I think you're seeing it in the lagging indicators with regards to the financials.

And so there's no short shortage of activity from a bit as well as a a win rate and I think you're seeing it into lagging indicators with regards the financials.

Jerry Revich: Okay. And then a question on the balance sheet, Kevin. So unbilled receivables plus contract assets were up, you know, $70 million sequentially in Q1, you know, they were up $200 million last year. Is that just working through contracts from businesses that were acquired? Or can you give us some more context? Because clearly, based on the guidance, you're gonna convert that into cash over the balance of the year. I'm wondering if you just build our comfort level on how concentrated that is and what's that related to?

Okay, and then a question on the balance sheet, Kevin moves so unbilled receivables plus contract assets were up $70 million sequentially in the first quarter. They were up 200 million last year is that just working through contracts from businesses that were acquired or can you give us some more context, because clearly based on the guy.

Since you're going to convert that into cash over the balance of a year I'm wondering if you just build or comfort level on how concentrated that is and what is that related to.

Kevin Berryman: Yeah, there's a couple larger contracts where it can be a little bit lumpy as it relates to how those things come to fruition. We're confident that given that lumpiness, some of that lumpiness will reverse over the course of the next couple of quarters specifically. So we're feeling pretty good about it, and that's one of the reasons that we're pretty excited about the balance of the year cash flow. And so, at the end of the day, we're on it, we're focused, and the team is, I'm confident is gonna execute against it.

Yeah, there's a there's a couple of larger contracts, where it can be a little bit lumpy as it relates to how those things come to fruition, we're confident that given that lumpiness. Some of that Lumpiness will reverse over the course of the next couple of quarters, specifically, so we're feeling pretty good about it and that's a that's one of the reasons that we're pretty excited about.

The balance of the your cash flow and so at the end of the day. We're we're on that we're focused and the team is a I'm confident is going to execute against it.

Jerry Revich: Kevin, what are the milestones, and are the projects on time so far? Any additional color that you can share?

And Kevin what are the milestones in our the projects on time so far.

Jerry Revich: Kevin, what are the milestones, and are the projects on time so far? Any additional color that you can share?

Any additional color that you can true.

Sorry, Jamie milestones with regards to those those will actually mother jobs that were you referring to yes. So in other words when can we.

Bob Pragada: Sorry, Jerry. Milestones with regards to those-

Bob Pragada: Sorry, Jerry. Milestones with regards to those potentially lumpy jobs, is that what you're referring to?

Jerry Revich: Well, yeah.

Bob Pragada: Potentially lumpy jobs, is that what you're referring to?

Jerry Revich: Yeah. So in other words, when can we change unbilled receivables and contract assets into billed receivables and eventually collect cash? So what are the milestone dates that we have to complete on those contracts to be able to-

Change unbilled receivables or contract assets into billed receivables and eventually.

Cash so what are what are the milestone dates that we have to complete.

On those contracts to be able to issue the invoice if you will.

Bob Pragada: Yeah

Jerry Revich: ... issue the invoice, if you will?

Bob Pragada: Yeah. And so, so it's right in line with what Kevin said. It's within the next couple of quarters, so that improvement that we're seeing over Q2, Q3, and the balance of the year, those milestones fit right within that timeframe.

And so it fits right in line with what Kevin said, it's within the next couple of quarters. So that that improvement that we're seeing over Q2 Q3, and the bound for the year those milestones fit right within that timeframe.

Jerry Revich: Okay. Thank you.

Okay. Thank you.

Our next question comes from the line of Michael to you. This from vertical research. Your line is open.

Operator: Our next question comes from the line of Michael Dudas from Vertical Research. Your line is open.

Good morning, gentlemen.

Michael Dudas: Good morning, gentlemen. Steve, in your-

Michael Dudas: Good morning, gentlemen. Steve.

Steve in your sort of Mike in your prepared in your prepared remarks, you talked quite a bit about climate change and I think most people have been noticing lease I have an over the last several months Stephen weeks.

Steve Demetriou: Morning, Mike.

Michael Dudas: In your prepared remarks, you talked quite a bit about climate change, and I think most people have been noticing, at least I have, over the last several months, even weeks, a lot more visibility, a lot more concern, a lot more companies talking about you. Is it more from a government standpoint, or are you having your private client customers, you know, engaging you on these solutions? And in PPS, when do you think we'll start to see noticeable, like, wins or announcements that will start to drive you where, I'm sure this is better margin, but better work through that segment?

A lot more visibility lot more concerned what more companies talking about Q.

Is it more from the government standpoint are you, having your private client customers.

Engaging when these solutions and and in NPS. When do you think will start to see noticeable like Windsor announcements that will.

Start to drive from you've were but I'm sure, there's better margin, but better work through that you see that segment.

Steve Demetriou: Yeah. So, just use the World Economic Forum, Davos, just in the last couple weeks as a barometer. It, it was clear that it was across all sectors, government sectors, the politicians that are there, the commercial CEOs on a global basis. It, it felt like coming out of this Davos that there was a huge shift, and this is something that, you know, we got to casually look at over the next several years to a crisis that everybody's on top of and committed to. So, you know, I think it's transitioned now to be a major issue and opportunity for us at Jacobs. We're, we're developing our own plan to be at net zero carbon neutral, you know, at, at some point in the future.

Yeah. So just use the world Economic Forum Davos system last couple of weeks as.

Barometer.

It was clear that it was across all sectors government sectors. The politicians that are there.

So.

On a global basis.

It felt like coming out of this davos that the was.

Huge.

This is something that we've got to cause we look at over the next couple of years to a crisis that everybody is on top of and committed to so.

Thanks good.

Its transition bound to be a major.

Issue and opportunity for us for Jacobs.

Helping our own plant to be material carbon neutral.

Some point in the future him and.

Steve Demetriou: More importantly, we're already winning business, and we're already in the mix of being a solutions player on a global basis. You know, we announced over the last year, year and a half, projects like the Miami Beach sea level rise, what we're doing in London around the Thames River, and you name it, any major city, you know, whether it's San Francisco or all the way to Singapore; the type of things we're doing to address climate change is we're, you know, we're viewed as a solutions provider by our clients. Clearly higher margin opportunities, and it's across the board. We're not only going in with traditional solutions, but we're going in with innovative solutions, using artificial intelligence and digital capabilities to address these issues in a much more efficient, innovative way.

More importantly, we're already winning business, and we're already in the mix of being a solutions player on a global basis. You know, we announced over the last year, year and a half, projects like the Miami Beach sea level rise, what we're doing in London around the Thames River, and you name it, any major city, you know, whether it's San Francisco or all the way to Singapore; the type of things we're doing to address climate change is we're, you know, we're viewed as a solutions provider by our clients. Clearly higher margin opportunities, and it's across the board. We're not only going in with traditional solutions, but we're going in with innovative solutions, using artificial intelligence and digital capabilities to address these issues in a much more efficient, innovative way.

And more importantly, we're already winning business and we're already in the mix being a solutions player on a global basis.

We announced over the last year year, and a half projects like the Miami Beach Sea level was what we're doing.

In London around the Thames River.

And you name it any major city.

Other at San Francisco, and we're always to Singapore. The type of things we're doing through to address climate changes were you know were viewed as the solutions provided by our clients clearly higher margin opportunities and and it's across the board, where we're we're not only going in with traditional solution, but we're going with innovative solutions.

Artificial intelligence and digital capabilities to address these issues in a much more efficient innovative way.

Steve Demetriou: And as a result, we're, you know, we got a high win rate as we pursue these opportunities across the globe.

And as a result, we're, you know, we got a high win rate as we pursue these opportunities across the globe.

As a result, we're you know we're going to high win rate as we pursue these opportunities across the book.

And I assume that's where a lot of the didnt. The internal investment me. So you talked about.

Michael Dudas: I assume that's where a lot of the internal investment, Lisa, you talked about, relative to 2020 beyond, adding the talent and scope and solutions on that front?

Relative to 2020 beyond adding the talent and scope and solutions on that front.

Yeah, absolutely Mike we clearly the human capital element is a is a big piece of that if you look at our demographics right now the age demographic probably stands out as a I'd just say in the last 10 years that number has dropped by 10 years.

Bob Pragada: Yeah, absolutely, Mike. We clearly, the human capital element is a big piece of that. If you look at our demographics right now, the age demographics, probably stands out as, I'd just say in the last 10 years, that number has dropped by 10 years. And then from a technology standpoint, we're putting some real investment in simulation tools, whether they be simulation tools around floodplains and flood control, all the way to water resiliency, and even coastal protection. We just were awarded, and I know this has been announced, the, it's called Project Orange. It's the coastal restoration for the Gulf Coast, starting in Galveston and going all the way through the Gulf of Mexico.

And then from a technology standpoint.

We're we're putting some some real investment in simulation tools, whether they'd be simulation tools around.

Flood claims and flood control all the way to water resiliency.

And even coastal protection, we just were awarded and I know this has been announced.

Yeah, It's called project Orange is the coastal restoration for the Gulf Coast, starting in Galveston, and going all the way through the Gulf of Mexico and into the technology that we're utilizing in order to to build those solutions is a is really impressive some more to follow.

Bob Pragada: The technology that we're utilizing in order to build those solutions is really impressive. So more to follow.

The technology that we're utilizing in order to build those solutions is really impressive. So more to follow.

Thanks, gentlemen.

Steve Demetriou: ... Thanks, gentlemen.

Our next question comes from the line Michael Feniger from Bank of America. Your line is open.

Operator: Our next question comes from the line of Michael Feniger from Bank of America. Your line is open.

Hey, guys. Thanks for taking my question, if I could just circle back on your comments before that you will still be in the M&A market. I mean can you flesh that out a little more you you mentioned, how your stock and the intrinsic value. There how are you seeing multiples moving in the pipeline when we look at did defense and.

Michael Feniger: Hey, guys. Thanks for taking my question. If I could just circle back on your comments before, that you will still be in the M&A market. I mean, can you flesh that out a little more? You mentioned how your stock and the intrinsic value there. How are you seeing multiples moving in the pipeline when we look at the defense and the people segment over the last few quarters?

And the people segments over the last few few quarters.

Well.

Steve Demetriou: Well, yeah, you know, from a, from an M&A standpoint, I think Kevin said it exactly right. You know, our first priority is our own stock. That's why we just announced a billion-dollar stock buyback. We, we still see Jacobs as being one of the best, if not the best, use of our capital over the near term, you know, based on what we see our organic runway and, you know, the path forward for the company. If we, you know, we're staying core to our strategic plan that we announced a year ago with regard to things like strengthening our cap- capability in digital consulting or, selective geographic expansion, you know, gaining more bolt-on capabilities around innovation and technology.

From a from an M&A standpoint, I think Kevin said it exactly right.

Our first priority as our own stock that's why we've just announced the believe little stock buyback, we still see objectives.

One of the best if not be best use of our capital over the near term you know based on what we see our organic runway and a path forward for the company.

We were seeing core to our strategic plan that we announced a year ago with regard to things like.

Our incoming okay capability and digital consulting or.

Selective geographic expansion.

Gaining more bolt on capabilities around innovation and technology and so the things like.

Steve Demetriou: You know, so the things like KeyW and Wood, most recently, were more in the, you know, form of bolt-on strategic enhancements to our ability to have outsized organic growth. And I think that's what you'll see us continue to be focused on over the near term. We have the luxury of being highly selective because of our ability to redeploy our capital to Jacobs. And so any acquisition that we make, you know, over the next few years, it's gonna be benchmarked against the alternative of buying our stock back, so it has to be superior value.

You know, so the things like KeyW and Wood, most recently, were more in the, you know, form of bolt-on strategic enhancements to our ability to have outsized organic growth. And I think that's what you'll see us continue to be focused on over the near term. We have the luxury of being highly selective because of our ability to redeploy our capital to Jacobs. And so any acquisition that we make, you know, over the next few years, it's gonna be benchmarked against the alternative of buying our stock back, so it has to be superior value.

CW and would most recently.

Were more in the form of bolt on strategic enhancements to our ability to.

Outsized organic growth and I think that's what you'll see us continue to be focused on over the near term.

We have the luxury of being highly selective because of.

Our ability to repay deploying our capital against two two Jacobs and so any acquisition that we made over the next few years, it's going to be benchmark.

Against the alternative with buying our stock our stock back so what has to be superior value.

Fair enough and what we think of defense in the private market. We've seen a lot activity there to really drive scale. If we look at the designing consulting side for environment water transportation, how important is scale there in the industry. Obviously cease to end has been a success just hoping you could talk.

Michael Feniger: Fair enough. And when we think of defense in the private market, we've seen a lot of activity there to really drive scale. If we look at the design and consulting side for, you know, environment, water, transportation, how important is scale there in the industry? Obviously, CH2M has been a success. I'm just hoping you could talk about scale and how that benefits in that fragmented industry right there.

About scale and how that benefits in that fragmented industry right there.

So scale definitely definitely helps in scale matters, but I would probably characterize it as a its one of a few key criteria, it's not scale by itself. It scale, coupled with technical expertise coupled with technology enabled solutions.

Bob Pragada: So scale definitely helps, and scale matters, but I would probably characterize it as it's one of a few key criteria. It's not scale by itself. It's scale coupled with technical expertise, coupled with technology-enabled solutions. And so we see all of that, you know, really as the driver, not scale for scale purposes.

And so we see all of that.

We added the driver not scale for scale purposes.

Steve Demetriou: And I would want to build on that because I think that's been a key ingredient to our success at Jacobs with our acquisition strategy. You know, a lot of companies make acquisitions that double their size in an industry, but it's, there's a lot of overlap, and as a result, there's all kinds of cultural disconnects that get created, and you know, we've seen those around the industry for the last decade. CH2M was a perfect example of a complementary acquisition. Yes, it did give us scale, but more importantly, it kind of filled in the holes that we didn't have. So it was water, you know, strengthening our environmental, like Tier One nuclear and a whole host of other things.

I want to build on that because I think thats been.

A key ingredient to our success at Jacobs with our acquisition strategy a lot of companies make acquisitions.

That double the size of an industry, but there's a lot of overlap.

And as a result, there's all kinds of cultural disconnects that created and.

We've seen those around the industry last decade.

Your next to him was a perfect example of a complimentary.

Yes, it did give a scale, but more importantly, it kind of filled in the holes that we didnt have so it was water.

Thank the me our environmental our tier one nuclear and a whole host of other things and then as a result, it was more of a diverse offerings that gave our clients more of a one stop shop at Jacobs.

Steve Demetriou: As a result, it was more of a diverse offering that gave our clients more of a one-stop shop at Jacobs, that I would just put more in the area of value and diversity rather than scale growth.

As a result, it was more of a diverse offering that gave our clients more of a one-stop shop at Jacobs, that I would just put more in the area of value and diversity rather than scale growth.

But I would just put more in the area of value and diversity rather than a skilled group.

Thank you.

Michael Feniger: Thank you.

Our next question comes from the line of Sean Eastman from Keybanc capital markets. Your line is open.

Operator: Our next question comes from the line of Sean Eastman from KeyBanc Capital Markets. Your line is open.

Okay. Thanks for taking my questions just to continue on the last discussion topic. There around scale of course, a lot of chatter recently around consolidation in the design engineering space I just be curious to get your sense on from a competitive perspective, what the emergence of another.

Sean Eastman: Hi, team. Thanks for taking my questions. Just to continue on the last discussion topic there around scale. You know, of course, a lot of chatter recently around consolidation in the design and engineering space. I'd just be curious to get your sense on, from a competitive perspective, what the emergence of another kind of mega player through a combination would mean competitively for Jacobs? You know, would there be, you know, a potential threat there, or, you know, on, on the flip side, potential opportunities emerging?

Kind of Mega player through a combination would mean competitively for Jacobs.

There be.

Potential threat there or.

On the flip side potential opportunities emerging.

Steve Demetriou: Yeah, it really depends, again, on what that combination leads to. If it's a combination that two companies or two entities get together and there's just a lot of overlap, that'll be a positive force.

Yes, it really depends again.

On.

What that combination leads to.

It's a combination that.

Two companies are two entities get together and there's just a lot of overlap that will be a positive for us.

Sean Eastman: Mm-hmm.

Steve Demetriou: There'll be talent opportunities, there'll be disruption, there'll be culture challenges that, you know, impact those kind of acquisitions. Consolidation is also a positive from a standpoint that, you know, as industries get fewer competition, although stronger, there's positives out of that. So, you know, clearly, we're not saying that there's no threats of those type of combinations if they occur, but, you know, at the end of the day, our view is that it isn't about scale. It's about value, it's about differentiation, it's about matching that up with a culture of execution and, you know, innovation and accountability, and all the things that we've been demonstrating over the last four years.

Weve talent that opportunity still be disruption they'll be culture challenges that you know.

Back those kind of acquisitions.

Consolidation is also a positive from a standpoint.

It was industries got fewer.

Petition although stronger.

Theres positives out of that so.

Clearly, we're not saying that there's no threats of.

Those type of combinations.

They occur but at the end of the day.

Our view is that.

Isn't about scale, it's about value, it's about differentiation, it's about matching up with a culture of execution and.

Innovation and accountability and all the things that we've been demonstrated over the last four years and.

Steve Demetriou: So, you know, we'll stay close to what happens out there in the industry, but, you know, it really depends on what that looks like.

So, you know, we'll stay close to what happens out there in the industry, but, you know, it really depends on what that looks like.

So you know well, we'll stay close to what happens out there in the industry, but.

It really depends on what that.

It looks like.

Sean Eastman: Okay, that's helpful. And next one for me is just on this transition at the DOE Hanford site. It's come up a few times on the call today. I'm just curious, you know, it seems like the tanks contractor selection process has been a little more protracted than expected. And I'm just wondering, given this is the one kind of big recompute this year, how we should be thinking about this Plateau versus Tanks dynamic, and timing relative to what's built into the 2020 guidance?

Okay. That's helpful and next one for me is just on this transition at the deal you Hanford site has come up a few times on the call today.

I'm just curious it yet it seems like the tanks.

Contractor selection process has been a little more protracted than than expected and I'm. Just wondering given this is the one kind of big Recompete. This year, how we should be thinking about this plateau versus tanks dynamic.

And timing relative to what's built into the.

2020 guidance.

I think there is.

Steve Demetriou: Yeah, I think there's not a lot of risk for us over the short term in our guidance around Hanford. And for us, it's playing out so far. We'll see what the outcome is, as we expect it. As we said in our previous call, you know, we did pursue both Plateau and Tanks, but we decided to be a sub or, you know, we didn't move into the prime position in Plateau and really put all our efforts around teaming up with a great partner and pursuing Tanks, where we believe we could offer something unique and innovative to the client. And so as far as how it plays out, you know, there is uncertainty of whether it's a month away or six months away.

This is not a lot of risk for us over the short term and our guidance.

Hanford.

And I am.

Playing out so far we'll see what the what the outcome is we expect this as we said in our.

Previous calls that we did pursue bowl less so in fact.

We decided to.

So where we didn't move into the prime physician and plateauing really put all our efforts around.

Teaming up with a great partner and pursuing tanks, where we believe we can offer something unique.

Very good for the client and ER.

And so as far as how it plays out there is uncertainty or whether it's a month away or six months away and I think the where they're trying to finalize the plateau initiatives is a protest going on and that initiative that probably has stalled tax whether it's a one month stall or.

Steve Demetriou: You know, I think that they're trying to finalize the Plateau initiative. There's a protest going on in that initiative that probably has stalled tanks. Whether it's a one-month stall or, you know, something that'll be several months, we don't know, but we're not -- it's gonna be immaterial to our 2020 results.

You know, I think that they're trying to finalize the Plateau initiative. There's a protest going on in that initiative that probably has stalled tanks. Whether it's a one-month stall or, you know, something that'll be several months, we don't know, but we're not -- it's gonna be immaterial to our 2020 results.

You know something that'll be several months, we don't know, but we're not.

Going to be immaterial to our 2020 results.

Sean Eastman: Okay, very helpful. Thanks for the time.

Okay very helpful. Thanks for the time.

Our next question comes from the line of Chad Dillard from Deutsche Bank. Your line is open.

Operator: Our next question comes from the line of Chad Dillard from Deutsche Bank. Your line is open.

Hi, guys.

Operator: Hey, guys.

Chad Dillard: Hey, guys.

You know Chad.

Steve Demetriou: Hello, Chad.

Operator: So you guys talked about going after different contract types in CMS, which would ultimately drive your margins upward. I just wanted to get a little bit more color on that. Can you talk about just, you know, what different capabilities you need? Are you potentially seeing new competitors in that new landscape? And just talk about the progress thus far on achieving that.

Chad Dillard: So you guys talked about going after different contract types in CMS, which would ultimately drive your margins upward. I just wanted to get a little bit more color on that. Can you talk about just, you know, what different capabilities you need? Are you potentially seeing new competitors in that new landscape? And just talk about the progress thus far on achieving that.

So you guys talked about going after different contract types, and CMS, which would ultimately driving margins up where it I just wanted to get a little more color on that how can you talk about just what's different capabilities. We need are you potentially seeing new competitors something that new landscape.

And just talk about the progress thus far on achieving that.

Sure just before answering directly just a little bit of a backdrop.

Bob Pragada: Sure. You know, just before answering directly, just as a little bit of a backdrop, and it kind of applies to, to M&A as well, but specifically on the contract type. If you remember back in our Investor Day, this was a defined element of our strategy. And so the capabilities in order to go up the value chain, coupled with the systems and project delivery know-how on how to deliver fixed-price work, we have, and we've had for years. We're probably, you know, not as aggressive on converting what historically was cost reimbursable type work into fixed-price task orders, and now that initiative is in full force. From a competitive perspective, we're not alone.

And it kind of apply to try to M&A as well, but specifically on the contract type. If you remember back in our Investor Day. This was a defined element of our strategy and so the capabilities in order to grow up the value chain coupled with.

The systems and and project delivery know how on how to deliver fixed price work, we have and we've had for for years, we were probably you know.

Not as aggressive on converting.

Historically was cost Reimbursable type work into fixed price task orders and now that initiatives.

Is in full force from a competitive.

Perspective.

We're not alone so the competition.

Bob Pragada: So, the competition is also going down the same path. We're pretty confident that we have, you know, we have an edge in that because of the entirety of our business, even beyond CMS. Into PPS, you know, it's kind of embedded in our roots on how to deliver great projects. So, we're confident that this is something that's gonna take hold. And, like we said back in February, it's gonna be about a 12 to 24-month period for us to get that as a material part of our portfolio, but we're on the right path.

So, the competition is also going down the same path. We're pretty confident that we have, you know, we have an edge in that because of the entirety of our business, even beyond CMS. Into PPS, you know, it's kind of embedded in our roots on how to deliver great projects. So, we're confident that this is something that's gonna take hold. And, like we said back in February, it's gonna be about a 12 to 24-month period for us to get that as a material part of our portfolio, but we're on the right path.

It's also going down the same pads, we're we're pretty confident that that we have.

We have a edge in that because of the entirety of our business even beyond CMS into PPS, you know, it's kind of embedded in our roots on how to deliver great projects. So so we're confident that this is something that's going to take hold and and like we said back in February it's going to be about a 12 to 24 month period for us to get that.

As a material part of our of our portfolio, but we're on the right path.

That's helpful and just a question on the quarter I'm just in terms of the core fee cash flow the business and I'm, sorry, if I Miss you mentioned earlier.

Operator: That's helpful. And, just a question on the quarter. Just in terms of the core Free Cash Flow of the business. And I'm sorry if I missed it, you mentioned it earlier. Can you just talk about like, what that was? And then hopefully, you can bridge that to what the actual headline number was. And then, secondly, on CMS margins, I think there may have been a closeout and any possibility of quantifying that would be great. Thanks.

Chad Dillard: That's helpful. And, just a question on the quarter. Just in terms of the core Free Cash Flow of the business. And I'm sorry if I missed it, you mentioned it earlier. Can you just talk about like, what that was? And then hopefully, you can bridge that to what the actual headline number was. And then, secondly, on CMS margins, I think there may have been a closeout and any possibility of quantifying that would be great. Thanks.

Can you just talk about like what that wise and then hopefully hopefully you can you can bridge that to what the actual headline number was.

And then secondly on CMS margins I think there may have been a close out.

The possibility of quantifying that would be great. Thanks.

Kevin Berryman: We won't go into the details, but certainly, taking your second question first, the margin pickup was a chunk of the incremental benefits we had. The idea, though, as it relates to what Bob was talking about in terms of the other margin improvement initiatives, we feel are taking hold and gaining traction as it relates to the balance of the year. So that's perhaps that one. As it relates to the cash flow, cash flow was kind of in the neighborhood in Q1 of -$150 million. And there was a couple pluses and minuses in that number. So if you look at the headline number, our underlying was probably pretty close to the same number.

Well go into into the details, but certainly the the taking your your second question first to the margin pickup was was up was a chunk of the incremental benefits. We had the the idea, though as it relates to what Bob was talking about in terms of the other margin improvement in.

Initiatives, we feel are taking hold and and gaining traction as it relates to the balance of.

Of the or so that's a perhaps out one as it relates to the cash flow cash flow, it's kind of in the neighborhood in Q1 of a negative $150 million.

And and there was a couple pluses and minuses in that number. So if you look at the headline number our underlying goal is probably pretty close to the same number.

Kevin Berryman: Clearly, we had restructuring that was part of that, but we also had some benefits as it relates to ECR-related adjustments on working capital, which was a positive, and then we also had some insurance proceeds that was associated with the new EFAL matter. So at the end of the day, pretty close to being the same number. And I think that that translates into us being able to leverage off of what that underlying number is, focused on ability to deliver incremental improvements in collections, and we're feeling pretty good about the balance of the year.

Clearly, we had restructuring that was part of that, but we also had some benefits as it relates to ECR-related adjustments on working capital, which was a positive, and then we also had some insurance proceeds that was associated with the new EFAL matter. So at the end of the day, pretty close to being the same number. And I think that that translates into us being able to leverage off of what that underlying number is, focused on ability to deliver incremental improvements in collections, and we're feeling pretty good about the balance of the year.

Clearly we had restructuring that was part of that but we also had some benefits as it relates to.

LCR related adjustments on working capital, which was a positive and then we also had some insurance proceeds that was associated with a newly found matter. So at the end of the day pretty close to being the same number and and and I think that that translates into a us being able to to leverage off of.

What that underlying number is focused on ability to deliver incremental improvements and collections were feeling pretty good about the balance.

Operator: Yep. Thank you. That's all for me.

Chad Dillard: Yep. Thank you. That's all for me.

Sure.

Thank you that's all for me.

[noise]. Your last question comes from Andrew Wittmann with Baird. Your line is open.

Operator: Your last question comes from Andrew Wittman with Baird. Your line is open.

Sean Eastman: I'm gonna yield the floor. All of my questions have been asked and answered. Thank you.

Andrew Wittmann: I'm gonna yield the floor. All of my questions have been asked and answered. Thank you.

I'm going to yield the florals my questions have been asked and answered. Thank you.

Okay, and then no further questions queued up at this time.

Operator: Okay. There are no further questions queued up at this time.

Steve Demetriou: All right. Thank you. The most exciting part of where we are as a company is the momentum that we've generated by our people's belief and commitment in what we're doing and where we're headed. At the end of the day, we're a people business. To be the employer of choice in a highly competitive marketplace, genuine engagement and buy-in from our people is critical. Our focus on global challenges that are important to us as human beings, as well as important to each and every one of our clients, is a key part of that engagement and commitment. The return is visible every day through the innovative solutions we're delivering to our clients. Our people really are reinvesting tomorrow. Thank you very much.

All right. Thank you most exciting part of where we are as a company was the momentum that we've generated by our people's belief and commitment and what we're doing and where we're headed.

We ended the day, where people business to be the employer of choice in a highly competitive marketplace genuine engagement and buying from our people is critical are focused on global challenges that are important to us as human beings as well as important to each and every one of our client.

A key part of that engagement commitment returns visible everyday through the innovative solutions.

Delivering for our clients are people really are reinvesting tomorrow. Thank you very much.

This concludes today's conference call you may now disconnect.

Operator: This concludes today's conference call. You may now disconnect.

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