Q2 2024 AECOM Earnings Call

Operator: Good morning, and welcome to the AECOM second quarter 2024 conference call. I would like to inform all participants that this call is being recorded at the request of AECOM. This broadcast is the copyright property of AECOM. Any rebroadcast of this information in whole or part without the prior written permission of AECOM is prohibited.

Good morning, and welcome to the H E Com second quarter 'twenty 'twenty four conference call I would like to inform all participants. This call is being recorded at the request of AE com.

This broadcast is the copyright property of AE com any rebroadcast of this information in whole or part without the prior written permission of E. Comm is prohibited.

Operator: As a reminder, AECOM is also simulcasting this presentation with slides in the investor section at www.aecom.com. Later, we will conduct a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. And if you would like to withdraw that question, again, press star 1. Thank you. I would now like to turn the conference over to Will Gabrielski, Senior Vice President, Finance, Treasury, and Investor Relations. Will, you may begin your conference.

Reminder, AE com. It's also simulcast in this presentation with slides at the investors section at Www Dot H E. Com Dotcom later, we will conduct a question and answer session.

Speaker Change: If you would like to ask a question. Please press star one on your telephone keypad and if you would like to withdraw that question again press Star one. Thank you I would now like to turn the conference over to Wil Gabriel Ski Senior Vice President Finance Treasury and Investor Relations well.

Speaker Change: You may begin your conference.

William Gabrielski: Thank you, Operator. I'd like to direct your attention to the Safe Harbor Statement on page 1 of today's presentation. Today's discussion contains forward-looking statements about future business and financial expectations. Actual results may differ significantly from those projected in today's forward-looking statements due to various risks and uncertainties, including the risks described in our periodic reports filed with the SEC. Except as required and required by law, we undertake no obligation to update our forward-looking statements.

Speaker Change: Thank you operator, I would like to direct your attention to the Safe Harbor statement on page one of today's presentation. Today's discussion contains forward looking statements about future business and financial expectations. Actual results may differ significantly from those projected in today's forward looking statements due to various risks and uncertainties, including the risks described in our periodic reports filed with the SEC.

William Gabrielski: We use certain non-GAAP financial measures in our presentation. The appropriate GAAP reconciliations are incorporated into our materials, which are posted on our website. Growth rates are presented on a year-over-year basis unless otherwise noted.

Speaker Change: As required by law, we undertake no obligation to update our forward looking statements, we use certain non-GAAP financial measures in our presentation. The appropriate GAAP reconciliations are incorporated into our materials, which are posted to our website growth rates are presented on a year over year basis.

Speaker Change: Otherwise noted.

William Gabrielski: Any references to segment margins or segment-adjusted operating margins will reflect the performance for the Americas and international segments. When discussing revenue and revenue growth, we will refer to Net Service Revenue, or NSR, which is defined as revenue excluding pass-through revenue. NSR and backlog growth rates are presented on a constant currency basis unless otherwise noted. Today's remarks will focus on continuing operations. Our discussion excludes the results of the AECOM capital business.

Speaker Change: Any references to segment margins were segment adjusted operating margins will reflect our performance for the Americas and international segments, when discussing revenue and revenue growth. We will refer to net service revenue or MSR, which is defined as revenue excluding pass through revenue and backlog growth rates are presented on a constant currency basis, unless otherwise noted today's remarks will focus.

Speaker Change: Continuing operations are discussion excludes the results of the AECOM capital business. After the end of the second quarter, we closed the transaction that transmission capital into a new platform, while ensuring the team will continue to support <unk> com's existing investment vehicles and investments to completion during the quarter. We also incurred a noncash $103 million loss in discontinued.

William Gabrielski: After the end of the second quarter, we closed a transaction that transitioned the AECOM capital team to a new platform, while ensuring the team will continue to support AECOM's existing investment vehicles and investments through completion. During the quarter, we also incurred a non-cash $103 million loss in discontinued operations related to revisions to estimated contingent consideration receivables recognized at the time of sale of the civil construction business in 2021 On today's call, Troy Wright, our Chief Executive Officer, will review our key accomplishments, our strategy, and our outlook for the business.

Speaker Change: Operations related to revisions to estimated contingent consideration receivables recognized at the time of sale of the civil construction business in 2021.

William Gabrielski: Lara Poloni, our President, will discuss key operational successes and priorities. And Gaurav Kapoor, our Chief Financial and Operations Officer, will review our financial performance and outlook in greater detail. We will conclude with a question and answer session. With that, I will turn the call over to Troy.

Speaker Change: On today's call Troy Rudd, our Chief Executive Officer will review, our key accomplishments our strategy and our outlook for the business wire Polonia, our president will discuss key operational successes and priorities and guard before our chief financial and operations Officer will review, our financial performance and outlook in greater detail, we will conclude with a question and answer session with that.

Troy Rudd: I will turn the call over to Troy.

Troy Wright: Thank you, Will, and thank you all for joining us today. I'm pleased to report that, based on our strong second quarter and first half operational performance, we are increasing the midpoint of our adjusted EBITDA guidance for the full year. The strength of our results rests on the expertise and focus of our 52,000 professionals who have distinguished AECOM in the market. Through our TechX initiative, we continue to make key investments in the professional and technical development of our people, ensuring that we bring the best of our expertise to our clients around the world.

Troy Rudd: Thank you Bill and thank you all for joining US today I'm pleased to report that based on our strong second quarter and first half operational performance, we are increasing the midpoint of our adjusted EBITDA guidance for the full year.

Troy Rudd: The strength of our results rests on the expertise and focus of our 52000 professionals, who have distinguished 80 come in the market.

Troy Rudd: Through our <unk> initiative, we continue to make key investments in the professional and technical developments of our people ensuring that we bring the best of our expertise to our clients around the world with our unrivaled technical expertise and highly collaborative culture. We are consistently recognized as a leader in all of our markets.

Troy Wright: With our unrivaled technical expertise and highly collaborative culture, we are consistently recognized as a leader in all of our markets. To this point, I'm pleased to report that, in late April, we were recognized by E&R as the number one water consulting firm in our industry, adding to our existing leadership positions in the transportation, environment, and facilities market.

Troy Rudd: To this point I am pleased to report that in late April we were recognized by <unk> as the number one water consulting firm in our industry, adding to our existing leadership positions in the transportation environment and facilities markets.

Troy Wright: This accomplishment reflects our scale and record-level investments and growth, which have contributed to us winning work at a record high rate. This recognition also comes at an opportune time when key issues, including the impact of climate change, water scarcity, and emerging contaminants, are creating unprecedented demand and funding. The recent final EPA rule establishing maximum contaminant levels for PFAS stands as a great example.

Troy Rudd: This accomplishment reflects our scale and record level of investments in growth, which have contributed to us winning work at a record high rate.

Troy Rudd: This recognition also come the opportune time, when key issues, including the impact of climate change water scarcity and emerging contaminants are trading unprecedented demand and funding.

Troy Rudd: The recent final EPA rule, establishing maximum contaminant levels for PFS stands as a great example.

Troy Wright: This is a market where we have supported clients for more than two decades, and our backlog increased by nearly 50% during the second quarter. Now, turning to our second quarter results in more detail. Net service revenue increased by 8% and by 9% when adjusted for year-on-year fluctuations in workdays. Notably, this included strong performance in every key geography, as well as growth in the environment, water, and transportation markets. We also delivered records for our adjusted EBITDA, margins, backlog, and pipeline of opportunities, and adjusted EPS increased by 13 percent.

Troy Rudd: The market, where we have supported clients for more than two decades, and our backlog increased by nearly 50% during the second quarter.

Troy Rudd: Turning to our second quarter results in more detail.

Troy Rudd: Net service revenue increased by 8% and by 9% when adjusted for year on year fluctuations in workdays.

Troy Rudd: Notably this included strong performance in every key geography, as well as growth in the environment water and transportation end markets.

Troy Rudd: We also delivered records for our adjusted EBITDA margins backlog and pipeline of opportunities and adjusted EPS increased by 13%.

Troy Wright: Cashflow is also strong, which is a testament to the higher returns and lower risk characteristics of our professional services business. Consistently strong cash flow generation supports a returns-focused capital allocation policy, which is built on organic growth investments and returns to shareholders through repurchases and dividends.

Troy Rudd: Cash flow was also strong which is a testament to the higher returning and lower risk characteristics of our professional services business. Our consistently strong cash flow generation supports a returns focused capital allocation policy, which is built on organic growth investments and returns to shareholders through repurchases and dividends.

Troy Wright: A few key themes across the business underpin our conference. First, we are winning at near record levels, and it is clear that our competitive advantage is delivering organic market share gains. In the second quarter, we won approximately $0.50 of every dollar we bid, which marks the 10th consecutive quarter with a win rate at or nearly 50%.

Troy Rudd: A few key themes across the business underpin our confidence.

Troy Rudd: First we are winning at near record level and it is clear that our competitive advantage is delivering organic market share gains.

Troy Rudd: In the second quarter, we won approximately 50 of every dollar rebid, which marks the 10th consecutive quarter with a win rate at or nearly 50% on our large pursuits, where our competitive advantages are even greater our win rate is 30% higher.

Troy Wright: On our largest pursuits, where our competitive advantages are even greater, our win rate is 30% higher. Second, our adjusted EBITDA margin increased by 40 basis points to 15.4%, a new all-time high. Importantly, our strong margins enable us to reinvest in organic growth. Today, we are investing at record levels in business development and digital initiatives to capture a greater share of our record pipeline and compound our advantage over time. Third, the long-term megatrends of global investments in infrastructure, State Ability to Resilience, and the Energy Transition are firmly intact.

Troy Rudd: Second our adjusted EBITDA margin increased by 40 basis points to 15, 4%, a new all time high.

Troy Rudd: Importantly, our strong margins enabled us to reinvest in organic growth.

Troy Rudd: Today, we are investing at record levels and business development and digital initiatives to capture a greater share of our record pipeline and compound our advantage over time.

Third long term megatrends of global investments in infrastructure sustainability, and resilience and the energy transition are firmly intact. As a result activity is strong in all of our largest and most profitable markets.

Troy Wright: As a result, activity is strong in all of our largest and most profitable markets. For example, in the U.S., funding from the Infrastructure Investment and Jobs Act and strong federal, state, and local trends supported a 1.4 book-to-burn ratio in the quarter. In Canada, the government released a $56 billion 10-year infrastructure investment program, which is double that of the prior multi-year plan. In the UK, near-term election uncertainty has clouded the picture on larger transportation projects.

Troy Rudd: For example in the U S funding from the infrastructure investment and jobs Act and strong federal state and local trends supported a one four book to burn ratio in the quarter.

Troy Rudd: Canada. The government released a $56 billion 10 year infrastructure investment program, which is double that of the prior multiyear plan.

Troy Rudd: In the U K near term election uncertainty has clouded the picture on larger transportation projects.

Troy Wright: However, our backlog is at record levels and reflects an increasingly diverse set of opportunities. This includes the expected near doubling of funding over the next five years for the AMP-8 water program, where we have existing experience with nearly every large water utility involved. In the UK market, we also have ongoing investments through transportation frameworks and new opportunities around energy transition. And in Australia, the ongoing $120 billion infrastructure investment program is advancing.

Troy Rudd: However, our backlog is at record levels and reflects an increasingly diverse set of opportunities. This includes the expected near doubling of funding over the next five years for the App eight water program, where we have existing experience with nearly every large water utility involved.

Troy Rudd: In the UK market, we also have ongoing investments through transportation frameworks and new opportunities around energy transition.

Troy Rudd: And in Australia, the ongoing $120 billion infrastructure investment program is advancing and we are already working on several key projects that support this pipeline.

Troy Wright: And we are already working on several key projects that support this pipeline. Finally, and most importantly, our decision to build a global program management advisory business has been a game-changer. I want to expand upon why this has been the case and why we have set a longer-term ambition of delivering 50% of our revenue through program management advisory services. Our investment program management was born from an emerging need we identified in the market, resulting from a few accelerating trends.

Troy Rudd: Finally, and most importantly, our decision to build a global program management Advisory business has been a game changer.

Troy Rudd: Wanted to expand upon why this has been the case and why we have set a longer term ambition of delivering 50% of our revenue through program management Advisory services.

Troy Wright: First, project size and complexity continue to increase, including a tenfold increase over the past ten years in the number of multi-billion dollar projects in the U.S. alone. At the same time, our clients are increasingly facing internal capacity and capability constraints to deliver on their ambitious objectives, which has created more demand for technical expertise and program management consulting services to augment their in-house capability. Lastly, while plenty of companies offer a program management capability, we saw a void in that none combined this capability with the deep technical expertise and the culture of global collaboration that we have.

Troy Rudd: Our investment program management was born from an emerging need we identified in the market, resulting from a few accelerating trends.

Troy Rudd: First project size and complexity continues to increase including a 10 fold increase over the past 10 years and the number of multibillion dollar projects in the U S alone.

Troy Rudd: At the same time, our clients are increasingly facing internal capacity and capability constraints to deliver on their ambitious objectives, which has created more demand for technical expertise and program management consulting services to argument our in house capabilities.

Troy Rudd: Lastly, we're plenty of companies offer a program management capability to solve void in that non combined this capability with the deep technical expertise and the culture of global collaboration that we have.

Troy Wright: Program management advisory services also include several financial benefits to the organization, including elevating the value of our technical expertise and expanding our addressable market share of higher margin, lower risk elements of an infrastructure project or program, creating more visibility through larger multi-year winds, and elevating our role with clients, which leads to more opportunities over time. As a result, we set out to truly redefine how global program management is delivered. We invested in the best program management and digital resources in the industry, and we focused our resources on the biggest opportunities.

Troy Rudd: Program Management Advisory services also include several financial benefits to the organization, including elevating the value of our technical expertise.

Troy Rudd: Spanning our addressable market share of higher margin lower risk elements of an infrastructure project to program.

Troy Rudd: More visibility through larger multiyear wins.

Troy Rudd: And elevating our role with clients, which leads to more opportunities over time.

Troy Rudd: As a result, we set out to truly redefine how global program management is delivered.

Troy Rudd: We invested to bring on the best program management and digital resources in the industry.

Troy Rudd: And we focused our resources on the biggest opportunities.

Troy Wright: I'm pleased to report that we have over-delivered on our initial goal to double program management revenue within three years. And today, program management represents 15% of our net service revenue. In fact, we have won 15 of our last 16 large pursuits, including several defining ones. These include the FEMA PA TAC win this quarter, which further establishes AECOM as a leader for FEMA on disaster response work. We are also the program manager for California High-Speed Rail, the largest high-speed rail investment underway globally, and for the U.S. Navy on its largest environmental contract.

Troy Rudd: I am pleased to report that we have over delivered on our initial goal to double program management revenue within three years and today program management represents 15% of our net service revenue.

Troy Rudd: In fact, we have 115 of our last 16 large pursuits, including several defining wins.

Troy Rudd: These include the FEMA tack win this quarter, which further establishes <unk> as a leader for FEMA on disaster response work.

Troy Rudd: We are also the program management for California High speed rail the largest high speed rail investment underway globally and for the U S. Navy on its largest environmental contracts.

Troy Wright: Taken together, we are energized by the strength of our performance in the market, a record backlog in the pipeline, and the clear advantages created by the execution of our strategy. With that, I will turn the call over to Lara.

Troy Rudd: Taken together, we are energized by the strength of our performance.

Troy Rudd: Trends across our markets.

Troy Rudd: Our record backlog and pipeline and the clear advantages created by the execution of our strategy.

Troy Rudd: With that I will turn the call over to Laura.

Lara Poloni: Thanks Troy. I am proud of our continued strong performance. Today, not only are we winning larger and higher-value pursuits, but we are winning at a consistently higher rate than ever before. These accomplishments are the culmination of several elements of our strategy that are bearing fruit. First, the volume of investment and opportunity across our industry is at unprecedented levels. To fully capitalise on this, we have built our strategy on allocating our time and resources to our largest clients, where we see the greatest growth opportunities.

Laura: Thanks, Troy I am proud of our continued strong performance today, not only are we winning larger and higher value.

Laura: Winning at a consistently higher right than ever before.

Laura: His accomplishments are the culmination of several elements of our strategy that are bearing fruit.

Laura: The volume of investment and opportunity across our interest rate is at unprecedented levels to fully capitalized we have built our strategy on allocating our time and resources to our largest clients, where we see the greatest growth opportunities.

Lara Poloni: Reflecting this effort, revenue with our top 200 clients, who represent more than 50% of our revenue, has grown multiple times faster than the rest of the business over the past several years. Importantly, our backlog with these clients is growing even faster, which underscores the confidence we have in our growth outlook.

Laura: Reflective of this asset revenue without top 200 clients, who represent more than 50% of our revenue has grown multiple times faster than the rest of the business over the past several years.

Laura: Ultimately our backlog with these clients is growing even faster, which underscores the confidence we have in our growth outlook.

Lara Poloni: Second, through our program management business, we are elevating the value of our technical expertise within our number one ranked transportation, water, environment, and facilities businesses. As a result, we are also winning more large projects than ever before. Our share of wins valued at more than $50 million has doubled, and wins valued at greater than $100 million have tripled over the past few years.

Laura: Second through our program management business, we are elevating the value of our technical expertise within our number one ranked transportation water environment and facilities businesses. As a result, we are also winning more larger projects than ever before our share of win valued at more than $50 million has doubled and wind valued it.

Laura: And $100 million have tripled over the past few years large wins enhanced earnings visibility and capitalize on our company's global scale and industry, leading technical expertise.

Lara Poloni: Large wins enhance earnings visibility and capitalize on our company's global scale and industry-leading technical expertise. Third, our focus on technical excellence and career development is paying dividends. We have been very intentional about reinvesting to build global technical practice networks and technical academies to support our strategy and drive collaboration across the business. These programs are a key part of what we refer to as TechX, which is designed to elevate our culture through technical development programs for our teams. These investments are contributing to our low employee attrition rate, which is at levels that rival the lows we experienced even prior to the pandemic.

Laura: Third our focus on technical excellence and create development is paying dividends.

Laura: Have been very intentional about reinvesting to build global technical practice networks and technical Academy to support our strategy and drive collaboration across the business. These programs are a key part of what we refer to as take X, which is designed to elevate our culture through technical development programs for attained.

Laura: These investments are contributing to our low employee attrition, which is at levels that rival the lows, we experienced even prior to the pandemic.

Lara Poloni: Finally, our focus on high-growth end markets is contributing to our strong revenue and backlog trends. This includes the nearly 50% backlog growth for PFAS-related work this quarter, and we expect net service revenue growth to accelerate following the recent final EPA water rule. Importantly, we already hold every major environmental contract vehicle, including the key vehicles for PFAS-related work for all of the Department of Defense, NASA, and many other civilian agencies of the U.S. government.

Laura: Finally, our focus on high growth end markets is contributing to our strong revenue and backlog trends. This includes the nearly 50% backlog growth for PFS related work this quarter and we expect net service revenue growth to accelerate following the recent final EPA Volcker rule.

Laura: Fortunately, we already hold every major environmental contract vehicle, including the K vehicles. The PFS related work for all of the department of Defense NASA and many other civilian agencies of the U S. Government. This strength with further solidified with our recent selection by the U S Army for a $464 million multiple award.

Lara Poloni: This strength was further solidified with our recent selection by the U.S. Army for a $464 million multiple award contract. Our number one position in water and environmental has us well positioned to continue to capitalize. This also includes nearly 20% growth in our digital consulting practice, where our infrastructure clients are turning to our capabilities and deep knowledge of their assets to help drive automation and digitization opportunities. In addition, investments in electrification and renewable energy are driving a record pipeline of opportunities and continued growth.

Laura: Contract and number one position in water and environment has us well positioned to continue to capitalize.

Laura: This also includes nearly 20% growth in our digital consulting practice warehouse infrastructure clients attending to our capabilities and deep knowledge of their assets to help drive automation and digitization opportunities.

Laura: In addition investments in electrification and renewable energy are driving a record pipeline of opportunities and continued growth in.

Lara Poloni: In the UK alone, we have recently been selected for marquee programs, including the SCAPE Power Utilities Consultancy Framework and for the Great Grid Upgrade. On the latter, in particular, the integration of our global design centers into our offering provided a key advantage in addressing a local shortage of electrical grid design experts. We also realized some key milestones in our data center business during the quarter, including a landmark win for us in the U.S. As we look ahead, we are well positioned as these markets continue to accelerate. With that, I will turn the call over to Gaur.

Laura: The U K a line, we have recently bank related to marketing programs, including for the escape how utilities consultancy framework and for the great grade upgrade on the latter in particular, the integration of our global design centers into our offering provided a key advantage in addressing our local shortage for electrical grid design X date.

Laura: We also realized some key milestones in our data center business during the quarter, including a landmark win for us in the U S.

Laura: As we look ahead, we are well positioned as these markets continue to accelerate with that I will turn the call over to Guy.

Gaurav Kapoor: Thanks, Lara. Our second quarter and first half results extended our track record of delivering on our financial and strategic objectives. We delivered another quarter with strong net service revenue growth, and our adjusted EBITDA margin expanded to new highs. As a result, adjusted EBITDA increased by 10% to $268 million in the quarter, and adjusted EPS increased by 13% to $1.04. Turning to America's Second. Net services revenue increased by 10%.

Guy: Thanks, Laura our second quarter and first half results extended our track record of delivering on our financial and strategic objectives.

We delivered another quarter with strong net service revenue growth and our adjusted EBITDA margin expanded to new highs.

Guy: As a result, adjusted EBITDA increased by 10% to $268 million in the quarter and adjusted EPS increased by 13% to $1 <unk>.

Turning to the Americas segment.

Net services revenue increased by 10%. We also delivered strong profitability with an adjusted operating margin of 18%, which continues to be at the top of our industry.

Gaurav Kapoor: We also delivered strong profitability with an adjusting operating margin of 18%, which continues to be at the top of our... Our business development investment in the quarter was 50 basis points higher as a percentage of net revenue than what was built into our plan. Thus, we can continue to take advantage of robust pipelines for all of our end markets with record win rates in our largest, most profitable business. This is a great example of how we prioritize organic investments that drive a greater than 40% ROI and give us more confidence in our near and longer-term margin expansion objectives.

Guy: Our business development investment in the quarter was 50 basis points higher as a percentage of net revenue than what was built into our plan. So we can continue to take advantage of robust pipelines for all of our end markets with record win rates in our largest most profitable businesses.

Guy: This is a great example of how we prioritize organic investments that drive a greater than 40% ROI and give us more confidence in our near and longer term margin expansion objectives.

Gaurav Kapoor: To that point, our backlog increased to a record high, and winds and our water, environment, transportation, and markets contributed to a 1.3 book-to-burn ratio. Notably, we won FEMA's public assistance contract for disaster recovery, and our zone is amongst the most active, including the Caribbean and New York area. We also won a Landmark Rail Tunnel Replacement Contract for Amtrak's Frederick Douglas Tunnel and were selected to provide program management services for San Diego Airport's Capital Improvement Program, including the replacement and expansion of the new Terminal 1.

Guy: To that point, our backlog increased to a record high and wins in our water environment and transportation end markets contributed to a one three book to burn ratio.

Notably we won Bemis public system contract for disaster recovery and our zone is amongst the most active including the Caribbean and New York area.

Guy: We also won a landmark rail tunnel replacement contract for Amtrak's Frederick Douglass Tunnel, and we're selected to provide program management services for San Diego airports capital improvement program, including the replacement and expansion of the new terminal one.

Gaurav Kapoor: The scale and significance of these wins underscores the strength of our capability. Turning to the international segment, net services revenue increased by 6%. I should note that we had fewer working days this year as compared to last year, which impacted our growth by approximately 200 days. However, importantly, the Adjusted Operating Margin expanded by 240 basis points to 10.9%, which is a new high and reflects substantial progress on our commitment to deliver best-in-class margins in the second half. In addition, our backlog increased across all of our largest geographies, which provides for continued strong visibility

Guy: The scale and significance of these wins underscores the strength of our capabilities.

Guy: Turning to the international segment.

Guy: Net services revenue increased by 6%.

Guy: Should note that we had fewer working days this year as compared to last year, which impacted our growth by approximately 200 basis points.

Guy: Importantly, adjusted operating margin expanded by 240 basis points to 10, 9%, which is a new high end reflects substantial progress on our commitment to deliver best in class margins in this segment.

Guy: In addition, our backlog increased across all of our largest geographies, which provides for continued strong visibility.

Gaurav Kapoor: Looking ahead, demand trends across all our markets remain strong. In the Middle East, our clients are undertaking unprecedented infrastructure programs. While there have been reports of extended timelines for one element of NEOM, we do not expect this to impact our trajectory.

Guy: Looking ahead demand trends across all of our markets remained strong.

Guy: In the middle East our clients are undertaking unprecedented infrastructure programs. While there have been reports of extended timelines for one element of neon we do not expect this to impact our trajectory in fact, our head count for Neon client is at an all time high which we expect will be maintained well into the future.

Gaurav Kapoor: In fact, our headcount for neon clients is at an all-time high, which we expect will be maintained well into the future. In the UK, our revenue increase and backlog are at an all-time high, and we have built substantial positions on key frameworks that will continue to benefit us through periods of uncertainty and accelerating energy transition and water investments that Troy mentioned are not impacted by near-term political considerations. Turning to cash flow, free cash flow was $161 million in the first half of the year and enabled a return of $145 million to shareholders through repurchases and dividends.

Guy: In the U K, our revenue increase and backlog is at an all time high and we have built substantial positions on key frameworks that will continue to benefit us through periods of uncertainty and accelerating energy transition in water investments that Troy mentioned is not impacted by the near term political considerations.

Guy: Turning to cash flow.

Guy: Free cash flow was 161 million in the first half of the year and enabled the return of 145 million to shareholders through repurchases and dividends.

Gaurav Kapoor: Further, enabling a returns-focused capital allocation policy, we successfully completed a strategic amendment and extension of our credit facilities after the quarter ended. This transaction allowed us to lock in historically attractive pricing and extend the maturity of our debt. As a result of the refinance, 70% of our debt is fixed or capped, and we are operating from a position of strength and certainty on our cost of debt. Reflecting this strong financial outperformance to date, we are increasing our adjusted EBITDA guidance for fiscal 2024.

Guy: Further, enabling our returns focused capital allocation policy, we successfully completed a strategic amendment and extension of our credit facilities. After the quarter ended.

Guy: This transaction allowed us to lock in historically attractive pricing and extend the maturity of our debt as.

Guy: As a result of the refinance 70% of our debt is fixed or capped.

Guy: We are operating from a position of strength and certainty on our cost of debt.

Guy: Reflecting this strong financial outperformance to date, we are increasing our adjusted EBITDA guidance for fiscal 2024.

Gaurav Kapoor: We continue to expect strong net services revenue growth of 8-10%, a record segment adjusted operating margin of 15.6%, and 20% adjusted earnings per share growth for the full year. We also reaffirmed our expectations to convert adjusted net income to free cash flow at a rate of 100% or greater. Our tax rate in the third quarter is expected to be again in the high 20s. With that operator, we're ready for questions.

Guy: We continue to expect strong net services revenue growth of 8% to 10% a record segment adjusted operating margin of 15, 6% and 20% adjusted earnings per share growth for the full year.

Guy: We also reaffirmed our expectations to convert adjusted net income to free cash flow at a rate of 100% or greater.

Guy: Our tax rate in the third quarter is expected to be again in the high <unk>.

Speaker Change: With that operator, we're ready for questions.

Operator: Thank you. We will now begin the question and answer session. To ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again. If you are called upon to ask your question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Please limit yourself to one question and one follow-up. Your first question comes from the line of Michael Feniger with Bank of America. Please go ahead.

Speaker Change: Thank you we will now begin the question and answer session to ask a question. Please press star one on your telephone keypad raise your hand and join the queue.

Speaker Change: I would like to withdraw your question simply press Star one again.

Speaker Change: If you are called upon to ask your question and our listening via loud speaker on your device. Please pickup your handset and Im sure that your phone is not on mute when asking your question. Please.

Speaker Change: Please limit yourself to one question and one follow up your first question comes from the line of Michael Feniger with Bank of America. Please go ahead.

Michael J. Feniger: Thanks, everyone, for taking my question. I just want to start off with the Americas and the investment there. Obviously, margins came down a little bit. It's just interesting to see AECOM making business development investments at this part of the cycle. Like, what does it suggest that you guys are seeing in the pipeline? How is that informing your thoughts, really, on the growth outlook into 2025? And what's the kind of timeframe we should think about this incremental investment that's coming to business? Is this something we should expect also maybe in Q3? It's bracketed in the second half, just helping to get in front of what you guys maybe are expecting to see in terms of growth in 2025.

Michael J. Feniger: Okay. Thanks, everyone for taking my question I, just want to start off with the Americas seeing the investment there obviously margins came down a little bit is intriguing to see E com, making it as did the development investments at this part of the cycle like what does it suggest that you guys are seeing in the pipeline.

Michael J. Feniger: Any help there would be helpful.

Michael J. Feniger: How that's informing your thoughts really on the growth outlook into 2025, and what's kind of the timeframe should we think about this incremental investment that's coming the business is there something we should expect also maybe.

Michael J. Feniger: In Q3, it's bracketed in the second half just helping to get in front of what you guys were expecting to see growth was in 2025 any help there would be helpful.

Speaker Change: Alright, Thank you Michael.

Troy Wright: Thank you, Michael. Let me start by saying, um, maybe there's a different belief about where we are in the cycle. We seem to get this question, and it indicates that maybe people believe we're late in the cycle, and what we're finding is, in fact, we're not late in the cycle. We view this as we're in the beginning of some really long-term trends around investment infrastructure, and so certainly the investments in traditional infrastructure, you see the appetite for it, and you see the funding that's available.

Speaker Change: So.

Speaker Change: Let me start by saying.

Speaker Change: Maybe there is a different belief about where we are in the cycle.

Speaker Change: Seem to we.

Speaker Change: We seem to get the.

Speaker Change: Get this question and it indicates that maybe people believe we're late in the cycle.

Speaker Change: What we're finding is in fact, we're not late late in the cycle.

Speaker Change: We view this as we're in the beginning of some really long term trends around the investment in infrastructure and so certainly the investments in traditional infrastructure you see the appetite for it and you see the funding that's available.

Troy Wright: But also, there are investments in infrastructure that are just improving the sustainability and the resilience of that infrastructure. And we see that happening for a long period of time. And then, beyond that, there is a large energy transition that is taking place.

Speaker Change: But also there is investments in infrastructure that are just improving the sustainability and the resilience of that infrastructure and we see that happening for a long period of time.

Speaker Change: And then beyond that there is a large energy transition that is taking place.

Troy Wright: And I won't get into a lot of detail about it, but I will point out something like a win that we have in the UK, the UK Great Grid Project, where there's been a long-term investment in renewable energy, and now there is a very large investment being made in making sure that that energy can actually be transmitted to the communities that it will benefit. We don't really view this as we're late in the cycle. We believe we're early in the cycle.

Speaker Change: And I won't get into a lot of detail about it but I will point out something like a.

Speaker Change: A win that we have in the U K the.

Speaker Change: The UK, great grid project, where there has been a long term investment and actually in renewables and now there is a very large investment would be made in making sure that.

That energy can actually transmitted to the communities that will benefit.

Speaker Change: So.

Speaker Change: We don't really view that says we're late in the cycle. We believe we're early in the cycle and then the other things that give us confidence.

Troy Wright: And then the other thing to give us confidence is the fact that we've worked to expand our addressable market share. So by, you know, building and investing in a program management advisory business, we're actually exposing ourselves to significantly more of our customers' spend, and we think that has a long-term impact on us, and then we are winning at an outsized rate. So we believe that we're taking market share. So it's really all three of those things that line up together that give us really great confidence in the long term.

Speaker Change: Or the fact that we've worked to expand our addressable market share.

Speaker Change: By building and investing in our program management advisory business, we're actually exposing ourselves to significant more of our customers spend and we think that has a long term impact on us.

Speaker Change: And then we are winning at an outsized rate.

Speaker Change: So we believe that we're taking market share. So it's really all three of those things lining up together that give us really great confidence in the long term.

Troy Wright: And sort of in the midterm or the short term, if you want to look at it, in particular in the U.S., there's a budget that's been put in place in March, so there's funding through the year. There's money that's been put in place that will benefit the midterm when you look at the IIJA and you look at the IRA. So there certainly is funding in the U.S., and then at a state and local level, there's a lot of funding.

Speaker Change: And so in the mid term or the short term if you want to look at it in particular in the U S.

Speaker Change: A budget that's been put in place in March so theres funding through the year.

Speaker Change: There is money that's been put in place that will benefit the mid term the mid term.

Speaker Change: When you look at the <unk> and you look at the IRA. So Theres certainly is funding in the U S. And then at the state and local level. There is a lot of funding.

Troy Wright: But I also don't want to give the impression that it's the only place in the world where it's set up well and sort of the midterm for us, because when we look at Canada and the UK, and we look at Australia, there are great long-term packages that have been put in place by those governments to invest in infrastructure. And just to remind everybody, we did say that, and we continue to say this, 90% of our business is generated in those four markets. So, again, we believe that we're early in a long-term investment in infrastructure cycle.

Speaker Change: But I also don't want to give the impression that's the only place in the world, where there is set up well and sort of the mid terms for us because when we look at Canada and the U K and we look at Australia. There are great long term packages that have been put in place by those governments to invest in infrastructure and.

Just to remind everybody we did say that and we continue to say this is 90%.

Speaker Change: Our business is generated in those four markets. So again, we believe that we are.

Speaker Change: Early in a long term investment in infrastructure cycle.

Michael J. Feniger: Thanks for that. And just to ask about the free cash flow to see in the quarter, I think it was positive 74 million. Is there anything unusual going on there or not?

Speaker Change: Thanks for that and just to ask actually about the free cash flow to see in the quarter I think it was positive $74 million.

Speaker Change: Is there anything one time going on there or.

Michael J. Feniger: Is this something where AECOM is kind of starting to smooth out that free cash flow profile? And just to follow up on that, I think the first half of free cash flow is tracking above your target on the conversion rate. I'm just curious if some of the growth you guys are seeing, maybe in program management and advisory, is there a step function change where actually free cash flow can consistently track above that 100% conversion rate based on, you know, your end markets and the capital structure?

Speaker Change: Is this something where income is kind of starting to smooth out that free cash flow profile and just a follow up with that I think the first half of free cash flow is tracking above.

Speaker Change: Your your target on the conversion rates I'm just curious if some of the growth you guys are seeing maybe in program management advisory.

Speaker Change: Is there a step function change were actually free cash flow can consistently track above 100% conversion rate based on your end markets and the <unk>.

Gaurav Kapoor: If there's anything you should kind of take away from that first half performance, thanks, everyone. Yeah, hey, morning, Michael.

Speaker Change: Capital structure, if there's anything we should kind of take away from that first half performance. Thanks, everyone.

Gaurav Kapoor: Yeah, hey, morning, Michael. This is Gaurav.

Speaker Change: Yeah, Hey, good morning, Michael This is <unk> I'll take that question. So there is first and foremost there's nothing unusual in the first half cash flow, including the second cap that we've generated is consistent with what we've communicated when this management team took over the culture that we've tried to percolate and now youre seeing it in our DNA.

Gaurav Kapoor: I'll take that question. So, first and foremost, there's nothing unusual in the first half cash flow, including the second half that we've generated. It's consistent with what we communicated when this management team took over. The culture that we've tried to percolate, and now you're seeing it in our DNA, in every facet of our results, is continuous improvement. And cash flow phasing is also part of that. The second thing I would also say is in terms of what we expect and what we've committed to. Remember, our guidance is 100% plus on free cash flow, and that's consistent with what we have historically delivered.

Speaker Change: In every facet of our results as of continuous improvement.

Speaker Change: And cash flow phasing is also part of that the second thing I would also say in terms of of what we expect and what we've committed to you remember our guidance is 100% plus on free cash flow.

Speaker Change: And thats been consistent with what we have historically delivered.

Speaker Change: Okay.

Operator: Your next question comes from the line of Jamie Cook with Druis Securities. Please go ahead.

Speaker Change: Our next question comes from the line of Jamie Cook withdrew its securities. Please go ahead.

Jamie Lyn Cook: Hi, good morning, and nice quarter. I have two questions. One, you know, as you think about, you know, winning larger projects and moving the business more towards program management, can you just talk about what you're seeing in terms of like the gross margin that you're seeing in backlog? I'm just wondering if, over time, there's an opportunity for greater operating leverage in the business model as you move to some of these larger projects or more technical projects?

Jamie Lyn Cook: Hi, good morning, and nice quarter, I guess two questions.

Jamie Lyn Cook: One.

Jamie Lyn Cook: As you think about.

Jamie Lyn Cook: Winning larger projects and moving the business more towards <unk>.

Jamie Lyn Cook: Program management can you just talk to what Youre seeing in terms of like the gross margin that youre seeing in backlog I'm just wondering if over time there is an opportunity.

Jamie Lyn Cook: Yes for greater operating leverage in the business model as you move to some of these larger projects are more technical projects and then my second follow up question.

Jamie Lyn Cook: And then my second follow-up question: can you just talk about your capability in, you know, the grid T&D? It sounds like you've been winning some market share there. Maybe the market undervalues the opportunity for you guys and for utility transmission and distribution. And then wait, sorry, one last question. The 50 bips on investment, was that a pull forward, or is that incremental? You know, I'm just trying to see if he kept your guidance the same with incremental investment.

Jamie Lyn Cook: Can you just talk about your capability and.

Jamie Lyn Cook: The grid T&D it sounds like you've been winning some share there may be the market under appreciates.

The opportunity for you guys and utility transmission and distribution and then wait sorry, one last you didn't answer the last question. The 50 bps on investment was that a pull forward or is that incremental.

Jamie Lyn Cook: I'm just trying to see if you kept your guidance the same with incremental investment.

I know that was a lot, but I was out for two quarters. So I gave myself an extra one thanks.

Troy Wright: Jamie, we'll give you the benefit of the extra question. Thank you. I will take, I'll take the first one, Lara will take the second one, and Gaur will take the third one.

Jamie Lyn Cook: Jamie will give you the benefit of the extra question. Thank you.

Jamie Lyn Cook: I'll take I'll take the first one.

Jamie Lyn Cook: <unk> will take the second one in garden will take the third one.

Troy Wright: So we'll equally distribute the load. So first of all, with respect to program management, that business we actually see has very similar margins to what the rest of the design businesses had over the years. But similar to the design business, we also see the margin improving over time. The one, I guess I'll say, the one point about the program management business, as you described it, I think you made reference to leverage, which is that there certainly is leverage in that business because what we have found is that when you undertake a large program management project, over time, for various reasons, the workload will expand.

Speaker Change: Contribute to load.

Speaker Change: So first of all with respect to program management.

Speaker Change: That business, we actually see it have some very similar margins to what the rest of the design business has had.

Speaker Change: Over the years, but similar to the design business. We also see the margin improving over time.

Speaker Change: One I guess I'll say, the one point about the program management business and you described it I think you made reference to leverage which is there certainly is leveraging that business because what we have found is that when you undertake a large program management project.

Speaker Change: Tim over time for various reasons that the workload will expand and typically in those large projects. We would see change orders that would be a very significant in size and so really those projects are and when you reach the conclusion of them and deliver those outcomes, they're much larger than you had anticipated and so you saw.

Troy Wright: And typically, in those large projects, you know, we would see change orders that would be very significant in size. And so really, those projects are, when you reach the conclusion of them and deliver those outcomes, they're much larger than you had anticipated. And so you certainly have much better leverage on the investment that you made to capture and originally set up and deliver those projects. So, over a long period of time, they can end up having much better margins than we would typically see in our design process.

Speaker Change: Certainly have a much better leverage on the investments that you've made to capture and originally set up and deliver those projects. So over a long period of time. They can end up having much better margins than we would see typically in our design business.

Lara Poloni: And Jamie, with respect to the capabilities that we brought to the table with the great grid win, certainly our number one position in environment was a big factor, so environmental and energy grid design we're seeing is a particularly labor-constrained sub-market in the UK, so that the fact that we bring not just the local environmental credentials but the global leading position was a significant factor in that win, but when we look at the broader energy transition, there are many capabilities that we bring globally, so with generation we're supporting with permitting and design work, transmission and distribution we're a leading firm for consulting and broader planning services, and then of course the water component of these projects is considerable, and so our market leading position in water across all the disciplines is another key contributor to the infrastructure that's required for pumping, for any aspect of energy transition.

Speaker Change: And Jami with respect to the capabilities that we brought to the table with a great great win.

Speaker Change: Certainly our number one position in environment was a big factor side, environmental and energy grid design way, saying is particularly likely constrained.

Speaker Change: Marketing in the U K side that the fact that we bring not just the local environmental credentials that the global leading position with a significant factor in that win but when we look at the broader energy transition. There are many capabilities that we bring globally with generation waste play supporting with permitting and design work transmission distribution, we're a leading firm that can.

Speaker Change: <unk> and broader planning services and then of course, the water component of these projects is considerable and so our market leading position in water across all the disciplines is another key contributor to the the infrastructure that's required.

Speaker Change: Full pumping for any aspect of energy transition.

Lara Poloni: Morning, Jamie. This is Gaurav.

Speaker Change: Good morning, Jamie This is dara good too good to hear from you again.

Dara: I'll answer I'll respond to the margin question you asked our.

Gaurav Kapoor: Good to hear from you again. I'll answer, and I'll respond to the margin question you asked. You know, our margins in America are very healthy and robust, even at 18% of what we delivered in the quarter. They're at the top of the peer group, the public peer group.

Speaker Change: Our margins in Americas were very healthy and robust even at 18%, but we delivered in the quarter, they're at the top of the peer group public peer group.

Gaurav Kapoor: But to your specific question and what my remark was, we spent more BB than we had planned and still delivered on that 18% margin. So let me just give you a little bit more color on what I mean by that. When we set our plan and we commit to deliver on our margin targets, they're at the consolidated enterprise level. And also, when we set those plans, we always include BB growth according to the plan that we're. So, as we saw the first half play out, you know, we had the luxury of two segments in our America's and international margins that were delivering really strong margins.

Speaker Change: But to your specific question and what my remark was we spent more bebe.

Speaker Change: We had planned and still delivered on the 18% margin. So let me just give you a little bit more color.

What do I mean by that.

Speaker Change: When we set our plans and we commit to deliver on our margin targets. They are at the consolidated enterprise.

Speaker Change: Level and also when we set those plans. We always include BB growth. According to plan that we're going to spend consistent with our MSR and revenue growth.

Speaker Change: So as we saw in the first half play out.

Speaker Change: Had the luxury of two segments in our Americas and international margins that were delivering really strong margins.

Gaurav Kapoor: And, you know, the key thing I want to point out here is that we've always talked about organic investments and why we prioritize them because they deliver, you know, more than 40% ROI. And we make organic investments through our margin. This is a perfect example of that, how we assess and make those organic investments. So when we saw strong margins coming through that first half of the year in international and Americas.

Speaker Change: And the key thing I want to point out here is we've always talked about organic investments and why we prioritize them because they deliver more than 40% ROI and we make organic investments through our margin. This is a perfect example of that on how do we assess and make those organic investments.

Speaker Change: So when we saw.

Speaker Change: The strong margins coming through fat first half of the year in international in the Americas. We also saw two choice point earlier.

Speaker Change: Pipeline in our largest market in America that that record high in all of our end markets, where our win rates are at 50 plus percent and our enterprise critical pursuits, where the largest projects. It's more than 70 plus percent. So we decided to spend to take advantage of this robust pipeline, we decided to spend.

Gaurav Kapoor: We also saw, to Troy's point earlier, a pipeline in our largest market in America is at a record high in all of our end markets, where our win rates are at 50 plus percent, and our enterprise critical pursuits are the largest projects. It's more than 70 plus percent.

Gaurav Kapoor: So we decided to spend, to take advantage of this robust pipeline, we decided to spend 50 bps more in the second quarter and 40 bps more than what we had planned year-to-date in the Americas, so we can continue to deliver on margin growth into the future. It gives us more confidence, not only in the second half but as we even operate beyond FY24, on the strength of our business in terms of growth and margin delivery. Thank you so much. Also, just to clarify, sorry Jamie, there's no change in the guidance that we expect to deliver for FY24. We will be delivering on our margin commitment. Okay, I will...

Speaker Change: 50 bps more in the second quarter, and 40 bps more than what we have planned year to date in Americas. So we can continue to deliver on margin growth into the future. It provides us more confidence not only in the second half, but as we even operate beyond FY 'twenty four on the strength of our business in terms.

Speaker Change: A growth and margin delivery.

Speaker Change: Thank you. So much also just to clarify sorry, Jamie there is no change in the guidance that we expect to deliver for FY 'twenty four we will be delivering on our margin commitments.

Jamie Lyn Cook: Okay. I appreciate the time. Thanks, guys. Next quarter.

Speaker Change: Okay I appreciate the time, thanks, guys nice quarter.

Speaker Change: Thank you.

Operator: Your next question comes from the line of Sabahat Khan from RBC Capital Markets. Please go ahead.

Speaker Change: Your next question comes from the line of <unk> Khan from RBC capital markets. Please go ahead.

Sabahat Khan: Thanks and good morning. I just want to give you a little bit more color on the international side. There's obviously been a lot of margin improvement there. I guess, you know, outside of just steady, maybe progress on the international side, you know, with you having pruned a lot of your international markets, is there any kind of sizable change, you know, new end markets you might pursue? I'm just trying to get an idea of what sort of next leg of improvement on the international side could be.

Khan: Thanks, and good morning, just wanted to get a little bit more color on the international side.

Khan: There's obviously been a lot of margin improvement there I guess.

Khan: Outside of just steady maybe progress on the international side, you haven't pruned a lot of your international markets is there any kind of sizable chain.

Khan: New end markets you might pursue.

Sabahat Khan: Margins are obviously now in double digits for a few quarters now. Just trying to understand if it will look more like a mature business now or if, you know, there's any possible new strategy on that front. Thanks.

Khan: Just trying to get an idea of what sort of the next leg of improvement on the international side could be margins are obviously now in double digits for a few quarters now just trying to understand if will look more like a mature business now we're.

Speaker Change: If there is any possible new strategy on that front. Thanks.

Troy Wright: Thanks, Sabah. I'm going to, first, just take the opportunities in our international markets and talk about that, and then I'll turn over the margin question to Gar. But as we look across international markets, we see robust opportunities. And just to give you a sense of the opportunities that we have realized this quarter. Our book to burn in the UK was 1.7 times, our book to burn in Australia was 1.2 times, and our book to burn in Canada was 1.1 times.

Speaker Change: Thanks Oliver.

Speaker Change: I'm going to.

Speaker Change: First going to just take the opportunities in our international markets and talk about that and then I'll turn it over to the margin question to guard.

Speaker Change: But as.

Speaker Change: As we look across international markets, we see robust opportunities.

Speaker Change: And I'll, just just to give you a sense of the opportunities that we realized this quarter.

Speaker Change: Our book to burn in the UK was one seven times, our book to burn in Australia was one two times and our book to burn in Canada was one one times.

Troy Wright: And so that indicates that, again, we have healthy markets and we have healthy opportunities. And, as we said in prepared comments, we are actually seeing our pipeline, our global pipeline, continue to improve. In terms of what's next for us, we are still working to drive improvement or transform how we deliver our design work, and we see that continuing to create an opportunity to take more market share. We're going to continue to invest in and expand program management and advisory services.

Speaker Change: And so that indicates that again, we have healthy markets and we have healthy opportunities.

Speaker Change: And as we said in our prepared comments, we actually are seeing our pipeline our global pipeline continued to improve.

Speaker Change: In terms of what's next for us.

Speaker Change: We're still working to drive an improvement in trends from how we deliver.

Speaker Change: Our design work and we see that continuing to create an opportunity to take more market share we're going to continue to invest in and expand and program management and advisory.

Troy Wright: And in particular, we have a focus on the energy market. And so there's nothing really new that we're doing other than just continuing to advance the strategy that we set out a few years ago, which is to expand the opportunity in our design business, to grow our advisory program management business, and continue to differentiate ourselves to create a competitive advantage and continue to take market share, see that as being sort of very equally distributed and that offer being equal around the world.

Speaker Change: And in particular.

Speaker Change: We have a focus on the energy markets and so there's nothing really new that we're doing other than just continuing to advance the strategy.

Speaker Change: That we said it a few years ago, which is to expand the opportunity in our design business to grow our advisory program management business and continue to differentiate ourselves to create a competitive advantage and continue to take market share and we see that as being sort of very equally distributed in that offer being equally equal around the world.

Gaurav Kapoor: and Sabahat and Gaurav, to your question on margins in the international context, they're very healthy. But I just want to clarify, as we have done before.

Speaker Change: And so with regards to your to your question on margins in the international.

Speaker Change: They are very healthy, but I just wanted to clarify as we have done before.

Gaurav Kapoor: Our expectations of what we will be delivering on international are not the status quo. Yes, we've experienced over 200 bips of margin growth year over year, quarter over, past year quarter to this year, but our expectations and ambitions are to be best in class, just like we are in the Americas, and that's what we're marching to. So as you look to our near-term target that we've said the enterprise at a consolidated level will deliver 17%, and beyond that 17% plus margin, international is going to be a significant contributor to that margin growth through various initiatives, including the growth opportunities that Troy clearly laid out.

Speaker Change: Our expectations of what we will be delivering on international is not the status quo, yes, we've experienced over 200 bps of margin growth year over year quarter over.

Speaker Change: As in past year quarter to this year, but our expectations and ambitions are to be best in class just like we are in the Americas and that's what we're marching to so as you look to our near term target that we've set the enterprise at a consolidated level will deliver 17% and beyond that 17% plus.

Speaker Change: Margins International is going to be a significant contribution contributor of that margin growth through various initiatives, including the growth opportunities that Troy clearly laid out those are going to be very important and then when you combine that with how we use our enterprise capability centers, how we incorporate digital.

Gaurav Kapoor: Those are going to be very important, and then when you combine that with how we use our enterprise capability centers, how we incorporate digital technologies into the delivery, all of those things are going to continue to expand our margins both in the international and at enterprises.

Speaker Change: <unk> into the delivery all of those things are going to continue to expand our margins in international and enterprise level.

Sabahat Khan: Okay, great. Thanks.

Speaker Change: Okay, great. Thanks, and then just one on I guess, the larger funding packages you talked about.

Troy Wright: And then just one on, I guess, the larger funding packages. You know, you talked about some of the near-term growth and near to medium-term growth coming from the IIJ. Can you maybe talk us through which end markets you're expecting to see maybe more support from the IIJ over the next, call it, 12 to 24 months and maybe medium to longer term? We are hearing that, you know, funding probably accelerates over the next 12 to 18 months and plateaus for about three to four years. Is that directionally in line with your expectations of how the money flows as well? So maybe just a bit on the near-term and just your perspectives on how the longer-term money will come. Thanks. Yeah, so.

Speaker Change: Some of the near term growth and near to medium term growth coming from the AIG can.

Speaker Change: Can you maybe talk us through which end markets, you're expecting to see maybe more of the support from the IHA over the next call. It 12 months to 24 months and maybe medium to longer term. We are hearing that funding probably accelerates over the next 12 to 18 months and plateaus for about three to four years.

Speaker Change: Is that Directionally in line with your expectations of how the money flows as well so maybe just a bit on the near term and just your perspective on how the longer term money comes thanks.

Speaker Change: Yes.

Speaker Change: Yeah. So.

Troy Wright: Just in terms of the end markets, our end markets have been particularly strong for the last few quarters and have remained strong this quarter, and we see them remaining strong again driven by transportation, water, and the environment business. We also see increasing opportunities in energy.

Speaker Change: Just in terms of the end markets or end markets that have been particularly strong for the last few quarters.

Speaker Change: And have remained strong this quarter and we see remaining strong again, driven by transportation water and environment business. We also see increase in opportunities in energy and then.

Troy Wright: And then as we look up through the next three years, as I said, we really are optimistic about our continued opportunity to grow because while we see funding in the midterm lining up, we see some very good long-term trends, but most importantly, as I said a little bit earlier, we've expanded our exposure to our client spends on projects through program management advisory, and that is significant. And based on our win rates, we're taking market share, and we don't see that continuing to change.

Speaker Change: We look out through the next three years as I said.

Speaker Change: We really are optimistic about our continued opportunity to grow because while we see funding in the midterm lining up we see some very good long term trends, but most importantly, the settled earlier as we've expanded our exposure to our client spends on project and program management advisory and that is significant.

Speaker Change: And based on our win rates, we are taking market share and we don't see that continuing to change.

Troy Wright: As I said, the prepared comments overall for this is the 10th quarter where we've won at 50% or higher in terms of our win rates or capture rates. And on the larger programs or projects, we're winning almost two out of every three times. So that indicates that we're taking market share, and I think we've created an advantage that'll take a lot of time for others to replicate, if they can.

Speaker Change: As I said in the prepared comments.

Speaker Change: Overall for this is the 10th quarter, where we've won at 50% or higher in terms of our win rates or our capture rates and on the larger programs and projects, we're winning almost two out of every three times.

Speaker Change: So that indicates that we're taking market share and I think we've created advantage that don't take a lot of a lot of time for others to.

Speaker Change: To replicate if they can.

Speaker Change: Okay. Thank you.

Operator: Your next question comes from the line of Sangita Jain with KeyBank Capital Markets; please go ahead.

Speaker Change: Your next question comes from the line of Sanjay Jain with Keybanc capital markets. Please go ahead.

Sangita Jain: Hi. Thank you so much for taking my question. So I want to go back to an earlier question that was asked about the momentum in the business. With the strong U.S. book-to-bill, the higher business development expense, and the PFAS rulings, should all these point to a higher sustainable revenue growth rate than the 8% that you've outlined? How should we think about that?

Sangita Jain: Alright. Thank you so much for taking my question. So I wanted to go back to an earlier question that was asked on the <unk>.

Sangita Jain: Momentum in the business with the strong U S book to Bill to hire business development expense the PFS rulings.

Speaker Change: Should all of these point to them.

Speaker Change: Higher sustainable revenue growth rate than the 8% that you've outlined.

Speaker Change: How should we think about that.

Speaker Change: Okay.

Troy Wright: So again, I wouldn't think about this as, you know, long-term sustainable growth beyond the guidance that we've given this year. What we said previously is that we think this year will be a very good year for growth. We haven't commented on the future.

Speaker Change: So again I wouldn't I wouldn't think about this I wouldn't think about this is.

Speaker Change: <unk>.

Speaker Change: Our long term sustainable growth beyond the guidance that we've given this year. What we said previously is that we think this year is a very good year for growth. We haven't commented on the future and so this year our guidance has been 8% to 10% we believe that over the long term and I would say.

Troy Wright: And so this year, our guidance has been eight to 10%. We believe that over the long term, and when I say long term, we're talking multiple years, our guidance still remains between 5% and 8%, and we think that's a reflection of that. The opportunity and the investment in infrastructure, our exposure to clients' budgets, and, Frankly, that's taking market share. And so, in the long term, that's where we sit. But the other important part of this is to think about this as margin improvement because it's a combination of the two that really creates value, we think.

Speaker Change: Long term, we're talking multiple years, our guidance still remains between 5% and 8% and we think thats reflect reflection of.

Speaker Change: The opportunity and the investment in infrastructure.

Speaker Change: Our exposure to clients budgets, and frankly is taking market share and so in the long term, that's where we sit.

Speaker Change: But the other important part of this is to think about this as margin improvement because.

Speaker Change: It's a combination of the two that really we think create value because as we continue to grow. We also will continue to invest heavily in the business and in the future and at the same time expand our margins and so it really is the combination of the two that we think you should again you should think about because you can search.

Troy Wright: Because as we continue to grow, we will also continue to invest heavily in the business and in the future and, at the same time, expand our margins. And so it really is the combination of the two that we think you should, again, think about, because you can certainly have a lot of growth in a business like this, but you can do it at declining margins, and we don't think that that makes any sense.

Speaker Change: We have a lot of growth in a business like this but you can do it at declining margins and we don't think that that makes any sense.

Lara Poloni: Great. Thanks. That's helpful. And on the PFAS rules that came out recently, and you talked about your backlog built up in that, can you help us map it out in terms of revenue recognition and maybe average project size? And I also want to ask you about your destruction technology and how you're marketing that.

Speaker Change: Great. Thanks, that's helpful and on the PFS rules that came out recently and you talked about backlog build in that can you help us map. It out in terms of revenue recognition and maybe average project size and I also want to ask you about your destruction technology and how you're marketing that.

Speaker Change: Okay.

Lara Poloni: I'll take that. Thank you, Sangita. We're still very optimistic about the opportunities with PFAS, and of course, we come from the market leading position there, and we believe that what separates us from the peers at the moment is we have complete coverage going forward of the most important U.S. government contract. So, obviously, the new maximum containment level and the Hazardous Substance Designations, both meaningful catalysts for us, but we've been positioning for these sort of legislative changes for quite some time, and we've got the technical capability at global scale to mobilize it, but today it's about at 1% of our revenue, but we're optimistic that there's going to be substantial growth and NSR growth acceleration, and it has the potential to be two to three times bigger over the next few years for us.

Speaker Change: I'll take that thank you Sanjay I mean, we're still very optimistic about the opportunities with pay fast and of course, we come from the market leading position there and we believe that what separates us from the piece at the moment as we have complete coverage going forward as the most important U S government contracts.

Speaker Change: Obviously, the new maximum containment level.

Speaker Change: Thanks, and the hesitant substance designations, both meaningful catalyst for us.

Speaker Change: But we've been positioning so they sort of legislative changes for quite some time and we've got the technical capability at global scale and mobilize their pet.

Speaker Change: Today, it's about 1% of our revenue, but we're optimistic.

Speaker Change: Take that David.

Speaker Change: Going to be substantial growth and earnings growth acceleration.

Speaker Change: And then has the potential to be two to three times bigger over the next piece for us.

Gaurav Kapoor: and Sangeeta Disgar. We don't provide average contract size in this sub-discipline.

Speaker Change: We don't provide average.

Speaker Change: Contract size into the sub disciplines.

Sangita Jain: Got it. Appreciate it. Thank you. Thank you. Thank you.

Speaker Change: Got it appreciate it thank you.

Speaker Change: Thank you. Thank you.

Operator: Your next question comes from the line "Vlad" by Strictly with Citigroup. Please go ahead.

Citigroup: Your next question comes from the line of <unk> by strictly with Citigroup. Please go ahead.

Vlad: Hey, good morning, everyone. Thanks for taking my call. Um, maybe just following up on that last question around the PFAS wins, can you just talk about sort of, uh, beyond, um, the U.S. and North America, how you're seeing PFAS regulations evolve and how you're thinking about the potential for PFAS opportunities globally?

Citigroup: Hey, good morning, everyone. Thanks, Thanks for taking my call.

Citigroup: So maybe just following up on that last question on the <unk> can you just talk about sort of beyond.

Citigroup: The U S in North America, how Youre seeing peak loss.

Citigroup: Regulations evolve and how youre thinking about the potential for P cost opportunities globally.

Lara Poloni: Sure, Vlad, I'll take that. We, I mean, there are opportunities, certainly, at a global scale, and what we've seen over the last few years is, in fact, that other parts of our international operations, for example, the European regulations probably moved ahead faster than the pace that we've seen in the US, and certainly in Australia as well. They were quite advanced in terms of the maximum containment levels, and this is a team on a global scale for us that works very well globally.

Speaker Change: So I will take that.

Speaker Change: There are opportunities certainly its level scale than what we've seen over the last few years and is in fact that other parts of out.

Citigroup: International operations for example, the European rigs, probably moved ahead faster than the pace that we've seen in the U S and certainly in Australia as well.

Citigroup: Quite advanced in terms of.

Citigroup: The minimum contain maximum contaminant levels.

Citigroup: And this is a team of glass level scale for us that works.

Citigroup: Very well globally and it's not just the environmental credentials, but also a number one number one position in water. So we see substantial opportunities at global scale for both of those end markets for us.

Lara Poloni: And it's not just the environmental credentials but also our number one position in water. So we see substantial opportunities at a global scale for both of those end markets for us. And it's not just with government clients. We see substantial private sector opportunities as well. So the fact that we have complete coverage of all the government contracts is a very robust starting point, together with the key clients that we focus on in the private sector. So there are opportunities at a global scale across both the private and public sectors for us going forward.

Citigroup: Just with the government clients, we say substantial private sector opportunities as well. So the fact that we have complete coverage of all the government contracts is a very robust starting point together with the clients that we focus on in the private sector. So there are opportunities at global scale across both private and public sectors for us going forward.

Speaker Change: Okay, Great that's helpful or I appreciate it and then maybe just separately.

Lara Poloni: Great, that's helpful, Laura, I appreciate it. And then, maybe just separately, you highlighted an increase in the number of large projects over the past few years, you know, above the $100 million and above the $50 million range. And obviously, your focus on program management. So can you just talk about, you know, is there a way to think about how big these larger projects are as a portion of your overall backlog today as compared to a few years ago? And you know where you think that can go over the next few years. Yeah.

Speaker Change: You highlighted.

Speaker Change: The <unk>.

Speaker Change: Increase in the number of large projects over the past few years above the $100 million and above the $50 million range. So.

Citigroup: And obviously your focus on program management. So can you just talk about is there a way to think about.

Citigroup: How big these larger projects are as a portion of your overall backlog today as compared to a few years ago.

Citigroup: What do you think that can go to over the next few years.

Speaker Change: Yeah. So.

Troy Wright: We may have given this statistic in the past, and it's improved. What we talked about is that winds, over the size of $25 million, have increased substantially. If I go back a number of years, I think it might be 2009, I'll call it low teens is the percentage of our wins.

Speaker Change: We may have we may have given the statistic in the past and it's improved what we talked about it.

Speaker Change: Wins over the size of $25 million.

Speaker Change: Have increased substantially if I go back a number of years.

Speaker Change: I think it might be in 2019.

Speaker Change: And then the.

Speaker Change: Low load I'll call it low teens as a percentage of our wins.

Troy Wright: That's been improving, and this quarter, about one-third of our overall wins were over $25 million. So that's a very substantial increase over the course of the last four years. And as we continue to advance forward, you know, we see that remaining consistent and, most likely, continue to improve. I'll say that in terms of the.

Speaker Change: That's been improving and in this quarter, we were about one third of our overall wins for over $25 million.

Speaker Change: So that's a very substantial increase over the course of the last four years.

Speaker Change: And as we continue to advance forward, we see that remaining consistent and most likely continuing to improve I'll say that in terms of the.

Troy Wright: The size and nature of projects that are in the market and the ambitions of our clients mean that the size of the programs and projects they're taking on is very large. Again, I think we made a reference in our prepared comments to the increase in the number of programs or projects that are well over a billion dollars. So sort of when you look at a firm like us, given our scientific expertise and the expertise we have built in program management.

Speaker Change: The size and the nature of projects that are in the market and the ambitions of our clients.

Speaker Change: The size of the programs and projects that are taking on a very large again I think we made a reference in our prepared comments to the increase in the number of programs and projects that are well over $1 billion.

Speaker Change: And so sort of when you look at a firm like us given our.

Speaker Change: Scientific expertise and the expertise, we build and program management.

Troy Wright: We really are unrivaled in terms of our ability to deliver those large, complex infrastructure projects on behalf of our clients, and that puts us in a market-leading position. And the best evidence of that market-leading position, we said, is that in our last 16 large bids, which were over $25 million, we won 15. So again, when we think about the opportunity that someone with the ability that we have and the size and the scale that we have to take advantage of that, that's where you go in the marketplace, to those large, complex projects where we have the opportunity to help our clients like no one else.

Speaker Change: Really our unrivaled in terms of our ability to deliver those large complex infrastructure projects on behalf of our clients and that puts us at a market leading position and the best evidence of that market leading position. We said is that in our last 16 large bids which are over $25 million, we $1 15.

Speaker Change: Hmm.

Speaker Change: So again.

Speaker Change: When we think about the opportunity is someone with the ability that we have and the size and the scale that we have to take advantage of that Thats, where you go in the marketplace.

Speaker Change: Are those large complex projects, where we have the opportunity to help our clients like no one else.

Vlad: I appreciate that, Troy. Thanks.

Speaker Change: I appreciate that thanks.

Speaker Change: Yes.

Operator: Your next question comes from the line of Steven Fisher with UBS. Please go ahead.

Speaker Change: Your next question comes from the line of Steven Fisher with UBS. Please go ahead.

Steven Fisher: Thanks. Good morning.

Steven Fisher: Thanks. Good morning, just wanted to follow up on the business development costs I know you said that you.

Steven Fisher: Just wanted to follow up on the business development costs. I know Gaur said... You will hit the margin targets this year. How should we think about the trajectory of those business development costs, and when should we think about the margins, specifically in America, which is starting to grow again on a year-over-year basis?

Steven Fisher: You will hit the margin targets this year.

Steven Fisher: How should we think about the trajectory of those business development cost and when should we think about the margins specifically in the Americas, starting to grow again on a year over year basis.

Gaurav Kapoor: Yeah, so, Steven, in terms of the trajectory of it, what I commented on, and how you guys should look at it, is that these organic investments have historically delivered 40 plus percent ROI. And as we look at the enterprise level as to our commitment to deliver 15.6% margin for the year, if you just look at our historical phasing, including America's international segment, and apply that historical phasing to the second half, it will lead you to the same conclusion we have, which is full confidence in delivering the year's target of 15.6% margin delivery.

Speaker Change: Yeah. So.

Speaker Change: Stephen in terms of the trajectory of it.

Speaker Change: What I commented was and how you guys should look at it is these organic investments have historically delivered to US 40 plus percent ROI.

Speaker Change: And as we look at the enterprise level as to our commitment to deliver 15, 6% margin for the year. If you just look at our historical phasing, including the Americas and international segments and apply that historical phasing through the second half. It will lead you to to the same conclusion, we have which is full confidence.

Steven Fisher: In delivering the year your target of 15, 6% on margin delivery.

Steven Fisher: And does that imply within the Americas that margins will be growing year over year in the second half?

Michael Feniger: Does that imply within the Americas that the margins will be growing year over year in the second half.

Steven Fisher: Yes.

Gaurav Kapoor: Again, we manage to meet the consolidated margin targets, all right? And we're going to evaluate all the different opportunities that exist at that point in time to decide what are the best investments to make at the enterprise.

Steven Fisher: Again, we manage to the consolidated margin targets right and we're going to evaluate all the different opportunities that.

Gaurav Kapoor: That exists at that point in time to decide what are the best investments to make at the enterprise. So not only do we continue to deliver our promises for today, but we continue to deliver strength to strength as we move into the future. So I think.

Gaurav Kapoor: So, not only do we continue to deliver our promises for today, but we continue to deliver strength to strength as we move into the future. So, yeah, I think Troy said this in previous quarters too, if our margins are within each segment, 25 to 30 bps of whatever the models may state, we're comfortable with that. Again, we're focused on the overall health of the business, and the strong backlog growth that you're seeing in the market.

<unk> said this in past quarters too if our margins are within each segment, 25% to 30 bps.

Gaurav Kapoor: Whatever the models May state, we're comfortable with that again, we're focused at the overall health of the business strong backlog growth that youre seeing in the markets.

Gaurav Kapoor: These investments that we have made in the past and we're continuing to make, they're the ones leading to 1.3 book to burn in our biggest market in America, 1.7 in the UK, 1.3 in ANZ. These are great results on the back of very, very healthy NSR growth that we're delivering in our business. So again, I would kind of sway away from being very fixed and tunnel visioned into some particular segment margin target but just focus on the overall healthy growth we're delivering and expectations going forward to deliver the 17% and then 17 plus percent from there on.

Lara Poloni: These investments that we've made in the past and we're continuing to make they are the ones leading to one three book to burn in our biggest market in Americas, one seven in the UK one three of and these are great results on back of very very healthy MSR growth that we're delivering.

Gaurav Kapoor: In our in our businesses. So again I would just kind of sway away from really being very fixed from tunnel vision into some particular segment margin target, but just focus on the overall.

Gaurav Kapoor: Healthy growth, we're delivering and expectations going forward to deliver the 17% and 17% from thereon.

Steven Fisher: Fair enough. And then just in terms of the time lag between when you incur these expenditures on business development relative to when it should translate into organic growth. Yeah. Is there any particular, you know, correlation there? You know, what would be the typical time frame for seeing that translate into organic growth? Is it just within a couple of quarters or might it be longer than that given the scale of these opportunities? to save money.

Speaker Change: Fair enough and then just in terms of the time lag between when you incur these expenditures on business development relative to when it.

Steven Fisher: Should translate into organic growth is there any particular correlation there.

Steven Fisher: What would be the typical timeframe for we're seeing that translate into organic growth is it just within a couple of quarters or might it be longer than that given the scale of these opportunities.

Troy Wright: So Steve, typically, we would see it translated in a number of quarters, but as the winds become larger and larger, it does take a longer period of time for them to start and then to ramp up to scale. So, you know what typically would have been a few quarters and some of these larger programs and projects are a little bit longer than that. But of course, the benefit is that those large projects last for a very long period of time and give us visibility and certainty in the business that we haven't had in the past.

Steven Fisher: So save up typically we would see it translate in a number of quarters.

Troy Wright: As the wins become larger and larger it does take a longer period of time for them to start and then to ramp up to scale.

Troy Wright: So.

Troy Wright: What typically would have been a few quarters and some of these larger programs and projects is a little bit longer than that but of course the benefit is that.

Troy Wright: Those large projects last for a very long period of time and give us visibility.

Troy Wright: And certainty in the business that we haven't had in the past.

Speaker Change: Terrific. Thank you.

Speaker Change: Thank you. Thank you.

Operator: Your next question comes from the line of Michael Dudas with Vertical Research. Please go ahead.

Troy Wright: Your next question comes from the line of Michael Dudas with vertical research. Please go ahead.

Michael Stephan Dudas: Good morning, gentlemen, and Lara. Thank you for joining us.

Michael Stephan Dudas: Good morning, gentlemen.

Michael Stephan Dudas: I'm wondering if you good morning.

Michael Stephan Dudas: I was intrigued by a couple of your prepared remarks, one about customers and clients having less capacity to do the work that they have done in the past and relying on firms like yours more. And secondly, the enterprise value system that you have relative to engineering centers and such. How are those two dynamics going to aid not only growth and maybe your shift towards project management work but also how it impacts generating the margins that you guys are anticipating for here in the future? So,

Michael Stephan Dudas: Frozen and couple of your in your prepared remarks, one about customers and clients, having less capacity to do the work that maybe you've done in the past and relying on firms like yours more and secondly, the enterprise value.

Michael Stephan Dudas: System that you have relative to.

Michael Stephan Dudas: Engineering centers and such.

Michael Stephan Dudas: Two dynamics going to aid.

Michael Stephan Dudas: Not only the growth and maybe your shift towards project management work and secondly, how it impacts generating the margins that you guys are anticipating for sure in the future.

Troy Wright: So, just in terms of the program management business, you know, when we saw this opportunity with the significant investment in infrastructure that started years ago in infrastructure, the size of the projects and really the complexity of the projects and programs was getting to a point where it's clear that customers would need help to actually manage that. And so that created a market opportunity for us, and then coupled with, again, I'll say our design expertise, our engineering, and scientific ability, put us in a position to be the best people to provide those, again, those on our side services.

Michael Stephan Dudas: So just in terms of the program management business is when we we started this opportunity with the significant investments started years ago and infrastructure.

Troy Wright: That.

Troy Wright: The size of the projects and really the complexity of the projects and programs was getting to a point where declare that customers would need help to actually manage that.

Troy Wright: So that created a market opportunity for us and then coupled with our again I'll say our design expertise are our engineering and scientific ability.

Troy Wright: We are positioned to be the best person to provide those.

Troy Wright: Again this is on our side services. The other thing that was happening as kind of go back to the trend around COVID-19 within our customer base there were a lot of people.

Troy Wright: The other thing that was happening, to kind of go back to the trend around COVID, within our customer base, there were a lot of people that were leaving the industry, and whether that's retiring or choosing to do something different, they were leaving the industry, and that was happening on our client side. So while the demand for our clients was increasing, effectively, the supply of scientific ability and management ability to provide that help on those projects was declining, and that created a perfect opportunity for us.

Troy Wright: That were.

Troy Wright: Leaving the industry and whether that's retiring or choosing to do something different and they are leaving the industry and that was happening on our client side, so well the demand for our clients was increasing.

Troy Wright: Secondly, the supply of.

Troy Wright: The.

Troy Wright: Scientific ability and the management ability to provide that that help on those projects was declining and it created a perfect opportunity for us.

Troy Wright: And so as we go forward, again, we see this as a very robust long-term opportunity because of the marketplace, but also because we believe we have built something that, at the moment, it certainly has a competitive advantage. There are others in the market that offer that opportunity, right? They provide program management services, but they do not have the expertise that we bring, the technical expertise around engineering and construction oversight and supervision that we bring, and so it puts us in this unique position.

Troy Wright: And so as we go forward again, we see this as a very robust long term opportunity because of the marketplace, but also because we believe we built something that.

Troy Wright: So we think that the.

Troy Wright: At the moment is certainly a competitive advantage there are others in the market that offer that opportunity.

Troy Wright: City right. They provide program management services, but they do not have the expertise that we bring the technical expertise around engineering.

Troy Wright: And.

Troy Wright: Construction oversight and supervision that we bring and so it puts us in this unique position.

Speaker Change: Thank you Troy.

Speaker Change: Thank you.

Operator: Your next question comes from the line of Adam Thalhimer with Thompson Davis. Please go ahead.

Troy Wright: Your next question comes from the line of Adam Thalheimer with Thompson Davis. Please go ahead.

Adam Robert Thalhimer: Hey, good morning guys. Two questions, probably both for Lara.

Adam Robert Thalhimer: Hey, good morning, guys two questions probably both for Lora.

Lara Poloni: The Canadian Infrastructure Program you mentioned; can you, uh..., expand on the size, timing, and then which particular opportunities you guys are focused on from that? And then we said you had a landmark data center win. I was curious if you could give additional color on that and also the outlook for data.

Adam Robert Thalhimer: The Canadian infrastructure program, you mentioned can you.

Lara Poloni: Expand on like the size timing, and then which particular opportunities you guys are focused on from that.

Lara Poloni: And then the.

Lara Poloni: You said you had a landmark data center when I was curious if you could give additional color on that and also the outlook for data centers.

Lara Poloni: Thanks for the question Adam. So we've been talking about Canada for a few quarters now, and it is one of our core international markets for us where we are very strong across all of the key segments of our business. We know that the Canadian federal government has been talking about doubling their funding for infrastructure over the next 10 years, so a very robust long-term pipeline for infrastructure projects, for rail, for water.

Speaker Change: Sure. Thanks for the question Adam So we've been talking about Canada for a few quarters now and it is one of our core international.

Lara Poloni: Markets for Us, where we have very strong.

Lara Poloni: Capability across all of the key segments of our business, we know that the Canadian Federal government has seen.

Lara Poloni: Talking about doubling the funding for infrastructure over the next 10 years, so a very robust long term pipeline for infrastructure projects.

Lara Poloni: Rail for water asked because your wins over the last couple of ethane in transit and also in water. So we've got very strong long term coverage of those segments in particular.

Lara Poloni: Our signature wins over the last couple of years have been in transit and also in water, so we've got very strong long-term coverage of those segments in particular. And I think Troy mentioned a book to burn this quarter of 1.6, so very strong from a backlog position and a long-term visibility point of view as well.

Lara Poloni: And I think Troy mentioned a booked it then this quarter of one six so.

Lara Poloni: Good very strong from a backlog position and our long term visibility point of view as well. So we expect the long term infrastructure out looking in Canada to remain very strong with respect to your question about data centers, we have at global scale coverage and.

Adam Robert Thalhimer: So we expect the long-term infrastructure outlook in Canada to remain very strong. With respect to your question about data centers, we have global coverage and a long-term relationship with all of the major hyperscalers, and the win in the quarter was a data center win with one of those clients here in the US. And I think the long-term positioning, again, our key client program, includes that segment of the facilities business as well, and all parts of the business are engaged in those opportunities, be it the building engineering, or the environmental teams doing the due diligence of sites for data centers.

Adam Robert Thalhimer: And long term relationship with all of the major heart Skyler.

Adam Robert Thalhimer: And the win in the quarter was a data center.

Adam Robert Thalhimer: Win with one of the highest client here.

Adam Robert Thalhimer: And here in the U S and.

Adam Robert Thalhimer: I think the long term positioning again, our key client program. It includes that segment.

Adam Robert Thalhimer: The facilities business as well.

Adam Robert Thalhimer: And all parts of the business are engaged and nice opportunity.

Adam Robert Thalhimer: Building engineering, the environmental teams doing the due diligence aside for Datacenters. We know is that there's a hungry appetite for more of these data centers to be built not just here in the U S, but across the world. So it's certainly a segment that we have a lot of optimism about.

Adam Robert Thalhimer: We know that there is a hungry appetite for more of these data centers to be built, not just here in the US but across the world, so it's certainly a segment that we have a lot of optimism about.

Lara Poloni: And then do you guys get a sense for, or do you have a sense for, I get a lot of questions about what are the limiting factors for data center growth, so power and permitting, those kinds of issues. Are you seeing that as a limiting factor for your growth in data centers, or is that maybe two years from now?

Adam Robert Thalhimer: And then do you guys get a.

Lara Poloni: You have a sense for I get a lot of questions about what are the limiting factors for data center growth power and permitting.

Lara Poloni: Those kinds of issues and I'm seeing that as a limiting factor like for your growth in data centers or is that maybe two years from now.

Adam Robert Thalhimer: We see, I mean, all of the service coverage that we have creates massive opportunities, to be frank. So we can assist not just with the electrical supply. I mean, often it's the power supply and the supporting infrastructure that is a limiting factor for many of our clients, but that's why they come to us. I mean from the very beginning in terms of site selection and giving them a lot of options through the work that our permitting and land use planning teams do to the transportation access for the fulfilment and logistics centers as well, so again, I think we're well placed.

Lara Poloni: We see that all of the service coverage that we have put to create massive opportunity to be Frank side. We.

Adam Robert Thalhimer: We can it's not just with the electrical supply often it's a pallet supply and the supporting infrastructure that is a limiting factor for many of our funds, but that's why they come to us from the very beginning intend to site selection and giving them a lot of options through the work that our permitting and land use planning teams due to the transportation access.

Adam Robert Thalhimer: For the fulfillment and logistics centers as well so again I think we're well placed.

Adam Robert Thalhimer: And our global scale again is the other factor why we're winning what matters in this segment as well. So these are global clients, and they want full service capability and that global reach, so it's a significant opportunity for us and really plays to our strengths.

Adam Robert Thalhimer: And that level scale again is the other factor why were winning what matters in this segment as well. So these are global clients and they want full service capability.

Adam Robert Thalhimer: And that global rates.

Adam Robert Thalhimer: It's a significant opportunity for us and really play to our strength.

Lara Poloni: Good answer. Thanks, Lara.

Speaker Change: Good answer thanks, Laura.

Lara Poloni: Thank you.

Troy Wright: That concludes our question and answer session. I will now turn the conference over to Chief Executive Officer Tory Rudd for closing remarks.

Lara Poloni: That concludes our question and answer session I will now turn the conference over to Chief Executive Officer, Troy Rod for closing remarks.

Troy Wright: Thank you, Operator. And I'd like to end the call by thanking our teams for a very strong start to the year. We are winning more work than we have ever won before and continuing to expand our margins. And we're growing at a very high rate. And I would like to congratulate our teams, again, for being recognized by ENR as the number one water consulting firm. And again, adding to our positions as leaders in transportation, environment, and facilities. Well done!

Tory Rudd: Thank you operator.

Tory Rudd: And I'd like to hand, the call by thanking our teams for.

Troy Wright: For a very strong start to the year.

Troy Wright: We are winning more work than we have ever won before continuing to expand our margins and we're growing at a very high rate and I would like to congratulate our teams again.

Troy Wright: For being recognized DNR as the number one.

Troy Wright: Water consulting firm and again, adding to our positions as the leader in transportation environment and facilities well done.

Speaker Change: Thank you very much.

Operator: This concludes today's conference call. Thank you for your participation, and you may now disconnect.

Speaker Change: This concludes today's conference call. Thank you for your participation and you may now disconnect.

Unnamed: [inaudible]

Unnamed: [music].

Unnamed: Yes.

Unnamed: Okay.

Unnamed: Yes.

Unnamed: [music].

Unnamed: Yes.

Unnamed: Yes.

Unnamed: [music].

Unnamed: Yes.

Unnamed: Okay.

Unnamed: Okay.

Unnamed: [music].

Unnamed: Okay.

Unnamed: [music].

Unnamed: Thanks.

Unnamed: Yeah.

Unnamed: Yes.

Unnamed: [music].

Unnamed: Okay.

Unnamed: [music].

Unnamed: Okay.