Aecom (ACM) Q4 2013 Earnings Report, Transcript and Summary

Good morning, and welcome to the AECOM Fourth Quarter 2013 Earnings Conference Call. I'd like to inform all participants that this call is being recorded at the request of AECOM. This broadcast is the copyrighted property of AECOM. Any rebroadcast of this information in whole or part without the prior written permission of AECOM is prohibited. As a reminder, AECOM is also simulcasting this presentation with slides at the Investor section at www.aecom.com. Later, we'll conduct a question-and-answer session. Now I'd like to turn the call over to Lynn Antipas Tyson, Senior Vice President, Investor Relations.

Thank you, operator. Good morning. I'd like to remind everyone that today's discussion contains forward-looking statements based on the environment as we see it today and, as such, does include risks and uncertainties. Our actual results might differ materially from those projected in those forward-looking statements. Please refer to our press release or Page 2 of our earnings presentation and to our reports filed with the SEC for more information on the specific risk factors that could cause actual results to differ materially. Note that we are using certain non-GAAP financial measures as references in the presentation. The appropriate GAAP financial reconciliations are posted on our website. Please also note that all year-over-year references to progress or versus adjusted numbers for fiscal 2012 and unless otherwise mentioned, all percentages refer to year-over-year progress. Before we get started, I wanted note to that as part of our Investor Relations outreach, we will hold our annual Analyst Meeting here in New York City on Tuesday, December 17, starting at 5:30 p.m. Similar to last year, prior to the meeting, we will offer a tour of an iconic AECOM project. Details will be sent out shortly. The meeting will be webcast and a copy of the presentation transcript will posted on the Investor Relations portion of our website. Beginning today's presentation is John Dionisio, Chairman and Chief Executive Officer. John?

Thank you, Lynn. Good morning, everyone, and thank you for joining us today. With me are Mike Burke, our President; and Steve Kadenacy, our Chief Financial Officer. Please turn to Slide 4. Our quarter end full year results demonstrate the progress we've made to advance towards our long-term financial and operational goals, while strengthening our competitive position. We achieved this despite macroeconomic challenges in certain areas of our business. Our unique operating model of diverse business lines and broad geographic reach is a critical factor in our success. We ended the year with $16.6 billion in backlog, up 3%, with gains in all of our PTS end markets. Our niche acquisitions in Southeast Asia, Eastern Europe and Africa contributed positively to our results and support our goal to increase our mix of revenue and profit from key emerging geographies. We made organic investments to enhance our technical and leadership capabilities in high-growth end markets and sectors, consistent with our target to increase our mix of higher-margin technical and construction services. And we enhanced our key account management program to support our goal to grow our business with top private and multinational clients. Our careful management of our operations allowed us to deliver healthy margins in spite of lower net service revenue and is the client and profit contribution from Australia. Our margin performance underscores the resiliency of our business model, supported by the broad span of our global footprint and portfolio of services. Lastly, we delivered on our commitment to improve cash conversion and deploy capital to high-return investments. During the year, we generated $356 million in free cash flow or 147% of net income, which yielded $3.50 per share in free cash flow. We also invested $373 million to repurchase our stock. Turning to guidance for fiscal 2014. We have set an earnings per share range of $2.35 to $2.45. This forecast reflects strong gains in our growth markets, which we expect to be offset by continued challenges in Australia, as well as expectations for our grossly flat growth in our Americas region. During our prepared comments, Steve, Mike and I will focus on how the actions we took in fiscal 2013, to advance forward our long-term goals, including organic growth, strengthening our competitive position, as we head into fiscal 2014. Now let me turn the call over to Steve. Steve?

Thanks, John. Please turn to Slide 5. In the quarter, we continue to execute on our productivity initiatives, which allowed us to deliver improved operating margins in both our segments. In addition, our free cash flow conversion remain strong. Gross revenue was flat, while net service revenue was down 7.2% to $1.2 billion. These declines were primarily driven by Australia, the Americas and our MSS segment. New wins in backlog remain healthy. As we've mentioned throughout the year, the time to convert backlog to NSR has lengthened. Part of this is driven by the favorable mix shift to our higher-margin construction services business and the increased number of design-build and alternative delivery projects, which have a longer average lifecycle. And part of the lengthening is driven by a more cautious approach to our clients -- by our clients to project starts in the Americas. Backlog of $16.6 billion was up 3% year-over-year and down 1.4% sequentially. Operating margin of 9.9% was down 35 basis points year-over-year and up 81 basis points sequentially. Our tax rate for the quarter was 31.8% and EPS was $0.77. Our earnings and cash flow improved consistently as we progressed throughout the year. Given the economic conditions we've faced, the resiliency of our diversified business model enabled improving margins and strong cash flow. Please turn to Slide 7. Looking at PTS. Gross revenue was up 2%, while net service revenue was down 5.8%. Net service revenue was up double-digits in the Middle East and Asia and we also delivered solid growth in Europe and in construction services. This growth was offset by declines in the Americas and Australia. Excluding Australia, NSR was up 2%. Operating profit was down, however, margins increased on both a sequential and a year-over-year basis, aided by improved cost and efficiencies. In…

Thank you, Steve. Please turn to Slide 13. Heading into fiscal 2014, it's appropriate to revisit the key trends that are shaping our industry and how, against this backdrop, we are making investments to strengthen our competitive position. A pivotal trend is the shift in how our clients are buying services. Increasingly, clients want to partner with firms that can deliver end-to-end, integrated service solutions anywhere in the world. Clients are looking for multiple service line offerings from design and engineering to project and construction management. In some cases, they are also looking for financial partners. As a result, integrated delivery capabilities such as design-build and EPCM are critical and the ability to deliver these capabilities globally is a competitive advantage. There are few companies poised to deliver diverse services across so many end markets and even fewer with a global reach to perform seamlessly around the world. Our diversification strategy has positioned us in over 140 countries and our investments have given us one of the most diversified service portfolios in the industry. Our current investments are designed to continue this success. Every organic investment and acquisition we make is targeted to strengthen our competitive advantage by either adding to the portfolio of services we offer or expanding our geographic reach. In some cases, an investment can accomplish both. Let me share with you a few investment highlights from this year. Please turn to Page 14. First, our acquisitions have enhanced our ability to deliver construction projects in both the program management and construction management space. The demand we are seeing for delivery skills is quite strong and we are taking steps to meet the demand. Over the last year, we have won over $2 billion in construction management work, which we would not have been in a position…

Thank you, Mike. Our technical expertise, commitment to our clients and global reach enable AECOM to conceive, manage and support some of the most complex projects in the world. As I review our performance by geography, I want to highlight projects that are emblematic of our end market strength and expertise, particularly those where we harnessed our capabilities across geographies and business lines. Please turn to Slide 16. Let's start in the Americas. During the year, the region accounted for 60% of gross revenue and 49% of net service revenue. The region delivered $5.7 billion in gross revenue wins, up 3%, aided by a 9% increase in construction services. Net service revenue wins in our design business were up 6% for the year, supported by growth in our facilities and civil infrastructure end markets, especially energy and also transportation where we captured $1 billion in new wins. Our strategy in our largest-developed market is to continue to focus on our core strength in civil infrastructure, as well as capitalize on new growth opportunities. In energy, for instance, wins were up 23%, a prime example of our sharpened focused in our core end markets in a recent win to provide a broad range of services, including overall project management, engineering design, construction oversight and environmental assessment for a new $1 billion transmission line project in Northwest Ontario. Turning to Europe, the Middle East and Africa. This region was a real success story for us this year, with a 12% increase in net service revenue, a 19% increase in backlog and a 24% increase in wins, supported by growth in every major end market and geography. We expect this type of performance to continue in fiscal 2014, supported by a strong management team, abundant market opportunities and solid client relationships. In addition,…

[Operator Instructions] We have a question from Tahira Afzal from KeyBanc Capital Markets.

I guess, my first question is, in Australia, you really started around a year back in terms of resizing. And I just wanted to get a sense, has it gotten progressively worse as you've gone through the year to resize and, hence, 2014 looks challenging? And, really, has there been an outlook change in Australia for the worst from the beginning of this year to where we are now?

Well, as we mentioned to you 2 quarters ago, the market in Australia was major -- had a major impact of the shutdown of their mining business. And with that, that affected all our end markets. The government didn't have the money to spend on some of their capital programs, private investments were uncomfortable with the marketplace and, also, they were in the middle of a major administrative change with the new government. We took out about 1,500 people. We incurred about $20 million in restructuring costs and we rightsized the company in terms of the workload they have. We maintained some of the staff to complete projects, which ended at the end of fiscal '13, which will now have to be excessed as we go into '14. But with that, with this next round of reductions, we feel we have the right structure. And now looking at '14, what we see is the capitalization or the capitalizing on the infrastructure stimulus program which the new government is putting in place. They realized that they need to do something to spur the economy and they're going to have a stimulus program, not too much different than we had here in the United States several years back, which will focus on the infrastructure spending. We're also seeing an increase in alternative delivery and private investments into the -- in the country. And we feel that we will, by the end of 2014, have totally rightsized the company. We're hoping to be profitable in 2014. And this is not too much different than what we encountered when we restructured our European operation. And now, this year, Europe was significantly profitable. So there are significant opportunities ahead and that doesn't mean there's not some headwinds that we have to continue to focus on. But, overall, we believe we've taken the right steps to restructure the organization to ensure that it is profitable.

Got it. Okay. And then, I guess your 2014 guidance seems a little more back-end loaded. And I know, beginning of last year, fiscal year -- or rather this outgoing fiscal year, you did have some restructuring costs that were front-end loaded. So I'm a little surprised on why it's a little more back-end loaded. And then, you do have your rent expense and global procurement consolidation contributing positively to 2015 margins. So as you look out directionally, do you see progressively this margin profile, in general, improving just on the backlog of large projects you have that, I assume, on deferred recognition or slow recognition in the early phases and so you don't really need much revenue growth as you exit 2014?

Yes.

I'll have Steve answer that question.

With the -- many questions there. But the first part, I think the answer to all those questions involves Australia, Tahira. So the first part of FY '14, we're going to see continued restructuring in Australia. We progressed in Australia throughout FY '13. It became more profitable all year long and it was profitable in FY '13. We expect the same in FY '14, but because we burned off some of our contracted backlog in Australia in FY '13 and didn't replace as fast as we needed to, we still have some restructuring to do and we're going to take those steps. So John mentioned the $18 million to $20 million in FY '13. FY '14 will bring another $12 million to $15 million of restructuring costs, mostly in the first quarter, Tahira. So that's kind of the reason for our initial lower percentage of full year earnings in Q1. So the second part of your question is really what's going on with our margins? Are we still comfortable? We are underlying all of this as we are comfortable with our margins. If you take out Australia, we improved on an operating income margin basis in both our segments and that's really a reflection of underlying utilization improvements, the real estate savings that we've talked about for quite some time, the introduction of our e-procurement system and other activities that we're taking action on. And your conclusion then if revenue comes back and our earnings guidance at the midpoint assumes no growth, if that growth comes back, it falls to the bottom line much faster than in years past. So we are optimistic in that regard as well.

The next question comes from Andrew Kaplowitz from Barclays Capital.

Steve, can I follow up on Tahira's question in the sense that you're doing -- you said you're going to do $12 million to $15 million of restructuring versus the $18 million to $20 million you did this year. That still assumes that margins are not going anywhere in '14 versus '13. Is it pricing that's becoming more difficult? Do you have a mix issue where North America is not growing and that's a higher-margin business? I'm just trying to understand why your -- at the middle of your range, your margin guidance wouldn't be up a little bit?

Well, we're forecasting flat, Andy. And really, we're looking at some of the same challenges that we had in FY '13 and FY '14 and hoping that during the year that, that growth will come back and bring our margins. But going into the year, we see Australia being flat, we see the Americas being flat, but with some promise of upside in the back half and we see GSG flat. So you kind of combine those things and, overall, I think at this point in the year, we're comfortable with flat margins. If growth comes back, our margins are going to be better.

But your cost basis, Stephen, in '14 should be less than your cost basis in '13, correct? In terms of what you've been able to do so far in cost-cutting?

Well, I think that the cost-cutting is in there. But we're not getting the revenue growth that we need to let it drop to the bottom line.

Okay. Then that's fine. Let me ask you about MSS margins in the quarter. You had a goal for the year of doubling MSS operating profits and this quarter was a little bit of a setback. So you've had some execution issues in the past but we know that there's, obviously, uncertainty with the federal government. It was a tough quarter for all the guys that we follow for -- in terms of federal exposure. So maybe you can talk to us about what happened in MSS this quarter and what you see going forward?

Yes. Andy, let me take that one. First of all, we had a dramatic recovery in the MSS segment in FY '13 over FY '12. Our operating income was up 50%. Our margins were up 284 basis points year-over-year. And we're continuing to expect those higher margins in FY '14. However, in the fourth quarter, we had 2 government contracting issues that were unrelated to project performance. Our project performance continues to perform according to expectations. But we had 2 government contracting issues in Q4 where the government raised questions on those contracts. And as we have always done, we took the conservative position and established to reserve for those 2 contracts. Now, as you know, Andy, because you've been following us for a while, historically, we've had a very positive outcomes to government contracting disputes and any favorable outcome to that dispute is an upside in '14, if it's resolved in '14. And to give you an example, you remember the CSA contract, going back a little over a year ago, we told you we had $100 million-plus, almost $120 million that CSA was holding back from us as a disputed item. It took us years to get through that. We received another $48 million on the CSA contract in Q4. So out of that $120 million they owed us, we still have about $8 million left to collect. But working through these government contracting disputes, it's laborious, it's painful, but we've got a pretty good track record of it. But it's those 2 contracts that contributed to the Q4 performance. But, again, those -- that shortfall is not related to project performance. We're performing well. We are significantly shifting our mix away from the higher-volume, low-margin work in MSS, much more towards the higher-margin work that is turning away from the war effort. And so, all in all, we're very pleased with the progress of the business.

And Mike, do you think with that reserve, you've sort of solved the disagreement with the government customer, correct?

Well, no, we have not solved the disagreement. That's why we have put up a reserve.

No, I understand. But like, that takes care of -- that's why you think your liability is there, correct?

As I said, we always take a very conservative position when we're notified of the government of a dispute. And I'd rather -- we'd rather be surprising to the upside than the downside.

I appreciate that. And then can you quantify that for us, the reserve, or no?

It's -- as you can see, we had a shortfall according to our expectation. What we have previously said, we were going to have an operating income for the quarter in that segment. And the entirety of that shortfall is due to the establishment of reserves.

The next question comes from Steven Fisher from UBS.

Just a housekeeping to start off. Can you just give us what the professional services organic NSR growth was year-over-year? I think it was 8% decline in the fiscal third quarter, wondering what that was in the fourth quarter?

PTS at constant currency was down 6.7%.

Okay. And then maybe this is for John. I guess, what do you think, at this point, is standing in the way of growth in the Americas? Is it mainly the federal business? Or is it more broad than that? I mean, I know you mentioned some of the better-growing areas in your comments. But just really curious, what's standing in the way of North American growth at this point?

I think what we're finding, I mean, we look at the wins in the backlog, which is strong, and throughout '13, we've had a -- just a sluggishness in getting projects started, things that, as I used to say, things that would take 6 months to -- from the time you win to when you could start booking it. They're taking a year. Clients are telling us the events take longer. It's really the -- what we see in the Americas and this goes through, I guess, all our end markets, is the scaling back of public financing while the private side is increasing. And so that is -- that's caused some uneasiness in the marketplace. The good news is that there are certain markets that are really starting to gel. Here in New York, I mean, the construction industry in New York is at the same levels it was when it was an all-time high in 2008. They're increasing residential, non-residential and private investments. That's balancing -- that's counteracting the reduction in public side. The other thing is Congress, the Senate and the House, passed a Water Resources Development Act, which is a $10 billion financing program, which could provide some public, private partnership work. That makes a major advancement since we've been looking for that for quite some time. They're starting to think about the reauthorization of the highway bill. That's a plus. And then after they do that, they have, on the table, about a $63 billion FAA bill. And all of that -- now they're looking at some tax reforms, which will provide -- which will encourage state and local governments to initiate -- to get involved in more private financing of infrastructure. So it's a -- what we've seen in the past is the sluggishness of -- on the public side. But on a positive note, the increase in the private side. And with that is driving some of the construction markets around the United States, in the big cities, L.A., New York, Chicago, Miami. So looking forward, I think here in the United States -- and then also let's not forget the energy side of the business, which transit and freight rail, which is being driven by the shale market in Canada or in the West. So there are a lot of good things that are occurring and I believe when we look at our business, we are more bullish about FY '14 at this time, than we were in FY '13 at this time.

That's very helpful. And then, Steve, in terms of cost reductions, should we see that more on your segment margins or in the overall G&A number? I mean, it looks like the G&A is running around $24 million a quarter. I was just wondering, should that go down in fiscal '14?

You should see it in our OI margins because we forecast -- I mean, we reclassed our SG&A almost entirely to our cost of sales. So you see most of our real estate savings, our procurement savings within the segments. Our G&A, because it roughly models flat to FY '13.

Before we go on to the next question, I want to make a correction to something I said earlier. I said that we received that last payment from CSA of $48 million in Q4. Actually, it came in after the cutoff. It came in last month. So that will be reflected in our Q1 of '14.

The next question comes from Andrew Wittmann from Baird. Andrew J. Wittmann - Robert W. Baird & Co. Incorporated, Research Division: And some -- to my questions, I wanted to dig into those cash flows a little bit more. First of all, just a kind of an update, was there any factoring positively or negatively in the quarter, Steve?

We did factor in the quarter a net basis. It was only $100,000. On a gross basis, it was about $70 million. Andrew J. Wittmann - Robert W. Baird & Co. Incorporated, Research Division: Got it. And did you find -- it sounds like there was some greater scrutiny on this MSS contract. Is it fair to say, kind of more broadly, that the government collections are more difficult? And do you -- have you scrubbed the portfolio of government work for other potential challenges that might come and also might have to be written down later? I just want to understand where we are and if this is going to be a lingering problem as we move into next year?

Yes, let me take that question as it relates to the government contracts and Steve could take it more broadly. We have, for some time now, have seen the government slowing down payments and putting up more obstacles to payments. But the fact is, that in our MSS segment, our DSOs are down 10 days year-over-year. So we are making improvements in our collections in MSS but against a difficult backdrop. But you have 2 challenges. One is that the government is more closely reviewing contracts before they make final payment, so that slows it down a bit. But our outcomes have ultimately been successful in collecting the money from the government. And then when you have work stoppages and furloughs on the government side, the people that they lay off first are the people that pay the bills. And so that has slowed down a bit. But the bottom line is, our DSOs are down 10 days in MSS year-over-year. Andrew J. Wittmann - Robert W. Baird & Co. Incorporated, Research Division: Got it. Actually, just building on MSS there, Mike, this year was pretty helpful given the lumpiness of that segment from where we said. The fact you already say, we're going to double it this year, like gave us pretty good visibility as to what to expect. As we move into '14, I'm kind of curious as to how you think we should be thinking about that business specifically? Are the JV contributions higher or lower in the fourth quarter here with the write-down? I'm trying to establish, really, just kind of a run rate of operating income as we should be thinking about it as we move here into '14? Any help would be appreciated here.

Yes. Sure. I think they're starting off on a macro perspective, The way to think about that business is the bottom line, EBIT line it's relatively flat year-over-year. However, the mix shift will continue to head in the same direction that it has been heading. We are repositioning that business away from the high-volume, low-margin work that has primarily been a Department of Defense related work overseas and we're repositioning that into lower-volume, higher-margin work here in the U.S. So our margins, operating income margins, have continued to improve in that segment. They will continue to improve in FY '14, but you'll see the revenue coming down as we move away from the higher-volume, low-margin work. So if you're trying to get a better vision on MSS in '14, you should think about it as a flattish business on the EBIT line, lower on the revenue line, higher on the margin line, the 40%. Andrew J. Wittmann - Robert W. Baird & Co. Incorporated, Research Division: Yes. Great. That's really helpful. And maybe just one final question to John. The return of capital program has been, clearly, I think, successful, especially when you're buying stock in the low-20s. Stock clearly moved past that. Stock has been in the 30-range here. I'm just kind of curious as when you think about your return of capital commitments, is the potential for a special dividend being contemplated? And how does that reconcile versus your incentive compensation plan, which really incentivizes earnings per share and free cash flow per share metrics? In other words, is there -- now that the stock has moved a little bit, is the special dividend more in the consideration sample set from the board's perspective?

Well, you're asking me? Our incentive compensation plan, both the short-term and long-term, for all our senior executives, we compensate people on an earnings per share and also on a cash earnings per share. So it's tied into very specific KPIs. We've spoken about dividends, M&As and repurchasing over the past 24 months and when the stock was down at -- in the range of $20 a share and coming to a certain point and that point could be in the 30s, that if you -- it's in our best interest because the value of our stock versus an acquisition that we focus on repurchasing our shares. And we've done that over the past 1.5 years. As we look forward and depending upon the stock price, we're going to get into a range where it might be breakeven to either buy stocks back or to make investments for the future through M&As, both niche acquisitions and some significant acquisitions. And then, we thought of -- in a range of maybe up to 30s, that, that would be -- it makes sense then to provide a special dividend for our shareholders. And that's how we're thinking about it. Right now, we're not in that range that we think about the dividend and we're looking at share repurchases and M&As. And I think we -- and over the past, we've articulated that in our various meetings, of what our game plan would be.

[Operator Instructions] We have a question from Sameer Rathod from Macquarie.

Just -- perhaps you already answered this, but I know that previously, you've commented on receivables and selling receivables to generate cash. How much was that in the quarter?

As I have mentioned on the last question, on a net basis, it was $100,000.

Okay. Perfect. Second, I guess, looking at your definition of free cash flow, is there a reason why you're not including net distributions to non-controlling interest as part of the definition? It seems like if you have joint ventures, the drag on cash would be an ongoing basis.

We've been with the -- just the operating cash minus CapEx for quite some time now. It's how we look at it.

But, I mean, analytically, wouldn't distributions to non-controlling interest also be an ongoing thing, core to your business, if you have joint ventures?

If we make distributions to minority interest holders, yes, there will be a drain on cash.

And the last question comes from John Rogers from D.A. Davidson. John B. Rogers - D.A. Davidson & Co., Research Division: A couple of things. First of all, just -- I guess, for Mike. On AECOM Capital, the -- you were talking about $150 million investment. Can you give us a sense -- and I guess just over the next couple of years, what scale of projects that can support or the revenue opportunities that sort of an investment could provide?

Sure. I just -- I can give you a better snapshot of the first 2 investments we've made. The first investment we've made, we deployed $30 million of equity against a $200 million project where we are currently building it and coming up out of the ground right now. So, generally... John B. Rogers - D.A. Davidson & Co., Research Division: Sorry, Mike, when you say a $200 million project, just so I'm clear, that's $200 million opportunity for AECOM or total value of the project?

That's the total cost of the project that we are building it. So of that, you have, not to get into too many details, but over $200 million, let's just say you have $50 million ascribed to land and $150 million is the construction revenue that we would earn the revenue on, approximately. John B. Rogers - D.A. Davidson & Co., Research Division: Okay. Okay. That's -- yes, that's what I was looking for. And is that a rough sort of way to think about the gearing on that?

Yes, it's generally -- we put up -- we're going to put up half the equity with the developer and then you're going to leverage that equity, 2 to 1 and you can get to the rough math on that. So $150 million of equity, pair it up with $150 million of someone else's equity, lever that up 2 to 1 and you're talking about $1 billion plus of projects. We -- that would be on the low end. We would hope to generate revenue well in excess of that by bringing in limited partners into the capital and that structure. John B. Rogers - D.A. Davidson & Co., Research Division: Okay. That's very helpful. And then my second question was just, as you do more construction-oriented work, project management, what is the margin profile of that kind of work versus your traditional business and as well as the risk profile?

Our construction management and program management are -- our project margins are higher than the margins we would earn on traditional design services. And we've been talking about that, John, for years as we try to build out our program management services and our CM services. We've done a nice job of that here in the U.S. We're doing a very nice job of it in the Middle East. And those margins are definitely higher than our historical design services. And that is one of the components, when you hear Steve talk about our longer-term EBIT margins. Doing that mix shift is one of those components. John B. Rogers - D.A. Davidson & Co., Research Division: Okay. And you're seeing that now, I guess, is what I'm just trying to...

Yes. John B. Rogers - D.A. Davidson & Co., Research Division: Okay. Okay. And the risk associated with that work?

Well, program management is no different risk than design. And the CM work that we're taking on at risk, John, we are not taking on a lump sum-fixed firm price delivery on a broad scale. Most of the CM work that we're taking on is our -- we're performing under a guaranteed maximum price structure with a structure that causes us to share the savings and give back some of our profits, should we not hit the maximum price target. So that's then -- and that's the way we've been delivering those services for years, John. And knock on wood, it's been very successful.

We do have a follow-up question from Andrew Wittmann from Baird. Andrew J. Wittmann - Robert W. Baird & Co. Incorporated, Research Division: I just wanted to touch base on a couple other long-term goals. I think you've given me the initial guidance for '14 to step back and kind of look at the future. The prior commitments of margin, I think, was one of the interesting ones from a long-term perspective regarding your company, regarding your stock. Can you just talk about the feasibility of the 12% EBITDA margin in '15? And how you think you might get there? Or if that's now more of a stretch goal rather than something that was more kind of a primary path?

We think the 12% is still doable. We took the timeline off last year just because of the situation with the top line. So I think it's 100% contingent on our returning to organic NSR growth. And we believe that will happen in the future. So it's still our target. It's still our goal. And we think it's achievable, but we haven't put a timeline on it as of now. Andrew J. Wittmann - Robert W. Baird & Co. Incorporated, Research Division: Got you. And what about -- and Steve, what about on the DSOs here, we've got MSS DSOs coming in. You've kind of reiterated in the comments if you add net income, but can we do better than net income in '14, you think?

Yes, I mean, I think we're still uncomfortable with net income right now. DSO is a -- at a consolidated level, is a difficult target to forecast, mainly because your mix of your business is shifting. And for us, that was extremely true in FY '13 where our rapidly growing markets are higher DSO, like the Middle East, like Southeast Asia. And because where our DSOs are typically lower, like Australia, we were declining, we saw that we kind of had a headwind on our DSO. So if you adjust for that mix, you get our DSOs would have had another 4-day improvement year-over-year. And, as Mike mentioned, we got that CSA payment. It would have been another 2 days. If we got that just a few days earlier, it would have been an 82. So we think 80 days is still an achievable target, but as we mix shift more towards these emerging markets where DSOs tend to run higher, it will be a tougher target. But underlying all of that where significant improvements even in those high DSO markets, like the Middle East, which improved significantly year-over-year, which is why we were able to do 147% of net income in FY '13. So we'll continue to target. I think it's much easier because cash is cash, either it comes in on a day or a quarter, or it doesn't. And it may come a few days later. It's easier to target on a long-term basis, which is why we have the $1.3 billion to $1.8 billion target out there. And we're coming off 2 years in excess of $140 million. Our conservative estimate at this point is to get to 100%. Andrew J. Wittmann - Robert W. Baird & Co. Incorporated, Research Division: Yes. Okay. That's helpful. And maybe just one more. On utilization, you make the comment in the presentation here that kind of exclusive of Australia utilization, it was up 50 bps. So as you look forward here, how much more of an opportunity is utilization for '14? Are there -- are some of the assistance that you've been putting in place are going to help you get better utilization? I just kind of always like to take the temperature on where you think utilization is versus where it maybe could be, or should be, in the opportunity side there?

Again, utilization is a tough one to do on an enterprise-level, just because we have so many different businesses that run at different utilization levels. But my answer is that we do believe there's opportunity in utilization for a few reasons. One is that we continue to shift our mix of business into higher-utilized businesses like construction services, program management services and bigger projects, in general, and larger projects like the Middle East where we have higher utilization. So that mix shift will help our utilization. And then, we're out of the gates taking active action in Australia, which will hopefully improve Australian utilization year-over-year as well. So we feel there are still some opportunity there. Andrew J. Wittmann - Robert W. Baird & Co. Incorporated, Research Division: That algorithm between 100 basis points of utilization and $50 million of EBITDA, does that still hold?

Last I've done that math, it did. Yes.

I'll now turn the call over to John Dionisio for final remarks.

Thank you, operator. Before we end, I'd like to reinforce 3 points. One, results in fiscal 2013 demonstrate the progress we've made to advance some of our long-term goals, financial and operating goals; second, our global footprint and diverse business model enable us to be competitive on any major project we pursue around the world and our organic investments in acquisitive -- and acquisition strength in this competitive advantage; and the third thing I'd like you to remember is our balanced capital allocation strategy has driven and will continue to drive improved returns over time. I want to thank you, all, for joining the call and for your interest in AECOM. And I look forward to seeing you in February. Well, here anyway. Thank you.

Thank you, ladies and gentlemen. This concludes this conference. Thank you for participating. You may now disconnect.