Jacobs Solutions Inc. (J) Q1 2013 Earnings Report, Transcript and Summary

Good morning, and welcome to the Jacobs Engineering First Quarter Fiscal Year 2013 Earnings Conference Call and Webcast. [Operator Instructions] Please note that this event is being recorded. I would now like to turn the conference over to Patty Bruner, who will read the forward statement. Please go ahead, ma'am.

Thank you. The company requests that we point out that any statements that the company makes today that are not based on historical facts are forward-looking statements. Although such statements are based on management's current estimates and expectations and currently available competitive financial and economic data, forward-looking statements are inherently uncertain and involve risks and uncertainties that could cause actual results of the company to differ materially from what may be inferred from the forward-looking statements. For a description of some of the factors which may occur that could cause or contribute to such differences, the company requests that you read its most recent Annual Report on Form 10-K for the period ended September 28, 2012, including: Item 1A, Risk Factors; Item 3, Legal Proceedings; and Item 7, Management's Discussions and Analysis of Financial Conditions; and results of operations contained therein for a description of our business, legal proceedings and other information that describes the factors that could cause actual results to differ from such forward-looking statements. The company undertakes no obligation to release publicly any revisions or updates to any forward-looking statements, whether as a result of new information, future events or otherwise. And now I'll turn the call over to John Prosser, CFO of Jacobs, who will discuss financial results.

Thank you, Patty, and welcome, everyone. I'll briefly go through our financial highlights for the quarter, and then I'll turn it over to Craig Martin, our CEO, to review the operations and outlook for the business. If you go to Slide 4 on the presentation, this is, as was reported in our earnings release, we ended up the quarter with diluted EPS of $0.76, which is a little bit better than the street consensus. Net earnings were $99 million. Backlog continues to grow nicely and grew to $16.2 billion at the end of the quarter. And we have seen that there -- our trailing 12-month book-to-bill continues to grow and is just slightly over 1.15 as of the end of the quarter. Continue to have a strong balance sheet, good working capital growth and cash grew nicely during the quarter. We're up to $1.2 billion in cash. Net cash was -- is over $700 million. This is up a couple of hundred million dollars from the prior quarter. And we have continued our guidance at the $3 to $3.50 range for fiscal year '13. Moving on to Slide 5, this is just a tracking of our history with the last dot being the trailing 12, continues to show growth. And while we're not back up to our historical target of the 15% annual average growth, we are hovering just slightly below that, and we think in the years to come, that will certainly be a goal that we will continue to track. Moving on to Slide 6, the backlog, a little closer look at this. It was a very good quarter knowing that total backlog grew almost 12% year-over-year, but both the field services and professional services continue to grow nicely, with field services up about 16% and professional service is up about 9.5%. With that, I will now turn it over to Craig to talk about the -- our growth strategies.

Thank you, John. Good morning, everyone. I'm going to go through our strategies for growth, the way in which we're going to keep that 15% compound growth going. And you see that here on Slide 7, there are 5 bullets. I'm going to cover the first 4, our business model, our market diversity, our geographic presence and our acquisitions appetite on individual slides later on. But I wanted to take a minute here to talk about our driving down costs. We had a terrific quarter from a cost perspective. SG&A is down almost 2% year-over-year, and that cost advantage continues to be a strength for Jacobs. Our customers are increasingly seeing their markets as competitive, and they're seeing a provider like Jacobs who can provide very cost-effective services and so make a decent profit as a very attractive alternative to some of the higher-priced companies out there. So we think we have a good strategy to continue to grow at that 15% compound rate. Turning now to Slide #8, this is our relationship-based business model. If you think about it in the way we've diagrammed it here, it's what we think of as a virtuous circle. You can start at any point in the circle and see why it's self-reinforcing. So if you start with our long-term relationships, our ability to build trust and client knowledge, that just continuously improve our services, and therefore, provides superior value, that gives our customers a repurchase loyalty focus. That fuels our growth, lowers our cost of doing business and results in manageable risk. All that provides for steady earnings growth, which we can then reinvest to develop those client relationships and continue to improve our performance. So it's a very positive circle of performance for us, and we think it actually has become a bit of a differentiator in the marketplace with our customers. Even our customers are beginning to tell us that they perceive the differences. Turning now to Slide 9, this is sort of how the market diversity shapes up. Won't spend a lot of time on this slide, but I just want to give you the sense of how these markets compare overall. Let's move on now to Slide 10. This is the public & institutional market. And this has been a better than, perhaps, even we expected market as we've gone through the year so far. Let me start with national governments. We've characterized that as improving. In particular, our position on things like MATOCS, Multiple Award Task Order Contracts, has proven to be an advantage. We've been saying for some time now that our ability to win MATOCS and take market share and what were single-award contracts in the past is a strength, and I think we're demonstrating that steadily. We have 4 pretty significant awards in the national government space in the quarter, totaling something north of $1.4 billion. All of that goes into backlog. We continue to have a really good reputation as a contractor in the national government space, both as a GOCO-type contractor, Government Owned/Contractor Operated, and is a large contract enterprise-wide kind of contract position. We think that's going to continue to result in significant opportunities for us as a company, both as a GOCO and consulting with customers in the defense arena on how to do GOCOs right. We also see the nuclear cleanup business has continued to be quite strong. The funding in the U.K., for example, is up to $4 billion and we're seeing some major opportunities being released, some of which we've already won, some we expect to win in the next couple of quarters. Moving now to infrastructure. That business remains actually quite strong globally. It's a good business for us. We're able to leverage our capability in the U.S. and India into markets in the Middle East and Australia. We're seeing lots of investment by the local community in infrastructure. Almost every bond issued in the U.S., over 90% of the bond issues in the U.S. passed in the recent election. That's $30 billion plus or minus worth of work. We're also seeing a lot of opportunity for projects that are funded by user fees, rail and water, some highway, but it's largely a rail and water, wastewater business. And then the pipeline in natural gas industry, which is partly an oil and gas play and partly an infrastructure play, is quite strong market. And we -- you may note from our announcement about Senfra, we're one of the early leaders now in the whole pipeline safety industry, which we think is going to be something like a $6 billion market. Finally, moving on to buildings. It's still a mixed market. The good news for us is that the part of it we're not in, retail, commercial, office, multi-family housing, not our business and not strong. But the parts we are in, healthcare, hospitals, technically complex buildings, is quite strong. Our position as a market leader in mission-critical facilities, that's things like data centers and operation centers, remains very strong. We think that's going to be an $80 billion year, market year by the end of the decade. It's probably closer to $50 billion today. So we think that market's going to be very strong. We have a terrific position in that market and we're very much an industry leader. The healthcare business, obviously, there are many things about the Affordable Care Act that are going to cost companies money, us, too. But the fact is it's adding 30 million users to the system, and that means a lot of hospital construction, a lot of maintenance and growth opportunities for us. We are well-positioned to take advantage of it as a leading manager, a builder of hospitals. And then finally, the K-12 and higher ed business remain strong, another strength of ours. We're already managing 8 major programs and we have 9 programs like that in the state phase, and we expect those to convert to full project management, construction management opportunities. Turning on to Slide 11 now, this is the process part of our business. Again, 3 sectors to it: Refining, Oil and Gas, and Chemicals. Let me start with refining. That business continues to be better for us. We're seeing solid margins on our client side and that's driving investments. There's been an uptick in capital spending on environmental and regulatory projects. There's a lot of traditional small and mid-cap work just to keep these big refineries running. There's some minor capacity addition and then, of course, there's crude slight changes that are also driving additional projects both in terms of the heavy sour crude side of it, but now we also have a light sweet crude aspect that changes the configuration again. So we think there's going to be a lot of activity, particularly in the northern refineries with the vantage crudes like the Bakken and the Marcellus -- no, not so much the Marcellus, like the Bakken, that will drive business for Jacobs as we go forward. So I think Refining is improving and will increase its position in terms of Jacobs as we go forward. Oil and gas market remains very, very strong. It's one of our hottest markets. Our clients are making lots of money and they're spending lots of money. We're seeing global E&P investment at north of $600 billion. Probably $160 billion, $150 billion, $160 billion of that is accessible to Jacobs. And we think that's going to be a tremendous growth market for us as we go forward. The opportunities for us will largely be in the heavy oils like we do in Canada with the oil sands, as well as unconventional gas and onshore gas globally. We have a very strong position in North America already. We think we're going to be able to leverage that into a stronger position in North America and expand that globally. We're seeing similar opportunities in places like the Middle East, and I'll talk about that a little more when we get to the geographic discussion. And in the chemicals market, it's as good as it's ever been in my memory. It's a very strong market for us right now. It's obviously a business where there's a key driver is this cheap gas and what that means in terms of chemical feedstocks. We're seeing lots of investment across a number of our clients. Our chemical company is the ones we've worked for traditionally for years. Our core clients have enormous investment programs planned. We're expecting something more than $30 billion in CapEx in North America alone. So it's just a -- it's a record market and there's huge opportunity. Moving on now to Slide 12, this is the sector we call Industrial. Three parts to it as well, or actually many parts to it, I shouldn't say 3. First, PharmaBio. That business continues to improve. We're seeing a lot of opportunities to support our clients in the third world, so that's places like India and China, we're well positioned. We're also seeing activity in Brazil. We'll talk about that again in a minute. But there's a real focus on bringing pharmaceuticals to the third world. In India alone, you can see from the note here, we're expecting the investment to go from something like $16 billion to $50 billion over the next 8 years, 8, 9 years. Mining & Minerals market, also strong market for us. I don't think mining and minerals is strong globally, but we happen to be well positioned in some key markets with key customers, and those customers seem to be going forward with their projects. So we're seeing good activity in the Americas. I think for us and for most everyone else, the market's fairly weak in Australia. But I think the Americas will continue to provide a good growth opportunity for us. And so we still characterize that market as strong. Moving down to sort of the mix of everything else that we do: Power, Pulp & Paper, High Tech, Food & Consumer Products, it is a mix of stuff and it's a mixed market. We're certainly seeing a lot of investment by our customers in growth, particularly again in the third world, and we're there to help them expand their capability and deliver their products. We also think there are going to be a lot of facility upgrades. I think you can see here the EPS -- EPA estimates about $5.4 billion of facility upgrades for these kinds of customers in the U.S. alone. And we think that this market will continue to be one where alliances are real positive for Jacobs. So we're fairly excited about its ability to continue to grow, but I think in terms of its contribution to the company overall, it's not going to move the needle as much as some of the other markets that we've talked about. Moving on to Slide 13, this is sort of the geographic distribution of our operations. This hasn't changed much, but I would like to talk a little bit about the individual geographies and what seems to be going on. So let me start with North America. Obviously, very busy in oil sands and this huge chemicals market investment's going to drive a bunch of business along with the conventional and the unconventional onshore gas business. So all of the heavy process businesses that Jacobs plays in, in North America are quite strong. We're seeing a lot of activity in rail, transit, schools, healthcare. The highways business is still a little weak, but it's improving. Mining and minerals for us in places like Nevada and Arizona continue to be pretty good, and some of our major customers are announcing ongoing expansions such as Freeport-McMoRan's announcement with their recent earnings. Moving to South America, we're busy and we expect to continue to be busy. The businesses that we're working with, the customers that we have projects for today are continuing to invest and expand those projects. So we're pretty active in recruiting across the world, trying to find Spanish-speaking engineers and contracting people. It's a big market for us from a mining and minerals point of view, but we think it has the potential as well to grow in oil and gas and pharmaBio and food and consumer products, because those things are also being driven by these expansions I talked about earlier. We're particularly interested in finding a way to do business in Brazil and do it effectively. And I think that's an important opportunity because a lot of our customers are talking about investment in Brazil. Moving over now to Europe, we're seeing some activity in the onshore process industries, some oil and gas business in the U.K. and Northern Europe. We've been seeing a fair amount of work. We had Q1 awards that went nearly $1 billion dollars in the oil and gas space, plus we've got, of course, our traditional small-cap work for our refining customers and chemical customers all along the Rhine Valley. U.K. defense budget is fueling a bunch of new opportunities. This is where a lot of that GOCO work will come, and our opportunities to both consult and act as GOCOs. The power and environment market is strong in the U.K. Power for Jacobs, probably the one place we have real strength is in Europe, both in Continental Europe and in the U.K., and we're expecting that will drive some business as well. So overall, Europe is not as weak, perhaps, for us as it might be, from a growth point of view, globally. We're feeling like we'll be able to do okay in Europe and perhaps even increase our market share a bit. Middle East and Africa, start sort of in Northern Africa, a great relationship with OCP. Our joint venture there is continuing to grow and finding expanding opportunities globally. We're doing very well in growing our position in the Middle East. Once again, the Jacobs approach, the being local and executing projects locally, is quite a bit of favor with our customers in the Middle East, and that continues to be a draw for us and an opportunity to expand our business. And the level of investment there, over and above what I would characterize as sustaining capital, which is obviously a very attractive aspect of the Middle East for Jacobs, there's just planned investment in the hundreds of billions of dollars. I think just between Saudi Arabia and the Emirates, there's something like $200 billion of investment planned over the next 5 years. Moving now to India. The 5-year plan for infrastructure in India is $1 trillion dollars. They won't spend all of that, but we're very well positioned to participate in the infrastructure market in India, and we've had a couple of nice awards already that I think are going to continue to provide opportunities for growth. We're seeing a lot of activity in things like fertilizer and a fair amount of activity in the refining and chemicals industry as well. So we think those -- the Indian market will be a good market for us as a domestic market and, of course, we continue to have a very successful high-value engineering center in India, several of them actually, that provide leverage and scale for our growth globally. Moving on now to China and Southeast Asia. We really do now have a position of strength in China and Southeast Asia, and we're able to support our customers who are making investments in that part of the world much more effectively than we were a few years ago. So we think for Jacobs, in particular, China and Southeast Asia will be a source of significant growth as we go from a very small player to a significant one. And then finally, talking a bit about Australia, I mentioned already the mining and minerals business is under pressure. However, there's lots of heavy process work out there, and we think that's going to be an opportunity for Jacobs to continue to grow. We've had a couple of announcements of Australia oil and gas projects already in the quarter, and we see a lot of opportunity for that to continue. And of course, we have a good national government/defense business there, and that continues to remain strong. We look across the India, China, Australia kind of market, it's broadly expected to be a real strength for us as we go forward, particularly India and Australia. I think they're going to be big positives for us that I haven't mentioned maybe as much as China. Now moving on to Slide 14, this is the acquisition slide. We've been very successful with acquisitions. We continue to have lots of irons in the fire as it were, plenty of opportunities for acquisition. Our focus areas are where you might expect, China, Australia and Brazil from a geography point of view. Oil and gas, mining and some niche market additions from a markets point of view. And of course, things that will let us add core clients are always of interest us. So I think there's a lot of opportunity out there, the pricing is attractive on acquisitions, and I think this will be a part of our growth as we go forward even though there's probably nothing right in the immediate term. So that brings us to the commercial at the end here. Why Jacobs? We've got a history of solid growth. We have a unique relationship-based business model. We're fully diverse and able to demonstrate that we can grow in diverse markets even when the markets themselves aren't growing. We've got a strong balance sheet and a great cash position to fuel our acquisition appetite, and of course, we've got a really solid cost position in the company. So overall, I think there's lot of reasons to think that Jacobs will do well going forward, and that's certainly our outlook as we sit here today. With that, Denise, I'll turn it over for questions.

[Operator Instructions] The first question will come from Andy Kaplowitz of Barclays.

Craig, so if you look at the backlog in process, sequentially, it flattened here. It's up nicely year-over-year. I know you're going to tell me it's lumpy. But to try and characterize that particular part of the business better, how you -- how do the leading indicators in that business look? Things like billable hours, overtime, utilization, salary multiplier? You put all these things together, are they still flashing green for you? And how did they do throughout the quarter given some uncertainty on the political front?

I guess yes, it's lumpy, so that first part of your question was -- the answer is yes. But the second part of your question, the answer is yes also. Billable hours are growing nicely. We're seeing high utilization. We're starting to work a lot of overtime. So everything about the business, salary pressures are starting back in. There's starting to be some opportunity to move up margins. So everything -- all the indicators in the process industry are where they were a quarter ago or 2 quarters ago, and we have every confidence that we're going to continue to see good solid growth out of that. I think the flat backlog quarter-over-quarter is a timing issue more than anything else.

Okay, that's what I thought you'd say. If I -- I remember, I think it was at your Investor Day, you talked about maybe having -- cost structure would be higher in the first quarter and it really wasn't. When you talked about maybe some interruption, that public business from the election and obviously, doesn't look like we saw anything. So maybe if you could comment on that. And I know that -- I don't want to steal Jamie's [ph] thunder about guidance, but like all I would ask there is it seems like this quarter may have been marginally better than you thought yet you keep guidance.

Well, a couple of things. In terms of the quarter, we worked really hard this quarter to keep the G&As down, partly because we knew we had these headwinds and partly because this quarter, we always have the headwind of reduced billable hours because of the holidays. And I think the team did a terrific job of managing cost to offset those things. And so yes, we did have a quarter that was a little better than our expectations. Now why does that not fall into guidance? It's just too soon. We don't have quite the level of visibility that we need to have to think about raising or lowering or whatever guidance. And so we kept the guidance where it is because we think that's the prudent place to be at this point in time.

And our next question will come from Jamie Cook of Credit Suisse. Jamie L. Cook - Crédit Suisse AG, Research Division: I guess just 2 questions, partly building on what Andy just asked. The first question back to you, it sounds like you're more constructive on sort of the leading indicators. And one of your peers, couple of weeks ago, came out and said that labor constraints were looking like it was becoming a slight bit of an issue sort of in the Gulf Coast area on the petrochem side. So I was just wondering if you can -- it's the first time I've sort of heard that in a while. I'm just wondering if you can expand if you're seeing anything like that down there. Are you seeing labor rates increase or capacity tightening specifically within North American hydrocarbon? And then I guess my next question just to sort of build on the guidance question, we're still at a point where the backlog's growing quicker than the top line is. At what point, John, do we expect to see that inflection point where we start to get some double-digit top line growth? I mean, I know last quarter, you said even if your margins can grow -- outpace your revenue growth, I'm just sort of wondering when we see that burn rate kick in. And I'll get back in queue.

Well, let me take the first part of your question, Jamie, and we are certainly seeing pressure both -- more so on engineering labor at this stage than craft labor, but we are seeing pressure in both on the Gulf Coast. I think I said last quarter when we had our call that we were forecasting dramatic increase in requirements for engineering capability as a result of the impacts of both the unconventional gas and the chemicals expansions on the Gulf Coast and in North America. And nothing about that's changed. We are seeing some pressure on rates. We're seeing pressure on turnover. And maybe just if I can get Greg Landry who runs our southern operations, it's one of his responsibilities, to comment just a little further. Greg, you'll have to speak up because you're aways from the line.

Yes. Well, just a snapshot there. We're actually at historical levels from the stats on engineering side as we talk here today. And if you look into the next 2, 3 years, I mean, on a monthly basis, there's new chemical opportunities being publicly announced between Mobile, Alabama and Corpus Christi, Texas. So we will continue to see pressure on escalation and rates, but it's all good news. The craft side of the business is probably another 8 months to a year away before we start seeing pressure there, but on the engineering side, we're in the throes of it right now. Jamie L. Cook - Crédit Suisse AG, Research Division: Okay. And to be -- sorry, just one more question to build on that. So it sounds like you're seeing, to be clear, it sounds like you're seeing sort of similar things, which just means the market's tightening and you feel a little better. My second question, while I know you're a cost-plus contractor, are you seeing more -- a bigger appetite from some customers that potentially would have want -- wouldn't have talked to you or would have wanted to go fixed priced, moving more towards a cost-plus model? Do you see customers' willingness to do cost-plus growing, I guess, relative to where we've been?

That's generally, our experience is as markets get tight, the work tends to move to cost-reimbursable because there's no appetite even among the traditionally lump-sum contracting community. The appetite for doing lump sum goes away because the risks become just enormous by comparison. So the mecca does shift toward our model, and that has -- does represent, I think, a particular opportunity for us in these upcycles that we can benefit from as we go forward. So I see that as also as a positive for Jacobs relative to our competition and a positive for the industry in terms of surprises. Jamie L. Cook - Crédit Suisse AG, Research Division: Okay. And sorry, just a last question on the guide and I'll get back in queue. In terms of backlog versus revenue growth, the revenue growth continues to lag sort of backlog. When we expect that inflection point?

Okay. As we said, we don't give specific guidance on revenues. But if you look at the first quarter compared to last year's first quarter, there has been about a 5% growth in revenues. It's down a little bit from the prior quarter, but that has to do with the holidays and just the kind of the general curve. We still believe that going forward, that midyear this year to -- into '14 should be the time when we start seeing the revenue pick up as the field services start picking up. We still see a lot of activity moving to the field, both on the maintenance and sustaining capital side, but also on some of the larger programs such as up in Canada and such that are moving toward the field. And so it looks like -- and I would say that either late '13, mid to late '13 and into '14, you should start seeing better revenue comparisons. Jamie L. Cook - Crédit Suisse AG, Research Division: And not to split hairs, when you're saying midyear, are you talking your fiscal or calendar?

Our fiscal.

Our next question will come from Steven Fisher of UBS.

Just to follow up on that last question. So it doesn't really sound like your timing expectations for the ramp-up in field services has changed much at all. So I guess I'm curious from your perspective, what still has to happen for these things, these decisions to be made and for these projects and the ramp-up to come to fruition?

That's a tough question because I don't think it -- there's a single answer. I think if you look across the spectrum of projects, the answers vary by the customer and by the end user market. But I think for the most part, what we're seeing happen is pretty much on the schedule we've been outlining now for several quarters. And we are not seeing much drift one way or the other. And my concern about the fiscal cliff discussion for a while was that it might push all these projects significantly out. And it doesn't seem to have done that. So our customers seem to be planning their investments, particularly ones in the natural gas or in the chemical side, based on their ability to look at the global market for their products or increase the local market for their products, depending on which product we're talking about. And I think we're going to continue to see them move into construction phases pretty much as we've described. I expect the FEED cycle won't peak until maybe our third fiscal quarter. So that still suggests an awful lot of that work is out even beyond the third fiscal quarter from a construction point of view. But we're starting to see a lot of jobs going into detail design and into construction. So I think to John's point, we'll start to see the uptick in the third fiscal quarter or close to it.

That's helpful. And I guess if we maybe picked one specifically in terms of the oil sands, I'm wondering if you could talk about how the activity in that market's changed with the oil price differential dynamics over the last few months. And then, I guess, specifically or additionally, how the turnaround opportunities there are developing?

Well, 2 different questions, but let me try to answer each one. With respect to the project volumes, the new announcements, planned investment, we're not seeing any falloff in the work. We're also not seeing any particular increase. I think what we're looking at is oil prices, they were what? $85 the last time we had this call and they're $96 today, at least the NYMEX numbers are. I don't think there's a lot of difference in those 2 numbers from an investment perspective in the oil sands. So I think the level of investment will be fairly steady as long as oil prices remain in a north of 70 minus 100 kind of range. I have Tom Hammond here who -- the oil sands team reports to Tom. Maybe Tom could comment.

We haven't seen any change directionally in the level of investments, the projects that are being identified. I do think the difference in this investment cycle, in the last investment cycle, in Canada is that the owners are a little more, I would say -- I don't want to say cautious in terms of investing, but a little bit more deliberate in terms of their project execution. They're not in a race to get to the field. They're taking their time during what we call the design basis part of the projects and the FEED part of the projects. And so it's still probably a year off before the large ramp-up in the field activities in Canada. We would expect the turnaround cycle this year to be a normal turnaround cycle. That's all the indications we have. Of course, that could change. But we're coming actually, coming out of the slow season up there. They break for the holidays in December, January. Part of the winter months are actually the slowest months in terms of maintenance turnarounds and the like. We had a good bit of business in the fall and we'll expect to, say, about mid February, to start ramping up for the spring turnarounds, all of which seem to be kind of on plan right now.

Okay. So you haven't seen any further pushouts because the suppressed level of WCS relative to WTI? Doesn't sound like it.

No. And the investments up there are very large and they take a long time to reach production, so I don't think that the industry up there is working on that basis. I think the positive things, as I understand it, the governor of North Dakota approved the Keystone Pipeline incentive, approved it. And also, the Canadians are talking about moving forward with the pipeline to the east. And the big one they need is a pipeline to the west, and that's going to take a while, but those conversations all seem to be moving at a reasonable speed.

Our next question will come from Scott Levine of JP Morgan. Scott Justin Levine - JP Morgan Chase & Co, Research Division: So it sounds like some of your labor costs are starting to move up in the market, starting to tighten. I was hoping you might be able to elaborate on pricing trends. It seems the last few quarters that in the private sector markets, it's been improving, and in the public sector, maybe it's going the other way. Overall, if you could comment regarding pricing trends, whether you were able to recover these costs and maybe whether we should expect gross margins? I know mix is a factor. Should we expect margin -- gross margins to hold steady, maybe move up? A little bit more color there.

Sure. Pricing trends in the process industry and our industrial area both are trending positive, in a sense that I mean costs are going up but customers are allowing us to expand our multipliers. So we're getting actually a double benefit. Remember that we're -- almost our work is cost-reimbursable. So as labor costs grow, our multiplier approach to pricing results in additional recovery of gross margin. And if we are able to control our G&A, we get a double benefit of that in terms of improving the bottom line significantly. So from Jacobs, at least, upward pressure on labor rates is a positive for the income statement. In the public sector, I would say that the overall trends in pricing are negative. It's getting tougher and cost is becoming an increasing factor in those businesses. But it's still, for the most part, a cost-plus marketplace. And so we actually have an advantage in terms of growing share. I was real proud of our team on the public sector side in terms of their ability to grow their backlog, both quarter-over-quarter and year-over-year, in what's a very tough market. And they did that entirely by taking share. And I think our cost advantage is vis-à-vis our competition in that sector were a real plus for us. So I think the impact there is mildly negative on margins generally, but probably not negative on Jacobs. The impact in the process and industrial is positive for the industry and Jacobs, unless you're in the lump sum business. And I think the lump sum business could be pretty ugly for the next 3 or 4 quarters or more. Does that answer your question? Scott Justin Levine - JP Morgan Chase & Co, Research Division: It does. And maybe as a follow-on, given the expectation that field activities ramp and generally the margins are lower in that, beginning in the middle of the fiscal year, should we think about -- how should the mix impact gross margins at the corporate level maybe second half '13 into '14? And can we expect improvement or does mix maybe limit any improvement at the corporate level?

Given the pricing trends that we're seeing, and that's across our business, I think you would -- if anything was staying equal, we'd see improving trends. That will be dampened a little bit because of mix as we get more into the field services and that starts growing. But overall, it shouldn't dampen it to the point of being negative, but it should be maybe flat to up a little bit. But the individual elements will be up more than the total. Scott Justin Levine - JP Morgan Chase & Co, Research Division: Got it. One quick follow-up as well. The noncontrolling interest ticked up a little bit here sequentially. I'm hoping you can give us a sense, maybe do we -- from a modeling perspective, should we expect that to flatten out or is it still going up or maybe additional color there?

Well, let me make the initial comment and I'll ask John to elaborate if he wants. Our joint ventures and our -- not joint ventures, our joint companies, our companies where we have majority but not controlling interest are performing quite well. And as a result, I think we're going to see, for example, our work in Saudi Arabia would be one to point to, I think as a result, we're likely to see an increase in noncontrolling interest as those businesses are successful. And so I think that's a -- in real truth, that's a positive for us in terms of how well some of these things are working and how effective we're being able to be in building on the back of these relationships where we've acquired less than 100% control. John, do you want to add anything?

No, I think that, that's a good summation and some of these are overseas. There's one that's still here in the U.S., but it does show that we are -- these acquisitions are growing and continuing to contribute positively. So the growth of that line means that our share is growing as well. So that is a good news part of the element.

Our next question will come from Tahira Afzal of KeyBanc.

First question is in regards to competitive dynamics in North America. Clearly, there's a lot of excitement of all the work that is upcoming in related to the shale gas development and really a lot of the chemical and derivative plays there. Are you seeing any of your international competitors really looking at North America as a consequence a little closer? And could you talk a bit about barriers of entry for international contractors to really take a bigger share?

Sure. We are seeing some activity from international competitors. Certainly, companies like WorleyParsons are very focused on trying to grow their U.S. Gulf Coast position. We're seeing some activity by the Koreans and the Chinese, but again, mostly on major greenfield kinds of opportunities and generally in the after-FEED sort of mode, a lot like what we see in the Middle East. But I think that it will be a very, very difficult market to penetrate. For the most part, the engineering capability of the Gulf Coast is dominated by the U.S. players. And we have seen cycles where competitors like the Chinese or the Koreans try to come into North America being -- they've been very unsuccessful. So I think that the barriers to entry are fairly significant for those competitors. And I think unless you've had a traditional historic position like WorleyParsons has through the Parsons acquisition, it would be very, very difficult to establish a strong foothold in the Gulf Coast. And Greg, would you care to comment?

No, we're actually seeing some of the owners testing it, but they have not been successful at this point in time. And basically, it's due because of what Craig's talking about. It is establishing foothold, but from a resource basis. They have to bring people in it, which is extremely difficult. And then you go on the construction side, they're pulling from the same resource base as the U.S. firm. So the advantage they have, as they would in the Middle East, I'd use that as an example, of bringing in foreign workers is not as advantageous here in the U.S. So that presents a major challenge for them, to bring what they bring in other parts of the world.

Got it. Okay, that is very helpful. And, sir, the second question is in regards to one of the end markets you talked about Greg, and that's the pipeline market. You talked a bit about the safety and slash, I guess, the integrity market in a sense. And could you talk a little more about the opportunity sets and whether it's really automatic rate approvals that are helping or some other regulatory changes that are really helping this market move forward?

Sure. A lot of this pipeline safety business is being driven by the San Bruno explosion and all the property damage and loss of life that went with that. And so virtually all of the pipeline owners and users, starting first, of course, with the regional gas supply players to homes and industry, are being required to go through a Pipeline Safety Enhancement Program, PSEP. And these programs range in cost for these utilities from $1.5 billion to $5 billion, depending on the scale of the utility involved. We've been successful in winning a couple of the very early program management design opportunities in those businesses, which kind of puts us in a leadership position across the industry, and we think that market is going to be $6 billion or $7 billion a year for the next decade or so. So it's a $70-plus billion market. With our wins with the Peoples Gas in Chicago and Sempra here in Southern California, we're very well positioned to take advantage of that. And the money will go through the rate base. It's -- at least, so far, it appears. As long as you structure the program right, get it presented appropriately to the regulators, the cost of making these improvements, and there's a lot of improvements to be made, will go into the rate base. So the money will be there. So we're, like I said, pretty optimistic about what this industry and this area could represent for Jacobs going forward. And that's separate from anything like Keystone or any of the other pipeline work that's more in the -- out in the countryside.

Got it again. Last question is on the domestic power market. I know it's a smaller market for you folks. But I just wanted to get any commentary you have on any changes in outlook. We've been hearing a bit about energy efficiency really taking a bit of an impact on demand projections from a 5- to 10-year point of view. So I would love to get your viewpoint on generation needs in the near to medium terms.

Okay. Well, we don't have much of a viewpoint, because it isn't a market where we're really strong and -- particularly in North America. What we read and are being told is that natural gas will be replacing coal at an increasing rate and that a big source of consumption for this natural gas supply coming out of the unconventional gas and so on will be, in fact, for power generation. So that argues, in my mind, for significant investment in gas-fired combustion turbine and heat recovery kinds of investments. And in fact, I think I read somewhere, as a result of the move from natural gas to coal, the U.S. is one of the best countries in the world, maybe the #1 country in the world in terms of reducing greenhouse gas emissions, which is, I think, something I didn't know at least, and I think that's the period 2006 to '11, something like that. So I think if you're in the combustion turbine, heat recovery combined cycle kind of power business, there is going to be a lot of work out there. I think if you're trying to make money off the coal cycle, you're going to be in a tough market. We're not really in either one.

Our next question will come from Michael Dudas of Sterne Agee. Michael S. Dudas - Sterne Agee & Leach Inc., Research Division: Quickly here, Craig, when you look at new business opportunities through fiscal year 2013, do you anticipate more new business coming from North America or the rest of the world?

Wow, that's an interesting question. Michael S. Dudas - Sterne Agee & Leach Inc., Research Division: More of a question than an assumption.

Yes, of course, right? It a little bit depends on how you define more, right? I mean, we have a very large presence in North America. It's a big, big part of our business, and it's going to grow nicely. So in absolute terms, more will come from North America than rest of the world. In terms of relative growth though, I think rest of the world will have greater relative growth than the U.S. will. So I guess there's 2 different ways of looking at that question. Is that -- does that help? Michael S. Dudas - Sterne Agee & Leach Inc., Research Division: Yes, it does. My second one is which grows better, private sector or public sector businesses?

I think, without a doubt, the private sector businesses, the process and the industrial parts of it, the work and buildings that we do to support our private sector customers will be higher growth than the public and institutional businesses. Well, public and institutional is largely going to be a matter of taking market share, and that's always harder than growing in a growing market. I mean, there's still market share to be taken in both. But certainly, the growth in the process and industrial side will be higher than the public institutional side. Michael S. Dudas - Sterne Agee & Leach Inc., Research Division: And would, like, the buildings and infrastructure growth opportunities in the Middle East off -- be greater than maybe what you're seeing in the U.S.?

I think those -- for us, they're going to be very significant because we're starting from almost none. In terms of what they mean to the businesses, I don't think they, in and of themselves, offset what we are seeing in weakness in the buildings and infrastructure market domestically. But those things, coupled with our ability to expand our share, and we're doing really well at doing that as we speak, means that those businesses will continue to grow. Michael S. Dudas - Sterne Agee & Leach Inc., Research Division: And my final question on the theme is when you look at what your order revenue and potential earnings contributions for this year and next are, is it going to be more than historically weighted towards your organic side or will the recent acquisitions that you assimilated over the past couple of years add more to the growth?

We don't really think of it that way. Once we buy them, they're organic. And in fact, we generally redistribute what we buy into our regional models so we get that customer-facing side. So I'd have to do research to even come close to answering that question. We're expecting our growth in '13 to be largely organic.

Our next question will come from John Rogers of D.A. Davidson. John Rogers - D.A. Davidson & Co., Research Division: Can you hear me?

Yes. You're breaking up a little, but I think we can hear you. John Rogers - D.A. Davidson & Co., Research Division: Okay. Sorry about that. Craig, as this cycle develops over the next couple of years, I'm just wondering, are there opportunities near term for major single projects a la Motiva for Jacobs?

Absolutely, there are. Whether they'll be to the Motiva scale or not, I wouldn't say. But certainly, multi-billion dollar opportunities are going to be out there as these programs develop, and we will certainly be a participant in some of those. John Rogers - D.A. Davidson & Co., Research Division: I mean, strategically, your model has always been, I guess, some of the smaller capital projects to add on with, occasionally, the large projects coming through. And I'm just wondering, strategically, do you have to think about positioning yourself any differently to go after those large multi-billion dollar projects?

No, we don't. John Rogers - D.A. Davidson & Co., Research Division: Or do you do it across all markets?

What we're -- well, with one exception, which I'll come to in a minute, but for the most part, our small- and medium-cap model is the one that we continue follow. It works extremely well for us. And it positions us to do major projects for those customers, because of most major projects these days are not greenfield, standalone, out in the middle of nowhere. Most of them are brownfield or near brownfield. And so our physical presence, our local knowledge, our understanding of the operation of the facility from our being their small-cap contractor or their maintenance contractor puts us in a favorite position, when major investments come along, to get either all or a significant part of that. Jacobs today, I think -- most of our customers perceive us as being easily a source of -- for $1 billion-minus kind of projects. And in some industry, it may be bigger than that. And then -- and so when the $5 billion job comes along, we may need to partner with somebody and probably would, just to spread the capacity issues around. But I think our position is really good. And it doesn't really require that we do anything differently than to -- than we have in the past, except perhaps focus on hiring more of the kinds of people who run these multi-billion dollar kinds of programs onto our team, and we're doing quite a good job of that actually. The single exception, that's probably the mining and minerals business where we have historically been doing big jobs. And our opportunity there is to take our small-cap and medium-cap model and drive it into the mining and minerals industry. Part of why I am so positive about the industry, unlike I think a lot of our competitors, is I think there's a huge opportunity to do that. For the most part, that work's not being done today by the kinds of competitors that are good at it. And so I think there's a huge leverage in that industry to go convert it to our model, I would say, without sacrificing who really do these giant projects. John Rogers - D.A. Davidson & Co., Research Division: Okay. And then secondly, you mentioned that most of your growth this year you're expecting or guiding or planning for it to be organic, are there more less acquisition opportunities out there today? Has that changed at all with the market recovering, or is it creating more acquisition opportunities?

Yes. I would say that there are more acquisition opportunities on our table today than there have been at other times in the past. And I think the market for acquisition opportunities is quite good. The multiples for the targets have not yet seen a lot of increase. So the multiples are, frankly, from our perspective, very attractive. So that there's both a good supply of candidates out there and a fairly good market multiple on the acquisition. So I think there's a lot of leverage in acquisitions. But as I think I've said on these calls many times, acquisitions are opportunistic. You can only do them when the seller and the buyer can get to a deal, and you have to have a willing seller. I think we see those things out there, but timing will be a challenge.

Our next question will come from Robert Norfleet of BB&T Capital Markets. John A. Allison - BB&T Corporation: This is John Allison in for Rob. My first question is in regards to the national government segment. For the contracts that are up for rebid, do we still see the timeline to be within 2013 for these awards to hit? And should we ultimately expect to see backlog growth?

Well, certainly there are a number of big, single-contract awards out there that we would expect to get awarded sometime between now and the end of the fiscal year. We were very conservative about the way we backlogged those things. So while there may be some substantial awards, like the Kennedy award that we announced last quarter, their impact on backlog is much slower because of the way we approach the backlog itself. So giant leaps in backlog as a result of awards in the national government space probably aren't going to happen. But I believe we'll be able to grow our backlog in national government, so things go like we think they will. John A. Allison - BB&T Corporation: Okay, got you. My second question, could you give a little color on the opportunities you're seeing in the Middle East, especially with the GES contracts? And should we expect to see a ramp in award activity in 2013 year?

Well, Middle East is a very strong market. As I think I mentioned, we think between the Emirates and the Kingdom, we'll see something like $200 billion worth of awards in the next 5 years. The GES contract is going quite well. We continue to be sort of the role model for GES plus in terms of achieving what the intended outcome was. We're doing major projects, entire FEEDs for clean fuels programs, almost entirely in-country. And I think that's -- it continues to enhance our reputation with Aramco and in the Kingdom more broadly. Greg, do you want to comment?

Well, yes. On the GES plus especially, we're actually broadening our services to Aramco on the GES plus, which should give us lot more opportunities than just the FEED side or on the oil and gas side. But also is that there are other companies that's taking look at the GES model that we were in very good position to capitalize on. So yes, we're quite strong on a -- and particularly in Saudi Arabia on those opportunities. And the UAE, where our business on the oil and gas side is picking up quite well, we are reaching out to more clients and then we've had some nice awards here in the last year or so, so yes, very positive in that part of the world. John A. Allison - BB&T Corporation: Okay, and one last one, if you don't mind, regarding the chemicals market. What do you see as Jacobs's areas of strength across the supply chain, such as ammonia polypropylene, gas to liquid, et cetera? And what you see as your greatest opportunity areas?

Well, Jacobs has great, great, great strength in derivatives, ethylene derivatives. So polyethylene would be an example, EO, EPG, pretty much all of the downstream from the ethylene cracker kinds of projects are Jacobs's strength. We've probably done more of those kinds of projects than anyone, particularly when you start thinking about -- in the Gulf Coast or in the U.S. We also have tremendous capability in utilities in off-sites and bring a tremendous capability, not only domestically but in terms of what we can put in India. Because the -- our Indian operation has been doing U&O work for 30, 40 years. So we're really good at it, and we can do it very, very cost effectively. So we're not going to do any ethylene crackers, but we'll probably do an awful lot of what's left. Gas to liquids, I think the -- we have no particular gas-to-liquids expertise, but there's so much associated with a GTL job that isn't the GTL itself. Again, I think things like U&O, big bucks for us. I think there'll be opportunities because of the scale of these projects, where Jacobs participates in joint ventures. So I think that those will also represent some significant opportunities for us as a company. And then there's also the whole program and master sort of program for these developments. When you think about something like a whole new ethylene complex up in the Marcellus, there's a planning cycle and figuring out how to get that all done that might ultimately lead into program management role, that's also something Jacobs is quite good at. And you don't know -- you don't have to have ethylene technology to take on that responsibility. So that's another area. I mean, I just use that as an example of where we might be able to be a -- take a leadership role in the overall program. So this whole chemical cycle is really very good for us and one where we have tremendous expertise and long-term client relationships to support our position.

Our next question will come from Andrew Wittmann of Robert W. Baird. Andrew J. Wittmann - Robert W. Baird & Co. Incorporated, Research Division: John, you kind of mentioned and, Craig, you kind of mentioned that G&A performance in the quarter was really exceptional, and I think we would all agree. But on a go-forward basis, how sustainability is this level of execution, maybe more specifically in dollar terms, even as the company moves into field services? Are near these levels of run rate achievable?

Well, the -- as Craig had said earlier, the first quarter always has the advantage of all the holidays. Because while that negatively impacts our billable hours and hours charged to projects, it also does help our G&As because those folks take the holidays and such as well. So there's traditionally a little bit of a ramp-up in dollars from the -- our first quarter to the second quarter, the first calendar quarter. Our -- so we would expect to see a little bit of that. But certainly, I think the trend, as a percent of revenue, will be flat to improving as we go forward, particularly since -- as we see the field services grow, you don't have the same G&A impact because you don't have the space, you don't have all the people supervision and such that goes along with growing the professional services side. So as we see the field services revenues coming back up, the G&A percentage of revenues will trend down even more favorably. But through the year, I think we'll see a little bit of step-up in the second quarter dollar-wise, and then it'll be flat to maybe even trailing down as we go through the rest of the year. Andrew J. Wittmann - Robert W. Baird & Co. Incorporated, Research Division: Helpful. Craig, on the federal government work, I guess we're past Phase 1 of the fiscal cliff heading into Phase 2. Have you seen bidding activity or RFPs from the government change in their velocity now that we're at least past the first hurdle here? Can you just talk about what the complexions of that business look like today, visibility et cetera?

Sure. That -- the business, interestingly enough, is largely unchanged. It didn't change a lot with the looming fiscal cliff, and it hasn't changed a lot since this sort of kick-the-can activity took place. And I don't know that we expect that it will, certainly not in this fiscal year. It may be that we'll see some changes in activity as we go into '14. But I think it's too early to say with any certainty. Tom, do you want to comment?

No, I don't think that we've seen any change, and certainly, I don't think it's driven by the fiscal cliff or the budget uncertainties. But if there is a trend over the last 2 years, it's more on the federal side in terms of contracting strategy as they move from large single awards to MATOCS have actually extended the contracting cycle. And so I think we've seen over the last year, the last 2 years, even as we speak today, a lot of the contracts where we're the incumbent have got 3 months, 6 months, even 9-month extensions so the government could go through its bidding process. On the whole, that's good for Jacobs. Since we're the incumbent, we just carry on under the current contract for an extended period of time. But I don’t think any of that has anything to do with budget crisis, this fiscal cliffs. Sometimes elections slows things down a little bit. We maybe saw a little bit of a slowdown, but I may not put in the little-bit category, 30, 60 days, especially since there was -- Obama was reelected. So we haven't seen any evidence of it yet. Andrew J. Wittmann - Robert W. Baird & Co. Incorporated, Research Division: What about as you look maybe past February 28, as that's the date that Congress eventually gives us in terms of maybe finding out some budget certainty in terms of spending? Does that release the valve on other projects that maybe have intended us to take a longer duration to execute? And just kind of your view as to what could happen to federal government if we get some clarity out of them.

I think it has minimal impact on our business. The nature of our business, the duration of these contracts, the type of work that we're doing are not amendable, frankly, to rapid change. Most of these contracts, you can reduce the scope or cut back on the headcount, but the work that's being done can't go away. And so I don't see any likely step change with more budget clarity for businesses like ours. I think that might be different if you were in the hardware supply business on the defense side. But the way our services business works, we're not expecting big swings, one direction or the other. Is that fair, Tom?

Yes. I think -- one thing, maybe we need to characterize our federal business a little bit. Our federal business is largely not driven by big projects. They're driven by big contracts, which have a long duration, 5 years, 8 years, 10 years, to supply resources to enable government agencies to do what they're going to do. Unless the entire mission goes away, there's some level of support that's required. Now budget constraints, we might see a 10% reduction or 20% reduction in particular contracts as the missions of the agencies change or as the budgets get tighter. But the contract itself doesn't really vaporize, and we're not bidding on -- for the most part, with 1 or 2 exceptions, there are not a lot of single-event big projects that are in our ongoing federal business. Does that help? Andrew J. Wittmann - Robert W. Baird & Co. Incorporated, Research Division: That helps a lot.

Our next question will come from Brian Konigsberg of Vertical Research.

I just want to touch more on the chemicals opportunity. Obviously, there's a lot of enthusiasm for what's going on. But I'm just curious what you think the actual gating factors are. There seems to be a lot of projects being planned for the Gulf Coast, obviously, Texas in particular, a bit in Louisiana. I mean, the capacity to actually execute these projects, does that become a big issue to be able to procure the amount of labor needed to actually get these projects off the ground? Maybe if you can just give us some thoughts around that.

Sure. I think that the capacity issues will be less significant in this cycle for some contractors and, therefore their customers, than it has been in prior cycles, simply because a number of the big contractors, Jacobs included, had developed a significant capability to move work off the Gulf Coast. So the historic constraints of everything having to be done on the Gulf Coast, I think those constraints will be less significant this time around, although there still will be some. I think that there will be a point in time when projects begin to look expensive and that the -- some of the projects that might have been announced that were sort of not in the leading part of the pack don't go forward. But that's usually a couple of years into the cycle. So I don't think that's a fiscal '13 or even probably a fiscal '14 issue. But if you go look -- if you go back to the bubble in 2007, 2008, before the bubble just completely collapsed, we started to see a few projects gets --get extended because the costs were simply too high. And I think you'll see that again in this cycle if it continues like it appears to, but I don't think that's a near-term issue.

Got it. And just secondly, on the Middle Eastern opportunities. So I think you mentioned that you may be able to pursue some work outside of just the FEED contracting. Is that within the GES plus framework whether it would be a PMC or EPCM or whether it might be -- is that type of work falling within the GES plus structure where it's only going to be several contractors competing for it, or does that fall outside of that GE plus -- GES plus framework?

The answer to that question is yes. And by that, I mean, it's both. We have that ability to do those kinds of things under the GES framework, but we also see lots of opportunity outside that framework. I don't know, Greg, do you want to elaborate at all?

No, that's correct. It's well mentioned, Craig. Again, the opportunities in the Middle East are numerous, and we're sticking to what we do. And the GES plus is expanding, and other GES-type contracts are coming out. But the opportunities outside of that family of contract GES are quite favorable to us, and we have recently won some sizable PMC projects.

Our next question will come from Chase Jacobson of William Blair. Chase Jacobson - William Blair & Company L.L.C., Research Division: So the one -- Craig, you talked about gaining market share a number of times on the call in a number of your different markets. Can you give any color as to where you're getting the market share from? And it sounds like a lot of it's because of your cost advantage. What is keeping your competitors from lowering cost or going after some of these contracts on price, just seeing that you're taking share from them? Any color on that would be great.

Yes. Let me start with the second part of your question first. Remember that, that public sector market has, for the most part, been a cost-plus market for 50 years. And what that's done is that it's basically set up these businesses that are a lot of our competitors to a position where the government will pay you -- whether it's local government or federal government, will pay you whatever your costs are, plus a profit on your costs. And that's resulted in, frankly, fairly poor cost discipline in the public sector companies, maybe not so much the big public ones as it -- as in the rest of the industry. In fact, we find when we make acquisitions of companies who have traditionally worked in these industries, that their cost structure is often 25%, 30% higher than it needs to be or than it is under Jacobs. So that being the case, we're now in a market where the customers are becoming sensitive of those issues, and it's starting to drive work toward the big contractors, and specifically Jacobs, who have these relatively low cost structures. And so the folks who are suffering most aren't necessarily the big public sector -- big public company competitors of Jacobs. It's the little guys, quite frankly, who are getting beat up pretty bad. If you're a mid-tier or small infrastructure engineering company today, you're having a very tough time getting away from any –- other than win a little curb and gutter work, you're going to have a tough time growing your business and you're going to have a tough time holding on to share. So that really is the bigger part of where our market share growth comes, in something like the infrastructure business. Does that answer your question? Chase Jacobson - William Blair & Company L.L.C., Research Division: Yes, that was actually very helpful. The second question I have -- let's take one shot here on the acquisition front. So after it was a little over 2 years ago at this point, you've been building cash nicely since then. You've been talking about acquisitions. You talked pretty positively about the environment for acquisitions in terms of multiples and the amount of companies that are out there. But at the same time, you kind of say you don't expect anything in the near to intermediate term. Can we imply -- does that imply anything about the potential size of the next deal that you may do?

Right. It doesn't -- it wasn't intended to, let's put it that way, right. We continue to look at everything from small deals to fairly large ones. Obviously, fairly large ones take longer to mature than the small ones do. We're also looking largely outside the U.S. So things like due diligence and contracting requirements and local governments' requirements relative to acquisitions all factor into the timing as well. It's certainly more difficult to do an acquisition in Brazil maybe than it is anywhere else in the world, I don't know, because you've got all the Brazilian rules, you've got all the foreign corrupt practices work to do. It's a big challenge relative to due diligence and setting up the deal relative to buying a company on the Gulf Coast that has a particular expertise we like. So long way -- winded way of saying, lots of prospects out there, a little more complex to do, even when they're small, than what they have been historically. And so we're being cautious about when we think things might happen.

Our next question will come from Robert Connors of Stifel, Nicolaus. Robert V. Connors - Stifel, Nicolaus & Co., Inc., Research Division: Within the U.S. refining and chemical clients that you guys serve, just wondering what your market share position on the O&M side when you look at different regions, such as what does your market share look like for the Gulf Coast region and then compare that to, say, like the PAD 1 and PAD 5 districts.

I can't really give you a good answer to that question. We've tried to calculate our market share more than once, and it's very, very difficult to get good data to let you determine your market share. I would tell you that my estimate of that is that in all cases, we're low single digits, maybe on the Gulf Coast, low double-digits. It's a huge business, and there are lots of people in it. You have to have the perspective that in our industry generally, we have about -- as a company, we have about a 0.2% market share. So even with our big customers, individual customers, it's very difficult to figure out what our share of their CapEx actually is. So 'd love to answer that question, but I don't know the answer. Robert V. Connors - Stifel, Nicolaus & Co., Inc., Research Division: Okay, that's helpful. But I guess -- did -- when do you guys expect the turnaround work to pick back up? I think you had indicated that earlier in 2013. And then regarding turnaround and also some of the maintenance contracts, is there a -- are any of those coming up for rebid any time soon?

Let me take the turnaround question first. Turnarounds are generally awarded on a turnaround-by-turnaround basis. So each turnaround is its own competition. Sometimes you get them self sourced, sometimes you don't. The turnaround season will start when the weather warms up, for the large part. So we're expecting strong turnaround activity to begin in the -- in our fiscal third quarter and continue through summer. That's one of the things that makes the second quarter a little weaker than we would like it to be, because we don't have a lot of field construction activity and field turnaround work in that January-February timeframe. But if -- there's every expectation, as we sit here today, at least, that it's going to be a good, solid turnaround season. On the maintenance contracts, generally, maintenance contracts have something like a 3-year term. And so there's always something coming up for rebid, either ours or somebody else's, and that's just part of the ongoing business. That's -- our approach is to keep about a year of the maintenance contract in backlog until we get to the end, and then we see what happens. Robert V. Connors - Stifel, Nicolaus & Co., Inc., Research Division: Okay. And if I could just squeeze one more in is that all the field -- with field services ramping and maybe a little bit of margin decrement from that, I think the one thing that's escaped -- escapes is that field service. The cash flow characteristics are much better. So I was just wondering, can you get to the sort of networking capital position as field services rises into late '13 and '14 that you enjoyed back in, say, '05-'07 timeframe?

Yes, in fact -- usually, the field services are cash neutral as opposed to our professional services. And as -- so as we see that ramp up, you won't see a corresponding ramp-up in receivables and working capital needs. And in fact, on some of the -- outside the maintenance but just on -- as we go from the detail design and construction, often we can wrap the detail designs into the payment terms we get for the overall cash flow, particularly as the field services start up. So it can have a little bit of a benefit even on the professional services side as it relates to the projects. So when you look at our different businesses, the businesses that have a higher component of field services tend to have better DSOs and such than the pure professional services parts of our business would have.

And generally, the process in industrial businesses as well. So private versus public also tends to have slightly better DSOs.

Yes. Getting back to just -- in fact, '05, '06 and such, we are more in the international arena, particularly more of the Middle East and such. And there, these practices tend to stretch out receivables a little bit. So you hit a little bit of a balance or -- there. But I think, certainly, that's the direction we would expect to see the working capital, the receivables moving to work -- back to work as we see the business pick back up on field services.

And we've come to our last question, which will come from Stewart Scharf of S&P Capital IQ. Stewart Scharf - S&P Equity Research: You mentioned it's been very positive on many of the segments across oil and gas and chemicals and infrastructure and now improvement in PharmaBio and spoke a lot of comp. I've been trying to get a feel for what the risk is or what would be the greatest surprise to you as far as something that -- what areas would -- that you would expect something to go wrong, or do you see the strong segments continuing to be strong while the others become strong, so there -- so all segments are strong at the same time? Or -- I just want to get a sense of what your – what would be a negative surprise?

Well, certainly, a negative surprise would be if the outlook for our key customers were to turn sharply down, or that we start to have big cash flow challenges and we start seeing project cancellations, like we did in the '08 timeframe. That -- the industry deals -- at least we deal well with what I characterize as gradual change because we can adapt. But when you have 4 or 5 customers cancel 40% or 50% of their work, those kinds of things are pretty traumatic for the system. So if -- as a result of European economic crisis, some failure of our government to deal with the fiscal cliff, the captains of industry became dramatically more negative about the future and started canceling projects, that certainly could be the -- could be a risk. I talk with the CEOs of our customers with some frequency. I was with several CEOs when I was in Australia and China recently. That's not the outlook that's being described to me. Even in the mining and minerals industry, that’s not the outlook I hear. So I don't have any reason to suspect that is coming, but I think that could be a dramatic -- if you're looking for one, that could be the dramatic impact. In terms of the growth of the markets, we don't ever expect all of our markets to be growing solidly at one time. In fact, we've tried to build an engine here, if you'll forgive the analogy, that's got 8 cylinders and needs 5 or so to run to grow well, and that's really where we are today. As long as 5 or 6 of our markets are growing nicely and our share of that market is what we think it should be, we're going to grow nicely as a company. And we'll always have a market or 2 that's not as strong or even weak, negative weak, in that group of markets somewhat. Does that answer your question? Stewart Scharf - S&P Equity Research: Yes. And regarding the target of 15% earnings growth, you mentioned over the next few years, on the average, would that imply that you're looking to be -- for it to be closer to the mid-teens more consistently? Or do you see the potential for it getting back to that 20%-plus growth from 5 or 6 years ago?

I think you'll see periods where the trailing growth rates are in the high teens, low-20s. It'll be from a combination of strong markets and good acquisition growth. But our expectation is that over the long term, it's going to be plus or minus that 15% -- well, 15% plus, I hope. And it'll be a combination of organic growth and acquisition growth. And like I say is when you get in a strong upsurge market like we had in that 2006, '07, '8 timeframe, that's when you'll see some of those growth numbers going to spike up. But of course, you'll pay the price for that when you get the kinds of numbers we have today.

Yes. We would actually rather not see those kinds of bubbles, because the reaction is usually negative afterwards. So you got to recall that when we were having that 20-plus trailing compounded growth rate, the annual growth rates, individually, were up in the 30%, 40%. And that is very tough to sustain, not only because of the required growth for us but also the capital spend of our customers that drives that kind of growth. So we'd rather see a little bit more moderation in the markets than the boom-bust cycles that you often -- that you've seen historically.

And this will conclude our question-and-answer session. I would like to turn the conference back over to Craig Martin for his closing result -- remarks.

Well, thank you all. I think this was another good quarter for us. As I said, I was particularly proud of our team on the cost-control side. We had a good sales quarter. We're looking forward to another good quarter in -- from a sales perspective as we go forward. Still a challenge or 2 in terms of the construction side for this next quarter, but I think the uptick that John described in the outquarters will be a real positive for us. I think we're in a great position to see some good growth for the next several quarters and maybe even the next several years. Thank you all.

Ladies and gentlemen, the conference has now concluded. We thank you for attending today's presentation. You may now disconnect your lines.