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

Our earnings announcement and Form 10-K were filed this morning, and we have posted a copy of the slide presentation to our website, which we will reference in our prepared remarks. I would like to refer you to our forward-looking statement disclosure, which is summarized on Slide 2. Certain statements contained in this presentation constitute forward-looking statements as such term is defined in Section 27A of the Securities Act of 1933 as amended in Section 21E of the Securities Exchange Act of 1934, as amended, and such statements are intended to be covered by the Safe Harbor provided by the same. Statements made in this presentation that are not based on historical fact are forward-looking statements. Although such statements are based on management’s current estimates and expectations and currently available competitive financial and economic data, forward-looking statements are inherently uncertain, and you should not place undue reliance on such statements as actual results may differ materially. We caution the reader that there are variety of risks, uncertainties and other factors that could cause actual results to differ materially from what is contained, projected or implied in our forward-looking statements. For a description of some of the risks, uncertainties and other factors that may occur that could cause actual results to differ from our forward-looking statements, see our annual report on Form 10-K for the period ending September 29, 2017, as well as other filings with the Securities and Exchange Commission. We are under no duty to update any of the forward-looking statements after this date of this presentation to confirm to actual results, except as required by applicable law. Please now turn to Slide 3 for a review of the agenda for today’s call. I would like to note a few items in regards to our presentation and remarks today.…

Thank you, Jon. Welcome, everyone, to our Fiscal Year 2018 First Quarter Earnings Call. Before discussing our financial results, I’d like to begin by reinforcing the priorities that we have set for the company. These are to further demonstrate our winning culture of safety, integrity and client centricity, to continue to strengthen our industry-leading quality and delivery, to progress our diversification into higher-growth, high-margin programs and projects; and of course, relentlessly drive a successful integration of CH2M, combining the best of both organizations to achieve our committed earnings growth and cash generation targets. By achieving these objectives, we expect to further differentiate Jacobs competitively, retain and attract the industry’s foremost talent and generate superior value for our stakeholders and society. Now turning to our 2018 fiscal year first quarter results. We continued to benefit from strong end-market demand across both our Aerospace & Technology and Buildings & Infrastructure lines of business, and we experienced modestly improved fundamentals in our petroleum, chemicals and mining sectors. First quarter Jacobs-only backlog was relatively flat at $19.6 billion, versus the prior quarters record-high backlog, but up $1.4 billion compared to last year’s first quarter. This reflects the fact that three out of four of our lines of business posted year-over-year backlog growth. It’s also important to note that our quarter-end backlog continued to exclude the impact of close to $850 million of previous awards that remained under protest at the end of the first quarter. From a P&L standpoint, Jacobs revenue, excluding CH2M, was up 3% versus the prior year. Total gross margin was solid at 17.7%, up over 100 basis points from last year’s first quarter, as we continue to deliver on our strategy to drive improved project execution and shift our portfolio to higher-value business. Adjusted earnings per share of $0.77 increased…

Thank you, Steve. And moving to Slide 11, you will see a more detailed summary of our financial performance for the first quarter of our fiscal 2018 year. Before I start to review our results, I would like to reiterate what Jon said earlier that our reported results include only 15 days of CH2M in the quarter. Please note that we have also footnoted the stub period contribution to our reported metrics within our earnings slide presentation, all of which is posted to our Investor Relations website. So during the quarter, Jacobs legacy revenue continued to gain momentum, growing 3% year-over-year, driven by a strong 10% increase in higher margin professional services revenue. The increase in Jacobs revenue was driven by solid performance in our Aerospace & Technology and Buildings & Infrastructure lines of businesses, offset by some softness in our Petroleum & Chemicals line of business, which, as Steve highlighted, was driven by the continued challenges in their end markets. When including the stub period impact of CH2M into our results for the quarter, our revenue actually grew nearly 8% versus the year-ago quarter. Overall gross margins, including the CH2M stub period impact, were 17.7%. And Jacobs legacy gross margins continued to be strong at 17.6%, up 120 basis points year-over-year. While corporate Q1 G&A costs were up year-over-year, approximately half of the increase was driven by some discreet accrual adjustments, a partial lump sum pension settlement and increased legal fees. Our medical costs are also expected to be up year-over-year, which will put upward pressure on corporate costs for the balance of the year. While GAAP operating profit margin was 1.7% due to the CH2M-related acquisition and integration costs and a onetime noncash charge associated with the change in the U.S. tax law, our adjusted operating profit margin…

Thank you, Kevin. Finally, on Slide 17, in summary, we’re executing well against our three-year strategy to maintain the culture of safety, integrity and innovation, while driving operational and financial discipline with a focus on profitable growth. Our first quarter was a solid start to fiscal year 2018, and we’re optimistic that an improving macro backdrop is unfolding and we’re positioned well to benefit from it. Finally, we remain confident in our previous outlook. And as a result of a lower expected tax rate, we are raising our fiscal 2018 adjusted earnings per share outlook to a range of $3.85 to $4.25, which is up from last quarter’s guidance range of $3.55 to $3.95. So operator, we’ll now open up the call for questions.

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

Thank you very much and congratulations on the quarter.

Thank you, Tahira.

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

Yes, look, I think the margin profile associated with the synergies, there was very limited synergies in the first quarter. You might remember that we did some – took some actions at the end of the fourth quarter, our fiscal fourth quarter, which probably added $0.015 to the figures, which is embedded into that $0.77 figure. So I would say it wasn’t material enough to really fundamentally change the margin profile. So I think the flattish numbers kind of remain in place as it relates to that margin profile you’re alluding to.

Got it, okay. And Steve and Kevin, it seems like we’re at a stage based on your bottoms-up commentary and really a backlog where we could potentially start seeing mid to high single-digit revenue growth into fiscal year 2019 or at least mid-single. To the extent we do, what is the margin profile? How much of that trickles in? Or was this – if you start to go into the high single-digit organic growth rate sort of range, do you need to make some more investments to keep that up?

Yes. Just, Tahira, I think a couple of points to your question, that we do believe that all four of our lines of business will, from a P&L standpoint, be seeing revenue growth this year versus last year, some more than others. And from a backlog standpoint, Aerospace & Technology, Buildings & Infrastructure and even modestly on Petroleum & Chemicals, we’re expecting positive backlog momentum through the rest of this year. The A&T situation will give us probably our biggest boost from a scale to be able to drive both profit growth and margin growth with these large projects that I described starting to move into execution as we get into the second half especially, third and fourth quarter. And so we do expect to see some momentum on both profit and margin growth there. But you did say it, we are seeing a strong profile, and therefore, we’re making sure that we’re hiring and training and putting in the investments to make sure that we’re positioned for 2019 and beyond. But all in all, we think that there is still opportunity for margin improvement, but clearly profit growth as we go through the second half of this year.

Got it, thank you.

Let me also say, just on what Steve said, on the revenue side, there is going to be a ramp over the course of the year. And so we’ll – our expectation is we go from low single digits up into the higher end of the single-digit range over the course of the balance of the year. So A&T will certainly be a part of that ramp-up in terms of revenue growth, too.

Okay, great. Congrats again guys.

Thank you.

Thank you.

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

Hi, good morning and nice quarter. I guess two questions. One, I was impressed with the margins within the – the margin improvement that we saw in the Petroleum & Chemicals sector. So can you talk about sort of the sustainability of those margins? And then, Steve, as you look to that market potentially improving, do you see Jacobs participating more in the OpEx cycle or big CapEx cycle within Petroleum & Chemicals moving forward? And then I guess, my second question. Kevin, you commented, I think, about the second quarter in $0.10 of sort of non-discrete items or whatever. Can you just talk about that relative – give more color around that? Are you implying that the street is too high, $0.10, just because the modeling gets a little funky with us trying to model CH2M? Hell, I just want to make sure we’re not, better expectations are correct for the second quarter. Thanks.

Thank you, Jamie. So on the Petroleum & Chemicals questions, we’re very pleased with the focus on margin improvement. On both the year-over-year and sequential basis, the Petroleum & Chemicals team had clearly driven up the operating profit margin, which is critical to achieving our strategy. And as we get through the year, we’re seeing a nice mix of everything from some selective large projects, especially overseas. We have some good things going on in the Middle East and some of the other locations, but also a good mix of sustaining capital and O&M. And so overall, that profile should allow us to continue to see year-over-year margin improvement as we get through the rest of this year and also start to see that sequential revenue growth in P&C, as they’ve sort of cleaned up from the past and are now benefiting from the higher mix of backlog that they’ve been winning over the last several quarters.

And Steve, just to follow up on the – because obviously, there’s a lot of work that’s going to be happening in the Middle East, and you guys are well-positioned on one specific job that I’m sure you know what I’m talking about. Can you talk about your willingness? Is this – is energy influx in particular work in the Middle East? Are you comfortable with taking on fixed price risk? Or – I’m just trying to think about how you plan to participate in that market, which could potentially be higher fixed price work.

Yes, we’re – we don’t see a radical change unfolding in the Middle East and internationally on the projects that we’re working on. So other than a couple of selective projects that we have out of our Houston office for U.S. chemical clients that we’ve talked about in the past, everything that we’re working on is very consistent with our risk profile. And so we’re excited about some of these major projects that are involving both chemicals, some of the chemical derivatives, some large refining projects in Asia Pacific and the Middle East. And then what CH2M brings us with the water and environmental capabilities to add onto that to really put ourselves in a much stronger position to win these projects because of the wider services that we offer. All in all, Jamie, we just see well positioned with similar risk profile as we go forward.

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

Yes, look, I think to reiterate Steve’s comments, actually, we said in the past that this 80/20 split that we’ve had historically and which is not too dissimilar given CH2M’s portfolio, that we would effectively kind of adhere to that in general terms and that it wouldn’t materially change. And as you know, the lump sum projects that we do, do are very, very strongly negotiated. So I think that’s an important additional comment to make. It’s not these blind bid lump sum projects, we don’t go down that path, obviously. So that’s just one comment. As it relates to the second quarter, look, specifically with the increase in the guidance that we have provided relative to the tax, I commented on the corporate G&A cost and that there were some kind of discrete items, the way I would characterize it, it’s more of the same in Q2, which will then fall off in Q3. There are different costs that will be incurred in Q2 versus those that I outlined. And I just wanted to give you guys a heads-up that, that incremental guide on the tax benefits, we won’t see some of that in the second quarter. And it was just prudent to do so, so you kind of model it correctly.

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

Thanks.

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

Hey, good morning, guys.

Good morning.

Good morning.

Steve or Kevin, can you give us more color into the expected organic revenue growth at CH2 for 2018? You mentioned that last quarter, it was down a little as oil and gas was a drag, but it was up an underlying 2% in calendar year 2017. And you’ve previously given us buckets of growth for CH2, water and environment expect to grow 4% to 5%; nuclear start to grow 2% to 3%. So as you close the deal, do you see any of these CH2 businesses going slower or faster than what you originally thought in 2018?

Yes. So maybe starting with CH2M because I think you’re asking for both what we’ve acquired but as well as the underlying Jacobs organic growth. But the strength that we have with the timing of CH2M is their state and local business, which is going to be predominantly integrated with our Buildings & Infrastructure to create this new BIF line of business. The backlog was up 18% in 2017 versus 2016. So that bodes well for now starting to see the P&L revenue and profit growth from that backlog start to get executed in 2018. And the national sector, which is going to be, for the most part, integrated with our Aerospace & Technology, was up 11%. The one soft spot was the private sector, but the benefit of putting their private sector now together with, especially the oil and gas side of it, with our Petroleum & Chemicals is really going to be the revenue synergies drive to win new business with the environmental and water capabilities we now bring to the Jacobs’ much larger platform of Petroleum & Chemicals. The timing of that revenue organic growth into the P&L will probably lag a couple of quarters as we went and start to execute those businesses. But we feel very positive about the timing of the backlog growth and now starting to see that impact the P&L in 2018 for Jacobs on the CH2M side. Does that answer your question, Andrew?

Yes, I think it does. Actually, I was mostly asking about CH2. So let me ask you about CH2 in terms of free cash flow and your expectation there going forward. And then related to that, you’ve mentioned that Jacobs’ net debt post the deal close was $1.5 billion. I think you had suggested net debt would be closer to $1.9 billion. So did CH2 come over with more cash? Was it your higher stock price that helped you in closing the deal? Like maybe you could just talk about the particulars there?

No, we did have a little bit more cash than we had expected, Andrew, is the short answer to the question. And effectively, that translated into that $1.5 billion net debt. So we’re – the good news is we’re starting from a strong perspective as it relates to that. So look, it doesn’t change our philosophy on how we go forward to delever. We think that’s an appropriate thing to do, where we’re really committed to this very strong position of being a good solid investment, strong investment-grade rating. Even though we don’t have public debt, we philosophically want to have very strong investment grade kind of metrics, and so we’re committed to that. So I think that bodes well. I would say, just additional comments maybe on Steve’s comments on the growth. We certainly like the growth outlook in state and local for sure, I think, as well on the federal side, and then there could be some potential pressure on the side of private. So I think fundamentally, the things that we called out in terms of growth profile is where we think the growth can come from in CH2M.

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

Yes. Look, we think that there is an opportunity to improve the cash flow profile. They have higher levels of DSOs, and we also think there’s an ability, and that will happen through synergies and focusing on possible business, which they’ve already started to do. The legacy CH2M team had really started that journey already. So I think there’s an opportunity for the operational cash flows of CH2M to improve over time. It doesn’t happen immediately. We’ve talked about us being able to get to a conversion number of at least one longer term, and that will be muddied in the short-term because of our costs to try and get the synergies and all that kind of stuff. But we do fundamentally believe there’s opportunities to improve it longer term.

Thanks, guys.

Thank you.

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

Great. Good morning. I guess, I just wanted to get some perspectives from you guys now that you’ve closed on CH2M. Before the deal closed, there’s a public filing where CH2M laid out kind of their view of their multiyear growth period. With your ownership of that now, how do you feel about that projection that they had out, recognizing that the 2017 number came in a little bit light of what the company has expected at the time?

So let me start and, Kevin, maybe build on it. 2017 ended up almost spot on to what we had modeled and therefore had used for our projections that we gave with regard to EPS accretion, et cetera. So we’re pleased with the final 2017 number. We feel confident in our 2018 financials as well. As I mentioned, the backlog, very high backlog. So as far as what we need to grow and achieve our overall guidance that we just gave, we feel very confident in both the CH2M and Jacobs underlying outlook as well as some of the other benefits we’ve talked about. And then we got super excited about 2019 and beyond because by that time, we’ll have had the time to really leverage the revenue synergies that we’ve been talking about. Obviously, in the early days, we’re very heavily focused on delivering $150 million of cost synergies we’ve talked about. But we’re not – as the teams have now come together, there’s a lot of excitement about what we can do in 2019 and beyond. Just as a couple of examples that we’ve come to learn over the last couple of months. Bob Pragada, our President of the new BIF, was out in Asia Pacific and Middle East and India. And the things that he and the combined teams have been talking about are smart city work in India, that CH2M brings a much higher level than we were doing in our infrastructure side where we’ve been heavily focused on Petroleum & Chemicals in India. They bring the Buildings & Infrastructure innovation side, putting those two together will be powerful. Singapore, deep relationships that the CH2M folks have with the government there, especially in utilities, transportation is combining now with our capabilities. And then the iconic programs that we’ve talked about several times really showed in some of the Middle East activities they have working on Dubai Expo 2020 and the Qatar World Cup 2022, and now being able to put these capabilities together, and I just gave you just a small sampling of what excites us that’s going to cut across all three of our new lines of business as it relates to growth. We remain as bullish as we were when we announced the deal and when we closed the deal.

So Andrew, just I guess relative to the CH2M model that was included in the S-4, look, that model was a robust model, and I’ll leave it at that. That doesn’t mean that we didn’t have our own view of very strong financial performance, which was incorporated into our valuation of the deal. So maybe I’ll leave it at that. And we’re excited about how they finished in 2017 and how they were looking to drive the performance in 2018.

Okay, fair enough. Thank you.

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

Good morning, Jon, Kevin, Steve.

Good morning.

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

Okay, thank you, Mike. And from time to time, we apologize for the sirens in the background. We’re doing this call from our New York City office in Penn Station, and it gets a little loud out there. And so we hope it’s minimal. But Mike, the answer is really all of the above. And you really laid it out very nicely because it is a combination of all three of those factors that you talked about. The biggest one, really going back to a few years ago when we launched our new strategy, and we talked about a more disciplined approach, but also a much stronger capability of understanding where we make our money, where we don’t, which offices are driving the higher profitability. And just – and also really understanding ultimately as we are now going out and bidding and winning business, how we’re going to upfront integrate that with operations on a much more seamless way that preserve the as-sold margin all the way to the end of the project. But equal to that and pretty impressive has been the added innovation that we’re now bringing in the extended services. This whole Jacobs Connected Enterprise is a major contributor led by Aerospace & Technology. And when you look at what Terry Hagen and the team have won over the last 1.5 years, we’re getting into – we’re shifting away from these rebid projects that we had about a couple of years ago that were good solid margins but lower margins, to these impressive projects that we are bringing in more IT infrastructure, cybersecurity, additional elements that we weren’t having in several years ago. And some of these are large projects, some of these are smaller niche projects, but clearly contributing to the type of margin growth. So it really is a combination of commercial excellence, project execution and just a much sharper understanding of the financial and business acumen around selling and delivering projects. Kevin, anything to add on the as-sold margin piece of Mike’s question?

Yes. Mike, look, I think everything Steve said reiterate obviously. The second point is the project execution has dramatically improved over the course of the last three years. If you look at what we call write-downs, which is basically we give away $50,000 here, $100,000 there, $200,000 here, maybe a $1 million or $2 million now and again, those numbers have dramatically been reduced over the period 2015 to 2017. So gross margin improvement has been driven, to some extent, by that. But actually, those write-downs are down 50% versus the number of 2015. So it is all of the things Steve talked about and really this whole fundamental getting back to project execution, doing good work for our clients, being transparent, not surprising them and executing in a manner that allows us to protect more of that gross margin.

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

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

Hi, good morning, everyone. You folks spoke about the infrastructure market in your prepared remarks as, it looks like, as the strongest end market outlook. Can you just expand on what you’re seeing from a feasibility study standpoint, where do you see the strongest momentum by region? And what’s your sense on the addressable pipeline of opportunities for you folks to get awards from this end market in fiscal 2018? And how does that compare to last year?

Yes, from a Jacobs-only side, if we start there, clearly, the transportation, it really does come down to that big three that I talked about earlier, Jerry, is airports especially, just a tremendous amount of opportunities globally on airport opportunities. And we’ve been winning, I would say, more than our fair share compared – the last couple of years compared to the past. And we’re in the mix of some very major projects around the world. And so the whole global – globalization of that by our Buildings & Infrastructure team to be able to bring the best resources and win projects locally has just been impressive. But big highway jobs in the U.S., transit in Australia, some big waste treatment facilities especially in the U.S. are some examples there. The resiliency drive that I talked about really over the last couple of years, a tremendous focus and improvement at Jacobs in them being able to bring sustainable solutions, capitalizing on climate change and the things that our clients need. And then on the buildings side, health care, especially outside of the U.S., some big health care opportunities in Singapore and U.K. and really around the world, mission-critical on our buildings’ data centers. We’re in the mix of some data centers in Asia Pacific and India. And overall, when we look at our pipeline globally, it’s up 20% year-over-year, the underlying pipeline of opportunity, and that’s why I mentioned we’re sort of flushed with opportunities. Obviously, we got to go out and win those. And so, Jerry, it really is across both the Buildings & Infrastructure platform. And that’s why I’m positive about now the timing of CH2M coming into the company because they would be saying the same thing if they were a standalone company of the state and local business up 18% and water being critical, environmental solutions needed by all of industries around the world. And we’ve put that together with Jacobs, and we’re really excited about the opportunities going forward.

And Steve, what we’ve seen for a number of companies in the U.S. infrastructure value chain, if you will, a relatively disappointing 2017, and considering how much visibility you folks have on the feasibility study side, I’m wondering if you can talk about the cadence of the opportunity set in the U.S. specifically as well. So you mentioned, globally, the pipeline is up 20%. What’s your read on data center pickup in the U.S. markets specifically based on what you folks are seeing?

Everything I said, we included the U.S. We’re seeing the budgets improving in the U.S., especially on the state and local side. There was some data that came out yesterday from one of the sources that U.S. transportation funding in 2017 was up, I think, it was 6% or 7% versus prior year. And all the discussions we’re having with clients, there continues to be that sort of more bullishness. Obviously, waiting to see what happens with the federal side and when and if our U.S. government is going to get together on both sides of the aisle and get this thing across the finish line. There’s just a lot of – there’s a lot of projects that are not only in the pipeline but appear to have the funding to move to the field, and we’re in the mix on these things. So Jerry, I think it’s consistent in the U.S. of what I said.

Okay. I appreciate the color. And then separately, Kevin, you folks had a really strong 2017 in terms of improvement in line of business margins really across the portfolio. As you think about what’s in the backlog over the next 9 months to 12 months, can you talk about where do you see room for the margin improvement momentum to continue by line of business versus where should we be thinking about products or projects in various stages of completion that might have a different margin profile as we head through fiscal 2018?

So Jerry, I think the overall picture is really, and part of the strategy that we put in place back in late 2016 calendar year, is really each of the line of business is focusing on trying to improve their profitability. And that strategy remains. So consequently, it doesn’t mean that we’re not going to invest in our businesses to ensure that, that growth is there. But we would expect that we would continue to have some ability to improve our margins longer term. Having said all of that, I do think the one kind of call-out, which could be a little bit different in 2018 specifically is Aerospace & Technology because of their very large enterprise contracts that they’ve won. A good margin business, but they’re not necessarily a higher-margin business. So as that kind of flows through, through 2018, as A&T ramps up, I would say that they’ll stay in that 8% to 9% range, but may not see some fundamental improvements in operating profit margin. But each of the other organizations are looking to try and drive continued improvement. It won’t all come at once. There will be a journey along that path. But ultimately, our expectations is the teams will continue to drive towards that.

Yes, I appreciate it. Thank you.

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

Hi, good morning, everyone.

Good morning.

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

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

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

So look, if you look at our A&T business, it is largely a U.S.-driven business because of the large federal presence that we have in the various parts of the U.S. government, whether it’s DoD, whether it’s the intelligence communities, whether it’s NASA, all of these initiatives, plus the DOE with environmental spend of the historical Jacobs. And now, especially with the new business coming at CH2M, it’s even more U.S.-focused. So if you look at those numbers, I don’t know with CH2M what the percentage is of A&T, but it is driven primarily by the U.S., and I would say it’s probably at least 80% of the business relative to that. Well, don’t hold me to that number, but effectively, it’s a big chunk, especially more so now with CH2M coming into the picture.

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

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

Yes, there’s discussion, but I would say at this stage, sitting here, it’s still very early. I think everyone’s still trying to figure out their tax situation. And just like us, just in the last few weeks, we’ve come to a really better understanding. So that’s going to pick up, but let me just comment on that, that our hope is that certain industries, like the life science industry, that they’ll use that benefit of being able to repatriate funds and use that to grow infrastructure and grow assets and expand in the U.S. rather than using it all to buy back stock. And if it’s the former, then we’re going to benefit. I think the industry consolidation is going to heat up as these companies get more sort of confident in investing. And we play a big part in industry consolidation with regard to the studies, master planning, but also helping facilitate the integration and facilities optimization, et cetera. So there’s a lot refining. I mentioned earlier, we’re seeing a lot – we’re hearing a lot of discussion in the U.S. But with regard to RFPs and real projects unfolding, I think we’re a few quarters away from really understanding how that’s going to unfold.

Got it. Thanks guys.

So Denise, I think we probably, given the schedule here, we’re going to need to cut the questions off at this particular point in time. But I would like to add one comment to those on the call. Just a note to advise everyone that Terry Hagen, our President of our Aerospace, Technology, Environment and Nuclear business, is going to be presenting at the Cowen conference tomorrow at the Lotte. And Steve was originally going to be presenting but has a conflict now, so I’ll be joining Terry to talk about some of the specific and unique things that we do on our Aerospace & Technology business for the defense and aerospace industry. So excited about delivering some of the news there as it relates to the strengths and capabilities of our team. So just wanted to throw that out to the team.

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

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