Good morning. May name is Elaine, and I will be your conference operator today. At this time, I would like to welcome everyone to the Jacobs Fiscal Third Quarter 2020 Earnings Conference Call and Webcast. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. Mr. Jonathan Doros, you may begin your conference from Investor Relations.

Good morning and evening to all. Our earnings announcement was filed this evening and we have posted a copy of this slide presentation and our prepared remarks to our website, which we will reference during the call. I'd like to refer you to our forward-looking statement disclaimer, which is summarized on slide 2. Certain statements contained in this presentation constitute forward-looking statements, as such is defined in Section 27A of the Securities Act of 1933, as amended; and Section 21E of the Securities and Exchange Act of 1934, as amended, and such statements are intended to be covered by the safe harbor provided by the same. Statements made in this presentation that are not based on historical facts are forward-looking statements. Examples of forward-looking statements include, but are not limited to, statements we make concerning the potential effects of the COVID-19 pandemic on our business, financial condition and results of operations and our expectations as to our future growth, prospects, financial outlook, and business strategy for fiscal 2020, or future years. 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 a variety of risks, uncertainties, and other factors that could cause actual results to differ materially from what is contained, projected or implied by our forward-looking statements, such factors include the magnitude timing, duration and ultimate impact of the COVID-19 pandemic and any resulting economic downturn on a result, prospects and opportunities, the timeline for easing removing shelter-in-place, stay-at-home or social distancing, travel restrictions and similar orders, measures or restrictions imposed by governments, health officials in response to the pandemic or such…

All right. Thank you, Jon. And thanks everyone for joining us today to discuss our third quarter business performance and strategy update. While the COVID-19 pandemic continues to occupy our time, as leaders, we must not lose sight on speaking up for what's right. Earlier today, we launched Jacobs’ Global Action Plan for advancing justice and equality, which was developed in a direct response to recent social and racial injustices. For the last several years, I've been pleased with Jacobs’ industry-leading progress on building a high-performance culture, led by our focus on inclusion and diversity, which we call TogetherBeyond. We believe this has been a critical success factor in driving improved performance and shareholder returns. Today's launch of Jacobs’ Advancing Justice and Equality Action Plan is our next phase of this journey and holds on are TogetherBeyond strategy with the four primary pillars centered around culture building and engagement; leadership, commitment and accountability; developing talent; and growing the business. This action plan is about achieving true equality for all our employees, current and future, with a priority now on ensuring black employees have unquestionable equal opportunity and the tools needed to advance and achieve their ultimate goals at Jacobs. I'm proud of the employee engagement in the development of this action plan, starting with the team, who collaborated alongside Jacobs' Board of Directors and our executive leadership team to outline transparent, specific and measurable actions. First commitment is amplifying a culture of belonging by expanding our existing Conscious Inclusion program through Bystander Intervention training with the commitment to training our 55,000-person global workforce by the end of fiscal year 2021. Engaging 3,000 Jacobs’ leaders and meaningful dialogues on antiracism to expand their focus on justice and equality. Driving personal accountability of senior leadership for inclusion by tying individual inclusion and…

Thank you, Steve. And now, moving on to slide 7 to review our Critical Mission Solutions performance. During the third quarter, our CMS business performed better than the COVID outlook we provided in the second quarter. Our solid third quarter results demonstrate CMS’s resiliency and agility to work and perform at the highest levels for our clients. Though we will continue to be in COVID impacted environment through early fiscal 2021, our performance has been encouraging. The ability to recover from the shutdown despite physical distancing occurred faster than originally anticipated as our workforce and clients have addressed challenges and continue to execute on our contracts, regardless of work location. The underlying structural demand for our services remained strong. And as a result, total CMS backlog is now at $9.1 billion, representing a 3% year-over-year growth on a pro forma basis. While a portion of our CMS portfolio can be performed remotely, we did see some impact in our long-term enterprise contracts that involve highly technical work on client sites. Some elements of these stable and resilient contracts did experience temporary impacts from physical distancing protocols. Let me share with you some details on the impact along with some notable wins by sector. Our U.S. federal civilian business makes up about 35% of CMS’s revenue, with the majority of the revenue coming from our NASA and DOE clients. As we’ve shared with you in the past, Jacobs provides broad support to NASA in its accelerated work to meet the current administration's mandate to return to the moon in 2024. NASA must make progress towards these national goals, despite the challenges of working remotely and the reduced on-site workforce. At the end of our second quarter, we anticipated a low overall impact at NASA in the second half of fiscal year…

Thank you, Bob. I'll discuss a more detailed summary now of our financial performance for the third quarter of fiscal 2020 on slide nine. Third quarter gross revenue increased 3% year-over-year with pro forma net revenue down 4%. PPS net revenue was flat year-over-year and CMS declined 9% on a pro forma basis. As Bob noted in his comments, the CMS decline was mainly attributed to physical distancing restrictions experienced to the COVID-19 pandemic. Adjusted gross margin in the quarter as a percentage of net revenue was 23.5%, down 35 basis points year-over-year. As we discussed last quarter, the gross margin continues to face a headwind due to the flow-through effect on the reimbursable rate of our more efficient cost structure in PPS -- P&PS, positively offset by gross margin improvements in our CMS business. The lower reimbursement rate for fixed costs is more than offset by the underlying lower level of G&A costs, thus representing positive operating profit and margin impacts. This is reflected in lower G&A as a percentage of net revenue of 40 basis points year-over-year to 14.6%. During the current quarter, our G&A also benefited from lower travel and employee-related costs associated with actions taken to offset the short-term financial headwinds from COVID-19. Now that we have increased visibility into the dynamics of operating in the COVID-19 environment, we are adjusting our operating model accordingly and expect G&A as a percentage of revenue to increase modestly in the fourth quarter. GAAP operating profits improved substantially versus last year, driven by lower integration and divestiture-related costs, up 116% to $194 million and included $20 million of restructuring, transaction and other charges, and $24 million of other charges consisting of $23 million of amortization from acquired intangibles, and $1 million of costs associated with Worley transition services agreement.…

All right. Thanks, Kevin. Now, let me review our total company outlook. Given our better than expected transition to a virtual work environment and the ramp up of on site operations, we’re updating our fiscal 2020 outlook. We now expect adjusted EBITDA outlook to a range of $1 billion to $1.50 billion from the $950 million to $1.50 billion. We are also updating our fiscal 2020 adjusted EPS guidance to a range of $5.05 to $5.30, up from the $4.80 to $5.30 previous guidance. Importantly, at the midpoint of our revised EPS range, 2020 total fiscal year adjusted EPS represents year-over-year growth when excluding the impact from discrete tax items in both years. Let me also provide some insight to the COVID specific impact on this outlook. At the time of our second quarter earnings call, we communicated that we expected the gross impact to second half 2020 earnings would be approximate -- the net impact the second half fiscal 2020 earnings would be approximately $0.50 per share. However, as a result of our enhanced ability to adapt to physical distancing, we now expect a lower net impact from COVID of $0.35 per share. Given our success in adjusting our operations to a virtual work environment, we are further evaluating opportunities to significantly improve our efficiency through new structural changes to our future of work and look forward to sharing our strategy over the coming quarters. And looking into fiscal 2021, we continue to expect year-over-year adjusted EBITDA growth with the second half stronger than the first half performance. With that, I'd like to open the call for questions. Operator, we'll now open the call.

[Operator Instructions] And your first question comes from the line of Michael Dudas from Vertical Research.

First question maybe for Bob. When you talked about in your prepared remarks looking at your P&PS business, and maybe a little bit more detail on the public funded versus private funded areas. Obviously, you mentioned some positive takeaways from some of the private sector advanced facilities work. How concerned are you relative to what we're seeing from Washington and the time lag relative to on the public side getting some of those projects that are on the books start to get some revenues flowing to the bottom line? Is that part of the caution that you're looking at the fiscal year, or say first calendar quarter of fiscal ‘21 moving into ‘21 going forward?

Michael, we’re actually cautiously optimistic that something will be done. But in any scenario, the strength of our backlog right now is sustainable and resilient. So really when we talk about growth is really is the discussion around the dependence on stimulus. As far as a steady she goes, our backlog is represented back to date. So that kind of brings a little bit of the separation as being totally and solely dependent on those that are being discussed right now, become more of a topic later in the fiscal year, next year.

And when you talk about from the private sector on the advanced facilities on the vaccines and such and data centers and the technology side, but you say its high intensity, that could be a positive surprise impact to ‘21 revenue, ‘21, ‘22 revenue or booking flows and is that something that's much more real behind the scenes and maybe what we’re seeing from the news going on in the marketplace that there’s certainly quite a bit of that in those sectors?

And Michael, you've been with us for a long time, you know how well positioned we are there too. So, we see the short term book and burn component of that being a real positive for us. And we're seeing, I would call, we're in the early innings of what that could mean for the business, specifically our positioning with these clients that we've had for several decades.

Your next question comes from Joseph DeNardi from Stifel.

It could be Bob or Steve, I think every defence company's being asked now how sensitive their business is due to defence budgets over the next few year. So I want to ask you that but maybe in a slightly different way. I think a significant aspect of the CMS strategy or at least a big part of the pipeline at CMS relates to weapons and program sustainment and that the opportunity there is mainly taking market share from OEMs, you won NORAD, it shows you guys have the capabilities to win sustainment. So can you talk about your confidence and being able to grow CMS over the next few years regardless of the top line DoD budget number? Thank you.

Bob, let me start and you add on. Actually, when we look at the budget that's relatively flat overall on Department of Defence, the certain -- components of that budget, when you start to peel your onion, is actually there's several growth items that are aligned with most of our priority initiatives. You look at the DoD space budget its up 28%, $18 billion budget, which fits right into our whole space intelligence activities coming out of the whole KeyW acquisition. Cybersecurity is up 5%. The Hypersonics, which were a growing player with our missile defence work, a recent Air Force win, some work that we do for NASA around that area, a whole host of classified programs where the budgets are up. And then you even look at, you know, like PFAS where they added $180 million where we're in the mix there. So environmental, Department of Defense, across our CMS, we actually feel pretty positive from a budget standpoint, even when you look at the headline of a flat Department of Defense budget.

Joe, the other part of that question is around and the strategy around gaining that market share really then comes from technology hubs that we have within the overall company and differentiating our position around what would traditionally been a people and seats kind of business around sustainment. So a technology enabled solution in order to take that market share.

Kevin, you mentioned in your prepared remarks that transitioning to higher margin work at CMS will represent revenue headwind near term. What's the message there? I mean, how material is that? When does the headwind kind of end? And is there maybe a specific portion of CMS that you kind of want to let run off? Any color there would be helpful. Thank you.

So yes, there is a few contracts that we've had, which are going to be running off over the course of the first part of 2021 specifically, doesn't mean that we're not going to be able to show some growth. And especially I would focus the commentary more on bottom line as opposed to top line relative to that dynamic, Joe. So I think that the margin profile that we've been talking about, we do believe we're going to start to see some fundamental benefits of that in a more material manner as we enter into 2021. And so while the revenue could face some flattish kind of pressure over the short term, I think ultimately we're going to be in a position where as these new kind of projects and programs come into play with the associated ramp up in revenue and margin associated with those, you'll start to see that really play out in a nice way as we progress through 2021.

And your next question comes from the line of [Jim] Cook from Credit Suisse.

I guess a couple of questions. One, you know, at your Analyst Day in 2019, I think you talked about sort of $7 to $8 earnings power potential for the company, understanding that’s not in the cards for 2021. Can you just give us sort of your updated view on, is there a bridge to get there past 2021 and what would have to happen for you guys to get there? And then I guess my second question, obviously, the cash flow in the quarter was positive. Kevin, can you just help us understand where you think DSOs can go sort of over the next sort of 12 to 18 months and you know, just how you're thinking about cash flow opportunities, to improve cash flow conversion more consistently? Thank you.

I'll take the first one Kevin and then why don’t you build on it. So Jamie, with regard to the 2019 strategy, I really think the best answer is the fundamentals of that strategy are solid. And if anything have been strengthened as we continue to diversify the company and bring innovative solutions. And it's just as you suggested, it's just moved to the right. And obviously, funding is going to play a key component on some elements of it but we're very confident, that's again just a matter of timing and that we're going to see the growth. But when you look at our critical mission solutions business and our people and places solutions, I just look at the 2019 strategy that led to that $7 to $8 outlook and feel very confident that that's still out there for us in the near-term. And as we progress and to given some guidance for '21 and I'm sure we’ll also kind of give some update overall on the timing of that question. Kevin?

So let me add some comments to Steve’s comments. Just reminding Jamie and I think you're already sensitized to as the $7 to $8 was a potential earnings potential, which assumed that we would fully utilize the strength of our balance sheet in some manner, shape or form. And I think that clearly, as I just communicated, the strength of the balance sheet is as robust as it ever has been and consequently, those opportunities to utilize capital longer term are to fundamentally increase our growth potential is certainly there. So I would just make that comment. And that it's going to be conditioned upon the utilization of the balance sheet. I think clearly COVID is, has required us to step back and reflect and make sure we're taking care of business and we'll continue to do that. But I think that clearly longer term no change, I would say versus our ability to get to those kind of figures over the period of time that we will be talking about as we think about over the next year or two, or thereabout. The other point I would say on the DSOs, look COVID is putting some challenges in place for us as it relates to the DSOs. So if you go and you think about where we progressed or not over the course of 2021, we have had some challenges in the 2020 periods. And I think that we're just going to have to continue to focus on that get back to it. Certainly, there could be some pockets of disruption in areas where it would be tough to get back at those until there is greater visibility in terms of some of the underlying sectors of which we're supporting but we do believe we have that ability. And so couple of three days adds up to some pretty significant figures in terms of our improvements in cash flow. And we would expect that as we get through COVID, I'm not going to say exactly when that will be and when our customers are back kind of without being impacted by some of the dynamics, certainly, we feel like we're going to be able to get those numbers down by those levels and then some longer term to help us get to the conversion numbers that we would like.

And your next question comes from the line of Josh Sullivan from Benchmark.

On the defense contracting environment, you mentioned you've adjusted your G&A. How has the defense customer responded to that? Are they accepting COVID pass-throughs? And then also curious if there’s increased costs plus additional remote working, has had any impact on the government's perspective on low cost, technically acceptable bids versus the more value added technology enabled approaches you guys are starting to put forward?

So I think that -- I’ll answer the second part first, Josh, is that we do see that the value added in the differentiated solution is being accepted by our government client. As a differentiated solution, the natural if you look at what happened during the last dislocation or the global financial crisis, there was a trend more towards acceptable low bid. We haven't seen that yet. So I think that kind of plays to where we sit in the value trajectory. First part on some of the, when I say stimulus, some of the continuing efforts to keep our people going on critical efforts. I think that's a testament again to our portfolio. If you look at each sector that we're serving, it's not everybody that in the defense contracting community received the CARES 3610 type of compensation. We did, just because of how critical our services are with our government client. So we like our positioning of where we sit in the defense focused areas right now.

And then you guys have a very unique perspective of the global infrastructure environment. Just curious if you could just give us a sense of what the typical cost of designing in and securing against COVID is for the customer versus maybe that same project was without COVID productions a year ago?

So Josh, I'd say that with our clients, we don't go after a lot of newer clients. So if you look at the major public agencies that we do work for, whether it’d be in the U.S. on state DOTs or big water agencies, UK, Australia, these are clients that we’d have larger framework agreements with pre-established commercial arrangements. And so going back to Michael Dudas' first question what we've seen is is a use of that platform, that framework agreements that were already in place so any type of pricing pressures we haven't seen as far as the clients having to spend more dollars in order to get that work done. I think those vehicles are helping the client as well, because that cost of procurement that we talk about it from a supply chain standpoint having those agreements in place has helped the clients as well.

And your next question comes from the line of Andy Kaplowitz from Citi.

So we talk a lot about the interruption from physical distancing, but maybe not as much about the positive impacts that the pandemic could have on Jacobs. We talked about life science potential but could you talk about how your customers are reacting to the potential for re-shoring and bolstering supply chains in general and how Jacobs could be involved there? And then how work from home could potentially lower longer term costs for Jacobs in terms of mainly the potential to lower physical real estate costs as you go into FY21?

As far as the pandemic and the impact on our business, it's pretty widespread and there's a lot of opportunities there. Bob talked a lot about the life sciences side. When you look at the whole future of work, and I'll come back to the sort of the Jacobs opportunity. But the demand opportunity now that's out there for, we would say, we're in the whole supply chain of the digitization, massive change in the economy around digitization is, our industry leading position around semiconductor work, our mission critical data centers better accelerating and the whole race for 5G, all three of those areas we’re a critical player in. And we’ve clearly seen the fact with more virtual work, more streaming and online gaming, et cetera, that whole drive is going to increase the need for semiconductor capacity, data center capacity and 5G is another big example around a whole advanced facilities business. As it relates to Jacobs, we've commented that we had been working on a future of work strategy over the next several years prior to COVID-19. Our ability to rapidly shift to 85 plus percent of our employees and maintain strong productivity and be able to demonstrate that we not only can deliver projects but win business in that area is accelerating now, our work around, looking at what we can do, starting as early as 2021. And so we have a team looking at that. That's where we commented we'll be updating over the next several quarters of what that looks like, what the timing is, but we're very excited about next phase in our transformation journey around accelerating future work.

I was just going to say we were planning to give an update on those efforts as we close out the fiscal 2020 year, and what the potential implications would be for 2021.

And there's an obvious follow-up there just in terms of revenue visibility. I know Michael asked the question. Let me ask it in a different way. As you sit here today, you mentioned pro forma backlog growth is up 4%. You have say strong book-to-bill in both segments. There's some question of whether PPS needs help from stimulus or new infrastructure bill, but you've got there's advanced facility stuff that we just talked about. So can you talk about your confidence in revenue growth in ‘21? Obviously, you've seen confident EBITDA and EPS growth. But in revenue growth in both segments?

I think our belief is that absent in any substantive stimulus that comes into play, and this is not the only the U.S. but there are other regions around the globe in the UK and Australia specifically where we would be watching those areas closely. Look, I think we have a portfolio that's stable and has the ability to continue to build capabilities and deliver solutions to our clients. I think that as we think about that dynamic, we could see some growth in 2021 absent. But I think ultimately our belief is that stimulation there will be something as it relates to that and that probably results in the back half of 2021 being that much more stronger than the beginning parts of it. But I think that clearly the resiliency of our portfolio was we would suggest that we have the ability to grow in 2021.

Andy, if I could just add one more to your, the re-shoring comment, because it's an important one ad it goes to what Kevin and Steve are saying. I'd look at it from this dynamic. All of our larger, and those are we call them core, clients we've been with for decades. They're going through, clearly, there's a headline news on re-shoring. But think about it from a two step process. All of these clients are also looking at their product portfolio mix and then looking at the re-shoring aspect of that supply chain from the learnings of now countries being blocked during the pandemic. And so I would kind of characterize that as early innings. But with probably some optimism that that's going to be real as these two parallel efforts are going on at the same time.

And your next question is from Gautam Khanna from Cowen.

Just wanted to follow up on some of the earlier questions, specifically thinking about revenue growth next year at CMS, you called out the transition on the one contract. Maybe if you could just quantify what the known headwinds are into next year and then if you could also maybe calibrate just on recompetes, you know, what percentage of sales are up for recompete in ‘21 or between now and the end of ‘21 and you know, what percentage of revenues therefore are vulnerable in ‘21 to recompetes? Thank you.

Let me start Keven and then maybe you can give whatever guides you want on the quantification of revenue. But ‘21 is going to be a fairly light year to almost down to one or two recompete. So it's a very immaterial effect for us in 2021. And so from a revenue standpoint, we don't see risk around that. In fact, we're excited about some initiatives that others are looking at the recompetes that we're hopefully going to gain some share on. But Kevin, do you want to talk about the revenue question?

There's basically two things that are out there. We've had very large procurement revenue in 2020, which has actually dampened our margin profile. We've talked about that over the course of this fiscal year that will be transitioning off the books over the course of the first part of, the first half of 2021. And then of course depending upon how Hanford plays out, the Hanford Plateau project, obviously, will be off the books over the course of 2021, that assumes that the current protest dynamic doesn't change any material direction there. So those are numbers that will be plus $500 million certainly over the course of the full year, and we'll see how that plays out. But I think what I would suggest to you is the strength of the pipeline in our minds overcomes that number and ultimately starts to drive incremental profitability, because the procurement in Hanford Plateau are obviously lower parts of our margin profile. So that goes away, pipeline comes in and replaces it and margin goes up all at the same time, resulting in good operating profit growth.

And I was hoping maybe you can actually quantify the higher procurement sort of pass through stuff this year, how much is sort of non-recurring. And then relatedly bookings in the September quarter, obviously, off to a good start. Maybe can you give us a sense for what just based on when the adjudications lie, how the bookings outlook at CMS looks the next September, December quarters, kind of what you're expecting as potentials in terms of book-to-bill?

Kevin maybe I’ll start. Just building on Kevin’s pipeline comment and what Bob talked about earlier on protests. So, we're getting off to a fast start, first and foremost, because some things we want in the third quarter are not on the books yet as it relates to our book-to-bill and our bookings and backlog. And so that, when you look at, first of all, when you look at those two initiatives but maybe Kings Bay and the NORAD wins, you put that into with everything else we won in the third quarter and the book-to-bill was strong in critical mission solutions. Our pipeline is at a record high, significant increase from where it was a year ago when we look at our current CMS pipeline of $30 billion. And when you look at the margin in that pipeline, it's exciting. And the things we've just recently announced are all margin enhancement, along of course with the Wood acquisition and KeyW acquisition as those continue to ramp up. So, as Kevin said that you put all that together, this is for us, a great transition that we're going through that's consistent with our strategy that we outlined of growing the business but enhancing the margins at the same time. And we feel confident that that's playing out now as we get into 2021 and beyond. And so, Kevin or Bob, anything to add to that?

No, I think Steve, I think the first quarter will look solid. And as far as that hovering at one or above is very much within reach, we've got a nice pipeline.

And your next question is from Steven Fisher from UBS.

So you talked a few months ago about EBITDA growing in 2021, and you've reiterated it here today. I'm just curious how the drivers of that growth changed in the last few months or so, to what extent maybe is it more margin driven now rather than revenue, inorganic versus organic, or any particular program that maybe driving it now that were different than you were thinking a few months ago?

Well, let me just qualitatively say that some things that sort of help us make that comment about growth next year are most two recent acquisitions we made, KeyW and Wood, are clearly going to contribute to some of that growth next year. We've been doing very well on the KeyW acquisition around the cyber side and the mission IT side. As we've talked about this great opportunity we have on space intelligence has moved to the right a bit where it underperformed this year, but everything is still standing there with regard to the great opportunity. And we have two specific initiatives that we're moving through and we expect to drive growth next year around that whole space intelligence side of KeyW, along with the other two businesses. So we're very positive about that business. Wood Nuclear, combination with Jacobs, we're going to see the majority of the synergies next year around the cost synergies, as well as some revenue synergies. So those two businesses are going to contribute. We're going to have kind of some balancing things going on on the cost side as we resume some discretionary spending that we temporarily halted but at the same time, we have some initiatives underway where we're going to see some productivity and efficiency coming in with some of the things that we've initially talked about with future of work, et cetera. And then the rest of it is really driven by just a continuation of what we've talked about of being aligned to the secular trends that are moving in the right direction, national security, water infrastructure, water still is -- we're very bullish on, environmental resiliency, of course the whole healthcare and life sciences. We've been talking a lot about the intelligent asset management side on critical mission solutions that the three Navy wins over the last 12 to 18 months margin enhancement profit growth, and then, of course, this whole race to the Artemis 2024 space exploration side of things and add on top of that, the digital initiatives that we're working across both businesses but really the drivers of what we're talking about.

And then maybe Kevin, I’m curious what's the shape of how that 4% decline in pro forma revenues trends over the next handful of quarters. Should we assume that that remains negative through the fiscal first quarter of next year and then it starts to turn positive, or is that more like a second half of '21? Any thoughts on kind of the shape of that recovery.

Probably not going to give you specifics relative to it, but I do think certainly we're facing a more muted short-term dynamic versus longer term consistent with the comments that we've made. So probably not going to give you a lot of incremental color but certainly, we're going to be more muted in the short-term. Certainly, I would say as it relates to the Q4 numbers, certainly we're going to be thinking about that relative to the numbers. And so maybe I'll leave it there and then we'll play out and give you more perspectives as we enter into 2021 after we finish up Q4 and have another three months under our belt relative to the COVID-19 pandemic.

And your last question comes from Michael Feniger from Bank of America.

I know you said you expect some federal support on the PPS side. But before we get to November elections, there's a Fast Act expiring at the end of September. The recent Republican stimulus proposal really lacked aid for the state and local municipalities. So I'm just curious what is kind of the base assumption here? Can you guys grow, if there is a CR one year extension maybe and they just kind of punt to November? Maybe you could just flesh out your exposure by states and what you're seeing there. Are some states showing more than others, are they accessing rainy day funds? Clarity on that will be helpful.

The short answer, Michael, is that we're going to be solid. As far as tangible anticipated growth pre-pandemic, clearly, we're kind of in the new norm now. But when I say solid and when I'm saying solid, I'm talking about Michael in the event that there isn't agreement and we're moving towards an election. And it goes back to my earlier comment around the strength of our backlog and programs that have already, not only been approved but also funded and are a part of current state budgets that we don't see any reallocation going on there. So that's in the event. Now, the Fast Act line item, though, you mentioned it’s not in the Republican proposal, it is in the democratic, as well as it could be a negotiating tool as well. So I think it's too early to make an assessment on that. As far as areas that give us that confidence. If you look at what kind of our main centers of really strong presence, these are household names that do have surpluses as it pertains to certain, I’m speaking mostly on the transportation side even with revenues coming down from a user fees perspective, California, Texas, Southeast United States. And so those programs that were in our backlog and continue to be awarded, we're seeing very close to our clients and those are going to continue. How fast and how much they grow, we're still in the middle of that right now.

And I'll now turn the call over to your CEO for closing remarks.

All right. So thanks, everyone. Look, the past five months as the pandemic increased in intensity, we kept our focus on our people. The culture of caring that we've talked about is part of our D&A. Today's launch of our action plan for advancing justice and equality is our next phase, it’s our call to action and direct response to the recent social and racial injustices and actions that go beyond words of rhetoric and actions we hope others will do the same. As we look at our business, these last two quarters have proven the resiliency of our company to stay the course, drive results in times of uncertainty, the diversity of our end markets, the strong foundation, the strong global teams, have all held firm. And looking forward, the highly recurring nature of our work provides us some good visibility into our business opportunities and we expect to grow EBITDA in 2021. Thank you and good luck.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.