Jacobs Engineering (J) 8 Aug 232023 Q3 Earnings call transcript

Ladies and gentlemen, thank you for standing by. My name is Brent, and I will be your conference operator today. At this time, I'd like to welcome everyone to the Jacobs Fiscal Third Quarter 2023 Earnings Call and Webcast. [Operator Instructions].

It is now my pleasure to turn today's call over to Mr. of and President Relations. Vice Evans, Corporate Investor Development Jonathan Sir, ahead. please go

morning. Good you. Thank

which the XX-Q Our refer material slide information measures. posted website, have earnings you financial presentation and non-GAAP about reference were our this of announcement for and to filed Slide morning, the like I call. would and two we on our we'll to statements during presentation a forward-looking

Turning to the agenda.

Berryman. be Jacobs' CEO, Pragada; Speaking today's Kevin call will on and Bob CFO,

CFO, Bob highlights are begin joined activities. provide will quarter cash also financial our incoming well a recent of more summarizing overview We an an metrics providing and results. a as and of flow. our review from will And overview discussion provide by separation-related by third of of Claudia in-depth as sheet Kevin our activities will our balance

Finally, along outlook up call our for Bob questions. we'll with closing on provide open will and then the updated details remarks,

for address to our Before changes reporting over review SEC to best to I be made change hand Note, practices consistently we that and not and pass-through name practices this it more convention net of want to make measure the revenue Bob, to review, impact excluding prominent intended industry decided aligned have some does the We guidelines. and amend is our were with reporting in quarter. for from to After simply I adjusted our costs revenue. rent name measurement. net revenue, this a non-GAAP nature

reflect had been have In to in minor prior adjustments that addition, certain to not made properly revenues we certain review, included. internal pass-through periods previously after an amounts

change adjusted reported included or & been the appendix deemed immaterial our in the we this cash no revenue Note, and fiscal has earnings, as materials As XXXX Places for operating have this to on flow. XXXX. in fiscal adjusted a impact we has presentation, that have People net result, income

to over turn I'll that, Bob. With it

you thank to day, quarter everyone, XXXX our Jonathan. third year you, for and fiscal discuss today joining Thank Good us performance. business

spend to like Jacobs. by our commitment now XX,XXX-plus extraordinary Turning six be people, inspired and our and and our talent and at appreciative both world's for clients been here as to dedication the begin in to expertise and they seat continue continued the of recognizing I've I months with time to I'd the toughest I some Slide of of the CEO over four. challenges. teammates bring world-class

require all outcomes. with our technology-enabled the more step those Now that best of forward enhance and brightest minds and communities do I'm innovative proud to we than communities. better serve drive to our to to play ever, and solutions part

progress want associated significant update previously I to the provide make separate before The announced the move company on separation. results. with intent continues CMS our to to on intended the our Firstly, business quarter third an to activities I on

In addition, parties. multiple outside interest following announcement, the there from has positive been

are evaluating maximize with currently our value. commitment We this shareholder consistent interest to

completed subject previously a fiscal is As spin-off, to in is which conditions, expected be to XXXX. customary communicated,

on are stakeholders. we maximizing laser-focused of value all reiterate, our me for Let

independent our greater companies be that we that operational believe the CMS, tirelessly will to of future. and of teams both As fiscal to each believe separation progress year we continue optimization will company propel stand of we in enhancements year success. have the we up for acceleration. number a towards to a Consequently, the work identified process, In heights XXXX

more lead platforms, drive delivery our cohesive leverages to optimization, global efficiencies five, to potential and continue model that our we unleash on our operating to to just Jacobs and to structure Turning our This value-creating Slide accelerate in size enhance will advisory not in digital industry, growth. our and but consulting significant cost profitability. model see a and

technology-enabled and investments and energy highlighted have people, re-shoring infrastructure, a platforms we behind sustainability, proudly portfolio scarcity, years, aligned transition. and many for critical secular invested acceleration, water with growth, our megatrend, solutions. On We've in managed in

than Our differentiated clients more need and now is driving we growth, expertise higher ever, us solutions. and are Jacobs higher margin, delivering.

market already opportunities. these are capitalizing is on growing, and addressable Our we

record solutions I hallmark Turning and and QX; our advisory. to invest both am Notably, behind Slide pleased accelerators, growth entirely us response, six business improving to and measured growth report our model, drive cash as quarter our continue to we And is and conversion, organic. consulting another profit. climate operating allowing data by revenue a to of

Places People growth will in business profit line growth XX% with Kevin & operating X% detail experiencing adjusted and revenue year-over-year. the business significant global top line accelerating Our up we're year-over-year units. delivered net of up our

We shoots year-over-year. growth backlog see X% green a broad-based with margin of continue to gross

Its faster grow to rate. provides QX re-compete growth profit revenue our win was and visibility CMS outlook to margin X% in in that our and of at which at robust over CMS current book line, XXXX pillar increased confidence continues pipeline rates. XX% forecasted awards XX% award an minimal remained with year-over-year, a XX and Our major than continued pursuits. persist will behind top expansion. of remains and growth operating pipeline expectations stability. CMS prospects bps higher fiscal

successfully scheduled a December and second scheduled In first its the and qualification As of software, advancing for flight NASA time of Marshall team program the very result, a software the completed required the Jacobs II II of for notably at Jacobs integrated testing Center is hardware SLS XXXX, testing all involved. the Space team missions personnel exciting flight for for phase an initial mission. Artemis July, formal Artemis crude flight and the early

to in our Margins year-over-year, in by strategic XX%, led the above opportunities energy supported backlog and continue once transition. QX stabilized in cost during and the management to taken quarter, have see in and actions energy we continues PA sectors. defense Consulting team. increased highest confidence sales increasing PA by sales the again talented

a electricity developer securing contract in wind we in fixed wind example, assisted offshore For first leading auction. a Ireland's offshore price

for its in from significant impacts assess expertise clients digital their who and businesses. to seeing looking also interest is are PA opportunities AI-related

client of cyber mitigating leading a support to a threats. cybersecurity understanding specific development example, hired strategic and PA comprehensive with of plan AI the the an focus on As power

delivered Divergent a operating with and in X% XX% revenue growth year-over-year adjusted Our net growth unit quarter operating Solutions profit. strong

we pursuit competitive for the already Software-as-a-Service offering. Department functionality statewide to emission and carbon scale another planning reduction Transportation Streetlights with This efforts. large programming the won contract extend Streetlight freight Ohio traffic the provides During support support and modeling state's of to new congestion quarter, safety and management efforts. is for analysis,

seven; Turning drinking our water across innovative From project business. with $X we treatment the continue enterprise, and in billion greater reuse to offering, see coupled delivery remains to robust. our water considerable Jacobs than to to opportunities geographically diverse demand Slide looking water

growth QX, water During we pursuits. saw behind a scarcity-related healthy

Singapore scope increases Public our Board. example, long-standing with Utilities partnership with wins For the and new

to central supply Underinvestment largest for create largest -- country's awarded needs And selected Southern by continue to a agency in water base. provide we utility been more advisory of proofing interceptor storage sustainable, a large a ever future expansion needs were also be Zealand, driver. major management also have in funding one drought-resilient we program, an and local to New project. groundwater California of In strategic program U.S., proofing our the the wastewater services and the extension

sustainability We also continue see to projects. environmental and

infrastructure to from million Great Super services U.S. a provide landed and EPA's technical associated in National marquee Lakes Office tasks management and Lake Great the environmental, Program area. award $XXX we the example, Fund For RegionFind

New between which buses momentum development to also Regional And work. Orleans connector and the and for iconic We their has wins charging for energy-efficient year the no we the aligned successful Transit Ohio subsequent an continuing emissions Kentucky see to we ago services delivery continue Bridge, performed And in economic were years. infrastructure. support of accelerate aligned grant legislation subsequently in Spence Authority awarded IIJA been period. versus postponed example, Brent to closely low application. and provide And many continue and

poised are for building in we proven eight, across leadership strong track operational our Slide for this sectors we excellence. off to serve, summary, and growth Turning position well established record extremely

Now detail. our financial further to in to Kevin results review I'll call the turn over

results. financial me our to nine you, Bob, let a Thank and for of right third turn overview quarter Slide

year-over-year adjusted adjusted was the basis. slightly to my due additional will margin PA down primarily remarks. gross net I in grew X% Consulting. grew later net constant revenue as quarter X% Gross a XX%, revenue of Adjusted provide revenue Third currency revenue year-over-year, segments grew quarter and year-over-year a net on comments percentage our X.X%. in regarding

and a G&A and more net adjusted below $XX year-over-year included noncash for Adjusted percentage million as as revenue GAAP strategy. XXXX. over offsetting than $XXX other and the million margin; separation-related targeting our the acquired quarter transaction figure discipline efforts charge was $X.X G&A upon real a taken, work are and to XXX aligned from million fiscal Costs of of we a was the gross XX.X% in to actions sequentially XX% better improving our million of XXXX, managed well restructuring of $XX stay year and XX.X%, costs future full revenue to percentage net adjusted estate related operating basis footprint to due lower intangibles, for decreasing profit and were well still amortization the realized points and

of The other transaction, separation $XX costs. million costs three distinct included of related types and restructuring

million the approximately the demands. the Consulting cost PA The company's of our to market a align relates to $XX end represents initiative business with and in XX% structure to rightsize first restructuring

of advisory with and amount CMS. associated other The XX% the of the and our second costs the cost with represents separation approximately associated initial is

which of and part with is equity-based XX% associated were is transactions. incentive approximately related of total the considered agreement previous to PA bucket, noncash transaction Third the other consideration miscellaneous million, $XX PA the that costs of the contingent of cost structure

items, million, $XXX Excluding operating these over adjusted year-over-year. XX% profit was up

million the will have Our CMS figure impairment impairments be that total this Such largely for the million. excluding exit XXXX. $XXX well at fiscal this new forecasted efforts, figure million the as below year. the will total the in $XXX Of year, total approximately remain noncash items $XXX million discrete costs total we figure, for $XX we separation the year, complete of will

be the include planned connection we as forward, incurred our with CMS. course, to separation of will costs in Of now go expenses

Claudia let her would prepared detail in I provide remarks. more

to revenue to included XX and costs, the profit related impairment to align amortization our reducing related up XX.X%, I'll from dynamics GAAP intangibles; to $X.XX reporting annual transaction, $X.XX underlying restructuring $X.XX a was our related tax a operating from adjusted EPS estate operations segment. the impact noncash charge to the $X.XX real a share basis adjusted year-over-year. during Our adjustment of discuss per and by projected footprint; rate. points acquired and was charge adjusted review continuing other net $X.XX

X% Excluding third these year-over-year. $X.XX, down quarter EPS items, was adjusted

down investment the while year cost our ago the benefited versus gain of from the $X.XX sale associated with WatchGuard period, Importantly, XXXX investment.

year-over-year. EPS reduced incremental have net in The quarter In costs is $X.XX the EPS versus interest of $X.XX addition, in a figure. ago this year XXXX, impact headwind

ahead with was versus we ago forecast, our our period. overview range at expect our adjusted QX year EPS EBITDA QX year-over-year, of net As of XX.X% the to $XXX representing full end providing look healthy guidance we year the and to an down adjusted million was X% revenue. of Bob growth call, show

our ratio backlog book-to-bill revenue up and X% was year-over-year. The Xx, again, was Finally, improving year-over-year. with margin backlog, gross

Pacific. although to Backlog backlog led year-over-year, our the was on units, Solutions but offset by up Slide strong as continues turn business continues was to LOB revenue results. in in performance, advanced by some solid to all Middle see Asia consistently net QX. and adjusted Places strength let's to facilities. focus the Growth in quality continue more & pressure, the XX% was work People was almost X%, than currency. we for year-over-year and QX margins strong across Regarding Americas up XX X% East, up improving was gross operating delivering revenue flat see profit constant and of momentum, Europe

of growth QX management, operating of in G&A XX% year-over-year. revenue profit XX.X%, XX driven and strong in solid adjusted by operating XX% a basis up as percentage points resulting leverage up was and profit net currency, constant

year-over-year expect improvement continue in and in operating We and to places margin QX. strong profit people growth

sixth consecutive and X Places Our revenue sciences, the Advanced plans from investments Facilities Tier unit, revenue posted life chains, electric our customers in robust quarter demand long-term vehicle our spending continue & crosscurrents, and of supply People semiconductor double-digit pursue X/X benefits Despite by macroeconomic underpinned at growth. which drivers. of to represents approximately

remains pipeline to continue sales about encouraged outlook Our we for this and be and the segment. backlog healthy,

higher operating as at XX%-plus unit Our backlog Places to reported legislation-driven Americas with convert QX profit & begins growth rates. People

our For overall nearly XX% current We places with example, double-digit by of water, and about remain our ahead trending and cities IIJA-related opportunities is and energy growth led enthusiastic profit plan. growth power. pipeline

a and single QX international Giga and to strategic Asia Our were bright supported year-over-year East by Cities profit be pursuits. Pacific continue as revenue water up in and spot business, the portfolio, operating high Middle digits the

result, CMS benefited X% as in with Critical currency. was over solutions. technology Moving CMS pipeline revenue positions constant rate OP healthy and remains energy and also QX is XX% XX% a X% up year-to-date. up up focus an guidance, in up Solutions; win year-over-year. has up sales Mission profit The growth year-over-year. very with And operating backlog core year-over-year and to from as areas its and defense, consistent margin were for strategic profit both previous CMS space, of sequentially our operating year-over-year, XX%

as expect margins continue pipeline we on We a basis of to convert X% margin IDIQ higher on opportunities. operating approximately an full to year

quarters be our remain profit to higher-margin revenue year-over-year continue as Moving to expected an This in as improvement focused the Operating before coming quarter QX's X% when normalized adjusting net Divergent large a to of benefit margin we the compared Solutions; in the term increased underlying fruit. prior investments trend in adjusted near quarter. bear a sales on offerings should technology contracts. as acceleration X.X%, for license sale for sequential was margin and

We a in we result, QX. have past quarterly continue the divergence, to momentum two the margins over that approach margin increasing And to quarters durable. underlying XX% is as expect confidence

margins to a operating performance PA's relative Consulting. by year-over-year Revenue tough a and PA be margin XX%-plus improvement. continues potential value up peers was up with company's environment. expect action OP the year-over-year. QX basis to their XXX PA from longer-term utilization, PA improve XX% take up in driven economic was and of points indication of medium an X.Xx, Turning with to we year-over-year X% profit term for management to clients XX.X%, to for the to over book-to-bill

QX, million our guidance. Our with adjusted unallocated in were $XX corporate costs consistent

In our remarks. We comprehensive our short in above business will separation, a for remain that and streamlined prepared time. may the CMS level model we conjunction on under focused initiated period the quarterly evaluation of perspective Claudia recent advanced facility. with expect run a more elevated cost rate structure her have at infrastructure a of provide her or

Slide XX net our sheet, despite cash generation, of cash indicative earnings resulting of to quarter conversion and in the we into flow efforts. of a separation-related very discuss quality which cash $XXX income Turning a strong restructuring posted to year-to-date million, free flow. balance flow is Free our cash of temporary was and flow XXX%

for XXX% or well recorded at result, a flow cash As full year. are deliver we the positioned to and adjusted above our targets conversion anticipated

of opportunistic the agile free flow, Regarding deployment cash our remain we and in repurchasing shares.

$XXX. repurchased cash $XXX of shares average ended in During debt with in QX, $X.X million billion we at resulting billion an net $X.X over billion, $X.X just quarter price gross of debt. of of the We and

more profile We of expected to to remains CMS sheet. debt X.Xx indication approximately a a clear investment-grade our balance net QX the XXXX Our EBITDA separation. as adjusted continued strength of announced today remain and post of committed our focused credit maintaining business both

is rate debt to and weighted debt, XX% approximately the retire to the intend debt our of QX, quarters. of X%. coming interest opportunistically rate our was average of We floating tied As end in rate floating

in related appendix interest maturities, your our presentation, we expense. the For derivatives have included to and detail of quarterly debt the interest rate benefit, additional

given sheet quarterly which and cash August will on XX% Finally, we XX. to balance our flow, remain paid strong year-over-year be free increased our and committed dividend,

X.X wanted I few has to such on It past with CFO August witnessing honor over collective Before last an role and words earnings call. my talented accomplishments say on I Claudia years. XX, colleagues our the transition working to formally a the been

have I have achievements within immensely of company tenure, proud we our growth and together. made am transformation the During observed I my and

unwavering our has for to your to employees my heartfelt thanks team excellence; support, leadership investors, in I our Board, instrumental their the to trust commitment been passion and and extend dedicated success.

to future time to a my look my in end, that in supporting special going confident as forward good also bright with While and an the as in remain doubt is adviser I company have CFO CFO Bob the I comes in forward. role. the new no company's role hands Claudia

now Claudia. over will turn I the to call

you, Thank Kevin.

one Turning look this for important to such feel period partner Kevin have inflection and been He to privileged in I has superb its next week. to I been help lead this transition formally throughout now over forward Slide just at an a company Jacobs year with XX, point succeeding and history.

I've of the Strategy of management Development, As separation. center and stand-up the rollout Corporate overseen EVP our of strategic office the at CMS

also serve models with risk separation. operating goal Our effectively we work we effective to manage is can to We associated and to progress clients our have costs. companies that optimize eliminate separation-related interruption, both towards without the stranded intend to made to Due tireless of the confidently teams, hard significant continue our reinforce and

to we can independent lead Jacobs there to Yet, target value gains goal is levers have Last independent most profit one our outlined margins that margins separation continued from and further addition, that of to exciting have is operating of with time. alone. identified In more Jacobs. Jacobs. we growth quarter, XX% We'll the over believe productivity post is upside, profitability further the the further we at and streamlined drive about aspects believe separation it say we of But to separation. expand opportunity the

committed with model creation. Jacobs growth rest of aligns recognized I, and like vision. purpose team, foundation strong sustainable value the with to has Jacobs the a Jacobs' both am a absolutely purpose-led that business

and our the to vision I for employees, stakeholders. Our results our forward position. of months and commitment and meeting clients I weeks broader CFO look investors our to superior in assume the shareholders, underpins as to employees more deliver come,

I Bob. the and over to will you, call Thank turn

you, Claudia. Thank

a for and FY adjusted outlook $X.XX to XX, indicators, to of 'XX reiterate to performance adjusted strong to Slide $X.XX. EPS year-to-date due forward billion billion to to EBITDA $X.XX our range we Turning $X.XX and

QX XXXX guidance for release. year provide our earnings in with We conjunction fiscal will

Slide like special to closing, his is have contribution great a continued XX, support adviser. express in my a of personal my appreciation over tremendous fantastic I last the years. X-plus am I transformational Kevin's to has the our for privileged as success Kevin Turning to been and to would business company partner. friend

success We look on fortunate are I accomplishments contributions as very to continued critical our Claudia and date. a her team. her forward building to have on leader to

will questions. the we for now Operator, open call

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

is line Your open.

improvement. some the the where play pipeline the about as I'm quarter Good how may Thank -- morning, for And a expectation well if look margin of from? this CMS little improvement either and margin that you. you the Bob. about that as move share Claudia. is into margin recent XXXX mix, coming biggest the Kevin. bit done, given through Jonathan. you bookings, encouraged backlog that continued could Bob, at you Maybe include we XXXX? the to want three improvement on and And

of thanks. I'd coming improvement margin drivers. Mike, key now, Yes. couple from the right say a is

First is mix. the around

We the end part at not consulting when are of our right finding right board, where even we're And a service advisory across kind our I in the jobs higher-margin on got saying say the higher-end, PA, hitting component. larger front infrastructure exclusively a component. that's consultative portfolio now, I'm engagements that, of

definitely driver. So a is mix

The second is for working been margin discipline the we've on a component operational while. expansion around that on current quite

in as delivery project evolve. has as our the offering so our to And well continued stability

Moving enablement as is continued as far to through. the the starting forward, come expansion, digital

the larger delivery that becoming and for then forward. been is portfolio, real global it see our delivery the but that broad we is fruit, moving paying quarters, part quite rise some continuing We've enterprise. that it's about can't is yet, see This but this several across talking and to model And global a model. You just of broad.

Citigroup. question line next from of Andy is the with Your Kaplowitz

is open. line Your

your Good Kevin, all morning, thanks everyone. help. for

Thank you, Andy.

the leakage could from how any it regarding color decision basis What's CMS. that when interested think And and guys had give detail could more tax spin? tax looking about the sale? can, you any for a potential versus CMS' give make might to interest? us consider on you at you a you potential mentioned more time the how regarding that a parties you So you extent you us To Is strategic? frame

-- That's more we Yes. Andy, I go interest the right unfortunately, strong. we detail I've mentioned And apologize. just is We're that evaluating. into any on now, can't can't. that.

fine, That's Bob.

a ask question. then let So me different

forward. People moving & You Places -- growth

You revenue mentioned X% P&PS year-over-year. adjusted net up

QX related your you up you some think the U.S. accelerate see And funding suggest keep they're into kind think you of main here? could to do in seeing acceleration continue I Do from also growth in or funding morning accelerate 'XX? peers in fiscal the you IIJA recorded

really flow assistance flowing, grant I'd that's got in We through do. we're That that The that in Andy, grant is applications. in coupled component in with formulaic but innings, it's early actually the has of based do. component seeing the we We still -- the the and the say really IIJA helped. funding front of now, with kind

yes, do forward not legislation-driven been big continue to see the also passed legislation piece. but funding, So going is that's moving other we IIJA, and a just that that be to

The other has stimulated kind -- it's world. it acts done it's around the thing other of that legislative is

now seen I in as the infrastructure EU Chips think well parts that out world. Act we've of coming there's stimulus the of to components as some other an

the of world getting kind behind this. is So

Credit the next with is question Cook Jamie Your Suisse. line of from

Your line open. is

as year. talking what understanding as we greater mix what the well wondering delivery, well the Nice happens is guess a have the your that you're a story as on if Jacobs, question, and enablement. with the sort and project for story just as delivery my side? depending opportunity costs restructure I there new or quarter. cost digital on you're And first about Kevin, margin of there's all CMS cost thanks streamline you, to mix, there. project throughout congrats, help the seeing side, But consulting Just

with strong priorities, to the way share the Can the about quarter in investors the flow sort about talk here. you see to repurchase shorter-term allocation repurchase the things of nice continue sideline? should in was it cash question, second my then And think that in being acquisitions capital more

Claudia. ahead, Go Sure.

you, Jamie. thank So

one, the the On first opportunities. cost

the is we day for just model, delivery more global start. strategy opportunities X we with and see as streamlined to a mentioned more I business our lots in remarks, of my And as can leverage opportunity the also efficiencies we -- see more So prepared platform.

that focused the So will efficiencies, that, bring. strategy agility more and

lots on optimization the So of opportunities cost front.

capital portfolio. the opportunities happy with the we have, are we before, we structure, -- we On allocation it are said very our

building focusing portfolio the We are delivering to on organic to we time. We over and this see in opportunities this We've our it. invest growth, see ourselves continue growth.

So we that and excess our cash prioritize to returning shareholders.

those So risk-adjusted the on that priorities are all and a really basis.

next is line of Revich Goldman with Sachs. question Jerry Your from the

line is open. Your

Hi, Kevin, good morning, congratulations. and everyone

I think in your nearly X nearly years, quadrupled. the has stock

So well and again. congratulations done, Claudia .

Thank you.

could backlog you mind? business, portfolio I'm runway of ask is People don't a year on & or Bob, facilities performance wondering you X/X Places the on if or there just looks it Places like in far. of the talk you about touch X? point, XX% to portion more over be at disclosures, really that backlog, that the & on so if the given next advanced you based if just Can that's about, the good just a this People for of could so Just

X life last that's years, really continued Yes, specifically four gives We in the kind in regards great Kevin driven growth, industry just looking Sure. that doing coming but what's this seeing now was us with confidence of for obesity past, That happening oncology is Chips customers as the world, a really six moving guess of percentage is us would going confidence Tier the obesity a talked in of pipeline it seeing of been been on Backlog disease, in positive larger of that, it's our but the in work but give that then what and level in a EV about the our bigger going that's at and re-shoring, The I probably backlog quarters, effect tailwinds answer short it a got things in some be sciences, way growth robust. -- we yes. heart our coupled and we're And see the is is forward. it. drugs are in Jerry, of with portfolio that the the mentioned and we've business Act to published, back, we've that all mode You with our been better having technology in portfolio. the out and the that ages. -- step well for been by to it's on the part was part we're

with next line is Bert Subin question from Stifel. of Your the

Your open. is line

both good and Claudia. Hey, morning. congratulations and Kevin

Thanks, Bert.

Bert. you, Thank

on least follow-up at just that question, term. you is part of single to of digits, in Facility double become track digits that, continue medium to business is a of grow you of larger for rest business a Maybe business Bob, on already can Does that Advanced the if the going and think sort that the high the growing lead believe to that period a time?

probably out. confidence have trends continued the we basing in now, a in right is think that months nine What have, our I visibility visibility standpoint to the from indications six are, the project But yes. technology. we we're

short So answer is yes. the

FX sequentially quarter? the walk sort changes, become And guys you above Got will tailwind, you we just margins potentially of have that broader guess, has guidance it. there seemed question. to as think know about out stepping also I range that Can remain us just of what then P&PS sort the targeted fourth a relative at or through up. I with imply sales but the

sort of there IIJA your driven posting view, that? see ramp is projects is or starting come that's else that something largely through to in by So you're

ahead, Go Kevin.

it of we've remarks. in those to our growth a certainly as execution, that good things: say businesses I Look, prepared variety it's good discussed already relates would

ultimately drive so forward in year And well XXXX. I think it continue and positions to well to end the us

Eastman Your KeyBanc. Sean line is next question with from of the

open. is line Your

corporate just my but days, And to impressive more. CFO you to I'm costs should a taking early I that to little And a streamlining the see we also, more it kind tenure. where for Claudia the I expect just enhancement? comment costs? the press Is remaining all Thanks short realize corporate a say I wanted then comments segments? so made it's Kevin, and team. Is the very Hi, of about questions it of bit on amount and, curious Congratulations. Kevin, a in think efficiencies for wanted time. elevated I across

is So year? into if also step Some going I that expected wondered to run down be rate next there helpful. clarity would

you, Thank Yes. Sean.

right? want is part with and the the is under first, entanglements understanding say all So separation the to of I that. way, So work

and progress So sharing will -- more process. be we the a lot we as just in

so So is, or functions that to many different you factors one, and to functions. when processes explain that are tasks have together, put you it there and applies different

workflows So functions? in support on? delivery you finance it put that, HR, can think it and Sean, is numbers it so so on. of and the is Is Is model it to

So see where data you simplify to streamlined, share the as ability those efficiencies operate. you on and also you depending

XX standup operate. and And and So streams that we multiple that sharing where will give goes the we structured the all idea, process work office everywhere the operations said, have. we you that it it's we in underway. as as To process and around well management it's at different in be progress I work an functions and is have a And we really levels. very the

the global element our as of I is And very that strong delivery said platform. of key before, model one

we to maximize So extract as that of platform. that further the allows us efficiencies use

follow-up my be And for Bob. Okay. would

a think grow but to I you being able continue current to P&PS, made relative I rates. think was it about comment to at

go the RemainCo can expectations wanted relative forward? flesh as to a just I much on growth to line as out top So for we

Sure. long-term us. referring we've to X% rate, that the got to. ] [ was And comment now, growth my and what was tailwinds right behind We some nice stuck line top to X%

we end the that are. where So higher range of is

of line Your next question is Dillard the Chad with AllianceBernstein. from

is open. Your line

you, my Kevin. Hi. congrats I extend want just And Good to morning, to guys.

I spend time want So the on business. to water some

business. little more being a in you think talked and I you a rate about on $X give terms you're a pipeline the billion seeing think the about like Can P&PS it growth margin to of color broader targets? pipeline How to relative what a perspective? from

the I'm fastest-growing the Sure, we and talking Chad. XX% and the is that within in globally, the in sector, business, The in pipeline the pipeline pipeline. water that have XX%, growth year-on-year probably is

as climate then states of for not that as supplemented the the by that's just being our I mean well EPA the driven areas and infrastructure being funded these need government around user all world. in regulations robust, So a U.S. around water, just very these the of happening and are change drought is infested need in response need. driving whole the happening certain variety fees, the a is actions sources. climate are This by are

drivers So municipal standing and are away. areas and and they're strong state going the The need governments are behind all high kind of is and it. of not

we've the in leader been we're decades, we're as that's right in Chad, middle So it. that and And and a coming know, you really through. for -- sector of

should how broader rate we And about and that helpful. think That's relative P&PS segment? margins just the to growth of the business

are margins right say now today. mean kind the within above of sector I'd Yes. margins the

to that I going part forward. there. some I it's our of portfolio room think overall there's be think to And major continue a moving enterprise-wide

then you restructuring I about PA. talked helpful. And some That's think

benefits? How And initiatives? about kind think to Just actually trying about run to to think full future margin a rate we'll get get cost how when you the sense of for those saving of costs? any think

what... PA Are specifically you talking on or

PA. Just

Just PA?

Yes.

been cost the have actions look, taken. Well,

go-forward to that, as And it. into on for So to opposed rightsizing management business have talking they a grow where will the got team go that about the to ultimately, after we basis a improve while. decided margins. point we're the expecting proactively and utilization been the it

about excited by we're ability have that to for the work place. so good taken the management Really And team.

is going rate the run effectively being forward. that embedded business so into And

Yes. And sustainable.

And sustainable.

Yes.

of UBS. Fisher line from Steven Your the next question with is

open. Your is line

morning Kevin, best into to zoom growth. wanted Good P&PS Thanks. the wishes. I profit

the top talking end. before, at about were high the line Bob, You

XX% QX. quarter Where double it slowdown in -- in mean from digit, was was but a I profit it see XX% that going? Is you year-over-year that growth the before. the still do about Just

So I for you think and low guess, about here? is a Just trying QX from this sort there's here the profit of actual an normalizing into how into to or to expectation reacceleration frame think in do XXXX? that growth -- is this trajectory double-digit

a we've from been growth perspective. that that Yes. a bottom sustained Steve, vocal think from double-digit drive we standpoint, I could line

around an mix. I was there question think earlier

double-digit we're it's is way in some the the the go-forward basis where sustaining get that where events going to on might at I'd we think a So have it. now say business. area growth to sustained in about pops But

There's I'm curious economy. to types broader of streamlining landings the eight about here. in your Bob, operations, the decision-making is for how of that at managing you you're weeks the lots away economic outlook? different the but so seven from for clearly are the curious Okay. start way You're decisions That's business been into economic picture other? factoring today? making are helpful. question regard bigger to proactive of about or And the a of sort how you're then different our planning next talk you're if the landings with What affecting fiscal the Obviously, X year, moment?

things, of course a deliberate that have now and and talked a the very got several feel over say the years we comfortable And lot of is those I that we over end Yes. on, have are last -- is nobody about One I'd that it Kevin in is say say are years. going thing Steve. Claudia strong you're hearing been couple they that acutely markets we same of have focused resilient to recession. of tailwinds. the Wouldn't

well of But and broad-based in exposure of sciences even that those have area and reshaping probably geopolitical type we other world tied to the the these that inflation some of going aren't consumer-driven life in anywhere kind than And geoeconomic now to broader and are the tailwinds the of less consumer, are as is to world. chips as areas. tied manufacturing

wherever we So we portfolio confident tailwinds, feel feel is strong. And those standpoint, in. from the economy a going,

and a operating right The around CMS the prepared other go talk inflection little to using company a our doing cost component, point now and that We're this is we how and model lot run to our about we're with of separation on how even the the operations market, accelerate the posture. in and remarks. we bit

resilience. So internal that's creating more

last And something Claudia and is that's that earlier, would spoke say optimization. cost about then I the

decades, focused we're us that and time, been -- we to DNA, been very has a structure known company look to the us in Steve, going and acutely leaner cost for management have long we known that have We for at you've continue do prospect. that's a as in to continue on our and cost

comes next Baird. with line from Wittmann the of Your question Andy

open. is line Your

little It some taking you costs. I new Great. for I of my cash it's Kevin, the wanted questions. And been pleasure. cash PA of to estate kind looks restructuring. in I come guess of that a the there's is outlook But the Thank a for out cash guess quarter questions split bit, down Good restructuring bit. they're million X probably related of little up morning. for suppose $XX like ask that's about real to on a I taken the noncash them. The this. down

had that that costs, cash down be restructuring is what this or can factor, 'XX round to you a would or outlook the charges that expect to on big million potential the is cash recognizing 'XX you various flow you restructuring One sale costs XXXX? the of the second think the $XX CMS do in think we've the will for the Obviously, been past, restructuring for versus roughly reinvested generally question but have past you profit think higher in could the recognize cost line, been up be? the of do is, bit through programs little do given the the growth? be, a that in And

Kevin, go ahead.

thanks, me Maybe stab. -- Andy. But take a let

we're in now that we separation remarks, prepared relative efforts. to through suggested Claudia As right her CMS as speak, working the

perspective premature give on really that. it's so any to And

line basically relative XXXX to your I think for bottom correct. is cash the comment

asked, other it's you the so the to it be to day, end going -- of going reinvested? the or drop at to be bottom And point that think is line the I

And work clear I get it. I plan cost there. color, think But a will and Bob we'll comments I will give stranded the some that we'll take XXXX. opportunities we it that in and release Claudia when is that in think give are, believe, has her after and we to be earnings it that's going fundamentally, substance, color some QX hard talk very to made additional the additional what think leave outlook of lot Claudia our of for

I Andy, for key add cash we that, us. And what a is metric to use as conversion would the

is it's the really and conversion. cash we cash show strong So important conversion have the shown to

the to help is the these very the are conversion that numbers our delivery. numbers. But we investors committed numbers. strong, very understand strong to maintaining to cash all So that helps Hopefully, remains analyze and

ramp I business that my Divergent I just heard you're it. comments on of Got for here. contracts always had of implicit question, quarter. ask believe follow-up start for kind the you has about an that more will that of This fourth the would I significantly. contributing kind guess some the

quarters, still ramp? and visibility than the coverage ramp can even I notable better up believe has guess you that revenue materially that last of the what's realized fixed the in you more margins into do to for is, cost have couple been question you've And that, sure? lead which push

And quarters, area -- you as rate those and of kind part the is, And platforms at in Divergent, do. we've developed we growing Andy, talked Yes, that are transportation those around that's water. if previous if you that we've dissect fastest the about are look very of fast. growing

are an that of line for enablement platforms part not growth line and question, the creating are seeing bottom top Divergent earlier that too. in Now is why reason these necessarily at the because that P&PS, driving we're digital of expansion the at margin

the platforms that standpoint, getting line answer well. those be, it's driven and bottom now the infrastructure, and see visibility, yes, by into a sector we're water, transportation energy from So we being would and as

P&PS. So on continue to catalyze more follow that's to going how to

from [Operator Instructions] Your next Khan with question Sabahat Markets. line Capital of RBC comes the

Your line open. is

Okay. Great.

by you then of and are the just this you the I curious I'm work? of of that's XX probably markets, end which you at money curious you've Just, see some markets even market as more guess, flowing IRA ahead look IIJA, or months, end you so think and sort seen concentrated to the which just where chipset. some on that we'll I'm end -- And money, kind winning it's stimulus to infrastructure of next XX it's how point? whether said the far.

the really early Sabahat, transportation. been early innings phases the have it's indexed of more towards Sure. probably

fleeting green front some and we're I the more job Orleans of But we're of bus end starting New see the -- in other doing where we're different mentioned So kind seeing transport. that. the of now to systems the

it, guides we'll IRA over the under in and now are energy start components some with to that spill some as So well. of clean to application transport, tied

additional or lead-free as sorry, some well of up, too. say we the the be the water some I coming I'm the of on would infrastructure, and whether topic larger see -- pipe the to that work as lead it support work some of larger, expect would lead

of energy component So down transport first, water. and the transport energy moving the and into clean road then

something the the just 'XX 'XX. separation improvements and of -- those on trying then ongoing the Just in CMS plan that's in tied timing on that And fiscal of see business? two understand of is Or in just are fiscal just of to should events you've P&PS. of throttle when numbers? savings on -- sale question going see terms that kind to timing of your you meaningful the or that understand, tied the the a is guess housekeeping-type is that trying to full about if benefit the execute we cost and Great. I a more talked we

Yes.

PA more on the and with has. the really comment markets it's end aligned focused is that PA So PA

in markets and some then the a and strength strength what is are they in in have of aligned that resources with lot see then markets more other flat. they the that specific So more markets

related. PA really that's So

connectivity about with the and with the rest strategy and that of at model our see our reductions and have more as is efficiency gains we comments the CMS company streamlined productivity looking more that the and Bob then between operating efforts all the -- And execution. and CMS a cost we made

last is Sabahat, In I P&PS, the part is the answer yes. which think with XXXX, the

savings P&PS. Thinking about from the

Okay.

in them see 'XX? should we So

Yes.

turn to Mr. Bob There are will Pragada. the this time. call I at further now no questions back

Kevin, Claudia time. to next you look joining Thanks, talking the thank forward to right. much, future. Look success. you forward continued everyone, and All and welcome so and everyone. Thanks, to growth for to

call. today's conference Ladies this concludes gentlemen, and

now You disconnect. may