Good morning and welcome to the AECOM First Quarter 2015 Earnings Conference Call. I would like to inform all participants, this call is being recorded at the request of AECOM. This broadcast is the copyrighted property of AECOM. Any rebroadcast of this information, in whole or part, without the prior written permission of AECOM is prohibited. As a reminder, AECOM is also simulcasting this presentation with slides at Investors Section at www.aecom.com. Later, we will conduct a question-and-answer session [Operator Instructions]. I would like to turn the call over to Will Gabrielski, Vice President, Investor Relations.

Thank you, operator. Before reviewing our fiscal 2015 first quarter results, I would like direct you to our Safe Harbor statement on Page 2 of today’s presentation materials. Today’s discussion contains forward-looking statements based on the environment as we currently see it and includes risks and uncertainties. Actual results may differ significantly from those projected in today’s forward-looking statements. Please refer to our press release Page 2 of our earnings presentation or our reports filed with the SEC for more information on the risk factors that could cause actual results to differ materially from projections. We are using certain non-GAAP financial measures as references in the presentation. The appropriate GAAP financial reconciliations are incorporated into our press release which is posted on our website. Please also note that all percentages refer to year-over-year progress except where otherwise noted. In addition, our discussion of financial results will exclude the impact of acquisition and integration related expenses, including transaction costs related to financing reported in interest expenses, and the amortization of intangible assets unless otherwise noted. Please turn to Slide 3. Beginning today's presentation is Mike Burke, Chief Executive Officer. Mike?

Thank you, Will. Welcome, everyone, to our fiscal first quarter earnings call. Joining me today is Steve Kadenacy, President and Chief Financial Officer. I will begin with an overview of AECOM's results for the quarter.. Then Steve will review our financial performance in greater detail and provide specifics on our full year outlook. And finally, I will conclude with additional remarks on the trends across our diverse business. Please turn to Slide 4. In July, of 2014 we announced the agreement to bring AECOM and URS together, marking the largest combination in the sectors history. Now four months removed from the closing of that transaction AECOM is closer than ever to fulfilling our vision to become the world’s premier fully integrated infrastructure firm. Today we have nearly 100,000 employees in more than a 150 countries. These talented employees are qualified to work anywhere in the industry, but they choose to work at AECOM, because we offer a truly differentiated platform and growth opportunity. As we bring these two large companies together, we remain focused on ensuring smooth day-to-day operations and delivering strong financial performance. In the first quarter, we had wins of $4.6 billion and a backlog of almost $41 billion. Adjusted earnings per share were $0.71. We delivered strong free cash flow and we began to reduce our debt. For the full-year, we are reiterating our EPS guidance and remain on track with our financial and strategic objectives. Our diversified model is proving resilient in the pace of uneven economic conditions and we remain optimistic about the trends in many of our end markets. I will now turn the call over to Steve, who will discuss the quarter’s financial performance.

Thanks Mike. Please turn to Slide 5. Please note that the fiscal first quarter growth rates benefited from the consolidation of a 11 weeks of URS Financials and the first full quarter of contribution from Hunt Construction. My comments today is speak to the adjusted results unless otherwise noted. First quarter revenue was $4.2 billion, organic revenue increased over 3% on a constant currency basis driven by 25% growth in our building construction business and strength in Asia and EMEA. During the quarter we successfully closed the financing for the URS transaction and delivered strong cash flow, which I will discuss in a moment. Please turn to Slide 6. As Mike noted, we ended the first quarter with almost $41 billion in backlog. The first quarter was the fifth consecutive where we delivered a book-to-burn ratio that was over one. Organic backlog increased 18% on a constant currency basis driven by favorable trends in Americas design Asia and private construction. Please turn to Slide 7. First quarter revenue in our design and consulting services segment was $1.9 million, which was in line with our expectations. Excluding the approximately $32 million gain in prior year results due to the consolidation of the AECOM Arabia joint venture the operating margin was unchanged at 4.4%. The backlog growth we had in the quarter was broad-based supporting our view that the trends that drive the Americas design business are improving and activity in our international markets remain strong. Please turn to Slide 8. The Construction Services segment delivered another solid quarter that included 25% organic revenue growth. The operating margin increased by 300 basis points to 4.5%. This increase is the result of the acquired operations and improvement in our legacy building construction business. I should also note that margins benefited by nearly one…

Thanks Steve. Please turn to Slide 12. I will begin by summarizing key trends in our markets and then move into more detailed review of our segments. Beginning in the U.S. the private sector remains strong and we are executing a number of major infrastructure projects. Later cycle state and local clients are benefiting from improved tax recites and incremental funding from recent infrastructure bond measures and activity levels are improving. The backdrop in the federal market is also better, the passage of the omnibus bill in December along with the recently released budget request for fiscal 2016 demonstrate a high level support for the federal clients we serve. Internationally, our design business continues to grow, highlighted by the backlog growth in our Asia Pacific markets and robust infrastructure demand in the UK. In the Middle East, our business remains on track and we are pursuing some of the largest opportunities we have ever seen in the region. Let me move on to the segments beginning with design and consulting services. The Americas design business performed inline with our expectations; our wins were strong and reflected new work for both public and private sector clients. The dialogue around funding for federal transportation is encouraging, especially the bipartisan support for increasing the Federal Highway Trust Fund. The President’s 2016 budget put forth a six year $478 billion highway and transit plan which is an 11% from prior levels. There are several options on the table to help increase funding from raising the gas tax to deploying tax revenue from repatriated corporate profits. We are increasingly confident in our outlook for the Americas market, as you know this is one of AECOM’s most meaningful business units and has the higher degree of operating leverage once revenue growth resumes. I will now pivot…

Thank you. We will now begin the question-and-answer session. [Operator Instructions] We have a question from Anna Kaminskaya from Bank of America. Please go ahead.

Hi, guys. Good quarter. Just first, I wanted to touch on the outlook. Maybe if you look at lower tax rate and interest expense, that may be added about $0.12 to the year. So where did you take off 4% of growth on your I guess core operating outlook for 2015? Is it oil and gas, or are you seeing weakness somewhere else?

Anna, thank you. As you heard us mentioned in the comments here there is really two headwinds there, one is oil and gas and the second one is the stronger U.S. dollar is impacting us with a little over 20% of our revenue coming from foreign currencies that are not U.S. dollar denominated.

Okay. And is it possible to break out that in terms of buckets? The majority, I would assume, is still oil and gas.

Yes, the majority is oil and gas.

And so what do you forecast for that business? How much would it be down? And if I think about it, it does tend to have higher fixed cost component. Is there a way to look at it from incremental margins, or is that not the right way to look from the volume decline in oil and gas?

Yes, we are not prepared to give specific revenue forecasting on the oil and gas business just yet. So if I’d to say it is a challenged market not just for us, but for the entire sector and the past quarter we’ve seen a lot of disruption as the people starting to get their heads around the forward price on oil and we think we’ll have more clarity in the coming months as people start locking in on what they really believe that the forward oil price would be and how it will effect their capital expenditures. But so if I’d to say it’s clearly are most challenged segment. But the good news is that only 15% of our revenue comes from the oil and gas sector. So that’s a positive for us and it speaks to our diversified business that we have and we are also very focused on new opportunities that are being presented to us that will benefit from the lower price of energy whether that be fertilizer plants whether would be the automotive industry or certain petchem end markets.

Okay, great. And just wanted to switch quickly to your synergy outlook. Just given that I guess growth with some of the market is still pretty choppy, how do you see the risk of maybe growth synergies being diluted by pricing pressure were being passed down to the customers to ensure better topline growth? How should we be taking about that growth synergies number being converted to your net income?

This is Steve, our synergy outlook is pretty robust if anything we gain more confidence in it, we are always in a competitive market, so we are always facing the need to be efficient in our pricing other than in that oil and gas market where Mike is referring or you are having kind of a macroeconomic change, we are not seeing significant changes to our already competitive markets in other places. So our expectation is still to drive that to the bottom line on a net basis.

Thank you very much.

You’re welcome.

Thank you. Our next comes from Andrew Kaplowitz from Barclays. Please go ahead.

Guys good morning, its Allen Fleming in for Andy this morning. Nice quarter.

Good morning.

I wanted to start with a question on your cash flow; a very strong result this quarter. So Steve, maybe you can talk about how sustainable that level of cash flow is, if there was anything lumpy in there that caused or contributed to the strong performance this quarter.

Yes, I don’t think we’ll that well every quarter, but we're still very bullish on our overall cash flow situation and our ability to get the leverage ratio down to approaching two times debt to EBITDA by 2017. So we had a great cash flow that’s 2.50 that was also impacted by the way about a $100 million in A&I so it was actually more robust than that but of course cash in general is lumpy. The implication in our guidance to get down to approaching two times is roughly $2 billion in debt pay down over that three year period which would imply somewhere between $600 million and $8 million in cash flow a year and our expectation is that we will do that. The reason we put a range on it is that cash unlike accrual accounting if a payment comes in and one period or one day versus another day could flow between quarters and between years, but on a three year basis we're very positive.

Okay. I appreciate that. And maybe switching gears, I can push you a little more on your design business. Your commentary there seems more constructive this quarter. You were able to grow backlog in your Americas design business. I think last quarter you had talked about the pipeline of opportunities there and Americas design being up something like 20%, so maybe you can compare how that pipeline looks today versus a couple months ago. And maybe, Mike, you can talk about your confidence that this business is reaching an inflection point.

Yes you know listen we’ve been on the precipice of an inflection point for a while it seems like, but we have had two quarters of very solid backlog growth in that segment and we are starting to see improving economic conditions across the U.S. as it relates to infrastructure and I mentioned in some of my comments we're seeing increased recites, we're seeing increased bond measures at the municipal level, we're seeing great bipartisan support in Washington for investment in infrastructure, the economic conditions generally are improving and all of that seems to be pointing in the right direction. I don’t want to suggest we are entirely out of the woods yet though. The Americas design business has been difficult for a few years now and you know two quarters of good wins doesn’t make a real strong trend, but things are pointing in the right direction. And we are seeing macro conditions that should support the opportunities that we seek over the coming year. So I think I would suggest we are somewhat optimistic but we’re cautiously optimistic.

Okay. I appreciate that. I'll pass it on, guys.

Thank you. Our next question comes from Tahira Afzal from KeyBanc. Please go ahead.

Good morning folks and congratulations on the quarter.

Thank you.

I guess first question, would love to get a sense on - you provided the details around this past quarter. You've kept your guidance for the full year pretty wide still. So I would love to get a sense on, given all the moving parts of the first quarter, what made you decide to keep it fairly wide for this year.

I think Tahira there’s still the two big uncertainties I mentioned earlier the oil and gas base and FX. Still those numbers just in the past two months have been bounced around quite a bit, oil is up 30% since we had our last earnings call. FX moved quite harshly against us in the past few weeks alone. And so given the volatility around those two big components we still have – we still want to keep that range fairly wide.

Got it, okay. And the second question is really around the macro side. You mentioned in your prepared commentary about the proposed highway budget, etc., and it does look very promising. Within that, the biggest category that seems to be introduced is around safety measures, particularly on bridges. So could you give us a bit of an idea of your exposure currently in the British market domestically, and where you think that could go going forward?.

Yes, listen we are one of the biggest players in that space by fairly large margin, there are highways, bridges, transportation between the legacy AECOM business and the URS business, we were number one, AECOM was number one in that business before we joined with URS. So clearly we have a very significant position in that space we are very well placed to take advantage of funding coming into that sector. And there has been a lot of talk about bridge safety for quite sometime. And we hope that the bipartisan support that we are seeing in Washington now will put some money behind all the talk we’ve seen for years in that space. But we definitely have the right skill sets and expertise to take advantage of any funding that comes to bridge safety.

Got it. Thank you very much.

Thank you.

Thank you. And our next question comes from Andy Wittmann from Baird. Please go ahead.

Hey guys, thanks for taking my questions. The cash flow was quite impressive. I wanted to understand a little bit more inside of that, Steve. Was there a positive or negative effect of the net factoring in addition to the - did you say it was $100 million of cash restructuring expenses?

The factoring was net $19 million, so it wasn’t significant to the overall free cash flow situation. It was just strong performance by both legacy URS and AECOM.

And then you said I think in the prepared remarks there is - I think you said $250 million is something and $140 million is something else. Was that operating? Can you just clarify what those numbers were again?

Are you talking about acquisition and integration related costs?

I think that's what it was, yes.

So we added $206 million P&L, $236 million in cash A&I cost during the quarter and the bulk of the cash cost were in financing related which I mentioned a $140 million, but there are also transaction fees that would boost that number even higher just to close the deal. So the vast majority of the cash expanded was to close the transaction.

Got you. So we know that there was a big receivable sticking out there from the chem demil contract. Should we assume that a substantial portion of that was the driver of this quarter's results, or was it something more broad based with the working capital of the business?

No, I think it was under $50 million contribution from chem demil.

Okay, great. And then Mike, I just wanted to get your thoughts on Sellafield and how that impacted your guidance, if at all. Was that maybe already contemplated in the initial guidance that you gave us? Was there an impact in the backlog in the reported quarter, or has it been pulled out already? Or is that potentially something that the future we have to be expecting? Just your thoughts on that would be helpful.

Yes, sure it has not impacted our outlook for FY 2015 just by a background for people that might be fully up to speed on that, the UK government has decided to change their procurement model for the Sellafield site. We have about $17 million of operating income in FY 2015 from that project, we fully expect to earn all that in FY 2015. We still do not know how long it will take to transition at a minimum we have 15 more months working on that project that operating income level that I mentioned. It is my best estimate that it will take longer than 15 months to transition that project. And then when it transitions the UK government will still need significant, very significant support from contractors like ourselves. So we fully expect to continue to have a very meaningful role a profitable role on the Sellafield site regardless of the change in the procurement methodology that the UK government will use. With regard to your question on backlog that has already been taking out of backlog for anything that would happen in the future is already taken out of backlog, so we correctly stated our backlog as of the 12/31 number to account for the current expectations during the transition period and there is nothing in the backlog beyond that period.

That's very helpful. Thank you, Mike. Maybe just one final question. I know it's been asked a few times since the announcement of the URS deal, but I figured -- give me one more shot here as you have closed the deal a little bit longer, which is just how should investors be thinking about the margins by segment? Are you prepared to give ranges as to what you think is realistic there? Or, maybe how does this quarter's results compare to what you would expect over the longer-term?

Yes, by segment we are quite ready to comment and give guidance out yet as we pull our arms around this and also combine the businesses and drive the integration through which will ultimately drive synergies on a combined basis all segments we are driving to get to the high 6% range on gross revenue, which would equate to that 12% legacy AECOM guidance on NSR. So I think over time we will give you guidance - more guidance within the segments and as we drive the integration, but given as much as we are going on in the moving pieces we are not prepared to do that yet, but we will.

Well, that makes sense. Thanks guys.

You are welcome.

Thank you. And our next question comes from John Rogers from D.A. Davidson. Please go ahead.

Hi, good morning. Mike, Steve, just going back to the construction services segment for a second, can you give us a sense of how much of that work right now, or backlog, is private versus public?

John, I don’t know that number exactly off the top of my head, but the very significant majority of it I am going to estimate about 70% of it is private sector about 30% public.

Okay. But the growth now is coming more so out of the private side? Is that right? Mike.

Yes, no question the very, very strong segment there is the private sector, tall vertical construction in the major metropolitan areas is stronger than its been since 2006 or 2007.

Okay. And is there any opportunities or expectation that significant project closeouts or timing issues that we should be aware of this year?

No nothing that stands out.

Okay. Okay, great. Thank you.

You are welcome.

Thank you. And we have question from Chase Jacobson from William Blair. Please go ahead.

Hi thanks for taking my question.

Hello.

First, on the synergies and the acquisition costs, I know that you maintained the outlook for the expected synergies for the year. I was wondering if you could give us any color on what the cost synergies were in the quarter. And then as it relates to the higher acquisition and integration costs, Steve, I know you mentioned that it had to do with accelerated real estate consolidation. How much of that has already been recognized and how much of that is expected in the future? Just any color you could give on those.

That was good questions Chase. The synergies in the quarter were immaterial, largely because in the first few weeks of closing the transaction we were in the planning phase for integration and we had a formal launch day at the beginning of this quarter, so many of the actions that we are taking are occurring now will through the $110 million of realized synergies that we’ve guided to. In terms of the accelerated real estate costs, those were contemplated in our overall real estate plan that we’ve already commuted in the 2.75 but we were contemplating doing certain consolidations until 2016, and we’ve realized based on our real estate teams performance that we are able to accelerate those and those will therefore drive some of the 2.75 sooner than we would have experienced over the three year period, we're going to get it 2016.

Okay, that's helpful. And then, just another question to follow up here as we try to figure out the new segments, and we look at organic growth for the year. I guess there was 3% constant currency for the quarter. How does – how do you expect organic revenue growth to progress through the year relative to the first quarter? So is the 3% sustainable and should we – I think I know the answer, but how is the mix between the segments going to change relative to the first quarter as we go out through the year?

I don’t know that we are prepared to get specific on organic growth by segment, but we have had two quarters in a row now of organic growth after both URS and AECOM having previous two years of significant challenges to growth. So I don’t want to commit specifically to organic growth by quarter for the rest of the year, but the backlog would suggest that we are winning the kind of work that would contribute ultimately to organic growth. Clearly the strongest growth segment is construction services, right now with a significant headwinds on the oil and gas side. Our growth in Asia is still significant, but we all know that Asia economic conditions have slowed just a bit. We are seeing growth in Europe and the Middle East and the big engine is growth in Americas design and that is - as we mentioned earlier that is an encouraging market, we feel like we are on the precipice of growth there. But I’m not willing to pound my fist on the table and say the U.S. design business is about to take off, but that’s what we are focused on.

Okay, very helpful, thank you.

You bet.

Thank you. We have a question from Jamie Cook with Credit Suisse. Please go ahead.

Hi, good afternoon and good morning. I guess just two quick follow questions. One, with regard to URS, obviously people have brought up Flint and Sellafield. I guess, Mike, can you talk about are there any areas of surprise potentially on the upside that you are seeing within URS, whether parts of the business are growing faster on a core basis, on a synergistic basis, on a - are there more cost opportunities or cash flow there? Can you talk about sort of the potential offsets to Flint and Sellafield? And then I guess my follow-up question is are there any other up-and-coming contracts that you will be bidding on over the next sort of 12 months to 18 months with the UK that could potentially help offset some of Sellafield? Thanks.

Sure, let me the last question first is, we are bidding on a whole host of a very interesting opportunities in the UK that would offset Sellafield, we have been very enthusiastic about the direction of the UK government to outsource to the private sector in areas other than Sellafields, the Sellafield is it changing the procurement model, but we are seeing certainly on the Ministry of Defense side as I think you know we acquired a fairly significant contract with the Ministry of Defense through the URS transaction and I’ve spend time there personally with the MoD and the DOE and there is still a lot of opportunity in UK for outsourcing the liquid offset debt. But going back to your first question, I wouldn’t say there is any material positive surprises that we have seen from URS that I would call out. What I can say is that we are very enthusiastic about the opportunities that are in front of us due to the new capabilities that we acquired and in particular if you look at the industrial sector, when I mentioned earlier although we’ve got headwinds on the oil and gas side, there are a whole host of opportunities that will be driven by lower energy prices and through the URS transaction we acquired a numerous capabilities in industrial sector, the petrochemical sector, the fertilizer sector, the automotive sector all of which are creating a quite a bit of demands right now. We also are enthusiastic about the upside and opportunities from using the industrial capability skill set from URS to deliver through our global platform. So right now we have four very significant projects in Southeast Asia in the industrial sector where we are bidding on projects for some of our global multinational clients to big five companies and other multinationals that want us to do work for them in that region where we have a geographic platform. And URS brought us those expertise. So the pleasant surprises are the synergy opportunities to take the skill sets that we gathered from the URS transaction and bring them into our global markets, we’ve had the URS teams from federal government services in Australia pursuing opportunities for the Australia government again because we had a big platform and relationships there. So those are the opportunities that are most exciting for us as we get through the integration base here. And quickly now turn our attention to the revenue synergies as we capture the cost saving synergies.

Alrighty, thanks, I will get back in queue.

Great thanks. Jamie. End of Q&A

We have no further questions at this time.

Okay. All right, so if there is no further questions thank you operator. Let me close by saying that today we can confidently say our addressable market opportunity has never been bigger. Our customer engagement has never been higher and our passion to deliver on the vision to be the leading provider of integrated infrastructure services globally has never been greater. We look forward to all the opportunities in front of us and we look forward to speaking with you again in three months. Have a great day.