Good morning and welcome to AECOM's first quarter 2016 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 the Investors section at www.aecom.com. Later, we will conduct a question-and-answer session. I'd now like to turn the call over to Will Gabrielski, Vice President of Investor Relations.

Thank you, operator. Before reviewing our results, I would like to direct you to the Safe Harbor statement on page 2 of today's presentation. Today's discussion contains forward-looking statements about growth and profitability, as well as risks and uncertainties. Actual results may differ significantly from those projected in today's forward-looking statements. Please refer to our press release, page two of our earnings presentation, and our reports filed with the SEC for more information on the risk factors that could cause our results to differ materially from projections. Except as required by law, we take no obligation to update our forward-looking statements. We are using certain non-GAAP financial measures in our 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. Our discussion of financial results excludes the impact of acquisition and integration-related expenses, the amortization of intangible assets and financial impact associated with expected and actual dispositions of non-core businesses and assets unless otherwise noted. Today's discussion of organic growth represents the year-on-year change for the entire company on a constant currency basis. Please turn to slide 3. Beginning today's presentation is Mike Burke, AECOM's Chairman and Chief Executive Officer. Mike? Michael S. Burke - Chairman & Chief Executive Officer: Thank you, Will. Welcome, everyone. Joining me today is Steve Kadenacy, our President; and Troy Rudd, our Chief Financial Officer. I will begin with an overview of AECOM's results and discuss the trends across our diverse business. Then, Troy will review our financial performance in greater detail. Steve will conclude with financial guidance before turning the call over for question-and-answer session. Please turn to slide 4. We're off to a strong start in 2016 with most of our…

Thanks, Troy. Please turn to the slide 12. Our start to the year is a testament to our diversification and our emphasis on execution delivering on our financial and capital allocation commitments to our shareholders is our top priority. And we are confident that we're on track for another year of strong and consistent performance against our targets. With that, we are reiterating our fiscal 2016 adjusted EPS guidance of $3 to $3.40. Our strong first quarter EPS performance provides us with additional confidence in our guidance range. We are also on track to deliver free cash flow within our $600 million to $800 million range. Unlike last year, we expect our cash flow to follow historical phasing. Recall that last year's first-quarter cash flow benefited from a number of items, including the final chem demil incentive payment. Finally, we are progressing well in our pursuit of synergies. We're on track to achieve $325 million run rate savings in 2017 and exit 2016 at a $275 million run rate. Now, I'll turn the call over to Q&A. Operator, we're now ready for questions.

Thank you. And our first question comes from Andrew Kaplowitz from Citigroup. Andrew, please go ahead.

Hey. Good morning, guys. W. Troy Rudd - Chief Financial Officer & Executive Vice President: Good morning.

So solid quarter in a tough environment. I did want to ask you about DCS organic revenue. It was down 5% in 4Q. It was down 5%, but it is better than 4Q's, down 11%, and still little worse than last year's 4% organic decline. So, what I'm getting at is, I know we ask you this question every quarter. We understand the total backlog is up, but given contracted backlog is still down high single-digits. What conviction can we have that DCS organic revenue can turn more positive in 2016? Have you seen any change in the U.S. infrastructure markets after the passage of the U.S. transportation bill or is it just too early for that?

Hey Andy, it's Steve. No, we're absolutely seeing a change. Our pipeline is looking good. And obviously, our wins are quite good and our book-to-burn has been positive for the last three quarters. So, overall, we're seeing increased optimism in the business particularly in the Americas. But the pudding obviously comes when you convert that into revenue and where the FAST Act comes in for larger infrastructure projects, those don't convert right away. So we're in a process right now of booking those in the contracted and they will start to convert for the remaining of the year. The FAST Act is a positive for us because it unleashes those larger projects, but the larger the project, the slower the booking. But we are positive for the full year. We're seeing a lot of good things in the business and we think hopefully by the end of the year, we'll start to turn towards positive organic growth.

Okay. That's helpful, Steve. And then just shifting to international markets, I think Mike mentioned Middle East, Hong Kong, obviously, it's a question that comes up to. And given the oil volatility and the volatility in China and Hong Kong, have you seen – you have mentioned, good wins, good market share in Hong Kong, but as you guys know Hong Kong and Southeast Asia have been good growth markets for you over time. Do you still think these businesses can be growth businesses for you in the current environment? Michael S. Burke - Chairman & Chief Executive Officer: Yeah. Andy, it's Mike. We absolutely do. I think the concerns that you've seen in that region have been primarily focused on the PRC, and PRC is less than 1% of our revenue, less than 2% of our EBITDA, but 88% of our head count across the Asia-Pacific region are outside of the PRC. And so, when we look at Hong Kong and South East Asia, we still feel pretty good about those markets. They're still significant market for us, they are still significant infrastructure investments and we're positive on those markets. As it relates to the Middle East, I just got back from the Middle East last week and those markets are still doing quite well. Those markets grew in the quarter, and there's still a lot of infrastructure money being spent in that region. As you know, our business in that region is not in the oil sector. Now, we recognized that those governments are petrodollar funded governments, but those governments, at least the countries in which we're operating, have significant national reserves that are funding current budget deficits due to the price of oil. So, those markets are still positive for us.

Okay. That's helpful, Mike. And then just a clean-up item, Steve or Troy. I might have missed this, but did you disclose how much AECOM capital gains you had in the first quarter and can you talk about cadence if possible for the rest of the year. I know you said you'll have some. But any more clarity on that? Michael S. Burke - Chairman & Chief Executive Officer: Andy, its Mike. We did not have any capital gains in the quarter from AECOM Capital, but as we've said last quarter, due to the investments that we've made over the past three years there, we have significant gains, built-in gains, in that portfolio and we expect to trigger those gains over the coming years and we expect to have at least a portion of those gains realized during this year. But we have not – we have not pinpointed a specific quarter in which we will trigger those gains.

Okay. Thanks, guys. Michael S. Burke - Chairman & Chief Executive Officer: Sure.

And our next question comes from Jamie Cook from Credit Suisse. Jamie, please go ahead. Jamie L. Cook - Credit Suisse Securities (USA) LLC (Broker): Hi. Good morning. A couple of questions, one, within in the Management Services division, you noted $35 billion of pursuits, which I think $9 billion you said could be coming over in the next couple of months. So can you give a little more color on what you would think your expected win rate is? How quickly these could contribute your earnings, just the profile of these contracts? And then my second question, I think during your prepared remarks within construction, you talked about within the Americas specifically, that some wins that you had last year had been – you'd been slower to recognize revenues or those projects were taking longer to start. Can you just give more color on the types of projects and what was causing the delays and when you expect that to recover? Thanks. Michael S. Burke - Chairman & Chief Executive Officer: Sure. Jamie, let me take the first half of that question, I'll let Steve take the second half of it. The MS pipeline is more robust right now for us than we've seen in a long, long time. I mentioned $35 billion in qualified pipeline. Our win rates generally in that segment are in the 35% range. So generally we're winning one in three projects that we go after. Now of course those projects are fairly lumpy. In fact, there's two projects that we are currently bidding on, one for $5 billion and one for $3 billion. So, a win or loss on those heavily influence the dollar – the total dollars on the win rate. But generally, that's the kind of win rate we expect. Our win…

And our next question comes from Steven Fisher from UBS. Steven, please go ahead.

Thanks. Good morning. Michael S. Burke - Chairman & Chief Executive Officer: Good morning.

I wonder if you could talk about where do you think we are in the cycle in North American building construction? And then, how might you manage a transition broadly for the company from an organic growth perspective if that overall building construction growth turns to decline? Michael S. Burke - Chairman & Chief Executive Officer: So – let me try and answer that, where do we – where are we in that cycle. It's difficult to predict exactly where we are in the cycle, but I'll tell you, we still see continued growth in that sector. We had wins in Q1 of $1.9 billion. We've got $13.6 billion of wins – I'm sorry, in backlog in that sector – so we're continuing to win new work in that sector broadly across all of our metro markets. So, we're still seeing momentum in that sector where we see continued growth like we did this quarter. 42% growth is not something we're going to continue to repeat quarter in, quarter out. But we do have a lot of visibility out through 2020 in that sector, so the good thing about that sector is they're long lead-time projects, so we get good visibility for a while. But right now if you look across our entire business, two-thirds of our business is growing and the third of it is not, so overall that's still a positive trend for us.

And do you anticipate that given the tough comps that are coming up that you'll still be able to achieve organic growth in overall building construction in 2016 as the year progresses? And I guess maybe I'll tie this to my second question, which is sort of asking Andy's question a little more broadly. So I think last quarter, you said you expect modest organic growth in 2016. I think you've called out 3% growth for the first quarter ex-chem demil, so I'm not sure if that's on the same basis. So I guess I'm curious how Q1 played out relative to your expectation for growth for the whole year, so those two parts of those questions, if I could? Thanks. Michael S. Burke - Chairman & Chief Executive Officer: So, you're talking about both the building construction and the overall business, correct.

Yeah. First part was building construction, second part is overall company. Michael S. Burke - Chairman & Chief Executive Officer: So, let me start with the building construction piece. We feel very confident that we'll have double digit growth throughout the entirety of FY 2016 because of the recent big wins that will now start ramping up. So we feel good about organic growth in building construction. And overall, I think it's important to carve up the business just a little bit, right? So we know what happened in chem demil; we understand that contract and we create a lot of transparency on that over the past year. So put the chem demil to the side and we know what's happening in oil and gas, but that to decide. So you take out those two components of the business and organically, our business grew 3% in the quarter.

Right. And so, I think last quarter you said modest organic growth overall in 2016, is that at the same basis and does the first quarter at plus 3% put you on track for the modest growth for the full year? Michael S. Burke - Chairman & Chief Executive Officer: I think for full year, we expect the business to trend to organic growth. And so, relative to our expectations is we would've liked to do a little bit better, given how much we have in the backlog in DCS and the slowness of it converting, which we believe it will. So, we think organic growth will ramp during the year, particularly ex-chem demil.

Okay. Thanks a lot.

Your next question comes from Chase Jacobson from William Blair. Chase, please go ahead. Chase A. Jacobson - William Blair & Co. LLC: Hi. Good afternoon. Michael S. Burke - Chairman & Chief Executive Officer: Good afternoon. Chase A. Jacobson - William Blair & Co. LLC: So, I wanted to ask about the Construction Services margin there. I know you're coming of a tough comp from last year and oil and gas is still a headwind, but that business is growing and you've talked about and I think just to Steve's question, you said that you expect continued double-digit growth in the building. So, how low is the building construction margin in that business and with that growing, are you going to be able to break out of this kind of 1% to 2% adjusted range? Michael S. Burke - Chairman & Chief Executive Officer: No. I believe overall for a long – kind of a macro forecast for Construction Services would be about 2%. The building construction margin is extremely low. But it also requires almost no working capital associated with it. So, the return on invested capital is extremely high. And that is because we put up the buildings and our subcontractors are on a pay when paid basis. So, we don't deploy a lot of working capital associated with it. So, we're happy for that margin to be low as long as that business model is the same. Why – but there is upside obviously in my 2% forecast for that business and that's because the rest of our construction business tends to run a bit higher margin, and our pipeline in the rest of the construction business is quite strong. In fact, we would expect to post significant growth in non-building construction and Construction Services backlog in Q2. Chase A. Jacobson - William Blair & Co. LLC: Okay. That's helpful. And then, just a couple of housekeeping items. Did you say exactly what the non-core assets were in the quarter, and what are the recognized synergies today out of the $325?

So the non-core assets in the quarter related to our oil and gas business. So there were some businesses that did meet with the overall design, build, operate, finance and with the core competencies of the business. So, those were the assets in the businesses that we disposed off during the first quarter. Chase A. Jacobson - William Blair & Co. LLC: And are there more of those?

There are some assets that will be disposed off in the second quarter, they've been reflected in that number. But we have them ongoing to option in the second quarter. And so, we'll see the impact of that. Chase A. Jacobson - William Blair & Co. LLC: Okay. And then just what's the progress on the synergies out of the total? Michael S. Burke - Chairman & Chief Executive Officer: We're right on track for synergies. Our run rate is now around $200 million. And the real estate program continues to drive the significant portion of that. And that's on track. And the increase that we added to, at the end of our Q4 to take our synergies up from $275 million to $325 million is still well within sight. Chase A. Jacobson - William Blair & Co. LLC: Great. Thank you. Michael S. Burke - Chairman & Chief Executive Officer: You're welcome.

And our next question comes from Tahira Afzal from KeyBanc. Tahira, please go ahead.

Thank you. Congrats on the good quarter. Michael S. Burke - Chairman & Chief Executive Officer: Thank you.

First question is, as the transportation business gets projects circulating again, can you talk a bit about how your joint sort of proposition now that you have URS in the mix. It's been really received by the DOTs and customers out there, and how that's really going to influence your market share, off this cycles hopefully as it transpose? Michael S. Burke - Chairman & Chief Executive Officer: Well, we're certainly seeing an increase in alternative delivery methodologies coming out from the Department of Transportations and other agencies. So, we're quite optimistic that over time, our strategy of being fully integrated will pay off. I think, it's early days for that. I will say that the FAST Act, however, is starting to move large projects into the forefront, in terms of our bidding pipeline, now I mean, some in your neighborhood there in New York or been discussed and coming out to bid as high as $16 billion in value. And without the FAST Act and the visibility for a five-year funding from the Federal Government and 15% growth, during that five years, I don't think that you'd have as many of these significant projects that we're now tracking in the pipeline. And then, more and more we're seeing those come out from traditional agencies that were all within the design bid methodology coming out and looking for fully-integrated delivery. So, I think, it's early days to hear it, but we're very confident that our strategy is the right one to be able to capitalize that when it's required and when they're coming out in more traditional bidding methodologies to also be able to satisfy client demand on that end.

Got it, okay. And your divestment client model as you've said has helped you clearly weather all the volatility so far. Now as we look forward, it seems like maybe defense spending and transportation pickup, you've had a nice run on the private commercial side, and at some point the momentum will at least fade to some degree. Do you feel you have enough legs of growth from a two- to three-year timeframe right now given all the businesses that are yet to really pick up? Michael S. Burke - Chairman & Chief Executive Officer: Tahira, we certainly do and we see it in a number of ways. We've talked about the growth in the construction business earlier. We've talked about the infrastructure momentum in the U.S. due to the FAST Act, but you also mentioned defense. And defense here in the U.S., due to the passage of the omnibus bill gives us a lot more clarity to defense spending here in the U.S. and I talked about the bidding that we have in our pipeline, which if we hit just our normal win rate on those bids, we'll have very significant growth in that market. But more importantly, we're taking these areas of expertise that we have now put together in this combined organization and taking them to other market. So, defense spending is one we've long been a big player in the defense market here in the U.S., but we have now taken those capabilities and we've expanded it into the UK where we have a significant business there now on the defense side and significant pipeline there. I mentioned that I just returned from the Middle East where we just won our first defense contract in the Middle East and we are bidding on a number of other complex design build opportunities for the defense sector there. We are performing defense sector work now in Australia. We've stood up a book defense business, as well as a Construction Services business across Asia-Pacific. So we see a lot of growth coming just from taking the expertise that we have acquired through the URS acquisition of pushing it out through our global platform, and all of that we believe will contribute to growth over the coming years within this organization. But yeah – this diversification that we've undertaken is also driving significant cash. And especially when we look at our business today and look at where our current stock prices, we're still looking at a current almost 20% cash ROE in this business and this diversification is going to continue to drive that kind of cash flow.

Got it. That was actually pretty helpful. And last question is, you know – I know you just sat down your energy exposure. You know at some point energy is going to come back, oil and gas is what I mean. Is there a point and where to start look at that again because there are a lot of valuations that might be looking more attractive now from an M&A standpoint? Michael S. Burke - Chairman & Chief Executive Officer: Yes, so – listen, today oil and gas we've about 9% of our exposures in the oil and gas sector today and the good part about that is, as Steve mentioned earlier, we had a profitable quarter in the oil and gas sector and that today 80% of our exposures OpEx and sustaining capital work and O&M type work in that sector, and a very little of it is applicable to cap to new capital works projects. But should capital expenditures comes back to that sector. We have the expertise, we have the track record and we see that as entirely upside to that sector from here. But whether we will look at M&A opportunities in that space, we're always looking at opportunities that are priced right that fit our strategic direction, and I think your observation is correct that the prices are beaten down in that sector right now and energy is here for the long term and there could be opportunities there, but nothing that we're prepared to talk about today.

Okay. Thanks, Mike. Michael S. Burke - Chairman & Chief Executive Officer: Sure.

And our next question comes from Justin Hauke from Robert W. Baird. Justin, please go ahead. Justin P. Hauke - Robert W. Baird & Co., Inc. (Broker): Thank you and good morning, guys. I guess maybe let me start with a quick housekeeping and then I'll ask a broader question. But just, I believe this is the last quarter that you were going to have the significant chem demil headwind. So just – I don't know for posterity's sake – maybe just can you help us quantify what the year-over-year impact was and then also confirm that we shouldn't have that magnitude of year-over-year hit going forward? Michael S. Burke - Chairman & Chief Executive Officer: Yeah. Justin, you're correct. This is the last quarter that we'll have the significant chem demil headwind and the impact in the prior quarter was about $0.15 or $33 million. Justin P. Hauke - Robert W. Baird & Co., Inc. (Broker): Great. Thank you. And then, I guess the second question just on the guidance, I'm trying to understand maybe the magnitude of the weakening in the Americas business because it seems like the Americas and then a little bit in Asia-Pacific, those are the only two areas that kind of deviated from plan. So, is it fair to think of the flowthrough from the gains on the legal settlements, the $0.07, is that approximately offsetting what would have otherwise been your view for those other business lines, so that keeps it flat or would that be too far of an extension? Michael S. Burke - Chairman & Chief Executive Officer: I'm not sure I understand the question, Justin. Justin P. Hauke - Robert W. Baird & Co., Inc. (Broker): I guess I'm just trying to understand that the $0.07 gain that you had…

And our next question comes from Adam Thalhimer from BB&T Capital Markets. Adam, please go ahead. Adam Robert Thalhimer - BB&T Capital Markets: Hey. Good morning, guys.

Good morning. Michael S. Burke - Chairman & Chief Executive Officer: Good morning. Adam Robert Thalhimer - BB&T Capital Markets: I wanted to ask about just kind of a general level of competition out there. There are some very large oil and gas players who also play in infrastructure. I'm just curious if those – are you're seeing those companies be more aggressive going after infrastructure projects? Michael S. Burke - Chairman & Chief Executive Officer: Not necessarily. The competition set is similar to the competition set that we've always dealt with. And so, we don't see any different levels of competition; it's a tough marketplace to compete in as it always has been and always will be. But we don't see the competitor set changing at all during these times. Adam Robert Thalhimer - BB&T Capital Markets: Okay. And then, I wanted to ask about on the capital allocation side. I felt – maybe I read you wrong, but I felt like you – or maybe opened up a little bit more to share repurchases, which given what the stock is doing might make sense, I just wonder – give some additional color on that? Michael S. Burke - Chairman & Chief Executive Officer: Yeah. Listen, we constantly analyze our capital allocation strategies and stock buybacks is one of those triggers that we look at. But we are analyzing all of those options on a regular basis and we haven't made any firm decisions that we're prepared to disclose at this point in time. But clearly, stock buybacks are something that do become more attractive at certain price points of our stock. Adam Robert Thalhimer - BB&T Capital Markets: Okay. Thank you.

And our next question comes from Sameer Rathod from Macquarie. Sameer, please go ahead. Sameer Rathod - Macquarie Capital (USA), Inc.: Good morning. Just a couple of quick housekeeping questions. Maybe I missed this, but Sellafield, I think, is supposed to be a headwind for the next three quarters since I think their contract's supposed to end this quarter. Did you guys quantify that or is that the correct understanding or what kind of impact that's going to have for rest of the year? Michael S. Burke - Chairman & Chief Executive Officer: We didn't quantify – I mean we've quantified it in the past where it was approximately $20 million of EBITDA for the full year – and that is going down obviously as the structure of that project has changed. But we'll still be competing on a go-forward basis for a work on there, and we'll have ongoing work there for what – for people that are already there that we anticipate to stay on, but we haven't quantified exactly how much that ongoing revenue will be. Sameer Rathod - Macquarie Capital (USA), Inc.: Right. My next question is on goodwill impairment. I know obviously you tested in the fourth quarter, but given the decline in share price, I think one of the triggers is the market cap is below book value, is that an accurate understanding or how should we think about that here in the second quarter? Michael S. Burke - Chairman & Chief Executive Officer: So, there is an accurate understanding, we go through doing a valuation each of the quarters and during the year to what understand whether there is an impact on goodwill, but, we typically – we typically do that in the fourth quarter, but again we evaluate that throughout the year,…

Again our final question comes from Michael Dudas from Sterne Agee. Michael, please go ahead.

Good morning. Thanks for taking the question. Mike, just need to follow on, on the private side. Thoughts on power and where do you guys stand relative to maybe when you were planning out 2016 and how the outlook looks today for the new business? Michael S. Burke - Chairman & Chief Executive Officer: Yes. So, the power sector has been a real positive for us. That's been a challenged market for a number of years, but we returned to organic growth in the quarter in the power and industrial sector and we see a lot of opportunities in front of us right now, and we are expecting this, the Q2, to be a real good quarter for us in wins because we handicap the bids that we have outstanding and there's a few decisions that are going to made this quarter that are very encouraging to us. So, power is attractive to us, the coal ash opportunities due to new regulatory environments is attractive to us. And so, overall, we returned to growth and there's more opportunities in front of us currently than we've seen in the past.

Thanks. I'll leave with that. Thanks, gentlemen. Michael S. Burke - Chairman & Chief Executive Officer: Thank you.

Thank you.

Thank you. I will now turn the call back over to Mike Burke for closing remarks. Michael S. Burke - Chairman & Chief Executive Officer: Great. Thank you, operator. Well, thank you everyone for participating today and as hopefully you gathered from this call, we feel pretty good about this past quarter with our margins increasing which is evidenced that the synergies that we've been talking about are currently being realized. We feel good about the pipeline of opportunities and the wins in the quarter. And we continuing to deliver on the commitments that we've made to all of you over the past year. And now that we're delivering on those commitments, it's increasing our flexibility to consider our capital allocation strategies that we've talked about. And so, all of this leads us to a position where given today's current stock price, we have a 20% cash return on equity. And so, we're going to continue to execute against our strategy, continue to collect our cash, continue to extract our synergies, and continue to produce the high returns on our equity that we expect our over time will translate into an improved stock price. And so, thank you again for participating today and we look forward to updating you again at the end of next quarter. Have a great day.