Jacobs Solutions Inc. (J) Q2 2011 Earnings Report, Transcript and Summary

Good morning, and welcome to the Jacobs Engineering Second Quarter 2011 Results Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Patty Bruner. Please go ahead.

The company requests that we point out that any statements that the company makes today that are not based on historical fact are forward-looking statements. Although such statements are based on management's current estimates and expectations and currently available competitive financial and economic data, forward-looking statements are inherently uncertain and involve risks and uncertainties that could cause actual results of the company to differ materially from what may be inferred from the forward-looking statements. For a description of some of the factors which may occur that could cause or contribute to such differences, the company requests that you read its most recent earnings release and its Annual Report on Form 10-K for the period ended October 1, 2010, including Item 1A, Risk Factors; Item 3, Legal Proceedings; and Item 7, Management's Discussion and Analysis of Financial Conditions and Results of Operations contained therein, and the most recent Form 10-Q for the period ended December 31, 2010, for a description of our business, legal proceedings and other information that describes the factors that could cause actual results to differ from such forward-looking statements. The company undertakes no obligation to release publicly any revisions or updates to any forward-looking statements, whether as a result of new information, future events or otherwise. And now I'll turn the call over to John Prosser, CFO, to discuss results.

Thank you, Patty, and welcome, everyone. We can go over the financial highlights for the quarter, and then I will turn it over to Craig Martin, our CEO, to give a business overview. We're on Slide 4, just the highlights for the quarter. We did report earnings of $0.63 per share. That included $0.04 that was the contribution from Aker, and that's $0.04 net of any of the acquisition in due diligence costs that were also incurred during the quarter. The year-to-date EPS is $1.15 and reflects those same Aker earnings. The backlog grew nicely into the quarter, and we'll talk about that a little bit later. But it grew to $14 billion from the reported $13 billion last quarter, and we continue to have a strong balance sheet. Our Q will be filed by the end of the week, so you'll see the details of that. Net cash was at $284 million. That's down from last quarter because of the Aker acquisition, and it reflects the change for the cash that went out and the debt that was incurred related to that acquisition. And as we've pointed out in the press release, we have revised the range of our guidance. And the new range is from $2.40 to $2.80, which represents taking down the top end of the range by $0.05, which really reflects some of the uncertainty we're seeing, primarily in the public markets, particularly national government markets, as many of our major public clients, the federal government here in U.S., U.K., are going through some significant budget reviews and budget troubles. But I think our outlook continues to be very positive, except for that one area of uncertainty. And Craig will spend more time on that. Moving to the next slide, Slide 5, just to review our history of earnings. You see that we've flattened as we look at the trailing 12 compared to this last year '10. But more importantly, if you look at the 10-year compounded growth rate, even with the reductions we've had over the last couple of years, we're still showing that we're meeting that long-term growth rate of 15% that we talked about as our earnings growth goals. Turning on to Slide 6, which is the history of backlog. As I said, with $14 billion in total backlog, it's up $1 billion from last quarter. It includes approximately $600 million of backlog that came in from the Aker acquisition. So even excluding Aker, we still had a nice growth in backlog of about $400 million or so. On the professional services line, which has showed a more consistent track over the last few years, it is up to $8.7 billion. That includes about $500 million of Aker backlog. But again, even without the addition of the Aker backlog, we had a nice increase of about $300 million. There were no significant deletions or changes in backlog. So this was a very clean quarter as far as bookings and activity in the new business, and represents what we think is a very good trend as we go forward through the year. With that, I will now turn it over to Craig Martin, our CEO, to give the overview for the quarter.

Thank you, John, and good morning, everyone. On Slide 7 now, which is titled Strategies for Growth. These are the same strategies we talk about in these conference calls every quarter; nothing about them has changed. I'm going to talk about 4 of them in a little more detail. Our business model, our market diversity, our multi-domestic strategy and acquisitions, but I don't want to miss the point about driving down costs. We continue to be in a very competitive market. A number of our competitors are by no means full up in their shops. Cost pressures continue to be high, and we're continuing to aggressively market work to grow our share. The good news is we are able to get our G&As down, and so our cost posture continues to improve as we go forward through the years. It's a good new position for us to be in. Moving on now to Slide 8, our relationship-based business model. I won't spend a lot of time on this slide. I think most of you have heard this story many times. The slide compares our business model with the industry model on the right. And let me take a minute to talk about the industry model first. It tends to be focused on transactional projects. Those are the big events, the lump-sum turnkeys. For the most part, it is truly global competition-based. So the competitors include: the Japanese, the Koreans, the Chinese; it's a large market with very fierce competition for big events. When you contrast that with our approach, our approach is very much based on preferred relationships. It is a repeat-business-focused model. We're about 93.5% repeat business this last quarter. So that is indicative of how the business is functioning. About 80%, 75% to 80% of our business comes from preferred relationships. The rest comes from discrete projects and a very, very small slice of the transactional projects. I think it is the ideal business model for the market that we are entering. There's a lot more activity in the market now. It tends to be smaller projects rather than big events. And it tends to be alliance and efficiency-focused in terms of delivery, and those things play well for Jacobs' business model. I had an interesting meeting with one of our customers last week, the COO. This customer said, "What we find interesting about Jacobs is that your competitors are only interested in our big projects. You're interested in our whole business." And I think that quote really does a good job of summarizing the difference between our business model and some of our main competitors. Moving on now to Slide 9. This is our pie chart with all of the markets in it. I will try to talk a little bit about each market and give you a sense of how we feel about those markets going forward. I'll start at the top with the PharmaBio business. We are, and continue to be, sort of the last man standing in the PharmaBio business. It's a very good business for us. And we clearly have a dominant position in the marketplace. There is a lot of activity picking up in PharmaBio. There's a fair amount of pent-up demand that's sort of post-merger. Our main customers have been looking at merger activities and consolidation and rationalization and achieving all of the synergies that they promised the marketplace. And that's left the capital projects business a little bit behind the curve, so to speak. So we expect to see, and are seeing, a lot more activity in the PharmaBio market than we've seen in the last couple of years. It's interesting also that our customers are focusing more on buying IP rather than trying to develop it, buying intellectual property, their products. That's good news for us because it tends to drive manufacturing on a much more rapid basis. The needs are more immediate. And that's particularly true right now in the insulin and oncology drugs business. And of course, PharmaBio tracks the GDP to some extent. And certainly, with the GDP improving, we see some improvements in PharmaBio there as well. So good market, and one we think has good promise for the next year or two. Moving on around to Chemicals. Chemicals is a surprisingly robust market. There's a lot of activity out there. It's the best we've seen in a decade at least. Plenty of activity derived from lower-cost feedstocks and the natural gas liquids, a by-product of all the gas extraction in places like the U.S. There's a lot of NGLs and a very low gas price. My customers are, at least the ones I've talked to recently, are pretty positive about that. One of the customers said they believe that the advantage that gas prices are giving in the U.S. is structural, and they have significant plans for investments in the U.S. So that's a good news story. It would be very positive for us going forward. When you go outside the U.S., there's a lot of downstream projects. Downstream, by that I mean downstream of the ethylene, polypropylene. A lot of activity related to automotives, for example, and paints, plastics, polymers, refrigerants, and then we continue to see a lot of major activity in the polysilicon world. So that business, the Chemicals business, is quite good for us. We're also surprisingly strong in alliances right now. A number of our customers are out getting alliance relationships established. And we're pretty excited about that because that again plays to our strength. Moving on to Oil & Gas Upstream. It's a robust business globally. Oil price is $112, is what I saw this morning on the ticker. It drives a lot of investment at that kind of price. And there's a lot of needs for that investment because there's a lot of replacement to do. For us, that means the Oil Sands remain very, very strong. I still, the FEEDs sort of business, early design at this point. And the competition up in Canada is still pretty hungry. So the margins are still tight. But the business is growing rapidly, and we've gotten in early, we've gotten a lot of work. Our business is very robust right now. And it looks like it's going to continue to be so. On the gas side, the oil & gas. There are opportunities around, the increase around the world. This is a strength for Jacobs. We have a pretty good gas credentials, and we continue to profit from that business both here in North America, with the shale gas side and in the Middle East. In oil productions, an area of opportunity where we still are not as strong as some of our competition, and we're looking at ways to strengthen our capability on the oil production side. We think that could drive some additional growth. So oil and gas market looks quite good. It's another great opportunity for Jacobs where we have small share in a large market. Moving on to Refining, the downstream business. We don't expect to see any grassroots projects of any major size in the U.S. or Europe. The major investments will go to the Middle East. As you know, we announced the award of the GES plus contract to Jacobs. That's a huge win for us and represents an enormous opportunity for growth in our Middle East operations. And all of that will be in the Refining business and in the Upstream Oil and Gas business. So that's good news, actually, for both these markets. There are a lot of small to medium projects in the refining world right now. And they're all over place, and so that's another area of focus for us in terms of where we see things going. Again, refining is probably not as strong a market as the first -- the previous 2, chemicals and oil and gas, but it's clearly better today than it was a year ago. And looks like it's going to continue to get better for a while. Moving now down to Other. That sort of catch-all category. This is pulp and paper, power, high-tech, food and consumer products. That's a pretty good business in lots of ways right now. The Power business is relatively robust in -- outside the U.S. The problems in Japan did not seem to have negatively affected nuclear investment outside the U.S. as much as we thought it might. So that's good news because that's really one of the places where we're active. Pulp and paper market is about as good as it has ever been, certainly the best it's been in a decade or so. We're seeing a lot of opportunities for food and consumer product alliances. And there's been a resurgence of the high-tech business for us. In particular, 1 customer has some very major expansion plans. It looks like we'll be able to be part of that customer's expansion going forward. Moving now to the bottom of the pie, Mining & Mineral. You see that's a little 2% segment. It's a small percentage right now because it represents 2 months of the acquisition plus Jacobs' normal Mining & Minerals business combined. So it's 6 months of Jacobs -- or a year of Jacobs and 2 months of Aker, I think is correct. It's a very strong market for us. We see lots of opportunity here. The main players in the mining and minerals market had a $66 billion CapEx program for next year. In addition to that, we're seeing lots of activity in the sustaining capital and maintenance arena, so both of those are real positives for us. And we're looking to see robust growth in the Mining & Minerals business, partly because we'll get more -- a full year in there eventually. But because mostly, we see a really good, strong market going forward. Now we'll move around the clock of the markets that have a little more uncertainty in them. Let me start with the Infrastructure. It's a little bit more uncertain than the markets I just talked about. The business is fairly weak in the highways arena. It's stronger in rail and air. A lot of what's going to happen in Infrastructure is going to be a function of what happens to user fees. So user fees will be a key aspect of investment. If you look at things like vehicle-miles traveled in the Infrastructure business, they're down about 2.5% over their peak. So there is a shortfall in the user fees related to the highway infrastructure or transportation infrastructure business. But not as severe as we might otherwise believe listening to the state budget issues. It just does create some uncertainty. There's also going to be a lot of activity in the project finance and in the Public Private Partnerships. The Water business, which is the other aspect of infrastructure for us, is good. It's growing nicely. It is largely driven by user fees and hasn't seen the downturn to the same extent that the other state budgets and local budgets had. It's largely a local business. So we think that's going to be good business for us. Those are mostly characterization of the U.S. market. We're also a big player in the U.K. market. The situation there is a little different. The U.K. market is clearly more mature. They're further down the road of dealing with their budget shortfalls. We've positioned very well in the parts of the market where user fees drive investments. And I'm very optimistic that our U.K. market position will only improve as we go forward. Although I think it will improve gradually. Moving on now to Buildings. Remember, this is a Technical Buildings business, so it's more about buildings that have a high-technical content inside than what's on the outside. It's not commercial buildings. It's not office buildings. It's not multi-family housing. It's the mission command centers, healthcare facilities, schools, jails, hospitals, that kind of work is what drives our technical buildings. It is affected by what's happening in public-sector spending in both the U.S. and Europe. But our segment of the business is probably not affected quite as much as the buildings market generally. Certainly, not having a commercial market focus has been a positive for us. The good markets, the K-12 business, the Healthcare business, the mission-critical facilities, things like data centers, remain very robust in that marketplace. And we see huge opportunities in the buildings marketplace in the Middle East. So we think there's another great growth opportunity there. So not a bad business, just maybe not quite as robust as we'd like it to be. And now the national governments, 2 sections to our national government business. 1 is the Aerospace and Defense side, the Research and Development, Test Engineering, the Scientific and Technical Services end. The other is environmental management, environmental radiation, sustainability kinds of activities. Let me take the Aerospace and Defense piece first. It is a huge market, but there is considerable uncertainty – well, considerable is an exaggeration. There is some uncertainty, significant uncertainty, about how much money is going to be spent and where. There are areas where we're pretty confident things are going to be strong. IT is going to be strong. And actually, as we look at our proposal portfolio, our proposal portfolio looks pretty good. But I think in looking at that part of the federal business, it's going to be a game of trying to take market share from our competition. I believe we're pretty good at that, so I'm not real pessimistic about our position in this market. I'm looking to see us grow, but maybe not at the same rates we've been growing the last few years. Another area of uncertainty is what's going to happen with NASA. But so far, where we are on NASA, it looks like it's about neutral to us going forward. We'll see how things unfold as we get further down the road in the budget cycle. An awful lot of this is going to remain uncertain until after the 2012 election. Moving on now to environmental remediation and sustainability. Let me start with the U.K. there. The work that the nuclear decommissioning agency is doing continues to grow. Their budgets stayed up through the resolution. And we're a stronger player in that market now with the addition of Aker. Between the two of us, we have a very, very strong position in the nuclear remediation, nuclear cleanup market in the U.K. So that business looks pretty good to us. The U.S. market is pretty flat. We don't see a lot of new investment in the U.S. market, but I think we do see some pretty good opportunities for us as a company. So we think there's going to be some opportunities for modest growth in that area. Overall, if you look at the markets, the national governments business is probably the area where we have the most discomfort. I think it'll be an okay business, but I don't think it's going to be as robust as it's been in the past, at least not for a little while. Moving on now to Slide 10, geographic diversity. As you can see, we've, over the last few years, managed to get a pretty broad geographic diversity, particularly now with the addition of Aker. And we're going to continue to focus on expanding our geographic diversity based on where our customers are going with their money. So in addition to the places where we are, we see some significant opportunity in Brazil. We see some opportunity in Oman, and some in the ASEAN countries. As you know, we've announced a mining project in Lao -- I mean in Vietnam, and we expect that we'll be doing a bunch of consumer-related projects in the ASEAN countries, particularly in Vietnam as well. Obviously, we're also continuing to focus on expanding our existing businesses. Our basic principle is get into the market, get established, and then sell other services to our customers in those marketplaces to allow us to grow. Moving on now to Slide 11. This is our acquisitions slide. You see we've got quite a stack of stuff at the top right of that slide that we've done in the last little bit. This continues to be very good area for us. There are lots of interesting acquisitions out there at prices that make good sense from our perspective. The Aerospace and Defense arena, the uncertainty about the markets is driving some fairly attractive pricing in companies in that business. And we think there's some opportunities there. Infrastructure and Buildings business also has some opportunities for the same reason. We think there's some opportunity to expand our Mining and Minerals portfolio, and there are some opportunities out there to do that. In terms of geographies, Asia is certainly very interesting, South America, China, plus we'll continue to do the niche deals that we've always done to augment our capabilities, and expand our resource base in countries where we're already established. So I think the acquisition activity will continue to be good. We've got good, solid cash flow to fund that acquisition activity. And I think we can continue to add to our earnings growth in the long run through those acquisitions. Just going to Slide 12 now, which is our standard sort of commercial advertising. We do think there's a lot of reasons to feel positive about Jacobs right now. Our customer-driven business model is absolutely in its sweet spot. We're continuing to be able to diversify across markets, geographies and services. We've got a solid data feed to help us drive acquisitions. So we don't think -- there's no reason to think that we can't continue to grow at a 15% compound on the EPS line as we go forward. And with that, I think we are ready to turn it over to questions.

[Operator Instructions] Our first question comes from Jamie Cook of Credit Suisse. Jamie Cook - Crédit Suisse AG: A couple of questions. 1, on the margin line, your margins improved sequentially to 5% from 4.4%. I'm just trying to get a feel for how much was your core business versus what was the Aker acquisition. So if you could help me out there. And what you’re seeing on billable hours sequentially for your base business; you mentioned improvement last quarter. And then just my last question, Craig, at the end, you said you feel comfortable with the 15% EPS growth. Does that mean we’re sort of at the inflection point and Jacobs is back to its 15%, at least for the next 12 to 24 months?

I'll let John start with the margin question, and we'll work our way through the list. Jamie Cook - Crédit Suisse AG: Cool. Thanks.

On the margins, yes, the operating margins were right around the 5%. And part of that is the business mix because if you notice the professional services revenues are growing faster than the construction revenues. Aker coming into the mix, their net margins were very similar to ours. Although they tend to be more heavily weighted to the professional services. But we did have some of the due diligence and transaction costs that were included in their G&As that offset some of that. You peel that back, and the fact that they have very little pass-through costs, and their field services mostly are professional services and construction management people and such like that, if you peel some of these other things back, their margins tend to be a little bit higher than ours. But it's because they -- just their model’s a little different. They don't have the pass-through costs that we typically have on some of our field services activities. So...

At the moment.

At the moment. I think as we go forward, that may change, and as they get more integrated with our field service activities as well. So I think in comparing that to last quarter, you'll recall that we had a fair amount of due diligence costs in that last quarter that brought that margin down. And without the due diligence costs, the margins were probably closer to 4.8%. So there is a little bit of a change, but not as evident of the change, or as broad a change as just looking quarter-to-quarter. And I think... Jamie Cook - Crédit Suisse AG: But are you seeing any improvement on just the pricing environment? Or have your -- because the last quarter, you mentioned your core business, the billable hours increased sequentially. I'm just wondering if we're seeing an improvement in the overall market.

No. In fact, what I was going to say is that, that change really is almost all attributable to mix, and a little bit higher levels of professional services. Pricing continues to be very competitive and very strategic. As Craig said, we're looking to take market share in those downturns in some of our government markets. And even in that market, which historically, tends to be more stable than some of the private sector markets as far as pricing. We're seeing a higher level of price competition than we would in normal times. So, yes, it is still a competitive market. And we're still focused on making sure that we take market share in this downturn. Your second part of your question, the billable hours, we continue to see that slow but steady increase. It's not robust, but it certainly is going in the right direction. And I think with the growth in the backlog, I think the professional services, that will tend to feed that as we go forward over the next few quarters. Jamie Cook - Crédit Suisse AG: And are we at the old Jacobs' 15% forever?

We have never not been 15% forever. It's just a matter of whether it's 15% or not this month, or this quarter or this year. Just quickly, to touch 1 more minute on the billable hours question, we are seeing a steady increase in billable hours. We've had net positive hiring for 16 over the last 17 weeks. I think that's right. It might be 15 in the last 16. But at any rate, so we're seeing the kinds of things that we would like to see from the standpoint of the business getting better. But to John's point, it's still just a little slow. In terms of the inflection point, I believe that we have seen the bottom, and that we are on our way up out of that bottom. And that we will be doing so at an increasing pace over time. Whether we'll get back to a 15% quarter-over-quarter growth -- or not quarter-over-quarter, but year-over-year growth in the next 12 months, I'm not ready to say that we will. I think the markets are still pretty challenging, but I'm not ready to say we won't either. It's just, we're just right at that point when we're starting to see the system build some momentum, but it's a little too early to call the rate of change that robust. Did that answer your question? Jamie Cook - Crédit Suisse AG: Okay. That's fair. Thank you. I'll get back in queue.

Our next question is from Will Gabrielski of Gleacher. Will Gabrielski - Gleacher & Company, Inc.: Thanks. A couple of questions. 1, if you didn't quantify the Aker backlog additions, how did you add that to the backlog number for the quarter? And are guys able to quantify that for us?

John?

As we said, the total was just over $600 million that we added into the backlog. And of that, about $500 million was professional services. And that came in -- it was actually about the same when we did the acquisition and closed the acquisition on the 1st of February. So their sales rate was consistent with the workout for the couple of months. Will Gabrielski - Gleacher & Company, Inc.: Okay. I guess just to help me understand the Aker business, it seems like their backlog coverage of revenue is a little bit lower than what we see from some of the other bigger mining companies, and the obvious one is Fluor. Is there just a difference in mix of project types that we should be expecting?

I don't think it’s as much of a difference in the project types as it is the pass-throughs and construction-related revenues. One of the things that we bring to the party here in our relationship now is that a stronger EPC, EPCM capability in Jacobs than what Aker had in its own right. And so what you're really seeing in terms of that backlog to revenue situation today is a very, very much a professional services kind of business. And I think as we start to bring in construction, and we have a longer project duration in backlog, you'll see that ratio change. Will Gabrielski - Gleacher & Company, Inc.: But the margins should stay constant with that mix happening?

Well as you get pass-throughs in, that will push the margins down. Because as I've said, I think on the last call, I expect in the long run that Aker margins will be about the same as Jacobs' margins. Will Gabrielski - Gleacher & Company, Inc.: Okay. And I guess the added $0.04 in the quarter, net of all your costs from the deal, and that was for 2 months of business. Going forward, you're still taking down the top end of your range, and you've commented on why. I'm just wondering if Aker performed in line better or worse in those first few months than your initial take was when you gave guidance a few months ago.

Well, 2 months is hardly enough to get a trend out of an acquisition. We're very happy with Aker's performance in the first couple of months, and we think that they're going to continue to do well going forward. There's nothing about their performance that's causing us to revise our expectations. Frankly, I think as much as anything, we just don't think it's likely we're going $2.85. I mean, you can do the math. And if you take $1.15 from $2.85, that's some awfully strong uptakes in the next 2 quarters. And it's just not going to happen that fast. And so we felt like it was important to take the top of the range down a little bit and not kid ourselves. Will Gabrielski - Gleacher & Company, Inc.: Okay. And then lastly, the Middle East. It seems like you're getting some traction, how are the margins on that work?

They're tough. It's tight. It's a very competitive marketplace. That's the marketplace we work. Will Gabrielski - Gleacher & Company, Inc.: Okay. Thank you, guys.

Our next question comes from Richard Paget of WJB Capital.

Wondering if we could talk a little bit more about trends in the Aker backlog. If I look at the P&C backlog historically, it looks like it peaked around 2Q '10. Now I know it's not exactly apples-to-apples because you didn't acquire the whole business. And I'm sure maybe there was some backlog translation, but that $600 million seems a lot lower than the peak a year ago. So I'm just trying to get a sense of how things have been progressing. And what your outlook for growing backlog in that particular segment is going forward?

Well, a couple of observations. In the Q2 '10 Aker numbers is a very substantial lump-sum construction business that we did not buy, and very high risk business, big numbers on the revenue side, small numbers on the margin and profit side, like negative numbers in some cases. And our view was that we didn't want that business. And I haven't analyzed it because it isn't relevant; we didn't buy it. But I would guess a lot of that backlog was associated with that part of the business.

So is that the long-view project for the...

Yes, things like long view are a perfect example of that. And so that's part of it. We see -- as we look at where we are right now with Aker, we see a very good prospect list. We're winning work. We're being invited into some major projects as a principal contractor. And so I think we'll see nice, steady, solid growth of that backlog. I think everything we've kind of expected this acquisition to do, at least at this point, we believe it's going to do.

Okay. And I know you have some uranium exposure. Any changes in that market outlook given the events in Japan?

Not so far. I mean that's something we continue to watch and scratch our head about, whether there's going to be an impact or not. But frankly, these uranium projects, you’ve really got to take a long view. These aren't 5-year projects or 3-year projects; they are 50-year projects. And I think most of the customers who are in that end of the business are taking that long view. So I'm optimistic there won't be much in the way of a negative impact from what happened in Japan.

And then finally, I know you took on some short-term debt in the transaction. Is that something you plan on paying down at the end of the year, or you're going to keep that on the books going forward?

Well, we'll be paying it down with cash flow. We're evaluating. Certainly, there's some tax aspects of what we may want to pay down, and transferring money around. Part of the reason we took the debt on was because of where the purchases were being made versus where the card cash balances were sitting. As we sort that out, we would expect to see the loan balances coming down. We aren't looking at it as long-term debt. Our base revolver does come up for renegotiation in '12. And so we'll evaluate that all as we look at the -- when we get to renegotiating our underlying syndicated revolver.

All right. Thanks. I'll get back in the queue.

Our next question comes from Tahira Afzal of KeyBanc.

I have 2 questions. Number 1, if you look at the quarter in terms of bookings, could you talk a bit about where perhaps the bookings came in stronger versus your expectations and where they were weaker? And then second question, in the past cycle, even though your focus is more on small to mid-size projects, which is the Baseload business, in the past cycle, you did booked some large projects as well, largely on the Oil Sand side, some on the downstream side. As you look at your prospect list, do you see similar opportunities that do fit within the Jacobs' model of risk coming back? Or are most of the project opportunities you're looking at right now, most are your usual run-of-the-mill business?

Well, first off, in terms of additions to backlog, if there were areas where we were a little disappointed, we were a little disappointed in the infrastructure business in terms of the additions to backlog there. And in the environmental remediation, environmental management area of the national governments business. Surprisingly, the Aerospace and Defense piece, where I was concerned at the beginning of the quarter, we have pretty strong quarter from a new awards point of view. So I think we had 8 or so awards in the quarter of some substance. So I think from that standpoint, those 2 areas were where we were a little bit disappointed. But like I say, it was a pretty good, strong quarter from a sales point of view, one of the stronger ones in several quarters now. So overall, we felt pretty good about the sales in the quarter. With respect to the big projects question, we certainly expect that our profile in the Oil Sands will be similar to what it's been in the past and that we will have a number of large projects in our portfolio. Our challenge up there continues to be, and I think we're doing a good job of also penetrating that sustaining capital business. Because we want to be less vulnerable -- the next time there's a cycle up there, and there will be one, we want to be less vulnerable to be in a big-projects-only position. And so we're making a lot of progress in that regard, in that part of the world. We will continue to see big projects come into Jacobs' portfolio. Whether we’ll see the multi-billion dollar refinery expansion kind of projects come into the portfolio is more questionable. We'll see some of that perhaps in the Middle East. But I would guess we're going to be talking about projects in the $2 billion-minus range for the most part. And we'll see those largely in the Middle East and in Canada. Does that answer your question?

It definitely does. Thank you very much.

Our next question comes from Alex Rygiel of FBR. Alexander Rygiel - FBR Capital Markets & Co.: Craig, could you quantify the number of headcount in the Middle East today? And how that's changed over the last 2 or 3 years and how you think it could change over the next 2 or 3 years?

Well, let's see, I think today -- I'll turn that over to our Middle East expert here, actually. Mr. Watson is sitting with me. And he's been pushing that part of the world for us as our head man in charge. So, Noel?

Yes, the Middle East headcount has probably been fairly static over the past couple of years as we've gone through a major restructuring activity as we re-tool that activity for the kinds of work that are coming at us now. We are in a unique position, and I guess we announced the GES plus win here recently. And we are going to get some fairly sizable activity under that contract, which is going to create a fairly significant growth spurt here, let's say, over the next, I would guess 12 to 24 months, and that growth spurt is already underway. We have been assigned some big contracts under that. We also won a fairly sizable contract up in the Netherlands [indiscernible] where we did press release. And so our Middle East activities seems on the cusp of really taking off right now.

That's great. We have, Noel didn't mention it, but we have one distinction, I think. We're one of the few GES contractors, GES plus contractors, who's already licensed to do business under that contract. And that's a big plus for us, and we think that will accelerate awards for us as we go forward. Alexander Rygiel - FBR Capital Markets & Co.: And you also mentioned the nuclear market outside the U.S. Could you expand upon that a little bit and Jacobs' strategic positioning in that market?

Sure. We have chosen to take a position that's sort of not on the technology-of-nuclear side, but in what I’ll characterize as balance of plant. And we're working as the sort of balance of plant engineer both for some of the providers of technology, like AREVA, and for customers as the owner's engineer. And we think that positioning makes a lot of sense, given our business model, given our focus on the relationships and the fact that there's lots of people who know about them a lot. There are some well established players who know how to build a nuclear power island. So that's the position we've taken, and we think that's a good spot for us. It doesn't have the same level of competition in it. The projects, again, tend to be a little smaller and not as attractive to the big players. And so that's where we are and where we think that our best market play will continue to be. Alexander Rygiel - FBR Capital Markets & Co.: And lastly, you referenced smaller to medium refinery projects picking up, but you also, I think, mentioned, or didn't mention, anything about competition. Can you address competition and the margin outlook for the smaller- to medium-sized refinery projects?

The small- medium-sized refinery market is still over-served by the competitors. And so pricing pressure in refining continues to be pretty strong. I think that we'll start to see that moderate, but it's probably another quarter or 2 before it’ll happen. Alexander Rygiel - FBR Capital Markets & Co.: Helpful. Thank you very much.

Our next question comes from Michael Dudas of Jefferies. Michael Dudas - Jefferies & Company, Inc.: Any of your clients, I guess, broad question, maybe one of the private sector side, have been seeing any concerns about either situation Japan from a supply standpoint or supply chain, North Africa concerns or some of the cost inflation that people have been talking about, it seems like hourly, with regard to excess or liquidity in pricing inflation in emerging and developing economies?

There's been a fair amount of talk about what the tsunami means to Japan and to the supply, particularly in the microelectronics world. But we're not -- most of the customers that I've talked to since the tsunami are either aren't affected by that or expect the effect to be price pushes, the cost push, more so than just no supply at all. So deliveries will stretch out on things, but the bigger problem is it will get a little bit more expensive. I think, from our perspective, that probably doesn't affect us very much. The Microelectronics business, broadly, is not a business we serve outside of semiconductor manufacturing. And that only on a limited number of customers. So I don't see that as a particularly big issue as we sit here today. The instability in the Middle East is -- I think a number of people have concerns about that. There was a really good article written by Tony Cordesman that I haven't even finished reading yet, but the first part of it, I really like. It's talking about what's likely to happen and where. But I think, as we look at where we're currently working, Saudi Arabia, Abu Dhabi and Morocco being the 3 main countries, we think we're in a better position in those markets and maybe some of the other markets, Syria, Libya, that sort of thing. But it is an area of concern on everybody's part. And I think it's just something we're going to have to continue to monitor. I don't think, certainly, nobody at this table is qualified to predict what's going to happen. And then with respect to what that means to the Oil business, what I do think it means is it will drive a lot of exploration and production activities in places outside of the Middle East as people try to assure a stable supply. It's really a big plus in my opinion for our Oil Sands business, because I think the relative certainty of the Oil Sands supply will become an increasing positive. And so I think that's good news. Inflation is -- who knows? Again, we probably need a macroeconomics person sitting in the room to help us with that question. We are certainly seeing cost pressure on some projects driven by demand more than anything else. Whether that results in inflationary impact that starts to affect projects and investment, I don't see that yet. I haven't heard that from our customers when I talk to them. But that tends to be something people react to after the fact rather than before the fact. So I might not hear from our customers on it. Does that answer your question, Mike? Michael Dudas - Jefferies & Company, Inc.: It sure does. I think Noel can answer all those questions. He’s got prognostication experience [ph].

He’s still predicting $20 oil, so… Michael Dudas - Jefferies & Company, Inc.: I'll leave it there. Thanks for your thoughts, gentlemen.

Thank you. No comment.

Our next question comes from Avi Fisher of BMO Capital Markets.

Avi Fisher. Thanks for taking my questions. Can you clarify a little bit in your mining work, maybe revenues by end market or by types of research that you do or roughly within that area? So what are the biggest markets for mining?

So in terms of geography, for example?

Either geography or more by the type of resource: copper, gold...

Well, across the spectrum of minerals, the markets are all pretty robust in an awful lot of the minerals. The Processing business is driven by growth in countries like India and China, and so you see a lot of activity in copper and gold and the other metals that are related to those. You see a lot of opportunity in iron ore and in coal as well. In terms of where are the projects, what you see mostly is Chile, Peru, for the metals-based projects. We're seeing some activity in Brazil around coal. Australia is a broad spectrum of metals, but, in particular, uranium, iron ore and coal are very strong.

What are Aker's biggest markets in terms of its copper? And then how much of their business is copper -- of what you acquired, how much is copper?

Well, metals processing is probably their single biggest market from a minerals processing point of view. So gold, silver, copper and the related projects, and the skills are pretty transferable across those, that spectrum. So you kind of have to lump that non-ferrous metals into one pile, and that's certainly one of their strengths. And then the other strength, which is Australia focused, is on the uranium side.

So Aker is primarily metals processing across all the non-ferrous metals and then Australian, uranium? Is that correct? I just wanted to just clarify some of that.

Yes, that's right. The Aker guys will probably tell you that my answer was inadequate, but they're the experts and I'm not, so I'll take the fifth on that one.

Right. I mean, if you care to add a little more detail, that would be great.

I'm not qualified to add more detail. I'm not a minerals processing guy.

Got you, okay. You mentioned that environmental remediation was a little bit disappointing, and I wonder if you can clarify sort of where it was disappointing. Was it the DOE slowing the spending on the stimulus? Was it projects slowing down? Is it the competition...

It's two things, I think, in two different ways. In the U.S. markets, it is -- the awards have been slower to come than we had hoped. We're chasing a number of interesting projects that should be good projects for Jacobs. A couple of those we thought would've been awarded already, and have not been.

And are those government awards or private awards?

Government, DOE for the most part.

And do you know why they're slowing?

I think there's a whole lethargy in government right now in terms of pushing things out the door, and things take longer. There's more review cycles; there's more input from Washington. And I think that drags out the process.

Okay. Is some of that, do you think, impacted by the sort of burn-off of stimulus work?

No. Stimulus really didn't have much in impact there. Stimulus was much more in the infrastructure and buildings arena. And there's still some money being spent, but most of that is behind us. In the U.K., I think the challenge is somewhat similar. There's a lot of work to be done. The NDA has a big budget, but they're slow to push projects and awards out the door. And there, there's been some challenges in terms of the solicitations coming slowly, as well as slowness in awards. Still, it's clearly a better market than the U.S. one in terms of its growth potential.

So off of a lower base?

Yes, for us. It's a good business, but it isn't of the scale of what we have in the States.

And then just continuing to ask for a little bit more sort of detail and clarity within the Oil Sands, I think one of your clients -- I think last quarter you said there was a big project that's gone from you. I think it was awarded to someone else in the quarter. What are the other opportunities in the Oil Sands for you? And can you talk about some of the timing on it?

I'm not sure how to answer that question. Virtually, all of the major Oil Sands producers either are customers of ours or are potential customers of ours. I don't know what project you're referring to that got away, just off the top of my head. But if you go with the Suncors and Syncrudes or the ConocoPhillips -- all of those kind of players out there have major investments, and we have significant roles with virtually all of the major players. There are customers with 2 or 3 investments going simultaneously. They rarely put all three of those investments in 1 company's hands. So we might have 1 or 2 of them, and someone else will have the third. But I really think that we have taken, and out of the box, a pretty strong position in re-energization of the Oil Sands and probably have the premier position at the moment. We’ve certainly staffed up faster than most of our competition. Our shops are rapidly moving to where we're having to take additional buildings for expansion purposes. So that's a good, growing business for us, and our position in that market has never been better.

And is it across the board? Is it focused on SAGD, still? Is it…

No, we're still pretty focused on SAGD. There is other work out there. We're doing some tailings work on the mining side. We're doing some work on the processing side of the mine expansions. But we don't get involved at all on the mine itself, and we're not doing any upgrade or work of any significance at this point in time.

Okay. And then also continuing to get more detail, you mentioned that the national governments was the most discomforting and not as robust in the past. I mean, are you looking back to the -- is that a sign that it could be down? Or is that just kind of flattish?

Well, I think that the spending will be down. Now the good news about the spending is, even if the spending's down it's still a huge spend. But I think when the spending is down, it's going to make the market more competitive. So margins will be under pressure for the big federal jobs, for a change. Not normally a big factor. And I think you will see issues with delayed funding projects and tasks being slowed; those are the concerns. We're not seeing that to a huge degree just yet. But when you’ve got a Congress and an administration that are sort of gridlocked about everything, and a budget problem with the magnitude of our federal budget here in the U.S., I think you have to be concerned about how much of that spending is going to happen and how soon is it going to happen. I think a lot of our folks believe that we are going to operate under the equivalent of a continuing resolution until after the election, which would essentially be kind of a no-growth environment from a federal point of view. But that still presents opportunities for us to grow our market share. It will just be a fight.

I appreciate the detail. And then finally, on petchem, you've talked in the past about, I think you've said in the past that you're kind of focused on the polypropylene side, less on the polyethylene side. So I'm not sure how to read through to, say, DOE's talking about cracking naphthalene to ethylene. Is that an opportunity for you? Is that not a market -- I mean, what's your exposure to that market?

The ethylene part of it is not much of an opportunity for us. We're not a big player in the ethylene part of the cycle and don't expect to be. There's always other -- balance of plant work and that sort of thing directly associated with the ethylene cracker. But a new ethylene unit puts out all -- creates all kinds of derivative units: polypropylene, polyethylene, EOEG. I mean, there's just a ton of stuff that -- I don't even know what all those names mean sometimes. But there's a ton of others, what I call secondary olefins and chemicals that ethylene is then made into. And those projects are the ones where we have considerable strength.

Got you. So the abundance of ethylene creates opportunities for further downstream...

Right. Because there's not much you do with ethylene as ethylene, right? You've got to make it into something else. And it's the making it into something else where we have really strong market position.

But the low -- well, I guess the low price for ethylene is a double-edged sword. Obviously, people will be -- the clients will be buying it. But will the producers be putting money into it?

Well, it's interesting. A couple of players, like DOE, have announced that they're considering major new crackers. And I'm not -- I don't really look at the ethylene markets. It always seems like ethylene's in oversupply, and it always seems like people are announcing new projects and building new projects to keep ethylene in oversupply. But I guess our attitude is just kind of, "As long as there's lots of ethylene, there'll be lots of secondary chemicals projects, and that's what we want." If you look at the demand side of it, I mentioned in my prepared remarks, we're seeing an awful lot of demand in automotive-related things: paints, polymers, things for tires, rubber, those kinds of things. And so I think an awful lot of this product is going places that will benefit Jacobs in terms of projects.

Got you. And 2 quick questions for John, so he doesn't feel left out. The Aker acquisition, how much revenues were contributed from it?

For the quarter, for the two months, it was about $170 million.

So we could kind of pro-rate that to get, to estimate full quarter?

It should be, yes.

And then there's a question early on, of course, margins, and I just want to understand, is there, I don't know how to put this, but is there an element of kind of over-earning on margins? Or is this the rate that you can get as long as the mix kind of stays in this area?

Well, I think there's going to be a lot of things that will impact the margins. I mean as we go forward, we'll improve their G&As, but we'll also probably, as Craig said, we'll expand their field services activities so they'll start getting more pass-throughs, so the mix will change. But their revenues and their margins on their professional services are similar to what we would see on our professional services in the process. Other than they're in a stronger part of the cycle, and we're in the weaker part of the cycle if you're looking at chemicals and refining. So the margins always go through the cycles, and so you can't compare where they are in a strong cycle versus where we are in a weaker cycle. But I think that the margins, given the similar mix, will be similar.

Got you. And as you expand your reach into the Middle East, your exposure in the Middle East, do you expect -- or could there be any negative impact on your free cash flow? Because there has been -- some people say they're historically slower-paying.

We haven't seen anything significant. We're dealing primarily, again, on the professional services side, and that's a pay-as-you-go kind of a market, and it tends to be similar to what we get payment in the West. You have to stay on top of it, you have to stay close to your customers, but you have to do that in the West, too. I mean, some of our slowest-paying customers are some of our best customers.

Thanks for the color.

Our next question comes from Scott Levine with JPMorgan. Scott Levine - JP Morgan Chase & Co: On the field side, so it looks like if you normalize $400 million addition from Aker in field, it looks like you did have growth in the field backlog in the quarter after several quarters of decline. I'm wondering whether that would surprise you, whether that signals something, or whether you expect that trend to continue going forward?

Well I think over the next few quarters, particularly as we see things like up in Canada, move from the front end and into the detailed design but then, more importantly, into the field, we will see the construction and field services growing. We've been saying that it was going to be a few quarters before we saw any significant growth in the field, that we'd see growth in the professional services first, and that's still the pattern. Quarter-to-quarter, I think, if you take Aker out, we grew less than $100 million, so it's not exactly a robust growth in the field services. But it is an indication of things are starting to move through the pipeline out of the some of the things that we were doing engineering on are starting to move into the field. So I think that while it will probably be moderate in the next couple of quarters as we move, certainly, I think, as we move into '12, we'll start seeing the field service activity pick up. Scott Levine - JP Morgan Chase & Co: And then as a follow-on to that, most of the Motiva or all of the Motiva is in, in field, and while I'm not asking for you to quantify that, could you remind us of the timing of that in terms of your role [ph] so we can get a sense of what the growth might look in field into 2012?

It's about 12 months on Motiva left. Scott Levine - JP Morgan Chase & Co: 12 months, got it. And then 1 last 1 on the SG&A, just a little bit more color here. A little bit of a step-up in the second quarter. Can you give us a sense of what we can expect in that line? It sounds like you're saying it could come down going forward, but is there anything one-time in that line? Or how could we think about overhead going forward?

Well, the big step-up was related to bringing Aker in and the ongoing due diligence costs. So in round numbers that was $29 million, $30 million. So I think that, as the business picks up, there is a little bit of pressure on the G&A's up. We are starting to see salaries have some increases and things like that. So I think we would expect to be holding those in line. But at least this next quarter, we'll have Aker in for the full quarter as opposed to just 2 months, so there will be a little bit of a step-up related to that. There will be some continuing integration costs and things like that, that will be unusual, a little bit more than what business as usual kind of G&As. But I would expect, and we would certainly focus that these will be, other than the impact of bringing Aker in, that the growth will be flat to very, very moderate. Scott Levine - JP Morgan Chase & Co: Got it. But to be clear on that $29 million to $30 million, is that tied to due diligence or one-time that wouldn't expect to continue?

No. Most of that is just their G&As of doing business. Due diligence was probably around a couple of million dollars. Scott Levine - JP Morgan Chase & Co: Got it. Okay, so flattish going forward. It sounds like it's slightly up.

So a couple of million after tax, so it will be a little bit more than that in the G&As.

If you look at a same-store sales basis year-over-year, G&As are down modestly $6 million or $7 million. Scott Levine - JP Morgan Chase & Co: Got it. Thanks, guys.

Our next question comes from Andy Kaplowitz of Barclays Capital.

So Craig, you guys have always been pretty even-keeled, I think, historically, and Jacobs has said many, many times, that you're not going to have all business doing well at once. But if you can have sort of 5 or 6 businesses do well, that's what you want to see, which seems like what we have here. And we also have Backlog growing in both segments of your business, I would guess, probably a little better than you expected organically. So why so even-keeled here? I mean, I know you're being cautiously optimistic, but it just seems to me that maybe, you're being a little overly cautious versus the turn in your market?

Well, I want you to be right, but I'm not prepared to say that you are. It's just -- if you look at everything that's going on in our market, even in the good markets, you have to recognize that it's still a little tentative. And so, for example, take the Oil Sands -- lots of work being awarded. We're winning more than our share. We're doing really well, but it's all FEEDs. And FEEDs aren't -- they don't feed that monster when it comes time to see that 15% compound growth. That's got to turn into detailed design and procurement and construction or construction management; that's what really feeds the monster on the growth side. So maybe we're being too conservative, but I think we're still in a time when a little bit of caution is called for. Because I really don't think you can say, with comfort, that the strong markets are going to stay with us or that the weak markets might not get weaker. I don't say you can -- I don't have any certainty they will. I'm certainly not trying to hang Craig here. But I think it's probably prudent to just be a little conservative about where things are going based on what we see in the marketplace.

I think that's fair. Last quarter, we had talked about sort of comparatively where this cycle is versus the cycle we saw, maybe from '04 to '08. So maybe I'll ask the question again, focused on refining. You did say in your prepared remarks that you thought petrochemicals was the best in a decade in terms of the end market. So where are we in refining for your business right now, you think, if you compare it to that time period?

Well, we're still toward the bottom of best in a decade. Let me be clear: I don't think we're going to see another uptick in refining like we saw from '04 to '08, at least not in the relevant future. So I think the refining business is going to come back. I think it's going to come back in a way that's favorable to Jacobs, frankly, because I think it's going to tend to be smaller projects and environmental-driven work, I mean, we didn’t talk about that today. But I think there's a lot of drivers for expansion of the Refinery business for us that aren't really drivers for some of our competitors. But if you just try to put it on a scale of 2008 being the peak of the market and last year being the bottom of the market, we're probably somewhere, in a scale of 1 to 10, 2 or 3 at this point.

All right, that's fair, Craig. How about this quarter versus last quarter in terms of biddable work in those two markets in refining and petrochemical?

Prospects are improving steadily. There's no question that there's more opportunity out there this quarter than there was last quarter, and there was more last quarter than the previous quarter.

Got you. And 1 more if I could, on the mining market in general. I know you've only owned it for a couple of months, but you mentioned that it's in a stronger place generally in oil and gas. Does that mean -- we hear all the time about scarcity of engineering in that market, which should be very positive for pricing and, therefore, margins. Do you see that? Is that getting better for you over time?

It's hard for me to judge just yet. There are lots of reasons to think that, that would be right. That we would start to see some opportunity to raise margins a little bit, because it is a very robust market served by a limited number of competitors. And then there are some resource constraints. But I think it's -- we haven't seen it enough yet to be comfortable with that, and I'm ever mindful of David Seaton's comments at Fluor about the margins in mining being lower than their margins overall. And they're a good company and a main competitor in this business, so if they're saying the margins are a little tighter, that has to mean something for us as we look at the margins going forward.

That's fair, Craig, but it also has to do with their mix of work, right? I mean, they have...

Yes. No, there's no question. Their mix of work’s always had a little different margin. You see it in the margins for the business, generally. Their mix of work's always been a little different. Their way of accounting for construction has always been a little different. And so they always show a little different margin profile. But relative margin would be, I think, meaningful, whether it's for Jacobs or for Fluor, because we do go head-to-head on this stuff.

Understand. Thank you.

Our next question comes from Joe Ritchie of Goldman Sachs.

So just following up on the margins for 1 minute. The gross margins you guys booked this quarter, 15.2%, about the best growth margins we've seen in about 3 years. So given the fact that your business is shifting to more the technical professional services side, even this quarter, it's a greater percentage of your mix, and we would expect that to continue going forward. Should we see those margins at least stay steady at 15.2%, and potentially improve as we get through the next four quarters?

Well, first of all, we would expect to see the field services probably picking up as we get into '12. So we don't expect this to be a permanent or a long-term shift. And the fact that the gross margins are the best they've been in a few years is probably tied to the fact that the construction or field services are at the lowest level it's been over the last few years. So it really is a mix issue, and as that mix turns, I think you're going to see the margins turn as well. But having said that, I think that, certainly over the next couple of quarters, we wouldn't expect any major changes one way or the other, other than as it might reflect the mix.

Okay. And then, I guess, just following up on Scott Levine's point from earlier on the SG&A. And so there was -- I think you mentioned only a couple million dollars in SG&A expenses this quarter, that was one-time, and so we should then expect the trends to continue over the next few quarters but that step-up of, let's say, $26 million to $27 million, and then just stay flat as your revenue accelerates over the next few quarters. Is that the right way to think about it?

Well, that amount was only for 2 months. So you're going to have the third increase for next quarter just coming out of the fact that it will be for the full quarter. And then going forward, beyond that, we would -- as we get them on to our systems and get them into our structure and such, we would expect to see some improvements.

Okay, great. And I guess, just a follow-up, Craig, I know earlier you mentioned that, on the guidance revision -- it wasn't very surprising to us that you lowered guidance, given where we are at this stage of the year from an EPS standpoint. I guess my 1 question is, how come you didn’t lower the top end of the range even further? And is there still an opportunity, do you think, to actually get to the high end of the range?

I think getting to the top of the range will be challenging. It would take some pretty robust activity in the market. It's not out of the question, but it's not highly likely either.

Okay. Fair enough. Well, thanks for answering my questions.

Our next question comes from Robert Connors of Stifel, Nicolaus. Robert Connors - Stifel, Nicolaus & Co., Inc.: Yes, just real quick, regarding Canadian Oil Sands. As oil and gas producers there look to push out some more engineering to save lower-cost centers versus prior cycles, will we see Jacobs capture some of that cost savings? Or will most of it flow probably to the client?

Well, we've tried to structure our low-cost engineering centers so that we share the benefit with our customers. And we've been pretty successful up to now in doing that. So that's what our expectation would be up in Canada. We would expect that the customers will see the benefit of the low-cost engineering centers. We're pushing that very hard. But overall, that won’t negatively affect our margins. Robert Connors - Stifel, Nicolaus & Co., Inc.: And do you find them to be a little bit more amenable to doing that versus, say, a few years ago?

They're certainly more amenable than they were a few years ago, but there is still a fairly high resistance in Canada to doing work anywhere but in Canada with Canadians. So there's still some resistance now because, I think, as the resource pool starts to dry up, and it should based on what we see going forward, we'll see more opportunities to move work. But there is a strong preference for a local supply in that market. Robert Connors - Stifel, Nicolaus & Co., Inc.: And then just real quick to touch upon your comments regarding tightness in the Middle East oil and gas markets on margins. Is that sort of overall? Or does that also apply to the GES plus contract? I would think that with just a few bidders on that contract, that maybe the profitability is a little bit better?

It is a little bit better than pastimes, perhaps, but it's still a very competitive market. And all of the players know what they need to do to be competitive. You can win a GES plus contract and not get any GES plus work if you're not competitive. Robert Connors - Stifel, Nicolaus & Co., Inc.: Okay, all right, thanks.

Our next question comes from John Rogers of D.A. Davidson. John Rogers - D.A. Davidson & Co.: Just one follow-up. Craig, you talked about better opportunities for acquisitions in the market. Do you feel pressure or urgency to move with some of these, given that, I mean, if the market's really turning, presumably, the good pricing won't be around?

No, I wouldn't say that we're feeling any particular pressure. There are a lot of good deals out there. The whole deal process, as you know, is one that's opportunistic. It's got to be the right company at the right time at the right price. So even though there are lots of deals out there, that doesn't mean we'll do lots of deals. But I don't think we're going to see -- in most markets, we're going to see a big upturn in pricing in the short term. Exceptions might be, if we wanted to add to our minerals portfolio, finance somebody in the mining, minerals arena, that's as good a deal as we made for the Aker businesses. That might be hard to do. And oil and gas, as you know, we've been tried to do a big deal in oil and gas for forever, and we still haven't gotten it done, and that's all because the pricing is never moderated in the Oil and Gas business. So we're going to be prudent about this. We can grow organically, as well, and so we'll do deals when they make sense. John Rogers - D.A. Davidson & Co.: And then, I mean, should we assume -- I mean you've done acquisitions pretty regularly, although not on a consistent timeline. But it's fair to assume that part of that -- your growth plan is still, I don't know, 1/3, 1/2, coming off acquisitions?

Yes, now that's absolutely right. We're still expecting to get roughly 1/3 or a little more, 40%, something like that, from acquisitions, on a year-in-and-year-out basis. But as you look back through the history, you can find years where we made almost no acquisitions and grew 20% a year, 30% a year, and you find other years where acquisitions represented a significant part of our growth. I think that sort of history is going to continue itself out in the future. There will be good years and bad years for acquisitions, and there will be good years and bad years for organic growth. John Rogers - D.A. Davidson & Co.: Okay, I appreciate the color. Thank you.

Our next question comes from Steven Fisher of UBS.

This is Brandon Verblow for Steve. I just had a couple of questions related to infrastructure. I guess you mentioned that the business is uncertain. Can you also talk about what you think the pace of municipal bond issuances is so far this year, means for that business and at what point does that start to concern you?

Well, the pace of municipal bond issuances, as I understand the data, is down a bit. That's usually a 2- to 3-year kind of leading indicator of when the money will be spent. So if that sort of thing were to continue through this year, it would be bad for the 2012, 2013 kind of timeframe, but probably not so much for the immediate business of the company.

Okay. And related to the, I guess, multi-year high-rate legislation, you mentioned that you expect us to be kind of on a continuing resolution-type budget basis until the 2012 election. Does that mean you don't expect your multi-year legislation until after that?

Let me put it this way. I'm pessimistic that we're going to get meaningful legislation from a transportation point of view with this Congress and this administration. So yes, that's essentially what I'm saying. I think we'll be working under what amounts to a continuing resolution. Obama's infrastructure budget, I don't believe it will fly. And I think we're just kind of going to be stuck in this no man's land for a while.

Okay, thank you.

Our next question comes from Rob Norfleet of BB&T Capital Markets. Robert Norfleet - BB&T Capital Markets: Most of my questions have been answered, but just a few I wanted to hit on. In terms of Aker, John, I know you had mentioned, obviously, we're going to start seeing the amortization of intangibles, some this quarter, more in the third and the fourth quarter. How should we look at that on a run rate going forward? And what should we assume the impact to margins to be?

Well, it's already in this quarter, and so for the 2 months, it will be consistent as we go forward. It will be in the range of $4 million a quarter, and it was $2.7 million for the 2 months. So that will be fairly consistent as we go forward. We're still doing all the studies and such like that. That's our preliminary estimate, so it will be refined over the next couple of quarters, but it shouldn't change significantly from those levels. Robert Norfleet - BB&T Capital Markets: That's helpful. And earlier, you all mentioned, obviously, albeit seeing less work, particularly in the government side, just because of the budgetary constraints, but really going after market share. Can you elaborate just on some opportunities that you see in that business in terms of going after share? And I guess I would also be curious as to how you would expect, in some cases, gaining share to impact margins. Would you be willing to give up, obviously, some margin in an effort to do that?

Well, I'm probably not in the best position to be specific about opportunities right now in terms of that market. But to your second question, absolutely. We are big believers that as you take share, you position yourself best for the more robust cycle of the market. So we would certainly be willing and able to sacrifice margin in order to expand our market share. And in fact, that's part of our plan. One of the ways that our cost structure helps us to steal share in these down cycles is that we have that beneficial cost position. Robert Norfleet - BB&T Capital Markets: Okay. And Craig, just you had mentioned, obviously, cautionary commentary on government and infrastructure, but we’ve obviously had the ability to see the preliminary 2012 budget, and clearly, we know that can change pretty dramatically. But what are your initial puts and takes when you read through the budget, and just look at, for example, funding for DOE and then some of the other programs in which you have high involvement with?

Well, without getting into a specific discussion, and I haven't spent a lot of time with the budget, but several of our folks have -- we kind of say, look at this sort of middle case that we think is probably the most likely outcome, which is essentially, for the businesses we're in, relatively flat spending. Probably not down a lot, but certainly not up a lot. There are a couple of exemptions to that. We think the IT side is going to have some upside on it, and so we're a little bit more positive about that. But there’s cases based on what has been asked for and what we think might happen that range from a fairly significant downturn in spending, 4%, 5%, 6%, 7%, to a mostly upbeat spending cycle. It's really -- the discretionary part of the budget, the way our guys think of it, there’s about $1.3 trillion that fits in sort of the general programs that we approach the government, and the places where we can compete. Of that, some additional part of that is inaccessible to us because of the nature of what it is. But if the spending stays in a range that supports that kind of discretionary spend, that's kind of our middle case. Does that make sense? Robert Norfleet - BB&T Capital Markets: It does. And lastly, are we still seeing some flow-through of stimulus funding, kind of lagging from 2010, 2011?

Yes, we are. We're probably not finished spending stimulus money for a couple more quarters. But obviously, there's no new money coming into that. So it's just working off the backlog. Robert Norfleet - BB&T Capital Markets: Great. Well, thanks for your time.

This concludes our question-and-answer session. I would like to turn the conference back over to Craig Martin for any closing remarks.

I want to thank you all for your interest. I think we've got a good story. We're feeling, I think, increasingly positive but cautious about the world going forward, and look forward to having this conversation again here in about 3 months. Thank you, all.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect, and have a great day.