Good day, and welcome to the Jacobs Engineering Fiscal Year 2014 Second Quarter Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Ms. Michelle Jones, Vice President of Corporate Communications. Please go ahead.

Thank you, Betty. Statements included in this webcast that are not based on historical facts 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 you should not place undue reliance on such statements as actual results may differ materially. There are a variety of risks, uncertainties and other factors that could cause actual results to differ materially from what is contained, projected or implied by our forward-looking statements. For a description of some of the risks, uncertainties and other factors that may occur that could cause actual results to differ from our forward-looking statements, see our annual report on Form 10-K for the period ended September 27, 2013, and in particular, the discussions contained in Item 1, business; Item 1A, Risk Factors; Item 3, Legal Proceedings and Item 7, Management Discussion & Analysis of financial condition and results of operations, as well as the company's other filings with the Securities and Exchange Commission. The company undertakes no obligation to release publicly any revisions or updates to any forward-looking statements that are discussed on this webcast. With that, I'd like to turn the call over to John Prosser, Executive Vice President, Finance and Administration.

Thank you, Michelle, and good morning, everyone. I'll go over the financial highlights for the quarter and then I'll turn it over to Craig Martin, our CEO, to review our growth strategies and the business overview. If you go to Slide 4, as you'll see and as you saw in the earnings release, we had a disappointing second quarter. Reported earnings of $0.63 per share, $83.5 million for the quarter. These numbers reflect and includes a net of about $0.19 of unusual items, which I'll talk a little bit more in a minute. On a more positive note, the backlog at the end of the quarter went back up to a record high and it continues to grow and ended the quarter at $18.4 billion. So that's a good sign for the future. Good book-to-bill ratio for the trailing 12 at 1.13, continued to have a strong balance sheet. Our cash position was at just under $700 million, it was down a little bit from last quarter. It reflects about $110 million of paydown of our -- of the debt that we incurred with the SKM acquisition and also use of $65 million for a smaller acquisition that we closed during the quarter. We have revised our '14 guidance to a range of $3.15 to $3.55. This guidance excludes the impact of the unusual items I referenced above or earlier and also the similar items that we had in the first quarter. Just by way of clarification, if you recall, the first quarter, we had a net of about $0.05 of negative items, that was 10% -- or $0.10, excuse me, $0.10 charge related to closing costs and operations at SKM for the last couple of weeks of the first quarter. And it was offset by a tax benefit from…

Thank you, John, and good morning, everyone. We'll start on Slide 8, growth strategy. You've seen this slide largely before. I'm going to talk about the first 4 bullets in a little more detail later on. Our business relationship model continues to be a differentiator. We have good market diversity and I'll talk about how we're leveraging that. We have a good geographic presence as well. We've got a good solid cash position, both for acquisitions and to pay down our debt. And the bullet I won't talk more about after this slide is the last one, continue to drive down costs. The market remains price sensitive. We still are not seeing that point in the marketplace where price is not an issue and where we're starting to see margin expansion other than in a most minor way. So it's really important that we drive down our costs. In addition, we do see substantial synergies from SKM, and we think we want to act more quickly to obtain those synergies. So we're pushing hard to get those quicker and in greater magnitude as we look forward. We're also putting an intense focus on our operational efficiency. John has talked about the restructuring. That will also give us the opportunity to correct a couple of project performance issues that led to some of the problems that we talked about earlier. Moving on now to Slide 9. This is our relationship-based business model. You can see that it's pretty much what we've always described, what I think of as a virtuous circle of customer relationship development, good outcomes for the customer, which leads to more business with that customer. I'm pleased that again this quarter, our repeat business was over 96%. So we've had another strong quarter in terms of customer development,…

[Operator Instructions] And our first question comes from Andrew Kaplowitz of Barclays.

So, Craig, maybe you can give us some more color on the reserves and the projects you took in Europe and why do you think they're really one-time in nature? Can you elaborate on the restructuring you're going to do that really will make these projects one-time in nature going forward?

We can't elaborate very much on the projects. The projects are very likely to be, in fact, some are, in litigation. And to talk about them in any detail would expose what we believe our position is going forward. So I can't, unfortunately, give you a lot of detail. As you know, and any time we run the business, we're going to have ups and downs in projects. But the magnitude and the timing of these was just unusual and not typical of how we run the business. It happens from time to time. You've been around since 10 years ago and probably remember other times when that -- these sort of things happen to us; it's pretty rare, we intend to keep it pretty rare. But we got a couple of minor changes -- not so minor, but some minor changes we need to make in Europe to make sure that this doesn't recur and we're going to do that as part of the restructuring. I know that's not a real great answer, but it's probably the best I can give you, okay?

Yes, yes. And I understand. I mean, were these fixed-price projects or were they cost reimbursable and the customer disagreed? Like any color there?

Well, I can give you a little bit of color but not much. The projects, for the most part, had features that are unusual for us and -- in terms of the liabilities we've signed up for or the way in which the cost-reimbursable part of the project works, and that's created part of the problem.

Got it. And how significant is this restructuring, Craig? And what kind of benefits do you expect on it in 2015?

I'm not yet in a position to quantify the benefits in '15. We think that the restructuring charges will be on the order of magnitude of $0.40 in the coming 2 quarters. So it is a significant number.

Okay. And then just shifting gears. Even excluding these unusual items, you did lower your full year guidance quite a bit. What really is going on here? Is that really just you started the year pretty slowly and revenues have been slow to pick up? Is it SKM really? Is that a big factor there? Maybe you can give us a little more color on what really happened. I mean, it's obvious that you started the year slowly, but anything else beyond that?

Well, I think the slow start of the year is certainly a factor. The timing of the SKM acquisition, just the dime that it cost us in the first quarter is a factor. And SKM continues to be a little bit of a factor going forward. As John pointed out, we're not yet realizing all the effects at the bottom line that we expected to get from SKM. On the other hand, we're pretty confident we will get those and in fairly short order. Part of what we've done is accelerate our restructuring and integration of SKM to capture that sooner. Normally in these situations, you don't ever hear us talk about restructuring charges for acquisitions because we're -- we take a very leisurely approach to doing that so as to make the -- as little pain as possible. Under the circumstances with the weak markets, particularly in the mining and minerals area, we're accelerating the integration that we would do anyway. And so it's going to pile up in 1 or 2 quarters. And that's a big driver. But it should give us late '14, '15 kind of timing where we'll see SKM at or even above our original expectation.

Okay. And I think it's right to say that it was a bit of a surprise to you that mining weakened in the quarter again, is that fair, at SKM?

I wouldn't say it weakened again, it has remained weak. We continue to see the outlook for mining and minerals as strong sort of fourth quarter of '14, fourth calendar quarter of '14 -- as stronger, maybe I shouldn't say strong yet. But the challenges have been pretty significant in Australia, and we're doing a good job of dealing with those. But one of things we've got to do to deal with them effectively and maximize our profitability is downsize our operations, particularly in the functional areas.

Your next question comes from Steven Fisher of UBS.

First, Craig, just to clarify that problem project, that has now been completed?

It's in commissioning. So it's not quite done, but close enough. It's not just one project, understand.

Okay. But in other words, you're not expecting any further cost impacts in subsequent quarters for those projects specifically?

No. We think we have a very good handle on where we are. Some of this is going to -- I'm confident will go to litigation. So the final outcome may not be known for several years. But we have a good strong position and I'm comfortable with our reserves. I don't expect -- as I said in my closing remarks, when I said this is behind us, I truly believe that's true.

Okay, great. And then I know you mentioned restructuring actions are going to fuel fiscal '15 growth, but you're not ready to quantify the benefits yet. But I mean, if this is really just sort of an SG&A issue and your gross margins are kind of still on track and revenue and backlog are still okay, now that you have a more depressed 2014, I mean, is there any reason that we shouldn't be assuming that 2015 is going to be an accelerating growth year in terms of -- even better than your typical -- your targeted 15% growth?

Well, as John tells you, we don't give guidance for '15 just yet. But I'm very optimistic about what '15 looks like. Is that a backhanded way of answering your question?

Yes. I mean, in our view, I mean, we don't see any reason why off a depressed year, it shouldn't be a very accelerated year if it's really restructuring within your control. But I guess, we'll see how that plays out. But I guess I'm just kind of wondering how we should think about cash generation and usage over the next few quarters? I guess with the stock under some pressure here, might it make sense to authorize a buyback?

We will continue to utilize and monitor our cash very closely. We'll look at the long-term uses of cash depending on what the stock does. As we've said before, we always monitor that and have discussions at both management and board level, anticipating where -- how we should use that cash. But we have great uses of cash, just with paying down the debt and getting us in a better position that we generated from SKM. And there are still, while we're not focusing on large acquisitions, but there are still a number of niche acquisitions in a couple of markets that are very interesting that we also want to advantage of. And we think those are at prices that are favorable uses of our cash as well. So we'll continue to monitor that. And depending on the circumstances make what we feel is the right allocation of the capital.

We continue to look at sources and uses of cash with the board on a frequent basis. And obviously, we're going to be alert to doing the right thing with the cash at the right time.

Our next question comes from Tahira Afzal of KeyBanc.

I guess my main question is as Jacobs is clearly exceptional at integrating, and it seems like our expectations about SKM are now perhaps a little more driven by a more sort of accelerated integration. I guess, just looking back in terms of how much you paid for SKM and how comfortable you feel around that versus what you see today. Are there some lessons in terms of the due diligence that you feel you've learned through the process, and we should assume those have been applied to your smaller but more recent acquisitions?

Well, with respect to the SKM acquisition, first of all, if there's -- everything we see about it, when we look at the numbers, even where we are today, it's going to be a very good deal for the shareholders. So I have no lack of confidence in that situation at all. If I have criticisms of the way in which we handled the acquisition, we knew the mining and minerals market was weak, we knew it would have an impact. I think we could have been more aggressive about obtaining the synergies and doing the integration than we were and that's not normal for us. But I think in this particular case, we probably should have taken a harder look at it, maybe gotten after it a bit quicker, but we're going to remedy that this next quarter.

Got it, okay. And a second follow-up question, Craig, is really on your end markets. You seem to be pretty bullish incrementally on the midstream side and we see that in the recent acquisitions you've made. As you look at the petrochem side, as you said, projects seem to have been slower to roll out. But we're hearing positive commentary when we've -- at least in this earnings season. So any incremental color you can provide, and I know you already have in terms of some of those field services activities and the timing, as you see it today.

I think -- my view and our view of the petrochemicals business is pretty consistent with what we told you at the end of the first quarter. It's a good, strong, robust market that customers are being very conservative about releasing projects. But I think the optimism that you're hearing from others is probably mirrored by our own. And my point in my prepared remarks about the fact that we're actually starting to see some of these projects go to the execute phase, detailed design and construction, is an indication that things are starting to unblock or open up, and we're going to start -- well, not start to, I think we'll continue to see projects going to execute, and that will be a positive for us and obviously others in the industry who have that kind of work in the FEED stage today. So yes, I think the market is finally starting to open up and release the bigger parts of the programs, I think that will be a positive for us and the other competitors in the industry.

And our next question comes from Michael Dudas of Sterne Agee. Michael S. Dudas - Sterne Agee & Leach Inc., Research Division: For John or Craig, so if I look at the guidance today versus 6 months ago and given the commentary you've made and the answer to some of the questions, would the vast majority of it would be the integration, surprise issues relative to SKM?

Looking at the guidance, we're really excluding some of those impacts. Certainly going forward, the lower rate of earnings that we saw this last quarter are affecting the second half. But we'll get to those and get that straightened out. I think some of the other items that Craig's kind of alluded to, things have been a little slower getting started. So as far as some of the awards in the petrochemical area and other areas, the softness in the market in Australia that affected SKM. I think that also the pricing, the margins at 6 months ago, even 3 months ago, we felt we saw a little bit better improvement in margins and this market has stayed more competitive longer than what we would have anticipated. And so all that, that's probably dampening our short-term outlook a little bit as well. So I think -- and also, if you look at our guidance, which we've revised, but I always talk about midpoints and such, but you guys have gotten out ahead of us by a fair amount as well. So I think that you're a little more optimistic than we were even in our last guidance. Michael S. Dudas - Sterne Agee & Leach Inc., Research Division: You mean me specifically, John, or everyone, are you being general [ph]?

He's picking on you, Mike. Don't kid yourself.

You asked the question. You're the one that's on the phone. That was a general comment. When the Street's $0.08 to $0.10 above our midpoint, that seems to be a little bit high. Michael S. Dudas - Sterne Agee & Leach Inc., Research Division: And theoretically, the midpoint would still be in the original guidance range that you put out 6 months ago, so I get that.

That's a probability. Yes, it is there. Michael S. Dudas - Sterne Agee & Leach Inc., Research Division: For Craig. So again, to finish up my -- the thoughts on SKM. When you said the expectation for the integration and the opportunities are greater today than you'd thought 6 months ago. And I know you won't quantify it, but is there an order of magnitude that you can show or provide us that level of comfort? Is it because of the markets you're serving they're going to get better? Or that the cost structure, combined with the margin pickup, is going to really drive a lot more returns and earnings growth from this acquisition in 2015.

I think it's a little bit of 2 different factors, Mike. First off, we are starting to see big projects in the mining business, we are starting to see our strategy to do sustaining capital pick up. And I think we're going to see improvements in mining and minerals business, a big chunk of which is SKM-related that are going to drive improvement. The other thing I see is very significant opportunities to reduce structural costs and that's not unusual. We often see that in acquisitions, particularly in industries like infrastructure where SKM's very big. We usually honestly take a fairly leisurely approach to getting those savings. And our view here is that the timing is such, we could go -- we should just go ahead and get them in a much more aggressive way and get that bottom line impact sooner. So it's the combination, I think, that's the positive as we go forward. And that combination I think is going to be what's got the real positive impact for '15. Did I answer your question? Michael S. Dudas - Sterne Agee & Leach Inc., Research Division: Yes. I think that's fair. And I'll just ask one final follow-up. You mentioned in your prepared remarks, on the pipeline opportunities, what kind of share do you think you have now? Is it a very competitive market out there for you? And on these large programs [ph] that are coming up for bid, are you -- do you have the manpower and capabilities to gather an inordinate amount of share of that type of business? Because it seems like it's going to be a very large opportunity in the next few years in the U.S. and North America.

Well, I think our share today is, gosh, low-single digits, maybe less, if you can imagine that. It's a big market and we're still not a big player. But I think our opportunity to leverage up and to take share there is very significant. The impact of acquisitions like MARMAC and Eagleton are pretty significant on our credibility with those customers. And in some ways, it's not different than the comments I made earlier about the intelligence community. Pipeliners see themselves as a club and if you're not a pipeliner, you're not in the club. And so we went out and became a pipeliner by acquisition. And I think the leverage that, that represents is huge. We've seen the Eagleton acquisition grow by 10%, 12% in 3 months, just on the back of us being able to leverage them into 2 projects. So I think the outlook's very positive there, it's a huge market. And I believe we'll -- that's another place where I'm looking to have a $1 billion business in the not-too-distant future. I'm looking at the guy who runs it right across the table from me at the moment and he's nodding his head yes.

And our next question comes from Brian Konigsberg of Vertical Research.

Can you actually maybe just touch on the market and pricing dynamics that you've seen so far? I mean some of the larger ones that are coming to market seems like the terms in the U.S. anyway are, I guess, a bit more hybrid in nature, people taking on more risk. But how are the pricing that you're seeing for the projects you are pursuing?

We are seeing the clients try to push more risk on to their suppliers. So that's a battle we're fighting constantly. So far, it's a battle we're winning but it is a battle we have to fight every time we look at one of these projects. And that's partly an indication that the market is just not yet truly as strong as any of us would like it to be. So margins are running faintly better quarter-by-quarter, but by that I mean very faintly, we're talking about 0.1 basis point or less kind of growth in a quarter. So it's -- excuse me, it's not a robust market yet by any means. It's not dirt cheap like it was after the bust in 2008, but it's pretty skinny. And so I -- and I think that's going to continue till more of these projects get released into detailed design and execute. Because the demand for a capability, when you're in execute is 4x what it is when you're in FEED. I think that's a very significant difference in terms of the supply of capability on the Gulf Coast. And then, of course, as we move into construction, construction and labor issues will become very significant and that's another factor that will ameliorate this terms issue because willingness of our competitors to take risks that we won't take will go down rapidly when there's no people to do the work.

Got you. And I apologize if you touched on this at all, but just as far as government work and the transition to MATOC type of, I guess, competition structures, maybe just talk about the dynamics with the overall market in general and the spending that you're seeing and your ability to take share and what is the value proposition you are offering to get that share, which I assume you're doing?

Well, our share growth is actually quite good. I actually had some data, I don't have it in front of me today, that looked at our share growth in DOD and NASA, those 2 federal markets combined, over the last 10 years and we have sharply increasing growth. We more than doubled that business. And if you look at some of the major players who had significantly more share than we did, say a Lockheed Martin or a Northrop Grumman, their shares have gone dramatically the other way. So we clearly are taking share. But we're doing that on the basis of a really spectacular track record of sustained superior performance. So when our customers in that business look at our past performance, they see a really strong, almost unblemished past performance record. And then we manage to be very cost competitive. And in a MATOC world, the advantages of those 2 combinations are really difficult to beat. When we have both the best price and the best technical offering, we win. And so our share on the MATOC side has been good. Where we've had single award contracts converted to MATOC, we have lost some share. But where others have had single award contracts converted to MATOC, we've gained more share than we've lost on our single award contracts. So the net effect has been an opportunity to grow market share, and our team has been very successful in doing that. I'm very proud of them.

And our next question is from Luke Folta of Jefferies.

I guess, first question I had was -- I'm interested in what you've got planned for the outlook on the telecom space. I know you said you want to get to $1 billion in revenues in that business at some point. Can you give us some sense of following the acquisitions that you've made recently, kind of where we are in terms of the size of that business? And also, it seems like there's just a massive amount of growth in that business on the what they call small cell or distributed antenna system side of the market where we're seeing a bit of shift in spending into those buckets. Do you currently have leverage to that aspect of the business?

We do. We have a, I would characterize a modest gas offering as we sit here today, and we continue to expand that offering. There are a number of small players around the North American geography, the U.S. geography, who have good skills but no reach and we're rolling those up steadily now into a business. I expect that we'll start -- we'll be in the $300 million class fairly soon, I mean like maybe by the end of the year. Although, I'm not -- don't quote me on that. And I think we'll see that $1 billion growth pretty fast thereafter. It's clearly a market where the customer is crying for additional capability. And capability with global or -- not global, but U.S.-wide reach. Yes?

Is it fair to assume that margins in that business are dramatically better than what you're seeing in most other markets? Because some of the comps out there were -- it seems like there's -- some of the margins there are into the 20s on an EBIT basis.

I think it depends on the aspect of the service that you're looking at. If you're talking about things like tower climbing and the work of direct installation, the margins are certainly better than our field services work generally, but they're certainly not at the 20% level. If you look at engineering services, network analysis, those kinds of things, they command a very nice premium compared to the more, I hate to say it, run-of-the-mill engineering services.

Any sense of what the split is in Jacobs in terms of field versus professional services in telecom?

Right now, we're probably about 50/50, give or take.

Okay. And just on the Tier 3 regulations, really nice win rate there, it seems. 50%, you said. Can you -- you said 60% or so what the projects that you think will come to market have been -- haven't come yet, implying that you've won -- or that 40% has. Can you give us some sense of what you've won so far? Just trying to get a sense of what the scale is and what's still available out there.

Well, these projects, the programs individually run from $50 million to $200 million in terms of capital cost. So just to use a hypothetical number, let's say, that 20 projects have been awarded and we won 12, which is about the right ratio. They'll range in size from, I'd say, $50 million to $200 million, maybe in a few cases, $300 million. So probably you're looking on an average there of -- well, let's use an average of $100 million just to keep it simple. So that's $1 billion worth of work. Unfortunately, I've got no customer who's let me announce that work yet. So I'm not able to give a lot more detail.

And our next question comes from Jamie Cook of Credit Suisse. Jamie L. Cook - Crédit Suisse AG, Research Division: Just a couple of questions. Sorry to belabor on the issues in the quarter. But I guess, Craig, one thing, I mean, you talked about the restructuring actions that you're going to take that should yield benefits. Your backlog's been growing. As we look to 2015 with the organic growth that you're seeing and the growth for some of the acquisitions, plus the restructuring, do we get to a point where you should finally achieve, I would hope, beyond 15% sort of EPS growth because we continue to push that off every 3 to 6 months. And then my second question is the issues really seem to be that you're having focus internationally whereas historically, Jacobs has been more of a North American-centric type company. I mean, does it make you think just doing business internationally is just a little more challenging? So when we think of Jacobs as being a more sort of derisking C company, I mean, we should just expect a little more volatility or more of these hiccups relative to what we've seen with Jacobs over the past 15 years?

Let me answer the second question first. I really don't think you should expect more volatility. I think that we are continuing to contract on a basis that is consistent with our principles and that quarter in and quarter out, we ought to be pretty predictable as a company. I will say though as projects that we do get bigger, the chances of having an individual project that outcome is material does go up. So it's not a perfectly linear level of volatility going forward. Does that make sense? Jamie L. Cook - Crédit Suisse AG, Research Division: Yes, I guess so.

If you have a bad big project, it doesn't get offset by a whole bunch of other good projects, right? Jamie L. Cook - Crédit Suisse AG, Research Division: Yes. You just don't usually hear Jacobs having bad projects.

Well, and we don't usually have them. But I don't want to ignore the possibility that we could have a big job that didn't go well, and therefore, have an upset, and I don't want to have told you, well, that can't happen because it could happen. But I don't think it's very likely. I think the volatility that you've seen historically is the volatility you're likely to see going forward. Okay. Going back to the earnings growth outlook. Like I said earlier, we're not ready yet to give FY '15 guidance, but I am very optimistic about '15. I think we've got a real opportunity to do particularly well. And obviously, in my mind, that's not ordinary growth. So I guess, another indirect way of answering your question. Jamie L. Cook - Crédit Suisse AG, Research Division: Okay. We've belabored the point.

Our next question comes from Andy Wittmann of Robert Baird. Andrew J. Wittmann - Robert W. Baird & Co. Incorporated, Research Division: John, I just wanted to clarify. In the commentary, you mentioned that SKM related is going to affect the second half, yet in the guidance, it seems like you're excluding some of the one-time items. How should we think about that? I just want to be clear that the SKM negative effects from restructuring whatever else, are in fact added back. So if that's the case, what are -- how does that affect the second half? Is it just cash and then we're adding it back on the adjusted EPS level? Or how should we think about that?

Well, what we're focusing on in the guidance on the second half is specifically these restructuring charges, both related to SKM and other parts of the business are not included in the guidance. My comment was that SKM is not operating at the level that we thought they would this year. That probably will -- that has impacted our guidance going forward, but that's included in our guidance. The operating side of SKM is included in our guidance at a lower level than what was in the original, earlier guidance. But the restructuring and integration costs still are outside the guidance that we provided. Andrew J. Wittmann - Robert W. Baird & Co. Incorporated, Research Division: Got it, that's helpful. Just thoughts on the problem contract. Was that a contract that you recently acquired yourselves into through either Aker or SKM or one of the more recent large acquisitions or is this something that's kind of was part of Jacobs the whole time?

That's a question I can't answer because it would be too revealing to the customers involved.

And just to be clear, this wasn't just 1 or 2 contracts, it was about a half a dozen contracts that impacted us at various levels. There were 1 or 2 that were more significant than the others. In that charge, there's more than just a couple of contracts. Andrew J. Wittmann - Robert W. Baird & Co. Incorporated, Research Division: Got you. Craig, in the past, you've talked about the $1 billion plus large opportunities. I think, John, in the spring, you started talking that to be, first, you said kind of 20-ish and then you said maybe more than 20. Craig, just update there on large project gestation, if you would, and the likelihood for you to get your share or more than your share even this fiscal year?

The large project gestation continues to be a positive. I looked at a list yesterday in our sales review that must have had 25 projects on it. And these were all the sort of the big ones. And our win ratios continue to be good in that regard. So I'm certainly very positive about where we are. I don't know that we'll win 57% of the big projects. I think that would be unrealistic for us. But I do think our win ratios will be pretty significant and more than adequate to fuel the growth that we're talking about. Andrew J. Wittmann - Robert W. Baird & Co. Incorporated, Research Division: Got it. Maybe one final question here is just on the gross margins, they actually reported pretty well despite some of the other challenges. Is that mix benefit from SKM or something else? How do you explain that the gross margins were actually pretty strong?

We do get a mix benefit from SKM. Their unit margins are higher than industry averages. Offsetting that, their unit costs are higher than industry averages as well. So the opportunity is to keep the margins up and the -- get costs down, and I think we'll be able to do that.

And our next question comes from Vishal Shah of Deutsche Bank.

I just wanted to clarify a comment you made on mining. You said project activity is starting to improve. I'm curious whether you're seeing that in any particular part of the -- in any particular region and also whether it's any particular commodity type where you're seeing more activity.

Sure. Regionally, it's South America and Asia, not Australia, and -- although there's one fairly big program in Australia, I think we're going to see. And then it's almost all copper.

Okay. I mean do you have any insight as to whether you're starting to see impact of that in 2014 or it's most likely 2015?

I think the big impact is all 2015 and beyond because it will -- there's FEED and study work that will be pretty substantial first. Were you able to hear that?

Yes.

And our next question comes from Jerry Revich of Goldman Sachs.

This is Matt Rybak on behalf of Jerry. You guys highlighted U.S. infrastructure opportunities as a strong end market for you going forward. I was just wondering if you could possibly quantify the opportunities you're pursuing over the next 12 months and touch on whether or not you're seeing any award delays ahead of the September highway bill deadline.

I probably can't quantify any specific details. It is an improving market for 3 reasons: more activity on project finance, design build, TTPs, better focus on local tax revenues, particularly sales tax, to support expansions and, of course, we do have a highways bill, for the moment at least. So all those things are positives for the market and we are seeing some decent growth. We're also, because of our positioning, I think we're taking a little market share and so that's a positive for us as well. So I'm optimistic. I think the federal gyrations are less and less critical to the infrastructure market because of what the states and more importantly, the local communities are doing to deal with their infrastructure issues. People are just getting tired of waiting on the feds for money. And so we are seeing a fair amount of activity that's sort of independent of federal funding. And I think that will tend to continue. The backlog is enormous. I saw a study from I think it was McKinsey just the other day, and their argument is there's a $57 trillion investment in infrastructure globally that has to be made between now and 2035, I think that was the date. I mean $57 trillion, that's a really big number. So I remain very positive about our infrastructure business, and I'm seeing us start to get growing share of that market.

And when you talk about share gains, is that on any specific type of project? Or are you aggregating roads and bridges and projects of that nature together?

Well, the places we're probably doing the best in terms of taking share are rail and water and wastewater.

Got it. Got it. And then to switch gears just a little bit. You highlighted on the first call that you were seeing some project delays in the North America refining side. And I was just wondering if you could provide us with an update as to how those projects are moving along?

The refining projects continue to progress. Again, I think it's a little bit of the same outlook we've described across the whole hydrocarbons industry in the U.S. where customers are reluctant to go into execute phase till they're very confident of the outcome and the competitive situation, in terms of what's going to -- what's the availability of supply. But I think things like Tier 3 gasoline and ISA 84 in the refining business, are going to drive people to invest. And because that's a calendar-based issue in terms of having to deliver on those investments rather than one that's market based, I think those projects will move forward fairly crisply, but maybe not quite as fast as we'd like. Tier 3 in particular, I think I mentioned this last quarter, a number of our customers have been able to buy their way around the Tier 3 rules in the short term. But in the long term, they won't be able to do that, and that will push them to make the investment. Did that answer your question, Matt?

That's perfect.

And we've reached the end of our Q&A session. I would like to turn the conference back over to Mr. Craig Martin, President and CEO, for any closing remarks.

I want to thank all of you for taking the time to talk with us. It's been a tough quarter and a tough first half. But I really do believe it's behind us. I think we're doing the right things to get the business going in a very positive direction. I think we have a terrific story in terms of backlog growth and our positioning in the marketplace. And I think if you stick with us, you'll be very, very happy with the outcomes as we go forward. With that, thank you all.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.