Good day, and welcome to the Jacobs Engineering Group Inc Fourth Quarter and Fiscal Year 2016 Results Conference Call and Webcast. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note that this event is being recorded. I’d now like to turn the conference over to Mr. Kevin Berryman, Chief Financial Officer and Executive Vice President. Please go ahead, sir.

Thank you, Dan, and good morning and afternoon to all. We welcome everyone to our 2016 fourth quarter earnings call. I will be joined on the call today by Steve Demetriou, our Chairman and CEO. Turning to Slide 2, as you know, our earnings announcement and Form 10-K were released this morning, and we have posted a copy of this slide presentation to our website, which we will reference in our prepared remarks. Before starting, I would like to refer you to our forward-looking statement disclaimer. Any statements that we make today that are not based on historical fact are forward-looking statements. Although such statements are based on our 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 Jacobs' actual results to differ materially from what may be 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 most recent earnings release and our annual report on Form 10-K for the period ended September 30, 2016, including Item 1, Business; Item 1A, Risk Factors; Item 3, Legal Proceedings; and Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations; as well as other filings with the Securities and Exchange Commission. We undertake no obligation to update any forward-looking statements. During today’s discussions, we will make a number of references to non-GAAP financial measures. You will find additional disclosures regarding these non-GAAP measures including reconciliation of these measures with comparable GAAP measures in the presentation that accompanies our prepared remarks, which can be found on our Investor Relations website located at www.jacobs.com. Please now turn to Slide 3 for a quick review of the agenda for today's call. Steve will begin our fourth quarter earnings presentation with some comments on the business and our results over the quarter and fiscal year, followed by a summary of market conditions for each of our four lines of business and backlog. I will then provide some more in-depth discussion on our financial metrics and results for each LOB. I will continue with some comments on our restructuring and our share buyback program, before Steve finishes with some closing comments. After, we will open it up for some questions. With that, I would now like to pass it over to our Chairman and CEO, Steve Demetriou.

Thank you, Kevin. Welcome to our fiscal year 2016 fourth quarter earnings call. Before we move into the financials, I would like to spend a few minutes discussing the recently completed fiscal year 2016. Over the past year, while facing challenging conditions in several of our key end markets, we took the opportunity to implement a set of key improvement initiatives that significantly strengthened our foundation and positions us for success moving forward. The most important steps taken involved recognizing the four global lines of business, implementing a major restructuring to right size the company and become more cost efficient and developing a corporate strategy aimed at profitably growing Jacobs. While undertaking these initiatives, we also implemented a number of changes designed to increase accountability and transparency to drive greater financial discipline. In turn significantly optimizing cost and working capital allowing us to reinvest in Jacobs to upgrade our tools and processes to further strength the business and delivery of projects for our clients. Our efforts to transform the core is driving a renewed sense of urgency and energy across our company to deliver business improvements across the globe. While much has and continues to be done to positively change Jacobs, we’re also cognizant of our very successful past. Since 1947, when Joe Jacobs founded our great company, Jacobs was headquartered in Pasadena, California, and enjoyed decades of impressive growth. In recent years, as we faced challenges to sustain growth, we recognized the need to transform our business and structure. One of the many steps identified was the new headquarters location. As such last month, we announced our relocation to Dallas, Texas, which fits with our plans to drive efficiency, attract top talent and achieve a more convenient access to best serve our clients. Moving to Slide 5 and a…

Thanks, Steve. I'm turning now to Slide 11 and you will see a more detailed summary of our financial performance over the quarter and fiscal year 2016. As we have communicated throughout the current fiscal year, adverse market conditions in certain end markets continue to negatively impact certain of our businesses. As a result of these ongoing pressures, particularly in oil and gas, our revenue for the quarter was $2.6 billion, down approximately 15% versus our third quarter last year. For the year revenue was $11 billion, down 10% versus last year. EPS on an adjusted basis was $0.77, which excludes $0.53 per share in after-tax restructuring and other charges, which are comprised of after-tax charges of $0.30 per share in connection with our restructuring activities that began in fiscal year 2015, $0.14 per share loss on the sale of our French subsidiary, as a result of our strategic decision to exit our French operations, and a $0.09 per share non-cash write-off on an equity investment. While the adjusted EPS of $0.77 for the fiscal year – fiscal quarter four was lower than $0.80 reported in the comparable quarter last year, note that fiscal year 2015 included a 53rd week in our Q4 results in 2015, which added approximately a $0.03 per share benefit to the year ago quarter. Book-to-bill on a trailing 12 month basis continue to improve over the course of fiscal year 2016 and ended at a high for the year at 1.0 times. Q4 gross margin percentage was up 120 basis points versus the year ago quarter, indicative of our improving execution and focus on cost discipline. Importantly, our gross margin percentage for our professional services business continues the positive trend that we have seen earlier this year. Specifically, this helped to increase our consolidated gross…

Thanks, Kevin. Moving to the last slide, we're pleased with our fourth quarter and fiscal year 2016 results. We expect challenging market conditions to continue into fiscal year 2017. Weak growth in developed markets, geopolitical issues and uncertain commodity prices will continue to impact some of our end-markets. Much like the beginning of last year, our oil and gas mining and certain industrial clients are continuing to avoid large capital expenditures to conserve cash. We do believe most of the declines in these end markets are now behind us, but it remains to be seen when industry growth will return in these sectors. More positively, we saw select growth opportunities in our buildings and infrastructure, aerospace and technology and life sciences markets in fiscal year 2016 and we expect further growth in these end markets in 2017. As we progressed through our fiscal year 2016, we saw a backlog stabilize and then increase by the fourth quarter. And we expect further increases to our backlog as we progress through fiscal year 2017. We also remain heavily focused on improving margins. The restructuring we have undertaken over the past several quarters continues to provide momentum and supports our ability to invest back in our profitable growth agenda. We are seeing improvements in our project delivery efforts and write offs continue to be reduced across the board. Finally, our efforts to improve our financial performance in 2016 and particularly our operating profits, gives us confidence and a more stable outlook for fiscal year 2017. Consequently, we're providing initial guidance between $3 and $3.30 for adjusted EPS, which provides for operating profit growth in a continuing challenged market environment and includes a set of largely one-time investments of $0.15 per share to support our growth strategy. As Kevin mentioned, our strategic review is complete and we look forward to our discussions next week at our Investor Day on December 1st, where we will outline our strategy for long-term sustainable shareholder value. With that I'd like to thank you for listening and we’ll now open it up for questions.

We will now begin the question-and-answer session. [Operator Instructions] And our first question comes from Jerry Revich of Goldman Sachs. Please go ahead. Mr. Revich is your line on mute?

Hello, Jerry, are you there? Dan, we move on to next question.

Yes, sir. Our next question comes from Andrew Kaplowitz of Citi. Please go ahead.

Good morning, guys.

Good morning, Andrew.

Good morning, Andrew.

Kevin, just if you can start with cash flow. Can you talk about the improvements in working capital that you can continue to record if my math is right the free cash flow conversion on adjusted net income looks like it was over 150% in FY 2016? When you look at FY 2017, could you still achieve free cash conversion north of 100% and how much more runway do you have toward working capital improvements? Can you get DSO sustainably under 70 days because that’s already a pretty good target?

Thanks for the question, Andrew. Look, we’re very pleased with the amount of progress. A lot of hard work within the lines of businesses to really gain some momentum in the back half of the year specifically on improving our DSO, it doesn't just automatically happen. I do think that our year-end position is really quite good. And the way we think about why being long-term working capital benefit and specifically accounts receivable isn't about a point in time. It's about an average level, so that we ultimately are able to have a sustainable level of working capital. So having said all of that, I would not perceive us being able to necessarily have the kind of free cash flow that we saw in 2016 per se, but we are planning on continuing to drive DSO improvements in 2017. It will be part of our financial metrics. We'll talk a little bit more about this in our Investor Day next week, but we still think there are opportunities to improve and longer-term be a more efficient capital investment behind our business, which ultimately we’ll increase our return on invested capital.

Okay, thanks for that Kevin. And Steve, I kind of have to ask you a topical question, which I'm sure you’re expecting and it does involve U.S. transportation. You mentioned it's sort of a steady business right now, but you also talked about strength or positioning that you have in California, Texas, Florida. Can you talk about the confidence that you have in these markets maybe beginning to pick up after we did get some positive referendum spending? And then maybe talk about Jacobs’ overall positioning if Trump does get through a bigger spend on infrastructure? How do we think about that and early sort of thoughts?

Yes, well, as I mentioned, we feel very well positioned with where our major abilities are in the U.S. Texas, Florida, California where we do see pretty robust certain spending, more certainty around spending in those areas. And those are three states where we believe provide leadership and strong abilities. So we were bullish on our capabilities to grow in transportation regardless of the election outcome. And so, we're pleased to see a lot of positive hype around what's going on with the Trump expectations, but we were positive moving forward in transportation. And when we talked about transportation by the way, we think of not only highways but we think of rail where we've got a very strong position and then the broader aviation sector where we're seeing the big benefits of how we've integrated buildings and infrastructure because as you know we get into aviation projects, it’s a combination of infrastructure, but as well as building facilities. And our new line of business structure has given us the capability to leverage off of certain strengths regionally and take those strengths globally. And I think you're going to see us win projects around the world. Over the next several quarters that are going to be very exciting.

Okay. And then Kevin maybe if I could just ask you about the mining disputes in the quarter. You know you mentioned second quarter and now in the fourth quarter, is there any concern that we should have that these things continue or maybe get bigger or is it basically sort of the tail end of the mining cycle and 2017 should be a cleaner year for that?

Look, I will answer the question in a couple ways. The first one is, as we've been improving our project execution, we're seeing a holistic reduction in terms of some of the potential exposures relative to us losing some margin because of certain project disputes with our clients. So, in general, we're seeing a reduction in 2016 and also into 2017. So we holistically are seeing a reduction. As it relates to the specific question on mining, you know, that that business is really quite challenged right now. We're not doing much work and a lot of the work that we are doing is sustaining cap related activities plus obviously we have the new project we announced up in Mongolia, I think that was last quarter or a quarter before. So I think we're well positioned as it relates to our ability to deliver against our actual margin and in that particular business going forward.

Thanks guys.

And our next question comes from Steven Fisher of UBS. Please go ahead.

Thanks. Good morning.

Good morning.

Just a quick clarification first what the tax rate that you guys have assumed for fiscal 2017?

Look, we've effectively always – we’re in the neighborhood of low 30s basically and we would expect that that will be able to continue to drive towards those kind of numbers.

Okay, that's helpful. And then in 2016 three out of your four segments had declining revenues, but you're talking now about a pivot to growth. Can you just talk about what that that means exactly? How many segments do you expect to grow versus decline in 2017? And are you expecting overall revenue growth?

So, I think the revenue is a tough metric for our company because as you know we have certain businesses we win with pass-through revenue. And we typically like to focus in on the professional services side where we get good margin. And we have shifted our strategy as we go forward that we're going to be much more conscious of the total margin. And therefore whether it’s professional services or the field services side, we're expecting to drive margin improvement. And as a result, you're seeing the effect to some extent of a strategy mix of really focusing on margin as we also drive down costs and all the things that we've talked about for fiscal year 2016. But as we move into 2017, we are talking about the whole shift of – and pivoting to growth and we feel like its pretty broad based. As you saw, we got backlog growth in our petroleum and chemicals business, which I think is extremely successful achievement in light of the tough conditions. And that’s because of a successful strategy shift to really focus on petrochemicals. Lions share of our wins are coming in petrochemicals. We continue to see a very robust pipeline of activity in petrochemicals. And again, our new line of business structure has given us the opportunity to really globalize and expand beyond our previous core client focus to a much larger set of customers. So we see that in petroleum and chemicals. I think we gave you a sense that building an infrastructure. We’re pretty bullish globally. And we are actually leading the way in growth in Australia. Our Australia team on the backs of what came out of the political situation last year has really driven some spending increase across that country and we're now seeing momentum in the U.S. and UK, as well. So, very positive on building an infrastructure. Aerospace and technology, one thing in that business, we all need to remind ourselves about is that from 2010 to 2015, there was a 25% decline in federal defense spending in the U.S. and in spite of that we held our backlog up. And now as we’ve progressed our strategy and we’ve seen stabilization of that spending and we're gaining market share in what's a very large spend in the government services, in the U.S. especially, we believe as we get through 2017, we're going to actually see backlog growth and revenue growth. I think the area that right now is I'd say more stable is the overall industrial segment because that is made up of a lot of different businesses and there's a bit of a timing going on when we win the next wave of pharma projects as we burn off some backlog in that business. So that's kind of the overall story of sales growth.

Steven, this is Kevin maybe augmenting Steve’s commentary specifically started his discussion relative to that focus on margin and that we're looking really to focus on driving a profitable growth agenda as opposed to just a growth agenda. So that's an important point that he made. The other note that is important to understand is as we rook at this focus of pivoting to our profitable growth agenda, I would say in those businesses, specifically petroleum and chemicals, we're still comparing to some pretty big year-ago numbers and the stabilization of that business is happening as we speak. So as we progress over the course of 2017, we would expect that that pivot to growth will actually play out hopefully in the petroleum and chemicals business. But at least in the near term, there will be some pressure points in the first quarters of the year.

Okay, just quickly the $0.15 of strategic investments, can you just say what that is and have those been made already, is that just technology or is that more M&A related, what is that?

So next week at Investor Day, we're going to layout our growth strategy and talk a little more about that, but it’s really near-term investments, very heavily weighted toward the first quarter and a large portion of it in the first quarter of our current quarter fiscal year. It involves a set of actions to ignite our strategy and position us or to achieve our three-year goals that we're putting into our strategy. And it involves some external consultants that we're bringing in as part of our strategy execution. It involves a major new tool set and project controls, and a few other areas of delivering projects and also some systems enhancements that we're implementing as we as we speak. So, again, very front-end loaded to the fiscal year. And we believe are going to be critical and measurable as far as how we achieve our three-year growth strategy.

Thanks guys, I appreciate it.

Our next question comes from Jamie Cook of Credit Suisse. Please go ahead.

Good morning. I guess a couple questions. First, Steve just with regards to the restructuring actions, we've been through, I guess, several increases in terms of the restructuring actions that you've taken. I mean do you feel like we're finally at the point where this is sort of the last round of costs that we're through enough that we shouldn't see more cost increases going through at 2017. I’m trying to figure out where we are in terms of the innings of the ball game there. And then I guess my two other quick questions, while it's still very early Steve, I think people are trying to figure out sort of post the election has the tone from customers changed at all, do you feel like its post-election? And then my last question, any update that you could provide on the Motiva arbitration? Thanks.

Yes, so with regard to the restructuring, we're in the very late stages of completing a very successful restructuring. And as we move into 2017, I really want to emphasize what we're talking about now is the pivot to growth, but we're not going to take our eye off the cost ball. We still believe that we have several productivity efficiency steps that we can implement on an ongoing basis, like all great companies do. But it's really to move away from a mindset of restructuring to do productivity and with a large effort around now taking that leaner cost structure and winning more business because of the competitiveness that that brought us. As far as the post-election situation, again I feel like I’ve commented on that Jamie that with everything we were doing to position ourselves for growth, we attributed the momentum to that activity and less around the early stages of post-election. Are we optimistic? Yes. Do we hope all the stuff we read about happens? Of course. And we've seen what the Australian elections have done. And we hope that same thing happens in the U.S. And in fact Theresa May’s administration in the UK is reaffirming several of the important nuclear and other projects in that region that are important to us. And so we feel good about what’s going on globally around the political side of positioning our business. With regard to Motiva, the arbitration process continues. We continue to feel very confident around that whole activity. And we hope in the near-term, we’ll be able to put that behind us and move forward.

Okay. Thanks. I’ll get back in queue.

Our next question comes from Tahira Afzal of KeyBanc Capital Markets. Please go ahead.

Hi, folks congratulations on the good year.

Thank you, Tahira.

Steve, if you look at three years from now, there is so many new developments that have happened on a macro level. Are you more excited about the opportunities on the aerospace and defense side? Are you more excited about infrastructure and this is on a global basis?

Right. So, I don’t want to steal the thunder for next week and I know we’re going to see you there. And so, we look forward to talking about this at length with the line of business leaders with Kevin and me going through this. But I think what you’re going to see Jacobs shifting and the shift is already underway is that we really have moved from a company that had 250 offices that everyone around the world at Jacobs was sort of locally focused on how to win business at offices. To a much more targeted strategic growth strategy that’s going to be fact based around where we believe the markets are growing fastest, where we’re the natural owner of that market if you will and where we’re strong. And therefore still maintaining a very strong diversity of end market participation, but I think a much more focused strategic area. And we’re going to highlight what those markets are next week. They clearly involved building an infrastructure markets. But even within that big B&I sector, there is going to be priority targets. Aerospace and technology, of course, is going to lead the way. And you’re going to hear about the focus there and how we’re going to extend into some new areas outside of our current situation. And even in petroleum and chemicals I think I’ve already talked about the focus on downstream and petrochemicals and Gary Mandel will talk about that next week and discuss how we’re going to focus there and a few other important sub-verticals across Jacob. So, we’re looking forward to laying that out next week.

Okay. And Steve, I know you sort of emphasize the one-time nature of the investments you are making next year, the $0.15. So some of our companies in the past they end up being more recurring. What gives you confidence that that is going to be more of a one-time element?

The first thing that gives us confidence is our culture, the transparency, the rigor, everything is traced now as far as making sure when we talk about restructuring costs that we’re going to get the savings and we cement those savings in and they are not offset somewhere else. And so, the same question you have is the same sort of – and I’ll just say the paranoia that we have to track the spending, track the savings and demonstrate that they’ve given us profitable growth. And I think that’s the best way to answer it is that’s just our culture moving forward.

Thanks a lot.

Our next question comes from Anna Kaminskaya of Bank of America Merrill Lynch. Please go ahead.

Good morning guys. So my first question is just around the cadence of quarterly EPS next year. I think you’ve mentioned 1Q will have the $0.15 of growth investment. So, should we be thinking that kind of 1Q EPS will be somewhat below what the Street is modeling and your outlook is more second half weighted?

Good morning, Anna. This is Kevin. Yes, our Q1 is going to be the quarter where we will face some comparable issues versus year ago. Remember last year, we had a discrete tax item benefit of – I think it was $0.09 a year ago. So that’s not necessarily going to be repeated. And then, of course, we have the investments that Steve related to. But the other dynamic is also that as we’ve stabilized or we believe that we’re beginning to stabilize our revenues, the first quarter of this year compared to last year, there still was a larger revenue stream that we were realized in the first quarter. So there is specifically some challenges in Q1. And as it relates to your specific comment about the balance of the year that’s where we see the pivot that Steve is alluding to while we’ll start to be able to see improved EPS growth in the back part of the year. But certainly Q1 will have some comparability challenges versus year ago.

Okay. And then on the backlog I think you mentioned and you expect growth in 2017 are there any particular large projects that are driving it or are you just seeing better opportunities across the board? And I think you also mentioned that you are changing your incentive structure, I’m not sure if you can touch on it, today or we have to wait until next week? How do you balance backlog growth against profitable backlog growth? And you mentioned that environment remains competitive, we have seen it across different companies. How do you ensure and how do you see – kind of how do you get visibility into profitable backlog growth?

Right, so a lot in that question but great question. The backlog momentum is really across the board rather than any single projects. I think that’s been traditionally Jacobs’ strength is that we’re not over reliant on large projects that it really is built off of our strong end market diversity. And I think I covered that earlier that we actually see it in most of our line of businesses and feel throughout the year that that’s going to happen. Last year, we recognized the need to really drive cash and put DSO and working capital in our management incentive compensation targets. And we’re going to maintain that going into 2017 because we believe as Kevin said there is more working capital efficiency out there. But as we pivot to growth, we now want to do the same thing with backlog growth specifically. And I think you hit the nail on the head that is profitable growth. And so as we look at backlog growth without getting into the specifics what our board is going to hold us accountable for is actually the gross margin in that backlog growth. So it is going to be aimed at profitable backlog growth and we put new systems and tools in place to be able to measure that growth, which kind of goes to the last question as we talk about margin focus and it’s still in a very tough environment. I think the major difference moving forward is we now have the ability to measure profitability by client, by office and many other ways in a much better way than we had a few years ago. So as everyone goes after upgrading the mix, they actually have the tools and capability to track that.

Okay, super helpful. And then maybe last question more of a modeling for Kevin. Just looking at corporate expense, you’ve been running at $20 million and this quarter it’s only $2 million. Is it just allocation of corporate expense to the segments and how should we model it kind of going forward?

Look, I think modeling the total year figures is probably not an inaccurate way to think about 2017 consistent with 2016. There can be some variability in those numbers just because of how the true-ups occur over the course of the year, but generally speaking, modeling kind of consistent with 2016 is not a bad idea.

Great, thank you very much.

[Operator Instructions] Our next question comes from Chad Dillard of Deutsche Bank. Please go ahead.

Yes, hi. Good morning. What percentage of your year-end backlog will be recognized as revenue for 2017? I’m just trying to get a sense for how much of the 2017 earning has already booked versus what you need to win for 2017?

Hi, Chad, we typically have about 60%, 65% which were in that range as it relates to the percentage of our backlog that we would expect to burn in 2017.

Thanks. And then on the petroleum and chemicals margins, I saw a nice step up in this fourth quarter at about 5%, were there any one-time items or non-recurring items to contemplate? And then is this the run rate that we should be contemplating going forward? And if you could just touch on just how to think about margins for the rest of 2017 that would be helpful.

Yes, we did have some specific items that help support the margins in 2016 fourth quarter. However, I will really suggest that the biggest driver to the overall performance in petroleum and chemicals over the course of the year with a very, very strict adherence to the restructuring and delivering cost savings as it relates to that. So as we think about 2017 going forward, the fundamental profitability of that business has been reoriented to ensure that the savings profile that was developed over the course of 2015 and 2016 was an aggressive restructuring effort carries forward and allows us to continue to have an improved dynamic of longer-term in the petroleum and chemicals business.

Great, that’s helpful. Thank you.

Our next question comes from Justin Hauke of Robert W. Baird. Please go ahead.

Yes. Good morning. Thank you for taking my question. I guess I just wanted to focus a little bit more on the moving pieces on the margins for next year. Just given the tax rate that you gave and the pivot towards growth it would imply that the margins are up – I don’t know 20 or 30 basis points at the midpoint of guidance. And I’m just trying to understand I mean some of that’s going to be just the benefit alone from the mix shift of your business lines, but you also have the unrealized savings from the restructuring. So may be just an update on what the net savings are thus far and how much more still to go in 2017?

Look, thanks for the question. We’re going to be talking little bit about this at our Investor Day, so sorry to punt a little bit, but we will talk about it. Look I think the comment I would make is first, there is a focus on attempting to drive incremental margins for the business in general. So you made the comment that there is an implication of margin that certainly would be our intent that we try to drive improvements in margins longer-term. So that certainly consistent with our intent, but we’ll provide a little bit more detail in terms of the restructuring, the investments we’re making all of those types of things which we started to talk about over the course of this call and we’ll talk in more detail next week. But clearly, the intent of our business and certainly the profitable growth pivot that Steve has alluded to is very much about trying to ensure that as we build from are now more profitable foundation that we’re adding profitable growth to it.

Okay, that’s fair. We’ll look forward to next week. And I guess maybe the other question and maybe this is going to be addressed next week as well. But since you did mention in the prepared remarks that you are in a net cash position, the buyback is still steady at $500 million three-year pace that you talked about. Is there any comment that you want to offer at this point about where you see your balance sheet trending to, what you see at an optimal capital structure and how you might deploy that?

More to come next week.

All right. Thank you very much, I appreciate it. We’ll look forward to it.

Very good.

Our next question comes from Michael Dudas of Vertical Research. Please go ahead.

Hi, good morning, gentlemen.

Hello, Michael. How you are doing?

I’m wonderful. Thank you. Just quickly and I know will be in details next week. Steve as you look at the restructuring and how you positioned your lines of businesses; is Jacobs positioned or each line of business positioned to take on more risk or try to grab more margins on a project relative to a lump sum services or fixed price work? I guess it’s edged up a little bit in the last 12 months to 18 months and relative to your total backlog, I’m sure everything is scrubbed and quite profitable. But is Jacobs willing to kind of move down that curve as you come out for your – search for growth or pivot for growth rather?

Again, just so we don’t keep saying this, but next week we’re going to have a better opportunity to sort of lay that whole picture out for you and others. But I – just to kind of give you a bit of a headline to what you’re hearing next week is that I don’t think you’ll see a radical shift in our risk profile. I think there will be some modest improvements and I think it should be viewed as improvement that where we’re capable of taking more intelligent risk. We will and we’ve proven it over the last couple of years in certain areas where we’ve been successful. Most of the write-offs that you hear about at Jacobs actually involved the more reimbursable side of our business. And where we have decided to take on some sort of fixed price risk in the past, it’s actually been very successful. And so you’ll see more targeted strategic moves to extend that where it makes sense. But very selective, very carefully and I think the guys will outline that next week.

Fair enough, Steve. Have a great Thanksgiving, guys.

You too.

Our next question comes from Jerry Revich of Goldman Sachs. Please go ahead.

Hi, good morning.

Hi, Jerry.

I’m wondering if you could talk about within buildings and infrastructure you’ve had excellent bookings all year. Can you just talk about based on the project timing when do you expect the revenue burn to accelerate and deliver year-over-year revenue growth. How do you see that over the next couple of quarters?

We’re probably most positive on what Kevin talked about is the shift to not only see backlog, but see it in the top line revenue and our P&L in this business, building and infrastructure. So based on the size of the projects we do here and some of the other factors, we should see that earlier in the 2017 year than maybe some of the other LOBs.

Okay, within aerospace and technology in the quarter, your revenue declined year-over-year basis was more than it has been in the trailing couple of quarters. Can you add some context, how much of that is project timing versus extra week day that you mentioned. Can you give us any more color on what were the big drivers and how we should be thinking about the revenue burn cadence for that product line on the same basis you just provided for billings and infrastructure in 2017?

Look, I think Jerry, on aerospace and technology, there is a shift in our mix, it is going on within that business right now. And that will ultimately result in there being some pressure point on our revenue in 2017. Having said all of that, very excited about the underlying shift to the good opportunities and growth opportunities longer term and at the end of the day the margin profile on the operating process will play out in a way that it will evident as we go through into the longer term. So some pressure I would say on 2017 purposeful and I expected as it relate to that business, but we think its reorienting the mix to something that will be more attractive longer-term.

Okay. Your comments on top line are very clear Kevin. What about for margins as that what’s – what are the mix shift implications could operating profits be more resilient than revenue for that line of business in 2017?

I think ultimately yes, but I’ll let you figure that out as you model through.

All right, thank you.

All right.

Okay. Well, thank you for calling in and we want to thank the investment community for listening to the quarterly call today. We believe the actions we’ve undertaken continue to increase shareholder value. We’re going to drive long-term sustainability of a stronger and healthier Jacobs. Look forward to seeing many of you next week and for those of you in the U.S. wish you a very happy Thanksgiving. Thank you.

And ladies and gentlemen, the conference is now concluded. Thank you for attending today’s presentation. You may now disconnect.