Thank you for joining us today for the Jacobs Fiscal First Quarter 2021 Earnings Conference Call and Webcast. All participants will be in listen-only mode during the presentations. After the presentations, we will have a question-and-answer session. I will now turn the conference over to Jonathan Doros from Investor Relations. Thank you. Please proceed.

Thank you. During this presentation, we'll be referring to certain non-GAAP financial measures. Please refer to Slide 2 of the presentation for more information on these figures. In addition, during the presentation, we will discuss comparisons of current results to prior-period on a pro forma basis. See Slide 2 for more information on the calculations of these pro forma measures. Our pro forma comparisons current and prior-period excludes the results of the Woods Nuclear business which closed in March 2020 and Buffalo Group which closed in November of 2020. We provide historical pro forma results in the Appendix of the investor presentation. Turning to the agenda on Slide 3. Speaking on today's call will be Jacobs' Chair and CEO, Steve Demetriou; President and Chief Operating Officer, Bob Pragada; and President and Chief Financial Officer, Kevin Berryman. Steve will begin by updating the progress we're making against our strategy and reviewing our commitments to ESG and sustainability solutions. Bob will then review our performance by line of business and Kevin will provide some more in-depth discussion of our financial metrics, followed by an update on our Focus 2023 integration efforts, as well as a review of our balance sheet to cash flow. Finally, Steve will provide a detailed, our updated outlook along with the closing remarks, and then we'll open the call for your questions. With that, I'll now pass it over to Steve Demetriou, Chair and CEO.

Thanks, Jon, and thanks, everyone for joining us today to discuss our first quarter fiscal year 2021 business performance and strategy update. It's been about a year since the pandemic started, and we hope everyone is safe and healthy, as COVID-19 continues to impact all facets of our daily lives. At Jacobs, in addition to keeping our people safe, we're continuing to support national governments and industry and their production and distribution of critical vaccines. Turning to Slide 4 to discuss our first quarter results, it's important to review our strategy which is foundational to an investment in Jacobs. We believe the transformation that Jacobs has undergone over the last several years has created a compelling multi-decade investment opportunity for our current and potential shareholders based on three key tenets. First, we have transformed our culture, aligned around a common purpose of creating a connected sustainable world underpinned by strong values of we do things right. We challenge the acceptance, we aim higher, and we live inclusion. This culture permeates through our more than 50,000 people, the solutions we deliver for our clients, and the engagement in our communities where we live and work. Our purpose-driven culture has also enabled us to quickly adapt to changes in market conditions, while also staying focused on our long-term vision of being a technology-enabled solutions provider. Second, we have a portfolio of solutions aligned to a diverse set of global opportunities such as space exploration, cyber readiness, climate change, and modernizing and digitizing our infrastructure. Our thematic growth areas are global, allowing us to address them efficiently, effectively, and competitively at scale through our integrated global platform of technology, our talented resources, domain expertise, and enhanced brand awareness. Finally, our Jacobs Management team has demonstrated the ability to strategically allocate capital, including successfully executing acquisitions. Our continued focus on strategy and execution has resulted in a strong start to fiscal 2021 even while continuing to manage the headwinds from the global pandemic. First quarter net revenue increased 3% year-over-year and adjusted EBITDA grew 8%. Our backlog ended the first quarter up 11% year-over-year and up 7% on a pro forma basis. Given the strong momentum, we're increasing the mid-point of our full fiscal year 2021 adjusted EBITDA and EPS outlook. Our cash flow generation was strong during the first quarter, and our balance sheet remains healthy. In the near-term, we do expect to deploy excess cash towards paying down debt. Last quarter, we announced a strategic majority investment in PA Consulting, and we are happy to share that the transaction was overwhelmingly approved on February 4 with 99.8% of PA shareholders voted in favor of the transaction. Particularly exciting was the fact that the voluntary election for management rollover was fully subscribed, and new partner hiring has also been very successful post-announcement, indicating the enthusiasm and commitment of PA partners and employees about the future growth opportunity of this partnership. Confirmation of the scheme of arrangement is awaiting regulatory approval by the Financial Conduct Authority in the UK, and we expect to close the investment by the end of this current quarter. PA's performance for calendar 2020 exceeded our expectations, and their pipeline of strategic and technical consulting work continues to grow. This includes a new engagement with the UK's Department of International Trade, advising on project defense and UK supply chain resilience to underpin economic and national security. Along with reaching a key milestone with the National Institute for Health Research, where they completed a UK public sector first delivery of Google Cloud Search to upgrade research platforms. Once we complete the transaction, we expect significant benefit for the clients of our firms driven by the complementary solutions offering of PA and Jacobs. Now looking further into fiscal 2021 and beyond, we believe Jacobs has a compelling organic growth opportunity and as appropriate, we will further accelerate that growth through thoughtful strategic acquisitions that offer a higher return versus our alternatives of repurchasing shares of Jacobs. Turning to Slide 5, I'd like to review some recent ESG actions. As a company we're committed to delivering results to all our stakeholders, our employees, our clients, our investors, and our communities. Delivering on this includes our commitment to our sustainability strategy called PlanBeyond and our Climate Action Plan launched last year. I'm pleased to report that we achieved a net zero carbon, including 100% renewable energy for our operations in 2020. And our carbon reduction targets have been formally approved by the science-based targets initiative. The climate agenda will continue to be front and center in 2021 with the United States rejoining the Paris Agreement and the 26th UN Climate Change Conference of the Parties or COP26 being held in November. In support, Jacobs announced our Pledge to Action, a campaign inviting our clients and suppliers around the globe to take measurable actions to tackle climate change before the opening of COP26, and we're also leveraging the power of our Jacobs people in making a positive impact. We launched our Climate Countdown Challenge where employees can join a new mission each month to tackle the climate crisis. Through both of these initiatives, we hope to raise awareness, inspire, and motivate individuals and companies and demonstrate the collective power of organizations taking actions now to make an impact for generations to come. Moving to Slide 6, at Jacobs, we intend to lead from the front in the transformation to a net zero economy. In combination with the COVID-19 pandemic, climate change remains the major global driver for ecological, social, and economic disruption, impacting every person, community, business, and governments around the world. It's also a major disruptor advancing technology-enabled innovation and sustainable business models for addressing decarbonization, the global energy transition, and resource scarcity. Jacobs is uniquely positioned to support our clients and communities in developing and deploying solutions and technologies across the full spectrum of decarbonization efforts, including renewable energy and clean power, carbon capture and storage, energy efficiency and energy storage, green buildings, sustainable transport, circular economy, carbon management mitigation and compliance consulting, as well as adaptation and resilience for all facets of infrastructure. This includes developing technology solutions, like our recently announced launch of Jacobs Travel Service Optimization solution, which transforms the home-to-school travel experience for children and young people with special educational needs and disabilities. This solution combines our deep domain knowledge with the latest advances in data analytics to determine the most efficient ride-sharing experience while supporting decarbonization and our long-term transition to a net zero economy. With that, I'll turn the call over to Bob Pragada to provide more detail by line of business.

Thank you, Steve. Now, let's turn to Slide 7 to review the quarterly performance for Critical Mission Solutions. In the first quarter, our CMS business demonstrated strong performance even with high COVID-19 case levels. Our workforce and clients have effectively dealt with the challenges of physical distancing and are successfully executing contracts, maintaining approximately 95% of normal operating levels. Our total CMS backlog is at $9.7 billion, showing a 14% increase year-over-year and a 4% rise on a pro forma basis. The CMS strategy prioritizes both revenue growth and margin expansion by aligning with our go-to-market strategy focusing on critical national priorities such as digital monetization, strategic data utilization, low earth orbit satellites, hypersonics, and cyber security. I will detail each of these areas. Starting with digital modernization, our global government clients are focused on transforming their digital information, communication, and security systems to enhance national security. We are actively partnering with our clients on this journey as we develop and manage their next-generation digital systems. In December, we cleared the protest period for the Navy Kings Bay Intelligent Asset Management Award, and we received a new digital modernization project for the Army's Intelligence and Security Command. In addition to digital modernization, another key growth area for us is the Department of Defense’s increased emphasis on strategic data utilization. The DOD is evolving into a data-centric organization that merges edge computing with data intelligence and rapid analysis, viewing this as a strategic asset essential for Warfighter advantage. For instance, our Intelligence, Surveillance, and Reconnaissance team recently secured a spot on the 10-year $950 million Ceiling IDIQ contract to deliver various unmanned aircraft solutions and satellite payload services for the Air Force’s Advanced Battlefield Management System. The ABMS enables joint forces to employ advanced methods and technologies to swiftly collect, analyze, and share intelligence and make real-time decisions. Now, regarding low earth orbit satellites, these are vital for advanced communication, military reconnaissance, and intelligence applications. Jacobs has embarked on an era of advanced radar payloads with the successful launch of our Mango One satellite, enabling government and commercial clients to deploy space-based sensors for continuous monitoring and actionable intelligence across land, sea, air, and space. Turning to hypersonics, this technology is a top priority for government clients. Jacobs has decades of experience supporting the Air Force and NASA, establishing us as a leader in hypersonic solutions. During the quarter, we won a hypersonic test cell contract from the Air Force to upgrade the Arnold Engineering Development Complex into a large-scale clean air test facility. Lastly, the cyber landscape remains critical, particularly following the SolarWinds Sunburst attack, which highlighted vulnerabilities in advanced attacks. The Biden administration has proposed over $9 billion in increased spending for cybersecurity and modernization efforts. As we noted last quarter, the British government has also approved a substantial military investment to enhance defense capabilities, including cybersecurity. Our cyber and intelligence business has expanded to over 3,300 professionals, and our strategy includes adding complementary capabilities and clients. The Buffalo Group acquisition, completed last November, has delivered strong early performance, facilitating immediate scale and access to a significant number of U.S. intelligence agencies and combatant commands. In summary, we observe sustained structural demand for our solutions, supported by a healthy CMS sales pipeline exceeding $30 billion for the next 18 months, including more than $10 billion in-source selection and an improving margin profile. Now, let's move to Slide 8, where I will discuss our People & Places Solutions business. Last quarter, we expressed optimism regarding our balanced portfolio and ability to sustain resilience amid economic and geopolitical challenges. This is reflected in our strong P&L performance for the quarter and a 9% year-over-year growth in backlog. However, after steady pipeline activity in 2020 and momentum in government funding, the timing remains uncertain in key markets, notably the U.S. and UK. We expect our pipeline to improve as governments finalize their budgets. I'll highlight four trends influencing the macroeconomic environment within our sectors, where we are strategically positioned to take advantage: first, climate change and the decarbonization of the economy; second, economic stimulus aimed at long-term job growth and recovery; third, the ongoing impacts of the pandemic and growth within health and life sciences, along with cloud computing; and fourth, the modernization of infrastructure and industry digitization. Starting with climate change and decarbonization, the environmental sector is seeing growth as governments and various stakeholders reaffirm their climate commitments and advance their decarbonization initiatives. We have experienced the largest growth in this sector year-over-year and expect our investment in PA Consulting to further bolster our decarbonization solutions offerings. Our expertise includes advising clients on climate action goals, developing strategic policies, helping with program implementation, and providing intelligent asset management across all geographies and sectors. A notable achievement is our recent contract in Orange County, Florida, to innovate sustainable waste management systems aimed at reducing greenhouse gas emissions. Additionally, we secured awards for the Marinus Link Electricity Interconnector in Australia and Project Connect, which features one of the largest lithium-ion batteries supporting Australia's shift to renewable energy. In the Middle East, our role as program manager for Expo 2020 Dubai includes the sustainability pavilion known as Terra, which aims for net-zero carbon and showcases future possibilities when the Expo opens. Next, I will address the economic stimulus initiatives focused on long-term job creation and recovery. The current U.S. administration is pursuing an ambitious agenda that aligns with the long-term growth of our markets, and we anticipate continued focus on COVID relief, climate change, and infrastructure modernization. As these initiatives progress, we expect funding to support projects at federal, state, and local levels, where we are well-equipped to assist through longstanding framework agreements. In the UK, we are positioned to benefit from stimulus initiatives and a leveling-up agenda designed to rebalance the economy, providing integrated solutions that yield tangible benefits for communities. In the Asia-Pacific region, particularly India, Singapore, and Australia, we forecast an economic revival driven by infrastructure projects, primarily in transportation and renewable energy. Now, regarding the impacts of the pandemic and growth in health, life sciences, and cloud computing, we see the ongoing production of COVID vaccines increasing capacity and distribution, along with heightened demand from biotechnology contract manufacturers. Our investment in PA Consulting will enhance our end-to-end delivery capabilities in this sector. Demand for cloud computing continues to drive our data center business, and we are adapting our client base to align with market trends, including semiconductor manufacturing. In the built environment, we are gaining traction with clients focused on healthcare, such as leading initial engineering efforts for the University of California Davis Health Center campus and the Royal Prince Alfred Hospital Redevelopment in Australia. Finally, infrastructure monetization and industry digitization remain priorities across all sectors. In transportation, we have secured engineering projects for bus rapid transit systems in Houston and Southeast Asia, illustrating our commitment to enhancing urban sustainability. Water sector trends remain steady, with digital technology implementation emphasizing the water-energy nexus and resilience. We have developed a digital twin of the watershed for Las Virgenes Municipal Water District in California, utilizing our proprietary platform, Replica, to evaluate water supply scenarios effectively. To summarize, the foundation of our People & Places Solutions business is solid, supported by our long-term client relationships and frameworks that allow us to react swiftly when government funding becomes available. Positioned well for current market trends, we expect a consistent growth trajectory, with improving profitability as we ascend the value chain. I will now hand the call over to Kevin for a deeper dive into our financial performance.

Thanks, Bob. And now turning over to Slide 9. First quarter gross revenue increased 1% year-over-year with pro forma net revenue flat, revenue for CMS increased 3% on a pro forma basis, and P&PS net revenue was down 3%. The P&PS decline was mainly attributed to slower revenue burn, although the outlook for the business remains strong with backlog up 9% year-over-year. In the near-term, we expect reported net revenue growth to be flat to up slightly year-over-year, then gain additional momentum in the second half of fiscal 2021. Adjusted gross margin in the quarter as a percentage of net revenue was 23.1%, down 110 basis points year-over-year. The lower gross margin on a year-over-year basis was driven primarily by two factors. A tough compare from Q1 2020 that benefited from a favorable impact from lower benefit costs carried in corporate, and a higher mix of CMS revenue which carries lower gross margins, but also has a lower G&A as a percentage of revenue. CMS gross margins increased on a year-over-year basis by almost 100 basis points, as we benefited from a mix of higher margin revenues from acquisitions and new business wins. P&PS gross margins saw some modest pressure in Q1 due to a higher amount of America's program management and O&M revenue. Lower consolidated G&A as a percentage of net revenue up 170 basis points year-over-year to 13.6% more than offset the gross margin impact. As it pertains to G&A, the first quarter continued to benefit from our ability to proactively manage our cost structure. The CMS mix benefit previously stated and some focused 2023 savings from lower real estate costs, lower travel, and lower COVID-related employee medical costs. As we look forward, we'll continue to be disciplined in the management of our G&A cost. GAAP operating profit was $214 million and included $22 million of restructuring transaction and other charges, the majority associated with our recently announced Focus 2023 initiative and $23 million of amortization from acquired intangibles. Adjusting for these items, adjusted operating profit was $259 million, up 10% with both lines of business posting double-digit percent increases in operating profit. As a result, our adjusted operating profit to net revenue was 9.5%, up 60 basis points year-over-year on a reported basis. GAAP net earnings and EPS from continuing operations were $257 million and $1.96 per share, and included a benefit of $0.54 driven by mark-to-market adjustments for our Worley equity stake, a $0.47 benefit related to a mark-to-market investment in AI software provider C3.ai, $0.16 per share of after-tax charges primarily related to Focus 2023 and other restructuring costs, a $0.17 charge related to the impairment of our AWA management investment, and amortization of acquired intangibles of $0.13. Excluding these items, second quarter adjusted EPS was $1.41, up 17%. Let me provide some detail on our investment in AI software provider, C3.ai. In 2010, we made a small investment in the company, which recently completed an IPO. Today, our investment represents more than 750,000 shares in the company. Due to our lockup requirements surrounding our ownership, we applied a discount to the quarter-end value of our interest in the company, resulting in the investment valued at $85 million on our quarter-end balance sheet. At today's price, our interest represents a greater than 20 times return on our original investment. Q1 adjusted EBITDA was $280 million, and was up 8% year-over-year, reaching 10.3% of net revenue. Finally, turning to our bookings during the quarter, our pro forma book-to-bill ratio was 1.2 times for Q1 driven by strong book-to-bill in P&PS. From a pipeline standpoint, we continue to grow the CMS pipeline, both on a pro forma and reported basis. The timing of when this robust CMS pipeline will convert into backlog is weighted more towards the second half of fiscal 2021, resulting in our projected backlog exhibiting year-over-year growth for the year. The P&PS overall sales pipeline has increased as well driven by a pro-environmental Biden administration, broader potential infrastructure stimulus in the U.S., and an improving economic outlook. The exact timing of when many of these new stimulus-related opportunities will convert to bookings will become clear over the coming months and will help support backlog growth for the year. Regarding our LOB performance, let's turn to Slide 10. Starting with CMS, revenue was up 9.5% year-over-year and up 3% on a pro forma basis. CMS operating profit was $110 million, up 22% and up 15% year-over-year on a pro forma basis. Operating profit margin was up 90 basis points year-over-year to 8.5%. Improvement was driven by our strategy to focus on higher margin opportunities, such as our recent NORAD win, which is now fully ramped. We also saw some additional benefits from favorable project close-outs. As we progress through fiscal 2021, we expect low-single-digit CMS reported revenue growth as we approach the one-year anniversary of the Wood Nuclear acquisition and continue to ramp new wins. More than offsetting the revenue headwind from fully transitioning of two large lower-margin projects previously discussed, which account for a nearly $600 million headwind in annual revenue in 2021. Given the strategy to capture higher value businesses, vehicles acquisitions and organic efforts, we will continue to expect reported and pro forma operating profit growth to be up double-digit year-over-year. Moving to P&PS, Q1 net revenue was down 3% year-over-year driven by a lower short-term burn rate as bookings growth remained strong and backlog was up 9% year-over-year with a 1.3 times book-to-bill. We continue to see solid revenue growth in our Americas business offset by some timing-related slowdown in our advanced facilities and Europe and Middle East businesses. P&PS operating profit was up 10% year-over-year, and as a percentage of net revenue was 13.7% for the quarter, up 160 basis points year-over-year driven by disciplined management of G&A costs. Looking forward, we continue to project P&PS revenue to be up low-single-digits for fiscal 2021 with improving year-over-year growth as we progress through the year. We expect operating profit margin as a percentage of net revenue to moderate from Q1 levels, but still increase from fiscal 2020, driven by strong operating profit growth. Our non-allocated corporate costs were $47 million for the quarter. While this figure was supported by strong cost discipline, we continue to expect our non-allocated corporate costs to be higher year-over-year driven primarily by inflation in medical costs, enhanced employee benefits, and increases in discretionary medical procedures that were put on hold during fiscal 2020 and the first quarter of 2021 due to COVID-19 concerns. Now turning to Slide 11, I'd like to update you on our Focus 2023 and M&A integrations. We continue to make strong progress on our strategic initiative Focus 2023 that we believe will, one, lead to enhanced employee and customer experience; two, improve our ability to capture emerging high growth margin opportunities; and three, drive a more efficient cost structure through increased automation and process aligned for overall longer-term profitability. During the quarter, we incurred an additional $10 million charge in cash outflows of approximately $30 million related to our Focus 2023 initiatives. These investments were mainly related to improving the utilization of our physical spaces, deploying new tools and technologies for better efficiency in our business, and strategically leaning out the organization. Turning to our recent acquisition of The Buffalo Group, the company had a strong quarter with double-digit revenue growth; continue to expect that the acquisition will deliver $0.08 to $0.10 adjusted EPS accretion during fiscal 2021. Regarding PA Consulting, we're pleased with the preliminary results for calendar year 2020, which are tracking ahead of our expectations. We're also optimistic about their calendar year 2021 growth plan, and after this transaction closes later this quarter, we look forward to discussing our results and growth plan in more detail. We continue to expect $0.52 to $0.57 of adjusted EPS accretion from PA Consulting for fiscal 2022. And finally, when including all integration and restructuring initiatives, as well as the AWE charge but excluding PA Consulting, we now expect the total of approximately $100 million of P&L charges and $110 million in related cash outflows in fiscal 2021. When including an additional non-recurring headwind associated with a payment of 2020 related UK VAT tax payment in the current quarter, we expect a total of approximately $150 million of one-time cash outflows in fiscal year 2021. We'll update these estimates to include PA Consulting after we close the transaction. Now on to cash generation and the balance sheet on Slide 12. During the first quarter, we generated $96 million in reported free cash flow, a significant improvement versus the level seen in the last several Q1 periods, primarily a result of an improvement of three days in DSO versus a year-ago, other working capital benefits, and less headwinds from cash restructuring. The strong Q1 cash flow included a net negative of $44 million of one-time costs associated with Focus 2020 restructuring and other items. Regarding the balance sheet, we ended the quarter with cash of approximately $837 million and a gross debt of $1.8 billion, resulting in $1 billion of net debt before attributing the benefit of the Worley and C3.ai equity. Treating the Worley and C3.ai equity as cash our pro forma net debt to expected adjusted 2021 EBITDA is approximately 0.4 times, a clear indication of the strength of our balance sheet. During our current fiscal second quarter, we finalized a new delayed draw term loan related to our PA Consulting investment. Post PA close, we expect our balance sheet to have continued financial flexibility. However, we'll be prudent to deploy excess cash toward debt repayment over the short-term. And finally, given our strong balance sheet and free cash flow, we remain committed to our quarterly dividend which was increased to 11% earlier this year to $0.21 per share. Now, I'll turn it back over to Steve for Slide number 13.

Thanks, Kevin. Now, let me review our total company outlook for fiscal 2021. Given our strong start to the fiscal year, we're raising the low-end of our previous guidance ranges. We now expect adjusted EBITDA outlook to be in a range of $1.075 billion to $1.155 billion versus our previous outlooks of $1.055 billion to $1.155 billion. And we expect adjusted EPS to now be in a range of $5.30 to $6 versus our previous outlook of $5.20 to $6. It is important to note that our guidance does not include any benefit from the PA Consulting investment, which we expect to close by the end of fiscal second quarter. Looking beyond fiscal 2021, we continue to expect double-digit adjusted EBITDA growth as we benefit from our Focus 2023 initiatives, as well as potential infrastructure-related stimulus and a strong alignment to a diverse set of large secular growth opportunities. Operator, we'll now open the call for questions.

Our first question comes from Joseph DeNardi with Stifel. Your line is now open.

Hi, thanks. Good morning. Bob, you talked a little bit about the Mango launch. Can you just speak to kind of what that now allows you to do in order to maybe more effectively market and sell that capability? And then can you just update us on the pipeline of opportunities related to that technology across the government to the extent you can?

Sure, Joe. So on the first, we're really excited about what Mango One brings to us. So it's a heavy payload, low earth orbit satellite, that's ours. And we invested in this, and it's now in space gathering data. It is kind of a right of entry to some of the higher-end, both intelligence agencies as well as other application platforms. And it's going to put us in a really unique position for not only ongoing pursuits but even for offerings that come in the future. So I'd say that the programs and projects that we've talked about Project M and all kinds of other tropical fruits that we refer to these programs by, it puts us in a very much differentiated position to further strengthen our win ratio. There's only a few that happen.

Hi, good morning. Nice quarter. I guess my first question relates to the strong margin performance that you saw in P&PS. So I'm just wondering, how much of that is sort of project mix versus potential short-term, lower discretionary costs, how sustainable that is? And then I guess my longer-term question is while the margins in CMS are improving, there's still a big gap between CMS and P&PS. I'm just wondering over what time can the gap between the two segment margins narrow more? Thank you.

So Steve, you want me to take that?

Yes, go ahead, Kevin.

Thank you for the question, Jamie. Regarding the P&PS margin profile, we experienced solid gross margin performance, primarily due to disciplined management of our G&A costs. Some improvements have been made because of our efforts related to reducing our real estate footprint and travel expenses. Additionally, we have taken significant proactive measures to appropriately manage our labor costs in light of the pandemic situation. We are closely monitoring this. As our business is expected to recover over the course of this year, some costs will re-emerge, but this will be accompanied by higher gross profit. Therefore, while the margin profile may not match the level of Q1, it is still projected to be well above what we saw in 2020, and we are optimistic about this opportunity. Regarding the margin profiles of the two businesses, we believe there is potential for improvement on both sides. A major focus for 2021 is to tangibly reduce the margin profile difference between the two businesses. We have indicated that CMS margins are expected to show strong improvement this year, and we have already begun to see that in the first quarter, which we anticipate will continue throughout the remainder of 2021.

Just a question on the free cash generation and congratulations on moving the needle there. Just to the comments before about kind of a mix shift moving around. I mean, is there anything we should be thinking about any turmoil in the DSOs? I mean, is there anything that we should be thinking about as far as the free cash flow profile while you do that mix shift up to kind of more high-value work?

In general, I would say that the opportunity for us to continue to drive DSO improvements from existing levels, we believe that this remains an opportunity. It's tough work, as I've always said relative to the ability to continue to drive that number down. Very pleased with the work in Q4 of last year, very pleased with where we ended Q1 of fiscal 2021. And we believe that there's an opportunity to continue to drive that down, and that our mix of projects won't necessarily, ultimately result in that underlying trend longer term. So we still feel good about that and still got a lot of work to do, but we feel good about the cash flow generative nature of the portfolio going forward.

Steve, I'm wondering if you could talk about your M&A pipeline as it stands today, considering the cost reduction efforts and the upcoming integration with PA Consulting. How active are you folks in terms of scouting for opportunities at this point and based on the lean work that you're doing, does that expand the opportunity set in terms of the cost reduction opportunities you might have as you look at the next set of companies in the pipeline whether it's 2021 or 2022 event? Can you just flush that out for us, please? Thanks.

We are constantly active in exploring global opportunities and will continue to do so. Recently, we executed acquisitions with The Buffalo Group and PA Consulting, and Wood Nuclear is relatively new as well. Our primary focus is to successfully execute these acquisitions and show continued success. We are proud of our major acquisition of CH2M in 2017, where we not only met but exceeded expectations, and our current priority is to concentrate on that. Over the next few months, our main capital deployment will be aimed at reducing debt. However, our strategy pipeline includes several bolt-on opportunities within PA Consulting. PA has been very successful with bolt-on acquisitions, which have generated value, and we aim to continue supporting that. We believe there are exciting prospects in the consulting sector, which offers higher margins and value. We also plan to accelerate our digital modernization and utilize strategic data as we have with our recent acquisitions, including KeyW and The Buffalo Group. We’ll remain active in the government services space and seek any additional bolt-on acquisitions that can enhance our P&PS business. Lastly, there's potential for geographic expansion, as the majority of our revenue currently comes from the U.S. and UK, with other regions contributing significantly less. We believe there are strong geographic expansion opportunities ahead.

And just trying to get a read on P&PS, given the lower revenue burn, but strong backlog. Bob, you talked about still seeing some funding in COVID-related uncertainty out there, but the trends you mentioned especially more focus on climate change, digitization, stimulus, seem to be overwhelming that uncertainty at least in backlog. So maybe you can give us more color, what was the biggest driver of backlog growth in Q1, and especially if we do see some U.S. stimulus here, is it possible to backlog growth continues at that high-single-digit rate you saw even accelerate from here?

Yes. I'll start with that and then discuss the year-on-year performance. The short answer is yes. The pipeline we leveraged in the first quarter is still active as we engage with our clients in anticipation of stimulus. Our role in the value chain, particularly during the initial concept phase and project scoping, remains vital as we evaluate different structures and objectives. We continue to see opportunities driven by the pandemic, particularly in healthcare and in the data center and semiconductor manufacturing sectors. These areas remain robust. Regarding the year-on-year performance, I want to emphasize the sustainability of our work due to our established framework and relationships with clients. While there has been a slight revenue decrease, it wasn't a dramatic drop. We experienced some decline in Q3 of last year, but we've managed to maintain our position. It's important to note that when comparing to last year, there was no pandemic impact in the current year. Therefore, the flatness we observe in revenue is reflective of that context, and we expect to see product turnaround as more backlog is converted.

Great, thanks. Good morning, guys. Can you just talk a little bit about the increase in restructuring from I think it was $80 million to $100 million plan for the year, why did it increase, kind of what's the cadence from here? I think it will certainly be a milestone when restructuring generally becomes immaterial, but I'm just wondering if they do that as long as there is going to be some M&A activity, should there be some ongoing restructuring?

Yes, thanks. Appreciate the question; look on the number going from the 80 till 100. That's effectively driven by the AWE item that is a non-cash charge. We highlighted that there was a current evaluation that was occurring during our Q4 call, you might recall. And so we basically had to write down our AWE investment that was made several years ago, so no real difference in terms of restructuring. Of course, we have not yet included any of the dynamics associated with PA; there will be some costs obviously there. And that will be further clarified after we actually have PA come on into the full, hopefully expected by the end of this quarter. So no real fundamental change at this particular point in time other than the AWE charge, non-cash charge.

So within your greater than $30 billion project pipeline, I think there are a couple of large projects you guys talked about in the past on the weapon sustainment and ISR side. Can you give us your latest thoughts on these what timing there has been, any change in competitive landscape, the positioning? And then also, can you talk about a certain level of design activity that you're seeing globally if they acquire your private P&PS business? What are you seeing accelerating growth versus maybe some stall in the recovery? Thanks.

Chad, maybe I'll start.

Here in Bob. Chad, I may start on the latter.

When we discuss the P&Ps business, it's clear that our pipeline is driven by the digital modernization and strategic data utilization initiatives that Bob mentioned earlier. This includes our clients across various sectors like buildings, infrastructure, and advanced facilities. The focus on climate change is expected to intensify with the change in administration in the U.S., alongside global priorities in this area. Regarding climate change, we're actively engaged in initiatives related to SolarWinds, hydrogen, and energy storage with batteries, building on our experience in resilience against flooding and sea-level rise among other challenges. There's also a significant opportunity in the advanced facilities sector, spurred by the pandemic, particularly in life sciences and electronics. In life sciences, there's a surge in demand for non-COVID activities, with a focus on areas like oncology, diabetes, and gene therapy, leading to substantial manufacturing opportunities. Additionally, the healthcare sector, particularly hospitals, and the electronics sector involving 5G, data centers, and semiconductors are also witnessing substantial growth. Globally, countries, starting with the U.S., are stimulating their economies as they recover from the pandemic, and we're seeing positive momentum in the U.S. with plans for the COVID relief package and upcoming infrastructure stimulus, which will be beneficial for Jacobs. This outlook extends into 2022 and beyond regarding infrastructure stimulus, independent of any direct dependencies. In the UK and several other countries, similar positive momentum is evident in infrastructure and economic initiatives. Overall, there's significant positive momentum in the P&PS sector. Bob, would you like to discuss the backlog in CMS?

Yes. We are expecting developments within the next 12 months. I believe I mentioned that $10 billion is currently in the selection process. Specifically, the question pertained to ISR and our approach to cyber in that context. With The Buffalo Group and our current positioning in both cyber and intelligence, we are now involved with most of the related command structures—whether intelligent commands, defense, or joint commands. We have enhanced our skill sets across multiple domains. Thus, we anticipate these awards to start coming in. While they may not be as substantial or long-term, which is typical for such jobs, we expect a steady flow beginning in Q3 and continuing beyond, with improved margins.

There has been a surge in investor interest for space exploration and space reconnaissance, are you able to quantify the size of Jacobs' space portfolio as it relates to NASA, the intelligence community, and the Missile Defense Agency and on this note, can you review what role Jacobs is expected to play for the Artemis Moon Program? Thanks.

Space has long been a core strength and a vital part of our revenue due to our extensive history with NASA, where we serve as their leading solutions provider across nearly all of their locations. This foundation has been bolstered by the KeyW acquisition and other initiatives we have pursued, both organically and through partnerships. We are particularly excited about low-earth space intelligence, much of which involves highly classified work and is expected to significantly contribute to our overall space initiatives as a high-growth area. Additionally, our intelligence work and connections within the space community are leading us into the hypersonics sector, which we believe will become important for us, starting with consulting and research development and progressing to major programs. Currently, that segment is valued at over $1 billion, and we anticipate strong growth moving forward.

I think nice start to the year. I'm just curious, a lot of companies are talking about digital data. I'm just curious as we think about Focus 2023, what do you think Jacobs is doing better than the competition as we think about digital and data effectively moving the company up the value chain?

Let me start by explaining how we've reached this point. Jacobs has a long history of working on digital smart initiatives, including collaborations with NASA and others. Over the past few years, the acquisition of CH2M has significantly enhanced our capabilities, particularly with innovations like digital twins and other advanced technologies. In addition, we've implemented a strategy that includes the Jacobs Connected Enterprise, elevating our culture and emphasizing talent attraction focused on bringing in subject matter experts and digital skills. This has been remarkable, especially as we engage with some of the most innovative firms to attract their talent. Two major recent developments include our rebranding effort, which has increased awareness among clients about the full range of our capabilities that were previously known only to select clients. This brand initiative, launched last year, was crucial. Additionally, our collaboration with PA Consulting is set to elevate our end-to-end solutions. Our intellectual property across various sectors is impressive, and we maintain technology hubs focused on geospatial, predictive analytics, cybersecurity, Internet of Things, and intelligent asset management. Ultimately, what sets Jacobs apart is our combination of deep domain knowledge from decades of experience, a broad range of clients, and a cutting-edge technology skill set that allows us to deliver exceptional digital solutions. Together, we believe this places us in a uniquely differentiated position.

Good morning, gentlemen. This one for Kevin. Wondering do you have any more 20 baggers in that asset portfolio of yours. Appreciate to know that, but more seriously, could you remind us when PA closes, what the balance sheet metrics on net debt, cash, leverage ratios? And how you're thinking about the current ownership of Worley and C3.ai relative to your deleveraging opportunities or your cash needs going forward?

Thanks, Mike, for the question. A lot of the work that Steve mentioned in our strategy over the last several years has positioned us very well from a balance sheet perspective to execute the PA transaction. Once we close, our actual net debt will likely be around two times. This still puts us in a good position, as we will have substantial cash on hand at that time, providing us with some flexibility. Although our gross debt levels will be a bit higher, we plan to manage that in the short term with the additional cash generation we expect. We believe we still have significant flexibility regarding how we deploy capital. This won't necessarily happen immediately, but as we move through the next few months and into later 2021, we expect to have even more flexibility. We're well-positioned in terms of our debt structure, even after the approximately $1.8 billion in funds being paid out. Our leverage factors will remain favorable. As for our other equity matters, these are solid strategic investments, and we'll continue to evaluate their long-term implications.

Yes. Thanks for squeezing me in. I'm just curious on your mix in the growth prospects going forward. Basically, over the next two to three years, do you feel like more of your growth is coming from P&PS, with the infrastructure, environmental, or advanced facilities or is it mostly coming from CMS? And lastly, just to be clear, do you need a big infrastructure package to pass to reach your double-digit growth objectives in 2020? Is that critical to hit that 2020 and beyond target you guys laid out? Thank you.

So you want me to go, guys, first?

Yes, go ahead, Kev.

Yes. Look, the guidance that we've provided, it doesn't assume anything as it relates to a major infrastructure there. There certainly seems to be some incremental momentum there and our view, however, is that we will start to see an ability to start to see incremental momentum in the back half of 2021, and certainly, the sustainability comment that Bob had made is important because of the particular stimulus package that's being considered right now provides that opportunity to do so. I think if you combine it all together with Focus 2023 and our continued efforts to drive the effectiveness across the globe and with the continuation of an improving economic picture, we still think there is an ability to have great growth in 2022 and beyond. That would be double-digit obviously. If there is a large infrastructure built, that would be augmenting some of those numbers. I think as it relates to both CMS and PPS, with P&PS, we feel good about the growth prospects of both of the business long term. Both are aligned with really strong growth trends, critical mission areas as outlined by Bob, and then of course, People & Places aligned with secular long-term growth trend. So we feel pretty good about the growth algorithm that's facing us in terms of both of the businesses.

Our next question comes from Gautam Khanna with Cowen. Your line is now open.

Hey guys, this is Dan on for Gautam Khanna. Thanks for taking the question. Just a quick one here. Do you have the CMS book-to-bill number excluding the acquired backlog from Buffalo?

Yes, it's about a little over 1.05, 1.06 to include Wood.

It's one time. It is one time, even without Wood.

There are no further questions in queue at this time. I'll turn the call over to Steve Demetriou for any closing comments.

All right, thank you. In conclusion, our Jacob's people drive our performance. And this year more than ever, their commitment, creativity, and perseverance were our differentiator. We've chosen to honor their spirit in our integrated Annual Report for 2020, which we launched two weeks ago. I encourage you to visit the Investor page of our website to read the report and explore some of the stories of accomplishment for our clients and our communities in furthering our strong culture. Thank you.

This concludes today's conference call. You may now disconnect.