Jacobs Engineering Group Earnings Call Nuggets: Flat Backlog and Timeline for Top Line Growth
Andy Kaplowitz – Barclays: Craig, so if you look at the backlog in process, sequentially it flattened here. It’s up nicely year-over-year. I know you are going to me it’s lumpy. But to try and characterize that particular part of the business better, how do the leading indicators in that business look, things like billable hours, overtime, utilization, salary multiplier? As you put all these things together, are they still flashing green for you and how did they do throughout the quarter given some uncertainty on the political front?
Craig L. Martin – President and CEO: I guess, yes, it’s lumpy. So, that first part of your question was – the answer is yes. But the second part of your question, the answer is yes also. Billable hours are growing nicely. We are seeing high utilization. We are starting to work a lot of overtime. So, everything about the business, salary pressures are starting back in. There’s starting to be some opportunity to move up margins. So, everything – only indicators in the process industry are where they were a quarter ago or two quarters ago, and we have every confidence that we’re going to continue to see good solid growth out of that. I think the flat backlog quarter-over-quarter is a timing issue more than anything else.
Andy Kaplowitz – Barclays: That’s what I thought you’d say. I remember I think it was at your Investor Day you talked about maybe having – cost structure would be higher in the first quarter and it really wasn’t. And you talked about maybe some interruption in that public business from the election, and obviously doesn’t look like we saw anything. So, maybe if you could comment on that? And I know that – I don’t want to steal Jamie’s thunder about guidance, but like all I would ask there is, seems like this quarter may have been marginally better than you thought, yet you keep guidance?
Craig L. Martin – President and CEO: Well, a couple of things. In terms of the quarter we worked really hard this quarter to keep the G&As down, partly because we knew we had these headwinds, and partly because this quarter we always have the headwind of reduced billable hours because of the holidays. And I think the team did a terrific job of managing costs to offset those things. And so, yeah, we did a quarter that was a little better than our expectations. Now, why is that not fully into guidance, it’s just too soon. We don’t have quite the level of visibility that we need to have to think about raising or lowering or whatever guidance, and so we’ve kept the guidance where it is because we think that’s the prudent place to be at this point in time.
Timeline for Top Line Growth
Jamie Cook – Credit Suisse: Nice quarter. I guess, just two questions, partly building on what Andy just asked. The first question back to you, it sounds like you’re more constructive on sort of the leading indicators and one of your peers a couple of weeks ago came out and said that labor constraints were looking like it was becoming a slight bit of an issues sort of the in the Gulf Coast area on the petrochem side. So, I was just wondering if you – it’s a first time I’ve sort of heard that in a while, I’m just wondering if you can expand if you’re seeing anything like that down there, are you seeing labor rates increase or capacity tightening specifically within North American hydrocarbon. Then I guess my next question just to sort of build on the guidance question. We’re still at a point where the backlog is growing quicker than the top line is. At what point, John, do we expect to see that inflection point where we start to get some double-digit top line growth? I mean, I know last quarter you said even if your margins can outpace your revenue growth, but I’m just sort of wondering when we see that burn rate kick in. And I’ll get back in queue.
Craig L. Martin – President and CEO: Let me take the first part of your question, Jamie. We are certainly seeing pressure both – more so on in engineering labor at this stage than craft labor, but we are seeing pressure both on the Gulf Coast. I think I said last quarter when we – at our call that we were forecasting dramatic increase in requirements for engineering capability as a result of the impact of both the unconventional gas and the chemicals expansions on the Gulf Coast and in North America and nothing about that has changed. We are seeing some pressure on rates. We’re seeing pressure on turnover. And maybe if I can get Greg Landry, who runs our Southern operations, it’s one of his responsibilities, to comment just a little further. Greg, you’ll have to speak up cause (you’re away from live).
Gregory J. Landry – EVP, Operations: Yes. So, well, just a snapshot there. We are actually at historical levels from the staffing on engineering side as we talk here today. If you look into the next two, three years, I mean on a monthly basis there’s new chemical opportunities that’s being publically announced between (indiscernible) Alabama and Corpus Christi, Texas. So, we will continue to see pressure on escalation and rates, but it’s all good news. The (crash) side of the business, it’s probably another eight months to a year away before we start seeing pressure, but on engineering side, we are (in throws of it) right now.
Jamie Cook – Credit Suisse: Just one more question to build on that, so it sounds like you are seeing – to be clear, it sounds like you are seeing sort of similar things which means the market is tightening and you feel a little better. My second question, while, I know you are a cost plus contractor, are you seeing more, a bigger appetite from some customers that potentially would have wanted – wouldn’t have talked to you or would have wanted to go fixed price moving more towards a cost-plus model? Do you see customers’ willingness to do cost-plus growing I guess relative to where we’ve been?
Craig L. Martin – President and CEO: Generally, our experience is, as markets get tight, the work tends to move to cost reimbursable, because there’s no appetite even among the traditionally lump-sum contracting community. The appetite for doing lump-sum goes away because the risks become just enormous by comparison. So (the mecca) does shift toward our model and that does represent I think a particular opportunity for us in these up-cycles that we can benefit from as we go forward. So I see that also as a positive for Jacobs relative to our competition and a positive for the industry in terms of surprises.
Jamie Cook – Credit Suisse: Sorry, just the last question on the guide and then I’ll get back in queue in terms of backlog versus revenue growth. The revenue growth continues to lag sort of backlog; when we expect that inflection point?
Craig L. Martin – President and CEO: John?
John W. Prosser, Jr. – EVP, Finance and Administration: Okay, yeah. As you know, we don’t give specific guidance on revenues, but if you look at the first quarter compared to last year’s first quarter, there has been about a 5% growth in revenues. It’s down a little bit from the prior quarter, but that has to do with the holidays and just kind of the general curve. We still believe that going forward that midyear this year into ’14 should be the time when we start seeing the revenue pick up as the field services start picking up. We still see a lot of activity moving to the field, both on the maintenance and sustaining capital side, but also on some of the larger programs such as up in Canada and such that are moving toward the field. And so, it looks like – and I would say that either late ’13 – mid to late ’13 and into ’14 you should start seeing better revenue comparisons.
Jamie Cook – Credit Suisse: And not to split here, when you’re seeing midyear are you talking your fiscal or calendar?
John W. Prosser, Jr. – EVP, Finance and Administration: Our fiscal.
A Closer Look: Jacobs Engineering Group Earnings Cheat Sheet>>