Jacobs Solutions Inc. (J) Earnings Call Transcript & Summary

Good morning, everyone. And welcome to today's fireless chat with Jacobs. I'm Jerry Revich, and I'm excited to have with us today from Jacobs, Steve Demetriou, Chair and Chief Executive Officer; and Kevin Berryman, President and Chief Financial Officer. Steve and Kevin, thank you very much for joining us for our virtual conference.

Great. Thank you for hosting, Jerry.

Glad to be here.

Gentlemen, I'm wondering if we could start the discussion from a high-level standpoint. The business today is very different from when you folks took over as a management team, some 5-odd years ago. Margins are higher. The technology content is higher as well, and you don't have oil and gas exposure anymore. Is the transformation phase of the Jacobs story now over? How much time are you spending on the M&A pipeline today compared to 3 to 4 years ago?

Yes. No. It's a great question. And let me just recap the fact that over the last 5 years, if you just -- if we just sort of summarize, we were -- Kevin and I came in on the heels of the company's largest acquisition at that point, SKM, which expanded the company's profile, and, in that case, the mining sector as well as some infrastructure that came with that. And we clearly saw the need to massively change the culture of the company, which we've talked a lot about, to restructure the cost profile of the company and really think about the portfolio to get back on a path of growth. And as we think about where we are 5-years later is -- the 2 major steps that we took around the portfolio was to divest our Energy, Chemical, Resources business, which involved everything from oil and gas refining, chemicals, mining, et cetera, and to redeploy that capital to essentially double down on infrastructure and technology with the acquisition, the biggest step being the acquisition of CH2M and which is going extremely well, as well as some other acquisitions like KeyW and Blue Canopy and some cybersecurity initiatives. And then the most recent side on our global government services, nuclear remediation side, was the Wood Nuclear business. So clearly, a transformed portfolio. We've been highly successful on completing the cost restructuring, which is contributing to the margin profile that you talked about. But we're in the early stages of really seeing the benefits, first and foremost, of our culture transformation, but as well as just driving the whole innovation side of our new portfolio to demonstrate significant growth over the next several years. So I really look forward to talking more about that today.

And Steve, can you expand more on the cultural point? When you came in, it was a matrix organizational structure. One of the first things you folks did was drive full P&L responsibility. So it feels like a lot of elements are in place. So can you just expand on that point in terms of what you're looking for an opportunity set from the culture? Because it seems like the pieces are -- have been in place.

Yes. When we arrived, I want to first say there was a strong foundation in the company of certain cultural aspects, safety, customer sort of profile, culture of caring and integrity. And Jacobs had a good reputation, but it was essentially a sleeping company that was really focused on billable hours, every office around the world, several hundred offices all fending for themselves to kind of go after every sector that they could feel like they could maximize billable hours on. And we took a step back, and after a major strategy effort, essentially the first strategy effort in the history of the company, was to recognize that the better way of running the company was to have a global focus on certain lines of businesses. And at that time, we ended up over the course of the initial period to focus on 3 lines of business with our current 2 plus Energy, Chemicals and Resources, and really create a P&L focus around that strategy, which basically said we're not going to focus on everything. We're going to focus on the higher-margin, higher value opportunity, less about volume, more about margin and value. And that whole accountability culture really gave us the fast start to driving the performance that we've been able to achieve over the last several years. But in parallel, it was a lot of the softer side of things that you have to make that sort of accountability culture and strategic focus culture a success. When we first arrived 5 years ago, there was no diversity in the company. We had 100% men sitting in Pasadena running the company. We now have a significantly more inclusive and diverse company, not only gender diversity, where the leadership team today is more than 50% women on the leadership, but age diversity, international diversity and a whole host of other aspect, ethnicity, et cetera. So -- and that is not a political thing. That is a best-in-class, proven, that diversity drives results, better instincts, better thinking. It gives all of our employees a feeling like they have a place that they belong and, therefore, improve retention and ultimately drive better profitability and shareholder value. And that's playing out. And so as we go beyond that, our mental health focus, recognizing we have 55,000 people in this company, it's a people business, we've got to focus on the well-being of our employees. That's contributing. And then the whole focus on things like sustainability, climate change, innovation. These are the things that employees want to be part of going forward. It's not just about profitability. Clearly, profitability's top of mind. It's #1 priority as far as shareholder value, but it's got to be balanced with all these other aspects of the greater purpose of our company that leads to retention, that leads to motivation and inspiration and drives better overall results. So Jerry, that's kind of a high-level view of our culture.

Okay. Yes, I appreciate it, Steve. And then, Kevin, I'm wondering if you could chime in and just talk about the M&A pipeline today compared to a couple of years ago. It sounds like you have the key pieces in place that you're looking for in the portfolio. But Steve, please chime in if you disagree with that assessment.

Yes. Thanks, Jerry. Look, we've been very proactive over the last 5 years in monitoring and evaluating opportunities. I will say, first and foremost though, it has always been focused and centered around what our strategy was. And all the steps that Steve is talking about in his preliminary comments, in response to your initial question, were really fundamentally based and founded in an analysis of our strategy. And what that kind of ultimately resulted in was crystallization of what the opportunities look like, which led to some of the actions taken. I think we're no different today in terms of that situation. And certainly, there are opportunities that continue to be out there. However, we are in a unique situation, obviously, currently today, and COVID has created some challenges as it relates to whether or not those transactions could make sense given the current environment. So I would say that as we sit here today in executing in the short term, we're very excited about fundamentally what the organic growth outlook for our company is. Given that strategy, given the repositioning of the portfolio and all of the opportunities, we now believe we have in front of us to leverage off of those capabilities. And the fact that we're aligned against what we believe are strong long-term growth trends and high priority spend areas for both our customers on the private and public side. So we feel good about that. So where we are today is certainly monitoring opportunities believe there might be some out there, but we're also evaluating that within the construct of what are the uses of cash we have. And clearly, with some disruption in the investor -- investment community relative to what multiples look like and whatever, we still believe we have long-term growth capabilities regardless of acquisitions. And so, ultimately, our ability to utilize capital maybe is a little bit more oriented around investing in our own sales with share buybacks as we get more comfortable with the current disruption in the industries, in the financial industries. And so I would say that that's probably we're going to always have to compare those M&A opportunities to the investment profile relative to investing in our own shares. And certainly, at our current share price, that's a pretty strong hurdle for us to consider making acquisitions at this point in time.

Okay. And Kevin, at the Analyst Day, you folks laid out leverage targets of 2 to 3x EBITDA. It's been nice to enter this environment with a very clean balance sheet. Has your thinking evolved around given the experience here on the willingness to lever up to 2 to 3 turns? And then the other topic, if you wouldn't mind addressing, obviously, cash is king in this environment. Can you talk about what you would need to see to go back and move forward on the buyback program that you just referenced?

Thanks, Jerry. I think that ultimately, that 2 to 3x is still relevant. I would suggest to you that the high end of that range would be driven probably by M&A-related activities. So it's not like we're going to be sitting there targeting 3x. We could go up to that and then manage our way back down, given the strong growth profile of our cash flow relative to potentially taking those actions. So I don't think that we fundamentally have a different view of that as we sit here today. I think the short-term nature associated with COVID-19 just in the financial markets is clearly, as I've already said, something that we're thinking about. And I would say we've taken some actions in the short term to ultimately ensure that we are maximizing access to liquidity and cash. 2 things that we did. We suspended a share buyback program as COVID-19 was developing, and it was clear that was becoming a material dynamic that we had to be paying attention to, and managing around and through. And so that's temporary in our views as it relates to that dynamic, but we took that action. The other thing that we did in actually in March is finalized ultimately the establishment of a new term loan, $1 billion. That had nothing to do with COVID. It was all about preliminarily evaluating our strategy and putting ourselves in a position where the thought was, let's get a term loan. That's when -- swap it into fixed rates because we were like in the long term rate profile, ultimately pay down our revolver and kind of recapitalize the balance sheet in a more positive manner with a greater percentage of our interest rate locked in for long terms. And we were able to accomplish that and finalize it even as COVID-19 was developing. And the only thing that we've done really is to keep the cash, and we haven't paid down the revolver yet. But I would say that as we get more comfortable that the disruption in the financial markets are such that we do have access to liquidity. And to that revolver, I would suggest that we'd probably use our excess cash right now, pay down our excess debt. It wouldn't change our net debt profile, but that would be the first step we would take before considering any other uses of capital just because we want to make sure that we have access to cash. And it's becoming clear what the actions the Fed has been taking over the last month or 2 that certainly, they're being very firm in their desire to ensure that, that ability to have access to liquidity is there. We'll just continue to monitor and see how that plays out.

And Steve, as we think about the targets that you folks laid out at the Analyst Day, can you talk about what aspects of the business have evolved ahead of plan? And on the flip side, obviously, no one expected a pandemic at that time, but outside of coronavirus, are there any areas where you would like to have seen more progress relative to the plan?

Yes. I want to sort of recap that going into the first half of this year, and we've demonstrated it with our second quarter earnings, before COVID-19 hit, that we were having a great first 6 months and at or actually potentially above our target that we have set for the year. And that was as a result of most aspects of our 2 lines of business is doing very well. As we are now into a few months of this COVID-19 situation, the areas overall are actually doing very well while we are temporarily limited by physical distancing. When you look at our People & Places Solutions business and our Critical Mission Solutions business, the pipeline, it all starts with the pipeline of opportunities, which will then result in the growth that we want over the next 12 to 24 months, is at record highs. And there's been no material cancellations. The issues are the things that are moving to the right. When we talk about our Critical Mission Solutions pipeline of over $37 billion, about 1/3 of that are a handful of some major large enterprise nuclear contracts, but 2/3 of that record pipeline is really around some higher-margin, higher value opportunities that really are critical to the whole strategic growth of the company. And then on the People & Places Solutions side, similar story. We're sitting on a pipeline with higher margin, very strong overall pipeline. And so across the company, our infrastructure and Critical Missions Business are doing very well. Things like cybersecurity are outperforming even in this environment because of the area we're in. We expect Life Sciences to really have a very strong 2021 as that is temporarily down because Life Sciences, pharmaceutical companies are reconfiguring their supply chain, learning from COVID-19 and rethinking CapEx profile of maybe more localization rather than globalization. But that's going to trigger based on health care and everything else that's going to be a focus over the next few years as a significant opportunity for Jacobs. And so, generally, all of our infrastructure and technology sectors are doing well. The area that I would say that through the last 6 to 12 months maybe that we would say has been slower than we had hoped, was just a piece of the KeyW acquisition, which was around the low Earth orbit space intelligence business, which we always knew was a major long-term play for the company, but there was a timing question of the work that we're doing on these top secret initiatives for the clients, has been pushed to the right. Pushed to the right, not necessarily because of COVID-19, just more around the phasing of those programs. The good news is the pipeline of those opportunities are even bigger than when we bought KeyW. The rest of KeyW is doing very well around cybersecurity and mission IT, and we still believe that other part of it around space intelligence ISR is going to be a significant opportunity going forward as we get into '21 and '22. And so, overall, feeling really good about our resilient portfolio.

And Steve, can you talk about the challenge of moving around resources in PPS to focus on areas that are less impacted by COVID-19? Obviously, there's going to be an adjustment in Life Sciences that you mentioned on the call. You spoke a fair part sort of your Asia business. You're essentially going after other markets compared to the initial plan for this year. Can you just talk about the challenge of doing that as an organization? And how do you expect win rates to shake out as you reallocate resources to those markets? How should we think about that adjustment?

Yes. I think we've been fortunate that a few years ago, when we really focused on strategy, one of the big things that Bob Pragada, our Chief Operating Officer and Head of P&PS, focused on with his leadership team was creating this global integrated delivery structure that we've talked about a lot, that we believe is a differentiator, a competitive differentiator that allows us to tap into resources from around the world to the local project. And when we look at a lot of the major infrastructure work that we do, it's amazing, the diversity -- international diversity of our teams. And part of that we're able to do because just like we're operating today remotely, we have really increased the work out of India, out of Poland, out of a whole host of other offices around the world, where we either get some unique talent, lower cost, certain quality that we need. And as a result, that gives us flexibility to move our resources, not only globally to the projects, but even upskilling these resources to be flexible around working on aviation or other transportation, highway projects, et cetera. And during this COVID-19, we're actually taking advantage of this opportunity by putting in new tools that allow a more rapid opportunity when there is a shift in, okay, aviation is down, but this water project or environmental or health care project is ramping up, that we have the ability to move quickly and flexibly to get resources redeployed. There could be some weeks and months of temporary work that has to get going. But as you -- as we look at the overall pipeline and win rate factor, we believe that strengthens our ability to build a bigger, richer pipeline and continue to do extremely well on our win rate, which has been a success over the last couple of years.

And as we think about getting on track post-COVID, you guided to on the call organic growth headwinds for, obviously, COVID reasons in the back half of the year. When do you expect to return to positive organic growth across the portfolio? How do you expect all of these distancing issues to play out in your business as we exit '20?

Right. Look, as we exit '20, overall, as we said on our earnings call, we do expect growth in '21 move, that we will start to see in some particular areas as we are moving through the fourth quarter. But clearly, '20 versus '21 versus '20, we're expecting to see growth. The physical distancing situation has been a bigger issue actually on our Critical Mission Solutions business versus People & Places, partly based on what I just described around our global integrated delivery and a lot of work being able to be already set up to be worked remotely, where Critical Missions on these large enterprise contracts, Department of Defense, NASA, DOE and even some of the mission IT, although we're getting CARES Act support and client support and keeping our talent ready, mission ready, in many cases, that's just covering costs. And until we can get our client back to the site and us back on the site, the fee aspect won't start ramping up. Now the good news is that's already starting to happen. When I -- we've now gone through our first month, April in the second half, where we feel good about that month relative to the way we described the second half. We're seeing, every week, certain things happening, whether it's the automotive technology side or at some of these large enterprise government contracts where they're starting to get people back on site. And so we're going to -- we really see this sort of methodical ramp-up throughout the second half of the year, especially into the fourth quarter, around our Critical Mission Solutions around this physical distancing. And as we get into 2021, we will -- we expect physical distancing will continue -- could continue all through 2021. But it will be in an adapted approach, where we -- our customers and ourselves have figured out by the end of this fiscal year how to deal with that and be able to work on these sites and get back to environmental remediation, space exploration, the national security, mission IT. And we're starting to see that ramp already occurring in that Critical Mission Solutions side. I think People & Places Solutions, it's a different approach because rather than these huge, large enterprise contracts, it's -- we're spread out globally. It's part of the strength of that business, very diverse, cutting across a whole host of sectors. Areas like water continue to be strong because water is not only needed for security and health and day-to-day life. We are a major player. And we not only get into water expansion and things like that, we actually operate and maintain several thousand of our people water utilities across the globe. And so that area continues to be strong. But as we get into some of these specific projects around P&PS, I think we'll see a less sort of significant impact in the third quarter, although some -- and then a good modest recovery in the fourth quarter and then getting, as we said, both of these lines of business is demonstrating growth year-over-year '21 versus '20.

And Steve, can we just unpack the Critical Mission Solutions part of that discussion? So how many employees are unable to be on the job site that have to be on the job site for you to earn the fees at the peak of the pandemic? How many employees are we talking about directionally? And can you just talk about the cadence? To what extent are these areas receiving preferential treatment as states' ease of restrictions then allows, in some areas, industries to get back to work as we head into the back half of May?

Look, our Critical Mission Solutions, we actually have -- we have -- when I say that we've got to get back to the site, I sort of overexaggerated from a standpoint. A lot of these sites are essential, and we have some of our resources actually been through the entire COVID-19 working on the site. And we're working on the site. We're getting our fee, et cetera. But the physical distancing has limited what was the run rate of that business, as everyone had a halt, figure this out, send people home. And let's take mission IT, where we have people working in skiffs that are required for this top-secret cleared work. The skiffs have gone to a situation, because of physical distancing, where they're limiting the amount of people that can be in a skiff at one time. And it's kind of a rotation going on. And so some skiffs are operating at 50% rate right now. And the other 50% are mission-ready, waiting at home, getting covered under the CARES Act, but we're not getting our full fee. That is starting to -- even under skiffs, there's ways to work around it. We have skiffs. Our clients have skiffs. We're reconfiguring things, working it with our clients. We see that ramping up all the way to the large remediation sites in the U.K. and in the U.S., et cetera. We don't have a number to put on it. But I think the way I'd like to describe it, and this is things that I've been in direct contact with our clients, and we feel like we've got good transparency here. These are things that have to get done. They can only go so long to postpone work that has to get done around national security or environmental nuclear remediation. Space exploration. NASA, we're doing a great job getting people back on site. NASA has been very innovative and quick to start to think about how to ramp up around physical distancing. And part of the reason is NASA has to hit the 2000 space exploration Artemis program to 2024. That's a tough date. I mean, that can't be delayed because of the whole lunar cycle and everything else. You missed that date. You're talking about years of getting that program. And so there's actually been a lot of work around increasing the focus on that during this COVID-19, and which bodes well for us as this whole physical distancing starts to get worked out, and part of the reason why we're confident in a 2021 versus '20 growth.

Okay. And then can we expand the discussion on the KeyW acquisition? So you spoke about with a major program there being pushed out to the right. Can you just say more about the performance of the product relative to the Key specifications on what drove the pushout? And at the same time, I believe you folks made some progress on cross-selling parts of the KeyW technology and PPS. So I'm wondering if you could just update us on that and talk about how that part of the integration story is playing out.

Yes. So great question, Jerry. 3 things that quickly come to mind. KeyW has 3 legs. It has a cybersecurity leg. It has a mission IT leg, and then it has this ISR products, both ground and space ISR. Cybersecurity doing very well, put that together with our portfolio of Blue Canopy, where we have a new hire that is leading. For the first time, we've put all that under one leader, and we're off to a great start. And that's outperforming this year's target. The mission IT piece is well integrated with Jacobs' mission IT. It's creating opportunity, expanding opportunity. That's all going well. The space intelligence program, which we said was really the long-term upside for the company as we get into the next several years, there was one particular program that we thought was actually going to be the first one out of the box. And that's continuing to phase very well. We're doing extremely well on it. But for whatever reason, the client is taking longer, and we'll see if that one is going to play out more into 2021. But the pipeline has increased. We talked about the fact there were some follow-on projects around that program with different parts of the government. And one of them actually got accelerated, and we announced the win last month that -- around that whole space intelligence on another top-secret initiative. And that one is off and running, demonstrating that the pipeline has actually richer opportunities. So there's just really a timing of the first project we were working on, and that's really nothing to do with anything other than the pace of government moving forward to push the button on that. I want to go back, Jerry, just to recap some of what we talked about with all this resourcing piece with regard to critical missions and as well as P&PS. To make it kind of clear that our second half that Kevin talked about, the guidance and what we adjusted the guidance to do, was really all about the fact that rather than do what we would normally do in a temporary downturn of our business, and that is to rightsize, do across-the-board job cuts to -- our belief that this is temporary, that we'll get this physical distancing things solved, and that we made a strategic decision that we estimate to be about a $100 million impact in the second half of this year to retain our current talent capacity, to be able to pounce on the expected recovery, to differentiate ourselves versus a lot of our competition around that and to move forward with this uninterrupted, if you will, talent strategy as we get into 2021. And just want to make sure that, that message was clear.

And in terms of the move piece around that point, Steve, so let's say if we're starting out in fiscal '21, and we're, for whatever reason, not able to get the same number of people per job site on a sustained basis. Would you look to make the difficult decisions at that point? Can you talk about your patience level, if you will, as we await the ramp-up into fiscal '21 on the job sites?

Yes. Great question, Jerry. We're not going to be blindly positive about what I just talked about. We're obviously watching it closely. As I said, the good news is we had -- we got off to a good first month around our second half forecast and everything. So we're going to monitor it very closely every week, make sure that we're seeing the ramp-up that we're talking about. If we're wrong, and the reason we potentially would be wrong is if this COVID-19 thing just had a major reoccurrence, and rather than the opening of economy and recovering, that we have another big jolt later on this year, we'll have to adjust. We'll have to make the tough decisions. We've done it before. We know how to do it. We work quickly. We believe we've got a leadership team that can execute that. So we will do the right thing for the business and make those tough decisions, if necessary.

Okay. And then, Kevin, to shift gears, can we go back to the cash flow and the balance sheet discussion? I think you've spoken about wanting to have made progress on days sales outstanding in terms of the receivables than what we've seen. Can you just expand on that point? How much has that growth in unbilled receivables been driven by a particular part of the portfolio? Is it a mix issue? Is it a terms issue? And at which point should we think about DSOs potentially becoming a cash flow tailwind relative to net income?

Thanks for the question, Jerry. Look, I think there's a couple of things that are probably worthy of calling out. The first thing is that as part of our strategy and our transformation over the last several years, actually, we've changed the incentive structure. I think many investors already know that, but probably worth calling out and reinforcing, that our annual incentive structure does have targets associated with DSO. And so it affects our collector pocketbooks as it relates to how we perform on it. So it is something of import and a focus throughout the organization. So I want to make that comment. Second point is that I do believe, with the significant amount of transformation with the CH2M acquisition, the ECR, that we were doing a lot ultimately over the last couple of years. And I would say DSO is one of the areas where we are doubling down on our focus and ultimately trying to improve that. But we did probably not get as far along as we wanted relative to the performance. I make the comment about what DSO work is. It is pick-and-shovel work, and it's ultimately about driving every single day the efforts to ultimately improve upon it. As we think about our DSO at current levels, there's no differences in terms. There's no underlying dynamic of concern relative to what's going on from the business, underlying trends on the business. And I do think that there is some project mix relative to new revenue recognition standards and how -- when you do have some projects, you have to accrue for the revenue before you can actually bill it. And that's just through the new accounting standard, rev rec 606, accounting standards 606. But that's -- look, I don't want to say that, that is why and that's as an excuse. What we ultimately got to do is continue to drive our DSOs down. And I can assure you that it's a focus area that every time we have business reviews, people are really, really focused on it. As it relates to going forward, we think that, that is going to be a critical, not that we're going to crack, which will facilitate our ability to improve our cash flow conversion longer term. We've talked about as we approach the end of 2021, getting to that 1x conversion of net income, this is going to be a critical part of how we're going to be able to do that. So we're still focused on it and still believe that, as an organization, we have the opportunity to drive improvement. In the short term, I will say that in terms of our guidance for the second half, where we said we're going to have a strong second half of free cash flow, we said more than $400 million, we had an improvement in our cash flow in Q2. We talked about it positive in Q2. It did ultimately. And so we're now expecting that momentum to continue. And that assumes that we're not really going to make a heck of a lot of progress in DSOs, and we've just -- not that there's any underlying dynamic. We're just saying with COVID-19 out there, disruption in the supply chain of interacting with our customers, them being virtual and maybe working from home, there could be some slippage in the short term. But ultimately, that's temporary. We think that, hopefully, we won't see that. But in the guidance we provided, I just thought it was prudent to do so. So as we look to the second half, we expect that cash flow to be pretty strong, and then ultimately look for that to carry forward into 2021 and beyond.

Okay. And we've got a question here from the webcast. There are 2 questions here. I'll just put them together. What proportion of your revenue would you consider directly tied to state and local spending? And how do you think about the trends in that end market, given the funding headwinds? And the other question is, separately, what are you hearing from customers around on-shoring? Has the interest level picked up outside of Life Sciences, Steve, that you alluded to?

Steve, you want to take it? Or you want me to go first and you follow up?

Why don't you -- yes. Why don't you start on the revenue -- yes, start on the revenue comment, percent revenue, Kevin, and then I'll pick up from there.

Yes. Look, really, state and local is obviously oriented around our People & Places business. And I would say in the total -- the totality of that business, roughly 65% or thereabouts is government-related, and of that 65% of P&PS business. So that's just the PPS LOB. I would say of that 65%, it probably approaches 40% to 45% of that is state and local. So if you think about of the 65%, 45 percentage points of that 65% is 40 to 45 percentage points is state and local. And so as you look at the CMS side, really not a big chunk at all associated with state and local. So it really is a P&PS business. So slightly under half. 45% of P&PS is relative to the state and local. So Steve, over to you on comments relative to the future of that business.

Yes. So -- right. So I just -- clearly, state and local is important, right? And it's -- even outside of the U.S., most of the decisions, funding, et cetera, is coming from local governments, et cetera. It's important to first start to say that starting in the U.S., a majority -- a lot of the funding comes from federal funding mechanisms that feed into state and local. And that's why there's discussions around CARES Act 2 being focused on state, local and infrastructure, et cetera. But every city that we're dealing with, and, again, we're staying very close to this right here in Dallas, the mayor and the state, both in governor, mayor and other officials, are being proactive on not sitting waiting for CARES Act, et cetera, and have worked some significant funding mechanism. New York has just done a major bond initiative that was really positive over the last couple of weeks. So we expect that there will be support over the course of the next few months that will address state and local. We saw the Congress come out with something that we know will be initially rejected by the Senate, but we think it's going to lead to some discussion that will eventually create a CARES Act 2 around state and local, and then what's going to happen later this year around a long overdue -- forget COVID-19, there's a crisis in the U.S. around infrastructure that's been discussed for years to put a major federal stimulus bill to create jobs and solve the problems around the nation on infrastructure. Everything from water and transportation, et cetera, is going to be another area of opportunity. So we are continuing to win business today, state and locally around the world, including the U.S. We haven't seen anything get canceled, of anything material. But it there most likely going to need to be some support mechanism, and we think there's a good probability it's going to happen.

Okay. Good. Well, that's all the time that we have for our conversation. Steve, Kevin, thank you so much for joining us, nice chatting with you. Thanks, everyone.

Thank you.

Thanks, Jerry.