Steven Fisher: Thanks. Good morning. I just wanted to come back to the regional growth for a second and just curious how you see the relative growth rates overall in the Americas versus international over the next several quarters. Curious, which should be growing faster? And what would drive that?
Troy Rudd: Yeah. Good morning, Steve. Well we are actually seeing a little bit more momentum in our Americas market in Canada and the U.S. Then we have seen outside the U.S., but again not to point out that we are seeing significant slowing. We’re actually just seeing more projects come to market because the finance available again across the Americas, Canada, and U.S. And again, you can see that in our contracted backlog. The other thing I’ll point out is that you said that our NSR, our DCS business in the Americas grew faster than international during the quarter. That also is helpful, because our margins are significantly higher in our Americas business in the U.S. And so as we see the opportunity to accelerate in North America we also think that again bodes well for the future of the profitability of the business.
Steven Fisher: Great. Just a cadence question. So 7% NSR growth in Q1, kind of 8% to 10% full year expectation. Can you just give us a sense of how the rest of the year’s cadence will play out? Do you think as soon as Q2 will start to be sort of towards the upper end of that range, or do you think sort of like, somewhere in that range, just the rest of the year?
Gaurav Kapoor: Yeah. Steve, this is Gaurav. In terms of the annual forecast that hasn’t changed. It’s 8% to 10% and we fully expect to be within that range. In terms of cadence and phasing in Q2, we expect, because there’s fewer number of workdays. So there’s just going to be a shift between Q2 and later quarters than what you — and us — we have historically experienced. And we can work with that with you offline if that’s okay.
Steven Fisher: Sure. Thanks very much.
Troy Rudd: Thank you.
Operator: Your next question comes from the line of Michael Dudas from Vertical Research. Please go ahead.
Michael Dudas: Good morning, Lara and gentlemen.
Lara Poloni: Good morning.
Gaurav Kapoor: Good morning.
Troy Rudd: Good morning.
Michael Dudas: Troy, thinking about public sector versus private, just maybe generally you maybe you can break it down from Americas International, but is the growth rates there surprising you one way or the other, and as you look at your 5% to 8% long-term net revenue growth organic expectations, it seems you be focusing more on public? And is that mix going to change a bit? And I guess on top of that on the CM business, are you being much more selective? Are you pulling back or are you like where is the cadence and the pace of what you’re doing in that market given the mix and importance of growth elsewhere out of the AECOM’s platform?
Troy Rudd: Mike, thank you. I’m going to share this with Lara. I’ll let her take the first part of your question, then and I’ll take the second part of your question on CM.
Michael Dudas: Thank you.
Lara Poloni: Yeah. Thanks, Michael. So we — in terms of that balance in our portfolio, it remains pretty constant. It’s about 60% public and 40% private. We see substantial opportunities in both sectors going forward in line with those ongoing secular trend. So a long-term infrastructure, very robust. A lot of wins in this first quarter for many of our public transportation clients. Some nice wins in terms of — with the resiliency and sustainability by — signaled by our great win when we see which rounds out the project lifecycle work that we are undertaking to them, water and environmental services. And then in terms of that outlook obviously strong opportunities ahead of us in terms of our market leadership with PFAS. But that’s a good example of where those opportunities are actually nicely balanced between public sector clients in for example in the defense space but private sector opportunities also in Aviation and the growing opportunities are going to come –it’s going to come up for private industrial clients.
But we know there are a lot of longer-term liabilities. So that gives you a couple of examples around how we have a pretty — looking at — have a pretty balanced portfolio going forward between public and private.
Troy Rudd: And with respect to CM, I’ll again, Gaurav covered a little bit of this, so I’ll just try and leave you with three, what I think are three important points. First is that, Construction Management those debookings were frankly immaterial to the profit that we had in backlog and it gives you a sense of the strength of DCS business and the strength of margins that reside in that business. Second is those debookings were frankly at our discretion. There were places where we had been awarded the work and the client wanted us to take on a different set of terms and conditions that we weren’t comfortable with. So it just gets to the point that we are not going to again chase work perhaps in a market that would be difficult and that’s sort of the commercial tolerability environment.
And the third thing is, we saw this through the conversations with our clients and through our pipeline a number of years ago that there was going to be a sort of a slowing in tall buildings. And so we made the decision to actually pivot the CM business and start to focus on other kinds of projects and build experiences for the future. And as Gaurav pointed out one-third of our business comes in — comes from aviation. If you go back five years ago we didn’t have that same expertise and so we are building experience and frankly world-class quals. So that team will be able to pivot to that market in the future where we see long-term opportunity. And so that’s been a focus with CM is, we think that, that business in the future. Well, we are making some good decisions as that business evolves.
But we see there being strength in the future and the business will just look different if you look forward five years.
Michael Dudas: Excellent. Thank you, Lara. Thank you, Troy.
Troy Rudd: Thanks.
Lara Poloni: Thanks.
Operator: Your next question comes from the line of Adam Thalhimer from Thompson Davis. Please go ahead.
Adam Thalhimer: Hey. Good morning, guys. Congrats on the strong start to fiscal ’24, nice Q1.
Troy Rudd: Thank you.
Adam Thalhimer: I also wanted to ask about the early stages of your project funnel. When you look at Stage 1 and 2 of your pipeline, are there any particular end-markets that are contributing to strength there?
Troy Rudd: Well, it’s sort of as we — as I described a little bit earlier, we are seeing strength across all of our end markets. So we think about as — is environment, energy, transportation, water, even our facilities, buildings and places for us and then across that it’s a combination of design work and program management advisory work. So again, I just see that strength across the entire pipeline in the early stages, but again as I said, there are some places where it’s not a perfect world. There are places where there is some slowness in the market, which we pointed out in the U.K. in transportation, and certainly in tall buildings here in North America where we’re exposed. But overall…
Adam Thalhimer: Okay. That’s my second question.
Troy Rudd: Yeah.
Adam Thalhimer: Okay, sorry. So the weakness that you’re seeing in U.S. tall buildings, do you think that will broaden into other sectors or do you think the vast majority of your end markets, will stay strong, while tall buildings goes through a downturn?
Troy Rudd: Well again, I think that if you look at the long-term trends are needs. And again this sort of goes back to the long-term trends around the need for improved infrastructure. The funding is available for it. Secondly is, there’s large investments, is this sort of as infrastructure is being transitioned and there funding for it as well. So you think about the long-term investment in building semiconductor chip capacity here in North America. So, those trends are changing. And then the other big trend which we are seeing a lot more activity is in energy transition. There is a long-term investment in energy transition that is taking place. And so we just — we don’t see that changing. And again when we look at, I’ll call it again our commercial office markets or mixed-use markets, that’s really in the private developer market.
And I think that’s very interest rate sensitive and that’s what’s driving that outcome. But the funding is the need and the funding across our other markets still remains lined up well. And again, I’d just make the point about that again, our kind of new commercial office market or commercial retail market that represents less than a few points of NSR for entire business and such that we are been actively transitioning away from that work to other — well-funded opportunities.
