Robert Pragada: Yes. Mike, it’s a great question. So the short answer is yes. We are starting to see that margin increase according to the profile and the mix. And I’d probably index more towards the water market right now on the mix. Just to give you a statistic, year-on-year growth in our bookings in water have gone up 30%. The other kind of notable one is what we call cities and places, but it’s kind of our built environment business, it’s been really driven by the Middle East. That year-on-year has been about 40%. And what’s kind of positive about both of those — and I never thought that I’d say this before, but from a cash standpoint and a margin standpoint, we’re hitting company-wide type of margin targets in the Middle East, which is a positive. And then the water sector has traditionally been our higher-margin component of our business. So kind of 2 trends there.
Michael Dudas: Perfect. And what about for bookings and outlook as we move through 2024? Are those the areas you concentrated or are there other areas, given life science, [indiscernible] et cetera?
Robert Pragada: Yes. So moving forward, we’re starting to see some pretty exciting developments happening within the life sciences world. That — as we’ve talked about it before, it’s been red hot for several years. I’d say, the last couple of quarters, we’ve seen — it hasn’t declined, but it hasn’t been accelerating the way it was in the past. Just in the last 6 weeks, we’ve had some really deep conversations but these are Tier 1 clients we’ve had forever, that hopefully we’ll be reporting some really good news next quarter on those jobs. I did mention the Lilly job in Germany. That portfolio, specifically around GLP-1 has continued to be strong. Novo just announced the acquisition of Catalent. Those Catalent facilities are going to need to be retrofitted and we were already in the middle of Novo’s work.
So that’s a real positive too. So I’d look at life sciences getting back. And then the chip manufacturing world has been kind of at the — as our design work continued from an external semi market standpoint, we’re now on the upswing of a new cycle. And so we’re seeing more work around the tool OEM. So a lot of the R&D work in order to support these manufacturing facilities on higher-powered chips really driven by AI has been a nice early bookings. So kind of concept work that’s happening there.
Operator: We’ll move to our next question from Andrew Kaplowitz at Citigroup.
Andrew Kaplowitz: So Bob, just following up on Mike’s question. You mentioned water overall, the Middle East driving your overall People & Places business, which is great. But are there any areas that you are worried about on that side. You mentioned the U.K. for PA, but not really for People & Places. And your backlog was up nicely in the quarter. Does it just continue to sequentially rise from here?
Robert Pragada: Yes, I’d say the answer to the last part, Andy, is yes. And from a margin — from a P&L margin perspective, we feel comfortable that our year-on-year increase that I mentioned in the script, is real. And so year-on-year margin increased year-on-year. If there were areas where I’d say soft might be too strong, but if there are areas that we’ve got a high level of attention on, it is the U.K. We’ve been able to stay flat in the U.K., which is a positive. But we did have the national infrastructure and construction report just published here, I think it was Friday. And the U.K. government committing to the same level of spend, GBP 775 billion over the course of the next 10 years, with some consideration for inflation. So that’s an area that we’re continuing to put some attention on to make sure that we continue to grow, but overall positive.
Andrew Kaplowitz: That’s helpful. And then maybe just on divergent solutions. I know a piece of it is going to go with the RMT, but maybe a little more color on the inventory write-down. Divergence just as you know, like underlying margin is good, but it’s kind of been all over the place a little bit over the last several quarters. So what does Divergent look like as you go forward, let’s say, post RMT for Jacobs?
Robert Pragada: Yes. So let me just clarify one thing, Andy. The inventory write-down has to do with the Cyber & Intelligence business, and that actually is in the perimeter and will be going. And it’s really a part of the separation financials and inventory that we had to disposition. So that’s not in the piece that will continue with independent Jacobs. . We see more of it and we’re working on this operating model right now. Transportation, water and what we’re doing in the built environment around digital enablement, being a strong horizontal cross cutter through now the entirety of the business. So simplifying our reporting as well as taking all the successes that we had within the transportation and water digitization and digital enablement. And integrating them into now what will be independent Jacobs. And so much more to follow on that.
Operator: Next, we’ll move to Steven Fisher at UBS. .
Steven Fisher: Bob, you mentioned that you’re on track with the cost expectations you identified at the beginning of the year. So does that mean the $40 million of temporary costs and $275 million of restructuring are still the numbers to keep in mind. And if so, how much of that has been incurred to date? Is that the $17 million plus the $9 million? Or should the $40 million be lower now that you’re going to be getting reimbursed for some of that.
