Jacobs Solutions Inc.

After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Jonathan Evans, Vice President of Corporate Development, Investor Relations. Please go ahead.

Thank you. Good morning. Our earnings announcement was filed this morning, and we have posted a slide presentation on our website, which we'll reference during the call. Our 10-K will be filed later today. I would like to refer you to slide two of the presentation material for information about our forward-looking statements and non-GAAP financial measures. Turning to the agenda on slide three. Speaking on today's call will be Jacob's CEO, Bob Fregata, and CFO, Claudia Jaramillo. Bob will begin by providing an overview of recent activities then summarizing highlights from our fourth quarter results. Claudia will provide a more in-depth discussion of our financial metrics, as well as a review of our balance sheet and cash flow. Finally, Bob will provide details on our updated outlook, along with closing remarks, and then we'll open up the call for questions. With that, I'll turn it over to our CEO, Bob Fregata.

Thanks, Jonathan. Good day, everyone. Thank you for joining us to discuss our fourth quarter and fiscal year. 2023 business performance, and 2024 outlook. Our team has shown remarkable strength, adaptability, and dedication in continuing to deliver outstanding results to our clients. I am proud of our people for continuing to drive our culture of caring to new heights. Over the past couple of quarters, we have shared our intention to simplify our business model, optimize our cost structure, and accelerate profitable growth and margin expansion. Today marks a key turning point as we boldly move forward. I want to provide an update on our previously announced intent to separate the CMS business on slide four before I move on to our fourth quarter results. As we communicated following a robust evaluation of all opportunities, we are excited to announce the creation of a new leading government services player. Jacobs will be separating our industry-leading government services businesses Critical Mission Solutions and the Cyber Intelligence Unit of Divergent Solutions by the way of a spinoff to Jacobs shareholders and then combining those assets with Amentum through a merger which has been structured as a reverse Morris Trust. This combination is intended to be largely tax-free for Jacobs shareholders. Turning to slide five. The combination creates a combined government technology services leader with an approximately $13 billion in revenue and approximately $1.1 billion of combined adjusted EBITDA, including $50 to $70 million of net synergies expected to be realized by year two. Jacobs shareholders will own 51% and Jacobs will retain a stake equal to between 7.5% to 12% of the combined company based on achievement of operating profit targets prior to close. Jacobs will also receive a $1 billion cash dividend subject to customary adjustments, as well as an additional value through the disposition of our retained stake within 12 months of closing. As part of our continued separation efforts, we concluded it was best to include the majority of our Divergent Solutions business, including the Cyber Intelligence Unit, in the separation perimeter. Owing to the strategic synergies, shared costs, and operational overlap with CMS. We will retain the infrastructure-related software assets of Divergence Solutions, given their strong strategic fit with our critical infrastructure, advanced facilities, and PA consulting businesses. We believe this combination of two premium industry leaders who share strong operating platforms, high-performance cultures, and a breadth of expertise offers shareholders the best opportunity to realize long-term value. The combined business has the ability to drive significant innovation and growth with meaningful cost synergies, added scale, and diverse end-market exposure, and is supported by secular growth trends. After a comprehensive review of all inbound inquiries, we believe the transaction is in the best interest of the company and all stakeholders. The transaction has been unanimously approved by the Jacobs Board as well as the financial sponsors of amentum, and is not subject to any other shareholder approvals. The transaction is expected to close in the second half of fiscal year 2024, subject to customary closing conditions and regulatory approval. For more details regarding the structure of the deal, I invite you to review the materials we published earlier. Moving to slide six, which shows our multi-year transformational. As part of this strategic separation, which results in a more focused Jacobs, we are concurrently announcing a cost optimization plan to be executed over the next 24 months, during which time we will target over 300 basis points of margin expansion as compared to our as-reported fiscal year 2023 results, driving an expected adjusted EBITDA margin of at least 13.8% in fiscal year 2025 for pro forma Jacobs. Claudia will share more details in her prepared remarks. Post-transaction, Jacobs will be a well-capitalized, pure-play, critical infrastructure and sustainability leader with a strong balance sheet and significant growth potential. Fiscal 2023 marked records for revenue and free cash flow generation for Jacobs, and we look forward to 2024 as we begin to chart our path forward as two leading independent companies. Turning to slide 7 and Q4. I'm pleased to report another record quarter as measured by both revenue and operating profits. I would like to once again reiterate that this growth is entirely organic. Strong cash conversion remains a hallmark of our business model and remain robust in Q4, allowing us to drive record fiscal year 2023 free cash flow in order to return capital to shareholders while investing behind our growth accelerators, climate response, data solutions, and consulting and advisories. We recorded 104% underlying free cash flow conversion to adjusted net income in FY 2023 on a record year of $837 million in free cash flow generation. We expect to generate greater than 100% underlying free cash flow conversion again in FY 2024 before the impact of restructuring transaction separation costs. Our underlying business and outlook remains very healthy. and we continue to be excited about robust growth opportunities in all our end markets. Turning to slide eight, our people and places line of business delivered accelerating top line growth with adjusted net revenue up 11% year over year and adjusted operating profit up 12% year over year. Cloudy will provide further details on the significant growth we're experiencing in our global business unit. We continue to see widespread positive indicators with a gross profit and backlog growth of 8% year over year. Once again, our pipeline continues to grow faster than our top line, which provides visibility and confidence in our expectations that growth can persist at mid to high single digits organically in FY24. Looking back at FY23, I want to highlight the significant achievements of our PMPS business with double-digit organic OP growth in every quarter. Water continues to be a pillar of our business. the top 30 wins in the quarter nine were in the water sector of those wins we wanted to highlight two that showcase our digital and data capabilities firstly at the city of farmington new mexico wastewater and surface water treatment plant our data enabled data enabled product aqua dna is a key part of the solution to provide resiliency efforts and improve energy efficiency secondly For Boston Water and Sewer Commission, we are leveraging our AI model that analyzes assets that are most likely to fail, helping our clients create data-driven maintenance and replacement plants. In the energy transition space, Jacobs has been selected as the program manager for the ThyssenKrupp $2.5 billion effort to decarbonize its steel mill in Dewsburg, Germany, with a new green hydrogen-powered plant. The site is Europe's largest steel mill, and the effort represents one of the largest industrial decarbonization projects worldwide. It is also a testament to the diversity of our expertise. In transportation, our largest market, we continue to see broad-based momentum from IIJA-related funding. Overall, IIJA-related pipeline has increased approximately 20% year over year. In Q4, we were selected to lead and manage the 10-year renovation of the Seattle-Tacoma International Airport's international terminal, emphasizing upgrades to enhance mobility and energy efficiency to position Seattle as a global tourism and business hub. Internationally, we continue to see high levels of activity in the Middle East. For example, in climate response, we are providing program management services to the Saudi Arabia National Center for Environmental Compliance. The work forms part of their ongoing environmental remediation program to repair damage to terrestrial and coastal environments. Our environmental expertise is truly global, and we continue to see a robust opportunity set related to our clients' climate-related challenges. In CMS, we performed very well in Q4 to cap off a great year. CMS Q4 revenue was 7% higher year over year, and operating profit increased 26%. behind 128 bits of margin expansion. Its pipeline and growth outlook remain robust with major award prospects in FY 2024 and minimal forecasted re-compete pursuits. CMS was awarded a new project management resources framework contract with EDF Nuclear Generation, licensee of eight nuclear power stations, which account for approximately 16% of the UK's electricity output. PA Consulting continues to pose strong results with 13% revenue growth and nearly 21% operating profit margins, despite a very challenging macro environment. While we remain cognizant of the weakness that some consulting peers are seeing, we continue to be pleased with strong operational performance delivered by the PA team. Utilization has improved, and during Q4, PA announced the appointment of Christian Norris as its new CEO. Christian formerly led PA's Life Sciences Unit, is a respected leader, both internally and externally, and has creative ideas to take the Jacobs partnership with PA to new heights. For example, the power of our relationship is driving further opportunities as evidenced in our recent award to the Copenhagen Metro Fairmark. Together with PA, we are bringing our enterprise digital tools, AI solutions, and deep knowledge of the rail sector to support the Copenhagen Metro as it continues to deliver modern, future-ready infrastructure to meet the city's fast-growing population and urban travel demand. Our Divergent Solutions operating unit delivered a strong quarter with 3% adjusted net revenue growth and 58% year-over-year growth in operating profits. In Divergent, we are a leader in space innovation with the introduction of Mango 2, a revolutionary radio frequency signal detection system that utilizes cutting-edge AI and machine learning analytics, emphasizing affordability. An example of the leading IP portfolio that reinforces independent CMS as a formidable player in the space arena. Turning to slide nine. In summary, we are extremely well positioned for growth across all the sectors we serve, building off our established leadership position and proven track record of operational excellence. We are excited to turn the page on this next chapter in Jacobs' history where we will be creating two leading independent companies. Look at slide 10. Independent Jacobs is a leader in the majority of sectors in which we operate and a global leader in the overall industry. With today's announcement, we are enthusiastic about the opportunity to further simplify our business structure, optimize our cost base, and accelerate growth and margin improvement in the quarters and years ahead. Now I'll turn the call over to Claudia to review our financial results in further detail.