KBR - Earnings call transcript Q3 2017

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Operator

Good day and welcome to KBR's Third Quarter 2017 Earnings Conference Call. This call is being recorded.

As a reminder, your lines will be in a listen-only mode for the duration of the call. There will be a question-and-answer session immediately following prepared remarks.

You will receive instructions at that time.

introductions, Nelson like Rowe. and call turn remarks to over opening I to would the For Please ahead, go sir.

Nelson E. Rowe

results. Good morning, KBR's financial discuss us today and thank you third for quarter joining to XXXX

Stuart refer earnings Joining financial results, Bradie, Please of us of and the and Executive Officer. operational Chief Sopp, expectations market that remainder is President Mark call XXXX. kbr.com. will Stuart on will and KBR; President Chief Mark for Executive presentation today's the and to on the Officer and Financial and website our Vice outlook Investors be discuss KBR's of section posted in

days Following remarks, release announcing kbr.com. third prepared replay website. Today's and be A quarter your questions. KBR's a quarter the third on results also call seven is will will be their KBR's Form at will being available on XX-Q webcast we press also available and take for website

current turn audience These differ future results impact on like earnings quarter risks their our cause to financial risks the views results about from impact Stuart, events Before reports for the third actual discussions XX-Q over These XX, Form and uncertainties that forward-looking and our Form statements, press and September statement. are to KBR's involve operations would forward-looking XXXX performance. on today's include KBR's and that potential I call reflecting we the in matters and third discussed remind significantly could quarter release, ending period to may X-K.

our at documents on these all find website can You kbr.com.

the to turn over will I call Now, Stuart.

Stuart J. B. Bradie

thank you, and for Nelson. us. Good joining you, morning Thank all,

our important, at is company business, slide a moment. the zero are looking recordable self to bit simply, performance. not incident and achieved an little good But at on X on is I our harm our our higher & including Consulting. pleased E&C, A XXXX again Directionally for KBRwyle; OpEx-facing are business, solid highlights. slide Government Executing with on right winning together a strategic portfolio X, cash wins the and led the Services businesses and Strong is our and is that Astros a quarter. project, a we're days rate to and both an will business, risk become was and are enough, for with predictable clean as Texan has global discipline few more core better I've industry-leading both operations, pleasing. we on report tell, small zero the quarter work guidance given to across more commitment takes that strategic can I'm which strong areas, earnings update around third of harm people reducing a cash total safety and with and by in KBR's fairly quarter vision raising year the begin is project how the strategy, highlighted. full growth onto focus performing and and level. safety also us on one's bookings, later. and our good those KBR performance; which Technology us. our Quite commercial that achieve on for execution, priority Together KBR sites after margin culture projects delivered profile; wins on day. You mix every the

plus secured We our of Diego operations for eight, were these five-year Garcia respectfully. contracts our XXXX. contract, the protests operations both contracts, re-compete in Bahrain period, favor in final base major Djibouti base eight-year the KBRwyle, For projects and resolved

is continues from our a maintenance secured Internationally, business to and performing and space KBRwiley a solutions contract. vertical contract security grow. niche FAA NASA's on secured UK seat Our and REMIS the well

was of E&C, Wiley I on of development Australia. HTSI through more Sigma will the JVGAS Defense, who to BP's expected originally built is In with the of detail, to anniversary Consulting ongoing ammonia contract in This an KBR. our the were the facility highly and In pre-FEED in Mauritania a the contract work developments, of differentiated and strategy, for we our is an conjunction the into Senegal. and gas will for acquisition with by awarded pulled strategic Sigma in Granherne, the Mark, also revamp JVGAS's will Russia, grow on we through announced in Technology, Bravo cash the see in QX work Ministry results you four-year including work classified for through expectation acquisitions. following E&C actually Algeria. awarded our arena in business, KBRwiley XXXX. we handover addition, what take of we Bravo EPCM position guidance. Australian In in now by and major takes this

Mark W. Sopp

Great. I'll X Thanks, start of Stuart. the earnings presentation. on slide

clean on in the in factors Wyle good and bit. As growth administrative transaction for favorable plan and year's expenses included continued expenses this at be last which growth to of in a attendant net adjusted above healthy the EPS performance in & with and continued quarter, XXXX prior with which continued upping Stuart a basis XXXX and some adjustments led perform as project impressive we've little guidance levels Technology to again. the with, year performance, or $X.XX EPS some to margins. drove above on contributed Government our was well this margins and and HTSI our E&C, acquisitions. large associated sequential for General project highlighted QX for charges. in Services, normative year More forming Consulting, included These the and

an of as due we had project expected the losses in rate QX to XXXX last benefit income year. tax Our QX in effective XX% to compared tax was

And was $X.XX, is finally, EPS plan basis was $X.XX the flow $XX was operating and QX. with out As for said, GAAP the track I on we've year. year-over-year adjusted for million set cash of improved

off words, of that higher we nearing flow a inception in As we received net project cash outflows been prior years. this at In year burning impacted proportion have projects other by explained, operating associated has now are capital working advances completion. with adversely we

Consulting just winning bid X% wins contract in will Military, in provider into earnings On profit all strength area training so this We and overseas-based but drove of visibility provide consulting HTSI X, QX joint catalyst have ahead. year. for this the & equity earnings in to in winning operations, year above ramp-up due Gross new support far existing to be and and page for also from happened should margins and this Government choice sequentially significant growth particularly year-over-year in logistics primarily to aided year. XX%. see acquisition, of have expect this venture. contracts. to we few about our end experiencing our by grew significant last the continued These margin the where sequentially revenue of school on Technology under become U.S. but re-compete plus particular growth year, more capturing Kingdom a at licensing, the mission foundation grow growth digging QX, sales, in and Services for with which which it military wins, and in We've a QX, segments. seen Affinity to year-over-year quarter new the years we everything fiscal and flight also the United mostly the of support resolved equity in was strong the

have completion, We we of for from on E&C, execution predict. had services remain the pipeline which quarter. nearing of E&C developed. the we've optimistic difficult remains small number recently a the contributed to margins opportunities X% wins, will announced, projects For that come larger had as to project and strong of eventually Timing

no out our of as that's in As able project some we cash enter our recorded closing project, and some major changes last of here and Over associated QX. into out remaining profit close stages costs the we Business in to with this to respect QX in X. segment, to With the Non-strategic slide final well. reduce power were debt,

was a improved $XXX With EPS position with and a to X. to with upping for favorable now. $X.XX modestly net to we the million to cash to range go, EBITDA of On to position guidance the slide of experienced to we respect million. guidance range cash debt adjusted $XXX are QX upping flows and same a remain gross guidance, $X.XX Our

operating $XXX million. million On keeping to are to X. $XXX We slide flow at cash

little what on expect color Here's more to QX. bit in a

market project studies seeing projects the come. stage to and be life to for services backdrop, is predict and projects, T&C consulting leading in conditions indicator a we continue to for As EPC favorable are E&C. early projects Consulting & And Government E&C a for and the Technology remains early-stage cycle hard large Services, increased favorable large timing while

This For lower Services to number expect revenues normative holidays trend a businesses. Government sequentially, downtick primarily Government Services, productive due days of for QX. to is a we in from

sequentially in IV LogCAP impact under order have task short modest QX so a well. a to negative completed also We QX, that'll as

the result. sequential of growth. same, more this in And fourth and impact And continued quarter for year's due given do ongoing project revenue Consulting, wins declines ramp-downs. to not we & the to sequential expect E&C, are where year-over-year we new year, any in Technology the we For see fiscal revenue

issue flow, to guided we E&C XXXX. QX all for timing items year. range benefited net For at guidance QX, XXXX we level in we've $XXX in operating February while forward cash from million higher that the release $XX we some segment, stage year and wind the of the this in the performance as late finishing projects the at we'll looks to million setting The down team in in outflows expect and QX time. as momentum We'll

Stuart. Now, back to

Stuart J. B. Bradie

a backlog. growth At Consulting, and you, realizing KBRwyle, the On to our really global our margins. to Thank Overall, QX on customers, synergies continued with summary. leads It's and segment the & is well. our quarter in strong expect with XX, slide government In executing Technology prospect us group further simply level, level, strategy. pipeline growing at beyond and working in Mark. clean performing

E&C good saw is to, predictable in QX, project our is And itself, leading E&C delivering with an to more As number projects, smaller results. alluded indicator together Mark future which project and opportunities. Consulting increasing OpEx-facing a increased execution, business of good activity

the Our allowed opportunities QX we of XXXX. I in late momentum downstream you. also and in offshore will We're move the to the move early currently believe for operator, prospect pipeline us has and we level Overall, arena will into up that of greater East market a backlog now questions. with to earnings the Middle remains the raise strategic attractive have Thank the number consistency predictability back in again will open engaged hand we and forward and in as in who U.S. in guidance. call XXXX. high our a

Operator

you. Thank

will first go KeyBanc Capital Markets. We with Tahira to Afzal

Tahira Afzal

a quarter. Congrats folks. Hi, on great

Stuart J. B. Bradie

Thank you, Tahira.

Tahira Afzal

back get seems Investor Day, about guys to like and biases you on. numbers Services, later your some first end your XXXX I guess to a for guidance sense of detailed be for to to Government are question, to think headline But, upper you've out instance, I would know out you introduce giving in align. going I as love be did out It sense a laid what for the XXXX. closer turning where is in

would on numbers So, shaping up how any be qualitatively things headline helpful. versus thoughts those are

Stuart J. B. Bradie

not Good XXXX. unexpected, lots question, of about questions sure and there'll Tahira. I'm be

worked that, that Let this as picking of XXXX. we And that. and were projects profile our up, on sort I of because me about of Investor sort was way it about EPS you through thinking was still mean, lot we're way loss-making if we revenues execution first keep Day, that around E&C good of like debate us, a and an the of off for going And and feeds our that the and feel to through given sort the working forecast. pipeline, start prospect sort into quite XXXX, spend market gave things our in flat year. its forecast bump remember, really

to So, get the that's there. first probably thing out

is In things terms profit particularly because and around grow really lot us, for that recurring margins quarter-on-quarter gross which exciting to the really, continues there's like revenue of that. catalysts a and and the Technology, line, and of

many trend last I So, you're we've that's that seasonal, is years have I of we terms the we many, and prospects quite seen in won expect work But as that mean, in GS, as said we billion of I in good fact. think are that business And to quarter grow. over in the $X to right, continue continuing. for quarter.

of do quarter. I we're the the the at are aiming tend spectrum. in directionally, I end opportunity correct, that think to think got the to you we've such government – third budgets But you're growth achieve higher that well

Tahira Afzal

But, on some a you the over Africa five And FPSO about lot would article helpful. notably work might know year. whether Very bit a bit today, a talked on months, on confident you than that cetera. West about like more LNG, to that's in on there And last bidding you how it I as Good. on you market get I feel a love offshore. and up that guess follow-up, be maybe look on et thoughts people your was have even petrochem. side. more you seems LNG maybe as guys the for out picked four, the RFPs offshore focus I an next and into And incrementally

Stuart J. B. Bradie

phases. that that overall, arena. offshore think we've We been Sverdrup ago considered won positioned and dollars work, and is sometime successful. that's next that's I I moving market well challenged, talked the for in And into Johan we're our now and where very quite still think pointed been our the we and But effort. bid that about

there. there So, opportunities are

go are seeing. Africa be mean, continue are coming to Trinidad guess, question for in and this coal above of and about, and guess we quite alternative alternatives, going around known, you've of really talking the is big scenario I – still still well. opportunity quarter, as $XX, into all It really on trying think that. culminates as pressures, we're does what that, means And itself, all to really on I'm considerate, guess, attractive oil opportunities cetera. of well what think $XX I and guess, a to looking really up picked of, really, where that, work Russian a for mean? is like in we're comes And for the America and I security natural I all with sure West a China But, because in continues BP crash all really with which think issue well Our press, companies Europe XXXX looking zoning that that on, and people bit I places replace Europe et Exxon and Azerbaijan supply great coal developments. demand it North all environmental and cross. The sort I like gas to it those I in going supply-demand I of very think in expectation, I is others that's with sort LNG sensible for long mark,

Tahira Afzal

Right.

Stuart J. B. Bradie

see XXXX And some FIDs start into guess movement walk I back, if early you expectation our in LNG you'll through that is that and to XXXX.

Tahira Afzal

folks. a lot, And Very helpful. Thanks congrats again.

Stuart J. B. Bradie

Thank you.

Operator

Cook Jamie Credit to next Suisse. go we'll And with

Jamie L. Cook

guess. Hi. Nice quarter. Good morning. I questions, Two

quarter, like of last went Mark, I the Stuart change unapproved First, quite materially. fairly orders quarter got or again they a attention. bit mean, looks this it up

on how given to provide So, we the Stuart, trending (XX:XX) more you a if that? much resolution you how of quarters depending core and I else couple that a technology you could not over And do strategically about on of greater we're about if question, business, value wanted CEI's my term make should interest was Thanks. business or think think to that depending guess, gets, strategic longer will business, it's that about create color, next the concerned it you hearing that second on you or are multiple how potential on level, whether whatever that shareholder be or how you, rethink your over the it? you could Technology someone CBI

Mark W. Sopp

to to as change orders but it, for, of discuss almost orders, through footnote. entirely related Jamie. unapproved received their they activity have reserved the in they finalized those. projects. the And for – the cost subcontractors Hi, job, in be before in rights and and/or or have that part in most the Yeah, the they And is have the under have we sense. funding because negotiations change clients unapproved to status, The later order disclosed those orders footnote those that in an additional submitted the work our we, funded It's change customary remain approved reimbursable is uptick relative requested as of has we Mark. where relative say to are continues to

honestly XXXX. in where might until in in recent concludes we've And completion expect we really as the mid-XXXX in to of of timeframe reach so, we down we'll project But, occur. quite the tamper same it's to more that couple increase next expect see more seen that the quarters And that quarters. we

Jamie L. Cook

know a of mean, mid-XXXX, I to surprised, your quarters relative just is. big. is your level? to see this company mean, there Okay. what next we I'm the I to what is at just amount order couple expectation the maximum mean, change unapproved total I level over through get could

Stuart J. B. Bradie

the way what the that, associated actually, think, It's our I with difficult the as with we Australia – is the their finish the mechanism main, at ongoing the are having number the finalizing take negotiate works not the day, of it. is, trains. end oversight Jamie, costs, change they're And their in part with and in clients the would terms of because in still to say of overall on closeout it's we work to reimbursable this of unapproved costs. around numbers, approval all the this but and a that, the put the order, costs sort I these rights subcontracted into accounts of

don't things. reimbursable the fully is think is funded second in and really being important the the the loan by that into I is, the two ... this So, subcontractors, essentially thing go have customer. One a I

Jamie L. Cook

Okay. I'm sorry.

Stuart J. B. Bradie

Yeah.

As of next second the and (XX:XX) the year, I same this of first sort it's conclusion, Mark said, the access the publicly more job of at to in year. driving train think of is train end middle

go start as itself we resolve So, to it will forward.

Jamie L. Cook

then, And the business? Technology Okay.

Stuart J. B. Bradie

having that CB&I main business. I I to Yeah. is. the of sell their situation to day, think in it. don't as being at because And and driver that's Good having the by there They the on as is spurred I see sell, they value end guess, is of business And current again, question. want a huge sell this understand unfortunate technology. the to their

opportunities sector. the E&C So, into in leading

very think of we've Consulting Granherne is that well, of sort in for us key allowing & and what his work of there cetera. to et Mark we course, sort got as doing we're said Consulting that and stuff part in sort I all go alluded is and really BP And do, through doing and It's we've along. Technology to of remarks. a of our

you we'll column if going in strategic settlement. do think of differentiated post them less make like, it's And forward. sort I So, the house, been have a that the CB&I key

Jamie L. Cook

Okay. in get back Thanks. I'll queue.

Operator

We'll question Thielman take our with next Davidson. from Brent D.A.

Brent Edward Thielman

morning. quarter. Hi. Thanks. Great Good

Stuart J. B. Bradie

Thank you.

Brent Edward Thielman

Stuart, you the talked business. before about developing T&C in good activity

Now, just markets want you're leverage want to China. to curious, that opportunities the mean, geographies are you and I in I mean, seeing would E&C developing participate? healthy be know business I in don't and

Stuart J. B. Bradie

it markets – to Yeah. itself, group I And good into front-end more And designs which there wouldn't it we could is and we designs question. way we're consulting to Technology of but take I look where them also a happy a to is EPC of management are construction, than or do mean, fill global markets think and project sum the Consulting in a in pre-FEEDs it's where opportunities for business, that in and at sort us do would. lump terms assignments. we means and detailed

to there's think no and white question. So, I that black answer

to compelled E&C our would But capability T&C? yes. the allows that answer so? we think you both want The in like on no. it selective you But, opportunities good is be right, places are from take. do The I is their where we but risk profile businesses it own does in leverage to answer to are what that to businesses there is are

Brent Edward Thielman

in and And M&A still you're looking thoughts Okay. areas in guess, in or any comments on Government? at I focused T&C interested or

Stuart J. B. Bradie

Yeah.

Bravo high-end, look to Government opportunities did consistent CIS. we're the the differentiating mean, in quarter, chain, we'll food we in think pretty that and Services I I upped in the Sigma continue for arena.

business we've couple than justify year other Technology are that talked opportunities that the if have is globally. polycarbonate market. before more place in about arena the maintenance in piece. And deal that earlier certainly, We the did successful, of in a continually looking We the our and we we'll are positioning this

well, to earnings well. and Breton line is momentum overseas our Ridge positioning positive and to results we maintenance JV equity contributing gaining Our forward go growing and as as continues do the us and

– we So, want And I all type predictable said good profile. businesses, of think three those conversion really core are all them cash we along fit with fit what they and longer areas. that is three the our term, cash

Brent Edward Thielman

Okay. Great. you. Thank

Operator

we'll And with next go to Ruttenbur Drexel Hamilton. Brian

Brian Ruttenbur

then a Yes. One Thank or tough and you much. very two question. housekeeping

down good previous million am D&A number first forward, the $XX housekeeping. going million. I the Is $XX D&A. or $XX you're think going million of forward So, quarter believe I was I missing something? to

Mark W. Sopp

an clean XX% a target annual to XX% It's number on basis. I forward. going

Nelson E. Rowe

acquisitions And backlog, of off Brian, year. that's the the in one

Brian Ruttenbur

I'm sorry. you Can backlog? about repeat something

Nelson E. Rowe

that's Brian. purchase for Hi, running That's for – This off the Nelson. the the the is backlog backlog accounting. acquisitions, the

that write-off. So,

So, now a million be you that the good number going have $XX should forward.

Brian Ruttenbur

Okay. Great.

acquisition. it on is in terms small was the this Sigma talk Can Was question Next adds significant revenue? or you of that add-on? just Bravo about what a

Stuart J. B. Bradie

the disclosures. It's the And – of got I million in But I more bolt-on. is, Austrian around where Defense. it's arena that strategically, Ministry was it's important what's in $XX acquisition about takes the think prices. a us for far it classified value we've The in mean,

the IT as well. So, arena it's in

Defense what Ministry got a allowed into – that and so, the we've going to area Australia of us synergize of different which completely there takes forward. in us And and take

than So, strategic it's the scale. more about direction

Brian Ruttenbur

And some of the Okay. harder then, questions.

of Services bookings. for forward average, to that going Government item, Can of you about, you those or business gross Are specific talk mix a talk whatever In to below of the... of terms kind either average? within profitability on trying line they the to traction, above of moving want operating lot margins gross or understand Services, the average, lot a about Government Just of getting you're bookings? be

Stuart J. B. Bradie

good a mean, I Yeah. question. that's

efficiencies at of and you have And depends it the executing. individual you dynamic type sort annual base in on better is like things that actually each operations get through work time booking. think better as sort you deals think fixed I of – can I in long-term price

So, do the better. you margins, through time, should

nature, you're so, Does mean, margin that average, I reimbursable think in more and pretty good within the into. the I about think – guidance. just because our that's the we're guidance, I is bidding that overall, it's market profile that's feeling –

Brian Ruttenbur

Okay.

should that? of right read overall the margins kind on better. So, stable Services moving we forward that have Government or Is

Stuart J. B. Bradie

provide few Well, the and XXXX is our the science for targeted, generally above in average. a space parts we've But moving months. we lower of guidance we'll nicely. that business both be logistics speaking, portfolio of which and well above tends be and engineering before as had than is the categories set The doing along can and slightly all growing averages and considering those out targets and to the international business very the to

as And the forth, shape so, we term. portfolio with longer for taking the provided the we Investor feel at back Day the good again, numbers set we and is

Operator

And with Norfleet next Global we'll Rob Advisors. Alembic to go

Robert F. Norfleet

Good morning, guys.

some in as programs the specific just of quickly coming up bidding us markets large Government of there you're XXXX, the serve. Just maybe terms on XXXX? business, through And to walk you that end it that kind any in are relates in different significant rebids

Stuart J. B. Bradie

army rather contracts. to I is which way looking is put LogCAP of into looking mean, of that V, we're significantly. configuration unsurprisingly. at is individual that than The structuring that IV sort that major regions the the around moves at changes rebid But LogCAP it to the

So, for the be for be there there for contractor example, will Africa, Middle cetera. East, a a will et contractor

Europe a that Central quite to business, particularly as have good goes us we Middle of therefore really and would and that and years. it it forward, where like is affords and a feel opportunity number the prevail well, that lock that it places that as to expand quite East in opportunity I would for that And we're relates think performing significant. the So,

about very So, XXXX. the excited that. That's probably re-compete in have we we're feeling largest

Mark W. Sopp

largest. the Clearly

a We have pre-positioned or stock .... bid

Stuart J. B. Bradie

Yes.

Mark W. Sopp

for ...a through; re-compete well. coming as XXXX that's scheduled

as that's to top another amongst contracts, LogCAP one not IV so, big V. as LogCAP our And

largest. mentioned, Stuart by that's As far the

Stuart J. B. Bradie

of we've have upside other as for on. a in competitive for we And in side. NASA us, with We us. call bids of said, of opportunities significant have environment. because bids got opportunity I significant that in the specific some logistics And in significant continual front terms bids pre-positioned the with going significant Mark – terms could to just tend really out think themselves a not NASA, But, the bids stock, of

systems business talked very pretty is the where contract Our we that's this headquartered, We with away this everyone niche had about about security Charleston, doing feeling we're board little that. that a positive. at down and good FAA quarter, And well business, came quarter, and bit in a earlier growing. and very looking

seeing and I to continues So, guess but around. lot differentiated they we're well. of position think as do opportunities all three that The internationally getting business also UK across verticals, unique is as I well integrator opportunities facilities a interest where we're sit a a

and XXXX KBR, that of done feeling in we're going together opportunity. Wiley, the into will that, out in we've of all to buoyant the think I think a more get greater and I internals look lot think I about HTSI quite So, opportunities provide the front opportunity effort us sorted of and to coming externally Government the even Services,

about business. So we're feeling quite that good

Robert F. Norfleet

a Great. of in work lot E&C. not price EPC currently there's just fixed helpful. you. And Thank quickly portfolio. the Obviously, on That's

in as kind at XXXX? a work some that of feel EPC. get bid higher see boost price pretty possibly price how you work from of transfer the will look in cost fixed bit comfortable If we've margin, booked fixed that next margin should the the reimbursable, if And the working price breakout margin, we price potentially meaning does obviously it pipeline of projects of obviously you little of that the year, fixed work in should again, is away get more EPC because roughly gotten terms of versus what's FID kind fixed

Stuart J. B. Bradie

that moment the and is the at a but we're fixed that mean, But mean, not greater is end have better particularly little better of just a tends services bit less at because margins is what would price little less. I risk the I I'm say – associated the volume to arena if the doing the the I than bit actually typically sure job. margin, are

the terms rest specific do, versus of price we're of EPC, In what I that. quite ratio mean, the we about the fixed

bit a historically, are target after of and feeling we in differentiated that And logic if front that that typically go opportunity, set opportunities long a good opportunity we execution. the follow are project, if you in I wasn't space. your are with further ratio. really better. the space, we about We disciplined as in are and associated think little The aspects the bids And can risks buy. as manage if to are we don't a want is margins we it us about that five yes, of more answer track, we're really be approaching a commercial differentiated then down a you then the and

there's If you're more less commercially considered, then volatility.

Robert F. Norfleet

Thanks, guys. then, quarter. good on a congrats And Great.

Stuart J. B. Bradie

Thank much. you very

Mark W. Sopp

Rob. Thanks,

Operator

We'll to Dillard Bank. go with next Deutsche Chad

Chad Dillard

everyone. Hi. Good morning,

Stuart J. B. Bradie

Hi, Chad.

Chad Dillard

So, pretty about last seems the quarter. guidance $X.XX, to for $X.XX and earnings that XQ wide suggest it the implied range being

just swing that So, the to get to end range I your that big conservative? get low of is on factors view too of And was range? some the what curious are into you the either

Stuart J. B. Bradie

ahead. Go

Mark W. Sopp

things business, that the and In into guidance policy, tried this fourth as we've overall, our of come to I expect there of and a be So, that in year, to run is were outlook a reflects we through to picture. couple same current responsible view. quarter, course articulate think our forecasting the the to conservative

government attribute earlier. We setting to always guidance seasonality some of for I have account you'll unknown do it or that of when degree some First, that. you're mentioned

is indicative is And the comes with forward, but we lower that a that'll business of EPS so, EPS, but in in And associated that'll cost seasonal charge forward. that, be just going cents nature. fourth going to of That and there the not facilities our structure the that business. is the expecting few better are of position trend profit modest a and some quarter

other of in expecting some mentioned conservatism baked the we profit before, On things, side that we're that those seasonality at ongoing targets that rates we've our and again, and normality of in. our general

mode our continue trying this of the solid that's we positive. twice just upped we're think So, and We've guidance providing very year to performance.

Stuart J. B. Bradie

Nice.

Chad Dillard

That's helpful.

Stuart J. B. Bradie

concerned. It I'm guidance. okay that in to but add tenure other comment only the as as to to in happens better than this. to be And we what we two that's want increased And is then second just making that we the Mark sure skis want think quarters time is, said, put only good. to I that, this is if far as row, get a I'd of forward the ahead in all my our do be that We we've don't achievable.

Chad Dillard

in That's or that and Ichthys? equity on we up helpful. of the down back then, step are what And the to construction do expect And downward the here? for curve the you slope pick drove earnings

Stuart J. B. Bradie

some and equity had I mean, said of because in dilution the we've earnings before, I adjustments. think we've

be project, historical put think will increase been the about the forward we quite mass costs the of we've dilution clear towards the as and move in numbers and I any the that that's the (XX:XX). mean, recovered. conclusion to I as Obviously, market. disclosures or the

I you're just issue think timing us. a downward So, for don't seeing It's a cycle.

Mark W. Sopp

if XXXX, Stuart you we And because planned same see much done other what improving. bit At joint have not relative dilution ventures XXXX we & a deferred, to see mentioned we quite we time, earlier. Root may this will, Brown with the year. have through change a when otherwise is of year-over-year

shaping So, that's XXXX. we think things for in better

some will things, I up. go So, think,

the continue think flight UK school. ramp our grow, the will contracts up particularly with in military of training to I

down them XXXX, things project are so, one part in And life, through being of latter the as of then up. some their will coming others come this

And of come so, February. lay in all the view out our overall late we'll guidance terms that in

Operator

Vertical to next Research. go with We'll Michael Dudas

Michael S. Dudas

maybe or tonight luck tomorrow. Good gentlemen. morning, Good

Stuart J. B. Bradie

you. Yes. Thank

Mark W. Sopp

Michael. Thanks,

Michael S. Dudas

a I'm two question lift My voice things. got is surprised you few regarding games. the last after

Is going some my driving you're prepared internationally time the bookings you a seeing well you're it's Thanks. been second success great greater or than to international been generate to in been maybe we're successes the now growth asset that domestically? What's be growth your KBRwyle. anticipate positioned the and remarks, probably competitors this be, there's people but third anticipated, you better U.S. see what have what you we're question attribute in I a some of lot better that would the that towards? spending faster a I having the you did analysts wins? had defense quarter, themselves. know lot than relative something to What talk integrated, in seeing those own do and and you are about – would it'll First, as And been

Stuart J. B. Bradie

just I focus. mean, question, it's first the

we achieving doing done targets really said up And the the their rates win integration appropriate set the didn't together, team were could get how first do historical I in really P at they're we you although achieve we dollars has perhaps and some and we we there. the that for we what and along on bid team success was the job think has look an a know, past As get way. absolutely spending forth, and certainly our to committed well folks all focused thing those Mark, any would the around the more and sales that? leverage fantastic can market and and think analysts (XX:XX) position performance done really, in really synergies

Mark W. Sopp

energy business our into had the rate tremendous time business legacy long not there. of Similarly, our mix logistics and business. to help new the tremendous of those over And traditional support into and business, a months our for a Well, there's tapped a folks legacy and amount differentiators and XX win have help we've well. folks that HTSI really and run provide that heritage can has introduced lot one in new KBR mission as is thing Government I see past capability had Wyle the capability a and

every staying re-compete extraordinarily serving so, delivering do rate is win And plus they're we're and with and day their well clearly what they're teaming customers. making pleased on Customers the together, high. what sure focused they are they're

bring but to new to the of all combination we market. a focus, that so, excitement also And capability have the with

Stuart J. B. Bradie

international... the And

Mark W. Sopp

a think possibly but market defense, the feel the forms more robust to of years the same. is two all from much really we International, very that We has only that. PFIs, UK, there to for a the hit region. for one, case put We pipeline here. that's but place not together than relative us, There's interesting last the group the benefited the been it's that government bigger and in growth,

so, underscores the Bravo. rates, but of be even terms interesting, importance And And Sigma in optimistic say capability relative I Australia smaller absolute. might like And that adding of there. would more we're growth the in

digits, rates reset, we It's increases Australian and growth Our aggregate the the a in in very tremendous to but are XX we Defense on years. intend exquisite not investment there healthy that. capitalize see budgets very, and double very very significantly next over

Operator

to with go Well UBS. Steven Fisher next

Steven Michael Fisher

morning. Good Thanks.

Stuart J. B. Bradie

Good morning, Steve.

Steven Michael Fisher

Morning.

compared to quarter, because more sounded this to come last Stuart, orders, unapproved Just to ultimately when raised you the end quarter certain back changed you this project? want the about give or to that change possibility could going we how responsibility should the cost on something to the up court So, clarity think risk of responsibility more that you falls, has on where

Stuart J. B. Bradie

up negotiation these before it's customer, anything end that number and in project to large mechanism we reserve ever of go as a Steve, of appropriate. system, all will got with conservative all you put as And what under and very what into with said it. in But works these in in never towards and outcome customers you've moves to as we until take concludes agree I much that's is up. it's As they scope the think we're doing. the the revenue our with end. that fully we subcontractors portion I way that of that nature any their we're commercial that if the very, very the of And projects, forward fund are the reimbursable rights that orders driving way the they And change the that the the signed the part certainly

Steven Michael Fisher

were can having expectation little projects, on prospects Okay. good That's talking pipeline size E&C to And an Investor from size us your I Stuart, the about of small-to-medium a going there. back a a perspective, helpful. color just more you give because know Day, you

I million, $XXX perspective? you're the what from about around spot. Today think about was large prospect size of are $X.X potential the project. a kind billion like for talking How was your it thinking sweet you looks

Stuart J. B. Bradie

Yeah.

of of I decisions around make mean it's Investor billion-type range people opportunity, knows significant same will is we're the think to you that that that opportunities. the the the that excites that course, Everyone well and presented – mentioned a that forward outlook in but come FIDs LNG, Canada XXXX. terms in around the at FID still of that to for us, that easier sweet opportunity Day really spot into question sort going than portfolio I the bidding we $XX that's as

portfolio are we're the there. of we're some where our the the numbers ranges. before, in downstream the seeing opportunities there offshore, is go of work we're activity I focused good in back And project U.S., the and be a the market those in East, only quite in those again, early bit in think to seeing, similarly, to will I've again what Middle there the we the And reported. sorts said dollars around (XX:XX) bid And petrochem ranges. opportunities have of putting project sector sort certainly

think stand I Investor in we sort of our by Day. So, statements

in are as early not we've I successful projects I think front think have successful effort, whether us ahead. that been we'll find XXXX. or think we I focused the move where out their And into the team of go will

presented terms before, pretty said Day profile. good feeling revenue I around as of that E&C we're Investor we So, still at in about flat what

Operator

with Alan Fleming to Citi. next go we'll And

Alan Fleming

there? Hi. Good you you on kind follow morning. was your that are expand seeing tied prices? And in what a And bit. so, comment shorter-cycle to trends seeing businesses Had you a E&C. businesses prepared little through to oil in thought said growth want more do Stuart, OpEx-facing of up I year? I that growth in the the just that's this on were that And remarks of I recent stability made you small-to-midsize interesting. within can think you think the markets maybe kind in you if improved

Stuart J. B. Bradie

Good question. Yeah.

project number it get moment. Australian of and And the got first mines, geography. the well sectors, which in business, mines announced attention we very, is mining bit infrastructure, recently went in in that the the oil couple the I the starting market, (XX:XX) in a doing over more at think across is it's to gas. project and we've in a And the that business different very profitable that It's and answer grown years. each last to of

Sea in services, well engineering-type like really, offshore Arabia, our that's lot and onshore to UK, a Russia Middle East performing and from the UK the we as and et Algeria, our in are client base side, Sea terms also In there work. work work the really going going our work side, locally well on supporting services on but sector. there In the Norwegian Aramco Azerbaijan North and to predominantly UK business, places cetera, supporting of as from both Saudi with obviously just North but geographical diversified the the reach to of

to we've that we're in Root, and to venture capability opportunities downstream, East we've upstream, existing is, talked nature We the Russia, got maintenance in in & globally Indonesia. our and full and leverage build able Poland Brown that a business. Middle about in of we're grown really, capability. also in And the and work side. business spread in on our So, Saudi. got We're that's got joint significantly the Services again, we've predominantly and earlier of the U.S., and

being And white So, and the that's collar, of blue collar going. to the and really got combine spend niche – we keep there lots assets the they able companies and get that where one do the really could money, the because you or is our to have OpEx-facing, to other.

but taking smarts, we've globally the you execution get time, an I very that the get got a same model doing think in and way it's efficient well. and proposition at you can where the can we're

Alan Fleming

guess for next guess the as request for in up, a Ichthys few weeks. because I step see is response to And Ichthys come your a file on scope fixed appreciate want looks that. power the arbitration. the the a in here plant the next price I to it that And follow I of I do back I Q the to filed JV consortium like

price on of of of on the about arbitration you the today complete? you to us So, your fixed here stands And project? being kind in portion in update an Stuart, where percent talk plant give successfully in an able terms the can can power prevail confidence

Stuart J. B. Bradie

Yeah.

understand it Ichthys down meet to just the look to good So, and project again, myself at to the I the was quarter and question. where went team in heading.

getting will down I not execution power plant agreed we've think that up. solutions temporary that is slow the power on this there's facility the the first thing of started that

say. So, that's the thing to first

team where The the of percent – through; numbers second heading in associated are that been historically. in complete the still it's is terms power issues with of a there's terms quoted of of number that that terms working on the in the progress, and been we have which we somewhere is plant rework we're still in

firms mean, support third-parties everyone on of of terms opinions today legal works needs this ability stake In recover, we our knows U.S. and our position, a of from and stand and support I to that's and level law cetera. to one and call how GAAP the auditors, with the things where et

So, I off mean, this the job. consortium walked

because the and that. to want what and three it around do need the GE authority behind that partners they're technical on off to walk of clearly still they doing equipment sits One didn't job, that's the the

process partners. for the the know. In breached completely we contract unsustainable one cost they we're been walked two has terms of point sold to as and the that feel companies off those saw job, of the they all them We because escalating the and in other a

were they clearly So, struggling.

we about certainly so support good our recover to opportunity And would pretty feel that. and opinions the legal

Mark W. Sopp

the think our And time. prevail, arbitration that rights feel against with us they that them to the and that recovered cost will in their in repudiated from will we against will be the not complete we contract we We as case work over that, their incur good succeed and favor mentioned Stuart there us. point

Operator

Now, to or Stuart our I'd Bradie turn closing session. like additional any over remarks. the call to we'll for question-and-answer conclude

Stuart J. B. Bradie

time. Thank the Thank taking for you you.

As before, XXXX. of color. most expected I questions clean to given we've as some the said but related it's hopefully quarter, And a

at today I performing Government we is the T&C think great is fantastic give the that well. business. move I of work we is shape. well, the meeting some think But overall February will is got – in business XXXX our guidance some clarity expectation is expect from Services -E&Cs takeaway end good in and think obviously We've the into people forward time around main doing as very what absolute is I the in growing and and

good work feeling about the quite good that we're about So, in fact that we've a pretty the pretty bit of won and quarter.

So, available much we'll thank today. time. you very later calls taking for be the you. for Thank Obviously, on

Operator

you today's conclude your We conference. does That for thank participation.

may You disconnect. now

KBR (KBR) 31 Oct 172017 Q3 Earnings call transcript