KBR - Earnings call transcript Q2 2019

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, and welcome to KBR Inc.

Second Quarter 2019 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.

at instructions receive will this time. You

remarks turn the opening ahead. and Vasquez. introductions, to like now would call go I Please For over Alison to

Alison Vasquez

morning, second attending Good you earnings XXXX call. KBR's thank and quarter for

today Mark Executive and us Executive Financial and Sopp, are and Vice President Joining Chief Bradie, Officer; Chief President Officer. Stuart

is results. Investors for will we will remarks, of discuss Mark quarter, questions. and at these earnings from the kbr.com. the our the After call available market our website Stuart highlights outlook, section Today's presentation and on financial open

results I would performance differ are available results the and cause events audience views discussion that uncertainties slide this recent our and statements, that matters outlined and our significantly future These risks our financial to forward-looking as forward-looking reflecting discussed like to statements. in These our website. XX-K about most on remind may risks could two. impact on include impact on their and from potential actual involve KBR's operations

turn I'll the Stuart. now over to call

Stuart Bradie

Alison. you all environment. to interest committed and on of on aligned safety, the us and you four graph. to every like takes achieving excellence to joining thank KBR Harm as slide see start the security, for morning KBR. the I'd Zero your in performance in course for XX,XXX health, fully and by deliver It person, Thanks, Good be usual and to

unwavering themselves And wish since a and results Zero thank We've had and for of belief XXXX. of a a great for a of inception become KBR to values. culture cornerstone to first half and I The their all start care has passion. courage and speak Harm and to program, great

this people is essential. company, a As

our course May, new growth growth was our in growth in-line in slide very performance Investor as pleasing QX, A year-on-year, EBITDA, QX story. After Day On a At supports a collectively of five. the of and in story. and thus target. long-term XX% we strong half first presented for performance margin XXXX revenue in and with value KBR the our delivered to XX%

in technology very and cash on been in continued our more of on also this is from delivered leading positive organic growth later. performance With Mark cash, Government has XX% and pleasing a conversion cash Solutions year-to-date and

performing is XXth earnings a expectation. or more above the This continues focus consecutive to and quarter sustainable. quality is predictable deliver at that has backlog of growth The and delivery and and our both

overall continue announced The awards QX. has Our from for in in will QX reimbursable pushing into book-to-bill Energy services. Note Methanex X.X. continued FID all QX. recently was the with the Solutions for major quarter momentum And are

Our period protest Solutions as include And book-to-bill Government expiring under which you not V, is this to protest, in know in LOGCAP does with early X.X. was mid-August. the

will in is can outlook to color pipeline give our moment, I momentum see touch on Slide you but overall continues. a and As our let's market on X. briefly up backlog more on

the for is big First Solutions. budget Government lot But that this pass this happen to still is support XXXX The needs for a XXXX. We're course and the by U.S. partition the defense by there to fall. reassured of progress. budgets news

full would budget domain to defense deep and military allow very are a KBR is where These very, year to continue two mission and well strength A its modernization. focus provide on areas critical expertise. by services DOD positioned enabled life-cycle

unique, results our very contracts. long-term and and be and and international margins Our Middle with relationships East GS underpinned it's experienced significant Sellafield, taken business are well Australian enduring a delivering market that recent share growth. business outstanding is as to well strong Both UK, business We've you positioned. and continues know wins has by

for that own clear. license investment. we revenue for of KSAT Recent note is propriety in both cost fueling a our increased U.S. KSAT and prices that catalyst renewed the and solution. KSAT delivers interest and another Brownfield disruptive ongoing opportunity in alkylation the opportunities is pipeline CapEx demand technology for sold effective very just that We stabilization safe thus green the In in also ammonia exciting. Technology, our is long-term [ph] seeing We're

in In risk our energy U.S. the that the opportunities provide continue market, to and East fit the downstream sector excellent our Middle appetite.

of pipeline opportunities Our very healthy. is

global across focus to domestically the on in geographical customers opening Our are boundaries. both execution is doors are and and business, accelerating U.S. investment repeat on innovation

forward. a few for the have questions with about The changing very, dynamic, there'll LNG be the Robust I'm LNG in project market a all about excited competitive Q&A. going very is KBR got future. attractive us opportunities sure

up outlook market and uncertainty. associated our quality with is backlog demonstrated of across our all segments of with less our a So positive, earnings. And remains

nicely us slide about quickly takes continued to growth. this talk So onto seven

million, the risk. can total numbers any have pursuits times, mitigates near-term. all exciting You see our $XX of yourself, billion, pipeline eggs with for concentration which one $XXX a really $XXX Pleasingly, pipeline billion don't we with XXX basket over over with in

grew work the presented at on those Investor graph revenue It's Day deliver et the This by overall to growth XX% we recompletes, contract, was targets through XXXX. of right, cetera to XX% XX% under about of on supported achieves but couple targets by Looking there a will KBR. when our just for can bump a approximately pleased win, this FID has up graph, NASA another our since the LNG you onto Freeport see Day, of to XX%. Driven report months this new XX%. Investor I'm now number primarily

this will We periodically. slide update

give of cash our support growth and and backlog, it generative I attributes quality should KBR’s of and the value future. believe earnings the investors' confidence With

the the you more hand will on financials will now I over who to Mark, and segments. give detail

Mark Sopp

Great, slide it nine. on Stuart. pick up Thanks. I'll

heavy doing for the maintain so, along over like managed awards years. out And Although a successfully on project transporter vehicles the in meet we cover that of awards contracts including Defense and way. point UK We Ministry XX have the United slide the our the previous PFI to equipment the our team also past to image that under military number number best PFI would vehicles Kingdom these shows of around a won MoD the and safety I provision of allied has world and needs. the

stuff. cool really So

results Now the nine. on into slide

the across at expectations out year. strong in board pointing A worth were results consistent couple with the and our this here. of point highlights Our

our we strength at $X.X the growth, First project in disproportionately that business gross share distortion and towards which completion to billion non-controlling of rate, partners organic scale for ongoing these a see favorable projects, we a $XX is in benefit, operating year our LNG can gain run strategy. starting which some consolidated There's profit of this largely by as JV you envisioned representing bottom that in income the of offset revenue expense QX last an benefited a the is with in the lines the XXXX. million benefits had This at table. provide comparisons which long-term interest,

When added year-over-year. quarter for the EBITDA tables and effect and margin you adjust as the have by this, We've appendix this showing also are essentially many gross operating in flat profiles segment requested.

with of our website. to up little our QX million Industrial a new also a Also about $XX in good some GS cost and out, Root project planning also and above our this lump implementation business than was our normative by costs Norm per launch SG&A and norm, quarter. some and level Services year favorable tax new costs. more a earnings close sum continued Brown ERP driven results was is Equity in venture. consistently little out & joint stronger but on brand

conversion to at EPS amounts for cash opportunity but strong strong $XX services. Adjusted nudge for and gives predominantly a second revenue went DSO on the a of in $XX even basis, million was was well up Operating year-to-date a ratio on April government of growth our little flow bit. the a We last also particularly year-over-year, did X, on better didn't year-to-date cash us XX% system QX nicely half. and conversion and year ahead in continued well X.XX. which This margins overall, conversion cash million up

to slide XX. on Moving

X% growth base the quarter. segment for our at at on trends, digit This growth QX, in Force can excluding Air still work space. is organic in producing remains the now see was Looking straight a double [ph] run sixth organic best-in-class the the XX% GS GS restoration billion growth business Base. organic rate, GS revenue $X Tyndall you

in little QX, been the sale UK, a the a that work and consistently above Tyndall. in with contract fees also at definitization gain we've the margins In Profit of a been digits. high-single were doing have small on we on the of

up, Growth which well. human logistics is and including has ramp from really integration engineering performance and been contributed base support, and operations going performance, space human contract [indiscernible] and health systems and our

range Technology Services our in change in heavy QX, the a excellent overall mix No for brought at produce was segment. also continues margins to margins little mid-XX% growth, XX%. which equipment this in for while outlook to

this year-over-year, modestly growth. Energy conditions straight Solutions still of second down keep quarter sequential while improving, the Our is

utilization projects to We is driving profitability. up as overhead have out well continue good close and favorably

currently services As we here, last discussed is with XX% the over Day, top line in year. improvement growth our recent Investor driver

with Now of just about $X run annual billion. rate an

second This segment straight greater the than the quarter a ES overall. Xx with for is book-to-bill

driving levels, pretty Freeport talked with QX, us growth long-term reimbursable all for and about the consistent FID costs recent earlier, all much said Methanex we well May. to with achieving in Stewart the targets As Together work growth bodes with funds. of still in in ahead

more and here. XX, news slide capital structure Now the liquidity good There's matters. addressing

combination continue million, has cash over EBITDA ongoing of $XX are a a us growth quarter debt year-to-date Debt improved $XX was over We a operating much which to million the reduction. last which on reduction of about with delever just year totaled flow this little business discretionary. basis, and helped

been of average schedule of leverage gross cash. have way. our net to ratio a as X.X, brought EBITDA at ahead debt by targeting ratio to This we the below X.Xx And

projects cash in pooling client While This improve working is bear and advances for balance are free other quarters. from future on we on cash like debt more of globally and to is have reduction. Aspire, fruit the much to the dedicated we’ve we for sheet the up to of capital QX targeted

the all you funding our be provided conference. cash and With virtually operating available the will Ichthys nearly going for May deployment to complete, we flow investor requirements in prioritization forward

slide with up Finishing XX.

expectations. earnings business, of from services TS up consistent see continued project mix going on increase So far with the work the ramp is to half, ES second delivery new and better We driven and our and continuing GS well, mass profitability by year across over in and segment. stability our improvement

the the adjusted range. therefore, in recognize our tax to see existing a consistent guidance rate XX% guidance with flow second down million our guided credits part of coming half recent addition, the year million of stronger tax In and the half XX% $XXX effective to expect $X.XX We second to always $X.XX with reaffirm EPS plan experience. cash $XXX for tax operating we we that our as are to rate deliver

wrap Back it Stuart to to up.

Stuart Bradie

KBR. a Thanks, and Value. Growth is XX, Mark. titled On be a to fantastic to slide It time

Our reshape to people results. deliver outstanding KBR continue and

Our create continue attractive consecutive and growing increase with long-term quarters cash characteristics and and across of quality pipeline, attractive backlog government, to opportunities are market certainty we nicely and combined of with earnings an performance, deliver targets. to against our energy dynamics

I Thank the now operator, will who will And back call questions. you. to open for hand up the

Operator

question Davidson. take Thielman We'll Instructions] ahead. [Operator go with you. our Thank Please first from D.A. Brent

Brent Thielman

on Great, the thanks. quarter. Congratulations

Stuart Bradie

very you Thank much.

Brent Thielman

And on portfolio Stuart selective imagine have another be on of of get talked mix? Solutions, congrats desire a about and pick this I to to you and for you've project whether know and some LNG to Energy to Freeport. best thoughts guess I the projects the add these fit. time want I sort the government KBR's your ability

Stuart Bradie

we to the get strong sense. about and can I a that do behave we in the XX got it U.S. a has going in before opportunity probably That's to on -- got Only if customer the LNG building get talked execution got we concurrently. to UK the where who's LNG with from an conditions think we're makes this think have terms capability And I've only Nigeria, there. properly. two we've if And one and we've

our what good I we And it. the considered back So But, we don't do under can't there headroom think do with will messaging. as And come highly there's an we about think still quality do, we won’t got and hopefully been very terms who believe it statement times any backlog we've I I'll LNG do we've for, do what to be and perspective. of it in we a earnings we've to consistent from many it. need made we

Brent Thielman

to I put kind five aside? bookings kind so guess we is of guess of I and momentum lot size And follow opportunities recompete the this you've looked of new see in out guess far you've the up into opportunities of great. scale year, keep shaping I that robust you Okay, pipeline the and successes this were so and next if a long award cap my government to had you up, year. seen how year, as do this at

Stuart Bradie

an while. it's mean, I interesting been dynamic little the last quite over

been team for You're delivery recompete. of quite has our enormously rate terms right, in an the and recompete job outstanding, those win has and good ongoing done positioning

So that's been very pleasing.

I course, that and to others, awards and went of pipeline our with have the Services period quarter happened last losses, those some Government in over quarter think the and with sense of from the coming up actually out. this

the So of is quite we're pursuits significant I highly is the and and attractive. The market million near-term. the think market positioned there, way is over number in $XXX exciting

the quality because going So in, we're of come feeling about but us. in the of good last quarter, in what's front replacement really pipeline the also that's it's up,

Brent Thielman

Thank you.

Operator

our to with from yourself Please ahead. go next take with As a follow Suisse. We'll one Credit please question reminder limit up. Cook question a Jamie to participants

Unidentified Analyst

everyone. Jamie. Thanks Hi, taking question. on good [ph] Con my morning, for Alex This for is

So question on Energy the Solutions.

said, as segment, was a some past some decline, there that on sequential over the to you the it's So couple quarters. only has quite the have year-over-year improvement but quarter been

expect So half this I including LNG you XXXX like that the could Freeport business wondering, segment, which you've highlighted, outlook, whether as see out over the of guess bigger revenue and I just in general outlook the for in when back the year? a award was given uptick or the be called we to

Stuart Bradie

the a services XXXX think of winning is on particular LNG. growth that from were about would quite and stating coming I be Investor piece our Day the we that lot

the So it not high actually The fourth is actually is of as the Freeport consequence because is wraps we sooner. it's And interesting with typical. LNG an today, the being trains train period up to engineering. of of of characteristic that engineering as as identical get after three built a field level

this thereafter. will at year FID year, the next the latter assuming early happens of the mobilize So part actually we very quickly field

XXXX, significant start the as ramp far see to through and and construction a faster is we LNG than probably quite will as you as So, up is typical. concerned side progress on

well we're this blade and into And on will the into obviously phase the field EPC as that, Methanex for and also of field mobilize we say to we've move XXXX. now include moving into actually mobilizing Exxon as right the as procurement

activity into So and and I think as you we uptick move will progressively volume significant see so. quite in XXXX a

push quite a I in So beyond. think, you'll see XXXX and

Unidentified Analyst

you Thank great. much. That's very

Operator

next We'll ahead. Go take Tahira question KeyBanc. from Afzal with our

Tahira Afzal

congratulations the quarters, Hi, on Stuart.

Stuart Bradie

much, you Thank very Tahira.

Tahira Afzal

everything flyby few upsize $XXX coming could Form time I not And or up enough. annum, billion budget? so extent and on potential next all I've the comment first a a that you over does that of enforced, the per big -- been sizably essentially question read the bit just So, the the does being seem on out can NASA or guess To years? what go for We've mean that so $X timeline me. million bit on front. tracking moon mission the we've pretty now seen the are big announcements are NASA

Stuart Bradie

I -- with moon that's next could the on mean, it but over we're under the space areas our think of health, actually the sector. activity few I think falls of space other yes, years I the grow shot, course, where not happening Yes, busy up under human which just

levels think of itself, in that shots activity that in will I there's of of there's a terms -- terms don't where always not think So, actually yet there I be. the moon well, and clarity the

that position moon interest, sort a of we to of are need shot. support going in we we've dialogue advantage activity think We the things how a And there's got a clearer, seeing very huge lot to lot that to we're on terms think of certainly of but to And I of I it. in market positioned amount best well of become come take area. back as

Tahira Afzal

and the cadence in follow to up I I'm look see surprise terms Stuart, as see trying outsize? positioned question. the going projects Got and it, we come the we XX there these to really then next you guys to months, of well ahead [ph] Blackamine like believe And you do When ask you Are flurry good. a And on I realistically? And are the look that But then a well. then and LNG are year positioned you on I how just for and of it that ends? all Nigeria set you're out well LNG follow many real is reason think this assess how very are? going and at on sleepers cycles, those

Stuart Bradie

the to than they to move tend might Yes, in projects get like, -- or expect or there's because, or take of delays we've I FID that in think longer forward waves or as all up have, be. last these cycles they people past, longer seen whatever

think talked Nigeria right, will So, the but the have now another. few -- that should Charles you're ones think about next we're Lake and is the that And of times I a Tahira. and we’re that tracking bid doing and quite the ahead, I not at all sort terms in go we of EPC bidding we've frontend moment, these for

to ones be of in harder move So focused will on ability their very projects credibility place. it’s on I'm and develop go feel one so which are ones up of off-stakes be difficult and these because say very two will we’re and our clients then will to forward because get that or of particularly successful ahead sure that really trying to to which much ahead that depend won’t the and go sort opportunities clients substance of backed we

this And to too signed that’s a proceed publicly contract of EPC for we’ve we’ve got But Freeport to all set to yet, good sort pre-sites in terms I LNG advance shape and limited notice yesterday. one of number out a but stall for our of announced in win outlook the think actually we’ve we’ve our us not I think activities. and

be for that all well that. So as

so and that sort you our were of really of LNG we really targets when if And whole laid our like Freeport which is -- if based we sense. you -- in one on project security May in that mid-sized stall is out that sort

really about And say that more will that growth greenfield we’ve so it’s that value opportunity just ones better a the which is and what ones anything above great expansions ahead think to additive who would got and And difficult to I to go talk present that go potential convert net which the story I say and customers additive our but won’t that guess associated got probably with ones the publicly are. has chance given ahead secondly we then projects. to versus the is

Tahira Afzal

so and it, you congratulations, much Got thank Stuart.

Stuart Bradie

you. Thank

Operator

Instructions] your ahead. from open. line Goldman Revich go [Operator our next take Revich question with Mr. We’ll Jerry Please Sachs. is

Jerry Revich

sorry, me you hear Yes, now? can

Stuart Bradie

Yes, enough. clear

Jerry Revich

Okay, morning perfect. everyone. Good

nice the nice booking really [indiscernible] you competitive that were that just across after discussion portfolio about to So talk prospect more it’s you the so a couple of had standpoint environment contract And maybe a performance folks cost can in what discussion? dive just LNG from in into contractors runs other win Freeport the able was bit you have project…

Stuart Bradie

overruns, not Yes, I was clear, we’ve the what Jerry, in the won the and identical you’re on not that that cost mean, think challenges Freeport you I is asking having happening I line Freeport others are think, super the I we train the what’s while to fact but trains. well look I at fourth feel we’re LNG if it’s really that’s think the of question. But do think positioned

level job very we’ve just sync manpower of to [indiscernible] gas quite door the bit a a for that finished think right BSF similar project site a at onsite. I next

of potash, the the how And labor right the mayor, well, the next force, area knew so we know door. to know operate know we dynamics we we the

in have and op we also the dynamics obviously lessons costs to that learned We’re of as into productivity and we And labor move all advantage the the norms that train. fourth arena. lessons executions associated are learned the stock going with we understand cost and the

we unique not the get closer likely or and on there’s very to think in for this customer. as we’ll of with our so associated later signing sort And pricing risk with some FID, I line disclose mitigators that contract

associated I that revenue share this looking when we for with we’re something are we’ve market to and And to said different. quality that actually comes along do think there clear pricing smart of revenue booking is all and not our booking long-term been with of earnings we no the very growth very sake price consistent

think this recently they've vocal significantly, there’s attributes it to profitable quite that and the quite, the So for been unique and I guess, and we doing train is I has pricing and know derisk of were pricing public. that they the I that actually existing incumbent, that some think the been

So as benchmarks you'll get forward. some move clear we

identical six trains things we do when that to I trains, business know subcontractor well, at start very and it's the world. seventh be that's well, very the And build part we to we like Nigeria trains, we the in of then LNG, environment that all look six and know and how know of driven the the first and to customer build the

we're doing the not So something day again our significant derisking again, the want Nigeria with with earnings revenue have reflect associated what And return, to associated quite pricing we at will end growth. the fact just of there. that in a

we’re please be driving at is market ask is one And questions, we trying on of were the Nigeria And to think the is tightening. quite but two, we not two everything moment, hopefully is consistent. It side way, highly two competitive were one one which was same so of the two And message the the Freeport on we're on I of the interesting Charles. one landscape we're of considered. on

these deals had everything, is people because significant issues. So having improving, be we feel a we XX-XX But that now place for good chance a if project fair really, it's competitive is the pretty and significant win win we the maybe, certainly, I to us. have that's a also, on share, think landscape

appetite willingness And to so silly the or do the something less. is

Jerry Revich

to on well. like from had the outlook just pretty compared positive based order have outlook the rate And prepared in here. is a of hydrocarbons reimbursable drive markets expect what it others the good more then great. outside interesting you Can your end few terms expand of projects, that you a That's you as ammonia, folks space? win sounds remarks, to in on And sounds the your prospect for as

Stuart Bradie

I taking of plants, And actually no associated Permian, opportunities going in of advantage positioned ammonia, two monetizing mean, what's our a but Azerbaijan, doing activity. front announced area, of that's market I point, the in got refinery us, that's the Yeah, in with what the doing lot dynamics what Plus, well have at I really that is expansions cheap we've which East. newest driving very or guess, methanol gas -- U.S. we've Middle as we're the said, in the we're this we is of lot well, in in midstream the one we very, we're and a

of markets, So mid driven lot downstream that the of in U.S. and sort but one the there's in of sector. last the three two that’s quarters the key or a that's in couple book-to-bill

Jerry Revich

Thank discussion. the appreciate I Okay. you.

Stuart Bradie

Welcome.

Operator

& our Company. go question Khanna take We'll next ahead. Cowen from Please Gautam with

Jeff Molinari

morning, is Thank Khanna. this questions. taking for my Gautam Good you for Jeff Molinari on

Stuart Bradie

Good morning, Jeff.

Jeff Molinari

Good morning.

annual on LOGCAP expectation the sales award. for expectation if in win. if the the from you'll do first expire, protest latest What's get forward book upon like question impact the that Looks well going congratulations V and -- margin a formal you So protest QX what's project? which latest does expires -- the

Stuart Bradie

let then bit I'll and Yes, first the I just answer numbers. about talk timing, Mark little think on a I'll the part

months. will think to the that right, at. is to a mid-August. six And likely on I in then where as Day, one quite we're another. about you period you're we'll early said actually And from feed over We've transition move protest take there's contract ultimately, quite clearly Investor understand our So,

to outlook assumed for current And and has impact no in XXXX, so been there'll impact fact be very all. our little at

the And ramp up come XXXX. through so will the in change associated actually with

of So this. Mark? timing sort aspects that's to And a

Mark Sopp

-- at looked May. Yes, accordingly, been terms was will we’ll to had the for clear particularly guide of areas, so that to targets relative that no exactly more us conservative XXXX. for and what next hard our and more, know cautious. Afghanistan. very contractors for that plans we objective is just very what our the we about regions impact our a And about in new of conservative talked targets data Stuart, to purposes previous in taken as done prepare we view of what have in being right, course to We've in We the those be year,

recognize would stability you will, nice more funded of It's if [ph] it as predictability of business, good is O&M is of we the also the and so opposed We that. takeover, for NORTHCOM that sustaining us. like book the OCL to really training for area, out and of

with be At the That the larger end to CENTCOM above presence, of our V, we being work. once a LOGCAP result to our taken the extensively said, footprint of our run previous modestly the from as really we with and being gets NORTHCOM going more data Afghanistan XXXX, conservative relative expect a added, view the day, sometime in we've current see increased incumbents. rate, than

Jeff Molinari

got question. one color, more the I for Thanks guys.

to of over happy switching to unchanged, said turn release the know, expect client that. the Just the when of business. But final recoveries? gears which the for see and the Thank update for you complete were what on the timeframe an and project, do the to side expectations are remain kind expectations mind side providing we other you. the Do Ichthys was I the you

Stuart Bradie

save got steam the control turbines little I’ll only I finishing we've we're gas chance turbines and be and care able bit exploiting station three of three steam to else, identical to and couple hoping I STG I all our try at the X steam and from Those weeks customer. to power everyone's and having of this dig a everything the the have moment with X, to were call the turbines, STG was think aware can exporting are cost on sink Okay. finish that in power the on a cetera we power et turbines. X

is are to perform it's today. fair assume three performing and certainly performing will all that So, two one

that's progress. So fantastic

those of during completely. to close We site the with off in month probably September out the expect handover then be we'll the August of the and tuning and commissioning

Operator

our next question with from Research. Michael Vertical Okay, ahead. we'll take Dudas go Please

Michael Dudas

are Good how gentlemen. doing? morning, Alison, you

Stuart Bradie

of Michael, you're always the day. the charmer

Michael Dudas

to trying consistent. Just be

utilization guess, risk that we -- of opportunity. quite risk it to over been a I Stuart, optimal just you the these slide achieve the growth do the the is very, buckets get you to you by How seven very cash those is sounds think having what margin, the think targets. next So It improve about that achieve have, do looking number to to the next following years? there's of several of what return need discussion, -- here bit go flow trying of through When years should to that book anticipate funnel when helpful over and we've outlook. and and reading from the it XX% relative the you at several we how do fill level it you're more you others. talent How

Stuart Bradie

the I in the achieving is we're in no think that. take aiming impact a resource you Mike targets at There or where really is May, margin to should business. we've that anticipate the -- constraint all published

carries is something engineering in of business business that. end on about things and here basis. do that green chart, ongoing we usually, of and which advisory an recurring on consulting book think what to that short-term that tasks sort do have we in the And of we the dynamic talked the the is business XX% front part of of our design is even fact technology, I pieces piece that a of book like is and small XX% that our haven't

so booked those that the areas. significantly. of in told we our within that's we're would So, truth, nature course, it, just bars, down recurring those haven’t of if the obviously, business a we XX% be but portray actually But green

trying in So with I think all we're grasses a genitive have importantly, in changed we've those cost is KBR long and to do term that dynamic as even in we've margin that that more got profile way or more importantly contracts qualities. the built

of course, we're because a view to consequence to investment what means on there? a the better areas. and backlog quality of Are that taken we've there opportunities the it And the as some of that Yes, community, through conservative way do trying going of that XXXX. show

along balanced uptake is our on growth a we we're of out. we're But might get to and in not But story grow what well it's scale. the think we we actually consistent the the the generate value banking said about that we’ve that's end is also this with And And will bit story positioned cash. being terms we a it's We're the very this piece margins through here. -- company. actually I banking of be little And, I the of think on day, all view. that, believe way economies proving a at

Michael Dudas

Appreciate that.

bit tremendous follow think Just look when we've be leverage a after that and do on highlight a the But And to as maybe issues, business Mark, an think you. on might a maybe the issues quick balance balance on KBR standpoint, sheet that getting you as we at acquisition where seen Thank you balance XXXX. little we're just a and standpoint, program? cash just assuming generation. lower? the sheet, maybe positive performance and anticipated, the driving and sheet up, through the about for ready think the from from I'm ratios thinking

Mark Sopp

to alternatives. enable about we overall. been a our been intent years, will compelling us we've would and pretty think, or clear we absent a would that balance clear we've number recent That that of year M&A on a de-leveraging, quite done in I strong so focus We've sheet have strategic well. very

our to in good leverage a of year, chance end we got by I the this think year. targeted cross the fiscal

always said lot says been time. And the very transformative So M&A favorably that's we we've all that kiss opportunities frogs, a and come -- company. for look this Stuart of has that forward at But great.

we so keen attention pay to that. And

something always we're we've in as M&A of as of having about furthering our And And would and interest, it talked what's about basis so flexible strategic from the a of I a a opportunities being industrial for aware well balance strong to, out there. a avail become have ourselves priority alternatives. services, in pertains We've sheet example, an we leader We criteria area. the technology. perspective, as space portfolio, talked global with say on would

barriers entry business revenue up to for that are present us to again, if so, move synergies they relative you to and and generate can And will, if our allow opportunities market businesses themselves, as today portfolio very it pursued. we we alternatives low protected from have be the And enable like it's a interested. to competitive and about those intensity, it’s perspective, generative, is we're capital cash what does

when we And alternative more where we're be can been aggressive we've as point clear, not very for value the they're there, our And are there. well. buybacks certainly attractive very near creation

Michael Dudas

gentlemen. Thanks, thoughts. the Appreciate

Mark Sopp

you. Thank

Operator

Kaplowitz question We'll go take Andy Citi. our with next ahead. from Please

Unidentified Analyst

on Andy, for Hi, you questions. of this [ph] is taking behalf Piyush my thank

Stuart Bradie

Proceed. for Thanks us. joining

Unidentified Analyst

do At this higher of be for point, long could you constraint would year? if target do of technology for range from another your in you range? And any year? you strong see any the this pullback had rate stops growth XXXX the the end also, beating think on remainder term growth quarter. like Technology highlight you Or for the that

Stuart Bradie

across our the guess, and the been and think like mean, world to I ammonia there moment of that's is guess a -- I our portfolio. very technology we're pricing traction And Mark people yes, investment at leader. decisions the the disruptor has allowing where said, arena stabilization a exciting. I getting So demand make as in I KSAT technologies ongoing particularly And, we’re

very, So laid we're my the we expectation for healthy out we’re And that of pipeline May. front targets in in that on actually code us technology. seeing think the zip is well in be a to of I track very

as rec had a than we’re And are there forward period longer so going rev margins because revenue recognized well getting been plays performance and forward that more the as actually consistency over well there historically. help new rules us in all

So there’s business. of profile the more stability in that earnings

So that very bears well.

other that rather heading I where disrupt coming mean point things that technology I at other could Is say sort or this I in not there disruptive unforeseen technology. of would we’re pretty than aware we’re the than think anything geopolitical we’re that about confident some of -- on market to

Unidentified Analyst

the And your you on remarks, and elaborate think Was the cash can in quarter? touched That expectations but briefly prepared the on your should for of line year? in your for with you the was this we helpful. about this remainder cadence cash flow how for performance

Mark Sopp

really on quarter little step on the behind having we’re say externally back Sure, superb a from in synergies, this first of acquisitions. still I when on track. I some say would growth. We basis that integrating focused credit and right recomplete, I are and slightly ahead are running the we you think organic second very to in our generating that expectations our we’re will quarter a year-to-date

like we’re the also implementation teams and scale future things inside the very effectively. to so busy already prepare as and ERP ability are efficiently doing to on And for the well the and

do better, half. little that manage And be along with activity, a second path do that capital focus. to but ratio challenging will key it conversion we time but will some to take We it is working it’s of we a in can expect stronger the better, the

We’re customers, very there. we’re again comfortable on our the generative still operate capital guidance we business consolidated negative with and quite net a advances so our with we working effective year cash basis the very from for a get with

program speed finance have there a that we And is but you with our also billing, the assure we’re the can skills and business team, priorities speed I But this whole fine for collection so impressively. the grown of sport. of function, team it’s important the as other priority the managers an we have the all tuning

Unidentified Analyst

you. Thank

Operator

Chad Please will go ahead. Bank. We Deutsche take our from next Dillard with question

Unidentified Analyst

Couple in the Chad thanks could George for [ph] of of for taking close things, is out you quantify the this quarter? GS the Hi, for the first on question. benefit

Mark Sopp

of talk aggregate. for within half our points asset specific sales that, to a like was the percentage terms in of full definitization We the about items but segments don’t it a turn in

should quarter reasons. go XX X So margins those this GS between you’ve seeing and for usually in above our normative XX and we

Unidentified Analyst

energy helpful. customers cost thing, your work doing you reimbursable Got being comfortable to with it, type is see pipeline of how that with second project continue And much you more and of guys? that’s

Stuart Bradie

the seeing business now do customers repeat dynamic we’re I that the in into so just seeing performance can guess opportunities and should as said think get relationships our doing and before the U.S. best quite is lot the I we’re we’re And getting a you of we’re Saudi to people overseas friendly in the in Saudi quite our business, U.S. we’re cetera what that you enough a of measure good I Aramco of do and Yes, performance good significant because our activity. the bring investing able et of job SABIC like and development that and and

us course dynamics of environment in are significant those top on Methanex so And of reimbursable that. opportunity affording the

pieces with very And only so QX that and sum seeing doing that bill and to in and posted been saw lump lot of was And all customers focused in major work and also in we’re we’ve So QX of very we’ve the are opportunity all a our they LNG. the with we’re work market the very, book turnkey clear interested booked reimbursable. that. we've the been that in there cost that on

on reason in we've LNG all clear, jobs made projects, analysis we've in holistically done the and fact, quite and past. money the that done we that have the consistently contractual back looking for And and regardless is structure the of the

put risk we're do decided that turnkey pretty confident needs have -- be be And very and that those the skills right LNG out manage management that, we teams technology of to understanding in well a pretty to have focused. and So and we as quite doing and base to that and frankly we to that feel going we're some we're onto A our distracted to consequence jobs going elsewhere. not resource

a market significant the and the we booking But is where clear, we're mean very a actually that what also does is interesting of is risk also focus. dynamic aspects What that work guess, reimbursement other basis. on very, have the I

the look So is project today, main at LNG at reversible one there the book-to-bill. work in our time on shows chart the and when excluding going XXXX, -- so that Everything little the cost within that excluding to XX%. we materials

Operator

Sommer next ahead. SunTrust. Tobey our go take from question Please We'll with

Tobey Sommer

including morning. recompetes win and Good Solutions could takeaways bid investments? rate and discuss proposal you. area, inform In Thank the your Government how you and those trends trends

Mark Sopp

Marine won with We certainly LOGCAP Corp quite been $X I and on say Like of entered particularly this we the concentration, preposition a the V stock, basis. those with both pleasing. has year win recompete with rate

never XX what We year, the to focus than what customers recompetes the recompetes had easy. hats is unit more But and team underpins basis more execution wins off above That's every they’re this on to for on we’re bring are bid. they above fancy a XX% else on that recompete than a well day. really they've and innovation those the the anything

I the think remarkably well. that has team done

pursuits new from and recompetes including XX%. pretty rate, is win And that's overall experience, about strong. The my

hard fair at something of shot that share And in launch we're So and too now like with we're with a QX running, to that launch taking we're week our and really of here or the starting proud up in we're those NASA, some our things way. -- activities winning along the a two support.

credibility the it's bit quite elements come Honeywell, KBR the and So together team across quite as as of legacy SGT built team a and we’re has one good. widely

us the run more And enable of that in go after rate this rates we so of market saw range wider we we scale, in -- a about the to when benefits can I with I the aggressive seeking and NASA terms and demonstrated like takeaways Stuart the they mentioned should win earlier have we’re team billion and procurements now $X with others. share scale, and and to to POTUS that has able at business, be in do and before,

after an So and aggressively it entrepreneurial they've that and excellent. to got way in the to much track them a capital is to leave we do pretty pursuit go record

of we more So wish same. the to see

Stuart Bradie

Tobey, we well win you know above how Marine so you scale value, recompete V do on percentage of interesting of the because the It's the win analysis LOGCAP just analysis our your that, the is core XX%. based and depending did

talk think is actually quarters do our I to numbers Mark of If happened one proposals enough where it’s over don't things about engineering closer that's last did. But the on submitted it of the this pleasing business. and has we you few

grown cool of do close a engineering grow stuff continues so it nicely XX% significantly Our business and very win and has in strong rate there. lot we and to [indiscernible], very with with to

growing not while $X get continues them. a last that it business $XX win noise of doesn't double-digits of that the outperform. and And and in circa million a really it billion to lot because the And we the little lot was that but is ones,

very, And that part portfolio. business the behaving with and very so our is that is pleased a of fantastic really way we're

Tobey Sommer

company, answer. appetite much extensive as respect more and changes Government the With customer? to seeing be in the that to their you among your arrangements more contract the types very mix, any profitable the arena contract customers, move Solutions to are solutions towards could Thank cost for to you principal or effective based for

Stuart Bradie

Yes, while, more in than I team they're that price the an we're been more think we've those towards for a you just And just demonstrated the all lowest our -- all we've I introduced best actually rather think resource do increasing that's very that and seen now laser trend technically we're seeing turning capability, value, think digital been across the in looking historical bids with have come up solutions. happening than solutions way I today. has acceptable. And solutions that like innovation or for to we we've with rather

more do of way the use that management tools logistics And a is Maximo KBR, called guess, off that I but would allow we becoming the I us around our in sort arena tools smart logistics good more to efficiency enhanced driven solutions less. with very, which very, example be significantly the shelf, guess, we've and with

spend more fixed like customer things the of driving IQs at you're multi if time, and on in and sort efficient that, But become price same you're working idea So up. that. based also margins minimizing you years, operations year-on-year a with over the

that's driving through think use intelligence complete the and things win-win I new smart artificial and of a like efficiency that. So,

worked well. really really, So it's out

the culture think add but be to to we're for continue customer. look both I recognizing we've that that some within needs we it need and to change recognized So And to to innovation ago. to are us, you we quite also business to time I that right, just value are that think have solutions the

Mark Sopp

types. then referred in are technologies moving contract to. major to systems I'd don't market Toby integration, And in any I shift that, up Stuart think we add seeing and the engineering that. But are that and we

us is sense. a reimbursable mostly but value so the cost move up And helping chain, that in still

of type what profile say past the exposure, and the markets, in the shift is seeing different overall the would the not much balanced that and it's but international in is business either, a years. I about U.S., more we're margin KBR over growing will, is one-third where well really of than you U.S. if big to attractive couple

that's result, a to overall margins. our as beneficial And

of that good do. As X% work we’ve pretty logistics amount to we space the discussed XX% and is

Tobey Sommer

Thank much. you very

Operator

to This back Bradie for to concludes turn question-and-answer conference today's like remarks. I'd closing Stuart session. the

Stuart Bradie

you much. very Thank

really It's very a a taking So easy and the and yes, thanks work great of much in thinking opportunity interest just hard row front us is onwards for XXth quarter and for we've and in and got good for upwards KBR. in you time the and thank of another lot your us.

down continued So let hill rolling they the the as say. snowball

So thank you again for your time.

Operator

participation. This concludes you today's call. Thank for your

You may now disconnect.

KBR (KBR) 31 Jul 192019 Q2 Earnings call transcript