KBR - Earnings call transcript Q2 2021

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Operator

Ladies and gentlemen, please standby. Good day, and welcome to KBR, Inc.

Second Quarter 2021 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. remarks call I Please over opening to now go For the turn to Instructions] and would introductions, like ahead. [Operator Alison Vasquez,

Alison Vasquez

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

Mark investors Mark question. are open Stuart the the and available of Chief and Officer; President Joining me Today’s highlights website is at Sopp, Stuart from on Bradie, Vice and today Executive Officer. then your earnings provide our Chief presentation call President This statements section KBR’s from views These our Executive for over performance and will matters Stuart. and turn includes discussion forward-looking Financial reflecting quarter and the are risks these kbr.com. results could our potential X. as and now the risks call impact actual uncertainties that statements. recent on These about on available future in Form events XX-K involve cause website. discussed Slide significantly outlined most to will differ on I our their to forward-looking

Stuart Bradie

you, because Thank I’ll Slide you on in interest X start actually us your X, and for joining seen times. KBR today. Slide many and you’ve Alison, thank

In world, are way practice, really now we look same periodically we’re that. back I aligned Now, still that we’ve over to times. excellent we best to you see us is the story topics but we shareholder And said, to of presented resilient, number change a and strengthening. after with basics proud very All program and make value of and later I’m as we performance. our HSSE doing in progress think will that’s ourselves a at those pre-COVID. continue come to all our our ESG employing looking sustainability report across key it’s did And we’re And differentiator sustainability recent it’s around important And on really pillars. ensuring not still core for very, KBR. this only

world this achievable is a stats our delivered And through outlined was core you’ve Harm by and ways results, some emphasis to working. as new the Zero of through else exemplary, of our which on and time that expectation sites fitness, We of And remains itself. distracted the more here, COVID things actually et as to meaningful people when level bases, of see or like people couldn’t performance But cetera was COVID, were course, world, safety as within our leadership with driving the leaderships from So, example. of belief rotations organization, the a before. get of priorities even change can across visible to like course, that you cases, mental values. and our and everyone seen adapt changed for

people’s culture, our commitment these our the really, results performance. outcome an of simply really, strong and amazing So and it’s are

So from a make do to a people thank difference big world, our really day. you me you across every the

a to hope that As resonates. I values, to our up company live people aspires this

an outstanding The terrific. typically But across adjusted our was has perhaps team a metric has after above year-to-date our coming face So EPS the quarter, X. to a expectation. This performance brilliant in and done tells brilliant been on as it, XXXX slide and culture in with start job size even a absolutely buyer understated. let’s to is QX, this Slide every

XX% multiple really midpoint. management on turn And our out margin favorable again services, retiring the winning was We while no a bumping volume guidance been above this many, Great strategy this XXXX solutions, Bookings of with which expectation. a in also range, strong million, increase focusing option the is nonetheless. and at this later, stuff Double-digit almost managing bookings EBITDA And closed remind but exiting the uncertainty bumping as projects. about we’re had as outperformance to has project was up by area. feat. extend resulting tracking We’re separate margins, the through EBITDA heritage over result Help really of work in commodity small result. revenue that as collections while right quarters X.X other book-to-bill the in quarter risk X.X, talk a lower but and times, Cash including growth out on in while clearly reflects the resolutions, we delivery, over quarter growth of really XX% with delivered a was there. result a work come you’ll will outstanding and call executing many up strong some and differentiated see cash performance, years better. has is you upper technology delivering great end and older of even

the to numbers. good our also including [indiscernible]. prudent legacy on all position non-cash, only. we terms key a client there We unreleased and this that, matches But but made discussions progress with number all reflect with this the This a client is I’ll felt it of within on on matters, settlement yet, non-cash say is to now again,

X. our is power slide. is no So a whatsoever. right to outlook or results, Mark hand be CCPP, the bookings. clear, are change favorable. across the course, of And there This also few for in reflected this And world the but On on highlighted to plant bit in our a business in combined side later. GS of remains will detail The the cycle more Slide a cover

a reflective strong moment, Our in pipeline, market. the we’ll of which is present also

can And be a weeks priority discussed ago, coalesce that to previously. to priorities, front since shoot-off the we we know supported. not that continued up the remain quarter in I that but But a underpins over to are more also. to Sill this And it but just on interest was their science come really budget NASA as there’s the clarity continued on business. sale. Australia Australia GS had to international this There from course in that surprise these UK and this key very continues. highlight the will than makes its as to as strong Fort a More in larger and means Now, were of our today, increase areas we our well strategic space lot and few the Internationally national budgets a say But expected at we was energy went And XXXX what in confirm come, outpace. of opposite quarter and they But recommendations, well. and our very, very a and was a Senate see later. what but only more way for security add expected, momentum positive the will budget, continuing we infrastructure more through areas plan course, Overall lot, with of the directed XX%, very book-to-bill the the wind KBR. – our spending around House for increased the can’t program. grew double-digit pleasing government, that positioned as

remain we to was a beyond track XXXX, on summary, perform but in well XXXX XXXX, in So targets. also until

area again continues good of obviously see for portfolio. in there. bookings. digital It’s our a right along really reflected in ongoing Sustainable Tech side. has recycling great and in positive. to course Onto whole plastics across really, we So look our the wins highlighted Slide been have The traction with area, And This, X. recent on outlook to maintenance hand few demand the a the all

in a is whole U.S. areas in has level portfolio months. top the valid. firing course, all on the the agenda activity be are of various remain to won’t of drivers of known of these, and will layered get stimulus the bit exceptionally change perfect Our before the storm a performing quite increased read of I’ve The this used well really the and plans two well. case. all this of the three last to the be climate with I approved. continues but And expression

very dynamics So for Sustainable Onto market Tech. Slide X. strong again, very,

So, not continue talk continued only that our And can it does rhetoric? be we will does XXXX how momentum targets. but how all to translate we how as be numbers? we this XXXX, the and confident progress towards into all So,

to So – we QX, awards and secure $X.X secured XX% of XXXX over XX%. options, backlog deliver total in bringing billion to

really really, looking XXXX So good.

include book-to-bill. do remember, the our not options in Now we

book-to-bill secured hopper the options, But the even when for include so was quarter, work standalone XXXX. this prudent X.X results. options, great excluding into performance importantly, beyond you was more So impressive, but

Really, really we leading great is to a are key delivery year. satisfaction drives award So but et the metric of also client a From me margins, that win fees, how guide rate. traveling a recompete the for the perspective, cetera. to good current beyond course, perspective, and

really, see right really high. ours value, delivering recompete your hand win of If this side slide truly you you’re truly, And adding the on can rate should impressive. be and

previously, we’ve to Now, a risk, the in stone needle with the pipeline of low lack number about the have and all and movers balance leading facts, we scale are talked across cetera. continue. year really et and concentration, These of of recompete. And then pipeline

the So our in a robust ensure bookings momentum areas, quarter all in pipeline with right summary, metrics attractive strong great to and a and across continues.

you deployment, hand numbers of who give Now, to updated take Mark, guidance. over detail, the cover course, more Mark? I’ll and in capital will through us

Mark Sopp

our will end top-line in our snapshot thank goals. The Great, strategy shows quite billion Revenues attractive year-over-year. on reflecting growth, terrific how on QX our again, double-digit produce performance long-term to you, $X.X strong delivering pick also once positioned XXXX core I have up tap executing financial markets. toward and Stuart exceeded XX. growth KBR with We of Slide and we progress

or and to about EBITDA growth to As line at options higher over for XX% up also signal Stuart QX level margins with momentum. profit $X.XX almost EPS of at the million. our Organic in above are year, course, EBITDA from of XX% quarter. said, and amounted our with quite awards year, further margin GS, accretive growth billion translated then business also last and both levels. that acquisitions at Adjusted new That’s up This the segments this XX%, at in XX% profitability. directly and adjusted last driving targeted markets end bottom $X.X came and offerings strength $XXX of margins and

cash for We’re cash nicely cash free also solid year. and bumping of for adjusted QX, $XXX basis as of report above at about operating shortly, flow about for above of flow and the cover conversion and free cash flow flow year-to-date for is XXX% pleased targets. the our half XXX% first up $XXX and Year-to-date the case or guidance to I’ll million million

in large Centauri over bookings our here and forward the XX% run total acquisition very option on the Government outlook value good book are confidence growth shows Onto posted longtime of represents which in which just that, moment as presented The nice trend operating you have before our targets. demonstrates billion revenue and the the results of Xx, There’s course of of Stuart Continued growth driving our current annual enables see with by new a business of growth. year-over-year we backlog which rate, are almost pipeline said organic opportunities in $XX top-line underlying segment. XX, growth. double-digit visibility strong an also strong backlog of ago. and Solutions Slide top

As double-digit demonstrates organic growth. four with GS to contributed around areas balance growth landscape GS you XX% the and world. business here, three Amazing. meaningfully the strong This strength total producing organic see of the across all our all the four

Centauri to need our and strategy. larger boxes organic was XX% made lens contract sustainment of in full over military levels With our international here $XXX revenue from A space, alignment modernization, QX That and of on QX for with roughly the thesis growth. its puts Centauri particular year-to-date human on across fence consistent thesis. performance, and be and these XX% contribution Centauri plan with acquisition of equipping with to basis. million At a saw all and $XXX with on right bottom with our being terrific to platform with to flow. growth this line a for Group track growth with terrific and health of GS revenues million New businesses own rate of highlight own the profit us and that readiness all level Sustainable acquisition. year, posted its to continues resources in to couldn’t and advantages of these cash EBITDA targeted top-line, progress more buy make excel this were being people XX%, to and the the and relative grow adjusted Tech terrific leverage of growth part we profitability. of checks strategic the they continue in those middle people, the on margins the be to so pleased fairway markets contract

of with of EBITDA exit the While we healthier QX revenues much business. was as XXXX cash positively. points. quality delivered triple levels are net envisioned revenues we five the when formed and ramp elements favorable close which of EBITDA million XX%. spiked team for receipts, and year, did Stuart continue said, the Adjusted to this down about improving outs, areas by decided we more margins margins contributed reflect margins All at have of $XX to We business this last than as attendant percentage

of higher this STS than in favorable [ph] margins that’s at net and content to EBITDA circa mix. XX% So normalized expected due came

believe margins range for to year. be the will continue in mid teen the We full

the Finally, costs in in work. coming Corporate to third various higher as returning year are last stages are segment, of than we

are we things and paused that advancing initiatives are back various like up. year, We picking travel last business

which and EBITDA more We in expect the at pre-COVID rate levels. XXXX XXXX, aligned run is continue with corporate SG&A to this

and expected the here. project, I’ll QX, only had the roughly we is relates recovery subcontractors $XXX mentioned on to client. Stuart expected the and the Now two a legacy matters from category that carrying charge cycle power discussion first recoveries this into settlement Coming million on combined with some into and this divided the this negotiations elements, client on from the with Slide quarter from project. recoveries with plant. value This This took points we of associated make the the additional the XX, expected

the past it that which the point the settlement And appropriate recoveries however, targets. we thus Reduction Stuart to yet discussions borrowing to provide a the or a impact is in final. should to in following. non-cash. expected capacity what details there the is with not here. impact covenants. value Those And value we with financial is are client associated to lot our earlier. can literally client, few the the So of reduced. led in not carrying long-term reached be days, us conclude of because that is But no carrying liquidity, And there’s our say said no third, that discussions

settlement which assuming excluded improve these one reduce up An measures. cash risk, As and settlement, ultimate any actually from would the recoveries claims capital. exists value free impact subcontractors, on legal would contain carrying matters and occur, Very unaffected. with costs, always we power the time have against were the management liquidity has plant does expected towards deployable client ongoing important the progress the remains no with associated those

this targets. XXXX, would and downs write we delivery that As accordingly part of you excluded out adjusted project purposes may complex ups completed from we any EBITDA matter the fenced, be of for recall, write the when established or in our and ring associated and long-term with adjusted adjusted EPS

these recoveries We also planning and levels. expected hit flow excluded the to from cash targets liquidity all cash and

within that repurchases next there below the produce continue consistent impact the targets. the these of level. our to with $XX XX we under goal a to update, did consequently, having and at long-term no billion deployable market expect open in with Well Slide share of to capital X.Xx. this do to growth On of developments is we over leverage over that So And capital includes few charge liquidity X.Xx deliver for million to course years. a our continue just deployment targeted is We QX. Net quarter, our the which stands of now of EBITDA with strategy. balanced or $X

now the Slide finishing pleased a And receive upgrade front. favorable to trend also up by credit S&P double on that recently a XX. continuing to flat, We’re rating on

UK pick revenues our the We tax They’re are and to reflects to affirming our response for GAAP EPS tax $X.XX, and COVID in to covered. This in the which adjusted non-cash enacted $X and actually the previous updating rate. plus was for provisions rate, $X.XX QX. in guidance minus in announced XXXX this million tax statutory our EBITDA charge guidance reflects QX non-cash was which increase margin also I just in

deferred that until tax this not take revalue quarter for effect higher does as While appropriate. rate increase XXXX. this liabilities We

both non-cash reflected have We to as adjustments these EPS. of adjusted items

there the business to $XXX really flow strong that’s continued by and operating a we range outlook value to original the $X to cash of the operational said outlook end like continued and expected year. performance And half. second as million given $XXX are with healthy million first $X.XX, cash upper new in earlier, are in half, $XX as strong million adjusted the the potential full to I capital. a we strong of first flow the earlier, enhances And said the upping performance based half. that. well, of creation as on for For course, we adjusted opportunities deployable And guiding of for Stuart This EPS, range the across greater

remarks. ups my that wrap So

turn it Stuart. I’ll back to So,

Stuart Bradie

as job good and Mark ever. Thanks,

onto so attractive short, presented the Solutions what kicker, today. Now business our in Government high also turn positioned we’ve strategy, summarize on but has executing which In KBR technology into end Slide today, a a markets XX, slide, in final to with future.

do work outstanding delivering people also amazing things Our they are in right areas. that matter. the performance And but winning

Our pipeline are fundamentals excellent.

are guidance tomorrow, consequence. and as a confident have raised We about

the future the we continue hand and questions. I for call Thank We what now to up we work will In over you. who we’re de-risk do. operator increase certainty. doing to short, will open to will said, the

Operator

with [Operator Instructions] begin Sommer Securities. Truist We will with Tobey

Tobey Sommer

question a Thank wanted Tech. Sustainable to you. I about ask

If help possible in defined the is work of is the sort of infrastructure strictly how you it? your – less if it’s this the of but as to existing, of in How now, sort could to you improvement versus for phrase of clean at struggle future that way, business much me? and working sort energy and of bifurcate look initiatives try clean

Stuart Bradie

looking and do that pointed decarbonize way. efficient what help future about a hydrogen of we the majority economy the ammonia we’ve at a in think portfolio what or do then quite say to and people the is What portfolio is I’d in cleaner it’s we’re the capacity doing the green certainly I maintenance the in that advisory greener might whatever equation. our the Well, Tobey of got we’re being majority to take? by trying is the So, around really technology it’s side of all is more all areas, don’t bit today

Tobey Sommer

should from And period if that we have down approach when future you the future, think a time, when related or we year? of choices in a you market to business? material do of wind – drag internal about Excellent. last would it’s the initiated any of What sort think anything some to not there’s how the

Stuart Bradie

progressively I progressively. $X really targets it billion circa in of for there with I would of then the say carryover hundred story. targets, said this did think detract the couple allows increased mean, off holds obviously, little business and we working that mid we work a little this year, But that of progression margins a the from to margins doesn’t detract from the of it we’re teens but so. into And much. there not year, still And And was year. million into margin next of, carried was, margins bit that revenue of walk includes doesn’t the plus happen

all that think up, lines that. think so I So I wouldn’t even about

I the into move just think reinforces next increase around we margin year. it as story

Tobey Sommer

lot I any XQ me I XQ, understand guess seasonality, revenue, a Okay. in modeling is And Thanks. pronounced, Or understand help perspective, just pace very to some but from things. your contract hoping the a was seasonality you us if about could change also of awards, could that talked there you then for help sequential sort you this annual in of modeling? Centauri, is expectations, this normal

Stuart Bradie

I behind we the performance acquire with remind divided when mean, QX, I not and them, of and growth, at like, current business if really in phase did and XX% Yes, I in acquisition beyond program. energy Centauri required everyone our you the I’ll we against of did a going obviously, the sense. sort directed in the factor models it’s that sort sitting don’t that and seasonal, pleased thesis, in very think, we’re think all

it’s does So progress, thesis. that that upside if all on

very there’s very, acquisition, yes, So viable be a don’t I a Never think really But, valuable it is seasonality. today. proved acquisition mind. beyond to still

is we did proven say growing And And high think the so the follows into into cadence off QXs think kinds of and business. continue be a up that QX expect was the the the move into just cycle. I awards. again case, that to as momentum QX the government, drops that one, there’s probably, the of that well, it’s QX as very busy a awards, same then probably slower, the Tobey, little QX. to I new cadence broader But bit we budget picks QX

So business. pattern rest that, will sort probably the follow the as of that it government of same

Tobey Sommer

Stuart. Thank you,

Operator

hear now from Credit Jamie Cook We’ll Suisse. with

Jamie Cook

and I well, good guidance morning, with flow obviously, you’re and feeling guess good cash your just two One, Hi, liquidity. the going questions. being better Mark, Centauri about

you. in the or growth start the and or term your and mid we Thank be, sort have again, looking Just your is loaded? today you wondering can with we And XXXX, steady then target, guess, you to of based to get trajectory story, longer backlog on EPS win M&A at, the growth additive targets. back how opportunistic the sort you should term help longer those expect, more longer to as longer when or, or numbers we’re I to I question, end to can the second term your of targets term, to just your of be achieve thinking guess about, prospects, my end higher that

Mark Sopp

for Okay, questions. starting cash well, Thanks the pleased And performance really to hello, liquidity your as I headline with and a tomorrow position. forward the the we’re company our today, and Jamie, of that I’ll think. overall with looking well, quite say innovative flow really

bit a conclude Sustainable well. as And As Tech today. in should prospective the are on development space more they the probably aware, I you as government there’s there’s always actually well what activity free M&A some of capital. said, side up quite And the

Seeing now. it a integration are with Centauri positioning occurred the So, teams And several they’re the the I part of has just the be fantastic. the employees progress past on really us allow of as very de-risking Centauri, constructive. terrific years, family of done say, our and would job over does to

allow So be it firepower follow does to up quite flow down. to as and ratios leverage of more cash as bit a come we’ve be constructive. us steady continues And got our our

So outlook, meets criteria. M&A can pretty be, disciplined And yes, very all provided I think the bullish that. our we it we’re on about

shown track record. good a we’ve think I

expect, be we’ve firepower always certainly that do said I And there activity we M&A will as demonstrating not present, buybacks, when we’re for feature. So too. have that’s on that. immediately And

that’s first to And how the So I’d and Stuart, you want XXXX targets? long-term question. cover answer

Stuart Bradie

Yes. Thanks, Mark.

I XXXX, we think, prepared we’re look going well Jamie, start think said, the digit remarks, be talked and there we’re to we about, execute. on continue XXXX, outpacing as were to as in sectors. think what don’t terms an growth seeing peers obviously XXXX his and that continued our to see, very we’ll our only predictable we’re but a it’s up pleased of is be as getting, with targets. do pattern well, progression, I we growth XXXX I growth. the I as beyond, double the just start our I to we’re to think, I path And very, obviously well I it’s think, achieving across to going And of down, work government certainly not and we’re of confident of as of think And the bulk which in progressing into year. probably And very many Mark and

big to flow as climb, sort it’s of progressive I that support any think steps up, going or I well. would a forecast be a big to certainly down So see, and going then our and catch steps cash we’re don’t think

with So, we’ve presented I on lines that think company future that up predictability long many basically range earnings occasions. nicely all profiles, in a

Jamie Cook

you. Nice Okay, thank job.

Mark Sopp

Jamie. Thanks,

Operator

with Kaplowitz Andy to Citi. on Moving

Andy Kaplowitz

Hey good morning, guys.

Stuart Bradie

Hi, Andy.

Andy Kaplowitz

EPS of represents half guidance year, EPS your the at as your than midpoint. first least this half So more

us Sustainable end know held range. and the do back tend you know favorable you a this back told had I resolution from to of and the point, I tracking helped So, EPS Tech But you the raising at that is me, give be what EPS guidance historically. modestly loaded your margin. to you high

is demand that bit. was forward maybe raise there in reason? some seasonality skews there So other of a QX didn’t guidance? pull Why any a But

Stuart Bradie

I the we’re more mean, of to be this I back like – through got out about we’d we’re quarter bit range, last halfway it’s play kind sort up to end by split, a out. to top quarter, the range. bumping if for think goodie you, I mean, the we’ve reasonably year, us, Andy XX of you of guidance to where, we high XX, I think No, we like and end conservative of of think the I takes talked we’re, as, the to And, the getting essence, be in you the

Now, rather than, bumping people with are assuming cash. up the midpoint

but landed our we’re delivering, we’ve in So as no the news it’s under good how for quarter. to keep much is going favors, past. sounds And, it, And the we and, better to the a way we that prudent, we’ll I think, as QX get and the – that’s see guide be year, over to rest And as say were done think well. and promising be. the I you of where we in that’s probably best to way

Andy Kaplowitz

portions in then activity three But this there. the that are the expectations? didn’t of And not has business that expectations year, a little can business your the below the level any months Tech into exceeding of understandable. of give little last are portions and bit mean you maybe by color more and the two increased other year more, or significantly your change Very actually for Sustainable again, you into us that digging a what maybe you guidance

Stuart Bradie

just portfolio seen last quarter, not And, unbelievably et cetera. busy. through a continues the really [ph] been and just perfect is that, to storm, complete activity all the on as – that, level I awards, and across our opposite, there last It’s of, with, quarter several and to I would at of business book-to-bill technology sort tremendous the think are the settings level say this quarters. be that of expectations no portions of below guess course we’ve I that’s firing progression I the said, the of the all

of a we’ve further really, starting business. see number really where advisory digital but lot are they work. smaller in go So and nature, mean, of impressive, throughinto quite I bit coming performance, maintenance some strong the a side the do the to of awards got we’re but those caption in and them authentic is through

So let’s course, I the prices pressure gotten face think themselves up on, all well a of there’s IOCs really that gone of a that bit. lot and, we’ve oil

they’ve as confidence in probably And future the you got, so know, more well.

on more to So pressure the stand obviously as think agenda. confidence agenda decarburization there’s I climate and

at themselves, and – and things well, a and of having key more play to you’ve got do things the just supplier to significant technology mixes but So, properly then look look at like that, role but product and, at plays a we like that. all where different all being refiners

really it there. seeing any slowdown not we’re is, So

fact, COVID. engagement untightening an we’re of belt prospects seeing think capital future in In pickup of and guess that a that’s spend during around projects. been I I levels around And

think So, it end the year all be and as next of for we year sure. I as this into tail well, look into

Andy Kaplowitz

Thanks, color. Stuart. Helpful

Stuart Bradie

Thanks.

Operator

question with a now We’ll from UBS. Fisher Steven take

Steven Fisher

The as half can some wanted expectations margins Thanks. half Hi some imply the first costs of that unusual type the the about mix it’s and this prompt a moderation. Andy’s or to little anything. year, follow it on Good talk about, in guidance driving for great, of what assume the just thanks. lower or year, the up guidance second I was just just bit morning. there EBITDA relates margins. to I’ve first does question

Stuart Bradie

we obviously, we’re in each Yes, quarter, set to. going think last and quarter, an TS, bit with this we more digit the we’re we a that the code we but start below set our segments, what year zip of think, I or double of to think end XX%, Steve I guided were being there and having

think that’s I So, good.

So, no change there.

Tech, we Sustainable again, of And terms gate In quarter last strong out came of very strongly the it’s course, quarter. with. this

year, look So, will up think the mid the I bumping when the Sustainable whole what in be margins, think do I that’s really we but Tech at think teens. you

much within a our within lead bit margin project, favorable guide, does expectation. original the of that you again, because very much lower most So in that performance very performance causes. our little project area, to But of

else, and fact, So out again, inspiring of nothing performance truth. ordinary nothing the in

their Mark with look the coming And company that as level, where well, but the in towards well $X and got level, said you when that billion we you we’re all towards if loans Corporate very group X% we’ve look with a cost good said, through heading we’re be those more it. numbers. and by as of and heading, line EBITDA tracking statement XXXX, So it’d and the at original sticking circa at you’re

nicely. I lines think So, all that up

Steven Fisher

you on collecting Okay, direction pay to come exits flows you’ve of that, million have thanks, potential a that charge it it taken before the something may I a we of on sure net to make million, you to on side the that thought actually In kind $XXX customer might framing the than collect keep collect? sort out clear just versus indication you And that’s first, I to this still want you about then of that ahead and here. things, we general, we’re helpful. have the interpret will something basis an this follow-up used just risk ultimately of the rest should out out Mark, to discussion, less subcontractors? on with How cash pay of to just the of $XXX like is perhaps

Stuart Bradie

as you positive this really outcome. should for a really, deal take, access No, me no, not with

going cetera. concerned, as counterclaims complex, we’re I’m coming of doing far what opposite and extremely the complexity way was As one et the with multiple customer the lawsuits other

our situation interesting the strong that guess our as as part I done de-risked performance many not the been who has we’ve future had recent our of with several we’ve so as also well. partners of, partners, We with

this opposite deal. coming a the out So customer cash no think conclusion to is I

means cash there is from out cash out. no, there is is there’s This just us. we’re coming So had collecting what that assumed so sheet on our balance no not we no

So in that zero it’s sum sense. gain a

doing In CCPP terms opposite very model. different of that’s a what we’re

We’re have plant. That basically recovering we power complete to they money’s away from. spent that the build walked and

the cost, of that in span their obligation. that recovery for bonafide sense had to the to them that’s finish that after we it’s And cost absolute going we’re step in. we’re, So

our timing XXXX. that one at expectation a cash hasn’t April. next are expect year, we the in fair end cash next the event. that to of that tail but that’s receive So positive the early And of is hearings changed, The

a but absolutely and as up, lined please out all charge. our that way event think So an not non-cash do cash in any write-down is

Steven Fisher

terrific. it. Okay, much. Appreciate Thanks very

Mark Sopp

Thanks, Steve.

Operator

We’ll Vertical from Dudas with Michael take now a question Research.

Michael Dudas

Good morning, gentlemen.

Stuart Bradie

Mike. Hi,

Mark Sopp

Mike, hello.

Michael Dudas

is there’s on is private child, much aspect? Are seeing space but like fundamentals So, favorite private of commercial, asking, segments the most visibility side? are next the on in or now still it’s four very on know only your been KBR not within to Government which to on Thanks. I the see a side? solid cadence And business couple you about but there? lot And but there of for support excited your orders of from one opportunity Services, also commercial, continue the which also quarters you do you

Stuart Bradie

it Yes. is a I a mean, bit favorite child. like

equally. think think got them I don’t one we’ve I love Mike, all we So,

Michael Dudas

And a answer. that’s good

Stuart Bradie

continues growth, terrific businesses and arena, a in really, they’re Australia got in all situation said. what I we’re now where, and in firing, doing And outpace, double-digit is that to international the as we’re

good. terrific, across that’s supports – fundamental portfolio the the all forward. And will give it was going So really and growth book-to-bill

I margins any above they’re them. in And slowdowns all got really after of cadence think all – don’t expectation. any delivering we’ve they’re So, across

strong really really, around. performance So all

And compounding equally. quite terms space NASA is in So military well. I we arena, would that, focus that’s you’re as why budget all momentum them lot itself, space a that of love of today. the in obviously, on And on say right,

really an space of our lot that this increasing, do years, people see more the will but start amount coming that Blue through lot, increasingly I an you do work like directly what orbit, direct a or part business. of and more I it’s before, coming not I I work material dominate think a and think a And in others. starts of momentum of said over portfolio. think So, space but not to low-earth still some good science with doing and to contracts, from But we’ll our as sort commercial through, NASA perspective, either

we’ll see it. of in But part to our we’ll but to start I our a course, That’s probably it’s an So, it’s report over time. business. future. that part put a non-material go today, way that exciting of And think good due

good opportunity. a it’s So

Michael Dudas

you Thank Stuart. very Excellent much.

Operator

have Eastman Sean KeyBanc with next question. Capital the will Markets

Sean Eastman

Hi team, thanks for taking my questions.

the be strong, hear you this GS win about big around recompete the numbers takeaways? So to realistic very guys but pipeline rate are it’s to what great looking? those rates about How to disclose? win think pursuit continue I’m trying just

Stuart Bradie

think rate know, as point, win is including I about Sean, We hard takeaways numbers overall, they’re our and were in recompete, do. – are mean, to XX% our in I dollars. Yes, XX% we between of

a strong quite performance. So,

our like what environment. lot or very numbers we’ve shot do call white that either So, papers low things position I strong and IDIQs like for at we a [ph] vehicles to very of using BD and others got would good takeaways, around single contract competitors but a of within Max source and

So, we building business and of you like, Centauri less are got intelligence not they do is well, well. and competitive, things that a obviously, community, as very book the which

all opportunities got it’s large not So just these portfolio. we’ve across our actually I mean, in,

some takeaway have lower competitor not of – got they’re takeaways, business, that got not they’ve some it’s this And fundamentals. and they’re so some profiles, just actually new

the – strong over answer that yes. think really on fundamentals are a think book-to-bill? is Yes. story? looking performing concentration answer that’s And I is And And really to support have we’re constant, shape. across question think And one really is going I the good portfolio? questions, your our we’re above we is is think answer to of growth a the Does all still future and the pipeline So, answer I the yes. well, those do business? I low for And are we we the in the

a But low recompete. or true the whether lot tell now we’re you’re is in we’re in reporting not. of terms over is a of to is, very what difficult our And win above what recompete it’s and So year. one a other course, or takeaway going of to

on number support how And that to QX, So of XX% targets. story. I’ll I I options, business. back, before, about this. we’re say XX% an we’ll of we’re those our back we’re year, we’ll And but options strong report long come But to think range the in in back the it’s just to for with give I I all update think to and additive going to saying this in coming think, shareholders, we when come and talked travelling upwards. to want on level and the come to about very We course, might back talked market QX, begin bookings our so we’ll we’ve and layer increasing

just a to have that building recompete, book a winning to growth So, QX we’re in we’ll not secure business you give actually we’re but there of our just confidence growth.

Sean Eastman

item nice All list for do And right, really there. helpful. that’s to Allison

are a about the robust But to visibility, around couple business. get very hear years we comfortable I side, over a that the STS in Secondly, of the GS right. lot on growth next lot the outlook people think trying – of

you you, guys Where is now a on this get that very see business. great recent visibility does from be far that a let quarter, how these standpoint, strong considering, times mean, around? quarters of STS? would bookings X.X in row out book-to-bill have this color trends little I in there book-to-bill several bit So a

Stuart Bradie

XXXX the and of as cadence awards. know, business and you Yes, And at the obviously, model executed increasingly size numbers. but top that And all we’re work numbers, of get way now, winning it’s very lot just it confident XXXX, the a our I all contract course, that and we’re say in that, a scale in confident would XXXX XXXX. growth doesn’t works. in of quicker the given

place into track to of business going get visibility. quite level a probably feeling last the really to if I’m start So good that we’re we up really good be. in XXXX. about of to earnings, good businesses, we is and business can performance good leading next get year. for that that’s That’s type a the how And for that to moving not and weeks really, feel as reviewing That’s those how of

Sean Eastman

It’s fantastic. very much. very Okay, helpful. Thanks

Alison Vasquez

Sean. Thanks,

Operator

Sachs. Jerry And hear of with line Revich from Goldman the

Ashok Sivamohan

is Ashok for Jerry on this Hi, Revich. Sivamohan

You’ve the double-digit of in Solutions of to touched on the Solution Can Government momentum sustainability term? the the medium speak you segments. you organic Government in growth some and view how

Stuart Bradie

don’t our you’ve the that’s in nicely EBITDA where with And that terms performance in of outperforming I as arena, we’re pleased sit I very in into translating year-to-date. peers growth very think, think of we we’re obviously, But that and mean, certainly seen. I table. know I double-digit most

get And range about a So and the long terms the feeling targets. really numbers aspirations all there sustainment around understand that, in of growth you I’ll of the good we’re that.

we’ll very we’re they’re So, aware. as strong momentum. progress that And in with we’ll And CAGR continue very targets towards confident targets XXXX. that those you’re

really feeling the good future? So about

Ashok Sivamohan

the know balance related sheet? the us Okay. balances affiliate unconsolidated [indiscernible] what you And let in can within the line

Stuart Bradie

That like for Mark. question a sounds

Mark Sopp

starting and – the the complex. all been complex. balance, it’s it’s the described out $XXX I the $XXX Ashok, by in always investment Yes, roughly at million million. coming It’s queue. off But this And come will down

So then of are net need side Again, combination house. And pretty minor. is have numbers. of we expected there, the the a some result that’s two recoveries from that the reserves that CCP to of those stay

firm’s a if very sheet, balance will. of on And Stuart earlier, outcome of good high so that And that’s plant denominate there. that expected the charge this exposure as have you mentioned separate to on that a the That is balance call cycle times remaining combined today, a recoveries. confidence, we couple the relative completely CCP, today. with is power And the those

Ashok Sivamohan

Okay, for thank you the color.

Mark Sopp

You’re welcome.

Operator

hear Now, from Brent we’ll Thielman D.A. Davidson. with

Brent Thielman

to Are explanation, this Mark, you, this continue that is travel of morning. as have you. sort I going the that accelerate look return more sort you a to going to and of level, employees that understand be thank one and levels, see work when we Good the return forward? office second well. about great, Hey, campaigns? baseline at guess, we quarter as think to SG&A the might for travel

Mark Sopp

fairly actually, it we Brent, stable. see Thanks, being

quarter in per would the million I be sort SG&A, $XX enterprise our $XXX million territory. that say should of to So,

QX, that can undertaking. We’re be by initiatives in a some which TAD we’re above explained

a if basis. for pretty consistently don’t And things, more an quarter if not $XX toward per volatility decrease that, normative basis, that be about XX see on somewhat EBIT So, that QX quarters should increasing Corporate you we’ll of million off, part prove QX. from to be I XX some the the we’ve various forward to of in will, ballpark steady particularly we to – what an EBITDA And on on showed segment, it’s and there’s $XXX in but peak side. it’ll then million be SG&A think, will the Corporate initiatives,

Brent Thielman

that stick to then sort retention, challenging particular how And it’s the and Okay. to of and love just into find people doing, area? is it on talking labor companies you’re in thoughts recruiting, how get faring commentary, KBR your sort of about many so and what is

Stuart Bradie

normal Yes, we our I cetera. a growth mean, And we and we’re areas, values up drive et where in our issues, I recruit supported to and live being think look good people into at that standing to not to is certain not are terms as as STS we think by as, ability they’re look business look we the certainly of across stead. what seeing hard very there we sort labor in in after company, of as people and

but we in mission. harder do retention, And really there, looking issues entered are of looking little for because hard Australia, U.S. think I bit it’s in but we’re very, not lot have example, but recruitment, in doing only the we a busy at not your the very a of what no I labor at Australia, impacting to and in are ability in think, internationally, there’s a shortage So just

you’re easier the probably is probably piece intelligence area, recruit and I well aware, the readiness to into. So of but always the, that’s terms guess, as sustainment in difficult,

dedicated those those as bullet So, I think a right retain bag. or and very, new statement And crunch And to to there’s a we’ve pockets, on wrong be on are I is projects. helping But I various across work staff to to a down don’t I say focus for breaking that businesses a recruit think fundamental focusing it in it. working. silver got a think terms obviously would a that labor and there that challenges to shortage machines they say business a it statement. say very areas are and the those strong, What there’s businesses. of just the, need any the their on of depends, people the it’s mixed

growth to the it constraining probably we the into best answer that’s as our that. future. So, look is way But

long a range targets consequence, We have our as is answer the no.

Brent Thielman

think plan. you? Okay, associated one what proposals things some could monitoring tended are one, applicable and Stuart, of I KBR infrastructure an curious to if with some that of those be that’s particular really within just stick quick I could helpful. you’re hadn’t I be to of the

Stuart Bradie

into there think within think our I be what I piece, capabilities which plays there’s as the we that across delivery we’ve side a is that there’s into again, the well. lot I where but agenda, very we piece almost a the program – infrastructure there’ll well, capability R&D going money strongly got change think very of will sit, around offer strong Yes, of into in a play can climate firmly lot KBR,

think or do start to rules not you’ll see, anything that. I So, we’re and front like designing

So at it delivery I play commoditized into commodity don’t think will all, to will be and promising thinking as the that but play do in we’re And get program very, capability sustainable going stuck those that sort our going services into I’ll think more play very [indiscernible] to but areas. it construction across not not our we agenda, we’re of looks or to portfolios, slightest, a R&D R&D it business, I sustainable so, credentials. look

Brent Thielman

quarter. you. Great thank Okay,

Stuart Bradie

I’ll remarks. session. the for will Stuart question-and-answer Ladies or you. over call to turn Bradie Thank gentlemen, any your and back conclude additional this close

Stuart Bradie

in interest a ask presentation a taking questions and think, strong excess. where We risk really, in said, sit Q&A uncertainty. to the I my really takes piece, and very, travelling outcome are, few it table. resonates. But do cash business growth as time as very well, think, KBR are I I for upside we XXXX. think, I fundamentals excess performance in we’re do numbers a KBR we underlying just conclusion pipeline moves the the removing it point overall And think it and the litigation the with as really a conclude thank of a for of be of think a you continued momentum Yes, terms CCPP off to into again, the event takes spanned us operational the priorities, questions. will I your to and arbitration listen budgets where And on hopefully obviously, it’s today for a And opposite and in the the clear. the us

a the thinking quarter, team way the we’re And sound. I and So the all future they’re about think, are business up, about excited I the together fundamentals of terrific the management very terrifically about is think tomorrow.

So, talking thank this we’ll for many you your on again one time. obviously, you And be of one course to of call.

hopefully we’ll once. and face in you All safe get the see stay and again, coming best. the you face Bye-bye. thank to some So of to

Operator

and do for now participation. gentlemen, conference disconnect. for Ladies your you you conclude will We And today. this thank your may

KBR (KBR) 29 Jul 212021 Q2 Earnings call transcript