KBR - Earnings call transcript Q2 2022

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Operator

Hello everyone and a warm welcome to KBR, Inc.’s Q2 2022 Earnings Conference Call. My name is Melissa and I will be your moderator. [Operator Instructions]. I now have the pleasure of handing over to our host, Alison Vasquez, Vice President of Investor Relations to begin. Alison, over to you.

Alison Vasquez

Melissa. you Thank the XXXX from welcome KBR's to Good call. UK quarter earnings second day and

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

Stuart J. B. Bradie

thank Slide all Thanks X. Alison and today. on us you for I'll start joining

for fully is which KBR convert with where placing I allows of In landfill neutral recycling, a recycling and enable high destined mission As spend much you would high in $XXX us exciting. sector Mura mixed Mura, know wide global feedstocks. plastics focused, we pioneer end-to-end the also with a expanding participate committed additional of X more growth always to own global million circular a this range enabling tons zero want sustainably a a economy, operations. to invest today Targeting Technology of partnership June base it’s on to into solution of kick by future to we ESG focus in plastic in center developing advanced million its with XXXX, providing so waste, harm which an plastics annual be global to Mura really by through off licenses moment of our a an client chemical today KBR capacity development plastic is back of to pipeline global quality technology and its operation or a advanced at

investment really, I builds already very so and loop And year company, together the approximately Our licensing XXX,XXX really the momentum. Mura’s in a advances chemicals recycling, partner. to a operating on exclusive would solve team as last with say great and into is this relationship we process we technology the tons alliance such to numerous And world's have entered technology you'd be modularization largest collaborative have expect, already digital water capacity as licensed power, of solutions. great produced

under an KBR will engineering, be management, Now projects for support provider etc. integration, project services led also Mura the preferred expanded to agreement, partnership

adding sets key skill really KBR. So bringing is from value

develop multiple of important an to scale in Europe role week in U.S. That that a world the of key Dow to tons up and big off will as last circular produces. adding announcement recycling just Now advanced a made play XXX,XXX with Mura feed taker capacity. Mura facilities collectively the

Dow’s by very what development. represents together, capabilities. of beginning excited endorsement is just upscale to a so is huge This announcement of and technology Mura advance largest date commitment this recycling this to we're the can Now and actually KBR accomplish the

Slide Now and key from takeaways some on the to X, quarter.

raised We guidance. hot. started, we Now the in before outperformed I QX we get remember pretty started and

cylinders. from quarter future business earnings firing a potential perspective. on excellent was for all this KBR is delivery The and another a both Now perspective

continue we Now quarter. outperform that's why this why to and again we raised guidance last quarter

Our top bottom XX% growth adjusted EBITDA people with delivered to almost year-on-year.

in over and and a and adjusted of EPS any exceptional. growth bang on. and is even this conversion was better course again any was at really of highlight time importantly XX% And market Now cash generation

as some Now through would Mark and puts the takes these, there expect around. will outstanding on give details you all quarter and were result an you

bookings were both in of QX expected across a and absolutely SPS, great in book-to-bill X.Xx, a As terrific culminating GS good performance.

associated business of upon continue but moment some in underpins high to expansion cover again quarter. work we win margin with will a to I position this we awards our the and targets importantly our support long-term these level expectations. a built have growing book targets very the Now of the earnings at profile right and key A this

of continued in will portfolio. in transformation in really via some terrific investments As digital that areas by early a a and customers performance and took couple that which team, UK, at above on divested business, resolutions or little margin VIMA later, all effort and invested and economy in way detail. was bit of the some you We will and added the excellent. sales circular non-core helped across discuss cash were skills the Also, Mark see the these contract even the we touch shortly. to was margins quarter we meaningful asset without key in reshape will a the by expectations Mura But that acquisition a then with

respectfully. arguably for XXXX to XXXX $XX year President's the days, over proposed outlook has billion Now remains, defense Senate positive Government early briefly increases represents increasingly proposed each and And been, increase budget House budgets, I a on X% the the have touch and incremental but and $XX is approved levels. full X, billion of KBR. on Slide for the to want Solutions

I tell soon signs would think all where North. to Now too point all it land this is but

this awards process space scale sizable across and of cadence its remains course continued areas in of early in Europe. pace the aware. LOGCAP stages, while to be at the QX that fiscal expect budget as to but cyber, where and by and through modernization, year September encouraged course, Now to in in overall we're elevated KBR end intel, of be accelerated RDT&€, government's the of continue activities defense internationally The given is the is think fairly U.S. increases you're book-to-bill U.S. in continued the we and towards our I through reflected

seen the a NATO Ukraine commitments U.S., importantly, range relation of have activities. wide from to from you supporting Now increased in but across also

Now area. historically KBR this not only and supports U.S. the Europe, supported to and UK starting orders of but both task the and we're beginnings has in NATO see

this While will to are but longer positioned still serve clearly, early missions. tell it's term near too where and to go we and early

numbers a very backlog. deliver has means As highlighted on overall of performance bookings almost of it its the and strong course, healthy XXXX slide, now the work GS XX% requires the to

to and business highlighted we've wins via DEVSECOPS, really, pace new [indiscernible] high this the that the on picked out via up clients ceilings, contract and services result A strategy RDT&E, Now astute we've portfolio. across across like to this really capture talked intel our and increased contract other is really, Awards previously And some expand vehicles this quarter showcase by right team. capabilities. quarter. contract our defense end about to playing great really

Operations announced quarter. already which this our of is we the ground As talked This won but end for separately at this year, was before of And little bookings on a was bit about the contract NASA. largest Mission the systems recompete this QX, you know, Goddard. went at we've into

five-year is a $XXX million. worth up to this contract Now

of a spacesuit to for This a Gen out spend won like Now and of government Mars, quite missions human mechanisms collaborations coming is by program XX-year, billion on example in large to is commercial of and moment NASA in a great the of KBRs IDIQ xEVA contracting KBR as and like Axiom Next $X.X team, the Space increasing contribute part domain. ability cool. convergence contract I'd space to the today the commercial

playing think, strengths. our on really, really I So

with program customer. this technologies, and NASA that as transition commercial data a like spacesuit innovative time service will leverage Now as looks key a in a and into for something applications model

Now services to of encourages future same on an to commercial spacewalk use emerging exploration a market program customers, the grants the technologies for range this also approach right procurement. NASA and new

spacesuit support to ingenious. quite provide program, and perform So its work. continue we will that we ongoing maintenance to for operational NASA Today,

So wins new next several be incremental. over will years, the under Spaceship the Program

order's for the task Artemis the outside and The include to of demonstration [ph] in station first completed first the space be landing. Lunar Orbit Lunar development

really So stuff. exciting really,

bit before, we said Slide we to do clear business to showcasing We on X. I've footprint. our is but this of wanted a time our of part expanding spend Now believe as GS think a And differentiator. underappreciated, typically it's international

have some people $X across we airtime I billion. line key XX time data over circa organically workforce of of similar of and a people bit the So transformation. assets has annual This in of high-end revenues The shows today. on period. diverse X,XXX U.S. that different a very both to to now acquisitively, come this mean, workforce locations KBR points. built and that very, We quality really with have our over a give to kind slide wanted is it of been this

margins portfolio level Our very at capabilities very, teens for the engineering, in very, as time. EBITDA data has it's healthy performing consulting, in transformation, XX%, digital business and and renewable energy, high-end more. attractive quite and and advisory, much strategic that shown science, security include systems resilience, a this very at a been The here, CAGR

we've Kahn. importance our Now strengthened to Paul Executive on and the Team reflect the of actually International, bringing GS differentiation by

this as to Now the of part further business. reports Paul we and me, recently joined and our grow executive strengthen ranks to look

Now Executive and and Paul He a has of a the of Airbus leadership Thales. was CEO executive credentials, at Cobham. UK for worked depth great previously Senior

excited GS I the to very to our I'm International. it welcome and team, to reinforces So commitment Paul think

that. good this of a be and come I on U.S., the alignment addition already the on obviously to Frazer-Nash. of a and AUKUS more engaged between we're that's would via And example think [ph] Now UK, increased with program the Australia. And VIMA

things coming there. So good

So X. on Slide to

sort STS recently has than about Now other many, strong. back reputation and there Middle enthused and a long-term and And COVID the with market obviously, more performance been customers. visiting thus, chemical our went outlook been got in And really, ever. lifted recently really I'm countries, to I and of the customers, top the our absolutely IoC many East restrictions delivery

Russia-Ukraine lot secular talk and Now as and green; particularly not the forefront of of hydrogen, a obviously like transition will opportunities ammonia a about be clients' and fuel, the the of security, economy. energy in and investment at by course, lot things and gas both energy; blue war; this are investment heightened of in future for surprise; our a thinking

imbalance all and The are the backdrop increasing of driving high-end our time. to capability, have been priorities for supply-demand right now. technology continually decarbonization our our a decisions are portfolio services, some truth investment and Now for in long-term these demand

a indeed. and assets. was QX of and overall It XXXX Now sustainability, side. its STS even There may very, stronger circa decarbonization under ammonia highlighted backlog healthy Awards has was awards you this very in momentum XX% the contracts right-hand actually energy recall, book-to-bill quarter. strong. the contract work our key in now Shah green importantly and of demonstrate transition, existing Deniz are project in in some like continued for

Plaquemines about and their Now copy is Venture or which Global that three we've Pass project. time. here now for the engineering, four the on And Essentially, integration over announced Calcasieu role project, this talked our is management, producing commissioning FID support some next of is years. LNG. project a

is this profile, risk change our program fully stated there. so aligned Now with no

equipment, pieces really We construction many the number is joint they responsibility. partner a and the of venture client the partner have good who And packages. and majority a have Zachry, the our other of a is key liquefaction partner, modules in a partner, furnishing including itself called

minority a come joint as through profit earnings. our venture, will partner and this Now in equity

is prominent an growth to earnings as is the STS Slide equity and thoughts KBR earnings And going coming into a forward. on sizable some with really with and more all and that important accelerator. on storyline story, I XX really, think VG about STS margin mix margin expansion. Now even

short into XXXX, will reorganizing just restructured commoditized redoubled that this seems XXXX just as in projects a formally during yes, COVID, this business' EPC that. business lump we recall services, to set ago, time double businesses like sustainability $XXX we and strategy around to technology You it exiting and In sum course and all the a in solutions, by did sustainable XXXX. bold very million-plus XXXX, our foundation, EBITDA we

see think Now was from met this with I degree skepticism delivered. that can some but initially has understandably, team all of absolutely investors, you this

annual to generate almost on this of million of and year is KBR's that course STS EBITDA circa represents Now $XXX XX%, profit.

and stronger, So up into pace last more ahead to solid track. our sort earnings X.Xx teens with it's the end of this upper to And negative actually accelerating where It business that counts it business importantly posted cash. book-to-bill of continues of truth, set in story. low real growth a it and And deliver this are getting to of it XX over earnings It's real, actually, and working deliver of pleased piece is its profile. months. XXs the and on with margins, most, is I with be markets and strong margin capital. couldn't And evolution operate

for hand to really, really over ahead Mark. And So exciting now times Mark? I'll STS.

Mark Sopp

up highlights Great. the Thank XX pick and for results then I'll segments for Slide on I'll that. the hit Stuart. you, consolidated after the of quarter,

advance do the those fronts, transition delivered our their of but said, energy and roles that turn, security, X% in in Adjusted like culture. consolidated revenues $XXX core in Stuart including These really a they really our all matter businesses. in both EBITDA motivate As QX, year. around playing our XX% impact fact over an world role a the margins space, came critical team world. QX important billion. all to fronts, these the enable just over team up areas in last team's the energy This do national successful on were up by on solutions and clients security, types excellent healthy things reflected of at in In employees $X.X scheme to million,

also We so in case QX the a was Hedging plus goodies FX that benefited and interest and earnings P&L through this up Adjusted per on on also quarter, the Natasha flowing XX% year, moment. share which some off to expense. last actually exchange, and results I'll of of the more cover interest in was growth, contained hats favorable over that last foreign actions year, Treasurer, our taxes, one. year-over-year building EBITDA had

discrete charge recur a On that the in year. normative about at were did this Taxes had year not tax we XX%. tax QX last side, year this

this our announced ownership this in the Mura, to upfront, million percentage As aggregate XX%. $XX of Stuart commitment commitment we increase We June investment funded of which roughly to mentioned $XXX would million year.

QX EPS, result, market fair noncash investment -- gain stepped of but we practice, its in a market value quality really $XXX year, it $XXX in from an the ascribed we a out adjusted and is As original with unrealized indeed excellent and have and other up our flow X% numbers Mura. Consistent the respectively. past our that value in to quarter cash to reflection back investors blue-chip XXXX of up adjusted Operating have million gain. we made million, $XX were good with strategic and and last this free current million

in and pace business be in quite within cash this Government assets, conflict the boosts line, of buys European Deployable continuing OP performing nicely on $XXX better the year-over-year, us our organic all the two area on-contract contribution was area some command. our $XXX over response and Even of difficult Defense cash performed guide. in growth from but capital quarter, elevated First subcontractor Space half the deployment and some it was but which for group-leading higher this a and the flow busy growth with The of million to material the for both dollars quarter four million proceeds obviously good settlement readiness our activity increased puts noncore growth the Slide and bottom profit FX the on with Australia improved execution. to timing plus a Ichthys the and and and to sustainment Government us allied areas cash, profit line, headwinds, that top well. well the Intel year tough optionality. in predict. and well free time, year and driver XXXX, which on flattish dollar and sale terrific came flow, Frazer-Nash Science post free International delays to is X% full for more business as QX, at On in this marvelous. And suggests mix may is XX the here with fact, was were on on segments. top margins through with with operating couple and with

in we $XX by sales, XXX in basis reported quarter on the Stuart monetized about cash recognized points. gain $XX Government for million boosting business asset the margins in a mentioned, million investments and certain As EBITDA

excluding XX%. line right our at Importantly, were GS gains, in in with asset these margins targets the

Now right XX%. projects little a Stuart has STS. is line on planned of sequential busy to top now growth very The as said, almost of areas from still This the growing behind set produced business, out timing away in Russia higher-margin and and to our strategy but we do. number, us as pit

half outlook STS highlighted, the Stuart for and was also in outstanding second the profit QX, is excellent. As delivery

energy transition the a are towards energy move greener by fueled from future and solutions seeing constraints and from investments, we're security the stemming Our prices, to conflict. efforts further Russia-Ukraine energy benefiting supply are and strong

hope this energy earlier we this from higher-margin XX%. of margins million growth but transition items hold EBITDA now still expansion The margin some XX% quarter the our is benefited margins. couple with the at a in was net In $XX accelerated contribution items, of addition, press forward this that with attributable business STS directly excellent in to taking customers quarter. government these is of QX STS of to in business. saw in areas our releases exceeded this the pulled QX you core

rising put are swaps in helping which more conditions offset in really under previously reductions, effect this rate helped the have favorable in regard. ahead are place QX at As stands Stuart our now EBITDA, benefiting On cash pace strong to Slide upper targeted leverage Net mentioned growth profile. teens-plus to of earlier, we flows, X.Xx, achieve also rate XX. interest and of margin from we debt rates. Interest

first from $XX resolution matter, asset proceeds million subcontractor $XX recoveries QX deployment. buybacks. event reduction in QX in of earlier had first about This investment. of We Ichthys by about had quarter, We stock $XX the million. million sales. plus $XXX roughly today, will of about tranche from the million debt $XXX Deployments for the closed the obviously another were Mura million the our and a VIMA $XXX treasury was about the be tranche in We acquisition of and so million that boosted on

be environment. but XX. deployment given plan we like to not Slide on interest conservative emphasize, capital changed, and capital, guidance have rate to with the priorities On to economic Our I'd

overall good across results and were first accelerated We the based are affirming did for this of and have QX in second in mix on XX% current the we particularly year work We guidance a and of guidance, handful XXXX half. That that a fiscal rest our market contract feel good Back With rest we progress half board under our the it conditions. strong course quarter benefits we'll continue healthy originally closeouts from deliver through of full year. the about of Stuart. and to covers it to me. as expected revisit our of to the XXXX,

Stuart J. B. Bradie

done. Thanks, Mark. Nicely

Now to summarize.

I the deliver will double-digit associated to are absolutely portfolio quarter. think win closed the robust, adjusted we out our business. and EPS STS support long-term targets continue expansion. work in a of across Bookings of with and EBITDA the pipeline and, remains of aligned and the about and first both that of opportunities we've outlook excellent positive the course, market the excited outlook. XXXX really can GS attractive I'm margin half and and growth with all were we agree, bang, in a adjusted trajectory The

continue in acquisition capital do. capital we reduction, investment the in we we doing a return balanced debt Mura, would said to we With so, strategic what to manner, shareholders, deploy as additional VIMA, would said we do of of

course, cash earnings. then contribution will and going with International We year forward, the work an of story. about we growth quarter, on will KBR when now long-term story whole but a in a All XXXX for HomeSafe and to rightfully hand fully back with another hence excellent XXXX, of earnings on lot revenue to and today EBITDA with conversion, and right margins a increasing over we're to course, so. for really consolidate and tell momentum it and fantastic GS and now cash. the have XXXX really path who this XX% for talking higher equity Thus, EPS questions. help with share, we ahead and, building under layer you lot overall margins and later targets. And to not the listening contract of the the about via STS, where We year, talked for Melissa, EBITDA looking winning full XXXX. call we'll will more in you and XX% strong work all, I'll proven Thank be growth EBITDA EPS EPS secure open is our

Operator

Instructions]. you Thank Stuart. [Operator

question Our Sachs. comes first from today go ahead. Goldman Revich please Jerry of Jerry,

Unidentified Analyst

on in on appreciate construction billion venture services for that budget. KBR's the this but of it's is first question that the design, joint is recent today. Jerry projects Adam I LNG and Hi, we've My outside [ph] Davis $X.X LNG modular over seen will role provide award. many that been have

under the So can costs, it the you is the that at of the factors risk? is profitability us just with risk build and is labor responsible scenarios labor productivity, comfort help JV JV what for,

Stuart J. B. Bradie

really this. a risk much tanks, customer sum I is feel But do market. services mean, construction. of customer expected commercial there's in feels is a lump that under bring remember, very good providing no I liquefaction The we itself FID. LNG and itself they lump sum way IP itself remember, guess, no -- course, The the there not profile. risk. we, fits sum I the the model as the construction very, the the one And constitute is profile. lump lump around stated pretreatment. sum risk to modules, There's is said, question with this this So I project. and not It mean, it's about good very our the

for with that an construct. them in risk And lot that risk integration comes vendors playing process with that we're area. although doesn't in role, So actually exist a us project typical sits that their of and LNG your this typical type

model. commercial So a very it's unique

that out our risk think profile. should responsible change not construction lump out does business. EPC of I risk construction. taking take the And KBR's actually sum comments in it of context. stated course, We're the We're of that at you we're comfort not for

enough So into that numbers comfort our that I are long-range most the on themselves conservative And gives It earnings for and comes hopefully, you through model. also the would already targets. around built say equity that risk side, us.

Unidentified Analyst

can great. on us here? just the thinking Solutions update in from you burn how you're And That's cadence about revenue Government

Mark Sopp

Sure, went Mark the relative this the quarter. We details to here. through components

We have built awards. of quite pipeline a outstanding

year got year. we that of to very for So a modest decided the next We've our in extracting in OEW hopefully, flat favor we to minor year. growth hoping see the some rest of the is we as year. good of out effects impact this It of impact the are course, overall last That year, visibility get the probably very through of rest business a the have will have. quarter-over-quarter, favorable but

seen So out. of coming we have seen some delays. not decisions We've a lot

recompete biggest in are of the the gets with sure, way. for QX, book-to-bill the We out pleased

fair actually our decisions on Pace with winning long-term long-term of better, our are outlook we're we're comfortable so the be And bullish but share. could targets. and

Stuart J. B. Bradie

to on Just a there. bit pile

remarks. difficult NATO bit talked a as obviously, in very as this coming we're I is although, through feel too given and year. said, change from U.S. of commitment growth I think seeing work UCOM, of course we the went Mark more the And expect predict, work I think we that about through opportunity to probably the much. as positive. the there's that we the year, it's rest think And And coming segment. through we to we of cadence the the through move next into little Obviously, prepared don't this that

Unidentified Analyst

you. thank it, Got

Stuart J. B. Bradie

Thank you Adam.

Operator

Jerry. you Thank

Eastman you. comes Capital next of Sean over to Sean, Markets. Our KeyBanc from question

Sean Eastman

Hi, for Thanks my team. taking questions.

sort wanted to just I just of question clarification. is So first --

have the intact guidance strong XXXX We in obviously, outperformance at quarter. some the very an after, level segment second

update in the be it of underneath were noise? how the there's kind any assess to whether helpful like contemplated to the full negative ex just offsets year these quarter So on pickups of the that, year frame in for perhaps previously, example, underlying FX, the second full some would

Stuart J. B. Bradie

the I QX. again, absolutely to mean, in an answer the is half way I guidance very have mean, Sean, think of question. I we good first a outstanding raised We this And easiest year.

our the are to probably QX. we I rest strong a through in We our revisit of who's more the conservative perform if we actually Mark, conservative you than came guidance year. like And just nature, very -- continue am, said as we through progress know,

is performance think I in this think And making relooking we'll strong that I point. on in sure positive at a think through, comes got certainly question guidance more So a be we've QX. way that I if at

there's the would guarantee that, probably that course, -- So at of very that, be but I mean carefully. you of think should no trajectory looking we I tell that's something

Sean Eastman

to on impact on there. the large. be a going size STS an to Okay. in And have go-forward to maybe little that coming assume Interesting a model it considering contract comment. on also Plaquemines go-forward no Thanks quite run rate. changes bit would would obviously, how quarterly there's be And of revenue of for to line of I terms arithmetic to equity the target, that a margin this it's Stuart. the helpful then And get idea back award, going flow through earnings, would it here.

well. any be So would helpful color around that as

Stuart J. B. Bradie

go mean, -- the I growth consider our we teens And Yes. I our on to I our over is above STS in it And has plus. mean, think high these margin XX% of I expansion XXs. and both the that. low guide room time EBITDA think for into

of and any that bit that, hopefully, get EPS come the announcements look with today think around skepticism disappears and that growth if out, some if answer of Sean, our under more of skepticism So at laid fully. a some hopefully, there's that also, disappears to expansion, also. we've margin the belt, to today etcetera, skepticism that I also with you we back think skepticism time But underlying I need any business

that's time, best but probably the back we'll way answer it So today. come to over

Sean Eastman

thanks. there. over I Okay, will turn it

Operator

Thank you for your question Sean.

Our next Brent D.A. to Brent, from Thielman question you. Davidson. comes over today of

Brent Thielman

opportunities. thank the on one more Hey, just Maybe LNG you.

scope of prospects stewarded sort this Just of and and wondering pursuing get there sort in? similar-sized of you're are can risk if that out involved profile there sort there of out this

Stuart J. B. Bradie

certainly within on would got to of sales. then trying you with go a outside we'll think they've we way, or not perform a well, that on for course, their shape LNG probably think work. lot the mean, and Phase are not they if a form that. of some we're to successful, things would think that here. think this I we'll little derisks of by I of -- see targeting we if in that into that, of between getting I to think honest, be be next any prospects of in way Yes. I Plaquemines, marketplace terms are project lot has Pass, they far the VG unique aside, And as and the I a considerably. fruition this proposed while, do today, on And back I'm VG But in And that in portfolio Calcasieu other But that commercial the that sum there's management X a comes few the lump announcements proven EPC number progress. in and quite And is basis. shot done model business LNG and has which project

wouldn't management project make to East the roles successful a basis, than this models maybe in will think some going it. on doing development are those. be they at we're will -- if and well. not going by count were LNG others, on continue around forward, in they we'll this Middle see being do will adopted that our the I reimbursable I But different work fact, really not very commercial In today the they past. And look what that But

Brent Thielman

focus piece room the overall of just what's view of international new on what on front long-term of Okay. your to in of the And penetrate have segment. interested I what this growth you relatively then the you've I and Stuart. on margins to I the of GS ability what -- the the of today? with as international to segment. mean of you Obviously, kind and sort business program lot done a build potential appreciate of organic the call was portion out attractive that, sort

Stuart J. B. Bradie

VIMA that also and UK U.S. in, the Australia synergies all of in U.S. to we'd that way realize, believe, think I trajectory I strong fact, and is across think, plays expect XX%, well we and as been three, united some connection to the to a think we have And in that they And the that the historically just integrate three marketplace. and Frazer-Nash and I -- CAGRs the between our continue. mean, jurisdictions. actually and stronger in all footprint and we a I come will sort

of attractive. over continue see So extremely continue in I really, to think really course, of markets. of that $X some becoming level at start these an outperforming our important billion. be you'll portfolio our And it's -- you'll to margin increasingly will well part growth And expectations

actually And the our wanted to that's a I to than to So similar why the that's U.S. of that to give material really U.S. typically and place differentiation. attractive think are it's become the part is market. going the returns market, business. we We being highlight transformation there greater more color tried you, you up taking

gives great story. us margin piece of enhancement sort that So differentiation of in it a

Brent Thielman

Very you. good, thank

Operator

Thank you Brent.

Kaplowitz from Andy, of ahead. go Citigroup. today question next please comes Andy Our

Andrew Kaplowitz

morning good guys. Hey,

Stuart J. B. Bradie

Andy. Hi

Andrew Kaplowitz

have margin So, or to it markets you seem forward have projects doesn't you're chain like KBR, chain than given are labor issues? about and/or but affecting can been supply talk issues, cost move impacting any global your and supply labor having slower you tight seen any expected how

Stuart J. B. Bradie

Andy, business. not services I mean, I mean, we're typically really. a

review terms As midyear that's across view, things, the the mean, you of know, from numbers and today. inflationary not business we and point I an we're into a built in really of -- did all salaries

retention think numbers somewhat. leveling are recruitment I and and out our

higher but addressed typically. recruitment ago, so provider a was though we've of was year that. a And it a up labor turnover than we're even bit keeping And pace, probably is

So seeing the other we're not FX supply of interest and on any question what real really piece is the impact rates. around I think do. And we chain

them. I think Mark addressed

to think outperform. treasury and helps, also risks have of job Mark somewhat, the It and actually team I course. a businesses of continue and terrific our the mitigating done international those

So I think those than others are ourselves. perhaps greater areas feeling headwinds -- some in

to us outlook. encourages be that think positive this with on I so call And very the

Andrew Kaplowitz

of behind revenue then Inflation quarter, in nice views are tailwind, bit sort what secularly, you're And the cyclically, $XXX a but any EBITDA us color a what it. know in what give year. STS flattish I on it following like into in on more And think initial business, double-digit this seeing? it little KBR? to you you so Can said that have seeing Got were just you million achieve target growth, and you you then the seems Act maybe Reduction mean the I up. could of should is for

Stuart J. B. Bradie

answering part think Yes. the latter obviously, I first. I mean,

that. I energy that we've obviously, strong And the full you're as well the In I market. dollars I think, tailwinds targeted lot of sort quite done points and effort we at as the not of and assessment security climate again, change, But all mean, aware. of think, U.S., at into a effort said, puts North.

mean it's you've oil sets. seeing we're I got probably of plays South that the and into that price IOCs in terms only It that in key today. the our far, are where NOCs of modeled at skill does. So an And across board, really budgets what far original

So these the dollars dropped are incremental to all really. line, bottom are that

seeing And wants imbalance, market and to supply-demand address, that share. guess, client they to to a cash-rich so want gain base the security energy the we're continue and issue very I

etcetera. around ADNOC, transitioning they And right from and East hydrogen oil away so And taking crude is mess. thought that from the turning crude Middle from into and chemicals, companies burning Aramco are energy like a investment it about then not contain for etcetera commitments we really and investment strong and and component a

our also So will you that And a they're aligning others work, of with a being technology to lot try like. share lot cashed cash lot defend. put portfolio, market up, to if a of

investments see across has under in So this years increased quite you're I for we'll in few the a truth aware. board. investment think there sector And to well been start now, as

that margins making that made before. -- it's never So they've got you've actually refiners

fit again, the in, chemicals the how And sort So hydrogen our And future green capability. very, then of at book-to-bill very very very, plays making on sweating the and technology looking is whole there's with the olefins hydrogen the that then everyone's the sort of particularly you've is fact asset And a actually got and really, expanding, course, marketplace of technologies future. consequence, much that demand optionality, the guess, at to strong. expand sure And STS that and and as around of of I that's businesses, you and shopping companies they looking layer blue you see list. can our course, very strong. similarly

to projects. a but cycle, the storm a to for And from not almost we it's an we're that demand across that seen urgency ability years. number actually perfect seeing And So and of pay board. only the haven't this a there's for

it uptick was seeing in we're opportunity business, very than my about probably I is so remarks it's around prepared which a my lot across why that of But and of normal think real, well sort first Germany. security that. and so less market, award that already conservative to set super I of announced it's in piece, And upbeat a as LNG, really energy to do have shows the that of the VG VG company the self sales

more probably and that come So there's to cycle. -- in

certainly a gives number year, a very of years. So outlook, I one think not strong medium-term it but

Andrew Kaplowitz

Appreciate all the color.

Operator

Thank Andy. you

Jamie ahead. Jamie, from Credit today Suisse. question go Our comes please of Cook next

Jamie Cook

about flow can next XX you the I in years backlog versus, just two Stuart, quarter business and Hey, balance then a is go good you my don't position, some into you priorities, update the Thank And about as portfolio question, of ago, sort sheet's the lots do guys think allocation strong, U.S. in if of know, we and second about are larger I'd obviously, I the sort just a earnings given to grow years about the opportunity a five there I thinking the But today as about model talk niche earnings morning. of any a you. different, you we're to of the sort think months? obviously opportunities? questions. how and good the still visibility you're thinking the recession there's the you acquisitions, think One, was of doing have, capital Mark, about your recession, guess ago, do of out XX resilience you how cash two in your concerns lot KBR Europe. M&A

Stuart J. B. Bradie

very that be be continue -- strategic earlier. I whether And the Thanks, I Jamie. every continue mentioned I I the -- that business is we away. to geopolitical, but look at our planning, the disturbances that's portfolio not earnings areas think energy economic. very going issue year, this mean, nicely through or funded really look if you be businesses will obviously, in political, think at resiliency we've that just funded could security, of to mean year, not about we actually as and our we single any and positioned

the the commitments, think agenda program. you that undertaken moving year, If thing already change VG example, the the commitments from a and being three, it's multiyear about perfect a resiliency four-year one are -- a that of climate it's a not LNG perspective being are being

I the that of recession. then recession near-peer the at and of length and Russia our my think And mean, being look think contract strong. mean, to I turn our tenure potential I not XX confidence you the that that extremely, continue. for we've important the our tenure, that of business is what regardless continued think, portfolio. very, this threats resiliency done around prepared very or understand around in areas need investments continue. years are is because China actually differentiated very and in So I areas is tenure off, about with of to and our the going resiliency think actually I of business. is at Government, portfolio the think or and providing, contracts And the and think in And people remember, threats, done remarks KBR the positioned when we of the around resiliency we've the time people why year, about portfolio I the not length but will where that to one And we've average really extremely any I therefore, shareholders of top I will discussed away, talk

I to purposely. think to we've I that done think very to And we're second of And hopefully, think try been any a that mean be that resonates. very, market. thoughtful well the the I And through number potential I very now articulate and question? recession. so around So on occasions we've Mark, that And -- resilient very positioned

Mark Sopp

balance that, and it we we're way. a Look, to speculative want and have interest to we great be going where that the And are magnitude overly we rates achieve situation not morning very We've Good and are worked keep want of in sheet today. either. Jamie. Yes, a hard where the to we to don't sure you. that,

we earlier say morning. an continue attractive to just did was to to We VIMA that That intend I tend done be at obviously valuation. balanced. this deploying So capital. be did in cautious We

would at And be have I think dry acquisitions a for we to continue pricing have attractive powder event valuations, constructive for better view like available we'd but a of recession. that. to also in modest-sized be later we might some there the

with So on more we'll that, respect cautious usual than be the to front. M&A

Stuart J. B. Bradie

Yes.

circa that's I mid-teen margins think will I growing a mean, pay market the what for and they're I business that market actually very this teens think mean, obviously low today, transformation bolt-ons, strategic times, Jamie, with you XXs. these out deal. little the bit. for running context a the in but key them and that bolt-ons, come -- right, XX a I theme that's interesting if multiple business of But what attractive I mean, is we it's do. a us. through in really, it's call And Mark's in and we we wider achieve of you high was And put much CAGRs really with can heat digital the

perhaps time sizable, with are recession. affordable to for may that able in you are when resilient in people to may be not assets be Some as little rates bit and it'd more context example. right be to if the the trouble are more higher broader get like, is who over U.S. pounce, nice themselves a in interest levered And and the and

kind that's today. where So is our of thinking

Jamie Cook

Appreciate the color. Thanks lot. a

Operator

Jamie. you Thank

Our Summer Securities. you. next comes from Tobey question Truist of to today over Tobey,

Tobey Sommer

and what's we space exposure to segment relative the GS company segment a and your the the of military for the Intel, versus is to there growth the compared basis? If GS you. a NASA Thank domain today think compared on how of overall outlook go-forward growth

Stuart J. B. Bradie

excitement good with the question, of increase across, to go a about a beyond. I Tobey. Lots lot commitment and in Yes. and budget obviously, mean the the side moon NASA discussion, the to of space it's

through is and contract then changing coming and with actually been symbiotic we you structures NASA commercial. sort and relationship, space billion you And that revenue You has consequence it right commercial in greater if at, space. see commercialization pick but year-on-year of course, of that get is, look investment dollar growing awards think in did government of had. multiple start can and science's their and actually is sitting this that, comes the recompete, level to quite implications, quick, the contractual of that our that this ever far a greater that got a as But between obviously, is profile arena. portfolio. across bit GSMO in military a iMax we do of then, has I space The part fairly the have slow which And through, pickup I our obviously, year, was like is guess which of and what D&I business award. And in very QX -- NASA that And our stuff. in vehicles space good it side, Intel awards today course, And than broader segment. those we're seeing things our flat up it's

Our has been performance terrific.

which up, margins the want. we So what is exactly are

having GS predict. international this. the of importantly, to piece, what to think confident recompete difficult we're that's I and, are win through segment. key the targets in But the our think the is growth year, I that realm, we whole D&I timing will growth space you increase roll And get when now -- piece in the pretty an of cadence piece actually and But want anything doing XXXX. between we overall sustainment. And we achievable are in course, GSI, across to next anything of so And that

Tobey Sommer

Government those if of an or what so, are my is, growth And and you. for proposal well bid in Difficulty]. you teams area Solutions investments your luring? grow to means level are the in opportunity And teams follow-up it Thank investing to what [Technical you prosecute

Mark Sopp

after are things and Tobey, good with after modest team. go it the built you take you degree. degree. increasing you'd does of and flow It tend some and make Mark and we But ebb to best them here. to a and combine out Yes, When all couldn't expect, you bids them to before. of proposals, a acquisitions, as go we've specific brightest

that. more early done the will we scale, chain up I I think and well. And in on go in investments. still innings food as think up it we've that we're require

Organic of the So into our best that growth baked type we is plan. growth, have long-term obviously.

we pay sights those make is in types that can. and to sure our And so often investments definitely that we as leverage as of much off,

Tobey Sommer

Thank you.

Operator

Thank Tobey. you

question the Gautam Cowen. of Khanna next from Our to over you. Gautam, line of comes

Gautam Khanna

if and next past, update this was and Hi, of in say in task wondering the good timing wondering can that's about there? the still And talked on Russia-Ukraine. I was terms us if secondly, escalation could October business an you things. million track that for the HomeSafe morning what the on win. and might about year of you update orders seeing like guys. on circumstances sort I two if you you. related of you revenues? One, resolution around could the Alliance what us $XXX look to Thank the Eurocom And

Stuart J. B. Bradie

Okay.

process maybe, Mark, second. and to HomeSafe first one, on the I'll the be the mean, So track. take continues I

this is would haven't in in not concern the out earlier, October. happening so We heard time any us laid we that give table anything that

and that You'll we'll change, we Gautam, our transition so our do back you come and all how on Once that. have transition, bears But no we get an awarded, update. far, X-month recall, out. give

Mark Sopp

the to those Gautam, well you UK growth the there's V, well support your UCOM, relative the then activities. second and plus-up on to our the in there's Russia And normal and LOGCAP relative to believe positioned affair, there it's as question, activity I and supporting know

and a it's we've pace, that, to as tell continue long with after over time, suspect contracts from that view, say this that, -- be to it's and far its up specific pace customer. guidance cautious year, there through hard QX. expect for roughly we to normal It's but we So about our looking of very hard in $XXX we'll million little and the a been at type after

So we're front. on cautious that

Gautam Khanna

you. Thank

Operator

Gautam. you Thank

Bert over from Stifel. comes to question of Subin next you. Bert, Our

Bert Subin

good and you thank morning. Great,

Stuart J. B. Bradie

Hi Bert.

Bert Subin

Stuart, out talking them to If businesses the Mark, and you and XXXX had space, LOGCAP, you sort say say, grow of targets? a you Government the to confidence franchise you going have within what services international if about and were faster approach parse lot government choose, on the been which guys you of to would I those is couple Solutions. as -- of

Stuart J. B. Bradie

to It's almost question impossible ask. an

that has think business the D&I had organic fantastic I growth.

CAGR. nice looked this coming XX% to you'll quite continues to last things of Space its through, The the things LOGCAP come I GSI And nicely, said, without quarter, quite business. sort But it's growth awarded, RNS from said, you unpredictable. it If pace, are as business, Mark it's when if I and just through cadence difficult NASA at predict. year, think see perform

every So I from the little portfolio. the does these the and performance think continued the better our And should the confidence bit other. the take is at And quarter, shareholders is I think of a above segments expectation. one beauty market or than that

awards, they're or resolution time Now might all a someone outpace award very, or be. well, But fees basis, performing said. it the of closeouts other will of whatever just on contract quarterly on very Mark as

that's day, out very market growth are comfortable piece more that's And those the think more realistic important. So I achieving we laid end through what on quarter. hopefully, think the think getting is more we've of at that I the the I as targets. each head And and

you saying, favorite probably your the -- rather So I right. it's don't that's mean, bit child?" a way answer I "Who's than to think best and it that, to just like do

And strength. so ultimately, And the I think portfolio the going not to. we're that is

Bert Subin

quick sizable And other about in right short hearing through refining. not business, a on clearly, the of a just you for recycling a thinking side a And the we and lot the the recycling, energy How the but targets? highlighted European about lot the have now follow-up, pretty out, other where components, components should side. supply, inorganics, business, obviously, ammonia crisis If of think refining some petrochemicals, about that of is highlighted you've how capacity on being we globally, you growth going deal other of get look STS. think Mura syngas, a we're built energy in you of at components side, but got in energy enough. that you the the things I position context of Fair the some the the fertilizer you're in just should and those

Stuart J. B. Bradie

It's Yes. a kind I of think. similar answer,

is Our portfolio the strength.

opportunities traction continued huge ammonia piece I right green certainly the coming got but olefins, that seeing you've to in have We and cycle seeing through, green We're amount as year. There's is think movement lot hydrogen I ammonia, you huge activity the then explained a amount think And There's We've remarks. a whole in I a again announced there see in much related I mean, some side. now. ammonia the that maybe us. XX-plus you're and activity in a for investment there's of that maybe technologies. this we'll that as of and of which a areas. those as And of huge not prepared around segment we're number blue uptick expected, positive And my and olefins blue area. ammonia a some hopefully, of and bidding -- in seeing lot in we're the

seems to again, the win the one every be on So awards, seems over it to depending other. quarter, timing out -- of

fuels them in investment to seeing looking renewables. technologies particularly improve, and we've would help new spending terms moving with I and keep optionality to from seeing, at assets in We're that. to what obviously, traditional. refiners other time develop away, we're options to cash their We're there. So seeing get And got of transportation companies say,

in we're rest but seeing seen the unexpected, of lot activity, across North America world. not many of today years, which so is we've So the than for a more also

not it's over another over it's -- one think other. I segment So the technology again, or one

bullish I response we think about And question. it's a pretty ammonia. feel portfolio things like actually

Bert Subin

not you're you're on impact negative right material a now? that going something clarify, just what's or to from monitoring in just So is Europe expecting

Stuart J. B. Bradie

other than -- material We what's an going do But on anything, material to upside. not Europe on It's that a we've of demand because in in the energy the out targets security. already. impact in and increase expect impact on a our if laid

Bert Subin

Stuart. you Thank

Operator

Bert. you Thank

you. Manu, of Our from to Vertical over Manu comes question next Close Research.

Michael Dudas

Speakers]. [Multiple gentlemen afternoon Mike it I is Hey, Dudas. Good and think Alison.

Alison Vasquez

Mike. Hi

Michael Dudas

politics predict you ask race. there grow the the the UK assets Prime that of of of since and you're to give would over very a of won't and I a sense given the opportunity winner certainly is to agree? can I -- to out assume So going if business UK, lot of Minister strong just you there, your want talent budgets what's on, you've over you the and I But that adding and given been would part see

Stuart J. B. Bradie

has and the to party, spending the -- defense four-year party. budget UK a is cycle It's Very does an much Unlike their of so. I that in as to been does annual leadership and I just -- the commitment remember, commitment. of it's change change not the a this three clear conservative mean U.S. it's set.

So very regime. the it's different

be Frazer-Nash etcetera, Brexit, in more that, And about we're with factors. Ukraine. in become little going has a about We're are spend. a fact, feeling bit UK feeling the support the which So it in activity heightened by really war our of of the UK -- dynamic, And we've to very to different good on is self-sufficient. where confident commitments those others, consequence effort and the and the to got whole as levels around has the UK VIMA,

Michael Dudas

thanks. it, Appreciate

Operator

to over to over question you. now Mike. Thank you of Avi, Avi move Jaroslawicz question We'll UBS. next for your our from

Avinatan Jaroslawicz

in color if in months, mean there few window just range frame quarters, of that just for a rather On any guys. help that they they've be they're now of terms you awards more kind unpredictable. been I like years, you on does -- the a morning NASA of those noted good measured that also guess sluggish possibly helpful? and Steve can being a Hey, are Fisher. would than past in timing, Wondering

Stuart J. B. Bradie

Yes.

forward, think and we the I fairly contract, is was order. was the problem GSMO not we was So protested it unpredictable. you've and bid It move got I which is in short which mean, awarded terrific.

we over You was later, four now it's protested. be And again. had evaluation. years under that you bid NASA year. this being won. And got year. the some Mossy bid, a the contract like, if It for we machine, in we'll within hopefully, that We are later awarded And we've

tell. get So -- I people just waiting for It's that relates resourcing, we the I to we think And the answer different sort award. really mean that's question, I and different centers, don't different same it And just tricky get. ask priorities. to of our probably

in through Anything our is mean of of the actually away from that positive Program, what I nice year and we year. to yes, story. the and comes said a end largest of win do recompete Spacesuit I low. discussed the very is just everything impact XXXX our take doing thing the to is between additive. that remarks, We we that risk is the now we we my as We've not won won So think the

terms in award also but unless and I well. strong recompetes, having don't well really helps us you you're of think the really get fees margins really, for performance not because just position returns that are us we doing

that see well of six end I that. think next like progresses and the the plays well, to months pick get And up suspect things people things will time over COVID moving awards So we year. back as as of I will and from all the bit little cadence as a the more

Avinatan Jaroslawicz

sustain Got about it, wind do or backlog a STS some thanks bigger these you programs burn? down for it the here, in levels to that. how to And as just able here, be from of we maybe follow-up at as should be expect thinking maybe these

Stuart J. B. Bradie

the that about that I mean, with -- But a challenge that is Yes. continuing I in then do. I arena mean market that. your The book-to-bill. I think billion momentum the is nice do in I think thing that arena. supporting is win enhances $X.X really announcing continued it

be to going we're that saying not struggling. I'm So

really I hot. is market the opposite. think I that the think

where the that's want everywhere. in to market also. the to that success we really, think play. don't in want our strong And think play And to is really our I we I areas position key

and and of being smart the earnings around think work of we continue profile I profile front So be will why being that the that after to go work focused, cash and mind.

many headwinds think don't there. I there's no, too So

Avinatan Jaroslawicz

color. Appreciate Understood. the you. Thank

Operator

Stuart This remarks. concludes today's I CEO, you. hand President of will to for And the now Thank Bradie, back Q&A final call. portion and

Stuart J. B. Bradie

short I mean thank just a you. Thank you. I think

I think, Thank next listening. of you. course And or so. some the And last obviously, hour over so. or excellent questions the you be we'll further thank over to the day talking for you

Operator

today's This call. you. concludes Thank

You lines. may now your disconnect

KBR (KBR) 2 Aug 222022 Q2 Earnings call transcript