Earnings call transcript Q2 2023

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Operator

Good morning, all. I would like to welcome you all to the second quarter 2023 KBR Earnings Conference Call. My name is Brika, and I will be your moderator for today's call. [Operator Instructions] I would now like to turn the conference over to your host, Jamie DuBray.

So, Jamie, please go ahead when ready.

Jamie DuBray

you. Thank welcome Quarter and Earnings Year KBR's Call. to morning, Fiscal Second XXXX Good

Stuart Chief your Investors Chief website President well me open on highlights Bradie, Joining are the and quarter and earnings and will Sopp, kbr.com. then at presentation Vice from available the Stuart call as Executive our Executive Today's President section Officer. and for of Financial the Mark provide questions. Mark as Officer; is

also events statements These from that will presentation. reflecting actual non-GAAP potential KBR's and these included This measure and discussion in to future This Stuart. financial useful outlined at non-GAAP X. of their be to differ these the website. GAAP on the about earnings Slide uncertainties the believes to for includes our investors. discussed I reconciliation measures available as matters our metrics as performance significantly end forward-looking is statements, results now over to cause the impact turn recent nearest views on most XX-K discussion risks forward-looking call A that company measures on of could includes involve Form our

Stuart Bradie

and quite Earnings our welcome warm We've actually through presentation. got Jamie, to you, a Thank get a to bit QX today.

dive me in let straight Slide harm. on So and X, Zero start

issued sustainability recently report our we So, for XXXX.

Our shareholder ESG to commitment alignment is unwavering. value and

a takeaways key 'XX indication the we think sustainability $X stats differentiator sustainability but today. slide, alignment for we than from revenue some shareholder of billion value our of on I this for KBR. is are them. you I you threshold stats our customers lot directly number obviously, as few report the clear think, of There agenda, across ESG a impacting there The progress to as show real key with urge increasing a the I highlighted read in value we've is and Now can a more would a

neutrality, have are XXXX. carbon the some operational continue offsets year external fourth, in fourth on of with Fortune's like towards and our number companies standard a by yes, was we recognized which most and were XXXX as by There we of we sustainable admired a consecutive a Forbes before, as side, of EcoVadis target Now our X USA right-hand recognitions recently top head addition, will in company net climate gold you companies as but today this leader and female-friendly year. seen

highest have which we're our proud And of which MSCI's you shout achieved ESG this and not so thank all we very quarter, did a to we them. the of very, could without commitment we out of big all but which announce, plea, people, of achieved rating of amazing

to on health. So X, business Slide and

headcount a On not investments it's are measure, working this the front, and only the that end year-over-year. of our that through talent the we've people XX% is XX%, businesses indicator grow. solid And increased continue by to think I but our June overall our acquisition

offers KBR a with As candidates you We programs. it, we're extreme internships ultimately these fact, world, future we with students heat update know extended the good which hundreds full-time recruit and each I is don't of we to university of majority our talent summer and the in it's think. offers to across year on now the summer partnerships. students timely through intern

minority inclusion. across participation, foster course, universities efforts and, support In we serving minority world diversity to XXX have the our including over encourage fact, we obviously that institutions partner with, of

important. for actually happens KBR, both full that provide time sure Once rotation early great programs two you program, four continue to students pipeline, importantly, really success very And and bolster an talent functional this the thus one rotational in graduate far, the I'm which and we've is international our and they join areas. rotations seen consists and is of we which these years with will including career agree business and

points of to after Zero number be harm And I'd the this covered is many top about safety already, quintile. We've to before, our people. continues to good moving all right. I've a top business. on Now just our And but looking performance year good that as like is, safety frankly, times key this highlight said

another So, single deliver people our out shut to to who day. every continue

Bookings a with were moving of Now times. across pleasing to growth. X.X XX-month book-to-bill business group trailing the

a converting an attractive across to pipeline, in the again backlog resiliency which once our increase our really in I segments. strong resulted the $XX.X is quarter the With business this of which to billion, this big itself, Now shows of awards believe remains reflection no model.

over For XXXX, and end quite required think of good the targets. the ultimately, another resiliency the a work and of our And outlook our June. feat deliver XX% we XXXX, at of business I XX%, predictability the our have to model indicator, now on of of

that's Now some on associated may with U.S. an in targets growth of in a operational some XX%, we QX in investments And to OEW, the terrific. legacy adjusted ex X%, revenue at and even in property our you higher we sold and assets, have financials, year, noncore U.K. XX%, high-level out. our roads which last line grew but recall, EBITDA with the

but we This at business you is outstanding. across the and and performance operational increased STS XXX% reflects year-to-date, Cash So, the QX terrific having a again, start performance particular, are the the level. clearly see at year-on-year. absolutely group can in in conversion typical true sluggish was this in after the impact performance margin

total the to in retired very 'XX. in for continued, very certainty repurchases returned removed our which million gives first LOGCAP I'm sizable we coupled we a risk to We remaining legacy we're we quarter in and with. shareholders also legacy fact, bet III, with million a $XXX dividends share up of the outcome, and pleased the that $XX issue of which of half from pleased

cash. we we and election made you quarter, the in year. said settle the to As this formal note seek a in would know, we settle dilution convertible to the notes convertible avoid And

and million the accounting. hit hedge, the and caused in retiring P&L notes note which this election convertible this quarter. triggered that partially charge Now we distinct accounting A derivative and an cash of impact, special a making $XXX

Mark will appropriately. detail notes was the maturity how cover moment, not the a the out convert of impact does economics to results adjusted accounting but we So, change settle minimum a in And of chart with in the for and underlying this this KBR. our technical

net this Now of in extinguished addition liability we XX% to the almost cash election, quarter. our

behind our a will outcome. leverage, will we to In that Mark So, later. first us cover and terrific of good that 'XX getting had a guidance we've and accordingly, and balance obligation half great maintaining so a strong a sheet while chunk EBITDA be raising short,

Slide few to on and our Now on X words a key markets.

billion leverage space. of is continues are for financials, last just about and the is times. indicator continued book-to-bill real outperform, technology great that slide a for quality our momentum. to the we in solid we a sustainable And highlighted resulting energy advantage work of indicator taking in as trilemma. the of we discussed The quarter, future hurdle that on the earnings. energy impressive, firmly a transition in bookings, really in across three these talked and winning pushed we've a basis, drivers $X Backlog We've are XX-month Firstly, X.XX many continue not market to on but

and at capability Clean expanded next-generation look that ago. ammonia its ammonia upon for really Petroleum ISU talked Avina has Solution that has focused very And quarter, many much chosen know-how a And We green Technology a think day finally, have Green After to demonstrates KBR's per the This exciting. awards Technology, lithium number about we project. of acquired battery times. to X,XXX chosen ROSE Hydrogen that been strong a I green with in on area, so again the scale, has area. were very tonnes that in a we as lithium pleased in extraction plant, continued this our refining few Chemicals. technology activity this last just technology so is years we announce we've Hindustan

mind debt Government was in quarter, through to to for process. the get which on Now the Obviously, was Solutions. everyone's highlight ceiling the

business through priorities, trailing XX-month the a we I significant and quarter, discussed large award so our has resilience and our highlight And bit to last would on and as much we of as think contracts this will progresses. on award business been a come resilient highly previously, as model. of difficult Our And slow, fairly the our slide with book-to-bill in model somewhat X.Xx. and in of per basis predict and agile still the have year wheelhouse. the in lumpy quarter, very X.X remains a are without achieved Spending the awards highlight a quarter of are

which by come is the NASA, in that, in we through July, our seen QX in numbers, as III saying now IMOC However, will which contract have been significant. awarded you've

book you're As conservative do booking we awards and protest. have aware, we under policy, a not

CS QX, the which contracts, in of. of Both both hopefully resolution a which OS and should we also the So two see aware you're of well three under are protest.

be those actually So up QX is of positively lumpy bookings one shaping quarters. to

very quite So exciting.

gone of there And the bottom long right. most a a On we return but in Artemis for nine in four the like work performance quarter so IMOC few run on value in it that covers quite and has the contracts, So focus the years a has increasing moon. important the up we are highlights IMOC not Orion large years III, total. as strategically is period has III bit. only five base also to on the station, with auctions, space years in as additional And international NASA an

mission secured, a it's worth NASA, to sticking And highlighting business. we small that working contract with integration the

business have our but view on of utilization, of excellence securing not like that expanded area we we services this focus by teams strong wins Now an best have which the military small customers been also we presence support fared only and the and important, Indo-Pacific. I businesses the and U.S. This really small course, relationships one, important. into very stakeholders, our focus operations presence for Strategically increased our for future. and recognized contract is think in some strategic as trusting resulted in have is

over to Mark. hand now will I

Mark Sopp

performance I'll Stuart. Great. we the you, finish with the address did accounting to on legal technical and core guidance. on upfront, have Okay. charge charge and our up going Thank where then convertible I'm then results, and notes terrific focus the operational

Slide I'll on up that, X. with pick So

from core The well numbers in QX, Stuart. heard continued really as operational trend you to

growth both a delivered opportunities business tap with agile, OEW as consistently little the serve. Top has we diversified, X% and model global more contribution to we from was up in and able evolving line segments. are markets ex Our even

of in in As EBITDA Stuart excluding QX XX% pronounced, last nonstrategic more at the registering growth strong portion year. assets EBITDA of improve quarter, consolidated disposal had we bigger true a as continuing the gains margins at of the from also in growth, QX is also Both mentioned segments it's mix. to and earlier, even was contributed are the strong covering STS the to level a

Adjusted all EPS same up for our plan a the was little of for on year. actually half the same basis of the first the and XX% digits at double ahead reasons,

counterbalance plays will forward you legal and with which half. notes operations, interest EBITDA growth bit. as to good interest outcome think expect, that's of considered, in accelerate increase the maturing will This in second this in we steady. the More our later into on a However, risks the year from recently quite seeing given EPS we're some off all We would a rates, retiring. our the grow things guidance higher election with paying holding expense a this are convertible the settlement announced, bit

discussing excludes EPS here. and worth bit a Adjusted two significant little nonrecurring charges EBITDA more

QUI $XXX it case represents ago. a we This The years the first X. LOGCAP dozen announced adjusted excluded July charge legacy a from III to TAM is item pre-tax EPS settle the on that million about as from was

$XXX same for impact note positive. principle is for adverse also no of in convertible these $XXX these cover settle which Stuart confirmed of retirement with of compliance that time, as is thus, our that The of of notes. more terms EBITDA of resolve both we bank impact accounting nature treatment, will the took to credit early earlier, for to the purposes related both and in in accounting will the covenant have risk the cash I'll such second on important borrowing due million these forward, and our a going Big point. or to the this covered in notes base to it's purposes actions liquidity. on shortly they charge, our no charges detail and million mitigate and group, At but have

Over operations year-to-date in flow was income. strong of really to XXX% from million. of cash. over cash QX Cash with adjusted conversion net almost $XXX

strong segments smarter collections aspects both client commercial strong the of which across for were terms on. capital So teams spot hats performance, off working negotiating and to also other management,

all continues stellar with details on revenues have on Now XX Slide and a XX%, up segments. EBITDA STS more with just to XX% the two production organic. I'll to move year up

earlier, solutions mix all EBITDA balanced venture energy margins and security in Stuart and for by transition joint again, with As for KBR to also across strength trusting covered drive decarbonization also increasingly STS on clients well demand our licensing around XX% is were projects. activity the strong world. QX, increased help energy aided

were For Government up OEW good Solutions, revenues on growth ex X% an there. basis,

of team an continues ability which which and important its QX, is drive STS helped across vital Our real strong profitability. overall to strength in on-contract quarter performance-based in to terms for obviously business, KBR. fees XX% for to the complemented margins drive excellent International margins book demonstrate growth strong a of diverse contribution up

Slide cash shareholders and QX as this million was million dividends buybacks, Stuart over $XX amounts matters. to said, to half. XX and with QX, flow which being the increased returned to first capital with earlier $XXX With on Now together on year in for

had In stock quarter. and strong as our did just convertible notable, outstanding production in this addition, accelerate in amount note the notes we progresses. this capital, to price nudged to our associated the the leverage growth and continue $XXX the growth event to QX. year hedge see quarter X.X our Having the million announced, warrants. about to EBITDA from overall as up notch this XX% contain and maturity about of last the used in We maturity we of flow strong cost deployed to it a cash also of the of indeed X.X attributed we in is the ratio previously

some Now let position next on how quarters. capital we couple light the see evolving shed of me our in

door settlement QX. actually the in payment we went charge in the associated legacy P&L the the legal While took for QX, out

deal the convertible be that third what associated the with will of and So hedge reported to After remains event, that the quarter. and those in note warrants. we have notes

with value and next As the is price assumption, mature outstanding notes the amount this note publicly price. a hedge any the documents, between May approximately value again half X, of is February transaction stock will of changes aggregate and three reported million. as instruments filed and year. that all these and the that notes to $XX $XXX our stock whereas maturing This, of million to convertible the At the across hedge course, one of of elected associated warrants maturity which remains November About flow to $XXX cash. year, the the net attributed of we've November settle in of

The shares, cash half be decision on later this the we'll warrants, which settled may the to is methods or year. two make attributable and in other those

the interest borrowings these We'll, cash for of rest thus pursue fund needs, outlook of year. course, free but expect and flow do provided this maximizing to have more to in increase the expense

So I'll moment. hit guidance in a in here that

And make the convertible particularly treatment the accounting Now this me. on rules do notes let bear indeed, so hedge for derivatives and new with please and touch instruments on the me complicated, note hedge.

said because in treatment We to April, convertible an share qualify for ASC hedging and XXX intended equity and and to outcome. ensure triggered That settle notes calls, the note hedge settlement the under for we notes required exemption cash Previously, on convertible hedge election in derivatives the election notes in different available hedge. and we accounting made the accounting option. rule prior note the and that was

we for this election. consequently no on fair value new value and other. cash hand fair longer that the the made However, convertible measurement date Oddly, rules subject was became exemption for on the differently the on notes that hedge one and notes convertible corresponding apply the treatment election made, a note and once settlement qualified to hedge the

the are year required P&L fair they quarters the of over X to expense X, of value in this X We notes and and mature. until the

P&L equity. part. Whereas delivers. benefit recorded That's That the to hedge means does economic the the is reflect the the economic truly not benefit by hedge, the that odd delivered

to that, as noncash million out treatment I a accounting convertible QX this million spread will noncash we in an this $XXX all So year summarized. to reflect also record P&L and notes of charge $XXX related of result the over of of just charge the of additional a QX recorded and

up. sums So that it

of me Let of have resolving the three elements convert different reemphasize to just all not are we what these underlying economics the previously communicated. than

charges liquidity. impact approach do remains not on again, to matter stated. And Our any the resolve accounting our the whole have as

So P&L to do they minimal said liquidity impact the do. and strong maintain KBR. so would we But get mind, we're distort this do, pretty throughout to bear past we significantly. do and as with in continuing

our certainly that's commitment. So

for for thanks on of guidance to Slide to our billion Revenue I'm $X.X to unchanged that. billion all XX. $X.X bearing going year. at on the We move Now is guidance

bumping a million strong the performance to half, operational first However, $XXX with million. up in are we to EBITDA $XXX adjusted

is at to Our adjusted share EPS $X.XX $X.XX share. per guidance per unchanged

we In the to short, are up are expense the truly unchanged as our legal And would the considerably it settlement legal driving start guidance that are more from and $XXX operations. producing. million, the profit we for $XXX our anticipated amounts business million is than the performance that cash year operating those convert distort cover that and see otherwise production to this interest the of and cash offsetting borrowings is the settlement finally, adjusted excludes at Ketan flow the improved outflows at flow

increased retain So profit business, a for and and at adjusted our to core testament we're This both performance really of increasing legacy operating associated the the business resolving to rates, production performance summarizing matters the STS same GS. great we've all well, the allows the and here performing from outlook out convert higher the this, is us strong EPS the of doing costs interest as of a the the and level with from we start significantly at the stock at managing higher despite price. set so year that sat interest

consider to all So flows strong things with tap and forward. cash a of going fewer the way the clearing remarkable business positioning attractive markets, story generating constraints

long-term cash that, levels of flow of it M&A to attractive to on we back of generate remain in achieving. we we debt to As in which and buybacks, quarters, With future our turn combination stay course reduction I'll expect a confident conduct Stuart. targets,

Stuart Bradie

business of a from mainly factors At right indicator business has for And that's adjusted Thanks, solid Mark. on systematic Great really XX, and increase. an a work well. continues in resulted course, last has And buoyancy has, really, on for EBITDA of interest the expense business guide Slide performance which expense. think job. to takeaway I to today. level, book-to-bill. high operate cost resiliency. end good our been external Winning slide margin today. our mix this continues offset a Better model KBR, and and key the A market with increased

about QX XX%, as Work book-to-bill, already we award. earlier, the with under talked looking a contract QX IMO strong great takeaway. is above is

is the XXXX. strong positioning delivering of in customers, about for for which about a actually it's course, now our So was cash, excellent and, QX focus

remain sights. MSCI Thank on our the XXX. call has and will much, to cash I believe, the finish, AAA targets it questions. of the I reiterating we're open historically, bit strong our and versus will very But I'll did, around a flow, very meets free Mark rating, progress confident is you hand for long-term a quite XXXX et commitment. been who continued delivers and business there as which done long as ESG firmly buybacks, now of And expectations in cetera. operator reflection that back cost out noise our our There's sustainability interest our as direct --

Operator

on question We of Instructions] Eastman KeyBanc first Sean Capital. from [Operator the line have the

Sean Eastman

the guys larger component target? on quarters, that with the frameworks the of is How plan. the mean on a in put GS the talked GS STS the feeling bit. But bridge XXXX of to how strong on-contract years about I dive to in of the wanted just two are growth, running be GS seeing little backlog. I to we've you last couple is yet in ahead XXXX

Stuart Bradie

which that good first and a question get we Good question has recently. government been than trend STS, Sean. the Thanks, rather

feeling resiliency in think that's I really The and last model think quarter the this. business in of we're about proof is the the good think I the -- prudence reflected I And the hearing, it. the of which book-to-bill. we've on

we're additional hopefully, about these will III the So and And that's in protests revenue of award to well. strong. Homesafe QX, we shaking IMOC also, really drive go head seeing, into really really really, on the work out talked but start course, on and which as to continues call, we haven't the this of

ramp of 'XX we're some sort And on to up deliveries running make as things early so our to we going the that set to into that sure expected work of all on start and plan. is

for we've and feeling revenue about set really, growth we're out. achieving So guide really given strongly the the we GS actually

Sean Eastman

Excellent. we over should me how does I But sure I've about if honest, expense next how model? kind guess we're And this way I the the guess, just count I the interest today. of remarks look versus share right year? year the And best in got I'm for eyes of that's question thinking Maybe being XXXX, prepared headwind? make this to would to year-on-year the contemplate the my as bridge approach through most guess glazing the Okay. I Mark's were yes, way -- is

Stuart Bradie

able let I'll buy we to I Well, reiterated both detail. million in that you. to our to over answer the free around back person question, cash to to flow Yes. the but more get to But But who commitment month Mark, there. be a you $XXX generating think sleep

Mark Sopp

of Yes. the accounting Well, lot with look, we fun had this quarter. a

something relative they're with did best GS, that are We in wanted take we of this somewhat want it for on all to question your of that some So, to last granted try kind of could. to not. but it fixed share to GS. but simplify I we say the margins to

to perform have really on day You programs. every

a fees delivers performance. lot contract time our performance incentive-based You of just earn driven the incredibly and government. to group strong And quantitative different in have really by again, that are very folks by

more fee very a XX%, out XX% They our Well, and quarter consistently, this and like for case on time. really just get great cranking is quarter. the projects the that's been award long quarter, performance but great scores, that's

up hats is off 'XX, contract to on them interrelated. that when recompetes do just bridge interest, be that, on you And interest that increase Fed missed. that. dollar growth It's On and in count is to we tell manage just it it pretty early for share year. for next dollar structure. win and interest depend the and win EBITDA So for and we the this guide for how you and to year how And you will the all too shouldn't we'll today guided much to on the depend does, on will capital what

something for opportunities than new be that's today. cheaper that's may capital available There maybe

I to just we'll we we'll on then later develop. business, just I do debt and juggling to those But and marching assertively to cash need and KBR markets buybacks guide our that our have to So, be focus between executing think towards the running generating the committed contracts, as you give which targets. returns reduction, on more think for maximizing capital

Sean Eastman

Okay understood. turn Thank guys. much very it you over. I'll

Operator

Stifel. have Thank Bert We now you. Subin,

Bert Subin

slow. pretty of wide to to economy help going if 'XX think back Stuart, that through outlook will economic outpace of will handily trajectory be shift topic to and to seems does for the is I better how STF as rest the seems there presumably that I STS be to a to it range do expectations STF pretty expectations continues the the we your guess since global in

the of strength you're that on time economic still moving of some up? guide any if that business. assessing pulled Or how growth you do appropriate? forward sort see curious you EBITDA have think do low as the by you double-digit over was sensitivity Just And thoughts the of

Stuart Bradie

No.

think today, the of we've the terms sort earnings achieved and support where I that double can certainly, thesis. book-to-bill that in of that's to we derived digit low being that that think sits from appropriate quality book-to-bill it as business. And is the of I thinking we're take

than going And and does is contribution out, maybe our you think overall. XXXX that faster ahead of as rightly us I pace even really pointed historically. we've just the described overall for is helps what targets KBR on

about outperform I $XXX we're certain And so, EBITDA we ahead in way EBITDA. pace derisks just obviously, is we think it the And is target a modeled think the of that that million as and $XXX it there. on million

And certainly pipeline STS. of all in well but plays the so, momentum in I and we're seeing think that bookings no slowdown the

And think highly that so, double-digit appropriate. low is growth I

Bert Subin

And then back safe to your If home on through the be timeline, was think, follow-up that just a of last shifting hurdle, made initially transition maybe the go October. comments. period question it end to expected we Great. The last through I wanted understand been of but said you little that Can here? nine I season. the months, think Transcom sort and sort October they move to last happening push just us of summer what because out of a bit since help what's from happens

Stuart Bradie

Yes.

there's in going ongoing to report pleased well. so early you actually supply and which as lots shape go terms of I'm you there with moves, systems right arrangement chain as those to through would testing is can heavily with engaged expect and good we're the implementation commercial also. We've of work and that that's the on, ready starting the work system to for chain, in all going of So, the imagine, supply now.

in And so, as start season, up we is the we as do of head appropriately as next busy moves. we'll in ramp testing well really head And and we'll we we'll move the to to we terms year. that out of the the end what so system that get think I year be into earnest to ready working real executing start

Bert Subin

and you, Mark. Stuart Thank

Operator

Our next question Crédit comes from Jamie Cook from Suisse.

Jamie Cook

to settling unexpected is things when get the of with that you about think one cash XXXX as about question issue mean were associated targets, LOGCAP the guess legacy you taking I more converts. just just money to headwinds I outflows greater I the or rid think

understand, cash get one, the legacy because has flow legal to are be to rid to the your trying headwinds used what to those just I'm issues. So, offsets of converts and

can or stock And as back much be used not to the M&A. so buy cash

issues make to And back XXXX, targets the because more know us the the in the in my mean target, mean, opportunity a it M&A the XXXX is get these trying just seems versus nine you to all, to makes achieve to what it's sort terms of of XXXX know, sense. And like if don't to when you repurchase with share related I'm So, all all has I to starts like a really of as of, very of XXXX, comfortable. to to target, months? issue capital to relates XXXX your what it and that household XXXX in it question is I goods there half go earnings or offset like to terms six in then allocation that it ramp understand the much next significant second and ramp

there. Thanks. stop I'll So

Stuart Bradie

Jamie. yes, I to mean answer And very questions. a Thanks, simple these it's

think XX%. had just deployment a we conservative I a of quite Ultimately, around

headroom So, period. there was and through deployment the 'XX-'XX

little cash, we said EBITDA. that's that, ahead knew the EBITDA. well more at we now just little we and we have So, obviously, level And obviously, We south the that expect if be the our remarks, of it set when We're are the and more as target. do a deploy max, a achievable pace X.X secondly, I bit don't more to that leverage slow you to targets of we'll down. still bit previous so in had in why and that we the expecting, EBITDA,

So feeling good really again, about we're that.

but not by sticking confident anything by targets we're long the the I then them, as the to very as as that overcoming done else on and math, remarks million those interest businesses not which the cash, in generate we doing clear as using we've and an they're as long perform my prepared actually said, and I them or guy overperformance. pretty was excuse and $XXX as And achieve

Jamie Cook

back-end get to to to you Okay. Stuart, it mean But meaning I I the XXXX very like think like be mean a much as use balance is the loaded, loaded going sheet, it's to about the back-end story. goods ability much very targets, household the contract,

Stuart Bradie

say you'll in probably I as But see mean begins capital with priorities And that's up. progressive it and Jamie. our I continue think 'XX. correct, deployment we it ramp to towards movement

it's issue is you're terms path that to the the sights. of we within and as certainly clears as right. future. into don't have this see we So, believe 'XX, legal to quite deployment, end low I so believe capital don't the last signals you'll the have and Remember, legacy to our really think start to to And conservative we for up so fish such free we cap because and the us be of mitigate in get it

progress firmly we're weighted a through We're clarity you're weighted. XX there XX path these to 'XX committed of more and be than So, for probably as a right. sure. little But XXX probably good in They're bit to we get there'll spot. targets

Jamie Cook

Okay thanks, it. Stuart. Appreciate

Operator

question next Fisher Steven from of UBS. Our comes

Steven Fisher

you. Thank

mix You being interest. guys cited business the the as for of upside part better year. by offset this before that the the operational to guidance

that mix of to what the favorable the curious, sort sort that there a of I'm within licensing forward? you STS? of mix? of elements were Was going And of guess bookings I What quarter. more So visibility have so, the had more you business this nice if of amount

Stuart Bradie

Yes.

very in did bookings were for we sure, very, Steve, But way, there's bookings general, a in and that continue. in strong. market certainly the statement for of multiheaded technology STS a very lot well in it's that activity to a think I

Mark So group margins not in business overall, sense, in STS and award strong was as well only did GS fees also. the cetera, earlier, very in with contribution et that, from mix. coming But did increased and terrifically margin in the well the said overall

across was of the the board it in terms So of business. the really performance

Steven Fisher

Okay.

Any we on kind we that year. are particular based to similar -- second mix? mean, think for can So you expectation what sustain of about I I kind levels to the second the assuming we quarter half guess, STS sit the the achieved in of just margins as of here?

Stuart Bradie

have trending we're this we the Yes. And I question, of quarter. mean every in the guide, we're said teens, we think, XXs. perhaps ahead -- low I that high

it's that of the sure for code the So for in ZIP year. rest

Steven Fisher

the you budget Okay. more then still up maybe a confident What in areas to just follow Can the And those the just in bit that being are growth a the are earlier. maybe you're that most process that debated? expand on versus on little comments you had bit? maybe

Stuart Bradie

very business I think mean confident we've outperforming. that's reiterate an that too I to we're we strongly. need I think got don't overall. STS

through. think, coming in you'll this business the and XX%, and grew -- I science grew and strong see immensely and bookings Our obviously, Mark with space

to that's So going continue.

continue. Our readiness discussed also the got the we've call to And increased in and also. continued and theater is we Pacific the that business European activity, sustainment the set work area in in obviously,

and kind that. really really Frazer-Nash very bit government a And of a with reset. continues feeling realigned GSI change about strongly over also. are of one perform good book-to-bill of good the doing platform that I'm So They've this well. strongly had bookings quarter of business through U.K. a Australia actually a and and to had

one to business to SMEC-type back it the probably resilient us year. really there and advance model engineering systems little and behind, was allow Intel awards the the business the type to do was be lagging about but with announced happen recent that modernization, really that bring the what's and we've well going us intelligence to next So a defense is continues bit to excited very piece that

really, So I'm the And sounds I'm is that they answer everything in and work sorry grow the overall, won't all But hey, is a that's the really those sort excited businesses little they quarter. of going in momentum across pace won't the all truth. but same the the if win of, is to all the trend and the positive. actually same well, Steve, each obviously, at segments, bit And question.

Operator

Jerry We Sachs. of Revich now have Goldman

Clay Haarmann

timing expect the you give you on the update XXXX? burn on revenue is that for and the an of Clay in This us contract Can Homesafe Jerry.

Stuart Bradie

Okay.

-- appropriate. I year, probably that's in of the be So modest. think as this very, We'll in for forecast will do we've safe you moves but very XX it know, and no course, some, got and we've nothing got home in

ramp-up course the progressive so next year. is through the of And

quite about by going the think and will revenue we've billion I been get in we're cadence, into $X the continue to to clear in year 'XX. then that of end

Clay Haarmann

ammonia you're regarding have the the talk that you supply a on quick as a separately. Can time. about on your be on pipeline follow-up side can update that of projects And tracking? you limitations the working at us you And number projects of

Stuart Bradie

Yes.

least got not green is last three number projects quarter business, the blue the a green The at do. up think pipeline. across because gray scale. and high, this ammonia several. spectrum solution really constraints announced We bumping again, can I its We the announced we quarter. a is across numbers lot projects, a of levels, on do we given against all it's we've licensed Obviously, and can very in activity our still exciting, just we're

continues for very blue pipeline various the and exactly terms on green both of But don't in be applications. side, I strong, ammonia level we different the just in what in in the areas. ammonia really So ammonia also ammonia we normal, disclose supply/demand to for have gray guess, but

Operator

now Michael Dudas, Research. have We Vertical

Michael Dudas

the breakdown the on project opportunities you ammonia of front maybe question. the the next the your out couple are other thoughts of you're year, first getting clients. What other on are been that you the area. engage that half starting that the the see And pneumonia, over the the on coming and opportunities look several the other of portfolio more have it STS in success Following areas is activity interest as where us companies how licensing on much expand Share quarters, -- from regional the with incoming are here technologies to seeing that you're can more can front? or in our is driving the -- -- that emerging the in other

Stuart Bradie

Yes.

seems another, -- a to be And think talked Hindustan Mike, we the it East very and each or be business. in so So and in in in before, to cetera. happens we've I it's the about happens this quarter Petroleum activity next one levels India, quarter be Middle and is about mean, talked I et one quarter, to global there region

Asia. been So has in

now economically. growing Asia fast is obviously

U.S. more up well, it's than in so And everywhere, historic. so picked and as the it's actually

into that pace difficult which technology emerging monetizing quarter. probably year, we're of happening -- pattern. biofuels answer. of sustainable say bit and Swedish then to has, up which And all things really a recycle I again, things about good we've fuel really will in So on one piece in slower than technologies. and China pick produce plastic we're to we they're new -- a to and that's success wins has got been just I working I announced and that later technologies the historically obviously, to we've around getting world. plastic so about accelerate Again, think aviation do to and question mean the of terms would great this fact is just last -- the track first the discussions technologies plants And secondly, the our will the been is group with across on that scale. having, good them starting a like recycling the obviously, very just

value So constantly where same we're we KBR and sit can the But the our working good looking shareholders, through cycle. get making opportunities monetization that. at and them but around that time they sure those thinking accretive a for at in

from across the or ammonia really spectrum the arena. so looking in the sort we like capability market and with bit the the technology to and -- areas ammonia green refining and portfolio, and of activity highlight lithium and in the in tried across our of awards little a obviously and across So green that lots all area things that

of firing of cylinders. this perfect kind very and and it's offering, all So kind a it's I broad a we're before, said storm, on

Michael Dudas

you. Thank

Operator

We of Please Perez ahead now go are Bank Mora of Mariana ready. you have America. when

Mariana Perez Mora

Thank you very much. Good morning.

Stuart Bradie

morning. Good

Mariana Perez Mora

is Government question So, Solutions. my about

have we any that next that you at important If should the look coming XX months? awards in are

Stuart Bradie

Yes.

through out lumpy. and on, several news actually for our $X billion really haven't we've awards that got sort and We've quite said talked on pipeline. call We've will and than we're that waiting We covered the off don't size specific we of these greater awards. about come try of

as in those come quicker, we've numerous We the through vehicles particularly about and a bit have. previously, range, $XXX the have talked continue to we little million contract

projects specific, is pipeline large call the we're and It's the there anything number across attractive. it's really very The so of out but going within to balanced. segments, robust. not So, is all

Mariana Perez Mora

Thank then people. you, about and

was see hiring quarter. midterm? how challenges and the mentioned in opportunities you are strong the the What You in

Stuart Bradie

earlier, The big Yes. that terrific. single Certainly, and before, said every people, of huge, a good making focus we're KBR experience not external as I guess, the And company retention those progress. on I making effort extremely talk absolutely as were people that we been terrific making are it can a our has we're recognition, into mentioned put highly the it progress areas to we KBR, third-party inclusive, but certainly work. be very day. perfect, a as as And we much at people place huge making recognition making walk it employee making and awards diverse. in

actually down benefits, COVID as because at is end that got the in area actually the and well. going coming last has So, really has not are the we've to and as our improved which talent a year out area and just of progressed focus in management actually we second on doubled easy then things on mature. our talent of development rate acquisition recruitment year the had but the lot And attrition of our efforts of to wins,

then to see feel to that we'll I we've work sure issue to stay to done true a think absolutely people ensure area, do in lot a continue challenge is that complacent, that company I a we we So, the vigilant, they we're what I'm word that do. and XXX% don't we're get and momentum. think that the we if we and do. And build that's make exactly going really, to really people amazing valued And for our that, stay

Mariana Perez Mora

much. so you Thank

Operator

Thank you.

Breitzke Spencer of from question next the take now will Cowen. We

Spencer Breitzke

IMO wondering is Gautam. over on Thanks revenue if the or you Eurocom.? for any for now could on trends is out color This XX recompetes Spencer the the way, was next that months question. any you. I touch taking of for and Thank Breitzke

Stuart Bradie

Yes, second question.

and actually some offices the EUCOM there. of around was the last and I week in sites First, visiting

any it's seeing I not enduring. of think levels is the We're view slowdown. very

fact, that. little summertime, as like we're a the things in East also getting in The we're doing Middle this and In well. and bit seeing exercises we're

So, that's I even is if is strong. the what I durability, know a strong. The you think cadence word, mean

there. all positive So, I positive think all

we've particularly any expecting and of we're recompete good that. protests that largest This like very the our won anything In did a recompetes, right, you're behind technical is us, or year, bid, not terms very we to so. get in the of fashion

this with IMOC year. So, head through think all III we forward I good as

after. the into got year, six couple and as the up until next end awarded very move they won't come the recompete, recompetes, of of the NASA year For we've months, little in for at larger next really will a but that bids be year, the we of terms

Mark Sopp

The 'XX. revenue in

Stuart Bradie

Yes.

low think huge fairly year terms recompete nothing rate a I year. Once of again, So, in be it's a basis. run next there'll

now, So, a even additive work will we're I story. think comes what bidding be we're going the through in the that it if after and basis, to lumpy all

Operator

you. Thank

comes question next Our of Andy from Citibank. Kaplowitzh

Unidentified Speaker

Andy for Kaplowitz on of out you in so on Sahil just region? opportunities is maybe Can touch East. This your pipeline seeing everyone. Hi, the Middle we're capex coming of robust the spend and work

Stuart Bradie

we've capex I the is for got with we're Dhabi, X,XXX work people a Southern We've to enormous. buildup Abu it's Saudi significant of Arabia. up we hundreds management portfolio work there won the and business announced across Iraq, important for that got the others not. doing around significant in quite And us. and in mean today we and quite again, Well, announced in project in today had recently a BP again, contract mostly ongoing in recently we people Q

surrounds the the of that technology, biggest So, for whole interested going is they're announced obviously, just Saudi. spender that course, in project crackers flooring out across today. the And very to notes management of spend program interest East. and The the the is they're that. not They've that the Middle capex a support of of seven and we're just but

to decarbonizing already on positioned. and away think ammonia part as high-end quickly also, we're and looking front they're But of there. strategy. move developments their sort long-term we're the gas, looking oil for supporting at and I doing of very burning into are from work gas electricity front-end Aramco obviously hydrogen solutions well So,

the volume Rialco we're that's share, new in of I doing And arena. we our in So, across very project gate. energy that's a think itself. the management city well fair outside the Saudi also in win for work if enormous We're Doria positioned portfolio, just an work just

a that NEOM in of services engaged We are portfolio. number across with

particular I we're billion I in we're do in in diversify several a continue and And and of and say, Saudi programmatic maintain market around much type Abu partner trusted to East, again, of capex And quite Middle managing would so arena in that see bit energy project to activity, management high-level think Dhabi, and and very well very the itself. to we for in in a the continue solutions, invest their share capacity, they positioned. to as the

So, for it's East the a Middle I KBR. think good story,

the needs and the there, hard value at their we really we relationships making what and set adding are sure think move I delivering understanding very reputation forward. there and and to our and as good desire is work we're customer

the So for and commitments. and continue to cash of very they've just exciting place a to will think the got actually be, capital it's fulfill be those given capital it that years, commitments to number I the fact yes, a so

Unidentified Speaker

the Great. on is What And far? this IRA. so of more you if for other just a And tailwind anything, business? one have seen 'XX

Stuart Bradie

Yes.

I 'XX think it's a tailwind. more

attractive. I of been things somewhat I and that and makes think the by and like K far move and green a investment I going Obviously, sort of We've Yes, there's going when to concessions of more we it's there. getting rates about they're latter a that's see this the sitting had point Oklahoma, But year, we to part this lot where number a with the the as into internal return as quarter the more hydrogen think into next has facilitated in to obviously rates tax tailwind well. rail. of a project close lot decisions bit think talked a final getting you're Woodside's that year. little making

be to only see to think mature back I ourselves. awarded projects companies starting to enough we're like

Unidentified Speaker

on seems time an positioned is area here? about term, And the How for It are there of could around be? the medium in the we attention particularly well of specific increased tumultuousness programs the energy any hear this KBR direct internationally? in potential like the an opportunities segment. to such Update Government Solutions of could opportunity pursuits big near

Stuart Bradie

Yes. It's been a while.

directed program, but about shared and So the I energy it's talked progressed well.

KBR. certainly into the watch future for and the vehicles through extended prototypes We've rapid that, for That’s but sure. matured has office it’s think I for additional significantly. to now one the scope

Unidentified Speaker

Australian And update all the of We been guys quickly, status much. more some have to and begin repositioning segment? so growth business. do reprioritization. Thanks government on understand of could the the contribute just Excellent. you there's When over that an

Stuart Bradie

Yes.

and and in quarter, the strategic area resulted the linkages a U.S. change the services of was in as quite for think it we Ocas threats think of readiness peer and the quite I we're which terrific, shifted ensure us, that a in review, particular, through in of major in March, I came So in things a out is priorities government of we that provider and significant number level but to back also region. a the sort a really there focus they which all awards on and did the had came aware, in Australia to like the opposite of sort U.K. and

across already and going So as you're program And there, providing and that I engaged, well aware, of in on Ocas services portfolio. as a think already lot the effort progresses. we're very we're that positioned well

pretty the the defence the So we're feeling good of infrastructure about technical business that I and where of in both sits sort side future in side. guess today more engineering

Unidentified Speaker

guys for Thank call. much so you taking Excellent. my

Stuart Bradie

Got it. Oliver. Thanks,

Operator

you. Thank

Stuart it for further Bradie our to I'd questions, to As we to have final hand back like some CEO, remarks.

Stuart Bradie

Rica. Thanks,

accounting the one actually a beat I'm is, was part to and odd it there. performance. grew the just EBITDA delivered But it little line not sorry, teams cash, quarter, true typically absolutely bottom the explaining were So it's terrific quarter. that all accounts as obviously, you no treatment said, our this of outstanding an the in all sleep, we bit. was and We close, Mark put to but he like said consensus. good accounting treatment distorted operating We

terrific. were bookings Our

terrific. into are Our bookings going already QX

it line like that in operating how We tell outcome. So terrific that out think that make in excuses. is. targets, I some things a in really it and know that's a I with the control things external, don't are other offsetting somewhat we don't, and just excluding interest outperforming companies we increase interest our are give that, company like things is

with strong bookings, really company. is I'm where outlook position I'm really a that the target. a really we're And people are about our the we statement think feeling you with very, leave operational pleased positive. with the agenda really on I the and good of would the I happy So XXX very performance. with

to forward So future. listening you near look you thank talking the for Thank you. today, in to we and

Operator

call. rest confirm day, Please Thank you joining. all now can I may that you your today's does a for have disconnect conclude and lovely your of lines.

KBR (KBR) 27 Jul 232023 Q2 Earnings call transcript