Q4 2023 KBR Inc Earnings Call

Operator: www.TheBusinessProfessor.com Thank you for your patience, everyone. The Q4 and FY2023 KBR Inc. Earnings Conference call will begin shortly. To register a question during today's call, please press star followed by one on your telephone keypad. If you change your mind, please press star followed by two.

Thank you for your patience, everyone at the Q4 and FY 'twenty two 'twenty three KBR, Inc. Earnings Conference call will begin shortly to register a question during today's call. Please press star followed by one on your telephone keypad. If you change your mind. Please press star followed by two.

[music].

Drew: My name is Drew, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Q4 and FY 2023 KBR Inc. Earnings Conference. All lines have been placed on mute to prevent any background noise.

Drew: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question, please press start, followed by one on your telephone keypad. If you change your mind, please press start, followed by two. I will now hand over to Jamie Debray, Vice President of Investor Relations. Please go ahead when you are ready.

Jamie L. Cook: Thank you. Good morning, and welcome to KBR's fourth quarter and fiscal year 2023 earnings call. Joining me are Stuart Brady, President and Chief Executive Officer, as well as Mark Sopp, Executive Vice President and Chief Financial Officer. Stuart and Mark will provide highlights from the quarter and then open the call for your questions.

Jamie L. Cook: Today's earnings presentation is available on the investor section of our website at KBR.com. This discussion includes forward-looking statements reflecting KBR's views about future events and their potential impact on performance, as outlined on slide 2. These matters involve risks and uncertainties that could cause actual results to differ significantly from these forward-looking statements, as discussed in our most recent Form 10-K, available on our website.

Drew: Good morning, My name is drew and I'll be your conference operator today at this time I would like to welcome everyone to the Q4 and FY 2023 at KBR, Inc. Earnings Conference all lines have been placed on mute to prevent any background noise.

Jamie L. Cook: This discussion also includes non-GAAP financial measures that the company believes to be useful metrics for investors. A reconciliation of these non-GAAP measures to the nearest GAAP measure is included at the end of our earnings presentation. I will now turn the call over to Stuart.

Drew: After the Speakers' remarks, there will be a question and answer session. If you'd like to ask a question. Please press star followed by one on your telephone keypad. If you change your mind. Please press star followed by two.

Stuart J. B. Bradie: Thanks, Jamie, and a warm welcome to our 2023 year-end earnings presentation. I will start on slide five. As we reflect on 2023, I wanted to begin today with a theme of looking after our people. Creating an environment where each and every person can go home after work, at a minimum, the same as when they started their day is very personal to myself and the whole leadership of KBR. A zero harm program is only as good as our processes and, of course, our people being committed to our values every single day. I am therefore pleased to report that once again we achieved top quintile results, an outstanding achievement given what we do and where we do it. So a huge shout out to KBS people all across the world.

Jamie: I'll now hand over to Jamie debris, Vice President of Investor Relations. Please go ahead would you ever I D.

Jamie L. Cook: Good morning, and welcome to Kbr's fourth quarter and fiscal year 2023 earnings call. Joining me are Stuart Brady, President and Chief Executive Officer, as well as Mark Sopp, Executive Vice President and Chief Financial Officer.

Jamie Debris: Stuart and Mark will provide highlights from the quarter and then open the call for your questions.

Jamie Debris: Today's earnings presentation is available on the investors section of our website at <unk> Dot com.

Jamie Debris: This discussion includes forward looking statements, reflecting kbr's views about future events and their potential impact on performance as outlined on slide two.

Jamie Debris: These matters involve risks and uncertainties that could cause actual results to differ significantly from these forward looking statements as discussed in our most recent Form 10-K available on our website.

Stuart J. B. Bradie: There are a number of achievements and milestones that we have celebrated through the year as examples of this exemplary performance on this slide. I won't read them as there are many others, but this gives us a good feel for the global and complex nature of what we do and why we are so proud of our HSSE performance and ongoing commitment to continual improvement. On to slide six on business health. I will focus my remarks on the full year performance and outlook. I'll also give you an update on HomeSafe.

Jamie Debris: This discussion also includes non-GAAP financial measures that the company believes to be useful metric for investors.

A reconciliation of these non-GAAP measures to the nearest GAAP measure is included at the end of our earnings presentation I will now turn the call over to Stuart.

Stuart J. B. Bradie: Thanks, Jamie and a warm welcome to <unk> 2000, <unk> year end earnings presentation.

Stuart J. B. Bradie: I will start on slide five.

Stuart J. B. Bradie: As we reflect on 2023 I wanted to begin today with a theme of looking after our people.

Stuart J. B. Bradie: Mark will cover the quarter results, which are once again resilient. We met or exceeded our expectations on all key metrics. Mark will also break down the year a bit more and present, of course, on 24 guidance. On the people front, we increased our headcount by double digits, which is aligned with our organic growth. Pleasingly, through the year, our attrition rate has reduced. And through independently run surveys, I'm proud to report that KBR is now certified as a great place to work in 16 countries. This is a direct result of the emphasis we place on valuing our people. We are, of course, not perfect, and we will strive for continual improvement and deliver even greater investment in our people in 24. But I think it's important we must also recognize the 23 performance. Talking of recognition, you can see some of the awards we received during the year. And importantly, these were all assessed independently.

Stuart J. B. Bradie: Creating an environment, where each and every passing can go home after work at a minimum the same as when they started the day.

Stuart J. B. Bradie: Personal to myself and the whole leadership of KBR.

Stuart J. B. Bradie: Zero harm program is only as good as our processes and of course, our people being committed to values every single day.

Stuart J. B. Bradie: And therefore pleased to report that once again, we achieved top quintile results.

Stuart J. B. Bradie: Standing achievement, given what we do and where we do it.

Stuart J. B. Bradie: So a huge shout out to KBS people all across the world.

Stuart J. B. Bradie: There are a number of achievements on milestones that we have celebrated through the year as examples of this exemplary performance on this slide.

Stuart J. B. Bradie: I won't read them as there are many others, but this gives us a good feel for the global and complex nature of what we do and why we are so proud of our HSE performance.

Stuart J. B. Bradie: Ongoing commitment to continuous improvement.

Stuart J. B. Bradie: On zero harm, we've already covered the safety stats. From our employee survey, you can see that our people truly believe that we are committed and do care for them and about them. As you are aware, our unique ESG position allows us to deliver shareholder value in addition to fulfilling our ESG goals. These align with UN Sustainable Development Goal number seven, which is affordable and clean energy.

Stuart J. B. Bradie: On to slide six on business health.

Stuart J. B. Bradie: I will focus my remarks on the full year performance and outlook.

Stuart J. B. Bradie: I'll also give you an update on home safe.

Stuart J. B. Bradie: Mark will cover the quarter results, which were once again resilient, we met or exceeded expectations on all key metrics Mark will also breakdown the year a bit more on present of course on 24 guidance.

Stuart J. B. Bradie: On the people front, we increased our head count by double digits.

Stuart J. B. Bradie: Is aligned with our organic growth.

Stuart J. B. Bradie: And as you'll see on the slide, we've listed an example from each of the businesses. In GSUS, we support the FAA Vale project designed to achieve cleaner emissions from airport ground support equipment. In GS International, we support the UK MOD with testing of zero-emission military aircraft.

Stuart J. B. Bradie: We through the year, our attrition reduced and through independently run service I'm proud to report that KBR is now certified as a great place to work in 16 countries.

Stuart J. B. Bradie: This is a direct result of the emphasis we place on volume of people.

Stuart J. B. Bradie: We are of course, not perfect and we will in 'twenty, four and beyond 24 strive for continuous improvement and deliver even greater investment in our people.

Stuart J. B. Bradie: And as you know, in STS, we have many sustainable clean energy technologies that help some of the largest organizations in the world deliver cleaner environmental outcomes. Moving on to business growth, these are the metrics around work winning.

Stuart J. B. Bradie: But I think it's important we must also recognize the 23 performance.

Stuart J. B. Bradie: Talking of recognition you can see some of the awards we received during the year.

Stuart J. B. Bradie: Overall, trailing 12-month book-to-bill was 1.1 times, and as you would expect with this result, backlog was up 10% year-on-year to $21.7 billion, including options. This provides great visibility of future earnings potential and importantly excludes home save. There is more positive news on that in a moment.

Stuart J. B. Bradie: And importantly, these were all assessed independently.

Stuart J. B. Bradie: One zero harm we've already covered the safety stats from our people. So that you can see that our people truly believe that we are committed and do care for them.

Stuart J. B. Bradie: Sure.

Stuart J. B. Bradie: As you are aware our unique ESG position allows us to deliver shareholder value. In addition to fulfilling our ESG goals. These aligned with the UN sustainable development goal number seven which is affordable and clean energy.

Stuart J. B. Bradie: In terms of 2024, this translates to 75% of work under contract as we start the year. Given, in a typical year, we also execute 15 to 20 percent of our revenue on smaller short-term consulting contracts, plus, of course, ongoing contract growth, this is a very solid basis for the year ahead. Now on to Group Financial.

Stuart J. B. Bradie: And as Youll see on the slide we have listed an example from each of the businesses and Ges U S. We support the F. A Vale project designed to achieve cleaner emissions from airport ground support equipment.

Stuart J. B. Bradie: In <unk> International we support the U K and Woody with testing of zero emission military aircraft and as you know in STS we have many sustainable clean energy technologies, which helped some of the largest organizations in the world deliver cleaner environmental outcomes.

Stuart J. B. Bradie: Strong organic growth at 11% XOEW, a fantastic performance in its own right, but more impressive was the associated adjusted EBITDA results. We delivered 12% year-on-year adjusted EBITDA growth by increasing margins to 10.7%, an outstanding result. Now on to cash.

Stuart J. B. Bradie: Moving onto business growth now these are the metrics around work winning.

Stuart J. B. Bradie: Overall trailing 12 months book to Bill was one one times and as you would expect with this result was up 10% year on year to $21 $7 billion, including options.

Stuart J. B. Bradie: We settled the convertibility and warrants in cash as promised, not only avoiding dilution but reducing our share count, truly delivering on our commitment to maximize shareholder returns. This was all possible due to excellent cash management and strong treasury and tax management, with adjusted OCF conversion at 117% for the year. Absolutely outstanding.

Stuart J. B. Bradie: This provides great visibility of future earnings potential and importantly excludes home safe that more positive news on that in a moment.

Stuart J. B. Bradie: In terms of 2024 this translates to 75% of work under contract as we start the year.

Stuart J. B. Bradie: So, in short, we exceeded our expectations across all key metrics for the full year. Revenue growth, adjusted EBITDA, adjusted EPS, and, of course, cash. Our book of business underpins our continued momentum and growth. Our vision is to deliver technology and increasingly higher-end, technically differentiated services in attractive end markets that matter. Safe, secure, and sustainable.

Stuart J. B. Bradie: Given in a typical year, we also execute 15% to 20% of our revenue and smaller short term consulting contracts plus of course ongoing contract growth.

Stuart J. B. Bradie: This is a very solid basis for the year ahead.

Onto group financials.

Stuart J. B. Bradie: Strong organic growth, 11% ex <unk>.

Stuart J. B. Bradie: Fantastic performance in its own right, but more impressive was the associated adjusted EBITDA result, we delivered 12% year on year adjusted EBITDA growth by increasing margins to 10, 7% and outstanding result.

Stuart J. B. Bradie: We continue to realize our vision, continually moving away from markets and business models that have become commoditized, growing our technology portfolio both in GS and STS, and ensuring we operate more in the differentiated services market. This, of course, should result in enhanced margins over time, which was clearly the case in 2023. All of this was achieved in quite a volatile year, not only geopolitically but also fiscally, especially with increased interest rates. Now on to slide seven.

Stuart J. B. Bradie: Onto cash we settled the convert and warrants and cash as promised not.

Not only avoiding dilution, but reducing our share count.

Stuart J. B. Bradie: Truly delivering on our commitment to maximize shareholder return.

Stuart J. B. Bradie: This was all possible due to excellent cash management and strong treasury and tax management with adjusted OCI conversion at 117% for the year absolutely outstanding.

Stuart J. B. Bradie: I'm not going to spend too much time on these slides as the markets we discussed last quarter and, in fact, most of 2023 remain unchanged. You can see three awards on the left demonstrating how engaged KBR is across sustainability in all aspects of the energy trilemma. STS booked a bill on a trailing 12-month basis was 1.1 times, and excluding the large LNG project, which of course has a large burn. The trailing 12-month book-to-bill was 1.2 times.

Stuart J. B. Bradie: So in short, we met or exceeded expectations across all key metrics for the full year revenue growth adjusted EBITDA adjusted EPS and of course cash.

Stuart J. B. Bradie: Our book of business underpins, our continued momentum and growth.

Stuart J. B. Bradie: Our vision is to deliver technology.

Stuart J. B. Bradie: Increasingly higher and technically differentiated services and attractive end markets that matter.

Stuart J. B. Bradie: I think it is a really strong indicator that SDS, both in technology and sustainable services, continues to grow and win work in critical areas aligned with our vision. The margin performance demonstrates this, which Mark will cover in a moment. As a reminder, we have a number of inbound requests to do a deeper dive on STS. Why has its adjusted EBITDA grown 50% year-on-year? What is the book of business, and how does it work out to demonstrate the non-cyclical long business attributes?

Stuart J. B. Bradie: <unk> secure unsustainable.

Stuart J. B. Bradie: We continue to realize our vision continually moving away from markets and business models that become commoditized.

Stuart J. B. Bradie: Growing our technology portfolio, both in GFS, and STS and ensuring we operate more in the differentiated services market.

Stuart J. B. Bradie: This of course should result in enhanced margins over time, which was clearly the case in 2023.

Stuart J. B. Bradie: How do we make our returns? And what are the key markets going forward and their outlook? Our intent is to present a focused, I guess what we're calling an SDS Primer, the week of March 11th to answer these questions. The objective is to increase investors' knowledge of this business before we go into an investor day, at which our focus will be very much on future direction, increased synergy, and the potentials going forward. On the government side, in a year of volatility, both internationally and domestically, the team did an amazing job. GS Book-to-Bill on a trailing 12-month basis was at 1.2x. We have highlighted some example wins that again show the realization of our vision. Trusting in Technology, Directed Energy via D.M. Schorat.

Stuart J. B. Bradie: All of this was achieved in <unk>.

Stuart J. B. Bradie: Quite a volatile year, not only geopolitically, but also fiscally, especially with increased interest rates.

Stuart J. B. Bradie: Onto slide seven.

Stuart J. B. Bradie: I'm not going to spend too much time on these slides is the markets, we discussed last quarter and in fact, most of 2023 remain unchanged.

Stuart J. B. Bradie: You can see three awards on the left demonstrating high engage KBR is across sustainability in all aspects of the energy trilemma.

Stuart J. B. Bradie: STS book to Bill on a trailing 12 month basis was one one times and.

Stuart J. B. Bradie: And excluding the large LNG projects, which of course has a large burden.

Stuart J. B. Bradie: The trailing 12 months book to Bill was one two times.

Stuart J. B. Bradie: High-end consulting via Fraser Nash, working with the UK government, showing very strong synergy with SDS. And thirdly, absolutely great performance via highly differentiated services leading to extended scope on the preservation of the force and family contract. KBR is very well positioned in key markets that, post-appropriation, we expect, will be well funded. Now on to slide eight and Home Safe.

Stuart J. B. Bradie: I think a really strong indicator of the STS both in technology unsustainable services continues to grow and win work in critical areas aligned with our vision.

Stuart J. B. Bradie: The margin performance demonstrates this which mark will cover in a moment.

Stuart J. B. Bradie: As a reminder, we have a number of inbound requests to do a deeper dive on the STS.

Stuart J. B. Bradie: Why has it grown adjusted EBITDA, 50% year on year, what is the book of business and how does it work off to demonstrate the non cyclical loan business attributes how do we make our returns and what are the key markets going forward on their outlook.

Stuart J. B. Bradie: Last quarter, we recognized that we delivered a status update that was devoid of clarity. It was the truth, but we also recognize the market does not like uncertainty. As you can well imagine, our team and Transcom have been working very hard together to provide more clarity. We created a joint TIGER team with Transcom to improve the integration of government and contractor systems.

Stuart J. B. Bradie: Our intent is to present, a focused I guess, what we are calling on STS primer.

Stuart J. B. Bradie: Of March 11th to answer these questions. The objective is to increase in vessels knowledge of this business before we go into an investor day at switch our focus will be very much on future direction increased synergy and the potentials going forward.

Stuart J. B. Bradie: We added additional leadership with specific operational expertise, and together, we are partnering with individual services branches to drive organizational change management. We are jointly committed to a successful path forward and feeling very upbeat. I am thus pleased to report that Round 1 systems testing was completed successfully in January.

Stuart J. B. Bradie: On the government side and a year of volatility both internationally and domestically the team did an amazing job.

Stuart J. B. Bradie: <unk> book to Bill on a trailing 12 month basis was $1 two X.

Stuart J. B. Bradie: We've highlighted some example wins again showed the realization of our vision.

Stuart J. B. Bradie: Lastly in technology directed energy via <unk>.

Stuart J. B. Bradie: Now this clears the way to starting operational test moves at the local level in the spring of this year. The volume ramp will be in a controlled manner through the year, with the expectation of significantly ramping up into 2025, especially the busy season, and international moves will then follow as we head into 2026. So, in short, circa a delay of one year. Now, remember, this is a nine-year program.

Stuart J. B. Bradie: High end consulting Viet Frazer Nash working with the UK government, showing very strong synergy with Sds.

Stuart J. B. Bradie: And thirdly, absolutely great performance via highly differentiated services, leading to extended scope.

Stuart J. B. Bradie: On the preservation of the <unk> family contract.

Stuart J. B. Bradie: So although a delay is always frustrating, I believe it has allowed both sides time to de-risk the startup and, of course, the ramp, which is ultimately a good thing. In addition, we have reached contractual agreement with Transcom on an extended and funded establishment and test period, which covers HomeSafe's project management and development costs up until we reach a sufficient volume of moves, therefore insulating us from carrying overhead costs before higher volume moves get underway. Now I've seen some reports and quite a bit of media noise on the supply chain side of the moving and transportation industry. Firstly, I'll start by emphasizing the intent of this program is to redefine the moving experience of our military personnel and their families. Secondly, to deploy an IT backbone with intelligence to retain data and knowledge that allows for optimization and, importantly, accountability. To achieve this, we require a certain level of disruption, and, of course, disruption leads to change.

Stuart J. B. Bradie: <unk> is very well positioned in key markets post appropriation, we expect will be well funded.

Stuart J. B. Bradie: Now onto slide eight on home safe.

Stuart J. B. Bradie: Last quarter, we recognized that we delivered a status update that was devoid of clarity.

Stuart J. B. Bradie: It was the truth, but we also recognize the market does not like uncertainty.

As you can well imagine our team on transcon I've been working very hard together to provide more clarity.

Stuart J. B. Bradie: We created a giant tiger team with Transco to improve the integration of government on contracted systems, we added additional leadership with specific operational expertise.

Stuart J. B. Bradie: Together, we are partnering with individual services branches to drive organizational change management, we had.

Stuart J. B. Bradie: Currently committed to a successful path forward and feeling very upbeat.

Stuart J. B. Bradie: I am pleased to report that round one systems testing was completed successfully in January.

Stuart J. B. Bradie: To demonstrate the maturity of the supply chain development for the contract, here are statistics on the current state of the supplier network. In the HomeSafe Digital Supplier Management System, we have over 2,200 suppliers registered as of today, of which 380 have already fully executed contract agreements that can provide 100% coverage of a current service area, and we have several large fan lines also committed to the program once we get to higher volumes. The new Global Household Goods Contract is not limited to current DoD-approved providers but will be open to a broader set of the transportation market.

Stuart J. B. Bradie: Now this pleased the way to starting operational test moves at the local level and spring of this year.

Stuart J. B. Bradie: The volume ramp will be in a controlled manner through the year with the expectation of significantly ramping up into 2025, especially the busy season.

Stuart J. B. Bradie: On International moves will then follow as we head into 2026.

So in short circuit, a delay of one year.

Stuart J. B. Bradie: Now remember this is a nine year programs. So the delay is always frustrating I believe it has a light both sides the time to de risk the startup and of course, the ramp which ultimately is a good thing.

Stuart J. B. Bradie: In addition, we have reached contractual agreement with Transco on in an extended unfunded establishment and test period, which covers home safes project management on development cost up until we reach a sufficient volume of moves therefore, insulating us from cutting overhead costs before.

Stuart J. B. Bradie: We intend and commit to being entrepreneurial and innovative, attracting not only traditional van lines and owner operators but also non-traditional providers to do moves in a more efficient manner. I suspect the supply chain will change in some areas, and there will likely be noise as a consequence, which is only to be expected. Both HomeSafe and Transcom are committed to these outcomes, which include paying a fair and reasonable rate to service providers, rewarding those that perform with additional volumes, including small businesses, of course, and providing better services to our DoD families.

Stuart J. B. Bradie: Volume moves get underway.

Stuart J. B. Bradie: Now I've seen some reports on quite a bit of media noise on the supply chain side of the moving and transportation industry.

Stuart J. B. Bradie: Firstly I'll start with emphasizing the intent of this program is to redefine the moving experience of our military personnel and their families.

Stuart J. B. Bradie: So, what does this mean for 2024? We have a more defined path forward and are in a much better position given the recent modification agreement and supply chain development. We intend to set initial 2024 guidance with a very conservative view of homes.

Stuart J. B. Bradie: Secondly is to deploy it backbone with intelligence to retain data and knowledge.

Stuart J. B. Bradie: As for optimization and importantly accountability.

Stuart J. B. Bradie: To achieve this we require a certain level of disruption and of course disruption leads to change.

Mark W. Sopp: With local test moves beginning in the spring, we expect a nominal amount of revenue of circa $125 to $175 million during the year, with profits, as we've guided before, at the mid single digits and increasing over time to align with the GS margins today. Of course, we expect volumes to ramp considerably in 2025 with the domestic busy season and again in 2026 as international moves are added. One quarter is sometimes a long time in business, and clearly, there has been significant progress since Q3. And I want to be very clear, we're extremely upbeat about HomeSafe and what it can deliver to men and women in uniform, but also to our shareholders over the years ahead. I will now hand over to Mark, who will cover the quarter, the year in a bit more detail and, of course, 24 guidance. Great. Thank you, Stuart. Hello, everyone.

Stuart J. B. Bradie: To demonstrate the maturity of the supply chain development for the contract heater statistics on the current state of our supplier network.

Stuart J. B. Bradie: And the home safe digital supplier management system.

Stuart J. B. Bradie: Over 2200 suppliers registered as of today.

Stuart J. B. Bradie: Of which 380 have already fully executed contract agreements, which can provide 100% coverage of our current service areas.

Stuart J. B. Bradie: And we have several large fine lines also committed to the program once we get to higher volumes.

The new global household goods contract is not only limited to current Dod approved providers and will be open to a broader set of the transportation market.

Stuart J. B. Bradie: We intend and commit to being entrepreneurial and innovative attracting not only traditional van lines on owner operators, but also non traditional providers to do moves in a more efficient manner.

Stuart J. B. Bradie: I suspect the supply chain will change in areas and they will likely be noise as a consequence, which is only to be expect both home safe on transco.

Mark W. Sopp: I'll start on slide 10 with the Q4 results. Then I'll hit Fiscal Year Results, Capital Structure Matters, and then finish with our guide for 2024. So first up, we were pleased to finish fiscal 2023 with a strong Q4. The top line grew 8% in the quarter, all organic, with amplified growth and profit.

Stuart J. B. Bradie: <unk> to these outcomes, which include paying a fair and reasonable rate to service providers rewarding those that perform with additional volumes, including small businesses of course on providing better services to Dod families.

Mark W. Sopp: Justin Ibbett-Dobb is up 20% with contributions from both business areas in volume and also in margin. I'll hit the drivers of this when I cover the segment slide here in a moment. Adjusted EPS was $0.69 for the quarter, in line with expectations.

Stuart J. B. Bradie: So what does this mean for 2024.

Stuart J. B. Bradie: We have a more defined path forward on it in a much better position given the recent modification agreement and supply chain developments.

Stuart J. B. Bradie: We intend to set initial 24 guidance with a very conservative view of home safe.

Mark W. Sopp: Q4 23 Adjusted EPS does reflect considerably higher interest costs and a higher tax rate than the prior year quarter. However, operating in free cash flow results finish strong, enabling a terrific full year outcome. As Stuart indicated earlier, cash performance was critical in building our treasury to enable us to fully settle the convertible maturity and warrants and get that out of the way as we entered into 2024. Over to slide 11.

Stuart J. B. Bradie: With local test moves beginning in the spring, we expect nominal amount of revenue circa $1 $25 million to $175 million during the year.

Stuart J. B. Bradie: With profits as we've guided before at the mid single digits and increasing over time to align with the GFS margins today.

Stuart J. B. Bradie: Of course, we expect volumes to ramp considerably in 2025 with the domestic busy season and again in 2026 international moves around it.

Mark W. Sopp: For the full year, all metrics were on or above our plan and also consistent with our long-term targets, so we're very pleased with that. Revenue was just about $7 billion for the year, just a hair under, up 11% over 2022 on an ex-OAW basis and up 6% without that adjustment. Adjusted EBITDA grew to $747 million.

Stuart J. B. Bradie: One quarter is sometimes a long time in business and clearly there has been significant progress since Q3, and I want to be very clear were extremely upbeat about home safe and what it can deliver to men and women in uniform, but also to our shareholders over the years ahead.

Stuart J. B. Bradie: I will now hand over to Mark who will cover the quarter the year and a bit more detail and of course 24 guidance Mark.

Mark W. Sopp: Great. Thank you Stuart Hello, everyone I'll start on slide 10, with the Q4 results.

Mark W. Sopp: That's up 12% over last year, driven by 50 basis points of adjusted EBITDA margin improvement. This improvement was attributed to excellent project execution across the board, Greater Growth Contribution, Favorable Project Mix, and Economies of Scale from Sustainable Tech. Adjusted EPS was up 7% for the year and in line with our original guide for 2023. In the end, it was pleasing to see our operations over-perform on the EBITDA line to offset about $20 million of unplanned headwinds in interest expense. Operating cash flow of $463 million was one of the highlights of the year.

Mark W. Sopp: I'll hit fiscal year results capital structure matters, and then finish with our guide for 2024.

Mark W. Sopp: So first off we were pleased to finish fiscal 2023 with a strong Q4.

Mark W. Sopp: Top line grew 8% in the quarter, all organic with amplified growth and profit.

Mark W. Sopp: Adjusted EBITDA was up 20% with contributions from both business areas and volume and also in margins.

Mark W. Sopp: I'll hit the drivers of this when I cover the segment slide here in a moment.

Mark W. Sopp: Adjusted EPS was <unk> 69 for the quarter inline with expectations.

Mark W. Sopp: Q4, 23, adjusted EPS does reflect considerably higher interest cost and a higher tax rate in the prior year quarter.

Mark W. Sopp: We overperformed here relative to our guide, with more client advances received in STS and better than expected accounts receivable collections across the board in Q4. The team really worked hard and well together to lower DSO all year and also negotiate favorable cash terms on new contracts. This result underscores our quality of earnings and also client satisfaction across both segments. As I will discuss further in a moment, advances and strong collections are probably accelerations to some degree, so we expect to see some flip side of this in 2024. Now on to slide 12, for segment performance. I'll start with STS.

Mark W. Sopp: Operating and free cash flow results and a strong enabling a terrific full year outcome.

Mark W. Sopp: As Stuart indicated earlier cash performance was critical in building, our treasury to enable us to fully settle the convertible maturity and warrants and get that out of the way as we entered into 2024.

Mark W. Sopp: Over to slide 11 for the full year, all metrics were on or above our plan and also consistent with our long term targets.

Mark W. Sopp: With that.

Mark W. Sopp: Revenue was just about at $7 billion for the year, just a hair under.

Mark W. Sopp: Up 11% over 2022 on an ex <unk> basis, and up 6% without that adjustment.

Mark W. Sopp: Adjusted EBITDA grew to 747 million, that's up 12% over last year, driven by 50 basis points of adjusted EBITDA margin improvement.

Mark W. Sopp: As we have mentioned a number of times, our focus in this segment is Eva Da Gross, which includes after-tax equity and earnings from unconsolidated joint ventures, for which we report no revenue. As seen on the left, Q4 was a continuation of a stellar year for FTS. We're seeing strong global demand for energy security requirements, decarbonization solutions, and new energy transition enablers that we provide. Our business model in STS provides a good demonstration of the ability to quickly convert demand to EBITDA by leveraging IP Licensing, Product Sales, and Quick Ramp-Up on Sustainable Services, all simultaneously. STS finished the year with ongoing growth plus superb margins in cash flow, with new business bookings paving the way for more success in 2024. Adjusted EBITDA growth was 42% in the quarter.

Mark W. Sopp: This improvement was attributed to excellent project execution across the board.

Mark W. Sopp: And greater growth contribution favorable project mix and economies of scale from sustainable Tech.

Mark W. Sopp: Adjusted EPS was up 7% for the year and in line with our original guide for 2023.

Mark W. Sopp: In the end it was pleasing to see our operations over perform on the EBITDA line to offset about $20 million of unplanned headwind in interest expense.

Mark W. Sopp: Operating cash flow of $463 million was one of the highlights of the year.

Mark W. Sopp: Over performed here relative to our guide with more client advances received in STS and better than expected accounts receivable collections across the board in Q4.

Mark W. Sopp: The team really worked hard and well together to lower DSO all year.

Mark W. Sopp: And also negotiate favorable cash terms on new contracts.

Mark W. Sopp: All parts of STS are contributing to this result, across offerings like licensing, equipment, design, and engineering services, and also across multiple geographies and multiple verticals like ammonia, chemicals, olefins, and various emerging areas. For the full year, adjusted EBITDA was up 50% for all the same reasons as we had in Q4. Geographically, revenue in the Middle East and Europe was up about 37 percent, the U.S. was up about 11 percent, and Asia and the rest of the world were up about 44 percent. So STS, indeed, is a global business. Over to the government segment on slide 13. Q4 revenues were up 6%, with adjusted EBITDA up 8% on improved margins. Growth drivers were defense and intelligence and also international, up 22% and 15%, respectively.

Mark W. Sopp: This result, underscores our quality of earnings and also client satisfaction across both segments.

Mark W. Sopp: As I will discuss further in a moment advances and strong collections are probably acceleration to some degree. So we expect to see some flip side of this in 2024.

Mark W. Sopp: Now on to slide 12 for segment performance.

Speaker Change: I'll start with STS.

Speaker Change: As we have mentioned a number of times our focus in this segment is EBITDA growth.

Speaker Change: Which includes after tax equity and earnings from unconsolidated joint ventures.

Speaker Change: Which we report no revenue.

Speaker Change: As seen on the left Q4 was a continuation of a stellar year for Sps.

Speaker Change: We're seeing strong global demand for energy security requirements de Carbonization solutions, and new energy transition enablers that we provide.

Speaker Change: Our business model and Sps provides a good demonstration of the ability to quickly convert demand to EBITDA.

Speaker Change: And leveraging IP licensing product sales and quick ramp up on sustainable services all simultaneously.

Mark W. Sopp: Within these bright spots were the resumed pace on DEM Shorad, as Stuart mentioned earlier. Terrific growth in defense and intelligence on advanced technology projects funded under the RDT&E budget, across our expansive IDIQ portfolio, and also continued excellent performance by our Fraser Nash Technical Consulting Platform. Science and space had modest growth, with the FEDSIV budget constrained by the continuing resolution. Readiness and sustainment pulled back with reductions in the European Command theaters.

Speaker Change: STS finished the year with ongoing growth plus superb margins and cash flow with new business bookings paving the way for more success in 2024.

Speaker Change: Adjusted EBITDA growth was 42% in the quarter.

All parts of STS are contributing to this result.

Across offerings like licensing equipment design, and engineering services and also across multiple geographies and multiple verticals like ammonia chemicals olefins in various emerging areas.

Speaker Change: For the full year adjusted EBITDA was up 50% for all the same reasons as we had in Q4.

Mark W. Sopp: We tie this directly to the funding debate in Congress on military support levels to Ukraine. For the year, revenues were up 7% XOAW, with margins at 10%, in line with expectations. Earlier in the year, readiness and sustainment drove quite a bit of growth, while defense and intelligence and international lag due to the DEM Shorad delays, now resolved, and the government turnover implications in Australia. As you saw in Q4, it's good to see D&I and international return to higher growth to offset the political issues we're dealing with in writing this Consensus and in the Ukraine. This is a clear demonstration of the strength and resiliency of our well-diversified government solutions business.

Speaker Change: Geographically revenue in the Middle East and Europe was up about 37% U S was up about 11% and Asia and the rest of the world was up about 44%.

Speaker Change: So STS indeed, it's a global business.

Speaker Change: Over to the government segment on slide 13.

Speaker Change: Q4 revenues were up 6% with adjusted EBITDA up 8% on improved margins.

Speaker Change: Growth drivers were defense and Intel and also international up 22% and 15% respectively.

Speaker Change: Within these bright spots were resumed pace on <unk> Stuart mentioned that earlier.

Speaker Change: Terrific growth in defense and Intel on advanced technology projects funded under the <unk> budget.

Mark W. Sopp: So that summarizes the P&L. Now, let's move over to slide 14 for cash flow and capital structure matters. In 2023, we will use cash in three main ways. We have retired two risks, the convertible notes and warrants, and also the legacy legal matters. The third use was returning about $210 million of funds to shareholders via buybacks and dividends. As Stuart said earlier, we were pleased to be able to lean forward and resolve all elements of the convertible, either on time or in advance, and doing so without dilution so that we would not carry this overhang into 2024. So that's done. The convertible notes and warrants, the legal matter, and the return of capital to shareholders used about $950 million in cash.

Speaker Change: Across our expansive Iq portfolio.

Speaker Change: And also continued excellent performance by our Frazier NASS technical consulting platform.

Speaker Change: Science and space had modest growth with the fed sieve budget constrained by the continuing resolution.

Speaker Change: Readiness, and Sustainment and pulled back with reductions in the European Command Theater.

Speaker Change: Tie that directly to the funding debate in Congress on military support levels to Ukraine.

Speaker Change: For the year revenues were up 7% ex L. A W with margins at 10% in line with expectations.

Speaker Change: Earlier in the year readiness, and Sustainment drove quite a bit of growth while.

Speaker Change: While defense and Intel and international lagged due to the <unk> delays that result.

Speaker Change: And the government turnover implications in Australia.

Speaker Change: As you saw in Q4, it's good to see DNI and international return to higher growth to offset the political issues, we're dealing with and readiness and sustainment in Ukraine.

Mark W. Sopp: Quite amazingly, with adjusted EBITDA growth, strong free cash flow, and by tapping repatriated cash, we finished 2023 with a net leverage ratio of 2.1%, flat from last year, and no change year over year after all of that deployment. So we think this is quite an accomplishment and means we can manage these various deployments without strapping us with burdensome debt going forward. In January of this year, with the convertible notes out of the way and with favorable signals that we got from the Fed in late December, we jumped on the opportunity to refinance much of our debt.

Speaker Change: This is a clear demonstration of the strength and resiliency of our well diversified government solutions business.

Speaker Change: So that summarizes the P&L, let's move over to slide 14 for cash flow and capital structure matters.

In 2023, we used cash in three main ways. We retired two risks the convertible notes and warrants and also the legacy legal matter the <unk>.

Speaker Change: Third use was returning about $210 million of funds to shareholders via buybacks and dividends.

Speaker Change: As Stuart said earlier, we were pleased to be able to lean forward and resolve all elements of the convertible either on time or in advance.

Stuart J. B. Bradie: And doing so without dilution so that we will not carry this overhang into 2024, so thats done.

Mark W. Sopp: The details are provided in recently filed 8Ks, but to summarize... First, we had a cluster of debt maturities in 2026 and 2027. In the refinancing, we pushed those out to 2029 and 2031, mitigating our maturity risk substantially. And second, while keeping total debt neutral, we upsized the longer term maturity Term Loan B and freed up almost all of our one billion revolver availability.

Stuart J. B. Bradie: The convertible notes and warrants the legal matter and the return of capital to shareholders used about $950 million in cash.

Stuart J. B. Bradie: Quite amazingly with adjusted EBITDA growth strong free cash flow and by tapping repatriated cash. We finished 2023 with a net leverage ratio of two one.

Flat from last year, no change year over year after all of that deployment.

Stuart J. B. Bradie: So we think this is quite an accomplishment and means we manage these various deployments without scrapping us with burdensome debt going forward.

Mark W. Sopp: So that move enhances the capital deployment option significantly moving forward. The combination of taking care of the convertible and refinancing of the loans is a boost to our capital structure and certainly better supports our growth strategy going forward. In terms of the strategy for capital deployment going forward, our priorities are not changed.

Stuart J. B. Bradie: Okay.

In January of this year with the convertible notes out of the way and with favorable signals that we got from the fed.

Stuart J. B. Bradie: Said in late December actually.

Stuart J. B. Bradie: We jumped on the opportunity to refinance much of our debt.

Stuart J. B. Bradie: The details are provided in our recently filed 8-K, but to summarize.

Stuart J. B. Bradie: First we had a cluster of debt maturities in 2026 and 27.

Stuart J. B. Bradie: And the refinancing we push those out to 2029 and 2031 mitigating.

Mark W. Sopp: But our options are clearly more robust with the recent actions we've just taken. For a long time, we have committed to paying an attractive level of dividends, while also holding leverage levels at responsible numbers. We've also sought to keep payout ratios relatively constant as we generate net income and free cash flow growth.

Stuart J. B. Bradie: Mitigating our maturity risk substantially.

Stuart J. B. Bradie: And second while keeping total debt neutral, we upsize the longer term maturity term loan b and freed up almost all of our $1 billion revolver availability.

Stuart J. B. Bradie: So that move enhance the capital deployment options significantly moving forward.

Mark W. Sopp: In line with this and in conjunction with initiating our 2024 guidance with continued growth, we are increasing our annual regular dividend from $0.54 per share to $0.60 per share. This will take effect on the next record date of March 15. This marks the fifth year in a row of increasing our dividend by a significant amount. Deployable capital after dividends will be directed toward either M&A, buybacks, or debt reduction, based on our view of the best long-term contribution to shareholder value. And finally, to maximize flexibility, our board has just approved replenishing our stock buyback authorization to 500 million. I'll finish up with our guidance for 2024 on slide 15. We are pleased to again set expectations for ongoing growth in profits and cash flow, reflecting healthy end markets, strong offerings, and new business momentum coming out of 2023.

Stuart J. B. Bradie: The combination of taking care of the convertible and refinancing of the loans as a boost to our capital structure and certainly better supports our growth strategy going forward.

Stuart J. B. Bradie: In terms of the strategy for capital deployment going forward, our priorities are not changed but our options are clearly more robust with the recent actions we've just taken.

Stuart J. B. Bradie: For a long time, we are committed to paying an attractive level of dividends.

Stuart J. B. Bradie: While also holding leverage levels at responsible numbers.

Stuart J. B. Bradie: We've also sought to keep payout ratios relatively constant as we generate net income and free cash flow growth.

Stuart J. B. Bradie: In line with this and in conjunction with initiating our 2024 guidance with continued growth.

Stuart J. B. Bradie: We are increasing our annual regular dividend from <unk> 54 per share to <unk> 60 per share.

Stuart J. B. Bradie: This will take effect. The next record date of March 15.

This marks the fifth year in a row of increasing our dividend by a significant amount.

Stuart J. B. Bradie: Deployable capital after dividends will be directed towards either M&A buybacks <unk> debt reduction.

Stuart J. B. Bradie: Based on our view of the best long term contribution to shareholder value.

Mark W. Sopp: We expect revenues in the $7.4 billion to $7.7 billion range and adjusted EBITDA in the $810 million to $850 million range. The midpoint of the adjusted EBITDA reflects a growth rate of 11% over 2023. We expect adjusted EPS in the range of $3.10 to $3.30, which represents a growth rate of 10% at the midpoint. The Adjusted EPS Guide reflects about $15 million more of interest expense over 2023, primarily from higher rates. The guide also assumes a higher tax rate in the 25% to 27% range.

Stuart J. B. Bradie: And finally to maximize flexibility our board has just approved replenishing our stock buyback authorization.

Stuart J. B. Bradie: $500 million.

Stuart J. B. Bradie: I'll finish up with our guidance for 2024 on slide 15.

Stuart J. B. Bradie: We are pleased to again set expectations for ongoing growth in profits and cash flow, reflecting healthy end markets strong offerings, and new business momentum coming out of 2023.

We expect revenues in the $7 4 billion to $7 7 billion in.

Stuart J. B. Bradie: And adjusted EBITDA in the $810 million to $850 million range.

Stuart J. B. Bradie: The midpoint in the adjusted EBITDA reflects a growth rate of 11% over 2023.

Stuart J. B. Bradie: We expect adjusted EPS in the range of $3 10 to $3 30.

Mark W. Sopp: As I said last quarter, this is due to higher international mix. Share count is assumed at 135 million units, which excludes capital deployment but includes a modest level of repurchases to offset our annual share count creep. As for timing, we expect about 45% of adjusted EPS in the first half, and 55% in the second. This is due to the expected timing of projects, including work in Europe due to the continuing resolution and funding for Ukraine, as well as the home safe ramp and the overall growth trend in our business. For Adjusted Operating Cash Flow, we exceeded expectations in 2023, which did include some cash advances in STS and Q4, and also strong collections in government as well.

Stuart J. B. Bradie: Which represents a growth rate of 10% at the midpoint.

Stuart J. B. Bradie: The adjusted EPS Guide reflects about $15 million more of interest expense over 2023, primarily from higher rates.

Stuart J. B. Bradie: The guide also assumes a higher tax rate in the 25% to 27% range.

Stuart J. B. Bradie: As I said last quarter. This is due to higher international mix.

Stuart J. B. Bradie: Share count is assumed at 135 million units, which excludes capital deployment, but include a modest level of repurchases to offset our annual share count creep.

Stuart J. B. Bradie: As for timing, we expect about 45% of adjusted EPS in the first half 55% in the second.

Stuart J. B. Bradie: This is due to expected timing of projects, including work in Europe due to the continuing resolution and funding for Ukraine, as well as the home safe ramp and the overall growth trend in our business.

Mark W. Sopp: I said earlier there's about a $20 million give back on this to 2024, but our guide is still up with a range of $450 million to $480 million of operating cash flow for 2024. In sum, there are a few highlights worth reemphasizing here. First, we met or exceeded all key financial metrics in 2023 with overperformance and adjusted EBITDA generation, which I said offset some of the interest expense headwinds we had. Second, over the course of 2023 and so far in 2024, we've de-risked our future in several ways. We continue to demonstrate superb cash flow production, which opened up opportunities to improve our capital structure for the future. That included settling our convertible notes and warrants, and also settling legacy legal matters, and finally, extending and improving our credit facilities.

Stuart J. B. Bradie: For adjusted operating cash flow, we exceeded expectations in 2023.

Stuart J. B. Bradie: <unk> did include some cash advances in STS in Q4, and also strong collections and government as well.

Stuart J. B. Bradie: I said earlier, there's about a $20 million give back on this to 2024, but our guide is still up with a range of $450 million to $480 million of operating cash flow for 2024.

Stuart J. B. Bradie: In sum there are a few highlights worth re emphasizing here.

Stuart J. B. Bradie: First we met or exceeded all key financial metrics in 2023 with over performance in adjusted EBITDA generation, which I said offset some of the interest expense headwinds we had.

Stuart J. B. Bradie: And second over the course of 2023 and so far in 2024.

Stuart J. B. Bradie: We've derisked our future in several ways.

Stuart J. B. Bradie: We continued to demonstrate superb cash flow production.

Stuart J. B. Bradie: Which opened up opportunities to improve our capital structure for the future that included settling our convertible notes and warrants and also settling a legacy legal matter and finally, extending and improving our credit facilities.

Mark W. Sopp: The third point I'd emphasize is our core business momentum and recent bookings do indeed drive growth plans for 24 and well beyond that. Those elements together enable an attractive growth outlook for 2024, catalysts for attractive growth again in 2025, including a meaningful plan ramp on home safety, and a more flexible capital structure to expand deployment opportunities, which represent an upside to our outlook. Thanks for your patience through all of that. Now, back to Stuart to wrap it up. Stuart

Stuart J. B. Bradie: The third point I'd emphasize is our core business momentum and recent bookings does indeed drive growth plans for 'twenty, four and well beyond that.

Stuart J. B. Bradie: Those elements together enabled an attractive growth outlook for 2020 for a catalyst for attractive growth again in 2025, including a meaningful planned ramp on home safe.

Stuart J. B. Bradie: And a more flexible capital structure to expand deployment opportunities, which represent an upside to our outlook.

Stuart J. B. Bradie: Thanks for your patience through all of that now back to Stuart to wrap it up.

Stuart J. B. Bradie: Thank you, Mark. Now, I will summarize with a few takeaways. Strong finish to full year 23, concluding an absolutely stellar full year. Backlog in options up 10% and adjusted EBITDA growth of 12% year over year, with, of course, margin expansion. We have a dearest 2024 and beyond with the Convert and Warrant Settlement Legacy Legal Resolution and Refinance Capital Structure. The balance sheet is in really good shape, giving us deployment optionality. A key takeaway.

Stuart J. B. Bradie: Thank you Mark now, let me summarize with a few takeaways strong finish to full year 'twenty three concluding an absolutely stellar full year backlog and options up 10% and adjusted EBITDA growth of 12% year over year with of course margin expansion.

Stuart J. B. Bradie: We have a derisked 2024, and beyond with the convert and warrant settlement legacy legal resolution and refinanced capital structure.

Balance sheet is in real good shape, giving deployment optionality.

Stuart J. B. Bradie: A key takeaway.

Operator: A more defined path forward on HomeSafe through continued partnership with Transcom and positive supply chain development. Over 75% of work is under contract as we start the year against a full year 24 guide that delivers double-digit growth in both adjusted EBITDA and adjusted EPS midpoints, with effectively no capital deployment baked in, which, of course, is an opportunity as we progress through the year. So committed to delivering sustained growth for KBR shareholders with adjusted EBITDA in line with our progression towards a 2025 target of 925 million euros EBITDA. Thank you for listening, and I will now hand back to the operator, who will open the call to questions. Thank you. At this time, I would like to remind everyone that in order to ask a question, please press the star followed by the number one on your telephone keypad. To withdraw your question, please press the star followed by two.

Stuart J. B. Bradie: A more defined path forward on home safe through continued partnership with transform and positive supply chain developments.

Stuart J. B. Bradie: Over 75% work under contract as we start the year against the full year 'twenty four guide that delivers double digit growth in both adjusted EBITDA and adjusted EPS mid points with effectively no capital deployment baked in which of course.

As an opportunity as we progress through the year.

Stuart J. B. Bradie: So we're committed to delivering sustained growth for KBR shareholders with adjusted EBITDA in line with our progression towards 2025 target of 92 5 million EBITDA.

Speaker Change: Thank you for listening and I will now hand back to the operator, who will open the call up for questions.

Speaker Change: Thank you at this time I would like to remind everyone in order to ask a question. Please press star followed by the number one and you kind of think keypad to withdraw your question. Please press star followed by <unk>.

Tobey O'Brien Sommer: Our first question today comes from Tobey Sommer from Truist. Your line is now open. Please go ahead. Thank you. Good morning.

Speaker Change: First question today comes from Tobey Sommer from Jerry Your line is now open. Please go ahead.

Tobey O'Brien Sommer: Thank you.

Tobey O'Brien Sommer: Good morning.

Stuart J. B. Bradie: As you look out into 2024 with your guidance, how should we think about it at the segment level in terms of the trajectory of organic growth in GS and STS? Yeah, thanks, Tobey. I mean, our original targets that we set forth towards 2025 are unchanged. I mean, the growth in GS is between 5 and 8%, and the growth in SDS is in the low double digits, and we expect that to continue. And within the STS segment, I guess you exited the year at around 21% margin. How do you think about leverage in that business as an opportunity for margin expansion, given, you know, double-digit expectations for organic growth? Yeah, I think Tobey, we're ahead of pace in terms of achieving, you know, we said we'd be in the high teens, low 20s over time, and we've got there faster. I mean, our expectation is that margins will kind of hold where they are today through the course of the year. And that's embodied in the guidance. OK. Here's one quick one on home safety.

Tobey O'Brien Sommer: As you look out into 2024 with your guidance how does how should we think about it at the segment level in terms of the trajectory of organic growth in.

Tobey O'Brien Sommer: In GFS and Sps.

Speaker Change: Yes, Thanks Tory.

Speaker Change: So our original targets that we set forth.

Towards 2025 are unchanged.

Tory: The growth in GFS is between five and 8%.

Tory: The growth in STS is in the low double digits.

Tory: And we expect that to continue.

Tory: And.

Tory: Within the STS segment.

Tory: I guess you exited the year at around 21% margin.

Speaker Change: How do you think about.

Speaker Change: Leverage in that business.

Speaker Change: The opportunity for margin expansion, given double digit expectations for organic growth.

Yes, I think.

Speaker Change: I think tobey.

Speaker Change: Ahead of pace in terms of achieving.

Speaker Change: We said we'd be in the high teens low twenty's over time, and we've got there faster.

Stuart J. B. Bradie: Given the delays and sort of from when the initial contract was let, an extended sort of litigation and protest period. And now this is. Will the duration be extended as well, or sort of the clocks start a little bit later as a result of these delays, or would the original timeline still hold at the end of that conversation? I mean, certainly, the protest period and the legal pieces with the term of the contract, but to date, the contract term is nine and a half years or so, there will be obviously re-competes and things like that at the end of it, but that holds Fine. And last, but what if I could think of any more...

Speaker Change: Our expectation is margins will hold where they are today through the course of the year and nuts, that's embodied in the guide.

Speaker Change: Okay.

Speaker Change: One quick one on home given the delays and sort of for when the initial contract was less.

Speaker Change: Extended.

Speaker Change: Sort of.

Speaker Change: Litigation in protest period.

And now this is will the duration be extended as well or sort of the clock start a little bit later as a result of these delays or with the original timelines still hold for the end of that contract.

Speaker Change: I mean, certainly the protest period in the legal pieces with the time of the contract but to date. The contract term is nine five years. So there will be obviously, we compete and things like that at the end of it but that holds as it stands today. There is no extension to that just because of the.

Mark W. Sopp: Sorry Tobey, it's Mark here. Once we start making real moves, that's when we really should consider the clock to start to tick on the nine-year period that's due. Gotcha. Okay, that's helpful.

Stuart J. B. Bradie: And then, for your guidance, do you assume that a budget and supplemental spending bill are passed? Because I did see sort of the apportionment of 45% of earnings in the first half and 55% in the back. Yeah, I mean, there's obviously a bit of a home safe in that that builds up as we go through the year. We expect more in the second half than the first half, obviously, as first moves are only in the spring. We do have, you know, you've seen the volatility in our R&S business due to, I guess, a little bit of a slowdown in UCOM that is flatlining at the moment. And we've kind of assumed that as we progress, with a bit of upside coming at the back end of the year. But I think the other thing to take into consideration in that statement is that we have 75% of our work under contract today. So I think that puts us in a very sound position. We've always said there are multiple pathways for KBR to deliver EBITDA.

Speaker Change: We did start the development work has taken longer that's just part of the deal.

Speaker Change: I think.

Speaker Change: And last quarter.

Speaker Change: Which is.

Speaker Change: Sorry, Tobey its mark here just once we start real moves that's when we really should consider that clock to start to tick on the nine year period that Steve mentioned.

Tobey O'Brien Sommer: Got you Okay. That's helpful and then for your guidance.

Do you assume that our budget and supplemental bill spending bill are passed.

Speaker Change: Because I did see sort of the apportionment of 45% of earnings in the first half and 55 in the back half.

Speaker Change: Yes, I mean, there's obviously a bit of home safe and not that buildup as we go through the year, we expect more in the second Hoffman. The first half obviously is the first moves that are only in the spring.

Speaker Change: We do have.

Speaker Change: You've seen the volatility in our rns business due to I guess, a little bit of a slowdown in new column that is flat lining at the moment.

Stuart J. B. Bradie: So, as Mark explained in his remarks, you know, we're growing substantially in defense and Intel and international. You know, the trajectory of those businesses going into 24 is actually very, very healthy because of the work they secured near the tail end of the year also. So I think there are different levers to pull there.

Speaker Change: Kind of assumed as we progressed with a bit of upside coming at the back end of the year, but I think the other thing to take into consideration and that statement is we have 75% of our work under contract today.

Speaker Change: So I think that puts us in a very sound position. We've always said, there's multiple pathways for KBR to deliver EBITDA. So as Mark explained in his remarks.

Stuart J. B. Bradie: So I don't think we're counting on the resolution of budgets or, and, you know, those are difficult to predict. And it would be folly for us to sort of assume anything around here. We've actually based it on our business as it stands today, and we've got some conservatism in a certain place. And I feel that we're well positioned to deliver what we've actually guided. Thank you. Our next question today comes from Michael Dudas from Vertical Research. Your line is now open, please go ahead. Morning, Jamie, Mark, and Stuart.

Speaker Change: We are growing substantially in defense and Intel and international.

The trajectory of those businesses going into 'twenty four is obviously very very healthy because of the what the secured near the tail end of the year also so so I think theres different levers to pull there. So I don't think we are counting on resolution of budgets are.

Speaker Change: Those are difficult to predict and it would be.

Speaker Change: Falling for us to sort of assume anything around there we've actually based on our business as it stands today and we've got some some conservatism into that in place and I feel that we are well positioned to deliver what we've obviously guided.

Michael S. Dudas: Hi Mike. Hi Michael. I know you'll give more detail next month and Vinny Chiang. Yeah, good question, Mike. I think I would like to just start off because I've seen some of the early reports coming out on Book to Bill and SDS, and I think some of the folks are a little bit off the mark, and that's kind of perhaps somewhat our fault as well because, in our disclosures, we don't give a breakdown of the equity and earnings backlog. So in SDS, if you exclude the equity and earnings backlog piece, where you know So I just wanted to give some context there, and most of that is coming across the energy trilemma.

Speaker Change: Thank you.

Speaker Change: Our next question today comes from Michael Dudas from vertical research. Your line is now open. Please go ahead.

Speaker Change: Yes.

Michael S. Dudas: Good morning, Jamie Mark Stewart.

Michael S. Dudas: And Michael.

Michael S. Dudas: I know you'll give more details next month.

Michael S. Dudas: Maybe you could share.

Speaker Change: As youre looking out towards the pipeline of opportunities in business on Sts.

Speaker Change: Any significant changes in what clients are demanding relative to the service to supervise Ormat technologies.

Speaker Change: Or is the ammonia hydrogen.

Speaker Change: Markets.

Speaker Change: Perhaps you could still have great visibility of course, there's always a lot of noise about puts and takes on clean energy focus elsewhere. So just want to get a sense of that as your comfort level heading through 'twenty four.

Speaker Change: The margin mix, improving or at least maintain those levels into 'twenty five.

Speaker Change: Yes, good question, Mike I think.

Stuart J. B. Bradie: Well, all of it really is there is a lot of installed base that is trying to decarbonize, you've got energy security concerns, and a lot happening, particularly in the Middle East, as they look to, I guess, change up their mix of products and actually decarbonize their own industries. And the level of ammonia work that we've won through the year is very, very impressive. And obviously, we've now got ammonia cracking as well, which actually takes the ammonia and turns it back into hydrogen.

Speaker Change: We'd like to just start off because I've seen some of the early reports coming out on on book to Bill in STS and I think.

Speaker Change: Some of the folks that are a little bit off the mark and Thats kind of perhaps somewhat I felt as well because they know disclosures, we don't give a breakdown of the equity and earnings backlog. So Sts.

Speaker Change: If you exclude the equity and earnings backlog piece, where.

Speaker Change: The LNG projects are running at peak at the moment.

Speaker Change: The book to Bill.

Stuart J. B. Bradie: So we're seeing no slowdown in that market. I think when you look at the overall spend, the capital spend, and we'll talk about this in the primer, I mean, the energy security piece is dwarfing energy transition. But every year, the percentage of energy transition spend increases.

Speaker Change: Was one one in Q4 and over the year.

Speaker Change: Backlog grew 15% and core business. So I just wanted to give some context there.

Speaker Change: Most of that is coming across the energy trilemma will all of it really it is there's a lot of installed base. They are trying to decarbonize, you've got energy security concerns and a lot happening, particularly in the middle East.

Stuart J. B. Bradie: So, we are very well positioned in the energy security market and the things that we do in sort of, you know, taking forward energy security with a decarbonized theme, which is terrific for us and a very large installed base to leverage off. And then secondly, as energy transitions, whether that's ammonia, hydrogen, or any derivative thereof like methanol, we're very well positioned as that market continues to grow, and you've seen success in those areas, and we're very much at the forefront of multiple green ammonia projects that we've announced recently, etc. So I think it's going to be an increasing part of our portfolio, but it will happen over time. But I think that's absolutely fine for us because we can play in energy security as well as energy transition, and as those two come together, we're very well positioned. Our next question today comes from Bert Subin from Stifel. Your line is now open; please go ahead.

Speaker Change: As they as they look to I guess.

Speaker Change: Their mix of products and not just the decarbonize their own industries.

Speaker Change: And on the level of ammonia work that we've won through the year is very very impressive and obviously, we've now got ammonia cracking as well that actually takes the ammonia tons back into into hydrogen and so we're seeing no slowdown in that market I think when you look at the overall spend the capital spend and we'll talk about this in the primary.

Speaker Change: I mean, the energy security piece is dwarfing energy transition, but every year the percentage of energy transition spend increases.

Speaker Change: So as we are very well positioned in the energy security market and things that we do.

Speaker Change: And so.

Speaker Change: Taking taking forward any energy security with a decarbonize thematic.

Speaker Change: Which is terrific for us in a very large installed base to leverage off and then secondly, as energy transition, whether that's ammonia hydrogen.

Bert Subin: Hey, good morning, Stuart and Mark. Thank you for the question. Payback.

Speaker Change: Are there any derivative thereof like methanol.

Speaker Change: Well positioned as we as that market continues to grow and you have seen our success in those areas and we're very much at the forefront of multiple green Green ammonia projects that we've announced recently et cetera. So so I think it's going to be an increasing part of our portfolio.

Stuart J. B. Bradie: Um, maybe just to start on the 24 guide, it seems like 310 to 330 on the adjusted EPS side is.., is pretty good considering you're not assuming any capital allocations sort of beyond the share repurchases to avoid creep and you're factoring in a, you know, considerably higher tax rate. If we think about maybe the higher end of that range, excluding capital deployment, you know, if you're ending at 330, you know, a year from now, we're talking about it, is that more driven by government solutions or is that more driven by a Yes, I mean I think the important takeaway is that the combined EBITDA keeps on our path to 925 which we committed to last quarter and we're we're feeling pretty good about that particularly with where HomeSafe is heading as well.

Speaker Change: But it will happen over time, but I think that's absolutely fine for us because we can we can play in energy security as well as the energy transition as those two come together, we're very well positioned.

Speaker Change: Our next question today comes from Stephen <unk> from Stifel. Your line is now Edson. Please go ahead.

Stephen: Hey, good morning, Stuart and Mark Thank you for the question.

Stephen: Payback.

Stephen: Maybe just to start on the 24 guide it seems like $3 10 to $3 30 on an adjusted EPS side.

Stephen: It's pretty good considering youre, not assuming any capital allocation sort of beyond the share repurchases to avoid and youre factoring in a considerably higher tax rate.

Stuart J. B. Bradie: Obviously if CR resolves sooner and there's more funding flowing to Ukraine there could be upside towards our assumptions on the spend in UCOM etc but also you know we've got a very very strong pipeline in SDS and I think you know ultimately if we win our fair share there that could also outperform a bit so but I'd like to stick to the guide I mean double-digit growth I mean our revenues up nine to ten percent our EBITDA is up 11 which shows you know slight margin expansion across the portfolio it keeps very healthily on track to you know what people thought were very lofty targets back in the day and we're well on path to achieving those and as you say we've got capital deployment optionality so I think we keep talking about the levers we can pull and the fact that you know we didn't get derailed last year with the slowdown in UCOM you know we still exceeded expectations particularly in EBITDA and so again with D&I outperforming and international outperforming and SDS outperforming in, And so I think you'll see ebbs and flows across the segments through the course of the year, and that's why I said yes to both. I think there are opportunities across both segments to do well, and if the stars align, obviously, that would be terrific, but our guide is our guide, and that's what we're sticking to in this market.

Stephen: If we think about maybe the higher end of that range excluding capital deployment.

Stephen: If you're ending at $3 30.

Stephen: A year from now we're talking about it is that more driven by government solutions or is that more driven by us yet.

Stephen: Okay.

Stephen: Yes.

Stephen: I mean, I think I think the important takeaway is that the combined EBITDA keeps us on a path to $9 25, which we committed to last quarter.

Stephen: We're feeling pretty good about.

Stephen: Particularly with the player home safe is heading as well.

Stephen: Obviously if.

Stephen: CR resolves.

Stephen: And those more funding flowing to Ukraine, there could be upside towards our assumptions on the spend and you call them et cetera.

Stephen: But also we've got a very very strong pipeline in STS and I think ultimately if we win our fair share of that that could also outperform a bit so but I'd like to stick to the guide I mean double digit growth.

Stephen: Revenues up 9% to 10% of our EBITDA is up 11, which shows slight margin expansion across the portfolio. It keeps us very healthily on track to what people thought were very lofty target back in the day and we're well on path to achieving those and as you say, we've got capital deployment Optionality.

Stuart J. B. Bradie: With volatility and uncertainty, I think doing double-digit growth with a very high proportionate work under contract is a very good place. Stuart, maybe just to follow up on some of the comments on HomeSafe and the 25 target. Just based on what you said in your prior remarks, and what we see in the presentation, you know, I guess international starting in 26 would sort of assume that HomeSafe exits 25 at around 80% ramp, just if that's the process, 80-20. If we're doing that math on top of 830 billion as your midpoint in 24, it would get us fairly close to 925 just on HomeSafe. It probably only assumes low single-digit EBITDA growth for the rest of the business. Can you just give us, you know, sort of how you're thinking about that number? And I guess last quarter, when you mentioned it, you sort of noted that you could hit 925, you know, with pretty little contribution from Home Safe. I'm just curious if anything changed or if that's just a sort of a conservative watermark that you're planning, or the latter.

Stephen: I think we keep talking about the levers we can pull and the fact that we.

Stephen: We didn't get derailed last year with the slowdown in UK, we still exceeded expectations.

Stephen: Our expectations, particularly in EBITDA.

Stephen: So again with DNI outperforming in international outperforming in STS outperforming interest.

Stephen: So I think you'll see ebbs and flows across the segments through the course of the year and that's why I said, yes to both.

Stephen: There are opportunities across across both both segments two to do well in.

Stephen: If the stars align obviously that would be terrific.

Stephen: As a guide.

Stephen: Yes.

Stephen: But we're sticking to and in this market.

Stephen: Volatility and uncertainty I think being double digit growth with a very high proportion of work under contract is a very good place to be.

Stephen: Stuart maybe just a follow up on some of the comments on home safe and the 25 target.

Stuart J. B. Bradie: Just based on what you said in your prepared remarks, what we see in the presentation.

Stuart J. B. Bradie: International starting in 'twenty, six what's sort of assumed that home safe exit 25 at around 80% ramps just if thats the process 80 20.

Stuart J. B. Bradie: You know, we're in a position today where we've tried to give you far more clarity on home safe for 24. And rightfully so, given the progress we've made, there will be significant ramps up and 25, and again in 26. But I think we need a little bit more time to give you color on that. And, of course, we were looking for an investor day later this year, and obviously, that will give us a little bit more time. So I don't really want to give you numbers today on 25 or 26 because I got a significant punch in the nose last quarter for not being able to live up to expectations.

Stuart J. B. Bradie: If we're doing that math on top of $8 $30 billion is your midpoint in 'twenty four it would get us fairly close to 995, just on home safe, probably only assumes like low single digit EBITDA growth for the rest of the business.

Stuart J. B. Bradie: Can you just give us sort of how youre thinking about that number and I guess last quarter. When you had mentioned that you sort of noted that you speak you get at 995.

Stuart J. B. Bradie: With pretty little contribution so I'm, just curious if anything changed or if that's just a sort of a conservative watermark that you are planning towards.

Stuart J. B. Bradie: All of the latter.

Stuart J. B. Bradie: We were in a position today, where we've tried to give you far more clarity on Jose for 'twenty, four and rightfully. So given the progress we've made there will be significant ramp in 'twenty five and again in 'twenty six.

Stuart J. B. Bradie: So, you know, that lesson learned there. But, but, you know, we're feeling really good about home safe, and, you know, we've talked about it often, and I think you, I mean, all the sell side and a lot of investors know the expected ramp over time. And, but, we're not going to give you numbers today. Sorry to be so vague, but I think that's probably the prudent thing to do.

Stuart J. B. Bradie: But I think we need a little bit more.

Stuart J. B. Bradie: Time to give you color on that and of course, we were looking for an Investor day later on this year and obviously that will give us a little bit more time. So I don't really want to give you numbers today on 'twenty five 'twenty six because I got a significant punching the newest last quarter for not being able to live up to expectations.

Stuart J. B. Bradie: And I would rather be conservative in that. Oh, very, very helpful. Just one quick sort of clarification question about some of the earlier SDS comments. The Middle East has been really strong. I haven't seen decay.

Stuart J. B. Bradie: So you know that.

Stuart J. B. Bradie: That lesson there but.

Stuart J. B. Bradie: Really really good about home safely.

Stuart J. B. Bradie: We've talked about it often and I think you.

Stuart J. B. Bradie: I mean, all the sell side and a lot of investors know the expected ramp over time.

Stuart J. B. Bradie: But we're not going to give you numbers today.

Stuart J. B. Bradie: I'm not sure if it's out, but I think you were running at over 60% growth there through the first three quarters. Is your expectation that that's going to be the strongest growing market for you in 24? And is there any potential U.S. catch up with IRS?

Stuart J. B. Bradie: Sorry to be so vague, but I think thats, probably the prudent thing to do and I would rather be conservative.

Stuart J. B. Bradie: In that sense.

Speaker Change: Oh very helpful. Just one quick sort of clarification question with some of the earlier comments.

Speaker Change: Middle East has been really strong I haven't seen the K I'm not sure if it's out but I think you were running it like over 60% growth there through the first three quarters.

Stuart J. B. Bradie: Yes to both of those questions. The Middle East continues to be buoyant. The capital spend profile is enormous. It dwarfs every other part of the world.

Speaker Change: Is your expectation that that's going to be the strongest growing market for you in 'twenty four.

Speaker Change: Is there any potential U S ketchup with IRI.

Speaker Change: Yes to both of those questions.

Stuart J. B. Bradie: I think Saudi Arabia is slated to be the fastest growing economy this year and again next year, likely. And clearly, they've got their Vision 2030, and they're executing on it. And we've got a significant pipeline and growth not only in Saudi Arabia but in Abu Dhabi and in Kuwait and other countries in the Middle East. And there's no doubt the southern hemisphere, in general, is driving a lot of global growth. Any sort of level of global growth is going to come from there in our business. But in terms of the IRA bill, we did a deep dive on that recently. We understand the drivers and all the seven hubs we recognize.

Speaker Change: The middle East continues to be buying the capital spend profiles enormous.

Speaker Change: Yes.

Speaker Change: Every other part of the World I think.

Speaker Change: Saudis slated to be the fastest growing economy. This year on again next year likely.

Speaker Change: And clearly they've got a vision 2030, and they're executing on it and we.

Speaker Change: Got.

Speaker Change: Our significant pipeline and growth not only in Saudi but in Abu Dhabi, and Kuwait and other countries in the Middle East then there is no doubt at the southern Hemisphere in general is driving a lot of Google any sort of level of global growth is going to come from there in our business.

Stuart J. B. Bradie: At the moment, it's a very low drawdown on the $7 billion from the government. I think people are still forming rather than storming, if you like. But we recognize which hubs we can really add value to, and we're in discussions there. So as they start to progress, there's very much an upside, I think for KBR. Thanks, Stuart. I appreciate all the color.

Speaker Change: But in terms of the IRA Bill we did a deep dive on that recently.

Speaker Change: Understand the drivers and all of the seven hubs we were recognized at the moment.

Speaker Change: It was about a little drawdown on the $7 billion from the government.

Speaker Change: I think people are still forming Ron and storming if you like but we recognize which hubs we can really add value to and were in discussions there. So as they start to progress that's very much an upside I think for KBR.

Mariana Perez Mora: Our next question today comes from Mariana Perez Mora from Bank of America. Your line is now open. Please go ahead. Good morning, everyone.

Speaker Change: Thanks, Stuart I appreciate all the color.

Speaker Change: Our next question today comes from Mariana Perez Mora from Bank of America. Your line is now open. Please go ahead.

Stuart J. B. Bradie: So my question is on defense and Intel. Could you please discuss what are the main drivers in terms of contracts or technologies and how we should think about that for the next like three, five years? Yeah, the defense and intelligence are obviously in two separate sub-segments, if you like. The defense piece is mostly driven around the CEDA business, as others would know it. We've got a very strong IDIQ portfolio, and we've got some excellent contract vehicles. One we've talked about the most is IACMAC, and that allows us to do very short-term procurements.

Speaker Change: Good morning, everyone.

Speaker Change: So my question is on defense and Intel.

Speaker Change: Could you. Please discuss what are the main drivers in terms of contracts or technologies and how should we think about that for the next like three five years.

Speaker Change: Yes.

The defense business Defense and Intel is obviously in two separate sub segments. If you like the defense pieces.

Speaker Change: Mostly driven around the seta business as others would know it.

Speaker Change: We've got a very strong idea IQ portfolio and we've got.

Stuart J. B. Bradie: Because the size of the contracts is not amazingly large, we don't often announce it until we get to aggregate numbers, but the bookings there were significant last year, and the growth in that particular business was in the high single digits and standalone, and that seems to be the cadence of that business. I think the other attribute of it is it's becoming more digitally differentiated, and so the scope that we're seeing in re-competes and our re-compete win rate is very, very high in that business, just because of the technical nature and domain expertise that we deploy. And we've seen scope and margin creep as a consequence of that digital differentiation. So that's the defense side, and through defense modernization, which is, of course, a big strategic thrust of the DoD, but also overseas as well, it is in good shape to continue with that growth profile. On the intelligence side, we do a lot of work for the three-letter acronym agencies, and we've made particular inroads post the Centauri acquisition in changing, I guess, our profile from a small business to a prime. And that's starting really now to take hold, and we're seeing quite a lot of significant wins in that area.

Speaker Change: Excellent contract vehicles, one we've talked about the most is mark.

Speaker Change: That allows us for very short term procurements.

Because because the size of the contracts are not amazingly large we don't often announce it until we get to aggregate numbers, but the bookings there were significant last year and the growth in that particular business was in the high single digits and Standalone and it seems to be the cadence of that business and I think the other attribute.

Speaker Change: All of it.

Speaker Change: Is it becoming more digitally differentiate it.

Speaker Change: So the scope that we're seeing on recompete in our Recompete win rate is very very high in that business.

Speaker Change: Just by the technical nature and domain expertise that we deploy.

Speaker Change: And we've seen scope and margin creep as a consequence of that digital differentiation. So so that's the defense side and through defense modernization, which is of course, a big strategic thrust of the Dod, but also overseas as well.

Speaker Change: That is in good shape to continue with that growth profile.

Speaker Change: On the intelligence side, we do a lot of work for the <unk> III later I can imagine season, we've made particular inroads post the <unk> acquisition of changing I guess, our profile from a small business into a prime.

Speaker Change: And that started really now to take hold and we're seeing quite a lot of significant wins in that arena.

Stuart J. B. Bradie: And then we had some delays last year, as you all know, on the directed energy program, which resolved itself in Q4, and as we move forward with another couple of vehicles in that laser program. So again, I think through 24, that business itself will be growing in the double digits. So I think that the defense and intelligence portfolio is a real growth driver for us going into next year and really helps us with any volatility that may happen in R&S. So, yeah. Thank you very much.

Speaker Change: Then we had some delays last year as.

Speaker Change: You all know on the directed energy program, which resolved itself in Q4 and as we move forward with another couple of vehicles and not laser program. So.

Speaker Change: Again, I think through 'twenty for that business itself.

Speaker Change: We'll be we'll be growing in the double digits. So I think that defense and Intel portfolio as a real growth driver for us.

Speaker Change: Going into next year, and really helps us with any volatility that may happen in iron <expletive>.

Speaker Change: Yes.

Speaker Change: Thank you very much and then if I may can you. Please discuss international asked well, where do you see most growth coming from asset.

Stuart J. B. Bradie: And then, if I may, can you please discuss international as well? Where do you see most growth coming from? Energy, military, or any specific country or region?

Speaker Change: G military or any specific region.

Stuart J. B. Bradie: Yeah, so in the government realm, as you all know, we acquired a business called Fraser Nash and added to it with two other high-level consultancies in the digital and the advisory space. And we've now integrated that business fully. As we came through last year, that's really starting to pick up momentum, which is terrific. And it really comes in at high margins as well, as you would expect with that sort of high-end differentiated consulting engineering portfolio. And Fraser Nash is a little bit unique because 60% of his business is in the government realm, some classified, some in digital, some in cyber, but also in things like nuclear assurance, where we're probably the leading consultant.

Speaker Change: Yes, so in the government.

Speaker Change: As you all know we acquired a business called Frazer Nash an attitude with two other sort of high level Consultancies in.

Speaker Change: In the digital in the advisory space.

Now integrate that business freely.

Speaker Change: As we came through last year, and that's really starting to pick up momentum in.

Speaker Change: Which is terrific and it really comes in at high margins as well as you would expect with that sort of high end differentiated consulting engineering portfolio. The Fraser nausea is a little bit unique because 60% of our business is in the government rail some classified some digital some cyber but also in things like nuclear assurance, where we're probably the leading consultant.

Stuart J. B. Bradie: And when you look at things like AUKUS and the new nuclear programs that are around, obviously, we're very well positioned there. The other 40% of its business is actually in the commercial arena, where it does energy transition advisory, it does work in solar, etc., and does a lot of consulting and helps businesses decarbonize with some software tools that allow them to actually measure how they're doing.

Speaker Change: When you look at things like <unk> and the new nuclear programs that are around.

Speaker Change: Obviously, we're very well positioned there the other 40% of its business is actually in the commercial arena, but it does energy transition advisory it does rocking solar et cetera does although at a consulting and helping businesses decarbonize with some software tools that allow them to actually measure how they are doing so.

Stuart J. B. Bradie: So it's quite a diverse consultancy portfolio, but very much pointed at our two businesses. So that's gathering a good head of steam. And then, secondly, the Australian government changed last year. It slowed us down a little bit.

Speaker Change: It's it's.

Speaker Change: It's quite a diverse consultancy portfolio, but very much pointed at our two businesses.

Speaker Change: So that's that's gathering a good head of steam.

Speaker Change: And then secondly, the Australian government changed last year slowed us down a little bit they've come through the review now.

Stuart J. B. Bradie: They've come through their review, and now we're starting to see quite a bit of, I guess, clarity in that market. And we've sort of re-based, and we're starting to see growth coming through in Australia as well, particularly, again, and I would say in that high-end consulting area, whether it's in digital, cyber, or interoperability around software. So I think it's a very strong portfolio performing in those key markets today, with an opportunity to then move more into the other areas of what I would say that are friends of allies, if you like, in the Middle East and things like that, where we're seeing quite a level of bid activity today. So it has a very strong outlook, the GSI business. In terms of the question on energy, as we said earlier, I think there is a huge, huge capital spend, particularly in the Middle East, but also in Asia and somewhat in Australia as well.

Speaker Change: Now, we're starting to see quite a bit of.

Speaker Change: Clarity in that market.

Speaker Change: We've re baseline and we're starting to see growth coming through in Australia, as well, particularly again I would say in the high end consulting area, whether it's in digital cyber our interoperability around software. So I think it's.

Speaker Change: Very strong portfolio performing in those key markets today with an opportunity to then move more into the other areas of.

Speaker Change: I would say.

Speaker Change: <unk> of all eyes, if you like in the Middle East and things like that but we are seeing quite a quite a level of bid activity. Today. So it's got a very strong outlook. The GSI business in terms of the question on energy as we said earlier I think this is a huge huge capital spend particularly.

Speaker Change: <unk> in the Middle East, but also in Asia and somewhat in Australia as well as you all know we're doing the Pluto project done there the Pluto LNG.

Stuart J. B. Bradie: As you all know, we're doing the Pluto project down there, the Pluto LNG sort of revamp for the existing facilities there on a cost-reimbursable basis. So there's lots happening across both ends of the portfolio. And it's very attractive going forward, and I don't see that slowing down. Thank you.

Speaker Change: Sort of revamp for the existing facilities there on a cost reimbursable basis. So so theres lots happening across both ends of the portfolio.

Speaker Change: Yes.

Speaker Change: The attractive going forward and I don't see that slowing down.

Speaker Change: Thank you Tim if I may last one from me on home safe.

Stuart J. B. Bradie: Margins. Usually, logistic programs are in the mid-single-digit margins. How do you, like, what are the main drivers that will drive HomeSafe to the type of margins that global government services enjoys? Yeah, I think Marianne, you've got to remember our role there is, we're not, we're doing supply chain as a service. We're actually not, we don't physically have trucks or warehousing or, you know, packers and things like that. We're, you know, coming in to manage a program at scale, to somewhat look at a new way of moving the families of the military. And ultimately, we're deploying a very digital backbone to this so that we can deploy AI and ML so that we can actually, you know, drive efficiency by not running, think rudimentary, two trucks to the same place at the same time because they're two different providers but actually unifying that and taking efficiency gains, which of course will drive our margins, but also reduce the carbon footprint of that industry.

Speaker Change: Margins usually logistics.

Speaker Change: In the mid single digit margins.

Speaker Change: Like what are the main drivers that will drive home safe to this type of margins that global Gorman service SaaS.

Tim: Yes, I think Mario and you've got to remember our role there is.

Tim: We are not.

Tim: We are doing supply chain as a service we're actually not.

Tim: We don't physically have trucks, our warehousing R tacos and things like that.

We are coming into to manage a program at scale to somewhat.

Tim: Look at a new way.

Tim: Of moving.

Tim: The families of the military.

Tim: And ultimately we're deploying a very digital backbone to this so that we can deploy AI and ml. So that we can actually drive efficiency by not running.

Tim: Thinking rudimentary two trucks to the same place at the same time, because they are two different providers, but obviously unifying that and taking taking efficiency gains which of course will drive our margins, but also reduce the carbon footprint of the industry.

Stuart J. B. Bradie: So I think our role is very, very different than a typical logistics supplier in that realm. And that's why we talk about increasing margins over time, because I think the more we do it, the more efficient we'll get, the better providers we'll get, we'll get more volume, we'll get volume discounts as a consequence, etc. So it's quite easy to step back and look at the logic behind this. But that doesn't mean it's easy to get done.

Tim: So I think our goal is very very different than a typical logistics supplier and not route and Thats why we talk about increasing margins over time, because I think the more the more we do it the more efficient we will get the <unk>.

Tim: Data providers will get more volume, we will get volume discounts as a consequence et cetera. So that's quite easy to step back and look at the logic behind this that doesn't mean, it's easy to get done, but we're well on the possibly now and we're pretty confident that over time, we can we can.

Stuart J. B. Bradie: But we're well on the pathway now, and we're pretty confident that over time, we can get the margins down. And as I said in my prepared remarks, we're being very innovative in the way we're looking at this. And we're not restricted at all to the current DOD supply chain, which I think has been missed by many in the media. Amazing, thanks so much.

Tim: Get the margins down and as I said in my prepared remarks, we're being very innovative at the way we're looking at this.

Tim: Im not restricted at all to the current Dod supply chain, which I think is.

Tim: It's been missed by many in the media.

Amazing: Amazing Thanks, so much.

Jerry David Revich: Our next question comes from Jerry Revich from Goldman Sachs. Your line is now open, please go ahead. Yes, hi, everyone.

Amazing: Our next question comes from Jerry Revich from Goldman Sachs. Your line is now open. Please go ahead.

Jerry David Revich: Yes, hi, good morning, everyone.

Stuart J. B. Bradie: Stuart, I'm wondering if you could just, hi, on Homesafe. Congratulations on the progress in terms of ramping up signed contractors. Can you put in perspective the 2,200 that you mentioned in your prepared remarks? What does that number need to get to for each of the phases?

Jerry David Revich: Stuart I'm wondering if you could just.

Jerry David Revich: On wholesale.

Jerry David Revich: Congratulations on the progress in terms of ramping up signed contractors can you put in perspective. The 200 that you mentioned in your prepared remarks.

Jerry David Revich: Does that number need to get to for each of the phases I know youre going to roll it out based on the types of moves skip can you just frame that up.

Stuart J. B. Bradie: I know you're going to roll it out based on the types of moves, but can you just frame that for us, if you don't mind, on where we are relative to the ultimate number? Yeah, so I think we've, you know, as I also said in the prepared remarks, we've got, you know, enough, enough, enough of the supply chain signed up for, for, for certainly what's in front of us. And, and, you know, we're obviously expanding that daily. So I'm feeling pretty good about the supply chain and engagement of the supply chain. For the 2200, we've got a supplier database that allows the, you know, people to sign up for companies to sign up, including small businesses, and to really sort of register their interest to provide services to HomeSafe. And that's the 2200.

Speaker Change: For us.

You don't mind on where we are relative to the ultimate number.

Speaker Change: Yes, so I think.

Speaker Change: As I also said in the prepared remarks, we've got.

Enough.

Enough of the supply chain signed up for.

Speaker Change: But certainly what's in front of us.

Speaker Change: We are obviously expanding that daily.

Speaker Change: So I'm feeling pretty good about the supply chain and the engagement of the supply chain.

But the 20 to 100, we've got a supplier database that allows.

Speaker Change: The people to sign up for our companies to sign up including small businesses in <unk>.

Speaker Change: <unk> released a register.

Speaker Change: Their interest to provide services to two home safe and that's the 200 and out of that 10 to 2200, we've signed 380 contracts already.

Stuart J. B. Bradie: And out of that 10 to 2200, we've already signed 380 contracts. So we've got very, very good coverage across the supply chain for what we expect going forward. Okay, and then can I ask about sustainable tech solutions, can you just talk about the moving pieces within the portfolio, the growth outlook that you see for the longer cycle part of the business, ammonia and plastics, how fast is that growing in 24? And then for the shorter cycle business, what amount of activity do you need to see in terms of bookings turn into revenue relative to the double digit organic growth outlook that you mentioned?

So we've got very very good coverage across the supply chain for what we expect.

Speaker Change: Going forward.

Speaker Change: Okay. Okay, and then can I ask in a sustainable Tech solutions can you just talk about the moving pieces within the portfolio.

Speaker Change: The growth outlook that you see for the longer cycle part of the business.

Speaker Change: Plastics, how fast is that growing in 'twenty.

Speaker Change: <unk> 24, and then for the shorter cycle business.

Speaker Change: What amount of activity do you need to see in terms of bookings turn into revenue relative to a double digit organic growth outlook that you mentioned.

Stuart J. B. Bradie: Yeah, STS is going into the year probably with its highest level of work under contract that we've seen in recent times. So we're feeling pretty good about that double-digit growth for sure. And it's a good balance.

Speaker Change: Yes, the STS is going into the year, probably with its highest level of work under contract that we've seen in recent times.

Speaker Change: So we're feeling pretty good about that double digit growth for sure.

Speaker Change: It's a good balance I think thats why we feel quite confident.

Stuart J. B. Bradie: I think that's why we feel quite confident. The sustainable services piece of the business, which is really underpinned by the technologies, is going great guns. And we'll explain a bit more about that in the STS primer. And then again, best of day.

Speaker Change: <unk>.

Speaker Change: The sustainable services piece of the business, which is really underpinned by the technologies is going great guns, and will explain a bit more about that.

Speaker Change: The STS primer, and then again Investor day.

Stuart J. B. Bradie: I think the drivers around ammonia we talked about earlier, so I won't cover that again. And that rolls into hydrogen, of course. I think energy security continues to play a big part in this. And you've seen that from many of the energy companies, you know; they want to, they've got to continue to really think about energy security in a very concise way. But they are trying to do it in a responsible decarbonized solution.

Speaker Change: I think the drivers are in the morning.

Speaker Change: We talked about <unk> cover that again.

That rolls into hydrogen of course.

Speaker Change: I think LNG security continues to be a big part in this and you've seen that from many of the energy companies.

Speaker Change: They want to they've got to continue to really think about energy security in a very concise way, but they are trying to do it in a responsible decarbonize solution and we are really at the forefront of that so I think where we.

Stuart J. B. Bradie: And we are really at the forefront of that. So I think we're, we're very well positioned. And plastics recycling, again, that's a kind of different market.

Speaker Change: We are very well positioned and plastics recycling again.

Speaker Change: On a different market.

Stuart J. B. Bradie: You know, we will be producing our first product, I think, coming to the end of this quarter early in Q2 at the Wiltshire site and at the Moore facility. And I think that really opens the door to accelerate that market. I think everyone's waiting to make sure that that all works. And of course, what we've not really said to the market, which it's probably good to do a little bit today, is the fact that there are two other facilities that are being built, one in Korea and one in Japan. And they could end up actually, if Wilton slips a little bit, they'll end up going first. So we've got three sort of world-scale plants happening all at the same time now.

Speaker Change: We will be.

Speaker Change: You're saying first product I think coming to the end of this quarter early in Q2 and what your site.

Speaker Change: And the <unk> facility and I think that really opens the door to accelerate that market I think everyone's waiting to make sure that that all works.

Speaker Change: Of course, but we have not really said to the market probably do a little bit today is the fact that there's two other facilities that are being built one in Korea and one in Japan.

Speaker Change: They could end up actually.

Speaker Change: <unk> slipped a little bit they will end up going first so we've got we've really got 333 sort of world scale plants happening all at the same time.

Stuart J. B. Bradie: And one of those is a modularized solution that we sort of developed after we took additional investments. So that bears well for speed to market and cost effectiveness, etc. as this continues. So we're really upbeat about the plastics recycling market. And again, we'll cover more of that in the primer. The other market that's really hot at the moment is olefins. And that's particularly coming out of the Middle East. Both Aramco and SABIC in Saudi Arabia have got considerable programs.

Speaker Change: And one of those is with a modularized solution that we developed.

Speaker Change: Developed after we took additional investments so that bodes well for speed to market and cost effectiveness et cetera. As this continues so we're really upbeat about that plastics recycling market and again will cover more of that in the in the <unk>.

Speaker Change: The other market that's really at the moment.

Speaker Change: As the olefins and Thats, particularly coming out of the middle East.

Speaker Change: Aramco and Sabic in Saudi.

Speaker Change: Considerable programs.

Stuart J. B. Bradie: My expectation is that it will be difficult for everything to happen in parallel; there'll be a little bit of a series development there. But that's kind of okay for us as well, because that just expands the pipeline over time. And I think we're very well positioned on the LTC program we talked about before, the liquid to chemicals program, and hopefully, we can get to really sort of announcing something on that later this quarter and, if not, early Q2. Thanks. Our next question comes from Steven Fisher from UBS. Your line is now open, please go ahead. Thanks. Good morning.

Speaker Change: My expectation is it will be difficult for everything to happen.

Speaker Change: In parallel and there'll be a little bit of a series development, there, but thats kind of okay for us as well because that just expands the pipeline over time.

Speaker Change: And I think we're very well positioned.

Speaker Change: On the LTC program, we've talked about before the liquid to chemicals program in and hopefully we can we can get to to really sort of announcing something on not later this quarter.

Speaker Change: And if not early Q2.

Speaker Change: Okay Super Thanks.

Speaker Change: Our next question comes from Steven Fisher from UBS. Your line is now open. Please go ahead.

Steven Fisher: Hey, Thanks, good morning.

Steven Fisher: Stuart, you mentioned the desire to be a little vague on 2025 when you were asked about the Homestase amounts embedded in there, but maybe to ask you about the STS angle. I think you had previously expected the upside of the STS to more than make up for Homestase. So, has anything changed in your thinking about that and the framing of the STS potential contribution? Sounds like from the answer you just gave, Jerry, there's quite a bit happening and potential for upside there. And I guess, can you maybe just give us your latest thinking on the synergy between STS and government? You did mention in your prepared remarks one particular contract that offered some synergy. So, I was just curious about sort of the commitment to keeping the businesses together. Thank you.

Steven Fisher: You mentioned the desire to make on 2025 when you asked about when you were asked about the home safe.

Steven Fisher: Amount embedded in there, but maybe to ask you about the scf in Angola, I think you had previously expected.

Steven Fisher: The STS more than make up for home state so.

Steven Fisher: Has anything changed in your thinking about that in the framing of the STS potential contribution and it sounds like the answer you just gave Jerry there's quite a bit.

Steven Fisher: <unk> and potential for upside there and I guess can you maybe just give us your latest thinking on the synergies between STS and government you did mention in your prepared remarks.

Steven Fisher: One particular contract that also in some synergies. So just curious about sort of a commitment to keeping the businesses together. Thank you.

Stuart J. B. Bradie: That's a lot, Steve, in one question. Yeah, I mean, I think, you know, as we said last quarter, we were confident on the 925 number. And I think with what happened at HomeSafe, we're even more confident with the 925 number. And I'll probably leave it at that until we get to May or whatever, when we have our investor day. On synergies, as I kind of explained earlier, the bit that seems to be the connectivity piece between commercial and government is very much what's happening in government international business, and Fraser Nash was a perfect example of that, as I explained earlier.

Speaker Change: That's a lot Steve and one question.

Speaker Change: Yes.

Speaker Change: Thank you.

Speaker Change: As we said last quarter, we were confident on the 925 number and I think with.

Speaker Change: With what's happened in home safe, we're even more confident with the 925 number.

Speaker Change: Leave that until we get to may or whatever when we have an investor day.

Speaker Change: On on the synergies.

Speaker Change: Kind of.

Speaker Change: <unk>.

Speaker Change: The bit that seems to be the connectivity piece between commercial and government is very much what's happening in government International business and Frazer Nash was a perfect example of that I explained earlier.

Stuart J. B. Bradie: We're seeing a lot more connectivity in places like Saudi Arabia and in Australia, for that matter, where we're seeing that the contracts there are far more commercial in the government realm, and we're seeing a lot more connectivity between the two businesses and our profile, and being able to leverage our reputation from one end to the other. So I think again I'll sort of limit my remarks to that, Steve, until we get to our investor day, but it's certainly a hot topic. I understand there's been a lot of discussion around the synergies between these businesses and what we should do with them strategically, but we'll get to that when we get to investor day, if you don't mind. Our next question today comes from Sangita Jain from KeyBank Capital Markets. Your line is now open; please go ahead.

Speaker Change: We're seeing a lot more connectivity in places like.

Speaker Change: Saudi.

Speaker Change: And in Australia for that matter, where we're where we're very much seeing the contracts there are far more commercial and the government realm, and we're seeing a lot more connectivity between the two businesses in our profile and being able to leverage our reputation from one end to the other.

So I think again.

Speaker Change: Ill limit my remarks to that Steve until we get to Investor day, but it certainly.

Speaker Change: Topic I understand there's been a lot of.

Speaker Change: Discussion around.

Speaker Change: The synergies between these businesses.

Speaker Change: And what we should do with them strategically but.

Speaker Change: We will get to that when we get to Investor day, If you don't mind.

Speaker Change: Our next question today comes from Sanjay Jain from <unk>.

Sanjay Jain: Keybanc capital markets. Your line is now open. Please go ahead.

Sangita Jain: Yeah, thank you for taking my questions. If I can ask a couple on Homesafe, that's $60 million in contract modification that was announced a week or so ago. How should we think about that? Is that all 2024? Or does that split between 2024 and 2025? Hey, Sangeeta. First, thanks for visiting us a couple weeks ago. Great to see you. It's Mark here.

Sanjay Jain: Yes. Thank you.

Sanjay Jain: <unk>.

Sanjay Jain: If I can ask a couple on home safe.

Sanjay Jain: That's $16 million of contract modification, there was announced a week or so ago. How should we think about that is that all 2024 does that split between 24 and 25.

Hey, Thanks, Peter first thanks for visiting US a couple of weeks ago, great to see Mark here the $60 million. We can assume will be expanded this calendar year and so that is for recognition of the slower ramp in the overhead will incur along that path as well as.

Mark W. Sopp: The $60 million, we can assume, will be expended this calendar year. And so that is for recognition of the slower ramp and the overhead that will incur along that path, as well as the government and the client asking for more development, more capability out of the system, which we're developing with our joint venture partners. And so it covers both of those realms.

Sanjay Jain: The government and the client asking for more development more capability out of the system, which we are developing with our joint venture partners and so it covers both of those rounds and we expect to burn through that this year and start.

Mark W. Sopp: And we expect to burn through that this year and start making moves in earnest pretty soon, hopefully picking up pace as the year progresses. So is that part of that $150 million of home-safe revenue for this year then? Yes, it is.

Sanjay Jain: Moves in earnest pretty soon and hopefully picking up pace as the year progresses.

Sanjay Jain: So is that part of that 150.

Sanjay Jain: Obviously, if you have any for this year Dan.

Dan: Yes, yes it is.

Stuart J. B. Bradie: Okay, and if I can ask you one more on Home Safe, how should we be factoring in backlog for that? How do you plan to do that, and how should we think about it? So, good question. There's nothing in backlog today for Homesave in terms of moves. And I, you know, as we start to get clarity, we'll book the backlog. That's probably the way I would suggest.

Okay.

And if I can ask one.

Dan: And if I can ask you one more on home safe how should we be.

Dan: <unk> backlog for that how do you plan to do that and how should we think about it.

Dan: So.

Speaker Change: Good question.

Speaker Change: There is nothing in backlog today for home safe in terms of moves.

Speaker Change: Yes.

Speaker Change: As we start to get clarity, we'll book the backlog is probably the way I would suggest.

Stuart J. B. Bradie: And when we get up to proper cadence, I think it'll be an annual booking rather than trying to book 10 years in advance. And we've just got to work through that. But that's our thinking at the moment.

Speaker Change: And when we get up to proper cadence I think there'll be an annual booking rather than trying to 10 years in advance.

Speaker Change: We've just got to work through that but that's our thoughts at the moment.

Stuart J. B. Bradie: So more to come on that. But I think the takeaway today is that there's really nothing really in the backlog of any material numbers for Homesave in 2024. Our final question today comes from Gautam Khanna from TD Cohen. Your line is now open.

Speaker Change: So more to come on that but.

Speaker Change: But I think the takeaway today is that there is nothing really in backlog of any material numbers for home safe in 2024.

Speaker Change: Our final question today comes from Gautam Khanna from TD, Kevin Your line is now open.

Gautam J. Khanna: Hey, good morning, guys. Thank you, Gautam. I had a couple questions on HomeSafe.

Gautam J. Khanna: Hey, good morning, guys.

Gautam J. Khanna: Sure.

Gautam J. Khanna: Okay got it.

Gautam J. Khanna: I had a couple of questions on home say first so the contracts still seems subject to that service contract tax and I was curious.

Stuart J. B. Bradie: First, the contract still seems subject to that Service Contract Act. And I was curious, Has that been an issue with the folks that you've signed up, you know, the 380 plus? in terms of their ability to comply. I'm just curious, like, how much of a burden that is on them that might slow the ramp for Homesafe.

Gautam J. Khanna: Has that been an issue with the folks that you've signed up 380 plus.

Gautam J. Khanna: In terms of their ability to comply and I'm just curious like how much of a.

Gautam J. Khanna: Yeah.

Gautam J. Khanna: Whatever burden that is on them that might slow the ramp.

Gautam J. Khanna: For home space.

Gautam J. Khanna: Yeah.

Stuart J. B. Bradie: I mean, today, Gautam, the answer is no. I mean, the whole point of SCA and TRANSCOM and KBR is committed to that. And I had a conversation at a very senior level in TRANSCOM a couple of weeks ago on this subject. And I think, firstly, we really want providers who are behaving properly and doing proper screening and things, as you can imagine, for the military and doing what they should be doing from a remuneration perspective.

Gautam J. Khanna: I mean today the answer is no I mean, the whole point of FCA in Transco and KBR committed to that.

Gautam J. Khanna: Conversation of any senior level and transform a couple of weeks ago on the subject.

Gautam J. Khanna: I think firstly neither.

Gautam J. Khanna: We really want providers who are properly.

Gautam J. Khanna: Behaving properly and doing proper screening and things as you can imagine for the military in and doing what they should be doing from a from a.

Gautam J. Khanna: <unk>.

Gautam J. Khanna: Every numeration perspective.

Stuart J. B. Bradie: But between TRANSCOM and ourselves, we're pretty clear that we'll not disadvantage KBR commercially either. So I think there's an agreement to that. I know there's been a lot of discussion around it, but at the moment, I think it's something we're working through, but I don't see it as a concern. In fact, I see it as a huge positive in terms of the quality of the people that we'll actually get to work for us. And it absolutely aligns with KBR's values for people and actually with TRANSCOM's intentions as well. Gotcha. And then, you know. We've obviously heard some pushback in the channel from people about the pricing terms. I was curious if there were any.

Gautam J. Khanna: <unk>.

Gautam J. Khanna: Between Transco went ourselves we were pretty clear that that will not disadvantage KBR commercially either so.

Gautam J. Khanna: So I think this commitment to that I know theres been a lot of discussion around it but.

Gautam J. Khanna: At the moment I think it's it's.

Gautam J. Khanna: Something we're working through but I don't see as a concern in fact I see as a huge positive in terms of the quality of the people that we will actually get to to work for us.

Gautam J. Khanna: Absolutely aligns with KBS values on people.

Gautam J. Khanna: So.

Gautam J. Khanna: And then.

Actually with <unk> intentions as well.

Speaker Change: Got you and then.

Speaker Change: We've obviously heard some pushback in the channel for Mike the pricing terms I was curious if there is any.

Stuart J. B. Bradie: The case for economic price adjustments, as you guys have seen, has there been any indication from the customer as to whether they're, They're looking at that again, or not? Yeah, I mean, it's an ongoing annual review process. And I think we explained that earlier, you know, there are those economic price adjustments built into the contract to review as we go forward. And that includes pass-through increases and things like fuel and, you know, so it's, you know, in that sense, I'm pretty confident we'll get this. I mean, we've got most of it, whether we've got the supply chain signed up on the terms that we need them to be signed up on already. Obviously, they've been making hay while the sun shines a little bit during COVID.

Speaker Change: Case for economic price adjustments have you guys had.

Speaker Change: You had any indication from the customer as to whether there.

Speaker Change: They are looking at that again or.

Speaker Change: Yes, it's an ongoing annual review process.

Speaker Change: I think we explained earlier there are economic price adjustments with built into the contract to review as we go forward and that includes pass through increases in things like fuel and.

Speaker Change: And so it's.

Speaker Change: I'm, not saying I'm pretty confident we'll get there and.

We've got most of it we've got the supply chain signed up on the terms that we need them to be signed up on already.

Speaker Change: Obviously, they've been making hay, while the Sun shines a little bit during Covid and I think theres been quite a lot of rate increases and you can you can understand the noise, but.

Stuart J. B. Bradie: And I think there's been quite a lot of rate increases. And, and you can, you can understand the noise. But, ultimately, the objective of this is actually to do a better job in terms of quality and make the move experience better for the military families. At the moment, the feedback is not positive on that. And then secondly, to somewhat disrupt the industry so it becomes far more competitive, and a lot of the middle layers are taken out, and we get a focus on the actual truckers and their families, and we actually, you know, help them grow their businesses because they're performing and they're accountable. So I expect more noise in that sense. Am I concerned about the rate structure?

Speaker Change: But ultimately the objective of this is obviously.

Speaker Change: They do a better job in terms of quality.

The move experience better for the military families at the moment the feedback is not positive and not and then secondly is actually to somewhat disrupt the industry. So it becomes far more competitive and a lot of the.

Speaker Change: The middle layers are taken out and we get our focus into the actual truckers and their families and we actually.

Speaker Change: Help them grow their businesses, because they are performing and they're accountable. So I expect more noise in that sense am I concerned about the rate structure.

Stuart J. B. Bradie: No, I'm not. I think we'll work through that with Transcom and, and the supply chain and in collaboration. And to date, we have not seen other than from some making noise in the media to too much, too much trouble in that regard.

Speaker Change: No I'm not I think we'll work through that with transform and.

On the supply chain and collaborations and to date, we have not seen other than from some making noise in the media too too much too much trouble and knock out.

Stuart J. B. Bradie: That concludes the Q&A portion of today's call. I will now hand back over to Stuart Bradie for any final remarks. Okay, thank you very much. Good questions.

Speaker Change: That concludes the Q&A portion on today's call I will now hand back over to Stuart Brady for any final remarks.

Stuart J. B. Bradie: Okay. Thank you very much.

Stuart J. B. Bradie: Good questions and thank you for your time as always and your interest in KBR.

And thank you for your time, as always, and your interest in KBR. I think, in short, we're well on our path to our 9.25 target in EBITDA terms, double-digit growth, with margin expansion going into the year. I'll be as well; Mark and the team have done a great job preserving the balance sheet to give us capital deployment optionality, and with 75% work under contract, feeling really good about the year ahead. So, all up, very buoyant, and obviously, the home safe stabilization and a bit more clarity there also really, really helps. So thank you very much indeed. We'll be doing the STS primer obviously in a couple of weeks' time, which will lead us into investor day in due course. So thank you. That concludes today's Q4 and FY 2023 KBR Inc. Earnings Conference call. You may now disconnect your line.

Stuart J. B. Bradie: I think in short, we're well on our path to a 995 target.

Stuart J. B. Bradie: In EBITDA terms of double digit growth.

Stuart J. B. Bradie: With margin expansion going into the year.

Stuart J. B. Bradie: <unk> is well mark and the team have done a great job.

Stuart J. B. Bradie: Having the balance sheet to go with this capital deployment Optionality and.

With 75% work under contract were feeling really good about the year. So so all up very buoyant and oversee the home safe.

Speaker Change: Stabilization in a bit more clarity there also really really helps so thank you very much indeed, we will be doing the STS primary obviously in a couple of weeks' time.

Speaker Change: It will lead us into Investor day in due course, so thank you.

Speaker Change: That concludes today's Q4 and FY 2023, KBR, Inc. Earnings Conference call you May now disconnect your lines.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.