Q4 2024 KBR Inc Earnings Call
All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end if he would like to ask a question. Please press star one on your telephone keypad it'd nice to pass the conference over to your host Jamie debris, Vice President of Investor Relations.
Speaker Change: Thank you good afternoon, and welcome to Kbr's fourth quarter and fiscal 2024 earnings call. Joining me are Stuart Brady, President and Chief Executive Officer, and Mark Sopp, Executive Vice President and Chief Financial Officer.
Excuse me, ladies and gentlemen, please remain holding the conference will begin shortly again, please remain whole day of the conference will begin momentarily.
[music].
Speaker Change: And Mark will provide highlights from the quarter and full year and then open the call for your questions.
Speaker Change: Today's earnings presentation is available on the investors section of our website at KBR Dot Com. This discussion includes forward looking statements, reflecting kbr's views about future events and their potential impact on performance as outlined on slide two these matters involve risks and uncertainties that could cause actual results to differ significantly from these.
Speaker Change: Forward looking statements as discussed in our most recent Form 10-K available on our website. This.
Speaker Change: 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.
Stuart Brady: Thanks, Jamie and good afternoon, everyone I will pick up on slide four.
Speaker Change: As you know we start every earnings call with a zero harm moment on FERC. This month, we are celebrating our 10th anniversary of our zero harm program activity.
Speaker Change: Today, I would like to highlight <unk> on given update on progress.
Speaker Change: <unk> technology is the global pioneer of our next generation advanced plastics recycling technology Cold Hydro PRT.
Speaker Change: <unk> is proud to be mirrors exclusive global licensing partner on preferred engineering partner and of course with an investor in the hydro.
Speaker Change: Process itself.
Speaker Change: Good afternoon. Thank you for attending today's Kbr's fourth quarter and full year 2024 earnings Conference call. My name is to me and I will be your moderator for today's call all lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end if you would like to ask a question. Please press.
Speaker Change: Three commercial scale facilities are being built almost in parallel mirrors and the Wilton and Wilton U K LG <unk> in Korea on Mitsubishi is plant in Japan.
Speaker Change: And LG chemicals plants have had several successful operational runs and both plants aimed for commercial operations by March with key customers like Dawn, a nasty looking to incorporate recycled feedstocks to enhance the sustainability and the plastics manufacturing.
Speaker Change: Star one on your telephone keypad I would now I suppose the conference over to your host Jamie debris, Vice President of Investor Relations.
Speaker Change: Thank you good afternoon, and welcome to Kbr's fourth quarter and fiscal 'twenty 'twenty four earnings call. Joining me are Stuart Brady, President and Chief Executive Officer, and Mark Sopp, Executive Vice President and Chief Financial Officer, Stuart and Mark will provide highlights from the quarter and.
Speaker Change: Facility in Japan is scheduled to come on stream a few months later.
Speaker Change: Now we're excited about what this means for the circular economy on to KBR of course to give you a feel for the positive impact over the course of the year. The UK facility, we recycled the annual plastic packaging waste of approximately 700000 residents and replacing an equivalent of roughly.
Speaker Change: Full year and then open the call for your questions. Today's earnings presentation is available on the investors section of our website at KBR Dot Com. This discussion includes forward looking statements, reflecting kbr's views about future events and their potential impact on performance.
Speaker Change: 100000 barrels of fossil oil quite impressive.
Speaker Change: Now onto slide five and some key messages.
Speaker Change: Outlined on slide two 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 there's.
We delivered very strong fourth quarter, and full year, 2024 performance, which actually exceeded our previous expectations.
Speaker Change: Starting with our financial performance at a high level, we delivered $2 $1 billion of revenue in the fourth quarter.
Speaker Change: There's 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.
Speaker Change: Brought our 2024 total to $7 7 billion, which is all of the top of our guidance range.
Thanks, Jamie and good afternoon, everyone I will pick up on slide four.
Speaker Change: Now this represents double digit growth of 23% for the quarter and 11% for the year.
Stuart Brady: As you know we start every earnings call with a zero harm moment and in fact this month, we are celebrating our 10th anniversary of our zero harm program at KBR.
Speaker Change: Organic growth for the full year was 9%.
Speaker Change: We generated strong adjusted EBITDA of $220 million in the quarter and $870 million for the full year also at the top of our guidance range.
Speaker Change: Today, I would like to highlight South Carolina to give an update on <unk> progress.
Speaker Change: Technology is the global pioneer of our next generation advanced plastics recycling technology Cold Hydro PRT.
Speaker Change: Due to a combination of strong execution on operational efficiency, we delivered 11, 2% adjusted EBITDA margin up roughly 50 basis points year over year.
Speaker Change: And <unk> is proud to be mirrors exclusive global licensing partner on preferred engineering partner and of course, we're an investor in the hydro PRT process itself.
Speaker Change: We continue to successfully on methodically execute our growth strategy, we are winning work with new customers and end markets globally and are continuing to move upmarket with our acquisition of linquist.
Speaker Change: There are three commercial scale facilities are being built almost in parallel mirrors and the Wilton and Wilton U K LG Chem in Korea, and Mitsubishi is plant in Japan.
With the segment realignment and a leadership updates which was the key topics of our webinar in early January we have now more agile and better aligned to our markets.
Speaker Change: And LG chemicals plants have had several successful operational runs and both plants and for commercial operations by March with key customers like Dawn, a nasty looking to incorporate recycled feedstocks to enhance the sustainability and the plastics manufacturing.
We will also highlight our resilient business model and alignment to strong secular growth trends more in a minute.
Speaker Change: Finally, we are issuing our 2025 financial outlook, which equates to double digit growth at the midpoint across all guidance metrics supported by disciplined strategic execution as we advance towards our 2027 objectives now on to slide six.
Speaker Change: The facility in Japan is scheduled to come on stream a few months later.
Speaker Change: We're excited about what this means for the circular economy and <unk> of course to give me a feel for the positive impact over the course of the year. The UK facility, we'll recycle the annual plastic packaging waste of approximately 700000 residents and replacing an equivalent of roughly.
Speaker Change: I'll start with an update on our key contracts and recent wins, starting with home safe.
Speaker Change: Showing successful test moves in Q4, the ramp increased markedly in January this year.
Speaker Change: 100000 barrels of fossil oil quite impressive.
Speaker Change: And now we're taking in roughly 300 moves per day from Commscope.
Speaker Change: So onto slide five and some key messages.
Speaker Change: We delivered very strong fourth quarter, and full year, 2024 performance, which actually exceeded our previous expectations.
Speaker Change: With the program progressing significantly there is increased interest from new suppliers.
The move volume has really just started in earnest. So we are in the early months of execution and bought as a 10 year transformational program and both home safe on Transcon remain completely committed to a successful transformation.
Speaker Change: Starting with our financial performance at a high level, we delivered $2 $1 billion of revenue in the fourth quarter.
And that brought our 2024 total to $7 7 billion, which is all of the top of our guidance range.
Speaker Change: Over to a joint venture supporting the Plaquemines LNG project a.
Speaker Change: Now this represents double digit growth of 23% for the quarter and 11% for the year.
Speaker Change: Our customer announced first LNG production in December as you know achieving this milestone just 13 months from its final investment decision, which makes plaquemines LNG one of the fastest greenfield projects to be built.
Speaker Change: Organic growth for the full year was 9%.
Speaker Change: We generated strong adjusted EBITDA of $228 million in the quarter and $870 million for the full year also.
Speaker Change: Work is progressing well to deliver the fully planned capacity over 2025 and 2026.
Speaker Change: <unk> right.
Speaker Change: Due to a combination of strong execution and operational efficiency, we delivered 11, 2% adjusted EBITDA margin up roughly 50 basis points year over year.
Speaker Change: Lastly, with the executive order now reversing the LNG bond the Lake Charles LNG project is advancing their off takes and limited notice to proceed as anticipated by mid 2025 with final investment decision expected later in the year.
Speaker Change: We continue to successfully and methodically execute our growth strategy, we are winning work with new customers and markets globally and are continuing to move upmarket with our acquisition of linquist.
Speaker Change: We were pleased to announce a number of new contract wins during the fourth quarter and a few are highlighted here to deliver strong results in 2025 and beyond.
Speaker Change: With our segment realignment and a leadership updates which were the key topics of our webinar in early January we are now more agile and better aligned to our markets.
Speaker Change: The New administration has emphasized the need for.
Speaker Change: Technical logical advancement in the areas of unmanned systems, hypersonic <unk> micro electronics and directed energy.
Speaker Change: We will also highlight our resilient business model and alignment to strong secular growth trends more in a minute.
Speaker Change: This $445 million contract win for the Department of Defense Joint Mission environment Task capability program under $88 million contract win for rapid prototyping aligns nicely with these priorities and in particular I think these wins demonstrate expertise and systems design test.
Speaker Change: Finally, we are issuing our 2025 financial outlook, which equates to double digit growth at the midpoint across all guidance metrics supported by disciplined strategic execution as we advance towards our 2027 objectives.
Speaker Change: Now on to slide six.
Speaker Change: And inter operability.
Speaker Change: I will start with an update on our key contracts and recent wins, starting with home safe.
Speaker Change: Secondly, <unk> market, leading ammonia process technology was selected for two new projects, one in Angola, and one in Kazakhstan, which will of course produce fertilizer critical to supporting growing populations.
Speaker Change: Following successful tests moves in Q4, the ramp increased markedly in January this year.
Speaker Change: And now we're taking it roughly 300 moves per day from Commscope.
Speaker Change: And we think this demonstrates our market leading position and really builds on our installed base of 260 facilities across the world, bringing the number of ammonia projects. We've won in 2024 to seven.
Speaker Change: With the program progressing significantly there is increased interest from new suppliers.
Speaker Change: The move volume has really just started an analyst. So we are in the early months of execution and bought as a 10 year transformational program and both wholesale and <unk> remain completely committed to a successful transformation.
Speaker Change: Lastly, KBR was chosen for several significant engineering and project management roles in the quarter, including shells monitor LNG project.
Speaker Change: Non LNG project on Saudi Aramco Shave a gas increment project. In addition, KBR also signed a global agreement with BP for Engineering and project management across their portfolio.
Speaker Change: Over to a joint venture supporting the Plaquemines LNG project.
Speaker Change: Our customer announced first LNG production in December as you know.
Speaker Change: Leaving this milestone just 13 months from its final investment decision, which makes plaquemines LNG one of the fastest greenfield projects to be built.
Speaker Change: These project wins demonstrate the momentum in the gas market and the greater need for energy security and I think KBR is very well positioned to address this market through its differentiated capabilities and extensive global presence.
Speaker Change: Work is progressing well to deliver the fully fund capacity over 2025 and 2026.
Speaker Change: In short our book of business is strong and we ended the year with a one one times trailing 12 month book to Bill and over $21 billion in backlog in auctions.
Speaker Change: And lastly, with the executive order now reversing the LNG bond the Lake Charles LNG project is advancing their off takes and limited notice to proceed as anticipated by mid 2025 with final investment decision expected later in the year.
Speaker Change: One of KBR strengths is that our portfolio offers multiple paths to achieving our growth objectives.
We were pleased to announce a number of new contract wins during the fourth quarter and a few are highlighted here to deliver strong results in 2025 and beyond.
Speaker Change: Allowing us to successfully navigate different macro environments and I'll go into this more a bit later on.
Speaker Change: The New administration has emphasized the need for.
Speaker Change: Onto slide seven.
Speaker Change: Technical logical advancement in the areas of unmanned systems, hypersonic <unk> micro electronics and directed energy.
Speaker Change: Delivering on our strategy in 2024, so sort of doing what we said we would do that.
Speaker Change: Our strong financial performance was supported by execution across the four pillars of our strategy.
Speaker Change: This $445 million contract win for the Department of Defense Joint Mission environment Test capability program under $88 million contract win for rapid prototyping aligns nicely with these priorities and then particularly I think these wins demonstrate expertise and systems design test.
Speaker Change: We made significant progress on each area over the past year.
Speaker Change: Firstly under thrive and expand.
Speaker Change: We secured a contract for the Lake Charles LNG project, a planned $10 billion plus project with our partner technique.
Speaker Change: And inter operability.
Speaker Change: By effectively using the information analysis centers multiple award contract vehicle IAG, Mark we won over one $5 billion of work.
Speaker Change: Secondly, kbr's market, leading ammonia process technology was selected for two new projects, one in Angola, and one in Kazakhstan, which will of course reduce fertilizer critical to supporting growing populations.
Speaker Change: As I'd IQ.
Speaker Change: And this means quicker procurement, enabling more timely delivery of mission critical national security needs for our customers and a more resilient revenue stream for us.
Speaker Change: And we think this demonstrates our market leading position and really builds on our installed base of 260 facilities across the world, bringing the number of ammonia projects. We've won in 2024 to seven.
Speaker Change: Also won work with new customers in the Defense Health Agency, the department of state and with the government of Iraq, where we started a five year strategic partnership to help develop the future vision, including energy and infrastructure.
Speaker Change: Lastly, KBR was chosen for several significant engineering and project management roles in the quarter, including shells monitor LNG project.
Speaker Change: And lastly, outstanding bid value of waiting decisions climbed to over $17 billion to $1 $7 billion and MTS really delivering on our commitment to increased bid volume this year by over 50% plus.
Speaker Change: Non LNG project on Saudi Aramco Shave a gas increment project. In addition, KBR also signed a global agreement with BP for Engineering and project management across their portfolio.
These project wins demonstrate the momentum in the gas market and the greater need for energy security and I think KBR is very well positioned to address this market through its differentiated capabilities and extensive global presence.
Speaker Change: Second is to deliver innovation.
Speaker Change: In partnership with <unk>, we added a new proprietary technology called pure lithium, which enabled zero emission direct lithium extraction from produce wastewater.
Speaker Change: In short our book of business is strong and we ended the year with a one one times trailing 12 month book to Bill and over $21 billion in backlog and options.
Speaker Change: Which is a typical byproduct from oil and gas production.
Speaker Change: We recently announced that this technology was selected by Weird Bill for the demonstration plant in the UK.
Speaker Change: And one of KBR strengths is that our portfolio offers multiple paths to achieving our growth objectives.
Speaker Change: With the Naval information warfare Center.
Speaker Change: <unk> prototype component on designs into new or existing information warfare systems, including command and control systems intelligence surveillance and reconnaissance systems on cyber systems.
Speaker Change: Allowing us to successfully navigate different macro environments and I'll go into this more a bit later on.
Speaker Change: Onto slide seven.
Speaker Change: We also launched our digital accelerator program and completed the standup and connection of our digital Engineering Labs in Alabama, Maryland, Virginia and Pennsylvania.
Speaker Change: Delivering on our strategy in 2024, so sort of doing what we said we would do.
Speaker Change: Our strong financial performance was supported by execution across the four pillars of our strategy.
Speaker Change: <unk> core modeling and simulation capabilities and we're already seeing on contract growth across several of our Army Navy Intel customers and these are important enablers as the market continues to grow around interconnected systems and data.
Speaker Change: We made significant progress on each area over the past year.
Speaker Change: Firstly on the thrive and expand.
Speaker Change: We secured a contract for the Lake Charles LNG project, a planned $10 billion plus project with our partner techniques.
Mark Sopp: By effectively using the information analysis centers multiple award contract vehicle IAG, Mark we won over one $5 billion.
Speaker Change: Our third pillar is to drive operational excellence globally.
Speaker Change: As we discussed earlier, we have delivered adjusted EBITDA margin expansion of 50 bps year over year really down to strong project execution and operational efficiency.
Speaker Change: <unk> Iq.
Speaker Change: And this means quicker procurement, enabling more timely delivery of mission critical national security needs for our customers.
Speaker Change: As we described during our special webcast in January we've realigned our segments to mission Tech and sustainable Tech with the associated synergy and cost benefits and so doing making both segments.
Speaker Change: More resilient revenue stream for us.
Speaker Change: We also won work with new customers in the Defense Health Agency, the department of state and with the government of Iraq, where we started a five year strategic partnership to help develop the future vision, including energy and infrastructure.
Speaker Change: Self sufficient.
Speaker Change: Our fourth pillar focused on effective capital deployment very important during the year, we deployed over $1 billion in cash we returned nearly $300 million to shareholders through buybacks and regular dividends and secondly of course, we acquired linguist linked quest expands <unk> mission expertise.
Speaker Change: And lastly, outstanding bid value of waiting decisions climbed to over $17 billion $1 $7 billion and MTS really delivering on our commitment to increase bid volume this year by over 50% plus.
Speaker Change: Particularly in the military space domain, and then and in the digital arena with advanced Inter Operability and model based systems engineering capabilities now.
Speaker Change: Second is to deliver innovation and.
Speaker Change: Partnership with <unk>, we added a new proprietary technology called pure lithium, which enables Syria emission direct lithium extraction from produce wastewater, which is a typical byproduct from oil and gas production.
Speaker Change: Now these capabilities will be in high demand going forward and this is evidenced by Linquist direct award contracts of over $2 billion of available ceiling value over the next four plus years, so very exciting that we have.
Speaker Change: <unk> included an additional slide in the appendix with some key details on linquist.
Speaker Change: We recently announced that this technology was selected by Weird Bill for the demonstration plant in the UK.
Speaker Change: So these actions are built upon our differentiated business model, which I will now cover onto slide eight.
Speaker Change: With the Naval information Warfare Center, we are integrating prototype component on designs into new or existing information warfare systems, including command and control systems intelligence surveillance and reconnaissance systems and cyber systems.
Speaker Change: KBR is positioned for resilience on growth and thanks to our unique business model in alignment with strong secular growth trends.
Speaker Change: Really enables multiple pathways to achieving those objectives are model focuses on auto leadership customer centric national operations are truly important in multiple countries across the globe domain expertise and elevated technology positioning and <unk>.
Speaker Change: We also launched our digital accelerator program and completed the standup and connection of our digital engineering labs in Alabama.
Speaker Change: Virginia and Pennsylvania.
Speaker Change: This adds core modeling and simulation capabilities and we're already seeing on contract growth across several of our Army Navy Intel customers and these are important enablers as the market continues to grow around interconnected systems and data.
Speaker Change: These strengths are supported by a capital light structure strong cash flows and cost discipline, leading to resilient financial performance.
In the chart you can see our 2024 adjusted EBITDA mix, showing roughly 60% six zero percent comes from non U S government customers, notably from sustainable Tech on a sizable business with Allied government customers in the UK, Australia and the Middle East.
Speaker Change: Our third pillar is to drive operational excellence globally.
Speaker Change: As we discussed earlier, we have delivered adjusted EBITDA margin expansion of 50 bps year over year really down to strong project execution and operational efficiency.
Speaker Change: The remaining 30% EBITDA 30, plus percent EBITDA generation from the U S. Government is concentrated in solving mission critical operationally focused on technology development rules in areas like military space missile defense digital warfare.
Speaker Change: And as we described during our special webcast in January we realigned our segments to mission Tech and sustainable Tech with the associated synergy and cost benefits and so doing making both segments more self sufficient.
Speaker Change: Our fourth pillar focused on effective capital deployment very important during the year, we deployed over $1 billion in cash we returned nearly $300 million to shareholders through buybacks and regular dividends and secondly of course, we acquired linguist linked quest expands <unk> mission expertise.
Speaker Change: Direct support to our Warfighters all critical.
Speaker Change: We believe our business is very well positioned.
Speaker Change: With the new administration priorities.
Speaker Change: And most of the NASA work is the literal operations of human on satellite space missions, including those support and commercial missions, such as Spacex Blue origin and axiom.
Speaker Change: Particularly in the military space domain, and then and in the digital arena with advanced Inter Operability and model based systems engineering capabilities.
Speaker Change: And notably.
Speaker Change: Less than 2% of our adjusted EBITDA relates to federal civilian agencies site of Nossa, so less than 2% opposite offensive.
These capabilities will be in high demand going forward and this is evidenced by liquid direct award contracts of over $2 billion of available ceiling value over the next four plus years, so very exciting.
Speaker Change: And now let me touch on how KBR is aligned to strong secular growth trends on slide nine.
Speaker Change: Our strategy is to align with exciting growing high end markets as you know where we are differentiated.
Speaker Change: Included an additional slide in the appendix with some key details on linguist.
Speaker Change: So these actions are built upon our differentiated business model, which I will now cover onto slide eight.
Speaker Change: Read the entire slide to you, but you can see that our book of business is well aligned to strong secular growth trends. So just picking a couple in U S. Defense. We are aligned to mission priorities of the New administration as we've just discussed, particularly a tip of the spear operational focus.
Speaker Change: KBR is positioned for resilience on growth thanks to our unique business model in alignment with strong secular growth trends. Its really enables multiple pathways to achieving those objectives are model focuses on agile leadership customer centric national operations, that's really important.
Speaker Change: And international Defense, we're positioned for resilience and growth from increased international defense spending.
Speaker Change: In multiple countries across the globe domain expertise elevated technology positioning.
Speaker Change: I'll remind you that KBR historically supported both the UK MLD on NATO and overseas missions.
Speaker Change: And these strengths are supported by a capital light structure strong cash flows and cost discipline, leading to resilient financial performance now.
Speaker Change: As we've discussed many times energy has real momentum and as a global priority of which KBR is very well positioned in this market.
Speaker Change: In the chart you can see our 2024 adjusted EBITDA mix, showing roughly 60% six zero percent comes from non U S government customers, notably from sustainable Tech on a sizable business with Allied government customers in the UK, Australia and the Middle East.
Speaker Change: And infrastructure includes strong tailwind from broadening industrial base on diversifying economies, particularly in the middle East.
Speaker Change: <unk> business model combined with our differentiation and our alignment to strong secular growth trends really informed our market outlook for fiscal year 2025, and Mark will cover this shortly.
Speaker Change: The remaining 30% EBITDA 30, plus percent EBITDA generation from the U S. Government is concentrated in solving mission critical <unk>.
Mark Sopp: With that I'll turn it over to Mark.
Speaker Change: Operationally focused on technology development rules in areas like military space missile defense digital warfare.
Mark Sopp: Thank you Stuart and good afternoon, everyone on slide 11, covering Q4 performance.
Speaker Change: <unk> direct support to our war fighters all critical.
Mark Sopp: As you see revenues in the quarter were $2 1 billion, that's up 23% versus the prior year and that was driven by growth across both segments and also the linked quest acquisition, we made in late Q3.
Speaker Change: We believe our business is very well positioned.
With the new administration priorities.
Speaker Change: Most of the NASA work is the literal operations of human in satellite space missions, including those support and commercial missions, such as Spacex Blue origin and axiom.
Mark Sopp: Adjusted EBITDA was up 21% with margins at 10, 7%.
Mark Sopp: Adjusted EPS was <unk> 91 in the quarter, that's up 32% over last year.
And notably.
Speaker Change: Less than 2% of our adjusted EBITDA relates to federal civilian agencies outside of NASA, so less than 2% opposite offensive.
Mark Sopp: Exceeded the adjusted EBITDA growth rate despite year over year interest headwinds driven by favorable Q4 tax adjustments that were within our guided range favor.
And now let me touch on how KBR is aligned to strong secular growth trends on slide nine.
Mark Sopp: Favorable year over year below the line items like mostly FX.
Speaker Change: Our strategy is to align with exciting growing high end markets as you know where we are differentiated.
Mark Sopp: And a lower share count on repurchases over the past 12 months.
Mark Sopp: On to slide 12 for the full year.
Speaker Change: No I won't read the entire slide to you, but you can see that our book of business is well aligned to strong secular growth trends. So just picking a couple in U S. Defense. We are aligned to mission priorities of the New administration as we've just discussed, particularly a tip of the spear operational focus.
Mark Sopp: Revenues were strong at $7 7 billion up 11%.
Mark Sopp: Versus last year, and that's supported by a robust growth across both segments with the additional benefit of course of delinquent acquisition, which contributed about two five percentage points to the to the total.
Mark Sopp: Adjusted EBITDA was up 16% with margins, increasing a half a percent to 11, 2% for the year.
Speaker Change: And international Defense, we are positioned for resilience and growth from increased international defense spending.
Mark Sopp: This type of positive result, as I always say starts with excellent program execution and that certainly was the case.
Speaker Change: I'll remind you that KBR historically that supported both the UK MLD on NATO and overseas missions.
Mark Sopp: Also as has been the case all year sustainable Tech topline growth of 17% at 20% plus margins is clearly benefiting margins in terms of mix.
Speaker Change: As we've discussed many times energy has real momentum and as a global priority of which KBR is very well positioned in this market.
Mark Sopp: Adjusted EPS was $3 34 up 15% versus the prior year generally in line with the adjusted EBITDA increase offset by higher interest cost.
Speaker Change: On infrastructure includes strong tailwind from broadening industrial base on diversifying economies, particularly in the middle East.
Speaker Change: <unk> business model combined with our differentiation and our alignment to strong secular growth trends really informed our market outlook for fiscal year 2025, and Mark will cover this shortly.
Mark Sopp: Taxes were largely consistent year to year.
Mark Sopp: And as Stuart indicated revenue and adjusted EBITDA were at the high end of our guidance ranges for the year, whereas the adjusted EPS exceeded the top end of our range.
Mark Sopp: With that I'll turn it over to Mark.
Mark Sopp: Cash flows were $462 million for the year.
Mark Sopp: Thank you Stuart and good afternoon, everyone on slide 11, covering Q4 performance.
Mark Sopp: With an ocs conversion of 103% to net income.
Mark Sopp: You see revenues in the quarter were $2 1 billion, that's up 23% versus the prior year and that was driven by growth across both segments and also the link Quest acquisition, we made in late Q3.
Mark Sopp: Later in the year, we did make a voluntary payment of $21 million to pre fund our 2025, United Kingdom pension obligation.
Mark Sopp: This action was taken in conjunction with seeking a negotiated outcome to enable greater utilization of collateralized cash in the UK going forward.
Mark Sopp: Adjusted EBITDA was up 21% with margins at 10, 7%.
Mark Sopp: Adjusted EPS was <unk> 91 in the quarter, that's up 32% over last year.
Mark Sopp: The intention of bumping up our ultimate capital deployment capacity by over $50 million.
Mark Sopp: The prepayment did result in OCI, finishing at the low end of our guide for the year, but certainly we think worthwhile benefits in the long term relative to deployment capacity.
Mark Sopp: Exceeded the adjusted EBITDA growth rate despite year over year interest headwinds driven by favorable Q4 tax adjustments that were within our guided range.
Mark Sopp: Favorable year over year below the line items like mostly FX and.
Mark Sopp: On to slide 13, and our segment performance first.
Mark Sopp: A lower share count on repurchases over the past 12 months.
Mark Sopp: First off with government solutions revenues in Q4 increased 20% to $1 6 billion.
Mark Sopp: On to slide 12 for the full year.
Mark Sopp: With $150 million and adjusted EBITDA and margins at nine 4%.
Mark Sopp: Revenues were strong at $7 7 billion up 11%.
Mark Sopp: Versus last year, and that's supported by a robust growth across both segments with the additional benefit of course of the Lincoln acquisition, which contributed about two five percentage points to the to the total.
Mark Sopp: As you see all four business units contributed.
Mark Sopp: Defense and Intel revenue growth was particularly strong as you see up 33% supported by the <unk> acquisition and also organic growth.
Mark Sopp: Adjusted EBITDA was up 16% with margins increasing a half.
Mark Sopp: Primary drivers here include military space missile defense and support of advanced technologies, including hypersonic and digital upgrades on various military platforms.
Mark Sopp: 4% to 11, 2% for the year.
Mark Sopp: This type of positive result, as I always say starts with excellent program execution and that certainly was the case.
Mark Sopp: International also performed well with an increase of 20% driven by core UK on Australia defense programs and healthy increases in infrastructure work in Australia, and the Middle East.
Mark Sopp: Also as has been the case all year sustainable Tech topline growth of 17% at 20% plus margins is clearly benefiting margins in terms of mix.
Mark Sopp: As a reminder, the infrastructure area will shift to STS and 2025 as part of the realignment we discussed in early January.
Mark Sopp: Adjusted EPS was $3 34 up 15% versus the prior year generally in line with the adjusted EBITDA increase offset by higher interest cost.
Mark Sopp: Margins were consistent with last year with normal Q4 seasonality due to lower labor utilization.
Mark Sopp: Taxes were largely consistent year to year and.
Mark Sopp: And as Stuart indicated revenue and adjusted EBITDA were at the high end of our guidance ranges for the year, whereas adjusted EPS exceeded the top end of our range.
Mark Sopp: Book to Bill in the quarter was <unk> nine times.
Mark Sopp: That isn't unusual for Q4, we'd note significant awards in our favor remain in protests, which hopefully will benefit future quarters.
Mark Sopp: Operating cash flows were $462 million for the year.
Mark Sopp: And for the full year revenues were $5 9 billion up 10% with adjusted EBITDA of 587 million also up 10% at a 10% margin very consistent with last year.
Mark Sopp: With an ocs conversion of 103% to net income.
Later in the year, we did make a voluntary payment of 21 million to pre fund our 2025.
Mark Sopp: I did kingdom pension obligation this.
Mark Sopp: On to slide 14 sustainable Tech.
Mark Sopp: Action was taken in conjunction with seeking a negotiated outcome to enable greater utilization of collateralized cash in the UK going forward with the intention of bumping up our ultimate capital deployment capacity by over $50 million.
Mark Sopp: Sustainable Tech solutions revenues in the quarter were up 30%.
Mark Sopp: With $108 million and adjusted EBITDA and margins at 26%.
Mark Sopp: This is quite remarkable given the softness we saw in this market earlier in the year that you might recall.
Mark Sopp: The prepayment did result in OCI, finishing at the low end of our guide for the year, but certainly we think worthwhile benefits in the long term relative to deployment capacity.
Mark Sopp: As Stuart suggested earlier since the summer demand has increased for our ammonia energy security and various de carbonization offerings.
Mark Sopp: On to slide 13, and our segment performance.
New projects and on project growth have both contributed significantly.
Mark Sopp: First off with government solutions revenues in Q4 increased 20% to $1 6 billion with $150 million and adjusted EBITDA and margins at nine 4%.
Mark Sopp: Ammonia technology program management consulting services and LNG projects are the main drivers with LNG demand signals.
As you see all four business units contributed.
Mark Sopp: Particularly picking up after the U S election in November.
Mark Sopp: Defense and Intel revenue growth was particularly strong as you see up 33% supported by the linked list acquisition and also organic growth.
Mark Sopp: All of these same factors drove a strong book to Bill performance of one three times.
Mark Sopp: In Q4 margins as has been the case all year were consistent with our long term targets 20 plus percent.
Mark Sopp: Primary drivers here include military space missile defense and support of advanced technologies, including hypersonic.
For the full year revenues were $1 9 billion up 17% with adjusted EBITDA of $398 million up 18% and at a margin of 21, 3%.
Mark Sopp: And digital upgrades on various military platforms.
Mark Sopp: International also performed well with an increase of 20% driven by core UK on Australia defense programs and healthy increases in infrastructure work in Australia, and the Middle East.
Mark Sopp: This marks the third consecutive year sustainable Tech has had double digit adjusted EBITDA growth.
Mark Sopp: As a reminder, the infrastructure area will shift to STS and 2025 as part of the realignment we discussed in early January.
Mark Sopp: Book to Bill for the full year. It was also a strong one one times.
Mark Sopp: Over to slide 15, and the balance sheet and capital matters as Stuart said earlier, we executed a balanced capital deployment plan in 2024 consistent with the course, we set at the beginning of the year.
Mark Sopp: Margins were consistent with last year with normal Q4 seasonality due to lower labor utilization.
Mark Sopp: Book to Bill in the quarter was <unk> nine times.
Mark Sopp: That isn't unusual for Q4, we'd note significant awards in our favor remain in protest, which hopefully will benefit future quarters.
Mark Sopp: We deployed over $1 billion in capital with about 75% of that attributed to the linked list acquisition.
Mark Sopp: And the rest on returning cash to shareholders primarily through buybacks.
Mark Sopp: And for the full year revenues were $5 9 billion up 10% with adjusted EBITDA of 587 million also up 10% at a 10% margin very consistent with last year.
Mark Sopp: With over $1 billion deployed we ended 2024 with a net leverage of two six times. We expect this leverage ratio to work down as we grow EBITDA in 2025.
Mark Sopp: On to slide 14 sustainable Tech.
Mark Sopp: Now I'd like to provide a little bit of clarity on our capital allocation priorities going forward.
Mark Sopp: Sustainable Tech solutions revenues in the quarter were up 30%.
Mark Sopp: Our first priority as you would probably expect us to fund organic growth and also actions to drive operating excellence.
Mark Sopp: With $108 million and adjusted EBITDA and margins at 26%.
Mark Sopp: That's number one number two we are targeting a leverage ratio below two five X and the current interest rate environment.
Mark Sopp: This is quite remarkable given the softness we saw in this market earlier in the year that you might recall.
Mark Sopp: As Stuart suggested earlier since the summer demand has increased for our ammonia energy security and various de carbonization offerings.
Mark Sopp: And EBITDA should get us there quite soon.
Mark Sopp: Our next priority is returning capital to shareholders within this we plan to continue buybacks with bias to do more.
Mark Sopp: New projects and on project growth have both contributed significantly.
Mark Sopp: Ammonia technology program management consulting services and LNG projects are the main drivers with LNG demand signals.
Mark Sopp: Consistent with our growth we are announcing our board has approved an increase in full replenishment of our stock buyback authorization to $750 million effective today.
Mark Sopp: Particularly picking up after the U S election in November.
Mark Sopp: Yeah.
Mark Sopp: We're also committed to maintaining an attractive dividend.
Mark Sopp: All of these same factors drove a strong book to Bill performance of one three times.
Mark Sopp: As we are tracking to the growth levels consistent with our long term targets. Our board has approved increasing our regular dividend effective this march.
Mark Sopp: In Q4 margins as has been the case all year were consistent with our long term targets 20 plus percent.
Mark Sopp: By 10% to <unk> 66 per annum were $16.05 per quarter.
Mark Sopp: For the full year revenues were $1 9 billion up 17% with adjusted EBITDA of $398 million up 18%.
Mark Sopp: Since our first increase in the regular dividend in 2020, the average rate of annual dividend increase has been 13%.
Mark Sopp: At a margin of 21, 3%.
Mark Sopp: Finally, we will continue to take a disciplined approach to acquisitions focused on bolt ons that have a strong strategic fit cultural fit of course and also attractive financial profile.
Mark Sopp: This marks the third consecutive year sustainable Tech has had double digit adjusted EBITDA growth.
Mark Sopp: Book to Bill for the full year was also a strong one one times.
Mark Sopp: I'll now turn to slide 16, and our fiscal 2025 guidance.
Mark Sopp: Over to slide 15, and the balance sheet and capital matters as Stuart said earlier, we executed a balanced capital deployment plan in 2024 consistent with the course, we set at the beginning of the year.
Mark Sopp: For fiscal 2020 fiber issuing the following we expect.
Revenue in the range of $8 7 billion to $9 1 billion.
Representing an increase of 15% at the midpoint.
Mark Sopp: We deployed over $1 billion in capital with about 75% of that attributed to the linked list acquisition.
Mark Sopp: We anticipate adjusted EBITDA of $950 million to $990 million, an increase of 11% at the midpoint.
Mark Sopp: And the rest on returning cash to shareholders primarily through buybacks.
Mark Sopp: With over $1 billion deployed we ended 2024 with a net leverage of two six times. We expect this leverage ratio to work down as we grow EBITDA in 2025.
Mark Sopp: We expect adjusted EPS of $3 71 to $3 95.
Mark Sopp: Representing increase of approximately 15% at the midpoint.
Mark Sopp: And lastly for operating cash flows, we expect a range of $500 million to $550 million up 14% at the midpoint.
Mark Sopp: Now I'd like to provide a little bit of clarity on our capital allocation priorities going forward.
Mark Sopp: Our first priority as you would probably expect us to fund organic growth and also actions to drive operating excellence.
Mark Sopp: Capex is expected to be between $50 million and $65 million for the year.
Mark Sopp: That's number one number two we are targeting a leverage ratio below two five X and the current interest rate environment.
Mark Sopp: And our projected effective tax rate is 25% to 27%.
Mark Sopp: Finally, we are expecting phasing of adjusted EPS to be 47% in the first half 53% in the second half.
Mark Sopp: And EBITDA should get us there quite soon.
Mark Sopp: Our next priority is returning capital to shareholders within this we plan to continue buybacks with bias to do more.
Mark Sopp: And with those objectives for 2025, we are certainly progressing well towards the 2027 targets issued in our May 2020 for Investor day.
Mark Sopp: Consistent with our growth we are announcing our board has approved an increase in full replenishment of our stock buyback authorization to $750 million effective today.
Mark Sopp: Now our guidance does include key assumptions and I think those are worth highlighting given the current political and economic environment.
Mark Sopp: Yeah.
Mark Sopp: We're also committed to maintaining an attractive dividend.
Mark Sopp: First of all Stewart said earlier, we believe the types of National security space and operations programs that we support will continue to be dependent upon and demanded by our global customers, including the U S government.
Mark Sopp: As we are tracking to the growth levels consistent with our long term targets. Our board has approved increasing our regular dividend effective this march.
Mark Sopp: By 10% to <unk> 66 per annum or $16.05 per quarter.
Mark Sopp: We are accordingly, assuming all material programs. We currently support remain in place.
Mark Sopp: Since our first increase in the regular dividend in 2020, the average rate of annual dividend increase has been 13%.
Mark Sopp: If that changes materially we will certainly provide an update as appropriate.
We believe there is significant probability of a full year continuing resolution for the U S government fiscal 2025.
Mark Sopp: Finally, we will continue to take a disciplined approach to acquisitions focused on bolt ons that have a strong strategic fit cultural fit of course and also attractive financial profile.
Mark Sopp: That assumed funding and tasking, including on contract growth for mission critical National Security operations and modernization programs remains intact.
Mark Sopp: I will now turn to slide 16, and our fiscal 2025 guidance.
Mark Sopp: As we've previously communicated 2025 will be a year in which home safe volumes ramp up considerably.
Mark Sopp: For fiscal 2025 are issuing the following we expect revenue in the range of $8 7 billion to $9 1 billion.
Mark Sopp: Assuming home safe continues to ramp but not at the full domestic moves pace for the peak summer season.
Mark Sopp: Representing an increase of 15% at the midpoint.
Mark Sopp: Estimated revenue range is $300 million to $500 million for the year.
Mark Sopp: We anticipate adjusted EBITDA of $950 million to $990 million, an increase of 11% at the midpoint.
Mark Sopp: This compares to less than $50 million in 2024, so quite a contributor to growth.
Mark Sopp: We expect adjusted EPS of $3 71 to $3 95.
Mark Sopp: We are not contemplating material effects from some of the proposed tariffs.
Mark Sopp: Our current business levels in Mexico, Canada, and China are not material.
Mark Sopp: Representing increase of approximately 15% at the midpoint.
Mark Sopp: And lastly for operating cash flows, we expect a range of $500 million to $550 million up 14% at the midpoint.
Mark Sopp: And finally, we are expecting interest rate and foreign exchange rates to remain static from where we are today.
Mark Sopp: So in closing our plan for 2025 is consistent with our long term targets, we set at Investor day, and we do so with confidence strong growth momentum and a very dedicated global team.
Mark Sopp: Capex is expected to be between $50 million and $65 million for the year.
Mark Sopp: And our projected effective tax rate is 25% to 27%.
Mark Sopp: Finally, we are expecting phasing of adjusted EPS to be 47% in the first half 53% in the second half.
Stuart Brady: With that I'll turn it back to Stuart.
Stuart Brady: Thanks, Mark I'm on slide 17, with some key takeaways.
Stuart Brady: Firstly strong fourth quarter and fiscal year 2024 results with double digit growth margin expansion.
Mark Sopp: And with those objectives for 2025, we are certainly progressing well towards the 2027 targets issued in our May 2020 for Investor day.
Stuart Brady: Book to Bill of one one times.
Stuart Brady: We delivered on our strategy in fiscal year 2024, as we discussed earlier to move upmarket and position and areas of differentiation.
Mark Sopp: Now our guidance does include key assumptions and I think those are worth highlighting given the current political and economic environment.
Mark Sopp: First as Stuart said earlier, we believe the types of National security space and operations programs that we support will continue to be dependent upon and demanded by our global customers, including the U S government.
Stuart Brady: I think we demonstrated a diversified portfolio and our resilient business model and with more than 60% of our adjusted EBITDA generated from the U S government customers.
Stuart Brady: We are confident in our 2025 outlook with double digit growth at the midpoint across all metrics and entering 2025 with 75 plus percent work under contract.
Mark Sopp: We are accordingly, assuming all material programs. We currently support remain in place.
Mark Sopp: If that changes materially we will certainly provide an update as appropriate.
Mark Sopp: We believe there is significant probability of a full year continuing resolution for the U S government fiscal 2025.
Stuart Brady: With that we're happy to take your questions and I'll hand, the call back to the operator. Thank you.
Mark Sopp: Let assumed funding and tasking, including on contract growth for mission critical National Security operations and modernization programs remains intact.
Stuart Brady: Thank you we will now begin the question and answer session.
Speaker Change: I would like to ask a question. Please press star followed by one on your telephone keypad.
Is there any reason at all you would like to move that a question. Please press star followed by two again to ask a question. Please press star one as a reminder, if you are using a speaker phone. Please remember typically up your handset before asking your question.
Mark Sopp: As we've previously communicated 2025 will be a year in which home safe volumes ramp up considerably.
Assuming home safe continues to ramp but not at the full domestic moves pace for the peak summer season.
Speaker Change: The first comes from Brent Thielman with D. A Davidson you May proceed.
Mark Sopp: Estimated revenue range is $300 million to $500 million for the year.
Mark Sopp: This compares to less than $50 million in 2024, so quite a contributor to growth.
Brent Thielman: Hey, great. Thanks.
Speaker Change: And congrats on a great finish to the year.
Speaker Change: I guess, maybe it maybe a question for Mark just in terms of the <unk>.
Mark Sopp: We are not contemplating material effects from some of the proposed tariffs.
Speaker Change: <unk> revenue outlook here for 2020 fives call it up $1, one $1 2 billion at the midpoint I think I heard you call out three to 500 did you specify what you're anticipating from link quest in 2025, and maybe just a little further color in terms of how that integration is going.
Mark Sopp: Our current business levels in Mexico, Canada, and China are not material.
Mark Sopp: And finally, we are expecting interest rates and foreign exchange rates to remain static from where we are today.
Mark Sopp: So in closing our plan for 2025 is consistent with our long term targets, we set at Investor day, and we do so with confidence strong growth momentum and a very dedicated global team.
Speaker Change: Great well first thanks for tuning in and thanks, Great question.
Speaker Change: So the revenue guide $8 seven to $9 1 billion.
Stuart Brady: With that I'll turn it back to Stuart.
Speaker Change: Represents growth of 15% at the midpoint you talked about that in the prepared remarks.
Stuart Brady: Thanks, Mark I'm on slide 17, with some key takeaways.
Speaker Change: Of that you mentioned the home safe number.
Stuart Brady: Firstly strong fourth quarter and fiscal year 2024 results with double digit growth margin expansion and book to Bill of one one times.
Speaker Change: Roughly five percentage points of the growth linked quest similar number it's.
Speaker Change: It's about inorganic addition of $400 million to the 25 numbers.
Speaker Change: Running very consistently with our original expectations ballpark $600 million per year.
Stuart Brady: We delivered on our strategy in fiscal year 2024, as we discussed earlier to move upmarket and position and areas of differentiation.
Speaker Change: I'll really performing great culture, as we said many times before it couldnt be better.
Speaker Change: BD teams are collaborating to really go after new interesting work some of them, which we've already won.
Stuart Brady: I think we demonstrated a diversified portfolio and our resilient business model and with more than 60% of our adjusted EBITDA generated from non U S government customers.
Speaker Change: Quite a bit but just on the pipeline.
Speaker Change: So and this is all of that good margins as well as we set forth to do so it literally couldnt be happier with the status of the the team the integration and how they are contributing to KBR set of capabilities.
Stuart Brady: We are confident in our 2025 outlook with double digit growth at the midpoint across all metrics and entering 2025 with 75 plus percent work under contract.
Speaker Change: Perfect. Thanks, Marc and then I guess my follow up would just be I mean, obviously a lot of success here with black mines, some clinical milestones here just curious how that.
Stuart Brady: With that we're happy to take your questions and I'll hand, the call back to.
Speaker Change: The operator, thank you.
Speaker Change: If that is opening up discussions maybe with others outside.
Charles: Hi, Charles.
Charles: We're waiting to RFID, there, but maybe that the tempo of discussions beyond that just with the great success and perhaps your tablet black mindshare. Thank you.
Speaker Change: Yeah.
Charles: Yes, good question I think.
Charles: We've talked a little bit in the prepared remarks about the outlook for LNG I think.
Speaker Change: Although.
Charles: The World is telling us is going to be a got a couple of hundred million tonnes of LNG over.
Speaker Change: Thank you we will now begin the question and answer session.
Speaker Change: If you would like to ask a question. Please press star followed by one on your telephone keypad.
Charles: 70 stood at 28 30.
Charles: So theres a lot of activity.
Speaker Change: Any reason at all you would like to move that question. Please press star followed by two again to ask a question. Please press star one.
Charles: A lot of early engagements in the LNG market from multiple customers someone new market entities. Some of our older projects that are being revived as a consequence of that.
Speaker Change: As a reminder, if you are using a speaker phone. Please remember to pick up your handset before asking your question.
Charles: The administration's focus and energy security, So I think it's going to be a very volume part.
Speaker Change: First comes from Brent Thielman with D. A Davidson you May proceed.
Charles: Our future we're seeing.
Brent Thielman: Hey, great. Thanks.
Charles: Operators with facilities that are operating today looking at expansions in <unk>.
Speaker Change: And congrats on a great finish to the year.
Bottleneck for LNG as you would expect so so I think it's a very exciting time to be in that market and certainly delivering LNG.
I guess, maybe maybe a question for Mark just in terms of the initial revenue outlook here for 2020 fives call. It at $1, one $1 2 billion at the midpoint I think I heard you call out three to 500 did.
Charles: Certainly right up there in terms of record time.
Charles: Each of us to LNG and <unk>.
Charles: <unk>.
Charles: A very good position, particularly as we understand currently before us and all the current supply chain.
Speaker Change: Did you specify what you're anticipating from link quest in 2025, and maybe just a little further color in terms of how that integration is going.
Charles: It works et cetera, so yes.
Speaker Change: Good shape there. Thank you.
Speaker Change: Great well first thanks for tuning in and thanks, Great question. So.
Charles: Yeah.
Charles: Thank you.
Speaker Change: So the revenue guide $8 seven to $9 1 billion.
Charles: Thank you.
Speaker Change: Represents growth, 15% at the midpoint you talked about that in the prepared remarks.
Speaker Change: The next question comes from Mariana Perez Mora with Bank of America You May proceed.
Speaker Change: Of that you mentioned the home safe number.
Speaker Change: Roughly five percentage points of the growth linked quest similar numbers it's.
Speaker Change: Good afternoon, everyone or good morning.
Speaker Change: It's about inorganic addition of $400 million to the 25 numbers.
Speaker Change: Correspondence.
Could you mind discussing what are the main drivers when you think about like 2025 growth and how you think about like international contributing to that.
Speaker Change: Running very consistently with our original expectations ballpark $600 million per year.
Speaker Change: Really performing great culture, as we said many times before it couldnt be better.
Speaker Change: Yeah.
Speaker Change: Okay International.
Speaker Change: BD teams are collaborating to really go after new interesting work some of them, which we've already won.
Speaker Change: Big context, because our.
Speaker Change: People think of that on the government side, but it's also the sustainable technology site for US I think mark was pretty clear in terms of.
Speaker Change: Quite a bit of logistical and the pipeline.
Speaker Change: So and this is all of that good margins as well as we set forth to do so it literally couldnt be happier with the status of the the team the integration and how they are contributing to KBR set of capabilities.
Speaker Change: Growth as it relates to linguists done as it relates to Jose when we've taken a very balanced view across the rest of the MTS portfolio.
Speaker Change: Perfect. Thanks, Marc and then I guess my follow up would just be I mean, obviously a lot of success here with black mines at some critical milestones here just curious how that.
Speaker Change: Particularly with continuing resolutions expected et cetera.
Speaker Change: So I think that's prudent I think it's quite quite balanced in the way we've approached the international government markets. We're seeing increased spending of course from governments. There is a lot of.
Speaker Change: If that is opening up discussions maybe with others outside.
Speaker Change: Noise in Europe as you may have seen.
Speaker Change: Charles machine, our weighting to RFID, there, but maybe that the tempo of discussions beyond that just with the great success and perhaps your tablet black mines here. Thank you.
Speaker Change: From.
Speaker Change: What's happening opposite Ukraine, and the increased defense spending in Europe expected as we go forward.
Speaker Change: So we're actually taking this call from Australia.
Speaker Change: Yes, good question I think.
Larry: I'm, Larry I understand depending especially in the morning.
Speaker Change: We've talked a little bit in the prepared remarks about the outlook for LNG I think.
Larry: And we're down visiting our business this year the government customers done here.
Speaker Change: The World is telling us is going to be a gap of a couple of hundred million tons of LNG over.
Larry: The market theaters attracted most of the infrastructure.
Speaker Change: 70 stood at 2030.
Larry: And the government side, we've got a very high and digitally enabled business in Australia. So we're expecting pretty good growth going forward without business over multiple years.
Speaker Change: So theres a lot of activity with <unk>.
Speaker Change: A lot of early engagements in the LNG market from multiple customers somewhat new market entities. Some of our older projects that are being revived as a consequence of that.
Larry: The pipeline so.
Larry: When I look at the sustainable Tech business, we've talked about LNG as it relates I think most people thinking about the U S. But we are seeing increased activity in at least that we covered a little bit of that in the prepared remarks, but also we're seeing Asia started to take off as well, but but importantly, adopting a guess.
Speaker Change: The administration's focus and energy security.
Speaker Change: So I think it's going to be a very volume part.
Speaker Change: Our future we're seeing.
Speaker Change: Operators with facilities that are operating today looking at expansions and Debottleneck.
Speaker Change: For LNG as you would expect so so I think it's a very exciting time to be in that market and certainly delivering LNG.
Larry: Our risk model that suits our appetite.
Larry: So not your traditional lump sum EPC, which I think has proven slowly.
Speaker Change: Certainly right up there in terms of record time for <unk>.
Speaker Change: The LNG market.
Larry: Any companies over the.
Speaker Change: Very good positioned, particularly as we understand currently before us and all the current supply chain.
Larry: The years of course, we got out of that many years ago I think.
Larry: Properly. So so it was just stood us in very good stead, but the global size the growth in energy demand is there.
Speaker Change: Fox et cetera, so yes.
Speaker Change: Good shape there. Thank you.
Speaker Change: Yeah.
Larry: The middle East.
Speaker Change: Thank you.
Larry: We're seeing increases.
Larry: Asia, Our Singapore business for example.
Speaker Change: Thank you the.
Speaker Change: The next question comes from Mariana Perez Mora with Bank of America You May proceed.
Larry: But the middle East up plays an important role not just in at least itself.
Larry: It'll double digit across those countries in terms of our presence, but also with the larger projects are executed technical ops.
Speaker Change: Good afternoon, everyone or good morning Corey.
Speaker Change: Correspondence.
Could you remind us what are the main drivers when you think about like 2025 growth and how you think about like international contributing to that.
Larry: Houston.
Generally so it's so we're seeing lots of activity outside the U S, which is why we want to reinforce our multiple pathways that we have to.
Speaker Change: Okay.
Larry: Gross.
Speaker Change: It was a big context, because our.
Larry: Some ups some downs I'm sure everything will be perfect, but I think having multiple possibly as proven in the past that we're very resilient and thats why we talk about it quite a bit.
Speaker Change: People think of that on the government side, but it's also the sustainable technology site for US I think mark was pretty clear in terms of.
So I think we're in good shape going forward.
Speaker Change: Growth as it relates to linguists done as it relates to Jose we've taken a very balanced view across the rest of the <unk>.
Larry: And then if I may follow up on Logcap and all the support that you are doing.
Larry: In Europe, how do you think about that.
Speaker Change: <unk> portfolio.
Particularly with continuing resolutions expected et cetera.
Larry: It sounds like going forward in the next like 12 to 18 months.
Speaker Change: So I think that's prudent I think it's quite quite balanced in the way we've approached.
Larry: Yes, I think thats. Another good question and one we've looked at internally very closely we've talked about it before.
International Government markets, we're seeing increased spending of course from governments. There is a lot of.
Larry: $2 million to $300 million of revenue.
Speaker Change: Noise in Europe as you may have seen from from.
Larry: Single digit margins so from a materiality.
Speaker Change: What's happening opposite Ukraine, and the increased defense spending in Europe expected as we go forward, but also we're actually taking this call from Australia.
Larry: Point of view in terms of our EBITDA.
Larry: Not significant.
Larry: And the budgets are sort of the guidance as we looked into next year as I said, we've taken a very balanced view across the portfolio.
Speaker Change: Im wondering I understand depending.
Speaker Change: Good morning.
Larry: As I think prudently so.
Speaker Change: And we're done with that business this year.
Larry: So I think the way we think about it is I mean.
Speaker Change: Government customers done here.
And secondly exit this basically said that we know obviously it was drawn.
Speaker Change: The market very attractive infrastructure.
Larry: The short to medium term.
Speaker Change: And the government side, we've got a very high and digitally enabled business in Australia. So we're expecting pretty good growth going forward without business over multiple years in fact, that's what's in the pipeline. So.
Larry: Goodness knows what happens opposite.
Larry: We can't really speculate in terms of outcomes.
Larry: Yes.
Larry: So I think I think ultimately we've got quite a lot of.
Speaker Change: When I look at the sustainable Tech business, we've talked about LNG as it relates I think most people thinking about the U S. But we are seeing increased activity in at least that we covered a little bit of that in the prepared remarks, but also we're seeing Asia, starting to take off as well, but but importantly adopting.
Larry: Confidence in terms of the numbers, we have through 'twenty five.
And we've got.
Larry: So as a consequence of that.
Larry: <unk> that we've taken and I think it's fairly appropriate in terms of how we're positioned.
Larry: Thanks for that.
Mark Sopp: Thank you and last one try to mark.
Speaker Change: Yes.
Speaker Change: Our risk model that suits our appetite.
Mark Sopp: We check com safe, how should we think about EBITDA margins in this current level of contribution.
Speaker Change: So not your traditional lump sum EPC, which I think has proven slowly.
Mark Sopp: Yeah.
Speaker Change: Companies over the.
Mark Sopp: Okay.
Speaker Change: The years of course, we got out of that.
Mark Sopp: Or just the Yukon piece and Logcap five that you mentioned stores wildly.
Many years ago I think.
Speaker Change: Properly. So so it was just stood us in very good stead, but the global size the growth in energy as demand is there.
Mark Sopp: If our home safe.
Okay Alright.
Mark Sopp: I couldn't hear that clearly.
Mark Sopp: Probably right now.
Speaker Change: The middle East I think.
Mark Sopp: Anyway, let's unsafely.
Speaker Change: We're seeing increases.
Speaker Change: Asia, Our Singapore business for example, Spain very busy.
Mark Sopp: We're in a ramp up phase and I'm sure we'll talk about that.
Mark Sopp: Quite a bit for others, but.
Speaker Change: But the middle East up plays an important role not just in at least itself.
Mark Sopp: But we were expecting.
Speaker Change: It will double digit across those countries in terms of our presence, but also with the larger projects are executed that technical ops.
Mark Sopp: Very cautious amount of profitability in the year of ramp up.
Mark Sopp: Due to all the issues you would expect in a major transformational program and so we're navigating through that well really proud of the team's efforts and so it's really a negligible contribution to the profit for 2025 and as expected and so we see contribution of all of our other parts of the business really carrying the day.
Speaker Change: Houston.
Speaker Change: So it's so we're seeing lots of activity outside the U S, which is why we want to reinforce our multiple pathways that we have to grow.
Speaker Change: Both.
Speaker Change: There'll be some ups some downs I'm sure everything will be perfect, but I think having multiple pathways as proven in the past that we're very resilient and thats why we talk about it quite a bit.
Mark Sopp: So we'll report that as it comes during the year.
And that's what is the status today.
Speaker Change: So I think we're in good shape going forward.
Speaker Change: And then if I may follow up on Logcap and all the support.
Mark Sopp: Okay.
Mark Sopp: Thank you. Thank you the next to the.
Speaker Change: In Europe, how do you think about that.
Mark Sopp: Our next question comes from Steven Fisher with UBS.
Speaker Change: It sounds like going forward in the next like 12 to 18 months.
Mark Sopp: Oh, great. Thanks, a lot.
Speaker Change: Yes, I think thats. Another good question and one we've looked at internally very closely we've talked about it before.
Mark Sopp: So I know you guys stepped up the bidding over the past year in the mission technology business and he decided that 55%.
Speaker Change: $2 million to $300 million of revenue.
Mark Sopp: This increase in bids can you just talk about where you are in that process in terms of getting decisions back on those I wasn't sure if that was what you're referring to in terms of things under protest or is there still a pretty good ramp of awards.
Speaker Change: Single digit margins, so furloughed Cereology point of view in terms of our EBITDA.
Significant.
Speaker Change: In the budget, so I saw any of that guidance.
Speaker Change: Next year as I said, we've taken a very balanced view across the portfolio.
Mark Sopp: Awards to come there I'm, just trying to gauge what sort of the bookings landscape might look like in that business for the next four quarters.
Speaker Change: As I think prudently so.
Speaker Change: So I think the way we think about it is I mean.
Mark Sopp: Yes, Steve as we said in our webcast in January.
Speaker Change: Defense Secretary exit this basically said that we know obviously it was drawn.
Mark Sopp: Yes.
Mark Sopp: We've been talking about this through the course of 2000 and towards realizing our.
Speaker Change: In short to medium term.
Speaker Change: Goodness knows what happens is opposite.
Mark Sopp: Our teams and our whole business development capability effort really up skilling that says we.
Speaker Change: Can't really speculate in terms of outcomes.
Speaker Change: Yes.
Speaker Change: So I think I think ultimately we have.
Mark Sopp: Will be positioned to MTS.
Got quite a lot of.
Mark Sopp: And we had a target of increasing bid volume, which we exceeded and we expect to grow that further into 2025.
Speaker Change: The confidence in terms of the numbers, we have through 'twenty five.
Speaker Change: And we've got.
Speaker Change: So as a consequence of the <unk>.
Speaker Change: <unk> that we've taken and I think it's fairly appropriate in terms of our position.
Speaker Change: We have quite a lot under protest not saying that we have one under protest.
Mark Sopp: The one $5 billion.
Speaker Change: The guide for that.
Mark Sopp: And that's going through the typical protest.
Mark Sopp: Thank you and last one try to mark.
Mark Sopp: Most of nations.
Mark Sopp: Check com safe, how should we think about EBITDA margins in this current level of contribution.
Mark Sopp: And then the various agencies, where we've won that work. So hopefully that will start to come through in Q1 and maybe into Q2.
Mark Sopp: Okay.
Mark Sopp: So that really sets ourselves up assuming you win the protest of course.
Mark Sopp: Or just the Yukon piece and Logcap five that you mentioned stores wildly.
Mark Sopp: And then we've got 17 billion.
Mark Sopp: Alright.
Mark Sopp: <unk> four award.
Barry: Okay, sorry, Barry I couldn't hear that clearly.
Mark Sopp: The course of the next 12 months.
Mark Sopp: Pardon me right now.
Mark Sopp: So that's those are the bids submitted waiting for evaluation on awards.
Mark Sopp: Anyway, let's unsafely.
Mark Sopp: We're in a ramp up phase and I'm sure we'll talk about that.
Mark Sopp: We won't speculate on timing.
Quite a bit for others, but.
Mark Sopp: And particularly in this environment, but I think it is a great indicator of the business.
Mark Sopp: But we were expecting.
Mark Sopp: Very cautious amount of profitability in the year of ramp up.
Mark Sopp: In front of us and where we're positioned but what I would say is that.
Speaker Change: You too.
Speaker Change: All of the issues you would expect in a major transformational program and so we're navigating through that well really proud of the team's efforts and so it's really a negligible contribution to the profit for 2025% as expected and so we see contribution of all of our other parts of the business really carrying the day.
Mark Sopp: On top of that we are going into this year was 75% of our work under contract.
Mark Sopp: So very healthy healthy Nomura.
Mark Sopp: And secondly.
Mark Sopp: As we alluded to and alluded to it but really talk very clearly.
Mark Sopp: Paired remarks in terms of.
Mark Sopp: Unique contract vehicles that we're utilizing that.
So we'll report that as it comes during the year.
Mark Sopp: Get to procurements quickly.
Speaker Change: And that's what is the status today.
Mark Sopp: Any quicker for us of course, but actually addressing the customer's national security concerns has done extremely well in 24 hour.
Speaker Change: Okay.
Speaker Change: Max and rich.
Speaker Change: Thank you. Thank you the next to the.
Speaker Change: <unk> unique contract vehicles that linkage brought across being able to be utilized.
Speaker Change: Our next question comes from Steven Fisher with UBS.
Speaker Change: Circa $2 billion that we can fill up on the contract vehicles.
Speaker Change: Oh, great. Thanks, a lot.
Speaker Change: So I know you guys stepped up the bidding over the past year in the mission technology business and he decided that 55%.
Speaker Change: Sure.
Speaker Change: And turned into 25, so very attractive.
Speaker Change: Areas, where we cannot see that.
Speaker Change: Plus increase in bids can you just talk about where you are in that process in terms of getting decisions back on those I wasn't sure if that was what you're referring to in terms of things under protest or is there still a pretty good ramp of <unk>.
Speaker Change: Strong performance.
Speaker Change: And of course, the digital lab piece, we talked about is really exciting and I think adding on.
Speaker Change: On contract growth. So when you add them all of those levers if you like not to mention obviously what happens in sustainable technologies.
Speaker Change: Awards to come there I'm, just trying to gauge what sort of the bookings landscape might look like in that business for the next four quarters.
Speaker Change: International government.
Speaker Change: Will be constrained by SCR in any way.
Speaker Change: Going into the year with 75% under contract with these additional pathways to growth I think is terrific.
Steve: Yes, Steve as we said in our webcast in January.
Steve: We've been talking about this through the course of 2000 and realigning our.
It sounds great and then just maybe on on home safe.
Steve: Big teams and our business development capability effort really upskilling, that's as we because.
Speaker Change: Maybe if you could give a little more color on how this year has progressed because it sounded like you are saying things stepped up pretty nicely at the beginning of the year started to build a little momentum, but it sounds like maybe not.
Steve: This will be positioned to MTS.
Steve: And we had a target of increasing bid volume, which we exceeded and we expect to grow that further into 2025.
Speaker Change: Change now is that you might not do the full domestic moves. So can you talk about what some of the puts and takes are of of what's going right. There, but yet at the same time is perhaps holding back the assumptions and I know you said, it's sort of a negligible profit impact.
Speaker Change: Quite a lot under protest not say that we have one under protest probably close to one $5 billion.
Speaker Change: And that's going through the typical protest massive nations and within the various agencies, where we've won that work. So hopefully that will start to come through in Q1 and maybe into Q2.
Speaker Change: For this year, but just curious to learn a little bit more about kind of what's happening behind the scenes.
Speaker Change: Yes so.
Speaker Change: Just to give it some context, we put up I think the whole shape of lines.
So that really sets ourselves up assuming you win the protest of course.
Speaker Change: And then we've got $17 billion.
Speaker Change: Press release in their own right recently, saying that ticketing orders of circa 300, 250 moves a day I think we resolved and almost just under 4000, Johnny loan So thats quite an increase from December.
Speaker Change: Waiting for award.
Speaker Change: During the course of the next 12 months.
Speaker Change: So thats actually the bid submitted waiting for evaluation on awards. So we.
Speaker Change: We won't speculate on timing.
Speaker Change: Probably about a 400% increase actually in December. So you can see the ramp is progressing nicely and with that of course, we are taking on service providers and took on an additional 120 and got well over 500 providers now in the supply chain, but I would just remind everyone one months.
Speaker Change: And particularly in this environment, but I think it's a great indicator of that.
Speaker Change: Business.
Speaker Change: In front of us and where we're positioned but what I would say is that.
Speaker Change: Top of that we are going into this year was 75% of our work under contract.
Speaker Change: Very healthy healthy Nomura.
Speaker Change: And secondly.
True performance into 10 year massive transformation program. So.
Speaker Change: As we alluded to.
Speaker Change: But really talk very clearly I thought in the prepared remarks, it sounds quite unique contract vehicles that we're utilizing that to get to procurements quickly.
Speaker Change: I think it's.
It's correct that we think that through in terms of ensuring that we deliver.
Speaker Change: Thank you.
Speaker Change: Revenue quicker for us of course, but actually.
Speaker Change: Our focus and objective is is it really too to really improve the performance of against the legacy program, which has underperformed in many areas, which is hence the change so we want to make sure that.
Speaker Change: Addressing the customer's national security concerns and we've done extremely well in 24 hour.
Speaker Change: Max and we see the contract vehicles that link was brought across being able to be utilized.
Speaker Change: Like all programs, we probably will not perfect, but we want to be and we're just being very very sensible about how the ramp goes forward to make sure that operationally we start to really saw improved performance of our.
Circa $2 billion.
Speaker Change: Can fill up on the contract vehicles.
Speaker Change: 24.
Speaker Change: And then to 25% so very attractive.
Areas, where we cannot see a very strong performance.
Speaker Change: One program, but also against the legacy program. The Signet will stand us in good stead. So it's more of an element of being being focused on delivery at a 10 year program as I said Steve.
Speaker Change: And of course, the digital lab piece, we talked about is really exciting.
Speaker Change: I think on contract growth. So when you add them all of those levers if you like not to mention obviously, what happens in sustainable technologies Thats not an international government.
Speaker Change: Want to win the battle and lose the war.
Speaker Change: Do you want to be very careful about how you actually deliver and make sure you got and I would say been talking too.
Speaker Change: Really constrained by SCR in any way going into the year with 75% under contract with these additional pathways to growth I think is terrific.
Speaker Change: New general at Transco months, I think I can say quite openly that both <unk> and we'll see if alliance at 100% committed to the new program and I think we're starting to see the ramp.
Speaker Change: Yes.
Speaker Change: It sounds great and then just maybe on on home safe.
Speaker Change: <unk> has gone up more of the supply chain coming in and being interested because clearly this is the way forward. So so I think thats I think is sensibly balanced in our guide and obviously if we if we start to go a little bit quicker will tell you as we progress the year, but better we tell you that the other way around I would suggest.
Speaker Change: Maybe if you could give a little more color on how this year has progressed because it sounded like you are saying things stepped up pretty nicely at the beginning of the year started to build a little momentum, but it sounds like maybe not.
Speaker Change: The change now is that you might not do the full domestic moves. So can you talk about what some of the puts and takes are of of what's going right. There, but yet at the same time is perhaps holding back the assumptions and I know you said, it's sort of a negligible profit impact.
Speaker Change: Thank you. The next question comes from Jerry Revich with Goldman Sachs. You May proceed.
Jerry Revich: Yes, hi, good morning, everyone.
For this year, but just curious to learn a little bit more about kind of what's happening behind the scenes.
Speaker Change: Good afternoon.
Speaker Change: Good morning can you talk about Stuart.
Speaker Change: Potential risk factors to 'twenty five government solutions guidance, if we do see a slowdown in awards what level of risk should we be thinking about relative to the guide that you folks laid out.
Speaker Change: Yes so.
Speaker Change: Just to give it some context, we put up I think hopefully if the lines.
Speaker Change: Press release in their own right recently, saying that taking orders so I can see.
Speaker Change: 100, 250 moves a day I think we'd love them to almost just under 4000, John you a loan so thats quite an increase from December.
Speaker Change: Thanks, Jeremy It goes back to what I was talking about earlier, if you actually just take MTS.
Speaker Change: Sure.
Speaker Change: Probably about a 400% increase actually in December. So you can see the ramp is progressing nicely and with that of course, we are particularly on service providers and took on an additional 120 and got well over 500 provide just on the supply chain.
Speaker Change: The one youre looking at 400 relinquished and then you'll see the 500 million for wholesale if and when you. When you. If you do the math back you can see that.
Speaker Change: Growth rates are in the low single digits for the base business.
Speaker Change: That's a very considered sensible growth expectation given the uncertainty that again, we can't speculate on timing and what Deutsche and all these things are going to do but ultimately I think given we've got the international footprint with MTS I think thats a very.
Speaker Change: Just to remind everyone one months.
Speaker Change: <unk> performance into 10 year massive transformation program. So.
Speaker Change: I think it's correct that we think that through in terms of ensuring that we deliver.
Speaker Change: Balanced element of our guidance. So just to give you color and then you've got Sps, which is growing in line with our targets.
Speaker Change: I think.
Speaker Change: Our focus and objective is is it really too to really improve the performance of against the legacy program, which has underperformed in many areas, which is hence the change so we want to make sure that.
Speaker Change: We're feeling pretty bullish about that but I think overall.
Speaker Change: Having these multiple pathways that we've talked about numerous times on this call really sets us up nicely and we are pretty confident of our guidance.
Speaker Change: Like all programs, we probably were not perfect, but we want to be and we're just being very very sensible about how the ramp goes forward to make sure that operationally we start to really saw improved performance of our own program, but also against the legacy program, but I think that will stand us in good stead. So it's more of an element of a beat.
Speaker Change: We've been in all the years that we've been doing this with our guidance every year.
Speaker Change: When I when you when you start to look at numbers like 15% revenue growth is probably.
Speaker Change: In this environment, probably people are thinking that thats quite high.
Speaker Change: Being focused on delivery, it's a 10 year program as I said Steve.
Speaker Change: But when you start to break it down because of the.
Speaker Change: What we've got with this wholesale fund with linguists then on.
Speaker Change: Want to win the battle and lose the war.
Speaker Change: And with the excitement of what's happening in the energy markets across the World I think you could see it.
Speaker Change: Do you want to be very careful about how you actually deliver and make sure you've got and I would say been talking too.
Speaker Change: It's a very achievable number.
Speaker Change: The agenda I'll, let John comment I think I can say quite openly that both <unk> and we'll see if alliance at 100% committed to the new program and I think we're starting to see the ramp.
Speaker Change: Okay.
Speaker Change: And then can you talk about the equity income performance in the quarter, which line of business drove the lower equity income.
Speaker Change: It's gone up more of the supply chain coming in and being interested because clearly this is the way forward. So so I think thats I think is sensibly balanced in our guide and obviously, if we as we start to go a little bit quicker. We will tell you as we progress the year, but better we tell you that.
Speaker Change: In terms of segments earnings contribution that's embedded in the guided 25. Please.
Speaker Change: No Jeremy.
Speaker Change: Did you pick that up and so for the for the full year the numbers were pretty consistent year over year, but in Q4, you did see.
Speaker Change: I jumped down in equity and earnings and Thats.
Speaker Change: The other way around I would suggest.
Speaker Change: For one thing to deliver the margins we did despite a contribution from equity earnings is significant.
Speaker Change: Thank you the next.
Speaker Change: Question comes from Jerry Revich with Goldman Sachs. You May proceed.
Speaker Change: Positive in my view.
Speaker Change: There were two things at work.
Jerry Revich: Yes, hi, good morning, everyone.
Speaker Change: Happening in the fourth quarter. One was we did have a very accounting centric non cash adjustment on a contingent liability for picked us believe it or not that's still out there and that was re measured.
Speaker Change: Good afternoon.
Speaker Change: Good morning can you talk about Stuart.
Speaker Change: Potential risk factors to 'twenty five government solutions guidance, if we do see a slowdown in awards what level of risk should we be thinking about relative to the guide that you folks laid out.
Speaker Change: From a foreign currency exchange downward by $10 million that particular, one we added back in the adjusted EPS, but it does show a reduction in equity in earnings when you look at just that line item.
Jeremy: Thanks, Jeremy.
Goes back to what I was talking about earlier.
Speaker Change: If you actually just take MTS.
Speaker Change: So that was 10 and then there was a similar number actually on the Plaquemines DG project.
Jeremy: <unk> alone.
Jeremy: Looking at 400 relinquished and then you'll see the $500 million for wholesale if and when you. When you. If you do the math back you can see that.
Speaker Change: So we actually scope increase on the project.
Speaker Change: It is generally a good thing, but that did lower our percentage of completion, we had to reset.
Jeremy: Growth rates are in the low single digits for the base business.
Speaker Change: The JV.
Speaker Change: Positioned accordingly so.
Speaker Change: That's a very considered sensible growth expectation given the uncertainty that again, we can't speculate on timing and work diligently. All these things are going to do but ultimately I think given we've got the international footprint with MTS I think thats a very.
Speaker Change: Generally a good thing.
Speaker Change: As longevity to the project and the income stream from it.
Speaker Change: I took a minor step back in Q4, so those are the reasons.
Speaker Change: So really not substantive.
Speaker Change: <unk>.
Speaker Change: Our view of the business and the confidence we have in the guide for 'twenty five.
Speaker Change: Balanced element of our guidance. So just to give you color and then you've got Sps, which is growing in line with our targets.
Speaker Change: Thank you.
Speaker Change: Thank you. The next question comes from Michael Dudas with vertical research you May proceed.
Speaker Change: We're feeling pretty bullish about it but I think overall.
Speaker Change: Having these multiple pathways that we've talked about numerous times on this call really sets us up nicely and we are pretty confident of our guidance.
Speaker Change: Yeah.
Speaker Change: Good morning, Jimmy Stewart Mark.
Speaker Change: Good morning, Mike.
Speaker Change: Sure.
Speaker Change: Okay.
Speaker Change: We've been in all the years that we've been doing this guidance every year.
Speaker Change: I Hope you can go all the way Australia for the <unk> thing I didn't think we'd have to hear that name ever again.
Speaker Change: <unk>.
Speaker Change: When you when you start to look at numbers like 15% revenue growth that's probably.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: It's just a quarterly accounting right.
Speaker Change: In this environment, probably people are thinking that thats quite high.
Speaker Change: So there's no real.
Speaker Change: But when you start to break it down because of the.
Okay.
Okay understood.
Speaker Change: What we've got with this whole say fund with linguists then on with the excitement of what's happening in the energy markets across the World I think you could see it.
Speaker Change: Stuart maybe you could share with the call we had in January and the realignment of the businesses.
Speaker Change: What's happened since then and what's giving you more confidence with some wins or some opportunities that maybe can drive maybe better performance to get that 25% of business into the <unk>, but maybe even lift the outlook for beyond given what you guys have realigned and given some of the tailwind.
Speaker Change: It's a very achievable number.
Speaker Change: Okay.
And then can you talk about the equity income performance in the quarter, which line of business drove the lower equity income.
Speaker Change: In terms of segments earnings contribution that's better than the guided 25. Please.
Speaker Change: You have.
Speaker Change: No Jerry good, giving you pick that up and so for the for the full year the numbers were pretty consistent year over year, but in Q4, you did see that.
Speaker Change: Thanks, Mike.
Speaker Change: So the realignment has.
Speaker Change: We said was we were headed to the end of 2004 was was done.
Speaker Change: Jumped down in equity and earnings and Thats.
Speaker Change: Please to announce that the integration of linguistic substantially done those systems.
Speaker Change: For one thing to deliver the margins we did despite the contribution from equity earnings is significant.
Our systems are things across that we havent achieved when we talked in January so thats kind of behind us.
Speaker Change: I am positive in my view.
Speaker Change: There were two things at work.
Speaker Change: So the company has realigned into mission Tech and sustainable tack with really just the infrastructure piece moving across from the legacy international government into into the STS.
Speaker Change: Happening in the fourth quarter. One was we did have a very accounting centric non cash adjustment on a contingent liability for <unk> believe it or not that's still out there and that was re measured.
Speaker Change: I think what we're seeing now is just the realization of synergy opportunities the cost exercise that we embarked on we have achieved that we took the $70 million of cost I would tell you what didn't drop.
Speaker Change: From a foreign currency exchange downward by $10 million that particular, one we added back in the adjusted EPS, but it does show a reduction in equity earnings when you look at just that line item.
Speaker Change: Bottom line because of the way that we have these reimbursable contracts in the U S. But that's really positioned us nicely for to be competitive on.
Speaker Change: So that was 10 and then there was a similar number actually on the Plaquemines DG project.
Speaker Change: We actually just scope increase on the project, which is generally a good thing, but that did lower our percentage of completion, we had to reset.
Speaker Change: Across our business.
Speaker Change: And Youll see the reduction in corporate costs as we go forward to next year. So I think that all sets us up nicely. So that's all behind us as well, but I think the main reason we did this was to be aligned in the portfolios.
Speaker Change: The JV.
Speaker Change: Positioned accordingly so.
Speaker Change: Generally a good thing and it.
Speaker Change: Customers may.
Thats longevity to the project and the income stream from it.
Speaker Change: Sure talent was aligned to provide solutions to those customers.
Both I took a minor step back in Q4, so those are the reasons.
Speaker Change: And certainly the book of business that we've got coming down the pipe is very exciting.
Speaker Change: So really not substitute to the to the <unk>.
Speaker Change: Our view of the business and the confidence we have in the guide for 'twenty five.
Speaker Change: The Lincoln deal has already given us fantastic wins positioned nicely for us.
Speaker Change: Thank you.
Speaker Change: 425 on beyond across the portfolio, particularly in space for us in looking at the broader Air force portfolio with digital enabled labs and things like that that we addressed it.
Speaker Change: Okay.
Speaker Change: Thank you. The next question comes from Michael Dudas with vertical research you May proceed.
Speaker Change: Good morning, Jimmy Stewart Mark.
Speaker Change: Remarks, but also within the sustainable tag in the Middle East the infrastructure portfolio, we have there on down in Australia.
Speaker Change: Good morning, Michael.
Speaker Change: Yeah.
Speaker Change: I Hope you can go all the way Australia Ischys thing I didn't think we'd have to hear that name ever again.
Speaker Change: But we do a balance.
Speaker Change: Infrastructure work across defense infrastructure supporting the <unk> program as well as looking at it.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: That's just quarterly accounting Mike Dahl.
Speaker Change: That's what's happening in things like water and transport.
Speaker Change: There's no real okay.
Speaker Change: Thanks.
Speaker Change: Our board going really really well.
Speaker Change: Okay.
Stuart maybe you could share with the call we had in January and the realignment of the businesses.
Speaker Change: Very much aligned business model wise.
Honestly in countries, where we've got very strong Sts presence.
Speaker Change: What's happened since then and what's giving you more confidence with some wins with some opportunities that maybe can drive maybe better performance to get that 25% of business into KBR, but maybe even lift the outlook for beyond given what you guys have realigned and given some of the <unk>.
Speaker Change: Our customer engagement and our brand recognition is really strong and that's helpful. So I think I think not move has been well received by our people it's been an easy an easy shift.
Speaker Change: The.
Speaker Change: We had one bad data in terms of taking cost out, which I think the team did a fantastic job. So no dislocation as a consequence.
Speaker Change: Do you have.
And then suddenly I think the customers are seeing the benefit of the of the combined capability in the appropriate markets.
Speaker Change: Thanks, Mike So the realignment has.
Speaker Change: We said was we headed to the end of 2004 was was done.
Speaker Change: That's encouraging Stuart my follow up is for you or for Mark.
Speaker Change: Please to announce that the integration of linguistic substantially done those.
Speaker Change: Looking back to the capital allocation given the dislocation in valuations in the marketplace. When you could talk about.
Speaker Change: Systems of things across that we hadn't achieved when we talked in January so thats kind of behind us.
Speaker Change: So the company has realigned into mission Tech and sustainable Tac was really just the infrastructure piece moving across from the legacy international government into into the STS.
Speaker Change: Maybe acquisition book and maybe as you think about your targets on that leverage and cash flows and timing.
Speaker Change: Is I assume that share repurchase is powder.
Speaker Change: Dry powder in.
Speaker Change: And I think what we're seeing now is just the realization of synergy opportunities the cost exercise that we embarked on we have achieved that we took the $30 million of cost I would tell you what didn't drop to the bottom line because of the.
Speaker Change: Desire to take advantage of that.
Speaker Change: Yes.
Speaker Change: Yes, Michael you picked up the earlier remarks quite clearly and so while there is always an eye toward M&A.
Speaker Change: That we have these reimbursable contracts in the U S, but that's really positioned us nicely for to be competitive on.
I was pretty clear that <unk>.
Speaker Change: Where we are with our outlook, which is very healthy and resilient as Stuart said many times and.
Speaker Change: Across our business.
Speaker Change: Where we are with the valuation.
Speaker Change: And Youll see the reduction in corporate costs as we go forward into next year. So I think that all sets us up nicely. So that's all behind us as well, but I think the main reason we did this was to be aligned in the portfolios.
Speaker Change: Have a bias to do more buybacks and with that our board had authorized a substantial increase in the authorization.
Speaker Change: And because we can naturally lever down from two six to maybe 2122 by year end, just with EBITDA growth, there's really no need.
Speaker Change: Customers may.
Speaker Change: Sure Tyler was aligned to provide solutions to those customers.
Speaker Change: To use cash to pay down debt and achieve our targets, though so we expect to do buybacks.
Speaker Change: And certainly the book of business that we've got coming down the pipe is very exciting.
The Lincoln deal has already given us fantastic wins positioned nicely for us.
Speaker Change: Yeah.
Speaker Change: When we can as the window opens with the capital we have the cash flow outlook, we have for the year.
25 on beyond across the portfolio, particularly in space for us in looking at the product Air Force portfolio with digital enabled labs and things like that that we addressed it.
Speaker Change: I'll add a little bit of excess cash on the balance sheet sitting here as we closed out 2024. So we're certainly bullish on that use of capital going forward in this environment.
Remarks, but also within the sustainable tag in the Middle East the infrastructure portfolio, we have there on down in Australia.
Speaker Change: Thank you. The next question comes from Andy Kaplowitz with Citigroup you May proceed.
Speaker Change: But we do a balance of infrastructure work across defense infrastructure supporting the <unk> program as well as looking at it.
Andy Kaplowitz: Hey, good morning, everyone.
Mark Sopp: Hi, Good morning, Hey, Mark just a little.
Speaker Change: It's what's happening in things like water and transport.
Speaker Change: Good morning.
Speaker Change: Just a little more color on Fps can you maybe color where the demand for ammonia is coming from because it doesn't seem like it would be from AG projects right now and maybe a similar question for energy security and de Carbonization, I think we get the LNG potential pick up but where are the other pockets of growth I know you mentioned middle East spend so maybe thats a lot of it but just I'm trying to.
Speaker Change: Going.
Speaker Change: Really well.
Speaker Change: Very much aligned business model wise.
Speaker Change: Honestly in countries, where we've got very strong Sts presence.
Speaker Change: So our customer engagement and our brand recognition is really strong and that's helpful. So I think I think that move has been well received by our people it's been an easy an easy shift.
Speaker Change: Think about durability.
Speaker Change: Demand environment.
CSN.
Speaker Change: Yes, so thanks, thanks Sandy.
Speaker Change: The.
Speaker Change: We had one bad data in terms of taking cost out, which I think the team did a fantastic job. So no dislocation as a consequence.
Speaker Change: Yes, we do have durability in the STS base I would say.
Speaker Change: You're right, we've got the LNG market, which I think as you said, everyone really understands and understands.
Speaker Change: And then suddenly I think the customers are seeing the benefit of the of the combined capability in the appropriate markets.
Speaker Change: The supply demand dynamics, there and what's happening in the U S.
Speaker Change: That's encouraging Stuart my follow up is for you or for Mark.
Speaker Change: But I think in the broader energy security market were seeing continued activity, we've seen lots happening in the U S. Also around data security on the Trinidad and obviously across the middle East as you rightly picked up on as he tries to try to.
Speaker Change: Looking back to the capital allocation given the dislocation in valuations in the marketplace. When you could talk about.
Speaker Change: The acquisition book and maybe as you think about your targets on that leverage and cash flows and timing.
Speaker Change: Diversify their economies, but really sort of exploit gas in a meaningful way I think gas becoming that transition fuels.
Speaker Change: Is I assume that share repurchase is powder.
Speaker Change: Powder dry powder and.
Speaker Change: As the energy transition piece moves to the right because of affordability challenges in terms of ammonia I think that's very much on.
Speaker Change: Desire to take advantage of that.
Speaker Change: Yes.
Speaker Change: Yes, Michael you picked up the earlier remarks quite clearly and so while there is always an eye toward M&A.
Speaker Change: <unk> play we reinforced the Nashville National operational focus we have in the country focus that really has allowed us to be very solid tailored and what's right for the individual countries and customers within those I think we've talked about.
Speaker Change: I was pretty clear that where we are with our outlook which is.
Speaker Change: Very healthy and resilient as Stuart said, many times and.
Where we are with the valuation.
Speaker Change: Have a bias to do more buybacks and with that our board did authorize a substantial increase in the authorization.
Speaker Change: Places like Kazakhstan and Angola.
Speaker Change: In the global marketplace, and when Youre looking at places like Angola.
And because we can naturally lever down from two six to maybe 2122 by year end just with EBITDA growth there is really no need.
Speaker Change: The government has provided very very attractive prices with gas into the facility as it makes it a highly competitive.
Speaker Change: To use cash to pay down debt and achieve our targets, though so we expect to do buybacks.
Speaker Change: I think that'll be the first of many trains there assuming that dynamic continues.
Speaker Change: Kazakhstan and slashed.
Speaker Change: Major investments into finalizes, therefore, probably in multiple decades.
Speaker Change: When we can as the window opens with the capital that we have the cash flow outlook, we have for the year.
Speaker Change: It's not it's typical.
Speaker Change: And a little bit of excess cash on the balance sheet sitting here as we closed out 2024. So we're certainly bullish on that use of capital going forward in this environment.
Speaker Change: Typical.
Speaker Change: Different countries dynamics that drive the economics of these projects and that's why it's extremely important to everybody. So a global business with a strong footprint.
Speaker Change: Across the globe from a business development on an execution perspective, which we have.
Speaker Change: Thank you. The next question comes from Andy Kaplowitz with Citigroup you May proceed.
Speaker Change: So I think the dynamics are different.
Speaker Change: Okay.
Speaker Change: But.
Andy Kaplowitz: Hey, good morning, everyone.
Speaker Change: But I think nobody global nature I'll go back to my comments again about these multiple pathways to growth.
Andy Kaplowitz: Hi, Good morning, Hey, Mark just a little.
Andy Kaplowitz: Good morning.
Speaker Change: Just a little more color on fts, maybe color, where the demand for ammonia is coming from because it doesn't seem like it would be from AG projects right now maybe a similar question for energy security and de Carbonization, I think we get the LNG potential pick up but what are the other pockets of growth I know you mentioned middle East spend so maybe thats a lot of it but just I'm trying to.
Speaker Change: We've got a portfolio of 70 plus technologies as you know it's not just the media.
Speaker Change: They'll go up and down as companies cycle, what we want to do with their businesses.
Speaker Change: Very helpful. Stuart and then maybe just back to MTS, Mike in Q4 revenue was quite high I think a lot of that was one question, obviously, but did you see any sort of like spending last year something like that before the new administration took hold.
Andy Kaplowitz: Think about durability.
Andy Kaplowitz: Demand environment.
Andy Kaplowitz: CSN.
Andy Kaplowitz: Yes, so thanks, thanks Sandy.
Speaker Change: Yes, we do have durability in the Sds piece I would say.
Speaker Change: We think about bookings for you guys. Obviously timing is now you can always be lumpy, but should we think that bookings might be a little slower for a quarter or two before they pick up or how do you think about that have you seen any <unk> impact so far.
You're right, we've got the LNG market, which I think as you said, if it was really understands and understands.
Speaker Change: The supply demand dynamics, there and what's happening in the U S.
Speaker Change: But I think in the broader energy security market were seeing continued activity, we've seen lots happening in the U S. Also around data security on the Trinidad and obviously across the middle East as you rightly picked up as they try to.
Speaker Change: Do you expect to sandy.
So on doors.
Speaker Change: We have not seen impact at all yet.
Speaker Change: In terms of timing of awards going into next year, we do think there probably will be slower.
Speaker Change: Diversify their economies, but really sort of exploit gas in a meaningful way I think gas becoming.
Speaker Change: <unk> resolution in the <unk>.
Speaker Change: Certainly within the administration that we just won't speculate on that.
Speaker Change: Just confused.
Speaker Change: We do have as we said $1 5 billion, that's under protest and that could come through in the first half of the year, which would obviously make bookings.
Speaker Change: As the energy transition piece moves to the right because of affordability challenges in terms of ammonia I think that's very much on.
Speaker Change: Probably reasonably strong in Q1 Q2, depending on the timing of the resolution of those protests.
Speaker Change: National play, we reinforced the national the National operational focus we have in the country focus that really has allowed us to to be very solid tailored and what's right for the individual countries and customers within those I think we talked about.
Speaker Change: So that's kind of that's kind of where we.
Speaker Change: We sit on that.
Speaker Change: SaaS bookings will be progressive through the year.
Speaker Change: Okay.
Speaker Change: <unk> seen in prior years and international government. Similarly, so.
Speaker Change: Places like Kazakhstan and Angola.
Speaker Change: In the global marketplace, and when Youre looking at places like Angola.
Speaker Change: And I would say Andy that I think we did have a little bit of pickup in tasking.
Speaker Change: The government has provided very very attractive prices with gas into being one of your facilities. It makes it a highly competitive.
Speaker Change: It is not to comment in the fourth quarter with the new CRM in place, but because of the administration change that maybe.
Speaker Change: I think that'll be the first of many trains there assuming that dynamic continues.
Speaker Change: Dynamics about.
Speaker Change: Upcoming slowness with some of the door to rhetoric and so forth there might have been a little bit of push to get things done in the tasking area in the fourth quarter. We had a couple of extra productive days in the fourth quarter as well so that helped a little bit.
Speaker Change: Kazakhstan since first sort of major investments into finalizes, therefore, probably multiple decades.
Speaker Change: It's not it's typical.
Speaker Change: Different countries dynamics that drive the economics of these projects and that's why it's extremely important for everybody.
Speaker Change: I will just further north what Stuart said about no we haven't seen a direct impact of the pace, we haven't seen any.
Speaker Change: The business with a strong footprint.
Speaker Change: Across the globe from a business development and execution capability perspective, which we have.
The adverse collections issues out of the government thus far.
Speaker Change: So we'll see how that goes but where we're seeing status quo at this point in time.
Speaker Change: So I think the dynamics are different.
Speaker Change: But.
Speaker Change: But I think they're very global nature I'll go back to my comments again about this not as a pathway to growth.
Speaker Change: Thank you the.
Speaker Change: Following comes from Sanjay Jain with Keybanc you May proceed.
Speaker Change: We've got a portfolio of 70 plus technologies as you know it's not just the media.
Speaker Change: Yeah.
Speaker Change: Hi, Good morning. Thank you for taking my question. So if I can ask one on home.
Speaker Change: Sure.
Speaker Change: Go up and down as companies cycle, what we want to do with their various businesses.
Speaker Change: That demand.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: Very helpful. Stuart and then maybe just back to MTS, Mike in Q4 revenue was quite high I think a lot of that was one question, obviously, but did you see any sort of like spending last year something like that before the new administration took hold and as we think about bookings for you guys. Obviously timing is.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: Bush started can you pancake them as they move forward.
Thank you.
Speaker Change: Apologize that cut out for us here could you repeat the question if you don't mind.
Speaker Change: Sorry, sorry, let's see if this works, but I was going to ask about the homepage Ram if the domestic Ram is taking a little bit longer can you still pancake the international ramp on top of that as the domestic sketchy before that date.
Speaker Change: <unk>.
Speaker Change: Be lumpy, but should we think the bookings might be a little slower for a quarter or two before they pick up or how do you think about that have you seen any <unk> impact so far or do you expect to sandy.
Speaker Change: So on doors.
Speaker Change: Our view in talking with the customer is that these will occur sequentially and so if domestic pushes out a bit then that could have a carryover effect to international. So we don't see a scenario today, where international will will accelerate in light of a change in pace of domestic.
Speaker Change: We have not seen impact at all yet.
Speaker Change: In terms of timing of awards going into next year, we do think there probably will be slower just the continuing resolution.
Speaker Change: What's happening within the administration that we just won't.
Speaker Change: Speculate on that but we do have as we said $1 5 billion, that's under protest and that could come sooner than the first half of the year, which would obviously.
Speaker Change: It's sequential.
Speaker Change: Okay, and then a quick one on we really appreciate the update that you guys provided.
Speaker Change: Things.
Speaker Change: Probably reasonably strong in Q1 Q2, depending on the timing of the resolution of those protests.
Speaker Change: How should we think about the P&L impact.
Speaker Change: Plant start operation.
Speaker Change: So thats good thats good.
Speaker Change: Where we sit on that.
Speaker Change: So the way to think about this is it's one of our multiple pathways to achieving our growth targets that we've given in our guidance I think it's a very exciting development and we'll give more updates as we get into two operational performance and let's see.
Speaker Change: <unk> bookings will be progressive through the year.
Speaker Change: Okay.
Speaker Change: As we've seen in prior years and international government.
Speaker Change: So.
Andy Kaplowitz: And I would say Andy that I think we did have a little bit of pickup in tasking.
Speaker Change: Australia, unless they go into Japan, so I'll get more into the.
Andy Kaplowitz: That's not to comment in the fourth quarter with the new <unk> in place, but because of the administration change that maybe.
Speaker Change: Mr Bishop facility and put them there.
Speaker Change: It's exciting we've talked a number of times about the number of licenses in the number of projects that are waiting for commercial operations to be declared and certainly heading that way. So it's just another example.
<unk>.
Andy Kaplowitz: Dynamics about.
Andy Kaplowitz: Upcoming slowness with some of the door to rhetoric and so forth there might have been a little bit of a push to get things done in the tasking area in the fourth quarter. We had a couple of extra productive days in the fourth quarter as well so that helped a little bit.
Speaker Change: Of the pathways that we even multimodal multiple pathways, we have to achieve their targets.
And it's exciting.
Speaker Change: And I'll just add that euro is very similar to our other offerings in STS in case this is not well known.
Andy Kaplowitz: I will just further endorsed that Stuart said about.
Andy Kaplowitz: Haven't seen a direct impact of the pace, we haven't seen it.
Speaker Change: But with a kicker because in the case of Euro we are exclusive licensing rights. So theres licensing opportunities Theres also proprietary equipment opportunity our clients that choose to work with us on the industrialization of their plants leveraging that technology and the finance there.
Andy Kaplowitz: And the adverse collections issues out of the government thus far.
Andy Kaplowitz: So we'll see how that goes but where we're seeing status quo at this point in time.
Andy Kaplowitz: Thank you.
Speaker Change: Gentlemen comes from Sanjay Jain with Keybanc you May proceed.
Speaker Change: Hi, Good morning. Thank you for taking my question. So if I can ask one on home.
Speaker Change: Our service offerings like PMC that we can offer two plants under construction.
Speaker Change: And as we've said, we have Barcelona shipped in euro and so.
Speaker Change: So if that demand.
Speaker Change: Okay.
In the future as they become profitable, which is certainly the intention that we participate in that respect as well. So it's multiple economic passengers case, yes, just give more color.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Bush started can you pancake them as they move forward.
Speaker Change: So we apologize.
Speaker Change: Yeah.
Speaker Change: Original sort of what they call statement build.
Speaker Change: Cut out for US here can you repeat the question if you don't mind.
<unk>.
Speaker Change: The whole facility into a module that can be more complicated than that.
Speaker Change: Sorry, sorry, let's see if this works, but I was going to ask about the homepage Ram if the domestic Ram is taking a little bit longer can you still pancake the international ramp on top of that as the domestic sketchy before that date.
Speaker Change: In the yard.
Speaker Change: It means it's safer and it's quicker it's more controllable in terms of schedule.
Speaker Change: Cost.
Speaker Change: But that really we sell as part of our proprietary equipment offerings, so really extending the scope for KBR in future endeavors.
Speaker Change: Our view in talking with the customer is that these will occur sequentially and so if domestic pushes out a bit then that could have a carryover effect to international. So we don't see a scenario today, where international will will accelerate in light of a change of pace of domestic routes.
Speaker Change: That was what was implied on the LG Chem facility, which is probably going to be built to go operational quicker than that.
Speaker Change: Bill facility.
Speaker Change: It's being built.
Speaker Change: So I think we've proven that thesis so it's a very exciting part of our future.
Speaker Change: Sequential.
Speaker Change: Okay, and then a quick one.
Speaker Change: Thank you.
Stuart Brady: No other questions queued I will pass it over to Stuart for you for final remarks.
Speaker Change: Really appreciate the update that you guys provided.
Speaker Change: How should we think about the P&L impact.
Stuart Brady: Thank you very much so in closing today, we're very excited about the possible <unk> in 2025 and beyond of course.
Start operations.
Yeah.
We are confident in our ability to continue creating value for our shareholders and to that end ill leave you with a few key takeaways. So we have completed our multiyear transformation, becoming a leading provider of differentiated innovative upmarket science technology and engineering solutions with large scale unimportant.
Speaker Change: So the way to think about this is it's one of our multiple pathways to achieving our growth targets that we've given our guidance I think it's a very exciting development and we'll give more updates as we get into two operational performance and I will say.
Speaker Change: From Australia, I'm actually going to Japan, so I'll get more into that.
Speaker Change: The <unk> facility and put him there.
Stuart Brady: <unk> global reach.
Stuart Brady: We serve diverse attractive end markets aligned with strong secular growth trends.
Speaker Change: It's exciting we've talked a number of times about the number of licenses in the number of projects that are waiting for commercial operations to be declared and secondly, heading that way. So that's just another example.
Stuart Brady: And we have top talent, combining deep domain expertise proprietary technologies and an unwavering focus on execution with a specialization in complex mission critical work.
Speaker Change: Of the pathways that we even multiple one of the multiple pathways, we have to achieve their targets.
Stuart Brady: We're excellent partners, where we've tried to be.
Speaker Change: And it's exciting.
Speaker Change: And I'll just add that euro is very similar to our other offerings in STS in case this is not well known.
Stuart Brady: Operating in dynamic teams to solve our customers' most complex challenges.
Stuart Brady: Quarter over quarter.
Speaker Change: But when the kicker because.
Stuart Brady: This resulted in recurring long term engagements.
Speaker Change: Case of Euro we are exclusive licensing rights. So theres licensing opportunities Theres also proprietary equipment opportunity our clients that choose to work with us on the industrialization of their plants leveraging that technology as a finance.
Stuart Brady: Over $21 billion of backlog options unimportant, it's 75% plus work under contract going into 2025.
Stuart Brady: Our diversification, a low capital intensity and a disciplined capital allocation generated stable predictable cash flows and long term shareholder returns.
Speaker Change: There are service offerings like PMC that we can offer two plants under construction.
Speaker Change: And as we've said, we have Barcelona shipped in euro and so.
Stuart Brady: We have growth and margin expansions plans in flight. So thank you again for joining us. Thank you again for your interest in KBR and we look forward to updating you again next quarter. Thank.
Speaker Change: In the future as they become profitable, which is certainly the attention that we participate in that respect as well. So it's multiple economic pass in this case, yes, just give more color.
Stuart Brady: Thank you.
Stuart Brady: Yes.
Stuart Brady: This concludes today's conference call. Thank you for your participation you may now disconnect your line.
Speaker Change: <unk>.
Speaker Change: Original sort of what they call statements build.
Speaker Change: Nine.
Speaker Change: The whole facility into a module that can be.
Speaker Change: Pocketed.
Speaker Change: In the yard.
Speaker Change: Which means it's safer and it's quicker it's more controllable in terms of schedule.
Speaker Change: Cost.
Speaker Change: But that really we sell as part of our proprietary equipment offerings, so really extending the scope for KBR in future endeavors.
Speaker Change: That was what was implied on the LG Chem facility, which is probably going to be built to go operational quicker than a stick built facility.
Speaker Change: It's being built.
Speaker Change: So I think we've proven that thesis so it's a very exciting part of our future.
Thank you Nick.
Stuart Brady: Currently no other questions queued I will pass it over to Stuart for you for final remarks.
Stuart Brady: Thank you very much so in closing today, we're very excited about the possible <unk> in 2025 and beyond of course, we.
Stuart Brady: We are confident in our ability to continue creating value for our shareholders and to that end ill leave you with a few key takeaways. So we have completed our multiyear transformation, becoming a leading provider of differentiated innovative upmarket science technology and engineering solutions with large scale unimportant.
Stuart Brady: <unk> global reach.
Stuart Brady: We serve diverse attractive end markets aligned with strong secular growth trends.
Stuart Brady: And we have top talent, combining deep domain expertise proprietary technologies and an unwavering focus on execution with a specialization in complex mission critical work.
Stuart Brady: Excellent partners, where we've tried to be.
Stuart Brady: Operating in dynamic teams to solve our customers' most complex challenges.
Stuart Brady: Quarter over quarter.
Stuart Brady: This resulted in recurring long term engagements.
Stuart Brady: Over $21 billion of backlog options unimportant, it's 75% plus work under contract going into 2025.
Stuart Brady: Our diversification, a low capital intensity and a disciplined capital allocation generated stable predictable cash flows and long term shareholder returns.
Stuart Brady: We have growth and margin expansions plans in flight. So thank you again for joining us. Thank you again for your interest in KBR and we look forward to updating you again next quarter. Thank.
Stuart Brady: Thank you.
Stuart Brady: Okay.
Stuart Brady: This concludes today's conference call. Thank you for your participation you may now disconnect your line.