KBR, Inc.

Ladies and gentlemen, please stand by. Good day and welcome to the KBR Inc. Second Quarter 2021 Earnings Conference Call. This call is being recorded. As a reminder, your lines will be in a listen-only mode for the duration of the call. There will be a question and answer session immediately following prepared remarks. You will receive instructions at that time. For opening remarks and introductions, I would like to turn the call over to Alison Vasquez. Please go ahead.

Good morning, and thank you for attending KBR's second quarter 2021 earnings call. Joining me today 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 then open the call for your questions. Today's earnings presentation is available on the investor section of our website at kbr.com. This discussion includes forward-looking statements reflecting KBR's views about future events and their potential impact on performance as outlined on slide two. These matters involve risks and uncertainties that could cause actual results to differ significantly from these forward-looking statements. These risks are discussed in our most recent Form 10-K available on our website. I will now turn the call over to Stuart.

Thank you, Alison, and thank you for your interest in KBR and joining us today. I'll actually start on slide five because you've seen slide four many times. Now, we've presented on a number of sustainability topics over recent times, and I'm proud to report we continue to make excellent progress across all of our sustainability program pillars. And thus, our ESG story is not only resilient but strengthening. And as you will see later, it's very, very aligned with shareholder value, a key differentiator for KBR. All that said, I think it's really important to periodically come back to basics and look at our core HSSE performance. In this changed world, we are still employing best practice, and we're really still doing that. And are we ensuring we're looking after ourselves and those around us in the same way we did pre-COVID? So driving the expectation that zero harm is achievable through our organization has delivered meaningful results as outlined here, and you've seen that before. But this belief remains a core within our values. And as you can see from the stats, our safety performance was actually exemplary even through COVID, which was a time when our people were, of course, distracted by COVID itself. We couldn't get the level of leadership or visible leaderships. and some cases rotations to bases, et cetera, and sites across the world. And, of course, our people, like everyone else, had to adapt to new ways of working. And priorities changed as the world changed, with more emphasis on things like mental fitness, for example. So, really, these results are simply the outcome of our strong culture and our people's commitment. And, really, it's an amazing performance. So a big thank you from me to our people across the world you really do make a difference every day. As a people company that aspires to live up to our values, I hope this resonates. So on to slide six. This slide tells the facts and is typically, as is our culture, understated. But let's face it, this was an outstanding quarter, perhaps even a banger. And after a brilliant start to 2021 in Q1, our year-to-date performance has been absolutely terrific. The team has done a brilliant job across every metric, with adjusted EPS coming in above expectation, with tracking to the upper end of our range. which, while I remind you, is over 20% increase over 2020 at the midpoint. Double-digit revenue growth, while exiting lower margin volume work, is no small feat. And this really, in turn, has delivered outstanding EBITDA performance, delivering EBITDA growth of almost 50%. It really reflects a strong delivery of bumping up margins, executing on strategy by exiting commodity services, and really focusing on differentiated solutions while retiring uncertainty and managing risk as we closed out some older projects. Cash management and resulting collections was again above expectation. Helped also with favorable project resolutions, but a great result nonetheless. And great stuff there. You've had me talk about winning the right work many, many times, and this has come through in the quarter.