KBR, Inc.

Ladies and gentlemen, we do apologize for that delay, and I'll turn the call over now to Allison Vasquez, Vice President of Investor Relations. Please go ahead.

Thank you, Orlando. Good morning, and thank you for attending KBR's fourth quarter and fiscal year 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 the year 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 as discussed in our most recent Form 10-K, also available on our website. I will now turn the call over to Stuart.

Thank you, Alison, and thank you all for joining us and for your interest in KBR. I will start on slide four. You've seen these before. Here are the ESG pillars of a zero harm program. And I think year ends are a good time to look back. And I'm pleased to report that we've made good progress across each of the pillars as we move towards our net zero goal. I've highlighted some key data points on slide five, which we'll touch on now. And these really build on the inclusion and diversity metrics we spotlighted last quarter. We're very proud to have achieved carbon neutrality for a second consecutive year on a path towards net zero carbon by 2030. From a health and safety perspective, we again had a stellar year and we continue to set the gold standard for zero harm days and incident rates. And our people are doing some amazing stuff, really great things across the communities in which we live and work, a really core part of who KBR is. But as I've said many, many times at KBR, our commitment to sustainability goes beyond and includes leveraging our IP and expertise to help others achieve their sustainability goals. thus creating value for all our stakeholders. And this is evidenced in over 30% of our revenue base that is directly linked to sustainability. Our people-centered, zero-harm culture is at the heart of KBR, and it's been really, really rewarding for our people to see many external recognitions of our progress in these important areas, some of which we've included here. I think a key takeaway here of these unsolicited recognitions, and they're really, really helpful in both retention and recruitment. These are only a few highlights for us from our sustainability report, which you know was issued in late 21. With ESG increasing in importance across the investment community, and in fact the world at large, I would encourage you to read our sustainability report, which of course is on our website. as it not only describes in detail the importance of ESG at KBR and our culture, but it also showcases that ESG at KBR aligns with shareholder value. So on to slide six and some highlights and key takeaways. I'm going to start by talking about KBR and some distinct differentiators that have served us very, very well for many years, again in Q4 and, of course, throughout 2021 and beyond. Firstly, we have a significant base load of long-term contracts across our portfolio, both domestically and importantly, internationally. And that allows us to have confidence in long-term targets and avoid downside volatility. Our people are embedded in mission-critical activities, doing things that really, really matter. Secondly, our international footprint again gives greater diversity and mitigates downside volatility. Thirdly, a sustainable tech business is a true growth engine and hugely margin accretive, as you know. And I think we've proven this in 2021. And fourthly, strategically, our businesses are positioned to take advantage of increased spending and market tailwinds. And finally, our people and culture, as far as I'm concerned, are simply amazing. And our people deliver quarter after quarter. So why do I highlight these differentiators? Because regardless of COVID, CR, labor market, geopolitical shifts, our significantly de-risked business model and our people have proven resilient consistently. In Q4, we performed. In 2021, we performed across the core business, delivering growth, margin improvement, and importantly, stellar cash. There's been quite a bit of discussion on OAW and for good reason, but I'd like to reiterate that our core business really performed. On OAW itself, which was a Herculean effort and a significant humanitarian mission that we're all super, super proud of at KBR, this was in line with expectation. Our ability to ramp up, to mobilize, and then demobilize complex and sizable supply chains very rapidly and deliver in high pressure environments is a real value add to our customers, the missions we serve, and of course, our shareholders. So in short, 2021 was a strong year. But as we know, that is now history. And you are more interested in tomorrow. I think a good indicator of how the business will perform tomorrow is, of course, book to bill. Our bookings were strong across government, sustainable technology solutions as a whole, and especially in heritage tech, which is quite telling, as you're aware. The quality of the work we are winning is aligned with our shift to higher end, differentiated and margin accretive work, so we're very, very pleased. More detail on this in a sec, but this all lines up to underscoring continued momentum into 22 and beyond. With strong cash generation and a healthy balance sheet, capital deployment is, of course, a priority. And I think 2021 was a model for balance across organic growth, M&A, and return of capital to shareholders with expanded dividends and continued share repurchases. On the M&A front, I actually just spent a week traveling across the UK, meeting our new colleagues at Fraser Nash, which we acquired, if you remember, last October. This business has an amazing brand and even more amazing culture of technical expertise. with a collaborative model that really delivers innovation in ways I think that can make all of KBR better. More on this in a moment. And we head into 2022 with significant amount of work under contract, well over 70%, with growth, earnings and cash all in line with our 2025 targets. Obviously more on guidance later from Mark, but 22 is shaping up to be a great year also. So on to slide seven and the outlook for government solutions. On the left, there's really nothing new. The spending priorities and investment areas remain as per the first bullet and all for the reasons we have discussed recently. We do not see these changing anytime soon, especially with heightening tensions internationally. And while it feels a little bit early to talk about 23 defence budgets in the midst of a 22 CR, Early indications based on reports last week indicate a national defense budget that could top $800 billion, which includes a nice 4% bump for DoD, which is great. If the spending priorities are a leading indicator, then the bookings in those areas are, of course, the lagging indicators, really proving out these priorities. As you can see, in 2021, award value plus options for government solutions was $6.7 billion, with a Q4 book to bill a strong 1.3. Some highlights through 21 just to give you a feel for the types of work we are winning. In our defense systems engineering business, we talk a lot about contract vehicles that really facilitate getting onto contract early for critical high-end work. IAC-MAC, which we've talked about a lot, is a great example Multiple awards, mainly due to size, et cetera, we don't really talk about individually. But collectively on this contract vehicle alone, we were awarded over $800 million in 2021. And that was similar in 2020 and certainly more to come in 2022. So I think a great demonstration there. Strategically, we moved upmarket in the UK with Fraser Nash. And this is at a time of change for the UK MOD as it comes to terms with Brexit, cyber, and importantly, the changing threat environment. The pipeline in Fraser Nash is looking really, really good for 2022. Our science and space business had a stellar year, delivering across the portfolio in civil and commercial space, health and human performance, and mission IT, with strong on-contract growth and margin performance. And of course, we want some interesting new work along the way, including a significant multi-year contract to provide high-end engineering services for space flight and ground systems, won by KBRJV. There's actually a number of bids in flight at the moment as we head into 22 due for award. We could, of course, not fail to mention OAW in the context of 2021, but in 2022, the ramp down has been as quick as the ramp up. if not quicker, as families and individuals have been placed into society by state. Our guidance for 2022 will include an OEW tail, but it's not material. And of course, the directed energy program advanced well through the year and continues into 22, and I'm sure there's more to come as we progress through the year. So on to slide eight, and we'll touch on the STS market outlook. Again, nothing I suspect you have not seen here. The market drivers are robust, and recent activity levels in ammonia in particular were very high, where KBR actually won all the announced Greenfield Awards we bid in 21, with bookings across the green, blue, and grey ammonia landscape just terrific. And a strong and growing pipeline of pursuits gives us great confidence into the future. Political will. and policy around climate change, not to mention societal pressure is real and not going away. As we mentioned last quarter, the increase in oil and gas prices recognizes the supply-demand imbalance and means increased spending capacity for traditional energy companies, and I'm sure lots have been talking about that. This allows clients, of course, to restart capital projects, and we're seeing that, and increase investments to decarbonize, improve energy efficiency, improve end product flexibility, and invest in energy transition projects, all of which are bang on KBR's wheelhouse of technology and expertise. With over $1 billion in bookings over the year and a Q4 book to bill of 1.1 across the STS portfolio, this sets us up nicely for double digit growth in 22, all in line with our targets. Now, remember, we had 150 million of low-margin reimbursable EPCs still being worked off in 2021 that make this book-to-bill even more impressive. As a strong indicator of continued high-end growth with increasing margins, the book-to-bill for Heritage Tech was a terrific 1.4 in Q4. As we've said often, the activity levels across the portfolio have and continue to be high. whether that be in plastics recycling, which has actually delivered more opportunities than we expected, to olefins and green refining, where we have won significant multi-year work, to high-end engineering in areas like hydrogen and decarbonization. The transition of this business, its focus on sustainability and the resultant performance in 2021 have frankly been amazing, but it's only the beginnings. And this takes us nicely onto slide nine. Our 2021 awards and group book to build at 1.2 and Q4 are a good near-term indicator. But for the longer term, we of course need to look at the pipeline of opportunities. So does the pipeline match the outlook? And you can see on the slide here that hopefully the scale, the lack of concentration risk, multiple opportunities that are $100 million plus, And a sizable cadre of needle movers over a billion dollars proves this out. Oh, and to be clear, our pipeline and our booking numbers exclude the HomeSafe Alliance, which you're aware is under protest. So lots to look forward to. With our performance in 2021, which is terrific, the growth and resiliency of our core business, our hugely differentiated large base load of work, the robust market outlook for our specific areas of business, a strong book to build, and pipeline, we once more reaffirm our 25 targets. So with that, I will now hand over to Mark, who will take you through the numbers in a bit more detail, cover capital deployment, and of course, the detailed guide for 2022. Mark. Great. Thank you, Stuart.