KBR, Inc.

Hello everyone and welcome to the KBR Inc third quarter 2022 earnings conference call. We will begin shortly. If you'd like to register a question ready for the Q&A, please press star followed by one on your telephone keypads. Please note that we'll be taking one question and one follow up from each attendee. Thank you. Thank you. Thank you. Hello everyone and welcome to the KBR Inc third quarter 2022 earnings conference call. My name is Charlie and I'll be coordinating the call today. You will have the opportunity to ask a question at the end of the presentation. If you'd like to register a question, please press star followed by one on your telephone keypad. Please note that we'll be taking one question and one follow-up from each attendee. I'll now hand over to your host, Jamie Dubre to begin. Jamie, please go ahead.

Good morning and welcome to KBR's third quarter 2022 earnings call. First, I'd like to introduce myself. I'm Jamie Debray, the new Vice President of Investor Relations for KBR, taking over from Allison, who's moved into a leadership role in our sustainable technology business. I'm excited to be here and for the opportunity to serve you. Joining me are Stuart Brady, President and Chief Executive Officer, as well as Mark Sopp, Executive Vice President and Chief Financial Officer. Stuart and Mark will provide highlights from the quarter and then open the call for your questions. 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 available on our website. 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.

Thank you Jamie and welcome to the KBR team and thank you all for joining us this morning and of course in your interest in KBR. Now I would be remiss if I also didn't take the opportunity to thank Alison. She's done a terrific job for us over the last few years as you all have experienced and know and she goes on to bigger and better things within KBR. Now onto slide four. Now you've seen this slide for several years now. The slide depicts a zero harm program which has 10 pillars across the ESG and sustainability spectrum. Now these 10 pillars and the underlying behaviors that make up the program and make it very successful are really, really important to our people and are an integral part of our values and of course our culture. We have incredible people at KBR and every year The amazing work they do in this area is captured in our sustainability report, which takes us nicely onto slide five. This year's report has recently been published and is available on our website. Some key highlights from this year's report are shown on the slide. Obviously not the full report, but just some key highlights. I won't read them all out as they're pretty self-explanatory. But the key takeaway is that our commitment to strong ESG performance is unwavering. And our focus on looking after our people, the environment, and communities where we live and work, inclusion and diversity, and being a socially responsible company with strong governance is evident. We will do all this while delivering shareholder value through the work that we do, which I think is a clear differentiator. And this leads me nicely onto slide six and the quarter highlights. Now today's presentation I think will be relatively quick as Q3 was a clean quarter. Now Mark will give you details in a moment, but in short, our revenue growth XOEW was solid in double digits with aligned earnings growth. Execution was once again terrific, resulting in strong margin performance And our free cash conversion was well above one, so a really, really strong performance. Trailing 12 months book to bill was 1.3 for the whole group, with once again STS outpacing. We continued with our balanced capital deployment strategy. Over and above the quarterly dividend, we closed on the Veeam acquisition, which is in the UK, enhancing our capabilities in digital transformation. and we repurchased about $50 million of our shares in the quarter. That's about 125 million year to date. As you may recall, we overperformed in Q1 and raised guidance. We also exceeded in Q2 and again in Q3, both in EPS and cash, and thus we will be raising guidance again today in both. More on that later. Now onto slide seven. The market in STS has several tailwinds, important long-term themes that continue to be at the forefront globally. The energy trilemma of energy security, decarbonization, and high energy prices and affordability is a reality. And the outlook is strong, especially with governments like the US introducing legislation that incentivizes the development of more sustainable projects in areas like hydrogen. which I believe you're already aware we're wholeheartedly involved with companies like Woodside here in the US already. The market conditions are reflected in the book to bill. And I'll just recap, booked a bill in Q1 for SDS was 1.3, in Q2 was 3.6, yes, 3.6, and in Q3, 1.4, which gives just under 2, 1.9 for the trailing 12 months. Amazing performance there, and I think it really demonstrates the strength of that market and our position within it. Energy security was very much the theme in our Q2 earnings presentation. and the activity and pipeline in this area continues to be very robust. However, this quarter we decided to highlight the decarbonization themes and how these are translating into growing demand and backlog for KBR. Blue ammonia in the US, plastics recycling in Korea, green ammonia with associated carbon neutrality in Norway, and a move into the technology realm in carbon capture. Our work under contract is solid for the year, and our EBITDA and earnings momentum into 23 and beyond is very, very exciting. Now on to slide eight. The GS outlook has not changed too much since last quarter. National security, defense modernization, cyber, and space superiority prioritization, all areas of focus for KBR. emerging technologies and innovation are key in areas like cyber science, AI, directed energy and again KBR is very well positioned as you're well aware. Budget requests in the US and increased commitments in the UK are both positive and with the backdrop of the ongoing conflict in Ukraine continuing and additional funding committed to support that mission. All very strong thematics. Our pipeline remains very, very strong, albeit award timings are actually quite difficult to predict, particularly in the US. This is reflected in our overall book-to-bill, which is 1.5 in Q2 and 0.8 in Q3, so you see quite lumpy in terms of timing of awards. I think the trailing 12 months is a much better guide, which stands at one across all of GS. The international business continues to perform really, really well, and bookings of Fraser Nash continue to be strongly aligned with UK priorities and budget increases. The US continuing resolution is not expected to have a material impact to performance, given our bedrock of business and differentiation with our international portfolio. Similar to STS, the focus is on execution, and on positioning for 23 and beyond, given the high level of work under contract for this year. We have highlighted some key wins from the quarter, which again reflect the market outlook comments and demonstrates, I believe, the enhanced capabilities and the agility required to be successful today. A new sizeable win under IACMAC to digitize and modernize analog systems with a modular open system architecture solution for vertical lift aircraft. I'm particularly excited about this win as it was hotly competed under the IACMAC structure and KBR excelled on technical differentiation. Additional highlights this quarter include a cyber and digitalization win in the UK as Prime. The new spacesuit went to return to the moon with Axiom. We are a key technology and capability team member. And selection of Alexander JV as one of five who now have a hunting license across R&D of hardware, systems, and software to enable scientific and technical intelligence for the National Air and Space Intelligence Center. Absolutely incredible programs. All exciting and very much aligned with a thematic of we do things that matter. and this really, really resonates with our people at KBR. I will now hand over to Mark, who will take you through the numbers in more detail, and of course, the guidance.