KBR, Inc.

Good morning. Thank you for attending today's KBR's third quarter 2025 earnings conference call. My name is Megan and I'll be your moderator today. 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 during that time, simply press star one on your telephone keypad. I would now like to pass the conference over to Jamie Dubray, VP of Investor Relations. Please go ahead.

Thank you. Good morning and welcome to KBR's third quarter fiscal 2025 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 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. The 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.

Thanks, Jamie, and good morning, everyone. I will pick up on slide four. As with all meetings at KBR, we begin today with a brief zero-harm moment. Last week, we published our 2024 sustainability report, and I would like to highlight several key achievements from this most recent publication. We are pleased to report an industry-leading health safety security incident rate and over 93% zero harm days. Additionally, 38% of KBS fiscal 2024 revenue, equivalent to $2.9 billion, was allocated towards sustainability initiatives, marking an increase from the $2.5 billion in the previous year. Furthermore, KBR has established and approved science-based near-term targets that align with their net zero objectives. These accomplishments distinguish KBR within our industry. For the third consecutive year, we have been awarded MSCI's top AAA rating, and we recently received a B- rating from ISS ESG Corporate. This is a recognized prime rating and at the top of our peer group. These highlights represent only a portion of our progress, and I encourage you to review the full sustainability report, which is available on our website via the QR code. Now on to slide five. Let me start today with revenue. Revenue was flat in the quarter year on year, and up 5% year to date from the prior year. While we are really encouraged by a strong book to bill of 1.4 times for the quarter, This was back-end weighted with little conversion to revenue in Q3. In MTS, as you know, we have significant contracts awarded to us, which are still under protest, and conversion remains uncertain with the government shutdown environment. In STS, we faced several headwinds in the first half of the year. LNG project development was delayed by prior administration decisions. Oversupply in petrochemicals led to multiple project cancellations and delays. Middle East unrest caused temporary pauses. And new tariffs delayed investment. Additionally, a market shift towards energy affordability resulted in most of our green technology prospects being postponed or cancelled. With that in mind, however, the SDS business has proven remarkably resilient. We have replaced the revenue reductions caused by the above headwinds with geographical expansion. We talked about the Middle East and countries like Iraq last quarter, and we've really doubled down in the better markets like LNG, ammonia for fertilizer, energy affordability, and circularity. STS' book to bill in Q3 was pleasing, but as I said a moment ago, this was back-end weighted. And Mark will discuss the short-term impact of this in a moment. The recent bookings, we think, show a shift in momentum, which we expect to continue in Q4, setting us up nicely heading into 2026. Importantly, we focused on what we can control. We delivered excellent bottom line performance in Q3 across all metrics. Adjusted EBITDA margins were up more than 100 basis point year on year at 12.4%. delivering an adjusted EBITDA of $240 million, up 10%. This was from a combination of delivery excellence, strong commercial management, and prudent cost control. This translated into an adjusted EPS of $1.02, an increase of 21% to 1% year over year. Now cash, really important. Cash was the standard in the quarter with conversion over 130% year-to-date, generating operating cash of $198 million in the quarter and $506 million year-to-date. And this takes us into a guided range for the full year, a terrific performance. Thirdly, our book-to-bill in the quarter in both segments was solid, and we continue to be well-positioned in key markets with a robust pipeline of opportunities awaiting award. In addition, we have several new wins in areas of strategic importance. More on this in a moment. In such volatile times, the quality of the work under contract and the pipeline are clear indicators of future earnings potential and thus worth more detail. Fourth, we'll remind you that circa 40% of KBR's group revenue and over 60% of adjusted EBITDA has zero exposure to the US government spending budgets, and of course, risk related to the shutdown. Within MTSUS, the majority of our portfolio, as we've discussed many times, is comprised of mission essential operational work, many of which are well-funded multi-year programs. This provides short-term resilience to the government shutdown. Mark will provide additional details in the outlook. Fifth, we returned more than $120 million in capital to shareholders this quarter, while managing leverage responsibly. Finally, work to progress the spin-off is on track, which I'll discuss in more detail later. On to slide six and some new contract wins. We were pleased to announce a number of new contract wins during the third quarter, a few of which I will highlight. Let me start with MTS. We were awarded a $2.5 billion ceiling value base period contract, plus another $1 billion in option value to support astronaut health and human performance during space missions. This achievement represents our largest recompete this year. Human performance in space remains a key strategic area for NASA. over the medium term as demonstrated by the significantly higher ceiling value awarded to us. Our booking value for this contract, to be clear, was below $1 billion, which is more consistent with the current run rate. MTS also secured several strategic contracts with the Air Force Research Laboratory utilizing our expertise in cybersecurity, trusted microelectronics, electronic warfare, digital forensics and sensing. These technological solutions are used to enhance situational awareness and therefore strengthen decision-making for our military customers. Really important stuff. MTS was also recently awarded a contract for the U.S. Space Force to deploy a groundbreaking collaborative digital engineering ecosystem called Integration Accelerator. To enhance Space Force decision-making, and accelerate capability deployment. The design implementation for collaborative environment, or DICE, together with integration accelerator will focus on establishing a state-of-the-art testing and training environment for the U.S. Space Force at its national headquarters. Moving to STS. We continue to be a strategic partner for Basra Oil Company and have extended our current contract two more years to continue to perform engineering procurement and construction management services for the Majnoon oil field in Iraq. And that's one of the country's most strategic assets. STS was also awarded a contract by the Abu Dhabi Transmission Company called TACA for program management consultancy services to manage the overall execution of the power and water transmission networks across multiple locations in the UAE to enable data center expansion. SDS was also awarded a front-end engineering design contract for Kuwait Oil Company, that's for the heavy oil program, another strategic energy security project for the nation. Last but not least, SDS was awarded the feed contract for the Abadi onshore LNG project in Indonesia. This is a complex project which has critical significance to national energy security and demonstrates KBR's long-standing track record in excellence in LNG. The book-to-bill for the group in the quarter was 1.4x, with a trailing 12 months of 1.0 times. Backlog and options now stand at more than $23 billion, and this value represents a 13% increase since prior year end and is the highest backlog and option value in KBR's recent history. And I think this clearly provides for the growth capacity contemplated in a long-term view. On to slide seven. Next, I'll update you on our pipeline and award trends in both segments. Currently, MTS has $18 billion in bids pending award with over 75% representing new business opportunities. Some contracts such as HHPC have recently been awarded. while new proposals have also been submitted and are awaiting decisions. Although the government contract environment did show some signs of improvement in Q3, the shutdown has brought decisions to a halt, so more delays should be expected. In addition to the $18 billion, there are now $3 billion in contracts awarded to KBR as the winning bidder that remain under protest, and that's an increase of 50% by 0% from the previous quarter. The major addition was a classified program in Indopaycom, which is now included in this category. Overall, this year, both the amount bid and the amount won have increased compared to the previous year's levels at this time. While short-term conversion has been a challenge, matters under a control to grow backlog, options, and pipeline have progressed well. and we remain confident in our strategic positioning moving forward. MTS itself delivered a 1.4 times book-to-bill in the quarter and ended with $19.7 billion in backlogging options, and that's an increase of almost $2 billion versus the prior quarter. SDS delivered a 1.2 times book-to-bill excluding LNG in the quarter and ended with $3.7 billion in backlog. We currently have over $5 billion in our near-term bid pipeline, and that excludes major LNG. This is up from the second quarter when we reported $4.5 billion. This is a 20 percent increase for our base business. You will also recall last quarter we saw an anticipated circa $1.5 billion in awards expected to be approved during the second half of the year. In this quarter, we secured over $800 million in bookings. which I believe demonstrate the value of the STS global business model, our deep customer relationships, and our laser focus on delivering value-add solutions to solve our customers' challenges. With that, I'll pass it over to Mark.