KBR : Fourth Quarter 2024 Transcript

Published: 2025-02-26 00:37:09 ET KBR

Corrected Transcript

24-Feb-2025

KBR, Inc. (KBR)

Q4 2024 Earnings Call

Total Pages: 20

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KBR, Inc. (KBR)

Corrected Transcript

Q4 2024 Earnings Call

24-Feb-2025

CORPORATE PARTICIPANTS

Jamie DuBray

Mark W. Sopp

Vice President-Investor Relations, KBR, Inc.

Executive Vice President & Chief Financial Officer, KBR, Inc.

Stuart J.B. Bradie

President, Chief Executive Officer & Director, KBR, Inc.

.....................................................................................................................................................................................................................................................................

OTHER PARTICIPANTS

Brent Thielman

Michael S. Dudas

Analyst, D.A. Davidson & Co.

Analyst, Vertical Research Partners LLC

Mariana Pérez Mora

Andrew Kaplowitz

Analyst, Bank of America

Analyst, Citigroup Global Markets, Inc.

Steven Fisher

Sangita Jain

Analyst, UBS Securities LLC

Analyst, KeyBanc Capital Markets, Inc.

Jerry Revich

Analyst, Goldman Sachs & Co. LLC

MANAGEMENT DISCUSSION SECTION

Operator: Good afternoon. Thank you for attending today's KBR's Fourth Quarter and Full Year 2024 Earnings Conference Call. My name is Tamiya, 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. [Operator Instructions]

I would now like to pass the conference over to your host, Jamie DuBray, Vice President of Investor Relations.

Jamie DuBray

Vice President-Investor Relations, KBR, Inc.

Thank you. Good afternoon, and welcome to KBR's fourth quarter and fiscal 2024 earnings call. Joining me are Stuart Bradie, 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 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.com.

This discussion includes forward-looking statements reflecting KBR's views about future events and their potential impact on performance as outlined on slide 2. 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.

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KBR, Inc. (KBR)

Corrected Transcript

Q4 2024 Earnings Call

24-Feb-2025

I will now turn the call over to Stuart.

Stuart J.B. Bradie

President, Chief Executive Officer & Director, KBR, Inc.

Thanks, Jamie. And good afternoon, everyone. I will pick up on slide 4. 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 a Zero Harm program at KBR. Today, I would like to highlight circularity, and give an update on Mura's progress. Mura Technology is the global pioneer of a next-generation advanced plastics recycling technology called Hydro-PRT. And KBR is proud to be Mura's exclusive global licensing partner and preferred engineering partner, and of course, we're an investor in the Hydro-PRT process itself. Now, there are three commercial-scale facilities, all being built almost in parallel, Mura's in Wilton, UK, LG Chem's in Korea, and Mitsubishi's plant in Japan.

Now, the Mura and LG Chemicals plants have had several successful operational runs, and both plants aim for commercial operations by March, with key customers like Dow and Neste looking to incorporate recycled feedstocks to enhance their sustainability in the plastics manufacturing. The facility in Japan is scheduled to come on stream a few months later. Now we're excited about what this means for the circular economy and to KBR, of course. To give you a feel for the positive impact, over the course of the year, the UK facility will recycle the annual plastic packaging waste of approximately 700,000 residents and replacing an equivalent of roughly 100,000 barrels of fossil oil. Quite impressive.

So, onto slide 5 and some key messages. We delivered very strong fourth quarter and full year 2024 performance, which actually exceeded our previous expectations. 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 over the top of our guidance range. Now, this represents double-digit growth of 23% for the quarter, and 11% for the year. Organic growth for the full year was 9%.

We generated strong adjusted EBITDA of $228 million in the quarter, and $870 million for the full year, also at the top of our guidance range. 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. Now, we continue to successfully and methodically execute our growth strategy. We are winning work with new customers and at markets globally, and are continuing to move upmarket with our acquisition of LinQuest.

With our segment realignment and our leadership updates, which were the key topics of our webinar in early January, we are now more agile and better aligned to our markets. We will also highlight our resilient business model and alignment to strong secular growth trends more in a minute. 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, onto slide 6. I'll start with an update on our key contracts and recent wins. Starting with HomeSafe. Following successful test moves in Q4, the ramp increased markedly in January this year, and now we're taking in roughly 300 moves per day from TRANSCOM. 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 in what is a 10-year transformational program. And both HomeSafe and TRANSCOM remain completely committed to a successful transformation.

Over to our joint venture supporting the Plaquemines LNG project. Our customer announced first LNG production in December, as you know, achieving this milestone just 30 months from its final investment decision, which makes Plaquemines LNG one of the fastest greenfield projects ever to be built. Work is progressing well to deliver

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KBR, Inc. (KBR)

Corrected Transcript

Q4 2024 Earnings Call

24-Feb-2025

the fully planned capacity over 2025 and 2026. And lastly, with the executive order now reversing the LNG ban, the Lake Charles LNG project is advancing their offtakes, and limited notice to proceed is anticipated by mid- 2025, with final investment decision expected later in the year.

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. The new administration has emphasized the need for technico- logical advancements in the areas of unmanned systems, hypersonics, microelectronics, and directed energy.

This $445 million contract win for the Department of Defense Joint Mission Environment Test Capability Program, and our $88 million contract win for rapid prototyping aligns nicely with these priorities. And in particular, I think these wins demonstrate expertise in systems design, test, and interoperability.

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 produce fertilizer critical to supporting growing populations. 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 won in 2024 to seven. Lastly, KBR was chosen for several significant engineering and project management roles in the quarter, including Shell's Manatee LNG Project, the Oman LNG Project, and Saudi Aramco's Shaybah 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. In short, our book of business is strong, and we ended the year with a 1.1 times trailing 12-month book- to-bill and over $21 billion in backlog and options. And one of KBR's strengths is that our portfolio offers multiple paths to achieving our growth objectives, allowing us to successfully navigate different macro environments. And I'll go into this more a bit later on.

Onto slide 7. Delivering on our strategy in 2024, so sort of doing what we said we would do. Now, our strong financial performance was supported by execution across the four pillars of our strategy, and we made significant progress on each area over the past year. Firstly, under thrive and expand, we secured a contract for the Lake Charles LNG project, a planned $10 billion-plus project with our partner Technip. By effectively using the Information Analysis Center's Multiple Award Contract vehicle, IAC MAC, we won over $1.5 billion of work as IDIQ, 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.

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 their future vision, including energy and infrastructure. And lastly, our standing bid value awaiting decisions climbed to over $17 billion in MTS, really delivering on our commitment to increase bid volume this year by over 50%-plus.

Second is to deliver innovation. In partnership with GeoLith, we added a new proprietary technology called Pure Lithium (sic) [PureLi] (00:10:45), which enables zero emission direct lithium extraction from produced wastewater, which is a typical byproduct from oil and gas production. We recently announced that this technology was selected by Weardale for their demonstration plant in the UK. With the Naval Information Warfare Center, we are integrating prototype components and designs into new or existing information warfare systems, including command and control systems, intelligence surveillance and reconnaissance systems, and cyber systems.

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KBR, Inc. (KBR)

Corrected Transcript

Q4 2024 Earnings Call

24-Feb-2025

We also launched a digital accelerator program, and completed the standup in connection of our four digital engineering labs in Alabama, Maryland, Virginia, and Pennsylvania. This adds core modeling and simulation capabilities, and we're already seeing on-contract growth across several of our Army, Navy, and Intel customers. And now these are important enablers as the market continues to grow around interconnected systems and data.

Our third pillar is to drive operational excellence globally. 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. And as we described during a special webcast in January, we realigned our segments to Mission Tech and Sustainable Tech with the associated synergy and cost benefits, in so doing, making both segments more self-sufficient.

Our fourth pillar, focused on effective capital deployment, very important. And 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 LinQuest. LinQuest expands KBR's mission expertise, particularly in the military space domain and in the digital arena with advanced interoperability and model-based systems engineering capabilities. Now these capabilities will be in high demand going forward, and this is evidenced by LinQuest's direct award contracts of over $2 billion of available ceiling value over the next four-plus years, so very exciting. Now we've included an additional slide in the appendix with some key details on LinQuest.

So these actions are built upon our differentiated business model, which I'll now cover. Onto slide 8. KBR is positioned for resilience and growth. And thanks to our unique business model and alignment with strong secular growth trends, this really enables multiple pathways to achieving those objectives. Our model focuses on agile leadership, customer-centric, national operations, that's really important in multiple countries across the globe, domain expertise, and elevated technology positioning. And these strengths are supported by a capital-light structure, strong cash flows, and cost discipline leading to resilient financial performance.

Now in the chart, you can see our 2024 adjusted EBITDA mix, showing roughly 60%, 6-0%, comes from non-US government customers, notably from Sustainable Tech, and a sizable business with allied government customers in the UK, Australia, and the Middle East. The remaining 30% EBITDA, 30-plus-percent EBITDA, generation from the US government is concentrated in serving mission-critical, operationally focused, and technology development roles in areas like military space, missile defense, digital warfare, and direct support to our warfighters, all critical.

We believe our business is very well-positioned with the new administration priorities. And most of the NASA work is the literal operations of human and satellite space missions, including those supporting commercial missions, such as SpaceX, Blue Origin, and Axiom. And notably, less than 2% of our adjusted EBITDA relates to federal civilian agencies outside of NASA, so less than 2% opposite fed-civ.

And now let me touch on how KBR is aligned to strong secular growth trends. Onto slide 9. Our strategy is to align with exciting, growing, high-end markets, as you know, where we are differentiated. Now, 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 US defense, we are aligned to mission priorities of the new administration, as we just discussed, particularly our tip-of-the-spear operational focus. In international defense, we're positioned for both resilience and growth from increased international defense spending. And I'll remind you that KBR historically has supported both the UK MoD and NATO in overseas missions.

As we've discussed many times, energy has real momentum and is a global priority, of which KBR is very well- positioned in this market. And infrastructure includes strong tailwinds from broadening industrial base and

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KBR, Inc. (KBR)

Corrected Transcript

Q4 2024 Earnings Call

24-Feb-2025

diversifying economies, particularly in the Middle East. KBR's business model, combined with a differentiation and an alignment to strong secular growth trends really informed our market outlook for fiscal year 2025. And Mark will cover this shortly.

And in fact, with that, I'll turn over to Mark.

Mark W. Sopp

Executive Vice President & Chief Financial Officer, KBR, Inc.

Thank you, Stuart. And good afternoon, everyone. I'm on slide 11 covering Q4 performance. 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 LinQuest acquisition we made in late Q3. Adjusted EBITDA was up 21% with margins at 10.7%. Adjusted EPS was $0.91 in the quarter, that's up 32% over last year. This exceeded the adjusted EBITDA growth rate despite year-over-year interest headwinds driven by favorable Q4 tax adjustments that were within our guided range, favorable year-over-year below-the-line items, like mostly FX, and a lower share count on repurchases over the past 12 months.

Onto slide 12 for the full year. Revenues were strong at $7.7 billion, up 11% versus last year, and that's supported by robust growth across both segments with the additional benefit, of course, of the LinQuest acquisition, which contributed about 2.5 percentage points to the total. Adjusted EBITDA was up 16% with margins increasing 0.5% to 11.2% for the year. This type of positive result, as I always say, starts with excellent program execution, and that certainly was the case. Also, as has been the case all year, Sustainable Tech top line growth of 79% at 20% plus margins is clearly benefiting margins in terms of mix.

Adjusted EPS was $3.34, up 15% versus the prior year, generally in line with the adjusted EBITDA increase, offset by higher interest cost. Taxes were largely consistent year-to-year. 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. Operating cash flows were $462 million for the year, with an OCF conversion of 103% to net income. Late in the year, we did make a voluntary payment of $21 million to prefund our 2025 United Kingdom pension obligation. This 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. The prepayment did result in OCF 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.

Onto slide 13, and our segment performance. First up, with Government Solutions, revenues in Q4 increased 20% to $1.6 billion, with $150 million in adjusted EBITDA, and margins at 9.4%. As you see, all four business units contributed. Defense and Intel revenue growth was particularly strong, as you see, up 33% supported by the LinQuest acquisition and also organic growth. Primary drivers here include military space, missile defense and support of advanced technologies, including hypersonics and digital upgrades on various military platforms. International also performed well with an increase of 20% driven by core UK and Australia defense programs, and healthy increases in infrastructure work in Australia and the Middle East. As a reminder, the infrastructure area will shift to STS in 2025 as part of the realignment we discussed in early January.

Margins were consistent with last year with normal Q4 seasonality due to lower labor utilization. Book-to-bill in the quarter was 0.9 times. While that isn't unusual for Q4, we note significant awards in our favor remain in protest, which hopefully will benefit future quarters. 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.

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KBR, Inc. (KBR)

Corrected Transcript

Q4 2024 Earnings Call

24-Feb-2025

Onto slide 14, Sustainable Tech. Within Sustainable Tech Solutions, revenues in the quarter were up 30% with $108 million in adjusted EBITDA and margins at 20.6%. This is quite remarkable given the softness we saw in this market earlier in the year that you might recall. As Stuart suggested earlier, since the summer, demand has increased for our ammonia, energy security, and various decarbonization offerings. New projects and on-project growth have both contributed significantly. Ammonia technology, program management, consulting services and LNG projects are the main drivers with LNG demand signals, particularly picking up after the US election in November. All these same factors drove a strong book-to-bill performance of 1.3 times. And Q4 margins, as has been the case all year, were consistent with our long-term target of 20-plus percent.

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%. This marks the third consecutive year Sustainable Tech has had double-digit adjusted EBITDA growth. Book-to-bill for the full year was also a strong 1.1 times.

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. We deployed over $1 billion in capital, with about 75% of that attributed to the LinQuest acquisition, and the rest on returning cash to shareholders, primarily through buybacks. With over $1 billion deployed, we ended 2024 with a net leverage of 2.6 times. We expect this leverage ratio to work down as we grow EBITDA in 2025.

Now, I'd like to provide a little bit of clarity on our capital allocation priorities going forward. Our first priority, as you probably expect, is to fund organic growth, and also actions to drive operating excellence. That's number one. Number two, we are targeting a leverage ratio below 2.5x in the current interest rate environment, growth in EBITDA should get us there quite soon. Our next priority is returning capital to shareholders. Within this, we plan to continue buybacks with bias to do more.

Consistent with our growth, we're announcing our board has approved an increase in full replenishment of our stock buyback authorization to $750 million, effective today. We're also committing to maintaining an attractive dividend. 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 by 10% to $0.66 per annum or $0.165 per quarter. Since our first increase in the regular dividend in 2020, the average rate of annual dividend increase has been 13%. 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.

I'll now turn on to slide 16, and our fiscal 2025 guidance. For fiscal 2025, we're 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. We anticipate adjusted EBITDA of $950 million to $990 million, an increase of 11% at the midpoint. We expect adjusted EPS of $3.71 to $3.95, representing an increase of approximately 15% at the midpoint. And lastly, for operating cash flows, we expect a range of $500 million to $550 million, up 14% at the midpoint. CapEx is expected to be between $50 million and $65 million for the year, and our projected effective tax rate is 25% to 27%. Finally, we are expecting phasing of adjusted EPS to be 47% in the first half, 53% in the second half. And with those objectives for 2025, we are certainly progressing well towards the 2027 targets issued in our May 2024 Investor Day.

Now, our guidance does include key assumptions, and I think those are worth highlighting given the current political and economic environment. First, as Stuart said earlier, we believe the types of national security, space and operations programs that we support will continue to be depended upon and demanded by our global customers, including the US government. We are accordingly assuming all material programs we currently support remain in place. If that changes materially, we'll certainly provide an update as appropriate. We believe

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KBR, Inc. (KBR)

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Q4 2024 Earnings Call

24-Feb-2025

there is significant probability of a full year continuing resolution for the US government fiscal 2025, but assume funding and tasking, including on-contract growth for mission-critical national security operations and modernization programs remains intact.

As we had previously communicated, 2025 will be a year in which HomeSafe volumes ramp up considerably. We're assuming HomeSafe continues to ramp, but not at the full domestic move's pace for the peak summer season. Our estimated revenue range of $300 million to $500 million for the year. This compares to less than $50 million in 2024, so quite a contributor to growth. We are not contemplating material effects from some the proposed tariffs. Our current business levels in Mexico, Canada and China are not material. And finally, we're expecting interest rates and foreign exchange rates to remain static from where we are today.

So, in closing, our plan for 2025 is consistent with the long-term targets we set at Investor Day, and we do so with confidence, strong growth momentum, and a very dedicated global team.

With that, I'll turn it back to Stuart.

Stuart J.B. Bradie

President, Chief Executive Officer & Director, KBR, Inc.

Thanks, Mark. I'm on slide 17 with some key takeaways. Firstly, strong fourth quarter and fiscal year 2024 results with double-digit growth, margin expansion, and book-to-bill of 1.1 times. We delivered on a strategy in fiscal year 2024, as we discussed earlier, to move upmarket and position in areas of differentiation. I think we demonstrated a diversified portfolio and a resilient business model, and with more than 60% of our adjusted EBITDA generated from non-US government customers. We're 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.

With that, we are happy to take your questions, and I'll hand the call back to the operator. Thank you. Hello?

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KBR, Inc. (KBR)

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Q4 2024 Earnings Call

24-Feb-2025

QUESTION AND ANSWER SECTION

Operator: Thank you. We will now begin the question-and-answer session. [Operator Instructions] The first comes from Brent Thielman with D.A. Davidson. You may proceed.

Brent Thielman

Analyst, D.A. Davidson & Co.

Hey, great. Thanks, and congrats on a great finish to the year. I guess maybe a question for Mark, just in terms of the initial revenue outlook here for 2025, call it up $1.1 billion, $1.2 billion at the midpoint. I think I heard you call out $300 million to $500 million from HomeSafe. Did you specify what you anticipated from LinQuest in 2025? And maybe just a little further color in terms of how that integration is going.

Mark W. Sopp

Executive Vice President & Chief Financial Officer, KBR, Inc.

Great, Brent. Well, first, thanks for tuning in, and thanks for great question. So, the revenue guide, $8.7 billion to $9.1 billion represents growth 15% at the midpoint. We talked about that in the prepared remarks. Of that, you mentioned the HomeSafe number, that's roughly 5 percentage points of the growth. LinQuest is a similar number. It's about inorganic additional $400 million to the 2025 numbers running very consistently with our original expectations ballpark $600 million per year. Really performing great. The culture, as we said many times before, couldn't be better. The BD teams are collaborating to really go after new interesting work, some of which we've already won, quite a bit of which is still in the pipeline. And this is all at good margins as well as we set forth to do. So, we really couldn't be happier with the status of the team, the integration, and how they are contributing to KBR's set of capabilities.

Brent Thielman

Analyst, D.A. Davidson & Co.

Perfect. Thanks, Mark. And then, I guess my follow-up would just be, I mean, obviously, a lot of success here with Plaquemines hit some critical milestones here. Just curious how that - if that is opening up discussions maybe with others outside of Lake Charles, which we know we're waiting for FID there, but maybe the tempo of discussions beyond that, just with the great success and approach you've had with Plaquemines here. Thank you.

Stuart J.B. Bradie

President, Chief Executive Officer & Director, KBR, Inc.

Yeah. Good question. I think we've talked a little bit in the prepared remarks about the outlook for LNG. I think the world is telling us there's going to be a gap of a couple of hundred million tons of LNG over certainly through to 2030 and beyond. So, there's a lot of activity. We're seeing a lot of early engagement in the LNG market from multiple customers, some are new market entries, some are older projects that are being revived as a consequence of the new administration's focus in energy security. So, I think it's going to be a very buoyant part of our future. We're seeing operators with facilities that are operating today looking at expansions and debottlenecking to produce more LNG, as you would expect.

So, I think it's a very exciting time to be in that market, and certainly delivering LNG, and so certainly right up there in terms of record time from FID to first LNG, and Plaquemines sets us in a very good position, particularly as we understand the current labor force and all the current supply chains, how it works, et cetera. So, yeah, we're in a good shape there. Thank you.

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KBR, Inc. (KBR)

Corrected Transcript

Q4 2024 Earnings Call

24-Feb-2025

Brent Thielman

Analyst, D.A. Davidson & Co.

Thank you.

Operator: Thank you. The next question comes from Mariana Pérez Mora with Bank of America. You may proceed.

Mariana Pérez Mora

Analyst, Bank of America

Good afternoon, everyone, or good morning, as it corresponds. 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?

Stuart J.B. Bradie

President, Chief Executive Officer & Director, KBR, Inc.

Okay. International is a big context, because our - people think of that on the Government side, but it's also in the Sustainable Technology side for us. I think Mark was pretty clear in terms of growth as it relates to LinQuest and as it relates to HomeSafe, and we've taken a very balanced view across the rest of the MTS portfolio, particularly with continuing resolutions expected, et cetera. So, I think that's prudent, and I think it's quite balanced in the way we've approached that. The International Government markets we're seeing increased spending, of course, from governments. There's a lot of noise in Europe, as you may have seen, from 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, believe it or not, which is why Mariana said depending, and this sort of especially in the morning here, and we're done visiting our businesses here, and the government and customers down here. And the market down here is looking very attractive, both in the infrastructure and in the government side. We've got a very high-end digitally enabled business in Australia, so we're expecting pretty good growth going forward with our business over multiple years, in fact, that's what's in the pipeline.

So, when I look at the Sustainable Tech business, we talked about LNG as it relates. I think most people thinking about the US, but we are seeing increased activity in the Middle East, and we covered a little bit of that in the prepared remarks. But also, we're seeing Asia starting to take off as well. But importantly, adopting, I guess, a risk model that suits our appetite. So, not your traditional warrants or BPC, which I think has proven foray to many companies over the years. And of course, we guided that many years ago, I think properly. So, that's just stood us in very good stead. But the Global South, the growth in energy is demand is there.

I think the Middle East, I think we're seeing increases in Asia, our Singapore business, for example, is very, very busy. But the Middle East plays an important role, not just in the Middle East itself, but we're growing double-digit across those many countries in terms of our presence, but also the larger projects that are executing in our technical hubs in whether at Houston and to Chennai. So, we're seeing lots of activity outside the US, which is why we wanted to reinforce on multiple pathways that we have to hit our growth. There'll be some ups, some downs, I'm sure not everything will be perfect, but I think having those multiple pathways is proven in the past that we're very resilient, and that's why we talk about it quite a bit. So, I think we're in good shape going forward.

Mariana Pérez Mora

Analyst, Bank of America

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KBR Inc. published this content on February 26, 2025, and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on February 26, 2025 at 05:36:54.486.