Good morning and thank you for attending KBR’s second quarter 2021 earnings call. Joining me today 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 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 our 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 5, because you’ve seen Slide 4 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 that’s our ESG story; it is not only resilient but strengthening. And as you will see later, it’s 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 changing world, we are still employing best practices, and we’re really still doing that. And now we ensure 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 core within our values. And as you can see from the stats, our safety performance was 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 leadership in some cases, rotations to bases, etc., and sites across the world. And of course, our people, like everyone else, had to adapt to new ways of working. And priorities changed; 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 6. This slide tells the size and is typically as our culture understated. But let’s face it, this was an outstanding quarter, perhaps even a banner one. 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 expectations. We’re tracking to the upper end of our range, which I will remind you is over a 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%. That really reflects a strong delivery, bumping up margins, executing on strategy by extending 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 were again above expectations. Help also with favorable project resolutions, but a great result nonetheless. And we’re bumping up cash guidance as a result. Great stuff there. We have talked about winning the right work many, many times, and this has come through in the quarter — a strong bookings quarter with a book-to-bill of 1.1, but as you’ll see later, the results, including option years, were even better. Bookings in our heritage technology were 1.9 million, clearly while the other separate call out and multiple quarters of outperformance in this area. We also made good progress on a number of legacy matters, including settlement discussions with a client on a project. This is all non-cash, and I’ll say that again, this is all non-cash unreleased to matches with the client only. So to be clear, as it pertains to the combined cycle power plant or CCPP, there is no change whatsoever; and Mark will cover this in a bit more detail later. On to Slide 7. The outlook for our Government Solutions business across the world remains favorable. This is, of course, reflected in our results, but also in our bookings, and a few are highlighted on the right-hand side of the slide. Our pipeline, which we’ll present in a moment, is also reflective of the strong market. Now, we know there’s a lot of interest in our directed energy program. And we can’t say a lot, but I will highlight that the shoot-off at Fort Sill a few weeks ago went very well. But more to come on that front later. There was, of course, more clarity on the 2022 budget and the priority areas that the Senate and House are not — as these coalesce around their recommendations, it was pleasing to confirm that our key strategic areas continued to be supported. And we remain very well positioned opposite national security priorities, as we discussed previously. Budgets were up as expected, but the NASA budget was a positive surprise with a larger than expected increase, which really underpins our continued momentum in our science and space business. They had a very strong book-to-bill in the quarter also. More to come, of course, from the infrastructure plan as it makes its way through government, and what this means for KBR. But for what we can see today, this will only add more wind to our sails. Internationally, increased spending in the UK and Australia continues. Overall, international GS grew double-digit in the quarter just over 10%, but Australia continued to outpace. So in summary, we remain on track to perform well in 2021, but beyond 2021, also until our 2025 targets. So all good there. On to Slide 8. The outlook for Sustainable Tech continues to look really positive. This, of course, has been reflected in our bookings. We have again highlighted a few recent wins on the right-hand side. It’s great to see traction in the plastics recycling area, and in the digital maintenance area along with ongoing demand across our portfolio. Our whole portfolio is performing exceptionally well. The drivers are well known and remain valid. I won’t read all of these, but the level of activity has increased quite a bit in the last two to three months. And of course, the climate change agenda in the U.S. will be layered on top of this as the various stimulus plans get approved. I’ve used the expression before of a perfect storm with all areas firing, and this really continues to be the case. So again, very strong market dynamics for Sustainable Tech. On to Slide 9. So, how does all this talk and rhetoric translate into numbers? And how can we be confident that the momentum will continue as we progress towards not only 2021 but also our 2025 targets? In Q2, we secured $1.9 billion in awards and options, bringing total secured backlog to deliver in 2021 to over 90%. So 2021 is looking really good. Now remember, we do not include the options in our book-to-bill. So excluding options, book-to-bill was 1.1 for the quarter, so great standalone results. But when you include options, this performance was even more impressive, but importantly, prudent work into the secured hopper beyond 2021. So really a great guide to how we are traveling beyond the current year. From a delivery perspective and a client satisfaction perspective, leading to good award fees, etc. Really, that also drives margins, of course, but the key metric for me is the recompete win rate. If you’re truly delivering and adding value, your recompete win rate should be high. And you can see ours on the right-hand side of this slide is really impressive. Now, we’ve talked about the scale of the pipeline and balance across the pipeline previously, really leading to a lack of concentration risk, etc. And then we have a number of needle movers in the year with low recompete. These are all strong facts, and continue. So in summary, a great quarter across all metrics with strong bookings in the right areas and a robust and attractive pipeline to ensure our momentum continues. Now, I’ll hand over to Mark, who will take us through the numbers in more detail, cover capital deployment, and of course, give you updated guidance.

Great, thank you, Stuart once again, and I will pick up on Slide 11. The snapshot of our core financial performance in Q2 2021 shows terrific progress toward executing our strategy and also delivering on our long-term goals. We produced strong top-line growth, reflecting how we have positioned KBR to tap quite attractive end markets. Revenues exceeded $1.5 billion with double-digit growth year-over-year. As Stuart said, new business awards and options amounted to $1.9 billion, further signaling strength in our offerings and also our end markets momentum. Adjusted EBITDA came in at $156 million, that’s up almost 50% from last year, with EBITDA margins at 10%, and also with both segments at or above targeted profit margin levels. This translated quite directly to the bottom line with adjusted EPS up about 50% over Q2 last year, at $0.58 for the quarter. Organic growth in Government Solutions, accretive acquisitions, and higher margins are driving this level of growth and profitability. We’re also pleased to report solid cash flow and free cash flow conversion of about 100% year-to-date and 120% for Q2, nicely at or above our targets. Year-to-date adjusted operating cash flow of $165 million and free cash flow of about $150 million is above our case for the first half. And as I’ll cover shortly, the basis for bumping up guidance for the year. Continued strong bookings and the Centauri acquisition are driving the nice trend you see here in year-over-year backlog growth. The total backlog and option value of $20 billion represents over 3 times our current annual revenue run rate, which as we have said before demonstrates the strong visibility in our forward book of business and enables good confidence in our growth outlook and also our long-term targets. There’s, of course, a very large pipeline of new opportunities on top of that, which Stuart presented just a moment ago. On to Slide 12, which shows operating results by segment. Government Solutions posted top-line growth of almost 30% with double-digit underlying organic growth. As you see here, all four business areas contributed meaningfully to the strong 13% total Government Solutions organic growth with three of the four producing double-digit organic growth. Amazing. This demonstrates the strength and balance across our Government Services landscape all around the world. New contract wins and on-contract growth across the fence modernization, space, human health and performance, international, and military readiness and sustainment all saw a contribution to these levels of growth. A particular highlight to be made here is with Centauri, which posted Q2 revenues of over $180 million with its own organic growth rate of 30% for Q2 and 16% on a year-to-date basis. That puts us on track for roughly $700 million of revenue from Centauri this year, consistent with our plan and in full alignment with our acquisition thesis. Our thesis is to buy terrific businesses with terrific people, equipping those people with the resources they need to continue to excel in strategic markets and leverage the advantages of being part of a larger platform to grow the top line, bottom line, and cash flow. Centauri checks all of these boxes, and we couldn’t be more pleased with this acquisition. At the Government Solutions group level, adjusted EBITDA margins were 10%, right in the middle of our targeted profitability. Sustainable Tech continues to make terrific progress on its own profit growth strategy. While revenues continue to reflect the ramp down of areas we decided to exit last year, the quality of revenues, as Stuart said, is improving with much healthier margins as we envisioned when we formed this business. Adjusted EBITDA for Q2 was more than triple 2020 levels at $61 million and the team delivered EBITDA margins of 20%. All elements of this business contributed positively. We did have favorable net closeouts and attendant cash receipts, which spiked margins by about five percentage points. So net of this content, STS EBITDA margins came in at circa 15%, and that’s higher than expected due to favorable mix. We continue to believe margins will be in the mid-teen range for the full year. Finally, the third segment, Corporate costs are coming in higher than last year as we are in various stages of returning to work. We are advancing various initiatives that we paused last year, and things like business travel are picking back up. We expect corporate EBITDA and SG&A to continue at this run rate in 2021, which is more aligned with the 2019 pre-COVID levels. Now on Slide 13, Stuart mentioned the settlement negotiations on the legacy with this project, and I’ll make some additional points here. Coming into Q2, we had a carrying value of roughly $565 million associated with expected recoveries from this project. This is divided into two elements, expected recoveries from the client and expected recovery from the subcontractors on the combined cycle power plant. This discussion and the charge that we took this quarter only relates to the first category matters with the client. So literally, in the past few days, we reached a point in the settlement discussions with the client, which led us to conclude that the carrying value associated with the expected client recoveries should be reduced. Those discussions, however, are not yet final. And thus, it is not appropriate to provide a lot of details here. But what we can say is the following: the reduction in the carrying value is non-cash. Because of that, there’s no impact on our liquidity, borrowing capacity, or financial covenants. And third, there is no impact on our long-term targets. As exists, matters were always excluded from these measures. An ultimate settlement, assuming one does occur, would reduce cash legal costs, free up management time, and contain any liquidity risk, which would actually improve deployable capital. Very important progress towards the settlement with the client has no impact on the ongoing claims we have against the power plant subcontractors, and the carrying value associated with those expected recoveries remains unaffected. As you may recall, when we completed the delivery part of the project in 2019, we established that any write-ups or write-downs associated with this complex matter would be ring-fenced, and adjusted out for purposes of adjusted EBITDA and adjusted EPS, and accordingly excluded from our long-term targets. We also excluded the expected hits to cash recoveries from all cash flow and liquidity targets and planning levels. So, consequently, there is no impact of this charge and these developments on our long-term targets. And that includes the $3 billion of deployable capital that we continue to expect to produce over the next few years. On to Slide 14 with a liquidity update, we continue to deliver with growth in EBITDA over the course of Q2. Net leverage now stands at 2.1x, well within our targeted 3.0x or below level. We did do open market share repurchases of just under $30 million for the quarter, which is consistent with our goal of having a balanced capital deployment strategy. We’re also pleased to recently receive a credit rating upgrade by S&P to double B flat, continuing a favorable trend on that front. And now finishing up on Slide 15. We are affirming our previous guidance for 2021 revenues and adjusted EBITDA margin and our tax rate. They are updating our GAAP EPS guidance to minus $0.10 to plus $0.10, which reflects the non-cash pick of this charge I just covered. This also reflects $7 million in non-cash tax provisions for the increase in the UK statutory tax rate, which was announced in Q1 in response to COVID and was actually enacted in Q2. While that increase does not take effect until 2023, we revalue deferred tax liabilities for this higher rate this quarter as appropriate. We have reflected both of these non-cash items as adjustments to adjusted EPS. For adjusted EPS, we are guiding to the upper end of the original range of $2 to $2.20, as Stuart said earlier, and that’s based on strong operational performance across the business in the first half. And of course, a strong continued outlook for the second half. Given the strong cash flow performance in the first half and continued healthy outlook there as well, we are upping adjusted operating cash flow by $20 million to a new range of $300 million to $340 million for the full year. This enhances potential value creation opportunities with greater expected deployable capital. And we really like that. So that wraps up my remarks. So, I’ll turn it back to Stuart.

Thanks, Mark, and good job as ever. Now onto our final slide, Slide 16, so to summarize what we’ve presented today. In short, a high-end Government Solutions business with a technology kicker, executing on strategy, which in turn has positioned KBR in attractive markets today, but also into the future. Our amazing people do things that matter. And they are delivering outstanding performance while also winning work in the right areas. Our pipeline fundamentals are excellent. We are confident about tomorrow and have raised guidance as a consequence. We continue to work to de-risk the future and increase certainty. In short, we’re doing what we said we will do. I will now hand over to the operator who will open the call up for questions. Thank you.

We will begin with Tobey Sommer from Truist Securities.

Thank you. I wanted to ask a question about Sustainable Tech. If you look at the business now, how much of your work is sort of strictly defined as clean energy initiatives of the future versus working for existing, less clean infrastructure in the improvement of it? If it’s possible to bifurcate in that way, could you help me?

Well, certainly the majority of what we’re doing, Tobey, is in the cleaner areas; all the technology portfolio is pointed that way. What we’re trying to do around our maintenance portfolio is really to help people decarbonize by being more efficient. In an advisory capacity, it’s all about the future and looking at a hydrogen economy, green ammonia, or whatever that might take? So, I don’t think we’ve got quite a bit. Then I’d say it’s the majority of what we do today is on the greener side of the equation.

Excellent. And how should we think about any future wind down of some of that business? When do you think we would approach the period of time, if it’s in the future, when there’s not a sort of material drag from anything related to the market or internal choices you initiated last year?

I mean, we’re progressively working, and I think we said there was a couple of hundred million in carryover of revenue and low margin work into this year, a little bit that’s carried into next year, but not much. But it doesn’t detract from the story. And it doesn’t detract from the targets of around $1 billion business with margins in the mid-teens; that still holds for this year. And that includes, we did say margins would increase progressively. Obviously, the walk-off of that allows that progression of margins to happen, really so. So I think all that lines up, so I wouldn’t even think about that. I think it just reinforces the story around margin increases as we move into next year.

Okay. And then I was also hoping you could help me understand this seasonality, if any, in Centauri; the Q1 to Q2 sequential change in revenue is very pronounced. You talked about sort of your annual expectations, but is there some seasonality that you could help us understand for modeling? Or is this just normal pace contract awards?

Yes, I don’t think it’s seasonal in a sense. I mean, obviously, we’re very pleased with the performance in Q2, and I think that 30% growth, and really sort of sitting behind our acquisition thesis, if you like; and the business models divided required Centauri. I’ll remind everyone that when we did acquire them, we did not factor in at all going beyond against the current phase in the directed energy program. So if that does progress, it’s all upside on that thesis. So it proved to be a very valuable acquisition. Beyond is still a viable acquisition today. But yes, I don’t think there’s really seasonality. I think there’s just the cadence of awards. But we did say it was a very high growing business. And I think it has proven to be the case, so we expect that momentum to continue into Q3 and Q4. And probably, well, Tobey, that probably follows the same cadence as the broader government business: Q1 is a little bit slower, then Q2 kinds of awards pick up, Q3 is the busy one, and then Q4 that drops off again as they move into the new budget cycle. So it probably will follow that pattern as the rest of the government business.

Thank you, Stuart.

Hi, good morning. I guess just two questions. One, Mark, obviously, with Centauri going well and the cash flow guidance being better, and you’re feeling good about your liquidity, just wondering how opportunistic you can be, or when we can start looking at M&A again, to be additive to the story, and I guess, help you with your sort of longer term or the mid-to-higher end of your longer-term EPS targets.

Okay, well, hello, Jamie, and looking forward to your headline tomorrow with a really quite innovative piece as well, starting today, I think. Thanks for the questions. I’ll say that we’re really pleased with the cash flow performance of the company and our overall liquidity position. As I said, the development should they conclude would actually free up more capital. And as you probably are well aware, there’s quite a bit of prospective M&A activity in the government space today. There’s always some on the Sustainable Tech side as well. So I would say our positioning and de-risking over the past several years does allow us to be very constructive. Seeing the progress on Centauri, the team has done a terrific job with the integration, and the employees of Centauri are fantastic. They’re really part of the family now. So it does allow us to be more constructive. We’ve got quite a bit of follow-up firepower as our cash flow continues to be steady, and as our leverage ratios come down. So yes, I think we can be pretty bullish on the M&A outlook, provided it meets all our criteria, and we’re very disciplined about that. I think we’ve shown a good track record. I do expect, as we’ve always said, that there will be M&A activity in the future. And when that’s not immediately present, we certainly have firepower for buybacks, too, and we’re demonstrating that.

And then, I just guess my second question based on the backlog you have today and the win prospects, as we’re thinking about 2022 and your longer-term target, should we expect sort of steady growth to get to those numbers, or is the growth trajectory to achieve your longer term targets more back-end loaded?

Okay, well, hello, Jamie, and looking forward to your headline tomorrow with really quite innovative as well, starting today, I think. Thanks for the questions. Alive and active, I’ll say, we’re really pleased with the cash flow performance. As I said, the development should they conclude would actually free up more capital. And as you probably are well aware, there’s quite a bit of prospective M&A activity in the government space today. There’s always some on the Sustainable Tech side as well. So I would say our positioning and de-risking has occurred over the past several years does allow us to be very constructive. Seeing the progress on Centauri, the team has done a terrific job with the integration of employees, and they’re really part of the family now. So, it does allow us to be more constructive. We’ve got quite a bit of follow-up firepower as our cash flow continues to be steady and as our leverage ratios come down. So yes, I think we can be pretty bullish on the M&A outlook, provided it meets all our criteria. We’re very disciplined about that. I think we’ve shown a good track record. So, I do expect, as we've always said that there will be M&A activity in the future. And when that’s not immediately present, we certainly have firepower for buybacks, too. And we’re demonstrating that.

Yes. Thanks, Mark. I think, Jamie, we’re obviously very pleased with the start of the year. We’re probably outpacing many of our government peers in terms of growth. And as Mark said in his prepared remarks, we’re seeing double-digit growth across the bulk of our sectors. That is also key to achieving not only 2021, which we’re well on the path to get as I talked about, but obviously 2022 and beyond. We’re certainly progressing well, and we remain very confident in our 2025 targets. I think what we’ll start to see as we look into 2022 is just continued progression. I don’t think it’s going to be an up and down; I think it’s going to be a very predictable growth pattern as we continue to do work and execute. So I don’t think we’re going to see any sort of big steps or big steps down and then catch up. I think it’s going to be a progressive climb. And certainly, our cash flow forecast would support that as well. So I think that all lines up nicely with long-range predictability in future earnings profiles, as we’ve presented on many occasions.

Hey, good morning, guys.

Hi, Andy.

So, as your first-half EPS represents more than half of your EPS guidance this year, at least the midpoint. So, I know you told us the EPS is tracking to the high end of the range. But what held you back from raising your EPS guidance at this point, given you do tend to be modestly back-end loaded historically? I know you had a favorable resolution in Sustainable Tech that helped margin. So maybe that skews seasonality a bit. But was there some pull-forward of demand in Q2? Is there any other reason why didn’t raise guidance?

No, I mean, it’s — I mean, we talked about the 45, 55 split last quarter, and I think if you sort of back out the goodie this quarter, that kind of takes you to the high end of the range. I think for us, we like to be conservative where we’re in essence; we’re bumping up guidance by getting to the top end of the range now rather than having people assume the midpoint while bumping up cash. So I think it’s a good news quarter. We’ll see where we land in Q3 as how we guide for the rest of the year, that’s probably the best way to say it, but you get no favors in over-promising and under-delivering; we’re much better off to keep our — to be prudent, and we’ve done that in the past. I think that sounds well; that’s the way we’re going to be.

Very understandable. And then maybe digging into Sustainable Tech a little bit more, again, you didn’t change your guidance for the year there. But can you give us a little more color into what you mean by that the level of activity has increased significantly in the last two or three months? Any portions of the business that are actually exceeding your expectations this year, and maybe any portions of the business that are not as good?

I would say that there are no portions of the business below expectations at all, and to the complete opposite, I think that’s firing on all settings; as I said, it’s sort of a perfect storm, the level of activity across our technology portfolio continues to really be unbelievably busy. We’ve seen the level of awards, not just this quarter, but the last quarter, etc.; it’s just been a tremendous book-to-bill progression through the course of the last several quarters. So really, really strong performance. But we’re starting to see quite a bit of traction in the digital maintenance side, where we’ve got a lot of awards coming through in the advisory business. Those are smaller in nature, but the number of them is impressive, and they do some authentic go through into further work. So all that is going really well. I think that let’s face it, we’ve gotten a lot of pressure on the IOCs themselves, and of course, oil prices have gone up, so they’ve got, probably more confidence in the future as well. So, I think there’s more confidence to stand in the obvious pressure on the climate agenda and decarbonization agenda. So, all plays well. And then you’ve got the refiners themselves having to look at different product mixes and look at things like more properly and things like that, where we play a significant role and being a key supplier of technology to do just that. So it really is, we’re not seeing any slowdown there; in fact, I think we’re seeing a pickup in prospects and levels of engagement around future projects. An untightening of that capital spend belt that’s been around during COVID. So, I think it will all work well as we look into the tail end of this year and into next year for sure.

Helpful color. Thanks, Stuart.

Hi great, thanks. Good morning. I just wanted to follow up on Andy’s first question there about the guidance expectations for this year, just as it relates to the EBITDA margins. The guidance does imply a little bit lower margins in the second half of the year than the first half. Can you just talk about what was driving that moderation? I assume it’s some type of mix or some unusual costs?

Yes, I’m having in each of the segments, I think we start with Sustainable Tech being in that set of 10% or more double-digit zip code. Obviously, we’re there this quarter; we were a bit below last quarter, but we think we’re going to end the year in line with what we guided to. So I think that’s good, so no change there. In terms of Sustainable Tech, of course, we came out of the gate very strongly last quarter, and it’s strong again this quarter. I think that’s really bumping up the margins, but when you look at the whole year, we do think Sustainable Tech will be in the mid-teens. So that does lead you to a little bit of lower margin performance in that area because of most favorable project causes. But again, very much within our original guide, very much within our performance expectation. So again, nothing else, nothing out of the ordinary; in fact, inspiring performance, so and as Mark said, we’ve got the Corporate cost coming through more in line with 2019, as well. If you look at where we’re heading, we said it’d be a circa $6 billion company with EBITDA that’s 9% of their loans at the group level, and we’re heading towards those numbers. And you’re sticking by that original statement and tracking very well towards it. So I think that all lines up nicely.

Okay, that’s helpful. And then just a follow-up on the exits discussion. Thanks, Mark, first, on the framing of that, I just want to make sure we’re clear about direction of potential cash flows here. How should we interpret the risk that you will actually have to pay something out on this charge that you’ve taken versus collecting perhaps less than you thought you might collect? Is this sort of an indication that we may have to pay out something like $150 million to $200 million before you ultimately collect the rest of it and still come out ahead on a net basis with the subcontractors?

No, no, you should not take this deal with excess for me as a really, really positive outcome. As far as I’m concerned, the complexity of what we’re doing opposite the customer was extremely complex, with multiple lawsuits going one way and counterclaims coming the other, etc. We also had the interesting situation with our partners who, as many of you know, we’ve done several with our partners, whose recent performance has not been as strong, so we’ve de-risked that part of our future as well. Coming to this conclusion opposite the customer is a no-cash-out deal; there’s no cash-out coming from us. This just means that we’re not collecting what we had assumed on our balance sheet, so there is no cash out; it’s a zero-sum gain in that sense. What we’re doing opposite CCPP is a very different model. We’re basically recovering money we have spent to build and complete the power plant, that they walked away from. We’re going after them for recovery of costs, and that’s the genuine cost we had to step in to finish their obligation. Our expectation is that’s a cash-positive event. The timing of that hasn’t changed, but the hearings are next April. We expect the fair one to receive that cash at the tail end of next year, early in 2023. So that all lines up, and please do not think our write-down is in any way a cash-out event; it is an absolutely non-cash charge.

Okay, terrific. Thanks very much. Appreciate it.

Good morning, gentlemen.

Hi, Mike.

So, I know it’s like asking which is your favorite child, but of your four segments within Government Solutions, which one do you see? Are you most excited about in the next couple of quarters on orders or business cadence aspect? There’s been a lot of visibility on space from now in commercial but also the private side? Are you still seeing the very solid fundamentals there? And is there much opportunity for KBR to continue to support not only on the commercial, but also on the private side?

Yes. I mean, it is a bit like a favorite child. So, I don’t think we’ve got one, Mike; I think we love them all equally. We’re in a situation now where, really, they’re all firing; the international business has got double-digit growth, and what we’re doing in that arena is terrific. Australia continues to outpace, as I said. So that’s all good. And the book-to-bill across the portfolio was terrific, and that really supports fundamental growth going forward. So, I don’t really think we’ve got any slowdowns in cadence across any of them. They’re all delivering margins above expectation. So really, really strong performance all around; that’s why we love them all equally. In terms of space itself, you’re quite right; there’s a lot of focus on military space today. The NASA budget is compounding on momentum in that arena as well. There’s a lot of good momentum in our science and space business. I think from a commercial space perspective, I think I said this before, it’s an increasing but still not material part of our portfolio. As that starts to dominate low-earth orbit, we’ll see what you will do over the coming years. I do think that we’ll start to see more and more work coming through, either through NASA contracts or directly with the likes of Blue and others. I think we’ll start to see that accrue over time, and we’ll report that in due course, but it’s an exciting part of our future. But today, it’s a non-material part of our business. That’s probably a good way to put it. So it’s a good opportunity.

Hi team, thanks for taking my questions. So it’s great to hear the GS recompete win rates continue to be very strong. But what about takeaways? How are those numbers looking? I’m just trying to think about the realistic win rate around this big pursuit pipeline you disclose?

Yes, I mean, as we know, Sean, takeaways are hard to do. I think our win rate overall, including recompete, is about 40% to 50% in dollars. So, quite a strong performance. We’ve got a good shot at takeaways, but we do a lot of what I would call strong business development around things like IDIQs and white papers and using our contract vehicles like Max and others to position for either single source or very low numbers of competitors within that environment. So, we do very well building a book of business there, and obviously, you’ve got things like Centauri and the intelligence community, which is less competitive. So it’s not just in — we’ve actually got these large opportunities across all our portfolios. They’re not just takeaways; they’re actually new business, some that have got lower competitor profiles, and some have takeaway fundamentals. I think the answer to your question is really are we looking over and above one on a book-to-bill? And the answer is yes. Does that support a growth story? Yes. And is the pipeline foundation still strong for the future? And I think the answer is yes. And are we performing well across our portfolio? And do we have constant, low concentration that’s going; I think the answer to all those questions is we’re in really good shape. It’s difficult to tell one or the other in terms of whether you’re going to win a takeaway or not. But what is true is we’re in a very low recompete year, and of course, a lot of what we’re reporting now is over and above our recompete, so it’s all additive to the story. We’ll come back in Q3, and I think we’ll give an update to the level of business; we talked about 55% to support our long-range targets. Of course, we’re very strong bookings year in options. When we layer those options, I want to begin to report back to the market and our shareholders just how we’re traveling on increasing that 55% number upwards. So, we’ll have a growth there in Q3 just to give you confidence that we’re not just winning our recompete but we’re actually building a book of business to secure growth.

All right, that’s really helpful. And nice to do list item for Alison there. Secondly, we hear a lot about the GS visibility, right. But on the STS side, I think a lot of people are trying to get comfortable around the very robust growth outlook over the next couple of years in that business. Considering the 1.6 times book-to-bill there this quarter, this is several quarters in a row now of very strong book-to-bill on that business. How far does that let you guys see out a little bit of color around? Where do these recent booking trends get you from a visibility standpoint in STS?

Yes, as you know, it’s a quicker cadence of contract awards, and given the scale and the size and the way that top business model works. I would say that, obviously, we’re very confident in our 2021 numbers and increasingly confident in our 2022 growth numbers. All the work we’re winning now, of course, doesn’t all get executed in 2021, but a lot of it in 2022. As we review the performance of those businesses in the last weeks leading up to earnings, we start to get quite a good feel for how that business will track in 2022. I’m feeling really good about how that’s moving into next year; that’s probably a good point for that type of business, allowing us to get all that level of visibility.

Hi, this is Ashok Sivamohan on for Jerry Revich. You’ve touched on the momentum and some of the Government Solution segments. Can you speak to how you view the sustainability of double-digit organic growth in Government Solutions in the medium term?

I mean, obviously, we’re very pleased with the performance year-to-date. I don’t know where we sit in that table, but I think we’re certainly outperforming most of our peers in terms of growth in that double-digit arena, and that’s translating very nicely into EBITDA, as you’ve seen. So, I’ll get there in terms of the sustainment of that, we’re feeling really good about our long-range targets. You all understand the growth numbers and the aspirations around that, so we’ll continue with that momentum. We’re very confident that we’ll progress towards those targets in 2025, and they’re very strong CAGR targets as you’re aware. So feeling really good about the future.

Yes, Ashok, this will all come out in the queue. But it’s complex; it’s always been complex. And the investment balance I described starting off at $565 million is coming down by roughly $200 million, so that net is the result of those two numbers. That’s a combination of expected recoveries from the Combined Cycle Power Plant side of the house. Again, some reserves we have that need to stay there, that are pretty minor. That’s the remaining exposure on the balance sheet, if you will. We have affirmed a couple of times on this call today that those expected recoveries, that denominate that balance is with the CCPP, the Combined Cycle Power Plant that is completely separate from the charge today and very high confidence, as Stuart mentioned earlier, relative to a good outcome there.

Hey, great, thank you. Good morning. Mark, this one might be for you as well. SG&A, I understand the return to work and travel explanation. I guess, when you look at the second quarter levels, is this sort of a baseline level we have to think about going forward? Are we going to see that continue to accelerate as more employees return to the office and sort of travel campaigns?

Thanks, Brent. We actually see it being fairly stable. I would say that our enterprise SG&A should be in the $90 million to $100 million per quarter sort of territory. We’re a tad above that in Q2, which can be explained by some initiatives we’re undertaking. I think Q2 will prove to be somewhat of a peak, and we’ll be more normative toward $90 million to $100 million on the SG&A side. And then the Corporate part of that, the Corporate segment, if you will, should be fairly consistently around $30 million ballpark per quarter on an EBIT basis, about $25 million on an EBITDA basis. There’s some volatility to that for various things, particularly initiatives, but we don’t see that increasing; it’ll steady off, if not decrease in forward quarters from what we showed in Q2.

Yes, I mean, I think we are a people company. We drive very hard to live up to our values and look after people, and that’s keeping us in good stead. And as we sort of look into certain areas, there are certainly not normal issues we think across what we’re seeing in STS in terms of labor. As we look at that business and the growth there is being supported by our ability to recruit, etc. So no issues there have entered in a lot of what we’re doing internationally. I think there’s a little bit of a labor shortage in Australia, for example, just because it’s very, very busy, but it’s not really impacting your ability to do the mission. We are looking hard at recruitment; we are looking at harder retention, and I think, not only in Australia but in the U.S. The intelligence piece is always difficult, as you’re probably well aware, but in terms of the readiness and sustainment area that’s probably easier to recruit into. It just depends; I think it’s a mixed bag. I don’t think there’s a silver bullet to any of it. Our very strong dedicated people to the various machines are working on their projects. But to say there’s a fundamental labor shortage or a crunch across the business is a wrong statement, but there are pockets, and focusing on those areas and helping those businesses recruit and retain staff is obviously a new focus for those businesses.

Okay, that’s really helpful. Stuart, if I could stick one quick one, and I hadn’t tended to think of KBR associated with an infrastructure plan. I’d just be curious what some of the particular things you’re monitoring within some of those proposals could be that are applicable to you?

Yes, well, I think there’s — we’ve almost got a very strong program delivery capability within KBR, but I think there’s a lot of money going into the R&D side around that infrastructure piece, which plays very firmly into our capabilities. There’ll be a lot in the climate change agenda, again, that will play strongly into what we can offer across the piece. So, I don’t think you’ll start to see — we’re not designing front and rules or anything like that. So, don’t be thinking we’re going into that sort of more commoditized business, not at all. But I do think it will play into our sustainable agenda; I think it will play into our R&D credentials. I’ll play a role in program delivery capability as we look across portfolios; we’re not going to get stuck into construction or commodity services in the slightest, but it looks very, very promising in those R&D sustainable areas. Just again, thank you for your interest in KBR and taking the time today to listen to the presentation and ask questions. We do think we’re traveling very, very well. The underlying operational performance and growth fundamentals are clear, and the numbers are, I think, in continued momentum with a pipeline where we sit opposite budgets and priorities, I hope, resonates. A few questions on excess, but as I said, in my Q&A piece, it’s a really strong outcome for us in terms of removing uncertainty. It takes risk off the table. It takes us to a point where the overall conclusion of excess will be a cash upside event for KBR as we conclude the CCPP arbitration litigation as it moves into 2022. So all up, I think a terrific quarter, I think the fundamentals of the business are sound, and we’re very excited about the future. The management team is terrifically together about the way they’re thinking about tomorrow. So thank you again for your time. Hopefully, we’ll get to see some of you face to face in the coming months. All the best. Bye-bye.

Ladies and gentlemen, this will conclude your question-and-answer session. I’ll turn the call back over to Stuart Bradie for any additional or closing remarks.

Ladies and gentlemen, this will conclude your conference for today. We do thank you for your participation and you may now disconnect.