Good day, welcome to the KBR, Inc. Second Quarter 2021 Earnings Conference Call. This call is being recorded. As a reminder, your lines will be in a listen-only mode for the duration of the call. There will be a question and answer session immediately following prepared remarks. You will receive instructions at that time. For opening remarks and introductions, I would like to turn the call over to Alison Vasquez. Please go ahead. 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 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. 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 five because you've seen slide four many times. We 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. Thus our ESG story is not only resilient but strengthening. 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 changed world, we are still employing best practice, we're really still doing that. Are we ensuring we are looking after ourselves and those around us in the same way we did pre-COVID? Driving the expectation that Zero H arm is achievable through our organization has delivered meaningful results as outlined here, and you've seen that before. This belief remains a core within our values. As you can see from the stats, our safety performance was actually 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, and some cases, rotations to bases, et cetera, and sites across the world. Of course, our people, like everyone else, had to adapt to new ways of working. Priorities changed as the world changed, with more emphasis on things like mental fitness, for example. Really these results are simply the outcome of our strong culture and our people's commitment and really it's an amazing performance. 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. Onto slide six. This slide tells the facts and is typically, as is our culture, understated. Let's face it, this was an outstanding quarter, perhaps even a banger. 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 expectation. We're tracking to the upper end of our range, which I'll 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. This really in turn has delivered outstanding EBITDA performance, delivering EBITDA growth of almost 50%. It really reflects a strong delivery, bumping up margins, executing on strategy by exiting 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 was again above expectation. Helped also with favorable project resolutions, a great result nonetheless. We're bumping up cash guidance as a result. Great stuff there. You've heard me talk about winning the right work many times, this has come through in the quarter. A strong bookings quarter with a book-to-bill of 1.1x. As you'll see later, the result including option years was even better. Bookings in heritage technology was 1.9, clearly worthy of a 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 Ichthys. We're not there yet, but we felt it prudent to reflect the position on key terms within our numbers. This is all non-cash, and I'll say this again, this is all non-cash and relates to matters with the client only. To be clear, the combined cycle power plant or CCPP, there is no change whatsoever. Mark will cover this in a bit more detail later. Onto slide seven. The outlook for our GS 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 this strong market. 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. 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, and as these coalesce around the 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. Fed civ budgets were up as expected, but the NASA budget was a positive surprise with a larger than expected increase that 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 this makes its way through government and what this means for KBR. From what we can see today, this will only add more wind to the sail. Internationally, increased spending in the U.K. and Australia continues. Overall, international GS grew double-digit in the quarter, just over 10%, with Australia continuing to outpace. In summary, we remain on track to perform well in 2021, beyond 2021 also and towards our 2025 targets. All good there. On to slide eight. The outlook for sustainable tech continues to look really positive. This, of course, has been reflected in our bookings, and we have again highlighted a few recent wins on the right-hand side. It's great, obviously, to see traction in the plastics recycling area and in the digital maintenance area, along with ongoing demand across our whole 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. 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. Again, very strong market dynamics for Sustainable Tech. On to slide nine. How does it all translate into numbers? How can we continue to be confident that the momentum will continue as we progress towards not only 2021, but our 2025 targets? In Q2, we secured $1.9 billion of awards and options, bringing total secured backlog to deliver 2021 to over 90%. 2021 looking really good. Now remember, we do not include options in our book-to-bill. Excluding options, the bill was 1.1 for the quarter. A great stand-alone result. When you include options, this performance is even more impressive, but importantly, could work into the secured hopper beyond 2021. 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, et cetera, really, that also drives margins, of course. 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. You can see ours on the right-hand side of the slide. We've talked about scale of the pipeline and balance across the pipeline previously, and really leading to lack of concentration, risk, et cetera, and that we have a number of needle movers in a year with no recompetes. These are all strong facts and continue. 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. 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. Mark. Great. Thank you, Stuart, once again, 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, and that of course, further signals strength of our offerings and also our end markets momentum. Adjusted EBITDA came in at $156 million. That's up almost 50% from last year, 50, 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 GS, accretive acquisitions, and higher margins are driving this level of growth in 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 pace for the first half, 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 3x 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 the 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 GS organic growth, with three of the four producing double-digit organic growth. Amazing. This demonstrates the strength and balance across our GS landscape all around the world. New contract wins and on-contract growth across defense 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 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, with that thesis being to buy terrific businesses with terrific people, equipping those people with the resources they need to continue to excel in strategic end 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 GS group level, adjusted EBITDA margins were 10%, so right in the middle of the fairway relative to 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, are 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 5 percentage points. Net of this bump, normalized STS EBITDA margins came in at circa 15%, a nudge higher than expected due to favorable mix. We continue to believe margins will be in the mid-teen range for the full year. 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. On to slide 13. Stuart mentioned the settlement negotiations on the legacy Ichthys 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 was divided into two elements, expected recoveries from the client and expected recoveries 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. Literally in the past few days, we reached a point in these 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. What we can say is the following. The reduction in the carrying value is non-cash. Stuart said that earlier. Because of that, there's no impact to our liquidity, borrowing capacity or financial covenants. Third, there's no impact to our long-term targets as Ichthys 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 this 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 Ichthys cash recoveries from all cash flow and liquidity targets and planning levels. Consequently, there is no impact of this charge and these developments to 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 de-lever 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 were also pleased to recently receive a credit rating upgrade by S&P to B B flat, continuing a favorable trend on that front. Now finishing up on slide 15. We are affirming our previous guidance for 2021 revenues and adjusted EBITDA margin and our tax rate. We are updating our GAAP EPS guidance to -$0.10 to +$0.10, which reflects the non-cash Ichthys charge I just covered. This also reflects $7 million in non-cash tax provisions for the increase in the U.K. 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 revalued 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 $2.00 - $2.20, as Stuart said earlier, and that's based on strong operational performance across the business in the first half. Of course, a strong continued outlook for the second half. As said earlier, 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-$340 million for the full year. This enhances potential value creation opportunities with greater expected deployable capital, and we really like that. That wraps up my remarks, so I'll turn it back to Stuart. Thanks, Mark, and great job as ever. On to our final slide 16. 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, but 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 are doing what we said we would do. I will now hand over to the operator, who will open the call up for questions. Thank you. Ladies and gentlemen, if you would like to ask a question, you can signal by pressing star one on your telephone keypad. Keep in mind if you are using a speakerphone, make sure the mute function is released so that signal can reach our equipment. We are asking that you limit yourself to one question and one follow-up question. Once again, star one for questions. We will begin with Tobey Sommer with 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 sort of clean energy initiatives of the future versus. I'm struggling trying to phrase this, but sort of 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 help people decarbonize by being more efficient. In the advisory capacity, it's all about the future and looking at a hydrogen economy or green ammonia or whatever shape that might take. I don't think we've got quite the breakdown, but I would say it's the majority of what we do today is in the greener side of the equation. Excellent. How should we think about any future sort of 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 material drag from anything related to the market or internal choices you initiated last year? We're progressively working that down. I think we said there was a couple of hundred million of carryover of revenue, low-margin work into this year. A little bit carries into next year, not much. It doesn't detract from the story, and it doesn't detract from the targets. The targets of a $1 billion circa-plus business with margins in the mid-teens still holds for this year. That includes those. We did say margins would increase progressively, and obviously the work off of that allows that progression of margins to happen, really. I think all that lines up. I wouldn't even think about that. I think it just reinforces the story around margin increase as we move into next year. Okay. Then, I was also from a modeling perspective, hoping you could help me understand the seasonality, if any, in Centauri, the 1Q to 2Q sequential change in revenue, 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 paced contract awards? I guess a lot of them. Thanks. Yeah, I don't think it's seasonal. In a sense, obviously we're very pleased with the performance in Q2, and I think, the 30% growth and really sort of sitting behind our acquisition sort of thesis, if you like, and the business model as to why we acquired Centauri. I'll remind everyone that when we did acquire them, we did not factor in at all going beyond, I guess, the current phase in the directed energy program. If that does progress, it's all upside on that thesis. Could prove to be a very valuable acquisition, beyond still a valuable acquisition today never mind. Yeah, I don't think there's truly seasonality. I think there's just a cadence of awards. We did say that was a very high-growing business, and I think it's proving to be the case. We expect that momentum to continue into Q3 into Q4. Thank you very much. Probably as well, Tobey, it probably follows the same cadence as the broader government. You know that Q1's a little bit slower. Q2 in terms of awards picks up. Q3 is the busy one. Q4, it drops off again as they move into the new budget cycle. It probably will follow that same sort of pattern as the rest of our government business. Thank you, Stuart. We'll now hear from Jamie Cook with Credit Suisse. 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. I just guess my second question, based on the backlog that you have today and the win prospects as we're thinking about 2022 and your longer-term targets, should we expect sort of steady growth to get to those numbers? Is the growth trajectory to achieve your longer term targets sort of more back-end loaded? Thank you. Okay. Well, hello Jamie, and looking forward to your headline tomorrow. They're always quite innovative. Thank you. As I'll start with 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 developments on Ichthys should they conclude, would actually free up more capital. As you probably are well aware, there's quite a bit of prospective M&A activity in the government space today, and there's always some on the sustainable tech side as well. I would say our positioning and de-risking, as has occurred over the past several years, does allow us to be very constructive. Seeing the progress on Centauri, the team's done a terrific job with the integration. The employees of Centauri are just fantastic, and they're really part of the family now. It does allow us to be more constructive, and we've got quite a bit of firepower as our cash flow continues to be steady and as our leverage ratios come down. Yeah, 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 our future, and when that's not immediately present, we certainly have firepower for buybacks too, and we're demonstrating that. That's how I'd answer the first question. Stuart, do you want to cover 2022 and long-term targets? Yeah. Thanks, Mark. I think, Jamie, we're obviously very pleased with the start of the year, and I think we're probably outpacing many of our government peers in terms of growth. As Mark said in his prepared remarks, we're seeing double-digit growth across the bulk of our sectors. That bears well to achieving not only 2021, which we're well on the path to getting there, as I talked about, but obviously 2022 and beyond. We're certainly progressing well. We're very confident of 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 book work and execute. I don't think we're going to see any sort of big steps up or big steps down and then a catch-up. I think it's going to be a progressive climb, and certainly our cash flow forecasts would support that as well. I think that all lines up nicely with the long-range predictability and future earnings profile of the company that we've basically presented on many occasions. Okay, thank you. Nice job. Thanks, Jamie. Moving on to Andy Kaplowitz with Citi. Hey, good morning, guys. Hi, Andy. As you know, your first half EPS represents more than half of your EPS guidance this year, at least the midpoint. I know you told us that EPS is tracking to the high end of the range, but what held you back from raising your EPS guidance at this point? You do tend to be modestly back-end loaded historically. I know you had the favorable resolution in sustainable tech that helped margins, so maybe that skews seasonality a bit. Was there some pull forward of demand in Q2? Is there any other reason why you didn't raise the guidance? No. We talked about the 45/55 split, I think, last quarter, and I think if you back out the goody this quarter, it kind of takes you to the high end of the range. I think for us, we like to be, as you know, Andy, we're halfway through the year. We've got a bit more to play out, and we like to be reasonably conservative. In essence, we're bumping up guidance by getting to the top end of the range now rather than people assume the midpoint. We're bumping up cash. I think it's a good news quarter, and we'll see where we land in Q3 as to how we guide for the rest of the year. That's probably the best way to say it. You get no favors in over-promising and under-delivering, as you know. We're much better to be prudent and as we've done in the past, and I think that served us well, and that's the way we're going to behave. Very understandable. 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? Are there portions of the business that are actually exceeding your expectations this year? Maybe any portions of the business that are not below expectations? I would say that there are no portions of the business below expectations at all. In fact, to the complete opposite. I think that it's firing on all cylinders. As I said, it is that sort of perfect storm. The level of activity and across our technology portfolio continues to really be unbelievably busy. We've seen the level of awards, not just this quarter, but last quarter and et cetera. It's just been a tremendous book-to-bill progression through the course of, I guess, it would be now the last several quarters. Really strong performance. We're starting to see quite a bit of traction in the digital maintenance side. We've got a lot of awards coming through in the advisory business. Those are small in nature, but the number of them is impressive and they do sometimes tend to pull through into further work. All that bears really well. I think that, let's face it, we've got a lot of pressure on the IOCs themselves, and of course, oil price has gone up a bit, they've got probably more confidence in the future as well. I think there's more confidence to spend. There's obviously pressure on the climate agenda and decarbonization agenda. It all plays well. Then you've got the refiners themselves having to look at different product mixes and look at things like more propylene and things like that, but where we play a significant role in being a key supplier of technology to do just that. 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 and I guess an untightening of that capital spend belt that's been around during COVID. I think it all bears well as we look into the tail end of this year and into next year for sure. Helpful color. Thanks, Stuart. Thanks. We will now take a question from Steven Fisher with UBS. 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's driving that moderation? I assume it's some type of mix, I don't know if there's some unusual costs or anything. Thanks. In each of the segments, I think we set our stall with GS, Steve being in the sort of the 10%, the low double-digit ZIP Code, and obviously we're there this quarter. We were a bit below last quarter, what we think we're going to end the year in what we guided to. I think that's good. No change there. In terms of Sustainable Tech, of course, we came out the gate very strongly last quarter, and strong again this quarter. I think that's really bumping up the margins. I think when you look at the whole year, we do think Sustainable Tech will be in the mid-teens. That does lead you to a little bit of lower margin performance in that area because of the favorable project closeouts. Again, very much within our original guide, very much within our performance expectations. Again, nothing out of the ordinary. In fact, an inspiring performance in truth. As Mark said, we've got the corporate costs coming through more in line with 2019 as well when you look at the group level. All in, if you look where we're heading, we said we'd be a circa $6 billion company with EBITDA at 9% or thereabouts at the group level. We're heading towards those numbers and sticking by that original statement and tracking very well towards it. I think that all lines up nicely. Okay. That's helpful. Then just to follow up on the Ichthys discussion. Thanks, Mark, for 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 in general? If we kind of keep it just to the customer side of things, is this sort of an indication that we may have to pay out something like $150 million-$200 million before you ultimately collect the rest of it and still come out ahead on a net basis with the subcontractors? No, you should not think of it like that. This deal with Ichthys for me is a really positive outcome. As far as I'm concerned, the complexity of what we were doing opposite the customer was extremely complex, with multiple lawsuits going one way and counterclaims coming the other, et cetera. We also had, I guess, the interesting situation with our partners who, as many of you know, we're joint several with our partners, whose recent performance has not been as strong. We've de-risked that part of our future as well. I think 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. There's no cash out. It's a zero-sum game in that sense, Steve. In terms of what we're doing opposite CCPP, that's a very different matter. We're basically recovering monies that we have spent to build and complete the power plant that they walked away from. We're going after them for recovery of cost in that sense that we've bonafide the absolute cost that we had to step in and actually spend to finish their obligation. Our expectation there is that's a cash positive event. The timing of that hasn't changed as if the hearings are next April, and we expect with a fair wind to receive that cash at the tail end of next year, early in 2023. That all lines up. Please do not think our write-down is in any way a cash out event. It's an absolutely non-cash charge. Okay, terrific. Thanks very much. Appreciate it. Thanks, Steve. We'll now take a question from Michael Dudas with Vertical Research. Morning, gentlemen. Alison. Hi, Mike. Mike. Mike, hello. Hello. I know this is like asking which is your favorite child, but of your four segments within Government Solutions, which one are you most excited about in the next couple of quarters on an orders or business cadence aspect? There's been a lot of visibility on space from not only commercial but also the private side. Are you still seeing the very solid fundamentals there? Is there much opportunity for KBR to continue to support not only on the commercial but also on the private side? Thanks. Yeah. 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. Oh, that's such a good answer. 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, and Australia continues to outpace, as I said. That's all good, and the book-to-bill across the portfolio was terrific and really supports fundamental growth going forward. I don't really think we've got any slowdowns in cadence across any of them. They're all delivering margins at or above expectations. Really strong performance all round. That's why we love them all equally. I would say that in terms of space itself, you're quite right. A lot of focus on military space today, and obviously the NASA budget's compounding our momentum in that arena as well. 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 sort of really dominate low-earth orbit, which it will do over the coming years, I do think that we'll start to see more and more work coming through, either through our NASA contracts or directly doing some, but not an increasingly amount of direct work with people like Blue and others. I think we'll start to see that grow over time, and we'll report that in due course. 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. It's a good opportunity. Excellent, Stuart. Thank you very much. Sean Eastman with KeyBanc Capital Markets will have the next question. Hi, team. Thanks for taking my questions. It's great to hear the GS recompete win rates continue to be very strong. What about takeaways? How are those numbers looking? I'm just trying to think about a realistic win rate around this big pursuit pipeline you guys disclose. Yeah. As we know, Sean, takeaways, they're hard to do. We're in a point now, I think our win rate overall, including recompetes, is about between 40% and 50% in numbers and dollars. Quite a strong performance. We've got a good shot at takeaways, but we do a lot of what I would call very strong BD around things like IDIQs and white papers and using our contract vehicles like IAC-MAC and others to position for either single source or very low numbers of competitors within that environment. We do very well building a book of business there. Obviously, you've got things like Centauri and the intelligence community, which is a bit less competitive as well. It's not just. We've actually got these large opportunities across all our portfolio. They're not just takeaways, they're actually some that's new business, some that have got lower competitor profiles and some that have got takeaway fundamentals. I think really, I think the answer to your question is really, are we booking over and above one in our book-to-bill? The answer is yes. Does that support our growth story? Yes. Is the pipeline fundamentals still strong for the future of the business? I think the answer is yes. Are we performing well across our portfolio and do we have low concentration risk? 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. What is true is we're in a very low recompete year. Of course, a lot of what we're reporting now is over and above our recompetes. It's all additive to the story. We'll come back. I think we talked about this before, but I think we'll come back in Q3. Alison might kill me for saying this. We're going to come back in Q3, and I think we'll give an update to the level of booked business. We talked about 55% to support our long-range targets. Of course, we'll do a very strong bookings year and with options. When we layer in those options, I want to be good to report back to the market and our shareholders just how we're traveling on and increasing that 55% number upwards. We'll have a go at that in Q3 just to give you confidence that we're not just winning our recompetes, but we're actually building a book of business to secure our growth. All right. That's really helpful. A nice to-do list item for Alison there. Secondly, we hear a lot about the GS visibility, right? 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 1.6 x book-to-bill there this quarter, this is several quarters in a row now of very strong book-to-bill in that business. How far does that let you guys see out? A little bit of color around where these recent bookings trends get you from a visibility standpoint would be great in STS. Yeah. As you know, it's a quicker cadence of contract awards and burn, just given the scale and the size. The way that that business model works. I would say that obviously we're very confident in our 2021 numbers and increasingly confident in our 2022 growth numbers. The work that we're winning now, of course, doesn't all get executed in 2021, but a lot of it in 2022. As we're reviewing the performance of those businesses and the last weeks leading up to earnings, we start to get quite a good feel for how that business is going to track in 2022. I'm feeling really good about how that's moving into next year. Okay. That's really good for that type of business. Really, if we can get that level of visibility, that's a good place to be. Okay, fantastic. Very helpful. Thanks very much. Thanks. We'll now hear from the line of Jerry Revich with Goldman Sachs. Hi, this is Ashok Sivamohan on for Jerry Revich. You touched on the momentum in some of the Government Solutions segments. Can you speak to how you view the sustainability of double-digit organic growth in Government Solutions in the medium term? 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. All good there. In terms of the sustainment of that, we're feeling really good about our long-range targets, and you all understand the growth numbers and the aspirations around that. We'll continue with that momentum, and we're very confident that we'll progress towards those targets in 2025, and they're very strong CAGR targets, as you're aware. Feeling really good about the future. Okay. Can you let us know what the Ichthys-related balance is within the unconsolidated affiliate line in the balance sheet? That sounds like a question for Mark. Yes, Ashok. This will all come out in the Q, but it's complex. It's always been complex. The investment balance, I described it starting off at $565 and it's coming down by roughly $200. The net is a result of those two numbers, and that's a combination of expected recoveries from the CCPP 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 combined cycle power plant that is completely separate of the charge today and very high confidence, as Stuart mentioned earlier, relative to a good outcome there. Okay. Thank you for the color. You're welcome. Now we'll hear from Brent Thielman with D.A. Davidson. Hey, great. Thank you. Good morning. Mark, this one might be for you as well. G&A 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 ought to think about going forward, or we're 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-$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, $100 on the SG&A side. The corporate part of that, the corporate segment, if you will, should be pretty consistently $30 ballpark per quarter on an EBIT basis, about $25 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. Okay. Sticking to sort of the labor commentary, many companies talking about how challenging it is to find people and recruit and retention. I'd love to just get your thoughts on what KBR is doing and sort of how you're faring in that particular area? I think as you know, we are a people company. We drive very hard to live up to our values and look after our people, that's standing us in good stead. As we sort of loop into certain areas, there's certainly no real issues, we think, across what we're seeing in STS in terms of labor as we look at that business, the growth there is being supported by our ability to recruit, et cetera. No issues there. I think 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 they're very busy, it's not really impacting our ability to do the mission. We are looking hard at recruitment. We are looking hard at retention. I think not only in Australia, but in the U.S. The intelligence piece is always difficult, as you're probably well aware. 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. I think we've got very strong, dedicated people to the various missions that are working what they need to work in terms of the challenges on their projects. To say that there's a fundamental labor shortage or a crunch across the business is a wrong statement. To say there are pockets, I'd say it would be a right statement. Breaking that down and focusing on those areas and helping those businesses recruit and retain staff is obviously an area of focus for those businesses. That's probably the best way to answer it. Is it constraining our growth as we look into the future? Are we hesitant about our long-range targets as a consequence? The answer is no. Okay. That's really helpful, Stuart. If I could sneak one quick one in. I hadn't tended to think of KBR or associate it 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. I think there's always got a very strong program delivery capability within KBR, 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 and where we sit. There'll be a lot in the climate change agenda, again, that will play strongly into what we can offer across the piece there as well. I do think you'll start to see, we're not a design firm in roads or anything like that, don't be thinking we're going into that more commoditized business. Not at all. I do think it will play to our sustainable agenda. I think it will play to our R&D credentials, it'll play into our strong program delivery capability as we look across portfolios. We're not going to get sucked into construction or commodity services in the slightest. It looks very promising in those R&D and sustainable areas. Okay. Thank you. Great query. Thank you. Ladies and gentlemen, this will conclude your question and answer session. I will turn the call back over to Stuart Bradie for any additional or closing remarks. Just again, a 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 well. The underlying operational performance of the business and the growth fundamentals are clear, and the numbers, I think in the continued momentum with the pipeline and where we sit opposite budget spend and priorities, I think hopefully resonates. I do think, obviously a few questions on Ichthys, but as I said in my Q&A piece, I think it's a really strong outcome for us in terms of removing uncertainty, and it takes a risk off the table and really takes it to a point where the overall conclusion of Ichthys will be a cash upside event for KBR as we conclude the CCPP arbitration litigation as it moves into 2022. All up, I think a terrific quarter. I think the fundamentals of the business are sound, and we're very excited about the future, and the management team is terrifically together about the way they're thinking about tomorrow. Thank you again for your time, and obviously, we'll be talking to many of you one-on-one post this call. Thank you again, and stay safe, and 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 conference for today. We do thank you for your participation, and you may now disconnect.