Good day and welcome to the KBR's Second Quarter 2015 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 Zac Nagle, Vice President, Investor Relations. Please go ahead, sir. Zachary A. Nagle - Vice President-Investor Relations & Communications: Good morning and thank you for joining us for KBR's Second Quarter 2015 Earnings Conference Call. Today's call is also being webcast, and a replay will be available on KBR's website for seven days at kbr.com. The press release announcing KBR's second quarter results is also available on KBR's website. Joining me today are Stuart Bradie, President and Chief Executive Officer; and Brian Ferraioli, Executive Vice President and Chief Financial Officer. During today's call, Stuart and Brian will cover KBR's results in more detail and discuss our market outlook by major segment. Please refer to the accompanying presentation that is posted on our website at kbr.com. After our prepared remarks, we'll open the floor for questions. Before turning the call over to Stuart, I would like to remind our audience that today's comments may include forward-looking statements reflecting KBR's views about future events and their potential impact on performance. These matters involve risks and uncertainties that could impact operations and financial results and cause our actual results to differ significantly from our forward-looking statements. These risks are discussed in KBR's second quarter earnings press release, KBR's earnings presentation, KBR's Form 10-K for the period ended December 31, 2014 and KBR's current reports on Form 8-K. You can find all of these documents at kbr.com. Now…

Thank you. We'll now take our first question from John Rogers with D.A. Davidson. John Bergstrom Rogers - D.A. Davidson & Co.: Hi. Good morning. Congratulations on the quarter. I guess first question, Stuart, of the $200 million in annual cost savings that you're targeting, how much have you recognized of that in 2015? And so what would be the incremental amount in 2016? Stuart Bradie - President & Chief Executive Officer & Group President-Engineering & Construction: Brian's probably best to answer that question. Brian K. Ferraioli - Chief Financial Officer & Executive Vice President: Yeah, John, we haven't given the specific ranges for that, and the challenge is some of those costs are still in the results for the year. As the reductions occurred throughout the year and continue to occur, you had cost in there for the first six months, you have cost in for the first three months, so that $125 million is being spread out, some of which have been identified and are being actioned, and the costs haven't yet come out of the results that have been published. So by the end of the year, the full $125 million will be effective, but it's really a blend throughout the year. John Bergstrom Rogers - D.A. Davidson & Co.: Okay. Sorry, the $125 million? You referred to $200 million in annual cost savings. Brian K. Ferraioli - Chief Financial Officer & Executive Vice President: Yes. Well what we've said is $125 million has been identified and actioned to date; $200 million is the goal. John Bergstrom Rogers - D.A. Davidson & Co.: Okay. Okay. Thanks for that clarification. And then I guess, Brian, just one other thing. In terms of the guidance, the $1.22 to $1.37, that includes presumably restructuring costs? Brian K. Ferraioli - Chief Financial Officer & Executive Vice President: It does. It does. It reflects the gain on the Building Group sale, which obviously had not been baked into the guidance at the beginning of the year, but it includes the restructuring and it also frankly, includes the correction of the error. The restructuring and the correction of the error kind of balance out. John Bergstrom Rogers - D.A. Davidson & Co.: Okay. Great. Thanks. I'll get back in queue. Brian K. Ferraioli - Chief Financial Officer & Executive Vice President: Thank you.

And we'll take our next question from Tahira Afzal with KeyBanc Capital Markets.

Good morning, folks, and congratulations. Very solid quarter. Stuart Bradie - President & Chief Executive Officer & Group President-Engineering & Construction: Thank you, Tahira.

The first question, Stuart, we've seen sort of a scurry or flurry of LNG announcements recently, including potential contractor selections. If I do the math, it seems that at least for the near term demand, let's say, for the next three years, we're probably going to see an excess of capacity with customers are saying they're going ahead with projects. So I would love to get your viewpoint, do you think there's a chance you'll see a slight over-build as customers try to take advantage of a transitory low-cost environment? Or do you think eventually some of these projects will get slightly pushed out? Stuart Bradie - President & Chief Executive Officer & Group President-Engineering & Construction: I think probably the latter, Tahira. I think at the end of the day, the customers themselves, the client base are under capital allocation pressure as you know, and they're trying to cut their own costs and some are out over their skis and they're trying to get back. So I suspect the latter and that, I think what will be important is the cost of development and the relative competitiveness of the LNG projects themselves against each other. And I think we've said that all along, that we feel the ones that are more brownfield in nature can take advantage of existing infrastructure, et cetera, that are really sort of have the best chance to go ahead.

Got it. Okay. And Stuart, the next question, you mentioned again in your commentary that you're still hoping to see low teens kind of margins on the Government Services side. I would assume that would mean that you still expect that large U.K. contract to potentially be on time and we should start seeing a potential kick from that in 2016? Stuart Bradie - President & Chief Executive Officer & Group President-Engineering & Construction: Yeah, I mean, there's two of those contracts. I think one is progressing very well, the Fixed Wing, and we do think that will close this year. And the Army 2020 is, as every year in the – you're in the – at the mercy of politics, and we do feel positive that that will progress again; it may move out a little bit, but I think there's a significant commitment from the U.K. government to bring the Army back from Germany. So it's just the (25:54). So I think we made the statement so we think both of those happen this year, but while certainly MFDS will happen this year and the decisions on Army 2020 will be made this year.

Got it. Thank you very much, folks. Congrats, and I'll hop back in the queue. Stuart Bradie - President & Chief Executive Officer & Group President-Engineering & Construction: Thanks. Brian K. Ferraioli - Chief Financial Officer & Executive Vice President: Thanks, Tahira.

We'll now move on to our next question from Steven Fisher with UBS.

Great. Thanks. Good morning. Stuart Bradie - President & Chief Executive Officer & Group President-Engineering & Construction: Good morning. Brian K. Ferraioli - Chief Financial Officer & Executive Vice President: Good morning, Steve.

Just wondering if you could talk about the trajectory of backlog you see in both the near term in Q3 and Q4 and then, how you think the backlog could progress in 2016, assuming Magnolia and Tangguh projects come through? And related to that, are the Tangguh and Magnolia potential awards bigger than what you still have left to burn on Gorgon and Ichthys? Stuart Bradie - President & Chief Executive Officer & Group President-Engineering & Construction: Good question. I think – I mean, everything relates to timing, I think, Steve. Our statements before were really that we expected backlog to be flat through the year and certainly our performance this quarter is – would sort of hold up in that debate. I think going into towards the end of the year, there's a lot – not a lot – but we're thinking very much, very heavily around the fertilizer project and the timing around that is set for this financial year, but again, it could probably – it could slip. It's not scheduled to, but these things can move a little bit to the right, and if it moves to the right, it'll slip into early 2016. But moving into 2016 on the broader question around Tangguh and our ammonia opportunities on Magnolia, there's a good opportunity for us if the stars align with those things could increase our backlog.

Okay. And then I'm not sure if I missed it. I didn't see anything definitive in the Q, but just if you could just give us the Pemex update. It sounded like that was sort of potentially imminent, but I know it's a hard thing to nail down specifically. I don't know if there's any update there you could give us? Stuart Bradie - President & Chief Executive Officer & Group President-Engineering & Construction: Yeah, unfortunately not. Again, I think we're at the mercy of the U.S. legal system and we're still waiting for the ruling. And as we said last time, once that ruling is made, assuming it's in our favor, it then goes back to the lower courts for I guess the formal implementation of that ruling. And thereafter, the recourse that Pemex would have would be to the Supreme Court. And if the Supreme Court does not hear that because it's simply a resolution of business, not a matter of law, and that's really the feedback we've had from the third-party lawyers, but the external counsel, that they feel it's unlikely the Supreme Court would hear that. I mean, unlikely doesn't mean they won't, of course, but it's unlikely. And then it would be finally finished, but we're waiting for that ruling to come out of the system. And all the arguments and papers and things are all submitted and have been for quite a few months now. So...

Are we still – sorry. Go ahead. Stuart Bradie - President & Chief Executive Officer & Group President-Engineering & Construction: Yeah, no, we'll obviously, when that – when we do hear that, we'll come out and tell you.

So probably still more in 2016 kind of timeframe for that? Stuart Bradie - President & Chief Executive Officer & Group President-Engineering & Construction: Yeah. I think that's right.

Okay. All right. Nice job on the quarter. Thanks. Stuart Bradie - President & Chief Executive Officer & Group President-Engineering & Construction: Thanks. Brian K. Ferraioli - Chief Financial Officer & Executive Vice President: Thank you.

We'll now take our next question from Jamie Cook with Credit Suisse. Jamie L. Cook - Credit Suisse Securities (USA) LLC (Broker): Hi. Good morning, and nice quarter. I guess a couple questions. You know, one, Brian, as it relates to the guidance, the implied guidance for the back half of the year, I think implies like $0.43 to $0.58, which would imply numbers at the low end of the range are below the first half sort of clean numbers. So I'm just trying to understand what would be the drivers behind that. One, are there any – just given the cost saving initiative that you should benefit from. So are there any deferrals or projects getting pushed out? Are there any projects that are completing? I'm just trying to understand why the back end of the guide would be so much lower relative to what we've seen in the first half with the cost saving benefits that you're getting? And then I guess my second question relates to cash flow. It was a little light in the quarter relative to what I would have thought. So can you give your expectations on how you're thinking about the back half of the year? And then I guess my last question, Stuart, would be you talked about the two LNG projects. Could you talk about the resolution of the pending change orders? I guess just given that we're six months into the year, how you're feeling about that contribution in 2016? I think there was news this morning that there were pending strikes in the Gorgon project. I'm just trying to get a feel if you're still comfortable with your ability to get those change orders. Thanks. Brian K. Ferraioli - Chief Financial Officer & Executive Vice President: Okay. I guess…

We'll now take our next question from Jerry Revich with Goldman Sachs. Jerry David Revich - Goldman Sachs & Co.: Hi. Good morning. Brian K. Ferraioli - Chief Financial Officer & Executive Vice President: Good morning, Jerry. Stuart Bradie - President & Chief Executive Officer & Group President-Engineering & Construction: Good morning, Jerry. Jerry David Revich - Goldman Sachs & Co.: I'm wondering if you could just talk about the Johan Sverdrup field. I think we're looking for total CapEx of over $3 billion. Would love to understand what proportion of that would be addressable scope for you and then are there opportunities for follow-on work on the surrounding fields? And I understand those fields are moving towards final investment decision as well this year. Stuart Bradie - President & Chief Executive Officer & Group President-Engineering & Construction: On Johan Sverdrup, the first phase is circa $3 billion to $4 billion. Our addressable piece of that is a piece that we've won to date and that cost to $850 million to $900 million that we're in joint venture with Kvaerner. And so that's what we've announced. I think the exciting part about it, Jerry, is the fact that we feel it's the first stage of a multi-stage development. So I think the overall future CapEx spend on that particular development will be significantly above $3 billion for sure. So that's probably the more exciting piece about it. Jerry David Revich - Goldman Sachs & Co.: Okay. Thank you. And Stuart, you spoke about in your prepared remarks, opportunities in the Middle East in refining and petrochem. I'm wondering if you could just give us some more color in terms of number of greenfields, anything you're comfortable sharing just to flush out the opportunity set for us. Stuart Bradie - President & Chief Executive Officer & Group President-Engineering & Construction: We've not, I think most people are aware that we're in the midst of doing the Sadara complex in the Middle East which is the largest integrated petrochem facility in the world which is a joint venture between Dow Chemicals and Aramco. And we've got a rich history in the Middle East and particularly in Saudi Arabia, both with Sabic and with Aramco. And we're seeing a number of opportunities not just with inside Saudi Arabia as well but outside, and also people like Sabic, companies like Sabic, looking outside of Saudi to expand their portfolios, and so I think it's difficult at this stage and we've not talked specifically about named opportunities in there, but it's an ongoing part of our business and there are a number of key prospects in and around that part of the world for sure. Jerry David Revich - Goldman Sachs & Co.: Thank you.

Thank you. Our next question now comes from Brian Konigsberg with Vertical Research Partners.

Yes. Hi. Good morning. Stuart Bradie - President & Chief Executive Officer & Group President-Engineering & Construction: Good morning, Brian.

Hey. I just wanted to touch on the comment that you made, seeing some progress on closing U.S. government audits, on LogCAP and RIO billing. Will that give you the opportunity to accelerate the collections on the Form 1s that are outstanding? Is that included in the cash flow outlook? Brian K. Ferraioli - Chief Financial Officer & Executive Vice President: Yes, the more we close out the audits, there is an opportunity for us to collect some cash as we're pushing for funding. The two are separate. Some of the disputes we have with the Form 1s are separate from the audit, but to the extent that we do owe some money, we can offset it against what is owed to us, so we eliminate the liability. But to answer your specific question, there is no significant amounts of cash included in the cash flow forecast coming from the settlements with the U.S. government. They could come, but that would be upside.

All right. Great. And just secondly, just questions on FLNG, so involved in pre-FEED. I was under the impression at least one of those was a little bit further along particularly on the east coast of Africa. Maybe you can just comment, is the next stage on at least one of those a FEED/EPC opportunity or will it progress into FEED and then later on into EPC? Stuart Bradie - President & Chief Executive Officer & Group President-Engineering & Construction: That's probably my choice of – oh, sorry, Brian, my choice of words weren't particularly good there. We did actually say that one is in pre-FEED and one is tendering. And the one that's tendering is the EPC opportunity in the east coast of Africa.

And that would be anticipated by year end? Stuart Bradie - President & Chief Executive Officer & Group President-Engineering & Construction: Yes.

Understood. All right, thanks. Stuart Bradie - President & Chief Executive Officer & Group President-Engineering & Construction: The client is saying that they will make a decision before year end.

Got it. Thank you very much.

We'll now move on to George O'Leary with Tudor, Pickering, Holt & Company. George O’Leary - Tudor, Pickering, Holt & Co. Securities, Inc.: Good morning, guys. Stuart Bradie - President & Chief Executive Officer & Group President-Engineering & Construction: Good morning. George O’Leary - Tudor, Pickering, Holt & Co. Securities, Inc.: Good job on the cost savings execution so far. I was wondering if you could just provide a little more color on where the incremental cost saves came from quarter-on-quarter? And then as you look forward, if you broke it down into some buckets, corporate costs, combining facilities versus incremental reductions in work force, where you see the lowest hanging fruit and then the more challenging cost cuts as we move through the back half of the year? Brian K. Ferraioli - Chief Financial Officer & Executive Vice President: Well, the cost reductions really come across everything. We are looking at all costs, whether it be staffing levels, whether it be office, whether it be IT, whether it be travel, training, et cetera. So, it really is a comprehensive approach and we're not trying to break it down by individual categories, we're just looking at the totals. What I can tell you is, the majority of which is occurring in the businesses in terms of percentage, it's embedded in the gross profit number that you see, but you get a lot more visibility into the G&A line which is pretty transparent in the financial statements. So – but without question and unfortunately – the majority of the costs related to reductions in total staffing. But again, it is a comprehensive approach to cost and we are encouraging people to come up with ideas, suggestions on how we can accelerate this, be more efficient, and we've gotten some very good…

And we'll take our next question from Robert Connors with Stifel. Robert Connors - Stifel, Nicolaus & Co., Inc.: Hey, guys. Good morning. How are you? Stuart Bradie - President & Chief Executive Officer & Group President-Engineering & Construction: Good morning, Rob. Robert Connors - Stifel, Nicolaus & Co., Inc.: I just noticed perusing the Q very quickly that the language around a potential repatriation was removed versus the past couple of filings. And just wondering what the reasoning was around that. Brian K. Ferraioli - Chief Financial Officer & Executive Vice President: The repatriation of cash from overseas? Robert Connors - Stifel, Nicolaus & Co., Inc.: Yeah. I believe there was a strategy that identified possibly up to $370 million sitting in Australia and the U.K.? Brian K. Ferraioli - Chief Financial Officer & Executive Vice President: Well we have repatriated some cash. But to be honest, I'm not clear why any language was removed other than we have repatriated some cash. We had put a plan in place, and we've been able to bring cash back without incurring any significant cash or P&L hits. Robert Connors - Stifel, Nicolaus & Co., Inc.: Okay. Do you have any numbers around how much was brought back year-to-date? Brian K. Ferraioli - Chief Financial Officer & Executive Vice President: I don't. But cash moves back and forth routinely. We're talking at least a couple hundred million dollars. Robert Connors - Stifel, Nicolaus & Co., Inc.: Okay. Great. That was my only question. Brian K. Ferraioli - Chief Financial Officer & Executive Vice President: Okay, Rob. Thank you. Robert Connors - Stifel, Nicolaus & Co., Inc.: Thanks.

We'll now take our final question from Vishal Shah with Deutsche Bank.

Hi. This is – thanks for taking my question. Just wanted to get some clarification on the profitability of the two segments, the E&C segment is running at upper single digit margins. And you still have some restructuring to go. How should we think about that segment profitability in the second half? And could there be some upside to your target margins in that segment as well as in the Technology segment? Thank you. Brian K. Ferraioli - Chief Financial Officer & Executive Vice President: Well, I think we're sticking by the long-term goals that we established when we rolled out the strategy with the Technology & Consulting being in the low 20%s. The mix of work will impact both of the segments. But in Technology & Consulting, the more technology the higher the margin would be. The more proprietary equipment and consulting services, those margins would come back down. So it really depends on the mix. On a longer term basis, the blend in the low 20%s we think still is a reasonable estimate. And the same with the engineering and construction where the mix has a big influence. If you do more services the profit margin would tend to be higher. If you do more EPC where you have the construction, the margins tend to be lower, the volume of business will be higher but the margins will be lower. So again, on a longer-term basis, we think the upper single digits for the E&C is a good basis. That will move around from quarter-to-quarter depending again on the mix. But we're pretty confident that we can achieve those goals that we set out last December.

That's helpful. And can you just comment on the Middle East strategy? And you said that you are looking to hire new business head and president in that region. What sort of changes do you expect to make in that region? Stuart Bradie - President & Chief Executive Officer & Group President-Engineering & Construction: Representation, Vishal, in the Middle East is very much about going and doing a project and coming out – the Pearl GTL project we did in Qatar would be a good opportunity. But since then really our legacy has very much centered attention on Saudi Arabia. And so we feel there's great opportunity for us to build businesses in and around the rest of the Middle East, whether that's in Oman or Qatar or Abu Dhabi or Kuwait, et cetera. And opportunities in Iraq, for that matter. And really establish, our brand is very well-respected, it's very well-known across the Middle East. And I think we've got a great opportunity and some significant growth opportunities for us looking at the Middle East in isolation.

Thank you.

Thank you. And that does conclude the question-and-answer session. Mr. Stuart Bradie, at this time I will turn the conference back over to you for any additional or closing remarks. Stuart Bradie - President & Chief Executive Officer & Group President-Engineering & Construction: Thank you. Thank you very much. Well thank you very much for taking the time to listen to us this morning. Again it's a pleasure to be able to talk about a company we're very passionate about and we're very passionate about the future. And I think coming back to some of the statements earlier, we're very conscious that historically we failed to deliver on promises and certainly since my tenure we've been very clear as to what our strategic goals were and what the metrics would be that we should be measured against, and we're sticking by those and we report against them next quarter again. So thank you very much again for taking the time, and I look forward to seeing you all as we travel around. Thank you.

That does conclude today's conference. Thank you all for your participation, and you may now disconnect.