Hello, everyone, welcome to the KBR Inc. Fourth Quarter 2022 Earnings Conference Call. My name is Charlie and I’ll be coordinating the call today. [Operator Instructions] I will now hand over to your host, Jamie DuBray to begin. Jamie, please go ahead.

Thank you, Charlie. Good morning, and welcome to KBR’s fourth quarter and fiscal year 2022 earnings call. Joining me are Stuart Bradie, President and Chief Executive Officer; as well as Mark Sopp, Executive Vice President and Chief Financial Officer. Stuart and Mark will provide highlights from the year and then open the call for your questions. Today’s earnings presentation is available on the Investors section of our website at kbr.com. This discussion includes forward-looking statements reflecting KBR’s views about future events and their potential impact on performance as outlined on Slide 2. These matters involve risks and uncertainties that could cause actual results to differ significantly from these forward-looking statements, as discussed in our most recent Form 10-K available on our website. This discussion also includes non-GAAP financial measures that the company believes to be useful metrics for investors. A reconciliation of these non-GAAP measures to the nearest GAAP measure is included at the end of our presentation. I will now turn the call over to Stuart.

Thank you, Jamie, and thank you for taking the time to listen this morning. I will start on Slide 4. Now you’ve seen this before. It’s our Zero Harm pillars. And today, given its year-end, I would like to focus on health, safety and security, which is the button on the top right there and really have a look at our performance in 2022, which we’re going to do on Slide 5. So when it comes to HSSE, we focus a lot on leading indicators, things like visible leadership, interventions, tonnage to care conversations, task planning and things like risk assessments. And we believe this drives the right behavior in line with our people-centric values. The proof, however, that we – what we do on the front end is really working is, of course, what comes through on the back end so the lagging indicators. Now remember, we believe good safety is good business. And often, there’s a direct link between safety performance and mission and project delivery performance. So I’m just pleased to report that in 2022, we had one-off, if not the strongest performances in our history, with a total recordable incident rate of 0.079 and we achieved 91% Zero Harm Days across all our projects, our sites, offices on a global basis. And these numbers include contractors and subcontractors under our responsibility, so quite a performance. Both of these lagging indicators are industry-leading and are a direct result of the amazing performance of our people and our partners all over the world. This takes a laser focus day in, day out, 24/7, and I will publicly like to thank everyone involved. The team truly delivered. We’ve highlighted some standout projects and programs as well as some of the external awards we have received during the course of…

Awesome. Thank you, Stuart. I’ll pick it up on Slide 11, and I’ll say it sure is a pleasure to report another year of healthy balanced financial performance and progress towards achieving our long-term targets that Stuart just covered. Revenues for 2022 were in line with expectations, coming in at $6.6 billion and as you can see, up 9% over last year on an ex-OAW basis. 6% of this 9% was organic growth. As a reminder, OAW or Operation Allies Welcome was the large episodic humanitarian support effort that generated about $1.6 billion in revenue in 2021 with a few hundred million spilling into early 2022. All business units within Government Solutions and Sustainable Tech, STS contributed to growth this year, and sure is nice to see STS turn the corner on producing top line growth as legacy work continues to trickle off and being replaced by much more profitable and sustainable endeavors, just like our plan all along. Profits were the bigger story, and we’ve been emphasizing this with investors for some time. Our strategy has been to focus on upmarket offerings in the government, and high-margin IP and integrated solutions in sustainable tech. This shift underpins the profit margin improvement plan we have been body in our long-term targets. Our results for 2022 show we are off to an excellent start indeed. Adjusted EBITDA margins grew to 10% with improvement coming from both gov and sustainable tech, together, adjusted EBITDA margins grew 166 basis points. And consequently, adjusted EBITDA dollars grew 7% in total despite the OAW headwind. And as Stuart said, 18% adjusted EBITDA dollar growth, excluding OAW, quite terrific. Adjusted EPS finished the year at $2.71, above our guidance. Finishing above reflects continued excellent project performance by both segments, a bigger R&D credit than expected and…

Thanks, Mark. Great job. Let’s move to Slide 16, the final slide of today. Just – it’s been about a long presentation, lots to take in. So just to give you some key takeaways from today. Firstly, I mean our commitment to make KBR an absolutely great place to work for all is unwavering, and we made good progress advancing our people agenda in 2022, and we’ll continue to work that. We delivered in the year doing what we said we would do and frankly, outperformed with sustainable technology, earnings growth and cash management being absolute standouts. We presented multiple strategic pathways to achieving our growth targets as we head into 2023 with circa 70%, 7-0% work under contract. In 2022, we returned more capital to shareholders than ever and as Mark presented, that is set to increase in 2023 and through to 2025, which gives us increasing confidence in delivering a 2025 adjusted EPS target of $4.75. Now I’ll hand over the call back to Charlie, who will open up for questions. Thank you.

Thank you. [Operator Instructions] Our first question comes from Steven Fisher of UBS. Steven, your line is open. Please go ahead.

Thanks. Good morning. So just one question on your 2025 target. I guess, Mark, given that it assumes roughly a turn higher of leverage than you are at now. How committed are you to putting that turn on? Or are you considering sort of an acceptable outcome of a lower EPS goal if you don’t find deals that meet your criteria? I know you have a good awareness of discipline on M&A. I think, Stuart or Mark, you may have said that we’ll see an increased proportion of buyback. So how are you thinking about that turn of leverage in there?

Well, we are confident that at our scale and our diversification and multiple paths to get there, as Stuart said, we can lever up in this type of environment. Obviously, we’ll be cautious if environments get extreme, but we – the outlook looks reasonably within our control in the credit markets to lever up responsibly at that level and to deploy more capital going forward that Stuart clearly suggested. So we’re very confident in our ability to perform in the organic business. We expect to continue to do some tuck-in M&A where we find really attractive opportunities. And as we signaled quite clearly, we’re very comfortable with our outlook to the extent that buybacks are increasingly more attractive for us, and we’re comfortable levering up in doing so at that level. We think that’s a very responsible level 3.0 given the scale we have and the diversification and multiple pathways to deliver. So answer – short answer, yes, Steve, to do at that level.

Okay. Great. And then I know you said that the organic growth was in line with your targets. Can you just give us what that organic growth was and how you see that developing over the course of 2023? And if there’s any color on how that varies within the four Government Solutions segments that would be great.

Yes. When you look at the GS business, we’re right in line with the targets that we have had for some time, 5% to 8% were right there. And we’re comfortable with that. We have multiple path ways to get there. We cite, as Stuart mentioned, RDT&E is a great growth, military space and space superiority is doing well for us. The international piece continues to do incredibly well. And so that’s our target for GS and separate from that STS is much higher as you would expect. And that embodies the work under contract position we have coming into 2023.

Okay, thank you.

Thank you. [Operator Instructions] Our next question comes from Gautam Khanna of Cowen. Gautam, your line is open. Please go ahead.

Yes. Hey, thank you guys. Good morning.

Good morning, Gautam.

Hi, Gautam.

So I had a question just on the assumptions on HomeSafe. You mentioned there’s no moving that’s anticipated in 2023. Could you just talk about what you’re actually anticipating to recognize in terms of revenue and any associated EBITDA contribution this year and how that plays out in 2024 and when you get to full run rate [indiscernible] revised.

Yes. I mean we decided to take a very conservative view in our 2023 guide, and Mark explained that, that we’re going through the transition period. Everyone knows that it runs for most of this year, and we expect it to start in the fall. But we decided just to be very conservative and not include any move. So any moves would be upside from our position today. And the ramp-up going into 2024, 2025 is as we expressed earlier, we think about that cadence moving up sort of $0.5 billion every six months as we move through into full cadence in 2025. So that’s kind of where our thinking is at the moment, that’s the basis of how we’ve structured our targets and these things. I think the way we’ve done it, Gautam, again, is conservative. But as we get closer to the end of the year, as we sort of get, I guess, further embedded, I think that we’ll be able to give you more clarity. But until then, that’s the assumptions that are embedded and it’s better that we are conservative and surprised to the upside than the other way around it.

Thank you.

Thank you. Our next question comes from Bert Subin of Stifel. Bert, your line is open. Please go ahead.

Hey, good morning and thanks for the question.

Hey, Bert.

Mark, maybe just a follow-up to some of your comments on an earlier question. If you look at Government Solutions, organic top line growth sort of bounced around, obviously, a variety of items in there. Do you still see the 5% to 8% organic growth CAGR is reasonable when we strip out items like HomeSafe. And if we look across the segments, it sounds like in your commentary that D&I and RDOFs are ahead of that range and maybe international and sciences space are behind. Is there a path to those latter two catching up in 2023? Or is that more of a 2024 story?

Our business units continue to impress us each year, one ends up on the top of the list and so forth. So they do rotate a bit in terms of their contribution. In 2022 international and space and science were really strong. But we really finished the year with a really good pace in D&I and that was absent of some pass-through that pushed to the right. So we feel great about our positioning on our contract vehicles in D&I and the increased focus of that type of threat that we serve in the D&I market. So we believe that will be a reliable driver of growth in both 2023 and 2024 and beyond. Science and space, those are clumpy procurements, as we’ve mentioned. So we do have some on-contract growth, but we are dependent on the big things coming to market, and those are a little harder to predict. So that one Steady Eddy for sure, great performance and choppier growth. And so it’s hard to say how much happens in 2023, 2024, 2025, but the overall addressable market and our positioning there couldn’t be better. So I think that we’re – as others have said and experience, the procurement decisions coming out of the government were not very strong during calendar 2022 across the board. Our book-to-bill reflects that but we’ve got great work under coverage, and we expect to produce the growth that we talked about towards the low end of our range on the long-term targets for 2023, given that condition but the atmospherics in spending in this area and our positioning are really right for the long-term, and that’s why we’re so comfortable with the long-term targets.

Okay. That’s super helpful. And then maybe – I’m sorry, can I start.

No, go ahead. I just asking that if that was helpful.

Yes. No, that was great, Mark. Thank you. I was just going to say maybe switching to the STS side. Stuart, you mentioned in your prepared remarks that STS is essentially two years ahead of schedule to that $300 million EBITDA target. What’s your visibility like maybe both on the near and medium term, like as we think about 2023 and into 2024 and 2025? Is the conviction that, that continues to grow beyond 2023 driven by the fact that you have line of sight to that growth in your pipeline? Or is it just in general, what you’re seeing in terms of demand for ammonia, LNG recycling projects sort of across the gamut?

No. I mean, my excitement actually is from both the market drivers, but also the fact that our pipeline is super strong. We’re entering 2023 with quite high levels of work under contract and higher than probably some previous years. I think, as Mark said, scale will drive margin increase. We still got a bit of work off of legacy EPC projects that, again, these reimbursable long-term ones are coming to an end this year, but we’ve got a bit of carryover that will again, help drive margins up over time as those work off. So I think our visibility is very strong into 2024, 2025. I think we are super excited about the growth dynamics not just in what we do in volume, but the margin return associated with that volume, the quality of earnings in that business is terrific. And everyone forgets it actually runs on negative working capital. So really, the cash characteristics of STS is absolutely terrific. And remember, we’ve got customers today that are very cash rich. And we’ve got energy security challenges, we’ve got decarbonization thematics and we’ve got, obviously, energy transition and hydrogen opportunities. So I often talk about this being a perfect storm, and I think it truly is and it’s happening on a global basis. And I’m super excited about where STS is going. And I think we’ve proven our thesis that it was right to move away from commoditized construction. It was right to get out of EPC laps on. It was right to actually reposition the business to high-value differentiated capabilities. And I think it’s – that thesis is proving out well.

Great. Thanks so much Stuart and Mark.

Thank you, Bert.

Thank you. Our next question comes from Jerry Revich of Goldman Sachs. Jerry, your line is open. Please proceed.

This is Adam Bubes on for Jerry today. Thanks for taking my question. I was wondering if you can update us on the prospect list in sustainable technologies. Particularly, I’m interested in hearing more about the mix and how big these projects are in the pipeline?

Well, it’s a mixed bag really. I mean I think the prospect pipeline, as I said previously, is super exciting and very attractive, and it’s multifaceted from small, medium and large as you would expect, across the globe and the scale of our portfolio. I mean in the IP world and what we do in sort of technology-led industrial services and solutions, the scale of those is probably less, but the cadence is higher. And the visibility into the future is very strong there. But as you know, the contract values are probably smaller. And sustainable services, we try to show that it’s a 50-50 balance between IP and sustainable services as we are today and moving forward. And the scale of some of those is quite significant up into the $500 million plus to close to $1 billion type work over multiple years. But I think the key takeaway here is its all services. There’s no construction risk involved in any of this, and we’re stuck true to our risk profile and our business model and I think the results are proving that out. So we’ve got stronger visibility into the future because of some of these larger contracts, but it is made up, of course, of high cadence, smaller contracts as well. And that’s been our past experience, and we’ve seen that perform arguably over the last, God, decade, CAGRs in the double digits. So I’m feeling pretty good about that whole mix, entry.

Helpful. And then shifting gears, how should we think about total company EBITDA margin cadence through the year based on project burn timing?

Yes. I mean, logic we detail should be rising. And – but we’ve made commitments. As Mark said, there’s some mix in some of the portfolio-like technology over time and quarter-to-quarter. I think you should look at the overall year’s guide. We’ve been very clear where our EBITDA is and that’s up double digits, 10% from this year. So real earnings growth above our revenue growth. So I think that’s impressive. And then over time, you can see where we’re going in at 2025 targets as well. So I think all up, it’s moving up over time because of scale and mix, and we’re feeling pretty confident about that and the 2025 targets in general.

And I’ll just use the opportunity on that question because of the progressive growth of STS and its economy of scale dynamic the profit mix for 2023 is about 45-55 split first half, second half, that’s a little bit more back-end weighted than we’ve seen in the past, but it’s because of the growth trajectory of STS and the margins that come with that.

Yes. And the work off of these projects that we’ve carried quite forward the low-margin ones, we get rid of them in the first half.

Great. Thanks so much.

Thank you.

Thank you. [Operator Instructions] Our next question comes from Mariana Pérez Mora of Bank of America. Mariana, your line is open. Please go ahead. Mariana Pérez Mora: Thank you. Good morning, everyone.

Good morning.

Good morning. Mariana Pérez Mora: My question is going to be related to Government Solutions. You mentioned that really like several paths you have to grow there, international, local. And the geopolitical environment supports increased spending, especially on defense. But could you please give us some color on how you’re thinking about the political risk of both yearlong continuing resolution next year and actually, the contracting environment or the awarding environment being affected by this political uncertainty? How are you thinking about that?

Yes. I mean, I’m sure that’s a question that everyone in the government space has been asked at the moment. I think there’s a couple of differentiations that KBR brings to the table, obviously, STS is outside all the work we do in government services, internationals outside that. And if STS is 36% in 2023 and GSI is over 20, you can understand that over half of our business is not anywhere close to that issue. The other thing I’d say is that and this is mostly out of the U.S. We have multiple long-term contracts that are critical, and they continue, and we’ve seen this in previous CRs that they continue to be funded. I mean you can’t stop operating the international space station and things like that, for example. We’re very at the tip of the spear operationally positioned as we’ve talked about before. So I do – we are keeping an eye on that. History had shown that, it didn’t really impact the cadence of our performance so much. It was more a catch-up in cash and which we managed as we went into the following year. So it is on a watch list. We don’t think it’s going to impact our 2023 targets at all. And certainly, we don’t think it’s going to impact our 2025 target. So I think we’re very well positioned. I’m not belittling the challenge at all. There will be probably some slowdown in awards. But as long as there’s money on contracts, this will continue. And if they’re critical, then obviously, they continue regardless. So I think we’re well placed. And of course, we’ve got a differentiation with GSI and with STS that others in our peer group, I don’t think we’ve really got to pay, but others in our peer group, so defined do not have. Mark, anything more to add to that?

No, I think well said.

Okay. Mariana Pérez Mora: Thank you. And then you have – how this 70% that you have under contract today of the 2023 guidance compared to history? And do you have any large recompetes coming up this year. How is the timing of that like 30% that is remaining?

The work under contract coming into 2023 is almost identical to 2022 on a consolidated basis. So that’s terrific, and we did well in 2022, as you have seen. And relative to recompetes, we’ve got one pretty significant one in NASA that is underway. And the rest is very small relative to recompete risk in 2023, and it’s actually not that big in 2024 either. So we’ve got plenty of time to work on new bids during that low recompete cycle, which we will do. Mariana Pérez Mora: Great. Thank you.

Our next question comes from Andy Kaplowitz of Citigroup. Andy, your line is open. Please go ahead.

Good morning, everyone.

Good morning, Andy.

Stuart, obviously, very strong growth at STS and you talked about ammonia and plastics, for instance, is helping you drive your growth that’s allowing you to hit your targets two years early, but are you at all worried about potential cyclicality in the business? And how big an impact is the IRA having on the businesses at this point? Or has it really not started yet in terms of that impact?

Yes. I think I mean, I think the thematics that we’ve talked about, and obviously, we are excited about the growth and the growth prospects going forward. I do not believe they’re cyclical. I think that we’re seeing a long – I mean this is a sector that has probably been underinvested in during COVID and probably previously in truth. There was a bit of catch-up to do. I think the whole issue of energy security is at the top table for most countries today. And obviously, that will take a lot of investment in sorting out over time. So that’s not cyclical. We don’t believe – and obviously, the thematic around decarbonization and climate change is not going away and rightfully so. So we don’t see that cyclical in any way. We actually see that over – but what we can see ahead of us being absolutely non-cyclical and a growing part of our story. So very excited about that. So no real concern there at all. And in terms of the IRA, I think what we’re seeing from our perspective is that our customers looking at projects in hydrogen, and we’ve announced some of them recently and looking at doing multiple projects, their rates of return have also gone up because of the breaks that they’re getting and the incentives. And so I think for us, we will see upside, again, not a flash in the pan for KBR, but over time, as these projects come to realization. So I think it’s a very strong tailwind for us in the U.S. I think we’ll see greater investment in the U.S. by our customer base as a consequence. And again, I think that will really shore up and again and support what we’re doing towards our $475 million target. So I think it’s all positive, Andy. And certainly, and to be clear on this, we do not believe this is cyclical. We believe this is certainly what we can see into the future, a continual growth opportunity for KBR.

That’s great to hear, Stuart. So obviously, very positive on STS. The $300 million of EBITDA that you can – due in 2023. But when you look at your overall guide for 2023 and you sort of back into GS, very little EBITDA growth I think for 2023. Is there any sort of mix headwind on GS margin 2023, you’re just being conservative given the noise in DC or any thoughts on that?

Hey Andy, Mark here. I might have misheard Steve’s question earlier, the growth in GS is a little light in 2023 because of the OAW headwind we had in the first part of 2022 that I referenced in my remarks. Longer-term, we’re quite confident in the 5% to 8% organic, but it’s lower than that in 2023 for that reason. Margins are Steady Eddy in government. So we’re 10% or more, and that’s been the case for some time, and we don’t see any major reason to change that looking forward.

Yes. And I think as well, Andy, and as Mark said, the guide, if you take out OAW, it shows growth in government at 9%, 10%. I mean it’s pretty healthy organic growth. And so we’re feeling pretty good about our long-term targets. I think we’re well on pace. And as Mark said, we see no degradation in margins. And in fact, the markets in outside the U.S. are we’re seeing double-digit growth there. And of course, the margins, as you’re well aware, are higher there. So that should help us over the course.

Helpful guys.

Thank you, Andy.

Thank you. Our next question comes from Jamie Cook of Credit Suisse. Jamie, your line is open. Please proceed.

Hi, this is Chigusa Katoku on for Jamie. Thanks for taking my question. On STS, I wanted to ask how much of the EBITDA improvement this quarter was tied to the Plaquemines LNG contract? And then what is implied for the ramp of Plaquemines in 2023 guide? And when will it get full run rate? Thank you.

Yes. I mean, obviously, there’s a contribution coming through above and below through equity and earnings to what we do in unconsolidated joint ventures. We’ve got a very conservative steady cadence around how we would actually realize earnings from these long-term projects. We take a quite a sensible view across this. But we don’t give details on individual projects per se. So I think at the end of the day, the overall performance of STS is incredibly strong across the portfolio, including what we’re doing in that piece in LNG. And I don’t think we should, in any way, get – think that, that is actually driving earnings is the overall performance that’s driving on – and I want to make that clear so.

Okay. Thank you.

Thank you. Our next question comes from Michael Dudas of Vertical Research. Michael, your line is open. Please go ahead.

Good morning, gentlemen, Jamie.

Good morning, Mr. Dudas. How are you doing?

Good morning. Well, thank you. Stuart, maybe you could share your thoughts on how the integration is going with your recent UK acquisitions, how tenor of that market looks maybe that in Australia, which again, has been a very good market for you. And maybe also to follow-up on your comments about the Middle East and the growth there how sustainable and is some of those larger service projects after the IP awards, could that be – is that an area where you could – we could see some of those in the next couple of years?

Yes. So initially, the integration in the UK, where we’ve – as you know, we acquired Frazer-Nash more recently. But – and VIMA after that, actually, and Harmonic company before all the advisory digital high-end consulting, engineering type space. They all speak the same language. They’ve all lined up behind the Frazer-Nash brand, which is very well known and strong in the UK for those high-end services. And in truth, I think the integration is going as well as we could have hoped for interest. I think everyone’s – upbeat everyone’s together, we’ve moved them into offices that are – have to say are very smart and better than mine, I can tell you. And so I think the employee experience is terrific. I think we’re – where they’re flourishing. And of course, that being part of a winning team is part of works best experience. And I think that they’ve won more work today than they’ve ever won and their backlog is stronger today than it’s ever been. So I think they can see the future. And so there’s obviously stability and growth in front of them. So the people themselves are excited. So I can’t say any more, be more positive. I think it’s they’re performing terrifically well. In terms of the Middle East, the numbers are in the trillions, and they go out to 2030. So I mean, that is not a cyclical event. They are looking at their vision through this decade. And it’s quite consistent across the region. They are driving to be the most – the best, the most I guess, sustainable being responsible to climate change and [indiscernible] you can see that in things like the sustainable cities and things not to mention what they’re doing in the energy sector. So for us,…

We appreciate the candor. Thanks, Stuart.

Thanks.

Thank you. Our next question comes from Tobey Sommer of Truist Securities. Tobey, your line is open. Please go ahead.

Thank you. I wonder if you could speak to STS margins over the next few years with the additional scale of hitting the revenue targets for 2025 a couple of years early. There’s also opportunity for margins or maybe better described all-in profitability to be better than prior expectations over a multi-year period.

Yes. I think we cover that a bit last quarter because we were performing above expectation. Of course, that’s resulted in where we’ve landed in 2022 and our outlook for 2023 and beyond. You’re quite right. We had set out to move margins up over time, 1% or 2% each year, reaching by 2025, something in the high teens. And I think right now, we can see a path to high teens and certainly low-20s. As Mark said, as we ramp scale and the mix changes, I think there’s absolutely a pathway to do that for sure. But I will reiterate, we’re standing behind our $475 million target in 2025. And I think the beauty of that to me is we’ve got multiple pathways to get there. And obviously, the commitment to the capital deployment strategy is part of that, but I think just the business resilience and the levers we can pull or we’re not a one trick pony. And I think that’s really, really, really, really important in the world today.

And my follow-up is, could you remind us of the industrial logic for both of these segments to reside within the same company? Thanks.

Yes. I mean it’s – I think that industrial logic, we’ve touched on many, many times. I think we’re seeing an increasing symbiotic relationship between them. We report in segments because the market demands that we do that. But the people that we move across between the business units from GS to STS or even within GS or whatever is substantial. And we move key capabilities all the time every day. We are now sort of looking at – we’ve talked about this before, things like the future of hydrogen, much will depend on the management of hydrogen and the capability set that sits with that. It sits in NASA right now for us. And if you think of storage and utilization of hydrogen and where that sits, we’re seeing the Department of Defense setting out net zero commitments. And they’ve got to get there and I think our ability to help them get there is obvious. And so I do think that there’s a lot more behind the scenes that we probably need to do a better job of actually explaining. But I have to say, I think we’re seeing more and more coming together of these businesses over time, more sharing of capability, bringing expertise experience to bear for a solution. And then having to, of course, carve it back up a little bit to report in the various segments because that’s the way we’re kind of structured in the way that we report. So we’ll certainly be showing more on that as we progress.

Thank you very much.

Thank you. Our final question of today comes from Brent Thielman of D.A. Davidson. Brent, your line is open. Please proceed.

Hey, great. Thanks. Good morning. Hey, I might ask the STS upside potential question in a slightly different way, I guess. I mean I think the U.S. was still only a little over 1/3 of the business in 2021. I’m not sure what it flushed out in 2022. But obviously, these incentives afforded by IRA related to hydrogen and then what seems to be this awareness around ammonia, given global supply issues are real tailwinds here, I think for the business. But Stuart, is the upside potential indicative of a much stronger U.S. market you see coming or just simply a sort of business as usual, a multi-region approach that’s been driving the business to date, maybe greater adoption here is kind of icing on the cake.

I think the latter. I think this is a – it’s a global phenomenal. It’s a phenomenon. It’s a global market. We’re seeing – obviously, we talked about the Middle East earlier. So we’re seeing huge investment in attractive areas for KBR. But you’re quite right. I do think there’s icing on the cake with the U.S., I think the IRA bill is really driving a lot of activity. I mean there’s abundance of gas in the U.S., of course and we’re seeing companies like Mitsubishi sign up and Corpus Christi to do to look at doing 30,000 tonnes of ammonia. And that’s obviously to export back to Japan because of the demand that we talked about earlier in Japan. So I think we’re going to see increasing opportunity in the U.S., which almost is our backyard. But at the same time, I think it’s a global business. It’s proven that way for many years. And we – I think so it’s a one plus one scenario here, not one or the other.

Okay. I appreciate that. And then just my follow-up, when would you anticipate including the full value of HomeSafe’s in the backlog? Is it once that full transition occurs?

Yes, I think so. And I don’t think we’ll – I mean we haven’t landed on this yet, but the way that we book backlog is actually very conservative. We typically book backlog when it’s fully funded or we’ve got levels of track record that gives us very good idea and visibility of how work will be liquidated on a particular contract. So I think we’ll – I think more to come on that, but I think that as we head to was at the end of the year, we’ll put some of HomeSafe in backlog, how much that is. I’m not sure whether it will be a year or more. I don’t know but we’ll get visibility obviously at the end of this year as to what we’re going to do in 2024, and that will go into backlog at the appropriate time and we maybe do some cadence around that to get confidence of where we’re at, and then we can predict the future a little bit better. But again, I think it’s better to be conservative there rather than get it over your skis.

Okay. Thank you, Stuart.

Thank you. We currently have no further questions. I’ll hand back over to Stuart Bradie for any closing remarks.

Thank you for all your questions. Thank you for your interest in taking the time. I know it’s a busy time with earnings. So thank you for that. I think just to close, I think the key message to investors is the – obviously, the performance in STS, the earnings growth, which was absolutely terrific. And obviously, the cash generated, which really is part of our story, and we’ve talked about that many, many times and which gives us great confidence around our capital deployment strategy, how we’re going to deal with the convertible this year and how we’re actually moving forward towards that $475 million mark. So with that, I’ll obviously we’ll be talking to investors and analysts over the course of the next couple of days, and but thank you again.

Ladies and gentlemen, thank you for joining today’s call. You may now disconnect your lines.