Hello, all and a warm welcome to the Q1 2022 KBR, Inc. Earnings Conference Call. My name is Lydia and I will be your operator today. [Operator Instructions] It's my pleasure to now hand you over to our host today, Alison Vasquez. Please go ahead when you're ready..

Good morning and thank you for attending KBR's first quarter 2022 earnings call. Joining me are Stuart Bradie, President and Chief Executive Officer; and Mark Sopp, Executive Vice President and Chief Financial Officer. Stuart and Mark will provide highlights from the quarter and then open the call for 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, also available on our website. I will now turn the call over to Stuart..

prototyping, classified space capabilities, human health and performance, NASA ground systems and satellites and you can see the sizable long-term GSMO award at the bottom. Our GS book-to-bill and what is a seasonally slower quarter, similar to Q1 of last year, so not really a surprise.

But an important takeaway is that the GS business has an impressive 90%, 9-0 percent, of the work secured today to deliver our 2022 numbers, a terrific place to be. Now on to Slide 8 and we'll talk a little bit about Sustainable Technology. The outlook here is also terrific.

High oil and gas prices, coupled with continued sustainability commitments and a need to build additional capacity across commodity supply, including ammonia, clean refining products, olefins and petrochemicals, as a consequence of world events, is expanding global opportunities for our business.

We continue to see owners of aging assets looking to companies like KBR to help them decarbonize and drive efficiency via more data-enabled decision-making. We have highlighted some recent wins here to demonstrate this. Again, I will not read all the words as we've also announced these recently but the themes are again clear.

Olefins demand at scale, smart maintenance, plastics recycling, green and blue ammonia, hydrogen, et cetera. The STS book-to-bill in the quarter was 1.3. Combined with the pivot away from Russia, this really demonstrates the global nature and resiliency of this business.

Excluding the debooking of the Russian work, the book-to-bill of new work won in the quarter was actually 1.4. Super impressive and I'm sure you'll agree. And just to reaffirm what we said last month, that despite no longer having the Russian market, the outlook for STS for the year has not changed.

On this, on the previous slide, we've shown the backlog for each of the businesses. Combined for the group, this stands at $18.5 billion with options and our pipeline continues to be very, very sizable with line of sight to over $100 billion in the next several years but importantly, with $7 billion in proposal prep and $8 billion awaiting award.

And we continue to see over 150 opportunities at or above $100 million, so nicely balanced across the portfolio. So following on from our great year in 2021, momentum continues across all our key businesses with a fantastic start to the year and great visibility going forward, leading, of course, to an increase in guidance. Now, over to Mark..

Terrific. Thank you, Stuart. I'll pick it up on Slide 10 for the Q1 financial performance summary. As you've heard, all key metrics were up significantly, reflecting favorable market conditions and the strong overall business execution that Stuart highlighted moments ago.

These factors are the drivers to increasing our guidance which I'll cover a little later on. Revenues for Q1 were up 17%, driven by our Government segment, where we saw healthy growth across all 4 business units. Overall, margins were solid, with both segments right on track with our '22 targets, GS at 10%, STS at 16%.

Adjusted EPS was up 29%, driven by the overall EBITDA growth, coupled with modest improvement in nonoperating items year-over-year like FX, interest and taxes. Cash flow is terrific and right on track with our increased expectations for 2022. Working capital effectiveness improved with overall DSOs reduced.

Strong cash flow further strengthens our balance sheet, of course. And as previously announced and as Stuart covered earlier, the Ichthys subcontractor settlement in April will add significantly to our financial capacity as well. On to Slide 11 for our segment details.

Government continues to roll, with year-over-year top line growth of 25%, 21% being organic and strong margins at 10%. Defense & Intel was up 8% year-over-year, all organic and 11% up from Q4. This team continues to deliver its IDIQ portfolio extremely well and in high advanced technology areas.

This includes some of the contracts Stuart mentioned earlier. Science & Space was up 2% organically from last year and also up 10% sequentially from Q4.

While new business proposals awaiting award continues to mount in this business unit, Science & Space team has won all of its recent recompetes and is receiving terrific performance scores across its contract base. Readiness & Sustainment was up 62%, all organic, demonstrating the strong franchise we have in this part of the market again.

Ella's team is now quite busy supporting theater activities in the European Command, plus its wide range of recurring programs around the world. This team is always ready to serve and deliver. International grew 24%, with Frazer-Nash in Australia being the main drivers here.

The Frazer-Nash integration is going very well and the range and depth of advanced capabilities continues to impress us. And Australia is, once again, at the top of class, posting growth of 17% in the quarter. Margins were solid and as planned across all GS business units as we've said upfront.

Over to STS, this business is also delivering at a high level. Just stepping back, this team continues to build an attractive book of business and is leveraging its leading market positions as clients double down on sustainable, cleaner and safer ways to operate.

As we have said many times before, this is truly a global business, with access to a broad spectrum of the market and with a highly agile sales team.

Impressively, despite removing in-flight projects and future opportunities associated with Russia, other opportunities have been harvested and there is no change to the STS financial outlook for this year and beyond. All remains robust.

STS revenue ticked down in the quarter, due primarily to our intent to exit commercial activities in Russia which we announced last month and our previously discussed and announced exit from commoditized services in 2020.

In the quarter, this team generated $43 million of EBITDA and 16% margins, reflecting our strategic shift towards higher margin, sustainability-enabling differentiated technologies and engineering solutions.

From a comparative perspective, you'll likely recall, we had a program closeout benefit last year in the first quarter which boosted margins by about 3%.

So from a comparative perspective, margins in the STS business are up nicely year-over-year from 13% to 16%, an outstanding result and consistent with the transformation plan we set out for this business just about 1.5 years ago.

In summary, both businesses demonstrated great agility and resilience in the quarter, delivering strong growth, excellent profitability and very strong cash results which takes us nicely to liquidity and capital deployment on Slide 12. As said earlier, the balance sheet and liquidity position are in terrific shape. In Q1, we upped our dividend by 9%.

We continued buybacks and all the while leverage downticked to 2.3x EBITDA. The settlement with our former subcontractors on Ichthys occurred in April and approximately $200 million will be reflected in cash inflows from investing activities in Q2. There's more to come next year as well, as Stuart covered earlier.

While this inflow won't affect operating cash flow, it will, of course, add directly to deployable cash which, of course, is the name of the game. On to Slide 13.

With a strong Q1, 85% of work under contract across the consolidated portfolio, favorable business conditions and growing deployable capital, we are increasing our full year adjusted EPS guidance to a range of $2.53 to $2.65, a $0.06 increase over our original guidance at the midpoint.

We're also narrowing our revenue, operating cash flow and adjusted operating cash flow guidance ranges for the year, as outlined here. We expect consolidated EBITDA margins of 10% for the full year, with future quarters expanding from Q1. And in terms of timing, we expect 50-50 split in full year EPS cadence between the first half and the second half.

Thank you. And I'll now turn it back to Stuart to finish it up..

Strong growth, double-digit growth in revenue and adjusted EPS across all our key metrics, with outstanding operational performance, including safety which is an absolute testament to our great people, a significant derisking with CCPP and Russia exposure resolution combined with a cash injection of US$200 million in Q2, plus another $70 million circa in 12 months' time.

Together, with another quarter of excellent cash conversion, this, of course, results in greater deployment optionality and reduced uncertainty and, of course, reduced distraction.

The market outlook across the portfolio remains highly robust and the associated pipeline of opportunities are attractive and align with the positive outlook and the raised guidance. In short, momentum continues. Thank you. And I will now hand it back to the operator, who will open the call for questions..

[Operator Instructions] Our first question today comes from Tobey Sommer of Truist Securities..

My first question would be, what is the proportion of recompete business remaining for the year and -- in for calendar '23?.

Good morning, Tobey. As we said, we've won our largest recompete of the year with GSMO. That comes through in Q2, obviously. But we've announced that and that actually makes our recompete levels very, very low for the rest of the year, so I don't think anything significant that would derail our story and certainly in this year.

And going into next year, there are some larger recompetes for NASA that are coming through. The timing of that is still a little bit questionable. There's quite a backlog in NASA at the moment, quite a bit waiting, for the war. But it's quite telling that we want GSMO and we want it on a best value basis.

I don't have the exact percentage of recompetes for next year.

Mark, do you have that?.

We're looking forward, Tobey. I'm not going to speculate but it's -- I would call it a fairly normative in the government contracting since a year. We've had really low recompetes but very good success rates in the last couple. We're very open about that but '23-'24 is more normative.

And we'll, as we get closer to that year, I think we'll give you a better waterfall of that outlook maybe in the second quarter call..

Yes. And we'll know more about timing at that time as well. So -- but I think the takeaway for this year is that very early in the quarter, obviously, we've won the largest recompete and most of what we're building now is all additive..

And then with respect to funding actions, I'm curious if your customers had a different -- and you noted a difference in the calendar first quarter and then so far in April after having the budget, was there kind of a -- any kind of notable change, one would imagine, in improvement?.

Yes. I think, Tobey, I mean, obviously, the GSMO award was a good sign. But I think it's too early to tell. I think we'll know more as the quarter progresses..

And lastly, does your -- what's your posture now that you have finally put the period at the end of the sentence for Ichthys and all related kinds of work? And you look at M&A, what's the quality life of the pipeline for material kind of addition?.

Well, I mean, clearly, obviously, the excess cash is hugely additive to our optionality and obviously, the cash conversion continues to be strong. So we feel pretty good about the -- I guess, the level of deployment we can do. But as you rightly say, it's all about what's in the pipeline today.

And I think the world is certainly down a little bit but multiples still tend to be quite high. There's quite a bit in the market. But again, it's all about finding the things that are very complementary to what we do and align with our strategic vectors. So we're always out looking. Acquisitions have been a very core part of our story.

And we're not perfect, of course but I think we've done them reasonably well and it'll be very additive to shareholder value. So I think more to come probably but ultimately, you know I can't give you any details, of course.

But there's quite a bit out there and I think we're pretty upbeat as well with Frazer-Nash which we did, obviously, at the end of last year. And they're really performing at the top of the level that we expected. And their bookings were, as I said in my prepared remarks, at the largest they've ever been in terms of backlog.

So again, I think we're very upbeat about the opportunity to do more acquisitively..

Our next question today comes from Michael Dudas of Vertical Research Partners..

First question on STS. Can you -- as you look through and looking at the prospects in 2022 and beyond, certainly, you see a lot in the press about -- or in releases about ammonia and hydrogen. You've had pretty broad-based wins here lately.

What areas do you see over the next several quarters that might be more beneficial or see more activity on your front? And how is the conversion from when customers are starting to discuss early advisory thoughts about what to do with these technologies, moving ahead towards implementing final decisions? Is that starting to accelerate because of concerns about time to market and policy goals, et cetera? Would like to hear some thoughts on that..

So, I mean, there's a lot of dynamics at play in that question, Mike. I would say that the terrible war in Ukraine, of course, has changed, I guess, people's outlook in terms of speed to market. There's obviously a constraint in gas, there's a constraint in a lot of ammonia, et cetera.

And we're seeing people accelerate decisions around new developments and specialty expansions across that sort of portfolio. So you have that dynamic at play. You are seeing, of course, the whole sustainability and climate change agenda. Still very, very strong.

And again, we're seeing people come to market as decisions obviously impact that future energy security. And I think that all that bodes well for STS and the level of activity we've got in that business is enormous. And I really -- we're really upbeat about the prospects for STS.

And the fact that they pivoted away from Russia this quarter so well and filled the hopper by really pointing what is a very agile sales force into other areas, they've done terrifically well. And a big shout out to them because they had to do it quickly.

And I think the agility and the resilience of that business is showing through in the numbers and the book-to-bill. And so, I think that market is red hot and it's red hot for a number of factors. I've just described the high oil and gas prices, of course, also helped in terms of our customers' capital deployment options.

So I think -- and we're seeing company as well starting to look at aging assets and how to -- how best to make them more efficient and how to -- particularly to drive additional output given the constraints in that market..

And I'll add just one thing that's specifically encouraging is on Hydro-PRT, our plastics recycling capabilities, coupled with Mura. We've completed 3. We got a lot of projects in flight right now that are advisory consulting oriented relative to feasibility and implementation.

But of the 3 that were completed, all 3 have resulted in real projects coming out of those studies. So still early days on all of that but really good early signs of conversion rates of advisory to real highly profitable projects but also ones that are really impactful to the green future of those clients..

That's encouraging, Mark. Just a quick follow-up on what you said just at the end, Stuart, about aging assets. And I was intrigued by the contract that you won for the maintenance service, predictive, preventive work in the Middle East.

I would think there's probably a big backlog of those types of projects that are ahead given the lack of spending and defer this over the last couple of years and what energy companies and chemical companies are trying to do, no?.

No, absolutely. I mean this is through our technology-led Industrial Solutions business and very much looking at predictive, preventive and getting in front of the curve with the customer to drive down their carbon footprint and deliver efficiencies and greater output.

And I think the asset base -- I mean, that particular facility is in Jebel, if you've ever seen a picture or been to Jebel, there's a multitude of assets. I mean it's an enormous industrial base. And we've already started to do work for a sister company of them just down the road. So, I think there's an enormous opportunity in that arena.

I think this whole data-driven solution is the way of the future as we get more sophisticated and plant operators really understand how to sweat their assets in a more carbon-friendly way. So I'm really excited about that part of the business.

And certainly, there's a lot of momentum in the INSITE product which is our own IP, in terms of how we do remote monitoring. The number of licenses we've sold in the last year is equivalent to what we sold in the previous 3 or 4 years. And so the momentum around that is terrific..

Our next question today comes from Brent Thielman of D.A. Davidson..

Okay. The Readiness & Sustainment business, I mean, great comparables here this quarter.

I was just curious if there's any remaining OAW work impacting that? Or is this really more a function of other activities around the globe, including operations in Europe?.

Yes. I mean that's sort of an expected question around OAW, was a bit of a tail that came into this quarter, of course. And I mean, that project is essentially complete now. But the way to think about it is ex-contingency, the GS business globally grew circa 6%....

Organically..

Organically. And I think that's very telling and aligned with our sort of long-range target. So we're very pleased with that.

And I mean that business, the R&S business, is obviously benefiting from -- no one likes to benefit from difficult situations but the fact of the matter is economically, we've got an uptick in activity, both in the Defense & Intel business that we can't talk too much about.

But obviously, in the R&S business, from the work we're doing on LOGCAP, both in the U.S. and in, obviously, European Command, where there's a lot of activity. And we also run, as you are aware, many of you are aware, the prepositioned stock contracts in the U.S. to get equipment ready for deployment.

And there's an uptick in activity there, as you would expect as well. So we don't know how that's going to play out through the course of the year. I mean certainly, we don't see any short-term change in that.

But is there going to be a longer-term enduring mission as NATO really starts to become -- one thing that's really happened here is that NATO is back, isn't it? I mean I think, under the previous administration, there was a lot of challenges around NATO.

But certainly now, the importance of NATO and the relationship across the allies is front and center. So will there be an enduring mission? A betting person would probably say, yes, probably. What scale that is, what it looks like, we don't know.

But certainly, there's been quite a bit of uptick in activity around that as we previously said and as you would expect..

Okay. Very good. I guess the follow-up would just be -- maybe an update on the nondefense sort of related elements of the Government Solutions business and I guess, particularly around expectations this year. Science & Space is growing at, I guess, a relatively slower clip this quarter, kind of stable master budget, you've got the GSMO contract.

Just curious what your expectations are maybe through the course of the year in areas outside of Defense..

Yes. I mean that business -- I mean, it did grow 2% in the quarter but there's a plethora of things in the pipeline waiting for award that have been, I guess, waiting for several months now to come through the system.

And the fact that GSMO came through in the way it did and it was the best value award, with no actual protest which is unusual these days which is good. And so anything we're bidding there is additive. And there's quite a few billion dollars of work that we're bidding there.

So I mean, if the timing of that, it all happens over the first half of the year, I think you'll see quite a nice uptick in that business and if we win our fair share. But again, it's really unknown in terms of timing. So it's tricky to give you any guide there. But we are pretty comfortable with our overall GS growth.

We're very comfortable that the combination of the non-Defense and the Defense will actually meet our expectations through the course of the year. So that's why it's nice having these various elements of business. I think we're well positioned in all these markets. And I think the combination is the power in this.

And I said in my prepared remarks and I'll say it again, we don't talk about our international portfolio quite enough. I mean the performance of the U.K. business and the margins they're delivering is absolutely terrific. And Mark mentioned the growth in Australia as well at 17%; so all up.

I mean the margin enhancement, the growth that comes through from that international business, is absolutely terrific. So I think it all adds in combination. But when you look at Science and Space, it really comes down to the timing of awards and we're very pleased now that we've got through our largest recompete..

The next question is from Andy Kaplowitz of Citigroup..

Stuart or Mark, can you give us more color regarding STS revenue for '22? I think you said in the past that KBR delivered double-digit growth in the segment for the year. And I know, Mark, you said no change to guidance for the year. I think, Stuart, you said the market is red hot.

So does revenue growth in the segment accelerate from here and you should return to revenue growth even in Q2?.

No, absolutely. I think the -- I mean, the interesting start, we obviously had to debook some revenue from Russia. But I think we said we would cross the threshold, if you like, as the working off the heritage, reimbursable EPCs as we build up the book of business that really is our future.

And I think that threshold was all but met this quarter, just slightly off but we're there or thereabouts. And the growth coming in the core part of STS is in line with our expectations. And our book-to-bill would prove that out and I think our pipeline will prove that out and I think the outlook in the market would prove that out.

So we're very, very happy with that and very excited about it actually and the opportunities that we discussed earlier and Mike's question. And including plastic recycling, as Mark highlighted. So I think it all bears well for this year and for the foreseeable future, in truth..

Very helpful. And then maybe related, can you give us more color into how your businesses are faring, given the macro challenges that are out there? Obviously, you already have accounted for KBR's Russian exposure.

But are you seeing any impact on STS from a weaker China or China lockdowns? And are you seeing any supply chain issues slowing down projects? It doesn't seem like that but any color would be helpful..

No, we're not really impacted by the supply chain issues, just given the sort of work that we do. And I think the inflationary pressures we've talked about before, given a lot of our work is cost reimbursable. I think we're in pretty good shape there. The China market, we do work there in our technology business, of course.

But I think just the way that we're seeing more activity in places like North America and the U.S., in particular, than we've ever seen. And I mean, I don't really have too much concerns about that. We'll be watching it. Of course, we're not complacent in any way, shape or form. But I think the breadth of -- I mean, it's a global business.

We've I think we've proven that and hopefully, you're comfortable that, that statement is absolutely true. And we see opportunities all across the world that we can convert to keep this train running at the speed it's running. So I'm not really concerned about that.

I mean I made very firm statements about our expectation of double-digit growth just in the last question there and I think that will continue despite lockdowns in China.

And I think you'll start to see various countries ebb and flow just because of certain circumstances but I think the global nature and the resilience of this business is well proven..

Next in the queue, we have Bert Subin of Stifel..

So Stuart, at least, I guess, in your release, you guys noted that you booked 85% of what you need to hit your guidance for '22. Stuart, I think you said that's now 90%.

What do you see as the items that either drive guidance higher or result in you missing on the low end? I imagine the -- you guys are thinking there's upside to what you're putting out there..

Yes. We are a conservative bunch as everyone keeps beating us up about but it's better to be that way. I mean it's 90%. We've got 90% work under contract for GS and 85% overall.

And one has to remember that we do have things that come through that we don't know they're going to come through yet, small IDIQs, on-contract scope growth, a lot of what we do in the consulting arena and high-end engineering smaller contracts and things. And that makes up 10% to 15% of our revenue every single year.

And so when you add that on to the 85% number, you can understand that we feel pretty good about the coverage for the full year and meeting the guidance that we -- the increased guidance that we've put out.

So with the cadence of awards, if that starts to come through now that the budget is clear, I think that -- and given our low recompete position and given our commitment in STS and the double-digit growth, I think that obviously, we're confident of meeting what we've set out.

And is there an opportunity of things break on time, things like that to do a bit better? Of course, there is..

Okay. That's helpful. Maybe just on the STS side. When you guys put out your Investor Day or your Investor Day release back in '21, I think oil was something in the high 50s; today, over 100. How much of a tailwind do you expect that to be for STS as you think about your 2025 goals? Obviously, you've sort of reaffirmed that guidance.

I guess I'm wondering why that wouldn't be more of a tailwind, just given some of the things you guys are doing on the clean energy side?.

Yes. I mean usually, when you go to market, you've got double-digit growth with margin expansion at the same time, people are usually quite happy if we could say that at the beginning. But as ever, as the market evolves, you're right, there's fantastic tailwinds in that marketplace.

But I think, obviously, you've got environmental pressure and climate change agenda pressure on the big oil companies. And you're seeing them taking the revenue that they're receiving from these higher oil prices and decarbonizing their assets and looking at ways to diversify their portfolio which plays nicely into our STS positioning.

So you're right, there's significant tailwinds in that market. But I think -- at this particular point, I think it's quite right that we stick by our guidance, the double-digit growth with the margin expansion that we've put out there. I think that would be -- if we achieve that and maybe a little bit more, that would be a terrific outcome.

And we will set the bedrock for that to continue into next year and beyond..

Obviously, I was not trying to belittle anything you guys are doing. It just seems like you have some pretty serious tailwinds there..

No, no, no, I....

I appreciate the time..

Totally understand that. Thank you very much..

Next in the queue, we have a question from Jamie Cook of Credit Suisse..

This is Chigusa Katoku on for Jamie. My first question is following up on the R&S question earlier.

If growth moderates throughout the year, what would that mean for Government margins?.

I'm not sure I heard the first part of the question but I would say Government margins did 10% in Q1. That's online with target. It -- there's some modest dilution from finishing up OAW embodied in that number. And for that reason, all other things being equal, we actually expect a modest uptick in margins in GS over the rest of the year.

I'm not sure around to a bigger number but nonetheless, there will be more there, in light of that absence of OAW ramp down. And that's positive, plus the types of wins we've had and the market conditions do not suggest any deteriorate margins either. So we really feel good about where they're heading, their contract mix.

The international piece, of course, always helps, as we've talked about over and over again. So the trend there is good..

Yes. And I think that was demonstrated from Q4 last year into this year. When OAW was running it, it's height, I think we're up 0.25% coming into this quarter. And the other piece to layer on to that is just the growth of our international portfolio, where the margins are higher and meaningfully so.

And as a consequence of that, there's upward pressure on margins also. So Mark is right, we're feeling pretty good about the 10% that we've put out there. And I think that is a solid number to be modeling as we look forward..

Okay. That's helpful. And then as a follow up, I read in the news that the global household goods contract is being protested.

But if you could -- if it impacts your outlook, if could talk about it, if there are any impacts on your outlook, if any?.

Yes. We always said '22, there'll probably be very little or no impact on household goods whether this was resolved earlier or later. And when we presented the overall impact to KBR of that contract through time, again, a short delay, 6 months delay or so, it wouldn't really impact our '25 numbers and that holds true.

I mean the current status there is that it's in the Federal Court of Claims having -- the protest was obviously denied and resoundingly so. And the other bidders have gone to the Federal Court of Claims as is their right. But that has -- they have put out that there's a backstop to that decision at the end of October.

So we'll -- it may come earlier, of course and it gives us an opportunity to plan further and derisk as we sort of buildup that organization and do that sort of whole transition. So we're feeling that, that all still plays as it was previously presented. And we'll know more as the year progresses, hopefully before Q3 but certainly no later than that..

So to repeat, no -- there never was an expected consequence in '22. And that remains the case. It's a '23 and beyond story..

Our next question comes from Sean Eastman of KeyBanc Capital Markets..

Coming back to the 90% backlog coverage in GS for 2022, could you tell us what that number is for the outyears? I don't know if you have that in front of you, maybe for 2024 or 2025..

Sean, it's a good question. I think we were well over 65% and must be -- I mean, it depends what you assume for household goods and how that impacts the numerator and denominator in that. But ultimately, it's -- I would say it's above 65% today for obvious reasons, particularly with the wins that we've had. I don't have the exact number but....

It's over 70..

Over 70%, Mark's telling us..

Okay. Very helpful..

It's not just 1 year, it's the aggregate revenue production over the course of the 5-year period. So we're sitting there at plus 70% today and that's grown nicely. Started at 55, if you'll recall, back in the Investor Day. And so we've built that up nicely..

Okay. Very helpful. And you guys are going to love this one.

But what would you say to investors that had hoped you would update the $6 full capital deployment target on the conference call you held back in March?.

Yes, we do love that question, Sean. Thanks very much. So I mean, I think there's a bit of a misinterpretation and perhaps we didn't do a good enough job, in truth. But ultimately, we -- if you look at our core performance, without deployment, we're at the 4 50 mark. And I think that's an amazing story in its own right.

And obviously, as the share price goes out and you're looking at buybacks, it's harder to just do that simple math. But if you end up with the M&A coming in, then we certainly can bust through the $6. But I think we have to just look at the core business because the timing of M&A and things like that is always difficult to predict.

And so, without -- we can certainly do more than $6 through time but I think we should all get back to normative numbers and actually think more around what we do with our deployment in that sort of $4-plus to some deployment, 4 50 very easily. So I think -- Alison's talking, pointing at me, saying we said 4 75 with 50% deployment.

But that's all -- I mean, that's on a model on share price, as you know. So, I think that ultimately can we do better than $6? Of course, we can. But I think the market needs to look at the fact that our performance and our growth, looking at what we've put through, is at the top of our peer group, I believe.

And we should not get distracted away from that growth story. And when you start to layer on the built-in organic growth of household goods, it's an absolutely unique story and the differentiation that comes through from our international portfolio and the STS value drivers are sensational.

And people will keep getting wrapped up on the upper end of that number but ultimately, I think the core characteristics of our business and the growth drivers and our performance to date, proving out that growth story, are all in line. So thank you for the question, Sean.

I don't know if I answered it well enough for you but certainly, we feel really good about where we sit in terms of the growth of the business..

And finally, we have a question from Gautam Khanna of Cowen..

I have a couple of questions.

And forgive me if you answered the first one already, OAW revenues in Q1, how much was it?.

Yes, they will come through. They're about $250 million or something..

As expected, it will be in the Q..

It will be in the Q. But I think ex-contingency, I think the answer to that question was the 6% organic growth..

For GS..

For GS..

Understood. Okay. Secondly, I'm curious about -- in the past, you've given like a funnel, if you will, on bids outstanding and what have you. Just where does that stand right now at GS? And do you think we're going to see kind of a big uptick in bookings? Forget the TRANSCOM for a second and forget the NASA recompete.

But outside of stuff you've already won, in terms of adjudications in calendar Q2 and calendar Q3, do we see a big surge coming on the government side?.

It's always -- I mean you -- I mean, logic would dictate that is correct, Gautam. I mean there's been quite a bit of delay due to the CR positions and I guess, just people -- starting to get people in the office and things like that. But ultimately, that has to unlock now the budget's in place.

I think obviously, what's happening in the world today, you would expect that there would be an uptick in bookings and really, awards as we move through the course of the year. So, I think the answer to that is yes. We did -- I did try to give you a little bit of that in my sort of prepared remarks.

When we -- although we didn't do the slide on it, I think what we did was that we gave the backlog in each of the segments. And so when you when you start to look at that, that's the $18.5 billion with the options. But I also said that in proposals, they were up just circa $7 billion in prep.

But more importantly, I think there's $8 billion of waiting award. And that's quite high. And I think we -- and we've talked a little bit about NASA now perhaps looking like, with the GSMO award, perhaps that's the start of that cycle.

And we've got quite a few billion dollars with NASA but it's across the DoD portfolio and of course, the NASA portfolio. So the number is high. We do expect and reaffirm that we have very low recompetes, obviously, for the rest of the year, so ever win is additive. So I think it bears well for that.

But you're right, the cadence of awards logically should come through. But that's not to say that things won't defy logic, as you know. So -- but that's kind of where we sit..

Okay. That's very helpful. And then just -- I'm curious about the cash deployment and just balance sheet utilization. So would you guys actually consider larger deals that may actually require some equity component? Or is that kind of off the table? Just looking at things you can pay for in cash and....

I mean I think -- I mean, things have -- to do something like that, I mean, we'd have to be very transformational. I think that we are a prudent buyer and have been proven so in the past. We don't get caught up in deal fever and we are very, very straightforward on our accretion-dilution metrics.

So, I do think -- you never want to take anything off the table or put anything on the table in a way. But ultimately, Gautam, I think, that for us, it would have to be in an area that was absolutely bang on strategy.

I think that we would have to convince ourselves on those strategic vectors and the attractiveness of that market for the future but also that it didn't overlap with what we do today. I've talked often about the fact that I think part of our success is our focus on people.

And we -- when you bring businesses in that don't have overlap, you can look after all the people and not really sort of be thinking about people, thinking about if they've got a job tomorrow. They're looking about what they can do more, what extra responsibility and job security and things is important.

And that's allowed us to focus on revenue synergy which is obviously a far more attractive solution. So I wouldn't discount any potential acquisition but would have to fit those criteria, if that makes sense..

Absolutely. And last one. Again, forgive me if you said this in your opening remarks. I was a little late to the call. Just what is your expectation for the LOGCAP programs this year in terms of revenue year-over-year? Because you mentioned the 100 extra million of bookings and related to Poland.

But I'm just curious like what is -- if we aggregated it all, sort of what is European Command incrementally year-to-year? And how does that compare to all-in LOGCAP year-to-year?.

I mean I'll take a stab at this one. I think that -- I actually looked at this last night.

Even with the uptick in EUCOM, given what is happening in that theater, we may not achieve the level of revenues we had in 2020 from the collective LOGCAP which demonstrates how we've repivoted our business to other areas so successfully through all the things we've talked about. So the decay days of the Iraq contribution, we won't get there.

This is ex-OAW, of course which was very special. But the Command continues to be -- it's basically ramped up and fairly steady, absent extraordinary events which can always happen but that's steady where you'd expect it to be.

European Command is, of course, having some increased activity today and it's very difficult to predict how big and how long that will last. It's fairly modest through year-to-date.

It's not a major game changer like OAW was or some of our past LOGCAP activities but it's vitally important to the mission as is always the case and they're doing a great job supporting there.

So I think, all in, as we see with that business from time to time, there are spurts but this year feels a little bit more normative absent the finish of the tail of OAW in Q1 which is now done..

We have no further questions in the queue, so I'll turn the call back over to Stuart Bradie for final remarks..

As always, thank you very much for your interest in taking part this morning. I'll just close by saying, look, I think we're really off to a fantastic start in the year. And hopefully, the answers to the questions attest that. And we're feeling very excited about where the business is.

I think our people do an amazing job and I think our businesses are very well positioned to take advantage of significant tailwinds across our market base and across our whole international portfolio. So more to come, obviously and with enhanced capital deployment optionality, that is never a bad thing also.

And we'll continue to update you as we progress. So thank you very much..

This concludes today's call. Thank you for joining. Your line will now be disconnected..