KBR, Inc. (KBR) Earnings Call Transcript & Summary

Thanks. Good afternoon. Welcome, everyone, to the fireside chat with KBR. I'm Jerry Revich from Goldman Sachs, and I'm excited to have with me Mark Sopp, Vice President and Chief Financial Officer; Byron Bright, President, Government Services; and Alison Vasquez, Vice President, Investor Relations. Mark, Byron, Alison, thank you very much for joining us.

Thank you, Jerry.

Thank you for having us. Yes, we're excited to be here.

And Mark, Byron and Alison, I believe you have a few minutes of prepared remarks that you want to make before we jump into our fireless chat here.

Yes, Jerry. Thanks for the opportunity. We do want to cover a couple of things very quickly upfront and then move on to your Q&A. I'm really happy that Byron and Alison are with me. They are leaders in their field and leaders in the company, and they're doing a great job. So thank you for your interest in KBR. I'll just kind of cut to the chase on one thought, which is we have transformed KBR over the last couple of years. We think we've done that quite successfully to deliver stable, predictable earnings and cash flow across our businesses. We have made pretty major portfolio changes and improvements that significantly includes what Byron will cover today in our government business, which is by far our largest revenue and profit contributor in the business. We've also substantially derisked our energy business over the years. We don't do -- we don't have any lump sum contracts or fixed price contracts, in essence, in-house that have any material risk associated with them. We've rebranded the company. We've changed our GICS code. We've done a lot of communications. But I think it's fair to say that if you look at the stock price and you look at peer comparisons, it's fair to say that we are still significantly misunderstood. We have a very high-performance Government Solutions business that is at scale and has great performance metrics as well as diversification in and of itself. We have a high-performance Technology business that actually is not very dependent on oil price conditions, which we'll cover here. Majority of that business really is outside of the oil sector, if you will. And then we have an energy business that actually represented a very small portion of our planned profits this year, under 10%. That's going through some stress. We are underway in evaluating what we will do in that business longer term, and we will make that decision fairly soon. But it does represent a minority of the business, and we are very confident we can run it profitably at this level. We have very strict standards relative to profitability and cash flow generation for all of our businesses, and energy is not an exception. So we expect to come out of that with a strategy change of some kind that will hopefully clarify with our investors where we're going, why and how it will meet those criteria. So thanks again for being with us. And I think Byron is going to say a few things about the government business, and then we'll get to Q&A. Thanks.

Thank you, Jerry, and thank you, Mark. And again, thanks for everyone on the phone for the interest in KBR. Yes, I'm really excited to kind of build on what Mark has said about where our government business is today. It is a significant business that I think many people don't really understand, and I'm just honored to be part of it. It's been an extraordinary few months, as all of us have dealt with the challenges of the COVID situation. But I've been most impressed by this platform that we've built over the last 4, 5 years and that culture that we've instilled in our employees, and they have really stepped up to the challenge. And today, we have over 93% of our professional workforce working from home, and I can say that we haven't missed a beat. Our missions that we do for the government are what I would consider mission-critical, such as flying the International Space Station because no matter what's going on in the world, we still got to fly the station. So I think that's something that people don't quite understand, the resiliency of our business. And I really want to thank our customers. Our customers have really accepted this challenge as well. And I think you would find that they have really supported all of the industry in lots of different ways, and I hope we can get into that in some of the discussions. But we have a really good platform here, as Mark has talked about. We've gone through all of those changes that we needed to go through. We're really seeing good pipeline, good growth, solid operations. And it's just -- it's really good to be here today, and I look forward to getting to some of the details. Thank you, Jerry.

Okay. Perfect. And when we start the discussion, along the first point that you made, Mark, looking at the business today, very different from when you folks took over the franchise, no high-risk construction, LNG business, purely cost plus on what's left of energy services and then big scope expansion in government services and big share gains on that part of the platform as well. Is the portfolio adjustment part of the strategy now virtually complete? And what proportion of your time, Mark, Byron, do you now spend on M&A at this point?

Great, Jerry. So I would say that the transformation actions that had certain goals in mind has been completed, but times always change. And so our first set of goals for the transformation was to build a stable, predictable, profit- and cash flow-generating business that was not singularly dependent on large energy projects or wartime activities, in essence, on the government side. We were quite single-threaded on those 2 across the energy and government businesses, respectfully coming into our transformation. And we have massively changed that equation with diversification in our government business, the growth of the technology business and the expansion into recurring services in energy and removing risk out of the portfolio, both in terms of concentration risk and execution risk. And so we've done that, and we were very well positioned to deliver good financial results as a result of those transformations, and you've seen that. We've hit our expectations or exceeded them financially for the last 3 years. And so we're very proud of that, and it delivered its mission. We also structured the portfolio to make sure we could participate in breakout opportunities, one of which was LNG projects, which we have a rich legacy and history in doing and leading. Now we have to look to see if that upside is really there and is it worth the cost of keeping the team in place, and what are the terms and conditions going to be in LNG projects and perhaps other projects in light of the current energy situation, and how long will that last and how will clients react and how will competitors react. And as I said upfront, if we judge that there will be a bad behavior from a client and/or competitor perspective, which could not confidently yield adequate risk return and visible cash generative profits, then we won't do that. And we'll shift that strategy, and we could remove that opportunity to participate in that breakout because we might judge it to be not really that attractive financially. So that's the process we're going through, and we'll make adjustments accordingly. M&A has been a big part of our success in the transformation. Byron's team has been the primary beneficiary there, but technology as well. That, under Byron's leadership and his peers that run those businesses, we have really integrated Wyle, Honeywell, SGT and now SMA really well. And they've provided significant synergies that some of which we had planned for, others somewhat came as a surprise as things developed. And revenue synergies are what it's all about in a government reimbursable business. And so that's been really successful. And we've actually shared some synergies across to the energy business and vice versa as well. So M&A will be something that we continue to look at. We did say in our call the other day that capital markets quite -- maybe aren't quite there relative to M&A right now, but that is improving day to day, at least on the debt market side. And so we will certainly consider M&A in our strategic thrust areas as opportunities arise.

And if I could -- I was just going to add on to that, that, as Mark said, I think for us, it's really about strategy, right? We have a platform now that is at scale, that is diverse, that covers the breadth of what the government does. And we have what I think is a differentiated platform, and that we also have a significant international government portfolio that really adds another leg to what we go after. So I think, in terms of M&A, we focus a lot on the organic side. We've built an incredible business development machine to really continue to capture organically. But there are always capabilities and things out there, so we're constantly open to that opportunity. But it's really about, as Mark said, strategy and revenue synergies is what -- and cultural fit, which is where we've been successful in the past.

And Byron, for you, how much of your time do you spend evaluating M&A opportunities today compared to when you were very active with the 4 acquisitions that you mentioned?

Yes. I would say that we always look at M&A. I mean we've never stopped looking at M&A, regardless of where the markets have been. There's always properties coming on. And what we really try to focus on is how does that align to where our customers are going. And we've laid out publicly some of the growth drivers we've seen, whether that's defense modernization or space exploitation or health and human performance. And so we've constantly used that strategic lens. And I would say we spend as much time as we need to looking at those opportunities, just as we do at organic opportunities. So it's been pretty consistent over the last several years, but we really focus on how that aligns to our customers' needs and capabilities we might need to add to our portfolio.

And Mark, a comment you made was -- struck me as pretty interesting in terms of the market not giving you credit for the quality of the portfolio. One area that really stands out is the Technology Solutions business. These are assets that have garnered really attractive multiples from the petchem industry in terms of other quasi/similar businesses. Is there a price at which you would consider this sign, from an M&A standpoint? In terms of sum of the parts opportunity here, is there a price that you would evaluate it? Can you talk about how you're thinking about it? Because high recurring revenue mix, high margin, really interesting technology and, certainly, a value in the marketplace for this type of business.

Yes. Sure. Just to maybe introduce that, the answer needs to be explained relative to what the business really is, and I'll just cover that for a second. So our Technology business has 3 main components in terms of technology and customer access points and go-to-market elements, one of which -- and the largest of which is syngas/ammonia. So we are a world leader in ammonia technology, helping convert gas to that end product. And as you know, that end product is used primarily in fertilizers. And ultimately, it is a key part of the food supply chain around the world. The global market -- people are still eating quite a bit, and that doesn't change a whole lot. And so there is continuous demand for fertilizers as a result. And being a leader there has been very helpful for the growth of that business and the sustainability of that business and the visibility of that business. And then the second biggest category is in olefins, which are involved in producing plastics primarily, and that business is a little bit more oriented toward GDP growth, but not oil prices, like the first category, ammonia, not driven off of oil prices. And so we see our 2 biggest ones, ammonia and olefins, still performing well. To some degree, they are dependent on capital project expenditure for those end markets, and they can go through temporary sort of stress points in that capacity. But we find, over the years, that it is restored quite quickly. And we back that up with a 13% compounded annual growth over the last 10 years through a couple of downturns in oil prices. And so it's resilient. It's very much dependent on, again, food supply and GDP. The smallest component is in the refining sector. And that one, we're really focused on providing refineries with newer, cleaner solutions that are environmentally more attractive, sometimes through regulatory mandate. But oftentimes, refineries just want to do the right thing and have cleaner solutions. And most of our technology in refinery is about clean solutions on one hand, but it also helps the refineries produce different products out of their processing plants and can improve the economics of a refinery as well. So we have quite a value proposition there. And so because of that, those are all 3 global segments within technology. And we have proprietary assets there in the form of designs that enable the production of those things I mentioned. And we sell licenses, we sell proprietary equipment that are germane to those designs. We have engineering packages that we sell to integrate those designs into the plants. And then we are increasingly selling catalysts, which are consumables used in those processing actions that are reordered on a 2-, 3-, 4-year sort of cycle, which provides a recurring high margin piece as well. So to answer your question, we love this business. We have no plans to sell it. We have certainly tried to add to it. Most recently, the Lummus transaction that was a subset of McDermott, previously CB&I, that sold for -- although it's not yet closed given the environment, but the valuation there was 12, 13x. And that business is very much like our business. And so when we look at this, we think that our Technology business warrants that type of multiple. And when we think about sum of parts, that's the number we would ascribe to it. And it's been quite steady in that ballpark for a long time for the reasons I suggested.

Okay. And in terms of -- just to shift gears from the portfolio to Government Solutions. Specifically, Byron, I'm wondering if you could talk about, as you look at your end markets, how would you rank order the growth outlook over the next 3 to 5 years as you think about science and space versus logistics, other solutions. How do you think about that? Where do you see the strongest growth profile?

Yes. Thank you, Jerry. I think for our business, we really think of it in several domains, the science and space and then our systems engineering business. And both of those, I would say, are leading the way. I think if you just looked at the Q1 numbers, year-over-year growth, our space business was greater than 20% based on some really good wins they had back in 2019. And those are really coming online now. But our systems engineering business, where we are really supporting the government in all of their defense modernization goals, whether that's upgrading architectures for cloud modernization of different IT systems or whether that's supporting new sensors on unmanned airframes or supporting new missile defense technologies, so we're really embedded across the Department of Defense, in Navy aviation, in Army aviation, in all of the key areas of where -- if you look at the National Defense strategy, in order to kind of keep the force going, they have to upgrade. And so we do a significant amount of kind of sustainment engineering in those platforms. And so I think that's really where DoD is putting the money, is how do they take these new emerging technologies and apply them to their needs, and that's where we see the growth. I mean our international business is very healthy as well. I think we've expanded that, especially down in Australia. It's probably one of our fastest growing segments. And much like the type of systems engineering work that we see here in the U.S. for the Department of Defense, we're doing that same work for the Australian MoD. This is just a really strong technical workforce, and it really focuses on that domain expertise. We understand these systems, and we're somewhat technology-agnostic. We're not an OEM. We're not tied to a specific technology, but what we are is really understanding the mission. And so we're there to help the government customers make the right decisions on how they apply that technology. Our logistics business is still very large, and we can talk about that with the LogCAP wins, and it's still a significant piece of our business. But I'll tell you, even there, we're starting to see much more technology in the way that we do logistics. With the Internet of Things, supply chain management, today's environment where many of the supply chains have been disrupted, our ability to support the military overseas has been seen as leading the way, I think, for many of the logistic missions. So we do have some more volatility in that business. As you know, we had the hurricane response down at Tyndall over the last year or so. And so obviously, that gave us a short-term uptick, but I see that as a positive. The underlying space, engineering, international businesses are growing very steady, but the logistics businesses has great upside opportunity as we sit on many different IDIQ and contingency-type contracts where we can respond rapidly to pandemics or hurricanes or other world events.

And then in terms of the performance that we've seen out of these businesses recently, science and space was -- performed really well exiting in '19. Did that level of organic growth continue into the first quarter? And it looks like the engineering business probably got hit with project timing and of tough comps exiting '19. Looks like organic growth was a touch soft in the fourth quarter. How did that continue into the first quarter, Byron? And what's the outlook based on the Australia work and other items that you mentioned?

Yes. No, I'm not sure I believe our engineering work has been hit. I think in Q1, I think we saw year-over-year growth of about 8%. Alison can correct me on those numbers. But our engineering business has done quite well, and a lot of that is due to the nature of the task order-type work where we're embedded with these customers. And it continues to grow. We have a very healthy pipeline right now, I think, really across the business. It may be unusual from what I've seen. We're often -- you see them in one sector or the other, but I have large significant bids, in-source selection evaluation as we speak really in each domain and one of the healthier pipelines I've had in a while. We were concerned that our customers might slow down through this virus time, but I've really actually seen it the other way around. They're probably more accessible than they've ever been maybe because they can't travel. I've probably had more face-to-face or virtual engagement with customers. They are continuing to put out new bids and continuing to award and evaluate new bids. I think that's part of their mission to kind of keep the economy going as well. So our customers have been really supportive, and I think we have a pretty healthy pipeline as you continue to see solid growth. Even though we do have, like I said, some volatility in the logistics side of things, just by the nature of the type of work that, that is supporting short-term events.

And in terms of the last point that you mentioned, the bid activity moving forward, it's really interesting. Was there any lull in activity at all as some employees or the customer adjusted through the environment end of March and early April and then got used to it and productivity moved up exiting April into early May? Is that something that played out? Or was it humming along the whole time?

We've really seen virtually no disruption in our professional workforce. And they -- it was quite remarkable. Like I said, the customers have leaned forward to modify our contracts to make sure they were flexible enough for teleworking. They've actually accelerated some payments and are working to continue to do that. So I don't think we've seen really any drop in productivity in our professional workforce. In our logistics business, there was probably a little bit more disruption there, but it was really primarily travel disruptions. And that's a very complex business where we have thousands of employees in foreign countries, and they're constantly rotating in and out on their vacations and those kind of things. And so we did see some just by the nature of countries and travel kind of locking down. The upside to that is when they're on these locations, they're locked on military bases continuing to do the work. So they haven't lost the work for those that are on the bases. But I would say that's where we saw some productivity areas. But really, across the business, I've seen almost 0 impact.

It sounds like you've got a captive audience there.

And they do.

In terms of science and space, really interesting budget outlook for NASA over the next couple of years. Can you talk about what's the time frame of when you expect the expanded budget that we've seen for NASA translate into orders from your business? I think, typically, there's a -- general rule of thumb is about a year lag between the budget and reality. How does that look in this case from a revenue burn standpoint for your science and space business?

Yes, you're absolutely right. I mean I think if you follow the NASA budgets, I think they've actually been given more than they asked for the last couple of years, which is very unusual from Congress. So there's been great bipartisan support for return to the moon and onto Mars. We've already begun mini activities around training the next astronauts, both commercial as well as the ones -- the NASA astronauts. And so we're already seeing some of that work come on to our existing contracts. And as you know, we run mission and control, which is the operations side. We also run the back end of mission and control, where they're doing all the communications with the station. And the phrase we use there is plan, train, fly. So we're embedded with NASA, planning the future missions, working with the commercial space companies as they look to move their own rockets or their own vehicles to the station. And so we're planning those missions. We're training people, not just the astronauts, but the ground station operators on all the different aspects to run those missions. And then we actually fly those missions. So we're already starting to see some of that revenue come through our existing contracts. We have Space Act Agreements with NASA, so they can direct commercial companies to come to us through their contracts to use NASA facilities to do more of that type of work. So I mean, we feel very optimistic about where we are. We hope to see the first U.S. astronaut launched from U.S. soil in a long time this summer. And so we're supporting all of those test flights and test missions that you continue to hear about. And then across NASA, I think they have other missions, too, besides human space exploration. But we continue to work on many of the science and research aspects, whether that's the Earth observation missions we do or the next Landsat and the data analytics side of that. So it's a healthy business. I believe it was about a 22% growth in Q1 year-over-year. So we're already starting to see some of that pour into our current contracts.

And in terms of -- for logistics, you had a big win with LogCAP, and then you had a series of protests. Can you talk about if that protest process was delayed at all by COVID? What are the next steps in the government's review? And how do you think about the time frame?

Yes. So there were multiple protests. And I think Fluor was one of the last ones, and they withdrew their appeal. So there's only one open protest right now, and that really should be decided any day in the Court of Federal Claims. There was probably a month or so delay just with some scheduling of people because they couldn't travel and different things. I think that's why that has been delayed about a month. We really see that winding down and expect a good outcome. There are still appeal avenues that the other bidder may choose to take, but I can tell you that LOGCAP V has already started. We have a limited notice to proceed. We are actively planning the various transitions, and we have employees who -- I think we've turned in our first bill and getting our first invoice in already. So we are actively working on LOGCAP V today, even though this protest activity is going on in the background. And we -- I think us and the Army feel very confident in their source selection. I will say that some of the transition of the activities have been delayed again due to travel disruptions. And so right now, it's more of a planning phase. And as we understand the environment over the next several months, we hope to see that begin to ramp up.

And Byron, can you say more? So a month or so delay. So what's the expected timing on the process now?

Yes. I think probably -- I think, like I said, within any day, the final DynCorp protest decision at the Court of Federal Claims should be released I mean, literally any day. And then that would be the end of the current active protest. However, there are appeal processes that DynCorp may choose to take, which could take more time. But the Army appears to be moving forward.

And then you mentioned limited notice to proceed. At which point would you be at full run rate support for the scope of LOGCAP V based on the plans that the Army shared with you?

Yes. I believe it's really going to be through '21. I mean there is a pretty significant transition activity that has to occur. We are already in Europe and -- when -- we won EUCOM. We will be taking on NORTHCOM, which is several -- which we're really excited about. We think there could be some real long-term, steady-state growth there. Much of that -- the LOGCAP V is a different model. It's really a lot of sustainment and O&M work on there, not just contingencies. We think that'll give us steadier returns in the future and continue a baseload of work. So I do believe they've extended our current activities on LOGCAP IV. They've extended those through mid-next year, and most of the task orders are all ready. So they're in no hurry. I mean there's plenty of time to do this, right? These missions are really important, and they're complex and they're in difficult locations. And so it will be a phased transition across all these different task orders over the next 6 or 8 months. So I would say steady state, probably mid next year.

Okay. And then can we talk about Government Services margins? Mark, every time you and I have a conversation around this business, you folks wind up delivering better-than-expected results on a sustained basis. And you're certainly delivering better results than the long-term plan. I'm wondering if you folks can talk about what is it that's gone right in this business in terms of is it hitting milestones, is it the business mix. And in terms of -- as we think about the long-term target, why not move that higher? Is that just a contingency once the LogCAP business comes on, that we don't have expectations moving around as a lower margin part of the portfolio ramps up? Can you just talk to those points, if you don't mind?

Yes, Jerry. Sure. It is pretty much all mix. And so we -- our government business is differentiated relative to pretty much every peer in this space because about 25% of our earnings are generated from foreign customers, predominantly the U.K. Ministry of Defence and, as Byron was saying, increasingly, the Department of Defence in Australia. Those projects, we have a rich history there. And we are a market leader there, and we have a great brand there. And the types of contracts that are done in those markets are what you would call time and material here or even fixed price. When you listen to whether it's Booz Allen, SAIC, ManTech, CACI, Leidos, if they're ever talking about margin improvement opportunities, they talk about trying to shift more work out of cost reimbursable and into time and material or fixed price contract types. Now the U.S. government has to agree to do that for that to occur, and they're often reluctant to do so, but pretty much all of our international business is on that basis. And with good execution, we are consistently delivering margins well into the teens across that element of our business. And because of that mix, together with our other areas, Byron mentioned logistics, space and science and engineering, those are fairly normative margins in their categories. But because of the international mix, it bumps us up to the upper single digits relative to our long-term targets. We have done better than that in recent quarters as a result of even more mix from the capital works project on Aspire, which is winding down actually. It'll operate through 2020 and mostly through 2021, and then will cycle off. And so as we get toward the end of that, there are attractive product -- project margins at the tail end of a project, which is something you always like to see because we've performed very well. And secondly, we've had a couple of onetimers in there as well. We favorably settled a longstanding matter with the U.S. government called Private Security. We had a piece of that come through favorably in the first quarter, so that nudged us up about 1 percentage point in and of itself. So for those reasons, with part of Aspire coming down as scheduled here in a year or 2, and with no plans to see some of these onetime events, you can't plan on those recurring, you can't predict them that well, so we think it's appropriate to continue to guide towards the upper single-digit level.

Okay. That's very clear. And then as science and space grows along with the NASA budget that we spoke about earlier, are there any margin ramifications? Are you able to get margin leverage in that part of the business? And is -- given, I guess, the advanced work that you're doing, does the margin profile in that part of the portfolio drive accretion for the book if we see the portfolio shift in that direction?

I would say Byron should chime in here. I think the NASA project margins are quite tightly regulated and are generally cost reimbursable. And so the percentage of profitability is unlikely to change, much as we grow in scale on a project margin basis. But I will say that when Byron grows, the rest of KBR does not, particularly in the corporate side. And so there is a favorable economy of scale when we think about KBR consolidated margins as a result of sheer growth, even at constant margins on Byron's business. So that does enhance EPS growth as a result of that scale dynamic.

Yes, Mark, I think you're right. I think in NASA, specifically, a lot of that work is cost reimbursable because it's dynamic. You don't know when different events are going to happen and, therefore, that's the customer's choice. So those become pretty normative margins for a government services industry. But there is more work in that portfolio. We do our health and human performance through that portfolio, and that was one of our large bids we won last year. Because of our health experience with the astronauts, we were able to leverage that, and that was one of the great synergies we pulled out of these acquisitions, and one, what we call the POTFF, with this special operations, Preservation of The Force and Family, that's a time and material contract. We have nearly 500 employees now on that contract, which was new last year and has continued to ramp up. And so I do think there are other opportunities in our broader portfolio of science and research and health and space things that can help the margins. But I think NASA, in general, you would expect to be pretty normative over the long term.

Okay. And we have a couple of questions here over the webcast. Can you talk about how you folks think about the growth outlook for each of the 3 segments going forward? And then specifically, can you touch on the growth outlook? Sounds like normalized growth outlook for tech services, specifically, with a bit more color on tech services is what the questioner is asking for.

Okay. Byron, why don't you start with government? And then I'll clean up back in, I guess.

Yes. I think we've laid out our long-term growth targets, I think, at the Investor Day we had last May, and we've been meeting or exceeding those each quarter. I think we're still within that range, and we're looking at all the moving pieces that we have going on right now. I think like -- as I mentioned, I would just go back to the pipeline because that's really what drives our growth. And do we have a good pipeline? How many opportunities are in there? What's our ability to take those away? I really think we have one of the best business development teams in our industry. Our win rates have been significantly high, I think, in the high 90s on our recompetes, and 40s to 60s percent wins in our new business. So pretty significant win rates from what I'm used to seeing historically. And I think that's really built around different ways we go to market. The way we win contingency work is different than how we go win engineering. Consulting, advisory work is different than how we go win high-tech work. So I think we really have a great BD machine that's driving this growth, and we feel confident that we're going to be able to meet our long-term targets that we've laid out.

Great. And on the technology side, just as a reminder, this is a business, as I said earlier, that has had double-digit compounded annual growth historically. In addition to that, it has margins of mid-20%, 25%, give or take, very consistently and operates with negative working capital. It takes customer advances and cash before it starts its work in general. And so it's attractive on every measure there. While we did lower our expectations in terms of top line this year as a result of projects shifting to the right, and we were very clear about that in our original guidance and in our last earnings call a couple of weeks ago, we do not change our long-term targets or expectations for that business. We think that double-digit growth over the planning horizon, which has compounded annual growth 2018 through 2022, is intact at above 10%. So at margins that would not change and cash flow dynamics that would not change in that, that speaks to that multiple I said earlier. When you have business performance like that relative to growth, profits, cash flow, it merits in multiples of 12, 13x. It makes sense. And so we're sticking by that. Just interestingly, I mentioned refining being at stress right now, but I also mentioned that our technologies there are about making refineries cleaner and more profitable. We literally had this morning a webinar on our ROSE technology, which is a refining technology that helps clients comply to IMO 2020 standards. We had 178 different clients on that webinar in this market, just as an example. And so there is ongoing interest and, eventually, we believe, demand for that type of technology because refineries must operate cleaner. And there will be demand for high-octane fuels and things like that in the future. So that's that. On the Energy Solutions side, that's the one segment where we did not reaffirm our long-term targets relative to growth rates given our evaluation that's underway. We clearly are not expecting much growth this year, and we have been very conservative in our profit estimates. Whether we rebaseline that business and what the growth outlook is at that point in time, we will provide when we come through our assessment. But it's premature to do that yet until we complete our work. But that will be not in the too distant future, and we'll talk about that. But I do think that where we are optimistic in energy would include energy transition. Our consulting business is doing really well right now in the energy business because of its expertise in energy transition. And customers are increasingly confident in putting faith in us in the [ spud base ] and assessments we're doing in that area. We think that gas remains cheap. And conversion is burning the energy cycle, whether it's LNG or others, this is important. But I think, increasingly, hydrogen into the mix now, we understand that quite well. And that's probably more -- a bigger player in the future, and I imagine that will be in our focus as well.

Perfect. Well, that's all the time that we have for this webcast. But Mark, Byron, Alison, thank you so much for joining our conference. And let me get you on to your next set of meetings. Thank you very much for joining us, everyone.

Thank you, Jerry. Really appreciate it.

Thanks, Jerry. Thanks, everyone.

Thank you, Jerry.