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

Good morning. Good afternoon. Good day. Welcome to KBR's 2021 investor event Future Forward. We're excited to give you an inside view into our company and our 2025 growth outlook. Today's presentation includes forward-looking statements reflecting KBR's views about future events and their potential impact on performance, as outlined here. These matters involve risks and uncertainties that could cause actual results to differ from these statements. Those risks are discussed in our most recent Form 10-K, available on our website. Over the next 2 hours, our team will present our company's strategy, including our focus on prioritization of ESG, a handful of our exciting growth engines, our people-centered culture and our long-term targets through 2025. So let's get started. [Presentation]

What a video. Every time I see it, I'm inspired by the incredible work our people do 24/7, 365 days a year. I mean, it's very, very uplifting. So it's my absolute pleasure to welcome you to today's event, and to thank you for taking the time and for your interest in KBR. As a follow-on from the video I'm continuing on the ESG sustainability theme. If you've followed us for a while, you know sustainability is important to me personally. And culturally, KBR has been on this journey for some time. But at KBR, operating responsibly is the floor, not the ceiling. Our commitment goes way, way beyond being a responsible company. Our zero harm sustainability program has 10 pillars, as you've seen before, that define and guide our company and our people to deliver on our broader ESG commitments. All of our leaders have an element of compensation tied to achievable, measurable progress against our ESG goals, and these goals go over and above achieving carbon neutrality, which you're aware we did in 2019. They ensure there is continuous improvement as we head to net 0 by 2030. But like I said, it's not only in what we do as a good corporate citizen, as you saw in the video, it's about how our sustainable solutions, our technology and our expertise enable our customers to achieve their ESG objectives. Advancing our customers' ESG objectives is core to our strategy. It's an integral part of the work we do, the value we add and the difference we make deploying these technologies hugely compounds the positive impact KBR delivers to the planet, to our customers and, of course, to our shareholders, which is very important. Now our objective today is fairly simple and is centered around 4 key themes: ESG, momentum, our people and, of course, the numbers. On ESG, we aim to show you how we are a forward-leaning ESG company. And I think you've begun to see this already with the video, but this important pillar will actually thread through today's presentations, just as it does in our organization every day. On momentum. KBR has great momentum aligned with market megatrends. We have transformed into a higher-end solutions-orientated government services company with a green technology IP kicker. And this combination is unique, and we are very well positioned to deliver above-market growth, and leaders from our business will present the why and the how later on. Our people. We will bring to life our people agenda. We truly believe that our success is linked to creating an environment where an individual can be heard, where good ideas can come from any level in the organization, and where people feel empowered and where individual glory is dwarfed by team success: inclusive, diverse, passionate, trusting and collaborative. Jenni Myles, our Chief People Officer, will take you inside our organization to meet some of our amazing people and show you our culture in action. On the numbers, last but not least, and to bring us home, Mark will put the words into numbers: top and bottom line growth, cash generation, capital deployment and ROIC. You already know that in 2021, we are guiding to earnings growth in the 20% range and, of course, with continued strong cash conversion. Mark will build from 2021 and take you on to 2025 and our dynamic growth journey. Simple. Hopefully, that gives you a feel for what the next couple of hours has in store. Don't worry, there is a break, and we are planning to leave plenty of time at the end for questions. So let's just dive straight in, outlook and strategy. Now I recognize that many in the audience today know us well. But for those who do not, and are perhaps a little bit new to KBR and our transformation, what you're about to hear today is the next chapter of a longer strategic evolution. Today, KBR delivers science, technology and engineering solutions to governments and companies around the world. Moving on to evolution by the numbers. The charts on the left really tell the story of where we started, where we are today and where we're going. As you can see, we've actually changed a lot over the last 5 years. And as you'll hear today, we're very well positioned to continue the journey through to 2025 and beyond. Now today will be the last time you hear us, and certainly me, talk about transforming or transformation. Frankly, we have transformed. Now Alison, embarrassingly, asked me to include a sort of analogy here. So I really do apologize in advance, but I gave it a shot. So here it is. The new KBR rocket is ready. It's designed and delivered by amazing people. Lessons of the past have been incorporated. It has been super-charged and is now accelerating from the launch pad firmly on the right trajectory. Sorry, I couldn't resist a bit of a space-related analogy, but it's a great vision. Today, and right now, without the noise and historical distraction, KBR can really focus on achieving above-market organic growth, both in GS and in sustainable tech. There is now more clarity on how we will achieve our $8 billion 2025 revenue target, while at the same time expanding EBITDA margins and thus delivering amplified EPS growth. And more on our funnel for growth in a moment. First, let me just say a few more comments on where we are. On the right-hand side of the slide, you can see we have great balance across the business, with access to multiple funding streams and customers across the globe and a healthy mix of cost-reimbursable and performance-based contracts. As a simple and tangible sense check, we have delivered at or above expectation now for a number of years, delivering earnings growth, and at the same time generating hundreds of millions of dollars of free cash, while concurrently moving more upmarket and exiting elements of our business that were inherently more volatile. The challenges in 2020 did not slow us down. Our team quickly adapted to the new market environment. And as a result, 2020 was actually a year of significant achievement for KBR, as we accelerated our progress, delivered outstanding safety and operational performance, and as you know, generated healthy profit and importantly, superb cash flow. In our recently announced 2021 guidance we articulated 20% earnings growth with over 70%, that's 7 0 percent of work under contract today with a significant shift in KBR's exposure to OCO funding in the Middle East and Afghanistan, which, as you know, is now at nominal levels. In short, we have done what we said we would do. And arguably a wee bit more. As part of our transformation, last year we moved away from a 3-segment model to a 2-segment model, focused around government solutions and sustainable technology solutions. Now this shift concludes our move up-market into differentiated areas that provide attractive returns, a low-risk business model, consistent growth and importantly, strong cash conversion. Today, our 2 segments are organized into 5 businesses, nicely balanced. All in attractive end markets and all with backlog and a pipeline to support attractive growth looking ahead. In short, we have an exciting and very well positioned Government Solutions business with an attractive, high-margin, sustainable technology kicker. In 2020, we completed the largest acquisition in our history, as you know. Centauri has really taken KBR further up the food chain and firmly into critical areas opposite national security priorities and into the world of intel and military space at scale. You'll hear more on these exciting areas from Byron and Robert soon. Shifting to our new sustainable technology segment. In 2020, and earlier this year, we've actually given lots of detail on this segment and its low-risk business model, so we won't repeat it all here today. I will highlight, though, that our technology is very well positioned opposite decarbonization and climate change imperatives. And that technology is an exciting growth driver for KBR. Sustainable tech is not a fad. It is a large and growing market that has huge momentum. It's extremely hot and it's here to stay. We are positioned to grow our top line. And concurrently, we are positioned to deliver increasing margins, talk about a kicker. Think force multiplier. And remember, this business runs on negative working capital. More on this from Doug in a few moments. Today, we're going to bring this all together and discuss where we will go from here. We will show you our pipeline, and we'll showcase 3 areas that we believe that can supercharge KBR, all with growth that is expected to outpace. We will bring these supercharged markets to life by having the leaders of these businesses brief you. Now we have presented our strategic process on previous occasions and will not do so in-depth today. In short, our people are at the center of all we do and who we are. The quality of talent and the culture of collaboration, team ethos and mission focus is hugely powerful, and as I said earlier, hugely uplifting. Our people do things that matter, and they care. Our core business remains robust and resilient, which we believe we've proven and we have attractive long-term contracts and strong domain expertise in solid areas of the market to help ensure this continues. Our breakout growth factors and strategic themes remain intact. We continue to move upmarket and our future focus on attractive and well-funded end markets. I will not read all the bullets, but the takeaway here is that our strategy remains valid, and we're executing with strategic discipline. A key point is that the risk profile today is consistent across all of our business, delivering predictable growth, earnings and excellent cash conversion, as you've seen. We are well positioned and continue to secure work in attractive end markets that support continued growth. So an exciting, very well positioned and focused government solutions business with a sustainable technology kicker. You've heard me say that before. Prove it, you may be thinking. So in the following sessions, we will focus on the 3 distinct areas that we believe will deliver growth that outpace the norm. Now these are: space superiority, cyber analytics and sustainable technology. These growth accelerants give us confidence that we will achieve our long-term growth targets. They build upon a substantial and well positioned core business. They build upon the synergy upside we are realizing from Centauri. And further, they build upon the repositioning of a sustainable technology business. As we stand here today, coming out of an incredible resilient 2020, we're feeling really, really good about 2021 and our continued growth as we look ahead to 2025. We have and will continue to deliver on that simple thing of doing what we say we will do. So before we dive into the growth accelerants, I wanted to be very, very clear. KBR today is a growing company. In a moment, we'll present 3 exciting high-growth areas, but make no mistake, the broader KBR is strategically well positioned in strong end markets and is performing really well and growing. Now remember, we also benefit from having a solid bedrock of enduring long-term contracts in mission-critical ops-focused areas. And layered on that, are megatrends, strong tailwinds, if you like, that are growth accelerants. And these are in markets that KBR, frankly, is smack in the middle of. These are really exciting and, of course, drive above-market growth well beyond 2021. The result of these dynamics is the path to more than doubling EPS by 2025 from 2021 levels. Now let me say that again. From a 2021 base, we will be doubling EPS by 2025 to $4 to $6 per share. Now Mark will do the walk to 2025 in more detail later. So what are these megatrends and what connects them? They're aligned with the theme of today, Future Forward. With a very favorable spending and budgetary outlook, think national security priorities, increasingly [ appear ] threats, climate change and digitalization. All are in areas of rapid change with a proven need for technology, a need to operationalize R&D and a need to reach across national capabilities. And all are in areas that KBR is currently operating at scale, with proven capability and specialization. In other words, deep domain expertise. As the world's problems become more complex and more interrelated, our customers increasingly value our expertise and knowledge. Companies like KBR that can break down complex issues, are digitally and technology conversant, and can then operationalize solutions are in high, high demand. Our people are second to none in this area, technical experts with passion for the missions and customers they serve. That's why our future is exciting. Now before I hand off to Byron, Rob and Doug to brief you, to brief our growth engines, I invite you to look behind the curtain with me to see how KBR is delivering solutions and changing the world. [Presentation]

Good morning. Now that video is why we do what we do. It's great to be here today to talk to you about the first of 3 of the exciting growth engines, space superiority. My name is Byron Bright, and I'm the President of Government Solutions at KBR, and I'm just honored to lead an amazing group of people that are doing really important things. Our people today are working in the most exciting areas of the market, dealing with leading-edge technologies that are changing our world for the better. I'm excited to talk to you about that first area, of space superiority. And this is an area that builds on our well positioned core business, an area that builds on the synergies we are already realizing from Centauri and maybe most importantly, an area that benefits from accelerating market demand fundamentals. Over the next few minutes, I'm going to talk to you about the market dynamics and our unique footprint in those markets today. We want you to come away with insight into why we believe space is a valuable growth engine to KBR and our shareholders. It's truly an exciting time to be part of this new space industry. And you can remember that feeling when you were a little kid, looked up to the stars, to only dream of being an astronaut, or to participate in some small way. That dream is reality today. Bright young minds of this generation can enlist directly into the U.S. Space Force, advancing a vast array science and engineering innovations. Now if we turn to the next slide, you'll see that there are 3 themes that we believe are driving our growth thesis. First, the convergence of defense, intelligence, civil and commercial stakeholders. In the space domain, we see this trend across multiple technical areas, and clearly with the stand-up of the U.S. Space Force. The impact of this collaboration transforms how our customers execute space missions and accelerates technology advances in important areas, including space domain awareness, intelligence and navigation. This growing theme is on top of the current trend, where the U.S. government is augmenting the space industry with critical commercial services, such as space launch, communication and even commercial space imagery. Another trend we see is the premium our space customers have on speed. Now I'm not talking about the speed of the spacecraft, but the speed in which new and advanced capability must be deployed to the mission to secure our nation's economic and military advantage. Past developmental programs were executed over many years, and in many cases, decades, but future capability must be deployed much, much faster. Now in the space domain, this means everything from disaggregated satellite constellations; smaller, lighter, smarter, adaptable spacecraft and multiple mission command and control operating environments that are secure open architectures. Now these first 2 trends, the increased collaboration and the speed of development, are the drivers of the third trend, which is the digital-driven-business model. To execute in this converged environment at speed requires these agile new processes. Toolsets such as DevSec ops, digital engineering, artificial intelligence and machine learning, these are the key enablers for our industry moving forward. As Dr. Will Roper, the Former Undersecretary of Defense described so well, picture these digital environments like that Keanu Reeves movie the Matrix. Now picture those environments being used for research and development, prototyping and actual mission planning. This is not science fiction any more. This is our reality today, and I've seen it in action in Centauri's foundation lab. On this next slide, you can see a list of some of our current active space customers. Space is not just one agency anymore, like NASA or even just the Space Force. We literally have dozens and dozens of customers that are relying on space capabilities or playing a specific role in this new space ecosystem. Today, KBR is operating at scale across the military, intelligence and civil space landscapes, performing important work that spans space domain awareness, satellite communications, command and control, mission planning, human performance, advanced data analytics and so on. We expect these critical subsets of the defense budget that focus on modernizing technology and operations in space, to realize meaningful growth over the next 5 years. NASA spends $20 billion a year. Space Force spends $16 billion and growing. There's a significant amount of classified budget dollars and the total DoD Research, Development, Test and Evaluation budget is over $100 billion a year, which is where much of this emerging tech is going to come from that will continue to drive space and defense modernization. We have a growing pipeline of opportunities in a robust market. We have some exciting wins already in this market that are continuing to drive that above-market growth. Now, so how does KBR capture our share of that market? And why are we different? Let's turn to our strategy in space. Our strategy is founded on broad fundamental technical capabilities where one area feeds growth into the next area. We have been building out our space platform for multiple years, starting with our acquisitions of Wyle and Honeywell, which added strong domain expertise across systems engineering, health and human performance, test and evaluation and ground station development. The addition of SGT portfolio put us at the heart of space operations and mission control. Centauri has been a step function change for us, with significant digital engineering, prototyping and classified skill sets. The core tenets of our growth strategy, which allow us to capture that greater market share are based on: first, bringing together this incredible pool of talent and empowering them through many of the programs and culture enhancements that Jenni will discuss later. Second, we are connecting that technical workforce in ways never done before, allowing them to drive innovation across the full life cycle, from early development through to sustaining engineering and into mission operations. Third, a constant focus on technology-enabled digital solutions for our customers. With our customers' need to get capability on orbit faster, we see the continued demand for KBR's domain expertise. So help illustrate this and maybe make it a little bit more real for you, let me give you a couple of examples that demonstrate our strategy in motion. In mission planning and digital engineering. Today, we can build physics-based models, current space assets and fly digital missions hundreds of times in this stimulated environment in order to optimize the use of space assets. What does this mean for our clients? It means we're taking those traditional test and evaluations that once happened in the real physical world into those movie, Matrix-like environments. This increases speed, reduces cost, improves reliability for all of the new platforms. We can help intelligence analysts and mission planners decide what takes priority. How best to use these limited resources in space. Additionally, as we discover capability gaps using our models, we can then digitally design the next generation of space needs to help our customer make those investment trade-offs for that next major platform. The ability to literally fly a satellite digitally before you ever launch that piece of hardware is a game changer in terms of mission planning, training, and optimizing space capabilities. In the space domain awareness, this is another key growth area that's driving the need to protect our commercial, defense and intelligence-based assets due to the vital importance to our decision-makers and our economy. At the core of our capabilities, we have some of the world's leading experts in technologies that contribute to the safety of these systems, such as electro-optical sensors and electronic warfare technologies. We are developing signal processing algorithms, including multi-static radar imaging. We are integral to the design, systems engineering and the development of performance prediction models. We use these capabilities and apply deep learning technologies to support automatic target recognition and tracking from space sensors. Now we perform this work across multiple customer sets, primarily in the classified arena. Then my third example is really making it real, and we're already capitalizing on 1 of our many synergies, which is helping customers operationalize these solutions. We announced last month an important synergy win on the $500 million contract to support the U.S. Air Force's [ 10 cap ] program. This is a contract for the exploitation of national capabilities. And it includes work to help our customers solve real-world challenges in real time. We rapidly bring together teams of innovators to help make sure there are pilots, ground crews, analysts, and critical decision-makers for getting that information they need when they need it, often directly into the cockpit. Now much of this work still resides in the classified domain, but it includes advanced technical services for geolocation and tracking, sensor and data fusion, cyber and spectrum warfare and real-time data analytics and visualization. Combining KBR's long history of aerospace platform knowledge and Centauri's sensors and C4ISR and space capabilities give us great synergies to continue to grow in these emerging and nationally critical areas. As the earlier video demonstrated, KBR's people are doing things that matter. It gives us purpose. We are expanding human knowledge through science and research. We are protecting our space assets, that are integral to our economy and way of life. We are analyzing data to understand the impacts of climate change. We are doing all of this important work today underpinned by long-term contracts with well-funded customers. We continue to be the largest NASA support contractor when it comes to operational and training support. And we've recently won an especially important recompete with the U.S. Geological Survey, allowing us to continue to use space capabilities to develop data to combat climate change. Our space focus is simple: hire the brightest people and empower them to solve the biggest challenges, and the growth will continue. In 2020, we had double-digit year-over-year growth in both our Science & Space business and the space portions of our Defense & Intel business. With great backlog, some recent high-quality wins, a robust pipeline and market tailwinds at our back, you can see why we are so bullish on growth in this area. Just as we see space as an exciting growth driver, our cyber analytics portfolio is equally in high demand. I'm excited to introduce my new friend, joining me from Centauri, Rob Thomas, who is our Vice President of Cyber and Intelligence. Rob brings a long history of working in the classified arena, helping to protect and exploit many of the examples that I just listed. He's also an avid hockey fan, so don't get him started talking sports, or we might be here all day. Over to you, Rob.

Thanks, Byron. It's great to be here and I'm definitely excited to continue the conversation around key growth engines for KBR as we look ahead. First of all, go Caps! But second of all, as you mentioned, my name is Rob Thomas, and I'm here to discuss really our key role in the exploding area of cyber analytics, and the understanding of the importance it makes not only in the national security arena, but in every aspect of life. As a brief introduction to me, I began my career as an Intelligence officer within the Air Force, working advanced sensor, weapon technologies, et cetera. And following Desert Storm, I transitioned to industry where I've spent the rest of my time supporting various IC, Intelligence Community and DoD organizations. [ We're down ] with the Air Force. Over the last few years, though, my focus has evolved to include a significant emphasis on non-kinetic operations, something that you're going to learn more about as we go through this presentation. Really, there's 2 key themes that I hope you're going to take away from this presentation that really illustrates how they fit into KBR's overall growth strategy going forward. One, and should be no secret. Cyber is pervasive. It touches everything we do today. The impacts are not a government-only problem, but it's effectively an all-society problem. Cyber knows no borders. And second of all, which is equally important, KBR's domain expertise. It applies across the spectrum of cyber analytics, from the cutting-edge research in the areas of intrusive operations to the transition and operation of defense-related technologies to protect our customers' day-to-day operations. Something we'll talk more about as we go through this. For KBR, our priority is simple. It's to deliver the services and capabilities needed to protect our customers' data and the critical capabilities for their architectures from cyber threats. As we look forward, it's clear that the needs for cyber, cyber expertise, cyber solutions are increasing exponentially. You can't turn the TV or the radio on without hearing ads and needs for cyber and cyber-related capabilities. It's an obvious area for us as we go forward from a KBR perspective. So in the next few minutes as we go through this presentation, I'm going to be able to define for you what cyber analytics really means to us. What it means in terms of the market drivers and the customer base. I want to touch on our domain expertise as it -- really as it applies to U.S. government imperatives or mission areas by giving you some real-world examples, but it also is easy to extrapolate to see how it touches everyone's life on a day-to-day basis. And then lastly, I want to finish with this opportunity to leverage synergies for growth, really in consonance with the KBR continued transformation. This transformation that includes an increased emphasis on intel and DoD services and solutions as we go forward. So the list of customer priorities shown are really representative of key KBR programs that scientists, engineers and technicians are working on a daily basis. These include the secure supply chain, critical infrastructure program, cyber spectrum dominance, a fancy word that we'll get to you in the end that talks about where and who that's supporting; and lastly, non-kinetic operations. What's important to take away is that this is a cross-section from our ever-expanding cyber portfolio. It is not an exhaustive list, but they are key programs that are driving our growth going forward. Before we depart off the slide there, I want to discuss real briefly, this addressable market. And the addressable market represents really a summation or an aggregate of programs that are earmarked cyber. And while this stand-alone represents a significant market space, we, KBR believes the actual market to be much larger, but for a myriad of reasons, including predominantly classification, for example. It's largely obfuscated or hidden altogether. For example, it might be difficult to see where President Biden's EO, executive order to accelerate the hardening of federal government networks following the SolarWinds breach that happened in December of last year, where that falls. And then you might say, well, this is a U.S.-only problem. Clearly, it's not a U.S.-only problem. This isn't just happening here. You can see it with global partners, such as France. France is now embracing a EUR 1 billion increase in cyber-related funding to address attacks on their infrastructure, including hospitals. So all players, all stakeholders are in this game. So as we transition and we look at this relatively simple figure that's here, this triangle. This figure really provides a relatively simple framework to describe how KBR defines the world of cyber analytics. The term -- and the term to us is important, that it goes well beyond just supporting traditional cyber, cybersecurity or cyber IT, information technology-intensive operations. We operate in all domains of [ this showing ] figure. The top represents the highly specialized, high-end and frequently highly classified cyber-related programs addressing our customers' offensive-related operational needs, frequently referred to as non-kinetic operations. And for self-preservation reasons, I won't be discussing that in any more great detail. The middle of the slide represents the defensive side of our efforts, areas where our scientists, our technicians, our engineers are ensuring that the critical intelligence in war fighting systems, architectures, C4ISR architectures are operating without interruption. The architectures that Byron talked about earlier. Lastly, as shown, our workforce is working at scale to provide our customers with the underlying IT-focused implementation and training and really operations and sustainment of said capabilities. It's our path to getting these capabilities that are developed from an R&D perspective out to those end users. From that perspective, KBR is uniquely positioned to ensure that the critical R&D that's being done in these labs and in back rooms for [ core ] government programs, make it out to the field and to the real end users. It's not a science for science sake operation. KBR's analytics footprint today is approximately $500 million, with about 25% going to the offensive side, 25% going to infrastructure and half of it going to the defensive side. Regardless of what those activities are, though, none of this would be possible without the world-class expert teams that we've been fortunate to attract to joining the KBR family. They're the experts. They're the driving force that are making a difference for our customers. This, in our world, is a people first, then who do you work for business. And we have those people. So as we transition now to look at the real-world examples that we've decided to lay out where KBR is making a difference, where we're leading with a purpose. These, again, are not inclusive, but they do represent a cross-section that play to our corporate strengths and positioning across the cyber spectrum or the cyber spectrum domain. From an intelligence and community -- or intelligence community perspective, KBR scientists and engineers are the thought leaders in addressing how to improve the resilience and robustness of the secure supply chain. For example, our Trust microelectronics program is developing the blueprint. The leapfrog, the identification and implementation of breakthrough technologies and procedures, the means of, we call them operational instructions, needed to respond to these ever-increasing threats associated with integrating, with the potential integration of third-party components. Components that are bought, potentially not in the United States, but that are integrated into major DoD and IC-related programs. These programs range from next-generation sensors, space and air; weapons and weapons platforms; mission planning systems and in fact just about any other military system you can name. But the takeaway is, in all cases, the war fighter needs that system to operate as expected with no surprises at the time of most urgent need. So it's clearly an area, as we go forward, that you can see the government and our customers spending a lot more time in understanding what's being implemented within their architectures. As we transition now and talk about PNT, positioning, navigation and timing. PNT is fundamental to every system we operate within the defense and intelligence communities, from space to ground: knowing where you are and when you are. It may actually sound trivial, but it's actually a significant concern we're dealing with every day. Again, not only within the defense and intelligence communities, but also it applies in the civil and commercial domains. KBR is fortunate to have the government's go-to team of scientists and engineers that are identifying specific vulnerabilities and inherent risks that are prevalent within the global -- the family, really -- of global navigation satellite systems, which includes GPS, a specific constellation. Is this important? Absolutely. So there are clear and obvious implications to the military that I can point out: mission planning, safety of flight, navigation and targeting. But I'd rather depart from that and use something that's not a traditional military backdrop, but that [ one ] might be -- that's of more interest to all of us or all of you as we go forward. How about an active attack -- we refer to it sometimes as spoofing -- of the GPS constellation. And it's ironic that we use the term spoofing to almost downplay the significant or catastrophic consequences that could actually occur. But it's the types of words that we wrap around these types of activities. Let's say this spoofing occurs, and you're on the ground. No big deal. No big deal. If you're using Waze or you're using Google Maps, you might arrive on the wrong side of the shopping mall. Unless you're in California and you've relinquished control to a self-drive car. But what happens if you happen to be on a commercial airliner, jetting back to New York City for opening bell, a commercial airliner that up front pilots, NAVs, they believe, based upon GPS they're the only one that's occupying that specific location at that specific time, but in fact has company at 35,000 feet. Catastrophic? Yes. Real world? Yes. Something that KBR is working? Absolutely. So lastly, as we evolve from PNT, let's talk very briefly on cybersecurity for critical infrastructure. KBR is at the forefront of identifying risk in the vulnerabilities associated with the nation's critical infrastructure, CI. To be specific, we have world-class experts within the Department of Energy that are focused on identifying and countering from a defensive perspective, a myriad of real-world threats to our nation's power grid, Northwest Powergrid, to be specific. The need to project these industry capabilities, to deliver sustained, uninterrupted power, can't be underestimated. And again, as I mentioned, once you would look in the past and say, this is a government-only problem. It's clearly not a government-only problem. It's an all-society problem. Look at just the significant impacts we had for 3 days of snow in Texas and what it did to the power grid. Imagine that on a nation level now or on a global level. The bottom line, though, is in all areas, the threats that we're seeing are global. They're going to happen again. They're happening with increased frequency, and they're difficult to predict. So last, as we move forward, these are clearly enduring and significant challenges we're all facing. The cyber threat, it's real and growing every day. The evolution to this non-kinetic cyber-enabled threat that's employed on a global scale is a game changer, and it's the new reality. The near-peer adversary, which Stuart described earlier in his presentation, is no longer one that's based on force versus force. It's -- or what we refer to as symmetric warfare, big army versus big army, but it's one that's been replaced with technology versus technology. And really, the entrance into that club is relatively inexpensive. It's a computer, it's an Internet connectivity and a back room. So again, it's one of these areas that KBR is at the forefront and leading with a purpose. So effectively, combining Centauri's R&D, offensive and defensive cyber capabilities with KBR's skill in operationalizing, transitioning these technologies and these solutions to the end user is a real near-term synergy and an opportunity that we're very bullish on as we go forward from a growth trajectory perspective. With that, I'd like to introduce Doug Kelly, who's going to pivot really from the world of cyber where 1s and 0s are the threat, to one that now addresses our sustainable technology business and how KBR is advancing the mission against an entirely different kind of threat. Over to you, Doug.

Thank you, Rob. You've heard Byron and Rob tell you about how they're protecting the world, and I'm excited to talk with you today about how the sustainable technology business at KBR is protecting our planet and communities. Our technology solutions, including our proprietary IP, are a tremendous and dynamic growth opportunity for KBR, or as you've heard Stuart say, sustainable technology is the kicker for the entire business. So why does he call it a kicker? I believe the main reason is that sustainable technology is a high margin, double-digit growth business with a great cash profile. I mean, what's not to like? One of the core strategies that has fueled our growth and maintained margins is the addition of innovative and disruptive technologies to our portfolio. We achieve this through strategic alliances and acquisitions and through our incredibly innovative people, as Jenni will talk more about later. Our people are continually working to develop new technology solutions and challenging the status quo in the industries we serve. We've recently held several sustainable technology-focused investor events, where we've provided a deeper dive into this business. As you hopefully have heard, we have real near-term exciting growth opportunities across all areas of our global sustainable technology business. While all of our technologies help our clients meet their sustainability objectives in varying degrees, as referenced in the appendix material, I'm only going to focus on 3 exciting high-growth areas today: ammonia, digitalization and plastics recycling. So let's start with ammonia, a proven technology with a new future. As you know, KBR has a world-leading ammonia technology licensed to clients who produce 50%. Yes, that's 5 0 % of the world's supply today, with operating sites across 6 continents. We have continually invested in and innovated this technology and hold the records for the most reliable, the most energy-efficient and the largest single-train capacity ammonia plants in the industry. Quite an accomplishment. As a result of our leadership position, companies and governments across the globe are seeking out KBR to deliver solutions to meet their energy transition and sustainability objectives. To fully understand why we're so excited about ammonia, we only need to consider the huge expected growth to meet the near-term energy transition requirements and longer-term to enable the growth of the hydrogen economy. Today, hydrogen is a $230 billion market. But by 2050, it is expected to grow to $2.5 trillion. Since ammonia is 1 part nitrogen and 3 parts hydrogen, it's a very efficient carrier of hydrogen. We believe ammonia is the critical enabler of the future hydrogen economy, and our clients are relying on us as the market leader to make it happen. Historically, the ammonia industry has grown in line with GDP and population growth to supply the fertilizer and chemicals industries, primarily for food production. However, we're increasingly seeing a much higher growth outlook for the following reasons: first, marine transportation. Ammonia is a carbon-free alternative that is replacing fuel oil for ocean marine vessels. This is real, and the transition is happening today. We're seeing ammonia-fueled marine vessels being designed and built with many cruise lines and global shipping companies leading the way. Another area driving increased ammonia demand is power generation. Our advisory group is working with clients on how to reduce their carbon footprint by advising them on how to modernize existing coal-fired power stations to co-fire with ammonia to increase efficiency, reduce emissions and meet their commitments under the Paris Accord. Investments to build, expand and/or modernize ammonia facilities are growing, driven by the increased demand for traditional and nontraditional uses that I just mentioned. Based on our current outlook, we estimate that by 2025, the market will need an additional 2 to 4 new facilities per year. As the world leader in ammonia technology, we're also leading the charge to supply blue and green ammonia technology solutions. Now I've just mentioned a couple of colors, so let me explain. Traditional or gray ammonia uses natural gas as a feedstock. Blue ammonia is the same as gray ammonia, except that the CO2 generated from the process is captured and reinjected into the ground or used in other chemical processes rather than released into the atmosphere. Now green ammonia does not use natural gas at all, it rather uses electrolysis of water to produce the hydrogen and an air separation unit to produce the nitrogen to be fed into our market-leading ammonia synthesis process. Many ammonia producers are planning to add small-scale green ammonia plants alongside their gray ammonia plants as an initial step in their energy transition journey. One of our clients, Yara, a leading ammonia producer, just announced that they are establishing a clean ammonia business unit. We're helping companies like Yara and other leading fertilizer producers around the world with their sustainable ammonia growth transition plans. In fact, I am happy to announce that 2 different companies have awarded us green ammonia feasibility studies earlier this month. This is not a new initiative to KBR. We have been on this journey for many years and are leading the way with blue and green ammonia technology solutions that are available today. We have a growing pipeline of opportunities, and I'm personally very excited to see this technology area grow for KBR as we look ahead to 2025 and beyond. A second area where we see tremendous growth is with our digital technology enabled solutions. We are empowering our clients to achieve measurable safety, profitability and reliability enhancements using smart digital tools and AI-based analytics. It's important to understand that software alone is not sufficient. It's only by combining our market leading technology, IP content, together with the software that allows us to provide differentiated digital solutions for our clients. We are uniquely positioned to help our clients improve asset efficiency, reduced environmental impact, reduce their carbon footprint, all leading to a clean and sustainable future. I'd like to highlight just a couple of examples today. The first is remote performance monitoring. KBR's leading experts can support any plant anywhere in the world. I was in Houston in a meeting about a year ago during a discussion when we wanted to check how an ammonia plant in Russia was performing. We were able to securely access the system and view the same operating screens in Houston that the operators were using to run the plant in Russia. KBR experts in the meeting were able to review the operating data, provide real-time data-enabled expert advice on how the plant can be further optimized, demonstrating a real plant for our client, the tangible benefits of our digital solution, incredibly powerful. Second, reliability-based maintenance. KBR is working with leading companies to deploy AI and data analytics using many of the approaches that Byron and Rob talked about earlier to help our clients anticipate problems before they occur. We capture, analyze the monitor plant data and can reliably predict when equipment requires maintenance, but more importantly, notify operators when a change needs to be made to operations to avert an unplanned shutdown. Again, incredibly powerful. And these are just 2 of many examples where we're helping our clients digitize their operations, improve their own environmental footprint and ultimately, be more profitable. The third area that I'm especially excited about is our recently announced alliance with Mura Technology, which adds plastics recycling technology to the KBR portfolio. This is not just a bandwagon technology. This is differentiated proprietary technology. It's a revolutionary recycling process that uses supercritical steam to convert plastics back into the oils and chemicals they were made from. These products are then ready to be used for new plastics or other chemical products, essentially closing the loop on the plastic's circular economy. One of the unique capabilities of this technology is that it can recycle all forms of plastic, including those single-use plastics that are considered unrecyclable by other technologies today. This means that it has the potential to eliminate single-use plastic waste destined for our landfills or our oceans. So you may be asking, what does this mean for KBR? As an exclusive licensor of this extremely versatile and innovative technology, the outlook is exciting. Today, the construction of the commercial scale unit is underway in the U.K. and is expected to be completed in 2022, with an objective to have 1 million tonnes of worldwide capacity in development by 2025. The opportunity is immense for KBR and the planet. In addition to our alliance, KBR has taken an equity position in Mura. We are all-in. And not only KBR, but other strategic players are also investing in this disruptive technology and Mura. This is game-changing technology and will make a significant positive impact on our environment, especially for our oceans, is in line with KBR's One Ocean initiative that you've heard us discuss on prior calls. To summarize, the key message that I would like to leave with you today is that we're not only focused on being more sustainable here at KBR, but we're helping our clients become more green. And in doing so, we're making a tremendous positive impact on our world and community. Importantly, for this group, this means an exciting growth outlook for our technology IP, our digital initiatives and our sustainable solutions as we look to the future. Now I would like to turn it back over to you, Stuart.

Thanks, Doug. That was absolutely brilliant. And of course, thank you to Rob and Byron also, great job. And some excellent examples of doing things that matter, and making it clear why we believe KBR is well positioned in these higher growth markets. Now, we have talked about winning the right work and growing in areas of long-term strategic value for a number of years now, and our team has, frankly, done an amazing job. We have highlighted specific awards on the right-hand side that we're awarded all in the last year or so, quite a list. And only as we pull this together in one place as we look backwards did we really understand what a great job our people have done. Now all of these have been announced through the year, so I won't go into these again. But what we have done is we have grouped the awards into areas on the left-hand side that are hopefully helpful. And I'll give you a sec to read them. I think there's 3 takeaways: Firstly, these show clearly great momentum in upmarket, innovative, tech-enabled solutions, leveraging our team's advanced R&D capabilities, proprietary IP and, of course, the main expertise. Secondly, there are also a number of enduring programs really adding to our long-term contract base, which is a key differentiator, and we'll talk a little bit more about that later. And thirdly, limited concentration risk nicely balanced funding streams across a broad global customer base. This allows us to predict the future with growing confidence. Now this confidence was increased by our overall strong book-to-bill in 2020, which resulted in both GS and heritage tech growing backlog by greater than 20% year-over-year, a fantastic performance by any measure. But what really, really excites us is the type of work we won. Now before I move off this slide, please take a moment to absorb the significance of the number on the top right. Standing here today, we have over 55%, 5-5 percent, of the work we need to deliver our targets through to 2025. And this comes directly from our differentiated base of long-term contracts. In 2025, as a stand-alone year, we have already secured circa 40% of the work required to meet that target. Now think about that, think about the significance of that, given the growth through to 2025. So these statistics should not go unnoticed and will hopefully convey clearly why we are confident in our growth targets. Looking forward, we're also confident we can maintain this momentum, and this takes us nicely to our pursuit pipeline. The pipeline is nicely balanced across our business, as you can see from the wheel in the middle with attractive near-term pursuits at more than double our annual revenue, and over 10 pursuits with contract value greater than $1 billion that are also balanced across the portfolio. Now all are in areas where we strategically want to grow. Our 95%-plus recompete win rate continues and is a testament to the mission focus and the commitment of our outstanding people. But it's also worth noting that our pipeline has grown. It has grown over 25% year-on-year. Another really good indicator of continued momentum, especially as we head into a year with very low recompete. Now the new program project and technology awards, the phenomenal recompete win rates, the conversion and growth of the pipeline, they're all strong indicators, no doubt. But our success, as I've said many times, is because of our people. I am most delighted to welcome Jenni Myles to the virtual stage, to introduce you to some of our people, show you our culture and action and give you some of the recipe to our secret sauce. Now Jenni joined KBR as COVID first hit the world in early 2020. She literally led from the front as she onboarded and got to know KBR via MS Teams and Zoom. Now having your Chief People Officer as the test case really made us so much easier for those that followed. And her contribution has been nothing short of outstanding as we progress our people agenda. And so without further ado, Jenni.

Thanks for the introduction, Stuart. I am delighted to be here today to talk about the people of KBR and how we support the amazing work they do. Often when we speak about being successful as a business, we mean outperforming the competition in terms of revenue and profit. But in my opinion, the fiercest competition by far is for talent. So creating an environment in which our people can flourish, be successful and be happy at work isn't just good for them, it's absolutely essential for KBR and our shareholders. As Stuart mentioned, it's coming up to a year since I joined KBR myself, on-boarding remotely as many others did in 2020. Even through that virtual lens, it became clear to me so quickly that KBR is an exceptional organization, with a unique culture that helps us deliver for our customers and our communities and, of course, our investors. I know you've heard every company say it has great people and a special culture. But today, I intend to make it as real for you as it is for me as this truly is KBR's source of competitive advantage. Our vision is to bring together the best and brightest to deliver technology and solutions that help our customers accomplish their most critical missions and objectives. And in doing so, we strive to create a better, a safer and a more sustainable world. You've already heard about some of our technologies and solutions and their impact on the world. So now I get to talk about our people. You can see here some of the scientists, technologists and engineers who are the heart of KBR. There's Annie Jing, a chemical engineer specializing in hydrogen and ammonia process engineering and technology development. [ James George ] is an optical engineer who's a specialist in holographic imaging systems. And Tina Bayuse, a pharmacy operations expert is responsible for pharmacy practices for NASA's remote operations. Annnie, James and Tina are just a few examples of KBR's many researchers, problem solvers, inventors and solutions architects solving the most challenging issues in the world today. While the domain knowledge and expertise of these people are completely distinct, we are all brought together by a common culture founded on the One KBR values you see here. And to make sure this isn't just some nice words on PowerPoint, we're cascading personal conversations between employees and their managers so they can help bring the values alive every day at KBR. You'll have picked up from Byron and Rob and Doug's presentations that we're doing work that matters, which drives commitment, deep commitment from our employees. It's this huge sense of purpose, which positions KBR as a magnet to draw in the world's best diverse talent, and it's right at the heart of our employer brand. We then build on this by focusing on 3 things: cultivating a culture of belonging, focusing on employees' well-being and enabling their ongoing growth. Easy words to say, so let me to life for you. Let's start with belonging. Almost every company talks very sincerely about diversity and inclusion. But in KBR, we believe it's more important to talk about inclusion and diversity. Of course, it's essential to attract, develop and retain diverse employees. And as you can see on the slide, we're making good progress with that vision today. We work really hard to prevent adverse impacts, whether from conscious or unconscious bias. So for example, in 2020, we did a global pay equity review, and I'm pleased that the data showed our remuneration is fair and balanced regardless of gender. Data insights are also helping us tailor I&D improvement plans from every business and function across KBR. All managers are accountable for improvements, and there are direct links to our incentive programs. But this still isn't enough. We are stronger, more resilient and more innovative when all of our people can fully contribute and be their true selves at work. It's a testament to people like Natalie, Iyesha and Penny, who you see here that our I&D employee resource groups, or ERGs, have had a positive lasting impact on KBR employees through their community, advocacy and mutual support. In 2020, they connected hundreds of colleagues through virtual learning and networking events. You might have seen some of these pros on Monday as they came together to ring the opening bell at the New York Stock Exchange. It's a super example of our team of team's value in action. Turning now to well-being. Over the last year, COVID has shown a harsh light on the mental health of people everywhere. The uncertainty, financial and health worries and isolation we've all been touched by, of course, the dramatic rise in the number of people suffering from stress for anxiety. The one positive effect I see is that many more people now feel empowered to talk about how they feel, to seek help or to offer support where it's needed. In KBR, we've already taken significant steps in this area, building on the passion of people like Kim, who back in 2017 began advocating to launch an ERG, and persuaded local managers to establish a network of well-being ambassadors, which has really helped destigmatize mental health in KBR. Research shows that there's a massive return on investment in mental health and well-being. So since those early days, we've consciously encapsulated this within our Zero Harm culture. KBR is not just about helping people when they have a problem or even preventing issues arising in the first place. We believe, just as we all aspire to physical fitness, it's important that we consciously work on our mental fitness. As part to physical fitness, it's important that we consciously work on our mental fitness to enable us to thrive and perform at our best. After all, we're all somewhere on the spectrum you see here. It is no coincidence that KBR provides related services to our customers. For example, in the preservation of the Force and Family program, special operation forces have access to care from a full range of KBR's physical and mental health professionals, to optimize readiness and resilience of service members and their families. This program expanded on the very important work at NASA around astronaut health and human performance. And we apply the same ethos for the benefit of KBR employees, offering clinicians supported training to every manager, expanding the ambassadors and ERG programs across the globe and enabling access to counselors, learning and resources 2x47 through our employee support program. And soon, we'll be launching a new mental fitness app, like a fitbit for your mind, with targeted support to help employees' resilience and mental fitness. Lastly, I'd like to share with you how we help our employees grow by providing ongoing professional and personal development. Like most companies, we offer leadership programs to help us plan for succession and build business resilience, while supporting employees' career ambitions. You will not be surprised that Byron and Doug and Alison are all graduates from these programs. But for KBR, the scientific, technical and engineering skills of our people are what really differentiate us. We know that creating opportunities to share, challenge and learn is vital for those who possess genuine professional and scientific curiosity. So how do we do this? You can see here that we've established communities of interest to connect technical experts across the world in a wide range of areas, such as human performance enablement, AI, machine learning and cyber. As well as helping people grow, this collaboration also helps us innovate and solve real-world problems. For example, last month, a program manager in New Mexico tapped the autonomy COI to troubleshoot an issue with an unmanned ground vehicle. Colleagues supporting autonomous systems for the Navy, Army and NASA quickly provided advice to help resolve the issue. Another fabulous example of our team of team's philosophy in action. Our professional and technical learning is also supported by impact KBR's early careers ERG, which sponsors global learnings such as the Vision Series, where senior leaders engage with up and coming professionals to feed their curiosity, feed their drive and their motivation. I participated in the Vision Series 2, and the young people you see here like Derek and Emma, make me feel so optimistic about our talent pipeline. And of course, they provide the type of fresh new thinking that challenges convention, which has to be a good thing for all of us. At the other extreme of scientific and professional knowledge, our KBR fellows program recognizes preeminent scientists and industry world leaders by supporting their research and continual learning, thereby pushing the limits of knowledge in their specialist fields, which brings me full circle back to the great people who do great things that matter who I've introduced throughout my presentation. I trust you can see now how KBR's remarkable culture comes to life, and how we support the belonging, well-being and growth of our people. They truly are the best and brightest, whatever role they play. And it's a privilege for me to support them in achieving their purpose. You've made it to the halfway point of the program today, congratulations, and thank you for sticking with us. We're going to break here for 10 minutes, and when we return, Mark will take us through the numbers and the company's long-term targets. Thank you. [Break]

Welcome back from the break. First, thank goodness for Jenni, a super addition to our team and a huge breath of fresh air in KBR. She's really upping our game in managing our most vital asset, as you heard us say, our people. I'm Mark Sopp, thank you for your engagement today. It's always a pleasure to share with you what's new at KBR. So on a personal note, I've just entered my fifth year here at the company, and I have to say it's been a truly terrific experience. While the performance results have indeed been quite rewarding, I just have to say it's the journey with this team that has been the most meaningful. Back in my first Investor Day with KBR in 2017, it was just a couple of months after I had started with the company. And I did say on the stage that day, there's something special about this team and something special about the culture. But I didn't quite have my arms around it at that time. And I sit here today, and it's very vivid to me. We have a special culture of being strategic in everything we do. We are really committed to delivering to our stakeholders each and every day. We're very decisive and quick about change when that needs to happen. And we seriously put people first. You heard this from Jenni and also Stuart. Our unwavering focus on safety and sustainability demonstrates we put our people first. We mean it. So over the next 15 to 20 minutes, I plan to touch on the strategic playbook that has helped us guide to where we have gotten today. Then I want to lay out our vision for the next several years, quantitatively, and why we believe we can achieve this vision. I'll walk through our long-term targets that we're updating. We're going through 2025 here, and the underlying assumptions that we've used to derive them. I'll update our view on cash generation, our capital structure positioning, and I'll finish up with our capital deployment plans geared towards both growth and also value creation. Starting with strategy. We have a very deliberate strategic approach which guides all of our decisions. And this has enabled a number of positive outcomes. We've lowered our risk profile immensely. We've reshaped our portfolio with direct and greater access to attractive markets. And third, we've produced higher and more consistent levels of profit, strong cash flow and a much improved capital position. Pretty darn good. So the strategy is straightforward. I'll run through a number of elements here. And as Jenni said, we start with hiring the very best and brightest. We position KBR in attractive markets with solutions that we know our customers will demand. Oftentimes, we create demand with disruptive technology and solutions, like those you heard of from my colleagues earlier. We pursue customers that value highly dependable delivery because we're all about we deliver. We also value customers who value long-term strategic relationships. We pursue and deliver on long-term contracts across our base. And as a result, we carry an unusually long weighted average life span across our contract portfolio, which gives us lots of future business visibility. We seek a healthy mix of performance-based contracts. In a culture, which is all about we deliver, having skin in the game for delivering successful client outcomes is actually quite natural for us. As a result of being able to consistently deliver, performance-based contracting does indeed drive better margins for us today and enables improved margins in the future as we grow. More on this in a bit. We pursue a low capital intensity business model. And coupled with the long-term recurring contracts, we produce predictable margins and attractive cash flow. And finally, we use our generated cash to further positioning our offerings for growth through M&A, but also in balanced fashion, return meaningful cash to shareholders for value creation. Every one of us that you've heard from here today believes in this model. It's worked very well for us, and it's our playbook going forward. We have a vision for what KBR can be in 2025. You heard this from Stuart earlier, a path to reach $8 billion in revenues and $800 million in EBITDA, all on organic efforts. Along the way, we expect to generate a lot of cash and additional capital capacity by responsibly leveraging the company and by deploying that capital to further amplify EPS growth. Specifically, we see an opportunity to generate roughly $3 billion in aggregate free cash flow and incremental debt under these parameters. It's a lot. With this, we are targeting to increase adjusted EPS by 2 to 3x today's level. We see this as amounting to $4 to $6 of earnings per share by 2025 through a combination of growth, margin improvement and capital deployment. More on this in a bit as well. Moving on to our long-term targets. You've heard the team lay out our primary growth drivers across our 2 segments. One common growth driver across both our government and sustainable tech businesses is the large installed base that they have both built over the years. Remember, KBR has been around over 100 years. On the government side, our current book of business provides growth prospects via expanded recompetes, upsell opportunities and the continued tapping of our robust IDIQ contract portfolio, which we love. A good example of an expanded recompete was our recent 10-cap award with the U.S. Air Force. Byron covered that earlier. Great opportunity for us. On the sustainable technology side, we have amassed a large installed base over many decades, and these clients have constant need for technology upgrade and refresh. Perhaps more significantly, they must progress their sustainability agenda. This bodes well for sizable market growth in brownfield upgrade and conversion projects, which happens to be right in our wheelhouse. And building on top of the current book of business, we have substantial new up-market opportunities, and we're going to be pursuing brand-new work across space superiority vectors, cyber, systems integration and advanced supply chain offerings on the government side, and of course, the array of energy transition opportunities in sustainable technologies. This includes the potentially enormous increase in the demand for ammonia that Doug covered earlier. Importantly, we are unique in offering highly credible and citable energy transition solutions, synergistically to both the commercial and government sectors, uniquely. When our sustainable technology business landed projects to advise the governments of Japan and Singapore on how they can transition to a hydrogen-based economy, do you think it was relevant that we have an established dependable global government contracting business? Yes, of course, it was. And when our government business was asked to lead an energy transition study for the U.K. Ministry of Defense, you think it was relevant that we have an established and credible commercial sustainable technologies business that actually does energy transition studies for a living? Absolutely, it did. So as you see, we expect that there will be more and more of this crossover given the ubiquitous sense of urgency to achieve greater sustainability outcomes, and that actually applies to pretty much every organization. So with this background at the KBR level, we're targeting a combined 6% to 9% top line organic CAGR, and together with margin improvement, an adjusted EBITDA CAGR of 8% to 12%, that all works out to about $8 billion in revenue and $800 million of EBITDA by 2025. We're targeting to amplify adjusted EPS growth to a CAGR of 15% to 20% over this period using a conservative capital deployment assumption of just half of our accumulated free cash flow and leverage capacity. A full deployment scenario, which is our intention, improves this substantially as I'll show in a bit. However, for setting targets, we think it is appropriate to use the 50% deployment assumption. As you know, the timing and conditions around conducting M&A and buybacks are pretty difficult to predict. So that's why we've done it that way. And for cash flow, we expect continued strong conversion of income to cash. We've demonstrated that. We're changing our conversion metric favorably, now targeting essentially 100% conversion of net income to free cash flow, whereas before, it was net income to operating cash flow. This allows us to simply tie the targeted 2025 EPS level of $4 to $6 per share to a $4 to $6 per share free cash flow yield in 2025. So hopefully, that's straightforward. We are bumping up our return on invested capital target to 14% to 16%. This reflects expected margin improvement and working capital improvements over this period of time. That's the consolidated view, and now let me dig a little bit more into the 2 segments. We're targeting a 5% to 8% organic growth CAGR for our Government segment with EBITDA margin steady in the 10% to 11% range. This growth rate compares quite favorable to the peer group, and that's backed up by the attractive submarkets we're in, also the synergy drivers we have going forward and the terrific opportunity pipeline that Stuart covered earlier. We've nudged the growth rate down just to tick the previous targets to reflect the increasing scale of our government business and also the longer-term nature of these targets. For sustainable technologies, we're targeting a 10% to 12% organic top line CAGR from 21% to 25%. This rate is muted by the ramp down of legacy pass-through revenues that we will see over the course of this year and next year. But excluding that effect, we see organic CAGRs more like 15%, sensible, given the favorable megatrends that we have and our great positioning in this area. On the margins front, we are targeting improvement in profitability, consistent with what we've said before. This means mid-teens EBITDA for 2021, with improvement over time as we scale up. As a result, we're getting sustainable tech EBITDA to grow at a CAGR of 15% to 20%. As I said earlier and as Stuart also said, this team is very committed and focused on doing what we say we will do. We have a lot of credit to give to our employees. We think these targets reflect the hard work they put in to improve the brand of KBR. And with our up-market solutions in science, engineering and technology serving very attractive market areas and coupling this with a more mature operating model, these targets are achievable. Here's a simple stack that builds our targeted 15% to 20% adjusted EPS CAGR. We'll start with the revenue growth of 6% to 9%. Then we add 1 to 2 percentage point bump tied to the improved margins from sustainable tech. We expect another 1 to 2 percentage points of improvement from containing G&A expense as we grow. Economies of scale, if you will. This reflects our efforts that we've been undertaking to improve our infrastructure, new ERP systems, more standard and automated processes and the like. That's well underway. Moving to the right, with the conservative 50% deployment assumption, we generate another roughly 7 percentage points of EPS growth, altogether building to the 15% to 20% target. Here's more on capital deployment. First, our deployment priorities have not changed. The pecking order starts with funding organic growth, and maintaining responsible leverage, then maintaining an attractive dividend. After that, it's strategic, accretive M&A, if and when there are compelling opportunities that meet our criteria, and we're very disciplined about that. Absent that is share repurchases. The likely outcome is we will do a balance of M&A and buybacks with this approach. Our M&A strategy will continue to focus on augmenting up-market capabilities consistent with our M&A track record to date. So with that, here's the build of the cumulative deployable capital of $3 billion through 2025. The roughly one-to-one conversion of net income to free cash flow produces an aggregate of between $1.5 billion and $2 billion of cash over this time frame. Additional leverage attained from the growing base of EBITDA produces another $1 billion-plus of potentially deployable cash at a 3x net leverage. From that, we are assuming a consistent payout of dividends over this period of time. With 50% deployment of the remainder, assuming a semi-back model, we derive the additional EPS contribution, which, coupled with everything else, yields about $4 of earnings per share. That's depicted on the right side of this chart in the middle. That $4 per share aligns to the 15% to 20% EPS CAGR mentioned earlier. Deploying only 50%, however, would result in net leverage in the 1x territory, and that, of course, is suboptimal. A full capital deployment scenario with 3x leverage, again, our intention, would drive EPS up to the $5 to $6 per share territory, with an EPS CAGR well above the 15% to 20%. Moving on to dividends. We are pleased to announce today that we're increasing our regular quarterly dividend to $0.11 per share or $0.44 on an annualized basis. This will take effect immediately. This represents a 10% increase in follows last year's 25% increase. We believe that dividends are a good use of capital by augmenting our growth story with certain cash return to our shareholders, as enabled by the stable and predictable cash flow machine we have coming out of the business. As you can see here, our dividends over the past couple of years have grown in line with our earnings profile. Our intention is to increase regular dividends commensurate with the growth we expect in net income and free cash flow. And of course, will be subject to Board of Director approval as we pass-through time. So we've covered a lot of ground here, let me summarize. Our strategy, our discipline and our culture have enabled us to grow and deliver strong results over the past few years. It's also enabled us to have truly excellent market positioning sitting here today. We expect to continue to focus on providing technical solutions, particularly in the defense growth sectors we covered here today and to, of course, capitalize on our leadership position in energy transition and sustainable technologies. We see attractive growth in both of our segments and overall margin improvement with attendant strong cash flow generation. With an expanding capital base, there's plenty of opportunity to fuel additions to our growth platform, and at the same time, provide economics through returning cash to shareholders, as we've done. All of this is within our sights. And we can actually do so while maintaining a pretty conservative capital structure. As we further prove out the growth elements and as we deliver, increased scale and visibility could warrant a more aggressive capital structure position, and that would offer additional upside. Thank you for tuning in to the KBR story. It's fair to say all of us here today at both enjoyed and are quite proud of what we've accomplished as a team. And yes, we actually believe the future forward offers an enormously interesting and compelling value creation story for all of our stakeholders. And we're actually quite inspired by the momentum we have today and the teamwork we have to capture every little bit of this potential. Now I'm going to turn it back over to Stuart, the Chief, for his final remarks. Thanks again.

Thanks, Mark. Awesome job as ever, he's a class at. And I have to say since Mark jointed KBR, my life has got a whole lot easier. So to close and on to our final slide of the day. Our objective was simple and centered around 4 key themes: ESG, momentum, people and the 2025 targets. ESG, I think we're all aware, ESG is increasingly important. Today we tried to present that KBR goes beyond being a good corporate citizen. Sustainable technology solutions can really make a difference to our customers and help them achieve their sustainability goals. But importantly, it is also fully aligned with creating shareholder value. On momentum. KBR today is positioned much better than at any time in its recent history, and certainly in my tenure. Coming off a strong 2020, we laid out the case and the facts to support continued momentum. We are a high-end solutions-orientated government services company with a Green technology IP kicker. This combination is unique, and we are very well positioned to deliver above-market growth. I hope we succeeded in convincing you of this today. Our people. People are at the center of all we do. To continue to thrive, we need to continually employ and look after the best and the brightest. We presented how we are advancing our people agenda and why our culture is key to ensuring we are a talent magnet. KBR 2025. Mark presented our targets in some detail. Top and bottom line growth, cash generation, capital deployment and ROIC, and he did so as we promised through to 2025. We also presented why we are confident we can achieve these: backlog growth, pursuit pipeline, strategic growth vectors and accelerants and detail on a substantial long-term contract base. We take these targets extremely seriously. We, collectively, as a team, we are all in, and we are committed to continue to deliver that simple thing: doing what we said we would do. Thank you for listening, and we'll now move into Q&A.

[Operator Instructions] Our first question comes from Jerry Revich with Goldman Sachs.

I appreciate the update. Really impressive targets for sustainable technology growth, but essentially, correct me if I'm wrong, but the math implies, it can be a, call it, $3 billion revenue business. Can we just expand on how back-end loaded that is? Nice to hear about the win momentum. Can we maybe just flesh out in a bit more detail than we have in the past on what the path looks like for that business over '22, '23 versus towards the back end of the targets?

Thanks, Jerry, and thanks for your question. Yes. I mean, it's a very exciting part of our portfolio. As you heard today, I mean this technology IP kicker really is that, because you get both revenue growth and, of course, margin expansion through time. So in fact, what we would see as we look forward, and we've said we're going to double EBITDA by 2025 in this segment, off a '21 number of circa $1 billion in the mid-teens. And we stand by that target today, and that's very much part of what Mark presented. And we see the cadence being very sort of -- that it's not back-end loaded. I think as the margins improve over time, obviously, there's a bigger sort of driver in the EPS, EBITDA side of the equation. But that actually accumulates over time. It doesn't go flat and then go like this. It actually goes in a very sort of nice curve in an upward trajectory, as you would expect. And I think our most recent book-to-bill performance would just put fuel on that fire. And [ as does ] that hopefully, you gleaned that the pipeline of opportunities going forward are just as exciting with the growth in the pipeline as well. So everything is lining up to be very positive.

Okay, terrific. And then on Government Solutions, obviously, we've had the headwinds for the Logistics business over the past year. When do you expect organic growth to inflect positively for the portfolio as a whole? Obviously, Science & Space has done really well. But relative to the targets that we're looking at here, what's the cadence as you see it in that 4-year plan? And when exactly do you expect to see the positive inflection?

Yes. I mean, I think we expect to see that positive inflection as we expect to see that positive inflection as we move forward from today. Again, our book-to-bill has been very, very strong in 2020, as you're very well aware. And that includes Logistics. I think our base of long-term, enduring contracts, as I tried to talk quite heavily about in terms of the, what's secure and to underpin our targets is a unique differentiator in it as we look forward. We don't see, again, a sort of a big sort of upswing at the end. It's a very sort of steady growth cycle. And in terms of our outlook, I think as you're well aware, Jerry, when we did our year-end, we did talk about the fact that we've taken a very nominal or nonmaterial view in our guidance of OCO-funded work coming out of Afghanistan and the Middle East, and there's likely upside associated with that rather than downside. So I think that business is in very, very good shape. Again, it's growing very nicely. And you talked about Science & Space growing nicely, that grew at 12%, but the Defense & Intel business actually grew over 20%. So I think we are growing in the areas we wish to. We have moved strongly up-market. We've derisked the portfolio in terms of funding streams. And I think the way the guidance has been set really positions us for upside rather than downside risk. And as a consequence of that, we're feeling really, really strong about not only this year, but beyond this year.

That's great. Appreciate the update, and nice to hear about the steady ramp-up in both businesses. Let me leave it there.

Our next question comes from Tobey Sommer with Truist Securities.

I was wondering if you could speak to the federal budget outlook in -- maybe DoD outlook in your organic guidance range for the federal segment. How -- what do you assume as a context for those growth rates at the company level?

Yes. I'm going to something, Tobey, that we can only do at these events. I'm going to ask Byron Bright to answer that question, given that he's responsible for that -- for that business. And over to you, Byron.

Yes. Thanks, Stuart. I think I'm online here. Yes. So I think we're still waiting on the, Biden's updated budget, which will be coming out in a few months, and I'm sure you're tracking a lot of the articles on that, Tobey. I think most people are assuming a relatively kind of flat DoD budget through this period. But you have to kind of look down and we -- both Rob and I alluded to that in our remarks, that the areas we're in are those critical growing areas. So we see real material growth above the -- in that kind of 6%, 7%, 8%, 10% range in areas around some of the cyber needs, some of the space superiority changes. Just look at the amount of funding that's going to kind of go into the Space Force over the next several years, so -- so we're seeing real growth in those high-technology mission-critical areas. And even though you might not get the top line growth on the DoD budgets, I think what we've really tried to do the last 2 or 3 years is to position the portfolio where we see the requirements and the needs. And so I think we're optimistic about that, and we're not overly worried about the top line, although I would generally expect it to be relatively flat, but there's a bunch of debate going on about that right now. Hope that helps.

To add on to that a little bit. We tried quite hard, Tobey, during the presentation to really sort of convey where we sit in terms of this deep domain expertise. I mean it's a key feature of really what KBR brings to the table. And particularly with the addition of Centauri, we've got these top end R&D [ fueled ] fast type capabilities that allow us to really sort of sit at the top table. But below that, again, I think, as Rob mentioned, we have this strong heritage of being able to operationalize. So making real sort of fast-paced technology changes and applying them to real-life situations. And I think companies like that are going to be in big demand going forward, and we're seeing a lot of that rhetoric coming out of the DoD today.

If I could ask a different question on the tech business. Over the course of the forecasted period, how do you envision the services, either sort of size of projects or margin profile, evolving as your customers shift from [ studying ] ammonia in a hydrogen world to some sort of implementation phase?

Yes. So for us, Tobey, it's all about the ammonia technology. We're not going to be involved in [ lots I mean ] EPC work and building facilities. That's not what we do any more. We're very much at the technology end. So just as we do today, we sell technology to the fluid production industry, the ammonia producers. We sell the license, we sell the catalyst and we sell proprietary equipment and after sales services as well. So basically, it's -- that sort of offering would continue into the future. The exciting thing about ammonia is that it's an old and well-proven technology, as Doug said, where we've got 50% global market share, but it's in this renaissance, if you like, because we've suddenly got this opportunity to put ammonia into marine vessels. We've got ammonia going into coal-fired power stations to replace coal -- part of the coal -- going in as the feedstock to reduce the carbon emissions. And then the momentum continues into a hydrogen economy as we go forward. So it's not just about hydrogen. It's actually about the uptick in ammonia demand for us. And our risk profile and our margin profile and all the things attendant with our ammonia IP will continue. So we -- that's a very attractive -- the Syngas ammonia part of our business is a big platform for us within our technology portfolio. And the increasing demand around that is super exciting. And so you won't see us taking on additional risk, you will see additional volume coming through in ammonia, but with the attendant margins. And, I will say again, that runs on negative working capital.

Our next question comes from Jamie Cook with Crédit Suisse.

Thanks for the update and earnings outlook longer term. I guess my question, the first part is, as you think about your strong cash flow and your inorganic opportunity, is the focus on inorganic still more towards the Government Solutions business as people better appreciate the top line growth and margin expansion with sustainable technology solutions? Are there holes in your portfolio there? Or could we add on to ammonia? And could that become a bigger part of the business over time versus where it sits today? And I'm just wondering if there's any scale benefits to that? I understand you're not going to go into lump sum fixed price type stuff, Stuart. So I guess that's my first question. And then I guess, Stuart, just a question for you. A lot of debate too on what multiples we want to put on each part of the business. I mean, do you view both businesses as sort of comparable in terms of how you think about valuation? Or is one more attractive versus the other? I'm just trying to think about how you think about how the market should view the portfolio over the longer term.

Yes. So to answer your first question first, if you like, around M&A, I would say right off the bat that if you looked at our organic growth, that's super exciting in its own right and going into this year just with our guidance of 20% EPS growth this year. And then obviously looking at the CAGR is at 15% to 20% with [ great concern to ] capital deployment assumptions in those numbers. So very strong organic growth opportunity. And in terms of M&A, I think we've probably been successful in M&A, and I think Byron gave you a walk of the various companies that we've acquired through time and how we've built strategically on the portfolio. And as you know, and we've talked about this many times, our philosophy is very much about 1 plus 1 must be greater than 2. We don't buy market share, we buy strategic acceleration, and we're very careful about the people elements around that. So I mean, as you know, the government market is extremely fragmented. It's an enormous [ pace ] of business in the U.S. and globally. And so if we can find accretive, attractive and culturally aligned businesses, we would look to do inorganic opportunities through that. And in terms of the technology side, I think we've recently -- and Doug announced we have actually taken an equity stake, I don't know if people picked up on that, but we took an equity stake recently in the Mura Technology around plastics recycling. So we've got the global licensing opportunities and all that comes with that, but also we've got an equity stated at the top table. So I think that we would continue to look to our technology portfolio. Again, we know there's adjacencies. And where our portfolio is sitting today, obviously, I guess, the climate change and decarbonization agenda is very much where we want to be. And I do think there are opportunities to build upon that. So again, we will be looking. But as you know, you've got to kiss a lot of frogs, businesses have to be attractive culturally and financially, and they've got to be for sale. And so -- but we'll continue on that path. It's been very much part of our DNA over the last 4 or 5 years. And I think on the second question on multiples, I mean, that's -- they can -- people do look at -- some people do look at the sum of the parts, of course. And we view that we are a very high end government services business today, and we've talked a lot about our $1 billion franchise with NASA. And we tried to lay out our Defense & Intel business, at well over $1.5 billion going forward, et cetera. And when you start to look at that opposite our peer group, I think you could argue that our multiples are below the peer group that sit there. And so I do think there's a -- the market is catching up to that understanding and hopefully they catch up quicker. But we don't have the -- we can only work hard on educating, doing events like this. In terms of technology, it's quite hard to get comps. I think the most recent one, I think is the publicized bid for Grace [ on ] the technology side, more on the catalyst side of technology that was well north of the multiples government companies trade at. And that bid was rejected. The Lummus asset went for 12.5x to Chatterjee and Rhone in a distressed sale from McDermott, and that was a direct comp, if you like, for our technology business. And at 12.5x, obviously, that's valued way higher than we think tech is valued in our portfolio today. So again, by doing events like we've done in the most recent past to explain what's in the sustainable tech segment: its book-to-bill, its attributes, its cash conversion ratios, et cetera, and its margin profile through time, again, we can -- we hope that people will understand just how valuable that is. And that's why we view ourselves as a very high-end government business with an IP technology green kicker that we talked about today. And through time, we'll prove that thesis out. And I think in truth, I think we've proved that out over the last little while, and we'll continue to do so.

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

Great presentation. I guess just to pull it all together, I hope there's sort of a concise response to this. But just trying to think over this forecast period through 2025 what those big upside, downside swing factors are around the organic growth outlook? I mean, what do we need to be monitoring in terms of maybe big procurement wins or more macro or societal factors, technology development? I know you guys typically err on the side of conservatism. So I'm just wondering where we need to be looking for kind of potential upside as we move through the next couple of years.

I mean, Sean, we -- as you know, we have been quite conservative in our past, and we tend -- we've taken a quite a conservative view in sort of what we're doing on the OCO side, and Afghanistan et cetera, as we go forward. So that's certainly an area to watch. I would remind you that we do have 55, 5 5% of the area under the curve, if you like, towards our targets in 2025. And that's a remarkable number, and the team has done an amazing job to win these long-term enduring contracts. Clearly, the tip of the spear here are the operational side and these are enduring, and we're highly confident of that base of business. So I think the thing to watch really for us is really our performance as we progress through '21, and our book-to-bill as we progress through those. We do think we're opposite these very hot markets. We tried to present that today in some more detail. And I would encourage you to look at the slides at the appendix of the presentation. There's a lot more detail given in there around the 3 growth factors in particular, and on the long-term contracts. So I don't think there's 1 singular event. I don't think there's anything that can come from left field that we can see today that would really derail our progress. There might be unforeseen events, of course. We don't know about those sorts of things. But our concentration risk is low both in funding and our customer set, and we're a global -- a far more global company than many of our peers. So I do think we've got a very well-positioned business, a well-balanced business today. And as I said in my remarks, I don't think we've been in better shape, certainly in my tenure, than we are today. So we're very upbeat about tomorrow and beyond tomorrow. And yes, that's probably as much as I can say. Mark, maybe there's more you would like to say there?

Sure. I think I'll point out, Sean, that Stuart's chart on the pipeline shows 10 opportunities that are north -- a $1 billion or more. We've improved that number over time. I think it reflects the scale, the increasing scale of KBR, the synergy opportunities that we are working on together. As we've brought in the acquisitions over the years, Byron and team have done a remarkable job at a centralized business development approach for the elephant hunting, if you will, and they're very good at that. It's one of the -- it's the finest process I've seen relative to capture and discipline and maximizing the internal content, and that internal content is only increasing. And so we're very excited about the bigger opportunities in the pipeline. We've taken a very conservative view towards those relative to our targets. So if we're very successful there, that, I think, could be a catalyst for better performance. And as I think you heard vividly from Doug, the megatrends on the sustainable tech side are very exciting, and it's not 5 or 10 years out. I mean there's that potential on the hydrogen market for that out in time. But nearer-term, there's the decarbonization and there's the co-firing and there's the sustainability mandates that our clients have that are needed with the technologies that we're offering right now. And so I think there's a very consistent stream of growth opportunities in that business over this planning period. And so both sides of the ledger really have quite exciting catalysts for enhanced growth if we're fortunate. And we're certainly well positioned to be fortunate because we've got a strong team and a strong process.

Okay. Very, very helpful. And I guess just in light of the very bullish longer-term outlook commentary, we are nearing the end of the first quarter here. Is there any update on how you guys are tracking so far against the 2021 outlook? And more importantly, how that capture of the bid pipeline looks so far this year?

Yes. I mean, I think, Sean, we're probably -- [ formerly ] we were bang on. I think we're on track. We're doing very well. We've announced quite a few wins. So we're very upbeat about where we're at, and we're performing as we sort of presented at year-end against that 20% growth in adjusted EPS. And the balance, I think 40/60, first half, second half, and all of that is on track and that we're winning the right work in the right areas, and the teams are performing. And we're -- as I said, we're absolutely bang on track and that guidance holds.

Our next question comes from Gautam Khanna with Cowen & Company.

Appreciate the color and the presentation today. I had a couple of questions. I guess the first 1 maybe on the GS outlook. We know that near term, the recompete risk is fairly low. And I'm curious, like in the 5-year forecast, are there any years where we see kind of a catch-up outsized recompete risk of a higher than 20%, 25% of the sales base that comes up for rebid in any of those years...

Yes. I mean, you're quite right, Gautam, '21 is a very low recompete year, which is good news because if you look at our pipeline, obviously, it's all additive to the future. There's no special outlier in the future years. Of course, there's probably a higher level of recompetes as you go forward, just in the natural cadence. But in our outlook, we've taken a very measured view as to our win rates. It's all factored in terms of how we thought about that going forward. So I don't think we've been -- we're out over our skis there at all. I think we've taken a very sort of [ what I'll say ] considered view. And as I said, I don't think there's a particular year mark, unless you can think of one, I think there's a balance to that as we progress. And I think the nice part of it is that we go into next year, or this year that we're in, actually, with everything really being additive.

Yes. I think in addition to '21 being a low recompete year, '22 is also quite low. And one of the things that is, I think, special about our portfolio, as we've said before, and there's actually a chart in the appendix of our materials that illuminates this, is our contract positions with NASA, some of the international positions, are quite long, abnormatively long, and that's a positive relative to our predictability. And it reduces the sequence at which we have these big recompete years. And so even '23, we start to see more recompetes, on the NASA side in particular, there are some more coming in '25, but nothing that nears that 25% threshold at stake in any 1 year in this planning period. So the risk is quite distributed in this particular planning period. And I would expect that in the 5 years after that as well, due to the longer-term nature of these programs, which is a great aspect of the portfolio.

That's very helpful. And then maybe you did address this, but I just wanted to be firmer about it. Linearity in the outlook, should we think about it as 15% to 20% each year? Or is there -- just I'm curious about that compounding effect, if we're going to see higher end -- the higher end of that growth rate in '24 and '25, like you said, because of the margin traction at TS and elsewhere in the organization. So I just want to get a sense for whether you think it will be fairly evenly distributed through the period.

Yes. I mean, of course, it accelerates, Gautam, and Mark can add a bit of color if he wants. But it does accelerate, of course, but it's not a hockey stick. It's actually [ consider ]-- that is not -- that's not the profile. And -- but as you quite rightly pointed out, with margin expansion, you do -- there's an accelerant there for sure.

Right, so different -- let me ask differently. You don't anticipate any years where it dips below 15%?

It's certainly not going to go backwards, no.

Correct. Okay. And then 1 last one, Stuart, I thought I caught you saying 40% of 2025 is under some form of contract or is part of the existing base. Is that right? A, is that what I heard correct? And secondly, any color by segment, how that skews?

Yes. I think if you go to the slide in the appendix that Mark alluded to and I alluded to earlier as well, you could actually see the top 10, 11 sort of contracts that we have, their tenure and over the period from here until 2025. And you can see that base of business actually goes all the way through, essentially. So it's an amazing position to be in. You can see those contracts, you can -- it's quite easy to see which areas they are in. And it's honestly, having -- if you think about the growth profile we're putting forward and to achieve those targets as a stand-alone 2025 year, we already have circa 40% of that business in hand. I mean, that's an amazing statement in its own right, and it's true. That's why -- people were saying bullish targets and things like that. These are realistic targets. We've set this out in a way that we -- as I said in my remarks, we intend to achieve these targets and do what we say we're going to do. And ultimately, the data set to back that up is really underpinned by these long-term contracts and the scale that we have within KBR that really, really differentiates us against the competition.

One of the developments that we're really proud of is, the 40% out there in 2025 is obviously more weighted on the government side, given the long-term nature of the contracts. But if you look at the colors on those charts, it's well distributed across readiness and sustainment and science and space and traditional defense modernization. So the team has done a really good job over the past couple of years, winning bigger programs that are longer-term that are balanced across the capability areas that we have. And so that's lowered the risk profile, if you will, from a funding perspective, and it just reflects how well-rounded we are today.

And the qualities of these businesses, these contracts, is terrific. It's, again, underpins our cash generation capability of what we're portraying going forward.

Our next question comes from Steven Fisher with UBS.

And very helpful presentation. Stuart, I know you've talked -- so this is really just to follow up on Jamie's question. You've talked excitedly about the value of the technology kicker, but you've also talked in the past about trying to unlock the value of that business, which I think the multiple discussion before was trying to get at that. And you've talked about potentially trying to unlock that value sooner than later. So how are you thinking about the portfolio remaining as is, versus the desire to separate out that technology business, and the timing of making that decision? I know you said your job is to educate people. But how are you thinking about the timing of making a decision on keeping the portfolio as is or unlocking value?

Yes, we kind of expected that question, Steve. So thank you for asking it. I mean, Plan A is very much to educate people. Plan A is to realize the value of technology within our stock price. Plan A is to really continue to really educate the market on what's inside that segment and the value it brings to our customer base. I mean, how often do you hear of companies talking about ESG in a positive way? Often. How often do you hear about companies talking about ESG as actually driving shareholder value as a consequence of deploying strong sustainability technology? Not very often. So I do think it's an amazing piece of our portfolio and one that really, I think we're trying to really, really work hard at getting the true value seen through our stock price. And Mark spent quite a bit of time actually in his presentation, trying to talk about the increasing level of synergy we're realizing between sustainable tech and what we're seeing in the government side. And the fact of the matter is that a year ago it would have been highly unlikely we'd be talking about the Ministry of Defense in the U.K., asking us to respond to their pan for being more sustainable in their domain and how we could actually help them move to hydrogen fuel cells and things like that in some of their moving equipment and things like that. So it really is -- it's an interesting time for us, and we're working very hard. I think we've seen a reasonable response. I think we're still undervalued, of course, in this area. But I think we're seeing some movement in the stock price, which hopefully means that we are educating the market. And we'll continue to review that quarter-on-quarter, and we have to be realists in terms of our fiscal responsibility: if we do not get there, then we will have to look at how else we can achieve it.

Okay. That's very helpful. And then just to continue the discussion about the 55% and then 40% coverage that you already have out to 2025. In some prior presentations over the last year or so, you've kind of given the more near-term view on that coverage. Can you just walk us backwards on that and how much you might have covered for, say, '22, '23, '24, if you have those numbers?

Yes. I mean, we have said that in '21, we've got over 70, 7 0% coverage when we did our guidance. And obviously, that's probably moved up a little bit since then, given we've won some work. And as we look forward, I think it's sort of, I think, in '22, I'll just give you an idea in '22 and then you can work out the rest. We're at about 60% 6 0% for our '22 target today. It's not difficult to work out the rest, if you think we're to 40% in 25.

Our next question comes from Michael Dudas with Vertical Research Partners.

Excellent presentation. Stuart, I appreciated Jenni's contribution on the presentation. Thinking about the talent in the labor force or professional force you have. Can you remind us how much -- where you are today? And to fulfill the 5-year targets and goals that you have, on an organic basis, how much will you need to grow internally or bring on more talent from the outside? And are there areas for little niche opportunities that -- to help staff up to execute the expected backlog that you anticipate over the next several years? And how is the pandemic coming out of what we've been through the last 12 months, thank goodness we're getting hopefully close to the end of the tunnel, light at the end of the tunnel. How that's going? And are there any changes in folks hiring, retainment, where you can find different opportunities to help accelerate and support the growth of KBR?

So I'm going to hand that question over to Jenni in just a second, she can tell you how we've been doing on recruitment during COVID-19. And as I said in my remarks, she was one of the first recruits during COVID-19. So she's probably going to have some good insights on that and just how we're thinking about talent development and gaps there in a sec. But remember, Mike, when we -- and particularly, as we look in the government segment, as we do takeaways, a lot of the time the key employees move across with you. So you can scale up fairly quickly from an employee perspective. And what we've seen with a number of those and through the acquisition process is that if you truly look after your people, they really sort of rise up, and again, the cream often rises to the top as well, so you identify new sources of talent for the future, and you can move them across and into different areas of your business. So we've done extremely well, as Jenni will explain in a second, recruitment during 2020 and into early 2021. But I think we are not sticking our head in the sand in any way. We're actually trying to lean forward and trying -- we're trying to be a talent magnet, if you like, in terms of -- we really want people inside the company to enjoy the employee experience and talk positively outside of KBR, about how they're enjoying KBR and how we look after people because then, obviously, you get others putting their hand up to join you and you retain and nurture the talent that you have. So with that, I'll probably hand it over to Jenni. And Jenni, maybe you can deal with the other part of the question.

Thanks. There were multiple parts to the question, so forgive me if I don't get them all, but as far as 2020 was concerned, so I think most employers noticed a little bit of a lag in terms of how their hiring processes worked when COVID first hit. But in KBR, we were able to pivot almost immediately onto the virtual hiring circuit. And we hired -- I think it was something like 8,000 people last year. So I was one of many, and got the process then to a really fine art by the end of the year. The other advantage we had is that we know every employer has had an advantage from lower staff turnover because of nervousness around COVID and so on. But that did dissipate, whereas in KBR it stuck with us for the whole year. So our staff turnover levels were lower than we've had in previous years, and particularly in GS-U.S. And I think part of that is for all the reasons that we talked about earlier, in terms of the nature of the work we do. People love it. They thrive in that environment. They know that we care deeply about them. We've got a culture where they are empowered, where they can thrive, where they can excel and accelerate their own skills development. And so we've got relationships with universities, fellows programs, a multiplicity of activities that we really build around that, but the heart of the [ fact is ] the work we do and the culture that we've got.

I'll just say in the government sector, there's not a lot of discussion on safety. There's not a lot of discussion on environmental responsibility in terms of the peer sets on the defense contracting side. It's an enormous advantage we have at KBR is, is we do this for a living, in both the commercial and government sector. And as you can imagine, for those of you that have teenagers or millennial children or grandchildren, that matters a lot to them. And this element of our culture, the positive momentum we have here, the whole ESG story that you heard today, is an enormous retention and recruiting device that I think we have a leg up on, and speaks to the number that Jenni threw out there in terms of the ability to track the best and the brightest. And it does make a difference, and it just amplifies the story that we have here relative to the attractive growth areas and the people to put behind it.

That's encouraging because you can't execute the plan without the talent, for sure. Mark, my follow-up would be, as we look into -- I was very appreciative of the increase in the dividend, I'm sure our shareholders will be -- and the fact that will track over time as earnings and free cash flow grows. How do you think about near term? Again, in your presentation, [ there was ] a little more acceleration on the free cash and leverage maybe in the out years -- balancing the share repurchase for acquisition, say, over the next 6 to 12, 15 months. Any updated thoughts on that, especially given where, say, valuation is or maybe prior to today's move? And how that, we should think about that going forward, at least in the early stages of this 5-year plan?

Well, thank you, Michael. We're really pleased to have a great cash flow story and capital deployment potential to begin with. And the decisions we make here, of course, are highly impactful to our growth story going forward and our value creation opportunity that I think I well covered. And so it's very hard to predict what will happen in the marketplace. I was pretty clear that our first priority with what is deployable is towards strategic accretive M&A. And we believe we have a marvelous platform on both our government and sustainable tech side to bring in new people, new technology and leverage those opportunities. But they're only there when they're available, and we can't predict that. And so we've been deliberate to say when those opportunities aren't right in front of us, we will use buybacks. And I don't think it's real smart to try to pick a stock price, which is good, which is not so good. It's more of a capital structure story to put capital to work, whether it's investing in others that can join us, or investing in ourselves relative to the buyback. Both are good. Both create value over time, and we will -- we expect to do both of them over time as the M&A opportunities come and go, if you will. And so that's how we plan to play it and pay a nice, predictable and attractive dividend all at the same time.

Our next question comes from Andy Kaplowitz with Citigroup.

If I think about the big drivers of growth in sustainable tech, you talked about ammonia, digital, circular plastic. You seem really excited about all three, but obviously, those opportunities are at different levels of build-out. So when you look at the 10% to 12% long-term growth, are those opportunities all expected to grow similarly? Or is one a bigger opportunity than the others? And then obviously, you're still, I think, only in the first quarter of the new sustainable tech. So how are you thinking about legacy petchem refining growth in the business?

So from a technology perspective, I think it's quite interesting, Andy. We're seeing quite a huge amount of activity in the refining petchem segment as it relates to technology. We've got -- as you know, we've got our ROSE technology, which takes bottom of the barrel, the nasty stuff, if you like, and we can actually take that and take out all the SOx and NOx and actually convert it into something that's usable in the marine fuel [ silo ]. So the marine fuel side is still very much about cleaning, refining, if you like. And I think on ROSE, we've got something like a 90% market share. So a lot happening in that area around refining. A lot happening in the chemical segment as well, as people try to sort of lean forward around that sustainable platform. And we try -- and if you look, again, in the appendices, we've laid out all our technologies. For us there's far more than 3, there's dozens of technologies there. And we've lined out exactly where they have value opposite this climate change agenda and decarbonization. So please have a look there, and that will hopefully get you more excited about the portfolio rather than focusing in on 2 or 3. Doug was very clear, I think, upfront that he only had time to talk about 2 or 3 and the ones that are kind of in vogue, if you like, today around hydrogen. People are talking about the hydrogen future in green ammonia. As I said before, it's about ammonia sales for us, and that's a big uptick as you go forward, for a number of reasons as we highlighted earlier. And now when you start to look at the secular economy around plastics recycling, again, that's -- there are many competing technologies there that are stand-alone technologies under a Spark scenario that are valued more than probably KBR is, and they haven't built 1 thing yet. And so again, we're excited about that because it's a very much, we think, a great mousetrap for recycling, and we do think we've got the technology and that will come to bear as we go forward. But there's a lot in the portfolio, there's a lot there driving the book-to-bill today that are not associated with plastic recycling, not associated with Syngas. They're actually more associated with actually cleaning, refining and broadening the product set from refining as the world has changed during Covid. So I do think it's a fantastic portfolio that Doug and the team have in there, and those arrows are in the quiver and they can take them out and fire them appropriately. So there's a great balance to that, and I think there's going to be ebbs and flows as you go through time, particularly just with the cadence of [ a war that's ] associated with technology. It's reasonably quicker than the GS type business. But I think overall, we're very confident on the sustaining growth that's associated with that portfolio. Sorry, that was a long answer, but hopefully it was a good one.

Very thorough. And then, Mark, maybe just a follow-up on the greater efficiency that you're talking about and the improvement in infrastructure that you mentioned. When you mention the economies of scale of that 1% to 2% that's in your forward forecast, do you need to do any significant restructuring to get there? And could you give us a little more color into that 1% to 2% moving forward? Because it is a significant portion of the forward forecast.

Great question, Andy. So we talk a lot about the front end and the go-to-market strategy, which is appropriate, but there's quite a bit of activity in the operational side of the business that's been underway for some time. And that's important to achieve efficiency over time, better control and so forth. And so we've paid quite a bit of attention to that. We just don't talk about it very often. But on Jenni's side, they put in an ERP system for our human capital component last year. And we're fine-tuning that, if you will. That will further enable our interaction with our employees, their development, and our recruiting efforts more so. And then on the ERP side, we have adopted a philosophy to put in standard commercial off-the-shelf systems in all of our operations, which are scalable and which offer much more automation, and that will enable us to contain our G&A expense as we grow and be able to support the growth numbers you've seen today and even take on more, relative to acquisitions. And so we are building a machine, if you will, that will produce economies of scale like others have done. This isn't rocket science. And I'd say we're probably in inning 6 or 7 on that journey. So we have some work to do, but it's not the start. And we've got good momentum there. So we're quite confident we can deliver over the next, say, 2 years or so, the completion of that journey.

And I would say that Mark is all over this. I mean, this is a big driver of his around standardization and automation and using bots and things like that. And I think we're seeing the fruits of our labor, but that's why we're confident. The more we do it, the more we will see more fruits of that labor, and it will come through, as it has done in the past, with the reduced cost base. And as we scale up, we moved up our revenue, we don't have to scale up our SG&A. So that's where you get your economies of scale. So we're all in on that journey. And I think, as Mark said, we're well-progressed. And I think we've had good success in terms of rollouts and going live, et cetera. And like all companies, we're not perfect, we've stubbed our toe every now and then. But we've put up plaster and healed it and moved on and learned from that as we do the next rollout. So I'm pretty confident on that economy of scale message and I'm even more confident that it's in Mark's -- it's in his area to deliver. So I think you've got the right team, the right person and the right track record to deliver it.

And I'll just say there are people watching this video that are working their butts off, that are heroes in this story that you don't get to see on the video here, that are really doing the heavy lifting, and I'm really proud of them.

And Mark, there's no -- to be clear, there's no restructuring, new restructuring expense that's not in the forward plan? It's just the economies of scale at this point?

Yes, I should have answered that question, Andy. There's a little bit of residual that recurs from the actions we took before, that will bleed into the P&L that we will illuminate, but it's minor, it's single-digit stuff. But relative to major facility reductions and things like that, I think we're through that. And I think we have the business we want and the footprint we want going forward. So I don't envision anything there. We have some investments to make in ERP. I mentioned that in the CapEx discussion relative to our initial guide for '21. So there'll be a little bit of amping up there on the investment side. But in terms of Big Bang restructuring efforts, we believe we are through that.

There are no further questions in queue at this time. I would like to turn the call back over to Mr. Stuart (sic) [ Bradie ] for closing comments.

Thank you very much indeed. And thank you for taking the time today, and thank you for listening to KBR and our people and our story today. Very much appreciate your time, your questions and your continued interest. I do think, as we said today, we have arrived that -- I'm not going to use the T word because I'm not going to use that again. As I said in my presentation, this is all about tomorrow. And tomorrow for us is super exciting. As I said, we have not been in better shape since my tenure at KBR. We've got the right people, the right team, our culture is evolving every day, but it's super exciting. And I'm really, really pleased with where we are and where we've gotten to. We've had to make a lot of hard decisions on the way through. And a lot of what I'd say expedient decisions and taken advantage of situations that were in front of us. But we didn't stall, we didn't linger, and I think we've been bold. And I think as a consequence of that, we can stand here today and put targets out there that are, I think, are actually hugely achievable. We've presented the why they're achievable. We've given you the how we will achieve them. And we've presented some of the people today who are responsible for achieving them. So we're very bullish. We're very upbeat about tomorrow, and we will continue to do that simple thing, of doing what we say we will do. Thank you very much.