Sangita Jain: Great. Thanks so much. And if I can follow up with one on the LNG landscape now that we know Plaquemines [ph] may be coming sometime later this year on your thoughts on how you could potentially backfill that backlog and what you may be seeing on what can come out of the US LNG review?
Stuart Bradie: Yes. I think just to put Plaquemines in context, I think we remember this is, these are like half a million ton trains with 20 million tons of LNG across Phase 1 and Phase 2. So, you know, although we’ll produce LNG later in the fall, its one train after another after another after another for quite a while into the future through into ’26. So I just want to put that in context. In terms of the activity levels, I think we’re seeing quite a bit of activity inside the DOE themselves looking at, you know, the future of LNG, I guess in a decarbonised way within the U.S. context. I think everyone recognizes that ultimately LNG will go forward, but it will go forward with using electric drives or with CO2 sequestration or whatever it might look like from a lesser carbon footprint perspective.
So I think some of the projects will be reconfigured, but the activity levels, we are very upbeat about the future of LNG in the U.S. We’ve got cheap gas in this country and, you know, that needs to be monetized one way or the other. And if it’s not through LNG, it’ll be through ammonia or hydrogen or some other activities. But LNG itself, I’m sure, will be an attractive market going into the future. And there will be opportunities for us to continue with VG themselves of ambitious plans. And as long as we do well, I’m sure we’ll be part of those plans going forward. But there’s certainly others in the market that are very active and waiting for this LNG, I guess, reconfiguration of the landscape to be sort of clear as we head towards the end of the year.
But there’s a good opportunity, I think, for some of these to go ahead even before the end of the year. But we’ll see how that plays out. There’s just noise in the market that there’s some softening around that. We’ll see how that plays out in the next quarter as well.
Sangita Jain: Great. Thanks so much. See you next week.
Mark Sopp: See you next week.
Operator: Our next question comes from Jerry Revich from Goldman Sachs. Your line is now open. Please proceed.
Unidentified Analyst: Hi, this is Adam on for Jerry today. Thanks for taking our question. Can you just update us on your ammonia prospect list? How many plans do you expect to reach final investment decision this year? How does that compare to 2023?
Stuart Bradie: Yes, I mean, the trend is obviously positive. And we are going to cover the ammonia story in some depth in Investor Day. I think the EBITDA contribution opportunity to KBR as we look into the future, given the demand on ammonia as it relates to not only fertilizers, but hydrogen and sources of energy going forward is very, very attractive in terms of — remember, FID for us is only part of the journey, you know, that when the project actually is initiated, we get involved with the license fee and basic engineering and cost estimation and things like that. So even pre-FID, it’s very attractive for us to be in that market. And so FID isn’t really the piece for us. It’s actually, when the license is sold and the project starts to move forward, even pre-FID, we’ve got some very good returns in our portfolio.
So I think if you don’t mind, I think the way I cover this high level is to say that the ammonia market remains extremely attractive. And we’re going to do quite a deeper dive into ammonia, the ammonia story and its impact to KBR next week. And you’ll be very pleased and pleasantly surprised what a modest increase in number of plants per year does to our EBITDA.
Unidentified Analyst: Understood. Look forward to that. And could you just provide some color on the M&A pipeline? So, how active is the pipeline on the technology side versus government solutions right now?
Stuart Bradie: Yes. I mean, technology for us is, you know, we’re always open to acquire smart technology and new technologies and we did, we launched a number of those last year as we disclosed in the primer. But it’s difficult to acquire because it doesn’t come to market. You’ve got to be ready. So that pipeline is more — although it’s strategic for us and we know what we’d like, it’s kind of opportunistic if things come to market. We’re more likely, I think, unless something changes, to look at, I would say, newer technologies that are being developed the same way we saw identified Mura or SAF technologies and, you know, enhance those, work with the people who in the white coats, if you like, who developed them and try and commercialize them in a more global way.
So that’s kind of where the focus area is in our tech business. We’ve got existing technologies that have got a lot of headroom, I think, going forward. So, I don’t think acquisition is often the best source of funds, I think, internal development and protection of IP in that realm is a good place to spend our money and time and we’ll talk more about that next week also. In terms of GS, I think activity levels interface down a little longer — higher for longer, as Mark said. I think there’s, you know, belief that there’s stability now and that over time they’ll come down. So you’re starting to see more activity, I think, in the GS world and certainly there’s more things coming across the desk that we’re looking at. But I’ll reiterate, we are in a real good organic growth state.
The best use of funds is to support organic growth. But if there’s something that’s compelling, a creative, strategic, and fits our values, then we’ve got the balance sheet to be able to pounce. And I think, speed to market is going to be important, particularly as we head through an election year as well. So I think, yes, so in short, more activity in the GS space, but it’s got to make sense. It’s got to take this up-market, be digitally enabled, give us margin accretion, et cetera, and good synergy opportunities. And in tech, I think it’s more opportunistic. But I mean, our organic growth outlook is terrific. And that’s got to be the focus for us, unless it’s compelling.
Unidentified Analyst: Great. Thanks so much.
Operator: Our next question comes from Michael Dudas from Vertical Research. Your line is now open. Please go ahead.
Michael Dudas : Good morning.
Stuart Bradie: Morning, Michael. We can barely hear you. There you go.
Michael Dudas: Great. Thank you. I’m more of a phone guy than a digital guy, as you can tell. So on the — regarding on the STS front, just as you indicated about the strong book-to-bill and the pipeline bring good and how revenues are going in EBITDA flow this year. How’s that in the context of the four phases that you discussed in the primer that we had last month and where that stands? And how that can impact? Kind of how the EBITDA growth and margins flow this year may be in connection?
Stuart Bradie: Yes. I mean, yes, sorry, Michael, just breaking up a little bit. Yes. So I think what you’re asking was really through the, I guess the project lifecycle and the phases across when we sell technology and we can then get engaged in obviously the basic design and then PMC or execution or whatever those four phases. We’ll cover that a bit next week. We’ll get Jay to do that himself. But, you know, where are we at in that cycle? I think the more that we do in technology and particularly that’s the core catalyst for what we do in the services business as well. I think the bigger that phase for three and four opportunity becomes. And, you know, our bookings in Q1 would suggest that that trend is continuing and really starting to build out and giving us attractive longer term books of business.
And I think that again, we’re going to work pretty hard to demonstrate the non-cyclical nature of this business in New York next week. So I think it’s all shaping up as we predicted. I mean, it’s not perfect, of course, but I think the market trending is as we described in the primer. And of course, the more technology we sell, the greater the opportunity is moving to phase three and phase four. And we’re seeing that across the globe at the moment, particularly in what is called the Global South, which, you know, this new economic term for really a lot of the southern hemisphere where growth is outpacing the north hemisphere.
Michael Dudas: Excellent. Thank you, Stuart.
Operator: [Operator Instructions] Our next question comes from Gautam Khanna from TD Cowen. Your line is now open. Please proceed. Gautam your line is now open. Please proceed. We’re currently getting no audio from Gautam. We have no further questions in the queue. So I will hand it back over to Stuart Bradie for any closing remarks.
Stuart Bradie: Thank you. Thanks Drew. And so just to close out a fairly shorter call, given we’ve got Investor Day coming up next week, clean quarter, very strong start to the year, I think key takeaways, continued momentum in STS, strong margin performance across the businesses. I think outside of R&S, really strong performance in government, also milestones in HomeSafe with successful first moves, and obviously the Ukrainian supplemental in terms of funding, looking positive as we move into the latter parts of the year. So I think really strong start to the year, sets us up nicely to really build on an Investory Day. And we look forward to seeing you on the 8th in New York. So with that, we’ll close the call and thank you very much.
Operator: That concludes today’s call. You may now disconnect your lines.
