And then we had some delays last year, as you all know, on the directed energy program, which resolved itself in Q4 and as we move forward with another couple of vehicles in that laser program. So again, I think through ‘24, that business itself will be growing in the double digits. So I think that defense and intel, probably, is a real growth driver for us going into next year and really helps us with any volatility that may happen in our next. So, yes.
Mariana Mora: Thank you very much. And then if I may, can you please discuss international as well? Where do you see most growth coming from? Is it energy, military or any specific country or region?
Stuart Bradie: Yes. So in the government realm, as you all know, we acquired a business called Frazer-Nash and added to it with two other sort of high level consultancies in the digital and advisory space. And we’ve now integrated that business fully and as we came through last year and that’s really starting to pick up momentum and which is terrific. And it really comes in at high margins as well as you would expect with that sort of high end differentiate consulting engineering portfolio. And Frazer-Nash is a little bit unique because 60% of its business is in the government realm, some classified, some in digital, some in cyber, but also in things like nuclear assurance where we’re probably the leading consultant. And when you look at things like AUKUS and the new nuclear programs that are around, obviously we’re very well positioned there.
The other 40% of its business is actually in the commercial arena where it does energy transition, advisory, it does work in solar, et cetera and does a lot of consulting and helping businesses decarbonize with some software tools that allow them to actually measure how they’re doing. So it’s quite a diverse consultancy portfolio, but very much pointed at our two businesses. So that’s gathering a good head of steam. And then secondly, the Australian government changed last year, it slowed us down a little bit, they’ve come through their review, and now we’re starting to see quite a bit of, I guess, clarity in that market. And we’ve sort of re-baselined and we’re starting to see growth coming through in Australia as well, particularly again, and I would say in that high-end consulting area, whether it’s in digital, cyber or interoperability around software.
So I think it’s a very strong portfolio performing in those key markets today with an opportunity to then move more into the other areas of what I would say that are friends of allies, if you like, in the Middle East and things like that, but we’re seeing quite a level of bid activity today. So it’s got a very strong outlook to the GSI business. In terms of the question on energy, as we said earlier, I think there’s a huge capital spend, particularly in the Middle East, but also in Asia and somewhat in Australia as well as you all know, we’re doing the Pluto project down there, the Pluto LNG sort of revamped for the existing facilities there on a cost-reimbursable basis. So there’s lots happening across both ends of the portfolio. And yes, and it’s very attractive going forward.
And I don’t see that slowing down.
Mariana Mora: Thank you. If I may, last one from me on HomeSafe. Margins, usually logistic programs are in the mid-single digit margins. How do you, like, where are the main drivers that will drive HomeSafe to the type of margins that global and government services has?
Stuart Bradie: Yes, I think, Mariana, you’ve got to remember our role there. Is we’re not — we’re doing supply chain as a service. We’re actually not — we don’t physically have trucks or warehousing or packers and things like that. We’re coming in to manage a program at scale to somewhat look at a new way of moving the families of the military. And ultimately, we’re deploying a very digital backbone to this so that we can deploy AI and ML so that we can actually drive efficiency by not running, thinking rudimentary, two traps to the same place at the same time because they’re two different providers, but actually unifying that and taking efficiency gains, which of course will drive our margins but also reduce the carbon footprint of that industry.
So I think our role is very, very different than a typical logistics supplier in that realm. And that’s why we talk about increasing margins over time because I think the more, we do it, the more efficient we’ll get. The better providers will get more volume. We’ll get volume discounts as a consequence, et cetera. So it’s quite easy to step back and look at the logic behind this. That doesn’t mean it’s easy to get done, but we’re well on the pathway now and we’re pretty confident that over time we can get the margins down. And as I said, in my prepared remarks, we’re being very innovative at the way we’re looking at this and we’re not restricted at all to the current DoD supply chain which I think has been missed by many in the media.
Operator: Our next question comes from Jerry Revich from Goldman Sachs.
Jerry Revich: Yes, hi. Good morning, everyone. Stuart, I’m wondering if you just, hi, on HomeSafe, so congratulations on the progress in terms of ramping up signed contractors. Can you put in perspective the $2, 200 that you mentioned in your preparatory marks? What does that number need to get to for each of the phases? I know you’re going to roll it out based on the types of moves skip, can you just frame that for us if you don’t mind on where we are relative to the ultimate number?
Stuart Bradie: Yes, so I think we’ve, as I also said in the prepared marks, we’ve got enough of the supply chain signed up for certainly what’s in front of us and we’re obviously expanding that daily. So I’m feeling pretty good about the supply chain and the engagement of the supply chain. For the $2, 200, we’ve got a supplier database that allows the people to sign up or companies to sign up, including small businesses, and to really sort of register their interest to provide services to HomeSafe and that’s the $2, 200. And out of that 10 to 2, 200, we’ve signed 380 contracts already. So we’ve got very, very good coverage across the supply chain for what we expect going forward.
Jerry Revich: Okay, and then can I ask you in Sustainable Tech Solutions, can you just talk about the moving pieces within the portfolio, the growth outlook that you see for the longer cycle part of the business, ammonia and plastics, how fast is that growing in ‘24 and then for the shorter cycle business, what amount of activity do you need to see in terms of bookings turn into revenue relative to the double digit organic growth outlook that you mentioned?
Stuart Bradie: Yes, STS is going into the probably with its highest level of work under contract that we’ve seen in recent times. So we’re feeling pretty good about that double digit growth for sure. And it’s a good balance, I think that’s why we feel quite confident. It’s the sustainable services piece of the business which is really underpinned by the technologies is going great guns and we’ll explain a bit more about that in the STS Primer and then again at Investor Day. I think the drivers around ammonia, we talked about earlier, so I won’t cover that again and that rolls into hydrogen of course. I think energy security continues to be a big part in this and you’ve seen that from many of the energy companies. They want to, they’ve got to continue to really think about energy security in a very concise way but they are trying to do it in a responsible, decarbonized solution and we are really at the forefront of that.
So I think we’re very well positioned. In plastics recycling, again that’s a kind of different market. We will be producing first product I think coming to the end of this quarter early in Q2 in the Vulture site in the Mura facility and I think that really opens the door to accelerate that market. I think everyone’s waiting to make sure that that all works and of course what we’ve not really said to the market and probably good to do a little bit today is the fact that there’s two other facilities that are being built, one in Korea and one in Japan and they could end up actually if we slip a little bit, they’ll end up going first. So we’ve really got three sort of world-scale plants happening all at the same time now. And one of those is with a modelized solution that we sort of developed after we took additional investments so that bears well for speed to market and cost effectiveness, et cetera, as this continues.
So we’re really upbeat about that plastic recycling market. And again, we’ll cover more of that in the primer. The other market that’s really hot at the moment is [inaudible]. And that’s particularly coming out of the Middle East. Both Aramco and SABIC in Saudi have got considerable programs. My expectation is it’ll be difficult for everything to happen in parallel. There’ll be a little bit of a series development there. But that’s kind of okay for us as well, because that just expands the pipeline over time. And I think we’re very well positioned on the LTC program. We’ve talked about before the Liquid to Chemicals program. And hopefully we can get to really sort of announcing something on that later this quarter, if not early Q2.
Operator: Our next question comes from Steven Fisher from UBS.
Steven Fisher: Thanks. Good morning. So you mentioned the desire to be a little vague on 2025 when you were asked about the HomeSafe amount embedded in there. But maybe to ask you about the STS angle. I think you had previously expected upside the STS to more than make up for HomeSafe. So has anything changed in your thinking about that, of the framing of the STS potential contribution? And sounds like from the answer you just gave, Jerry. There’s quite a bit happening and potential for upside there. And I guess can you maybe just give us your latest thinking on the synergy between STS and government you did mention in your prepared remarks, one particular contract that offered some synergy. So just curious about sort of the commitment to keeping the businesses together. Thank you.
