Participants

Jamie DuBray; Vice president of Investor Relation; KBR Inc

Stuart Bradie; Chief Executive Officer; KBR Inc

Mark Sopp; Executive Vice President and Chief Financial Officer; KBR Inc

Andy Kaplowitz; Analyst; Citi

Steven Fisher; Analyst; UBS

Jerry Revich; Analyst; Goldman Sachs

Gautam Khanna; Analyst; TD Cowen

Presentation

Operator

Good morning, everyone, and welcome to KBR Third Quarter 2024 earnings conference call. My name is Emily, and I'll be coordinating your call today. ( Operator Instruction). I will now turn the call over to our host, Jamie DuBray, Vice President of Investor Relations. Please go ahead. Jamie.

Jamie DuBray

Thank you, Emily, and good morning, and welcome to KBR Third Quarter Fiscal 2024 earnings call. Joining me are Stuart Bradie, President and Chief Executive Officer, as well as Mark Sopp, Executive Vice President and Chief Financial Officer. Stuart and Mark will provide highlights from the quarter and then open the call for your questions.
Today's earnings presentation is available on the Investors section of our website at KBR.com. This discussion includes forward-looking statements reflecting KBR's views about future events and their potential impact on performance a s outlined on slide 2. These matters involve risks and uncertainties that could cause actual results to differ significantly from these forward-looking statements.
As discussed in our most recent Form 10K available on our website. This discussion also includes non-GAAP financial measures that the Company believes to be useful metric for investors. A reconciliation of these non-GAAP measures to the nearest GAAP measure is included at the end of our earnings presentation. I will now turn the call over to Stuart.

Stuart Bradie

Thank you, Jeremy, and welcome to our third quarter earnings presentation. And I would like to start on slide 4, if I may. We show this on every earnings presentation. So, no surprise that lays out of zero harm program on the pillars, both environmental and social that underpins our program. So, the progress we've made in each of these pillars is highlighted in our annual sustainability report, which takes remotely onto slide 5. So, this month, we issued our 2023 sustainability report. I mean, the team does an amazing job and showcasing all that were due across these pillars. We've shown only a few highlights on the slide here. No pickup on a few or health and safety performance was once again top Quintiles. They really demonstrating our commitment to really looking after our people, 37% of KBR group, 23 revenue, actually over $2.5 billion is directly linked to sustainability. And I think shows clear alignment with shareholder value, which we've talked about before, is a clear differentiator for KBR.
The results from our people surveys, which is run by an independent company undone anonymously, resulted in KBR being classified as a great place to work in multiple countries. So the survey showed as a couple of things, I think the first our focus on people is truly making a difference. Secondly, of course, we are not perfect, and we still have work to do. On this on the side of the slide, you will see a continued commitment to strong governance, and we continue to make progress in I&D, advancing our agenda on multiple fronts. Our maturity and commitment on delivery of sustainability has been externally scored by various agencies, and you've seen that before and MSCI. we believe is the most cited. And we're, of course, delighted to have achieved for the second consecutive year, the very highest ranking of triple-A. As I said, these are only a few hires lights and I would encourage you if you have time to have a look at the field document, which is on our website.
So on to Slide 6 on the group financial highlights for the quarter. This was another clean quarter and frankly, another set of terrific and consistent results. Group revenue was up double digit. That 10% year on year. Adjusted EBITDA increased 18%, one 8% over the same period. I think once again demonstrating the focus discipline to deliver on our strategy to winning the right work and then executing with excellence with prudent cost management. And this has resulted, as you would expect, and enhanced margins, which were up 70 bips. Cash was once again a standout with year-to-date conversion at 129%, an absolutely spectacular performance.
Now on to book to bill. Now, as you know, we've been providing a book to bill figure ex the plaque Emmons project for the last several quarters to convey our underlying business performance without the large LNG burn. And beginning this quarter, we will switch to only using this figure in our materials, especially in light of the new JV with technique, which I'll cover in a moment. On this basis, I'm really pleased to report that our book-to-bill at the group level was 1.2X in the quarter, and both SDSL. and GS. in particular, had a strong quarter, and this sets us up well to close out the year. But this together with our attractive pipeline and really gives the group a solid foundation heading into 25 and increased confidence to achieve our industry leading to long-term targets. And I think our people all across the world to continue to deliver every day doing what truly matters. And without them, these results would not be possible. So, as you're also aware, we closed on the LinQuest acquisition, and I'm pleased to report that the integration is well underway and expected alignment and values and culture are shining through. We've had numerous town hall meetings with LinQuest employees all over the country, and we could not be more pleased with the warm reception to KBR their deep domain expertise, really outstanding technical capability and their dedication to serve the mission of the customer, which is 100% aligned with how we operate doing things that master.
Lastly, I'm pleased to report that we will be increasing our guidance for revenue, adjusted EBITDA and adjusted EPS this year to reflect the addition of Linquist and our ongoing organic, strong performance.
By on to slide 7, some key awards, let me start with SDS. and Saudi Arabia. So, there's been quite a bit of speculation on this, and we're now in a position to talk about our role on the liquid chemicals project for Ramco LTC. As we've discussed previously, there was an opportunity across multiple world scale projects for all of and crackers were initially tendered as pre front end design, front end design and PMC project management contracts, plus there was an overarching coordinating project management contract or CPMC. now KBR, one of the crackers and the overarching CPMC. And this was actually the market and on any single company could win. So the cracker project that KBR secured two computing Ramco priorities was actually suspended, and this has been made public. That said, the CPMC., we believe is the key role. This is a multiyear endeavor, employing critical resources covering not only touching all the olefins projects at all stages, but also developing and working the integrated schedule, supply chain management strategy, data and digital management, phosphor Ramco, really managing that data in a digitalized way and really sort of looking at a continuity of system safety systems and the data digitalization of those systems being the project light technical authority. And to be clear, we will have team is embedded in each of the pre-FEED FEED, PCPMC. contractors during the other large projects on Ramco's behalf. So, this will ramp up progressively through the rest of this year and in 2025 and as a matter of fact, will continue well beyond our long-term targets. To give you a feel revenue to the pre feed will be between 50$ to $100 million are now going through you feed it into execution. Revenue will be several times this magnitude. So quite significant.
In addition, again, with Ramco, we have also secured another of the offshore gas development front end designs. This is our third to date. They are really key enablers for the LTC. program itself. This is another substantial and important piece of work, again, setting us up well for 2025 and a significant contribution to our long-term targets. I would remind you that around core are replacing crude by gas with gas to generate power, and the crude will then go via the LTC program into various petrochemicals. This is both values add for the crude but reduces the car footprint of energy production in the Kingdom significantly.
So now let me turn to LNG again quite a bit of speculation on this market. So firstly, on Plaquemines, we expect first LNG before year end. This will be one of the industry benchmarks for speed to market. And further LNG will be produced as the individual's smaller trains are commissioned progressively through 2025 and into 2026.
In the quarter, we secured the Lake Charles project and joint venture with technique. So this is a partner with what was successfully many times. We have strong construction and fabrication capability, and the customer is Energy Transfer. To be clear, the contract, the contract terms are firm aligned with our stated risk profile, and KBR will be performing management and technical services similar to our rule on platinums and again, similar to Black Diamond's. This will be reported through equity and earnings. Energy Transfer is making solid progress in offtakes and has the balance sheet to move the project through to final investment decision. And they've actually placed long lead orders already. That said, there's a bit more wood to chop on this. And I think the election will have an impact on timing which we do not expect FID. until the second half of 2025. In addition, and also in the LNG market.
In this quarter, we secured the front-end design for an additional LNG. Train for a confidential LNG producer in the Middle East, which could lead to bigger statements as that project progresses. And also in LNG, we secured the project management contract PMC for on behalf of Abu Dhabi National Oil Company for the new LNG project in Abu Dhabi. To be clear, this is for the execution phase. So again, this is multi-year and valued at circa $130 million. And this follows on from a successful PMC of the front-end design that we completed earlier in the year.
And finally, we just announced the award of the Shell Manati gas project in Trinidad, and this is an enabler for LNG and not part of the world. As we said previously, LNG is a global business that truly affords KBR attractive opportunities aligned with our desired risk profile and leveraging our differentiated capability.
Now let me shift a little bit to emerging technology areas. We announced our acquisition of sustainable aviation fuel technology early in 2024. Since then, we have digitalized and modularized tech while ensuring we can deliver an end-to-end solution. This solution no trademarked as pure staff is the first ASTM certified soft technology. And we're particularly excited for what's to come as no data and the intersection of increased demand supported legislation across the world and progressive incentives. And the project we announced to the Vienna is the first and in an exciting pipeline of opportunities, obviously more to come through 2025. on circularity and in particular related to our investment in Mira and hydro PRT plastics recycling technology. I personally visited the site in the UK at Wilton and saw the progress firsthand recently. Commissioning well advanced, and overall progress was impacted by skilled labor shortages due predominantly to Brexit, the plant will be producing product before year end that LG Chemicals plant in Korea, on the timetable and the Mitsubishi plant in Japan is looking to be just brought in early 2025.
So, in the world of new technology, having the fastest scale plant is absolutely terrific. But three operating at scale plants is actually the watershed. And we believe this will catalyze new license and project partnership opportunities in 2025 and beyond. So again, very, very exciting. STS book-to-bill was one dot all in the quarter, but actually this does not include the large are not LNGPMC i referred to earlier. That was signed a few days after quarter close, and we booked in Q4 and our invest and what's in the hopper, we expect Q4 to be a strong booking quarter for STS.
So on to government solutions. in the U.S. as expected, Q3 was a strong bookings quarter due to Department of Defense our annual budget cycles. However, our international business also had a great quarter and together achieving 1.3x for the quarter and 1.1 on a trailing month, 12 months basis has some highlights. This quarter were nine awards in systems engineering business. We had that I might contract vehicles. We've talked to talked about many times, actually this year, but we have been awarded approximately $1.5 billion in task orders under that contract, $1.2 billion of which were actually in Q3, as you aware we have only backlog funded $1.21 this quarter is the ceiling value of those combined contracts, which we will expect to book and burn over time. So one significant contract worth highlighting contained within that $1.2 billion reflects the increased attention and focus on funding expected for the Pacific with a circa $200 million multiyear contract supporting the Naval Warfare Center Pacific program, which is actually a new, Digital customer for KBR, where we will play a significant role in introducing and testing new technology as we progress the digital transformation and zero Trust environment for that customer.
And in space, as you know, a key strategic vector for KBR. We continued momentum with a follow-on strategic award by the Naval Research Lab. As shown on this slide. The acquisition of Linquist was made to accelerate our growth in military space, interoperability and digital engineering. And in the months since we've closed, Linquist has secured over $60 million of new orders under a unique contract vehicle that KBR does not currently utilize. I know Linquist actually does not utilize I Maxell with KBR and Linquist now able to use each other's contract vehicles. The revenue synergy opportunities are exciting because the procurement cycles for these are very, very quick.
Now before I move on, I would be remiss if I did not give you a home safe update. The systems testing for the interstate moves were successful and moves have started. Now. This is very significant, a significant milestone as it clears the way for essentially full domestic moves by. We expect to see and increase in moves in Q4 as new lanes are turned on revenue for the full year 2024 will be below our expectation that to be clear, there's no impact of profit because as you're aware, we were conservative in our in our original guide for 2024 and as a matter of fact, our long-term targets also contain a conservative ramp as presented at Investor Day. So the lower volume in 24 has no impact at all to our targets. A solid relationship with TransCon continues to be collaborative, and we look forward to progressively ramping up on the program and enhancing the moving experience for our men and women in uniform and their families through 25 and beyond. I will now hand over to Mark, who will take you through the Q3 performance and a bit more detail, including the 2024 for guidance increase. Mark.

Mark Sopp

Terrific. Thank you, Stuart, and good day, everyone. I'll pick it up on Slide 9. So, as you've heard from Stuart already, the results for Q3 were really good across the board with every single metric you see here up double digits over last year. Margin and cash flow with a particular highlight, with profitability running consistently in the mid-11 percent range all year and cash flow super strong at $422 million on a year-to-date basis, DSOs day sales outstanding continued to run at the lowest levels we had ever seen at KBR, averaging about 60 days through this year so far. As you know, low DSOs reflect high customer satisfaction and also importantly, superb teamwork across our operations are functions and customer touch points. Let me just quickly go on to Slide 10 on results of the segments over on the left. As you see, STS. is humming, along with continued good momentum and superb profit growth consistently above the 20% margin level. As I said before, this team does a remarkable job delivering intellectual property capabilities to customers all around the world while continuing to grow its services platform. Also, a very attractive overall margin. This is attributed to specialized domain expertise; scarce skill sets and they're very cost competitive delivery mechanism. On the right governance solutions had an excellent quarter as well, with revenues up 11% and profit up 14% on improved margins. Of particular importance, we saw increased award decisions in the U.S., many of which came in our favor.
As Stuart said, after experiencing delays in the first half, our win rate on award decisions was well over 50%. So, it's really a testament to the great team effort there. And as Stuart Bradie said, the government book-to-bill is one that three times in the quarter. All the while international grew an impressive 13% with contribution from the UK, Australia and the Middle East, which well demonstrates our expanding global reach.
Onto Slide 11 and capital matters, as said earlier, cash flow generation has been outstanding, which enabled deleveraging in September are coming off of the LinQuest acquisition, which closed in August. So just stepping back is terrific to have made such a sizable and high-quality acquisition like LinQuest plus deploy about a quarter of $1 billion backs and dividends year to date and still have a leverage ratio well south of three times. This underscores the power of our EBITDA growth and also cash generation. It's worth noting we received a credit upgrade attendant with the link plus deal with all agencies now at double B plus rating equivalents.
Together with the quality of the acquisitions, we lowered the borrowing rate on both the new debt associated with the deal and existing debt. We added committed liquidity and pushed out maturities. These actions will help contain interest cost and also enable more deployment options as we go down the road. All forms of capital deployment, spanning M&A, buybacks and debt reduction, deliver benefits to us. In our view, the most attractive long-term value for our shareholders. Now I'll finish up with Slide 12 and our forward view of guidance. Delinquent contribution for 2024 is consistent with the information we provided in the acquisition announcement, we are moderately increasing the revenue guide to to $7.5 billion to $7.7 billion, reflecting four months of linked question this year's results and also reflecting lower top line contribution from home safe that Stuart Bradie just mentioned.
On the profit side from year-to-date results and adding Linquist, we are increasing our adjusted EBITDA guidance range to $840 million to $870 million. For EPS the net effect of the Linquist EBITDA contribution and also the incremental interest that stems from that transaction enables a moderate increase to the adjusted EPS guide, raising the floor to a range of $3.20 to $3.30. As I say, cash flow generation has been strong all year. And because of the EPS. pump is modest, was four months of Linquist activity were sticking with the original cash flow range of $460 million to $480 million. So to wrap it up another quarter of a well rounded execution spending, program delivery, winning new work, generating cash flow and adding lighting-class to the team. This also enabled us to prove improve the capital structure for better earnings production and future deployment optionality. As we looked at 2025 and beyond. Thanks, everyone, for tuning in this morning. I'll turn it back over to Stuart Bradie.

Stuart Bradie

Thanks, Mark. Terrific job. As always, I will finish off on slide 13 with some key takeaways. So as Mark Sopp and myself, I've said earlier, outstanding third quarter performance with double digit year-over-year growth across all key metrics, revenue, profit and operating cash flow option. Terrific online. Quest has really performed well since closing, has won over $60 million of new work and really delivered solid, strong September results. But more importantly, integration is progressing really, really well with revenue synergy opportunities crystallizing. It's a very high, exciting acquisition indeed. But as a result of our strong year-to-date performance and of course, the addition of Linquist were written guidance, as Mark just talked about on revenue, adjusted EBITDA and adjusted EPS. And finally, on bookings, 1.2 times book to bill at the Group level, together with our attractive pipeline sets us up nicely the for the remainder of this year, of course. But more importantly, it gets momentum going into 2025. So, thank you again for joining us on today's call. And I'll now pass it back to Emily, who will open the call for questions. Thank you.

Question and Answer Session

Operator

Thank you. (Operator Instruction) Our first question comes from Andy Kaplowitz with Citi. Please go ahead

Andy Kaplowitz

Good morning, everyone. Good morning, everyone. Stuart and Mark and I noted earlier talk in morning. I know it's a bit early to talk too much about 25, but could you give us a little more color into your visibility and particularly in STS. growing in line with that algorithm you gave us through this year the 11% to 15% revenue growth as it looks like, as you said, in our trailing 12-month book-to-bill rate accelerate a bit in Q3. I know you talked about the strong expected Q4; last quarter I think you talked about some delays in energy transition projects. Are you still seeing those delays? And how do you think about the sustainability to one time book-to-bill that you recorded in Q3 moving forward?

Stuart Bradie

So, lots of lots of questions and one there, Andy,

Andy Kaplowitz

I pretty good and leaving them or the other

Stuart Bradie

I would say that it is still quite early where and obviously started our budgets for next year. I think that we are confident that we're aligned with our 11% to 15% growth expectations and STS going into next year. Our book to bill obviously picked up in Q3 and is looking strong in Q4 to underpin that. The margin performance continues to be very strong . I think energy transition projects, we're seeing more activity in the Middle East, in particular, around market share and ammonia and the gas green hydrogen. But I think in general, a lot will depend on the election results in terms of speed in the US. But overall, the energy security market combined with a with a growing energy transition, albeit probably slower than we expected, but still growing market really gives us good confidence that we'll be aligned with what we presented at Investor Day in terms of STS target. Hopefully that helps.

Andy Kaplowitz

It does, Stewart. And then, Mark, just I want to ask you about the guidance just in the context of Link Quest. Obviously, you put in four months; you mentioned that sort of the offset is home sales. I guess if I just look at sort of guidance raise, it seems like is there anything else that's a little slower than you thought, I guess because Lynn Quest, I think it could be a pretty sizable, if not more than the EBITDA change in the guidance.

Mark Sopp

Thanks, Andy. Just wanted one clarification, if you will, is while home safe as an offset to linked question on revenues, we did not really factor in profits for Homesafe, as Stuart said. So that's not a reason for contributing to your question relative to Q4 and the guide . So that is as expected for the year from a profit perspective, our home safe. But we do have interest expense coming in for LinQuest that we have good news is we have three, four months of LinQuest will be a three, four months of interest. So we have that occurring as good a job our treasury has done with minimizing the impact of that is LinQuest is accretive, but it's a couple of pennies. So we didn't think that warranted a big bump. We just moved up the midpoint by taking up the floor. We do have some seasonality that does kicking it kick in in the fourth quarter. I'm a little bit on things like on just the efficiency of our labor coming into the fourth quarter with holidays and things like that is a little off pays for parts of government in parts of SCS. So, we're being conservative outlook there, and that's about it. So not trying to get too fancy. We're adding some to the guide here, but cautiously sold heading into the fourth quarter and really in context, capping off a brilliant year of growth on all metrics and doing at or above what we set out to do at the beginning of the year.

Stuart Bradie

And I think just to finish off, and I think your original question was on EBITDA guide. I mean, we think that the LinQuest revenues about $175 million coming in at double digits. That's about a $17 million EBITDA return. And that's actually the raise that we've put into the announcement on the so completely consistent.

Operator

Our next question comes from the line of Tobey Sommer with Truist Securities.

Hey, good morning, everyone. This is Jasper Bibb on for Tobey. It sounds like a lot of exciting when the last years just coming figures. So how do you think makes soon from a lead arranger recycling was ramping up by the impact of the segment margins over the next couple of years, maybe relative to the flattish margin you outlined at your Investor Day in the spring?

Stuart Bradie

I think we having margins in the circa 20% range with a business that's growing 11% to 15%. I think, as you know, the targets we set out, and that's the targets we're going to hold to and maybe obviously, mix volatility around margins, mostly going as we've seen, we've achieved 21, 22 certain quarters, depending on mix. But I think our overall base stands and our long-term targets over time, particularly through 27 stands. So, I don't think there's going to be much change.

Thanks. And then I wanted to follow up on home sales are going to hear no impact to your targets for a little bit of a solid start there. Just to clarify, do you think there's still on plan with the, I guess, underlying 25 assumptions for home safe revenue from the Investor Day or as bad, maybe a little bit below plan elements being offset by other wins across the portfolio or white box?

Stuart Bradie

No, it's very much. And on target, as I said in my prepared remarks, we took quite a conservative view through 25, 26 and 27. And in fact, in terms of the way the program ramps up and certainly now we've cannot open the opportunity, if you like, for the systems testing to progress the domestic moves. I think of as any surprise, I think there's opportunity to the upside. There is a new program, however, but I do feel that we've got the the rice or numbers on a conservative base this within the 25 long-term target guide that we gave at Investor Day . And obviously more will come out as we guide for 25 in February.

Operator

Our next question comes from Michael Dudas with Vertical Research. Michael, please go ahead.

Hello, Jamie Steward, Mark. we are still with the EVA positive progress you mentioned with energy projects in the Middle East and selling particulates. Maybe shortly. What type of them workforce housing being staffed? Words, it has been medium 24 and how that may ramp in 2025. And I assume that's can be used throughout many of your offices globally. And are you given some of the opportunities that you have in your current opportunity you see further on contractor bookings over the next 12 to 18 months and some use of LNG or related opportunities there?

Stuart Bradie

Yes. I mean, it's a really good question, Mike. We are so for LTC program, the that will be laid out the Houston office supported by predominantly the Saudi office. As you can expect as things move into Saudi Arabia, the work on the gas development offshore actually led from head office, again, supported by Saudi on Chennai, in particular, the LNG projects that we are looking at really, again, lead either out of particularly out of Houston, our head, but predominantly in that case for adult of Chennai in our India office. And so it really has a global impact and allows us to to de-risk concentration. I would also say that in terms of the opportunity, when we're doing front end design, then obviously the follow-on opportunity is clear, depending on where you are in the world. And I think you have it in the Middle East that will likely be maybe of product packages, but really in the project management round. And if it's if it's in places that are not the Middle East, there's different contract vehicles that pursue our risk profile. So, but on all occasions, I think being involved early in the project performing well, often means that you actually have a role going forward. So that's why we put a lot of emphasis and explain to the market where we sit and sort of pre front ends concepts and front end designs because it really positions us not only for from a broader roles but also around understanding technology opportunities and things like that . Hopefully that helps.

It does, Stewart. And my follow-up is, you mentioned in your prepared remarks about some of the energy transition opportunities, we'd be more uncertain because of the US elections or maybe turning to the government side. Any change to your thoughts on what you've said, given your for your significant business units in Government Solutions relative to what you're seeing out of depending on what anticipated change could occur and it's anything that would cause any meet and even minor change your thoughts, given how things me it looks like to turn out.

Stuart Bradie

No, I don't I don't think materially, Mike. I think that there's strong bipartisan support around military spending and the department defense budgets. As we've seen in the past. I think the areas where we've positioned the business, whether that be in military space, so that in the Pacific are looking at the hypers Sonic's for cyber are evens civil space with NASA are going to be strongly supported regardless of how the elections turnout. So we're feeling we're feeling pretty good. That does have usually a question on what happens in Europe, low cap. But we feel that that's a moving more to will move more to a sustainment type solution depending on what happens. But with that, with Russia and Ukraine. But obviously, that's not a near-term resolution we see. But you never know. But I don't think there's going to be a material change in where the priority spending's going to be. And I think that we will guide appropriately as we go into 2025. And we're pretty confident of our targets of growth that we presented at Investor Day.

Operator

Next question comes from Steven Fisher with UBS. Please go ahead. Stephen.

Steven Fisher

Thanks a lot. So Stuart, you mentioned potential election impact on Lake Charles. I was just curious what are some of the scenarios that could play out with that project based on the election and kind of what would the timing implications be for for those various scenarios? And I don't want to put words in your mouth, but it sounded like the answer to Andy's question was that may be in the event that Lake Charles and say delayed by a longer period of time, say a couple of years. Do you still think you should have enough work in the next years to hit those 11% to 15% target that I want to put your words in your mouth but is cloud. I find that that's what you're messaging.

Stuart Bradie

So, in terms of the election and LNG, as you know, there's a pause in LNG projects in the US if the Democrats remain, there is a strong indication that some projects will be released or for going forward as long as they reach certain probably environmental hurdles and things like that. And we feel that Lake Charles is very well placed to be part of that cadre of the Republic. Any of them understated positioning is to is to really go faster. And as a consequence of that, I think that the project will go faster. And that was really my comments there. The FID. that we gave you in the second half of next year is probably based on the conservative view. I could go quicker than that. But again, there's obviously, as I said, wood to chop there in terms of our ability to look further afield for, I'm looking at our pipeline and the way that will perform. I think there's absolute credibility in the numbers we put forward regardless of timing of Lake Charles. And so in our sister, we had one particular analysts to who raise the fact that would be difficult and an LNG market to replace what we're doing in Plaquemines. And we've announced four associated LNG projects in one quarter. I know I really want to be strong on that point and you can see the opportunity set that's been realized in a very short order. So I think there's going to be more opportunity, not less. And certainly energy demand is not reducing its increasing, particularly in the global study. So so that's really my answer to the questions, Stephen, unless Mark, you want to state something further.

Mark Sopp

I think you covered it beautifully well store. Thank you.

Steven Fisher

And then maybe just on the Saudi side, just curious if you have a sense of how fluid that situation is with their programs there, they can we take this now take this PMC contract to the bank, if you will? Or could it still change either to the upside than downside? I know you're talking to my duties about some other opportunities, but I'm just wondering, is this thing now kind of locked in?

Stuart Bradie

Well, they will make a final investment decision. I believe, Steve, when the EPC pricing comes in after the front end designs are completed, but obviously were pre-FEED and FEED. And I'll take a couple of years to come through that exercise right now around core committed. And so, we feel very strongly that this is I have a solid set of bookings, but we don't break it into backlog until such times as we reach the various milestones gates. And but it was really to just give you an indication of a rule on LTC, the fact that Ramco viewers really a very strong capability and we've got a strong relationship, of course, and we've got our broader CPMC. roll potentially is bringing a whole set of different skill sets that have never really been delivered under the PMC environment before KBR was chosen to do that. So, I think ultimately, I think you should take it is really positive news. We're trying to give you a sense of the scale on a multiyear program. So really underpins our long range targets. And you have a feeling really good about it.

Operator

Your next question comes from Jerry Revich with Goldman Sachs. Please go ahead.

Jerry Revich

Yes, hi. Good morning, everyone. So today, I'm wondering If we just take a step back, you know, maybe five, six years ago, the risk times on a lot of these LNG projects and other large-scale energy projects was very attractive to you. Folks are now the win rates have been really, really attractive for you folks, including Lake Charles LNG. Can you just talk about what's chain changed over that timeframe in terms of industry discipline, and that's enabled the opportunity for you folks have such high win rate with acceptable and attractive returns for TAVR?

Stuart Bradie

Yes. I mean, we've been very clear. We're not taking lump sum EPC risk, and we don't take construction blue-collar risk. And we've been very true to that. We're not going back to the future, if you like and what we're doing here. So I think the that particularly with the VG. and the success of Venture Global in the first phase and in Plaquemines, I think the certainly new models that are new customers do developers are looking at because it allows them to carry that continue to manage the risk directly and also allows them to be heavily engaged in the decision making. And that doesn't suit our customers. There's still lump-sum EPC is out. There are many of them. You'll know that and we are not interested in them whatsoever. So I just think the market is realizing that could be a different way. It doesn't say everyone, but it does hit some. And where system we're actively engaged in the Middle East, where there's approach a project management contract or front-end design with PMC's where, of course, that fits our model very, very well. And we'll continue to chase those types of opportunities. But I think that's I think the two things I think really the I guess the intent of your question, is there a market for the risk profile that was that we are now have appetite for? Absolutely. And I think we've proven that. And secondly, are we we're positioned well enough globally to take advantage of that. And i think the answer, and we've demonstrated that we've put me on our board in Q3 in particular is absolutely, yes,

Jerry Revich

Super, can i ask on Heritage tech, could you just talk about what you expect to book over the next couple of quarters in areas like ammonia and plastic recycling? I know there's a pretty strong visibility on the pipeline and when you expect bookings to play out, can you just expand on what that looks like the next couple of quarters?

Stuart Bradie

Yes, we don't I mean, I think we're very excited, obviously, was soft and plastics recycling as we start to look at the pipeline of opportunities and where the markets are going for those . I think as I said in my prepared remarks, the catalyst for change in terms of active that final investment decision on the dozen or so licenses we've already sold for Hydro PRT is really down to the performance of what happens that we'll turn in Korea or in Japan. And so I think we'll update the market more on that as we as these start to produce product at year end and slightly into 25. So very excited about that. I think that bookings will come later in the year associated that with Jerry, just given the timing, but very, very strong pipeline there. In terms of ammonia, I mean, it continues to be an attractive market, at the ammonia pricing came down, as you know, through the course of the year. But there's still a lot of interest and actually moving forward, particularly in the Middle East around the fact they've got very, very attractive gas prices. They're looking at market share. There's also a growing demand for fertilizers as well as commitment around positioning for hydrogen as we move forward. So, I think as we go into 2025, we expect to see continued buoyancy in the ammonia market thinks that timing is very difficult to tell. And but I think the market itself remains a very attractive .

Operator

The next question comes from Sanjay Jain with KeyBanc Capital Markets. Please go ahead.

Hi, good morning. If I can ask one on the LTC. project that you said, the interest priority is to move more investment to other parts of Asia. Would you be able to follow them there for similar projects?

Stuart Bradie

I mean, I think, it depends on the contractual structure. But yes, of its upfront and design PMC, of course, we can't, and we've got offices in Asia that could support that. Depending on whether this I think historically, they've done more in China and increasingly looking at India, the views topic is really their overseas investment vehicle remember that our Amcor's owns the majority of Sabic at least 50% of not more time at. So, I think yes, in theory, but I don't suspect that's going to happen because I think that, as I said, the reason I said what I said in my prepared remarks was that they are looking to decarbonize in the kingdom. They're trying to use gas to produce power, which at the moment, the bond crude and the utilization of crude into petrochemicals as value and over time. And that's where they're pointing the investment dollar. So I don't think it's just an investment in liquid chemicals globally. I think those are strategic and I know in our sustainability in our play in Saudi itself, that's driving these investments. Got it.

And I know you referenced the long-term guidance a couple of times, but I think this project was in your long-term risk adjusted guidance that you gave us at your Analyst Day. So, I just wanted to know how you're thinking about that long-term guidance without this project in it.

Stuart Bradie

I'm sorry, I'm confused.

On your Analyst Day. You gave long-term guidance of eight, which included this LTC project and a risk-adjusted basis.

Stuart Bradie

It does. But remember, we've got a very prominent role on LTC, which is the coordinating PMC, which I said would be $70 to $100 million through pre-FEED on several times. The value through execution, which is aligned to our long multi-year projects are very long-term target. So so we've got very prominent role in LTC. That's what I was trying to. I spent quite a bit of time talking through that particular project has been a bit of a black box up today and apologies for that . But we were not allowed to standing by the customer, but now we can.

Operator

The next question comes from Gautam Khanna with Cowen. Please go ahead.

Gautam Khanna

Good morning, guys. I was curious like on a linked question, there was some language in the in the briefing about small business awards. I was curious, do they have a lot of small business set-aside work? If so can you quantify that model and how that runs through or runs off?

Stuart Bradie

Yes, they don't really have any small business set-aside. We obviously don't just stop through the acquisition. So that doesn't feature at all government.

Mark Sopp

I'll just expanded the work we view as SBIR. three. So that is not restricted to small business. It reflects, you know, initially it was perhaps under that set-aside type of construct, but now it's it's a preferential type of contract vehicle. I can that money to work quickly. It is fully available to large businesses, and it largely is done on a sole source basis to progress and commercialize other technologies that are at play that started off small and have become something bigger. So it's really an attractive type of vehicle for not only LinQuest last but a part of the KBR group as well.

Gautam Khanna

Thank you. That's helpful. And just last one for me on you may have addressed that i joined late CR the budget CR? I mean, what is your expectation for bookings over the next couple of quarters have contract for CR. expense?

Stuart Bradie

I mean, I think I think we've got enough in flight being looked at. We've got a number on it. There have been awarded under protest and we don't talk about them until the protest is resolved and quite sizable. So we I mean, assuming they come in our favor and yet you never know, of course, got some of the way the protocol. But I think bookings will remain pretty strong as a consequence of what's in flight and that obviously there will be some delays with CR, but we don't expect it to in any way change what we think we will guide to for next year along with a long way targets.

Operator

At this time, we have no further questions. I'll turn the call back to Stuart Bradie for final remarks.

Stuart Bradie

Thank you, Emily, and thank you again for listening, and thank you for your interest as always. And KBR, I think another terrific quarter, double-digit growth across all key metrics really start just revenue. It's actually develop delivering that revenue into profit was enhanced margins. So really a terrific effort by our people all across the world. So yes, thank you again, and I'm sure we'll be on calls later today and tomorrow and through the course of the next little while. So, thank you very much.

Operator

Thank you, everyone, for joining us today. This concludes our call, and you may now disconnect your lines.