Release Date: April 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Stuart and Mark, you mentioned Q1 tends to be a little lighter seasonally in terms of STS bookings and I think you said 1.1x the LNG burn. But could you elaborate on the pipeline of opportunities you're seeing any delays across any of the end markets in that business? And what's your confidence level at this point regarding continued double-digit EBITDA growth in STS?
A: Yes. I mean I think we're quite clear, Andy, in the call that ex VG, the book-to-bill for STS in 12 months is 1.2, which really underpins sort of, I guess, 20% growth. And the quarter stand-alone was 1.1. So our pipeline of opportunities, the activity levels in the ammonia market, the olefins markets and really this energy trilemma that we've discussed in the Primer are continuing unabated in truth, and we're seeing high levels of bid activity. We're seeing good momentum in the market. So we're very confident on the continued growth and the continued performance of STS. And that's been the case for some while, and we see that continuing going forward. And we'll talk a bit more about that in Investor Day and give you more -- we'll build on the STS Primer, particularly around the ammonia story, and particularly around the ROIC associated with that business. So I think it's a very positive outlook for that business.
Q: Maybe on the GS side, more color into how you're thinking about revenue growth moving forward. Do you see the Ukraine supplementals beginning to positively affect our mass as early as Q2? Is it more second half? And maybe the other businesses breakdown of momentum in those businesses in GS.
A: Yes. Again, we'll give more color at Investor Day, but I guess at a high level, I think those -- the performance in R&S, we're very clear on that was down 12% year-on-year. We had high levels of activity Q1 in Ukraine, due to Ukraine that the delayed funding impacted that. And I think there'll be some -- we'll have to see. It's kind of too early to call that. But logic would detect there would be some level of at least modest increase in activity in the European theater as a consequence of that increased funding as we move through the year, which quarters it will impact at this point, Andy, we can't be clear.
Q: I was wondering if you could comment on your customer relationship in HomeSafe and there, the customer sort of enthusiasm and conviction for what has been a long customer, a long sort of vendor transition.
A: Well, I think through all the relationship with TRANSCOM has been terrific. I mean, their commitment to the program, the representation to Congress of why they're doing this program and I guess they're phased in more cautious approach has resonated in Congress and with the folks themselves, the first moves have gone well. And the feedback from the personnel we've moved has been hugely positive. And -- but we've got to scale that up over time.
Q: I was wondering if you could comment also on the Mura plants and licensed plants and maybe speak to update us on the pipeline of interested parties watching the efficacy of that process in potential sales for the company out in the future?
A: Yes. I think we covered this a little bit earlier on. I mean I think this continued delay in the Wilton site due to really availability of resources on the contractor side. It's still looking likely that they'll produce first material as we head into next quarter. They will then get that plant commissioned and up at full capacity as we head into late Q2, early Q3 as we sit today.
Q: I just wanted to ask, I guess, first, just about sort of the thought process on guidance. It seems like you got off to a good start to the year. Core performance EBITDA was a little better. You've got the supplemental, which should drive some incremental improvement in R&S. And it sounds like you feel pretty good about the book-to-bill across the business, and you started repurchasing shares.
A: Yes. I mean I think -- I mean it's a question we debated, as you can imagine, internally for some time. But I think where we landed sorry for Scottish conservatism, but we decided that we would look to see how the supplemental start to flow through into next quarter. We wanted to get through our Investor Day and just get those messages clearer and resonate and again, just with HomeSafe now going, just to get a little bit more clarity. We've done successfully the first move, just what is the program ramp associated with that, et cetera.
Q: I guess this is the first call sort of the fiber. And the Primer, you talked about Middle East growth being sort of 20% plus over the next half decade. I think a little bit of that is predicated on some significant awards in Saudi Arabia. I was wondering if there's sort of any update as we think about that? And if there's any update on some of the transition that we've seen in NEOM and whether that's been a positive, neutral or negative, this pertains to your business over there.
A: Bert, Mark, yes, as you'll see in the Q filed shortly, the Middle East performance continues to grow really well year-over-year. That's been the case for some time. That is our expected case going forward. And as Stuart said, relative to an earlier question, the zippered up relationships we have, not only HomeSafe, but in the Middle East are fantastic, led by Jay Ibrahim, our leader there and his large team.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
