Good day, and welcome to the KBR Inc. First Quarter twenty twenty one Earnings Conference Call. This call is being recorded. As a reminder, your lines will be in a listen only mode for the duration of the call. There will be a question and answer session immediately following prepared remarks.
You will receive instructions at this time. For opening remarks and introductions, I would now like to turn the call over to Ms. Allison Vazquez. Please go ahead, ma'am.
Good morning, and thank you for attending KBR's first quarter twenty twenty one earnings call. Joining us today are Stuart Brady, President and Chief Executive Officer and 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 as outlined on Slide two.
These matters involve risks and uncertainties that could cause our actual results to differ significantly from these forward looking statements. These risks are discussed in our most recent Form 10 ks available on our website. I will now turn the call over to Stuart.
Thanks, Alison, and many thanks for joining us today. I will start on Slide four. Now you should all be very familiar with our Zero Harm Sustainability program by now and the 10 pillars that sit within it across the ESG spectrum. At our recent Investor Day, we've highlighted that being a good corporate citizen was the floor and not the ceiling at KBR. And I wanted to pull on that side a little bit more today.
The symbiotic relationship between shareholder value and KBR helping our clients achieve their sustainability goals is an absolutely key differentiator for KBR. And we want to build on that just a little on to Slide five. Now KBR has a suite of recycling technologies that enable circular processing and the broader circular economy. At the Investor Day, Doug introduced Murrah's revolutionary hydro PRS technology that closes the loop on the circular plastics economy. This is very exciting in its own right.
And this excitement, I think, was compounded with the recent announcement that Dow is also investing and importantly committing to offtake. This obviously is a huge endorsement on the sustainability aspects and, of course, a huge endorsement on the technology itself and is an important step forward. But at KBR, we have many recycling technologies as outlined on the slide. All are proprietary, differentiated, disruptive and market leading. Now we could spend the entire call, and I don't plan to do that, talking about these technologies.
But today, I'll highlight just one example to give you a flavor, and that's on sustainable fibers. A global retailer from Scandinavia came to us a few years ago to help them solve a big problem, how to recover valuable chemicals and water from what would have been a waste stream at the end of their process to produce manmade fibers. Our sustainable technology team applied a proven evaporation and crystallization technology to essentially recover and purify critical ingredients and water such that they can be reintroduced right at the front of the process, closing the loop on the circular processing. Now this solution has many benefits as I'm sure you can appreciate. It reduces processing cost.
It saves finite elemental resources and water and it eliminates a waste stream. So overall, it's great value for the client, obviously for KBR and our shareholders and of course the planet. So like you've heard me say before, advancing our clients' ESG objectives is core to KBR's strategy. And this example is just one of the many that demonstrates that tenet. So on to Slide six and some key highlights from the quarter.
The key takeaway here is overall revenue, EBITDA margin, adjusted EPS and cash were all in line with full year guidance and actually a little bit above our expectations for Q1. You'll recall that we stated that first half versus second half would be circa forty-sixty split at the EPS level. That has now shifted to a circa 40 five-fifty five split with a couple of things happening in Q1 that were expected to happen in Q2 and Q3. And this was especially the case in sustainable tech, and Mark will give you some more details on this later. Margins were bang on at the group level with some discrete items, some puts and takes that Mark will cover later within the segments.
But to be clear, full year margin guidance at the group and within the individual segments is not changing. And I'll say that again, the Q1 puts and takes did not change full year margin guidance. Free cash conversion at over 100% was again strong. And importantly, the team brought in over $1,600,000,000 in backlog and options during the quarter in high end technical upmarket areas, increasing our total backlog with options to $19,300,000,000 More on some of these wins in a moment, but super exciting. So Q1 was a relatively clean quarter at the group level.
And so today's presentation, you'll be glad to hear, should be relatively short as the overall business continued its momentum from 2020 and 2021 guidance remains unchanged. So on to Slide seven. The market outlook in GS was dominated by the release of the President's proposed 2022 budgets. The DoD budget was aligned with what we presented at Investor Day, so no surprises there. And KBR was very well positioned opposite national security and DoD strategic priorities.
A few of the areas are highlighted on the slide: artificial intelligence and machine learning, cyber, trusted microelectronics and directed energy. And you can see on the right hand side wins that helped prove this out. We're especially excited this quarter by the trusted microelectronics win to conduct advanced R and D, prototyping, laboratory testing and supply chain verification on critical microchips and components. This is really important work done by top tier scientists and PhDs to ensure major military systems and platforms operate as intended and have not been compromised. We also won new work with the U.
S. Space Force Rapid Capabilities Office or RCO to support the development and acquisition of new space capabilities and the modernization of the military space infrastructure. Again, this is highly advanced work centered around technical R and D in critical military space domain. Shifting a little bit over to the civil side, the civil space side, the NASA budget request was also released and shows a marked increase and continue to support for the return to the moon and beyond. And of course, increased funding across a range of Fed's activities focused as you would expect initially on COVID, climate change and an area of differentiation as you know for KBR and social justice.
The proposed infrastructure plan was also released and was very R and D heavy, very technology driven and climate focused, lining up well with KBR's R and D capability and technology portfolio. This quarter, we saw some great wins also in the international government business, as you can see on the right hand side of the slide, both in The UK and in Australia. And there was also good news from a budget perspective in The UK, and this follows on from Australia increasing its defense budget last year. As an aside, Rob Hockets, whom we met in our GS in Focus Day, and his team in Australia are off to another good start, posting top organic growth rates again at over 30% year on year this quarter. And this is a nice example of a great team doing things that matter within a healthy budget environment.
One aspect not on the slide but worth mentioning was the announcement on troop withdrawal from Afghanistan. As most of you are aware, we took a very conservative view in this area, which has proven to be prudent. So in short, no red flags coming from recent announcements, no red flags from the budget priorities, in fact, very much aligned to what we presented in Investor Day, so very much aligned with our expectations. The market and our strategic positioning reaffirm our ongoing momentum. Now on to Slide eight on sustainable technology.
The market and key strategic themes shown on the slide continue to gather momentum. It's a hot market. The recent announcements from the Biden administration are fully aligned with these themes as we discussed at Investor Day. Our suite of technologies remains in high demand, and I'm also pleased to announce a disruptive PDH technology, K Pro, that was actually launched last year, has secured its first commercial scale order. This is terrific.
There are details on this on the right hand side of the slide. But to put it simply, this technology takes low value propane and converts it into high value propylene. And it does so in a more sustainable and more cost effective manner than the competition. It is worth noting that the book to bill of heritage technology was 1.5 in the quarter, led by important sales of exciting new disruptive technologies, K Pro, K Cot and K SAT. Bookings of these technologies dominated the tech book to bill as clients look to meet growing demand for propylene and high value clean refining solutions with a disruptive, differentiated and in our view, often superior technologies.
Now we've talked a lot about KSAT technology in the past. And obviously, I've just covered K Pro. But I'd be remiss if I did not touch on KCOT and the KCOT win in the quarter, which was a substantial booking by the team. Now KCOT is KBR's catalytic olefins technology. It is the only, and I repeat, only technology of its kind in the market.
Now this technology is unique in that it produces meaningfully higher volumes of propylene versus competing technologies. And as you know, propylene is in very, very high demand. Additionally, TACOT is the only commercially proven continuous operating process on the market, which means that both CapEx and OpEx costs are substantially lower and that energy consumption and thus environmental impact are also greatly reduced. So in other words, it's highly monetizable at lower investment and operating costs, translating to a higher ROI for our clients and at the same time advancing their sustainability agenda, altogether very compelling. So staying on the right hand side of the slide, as you would expect, the cadence of awards in our Energy Transition Advisory business also increased and is a great early indicator of activity in that market.
But it's clearly a step change in this activity, and the cadence of new opportunities and awards has actually been above our expectation. Technology led Industrial Solutions also had a fantastic start to the year and the pipeline for our digital solutions that leverages our IP and our domain expertise and helps our customers reduce cost, enhance throughput, increasing efficiency while also advancing their own sustainability goals is resonating. As Mark will show you in a moment, sustainable technology has come out the gate strong in Q1, and we remain confident in delivering a 'twenty one guide that they will be a business that do circa $1,000,000,000 in revenue, likely a bit more and with EBITDA margins in the mid teens, the high end government business with a sustainable tech kicker. So on to Slide nine In Q1, we had some really nice wins in strategic areas as we've just touched on.
So really following through on winning the right work. The stats on the right, you will be familiar with. The stellar recompete win rate, the balanced portfolio of opportunities over $1,000,000,000 and multiple sizable opportunities over $100,000,000 showing both the overall scale of opportunity but also minimal concentration risk. The team has done a nice job across the customer set, booking over $1,600,000,000 in awards and options in the quarter, a pleasing result in a typically light bookings quarter. The key message here is that with recent budget announcements, we expect to see our pipeline remain robust and the momentum we have is expected to continue.
Now I'll remind you, we have a low recompete year in 2021 and in 2022. And you can probably see why we're so bullish on the outlook. Now when we announced guidance in late February, we stated that we had already secured over 70%, seven-zero percent of the work required to deliver the 2021 plan. In Q1, we had excellent execution, especially in sustainable technology. And this combined with Q1 bookings has driven the level of secured revenue closer to 80%.
So in short, the markets and budgets remain very favorable. We continue to deliver well. And on that, I'd just like to have a big shout out to our people who do an incredible job and do things that really matter. We are winning work in the differentiated areas we set out to do. Our ESG commitment and direct link to shareholder value is super exciting and compelling.
And Q1 was a great start to what is shaping up to be a great 2021 and beyond. I'll now hand over to Mark, who will give you some more color on the segments. Mark?
Awesome, Stuart. Thank you. I will pick up on Slide 11. So as you just heard, Q1 performance was generally in line with our '21 guidance expectations and also our long range targets that we presented to you last month in our Investor Day. Revenues of $1,500,000,000 and $135,000,000 of adjusted EBITDA are right in line with our fiscal 'twenty one guide of $6,000,000,000 top line and 9% EBITDA margin.
Cash was once again very strong out of the gate with free cash flow conversion coming in at a 9% for the quarter. As Stuart also said, what's particularly encouraging is the quality of the work that's coming in in new orders. We are winning high technology content, defense, research and development and modernization contracts in line with our upmarket strategy. Trusted microelectronics, rapid research and development and prototyping and others that Stuart cited earlier and also in our release are really good examples. These programs are high priority, high barrier to entry, and in some cases, leverageable to greater opportunities in the future.
The same is true in sustainable tech, a stellar quarter in bookings for proprietary process technologies, including strong bookings across our new disruptive sustainability focused technologies like you heard from Stuart, KCOT, K PRO, and KSAT, and measured progress on energy transition advisory and smart operations and maintenance awards. As I'll cover later, we did have some acceleration of profit in the first quarter, which will modestly reweight our first half to second half earnings more toward the 45%, fifty five % mix versus our initial guide of forty sixty. But the bottom line here is we are on track on all measures and thus reaffirming our guidance for the year. On to slide 12. First, as planned, we have collapsed into two segments, government solutions, GS, and Sustainable Technology Solutions, STS.
Highlights on the GS side include 19% top line growth, 5% of which was organic. We absorbed the headwind from reduced Middle East activity compared to last year with new growth areas predominantly in sustaining enduring programs. We have underscored the reduced dependency on the Middle East contingency work and the 15% growth in readiness and sustainment highlights the enormous success of our team in driving growth from new, more recurring sources that will carry forward. 15% net organic growth in light of the reduced Middle East activity is one of the top success stories this quarter. And, hats off to Ella Studer and her team for delivering not only excellent service in The Middle East for all the transitions going on and through a global pandemic, but also at the same time amazingly capturing and realizing tremendous growth in baseline recurring programs elsewhere in the world.
Truly remarkable. Growth came from sustaining O and M funded areas such as the important work our team does to plan, schedule, and support training rotations at the National Training Center. The rest of GS pretty much netted out, although I will mention and as Stuart alluded to, the Australia government business continues to produce really strong growth, up to about 30% organic year over year, offsetting some of the effect of winding down Aspire Capital Works in The UK. We were pleased with the really nice new award that the team won in The UK. Stuart also mentioned that earlier, and that will start contributing to earnings later this year.
I'll also point out the nice balance of top line contribution across all four business areas within GS, which is consistent with our strategic intentions of having low concentration risk, access to multiple funding channels and access to faster streams of funding growth as national priorities change. GS margins were a percentage point off of our long term guide, and this was primarily driven by timing items and provisions that we took for a legal matter. We do expect to achieve 10% EBITDA margins for the full year with strong contributions in the back half of the year driving that home. Now for STS, we're off to a great start in Q1 and are on track to meet the full year guide of $1,000,000,000 plus of revenue at mid teen margins. As planned, margins are vastly improved over last year, mostly from the fundamental improvement in business mix toward higher margin offerings and also the cost reductions we made last year in the overhead structure of that area.
As Stuart mentioned, profit was amplified in the first quarter by several percentage points on the favorable delivery of a sustainable technology project as well as an r and d investment recovery. These results were originally planned over several quarters this year, but due to good execution, early closeout, and also accelerated cash collection of those items, we recognized all of it in q one, which is certainly a great result from the team. Overall, while we'll likely have some margin variability this year due to timing and mix, we're confident, as I said earlier, our full year guide of revenue and the billion plus ZIP code and margins in the mid teens will be attained. Now on to Slide 13. Just a brief update here.
There's no real change to our capital structure and deployment strategy, which we fully covered in the Investor Day just
a few weeks
ago. Net leverage edged down just one tick driven from growth in EBITDA to 2.3. And in case you missed it, we bumped up our dividend for the second year in a row now at $0.11 per quarter, up 10% from the 2020 dividend level. And finishing up on Slide 14, as stated, we are reaffirming guidance on all measures for the full year 2021. The guide reflects a repositioned revenue profile in both our government and sustainable tech businesses.
On the government side, the guide reflects essentially an immaterial amount of Middle East contingency operations contribution replaced by upmarket advanced technology work and defense modernization, military and civil space, cybersecurity and a surge in growth from sustaining readiness and sustainment programs. On the SPS side, the guide reflects lower overall revenues, but much higher barrier work areas with stronger margin attributes, particularly fueled by our proprietary sustainable process technologies. These technologies are indeed benefiting from much more commitment to greater energy efficiency and improved environmental outcomes across our entire contract base. This is now complemented with an attractive front end advisory offering, which is gaining traction and a recurring smart operations and maintenance offering, which leverages the large installed base of industrial and government customers we have worldwide. Altogether, the changes have produced a higher margin, strong cash flow business with well established and reliable solutions in attractive end markets.
With that, I'll turn it back to Stuart.
Thanks, Mark. Great job. And on to our final slide, Slide 15. Our people continue to deliver. They really do.
And execution was again exemplary, and we started 2021 well, a super strong performance across the entire business. Cash conversion, really important, was again terrific. And our balance sheet and liquidity position, as Mark demonstrated, are both healthy. The circa 80%, eight-zero percent of the work secured to deliver our 'twenty one guide And with a strong Q1 now behind us, we are very confident of delivering 2021, and we reaffirm that guidance today. Now remember, that guidance reflects a 20% plus increase in adjusted EPS from a very, very resilient 2020 actual.
As we reiterated at Investor Day, we continually endeavor to do that simple thing, doing what we said we would do. Well, thank you for listening, and I'll now hand it back to the operator who will open the call up for questions.
We will now take our first question from Gautam at Cowen and Company. Please go ahead.
Yes. Hi. This is Dan on for Gautam. Good morning. And okay, so our question was, have you seen any you know, exciting opportunities or threats just in the initial budget proposal that that came through?
I I mean, speaking on in terms of, like, agencies.
Obviously, there's I mean, I think we Yes. We tried to cover that off in presentation somewhat on an Investor Day that we saw no real surprises, no red flags. And in fact, quite the opposite. I think we were very pleased with the levels of budget. And I think the priorities didn't throw up anything that disrupted our strategic advancement.
And so that's why we're very bullish about our future. And so I think in short, real surprises at all. I think outside of the DoD, obviously, the growing momentum and obviously, particularly around sustainability as well and of course, last night's presidential address as well, putting more money to work in the economy is just good news. And I think we are very well positioned to take advantage of that across the spectrum of what we do, which, again, is why we're so bullish. So no red flags, only more encouragement, I would say, is a short way to describe your question.
And, Dan, I'll I'll just add into that to to Stuart's remarks. You know, if you go back to the post election moments in time, there certainly was some concern about whether or not the new administration would continue to support NASA, that had, you know, some nice increases during the Trump administration, and we're really pleased to see a further bump up of six and a half percent in the request for NASA across the board and, you know, ongoing support for human spaceflight missions to the moon and and, you know, longer term beyond. So that part was particularly strong in addition to Stewardship marks as well.
Great. That's that's really helpful. Thank you. And then just quickly, it kind of seems like multiples in the government IT space have really compressed, whereas KBRs has you guys have had a nice run recently. And I'm wondering how does that inform kind of the balance between M and A versus repo and whether you guys have seen kind of the M and A pipeline become more active as a result of that or more affordable?
Yes. I mean, if your share price goes up, then if you're using that as currency, things become more affordable. But I think there's good recognition in the marketplace that KBR has changed significantly over time, and I think we're getting recognition for what it is we actually do today. We don't think we're I think our targets that we're reaffirming and obviously drive greater share price accumulation through time or EPS performance, and hopefully that reflects in share price accumulation over time as we laid out on Investor Day. In terms of the way that we think about the business, we do think we are very now today a very high end government business, but we do have this unique technology, sustainable technology kicker that is arguably should be valued at higher multiples than government.
And so I think there's certainly excitement around that marketplace, as you're well aware. So in terms and I think that came across hopefully strongly in Investor Day and has really supported the run up that we've had recently. And in terms of the M and A market, certainly, is still obviously lots of activity out there. Consolidation will continue. And but we've been very clear about our priorities in terms of how we're looking across our capital spectrum, and I think Mark laid those out.
So I don't think there's any change there at all. And just to reiterate, if we will fund organic growth and we've got really strong growth, as you had, 20% plus in EPS level, built into our guide, and that's the best use of cash. We've got our increasing dividend. And then, of course, if we can find a piece of M and A that fits our strategic future and accelerates us into new areas, and we won't acquire just the bulk up. We're not after market share per se and things that we already do.
We think we can do that organically. So it would be and it have to be a cultural fit and it would have to be accretive. And so you have to get all these things right. And if that doesn't occur, then obviously we'll be looking at we've got excess cash, obviously our leverage targets as we did at the end of last year. We'll look at buying back our own stock, no doubt about it.
Thanks a lot, guys.
Thank you, Dan.
Thank you. So we'll now take our next question from Michael at Vertical Research. Please go ahead.
Good morning, Allison, gentlemen.
Hi, Michael. Good morning, Mike.
Two questions. First, maybe for Mark. Certainly, you're talking about with these new businesses and upmarket in margins. Could you maybe reflect on, say, what the overall backlog margin, say, in GS and maybe what this new STS was six, nine months ago where it is today? And is it going to continue to move at a steady pace so as you execute, those margins will flow timely for meeting your targets over the next couple of years?
It seems that you're getting that high end bookings at a lot greater pace than we've seen in the recent quarters.
Thanks, Mike. Yeah, we're really pleased with the quality of work as we've repeated over and over again. In some cases, that's rewarded in strong margins and in cases such as NASA, as I think everybody knows, to a lesser degree, given the nature of economics in that agency and what others face with us. And we do so proudly and it's all good. And so we see balance in the bookings that are, yes, upmarket, but across a different mix of agencies, both in The US and internationally.
As you know, the international piece is favorable to margins. Parts of the domestic are favorable to margins like Centauri and the trusted microelectronics and the rapid prototyping. And, you know, the continued great work we do at NASA tends to go the other direction. And I would tell you that that the bookings we recently had in the pipeline we have suggest a a static sort of scenario in the margin, you know, 10, hopefully a little bit more territory. And if if that weighting changes, we'll, of course, I'll let you know.
But right now, all all signs indicate, you know, to a stability set of circumstances on the margin front for government.
I appreciate that. And my follow-up is
for
Stuart. So we've been we've been gaining from clients and certainly, Pat, since your Investor Day, the opportunities and certainly excitement on ammonia and hydrogen certainly and the opportunities there. Given what you reported here in some of the refining and chemical processes that have been working well with these new technologies over the last, say, twelve months with the institute and getting some traction. Can you maybe share, is ammonia in that same realm? Do you think that's a twelve, eighteen, twenty four month story?
Or are we going to see some activity much quicker? I would think your clients are certainly asking you a whole bunch of questions on how this could work through, especially with your leadership in that space.
Yes. Good question, Mark. On Mark's answer on margins, I think what we're seeing, of course, on what was heritage tech, which is, I think everyone knows, is a very high margin component of STS. And the cadence of bookings with another book to bill of 1.5 in this quarter versus Q4 and Q3 and Q2 were all well above one. It's just I think that's going to help drive margins upwards as we look at the mix in STS as we go forward.
So I just wanted to put that out there because that is exciting. And if we can keep that level of activity and that cadence going, clearly that puts up the pressure on margins, which obviously is good for everyone. In terms of the discussion on ammonia and hydrogen, yes, of course, it's hugely positive. And I think Mark and myself, we mentioned the cadence in the advisory business talking about energy transition and greener technologies, which includes hydrogen, of course, as part of that solution. So very much the tip of the spear there.
Lots of awards and studies ongoing, and we expect that, I mean, not all of them will prove out to be bigger opportunities, but lots will. And I think that really puts a lot of credibility on where the market is heading. And in terms of ammonia demand, we expect that to be continually increasing over time. We've got a lot of activity and a lot of bids in the pipeline for that. I think we'll start to see some of them come through in the second half of the year, and the cadence of that will continue.
And the reason for that is I think that I think people it takes two, three years to build these large ammonia facilities. And I think you can see the hydrogen demand with ammonia being, of course, the fuel, the transportation fuel for hydrogen and that demand growing. People will try and get ahead of that. And certainly, the discussions with the bigger ammonia producers have already started. And if you've been involved in any of their sort of investor days or dialogue, mean, that's very, very clear.
So I think it all stacks up really favorably for KBR. I think the drive for refining to be greener and our suite of green technologies we can apply to refineries to help them, the product mix of options we can give on terms of driving value for petrochemical producers around things using KCOT and actually delivering more propylene the traditional ethylene propylene mixes, again, highly attractive. And so I think you're seeing a little bit of a perfect storm across our portfolio. And we're at the pains not to just talk about ammonia and hydrogen in this call because that took up it takes a there's a lot of activity there and people get roped up and that, but and rightfully so, but I wanted just to make sure that we've got the message across on this call that we've got a suite of technologies over 70 technologies that are being deployed actively across the green refining area, the petrochemical piece and, of course, in the syngas ammonia piece for hydrogen future. So I think more to come on that, Mike.
And I'm sure as we get into Q2, Q3, Q4 of this year, you'll start to talk more about awards in that arena.
I duly noted, Stuart. Thank you so much.
Thank you. If you find that your question has been answered, you may remove yourself from the queue by pressing star key. We'll now take our next question from Tobey at Truist Securities. Please go ahead.
Thank you. With respect to the pipeline and kind of bid activity in tech, is that top of the funnel kind of increasing as one might expect with some of these headlines and momentum? And what do you given some of the developments that you've talked about so far on the call?
Yes. Don't think there's too much in terms of change in size per se. The size of awards from a technology perspective, they haven't really changed too much over time. I think the important pieces become with very strong cash conversion dynamics and attributes. And you've got the sort of high margin profile as we've discussed in the past.
No really big size changes there. But the opportunity set, as I've just said, with really being in the sort of perfect storm at the moment is, of course, growing. So the pipeline of opportunity is sizable, we're seeing that across all the areas in STS. And so it's not just in one area, and hopefully that came across in the presentation today. So we're feeling really positive about that business, and that's why we're very confident in our statements about what achieving $1,000,000,000 plus in revenue and mid teen margins this year.
And as Mark stated, longer term targets are also looking good. And if you think about if you remember the detail on SDS, that has a growing margin profile as well as growing revenue. So it's a double whammy, as they say. So it's a that's all looking very positive, the pipeline of opportunity would support that.
Thank you. My follow-up question has to do with sort of your the exposure you have to op tempo via LOGCAP. How what is the outlook for that to rebound to levels of a couple of years ago? Understand we've got some news on it for Afghanistan, but to some degree, OpTemple may be tied to the pandemic and COVID cases. Could you speak to that over sort of more of a medium term?
Yes.
It's a tricky question to answer, Tobey. I think we'd all be guessing. I think the important takeaway from what we're doing in our revenues and sustainment segment where LOGCAP sits, of course, is that we've had 15% organic growth with actually work happening mostly The U. S. And a bit internationally, but not really in that Middle East OCO arena.
So I think that's really the key takeaway in that segment for this quarter. And then once things become clear, obviously, we'll report back. I'm very upbeat about that segment and really GS in general. And I'm particularly happy with the fact that we took a very conservative and prudent approach to that arena as part of our sort of future guidance and our outlook and really taking away any sort of volatility in our performance as a consequence. So I think we'll report back when things become clearer.
There are there's potentially, of course, upside associated with that as things become clear, but maybe not necessarily so. But we'd be guessing if we said anything, Alison, I'd rather not guess. I'd rather tell you when we know the facts.
Thank you, Stuart. That's helpful. Thank
you. So we will now take our next question from Andy at Citigroup. Please go ahead.
Hey. Good morning, guys.
Good morning, Andy.
Sorry if this question has already been answered during the call a little late. But just in the on the defense side of the business, international defense, you mentioned the decline in Q1 was primarily attributable to a project completed. How do you see that end market trending over the rest of the year and going forward? It was strong for you most of last year. So do you see that sort
of resuming that strength over time? Yes. I mean, I think we do see that growing over time. I think the budget we did cover the budget, Andy, and the fact that The U. K.
Has got a 16% increase in its sort of defense budget in Australia announced moving up last year, as you're probably aware. So I think the budget environment supports our continued momentum there. We announced some good wins in the production of P and L. We also talked about the fact that the Australia business continues to outperform of So I think there's very healthy momentum. There's good There's good budget environment, and we're very well positioned to take advantage of what's in front of us.
I think that's why we're very upbeat of what we're doing internationally.
For that, Stuart. And I want to ask you about cyclical recovery in sustainable tech in the sense that you've got, you know, sizable tech chem, you know, some refining exposure. Have you seen sort of a bounce in those end markets in places like China and such, you where KBART is historically strong? And how do
you think about the cyclical recovery in that business over the next twelve months? Yes. Well, I don't know if it's cyclical recovery. I think it's there's certainly an uptempo across the technology portfolio in refining and in petrochem. But I think there's change that's happened, which really is proven to be advantageous for KBR.
And you 've got the refining community knowing that they have to change, and we're seeing a lot of activity, as we said, around green technology application in the refining segment. And in the petrochem segment, we're seeing this significant demand for propylene that's driving a lot of our activity around what we're doing in PDH and KCOT as we apply these sort of technologies, particularly KCOT unique to KBR. So I don't really think it's so much cyclical recovery. I think it's really sort of redefining the product offtakes to meet the, I guess, the sustainable demands of the future and the market demands for things like propylene. So I do I think that's what we're seeing, and we don't see that in any way slowing down.
It's a very hot market and will continue to be so because of the sustainability agenda that's driving, I guess, the world at the moment. It bears up well for a long term run. And then when you layer in the syngas and hydrogen ammonia opportunities on top of that, each quarter, I'm sure there'll be ups and downs in various elements. But all over it, it's all over the the hosts are offering. I think you'll just see continued growth.
Appreciate it, Stuart.
Thank you. As a reminder, if you would like to ask a question, please press star one. We will now take our next question from Sean at KeyBanc Capital Markets. Please go ahead.
Hi, guys. This is Alex on for Sean this morning. Thanks thanks for taking our questions. No worries. So to start off, I just wanted to ask on the cadence of awards because a a few federal contractors have highlighted some slowing in awards in the near term, which makes sense considering the change in administration.
But is is there a point at which we could see a catch up dynamic there?
I don't we've got a sort of an interesting quarter of awards. I think all up at $1,600,000,000 with options, we've had very strong award quarter with options, particularly in the NASA space arena where we've had a number of on program growth awards in terms of additional monies being applied and there's certain option years associated with that just the way that NASA does it. So the overall number was terrific for KBR in the quarter and really a good news story. But typically, Q1 is a slow bookings quarter and particularly after an election in the government realm, and I'm sure that's coming through with a number of our peers. I think we would probably, other than what I just mentioned, we would probably say that's the same across other bits of our government business.
But I don't really think there's huge slowdown. I think it's seasonal. I mean, typically, you get lower awards in Q1, it ramps up in Q2, it goes even higher in Q3 and then drops back down in Q4. That's the typical cadence for government. For Sustainable Tech, again, usually Q1 is a slower bookings quarter as people come out of year end and sort of and then they do sort of year on year budgets.
And they look to sort of pick up pace, as you like, as you move closer into Q2. So I really think that our bookings this quarter are highly favorable. I think it is a good news story for KBR given the typical seasonality.
Yes. That makes sense. And then on Centauri, can you provide us an update on the integration, whether there's a change in confidence behind the revenue synergy targets?
I mean, I think the integration is going really well as we talked about. Our initial focus with Centauri was to ensure that we delivered those synergies. And we talked about 10 cap previously. And in fact, Centauri's book to bill was 1.1 in the quarter. Again, sort of really, really sort of given the typical seasonal low bookings for government, again, a terrific performance and and they're performing to margin expectations.
So I think all up, the integration is going well and the business is performing at or above expectations. So hats off to the team. They're doing a terrific job. And I think the cultural alignment is proving to be very, very strong, which is, for me, really important.
Thank you. So that is all the questions we have in the queue for now. So I would like to turn the conference over to Stuart Brady for any additional or closing remarks.
Thanks, Ioann. Just thank you again for taking the time and for your interest in KBR. As I said at the beginning of the presentation, we're bang on. It's a very clean quarter in terms of where we're hitting all our numbers and being a little bit ahead in Q1 to in some metrics in terms of expectation. And obviously, tech has come out of the blocks really, really strongly.
Feeling good about the future, feeling good about where we sit. And as I said, saying that we're on track sounds a little bit understated in truth given that on track means a 20% growth in EPS. So all good for 2021 as we sit here today and obviously, strong Q1 performance really helping with that. So thank you for your interest again, and no doubt we'll talk to most people on this call in calls following this one. So yes, stay safe, and we'll talk soon.
Thank you.
This concludes today's call. Thank you for your participation. You may now disconnect.