KBR 2026财年第三季度业绩电话会议：可持续科技增长与重申业绩指引

KBR（纽约证券交易所代码：KBR）公布2026年第三季度实现盈利增长，可持续技术（Sustainable Tech）业务的扩张抵消了因美国国家航空航天局（NASA）项目缩减导致的任务技术（Mission Tech）业务收入下滑。管理层重申了2026全年的所有业绩指引指标，并表示KBR与Trinzic的按计划拆分工作仍在稳步推进。

核心要点

• 营业收入同比增长5%至约20.3亿美元；调整后EBITDA增长12%至2.68亿美元；调整后每股收益（EPS）增长10%至1.12美元。
• 可持续技术业务收入增长26%至7.62亿美元。在手订单达到创纪录的58亿美元，同比增长超50%，季度订单出货比（book-to-bill）为1.3倍。
• 受预期的NASA业务逆风影响，任务技术业务收入下降5%至约12.7亿美元，但调整后EBITDA增长5%，利润率扩大110个基点至11.5%。
• 今年迄今调整后经营现金流总计为3.71亿美元，现金转化率为95%。本季度末净杠杆率为2.1倍，低于KBR设定的2.5倍目标。
• 管理层重申了所有指标的全年2026年指引。该前景假设任务技术业务的环比收入将持平至小幅下降，而可持续技术业务将保持低两位数的环比增长。
• KBR预计KBR与Trinzic的拆分将在1月完成。领导团队已就位，Form 10表格已公开，并且Trinzic债券发行的筹备工作预计将在11月推进。

核心财务数据

本季度包含与某项独立税收优惠相关的1500万美元利息收入。KBR在调整后每股收益中剔除了该笔收益，并表示其基础税率仍处于26%至28%的指引区间内。

业务与经营业绩

可持续技术业务

可持续技术业务是主要增长引擎。随着整个投资组合中此前签约的项目加速推进，收入环比增长13%。季度订单出货比为1.3倍，而过去12个月的订单出货比达到1.6倍。剔除Brown & Root合资企业后，今年迄今的订单出货比为1.5倍。

在手订单升至创纪录的58亿美元，比上年同期水平高出50%以上。管理层表示，这为第四季度和2027年提供了更高的能见度。

中东地区依然是主要推动力。KBR获得了阿布扎比国家石油公司（ADNOC）的新项目管理咨询服务，并扩大了其在阿美公司（Aramco）Marjan海上油田项目中的作用。该公司还赢得了沙特阿拉伯迪里耶门（Diriyah Gate）项目的核心程序管理合约，以及在德克萨斯州的一项重大工程与集成项目。

获得的技术项目包括为沙特基础工业公司（SABIC）在沙特拟建的日产3500公吨工厂提供KBR净化器技术、欧洲的氨改造项目，以及哈萨克斯坦的可持续航空燃料技术项目。

可持续技术业务的调整后EBITDA利润率降至19.3%，主要是因为上年同期包含来自一家液化天然气（LNG）合资企业的较高贡献。剔除该合资企业后，季度调整后EBITDA利润率为13.9%，环比上升80个基点。按相同基准计算，今年迄今的利润率为14.3%。

任务技术业务

任务技术业务的收入下滑反映了NASA相关工作的减少，包括对IMO合同的内部化（in-sourcing）影响以及2025年失去ISOC项目（该项目随后被内部化）。

尽管业务量下降，调整后EBITDA仍增至1.45亿美元。利润率扩大反映出未并表合资企业的贡献增加、低利润率NASA项目到期后投资组合结构更趋优化，以及项目结算收益早于预期实现。

剔除NASA取消的订单后，任务技术业务的季度订单出货比为0.8倍，按列报口径则为0.6倍。KBR从在手订单中移除了预计剩余三年的NASA收入，以使其与预期的工作量保持一致。管理层表示，相关的2026年收入影响已包含在业绩指引中。

该业务获得了支持爱国者（Patriot）防空与反导系统以及关键任务射频工程的项目。FireFly还被选为美国五角大楼聚焦本土防御的反无人机试点项目中的四种定向能系统之一。

截至本季度末，KBR已提交且等待决策的提案金额达99亿美元。算上处于抗议（protest）阶段的招投标项目，该公司在在手订单之外确定了205亿美元的业务机会，其中约80%为新业务。

管理层业绩指引

KBR重申了2026全年的所有业绩指引指标。管理层的假设包括：

• 任务技术业务环比收入持平至小幅下降。
• 可持续技术业务保持低两位数的环比增长。
• 可持续技术业务全年收入实现15%左右（mid-teens）的增长。
• 不含LNG合资企业的情况下，可持续技术业务全年调整后EBITDA利润率预计在15%左右。
• 随着项目结算时间带来的有利影响趋于平缓，任务技术业务利润率将在第四季度回归更为正常的水平。
• 全年现金流保持在现有指引范围内，现金生成主要集中在第四季度。

管理层表示，1月份的拆分时间表仍按计划推进。在交易完成前，KBR和Trinzic正日益作为独立机构运营，包括采用独立的财务报告流程。

风险与关注点

• NASA业务内部化：管理层预计当前的内部化进程将在2026年期间完成。然而，NASA的后续举措可能会对2027年的任务技术业务造成更大的逆风，预计前两个季度将面临较高的基数压力。
• 采购流程周期拉长：美国政府采购进展有所放缓，给任务技术业务的订单出货比带来压力，尽管管理层表示资金支持和客户优先级总体上保持不变。
• 中东回款问题：客户付款持续延迟可能会导致约2500万至5000万美元的现金流推迟至年底之后，不过KBR仍预计能保持在全年现金流目标区间内。
• BRIS维护延期：Brown & Root合资企业的客户推迟了维护和停产检修工作。KBR预计第四季度这一疲软态势仍将持续，随着关键维护需求的解决，相关活动将在2027年有所恢复。
• Plaquemines LNG项目减少：管理层表示，第三季度LNG业务的贡献约为1.15亿美元，预计第四季度视里程碑节点情况还将贡献2500万至3500万美元。预计该项目的贡献将在2027年有所下降。
• 中标时机与申诉争议：在经历美国政府问责署（GAO）的申诉程序后，公司已重新获得美国国家科学基金会（NSF）及战术支持合同（Tactical Support Contract），但该中标项目尚未计入在手订单。

分析师问答环节点评

管理层表示，NASA在手订单的减少不会对2026年的损益产生额外的重大影响，因为预期影响此前已计入指引中。进入2027年后，KBR预计包括美国国家科学基金会南极项目及一项涉密中标项目在内的新合同将提供实质性抵消。

在可持续技术业务方面，管理层称合成氨领域的潜在机会规模巨大且遍布全球，涵盖新建设施及现有工厂的升级改造。KBR还表示，公司扩大了部分项目的业务范围，从而提升了在项目收入、EBITDA和现金流中的份额。

针对Plaquemines LNG盈利预计下滑的问题，管理层指出，可持续技术业务强劲的订单出货比、高质量的在手订单以及15%左右的基础利润率，将支撑业务势头延续至2027年。

财报电话会议完整文字记录

完整财报电话会议逐字稿

管理层陈述

Operator

Hello, everyone. Thank you for joining us, and welcome to KBR's Third Quarter 2026 Earnings Call. [Operator Instructions].

I will now hand the conference over to Rachael Goldwait, Head of Investor Relations. Please go ahead.

Rachael Goldwait

Thank you, and good morning. Welcome to KBRs Third Quarter 2026 Earnings Call. Joining me today are Stuart Bradie, President and CEO; and Shad Evans, Executive Vice President and CFO. Stuart and Shad will cover highlights from the quarter, and then we'll open the line for your questions. Today's earnings presentation is available on the Investor Relations section of our website at kbr.com. As outlined on Slide 2, today's discussion includes forward-looking statements and certain non-GAAP financial measures. Additional information, including reconciliations to nearest GAAP measure can be found in the presentation appendix.

With that, I'll turn the call over to Stuart.

Stuart Bradie

Thank you, Rachael, and good morning, everyone. I will pick up on Slide 4. As you know, we start every earnings call with a Zero Harm Moment because looking after our people is fundamental to who we are. Over this past year, in particular, that commitment has been tested as our teams have taken on the enormous task of creating two independent companies, while, of course, continuing to deliver for our customers around the world, and for our shareholders. We saw this firsthand this quarter with the successful cutover of key systems, including the transition of Trinzic's payroll systems, a major milestone. And it's a great example of what can be accomplished when talented people come together with a common purpose.

What gives me great confidence is that the same culture that defines KBR today will endure in both KBR and Trinzic going forward. And that is a commitment to our people, our customers, our shareholders and doing the right thing. And I want to thank everyone across both organizations for their hard work, their teamwork and unwavering focus as we move closer to separation. With that, let's move to Slide 5. Today, there are four key messages from the quarter: First, strong execution drove profitable growth and reinforced our confidence in the full year outlook; second, Sustainable tech continues to deliver stellar growth both year-over-year and sequentially, supported by strong bookings momentum and broad-based demand; third, Mission Tech performed well through the expected NASA headwinds with strong margins and excellent cash conversion; and finally, the separation continues to advance with key leadership governance and regulatory milestones in place ahead of the expected January separation date.

Moving to Slide 6, on sustainable tech. Sustainable Tech delivered another strong quarter, driven by structural demand shifts across energy security, food security and critical infrastructure. Book-to-bill was 1.3x for the quarter, making another period of strong bookings and bringing trailing 12 months book-to-bill to 1.6x as well. Backlog increased to another record at $5.8 billion and that is up more than 50%, 5-0, from a year ago. Excluding the Brown & Root joint venture, BRIS, year-to-date book-to-bill was 1.5x supporting our continued revenue growth outlook. BRIS bookings were softer as operators deferred maintenance and shutdowns in response to market conditions. We expect those deferrals to continue into Q4, with activity expected to recover in 2027 as critical maintenance needs are addressed.

The strong bookings secured over the last 12 months are now translating into accelerating growth and revenue increasing 13% sequentially as projects continue to ramp across the portfolio. And this keeps us on track for our mid-teens full year revenue growth outlook. The Middle East remains a key growth driver with project activity demonstrating resilience amidst regional conflict. New PMC awards with ADNOC in Abu Dhabi and an expanded role on Aramco's Marjan offshore field reinforced our position with strategic customers and our participation in critical energy investment.

In technology, SABIC in Saudi Arabia, selected our purifier technology for a new 3,500 metric tonne per day facility, a second large-scale Ammonia award this year following the Pampa award in Argentina. Together with ammonia revamp wins in Europe, these awards demonstrate continued investment in food security and supply resilience. We also secured another pure SAF award this quarter for Kazakhstan's for sustainable aviation fuel project, reflecting continued demand for technologies that advance decarbonization. In Critical Infrastructure, we secured a central program management role at Diriyah Gate, one of Saudi Arabia's largest giga projects, and a major program engineering and integration award in Texas, both extend our role in delivering complex critical infrastructure. Altogether, our record backlog and strong pipeline gives us increasing visibility into growth in Q4 and onwards into 2027.

Moving to Slide 7. Turning to Mission Tech. The business continues to perform as expected. Michael has stepped seamlessly into the role and the team delivered another solid quarter, including strong margins that Shad will discuss shortly. During the quarter, we secured important work supporting Patriot Air and Missile defense and mission-critical radio frequency engineering, extending long-standing customer relationships across high priority national security missions. And recently, FireFly was selected as 1 of 4 directed energy systems for a Pentagon-counter drone pilot focused on homeland defense. This follows its selection to protect launches of Cape Canaveral and further demonstrates the relevance of our technology in addressing critical and emerging customer needs, both international businesses in the U.K. and Australia also performed well with strong execution and healthy pipelines entering Q4 and 2027.

In the U.S., procurement time lines continue to extend, weighing on book-to-bill, which was 0.8x, excluding the NASA in-sourcing debooking. Importantly, customers aren't walking away. Funding generally remains in place and priorities are intact, but projects are moving a little bit more slowly. Our NASA in-sourcing continued during the quarter, consistent with what we discussed earlier this year. As the program ramps down, we removed the remaining 3-year revenue from the backlog to align the expected workload, bringing reported book-to-bill to 0.6x in the quarter. The anticipated 2026 revenue impact was already reflected in our guidance, so our full year outlook remains unchanged.

Awards under protest remained largely unchanged during the quarter. And that includes the National Science Foundation and Tactical Support Contract which we secured through re-award following the GAO protest process. We are working with the customer on transition, although the award is not yet reflected in backlog. Finally, we ended the quarter with $9.9 billion of submitted proposals awaiting customer decisions. And together with the wins under protest, that represents $20.5 billion of opportunity outside backlog, approximately 80% of which is new business, underscoring the depth of growth opportunities across the portfolio. Overall, the business is performing well. The pipeline remains robust and recent wins reinforce Mission Tech's strong competitive position as we prepare to launch Trinzic.

On to Slide 8, and an update on the spin. My last slide today, I'll finish with a brief update on the separation progress. We continue to make excellent progress and have now completed many of the key milestones required to launch KBR and Trinzic as independent companies. The leadership teams are fully in place and the Boards have largely been established on both sites. We expect to announce the KBR and Trinzic Boards in the coming weeks and we're very pleased with the caliber of directors who will help guide the respective companies from day 1.

We also made important progress on the regulatory front. The Form 10 is now public, as you're aware, giving investors the first detailed look at Trinzic as a stand-alone company, and we have resolved the SEC's comments to date. The PLR continues to progress and we expect formal notification regarding the spins tax-free treatment soon. As I mentioned earlier, the successful cutover of key systems is another important step towards operational readiness. The organizations are increasingly operating as stand-alone businesses ahead of separation, including financial reporting, providing additional time to validate processes and ensure a smooth transition. And while I wasn't directly a part of the rating agency meetings, the feedback has been very positive. Preparations for the Trinzic debt offering continues to move forward, and we currently expect to launch in November.

We've seen strong interest from the market, particularly given the quality of the business and the current environment. In 2 weeks, we will be hosting Investor Days for KBR and Trinzic. Michael, our teams and I look forward to sharing more about each company's strategy, their opportunities and financial outlook. And for those interested in joining us, registration remains available through our Investor Relations website.

While there is still work to be completed, the key building blocks are now in place, and we remain firmly on track for separation. With that, I'll hand over to Shad.

Shad Evans

Thanks, Stuart. I'll pick up on Slide 10 with our consolidated third quarter results. The headline is another quarter of profitable growth with strong execution, driving higher revenue, adjusted EBITDA and adjusted EPS. Revenue was approximately $2.03 billion, up $97 million or 5% from the prior year. Growth in sustainable tech more than offset the expected NASA headwinds in Mission Tech, which I'll cover more in detail on the next slide.

Adjusted EBITDA increased $28 million to $268 million, and adjusted EBITDA margins expanded 80 basis points to 13.2%. The improvement reflects strong execution across both businesses, including EBITDA contributions from unconsolidated joint ventures, favorable portfolio mix and lower corporate costs. Adjusted EPS was $1.12, up $0.10 or 10% from the prior year, driven by stronger operating performance, lower below-the-line expenses and a lower share count from repurchase activity over the last 12 months.

The quarter also included $15 million in interest income associated with a discrete tax benefit that reduced our year-to-date tax rate below the guided range. We excluded that benefit from adjusted EPS, and our underlying tax rate remains in line with the guided range of 26% to 28%. Year-to-date adjusted operating cash flow was $371 million and conversion remained strong at 95%, reflecting improved collections during the quarter. We remain on pace to deliver our full year cash flow outlook with cash flow expected to be weighted towards the fourth quarter. I'll discuss the remaining collection timing considerations when I cover guidance. Overall, the quarter reflects strong execution and keeps us on track to deliver full year expectations.

Turning to Slide 11. Starting with sustainable Tech. Revenue increased $157 million or 26% to $762 million. The strong booking activity we've seen over the past year is now converting into accelerated revenue growth. Adjusted EBITDA increased $19 million or 15% to $147 million. Quarterly adjusted EBITDA margin was 19.3% compared with 21.2% in the prior year. Growth trailed revenue primarily due to higher contribution from an LNG joint venture in the prior period.

Importantly, excluding the LNG joint venture, the quarter-to-date adjusted EBITDA margin was 13.9%, up 80 basis points from the prior quarter. On a year-to-date basis, adjusted EBITDA margin, excluding the LNG joint venture, was 14.3%, and that's consistent with our mid-teens full year adjusted EBITDA margin outlook. And MTS revenue was approximately $1.27 billion, and that was down $60 million or 5% as anticipated reductions in NASA-related programs were partially offset by growth across defense and intel and international government customers. These NASA headwinds reflect the in-sourcing impact on the IMO contract and the 2025 loss of ISOC which has since been in-sourced.

Importantly, adjusted EBITDA was $145 million, up $7 million or 5% from prior year with adjusted EBITDA margins expanding 110 basis points to 11.5%. The improvement reflects higher unconsolidated joint venture contributions, favorable portfolio mix from the roll-off of lower-margin NASA programs and the earlier-than-expected timing of favorable closeouts. Year-to-date adjusted EBITDA margin was 11.4%, which remains above the full year margin outlook due to the timing of favorable closeouts. Margins in Q4 are expected to return to normative levels. Overall, Sustainable Tech delivered strong revenue and adjusted EBITDA growth. while Mission Tech increased profitability despite lower volume.

Turning to capital allocation on Slide 12. Our balance sheet remains strong, and our approach to capital allocation remains disciplined. Net leverage ended the quarter at 2.1x, below our 2.5x target, providing financial flexibility as we prepare for separation. Our immediate cash focus is collecting outstanding receivables and carrying the third quarter collections momentum into year-end. During the quarter, we returned $21 million to shareholders through our regular dividend. As we approach separation, we're taking a prudent approach to capital allocation, funding the remaining net spin-related costs while preserving flexibility and strong balance sheets for both companies.

Turning to Slide 13. Based on our year-to-date performance and current visibility, we are reaffirming our full year 2026 guidance on all metrics. Our outlook assumes flat to modestly lower sequential revenue in Mission Tech and continued low double-digit sequential growth in Sustainable Tech, supported by strong bookings and demand trends we continue to see across the portfolio. Cash collection and timing remains an area of focus, particularly in the Middle East. While the conflict has not changed our outlook, continued delays in customer collections could shift approximately $25 million to $50 million of cash flow beyond year-end. Despite that potential timing, we currently expect to remain within our full year cash flow guidance range.

With that, I'll hand it back to Stuart.

Stuart Bradie

Thank you, Shad, and on to Slide 14, and I'll close with the 4 takeaways. We are growing profitably. We're executing well, and this gives us confidence in our full year commitments. Sustainable tech continues to deliver exceptional results with record backlog and strong revenue growth as bookings secured over the past year continue to convert into execution. Mission Tech continues to perform well, delivering strong margins despite the expected NASA headwinds while continuing to win important work across the portfolio and globally. And we continue to achieve major separation milestones with the leadership, governance and operational foundations all in place, ready to launch two strong independent companies. We remain excited about the opportunities ahead for both KBR and Trinzic and look forward to sharing more at our Investor Day in 2 weeks. With that, we'll open the line for questions. Thank you.

Operator

[Operator Instructions]. Your first question comes from the line of Adam Bubes with Goldman Sachs.

分析师问答

Anuj Khandelwal

This is Anuj on behalf of Adam. Can you help us frame the NASA headwind like how large it is on an annualized basis, when it laps and whether there is further debooking risk in it?

Shad Evans

Yes. Thanks for the question. As we've said before, there's no material change to the '26 expectations, MSOC was already contemplated in our guidance and [ IMO ] remains within the roughly 16 pack that we outlined in Q1. So really what you're seeing now is the remaining contract value coming out of backlog, really with no additional P&L impact. We are seeing some potential in-sourcing on additional NASA programs, which will create a larger headwind as we move into '27, but we'll provide more detail on that during Investor Day.

But importantly, we've got strong business momentum, including the NSF win on Antarctica and the classified award, which provides meaningful offsets heading into '27.

Operator

Your next question comes from the line of Jerry Revich with Wells Fargo.

Andrew Azzi

This is Andrew Azzi on for Jerry Revich. I just wanted to take a deeper look into the guidance. It implies a bit of a step down in 4Q with 1 quarter less, what gets you to the low end of -- I think it looks like a $60 million range from the top end to the low end? What's driving that in 4Q? Thank you.

Shad Evans

Yes. Thanks for the question, Andrew. We're -- we're really pleased, I think, with the year-to-date performance. We looked at the puts and takes for Q4. We continue to believe that our full year guidance is really the right framework. We expect MTS to be flat to slightly down in asked us to deliver that double-digit growth that's implied in the guide. And so with both businesses operating at normalized margins and no change meaningfully to the tax rate or share count. When you put all that together, we feel really comfortable about the full year outlook, and we're really focused now and what's ahead of us with both companies at our respective Investor Days.

Andrew Azzi

I appreciate that. I cut out a little bit, but I think I got most of what you were saying. For my next question, how can we think about the Plaquemines runoff quarterly through its completion and, let's say, 1H next year? And are there any completion items we have to be aware of, like, contingency releases or final close [indiscernible]? Appreciate any color there.

Shad Evans

Yes, sorry, the line is cutting out a little bit, Andrew. LNG contributions have been about $115 million for Q3. And so we expect another $25 million to $35 million in Q4, depending on milestone. That contribution does step down in '27, and we'll share that specific information with you during Investor Day and ahead of our guide. But really, the strength around the book-to-bill gives us confidence that we can absorb that headwind and still grow the business going into '27.

Operator

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

Tobey Sommer

Based on what you know and what you're hearing of incremental NASA outsourcing, when -- or in-sourcing, sorry. When might the process be completed just so we could get a sense for when that headwind for Trinzic would sort of cease based on our best information today?

Stuart Bradie

No, good question, Tobey. Thanks for that. We expect that to be all done this year. And so as we look into '27, the first 2 quarter comps are going to be challenging because we obviously have full run rate of NASA in the first 2 quarters. But as I said, I think it's all done this year. So we will start from a slate, if you like, and I'm sure the team will describe that in detail in Investor Day.

Tobey Sommer

And then could you describe on the new KBR side STS, what the pipeline looks like in Ammonia? And could you kind of refresh us just so we can interpret your prospective wins, what a project size from a dollar and duration looks like? I know they're not all equal, but a framework would be helpful.

Stuart Bradie

Thanks, Tobey, again, another good question. We're seeing, as I said in my prepared remarks, quite a structural change in that market around food security as countries start to look at sort of more security of supplies and supply chain resilience, having sort of growth in GDP and population as well as people moving into middle classes wanting better quality food, et cetera, around the world. So that's a really strong pool from the market. The pipeline of opportunities is significant. We're going to talk a little bit about that Investor Day, as you would expect.

But ultimately, that market is buoyant today, it's global. And it's not just new decks. It's actually revamps as well. As companies around the world start to look at how we can be more efficient and really sort of modernize the facilities given that market. And you've seen that coming through in Europe this quarter with the wins announced two wins in Europe. In terms of thinking about that in terms of our project size, again, we'll cover that a little bit more detail on Investor Day. But one out of, two, three projects is we've managed to position KBR to extend scope significantly. And so the share of the project wallet for want of a better description is substantially larger.

And so the revenue opportunity and associated EBITDA margins and cash around food security are very, very attractive. And that -- we feel that, that market is enduring and it's not just a flash in a pan, so to speak, given the structural change. So more to come at Investor Day, but certainly, we feel really good about that part of the business.

Operator

Your next question comes from the line of Ian Zaffino with Oppenheimer.

Ian Zaffino

Very strong backlog in SPS. What is the time frame that, that backlog will be delivered in? And maybe you could also talk about the margin of the business because I know there's tremendous growth on the top line, but we are kind of giving out some of the EBITDA line with Plaquemines next year. So just trying to -- and I know a lot of this will be discussed at the Investor Day, but maybe we could get a preview, as far as how are we thinking about that backlog being delivered? And then maybe what's the margin there and kind of do our own numbers.

Stuart Bradie

Again, very good question. And quite frankly, we have to get into that in Investor Day in more detail, but I think the headline would be very, I think, purposeful and transparent about the contribution from Plaquemines throughout the year and its impact on margins, ex-Plaquemines we're sitting in solid mid-teens, as you're aware, and that's been consistent for the course of the year. So that's just the way the business.

And as Shad said, we're confident we can -- with the bookings and the strength of those bookings and the quality of earnings associated with those bookings, we can continue our momentum into '27 and offset the Plaquemines sort of equity and earnings piece as we head forward. So you should take confidence in that book-to-bill translating into revenue and earnings to do just that. And that's probably all I'll say now because we've got to really get more detail on Investor Day, and we'll break it down in a very clear and transparent way where we're starting from, et cetera, as we head forward.

Operator

We have reached the end of the Q&A session. I will now turn the call back to Stuart Bradie for closing remarks.

Stuart Bradie

Thank you for joining us this morning, a fairly clean quarter, but very exciting as well. The businesses continue to perform the growth around SPS, particularly as standard, but the performance on margins in both businesses was terrific as well as the cash generation. The progress on separation remains firmly on track. All things are converging and we're having more and more confidence around achieving not only the regulatory pieces of this, but actually the hard work around systems and the bifurcation of those, and we're testing them and they're working the way they should. So we're feeling really good about that. So all up, looking forward to Investor Day and describing in detail more about both businesses.

As I said, Michael and I and the whole team are looking forward to that to show our way, so to speak and we'll see you there. Thank you very much.

Operator

This concludes today's call. Thank you for attending. You may now disconnect.