KBR 2026年第三季財報電話會議：永續科技成長與重申財測指引

KBR (NYSE: KBR) 公布 2026 年第三季實現獲利成長，主要得益於永續科技 (Sustainable Tech) 業務的擴張，充分彌補了與 NASA 計畫縮減相關的任務科技 (Mission Tech) 營收下滑。管理層重申所有 2026 全年財測指標，並表示 KBR 與 Trinzic 的預定拆分計畫正按計畫進行。

重點摘要

• 營收年增 5% 至約 20.3 億美元；調整後 EBITDA 成長 12% 至 2.68 億美元；調整後 EPS 成長 10% 至 1.12 美元。
• 永續科技營收成長 26% 至 7.62 億美元。在手訂單創下 58 億美元的歷史新高，年增超過 50%，單季訂單出貨比 (book-to-bill) 為 1.3 倍。
• 受預期中的 NASA 逆風影響，任務科技營收下降 5% 至約 12.7 億美元，但調整後 EBITDA 成長 5%，利潤率擴張 110 個基點至 11.5%。
• 今年以來調整後營運現金流總計 3.71 億美元，現金轉化率為 95%。本季結束時淨槓桿率為 2.1 倍，低於 KBR 的 2.5 倍目標。
• 管理層重申 2026 全年所有指標的財測。該展望假設任務科技營收將持平至微幅季減，而永續科技將持續保持低雙位數的季成長。
• KBR 預計將於 1 月完成 KBR 與 Trinzic 的拆分。領導團隊已就位，Form 10 文件已公開，而 Trinzic 的發債準備工作預計將於 11 月推進。

核心財務數據

本季包含與獨立稅務利益相關的 1,500 萬美元利息收入。KBR 在計算調整後 EPS 時扣除了該收益，並表示其基本稅率仍維持在 26% 至 28% 的預測範圍內。

業務與營運表現

永續科技

永續科技是主要的成長引擎。隨著先前獲得的專案在各產品組合中放量，營收季增 13%。單季訂單出貨比為 1.3 倍，而過去 12 個月的訂單出貨比達到 1.6 倍。扣除 Brown & Root 合資公司後，今年以來的訂單出貨比為 1.5 倍。

在手訂單升至創紀錄的 58 億美元，比去年同期高出 50% 以上。管理層表示，這為第四季和 2027 年提供了更高的能見度。

中東地區仍是主要驅動力。KBR 獲得了阿布達比 ADNOC 的新專案管理諮詢業務，並擴大了在阿美石油 (Aramco) Marjan 離岸油田的角色。該公司還獲得了沙烏地阿拉伯德拉伊耶門 (Diriyah Gate) 的核心計畫管理合約，以及德州一項重大工程與整合合約。

技術獲得的項目包括適用於 SABIC 在沙烏地阿拉伯規劃的日產 3,500 公噸設施的 KBR 淨化器技術、歐洲的氨氣改造專案，以及哈薩克的永續航空燃料技術合約。

永續科技的調整後 EBITDA 利潤率降至 19.3%，主因是去年同期包含較高的液化天然氣 (LNG) 合資公司貢獻。若扣除該合資公司，單季調整後 EBITDA 利潤率為 13.9%，季增 80 個基點。在相同基準下，今年以來的利潤率為 14.3%。

任務科技

任務科技的營收下滑反映了與 NASA 相關的工作減少，包括對 IMO 合約的內部收回 (in-sourcing) 影響，以及 2025 年失去 ISOC 合約（該合約隨後被內部收回）。

儘管業務量下降，調整後 EBITDA 仍增至 1.45 億美元。利潤率擴張反映了未併表合資公司的貢獻增加、低利潤率 NASA 計畫結束後更佳的產品組合，以及早於預期的結案收益。

扣除 NASA 訂單取消 (debooking) 的影響，任務科技的單季訂單出貨比為 0.8 倍，而列報基準下為 0.6 倍。KBR 從在手訂單中移除了剩餘三年的預期 NASA 營收，以與預期工作量保持一致。管理層表示，2026 年相關的營收影響已包含在財測中。

該業務獲得了支援愛國者防空與飛彈防禦系統以及關鍵任務射頻工程的工作。FireFly 也被選為五角大廈專注於國土防衛的反無人機試點計畫中四個定向能量系統之一。

本季結束時，KBR 有 99 億美元已提交的提案等待裁決。加上遭抗議（訴願）的得標合約，該公司在在手訂單之外確定了 205 億美元的潛在商機，其中約 80% 為新業務。

管理層財測

KBR 重申 2026 全年所有財測指標。管理層的假設包括：

• 任務科技營收季增率持平至微幅下滑。
• 永續科技持續保持低雙位數的季成長。
• 永續科技全年營收成長達 15% 左右 (mid-teens)。
• 扣除 LNG 合資公司後，永續科技全年的調整後 EBITDA 利潤率展望為 15% 左右。
• 隨著有利的結案時程影響趨緩，任務科技的利潤率將在第四季回歸較正常水準。
• 全年現金流維持在現有財測範圍內，且現金產生主要集中在第四季。

管理層表示，1 月的拆分時程仍按計畫進行。在交易完成之前，KBR 與 Trinzic 正日益作為獨立機構營運，包括透過獨立的財務報導流程。

風險與關注焦點

• NASA 業務回收內部：管理層預計目前的業務回收內部過程將於 2026 年期間完成。然而，NASA 的進一步行動可能會在 2027 年給任務科技帶來更大的逆風，預計前兩季的同期基期較高、比較困難。
• 採購時程延長：美國政府的採購進度放緩，對任務科技的訂單出貨比造成壓力，不過管理層表示資金和客戶的優先事項總體上保持不變。
• 中東應收帳款回收：客戶持續延遲付款可能會將約 2,500 萬至 5,000 萬美元的現金流推遲至年底之後，不過 KBR 仍預計將維持在全年現金流目標範圍內。
• BRIS 維護延後：Brown & Root 合資公司的客戶延後了維護和停工整修工作。KBR 預計第四季疲軟情況仍將持續，隨著關鍵維護工作的解決，營運活動將在 2027 年復甦。
• Plaquemines LNG 專案遞減：管理層表示，第三季 LNG 的貢獻約為 1.15 億美元，並預計第四季將視里程碑達成情況再貢獻 2,500 萬至 3,500 萬美元。預計該貢獻將在 2027 年有所下降。
• 得標時程與抗議：在經過 GAO 的抗議（訴願）程序後，美國國家科學基金會與戰術支援合約 (Tactical Support Contract) 已再次獲標，但該合約尚未計入在手訂單。

分析師問答亮點

管理層表示，NASA 在手訂單的減少不會對 2026 年損益產生額外的重大影響，因為預期影響已包含在財測中。KBR 預計新贏得的專案（包括美國國家科學基金會的南極合約以及一項機密專案）將在進入 2027 年時提供有意義的彌補。

在永續科技方面，管理層將氨氣潛在商機描述為龐大且全球性的，涵蓋新設施與現有工廠的升級。KBR 還表示，已擴大在部分專案上的服務範圍，從而提高了專案營收、EBITDA 和現金產生的份額。

關於 Plaquemines LNG 收益預期下降的問題，管理層指出，永續科技強勁的訂單出貨比、高品質的在手訂單以及 15% 左右的基礎利潤率，是支撐動能持續至 2027 年的因素。

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管理層陳述

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.

分析師問答

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.