KBR, a US based company operating in fields of science, technology and engineering, has posted a second-quarter (Q2) net income of $199 million and revenue of $1.9 billion, up 6% on a year-over-year-basis.

 

Revenues rose primarily due to growth across Sustainable Technology Solutions; and within Government Solutions, new and on-contract growth across International, Defense & Intel, and Science and Space, partially offset by decline in Ukraine activity in Readiness & Sustainment.

 

Net income attributable to KBR was $106 million, up $457 million compared to 2Q'23, primarily due to an after tax cash charge of $132 million in connection with the settlement of a legacy legal matter and a non-cash charge of $314 million recorded in connection with the election of cash as the settlement method for our Convertible Notes and the repurchase of a portion of our Convertible Notes in the prior year that did not recur in the current year.

 

Adjusted EBITDA up 13pc

Adjusted EBITDA was $216 million, up 13% compared to 2Q'23, with Adjusted EBITDA margins of 11.6%, up 75 bps year-over-year.

 

Diluted earnings per share was $0.79, up $3.39 compared to 2Q'23, primarily due to the increase in Net income attributable to KBR noted above. Adjusted earnings per share2 was $0.83, up $0.09 compared to 2Q'23, due to increases in gross profit and equity in earnings of unconsolidated affiliates, partially offset by higher selling, general and administrative expenses, interest expense, and provision for income taxes.

 

Operating cash flows were $170 million, down 33% compared to 2Q'23, primarily due to the timing of collections in the prior year.

 

Capital returned to shareholders totaled $118 million during the quarter, consisting of $97 million in share repurchases, inclusive of $96 million of open market repurchases and $1 million of repurchases to satisfy requirements of equity compensation plans, and $21 million in regular dividends.

 

'Fantastic quarter'

"I am pleased to announce another fantastic quarter in which KBR continues to drive operational excellence and deliver outstanding results for customers. The focus, agility and commitment of our people have the business performing well across our key metrics. We expect this to continue for the rest of the year and thus are raising profit and cash flow guidance," said Stuart Bradie, KBR President and CEO.

 

Bradie continued: "The announcement of the agreement to acquire LinQuest, an engineering, data analytics and digital integration company, builds on the strategy outlined in our investor day. We believe LinQuest will be an important accelerator to KBR's strategy of furthering the delivery of high-end technology, expertise and mission capabilities. It is a leader in supporting the US Space Force, US Air Force and other US Department of Defense and intelligence agencies, and together, KBR and LinQuest have highly complementary capabilities that we expect will drive revenue growth and synergy opportunities."

 

H1 results

For the first six months (H1) revenues were $3.7 billion, up 6% compared to YTD 2Q'23, primarily due to growth across Sustainable Technology Solutions; and within Government Solutions, new and on-contract growth across International, Defence & Intel, and Science and Space, partially offset by decline in Ukraine activity in Readiness & Sustainment.

 

Net income attributable to KBR was $199 million, up $464 million compared to YTD 2Q'23, primarily due to an after tax cash charge of $132 million in connection with the settlement of a legacy legal matter and a non-cash charge of $314 million recorded in connection with the election of cash as the settlement method for the firm’s Convertible Notes and the repurchase of a portion of its Convertible Notes in the prior year that did not recur in the current year.

 

Adjusted EBITDA was $423 million, up 13% compared to YTD 2Q'23, with Adjusted EBITDA margins of 11.5%, up 72 bps year-over-year.

 

Operating cash flows were $261 million, down 9% compared to YTD 2Q'23, primarily due to timing of collections.

 

Capital returned to shareholders totalled $197 million during the year to date period, consisting of $158 million in share repurchases, inclusive of $146 million of open market repurchases and $12 million of repurchases to satisfy requirements of equity compensation plans, and $39 million in regular dividends.

 

New business awards

Backlog and options as of June 28, 2024 totalled $20.1 billion. Delivered 1.0x trailing-twelve-months (TTM) book-to-bill as of June 28, 2024. Awarded $2.1 billion of bookings and options in the quarter.

 

Sustainable Technology Solutions (STS) delivered 0.8x TTM book-to-bill1 as of June 28, 2024, including awards and achievements in the quarter as follows:

 

KBR's green ammonia technology, K-GreeN, selected by OCIOR Energy for its plant located in Odisha's Gopalpur region, India. This will be the 10th KBR-licensed green ammonia plant globally and the first to be located in India.

 

Selected to design and deploy a proprietary operator training simulator for OCI Global's 3,000 metric tonnes per day Texas Blue Clean Ammonia facility, which is expected to deliver a 70% reduction in total greenhouse gas emissions compared to conventional ammonia production.

 

Awarded a five-year contract, with options, to provide advisory and consultancy services to support the Iraqi government's visionary infrastructure and future energy ambitions, including the delivery of megaprojects and sustainable development.

 

Awarded a contract by Sabic Fujian Petrochemicals to license KBR's market-leading phenol technology in China. KBR's phenol technology offers a sustainable and differentiated solution through reduced energy consumption and improved yields.

 

Government Solutions (GS) delivered 1.2x TTM book-to-bill as of June 28, 2024, including awards and achievements in the quarter as follows:

 

Health services support

Selected as one of 11 awardees under the Medical Q Coded Support and Services Next Generation contract, which contains a ceiling of $43 billion, to bid on task orders to provide health and wellness support for military personnel and their families. This contract is a continuation of KBR's five decades of vital health services support to individuals who perform in complex and multifaceted positions.

Awarded an $82 million cost-plus-fixed-fee task order under an IAC MAC contract by the United States Air Force for the Air Force Life Cycle Management Centre, which supports the B-52 System Programme Office. This task order builds on KBR's eight-year presence in the B-52 programme office.

 

Selected as one of the awardees under the Global Contingency Services Multiple Award Contract III, which contains a ceiling of $2 billion, to bid on task orders to provide short-term facility support services for natural disasters, humanitarian efforts and military actions, and to cover incumbent contractors' nonperformance or potential breaks in service at various locations throughout the world.

 

Awarded a $34 million recompete cost-plus-fixed-fee single award IDIQ contract by the US Naval Research Laboratory for facility operations, maintenance and security in Washington, D.C. over a five-year period.

 

Awarded a $52 million, 60-month cost-plus-fixed-fee recompete Information Analysis Centre Multiple Award Contract task order supporting the Counter Improvised Threat Systems Test and Evaluation for the Naval Air Warfare Centre Weapons Division Quick Reaction Capability Office.

 

Anticipated acquisition of LinQuest

On July 16, 2024, KBR announced it had entered into a definitive agreement to acquire LinQuest Corporation for $737 million, net of modest expected tax benefits. Excluding the expected tax benefits, the base purchase price to be paid is $745 million, subject to certain working capital, net debt and other customary adjustments. 

 

The transaction is expected to be accretive to Adjusted EPS, which excludes amortisation from purchased intangible assets and non-recurring transaction costs. KBR will utilise a combination of cash and existing debt capacity to fund the transaction, which is expected to close in Q3 or Q4 this year.--TradeArabia News Service