Outstanding 3Q Performance
Strong Bookings Momentum
Raising Guidance on Revenue, Adj.
EBITDA2 & Adj. EPS2
HOUSTON, Oct. 23,
2024 /PRNewswire/ -- KBR, Inc. (NYSE: KBR) today
announced its third quarter fiscal 2024 financial results.
"KBR's exceptional team has once again exceeded expectations
with outstanding third-quarter results," stated Stuart Bradie, KBR's President and CEO. "Our
team's dedication to our customers has resulted in year-over-year
growth across all financial metrics, including Revenues, Adjusted
EBITDA2, Adjusted EPS2, and notably,
Operating Cash Flows. The bookings and awards this quarter align
well with our focus areas of energy security and transition,
national defense, and sustainability, and bolster our confidence
for the rest of 2024 and heading into 2025."
"During the quarter, we strategically shaped our portfolio and
allocated capital in a thoughtful, balanced way," Bradie continued.
"Our acquisition of LinQuest, a leader in advanced engineering,
data analytics, and digital integration, enhances our capabilities
in space, air dominance, and connected battle space missions and
introduces KBR to new U.S. government customers and contract
vehicles. With strong performance across KBR and the integration of
LinQuest progressing well, I am pleased to announce an increase in
Revenue, Adjusted EBITDA2, and Adjusted EPS2
guidance for 2024. We welcome our new colleagues to the KBR family
and look forward to the opportunities to shape the future
together."
New Business Awards
Backlog and options as of
September 27, 2024 totaled
$22.1 billion. Delivered 1.2x
quarter-to-date (QTD) and 1.1x trailing-twelve-months (TTM)
book-to-bill1 as of September 27,
2024. Awarded $3.3 billion of
bookings and options1 in the quarter.
Sustainable Technology Solutions (STS) delivered 1.0x QTD and
1.1x TTM book-to-bill1 as of September 27, 2024, including awards and
achievements in the quarter as follows:
- Announced that KTJV, a KBR and Technip Energies joint venture,
has been selected by Lake Charles LNG Export Company, a subsidiary
of Energy Transfer LP, for its Lake Charles LNG transformation
project that includes the delivery of three liquefaction trains and
modifications to existing storage and dock facilities designed to
enable the export of 16.45 metric tons per annum of LNG. Under the
terms of the agreement, KTJV will provide high-end engineering,
procurement, construction management, construction, commissioning,
startup and other related services, subject to Lake Charles LNG's
decision to issue a notice to proceed for the project.
- Awarded an engineering and procurement services contract for
the Beachfield Manatee upgrade, the onshore portion of Shell's
Manatee gas field project located in the East Coast Marine Area of
Trinidad and Tobago. The Manatee
gas field supports global energy security and natural gas
production, providing gas for the country's Atlantic LNG
facility.
- PureSAF℠ technology, which is exclusively licensed by KBR
worldwide, was selected by Avina Clean Hydrogen Inc. for its
project in the U.S. Under the terms of the contract, KBR will
provide technology licensing, proprietary engineering design, and
front-end engineering design for Avina's facility to produce 120
million gallons of sustainable aviation fuel per year.
- Awarded a conceptual study contract for floating blue ammonia
production from Samsung Heavy Industries (SHI), one of the world's
largest shipbuilders in South
Korea. The study will utilize KBR's innovative blue ammonia
technology, suitable for offshore production, and leverage SHI's
expertise in the design of mega floating vessels.
- Awarded engineering contracts by Seatrium Group to develop
topsides facilities for two new high-production, energy-efficient
floating production storage and offloading units. The units are
being designed for Petrobras' Atapu and Sepia fields in the Santos
Basin, Brazil.
- KBR's ROSE® supercritical Solvent De-Asphalting (SDA)
technology was selected by Zhejiang Petroleum & Chemical Co.
Ltd., the operator of China's
largest refinery. KBR is a global leader in SDA technology with the
largest installed base and has been involved in the licensing,
design, engineering, and commissioning of 72 ROSE units worldwide
with a combined licensed capacity of nearly 1.66 million barrels
per day.
- Awarded an advisory consulting contract by Kuwait Oil Company
for the development of a country wide masterplan for the production
of 17GW of renewables and 25GW of green hydrogen by 2050.
- KBR's blue ammonia technology selected by Shell for its Blue
Horizons low-carbon hydrogen and ammonia project in Duqm,
Oman. The facility will utilize
KBR's leading ammonia synthesis loop technology to deliver
cost-competitive and low-carbon intensity ammonia.
Government Solutions (GS) delivered 1.3x QTD and 1.1x TTM
book-to-bill1 as of September 27,
2024, including awards and achievements in the quarter as
follows:
- Awarded an estimated $199 million
cost-plus-fixed-fee contract supporting the Naval Information
Warfare Center Pacific Program Executive Office Digital and
Enterprise Services Technical Director's Office. KBR was awarded
this contract under the Department of Defense Information Analysis
Center's multiple-award contract vehicle.
- Awarded the follow-on Space Science Instruments and
Experimental Payloads (SSIEP) 3 contract by the U.S. Navy for
continued development of space science instrument systems at the
Naval Research Lab (NRL) in Washington,
D.C. This award maintains KBR's presence at NRL where it has
supported SSIEP 1 and 2 since 2015.
- Awarded an estimated $153 million
cost-plus-fixed-fee recompete contract to support Naval Test Wings
Atlantic and Pacific Aircrew Services over a five-year period. This
strategic win builds on KBR's 45 years of aircrew services and
flight test support for the U.S. Navy.
- Awarded a 60-month cost-plus-fixed-fee recompete IAC MAC task
order with an estimated value of $140
million to provide operational safety, suitability, and
effectiveness engineering tasks supporting the Air Force Life Cycle
Management Center. As the U.S. Air Force's trusted partner, KBR
will continue to perform research and analyses at Hill Air Force
Base in Clearfield, Utah, and
other U.S. Air Force locations.
- Awarded an estimated $230 million
cost-plus-fixed-fee recompete IAC MAC contract by the U.S. Air
Force's 774th Enterprise Sourcing Squadron to develop and create
new knowledge for the enhancement of the DTIC repository and the
R&D and S&T community. The work will be primarily performed
at Naval Air Station Patuxent River,
Maryland and Huntsville,
Alabama over a period of five years.
- Awarded an estimated $113 million
IAC MAC task order to perform aeronautical systems research,
development, test and evaluation for the Air Force Life Cycle
Management Center Mobility Directorate at Wright-Patterson Air
Force Base, Ohio over a period of
five years.
- Awarded a contract to continue to deliver technical design
services at HMAS Stirling by the Security and Estate Group and the
Australian Submarine Agency. This work will support the sovereign
nuclear-powered submarines facilities and infrastructure program,
enabling the Submarine Rotational Force – West, and accelerating
Australia's ability to safely own,
operate, maintain and sustain its own future nuclear powered
submarine fleet.
- In the month since the acquisition closed, LinQuest secured
over $60 million of new orders under
a unique contract vehicle that KBR does not currently utilize —
SBIR Phase III, which allows for the commercialization of
technologies designed by small businesses.
- Selected as NASA's Agency-Level Large Business Prime Contractor
of the Year. This win underscores KBR's ongoing commitment to
critical programs at Goddard Space Flight Center, where it holds
three prime contracts, including Ground Systems and Missions
Operations III, as well as multiple subcontracts and joint
ventures.
KBR recently published its 2023 Sustainability Report and
received the following awards and achievements in the quarter:
- Received an AAA designation in MSCI's 2024 ESG (environmental,
social and governance) Ratings. The AAA rating is MSCI's highest
and is given to companies that are leading their industries in
managing the most significant ESG risks and opportunities. This is
KBR's second consecutive year receiving this designation.
- Earned a Gold Rating from EcoVadis, one of the world's largest
and most trusted providers of business sustainability ratings for
global supply chains. The Gold Rating places KBR in the top 5% of
assessed companies.
- Recognized by USA Today as one
of America's Climate Leaders for 2023. This data-driven recognition
ranks U.S.-based companies that have cut their carbon footprint in
recent years.
- Achieved an industry leading 93% Zero Harm days in 2023 and
delivered 37% of KBR's 2023 revenues from sustainability focused
projects.
Summarized Third Quarter 2024 Financial Results
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
27,
|
|
September
29,
|
|
September
27,
|
|
September
29,
|
Dollars in millions,
except share data
|
2024
|
|
2023
|
|
2024
|
|
2023
|
Revenues
|
1,947
|
|
1,770
|
|
$
5,620
|
|
$
5,226
|
Operating
income
|
173
|
|
147
|
|
520
|
|
301
|
Net income (loss)
attributable to KBR
|
100
|
|
(21)
|
|
299
|
|
(286)
|
Adjusted
EBITDA2
|
219
|
|
186
|
|
642
|
|
559
|
Operating income margin
%
|
8.9 %
|
|
8.3 %
|
|
9.3 %
|
|
5.8 %
|
Adjusted
EBITDA2 margin %
|
11.2 %
|
|
10.5 %
|
|
11.4 %
|
|
10.7 %
|
Earnings per
share:
|
|
|
|
|
|
|
|
Diluted earnings
per share
|
$
0.75
|
|
$
(0.16)
|
|
$
2.22
|
|
$
(2.10)
|
Adjusted
earnings per share2
|
$
0.84
|
|
$
0.75
|
|
$
2.44
|
|
$
2.18
|
Cash
flows:
|
|
|
|
|
|
|
|
Operating cash
flows
|
161
|
|
(40)
|
|
422
|
|
248
|
Adjusted
operating cash flows2
|
161
|
|
92
|
|
422
|
|
380
|
Adjusted free
cash flows2
|
142
|
|
70
|
|
368
|
|
320
|
Financial Highlights for the Three Months Ended September 27, 2024
- Revenue of $1.9 billion, up 10%
on a year-over-year-basis
- Net income attributable to KBR of $100
million; Adjusted EBITDA2 of $219 million, up 18% on a year-over-year basis
(11.2% Adjusted EBITDA2 margin)
- Diluted EPS of $0.75; Adjusted
EPS2 of $0.84, up 12% on a
year-over-year basis
- Operating cash flows of $161
million
- Bookings and options1 of $3.3
billion during the quarter with 1.2x QTD
book-to-bill1
Financial Highlights for the Nine Months Ended September 27, 2024
- Revenue of $5.6 billion, up 8% on
a year-over-year-basis
- Net income attributable to KBR of $299
million; Adjusted EBITDA2 of $642 million, up 15% on a year-over-year basis
(11.4% Adjusted EBITDA2 margin)
- Diluted EPS of $2.22; Adjusted
EPS2 of $2.44, up 12% on a
year-over-year basis
- Operating cash flows of $422
million
- Bookings and options1 of $6.7
billion during the year to date period with 1.1x TTM
book-to-bill1
Commentary on the Three Months Ended September 27, 2024
Revenues were
$1.9 billion, up 10% compared to
3Q'23, primarily due to on-contract growth across all of the
Government Solutions business units, the acquisition of LinQuest,
and growing demand in Sustainable Technology Solutions from
engineering and professional services and technology licensing.
Net income attributable to KBR was $100
million, up $121 million
compared to 3Q'23, primarily due to a non-cash charge of
$114 million in 3Q'23 in connection
with the election of cash as the settlement method for our
Convertible Notes that did not recur in the current year.
Adjusted EBITDA2 was $219 million, up
$33 million compared to 3Q'23, with
Adjusted EBITDA2 margins of 11.2%, up 74 bps
year-over-year.
Diluted earnings per share was $0.75, up $0.91 compared to 3Q'23, primarily due to the
increase in Net income attributable to KBR noted above and the
decrease in diluted weighted average common shares outstanding in
the current year. Adjusted earnings per share2
was $0.84, up $0.09 compared to
3Q'23, due to increases in gross profit, partially offset by higher
selling, general and administrative expenses, interest expense, and
provision for income taxes.
Operating cash flows were $161 million, up $201 million compared to 3Q'23, primarily due to
a $132 million after-tax outflow in
connection with the settlement of a legacy legal matter in the
prior year and strong customer collections in the current year.
Adjusted operating cash flows were $161
million, up $69 million
compared to 3Q'23, primarily due to cash from strong collections in
the current year.
Capital returned to shareholders totaled $29 million during the quarter, consisting of
$9 million in share repurchases,
inclusive of $8 million of open
market repurchases and $1 million of
repurchases to satisfy requirements of equity compensation plans,
and $20 million in regular
dividends.
Commentary on the Nine Months Ended September 27, 2024
Revenues were
$5.6 billion, up 8% compared to YTD
3Q'23, primarily due to growth across Sustainable Technology
Solutions; and within Government Solutions, new and on-contract
growth across International, Defense & Intel, and Science &
Space, partially offset by decline in Ukraine activity in Readiness &
Sustainment.
Net income attributable to KBR was $299
million, up $585 million
compared to YTD 3Q'23, primarily due to a $132 million settlement of a legacy legal matter
in the prior year, as well as a non-cash charge of $428 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 EBITDA2 was $642
million, up $83 million
compared to YTD 3Q'23, with Adjusted EBITDA2 margins of
11.4%, up 73 bps year-over-year.
Diluted earnings per share was $2.22, up $4.32
compared to YTD 3Q'23, primarily due to the increase in Net income
attributable to KBR noted above and the decrease in diluted
weighted average common shares outstanding in the current year.
Adjusted earnings per share2 was $2.44, up $0.26
compared to YTD 3Q'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, other non-operating expenses, and provision for income
taxes.
Operating cash flows were $422 million, up $174 million compared to YTD 3Q'23, primarily due
to a $132 million after-tax outflow
in connection with the settlement of a legacy legal matter in the
prior year and strong customer collections in the current year.
Adjusted operating cash flows were $422
million, up $42 million
compared to YTD 3Q'23, primarily due to strong collections in the
current year.
Capital returned to shareholders totaled $226 million during the year to date period,
consisting of $167 million in share
repurchases, inclusive of $154 million of open market
repurchases and $13 million of
repurchases to satisfy requirements of equity compensation plans,
and $59 million in regular
dividends.
Updated Fiscal 2024 Guidance
The table below
summarizes updated Fiscal 2024 guidance and represents our views as
of October 23, 2024. Updated guidance reflects KBR's strong
operational performance and the acquisition of LinQuest.
|
Updated Fiscal
2024
Guidance
|
Prior Fiscal
2024
Guidance
|
Revenue
|
$7.5B -
$7.7B
|
$7.4B -
$7.7B
|
Adjusted
EBITDA
|
$840M -
$870M
|
$825M -
$850M
|
Diluted
EPS*
|
$2.91 -
$3.01
|
$2.94 -
$3.09
|
Adjusted
EPS*
|
$3.20 -
$3.30
|
$3.15 -
$3.30
|
Operating cash
flows
|
$460M -
$480M
|
$460M -
$480M
|
|
|
*
|
Fiscal 2024 Diluted and
Adjusted EPS guidance is calculated using a share count of
approximately 135 million.
|
The company does not provide a reconciliation of Adjusted EBITDA
to the most comparable GAAP financial measure on a forward-looking
basis because the company is unable to predict with reasonable
certainty the ultimate outcome of legal proceedings, unusual gains
and losses, and acquisition-related expenses without unreasonable
effort, which could be material to the company's results computed
in accordance with GAAP.
Conference Call Details
The company will host a
conference call to discuss its third quarter financial results on
Wednesday, October 23, 2024, at 6:30
a.m. Central Time. The conference call will be webcast
simultaneously through the Investor Relations section of KBR's
website at investors.kbr.com. A replay of the webcast will be
available shortly after the call on KBR's website or by telephone
at +1.866.813.9403, passcode: 158025.
About KBR
We deliver science, technology and
engineering solutions to governments and companies around the
world. KBR employs approximately 37,000 people worldwide with
customers in more than 80 countries and operations in over 30
countries. KBR is proud to work with its customers across the globe
to provide technology, value-added services, and long-term
operations and maintenance services to ensure consistent delivery
with predictable results. At KBR, We Deliver.
Visit www.kbr.com
Forward-Looking Statements
The statements in
this press release that are not historical statements, including
statements regarding our expectations for our future financial
performance, effective tax rate, operating cash flows, contract
revenues, award activity and backlog, program activity, our
business strategy, business opportunities, interest expense, our
plans for raising and deploying capital and paying dividends, are
forward-looking statements within the meaning of the federal
securities laws. These statements are subject to numerous risks and
uncertainties, many of which are beyond the company's control that
could cause actual results to differ materially from the results
expressed or implied by the statements. These risks and
uncertainties include, but are not limited to: uncertainty, delays
or reductions in government funding, appropriations and payments,
including as a result of continuing resolution funding mechanisms,
government shutdowns or changing budget priorities; developments
and changes in government laws, regulations and policies that may
require us to pause, delay or abandon new and existing projects;
the ongoing conflict between Russia and Ukraine and in the Middle East and the related impacts on our
business; potential adverse economic and market conditions, such as
interest rate and currency exchange rate fluctuations, the
company's ability to manage its liquidity; the outcome of and the
publicity surrounding audits and investigations by domestic and
foreign government agencies and legislative bodies; potential
adverse proceedings by such agencies and potential adverse results
and consequences from such proceedings; changes in capital spending
by the company's customers; the company's ability to obtain
contracts from existing and new customers and perform under those
contracts; structural changes in the industries in which the
company operates; escalating costs associated with and the
performance of fixed-fee projects and the company's ability to
control its cost under its contracts; claims negotiations and
contract disputes with the company's customers; changes in the
demand for or price of oil and/or natural gas; protection of
intellectual property rights; compliance with environmental laws;
changes in government regulations and regulatory requirements;
compliance with laws related to income taxes; unsettled political
conditions, war and the effects of terrorism; foreign operations
and foreign exchange rates and controls; the development and
installation of financial systems; the possibility of cyber and
malware attacks; increased competition for employees; the ability
to successfully complete and integrate acquisitions; investment
decisions by project owners; and operations of joint ventures,
including joint ventures that are not controlled by the
company.
The company's most recently filed Annual Report on Form 10-K,
any subsequent Form 10-Qs and 8-Ks, and other U.S. Securities and
Exchange Commission filings discuss some of the important risk
factors that the company has identified that may affect its
business, results of operations and financial condition. Except as
required by law, the company undertakes no obligation to revise or
update publicly any forward-looking statements for any reason.
1
|
As used throughout this
release, book-to-bill excludes long-term UK PFIs and the
Plaquemines LNG project. The exclusion of the Plaquemines LNG
project from book-to-bill is a change from prior quarters. Bookings
and options exclude long-term UK PFIs and the Plaquemines LNG
project.
|
2
|
As used throughout this
earnings release, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted
earnings per share, Adjusted operating cash flows, and Adjusted
free cash flows are non-GAAP financial measures. See additional
information at the end of this release regarding non-GAAP financial
information, including reconciliations to the nearest GAAP
measures.
|
KBR,
Inc. Condensed Consolidated Statements of
Operations (In millions, except for per share
data) (Unaudited)
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
27,
|
|
September
29,
|
|
September
27,
|
|
September
29,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
Revenues:
|
|
|
|
|
|
|
|
Government
Solutions
|
$
1,490
|
|
$
1,345
|
|
$
4,273
|
|
$
4,025
|
Sustainable Technology
Solutions
|
457
|
|
425
|
|
1,347
|
|
1,201
|
Total
revenues
|
1,947
|
|
1,770
|
|
5,620
|
|
5,226
|
Gross
profit
|
291
|
|
244
|
|
810
|
|
740
|
Equity in earnings of
unconsolidated affiliates
|
27
|
|
32
|
|
97
|
|
78
|
Selling, general and
administrative expenses
|
(140)
|
|
(127)
|
|
(390)
|
|
(370)
|
Legal settlement of
legacy matter
|
—
|
|
—
|
|
—
|
|
(144)
|
Other
|
(5)
|
|
(2)
|
|
3
|
|
(3)
|
Operating
income:
|
|
|
|
|
|
|
|
Government
Solutions
|
123
|
|
108
|
|
362
|
|
182
|
Sustainable Technology
Solutions
|
95
|
|
84
|
|
277
|
|
243
|
Other
|
(45)
|
|
(45)
|
|
(119)
|
|
(124)
|
Total operating
income
|
173
|
|
147
|
|
520
|
|
301
|
Interest
expense
|
(37)
|
|
(30)
|
|
(100)
|
|
(85)
|
Charges associated with
Convertible Notes
|
—
|
|
(114)
|
|
—
|
|
(428)
|
Other non-operating
income (expense)
|
(2)
|
|
2
|
|
(10)
|
|
(1)
|
Income (loss) before
income taxes
|
134
|
|
5
|
|
410
|
|
(213)
|
Provision for income
taxes
|
(32)
|
|
(23)
|
|
(107)
|
|
(69)
|
Net income
(loss)
|
102
|
|
(18)
|
|
303
|
|
(282)
|
Less: Net income
attributable to noncontrolling interests
|
2
|
|
3
|
|
4
|
|
4
|
Net income (loss)
attributable to KBR
|
$
100
|
|
$
(21)
|
|
$
299
|
|
$
(286)
|
Adjusted
EBITDA1
|
$
219
|
|
$
186
|
|
$
642
|
|
$
559
|
Diluted EPS
|
$
0.75
|
|
$
(0.16)
|
|
$
2.22
|
|
$
(2.10)
|
Adjusted
EPS1
|
$
0.84
|
|
$
0.75
|
|
$
2.44
|
|
$
2.18
|
Diluted weighted
average common shares outstanding
|
133
|
|
135
|
|
134
|
|
136
|
Adjusted weighted
average common shares outstanding
|
133
|
|
139
|
|
134
|
|
139
|
1
|
See additional
information at the end of this release regarding non-GAAP financial
information, including a reconciliation to the nearest GAAP measure
|
KBR,
Inc. Condensed Consolidated Balance Sheets
(In millions, except share data)
|
|
|
|
September
27,
|
|
December
29,
|
|
|
2024
|
|
2023
|
|
|
(Unaudited)
|
|
|
Assets
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
462
|
|
$
304
|
Accounts receivable,
net of allowance for credit losses of $10 and $8,
respectively
|
|
1,095
|
|
981
|
Contract
assets
|
|
214
|
|
177
|
Other current
assets
|
|
190
|
|
189
|
Total current
assets
|
|
1,961
|
|
1,651
|
Property, plant, and
equipment, net of accumulated depreciation of $494 and $458
(including net PPE of $50 and $36 owned by a variable interest
entity), respectively
|
|
277
|
|
239
|
Operating lease
right-of-use assets
|
|
212
|
|
138
|
Goodwill
|
|
2,553
|
|
2,109
|
Intangible assets, net
of accumulated amortization of $420 and $382,
respectively
|
|
885
|
|
618
|
Equity in and advances
to unconsolidated affiliates
|
|
188
|
|
206
|
Deferred income
taxes
|
|
200
|
|
239
|
Other assets
|
|
505
|
|
365
|
Total
assets
|
|
$
6,781
|
|
$
5,565
|
Liabilities and
Shareholders' Equity
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable
|
|
$
737
|
|
$
593
|
Contract
liabilities
|
|
381
|
|
359
|
Accrued salaries, wages
and benefits
|
|
397
|
|
340
|
Current maturities of
long-term debt
|
|
46
|
|
31
|
Other current
liabilities
|
|
266
|
|
249
|
Total current
liabilities
|
|
1,827
|
|
1,572
|
Employee compensation
and benefits
|
|
128
|
|
120
|
Income tax
payable
|
|
111
|
|
106
|
Deferred income
taxes
|
|
84
|
|
106
|
Long-term
debt
|
|
2,560
|
|
1,801
|
Operating lease
liabilities
|
|
236
|
|
176
|
Other
liabilities
|
|
321
|
|
290
|
Total
liabilities
|
|
5,267
|
|
4,171
|
Commitments and
Contingencies
|
|
|
|
|
KBR shareholders'
equity:
|
|
|
|
|
Preferred stock, $0.001
par value, 50,000,000 shares authorized, none issued
|
|
—
|
|
—
|
Common stock, $0.001
par value 300,000,000 shares authorized, 182,392,098 and
181,713,586 shares issued, and 133,231,050 and 135,067,562 shares
outstanding, respectively
|
|
—
|
|
—
|
Paid-in capital in
excess of par ("PIC")
|
|
2,520
|
|
2,505
|
Retained
earnings
|
|
1,311
|
|
1,072
|
Treasury stock,
49,161,048 shares and 46,646,024 shares, at cost,
respectively
|
|
(1,443)
|
|
(1,279)
|
Accumulated other
comprehensive loss ("AOCL")
|
|
(885)
|
|
(915)
|
Total KBR
shareholders' equity
|
|
1,503
|
|
1,383
|
Noncontrolling
interests
|
|
11
|
|
11
|
Total shareholders'
equity
|
|
1,514
|
|
1,394
|
Total liabilities
and shareholders' equity
|
|
$
6,781
|
|
$
5,565
|
KBR,
Inc. Condensed Consolidated Statements of Cash
Flows (In millions) (Unaudited)
|
|
|
Nine Months
Ended
|
|
September
27,
|
|
September
29,
|
|
2024
|
|
2023
|
Cash flows from
operating activities:
|
|
|
|
Net income
(loss)
|
$
303
|
|
$
(282)
|
Adjustments to
reconcile net income (loss) to net cash provided by operating
activities:
|
|
|
|
Charges associated
with Convertible Notes
|
—
|
|
428
|
Depreciation and
amortization
|
112
|
|
104
|
Equity in earnings of
unconsolidated affiliates
|
(97)
|
|
(78)
|
Deferred income
tax
|
23
|
|
24
|
Other
|
24
|
|
31
|
Changes in operating
assets and liabilities:
|
|
|
|
Accounts receivable,
net of allowance for credit losses
|
(3)
|
|
(74)
|
Contract
assets
|
(32)
|
|
43
|
Accounts
payable
|
94
|
|
46
|
Contract
liabilities
|
10
|
|
67
|
Accrued salaries,
wages and benefits
|
32
|
|
(8)
|
Payments on operating
lease obligation
|
(52)
|
|
(50)
|
Payments from
unconsolidated affiliates, net
|
5
|
|
13
|
Distributions of
earnings from unconsolidated affiliates
|
123
|
|
58
|
Pension
funding
|
(30)
|
|
(9)
|
Other assets and
liabilities
|
(90)
|
|
(65)
|
Total cash flows
provided by operating activities
|
$
422
|
|
$
248
|
Cash flows from
investing activities:
|
|
|
|
Purchases of property,
plant and equipment
|
$
(54)
|
|
$
(60)
|
Proceeds from sale of
assets or investments
|
6
|
|
—
|
Return of (investments
in) equity method joint ventures, net
|
36
|
|
61
|
Acquisition of
business, net of cash acquired
|
(739)
|
|
—
|
Funding in other
investment
|
(5)
|
|
(39)
|
Other
|
5
|
|
(5)
|
Total cash flows
used in investing activities
|
$
(751)
|
|
$
(43)
|
Cash flows from
financing activities:
|
|
|
|
Borrowings on long-term
debt
|
574
|
|
—
|
Borrowings on
Revolver
|
343
|
|
430
|
Payments on short-term
and long-term debt
|
(81)
|
|
(12)
|
Payments on
Revolver
|
(63)
|
|
(270)
|
Payments on settlement
of warrants
|
(33)
|
|
(101)
|
Proceeds from the
settlement of note hedge
|
—
|
|
150
|
Payments to settle
Convertible Notes
|
—
|
|
(250)
|
Debt issuance
costs
|
(18)
|
|
(1)
|
Payments of dividends
to shareholders
|
(59)
|
|
(53)
|
Acquisition of
noncontrolling interest
|
(10)
|
|
—
|
Payments to reacquire
common stock
|
(167)
|
|
(137)
|
Other
|
(11)
|
|
(6)
|
Total cash flows
provided by (used in) financing activities
|
$
475
|
|
$
(250)
|
Effect of exchange rate
changes on cash
|
12
|
|
4
|
Increase (decrease) in
cash and cash equivalents
|
158
|
|
(41)
|
Cash and cash
equivalents at beginning of period
|
304
|
|
389
|
Cash and cash
equivalents at end of period
|
$
462
|
|
$
348
|
Supplemental
disclosure of cash flows information:
|
|
|
|
Noncash financing
activities
|
|
|
|
Dividends
declared
|
$
20
|
|
$
19
|
KBR,
Inc. Backlog Information (In
millions)
(Unaudited)
|
|
|
September
27,
|
|
December
29,
|
|
2024
|
|
2023
|
Government
Solutions
|
$
14,150
|
|
$
12,790
|
Sustainable Technology
Solutions
|
3,750
|
|
4,545
|
Total
backlog
|
$
17,900
|
|
$
17,335
|
Award
options
|
4,215
|
|
4,397
|
Total backlog and
options
|
$
22,115
|
|
$
21,732
|
Total backlog and options at September
27, 2024 totaled $22.1
billion, up 2% compared to December
29, 2023. Government Solutions backlog and options at
September 27, 2024 totaled
$18.4 billion, up $1.2 billion compared to December 29, 2023. Sustainable Technology
Solutions backlog at September 27,
2024 totaled $3.8 billion,
down $0.8 billion compared to
December 29, 2023.
Non-GAAP Financial Information
The following
information provides reconciliations of certain non-GAAP financial
measures presented in the press release to which this
reconciliation is attached to the most directly comparable
financial measures calculated and presented in accordance with
generally accepted accounting principles (GAAP). The company has
provided the non-GAAP financial information presented in the press
release as information supplemental and in addition to the
financial measures presented in the press release that are
calculated and presented in accordance with GAAP. Such non-GAAP
financial measures should not be considered superior to, as a
substitute for or alternative to, and should be considered in
conjunction with, the GAAP financial measures presented in the
press release. The non-GAAP financial measures in the press release
may differ from similar measures used by other companies.
EBITDA and Adjusted EBITDA
We evaluate performance
based on EBITDA, Adjusted EBITDA, and Adjusted EBITDA margin.
EBITDA is defined as Net income (loss) attributable to KBR, plus
Interest expense; Accretion of Convertible Notes debt
discounts; Other non-operating expense; Provision for income
taxes; and Depreciation and amortization. Adjusted EBITDA excludes
certain amounts included in EBITDA. Adjusted EBITDA margin is
calculated as Adjusted EBITDA divided by Revenues. EBITDA, Adjusted
EBITDA, and Adjusted EBITDA margin for each of the three- and
nine-month periods ended September 27,
2024 and September 29, 2023
are considered non-GAAP financial measures under SEC rules because
EBITDA and Adjusted EBITDA exclude certain amounts included in the
calculation of net income (loss) attributable to KBR in accordance
with GAAP for such periods. Management believes EBITDA, Adjusted
EBITDA, and Adjusted EBITDA margin afford investors a view of what
management considers KBR's core performance for each of the three-
and nine-month periods ended September 27,
2024 and September 29, 2023
and also affords investors the ability to make a more informed
assessment of such core performance for the comparable periods.
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
27,
|
|
September
29,
|
|
September
27,
|
|
September
29,
|
Dollars in
millions
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to KBR
|
$
100
|
|
$
(21)
|
|
$
299
|
|
$
(286)
|
Adjustments
|
|
|
|
|
|
|
|
•
Interest expense
|
37
|
|
30
|
|
100
|
|
85
|
•
Accretion of Convertible Notes debt discounts
|
—
|
|
114
|
|
—
|
|
242
|
•
Other non-operating expense
|
2
|
|
(2)
|
|
10
|
|
1
|
•
Provision for income taxes
|
32
|
|
23
|
|
107
|
|
69
|
•
Depreciation and amortization
|
41
|
|
34
|
|
112
|
|
104
|
EBITDA
|
$
212
|
|
$
178
|
|
$
628
|
|
$
215
|
Adjustments
|
|
|
|
|
|
|
|
•
Acquisition, integration and restructuring
|
9
|
|
3
|
|
15
|
|
6
|
•
Ichthys commercial resolution
|
(2)
|
|
4
|
|
1
|
|
6
|
•
Legacy legal fees and settlements
|
—
|
|
1
|
|
(2)
|
|
154
|
•
Benefits related to exit from Russian commercial
projects
|
—
|
|
—
|
|
—
|
|
(8)
|
•
Loss on derivative bifurcation
|
—
|
|
—
|
|
—
|
|
104
|
•
Loss on debt extinguishment
|
—
|
|
—
|
|
—
|
|
70
|
•
Loss on settlement of warrants
|
—
|
|
—
|
|
—
|
|
12
|
Adjusted
EBITDA
|
$
219
|
|
$
186
|
|
$
642
|
|
$
559
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
27,
|
|
September
29,
|
|
September
27,
|
|
September
29,
|
Dollars in
millions
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
|
|
|
|
|
|
|
Operating
income
|
$
173
|
|
$
147
|
|
$
520
|
|
$
301
|
Adjustments
|
|
|
|
|
|
|
|
•
Net income attributable to noncontrolling interests
|
(2)
|
|
(3)
|
|
(4)
|
|
(4)
|
•
Depreciation and amortization
|
41
|
|
34
|
|
112
|
|
104
|
•
Loss on derivative bifurcation
|
—
|
|
—
|
|
—
|
|
(104)
|
•
Loss on debt extinguishment
|
—
|
|
—
|
|
—
|
|
(70)
|
•
Loss on settlement of warrants
|
—
|
|
—
|
|
—
|
|
(12)
|
EBITDA
|
$
212
|
|
$
178
|
|
$
628
|
|
$
215
|
Adjusted EPS
Adjusted earnings per share (Adjusted
EPS) for each of the three- and nine-month periods ended
September 27, 2024 and September 29, 2023 is considered a non-GAAP
financial measure under SEC rules because Adjusted EPS excludes
certain amounts included in the Diluted EPS calculated in
accordance with GAAP for such periods. The most directly comparable
financial measure calculated in accordance with GAAP is Diluted EPS
for the same periods. Management believes that Adjusted EPS affords
investors a view of what management considers KBR's core earnings
performance for each of the three- and nine-month periods ended
September 27, 2024 and September 29, 2023 and also affords investors the
ability to make a more informed assessment of such core earnings
performance for the comparable periods.
We have calculated Adjusted EPS for each of the three- and
nine-month periods ended September 27,
2024 and September 29, 2023 by
adjusting Diluted EPS for the items included in the table
below.
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
27,
|
|
September
29,
|
|
September
27,
|
|
September
29,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
|
|
|
|
|
|
|
Diluted
EPS
|
$
0.75
|
|
$
(0.16)
|
|
$
2.22
|
|
$
(2.10)
|
Adjustments
|
|
|
|
|
|
|
|
•
Amortization related to acquisitions
|
0.06
|
|
0.04
|
|
0.14
|
|
0.12
|
•
Ichthys commercial dispute costs
|
(0.01)
|
|
0.03
|
|
0.01
|
|
0.04
|
•
Acquisition, integration and restructuring
|
0.04
|
|
0.01
|
|
0.08
|
|
0.03
|
•
Impact of convert accounting and Diluted EPS share
count1
|
—
|
|
—
|
|
—
|
|
0.05
|
•
Legacy legal fees and settlements
|
—
|
|
0.01
|
|
(0.01)
|
|
1.01
|
•
Benefits related to exit from Russian commercial
projects
|
—
|
|
—
|
|
—
|
|
(0.05)
|
•
Charges associated with Convertible Notes
|
—
|
|
0.82
|
|
—
|
|
3.08
|
Adjusted
EPS
|
$
0.84
|
|
$
0.75
|
|
$
2.44
|
|
$
2.18
|
Diluted weighted
average common shares outstanding
|
133
|
|
135
|
|
134
|
|
136
|
Adjusted weighted
average common shares outstanding
|
133
|
|
139
|
|
134
|
|
139
|
|
|
1
|
For the Nine Months
Ended September 29, 2023, adjusted share count includes
anti-dilutive shares for warrants excluded from Diluted EPS share
count.
|
We have calculated the updated 2024 guidance for Adjusted EPS by
adjusting Diluted EPS for the items included in the table
below.
|
Fiscal 2024
Guidance
|
Diluted
EPS1
guidance
|
$2.91
|
|
$3.01
|
Adjustments
|
|
•
Amortization related to acquisitions
|
0.21
|
•
Ichthys commercial dispute costs
|
0.01
|
•
Acquisition, integration and restructuring
|
0.09
|
•
Legacy legal fees
|
(0.02)
|
Adjusted
EPS1
guidance
|
$3.20
|
|
$3.30
|
|
|
1
|
Diluted and Adjusted
Fiscal 2024 EPS guidance are calculated using a share count of
approximately 135 million.
|
Adjusted Cash Flows Provided by Operating Activities and
Adjusted Free Cash Flows
Adjusted operating cash flows and
Adjusted free cash flows are considered non-GAAP financial measures
under SEC rules. Adjusted operating cash flows exclude certain
amounts included in the cash flows provided by operating activities
calculated in accordance with GAAP. Adjusted free cash flows
exclude capital expenditures from Adjusted operating cash flows.
The most directly comparable financial measure calculated in
accordance with GAAP is cash flows provided by operating
activities. Management believes that Adjusted operating cash flows
and Adjusted free cash flows afford investors a view of what
management considers KBR's core operating cash flow performance and
also afford investors the ability to make a more informed
assessment of such core operating cash generation performance.
We have calculated Adjusted operating cash flows and Adjusted
free cash flows for each of the three- and nine-month periods ended
September 27, 2024 and September 29, 2023 by adjusting operating cash
flow provided by operating activities for items included in the
table below.
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
27,
|
|
September
29,
|
|
September
27,
|
|
September
29,
|
Dollars in
millions
|
2024
|
|
2023
|
|
2024
|
|
2023
|
Cash flows provided by
operating activities
|
$
161
|
|
$
(40)
|
|
$
422
|
|
$
248
|
Add: Legacy legal
settlement (after tax)
|
—
|
|
132
|
|
—
|
|
132
|
Adjust: CARES Act
temporary tax repayment
|
—
|
|
—
|
|
—
|
|
—
|
Adjusted operating
cash flows
|
$
161
|
|
$
92
|
|
$
422
|
|
$
380
|
Less: Capital
expenditures
|
(19)
|
|
(22)
|
|
(54)
|
|
(60)
|
Adjusted free cash
flows
|
$
142
|
|
$
70
|
|
$
368
|
|
$
320
|
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SOURCE KBR, Inc.