KBR, Inc. (KBR) delivered a solid fourth-quarter 2024 performance, surpassing expectations on both revenues and earnings. The top and bottom lines increased on a year-over-year basis.See the Zacks Earnings Calendar to stay ahead of market-making news.KBR stock gained 2.1% during the trading session and 4.3% in the after-hours trading session yesterday, following the earnings release.KBR had a strong year, delivering revenue and earnings growth, margin expansion and maintaining its industry-leading safety re ...

KBR, Inc. (NYSE:KBR) Q4 2024 Earnings Conference Call February 24, 2025 4:00 PM ET Company Participants Jamie DuBray - VP, IR Stuart Bradie - President and CEO Mark Sopp - EVP, CFO Conference Call Participants Brent Thielman - D.A. Davidson Mariana Perez Mora - Bank of America Steven Fisher - UBS Jerry Revich - Goldman Sachs Michael Dudas - Vertical Research Andy Kaplowitz - Citigroup Sangita Jain - KeyBanc Operator Good afternoon. Thank you for attending today's KBR's Fourth Quarter and Full Year 2024 Earn ...

Company Performance - KBR Inc. reported quarterly earnings of $0.91 per share, exceeding the Zacks Consensus Estimate of $0.83 per share, and up from $0.69 per share a year ago, representing an earnings surprise of 9.64% [1] - The company posted revenues of $2.12 billion for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 8.04%, compared to $1.73 billion in the same quarter last year [2] - KBR has surpassed consensus EPS estimates in all four of the last quarters and has topped consensus revenue estimates two times over the last four quarters [2] Stock Performance and Outlook - KBR shares have declined approximately 15.2% since the beginning of the year, while the S&P 500 has gained 2.2% [3] - The current consensus EPS estimate for the upcoming quarter is $0.86 on revenues of $2.03 billion, and for the current fiscal year, it is $3.83 on revenues of $8.61 billion [7] - The estimate revisions trend for KBR is mixed, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Industry Context - KBR operates within the Zacks Engineering - R and D Services industry, which is currently ranked in the bottom 35% of over 250 Zacks industries [8] - The performance of KBR's stock may be influenced by the overall outlook for the industry, as research indicates that the top 50% of Zacks-ranked industries outperform the bottom 50% by more than 2 to 1 [8]

Financial Performance - Revenues for Q4 2024 were $2.1 billion, up 23% year-over-year, with a 15% organic growth[4] - Adjusted EBITDA for Q4 2024 was $228 million, an increase of 21%, resulting in an Adjusted EBITDA margin of 10.7%[6] - Net income attributable to KBR for Q4 2024 was $76 million, up 262% compared to the prior year[5] - Full fiscal year 2024 revenues reached $7.7 billion, an 11% increase, with Adjusted EBITDA of $870 million, up 16%[3] - Total revenues for the three months ended January 3, 2025, were $2.122 billion, compared to $1.730 billion for the same period in 2023, marking a year-over-year increase of approximately 23%[24] - Net income attributable to KBR for the year ended January 3, 2025, was $375 million, a significant recovery from a net loss of $265 million in the previous year[24] - Adjusted EBITDA for the year ended January 3, 2025, was $870 million, up from $747 million in the prior year, representing a growth of approximately 16%[24] - The company reported a diluted EPS of $2.79 for the year ended January 3, 2025, compared to a diluted loss per share of $1.96 in the previous year[24] - Net income for the year ended January 3, 2025, was $381 million, a significant improvement from a net loss of $261 million for the year ended December 29, 2023[28] - Adjusted EPS for the year ended January 3, 2025, was $3.34, compared to $2.91 for the year ended December 29, 2023, indicating improved earnings performance[36] Shareholder Returns - The company returned $297 million to shareholders in fiscal year 2024 through share repurchases and dividends[13] - A 10% increase in the quarterly dividend to $0.165 per share was approved, payable on April 15, 2025[14] Guidance and Projections - KBR's fiscal year 2025 revenue guidance is projected to be between $8.7 billion and $9.1 billion, representing a growth of 12% to 18% with a midpoint increase of 15%[17] - Adjusted EBITDA for fiscal year 2025 is expected to range from $950 million to $990 million, indicating a growth of 9% to 14% with a midpoint increase of 11%[17] - Adjusted EPS is forecasted to be between $3.71 and $3.95, reflecting an increase of 11% to 18% with a midpoint growth of 15%[17] - Operating cash flows are anticipated to be between $500 million and $550 million, showing growth of 8% to 19% with a midpoint increase of 14%[17] Backlog and Bookings - Bookings and options for Q4 2024 totaled $2.0 billion, maintaining a book-to-bill ratio of 1.0x[6] - KBR's backlog and options as of the fiscal year end totaled $21.2 billion, with a book-to-bill ratio of 1.1x on a trailing-twelve-month basis[4] Acquisitions and Strategic Moves - KBR acquired LinQuest, enhancing its capabilities in advanced engineering and data analytics for national security[2] - The company executed a realignment of its segments to enhance customer service and reduce costs, effective for fiscal 2025[15] Cash Flow and Assets - KBR's total assets increased to $6.663 billion as of January 3, 2025, compared to $5.565 billion as of December 29, 2023, reflecting a growth of approximately 19.7%[26] - Total cash flows provided by operating activities increased to $462 million for the year ended January 3, 2025, compared to $331 million for the previous year[28] - Cash and cash equivalents at the end of the period increased to $350 million from $304 million at the beginning of the period[28] Liabilities and Debt - KBR's total liabilities increased to $5.196 billion as of January 3, 2025, up from $4.171 billion as of December 29, 2023, indicating a growth of approximately 24.5%[26] - The company reported a total of $574 million in borrowings on short-term and long-term debt for the year ended January 3, 2025, compared to no borrowings in the previous year[28] - Interest expense increased to $144 million for the year ended January 3, 2025, from $115 million for the previous year, indicating higher borrowing costs[32] Operating Performance - Operating income for the Global Solutions segment was $453 million for the year ended January 3, 2025, compared to $285 million for the previous year, showing strong growth[34] - Operating cash flows for the three months ended January 3, 2025, were $40 million, down from $83 million for the same period in 2023[39] - Adjusted operating cash flows for the year ended January 3, 2025, were $462 million, slightly down from $463 million in 2023[39] - Operating cash conversion for the three months ended January 3, 2025, was 33%, significantly lower than 88% in the same period of 2023[39] - Adjusted operating cash conversion for the year ended January 3, 2025, was 103%, down from 117% in 2023[39] - Operating cash flow per adjusted share for the three months ended January 3, 2025, was $0.30, compared to $0.61 in the same period of 2023[39] - Adjusted operating cash flow per adjusted share for the year ended January 3, 2025, was $3.45, up from $3.40 in 2023[39] Legal Settlements - The legacy legal settlement after tax was $132 million in 2023, which did not recur in 2025[39]

Core Insights - KBR, Inc. reported strong financial performance for the fourth quarter and fiscal year 2024, with significant revenue and earnings growth, as well as margin expansion [2][4][7] - The company has issued guidance for fiscal year 2025, projecting revenue growth of 12% to 18% and adjusted EBITDA growth of 9% to 14% [20] Fiscal Year 2024 Highlights - Revenues for the fourth quarter reached $2.1 billion, a 23% increase from the previous year, driven by growth across all Government Solutions business units and contributions from the LinQuest acquisition [4][10] - Adjusted EBITDA for the fourth quarter was $228 million, up 21%, with an adjusted EBITDA margin of 10.7% [6][7] - Net income attributable to KBR for the fourth quarter was $76 million, a 262% increase compared to the prior year [5][7] - For the full fiscal year 2024, revenues totaled $7.7 billion, an 11% increase, and adjusted EBITDA was $870 million, up 16% [7][8] Segment Performance - Government Solutions segment revenues were $1.6 billion for the fourth quarter, up 20%, with adjusted EBITDA of $150 million [10][11] - Sustainable Technology Solutions segment revenues reached $524 million, a 30% increase, with adjusted EBITDA of $108 million [12][13] Cash Flow and Capital Deployment - Operating cash flows for the fiscal year were $462 million, with a cash conversion rate of 103% [15][40] - The company returned $297 million to shareholders through share repurchases and dividends during the fiscal year [15][18] Backlog and Bookings - As of the fiscal year end, backlog and options totaled $21.2 billion, with a book-to-bill ratio of 1.0x for the quarter [8][12] - Bookings for the fourth quarter were $2.0 billion, maintaining a book-to-bill ratio of 1.0x [7][8] Fiscal Year 2025 Guidance - KBR projects revenues between $8.7 billion and $9.1 billion for fiscal year 2025, with adjusted EBITDA expected to be between $950 million and $990 million [20][21] - The company anticipates adjusted EPS to range from $3.71 to $3.95, reflecting an increase of 11% to 18% [20]

Core Points - KBR, Inc. has elected Lt. General Wendy M. Masiello as Lead Independent Director, effective from the 2025 annual meeting of stockholders in May 2025 [1] - Lt. General Masiello has been on KBR's Board since August 2017 and has served in various capacities, including Chair of the Cybersecurity Committee [2][3] - KBR's Chair, General Lester L. Lyles, emphasized the Board's confidence in Masiello's leadership and operational experience [3] Company Overview - KBR delivers science, technology, and engineering solutions globally, employing approximately 38,000 people and serving customers in over 80 countries [6] - The company focuses on providing technology, value-added services, and long-term operations and maintenance services [6] Lt. General Wendy M. Masiello's Background - Masiello is a retired three-star General of the U.S. Air Force with extensive experience in defense contracting, managing a $1.4 billion budget and overseeing 20,000 contractors [4] - She has held significant roles in shaping Air Force contracting policy and led a $65 billion Service Acquisition portfolio [4] - Masiello has received numerous awards, including the Defense Superior Service Medal and the Distinguished Service Medal [4] Additional Roles and Contributions - Masiello serves on the boards of several organizations, including StandardAero and EURPAC Service, Inc., and is involved in various committees [5] - She advises the Department of Defense and the U.S. Air Force on acquisition innovation and research [5]

Company Participation in Investor Conferences - KBR will participate in the TD Cowen 46th Annual Aerospace and Defense Conference on February 12, 2025, with Mark Sopp and Jamie DuBray involved in a fireside chat [1] - Jamie DuBray will also participate in investor meetings at Citi's 2025 Global Industrial Tech and Mobility Conference on February 19, 2025 [2] Company Overview - KBR provides science, technology, and engineering solutions globally, employing approximately 37,000 people across 30 countries [3] - The company focuses on delivering technology, value-added services, and long-term operations and maintenance services to ensure consistent delivery with predictable results [3]

Core Points - KBR has been awarded a contract by Weardale Lithium Limited to develop a lithium brine extraction demonstration facility in Eastgate, County Durham, UK [1][2] - The facility aims to scale up to a commercial production target of 10,000 tons per annum of battery-grade lithium carbonate [2][4] - The project utilizes KBR's PureLi® technology in conjunction with Geolith SAS' Li-Capt® Direct Lithium Extraction (DLE) technology, which has already produced battery-grade lithium carbonate at pilot scale [3][4] Company and Industry Insights - KBR's collaboration with Weardale Lithium is part of a broader commitment to sustainable solutions addressing the increasing demand for lithium, crucial for electric vehicles (EVs) and renewable energy storage [4] - The project is expected to contribute over £1 billion to the North East England economy and is recognized in the UK Government's Critical Minerals Strategy, highlighting its importance in the transition to a net-zero economy [4] - Geolith SAS' DLE Li-Capt technology is noted for its selective lithium extraction with low carbon and water usage, emphasizing sustainability in lithium extraction methods [4] - KBR has over seven decades of experience in evaporation and crystallization technologies, focusing on the recovery and purification of critical minerals while adhering to environmental regulations [4][5]

Core Points - KBR has been awarded a $187 million task order by the U.S. Department of State to provide medical support services in Iraq under the MedSSI contract [1][2] - The MedSSI task order will support over 4,000 personnel and includes operating a Diplomatic Support Hospital and four clinics [2][3] - The contract period is five years, running through 2029, and KBR will provide a range of medical services including primary, urgent, and emergency care [2][3] Company Overview - KBR employs approximately 37,000 people globally and operates in over 30 countries, providing technology and engineering solutions [4] - The MedSSI task order marks KBR's first medical support contract with the U.S. Department of State, although the company has a long history of providing health services to NASA and the U.S. military [3][4]

Group 1: Contract and Project Details - KBR, Inc. has been awarded a significant contract to support sustainable energy production in Saudi Arabia, partnering with Saudi Aramco as part of the Master Expansion Program [1] - The contract, running through 2028, involves increasing and maintaining sustainable capacity across the Shaybah field's four Gas-Oil Separation Plants (GOSPs), including enhancements to power plants and well injection facilities [2] - The project emphasizes sustainability by integrating carbon-free energy alternatives, carbon capture, and gas reinjection to reduce emissions, supporting Saudi Aramco's 2060 net-zero goals [3] Group 2: KBR's Legacy and Strategic Positioning - KBR has over four decades of impactful collaboration in Saudi Arabia, advancing sectors such as energy, infrastructure, and sustainability, aligning with Saudi Arabia's Vision 2030 [4] - The awarded contract highlights KBR's strategic positioning in the sustainable energy sector and its role in driving advancements in Saudi Arabia, indicating a robust growth trajectory [8] Group 3: Financial Performance and Market Position - KBR's shares have lost 10.4% in the past six months, compared to a 6.2% decline in the Zacks Engineering - R and D Services industry, with concerns over high costs and expenses [7] - Increased activity in energy transition projects is expected to be beneficial for KBR in the upcoming period [7]