KBR(US:KBR)2025-02-25 04:01Financial Performance - KBR delivered $2.1 billion in revenue for Q4 2024, representing a 23% increase year-over-year, and a total of $7.7 billion for the full year, which is an 11% increase [10][36] - Adjusted EBITDA for Q4 was $228 million, with a full-year total of $870 million, achieving an adjusted EBITDA margin of 11.2%, up approximately 50 basis points year-over-year [11][38] - Adjusted EPS for Q4 was $0.91, a 32% increase compared to the previous year, while full-year adjusted EPS was $3.34, up 15% [36][39] Business Segment Performance - Government Solutions segment revenues increased by 20% in Q4 to $1.6 billion, with adjusted EBITDA of $150 million and margins at 9.4% [41] - Sustainable Tech Solutions saw a 30% revenue increase in Q4, reaching $108 million in adjusted EBITDA with margins at 20.6% [45] - For the full year, Sustainable Tech revenues were $1.9 billion, up 17%, with adjusted EBITDA of $398 million and a margin of 21.3% [47] Market Performance - The company ended the year with a book-to-bill ratio of 1.1 times and over $21 billion in backlog and options [19] - International markets, particularly in defense and infrastructure, are expected to contribute significantly to growth, with increased spending anticipated from governments [76][80] Company Strategy and Industry Position - KBR is focused on advancing its growth strategy through acquisitions, such as LinQuest, and enhancing operational efficiency [12][27] - The company is well-positioned in the LNG market, anticipating a significant gap in supply through 2030, which is expected to drive demand for its services [70][72] - KBR's business model emphasizes resilience and growth, with over 60% of adjusted EBITDA generated from non-US government customers [30][62] Management Commentary on Operating Environment and Future Outlook - Management expressed confidence in the 2025 outlook, projecting double-digit growth across all metrics, supported by disciplined strategic execution [13][62] - The company anticipates significant contributions from the HomeSafe program, estimating revenues between $300 million to $500 million for 2025, compared to less than $50 million in 2024 [58][66] - Management highlighted the importance of maintaining a balanced view across its portfolio amid uncertainties in government spending and contract awards [110][112] Other Important Information - KBR plans to return nearly $300 million to shareholders through buybacks and dividends, with a 10% increase in the regular dividend effective March 2025 [51][52] - The company has a disciplined approach to acquisitions, focusing on bolt-on opportunities that align strategically and culturally [52][130] Q&A Session Summary Question: Revenue outlook for 2025 and HomeSafe contribution - Management indicated that the revenue guidance for 2025 includes approximately $400 million from LinQuest and $300 million to $500 million from HomeSafe, with both performing well [66][68] Question: Growth drivers for 2025 and international contributions - Management noted that international markets, particularly in defense and sustainable technology, are expected to drive growth, with increased spending from governments [74][76] Question: Risks to government solutions guidance - Management acknowledged potential risks from a slowdown in awards but emphasized a balanced growth expectation across the portfolio [110][112] Question: Equity income performance and Plaquemines project - Management explained that lower equity income in Q4 was due to accounting adjustments and scope increases on projects, which are expected to contribute positively in the future [116][118] Question: Capital allocation and share repurchase strategy - Management confirmed a bias towards share buybacks in the current environment, with plans to leverage down from 2.6 times to around 2.1-2.2 times by year-end [130][131]